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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.
A bipartisan group of eight Senators led by Senate Foreign Relations Ranking Member Ben Cardin (D-MD) has just reintroduced a new version of a bill designed to identify and combat corruption overseas. The Combating Global Corruption Act of 2017 ties some potentially useful anti-corruption measures to a less-than-useful exercise in corruption ranking that will blunt their impact. That’s a shame, but it also suggests an easy fix: junk the ranking.
The bill mandates a number of requirements around foreign assistance: clauses that allow aid contracts to be terminated if ‘credible indicators’ of corruption are discovered, claw-back clauses regarding recovery of misappropriated funds and (best of all) requirements for the disclosure of the beneficial ownership of all contractors and subcontractors receiving aid funding.
These are valuable steps, but the bill only directs their use in certain countries. The requirements are tied to a State Department review of (amongst other things) recipient country laws, policies and practices regarding detection, investigation, prosecution, conviction and punishment of corruption, and whether or not the government is supporting education, civil society oversight, independent judicial decision-making and international investigations. Countries will be sorted into three tiers: compliance, trying to comply, or not even trying. The list will be published, and tier three countries subject to the anti-corruption requirements.
The tiered system is modeled on the State Department’s Trafficking in Persons Report, credited as a useful diplomatic tool for encouraging countries to do more to fight trafficking. But for all trafficking is a complex and multidimensional subject, it is considerably narrower and more easily quantified than ‘corruption.’ The same applies to measuring efforts to combat it. A wide-ranging review of policies and practices governing an opaque, multifaceted issue without a clear and widely agreed common understanding of what counts as corruption will inevitably end up an exercise in subjectivity. And so the Secretary of State’s corruption measure would join an ever-growing pile of similar subjective measures, none of which have demonstrated any great reliability or influence on real world outcomes related to corruption or poor governance. Take the Worldwide Governance Indicators, with its (largely subjective) control of corruption indicator: as its authors have noted, the measures underlying that indicator show no average change over time. (For a summary and links to literature on why such measures are unreliable in the first place, see here)
What makes all of this particularly unfortunate is that most of the measures required of aid in tier three countries would be valuable everywhere. Wouldn’t American taxpayers want their money back even if it was misappropriated in a country that the State Department thought was trying hard to fight corruption? Wouldn’t beneficial ownership information be valuable in all countries as a check against nepotism or self-dealing?
In short, the bill suggests using a fuzzy measure to arbitrarily limit valuable anti-corruption tools to a subset of countries. But the problem is easy to address: forget the ranking and make the requirements universal Call it the no-tiers approach to fighting corruption in US foreign assistance.
The world of business is still extremely gender-unequal. Across the countries in the World Bank’s enterprise surveys, less than one in five firms are run by a woman, for example. Governments could help fix that problem by using their immense purchasing power (close on $10 trillion a year in procurements) to foster the growth of women-owned enterprises. But at the moment—at least in the US—the government is a laggard rather than a leader when it comes to awarding contracts to women owned business. It’s time for that to change.
In 2015, the Federal government took over 16 million purchasing actions it labeled as ‘small business eligible,’ (where ‘small businesses’ were those with under 500 employees). These procurements were worth over $352 billion dollars. A little over two million of those actions were actually won by small businesses, worth $90 billion. And of the small business purchases, a little under 400,000 contracts, worth about $18 billion, went to majority women-owned small businesses also managed by a woman (both are requirements for being a ‘women-owned business’ in US government parlance). That’s 20 percent of the total spend going to small businesses or 5 percent of small business eligible spending.
That is grounds for congratulations (sort of) because the proportion of small business awards won by women-owned businesses is up from 14 percent in 2005. And the 2015 results means the US government has finally met the goal set in the 1994 Federal Acquisition Streamlining Act that 5 percent of small business eligible contracts went to women-owned firms. People born in the year the goal was set can now legally buy champagne to celebrate its achievement.
But before they pop the cork, members of the Bieber generation might want to reflect on the fact that women-owned firms are still under-represented even compared to their low share of the overall market-place. About one in four small businesses registered to contract with the US government are women-owned compared to their one-in-five share of small business contracts awarded. And accounting for a number of firm features including the age and size of the business, Department of Commerce analysis suggests the odds of a women-owned business winning a contract is roughly 21 percent lower than other businesses.
Looking at the performance of individual US government agencies, some appear to be doing a lot better than others in terms of increasing equality in contracting outcomes. The figure below looks at the 10 largest contracting agencies in 2015 and compares women-owned share of small business awards in 2005 to 2015. Most agencies cluster at the intersection of the average scores for the two years—14 percent in 2005 and 20 percent in 2015.
But there are some outliers: Veterans Affairs has given up an early lead to see its share of women-owned business halve over the period. More positively, both Health and Human Services (HHS) and the Commerce Department have dramatically extended an early lead so that over 30 percent of small business contracts go to women-owned business.
Figure 1: Women-Owned Share of Small Business Awards in the US Federal Government
That suggests that it is possible for governments to make rapid progress in terms of making marketplaces more gender-equal. And policies can help: the US Congress recently passed the Women’s Small Business Procurement Parity Act, for example, which gave those businesses opportunities to bid on sole-source contracts on advantageous terms offered to other targeted business groups like veteran-owned firms.
International organizations might want to support similar efforts—or at least not stand in their way. The World Bank already allows countries to give advantages to locally owned firms in procurement decisions, for example. Perhaps it could allow or encourage procurement officers in client countries to give advantages to women-owned firms, as well. There is a long way to go to ensure gender equality in the marketplace, and governments and international organizations should be leading progress, not dragging behind.
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.
Disclosure: my salary is in part paid by the Gates Foundation. Bill Gates penned a kind (unsolicited, but hugely appreciated) review of a book of mine about global progress that turned into the preface of the paperback version. I interviewed both Bill and Melinda once, but I hope they’ve forgotten that I lost both the recordings and the transcripts. When it comes to disagreements, I prefer cash transfers to chicken transfers (in particular for Gates Foundation grants). Thanks to Jason Hickel and Martin Kirk for comments on an earlier draft.
