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Foreign Direct Investments Could Bring Positive Spillovers

Hiau Looi Kee's picture

Despite the fact that many governments give incentives and tax benefits to attract foreign direct investments (FDI), empirical studies  on Venezuela, Czech Republic and Central and Eastern Europe have consistently shown that FDI crowd out and take away market opportunities from domestic enterprises and make the domestic firms less efficient.  However, it could be that not all FDI firms are alike, particularly when only some FDI use local intermediate inputs and have strong backward linkages.

Friday Roundup: Behavior and Development in the 2015 WDR, slow trade, and the case for Basic Income Guarantees

LTD Editors's picture

‘Conversable Economist,’ the blog of the Journal of Economic Perspectives, has a post by Timothy Taylor titled ‘Focusing Behavioral Economics on Development Professionals’ that reviews the WDR 2015.

David Brooks of the NYT opines about the new WB report in ‘In Praise of Small Miracles’ and from the tone of the comments his enthusiasm for ‘Mind, Society, and Behavior’ has ruffled the feathers of conservatives and liberals alike.

How is the World Bank Group seen in the eyes of opinion leaders in fragile and conflict affected states?

Sharon Felzer's picture

In the past year, attention has focused on the World Bank Group's (WBG) work in fragile and conflict affected states (FCS) in two distinct ways. First, the Independent Evaluation Group released its report on the work of the WBG in these countries. Second, within this first year of change at the WBG, Fragility, Conflict and Violence is identified as one of the five thematic groups that cut across the development efforts of the institution. The FCS team, aims, among other things,  to ensure a mainstreaming and strategic approach in all fragile states.

There is little doubt that, with more than 1.5 billion people living in countries affected by violent conflict, and with around twenty percent of the world’s poorest people living in fragile and conflict-affected situations (FCS), achieving the twin goals of ending poverty and boosting shared prosperity will have to require progress not only in middle income or even lower income client countries, but also in the most vulnerable client countries.

Revolutionizing Data Collection: From “Big Data” to “All Data”

Nobuo Yoshida's picture

The limited availability of data on poverty and inequality poses major challenges to the monitoring of the World Bank Group’s twin goals – ending extreme poverty and boosting shared prosperity. According to a recently completed study, for nearly one hundred countries at most two poverty estimates are available over the past decade.Worse still, for around half of them there was either one or no poverty estimate available.* Increasing the frequency of data on poverty is critical to effectively monitoring the Bank’s twin goals.
 
Against this background, the science of “Big Data” is often looked to as providing a potential solution. A famous example of this science is “Google Flu Trends (GFT)”, which uses search outcomes of Google to predict flu outbreaks. This technology has proven extremely quick to produce predictions and is also very cost-effective. The rapidly increasing volumes of raw data and the accompanying  improvement of computer science have enabled us to fill other kinds of data gaps in ways that we could not even have dreamt of  in the past.

Does Culture Matter for Development?

Augusto Lopez-Claros's picture

For a variety of reasons, economists have avoided getting too closely involved with the concept of culture and its relationship to economic development. There is a general acceptance that culture must have a role in guiding a population along a particular path, but, as Landes (1998) points out, a discomfort with what can be construed as implied criticism of a particular culture has discouraged broader public discourse.
 
As we discuss in a recent paper, the role of culture in economic development is not an easy subject to get a handle on. To start with, one faces issues of definition. The more all-encompassing the definition, the less helpful it tends to be in explaining patterns of development. Economists tend to narrowly define culture as “customary beliefs and values that ethnic, religious, and social groups transmit fairly unchanged from generation to generation” (Guiso, Sapienza and Zingales, 2006). This approach is largely dictated by the aim to identify causal relationships, by focusing on aspects of culture that are constant over time. Not surprisingly, some of the most insightful writing on the subject has been done by anthropologists. Murdock (1965) argues that a culture consists of habits that are shared by members of a society. It is the product of learning, not of heredity. Woolcock (2014) highlights how the sociologic scholarship has evolved to consider culture as “shaping a repertoire or ‘tool kit’ of habits, skills, and styles from which people construct ‘strategies of action” (Swidler, 1986, p.273).

