This week, the SDG Knowledge Weekly brief looks at papers and indexes launched at the annual meetings of the International Monetary Fund (IMF) and World Bank Group, which convened from 8-14 October 2018, in Nusa Dua, Bali, Indonesia, just after the country experienced a 7.5-magnitude earthquake. We focus particularly on knowledge offerings relating to SDGs 8 (decent work and economic growth), 9 (industry, innovation and infrastructure) and 10 (reduced inequalities).

Technological progress reshapes, rather than replaces, markets and production systems, according to WDR 2019.

The World Development Report (WDR) 2019, released during the meetings by the World Bank Group, focuses on “the changing nature of work,” particularly in the face of technological advances and fears that automation will replace employees with machines. The publication asserts that such fears are unfounded, noting that technological progress reshapes, rather than replaces, markets and production systems. It considers issues raised by automation and digitization vis-à-vis businesses, and reviews how these impacts can be harnessed to promote social protection and inclusion, describing the idea of a new social contract. A summary blog on the report is also available. The report also presents the World Bank’s Human Capital Index, which was formally launched in Bali. A World Bank press release notes that “jobs of the future require more investment in people.”

However, Sophie Edwards reports on Devex that civil society responses to the WDR have been less than positive, due to “a strong deregulatory thrust” and “attacks on many basic work rights” in a world where “technology is pushing down the value of labor in the economy.” Edwards notes that in a side session during the annual meetings, World Bank staff painted an optimistic scenario where new opportunities are created, but flagged that the poorest citizens and informal workers may not be able access those new jobs without increases in social protections from governments.

Also exploring fears of negative impacts on employment, the Pathways for Prosperity Commission on Technology and Inclusive Development released a report titled, ‘Charting Pathways for Inclusive Growth: From paralysis to preparation.’ The report examines the impact of technological innovation on growth, jobs and livelihoods, recognizing that “technologies are radically transforming peoples’ lives.” It explores whether frontier technologies such as machine learning will indeed benefit the world’s poorest. The Commission finds that estimates of job losses due to automation—which range from 9-80%—are misleading because the methodologies behind them tend to “ignore the upsides of technological progress” that often result in new opportunities. The report identifies five pathways that developing counties can pursue to ensure inclusive growth: 1) raising value from agriculture; 2) new global value chains in manufacturing; 3) global trade in services; 4) linking the informal sector to the formal economy; and 5) diverse, connected domestic economies that reduce costs and increase innovation. Across these pathways, the Commission underscores the need to create “a digital-ready country” that guides markets towards innovation through broad support for entrepreneurs and maximizes inclusiveness by ensuring a level playing field. The Commission is hosted by Oxford University’s Blavatnik School of Government.

Shanta Devarajan, Acting Chief Economist of the World Bank, compares the two publications above – ‘The Changing Nature of Work’ and ‘Charting Pathways for Inclusive Growth’ – in a post on The Brookings Institution’s blog titled, ‘the future of inclusive growth.’ Devarajan notes that both paint “an optimistic picture of the impact of technology on developing countries” and “provide a robust platform for harnessing the power of technology for inclusive growth.” Each report, he explains, addresses the impacts of technology on inequality, noting that efficiency gains outlined in the Pathways report can benefit poorer segments of society. He writes that farmers, who tend to have comparatively low incomes, could benefit from improved crop yields driven by data analytics and biotechnology. However, he cautions that the WDR articulates a blurring of firms’ boundaries, changing production patterns and employment trajectories.

Turning to SDG 10, Development Finance International (DFI) and Oxfam launched the Commitment to Reducing Inequality (CRI) Index 2018. The index, which assesses governments by their initiatives to bridge the gap between rich and poor, focuses on efforts in three policy areas: social spending, progressive taxation, and higher wages and stronger labor rights for workers (particularly women). This second edition builds on the 2017’s “beta version,” adding new sub-indicators in the tax and labor categories. Top overall performers include Denmark, Germany and Finland, while laggards are Nigeria, Uzbekistan and Haiti. However, the findings stress that all of the 157 countries it covers “could do more, even those near the top.”

IBON International published a paper, titled, ‘Implementing the World Bank Group’s Maximizing Finance for Development (MFD): Reinforcing Corporate Capture of the Global South.’ The piece looks into the implementation of the MFD model in Indonesia, Kenya and Peru, and articulates a need to move beyond this approach. The authors argue that the systematization of private actors in the model poses risks to peoples’ right to participate in development. They cite a UN Conference on Trade and Development (UNCTAD) report that finds “differences in private and social returns” of “bankable” projects under the MFD approach, and call for national development strategies to “be owned and led by the people… whose rights to land, social services and to development are at stake.”

On financing poverty eradication more broadly, Development Initiatives launched ‘Investments to End Poverty 2018’ during the IMF and World Bank meetings. The report explores ways of strengthening aid amidst a “rapidly changing development finance landscape,” the mobilization of all resources to leave no one behind, and moving from data to impact through increased transparency. The executive summary emphasizes that business as usual leaves people behind, and that urgent action is needed to change trajectories on meeting aid commitments and identifying the synergies between difference resources. It highlights growing global inequality, lamenting that that the world’s poorest are “falling further and further behind,” that information provision has not kept pace with the need for disaggregated data, and that investments must be made to ensure both wellbeing and economic potential, such as social protection, health and education.

Finally, as noted above, the World Bank launched its Human Capital Index, one pillar of the Human Capital Project, which aims to raise awareness on lack of investments in “human capital,” which encompasses peoples’ skills, health, knowledge, and resilience. Investing in these areas can enable increased productivity, flexibility and innovation, and can act as “a central driver of sustainable growth and poverty reduction,” the authors argue. The Index reviews five indicators on health and education that can be linked to productivity as an adult, in order to arrive at an aggregate score between 0 and 1. As noted by Devex, Singapore tops the list with a score of 0.88. The Human Capital Summit was held on 11 October 2018, in the margins of the IMF and World Bank meetings.

A report by McKinsey Global Institute titled, ‘Outperformers: High-growth emerging economies and the companies that propel them,’ examines why some emerging economies have grown faster and more consistently than others. The report examines 71 developing economies and identifies two factors that help explain their “outperformance”: a policy agenda that promotes growth, and the role of large companies. Among other findings, the authors highlight changes in the global landscape on demographics, trade patterns and the digital revolution, which they note provide new opportunities in both manufacturing and services.

Additional issues of the SDG Knowledge Weekly can be found here.