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52. Making Large-Scale Wind and Solar Power a Reality
- Author:
- Kevin Ummel
- Publication Date:
- 10-2013
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- South Africa and many other countries hope to aggressively expand wind and solar power (WSP) in the coming decades. This presents significant challenges for power system planning. Success hinges largely on the question of how and where to deploy WSP technologies. Well-designed deployment strategies can take advantage of natural variability in resources across space and time to help minimize costs, maximize benefits, and ensure reliability.
- Topic:
- Climate Change, Development, Economics, Energy Policy, and Science and Technology
- Political Geography:
- Africa
53. Is Anyone Listening? Does US Foreign Assistance Target People's Top Priorities?
- Author:
- Benjamin Leo
- Publication Date:
- 12-2013
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The United States government has made repeated declarations over the last decade to align its assistance programs behind developing countries' priorities. By utilizing public attitude surveys for 42 African and Latin American countries, this paper examines how well the US has implemented this guiding principle. Building upon the Quality of Official Development Assistance Assessment (QuODA) approach, I identify what people cite most frequently as the 'most pressing problems' facing their nations and then measure the percentage of US assistance commitments that are directed towards addressing them. By focusing on public surveys over time, this analysis attempts to provide a more nuanced and targeted examination of whether US portfolios are addressing what people care the most about. As reference points, I compare US alignment trends with the two regional multilateral development banks (MDBs) – the African Development Bank and the Inter-American Development Bank. Overall, this analysis suggests that US assistance may be only modestly aligned with what people in Sub-Saharan Africa and Latin America cite as their nation's most pressing problems. By comparison, the African Development Bank – which is majority-led by regional member nations – performs significantly better than the United States. Like the United States, however, the Inter-American Development Bank demonstrates a low relative level of support for people's top concerns.
- Topic:
- Security, Crime, Development, Economics, and Foreign Aid
- Political Geography:
- Africa, United States, America, and Latin America
54. Supplementing REDD+ with Biodiversity Payments: The Paradox of Paying for Multiple Ecosystem Services
- Author:
- Jonah Busch
- Publication Date:
- 11-2013
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- An international mechanism to reduce emissions from deforestation using carbon payments (REDD+) can be leveraged to make payments for forests' biodiversity as well. Paradoxically, under conditions consistent with emerging REDD+ programs, money spent on a mixture of carbon payments and biodiversity payments has the potential to incentivize the provision of greater climate benefits than an equal amount of money spent only on carbon payments.
- Topic:
- Climate Change, Economics, Environment, and Biosecurity
55. Savings by and for the Poor: A Research Review and Agenda
- Author:
- Dean Karlan, Jonathan Zinman, and Aishwarya Lakshmi Ratan
- Publication Date:
- 11-2013
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and limited functionality. This could lead to undersaving compared to a world without market or behavioral frictions. Undersaving can have important welfare consequences: variable consumption, low resilience to shocks, and foregone profitable investments.
- Topic:
- Development, Economics, Globalization, International Trade and Finance, Markets, Poverty, and Financial Crisis
56. Primary Schooling, Student Learning, and School Quality in Rural Bangladesh
- Author:
- Mohammad Niaz Asadullah and Nazmul Chaudhury
- Publication Date:
- 12-2013
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Using a primary school curricular standard basic mathematics competence test, this paper documents the low level of student achievement amongst 10-18 year old rural children in Bangladesh and tests the extent to which years spent in school increases learning. Our sample includes children currently enrolled in school as well as those out of school. About half of the children failed to pass the written competence test, a finding that also holds for those completing primary schooling. Even after holding constant a wide range of factors such as household income, parental characteristics, current enrollment status, and a direct measure of child ability, there remains a statistically significant correlation between schooling attained and basic mathematics competence above and beyond primary school completion. This pattern is more pronounced for girls who have lower competence compared to boys despite higher grade completion.
- Topic:
- Development, Economics, Islam, and Poverty
- Political Geography:
- South Asia
57. The Buoyant Billions: How "Middle Class" Are the New Middle Classes in Developing Countries? (And Why Does It Matter?)
- Author:
- Andy Sumner
- Publication Date:
- 10-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Middle-income countries (MICs) are now home to most of the world's extreme poor—the billion people living on less than $1.25 a day and a further billion people living on between $1.25 and $2. At the same time, many MICs are also home to a drastically expanding emerging middle or nonpolar group, called here the “buoyant billions.” This group includes those (mostly in MICs) living on between $2 and $4 a day and another billion people (also mostly in MICs) between $4 and $10 a day. Although they are above the average poverty line for developing countries, many people in these new “middle classes” may be insecure and at risk of falling into poverty. This paper outlines indicative data on trends relating to poverty and the nonpoor by different expenditure groups, and critically reviews the recent literature that contentiously labels such groups as “middle class.” The paper argues that such groups are neither extremely poor nor secure from poverty and that such groups are worthy of closer examination because their expansion may potentially have wider societal implications related, for example, to taxation, governance, and—ultimately—domestic politics.
- Topic:
- Development, Economics, Emerging Markets, and Poverty
58. Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico.
- Author:
- Nora Lustig, Luis F. Lopez-Calva, and Eduardo Ortiz-Juarez
- Publication Date:
- 10-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Between 2000 and 2010, the Gini coefficient declined in 13 of 17 Latin American countries. The decline was statistically significant and robust to changes in the time interval, inequality measures, and data sources. In-depth country studies for Argentina, Brazil, and Mexico suggest two main phenomena underlie this trend: a fall in the premium to skilled labor and more progressive government transfers. The fall in the premium to skills resulted from a combination of supply, demand, and institutional factors. Their relative importance depends on the country.
