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81. Trends in Private Capital Flows to Low-Income Countries: Good and Not-So-Good News

Author:
Nancy Lee and Asad Sami
Publication Date:
07-2019
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
Interest in mobilizing private finance for SDG investments is surging in a world of stagnating aid, limited fiscal space, and rising LIC debt. But is more reliance on private finance realistic for LICs? This paper explores the performance since the global financial crisis of one source of private finance for LICs: cross-border private capital inflows. Much of the evidence is encouraging, and some of it flies in the face of conventional wisdom. For LICs, private capital inflows are an important and growing source of finance. For the median LIC, private capital inflows are now as large as ODA as a share of GDP. And the FDI component—most of LIC inflows—has been stable and resilient throughout the post-crisis period. Importantly, inflows are not all captured by resource-rich LICs. In 2017, more than half of capital inflows to LICs went to non-resource-rich LICs. Increasingly, policies, not just resource endowments, shape LIC destinations for foreign capital. The relation between median capital inflows/GDP and median regulatory quality is significantly positive for non-resource-rich LICs. And sources of FDI are diversifying. In 2016, China’s stock of FDI in Africa was almost as large as that of the traditional investors: the US, UK, and France. But there is also not-so-good news. Median private capital inflow/GDP ratios are not positively correlated with median private domestic investment/GDP in LICs. Nor is there a significant relationship with median public investment/GDP. The apparent lack of complementarity between foreign and domestic investment may point to problems related to investment enclaves and/or the role of the state in LIC economies. As in other countries, non-FDI inflows to LICs are volatile and sensitive to global commodity prices and interest rates. We find no relation between median country per capita income levels and private inflows/GDP, highlighting the need for caution in IDA graduation policies.
Topic:
Development, Capital Flows, Interest Rates, Private Sector, and Capital
Political Geography:
Global Focus

82. Chinese Leadership and the Future of BRI: What Key Decisions Lie Ahead?

Author:
Brad Parks
Publication Date:
07-2019
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
It’s 2028. The Belt and Road Initiative (BRI) has been underway for 15 years, but the initial enthusiasm and momentum behind BRI has vanished. Many of the governments that initially joined the initiative have publicly withdrawn or quietly wound down their participation. China’s staunchest allies remain engaged but even they have reservations about the wisdom of the initiative. They are saddled with unproductive public investment projects and struggling to service their debts. Domestic public sentiment towards China has soured, and they have come to view their participation in BRI as more of a political liability than an asset. But they worry about the consequences of alienating their most important patron and creditor. China has also assumed a defensive posture. Lacking the goodwill that it possessed at the beginning of BRI, it is now using inducements and threats to prevent its remaining clients from abandoning the initiative. Western donors and lenders watch from the sidelines with a sense of bemusement. They encouraged China to “multilateralize” BRI by establishing a common set of project appraisal standards, procurement guidelines, fiduciary controls, and social and environmental safeguards that other aid agencies and development banks could support. But Beijing chose to go it alone. It opted not to embrace the use of economic rate-of-return analysis to vet project proposals; resisted efforts to harmonize its environmental, social, and fiduciary safeguards with those used by aid agencies and development banks outside of China; and pushed back on the “Western” suggestion that it modernize its monitoring and evaluation practices. China bet that its fast and flexible approach to infrastructure finance would prove to be so compelling that traditional donors and lenders would eventually jump on the bandwagon and co-finance BRI projects. But it miscalculated. Its model was insufficiently attractive on its merits to enlist the participation and support of the other major players in the bilateral and multilateral development finance market. Nor was it sufficiently appealing to sustain elite and public support in partner countries.
Topic:
Development, International Trade and Finance, Infrastructure, Leadership, and Belt and Road Initiative (BRI)
Political Geography:
China and Asia

83. “Contractors or Collectives?” Earmarked Funding of Multilaterals, Donor Needs and Institutional Integrity: The World Bank as a Case Study

