Ever heard of SDG washing? The urgency of SDG Due Diligence

Development Matters SDGs ,

By Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct

September 25, 2017 marks World SDG Action Day.

SDG-dayA couple of months ago during the OECD’s Global Forum on Responsible Business Conduct,1 I heard a new term: SDG washing. After green washing and blue washing – using a UN logo to signpost sustainability without doing much – the term SDG washing points to businesses that use the Sustainable Development Goals to market their positive contribution to some SDGs while ignoring their negative impact on others. For example, a car company may market their electric cars as saving the climate (SDG 13↑). Yet, the cobalt in their batteries may be mined by five-year old kids in Congo (SDG 8 ↓).

It is clear that the world will never reach the SDGs without businesses. While businesses can make positive contributions, such as creating jobs, finding innovative solutions for climate challenges or contributing to human capital development, they can also cause or contribute to negative impacts, such as exploiting labour in supply chains, damaging the environment or engaging in corrupt practices. Businesses should pay due attention to ensure that they avoid undermining the SDGs by causing or contributing to negative impacts. Continue reading →

What is Happening to Robin Hood? The Rise and Future of Progressive Redistribution

Development Matters policy , ,

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By Peter H. Lindert, Distinguished Professor of Economics, University of California, Davis1

Prof. Lindert will be delivering the 5th Angus Maddison Lecture on 3 October 2017
as part of the OECD Development Centre’s Angus Maddison Lecture Series
during DEV WEEK 2017.
Learn more and register to attend

sharing-money-2A global history of how governments redistribute between rich and middle and poor is unfolding. While such an account can start from new measures of fiscal progressivity in the 21st century, several countries can trace the history of fiscal redistribution in detail back to the 1960s, and then in broad outline back to the start of the 20th century.

What that history shows is a global rise in progressivity over the last 100 years. Earlier regimes took less and gave less. Before 1910, redistribution favoured the poor at the expense of the rich only in Britain and the Netherlands during the French War era of 1792 to 1815, as much as it did in the still-penurious government budgets around 1910. Why had Robin Hood still not arrived as late as the dawn of the 20th century? Three restraints blocked progressivity before the 20th century: pervasive poverty (only small surpluses were available to redistribute), lack of fiscal capacity and the delay in extending voting power to the masses, including women.
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Management and industrialisation in Africa

Development Matters Africa, policy , , , ,

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By Daniela Scur and Nicolas Lippolis, University of Oxford

Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa
Register to attend

Africa-IndustrialisaionThe manufacturing sector has traditionally been seen as an engine for development due to its high propensity for productivity gains. Worryingly, recent evidence suggests that this has not been the case in Africa.1 One important determinant of firm productivity is the quality of management practices, and new data sheds light on the state of management in some African countries.

Management around the world

For over 12 years, the World Management Survey (WMS) has been collecting data on management practices using an interview-based methodology. It defines 18 key management practices and scores them from worst practice (1) to best practice (5). The focus is on such practices as monitoring, target-setting and incentives/people management. Research using this data suggests a strong correlation between management and a series of productivity measures – such as firm size, profitability, sales growth, market value and survival. Experimental evidence further confirms a positive correlation.2 Continue reading →

Biases in entrepreneurship and industrial policy in Africa

Development Matters Africa, policy , , , ,

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By Wim Naudé, Professor in Business and Entrepreneurship in Emerging Markets, Maastricht University, Dean of the Maastricht School of Management, The Netherlands, and Research Fellow at the IZA Institute for Labor Economics, Bonn, Germany

Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa
Register to attend

shutterstock_415121221.jpgAfrica has failed to industrialise. At the same time, millions of young people are seeking jobs. Put one-and-one together and the answer seems to be that if these labour market entrants become entrepreneurs in industry then they can in one stroke create jobs and help Africa industrialise. Yet, optimising the nexus between entrepreneurship and industrialisation requires overcoming some vexing policy biases. These can be categorised as biases of over-estimation and biases of under-estimation.

