The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and limited functionality. This could lead to undersaving compared to a world without market or behavioral frictions.
Opening markets to trade with poor countries was a key part of the eighth Millennium Development Goal and its global partnership for development. Countries recognized that development is about more than aid and that the poorest countries needed to be more integrated with the global economy to help them create jobs and opportunities for growth. In 2005, the World Trade Organization embraced this goal and developing country members agreed that those of them “in a position to do so” should also open their markets to the least developed countries (LDCs). Since then, most developed countries have removed barriers on at least 98 percent of all goods for LDC exporters, while China and India adopted less expansive programs to improve market access for these countries.
People are complex; they defy easy summary. Like Walt Whitman, we all contain multitudes. As a discipline, economics has been successful in part because it has ignored this complexity.
In this paper we explore the Palma and corroborate the findings that the middle does indeed hold over time and through various stages of tax and transfers. Further, we find that the Gini is almost completely “explained” by only two points of the distribution: the same income shares which determine the Palma.
The Geography of Inequality: Where and by How Much Has Income Distribution Changed since 1990? - Working Paper 341
In this paper, we propose and justify an alternative approach based on four consumption “layers” identified by reference to the global consumption distribution.We consider how each layer of global society has fared since the end of the Cold War.
A strengthened OPIC—more efficiently deploying existing tools at no additional budget cost—would (1) increase US commercial access in emerging economies, (2) reflect economic, social, and political priorities in developing countries, (3) promote flagship US initiatives during austere budget conditions, and (4) support stability in fragile or frontline states.
The approach of 2015, the target date of the Millennium Development Goals, sets the stage for a global reengagement on the question of “what is development?” We argue that the post-2015 development framework for development should include Millennium Development Ideals which put into measurable form the high aspirations countries have for the well-being of their citizens.
In this paper we identify a group of people in Latin America and other developing countries that are not poor but not middle class either. We define them as the vulnerable “strugglers”, people living in households with daily income per capita between $4 and $10 (at constant 2005 PPP dollar). They are well above the international poverty line, but still vulnerable to falling back into poverty and hence not part of the secure middle class. In a first step, we use long-term growth projections to show that in Latin America about 200 million people will likely be in the struggler group in 2030, accounting for about a third of the total population.
In this note, CGD senior policy analyst Alexis Sowa outlines three recommendations for US development assistance to Pakistan: name the leader of US development efforts, clarify the mission, and finance what is already working.
Noting that Africa’s resource-rich countries have not translated their wealth into sustained economic growth and poverty reduction, this paper shows that by transferring a portion of resource-related government revenues uniformly and universally as direct payments to the population, some countries could increase both private consumption and the provision of public goods, and thereby reduce poverty and enhance social welfare. We make the case based on theoretical considerations and explore how these direct dividend payments would look in practice in a group of selected African countries.
Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco - Working Paper 330
Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico.
Long-Run Price Elasticities of Demand for Credit: Evidence from a Countrywide Field Experiment in Mexico - Working Paper 331
The long-run price elasticity of demand for credit is a key parameter for intertemporal modeling, policy levers, and lending practice. We use randomized interest rates, offered across 80 regions by Mexico’s largest microlender, to identify a 29-month dollars-borrowed elasticity of -1.9. This elasticity increases from -1.1 in year one to -2.9 in year three.
Supporting Multilateralism and Development in US Trade Policy with Duty-Free, Quota-Free Market Access and Food Aid Reform
Kimberly Ann Elliott encourages new US Trade Representative Michael Froman to seek congressional approval for duty-free, quota-free market access for all least developed countries and to push ahead on food aid reform
This paper lists—and attempts to address—the most serious objections to Oil-to-Cash. The response to many objections is to ask about a plausible counterfactual (how do cash transfers compare to the alternative policy options?). Others warrant a clearer articulation of available evidence or ways to mitigate real worries through smart program design.
Traditional measures of development divide the world into categories such as developed and developing, rich and poor, and North and South.
This is the data set for Working Paper 327, “The Future of Global Poverty in a Multi-Speed World: New Estimates of Scale and Location, 2010–2030,” in which Peter Edward and Andy Sumner introduce new model of growth, inequality, and poverty that allows comparison of a wide range of input assumptions.
The Future of Global Poverty in a Multi-Speed World: New Estimates of Scale and Location, 2010–2030 - Working Paper 327
In this working paper, Peter Edward and Andy Sumner introduce new model of growth, inequality, and poverty that comparison of a wide range of input assumptions. They find that it is plausible that $1.25 and $2 global poverty will reduce substantially by 2030 and the former – $1.25 poverty – could be very low by that time. However, this depends a lot on economic growth and inequality trends—up to almost an extra billion $2 poor people in one scenario.
Africa’s industrial progress has been disappointing. Part of the reason is that labor costs are higher than one might expect, given GDP per capita. Alan Gelb, Christian Meyer, and Vijaya Ramachandran distill the policy lessons.