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1. Development as Diffusion: Manufacturing Productivity and Sub-Saharan Africa's Missing Middle

Author:
Vijaya Ramachandran, Alan Gelb, and Christian J. Meyer
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
We consider economic development of Sub-Saharan Africa from the perspective of slow convergence of productivity, both across sectors and across firms within sectors. Why have "productivity enclaves", islands of high productivity in a sea of smaller low-productivity firms, not diffused more rapidly? We summarize and analyze three sets of factors: First, the poor business climate, which constrains the allocation of production factors between sectors and firms. Second, the complex political economy of business-government relations in Africa's small economies. Third, the distribution of firm capabilities. The roots of these factors lie in Africa's geography and its distinctive history, including the legacy of its colonial period on state formation and market structure.
Topic:
Development, Economics, Industrial Policy, and Markets
Political Geography:
Africa

2. How Should Donors Respond to Resource Windfalls in Poor Countries?

Author:
Alan Gelb, Anton Dobronogov, and Fernando Brant Saldanha
Publication Date:
07-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Natural resources are being discovered in more countries, both rich and poor. Many of the new and aspiring resource exporters are low-income countries that are still receiving substantial levels of foreign aid. Resource discoveries open up enormous opportunities, but also expose producing countries to huge trade and fiscal shocks from volatile commodity markets if their exports are highly concentrated. A large literature on the "resource curse" shows that these are damaging unless countries manage to cushion the effects through countercyclical policy. It also shows that the countries least likely to do so successfully are those with weaker institutions, and these are most likely to remain as clients of the aid system. This paper considers the question of how donors should respond to their clients' potential windfalls. It discusses several ways in which the focus and nature of foreign aid programs will need to change, including the level of financial assistance. The paper develops some ideas on how a donor like the International Development Association might structure its program of financial transfers to mitigate volatility. The paper outlines ways in which the International Development Association could use hedging instruments to vary disbursements while still working within a framework of country allocations that are not contingent on oil prices. Simulations suggest that the International Development Association could be structured to provide a larger degree of insurance if it is calibrated to hedge against large declines in resource prices. These suggestions are intended to complement other mechanisms, including self-insurance using Sovereign Wealth Funds (where possible) and the facilities of the International Monetary Fund.
Topic:
Economics, International Trade and Finance, Natural Resources, and Foreign Aid
Political Geography:
Uganda, Kenya, Tanzania, and Ghana

3. Cash at Your Fingertips: Biometric Technology for Transfers in Developing and Resource-Rich Countries

Author:
Alan Gelb and Caroline Decker
Publication Date:
06-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Cash transfers are often a good way for developing countries to address economic and social problems. They are less expensive than directly providing goods and services and allow recipients the flexibility to spend on what they need the most, but for many developing countries, the technical requirements for large-scale programs have been prohibitive. Now, however, biometric technologies have improved and become ubiquitous enough to allow the confident identification and low cost needed to implement successful cash-transfer programs in developing countries. This paper surveys the arguments for and against cash-transfer programs in resource-rich states, discusses some of the new biometric identification technologies, and reaches preliminary conclusions about their potentially very large benefits for developing countries. The barriers to cash-transfers are no longer technical, but political.
Topic:
Development, Economics, Science and Technology, and Foreign Aid

4. How Can Donors Create Incentives for Results and Flexibility for Fragile States? A Proposal for IDA

Author:
Alan Gelb
Publication Date:
10-2010
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
International Development Association (IDA) donors and others operating a country performance-based allocation system face two difficult problems: how to strengthen incentives to produce and document development results and how to increase flexibility for fragile states. Fragile states have the greatest need for projects, but their projects tend to rate poorly in performance-based allocations systems, which provide little incentive to produce successful projects in fragile states or other countries.
Topic:
Development, Economics, and Foreign Aid

5. To Formalize or Not to Formalize? Comparisons of Microenterprise Data from Southern and East Africa

Author:
Vijaya Ramachandran, Manju Kedia Shah, Alan Gelb, and Taye Mengistae
Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Why do firms choose to locate in the informal sector? Researchers often argue that the high cost of regulation prevents informal firms from becoming formal and productive. Our results point to a more nuanced story.
Topic:
Development, Economics, Markets, and Labor Issues
Political Geography:
Africa

6. Africa's Private Sector: What's Wrong with the Business Environment and What to Do About It

Author:
Vijaya Ramachandran, Manju Kedia Shah, and Alan Gelb
Publication Date:
03-2009
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
Why has the private sector failed to thrive in much of sub-Saharan Africa? Drawing on a unique set of enterprise surveys, we identify inadequate infrastructure (especially unreliable electricity and poor quality roads) and burdensome regulations as the biggest obstacles to doing business. We find as well that the private sector in many countries is dominated by ethnic minorities, which inhibits competition and lowers demand for a better business environment. Solutions include investing in infrastructure, providing risk guarantees, and reforming regulations to lower the cost of doing business, as well as increasing access to education for would-be entrepreneurs.
Topic:
Development, Economics, Emerging Markets, Globalization, and International Trade and Finance
Political Geography:
Africa