Ideas to Action:

Independent research for global prosperity

Publications

 

December 21, 2002

From Social Policy to an Open-Economy Social Contract in Latin America - Working Paper 21

I suggest in this paper the logic of going beyond the standard, poverty-targeted, elements of good social policy to a modern social contract adapted to the demands and the constraints of an open economy. Such a contract would be explicitly based on broad job-based growth. Second, it would be politically and economically directed not only at the currently poor but at the near-poor and economically insecure middle-income strata.

December 20, 2002

World Bank Capital Neither Complements Nor Substitutes for Private Capital - Working Paper 20

What should the World Bank optimally do with the US$10 to $20 billion it can loan each year? Has it, in fact, done what is optimal? This study suggests a simple framework within which to measure the World Bank against an optimal international public financier for development. It goes on to argue that a careful treatment of the empirical evidence on Bank lending strongly contradicts optimal behavior under different assumptions. The evidence, in fact, rejects any notion that the Bank has substituted for private capital or that it has successfully catalyzed private development finance.

Michael A. Clemens
December 19, 2002

Do Rich Countries Invest Less in Poor Countries than the Poor Countries Themselves? - Working Paper 19

Global private capital flows have barely touched the poorest nations; the rich invest mostly with the rich. It is possible that failures in the global capital market prevent capital from exploiting high returns in poor countries; it is also possible that fundamental returns to investment are lower in poor countries. In this paper, a novel empirical framework uses standard data to conclude that 85% of wealth bias, whether caused by market failure or not, is domestic in origin. That is, poor country lenders are deterred from investing in poor countries to nearly the same degree that rich-country lenders are.

Michael A. Clemens
December 18, 2002

Initial Reactions to the Announcement on the MCA

In this analysis, Steve Radelet reviews the Millennium Challenge Account’s (MCA) foundational tenets of country selection, ownership and organization. He also identifies some concerns, particularly the proposal to include lower-middle income countries at a later date; the statistical difficulties with requiring countries to pass a survey-based corruption indicator; and the potential coordination problems that may arise with two separate U.S. foreign assistance agencies.

December 13, 2002

Qualifying for the Millennium Challenge Account

This paper examines the Bush administration's proposed methodology for how countries qualify for the funding from the Millennium Challenge Account in detail, exploring the judgments required and examining some alternative methods.

December 11, 2002

The Devil is in the Details: From the Millennium Challenge Account to the Millennium Challenge Corporation

The devil will be in the details in the establishment of the Millennium Challenge Corporation (MCC)--as it is with most organizational innovations. In this MCA Monitor Analysis Carol Lancaster identifies five major issues that must be addressed: the political process by which the MCC will be established; how the MCC will be funded; the criteria for eligibility; implementation of programs; and the management of the organization, including the role of the Board.

Carol J. Lancaster
December 1, 2002

Private Sector Involvement in Financial Crisis Resolution: Definition, Measurement, and Implementation - Working Paper 18

Public policy on financial crises in emerging markets has implicitly been grounded in economic theory calling for lender-of-last-resort intervention when the country is solvent, and on theory recognizing that reputational damage is the quasi-collateral enabling lending to sovereigns with no physical collateral. The call for Private Sector Involvement — PSI — in the financing of crisis resolution has appropriately arisen from the desire for fairness as well as for successful outcomes. This paper identifies an array of PSI modalities and argues that in each crisis case the most voluntary type consistent with the circumstances should be chosen, to speed return to market access.

October 30, 2002

Policy Selectivity Foregone: Debt and Donor Behavior in Africa - Working Paper 17

We assess the dynamic behind the high net resource transfers of donors and creditors, IDA, bilaterals, IBRD, IMF and other multilateral creditors to the countries of sub-Saharan Africa in the 1980s and 1990s. Analyzing a panel of 37 recipient countries over the years 1978-98, we find that net transfers were greater in poorer and smaller countries. The quality of countries' policy framework mattered little, however, in determining overall net transfers.

Ishac Diwan
October 28, 2002

Do as I Say Not as I Do: A Critique of G-7 Proposals on Reforming the MDBs - Working Paper 16

The paper addresses three key issues raised by the G-7 in its proposals to reform the multilateral banks, in 2001. One, the restructuring of IDA with a part of its lending in the form of grants rather than loans. Two, the harmonization of procedures, policies and overlapping mandates among MDBs. And three, the volume of support by MDBs for Global Public Goods (GPGs) and the rankings and priorities among them.

October 27, 2002

Tropics, Germs, and Crops: How Endowments Influence Economic Development - Working Paper 15

Does economic development depend on geographic endowments like temperate instead of tropical location, the ecological conditions shaping diseases, or an environment good for grains or certain cash crops? Or do these endowments of tropics, germs, and crops affect economic development only through institutions or policies? We test the endowment, institution, and policy views against each other using cross country evidence. We find evidence that tropics, germs, and crops affect development through institutions. We find no evidence that tropics, germs, and crops affect country incomes directly other than through institutions, nor do we find any effect of policies on development once we control for institutions.

Ross Levine
October 23, 2002

Low Investment is Not the Constraint on African Development - Working Paper 13

While many analysts decry the lack of sufficient investment in Africa, we find no evidence that private and public investment are productive, either in Africa as a whole (unless Botswana is included in the sample), or in the manufacturing sector in Tanzania. In this restricted sense, inadequate investment is not the major obstacle to African economic development.

Shantayanan Devarajan , William R. Easterly and Howard Pack
October 18, 2002

Asymmetric Globalization: Global Markets Require Good Global Politics - Working Paper 12

The paper sets out two views of the facts about the effects of globalization on world poverty and inequality. The bottom line: globalization is not the cause, but neither is it the solution to world poverty and inequality. The paper then explores why and how the global economy is stacked against the poor, making globalization asymmetric, at least up to now. It concludes with some ideas about a new agenda of good global politics, an agenda to shape a future global economy and society that is less poor and less unequal—not only because it is more global and competitive, but also because it is more fair and more politically representative.

October 15, 2002

Where to Put the Millennium Challenge Account?

The oldest saw in Washington is the saying "Where you stand depends on where you sit". But just because it’s old doesn’t mean it isn’t right. This paper presents the options for housing the Millennium Challenge Account. Whether it is fully or partially integrated into an existing organization or created as a new organization, where this account is lodged organizationally will shape what it does, regardless of what the president intends it to do.

Carol J. Lancaster
October 1, 2002

What did Structural Adjustment Adjust? The Association of Policies and Growth with Repeated IMF and World Bank Adjustment Loans - Working Paper 11

One feature of adjustment loans that has been often overlooked in their evaluation is their frequent repetition to the same country, with such extremes as the 30 IMF and World Bank adjustment loans to Argentina over 1980-99 or the 26 adjustment loans to Cote d'Ivoire and Ghana. Repetition changes the nature of the selection problem, with the possible implication that new loans had to be given because earlier loans were not effective. This study finds that while there were relative successes and failures, none of the top 20 recipients of adjustment lending over 1980-99 were able to achieve reasonable growth and contain all policy distortions. The findings of this paper are in line with the foreign aid literature that shows that aid does not discriminate between good and bad policies. There's a big difference between structural adjustment lending and structural adjustment policies.

September 12, 2002

On Eligibility Criteria for the Millennium Challenge Account

This paper defines two distinct and overarching objectives for the MCA and proposes 12 criteria for assessing recipient country eligibility. The authors recommend that the MCA be targeted to the poorest countries that are eligible for World Bank grants and concessional loans.

Ruth Levine , Sarah Lucas and Sonal Shah

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