Martin Kirk and Jason Hickel published a piece earlier this week on the annual Gates Letter. The core critique is that the letter is too rosy. In particular, Kirk and Hickel say of the Gates' letter: "some of their examples are just wrong." The case they provide in illustration is the idea that poverty has been cut by half since 1990. The Gates "use figures based on a $1.25 a day poverty line, but there is a strong scholarly consensus that this line is far too low." Use other poverty lines, and global poverty "hasn’t been falling. In fact, it has been increasing—dramatically.” (See related pieces by Jason here and here).
I don't think this critique holds up.
Regarding the 'strong scholarly consensus' that the extreme poverty line is too low, Kirk and Hickel cite a 2006 paper arguing for a poverty line between $1.90 and $2.70 a day using 2002 PPPs. They could add me to the list, although really I’m just jumping on Lant Pritchett’s coat-tails—we want a $10 line. But I don't think Lant would claim his view has reached consensus.
Given that setting any poverty line is an exercise involving subjectivity, there isn't a single right answer to what’s the best line. I can’t think of a good approach to measuring consensus on what the line should be, but try a Google Scholar search of “$1.25 poverty line” and then try the same with $2.70 or $10 and see which one pops up most often (spoiler: $1.25). That’s not surprising: the world's governments came together last year at the United Nations and all committed to end extreme poverty by 2030 where extreme poverty was agreed as living on less than $1.25 a day, so it is a bit hard to blame the Gates' for using the same (dare I say) consensus number.
As to whether poverty has been rising or falling, if you use $5 a day—Kirk and Hickel's preferred cutoff—they suggest that 4 billion people still live below that threshold, and that (absolute) number has been rising over time. The latest povcalnet numbers involve different adjustments for purchasing power across countries than Hickel’s sources originally used, so aren’t directly comparable, but use his preferred new line of $7.40 and the number of poor has indeed climbed: from 3.8 billion to 4.1 billion since 1990.
The good news involves what is—and what’s not—driving the increase in absolute numbers of people living on less than $7.40 a day. The number can increase because people are getting poorer or because poor people are living longer and having children that survive. And as it turns out, the big, overwhelming reason there are more poor people is because people are dying less, not that they are earning less. Branko Milanovic’s work suggests that every global income percentile below the 78th saw positive income growth 1988-2008 (though, matching Martin Ravallion’s work, he suggests some of the world’s very poorest did see comparatively little in the way of income gains).
That is why it is really, really hard to choose an income cutoff where the percentage of the developing world's population poor under that cutoff has been rising. At $1.90 the proportion under the line has dropped from 35 percent to 11 percent between 1990 and 2013. At $7.40, the percentage of people in developing countries that are poor has fallen from 87 percent to 68 percent 1990-2013. At $10 the percentages are 92 percent to 77 percent. At $100 a day, the number rounds to 100 percent in 2013, but it is still fractionally lower than 1990.
Decrying the rising absolute number of poor people under these circumstances only makes sense if you care about there being too many people—you are worried about their unsustainable consumption, as it might be. (Although then you should really be worried about the number of rich people—they are the ones who consume more). If you like poor people but don’t like poverty, the complaint doesn’t make much sense.
So, by the most common international definition (adopted by the United Nations), poverty has been cut by more than half since 1990. That poverty line is surely too low as a measure of what we would like to see as the minimum quality of life worldwide, but under pretty much any income definition of a poverty, the proportion of the world living under that line has declined since 1990 as incomes have grown for the vast majority of humanity. And that’s a clear sign that global poverty has been falling—not increasing dramatically.
This week FIFA, the governing body of world soccer held its annual Conference for Equality and Inclusion, which asked “How does one transform indisputably beautiful words like ‘equality’ and ‘diversity’ into concrete actions that make a difference?” One way promised in FIFA’s new strategy is an “enhanced commitment to the promotion of human rights and women’s football.” And FIFA is not alone in demanding non-discrimination in sports. The Olympic Charter suggests that it is a “fundamental principle of Olympism” that “[t]he practice of sport is a human right. Every individual must have the possibility of practicing sport, without discrimination of any kind.”
But for all the protestations about equality, there’s evidence to suggest both the International Olympic Committee and FIFA turn a blind eye to evidence of considerable discrimination against women when it comes to the opportunity to compete at the highest levels of sport. They should be ready to back their beautiful words into concrete actions that make a difference, and one tool would be banning countries that grossly discriminate from participating in events.
The Olympic Charter makes clear that “[t]he enjoyment of the rights and freedoms set forth in this Olympic Charter shall be secured without discrimination of any kind, such as race, colour, sex, sexual orientation…or other status.” Regarding participation in the Olympic Games in particular, the Charter demands that National Olympic Committees must ensure no one has been excluded from participation “for racial, religious or political reasons or by reason of other forms of discrimination.”
But the International Olympic Committee doesn’t do much to enforce that demand. Take Saudi Arabia, where women cannot participate in state-organized sports leagues, national tournaments, or attend games as spectators. This translates into dramatically unequal opportunities to participate and compete: only under considerable pressure from the International Olympic Committee did Saudi Arabia send two female participants to the 2012 London Games (neither of whom actually lived in Saudi Arabia); no Saudi women participated in the 2014 Asian Games (199 men participated), and only four in the 2016 Rio Olympic games (out of a total of eleven participants). The International Olympic Committee’s limited intervention is evidence to be sure that it cared about the image of the Olympics, less evidence it cared about the Olympic Charter’s guarantees and the underlying problems that create such naked discrimination between sexes in the ability to enjoy and compete in sports.
Or look at soccer: FIFA reports on whether it recognizes a national men’s and/or women’s soccer team from every country worldwide, categorizing them as either “active” or “inactive.” FIFA lists 211 active men’s teams and 182 women’s teams of which 134 are active. FIFA also creates rankings of men’s teams—pretty much based on their probability of winning the World Cup. Out of the countries ranked in the top 100 men’s active teams worldwide, only three countries don’t have a women’s team: Saudi Arabia, Cape Verde (population 0.5m), and Togo (income per capita $1,489). Saudi Arabia is by far the highest ranked of the three. Out of the countries with a population above 25 million, two countries don’t have a women’s team: Saudi Arabia and Sudan. Out of the countries with a population of 25 million or more and an income per capita above $5,000, one country doesn’t have a women’s team: Saudi Arabia.
