May 2008

Greetings from Cambridge, Massachusetts!  The first day of the 2 ½ day workshop on the Roles of the News Media in the Governance Reform Agenda is wrapping up.  We are thrilled to report that we’ve had a series of rich and engaging discussions among some of the world’s best scholars and most seasoned practitioners.  So far, we have had debates, at times heated, but mostly civil, among practitioners, policymakers, and scholars on the normative underpinnings of the role of media in the governance agenda, the types of diagnostic media indicators available from around the world as well as performance metrics that have yet to be developed.  We delved into the need to clarify media assessment on multiple levels: theory, concept, method, practice, and policy.  We also talked about the roles of media in natural crises

A view of Beijing's traffic gridlock from my office.

These days, the news in Beijing is of course all about the Sichuan earthquake: threats from ‘quake lakes’, the mammoth relief and recovery effort, and the many, many human stories of survival, loss and compassion. Inevitably, though, attention will turn back to China’s other environmental problems – the ones that are related to the country’s rapid growth and its emergence as the world’s second largest energy user.

Decentralization has been a buzz word in the development world for a while, but disagreements remain about when and how different types of decentralization are successful in improving accountability and service delivery.  Although decentralization is often used as a monolithic concept, the term can include political, fiscal, administrative or market decentralization, and can involve varying degrees of transfer of authority and/or responsibility from the central government. 

There was an interesting discussion of decentralization on Megan McArdle’s blog in The Atlantic.  Most of the readers’ examples are from the US – but decentralization is a huge, and perhaps more crucial, issue in East Asia, where governments, the World Bank and other development partners are working to find innovative ways to improve governance and service delivery.  What do you think?  Are local governments more accountable than central governments?  Are there particular services or departments in your country that you think would be handled better by a subnational government than by the central government?

In Qingshen village, with some of the grandparents taking care of left-behind children and the NGO members who help them out.

One of the heart-breaking stories that I read in the aftermath of the Sichuan earthquake was of a grandfather who rushed to the village school only to find that its three stories had collapsed.  After tugging futilely at the giant concrete slabs for a while he realized that his grandchild and all the classmates were lost.  A careful reader looking through similar stories of personal loss would have realized that often it was a grandparent who rushed to the school.  The reason for this is that in rural Sichuan, as in much of rural China, there are many households in which both parents have gone as migrant laborers to the coast leaving children in the care of grandparents. These kids are known in Chinese as “left-behind children.”

The Philippine Center for Investigative Journalism recently published a special feature titled "Toilet Trouble" that referred to a Bank study on the economic impact of poor water and sanitation. The study (find the full summary in pdf at the bottom of that page in the box to the right <-- updated on June 18, site was redesigned) looked into four Southeast Asian countries: Philippines, Indonesia, Cambodia, and Vietnam, and found that these countries lose an estimated US$9 billion a year because of poor sanitation. The figures have reverberated quite a bit among media and governments, especially since 2008 is the International Year of Sanitation.

When the report was first launched, it went somewhat under the radar of the Bank's East Asia & Pacific website, so I'm bringing it back up to light here. Take a look at a slideshow on sanitation facts, too, or test your knowledge about the topic: for how long should you wash your hands --with soap suds-- after using the toilet? Well, the quiz doesn't ask you that precise question, but I'm giving you the answer here anyway: for at least 20 seconds, outside the stream of running water, before rinsing and drying with a clean or disposable towel.

Internet guru Clay Shirky, author of Here Comes Everybody, was at the World Bank last week to share his take on collaboration and new technologies. His main piece of advice for the Bank: "when someone knocks at your door with the next great big collaboration idea that will cost a million dollars, ask them to go outside for a walk and come back until the price tag is closer to 100,000 USD". New technologies have dramatically reduced the cost of failure: trying a new approach is now cheaper than convening a stakeholder meeting to discuss whether a proposed solution might work or not. This week, Gartner actually suggested that 5,000 USD is a realistic estimate for the cost of a collaboration trial.

And, of course, it is not only that the cost of failure has gone down: entry costs have plummeted, too. In the web 2.0 world, one can feed off existing infrastructures to get people to collaborate or campaign for a cause. No need, for example, to create a social networking site of your own -- you can just use Facebook. And once you succeed in getting people together, the cost of empowering them with information and coordinating their efforts are also minimal: as Shirky put it, social networks are "transaction costs lowering machines".