- Topic:
- Development, Economics, Emerging Markets, Globalization, International Trade and Finance, Poverty, and Social Stratification
- Political Geography:
- Brazil, Argentina, Latin America, and Mexico
59. Commitment to Development Index 2012
- Author:
- David Roodman
- Publication Date:
- 10-2012
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- Why does the CDI matter? Because in an increasingly integrated world, the behavior of rich countries can profoundly affect the lives of people in poor countries and because poverty and weak institutions in developing countries can breed public health crises, security threats, and economic crises that know no borders. Committing to policies that promote develop- ment and well-being is a global imperative—no human being should be denied the chance to live free of poverty and oppression and to enjoy a basic standard of education and health. The CDI countries, all democracies, preach concern for human life and dignity within their own borders; the Index looks at whether rich countries' actions match their words.
- Topic:
- Development, Economics, Education, Health, and Poverty
60. Hoping to Win, Expected to Lose: Theory and Lessons on Microenterprise Development
- Author:
- Dean Karlan, Ryan Knight, and Christopher Udry
- Publication Date:
- 11-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- We show how financial and managerial constraints impede experimentation and thus limit learning about the profitability of investments. Imperfect information about one's own type, but willingness to experiment to learn one's type, leads to short-run negative expected returns to investments, with some outliers succeeding. We find in an experiment that entrepreneurs invest randomized grants of cash and adopt advice from randomized grants of consulting services, but both lead to lower profits on average. In the long run, they revert back to their prior scale of operations. In a meta-analysis, results from 19 other experiments find mixed support for this theory.
- Topic:
- Development, Economics, Markets, Foreign Aid, and Foreign Direct Investment
- Political Geography:
- Africa
61. The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, and Peru: A Synthesis of Results
- Author:
- Nora Lustig
- Publication Date:
- 11-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- We apply a standard tax-and-benefit-incidence analysis to estimate the impact on inequality and poverty of direct taxes, indirect taxes and subsidies, and social spending (cash and food transfers and in-kind transfers in education and health). The extent of inequality reduction induced by direct taxes and transfers is rather small (2 percentage points on average), especially when compared with that found in Western Europe (15 percentage points on average). What prevents Argentina, Bolivia, and Brazil from achieving similar reductions in inequality is not the lack of revenues but the fact that they spend less on cash transfers—especially transfers that are progressive in absolute terms—as a share of GDP. Indirect taxes result in that net contributors to the fiscal system start at the fourth, third, and even second decile on average, depending on the country. When in-kind transfers in education and health are added, however, the bottom six deciles are net recipients. The impact of transfers on inequality and poverty reduction could be higher if spending on direct cash transfers that are progressive in absolute terms were increased, leakages to the nonpoor reduced, and coverage of the extreme poor by direct transfer programs expanded.
- Topic:
- Development, Economics, Education, Health, and Poverty
- Political Geography:
- Brazil, Argentina, Latin America, Mexico, Peru, and Bolivia
62. Agricultural Decisions after Relaxing Credit and Risk Constraints
- Author:
- Dean Karlan, Robert Osei, Christopher Udry, and Isaac Osei-Akoto
- Publication Date:
- 11-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The investment decisions of small-scale farmers in developing countries are conditioned by the farmers' financial environment. Binding credit-market constraints and incomplete insurance can reduce investment in activities with high expected profits. We conducted several experiments in northern Ghana in which farmers were randomly assigned to receive cash grants, grants of or opportunities to purchase rainfall-index insurance, or a combination of the two. Demand for index insurance is strong, and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture. The salient constraint to farmer investment is uninsured risk: when provided with insurance against the primary catastrophic risk they face, farmers are able to find resources to increase expenditure on their farms. Demand for insurance in subsequent years is strongly increasing in a farmer's own receipt of insurance payouts, and with the receipt of payouts by others in the farmer's social network. Both investment patterns and the demand for index insurance are consistent with the presence of important basis risk associated with the index insurance, and with imperfect trust that promised payouts will be delivered.
- Topic:
- Agriculture, Economics, Markets, Food, and Foreign Direct Investment
63. 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
64. Is There Such a Thing As Middle Class Values?
- Author:
- Florencia Torche, Luis F. Lopez-Calva, and Jamele Rigolini
- Publication Date:
- 02-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Middle class values have long been perceived as drivers of social cohesion and growth. In this paper we investigate the relation between class (measured by the position in the income distribution), values, and political orientations using comparable values surveys for six Latin American countries. We find that both a continuous measure of income and categorical measures of income-based class are robustly associated with values. Both income and class tend to display a similar association to values and political orientations as education, although differences persist in some important dimensions. Overall, we do not find strong evidence of any “middle class particularism”: values appear to gradually shift with income, and middle class values lay between the ones of poorer and richer classes. If any, the only peculiarity of middle class values is moderation. We also find changes in values across countries to be of much larger magnitude than the ones dictated by income, education and individual characteristics, suggesting that individual values vary primarily within bounds dictated by each society.
