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Road Deaths and Injuries Hold Back Economic Growth in Developing Countries

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A new World Bank study, funded by Bloomberg Philanthropies, finds that reducing road traffic deaths and injuries could result in substantial long-term income gains for low- and middle-income countries. The report, “The High Toll of Traffic Injuries: Unacceptable and Preventable,” introduces a new global methodology to calculate the economic impact of road safety and analyses the cases of China, India, the Philippines, Tanzania and Thailand.

While there is general recognition of road traffic injuries and fatalities, little is known about the link between road traffic injuries and economic growth. The new report quantifies how investments in road safety are also an investment in human capital.

The study finds that countries that do not invest in road safety could miss out on anywhere between 7 and 22% in potential per capita GDP growth over a 24-year period. This requires policymakers to prioritize proven investments in road safety. The cost of inaction is more than 1.25 million deaths a year globally, diminished productivity and reduced growth prospects.

Traffic Fatalities Strike Prime Working Age Adults in Low- and Middle-Income Countries (LMICs)

Road traffic fatalities disproportionately affect low- and middle-income countries, where 90% of global road deaths occur. Rising incomes in many developing countries have led to rapid motorization, while road safety management and regulations have not kept pace.

Death rates from road traffic injuries are high in LMICs – in 2015, reaching 34 per 100,000 in the countries studied. By contrast, the average across the 35 countries of the Organization for Economic Cooperation and Development (OECD) in the same year was 8 deaths per 100,000.

The greatest share of mortality and long-term disability from road traffic crashes happen amongst the working-age population (between 15 and 64 years old).

Reducing Road Traffic Deaths and Injuries Can Boost Income Growth 

According to the report, deaths and injuries from road traffic crashes affect medium- and long-term growth prospects by removing prime age adults from the work force, and reducing productivity due to the burden of injuries.

Using detailed data on deaths and economic indicators from 135 countries, the study estimates that, on average, a 10% reduction in road traffic deaths raises per capita real GDP by 3.6% over a 24-year horizon.

Over the period 2014-38, halving deaths and injuries due to road traffic could potentially add 22% to GDP per capita in Thailand, 15% in China, 14% in India, 7% in the Philippines and 7% in Tanzania.

Large Welfare Gains from Proven Cost-Effective Road Safety Interventions

In addition to the GDP gains from preventing death and injury, road safety interventions improve welfare benefits to the society.

The World Bank study has quantified these gains for the five countries using a range of income and risk reduction scenarios. Measured in 2005 US dollars, the welfare gains range between $5,000 to $80,000 in Tanzania, and between $850,000 to $1.8 million in Thailand.

To achieve these welfare gains the report lists interventions that include reducing and enforcing speed limits, reducing driving under the influence of alcohol, increasing seat-belt use through enforcement and public awareness campaigns, and integrating road safety in in all phases of planning, design, and operation of road infrastructure.

Making the Macroeconomic Case for Road Safety

“Traffic crashes kill more than 1.25 million people around the world each year and they also take a huge economic toll, with so much human potential being lost. Investments in road safety pay for themselves many times over, and hopefully this new report will spur governments to take actions that save lives,” said Michael R. Bloomberg, philanthropist, three-term Mayor of New York City and entrepreneur.

“Inspired by disease impact studies, this it is one of the first systematic efforts to estimate both the potential economic benefits and aggregate social welfare gains of reducing road traffic injuries in low- and middle income countries,” said José Luis Irigoyen, World Bank Senior Director for Transport and ICT.

“Curbing road traffic injuries would not just be a victory for the transport sector but a significant milestone for global development, with immediate and far-reaching benefits for public health, wellbeing, and economic growth.”

Bloomberg Philanthropies Initiative for Global Road Safety has dedicated $259 million over 12 years to implement interventions that have been proven to reduce road traffic fatalities and injuries in low- and middle-income countries.

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Economy

Radiation Processing Enables Small Businesses to Enter Global Value Chains in Malaysia

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Photo: M. Gaspar/IAEA

In today’s globalized world, becoming part of an international supply chain is key to the prospering of small businesses and their ability to create jobs. Meeting the quality requirements set by the multinationals that head these value chains is often tough for small and medium sized businesses (SMEs) operating on shoestring budgets. The country’s nuclear agency, Nuklear Malaysia, is doing its bit to help.

