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CGD in the News

November 9, 2017

Technology Cannot Solve All Of Africa’s Problems, But It Can Help With Many (The Economist)

From the article:

Asian countries such as Japan and later Taiwan, South Korea and China embraced many of the world’s latest technologies to build formidable manufacturing economies. But Africa was largely left out of the most recent waves of globalisation, in which labour-intensive manufacturing moved out of Europe and America and into Asia. In 1990 African countries accounted for about 9% of the developing world’s manufacturing output. By 2014 that share had slumped to 4%.

One reason was pinpointed in a recent study by economists at the Centre for Global Development in Washington, DC. It found that labour costs in Africa are about 60% higher than in comparable countries such as Bangladesh. More striking still, the capital cost of employing a worker in Kenya, at $10,000, is about nine times as much as in Bangladesh. This is partly because indirect costs caused by unreliable infrastructure, crime, corruption and poor regulation, among other things, can account for 20-30% of the total costs incurred by firms in Africa...

So can technology help change the fortunes of Africa, or should the region’s governments focus on getting ports and power to work? 

Read full article here.

October 27, 2017

Why Do Nations Invest In International Aid? Ask Norway. And China (Washington Post)

From the article:

How much are acts of generosity worth in international relations? For affluent countries, foreign aid has helped spread power and influence. Donors give foreign aid in part because it will benefit them. For example, political scientist Carol Lancasterfinds that domestic politics and international pressures combine to shape how and why donor governments give aid, and that aid was initially based on “hard-headed, diplomatic realism.”

The Trump administration’s proposal to slash foreign aid by more than one-third (including drastic cuts to global health and humanitarian aid) represents a major shift away from the goal of using aid to attain “smart power,” a strategy that supplements the ability to exercise brute force with efforts to win hearts and minds in far-off places. At the other end of the spectrum is Norway, a small but wealthy country, which has consistently tried to bolster its “soft power” ever since it helped broker a peace agreement between Israel and Palestine in the 1990s. Between these two extremes is China, which is using foreign aid to acquire greater soft power as it gears up for a more active role in world affairs...

As it struggles to better integrate foreign aid and national interests, Norway has been falling in the Center for Global Development’s rankings of countries committed to development — one of the most cited indexes among aid advocates and civil society organizations. Such results directly undermine its carefully cultivated image of being a humanitarian superpower.

Read full article here.

October 27, 2017

Kenya Can't Imitate China's Economic Model, As Things Stand (Daily Nation)

From the article:

My bet is that, Kenya specifically, and other developing countries, will need to be far more nimble than China was in negotiating manufacturing success.

report by the Centre for Global Development finds that only a few countries in Africa have the advantage in labour costs that would predict their ability to become manufacturing hubs.

Kenya, which has a comparatively diverse, large sector, is not among them, despite the fact that Kenya's long term growth prospects depend on the country's ability to unlock manufacturing efficiencies. The report appears to pour cold water on the wisdom informing Kenya’s industrial strategy.

Policy choices incompatible with being a regional manufacturing hub undermine the structural changes Kenya requires. If you agree with the report's conclusions, you may realise that Kenya’s overall development strategy is incoherent.

Read full article here.

October 26, 2017

The Story Of Ethiopia’s Incredible Economic Rise (Quartz)

From the article:

Ethiopia’s economy is booming, and despite the country’s current political turmoil, the IMF thinks the good times will last.

In 2000, Ethiopia, the second-most populous country in Africa, was the third-poorest country in the world. Its annual GDP per capita was only about $650. More than 50% of the population lived below the global poverty line, the highest poverty rate in the world.

What has happened since is miraculous. According to IMF estimates, from 2000 to 2016, Ethiopia was the third-fastest growing country of 10 million or more people in the world, as measured by GDP per capita. The country’s poverty rate fell to 31% by 2011 (the latest year Ethiopia’s poverty level was assessed by the World Bank)...

Ethiopia’s economy is concentrated in the services and agriculture sectors. The World Bank estimates that of the 10.8% average annual growth recorded by Ethiopia between 2004 and 2014, half came from services, like hospitality and transportation, which was mostly a result of country’s urbanization (pdf). Agriculture, meanwhile, accounted for 3.6% of the growth during the period. Improved agriculture production was mostly a result of the adaptation of improved seeds and chemical fertilizer, according to International Food Policy Research Institute. Manufacturing, though a small portion of the economy, is burgeoning, growing at more than 10% per year. A recent study by the Center for Global Development, a US think tank, concluded that Ethiopia was the most likely country in Africa to become the “New China.”

Read full article here.

October 17, 2017

Kenya Pays Factory Workers Twice As Rival Bangladesh (Business Daily)

From the article:

Workers in Kenyan factories earn more than twice the average wages that industries in Ethiopia and Bangladesh pay their labourers even as global brands favour low pay countries, a new study shows.

