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Launch of 2007 World Development Indicators, April 15, 2007

MS. TUCK:  Good afternoon.  I'm Merrell Tuck.  I'm a senior Communications Officer at the World Bank.

 

Welcome to the press conference for the World Development Indicators 2007.  I am happy to introduce the presenters for today:  The Chief Economist of the World Bank, François Bourguignon, also Senior Vice President for Development Economics, to my right‑‑he will start it off; and also we have Alan Gelb, who is Director for Development Policy of the World Bank; and to my left, Eric Swanson, who is the head of the Global Data Program at the World Bank, and he is the team leader on the World Development Indicators.

 

I would like to remind everyone that this press conference is embargoed until 2:30, and all materials are available just outside the room as well as on our Web site.

 

And for those of you who need translation, there is Spanish and French, using the headsets, if you need it.

 

So, without further ado, let me turn it over to François.

 

MR. BOURGUIGNON:  Thank you very much, Merrell, and welcome all of you to this launch of this year's World Development Indicators.

 

As you know, World Development Indicators is a compendium of data information on development.  It covers many very different areas, and we could definitely spend very much time on this area.  If you want to talk about military expenditures, if you want to talk about education, if you want to talk about debt, if you want to talk about demographics, everything is in the World Development Indicators.

 

Now, of course, I will not cover all of these issues in my remarks, but what I would like to do is simply to introduce this launch by making a few comments on growth and poverty reduction, the mission of the Bank, and the way which the WDI, the World Development Indicators, is allowing us to look at these issues.

 

If you look at the macroeconomic part of World Development Indicators, then you find that 2006 has been another year of very strong growth for developing countries and, as a matter of fact, for the whole global economy.  Global GDP grew by 3.9 percent between 2005 and 2006, but for developing countries the growth rate has been at the astonishing 7.2 percent.  This is in the continuation of a trend that we have observed over the last few years, and this is a trend which leads us to believe that there is kind of an autonomous process going on in the developing countries which will last for quite some time, and, of course, this is a very encouraging evolution.

 

And I would like to insist also on the fact that this very rapid growth for all developing countries is not only due to China and India.  Even when you consider developing countries without those two giants, you still find very high growth rates.  For example, for all low‑income countries, the growth rate over the last two or three years, on average, has been close to 5 percent, which is quite an achievement.

 

Now, if we move from growth performances to poverty‑‑and again, you will find very much information on poverty‑‑in particular, the last set of poverty estimates region by region that has been produced by the research group in the Bank‑‑I can even tell you the page‑‑this is page 63, so I engage you to go see that page‑‑you will find that global poverty has declined by a substantial amount.  There was 1.25 billion poor people in extreme poverty, less than $1 a day, in 1990, and there is less than a billion of these people today.  So, the Millennium Development Goal target of halving the proportion of extreme poverty in the world is definitely on track.

 

And this is again true, more or less, in all regions.  When we look at the poverty rate in all regions, we find that there is a very substantial drop in the poverty rate.  To give you an example, in Sub‑Saharan Africa, since between 1999 and 2004, the rate of poverty went down from 47 percent of the population to 42 percent of the population.  In five years, this is quite an achievement.

 

And for the first time in Sub‑Saharan Africa, we observe that this drop in the share of the population which is in extreme poverty is completely compensating the increase in the population, so that, probably for the first time since the sixties, we observed that the number of poor people, the absolute number of poor people, in Africa is stagnating after having grown more or less continuously since the early seventies.  So, this is certainly again very good news.

 

Now, when we go to a more detailed level, if we look at the country information in the numerous tables on this in the WDI, we find that, of course, this good news at the aggregate level is hiding disparities at the disaggregated level, and some countries are doing well while some other countries are not doing that well; and, from that point of view, a very interesting statistic is the fact that fragile states are typically doing much less well than other countries.

 

To get back to growth, fragile states have grown only by 2 percent in 2006, whereas other low‑income countries‑‑not fragile‑‑have grown at more than 6 percent.  So, this gives you an indication of what is the impact of fragility; and, when we compare fragile states with other low‑income countries, we find that more or less in all areas, in all dimensions of development, they are doing much less well.

