World Development Report 2014

The World Development Report 2014 examines how improving risk management can lead to larger gains in development and poverty reduction. It argues that improving risk management is crucial to reduce the negative impacts of shocks and hazards, but also to enable people to pursue new opportunities for growth and prosperity.

The last 25 years have witnessed unprecedented changes around the worldmany of them for the better. In all continents, numerous countries have embarked on a path of international integration, economic reform, technological modernization, and democratic participation. As result, economies that had been stagnant for decades are growing, people who had suffered deprivation for generations are escaping poverty, and hundreds of millions are enjoying the benefits of improved living standards and scientific and cultural sharing across nations. As the world changes, a host of opportunities arise constantly. With them, however, old and new risks appear, from the possibility of job loss and disease to the potential for social unrest and environmental damage. If ignored, these risks can turn into crises that reverse hard-fought gains and endanger the social and economic reforms that produced these gains. The World Development Report 2014, Managing Risk for Development, contends that the solution is not to reject the changes that bring about opportunities along with risks, but to prepare for them in a proactive and holistic way. Thus, managing risks responsibly and effectively has the potential to bring about a sense of security and means of progress to people in developing countries and beyond. Although individuals initiative and responsibility are essential for managing risk, their success can only be limited without a supportive social environment, especially when risks are large or systemic in nature. The WDR 2014 argues that a way in which people can successfully confront risks and opportunities that are beyond their means is to share their risk management with others. This can be done through naturally occurring social and economic systems that enable people to overcome the obstacles that individuals and groups suffer from, including lack of resources and information, cognitive and behavioral failures, missing markets and public goods, and social externalities and exclusion. These systems from the household and the community to the state and the international communityhave the potential to support peoples risk management in different yet complementary ways. The WDR 2014 presents a detailed approach and specific advice to improve resilience. For policy makers in developing (and developed) countries, the Report also provides strategic recommendations that cut across risks and social systems in an integrated framework. They attempt to provide both innovative solutions to long-standing problems in poor and emerging economies and ways to mainstream risk management into the development agenda. These recommendations should serve to guide the dialogue, operations, and contributions from key development actors from civil society and national governments to the donor community and international development organizations.

The second issue in a new series, Global Financial Development Report 2014 takes a step back and re-examines financial inclusion from the perspective of new global datasets and new evidence. It builds on a critical mass of new research and operational work produced by World Bank Group staff as well as outside researchers and contributors.

Work is constantly reshaped by technological progress. New ways of production are adopted, markets expand, and societies evolve. But some changes provoke more attention than others, in part due to the vast uncertainty involved in making predictions about the future. The 2019 World Development Report will study how the nature of work is changing as a result of advances in technology today. Technological progress disrupts existing systems. A new social contract is needed to smooth the transition and guard against rising inequality. Significant investments in human capital throughout a person’s lifecycle are vital to this effort. If workers are to stay competitive against machines they need to train or retool existing skills. A social protection system that includes a minimum basic level of protection for workers and citizens can complement new forms of employment. Improved private sector policies to encourage startup activity and competition can help countries compete in the digital age. Governments also need to ensure that firms pay their fair share of taxes, in part to fund this new social contract. The 2019 World Development Report presents an analysis of these issues based upon the available evidence.

In 2011 the World Bank—with funding from the Bill and Melinda Gates Foundation—launched the Global Findex database, the world's most comprehensive data set on how adults save, borrow, make payments, and manage risk. Drawing on survey data collected in collaboration with Gallup, Inc., the Global Findex database covers more than 140 economies around the world. The initial survey round was followed by a second one in 2014 and by a third in 2017. Compiled using nationally representative surveys of more than 150,000 adults age 15 and above in over 140 economies, The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution includes updated indicators on access to and use of formal and informal financial services. It has additional data on the use of financial technology (or fintech), including the use of mobile phones and the Internet to conduct financial transactions. The data reveal opportunities to expand access to financial services among people who do not have an account—the unbanked—as well as to promote greater use of digital financial services among those who do have an account. The Global Findex database has become a mainstay of global efforts to promote financial inclusion. In addition to being widely cited by scholars and development practitioners, Global Findex data are used to track progress toward the World Bank goal of Universal Financial Access by 2020 and the United Nations Sustainable Development Goals. The database, the full text of the report, and the underlying country-level data for all figures—along with the questionnaire, the survey methodology, and other relevant materials—are available at www.worldbank.org/globalfindex.

"The last 25 years have witnessed unprecedented changes around the world - many of them for the better. In all continents, numerous countries have embarked on a path of international integration, economic reform, technological modernization, and democratic participation. As result, economies that had been stagnant for decades are growing, people who had suffered deprivation for generations are escaping poverty, and hundreds of millions are enjoying the benefits of improved living standards and scientific and cultural sharing across nations. As the world changes, a host of opportunities arise constantly. With them, however, old and new risks appear, from the possibility of job loss and disease to the potential for social unrest and environmental damage. If ignored, these risks can turn into crises that reverse hard-fought gains and endanger the social and economic reforms that produced these gains. World Development Report (WDR) 2014: Managing Risk for Development, contends that the solution is not to reject the changes that bring about opportunities along with risks, but to prepare for them in a proactive and holistic way. Thus, managing risks responsibly and effectively has the potential to bring about a sense of security and means of progress to people in developing countries and beyond. Although individuals' initiative and responsibility are essential for managing risk, their success can only be limited without a supportive social environment, especially when risks are large or systemic in nature. The WDR 2014 argues that a way in which people can successfully confront risks and opportunities that are beyond their means is to share their risk management with others. This can be done through naturally occurring social and economic systems that enable people to overcome the obstacles that individuals and groups suffer from, including lack of resources and information, cognitive and behavioral failures, missing markets and public goods, and social externalities and exclusion. These systems - from the household and the community to the state and the international community-have the potential to support people's risk management in different yet complementary ways." -- World Bank website.

This first report deals with some of the major development issues confronting the developing countries and explores the relationship of the major trends in the international economy to them. It is designed to help clarify some of the linkages between the international economy and domestic strategies in the developing countries against the background of growing interdependence and increasing complexity in the world economy. It assesses the prospects for progress in accelerating growth and alleviating poverty, and identifies some of the major policy issues which will affect these prospects.

'Institutions fix the confines of and impose form upon the activities of human beings.' --Walton Hamilton, 'Institutions', 1932. The 'World Development Report 2002: Building Institutions for Markets' undertakes the complex issue of the basic institutions needed for markets to function properly. This year's 'World Development Report' goes beyond a simple examination of institutional structure and explores the functions of institutions. Recognizing that one size does not fit all, the report asks what do all institutions which support markets do? The answer is simple: Institutions channel information, define and enforce property rights, and increase or prevent competition. Understanding the functions that current institutions and their proposed replacements would provide is the first step. The report contends that once you have identified the institutional functions that are missing, you can then build effective institutions by following some basic principles: - Complement what exists already - in terms of other supporting institutions, human capacities, and technology. - Innovate to suit local norms and conditions. Experimenting with new structures can provide a country with creative solutions that work. - Connect communities of market players through open information flows and open trade. Open trade and information flows create demand for new institutions and improve the functioning of existing structures. - Compete among jurisdictions, firms, and individuals. Increased competition creates demand for new institutions as old ones lose their effectiveness. It also affects how people behave - improving institutional quality. These broad lessons and careful analyses, which links theory with pertinent evidence, are provided in the report. 'World Development Report 2002: Building Institutions for Markets' contains selected 'World Development Indicators'.