How Many People Are at Risk of Losing Their Homes in Your Neighborhood?
Signs on the ground after people gathered outside an apartment complex with the intention to stop the alleged eviction of one of the tenants in Mount Rainier, Md., last
Alongside the prospect of a new surge in coronavirus infections, another crisis is on the horizon: A nationwide wave of evictions threatens more than six million families that have fallen behind on rent.
The true extent of the threat has been masked by a national moratorium on evictions. But that ban will expire on Saturday, allowing landlords to start or continue eviction proceedings in most states.
See the share of households at risk by entering your county in the search field below.
This problem is especially acute in 250 counties where at least one-fifth of renters are behind, according to our analysis. But nationwide, the sheer scale of rent debt is alarming: An estimated $23 billion in all is outstanding, with about $3,800 per average household in arrears.
More...
https://www.nytimes.com/2021/07/28/opin ... 778d3e6de3
POVERTY ERADICATION
Video Quote: Multiple Inputs and Poverty Eradication
Video:
https://www.youtube.com/watch?v=q0V7egsKsmM
Video:
https://www.youtube.com/watch?v=q0V7egsKsmM
Poverty, Disease, Customs: Why So Many Indonesian Children Die of Covid
The disease kills far more children in developing countries than in rich ones, and some factors make them especially vulnerable in Indonesia.
The grave of Alesha Kimi Pramudita, a 22-month-old who died after being infected with the coronavirus in Yogyakarta, Indonesia, in July.Credit...
BULUS WETAN, Indonesia — When Debiyantoro, a hotel repairman, first lost his sense of taste, he wondered briefly if it might be Covid-19, but he quickly dismissed the idea. Having the disease would mean not being able to make a living.
Now he blames his reluctance to get tested for the death of his 22-month-old daughter, Alesha Kimi Pramudita. All 10 members of their crowded household suffered Covid-like symptoms but none were tested until Kimi went for an unrelated checkup. Hospitalized immediately, she died a day later.
“Although I thought it might have been Covid, I was afraid I wouldn’t be allowed to work, which means I couldn’t have supported my family,” Mr. Debiyantoro, who like many Indonesians uses one name, said as he tried to hold back tears. “But now I am filled with remorse that I lost my daughter.”
Across Indonesia, children have fallen victim to Covid in alarming numbers, with a striking increase since June, when the Delta variant began taking hold. The pandemic has killed at least 1,245 Indonesian children and the biggest recent jump has been among those under age 1, said Dr. Aman Bhakti Pulungan, head of the Indonesian Pediatric Society.
Researchers point to many reasons children would be more likely to die in developing countries, but many of those factors boil down to a single one: poverty.
Wealthy countries have gotten used to the idea that children are extremely rare pandemic victims. In the United States and Europe, people under 18 have accounted for about one of every 1,500 reported Covid deaths.
But the toll in less developed countries tells a different story. The pediatric society’s figures suggest that in Indonesia, about one of every 88 officially counted deaths has been that of a child.
More...
https://www.nytimes.com/2021/08/14/worl ... 778d3e6de3
The disease kills far more children in developing countries than in rich ones, and some factors make them especially vulnerable in Indonesia.
The grave of Alesha Kimi Pramudita, a 22-month-old who died after being infected with the coronavirus in Yogyakarta, Indonesia, in July.Credit...
BULUS WETAN, Indonesia — When Debiyantoro, a hotel repairman, first lost his sense of taste, he wondered briefly if it might be Covid-19, but he quickly dismissed the idea. Having the disease would mean not being able to make a living.
Now he blames his reluctance to get tested for the death of his 22-month-old daughter, Alesha Kimi Pramudita. All 10 members of their crowded household suffered Covid-like symptoms but none were tested until Kimi went for an unrelated checkup. Hospitalized immediately, she died a day later.
