Search

Begin New Search Political Geography Global Focus Publishing Institution The John F. Kennedy School of Government at Harvard University

1. Pandemic-era Inflation Drivers and Global Spillovers

Author:
Julian di Giovanni, Şebnem Kalemli-Özcan, Alvaro Silva, and Muhammad A. Yildirim
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We estimate a multi-country multi-sector New Keynesian model to quantify the drivers of domestic inflation during 2020–2023 in several countries, including the United States. The model matches observed inflation together with sector-level prices and wages. We further measure the relative importance of different types of shocks on inflation across countries over time. The key mechanism, the international transmission of demand, supply and energy shocks through global linkages helps us to match the behavior of the USD/Euro exchange rate. The quantification exercise yields four key findings. First, negative supply shocks to factors of production, labor and intermediate inputs, initially sparked inflation in 2020–2021. Global supply chains and complementarities in production played an amplification role in this initial phase. Second, positive aggregate demand shocks, due to stimulative policies, widened demand-supply imbalances, amplifying inflation further during 2021–2022. Third, the reallocation of consumption between goods and service sectors, a relative sector-level demand shock, played a role in transmitting these imbalances across countries through the global trade and production network. Fourth, global energy shocks have differential impacts on the US relative to other countries’ inflation rates. Further, complementarities between energy and other inputs to production play a particularly important role in the quantitative impact of these shocks on inflation.
Topic:
Economy, Inflation, Pandemic, COVID-19, and Supply Chains
Political Geography:
Global Focus and United States of America

2. How Pratham Learns While Scaling: A Case Study of Adaptive Design and Evaluation

Author:
Jossie Fahsbender, Siddhant Gokhale, and Michael Walton
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Developing scalable innovations is a central challenge in development. Organizations that succeed in scaling often prioritize measurement, learning, and evaluation, but how this is done is poorly understood. This paper explores the case of Pratham, one of the largest NGOs in primary education and an exceptional learning organization. While Pratham is renowned for its randomized control trial sequence with J-PAL, we underscore this is just one aspect of a wider array of learning activities. These include an iterative process to continuously refine and protocolize solutions as they scale, the use of on-field qualitative insights and quantitative tracking, open feedback channels between the field, state, and central offices, information exchange among content and evaluation teams, and a nationwide assessment of learning levels (ASER). The RCTs were effective because they were embedded within this broader learning process and culture. Pratham learns at three levels: learning to improve children's basic skills, learning as an organization about what does and doesn’t work, and fostering learning by others in the system. Its learning capacity is rooted in deep-seated values and a culture of openness, trust, problem-solving, and the freedom to experiment and learn from failure, inculcated and nurtured by its leadership. Throughout, we use the prism of an Adaptive Evaluation to provide a systematic framework for mirroring and understanding Pratham's organic learning processes (as affirmed by its own leadership). Pratham actively engages with the three main pillars of an Adaptive Evaluation, involving understanding systems, theorizing how to effect change, and iterating its designs. While Pratham’s culture will often not be transferable, the systematic analysis of how Pratham learns can provide a framework for other organizations aspiring to replicate Pratham's success as a learning institution.
Topic:
Development, Economy, Innovation, and Adaptation
Political Geography:
Global Focus

3. What Combination of Features Are Associated With Scalable and Sustainable Last-Mile Service Delivery Models? A Qualitative Comparative Analysis

Author:
Siddhant Gokale and Ojas
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This study explores the features of successful last-mile service delivery models for the poor. We define success in terms of two main outcomes — the scale of impact and the sustainability of the business model. Through a Qualitative Comparative Analysis (QCA) of 35 organizations across a variety of sectors, such as agriculture, health, education, finance, energy, and water and sanitation, we arrive at a two-fold conclusion about the most prevalent combination of business model features associated with scale and sustainability. For achieving scale, a combination of four features was sufficient (but not necessary) — a pull product, an asset-light capital investment strategy, a narrow customer base, and a vertically integrated business model. For achieving sustainability, a wide customer base was sufficient (but not necessary). Together, these reveal a tradeoff between sustainability and scaling, especially around customer segments. The QCA is supplemented by an in-depth qualitative case study analysis of three selected organizations to uncover additional factors behind the success of alternate models that deviate from the QCA results. We find that clarity in vision, blending technology with people, evidence-driven decision-making and adaptive learning, and strong value propositions for multiple stakeholders were key characteristics of successful last-mile delivery models with features different from the QCA conclusions.
Topic:
Economy, Business, Investment, and Sustainability
Political Geography:
Global Focus

4. Process and Implementation Evaluations: A Primer

Author:
Patricia J. Rogers and Michael Woolcock
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Beyond assessing whether or not interventions have achieved their stated goals, evaluations can also provide greater understanding—in real-time and at completion—about how, where, for whom, over what time frame, and which aspects of an intervention may (or may not) have succeeded, and thus where improvements might be sought. Moreover, to the extent any intervention is only as good as its implementation, evaluations can also help identify where breakdowns in the delivery system may have occurred and spaces wherein frontline implementers were able to find innovative solutions to local (“binding constraint”) problems. Process and implementation evaluations thus serve the vital purpose of jointly promoting accountability and learning, thereby expanding the common perception of evaluations as external instruments of compliance and discipline to internal procedures for promoting partnerships, innovation, and improvement (organizationally or technically). In this chapter, we describe six different types of process and implementation evaluations and describe their respective strengths and weaknesses in various contexts, for various purposes. As part of collective efforts to enhance the effectiveness of all classes of interventions, impact and process evaluations should be regarded as necessary complements.
Topic:
Development, Accountability, and Intervention
Political Geography:
Global Focus

5. Estimation of Nonlinear Exchange Rate Dynamics in Evolving Regimes

Author:
Jeffrey Frankel, Yao Hou, and Danxia Xie
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper develops a new econometric framework to estimate and classify exchange rate regimes. They are classified into four distinct categories: fixed exchange rates, BBC (band, basket and crawl), managed floating, and freely floating. The procedure captures the patterns of exchange rate dynamics and the interventions by authorities under each of the regimes. We pay particular attention to the BBC and offer a new approach to parameter estimation by utilizing a three-regime Threshold Auto Regressive (TAR) model to reveal the nonlinear nature of exchange rate dynamics. We further extend our benchmark framework to allow the evolution of exchange rate regimes over time by adopting the minimum description length (MDL) principle, to overcome the challenge of simultaneous two-dimensional inference of nonlinearity in the state dimension and structural breaks in the time dimension. We apply our framework to 26 countries. The results suggest that exchange rate dynamics under different regimes are well captured by our new framework.
Topic:
Economy, Econometrics, and Exchange Rates
Political Geography:
Global Focus

