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Biometrics, foreign aid, Africa, economics of resource-rich countries, growth and development, transition economies
Alan Gelb is a senior fellow at the Center for Global Development. His recent research includes aid and development outcomes, the transition from planned to market economies, the development applications of biometric ID technology, and the special development challenges of resource-rich countries.
He was previously director of development policy at the World Bank and chief economist for the bank’s Africa region and staff director for the 1996 World Development Report “From Plan to Market.”
With the expansion of cell coverage and mobile banking, millions of poor and rural people can now access financial services. But as financial institutions reach new populations, it is becoming clear that there are other issues keeping people from formal banking, such as the need for identification. Thankfully, there seems to be an easy solution. Just as mobile phones have helped overcome the issue of proximity for banking, biometrics could do the same for identification.
The World Bank’s Shanta Devarajan and Marcelo Giugale in yesterday’s Guardian Poverty Matters blog write:
Except for Botswana, the track record of Africa's mineral and hydrocarbon exporters is sobering. While Africa's central banks are today better equipped to deal with currency appreciation, and its civil society more alert to environmental hazards, the institutions that control graft are not strong. They must be improved. However, this will take time. Is there a shortcut to better accountability in the management of natural resources? Yes, there is: direct transfers of resource dividends to citizens.
Last week CGD published our working paper on the use of fingerprint and iris scans for cash transfers. As we continue to look into this topic, we are even more convinced of the potential this technology has for transfer systems, particularly those in resource-rich countries.
Cash transfers are increasingly being used by developing countries and development agencies to address a range of economic and social problems, including human investment and greater equality. But the option to directly distribute natural rent to citizens of resource-rich developing countries may also be especially relevant. Such an approach could encourage better resource management and head off the governance problems associated with the concentration of large rents in the hands of the state. Unfortunately, it is often difficult to establish efficient transfer programs in developing countries, many with a record of corruption and leakage. Evidence suggests that even well designed transfer programs experience 10-20 percent leakage, if not higher.
The application of biometrics to promote development and democratization is proceeding rapidly in the developing world—and largely below the radar of the media and development experts in high-income countries. Monitoring press releases on biometrics with the help of a news Google alert, I’ve been struck by the astonishing spread of this technology for use in voter registration in developing countries... Nepal, Zambia, Ghana, to name just three and ongoing cases.
Related Working Paper
Cash at Your Fingertips: Biometric Technology for Transfers in Developing and Resource-Rich Countries
Most recently, Gabon announced plans to introduce a biometric voter roll in advance of the next election: the opposition parties have been urging this for years. The election is due in December 2011, but the President is to seek a court ruling on its deferral to 2012 to allow for the orderly introduction of biometrics. The proposal has been supported by a group of NGOs and associations, as well as the Secretary General of one of the main opposition parties. Bolivia provides an example of what can be done to increase political inclusion. Over 5 million people were enrolled in 2009 within a period of 76 days by some 3,000 enrolment stations, increasing the voter roll by an astonishing 2 million people. The main drivers were the opposition parties, which were reluctant to contest an election with the old, discredited, roll. The exercise was very successful, in the assessment by the Carter Center.
This paper surveys the arguments for and against cash-transfer programs in resource-rich states, discusses some of the new biometric identification technologies, and reaches preliminary conclusions about their potentially very large benefits for developing countries.
Last week, the Government of Pakistan hosted officials from the United States and more than 30 donor countries and multilateral agencies in Islamabad for the Pakistan Development Forum. The big news from the two-day event was the announcement that the United States would accelerate disbursement of $500 million in previously committed aid to help Pakistan meet its flood rebuilding needs. (This pledge is above and beyond the more than $500 million the United States had previously committed to the immediate humanitarian needs from the flood.) What officials did not announces is what the US flood aid will be used for. My CGD colleagues Alan Gelb and Caroline Decker have recommended one proposal that the U.S. policymakers are currently considering: directing up to $500 million to finance a housing capitalization fund for flood-affected households.
How should Uganda use its prospective oil revenues? Our recent paper on this question argued that choices should be considered with an eye towards both their development impact and the implications for governance. We are happy that the paper has sparked debate in Uganda, including discussions in the Daily Monitor by Tabu Butagira and Nick Young. As Nick Young correctly observes, the question of what to do with oil revenues should be debated in Uganda rather than in Washington. In hopes of provoking further informed debate locally, we wish to clarify a few points about our paper that seem to have been misunderstood.
This is a joint post with Caroline Decker and originally appeared on The Hill's Congress Blog.
Pakistan clearly has an urgent need for swift, effective aid in the wake of its catastrophic summer of floods. Infrastructure has suffered unprecedented damage, and as many as 1.6 million households, mostly rural, have lost their homes and possessions. Beyond relief efforts to provide urgent needs—food, water, medical care, and temporary shelter—the priority of the Pakistani government and its international partners will be helping those directly affected get back on their feet and rebuild their lives. What is the best way to help? Even before the floods, spending aid money well in Pakistan was not going to be easy. In 2009, Congress pledged $7.5 billion in non-military aid over five years, but only a tiny fraction of that money has been disbursed. Finding channels (either inside or outside the Pakistani government) where the United States could be confident that dysfunction and corruption would not siphon away too much of the aid has been a challenge. That challenge is still present in the context of the flood reconstruction effort.
However, a new approach has the ability to leapfrog over these impediments.