With rigorous economic research and practical policy solutions, we focus on the issues and institutions that are critical to global development. Explore our core themes and topics to learn more about our work.
In timely and incisive analysis, our experts parse the latest development news and devise practical solutions to new and emerging challenges. Our events convene the top thinkers and doers in global development.
Technology, infrastructure, governance and anticorruption, human development, subjective wellbeing/happiness
Charles Kenny is a senior fellow and the director of technology and development at the Center for Global Development. His current work focuses on gender and development, the role of technology in development, governance and anticorruption and the post-2015 development agenda. He has published articles, chapters and books on issues including what we know about the causes of economic growth, the link between economic growth and broader development, the causes of improvements in global health, the link between economic growth and happiness, the end of the Malthusian trap, the role of communications technologies in development, the ‘digital divide,’ corruption, and progress towards the Millennium Development Goals. He is the author of the book "Getting Better: Why Global Development is Succeeding, and How We Can Improve the World Even More" and “The Upside of Down: Why the Rise of the Rest is Great for the West.” He has been a contributing editor at Foreign Policy magazine and a regular contributor to Business Week magazine. Kenny was previously at the World Bank, where his assignments included working with the VP for the Middle East and North Africa Region, coordinating work on governance and anticorruption in infrastructure and natural resources, and managing a number of investment and technical assistance projects covering telecommunications and the Internet.
The Broadband Commission for Digital Development is an ITU (UN International Telecommunications Union) and UNESCO–backed body set up to advocate for greater broadband access worldwide. The commission’s Declaration of Broadband Inclusion for All and other reports call for governments
to support ubiquitous fixed broadband access as a vital tool for economic growth and to reach the Millennium Development Goals. Examining the evidence, however, shows that the benefits of broadband are being oversold. Several points stand out: (i) the evidence for a large positive economic impact of
broadband is limited; (ii) the impact of broadband rollout on achieving the MDGs would be marginal;(iii) there is little evidence ubiquitous broadband is needed for ‘national competitiveness’ or to benefit from opportunities like business process outsourcing; (iv) the costs of fixed universal broadband rollout dwarf available resources in developing countries; (and so) (v) the case for government subsidy of fixed broadband rollout is very weak. There are, however, some worthwhile policy reforms that could speed broadband rollout without demanding significant government expenditure.
Construction is a vital part of development, but it often falls prey to poor governance and corruption. Making the details of construction contracts public is one proven way to help citizens get what they are paying for.
Senior fellow Charles Kenny's weekly Foreign Policy column on Occupy Wall Street.
From the Article
As the Occupy Wall Street protests drag on into their ninth week, the movement has spawned global "occupations" from Rome to London, Toronto to Santiago, Hong Kong to Taipei. Meanwhile, the protesters continue their calls for "democracy not corporatocracy" -- revolutionary language, even if it falls just a bit short of "eat the rich." So perhaps it is no surprise that some of those more at home with the traditional occupants of Wall Street have been quick to complainthat this is just one more sign of growing class warfare.
But is the threat of conflict between the rich and the rest a good thing once in a while? Talk of class warfare rears its head when more people start thinking that the rich are rich not because of their hard work or talent but because they are lucky or because the system is stacked in their favor. That view is becoming increasingly widespread -- 75 percent of Americans back a millionaires' tax, for example. And to an extent, it's right -- not just as a matter of fairness, but as a matter of economics. A bit of redistribution might actually help make everyone -- including the rich -- better off in the long term.
Behind the protests is a growing level of frustration over the yawning income gap. The top fifth of households in the United States earn 10 times what the poorest fifth makes and more than the rest of the country combined. The incomes of the richest 1 percent are 67 times those of the poorest 20 percent of households. And over time, that gap has widened. According to the Congressional Budget Office, between 1979 and 2007, the richest 1 percent saw their after-tax incomes climb 275 percent compared with an 18 percent rise for the poorest fifth. The story is similar, if less dramatic, in other rich economies.