It wouldn’t be fair to focus on Saudi Arabia alone. Out of 11,333 participants in the Summer Olympic Games at Rio, 5121 were women—that’s 45 percent. Fifty-one national teams were majority women, 133 majority men and 23 had equal numbers of men and women. Out of the 58 national delegations with more than 50 members, the percentage female varied between 14 and 65 percent. China and Romania both had delegations more than 60 percent female, but 21 countries had delegations less than 40 percent female. Iran, Algeria, Croatia, Azerbaijan, Cuba, Lithuania, and Venezuela all had delegations where fewer than three out of ten were women, with Iran and Algeria below one in five. The International Olympic Committee might want to confirm that girls and women from countries with massively gender-unequal representation are really given an equal opportunity to excel in sports and compete at the international level.
And in the worst cases, international sports bodies shouldn’t push window-dressing solutions like begging countries to find enough women to participate so that they don’t look bad. They should live up to their rhetoric and call countries out—to the point of excluding them from participation. History suggests sports bans can be a powerful tool to push broader progress. The South African apartheid regime refused to racially integrate teams, meaning that the country was only represented on the international sporting stage by whites. South Africa was excluded from the Olympics from 1964 onwards, and by 1970 the ruling bodies of over 20 sports had expelled the country. In a 1977 survey, white South Africans suggested the lack of international sport was one of the three most damaging consequences of apartheid.
Like apartheid, the worse violations of women’s rights worldwide involve institutionalized domination of one group over another with the support of the law and policy of the state. Practically they share restrictions on the freedom of movement and assembly as well as limits to the rights of citizenship. And in sports they mean gross inequalities in participation at the international level. Gender apartheid is ample grounds for global sports boycotts and bans from Olympic and FIFA participation.
In 2015, there were 77,470,857 visits to the United States from other countries. These visitors brought tremendous benefit: not only did they each spend an average of $4,400 on US goods and services during their stay, but also they helped US firms engage with foreign markets, raise the quality of students here, and help with the diffusion of knowledge. We should want more of these tourists and businesspeople, and the above suggests a real cost to inaccurate visa screening mechanisms—of which blanket bans are a prime example.
Many of the common source countries for visitors to the US are covered by a visa waiver program which means most citizens wishing to temporarily visit for work or vacation don’t have to apply for a visa before traveling. But for the rest, entering the US requires applying for a visa at a US consulate and attending an interview before they set foot on a plane. In 2016, over 8.5 million people from 196 countries applied for a tourist or business (B class) visa to visit the United States. Unfortunately, many potential visitors that needed a B-visa before their journey were out of luck: one in five of their applications was rejected. In some countries, the figure was far higher: if you are Ghanaian, for instance, there’s a 63 percent chance your application will be denied.
Why are they rejected?
The official guidance offers insight:
An application may be denied because the consular officer does not have all of the information required to determine if the applicant is eligible to receive a visa, because the applicant does not qualify for the visa category for which he or she applied, or because the information reviewed indicates the applicant falls within the scope of one of the inadmissibility or ineligibility grounds of the law. An applicant’s current and/or past actions, such as drug or criminal activities, as examples, may make the applicant ineligible for a visa.
And, in particular, under INA Section 214(b), you will be denied a visa if you “did not overcome the presumption of immigrant intent, required by law, by sufficiently demonstrating that you have strong ties to your home country that will compel you to leave the United States at the end of your temporary stay.” In other words, the US assumes you will use your temporary visa as a way to migrate permanently unless you prove otherwise.
Deterrent effect plus refusal risk equals…
The complex process and the risk of rejection will deter potential visitors from applying in the first place: in many countries, a $160 application fee (plus the hassle of the application and interview) enters you into a process where you’ve got less than a 50:50 chance of getting a visa. And then the rejection rate will further lower the number of applicants who actually get visas to travel. This double effect greatly reduces the number of visitors to the US.
The relationship between the visa refusal rate and the number of visas granted is large, significant, and negative. Simple OLS regressions suggest that, controlling for GDP, population, and country fixed effects, a 10 percentage point increase in the refusal rate is associated with a 10 percent decrease in the total number of visas granted.
The exact magnitude of the total deterrent effect of visa requirement plus refusal risk is uncertain—international estimates for the deterrent effect of visas range from a 20 percent decline in visitors in recent panel analysis to 70 percent in earlier cross-sectional literature, while an analysis of the visa waiver program suggests travelers from countries participating in the program were 7 to 9 percent more likely to visit the United States than travelers from countries not in the program. But let’s say the total burden of a visa requirement and refusal risk reduced the number of applicants from B-visa countries by 30 percent. Moving to a visa waiver program for all of those countries would increase the number of visitors to the US from those countries from 8.5 million to over 11 million, bringing in an estimated $14 billion dollars—equal to the entire state budget of North Dakota and larger than the budget of 16 other states.
Doubtless many of the visa rejections are valid—reflecting overstay or other risks—but this considerable economic hit does suggest there could be significant advantages to improving screening accuracy so that it produces as few false positives as possible. If we reject someone, we better be sure we have a good reason. And—from an economic perspective—it suggests blanket bans such as the ones re-proposed in Monday’s Trump Administration Executive Order are a big step in the wrong direction.
Data on refusal and approval rates used in this analysis are public records from the US State Department. For replication ease, the data and Stata code to produce the graphs and regressions can be found here. The shapefiles to create the map were downloaded from GADM.
There’s increasing appetite in the US to follow the UK model and launch a review of US spending through international organizations like the United Nations and the World Bank. There is a lot to be said for such an exercise—my colleague Todd Moss even carried out a mock version for the US a few years ago which suggested plaudits for Gavi and the African Development Fund alongside brickbats for the ILO and UNESCO. But I think the model has a serious weakness if it is going to be applied as broadly in the US as some proposals, including a draft executive order making the rounds, imply. I’d argue for (preferably) limiting the review to like-to-like comparisons covering aid and development institutions or (at least) using different criteria for judging the many different types of international organizations.