“Although I thought it might have been Covid, I was afraid I wouldn’t be allowed to work, which means I couldn’t have supported my family,” Mr. Debiyantoro, who like many Indonesians uses one name, said as he tried to hold back tears. “But now I am filled with remorse that I lost my daughter.”
Across Indonesia, children have fallen victim to Covid in alarming numbers, with a striking increase since June, when the Delta variant began taking hold. The pandemic has killed at least 1,245 Indonesian children and the biggest recent jump has been among those under age 1, said Dr. Aman Bhakti Pulungan, head of the Indonesian Pediatric Society.
Researchers point to many reasons children would be more likely to die in developing countries, but many of those factors boil down to a single one: poverty.
Wealthy countries have gotten used to the idea that children are extremely rare pandemic victims. In the United States and Europe, people under 18 have accounted for about one of every 1,500 reported Covid deaths.
But the toll in less developed countries tells a different story. The pediatric society’s figures suggest that in Indonesia, about one of every 88 officially counted deaths has been that of a child.
More...
https://www.nytimes.com/2021/08/14/worl ... 778d3e6de3
NHI is a joint program of Accelerate Prosperity and Aga Khan University (AKU)
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Applications for the 3rd cohort of our flagship National Health Incubator (NHI) Program are now open.
Apply Now: https://enketo.ona.io/x/z0qsv4uV
The deadline for submitting the applications is 5th August 2022.
The One Privilege Liberals Ignore
American liberals have led the campaign to reduce child poverty since Franklin Roosevelt, and it’s a proud legacy. But we have long had a blind spot.
We are often reluctant to acknowledge one of the significant drivers of child poverty — the widespread breakdown of family — for fear that to do so would be patronizing or racist. It’s an issue largely for working-class whites, Blacks and Hispanics, albeit most prevalent among African Americans. But just as you can’t have a serious conversation about poverty without discussing race, you also can’t engage unless you consider single-parent households. After all:
- Families headed by single mothers are five times as likely to live in poverty as married-couple families.
- Children in single-mother homes are less likely to graduate from high school or earn a college degree. They are more likely to become single parents themselves, perpetuating the cycle.
- Almost 30 percent of American children now live with a single parent or with no parent at all. One reason for the sensitivities is large racial disparities: Single parenting is less common in white and Asian households, but only 38 percent of Black children live with married parents.
“The data present some uncomfortable realities,” writes Melissa S. Kearney, an economist at the University of Maryland, in an important book on this topic to be published next week. “Two-parent families are beneficial for children,” she adds. “Places that have more two-parent families have higher rates of upward mobility. Not talking about these facts is counterproductive.”
We liberals often perceive the world through prisms of privilege, but we rarely discuss one of the most important privileges of all — and it’s the title of Kearney’s book, “The Two-Parent Privilege.”
Let me interrupt this column with a shower of caveats. Many children raised in part by single moms do extraordinarily well; one was a two-term president in the 1990s and another served two terms until 2017. And I think the big driver for the rise in single-parent households is bad decisions by policymakers that led to mass incarceration and a collapse of earnings for working-class men.
Yet this is still so wrenching to discuss.
That goes back to 1965, when Daniel Patrick Moynihan wrote a prescient report about the decline of marriage among Black Americans. Moynihan, who himself had been raised mostly in poverty by a single mother, warned that family breakdown would exacerbate social problems, but he was denounced by liberals for racism and victim-blaming.
Scholars ran for cover. It helped greatly that the eminent African American sociologist William Julius Wilson of Harvard later conducted research in this area and praised Moynihan’s work as “prophetic.” But even today there is a deep discomfort in liberal circles about acknowledging these realities.
A scholarly organization in the field published a call in 2021 to “dismantle family privilege” (such as championing two-parent families), which it warned was embedded in “white supremacist society.” And while 91 percent of college-educated conservatives agree that “children are better off if they have married parents,” only 30 percent of college-educated liberals agree, according to a report to be released next week by the Institute for Family Studies.