6. Adaptive Evaluation: A Complexity-Based Approach to Systematic Learning for Innovation and Scaling in Development

Author:
Siddhant Gokhale and Michael Walton
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Nearly all challenges in international development tend to be complex because they depend on constantly evolving human behaviour, systems, and contexts, involving multiple actors, entities, and processes. As a result, both the discovery and scaling of innovations to address challenges in development often involve changes in system behaviour or even system-level transformation. This is rarely a linear process over time and can result in unexpected outcomes. Existing evaluation techniques commonly used in international development, including Randomized Control Trials (RCT) and quasi-experimental methods, are good at assessing specific effects of interventions but are not designed for the change processes inherent to innovation and scaling within a system. There is a need to reconstruct how we use existing measurement tools, techniques, and methodologies so that they capture the complexity of the environment in which an intervention or change occurs. We introduce Adaptive Evaluation, designed to learn at various levels of complexity while supporting the transformation needed to foster sustainable change. An Adaptive Evaluation uses three main approaches to work with complex questions—systems diagnosis, theory-based assessment of change processes, and iterative designs. An Adaptive Evaluation typically builds hypotheses from field-based interactions, emphasizes learning over testing, advocates open-mindedness with techniques, and appreciates the value of dialogue and participation in navigating complex processes. It can use RCT or similar techniques to analyse specific processes within a system or a development cycle, but these are embedded in a broader approach to assessment and interpretation. It is designed to be flexible and adjust to shifting contexts. Finally, an Adaptive Evaluation can be applied at any stage in a complex intervention's lifecycle, from the interpretation of the system and change processes to rapid experimentation, prototyping, and testing of select interventions, and then adaptation to different settings for impact at scale. This paper provides the theoretical basis for an Adaptive Evaluation—the main approaches, core ideology, process, and applications.
Topic:
Scaling, Economic Complexity, Innovation, and Adaptive Evaluation
Political Geography:
Global Focus

7. Leaning-against-the-wind intervention and the “carry-trade” view of the cost of reserves

Author:
Eduardo Levy-Yeyati and Juan Francisco Gómez
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
For a sample of emerging economies, we estimate the quasi-fiscal costs of sterilized foreign exchange interventions as the P&L of an inverse carry trade. We show that these costs can be substantial when intervention has a neo-mercantilist motive (preserving an undervalued currency) or a stabilization motive (appreciating the exchange rate as a nominal anchor) but are rather small when interventions follow a countercyclical, leaning-against-the-wind (LAW) pattern to contain exchange rate volatility. We document that under LAW, central banks outperform a constant size carry trade, as they additionally benefit from buying against cyclical deviations, and that the cost of reserves under the carry-trade view is generally lower than the one obtained from the credit-risk view (which equals the marginal cost to the country´s sovereign spread).
Topic:
Foreign Exchange, Economy, International Reserves, Trade, and Exchange Rates
Political Geography:
Global Focus

8. Public policy actors view success differently, and it matters

Author:
Matt Andrews
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Literature tells us there are many dimensions of public policy success, and different actors in the policy process will likely focus on different dimensions. This paper asks how different actors in the policy process view policy success, and how much their views differ. It finds evidence that actors devising policy plans— designers—view success narrowly, as achieving near-term, programmed goals; whereas other actors involved in advocating for, authorizing, and implementing policies have a broader success perspective, paying more attention to non-program criteria like long-term impact, distributional and endurance success, and intertemporal gains that manifest in the way policies grow capability, political support, stakeholder satisfaction, and process legitimacy. Such finding raises a question about how policy objectives are determined when actors disagree, given that literature also tells us that policies are more likely to succeed when actors agree on what success is and how to achieve it.
Topic:
Government, Governance, and Public Policy
Political Geography:
Global Focus

9. A Simple Theory of Economic Development at the Extensive Industry Margin

Author:
Dario Diodato, Ricardo Hausmann, and Ulrich Schetter
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We revisit the well-known fact that richer countries tend to produce a larger variety of goods and analyze economic development through (export) diversifcation. We show that countries are more likely to enter ‘nearby’ industries, i.e., industries that require fewer new occupations. To rationalize this fnding, we develop a small open economy (SOE) model of economic development at the extensive industry margin. In our model, industries difer in their input requirements of non-tradeable occupations or tasks. The SOE grows if proft maximizing frms decide to enter new, more advanced industries, which requires training workers in all occupations that are new to the economy. As a consequence, the SOE is more likely to enter nearby industries in line with our motivating fact. We provide indirect evidence in support of our main mechanism and then discuss implications: We show that there may be multiple equilibria along the development path, with some equilibria leading on a pathway to prosperity while others resulting in an income trap, and discuss implications for industrial policy. We fnally show that the rise of China has a non-monotonic efect on the growth prospects of other developing countries, and provide suggestive evidence for this theoretical prediction.
Topic:
Industrial Policy, Poverty, Reform, Economy, Diversification, Exports, and Convergence
Political Geography:
Global Focus

10. What is public policy success, especially in development?

Author:
Matt Andrews
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Public policy work is hard, especially when one works in developing countries. It is even difficult to define what success looks like, and thus how to manage towards success. Literature helps manage such difficulty, providing studies that define the concept and show how it can be achieved. A core message from such is that success is multi-dimensional, and practitioner need to focus on multiple criteria when doing their policy work. But what dimensions and criteria matter? And do development practitioners really adopt this multi-dimensional view? Tackling such questions, the current paper reviews 45 applied studies from the public policy, project management and development evaluation literatures to see what they identify as key success criteria and if the practical studies (about development evaluation) are in sync with the more academic messages. Reading across all three literatures, I identify 30 potential success criteria in 6 categories or dimensions (program, impact and endurance, capability, political, stakeholder, and process). I find that the development evaluation literature focuses on a narrow set of 7 criteria, mostly in one dimension (program success) as compared to broader perspectives in the other literatures. This suggests that development practitioners have a narrow view on success, which is out of step with academic views on the topic. A conclusion proposes a broader approach for these practitioners.
Topic:
Development, Public Policy, and Project Management
Political Geography:
Global Focus

11. This is How to Think About and Achieve Public Policy Success

Author:
Matt Andrews
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Officials working on public policies must answer questions like ‘What does policy success mean?’ and ‘How should I pursue policy work in order to achieve success?’ These are difficult questions, but there are ways to respond. One way draws on what I call the program logic of policy success, which suggests that: (i) Success requires efficiently meeting goals that stakeholders view as relevant, (ii) by doing work focused on impacting high-level objectives through programs that deliver promised time-sensitive outputs and outcomes according to a clear, logical plan. I believe this logic dominates the global public policy community, as ‘the way’ officials and organizations should think about and do policy work. This paper tests such belief, showing that officials do think in this way and that this thinking is influenced by common budgeting and evaluation mechanisms. I conclude by asking if this way of thinking poses any concerns, especially if it biases policy organizations to produce some kinds of policy success and not others.
Topic:
Government, Public Policy, and Policymaking
Political Geography:
Global Focus

