Commodity Dependence, Trade, and Growth: When "Openness" is Not Enough - Working Paper 7

Amar Hamoudi

In this paper we argue that neither the level nor the change in a country's trade/GDP ratio can be taken as an indication of the "openness" of a country's trade policy. In particular, we examine the ways in which terms of trade shifts have affected trade/GDP ratio over the past two decades, and find that the empirical evidence offered by the existing literature overstates the importance of trade policy in economic growth.

Winners and Losers: Assessing the Distributional Impacts of Privatization - Working Paper 6

John Nellis

While most technical assessments classify privatization as a success, it remains widely and increasingly unpopular, largely because of the perception that it is fundamentally unfair, both in conception and execution. We review the increasing (but still uneven) literature and conclude that most privatization programs appear to have worsened the distribution of assets and income, at least in the short run. This is more evident in transition economies than in Latin America, and less clear for utilities such as electricity and telecommunications, where the poor have tended to benefit from much greater access, than for banks, oil companies, and other natural resource producers.

Guiding Principles for Design and Implementation of the MCA

Sarah Lucas and Sonal Shah

This paper defines seven principles to guide the design and implementation of the Millennium Challenge Account" (MCA), a new compact for development announced by President Bush in March. It assumes that MCA resources will be targeted to low-income countries that have limited, if any, access to private capital markets for sovereign debt, and for whom borrowing from the World Bank and other multilaterals is limited; and that the MCA will be an additional program to those already financed and administered by the U.S. government, which have related but not identical objectives, and affect a set of countries that is not necessarily the same.

How Does The Proposed Level of Foreign Economic Aid Under the Bush Budget Compare with Historical Levels? And What Would Be The Effects of Bush's New "Millennium Challenge Account"?


This paper examines trends in U.S. non-military global aid and how the administration’s proposed budget for fiscal year 2003 would affect those trends. The analysis addresses how the overall level of proposed aid compares with past levels and examines three standards for measuring aid over time: aid as a percentage of total government outlays, aid as a percentage of the economy, and aid in inflation adjusted terms.

Intellectual Property and the Availability of Pharmaceuticals in Poor Countries - Working Paper 5

Jean Olson Lanjouw

This paper examines arguments in favor and against the of patent rights on pharmaceuticals in the developing world as required by World Trade Organization membership. It emphasizes that these new pharmaceutical patents promise benefits and costs that differ with the characteristics of diseases. It also considers standard intellectual property and regulatory mechanisms that could be used to differentiate protection, and concludes that all have serious drawbacks. It then describes a new mechanism that would make differentiating protection a more feasible policy option.

Delivering on Debt Relief

Brian Deese

Over the last several years, the United States and other major donor countries have supported a historic initiative to write down the official debts of a group of heavily indebted poor countries, or HIPCs. Donor countries had two primary goals in supporting debt relief: to reduce countries' debt burdens to levels that would allow them to achieve sustainable growth; and to promote a new way of assisting poor countries focused on home-grown poverty alleviation and human development. While the current "enhanced HIPC" program of debt relief is more ambitious than any previous initiative, it will fall short of meeting these goals. We propose expanding the HIPC program to include all low-income countries and increasing the resources dedicated to debt relief. Because debt relief will still only be a first step, we also recommend reforms of the current "aid architecture" that will make debt more predictably sustainable, make aid more efficient, and help recipient countries graduate from aid dependence.

The Cartel of Good Intentions: Markets vs. Bureaucracy in Foreign Aid - Working Paper 4


The tragedy of foreign aid is not that it didn't work; it was never really tried. A group of well-meaning national and international bureaucracies dispensed foreign aid under conditions in which bureaucracy does not work well. The hostile environment under which such aid agencies functioned induced them to organize a cartel that increased inefficiency and reduced effective supply of development services, frustrating the good intentions and dedication of development professionals. The cartel of good intentions allows rich country politicians to feel that they are doing all in their power to help the world's poor, supports rich nations' foreign policy goals, preserves a panoply of large national and international institutions, and provides resources to poor country politicians with which to buy political support; in short, foreign aid works for everyone except for those whom it was intended to help.

External Advisors and Privatization in Transition Economies - Working Paper 3

John Nellis

This paper analyzes privatization and enterprise reform of three major countries in the transition region; Poland, Czechoslovakia (subsequently the Czech Republic), and the Soviet Union (subsequently Russia). For each, it discusses the prevailing ideologies of advisors prior to and during the transition process, the initial conditions faced by reformers and advisors, the policy frameworks that evolved, the results achieved, the mistakes made, and the opportunities missed.

Inequality Does Cause Underdevelopment - Working Paper 1


This paper argues that the conflicting results in the voluminous recent literature on inequality and growth are missing the big picture on inequality and long-run economic development. While finding some evidence consistent with other development fundamentals, the paper finds high inequality to independently be a large and statistically significant barrier to developing the mechanisms by which prosperity is achieved.

Washington Contentious: Economic Policies for Social Equity in Latin America

Nancy Birdsall , Augusto de la Torre and Rachel Menezes

At the end of the 1990s the future of Latin America seemed grim in the face of four devastating problems—slow and unsteady economic growth, persistent poverty, social injustice, and personal insecurity. For 10 years Latin America had pursued—with considerable vigor—the 10 economic policies that make up the Washington Consensus, the growth formula promoted by the U.S. Treasury and the international financial institutions. But performance fell far short of expectations, and a new approach was needed.