In fact, children simply do better on average in school and typically earn more in adulthood if they have married parents, and this is particularly true of boys. It doesn’t seem to matter if the two parents are a mom and dad or a same-sex couple.
One advantage of a two-parent family is simply a function of arithmetic: Two parents can earn two incomes, meaning less poverty.
Two-parent households seem to benefit not just their own kids but the neighborhood as well. Harvard’s Opportunity Insights group found that upward mobility was more likely for Black boys in neighborhoods with a higher share of Black dads living with their children.
One stunning and depressing gauge of racial inequity in the United States: The study found that 62 percent of white children live in low-poverty areas with fathers present in most homes, while only 4 percent of Black children do.
The collapse of marriage has happened mostly among less-educated Americans, including those who are white, Black or Hispanic. While many college graduates in theory embrace all kinds of family relationships, they remain traditional in their personal behaviors, mostly having children after marriage and raising their own kids in two-parent households. Brad Wilcox, a sociologist and family expert at the University of Virginia, calls this “talk left, walk right.”
The United States is an outlier in family breakdown. A Pew study of 130 countries found that American children were more likely to live with a single parent than those of any other nation. Conservatives sometimes argue that increases in welfare benefits undermined marriage, but this appears not to be a major factor — partly because European countries have both stronger social welfare programs and more two-parent families.
The proposed solutions from conservatives, such as marriage promotion efforts tried under the George W. Bush administration, likewise have had little impact. What does appear to strengthen marriage is lifting earnings of low-education men. This makes them more “marriageable,” researchers find.
Lifting earnings is where liberals have the solutions: strengthened labor unions, community college support, skills training initiatives such as high school career academies and groups that provide technical training like Per Scholas.
The breakdown of family primarily among low-income Americans may be uncomfortable to talk about, but it is part of the apparatus of inequality in the United States. It doesn’t help when we avert our eyes, ignore the data and deny the existence of two-parent privilege.
https://www.nytimes.com/2023/09/13/opin ... 778d3e6de3
Coming Soon in New York: Cocktails, Steak and Hypocrisy
A food distribution site in Madagascar last year.Credit...Joao Silva/The New York Times
World leaders will gather this coming week at the United Nations and proclaim their passion for ending poverty and hunger around the globe.
In that week, approximately 90,000 children under the age of 5 will die, mostly of preventable causes.
As leaders discuss their goal to end hunger, over steak, children will be starving — to the point that 148 million will be forever stunted from malnutrition.
Then, after a flurry of cocktail parties, the leaders will clap one another on the back, congratulate themselves for confronting global needs and go home to fret about their waistlines.
OK, that’s a bit unfair: Some leaders do genuinely work to address these issues. If I sound dyspeptic, it’s because over the decades I’ve watched so many of these U.N. sessions with their motorcades and $1,000-a-night suites, and I haven’t seen nearly enough of the hard work and difficult commitments that save children’s lives, ease hunger and end atrocities. Sometimes it feels like an annual orgy of hypocrisy.
In 2015, at this United Nations gathering, leaders embraced “sustainable development goals” — such as “no poverty” and “zero hunger” — that they pledged to achieve by 2030. Now we’re more than halfway to the deadline, and it’s clear we’re going to miss these goals by a mile. Millions will needlessly die as a consequence.
When the goals were adopted, the U.N. secretary general at the time, Ban Ki-moon, pronounced them “a defining moment in human history.”
The British prime minister, David Cameron, outlined the mission: “to reduce preventable deaths to zero, to eliminate illiteracy and malnutrition and to eradicate extreme poverty.”
Jim Yong Kim, then the World Bank president, proclaimed that all this “will be one of humankind’s greatest achievements.”
Results have not matched the rhetoric. In an update on the sustainable development goals, the U.N. says that progress toward 80 percent of the targets has been “weak,” “stalled” or “gone into reverse.”
Instead of ushering in “zero poverty,” the year 2030 is now forecast to have 575 million people living in extreme poverty. Instead of ending illiteracy, the world is on track to have 84 million children out of school in 2030.
