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451. AIDS Treatment and Intrahousehold Resource Allocations: Children's Nutrition and Schooling in Kenya

Author:
Markus Goldstein, Joshua Graff Zivin, and Harsha Thirumurthy
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The provision of life-saving antiretroviral (ARV) treatment has emerged as a key component of the global response to HIV/AIDS, but very little is known about the impact of this intervention on the welfare of children in the households of treated persons. We estimate the impact of ARV treatment on children's schooling and nutrition outcomes using longitudinal household survey data collected in collaboration with a treatment program in western Kenya. We find that children's weekly hours of school attendance increase by over 20 percent within six months after treatment is initiated for the adult household member. For boys in treatment households, these increases closely follow their reduced market labor supply. Similarly, young children's short-term nutritional status—as measured by their weight-for-height Z-score—also improves dramatically. We also present evidence that the impact of treatment is considerably larger when compared to the counterfactual scenario of no ARV treatment. The results illustrate how intrahousehold allocations of time and resources are altered in response to significant health improvements. Since the improvements in children's schooling and nutrition at these critical early ages will affect their socio-economic outcomes and wellbeing in adulthood, the widespread provision of ARV treatment is likely to generate significant long-run welfare benefits.
Topic:
Health and Human Welfare
Political Geography:
Kenya and Africa

452. Why Are There So Few Black-Owned Firms in Africa? Preliminary Results from Enterprise Survey Data

Author:
Vijaya Ramachandran and Manju Kedia Shah
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Much of the growth in Sub-Saharan Africa in the past decade has come from extractive industries, rather than from private, entrepreneurial activity. Furthermore, non-extractive activity in the private sector is often dominated by firms owned by ethnic minorities. This paper analyzes the characteristics of the formal private sector in five countries in sub-Saharan Africa, with a particular emphasis on Black African-owned (indigenous) firms. We find that indigenous firms start smaller and grow more slowly; however their rate of growth is positively influenced by whether the owner-entrepreneur has a university degree. We do not find overwhelming evidence that credit is the binding constraint but we do find that indigenous firms get less access to trade credit than firms owned by minority entrepreneurs. Finally, we discuss policy solutions that might enable a larger number of indigenous entrepreneurs to enter and survive in a vibrant, multi-ethnic private sector.
Topic:
International Relations, Development, Economics, and Humanitarian Aid
Political Geography:
Africa

453. How to Do xtabond2: An Introduction to "Difference" and "System" GMM in Stata

Author:
David Roodman
Publication Date:
12-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The Arellano-Bond (1991) and Arellano-Bover (1995)/Blundell-Bond (1998) linear generalized method of moments (GMM) estimators are increasingly popular. Both are general estimators designed for situations with “small T, large N” panels, meaning few time periods and many individuals; with independent variables that are not strictly exogenous, meaning correlated with past and possibly current realizations of the error; with fixed effects; and with heteroskedasticity and autocorrelation within individuals. This pedagogic paper first introduces linear GMM. Then it shows how limited time span and the potential for fixed effects and endogenous regressors drive the design of the estimators of interest, offering Stata-based examples along the way. Next it shows how to apply these estimators with xtabond2. It also explains how to perform the Arellano-Bond test for autocorrelation in a panel after other Stata commands, using abar.
Topic:
Development, Economics, and Science and Technology