The focus of the UK Multilateral Aid Review (MAR) was on 43 multilateral institutions that spend much of their time delivering aid-funded projects and services at the country level—the International Development Association at the World Bank, for example, which funds investment projects in developing countries from roads through schools to government procurement systems. The MAR was designed to evaluate an organization’s contribution to UK development objectives (what they do) and organizational strengths (how well they do it). And its attention was largely on the activities of those agencies in individual developing countries—so it awarded points for focus of activities on poor countries, striving for results at country level and so on.
The US equivalent might spread far wider—covering some or all of the 163-odd recipients listed in the State Department’s report on US Contributions to International Organizations as well as the multilateral development banks and other organizations not in the State Department report, including GAVI and the Global Fund.
That will capture a lot of organizations that aren’t in the aid business at all (the Pacific Salmon Commission, for example), a lot of organizations where at least some payments are mandated by treaty obligations, and a lot of organizations where US financing is both non-aid and treaty-obligated including core funding of the United Nations itself alongside UN peacekeeping operations. (For what its worth, the internationally agreed definition of overseas development assistance excludes core payments to international organizations as well as peacekeeping dues.)
That’s a problem. The UK Multilateral Aid Review was (largely) explicitly and implicitly comparing like with like: explicitly between different multilateral forms of aid delivery to developing countries and, implicitly, comparing multilateral aid delivery to bilateral aid delivery to developing countries. A broader US International Organization review would involve comparing a bunch of activities that can only be done by multilateral organizations only some bits of which might be considered ‘aid’ with a bunch of activities that could probably be done either bilaterally or multilaterally and might well count as aid.
Take some examples from the State Department list of International Organizations: the International Atomic Energy Agency gets access to nuclear power plants worldwide to inspect them. It only has that access because it is an internationally recognized UN body. No US equivalent could do the same job. Or look at UN peacekeeping: 0.1 percent of peacekeepers are American, they cost 1/86th per person the cost of US troops, and they operate with international authorization. The US couldn’t (and wouldn’t want to) operate all 16 peacekeeping operations. Then there’s the Multilateral Fund for the Implementation of the Montreal Protocol—that’s the institution that provides support to countries to ensure the ozone layer continues shrinking, avoiding millions of cases of skin cancer. The support is part of the treaty, and the US needs the treaty to ensure everyone—China, Russia, India, Europe—all halt producing the chlorofluorocarbons that were destroying the ozone layer.
Even with activities that are closer to traditional aid projects, there’s a sliding scale: Take Gavi, a global alliance that provides the vaccines used to immunize children in poor countries against a range of infectious diseases. In theory, the US could do this alone, but financing Gavi is far more cost effective: US financing helps leverage resources from other countries but more importantly Gavi uses bulk international purchasing to reduce the cost of vaccines, and coordinates delivery to ensure that all target countries get all of the vaccines they need for ubiquitous coverage. The US simply couldn't achieve that by itself without spending multiples the amount it spends in financing Gavi.
The logic of multilateral necessity is perhaps a little less compelling when it comes to financing school construction in Liberia or a road in Afghanistan. There are still lots of reasons why the US might want to work through international organizations—to work in places US officials aren’t welcome, to leverage donations from others, to reduce overhead costs of delivery, or because of the skills or flexibility of the multilateral donor. But in this case, an aid review could reasonably assess whether the multilateral approach was providing a better return for US financing than it would simply channeling the money through USAID.
What does all of this imply for a US international organization review? Perhaps the best choice would be to limit it to apples to apples comparisons: voluntary contributions to organizations that mainly do ‘traditional’ aid of the type that could be delivered either bilaterally or multilaterally. That’s (broadly) the route the British MAR took. But if the review has to be broader, it should use different sets of metrics to judge different types of financing.
Take the judgment criteria laid out in the UK MAR. They include some organization effectiveness measures that are widely applicable: demonstrates delivery against objectives, measures results, achieves economy in purchase of program inputs, controls administrative costs, has a comprehensive and open disclosure policy. But they also include mission criteria that are largely applicable to traditional aid delivered to individual countries: allocating resources to countries that need it most and to countries where it will be best used. Those criteria aren’t applicable to NATO or the Pacific Salmon Commission.
And if the US International Organization review is going to include payments made under treaty obligation and that aren’t about traditional aid, it should at the least add a filter of ‘multilateral necessity’—how much is the multilateral approach simply vital to delivering the outcomes the organization is set up to achieve. For organizations such as NATO and the International Atomic Energy Agency and activities including peacekeeping and global pandemic preparedness, the answer might be ‘critical.’ For organizations such as the International Development Association or activities including support for school construction the answer might be ‘greatly increases efficiency and impact, but not vital.’ Perhaps for some organizations, a review would conclude simply ‘not important.’
For institutions where multilateralism is simply a necessity (and, in many cases, financing is a treaty obligation), the review could focus on organizational efficiency. For institutions where multilateralism is less of a necessity and support is closer to traditional aid, the review might additionally consider prioritization between organizations. But without the multilateral necessity filter, an international organization review would miss the key justification for why many of the organizations were set up in the first place.
What is the value of women’s work? Organizers of the January 21 Women’s March on Washington are hoping that this year’s International Women’s Day can answer that question. The organizers have announced a strike on March 8 called “A Day Without a Woman,” which coincides with International Women’s Day. Inspired by the February 16 “Day Without Immigrants,” the strike will highlight “the enormous value that women of all backgrounds add to our socio-economic system—while receiving lower wages and experiencing greater inequities, vulnerability to discrimination, sexual harassment, and job insecurity.” Women are encouraged to take the day off paid and unpaid work to demonstrate the impact women have on the global economy.