​The Story of the 2015 World Development Report: Mind, Society, and Behavior

Varun Gauri's picture

English settlers to the New World believed that the climate of Newfoundland would be moderate, New England would be warm, and Virginia would be like southern Spain. These beliefs were based on the seemingly common sense view that climate is much the same at any given latitude around the globe.
 
What is striking is that these views persisted despite mounting evidence to the contrary. As late as 1620, after 13 years in the settlement, residents in Jamestown, Virginia, were still trying to import olive trees and other tropical plants, perhaps inspired by Father Andrew White, who had assured them that it was “probable that the soil will prove to be adapted to all the fruits of Italy, figs, pomegranates, oranges, olives, etc.” Eventually, the English settlers did adjust their mental models about North American climate. The accumulation of scientific data, combined with personal experience, was undeniable. But the adjustment was slow and costly, in terms of both money and lives lost.

Why Economics Today Should Give Us Hope: An Outsider’s View

Dani Clark's picture

At 23, starting graduate school for international relations, the prospect of taking economics frightened me. Having just spent my college career as a history major that marched for peace probably had something to do with it. There was also that time in 4th grade when I got a D in math, but we won’t go there.

Anyway, it was a very nice surprise when I found that the math and logic of economics made sense to me. I was proud of myself for “getting it.” And of course, for starting my own subscription to the Financial Times. Ah, the conspicuous consumption patterns of a newly-minted student of economics.

Roger Myerson goes on camera about his three week World Bank visit

Merrell Tuck-Primdahl's picture

Roger Myerson, eminent theorist and winner of the Nobel in economics, brought his abiding interest in democratic decentralization and development to the World Bank recently. He was hosted by the Development Economics Vice Presidency as a visiting fellow and spent three weeks here writing, thinking and meeting with staff from the Global Practice groups, from the Research Group, and from the East Asia region.
 
As his main output, Professor Myerson wrote a paper titled ‘Local Foundations for Better Governance: A review of Ghazala Mansuri and Vijayendra Rao’s Localizing Development’. He presented highlights from the paper to a diverse group of Bank staff on November 13.  The paper reflects on the theory and evidence for development strategies that are based on local community empowerment; it stresses that a key to viable democratic development in a nation is to increase the supply of leaders with good reputations for using public resources responsibly.

Ending Violence against Women

Quentin Wodon's picture

Today, November 25, is the International Day for the Elimination of Violence against Women. According to the United Nations, more than a third of women and girls worldwide experience physical or sexual violence in their lifetime. In some countries the proportion is at two thirds. More than 130 million girls and women have undergone female genital mutilation. Child marriage is even more pervasive, with 700 million women living today who married as children. In Africa and South Asia, close to half of girls still marry before the age of 18. These practices are declining, but only slowly. 
 
The widespread negative effects of violence against women have been documented, including in the recent World Bank report Voice and Agency: Empowering Women and Girls for Shared Prosperity. Complications related to pregnancy and childbirth lead 70,000 adolescent girls to die each year according to UNFPA’s State of the World Population report.

More than money: How cash transfers can transform international development

Jeremy Shapiro's picture

As an author of a recent impact evaluation looking at the effects of purely unconditional cash transfers in rural Kenya, and as a co-founder GiveDirectly, the organization that facilitated the cash transfers, I have been paying close attention to the research in this area. Much of it has been highly rigorous, and the evidence suggests that transfers do considerable good: reducing poverty, inequality and allowing poor families to accumulate assets. This is not to say cash transfers are a panacea, but all-in-all cash transfers can meaningfully improve the lives of the poor. So, where do we go from here?  

Beyond simply alleviating the poverty of many households, I believe cash transfers can play a transformative role in the aid industry. First, cash transfers can serve as a benchmark for the industry. The idea of using cash transfers as a performance benchmark is not new, but I believe it is limited from a practical standpoint, and more value may come from viewing cash transfers as a preference benchmark. Second, cash transfers are a uniquely low-risk and scalable solution to reducing poverty, which is no small thing in an industry that is prone to search for silver bullets with only a risky chance of truly solving poverty.

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