454. Payments for Progress: A Hands-Off Approach to Foreign Aid

Author:
Nancy Birdsall and Owen Barder
Publication Date:
12-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
There are significant differences of opinion about the merits of additional aid in meeting the MDGs, including whether and how aid should be given in 'fragile states', whether additional aid on the scale envisioned can be effectively used even in well-managed economies, and whether the aid system, particularly in highly aid-dependent countries, undermines instead of strengthens local institutions. We discuss an approach to scaling up foreign aid that would explicitly be aimed at strengthening local capacity and institutions, including in fragile states. “Payments for progress” would link additional aid to clear evidence of progress already achieved on the ground. This approach would give flexibility and autonomy to local institutions, providing an opening for local institutional experimentation, while at the same time ensuring that aid pays only for real, measurable achievements. Donors would bind themselves as a group to pay a specific amount for clear evidence of progress against one or more agreed goals in low-income developing countries. Developing country governments would present an independently audited statement reporting their progress on the measures, and donors would pay the agreed amount. Payments would be determined as a function of the outcomes, and not linked to the implementation of any particular policies, any other intermediate outputs, or “tied” to purchases from particular suppliers or companies. Governments that found ways to provide services efficiently and so reduce the costs of providing them would benefit from a larger surplus. We discuss the issues such an approach raises—in setting the benchmarks against which progress is measured, in avoiding cheating, and in managing unintended negative consequences of an incentives-based approach. We conclude with a summary of the advantages for donors and recipients.
Topic:
Foreign Policy, Development, Humanitarian Aid, and Third World

455. An Index of Donor Performance

Author:
David Roodman
Publication Date:
11-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The Commitment to Development Index of the Center for Global Development rates 21 rich countries on the “development-friendliness” of their policies. It is revised and updated annually. The component on foreign assistance combines quantitative and qualitative measures of official aid, and of fiscal policies that support private charitable giving. The quantitative measure uses a net transfers concept, as distinct from the net flows concept in the net Official Development Assistance measure of the Development Assistance Committee. The qualitative factors are: a penalty for tying aid; a discounting system that favors aid to poorer, better-governed recipients; and a penalty for “project proliferation.” The charitable giving measure is based on an estimate of the share of observed private giving to developing countries that is attributable to a) lower overall taxes or b) specific tax incentives for giving. De-spite the adjustments, overall results are dominated by differences in quantity of official aid given. This is because while there is a seven-fold range in net concessional transfers/GDP among the scored countries, variation in overall aid quality across donors appears far lower, and private giving is generally small. Denmark, the Netherlands, Norway, and Sweden score highest while the largest donors in absolute terms, the United States and Japan, rank at or near the bottom. Standings by the 2006 methodology have been relatively stable since 1995.
Topic:
International Relations, Development, Economics, and Humanitarian Aid
Political Geography:
United States, Japan, Norway, and Netherlands

456. Microfinance as Business

Author:
David Roodman and Uzma Qureshi
Publication Date:
11-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
IN THIS PAPER, we analyze microfinance institutions (MFIs) as businesses, asking how some MFIs succeed in reducing and covering costs, earning returns, attracting capital, and scaling up. We are interested in MFIs that are financially self-sufficient (covering the cost of daily operations as well as the cost of capital at a commercial rate) or merely operationally self-sufficient (not covering capital costs) or only, say, 90% operationally self-sufficient. All such MFIs strive for efficiency and are in many respects businesslike.
Topic:
Civil Society, Development, Economics, and Markets

457. Artificial States

Author:
William Easterly, Janina Matuszeski, and Alberto Alesina
Publication Date:
10-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Artificial states are those in which political borders do not coincide with a division of nationalities desired by the people on the ground. We propose and compute for all countries in the world two new measures how artificial states are. One is based on measuring how borders split ethnic groups into two separate adjacent countries. The other one measures how straight land borders are, under the assumption the straight land borders are more likely to be artificial. We then show that these two measures seem to be highly correlated with several measures of political and economic success.
Topic:
International Relations, Demographics, Economics, and Politics

