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Global poverty is decreasing, but billions of people still do not have the resources they need to survive and thrive. Economic growth can reduce poverty, but it can also drive inequality that generates social and economic problems. And efforts at domestic resource mobilization through taxation, though critical to funding the SDGs, can negatively impact the poor. In this work, CGD experts offer suggestions to improve how the world tracks and tackles poverty and the inequities the international global system creates.
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Recently the UN warned that 20 million people are facing famine in four countries. How can the International Fund for Agricultural Development (IFAD) help? Gilbert Houngbo, former Prime Minister of Togo and new IFAD president, joins the CGD podcast to discuss IFAD's impact and unique mandate.
Globalization is under attack in the West. The debate among pundits is no longer about whether globalization is to blame or not. It is about why globalization is now the bugaboo it has become. A common thread are changes, for the worse, in the economic and social standing of the Western middle class.
What are the economic, political, and technological risks to future global growth and stability? This complex question was the topic of a recent conversation between IMF Managing Director Christine Lagarde and CGD’s president Masood Ahmed. This week’s podcast is an edited version of their conversation.
What are the economic, political, and technological risks to future global growth and stability? This complex question was the topic of a recent CGD event, which featured a conversation between IMF's managing director Christine Lagarde and CGD’s president Masood Ahmed. This week's podcast is an edited version of their conversation.
The event took place just as the IMF revealed its latest World Economic Outlook. Its forecast for annual global growth in the coming years is relatively unchanged at around 3.5 percent—but what has changed, Lagarde said, is the “source and balancing of growth” around the world, with an upgrading of forecasts for Asia, Continental Europe and Canada, but lower projections for the US and UK. The picture for Sub-Saharan Africa is also cause for concern, as Lagarde and Ahmed discussed during the event.
They also talked about ways to address the concerns of people who have been “left behind” by development progress. For the Lagarde, that means “number one, telling the truth about what the likely consequences are of certain policies. … You have to start with that, and then allocate the resources and decide the policies that will actually help.”
Check out the podcast at the top of this page, and watch the full event on our website.
This past Tuesday, I attended the London Family Planning Summit, a high-level and high-profile gathering co-hosted by the United Kingdom Department for International Development (DFID), the Bill & Melinda Gates Foundation, and UNFPA with the goal of raising financial and political support for international efforts to expand contraceptive access to women and girls living in low- and middle-income countries. This follow-on event comes five years to the day after the original 2012 London Summit kicked off the global FP2020 movement, aiming to reach an additional 120 million women and girls with modern contraception by 2020. Watching the summit, one might understandably be overcome with a sensation of déjà vu: same issue, same co-hosts, same location, same hopeful tone, and same basic program (advocacy mixed with financial and programmatic pledging). But context is everything—and the summit’s optimistic tenor at times felt dissonant given the slower than hoped for progress over the past five years and the deep perils of the current political moment. With significant new money raised for the cause—an important accomplishment given the uncertainty around sustained US funding and the reinstatement of the Mexico City Policy—it’s now time for donors to get serious about optimizing the efficiency, impact, and sustainability of family planning programs.
How much did donors commit? A lot
First, the good news: the summit attracted meaningful new financial commitments that will be genuinely helpful in the years ahead. I’ve done my best to compile a quick and dirty “cheat sheet” of financial donor government, foundation, and private sector commitments of >US$1 million (see below). The cheat sheet is based on media reports, my own observation, and the online commitment tracker. But it can be quite difficult to distinguish “new money” from existing commitments, or to parse whether NGOs are double-counting the contributions of their donors.
By my count (involving a number of guesses and judgment calls), the summit resulted in about $870 million of truly new donor commitments, plus about $340 million that had already been announced or allocated in some form, and additional commitments from FP2020 focus countries for domestic spending. The biggest chunks of donor money come from the Gates Foundation (an increase of $375 million, or 60 percent over their already very substantial baseline spending through 2020); the United Kingdom (an extra £45 million per year through 2022); and Canada (US$188 million through 2020 from its previously announced Can$650 commitment to sexual and reproductive health). A number of donors committed only for 2017, and yet others indicated that further commitments are likely to be on the way, so overall totals could still rise. That’s a very significant sum of donor money, particularly on top of many donors’ substantial baseline contributions. (Again, I emphasize these figures are very rough estimates.)
Donor commitments at the London Family Planning Summit >US$1 million
Bill & Melinda Gates Foundation
60% increase above baseline levels of support
On top of baseline £180m per year
$188m ($241 CAD)
Part of already announced package
Part of $650 million over three years for SRHR announced in March
$84m (NOK 700m)
Includes an additional $12m per year in core UNFPA funding, $6pm to UNFPA supplies, $49m for She Decides, on top of baseline funding levels.
