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1. Marginal, Not Transformational: Development Finance Institutions and the Sustainable Development Goals

Author:
Charles Kenny
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Development finance institutions have positioned themselves as key agencies to help the world meet the Sustainable Development Goals. It is doubtful that they can deliver. This paper outlines the challenges facing DFIs in achieving (anywhere near) such an expansion in their impact, particularly in infrastructure and particularly in the poorest countries. It notes that private investment in SDG priority areas is low in the poorest countries, and the record of private investment in rolling out services is mixed. These issues are linked in part to significant supply side constraints based on country characteristics. DFIs do better than the market as a whole at investing in challenging infrastructure–but not by much. And while the scale of their ‘leverage’ in terms of attracting dollars that would otherwise not have been invested is hard to determine, in the poorest markets in infrastructure it is certainly low. Finally, DFIs and donors more broadly have long tried to improve deal flow with limited success, suggesting there are few deals on the margin of occurring which only require small extra incentives to materialize.
Topic:
Development, Finance, Institutions, and Sustainability
Political Geography:
Global Focus

2. When Does “What Works” Work? And What Does that Mean for UK Aid R&D Spend?

Author:
Charles Kenny, Euan Ritchie, and G. Lee Robinson
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
The UK’s Secretary of State for International Development[1] oversees an aid-financed R&D[2] budget that is larger than that of the next 15 biggest donors combined. [3] At the moment, a considerable proportion of that UK R&D spend goes towards solving global technological challenges related to neglected tropical diseases including malaria, and a considerable proportion again towards local evaluation of aid-financed development interventions. Much of the rest is somewhat opaquely distributed to British universities for research supposedly related to development. As well as reform of this last category, the range of more legitimate activities benefiting from ODA “research and development” calls for innovation in approaches to deliver outcomes. This paper will argue there is a (fuzzy) spectrum of development procedures, for some of which global innovation, evaluation, or “best practice” can be informative, for some of which local evaluation or experimentation can be useful, and for some of which perhaps only practical experience and local wisdom can help. That there is a spectrum of intervention types and research opportunities, and that local evidence is often required, has implications for the kind of research that UK aid can usefully support as part of its R&D program and where that research should happen. In turn, that suggests a reform agenda for the way UK ODA for R&D is currently spent.
Topic:
Development, International Cooperation, Foreign Aid, and Research
Political Geography:
United Kingdom and Europe

3. Automation and AI: Implications for African Development Prospects?

Author:
Charles Kenny
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
Now that computers are capable of taking the jobs that require brain as well as brawn, it may appear there is little left for humans to do. There are many scary forecasts of the capacity of automation and AI to replace a lot of workers very fast. Self-driving vehicles may wipe out opportunities for taxi driv- ers and truckers, for example. Brynjolfsson, Rock, and Syverson note there are 3.5 million people em- ployed driving vehicles in the US. If automation reduced that to 1.5 million, that alone would increase total US labor productivity by 1.7 percent,1 but it would also leave two million drivers looking for work. In 2013, Oxford economists Carl Frey and Michael Osborne made waves by predicting that 47 percent of US employment was automatable over the next two decades, with a higher estimate for developing countries.2 Erin Winick of Technology Review subsequently produced a summary table of job losses and gains estimations on automation.3 Some of the worldwide figures are in Table 1. There are clearly two sides to the ledger, but some of the predicted job loss numbers at the global level are considerable. The forecasts suggest bad news for Africa in particular, given concentration in types of low-skill jobs that might be easy to automate, rising working age populations, and already far too few good jobs to occupy the existing population. Arntz et al. suggest the share of workers at high risk of automation is 40 percent amongst those with a lower secondary education and above 50 percent for those with primary or less education.4 Advanced manufacturing and AI applications including automated call centers might even reverse the trend towards manufacturing and low-skilled services moving to developing countries. That would imperil a recent run of global income convergence. And there have been cases of impact al- ready: Foxconn replacing 30 percent of its workforce when it introduced robots, and 1,000 lost jobs in Vietnam when Adidas shuttered a factory and moved production to “speed factories” in Germany and the US. If this is the beginning of a trend, it would be harmful to African development prospects.
Topic:
Development, Science and Technology, Artificial Intelligence, Automation, and Emerging Technology
Political Geography:
Africa

