WEEK 1

GLOBAL ISSUES
GLOBAL ISSUES AND ENERGY SUPPLY - KEY
GLOBAL CHALLENGES AND ISSUES

GLOBAL ISSUES - INTRODUCTION

More than at any other time in history, the future of
humankind is being shaped by issues that are beyond any
one nations ability to solve.

Climate change,
avian flu,
financial instability,
terrorism,
waves of migrants and refugees,
water scarcities,
disappearing fisheries,
stark and seemingly intractable poverty

All of these are examples of global issues whose solution

requires cooperation among nations

 Each issue
affects a large number of people on different sides of national
boundaries.
is one of significant concern, directly or indirectly, to all or most of
the countries of the world,
often as evidenced by a major U.N. declaration or the holding of a
global conference on the issue.

has implications that require a global regulatory approach;

no one government has the power or the authority to impose a solution,
and market forces alone will not solve the problem.

 These commonalities amount almost to a definition of

global issue, and awareness of them will help in identifying
other such issues besides those named above.

SOME DEFINITIONS
First, however, a few other definitions and distinctions will
further clarify just what we mean by global issues.

GLOBALIZATION
Global issues, globalization, and global public goods are
related but differing concepts.
Globalization generally refers to the increasing
integration of economies around the world, particularly
through trade, production chains (where parts for a final
good, such as an automobile, are produced in one country
and assembled in another), and financial flows.
The term increasingly also refers to the movement of people
and of information (including not only financial and other raw
data but ideas, fashions, and culture as well) across
international borders.
Globalization can be understood as a driving force affecting
many global issues, from migration to fair trade to debt relief.

 The concept of global public goods is a more recent one,

and indeed its dimensions and implications are still being
worked out by researchers and policy analysts.
The International Task Force on Global Public Goods has
defined international public goods (a term that includes
both global and regional public goods) as goods and
services that address issues that:
(i)

are deemed to be important to the international community, to

both developed and developing countries;
(ii) (ii) typically cannot, or will not, be adequately addressed by
individual countries or entities acting alone; and, in such cases
(iii) (iii) are best addressed collectively on a multilateral basis.

 By this definition, most but not all of the global issues involve
the creation of - or the failure to create
global public goods.

WHAT GLOBAL ISSUES DO WE FACE TODAY?

Global issues are present in all areas of our lives as citizens
of the world.
They affect our economies, our environment, our capabilities
as humans, and our processes for making decisions
regarding cooperation at the global level (which this book
will call global governance).
These issues often turn out to be interconnected, although
they may not seem so at first.

 For example, energy consumption drives climate change,

which in turn threatens marine fisheries through changes in
ocean temperature and chemistry, and other food resources
through changes in rainfall patterns.
Global issues can be grouped into the five thematic areas
shown in Table 1.1.
Of course, there are also other possible categorizations and
other approaches to global issues.

TABLE 1.1 A List of Global Issues by Thematic Area

Thematic area
Global economy

Global issues
International trade,* financial
stability,* poverty and inequality,* debt
relief,* international migration,* food
security,* intellectual property rights

Human development Universal education,*

communicable diseases,* humanitarian
emergencies, hunger and
malnutrition,* refugees

Environment and
Climate change,* deforestation,*
access to safe water,*
natural resources
loss of biodiversity, land
degradation, sustainable energy,*
depletion of fisheries*

Peace and security

Arms proliferation, armed
conflict, terrorism, removal of land
mines, drug trafficking and other crime,
disarmament, genocide

 Global issues in the area of peace and security are also very
important but are beyond the expertise and mandate of the
World Bank.
Here therefore we have four parts, covering:
1. the global economy,
2. global human development,
3. the global environment and natural resources,
4. and global governance.

THE GLOBAL ECONOMY

National and regional economies around the world are
becoming increasingly integrated with each other through
trade in goods and services, transfer of technology, and
production chains.
The interconnectedness of financial markets is also
expanding rapidly.
Such integration offers greater opportunity for people to tap
into more and larger markets around the world, and so
increase both their incomes and their ability to enjoy all that
the world economy has to offer.

