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CGD in the News

January 31, 2019

Flush With Cash, China Continues to Borrow Billions from World Bank (NPR)

From the article:

During the Cold War, communist China shunned the capitalist World Bank. But once China embraced the institution in 1980 it quickly became one of the bank's largest borrowers of all time – taking out loans of more than $60 billion over the last four decades.

Today China is sitting on cash reserves of some $3 trillion. It's the world's second largest economy behind the U.S. It directly lends more money to other nations each year than the $2 billion or so it borrows from the World Bank.

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An analysis of the World Bank lending to China released earlier in January found that most of the new loans are focused in the poorer, inland parts of China. The analysis by the Center for Global Development also found that about 38 percent are targeted for what the bank calls "global public goods"-- issues that affect people beyond China's borders such as climate change and pollution.

"China is the world's largest polluter today and the biggest single category of expenditures for the World Bank is in this area," says Scott Morris, a senior fellow at the Center for Global Development and the lead author of the report.

January 31, 2019

World Bank President Jim Yong Kim bows out as the development lender looks for relevance (Deutsche Welle)

From the article:

Jim Yong Kim is officially leaving as president of the World Bank on February 1. His departure comes three years ahead of schedule and reveals the lender's confusion about its role in a globalized world.

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And how much can multilateral development banks raise in total? The Center for Global Development has estimated that all of them put together — not just the World Bank but also regional lenders such as the Asian Development Bank — can spend about $116 billion a year, out of which only about $45 billion is earmarked for infrastructure investment.

January 31, 2019

Opportunities and Challenges of Chinese Investments for African Nations (Becker Friedman Institute at UChicago)

From the article:

In November, 2018, BFI hosted the University of Chicago’s annual US-China Forum, focusing on China and the Global Economy. Academic and policy leaders from the US and China participated in the Forum, and several participants offered their thoughts on China and the global economy including W. Gyude Moore, Visiting Fellow at the Center for Global Development and Former Minister for Public Works of Liberia.

Moore discusses how Chinese investment has changed dynamics for African nations, and new opportunities and challenges has it presented.

Click here to watch!

January 31, 2019

Chinese investment in infrastructure is often a diplomatic trap (The Economist)

From the article:

For months Mahathir Mohamad has been plucking up courage to declare that, when it comes to Chinese investment in infrastructure, his is the Malaysia that can say no. At a projected cost of $20bn, the East Coast Rail Link, planned to run down peninsular Malaysia’s eastern seaboard before cutting west, is a big deal. In fact it is the second-biggest of all the projects of the Belt and Road Initiative (bri), China’s grand scheme to improve infrastructure across scores of countries, to tie East, West and all other compass points together.

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A report last year by the Centre for Global Development listed 23 countries involved in bri that were at “significant” risk of debt distress. One of them, Myanmar, wants to cut the size of a port and economic zone in Rakhine state, as well as shelve for good a controversial dam on the headwaters of the Irrawaddy. Another, Pakistan, the biggest recipient of bri projects, is facing a balance-of-payments crisis and has begged China for easier terms. Hawks making the running in the administration of President Donald Trump depict China as out to bankrupt weak governments, all the better to erode their sovereignty and dictate terms: “debt-trap diplomacy”.

January 31, 2019

Illicit financial flows are hard to stop (The Economist)

From the article:

When foreign aid enters developing countries, it is welcomed with handshakes and ribbon-cutting. Private money, by contrast, is sometimes smuggled across borders or siphoned into offshore bank accounts. Everyone agrees that such “illicit financial flows” are a problem. A report published on January 28th by Global Financial Integrity (gfi), a campaign group, estimates that illicit flows to and from developing countries are worth more than a fifth of their total trade with the rich world.

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Obviously, gun-running and drug-trafficking should count; in 2011 the unestimated that financial flows linked to transnational organised crime were worth 1.5% of global gdp. Bribes, and the proceeds of unregistered trade in legal goods, such as cigarettes, probably should, too. But broader definitions also fold in tax avoidance, which may not be illegal. The result is hopelessly vague, diverting attention from dirty money to smear legitimate businesses, argues Maya Forstater of the Centre for Global Development, a think-tank in Washington. Tax activists retort that the line between lawful and unlawful acts is often blurry. Developing countries lack resources to pursue complex legal cases, so big firms find it easier to get away with avoidance that should count as evasion.