 

So, I mention that because you know that this is a topic, a theme, which is of very much importance these days in the development community with more and more emphasis being put on the fragile states, and again the WDI is giving us a response for that.

 

Now, let me close by simply saying that the WDI is, in these days, we consider in the Bank and, I think, in the global development community that it is a unique instrument to monitor development.  There is very much emphasis on the need to look at the results that is being produced by all development efforts.  The only way we can look at results is through the kind of statistical analysis which is permitted by the WDI, and we certainly intend in the future to push further in the improvement of the quality and the detail of the statistics which are published in the WDI.

 

More generally, I would like also to mention the fact that this is not only something which is taking place in the Bank.  This is really a strong desire by the whole community.  There was yesterday a meeting with several donors on statistics, and there is this increasing commitment by donors to facilitate the production of the statistics to improve the capacity of the developing countries to produce statistics; and, from what we heard yesterday, we believe that the promises that were made to put more resources in order to expand the statistical capacity in the developing countries, that those promises will be held very shortly.

 

Thank you very much.

 

MS. TUCK:  Thank you, François.

 

Let us turn to Alan Gelb.

 

MR. GELB:  Thank you very much, Merrell.

 

Thank you all for coming.  It's a great pleasure for me to be involved in the launch of the WDI with you.

 

François has provided an overview of the WDI, especially in the areas of growth and poverty, and I don't want to say too much because we would like to encourage you to actually look at the report and look at the numbers and think about them.

 

But the main point I would like to make is that there are many different ways that one could look at and use the data that are included in the WDI, that it's not really just about having big tables of numbers country by country that you look through.  The data can be much more interesting, and they show a lot of interesting issues.  So, what I would like to do is take a look at some of the health data that are in the WDI.

 

Over the long term, there have been major gains in health in many developing countries.  In 1960, about 20 percent of all children in developing countries died before they reached five years old, and now this has fallen to around 8 percent.  It's still too high, but a massive improvement.

 

There are many countries that are still lagging, as well as disadvantaged groups within individual countries.  So, let's take three issues‑‑examples‑‑that come up in the health sector.  First, the WDI still shows that there is still a very big health divide between rich and poor countries.  If one takes or define the mortality as the percentage of children that die before they reach the age of five, for example, between 1990 and 2005 there had been some gains, but they have been quite modest and particularly in countries with very high rates which, of course, include many fragile states.  But the levels today are still 15 times higher in low‑income countries than in high‑income countries; and, as shown by examples‑‑Sierra Leone is shown in the book‑‑most young deaths occur before the age of five.   And there are many reasons for this, of course:  There is poverty, in some cases malaria, HIV/AIDS, malnutrition, lack of access to essential drugs, mother's education and so on.  And so there are many different reasons for that.

 

Second, the WDI shows that within individual countries there is often a wide gap in the health status between the rich and the poor.  We have increasingly been able to combine country information with information from a variety of surveys‑‑household surveys, demographic and health surveys‑‑to be able to show a more detailed picture of what is going on within individual countries.  As you can imagine, this is very important for targeting assistance and for getting better information on which programs are working.

 

For example, if one takes the ratios for the poorest 20 percent of the population relative to the richest 20 percent of the population across 56 countries, the WDI shows the ratio for severely underweight children is three times higher for the poor than the rich, undefined mortality is almost double, and the percentage of malnourished women is also almost double.

 

And then we could turn this around and look at access to services, the ratio of the richest 20 percent to the poorest 20 percent.  And we see an interesting pattern that the richest 20 percent are five times more likely to be able to have skilled attendants at birth.  Their access to prenatal care is almost three times as high as the rich among the poor, and the ratio of child vaccinations is almost twice as high; and it's clear that, for movement across the broad MDG spectrum, we are going to have to have more poor people in poor countries also having access to the same kinds of services.  So, there is an issue both between countries and within countries.

 

One of the other points that WDI notes is the poor quality of service in some countries that surveys of absenteeism of primary healthcare workers in six countries shows that, on average, a third of the workers were absent, and so clearly there was an issue on quality, which is also something discussed in the Global Monitoring Report.

