Do America’s current economic problems—slow productivity growth, weak investment, and rising income inequality—reflect flaws of capitalism or too little competition? Is the slide into more monopolistic structures an inevitable consequence of market forces such as technological change and globalization, or are political choices and policies to blame? What are the new challenges of 21st-century capitalism? What will it take to make American markets great again—for all?

On December 6, the Global Economy and Development program at Brookings is hosting a discussion that will feature an important recently published book on these issues by Thomas Philippon: The Great Reversal: How America Gave Up on Free Markets. A presentation on the book by the author will be followed by a discussion involving the author and invited panelists.

Following the discussion, the panel will take questions from the audience.

       

On October 31, the Global Economy and Development program at Brookings and the Center for the Implementation of Public Policies for Equity and Growth (CIPPEC) from Argentina co-hosted an event to assess democratic trends in the developing world and tease out implications for growth and development, drawing from recent electoral results in Africa, Latin America, and South Asia. The event kicked off with a brief presentation on global attitudes toward democracy by the Pew Research Center. A moderated panel with regional experts followed.

Following the discussion, the panel answered questions from the audience.

       

The ambitious 15-year agenda known as the Sustainable Development Goals, adopted in 2015 by all members of the United Nations, contains a pledge that “no one will be left behind.” This book aims to translate that bold global commitment into an action-oriented mindset, focused on supporting specific people in specific places who are facing specific problems.

In this volume, experts from Japan, the United States, Canada, and other countries address a range of challenges faced by people across the globe, including women and girls, smallholder farmers, migrants, and those living in extreme poverty. These are many of the people whose lives are at the heart of the aspirations embedded in the 17 Sustainable Development Goals. They are the people most in need of such essentials as health care, quality education, decent work, affordable energy, and a clean environment.

This book is the result of a collaboration between the Japan International Cooperation Research Institute and the Global Economy and Development program at Brookings. It offers practical ideas for transforming “leave no one behind” from a slogan into effective actions which, if implemented, will make it possible to reach the Sustainable Development Goals by 2030. In addition to policymakers in the field of sustainable development, this book will be of interest to academics, activists, and leaders of international organizations and civil society groups who work every day to promote inclusive economic and social progress.

Chapters and Contributors

1. Getting Specific to Leave No One Behind on Sustainable Development
   Homi Kharas, John W. McArthur, and Izumi Ohno
   
   Part I: People
2. Women on the Move: Can We Achieve Gender Equality by 2030?
   Hilary Mathews and Michelle Nunn
3. Breaking Out of the Poverty Trap
   Lindsay Coates and Scott Macmillan
4. No Smallholder Farmer Left Behind
   Jane Nelson
5. No Refugees and Migrants Left Behind
   Dany Bahar and Meagan Dooley
   
   Part II: Problems
6. Leapfrogging to Ensure No Child Is Left Without Access to a Twenty-First Century Education
   Rebecca Winthrop and Lauren Ziegler
7. Vulnerable Populations and Universal Health Coverage
   Krishna D. Rao, Saeda Makimoto, Michael Peters, Gabriel M. Leung, Gerald Bloom and Yasushi Katsuma
8. No Women Left Excluded from Financial Services
   Eiji Yamada, Erica Paula Sioson, Enerelt Murakami, and Akira Murata
9. Leaving No One Behind: Can Tax-Funded Transfer Programs Provide Income Floors in Sub-Saharan Africa?
   Nora Lustig, Jon Jellema, and Valentina Martinez Pabon
   
   Part III: Places
10. Spatial Targeting of Poverty Hotspots
    Jennifer L. Cohen, Raj M. Desai, and Homi Kharas
11. Leaving No Fragile State and No One Behind in a Prosperous World: A New Approach
    Landry Signé
12. The Importance of City Leadership in Leaving No One Behind
    Tony Pipa and Caroline Conroy
    
    On Politics
13. Left Behind or Pushed Back? Redistributing Power Over the Sustainable Development Goals
    Paul O’Brien

       

Pouring several colors of paint into a single bucket produces a gray pool of muck, not a shiny rainbow. Similarly, when it comes to discussions of financing the Sustainable Development Goals (SDGs), jumbling too many issues into the same debate leads to policy muddiness rather than practical breakthroughs. For example, the common “billions to trillions” refrain on SDG financing falls into this trap. While originally a useful device for calling attention to the need for a paradigm shift in financing, including from private sources, the meme’s emphasis on mega-aggregates is now a distraction from operational considerations.

