Social Science > Demography

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Kodjovi M. Eklou
,
Ialy Rasoamanana
,
Joanne Tan
,
Mamy Andrianarilala
,
Rolland Andrianjaka
,
Chrystelle Tsafack
, and
Almedina Music
This paper highlights the role of teacher training in improving educational outcomes in Madagascar. With a low and stagnating Human Capital Index of 0.39 and high learning poverty rates, economic growth is hindered by an inadequately skilled workforce. This paper finds that doubling the share of qualified primary school teachers, from the current 15 to 30 percent, would allow Madagascar to harness its demographic dividend, raising per capita real GDP growth by around 2.5 to 3.1 percentage points in Madagascar.
International Monetary Fund. European Dept.

Liechtenstein’s pension system is structured around a three-pillar framework designed to provide a balanced, sustainable, and secure retirement income. This well-capitalized system aims to safeguard a basic income level for all employees while encouraging supplemental private savings and income.

International Monetary Fund. African Dept.

The Malagasy education system is today at a critical crossroads. With a significant number of Malagasy children still outside of the education system, a poor and declining level of academic proficiency among students, as well as low primary school completion rate, urgent and bold reforms are needed. In line with the new Orientation Law for Madagascar's Education System (LOSEM)2, the Malagasy Ministry of National Education (MEN) identified three strategic pillars as key to strengthening basic education in the country: i) availability of well-trained, motivated, and competent teachers, ii) effective learning time (in terms of hourly volume) and quality (in terms of an effective teaching approach and academic remediation), and iii) learning conditions favorable to the development and fulfillment of learners. This paper focuses on the first strategic axis. After an overview of education attainment in Madagascar, it examines the link between education and growth with an emphasis on teachers’ training It finds that doubling the share of qualified primary school teachers could raise per capita real GDP growth by around 2.5 to 3.1 percentage points in Madagascar. The paper then quantifies the spending needs for recruiting and training primary school teachers, with focus on current unqualified teachers, to meet the country’s projected needs over the next 6 years and finally draws some policy implications.

International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper focuses on Bitcoin and financial inclusion in El Salvador. El Salvador’s economy can benefit from policies to facilitate access to financial services, enhance financial literacy and lower the cost of remittances. However, the Bitcoin adoption as legal tender has not contributed to promote financial inclusion and digital remittances. More than one year after implementation, the adoption of Bitcoin as official currency with legal tender status has thus far not led to visible improvements in financial inclusion. Despite the large use of public funds for subsidizing bitcoin transaction costs, acceptance and use by individuals and firms remains minimal. The project involves sizeable risks, including fiscal contingencies, consumer protection and governance issues, which could be magnified in the event of wider adoption and further fallout in crypto markets. Importantly, there is no evidence of any beneficial use case of Bitcoin for the unbanked population.
Stephanie Eble
,
Alexander Pitt
,
Irina Bunda
,
Oyun Erdene Adilbish
,
Nina Budina
,
Gee Hee Hong
,
Moheb T Malak
,
Sabiha Mohona
,
Alla Myrvoda
, and
Keyra Primus
European countries face high, rising, and long-lasting spending pressures, calling for a renewed focus on fiscal policy and comprehensive structural reforms to prepare their economies for the future. On top of existing fiscal consolidation needs, spending pressures in five key areas are imminent and growing in Europe: pensions and healthcare/long-term care driven by population aging; climate transition; increased defense spending; and higher borrowing costs. Some pressures are immediate, others will build up over time. Projections indicate that additional expenditures could reach 5¾ percent of GDP annually by 2050 in Advanced Europe and 8 percent in Central, Eastern, and Southeastern Europe (CESEE). Addressing these challenges will require extensive efforts, including enhancing institutional capacity and implementing deep structural reforms to manage spending, ensure adequate revenue, and meet environmental, social, and security objectives. Policymakers must also consider the distributional impacts of reforms, particularly on vulnerable households. A broad reform agenda tailored to country circumstances is essential, with urgent actions needed in many countries to ensure the sustainability of pension systems and to combat climate change through fiscal instruments like carbon pricing. Increased revenue mobilization, particularly in CESEE, and the reduction of inefficient spending are critical for creating fiscal space for priority expenditures. Strengthening the EU's fiscal capacity to provide common public goods such as climate, defense, energy security, and R&D and implementing structural reforms to enhance growth potential are also vital. However, raising awareness of these issues and implementing the necessary reforms will be challenging. A well-designed fiscal framework that incorporates long-term spending pressures, supported by comprehensive analysis and data, is crucial for informing public debate and guiding national decision-making to ensure that spending pressures are adequately addressed. Ultimately, inaction is not an option, as it risks fiscal sustainability and the fulfillment of priority spending needs.
Soo Jung Chang
,
Hamin Lee
,
Sumin Lee
,
Samil Oh
,
Zexi Sun
, and
Xin Cindy Xu
This paper examines the economic impact of Artificial Intelligence (AI) in Korea. Korea is among the global frontrunners in AI adoption, with higher adoption rates among larger, younger, and technologically advanced firms. AI holds the promise for boosting productivity and output, though the effects are more pronounced among larger and mature Korean firms. About half of jobs are exposed to AI, with higher exposures among female, younger, more educated, and higher income workers. Korea’s strong innovation and digital infrastructure highlights its AI readiness, while enhancing labor market flexibility and social safety nets are essential to fully harness AI’s potential.
William Kerr

Access to top performers sets an upper bound on a country’s aspirations

Serhan Cevik
The rise of financial technologies—fintech—could have transformative effects on the financial landscape, expanding the reach of services beyond the confines of geography and creating new competitive sources of finance for households and firms. But what makes fintech grow? Why do some countries have more financial innovation than others? In this paper, I use a comprehensive dataset to investigate the emergence and spread of fintech in a diverse panel of 98 countries over the period 2012–2020. This empirical analysis helps ascertain economic, demographic, technological and institutional factors that enable the development of fintech. The magnitude and statistical significance of these factors vary according to the type of fintech instrument and the level of economic development (advanced economies vs. developing countries). Finally, these findings reveal that policies and structural reforms can help promote financial innovation and cultivate fintech ventures—particularly by strengthening technological and institutional infrastructures and reducing cybersecurity threats.
Serhan Cevik

The rise of financial technologies—fintech—could have transformative effects on the financial landscape, expanding the reach of services beyond the confines of geography and creating new competitive sources of finance for households and firms. But what makes fintech grow? Why do some countries have more financial innovation than others? In this paper, I use a comprehensive dataset to investigate the emergence and spread of fintech in a diverse panel of 98 countries over the period 2012–2020. This empirical analysis helps ascertain economic, demographic, technological and institutional factors that enable the development of fintech. The magnitude and statistical significance of these factors vary according to the type of fintech instrument and the level of economic development (advanced economies vs. developing countries). Finally, these findings reveal that policies and structural reforms can help promote financial innovation and cultivate fintech ventures—particularly by strengthening technological and institutional infrastructures and reducing cybersecurity threats.

Alexander Pitt
Malta’s rapid growth over the past two decades has gone hand in hand with a significant expansion of the population. This has created bottlenecks in infrastructure, which will need to be addressed. While capacity in energy and water supply is currently adequate, investments in wastewater treatment and solid waste disposal are needed, as well as measures to reduce greenhouse gas emissions. In transport, need for action to ease congestion is urgent, while the costs for a sustainable solution are high and implementation would take time.