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CGD in the News

October 31, 2018

Europe must retain united front as #Chinese expansionism intensifies (EU Reporter)

By Colin Stevens 

From the article: 

As Beijing continues to throw significant capital at its ambitious Belt and Road Initiative (BRI), there is mounting evidence, from Djibouti to Sri Lanka, of how such allegedly benign investment can quickly turn into political influence and expansionism. The EU must act quickly to follow America’s example with regards to screening Chinese FDI, before the bloc ends up with Djibouti-style problems in its own backyard. 


While Djibouti might be the most glaring example of China’s recent expansionism, it’s far from the only one. Last December, an insolvent Sri Lanka was forced into handing over control of the Chinese-funded port of Hambantota. Elsewhere, recent analysis by the Center for Global Development (CGD) concluded that eight nations around the world, from Tajikistan to the Maldives, were in severe risk of falling into exactly the kind of “debt-trap diplomacy” that has ensnared Sri Lanka. The West isn’t immune to such machinations, either; NATO member and EU candidate Montenegro featured on the CGD’s list of the eight most vulnerable countries. 

Read the full article here.


October 31, 2018

Analysis: Muse-Mandalay Railway Agreement with China Raises Debt, Conflict Fears (The Irrawaddy)

By Nan Lwin 

From the article:

YANGON—Even as Laos’s planned railway connecting southern China with northeast Thailand comes under scrutiny due to its huge cost and uncertain benefits, Naypyitaw has agreed to conduct a feasibility study on a high-speed railway project that would link two economic centers in Myanmar as part of Beijing’s grand infrastructure plan for the region.

Critics of the rail project warn that it could saddle Myanmar with unsustainable debts, and point out that the route passes through conflict zones. By approving the feasibility study despite these concerns, the government has again signaled its willingness to cooperate with China in its bid for economic supremacy in the region.

Two state-owned companies, China Railway Eryuan Engineering Group (China Railway Group Ltd) and Myanmar Railways signed a memorandum of understanding (MoU) last week to begin studying a proposed railway line from Muse, in northern Shan State, to Mandalay. 


According to a March 2018 report by the Washington-based Center for Global Development, China is putting many countries involved in the BRI at financial risk through a series of “aid” activities and huge amounts of lending. 

Read the full article here

October 31, 2018

India Jumps 23 Places On World Bank’s Ease Of Doing Business Index (Bloomberg Quint)

By BQ Desk

From the article:

India jumped 23 places on the World Bank’s Doing Business Index as the country made it easier to start a business, deal with construction permits and facilitated quicker cross-border trade.

It’s now ranked at 77, the highest in South Asia, up from 100 last year, according to the World Bank’s Doing Business 2019 report. “India, with six reforms, is among the top-ten improvers for the second consecutive year,” the report said.

The improved ranking will boost the sentiment of Prime Minister Narendra Modi’s government ahead of the general election, at a time it’s facing flak for rising fuel prices and falling rupee. Last year, Finance Minister Arun Jaitley had said Modi wanted various ministries to target the top 50, which he thought was “doable”.


Earlier this year, World bank’s former chief economist had raised questions about the methodology to rank countries on the Doing Business Index.

Justin Sandefur, a senior fellow at the Center for Global Development, analysed the historical rankings and said India’s big leap in rankings were only visible due to a change in methodology. The World Bank has since defended its stance.

Read the full article here.


October 30, 2018

Opinion: How blockchain technology can reduce risks and lower costs after disasters (Devex)

By John Schellhase

From the article:

Among the many disruptions created by blockchain technology, the most profound may come in the way aid is delivered to people whose lives are upended by wars, famines, and natural disasters.

The influx of aid following a disaster shows the power of human generosity. Sadly, corrupt officials and middlemen often see it as an opportunity to enrich themselves at the expense of the displaced. The Center for Global Development estimated last year that about 5 percent of global aid, or $8 billion, is lost to theft and corruption each year. Measured against disaster victims’ relatively modest needs, it is a staggering sum.

Blockchain-based distribution systems won’t eliminate corruption, but their ability to confirm identity and execute secure digital transactions can ensure that a larger proportion of aid will reach its intended recipients.

Blockchain technology promises to change the way we store information, confirm transactions, exchange money, and protect our identities. The transparency and security of blockchain, or distributed ledger technology, can increase trust and lower costs for a variety of programs and projects. This is particularly true in countries with a weak or underdeveloped legacy of telecommunications and financial infrastructure.

Read the full article here.


October 29, 2018

Flush with money from Saudi monarchy, Silicon Valley grapples with Khashoggi’s death (New Indian Express)

By Anahita Mukherji

From the article: 

“Saudi Arabia wasn’t always this repressive. Now it’s unbearable,” read the headline of a Washington Post piece by journalist Jamal Khashoggi in September 2017. Over the last year, Khashoggi wrote a series of columns on Saudi Arabia’s violation of human rights, in which he spoke of the widespread arrest of activists and reformers who challenged the monarchy.