The purpose of SDG financing is to ensure the right mix of resources are available in the right places at the right time to solve specific real-world problems. These include challenges like deprivation of basic human needs, obesity-induced non-communicable disease, species loss from land and oceans, and greenhouse gas emissions into the atmosphere. The SDGs will only be properly financed and achieved when there is clarity on each of the underlying problems to be solved, on the respective mechanisms needed to address them, and on the appropriate mix and volume of resources needed for implementation. In this paper, we stress the need to think beyond financing aggregates to a more granular description of specific types of resource gaps in specific countries. We “zoom out” on the big picture issues in order to encourage “zooming in” on the practical ones.

Our starting point is to ask what it will take to build a new global economy that is consistent with the SDGs, including the imperative to address climate change. We think of an “SDG economy” as one where the aspirations of two foundational agreements on sustainable development are met. One is embedded in the third paragraph of the 2015 United Nations resolution (70/1) that gave us the SDGs, entitled “Transforming our world: the 2030 Agenda for sustainable development.” It offers a concise description of the overall ambition:

We resolve, between now and 2030, to end poverty and hunger everywhere; to combat inequalities within and among countries; to build peaceful, just and inclusive societies; to protect human rights and promote gender equality and the empowerment of women and girls; and to ensure the lasting protection of the planet and its natural resources. We resolve also to create conditions for sustainable, inclusive and sustained economic growth, shared prosperity and decent work for all, taking into account different levels of national development and capacities.

The second foundational agreement is embedded in paragraph 12 of the U.N.’s 2015 Addis Ababa Action Agenda on financing for development. It makes a commitment for a new “social compact,” one that delivers social protection and essential public services for all:

To end poverty in all its forms everywhere and finish the unfinished business of the Millennium Development Goals, we commit to a new social compact. In this effort, we will provide fiscally sustainable and nationally appropriate social protection systems and measures for all, including floors, with a focus on those furthest below the poverty line and the vulnerable, persons with disabilities, indigenous persons, children, youth and older persons. We also encourage countries to consider setting nationally appropriate spending targets for quality investments in essential public services for all, including health, education, energy, water and sanitation, consistent with national sustainable development strategies.

Within this Addis pledge, the emphasis on nationally appropriate spending targets is crucial. Addis did not envisage a single point estimate of spending needs for all, but instead allowed for country differentiation. Hence each country has a unique fiscal path to developing its own SDG economy.

Ultimately, SDG economies require building public services and societal systems that do three things: ensure essential public services are available to every human being; build fast-growing cities and industries that succeed on environmental and social terms too; and retrofit currently “advanced” cities and industries that are still not delivering on a range of SDG outcomes, such as the global food system and its adverse effects on health and the environment. In moving towards this vision, all segments of society must contribute. The private sector is crucial for many tasks, but the public sector is dominant for tackling market and coordination failures that cause SDG challenges to persist.

In this paper, we concentrate on what governments themselves must do through public spending, not because it is the only form of spending relevant for the SDGs – far from it – but because it is the form of spending most directly under the purview of policymakers. In doing this, we are able to clarify order-of-magnitude-type assessments of the nature of public spending volumes required for the SDGs. Presuming private dollars are complements to public dollars, the estimates in this paper can be considered as rough lower bounds for SDG spending and financing requirements.

October 23: The paper has been updated with revised Figures 2A and 2B, along with slightly revised text describing the slope of the graph.

       

In that spirit, a newly edited book, “Leave No One Behind: Time for Specifics on the Sustainable Development Goals,” aims to translate that ambitious commitment into an action-oriented mindset, focused on supporting specific people in specific places who are facing specific problems. The volume covers everything from tackling the obstacles faced by women, migrants, refugees and the ultra-poor to closing gaps in access to healthcare and quality education.

On October 18, the Global Economy and Development program at Brookings, together with the UN Foundation and the JICA Research Institute co-hosted an event to highlight outcomes from the September SDG summit in New York and to explore how key actors move from incremental action and approaches to transformative change, especially with respect to fulfilling the leave no one behind commitment. Book co-editor and co-author John McArthur, who is also a senior adviser at the UN Foundation, opened the event with a presentation on the volume’s central themes. A moderated panel of experts followed.

