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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.

Views From The Center Blog

 

Construction workers laying a road

Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 4: Challenges on Infrastructure and SME Lending

The adoption of Basel III by developing countries raises the question of what the impact of such regulatory reform will be on volume, cost, and composition of domestic credit in these economies and for the development of financial systems more generally. This is against the background of many emerging markets not yet having fully exploited the potential for financial development and inclusion in their economies.

bridge

Rethinking the Infrastructure Gap in the Poorest Countries

A recent blog post by Ricardo Hausmann caught my eye because it addresses issues that I’ll be focusing on during my visiting fellowship here at the Center for Global Development. Hausmann—a former Venezuelan minister of planning—discusses the difficulty of closing the infrastructure gap in developing countries, and highlights the dilemma of whether governments should finance infrastructure projects through public-private partnerships or through their national budgets. He’s right about the dilemma, but his solution isn’t workable for fragile and low-income countries where infrastructure needs are greatest.

Percentage of Foreign Bank Assets Among Total Bank Assets (Selected EMDEs)

Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 3: An Unlevel Playing Field Between Domestic and Foreign Banks Might Increase Governments’ Funding Costs

Responding to the latest assessment of Mexico’s implementation of the Basel III recommendations, the Mexican authorities argued that regulations for countries hosting foreign banks’ subsidiaries and for the parent countries of the subsidiaries should be aligned “in order to prevent distortions due to the asymmetric treatment of similar risk exposures by home and host jurisdictions,” which could result in an unlevel playing field between foreign subsidiaries and domestic banks.

Detail of chart showing that taxes can exacerbate poverty in the poorest countries

Chart of the Week: Taxing the Poor to Give to the Bureaucrat?

The world’s poorest people have been getting richer recently. But they remain incredibly poor. The 10 percent of the world’s population still consuming $1.90 or less a day are subsisting on a small fraction of the resources available to people at the US poverty line. So you’d hope that the governments of the countries where they live would be trying to raise their consumption levels. But the reality is more complex.

US Cross-Border Trade Finance to EMDEs by income categories (USD Billions)

Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 2: Effects on Trade Finance

Just as Basel III, among other factors, played a role in the decline in the volume of cross-border lending from advanced economies to EMDEs, it created incentives for a shift in the composition of these flows. Banks’ exposures to certain business lines have been affected, including those that are crucial for development like trade finance and infrastructure finance (the latter will be the subject of a future blog).

M-Pawa increased women’s happiness and optimism, business training had no additional significant effect (% of study participants answering ‘yes’)

The Clock is Ticking on Financial Inclusion and a Focus on Women Can Help

A sense of urgency was present at a recent World Bank Spring meeting on financial inclusion. This is not surprising, given the Bank’s ambitious goal of Universal Financial Access by 2020. Two years to go and globally about 1.7 billion adults remain unbanked—close to 1 billion of them are women. It’s clear that to meet this goal, we all must focus our efforts on women.

20-pound notes

What Advice Would You Give to Penny Mordaunt on Combating Illicit Financial Flows?

London is one of the world’s premier destinations for kleptocrats and corrupt oligarchs seeking to launder ill-gotten gains into property, investments, private school fees and influence. There is no reliable estimate of the total value of laundered funds that impacts on the UK. However the National Assessment of Serious Organised Crime says there is “a realistic possibility the scale of money laundering impacting the UK annually is in the hundreds of billions of pounds” (this includes both domestic and international sources). 

Development Cooperation Has Emerged a Winner in the EU’s 2021-2027 Budget Proposal, but the Odds Are Stacked against It

The long-awaited European Commission Communication on the Multiannual Financial Framework (MFF) 2021-2027—the EU’s long-term budget—has been unveiled, and so begins the EU’s big battle over money and priorities. Brace yourselves for a long arduous struggle that will expose divisions in the bloc in all sorts of ways—payers vs. recipients, east vs. west, north vs. south, federalists vs. intergovernmentalists, values vs interests. This is also the review that will shape the future of EU development cooperation and the credibility of the EU as a major player in the international development sphere. Does the Commission’s proposal live up to the challenge?

On Global Public Goods: It’s Not Big Money but It’s a Big Breakthrough

There is much to cheer about in last week’s announcement by the World Bank’s shareholders to increase its paid-in capital by $13 billion. It is a healthy signal that multilateralism is alive and well, at least in the development space. And on a practical level it is sufficient to ensure that at a minimum World Bank lending to sovereign borrowers can be sustained at current levels, and private sector operations can continue to grow.

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