None of his pieces moved Silicon Valley tech companies enough to sever ties with Saudi Arabia, a country that has massive investments in America’s tech hub. But all of a sudden, Khashoggi’s gruesome murder at the Saudi consulate in Istanbul earlier this month, believed to be orchestrated by Saudi’s monarchy, has put the spotlight on Silicon Valley’s blood money, leaving the tech industry in a quandary.

Earlier this year, Saudi prince Mohammed bin Salman visited Silicon Valley, and was photographed with the biggest stars of the tech world as they showed him around their offices. The crown prince was often referred to by his initials, MBS.

Over the last month, the acronym has come to stand for Mister Bone Saw, a reference to the manner in which Khashoggi’s body was allegedly dismembered and disposed off.

While it’s unlikely that Silicon Valley was completely unaware of Saudi Arabia’s abysmal human rights track record before Khashoggi’s death, it has now become impossible to ignore.


In a piece for Slate, Charles Kenny, senior fellow at the Centre for Global Development, calls Giridharadas’s proposal “a new form of international boycott — one that involves refusing to accept cash rather than the more traditional approach based on refusing to hand it over.”

As many tech firms that Saudi Arabia has invested in are private, he says this would involve a more straightforward process than for companies listed on the stock exchange.

He points to close ties between Saudi Arabia and the US, which make the US government-led sanctions against Saudi Arabia unlikely. Saudi Arabia is the largest buyer of US weapons, both countries are involved in military and intelligence cooperation and both are distasteful of Iran. And then there’s Saudi investment in President Donald Trump’s business.

Kenny points to consumer and institutional boycotts as an alternative to government sanctions. While the traditional method involves a refusal to buy or invest in a country, as was done to South Africa’s apartheid regime, Kenny believes this method won’t work for Saudi Arabia.

“Consumers don’t know where their gas comes from when they pump it at the station, and anyway, little Saudi gas oil makes it to the US,” Kenny wrote, adding that there is no point refusing to invest in Saudi firms, as the country is “desperately trying to find investment opportunities for its surplus cash.” According to him, the only option left is Giridharadas’s proposal of refusing to take Saudi money.

Read the full article here.

October 29, 2018

The IMF Faces An Uncertain Future (FX Street)

By Northern Trust Economic Research Department 

From the article: 

Earlier this month, the International Monetary Fund (IMF) conducted its fall meetings in Bali, Indonesia. The economic outlook released as background for the occasion was titled "Challenges to Steady Growth." The report highlighted "mounting uncertainties—not only over economic policies, but also over the global framework of international relations within which policies are made."

Uncertainty is also mounting around the IMF itself. Rising nationalism around the world has fostered suspicion about the motives and actions of multilateral organizations. Using domestic funds to benefit other countries, or allowing an outside body to dictate domestic policy, runs counter to the broadening desire to put home country first. 


According to a 2018 study by the Center for Global Development, 23 BRI participants are "at risk of debt distress." Pakistan, with the key China-Pakistan Economic Corridor, is the most vulnerable. China is reportedly financing about 80% of Pakistan's external debt on its own terms, with external repayments projected to rise by 65% to $12.7 billion in 2019. It seems extremely unlikely that Pakistan will be able to meet these obligations, leading it to reach out to the IMF for aid. The U.S., however, has expressed reluctance to have IMF funds make Chinese creditors whole. 

Read the full article here.

October 28, 2018

Quartz Africa Weekly Brief - Ethiopian cafes in China, tough migrant journeys, Naspers’ African tech millions (Quartz)

By Yink Adegoke 

From the brief:

“Hi, Quartz Africa readers!


One of my favorite anecdotes from a few years back, shared here before, is of the Nairobi Uber driver who on learning I had just arrived from New York, asked: “Do they have Uber in the US?” Since then I’ve encountered many drivers from Lagos to Cape Town and noted how quickly ride-sharing has spread in some of the big African cities, although, not without its challenges.

It’s also been interesting to see the rapid rise of Airbnb as a much needed alternative in some of Africa’s largest cities which have a shortage of affordable international standard hotels.

Uber and Airbnb are a big part of discussions about the short-term, freelance work “gig economy“, but in real terms they’re actually a small section of it.

For many African countries, the gig economy could just be called “the economy”. For example, just 17% of Kenyan employment is formal. Many of the economies are driven by the informal nature of the gainful employment that exists. The Center for Global Development addresses this in a paper this month which notes digital platforms help African freelance workers and budding enterprises on the path to formalization. But while this isn’t unique to Africa, it points out the degree to which these services are needed in Africa is what is unique. “Most entrepreneurs have never worked in the formal sector, nor do they have mentors who have created larger businesses.”

