Ideas to Action:

Independent research for global prosperity

CGD in the News

October 24, 2018

Island diplomacy: a storm in the Maldives (The Interpreter)

By Aarti Betigeri 

From the article: 

The Maldives, with its sun-soaked resorts and vivid turquoise waters, epitomises luxury and Instagram perfection for a breed of cashed-up holidaymakers and honeymooners. But the reality of the island nation is vastly different: creeping Salafism and hijabs, political uncertainty, and a gradual erosion of democratic freedoms, set against a backdrop of Chinese-funded infrastructure projects, all thanks to the former President Abdulla Yameen. 


Beijing has, in recent years, pledged to finance a heap of infrastructure projects – upgrading its international airport, building a 1.4 kilometre bridge between Hulhule and Male, all part of China’s Belt and Road Initiative. A memorandum of understanding on the initiative was signed in 2014 between the two countries.

These were enthusiastically supported by Yameen, however Solih has made it clear that he is not comfortable with the level of Chinese involvement, and any potential for China to use the Maldives as a convenient spot from where to view oil shipments and other sea traffic, but also a strategic staging post in its future plans in the Indian Ocean. 

According to the Center for Global Development, a US-based think tank, the loans from China to the Maldives come in at around $1.3 million – and the country is one of the most at-risk of any of those involved in the Belt and Road Initiative to failing to meet its repayments. 

Read the full article here


October 23, 2018

Snap shot pictures of poverty in Nigeria aren't accurate. Here's the real deal (News24)

By Zuhumnan Dapel

From the article:

Studies that reflect the movement of poverty levels at a particular point-in-time attract a lot of attention. They also inform academic and policy debates across the globe. In Africa, where poverty levels remain high, these snapshots of poverty levels are a big deal.

Grand new narratives emerge from snapshots of poverty levels. For example, the Africa Rising narrative was largely made on the back of numbers that reflected a massive wave of poverty reduction across the continent. Another is that Nigeria recorded remarkable success in its fight against poverty between 1996 and 2004. This is based on claims that the percentage of those living on less than $1.25 per day declined by 27.63% during this period. This would mean that about 27.13 million Nigerians escaped poverty.

While these snapshots can be useful, they are fundamentally insufficient and can be misleading. Our study of poverty numbers in Nigeria shows how unreliable the numbers are.

We took a different approach, one that’s been gaining traction in recent years – the study of the mobility of poverty, or the movement of people in and out of poverty over time.

It provides a much richer and nuanced understanding of poverty because it challenges the conventional view of “the poor” as a homogeneous and essentially static population.

Applying this approach, our study on poverty mobility in Nigeria found that between 1980 and 2010 there are more people falling into poverty than escaping it. And based on a related study, about 72%-91% of Nigeria’s poor are at risk of spending their entire life below the poverty line.


We also established that chronic poverty is less prevalent in Nigeria’s oil producing region and more prevalent in the country’s northeast and that 81% of those trapped in poverty were from the north.

Read the full article here.


October 23, 2018

SDG Knowledge Weekly: Finance Continued, and Private Sector Actions (SDG Knowledge Hub)

By Adam Fishman

From the article:

Building on the previous edition of the SDG Knowledge Weekly, which focused on the recent annual meetings of the World Bank and IMF, this week continues the discussion on financing sustainable development, bringing in private actors that are embracing new practices to support SDG implementation. We also highlight recent events that highlight how businesses can take action.

The Center for Global Development (CGD) published a brief titled, ‘Rising to the SDG Challenge: The unique contribution of the International Development Finance Club’ (IDFC). Noting “significant misalignment between the structure of” multilateral development banks (MDBs) and the SDGs’ financing needs, the paper argues that institutions with stronger country-level ties to non-sovereign actors are better-suited to facilitate progress on the SDGs. It highlights that the IDFC, with an aggregate US$3.7 trillion in assets, is “uniquely positioned” to play a leadership role in this regard, especially given that the Club’s 22 member institutions are located or primarily operate in developing economies. The paper emphasizes elements of a broader SDG agenda for IDFC members, including collaborative annual reporting, open dialogue on standard setting, project collaboration and learning from investments in fragile settings, among others.

The International Finance Corporation (IFC) developed nine draft Operating Principles for Impact Management. The principles focus on elements of: strategic intent, origination and structuring of investments, portfolio management, impact at exit and independent verification. IFC notes that the principles are not intended to be prescriptive, but rather, serve as a reference point for investors in the design and implementation of their own impact management systems, tools or approaches. A write-up of the release is available on Devex.

Read the full article here


October 23, 2018

Former president of Mexico criticizes Trump, praises NAFTA in NU speech (North by Northwestern)

By Brianna Bilter, Julio Vazquez

From the article:

Northwestern University hosted former president of Mexico Vicente Fox Tuesday evening for the 29th annual Leopold Lecture. Fox served as president of Mexico from 2000-2006. A member of the National Action Party, he ran on a platform geared toward economic reform and ending government corruption. His election ended the 71-year reign of the Institutional Revolutionary Party.

