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Foreign Assistance Agency Brief: United States Agency for International Development

3/22/17

The US Agency for International Development (USAID) is the lead US development agency, managing roughly $20 billion in annual appropriations. The agency operates in over 120 countries, including the world’s poorest and most fragile. Its work spans a wide range of sectors, supporting humanitarian relief, economic growth, health, education, and more. USAID’s broad remit reflects the agency’s mission: “We partner to end extreme poverty and promote resilient, democratic societies while advancing our security and prosperity."

Meeting Sub-Saharan Africa’s Frontier Market Financing Needs: More Is Better from the IMF

3/9/17

An energizing development for IMF staff working on sub-Saharan Africa (SSA) over the past decade was the region's clear growth uptick and progress in reducing poverty relative to earlier periods. A number of African countries graduated to lower middle-income country (MIC) status and became "frontier economies." This was the essence of the “Africa Rising” story. But since my time at the Fund, I have pondered whether the IMF has fully adjusted to the evolving financing needs of these countries. I think it’s fair to conclude that this adjustment is a work in progress and that SSA frontier countries can themselves do more to accelerate it.

Expanding Global Liquidity Insurance through Precautionary Lending: What the IMF Can Do

3/8/17

In the wake of the global financial crisis, the IMF undertook a series of reforms to its lending facilities to manage volatility and help prevent future crises. The reforms included the adoption of two new lending instruments: the Flexible Credit Line (FCL), introduced in 2009, and the Precautionary and Liquidity Line (PLL), introduced in 2011. They are meant to serve as precautionary measures—effectively, as insurance—for member states with a proven track economic record. Yet, the IMF’s precautionary instruments remain underutilized.

Expanding Global Liquidity Insurance: Myths and Realities of the IMF’s Precautionary Credit Lines - Working Paper 449

2/28/17

This paper addresses four misconceptions (or ‘myths’) that have likely played a role in the limited utilization of the IMF’s two precautionary credit lines, the Flexible Credit Line (FCL) and the Precautionary and Liquidity Line (PLL). These myths are 1) too stringent qualification criteria that limit country eligibility; 2) insufficient IMF resources; 3) high costs of precautionary borrowing; and 4) the economic stigma associated with IMF assistance. We show, in fact, that the pool of eligible member states is likely to be seven to eight times larger than the number of current users; that with the 2016 quota reform IMF resources are more than adequate to support a larger precautionary portfolio; that the two IMF credit lines are among the least costly and most advantageous instruments for liquidity support countries have; and that there is no evidence of negative market developments for countries now participating in the precautionary lines.

Making Global Trade More Gender-Inclusive

2/6/17

The benefits of global trade are numerous and well-documented, but trade channels can still be made more inclusive for women entrepreneurs and wage workers. Incorporating pre-ratification conditions into the trade agreement negotiation process to remove legal barriers against women’s equal participation in the economy (and therefore equal advantages from trade), as well as instituting follow-up enforcement mechanisms, can help to ensure trade benefits women and men more equally going forward.

Trade Misinvoicing in Developing Countries

2/3/17

This paper discusses selected issues in the analysis of trade misinvoicing. It starts by examining various motives for the misdeclaration of trade activities. It is argued that the broad range of incentives to fake customs declarations provides an important challenge for the empirical assessment of the extent of trade misinvoicing. After analyzing the costs and benefits of different empirical approaches to quantifying trade misinvoicing, the accuracy and reliability of estimation results reported in the literature are reviewed. It is shown that quantitative findings are heavily dependent on the underlying assumptions in the empirical analysis, making estimation results on trade misinvoicing practices largely a matter a faith.

Latin American Currency, Photo Credit: Alex Prolmos

Latin America in a New Global Political and Economic Scenario: What Does It Mean for the Region?

1/30/17

Since mid-2016, a new wave of political developments in advanced countries has been shaking Latin America. This latest assessment of the Latin American Committee on Financial Issues (CLAAF) examines how the anti-globalist movement sweeping the West will affect macroeconomic trends in Latin America.

Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries - Working Paper 448

1/30/17

Current policy discussion focuses primarily on the power of fiscal policy to reduce inequality. Yet, comparable fiscal incidence analysis for 28 low and middle income countries reveals that, although fiscal systems are always equalizing, that is not always true for poverty. To varying degrees, in all countries a portion of the poor are net payers into the fiscal system and are thus impoverished by the fiscal system. Consumption taxes are the main culprits of fiscally-induced impoverishment.

Temporary Work Visas as US-Haiti Development Cooperation: A Preliminary Impact Evaluation

1/23/17

We report a small-sample, preliminary evaluation of the economic impact of temporary overseas work by Haitian agricultural workers. We find that the effects of matching new seasonal agricultural jobs in the US with Haitian workers differs markedly from the effects of more traditional forms of assistance to Haiti, in three ways: The economic benefits are shared roughly equally between Haiti and the United States; these benefits are very large, including raising the value of Haitian workers’ labor by a multiple of fifteen; and the portion of the benefits accruing to Haiti is uncommonly well-targeted for the direct benefit of poor Haitian households.

Shared Harvest: Temporary Work Visas as US-Haiti Development Cooperation

1/23/17

We estimate the economic effects of short-term work by a small sample of farmers from Haiti in the United States, where no US workers are available. We then compare these to the effects of more traditional assistance. We find that these work opportunities benefit Haitian families much more directly, and to a dramatically greater extent, than more traditional forms of assistance—raising workers’ current earnings on average by multiple of 15.

Expanding Women’s Role in Developing Technology: Increasing Productivity, Improving Lives

1/19/17

Just as the evidence suggests that a more gender-inclusive political system may lead to better policies for women and girls and integrating women into corporate boards may mean reaching new consumers, there is a case to be made for increasing women’s presence in developing technology and innovation. Incorporating more women into technology sectors is likely to 1) increase productivity, 2) offers women a source of high-quality jobs, and 3) may have knock-on benefits for female consumers of technology, whose needs are more likely to be taken into account.

The Dangers of Deal Making for Development

1/17/17

Private sector development has long been viewed as essential for economic growth in developing countries, and the US role in promoting it has focused mostly on how developing country governments could best set a policy environment that made it possible. But let’s consider the risks of concentrating too heavily on the private sector. What could go wrong with an agenda that is centered on “deal making for development”?

Implementing Ownership at USAID and MCC: A US Agency-Level Perspective (Brief)

1/12/17

This brief considers how the United States Agency for International Development (USAID) and the Millennium Challenge Corporation (MCC) conceptualize ownership and apply the concept in practice. We focus on three pillars: ownership of priorities (the willingness and ability of donors to align their efforts with country priorities); ownership of implementation (the degree to which donors involve local partners in the design, implementation, monitoring, and evaluation of programs); and ownership of resources (the degree to which a partner country contributes its own finances to the objectives receiving donor support).

Beyond Brexit: Four Steps to Make Britain a Global Leader on Trade for Development

1/12/17

This paper looks at how the UK can, after Brexit, develop a world-leading trade for development policy. It uses a systematic assessment of how rich country trade policies affect developing countries to identify the leading approaches used elsewhere. It then identifies and describes four key steps: i) eliminating or lowering tariffs; ii) improving preferential access for the very poorest countries; iii) cutting red tape at the border; and iv) enhancing the effectiveness of its aid for trade. These steps would enable the UK to improve substantially on the approach taken by the EU and other countries, benefit UK consumers and businesses, and set a new standard in trade policy for development.

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