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3801. Mad Cows and Ailing Hens: The Transatlantic Relationship and Livestock Diseases

Author:
Kate O'Neill
Publication Date:
05-2006
Content Type:
Working Paper
Institution:
Institute of European Studies
Abstract:
This paper examines how the emergence and spread of animal diseases such as bovine spongiform encephalopathy (BSE, or “mad cow disease”) or avian influenza have shaped the dynamics of transatlantic trade in live animals and meat products. It then compares the responses of the US and the EU, respectively, to looming, potentially long-term threats of epidemics to human and animal health, focusing particularly on recent outbreaks BSE and avian flu. It documents what appears to be a shift away from a sole reliance on trade embargoes to protect animal and public health from disease outbreaks to deeper, institutional responses on the part of the US and EU respectively. However, while it appears that the EU is learning from the US public health establishment, there is little evidence of transatlantic cooperation in this area.
Topic:
International Relations, Disaster Relief, Economics, and Health
Political Geography:
United States and Europe

3802. 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

3803. 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

3804. 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

3805. 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

3806. 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

3807. 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

3808. 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

3809. Fragile States and U.S. Foreign Assistance: Show Me the Money

Author:
Stewart Patrick and Kaysie Brown
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The Bush administration has increasingly acknowledged that weak and failing states represent the core of today's global development challenge. It has also recognized that such states are potential threats to international peace and security. But despite the rhetoric, it has yet to formulate a coherent strategy around fragile states or commit adequate resources towards engaging them. Excluding funding for Iraq, Afghanistan, Pakistan, and HIV/AIDS, the administration's FY07 budget request proposes to spend just $1.1 billion in direct bilateral assistance to fragile states—little more than a dollar per person per year. In this new working paper, CGD research fellow Stewart Patrick and program associate Kaysie Brown urge U.S. policymakers to consider increasing aid to fragile states and to think creatively about how and when to engage these troubled countries. The authors also call for the policy community to integrate non-aid instruments into a more coherent government strategy. To put its money where its mouth is, the U.S. should treat aid to weak and failing states as a form of venture capital, with high risk but potentially high rewards.
Topic:
Economics, Government, and Humanitarian Aid
Political Geography:
Pakistan, Afghanistan, United States, and Iraq

3810. A Policymakers' Guide to Dutch Disease

Author:
Owen Barder
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
It is sometimes claimed that an increase in aid might cause Dutch Disease—that is, an appreciation of the real exchange rate which can slow the growth of a country's exports— and that aid increases might thereby harm a country's long-term growth prospects. This essay argues that it is unlikely that a long-term, sustained and predictable increase in aid would, through the impact on the real exchange rate, do more harm than good, for three reasons. First, there is not necessarily an adverse impact on exports from Dutch Disease, and any impact on economic growth may be small. Second, aid spent in part on improving the supply side—investments in infrastructure, education, government institutions and health—result in productivity benefits for the whole economy, which can offset any loss of competitiveness from the Dutch Disease effect. Third, the welfare of a nation's citizens depends on their consumption and investment, not just output. Even on pessimistic assumptions, the additional consumption and investment which the aid finances is larger than any likely adverse impact on output. However, the macroeconomic effects of aid can cause substantial harm if the aid is not sustained until its benefits are realized. The costs of a temporary loss of competitiveness might well exceed the benefits of the short-term increase in aid. To avoid doing harm, aid should be sustained and predictable, and used in part to promote economic growth. This maximizes the chances that the long-term productivity and growth benefits will offset the adverse effects—which may be small if they exist at all—that big aid surges may pose as a result of Dutch Disease.
Topic:
Economics, Health, and Humanitarian Aid
Political Geography:
Europe