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441. Performance-Based Incentives for Health: A Way to Improve Tuberculosis Detection and Treatment Completion?

Author:
Rena Eichler, Diana Weil, and Alexandra Beith
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Tuberculosis is a public health emergency in Africa, Eastern Europe, and Central Asia. Of the estimated 1.7 million deaths from TB, 98 percent are in the developing world, the majority being among the poor. In order to reach the MDG and the Stop TB partnership targets for 2015, TB detection rates need to double, treatment success rates must increase to more than 7075 percent, and strategies to address HIV-associated TB and multi-drug resistant TB must be aggressively expanded. DOTS, the internationally-recommended TB control strategy is the foundation of TB control efforts worldwide. A standard recording and monitoring system built on routine service-based data allows nearly all countries in the world to track progress in case detection and treatment completion through routine monitoring. This provides a good base for measuring the impact of different strategies for improving TB control outcomes.
Topic:
Development, Health, Human Welfare, and Humanitarian Aid
Political Geography:
Africa, Central Asia, and Eastern Europe

442. Do Visas Kill? Health Effects of African Health Professional Emigration

Author:
Michael Clemens
Publication Date:
03-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The emigration of highly skilled workers can in theory lower social welfare in the migrant-sending country. If such workers produce a good whose consumption conveys a positive externality—such as nurses and doctors in a very poor country—the loss can be greater, and welfare can even decline globally. Policies to impede emigration thus have the potential to raise sending-country and global welfare. This study uses a new database of health worker emigration from Africa to test whether exogenous decreases in emigration raise the number of domestic health professionals, increase the mass availability of basic primary care, or improve a range of public health outcomes. It identifies the effect through two separate natural quasi-experiments arising from the colonial division of the African continent. These produce exogenous changes in emigration comparable to those that would result from different immigration policies in principal receiving countries. The results suggest that Africa's generally low staffing levels and poor public health conditions are the result of factors entirely unrelated to international movements of health professionals. A simple model proposes that such results would be explained by segmentation of health workforce labor markets in the sending countries. The results further suggest that emigration has caused a greater production of health workers in Africa.
Topic:
International Relations, Health, and Migration
Political Geography:
Africa

443. Do No Harm: Aid, Weak Institutions, and the Missing Middle in Africa

Author:
Nancy Birdsall
Publication Date:
03-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The implicit assumption of the donor community is that Africa is trapped by its poverty, and that aid is necessary if Africa is to escape the trap. In this note I suggest an alternative assumption: that Africa is caught in an institutional trap, signaled and reinforced by the small share of income of its independent middle-income population. Theory and historical experience elsewhere suggest that a robust middle-income group contributes critically to the creation and sustenance of healthy institutions, particularly healthy institutions of the state. I propose that if external aid is to be helpful for institution-building in Africa's weak and fragile states, donors need to emphasize not providing more aid but minimizing the risks more aid poses for this group in Africa.
Topic:
Corruption, Development, Government, and Humanitarian Aid
Political Geography:
Africa

444. Why Doesn't Africa Get More Equity Investment? Frontier Stock Markets, Firm Size and Asset Allocations of Global Emerging Market Funds

Author:
Vijaya Ramachandran, Scott Standley, and Todd Moss
Publication Date:
02-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper addresses the question of investment in sub-Saharan African listed securities by examining characteristics of the continent's 15 equity markets, the rise and fall of African regional funds, and the asset allocation trends for global emerging market (GEM) funds. The data shows that South Africa is now a leading destination of capital, but that few managers invest elsewhere on the continent. However, we find that African markets are not treated differently than other markets and present evidence that small market size and low levels of liquidity are a binding deterrent for foreign institutional investors. Thus, orthodox market variables rather than market failure appear to explain Africa's low absolute levels of inward equity flows. The paper then turns to new data from firm surveys to explore why African firms remain small. The implications of our findings are threefold: (a) efforts to encourage greater private investment in these markets should concentrate on domestic audiences and specialized regional funds, (b) the depth and success of the Johannesburg Stock Exchange can perhaps be better utilized to benefit other parts of the continent, and (c) any long-term strategy should concentrate on the underlying barriers to firm entry and growth.
Topic:
Government, International Trade and Finance, and Markets
Political Geography:
Africa and South Africa

445. Group Versus Individual Liability: A Field Experiment in the Philippines

Author:
Xavier Giné and Dean Karlan
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Group liability is often portrayed as the key innovation that led to the explosion of the microcredit movement, which started with the Grameen Bank in the 1970s and continues on today with hundreds of institutions around the world. Group liability claims to improve repayment rates and lower transaction costs when lending to the poor by providing incentives for peers to screen, monitor and enforce each other's loans. However, some argue that group liability creates excessive pressure and discourages good clients from borrowing, jeopardizing both growth and sustainability. Therefore, it remains unclear whether group liability improves the lender's overall profitability and the poor's access to financial markets. We worked with a bank in the Philippines to conduct a field experiment to examine these issues. We randomly assigned half of the 169 pre-existing group liability “centers” of approximately twenty women to individual-liability centers (treatment) and kept the other half as-is with group liability (control). We find that converting to individual liability from group liability but keeping other aspects of group lending such as weekly repayment meeting does not affect the repayment rate, but leads to higher outreach by attracting new clients.
Topic:
Economics, Markets, and Poverty
Political Geography:
Philippines and Southeast Asia

