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2. A Post-Brexit Trade Policy for Development and a More Integrated Africa
- Author:
- Kimberly Ann Elliott
- Publication Date:
- 01-2020
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- The United Kingdom will confirm its departure from the European Union on 31st January 2020. As part of its independent trade policy, the government has committed to improve access to UK mar- kets for the poorest countries. This note sets out three ways it can do so: expanding duty-free market access while avoiding piecemeal trade agreements that undermine Africa’s own trade integration ef- forts; using an alternative framework for those trade agreements it does negotiate with developing countries; and supporting a “back-to-basics” multilateral negotiation at the World Trade Organiza- tion that could help to rebuild confidence in that institution and thus protect the interests of small and vulnerable countries. After a brief review of the background and context, it sets out specific pro- posals in each of these areas.
- Topic:
- Development, International Cooperation, International Trade and Finance, European Union, and Brexit
- Political Geography:
- Africa, United Kingdom, and Europe
3. Developing a More Inclusive US Trade Policy at Home and Abroad
- Author:
- Kimberly Ann Elliott
- Publication Date:
- 06-2019
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- American policymakers have failed to adequately respond to concerns about globalization’s effects and the resulting backlash has taken an ugly turn in recent years. While globalization is only one of many factors contributing to economic dislocation, sluggish wage growth and inequality in the United States, foreigners, and developing countries in particular, are frequently the target of those who are frustrated at being left behind. Yet few realize that US trade policy effectively discriminates against poorer countries. In addition, provisions in trade agreements that tilt the playing field in favor of business interests over those of American consumers and workers also often undermine development priorities in partner countries. American policymakers should rethink the substance and process of trade policy and negotiations to spread the benefits more broadly, at home and abroad.
- Topic:
- Globalization, International Trade and Finance, Inequality, and Domestic Policy
- Political Geography:
- United States and North America
4. Mexico’s Financial Risks: Solving Pemex for a Solvent Mexico
- Author:
- Laura Alfaro, Augusto de la Torre, Guillermo Calvo, Roque Fernandez, Pablo Guidotti, Paulo Leme, Enrique G. Mendoza, Guillermo Perry, Carmen M. Reinhart, and Liliana Rojas-Suarez
- Publication Date:
- 07-2019
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- Mexico’s financial risks and the policies being adopted by the new administration cannot be ade- quately assessed without recognizing key features that characterize the following initial conditions:
- Topic:
- Development, International Trade and Finance, Governance, Finance, Economic Growth, and Risk
- Political Geography:
- North America and Mexico
5. Chinese Leadership and the Future of BRI: What Key Decisions Lie Ahead?
- Author:
- Brad Parks
- Publication Date:
- 07-2019
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- It’s 2028. The Belt and Road Initiative (BRI) has been underway for 15 years, but the initial enthusiasm and momentum behind BRI has vanished. Many of the governments that initially joined the initiative have publicly withdrawn or quietly wound down their participation. China’s staunchest allies remain engaged but even they have reservations about the wisdom of the initiative. They are saddled with unproductive public investment projects and struggling to service their debts. Domestic public sentiment towards China has soured, and they have come to view their participation in BRI as more of a political liability than an asset. But they worry about the consequences of alienating their most important patron and creditor. China has also assumed a defensive posture. Lacking the goodwill that it possessed at the beginning of BRI, it is now using inducements and threats to prevent its remaining clients from abandoning the initiative. Western donors and lenders watch from the sidelines with a sense of bemusement. They encouraged China to “multilateralize” BRI by establishing a common set of project appraisal standards, procurement guidelines, fiduciary controls, and social and environmental safeguards that other aid agencies and development banks could support. But Beijing chose to go it alone. It opted not to embrace the use of economic rate-of-return analysis to vet project proposals; resisted efforts to harmonize its environmental, social, and fiduciary safeguards with those used by aid agencies and development banks outside of China; and pushed back on the “Western” suggestion that it modernize its monitoring and evaluation practices. China bet that its fast and flexible approach to infrastructure finance would prove to be so compelling that traditional donors and lenders would eventually jump on the bandwagon and co-finance BRI projects. But it miscalculated. Its model was insufficiently attractive on its merits to enlist the participation and support of the other major players in the bilateral and multilateral development finance market. Nor was it sufficiently appealing to sustain elite and public support in partner countries.
