Why should countries invest in human capital? As emerging technologies impact economies and societies, how can we ensure that the most vulnerable are protected? Who will step up to finance the SDGs? Next week’s Annual Meetings of the World Bank and the IMF will convene 13,000 global policymakers, private sector executives, academics, and civil society members in Bali, Indonesia as they work to address these questions and more.
Despite last Friday’s 7.5-magnitude earthquake and tsunami that devastated Indonesia’s island of Sulawesi, meetings will still go ahead as planned. While the decision to go ahead with the meetings is a sign of Indonesia’s resilience and strength, it underscores the importance of ensuring that the resources and energy devoted to this endeavor are deployed effectively to deliver ambitious and meaningful outcomes.
Below, our experts share their hopes and expectations for this year’s meetings.
The importance of human capital for learning outcomes
One of the many events to watch will be the launch of the Human Capital Index (HCI). This launch comes on the heels of the 2018 World Development Report (WDR) “Learning to Realize Education’s Promise” and in anticipation of the 2019 WDR “The Changing Nature of Work.”
We are excited to see that the HCI incorporates explicit measures of the learning being achieved in school. This builds on the key insight of the 2018 WDR–that improving education requires a focus on improving learning, not just on expanding schooling.
Since “what gets measured gets done,” the launch of this new index should stimulate additional resources for increasing human capital investments. Significant improvements in human capital will require children around the world to achieve substantially higher learning levels. A growing body of evidence—much of it coming out of CGD’s contributions to the RISE Program—shows that simply increasing spending on schooling (“more of the same”) will not deliver these improvements and that increasing spending alone is not enough. What can deliver results is meaningful changes in education systems. The education agenda for improving human capital should be an agenda of system wide change.
– Marla Spivack, CGD education consultant
The unique role of the IDFC in mobilizing the SDGs
On the sidelines of the World Bank-IMF meetings, CGD will host a session, alongside the OECD and the International Development Finance Club (IDFC), examining the role of the IDFC in supporting the sustainable development agenda. The club is a unique mix of national, bilateral, and regional development finance institutions all of whom share a broad development mandate. My forthcoming report on the IDFC’s role in support of the SDGs identifies the collective scale of these organizations, which greatly exceeds that of the World Bank and other major multilateral development banks, as well as operational practices and best practices associated with SDG activities among the IDFC members. I will present these and other key findings from the CGD study as part of panel moderated by Masood Ahmed, and that includes AFD CEO Rémy Rioux and other leading representatives from the IDFC membership and the OECD.
Can technology help bridge inequality gaps, including gender?
I’m pleased to see that there are multiple sessions on the intersections of technology with crucial development policy areas: financial services, tourism, social protection, macro-development, and the future of work. As technology is increasing labor flexibility, mobility, information flows, and access to networks, the culture of work itself is changing. Within these policy conversations I hope participants will discuss how these transformations impact women, about half of whom worldwide participate in the labor force and who make up the majority of workers in the informal economy.
There are tough issues to tackle. If there are fewer jobs, will men and women compete for more of the same jobs (even for roles traditionally held by women)? Will the jobs that are disappearing primarily be ones held by women? Who will hold the jobs being created by these new technologies? Disruptions caused by digitization can potentially worsen inequality if structural barriers to employment and economic empowerment aren’t addressed. But looking at it more positively, this shift could bridge gaps in inequality by creating new career paths, lowering the barriers in access to financial and social services, and promoting new innovation-oriented skills. And as more women turn to entrepreneurship and self-employment for financial stability, technology might be the catalyst to expanding their businesses.
The Eminent Persons Group Report 2018: Will the G20 follow through?
The financing model for the SDGs proposed in Addis Ababa in 2015 is proving untenable. Debt levels in many low-income countries, particularly Africa, continue to rise, putting the hard-won gains from the heavily indebted poor countries/multilateral debt relief initiatives and debt sustainability at risk. At the same time, the call for more financing for the SDGs is encouraging financiers, official and private, to lend more. The international community needs to urgently rethink its approach to SDG financing—more official development assistance, especially grants, more domestic resource mobilization, better outcomes, and perhaps slower ambition.
At the same time the international community has to prepare to deal with countries whose debts becomes unsustainable—new creditors (like the BRICS) and new financial arrangements (blended finance, guarantees) mean that old methods (Paris Club, multilateral debt relief) won’t work. Without some forethought, the first big debt workout will be chaotic and, worse, will set the precedent for future ones.
The report of the Eminent Persons Group (EPG) will be made public at the fall meetings. The EPG was commissioned by the G20 to see if the international financial institutions are fit for purpose for 21st century and are setting a clear path toward meeting the SDGs. While we haven’t seen the final report, earlier discussions indicate that the EPG will call for increased use of country platforms for support, better coordination among the multilateral development banks (MDBs) to leverage expertise, use of system-wide guarantees and syndication of loans to leverage available resources, as well as some serious rethinking about the global governance arrangements for the IFIs and MDBs. The real test of the G20’s commitment to the SDGs will be in the implementation of the recommendations of the report—will it be just another of a series of reports that sit on ministers’ bookshelves (or in their electronic filing systems), or will some action be taken? Is there really political will do some modest reforms that will move the system in the right direction?
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Helping the MDBs mobilize private finance for development
Unfortunately, the multilateral development banks are currently playing a marginal role in mobilizing private finance for SDG investments. The reasons are embedded in their business models. They are fundamentally commercial banks, which require them to limit risk tolerance and earn substantial returns to maintain financial sustainability. Their shareholders offer mixed messages: increase development impact, shift operations more to poor and fragile states, but don't jeopardize AAA ratings. If these banks are to greatly increase their mobilization of private finance, including in difficult environments, they must be given the financial scope, including off-balance sheet risk tolerant funding at scale, to adapt their financial models so that they can rise to the formidable challenges of the SDGs, including climate change.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
Image credit for social media/web: Photo By: Eugene Salazar / World Bank