June 18, 2008— With food, fuel and financial turmoil as a dominant backdrop, development economists, policy makers, academics and members of civil society met last week in Cape Town, South Africa to debate and explore pressing development issues. First sponsored by the World Bank in 1988 as a forum for the development community to share ideas, the 2008 Annual Bank Conference on Development Economics had the theme of ‘People, Politics and Globalization’. The event covered issues ranging from the impact of public health investments on the economy to the political economy of shared growth, to job creation in North Africa as well as South Africa. The impact of globalization on food prices and food security as well as the effects of climate change on development were also in focus.
| South African Finance Minister Trevor
Manuel and President Thabo Mbeki | | |  | | World Bank Chief Economist Justin Lin |
South African Finance Minister Trevor Manuel began the proceedings by warning about flagging support for globalization and by exhorting participants to focus on how to make growth more inclusive and sustainable. South African President Thabo Mbeki then delivered an opening address where we spoke of the need to relate development economics to the central task of advancing human progress.
“Our discussions are framed by the reality of rapidly rising prices of food, fuel and finance….None of us can afford to ignore the harsh realities that seek to erode the gains that we have until now taken for granted. The moment calls on us to dig deep within ourselves and advance a new, rational set of ideas to be pursued by thinkers and policymakers everywhere,” Manuel said.
Also at the opening, World Bank Chief Economist Justin Lin praised Africa’s recent growth trends, adding “Our obligation is to strengthen this trend along the road to a world free of poverty. But people are not just the end – they are also the means of development. They need incentives, opportunities and the ability to work. This very much depends on government – on politics. ”
Lin added that globalization brings with it the examples of success, as demonstrated by China and other East Asian economies.
Financial market turmoil and international banking in emerging markets exposes the resilience of emerging markets in the wake of the sub-prime crisis that started in the United States. Experts questioned how to balance growth priorities while managing public debt and agreed that the second round effects of the crisis could be serious and require careful management.
Mansoor Dailami, Manager of International Finance in the World Bank’s Development Prospects Group, said, “The internationalization of banking offers great potential for developing country financial markets, but it also heightens the risks of transmission of financial shocks, since 40% of domestic banking assets are now owned by foreign banks. ” Dailami is a lead author of the recently published Global Development Finance 2008: The Role of International Banking. The report warns that countries with heavy external financing needs are potentially most vulnerable to a credit crunch, particularly in cases where private debt inflows into the banking sector have contributed to a rapid expansion of domestic credit, which stokes inflationary pressures.
At the conference, sessions on food prices and security focused on striking a balance between urgent short-term financing needs with funding for longer term agricultural productivity.
Local policymakers and experts stressed the importance of supporting African crop and seed research that will boost future yields in a continent where 750 million people rely on farming for survival.
“A Framework for African Food Security has been agreed as part of Comprehensive African Agricultural Development Program and it commits member countries of the African Union to raise agricultural productivity by 6 percent,” explained Sheryl Hendriks of the School of Agricultural Sciences at the University of Kwazulu-Natal.
Next year the conference will be in Seoul, South Korea, where attendees will have the opportunity to explore the experience of the East Asia miracle.
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