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  • Author: Benjamin Leo
  • Publication Date: 12-2013
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: The United States government has made repeated declarations over the last decade to align its assistance programs behind developing countries' priorities. By utilizing public attitude surveys for 42 African and Latin American countries, this paper examines how well the US has implemented this guiding principle. Building upon the Quality of Official Development Assistance Assessment (QuODA) approach, I identify what people cite most frequently as the 'most pressing problems' facing their nations and then measure the percentage of US assistance commitments that are directed towards addressing them. By focusing on public surveys over time, this analysis attempts to provide a more nuanced and targeted examination of whether US portfolios are addressing what people care the most about. As reference points, I compare US alignment trends with the two regional multilateral development banks (MDBs) – the African Development Bank and the Inter-American Development Bank. Overall, this analysis suggests that US assistance may be only modestly aligned with what people in Sub-Saharan Africa and Latin America cite as their nation's most pressing problems. By comparison, the African Development Bank – which is majority-led by regional member nations – performs significantly better than the United States. Like the United States, however, the Inter-American Development Bank demonstrates a low relative level of support for people's top concerns.
  • Topic: Security, Crime, Development, Economics, Foreign Aid
  • Political Geography: Africa, United States, America, Latin America
  • Author: Liliana Rojas-Suarez, José Luis Guasch, Veronica Gonzales
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Over the last decade, Central American countries—Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua—have made significant progress in social and economic areas. In particular, they have stabilized their economies after decades of civil war and the economic volatility that plagued the region through the 1990s. Most countries in Central America have taken important steps to improve their business climates, particularly by enhancing macroeconomic stability, improving the soundness of their financial systems, making improvements in infrastructure services and trade facilitation, reducing red tape, and simplifying their regulatory and tax frameworks. As a result, before the 2008 financial crisis, GDP per capita in Central America grew at an average rate of 3 percent per year from 2003 to 2008, which, albeit modest, was the most robust and stable period of growth the region had witnessed since the early 1990s. However, despite this achievement, Central American economies are still lagging behind the rest of Latin America and other middle-income countries by per-capita growth rates of 0.5 to 2 percentage points. Even more worrying are the levels of poverty and inequality, which show the lack of inclusiveness in their growth models. Moreover, recent developments in the region show a number of red flags that are weakening macroeconomic and democratic stability. Significant structural changes are urgently needed to secure sustained and inclusive growth.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance
  • Political Geography: Latin America, Central America
  • Author: Nora Lustig, Luis F. Lopez-Calva, Eduardo Ortiz-Juarez
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Between 2000 and 2010, the Gini coefficient declined in 13 of 17 Latin American countries. The decline was statistically significant and robust to changes in the time interval, inequality measures, and data sources. In-depth country studies for Argentina, Brazil, and Mexico suggest two main phenomena underlie this trend: a fall in the premium to skilled labor and more progressive government transfers. The fall in the premium to skills resulted from a combination of supply, demand, and institutional factors. Their relative importance depends on the country.
  • Topic: Development, Economics, Emerging Markets, Globalization, International Trade and Finance, Poverty, Social Stratification
  • Political Geography: Brazil, Argentina, Latin America, Mexico
  • Author: Nora Lustig
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: We apply a standard tax-and-benefit-incidence analysis to estimate the impact on inequality and poverty of direct taxes, indirect taxes and subsidies, and social spending (cash and food transfers and in-kind transfers in education and health). The extent of inequality reduction induced by direct taxes and transfers is rather small (2 percentage points on average), especially when compared with that found in Western Europe (15 percentage points on average). What prevents Argentina, Bolivia, and Brazil from achieving similar reductions in inequality is not the lack of revenues but the fact that they spend less on cash transfers—especially transfers that are progressive in absolute terms—as a share of GDP. Indirect taxes result in that net contributors to the fiscal system start at the fourth, third, and even second decile on average, depending on the country. When in-kind transfers in education and health are added, however, the bottom six deciles are net recipients. The impact of transfers on inequality and poverty reduction could be higher if spending on direct cash transfers that are progressive in absolute terms were increased, leakages to the nonpoor reduced, and coverage of the extreme poor by direct transfer programs expanded.
  • Topic: Development, Economics, Education, Health, Poverty
  • Political Geography: Brazil, Argentina, Latin America, Mexico, Peru, Bolivia
  • 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: Benjamin Leo
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Four years ago, the G-7 pushed through an unprecedented initiative forcing the international financial institutions to cancel 100 percent of their outstanding debt claims on the world's poorest countries. Through the Multilateral Debt Relief Initiative (MDRI), these heavily indebted poor countries (HIPCs) stand to receive up to $60 billion in debt relief over time. Moreover, the World Bank, African Development Bank, and IMF shareholders approved a new debt sustainability framework to govern future lending decisions and prevent the need for yet another round of systemic debt relief. All parties emerged from these landmark agreements confident that the dragon of unsustainable debt finally had been slain. However, several unsettling trends raise serious questions about the finality of these actions. First, World Bank and AfDB lending disbursement volumes to these very same HIPC countries remain very high, and nearly the same as compared to pre-MDRI. Emergency IMF lending in response to the global economic crisis has compounded the situation. Second, IMF and World Bank growth projections for HIPCs remain overly rosy compared to actual and historical performance. Our new dataset of IMF growth projections suggests a structural optimism of at least one percentage point per year. Third, HIPCs continue to experience significant volatility in country performance measures that has a direct impact on their ability to carry debt sustainably. Taken together, these findings suggest that donor countries should re-examine the issue of debt sustainability in low-income countries and the system for determining the appropriate grant/loan mix. The upcoming IDA and AfDF replenishment negotiations present a timely opportunity to do so. Absent assertive and corrective action, the international community may be faced with the prospect of a HIPC IV agreement in the not too distant future.