We were also supposed to end child marriage by 2030. Oops. The U.N. now warns that this may take 300 more years.
The sustainable development goals were unrealistic; they were never going to be fully achieved. After all, we still allow child marriage in 41 states here in America (to our shame).
Lofty goals could be forgiven if they inspired progress, but I worry that they were sometimes less a spur to action than a substitute for it. Yes, the pandemic created setbacks, but let’s be honest: We dropped the ball.
In the late 1990s and early 2000s, there was an excitement about overcoming global poverty. Global organizations were formed to promote vaccines and fight AIDS, malaria and tuberculosis. Bleeding hearts from left and right worked together to save lives. Bono caught the spirit in a powerful 2004 commencement speech proclaiming that “we can be that generation that says no to stupid poverty.”
That passion brought results: Since 2000, the share of the world’s people living in poverty has plunged by more than 70 percent.
The excitement has faded. Countries turned inward, and leaders moved on (That includes the news media; count this column as self-criticism.) There has been progress since 2015, but not nearly as much as was possible.
The failures aren’t only in the rich countries. Sudan has collapsed into a maelstrom of killing and rape, which amplifies poverty. Ethiopia’s leader — a Nobel Peace Prize winner, no less — has presided over mass atrocities while making plans for a palace that may cost $10 billion.
We know what to do. The Bill and Melinda Gates Foundation has outlined a path to save the lives of some two million mothers and children over a decade. We have the tools and experience; we lack the resources and political will.
“Successes in nutrition show what’s possible, making failure to go to scale even more unacceptable,” Shawn Baker of Helen Keller Intl told me.
Developed countries quietly dropped their bold promises to increase aid. The World Food Program faces such funding shortfalls that it has had to cut 10 million hungry Afghans from food support.
“Now we need to make choices about who still gets food and who not,” Hsiao-Wei Lee of the World Food Program in Afghanistan told me. “How do I tell a mother with a hungry child on her hand that her family will not receive any assistance anymore, that her child may not be hungry enough?”
It’s maddening to see leaders proclaiming in ringing tones their passion for humanitarian goals that they don’t actually work to achieve. Instead, we could have a week of silence to honor those 90,000 children who will die during these festivities.
https://www.nytimes.com/2023/09/16/opin ... 778d3e6de3
Re: POVERTY ERADICATION
Poor Nations Are Writing a New Handbook for Getting Rich
Economies focused on exports have lifted millions out of poverty, but epochal changes in trade, supply chains and technology are making it a lot harder.
Garment factory workers after their shift in Dhaka, Bangladesh. The country built its success on turning farmers into textile workers.Credit...Atul Loke for The New York Times
For more than half a century, the handbook for how developing countries can grow rich hasn’t changed much: Move subsistence farmers into manufacturing jobs, and then sell what they produce to the rest of the world.
The recipe — customized in varying ways by Hong Kong, Singapore, South Korea, Taiwan and China — has produced the most potent engine the world has ever known for generating economic growth. It has helped lift hundreds of millions of people out of poverty, create jobs and raise standards of living.
The Asian Tigers and China succeeded by combining vast pools of cheap labor with access to international know-how and financing, and buyers that reached from Kalamazoo to Kuala Lumpur. Governments provided the scaffolding: They built up roads and schools, offered business-friendly rules and incentives, developed capable administrative institutions and nurtured incipient industries.
But technology is advancing, supply chains are shifting, and political tensions are reshaping trade patterns. And with that, doubts are growing about whether industrialization can still deliver the miracle growth it once did. For developing countries, which contain 85 percent of the globe’s population — 6.8 billion people — the implications are profound.
Today, manufacturing accounts for a smaller share of the world’s output, and China already does more than a third of it. At the same time, more emerging countries are selling inexpensive goods abroad, increasing competition. There are not as many gains to be squeezed out: Not everyone can be a net exporter or offer the world’s lowest wages and overhead.
