Ideas to Action:

Independent research for global prosperity

CGD in the News

December 31, 2006

Bush Has Quietly Tripled Aid to Africa [WaPo]

Senior fellow Steve Radelet is quoted in this Washington Post article highlighting the Bush Administration's major increases in aid to Africa.

From the article:

"I think the Bush administration deserves pretty high marks in terms of increasing aid to Africa," said Steve Radelet, a senior fellow at the Center for Global Development.

December 9, 2006

Letters to The Editor: Puzzle of Stern's Calculations on Global Warming Damage Explained (Financial Times)

Sir, The Stern review on climate economics may well achieve a long-overdue shift in the burden of proof towards those who argue that it is uneconomic to cut the rising path of carbon emissions by anything more than trivial amounts ("Benefits of climate action outweigh costs", November 7 - subscription required). Despite its emphasis on new scientific evidence of greater risks, it does so primarily by adopting essentially the discounting method I proposed in my book The Economics of Global Warming.

In this approach, which the Intergovernmental Panel on Climate Change has called "prescriptive", the rate of "pure time preference", or discounting solely for impatience, is set at zero. Future consumption is discounted only because of rising income levels. Only in this way do distant future generations have a meaningful chance to be taken into account.

In my earlier analysis, I limited the horizon to 300 years, because by then CO2 concentrations would begin to fall again as a consequence of mixing back into the deep ocean, as pointed out by oceanographer Eric Sundquist in 1990. In contrast, the Stern review adopts an infinite horizon.

It obtains finite effects only by applying a pure time preference rate slightly above zero, set at 0.1 per cent against the risk that humanity will self-destruct. Nonetheless, 93 per cent of the present value of all future economic welfare arises after the 2000-2200 period explicitly analysed in the review.

The review estimates that global warming damage reaches 1 to 4 per cent of gross domestic product by 2100, and 5 to 20 per cent only by 2200. The reader is thus surprised that the damage is equivalent to 5 to 20 per cent of GDP "now and forever". The puzzle is explained by the fact that the 2200 rate is frozen and continued for the infinite future thereafter. It is the overwhelming weight of this period, not risk-based attention to the band of uncertainty before 2200, that generates the summary all-time loss of 5 to 20 per cent of GDP.

Although I agree with the review's bottom line that strong abatement measures have a favourable benefit-cost ratio, this ratio may not be as high as it suggests once the partial reversal of global warming after about 2300 is taken into account.

December 1, 2006

Keep Hope

CGD's research on creating an Advance Market commitment for vaccines was cited in this Washington Post editorial that discusses the impact vaccines have on saving lives at a low cost.

From the article:

Over the past 50 years, vaccination campaigns have eradicated smallpox and contained polio, typhoid and measles. Because they do not require expert diagnosis or long-term treatment, vaccines are an especially formidable tool in countries with weak health systems. Some three-quarters of the world's children now receive a standard package of vaccines, saving 3 million lives a year and protecting millions more from disability. The cost of these programs per year of life saved comes to $20 in poor countries, according to the Center for Global Development. By contrast, medical interventions in the United States are considered cost-effective if they save a year of life for $50,000 or even $100,000.

November 20, 2006

Africa's Rural Areas Suffer Most from Health Care Worker Exodus

CGD research fellow Michael Clemens was interviewed for this VOA article on the migration of African health care workers.

From the article:

Michael Clemens, a fellow at the Center for Global Development research group, wondered what effect their departure had on their national medical systems. He looked at census data about health worker migration from Africa, comparing countries where many doctors and nurses have left and those where fewer have moved away.

Surprisingly, he says, it didn't seem to make a difference in commonly measured health standards. "This is from the bird's eye view, or satellite view of the continent in public health outcomes," he explains, "the chance that a typical child dies before his or her 5th birthday, mass availability of health care, the chance that any given birth is attended by skilled personnel, the chance that a child with an acute respiratory infection in the last two weeks goes to a clinic with modern facilities."

Health workers, like this woman presenting family planning information in a small village in Upper Guinea, provide an increasingly rare service in Africa's rural areas Clemens says his data show that countries that have lost many health workers still have many more at home. And those that lose workers are training new doctors and nurses. In visiting these countries to talk to health officials, the researcher discovered that in addition to out-migration, the problem is where within the country health professionals work. "There's a huge domestic drain of health professionals in all of these countries out of places and situations where these people are providing healthcare to the underserved," he reports. As an example, he points to Kenya. "The ratio of physicians per capita in urban areas to rural areas varies by a factor of almost 10 to 1. [There is a] huge movement of these people out of rural areas."

Clemens also found movement of workers from the public sector to the private sector, where care is more expensive.

Finally, Clemens says he found that in many counties, governments don't allocate enough money to pay for medical staff or facilities for them to work in. For example, in Mozambique, there are so few clinics that about half the population has never been to one. "There are all kinds of reasons for that," he points out. "Sometimes there isn't a clinic there, sometimes at the clinic you have to pay, sometimes it's not well supplied."

Clemens says the data raise important questions about allocation of resources and how that affects doctors and nurses' decisions to stay or leave. At this month's American Public Health Association annual meeting in Boston, he called for health care system reform in poor countries, to increase incentives for health workers to stay and practice in underserved areas.

November 8, 2006

U.S. Fund OKs Aid for El Salvador, Expands List

Senior fellow Steve Radelet was interviewed in this Reuters article about the Millennium Challenge Corporation's announcement of five new compact countries.

