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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.
Development economics, globalism and inequality, the aid system, international financial institutions, education, Latin America, climate financing
Nancy Birdsall is president emeritus and a senior fellow at the Center for Global Development, a policy-oriented research institution that opened its doors in Washington, DC in October 2001. Prior to launching the center, Birdsall served for three years as senior associate and director of the Economic Reform Project at the Carnegie Endowment for International Peace. Her work at Carnegie focused on issues of globalization and inequality, as well as on the reform of the international financial institutions.
From 1993 to 1998, Birdsall was executive vice-president of the Inter-American Development Bank, the largest of the regional development banks, where she oversaw a $30 billion public and private loan portfolio. Before joining the Inter-American Development Bank, she spent 14 years in research, policy, and management positions at the World Bank, most recently as director of the Policy Research Department.
Birdsall has been researching and writing on economic development issues for more than 25 years. Her most recent work focuses on the relationship between income distribution and economic growth and the role of regional public goods in development.
Birdsall is a member of the Board of Directors of the International Food Policy Research Council (IFPRI), of the African Population and Health Research Center, and of Mathematica. She has chaired the board of the International Center for Research on Women and has served on the boards of the Social Science Research Council, Overseas Development Council, and Accion. She has also served on committees and working groups of the National Academy of Sciences.
Birdsall holds a PhD in economics from Yale University and an MA in international relations from the Johns Hopkins School of Advanced International Studies.
Putting Education to Work in Egypt, by Nancy Birdsall and Lesley O'Connell. Prepared for Conference, Growth Beyond Stabilization: Prospects for Egypt, sponsored by The Egyptian Center for Economic Studies in collaboration with the Center for Institutional Reform and the Informal Sector, University of Maryland; the Harvard Institute for International Development, and the US Agency for International Development, February 3-4, 1999, Cairo, Egypt. March 1999.
"Intergenerational Mobility in Latin America: Deeper Markets and Better Schools Make a Difference," with Jere R. Behrman and Miguel Szekely, in New Markets, New Opportunities? Economic and Social Mobility in a Changing World (1999)
"The U.S. and the Social Challenge in Latin America: The New Agenda Needs New Instruments," with Nora Lustig and Lesley O'Connell, in The Search for Common Ground: U.S. National Interests and the Western Hemisphere in a New Century (W.W. Norton & Company, Inc., 1999)
"Deep Integration and Trade Agreements: Good for Developing Countries?" with Robert Z. Lawrence in Global Public Goods: International Cooperation in the 21st Century (Oxford University Press, 1999)
"No Tradeoff: Efficient Growth Via More Equal Human Capital Accumulation in Latin America," in Beyond Trade-Offs: Market Reforms and Equitable Growth in Latin America (1998)
"That Silly Inequality Debate," in Foreign Policy, May/June 2002
"Education in Latin America: Demand and Distribution are Factors that Matter," with Juan Luis Londoño and Lesley O'Connell in CEPAL Review 66, December 1998
"Life is Unfair: Inequality in the World," in Foreign Policy, Summer 1998
"Public Spending on Higher Education in Developing Countries: Too Much or Too Little?" in Economics of Education Review, 1996
The Millennium Challenge Corporation (MCC) was established to provide large-scale grant funding to poor, well-governed countries to support their efforts to reduce poverty and generate economic growth. However, the statutory definition of which countries are “poor” for the purposes of MCC candidacy is inadequate. Based solely on GNI per capita with a rigid graduation threshold, it does not portray a clear picture of broad-based well-being in a country. Using a new, comprehensive country-level dataset of median consumption/income, the authors explore the merits and limitations of such a measure and suggest how it might be applied as an additional determinant of MCC candidacy.
Does broadening financial access to large segments of the population pose risks to financial stability? Not necessarily, according to recent remarks by IMF managing director Christine Lagarde. Increasing access to basic financial transactions such as payments does not threaten financial stability, especially when appropriate supervisory and regulatory frameworks are in place. In fact, with the right regulatory supervision, increased access to financial services can result in both micro and macro benefits. Recognizing the macroeconomic and regulatory dimensions of financial inclusion, CGD and the IMF joined forces for a seminar to kick off the IMF Spring Meetings 2016.