- Topic:
- Development, International Trade and Finance, Infrastructure, Leadership, and Belt and Road Initiative (BRI)
- Political Geography:
- China and Asia
6. Gender Matters in Economic Empowerment Interventions: A Research Review
- Author:
- Mayra Buvinic and Megan O'Donnell
- Publication Date:
- 05-2017
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- A review of the recent evaluation evidence on financial services and training interventions questions their gender neutrality and suggests that some design features in these interventions can yield more positive economic outcomes for women than for men. These include features in savings and ‘Graduation’ programs that increase women’s economic self-reliance and self-control, and the practice of repeated micro borrowing that increases financial risk-taking and choice. ‘Smart’ design also includes high quality business management and jobs skills training, and stipends and other incentives in these training programs that address women’s additional time burdens and childcare demands. Peer support may also help to increase financial risk taking and confidence in business decisions, and may augment an otherwise negligible impact of financial literacy training. These features help women overcome gender-related constraints. However, when social norms are too restrictive, and women are prevented from doing any paid work, no design will be smart enough. Subjective economic empowerment appears to be an important intermediate outcome for women that should be promoted and more reliably and accurately measured. More research is also needed on de-biasing service provision, which can be gender biased; lastly, whenever possible, results should be sex-disaggregated and reported for individuals as well as households.
- Topic:
- Gender Issues, International Trade and Finance, and Global Political Economy
- Political Geography:
- Global Focus
7. Expanding Global Liquidity Insurance: Myths and Realities of the IMF’s Precautionary Credit Lines
- Author:
- Nancy Birdsall, Liliana Rojas-Suarez, and Anna Diofasi
- Publication Date:
- 02-2017
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Despite increasing volatility in the global economy, the uptake of the IMF’s two precautionary credit lines, the Flexible Credit Line (FCL) and the Precautionary and Liquidity Line (PLL), has remained limited—currently to just four countries. The two new lending instruments were created in the wake of the global financial crisis of 2008 to enable IMF member states to respond quickly and effectively to temporary balance of payment needs resulting from external shocks. Both credit lines offer immediate access to considerable sums—over 10 times a country’s IMF quota in some cases with no (FCL) or very limited (PLL) conditionality. This paper addresses four misconceptions (or ‘myths’) that have likely played a role in the limited utilization of the two precautionary credit lines: 1) too stringent qualification criteria that limit country eligibility; 2) insufficient IMF resources; 3) high costs of precautionary borrowing; and 4) the economic stigma associated with IMF assistance. We show, in fact, that the pool of eligible member states is likely to be seven to eight times larger than the number of current users; that with the 2016 quota reform IMF resources are more than adequate to support a larger precautionary portfolio; that the two IMF credit lines are among the least costly and most advantageous instruments for liquidity support countries have; and that there is no evidence of negative market developments for countries now participating in the precautionary lines.
- Topic:
- International Trade and Finance and Global Political Economy
- Political Geography:
- Global Focus
8. Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries
- Author:
- Nora Lustig
- Publication Date:
- 01-2017
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Current policy discussion focuses primarily on the power of fiscal policy to reduce inequality. Yet, comparable fiscal incidence analysis for 28 low and middle income countries reveals that, although fiscal systems are always equalizing, that is not always true for poverty. In Ethiopia, Tanzania, Ghana, Nicaragua, and Guatemala the extreme poverty headcount ratio is higher after taxes and transfers (excluding in-kind transfers) than before. In addition, to varying degrees, in all countries a portion of the poor are net payers into the fiscal system and are thus impoverished by the fiscal system. Consumption taxes are the main culprits of fiscally-induced impoverishment. Net direct taxes are always equalizing and indirect taxes net of subsidies are equalizing in nineteen countries of the 28. While spending on pre-school and primary school is pro-poor (i.e., the per capita transfer declines with income) in almost all countries, pro-poor secondary school spending is less prevalent, and tertiary education spending tends to be progressive only in relative terms (i.e., equalizing but not pro-poor). Health spending is always equalizing but not always pro-poor. More unequal countries devote more resources to redistributive spending and appear to redistribute more. The latter, however, is not a robust result across specifications.
- Topic:
- International Trade and Finance and Global Political Economy
- Political Geography:
- Global Focus
9. Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers
- Author:
- Ali Enami, Nora Lustig, and Rodrigo Aranda
- Publication Date:
- 01-2017
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper provides a theoretical foundation for analyzing the redistributive effect of taxes and transfers for the case in which the ranking of individuals by pre-fiscal income remains unchanged. We show that in a world with more than a single fiscal instrument, the simple rule that progressive taxes or transfers are always equalizing not necessarily holds, and offer alternative rules that survive a theoretical scrutiny. In particular, we show that the sign of the marginal contribution unambiguously predicts whether a tax or a transfer is equalizing or not.
