 I'm always quite curious in these events who you're competing against in terms of the other panels And then in fact, you know, if you look at the other panels There's a qualitative difference actually to this panel in the sense those are the the kind of I don't know how to put this Those are the kind of your kind of high attention Sexy crises in the terms of your refugees climate Economic crisis and actually this this this panel is more of a kind of slow-burning crisis That will eventually reach a people actually might underlie a lot of the issues. We certainly have a substantial interaction certainly with the refugee crisis But also with climate change and with economic crisis, too, of course, we were talking about jobs so my presentation gives a an overview of My Tony and myself take on the issues around employment The interaction of inclusive growth and structural change And there are some question marks about what aid might be able to do about that and some views on that and actually in a sense I've focused here on ODA, but you could think about well, what could development corporation more broadly not just ODA, but you know You know favorable trade policies dare even say it's you know the migration and other forms of international corporation So the presentation itself is premised on five Five arguments The first is that there's there's essentially I think three curves that help us understand What I'll call the jobs crisis. You could equally well call it the jobs opportunity particularly if If productive employment does emerge For those looking for work. So perhaps there's an opportunity as well But I think there's also a crisis to it in the sense of the the the numbers and what's required in a relatively short space of time the second contention relates to what I see what we see as the kind of Essentially the underlying tension between two development goals that developing countries are pursuing The first is structural change by which I mean the shift to a higher economic productivity different sectors or intra Intersectoral allocation of reallocation of economic activity and inclusive growth Then I talk a little bit about differences between the regions if you if you're looking at sub-Saharan Africa You'll get quite a different sense of the crisis compared to two other parts of the world If you look at the if you look as we will in the moment of the demographic curves, you'll probably start to panic Certainly that the number of people who'll be looking for jobs in sub-Saharan Africa is on the rise and will be Perhaps in the order of a hundred million for a year for a new entrance to the labor force So that's gonna be a substantial number of people looking for work I say a bit about structural change We tend to look at structural change as conceptually different to inclusive growth What I'm arguing is By looking at the tensions between the two and some of the trade-offs that might be a productive route to go down And finally when it comes to aid I think the things that aid can do that national funds can't and that might be an interesting Avenue to pursue when it comes to employment So first of all the three curves now So each picture represents a curve and this is this is not a test You most of you I think will know Arthur Lewis who's in the top right hand corner very famous development economist This is an anonymous baby from Google And then the bottom list there's people with placards Looking for jobs. So essentially we're talking about three curves. I think the first is the demographic curve Which is actually a set of curves. So there's dependency ratio working-age population But importantly, I think the labor force annual growth the absolute number of people that are looking for jobs each year And so for some parts of the world, it's too many. So for some parts of the world, we'll see it's actually too few perhaps Then there's a structural change curve Which is essentially about the the shares of GDP and employment and how they're spent sectorally Now that there's been some debate about Deindustrialization or premature deindustrialization in developing countries And what's the potential for the service sector to actually provide employment in the future? And then the third curve is is about job creation and how it relates to to GDP and value added So I think there's a tension here between And again, it's not a test I'm curious if anyone recognizes these people. The left-hand side is Simon Kuznetz very famous for the Kuznetz curve The the one on the right is probably less well known. He's Corrado genie who developed the genie coefficient So actually I think developing countries are pursuing two goals that create a tension Or at least a set of trade-offs. The first goal is is structural change. That's economic development The transition from an agrarian traditional subsistence economy into a high-productivity modern economy And the second is around inclusive growth Ensuring that the benefits of growth are broad-based. This is a historical debate that's Re-emerged in the World Bank shared prosperity thinking, but also it's essentially about pro-poor growth and participation in the growth process for employment Now one of those goals tends to push up inequality if you look at the although the the Kuznetz curve is is Largely dumped as a universal law If you look at the time series data for the countries that have been growing fast and that growth has been led by structural change You tend to find diesel shares of the richest expanding and of the poorest being squeezed On the other hand inclusive growth is best achieved with static or falling inequality So at the center of these is a is an issue around the dynamics of inequality that I think plays out through employment And how does this differ by regions? So I think you