Both CGD and the IMF have been actively engaged in rigorous research centered on financial inclusion. CGD recently published a report on how regulation can improve financial inclusion. The IMF has produced a study investigating the linkages between financial inclusion and macroeconomic benefits. The seminar provided a unique opportunity for the merger of these two areas of expertise.
While there is clear micro-level evidence for the benefits of financial inclusion in improving the daily lives of large segments of the population, the evidence for macro benefits of financial inclusion has been less clear. Lagarde’s opening remarks highlighted the main question motivating the first panel: is the concept of financial inclusion even macro-relevant? In other words, does increasing access to financial services make a difference at the national or global level? In short, yes. Previous evidence by the IMF has shown that inclusive growth could lead to tangible macroeconomic benefits, such as higher GDP and lower income inequality.
Watch Christine Lagarde’s comments on the macroeconomic benefits of financial inclusion from 6:30-8:17 in this video.
What is less clear is the link between financial inclusion and financial stability with respect to credit access. Credit can play a crucial role in helping the poor cope with poverty. However, unchecked credit access could also harm financial stability. The 2010 microfinance crisis in Andhra Pradesh, India is often cited as the prime example of such an instance. However, appropriate regulations and checks are critical to ensure that financial stability is preserved as credit access is broadened. In fact, Lagarde noted in her opening remarks: “Using information on supervisory quality in about 100 countries from the Financial Sector Assessment Program, we find that when supervision is of high quality, broadening credit access actually leads to an increase in financial stability.”
Watch Subir Gokarn and Aslı Demirgüç-Kunt discuss the risks of broadening credit access from 43:19-46:00 in this video.
The first panel also tackled ways to lower barriers to financial inclusion for traditionally marginalized groups, particularly women. Despite broad advances in improving access to basic financial services, the male-female financial inclusion gap has remained persistent. IMF’s Subir Gokarn and Gates Foundation’s Gargee Ghosh highlighted the role of attitudes and trust as key barriers to the uptake of financial services by marginalized customers. Product design is crucial to overcome such behavioral biases and to ensure that financial products are catered to the particular needs of consumers (also discussed in this CGD blog post). While the panel talked about the role of financial literacy and branchless banking in addressing some of the barriers faced by women, IMF’s Ratna Sahay went a step further, emphasizing a bolder approach to address the gender gap and recommended greater involvement of women in the supply side as financial services providers.
Watch Ratna Sahay discuss ways to reduce the gender gap in financial inclusion from 56:32-58:13 in this video.
Photo by IMF
The second panel kicked off with an opening presentation by CGD senior fellow Liliana Rojas-Suarez on the recently published CGD report on regulations for improving financial inclusion. Her presentation laid down the key principles and areas of focus for regulatory improvement to further financial inclusion without compromising financial regulators’ traditional mandates of stability, integrity, and consumer protection. The discussion of financial inclusion as a key policy objective alongside the traditional mandates of regulators is a big step forward in itself.
Watch Liliana Rojas-Suarez present CGD’s recent report on how regulations can improve financial inclusion from 7:05-9:54 in this video.
Any conversation about financial inclusion is incomplete without discussing the role of technology. Digital advances have played a major role in expanding financial services to previously underserved sections of the population. However, they have also introduced new risks through new products, players, and models. One important challenge for regulators is to not fall behind the technological curve, as noted by Nicola Véron, senior fellow at Bruegel. However, at the same time, regulators have to be cautious about not regulating prematurely, which could stifle innovation. The CGD report recommends striking a balance between ex ante and ex post regulations, where clear rules are specified ex ante but with the option for ex post intervention as services and providers evolve.
Watch Stijn Claessens talk about how to strike a balance between ex post and ex ante regulation from 27:13-29:00 in this video.
In line with another recommendation from CGD’s report, the panelists emphasized the need for greater coordination between different regulatory and supervisory agencies, both financial and non-financial ones. Tim Adams, president of the Institute of International Finance, pointed out that there is enormous fragmentation in the regulatory and supervisory space. Echoing these concerns, Tilman Ehrbeck, partner at Omidyar Network, took note that we are unlikely to see movement in the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) space until the regulatory and supervisory jurisdictions are in alignment.
Watch Tim Adams and Tilman Ehrbeck discuss the need for greater coordination between regulatory and supervisory agencies from 1:08:40-1:10:15 in this video.