From the article:

Steve Radelet, a senior fellow at the Washington-based Center for Global Development, said it made sense for the United States to provide generous assistance to Jordan, a strong ally and already a big recipient of U.S. funding, but MCC aid would be much better spent on poorer countries.

"Bringing in such a high profile political partner into the MCC risks politicizing the MCC," Radelet said.

"It is pretty hard to justify from a development perspective giving the next dollar to Jordan when there are plenty of other poor countries like Zambia, which could have qualified for this program and are in greater need," he added.

Learn more about CGD's research on the Millennium Challenge Account

November 2, 2006

Board Stymied on Picking New AIDS, TB Chief

Senior fellow Steve Radelet was quoted in this article about the decision of the Global Fund's board not to select a new Executive Director during their recent talks in Guatemala City.

From the article:

Steven Radelet, a senior fellow at the Washington-based think tank Center for Global Development, which recently produced a report on new challenges facing the fund, said the failure to elect a new leader "is not good for the organization," but added that "trying to force through one candidate wouldn't be good, either." "I think it's a good process in that they clearly give voice to developing countries in a much stronger way" than the World Bank or International Monetary Fund, he said.

Read CGD's latest report Challenges and Opportunities for the New Executive Director of the Global Fund: Seven Essential Tasks

November 2, 2006

China Elevates its Economic Profile in Africa

Senior fellow Todd Moss was quoted in this USA Today article about China's expanding role as a development actor in Africa.

From the article:

"China is taking a 'realpolitik' point of view, trying to secure natural resources to continue fueling its high rates of economic growth. ... For Africa, it's a mixed bag," says Todd Moss, senior fellow at the Center for Global Development in Washington.

October 31, 2006

The Difference Between Calves and Cows

Research fellow David Roodman's latest publication, Microfinance as Business (co-authored with Uzma Qureshi), is discussed in this posting on Salon.com by Andrew Leonard. The article focuses on the pros and cons of micro-finance for development.

From the article:

For a couple of weeks now, I've been puzzling about poor women and cows in Bangladesh.

Let me explain.

On the same day that Muhammad Yunus, founder of the Grameen Bank and chief apostle of the church of microcredit, received the Nobel Peace Prize, the Center For Global Development (CGD), a Washington-based nonprofit, published a study by David Roodman and Uzma Qureshi with the title "Microfinance as Business."

Microfinance is generally taken to mean the provision of small loans -- microcredit -- and other financial services to very poor people, and Yunus is widely acclaimed as the man who pioneered its effective application. So CGD's timing was excellent. But the thrust of the study was contrarian to the point of outright dissidence. Though the Nobel Prize committee, as CGD noted in its own interview with Roodman published three days later, "praised Yunus and Grameen for 'their efforts to create economic and social development from below,'" Roodman says that for him "the jury is still out" over whether microfinance contributes to economic development among the poor. In their paper, Roodman and Qureshi argued that there isn't yet definitive evidence that microfinance actually lifts people out of poverty.

"Unfortunately, rigorously derived evidence that microcredit helps people in this way is surprisingly thin."

Surprising is the right word, because microfinance has never been hotter. 2005 was dubbed "The Year of Microcredit" by the United Nations. Philanthropists, aid donors, and profit-seeking capitalists of every stripe are all pouring hundreds of milllions of dollars into microfinance schemes across the globe. (An absorbing article in last week's New Yorker delves deeply into the differing motivations, and consequent friction between, the new players in microfinance, who include Microsoft's Bill "philanthropist" Gates and eBay founder Pierre "profit-seeking" Omidyar.) Heartwarming success stories of people living in extreme poverty -- mostly women -- who have clawed their way out of the most abject circumstances with the help of miniscule loans, abound...

October 30, 2006

En el corto plazo Estados Unidos es el principal problema

CGD senior fellow Liliana Rojas-Suarez was featured in the Peruvian magazine Peru Economico.

October 30, 2006

Letter to The Editor: Balancing Lenders' Terms with Borrowers' Leverage (Financial Times)

Sir, Larry Summers, writing in the Economists' Forum ("Why not suppress the fund's board altogether?", September 27), notes that lenders reasonably set lending terms, and worries that support for the International Monetary Fund from the US and the other traditional powers would flag were there a tilt toward greater leverage for borrowers - who do, after all, benefit from the financial backing of the non-borrowers. But there are many options between the one country-one vote system at the United Nations, with its costs in effectiveness and fragile financial support, and the near-complete lack of any leverage at all for borrowers at the IMF, with its cost in lack of legitimacy.

At the Inter-American Development Bank, where 50 per cent of voting shares are now held by borrowers, the US and other non-borrowers are still able to ensure reasonable terms of lending, while borrowers' sense of ownership provides legitimacy.

Moreover, the borrowers insist on more discipline on the Bank's own administrative spending (thus holding down borrowing costs) than is evident at the IMF and the World Bank.

At the IMF a system of double majorities (majority of votes, majority of countries) for at least some decisions would generate a similar dynamic. Imagine the effect were it to require that the major powers engage other countries including small borrowers in such key decisions as the choice of the managing director.

Beyond the discussion about quota allocations and a new formula for assigning them, surely there are other ways to minimise the trade-off between legitimacy and financial sustainability at the IMF.

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