Image
Orange robots on a car factory’s assembly line.
Robotics at a car factory in China. Today, manufacturing accounts for a smaller share of the world’s output, and China already does more than a third of it. Credit...Qilai Shen for The New York Times
There are doubts that industrialization can create the game-changing benefits it did in the past. Factories today tend to rely more on automated technology and less on cheapworkers who have little training.
“You cannot generate enough jobs for the vast majority of workers who are not very educated,” said Dani Rodrik, a leading development economist at Harvard.
The process can be seen in Bangladesh, which the World Bank’s managing director called “one of the world’s greatest development stories” last year. The country built its success on turning farmers into textile workers.
Last year, though, Rubana Huq, chair of Mohammadi Group, a family-owned conglomerate, replaced 3,000 employees with automated jacquard machines to do complex weaving patterns.
The women found similar jobs elsewhere in the company. “But what follows when this happens on a large scale?” asked Ms. Huq, who is also president of the Bangladesh Garment Manufacturers and Exporters Association.
These workers don’t have training, she said. “They’re not going to turn into coders overnight.”
Recent global developments have accelerated the transition.
Image
People working at tables with sewing machines inside a factory with cloth material.
A garment factory in Bangladesh. The country is facing challenges with automation, which is affecting employment opportunities.Credit...Atul Loke for The New York Times
Supply chain meltdowns related to the Covid-19 pandemic and to sanctions prompted by Russia’s invasion of Ukraine drove up the price of essentials like food and fuel, biting into incomes. High interest rates, imposed by central banks to quell inflation, set off another series of crises: Developing nations’ debts ballooned, and investment capital dried up.
Last week, the International Monetary Fund warned of the noxious combination of lower growth and higher debt.
The supercharged globalization that had encouraged companies to buy and sell in every spot around the planet has also been shifting. Rising political tensions, especially between China and the United States, are affecting where businesses and governments invest and trade.
Companies want supply chains to be secure as well as cheap, and they are looking at neighbors or political allies to provide them.
In this new era, Mr. Rodrik said, “the industrialization model — which practically every country that has become rich has relied on — is no longer capable of generating rapid and sustained economic growth.”
Nor is it clear what might replace it.
Image
Office workers, in business casual dress, sitting at desks in cubicles working on computers.
A Siemens global capability center in Bengaluru, formerly known as Bangalore, a high-tech center in India.Credit...Aparna Jayakumar/Bloomberg
There’s a future in service jobs.
One alternative might be found in Bengaluru, a high-tech center in the Indian state of Karnataka.
Multinationals like Goldman Sachs, Victoria’s Secret and the Economist magazine have flocked to the city and set up hundreds of operational hubs — known as global capability centers — to handle accounting, design products, develop cybersecurity systems and artificial intelligence, and more.
Such centers are expected to generate 500,000 jobs nationwide in the next two to three years, according to the consulting firm Deloitte.
They are joining hundreds of biotech, engineering and information technology companies including homegrown giants like Tata Consultancy Services, Wipro and Infosys Limited. Four months ago, the American chip company AMD unveiled its largest global design center there.
“We have to move away from the idea of classic development stages, that you go from the farm to the factory and then from the factory to offices,” said Richard Baldwin, an economist at the IMD in Lausanne. “That whole development model is wrong.”
Two-thirds of the world’s output now comes from the service sector — a mishmash that includes dog walkers, manicurists, food preparers, cleaners and drivers, as well as highly trained chip designers, graphic artists, nurses, engineers and accountants.
It is possible to leapfrog to the service sector and grow by selling to businesses around the world, Mr. Baldwin argued. That is what helped India become the world’s fifth-largest economy.
Image
A busy road with traffic and commuters.
A commercial area in Bengaluru. The country provides a potential model for growth in the service sector.Credit...Saumya Khandelwal for The New York Times
In Bengaluru, formerly known as Bangalore, a general rise in middle-class living attracted more people and more businesses that, in turn, attracted more people and businesses, continuing the cycle, Mr. Baldwin explained.