Author:
Owen Barder, Euan Ritchie, and Andrew Rogerson
Publication Date:
07-2019
Content Type:
Case Study
Institution:
Center for Global Development (CGD)
Abstract:
We revisit the policy dilemmas thrown up by so-called Multi-bi funding (earmarked bilateral aid routed via multilateral channels), based on a case study of World Bank trust funds, given their industry-leading overall size and relative transparency. We update patterns of sources and uses of Multi-bi using the 2019 Trust Funds Directory and use this to derive a new Index of Responsible Multi-bi Donorship. We consider complementary donor motivations for Multi-bi, highlighting their perceived need to shift the focus of a multilateral institution faster than they believe possible through its core systems. We examine potential negative effects of Multi-bi on the distortion of funding choices available to client countries, and above all on the risk of “hollowing out” of the multilateral itself, as the locus of power and accountability shifts from the wider collective toward a narrower set of contracting relationships. We find that current trust fund reform efforts can at best partly address these dynamics, while the growing trend toward creation of sub-windows within the main core funding instrument could potentially make things worse. Instead, we offer a pragmatic two-track solution that could significantly reduce tensions between funder needs and institutional integrity. This involves (a) developing an improved battery of output indicators mapped to donor core contributions, to enhance visibility and results reporting and (b) routing new Multi-bi proposals increasingly through core governance processes, focusing initially on greater transparency and on demonstrating their additionality to donors’ core funding.
Topic:
Development, Economics, Finance, Banks, Donors, and Funding
Political Geography:
Global Focus

84. Five Takeaways on the Future of Humanitarian Reform

Author:
Jeremy Konyndyk
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
The world’s humanitarian aid architecture is growing outdated. Relief programs are most effective when they are integrated, locally owned, and demand driven. But humanitarian action in the 21st century remains constrained by a 20th-century aid model: siloed, supply driven, and centered on the individual mandates and sectors of major international aid agencies. This makes aid both less effective and less responsive than it could be. In a world where displacement is at the highest levels in generations, climate disasters are increasing, and humanitarian funding is beginning to level off, this disconnect is no longer tenable. But fixing it is not a simple matter—multiple rounds of humanitarian reform over the past 15 years have made progress but fallen short of fundamental change. Earlier this summer in Geneva, CGD convened two high-level private roundtables, one with leaders from humanitarian donor institutions and another with senior executives from major humanitarian aid agencies (both multilaterals and NGOs), to discuss how to make humanitarian aid more cohesive and user-centered. The meetings were part of a multiyear research initiative exploring how modernizing the humanitarian business model and humanitarian governance are integral to improving field-level humanitarian impact. CGD teed up the conversation with three emerging ideas from our research (you can see the presentation slides here). These ideas—the subjects of several forthcoming papers CGD is developing —explore ways of better aligning aid delivery around enhanced impact toward affected people’s priorities
Topic:
Development, Humanitarian Aid, International Cooperation, Reform, and Humanitarian Intervention
Political Geography:
Global Focus

85. Promoting Investment in Research for Development Outcomes: A Research Ventures Fund at the World Bank

Author:
Scott Morris
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
This note proposes a new Research Ventures Fund (RVF) at the World Bank to better prioritize R&D investments in support of development progress. The RVF would employ financing mechanisms that are consistent with research needs: significant scale and scope, patience, and tolerance for failure. Existing development-oriented research consortia like CGIAR would provide a promising start for RVF funding allocations. Donors to the IDA-19 replenishment should take the first step in securing funding for the new fund in 2019.
Topic:
Development, International Cooperation, Science and Technology, World Bank, Finance, Research, and Banking
Political Geography:
Global Focus

86. Building an EU-Africa Partnership of Equals: A Roadmap for the New European Leadership

Author:
Anita Kappeli
Publication Date:
09-2019
Content Type:
Special Report
Institution:
Center for Global Development (CGD)
Abstract:
The arrival of a new leadership team in Brussels provides an opportunity for Europe to reinvigorate its role as a global development power and to build a true partnership with its continental neighbour, Africa. These tasks have never been more urgent. With only 10 years to go, the world is far from achieving the Sustainable Development Goals (SDGs) by 2030. A confluence of well-documented global trends, including accelerating climate change, declining multilateralism, and the erosion of democratic norms, is only increasing the challenge.
Topic:
Development, Diplomacy, International Cooperation, European Union, Sustainability, and African Union
Political Geography:
Africa and Europe

