World Bank re­port

The Pak Banker - - FRONT PAGE -

The ' World De­vel­op­ment Re­port 2019', re­cently re­leased, has asked the gov­ern­ments to cre­ate fis­cal space for pub­lic fi­nanc­ing of hu­man cap­i­tal de­vel­op­ment and so­cial pro­tec­tion. The re­port sug­gests prop­erty taxes in large ci­ties, ex­cise taxes on sugar or to­bacco, and car­bon taxes are among the ways to in­crease a gov­ern­ment's rev­enue. The re­port says that the gov­ern­ments can op­ti­mise their tax­a­tion pol­icy and im­prove tax ad­min­is­tra­tion to in­crease rev­enue with­out re­sort­ing to tax rate in­creases.

The re­port points out that one rea­son gov­ern­ments do not in­vest in hu­man cap­i­tal is the lack of po­lit­i­cal in­cen­tives. Few data are pub­licly avail­able on whether health and ed­u­ca­tion sys­tems are gen­er­at­ing hu­man cap­i­tal. This gap hin­ders the de­sign of ef­fec­tive so­lu­tions, the pur­suit of im­prove­ment, and the abil­ity of cit­i­zens to hold their gov­ern­ments ac­count­able. The re­port says that fo­cus is needed on dis­ad­van­taged groups and early child­hood ed­u­ca­tion, and on de­vel­op­ing the cog­ni­tive and so­cial- be­havioural skills needed in the cur­rent mar­ket.

Ac­cord­ing to the re­port, most of the re­quired fis­cal re­sources are likely to come from im­proved ca­pac­ity in tax ad­min­is­tra­tion and pol­icy changes, par­tic­u­larly to value- added taxes and through ex­pan­sion of the tax base. Taxes on im­mov­able prop­erty could raise an ad­di­tional 3 per cent of GDP in mid­dle- in­come coun­tries and 1pc in poor coun­tries. Age- old tax avoid­ance and eva­sion schemes by firms and in­di­vid­u­als need to be tack­led as well. Four out of five For­tune 500 com­pa­nies op­er­ate one or more sub­sidiaries in coun­tries broadly per­ceived to op­er­ate pref­er­en­tial cor­po­rate tax regimes - of­ten re­ferred to as ' tax havens'. As a re­sult, es­ti­mates sug­gest that gov­ern­ments world­wide may miss out on $ 100- 240 bil­lion in an­nual rev­enue, which is equiv­a­lent to 4- 10pc of the global cor­po­rate in­come tax rev­enue. Fears about ro­bot- in­duced un­em­ploy­ment have dom­i­nated the dis­cus­sion over the fu­ture of work. The num­ber of ro­bots op­er­at­ing world­wide is ris­ing rapidly. By 2019 there will be 1.4 mil­lion new in­dus­trial ro­bots in op­er­a­tion, tak­ing the to­tal to 2.6m world­wide. Ro­bot den­sity per worker in 2018 is high­est in the Repub­lic of Korea, Sin­ga­pore and Ger­many. Yet in all th­ese coun­tries the em­ploy­ment rate re­mains high, de­spite the high preva­lence of ro­bots.

As for the cur­rent stock of work­ers, es­pe­cially those who can­not go back to school or to univer­sity, re- skilling and up- skilling those who are not in school or in for­mal jobs must be part of the re­sponse to tech­nol­ogy- in­duced la­bor mar­ket dis­rup­tion. But only rarely do adult learn­ing pro­grammes get it right. Adults face var­i­ous bind­ing con­straints that limit the ef­fec­tive­ness of tra­di­tional ap­proaches to learn­ing. Bet­ter di­ag­no­sis and eval­u­a­tion of adult learn­ing pro­grammes, along with bet­ter de­sign and bet­ter de­liv­ery of those pro­grams, are needed. The re­port says gov­ern­ments can raise the re­turns to work by cre­at­ing for­mal jobs for the poor. They can do this by nur­tur­ing an en­abling en­vi­ron­ment for busi­ness, in­vest­ing in en­trepreneur­ship train­ing for adults, and in­creas­ing ac­cess to tech­nol­ogy. The pay­off to women's par­tic­i­pa­tion in the work­force is sig­nif­i­cantly lower than for men - in other words, women ac­quire sig­nif­i­cantly less hu­man cap­i­tal than men do from work.

On the other hand, the IMF has warned in its twice- yearly re­port on the Asia Pa­cific re­gion that the mar­ket rout seen in emerg­ing economies could worsen if the US Fed­eral Re­serve and other ma­jor cen­tral banks tight­ened mone­tary pol­icy more quickly than ex­pected. Ac­cord­ing to the re­port, the tur­moil al­ready seen in some emerg­ing mar­ket economies could worsen, with neg­a­tive spillovers to Asia through re­duced cap­i­tal flows and higher fund­ing costs. Sus­tained trade ten­sions could slash Asia's eco­nomic growth by up to 0.9 per­cent­age point in com­ing years. IMF has urged pol­i­cy­mak­ers in the re­gion to lib­er­alise mar­kets to off­set the fall in ex­port sales.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.