Covid sped this transition, by forcing people to work remotely — from a different part of town, a different city or a different country.
In the new model, countries can focus growth around cities rather than a particular industry. “That creates economic activities which are fairly diverse,” Mr. Baldwin said.
“Think Bangalore, not South China,” he said.
Free markets are not enough.
Many developing nations remain focused on building export-oriented industries as the path to prosperity. And that’s how it should be, said Justin Yifu Lin, dean of the Institute of New Structural Economics at Peking University.
Pessimism about the classic development formula, he said, has been fueled by a misguided belief that the growth process was automatic: Just clear the way for the free market and the rest will take care of itself.
Countries were often pressured by the United States and the international institutions to embrace open markets and hands-off governance.
Export-led growth in Africa and Latin America stumbled because governments failed to protect and subsidize infant industries, said Mr. Lin, a former chief economist at the World Bank.
“Industrial policy was taboo for a long time,” he said, and many of those who tried failed. But there were also success stories like China and South Korea.
“You need the state to help the private sector overcome market failures,” he said. “You cannot do it without industrial policy. ”
Image
A cattle farm with bulls being rounded up.
Wagyu-Angus bull-calves that will become an export for Uruguay. Export-led growth in Africa and Latin America stumbled because governments failed to protect and subsidize infant industries, a former chief economist at the World Bank said.Credit...Sarah Pabst for The New York Times
It won’t work without education.
The overriding question is whether anything — services or manufacturing — can generate the type of growth that is desperately needed: broad based, large scale and sustainable.
Service jobs for businesses are multiplying, but many offering middle and high incomes are in areas like finance and tech, which tend to require advanced skills and education levels far above what most people in developing nations have.
In India, nearly half of college graduates don’t have the skills they need for these jobs, according to Wheebox, an educational testing service.
The mismatch is everywhere. The Future of Jobs report, published last year by the World Economic Forum, found that six in 10 workers will need retraining in the next three years, but the overwhelming majority won’t have access to it.
Other kinds of service jobs are proliferating, too, but many are neither well paid nor exportable. A barber in Bengaluru can’t cut your hair if you’re in Brooklyn.
That could mean smaller — and more uneven — growth.
Researchers at Yale University found that in India and several countries in sub-Saharan Africa, agricultural workers jumped into consumer service jobs and raised their productivity and incomes.
Image
A group of people walking into a field of maize.
Workers heading out to cultivate their harvest in Nigeria. In India and several countries in sub-Saharan Africa, agricultural workers jumped into consumer service jobs and raised their productivity and incomes.Credit...Finbarr O'Reilly for The New York Times
But there was a catch: The gains were “strikingly unequal” and disproportionately benefited the rich.
With a weakening global economy, developing countries will need to wring every bit of growth they can from every corner of their economies. Industrial policy is essential, Mr. Rodrik of Harvard said, but it should focus on smaller service firms and households because that is going to be the source of most future growth.
He and others caution that even so, gains are likely to be modest and hard won.
“The envelope has shrunk,” he said. “How much growth we can get is definitely less than in the past.”
The New Global Economy
https://www.nytimes.com/2024/04/02/busi ... 778d3e6de3
Economies focused on exports have lifted millions out of poverty, but epochal changes in trade, supply chains and technology are making it a lot harder.
Garment factory workers after their shift in Dhaka, Bangladesh. The country built its success on turning farmers into textile workers.Credit...Atul Loke for The New York Times
For more than half a century, the handbook for how developing countries can grow rich hasn’t changed much: Move subsistence farmers into manufacturing jobs, and then sell what they produce to the rest of the world.
The recipe — customized in varying ways by Hong Kong, Singapore, South Korea, Taiwan and China — has produced the most potent engine the world has ever known for generating economic growth. It has helped lift hundreds of millions of people out of poverty, create jobs and raise standards of living.