- Topic:
- International Political Economy and International Trade and Finance
- Political Geography:
- Global Focus
10. The Impact of Taxes and Social Spending on Inequality and Poverty in El Salvador
- Author:
- Nora Lustig, Margarita Beneke, and José Andrés Oliva
- Publication Date:
- 01-2017
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- We conducted a fiscal impact study to estimate the effect of taxes, social spending, and subsidies on inequality and poverty in El Salvador, using the methodology of the Commitment to Equity project. Taxes are progressive, but given their volume, their impact is limited. Direct transfers are concentrated on poor households, but their budget is small so their effect is limited; a significant portion of the subsidies goes to households in the upper income deciles, so although their budget is greater, their impact is low. The component that has the greatest effect on inequality is spending on education and health. Therefore, the impact of fiscal policy is limited and low when compared with other countries with a similar level of per capita income. There is room for improvement using current resources.
- Topic:
- International Trade and Finance, Poverty, and Income Inequality
- Political Geography:
- El Salvador
11. Aligning to 2020: How the FP2020 Core Partners Can Work Better, Together
- Author:
- Rachel Silverman and Amanda Glassman
- Publication Date:
- 11-2016
- Content Type:
- Special Report
- Institution:
- Center for Global Development
- Abstract:
- In July 2012, world leaders gathered in London to support the right of women and girls to make informed and autonomous choices about whether, when, and how many children they want to have. There, low income-country governments and donors committed to a new partnership—Family Planning 2020 (FP2020). FP2020 set an aspirational goal—120 million additional users of voluntary, high-quality family planning services by 2020—and received commitments totaling $4.6 billion in additional funding. Since then, the focus countries involved in the FP2020 partnership have made significant progress. Yet as FP2020 reaches its halfway point, and new, even more ambitious goals are set as part of the Sustainable Development Goals, gains fall short of aspirations. The midpoint of the FP2020 initiative is thus an important inflection point, offering an opportunity for family planning funders and the FP2020 partnership more broadly to take stock of progress, to reflect on the lessons of the past four years, to refine funding and accountability mechanisms, and to reallocate existing resources for greater impact. Of course, the primary responsibility for expanding contraceptive access falls squarely on country governments. Nonetheless, donor contributions play an important role. With the goal of reaching as many women and girls as possible by 2020 and an eye toward the 2030 Sustainable Development Goals, the Center for Global Development (CGD) convened a working group on donor alignment in family planning in fall 2015 to see how scarce donor resources could go farther to accelerate family planning gains. As the final product of the working group, the report analyzes the successes and limitations of family planning alignment to date, with a focus on procurement, cross-country and in-country resource allocation, incentives, and accountability mechanisms, and makes recommendations for next steps.
- Topic:
- International Trade and Finance, Population, and International Development
- Political Geography:
- Global Focus
12. Multilateral Development Banking for this Century's Development Challenges: Five Recommendations to Shareholders of the Old and New Multilateral Development Banks
- Author:
- Nancy Birdsall and Scott Morris
- Publication Date:
- 10-2016
- Content Type:
- Special Report
- Institution:
- Center for Global Development
- Abstract:
- The multilateral development banks (MDBs) emerged as one of the international community’s great success stories of the post–World War II era. Set up to address a market failure in long-term capital flows to post-conflict Europe and developing countries, they combined financial heft and technical knowledge for more than five decades to support their borrowing members’ investments in post-conflict reconstruction, growth stimulation, and poverty reduction. However, the geo-economic landscape has changed dramatically in this century, and with it the demands and needs of the developing world. Developing countries now make up half of the global economy. The capital market failure that originally motivated the MDBs is less acute. Almost all developing countries now rely primarily on domestic resources to manage public investment, and some of the poorest countries can borrow abroad on their own. Similarly, growth and the globalization of professional expertise on development practice have eroded whatever near-monopoly of advisory services the MDBs once had. At the same time, new challenges call for global collective action and financing of the sort the MDBs are well suited to provide but have been handicapped in doing so effectively. The list goes beyond major financial shocks, where the IMF’s role is clear—ranging from climate change, pandemic risk, increasing resistance to antibiotics, and poor management of international migration flows and of displaced and refugee populations. Other areas include the cross-border security and spillovers associated with growing competition for water and other renewable natural resources, and, with climate change, an increase in the frequency and human costs of weather and other shocks in low-income countries that are poorly equipped to respond.
