Ideas to Action:

Independent research for global prosperity

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December 7, 2006

Madagascar: Field Report

As the first country to sign a compact with the Millennium Challenge Corporation, Madagascar has been the global guinea pig for the MCA approach. Its early experience offers important lessons for countries following in its path - both about the real challenges of program administration, and the real potential of the MCA as a source of transformation and innovation.

Sarah Lucas
December 6, 2006

How to Do xtabond2: An Introduction to "Difference" and "System" GMM in Stata - Working Paper 103

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 6, 2006

Freetown to Hollywood: The Kimberley Process Takes on Africa's 'Blood Diamonds'

Diamonds, long seen as symbols of love and prosperity, are now blamed for war and corruption in some of the poorest places on earth. But do all diamonds fuel conflict and strife? In this CGD Note program associate Kaysie Brown and senior fellow Todd Moss consider the strengths and limitations of industry efforts to break the deadly link between diamonds and conflict, most notably through the Kimberley Process, which certifies that a diamond has been obtained legitimately. They find that the Kimberley Process, which has helped turn conflict diamonds into development diamonds, is a good thing but it could be even better. They also offer consumers tips on how to buy conflict-free diamonds.

Kaysie Brown and Todd Moss
Cover of Delivering on Doha: Farm Trade and the Poor
December 5, 2006

Delivering on Doha: Farm Trade and the Poor

Agricultural market liberalization is the linchpin for a successful conclusion to the Doha Round of World Trade Organization (WTO) negotiations because these are the most protected markets remaining in most rich countries. But the implications for developing countries, especially the poorest, are more complex than the current debate suggests. In her new book, Delivering on Doha: Farm Trade and the Poor, Kimberly Ann Elliott, a joint senior fellow at CGD and the Peterson Institute for International Economics, examines the structure of agricultural support in rich countries and the challenges and opportunities for reviving and completing the Doha Round of trade negotiations.

December 4, 2006

Payments for Progress: A Hands-Off Approach to Foreign Aid - Working Paper 102

The aid business has long grappled with the trade-off between showing results and supporting a country's own institution-building. Donors want to be sure that their money makes a difference, and often quickly. But close monitoring raises costs and pushing for quick results leads to projects that bypass or even undermine domestic institutions that are crucial to development. In Payments for Progress: A Hands-Off Approach to Foreign Aid, Owen Barder, now director of Global Development Effectiveness at the United Kingdom Department for International Development, and CGD president Nancy Birdsall propose solving this problem by having donors pay for proven progress towards such agreed goals as additional children completing school and additional kilometers of roads built. How to achieve these goals would be left to the aid recipient government. They suggest this approach may be particularly useful in fragile states. Learn more

November 7, 2006

Adding the Natural Resources Indicators: An Opportunity to Strengthen the MCA Eligibility Process

This analysis from CGD's MCA Monitor describes two new indicators of governance and policy performance that determine a country’s eligibility for Millennium Challenge Account (MCA) finance: Natural Resources Management Index and Land Rights & Access. The authors analyze the process that led to their selection and assess the suitability of the indicators for the MCC's use.

November 6, 2006

China's Export-Import Bank and Africa: New Lending, New Challenges

China's bid for a leading role in Africa gained sudden visibility on the weekend with an unprecedented gathering of leaders from 48 African countries in Beijing. Chinese president Hu Jintao pledged to double aid and to offer $5 billion in loans by 2009. China's newly high-profile overtures towards Africa have raised eyebrows—and a fair bit of anxiety—among Africa’s traditional development partners. Will Chinese lending lead to a new African debt crisis? In a new CGD Note, senior fellow Todd Moss and research assistant Sarah Rose examine the growing clout of a little-known instrument of China's Africa policy, the Export-Import Bank of China, and offer some advice for the West. Learn more

October 30, 2006

Will Politics Encroach in the MCA FY2007 Selection Round? The Cases of Jordan and Indonesia

The MCC Board of Directors faces many important decisions in the upcoming FY07 selection round. Perhaps the most controversial will be decisions about whether to select Indonesia and Jordan to be eligible this year. The MCA Monitor predicts that it is likely that the Board will select both countries due to a desire to include more predominantly Muslim countries and reward political allies. In this note the authors explain why they do not believe either would be a good choice.

October 30, 2006

Round Four of the MCA: Which Countries are Most Likely to Be Selected for FY2007?

This note explores the countries most likely to be selected for FY07 eligibility for the Millennium Challenge Account. The authors also discuss key issues the Board will face this year, including deciding eligibility for the four countries with signed compacts that do not pass the indicator test. Most controversially, the authors think it is highly likely that the Board will select both Indonesia and Jordan, but they do not believe that either would be an appropriate choice.