 

Third, another innovation actually in the WDI this year is that it uses comparative data to show how well countries are doing when you compare them with countries at similar levels of starting points.  Clearly, if you have a very high rate of infant mortality, you can expect to make larger gains than if you already have a very low rate of infant mortality, and the WDI shows patterns for many countries on these indicators their progress relative to countries starting off on similar positions.  It picks out, for example, some strong performers on health, include Bhutan, Guinea, Mozambique, which have reduced infant mortality twice as fast as typical countries have in their situations; and also some weak performers, including Zimbabwe, Swaziland, Botswana, where AIDS has been a serious issue. 

 

And so, we can see a number of things also about how the different Millennium Development Goals interact; for example, how progress on education and health tend to go together, how the country is doing better in reducing child mortality, also usually those which are making progress in reducing maternal mortality.

 

Finally, just to conclude with a couple of comments on the new index which is shown in the World Development Indicators, in WDI, the World Bank's Country Performance Institutional Assessment Index, the CPIA.

 

The CPIA is an annual assessment that's carried out every year of how countries that are receiving assistance from IDA, the International Development Association, manage the quality of their policies and institutions.  And the scores are used to allocate IDA.  They are part of the formula that goes to allocate the resources that the IDA provides to these countries, and IDA is quite selective in that countries with high scores will normally get quite a lot more IDA per head than the countries with low scores.

 

And we have also found, as a written paper for the recent IDA conference, that the countries with better scores usually are doing better also on development outcomes, reducing growth or reducing infant mortality, and so on.

 

So, these scores, which they're taken seriously‑‑a lot of effort goes into working with them.  I was previously the Chief Economist in the Africa Region, and I can assure you we spent a lot of time trying to develop accurate estimates‑‑they are always estimates, obviously, of these scores‑‑and, from 2000 onwards, the scores are being disclosed to increase transparency, and I believe that this is the first WDI that they have appeared in.

 

Let me now hand over to my colleague, Eric Swanson.

 

Thank you very much.

 

MS. TUCK:  Thank you, Alan.

 

MR. SWANSON:  Thank you, Alan.

 

Thank you, François. 

 

Each year, the World Development Indicators brings you information you need to report on the progress of development.  We tried to be comprehensive in it, and we tried to give you the big picture.  We also tried to give you important details you need to analyze development results. 

 

This is the Table of Contents, if you will, for the WDI.  François already discussed the poverty estimates and the important links between poverty reduction and economic growth.  You will find more information there in the World View section, in the People section, and in the Economy section.  Alan looked at measures of healthcare and health outcomes from the People section, and the CPIA indicators which he just mentioned are in the States and Markets section.  What I'm going to do now is tell you a couple of more stories with development data in there from WDI.

 

Economic trends.  As François said, low‑income countries are growing faster now than they have before.  They are growing faster than middle‑income or high‑income countries are.  On the left you see the bar is for low‑income.  Between 1995 and 2005, they averaged more than 5 percent growth per year, so this is high and sustained growth amongst low‑income countries.  But let's look beneath the averages. 

 

In this map, we show the 12 fastest growing countries in the world.  The fastest was Equatorial Guinea, which averaged annual growth between 1995 and 2005 of 20 percent a year; that's terrifically fast.  All 12 of the fastest growing countries had an average growth of GDP of 7 percent or better, which was fast enough to double their output in 10 years' time.

 

Now we add in 12 countries that had the slowest growth rates over the same decade, and the slowest of those was Zimbabwe, where its GDP has fallen by 3.3 percent a year for the last 10 years.  That's not good news, but it's interesting to note that amongst these slow‑growing economies that had slow growth over a 10‑year period, over the last couple of years some of them started to accelerate again, and more than half achieved growth rates of 5 percent in the year of 2005.

 

You are going to hear a lot about agriculture in the coming year because the World Development Report will take as its theme agriculture for development that will be released in September of this year.  As economies grow, the share of total output from agriculture generally falls‑‑and you see that in the graph in the upper left‑‑but agriculture remains a very important part of many developing economies.  It also produces rather meager returns for workers in those low‑income economies, and the graph on the right shows that.  Only $364 per worker, on average, in low‑income economies compared with $25,000 in high‑income economies.