- Topic:
- Economics, Political Economy, Social Stratification, and Culture
- Political Geography:
- Latin America
65. Remittances and Rashomon
- Author:
- Devesh Kapur and Randall Akee
- Publication Date:
- 01-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Utilizing a novel data set on remittance data for India that matches household surveys to administrative bank data, we investigate the differences in self-reported and actual deposits to Non-Resident Indian (NRI) accounts. There is a striking difference between the perceived and actual frequency, as well as the amount of deposits, to NRI accounts. Our results indicate the presence of non-classical measurement error in the reporting of remittances in the form of deposits to NRI accounts. As a consequence, regression analyses using remittances as an explanatory variable may contain large upward biases instead of the usual attenuation of results under classical measurement error. Instrumental variables estimates are no better; the estimated coefficients from these regressions are more than three times the size of the OLS regression results. The results point to the need to more carefully check the accuracy of the international remittance flows. The wide discrepancies in the Indian case could be both because of inaccuracies in the household survey as well as mis-classification of the Balance of Payment data with some fraction of reported remittances being disguised capital flows (and hence likely to be less stable) rather than current account flows for family maintenance.
- Topic:
- Development, Economics, and Labor Issues
- Political Geography:
- South Asia
66. FCPR–Forest Conservation Performance Rating for the Pan-Tropics
- Author:
- David Wheeler, Robin Kraft, and Dan Hammer
- Publication Date:
- 05-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This note introduces and illustrates fCPR (Forest Conservation Performance Rating), a system of color-coded ratings for tropical forest conservation performance that can be implemented for local areas, countries, regions, and the entire pan-tropics. The ratings reward tropical forest conservation in three dimensions: (1) exceeding expectations, given an area's forest clearing history and development status; (2) meeting or exceeding global REDD+ goals; and (3) achieving an immediate reduction in forest clearing. Green ratings are assigned to areas that meet condition (2); yellow to areas that meet (1) only; and red to countries that fail to meet either condition. We have developed fCPR at the Center for Global Development (CGD), using monthly forest clearing indicators from CGD's FORMA (Forest Monitoring for Action). This first release rates the quarterly conservation performance of 27 countries currently tracked by FORMA, as well as 242 of their states and provinces that contain tropical forests. The 27 countries accounted for 94 percent of tropical forest clearing during the period 2000–2005. Future releases will include additional countries as FORMA begins tracking them.
- Topic:
- Climate Change, Democratization, Development, Economics, Environment, and Natural Resources
67. The Global Financial Crisis: The Beginning of the End of the "Development" Agenda?
- Author:
- Nancy Birdsall
- Publication Date:
- 04-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- In this paper, written as the introduction to New Ideas on Development after the Financial Crisis (JHU Press, 2011), Nancy Birdsall discusses two themes. The first is the pre-crisis subtle shift in the prevailing model of capitalism in developing countries—away from orthodoxy or so-called market fundamentalism—that the crisis is likely to reinforce.
- Topic:
- Development, Economics, Globalization, Markets, and Financial Crisis
68. Energizing Rio+20: How the United States Can Promote Sustainable Energy for All at the 2012 Earth Summit
- Author:
- Nigel Purvis and Abigail Jones
- Publication Date:
- 04-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Worldwide, about 1.3 billion people lack access to electricity (one in five people), while unreliable electricity networks serve another 1 billion people. Roughly 2.7 billion—about 40 percent of the global population—lack access to clean cooking fuels. Instead, dirty, sometimes scarce and expensive fuels such as kerosene, candles, wood, animal waste, and crop residues power the lives of the energy poor, who pay disproportionately high costs and receive very poor quality in return. More than 95 percent of the energy poor are either in sub-Saharan Africa or developing Asia, while 84 percent are in rural areas—the same regions that are the most vulnerable to the adverse effects of climate change.
- Topic:
- Climate Change, Development, Economics, Energy Policy, Environment, and Poverty
- Political Geography:
- Africa, United States, and Asia
69. The Quality of Official Development Assistance Assessment 2009: Is Aid Quality Improving?
- Author:
- Nancy Birdsall, Homi Kharas, and Rita Perakis
- Publication Date:
- 04-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This report presents the results of the second edition of the Quality of Official Development Assistance (QuODA) assessment, with a focus on the changes that have occurred in donor performance since the first edition. These results were released in summary form in November, 2011, just before the Fourth High Level Forum on Aid Effectiveness in Busan, South Korea.
- Topic:
- International Relations, Development, Economics, Humanitarian Aid, Poverty, and Foreign Aid
- Political Geography:
- South Korea
70. Capital Requirements under Basel III in Latin America: The Cases of Bolivia, Colombia, Ecuador and Peru
- Author:
- Liliana Rojas-Suarez, Arturo J. Galindo, and Marielle del Valle
- Publication Date:
- 05-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- A number of banks in developed countries argue that the new capital requirements under Basel III are too stringent and that implementing the proposed regulation would require raising large amounts of capital, with adverse consequences on credit and the cost of finance. In contrast, many emerging market economies claim that their systems are adequately capitalized and that they have no problems with implementing the new capital requirements. This paper conducts a detailed calculation of capital held by the banks in four Latin American countries—known as the Andean countries: Bolivia, Colombia, Ecuador and Peru—and assesses the potential effects of full compliance with the capital requirements under Basel III. The conclusions are positive and show that while capital would decline somewhat in these countries after they make adjustments to comply with the new definition of capital under Basel III, they would still meet the Basel III recommendations on capital requirements. More importantly, these countries would hold Tier capital to risk-weighted-asset ratios significantly above the 8.5 percent requirement under Basel III. That is, not only the quantity, but also the quality of capital is adequate in the countries under study. While encouraging, these results should not be taken as a panacea since the new regulations are only effective if coupled with appropriate risk management and supervision mechanisms to control the build-up of excessive risk-taking by banks. Further research into these areas is needed for a complete assessment of the strength of banks in the Andean countries.
