COVID-19 is devastating human capital around the world, affecting lives and livelihoods and posing risks for long term growth and productivity enhancement. As the world seeks to build back better into a new era of green and equitable economic growth, a new World Bank report stresses that smart investments and reforms in tertiary education systems are at the heart of the big transformations required throughout economies and societies. Tertiary education is vital for the development of human capital and innovation to spur long term growth.
“Tertiary education is central to the development process – it is essential for the creation of opportunities, competitiveness, and growth,” said Mamta Murthi, World Bank Vice President for Human Development. “We encourage countries to address the challenges brought by the pandemic, to build back better, more equitable, efficient, and resilient tertiary education systems. This will build the essential professional expertise required to drive public and private sector development, including, among others, the doctors, nurses, teachers, engineers, technicians, scientists, and managers needed to support effective education, health service delivery, and to drive productivity and growth.”
Presented during the United Nations’ General Assembly meetings, the new policy approach paper, Steering Tertiary Education, Toward Resilient Systems that Deliver for All , reinforces the imperative that every country invest thoughtfully and strategically in diversified, well-articulated, and inclusive tertiary education systems. It examines the impact of the COVID-19 pandemic on the global tertiary education sector and identifies policies that can promote a resilient recovery.
The reportproposes a framework to guide policies and investments in tertiary education comprised of five principles to STEER tertiary systems and institutions toward greater relevance and impact:
- Building diversified Systems – shaping a strong contribution of tertiary education to both growth and competitiveness, and also social cohesion and human development; and positioning tertiary education in a lifelong learning context with flexible pathways allowing for access to different types of institutions and greater adaptability to the labor market needs and opportunities.
- Investing smartly in new Technologies – profiting from digitalization, to support improvement of teaching and research capacity, innovation and agility in service delivery, as well as the building of a digital ecosystem, which, overall, make tertiary education systems more resilient.
- Ensuring Equity in access and financing – acknowledging that inequity is a form of injustice and acting to ensure that equity and inclusion in access and success are a driving ethos for an effective and relevant tertiary education system.
- Achieving Efficiency in resource utilization – improving information systems by utilizing evidence to strengthen oversight and management; devising and deploying governance, financing, and quality assurance instruments that are designed to deliver more value for investments.
- Acquiring Resilience in service delivery so that learning continues – acknowledging the need for resilience planning, by taking stock of the successes and failures of the COVID-19 response at the systems and institutional levels; utilizing adaptive governance frameworks to embed immediate and strategic resilience interventions as well as leveraging digital technologies.
Jaime Saavedra, World Bank Global Director for Education, emphasized that, “Building back better tertiary education systems requires a holistic view of the tertiary ecosystem, removing the barriers that lead to isolated siloes of universities, technical institutions, colleges, and tertiary technical and vocational education institutions. They should all be part of one single ecosystem that assures opportunities of lifetime learning for all.”
The World Bank has been providing support for tertiary education reforms and innovation since 1963, collaborating with governments, tertiary education institutions, and other stakeholders across the globe. With more than $9 billion in investment projects, the World Bank is the largest external financier of the tertiary education sector.
Now and in the future, the World Bank will continue to support the development of agile, equitable, and efficient tertiary education systems and dynamic tertiary education institutions. This development is enabled by goal-oriented steering, effective financing geared toward performance, and purposeful quality assurance. It aims at a strong contribution of tertiary education to equitable growth, social cohesion with strong democratic foundations, climate resilience, and the success and social mobility of students.
New Initiative to Strengthen Cross-Border Investment in the Digital Economy
A pioneering effort to facilitate cross-border investment in the digital economy was launched this week at the World Economic Forum Annual Meeting 2022.
The new initiative on digital foreign direct investment, the Digital FDI initiative, will implement projects in several countries to help grow Digital FDI, as the reforms to attract such investment must take place at a country level. The first digital FDI project will take place in Nigeria.
Over the past few years, the Forum has worked to find the right partners to guide the work, develop principles published in the white paper launched in 2020 and share the potential for cooperation at the G20 and other platforms of corporation.
Attracting Digital FDI requires creating digital-friendly investment climates through targeted and country-specific policies, regulations and measures. These investments involve new business models, often based on data and technology, and platform economies, as well as using non-traditional assets. The Digital FDI initiative will aim to identify and implement enabling reforms through public-private projects in emerging markets and developing countries.
“Global FDI is rebounding, following the COVID-19 pandemic, and investment in the digital economy could not come at a better time. These country projects will help grow FDI into the digital economy, which is key for long-term growth, competitiveness and sustainable development”, said Børge Brende, President, World Economic Forum.
The Digital FDI initiative will be delivered as a joint effort between the World Economic Forum and the Digital Cooperation Organization (DCO), a new international organization that seeks to enable digital prosperity for all.
“As the first and only global multilateral focused on enabling digital prosperity for all, the DCO is partnering with the Forum on a Digital Foreign Direct Investment initiative to help countries develop digital FDI-friendly investment climates. We invite digital innovators with a commitment to economic development and inclusion to join us,” said Deemah Al Yahya, Secretary-General, DCO.
