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1. Rethinking the Financial Design of the World Bank

Author:
Devesh Kapur and Arjun Raychaudhuri
Publication Date:
01-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Since their inception, through 2012, the institutions comprising the World Bank group have been involved in lending nearly a trillion dollars. In this paper, we focus on the IBRD, which is the core of the World Bank. The IBRD has the potential to continue to grow and be an important player in official financial flows, supporting critical long-term development projects with large social returns, in sectors ranging from infrastructure, social sectors, or environment.
Topic:
Development, Economics, Environment, Foreign Aid, Infrastructure, and World Bank
Political Geography:
Europe

2. Estimating Illicit Flows of Capital via Trade Mispricing: A Forensic Analysis of Data on Switzerland

Author:
Alex Cobham, Petr Janský, and Alex Prats
Publication Date:
01-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper assesses the role of Switzerland as the leading hub for global commodities trading, in terms of the patterns of prices received by original exporting countries and subsequently by Switzerland and other jurisdictions. We find support for the hypotheses that (i) the average prices for commodity exports from developing countries to Switzerland are lower than those to other jurisdictions; and that (ii) Switzerland declares higher (re-)export prices for those commodities than do other jurisdictions. This pattern implies a potential capital loss for commodity exporting developing countries and we provide a range of estimates of that loss - each of which suggests the scale is substantial (the most conservative is around $8 billion a year) and that the issue merits greater research and policy attention. An important first step would be a Swiss commitment to meet international norms of trade transparency.
Topic:
Economics, Industrial Policy, International Trade and Finance, Markets, and Developing World
Political Geography:
Europe and Switzerland

3. Credit at Times of Stress: Latin American Lessons from the Global Financial Crisis

Author:
Liliana Rojas-Suarez and Carlos Montoro
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The financial systems in emerging market economies during the 2008–09 global financial crisis performed much better than in previous crisis episodes, albeit with significant differences across regions. For example, real credit growth in Asia and Latin America was less affected than in Central and Eastern Europe. This paper identifies the factors at both the country and the bank levels that contributed to the behavior of real credit growth in Latin America during the global financial crisis. The resilience of real credit during the crisis was highly related to policies, measures and reforms implemented in the pre-crisis period. In particular, we find that the best explanatory variables were those that gauged the economy's capacity to withstand an external financial shock. Key were balance sheet measures such as the economy's overall currency mismatches and external debt ratios (measuring either total debt or short-term debt). The quality of pre-crisis credit growth mattered as much as its rate of expansion. Credit expansions that preserved healthy balance sheet measures (the “quality” dimension) proved to be more sustainable. Variables signalling the capacity to set countercyclical monetary and fiscal policies during the crisis were also important determinants. Moreover, financial soundness characteristics of Latin American banks, such as capitalization, liquidity and bank efficiency, also played a role in explaining the dynamics of real credit during the crisis. We also found that foreign banks and banks which had expanded credit growth more before the crisis were also those that cut credit most. The methodology used in this paper includes the construction of indicators of resilience of real credit growth to adverse external shocks in a large number of emerging markets, not just in Latin America. As additional data become available, these indicators could be part of a set of analytical tools to assess how emerging market economies are preparing themselves to cope with the adverse effects of global financial turbulence on real credit growth.
Topic:
Debt, Economics, Emerging Markets, Globalization, and Financial Crisis
Political Geography:
Europe, Asia, and Latin America

4. The Post-Washington Consensus: Development after the Crisis

Author:
Francis Fukuyama and Nancy Birdsall
Publication Date:
03-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A clear shift in the development agenda is underway. Traditionally, an agenda generated in the developed world was implemented in—and, indeed, often imposed on—the developing world. The United States, Europe, and Japan will continue to be significant sources of economic resources and ideas, but the emerging markets will become significant players. Countries such as Brazil, China, India, and South Africa will be both donors and recipients of resources for development and of best practices for how to use them. In fact, development has never been something that the rich bestowed on the poor but rather something the poor achieved for themselves. It appears that the Western powers are finally waking up to this truth in light of a financial crisis that, for them, is by no means over.
Topic:
Development, Economics, Emerging Markets, Poverty, and Foreign Aid
Political Geography:
United States, Japan, China, Europe, India, South Africa, and Brazil