can ask three questions The first is how many jobs are needed and how does this differ by region? The second is what you know which sectors and you know whether you talk about dig it make it or sell it And then think about how many jobs are actually being created and how that differs between regions and also the trade-offs between employment creation and productivity Productively growth So these are the these are effectively what the panel is about in many ways. These are the demography graphs for regions of the world 1950 to 20 2100, you know, of course the the projections are a medium variant here If you take them at face value, you as I say you'd probably start worrying some regions of the world Or at least you'd see a you know The crisis in other rooms may appear more acute and sexy, but actually the underlying crisis here is really quite significant I draw your attention to the graph on the right hand side, which I think is in some ways is perhaps a more important graph What it shows is for the regions of the world how the the the numbers of the working age population is changing the blue shaded Line is between now and 2030 and as you can see for Sub-Saharan Africa You have this it's kind of a very sharply rising curve Over a hundred million new entrance to the labor force every year Perhaps for the next 70 years if you accept the medium variant projections In other parts of the world particularly in East Asia what you have is almost the opposite in the sense a In China because of the one child policy But also Indonesia Malaysia over the next 10 years Other parts of East Asia will actually go to the situation where they're the labor forces is contracting and that of course raises issues for In you know How how that that's paid for and the kind of employment for those who are in the labor force and what they essentially will be taxed for India has a declining curve, but it's still at the level of a hundred million labor force entrants each year in in South Asia Then there's been a lot of debate recently about The the the issues of industrialization de-industrialization in many developing countries has now a debate about re-industrialization And so of course there's the you know The the Arthur Lewis Simon Kuznets and others historically talked about the structural transformation From a traditional society or traditional economy to a modern economy again drawing your attention to the Curves on the right-hand side of manufacturing in particular The the regions of the world are labeled by their initials ea's East Asia SSA is sub-Saharan Africa VA is value-added and EMP's employment and what you tend to find is it appears that the the share of Manufacturing in GDP or employment has reached some kind of peak And it's actually services that are on the rise now Within those patents. There's all sorts of oddities particularly for sub-Saharan Africa. I mean if you look for example Sub-Saharan Africa is actually And I think some of that relates to the the impacts on manufacturing of commodity booms, perhaps and Finally the the essentially the how many jobs are being created per unit of value-added So this shows how things differ regionally in terms of sectors and parts of the world This is the relationship between GDP or value-added and employment created So the the dotted line up the middle at 45 degrees is essentially one-to-one okay a As a relationship between job creation and employment if if a country's red curve is above the curve Then it's on the the favoring productivity side below the curve is favorite employment And I think what's interesting when you when you look across these curves is Actually in some parts of the world You can see that there's not only a Trending That's not that far from the one-to-one line and other parts of the curve The the the the line of best fit is substantial distance from the one-to-one curve And this is I mean to me this raises some of the trade-offs in some of this the debates about employment That I'll come to in a moment So I think that there's been a obviously there's a historic literature on inclusive growth and structural change And one way to try and think about the interaction of the two Around employment that might be useful is trying to think well if you were going to have inclusive structural change What would that look like? Clearly you could have a focus on the workers with less education or lower education levels You could have a focus on SMEs small and medium-sized enterprises. You might think about the employment to GDP ratios You might think about the trade-offs between productivity led growth and labor absorption Particularly at certain levels of development You might think about the composition of the informal and the formal sector But each of these has a kind of a kind of trade-off or a caveat So if you were thinking about The the employment to GDP ratios you might want to think also about the productivity gains issue and what's driving growth You were thinking about the composition of employment you may favor formal employment, but that actually may be less jobs All of these things seem to write sort of normative questions about the kind of kind of jobs that might be created in the trade-offs and Also, then it sort of follows on a set of trade-offs about who's supposed to do what about it? So again, it kind of crudely in a way the the quickest thing to do would be simply to put more capital or Or or expand state-owned enterprises, but of course that raises issues of the sustainability of that financial sustainability And also the levels of productivity You might want to liberalize the SME sector or the climate or support SMEs But then that would create a lot of informal low productivity jobs potentially You might want to think about foreign investment, but that tends to favor