One of Fox’s central points in his lecture was the impact of NAFTA. He noted that the agreement has fostered the trade of over a trillion U.S. dollars per year among its constituents, the United States, Mexico and Canada.

Fox stated that the income gap between the U.S. and Mexico has shrunk from a 12:1 ratio to a 5:1 ratio since NAFTA’s implementation, which he said reduces incentives to migrate to the U.S. He predicted that this gap will close to a 1:1 ratio in the next 25 years. This figure is disputed by the Center for Global Development, which found in 2015 that the wage gap between the two countries has grown under NAFTA.

Regardless, Fox does not want Mexico’s role in the North American economy to be understated. He emphasized Mexico’s prominence in the automobile and produce industries.

“We are not the little guy in the backyard. We do our share,” Fox said.

Read the full article here.


October 23, 2018

The truth on poverty reduction around the world (The Guardian)

By The Guardian 

From the article:

At risk of sounding repetitive, Nigeria is now the official poverty capital of the world. Official according to the world poverty clock although the government is still waiting for official confirmation from our statisticians to know for sure. This poverty is expected to continue for a while as many are projecting that sub-Saharan Africa in general, and Nigeria and the Democratic Republic of Congo in particular, are set to house the majority of the world’s poor.

However, if you have been following the Nigerian economy you would know that poverty is not a new thing. It may have been rising (still waiting for official confirmation of course) but it has been there for a while. So why are we in the news all of a sudden? Well, the other centres of global poverty have somehow managed to take massive steps towards eradicating poverty in their countries. In 1960 about 65 percent of the world lived in poverty. This dropped to 44 percent in 1981 and today has dropped to just over 8 percent of the world population living in extreme poverty. The Nigerian and African story is not necessarily that poverty has been increasing (which it has in many cases) but that the rest of the world has been very good at eradicating poverty, leaving Nigeria and Africa behind.

The obvious next question is “how did the rest of the world do it”. On this note, a new paper published by Lant Pritchett at the Centre for Global Development identifies some important observations. A significant part of the poverty reduction has been driven by economic growth in not just large economies like China and India but in smaller countries like Vietnam. Between 1980 and 2017, China reduced poverty from 84 percent to less than two percent today. In Vietnam, poverty dropped from 33 percent in 1993 to less than 10 percent in 2016.

Over this same period, many rich countries and development agencies have launched various programs and interventions across many countries including in Africa, trying to alleviate poverty. The verdict according to Pritchett? Economic growth and migration are responsible for almost all poverty reduction over the last four decades. Almost all countries that have reduced poverty significantly over the last few decades have experienced periods of strong economic growth. Economic growth is a necessary condition for any sustainable reduction in poverty. It does not mean that growth automatically reduces poverty, but no growth definitely implies that poverty is not going to be reduced.

Read the full article here.


October 22, 2018

China Is Forced to Reconsider Path Into Eastern Europe (Bloomberg)

By Bloomberg Editorial Board 

From the article: 

China’s efforts to make inroads in eastern Europe are being hindered by what nations see as failed promises on money materializing and the strings attached to investments.

The so-called 16+1 framework was established by China as a means to deepen its footprint in eastern Europe. Its members -- 11 European Union countries, from Poland to Hungary and Estonia, plus five Balkan states -- saw the annual forum as a means to attract Chinese investment in infrastructure like roads and rail networks to boost their economies. 

But many of those states are disenchanted with the lack of investment from China, according to people with direct knowledge of the forum. Members are also unhappy at Beijing’s preference to provide loans rather than cash, and now recognize that better deals are available within the EU framework, such as via the European Bank for Reconstruction and Development.

Some of those projects that have materialized with Chinese help have attracted unwelcome attention. Mounting costs for a highway development in Montenegro prompted the Washington-based Center for Global Development to single out the country as “at particular risk of debt distress,” while the tender for an as-yet unfinished high-speed rail link between Budapest and Belgrade prompted an EU commission probe. 

Read the full article here.


October 22, 2018

The case against Jeff Bezos’s and Elon Musk’s Mars colonies to save humanity (Vox)

By Kelsey Piper 

From the article: 

Going to Mars might be a fun goal. But keeping us alive requires staying focused on Earth.

What I heard from all of them was that, while space colonization is exciting, more resources are needed for risk-mitigation efforts here on Earth.

Beckstead, the Open Philanthropy Project program officer, is focused on those. “Given that there are many risks it doesn’t protect us from very well, and given that it’s expensive and going to take a long time ... I see options that are an easier route to success,” said Beckstead.He did, however, want to make sure I knew that he thinks space exploration is a worthy human endeavor — just not particularly high on the list of ways to keep our species alive.