The event concluded with closing remarks by CGD’s Nancy Birdsall, who drew attention to how financial inclusion has come a long way. The attention towards financial inclusion in both domestic and international agendas shows the increasing recognition of financial inclusion, especially digital financial services, as a key development tool. She also underscored the importance of data, particularly real-time data to bring financial services to underserved populations. By the end of the event, it was clear that advances in financial inclusion are fast-moving due to technology and will continue to require attention in times to come. The future of financial inclusion depends on how regulators and policymakers interact with these rapid technological advances driving financial products.
Watch Nancy Birdsall’s closing remarks on the future of financial inclusion from 1:26:19-1:28:06 in this video.
The European Bank for Reconstruction and Development was created exactly twenty five years ago to develop open and sustainable market economies in post-Cold War Europe. Now, its reach extends from Morocco to Mongolia – and its work from agribusiness to equity funds, manufacturing to natural resources, governance reform to financing the green economy. How is the EBRD changing with the times, and how should it respond to the imperatives set by the SDGs, the Paris climate agreement, and to the emergence of new players in development finance?
In a recent blog, Duncan Green wonders if “Pay by Results” (PbR) programs are overhyped and questions whether foreign aid agencies and NGOs should be pursuing them at all. If PbR programs are taking off, it doesn’t seem to be for a particular form of PbR that we describe as Cash on Delivery (COD) Aid. That’s not surprising. COD requires donors to be willing to try something substantially different from conventional aid. In particular, it requires them to recognize up front that development programs don’t always achieve results in the first few years, and it takes away the illusion of progress created by adherence to pre-approved plans and implementation schedules.
Only a few countries have stepped into this new way of doing aid. The UK experimented with paying Ethiopia a small sum for each additional secondary student who completes school and takes a test. To its credit, the UK and Ethiopia stuck by the agreement even after the first-year outcomes were much lower than they had anticipated. Norway is certainly a champion of patience among donors, maintaining its commitment to Indonesia for five years now, still waiting for Indonesia to complete a number of preconditions to the performance aid package.
Much of what Duncan Green questions in PbR applies to payments to specific service providers, NGOs, communities, or households. Indeed, the Bond study that he cites is focused on paying service providers for results. But these programs differ from COD in important ways. COD pays governments, not service providers. COD pays for only one or a few broad and important measures of outcomes that the government and donor care about, such as educated children, healthier people, access to inexpensive energy, or more efficient tax administration. COD requires that the outcome indicator be regularly reported to the public.
Why do these differences matter? Because without these features, PbR programs tend to create “deliverables” defined by donors, to be delivered on a preset schedule, which invites creation of “plans” and “result chains” and fixed implementation schedules. That, in turn, diverts donor attention from outcomes to inputs, indulging donor impatience and discouraging the kinds of local initiative and innovation (e.g., Problem-Driven Iterative Adaptation) that are ultimately the best guarantee of sustained progress.
Debates over something as abstract and generalized as PbR will continue to be fruitless unless people make clear distinctions about who is being paid, for what, and how. Performance agreements for a consultant writing reports, a health clinic caring for infectious disease, or an energy firm delivering electricity differ from each other, and differ from performance agreements with governments. PbR of the COD Aid type — paying governments in proportion to outcomes as COD Aid proposes — is still largely unexplored.
PbR may be overhyped at the same time that at least one type of PbR is underutilized.
Join us for a special event marking CGD’s 15th anniversary and EBRD’s 25th. EBRD president Sir Suma Chakrabarti will give a major policy speech on the future of multilateral development banking in a changing world, and then discuss the challenges and opportunities for MDBS with CGD president Nancy Birdsall. Directly afterwards, you are also invited to a reception from 5:15 - 7:00 p.m., hosted by EBRD to celebrate the opening of its new office in Washington DC.
In addition to the initiatives you hope to institutionalize in the next 10 months, we hope you’ll also seize the opportunity to put USAID in the forefront of testing a new approach to delivering aid.
The approach reconciles the view, taken for example by Michael Gerson and Rajiv Shah in the second edition of Moneyball for Government, that US foreign assistance should focus on measurably improving people’s lives in the short term with the view, espoused for example by John Norris of the Center for American Progress, that development is also about the long, slow slog of institution building.
The two approaches look to be at odds. Focusing on securing easily measurable results, for example in health and education, would seem to distract USAID experts and recipient country actors from the nitty gritty of building sound and effective country programs and institutions, for example in tax revenue capacity needed to fund government services.