The first International Women’s Day in 1909 was in honor of female garment workers who protested against poor working conditions. This year's strike will bring the day back to its roots. And 108 years later, unequal labor conditions remain a crucial gender issue. Worldwide, women’s average earnings are almost half those of men, with average global earned income at USD 10,778 for women and USD 19,873 for men. Women’s paid work is also disproportionately overrepresented in the informal sector where wages are lower and benefits and protections are lacking. (This isn’t just a developing country problem: in the United States about 25 percent of total employment is considered non-standard work and around 70 percent of this work is done by women.) Women continue to face higher risk of unemployment than men at the global level. And they are also more likely to work fewer hours for pay, often against their choice, due to domestic responsibilities: including domestic labor (including fetching water, cooking, cleaning, and caring for dependents), women have far longer working days than men.
It's clear that women contribute significantly to the global economy—and yet their work often goes unrecognized. The women’s labor strikes in 1909 made traditionally feminine labor visible. A strike in 2017 should demonstrate that today women’s work affects all sectors. That is why increasing women’s participation and equality in the labor force has such clear gains for development. When women earn a competitive income, they spend 90 percent of it on health, food, and education, meaning that increasing women’s income can contribute to breaking intergenerational cycles of poverty. The McKinsey Global Institute suggests that $12 trillion would be added to the global GDP if gender gaps in work and society were narrowed.
And we have a few suggestions for countries and companies that want to reap those gains:
Use Trade Agreements to Help Level the Playing Field
Women should have access to good jobs. One way to encourage that would be to use trade agreements to hold countries accountable for their labor standards. Agreements could stipulate the repeal of discriminatory laws including those that ban or disadvantage women in particular sectors prior to ratifying agreements. This could be bolstered by empowering local watchdog groups to monitor compliance.
Expand Women’s Role in Developing Technology
Women account for just 15 percent of all inventors behind nine million global patent applications. Countries and the private sector can level the playing field by incentivizing women’s innovation, prioritizing sectors with severe gender imbalances. Incentives can take many forms including scholarships, mentorship programs, research grants, and financing for women-led firms with high business potential.
Support Women to Move to Where the Good Jobs Are
Destination countries could acknowledge the capacity and drive of women migrants from gender-unequal countries that have managed to overcome barriers to build skills and experience by providing them a preference in employment-based visa decisions.
Create a Global Gender Equality Partnership
A Global Gender Equality Partnership could generate voluntary, specific, and monitorable commitments to policy change from member governments. This would ensure a sustained platform for accountability around issues of gender equality more broadly. For example, the partnership could track commitments to remove restrictions on women’s labor force participation.
While International Women’s Day has become a platform to celebrate our achievements in gender equity and highlight crucial issues ranging from political participation to health, this year let’s remember the day’s original purpose—and what countries and the private sector can do to advance women’s wages, working conditions, and voices in society.
The World Bank is in the process of reforming its procurement system, the set of rules that borrowers have to follow when they use Bank financing to buy goods and services. Most of the proposals sound very sensible: much less “prior review” of the process for smaller contracts (World Bank staff looking over bid documents, evaluation reports, and contract documents before they are finalized); more flexibility to use other people’s procurement systems if they’re high quality; more flexibility to use quality alongside cost in evaluating bids in return for greater transparency. There’s some worrying potential expansion of an already clunky safeguards system into procurement, but that aside it all looks great — at least in theory.
It is only great in theory because we have pretty much zero evidence on what actually works and what doesn’t when it comes to the current set of World Bank procurement rules. There’s some doubt that they prevent corruption (their primary aim), but almost no empirical evidence on that topic, let alone their broader impact on development outcomes.
There’s Great Data to Analyze…
What makes this dearth of evidence particularly odd is that there is a rich set of data on procurement processes sitting on World Bank servers: information on thousands of contracts and projects that could help guide a discussion of reform. It isn’t all in the public domain (though, kudos to the World Bank, more and more of it is). Surely there’s a spare economist somewhere amongst the 10,000 plus staff in the institution who could spend a few weeks putting together and analyzing a dataset. Here’s the kind of thing it could include:
From existing research: evidence on country characteristics, project characteristics, project development outcomes, supervision, and task manager quality.
From the World Bank procurement database on prior review contracts: measures of number and size of (prior review) contracts in a project, the number of bids on contracts in the project, the average negotiation length on contracts in the project, the number of contract amendments in the project.
(More of a reach) From the INT database of investigated and tainted contracts regarding fraud and corruption: a list of contracts.
…And it Could Help Answer Some Interesting Questions
I can’t think of a natural experiment that would allow for strong causal statements out of such a database, but a bunch of correlations alone would put us in a considerably stronger empirical position than we are today. The type of questions that could be informed by such an exercise:
What makes for good procurement outcomes in terms of plentiful bids, short negotiations, and few amendments? Is it something about the country, the sector, the task manager, or the project (or all of the above)?
Do procurement outcomes matter for project outcomes? Which ones?
Do higher rates of prior review or fewer contracts in a project or (even) contract suppliers from particular regions make for better project outcomes (and/or better procurement outcomes)?
(More of a reach) Do higher rates of prior review or fewer contracts in a project, or country, sector, task manager, or contract characteristics, correlate significantly with investigated or tainted projects?
There are surely more things that could be put in the database and more questions that could be addressed (thoughts very welcome in the comments). But for an institution that prides itself on evidence-based policymaking, the Bank should surely put the horse before the cart with a little bit of analysis before implementing procurement reforms?
This paper analyzes six waves of responses from the World Values Survey to understand the determinants of beliefs about women’s roles in society and their relationship with the legal system and outcomes.
The Millennium Challenge Corporation is a US agency that provides results-oriented assistance to low- and lower-middle income countries that exhibit strong performance on a number of measures of development. Among these measures is the Worldwide Governance Indicator for control of corruption. A country must score in the top half of its income group on control of corruption to pass the overall selection procedure. This paper examines the empirical underpinning of this “corruption hard hurdle.”
President Obama delivered his 2014 State of the Union speech Tuesday, January 28. Before the speech, we polled CGD experts to find out what they hoped to hear from from the president's address. Check out their oratorical contributions below and read about the development-related decisions and policies they would like to emerge in support of the rhetoric.
