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Fragile States: Employment Programs Must Become a Bridge to Prosperity

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In fragile and conflict-affected states, governments frequently turn to public works programs to provide temporary jobs to vulnerable populations. A new body of research is showing how policy makers can redesign these programs to transform their short-term benefits into long-term prosperity and stability.

“Millions of dollars have been spent on public works programs to bring jobs to those living in desperate circumstances,” said Asli Demirguc-Kunt, Director of Research at the World Bank. “Only a handful of rigorous studies have examined the impact and design of these programs. It’s a shocking lapse that we’re only just beginning to address.”

Eric Mvukiyehe, an economist with the World Bank’s DIME team, discussed the results of an on-going multi-year, multi-country effort to investigate the links between employment, welfare, and violence at a recent Policy Research Talk. Mvukiyehe and his colleagues have so far conducted seven impact evaluations of public works programs targeting 40,000 households in five conflict and violence-affected countries: Comoros, the Democratic Republic of Congo, Egypt, Tunisia, and Côte d’Ivoire, with results already available for the latter three cases.

The motivation for these programs is twofold: to provide vulnerable households a temporary income when jobs are scarce, and to create opportunities for at-risk youth who might otherwise be drawn to crime to survive.

The results of these programs have been strikingly consistent. In the short-term, they all deliver critical economic benefits for the communities where they are offered, whether measured by rates of employment, income, or consumption. The improvements in economic welfare—even if only temporary—are encouraging since they demonstrate these programs are effective safety nets during emergencies. However, the programs do little to tamp down crime or promote pro-social behaviors.

Results from Egypt illustrate these broader patterns. The country has long struggled with high rates of unemployment, and poor households faced severe deprivation in the wake of the 2008/2009 food and fuel crises. With support from the World Bank, the government of Egypt enacted the Emergency Labor-Intensive Investment Project, which included a component to employ poor youth on a short-term basis to work on health promotion, literacy, and other social service projects.

The program achieved its immediate objectives. Communities that were offered the program benefited from an uptick in employment, a 35 percent increase in monthly earnings, and much higher rates of saving. However, the benefits appeared to wane over time, with rates of employment falling close to their pre-intervention levels within a few months. The program also had little or no impact on measures of violence, conflict, or crime.

Given the results of Egypt’s public works program, as well as similar results in Tunisia and Côte d’Ivoire, Mvukiyehe urged researchers to work with policy makers to transform public works programs from a short-term emergency measure into a bridge to prosperity and stability. This would require targeting beneficiaries more effectively, providing support to participants to transition to the private labor market or start businesses, and identifying ways to more directly target crime and violence.

“We tend to conflate distinct problems and assume that one approach can solve them all,” said Mvukiyehe. “In fragile states, violence and poverty exist side by side, but they are two separate things. We need to be clear about what our priorities are and design programs accordingly.”

To target crime and violence directly, researchers have drawn on insights from the field of psychology. Cognitive behavioral therapy (CBT) is a technique that has proven to be effective at helping at-risk youth challenge harmful patterns of thought, learn how to emotionally self-regulate, and practice new skills and behaviors. Economists and psychologists teamed up to test a CBT intervention in Liberia, a country that has suffered two civil wars in the past three decades. They found that when poor, at-risk youth living in Monrovia were offered both a small cash grant and CBT, crime fell by a striking 37 percent one year after the intervention.

Complementary interventions can also help turn the short-term economic benefits of public works programs into sustained livelihoods. In the Democratic Republic of Congo, the DIME team is currently examining whether interventions such as vocational training and savings mechanisms can lead to enduring gains in employment. In Tunisia, a future evaluation will identify ways to help women overcome the specific barriers they face to participate in labor markets or start businesses.

Finding money to pay for these add-on interventions is no small task, but according to Mvukiyehe better program design could free up additional resources. An analysis of Côte d’Ivoire’s Emergency Youth Employment and Skills Development Project found that better targeting to the most vulnerable groups could drastically improve the cost effectiveness of the program—in principle making financing available to invest in other interventions.