Following the discussion, the panel answered questions from the audience.

       

When it comes to economic development, positive change is typically gradual and only noticeable over long periods of time; by contrast negative developments—economic crises—are often rapid and spectacular. This creates a biased narrative that focuses on negative news, while positive trends go unnoticed because they are less dramatic.

In this blog, amid an atmosphere of deepening gloom about prospects for the world economy, we want to draw attention to two long-term trends that illustrate the significant progress being made by most of humanity.

Two questions are central to each human being: How long will I live? How much money will I earn? While we all approach these questions with many nuances and influencing factors (such as education, health, political stability, climate, infrastructure), almost everyone in the world wants an uplifting answer to both questions. Everyone wants to live a long, healthy and prosperous life and most of us now actually have a credible shot at it.

For most of human history, this was not the case. People tended to die young and in poverty. However, over the last 50 years, the world has made fundamental improvements in how long people live and how much money they can spend. As people live longer there are also more older people than in the past. The classic population pyramid (with many young and few old people) was typical only 100 years ago. Not anymore. The shape will soon look more like a rectangle, with age cohorts of approximately equal size stretching out to 80 years of life expectancy.

These demographic shifts are also reshaping the perception of age. Historically, until about 2000 years ago, humans only lived for 30 years, which was also the typical lifespan of a forager in the savanna. But since the beginning of modern economic growth, sometime between 1850 and 1950 depending on the country, lifespans started to increase rapidly across the world. But because of the pattern of demographic change, with young cohorts expanding more rapidly than older cohorts, most people were in their formative years—children, teenagers, young and mobile. Those who were married, with a steady job and a settled lifestyle were in the minority. This has now changed. For the first time ever, there are as many people over the age of 30 as under the age of 30, a tipping point that has profound implications for the global economy.

We have commented before on another tipping point, one that separates the poor and vulnerable from the middle class and the rich. For the purposes of our analysis, we define poor and vulnerable people as those who live in households with a daily spending power of less than $11 per person per day (in 2011 PPP). This includes extreme poor people (living on less than $1.90 per day) and vulnerable groups (between $1.90 and $11). By contrast, middle class and rich households, who dominate global consumer spending, are defined as those who spend more than $11 per person per day.

If you apply these definitions globally you will see that 2019 is a pivotal year in global development. We are experiencing a double tipping point on both age and wealth dimensions. The world today is getting steadily older—mature, settled adults over the age of 30 are now half the population and growing. And the world is getting steadily richer—about half the world is now middle class or richer. When we combine income trends across demographic segments, we find that there are approximately 2.2 billion young and poor and the same number of old and rich people, while there are 1.6 billion young and rich and the same number of old and poor (Figure 1).

Combining the latest demographic and economic forecasts into the model, using a similar methodology as we use in the World Poverty Clock, we can calculate the speed at which each of these quadrants is changing. About 4 infants per second are surviving to age 30, but even more are graduating from 29 years old to 30 years old. So, the absolute number of those below 30 will be shrinking in the next decade. The number of those above 30 is derived by combining those crossing the 30-year threshold (growing by 4 people per second) and those who are dying (2 people per second). Similarly, the speed at which the world population is becoming wealthier is also about 4 people per second—a combination of those lucky enough to be born into middle class households (1 person per second) and those graduating into it as a result of economic growth in their country (3 people per second).

Most countries are now going through this transition towards becoming older and richer. Each will take a different path. In Asia, countries that are already relatively rich such as South Korea and Japan, are now aging fast. China is also aging rapidly, and while it is becoming rich it’s starting point of wealth is far below that of Korea or Japan. Many African countries are still trapped in the poor and young category. So, there is little uniformity across countries. Nevertheless, all countries will be facing a new world in 2030.

This world in 2030 will be mostly rich and largely old, with 8.3 billion inhabitants, some 700 million more than today. From now on, the world will have ever fewer poor people, about the same number of youth and young adults, and many more old and rich people. Over the next decade, we project that the world will add 800 million people above the age of 30, and there will be 100 million less people under the age of 30. In 2030, there will be 1.8 billion more people who will have at least $11 per day in spending power, while the number of poor and vulnerable with less than $11 per day will shrink by 1.1 billion (Figure 2).

