The role of asset bubbles as an unsustainable pillar of pre-2007 world economic growth has been widely recognized. Simultaneously, analysts worry that a secular stagnation, though momentarily offset by asset bubbles, may have been already at play in major advanced economies, leading to the ongoing sluggish and feeble recovery.
As I procrastinate writing this post, it seems only fitting to take a look at a paper that takes a look at different commitment devices.
It was not my first visit to a Kasturba Gandhi Balika Vidyalaya (KGBV). Every time I go to one, I come out inspired. What a great program this is: many thousands of girls who have missed the education boat are being brought back into the school system all over India! To me, it is the best part of Sarva Siksha Abiyan (SSA), the Government of India’s very successful Education for All Program.
That day in January, we were in Jehanabad in Bihar. We were sitting in the court yard of the KGBV school watching the karate demonstration the students put up for us. The girls learn karate for self-esteem and self-defense; it is a great thing. During the demo, one of the other girls came up to us. “I am Kusum”, she said, “I am in class 7.” Her English was perfect, so I complimented her on that. Kusum went back and we continued to watch the karate. When the program was over, Kusum came back to the front, with a determined look on her face. “Next year, I will go to class 8” she said. “I am happy you came to visit my school.”
The rewards of innovation for developing nations do not require much convincing. Poverty alleviation, faster economic growth, greater job creation, and higher worker remuneration are just some of the potential benefits. The idea of innovation as a key driver of development can be traced back to the seminal works of economists such as Joseph Schumpeter. Thus, it is no surprise that on July 30 and 31, 2013 a group of innovation leaders from 18 countries gathered in Santiago, Chile for the first pan Latin American Innovation Summit. The event was kicked off by Sebastian Piñera, then President of Chile, who had announced a national innovation budget of $1 billion. What about the private sector? An important driver of innovation is Research and Development (R & D) spending by businesses. Evidence shows that firms that invest in R&D and other innovation-related activities have higher productivity and are more capable of making technological advances than firms that do not. So, where do Latin American firms stand on R & D investment?
Financial Markets…Brazilian state-run oil company Petrobras sold $8.5 billion of international bonds yesterday, as the company continued to raise funds for its massive investment plan (some $221 billion over the next five years). The transaction comprised of six tranches with four different maturities. Petrobras’ bonds accounted for 40% of total bonds sold by Latin American sovereign and corporate borrowers thus far this year. The company also issued record-breaking $11 billion worth of debt last May.
Among those who talk about development & welfare policy/programs/projects, it is tres chic to talk about evidence-informed decision-making (including the evidence on evidence-informed decision-making and the evidence on the evidence on…[insert infinite recursion]).
This concept — formerly best-known as evidence-based policy-making — is contrasted with faith-based or we-thought-really-really-hard-about-this-and-mean-well-based decision-making. It is also contrasted with the (sneaky) strategy of policy-based evidence-making. Using these approaches may lead to not-optimal decision-making, adoption of not-optimal policies and subsequent not-optimal outcomes.
In contrast, proponents of the evidence-informed decision-making approach believe that through their approach, decision-makers are able to make more sound judgments between those policies that will provide the best way forward, those that may not and/or those that should maybe be repealed or revised. This may lead them to make decisions on policies according to these judgments, which, if properly implemented or rolled-back may, in turn, improve development and welfare outcomes. It is also important to bear in mind, however, that it is not evidence alone that drives policymaking. We discuss this idea in more detail in our next post.
In 1991, Egypt launched the Economic Reform and Structural Transformation Program (ERSAP) to address dire economic conditions. The difficult financial situation forced the government to reschedule its public debt twice, in 1987 and 1991. The Egyptian reform program moved at a slow pace until 2003, when the government pushed for further liberalization of the economy. The government began by floating the rate of exchange of the Egyptian pound in 2003, followed by the implementation of a series of policies aiming at shifting Egypt from a centrally planned to a free market economy.
The three points made in my previous post—that services particularly fail poor people, money is not the solution, and “the solution” is not the solution—can be explained by failures of accountability in the service delivery chain. This was the cornerstone of the 2004 World Development Report, Making Services Work for Poor People. In a private market—when I buy a sandwich, for example—there is a direct or “short route” of accountability between the client (me) and the sandwich provider. I pay him directly; I know whether I got a sandwich or not; and If I don’t like the sandwich, I can go elsewhere—and the provider knows that.
A question dominated discussions ahead of International Women’s Day on March 8: How can we make it count?
Gender equality and empowerment are principles that have been widely adopted for some time; but for many women, particularly those in developing countries, action lags way behind the rhetoric. The same is true in business: Evidence abounds for the business case for investing in women, but the reality remains that for a lot of women, things at work haven’t progressed much beyond what their mothers experienced.
It makes sense then that the issues that came up time and again during a panel I participated in at the sixth annual meeting of the UN's Women's Empowerment Principles (WEPs) titled “Jobs, Gender and Development: Confronting the Global Challenge," mainly related to the enduring challenges women face at work. I had gone there thinking I had much to add to that topic, but I came away having learned more than I could share, about topics I hadn’t expected.
With William Kerr and Alexander Segura.
Developing countries have become much more globally integrated. On a global dimension, they now trade a lot more with other countries than they did two decades ago. Domestic connectivity at the country level has been helped through investments in road networks as urban and rural areas are becoming better connected not just through roads but phones lines and faster flows of knowledge.
How global and local connectivity influence spatial development and distribution of jobs is a tricky question. A naïve approach might look industry-by-industry at their exposure to trade or highways and ask what happens to the average wage in the industry as highways form. This approach, however, risks confounding several forces. It could be, for example, that a decline in the average wage represents a positive outcome if 1) those firms and workers who were already in the industry are experiencing wage growth, and 2) the industry overall expands to pull in workers from subsistence agriculture. A declining average wage can signify the second factor is dominating the first factor, but this might be cause for celebration by policy makers rather than a source of concern.