- Topic:
- International Trade and Finance and International Development
- Political Geography:
- Global Focus
13. Financial Regulations for Improving Financial Inclusion
- Author:
- Stijn Claessens and Liliana Rojas-Suarez
- Publication Date:
- 03-2016
- Content Type:
- Special Report
- Institution:
- Center for Global Development
- Abstract:
- As recently as 2011, only 42 percent of adult Kenyans had a financial account of any kind; by 2014, according to the Global Findex, database that number had risen to 75 percent. [1] In subSaharan Africa, the share of adults with financial accounts rose by nearly half over the same period. Many other developing countries have also recorded gains in access to basic financial services. Much of this progress is being facilitated by the digital revolution of recent decades, which has led to the emergence of new financial services and new delivery channels. Whereas payment services often are the entry point into using formal financial services, they are not the only lowcost and widely accessible financial services being delivered in recent years. Driven by advances in new digital payment services, smallscale credit and new modes for delivering insurance services are being offered in several developing countries. Digital (payment) records are being used to make decisions about provision of credit to small businesses or individuals who do not have traditional collateral or credit history to secure loans. Additionally, affordable mobile systems have led to the provision of new and innovative financial services that would not be economically sustainable under the traditional brickandmortar model such as mobilebased crop microinsurance in subSaharan Africa and payasyougo energy delivery models for offgrid customers in India, Peru, and Tanzania. [2] Increased access to basic financial services, especially payments services, by larger segments of the population reflects the growing use of digital technologies in developing countries. Simultaneously, the adoption of proper regulation based on countryspecific opportunities, needs and conditions has been critical.
- Topic:
- International Political Economy, International Trade and Finance, and Financial Markets
- Political Geography:
- Global Focus
14. Guarantees, Subsidies, or Paying for Success? Choosing the Right Instrument to Catalyze Private Investment in Developing Countries
- Author:
- Owen Barder and Theodore Talbot
- Publication Date:
- 05-2015
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Governments, donors, and public sector agencies are seeking productive ways to ‘crowd in’ private sector involvement and capital to tackle international development challenges. The financial instruments that are used to create incentives for private sector involvement are typically those that lower an investment’s risk (such as credit guarantees) or those that lower the costs of various inputs (such as concessional loans, which subsidise borrowing).
- Topic:
- Development, Economics, and International Trade and Finance
15. Aligning Incentives, Accelerating Impact
- Author:
- Rachel Silverman, Mead Over, and Sebastian Bauhoff
- Publication Date:
- 12-2015
- Content Type:
- Special Report
- Institution:
- Center for Global Development
- Abstract:
- Founded in 2002, the Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund) is one of the world’s largest multilateral health funders, disbursing $3–$4 billion a year across 100-plus countries. Many of these countries rely on Global Fund monies to finance their respective disease responses—and for their citizens, the efficient and effective use of Global Fund monies can be the difference between life and death. Many researchers and policymakers have hypothesized that models tying grant payments to achieved and verified results—referred to in this report as next generation financing models—offer an opportunity for the Global Fund to push forward its strategic interests and accelerate the impact of its investments. Free from year-to-year disbursement pressure (like government agencies) and rigid allocation policies (like the World Bank’s International Development Association), the Global Fund is also uniquely equipped to push forward innovative financing models. But despite interest, the how of new grant designs remains a challenge. Realizing their potential requires technical know-how and careful, strategic decisionmaking that responds to specific country and epidemiological contexts—all with little evidence or experience to guide the way. This report thus addresses the how of next generation financing models—that is, the concrete steps needed to change the basis of payment from expenses to something else: outputs, outcomes, or impact. For example, when and why is changing the basis of payment a good idea? What are the right indicators and results to purchase from grantees? How much and how should grantees be remunerated for their achievements? How can the Global Fund verify that the basis of payment is sound—that the reported results are accurate and reliable and represent real progress against disease control goals? And what is needed to protect communities against coercion or other human rights abuses, ensuring that these new incentives do not drive unintended consequences?