 

Again, we could look at some of the countries that are most dependent upon agriculture.  Here are 12.  Some of them may be a little hard to see.  All of these are economies where more than 40 percent of their output, their GDP, comes from agriculture, and we could then superimpose on that countries where agricultural workers earn less than $200 a year.

 

If you look at the little factoids we have highlighted here, you will see, for example, in the U.S. that the typical agricultural worker produces $36,000 of output, although agriculture makes up only about 1 percent of the U.S. GDP.  Japan is similar.  But, when we look in Africa, at Ethiopia, where 48 percent of its output comes from agriculture, workers produce $150 a year.  This is not enough to even reach the $1 a day poverty level.  Congo Democratic Republic, very similar.

 

And even in a middle‑income economy like Brazil, where agriculture is 8 percent of GDP, the average value‑added per worker is around $3,000.

 

Now, Alan talked about the CPIA indicator.  Here is a picture of one cluster from it.  There are 16 separate scores that make up the CPIA.  Those are arranged in four clusters and an overall index.  The Public Sector Management and Institutions cluster is often viewed within the CPIA as its best all‑around quality of measure of governance, and this shows you the distribution of scores on that subindex.  The highest scoring country over there on the right was Samoa, with a score of 4.0 out of a possible 6.  So, I would have to say that there is no evidence of great inflation in the CPIA.  If you want to see all of the detailed scores for any country, you could find them in Table 5.9 of the WDI.

 

Now, the CPIA, by its nature, is a rather slow‑moving index because it takes into account a wide range of circumstances in a country and tracks them over time, but we also have indicators in the WDI that can reflect rather quick changes in the quality of governance or the economic climate in a country.  Here is an example from the Doing Business indicators, and it is a measure of the number of days it takes to register a business in a country.  You could see here that three of the high‑performing economies, reforms in the last year have resulted in a rapid drop in the cost of doing business, particularly in Indonesia, where the number of days it takes to register a business fell dramatically between 2005 and 2006, though it still has farther to go to catch up with India or China.

 

And then let's look quickly at another popular issue:  The question of migration.  Migration is an increasing force in a globalized economy.  Since 1990, 35 million people have relocated their residences from where they were born to a permanent residence in another country, adding to the stock of migrants throughout the world.  Over the period from 2000 to 2005, something more than 20 million people moved‑‑that includes both migrants and refugees‑‑and it's a net number.  It only tells us the net change.  It doesn't tell us the aggregate gross changes from year to year.

 

On the left are the largest net senders of migrants, including, as you see, Iran and Pakistan.  This highlights a fact that's often not appreciated, that much of the migration and movement of people throughout the world is not simply from developing countries to rich countries, but it represents movement within regions as people resettle and relocate either in some cases for economic reasons and in some cases for political reasons or others.  So, with Iran and Pakistan, we have movement out; and then, if we look on the other side, we notice that in Afghanistan we have movement in, reflecting the changes that have taken place in the region over the last five years.  Still, the largest net receiver of migrants is the United States.

 

And with the movement of people has also come the movement of money, remittances, sent home by migrants to their home countries.  You could see that, over the period since 1990, remittances have increased by some 600 percent, and these are often discussed as being a sort of new form of development aid.  But, looking at the chart, I want to point out that most of the remittances have gone to middle‑income economies, not to low‑income economies, which only received 25 percent of the total remittances in 2005, and you notice that they have grown more slowly than the middle‑income economies' receipts.  Furthermore, many of those remittances, of course, don't reach the poorest people in the countries where they go to.

 

So, that's a few of the stories we have in the WDI.  I want to take advantage of this moment to say we actually have a double launch going on this year.  We have also our atlas for global development, which was released just two weeks ago.  It also brings to you data about development, but it brings it to you with words and pictures as well as charts and graphics.  I think you will find it a very useful compendium of stories about development.  And, of course, since it's an atlas, it will also include maps and little factoids and league tables to let you know who is doing best and who is not.  In a modern world, we provide Internet links up there so you could find further information.