446. Credit Elasticities in Less-Developed Economies: Implications for Microcredit

Author:
Dean Karlan and Jonathan Zinman
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Policymakers often prescribe that microfinance institutions increase interest rates to eliminate reliance on subsidies. This strategy makes sense if the poor are rate insensitive: then microlenders increase profitability (or achieve sustainability) without reducing the poor's access to credit. We test the assumption of price inelastic demand using randomized trials conducted by a consumer lender in South Africa. The demand curves are downward-sloping, and steep for price increases relative to the lender's standard rates. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rates, which is consistent with binding liquidity constraints.
Topic:
Development, Economics, and Markets
Political Geography:
Africa and South Africa

447. Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment

Author:
Dean Karlan and Jonathan Zinman
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Information asymmetries are important in theory but difficult to identify in practice. We estimate the presence and importance of adverse selection and moral hazard in a consumer credit market using a new field experiment methodology. We randomized 58,000 direct mail offers issued by a major South African lender along three dimensions: 1) an initial "offer interest rate" featured on a direct mail solicitation; 2) a "contract interest rate" that was revealed only after a borrower agreed to the initial offer rate; and 3) a dynamic repayment incentive that extended preferential pricing on future loans to borrowers who remained in good standing. These three randomizations, combined with complete knowledge of the Lender's information set, permit identification of specific types of private information problems. Our setup distinguishes adverse selection from moral hazard effects on repayment, and thereby generates unique evidence on the existence and magnitudes of specific credit market frictions. We find evidence of moral hazard and weaker evidence for adverse selection. A rough calibration suggests that perhaps 7% to 16% of default is due to asymmetric information problems. Asymmetric information may help explain the prevalence of credit constraints even in a market that specializes in financing high-risk borrowers at very high rates.
Topic:
Civil Society, Development, Markets, and Poverty
Political Geography:
South Africa

448. Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts

Author:
Dean Karlan and Jonathan Zinman
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Expanding credit access is a key ingredient of development strategies worldwide. Microfinance practitioners, policymakers, and donors have ambitious goals for expanding access, and seek efficient methods for implementing and evaluating expansion. There is less consensus on the role of consumer credit in expansion initiatives. Some microfinance institutions are moving beyond entrepreneurial credit and offering consumer loans. But many practitioners and policymakers are skeptical about “unproductive” lending. These concerns are fueled by academic work highlighting behavioral biases that may induce consumers to overborrow. We estimate the impacts of a consumer credit supply expansion using a field experiment and follow-up data collection. A South African lender relaxed its risk assessment criteria by encouraging its loan officers to approve randomly selected marginal rejected applications. We estimate the resulting impacts using new survey data on borrower behavior and well-being, and administrative data on loan repayment. We find that the marginal loans increased credit access and produced measurable benefits in the form of increased employment, reduced hunger, and reduced poverty. The marginal loans also appear to have been profitable for the lender. The results must be interpreted with caution but suggest that consumer credit expansions can be welfare-improving.
Topic:
Development, Markets, and Poverty
Political Geography:
Africa and South Africa

449. Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions

Author:
Dean Karlan and Martin Valdivia
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Can one teach basic entrepreneurship skills, or are they fixed personal characteristics? Most academic and development policy discussions about microentrepreneurs focus on their access to credit, and assume their human capital to be fixed. The self-employed poor rarely have any formal training in business skills. However, a growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find that the treatment led to improved business knowledge, practices and revenues. The program also improved repayment and client retention rates for the microfinance institution. Larger effects found for those that expressed less interest in training in a baseline survey. This has important implications for implementing similar market-based interventions with a goal of recovering costs.
Topic:
Development, Economics, Education, and Gender Issues

450. Female Empowerment: Impact of a Commitment Savings Product in the Philippines

Author:
Dean Karlan, Wesley Yin, and Nava Ashraf
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Female “empowerment” has increasingly become a policy goal, both as an end to itself and as a means to achieving other development goals. Microfinance in particular has often been argued, but not without controversy, to be a tool for empowering women. Here, using a randomized controlled trial, we examine whether access to an individually-held commitment savings product leads to an increase in female decision-making power within the household. We find positive impacts, particularly for women who have below median decision-making power in the baseline, and we find this leads to a shift towards female-oriented durables goods purchased in the household.
Topic:
Development, Economics, and Gender Issues
Political Geography:
Southeast Asia