12. Managing for Motivation as Public Performance Improvement Strategy in Education & Far Beyond

Author:
Dan Honig
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
People management has an important role to play in improving public agency performance. This paper argues that a ‘Route Y’ managerial approach focused on supporting the empowered exercise of employee judgment will in many circumstances prove superior to conventional reform approaches steeped in ‘Route X’ monitoring and incentives. Returns to Route Y are greater when employees are or can become more “mission motivated” – that is, aligned with the goals of the agency in the absence of monitoring and extrinsic incentives. Returns to Route Y are also greater when monitoring is incomplete or otherwise likely to unproductively distort effort, thus lowering the returns to using performance-linked rewards and penalties. I argue that education systems are one (but far from the only) setting where Route Y is a lever worth focusing on in efforts to improve public performance in the developed and developing world alike.
Topic:
Development, Education, Public Policy, Performance Evaluation, and Project Management
Political Geography:
Global Focus

13. Economic Costs of Friend-shoring

Author:
Beata Javorcik, Lucas Kitzmueller, Helena Schweiger, and Muhammad A. Yıldırım
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Geo-political tensions and disruptions to global value chains have led policymakers to reevaluate their approach to globalisation. Many countries are considering regionalisation and friend-shoring – trading primarily with countries sharing similar values – as a way of minimising exposure to weaponisation of trade and securing access to critical inputs. If followed through, this process has the potential to reverse global economic integration of recent decades. This paper estimates the economic costs of friend-shoring using a quantitative model incorporating inter-country inter-industry linkages. The results suggest that friend-shoring may lead to real GDP losses of up to 4.6% of global GDP. Thus, although friend-shoring may provide insurance against extreme disruptions and increase the security of supply of vital inputs, it would come at a significant cost.
Topic:
Trade, Production, Regionalization, and Friend-shoring
Political Geography:
Global Focus

14. Yet it Endures: The Persistence of Original Sin

Author:
Barry Eichengreen, Ricardo Hausmann, and Ugo Panizza
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Notwithstanding announcements of progress, "international original sin" (the denomination of external debt in foreign currency) remains a persistent phenomenon in emerging markets. Although some middle-income countries have succeeded in developing markets in local-currency sovereign debt and attracting foreign investors, they continue to hedge their currency exposures through transactions with local pension funds and other resident investors. The result is to shift the locus of currency mismatches within emerging economies but not to eliminate them. Other countries have limited original sin by limiting external borrowing, passing up valuable investment opportunities in pursuit of stability. We document these trends, analyzing regional and global aggregates and national case studies. Our conclusion is that there remains a case for an international initiative to address currency risk in low- and middle-income economies so they can more fully exploit economic development opportunities.
Topic:
Markets, Economy, Investment, and Sovereign Debt
Political Geography:
Global Focus

15. Melons as Lemons: Asymmetric Information, Consumer Learning and Seller Reputation

Author:
Jie Bai
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
There is often a lack of reliable quality provision in many markets in developing countries and firms generally lack a reputation for quality. One potential explanation is that mistrust due to past bad behavior can make reputation-building difficult. I examine this hypothesis in a setting that features typical market conditions in developing countries: the retail watermelon markets in a major Chinese city. I first demonstrate empirically that there is substantial asymmetric information between sellers and buyers on quality and a stark absence of quality premium at baseline. I then randomly introduce one of two branding technologies into 40 out of 60 markets–one sticker label that is widely used and counterfeited and one novel expensive laser-cut label. The experiment findings show that laser-branding induced sellers to provide higher quality and led to higher sales profits. However, after the intervention was withdrawn, all markets reverted back to baseline. I incorporate the experimental variation into an empirical model of consumer learning and seller reputation building. The results suggest that consumers are hesitant to upgrade their perception under stickers, which makes reputation-building a low-return investment. While the new technology enhances learning, the resulting increase in profits is not sufficient to cover the fixed cost of the technology for small individual sellers. Counterfactual analysis shows that information friction and fragmented market lead to significant under-provision of quality.
Topic:
Economics, Markets, and Developing World
Political Geography:
China, Asia, and Global Focus

16. Lockdown Fatigue: The Diminishing Effects of Quarantines on the Spread of COVID-19

Author:
Patricio Goldstein, Eduardo Levy-Yeyati, and Luca Sartorio
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Non-Pharmaceutical Interventions (NPIs) have been for most countries the key policy instrument utilized to contain the impact of the COVID-19 pandemic. In this article, we conduct an empirical analysis of the impact of these policies on the virus’ transmission and death toll, for a panel of 152 countries, from the start of the pandemic through December 31, 2020. We find that lockdowns tend to significantly reduce the spread of the virus and the number of related deaths. We also show that this benign impact declines over time: after four months of strict lockdown, NPIs have a significantly weaker contribution in terms of their effect in reducing COVID-19 related fatalities. Part of the fading effect of quarantines could be attributed to an increasing non-compliance with mobility restrictions, as reflected in our estimates of a declining effect of lockdowns on measures of actual mobility. However, we additionally find that a reduction in de facto mobility also exhibits a diminishing effect on health outcomes, which suggests that lockdown fatigues may have introduced broader hurdles to containment policies.
Topic:
Crisis Management, Public Policy, Pandemic, COVID-19, Health Crisis, and Lockdown Policies
Political Geography:
Global Focus

17. Sorting, Matching and Economic Complexity

Author:
Muhammad A. Yildirim
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Assignment models in trade predict that countries with higher productivity levels are assortatively matched to industries that make better use of these higher levels. Here, we assume that the driver of productivity differences is the differential distribution of factors among countries. Utilizing such a structure, we define and estimate the average factor level (AFL) for countries and products using only the information about the production patterns. Interestingly, our estimates coincide with the complexity variables of (Hidalgo and Hausmann, 2009), providing an underlying economic rationale. We show that AFL is highly correlated with country-level characteristics and predictive of future economic growth.
Topic:
Economics, Economic Growth, Trade, Industry, and Productivity
Political Geography:
Global Focus

18. National Development Delivers: And How! And How?

Author:
Lant Pritchett
Publication Date:
05-2021
Content Type:
Special Report
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Core dual ideas of early development economics and practice were that (a) national development was a four-fold transformation of countries towards: (i) a more productive economy, (ii) a more responsive state, (iii) more capable administration, and (iv) a shared identity and equal treatment of citizens and (b) this four-fold transformation of national development would lead to higher levels of human wellbeing. The second idea is strikingly correct: development delivers. National development is empirically necessary for high wellbeing (no country with low levels of national development has high human wellbeing) and also empirically sufficient (no country with high national development has low levels of human wellbeing). Three measures of national development: productive economy, capable administration, and responsive state, explain (essentially) all of the observed variation in an omnibus indicator of wellbeing, the Social Progress Index, which is based on 58 distinct non-economic indicators. How national development delivers on wellbeing varies, in three ways. One, economic growth is much more important for achieving wellbeing at low versus high levels of income. Two, economic growth matters more for “basic needs” than for other dimensions of wellbeing (like social inclusiveness or environmental quality). Three, state capability matters more for wellbeing outcomes that depend on public production than on private goods (and for some wellbeing indicators, like physical safety, for which growth doesn’t matter at all). While these findings may seem too common sense to be worth a paper, national development--and particularly economic growth—is, strangely, under severe challenge as an important and legitimate objective of action within the development industry.
Topic:
Development, Economics, and Economic Growth
Political Geography:
Global Focus