Reflects 2017 increase in investments
Medicins du Monde*
About $44m (SEK $369m)
Approximate figures based on narrative of commitment. Mostly already announced/awarded increases in funding.
$41.4 m (€36m)
For UNFPA core funding
For SRHR in humanitarian settings, CERF, and She Decides
$25.5m ($33.5m AUD)
$3.5m AUD is for 2017 support to UNFPA supplies
Unclear – seemingly already allocated
For UNFPA supplies
$11.3m (DKK 75m)
Unclear – seemingly already allocated
For UNFPA supplies/IPPF
For UNFPA in Syria
To support Adolescents 360 partnership in Tanzania
* May be double-counting government or foundation donor support
Now it’s time to put the money to work
But with the successful rah-rah moment now behind us, it’s time for donors to get real about disappointing progress to date, ongoing financial and policy challenges, and the uncertainty of US financial support. Many of these issues should be familiar to anyone in the field, but to briefly recap: as of the 2016 midpoint, FP2020 reported that 30.2 million additional women and girls were using modern contraception compared to the 2012 baseline—6.2 million more than historical trends would predict, but 19.2 million below hoped for progress. A number of committing focus countries have not made good on their financial commitments from the original summit, even as they recommit this week. In most low- and middle-income countries, national or subnational government funding represents just a tiny sliver of the family planning funding base. FP2020 as a mechanism has struggled to define its identity and balance competing demands for advocacy, measurement, accountability, and technical support. Donor countries have found their aid budgets stressed by shifting political winds and the refugee crisis (though the latter issue appears to be abating at least in some countries). The Trump administration has reinstated the Mexico City Policy, stripping funding from a number of leading family planning providers. And although the hot-off-the-press draft House omnibus suggests only modest cuts to the US family planning budget for FY2018 (in contrast to the administration’s requested program elimination), the uncertainty means that the US is no longer a reliable partner to fund the recurrent costs of service delivery and commodity procurement.
The time is ripe to move beyond feel-good rhetoric and to confront these challenges head-on. Last year, working with the FP2020 partners, we issued a report with recommendations for donors to improve the efficiency, effectiveness, and sustainability of their investments—ideas that have taken on new urgency in the current climate. You can read the full report here, but for now I would highlight two under-examined areas:
Create better incentives for country co-financing. Too many countries are almost entirely dependent on donor funding for contraceptive commodities and service delivery—and that means that women and girls are deeply vulnerable to the ebbs and flows of donor countries’ politics. If the US funding faucet were to turn off, about 10 million women would lose access to contraceptives in low-income countries alone. Real country buy-in means that countries have their own fiscal skin in the game. Instead of pushing ministries of health to cough up funds based on rhetorical pressure alone, it’s past time for USAID and UNFPA Supplies to require co-financing for contraceptive donations, drawing from the GAVI model for vaccines. The copays could be extremely small at first, then gradually increase as countries grow wealthier, helping incentivize investment.
Ensure family planning is included and delivered effectively as part of health benefits packages. As universal health coverage has risen on the international agenda, many low- and middle-income countries are defining explicit health benefits packages as entitlements for their entire populations and creating health financing strategies to promote their effective delivery. Family planning does appear on most lists of essential health services, but a Marie Stopes International study suggests it is being frequently left off the reimbursable list of services and instead shunted into capitation packages or input-based budgets. Rather than simply pushing for a family planning line item in budgets (that can be removed at any time and does not necessarily create strong incentives for progress), family planning advocacy should be redirected to ensuring inclusion of a rights-based package of family planning commodities and services in the health benefits package, supported by financing arrangements that incentivize high-quality service delivery. In so doing, there are two key challenge. First, family planning may not be cost-effective as a health intervention alone in the most resource-constrained settings, but qualify for inclusion based on rights-based or actuarial criteria. (For more on how to conceptualize these issues, check out my chapter in the forthcoming CGD book on the design of health benefits packages.) Second, countries must design health financing strategies that incentivize high-quality service delivery but avoid undue coercion. There’s an important opportunity here for the family planning community to engage with the broader health financing conversation—an imperative for long-term program sustainability.
I encourage you to read the full report; we also have much to say about moving toward more rigorous resource allocation strategies and increasing accountability for implementers and service providers. The bottom line: the additional resources for family planning are fantastic. Now it’s our responsibility—to the women and girls who need to gain or sustain access to contraception, and to the taxpayers and private individuals funding these efforts—to make sure we use that money as effectively as possible.