  • Topic: Development, Economics, Foreign Aid
  • Political Geography: Latin America
  • Author: Liliana Rojas-Suarez
  • Publication Date: 06-2007
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: The depth of and access to financial services provided by banks throughout Latin America are extremely low in spite of its recognized importance for economic activity, employment and poverty alleviation. Low financial depth and access hurts the poor the most and is due to a variety of obstacles that are presented in this paper in four categories, along with recommendations to overcome them. The first category groups socio-economic obstacles that undercut the demand for financial services of large segments of the population. The second category identifies problems in the operations of the banking sector that impedes the adequate provision of financial services to households and firms. The third category captures institutional deficiencies, with emphasis on the quality of the legal framework and the governability of the countries in the region. The fourth category identifies regulations that tend to distort the provision of banking services. Recommendations to confront these obstacles include innovative proposals that take into consideration the political constraints facing individual countries. Some of the policy recommendations include: public-private partnerships to improve financial literacy, the creation of juries specialized in commercial activities to support the rights of borrowers and creditors, and the approval of regulation to allow widespread usage of technological innovations to permit low-income families and small firms to gain access to financial services.
  • Topic: Development, Economics, International Trade and Finance, Poverty
  • Political Geography: Latin America
  • Author: Ferdinando Regalía, Leslie Castro
  • Publication Date: 04-2007
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Nicaragua's Red de Protección Social (RPS) is one of the first conditional cash transfer (CCT) programs implemented in a low-income country. Demand-side incentives, in the form of monetary transfers, are provided to poor households on condition that their children attend school and visit preventive health care providers. The design of the program is unique among CCT programs because these demand-side incentives are complemented by supply-side incentives aimed at improving the provision of health care. Health care providers are paid on the basis of their performance against predetermined targets. Both private and nonprofit health care providers contracted by the government extend the coverage of services to previously underserved areas.
  • Topic: Development, Health, Humanitarian Aid
  • Political Geography: Latin America
  • Author: Amanda Glassman, Jessica Todd, Marie Gaarder
  • Publication Date: 04-2007
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: In order to support poor families in the developing world to seek and use health care, a multi-pronged strategy is needed on both the supply and the demand side of health care. A demand-side program called Conditional Cash Transfers (CCTs) strives to reduce poverty and also increase food consumption, school attendance, and use of preventive health care. Since 1997, seven countries in Latin America have implemented and evaluated CCT programs with health and nutrition components. The core of the program is based on encouraging poor mothers to seek preventive health services and attend health education talks by providing a cash incentive for their healthy behavior (with healthy behavior representing performance). Evaluations of these programs measured outputs in the utilization of services; health knowledge, attitudes, and practice; food consumption; the supply and quality of services; as well as outcomes in vaccination rates; nutritional status; morbidity; mortality; and fertility.
  • Topic: Development, Health, Humanitarian Aid
  • Political Geography: Latin America
  • Author: John Nellis
  • Publication Date: 03-2006
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: In the last 25 years many thousands of formerly state-owned and operated firms have been privatized in developing and transition countries, generating over $400 billion (US) in sales proceeds. In addition, thousands of firms have been transferred by privatization processes in which no money was raised (though a surprising number of state-owned firms remain in these regions). The vast majority of economic studies praise privatization's positive impact at the level of the firm, as well as its positive macroeconomic and welfare contributions. Moreover, contrary to popular conception, privatization has not contributed to maldistribution of income or increased poverty——at least in the best-studied Latin American cases. In sum, the technical picture is generally positive. Nonetheless, public opinion in the less developed world is generally suspicious of, and often hostile to, privatization. A good part of the problem is that privatization has proven harder to launch, and is more likely to produce errant results, in low-income, institutionally weak states, particularly in the most important infrastructure sectors. Privatization is hard to sell politically; it has become a lightning rod and handy scapegoat for all discontent related to liberalization and globalization. What is needed are reform mechanisms that give incentives and comfort to reputable private investors, that create and sustain the policy and regulatory institutions that make governments competent and honest partners with the private operators, while at the same time protecting consumers, particularly the most disadvantaged, from abuse.
  • Topic: Development, Economics, Government, Privatization
  • Political Geography: Latin America