19. Let’s Take the Con Out of Randomized Control Trials in Development: The Puzzles and Paradoxes of External Validity, Empirically Illustrated

Author:
Lant Pritchett
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The enthusiasm for the potential of RCTs in development rests in part on the assumption that the use of the rigorous evidence that emerges from an RCT (or from a small set of studies identified as rigorous in a “systematic” review) leads to the adoption of more effective policies, programs or projects. However, the supposed benefits of using rigorous evidence for “evidence based” policy making depend critically on the extent to which there is external validity. If estimates of causal impact or treatment effects that have internal validity (are unbiased) in one context (where the relevant “context” could be country, region, implementing organization, complementary policies, initial conditions, etc.) cannot be applied to another context then applying evidence that is rigorous in one context may actually reduce predictive accuracy in other contexts relative to simple evidence from that context—even if that evidence is biased (Pritchett and Sandefur 2015). Using empirical estimates from a large number of developing countries of the difference in student learning in public and private schools (just as one potential policy application) I show that commonly made assumptions about external validity are, in the face of the actual observed heterogeneity across contexts, both logically incoherent and empirically unhelpful. Logically incoherent, in that it is impossible to reconcile general claims about external validity of rigorous estimates of causal impact and the heterogeneity of the raw facts about differentials. Empirically unhelpful in that using a single (or small set) of rigorous estimates to apply to all other actually leads to a larger root mean square error of prediction of the “true” causal impact across contexts than just using the estimates from non-experimental data from each country. In the data about private and public schools, under plausible assumptions, an exclusive reliance on the rigorous evidence has RMSE three times worse than using the biased OLS result from each context. In making policy decisions one needs to rely on an understanding of the relevant phenomena that encompasses all of the available evidence.
Topic:
Development, Economics, Education, and Public Policy
Political Geography:
Global Focus

20. Successful Failure in Public Policy Work

Author:
Matt Andrews
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
It matters if public policies succeed in solving societal problems, but a dominant narrative holds that policies fail ‘often’. A large-sample study discussed in this paper suggests that this is not accurate, however. The most common policy result in this study is more ambiguous—what I call ‘successful failure’. Such result is achieved when a policy delivers enough low-level, short-term product to promise success, but ultimately (and repeatedly) fails to contribute to sustained highlevel, long-term impact (addressing the problems citizens care about). Such ‘successful failure’ is endemic to public policy work, and a more pernicious result than outright failure: It allows policy design and implementation actors to associate with incomplete near-run success but insulate themselves from future failure (which they blame on factors and actors beyond their control) and simultaneously enjoy repeated demand for work (because problems are never really solved.
Topic:
Government, Public Policy, and Problem Solving
Political Geography:
Global Focus

21. Leading with Intentionality: The 4P Framework for Strategic Leadership

Author:
Robert Wilkinson and Kimberlyn Leary
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The year 2020 has brought one crisis after another, perhaps exacerbating a common belief that a “heroic leader” can save the day. But does this mythical figure really exist? Leadership, once we study it, isn’t one thing exercised at the top by one person, as our colleague and leadership expert Ron Heifetz has observed; it is an activity exerted by people at all levels, and by noticing certain less obvious aspects of leadership, anyone can improve at it. Leadership is possible at any time there is a collective problem. Each of us may have a role to play in mobilizing others to address community problems, and each of us can improve our skills to be more effective.
Topic:
Leadership and Crisis Management
Political Geography:
Global Focus

22. Job Search and Hiring with Two-Sided Limited Information about Workseekers' Skills

Author:
Eliana Carranza, Robert Garlick, Kate Orkin, and Neil Rankin
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper presents field experimental evidence that limited information about workseekers’ skills distorts both firm and workseeker behavior. Assessing workseekers’ skills, giving workseekers their assessment results, and helping them to credibly share the results with firms increases workseekers’ employment and earnings. It also aligns their beliefs and search strategies more closely with their skills. Giving assessment results only to workseekers has similar effects on beliefs and search, but smaller effects on employment and earnings. Giving assessment results only to firms increases callbacks. These patterns are consistent with two-sided information frictions, a new finding that can inform the design of information-provision mechanisms.
Topic:
Labor Issues, Employment, Business, and Job Creation
Political Geography:
Global Focus

23. Horrible Trade-offs in a Pandemic: Lockdowns, Transfers, Fiscal Space, and Compliance

Author:
Ricardo Hausmann and Ulrich Schetter
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
In this paper, we develop a heterogeneous agent general equilibrium framework to analyze optimal joint policies of a lockdown and transfer payments in times of a pandemic. In our model, the effectiveness of a lockdown in mitigating the pandemic depends on endogenous compliance. A more stringent lockdown deepens the recession which implies that poorer parts of society find it harder to subsist. This reduces their compliance with the lockdown, and may cause deprivation of the very poor, giving rise to an excruciating trade-off between saving lives from the pandemic and from deprivation. Lump-sum transfers help mitigate this trade-off. We identify and discuss key trade-offs involved and provide comparative statics for optimal policy. We show that, ceteris paribus, the optimal lockdown is stricter for more severe pandemics and in richer countries. We then consider a government borrowing constraint and show that limited fiscal space lowers the optimal lockdown and welfare, and increases the aggregate death burden during the pandemic. We finally discuss distributional consequences and the political economy of fighting a pandemic.
Topic:
Development, Government, Political Economy, Inequality, Economic Growth, Fiscal Policy, Pandemic, and COVID-19
Political Geography:
Global Focus

24. Gender Differences in Professional Career Dynamics: New Evidence from a Global Law Firm

Author:
Ina Ganguli, Ricardo Hausmann, and Martina Viarengo
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We examine gender gaps in career dynamics in the legal sector using rich panel data from one of the largest global law firms in the world. The law firm studied is representative of multinational law firms and operates in 23 countries. The sample includes countries at different stages of development. We document the cross-country variation in gender gaps and how these gaps have changed over time. We show that while there is gender parity at the entry level in most countries by the end of the period examined, there are persistent raw gender gaps at the top of the organization across all countries. We observe significant heterogeneity among countries in terms of gender gaps in promotions and wages, but the gaps that exist appear to be declining over the period studied. We also observe that women are more likely to report exiting the firm for family and work-life balance reasons, while men report leaving for career advancement. Finally, we show that various measures of national institutions and culture appear to play a role in the differential labor-market outcomes of men and women.
Topic:
Gender Issues, Labor Issues, Women, Employment, Inequality, Human Capital, and Legal Sector
Political Geography:
Global Focus

25. Norms, Enforcement, and Tax Evasion

Author:
Timothy Besley, Anders Jensen, and Torsten Persson
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper studies individual and social motives in tax evasion. We build a simple dynamic model that incorporates these motives and their interaction. The social motives underpin the role of norms and is the source of the dynamics that we study. Our empirical analysis exploits the adoption in 1990 of a poll tax to fund local government in the UK, which led to widespread evasion. The evidence is consistent with the model’s main predictions on the dynamics of evasion.
Topic:
Political Economy, Economy, Financial Crimes, and Tax Systems
Political Geography:
United Kingdom, Europe, and Global Focus

