This paper examines how the lack of recognition of Somaliland by the international community—and the consequent ineligibility for foreign financial assistance—has shaped the region's political development. It finds evidence that Somaliland’s ineligibility for foreign aid facilitated the development of accountable political institutions and contributed to the willingness of Somalilanders to engage constructively in the state-building process.
Congressional Testimony: The World Bank’s Disclosure Policy Review and the Role of Democratic Participatory Processes in Achieving Successful Development Outcomes
CGD senior fellow Vijaya Ramachandran testifies before the House Committee on Financial Services about the World Bank’s disclosure policy. Ramachandran urges policymakers to base future capital increases to all of the MDBs on their progress on project evaluation and product innovation.
To Formalize or Not to Formalize? Comparisons of Microenterprise Data from Southern and East Africa - Working Paper 175
Why do so many businesses choose to remain informal? Vijaya Ramachandran and co-authors discover that the answer is more nuanced than often believed. In East Africa, for instance, the difference in productivity between formal and informal firms is often indistinguishable, while in Southern Africa productivity it is more differentiated. Policies to encourage formalization and increase productivity are likely to be more successful in East Africa, whereas an emphasis on job training and vocational skills might be more appropriate in Southern Africa.
This CGD Brief, based on the book Africa's Private Sector by Vijaya Ramachandran, Alan Gelb, and Manju Kedia Shah, shows how investing in infrastructure and improving access to education can help bring about a broad-based business class in Africa.
What's keeping private business from flourishing in Africa? On the basis of unique enterprise surveys, Vijaya Ramachandran and her co-authors identify poor roads and unreliable power as major physical challenges; ethnic segmentation and the economic predominance ethnic minorities further constrain the business environment. The author show how investing in infrastructure and improving access to education can help bring about a broad-based business class in Africa.
A Fresh Look at Global Governance: Exploring Objective Criteria for Representation - Working Paper 160
The authors of this CGD working paper analyze what the principal bodies of global government—the Bretton Woods institutions and the UN, the G-20 and the OECD—would like if a country’s membership and roles were contingent upon objective criteria that would better balance representation and effectiveness. They find major disparities between the results of their analysis and the state of affairs today, and they point to the need for changes far more fundamental than the incremental tweaks now being considered.
Do Regulatory Reforms Stimulate Investment and Growth? Evidence from the Doing Business Data, 2003-07 - Working Paper 159
In this paper, witha foreword by senior fellow Vijaya Ramachandran, Benjamin Eifert of UC-Berkeley investigates the effects of regulatory reform by drawing on years of data across 90 countries. He discusses the characteristics of countries that choose to reform and the results of these reforms. The paper it contains valuable insights for policymakers and institutions focused on regulatory reform in weak states.
Why should the United States care about economic growth in Africa? Because it is the right thing to do and the smart thing to do. Helping to spur economic growth in Africa promotes our values, enhances our security, and helps create economic and political opportunities for the people of the continent. Public interest in Africa is higher than ever—witness consumer movements such as Product Red—and bipartisan political support recently renewed funding for the President’s Emergency Plan for AIDS Relief (PEPFAR). Several new opportunities now exist for U.S. firms to compete and benefit from a win-win partnership with the region.
The White House and the World: A Global Development Agenda for the Next U.S. President shows how modest changes in U.S. policies could greatly improve the lives of poor people in developing countries, thus fostering greater stability, security, and prosperity globally and at home. Center for Global Development experts offer fresh perspectives and practical advice on trade policy, migration, foreign aid, climate change and more. In an introductory essay, CGD President Nancy Birdsall explains why and how the next U.S. president must lead in the creation of a better, safer world.
CGD senior fellow Vijaya Ramachandran argues in this essay that the next U.S. president can play a valuable role in helping Africa to overcome two crucial barriers to poverty reduction: lack of power and lack of roads. Ramachandran urges the next president to create a $1 billion Clean Energy Fund for Africa to facilitate the transfer of U.S. infrastructure technology, including renewable energy; and to encourage the World Bank and the African Development Bank to focus on cross-country regional infrastructure projects, also with a strong emphasis on clean technology. The essay is included in a forthcoming CGD volume: The White House and the World: A Global Development Agenda for the Next U.S. President.
