In the past ten years, especially since the global crisis, a range of new strategies for growth have been pursued by many countries. The second annual World Bank Group and Competitive Industries and Innovation Program conference: “New Growth Strategies: Delivering on their Promise?” advanced the discussions initiated at last year's event titled: "Making Growth Happen. Implementing Policies for Competitive Industries."
The opening session on the first day of the conference brought together a global audience of about 700 people, following the discussion in the World Bank Group Preston Auditorium and virtually around the world. (see Conference Agenda page with presentations and recordings of individual sessions)
In his remarks, Bertrand Badré, World Bank Group Managing Director and Chief Financial Officer watch the Conference opening noted that the world of development and economics is changing, and given the scale of challenges facing the world economy, the World Bank Group wants to be central to the debate about new solutions for growth, even if this debate is full of controversies and sensitivities. He argued that the World Bank Group must be a learning institution, where “it is safe and not revolutionary to have practical discussions about what works and what doesn’t work.” Regardless of whether we call it modern industrial policy or new growth strategies, he pointed out, it is happening, and the conference on New Growth Strategies aims to prolong this discussion and help countries make the right choices, backed by economic and market evidence.
Anabel Gonzalez, Senior Director for the Trade and Competitiveness Global Practice at the World Bank Group, in her welcoming remarks watch the Conference opening stressed that while growth is urgent, it is becoming harder to achieve. As old growth strategies are losing relevance, she pointed out countries around the world are searching for new ones, but these have not yet been tested. That is why, she argued “our partners in developing countries, and we at the Bank, need to better understand how to measure the impact of growth strategies, and to learn from that measurement to get better.” She referred to the mixed experiences with “new industrial policy” in Latin America and concluded by stressing that the new growth strategies require strong institutions, dialogue with the private sector and learning by doing processes.
In the keynote address, Professor Dani Rodrik shared his framework of thinking about growth strategies, arguing that growth in the future will have to come "the hard way," through economy-wide improvement in capabilities requiring broad-based investments in human capital and institutions, and even when done right, the potential growth rates will be lower in the future.
In the plenaries that followed, cabinet ministers, senior officials, eminent academics, city leaders and private sector representatives discussed how to measure the impact on the ground of these strategies, debated what institutional means are necessary to support these strategies, talked about the experiences of middle and high-income countries, explored the role cities and local governments can play in improving cities’ competitiveness, and listened to business leaders’ perspectives on global value chains.
Panel 1 – Measuring the Impact of the New Growth Strategies
In many places, five to ten years have passed since the push for new growth strategies began. Given that these strategies often start with a range of coordinated actions, with the hope to catalyze – indirectly – wider and greener growth, they create serious methodological and substantive issues in defining and measuring their impact. The first panel of the conference explored ways to measure the impact of the new growth strategies. How do they fit into, or reshape, traditional growth theory? Based on that, how can we adequately assess whether they are succeeding or failing? What are the implications, for theory and practice?
Professor Arvind Subramanian presented the analysis of the track record of the growth strategies over the past 15-20 years and how should we think about their sustainability going forward. The data he argued shows that poorer countries on average have been catching up with the richer ones. He challenged the general pessimism over the growth prospects, arguing that it is “too west centric” by focusing on Europe and the US, and that the fact that China slowing down should not have a negative overall impact on developing countries and their growth prospects going forward.
Sharing his practical experiences from Catalonia, Spain was Minister Andreu Mas-Collel. Based on the Spanish experiences, he cautioned other countries against using infrastructure industry as the main engine for growth. He recognized the positive impact of long-term micro-level “industrial policies” implemented before the crisis that helped Spanish enterprises gain international competitiveness and thrive during the financial crisis.
Panel 2 – Institutional Means to Support New Growth Strategies
Given that the traditional institutions struggled with “old” industrial policies in the times of less volatile and uncertain markets, they are absolutely inadequate to the new realities. New institutions are needed, and the second panel of the day explored the institutional means necessary to support new growth strategies.
