China, India are the future of global trade: World Bank’s Mahmoud Mohieldin
Why is the World Bank seeking to raise its capital? The World Bank is seeking to raise its capital in the next period by increasing the shares of its member countries that contribute to it, according to Mahmoud Mohieldin, World Bank Group’s senior vice president for the 2030 Development Agenda, United Nations Relations, and Partnerships.
Mohieldin said that there are many developments that pushed the World Bank to seek increasing its capital in the next period, which would finance investments in order to face these imbalances.
In statements to Daily News Egypt on the sidelines of the autumn meetings in Washington DC, Mohieldin said that development institutions and the World Bank created a list that includes the major challenges of our time, which differ in severity and depth then at the time the World Bank was established.
The World Bank faces problems associated with demographic imbalances that give rise to problems, whether in development or issues of refugees, said Mohieldin.
He mentioned that the imbalances are not only attributable to population increases, but may also be rooted in the population decline, as well as the situations in which large percentages of the population are too old or too young, saying that such situations need different types investment.
Communities with very high percentages of elderly people need significant social protection and health care programmes, he said. On the other hand, communities with a very high percentage of young people need investments in education, the labour market, and financial inclusion.
Some rural areas in the Arab countries developed without any cohesive plan and the population of some villages has grown higher than the population of some small-sized countries, said Mohieldin.
Failure exists in the face of demographic imbalances, he explained, adding that, depending on the issue, problems related to population size can be corrected with traditional programmes, such as birth control and propaganda campaigns.
He explained that the World Bank is seeking to solve the refugee problem and that it is not just a humanitarian problem, but fundamental problems in the roots of development pushed people towards conflict.
The World Bank is trying to handle the effects of 65 million displaced persons, including 21 million refugees outside their countries’ borders, said Mohieldin.
Speaking on the definition of an immigrant, Mohieldin said that it is quite different from the definition of a refugee, because immigrants leave their countries voluntarily, usually for economic reasons, while refugees are forced to do so.
He added that international institutions are required to provide humanitarian support to refugees and to assist in their situations. A second part to this, Mohieldin explained, is to handle the root causes for the crises that uproot these populations, whether it be a lack of job opportunities or investments in infrastructure.
Mohieldin also said that there is a change in the world’s economic centre of gravity, adding that over the past 40 years that centre has been moving towards the east.
There are opinions that say that the global centre of gravity is now east of the Arabian Gulf, said Mohieldin.
He explained that that development will allow countries to focus on studying the east and move international trade from west to east.
The future is in China and India, said Mohieldin, pointing out that Egypt has ports overlooking the Red Sea, which gives it the opportunity to direct its actions towards the east.
He said that countries are now heading south to countries like Morocco, South Africa, and a number of countries in Africa’s Sahel region, not only for investment, but also for education and technical training.
China has become significantly effective in the realm of international institutions, Mohieldin noted, although still less than the US. Moreover, China’s currency has become an international currency and the percentage of its contribution to the Special Drawing Right is higher than the Japanese yen and the British sterling pound.
He said that the World Bank has become an organisation that is more open to the world and dealing with economic orientations. It has begun talks on a number of issues, whether with the Islamic Development Bank to discuss offering Islamic financing or with the institutions concerned about climate change.
The World Bank promised to increase the financial contributions towards climate change to reach 28 percent of its portfolio, said Mohieldin.
Mohieldin also said that there is another challenge facing the World Bank: the sustainable development goals. There are 17 general goals, with 169 sub-goals covering human development, the fight against poverty, infrastructure, health, and education.
The sharp decline in the rates of economic development during the past period stands as a challenge in front of the bank, he said, adding that the bank will intervene to inject very large investments generating job opportunities on the short term.
There is a conflict between machine and man in production, said Mohieldin, mentioning that 80 percent of the loss of jobs in developed countries can be attributed to the increasing use of machines and technology, while only 20 percent is due to trade, according to the World Trade Organisation.
He added that training will allow people to become more efficient and will cost less than machines used in production.
Studies are being carried out on winning and losing parties as the result of Brexit and what the referendum’s impact will be on trade and investment in developed countries. Mohieldin said that the issue of market adaptation amid such a change is one of the bank’s roles in that crisis.
The World Bank is interested in investing in infrastructure and human development in general, as well as investing in the ability of the economy and society to face expected and unexpected shocks, concluded Mohieldin.
Source: Daily News Egypt