In the United States, a number of prominent Republicans, including House Budget Committee Chairman Paul Ryan and House Majority Leader Eric Cantor, have respondedto disquiet over this income gap by emphasizing the need for equality of opportunity for all Americans. That is surely the right focus: We want to reward both hard work and talent to ensure continued prosperity for everyone. But the evidence suggests we are a very long way from equality of opportunity in most countries, and in particular the United States. According to an analysisby economists Samuel Bowles and Herbert Gintis at the Santa Fe Institute, of children born to the poorest 10 percent of parents in the United States, more than half remain in the bottom fifth of incomes as adults.
This is a problem for everyone, rich and poor, because international evidence suggests that more equal economies grow faster. In fact, the historical evidence for the Americas, compiled in 2005 by economists Stanley Engerman and the late Kenneth Sokoloff of the National Bureau of Economic Research (NBER) suggests that an early source of wealth in the American Northeast was a colonial farming system based around small landholders that encouraged equality and the provision of public goods -- as opposed to the plantation model used in the South and the Caribbean, which favored a small elite uninterested in representative government or widespread education. Similarly, a number of East Asian countries such as South Korea started their path toward miracle growth with land reform and broad-based education, which leveled the economic playing field. More recently, New York University economist William Easterly and others have argued that a higher share of total income for the middle class is associated with improved outcomes in health, education, stability, and growth for all. Consider the economic burden of unequal opportunity on the United States today, with 9 percent unemployment, seven-tenths of a percent of the country in prison, and 28 percent of the population without a high school diploma.
Read it here.
It is widely agreed that the middle class is vital to progress because of its many virtues, but defining middle class in any meaningful way is difficult. And survey evidence suggests the middle class is not culturally unique, particularly socially progressive, or entrepreneurial.
Let There Be Light
A Center for Global Development brownbag seminar
Wednesday, February 22, 2012
**Please bring your lunch--beverages provided**
Co-Founder and CEO
Truman National Security Project
Hosted byCharles Kenny
Center for Global Development
Providing electricity to unlit and unstable parts of the globe is crucial to jump-starting development, improving the environment, and assisting fragile states that ferment many of today's security threats. Rachel Kleinfeld and Drew Sloan's new book, Let There Be Light, shows the failures of centralized electricity to meet these challenges---and describes how distributed, renewable energy such as solar and wind power can work. But, Kleinfeld and Sloan argue, it is not enough to harness the power of the elements. To scale, distributed energy must harness the power of the market. Kleinfeld will present the major challenges that have impeded distributed energy's success, and describe the roles development donors, social entrepreneurs, venture capitalists, the military, and the business world can play to make lighting the developing world a reality.
The World Development Report for 2017 is on Governance and the Law. The report fits into (and helps address) two linked debates about development and the role of the World Bank: first is the tension between best practices, rankings, and learning across economies with the ideas of going with the grain and problem-driven iterative adaption that have culminated in the President of the World Bank, Jim Kim, suggesting “we will never go back to the bad old days when the World Bank and other organizations told countries what to do. We don’t do that anymore.” Second is a debate over the strategic role of the Bank –building consensus and backing holistic endeavors like the SDGs or being more adversarial and pushing prioritization. Luis-Felipe Lopez-Calva, co-director of the Report will discuss these issues with Michael Klein, former vice president for financial and private sector development at the World Bank and a driving force behind the World Bank’s Doing Business indicators. An open discussion will follow.
Senior Fellow Charles Kenny writes his weekly column in Bloomberg Businessweek on how the developing world avoided the debt trap in wake of the global slowdown.
The following article originally appeared in Bloomberg Businessweek.
As the sequester demonstrates new lows in America’s fiscal management and the European debt crisis drags on for its third year, it’s worth noting that most of the rest of the world’s financial health is pretty good. Developing countries used to rule the roost when it came to debt crises and defaults. But after a painful period of policy reform supported by considerable debt relief and restructuring, they were in a far stronger position by the end of the last decade. This has allowed them to follow policies that cushioned their citizens from the impact of the global slowdown, rather than having to ratchet up the pain—in contrast to the paths chosen by governments in much of Europe and now, the U.S.