The Asian Tigers and China succeeded by combining vast pools of cheap labor with access to international know-how and financing, and buyers that reached from Kalamazoo to Kuala Lumpur. Governments provided the scaffolding: They built up roads and schools, offered business-friendly rules and incentives, developed capable administrative institutions and nurtured incipient industries.
But technology is advancing, supply chains are shifting, and political tensions are reshaping trade patterns. And with that, doubts are growing about whether industrialization can still deliver the miracle growth it once did. For developing countries, which contain 85 percent of the globe’s population — 6.8 billion people — the implications are profound.
Today, manufacturing accounts for a smaller share of the world’s output, and China already does more than a third of it. At the same time, more emerging countries are selling inexpensive goods abroad, increasing competition. There are not as many gains to be squeezed out: Not everyone can be a net exporter or offer the world’s lowest wages and overhead.
Image
Orange robots on a car factory’s assembly line.
Robotics at a car factory in China. Today, manufacturing accounts for a smaller share of the world’s output, and China already does more than a third of it. Credit...Qilai Shen for The New York Times
There are doubts that industrialization can create the game-changing benefits it did in the past. Factories today tend to rely more on automated technology and less on cheapworkers who have little training.
“You cannot generate enough jobs for the vast majority of workers who are not very educated,” said Dani Rodrik, a leading development economist at Harvard.
The process can be seen in Bangladesh, which the World Bank’s managing director called “one of the world’s greatest development stories” last year. The country built its success on turning farmers into textile workers.
Last year, though, Rubana Huq, chair of Mohammadi Group, a family-owned conglomerate, replaced 3,000 employees with automated jacquard machines to do complex weaving patterns.
The women found similar jobs elsewhere in the company. “But what follows when this happens on a large scale?” asked Ms. Huq, who is also president of the Bangladesh Garment Manufacturers and Exporters Association.
These workers don’t have training, she said. “They’re not going to turn into coders overnight.”
Recent global developments have accelerated the transition.
Image
People working at tables with sewing machines inside a factory with cloth material.
A garment factory in Bangladesh. The country is facing challenges with automation, which is affecting employment opportunities.Credit...Atul Loke for The New York Times
Supply chain meltdowns related to the Covid-19 pandemic and to sanctions prompted by Russia’s invasion of Ukraine drove up the price of essentials like food and fuel, biting into incomes. High interest rates, imposed by central banks to quell inflation, set off another series of crises: Developing nations’ debts ballooned, and investment capital dried up.
Last week, the International Monetary Fund warned of the noxious combination of lower growth and higher debt.
The supercharged globalization that had encouraged companies to buy and sell in every spot around the planet has also been shifting. Rising political tensions, especially between China and the United States, are affecting where businesses and governments invest and trade.
Companies want supply chains to be secure as well as cheap, and they are looking at neighbors or political allies to provide them.
In this new era, Mr. Rodrik said, “the industrialization model — which practically every country that has become rich has relied on — is no longer capable of generating rapid and sustained economic growth.”
Nor is it clear what might replace it.
Image
Office workers, in business casual dress, sitting at desks in cubicles working on computers.
A Siemens global capability center in Bengaluru, formerly known as Bangalore, a high-tech center in India.Credit...Aparna Jayakumar/Bloomberg
There’s a future in service jobs.
One alternative might be found in Bengaluru, a high-tech center in the Indian state of Karnataka.
Multinationals like Goldman Sachs, Victoria’s Secret and the Economist magazine have flocked to the city and set up hundreds of operational hubs — known as global capability centers — to handle accounting, design products, develop cybersecurity systems and artificial intelligence, and more.
Such centers are expected to generate 500,000 jobs nationwide in the next two to three years, according to the consulting firm Deloitte.
They are joining hundreds of biotech, engineering and information technology companies including homegrown giants like Tata Consultancy Services, Wipro and Infosys Limited. Four months ago, the American chip company AMD unveiled its largest global design center there.