First, industrialisation’s job-creation potential is often over-estimated. The world is in a Fourth Industrial Revolution (4IR) driven by technologies such as the Internet of Things, automation, additive manufacturing and big data analytics (see Naudé, 2017). These technologies are causing the loss of low-skilled routine jobs, of which Africa has a disproportionate share. It’s estimated that up to 66% of all jobs in developing countries are at risk. Relatively poor African countries such as Ethiopia are at a particular risk of having around 44% of current jobs susceptible to automation. The 4IR is furthermore leading to a ‘re-shoring’ of manufacturing back to advanced economies. This is to the detriment of low-wage labor in African and other developing countries. As Culey (2012) points out: How important is low-cost labor when you don’t actually need labor?
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Excessive informal sector: a drag on productivity

Development Matters policy , , ,

By Aleksander Surdej, Poland’s Ambassador to the OECD

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Photos by Victor Jiang / Shutterstock

The informal economy remains a problem when we discuss the prospects of economic development. It is perceived as a hindrance to economic progress because the informal sector does not pay taxes, does not include its employees in social insurance schemes and does little to offer labour law protections. Increasingly, various researchers (La Porta1, Shleifer2, 2014) and international organisations, like the OECD, converge in seeing the informal economy as an obstacle to economic development due to its imminent low productivity. Indeed, informal businesses are concentrated in low productivity sectors. They are, on average, smaller and hence less productive. They generate lower value added. They pay lower wages to their employees and do not train them. And the owners of informal businesses manage their firms less efficiently than their better educated formal sector counterparts.

The informal sector is hence both a symptom of economic backwardness and a drag on economic development. But, can this apparent vicious circle be broken, or is it an economic policy donquichottean task?

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Electricity for all in Africa: Possible?

Development Matters Africa , , , , ,

By Bakary Traoré, Economist, Sébastien Markley, Statistician, and Ines Zebdi, Research Assistant, OECD Development Centre 1 

Explore the 2017 African Economic Outlook: Entrepreneurship and Industrialisation in Africa for more on this subject

Electricity-in-Africa-shutterstock_563620138For decades, access to electricity has been a serious challenge in Africa. It still is. 600 million Africans are not connected to an electrical network. African businesses cite electricity amongst the two most severe constraints on their operations (Enterprise Surveys, 2016). Twenty-five of the 54 countries in Africa, including Nigeria, South Africa, Ghana and Senegal, deal with frequent power crises characterised by outages, irregular supply and surging electricity costs. These are symptoms of insufficient generation capacity and a lack of infrastructure.

Despite these sobering facts, a number of recent initiatives signal that major improvements may be underway. The impetus to act is driven by the benefits Africa can reap by investing in electrification. Such benefits go far beyond direct job creation in energy infrastructure, as important as that is. Several pieces of evidence (Jimenez [2017], Torero [2014], van de Walle et al. [2013]) suggest that household electrification also increases job opportunities by carving out more time for work and enabling rural micro-entrepreneurship. We see three reasons for hope that Africa is on the path to greater electrification – provided certain conditions are met.

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Strengthening Regional Agricultural Integration in West Africa

Development Matters Africa, Food security, policy, Youth , , , ,

By John Staatz, Professor Emeritus, Dept. of Agricultural, Food and Resource Economics, Michigan State University

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Photo credit: Ryan Vroegindewey

Soaring and volatile international food prices since 2007-08 have forced West African governments and their development partners to translate their long-standing rhetoric about support for West African agriculture into concrete programmes. Doing so effectively, however, has proven much more challenging than simply meeting the Comprehensive Africa Agriculture Development Programme (CAADP) goal of increasing the share of national budgets and donor funds dedicated to the agricultural sector. A recently released joint study by the Syngenta Foundation for Sustainable Agriculture (SFSA) and Michigan State University (MSU) draws lessons from such efforts over the past 10 years and suggests ways in which policies and programmes can be more effective in helping West Africa feed its young, burgeoning and increasingly urban population. Research by MSU, SFSA and West African scholars provides a number of crucial policy insights. Continue reading →