Progress in a Changing World

Mahmoud Mohieldin Senior Vice President World Bank Group

Distinguished Speaker @wbg2030 Forum 0 December 12 2017 worldbank.org/sdgs Addressing Global Megatrends & Challenges

Demographic transitions

Urbanization

Climate and resources

Commodity cycles

Technological disruptions

Fragility and violence

Debate about globalization

Shifts in the global economy 12/15/2017 1 Source: World Bank Forward Look, September 2017 2 Addressing Global Megatrends & Challenges

Demographic and  Economic diversification; 600 million new jobs (SDG#8) Growth Transitions

 Sustainable Health & welfare system (SDG#3)

Urbanization  Urban management (SDG#11)  Private expertise/funding for infrastructure/urban services (SDG#11; SDG#9; SDG#17)

Climate and  Shift from fossil fuels to renewables/ efficiency (SDG#7) Resources  Agriculture adaptation (SDG#2)

Cycles, Disruptions  Shocks and risks preparedness (SDG#13) and Fragility  Protecting vulnerable from fragility & violence (SDG#1; SDG#16)

Shifts in Global  New sources of growth and trade, especially for Economy commodity exporters (SDG#9) 12/15/2017 Reflections on the new global economy: multipolarity

Evolution of the earth’s economic center of The world’s economic center of gravity, 1980– gravity: 1 CE to 2025 2016, in black, at three-year intervals

1989 2007 2049 1980 1998 2016

Source: Danny Quah, 2011 Source: McKinsey Global Institute, 2012

12/15/2017 3 Solutions: What to Avoid and What to Pursue

12/15/2017 4 Solutions: Avoid bad ideas 1. Dealing with joblessness by relying on the civil service; 2. Underpaying civil servants compared to the private sector; 3. Cutting fiscal deficits by sacrificing public investment in infrastructure; 4. Subsidizing energy except for very limited subsidies to highly vulnerable sections of the population; 5. Open ended protection for specific sectors; 6. Imposing administrative price controls; 7. Banning exports; 8. Exchange rate misalignment; 9. Resisting urbanization/underinvesting in infrastructure; 10.Ignoring environmental implications; 11.Poorly regulating the Banking sector and excessive interference; 12.Measuring educational progress solely by higher enrollments and ignoring the quality of education The Growth12/15/2017 Report Strategies for Sustained Growth and Inclusive Development, 2008 5 Solutions: The policy ingredients of growth strategies

A list of common policies between countries with 7+ % growth over 25+ years

6 The Growth12/15/2017 Report Strategies for Sustained Growth and Inclusive Development, 2008 The 2030 Agenda and the Sustainable Development Goals

12/15/2017 7 An Opportunity for Transformation: From MDGs to SDGs

MDGs SDGs (2000-2015) (2016-2030) Goals 8 17

Targets 21 169

Indicators 60 ~231 Priority Areas Human Development Holistic: Economic, Social, Environmental

Scope Developing Countries Universal

The global development agendas serve as a compass and guide for countries to determine their national development path 12/15/2017 8 Looking Back: MDG Progress By number of countries

MDG 1.1 - Extreme Poverty 71 11 7 2 27 27

MDG 1.9 Under-nourishment 35 8 4 13 52 33

MDG 2.1 - Primary Completion 40 12 11 17 40 25

MDG 3.1 - Education Gender Parity 67 10 7 11 28 22

MDG 4.1 - Under-5 Mortality 38 18 16 37 34 2

MDG 4.2 - Infant Mortality 6 9 23 28 77 2

MDG 5.1 - Maternal Mortality 15 3 11 20 88 8

MDG 7.8 - Improved Water 67 5 2 12 40 19

MDG 7.9 - Improved Sanitation 36 7 7 14 58 23

Target Met Sufficient Progress Insufficient Progress Moderately Off Target Seriously Off Target Insufficient Data

Source: World12/15/2017 Bank data, staff calculations 9 Progress on the MDGs Share Of Global Poverty 1990

15% 2015

50% 12% 1% Global poverty: 4% 1.96 billion Global poverty: 51% 702 million 37.1 % of global 9.6% of global 30% population population 33%

East Asia and Pacific Europe and Central Asia Latin America and the Caribbean South Asia

