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CGD in the News

April 4, 2019

David Malpass sails past doubts to secure World Bank presidency (Financial Times)

From the article:

David Malpass is poised to secure approval from the World Bank’s board as the next president of the Washington-based multilateral lender on Friday, after a low-profile campaign with no competition.

The comfortable run experienced by the 63-year-old former chief economist of Bear Stearns on the path to the World Bank presidency marks a victory for the Trump administration, which will now have an avenue to bring its America-first worldview to one of the top international economic institutions.

Mr. Malpass has prevailed despite concerns among officials in many countries about his well-documented skepticism of multilateralism, and doubts about his commitment to some of the World Bank’s main goals, particularly combating climate change. 

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Mr. Malpass has laid out a narrower vision for the World Bank, saying it should be more exclusively focused on providing assistance to the poorest countries. He consistently warned that multilateralism had gone “too far” and international economic co-operation had become sprawling and ineffective.

“The timing is tough, because it’s a moment when the World Bank needs to do more, and have a leader with a big vision, bringing it into the 21st century,” said Nancy Birdsall, president emeritus of the Center for Global Development.

Mr. Malpass is expected to take office as early as next week, in time for the spring meetings of the International Monetary Fund and the World Bank, giving him the opportunity to make a high-profile debut.

His early actions will be closely scrutinised for any signs of tensions with China. In congressional testimony as recently as November, Mr. Malpass had warned that the multilateral development banks risked being captured by Beijing’s “geopolitical” influence.

 

February 20, 2019

How (and how not) to reform the World Bank (Talk Media News)

From the article:

President Trump has named his selection to lead the World Bank.

David Malpass is a veteran of Ronald Reagan’s Treasury Department and the George H. W. Bush’s State Department, but it’s his more recent criticisms of the World Bank’s size and of multilateralism in general that are turning heads.

With America already pulling back from the United Nations, NATO and other multilateral institutions, is the World Bank next?

This week on ‘Wake’ we’ll look at the history, present and future of the World Bank and consider how it could change in the Trump era.

Guests:

·         Nancy Birdsall, founding president, Center for Global Development

·         Catherine Weaver, professor of public policy, Lyndon B. Johnson School of Public Affairs, University of Texas at Austin

Listen here!

 

January 16, 2019

The World Bank Needs to Join the 21st Century (Foreign Policy)

From the article:

Nearly two decades into the 21st century, the World Bank remains a 20th-century institution. In recent years, its reputation has faded and its influence diminished—the natural outcome of the rise of China and other emerging markets and the increasing access of even the poorest countries to borrowing on the private capital market. The current World Bank president, Jim Yong Kim, essentially acknowledged his own institution’s reduced importance with his preemptive resignation, effective Feb. 1, to take a job with a private equity firm.

The only way that Kim’s successor—whoever that ends up being—can succeed is by recognizing that the institution needs a new direction to match this new era. The World Bank can no longer afford to think of itself as a routine international lender. Instead, it must adapt to the new challenges the world faces.

Among this century’s existential global threats is climate change. The World Bank’s next president needs to prioritize financing projects that reduce climate risks. The World Bank may be the only institution…

Click here to read more!

October 12, 2018

Opinion: Achieving the SDGs will require more than domestic resource mobilization (Devex)

By Sanjeev Gupta 

From the article: 

According to a recent IMF analysis, low-income developing countries will need resources equal to 14.4 percent of their gross domestic product on average to meet the Sustainable Development Goals in five areas: education, electricity, health, roads, and water.

One way to bridge this gap is by strengthening the domestic tax capacity of LIDCs, which could mobilize roughly 40 percent of the needed resources, or 5 percent of GDP, with official development assistance and flows from the private sector and civil society providing the remaining. The International Monetary Fund analysis further indicates that fewer resources would be required if LIDCs were to grow at exceptionally high rates through 2030 and if this money was well spent.

However, generating additional revenue equal to 5 percent of GDP in LIDCs will be challenging, given past trends in revenue performance and the political opposition that tax reforms are likely to face in these countries. This makes it imperative for policymakers to improve the efficiency of existing spending, which could potentially generate as much incremental resources as domestic taxation. 

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Past trends and the Addis Tax Initiative

In recent years, LIDCs have overall been collecting more taxes domestically. Between 2002 and 2014, average tax ratios rose by 2.8 percent of GDP in sub-Saharan Africa and by 3.6 percent in the Western Hemisphere and emerging and developing Asia.

