Does aid to Africa undermine the emergence of a robust African middle class? If so, what can be done about it? In this new working paper, CGD president Nancy Birdsall argues that high and unpredictable aid flows could be making life harder for Africa's small and medium-sized businesses by, for example, inflating wages and making governments less reliant on domestic revenue—and hence less accountable to taxpayers. She urges that donors systematically monitor such impacts in aid-dependent countries and suggests ways that aid could help to bolster Africa's crucial but fragile middle-income groups. Learn more
Although nearly all poor countries are classified by the World Bank as IDA-only, Nigeria stands out as a notable exception. Indeed, Africa’s most populous country is the poorest country in the world that is not classified as IDA-only. Under the World Bank’s own criteria, however, Nigeria has a strong case for reclassification. IDA-only status would have two potential benefits for Nigeria. First, it would expand Nigeria’s access to IDA resources and make the country eligible for grants. Second, it would strengthen Nigeria’s case for debt reduction. With a renewed economic reform effort getting under way and the emerging use of debt reduction as a tool for assisting economic and political transitions, the UK, the US, and other official creditors should support such a move as part of a broader strategy for encouraging progress in one of Africa’s most important countries.
Education is an end in itself, a human right, and a vital part of the capacity of individuals to lead lives they value. It gives people in developing countries the skills they need to improve their own lives and to help transform their societies. Women and men with better education earn more throughout their lives and participate more fully in the civic and political lives of their communities and countries. Particularly for women, education confers the skills and behaviors that lead to healthier lives. Education that reaches women, the poor, and marginalized ethnic groups not only benefits them directly; it contributes to a more equitable and just society.
This paper argues that regional public goods in developing countries are under-funded despite their potentially high rates of return compared to traditional country-focused investments. In Africa the under-funding of regional public goods is primarily a political and institutional challenge to be met by the countries in this region. But the donor community ought to consider the opportunity cost – for development progress itself, in Africa and elsewhere – of its relative neglect, and explore changes in the aid architecture that would encourage more attention to regional goods.
This paper applies a new approach to the estimation of the impact of policy, both the levels and the changes, on wage differentials using a new high-quality data set on wage differentials by schooling level for 18 Latin American countries for the period 1977–1998. The results indicate that liberalizing policy changes overall have had a short-run disequalizing effect of expanding wage differentials, although this effect tends to fade away over time.
At the United Nations Millennium Summit in 2000 the nations of the world committed to join forces to meet a set of measurable targets for reducing world poverty, disease, illiteracy and other indicators of human misery—all by the year 2015. These targets, later named the Millennium Development Goals, include seven measures of human development in poor countries. At the same summit, world leaders took on several qualitative targets applicable to rich countries, later collected in an eighth Goal. The key elements of the eighth Goal, pledge financial support and policy changes in trade, debt relief, and other areas to assist poor countries'domestic efforts to meet the first seven Goals. Combined, the eight Goals constitute a global compact between poor and rich to work today toward their mutual interests to secure a prosperous future.
The paper sets out two views of the facts about the effects of globalization on world poverty and inequality. The bottom line: globalization is not the cause, but neither is it the solution to world poverty and inequality. The paper then explores why and how the global economy is stacked against the poor, making globalization asymmetric, at least up to now. It concludes with some ideas about a new agenda of good global politics, an agenda to shape a future global economy and society that is less poor and less unequal—not only because it is more global and competitive, but also because it is more fair and more politically representative.
While most technical assessments classify privatization as a success, it remains widely and increasingly unpopular, largely because of the perception that it is fundamentally unfair, both in conception and execution. We review the increasing (but still uneven) literature and conclude that most privatization programs appear to have worsened the distribution of assets and income, at least in the short run. This is more evident in transition economies than in Latin America, and less clear for utilities such as electricity and telecommunications, where the poor have tended to benefit from much greater access, than for banks, oil companies, and other natural resource producers.
This study brings readers up to date on the complicated and controversial subject of debt relief for the poorest countries of the world.
Over the last several years, the United States and other major donor countries have supported a historic initiative to write down the official debts of a group of heavily indebted poor countries, or HIPCs. Donor countries had two primary goals in supporting debt relief: to reduce countries' debt burdens to levels that would allow them to achieve sustainable growth; and to promote a new way of assisting poor countries focused on home-grown poverty alleviation and human development. While the current "enhanced HIPC" program of debt relief is more ambitious than any previous initiative, it will fall short of meeting these goals. We propose expanding the HIPC program to include all low-income countries and increasing the resources dedicated to debt relief. Because debt relief will still only be a first step, we also recommend reforms of the current "aid architecture" that will make debt more predictably sustainable, make aid more efficient, and help recipient countries graduate from aid dependence.
This paper outlines the likely effects of the AIDS pandemic in Africa on the continent's ability to produce education and use it effectively for growth and poverty reduction.