In the Development 2.0 world, there are fewer and fewer justifications for the "not invented here" syndrome and massive budgets spent to develop proprietory IT solutions.  The challenge to adopt a try and test it approach that is open to failure and appropriation of solutions developed by others is not a technological one: it's first and foremost an issue of organisational culture.

Former Hong Kong anti-corruption administrator Bertrand de Speville was at the Bank recently, speaking about political will on anticorruption.  According to de Speville, there are seven essentials to fighting corruption:

1.    Political will
2.    Our values clearly stated in law
3.    A national anticorruption strategy - clear, concise and comprehensive
4.    An effective mechanism for implementing it
5.    Community support
6.    Resources
7.    Endurance

His talk focused on the first of these essentials, which de Speville sees as a prerequisite to the others.  He advocates gaining the support of cabinet members along with the public, and has suggestions for dealing with those complicit in past corruption cases.  Given his experience as anticorruption administrator in Hong Kong, his approach makes sense:  Hong Kong was extremely successful in transforming its exceptional level of corruption to an exceptional lack of corruption, and achieved this transformation through a top-down, government-led approach.

The talk generated several interesting questions about how appropriate this approach might be for other countries, including others in the East Asia and Pacific region:

As usual onFridays, from  Raj Nallari and Breda Griffith's lecture notes.

Theoretical considerations of gender inequality and economic growth (3)

Endogenous growth theory in particular provides a framework for analyzing the effects of gender inequalities on economic growth.  Endogenous growth theory arose from a seminal paper by Romer (1986) that challenged the main assumption of the neo-classical growth model, i.e. the law of diminishing returns.  Because of diminishing returns to a factor, the per capita growth rate was zero. Furthermore, the law of diminishing returns also implied that poor countries grew faster than rich countries and economies grew faster the farther they were from their steady state. Romer used the 1982 Summers and Heston data set to show that a regression of the growth rate of 114 countries on their initial level of income gave a positive coefficient.  This finding was in stark contrast with the neo-classical model that suggested that a regression of the growth rate on the initial level of income would give a negative coefficient. Romer’s conclusion was that the neo-classical model did not fit the data and, furthermore that it was intellectually unsatisfactory.  In contrast, endogenous growth theory that assumes constant returns to a factor, finds no automatic relationship between how poor an economy is and how rich it can grow. Disparity between countries is allowed to persist and does not disappear as suggested by the neo-classical growth model. 

Global trade could increase by trillions of dollars if transactions costs in developing countries are reduced to OECD levels. But what’s the most effective ways to achieve such reductions?

A group of high-level policy makers, academics, and World Bank Group staff met in Washington last week to strategize as part of a conference organized by the FIAS' Trade Logistics Advisory Program. Presenters discussed case studies from twelve developing and industrialized economies and state-of–the-art approaches to building efficient trade logistics services. Some governments are making progress in simplifying their trade-related regulatory procedures. Pakistan, for example, managed to reduce the number of trade transactions from 26 clearance steps, 34 signatures, and 64 verifications to one declaration form. And it increased the proportion of cargo that is cleared from in less than one day from 4% to 70%.

I went to New York with a colleague last week to visit the Open Society Institute (OSI). At CommGAP we are always seeking to win friends and influence networks. We met the Open Society Justice Initiative team. It was a useful and productive meeting. In the course of it, we were given books and reports about the work of the Justice Initiative and OSI generally. This is what happens when you visit organizations working in development: they give you their stuff to read. We do it too. Most of the publications you are asked to take home with you are things you probably will not touch once they find a place of honor on your bookshelf. Of course you intend to read them all; it is just that you hardly ever do.

May 5 and 6 saw an interesting research conference here in DC on Small Business Finance, looking at which banking practices and government interventions help foster small businesses' access to external finance. Twelve interesting papers and a stimulating panel discussion addressed an array of issues, ranging from banks' lending techniques over competition, government policies to informal and trade credit. Many papers and speakers questioned conventional wisdom on what we know and what policies are helpful.