With rigorous economic research and practical policy solutions, we focus on the issues and institutions that are critical to global development. Explore our core themes and topics to learn more about our work.
In timely and incisive analysis, our experts parse the latest development news and devise practical solutions to new and emerging challenges. Our events convene the top thinkers and doers in global development.
CGD’s work with particular relevance for Asia area includes an analysis on the potential effects of climate change on agricultural production, a Forest Monitoring for Action prototype that features high-resolution maps of Indonesia, and a review of China’s expanding development assistance programs.
A study of women and men business owners in East Java offers a unique opportunity to analyze characteristics of entrepreneurs and their businesses by gender for a country where such systematic data are scarce. The study is one of two randomized controlled trials launched in 2015 to assess the power of mobile savings and training for women entrepreneurs. This report details baseline results from the Indonesia trial, still under way, which is testing whether providing financial literacy training for women who are potential bank clients and varying financial incentives to bank agents promoting a new mobile savings product make a difference in increasing entrepreneurs’ uptake of formal savings and in improving economic outcomes. Short-term results of the other trial, in Tanzania, were reported in the first report in this series.
The paper critically reviews the arguments for and against both employment guarantees and income guarantees when viewed as rights-based policy instruments for poverty reduction in a developing economy, with special reference to India. Evidence on India’s National Rural Employment Guarantee Act does not suggest that the potential for either providing work when needed or reducing current poverty is being realized, despite pro-poor targeting. Instead, work is often rationed by local leaders in poor areas, and the poverty impact is small when all the costs are considered.
Aadhaar, the world’s largest biometric ID program, is at a crossroads. After a remarkable effort to enroll almost the entire Indian population of 1.25 billion in just over half a decade, its impact on privacy and distribution public benefits are being called into question. The concerns stem from the absence of a legal framework for collection and safeguarding of biometric information, as well as the policy framework that effectively makes Aadhaar authentication mandatory for accessing a variety of public services. In addition, there is disquiet with persistent efforts to persuade people to link bank, mobile, and tax accounts to Aadhaar in the face of uncertainty over the legal basis for this requirement. With the Supreme Court of India conducting hearings on a slew of petitions challenging its constitutional validity, it is fair to say that Aadhaar’s future and that of India’s digital governance reforms, hangs in the balance.
India’s Aadhaar debate is being closely watched across the world. Over a hundred countries—a majority of them in the developing world—have initiated programs that provide some form of digital identification for their constituents. Aadhaar’s approach is appealing to many countries. It collects minimal biographic data and avoids the problem of fragmented biometric databases and proprietary technologies that increase costs and reduce gains from digitization. Moreover, with the electronic Know Your Customer (e-KYC), Aadhaar has significantly expanded banking and financial services to the poor, streamlined government payments through direct transfers to beneficiaries, and enhanced the verification of existing and new mobile connections. These are important lessons that other countries are keen to learn from India’s experience.
Balancing development priorities and privacy concerns
The Aadhaar debate will therefore have an impact on the global discourse on how to balance the gains from better governance with individual’s right to privacy and protection of personal information in the digital age. ID programs are, of course, only one element of the general process of digitization that has been moving ahead rapidly across the world, including government, business, and social media. As recent events highlight, not all large data breaches involve centralized ID programs, and there also is no evidence that Aadhaar’s biometric database has been breached. Yet, by creating a common identifier, such programs do make it easier to integrate individual records across a variety of databases. The recent introduction of the “Virtual ID” is intended to mitigate this risk by providing users the ability to authenticate against a variable number; what remains to be seen is how widely it will be used.
Privacy aside, these are a number of distinct but often overlapping considerations that supporters and critics of Aadhaar need to weigh more carefully. The primary expressed motivation of Aadhaar has been to create an identity management and authentication system that would enable the government to improve the lives of the people. In rich countries as well as developing ones, poor people are frequently disadvantaged without having a trusted, recognized, and verifiable identity, especially in access to essential public services. Digital identity can increase state capacity to expand the beneficiary base for public goods and services while reducing the chances of corruption and “leakages” from inclusion of ghost and duplicate beneficiaries at the same time.