 At the same time, however, economic integration poses

serious inherent risks: in a globalized world economy, an
adverse event such as a financial crisis in one part of the
world can easily spread to other parts, just as a contagious
disease spreads from person to person.
An example of such contagion was the East Asian financial
crisis of 199798, in which a financial and currency crisis in
Thailand quickly triggered similar upheavals in the Republic
of Korea, Indonesia, and elsewhere, prompting international
intervention to avert a global crisis.

 Another example involves the globalization of trade and

labor markets:
Concerns about the fairness of recent international trade
agreements and about the effects of freer trade on jobs and
working conditions led to violent protests at the World Trade
Organization meeting in Seattle in 1999;
these protests helped change the dynamic of the latest round of
international trade negotiations.

 There are also concerns that the world economy is growing

in an unbalanced way, with rising inequalities in incomes
and opportunities.

POVERTY AND INEQUALITY

Substantial progress has been made in recent decades in
reducing poverty the proportion of people living in extreme
poverty worldwide has halved since 1980.
Yet poverty remains deep and widespread: more than a
billion people still subsist on less than one dollar a day, and
income per capita in the worlds high-income countries, on
average, is 65 times that in the low- income countries.

FINANCIAL STABILITY
The emergence of a global, market-based financial economy
has brought considerable benefits to those middle-income
countries at the forefront of economic reform and liberalization
the so-called emerging market economies.

Thanks largely to the opening of the financial sector in these

countries, investors in other countries can now better diversify
their investment choices across domestic and international
assets, increasing their expected rate of return.
Businesses within these countries, meanwhile, are better able
to finance promising ideas and fund their expansion plans.
As a result, financial resources worldwide are invested more
efficiently, boosting economic growth and living standards on
both sides of these transactions.

DEBT RELIEF AND DEBT SUSTAINABILITY

For the worlds poorest countries, foreign aid and the ability
to take on foreign debt present a valuable opportunity to
invest in their own development.
But foreign borrowing poses great disadvantages as well as
great advantages.
On the one hand, when the proceeds of public borrowing are
invested wisely, directed at the right policies and programs,
they can indeed promote more rapid development.

 On the other hand, too much borrowing, or any borrowing

that is not undertaken prudently, can act as a drag on the
economy, as precious funds must then be devoted to debt
service rather than to serving the countrys development
needs.

 This threat became increasingly and painfully evident in the

case of a number of low-income countries in the 1980s and
1990s.
Their plight sparked an international advocacy campaign,
popularly know as the Jubilee movement, to forgive the
debts of the poorest countries with huge debt burdens.
This campaign led in turn to the launch of the Heavily
Indebted Poor Countries (HIPC) Initiative in 1996, to
address the excessive debt burdens of the worlds poorest
nations.

 Since then, 38 of these countries, 32 of them in Sub-Saharan

Africa, have qualified or potentially qualify for HIPC assistance,
and of these, 18 are now receiving irrevocable debt relief and
10 are receiving interim relief.
The rest have been beset by persistent social difficulties that
make debt relief infeasible for now.
However, at their summit in Gleneagles, Scotland, in 2005, the
leaders of the Group of Eight major industrial nations pledged to
eventually write off 100 percent of the debt of the poorest
African countries.
In line with this proposal, officially known as the Multilateral Debt
Relief Initiative, efforts are under way to provide $37 billion in
debt relief to countries that are at the HIPC completion stage.

INTERNATIONAL MIGRATION
Increasing flows of people across national borders are both a
contributor to and a consequence of a more interconnected world.
About 180 million people worldwide already live outside their country
of birth, and pressure for international migration will continue
This is driven by differences in demographics and real incomes
between countries.
Research shows that although the largest economic gains from
immigration accrue to the immigrants themselves, the international
migration of labor can also benefit both the countries receiving
immigrants and the countries sending them,
On balance it boosts world income and reduces poverty.
In the receiving countries, migrants can fill labor shortages in certain
industries.

 In the sending countries, they can help ease unemployment

and other social pressures while increasing financial inflows,
in the form of remittances from the migrants to their families
back home.
Remittances also help level out the distribution of income
both within and across countries.
Worldwide remittances have doubled in the last decade,
reaching $216 billion in 2004, according to official statistics,
of which $151 billion is estimated to have gone to
developing countries.
Actual remittances are most likely higher, because
remittances through informal channels fail to be counted.