US-based Centre for Global Development puts the annual pay per worker in Kenyan industries at $2,118 (Sh218,154), equivalent to Sh18,179 per month.

Workers in Ethiopia’s sweatshops earn an average $909 (Sh93, 627), or Sh7,802 per month while the wage in Bangladesh, famous for its vibrant garments industry, is a paltry $835 (Sh86,005) yearly.

Tanzania factories pay an average $1,776 (Sh182,928) a year, or Sh15,244 monthly, the study shows.

“Yet taking the broader global picture their (Kenya) manufacturing labour appears costly relative to that of Bangladesh, a country with comparable income level and competitiveness rating,” the report says.

Read full article here.

October 17, 2017

Why Ethiopia Is Overtaking Kenya In The Race To Become The 'New China' (The Star)

From the article:

It is expensive to start and run a manufacturing factory in Kenya compared to at least 28 other African countries, a new study shows.

The study, by the Centre for Global Development, rates labor and capital costs per worker as top reasons for the country's unattractiveness. 

As per its findings, the labor cost per Kenyan worker is Sh218, 725 compared with Bangladesh where it is Sh86, 230 and Sh93, 872 in Ethiopia.

The researchers have found out that Ethiopia, already leading the way as Africa's 21st century center for manufacturing, has the best likelihood of being the "New China".

Read full article here.

October 15, 2017

Even Africa’s Poorest Countries Are Too Expensive To Be The World’s Next Manufacturing Hub (Quartz)

From the article:

Even though the global economy has evolved significantly in the last few decades away from the industrial revolution—which transformed many of the world’s advanced countries—there’s still much hope tied to the idea that manufacturing will play a key transformative role in developing countries in Africa today.

Yet, it may be foolish to place too big a bet on manufacturing in Africa, according to a new research paper from US think tank, Center for Global Development.

The researchers used World Bank data to look at 5,500 firms in 29 countries. They compared labor and capital costs, and productivity and efficiency of manufacturing in sub Saharan Africa with similar countries outside Africa, in particular Bangladesh. They did not have good news for most of the region.

Read full article here.

September 6, 2017

Report: US Ranks Near Bottom in Commitment to Global Development (Foreign Policy)

From the article:

The United States ranks 23rd of 27 of the wealthiest countries in how its policies impact the rest of the world, according to the 2017 Commitment to Development Index. The index, prepared by the Center for Global Development, a Washington, D.C.-based think tank, ranks countries based on their foreign aid, finance, technology, environment, trade, and security policy areas.

Scandinavian countries, which have traditionally places a high priority on development assistance, received top marks. Denmark took first place, followed by Sweden, Finland, and France. Germany surged 10 slots to 5th place from last year, primarily due to its open migration policy amid Europe’s refugee crisis. The United Kingdom took 7th place.

South Korea ranked last place, with Japan closely following in 26th place (despite their dismal rankings, however, both received top marks for technology policies).

Read full article here.

September 6, 2017

Nordic Countries Most Committed to Development, Says Think-Tank (Public Finance International)

From the article:

Center for Global Development’s Commitment to Development Index report, released this morning, ranked countries based on the impact of foreign aid and policies on trade, finance, migration, the environment and technology.

 “In our integrated world, decisions made by rich countries about their own policies and behaviour have repercussions for people in the developing nations,” author Ian Mitchell from Center for Global Development said in the report.

While Nordic countries ranked consistently high across the various components of the CDI, the US was ranked 23rd, down three places from last year, as a result of its low scores on finance, environment and aid, despite its high scores in trade and security. 

Denmark’s top overall ranking was a combination of its “generosity”, providing 0.75% of its national income, and the effectiveness of its aid, the report said.

Read full article here.

September 6, 2017

Trump or no Trump, US Ranks Near Bottom in Helping Poorer Nations (Thomson Reuters Foundation News)

From the article:

The United States placed near last among the world's wealthiest nations in an index ranking how their policies help improve the lives of people in poorer nations, a report showed on Wednesday.

The superpower ranked 23rd out of 27 countries in the yearly Commitment to Development Index but would have fared worse with data recent enough to capture U.S. President Donald Trump's policymaking, its authors said.

The Center for Global Development (CGD) compiled thousands of data points dating up to 2016, when Trump's predecessor Barack Obama was still in office.

The CGD said it looks at each nation's performance in areas of aid, trade, finance, migration, environment, technology and security to measure how policies of wealthy countries help or hurt the world's poorest people.

Denmark ranked at the top, in part due to effectiveness of its aid and its significant contribution to international peacekeeping efforts, the CGD said. It was followed by Sweden and Finland.

Read full article here.

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