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Microfinance, foreign aid, Commitment to Development Index, debt and debt relief

Bio

David Roodman, a former CGD senior fellow, worked at the Center from March 2002 to July 2013. His work at the Center focused on microfinance, debt relief, and aid effectiveness. His widely praised book Due Diligence confronts questions about the impacts of microfinance and how it should be supported. He wrote the book through a pathbreaking Microfinance Open Book Blog, where he shared questions, discoveries, and draft chapters.

Roodman was an architect and manager of the Commitment to Development Index since the project's inception in 2002. The Index ranks the world's richest countries based on their dedication to policies that benefit the 5 billion people living in poorer nations; it is widely recognized as the most comprehensive measure of rich-country policies towards the developing world.

Roodman wrote several papers questioning the capacity of common cross-country statistical techniques to shed light on what causes economic development. He co-authored a 2004 American Economic Review paper that challenged findings of World Bank research that aid works in a good policy environment. His non-technical Guide for the Perplexed builds on analysis of methodological problems and fragility in other studies. Among econometricians Roodman is best known for his computer programs that run in the statistical software package Stata; articles about them won him the inaugural Stata Journal editors' prize in 2012. Also in 2012, Roodman aged off the RePEc list of top young economists in the world, at number 6.

Roodman previously worked at the Worldwatch Institute, where he wrote three monographs on environmental issues, and one on debt, Still Waiting for the Jubilee: Pragmatic Solutions for the Third World Debt Crisis. He authored the book The Natural Wealth of Nations: Harnessing the Market for the Environment, which Foreign Affairs called "required reading for legislators around the world.” The Japanese edition garnered him a selection as one of "The Outstanding Young Persons" of 2003 by the Osaka Junior Chamber, which led to an audience with the Emperor and Empress.

Roodman spent academic year 1998–99 on a Fulbright in Vietnam.

Visit his website at davidroodman.com. 

 

 

 

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Media Contact

Holly Shulman
hshulman@cgdev.org

In the News

January 31, 2014
Top Free-Market Think Tanks Combat the Hegemony of the Bureaucrats (Forbes)
June 24, 2013
Crunching the numbers: What can microfinance achieve? (Myanmar Times)
March 21, 2013
Challenges in Using Micro-Credit to Help Yemen's Poor (IRIN)

High-res photo

More From David Roodman

December 8, 2016
Event
Does Mass Deworming Affect Child Nutrition?
David Roodman and Justin Sandefur

The WHO has recently debated whether to reaffirm its long-standing recommendation to deliver deworming drugs en masse to children in places with high worm prevalence. While deworming drugs are safe and cheap, a recent Cochrane review concluded there is “substantial evidence” that mass deworming has no impact on weight or other child outcomes, leading some to question the WHO policy.

July 22, 2014
Blog Post
Editing ODA: What to Omit and Add in the Definition of Aid
David Roodman

My earlier posts on the definition of Official Development Assistance (here, here) dwell on the questions of when and how to count loans as aid.

June 19, 2014
Blog Post
More on the Definition of ODA: Proper Credit for Credits
David Roodman

CGD’s recent publication of my paper on improving the statistical definition of Official Development Assistance (ODA) brought me into contact with several people involved with the ongoing review of this issue. (For the history of that process see my previous post.) Those conversations have stimulated my thinking. They have also helped me appreciate that among the questions in play, the hottest is how to count loans in ODA—where “hot” is some blend of complicated and controversial.

I wrote about loans in my last post. But I focused on arguing against factoring the probability of default into the assessed financial value of a loan. Here, I’ll explain some other loan-related recommendations. In another post, I’ll talk about other questions.

June 17, 2014
Publication
Data Set for "Peer Review of Social Science Research in...
Victoria Fan, David Roodman and William Savedoff

This is the data set for Working Paper 371 which analyzes correspondence letters to The Lancet and summarizes and categorizes common areas of dispute raised in these letters. 

June 24, 2014
Publication
Peer Review of Social Science Research in Global Health:...
Victoria Fan et al.

In recent years, the interdisciplinary nature of global health has blurred the lines between medicine and social science. As medical journals publish non-experimental research articles on social policies or macro-level interventions, controversies have arisen when social scientists have criticized the rigor and quality of medical journal articles.