- Topic:
- International Trade and Finance and Global Political Economy
- Political Geography:
- Global Focus
16. Power to the States: Making Fiscal Transfers Work for Better Health
- Author:
- Center for Global Development
- Publication Date:
- 12-2015
- Content Type:
- Special Report
- Institution:
- Center for Global Development
- Abstract:
- Most money and responsibility for health in large federal countries like India rests with subnational governments — states, provinces, districts, and municipalities. The policies and spending at the subnational level affect the pace, scale, and equity of health improvements in countries that account for much of the world’s disease burden: India, Indonesia, Nigeria, and Pakistan. Fiscal transfers between levels of government can — but do not always — play an important role in turning money into outcomes at the subnational level. Well designed, transfers can help put states on a level financial playing field by equalizing spending across states and adjusting allocations for the health risks of each state’s population. Transfers can increase accountability and create incentives for greater spending or effectiveness in service delivery. But transfers are rarely designed with attention to their desired outcomes. To get to better outcomes, international experience suggests that transfers need to be reexamined and reformed along three dimensions. First, central government’s allocation of national revenues to subnational governments should respond to needs and population size. Second, transfers should generate incentives to improve subnational governments’ spending quality and performance on outcomes. Third, independent systems to monitor, evaluate, and provide feedback data on subnational performance can generate greater accountability to the central government, parliaments, and legislatures as well as to citizens. These insights are seemingly simple and suggestive, but each country starts from its own unique history that requires careful technical analysis and political savvy to define reforms with genuine potential to improve health.
- Topic:
- International Political Economy, International Trade and Finance, and Financial Markets
- Political Geography:
- Global Focus
17. Stunted Growth: Why Don't African Firms Create More Jobs?
- Author:
- Vijaya Ramachandran, Leonardo Iacovone, and Martin Schmidt
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Many countries in Africa suffer high rates of underemployment or low rates of productive employment; many also anticipate large numbers of people to enter the workforce in the near future. This paper asks the question: Are African firms creating fewer jobs than those located elsewhere? And, if so, why? One reason may be that weak business environments slow the growth of firms and distort the allocation of resources away from better-performing firms, hence reducing their potential for job creation.
- Topic:
- Economics, Industrial Policy, International Trade and Finance, Markets, and Fragile/Failed State
- Political Geography:
- Africa and Israel
18. Estimating Illicit Flows of Capital via Trade Mispricing: A Forensic Analysis of Data on Switzerland
- Author:
- Alex Cobham, Petr Janský, and Alex Prats
- Publication Date:
- 01-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper assesses the role of Switzerland as the leading hub for global commodities trading, in terms of the patterns of prices received by original exporting countries and subsequently by Switzerland and other jurisdictions. We find support for the hypotheses that (i) the average prices for commodity exports from developing countries to Switzerland are lower than those to other jurisdictions; and that (ii) Switzerland declares higher (re-)export prices for those commodities than do other jurisdictions. This pattern implies a potential capital loss for commodity exporting developing countries and we provide a range of estimates of that loss - each of which suggests the scale is substantial (the most conservative is around $8 billion a year) and that the issue merits greater research and policy attention. An important first step would be a Swiss commitment to meet international norms of trade transparency.
- Topic:
- Economics, Industrial Policy, International Trade and Finance, Markets, and Developing World
- Political Geography:
- Europe and Switzerland
19. How Should Donors Respond to Resource Windfalls in Poor Countries?
- Author:
- Alan Gelb, Anton Dobronogov, and Fernando Brant Saldanha
- Publication Date:
- 07-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Natural resources are being discovered in more countries, both rich and poor. Many of the new and aspiring resource exporters are low-income countries that are still receiving substantial levels of foreign aid. Resource discoveries open up enormous opportunities, but also expose producing countries to huge trade and fiscal shocks from volatile commodity markets if their exports are highly concentrated. A large literature on the "resource curse" shows that these are damaging unless countries manage to cushion the effects through countercyclical policy. It also shows that the countries least likely to do so successfully are those with weaker institutions, and these are most likely to remain as clients of the aid system. This paper considers the question of how donors should respond to their clients' potential windfalls. It discusses several ways in which the focus and nature of foreign aid programs will need to change, including the level of financial assistance. The paper develops some ideas on how a donor like the International Development Association might structure its program of financial transfers to mitigate volatility. The paper outlines ways in which the International Development Association could use hedging instruments to vary disbursements while still working within a framework of country allocations that are not contingent on oil prices. Simulations suggest that the International Development Association could be structured to provide a larger degree of insurance if it is calibrated to hedge against large declines in resource prices. These suggestions are intended to complement other mechanisms, including self-insurance using Sovereign Wealth Funds (where possible) and the facilities of the International Monetary Fund.
- Topic:
- Economics, International Trade and Finance, Natural Resources, and Foreign Aid
- Political Geography:
- Uganda, Kenya, Tanzania, and Ghana