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Reality is not yet matching rhetoric in moving from “billions to trillions” to finance the SDGs—how can we accelerate sustainable development finance?
To meet the Sustainable Development Goals, the world must ramp up development financing from billions to trillions. We must think beyond aid, to private finance and unlocking developing countries’ own resources. How development financing is mobilized and allocated must also change. Shared problems like climate change and the threat of pandemics can only be addressed through international cooperation. In addition, the rise of China as a major bilateral development partner and the emergence of new development agencies raise the question of whether the existing multilateral financing system is fit for purpose.
Our research focuses on four questions: How can international finance produce sufficient funding for development? How should it be allocated to meet both ongoing needs and future challenges, such as climate change and pandemics? How can financing most effectively mobilize private capital, safeguard public monies, and keep debt levels sustainable? And how should existing institutions be changed to best assist?
I suggest in this paper the logic of going beyond the standard, poverty-targeted, elements of good social policy to a modern social contract adapted to the demands and the constraints of an open economy. Such a contract would be explicitly based on broad job-based growth. Second, it would be politically and economically directed not only at the currently poor but at the near-poor and economically insecure middle-income strata.
In this paper I set out the economic logic for why good global economic governance matters for reducing poverty and inequality and argue that a step towards better global governance would be better representation of developing countries in global and regional financial institutions.
The US government's proposed $5 billion Millennium Challenge Account (MCA) could provide upwards of $250-$300m or more per year per country in new development assistance to a small number of poor countries judged to have relatively "good" policies and institutions. Could this assistance be too much of a good thing and strain the absorptive capacity of recipient countries to use the funds effectively? Empirical evidence from the past 40 years of development assistance suggests that in most potential MCA countries, the sheer quantity of MCA money is unlikely to overwhelm the ability of recipients to use it well, if the funds are delivered effectively.
After a decade of economic reforms that dramatically altered the structure of economies in Latin America, making them more open and more competitive, and a decade of substantial increases in public spending on education, health and other social programs in virtually all countries, poverty and high inequality remain deeply entrenched. In this paper we ask the question whether some fundamentally different approach to what we call "social policy" in Latin America could make a difference — both in increasing growth and in directly reducing poverty. We propose a more explicitly "bootstraps"-style social policy, focused on enhancing productivity via better distribution of assets. We set out how this broader social policy could address the underlying causes and not just the symptoms of the region's unhappy combination of high poverty and inequality with low growth.
Sub-Saharan African states urgently need expanded and more dynamic private sectors, more efficient and effective infrastructure/utility provision, and increased investment from both domestic and foreign sources. The long-run and difficult solution is the creation and reinforcement of the institutions that underpin and guide proper market operations. In the interim, African governments and donors have little choice but to continue to experiment with the use of externally supplied substitutes for gaps in local regulatory and legal systems.
The Burnside and Dollar (2000) finding that aid raises growth in a good policy environment has had an important influence on policy and academic debates. We conduct a data gathering exercise that updates their data from 1970-93 to 1970-97, as well as filling in missing data for the original period 1970-93. We find that the BD finding is not robust to the use of this additional data. (JEL F350, O230, O400)
National economic policies' effects on growth were over-emphasized in the early literature on endogenous economic growth. Most of the early theoretical models of the new growth literature (and even their new neoclassical counterparts) predicted large policy effects, which was followed by empirical work showing large effects. A re-appraisal finds that the alleged association between growth and policies does not explain many stylized facts of the postwar era, depends on the extreme policy observations, that the association is not robust to different estimation methods (pooled vs. fixed effects vs. cross-section), does not show up as expected in event studies of trade openings and inflation stabilizations, and is driven out by institutional variables in levels regressions.
This paper applies a new approach to the estimation of the impact of policy, both the levels and the changes, on wage differentials using a new high-quality data set on wage differentials by schooling level for 18 Latin American countries for the period 1977–1998. The results indicate that liberalizing policy changes overall have had a short-run disequalizing effect of expanding wage differentials, although this effect tends to fade away over time.