But in fact development as institution building is a long, complex process; and the reality of complexity provides a powerful reason for pursuing short-term results. Aid programs that focus on the first approach are likely to help local actors achieve the second.
That’s the idea of Cash on Delivery Aid. USAID would pay recipient governments on the basis of a reported and verified outcome. Other bilateral donors are trying it. (The hard work is defining an appropriate outcome and a “price” for a unit of outcome.) USAID has financing tools and know-how; it already pays host governments for outputs through Fixed Amount Reimbursement Agreements (FARAs) and disburses funds to local NGOs for achievement of specified milestones through Fixed Obligation Grants. Moving from those programs to paying governments for a single outcome is a small step.
Cash on Delivery Aid builds in the critical benefit of putting development progress firmly in the hands of recipient governments, encouraging system reform and innovation on the part of local actors, who can take the lead in iterating toward locally efficient solutions. The role of USAID field staff is then to work closely with counterparts (when asked), bringing technical ideas and expertise as well as knowledge of the country context (exploiting well the autonomy their field positions encourage).
Finally, paying for measurable and verified outcomes is likely to encourage accountability of governments to their own citizens — a possible democracy bonus.
Pursuing locally efficient solutions will ensure more sustainable, long-run systems. We think paying for outcomes in health and education will help build local systems and institutions for the long term while improving lives in the short term. USAID should try it.
On February 23, CGD President Nancy Birdsall will deliver the first Kapuscinski Development Lecture of 2016 in Berlin, Germany. Her lecture, “The New Middle Class in the Developing World: Does It Matter?” will take a hard look at what it means to be middle class in developing countries and explore the role of strugglers, the rapidly expanding group of people caught between extreme poverty and the middle class.
Join the conversation on Twitter using #KapTalks — and be sure to follow us at @CGDev!
Join in person or online February 23 at 6:00 p.m. CET / 5:00 p.m. GMT / 12:00 p.m. EST. If you’re in Berlin on February 23, join the lecture in person at the Hertie School of Governance (details here). Register at firstname.lastname@example.org.
The Kapuscinski Development Lecture will be delivered by Nancy Birdsall, Founding President at the Center for Global Development. The lecture is a joint initiative of the European Commission, the United Nations Development Programme and the Hertie School of Governance. This is a non-CGD event and will be live-streamed.
In our first podcast of the new year and my first podcast as new host, I speak with CGD's president Nancy Birdsall on her expectations for 2015 as they relate to global development. We cover growing inequality, the marquee moments for development in 2015, and Nancy makes the case for optimism on the post-2015 development agenda. Have a listen.
The World Bank is conducting a far-reaching study of its role in the provision of global public goods. This is not the first and surely not the last. Still, there could be an opening this time around for a much-needed fresh approach. Given the increased urgency of cross-border problems and the bank’s potential for being a powerful force for good, this is trend worth watching.
Many obstacles to development transcend national borders and therefore cannot be adequately addressed within a single country. These include issues such as drug resistance and other cross-border health risks, financial crises contagion, money laundering, water scarcity, fisheries collapse and, of course, climate change. Economists call efforts to address these problems Global Public Goods (GPGs). Like other public goods, funding for GPGs is chronically in short supply: of $125 billion in annual official development assistance (ODA ) only about $3 billion goes to GPGs.
Many casual observers imagine that that the World Bank, as the world’s foremost development institution and with near global membership, is well placed to take the lead on GPGs. But since the bank was founded more than 60 years ago, most of its resources and decision-making have been locked up in single-country programs designed in discussions with government officials and coordinated by ministries of finance.
As a result, the bank lacks the mandate, products and incentives to address these global, cross-border challenges in a meaningful way in its core programs. A 2007 World Bank staff report for the Development Committee, the ministerial level group that oversees the bank and the IMF, described the bank’s contributions to GPGs primarily within the context of what could be done within its country-focused activities. This remains true today.
The bank’s main financing instrument, the market-based IBRD loan, requires a sovereign guarantee, limiting the ease of developing cross-country or global programs. Donor funding for low-income countries channeled through the soft-lending arm, IDA, provides only very limited allocations for cross-border programs. Although the World Bank manages several moderately sized multi-donor trust funds established to address some GPGs, these are ancillary to its core programs.