 Migration is not without its costs, however.

For the migrants themselves, the journey itself and the
search for fair employment and humane treatment in the
host country can be arduous and risky.
The host country government may bear added costs to
assimilate the migrants, and wages for some native workers
may fall.
The home country may suffer a loss of valuable skilled
workers.
The sum of these and other costs depends, of course, on
the number of migrants, and so the major issues
surrounding international migration today

INTERNATIONAL TRADE
In an ever more integrated world economy, international
trade matters more than ever before.
A robust and equitable trading system is central to the
fight against global poverty,
because it drives economic growth and provides jobs in
developing countries where they are sorely needed.

Measured by the volume of goods and services traded,

world trade continues to grow, and just since 2000, the
exports of developing countries as a group have increased
their share of world markets by more than a fifth, from 19
percent to 23 percent.

 Yet growth in trade in many low-income countries has long

been held back by protectionist policies in the more
developed countries.
Many rich countries offer subsidies to politically favored
domestic industries such as sugar, textiles, apparel, and
steel.
These subsidies are a serious barrier to low-income
countries exports.

 The Doha Development Round of multilateral trade talks,

under the auspices of the World Trade Organization (WTO),
collapsed WTO members have committed themselves to
make progress as the talks proceed.
Delivering on the promise of lowering tariffs as well as
nontariff barriers in both developed and developing
countries could stimulate worldwide increases in income
that would lift an estimated 144 million people out of poverty.

FOOD SECURITY
In a world of growing prosperity and agricultural abundance,
about 800 million people still do not get enough to eat.
Eliminating hunger is thus one of the most fundamental
challenges facing humanity.
The challenge is a complex one and difficult to unraveling its
multiple dimensions.

 The task of reducing hunger is inter- linked to issues of food

availability, access to food, food security, and distribution.
Food availability refers to the supply of food, whether at the
global, regional, national, or local level, without regard to the
ability of individuals to acquire it.
Sources of supply may include production within the
household, domestic commercial food production, food
stocks accumulated in earlier periods, commercially
purchased imports, and food aid.

 There are presently no signs of a food availability problem at

the global level.
In fact, global food production has more than kept pace with
growing world population in recent decades, increasing in
per capita terms by 0.9 percent annually and even faster in
such populous developing countries as China and India.

 In most circumstances the main cause of food insecurity is

not lack of availability but lack of access at the household
level:
because of weak purchasing power and insufficient household
agricultural production
both characteristics associated with poverty
millions of people cannot obtain enough of the food that is available
locally to meet their dietary needs.

And even access to sufficient food at the household level

does not guarantee that all individuals will have an adequate
food intake.
That depends upon the distribution of food among household
members, methods of food preparation, dietary preferences,
and mother-child feeding habits

HUMAN DEVELOPMENT
Defined as
creating an environment in which people can develop their full
potential and lead productive, creative lives in accord with their
needs and interests.

Three global issues related to the development and

preservation of human capability:
1. communicable diseases,
2. education,
3. and malnutrition.

 Building human capabilities through education, health

services, and access to resources and knowledge is
fundamental to human development.
Most of the actions needed lie within the domain of national
governments, but broad-based human development is a
global issue.
Education, good health, and good nutrition are all vital not
only for the earning capacity and general well-being of
individuals, but also for the prosperity of national economies
and, in a globalizing world, for the global economy.

 Controlling the global spread of diseases is determined in

part by the effectiveness of national public health programs,
but also by the degree of international cooperation in
containing outbreaks, and the weakest link in the chain
determines the risk for all.
The importance of education, health, and nutrition both for
individuals and for human society at all levels explains why
several of the Millennium Development Goals (MDGs)
focus on these human development issues.

GLOBAL ENVIRONMENT AND NATURAL RESOURCES

Issues related to conserving and more equitably sharing the

planets environmental and natural resources in ways that
meet present needs without undermining future uses.
This is the essence of environmental sustainabilitya
concept reflected in yet another of the MDGs.
Resources such as a stable world climate, energy, clean
fresh water, fisheries, and forests are all part of the global
commons, and all are already under stress.

