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212. Capital Requirements under Basel III in Latin America: The Cases of Bolivia, Colombia, Ecuador and Peru
- Author:
- Liliana Rojas-Suarez, Arturo J. Galindo, and Marielle del Valle
- Publication Date:
- 05-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- A number of banks in developed countries argue that the new capital requirements under Basel III are too stringent and that implementing the proposed regulation would require raising large amounts of capital, with adverse consequences on credit and the cost of finance. In contrast, many emerging market economies claim that their systems are adequately capitalized and that they have no problems with implementing the new capital requirements. This paper conducts a detailed calculation of capital held by the banks in four Latin American countries—known as the Andean countries: Bolivia, Colombia, Ecuador and Peru—and assesses the potential effects of full compliance with the capital requirements under Basel III. The conclusions are positive and show that while capital would decline somewhat in these countries after they make adjustments to comply with the new definition of capital under Basel III, they would still meet the Basel III recommendations on capital requirements. More importantly, these countries would hold Tier capital to risk-weighted-asset ratios significantly above the 8.5 percent requirement under Basel III. That is, not only the quantity, but also the quality of capital is adequate in the countries under study. While encouraging, these results should not be taken as a panacea since the new regulations are only effective if coupled with appropriate risk management and supervision mechanisms to control the build-up of excessive risk-taking by banks. Further research into these areas is needed for a complete assessment of the strength of banks in the Andean countries.
- Topic:
- Debt, Economics, International Trade and Finance, and Monetary Policy
- Political Geography:
- Colombia, Latin America, Peru, Ecuador, and Bolivia
213. Haiti: Where Has All the Money Gone?
- Author:
- Vijaya Ramachandran and Julie Walz
- Publication Date:
- 05-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Since the 2010 earthquake, almost $6 billion has been disbursed in official aid to Haiti, a country with a population of just under 10 million. An estimated $3 billion has been donated to NGOs in private contributions in addition to official aid. The United States Government alone has disbursed almost $2 billion of this total amount and has pledged over $3 billion for relief and reconstruction.
- Topic:
- Corruption, Humanitarian Aid, Non-Governmental Organization, and Foreign Aid
- Political Geography:
- United States, Caribbean, and Haiti
214. Adolescent Fertility in Low- and Middle-Income Countries: Effects and Solutions
- Author:
- Amanda Glassman, Kate McQueston, and Rachel Silverman
- Publication Date:
- 05-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Adolescent fertility in low- and middle-income countries presents a severe impediment to development and can lead to school dropout, lost productivity, and the intergenerational transmission of poverty. However, there is debate about whether adolescent pregnancy is a problem in and of itself or merely symptomatic of deeper, ingrained disadvantage. To inform policy choices and create a revised research agenda for population and development, this paper aggregates recent quantitative evidence on the socioeconomic consequences of and methods to reduce of teenage pregnancy in the developing world. The review finds variable results for all indicator types with the partial exception of knowledge-based indicators, which increased in response to almost all evaluating interventions, though it is not clear that such interventions necessarily lead to short- or long term-behavior change. The evidence base supporting the effectiveness of conditional cash transfers was relatively strong in comparison to other interventions. Similarly, programs that lowered barriers to attending school or increased the opportunity cost of school absence are also supported by the literature. On the basis of these findings, the authors argue that donors should adopt a rights-based approach to adolescent fertility and shift their focus from the proximate to distal causes of pregnancy, including human rights abuses, gender inequality, child marriage, and socioeconomic marginalization. Further research should be conducted to strengthen the evidence base by 1) establishing causality, 2) understanding the differential impacts of adolescent fertility in different contexts, and 3) investigating other the impact of adolescent fertility on other socioeconomic outcomes, such as labor participation, productivity, and the intergenerational transmission of poverty.
