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432. The Provision of Banking Services in Latin America: Obstacles and Recommendations
- 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:
- Political Economy and Third World
- Political Geography:
- Latin America
433. A Short Note on the Theme of Too Many Instruments
- Author:
- David Roodman
- Publication Date:
- 08-2007
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The “difference” and “system” generalized method of moments (GMM) estimators for dynamic panel models are growing steadily in popularity. The estimators are designed for panels with short time dimensions (T), and by default they generate instruments sets whose number grows quadratically in T. The dangers associated with having many instruments relative to observations are documented in the applied literature. The instruments can overfit endogenous variables, failing to expunge their endogenous components and biasing coefficient estimates. Mean while they can vitiate the Hansen J test for joint validity of those instruments, as well as the difference-in-Sargan/Hansen test for subsets of instruments. The weakness of these specification tests is a particular concern for system GMM, whose distinctive instruments are only valid under a non-trivial assumption. Judging by current practice, many researchers do not fully appreciate that popular implementations of these estimators can by default generate results that simultaneously are invalid yet appear valid. The potential for type I errors—false positives—is therefore substantial, especially after amplification by publication bias. This paper explains the risks and illustrates them with reference to two early applications of the estimators to economic growth, Forbes (2000) on income inequality and Levine, Loayza, and Beck (LLB, 2000) on financial sector development. Endogenous causation proves hard to rule out in both papers. Going forward, for results from these GMM estimators to be credible, researchers must report the instrument count and aggressively test estimates and specification test results for robustness to reductions in that count.
- Topic:
- Development, Economics, Political Economy, and Third World
434. Pathways Out of Poverty During an Economic Crisis: An Empirical Assessment of Rural Indonesia
- Author:
- Peter Timmer and Neil McCulloch
- Publication Date:
- 03-2007
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Most poor people in developing countries still live in rural areas and are primarily engaged in low productivity farming activities. Thus pathways out of poverty are likely to be strongly connected to productivity increases in the rural economy, whether they are realised in farming, rural non-farm enterprises or via rural-urban migration. We use cross-sectional data from the Central Statistical Board (BPS) for 1993 and 2002, as well as a panel data set from the Indonesia Family Life Survey (IFLS) for 1993 and 2000, to show which pathways out of poverty were most successful over this period. Our findings suggest that increased engagement of farmers in rural non-farm enterprises is an important route out of rural poverty, but that most of the rural agricultural poor that exit poverty still do so while remaining rural and agricultural. Thus changes in agricultural prices, wages and productivity still play a critical role in moving people out of poverty.
- Topic:
- Development, Economics, and Political Economy
- Political Geography:
- Indonesia and Asia
435. What Have IMF Programs With Low-Income Countries Assumed About Aid Flows?
- Author:
- David Goldsbrough and Ben Elberger
- Publication Date:
- 04-2007
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper examines the nature of aid projections in IMF programs with low-income countries. On average, IMF projections of net aid increased sharply in the first year of programs but tapered off in subsequent years. Projections were also significantly more optimistic in countries with low initial levels of aid but differed little across regions. Most notably, projections of net aid to countries in Sub-Saharan Africa following the Gleneagles Summit are significantly more pessimistic than the path implied by commitments to double aid to Africa by 2010. This pattern is strong throughout the group with only two Sub-Saharan African countries showing increases in net aid consistent with the Gleneagles commitments.
- Topic:
- Development, Political Economy, Poverty, and International Monetary Fund
- Political Geography:
- Africa
436. Cost-Effective Prevention of Diarrheal Diseases: A Critical Review
- Author:
- Michael Kremer and Alix Peterson Zwane
- Publication Date:
- 04-2007
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper critically reviews the existing research on the cost-effective prevention and treatment of diarrheal diseases, and identifies research priorities in this area aimed at finding ways to reduce the diarrheal disease burden. In contrast to the empirical knowledge base that exists for traditional child health programs to reduce diarrheal morbidity and mortality, evidence on the relative effectiveness and cost-effectiveness of various environmental health interventions is limited and subject to significant methodological concerns. There is a limited understanding of the determinants of long-term water and sanitation technology adoption and behavior change at the individual level. Even less is known about how collective action problems in water and sanitation infrastructure maintenance can be overcome. An agenda for future research includes evaluating alternative transmission interruption mechanisms, improving understanding of the determinants of individual-level technology adoption in the water and sanitation sector, and assessing the quality of infrastructure maintenance under different management schemes.
- Topic:
- Health, Human Welfare, Humanitarian Aid, and Poverty
437. Income Distribution: Effects on Growth and Development
- Author:
- Nancy Birdsall
- Publication Date:
- 04-2007
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- I review the literature on the effects of inequality on growth and development in the developing world. Two stylized facts emerge from empirical studies: inequality is more likely to harm growth in countries at low levels of income (below about $3200 per capita in 2000 dollars); and it is at high levels of inequality (at or above a Gini coefficient of .45) that a negative association emerges. Between 15 and 40 percent of the developing world's population lives in countries with these characteristics, depending on the inclusion of China, whose level of inequality has recently been measured at almost .45. Theory and evidence suggest that high inequality affects growth: (1) through interaction with incomplete and underdeveloped markets for capital and information; (2) by discouraging the evolution of the economic and political institutions associated with accountable government (which in turn enable a market environment conducive to investment and growth); and (3) by undermining the civic and social life that sustains effective collective decision-making.
- Topic:
- Development, Humanitarian Aid, Political Economy, and Poverty
- Political Geography:
- China
438. Performance-based Incentives for Health: Demand- and Supply-Side Incentives in the Nicaraguan Red de Protección Social
- Author:
- Ferdinando Regalía and 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, and Humanitarian Aid
- Political Geography:
- Latin America
439. Performance-Based Incentives for Health: Conditional Cash Transfer Programs in Latin America and the Caribbean
- Author:
- Amanda Glassman, Jessica Todd, and 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, and Humanitarian Aid
- Political Geography:
- Latin America
440. Performance-Based Incentives for Health: Six Years of Results from Supply-Side Programs in Haiti
- Author:
- Amanda Glassman, Jessica Todd, and Marie Gaarder
- Publication Date:
- 04-2007
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- USAID launched a project in 1995 to deliver basic health services in Haiti. The project began by reimbursing contracted NGOs for documented expenditures or inputs. In 1999, payment was changed to being based partly on attaining performance targets or outputs. The project also provided technical assistance to the NGOs, along with opportunities to participate in an NGO network and other cross-fertilization activities. Remarkable improvements in key health indicators have been achieved in the six years since payment for performance was phased in. Although it is difficult to isolate the effects of performance-based payment on these improved indicators from the efforts aimed at strengthening NGOs and other factors, panel regression results suggest that the new payment incentives were responsible for considerable improvements in both immunization coverage and attended deliveries. Results for prenatal and postnatal care were less significant, perhaps suggesting a strong patient behavioral element that is not under the influence of provider actions.
- Topic:
- Development, Health, and Humanitarian Aid
- Political Geography:
- Caribbean and Haiti