- Topic:
- Debt, Economics, International Trade and Finance, and Monetary Policy
- Political Geography:
- Colombia, Latin America, Peru, Ecuador, and Bolivia
71. Adolescent Fertility in Low- and Middle-Income Countries: Effects and Solutions
- Author:
- Amanda Glassman, Kate McQueston, and Rachel Silverman
- Publication Date:
- 05-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Adolescent fertility in low- and middle-income countries presents a severe impediment to development and can lead to school dropout, lost productivity, and the intergenerational transmission of poverty. However, there is debate about whether adolescent pregnancy is a problem in and of itself or merely symptomatic of deeper, ingrained disadvantage. To inform policy choices and create a revised research agenda for population and development, this paper aggregates recent quantitative evidence on the socioeconomic consequences of and methods to reduce of teenage pregnancy in the developing world. The review finds variable results for all indicator types with the partial exception of knowledge-based indicators, which increased in response to almost all evaluating interventions, though it is not clear that such interventions necessarily lead to short- or long term-behavior change. The evidence base supporting the effectiveness of conditional cash transfers was relatively strong in comparison to other interventions. Similarly, programs that lowered barriers to attending school or increased the opportunity cost of school absence are also supported by the literature. On the basis of these findings, the authors argue that donors should adopt a rights-based approach to adolescent fertility and shift their focus from the proximate to distal causes of pregnancy, including human rights abuses, gender inequality, child marriage, and socioeconomic marginalization. Further research should be conducted to strengthen the evidence base by 1) establishing causality, 2) understanding the differential impacts of adolescent fertility in different contexts, and 3) investigating other the impact of adolescent fertility on other socioeconomic outcomes, such as labor participation, productivity, and the intergenerational transmission of poverty.
- Topic:
- Democratization, Demographics, Development, Economics, Foreign Aid, and Youth Culture
72. MDGs 2.0: What Goals, Targets, and Timeframe?
- Author:
- Charles Kenny, Andy Sumner, and Jonathan Karver
- Publication Date:
- 06-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The Millennium Development Goals (MDGs) are widely cited as the primary yardstick against which advances in international development efforts are to be judged. At the same time, the Goals will be met or missed by 2015. It is not too early to start asking 'what next?' This paper builds on a discussion that has already begun to address potential approaches, goals and target indicators to help inform the process of developing a second generation of MDGs or 'MDGs 2.0.' The paper outlines potential goal areas based on the original Millennium Declaration, the timeframe for any MDGs 2.0 and attempts to calculate some reasonable targets associated with those goal areas.
- Topic:
- Development, Economics, Emerging Markets, Post Colonialism, and Political Theory
73. Competitiveness in Central America: The Road to Sustained Growth and Poverty Reduction
- Author:
- Liliana Rojas-Suarez, José Luis Guasch, and Veronica Gonzales
- Publication Date:
- 06-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Over the last decade, Central American countries—Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua—have made significant progress in social and economic areas. In particular, they have stabilized their economies after decades of civil war and the economic volatility that plagued the region through the 1990s. Most countries in Central America have taken important steps to improve their business climates, particularly by enhancing macroeconomic stability, improving the soundness of their financial systems, making improvements in infrastructure services and trade facilitation, reducing red tape, and simplifying their regulatory and tax frameworks. As a result, before the 2008 financial crisis, GDP per capita in Central America grew at an average rate of 3 percent per year from 2003 to 2008, which, albeit modest, was the most robust and stable period of growth the region had witnessed since the early 1990s. However, despite this achievement, Central American economies are still lagging behind the rest of Latin America and other middle-income countries by per-capita growth rates of 0.5 to 2 percentage points. Even more worrying are the levels of poverty and inequality, which show the lack of inclusiveness in their growth models. Moreover, recent developments in the region show a number of red flags that are weakening macroeconomic and democratic stability. Significant structural changes are urgently needed to secure sustained and inclusive growth.
- Topic:
- Development, Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- Latin America and Central America
74. No Longer Poor: Ghana's New Income Status and Implications of Graduation from IDA
- Author:
- Todd Moss and Stephanie Majerowicz
- Publication Date:
- 07-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Ghana's largest and most important creditor for the past three decades has been the International Development Association (IDA), the soft loan window of the World Bank. That will soon come to an end. The combination of Ghana's rapid economic growth and the recent GDP rebasing exercise means that Ghana suddenly finds itself above the income limit for IDA eligibility. Formal graduation is imminent and comes with significant implications for access to concessional finance, debt, and relations with other creditors. This paper considers the specific questions related to Ghana's relationship with the World Bank, as well as the broader questions about the country's new middle-income status.
- Topic:
- Development, Economics, Poverty, Foreign Aid, and Foreign Direct Investment
- Political Geography:
- Africa
75. Escaping Capability Traps through Problem-Driven Iterative Adaptation (PDIA)
- Author:
- Lant Pritchett, Michael Woolcock, and Matt Andrews
- Publication Date:
- 06-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Many reform initiatives in developing countries fail to achieve sustained improvements in performance because they are merely isomorphic mimicry—that is, governments and organizations pretend to reform by changing what policies or organizations look like rather than what they actually do. In addition, the flow of development resources and legitimacy without demonstrated improvements in performance undermines the impetus for effective action to build state capability or improve performance. This dynamic facilitates “capability traps” in which state capability stagnates, or even deteriorates, over long periods of time even though governments remain engaged in developmental rhetoric and continue to receive development resources. How can countries escape capability traps? We propose an approach, Problem-Driven Iterative Adaptation (PDIA), based on four core principles, each of which stands in sharp contrast with the standard approaches. First, PDIA focuses on solving locally nominated and defined problems in performance (as opposed to transplanting preconceived and packaged “best practice” solutions). Second, it seeks to create an authorizing environment for decision-making that encourages positive deviance and experimentation (as opposed to designing projects and programs and then requiring agents to implement them exactly as designed). Third, it embeds this experimentation in tight feedback loops that facilitate rapid experiential learning (as opposed to enduring long lag times in learning from ex post “evaluation”). Fourth, it actively engages broad sets of agents to ensure that reforms are viable, legitimate, relevant, and supportable (as opposed to a narrow set of external experts promoting the top-down diffusion of innovation).