International corporations interested in joining the fight against global poverty can choose from a wide range of options, according to a new CGD report released last week. The report, Joining the Fight Against Global Poverty: A Menu for Corporate Engagement, suggests six approaches for corporations to consider. Based on interviews with senior executives at 15 firms with global reach, it includes stories about what has worked (and what hasn't) and describes some of the advantages that companies have found in working for development.
Does Influence-Peddling Impact Industrial Competition? Evidence from Enterprise Surveys in Africa - Working Paper 127
CGD visiting fellow Vijaya Ramachandran and co-authors Manju Kedia Shah and Gaiv Tata used firm-level survey data from more than 1,500 enterprises in six African countries to discover how and why African firms lobby. Their working paper concludes that larger, entrenched firms lobby to protect their market share, and that this inhibits competition, reducing efficiency and growth. The authors suggest that regional integration could be one way out of this trap, because it expands the number of enterprises in the marketplace as well as the size of the market, thus making it both harder and less worthwhile for domestically entrenched enterprises to lobby to protect their market share.
Why Doesn't Africa Get More Equity Investment? Frontier Stock Markets, Firm Size and Asset Allocations of Global Emerging Market Funds - Working Paper 112
Africa receives only a tiny fraction of global investments in emerging markets. But the problem is not that fund managers are scared away by a seemingly steady stream of bad news out of Africa, nor is a general marketing of Africa to global investors the solution. Instead the authors of this new CGD working paper find that the small size of African markets and low levels of liquidity are a binding deterrent for foreign institutional investors. Drawing on firm surveys to explore why African firms remain small, the authors offer practical recommendations for increasing portfolio investment in Africa. Learn more
Why Are There So Few Black-Owned Firms in Africa? Preliminary Results from Enterprise Survey Data - Working Paper 104
Countries cannot grow without a vibrant domestic private sector, yet most growth in sub-Saharan Africa in the past decade has come from extractive industries, not private, entrepreneurial activity. Furthermore, non-extractive activity in the private sector is often dominated by firms owned by minority ethnic entrepreneurs--of Asian, Middle Easterner or Caucasian descent--not indigenous Africans. In this working paper, CGD visiting fellow Vijaya Ramachandran and her co-author analyze the constraints faced by domestic firms in five countries in sub-Saharan Africa. They offer policy recommendations to help indigenous entrepreneurs enter and survive in the private sector, including increasing university education and building networks among business professionals.Learn more
How do employers decide whether to provide their employees with HIV/AIDS prevention services? CGD Visiting Fellow Vijaya Ramachandran's data from 860 firms and 4,955 workers in Uganda, Tanzania, and Kenya shows that larger firms, and those with more highly skilled workers, invest more in HIV/AIDS prevention. Firms in which more than 50 percent of workers are unionized also are more likely to provide more prevention services.
In this CGD Brief, Todd Moss and Vijaya Ramachandran analyze the survey results of 300-400 manufacturing firms in Kenya, Tanzania and Uganda. Their main finding? Foreign firms perform better than local firms in generating jobs, increasing the productivty of their workers, and in skills transfer.
Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate Data - Working Paper 56
This paper ties together the macroeconomic and microeconomic evidence on the competitiveness of African manufacturing sectors. The conceptual framework is based on the newer theories that see the evolution of comparative advantage as influenced by the business climate—a key public good—and by external economies between clusters of firms entering in related sectors. Macroeconomic data from purchasing power parity (PPP), though imprecisely measured, estimates confirms that Africa is high-cost relative to its levels of income and productivity. This finding is compared with firm-level evidence from surveys undertaken for Investment Climate Assessments in 2000-2004.
Is Africa’s Skepticism of Foreign Capital Justified? Evidence from East African Firm Survey Data - Working Paper 41
The world has increasingly recognized that private capital has a vital role to play in economic development. African countries have moved to liberalize the investment environment, yet have not received much FDI. At least part of this poor performance is because of lingering skepticism toward foreign investment, owing to historical, ideological, and political reasons. Results from our three-country sample suugest that many of the common objections to foreign investment are exaggerated or false. Africa, by not attracting more FDI, is therefore failing to fully benefit from the potential of foreign capital to contribute to economic development and integration with the global economy.