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CGD’s work in this area focuses on strengthening financial systems in development countries through innovation and regulation.
Greater access for the poor to the formal financial system—including payments, savings, credit, and insurance—can greatly improve household stability and development prospects. CGD examines how to strengthen, broaden, and deepen financial systems in developing countries through innovation and regulation. We also study the effects of financial crises, to avoid and mitigate future shocks, and how developing countries can improve their business climates to spur inward investment.
As the organization responsible for setting international standards on anti-money laundering and countering the financing of terrorism (AML/CFT), the Financial Action Task Force (FATF) has encouraged countries to design measures that protect the integrity of the financial system and support financial inclusion. But it has also received criticism that poor implementation of its standards can undermine financial access.
This is the report of a midline evaluation of a randomized controlled trial to increase the utilization of saving and other financial services by women business owners in Indonesia. The trial was motivated by a recent law in Indonesia supporting the development of branchless banking services for a large unbanked rural population and by the results of several studies suggesting that it is possible to stimulate savings and improve a range of downstream outcomes with suitable interventions targeted to under-banked rural populations.
This paper ties together the macroeconomic and microeconomic evidence on the competitiveness of African manufacturing sectors. The conceptual framework is based on the newer theories that see the evolution of comparative advantage as influenced by the business climate—a key public good—and by external economies between clusters of firms entering in related sectors. Macroeconomic data from purchasing power parity (PPP), though imprecisely measured, estimates confirms that Africa is high-cost relative to its levels of income and productivity. This finding is compared with firm-level evidence from surveys undertaken for Investment Climate Assessments in 2000-2004.
At the end of the 1990s the future of Latin America seemed grim in the face of four devastating problems—slow and unsteady economic growth, persistent poverty, social injustice, and personal insecurity. For 10 years Latin America had pursued—with considerable vigor—the 10 economic policies that make up the Washington Consensus, the growth formula promoted by the U.S. Treasury and the international financial institutions. But performance fell far short of expectations, and a new approach was needed.
After more than a decade of financial sector liberalization, both of domestic markets and of international financial transactions (capital account liberalization), policymakers in many developing countries remain concerned about the effects that large and highly volatile capital flows have on their financial systems. However, in spite of the tremendous costs associated with the resolution of crises and signs of discontent among the population with the outcome of some reforms, to date there is no significant evidence indicating a reversal of the reform process. While one could advance a number of hypotheses explaining this "commitment to reforms," developing countries’ decisions and actions seem to indicate that policymakers perceive capital inflows as a necessary component to achieve growth and development.
This paper conducts a detailed calculation of capital held by the banks in four Latin American countries—known as the Andean countries: Bolivia, Colombia, Ecuador and Peru—and assesses the potential effects of full compliance with the capital requirements under Basel III.
The CGD Task Force on Access to Financial Services proposes 10 principles for financial-sector policymakers—including national authorities, donors, private-sector participants, international financial institutions, and others—on the facilitation, regulation, and direct provision of financial services.
Each of the G20 summits of the past seven years has suffered in comparison with the London and Pittsburgh Summits of 2009, when the imperative of crisis response motivated leaders, finance ministers, and central bankers to coordinate effectively with each other. Subsequent summits have lacked the same sense of urgency and have failed to deliver any kind of agenda that can be pinpointed as clearly as “saving the global economy.” This week’s summit in Hamburg, Germany promises more of the same, with the real possibility that the G20’s stock could fall even further at the hands of a non-cooperative US delegation.