26. Creative Destruction or Idiot Winds: Schumpeterian Theory Meets the Educational Sector in Developing Countries

Author:
Mark H. Moore
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This is one of a series of working papers from “RISE"—the large-scale education systems research programme supported by the UK’s Department for International Development (DFID), Australia’s Department of Foreign Affairs and Trade (DFAT), and the Bill and Melinda Gates Foundation.
Topic:
Development, Education, Governance, and Developing World
Political Geography:
Global Focus

27. Putting Global Governance in its Place

Author:
Dani Rodrik
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
In a world economy that is highly integrated, most policies produce effects across the border. This is often believed to be an argument for greater global governance, but the logic requires scrutiny. There remains strong revealed demand for policy and institutional diversity among nations, rooted in differences in historical, cultural, or development trajectories. The canonical case for global governance is based on two set of circumstances. The first occurs when there is global public good (GPG) and the second under “beggar-thy-neighbor” (BTN) policies. However, the world economy is not a global commons, and virtually no economic policy has the nature of a global public good (or bad). And while there are some important BTN policies, much of our current discussions deal with policies that are not true BTNs. The policy failures that exist arise not from weaknesses of global governance, but from distortions of domestic governance. As a general rule, these domestic failures cannot be fixed through international agreements or multilateral cooperation. The paper closes by discussing an alternative model of global governance called “democracy-enhancing global governance.”
Topic:
International Trade and Finance, Governance, Global Political Economy, and Trade Wars
Political Geography:
Global Focus and Global Markets

28. What Works for Active Labor Market Policies?

Author:
Eduardo Levy Yeyati, Martin Montane, and Luca Sartorio
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The past 5 years have witnessed a flurry of RCT evaluations that shed new light on the impact and cost effectiveness of Active Labor Market Policies (ALMPs) aiming to improve workers´ access to new jobs and better wages. We report the first systematic review of 102 RCT interventions comprising a total of 652 estimated impacts. We find that (i) a third of these estimates are positive and statistically significant (PPS) at conventional levels; (ii) programs are more likely to yield positive results when GDP growth is higher and unemployment lower; (iii) programs aimed at building human capital, such as vocational training, independent worker assistance and wage subsidies, show significant positive impact, and (iv) program length, monetary incentives, individualized follow up and activity targeting are all key features in determining the effectiveness of the interventions.
Topic:
Vocational Training, Labor Policies, Wage Subsidies, and Randomized Controlled Trials
Political Geography:
Global Focus and United States of America

29. When Do Development Projects Enhance Community Well-Being?

Author:
Michael Woolcock
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Many development agencies and governments now seek to engage directly with local communities, whether as a means to the realization of more familiar goals (infrastructure, healthcare, education) or as an end in itself (promoting greater inclusion, participation, well-being). These same agencies and governments, however, are also under increasing pressure to formally demonstrate that their actions ‘work’ and achieve their goals within relatively short timeframes – expectations which are, for the most part, necessary and desirable. But adequately assessing ‘community-driven’ approaches to development requires the deployment of theory and methods that accommodate their distinctive characteristics: building bridges is a qualitatively different task to building the rule of law and empowering minorities. Moreover, the ‘lessons’ inferred from average treatment effects derived from even the most rigorous assessments of community-driven interventions are likely to translate poorly to different contexts and scales of operation. Some guidance for anticipating and managing these conundrums are provided.
Topic:
Development, Government, Infrastructure, and International Development
Political Geography:
Global Focus and United States of America

30. The Cost of Holding Foreign Exchange Reserves

Author:
Eduardo Levy Yeyati and Eduardo Gómez
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Recent studies that have emphasized the costs of accumulating reserves for self-insurance purposes have overlooked two potentially important side-effects. First, the impact of the resulting lower spreads on the service costs of the stock of sovereign debt, which could substantially reduce the marginal cost of holding reserves. Second, when reserve accumulation reflects countercyclical LAW central bank interventions, the actual cost of reserves should be measured as the sum of valuation effects due to exchange rate changes and the local-to-foreign currency exchange rate differential (the inverse of a carry trade profit and loss total return flow), which yields a cost that is typically smaller than the one arising from traditional estimates based on the sovereign credit risk spreads. We document those effects empirically to illustrate that the cost of holding reserves may have been considerably smaller than usually assumed in both the academic literature and the policy debate.
Topic:
Financial Crisis, Exchange Rate Policy, International Reserves, and Capital Flows
Political Geography:
Global Focus and United States of America

31. How ETFs Amplify the Global Financial Cycle in Emerging Markets

Author:
Nathan Converse, Eduardo Levy Yeyati, and Tomas Williams
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Since the early 2000s exchange-traded funds (ETFs) have grown to become an important in- vestment vehicle worldwide. In this paper, we study how their growth affects the sensitivity of international capital flows to the global financial cycle. We combine comprehensive fund- level data on investor flows with a novel identification strategy that controls for unobservable time-varying economic conditions at the investment destination. For dedicated emerging mar- ket funds, we find that the sensitivity of investor flows to global financial conditions for equity (bond) ETFs is 2.5 (2.25) times higher than for equity (bond) mutual funds. In turn, we show that in countries where ETFs hold a larger share of financial assets, total cross-border equity flows and prices are significantly more sensitive to global financial conditions. We conclude that the growing role of ETFs as a channel for international capital flows amplifies the global financial cycle in emerging markets.
Topic:
Emerging Markets, International Trade and Finance, Global Political Economy, Capital Flows, and Mutual Funds
Political Geography:
Global Focus and Global Markets

32. Smart Development Banks

Author:
Eduardo Fernández-Arias, Ricardo Hausmann, and Ugo Panizza
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The conventional paradigm about development banks is that these institutions exist to target well-identified market failures. However, market failures are not directly observable and can only be ascertained with a suitable learning process. Hence, the question is how do the policymakers know what activities should be promoted, how do they learn about the obstacles to the creation of new activities? Rather than assuming that the government has arrived at the right list of market failures and uses development banks to close some well-identified market gaps, we suggest that development banks can be in charge of identifying these market failures through their loan-screening and lending activities to guide their operations and provide critical inputs for the design of productive development policies. In fact, they can also identify government failures that stand in the way of development and call for needed public inputs. This intelligence role of development banks is similar to the role that modern theories of financial intermediation assign to banks as institutions with a comparative advantage in producing and processing information. However, while private banks focus on information on private returns, development banks would potentially produce and organize information about social returns.
Topic:
Development, Industrial Policy, Markets, and Banks
Political Geography:
Global Focus and Global Markets

