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Efficient, resilient, and accountable governance systems are essential to successfully manage natural resources, provide public services, foster trade, attract private investment, and manage aid relationships. Corruption and secrecy are often at odds with such goals. Illicit financial flows, for example, undermine development and governance while secrecy in extractive industries can squander a nation’s wealth and weaken the social contract.
CGD’s work in this area focuses on contact transparency, tax evasion and avoidance, efforts to combat money laundering and terrorism financing, and the negative effects they can have on remittance flows and international security.
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CGD vice president and senior fellow Todd Moss and reasearch assistant Lauren Young propose direct cash distribution of Ghana's oil profits to help the country avoid the natural resource curse. One positive effect of the plan would be to strenghten democratic pressure on the government to be good stewards of the resource.
International aid works, but it could work much better. Reform efforts focused on better planning often ignore what constrains aid agencies and takes the bite out of their commitments. In this working paper, Owen Barder shows how forming a "collaborative market" around aid—one marked by transparency and collective regulation—would pave the way for more effective aid.
Zimbabwe is not only a problem for all of Africa, it’s a vexing dilemma for U.S policymakers. Some facts:
Morgan Tsvangirai won the March 2008 elections and should rightfully be president
Robert Mugabe and Tsvangirai are now partners in a shaky unity government forced on them (but not really enforced) by their neighbors
Mugabe’s men, responsible for the vicious campaign of violence and for destroying the economy, are still in positions of power
The deeply flawed unity government has, despite itself, made some real progress and for now is the only game in town
Thanks to Chairman Feingold for asking me to offer suggestions. Here is my full (3-pages only!) testimony. My recommendations at this time are to: 1) Keep targeted sanctions on. 2) Push the region, especially South Africa, to live up to their responsibilities. 3) Find creative ways to help restart critical public services while guarding against any money leaking into the hands of Mugabe’s agents.
Designate Zimbabwe a “focus country” for PEPFAR and PMI
Include Zimbabwe in the White House food security initiative…whatever that really turns out to be. (Zim has 3 million food insecure people this year.)
Push OPIC and ExIm to re-open facilities for private capital (e.g. a Zimbabwe Enterprise Fund, like OPIC has in Liberia)
Make a modest contribution to the World Bank’s special Zimbabwe trust fund and encourage the bank to be forward-leaning
Any other good ideas out there?
One interesting outcome already from today’s hearing: The South African parliament has never had a debate on Zimbabwe policy. While this seems both stunning and outrageous, today’s U.S. Senate hearing may actually help to change that. A prominent member of parliament (and the Democratic Alliance’s representative on the SADC parliamentary forum) issued this statement noting today’s event and calling for a debate on the floor. If it happens, kudos to Senator Feingold for not just moving U.S. policy along, but also encouraging the South Africans to reassess their stance.
In all the excitement last week around the impending announcement of the MCC CEO nominee, I forgot to post this blog giving a round of applause to the organization on its transparency A-game. Readers may recall the challenge we posed to the MCC back in May when, after commending them on publishing their project ERR data, urged them to "hit a home run" by also publishing their beneficiary analyses. Well, they did it, once again opening themselves up for kudos and criticism. But, most importantly, taking the risk we need all of our aid agencies to take -- sharing its successes and its failures in order to share overall lessons on what works.
While I'm at it, may I also just say "wow!" (I know hard for some of you to believe I can be that succint) on the public summary of the last Board of Director's meeting. The amount of detail on the discussion items is unprecedented -- check it out in comparison to that of the World Bank. Let's hope the summary of the next Board meeting -- FY10 country selection -- matches this last one in terms of detail.
In congressional testimony, CGD senior fellow Vijaya Ramachandran urged members of the House Financial Services Committee to look beyond a proposed new disclosure policy for the World Bank and instead consider why the bank is so often reluctant to release detailed information about its work. The core problem, she said, is dependence on a single outmoded and often ineffectual product—loans to individual countries.
