China's bid for a leading role in Africa gained sudden visibility on the weekend with an unprecedented gathering of leaders from 48 African countries in Beijing. Chinese president Hu Jintao pledged to double aid and to offer $5 billion in loans by 2009. China's newly high-profile overtures towards Africa have raised eyebrows—and a fair bit of anxiety—among Africa’s traditional development partners. Will Chinese lending lead to a new African debt crisis? In a new CGD Note, senior fellow Todd Moss and research assistant Sarah Rose examine the growing clout of a little-known instrument of China's Africa policy, the Export-Import Bank of China, and offer some advice for the West. Learn more
This note explores the countries most likely to be selected for FY07 eligibility for the Millennium Challenge Account. The authors also discuss key issues the Board will face this year, including deciding eligibility for the four countries with signed compacts that do not pass the indicator test. Most controversially, the authors think it is highly likely that the Board will select both Indonesia and Jordan, but they do not believe that either would be an appropriate choice.
The MCC Board of Directors faces many important decisions in the upcoming FY07 selection round. Perhaps the most controversial will be decisions about whether to select Indonesia and Jordan to be eligible this year. The MCA Monitor predicts that it is likely that the Board will select both countries due to a desire to include more predominantly Muslim countries and reward political allies. In this note the authors explain why they do not believe either would be a good choice.
Challenges and Opportunities for the New Executive Director of the Global Fund: Seven Essential Tasks
In its first four years, the Global Fund to Fight AIDS, Tuberculosis and Malaria has become one of the most important aid agencies in the world. As the Global Fund undergoes its first leadership transition, this CGD Working Group Report identifies seven tasks for the new Executive Director, starting from country operations, where ultimate results are achieved; through supporting arrangements (such as technical assistance, performance-based funding, procurement and supply chain strategies, and secretariat operations) and ending with the overarching issues of financing and Board relationships. The report offers specific recommendations for the new Executive Director and for the Board.
Microfinance is a widely celebrated strategy for helping poor people in the developing world. Leading microfinance institutions, including the Nobel Peace Prize-winning Grameen Bank, reach millions of clients. CGD research fellow David Roodman and Uzma Qureshi analyze why some microfinance institutions succeed in covering costs, earning returns, attracting capital, and scaling up. They conclude that financial imperatives can explain much about how microfinance products are designed, for example, the common emphasis on group lending to women. Thus the business acumen of microfinance innovators is underappreciated. But more rigorous study is needed to understand when and where these design choices help clients.
The colonial legacy of artificial borders is often seen as an important cause of problems for developing countries. In this paper CGD non-resident fellow William Easterly and his co-authors quantify this effect. They find that countries with straight borders that divide ethnic groups--lines on maps--tend to be less successful economically and politically than countries with less arbitrary borders.Learn more
The Millennium Challenge Account (MCA) was intended to complement-not replace-existing aid structures. But there are concerns that increases in MCA funding are diverting funding away from USAID. In this study, the authors find that core development aid targeted specifically at poverty reduction and economic growth has remained stagnant for several years, but that this downturn may be part of a more general trend. They recommend that the Director of Foreign Assistance establish a centralized and comprehensive database to help spur more effective decision making and oversight by the U.S. government and key aid constituencies.
In U.S. Foreign Aid Reform: Will It Fix What Is Broken? CGD research fellow Stewart Patrick says the U.S. foreign aid regime is broken, and it is not clear that the Bush administration's reform plan will fix it. Patrick proposes a total overhaul of the 1961 Foreign Assistance Act and the creation of an independent, cabinet-level department for international development.Learn more
In this CGD Note, CGD vice president Dennis de Tray and senior fellow Todd Moss argue that international financial institutions should transform their boards of resident executive directors into non-resident, non-executive bodies. Doing so would force the governing bodies to focus on their core responsibilities, increase accountability and reduce costs of all kinds. They urge the African Development Bank to go first. Learn more
Efforts to reform the IMF should be complemented by alternative approaches to doing what the Fund does, according to this new paper. The authors argue that competition would give developing countries more bargaining power and spur the IMF to improve. The paper focuses on the IMF's insurance role and argues for rapid restructuring and large cuts of the Fund's budget, with savings used to lower IMF interest rates.
This controversial book argues that irresistible demographic forces for greater international labor mobility are being checked by immovable anti-immigration ideas of rich-country citizens. Pritchett proposes breaking the gridlock through policies that support development while also being politically acceptable in rich countries. These include greater use of temporary worker permits, permit rationing, reliance on bilateral rather than multilateral agreements, and protection of migrants' fundamental human rights.
In response to a request from the Millennium Challenge Corporation, CGD convened the Global Health Indicators Working Group to examine potential measures of a government's commitment to health. The group's report recommends eight indicators for consideration by the MCC and other donors as they assess recipient countries' readiness to make effective use of foreign assistance. Learn more
Donald Kaberuka, the new president of the African Development Bank, leads an institution whose financial standing has been restored from the near collapse of 1995, but whose operational credibility remains a work-in-progress. This CGD working group report offers external, independent advice to Kaberuka and the Bank's board of directors on broad principles to guide the Bank’s renewal. The report contains six bold yet achievable recommendations for management and shareholders as they address the urgent task of reforming Africa's development bank. Prominent among the recommendations is a strong focus on infrastructure.
Critics allege that the World Bank is deeply flawed. Yet the world needs a strong World Bank to help manage development and the related global challenges of the 21st century. Do the Bank's shortcomings put its future at risk? If so, can the Bank be rescued? Rescuing the World Bank, a new book that includes a CGD working group report and selected essays edited by CGD president Nancy Birdsall, offers timely perspectives on challenges that are crucial to the Bank’s future success.
Donors are considering committing in advance to purchase vaccines against diseases concentrated in low-income countries to spur research and development on vaccines for neglected diseases. How much money is needed? The authors of this paper find that a commitment comparable in size to the average sales of recently launched commercial products (adjusted for lower marketing costs)—about $3 billion per disease when products are at a relatively early stage in development —would be a highly cost-effective way to address major killers, such as malaria, tuberculosis and HIV/AIDS. The paper includes a link to a Web-based spread sheet for readers to conduct their own sensitivity analysis.Learn more
The UN Millennium Development Goals (MDGs) seek to ensure that all children complete primary school by 2015. But school completion rates don't tell us how much--or how little--the kids actually learn. This new working paper co-authored by CGD non-resident fellow Lant Pritchett shows that even in countries that meet the primary school completion goal, most students fall short of minimum competency in reading, writing and arithmetic. The answer, the authors argue, is a Millennium Learning Goal that measures how much students actually know. Learn more
The Investment Climate Facility (ICF) for Africa was launched in June to help Africa tackle problems that hinder domestic and foreign investment. It aims to raise $550 million for promotion of property rights and financial markets, anti-corruption efforts, and reform of regulations, taxation, and customs. In this CGD Note, senior fellow Todd Moss lists the strengths of the proposal and asks tough questions, including: What exactly will the money be spent on? Why no independent evaluation? He concludes that the U.S. should support the facility--if convincing answers are forthcoming. Learn more
Analysis of the U.S. budget reveals a chasm between Washington rhetoric about the potentially large threats arising from weak and failing states and the paucity of resources devoted to engaging with these troubled countries. The authors argue that the U.S. should think creatively about how and when to engage and should boost the $1.1 billion requested for these countries in the 2007 budget, regarding it as a form of venture capital, with high risks but potentially high rewards. Learn more