33. Reasons for Using Mixed Methods in the Evaluation of Complex Projects

Author:
Michael Woolcock
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Evaluations of development projects are conducted to assess their net effectiveness and, by extension, to guide decisions regarding the merits of scaling-up successful projects and/or replicating them elsewhere. The key characteristics of ‘complex’ interventions – numerous face- to-face interactions, high discretion, imposed obligations, pervasive unknowns – rarely fit neatly into standard evaluation protocols, requiring the deployment of a wider array of research methods, tools and theory. The careful use of such ‘mixed methods’ approaches is especially important for discerning the conditions under which ‘successful’ projects of all kinds might be expanded or adopted elsewhere. These claims, and the practical implications to which they give rise, draw on an array of recent evaluations in different sectors in development.
Topic:
International Development, Humanitarian Intervention, and Public Policy
Political Geography:
Global Focus

34. HKS Faculty Research Working Paper Series

Author:
David Deming
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Science, Technology, Engineering, and Math (STEM) jobs are a key contributor to economic growth and national competitiveness. Yet STEM workers are perceived to be in short supply. This paper shows that the “STEM shortage” phenomenon is explained by technological change, which introduces new job skills and makes old ones obsolete. We find that the initially high economic return to applied STEM degrees declines by more than 50 percent in the first decade of working life. This coincides with a rapid exit of college graduates from STEM occupations. Using detailed job vacancy data, we show that STEM jobs change especially quickly over time, leading to flatter age-earnings profiles as the skills of older cohorts became obsolete. Our findings highlight the importance of technology-specific skills in explaining life-cycle returns to education, and show that STEM jobs are the leading edge of technology diffusion in the labor market.
Topic:
International Organization, International Political Economy, Science and Technology, and Labor Issues
Political Geography:
Global Focus

35. Corporate Purpose in Play: The Role of ESG Investing

Author:
John Gerard Ruggie
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
On August 19, 2019, the U.S. Business Roundtable (BR), comprising the CEOs of more than 200 of America’s largest corporations, issued a new mission statement on “the purpose of a corporation” (BR, 2019a). The press release noted that each periodic update on principles of corporate governance since 1997 had endorsed the principle of maximizing shareholder value. In contrast, the new statement commits signatory CEOs “to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders” (BR, 2019b). “[Milton] Friedman must be turning in his grave,” a Fortune magazine article declared (Murray, 2019)
Topic:
International Affairs
Political Geography:
Global Focus

36. Bound to Happen: Explanation Bias in Historical Analysis

Author:
Richard Zeckhauser
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper argues that historical analysis, necessarily written with hindsight, often underestimates the uncertainties of the past. We call this tendency explanation bias. This bias leads individuals – including professional historians – to imply greater certainty in causal analyses than the evidence justifies. Their analyses will treat what is plausible to be probable. We offer a few intuitions about why explanation bias exists, its relation to other well-established psychological biases, what it leads to, and how it might be combatted. Appreciating the depth of uncertainty and ignorance in our world is critical for accurately understanding, interpreting, and drawing from the past to illuminate the present and the near future
Topic:
International Affairs
Political Geography:
Global Focus

37. Targeted Debt Relief and the Origins of Financial Distress: Experimental Evidence from Distressed Credit Card Borrowers

Author:
Will Dobbie
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We study the drivers of financial distress using a large-scale field experiment that offered randomly selected borrowers a combination of (i) immediate payment reductions to target short- run liquidity constraints and (ii) delayed interest write-downs to target long-run debt constraints. We identify the separate e?ects of the payment reductions and interest write-downs using both the experiment and cross-sectional variation in treatment intensity. We find that the interest write-downs significantly improved both financial and labor market outcomes, despite not taking effect for three to five years. In sharp contrast, there were no positive e?ects of the more immediate payment reductions. These results run counter to the widespread view that financial distress is largely the result of short-run constraints.
Topic:
International Affairs
Political Geography:
Global Focus

38. The Intergenerational Effects of Parental Incarceration

Author:
Will Dobbie
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We estimate the causal effects of parental incarceration on children’s short- and long-run outcomes using administrative data from Sweden. Our empirical strategy exploits exogenous variation in parental incarceration from the random assignment of criminal defendants to judges with different incarceration tendencies. We find that the incarceration of a parent in childhood leads to a significant increase in teen crime and significant decreases in educational attainment and adult employment. The effects are concentrated among children from the most disadvantaged families, where criminal convictions increase by 10 percentage points, high school graduation decreases by 25 percentage points, and employment at age 25 decreases by 29 percentage points. In contrast, there are no detectable effects among children from more advantaged families. These results suggest that the incarceration of parents with young children may significantly increase the intergenerational persistence of poverty and criminal behavior, even in affluent countries with extensive social safety nets.
Topic:
International Political Economy, International Affairs, and Prisons/Penal Systems
Political Geography:
Global Focus

39. Measuring Bias in Consumer Lending

Author:
Will Dobbie
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper tests for bias in consumer lending using administrative data from a high-cost lender in the United Kingdom. We motivate our analysis using a new principal-agent model of bias, which predicts that profits should be higher for the most illiquid loan applicants at the margin if loan examiners are biased. We identify the profitability of marginal applicants using the quasi-random assignment of loan examiners. Consistent with our model, we find significant bias against immigrant and older applicants when using the firm’s preferred measure of long-run profits, but not when using the short-run measure used to evaluate examiner performance. Keywords: Discrimination, Consumer Credit
Topic:
Debt, International Political Economy, and International Affairs
Political Geography:
Global Focus

40. Using Behavioral Insights to Improve Truancy Notifications

Author:
Todd Rogers
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Many states mandate districts or schools notify parents when students have missed multiple unexcused days of school. We report a randomized experiment (N = 131,312) evaluating the impact of sending parents truancy notifications modified to target behavioral barriers that can hinder effective parental engagement. Modified truancy notifications that used simplified language, emphasized parental efficacy, and highlighted the negative incremental effects of missing school reduced absences by 0.07 days compared to the standard, legalistic, and punitively-worded notification—an estimated 40% improvement. This work illustrates how behavioral insights and randomized experiments can be used to improve administrative communications in education.
Topic:
International Relations and International Affairs
Political Geography:
Global Focus

41. Public Policy Failure: ‘How Often?’ and ‘What is Failure, Anyway’?

Author:
Matt Andrews
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Observers claim that public policies fail ‘often’. This paper asks, ‘how often’? It is an important question, because public policies absorb resources to address major social issues. We should know if policies are proving bad social investments; routinely failing to solve focal problems at high costs. Unfortunately, it is not easy to assess this. Many public policy organizations—governments in particular—do not provide accessible views onto overall success or failure. The World Bank does, however, provide such view—and it supports policy interventions one finds in governments across the world. The paper thus examines World Bank failure rates. It finds that there are different answers to the ‘how often’ question, depending on responses to a second question, ‘what is failure anyway?’ In studying both questions, the paper identifies a bias in the World Bank—and probably all organizations adopting rational ‘plan and control’ policy processes—to measuring ‘project and product success’ rather than a broader view of success as ‘problems are solved with development impact’. This means that policy organizations like the Bank judge success based on whether planned products are delivered through an efficient process; not whether policies solve the problems that warranted intervention in the first place, or whether the policies promoted development outcomes. Is this how citizens would want their public policy organizations to conceptualize success?
Topic:
Foreign Policy, Government, World Bank, and International Development
Political Geography:
Global Focus and United States of America

