WB: Promote clean growth for atmospheric stabilisation

The World Bank has exposed pros and cons of globalization cautioning that growth prospects are strong but social and environmental pressures from globalization need more attention.

The caution is in a just released 57-page World Bank Report on ``Global Economic Prospects - Managing the Next Wave of Globalization 2007.``

Among other things it notes that globalization could spur faster growth in average incomes in the next 25 years than during 1980 - 2005 with developing countries playing a central role.

The World Bank Report instantly cautions that, unless managed carefully, it could be accompanied by growing income inequality and potentially severe environmental pressures.

It points out further that growth in developing countries will reach a near record of 7 per cent this year adding that between this year and 2008, growth will probably slow, but still likely to exceed 6 per cent, more than twice the rate in high-income countries, which is expected to be 2.6 per cent.

It is for instance, exemplified that in Sub-Saharan Africa, GDP is estimated to have increased to an impressive 5.3 per cent in 2006, down marginally from 5.5 per cent in 2005 and marking the third year of more than 5 per cent growth.

It attributes the deceleration in growth mainly to a moderate slowdown in South Africa, the region`s largest economy.

Excluding South Africa,

regional growth was steady at 5.8 per cent, with oil exporters growing 6.9 per cent and small oil importers 4.7 per cent, reveals the report.

It contends that the apparent robust growth is portrayed as reflecting favorable international conditions and a substantially improved domestic policy environment that has improved countries supply potential.

The report adds: ``At the same time, debt relief combined with lower interest rates and risks have reduced debt-servicing costs, increasing public funds available for productive investment.``

Heartening too is the observation that growth in Sub-Saharan Africa is projected to remain above 5 per cent over the next two years as small oil-importing economies continue to grow by about 4.8 per cent .

It reveals that growth in oil exporters is on the acceleration due to increasing capacity in countries like Angola and Equatorial Guinea as well as a normalization of production levels in Nigeria.

On globalization, the report predicts that the global economy will expand from US$35 trillion in 2005 to $72 trillion in 2030.

The report further portrays that broad-based growth in developing countries sustained over the period would significantly affect global poverty and that the number of people living on less than $1 a day could be cut in half, from 1.1 billion now to 550 million in the year 2030.

It however,

cautions that some regions notably Africa, are at risk of being left behind. Moreover, income inequality could widen within many countries compounding current concerns over inequality between countries.

According to Francois Bourguignon, World Bank Chief Economist and Senior Vice President in his observation in the report says global trade in goods and services could rise more than threefold to $27 trillion in 2030.

He adds that trade as a share of the global economy will rise from one-quarter today to more than one-third out of which he says roughly half of the increase is likely to come from developing countries.

It is further portrayed that developing countries that only two decades ago provided 14 per cent of manufactured imports of rich countries, today supply 40 per cent, and by 2030 are likely to supply over 65 per cent.

Further revealed is the contention that import demand from developing countries is projected to emerge as a locomotive of the global economy.

The report says continuing integration of markets will make jobs around the world more subject to competitive pressures.

``As trade expands and technologies rapidly diffuse to developing countries, unskilled workers around the world - as well as some lower-skilled white collar workers - will face increasing competition across borders,`` notes in the report Uri Dadush, Director of the World Banks Development Economics Prospect Group.

According to the report,

global warming is a serious risk with estimation having it that rising output means that annual emissions of greenhouse gases will increase roughly by 50 per cent by 2030 and probably double by 2050 in the absence of widespread policy changes.

To avoid these policies will have to promote ``clean``growth so as to limit emissions to levels that will eventually stabilize atmospheric concentrations, notes the report.

It notes further that poor countries will need development assistance

to adapt to coming environmental changes including support for their participation in the carbon finance market.