Post-COVID, Latin American Leaders Say their Countries Are Open for Business
Rising food and energy prices and a migration crisis are posing significant economic and social challenges in Latin America, according to several leaders from the region speaking on a presidential panel at the World Economic Forum Annual Meeting 2022. However, they remain confident that investing in their economies will remain attractive.
“We cannot be indifferent in front of this humanitarian tragedy,” said Colombian President Ivan Duque, referring to challenges linked to Venezuelan migration to his country, which has seen close to 2 million cross the border over the past several years after fleeing economic hardship. Duque announced that Colombia would issue over 1 million temporary status cards to Venezuelan migrants.
Rising food and energy prices also pose threats to Latin American populations. President Luis Rodolfo Abinader Corona of the Dominican Republic noted that his government would soon authorize subsidies for corn to offset rising food prices and the increasing cost of poultry. The nation has already implemented fertilizer subsidies and support for wheat prices would likely follow.
While the region has experienced economic growth in recent years, the combined effects of the COVID-19 pandemic and supply chain and price shocks linked to Russia’s invasion of Ukraine have raised questions about future growth for a range of countries. Despite the challenges, many Latin American countries continue to tout their economies and to encourage foreign business for investment and “near-shoring”.
“Not red tape, but red carpet,” said President Rodrigo Chaves Robles of Costa Rica, on his nation’s readiness to welcome foreign investors. “Costa Rica is open for business. I will break all bottlenecks…. I will open all doors.”
Likewise, Dina Ercilia Boluarte, Peru’s Vice-President and Minister of Development and Social Inclusion, stressed the nation’s readiness for outside investors. “We will welcome you with a stable economy and legal guarantees.”
The focus of many Latin American nations is now on climate and environmental sustainability. In tourism-intensive nations, such as the Dominican Republic, the sector constitutes an essential part of GDP and employs 20% of the population. Diversifying beyond “sun-and-beach” tourism could ensure the sector remains resilient even in the face of intensifying climate change.
In addition, the region can accelerate investments in climate mitigation and renewable energy. Chaves said: “We’re improving our electricity grid to more renewables even though we have over-invested in the power generation with fossil fuels.” Transitioning energy sources in a time of rising prices poses serious challenges, he added, so the nation will need to proceed with its reforms in a way that balances current growth with sustainability goals.
Educational reform is another way Latin American leaders are preparing for digital and green energy transformations. Colombia recently completed training for 100,000 programmers, and Costa Rica is working to improve the efficiency of its education spending. Currently, the country spends twice as much as Viet Nam to educate students. While Viet Nam ranks eighth in students’ math scores, Costa Rica ranks near the bottom in terms of students’ maths performance.
Peru is promoting social inclusion by transforming how the state delivers social services to rural communities. One programme involves putting state services – such as vaccines, health supplies and training materials to reduce violence against women – on boats so officials can reach hard-to-access communities in dense Peruvian forests and remote villages. “We are bringing services of the state to our brothers and sisters to improve their quality of life,” Boluarte said.
Outlook Is Grim for Global Recession
As the war rages on in Ukraine with no end in sight, central bankers and economists are increasingly fearful that the world may be headed for recession. Supply chains remain choked as many of China’s factories are still shuttered over COVID, markets are panicky, with technology stocks in particular distress, and inflation is running high across much of the developed world.
“We are not in a recession yet, but the signs are not good,” said David Rubenstein, Co-Founder and Co-Chairman of Carlyle. “The war is not likely to end tomorrow and it will be a precipitative factor.”
“We have downgraded projections for growth for 143 countries, accounting for 86% of GDP,” said François Villeroy de Galhau, Governor of the Central Bank of France. “The horizon has darkened.” In addition to China’s COVID lockdowns, he cited the appreciation of the dollar and commodity price shocks in fuel resulting from the Russo-Ukrainian war.
But fuel isn’t the only commodity experiencing precipitous price increases – food may prove to be even more critical. “We can shrink use of petrol,” he said, “but we have to eat every day.” He added that with inflation running at 7.45% in Europe and rising, “We will have to mobilize monetary policy. There is an increase in consensus about this. In the short run, our priority is fighting inflation.”
He was speaking on The Global Economic Outlook session. His comments come as the World Economic Forum’s Community of Chief Economists warned of “dire human consequences” from the fragmentation of the global economy.
Jane Fraser, CEO of Citi, also emphasized the significance of food. While acknowledging some bright spots – including a Middle East that, she said, is stronger coming out of lockdown and exudes optimism – she warned: “Food is, I think, the big worry because that could be the wild card, when people are hungry around the world, and there’s going to be one-and-a-half-billion hungry people without the means or the access to food, particularly in Africa.”
The grim outlook was highlighted in the World Economic Forum’s quarterly Chief Economists Outlook, published today. Its key findings include declining real wages in both high- and low-income countries; political divisions creating geo-economic and supply chain fault lines; and persistent inflation in the United States, Europe and Latin America.
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