42. Two-Stage Examinations: Can Examinations Be More Formative Experiences?

Author:
Dan Levy, Mae Klinger, and Theodore Svoronos
Publication Date:
09-2018
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Two-stage examinations consist of a first stage in which students work individually as they typically do in examinations (stage 1), followed by a second stage in which they work in groups to complete another examination (stage 2), which typically consists of a subset of the questions from the first examination. Data from two-stage midterm and final examinations are used to assess the extent to which individuals improve their performance when collaborating with other students. On average, the group (stage 2) score was about one standard deviation above the individual (stage 1) score. While this difference cannot be interpreted as the causal effect of two-stage examinations on learning, it suggests that individuals experienced substantial performance gains when working in groups in an examination. This average performance gain was comparable with the average difference between the top performer of the group in stage 1 and the group’s stage 1 average, and was equivalent to about two-thirds of the difference between the “super student” score (i.e. the sum of the maximum score for each question in stage 1) and the group’s stage 1 average. This last result suggests that group collaboration takes substantial (albeit partial) advantage of the aggregate knowledge and skills of the group’s individual members. Student feedback about their experience with two-stage examinations reveal that that these types of examinations are generally perceived to be more helpful for learning and are less stressful than traditional examinations. Finally, using data on group gender compositions, we investigate the potential role of gender dynamics on group efficiency.
Topic:
Education, Gender Issues, Collaborative Learning, and Collaborative Efficiency
Political Geography:
Global Focus and United States of America

43. Enhancing Public Health Outcomes in Developing Countries: From Good Policies and Best Practices to Better Implementation

Author:
Michael Woolcock
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
In rich and poor countries alike, a core challenge is building the state’s capability for policy implementation. Delivering high-quality public health and health care – affordably, reliably, at scale, for all – exemplifies this challenge, since doing so requires deftly integrating refined technical skills (surgery), broad logistics management (supply chains, facilities maintenance), adaptive problem solving (curative care) and resolving ideological differences (who pays? who provides?), even as the prevailing health problems themselves only become more diverse, complex and expensive as countries become more prosperous. The current state of state capability in developing countries, however, is demonstrably alarming, with the strains and demands only likely to intensify in the coming decades. Prevailing ‘best practice’ strategies for building implementation capability – copying and scaling putative successes from abroad – are too often part of the problem, while individual training (‘capacity building’) and technological upgrades (e.g., new management information systems) remain necessary but deeply insufficient. An alternative approach is outlined, one centered on building implementation capability by working iteratively to solve problems nominated and prioritized by local actors.
Topic:
Health, Developing World, State, Public Policy, and Policy Implementation
Political Geography:
Global Focus

44. Explaining the Prevalence, Scaling and Variance of Urban Phenomena

Author:
Andres Gomez-Lievano, Oscar Patterson-Lomba, and Ricardo Hausmann
Publication Date:
12-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The prevalence of many urban phenomena changes systematically with population size1. We propose a theory that unifies models of economic complexity2, 3 and cultural evolution4 to derive urban scaling. The theory accounts for the difference in scaling exponents and average prevalence across phenomena, as well as the difference in the variance within phenomena across cities of similar size. The central ideas are that a number of necessary complementary factors must be simultaneously present for a phenomenon to occur, and that the diversity of factors is logarithmically related to population size. The model reveals that phenomena that require more factors will be less prevalent, scale more superlinearly and show larger variance across cities of similar size. The theory applies to data on education, employment, innovation, disease and crime, and it entails the ability to predict the prevalence of a phenomenon across cities, given information about the prevalence in a single city.
Topic:
Economics, Urbanization, Employment, and Economic Theory
Political Geography:
Global Focus and United States of America

45. Bringing Home the Gold? A Review of the Economic Impact of Hosting Mega-Events

Author:
Douglas Barrios, Stuart Russell, and Matt Andrews
Publication Date:
07-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
There is perhaps no larger sports policy decision than the decision to host or bid to host a mega-event like the FIFA World Cup or the Summer Olympics. Hosts and bidders usually justify their decisions by touting their potential impact. Many organizers and promoters either fund or widely disseminate ex-ante studies that tend to highlight the positive effects of the event. For instance, the consultancy firm Ernst & Young produced a 2010 report prior to the 2014 World Cup in Brazil that painted an optimistic picture of the event’s potential legacy. It estimated that an additional R$ 142.39 billion (4.91% of 2010 GDP) would flow through the Brazilian economy over the 2010-2014 period, generating 3.63 million jobs per year, R$ 63.48 billion (2.17% of 2010 GDP) of income for the population and additional tax collection of R$ 18.13 billion (0.62% of 2010 GDP) for the local, state and federal governments. Ernst & Young estimated that during the same period 2.98 million additional visitors would travel to Brazil, increasing the international tourist inflow up to 79%. Such results, if true, would clearly attractive for governments considering a bid, but these expected impacts don’t always materialize. Moreover, hosting mega-events requires significant investments - and the cost of these investments is rising. Zimbalist notes emerging economies like China, Brazil, and South Africa have increasingly perceived "mega-events as a sort of coming-out party signaling that [they are] now a modernized economy, ready to make [their] presence felt in world trade and politics" (Zimbalist 2015). Their intentions may be noble, but the intention of using mega-events as a "coming-out party" means developing countries hoping to host them need to make massive investments. They are confronted by significant obstacles in that they lack sufficient stadiums, accommodations, transportation systems, and other sports-related infrastructure. As a result, each of the mega-events hosted by emerging economies has been exorbitantly expensive. The 2014 World Cup cost Brazil between USD 15 billion and USD 20 billion, while Beijing reportedly spent USD 40 billion prior to the 2008 Summer Olympic (Zimbalist 2015). Additionally, as the debt-ridden 1976 Summer Olympics in Montreal demonstrates, expensive mega-events are not limited to emerging economies alone. Flyvbjerg and Stewart have even shown that every Olympics since 1960 has gone over budget (Flyvbjerg and Stewart 2012). Such incredible figures, in terms of both costs and benefits, beget the question: are mega-events worth it? Which type of reports should governments focus their attention on? What economic consequences should a government reasonably expect? With such high stakes, policymakers need to choose wisely. We attempt to answer these questions and aid the decisions of policymakers by providing a concise review of the rich academic literature on mega-events. For the purposes of this paper, we mainly focus on the Summer Olympic Games and the FIFA World Cup as mega-events. However, we also leverage information regarding events like the Winter Olympic Games, the UEFA football championships, and the Commonwealth Games. These events are organized on a smaller scale than the previous two, but they might provide some insights on how to best understand mega-events. We focus on claims surrounding the direct or indirect mechanisms that facilitate the impact that ex-ante studies predict. We provide a review of these claims and their validity according to the existing literature. Section 1 focuses on the argument that mega-events lead to increased economic activity in the host economy. Specifically, we evaluate whether or not mega-events leads to access to previously inaccessible funds and increased investments. These investments could theoretically come from supranational organizations, private stakeholders, or public stakeholders. We also consider whether or not these new expenditures and investments have the multiplicative effect that many ex-ante studies assume they have. We finally investigate if the economic activity surrounding mega-events leads to increased revenues and tax collection for host governments. Overall, the existing academic literature suggests that any increased economic activity resulting from the event is routinely dwarfed by additional public budgetary commitments. Moreover, the arguments regarding multiplicative effects and increased revenues also tend to be exaggerated. Section 2 shifts the focus to the potential impact of mega-events on a specific industry: tourism. We explore the effect of mega-events on the number of tourists visiting the host region and their spending habits. We explore this channel both for analyses specific to a single mega-event and for cross-country evaluations incorporating many events. Next, we consider the impact of a mega-event on a region’s brand and image in the international community with the idea of testing if hosting the competition will impact future tourism. Finally, we consider if mega-events lead to increases in the capacity of a city or country to welcome future tourists as a result of improved airport infrastructure, accommodations, and/or transportation systems. As was true in Section 1, the academic literature suggests that the claims of many ex-ante studies are misleading. Our review finds that there is some evidence for increases in tourist arrivals to certain events, but those increases are far smaller than what is generally predicted beforehand. These effects are also usually dependent on factors, such as the timing of the competition, that are specific to the host region and the event itself. Section 3 briefly discusses other potential qualitative and social impacts of mega-events such as international business relations, crime reduction, and the "feel-good effect." In the penultimate section, Section 4, we discuss how these conclusions should impact the decision-making of policymakers. Finally, in a short conclusion, we summarize the findings of our review.
Topic:
Infrastructure, Sports, Economy, Olympics, and World Cup
Political Geography:
China, South Africa, Brazil, and Global Focus