June 9, 2014
Blog Post
The Crisis in Official Development Assistance (ODA)...
David Roodman

Not to be melodramatic, but the official system for counting foreign aid is in crisis. The longstanding mathematical rule determining whether a loan’s interest rate is low enough to qualify it as aid has gone out of sync with the times. The rule’s benchmark interest rate of 10% per year was reasonable when adopted in 1972, but not now. Today, wealthy governments can borrow below 3%, lend a couple percent higher, come in well under the 10% bar, and count the potentially profitable lending as aid.

June 5, 2014
Publication
Data Set for "Straightening the Measuring Stick: A 14...
David Roodman

This is the data set for Policy Paper 44 which analyzes 14 proposals to change or preserve aspects of the official aid measurement system.

June 5, 2014
Publication
Straightening the Measuring Stick: A 14-Point Plan for...
David Roodman

The definition of foreign aid—Official Development Assistance, or ODA—is in crisis. The statistical aggregate assumed its current form between 1968 and 1972, and has failed to adjust to the times.

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October 2, 2009
Blog Post
Kiva Is Not Quite What It Seems
David Roodman

Kiva is the path-breaking, fast-growing person-to-person microlending site. It works this way: Kiva posts pictures and stories of people needing loans. You give your money to Kiva. Kiva sends it to a microlender. The lender makes the loan to a person you choose. He or she ordinarily repays. You get your money back with no interest. It's like eBay for microcredit. You knew that, right? Well guess what: you're wrong, and so is Kiva's diagram. Less that 5% of Kiva loans are disbursed after they are listed and funded on Kiva's site.

March 8, 2013
Blog Post
Four Arguments against the Elimination of Child Labor
David Roodman

Don't get me wrong: sarcastic headline aside, I'm not in favor of the exploitation of children.

December 6, 2006
Publication
How to Do xtabond2: An Introduction to "Difference" and ...
David Roodman

This working paper by CGD research fellow David Roodman provides an original synthesis and exposition of the literature on a particular class of econometric techniques called "dynamic panel estimators," and presents the first implementation of some of these techniques in Stata, a statistical software package widely used in the research community. Stata is designed to encourage users to develop new commands for it, which other users can then use or even modify. In this paper, Roodman introduces two commands, abar and xtabond2, which is one of the most frequently downloaded user-written Stata commands in the world. Learn more

December 13, 2011
Publication
Due Diligence: An Impertinent Inquiry into Microfinance
David Roodman

Readers of David Roodman's Microfinance Open Book Blog will immediately recognize his thorough, straightforward, and trenchant analysis of whether microfinance is the boon many think it is.

December 18, 2012
Blog Post
Ich bin ein Über-Geek
David Roodman and Mead Over

One popular statistical software package in academia is

October 11, 2010
Blog Post
What Is Microfinance?
David Roodman

I'm seen as an expert on microfinance. I'm writing a book about microfinance. I blog about microfinance.

December 4, 2012
Publication
Europe Beyond Aid: Assessing Europe’s Commitment to...
Owen Barder et al.

This paper provides the background to a series of more detailed studies of the policies of European countries as they relate to CGD's Commitment to Development Index.

October 12, 2009
Blog Post
Matt Flannery, Kiva CEO and Co-Founder, Replies
David Roodman

[I am honored to host Matt Flannery as my first guest blogger. My October 2 post about Kiva generated copious commentary and tweeting. Accepting a guest strays somewhat from the construct of this blog, but seems highly appropriate in this case.--David Roodman]

Hello Everyone,

This is Matt Flannery, Co-Founder and CEO of Kiva.

I recently read and enjoyed David’s article “Kiva Is Not Quite What It Seems”. The article is well-written and thoughtful, and has generated a lot of passionate responses. I'm writing here because I thought it would be helpful to hear from Kiva, as part of this dialogue, to increase understanding about what Kiva does and where it is going.

I see Kiva as a public property, “owned”, in a sense, by its three main constituents---the entrepreneurs, the lenders and the MFI partners, all of whom we serve. It is a delicate balance to serve all three at once. Sometimes it may seem that, for a particular decision, one has to benefit at the expense of the others. However, this is a short-sighted way of looking at things.

I firmly believe that, in the long run, each of Kiva’s constituencies want the others to be well-served, as they are all inter-connected, and rely on each other in their shared efforts towards poverty alleviation. What is needed to create this environment of mutual support is rich communication, promoting greater understanding around the challenges and needs of each constituent.