In considering the emerging lessons from India, one clarification to note is the difference between cleaning beneficiary rolls and changing the method of delivering benefits. On our recent visit we found very little discussion of what has been a relatively successful reform in the energy sector compared to other countries. Our recent paper on the reform of cooking gas subsidies in India (cited in the submission of the Attorney General of India to the Supreme Court on the constitutional validity of Aadhaar) explains how this this reform changed the mode of subsidy on cooking gas cylinders from in-kind to a direct transfer to the consumer’s bank account. This enabled the government to move from an administered price regime for domestic LPG to one where the consumers paid the market price and the subsidy was transferred directly upon delivery of the cylinder to the registered customer. The initial deduplication of LPG beneficiaries was undertaken with algorithmic matching of names and addresses that resulted in the issuance of a unique LPG ID number and this was only later tagged with Aadhaar and linked to bank accounts for the seamless transfer of the cash subsidy to consumers.
However, there is a continuing benefit of Aadhaar from maintaining the beneficiary list clean. This is done when new connections are issued, as in the case of the Ujjwala program that has provided new LPG connections to nearly 30 million poor rural women within the last two years. In the current scenario of increasing volatility in global energy prices, the gains from this reform could be substantial.
Improving quality of service delivery through digitization
A second point is the distinction between service quality and potential exclusion. In a recent survey on the perception and experience of digital governance that we conducted in Rajasthan, nearly half of the respondents said that they preferred the new system of LPG subsidy transfer over the previous one, with very few asserting the opposite view. As expressed by respondents, this was mainly due to the perceived reduction in corruption and black-marketing of subsidized cylinders diverted by dealers. Similarly, responses by beneficiaries of food rations through the public distribution system (PDS) showed that more preferred the new Aadhaar-enabled system than the previous system, again because they felt that their rations could no longer be diverted by unscrupulous dealers. These cases suggest the potential of digital systems to improve service delivery.
However, most of the debate has been focused on claims that PDS dealers are denying food rations, a constitutionally mandated entitlement, in the case that Aadhaar authentication of the beneficiary fails at the point of sale. Indeed, the government’s own submission to the Supreme Court flagged a problem. The Unique ID Authority of India (UIDAI) which is the custodian of Aadhaar’s database, stated that biometric authentication failure rate for fingerprints (after three attempts) was nearly 12 percent in government programs compared to 5 percent in banks and 3 percent for telecom operators. Other reports, including our own survey, suggest a rate of between 2 and 4 percent after repeated attempts.
The government’s figure is therefore unacceptably high when it comes to disbursal of benefits especially to poor and remote communities most in need. More understanding is urgently needed of the reasons behind their figure. In addition, it increases the importance of having effective protocols to manage exceptions, such as mobile one-time password (OTP) or iris-scan or authentication by a local authority. In Andhra Pradesh, the village Revenue officer is allowed to authenticate a beneficiary if needed as a last resort—a human response to possible failure of technology. Authentication failures of the magnitude cited in the government’s submission should serve as a wake-up call to urgently address this issue. Moreover, there could be a policy review to determine the need for “gold-plated” authentication of beneficiaries every time they access a service. Sometimes, the one-time deduplication of beneficiaries using Aadhaar may be more than sufficient for better delivery of services. When it comes to Aadhaar authentication, the best should not become the enemy of the (still very) good.
In the last international PISA assessment for math and science, Vietnam outperformed many developed countries, including the UK and the US. Yet Vietnam only has a small fraction of the GDP of these countries. No other low-income country performs at the same level or better than developed countries on an international assessment.
This “Vietnam effect” shows that high education quality is possible even with lower income levels, and appears to reveal revolutionary possibilities. Should other countries with similar income levels, such as Indonesia, be asking themselves: “Why not me?”
Figure 1: PISA test scores versus country income levels, 2015
The case for Vietnam as an exemplary outlier rests on the measurement of Vietnam’s performance being valid and reliable. Questions have been raised about the validity and reliability of PISA results and whether the high performance of some countries is representative of only a small privileged part of the population. There are two possible concerns: first, the test covers only in-school populations so it leaves out all those children who are not in school, and who may also be more likely to be academically weaker. Second, the PISA sampling may allow some education administrators to select the best performers from “better-off” cities or regions, which could lead to samples that are not representative.