 

We also support a number of Web sites that provide access to our data in many different forms.  There are three of them listed up there right now.  And you will find particularly the new MDG atlas, online atlas, I think, to be of some interest.  It's a dynamic presentation of the data.  It allows you to resize countries in order to see who is doing well and not doing well, and you could also download data from that.

 

So, thank you all very much for coming today.  I hope that you do find our information useful, and we are always available to not only answer questions but guide you through the database itself.

Merrell?

 

MS. TUCK:  Thank you, Eric.

 

I should also mention that outside the door we have summaries of how different developing regions are performing, and we have a fact sheet on the latest update on key data indicators, including extreme poverty indicators and other economic indicators.  So, there are some condensed and summarized fact sheets for people outside.

 

Also, we could get copies of Eric's presentation for anyone who might want it.  Please just ask at the press desk.  In addition, we will also try to get this afternoon a few copies of the atlas for people who really want to get it today.

 

I could also remind you again, please, of the embargo for 2:30, and I will now open it up for questions.  I would ask that you identify your news organization when you ask your question.  Thank you.  And let me know who you want to speak to.

 

QUESTION:  My name is Patrick Smith from Africa Confidential.

 

I wanted to ask you how confident you are in the statistics you're producing about countries in conflict, particularly Somalia, Sudan, and Democratic Republic of Congo.  I mean, I was surprised to see that health indicators in Sudan between 1990 and 2005 show an absolutely stunningly good recovery, although at that time Sudan was involved in at least three civil wars.  And if you compare the health statistics of Sudan in that period‑‑mortality, infant mortality, and so on‑‑they are much better than, say, Ghana, which is regarded as one of the more progressive and stable African countries.

 

Then, in the Defense section on Sudan, you talk about 2 percent of GDP being devoted to arms purchases presumably by the government and perhaps by the rebels as well, but you don't give any figure for the percentage of the government's national budget being devoted to arms sales.  So, I wonder where you got the figure for your GDP, if you can't actually give a figure for the budget at the same time.

 

The third point I just wanted to raise is about the financial statistics.  You have got excellent figures on international financial flows, trade flows, and so on.  You have got no figures on capital flight, particularly capital flight from the developing countries to the rich countries, and I think that is an area where there is increasing focus of interest at the moment, given what we are finding out about that particular phenomenon.

 

MS. TUCK:  Okay.  Those are some tough questions.  How do we want to split that up?  Maybe Eric can start, and then François, if you have something to add.

 

MR. SWANSON:  Let me say, you are right always to be skeptical about data coming out of countries that are in the middle of turmoil.  Gathering statistics in those conditions is very difficult.  Unfortunately, I can't tell you when the last survey on health and mortality rates in Sudan was done, at least not from here on the podium, although I could find that information for you.  This is work that's done by the World Health Organization and UNICEF, with some help from the World Bank as well, and in cases the countries like Sudan based on estimates that may involve extrapolating from old trends, so one should be cautious.

 

The question on the military data, the estimates themselves, as you may know, come from the Stockholm Institute for Peace Research, but the reason we could give you GDP estimates but not government budget estimates is simply that government budget data is much harder to get a hold of than standard estimates of the national accounts.  Again, one might want to make some allowance for the difficulty of estimating GNP or GDP in a country that's in turmoil, but we feel relatively confident about those estimates, even though we don't know the details of the government budget.

 

I'm not really an expert on measures of capital flight.  I don't know whether I could bounce that down the line to François or Alan.

 

MR. BOURGUIGNON:  First, let me on the point, I insisted in my initial remarks on the need to improve the performances of many countries on data collection, and I think that the example which has been given is a good illustration of this.  Of course, things are much more difficult in countries which are in, indeed, conflict.  But we cannot say either that nothing can be done.  It's possible to do some surveys and get information from these surveys.

 

On the capital‑flight question, I think that there is no official recording of capital flight, but almost by definition of “capital flight,” it is some say which in the balance of payments will appear in a line called "Errors and Omissions," and when we see that this line "Errors and Omission" is becoming extremely negative, then we have the feeling that most likely there is some capital flight taking place.  But it is not possible to say it is only capital flight, so there is no way we can pinpoint exactly what is going on in this area. 