CGD’s research found people in African cities tend to like this type of flexible work, be it ride-share drivers, e-commerce sellers or home stay hosts. CGD identifies another category of African e-worker called “digital translators”. In this context it means like when Kenya’s Safaricom employs 5,400 people formally, but has 130,000 mobile money outlets, which typically employ one or two people. Or e-commerce leader, Jumia, which employs 3,000 people across Africa, but has another 100,000 commission-based affiliates who help customers make orders.

Of course, it’s not all plain sailing with gig work in Africa—just like with operating in more advanced economies. Disruption has raised tensions in certain traditional sectors where high unemployment means the stakes are even higher. There are also the same questions of whether gig workers will get a fair share of profits.

There does seem a better opportunity for African governments to raise much needed taxes in the medium to long-term, but for now CGD suggests the best option to make gig work better might be to “recognize it for what it is, neither formal employment not self-employment, and not as one job but a portfolio of different gigs.”

Read the full brief here.


October 26, 2018

These countries spend the most on education (The European Sting)

By Sean Fleming

From the article:

Few would argue that a thriving education system is vital to a country’s success. But while education is a priority across the globe, the level of spending varies sharply from country to country.

The Organization for Economic Co-operation and Development (OECD) has published its annual Education at a Glance report, comparing a range of education sector metrics between its 36 member countries. Among those metrics is an exploration of how much money is spent on education by each of these countries.

The OECD average statutory salary for teachers is $44,397. Teachers in poorer countries are better paid in comparison with local wages than their developed world counterparts. According to the Center for Global Development (CGD), in most OECD countries, the average teacher earns somewhere between 75% and 150% of GDP per capita. “Most sub-Saharan African economies are at the other extreme. Looking at the two largest countries in the region, Nigeria pays teachers nearly 500% of per capita GDP, and Ethiopia nearly 700%,” the CGD says.

Read the full article here.


October 26, 2018

Emerging Europe starts to question wisdom of Chinese-funded infrastructure projects (Emerging Europe)

By Tamara Karelidze 

From the article: 

A number of emerging Europe countries which have agreed big money infrastructure deals with China are beginning to reconsider their options. Members of the so-called 16+1 group, which includes 11 European Union member states (Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) and five Western Balkans nations (Albania, Bosnia, Macedonia, Montenegro, Serbia) are increasingly concerned at what they see failed Chinese promises and unacceptable conditions placed on finance.

The 16+1 group was set up in 2012 by China as a means to attract Chinese investment in infrastructure – mainly roads and rail networks – and to boost their economies. Many countries initially viewed the investment as having far fewer strings (and requiring less transparency) than European Union money. A major new report by Bloomberg suggests that they were wrong, and that alternatives, such as the European Bank for Reconstruction and Development (EBRD) may be better. 

“Some of those projects that have materialised with Chinese help have attracted unwelcome attention. Mounting costs for a highway development in Montenegro prompted the Washington-based Center for Global Development to single out the country as ‘at particular risk of debt distress,’ while the tender for an as-yet unfinished high-speed rail link between Budapest and Belgrade prompted an EU commission probe,” writes Bloomberg. 

Read the full article here.

October 25, 2018

Attorneys see longer detention times for migrant children in Maryland as ICE detains potential sponsors (The Baltimore Sun)

By Thalia Juarez 

From the article: 

When Flor was 7 years old, she watched her father get brutally murdered and her mother raped during what a Guatemalan judge recently ruled was a genocide of indigenous Mayans by that country’s military.

“That image stayed with me. And every time I think of it I feel a great pain here,” said the 45-year-old K’iche Maya woman, pointing to her chest. “I’m scared to go back.”

The horrors she saw as a child and the lack of opportunity she found as an adult led Flor to flee to the United States in 2004.

Her nephew’s son, Carlos, followed — alone — a decade and a half later. (Flor asked that she and Carlos be identified using only pseudonyms out of concern for their safety.)

Flor, who does not have legal status in the United States, wants to sponsor the 16-year-old, but a recent federal policy change is discouraging her and other immigrants from sponsoring migrant children for fear of deportation themselves, advocates say, leaving the children to languish in detention centers or shelters.

This spring, under an agreement between the departments of Health and Human Services and Homeland Security, the Office of Refugee Resettlement began sharing information with Customs and Border Patrol and Immigration and Customs Enforcement. The agreement dictates fingerprints be collected from not only potential sponsors but from all adults in their household.

While ICE says the change is meant to keep children safe from traffickers, immigration attorneys say it can deter people who don’t have documentation or who are going through immigration proceedings themselves, increasing the length of detentions for youth. 


He is part of a recent surge of Guatemalan, El Salvadoran and Honduran children fleeing violence and poverty in their home countries, according to a study by The Center for Global Development examining US Customs and Border Protection data.

Read the full article here.