Thanks to the support of the Nuklear Malaysia, Wonderful Ebeam Cable has become the first SME in the country to supply cables to Malaysia’s booming automotive sector. “By using radiation technology, we have been able to improve our product line and meet the requirements of the car manufacturers,” said Managing Director Ir Chan Chang Choy. “This has allowed me to grow my business and increase the workforce.”

Due to the high temperature in engines, cables used in the engine compartment of vehicles need to be heat and flame resistant to make sure they, and the car, do not catch on fire. To improve the heat resistance and flame retardance of the insulation of copper wires, their polymers need to be crosslinked, forming an extremely tightly packed network of interconnected polymer chains. Crosslinked insulation material increases the service temperature of cable for instance from 75⁰C in the case of normal PVC to 100⁰C for crosslinked PVC.

Crosslinking can be achieved using chemicals, but the process requires higher temperatures. The alternative, the irradiation of polymers, leads to the formation of permanent bonds between the polymer chains at room temperature – which requires lower operating costs.

No SME in Malaysia has the technology in place to carry out such irradiation, and banks are reluctant to provide loans for the purchase of irradiation equipment, Chang Choy said. “These machines are expensive, and the banks do not accept the equipment itself as collateral, because there is no second hand market for irradiation equipment, so the banks cannot sell it if my company were to go bankrupt.” Also, their safe use requires extensive shielding, which can make up half the installation cost. And shielding cannot be removed and sold.

Enter Nuklear Malaysia, which irradiates the products of small businesses like Chang Choy’s for a small fee.

“The automotive industry has long been recognised as one of the key contributing factors towards the realisation of Malaysia’s aspiration to become an industrialised nation by 2020,” said Zulkafli Ghazali, Director of Radiation Processing Technology at Nuklear Malaysia. “This requires domestic capacity in cable manufacturing.” Through this support, the agency is doing its part to support the Government’s SME Masterplan to accelerate the growth of SMEs and increase their contribution to the economy from 32% of GDP to 41% by 2020.

Wonderful Ebeam Cable ships its products to Nuklear Malaysia’s irradiation facility in the centre of the country, some 300 kilometres to the north, three times a week. After a few days, the cables are returned, ready for the car companies.

Nuklear Malaysia is working with several SMEs in different areas of radiation processing – using ionizing radiation such as gamma radiation and  electron beam to change the physical, chemical or biological characteristics of materials to increase their usefulness and value or to reduce their impact on the environment. It is most widely used in the modification of plastic and rubber materials, the sterilization of medical devices and consumer items, the preservation of food and the reduction of environmental pollution. Nuklear Malaysia’s scientists have benefitted from a number of IAEA Technical Cooperation and Collaborative Research Projects, through which they were able to perfect the technologies used in radiation processing by working with experts from around the world. “The IAEA helps turn global expertise into local expertise,” Ghazali said.

The IAEA helps Member States strengthen capacities in adopting radiation-based techniques that support cleaner and safer industrial processes. Nuklear Malaysia has participated in several such projects and has been recognized, since 2006, as an IAEA Collaborating Centre for radiation processing of natural polymers and nano-materials.

This could come particularly handy in a few years’ time, he added. “If the country decides to build a nuclear power plant, we would need a lot more of cross-linked cables and other products manufactured using radiation processing technology.”

First published in International Atomic Energy Agency

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55 New Financial Inclusion Metrics For World’s 2 Billion Unbanked

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Today the World Economic Forum and 15 of its partners launched a new financial inclusion measurement framework. It defines the metrics that are crucial to understanding and improving how hundreds of millions of people access and use financial products like digital payments, savings accounts, and loans in the developing world.

The report complements ongoing efforts to quantify how financial services are being used, and their impact on people’s lives. “More nuanced metrics provide businesses and governments with the necessary inputs to offer customer-centric strategies that increase access and usage of financial services in a sustainable manner,” said Cheryl Martin, Managing Director, Head of Industries, World Economic Forum.

The findings, summarized in Advancing Financial Inclusion Metrics: Shifting from access to economic empowerment, proposes specific metrics to analyze the maturity of payments, credit, savings services and the overall regulatory environment. Greater visibility into these inputs is vital to financially include those left out of the formal economy whether in India or Mexico, Tunisia or Zimbabwe.