 

This is not only for the developing countries.  This is also for developed countries, although, of course, today with capital mobility, we don't have really to look at capital flight anymore, but I remember in the old days in my country there was foreign exchange control, there was in those days capital flight, and the way in which we were able to figure out what was going on was again looking at this errors‑and‑omissions item in the balance of payment.

 

MS. TUCK:  Anything to add on that, Alan?

 

MR. GELB:  Of course, it is a very difficult problem, Patrick, because you know in situations where there is going to be capital flight you will find distortions in the other balance of payments, too, by overinvoicing and underinvoicing, and so, in these conditions, it's a very difficult thing to do.

 

I think that whereas perhaps one could try to make estimates for individual countries based on very intimate knowledge of what's happening in the country, it's very difficult, then, to use those estimates in something this like, which is trying to present a global view using a standardized process as possible.

 

QUESTION:  I'm coming from Russia.

 

My question goes to Mr. Bourguignon, and it is about roles of the new donor.  How do you see the Russian role on their CIS region as a new donor emerging in this region, and how is the Millennium Development Goals actually being on track in this region?  I mean, we have poor countries like the Tajikistan or Kyrgyzstan, and what actually Russia could do to focus on this region, or it should be focused on other regions like Sub‑Saharan Africa, for example?  What do you think about that?

 

Thank you.

 

MR. BOURGUIGNON:  Maybe I could give some elements to answer that question, and maybe Alan will want to complement what I will say.

 

I think that we are, on the whole, very happy that the number of donors in the world is increasing.  This is very good news, and the challenge of development is big enough to be thankful to countries joining the group of donors.  So, this is true of Russia, this is true of China, this is true of India.  And this, I should say, is also true of private foundations coming in.

 

Maybe the dynamics of development assistance lately is more on the side of these new donors or nonconventional or traditional donors rather than on the side of traditional donors, in particular those countries which report to the DAC in the OECD.

 

On the specific role of Russia, I think that certainly there is a huge role to be played by Russia, thanks to its influence in all the regions in Central Asia, and we see when we go there some direct impact of Russian aid, and we also see a very obvious impact of the links, other economic links, with Russia.  I visited Tajikistan not a long time ago, and I was really quite amazed to see the amount of remittances coming from Russia, which, as a matter of fact, would mean that there is a large number of Tajik migrants in Russia; and, given the difficulties for which Tajikistan has gone through in the recent past, this is certainly very much that could help Tajikistan.

 

Now, I don't have the exact aid figures of Russia in mind so that I cannot say much more than that.  When we look now to the MDGs, the situation is certainly very different across the countries in the region; but, when we look at the Tajikistan or Uzbekistan, it is certainly the case that MDGs will not be reached or, if they have to be reached, then a fantastic acceleration has to be made in the coming years.

 

Now, this, of course, would not be true in a country like Kazakhstan where, for other reasons, of course, the level of income and social spending, recently issued several spending, are commensurate with the oil income of that country.

 

MR. GELB:  Just to supplement what François was saying, I mean, the countries of Eastern Europe, Central Asia, are very heterogeneous, as you know, and levels of income are heterogeneous.  On some of the measurements of MDGs, particular income poverty, many of the countries are quite well‑off, but they have quite high incidents of chronic disease, including, of course, parts of Russia and Ukraine itself, especially relative to the income level.

 

And I think that if you look at the distribution of activity of donors, you will find that many donors have areas of traditional interests, so there is some tendency, and I have no doubt that this area will be an area of particular interest and comparative advantage for Russia as a development partner.  And as François has said, we very much welcome development cooperation and assistance with‑‑from donors, and I think that in some of the countries, particularly those with large number of donors, the poorer ones, the important thing is everyone works together within the framework of an agreed program to maximize the efficiency of resources.

 

MS. TUCK:  Thank you, Alan.

 

QUESTION:  Mexico is ranked as the 12th economy in the world, but the 81st in gross national income.

 

Mr. Bourguignon, could you please tell me what does it means?