CLIMATE CHANGE
Virtually all climate scientists now agree that climate change is
occurring and is due largely to human activity, and that further
change is inevitable.
Recent studies indicate that human activity over the last 100
years has triggered a historically unprecedented rise in global
surface temperatures and ocean levels, with a worrisome
acceleration particularly over the last two decades.
The consequences will affect billions of people, particularly in
poor countries and in subtropical regions, through decreases
in agricultural productivity, increased incidence of flooding and
of severe weather events, an expanded range of waterborne
diseases, loss of biodiversity, and a number of other effects.

 Beyond this, if the global climate is pushed far out of

balance, it may become launched on an irreversible course
toward catastrophe, with worldwide repercussions.

ENERGY
The world economy of 2035 will be three to four times its
present size, thanks largely to rising incomes in developing
countries.
Even if dramatic improvements in energy efficiency are
achieved, this vastly expanded activity will consume much
more energy than the world uses today.
Pressures to supply enough fossil fuel, biomass, and
electricity to meet world demand will there- fore only get
worse.

 World economic activity must become radically less carbon

intensive, to avoid not only environmental disaster through
climate change, but also health disasters on an epic scale,
as cities in the developing world choke under a fog of
pollution.
A shift to renewable energy and low- or no-carbon fuels is
essential, as are the development and adoption of energyefficient technologies.

 This potentially bleak outlook makes water supply a critical

issue and one that cuts across national and regional
economies and many productive sectors. Many observers
predict that disputes over scarce water resources will fuel an
increase in armed conflicts.

SER MAIN CONCLUSIONS

Global reserves of main fossil fuels are enough for the
foreseeable future
Renewable energy will grow quickly but will not
increase much in share of global energy mix

Final Energy Supply by Source

Oil
Natural Gas
Electricity
Coal
Other

43%
17%
15%
13%
12%

Outlook
55% increase in global energy demand between 2000
and 2020
1998
2020
Dev. Countries 35% 50%

2100
70%

US$20 trillion (3-4% of world GDP) required for energy

investment

Oil
No. 1 energy source
Geopolitical priority
64% in the Middle East (20% in Saudi Arabia)
2% growth in consumption p.a.
R/P Ratio - 42 years

Crude Oil Reserves

North America
Asia

O ceania

Europe

South America

Africa

Middle East

Coal

Abundant but dirty (Clean coal technologies)

Total recoverable reserves: 910 billion tonnes - more than
200 years
72 countries (USA, Russia, China, Australia, India and
Germany hold over 75%)
27% of global primary energy demand, 40% of electricity

Proven Global Coal Reserves

South America
M iddle East (0.05%)
Africa
Oceania
Asia

Europe

North America

Natural Gas
High conversion efficiency
Environmentally benign
Geopolitical concerns
Europe - 40%, Middle East - 35%
R/P Ratio - 70 years

Proven Reserves of Natural Gas

South America

Oceania

North America
Africa

Middle East

Asia

Europe

Uranium and Nuclear

16-17% of worlds electricity
Huge uranium reserves
440 plants in 31 countries (end 2003)
Most current expansion in Asia
Poor public acceptance
High capital costs
Spent fuel, decommissioning

Renewables

Hydropower
The best source of renewable energy
Used in more than 150 countries
17% of worlds electricity
Carbon-free
Capital intensive
Huge potential only 33% developed

Wood
5% of global primary energy supply
Wide variations between regions
Asia = 42%
Africa = 27%
Central & North America = 14%
Latin America = 10%
Europe = 6%
Important for developing and rural economies

Bioenergy
Potentially the worlds largest and most sustainable
fuel resource
Finland & Sweden = 15-20% primary energy
Emerging technologies
High operating cost

Solar Energy
Important energy source
Widely distributed
Relatively low conversion efficiency
Suitable for small-scale domestic use
Cultural/political challenges
High production costs

Current Use of Solar

Wind
One of the fastest growing energy technologies
Widely available but centred in Europe
Economically competitive in remote areas
Improving technological solutions
Growing generating capacity

Other Renewables
Peat
Geothermal Energy
Tidal Energy
Wave Energy
Ocean Thermal Energy Conversion