46. Classifying Exchange Rate Regimes: 15 Years Later

Author:
Eduardo Levy-Yeyati and Federico Sturzenegger
Publication Date:
06-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Levy Yeyati and Sturzenegger (2001, 2003, 2005) proposed an exchange rate regime classification based on cluster analysis to group countries according to the relative volatility of exchange rates and reserves, thereby shifting the focus from a de jure to de facto approach in the empirical analysis of exchange rate policy. This note extends the classification through 2014 and broadens the country sample, increasing the number of classified country-year observations from 3335 to 5616. Based on this extension, the note documents the main stylized facts in the 2000s, including the behavior of exchange rate policy around the global financial crisis, and the prevalence of floating regimes.
Topic:
Economy, Global Political Economy, Global Financial Crisis, and Exchange Rate Policy
Political Geography:
Global Focus and Global Markets

47. The Big Stuck in State Capability for Policy Implementation

Author:
Matt Andrews, Lant Pritchett, and Michael Woolcock
Publication Date:
01-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We divide the 102 historically developing countries (HDCs) into those with ‘very weak’, ‘weak’, ‘middle’, and ‘strong’ state capability. Analyzing the levels and recent growth rates of the HDCs’ capability for policy implementation reveals how pervasively “stuck” most of them are. Only eight HDCs have attained strong capability, and since most of these are small (e.g., Singapore, UAE), less than 100 million (or 1.7%) of the roughly 5.8 billion people in HDCs currently live in high capability states. Almost half (49) of these countries have very weak or weak capability, and thus their long-run pace of acquiring capability is also very slow. Alarmingly, three quarters of these countries (36 of 49) have experienced negative growth in state capability in recent decades, while more than a third of all countries (36 of 102) have low and (in the medium run at least) deteriorating state capability. At current rates, the ‘time to high capability’ of the 49 currently weak capability states and the 36 with negative growth is obviously “forever”. But even for the 13 with positive growth, only three would reach strong capability by the end of the 21st century at their current medium run growth.
Topic:
Developing World, International Development, State, and Public Policy
Political Geography:
Global Focus and United States of America

48. The New Economic Case for Migration Restrictions

Author:
Michael Clemens and Lant Pritchett
Publication Date:
02-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
For decades, migration economics has stressed the effects of migration restrictions on income distribution in the host country. Recently the literature has taken a new direction by estimating the costs of migration restrictions to global economic efficiency. In contrast, a new strand of research posits that migration restrictions could be not only desirably redistributive, but in fact globally efficient. This is the new economic case for migration restrictions. The case rests on the possibility that without tight restrictions on migration, migrants from poor countries could transmit low productivity ("A" or Total Factor Productivity) to rich countries—offsetting efficiency gains from the spatial reallocation of labor from low to high-productivity places. We provide a novel assessment, proposing a simple model of dynamically efficient migration under productivity transmission and calibrating it with new macro and micro data. In this model, the case for efficiency-enhancing migration barriers rests on three parameters: transmission, the degree to which origin-country total factor productivity is embodied in migrants; assimilation, the degree to which migrants’ productivity determinants become like natives’ over time in the host country; and congestion, the degree to which transmission and assimilation change at higher migrant stocks. On current evidence about the magnitudes of these parameters, dynamically efficient policy would not imply open borders but would imply relaxations on current restrictions. That is, the new efficiency case for some migration restrictions is empirically a case against the stringency of current restrictions.
Topic:
Economics, Migration, Labor Issues, and Economy
Political Geography:
Global Focus

49. Doing Iterative and Adaptive Work

Author:
Matt Andrews, Lant Pritchett, and Michael Woolcock
Publication Date:
01-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Many of the challenges in international development are complex in nature. They involve many actors in uncertain contexts and with unclear solutions. Our work has proposed an approach to addressing such challenges, called Problem Driven Iterative Adaptation (PDIA). This paper is the most recent in a series intended to show how one can do PDIA, building on the first paper, "Doing Problem Driven Work." The current paper addresses a key part of the approach one moves to once a problem has been identified, performing real-time experimental iterations. This is intended as a practical paper that builds on experience and embeds exercises for readers who are actually involved in this kind of work.
Topic:
International Development, State, and Experimental Iterations
Political Geography:
Global Focus and United States of America

50. Managing Your Authorizing Environment in a PDIA Process

Author:
Matt Andrews, Lant Pritchett, and Michael Woolcock
Publication Date:
01-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Development and state building processes are about change. Change is, however, elusive in many contexts. In prior work, we have offered problem driven iterative adaptation (PDIA) as an approach to tackle wicked hard change challenges. This is our fourth practical working paper on ‘how’ to do PDIA. The working paper addresses questions about authority, given that authority is needed to make change happen—especially in hierarchical government settings. This authority is often difficult to attain, however. It is seldom located in one office of person, and is often harder to lock-in with complex challenges, given that they commonly involve significant risk and uncertainty and require engagement by many agents responding to different kinds of authority. Every effort must be taken to address such challenges, and efforts should include an explicit strategy to establish an appropriate authorizing environment. This working paper suggests ideas to adopt in this strategy, with practical exercises and examples to help the reader apply such ideas in her or his own work.
Topic:
Development, Government, International Development, and State
Political Geography:
Global Focus and United States of America