Over the past two decades, the world has made tremendous strides in reducing extreme poverty. But the extreme poor are becoming ever more concentrated in fragile states, where violence and conflict create large barriers to escaping poverty. Whether the world reaches the goal of eradicating extreme poverty by 2030 may hinge on the success of the development research community in designing programs that can address the multifaceted needs of these fragile states.

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Asia and Pacific on course to miss all Sustainable Development Goals

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Unless progress is accelerated, Asia and the Pacific are on course to miss all of the 17 Goals of the UN’s 2030 Agenda for Sustainable Development, the Executive Secretary of the UN regional commission for Asia and the Pacific (ESCAP), told UN News at the Organization’s Headquarters on Wednesday.

Under-Secretary-General Armida Salsiah Alisjahbana was in New York to take part in the High-Level Political Forum on Sustainable Development, the main UN platform for monitoring the progress that countries are making towards the Agenda, which is the UN’s blueprint for ending poverty and preserving the planet.

ESCAP’s latest Sustainable Development Goals Progress Report shows that, when it comes to some of the Goals, the region is actually going backwards. These are the goals related to access to clean water and sanitation (Goal 6), decent work and economic growth (Goal 8), and responsible consumption and production (Goal 11).

There are, said Ms. Alisjahbana, several reasons for this: “There is water scarcity, because of the pressure of urbanization, and the management of natural resources and the environment are making the situation worse. As for moving towards sustainable consumption, that has to do with behaviour and lifestyle. With increasing wealth you consume more, but what you consume is something that is actually not sustainable.

Governments, said the head of ESCAP, must ultimately be responsible for investments in sustainable development. Investing in basic infrastructure costs money, but there is a considerable multiplier effect, that has a positive effect on the economy. Countries with smaller financial resources should look at raising money through fiscal reforms rather than looking for aid, and risking becoming dependent, she added.

The Progress Report complains about a lack of data, an important point because, says Ms. Alisjahbana, without the correct data you can’t track progress, or evaluate the best actions to take going forward. Improved data must go hand in hand with improved capacity for analysing data, which means national statistical offices, and SDG monitoring.

Despite the many challenges facing the region’s efforts to achieve the Goals, Ms. Alisjahbana remains optimistic. The situation, she believes, can be turned around, through better cooperation, as well as the abundant talent and expertise found in the region.

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Asia and Pacific Growth Steady Amid Global Trade Tensions

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Developing Asia will maintain strong but moderating growth over 2019 and 2020, as supportive domestic demand counteracts an environment of global trade tensions, according to a new Asian Development Bank (ADB) report released today.

In a supplement to its Asian Development Outlook (ADO), ADB maintains growth forecasts for developing Asia at 5.7% in 2019 and 5.6% in 2020—unchanged from its April forecast. These growth rates are slightly down from developing Asia’s 5.9% growth in 2018. Excluding the newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China, the regional growth outlook has been revised down from 6.2% to 6.1% in 2019 and maintained at that rate in 2020.

Deepening trade tension between the People’s Republic of China (PRC) and the United States (US) remains the largest downside risk to this outlook, despite an apparent truce in late June that could allow trade negotiations between the two countries to resume.

“Even as the trade conflict continues, the region is set to maintain strong but moderating growth,” said ADB Chief Economist Mr. Yasuyuki Sawada. “However, until the world’s two largest economies reach agreement, uncertainty will continue to weigh on the regional outlook.”

The growth outlook for East Asia in 2019 has been revised down to 5.6% because of slower than expected activity in the Republic of Korea. The subregion’s growth outlook of 5.5% for 2020 is unchanged from April. Growth for the subregion’s largest economy, the PRC, is also unchanged, with forecasts of 6.3% in 2019 and 6.1% in 2020, as policy support offsets softening growth in domestic and external demand.

In South Asia, the economic outlook is robust, with growth projected at 6.6% in 2019 and 6.7% in 2020, albeit lower than forecast in April. The growth outlook for India has been cut to 7.0% in 2019 and 7.2% in 2020 because the fiscal 2018 outturn fell short.