 

MS. TUCK:  Would you repeat your question?

 

QUESTION:  Yes.

 

Mexico's ranking in the World Development Indicators as the 12th economy in the world, but if you take the gross national income, we are in the 81st place.  What is this telling us, please?

 

MR. BOURGUIGNON:  If I'm not mistaken, you're comparing two different rankings.  The definitions are not all the same.  It depends on whether you are counting GDP on initial income at market exchange rates using the exchange rate of the peso with respect to the dollar, or whether you are making a correction for what we call "purchasing power parity," taking into account that, once you have converted the dollar into pesos, what you could buy in Mexico is not the same thing as what you can buy in the U.S.  So, when we make the translation into purchasing power parity, Mexico has a much better rank than while using market exchange rate.

 

And the reason why we are publishing those two figures is because there is some discussion about the way in which this purchasing power parity is being computed, and you know that these days there is a lot of discussion taking place, maybe more on the other side‑‑I mean, on this side of the street, more in the Fund these days than in the Bank, one about the voice and the quotas of various countries in the Fund, and one element for the discussion is whether in the formula that is being used to compute the quotas, whether GDP should be used as PPP, purchasing power parity corrected, or market exchange rate.  And depending on the way in which you correct for purchasing power parity, this might make a difference.  This is why it is a very sensitive issue, and we will be publishing those two figures.

 

MS. TUCK:  Eric wanted to add something.

 

MR. SWANSON:  I wanted to say that when you mentioned Mexico's rank was 12, you were looking at the total GDP figure, the total product of the economy; but, when you mentioned its rank as 81st, you were looking at a GDP per capita that year.  There is a lot of people in Mexico sharing that output, and that accounts for part of the difference.

 

MS. TUCK:  Anything else?  Alan?  Did you have anything to add?

 

MR. GELB:  No.

 

MS. TUCK:  Okay.

 

QUESTION:  Roberto Gonzalez with La Jornada [ph.].

 

It's about Mexico, too, this question.  Remittances are an important inflow into Mexico; but, on the other side, so many people are outside the country, and Mexicans outside the country.  In your opinion, which is the social cost of immigration, or economic cost of immigration, in a country like Mexico?

 

MR. BOURGUIGNON:  This is an area where we have done some serious work in the Bank, and despite this work, I'm afraid that it's very difficult to answer your question for the following reason:  It is possible to make a purely economic calculation where we look at the number of Mexicans living abroad, when we have information on the characteristics of those people, we know more or less the kind of income they could have generated if they had stayed at home, and we know how much they are making by immigrating toward mostly the U.S.  So, by making a comparison of those two situations, the counterfactual, what would have happened if everybody had stayed at home and what we observe in the present situation, it's possible to get measure of the economic gain from migration.

 

Now, this economic gain is not exactly the size of the remittances because, when we look at remittances, we tend to forget that Mexican migrants who are living in the U.S. are also spending money in the U.S. or making money in the U.S.  So, we should take into account that part, too.

 

But, where things are really becoming very complicated is when we try to take into account the noneconomic cost or the noneconomic gain.  You are referring to social costs, which may be the fact that families which stay at home may not be very, very happy to have somebody from the family, the head of the household, for example, having migrated, and this contributes to social cost.

 

But there is also a psychological cost to migration, which is that, other things being equal, everybody would prefer to make the amount of money they are making by immigrating by staying at home.  So, there is a real psychological cost there, and it may not be because, in economic terms, there are positive flows associated with immigration that we should simply recommend this as being a recipe for development because it is necessary to take into account the costs that you are mentioning.

 

And those costs are not only in the sending country.  They are also‑‑you also have cost in host countries.  Again, let me cite my experience as a French citizen.  You have heard about those protests recently by part of the population, which is the migrant population, completely unsatisfied with the way in which they live in France there, or so most likely they would not have this problem if they had stayed at home.

 

So, there is social cost in the sense that migrants may not be well received or well integrated, which is a better word, in the host country.  But it is not possible to take explicitly those costs into account and to add them to the economic equation.  So, this is the reason why we are extremely cautious when we talk about costs and gains due to migration.