12/15/2017Sub-Saharan Africa 10 An Opportunity for Transformation: Lessons learned from the field

• Improve coordination and ensure the timeliness and effectiveness of policy instruments • Localize implementation and prioritize engagement of communities and community mobilization • Increase efficient allocation of resources • Recognize and identify interrelatedness of development goals at the onset • Ensure strong government involvement • Promote quality data • Increase cross-institutional collaboration • Bridge the humanitarian and development agendas

Based on report: “Transitioning from the MDGs to the SDGs” jointly written by the World Bank Group and the UN Development Programme 12/15/2017 11 Coordination of development agendas The Colombian Example

NAT’L DEV PLAN National Development Plan 2014-2018

Active national agendas determine actions related to at least 146 SDG targets - 86%

12/15/2017 12 Source: Colombia’s HLPF presentation Data: Crucial to understand how trends are shifting

12/15/2017 13 Financing sustainable development: The key components

Source: World 12/15/2017Bank Group, 2015 14 Financing sustainable development

$ Trillion Annual Average Infrastructure Investment until 2030 7

6 How much is out there?

More than $24.4 4 $10 trillion trillion in invested in low-yield negative government interest rate 3 securities bonds

$8 trillion 1 sitting in cash

0 12/15/2017 15 Financing sustainable development Private sector engagement is critical

$ BILLIONS FDI 1990 2015 Soaring Private Capital Flows, Flat Official Development Assistance

OFFICIAL DEVELOPMENT ASSISTANCE

12/15/2017 16 16 Source: IFC Presentation to Center for Global Development, February 2017 Financing sustainable development Private sector engagement needs to increase

Can commercial financing be cost- COMMERCIAL FINANCING effectively mobilized for sustainable 1 investment? If not…

UPSTREAM REFORMS & MARKET FAILURES Can upstream reforms be put 2 • Country and Sector Policies in place to address market • Regulations and Pricing failures? If not… • Institutions and Capacity

PUBLIC AND CONCESSIONAL RESOURCES FOR RISK Can risk instruments & credit INSTRUMENTS enhancements cost-effectively 3 & CREDIT ENHANCEMENTS cover remaining risks? If not… • Guarantees • First Loss

PUBLIC & CONCESSIONAL FINANCING, Can development objectives INCLUDING SUB-SOVEREIGN be resolved with scarce • Public finance (incl. national development banks and public financing? 4 domestic SWF) • MDBs and DFIs 17 12/15/2017 Financing sustainable development Opportunities for the private sector

12 largest business themes in a world economy heading for the SDGs

18 Source: Better12/15/2017 Business Better World Report, January 2017 Financing sustainable development Role of Sovereign Wealth Funds

Main Elements of SWF Policy

Source:12/15/2017 IMF, 2013 19 Financing sustainable development Role of financial inclusion

12/15/2017 20 Financing sustainable development: Role of savings

Influence savings behavior: introduce savings Improve real accounts for all income through: students Realize the •increasing total factor productivity, potential of fintech •increasing labor efficiency, and •maintaining price Key drivers of stability domestic savings

Mobilize digital/biometric ID Reform public systems social security Enhance commercial insurance systems

12/15/2017 21 22 Financing sustainable development: “Digitization” is disrupting every part of financial services

Source: World Bank Group, 2017 22 23 Financing sustainable development: Fintech will become critical

Source: FSB, Financial Stability Implications of FinTech, July 2017 23 The practice of sustainable development

INVEST IN PEOPLE INVEST IN INCLUSIVE GROWTH INVEST IN RESILIENCE

•Early childhood •Infrastructure •Fragility & development •Roads Conflict •Energy •Gender equality •Climate and •Sustainable weather shocks •Skills for jobs •Greening growth •Water •Pandemics •Equal management opportunities •Private sector •Job creation

Achieve the twin goals of ending extreme poverty and boosting shared prosperity

Sources: World12/15/2017 Bank Group, 2017 24 The practice of sustainable development Invest in people: Learning to realize education’s promise

Sources: World12/15/2017 Bank Group, 2017 The practice of sustainable development Invest in people: Learning to realize education’s promise

• Learning outcomes are poor: low levels, high inequality, slow progress The three dimensions • Schools are failing learners of the learning crisis • Systems are failing schools

Still there are reasons for hope

How to realize • Assess learning – to make it a serious goal education’s promise: • Act on evidence – to make schools work for all learners Three policy • Align actors – to make the whole system work for learning responses

“If your plan is for one year, plant rice. If your plan is for ten years, plant trees. If your plan is for one hundred years, educate children.” –Kuan Chung (7th Century BC).

