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  • Author: Gabriel Demombynes, Justin Sandefur
  • Publication Date: 10-2014
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: The lack of reliable development statistics for many poor countries has led the U.N. to call for a “data revolution” (United Nations, 2013). One fairly narrow but widespread interpretation of this revolution is for international aid donors to fund a coordinated wave of household surveys across the developing world, tracking progress on a new round of post-2015 Sustainable Development Goals. We use data from the International Household Survey Network (IHSN) to show (i) the supply of household surveys has accelerated dramatically over the past 30 years and that (ii) demand for survey data appears to be higher in democracies and more aid-dependent countries. We also show that given existing international survey programs, the cost to international aid donors of filling remaining survey gaps is manageable--on the order of $300 million per year. We argue that any aid-financed expansion of household surveys should be complemented with (a) increased access to data through open data protocols, and (b) simultaneous support for the broader statistical system, including routine administrative data systems.
  • Topic: Development, Human Welfare, Infrastructure
  • Political Geography: Asia, United Nations
  • Author: Lant Pritchett, Yamini Aiyar
  • Publication Date: 12-2014
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: We combine newly created data on per student government expenditure on children in government elementary schools across India, data on per student expenditure by households on students attending private elementary schools, and the ASER measure of learning achievement of students in rural areas. The combination of these three sources allows us to compare both the “accounting cost” difference of public and private schools and also the “economic cost”—what it would take public schools, at their existing efficacy in producing learning, to achieve the learning results of the private sector. We estimate that the “accounting cost” per student in a government school in the median state in 2011/12 was Rs. 14,615 while the median child in private school cost Rs. 5,961. Hence in the typical Indian state, educating a student in government school costs more than twice as much than in private school, a gap of Rs. 7,906. Just these accounting cost gaps aggregated state by state suggests an annual excess of public over private cost of children enrolled in government schools of Rs. 50,000 crores (one crore=10 million) or .6 percent of GDP. But even that staggering estimate does not account for the observed learning differentials between public and private. We produce a measure of inefficiency that combines both the excess accounting cost and a money metric estimate of the cost of the inefficacy of lower learning achievement. This measure is the cost at which government schools would be predicted to reach the learning levels of the private sector. Combining the calculations of accounting cost differentials plus the cost of reaching the higher levels of learning observed in the private sector state by state (as both accounting cost differences and learning differences vary widely across states) implies that the excess cost of achieving the existing private learning levels at public sector costs is Rs. 232,000 crores (2.78% of GDP, or nearly US$50 billion). It might seem counterintuitive that the total loss to inefficiency is larger than the actual budget, but that is because the actual budget produces such low levels of learning at such high cost that when the loss from both higher expenditures and lower outputs are measured it exceeds expenditures.
  • Topic: Economics, Education, Privatization, Reform
  • Political Geography: India, Asia
  • Author: Liliana Rojas-Suarez, Carlos Montoro
  • Publication Date: 02-2012
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: The financial systems in emerging market economies during the 2008–09 global financial crisis performed much better than in previous crisis episodes, albeit with significant differences across regions. For example, real credit growth in Asia and Latin America was less affected than in Central and Eastern Europe. This paper identifies the factors at both the country and the bank levels that contributed to the behavior of real credit growth in Latin America during the global financial crisis. The resilience of real credit during the crisis was highly related to policies, measures and reforms implemented in the pre-crisis period. In particular, we find that the best explanatory variables were those that gauged the economy's capacity to withstand an external financial shock. Key were balance sheet measures such as the economy's overall currency mismatches and external debt ratios (measuring either total debt or short-term debt). The quality of pre-crisis credit growth mattered as much as its rate of expansion. Credit expansions that preserved healthy balance sheet measures (the “quality” dimension) proved to be more sustainable. Variables signalling the capacity to set countercyclical monetary and fiscal policies during the crisis were also important determinants. Moreover, financial soundness characteristics of Latin American banks, such as capitalization, liquidity and bank efficiency, also played a role in explaining the dynamics of real credit during the crisis. We also found that foreign banks and banks which had expanded credit growth more before the crisis were also those that cut credit most. The methodology used in this paper includes the construction of indicators of resilience of real credit growth to adverse external shocks in a large number of emerging markets, not just in Latin America. As additional data become available, these indicators could be part of a set of analytical tools to assess how emerging market economies are preparing themselves to cope with the adverse effects of global financial turbulence on real credit growth.
  • Topic: Debt, Economics, Emerging Markets, Globalization, Financial Crisis
  • Political Geography: Europe, Asia, Latin America
  • Author: Nigel Purvis, Abigail Jones
  • Publication Date: 04-2012
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Worldwide, about 1.3 billion people lack access to electricity (one in five people), while unreliable electricity networks serve another 1 billion people. Roughly 2.7 billion—about 40 percent of the global population—lack access to clean cooking fuels. Instead, dirty, sometimes scarce and expensive fuels such as kerosene, candles, wood, animal waste, and crop residues power the lives of the energy poor, who pay disproportionately high costs and receive very poor quality in return. More than 95 percent of the energy poor are either in sub-Saharan Africa or developing Asia, while 84 percent are in rural areas—the same regions that are the most vulnerable to the adverse effects of climate change.