“We have to move away from the idea of classic development stages, that you go from the farm to the factory and then from the factory to offices,” said Richard Baldwin, an economist at the IMD in Lausanne. “That whole development model is wrong.”
Two-thirds of the world’s output now comes from the service sector — a mishmash that includes dog walkers, manicurists, food preparers, cleaners and drivers, as well as highly trained chip designers, graphic artists, nurses, engineers and accountants.
It is possible to leapfrog to the service sector and grow by selling to businesses around the world, Mr. Baldwin argued. That is what helped India become the world’s fifth-largest economy.
Image
A busy road with traffic and commuters.
A commercial area in Bengaluru. The country provides a potential model for growth in the service sector.Credit...Saumya Khandelwal for The New York Times
In Bengaluru, formerly known as Bangalore, a general rise in middle-class living attracted more people and more businesses that, in turn, attracted more people and businesses, continuing the cycle, Mr. Baldwin explained.
Covid sped this transition, by forcing people to work remotely — from a different part of town, a different city or a different country.
In the new model, countries can focus growth around cities rather than a particular industry. “That creates economic activities which are fairly diverse,” Mr. Baldwin said.
“Think Bangalore, not South China,” he said.
Free markets are not enough.
Many developing nations remain focused on building export-oriented industries as the path to prosperity. And that’s how it should be, said Justin Yifu Lin, dean of the Institute of New Structural Economics at Peking University.
Pessimism about the classic development formula, he said, has been fueled by a misguided belief that the growth process was automatic: Just clear the way for the free market and the rest will take care of itself.
Countries were often pressured by the United States and the international institutions to embrace open markets and hands-off governance.
Export-led growth in Africa and Latin America stumbled because governments failed to protect and subsidize infant industries, said Mr. Lin, a former chief economist at the World Bank.
“Industrial policy was taboo for a long time,” he said, and many of those who tried failed. But there were also success stories like China and South Korea.
“You need the state to help the private sector overcome market failures,” he said. “You cannot do it without industrial policy. ”
Image
A cattle farm with bulls being rounded up.
Wagyu-Angus bull-calves that will become an export for Uruguay. Export-led growth in Africa and Latin America stumbled because governments failed to protect and subsidize infant industries, a former chief economist at the World Bank said.Credit...Sarah Pabst for The New York Times
It won’t work without education.
The overriding question is whether anything — services or manufacturing — can generate the type of growth that is desperately needed: broad based, large scale and sustainable.
Service jobs for businesses are multiplying, but many offering middle and high incomes are in areas like finance and tech, which tend to require advanced skills and education levels far above what most people in developing nations have.
In India, nearly half of college graduates don’t have the skills they need for these jobs, according to Wheebox, an educational testing service.
The mismatch is everywhere. The Future of Jobs report, published last year by the World Economic Forum, found that six in 10 workers will need retraining in the next three years, but the overwhelming majority won’t have access to it.
Other kinds of service jobs are proliferating, too, but many are neither well paid nor exportable. A barber in Bengaluru can’t cut your hair if you’re in Brooklyn.
That could mean smaller — and more uneven — growth.
Researchers at Yale University found that in India and several countries in sub-Saharan Africa, agricultural workers jumped into consumer service jobs and raised their productivity and incomes.
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A group of people walking into a field of maize.
Workers heading out to cultivate their harvest in Nigeria. In India and several countries in sub-Saharan Africa, agricultural workers jumped into consumer service jobs and raised their productivity and incomes.Credit...Finbarr O'Reilly for The New York Times
But there was a catch: The gains were “strikingly unequal” and disproportionately benefited the rich.
With a weakening global economy, developing countries will need to wring every bit of growth they can from every corner of their economies. Industrial policy is essential, Mr. Rodrik of Harvard said, but it should focus on smaller service firms and households because that is going to be the source of most future growth.
He and others caution that even so, gains are likely to be modest and hard won.
“The envelope has shrunk,” he said. “How much growth we can get is definitely less than in the past.”
The New Global Economy
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