You may not be surprised that development didn’t feature prominently in the president’s speech. However, we were pleased to hear references to inequality, the economic benefits of immigration, climate, and trade, if not necessarily with the development lens offered by CGDers below. We were also thrilled to hear the shout-out to Power Africa (oh, and to Mad Men).
President Obama will deliver his 2014 State of the Union speech Tuesday, January 28. We polled CGD experts to find out what they’re hoping to hear when the president addresses Congress and the nation. Check out their oratorical contributions below and read about the development-related decisions and policies they would like to emerge in support of the rhetoric.
“Last year I called for an end to extreme poverty in the world by 2030. That end is in our sights. But inequality is rising not only here in the United States, but in China and India, in Europe and in Africa. To achieve real progress in tackling this pernicious challenge, we need to put the fight against inequality on our global agenda, as well as our domestic one.”
The president is justifiably concerned with growing inequality and declining social mobility in the United States. In the developing world, inequality remains a serious problem and one increasingly associated with a worrying cycle in which high concentrations of economic wealth corrupt political systems, and in turn feed rent-seeking by privileged insiders. Protests this year in Turkey, and in Brazil and Chile (countries where inequality is falling but remains very high), and the rise of resurgent extreme right parties in Greece and Spain signal citizens' growing frustration with economic policies that seem to sustain rather than fight that cycle— whether intentionally or not. The president can send a critical message, at no cost in budget terms, about American democratic values and commitment to inclusive growth around the world -- simply by referring to inequality as a global political as well as economic challenge. Follow-up should include revisiting the position of the United States on the framing of a post-2015 development agenda, as well as revitalizing support at the upcoming G20 summit for toughening up measures on tax cooperation and reduction of cross-border tax abuses already agreed to by the G-8 last year.
“The US economy was built by the hard work of immigrants and today immigration is more important than ever. But Silicon Valley does not run on engineers alone. It also runs on nannies, janitors, farm workers, and dish washers. Immigration reform that creates safe, legal pathways for low-skill migration will contribute to the recovery and continued sustained growth of our economy, prevent future crises of unauthorized immigration, and foster global development in ways that go beyond traditional aid.”
Over the next decade the US economy will need more than 5 million new low-skill workers for jobs like health aids, nannies, food services workers, and landscapers—jobs that require less than a high-school education, and can’t be off-shored or mechanized. Over this same period, just 1.7 million Americans will enter the labor force, only a small fraction of them without a high school diploma. The country needs a way for economically essential migration to take place legally. Filling those essential jobs is critical for our economic recovery and continued economic growth, because they directly complement higher-skill workers and make all of us more productive. This is why immigration reform that includes a robust temporary low-skill worker program, like the W-Visa program in the immigration bill passed by the Senate last year, is good for the American middle class. Meeting American firms’ demand for these low-skill workers will prevent future flows of unauthorized immigration, and expanding opportunities for temporary work in the US will have development benefits that far out size what traditional aid can offer—and at no fiscal cost to US taxpayers.
“I am calling on Congress to pass legislation that will ensure continued US leadership in the IMF, a vital partner to America’s economic interests. Congressional inaction undermines US interests in an institution that plays a critical role in combatting deeply damaging financial crises globally, helps to ensure a level playing field for US workers and companies around the world, and works with us to root out the financial seeds of terrorism.”
The United States badly needs a win on the international economic stage. In a year when the global community decided to go big in support of IDA, the World Bank’s fund for the poorest, the United States decided instead to go big on the Global Fund to Fight Aids, Tuberculosis, and Malaria. As a result, a substantial chunk of the United States’ NPR-style matching pledge to the Global Fund went unmatched, and the champions of IDA this time around were countries like the UK and China (China!). But nowhere in the international economic sphere is the United States more visibly out of step with the rest of the world than on IMF reform, where the US is singlehandedly holding up a hard-won agreement due to congressional inaction. Just a few months ago, President Obama weighed in personally on behalf of the Global Fund, making a direct appeal to other donors. It’s time for him to put his voice to the need for Congress to act on the IMF.
“American taxpayers deserve to know the government spends their hard-earned money. My Administration has taken steps to make accessing data on government spending faster and easier, but we can do more. I will instruct the Office of Management and Budget to publish the full text of all government contracts and task orders online at USAspending.gov, in a fully searchable database, and to develop new guidelines consistent with the Freedom of Information Act that will provide specific guidance on commercial and national secret exceptions.”
US taxpayers fund government contracts with the private sector that are worth hundreds of billions a year. They have a right to know what they are paying for, and there is plentiful evidence that greater transparency in the contracting process can lead to better outcomes in terms of price and quality. A number of other countries from Colombia to Slovakia to the UK already publish government contracts online. In the United States, you can access government contracts using a Freedom of Information Act request, but it can be a long, painful process and the rules governing what counts as ‘commercial secrets’ within a contract are vague enough that the released, redacted document is sometimes more black marker than text. The US should join a growing global movement towards contracting transparency-–and an Executive Order could make it happen.
“Stopping the loss of tropical forests is one of the most urgent, affordable, and feasible actions the international community can take to avert catastrophic climate change. The United States will provide meaningful rewards to those countries and companies that demonstrate success in reducing deforestation.”
Greenhouse gas emissions from tropical deforestation are our emissions too: forests are being cleared to make way for production of the food, fuel, and fiber that US citizens consume. But there are practical solutions to decouple production from deforestation, including policies being put into place by the governments of forest countries to improve law enforcement and forest management, and commitments from private companies to rid their supply chains of deforestation. The United States should join Norway and Germany in allocating aid funding to reward governments that successfully reduce deforestation with “Cash on Delivery.” As part of its contribution to the Tropical Forest Alliance, the US should ensure that the Lacey Act--designed to prevent the import of illegally-produced forest products-- is fully funded and aggressively implemented, and that federal procurement standards are “greened” to create markets for products certified as deforestation-free.
“We will ensure that our anti-tobacco policies are supported—not subverted—by our trade policies, and strengthened by our investments in aid.”