  • Topic: Climate Change, Development, Economics, Energy Policy, Environment, Poverty
  • Political Geography: Africa, United States, Asia
  • Author: Victoria Fan, Anup Karan, Ajay Mahal
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: In 2007, the state of Andhra Pradesh in southern India began rolling out the Aarogyasri health insurance to reduce catastrophic health expenditures in households “below the poverty line.” We exploit variation in program roll-out over time and districts to evaluate the impacts of the scheme using difference-in-differences. Our results suggest that, within the first year of implementation, Phase I of Aarogyasri significantly reduced out-of-pocket inpatient expenditures and, to a lesser extent, outpatient expenditures. These results are robust to checks using quantile regression and matching methods. No clear effects on catastrophic health expenditures or medical impoverishment are seen. Aarogyasri is not benefiting scheduled caste and scheduled tribe households as much as the rest of the population.
  • Topic: Health, Poverty, Health Care Policy
  • Political Geography: India, Asia, Andhra Pradesh
  • Author: Vijaya Ramachandran, Peter Timmer, Steven Block, Jenny C. Aker
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Rice production in Africa has tended to be low-yielding, geographically dispersed, and uncompetitive against low-cost Asian imports, even when protected by high freight costs and substantial trade barriers. Skyrocketing prices in world markets in 2007—08 were a shock to African consumers, producers, and governments alike. When international rice prices were relatively low, rice imports did not pose economic or political problems for West African governments. Extremely expensive imports reverse that equation. This paper addresses the response to that reversal first by presenting a historical review of trends in the West African rice sector and, second, by assessing the effect of world rice prices on domestic prices, primarily at the consumer level.
  • Topic: Humanitarian Aid, Food
  • Political Geography: Africa, Asia
  • Author: Tessa Bold, Mwangi Kimenyi, Germano Mwabu, Justin Sandefur
  • Publication Date: 12-2011
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Existing studies from the United States, Latin America, and Asia provide scant evidence that private schools dramatically improve academic performance relative to public schools. Using data from Kenya—a poor country with weak public institutions—we find a large effect of private schooling on test scores, equivalent to one full standard deviation. This finding is robust to endogenous sorting of more able pupils into private schools. The magnitude of the effect dwarfs the impact of any rigorously tested intervention to raise performance within public schools. Furthermore, nearly two thirds of private schools operate at lower cost than the median government school.
  • Topic: Development, Education, Government, Poverty
  • Political Geography: Kenya, United States, Asia, Latin America
  • Author: Arvind Subramanian, Aaditya Mattoo
  • Publication Date: 12-2011
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: 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. Even though China will have a stake in maintaining trade openness, an initiative that builds on but redefines the Doha Agenda would anchor China more fully in the multilateral trading system. Such an initiative would have two pillars. First, a new negotiating agenda that would include the major issues of interest to China and its trading partners, and thus unleash the powerful reciprocal liberalization mechanism that has driven the WTO process to previous successes. Second, new restraints on bilateralism and regionalism that would help preserve incentives for maintaining the current broad non-discriminatory trading order.
  • Topic: Economics, Industrial Policy, International Trade and Finance
  • Political Geography: China, Israel, Asia
  • Author: Paul Romer
  • Publication Date: 03-2010
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Non-resident fellow Paul Romer argues that the principal constraint to raising living standards in this century will come neither from scarce resources nor limited technologies. Rather it will come from our limited capacity to discover and implement new rules—new ideas about how to structure interactions among people, such as land titles, patents, and social norms. The central task of reducing global poverty is to find ways for developing countries to adopt new rules that are known to work better than the ones they have. Economists who advise leaders on policy have often overlooked why some good rules get adopted and others do not. But a better understanding of rules-that-change-rules could lead to breakthrough thinking about development policy. The special rules of China's Special Economic Zones, where new cities like Shenzhen could grow up, created small laboratories through which rules from Hong Kong spread to the mainland, helping unleash the largest and fastest reduction of poverty on record. Romer concludes that a new type of development policy would be to voluntarily charter new cities for the purpose of changing rules, using a range of new legal and political structures analogous to the ones that made Hong Kong and Shenzhen possible. The essay is adapted from a talk presented in Mexico City on October 2009, at the conference, “Challenges and Strategies for Promoting Economic Growth,” organized by Banco de México.
  • Topic: Development, Poverty, Science and Technology
  • Political Geography: China, Asia, Mexico, Hong Kong, Shenzhen
  • Author: Mead Over
  • Publication Date: 02-2009
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: The slower spread of AIDS in South Asian countries, combined with the fact that most South Asian countries have higher per capita incomes than the most severely affected countries of other regions imply that the various impacts of the disease will be smaller in South Asia than in the worst affected countries in other regions. While justified with respect to the impact of the disease on economic output, on poverty, or on orphanhood, this conclusion does not follow with respect to the health sector, where the relatively minor public role in health care delivery and the entrepreneurial and heterogeneous private health and pharmaceutical sectors combine to magnify the potential impact of the epidemic.
  • Topic: Health, Humanitarian Aid
  • Political Geography: South Asia, Asia