The Kiva website serves as the hub for that communication to take place. However, large gaps in communication still remain. We at Kiva have a long way to go to increase the level of understanding between the three parties and this article sheds some light on certain areas where we can improve.

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June 24, 2014
Publication
Peer Review of Social Science Research in Global Health:...
Victoria Fan et al.

In recent years, the interdisciplinary nature of global health has blurred the lines between medicine and social science. As medical journals publish non-experimental research articles on social policies or macro-level interventions, controversies have arisen when social scientists have criticized the rigor and quality of medical journal articles.

December 4, 2012
Publication
Europe Beyond Aid: Assessing Europe’s Commitment to...
Owen Barder et al.

This paper provides the background to a series of more detailed studies of the policies of European countries as they relate to CGD's Commitment to Development Index.

June 18, 2009
Publication
The Impact of Microcredit on the Poor in Bangladesh:...
David Roodman

CGD fellow David Roodman and Jonathan Morduch a landmark evaluation of the impact of microcredit on poor households in Bangladesh. They replicate the study's statistical analysis and put an end to the controversy surrounding it by showing that it fails to rule out reverse causation. A positive association between microcredit and household spending, for example, may merely indicate that richer families borrow more. With these studies in doubt, solid academic evidence that microcredit reduces poverty is even scarcer than previously understood.

April 7, 2009
Publication
Estimating Fully Observed Recursive Mixed-Process Models...
David Roodman

This working paper by CGD research fellow David Roodman provides an original synthesis and exposition of the statistical theory behind one of the most influential studies of the impact of microcredit on borrowers (Pitt and Khandker, Journal of Political Economy, 1998). The present paper also documents Roodman’s program, called cmp which for the first time makes it easy for other researchers to apply these methods. The program implements a "maximum likelihood" estimator for "fully observed, recursive, mixed-process systems of equations," and runs in the commercial statistical analysis package, Stata.

January 7, 2008
Publication
Through the Looking-Glass, and What OLS Found There: On...
David Roodman

The econometric quest for evidence on aid effectiveness continues. Practitioners in the $80 billion-a-year aid enterprise care about their work and hanker for objective evidence that they are helping. In this working paper, CGD research fellow David Roodman argues that there is a clear aid-growth relationship, but instead of being positive and running causally from aid to growth, it is negative and runs from growth to aid--aid, that is, as it is usually measured: as a fraction of GDP. Roughly speaking (and not surprisingly!), when GDP goes up, aid/GDP goes down. Roodman argues that choices that economists commonly make in running the numbers often flip the apparent sign and direction of the aid-growth link, making it appear that aid is raising growth.

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December 10, 2007
Publication
Macro Aid Effectiveness Research: A Guide for the...
David Roodman

The argument about whether foreign aid "works" rages on. Recently, Paul Collier sought a practical middle path between William Easterly's development pessimism and Jeffrey Sach's development boosterism. How can smart people draw such contradictory conclusions from the same data? This new working paper by CGD research fellow David Roodman answers this question by describing consensus where it exists and identifying sources of controversy. Roodman concludes that, while aid has eradicated diseases, prevented famines, and done many other good things, given the limited and noisy data available, its effects on growth in particular probably cannot be detected.

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October 10, 2007
Publication
How Do the BRICs Stack Up? Adding Brazil, Russia, India,...
David Roodman

In this working paper CGD research fellow David Roodman explains how the four biggest developing countries -- Brazil, Russia, India and China, a group Goldman Sachs dubbed the "BRICs" -- stack up to their rich-country counterparts on the environment component of the annual Commitment to Development Index (CDI). He finds they generally perform well on greenhouse gas emissions, consumption of ozone-depleting substances, and tropical timber imports. Major weaknesses include low gas taxes, Amazon deforestation and heavy fossil fuel use.

August 13, 2007
Publication
A Note on the Theme of Too Many Instruments - Working...
David Roodman

*REVISED Version May 2008

In development economics, statistical analysis usually begins with data from many observational units--households, companies, or countries--over just a few time periods. Two analysis techniques are becoming popular for studying causal relationships among variables in this "short panel" setting but their implementation may produce false results. In this new working paper CGD research fellow David Roodman shows how inaccurate results can skew the development debate and offers some simple techniques for reducing the risks.

Learn more

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