- Topic:
- Development, Economics, Political Economy, Foreign Aid, Foreign Direct Investment, and Governance
76. Renewable Resource Shocks and Conflict in India's Maoist Belt
- Author:
- Devesh Kapur, Kishore Gawande, and Shanker Satyanath
- Publication Date:
- 08-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Is there a causal relationship between shocks to renewable natural resources, such as agricultural and forest lands, and the intensity of conflict? In this paper, we conduct a rigorous econometric analysis of a civil conflict that the Indian Prime Minister has called the single biggest internal security challenge ever faced by his country, the so-called Maoist conflict. We focus on over-time within-district variation in the intensity of conflict in the states where this conflict is primarily located. Using a novel data set of killings, we find that adverse renewable resource shocks have a robust, significant association with the intensity of conflict. A one standard deviation decrease in our measure of renewable resources increases killings by 12.5 percent contemporaneously, 9.7 percent after a year, and 42.2 percent after two years. Our instrumental variables strategy allows us to interpret these findings in a causal manner.
- Topic:
- Security, Agriculture, Economics, and Natural Resources
- Political Geography:
- South Asia and India
77. How Can the World Bank Group Improve Its Private Sector Projects in African Fragile States?
- Author:
- Vijaya Ramachandran, Benjamin Leo, and Ross Thuotte
- Publication Date:
- 04-2012
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- In recent years, the World Bank Group has made increasingly strong and explicit commitments to fragile and conflict-affected states, putting them at the top of the development policy agenda. These commitments are promising, but give rise to significant operational challenges for the various arms of the World Bank Group, including the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). The bank also faces steady pressure from shareholders to scale up involvement in fragile states while also improving absorptive capacity and project effectiveness.
- Topic:
- Development, Economics, Markets, Foreign Aid, and World Bank
- Political Geography:
- Africa
78. A Note on the Middle Class in Latin America
- Author:
- Nancy Birdsall
- Publication Date:
- 08-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The Carbon Monitoring for Action (CARMA) database provides information about the carbon dioxide emissions, electricity production, corporate ownership, and location of more than 60,000 power plants in over 200 countries. Originally launched in 2007, CARMA is provided freely to the public at www.carma.org and remains the only comprehensive data source of its kind. This paper documents the methodology underpinning CARMA v3.0, released in July, 2012. Comparison of CARMA model output with reported data highlights the general difficulty of precisely predicting annual electricity generation for a given plant and year. Estimating the rate at which a plant emits CO2 (per unit of electricity generated) generally faces fewer obstacles. Ultimately, greater disclosure of plant-specific data is needed to overcome these limitations, particularly in major emitting countries like China, Russia, and Japan. For any given plant in CARMA v3.0, it is estimated that the reported value is within 20 percent of the actual value in 85 percent of cases for CO2 intensity, 75 percent for annual CO2 emissions, and 45 percent for annual electricity generation. CARMA's prediction models are shown to offer significantly better estimates than more naïve approaches to estimating plant-specific performance.
- Topic:
- Democratization, Economics, Poverty, and Social Stratification
- Political Geography:
- Russia, Japan, China, America, and Latin America
79. Direct Distribution of Oil Revenues in Venezuela: A Viable Alternative?
- Author:
- Pedro L. Rodríguez, José R. Morales, and Francisco J. Monaldi
- Publication Date:
- 09-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Venezuela is a textbook example of a resource-dependent country—between 1950 and 2008, oil generated over a trillion dollars of income for the state. Nevertheless, Venezuela currently combines an economy that is stagnant, despite high oil prices, with an increasingly authoritarian government. The authors argue that large oil rents that accrue to the state, together with a lack of formal and transparent mechanisms to facilitate citizen oversight, are a large part of the problem. They consider the nature of the fiscal contract between the Venezuelan government and its people. This has been characterized by increasing discretion of the executive; only a small share of the rents is now subject to political oversight within the framework of the budgetary system. The authors consider the case for direct distribution of rents, distinguishing it from a populist approach to transfers as effected through Venezuela's misiones. They also report on focus group discussions of the directdistribution approach and the political viability of direct transfers.
- Topic:
- Civil Society, Economics, Energy Policy, Government, Oil, and Political Economy
- Political Geography:
- Argentina and Latin America
80. Where Will the World's Poor Live? An Update on Global Poverty and the New Bottom Billion
- Author:
- Andy Sumner
- Publication Date:
- 09-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper updates the distribution of global poverty data and makes projections up to 2020. The paper asks the following question: Do the world's extreme poor live in poor countries? It is argued that many of the world's extreme poor already live in countries where the total cost of ending extreme poverty is not prohibitively high as a percentage of GDP. And in the not-too-distant future, most of the world's poor will live in countries that do have the domestic financial scope to end at least extreme poverty. This would imply a reframing of global poverty as largely a matter of domestic distribution.