CGD president Nancy Birdsall has been prominent among those urging the bank to do better. She has argued (see here, here, here and most recently, on climate change, here) that the bank has a strong comparative advantage in providing GPGs but it can only become effective in doing so if the its president seeks a mandate from the member countries and then creates new instruments—for example, new ways of mobilizing finance and loans that do not require sovereign guarantees—to pursue these goals.
Does the appointment of Jim Yong Kim, still in his first year at the helm of the institution, provide a fresh opening for such ideas? There are some encouraging signs. With his background in global health, especially HIV/AIDS, Kim is well aware of the cross-border dimensions of development problems. And he has been outspoken on the need for action to address climate change, commissioning a landmark report, Turn Down the Heat (see also this video of Kim discussing it) about far-reaching development impacts of runaway climate change.
This is the institutional environment in which Rachel Kyte, the bank’s vice president for sustainable development, has brought together a small team of experts for a new study, “Collective Solutions 2025.” The idea is to develop long-term scenarios and explore pathways to transform the bank so it can support “inclusive green growth” in a way that balances immediate, local development priorities with longer term regional and global public goods.
Nancy Birdsall, Rachel Kyte, and Michele de Nevers at a CGD round table event
At the World Bank’s request, Michele organized a round table on the draft report last month. Kyte and the bank team introduced the study and a group of seasoned development practitioners responded with questions and suggestions. Among the questions:
What kind of institution is needed to deliver global public goods?
Is it possible to reform the governance and mandate of the World Bank or is a new institution needed?
Can ODA and climate finance—now seen as separate resource streams even though the programs they support are often identical—be managed in a comprehensive fashion without undermining funding to the poorest countries?
In approaching GPGs, should the bank continue to focus on developing countries or widen the scope of its efforts to include all nations?
What policy, institutional, organizational and incentive barriers need to be overcome?
Should there be a new arm of the World Bank for climate change and other public goods?
Like any good brainstorming session, the meeting raised more questions than answers. The World Bank team will have a tough job in coming up with politically feasible proposals. We wish them luck. If you’d like to share your views, you can try the Collaboration for Development community set up by the World Bank for the purposes of this discussion. Or if you find the Collaboration for Development a bit daunting, here’s an easier option: the comments field on Kyte’s post on the World Bank blog platform. Or the easiest option of all: post your comments below.
In this paper we identify a group of people in Latin America and other developing countries that are not poor but not middle class either. We define them as the vulnerable “strugglers”, people living in households with daily income per capita between $4 and $10 (at constant 2005 PPP dollar). They are well above the international poverty line, but still vulnerable to falling back into poverty and hence not part of the secure middle class. In a first step, we use long-term growth projections to show that in Latin America about 200 million people will likely be in the struggler group in 2030, accounting for about a third of the total population.
The Europeans are struggling with the question—and considering agreeing to effective fines on themselves if they fail to meet targets on formal acceptance of asylum seekers. We don’t agree that refugees, who are sometimes but not always asylum seekers in the countries where they reside, necessarily constitute a burden; the evidence is compelling that countries benefit from immigration, particularly if immigrants are already well-educated, working-age adults, as is the case with most of the Syrians fleeing war at home. Still, there are real economic, security, and political costs of hosting refugees when, as with the Syrians, the arrivals are sudden and substantial.
Given those costs, how should we think about the obligations of potential host countries? Should the question be framed as a moral obligation? Among recipient countries, should the obligation be greater for countries that are geographically closer, or more similar in religious, cultural or other dimensions? But what if they are poorer than other nearby countries where refugees seek respite? And is the obligation of a host country greater if it played some role in generating the conflict that created a refugee problem in the first place?
Developing countries are bearing the greatest “burden”
In the pie chart and table below, we make a start at thinking about these questions. And our calculations throw up some striking and disturbing truths. The pie chart makes clear that developing countries are bearing the greatest “burden.” It also shows the tiny “burden” the United States has so far accepted. As Americans, we are struck by that extremely limited role. It stands in striking contrast to earlier refugee episodes such as Vietnam and Cuba, when the United States accepted refugees in the hundreds of thousands.
The data we collated is presented in the table at the bottom of this blog, and provides more details of our findings. For each country where any Syrian refugees currently reside (whether they are seeking asylum there or not), we show the numbers of those refugees alongside the recipient country’s non-refugee population and its total economic size and current per capita income—and we provide a ratio of refugees to population size and to per capita GDP.
