Seven Development Policy Wishes for 2016

January 12, 2016

Sometimes it feels like Groundhog Day. Every twelve months or so, I sit down to write about my main wishes for the forthcoming year in development, and every list for the last few years has included my desire to see the US make good on its commitment to IMF quota reform (which would be of little extra cost to the US taxpayer as the US share of IMF funds could be augmented from existing monies already set aside for global financial crises). Dear reader, you can share my past frustration here, here and here.

Now, as 2016 marks CGD’s 15th year of working to make the global system fairer for millions of people in developing countries (see the footnote below about how we will celebrate!), it is refreshing to be able to leave that old IMF chestnut off this year’s wish list: it was finally achieved at the tail end of 2015, as documented by my colleague Scott Morris and Visiting Fellow (and former Treasury official) Clay Lowery.

And some of my 2015 wishes that matter for climate were fulfilled as well:

  • Bill Gates answered my call (!) for a billionaire’s club to fund  underfunded global public goods. He has committed $1 billion of his own money and is joining with other investors and 20 countries to ramp up dramatically global investment in clean energy research.
  • India and Indonesia exploited falling oil prices to reduce their fiscal outlays for fuel subsidies, in effect raising the price of fuel in their countries.
  • Germany, the UK and Norway together promised another $5 billion in primarily outcome based, pay-for-performance money (see this CGD report) for reducing tropical deforestation. And India decided to link transfers to states in part to their protecting their own forests -- putting $6 billion on the table in pay-for-performance money for forests. Payments to tropical forest countries for the service their standing trees provide make eminent sense: standing trees are the cheapest and most efficient carbon capture and storage currently available to the world.
  • Carbon pricing in one form or another picked up. California will open the door to permitting polluters at home to offset their obligations by financing reduced deforestation in Acre, Brazil. China is gearing up its national cap and trade system to be launched in 2017, based on experience with cap and trade in three of its large cities; and the Obama Administration used an executive order that encourages trading across states in the US subject to new restrictions on pollution from coal-powered plants.

And: In last year’s wishes I hoped to see more women in leadership positions in development institutions. Voila!  Today, three women – Gayle Smith, Dana Hyde, and Elizabeth Littlefield – are in the leadership at USAID, the Millennium Challenge Corporation, and OPIC (the US development finance institution).

This year’s wish list

Some things I hope to see are extensions of promises made at the three big development conferences of 2015: Addis (development finance), New York (SDG adoption) and Paris (climate agreement). Others acknowledge that this is a special year in US politics, and all that that subsequently implies for the United States’ position in the world. And still others are finding a comfortable home on the perennial list. But just because I wish for them year after year doesn’t make them any less important – and witness what happened after years of wishing for IMF quota reform, more pay-for-performance transfers, and reduced fuel subsidies!

As ever, I hope you will comment, complain, tweet, and best of all, add your own to my wishes, as a way to encourage insiders to do the right thing to make this a fairer world for all in 2016 and beyond.

  1. Tobacco taxes. The IMF and World Bank still don’t do much about helping countries and regions tax tobacco. It’s not that straightforward but like other sin taxes (carbon, sugar/soda) tobacco taxes would matter; cigarettes are the cause of more premature deaths in developing countries than malaria, tuberculosis, and AIDS combined. And if they substitute for taxes on labor or help fund direct cash transfers – all the better
  2. Outcome-based education funding. I hope Gordon Brown and his commissioners (at the International Commission of Financing Global Education Opportunity), including our CGD Board Chair Larry Summers, endorse outcome-based funding tied to more learning in poor countries. The Commission could go farther: it could suggest traditional donors jumpstart a pooled fund combining private as well as public funding; the fund would make a five-year global offer under which any low-income country could collect every year, for example, $100 for every additional child that demonstrates new learning following (again, for example) the first year of secondary school, once that completion is independently verified. For too long, children in developing countries have been going to school (good) but not learning (bad). For Messrs. Brown and Summers, this paper explains; CGD came up with this idea almost 10 years old: it’s high time for action!
  3. Government contract transparency. In 2016, I hope to see more countries join the United Kingdom, Colombia, Slovakia, Georgia (and Mexico City) in making transparent their contracts with private providers of goods and services -- what my colleague Charles Kenny has dubbed “Publish What You Buy”. This belongs on the G-20 agenda next November/December, and ought to get a serious mention at the UK-hosted summit on corruption planned for this year.

What about the United States? Its prolonged presidential campaign makes 2016 a tough year for major development initiatives. Still, here are three wishes (please go here for more):

  1. Raise the gasoline tax. I wish once again (going back seven years to 2009) the US would raise the ignoble 18 cent federal tax on gasoline. A $3.50 to $4.00 variable gas tax throughout 2015 would have generated about $270 billion (!) to finance job-creating infrastructure at home. As important, a sensibly sized tax would reduce the continuing US appetite for big cars; it would lower carbon emissions and help save the developing world from the worst outcomes of climate change. 
  2. Accept more refugees. I hope to see the US agree to welcome 1 million Syrian refugees in the next several years. I know: This seems particularly hopeless this year. So perhaps my wish should be more modest: That presidential candidates venture the point that immigration is key to America’s greatness. Steve Jobs’ father was a Syrian immigrant, and America is already better off than western Europe thanks to past immigration (Lant Pritchett’s recent blog on Europe’s refugee ‘crisis’ shows the enormous need for a new generation of working age people there). Immigration to the US from the world’s poorest countries is also more effective than US aid programs as a driver of global poverty reduction.  For more on immigration as a win-win-win proposition, check out Michael Clemens’ call for something simple in the migration debate: facts.
  3. Greater investment in R+D. That a presidential candidate commit to the US investing at home for development abroad, that is commit to increasing public investment in the research, development, and deployment of development-relevant health, energy and agriculture from maybe $15 billion per year to $20 billion by the end of his or her term, especially in agriculture and renewable energy in light of a climate-challenged world. Remember: The Internet is the product of US public investment decades ago.

Seven is a lucky number, and smaller than 17 (sustainable development goals) and 169 (sustainable development targets. Here is a final wish:

  1. That the forthcoming SDG indicators do better on inequality, in two ways. First, include a single, robust, straightforward indicator of material inequality. Since the Gini coefficient will not do (hard to understand, and there is no “right” Gini), I propose (again – go here)  the median income or consumption of every country, which when compared to the gross national income per capita, captures inequality at the country level.  I am optimistic the World Bank will include this simple measure in its PovCalNet website, now that it has enough data from enough countries to do so. And when it comes to better measuring inequalities, we also need better data to track women's and girls' progress, with a special emphasis on better measures of women's work and economic participation, where there are big gaps in data and a lot of bad, misleading data. For more on measuring progress on the SDGs in 2016, listen to this new podcast.

Finally, I have a much longer-term wish. As mentioned earlier, CGD turns 15 this year – already so grown up! I like to say we are now established, but still not part of the Establishment. My wish is that, with your ongoing support, encouragement, constructive criticism and collaboration, we will continue to thrive for the next fifteen years and well beyond!

2016 marks CGD’s 15th year of turning ideas into action to reduce global poverty and inequality. Throughout the year we will be bringing you special events, blog posts, podcasts and publications to reflect on CGD’s most important contributions and look forward to work we hope will help increase global prosperity in the future. Stay tuned!

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CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.