Ideas to Action:

Independent research for global prosperity




December 28, 2011

Forest Clearing in the Pantropics: December 2005–August 2011 - Working Paper 283

This report summarizes recent trends in large-scale tropical forest clearing identified by FORMA (Forest Monitoring for Action). FORMA produces indicators that track monthly changes in the number of 1-sq.-km. tropical forest parcels that have experienced clearing with high probability. This report and the accompanying spreadsheet databases provide monthly estimates for 27 countries, 280 primary administrative units, and 2,907 secondary administrative units.

David Wheeler , Robin Kraft and Dan Hammer
December 20, 2011

Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal - Working Paper 281

To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues accruing directly to the government—is more likely to be scrutinized by citizens and hence subject to greater efficiency.

Shantayanan Devarajan , Hélène Ehrhart , Tuan Minh Le and Gaël Raballand
December 19, 2011

Economic Dynamics and Forest Clearing: A Spatial Econometric Analysis for Indonesia - Working Paper 280

David Wheeler and co-authors use detailed monthly data from FORMA (Forest Monitoring for Action) to determine the factors that contribute to deforestation in Indonesia. Their results highlight the importance of incorporating economic dynamics into financial compensation arrangements for forest conservation while casting doubt on the efficacy of tradition protection arrangements.

David Wheeler , Dan Hammer , Robin Kraft and Susmita Dasgupta
December 10, 2011

A China Round of Multilateral Trade Negotiations - Working Paper 277

Until recently, the World Trade Organization (WTO) has been an effective framework for cooperation because it has continually adapted to changing economic realities. The current Doha Agenda is an aberration because it does not reflect one of the biggest shifts in the international economic and trading system: the rise of China.

Aaditya Mattoo and Arvind Subramanian
December 8, 2011

Overselling Broadband: A Critique of the Recommendation of the Broadband Commission for Digital Development

The Broadband Commission for Digital Development is an ITU (UN International Telecommunications Union) and UNESCO–backed body set up to advocate for greater broadband access worldwide. The commission’s Declaration of Broadband Inclusion for All and other reports call for governments to support ubiquitous fixed broadband access as a vital tool for economic growth and to reach the Millennium Development Goals. Examining the evidence, however, shows that the benefits of broadband are being oversold. Several points stand out: (i) the evidence for a large positive economic impact of broadband is limited; (ii) the impact of broadband rollout on achieving the MDGs would be marginal;(iii) there is little evidence ubiquitous broadband is needed for ‘national competitiveness’ or to benefit from opportunities like business process outsourcing; (iv) the costs of fixed universal broadband rollout dwarf available resources in developing countries; (and so) (v) the case for government subsidy of fixed broadband rollout is very weak. There are, however, some worthwhile policy reforms that could speed broadband rollout without demanding significant government expenditure.

December 7, 2011

Quid Pro Quo: Builders, Politicians, and Election Finance in India - Working Paper 276 updated

In developing countries where elections are costly and accountability mechanisms weak, politicians often turn to illicit means of financing campaigns. This paper examines one such channel of illicit campaign finance: India’s real estate sector. Politicians and builders allegedly engage in a quid proquo, whereby the former park their illicit assets with the latter, and the latter rely on the former for favorable dispensation. At election time, however, builders need to re-route funds to politicians as a form of indirect election finance. One observable implication is that the demand for cement, the indispensible raw material used in the sector, should contract during elections since builders need to inject funds into campaigns. Using a novel monthly-level data set, we demonstrate that cement consumption does exhibit a political business cycle consistent with our hypothesis. Additional tests provide confidence in the robustness and interpretation of our findings.

December 1, 2011

Cash On Delivery Aid for Health: What Indicators Would Work Best? - Working Paper 275

This paper assesses the challenges of applying COD Aid in the health sector. After clarifying how COD Aid differs from results-based financing approaches, the paper presents four key characteristics for designing a successful agreement. It discusses features of the health sector and foreign aid flows to health that need to be considered when designing a successful COD Aid agreement for this sector.

William Savedoff and Katie Douglas Martel
December 1, 2011

Economic Shocks and Conflict: The (Absence of?) Evidence from Commodity Prices - Working Paper 274

One of the most influential ideas in the study of political instability is that income shocks provoke conflict. “State prize” theories argue that higher revenues increase incentives to capture the state.“Opportunity cost” theories argue that higher prices decrease individual incen-tives to revolt. Both mechanisms are central to leading models of state development and collapse. But are they wellfounded? We examine the effects of exogenous commodity price shocks on conflict and coups, and find little evidence in favor of either theory. Evidence runs especially against the state as prize. We do find weak evidence that the intensity of fighting falls as prices rise—results more consistent with the idea that revenues augment state capacity, not prize-seeking or opportunity cost. Nevertheless,the evidence for any of these income-conflict mecha-nisms is weak at best. We argue that errors and publication bias have likely distorted the theoret-ical and empirical literature on political instability.

Samuel Bazzi and Chris Blattman