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11. Credit at Times of Stress: Latin American Lessons from the Global Financial Crisis

Author:
Liliana Rojas-Suarez and 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, and Financial Crisis
Political Geography:
Europe, Asia, and Latin America

12. Energizing Rio+20: How the United States Can Promote Sustainable Energy for All at the 2012 Earth Summit

Author:
Nigel Purvis and 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, and Poverty
Political Geography:
Africa, United States, and Asia

13. State Health Insurance and Out-of-Pocket Health Expenditures in Andhra Pradesh, India

Author:
Victoria Fan, Anup Karan, and 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, and Health Care Policy
Political Geography:
India, Asia, and Andhra Pradesh

14. Regional Development Banks (ABCs of the IFIs Brief)

Author:
Jenny Ottenhoff
Publication Date:
09-2011
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
The regional development banks (RDBs) are multilateral financial institutions that provide financial and technical assistance for development in low- and middle-income countries within their regions. Finance is allocated through low-interest loans and grants for a range of development sectors such as health and education, infrastructure, public administration, financial and private-sector development, agriculture, and environmental and natural resource management. The term RDB usually refers to four institutions:
Topic:
Development, Economics, Foreign Aid, and Foreign Direct Investment
Political Geography:
Africa, Europe, and Asia

15. The ABCs of the General Capital Increase (ABCs of IFIs Brief)

Author:
Todd Moss, Sarah Jane Staats, and Julia Barmeier
Publication Date:
09-2011
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
The international financial institutions dramatically increased their lending in 2008–09 to help developing countries cope with the global financial crisis and support economic recovery. Today, these organizations are seeking billions of dollars in new funding. The IMF, which only a few years ago was losing clients and shedding staff, expanded by $750 billion in 2009. The World Bank and the four regional development banks for Africa, Asia, Europe, and Latin America have asked to increase their capital base by 30 to 200 percent. A general capital increase (GCI) for these development banks is an unusual request. A simultaneous GCI request is a oncein- a-generation occurrence.
Topic:
Development, Foreign Aid, and Financial Crisis
Political Geography:
Africa, Asia, Latin America, and Ethiopia

16. Leadership Selection at the International Financial Institutions

Author:
Jenny Ottenhoff
Publication Date:
09-2011
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
The International Financial Institutions (IFIs) are multilateral agencies. The term typically refers to the International Monetary Fund (IMF), which provides financing and policy advice to member nations experiencing economic difficulties, and the multilateral development banks (MDBs), which provide financing and technical support for development projects and economic reform in low- and middle-income countries. The term MDB is usually understood to mean the World Bank and four smaller regional development banks: African Development Bank (AfDB). Asian Development Bank (ADB). European Bank for Reconstruction and Development (EBRD) Inter-American Development Bank (IDB).
Topic:
Development, Economics, International Monetary Fund, Foreign Aid, and World Bank
Political Geography:
Africa, America, Europe, and Asia

17. The High Return to Private Schooling in a Low-Income Country

Author:
Tessa Bold, Mwangi Kimenyi, Germano Mwabu, and 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, and Poverty
Political Geography:
Kenya, United States, Asia, and Latin America

18. A China Round of Multilateral Trade Negotiations

Author:
Arvind Subramanian and 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, and International Trade and Finance
Political Geography:
China, Israel, and Asia

19. West African Experience with the World Rice Crisis, 2007–2008

Author:
Vijaya Ramachandran, Peter Timmer, Steven Block, and 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 and Food
Political Geography:
Africa and Asia

20. Technologies, Rules, and Progress: The Case for Charter Cities

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, and Science and Technology
Political Geography:
China, Asia, Mexico, Hong Kong, and Shenzhen