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Foreign direct investment, financial flows, private-sector development, humanitarian assistance, Africa
Vijaya Ramachandran is a senior fellow at the Center for Global Development. She works on the impact of the business environment on the productivity of firms in developing countries, and is the coauthor of an essay titled "Development as Diffusion: Manufacturing Productivity and Africa's Missing Middle,” published in the Oxford Handbook on Economics and Africa. Vijaya is also studying the unintended consequences of rich countries’ anti-money laundering policies on financial inclusion in poor countries. She has published her research in journals such as World Development, Development Policy Review, Governance, Prism, and AIDS and is the author of a CGD book, Africa’s Private Sector: What’s Wrong with the Business Environment and What to Do About It. Prior to joining CGD, Vijaya worked at the World Bank and in the Executive Office of the Secretary-General of the United Nations. She also served on the faculties of Georgetown University and Duke University. Her work has appeared in several media outlets including the Economist, Financial Times, Guardian, Washington Post, New York Times, National Public Radio, and Vox.
The first Economic Inclusion Strategy for the EBRD, to be officially launched in May 2017, builds on four years of implementing inclusion concepts through the Bank’s operations. Economic inclusion, the opening up of access to labour markets, entrepreneurship and, more generally, economic opportunities to all is integral to achieving a transition to sustainable market economies. The strategy covers the period of 2017 – 2021 and reflects the experience and lessons learned from the EBRD’s distinctive private sector focused inclusion approach as well as evolving inclusion challenges and best international practices across sectors and geographic regions.
There are two good reasons to harness the market power of iconic brands. First, policymakers and researchers with evidence-based arguments on migration are struggling to combat the hateful rhetoric of the tabloids. Second, the private sector has an important role to play in ensuring global economic prosperity. Among other things, it should use its power to fight the misinformation, ignorance, and hate directed towards the world’s most vulnerable people.
Prime Minister Narendra Modi’s announced a bold measure on Wednesday to reduce the role of unaccounted for cash or “black money” in the country’s economy by “de-monetizing” higher-denomination currency notes. The new policy bans the use of 500 rupee and 1,000 rupee currency notes. While this measure may have the positive (though potentially temporary) effect of forcing illicit activity out of the regulated economy, the process could be disorderly, with the poorest members of society bearing the brunt of the disruption.
In September 2015, world leaders agreed on a new development agenda, Agenda 2030, that would leave no one behind and that would eliminate extreme poverty and hunger. What are the most effective ways of reach those objectives? Is agriculture still the most effective way to reduce poverty, in a rapidly changing world with a growing demand for food and rapid urbanization in many developing countries? More broadly, what is the role of rural economies – including but beyond agriculture, rural societies, and rural landscapes in turning the agenda into reality?
Attention presidential transition teams: the Rethinking US Development Policy team at the Center for Global Development strongly urges you to include these three big ideas in your first year budget submission to Congress and pursue these three smart reforms during your first year.
In Haiti, already the poorest country in the western hemisphere, Hurricane Matthew’s devastation is still being calculated. We know that hundreds of people have died, and the damage to Haiti’s already-fragile infrastructure is immense. So what can people in rich countries do to help? Based on the latest research on humanitarian disaster relief and on the lessons learned in the wake of the 2010 earthquake in Haiti, here are some do’s and some don’ts for policymakers and individuals.
Photo: EU Humanitarian Aid and Civil Protection / cc
As we approach the third anniversary of the Haiti earthquake, reconstruction and recovery efforts continue—as does the debate within the development community: Why aren’t recovery efforts moving faster? Are international donors and NGOs helping or hurting recovery? Can traditional aid work amidst Haiti's weak government institutions? Are there alternative approaches that would be better?
CGD’s efforts on Haiti’s challenges continue. Here are our recent suggestions for alternative approaches in Haiti, as well as previous innovative ideas that remain relevant:
1) Cash Transfers for Haitians
Vijaja Ramachandran, Senior Fellow
Hurricane Sandy has exacerbated the food crisis in Haiti, as well as increased the incidence of water-based diseases, like cholera. Donors have responded accordingly, but donors must also take steps to improve the quality of their assistance to Haiti. Cash transfers are often the best way to empower disaster victims to rebuild their lives, while also generating demand that fuels the local economy. I recommend the World Food Programme’s Cash for Assets program as an effective model to be implemented for Haitians to purchase much-needed goods and services, in addition to coordinated humanitarian relief.