Read the full article here

 

October 10, 2018

Goldberg and Gopinath, the new two women chief economists of IMF and WB (EFE)

Note: Translated from Spanish using Google Translate.

From the article:

For the first time, two women will be the chief economists of the World Bank and the International Monetary Fund (IMF): Penny Goldberg and Gita Gopinath, respectively, which breaks the ceiling of crystal of decades in the large international financial institutions.

All this in the wake of Christine Lagarde, the first managing director of the IMF in its more than 70 years of history

"They are fascinating appointments," said Nancy Birdsall, president emeritus of the Center For Global Development in Washington.

"In fact, the best possible woman may be better than the best possible man given that she has had to overcome hidden barriers that her male colleagues do not face," Birdsall remarked.

In both cases, said the expert, the fundamental thing is that they contribute visions that are considered "challenging conventional wisdom".

Read the full article here.

 

July 10, 2018

A Firm Foundation: Contraception, Agency, and Women’s Economic Empowerment (New Security Beat)

By Kathleen Mogelgaard 

You are 20 years old. You live in a place where women get married young—when they are still girls, really—so you are already married. You gave birth to a happy baby girl about a year ago, and you have two older children, who are two and four.

You wake up early to nurse the baby, and soon the bigger kids want breakfast, too. Your mother-in-law is there to help prepare food, but your supply of wood is low so the fire doesn’t last long. You strap the baby to your back and head out to the forest to gather wood. An hour later you return with a hefty load, and you’re happy that you didn’t have to go very far today.

The older kids’ clothes are in desperate need of washing, so you’ll need to leave soon to refill the jerry can from the standpipe, which is about a mile away. But your baby is fussing—it’s time to nurse again—and you wonder if you can nurse her while you walk. Or maybe you can take just a few minutes to rest. You’ve been so tired lately, and you suspect that baby number four is on the way. As you sit down, your two-year-old starts wailing, and your four-year-old tugs your arm, “Mama, I’m still hungry”…

If this were you, you might feel bewildered if I asked whether you were “economically empowered.” This woman’s days are strongly dictated by the needs of her family. She may not feel that she has the power to make her own choices about money or livelihoods—or about much of anything. But what if she did have that power? What would that change—for her, and for the world? 

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Women’s agency is woven throughout these findings. Nancy Birdsall at the Center for Global Development describes a “reproductive ecosystem”—that is, a combination of social norms, economic realities, laws and customs, and access to contraception—that affects girls’ and women’s agency. We need to study this ecosystem further and quantify its contributions to women’s economic empowerment. 

Read the full article here.

February 14, 2018

Takeaways From The 2018 Australasian Aid Conference (Devex)

From the article:

CANBERRA — The 2018 Australasian Aid Conference, hosted by the Development Policy Centre and The Asia Foundation in Canberra on Feb. 13 and 14, brought together development and humanitarian researchers and professionals to discuss and debate the current state of aid.
 
From understanding economic conditions that lead to government instability to health, gender, and the modern objective of Australian and Asian donors, here are the key takeaways from two days of insightful discussion.
 
In targeting poverty, we can’t ignore the strugglers
 
Poverty is one of the most important development challenges donors and NGOs aim to address — so much so that ending poverty is goal #1 in the Sustainable Development Goals. But Nancy Birdsall, president emeritus of the Center for Global Development, said it is also crucial to reach “strugglers,” those who are above the $1.90 poverty line but at risk of falling below it.
 
Strugglers, she explained, earn between $4 and $10 per day. They have a highly volatile economic situation and are easily shaken by changes in household conditions or unexpected costs, making them deeply vulnerable.
 

Read the full article here

February 7, 2018

Foresight Africa Viewpoint – Sub-Saharan Africa Can Multiply Its Success Stories And Donors Can Help (Brookings)

From the article: 

In 2014, the IMF hosted its “Africa Rising” conference in Mozambique. Three years later, Mozambique defaulted on its debt. Steven Radelet’s upbeat 2010 book on Emerging Africa opened with a glowing summary of Ghana’s achievements. By 2015, Ghana was back in an IMF program due to worsening macroeconomic fundamentals. 

Yet many of the world’s poorest countries in sub-Saharan Africa have shown they can reform and improve governance. The Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative supported by the world’s major donors in the early 2000s took $75 billion in debt off the benefiting countries’ balance sheets—see the March 2016 World Bank-IMF update—and motivated wide-ranging macroeconomic and structural reforms that reduced poverty. Along with rapid growth in China and the commodity price boom, the result was a decade of high growth across the region. 

