Rich Dad Poor Dad Physical Book

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Ourrecent staff research finds that new technology risks widening the gap between rich and poor countries by shifting more investment to advanced economies where automation is already established. This could in turn have negative consequences for jobs in developing countries by threatening to replace rather than complement their growing labor force, which has traditionally provided an advantage to less developed economies. To prevent this growing divergence, policymakers in developing economies will need to take actions to raise productivity and improve skills among workers.

Share-in-production: Advanced economies have higher wages because total factor productivity is higher. These higher wages induce firms in advanced economies to use robots more intensively to begin with, especially when robots easily substitute for workers. Then, when robot productivity rises, the advanced economy will benefit more in the long run. This divergence grows larger, the more robots substitute for workers.

Terms-of-trade: A developing economy will likely specialize in sectors that rely more on unskilled labor, which it has more of compared to an advanced economy. Assuming robots replace unskilled labor but complement skilled workers, a permanent decline in the terms of trade in the developing region may emerge after the robot revolution. This is because robots will disproportionately displace unskilled workers, reducing their relative wages and lowering the price of the good that uses unskilled labor more intensively. The drop in relative price of its main output, in turn, acts as a further negative shock, reducing the incentive to invest and potentially leading to a fall not just in relative but in absolute GDP.

Our results critically depend on whether robots indeed substitute for workers. While it may be too early to predict the extent of this substitution in the future, we find suggestive evidence that this is the case. In particular, we find that higher wages coincide with significantly higher use of robots, consistent with the idea that firms substitute away from workers and towards robots in response to higher labor costs.

Improvements in the productivity of robots drive divergence between advanced and developing countries if robots substitute easily for workers. In addition, those improvements will tend to increase incomes but also increase income inequality, at least during the transition and possibly in the long run for some groups of workers, in both advanced and developing economies.

Our findings also underscore the importance of human capital accumulation to prevent divergence and point to potentially different growth dynamics among developing economies with different skill levels. The landscape is likely going to be much more challenging for developing countries which have hoped for high dividends from a much-anticipated demographic transition. The growing youth population in developing countries was hailed by policymakers as possibly a big chance to benefit from a transition of jobs from China as a result of its graduating middle-income status. Our findings show that robots may steal these jobs. Policymakers should act to mitigate those risks. Especially in the face of these new technologically-driven pressures, a drastic shift to rapidly improve productivity gains and invest in education and skills development will capitalize on the much-anticipated demographic transition.

IMFBlog is a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day.The IMF, based in Washington D.C., is an organization of 190 countries, working to foster global monetary cooperation and financial stability around the world.The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board. Read More

Urbanization has long been associated with human development and progress, but recent studies have shown that urban settings can also lead to significant inequalities and health problems. This paper is concerned with the adverse impact of urbanization on both developed and developing nations and both wealthy and poor populations within those nations, addressing issues associated with public health problems in urban areas. The discussion in this paper will be of interest to policy makers. The paper advocates policies that improve the socio-economic conditions of the urban poor and promote their better health. Further, this discussion encourages wealthy people and nations to become better informed about the challenges that may arise when urbanization occurs in their regions without the required social supports and infrastructure.

Some of the major health problems resulting from urbanization include poor nutrition, pollution-related health conditions and communicable diseases, poor sanitation and housing conditions, and related health conditions. These have direct impacts on individual quality of life, while straining public health systems and resources [6].

Urbanization has a major negative impact on the nutritional health of poor populations. Because they have limited financial resources and the cost of food is higher in cities, the urban poor lack nutritious diets and this leads to illness, which contributes to loss of appetite and poor absorption of nutrients among those affected. Furthermore, environmental contamination also contributes to undernutrition; street food is often prepared in unhygienic conditions, leading to outbreaks of food-borne illnesses (e.g., botulism, salmonellosis, and shigellosis) [6]. Urban dwellers also suffer from overnutrition and obesity, a growing global public health problem. Obesity and other lifestyle conditions contribute to chronic diseases (such as cancers, diabetes, and heart diseases). Although obesity is most common among the wealthy, international agencies have noted the emergence of increased weight among the middle class and poor in recent years [7].

Populations in poor nations that suffer from protein-energy malnutrition [8] have increased susceptibility to infection [9] through the impact of micronutrient deficiency on immune system development and function [10]. Around 168 million children under 5 are estimated to be malnourished and 76% of these children live in Asia [11]. At the same time, the World Health Organization is concerned that there is an emerging pandemic of obesity in poor countries that leads to non-communicable diseases such as diabetes, cardiovascular disease, cancer, hypertension, and stroke [12].

Pollution is another major contributor to poor health in urban environments. For instance, the World Health Organization estimated that 6.5 million people died (11.6% of all global deaths) as a consequence of indoor and outdoor air pollution and nearly 90% of air-pollution-related deaths occurred in low- and middle-income countries [18]. Poor nutrition and pollution both contribute to a third major challenge for urban populations: communicable diseases. The poor live in congested conditions, near open sewers and stagnant water, and are therefore constantly exposed to unhealthy waste [6]. Inadequate sanitation can lead to the transmission of helminths and other intestinal parasites. Pollution (e.g., from CO2 emission) from congested urban areas contributes to localized and global climate change and direct health problems, such as respiratory illnesses, cardiovascular diseases, and cancer for both the rich and the poor.

In addition to human-to-human transmission, animals and insects serve as efficient vectors for diseases within urban settings and do not discriminate between the rich and poor. The prevalence and impact of communicable diseases in urban settings, such as tuberculosis (TB), malaria, cholera, dengue, and others, is well established and of global concern.

National and international researchers and policy makers have explored various strategies to address such problems, yet the problems remain. For example, research on solutions for megacities has been ongoing since the early 1990s [19, 20]. These studies have concluded that pollution, unreliable electricity, and non-functioning infrastructure are priority initiatives; nevertheless, air pollution, quality of water in cities, congestion, disaster management issues, and infrastructure are not being systematically addressed [19, 20].

Although urbanization has become an irreversible phenomenon, some have argued that to resolve the problems of the city, we must tackle the root causes of the problem, such as improving the socio-economic situation of the urban poor.

Until the conditions in rural areas improve, populations will continue to migrate to urban settings. Given the challenges that rural development poses, the root causes are unlikely to be addressed in the near future. Therefore, governments and development agencies should concentrate on adapting to the challenges of urbanization, while seeking to reduce unplanned urbanization.

Some examples of policies and practices that should be considered include (i) policies that consider whole-of-life journeys, incorporating accessible employment, community participation, mobility/migration and social transition, to break generational poverty cycles; (ii) policies addressing urban environmental issues, such as planned urban space and taxes on the use of vehicles to reduce use or to encourage vehicles that use less fuel as well as encourage bicycle use, walking, and other forms of human transportation; (iii) greater cooperative planning between rural and urban regions to improve food security (e.g., subsidies for farmers providing locally produced, unprocessed and low cost food to urban centers); (iv) social protection and universal health coverage to reduce wealth disparity among urban dwellers; including introduction of programs and services for health, for example by establishing primary healthcare clinics accessible and affordable for all including those living in urban slums [23].

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