Ideas to Action:

Independent research for global prosperity



December 21, 2002

From Social Policy to an Open-Economy Social Contract in Latin America - Working Paper 21

I suggest in this paper the logic of going beyond the standard, poverty-targeted, elements of good social policy to a modern social contract adapted to the demands and the constraints of an open economy. Such a contract would be explicitly based on broad job-based growth. Second, it would be politically and economically directed not only at the currently poor but at the near-poor and economically insecure middle-income strata.

December 20, 2002

World Bank Capital Neither Complements Nor Substitutes for Private Capital - Working Paper 20

What should the World Bank optimally do with the US$10 to $20 billion it can loan each year? Has it, in fact, done what is optimal? This study suggests a simple framework within which to measure the World Bank against an optimal international public financier for development. It goes on to argue that a careful treatment of the empirical evidence on Bank lending strongly contradicts optimal behavior under different assumptions. The evidence, in fact, rejects any notion that the Bank has substituted for private capital or that it has successfully catalyzed private development finance.

Michael A. Clemens
December 19, 2002

Do Rich Countries Invest Less in Poor Countries than the Poor Countries Themselves? - Working Paper 19

Global private capital flows have barely touched the poorest nations; the rich invest mostly with the rich. It is possible that failures in the global capital market prevent capital from exploiting high returns in poor countries; it is also possible that fundamental returns to investment are lower in poor countries. In this paper, a novel empirical framework uses standard data to conclude that 85% of wealth bias, whether caused by market failure or not, is domestic in origin. That is, poor country lenders are deterred from investing in poor countries to nearly the same degree that rich-country lenders are.

Michael A. Clemens
December 18, 2002

Initial Reactions to the Announcement on the MCA

In this analysis, Steve Radelet reviews the Millennium Challenge Account’s (MCA) foundational tenets of country selection, ownership and organization. He also identifies some concerns, particularly the proposal to include lower-middle income countries at a later date; the statistical difficulties with requiring countries to pass a survey-based corruption indicator; and the potential coordination problems that may arise with two separate U.S. foreign assistance agencies.

December 13, 2002

Qualifying for the Millennium Challenge Account

This paper examines the Bush administration's proposed methodology for how countries qualify for the funding from the Millennium Challenge Account in detail, exploring the judgments required and examining some alternative methods.

December 11, 2002

The Devil is in the Details: From the Millennium Challenge Account to the Millennium Challenge Corporation

The devil will be in the details in the establishment of the Millennium Challenge Corporation (MCC)--as it is with most organizational innovations. In this MCA Monitor Analysis Carol Lancaster identifies five major issues that must be addressed: the political process by which the MCC will be established; how the MCC will be funded; the criteria for eligibility; implementation of programs; and the management of the organization, including the role of the Board.

Carol J. Lancaster
December 1, 2002

Private Sector Involvement in Financial Crisis Resolution: Definition, Measurement, and Implementation - Working Paper 18

Public policy on financial crises in emerging markets has implicitly been grounded in economic theory calling for lender-of-last-resort intervention when the country is solvent, and on theory recognizing that reputational damage is the quasi-collateral enabling lending to sovereigns with no physical collateral. The call for Private Sector Involvement — PSI — in the financing of crisis resolution has appropriately arisen from the desire for fairness as well as for successful outcomes. This paper identifies an array of PSI modalities and argues that in each crisis case the most voluntary type consistent with the circumstances should be chosen, to speed return to market access.