With the sole exception of Germany, with our rough estimate of 500,000 Syrian refugees (see sources and note for the table), the largest numbers of refugees are residing in Turkey, Jordan, Lebanon, Iraq, and Egypt—countries that are near to Syria and share to some extent the language and religion of most Syrians. (Proximity to home makes an eventual return seem more likely, but many of those refugees have been outside Syria for more than two years.) This is not surprising. With the exception of Sweden, these countries also have the highest ratio of refugees to population size—also not surprising.
But what is striking is that the nearby countries with high numbers of refugees by every measure in the table are also the poorest (on the basis of per capita income) of those listed.
Millions left in limbo
To be fair, it is also true that the United States continues to “accept” the largest number of refugees globally. Here, definitions matter. The very large Syrian refugee populations in countries like Germany and Turkey are residing there without permanent status or any certainty about their futures. Syrian refugees currently residing in the United States, like all refugees accepted by the US, have permanent status and a path to citizenship. That’s good, but it's also part of what makes the Syrian refugee crisis a crisis.
Countries like the United States that are ultimately willing to accept refugees on a permanent basis are exceedingly slow in doing so. Of the 10,000 Syrian refugees the US government pledged to resettle by October this year, fewer than 1,800 have arrived in the country thus far. And as months turn into years, millions of Syrian refugees remain outside the United States in limbo, unable to adequately provide for their own families or contribute to their full productive potential where they are – and increasing spending on humanitarian aid that could better be spent helping them settle abroad.
As American citizens and taxpayers (Birdsall and Morris) in a country of immigrants, whose greatness has been forged by immigrants, we find the situation troubling. Surely countries like ours can do better, satisfying security concerns while responding to the clear humanitarian needs presented by this crisis… and ultimately, as we have seen in prior waves of refugees, benefiting from the productivity, talents, and patriotism of our newest citizens.
Table 1. Estimated number of Syrian refugees by select host countries and host country characteristics
Sources: UNHCR, World Bank, Government of Canada, US Dept. of State, Die Welt, Al Jazeera, Voice of America, The Telegraph, The Japan Times
1 Estimated number of Syrian refugees from the ongoing civil war (from 2011 to today) physically residing in the country, regardless of asylum application status as of May 4, 2016. For Turkey, Lebanon, Jordan, Iraq, and Egypt the figures reflect the number of registered Syrian refugees in the country (as per UNHCR). For Sweden, the UK, and France, the figures reflect the number of official Syrian asylum applicants (as per UNHCR), though these are likely to be underestimates. The figures for Germany and Greece are based on government officials’ statements to the media and are above the number of officially registered asylum applicants (279,000 for Germany and 5,600 for Greece). The figures for Russia and Japan come from media reports and reflect the number of estimated asylum applicants in the countries. The rates of approval for both of these countries are reported to be much lower than for the European countries listed. For the US, Canada, and Brazil the figures reflect the number of refugees whose applications have been approved and who have arrived to the country.
In this paper, Nancy Birdsall sets out basic information on the growing middle class in Latin America and the Caribbean and provides grounds for optimism that such expansion might reinforce the inclusive politics that sustain broadly shared growth.
Nancy Birdsall argues that the concept of inclusive growth should go beyond the traditional emphasis on the poor (and the rest) and take into account changes in the size and economic command of the group conventionally defined as neither poor nor rich, that is, the middle class.
The last decade has seen considerable progress enrolling children in schools worldwide: today most people live in countries on track to meet the Millennium Development Goal of 100% primary completion by 2015.
Sadly, enrollment doesn’t necessarily equal learning. A new report by the CGD Study Group on Measuring Learning Outcomes shows a shockingly wide gap between education inputs and learning outcomes – many children finish primary school unable to read, write or do simple addition. The report, Schooling is Not Education: Using Assessment to Change the Politics of Non-Learning, finds the learning crisis reflects systemic issues in education sectors worldwide. It recommends strong assessment regimes as part of the solution.
On May 9, CGD president Nancy Birdsall will chair a conversation on the report with Alice Albright, chair of the Global Partnership for Education; CGD Study Group co-chair Lant Pritchett; Project director Charles Kenny; and other members of the Study Group. They will discuss the findings and implications for education in the post-2015 development agenda.