In their new paper, Markus Goldstein and co-authors examine the effects of land title registration in Rwanda using a national-level randomized control trial. They concluded that the program resulted in a significant shift of labor from agriculture to non-farm enterprises and wage work, with an improvement in welfare.
To coincide with the launch of the IMF’s latest global economic forecasts, and following the G-20 Summit, please join IMF Managing Director Christine Lagarde and CGD president Masood Ahmed for a conversation about challenges and trends ahead for the global economy.
What is the role of the IMF in ensuring inclusive growth and stability in the years to come, and how should it respond to ongoing and emerging issues, including fragile states, rising inequality, technological innovation, and the future of international economic cooperation? The discussion will focus on issues related to the future of the international economy.
When you read what economists have to say about development, it is easy to be disheartened about the prospects for poor countries. One big reason is that slow changing institutional factors are seen as key to development prospects. I’ve just published a CGD book that’s a little more optimistic: Results Not Receipts: Counting the Right Things in Aid and Corruption.
Most of the book is about what donor agencies like DFID and the World Bank should do about corruption in aid projects, but Results Not Receipts also discusses the role of corruption and weak governance in determining development outcomes more broadly—the subject of the sample chapter. And in that chapter, I’m more optimistic about progress both through improved institutions and despite weak institutions than some of my peers.
The dominant view amongst development economists is that historical forces and slow-changing government institutions have significantly determined development outcomes. In their blockbuster paper “The Colonial Origins of Comparative Development,” published in 2001, Daron Acemoglu and Simon Johnson from MIT and James Robinson from the University of Chicago traced through a causal chain, noting a strong relationship between mortality rates faced by soldiers, bishops, and sailors in colonies and the type of legal and political institutions they created—and between those early institutions and institutions today. Since then, economists from around the world have linked historical differences from soil type, through the extent of the slave trade to ancient knowledge of the wheel all through norms, culture, and institutional forms to modern economic outcomes.
And development economists have compiled measures of institutional quality that directly suggest institutions are slow to improve. CGD’s Lant Pritchett and colleagues studied the Worldwide Governance Indicators (initially complied by researchers at the World Bank). They suggest it would take over 600 years for Haiti to reach Singapore’s quality of government effectiveness as measured by those indicators, even with a generous interpretation of its previous rate of progress.
The abiding relationship between comparative development success today and historical measures of development cannot be denied. Nonetheless, for all the importance of history to comparative development, there’s a lot more to progress than the past. Around 5.1 billion people worldwide live in countries where we know average incomes have more than doubled since 1960. Nearly 2.2 billion people are in countries where average incomes have more than quintupled over the past 50 years. In Africa, eight economies in the region ended the last decade twice the size they’d started it. And as a whole, the developing world significantly outperformed rich countries in weathering the storm of the global financial crisis. It isn’t just income; other measures of the quality of life including health are rapidly improving worldwide—about two million children born this year will live to their fifth birthday who would have died were mortality rates unchanged from 10 years ago.
That progress is possible because countries at a given level of settler mortality or other measures of historical development are seeing better outcomes over time. And that suggests one of two things: either institutions can change faster than some measures suggest, or development isn’t just about slow-changing institutions. It is probably a bit of both. On the side of institutional change, Acemoglu, Johnson, and Robinson certainly didn’t support the notion that such change was always and everywhere achingly slow—they pointed to case of Japan during the 1870s and 1880s as well as South Korea during the 1960s as showing that rapid institutional change could underpin considerable growth. That should give hope to corruption fighters in developing countries who are doing brave and important work improving local institutions.
And the same institutions might produce better outcomes when new technologies allow for cheaper, simpler solutions. Think of vaccines and antibiotics allowing for health outcomes that previously could only be achieved by complex water and sewer systems alongside rigorously enforced public health measures. Or look at the mobile phone that so simplified telecommunications provision that over five billion people worldwide gained phone access in the space of around two decades.
The facts that institutions can rapidly improve whatever our imperfect measures suggest and that there is more to development outcomes than the quality of a country’s governance means that it isn’t naïve to be optimistic about the prospects of poor countries. And the progress we have seen in reducing poverty and increasing incomes worldwide over the past two decades implies it might be the pessimists who are being unrealistic.
I hope you’ll join me tomorrow to celebrate the release of Results Not Receipts: Counting the Right Things in Aid and Development. You can RSVP to attend the event here or watch the webcast online.