5. Regional Development Banks (ABCs of the IFIs Brief)

Author:
Jenny Ottenhoff
Publication Date:
09-2011
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
The regional development banks (RDBs) are multilateral financial institutions that provide financial and technical assistance for development in low- and middle-income countries within their regions. Finance is allocated through low-interest loans and grants for a range of development sectors such as health and education, infrastructure, public administration, financial and private-sector development, agriculture, and environmental and natural resource management. The term RDB usually refers to four institutions:
Topic:
Development, Economics, Foreign Aid, and Foreign Direct Investment
Political Geography:
Africa, Europe, and Asia

6. Leadership Selection at the International Financial Institutions

Author:
Jenny Ottenhoff
Publication Date:
09-2011
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
The International Financial Institutions (IFIs) are multilateral agencies. The term typically refers to the International Monetary Fund (IMF), which provides financing and policy advice to member nations experiencing economic difficulties, and the multilateral development banks (MDBs), which provide financing and technical support for development projects and economic reform in low- and middle-income countries. The term MDB is usually understood to mean the World Bank and four smaller regional development banks: African Development Bank (AfDB). Asian Development Bank (ADB). European Bank for Reconstruction and Development (EBRD) Inter-American Development Bank (IDB).
Topic:
Development, Economics, International Monetary Fund, Foreign Aid, and World Bank
Political Geography:
Africa, America, Europe, and Asia

7. Unity in Diversity: A Global Consensus on Choosing the IMF's Managing Director: Evidence from CGD's Online Survey

Author:
David Wheeler
Publication Date:
09-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
On May 19, 2011, the Center for Global Development launched an online survey of the global development community on three issues: the selection process for the IMF's managing director, criteria for rating the candidates, and actual ratings for 15 candidates who had been named by the international media. Between May 19 and June 23, CGD received 790 responses from people whose characteristics reflect the diversity of the international finance and development community. Survey participants represent 81 nations, all world regions, high-, middle-, and low-income countries, and all adult age groups. In this working paper, David Wheeler analyzes the survey results, incorporating the diversity of the respondents by dividing participants into four mutually exclusive assessment groups: Europeans, who have a particular interest in this context; non-European nationals of other high-income countries; and nationals of middle- and low-income countries. Although the participants are diverse, their responses indicate striking unity on all three survey issues. First, both European and non-European participants reject Europe's traditional selection prerogative by large margins, with equally strong support for an open, transparent, competitive selection process. Second, participants exhibit uniformity in the relative importance they ascribe to CGD's six criteria for selecting candidates. Third, the participants exhibit striking consistency in rating the fifteen candidates.
Topic:
Development, Economics, International Monetary Fund, and Governance
Political Geography:
Europe

8. A Policymakers' Guide to Dutch Disease

Author:
Owen Barder
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
It is sometimes claimed that an increase in aid might cause Dutch Disease—that is, an appreciation of the real exchange rate which can slow the growth of a country's exports— and that aid increases might thereby harm a country's long-term growth prospects. This essay argues that it is unlikely that a long-term, sustained and predictable increase in aid would, through the impact on the real exchange rate, do more harm than good, for three reasons. First, there is not necessarily an adverse impact on exports from Dutch Disease, and any impact on economic growth may be small. Second, aid spent in part on improving the supply side—investments in infrastructure, education, government institutions and health—result in productivity benefits for the whole economy, which can offset any loss of competitiveness from the Dutch Disease effect. Third, the welfare of a nation's citizens depends on their consumption and investment, not just output. Even on pessimistic assumptions, the additional consumption and investment which the aid finances is larger than any likely adverse impact on output. However, the macroeconomic effects of aid can cause substantial harm if the aid is not sustained until its benefits are realized. The costs of a temporary loss of competitiveness might well exceed the benefits of the short-term increase in aid. To avoid doing harm, aid should be sustained and predictable, and used in part to promote economic growth. This maximizes the chances that the long-term productivity and growth benefits will offset the adverse effects—which may be small if they exist at all—that big aid surges may pose as a result of Dutch Disease.
Topic:
Economics, Health, and Humanitarian Aid
Political Geography:
Europe