 

MS. TUCK:  Thank you.  Anybody want to add anything?

 

I also think that the issue of brain drain, I'm sure, is another one that faces Mexico, just like it does many other countries with very highly trained and highly educated people possibly moving to the United States or other countries for their professions where they could earn a lot more money.  This is a big problem in our globalizing world.

 

QUESTION:  I'm from Reuters. 

 

Can you outline the impact of climate change that you have seen in your latest assessment and how you view the risks going forward.

 

MR. BOURGUIGNON:  Your question, you are talking about damage caused by climate change.  Today, the scientific community is largely unable to give a figure for this damage.  Probably a couple of years or maybe one or two decades from now, then we would be able to say definitely that the temperature‑‑the average temperature has increased by so much, and these are the consequences that this had on drought, on the cultivation of specific crops, et cetera, et cetera.  Then it would be possible to put a figure on these costs.

 

While we know it's not so much at this stage the impact of climate change, what we know is the input into the climate change process which is essentially emission of greenhouse gases, and this is something which we follow, and you will find statistics on this in the WDI.  You will find how much is being emitted by every country in the world, so much is being emitted by industries or countries or by emerging countries, et cetera.  We will also find statistics on what is the energy efficiency of the countries, when you produce one unit of output, one dollar of output, are you using a lot of energy and, therefore, are you emitting a lot in the atmosphere, or are you using a little?

 

And these are more what do you have upstream in the climate change process than what we will find downstream, we are convinced‑‑and if you have had to look to the standing review of the climate issues, you will find it all evident there‑‑we are convinced that there are damages which are already being made, but it is difficult at this stage to attribute them precisely to the climate change phenomenon.

 

QUESTION:  In your statement to the Development Committee, you said that looking at reducing greenhouse emissions shouldn't be seen as a rich country's problem, and you have some figures on the contribution of fast‑growing developing countries will make by 20/20.

 

Are you suggesting or are you encouraging developing countries to do more now, and what actions do they need to take?

 

MR. BOURGUIGNON:  Definitely developing countries have to do something now for various reasons.  In this statement, I have shown that when we look at the incremental emission developing countries play or fast‑growing European countries play an enormous role.  So, these are the Chinas, Indias, Brazils, Mexico, et cetera.  So, therefore, it would be very difficult to compensate this increasing emission by reducing the emission of developing countries only.  So, the effort cannot come only from the European countries.  Of course, we have to push the developed countries to do as much as possible.  The European Union has recently committed itself to reducing greenhouse gases emission by a very substantial amount.  We all hope that the same would be done at one point of time by the United States and other developed countries.

 

But, what we know is that it is not sufficient to compensate for the increment that will come from developing countries, which means that the developing countries, too, must do something.

 

Now, what can they do?  Simply, I was referring to the energy efficiency of the production, so the point is to try to produce as much as they do today and to increase the production by as much as they want to increase production but using less energy.  What we know is there are more possibilities of this type in those countries because there were‑‑they have never worked or they have never been directly concerned by this issue of energy efficiency; and, when we compared the energy efficiency of developed and developing countries, the difference is very, very big.

 

So, if only the developing countries were getting to a level of energy efficiency in 20 years' time, equivalent to what is observed today in developed countries, this would reduce enormously the incremental emission of greenhouse gas.

 

So, there is really very much scope for intervention, policy, and action by developing countries.

 

MR. GELB:  Maybe also just to mention that obviously this will have a cost, and the developing countries themselves should not bear the entire cost of moving forward on the global side, so this is where the whole issue comes of the global framework for trying to find the cheapest, the most possible examples of increasing energy efficiency and reducing greenhouse gas, but then having a collective effort to support that.

 

MS. TUCK:  Thank you.

 

Well, I think we might wrap it up.  I want to thank everyone for coming to the press conference today, and again I remind you that we will have a transcript of this by the end of the day.  We will put copies out by the press desk.

 

Thank you so much.

 

And I know we held up the atlas, but you should also hold up the World Development Indicators, as you have already seen it, but do take a copy if they're any left.   They should be behind the press desk.

 

Thank you very much.

 

 





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