In other words, in 2030 we will see a very different world. We will probably not be thinking about “the good old days” but about how the days have become good for the old. That’s something for us to look forward to.

Note: This blog builds on an earlier blog by Homi Kharas et al. “A global tipping point” and on a presentation by Wolfgang Fengler at the Global Summit of Singularity University on August 20, 2019. We thank Jasmin Baier, Jonathan Karl, Aurelien Kruse and Dylan Pattillo for their support.

       

Since at least Adam Smith’s Wealth of Nations in 1776, economists have asked why certain places grow, prosper, and achieve a higher standard of living compared to other places. Ever since growth started to accelerate following the industrial revolution, it has been characterized by, above all, unevenness across places within countries. Appalachia, the Italian “Mezzogiorno,” and the Habsburg Empire east of the Tisa River, are a few well-known examples of laggards on the path towards industrialization.

These patterns of subnational “dualism” are still prevalent across the world, in rich and poor countries alike. The poorest counties in the United States have a per capita income less than that of Mongolia and Peru, while the poorest census-designated places are poorer than Myanmar or Nigeria.

From a policy perspective, it is increasingly important to know where poverty is concentrated at a level that is more granular than a country. In a new book chapter, we have found that a majority of developing countries will still have at least one region where extreme poverty is likely to persist in 2030. These regions have a combination of characteristics that make development difficult: poor agricultural suitability, a high burden of communicable disease, a high risk of natural disasters, water stress, and other geographic factors. Typically, these are areas that are away from urban areas where economic opportunities are concentrated. These poverty hotspots represent a serious challenge to the “leave no one behind” spirit of the Sustainable Development Goals.

Using spatial data on nighttime luminosity from satellite images, we can generate more granular, detailed forecasts for subnational growth and poverty. Figure 1 shows a global map with shaded areas for all poverty hotspots, defined as subnational regions (districts or provinces within a country) that are on track to have a per capita GDP of $4,900 or less in 2011 PPP terms in 2030. We chose the cut-off of $4,900 to represent a proxy for the mean level of development in a region where extreme poverty is likely to have been eradicated. We find 840 poverty hotspots globally, home to 1 billion people, from a universe of 3,609 administrative units one level below the nation-state (districts, states, and provinces). 102 countries have at least one poverty hotspot. Immediately, four principle clusters of hotspots are visible:

• Tropical Africa: Zones extending from the Sahel to northern Angola, to the southern borders of Zambia, Zimbabwe, and Mozambique, as well as Madagascar.
• Tropical Latin America: Scattered parts of Central America, the Caribbean coast of Venezuela along with most of its central and southern regions, part of Ecuador and Colombia, Suriname, French Guiana, and northeastern Brazil.
• Central-South Asia: Areas stretching from Tajikistan and Kyrgyzstan to most of Afghanistan, northwestern Pakistan, Kashmir on both sides of the line of control, much of Nepal, north-eastern Indian states, and parts of Bangladesh and Myanmar.
• Southeast Asia-Western Oceania: Sections of Cambodia, Vietnam, the Philippines, Indonesia, East Timor, Papua New Guinea, and the Solomon Islands.

Figure 1: Subnational poverty hotspots, 2030

The map shows that persistent poverty in lagging regions is indifferent to national boundaries. If we were to map poverty at an even finer level of disaggregation, we would find more scattered hotspots across the world.

What can be done to ensure that these areas are not left behind? Solutions such as encouraging emigration or spatial targeting of growth policies are inherently difficult. If migrants leave, and in so doing, take scarce capital with them, they can depress their source areas even more.

The reality is that migration is a complex decision, dependent on many factors. As the table shows, populations in poverty hotspots are expected to grow at more than twice the rate of other regions in developing countries because poorer populations with less access to health and education services have far higher fertility rates. The out-migration that does occur due to a per capita income growth rate that, for the past decade, has been barely one-sixth that of non-hotspots, is not rapid enough to outweigh higher natural population growth. Emigration, while a potential long-run solution, is not the answer for poverty hotspots in the timeframe of Agenda 2030.