But the momentum is fizzling out. In a new round of tough reforms, African leaders will need to do the heavy lifting. Africa is still poor, and not yet able to finance the investments critical to a new round of growth and poverty reduction. Here’s what donors could do:
 
1. Help jump-start a big push on regional infrastructure to knit together many small economies and create economies of scale for local producers. That requires attracting Foreign Direct Investment (FDI) since even the best-managed countries in sub-Saharan Africa (consider Rwanda, Côte d’Ivoire, or Senegal) cannot rely on market financing because maturities are too short and interest rates too high.
 
January 11, 2018

India’s Missing Middle Class (The Economist)

From the article: 
 
In absolute terms, India has wealth roughly comparable to Switzerland (population 8m) or South Korea (51m). Although India’s population is almost the size of China’s, it is central Europe, with a population about the size of India’s top 10% and boasting roughly the same spending power, that is a better comparison. Global companies pay attention to markets the size of Switzerland or central Europe. But they do not look to them to redefine their fortunes.
 
Confronted by this analysis, India bulls concede the middle class is comparatively small, but insist that bumper growth is coming. The assumptions behind that, though, are not convincing. For a start, the growth of the overall economy is good—the annual rate is currently 6.3%—but not great. From 2002 China grew at above 8% for 27 quarters in a row. Only three of the past 26 quarters have seen India growing at that sort of pace.
 
Another assumption is that past patterns will no longer hold and that the spoils of growth will be distributed to a class earning decent wages and not to the very rich or the very poor. Yet the sorts of job that have conventionally provided middle-class incomes are drying up. Goldman Sachs, another bank, estimates that at most 27m households make over $11,000 a year—just 2% of the population. Of those, 10m are government employees and managers at state-owned firms, where jobs have been disappearing at the rate of about 100,000 a year since 2000, in part as those state-owned enterprises lose ground to private rivals.
 
The remaining 17m are white-collar professionals, a lot of whom work in the information-technology sector, which is retrenching amid technological upheaval and threats of protectionism. In general, salaries at large companies have been stagnant for years and recruitment is dropping, according to CLSA, a brokerage.
 
Might those below the current white-collar professional layer graduate to membership of the middle class? This happened in China, where hordes migrated from the countryside to relatively high-paying jobs in factories in coastal areas. But such opportunities are thin on the ground in India. It has a lower urbanisation rate than its neighbours, and a bigger urban-rural wage gap, with little sign of change. It is not providing jobs to its young people: around a third of under-25s are not in employment, education or training.
 
There are other structural issues. Over 90% of workers are employed in the informal sector; most firms are not large or productive enough to pay anything approaching middle-class wages. “Most people in the middle class across the world have a payslip. They have a regular wage that comes with a job,” points out Nancy Birdsall of the Centre for Global Development, a think-tank. And women’s participation in the workforce is low, at 27%; worse, it has fallen by around ten percentage points since 2005, as households seem to have used increases in income to keep women at home. Households that might be able to afford luxuries if both partners worked cannot when only the man does.
 
October 13, 2017

What's At Stake In The World Bank's Quest For A Capital Increase? (Devex)

From the article:

A U.S. Treasury official told Reuters this week that the U.S. believes the bank needs to examine its lending to “countries and to projects that already have ample borrowing capacity.” Some see that position as evidence the Trump administration is using the World Bank as a sort of battleground in its economic fight with China.

But Kim — and a number of World Bank experts — point to several reasons why it makes sense for the bank to continue lending to China and other large economies, even if those countries could find access to other sources of capital...

“If you’re going to prioritize those issues … that are global in nature, you can’t ring-fence the issue to a low income country,” said Scott Morris, senior fellow at the Center for Global Development...

Whether the World Bank should receive a capital increase for IBRD — and how the bank might have to rebalance its positions to convince its biggest shareholders to grant that — is one small piece of a much larger conversation about development capital and the multilateral development banking system...

Nancy Birdsall, president emeritus at the Center for Global Development, cited CGD projections that by 2030, 86 percent of countries eligible for the World Bank’s fund for the poorest countries — the International Development Association — will be located in sub-Saharan Africa. If that happens, Birdsall said, then IDA will become a de-facto “African Development Bank based in Washington.”

Birdsall suggested that the MDBs’ shareholders should consider what it will mean over time to see a regional development bank — the AfDB — relatively marginalized by an increasing concentration of World Bank funding in the region where that regional bank operates.

“Is that the right way to look at the MDBs as a system? Let’s think that through,” Birdsall said.

Read full article here.

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