October 26, 2006

Challenges and Opportunities for the New Executive Director of the Global Fund: Seven Essential Tasks

In its first four years, the Global Fund to Fight AIDS, Tuberculosis and Malaria has become one of the most important aid agencies in the world. As the Global Fund undergoes its first leadership transition, this CGD Working Group Report identifies seven tasks for the new Executive Director, starting from country operations, where ultimate results are achieved; through supporting arrangements (such as technical assistance, performance-based funding, procurement and supply chain strategies, and secretariat operations) and ending with the overarching issues of financing and Board relationships. The report offers specific recommendations for the new Executive Director and for the Board.

The Global Fund Working Group
October 13, 2006

Microfinance as Business - Working Paper 101(Revised November 2006)

Microfinance is a widely celebrated strategy for helping poor people in the developing world. Leading microfinance institutions, including the Nobel Peace Prize-winning Grameen Bank, reach millions of clients. CGD research fellow David Roodman and Uzma Qureshi analyze why some microfinance institutions succeed in covering costs, earning returns, attracting capital, and scaling up. They conclude that financial imperatives can explain much about how microfinance products are designed, for example, the common emphasis on group lending to women. Thus the business acumen of microfinance innovators is underappreciated. But more rigorous study is needed to understand when and where these design choices help clients.

David Roodman and Uzma Qureshi
October 6, 2006

Artificial States - Working Paper 100

The colonial legacy of artificial borders is often seen as an important cause of problems for developing countries. In this paper CGD non-resident fellow William Easterly and his co-authors quantify this effect. They find that countries with straight borders that divide ethnic groups--lines on maps--tend to be less successful economically and politically than countries with less arbitrary borders.Learn more

Alberto Alesina and Janina Matuszeski
October 1, 2006

US Development Aid and the Millennium Challenge Account: Emerging Trends in Appropriations

The Millennium Challenge Account (MCA) was intended to complement-not replace-existing aid structures. But there are concerns that increases in MCA funding are diverting funding away from USAID. In this study, the authors find that core development aid targeted specifically at poverty reduction and economic growth has remained stagnant for several years, but that this downturn may be part of a more general trend. They recommend that the Director of Foreign Assistance establish a centralized and comprehensive database to help spur more effective decision making and oversight by the U.S. government and key aid constituencies.

Kaysie Brown and Myra Sessions
September 29, 2006

U.S. Foreign Aid Reform: Will It Fix What Is Broken?

In U.S. Foreign Aid Reform: Will It Fix What Is Broken? CGD research fellow Stewart Patrick says the U.S. foreign aid regime is broken, and it is not clear that the Bush administration's reform plan will fix it. Patrick proposes a total overhaul of the 1961 Foreign Assistance Act and the creation of an independent, cabinet-level department for international development.Learn more

September 22, 2006

Fixing International Financial Institutions: How Africa Can Lead the Way

In this CGD Note, CGD vice president Dennis de Tray and senior fellow Todd Moss argue that international financial institutions should transform their boards of resident executive directors into non-resident, non-executive bodies. Doing so would force the governing bodies to focus on their core responsibilities, increase accountability and reduce costs of all kinds. They urge the African Development Bank to go first. Learn more

Dennis de Tray and Todd Moss
September 15, 2006

Beyond the IMF - Working Paper 99

Efforts to reform the IMF should be complemented by alternative approaches to doing what the Fund does, according to this new paper. The authors argue that competition would give developing countries more bargaining power and spur the IMF to improve. The paper focuses on the IMF's insurance role and argues for rapid restructuring and large cuts of the Fund's budget, with savings used to lower IMF interest rates.

Learn more

Devesh Kapur and Richard Webb
Cover of Let Their People Come: Breaking the Gridlock on Global Labor Mobility
September 12, 2006

Let Their People Come: Breaking the Gridlock on Global Labor Mobility

This controversial book argues that irresistible demographic forces for greater international labor mobility are being checked by immovable anti-immigration ideas of rich-country citizens. Pritchett proposes breaking the gridlock through policies that support development while also being politically acceptable in rich countries. These include greater use of temporary worker permits, permit rationing, reliance on bilateral rather than multilateral agreements, and protection of migrants' fundamental human rights.

September 7, 2006

Measuring Commitment to Health: Global Health Indicators Working Group Report

In response to a request from the Millennium Challenge Corporation, CGD convened the Global Health Indicators Working Group to examine potential measures of a government's commitment to health. The group's report recommends eight indicators for consideration by the MCC and other donors as they assess recipient countries' readiness to make effective use of foreign assistance. Learn more

Jessica Pickett and Ruth Levine

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