Minister Idris Jala presented the complex process of development of the comprehensive development strategy for Malaysia that will transform it into a middle income country by 2020. Arun Maira shared his perspective on the challenges faced by India in transforming its institutions, and the ambitious agenda of the India Backbone Implementation Network. Christian Ketels presented various models that countries have experimented with and concluded by stressing that implementation of new growth strategies is extremely difficult for whatever the institutional set-up the country goes with. Final presenter in the panel, Professor Charles Sabel, talked in more detail about PEMANDU, the model used by the government of Malaysia.
Panel 3 – New Growth Strategies in Middle and High-Income Countries
Job creation has been the defining challenge for developed countries as much as for developing ones since the financial crisis. With persisting low growth, high unemployment and rising inequality, developed countries have been juggling with the same key challenges. The European Union and the government of New Zealand have recently engaged on new competitiveness and growth strategies for job creation. Director Didier Herbert from the EU and Matthew Gilbert from the Department of Treasury in New Zealand shared the defining features of these policies, and the key challenges in implementing them, and what can developing countries learn from them and adapt to their circumstances. Danny Leipziger from The Growth Dialogue at the George Washington University in Washington, DC, and former World Bank Group Vice President, shared his “"a message to policymakers" in which he encouraged them to "do the traditional first and the plus policies second.”
Panel 4 – Competitive Cities: New Growth Policies & Urban Development
With rapid urbanization in much of the developing world, cities are becoming the locus of the jobs challenge, a key nexus for global trade, but are also where economic inequality is felt most harshly. Cities’ success or failure in improving livelihoods and increasing economic opportunities for their residents cuts across urban management and economic development –beyond the technical challenges of building city roads and delivering treated water. The fourth panel of the conference explored ways in which cities and local governments can tackle income inequality and economic segregation while increasing competitiveness. Ravi Naidoo shared his experiences in transforming the city of Johannesburg in South Africa. Kevin Murphy talked about the renewed focus on cities by the World Economic Forum. Richard Newfarmer shared his observations from Africa.
Panel 5 – Global Value Chains – Perspectives from the Private Sector
Directed country interventions to favor the development of some value chains, like the automotive sector, have led to mixed results. This has especially been the case in the past few decades, where value-chains have become increasingly fragmented and globalized. Representatives of the private sector shared the perspective of business leaders on what drives the integration of a country as part of their global value chain. Representatives of General Electric, Cargill Inc. and Ittehad Steel Group from Pakistan explored what are the main drivers for private investment, growth, and job creation in that context. Mohsin Khalid stressed that in order for the new trade and competitiveness policies to effectively support GVCs, they need to be developed in dialogue and collaboration with the private sector.
Closing Remarks by IFC Chief Economist
In closing the first day of the conference, Ted Chu challenged the development community to think deeply about how to connect the many individual good case studies from across countries, cities, or industries – many of which were presented at the conference – to the macro picture because if not done, the developing country growth prospects will not change.
Second Day Deep-Dive Sessions
Since January 2014, a multi-practice team in the World Bank Group has been assembling evidence to support World Bank Group task teams responding to cities’ needs. Participants in Deep-dive on Competitive Cites tackled the question of how can cities generate more jobs. The session reviewed some of the key questions from World Bank Group clients: “what have other cities done to achieve job creation?”; “how can better determine priorities?”; “how do I get it done?” World Bank Group team presented intermediate findings on each area, focusing on pilot engagement in Johannesburg, global findings about city success, and the role of local governments in China.
Given that skills are a defining factor for competitiveness, participants in the session on Making Skills Programs Work, explored the private sector perspective on the effectiveness of skills programs, and debated what role other institutions may have in making these programs work.
The third deep-dive session: Climate Change and Growth Strategies, focused on the challenge climate change poses to growth strategies, and explored what policies can address both the challenges of ensuring growth and mitigating climate change, and discussed some of the examples from countries and circumstances where such policies and strategies are being effectively implemented.
The final session of the day: Towards an integrated World Bank Group Tourism Strategy, explored the opportunities and challenges in defining a new, integrated strategy that responds more comprehensively and systematically to the diverse and increasingly sophisticated needs of the tourism industry, while ensuring positive outcomes for local communities.
Each one of the deep-dives featured lively discussions in packed meeting rooms.