458. Beyond the IMF

Author:
Devesh Kapur and Richard Webb
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A consensus has developed that the International Monetary Fund (IMF) is not fulfilling its role, prompting multiple proposals for reform. However, this paper argues that the focus on reform should be complemented with an exploration of alternatives outside the IMF which hold the potential to not only give developing countries greater bargaining leverage with the Fund but also, by increasing competition, spurring the institution to better performance. The paper argues that most of the IMF's functions are being carried out in part through alternative institutional arrangements. It focuses in particular on the insurance role of the Fund and argues that developing countries are developing alternative insurance mechanisms, from a higher level of reserves, to regional co-insurance facilities to remittances as a counter-cyclical source of foreign exchange. The de facto exit of its clientele has been driven by the high political costs associated with Fund borrowing and now poses unprecedented challenges for the Fund, in particular pressures on its income. The paper argues for a rapid restructuring and significant cuts of the Fund's administrative budget with the budget savings instead directed to lower the interest rates charged to borrowers.
Topic:
Development, Economics, International Trade and Finance, and Third World

459. Advance Market Commitments for Vaccines Working Paper and Spread Sheet

Author:
Rachel Glennerster, Heidi Williams, Georg Weizsacker, Ruth Levine, Jean Lee, Michael R. Kremer, and Ernst R. Berndt
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The G8 is considering committing to purchase vaccines against diseases concentrated in low-income countries (if and when desirable vaccines are developed) as a way to spur research and development on vaccines for these diseases. Under such an “advance market commitment,” one or more sponsors would commit to a minimum price to be paid per person immunized for an eligible product, up to a certain number of individuals immunized. For additional purchases, the price would eventually drop to close to marginal cost. If no suitable product were developed, no payments would be made. We estimate the offer size which would make revenues similar to the revenues realized from investments in typical existing commercial pharmaceutical products, as well as the degree to which various model contracts and assumptions would affect the cost-effectiveness of such a commitment. We make adjustments for lower marketing costs under an advance market commitment and the risk that a developer may have to share the market with subsequent developers. We also show how this second risk could be reduced, and money saved, by introducing a superiority clause to a commitment. Under conservative assumptions, we document that a commitment comparable in value to sales earned by the average of a sample of recently launched commercial products (adjusted for lower marketing costs) would be a highly cost-effective way to address HIV/AIDS, malaria, and tuberculosis. Sensitivity analyses suggest most characteristics of a hypothetical vaccine would have little effect on the cost-effectiveness, but that the duration of protection conferred by a vaccine strongly affects potential cost-effectiveness. Readers can conduct their own sensitivity analyses employing a web-based spreadsheet tool.
Topic:
Development, Economics, Health, and Markets

460. A Millennium Learning Goal: Measuring Real Progress in Education

Author:
Lant Pritchett, Amer Hasan, and Deon Filmer
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The Millennium Development Goal for primary schooling completion has focused attention on a measurable output indicator to monitor increases in schooling in poor countries. We argue the next step, which moves towards the even more important Millennium Learning Goal, is to monitor outcomes of learning achievement. We demonstrate that even in countries meeting the MDG of primary completion, the majority of youth are not reaching even minimal competency levels, let alone the competencies demanded in a globalized environment. Even though Brazil is on track to the meet the MDG, our estimates are that 78 percent of Brazilian youth lack even minimally adequate competencies in mathematics and 96 percent do not reach what we posit as a reasonable global standard of adequacy. Mexico has reached the MDG—but 50 percent of youth are not minimally competent in math and 91 percent do not reach a global standard. While nearly all countries' education systems are expanding quantitatively nearly all are failing in their fundamental purpose. Policymakers, educators and citizens need to focus on the real target of schooling: adequately equipping their nation's youth for full participation as adults in economic, political and social roles. A goal of school completion alone is an increasingly inadequate guide for action. With a Millennium Learning Goal, progress of the education system will be judged on the outcomes of the system: the assessed mastery of the desired competencies of an entire age cohort—both those in school and out of school. By focusing on the learning achievement of all children in a cohort an MLG eliminates the false dichotomy between “access/enrollment” and “quality of those in school”: reaching an MLG depends on both.
Topic:
International Relations, Development, Economics, and Education
Political Geography:
Brazil and Mexico