An alternative is to accelerate the economic growth of poverty hotspots through targeted policies. In most countries, growth is most efficient when it builds on market forces of agglomeration, specialization, and trade—factors that favor urban centers, not rural, low-density regions. Market forces, if left unattended, can exacerbate the persistent inter-regional disparities that have given rise to laggard regions in the first place. In other words, “spatial” targeting will require specialized interventions that aim to alleviate the geographic sources of persistent poverty.

Our findings suggest that three types of spatially-targeted policies can make a difference: (1) those that improve human capital; (2) those that improve physical infrastructure and market connectivity; (3) those that enhance the resilience of regions to shocks such as like droughts, civil conflict, and natural disasters.

Figure 2 summarizes the marginal effects of improvements in various determinants of average annual per capita growth in subnational regions. For example, doubling the road network density within a subnational area will add just over 1 percentage point to growth rates. Mitigating the impact of droughts by half adds another percent. An additional percent increase in growth may be achieved by raising the subnational human development index (HDI) score by 10 percent (at the country level, this would be the equivalent of Rwanda raising its HDI score to that of Angola, Iraq raising its score to that of Thailand, or South Africa raising its score to that of Brazil). Cutting the rate of conflict deaths by half increases growth by an additional 0.5 percentage points. Increasing the accessibility of the subnational population to urban areas adds about 0.4 percentage points to growth.

Figure 2: Marginal effects of changes in subnational factors on annual growth

These five subnational reforms, therefore, could add 3.8 percentage points to a subnational region’s annual per capita growth over the next ten years. This is enough to add over 45 percent to a region’s GDP per capita in a decade. Additional reforms at the national level can complement these reforms—for example, doubling the country “rule of law” score increases per capita growth by another 0.75 percent annually.

Some of these reforms require policy changes. Others require a reallocation of resources, by the public sector as well as by aid donors. Countries such as India and Papua New Guinea have each successfully used geospatial data to target improvements to health and educational outcomes for marginalized groups in lagging regions. In the West Bank, satellite information has been used to focus resources on rebuilding roads to enable multiple access points to larger road networks. Farmers in Mozambique increased their productivity through the use of a network of recreational drones that provided highly granular data on crop yields. In the Democratic Republic of the Congo, a group of university students, using geo-referenced data from household surveys and government records, compiled, mapped, and publicized land ownership claims in a northern region of the country, thereby reducing encroachment and tensions over land use.

These are a few recent examples of how geospatial targeting can prompt improvements in lagging areas. Spatial targeting offers considerable promise in ensuring that geography will not become destiny for people left behind in developing and developed countries alike.

       

World leaders are gathering in New York this week to attend the first major stocktaking summit on the Sustainable Development Goals (SDGs). When the SDGs were agreed by all countries in 2015, they were intended to help countries accelerate their transition to more sustainable paths by 2030, with sustainability understood to include economic, environmental, and social issues. As part of this, all countries committed to “leave no one behind (LNOB),” a broad promise to address the pervasive and damaging problems of inequality and exclusion. The 2015 SDG agreement even doubled down on this commitment through a pledge to “reach the furthest behind first.”

All good as words, but much harder to deliver in practice. In the sphere of global development cooperation and poverty reduction, governments and official agencies often deploy the rhetoric of LNOB but revert to traditional development strategies in their programming. To make LNOB into a practical agenda, this tendency must be confronted. This is why we, together with colleagues at the Japan International Cooperation Agency and other partners, collaborated on a new edited volume, Leave No One Behind: Time for Specifics on the Sustainable Development Goals. We thought it time to showcase ideas that could help shift LNOB from admirable slogan to practical approach.

Considerable progress has been made on raising average living standards for much of humanity, but tackling inequality and exclusion is no small task and there are fewer big success stories to draw upon. Inclusion requires addressing complex drivers of social outcomes. It demands attention on the underlying reasons why highly marginalized people are being left behind in the first place. It suggests a shift from big picture thinking about national or regional trends to much more precise thinking about the challenges faced by individual people in the communities where they live.

Simply put, an LNOB agenda is not necessarily synonymous with a national development agenda. To illustrate the point, consider the example of Canada. It is a country that has made huge achievements in its long-term national development, but still faces profound LNOB challenges, as one of us has shown elsewhere. Even if driven by overall good intentions, government systems may bolster average national progress while doing far too little for many groups and individuals.