The United States invests billions each year to address some of the most pressing health challenges around the world, but more can be done to ensure that US policies on international trade back up this commitment to global health. Globally, deaths from tobacco use each year exceed the number of deaths from HIV/AIDs, TB, and malaria combined. At home, the United States has enacted smart policies and made tremendous progress against tobacco-related deaths--efforts that should be ‘exported’ and replicated around the world. Failure to stand up to the big tobacco bullies will make it more difficult for these countries to enforce anti-tobacco policies like package warnings and advertising restrictions, and will undermine the United States standing as a leader in global health. Further, the United States should do more to ensure that organizations like the World Bank and the IMF that have a mandate to modify taxes and subsidies, support countries in increasing tobacco taxes and cutting tobacco subsidies, saving both lives and money.
“We know trade is vitally important to our economy, but it is also a critical tool to reduce global poverty. As the United States continues to make progress negotiating with our trade partners across the Pacific and the Atlantic, we must ensure that these agreements benefit US workers and consumers but do not undermine our efforts to promote development in low-income countries or weaken the multilateral trade system that is so crucial to global prosperity.”
Negotiations across the Pacific and with the European Union will no doubt dominate the US trade agenda this year. The greatest risk for smaller, poorer countries is that these “mega-regional” deals will weaken the World Trade Organization and leave those countries with no refuge from discrimination and bullying by more powerful trader partners. Some poor countries, particularly Bangladesh and Cambodia, could also see their exports fall as a result of more favorable market access granted to competitors that are included in these deals, such as Vietnam.
To guard against the risk of undermining multilateralism, President Obama needs to be equally committed to ensuring that ongoing negotiations and development of a work program at the WTO are successful. In particular, US negotiators should push for a food security package that reduces or eliminates rich country agricultural subsidies, reforms food aid, and develops new rules that give developing countries the tools they need to pursue food security goals without distorting global markets. And, to mitigate the potential for trade diversion, President Obama should work with Congress to reduce barriers to trade with the world's poorest and most vulnerable countries.
“My Administration will work closely with Congress to extend trade legislation with Sub-Saharan Africa, negotiate new investment treaties, and significantly expand our efforts to promote more US investment in this important region, particularly in the power sector. Increasing our engagement will yield benefits to US businesses and put more Americans to work. And I look forward to finding additional opportunities for partnership this coming August, when I will host the first ever US-Africa Summit with leaders from 47 African nations.”
This past week, the White House formally announced that President Obama will host leaders from 47 African nations in early August. The summit agenda will focus heavily on promoting trade and investment ties with the region. These interests reflect the continent’s rapid economic growth over the last decade and widespread improvements in macroeconomic management and governance (despite pockets of instability and ongoing challenges in places like South Sudan and the Central African Republic). In the interim, the Administration and Congress will be considering a number of important programs and policies. First, both branches will be determining whether (and how) to extend the African Growth and Opportunities Act, which provides preferential US market access for qualifying countries. Second, the Administration will continue efforts to conclude bilateral investment treaty negotiations with the East African Community. Third, the Administration will continue implementation of its Power Africa Initiative, which seeks to expand electricity access for 20 million households. A presidential reference to these three efforts will be important for either getting them over the finish line (in the case of AGOA and the US-EAC BIT) or putting pressure for early and concrete results (for the Power Africa Initiative).
Beyond this, the US government should also take further steps to promote greater trade and investment ties with Sub-Saharan Africa, including: (1) unleashing the Overseas Private Investment Corporation; (2) expanding select USAID programs focused on unlocking private capital for development, such as the Development Credit Authority; and (3) announcing a new strategy for improving the impact and coherence of US trade capacity building programs.
Governments buy about $9 trillion worth of goods and services a year, and their procurement policies are increasingly subject to international standards and institutional regulation. Using a database of World Bank financed contracts, we explore the impact of a relatively minor procurement rule governing advertising on competition using regression discontinuity design and matching methods. Our findings suggest the potential for more significant and strongly enforced transparency initiatives to have a sizeable effect on procurement outcomes.
The New York Timesreported yesterday that the Trump Administration is considering a new Executive Order on “Auditing and Reducing US Funding of International Organizations.” It mandates cutting all funding to bodies that give full membership to the Palestinian Authority and fund abortion amongst other categories, but also suggests the to-be-established International Funding Accountability Committee recommend “at least a 40 percent overall decrease” in remaining US voluntary funding for international organizations. The draft order creates a committee to look at where these cuts could come from, and suggests a particular focus on peacekeeping operations; the International Criminal Court; development aid to countries that “oppose important United States policies”; and the United Nations Population Fund.
It is unclear if the Executive Order is designed to encompass international financial institutions including the World Bank and IMF (if it did, that would be another big reason for concern). But focusing in on the United Nations and related agencies, the proposed cutswould do almost nothing to reduce the deficit while weakening US national security and international leadership. Cuts to peacekeeping in particular would increase the risk the administration has to put US troops in harm’s way. International peacekeeping operations were singled out as requiring examination by the Committee. However, as some peacekeeping operations are voluntary, and others are assessed, it is unclear whether the Committee would recommend a 40 percent cut in all peacekeeping operations or just those involving voluntary contributions. Of course, the Committee is also required to recommend strategies to transition mandatory assessments to voluntary contributions (though this will almost certainly violate treaty obligations if acted on), so this is perhaps moot.
US funding for the United Nations and its agencies under the State Department International Organizations and Contributions to International Peacekeeping accounts amounts to a little over $4.5 billion a year—equal to a little over 0.1 percent of the total US federal budget, about two B-1 bombers or about one sixth the amount Americans spend each year on pet food. Over half of that sum goes to peacekeeping operations, about $600 million to UN operations and $1.4 billion to international bodies including the International Civil Aviation Organization and the International Atomic Energy Agency. (Other US government departments make additional payments to a range of international organizations inside and outside of the UN family—the biggest beneficiaries are the World Food Program and the UN High Commissioner for Refugees. The total across the US government is $10.8 billion). Most State Department contributions are based on treaty obligations, but the worst punishment the UN could likely mete out if the US refused to pay its assessed share of costs is to deny America a vote in the General Assembly. The real reason to keep up payments is that, for all its failings, the United Nations works.