- Topic:
- Development, Economics, and Poverty
81. What's Wrong with Dodd-Frank 1502? Conflict Minerals, Civilian Livelihoods, and the Unintended Consequences of Western Advocacy
- Author:
- Laura E. Seay
- Publication Date:
- 01-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Although its provisions have yet to be implemented, section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act is already having a profound effect on the Congolese mining sector. Nicknamed “Obama's Law” by the Congolese, section 1502 has created a de facto ban on Congolese mineral exports, put anywhere from tens of thousands up to 2 million Congolese miners out of work in the eastern Congo, and, despite ending most of the trade in Congolese conflict minerals, done little to improve the security situation or the daily lives of most Congolese. In this report, Laura Seay traces the development of section 1502 with respect to the pursuit of a conflict minerals-based strategy by U.S. advocates, examines the effects of the legislation, and recommends new courses of action to move forward in a way that both promotes accountability and transparency and allows Congolese artisanal miners to earn a living.
- Topic:
- Security, Development, Economics, International Trade and Finance, Markets, Poverty, Natural Resources, and Financial Crisis
- Political Geography:
- Africa, United States, and Democratic Republic of the Congo
82. Due Diligence: An Impertinent Inquiry into Microfinance
- Author:
- David Roodman
- Publication Date:
- 01-2012
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- Microfinance: Few development ideas have been so buoyed by high expectations in recent decades, and few have been so buffeted by difficulties in recent years. Images of microfinance lifting people out of poverty now compete with ones of the poor driven by debt to suicide. Where does the truth lie? David Roodman investigates in Due Diligence. He finds no evidence that small loans lift people out of poverty en masse but argues that financial services, like clean water and electricity, are essential to a modern life. The practical question is not whether microfinance should continue, but how it can play to its strengths, which lie in providing useful services to millions of poor people in a businesslike way. Due Diligence is the most complete investigation ever into the sources and consequences of microfinance. Rood - man explores the financial needs of poor people, the history of efforts to meet those needs, the business realities of doing so, and the arguments and evidence about how well modern microfinance is succeeding.
- Topic:
- Debt, Development, Economics, Globalization, Poverty, and Foreign Direct Investment
83. Global Health and the New Bottom Billion: How Funders Should Respond to Shifts in Global Poverty and Disease Burden
- Author:
- Amanda Glassman, Andy Sumner, and Denizhan Duran
- Publication Date:
- 01-2012
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- After a decade of rapid economic growth, many developing countries have attained middle-income status. But poverty reduction in these countries has not kept pace with economic growth. As a result, most of the world's poor—up to a billion people—now live in these new middle-income countries (MICs), making up a “new bottom billion.” As the new MICs are home to most of the world's poor, they also carry the majority of the global disease burden. This poses a challenge to global health agencies, in particular the GAVI Alliance and the Global Fund, which are accustomed to disbursing funds on the assumption that the majority of poor people live in poor countries.
- Topic:
- Development, Economics, Health, and Poverty
84. 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
85. Failed States, Vicious Cycles, and a Proposal
- Author:
- Raghuram G. Rajan
- Publication Date:
- 03-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Rajan examines the problems of failed states, including the repeated return to power of former warlords, which he argues causes institutions to become weaker and people to get poorer. He notes that economic power through property holdings or human capital gives people the means to hold their leaders accountable. In the absence of such distributed power, dictators reign. Rajan argues that in failed states, economic growth leading to empowered citizenry is more likely if a neutral party presides. He proposes a unique solution to allow the electorate to choose a foreigner, who would govern for a fixed term. Candidates could be proposed by the UN or retired leaders from other countries; they would campaign on a platform to build the basic foundations of government and create a sustainable distribution of power. Rajan emphasizes that this is not a return to the colonial model—the external candidate (like all the others) would be on a ballot and the electorate would choose whether he or she was their best chance to escape fragility.
- Topic:
- Democratization, Development, Economics, Government, and Fragile/Failed State
- Political Geography:
- United Nations
86. GAVI's Future: Steps to Build Strategic Leadership, Financial Sustainability, and Better Partnerships
- Author:
- Amanda Glassman, Lisa Carty, J. Stephen Morrison, and Margaret Reeves
- Publication Date:
- 06-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- On June 13, the GAVI Alliance convenes its first pledging conference in London with the aim of securing $3.7 billion to immunize an additional 250 million children by 2015. Founded in 2000, GAVI is an innovative partnership that combines donors, partner governments, UNICEF, WHO, civil society, and the private sector. It is designed to accelerate the financing and delivery of selected vaccines and related health services to the world's most disadvantaged populations. As GAVI enters its second decade of operations, it has established itself as a quiet success. And as it strives to sustain and expand its model of operations, it simultaneously strives to make itself better known and understood; better led, managed, and resourced; better assured of essential high-level political and financial support; and better served by well-functioning relations with its many essential partners.
- Topic:
- Development, Economics, Health, and Foreign Aid
87. Cash at Your Fingertips: Biometric Technology for Transfers in Developing and Resource-Rich Countries
- Author:
- Alan Gelb and Caroline Decker
- Publication Date:
- 06-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Cash transfers are often a good way for developing countries to address economic and social problems. They are less expensive than directly providing goods and services and allow recipients the flexibility to spend on what they need the most, but for many developing countries, the technical requirements for large-scale programs have been prohibitive. Now, however, biometric technologies have improved and become ubiquitous enough to allow the confident identification and low cost needed to implement successful cash-transfer programs in developing countries. This paper surveys the arguments for and against cash-transfer programs in resource-rich states, discusses some of the new biometric identification technologies, and reaches preliminary conclusions about their potentially very large benefits for developing countries. The barriers to cash-transfers are no longer technical, but political.