The LNOB challenge is particularly salient when thinking about global efforts for the SDGs because so much international cooperation has traditionally been channeled through governments and elite-dominated social structures. The powers that be, whether governments or economic elites, often have vested interests in system inertia, either through inadvertent neglect of the disadvantaged or by intentionally using their position to further their own interests. Public distrust of government varies tremendously around the world and is a problem in many countries, according to the Edelman Trust Barometer, especially in places like South Africa, Spain, and Brazil. A recent Pew Research Center poll also found that the share of people responding that the U.S. government is run by a few big interests looking out for themselves has risen from 29 percent in 1964 to 76 percent in 2018.

Our book highlights the scale of the challenge for no one to be left behind. It shows that on indicators related to life and death and personal well-being, where there is reasonably comprehensive global data, progress is still far too slow to meet the SDGs and the scale of interventions needs to be sharply accelerated. In fact, as we have highlighted elsewhere, some 44 million lives are at stake and there is little evidence as yet that the rate of progress on development indicators is changing fast enough. Worryingly, the evidence on some key inputs into development, like the volume and cross-country allocation of aid, is actually getting worse. The neediest countries are getting less international support.

The need for Specific Development Goals

At the same time, the global development community must also target its interventions better and be more specific about what outcomes are to be expected from any given project or program. We argue that the best way to put teeth into the LNOB agenda, both domestically and internationally, is to reframe the relevant SDG targets more precisely—on specific people facing specific problems in specific places. Our book is not comprehensive but suggests a way of designing the questions to be more actionable. How do we achieve gender equality by 2030; how do we improve the lot of the ultra-poor; what works for small-holder farmers; how to resolve problems faced by refugees and migrants; what leapfrogging opportunities are available to deliver quality education; are options for universal health care realistic; how to make sure women participate in new technologies for accessing financial services; what are the trade-offs in using domestic taxes to finance pro-poor transfers; can we identify poverty hotspots and develop better place-based policies; how should we manage approaches to fragile contexts; can we bring city leadership on board; and what can be done to redistribute power.

The book is not intended as a complete review of all the people, problems and places that need to be addressed to fulfill the LNOB pledge. But it does draw attention to the need for specific strategies and actions. That said, many of the chapter authors recognize the interdependence between success in one area and success in another. They point to the tension between solving specific problems and getting trapped into faulty policy and program segmentation. They also point to the difficulties in getting to specifics because of the dearth of adequately disaggregated data. Building a sound empirical foundation is essential for LNOB success.

Is it overly optimistic to think, in today’s fraught global context, that countries might cooperate on LNOB? Public opinion in many countries still supports the idea of expanding international collective efforts to alleviate suffering. Even amid the intense domestic debates across the United States, recent polling by the University of Maryland’s Program on International Policy Attitudes shows a strong foundation of global compassion. Americans do not look to foreign aid to help themselves—for example in jobs or improved national security—but to solve specific problems for others who are less fortunate. When a concrete issue is presented with a price tag showing how the burden can be shared with other countries, Americans are very willing to spend more, even if it means their taxes would go up.

The general point seems to be that clear, crisp goals with specific outcomes and strategies for collective contributions can elicit strong and widespread support. These are key ingredients for shifting the LNOB mantra from words to results. It’s time to focus on specific people, living in specific places, facing specific problems. We hope that the U.N. Summit, and efforts like our book, will help move the agenda this way.

       

This is the second in a two-part series of episodes from the Brookings-Blum Roundtable, an annual forum for global leaders, entrepreneurs, and policy practitioners to discuss innovative ideas and to pursue initiatives to alleviate global poverty. In this episode, Merrell Tuck-Primdahl, director of communications for the Global Economy and Development program at Brookings, speaks with four experts about China’s remarkable economic rise, its role in development projects in the region and around the world, and the U.S.-China trade war.

Guests featured in this episode are:

• Homi Kharas, interim VP and director of Global Economy and Development at Brookings
• Minxin Pei, a professor at Claremont McKenna College
• Weijian Shan, group chairman and CEO, Pacific Alliance Group
• Michael Froman, chair of the board, Center for Inclusive Growth, Mastercard, and former U.S. trade representative

Related content:

Will foreign aid matter in the 2020 election? (first episode)

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