In 1971, average external debt across 75 developing countries was worth less than a quarter of gross domestic product. Less than one in 10 saw ratios above 50 percent. By 1990, in the aftermath of the oil shock and two “lost decades” of growth, the average developing country had an external debt worth a little more than its GDP. More than six out of every 10 countries had ratios above 50 percent. As late as 2000, while average external debt levels had fallen to 83 percent of GDP, two thirds of countries still had external debt-to-GDP ratios above 50 percent.
The last decade brought dramatic change. By 2011, suggests the World Bank, the average external debt-to-GDP ratio fell to 42 percent and less than one in three developing countries had a ratio over 50 percent. Compare that to the euro zone, where gross external debt is worth about 125 percent of GDP. Similarly, public debt service in the developing world, measured as a percentage of exports, has fallen from 18 percent in 1990, through 8 percent in 2000, to below 3 percent in 2011.
This change involved three big factors: reform, relief, and growth. Reforms—including deficit reduction, moving to market interest rates, and introducing competitive exchange rates—were first introduced by Latin American governments in response to the debt crises of the 1980s. They were so strongly taken up by the U.S. Treasury, the World Bank, and the IMF that they became known as part of a broader package labeled the “Washington Consensus.”
The Washington troika pushed the “consensus” reform agenda, using the incentive of debt relief and restructuring. The Brady Plan, named for then-Treasury Secretary Nicholas Brady, restructured the debt of countries with considerable obligations to private banks. The multilateral lending institutions, meanwhile, introduced the Heavily Indebted Poor Countries (HIPC) initiative for the poorest countries that owed debt to the IMF and the World Bank. Under HIPC and its successor agreement, 30 African nations received over $70 billion in debt relief. Liberia and São Tomé actually received debt relief worth more than a year of GDP. Debt service paid by the HIPC countries declined from about 4 percent of GDP in 1999 to about 2 percent in 2005.
The third factor that helped with debt burdens in the last decade in particular was strong economic performance. Developing countries as a whole saw GDP expand by 79 percent from 2000 to 2010. That’s enough to reduce a constant debt stock as a percentage of GDP by about 44 percent.
Lower debt levels are associated with good things—not least, fewer debt crises. Carmen Reinhart and Kenneth Rogoff report in the American Economic Review that while more than one-third of the countries they study were in default at the peak of the 80’s debt crisis, the proportion was closer to one in 10 by 2010. The sustainability of debt has led to a distinct stability of inflation and global currencies. Reinhart and Rogoff suggest that during a five-year peak around 1990, more than half of all countries in the world saw a 15 percent or worse devaluation of their currency, with inflation scoring above 20 percent. In the last few years, this has dropped to below 5 percent.
Lower initial debt levels have also helped developing countries respond more forcefully to the global financial crisis. World Bank economists note that emerging economies didn’t sink as low during the 2008 crisis and bounced back faster than did advanced countries. In the past, they suggest, skittish foreign investors would force developing countries to cut spending and raise interest rates in the midst of a recession, worsening their slumps. This time around—thanks to lower debt, strong reserves, more flexible exchange rate regimes, and increasingly credible central bank leadership—many developing countries have possessed the ability to reduce interest rates and increase spending. And (unlike, say, the U.K.) most were smart enough to use that policy space to avoid shrinking their economies.
But the lessons for Europe aren’t straightforward, and they are even less so for the U.S. For a start, whatever restructuring or forgiveness Greece manages to milk out of its creditors is going to be considerably less generous than an HIPC settlement. Second, cutting long-term fiscal deficits and improving the current account situation is, to put it mildly, a bit late now. A “more flexible exchange rate” in the context of Greece or Portugal means to “leave the euro”—something that would carry considerable economic (and political) costs of its own. Finally, faster growth is possible at the margins, not least through greater competition in innovation, but rich economies will never expand at the pace that poor countries have managed over the last decade.
Any lessons probably apply to the next crisis—but there they apply to everyone. If what is going on in Europe isn’t enough of a defense against complacency in the developing world, the last lines of Reinhart and Rogoff’s paper might be: “There is little to suggest in this analysis that debt cycles and their connections with economic crises have changed appreciably over time.” Today Greece. The day after tomorrow: back to Latin America and Asia?
Read it here.