The initiative’s 15 core partners include financial providers, consulting companies, foundations, and consumer goods companies who together reach the majority of the world’s population, including the estimated 2 billion who currently don’t have bank accounts, debit or credit cards, or access to loans. They are Alliance for Financial Inclusion, BBVA, Bill and Melinda Gates Foundation, Credit Suisse, International Finance Corporation, Mastercard, Mercy Corps, MTN Group, PayPal, SWIFT, Tata Consultancy Services, Telenor Group, Unilever, UNSGSA, and the World Bank.

Paul Polman, Chief Executive Officer, Unilever said: “Data is critical to better understand the relationship between financial inclusion and greater wellbeing. By digitizing the processes of buying supplies and selling goods, small and micro businesses in emerging markets can gain access to appropriate low-interest credit, further boosting business growth.”

The report highlights that much of the required consumer data is already available. However, expanded data collection is needed in certain cases. In India, for instance, a country with 251 million people without access to financial services, only 11% of consumers used debit cards for payments over the course of a twelve month period 1.

This statistic is interesting, but fails to tell the whole story. Going several levels deeper, the application of more granular metrics would provide insights into the actual percentage of registered and unregistered businesses accepting digital payments; the barriers preventing both men and women from using digital financial services , alternative payment methods used (e.g., account direct transfer, card top-up), and the types of purchases made (e.g., groceries, utilities, healthcare, etc.). Understanding the customer at this level of detail would allow for more targeted solutions for increasing debit card acceptance.

As emphasized by H.M. Queen Máxima of the Netherlands, United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development, “I always emphasize the importance of data. Without good data, we cannot map potential demand for financial services, track progress, and develop customer-centric products and services for the excluded, including women. The knowledge data provides, in turn, will help shape effective policies and generate the strong political will needed to achieve full financial inclusion.”

The report was launched ahead of the Annual Meeting of the World Economic Forum, which takes place January 22-26 in Davos, Switzerland, and brings together governments, international organizations, business, civil society, cultural leaders, media, foremost experts and the young generation from all over the world.

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Economics Students Unite in Bangladesh to Explore Paths Toward One South Asia

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The 14th  South Asia Economic Students’ Meet (SAESM) commences in Chittagong, Bangladesh today, embracing the arrival of over 110 top economics undergraduates and faculties from seven countries in South Asia towards the realization of a more integrated South Asia.

Rising economists from Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka will engage in vigorous academic competitions and research presentations on South Asia’s development opportunities under the theme of regional integration in South Asia. The meet will also include discussions by professors and World Bank experts on how greater regional integration in South Asia can help countries achieve the Sustainable Development Goals (SDGs).

“South Asia is a region with immense potential and youthful energy waiting to thrive,” said Selim Raihan, SAESM Organizer for Bangladesh and Executive Director for the South Asia Network on Economic Modeling (SANEM). “Building trust among neighbors through students can help lay the foundation for lasting relationships that will benefit growth, poverty reduction and prosperity in the future.”

SAESM Chittagong will include essay presentations and defense by students on their essays submitted for SAESM, a quiz on economic knowledge, as well as a ‘budding economist competition’’ that selects the brightest young economist through the best written and oral defense. Hosted this year by SANEM, participants come from a variety of South Asian universities including Dhaka University (Bangladesh), Delhi University (India), Lahore University of Management Sciences (Pakistan), University of Kabul (Afghanistan), Royal Thimphu College (Bhutan), and Tribhuvan University (Nepal).

Recognizing its unparalleled efforts in facilitating regional academic and cultural exchange, the World Bank Group has supported SAESM for many years in the forms of financing, logistical support, external communications as well as speeches and competitions.

“Regional Integration in South Asia is a work in progress, but there are many grounds for optimism, including the growing realization that most of the gains from regional integration remain under-exploited.  To help realize some of these gains, the WBG is supporting country governments in South Asia to deepen cooperation with their neighbors in several areas including energy, trade and investment, and connectivity,” said Sanjay Kathuria, Lead Economist for the World Bank. “Gains are likely to be incremental because this is a complex and long-term agenda. Youth can bring a business-like, uncluttered approach to provide greater momentum to the process of creating One South Asia.”

Since SAESM was piloted in New Delhi, India in 2004 by a group of university professors, it has been hosted rotationally by organizers in India, Bangladesh, Nepal, Pakistan, Sri Lanka, and Bhutan. Afghanistan sent its first batch of delegates in 2014.

“When we started SAESM, our objective was to bring together brilliant young economists from across South Asia and engage them in intensive academic exchange. Over the years SAESM has itself ‘graduated’ numerous dazzling talents and sent them worldwide,” said Raihan.

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