Sources: World12/15/2017 Bank Group, 2017 26 The practice of sustainable development Invest in people: Learning to realize education’s promise

It’s more complicated than it looks: people act in reaction to the choices of others throughout the system 27 Sources: World12/15/2017 Bank Group, 2017 The practice of sustainable development Invest in people: Learning to realize education’s promise

Coherence and alignment toward learning

28 Sources: World12/ Bank15/ Group,2017 2017 The practice of sustainable development Invest in people: Health

SDG 3: Ensure Healthy lives and promote wellbeing for all at all ages Reduce global maternal mortality Reduce premature mortality from ratio noncommunicable diseases

End preventable deaths of Strengthen prevention and newborns and children under 5 treatment of substance abuse years of age Halve global deaths and injuries End the epidemics of AIDS, from road traffic accidents tuberculosis, malaria, neglected tropical diseases; combat Achieve universal health coverage hepatitis, water-borne diseases, other communicable diseases Substantially reduce number of deaths and illnesses from hazardous Ensure universal access to sexual chemicals and air, water and soil and reproductive health-care pollution and contamination services 12/15/2017 29 The practice of sustainable development Invest in people: Universal Health Coverage (UHC) The Two Goals of Universal Health Coverage Service delivery: By 2030, Financial risk protection: by everyone has access to 2030, no one is pushed into essential health services or kept in poverty by paying for health care

Three Dimensions to Improving UHC

Source: World12/15/2017 Bank Group, 2015 and Alaa Hamed, 2015 30 The practice of sustainable development Invest in resilience

Natural disaster risk profile

12/15/2017Source: KPMG 2017 31 The practice of sustainable development Invest in inclusive growth: Each industrial revolution shifts the manufacturing opportunities and patterns of specialization

Industrial revolutions and shifts in manufacturing specialization, 1784–present

Three “C”s determine the feasibility of success in export-led manufacturing:

• Competitiveness

• Capabilities

Source: Trouble12/15/2017 in the Making? The future of manufacturing-led development, World Bank, 2017 32 The practice of sustainable development Invest in inclusive growth: Harnessing technology and the digital dividend Number of years to reach 100 million users 80

0 Telephone Mobile Internet Facebook Whatsapp Instagram (1878)1878 (1979) 1990(1990) (2004) 2009(2009) (2010)

1979 2004 2010 Source: Adapted from World Economic Forum, 2017 12/15/2017 33 The practice of sustainable development Invest in inclusive growth: Harnessing technology and the digital dividend

Source: The Wall12/15/2017 Street Journal, 1998 34 The practice of sustainable development Invest in inclusive growth: Harnessing technology and the digital dividend Leapfrogging Disruptive Innovation

Source: CodigoDelSur, 2017 Source: Dassault Systemes, 2017

The Capability to Innovate in 1900 Drives Income Levels Today The Capabilities Escalator

12/15/2017 Source: Cirera; Maloney, The Innovation Paradox, 2017 35 The practice of sustainable development Invest in inclusive growth: Dashboard for inclusive, sustainable, and multidimensional growth

12/15/2017 36 Source: New Growth Models, World Economic Forum, 2014 The practice of sustainable development The mapping process of SDG targets and 11MP

Eleventh Malaysia Plan 2016-2020 and the SDGs

Strategic Thrust 1: Strategic Thrust 2: Strategic Thrust 3: Strategic Thrust 4: Strategic Thrust 5: Strategic Thrust 6: Enhancing Improving well- Accelerating human Pursuing green Strengthening Re-engineering inclusiveness being for all capital development growth for infrastructure to economic growth for towards an for an advanced sustainability and support economic greater prosperity equitable society nation resilience expansion