- Topic:
- Development, Economics, Science and Technology, and Foreign Aid
88. Declining Inequality in Latin America: Some Economics, Some Politics
- Author:
- Nancy Birdsall, Nora Lustig, and Darryl McLeod
- Publication Date:
- 05-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Latin America is known to have income inequality among the highest in the world. That inequality has been invoked to explain low growth, poor education, macroeconomic volatility, and political instability. But new research shows that inequality in the region is falling. In this paper we summarize recent findings on inequality, present and discuss an assessment of how the type of political regime matters and why, and investigate the relationship between changes in inequality and changes in the size of the middle class in the region. We conclude with some questions about whether and how changes in income distribution and in middle-class economic power will affect the politics of distribution in the future.
- Topic:
- Economics, Poverty, and Social Stratification
- Political Geography:
- Latin America
89. Fair Shares: Crediting Poor Countries for Carbon Mitigation
- Author:
- David Wheeler
- Publication Date:
- 07-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper computes national carbon mitigation costs using two simple principles: (1) Incremental costs for low-carbon energy investments are calculated using the cost of coal-fired power as the benchmark. (2) All low-carbon energy sources are counted, because reducing carbon emissions cannot be separated from other concerns: reducing local air pollution from fossil-fuel combustion; diversifying energy sources to reduce political and economic risks; and building competitive advantage in emerging clean-energy markets. The paper estimates energy growth and incremental costs for biomass, solar, wind, geothermal, hydro, and nuclear in 174 countries from 1990 to 2008. Then it compares national mitigation burdens using per-capita mitigation expenditures as shares of per-capita incomes. The results undermine the conventional view of North-South conflict that has dominated global climate negotiations, because they show that developing countries, whether by intention or not, have been critical participants in carbon mitigation all along. Furthermore, they suggest that developing countries have borne their fair share of global mitigation expenditures. But they also show that expenditures for both developed and developing countries have been so modest that low-carbon energy growth could accelerate greatly without undue strain.
- Topic:
- Climate Change, Development, Economics, and Energy Policy
90. Economics and Emigration: Trillion-dollar Bills on the Sidewalk?
- Author:
- Michael Clemens
- Publication Date:
- 08-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Large numbers of people born in poor countries would like to leave those countries, but barriers prevent their emigration. Those barriers, according to economists' best estimates to date, cost the world economy much more than all remaining barriers to the international movement of goods and capital combined. Yet economists spend much more time studying the movement of goods and capital, and when they study migration at all, they focus on the effects of immigration on nonmigrants in destination countries. I ask why this is the case and sketch a four-point research agenda on the effects of emigration. Barriers to emigration deserve a research priority that is commensurate with their likely colossal economic effects.
- Topic:
- Economics, Migration, Poverty, and Immigration
91. 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
92. International Monetary Fund (ABCs of the IFIs Brief)
- Author:
- Jenny Ottenhoff
- Publication Date:
- 09-2011
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- The primary role of the International Monetary Fund (IMF) is to promote stability of the international monetary system, the system of exchange rates and international payments that enables countries to transact with one another. To do so, the IMF provides financial assistance in the form of loans to help member countries address balance-of-payments problems, stabilize their economies, and restore sustainable economic growth. The IMF also carries out technical assistance and surveillance activities that help strengthen underlying economic fundamentals of member countries and the global financial systems at large.
- Topic:
- Development, Economics, International Monetary Fund, Foreign Aid, and Financial Crisis
93. 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
94. The Commander's Emergency Response Program in Afghanistan: Five Practical Recommendations
- Author:
- Vijaya Ramachandran, Gregory Johnson, and Julie Walz
- Publication Date:
- 09-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The U.S. military has become substantially engaged in economic development and stabilization and will likely continue to carry out these activities in in-conflict zones for some time to come. Since FY2002, nearly $62 billion has been appropriated for relief and reconstruction in Afghanistan. The Commander's Emergency Response Program (CERP), which provides funds for projects to address urgent reconstruction and relief efforts, is one component of the military's development operations. In this analysis, we take U.S. military involvement in development as a given and concentrate on providing recommendations for it to operate more efficiently and effectively. By doing so, we are not advocating that the U.S. military become involved in all types of development activities or that CERP be used more broadly; rather, our recommendations address the military's capacity to carry out what it is already doing in Afghanistan and other in-conflict situations.
- Topic:
- Conflict Resolution, Development, Economics, War, and Foreign Aid
- Political Geography:
- Afghanistan and United States
95. 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
96. Where Is the Virtue in the Middle Class?
- Author:
- Charles Kenny
- Publication Date:
- 11-2011
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- It is widely agreed by economists and political scientists that the middle class is vital to progress because of its many virtues. But it is difficult to define a middle class by income in a manner that does not either include a lot of very poor people or suggest that most countries have no middle class to speak of. Survey evidence suggests the middle class is not culturally unique, particularly socially progressive, or entrepreneurial. When the middle of the income distribution sides with poor people in demanding equitable access to quality government services (instead of siding with the wealthy for small government and unequal access), pro-poor policies are far more likely to emerge. But this necessary role should not be confused with virtue.
- Topic:
- Development, Economics, Education, Poverty, and Social Stratification
97. Forest Clearing in the Pantropics: December 2005–August 2011
- Author:
- David Wheeler, Robin Kraft, and Dan Hammer
- Publication Date:
- 12-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This report summarizes recent trends in large-scale tropical forest clearing identified by FORMA (Forest Monitoring for Action). Our analysis includes 27 countries that accounted for 94 percent of clearing during the period 2000–2005. We highlight countries with relatively large changes since 2005, both declines and increases. FORMA produces indicators that track monthly changes in the number of 1-sq.-km. tropical forest parcels that have experienced clearing with high probability. This report and the accompanying spreadsheet databases provide monthly estimates for 27 countries, 280 primary administrative units, and 2,907 secondary administrative units. Countries' divergent experiences since 2005 have significantly altered their shares of global clearing in some cases. Brazil's global share fell by 11.2 percentage points from December 2005 to August 2011, while the combined share of Malaysia, Indonesia, and Myanmar increased by 10.8. The diverse patterns revealed by FORMA's first global survey caution against facile generalizations about forest clearing in the pantropics. During the past five years, the relative scale and pace of clearing have changed across regions, within regions, and within countries. Although the overall trend seems hopeful, it remains to be seen whether the decline in forest clearing will persist as the global economy recovers.