The outlook for Southeast Asia has been downgraded slightly to 4.8% in 2019 and 4.9% in 2020 due to the trade impasse and a slowdown in the electronics cycle. In Central Asia, the growth outlook for 2019 has been revised up to 4.3% on account of an improved outlook for Kazakhstan. Central Asia’s growth outlook of 4.2% for 2020 is unchanged from April. The growth outlook in the Pacific—3.5% in 2019 and 3.2% in 2020—is unchanged, as the subregion continues to rebound from the effects of Cyclone Gita and an earthquake in Papua New Guinea, the subregion’s largest economy.

The major industrial economies have had slight revisions to their growth forecasts, with the US revised up to 2.6% for 2019 and the Euro area revised down to 1.3%. The growth outlook for Japan is unchanged at 0.8% in 2019 and 0.6% in 2020.

Developing Asia’s inflation projections were revised up from 2.5% to 2.6% for both 2019 and 2020, reflecting higher oil prices and various domestic factors, such as the continuing outbreak of African swine fever in several Asian economies, which is expected to drive up pork prices in the PRC.

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How to measure blockchain’s value in four steps

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To help organizations identify the value of blockchain technology and build a corresponding business case, the World Economic Forum, the International Organization for Public-Private Cooperation, has released the Blockchain Value Framework as part of the white paper, Building Value with Blockchain Technology: How to Evaluate Blockchain’s Benefits.

Co-designed with Accenture, the Blockchain Value Framework is the second in a series of white papers for organizations to better understand that blockchain technology is a tool deployed to achieve a specific purpose, not a goal in itself. This new framework provides organizations with the tools to begin measuring blockchain’s value, including key questions to consider. It is the first visual roadmap of its kind and is based on a global survey of 550 individuals across 13 industries, including automotive, banking and retail, public-sector leaders, chief executive officers and an analysis of 79 blockchain projects.

“In our last paper, we stressed that blockchain deployment is not the end goal,” said Sheila Warren, Head of Blockchain at the World Economic Forum. “We wanted to get beyond the hype. This new framework is for those business leaders that have figured out blockchain is the right solution for a specific problem, but don’t know what to do next.”

“Organizations need to make business decisions and investments with confidence and that requires proof of the value-add and an analysis of why, or why not, they should consider something new,” said David Treat, Managing Director and Global Blockchain Lead at Accenture. “Through this new framework, we aim to educate businesses and challenge them to rethink their current business models, relationships between ecosystem partners, customers and their investments in technology. The path to blockchain adoption starts here with evaluating the technical and strategic priorities and aligning them with investments in innovation.”

The framework starts with questions on blockchain’s role and desired impact. Assessing potential pain points and areas for opportunity without thinking about the technology is essential. Next is to examine the three key dimensions of blockchain’s role alongside its capabilities. The roadmap can assist organizations in moving from current-state assessment to future blockchain opportunity, and to identify where the value will be created and delivered. Cost savings, increased revenue and improved customer experience are all possible business case results.

According to the global survey conducted in conjunction with the new framework, 51% of survey respondents identified “missing out on developing new products/services” as the number one expectation if they do not invest in blockchain technology in the near future. The other two most common answers were missing out on speed/efficiency gains (23%) and missing out on cost savings (15%). The interviews highlighted the potential of the technology to simplify and optimize complete value chains through the sharing of simplified real-time data with increased efficiency. However, the paper also cautions businesses to carefully consider whether blockchain is the best solution, relative to other technologies or other digitization strategies. As noted in the Blockchain Beyond the Hype white paper, blockchain may not be a viable solution or it may not be the correct time to pursue this avenue.

In nine of the industries surveyed, the full traceability and integrity of the data were the top two potential advantages of using blockchain technology. Most of the industries surveyed could benefit from smart contracts and automation provided by blockchain. Surprisingly, few organizations selected “new business products or services” as one of the benefits. This suggests the current focus for organizations is on improving existing products and services before considering investing in new opportunities.

“We may be moving beyond the hype, but blockchain isn’t going away. Central banks are experimenting with digital currencies and supply chain networks are piloting blockchain policies. We are also seeing companies like Facebook and Starbucks entering the blockchain and cryptocurrency space. This means practical use cases of the technology will become more widespread,” Warren said. “A draft of the framework was further validated at a multilateral session of global leaders at the World Economic Forum Annual Meeting 2019 in Davos-Klosters.”

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