On the first point, not only does Vietnam do exceptionally well on learning outcomes, it also has great results for school enrollment and completed years of schooling. Vietnam has close to universal school enrollment at the primary level and lower secondary levels. Upper secondary enrollment has also seen amazing improvements, tripling from 27 percent in the early 1990s to 70 percent in recent years. In fact, the mean years of schooling of Vietnam’s adult population is higher than would be predicted by its per capita income (Dang & Glewwe, 2017). Therefore, the concern that PISA is not testing a significant proportion of out-of-school children is an issue when drawing comparisons with countries with universal enrollment at the PISA testing age of 15 years, but not a dominant issue.
On the second point, if there are sampling issues where some countries are able to select top performers from “better-off” cities or regions, then these are legitimate concerns that need to be independently investigated. However, the recent RISE paper by Dang & Glewwe (2017) uses alternate data sources to see what learning for Vietnamese children looks like. The paper uses nationally representative high-quality household survey data spanning a period between 1992 and 2014 combined with national grade 5 assessment data. Pulling together all the different data sources and analyzing the results still paints a promising picture of the learning outcomes for Vietnamese children. While these national databases do not allow for cross-country comparisons, they paint a clear upward trend for learning in the country. For math, test scores for grade 5 students jumped 0.40 standard deviations between 2001-2007. For Vietnamese language test, the jump was 0.22 standard deviations. These are huge jumps for a short span of 6 years, particularly compared to countries like India and Indonesia where indications are that scores have been stagnant at best.
Vietnam’s strong performance isn’t a mere illusion.
But a second concern is that since Vietnam is the only country in Figure 1 in the “low income/high performance” part of the graph, other countries could draw the conclusion that there is something completely unique about Vietnam. However, Vietnam appearing alone in that part of the space is an artefact of using current scores and GDP per capita. If one looks historically, one sees a number of other countries (albeit perhaps just by bias in the sample of countries for which international assessments took place, we have only East Asian examples) that achieved US levels of performance at levels of GDP per capita that are very low.
For instance, Japan in the early 1960s had only 13 percent of US current income level but already was far ahead of the United States in mathematics performance. In the early 1980s Thailand was still quite poor (had only 8 percent of US current income level, the same as contemporary Vietnam) but had science achievement of 13-year-olds equal to that of the United States.
Figure 2: Other countries have achieved US levels of learning in mathematics and science at very low levels of income
Source: Medrich & Griffith 1992 for assessment outcomes, PWT8.0 for GDP per capita.Note: Figure uses the 2011 GDP per capita figure for Vietnam. Figure uses simple average for cases with multiple years.
Figure 2 is potentially good news for two reasons: One, the fact that other countries besides Vietnam have managed to achieve high student learning performance at low levels of income suggests that Vietnam is not a singular experience and hence raises some hope that others can reach similar levels of performance. Two, one reason why the graphs in Figure 1 with just data for 2015 don’t show Japan, Korea, and Thailand as outliers is that they have had very rapid growth and hence have achieved high levels of productivity consistent with high levels of learning achievement. Hence, if Hanushek and Woessmann are right about the huge potential benefits for economic growth of higher learning outputs, then this explains why Vietnam appears in a current cross-section like an outlier—the others who were outliers had massive gains in income.
This still leaves the question of why Vietnam (and not other countries) is such a contemporary outlier? The question is the subject of the RISE Vietnam country research team agenda that is seeking to understand how Vietnam “got it right.”
This is one of a series of blog posts from “RISE"—the large-scale education systems research programme supported by the UK’s Department for International Development (DFID) and Australia’s Department of Foreign Affairs and Trade (DFAT). Experts from the Center for Global Development lead RISE’s research team.
In his appearance before the committee, Morris outlined findings from newly CGD published analysis exploring the debt implications of China’s Belt & Road Initiative—and offered his views on what it should mean for US global engagement.