January 30, 2019

David Malpass emerges as leading contender to head World Bank (Financial Times)

From the article:

The US is narrowing its list of potential nominees to lead the World Bank, with David Malpass, a senior Treasury official with sceptical views of multilateral institutions, emerging as one of its finalists, people familiar with the matter said. 

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“Malpass would represent a remarkably hostile choice to run the institution,” said Scott Morris of the Center for Global Development, a think-tank in Washington. “His views are fundamentally misaligned with those of the bank’s other shareholders.”

January 29, 2019

Brexiteers Sold a Vision of Britain That Wasn’t Rooted in Economic Reality (World Politics Review

From the article:

British Prime Minister Theresa May suffered a humiliating defeat earlier this month when Parliament voted by an overwhelming margin to reject the Brexit deal she had negotiated with the European Union. Yet there doesn’t appear to be a Plan B. 

Many are now betting that May will request a delay for Britain to leave the EU beyond the deadline of March 29, which May triggered in March 2017 by invoking Article 50 of the Lisbon Treaty and beginning the exit process. But the odds of a no-deal breakup also went up this month, despite fears that that outcome could lead to immediate delays in shipments and shortages of some foods and medicines. In the longer run, the current impasse reflects the fact that there are no easy answers. Assuming Brexit goes forward one way or the other, its costs could be felt for years.

Click here to read more!

January 29, 2019

Can China Turn the Middle of Nowhere Into the Center of the World Economy? (The New York Times Magazine)

From the article:

The Eurasian Pole of Inaccessibility is a striking name for an absence. It is the point farthest from a sea or ocean on the planet. Located in China just east of the border with Kazakhstan, the pole gets you a good distance from harbors and coastlines — at least 1,550 miles in any direction — into an expanse of white steppe and blue-beige mountain that is among the least populated places on earth. Here, among some of the last surviving pastoral nomads in Central Asia, nestled between two branches of the Tian Shan range on the edge of Kazakhstan, the largest infrastructure project in the history of the world is growing.

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Critics have described the B.R.I. as a new kind of colonialism or even part of a strategy of “debt-trap diplomacy,” seducing cash-poor countries with infrastructure projects that are unlikely to generate enough revenue to cover the interest on the loans that funded them. That is the unhappy situation at the China-funded Port of Hambantota in Sri Lanka, which the China Harbor Engineering Company took over after Sri Lanka fell behind on debt service. The Center for Global Development lists eight countries that face high risk of “debt distress” from B.R.I. projects that they can’t afford.

January 25, 2019

Global Fund must copper-bottom claims it has saved 27 million lives, say experts (The Telegraph)

From the article:

One of the world’s largest development funds risks “overstating” the number of lives it has saved and must improve transparency, experts have warned. 

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But according to experts writing in the Lancet journal, the claim is based on “obscure” methodology, which risks overstating the fund’s role in reducing deaths from HIV/Aids, TB and malaria and taking credit for other people's work. 

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The Lancet article suggests that the fund needs to more rigorously evaluate partner performance and prioritise evidence-based approaches to make a more compelling argument about why countries should invest once again. 

“Funders have tough choices to make," said Amanda Glassman, chief operating officer at the Center for Global Development. “A more grounded and evidence-based assessment of The Global Fund’s actual impacts would help the organisation make its case in the difficult replenishment cycle ahead.”

January 24, 2019

Could DFID be absorbed by the UK foreign office? (Devex)

From the article:

United Kingdom Member of Parliament Boris Johnson has once again called for the Department for International Development to be scrapped and rolled back into the Foreign & Commonwealth Office.

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“Had the Conservatives come back with a big majority [in the 2017 general election, in which Theresa May won a minority government], we suspected they might have seriously considered merging the departments,” Ian Mitchell, a senior policy fellow at the Center for Global Development, told Devex.

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The justification often given is that a joined-up approach between DFID and FCO would create greater coherence and efficiency. In reality, changes such as these are “generally driven by political motivations,” Mitchell said. “It doesn’t seem to be that it’s more effective; it seems that it’s a political choice to integrate.”

Having a single voice for the U.K. internationally and perceived greater control over foreign spending appeals to some and is a way to win over aid skeptics, Mitchell explained. In the minds of some MPs, “development should be secondary to our U.K. foreign policy objectives.”

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