Jim Yong Kim said rising broadband access had created a world where "keeping up with the Jones's" meant those in the developing world were comparing their lives with those in advanced economies.
echnology and the internet could fuel a fresh migration surge from developing countries as robots and automation destroy millions of low-skilled jobs, according to the president of the World Bank.
Jim Yong Kim said rising broadband access had created a world where "keeping up with the Jones's" meant those in the developing world were comparing their lives with those in advanced economies.
While these rising aspirations had led to "dynamism" and "inclusive, sustainable growth" when accompanied by local opportunities, Mr Kim said it also risked creating a generation of "frustrated" workers.
He said this scenario could "lead to lots of bad outcomes - fragility, conflict and even over time, extremism and migration".
"The evidence is very good that if you get access to broadband, overall satisfaction goes up, but the likelihood of wanting to migrate also goes up, and it goes up pretty dramatically. So seeing how other people live directly makes you want to migrate more," said Mr Kim.
"It used to be that keeping up with the Jones's used to be about keeping up with your neighbours, but now the Jones's can be everywhere in the world."
Mr Kim said income growth expectations tended to increase as people realised the opportunities open to them.
"Aspirations linked to opportunity leads to dynamism and growth in the economy, but aspirations linked to lack of opportunity lead to frustration and there's some very suggestive research that makes us extremely worried.
"As aspirations rise, more and more people get frustrated because the kinds of jobs that are available - certainly low skilled ones are going to be gone," he said.
"The traditional path to economic development, where you go from agriculture to light manufacturing to industrialisation, the path that Korea followed, that China followed, that so many countries followed, is not going to be open to huge numbers of low income countries today.
"So you're seeing the possibility that if broadband access becomes global quickly, then you can see reference incomes go up pretty dramatically which means that it makes our development task much much more urgent."
Mr Kim stressed that technological developments had benefited the global economy, including those in developing countries.
He said organisations like the World Bank could use their ability to borrow at low interest rates on financial markets to help private sector companies to invest and create jobs.
Overseas development aid has fallen in many developing countries, particularly in Africa, as countries such as Germany use foreign aid money to cope with an influx of refugees from Syria, said Mr Kim.
He said that, with the exception of the UK, many countries had not increased their overseas development aid to countries he believed were most vulnerable to globalisation.
"Those of us in the development field have to have a much greater sense of urgency - we have to wake up to rising aspirations, we have to do something differently [and] let the private sector take on the things that are commercially viable."
Growth strengthening
Mr Kim said global growth was likely to strengthen over the next two years amid a brighter outlook in advanced and emerging economies.
He said there were “bright signs” appearing around the world as emerging markets recover from a commodity slump and growth in Europe shows signs of gathering momentum.
The World Bank chief also said he was “encouraged” by his conversations with President Donald Trump, despite signs that support for international financial institutions like the the International Monetary Fund and the World Bank are waning under the new administration.
Mr Kim added that “question marks” remained over the direction of the US economy under Mr Trump, even though world growth, which is forecast at 2.7pc this year, was likely to “go up again in 2018”.
The World Bank predicted growth of 2.9pc next year at its most recent forecast in January.
Mr Kim said the outlook would be influenced by tax and spending decisions made by Mr Trump, noting that the “exuberance” displayed by markets and economic surveys in the wake of his election victory has been tempered in recent weeks.
“With US growth there’s still a question mark. There was a lot of exuberance at first and it’s a bit tempered now. But if Mr Trump is serious about investments in infrastructure - I know they’re having very in depth discussions about just how to do that - you can see the US continuing to perform.”
He said the European Union was also “doing better”, even as Brexit was likely to pose a downside risk to the bloc.
In a separate speech at the London School of Economics last night, Mr Kim said organisations like the World Bank had to do more to encourage private sector investment and not “crowd out” finance from businesses and individuals.
He said large organisations had to steer away from “low hanging fruit” and help to foster ambitious goals to create more jobs, boost growth and ensure low income countries were protected as technological developments destroy millions of jobs.
While the World Bank is perceived as a lender to developing countries, he said it needed to play the role of an investor.
“This is a no brainer, and the only way we’re going to get the resources we need to support the aspirations out there.”
Mr Trump’s nomination of Adam Lerrick as the next Treasury assistant secretary for international finance signalled that bodies like the World Bank will be scrutinised more carefully.
However, Mr Kim, who has met with Mr Trump as well as his advisers, including Gary Cohn, the former Goldman Sachs chief, said: “They’re very interested in the possibility of working with us on issues that they care about.
“We’ve been really encouraged by our conversations with the Trump administration, so we’ll see what happens. I don’t think you really know what they’re going to come out with on any single issue yet because they’re just voraciously learning how government works.”
Source : telegraph.co.uk
