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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.

 

Inside the IFC's Portfolio: The IFC Responds

IFC Spokesman Frederick Jones has replied to our blog on the IFC’s risk appetite. First off, thanks to Fred and the IFC for replying. The Corporation has a unique role to play in global development finance and we’re keen for that role to grow, so we’re happy that the report has generated so much conversation about IFC’s portfolio, both within and outside IFC. And second, we commend IFC for its plans to do more in poor countries and those that are classified as fragile states—it is where the Corporation can have the most impact and where it is most needed.

Is the IFC Taking On Even Less Risk Than We Suggest? Our Readers Respond

Since the publication of our paper on the IFC’s project portfolio last week, we have received several helpful comments from readers. They plausibly suggest that the portfolio may be (even) less risky than we suggested, with even more space to pivot towards the low income countries where the IFC can make the most difference. But until the IFC publishes more information, we won’t really know.

The International Finance Corporation’s Mission Is Facilitating Risky Investments—So Why Is It Taking on Less and Less Risk?

The IFC is designed to catalyze investments in countries that investors might consider too risky to invest in alone. But our recent analysis of IFC’s portfolio found that it is shying away from risky investments, raising serious questions about whether the IFC is focusing on the places where it can make the most difference.

How to Avoid Indicator Scandals: Three Ways to Fix the Doing Business Index

On Friday, the World Bank’s chief economist, Paul Romer, told the Wall Street Journal that the Bank unfairly influenced its own competitiveness rankings. He highlighted the case of Chile which suffered lower rankings on the Doing Business index during the Bachelet administration versus the Piñera years, and recalculated these rankings on his personal blog. Today, he issued a clarification of his views.  

Can Sub-Saharan Africa Be a Manufacturing Destination?

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.

Can Technology Solve the De-risking Problem?

In recent years, regulators have raised their expectations for what counts as adequate AML/CFT compliance. At the same time, they have cracked down on institutions that have fallen short. While arguably necessary, this more stringent enforcement has produced some unintended side effects. In particular, it has put pressure on banks’ ability and willingness to deliver certain types of services, notably correspondent banking services.

Financial Stability Board Echoes CGD Finding on Decline in Correspondent Banking

The Financial Stability Board's long-awaited report finds that the number of active CBRs has declined by 6 percent since 2011 and has continued through 2016, affecting all regions and major international currencies. The analysis suggests that small economies are among the most affected by CBR withdrawal. The bottom line: the decline of correspondent banking relationships, especially with smaller and poorer countries, remains an important policy issue.

The Informal Sector: What Do We Know So Far?

The informal sector is a major source of economic activity and job opportunities in poor countries as well as emerging economies. In sub-Saharan Africa, the size of the informal sector is estimated to employ over 70 percent of the population. Why do businesses remain informal? What gains in productivity or profitability do they forego by as a result of that choice?

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