- Topic:
- Agriculture, Economics, Globalization, and Natural Resources
- Political Geography:
- Indonesia, Malaysia, and Myanmar
98. From REDD to Green: A Global Incentive System to Stop Tropical Forest Clearing
- Author:
- David Wheeler, Robin Kraft, and Dan Hammer
- Publication Date:
- 12-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- In this paper, we develop and illustrate a prototype incentive system for promoting rapid reduction of forest clearing in tropical countries. Our proposed Tropical Forest Protection Fund (TFPF) is a cash-on-delivery system that rewards independently monitored performance without formal contracts. The system responds to forest tenure problems in many countries by dividing incentive payments between national governments, which command the greatest number of instruments that affect forest clearing, and indigenous communities, which often have tenure rights in forested lands. The TFPF incorporates both monetary and reputational incentives, which are calculated quarterly. The monetary incentives are unconditional cash transfers based on measured performance, while the reputational incentives are publicly disclosed, color-coded performance ratings for each country. The incentives include rewards for: (1) exceeding long-run expectations, given a country's forest clearing history and development status; (2) meeting or exceeding global REDD+ goals; and (3) achieving an immediate reduction in forest clearing. Drawing on monthly forest clearing indicators from the new FORMA (Forest Monitoring for Action) database, we illustrate a prototype TFPF for eight East Asian countries: Cambodia, China, Indonesia, Lao PDR, Malaysia, Myanmar, Thailand, and Vietnam. A system with identical design principles could be implemented by single or multiple donors for individual or multiple forest proprietors within one or more countries, as well as national or local governments in individual countries, tropical regions, or the global pan-tropics. Our results demonstrate the importance of financial flexibility in the design of the proposed TFPF. Its incentives are calculated to induce a massive, rapid reduction of tropical forest clearing. If that occurs, a TFPF for East Asia will need standby authority for disbursements that may total $10–14 billion annually for the next two decades. This financial burden will not persist, however, because the TFPF is designed to self-liquidate once all recipient countries have achieved clearly specified benchmarks. We estimate that the TFPF can be closed by 2070, with its major financial responsibility discharged by 2040.
- Topic:
- Agriculture, Economics, Globalization, and Markets
- Political Geography:
- China, Indonesia, Malaysia, East Asia, Vietnam, Cambodia, Thailand, Southeast Asia, and Myanmar
99. Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal
- Author:
- Shantayanan Devarajan, Hélène Ehrhart, Tuan Minh Le, and Gaël Raballand
- Publication Date:
- 12-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues accruing directly to the government—is more likely to be scrutinized by citizens and hence subject to greater efficiency. We develop the case as follows: First, we confirm that public expenditure efficiency is lower in oil-rich countries compared with other developing countries. Second, we develop a theoretical model to explain why citizens' scrutiny over public expenditure can be increased by transferring oil revenues to citizens and then taxing them. By receiving transfers and then paying taxes, citizens are better informed about the level of government revenue, and they have an incentive to ensure that their taxes are spent on public goods. Third, we show empirically that enhanced citizens' scrutiny is associated with more efficient government spending decisions and that accountability is stronger in countries that rely more on taxation to finance public spending. We conclude that, while it may be difficult to implement such a proposal in existing oil producers, there is scope for introducing it in some of Africa's new oil producers.
- Topic:
- Economics, International Trade and Finance, and Oil
- Political Geography:
- Africa
100. Economic Dynamics and Forest Clearing: A Spatial Econometric Analysis for Indonesia
- Author:
- David Wheeler, Robin Kraft, Susmita Dasgupta, Dan Hammer, and Brian Blankespoor
- Publication Date:
- 12-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper uses a large panel database to investigate the determinants of forest clearing in Indonesian kabupatens since 2005. Our study incorporates short-run changes in prices and demand for palm oil and wood products, as well as the exchange rate, the real interest rate, land-use zoning, forest protection, the estimated opportunity cost of forested land, the quality of local governance, the poverty rate, population density, the availability of communications infrastructure, transport cost, and local rainfall and terrain slope. Our econometric results highlight the role of dynamic economic factors in forest clearing. We find significant roles for lagged changes in all the short-run economic variables—product prices, demands, the exchange rate and the real interest rate—as well as communications infrastructure, some types of commercial zoning, rainfall, and terrain slope. We find no significance for the other variables, and the absence of impact for protected-area status is particularly notable. Our results strongly support the model of forest clearing as an investment that is highly sensitive to expectations about future forest product prices and demands, as well as changes in the cost of capital (indexed by the real interest rate), the relative cost of local inputs (indexed by the exchange rate), and the cost of land clearing (indexed by local precipitation). By implication, the opportunity cost of forested land fluctuates widely with changes in international markets and decisions by Indonesia's financial authorities about the exchange and interest rates. Our results suggest that forest conservation programs are unlikely to succeed if they ignore such powerful forces.
- Topic:
- Agriculture, Economics, Globalization, Markets, and Natural Resources
- Political Geography:
- Indonesia
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