CGD is especially concerned with the policies and practices of rich countries, corporations, and individual citizens that affect the world’s less fortunate people, especially the 5 billion least fortunate people who live in developing countries. In 2013 life for most people in those countries continued to get better as it has for several decades. In the advanced economies, the largely self-imposed austerity following the financial crisis of 2008-09 may finally be lifting.
I think these two trends create an opening — not so much for more aid, which in any event has a small role in the larger story of development — but for a renewal of international cooperation on some of the big barriers holding back development progress. Many of those barriers are problems for rich countries and people as well as for the poor: climate change, tax evasion, resistance to antibiotics, harsh immigration restrictions, cybercrime, drug trafficking, civil and sectarian strife. So my wish list leans heavily to propositions that require cooperation among nations, and to proposals best taken up by the leadership of the world’s international institutions.
It is a very ambitious list. I submit we development advocates should be ambitious and optimistic this year in pushing for sensible policy changes; after all, it is becoming more obvious every year that development is a win-win proposition: a better world for today’s poor and vulnerable promises a better world for all.
I asked my CGD colleagues and visitors to our website for help in constructing this list. Crowdsourcing worked so well that limiting my list to 10 wishes wasn’t easy. I’ve also tried to balance ambition with realism—though some unconventional ideas are so appealing I couldn’t resist including them, even though the chance of action in the near term is small to nil. I cheated a bit, bundling some related wishes into a single item. And I left out some important wishes specifically about US policy, relying instead on this list compiled by Beth Schwanke and Erin Collinson. Even so, many good ideas didn’t make the list. That’s actually good news. It shows just how many opportunities there are to use policy to make the world a fairer, safer, more prosperous place for us all.
Enough said. Here’s my development policy wish list for 2014:
1. Bloomberg, Bono, and Bill Gates team up on tobacco control
Three proven champions of global health and development collaborate on a global anti-smoking initiative. Why does this top the list? Because it’s really big and not hard to fix. Smoking is the leading cause of preventable death in the world, and if current trends continue it will kill one billion people this century, 10 times more than the 100 million it killed last century. Higher tobacco taxes are a proven deterrent to smoking.
While I’m at it, I’m wishing that Jim Kim, the first physician to serve as World Bank president, takes up the cause and forges an agreement among all multilateral development banks that by the end of 2014, fiscal experts advising member countries on revenue mobilization will offer support and encouragement to raise taxes on tobacco, consistent with the WHO Framework Convention on Tobacco Control. The US, unable to lead, at least stays out of the way. (HT: Bill Savedoff, Amanda Glassman; see here for a COD Aid approach)
2. The United States gets its development act together—and ends its IMF embarrassment
It’s a new year. Let’s hope for the best, even those of us in policy gridlocked Washington. Despite its many troubles, the United States is still too big, powerful, and influential on development issues to ignore. My colleagues’ wish list includes six eminently sensible policy proposals that could be accomplished this year. Two can be done straightaway, by leaders in the executive branch. Others require a push from the White House and leadership on Capitol Hill. They are all bureaucratically and politically manageable, and none requires any budget.
On the IMF, it’s time to end the international embarrassment of the US delaying a package of changes that can help the Fund protect Americans—and everybody else including poor people in developing countries—from the costs of the next global financial crisis. Clay Lowery and I explained why and how in an op-ed in The Hill last month. (Learn more here.)
3. Carbon pollution fees make sudden headway
In the US, a surprise coalition of conscientious conservatives and market-friendly enviros begins to hammer out agreement on a revenue-neutral carbon pollution fee of $20 per ton, setting of a virtuous circle in which China, worried about US border taxes on carbon embedded in its exports, and seeing an opening to address fiscal woes and cut conventional pollution that is fueling popular unrest, accelerates its own plans for carbon taxes (see Lawrence MacDonald’s policy fiction for how this might happen and Andreas DJ’s additional excellent comments). Far-fetched? Perhaps, but if Eli Lehrer and John Podesta would just sit down together they might be surprised at how much common ground they have when it comes to carbon pricing.) Why is it on this list? Because climate change and development are so closely intertwined as to be inseparable.