I took a look at the projects Beckstead has made grants to. Scientists at Rutgers Universityare studying the climate effects of nuclear war, hoping to create pressure towards safer nuclear policy by better understanding the devastation a war could cause. At UCLA’s School of Law, researchers are studying the international governance and cooperation implications of climate engineering. The Center for Global Development is looking at the Ebola crisis for takeaways about how we might manage a pandemic, and researchers at Oxford’s Future of Humanity Institute are studying international coordination on AI. 

Read the full article here

October 22, 2018

Trump Says He's Ending Central American Aid Over Migrant Caravan (Bloomberg)

By Toluse Olorunnipa, Nick Wadhams, and Eric Martin

From the article:

President Donald Trump said the U.S. will cut off foreign aid to Guatemala, Honduras and El Salvador as thousands of migrants continued to march from Central America toward the U.S. border.

Trump has sought to escalate undocumented immigration as an issue ahead of pivotal midterm congressional elections on Nov. 6, and he has blamed the so-called “caravan” of Central American migrants on Democrats. “Every time you see a Caravan, or people illegally coming, or attempting to come, into our Country illegally, think of and blame the Democrats for not giving us the votes to change our pathetic Immigration Laws!” he said earlier on Twitter.

Cutting aid isn’t as simple as turning off a tap. Much of the money for El Salvador, Guatemala, and Honduras was appropriated by Congress in the form of anti-corruption and good-governance programs. Those initiatives have broad support from lawmakers, who have already promised to put up a fight should Trump try to make good on his threat. A 1974 law prohibits the president from withholding money appropriated by Congress.

U.S. aid to the countries amounts to about 0.3 percent to 0.5 percent of their gross domestic product and was already expected to fall in 2019, according to Eurasia Group Latin America analyst Risa Grais-Targow. Cutting the aid wouldn’t have a huge impact on their economies, she said, but would represent “additional headwinds” on top of Trump’s broad immigration policies and his attempt to cancel a special immigration status for tens of thousands of Hondurans and El Salvadorans already in the U.S.

“Cutting assistance doesn’t give leverage in terms of changing policies, and actually undermines the existing U.S. efforts to tamp down what we know to be the drivers of migration,” said Jeremy Konyndyk of the Center for Global Development. “So it’s wrong-headed on both fronts.”

It’s also unclear whether Trump will make good on his Twitter threat.

“We’ve seen this movie before,” Konyndyk said. “We’ve seen the White House put out something really inflammatory that doesn’t translate into policy outcome.”

Read the full article here

October 22, 2018

Opinion: 2 things the World Bank's human capital index gets right on education (Devex)

By Lant Pritchett

From the article:

The idea that investing in human capital is central to promoting development has been widely accepted since the 1950s — and the world has seen spectacular progress. Improvements in life expectancy and the expansion of schooling in the developing world have been extraordinary: both have improved more in the past 60 years than the previous 6,000 years of human history.  

The World Bank recently announced its much-anticipated Human Capital Project — which signals a renewed emphasis on investing in human capital. But the initiative will only be effective if everyone recognizes the two new challenges the initiative brings to the fore.

First, the new human capital index recognizes that “schooling ain’t learning.” Parents, communities, and countries have always had learning goals for their youth, namely that they acquire the skills and capabilities they will need to be successful adults. However, the international community has often reduced learning goals to goals based on “time served” in a school. In the Millennium Development Goals, for example, the “universal primary completion” goal made no reference to what a child might learn in those years.

This had produced success in schooling, in that nearly every child now has access to and attends school. But, tragically, if you want to find an uneducated child in the world today, the place to find them is in school. Analysis of recent data from surveys of women around the world finds that less than half of adult women who completed only six years of schooling could read a single simple sentence.

While the Sustainable Development Goals reflect both goals for schooling and for learning, the World Bank’s new human capital index uses “learning adjusted school years” and is the first international measure to directly incorporate student learning into an overall index.

Read the full article here.


October 21, 2018

Concerns about Debt Grow on China’s Belt and Road (Voice of America)

By Voice of America 

From the article: 

Concerns about money owed to China for its Belt and Road Initiative are increasing in Asia, Africa and the Middle East.

The initiative, a huge infrastructure project, is a Chinese effort to improve transportation and increase trade across the area.

In recent weeks, more than $30 billion in infrastructure projects have been canceled. Officials are reconsidering some loans and investments. Governments from Vietnam to Zambia are seeing public opposition to Chinese investments as well as fear of what has been called “debt diplomacy.” 


Debt traps

The Center for Global Development says 23 of the 68 countries where China is investing for Belt and Road projects are at high risk of debt problems. Another eight, including Djibouti, may have debt problems linked to future projects. The Washington, D.C.-based group published the information in a report released earlier this year.

China argues that its investments are aimed at increasing trade and helping developing countries. 

Read the full article here.