2) Improve Transparency and Accountability
Vijaya Ramachandran, Senior Fellow, and Julie Walz, Policy Analyst
Since the 2010 earthquake, over $6 billion has been disbursed in official aid to help the people of Haiti. Almost 90 percent of aid has gone to international NGOs and private contractors (9.5 percent has gone to the Government of Haiti and .4 percent to Haitian NGOs and businesses). Yet, there’s very little transparency about how this money is spent. Funders should require more evaluations of NGO and contractor activities, and also report their activities in the IATI format. Further, the Government of Haiti should be encouraged to procure services through competitive bidding. This would not only increase accountability of NGOs and contractors providing the services but also enable the Haitian government to build control over the process.
3) Increase Local Procurement
Vijaya Ramachandran, Senior Fellow, and Julie Walz, Policy Analyst
Out of every $100 spent by the US Government for reconstruction following the 2010 earthquake in Haiti, only $1.35 went directly to Haitian companies. The current US development strategy focuses on stimulating economic activity and pledges support to Micro, Small, and Medium Enterprises along with the development of Caracol Industrial Park. Yet, a key tool is missing in the strategy to build economic security and jobs in Haiti – buying from local businesses.
4) Better Haiti Aid: MigrationMichael Clemens, Senior Fellow
“The U.S. government added Haiti to the list of more than 50 countries eligible to participate in the H-2 visa program for temporary and seasonal workers, ending a longstanding policy of excluding Haitians from America’s largest temporary employment-based visa program. This is wonderful news for Haitians and Americans. It has the potential to unlock hundreds of millions of dollars in new economic opportunity for Haitian workers and their families—at no cost to the U.S. or Haitian governments, and with no increase in overall U.S. immigration. This seemingly tiny change has vast economic potential. Given the huge wage differences (an estimated $19,000 in additional annual income per Haitian worker), if just 2,000 Haitians are permitted to work as H-2 workers in the United States each year, over the course of 10 years, that’s $400 million in additional, new income for Haitian families. That’s equal in size to the entire U.S. post-earthquake budget for reconstruction in Haiti. Building on this great work, the US should consider a Haitian Family Reunification Parole Program. Haitians who have been approved for US permanent residency must sometimes wait as much as 11 years in Haiti to receive their green cards. A parole program would permit some of them to wait for their green cards in the United Stated instead.”
5) Cholera in Haiti: The Blame GameVictoria Fan, Research Fellow, and Richard Cash, Senior Lecturer on Global Health, Harvard School of Public Health
“Since October 2010, Haiti has struggled to control a deadly cholera outbreak—on top of ongoing recovery efforts from the devastating earthquake in January 2010. In December 2011, a group of lawyers in Haiti, on behalf of some 15,000 victims of cholera, sued the United Nations for $50,000 for each victim and double that for families of those who died. Focusing on these immediate objects of blame are of epidemiologic interest, but deflect attention away from the country experiencing the disease, and in this case, unable to control the spread. In a country where aid agencies and NGOs play major roles relative to the government, this outbreak should draw attention not only to immediate causes but more importantly to the long-term failure by every involved party and to the urgency of improving Haiti’s water and sanitation as soon as possible.”
Click here and here to see earlier lists of alternative development ideas for Haiti, featuring more ideas and commentary on post-quake development efforts.
Last week we published a new paper, Can Africa Be A Manufacturing Destination?, that highlights the persistence of high labor costs in many countries in sub-Saharan Africa. This led to a lively debate on Twitter, initiated by Chris Blattman at the University of Chicago.
International debates on taxation and development have been informed by a popular narrative that there is a large ‘pot of gold’ for funding which could be released by cracking down on the questionable tax practices of multinational enterprises, and which could bridge the gap towards funding the sustainable development goals. How much of this is wishful thinking and how much really reflects what we know? This paper looks at the 'big numbers' that have shaped this debate and seeks to clarify the emerging evidence.
A new paper coauthored by Alan Gelb, Christian Meyer, Divyanshi Wadhwa, and myself suggests that Africa is not, in general, poised to embark on a manufacturing-led take-off, stepping into the shoes of emerging Asia. Africa, including those countries that have come to be regarded as leaders in development, has high manufacturing labor costs relative to GDP as well as high capital costs relative to low-income comparators.