4. Rich countries recognize that tropical forest services are a bargain
With or without progress on carbon pricing, I’m wishing for renewed attention to forest conservation, as rich countries and people recognize what a bargain it is and prepare to put big money into paying developing countries for tropical forest services that benefit us all (e.g. carbon sequestration, biodiversity). Forests get on my list this year in part because I am learning more about the issue from Frances Seymour and Jonah Busch, who offered useful specifics in comments (here and here) on my earlier blog post. (Learn more about CGD’s recent and upcoming work on Tropical Forests for Climate and Development.)
5. The G-20 gets serious about tax cooperation and elimination of tax evasion and other abuses
UK Prime Minister David Cameron is successful in encouraging first the G-8 and then the G-20 to get serious about preventing illicit financial flows, a major facilitator of corruption that undermines development. Australia takes up the issue, working to ensure that it is included in the November communiqué issued at the conclusion of the Brisbane Summit. In that document, the G-20 members commit to require all companies registered within their jurisdiction to disclose who really owns them (e.g. “beneficial ownership”) and to work to end abusive transfer pricing, which increases taxes on workers everywhere relative to sensible taxes on globally mobile capital. (HT: Alex Cobham, Owen Barder, Joseph Kraus)
6. Azevêdo reinvigorates the WTO
A savvy Brazilian diplomat, new World Trade Organization director-general Roberto Azevêdo makes the most of the fact that Brazil has been a global leader in granting least-developed countries (LDCs) duty-free, quota-free market access to cajole other major markets, including the US, to follow through by 2015 on their prior commitments to do the same. Azevêdo also launches a WTO work program on food security that addresses not only the old Doha issues (rich-country agricultural subsidies, food aid reform) but also important new issues: export restrictions during price spikes, the need for food reserve policies that do not distort global markets, and reduction of unintended side-effects of biofuel subsidies and mandates. (HT: Kim Elliott; learn more here, here, here, and here.)
7. The World Bank leads a big push to quadruple investment in infrastructure in developing countries in the next five years
Jim Kim announces that he will ask bank members to begin discussion of a substantial recapitalization of the bank, largely to increase financing for major infrastructure in developing countries, as part of a new annual combined IDA/IBRD World Bank Revenue Resource Review (WBRRR) starting in 2015. What’s a WBRRR? Find out from Scott Morris’s new essay, here.
8. The WHO and the FAO work together to slow resistance to antibiotics
9. International institutions become more legitimate and representative—starting with women
As Garth Luke pointed out in a comment on my call for ideas, “we have been talking about greater gender balance at the UN and in national governments for many years but progress has been too slow.” I also like Garth’s solution: the G-20 members agree that all delegate positions above a certain level will alternate between male and female incumbents. This is not just about gender equity for equity’s sake! There is solid evidence that diversity of any sort encourages smarter decision-making, and that the inclusion of women in particular improves the functioning of deliberative bodies.
While we are at it, let this be the year when the Europeans and the United States announce they will not insist that the next head of the IMF be a European and the next head of the World Bank be an American.
10. A post-2015 development agenda that leans in for lower inequality
This is the year when the heavy lifting will be done on the post-2015 development agenda. I have three wishes for this exercise.
First, I wish that the new development agenda include a commitment by all countries to measure and report on inequality, using a common indicator that is comparable across countries and over time. Several measures could work. My preferred indicator is the change in the mean-to-median ratio of either income or consumption (see slides), because the median is easy to understand and politically salient for all countries. To support this, the World Bank would need to deepen its assistance to countries’ household survey data collection.
Second, how about a UN resolution stating that in democratic elections women should have not only their own vote but also the right to vote on behalf of their children who are not yet of voting age themselves. This redresses the tendency for public investment to favor too much the old and immediate returns rather than the young and the future (see Now for the Long Term, the report of the Oxford-Martin Commission on Future Generations).
Too radical? My final wish is simple: Count every child because every child counts, starting with a drive for increased birth registration and improved service delivery for children in low-income developing countries. According to UNICEF estimates, some 230 million children under 5, about one-third of the total, are not registered and therefore do not officially exist. New approaches, including SMS, linking registration to the ID of mothers and strengthening this through the use of biometric data, can accelerate registration even in poor countries and roll out basic services far more efficiently. This should be complemented by a global effort to provide retroactive registration to the approximately 750 million unregistered people under 16. (HT: Alan Gelb)
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I made hard choices with this list; I have no doubt omitted or overlooked policies and actions you, kind readers, believe are crying out for attention by CGD and other development advocates. You can help us set our agenda, for this year and beyond, by commenting below.