“As long as the goal is to send as much money out the door as possible, there will be strong disincentives along the entire chain of command—from staff on the ground to management in Washington—to say that things are going wrong or to stop a project before it is completed,” Ramachandran said in congressional testimony last week.
Ramachandran, who previously worked for the World Bank and in the Executive Office of the Secretary General of the United Nations, is an expert in infrastructure and the obstacles to private sector development in Africa. She proposed two fundamental solutions to improve transparency beyond the increased document disclosure stipulated in the bank’s proposed policy:
Independent evaluation of bank-funded projects, to improve outcome effectiveness
Increased product innovation, to move the bank away from lending
Ramachandran urged Congress to base future capital increases to the World Bank and other multilateral development banks (MDBs) on their progress in these two areas.
“The lack of impact evaluation has not only hurt poor people but has also undermined the bank’s own credibility with its member country governments,” Ramachandran said during the hearing. “Evaluation by a third party of development projects, with a focus on the beneficiaries, is of much greater use to both the bank and its member countries than any effort to increase the ex post flow of information on financial inputs.”
The House Financial Services Committee oversees matters relating to international economic policy and development, including the policies and programs of financial institutions such as the World Bank and the International Monetary Fund (IMF). The committee, under Chairman Barney Frank (D-MA), has spearheaded various reform efforts aimed at increasing openness at the IMF and the World Bank.
In his opening statement, Frank expressed concern about the threat of corruption and asserted that he would attempt to block future funding to the bank unless it improves its transparency and accountability practices. Gary Miller (R-CA), ranking member of the Financial Services Subcommittee on International Monetary Policy and Trade, said that implementation of a disclosure policy will be the greatest challenge for the bank.
Ramachandran argued that internal reluctance to disclose information about poorly performing loans and projects contributes to the bank’s lack of transparency. As one part of the solution, the bank must diversify its product mix, offering more innovative financial services and reducing reliance on loans to individual countries.
Diversifying products “will provide staff members with a wider range of productive activities and will also scale up the number of alternative financial products that could respond to the changing realities—and risks and vulnerabilities—of an integrated global economy,” she said.
Ramachandran’s testimony hit on many of the same themes as a speech that same day by CGD president Nancy Birdsall, who argued that history, habits, and bureaucratic pressures have led the bank and other MDBs to emphasize disbursement above all else, sometimes at the expense of effective development outcomes.
Other witnesses on the panel—Joseph Stiglitz, Richard Bissell, Alnoor Ebrahim, and Thomas Blanton—proposed additional reforms to increase openness in the MDBs.
Stiglitz, former chief economist at the World Bank and a professor at Columbia University, pushed for governance changes within the bank and other MDBs, including more democratic accountability, increased transparency, and strengthened procedural safeguards.
Bissell, who testified on behalf of the Bank Information Center, Oxfam America, the World Wildlife Fund, and other organizations, directed his reservations about the proposed disclosure policy toward the bank’s leadership.
Following a question and answer period, Chairman Frank reasserted his commitment to reform efforts and encouraged witnesses to submit additional written suggestions.
Abstract: In order to contest elections in Pakistan in 2002, all candidates for Member of National Assembly had to file proof of graduating with a Bachelors degree or higher with their candidacy papers. This policy experiment had the effect of disqualifying 60 of the 207 MNAs elected in the 1997 election, 29% of the National Assembly incumbents. Even more drastically, it restricted 97 percent of the country from running for Parliament, leaving only 3 percent of the voting population who were college graduates as eligible to contest national elections. I use this policy experiment to measure the effect of legislator education on a number of development fund outcomes, controlling for year and constituency fixed effects. I find that there is no overall effect of legislator education on total development spending. Not only is the overall effect of education on policy insignificant, there is no composite effect of education and political competition on development spending in areas where the incumbent was disqualified and there was a smaller pool of substitute candidates. Educated politicians also do not appear to be spending significantly differently on education versus non-education projects.