UN organizations play a considerable role in everything from agreeing statistical measures through peace negotiations (like helping to end the civil war in Guatemala) to ensuring planes don’t crash into each other in international airspace and inspecting nuclear power stations. Again, it is the United Nations—not the US or the European Union—that is leading the response to Syria’s refugee emergency. And the UN also saves lives far away from war zones. The United Nations Children’s Fund currently supplies vaccines reaching more than a third of the world's children. The agency is one factor behind rapidly declining child mortality worldwide: the number of under-five deaths fell from more than 12 million in 1990 to 7.6 million in 2010.
Regarding the UN activities singled out by the draft Executive Order, the US doesn’t fund (and isn’t a member of) the International Criminal Court, so there are few savings to be had. And it isn’t clear how the US could cut development aid via to UN Agencies in a way that was specific to countries that “oppose US policies” (it might be easier, if morally suspect, with emergency aid, but appropriately the draft excludes that). Meanwhile, the UN Population Fund gets about $57 million of US funding for UN agencies. Clearly there isn’t much to cut here (which isn’t to say it should be cut regardless: access to family planning is a human right and a powerful force for development).
That leaves payments for peacekeeping operations as the most plausible target of significant cuts. But the evidence is particularly strong that peacekeeping works. From Sierra Leone and Liberia to Mozambique, El Salvador, and Cambodia, UN missions have helped end bloody civil wars and return countries to peace. Looking across all cases where blue-helmeted UN troops were deployed after a civil war, Virginia Fortna of Columbia University suggests the record is far from perfect, but peacekeeping usually works. Allowing for other factors such as the duration of the war and the development level of the country involved, she suggests when the international community deploys peacekeepers the risk of civil war reigniting drops by almost 70 percent. Madhav Joshi of the University of Notre Dame finds a similar result and adds evidence that UN missions contribute to durable peace in post–civil war states by promoting democracy. Lisa Hultman and Megan Shannon of Uppsala and the University of Colorado at Boulder also suggest that the presence of peacekeepers dramatically reduces civilian deaths. And lowering conflict worldwide makes America safer—it denies terrorists safe havens, limits refugee flows, and reduces the risk that US forces will need to intervene.
The United Nations is currently involved in 16 different peacekeeping operations from Cyprus through Lebanon to Haiti and along the India-Pakistan border. It does all of this at an annual expenditure to the US equal to about 0.015 percent of the costs of the wars in Afghanistan and Iraq. In part that’s because the US pays $2.1 million a year per American serviceman deployed to war zones compared to $24,500 per deployed UN peacekeeper—about 86 times as much. And the UN operates using just 72 Americans out of a force of 100,376. If you are worried about other countries pulling their weight when it comes to international security, UN Peacekeeping should be your instrument of choice. And if the US doesn't want its troops to be the world's policemen, it needs UN peacekeepers.
Overall, it is hard to argue that US expenditure on UN institutions is anything but a great deal—which isn’t to say there aren’t more or less efficient parts of the organization. A US exercise like the UK’s Multilateral Development Review could help in determining where America is getting the most back from its investment in international organizations. And such an exercise can be used to negotiate reforms—and get more for our money. Again, even effective parts of the organization need reform: peacekeepers have spread cholera in Haiti, and engaged in sexual abuse of children elsewhere. Paralysis in the face of Security Council division has left the organization powerless to bring peace to Syria. The UN’s reputation is not improved by giving the chair of a human rights committee to Saudi Arabia, or making Zimbabwe’s despot Robert Mugabe an international tourism ambassador.
But these problems are reasons for further engagement, not abandonment, including pressure for better oversight and accountability that the US Congress backed last year. And America has considerable influence over the UN family to push needed reforms—not only because it is the largest contributor (as befits its status as the largest economy worldwide in market terms), but also because the US and its closest allies are still hugely over-represented in the UN bureaucracy. Western Europe, North America, and Australia and New Zealand between them held 45 percent of top positions as recently as 2005—that compares to a 13 percent share of global population. Contrast China: despite a 23 percent share of world population, they held about one percent of senior positions. In addition, it is a fantastic deal for the US that the UN sits in New York: For every $1 the US contributes to the UN it receives $1.60 back in contracts for US-based businesses & benefits to the economy.
The United Nations is a flawed organization but it is still effective, comparatively cheap, and an irreplaceable tool of US foreign policy. Cutting funding to some of its most cost-effective elements would be a loss to American leadership, values, and security.
Update 1/30/2017: There are reports the Administration is holding off on issuing this Executive Order and that it is under review by the State Department and other agencies. And one draft of the order currently circulating suggests that the 40 percent cut would only apply to voluntary contributions to UN organizations, not assessed contributions that the US is obliged to pay as part of organization membership. The Order creates an International Funding Accountability Committee that is required to recommend strategies to transition mandatory assessments to voluntary contributions as well as recommend the cuts to voluntary contributions. US contributions to Peacekeeping involve both assessed and voluntary contributions. Assessed contributions are made to the UN peacekeeping missions on the ceasefire line between Syria and Israel, in Southern Lebanon, Kosovo, Liberia and elsewhere. Other peacekeeping contributions include to the Multinational Force and Observers operating on the Egypt-Israel border in Sinai (although this is mandated by the Egypt-Israel Treaty of Peace).
Note: This post was updated on Jan 30 at 12:05pm to reflect new information as described above, and on Jan 27 at 9:37am to correct errors. It originally excluded contributions to International Organizations from outside the State Department's core international organization accounts. These have now been added in. And the amount received by the UN Population was amended to $57 million, not $33 million as originally stated. Thanks to Sheba Crocker for alerting us.
The eighth Millennium Development Goal (MDG 8) covered a “global partnership for development” in areas including aid, trade, debt relief, drugs, and information and communications technology (ICT). Since the goal was formulated, there has been progress as well as gaps in the areas which were covered.
Civil Registration and Vital Statistics (CRVS) is a fundamental data collection system for countries and a critical enabler of access to services and participation in civic life for individuals. However, women face unique barriers to accessing CRVS systems, including distance, cost, and regulations that place demands on women for documentation not required from men.