skilled workers So that may not deal with the sort of inclusivity type arguments Or you may want to pursue labor market flexibility But may create more jobs, although I think on things like minimum wages. There's really quite an ambiguous literature now Certainly, there's an association with labor market flexibility and squeezing the share of GNI to the poorest 40% So they've market flexibility may create more jobs. It may also squeeze these share of income to the poorest I'm gonna leave that one and jump that for the moment. We can come back to the issues about what drives growth So what can I do about all these things in given the what you essentially got is a set of tensions and conflicts A lot of you in some parts of the world a very large number of people will be looking for work I mean, there's but I think I mean again somewhat crudely. There's three views you could take The first view is it's just not the business of aid to get involved in employment creation I mean, actually, I think you could make a reasonable argument that aid already creates a lot of jobs And I don't know if anyone's actually tried to sort of quantify that I remember a time when some years ago at DFID when there were a number of I think DFID now has a commitment to create 1 million jobs But these are all in different countries and no one had aggregated the whole thing together and it came out a million So I think I think it's clearly something that's on the donor radar I'm not sure about the sustainability of a dead job creation as well I mean, maybe there's a stronger argument to focus on SMEs or the climate for SMEs to try and stimulate Or make it easier for those kind of businesses You could also take the opposite line again with with with tensions and trade-offs You could just shift a large substantial proportion of ODA over to Production ODA over to in economic infrastructure. There's an interesting graph upstairs on the wider store. I think combined production and economic infrastructure only account for about a quarter of ODA and Social spending is of course rapidly rising up to cover to cover much of the rest Clearly there's there's there's trade-offs of that shift But that might provide a way of Really boosting economic infrastructure in a way that perhaps is harder for For countries when you have to when they when the payoff for some investments is actually 25 years in the future If you think of some large infrastructure projects roads and so forth perhaps And actually if you look at the evidence on aid some of the strongest evidence aid It's actually on the the economic productive sectors Or maybe there's something a bit more nuanced In terms of a reorientation orientation to inclusive structural change I mean it strikes me that Certainly outside of the very poorest countries a lot of countries that are doing okay Are largely a collection of of of well-off urban centers So you could talk about middle-income countries, but most middle-income countries are two or three middle-income states And then a bunch of low-income countries around them So maybe there's something to be said for thinking about spatial inequality and the role aid could play in reconnecting The kind of regions where a lot of the the less educated workers or poorer workers might might might dominate And connect those to the growth poles in countries So to conclude I think There's a There's a set of relationships around structural change and inclusive growth. This simply returns to the five original arguments In a way, I mean it's interesting when you go to conferences certainly in the UK The people who would be at a conference on structural change such as the International Growth Center LSE Would be a completely different crowd that would go to a poverty conference or conference on inclusive growth I think there wouldn't be a lot of overlap which strikes me that there's a kind of there's a literature more in very Very economic journals that's that's dealing with structural change And that literature isn't isn't intermingling or Synthesizing with inclusive growth and that may be because there's some real tensions there or people are looking at different things But it strikes me that there may be a conceptually interesting area to pursue there that might be of use to policy, too And And in the in the context of that the I mean I showed you the regional curves I mean once you start going down to country level you see how different things are even within regions But clearly there's a there's a set of countries that have substantial and growing numbers of labor force entrants And others that are declining which means that the what might be appropriate policies or or International cooperation in different countries could be quite different I think I made made the point about structural change can be inclusive They've suggested the focus on the low educated workers and some work We've been doing on Indonesia thinking about this recently as well But there's there's trade-offs in terms of the productivity Gains to to be made and how many jobs are created and what kinds of jobs are created And I think underlying this is there's an argument I've been thinking about for a long time that that maybe aid money can do things that national funds can't and That's things with longer-term horizons and the current typically countries have five-year parliaments And and many pieces of infrastructure are very large upfront costs with with returns in 20 25 years So maybe there's a role a different role for aid And of course infrastructure would be a very interesting area to pursue not only for its long-run economic development benefits in terms of jobs And you're expanding the production possibility frontier But also in terms of the the short-term stimulus in terms of in terms of jobs. Thank you