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Views from the Center

CGD experts offer ideas and analysis to improve international development policy. Also check out our Global Health blog and US Development Policy blog.

 

An industrial welder at work. Adobe Stock

Netflix’s “American Factory” and the New Geography of Manufacturing

Perhaps the most surprising was how similar these scenes playing out in America are to those I’ve seen in Africa. To be sure, many of the factories I visited in Africa were smaller-scale and simpler in their operations than the Ohio glass plant in American Factory. But some Chinese-owned factories in Africa are similarly large-scale and technologically advanced, and no matter the size of the factory, I witnessed many of the same struggles to find cross-cultural understanding, to teach workers genuinely difficult skills, and to withstand the pressure of a highly competitive, global industry.

Philippe Le Houérou at the WEF. Photo by World Economic Forum / Jakob Polacsek

Aid Transparency and Subsidies to Private Companies: A First Step, But a Long Road Ahead

Today the IFC announced a step forward in its transparency around the use of aid resources to finance private companies. That’s right and proper: When scarce aid, and scarce tax resources, are used to support private firms, citizens of donor countries and recipient countries alike have a right to know where the money is going to and how generous the terms. A number of us at CGD had been calling for greater transparency around subsidies to the private sector from the IFC and other development finance institutions, so this is a welcome first step. However, a few aspects have might be cause for concern.

An image showing money with relation to subsidies

Introducing Five Principles for the Use of Aid in Subsidies to the Private Sector

Development finance institutions like the International Finance Corporation and the UK’s CDC Group use public finance to support private investments in developing countries. At their best they can help create new markets and invest in the delivery of vital goods and services, creating good jobs and entrepreneurial opportunity along the way. They have been rapidly expanding over the past few years.

Burundian soldiers deployed with AMISOM on patrol. Photo from AMISOM Public Information, via Flickr

Converging Military Spending and Its Fiscal Consequences

Worldwide military spending as a percentage of GDP in the years since the Global Crisis has been at nearly half its level during the Cold War. This column identifies three groups into which spending has been converging. It also shows that external threat levels are a factor in determining military spending, but only in developing economies. The results suggest a significant peace dividend from reducing internal conflicts, with a country that moves from the bottom 25% to the top 25% of developing countries on political stability and the absence of violence/terrorism likely to reduce military spending by about half a percentage point of GDP. 

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