4. Can the US Development Finance Corporation Compete?

Author:
Charles Kenny
Publication Date:
10-2019
Content Type:
Research Paper
Institution:
Center for Global Development
Abstract:
The new US International Development Finance Corporation (USDFC) will be considerably larger than its predecessor, and it will also be more focused on low and lower middle income countries. It will have new tools to deliver but face expanded competition. The major challenge to the DFC is not Chinese investment (which largely funds projects ill-suited to support from the DFC), but other development finance institutions, many of which are deploying increasing quantities of subsidized capital to attract project sponsors. It is not clear that there are sufficient suitable deals in the shrinking set of low and lower-middle income countries to absorb DFI development finance, and the USDFC could lose projects to subsidized finance from elsewhere if this turns out to be the case. Given that, it should be a priority for the United States to agree rules with other donors that prevent development finance institutions from competing on the basis of subsidy. The new DFC needs increased capacity to deliver deals: both the tools provided by the BUILD Act which are being constrained by the administration and the staff and budget to actively build a pipeline of projects. A considerably bolstered administrative budget may involve reducing –potentially to zero—the profitability OPIC traditionally enjoyed.
Topic:
Development, Governance, Finance, Institutions, and Private Sector
Political Geography:
North America and United States of America

5. Results-Based Payments Reduce the Real Costs of Corruption in Foreign Aid

Author:
Charles Kenny and William Savedoff
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
Why don't foreign aid programs simply pay recipients for attaining agreed upon results? The idea has been around for decades, but it continues to meet resistance. Some donors worry that programs that pay for outputs or outcomes would not be able to control how funds are used and would thus be vulnerable to corruption. This brief explains why results-based payment systems are actually likely to be less vulnerable to corruption than traditional input-tracking approaches by making the effects of corruption-the failure of programs to deliver results-more visible.
Topic:
Corruption, Development, and Foreign Aid

6. Can Results-Based Payments Reduce Corruption?

Author:
Charles Kenny and William Savedoff
Publication Date:
10-2013
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A common objection to results-based programs is that they are somehow more vulnerable to corruption. This paper explains why results-based approaches to foreign aid may be less vulnerable to corruption than the traditional approaches which monitor and track the purchase and delivery of inputs and activities. The paper begins by classifying different corruption costs and specifically distinguishes the problem of diverted funds from the costs associated with failing to generate benefits. It then characterizes the key differences between traditional input-tracking programs and results-based approaches in terms of how they are supposed to work, the implicit risks that preoccupy designers, how they function in practice, and what this means both for the scale of corruption and the realization of benefits. It then considers the conditions under which one approach or another might be more appropriate. The paper concludes that input-tracking approaches are vulnerable to corruption because they have high failure costs and a weak track record for controlling diverted funds. By contrast, results-based approaches are less prone to failure costs and limit the capacity of dishonest agents to divert funds unless those agents first improve efficiency and outputs.
Topic:
Corruption, Development, Foreign Aid, and Governance

7. 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

8. The Best Things in Life are (Nearly) Free: Technology, Knowledge and Global Health

Author:
Charles Kenny and Ursula Casabonne
Publication Date:
05-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Casabonne and Kenny argue that two major factors underlie improved global health outcomes: first, the discovery of cheap technologies that can dramatically improve outcomes; second, the adoption of these technologies, thanks to the spread of knowledge. Other factors have played a role. Increased income not only allows for improved nutrition, but also helps to improve access to more complex preventative technologies. Institutional development is a second key to the spread of such complex technologies. Nonetheless, evidence of dramatic health improvements even in environments of weak institutions and stagnant incomes suggests that the role of these factors may be secondary.
Topic:
Development, Health, Poverty, and Foreign Aid

9. Publishing Construction Contracts as a Tool for Efficiency and Good Governance

Author:
Charles Kenny
Publication Date:
11-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Construction is a $1.7 trillion industry worldwide, much of which is linked to publicly financed projects. Outcomes from this financing are frequently suboptimal. Cost and time escalation, as well as poor quality, are linked to weak governance and corruption, which are endemic in the sector. There is considerable evidence that transparency and oversight are potentially powerful tools to reduce the development impact of corruption. One comparatively cheap and potentially powerful tool to improve outcomes in public procurement is the regular publication of contract and implementation details. In particular, the publication of government contracts would considerably improve transparency. Publication would also provide a large stock of public intellectual capital which should (i) reduce legal costs of contracting; and (ii) help spread best practices and ease the process of learning lessons from failed approaches. The approach is feasible: some jurisdictions have already introduced it.
Topic:
Corruption, Development, Political Economy, and Infrastructure

10. 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