- Topic:
- Democratization, Demographics, Development, Economics, Foreign Aid, and Youth Culture
215. 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
216. MDGs 2.0: What Goals, Targets, and Timeframe?
- Author:
- Charles Kenny, Andy Sumner, and Jonathan Karver
- Publication Date:
- 06-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The Millennium Development Goals (MDGs) are widely cited as the primary yardstick against which advances in international development efforts are to be judged. At the same time, the Goals will be met or missed by 2015. It is not too early to start asking 'what next?' This paper builds on a discussion that has already begun to address potential approaches, goals and target indicators to help inform the process of developing a second generation of MDGs or 'MDGs 2.0.' The paper outlines potential goal areas based on the original Millennium Declaration, the timeframe for any MDGs 2.0 and attempts to calculate some reasonable targets associated with those goal areas.
- Topic:
- Development, Economics, Emerging Markets, Post Colonialism, and Political Theory
217. Competitiveness in Central America: The Road to Sustained Growth and Poverty Reduction
- Author:
- Liliana Rojas-Suarez, José Luis Guasch, and 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, and International Trade and Finance
- Political Geography:
- Latin America and Central America
218. No Longer Poor: Ghana's New Income Status and Implications of Graduation from IDA
- Author:
- Todd Moss and Stephanie Majerowicz
- Publication Date:
- 07-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Ghana's largest and most important creditor for the past three decades has been the International Development Association (IDA), the soft loan window of the World Bank. That will soon come to an end. The combination of Ghana's rapid economic growth and the recent GDP rebasing exercise means that Ghana suddenly finds itself above the income limit for IDA eligibility. Formal graduation is imminent and comes with significant implications for access to concessional finance, debt, and relations with other creditors. This paper considers the specific questions related to Ghana's relationship with the World Bank, as well as the broader questions about the country's new middle-income status.
- Topic:
- Development, Economics, Poverty, Foreign Aid, and Foreign Direct Investment
- Political Geography:
- Africa
219. Escaping Capability Traps through Problem-Driven Iterative Adaptation (PDIA)
- Author:
- Lant Pritchett, Michael Woolcock, and Matt Andrews
- Publication Date:
- 06-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Many reform initiatives in developing countries fail to achieve sustained improvements in performance because they are merely isomorphic mimicry—that is, governments and organizations pretend to reform by changing what policies or organizations look like rather than what they actually do. In addition, the flow of development resources and legitimacy without demonstrated improvements in performance undermines the impetus for effective action to build state capability or improve performance. This dynamic facilitates “capability traps” in which state capability stagnates, or even deteriorates, over long periods of time even though governments remain engaged in developmental rhetoric and continue to receive development resources. How can countries escape capability traps? We propose an approach, Problem-Driven Iterative Adaptation (PDIA), based on four core principles, each of which stands in sharp contrast with the standard approaches. First, PDIA focuses on solving locally nominated and defined problems in performance (as opposed to transplanting preconceived and packaged “best practice” solutions). Second, it seeks to create an authorizing environment for decision-making that encourages positive deviance and experimentation (as opposed to designing projects and programs and then requiring agents to implement them exactly as designed). Third, it embeds this experimentation in tight feedback loops that facilitate rapid experiential learning (as opposed to enduring long lag times in learning from ex post “evaluation”). Fourth, it actively engages broad sets of agents to ensure that reforms are viable, legitimate, relevant, and supportable (as opposed to a narrow set of external experts promoting the top-down diffusion of innovation).
- Topic:
- Development, Economics, Political Economy, Foreign Aid, Foreign Direct Investment, and Governance
220. Assessing the Quality of Aid for Agriculture
- Author:
- Kimberly Elliott and Edward Collins
- Publication Date:
- 08-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- New international initiatives signal strong commitment to agriculture and food security in the face of growing demand and climate-change challenges. But aid to agriculture still represents just five percent of total official development assistance. With donor budgets under intense pressure, making aid effective is more important than ever, but we still know relatively little about the quality of aid in general and of agricultural aid in particular.
- Topic:
- Security, Agriculture, Climate Change, Development, Foreign Aid, and Food