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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.
According to its website, the United Nations Educational, Scientific and Cultural Organization (UNESCO) has stopped accepting nominations for its UNESCO-Obiang Nguema Mbasogo International Prize for Research in the Life Sciences. But we are guessing that the applicant pool remains quite small. Frankly, who would want his or her name affiliated with one of Africa’s worst dictators? Besides UNESCO, that is.
A hearty congratulations to Esther Duflo, winner of this year’s John Bates Clark Medal! Since 1947 the American Economic Association has awarded the medal to “that American economist under the age of forty who is judged to have made the most significant contribution to economic thought and knowledge.” In our profession, the Clark Medal ranks second only to the Nobel Prize, and about 40 percent of medal winners have gone on to win a Nobel. Esther, a 37-year-old native of France, richly deserves this platinum honor.
The World Food Programme has world-class logistics, but its ability to manage financial risk is extremely limited. The WFP should consider implementing a targeted hedging pilot strategy for increased predictability. Greater commitments of untied cash from donors and support for the proposed Food Security Trust Fund at the World Bank would help.
UN Secretary-General Ban Ki-moon has been getting negative press about the relief efforts after the earthquakes in Haiti and Chile. Perhaps worst is a scathing report from Refugees International accusing the UN of ineffectual leadership, missing coordination, and weak communication while an estimated 1.2 million Haitians remain displaced. Though much of the report consists of standard blandishments (the authors spent just 10 days in-country), there is indeed evidence of serious negligence. To give just one example: the organization initially planned on allowing itself two and a half months—well into the rainy season—to distribute plastic sheeting to protect the displaced. It took a personal intervention from a senior official to get this activity moved up.
In a little-noticed move in January, private military contractor DynCorp bought 100% of the shares of international development contractor Casals & Associates (the value of this acquisition was not disclosed). DynCorp says it plans to integrate Casals & Associates into its International Global Stabilization and Development Solutions division. In 2007, CGD research highlighted the Pentagon’s ever-expanding role in the development space. In the administration’s 2010-2011 budget proposal, 20% of the 2011 Department of State and Agency for International Development (USAID) budget is slated for “securing frontline states” (Afghanistan, Iraq, Pakistan). The DynCorp-Casals merger suggests a blurring of the line between development and defense in the private sector, as well.
On December 15th the Millennium Challenge Corporation (MCC), an innovative U.S. aid agency, is set to announce which countries will receive its unique development assistance. Casey Dunning, policy analyst at CGD and my guest on this week’s Wonkcast, provides insight and recommendations on how these countries will (and should) be selected. I catch Casey shortly after her return from Honduras, where she saw firsthand the positive impacts of an MCC compact on rural development and highway construction.
Today, the World Bank announced that Jim Yong Kim will be the institution’s next president. As the dust settles from the leadership selection debate, the focus will necessarily shift to the issues that confront Kim and the world’s leading development institution. One of the most difficult and important questions is: how can the bank more effectively engage in fragile and conflict-affected countries?
At the next meeting of its Executive Board in Rome on November 8, the management of the World Food Programme (WFP) will propose an expanded financing facility to the tune of $557 million to fund advance purchases of food. This is a welcome news that has the potential to cut hunger, by stretching WFP dollars and speeding deliveries.
Last week, lawmakers in Somaliland (Somalia's northern, semi-autonomous region) reportedly established Somaliland’s first central bank. The measure will pave the way for foreign commercial banks to start operating in Somaliland by 2013, providing much-needed financing support for Somaliland’s private sector businesses. Simultaneously, the donor community (represented by multilateral institutions and both Danish and US aid agencies) has expressed a strong interest in Somaliland. Two questions arise: How can international donors further support Somaliland’s businesses and what can they learn from the parliament’s new central bank?
In a recent blog post, we discussed the phenomenon of Haiti as a “Republic of NGOs” where the government and the private sector were crowded out by large international organizations that provided most services. Just as international donors have sidestepped the Haitian government, reconstruction contracts have also bypassed Haitian firms in favor of Beltway contractors. The Center for Economic and Policy Research analyzed the 1,490 contracts (worth $194.5 million) awarded between January 2010 and April 2011. Only 23 contracts--for a total of $4.8 million or 2.5 percent of the total—were awarded to Haitian companies. In comparison, contractors based in the Washington DC area received $76 million – almost 40 percent of the total.