A CGD Working Paper with Brian Webster and Ranil Dissanayake. We develop a simple empirical model of sector employment and output shares which, coupled with long-term projections of GDP per capita, provide indicative projections of the evolution and peak of manufacturing in lower income countries to 2050. These indicative projections suggest that cross-country income convergence will continue despite manufacturing peaking as a share of output. This forecast might seem implausible: countries have historically developed and become rich by shifting the composition of their production into manufacturing (and eventually out of manufacturing and into services). But we argue there is reason to think that this is a realistic possibility. First, we argue that there is the potential for a significant relocation of the global manufacturing base in the next two decades that are not fully captured in forecast estimates. Second, notwithstanding this potential relocation, we argue that the role of manufacturing as the unique path to prosperity has likely been overstated. We make the case for cautious, conditional optimism.
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A paper written with Zack Gehan and Robert Kenny, forthcoming in Telecommunications Policy. Worldwide there is an ongoing policy and regulatory push to make very high speed broadband available as widely as possible. Underlying the policy interventions to support higher speeds is an implicit assumption that higher speeds will enable different (and socially valuable) use. In this paper we empirically test whether higher speed lines are associated with greater household data usage in the UK. We find that after allowing for demographic factors, higher speed in fact has a very limited relationship to traffic. This suggests that mid-speed broadband is not in fact a constraint on household usage (as measured by traffic), and thus the benefits of policy interventions to support higher speeds remain somewhat speculative.
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This was an evidence submission to the UK Parliament's International Development Committee. I argue that while BII (British International Investment) has been a leader amongst development finance institutions (DFIs) in important respects, and has a strong staff and management focused on improving development outcomes, it still suffers from constraints that limit the impact of DFIs as a whole in supporting sustainable development, especially in the poorest countries. Like other DFIs, BII is unable to mobilize significant capital by crowding in private finance to its investments, its efforts to create new markets for private finance have had limited success and its use of subsidized capital has been inefficient.
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A CGD Working Paper with Zack Gehan. We develop scenarios for the shape of the global economy in 2050 building on a simple regression of the historic relationship between current income and lagged income, demographic features, climate, and education, using the coefficients to develop a “central” forecast and error terms to set high and low bounds on country outcomes. Scenarios examine combinations of low and high outcomes for different country groupings. “Central” forecasts suggest slowing per capita growth rates for high income countries as well as many upper middle income countries including China, with continued global income convergence. Scenario exercises suggest the potential for considerable variation in outcomes including global share of the economy and voting power in international institutions..
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A CGD Working Paper. Julian Simon argued that more people were associated with more prosperity: human talents were the “ultimate resource” and the force behind rising living standards. The last 30 years have been consistent with that view. But, globally, we are making fewer workers—and, more importantly, fewer potential innovators. In rich countries, human capital is growing considerably more slowly than in the past. Meanwhile innovation per researcher appears to be dropping as the population of researchers ages, while it takes longer to get to the knowledge frontier and more collaboration to expand it. Combined with the fact we are increasingly intolerant of risk and increasingly desirous of innovations in sectors where it is particularly hard to increase productivity, it is little surprise that productivity growth is indeed declining. To extend our two-century era of comparatively rapid progress, we need radically reduced discrimination in the global opportunity to innovate.
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Technology and trade can ensure water scarcity is not a constraint on progress. In PERC Reports.
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This is an *old* paper (2012) that I submitted to CGD for peer review and it got shot down. I can’t remember why, and I re-used some of the material in Results not Receipts but it has some interesting data in it and I still think I broadly agree with it so, with that caveat lector, here it is. For many donors throughout most of their history, the major assistance model has involved the tool of the investment project. This is based on a theory of aid and development that the key constraint facing developing countries seeking rapid growth is lack of investment and that donor financing to overcome that ‘investment gap’ can be overseen through the project process to ensure that it is efficiently spent to generate high returns. In reality, filling an ‘investment gap’ is neither an empirically well justified nor a practically well-implemented aid strategy. Furthermore, procurement oversight mechanisms appear to be doing a poor job at ensuring the average effectiveness of an investment portfolio in a country is significantly enhanced, or transferring knowledge, or building institutions. The procurement-focused project investment model should be limited in use to in cases where (i) a project design is significantly innovative and/or delivers regional or global public goods and/or aid is a large percentage of country investment and no agreement can be reached between donors and government on overall investment priorities in that country and (ii) alternate project approaches like output-based or cash on delivery models are deemed inappropriate.
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A CGD note. The long run global estimates of climate impact on GDP are small. That hides the fact that there are big volatility shocks and impacts are concentrated in poorer countries. And that matters a lot for policy response.
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A CGD Working Paper with George Yang. There is considerable interest in increasing private participation in infrastructure to meet the twin goals of climate mitigation and development in low- and middle-income countries. At the same time, this infrastructure needs to make returns in order to be financially sustainable. This paper reviews evidence on the economics of infrastructure investment and the role of human capital and uses two approaches to provide additional evidence on the link between human capital and infrastructure returns: (i) using estimated returns to individual World Bank infrastructure projects and their relationship to country levels of human capital and (ii) broader approaches linking the macroeconomic impact of infrastructure investment in the presence of varying human capital stocks.
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A CGD note. Can't hurt asking….
Charles Kenny 