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Finance and Development, September 2017
Article

Book Reviews

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 2017
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What Works to Lift the Poor

THE WORLD ECONOMY faces multiple challenges today. Growth prospects in advanced economies have dimmed. Many emerging market and developing economies feel the pinch from lower prices of oil and other commodity exports, resurgent debt levels, and gaping infrastructure needs. And threats from income polarization, climate change, and the mechanization of jobs continue to test the ability of policymakers to fulfill the dreams of economic security for their people. That is especially true for the poor, many of whom were left behind even when times were generally good.

Leila Janah

Give Work: Reversing Poverty One Job at a Time

Penguin Random House, New York, 2017, 272 pp., $27

While ending poverty has been a global imperative for several decades, achieving this goal has proved incredibly hard. Strong economic growth in developing economies like China and India helped pull several millions out of poverty, but history has shown that growth alone cannot always do it. Indeed, some 700 million people around the globe still subsist on less than living wages.

Give Work by Leila Janah, founder and CEO of the nonprofit Samasource, which connects impoverished people to digital work, provides a fresh take on tackling poverty from a social entrepreneur’s standpoint. The author argues that reversing poverty will require creating productive jobs for the poor that help break the cycle of despair and impoverishment once and for all. Giving jobs directly to the poor can have more traction than giving governments aid that can be misallocated or wasted, the author says.

Although Janah’s views are not necessarily new, the book is compelling through the evidence provided. The narrative is a personal account of the challenges the author needed to surmount before founding Samasource to target and train the poor for work outsourced by big companies. Getting there was not easy and demanded resilience, learning and persistence, and customizing a business model to work in different countries under different circumstances. Today Samasource has transformed the lives of about 35,000 of the world’s poorest people in countries like Haiti, India, and Kenya, as well as in rural areas of the United States.

The book emphasizes the positive potential of digital connectivity for jobs today—for example, training and providing people with digital work that can verify the data underlying search engines. At the same time, it recognizes that such solutions may not work that well down the road, given rapidly changing technology, and therefore need to continually evolve. But there is a clear case for making a difference and transforming lives as more such social enterprises join the effort to eradicate poverty one person and one job at a time.

But Janah is too quick to reject alternative approaches to addressing poverty elimination. She could have shown more empathy in recognizing that different entities—for-profit or nonprofit organizations like hers, public policymakers, international organizations—have different roles to play to support generation of economic growth and employment to reach the poor. Some focus on strengthening the economic conditions to make them more supportive of poverty elimination, while others directly target job creation, taking the enabling environment as a given.

Given the enormity of the poverty challenge, there must be a variety of approaches to chip away at it. More recognition of this range of tactics—and greater emphasis on the need for more traction in the work of all organizations—would have helped Janah avoid a somewhat defensive tone at some points.

RUPA DUTTAGUPTA, division chief, IMF Strategy, Policy, and Review Department

End of Globalization? Maybe, Maybe Not

FROM GLOBAL TO LOCAL, by University of Cambridge lecturer Finbarr Livesey, argues that technological change, consumer preferences, environmental challenges, and nationalism are driving a shift from globalization to an era of localization. Despite its subtitle, the book is cautious, arguing that global trade in goods will slow but not end as businesses locate production nearer to their customers.

The argument rests on four pillars. First, additive manufacturing and 3-D printing enable localized production that is more capital (robot) intensive than dependent on traditional economies of scale. Second, higher wages in China make offshoring less attractive. Third, consumers want custom products delivered fast, and global shipping costs are subject to limits on carbon emissions. Fourth, nationalism is driving trade, tax, and regulatory policies to resist offshoring.

International trade growth will slow relative to national incomes, reversing the trend toward globalization, Livesey predicts. Advanced manufacturing will reduce or eliminate fixed costs and hence scale economies, allowing multiple, small-scale facilities to serve local customers. Meanwhile, worldwide differences in resources are diminishing: production is increasingly concentrated in mobile smart machines such as 3-D printers and robots, and rapid capital accumulation in China has dramatically narrowed the difference between China’s capital-labor ratios and those of Europe and the United States. Add in Livesey’s observations about shipping costs and today’s nationalistic politics, and his case is made, that trade will diminish relative to income.

Maybe yes, maybe no. The fixed costs of production depend on robots and 3-D printers, but also on specialized knowledge, intellectual property, nearby complementary natural resources, and more. I doubt specialization will disappear. Resources available to countries depend on more than capital-labor ratios: climate, water, renewable energy, safety from natural hazards, and cultural traits, to name a few. For example, advances in technology are more likely to expand than displace global tourism. Moreover, many places with low-cost labor will continue to export laborintensive goods and services, such as construction.

Finbarr Livesey

From Global to Local: The Making of Things and the End of Globalisation

Profile Books, London, 2017, 224 pp., $26.95

Shipping costs may just as easily fall as rise. An expanded polar sea route from Asia to Europe would cut shipping time. Improved logistics and Internet-based services will ease trade, while advances in shipping and aviation will likely lower carbon dioxide emissions at a relatively low cost.

Nationalism is a real but hardly a decisive threat. US President Donald Trump’s protectionism is more bark than bite. And Chinese President Xi Jinping’s embrace of globalization and One Belt One Road initiative hold as much weight as nationalistic rumblings in Europe and the United States.

Part of the challenge is to define “globalization” more precisely. Trade growth in some manufactured goods might slow, but it could rise in many goods and services with crucial but scarce environmental inputs, such as food and feed, nonfood agriculture, renewable energy, tourism, and the like. Trade in intellectual property and financial services, including capital-intensive-infrastructure leasing and manufacturing facilities for low-income countries, is likely to grow.

The great strength of Livesey’s book is to make us look more closely and intelligently at the underlying drivers of globalization. Whether more or less of it, there will surely be a different kind of globalization in the coming years. Livesey’s fine book will help us understand and anticipate the changing dynamics of global economic interdependence.

JEFFREY D. SACHS, university professor at Columbia University, director of UN Sustainable Development Solutions Network

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