Key initiatives: Key initiatives: Key initiatives: The Key initiatives: Key initiatives: All Key initiatives: We Inclusivity ensures Healthy individuals focus on cradle-to- “Green growth” will Malaysians will will ensure quality all Malaysians and happy grave talent be a way of life. have access to growth and benefit from households, living in development and This will lead to basic amenities and international economic growth cohesive and united lifelong learning will strengthened food, be connected competitiveness. All regardless of communities – this improve labour water, and energy through integrated economic sectors gender, ethnicity, embodies the vision productivity, deliver security, lower transport and high- will migrate towards socio-economic for a socially a higher-skilled environmental risks, speed Internet. New more knowledge- status, or advanced Malaysia workforce, and and ultimately, investments will intensive and high geographic location create a virtuous better well-being focus on lowering value-added cycle of job and quality of life cost of business activities with creation, growth, and enhancing greater productivity. and social competitiveness development

12/15/2017 37 The practice of sustainable development The mapping process of SDG targets and 11MP

12/15/2017 38 Implementation Happens at the Local Level

12/15/2017 39 The practice of sustainable development Assessing social risk and its mitigation should be conducted at the local level

78 countries have a population of under 5 million 181 provinces have a population of over 5 million 86 provinces have a population of over 10 million

*Analysis conducted on developing countries

Source: Data calculations12/15/ from2017 local government statistics 40 Sample Municipal Budget

Expenses Revenues 1. Property tax (rates) on land and/or buildings 1. Preschool education 2. Tax on the transfer of immovable property 2. Primary and secondary school 3. Tax on motor vehicles 3. Health care 4. Local sales tax and/or tax on the sale of local products (or surcharge) 4. Social assistance and poverty alleviation 5. Tax on local businesses and services 5. Public order and civil protection 6. Tax on electricity consumption (surcharge) 6. Infrastructure and public services 7. Tax on nonmotorized vehicles 7. Environment protection 8. Tax on tourism, hotels, restaurants, and entertainment 8. Social, cultural, recreational expenditures 9. Tolls on roads, bridges, etc., within the limits of the local government 9. Local economic development 10. Charges for public works and public utilities such as waste collection, 10.Social housing drainage, sewerage, and water supply 11.Urban development 11. Charges for markets and rents for market stalls 12.Civil security 12. Charges for the use of bus stations and taxi parks 13.Transfer to sub-local government entities 13. Fees for approval of building plans and erection and re-erection of 14.(subsidies, grants, equity, in-kind) buildings 15.Loan repayment 14. Fees for fairs, agricultural shows, cattle fairs, industrial exhibitions, 16.Interest charges tournaments, and other public events 17.Guarantees called (paid by the municipality) 15. Fees for licensing of businesses, professions, and vocations 16. Fees for other licenses or permits and penalties or fines for violations 17. Fees for advertisement 18. Fees on sales of animals in cattle markets 19. Fees for registration and certification of births, marriages, and deaths 20. Fees for education and health facilities established or maintained by the local government 21. Fees for other specific services rendered by the local government 22. Rent from land, buildings, equipment, machinery, and vehicles 23. Surpluses from local commercial enterprises 24. Interest on bank deposits or other funds

Source: Municipal12 Finances/15 /Handbook:2017 Managing Local Expenditures, Morrell and Kopanyi 41 Localization of Urban Development: The case of China

Reforming land management and institutions

Reforming urban planning and design Improve the revenue base of local governments by mainstreaming a property Creating a mobile and versatile labor tax on housing force with equal access to a common standard of public services Improve the intergovernmental grants Localization system of Urban Managing environmental pressures Establish an explicit Development framework for local Placing urban finances on a more government transactions in China sustainable footing while creating financial discipline for local governments Reform the financial sector to enhance fiscal discipline of local governments Improving governance at the local level

Timing, sequencing, and monitoring 12/15/2017 42 Localization of Urban Development:

U.K. Midlands

Successful locally owned businesses help develop local markets, create Indonesia: innovation, success and redistribution in a self- A program is being reinforcing cycle implemented to enhance the capacity of local governments to improve efficiency and effectiveness of local public spending. Also implemented the PNPM program: community driven development

Colombia: Kenya:

A government funded drought insurance program brings satellite based insurance to Kenyan pastoralists and farmers using mPesa.

12/15/2017 43 Thank You worldbankgroup.org/sdgs

Mahmoud-Mohieldin on

Mahmoud Mohieldin 4 Senior VP 4