Ideas to Action:
Independent research for global prosperity
In this paper, part of the Innovations in Aid series, Jean-Michel Severino and Olivier Ray describe shifts in the objectives of overseas development assistance (ODA) over time and conclude that it is time to put the concept itself to bed—in favor of what they propose should be called “Global Policy Finance.”
This working paper examines the relationship between high inequality and liberalization of the financial sector in Latin America from 1975 to 2000. Using panel data, the authors find that increases in financial liberalization were associated with bank crises and other domestic and external shocks, and that higher schooling inequality reduces the impetus for liberalization brought on by bank crises.
This paper reviews several decades of scholarship on civil war and assesses the full effects of civil war on economic growth worldwide to chart a path forward for scholars and policymakers alike.
Visiting fellow Nora Lustig examines the policy dilemmas rising food prices force on developing countries. Letting prices adjust can generate inflationary pressure while efforts to stabilize domestic prices often exacerbate global price increases; during the recent food price crisis, many countries chose instead to shift the burden back to international markets.
The world rice market was aflame in spring 2008, and for several months it looked as if the trading edifice that had exhibited such resilience over the last two decades was going to burn to the ground. This paper aims to help policymakers in the rice-exporting and -importing nations to avoid a repeat of the disastrous price spike of 2008.
The net effect of supermarkets in the developing world will be to improve the welfare of consumers, but the extent of that benefit and how well it is distributed are open questions. Many factors, including the fate of small farmers, traditional traders, and mom-and-pop shops, will come into play, and any judgment of the supermarket revolution has to consider them all. In this CGD working paper, non-resident fellow Peter Timmer draws from many perspectives to assess the effect the supermarket revolution may have on poverty alleviation.
Senior fellow Mead Over estimates the effect of AIDS on poverty in South Asia and analyzes public policy options to help the region’s predominantly private health care systems meet the challenge of treating AIDS. He finds that South Asian governments should play a larger role in AIDS treatment than in other aspects of health care, in the interest of both efficiency and equity.
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.
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.
The debate on user fees in health and education has been contentious, but until recently much of the evidence has been anecdotal. Does charging poor people for health and education services improve or impede access? CGD non-resident fellow Michael Kremer and co-author Alaka Holla survey the evidence from recent randomized evaluations across a variety of settings to find out. The verdict: higher prices decrease access.
Read the working paper
Post-doctoral fellow Jenny Aker assesses the impact of weather shocks on grain markets in Niger. Droughts and crop failures occurred in Niger in both 2000 and 2004, but only the 2004 drought resulted in a severe food crisis. Many were quick to cite market failure and hoarding as causes of the crisis, but other factors such as the spatial distribution of drought, temporary trade restrictions, and inadequate incentives to import from Nigeria may have played a larger role.
Senior fellow David Wheeler and Kevin Ummel argue for rapid, very large-scale deployment of existing solar thermal technology. Using maps of solar radiation and project finance calculations, they show that with modest subsidies solar power generated in North Africa and the Middle East could meet the needs of 35 million Europeans by 2020. At that point, solar power would be cheaper than fossil fuels and future projects would no longer require subsidies.
World food prices risen over the past five years at an alarming pace after decreasing for three consecutive decades. CGD visiting fellow Nora Lustig argues that despite some relief since July 2008, the price hikes significantly set back poverty reduction, upset social stability, promote inflation, compromise rules-based trading systems, and hurt poor net consumers. Nonetheless, too many developing countries lack the instruments, administrative capacity, and fiscal space to implement safety nets fast enough and in the required scale.
How is information technology affecting markets and welfare in low income countries? According to a new CGD working paper by post-doctoral fellow Jenny Aker, the introduction of cell phones in Niger reduced grain price differences across markets by 20 percent between 2001 and 2006. The primary reason for this effect was a reduction in search costs: cell phones enabled traders to obtain market information more quickly and from a larger number of markets, thereby allowing them to allocate grains more efficiently. Cell phones not only helped market performance, but also trader and consumer welfare: cell phones were associated with a 4 percent reduction in consumer grain prices in 2004/2005, the year of a severe food crisis. The lower relative prices in cell phone markets could have allowed individuals to consume millet for additional 8–12 days.
The World Trade Organization’s collapsed Doha Round focused on issues of limited significance while the burning issues of the day were not even on the agenda. In this new working paper, CGD senior fellow Arvind Subramanian and co-author Aaditya Mattoo argue for a wider agenda for multilateral cooperation that includes such issues as food, energy, economic security, and the prevention and resolution of future financial crises.
LEARN MORE
When countries select immigrants based on skill, what happens in the migrants' countries of origin? Departing skilled workers obviously tend to reduce stocks of skill there, but the prospect of skilled migration can induce more investment in skill. It is not clear which effect dominates. This paper studies one of the fastest and relatively largest exoduses of skilled workers on record, in the Pacific country of Fiji, which paradoxically produced a net increase in the stock of skill within Fiji. It offers evidence that skilled migration prospects caused that net increase, and evidence to rule out several competing explanations.
While the precise contribution of biofuels to surging food prices is difficult to know, policies promoting production of the current generation of biofuels are not achieving their stated objectives of increased energy independence or reduced greenhouse gas emissions. Reaching the congressionally mandated goal of blending 15 billion gallons of renewable fuels in gasoline by 2015 would consume roughly 40 percent of the corn crop (based on recent production levels) while replacing just 7 percent of current gasoline consumption. The food crisis adds urgency to the need to change these policies but does not change the basic fact that there is little justification for the current set of policies.
Successful poverty reduction hinges on successful structural transformation, but poor countries must cope with political pressures resulting from deteriorating income distribution and simultaneously retain the policies that generate rapid economic growth. Based on historical and statistical evidence, CGD non-resident fellow Peter Timmer and Selvin Akkus argue for enacting policies to do just that: policies that value the many non-market payoffs of investment in agriculture, the main driver of short- and medium-term poverty reduction; context-specific policies to connect rural workers to urban economies to reduce rural poverty in the long term; and fairer rich-world agricultural trade policies to allow small farmers better access to domestic supply chains.
Commentary Menu