87. Building on Digital ID for Inclusive Services: Lessons from India

Author:
Alan Gelb and Anit Mukherjee
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
India has emerged as a leader in building on its biometric digital ID (Aadhaar) to reform service and program delivery. It moved quickly to consolidate the rollout of Aadhaar, and then to embed the unique Aadhaar number into program databases. A range of applications, including digital signature and payments, was then constructed on top of the Aadhaar foundation (the India Stack). Together with partners, the Center for Global Development is analyzing the effects of Aadhaar-based reforms. India offers lessons for many other countries as their focus evolves from rolling out an ID system towards using it to improve the efficiency and inclusivity of service delivery. Some programs using Aadhaar are federally administered but others are implemented at state level. It is already clear that some states and sectors are reforming better than others, generally because of better design of the digital reforms or stronger capacity to implement them. The three programs we discuss below high- light achievements as well as challenges that need to be overcome for greater efficiency and inclusion.
Topic:
Development, Governance, Identities, and Digitalization
Political Geography:
India and Asia

88. People-Driven Response: Power and Participation in Humanitarian Action

Author:
Jeremy Konyndyk and Rose Worden
Publication Date:
09-2019
Content Type:
Research Paper
Institution:
Center for Global Development (CGD)
Abstract:
The notion that humanitarian response should center on the people it serves, rather than the aid agencies serving them, has been repeatedly codified in humanitarian commitments as far back as the early 1990s. Yet the mainstream humanitarian system has struggled to translate these commitments into practice: corresponding reform efforts have failed to systemically broaden accountability to and participation of aid recipients in response efforts. Major constraints have included misaligned incentive structures between donors and aid agencies, power imbalances between aid providers and aid recipients, and operational and political complexities arising at field level. To produce real systemic change, the aid system must move beyond technical and rhetorical approaches to accountability and begin reshaping the power and incentive structures that influence aid decision-making. This paper proposes a set of mutually reinforcing recommendations centered around three imperatives: enshrining the influence of aid recipients at all levels of aid decision-making; developing independent channels for soliciting the priorities and perspectives of crisis-affected people; and institutionalizing a set of enabling changes to humanitarian operational and personnel practices.
Topic:
Development, Humanitarian Aid, Institutionalism, and Humanitarian Crisis
Political Geography:
Global Focus

89. Marginal, Not Transformational: Development Finance Institutions and the Sustainable Development Goals

Author:
Charles Kenny
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
Development finance institutions have positioned themselves as key agencies to help the world meet the Sustainable Development Goals. It is doubtful that they can deliver. This paper outlines the challenges facing DFIs in achieving (anywhere near) such an expansion in their impact, particularly in infrastructure and particularly in the poorest countries. It notes that private investment in SDG priority areas is low in the poorest countries, and the record of private investment in rolling out services is mixed. These issues are linked in part to significant supply side constraints based on country characteristics. DFIs do better than the market as a whole at investing in challenging infrastructure–but not by much. And while the scale of their ‘leverage’ in terms of attracting dollars that would otherwise not have been invested is hard to determine, in the poorest markets in infrastructure it is certainly low. Finally, DFIs and donors more broadly have long tried to improve deal flow with limited success, suggesting there are few deals on the margin of occurring which only require small extra incentives to materialize.
Topic:
Development, Finance, Institutions, and Sustainability
Political Geography:
Global Focus

90. Teacher Professional Development around the World: The Gap between Evidence and Practice

Author:
Anna Popova, David Evans, Mary E. Breeding, and Violeta Arancibia
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
Many teachers in low- and middle-income countries lack the skills to teach effectively, and professional development (PD) programs are the principal tool that governments use to upgrade those skills. At the same time, few PD programs are evaluated, and those that are evaluated show highly varying results. In this paper, we propose a set of indicators—the In-Service Teacher Training Survey Instrument—to standardize reporting on teacher PD programs. Applying the instrument to 33 rigorously evaluated PD programs, we find that programs that link participation to career incentives, have a specific subject focus, incorporate lesson enactment in the training, and include initial face-to-face training tend to show higher student learning gains. In qualitative interviews, program implementers also report follow-up visits as among the most effective characteristics of their professional development programs. We then use the instrument to present novel data on a sample of 139 government-funded, at-scale professional development programs across 14 countries. The attributes of most at-scale teacher professional development programs differ sharply from those of programs that evidence suggests are effective, with fewer incentives to participate in PD, fewer opportunities to practice new skills, and less follow-up once teachers return to their classrooms.
Topic:
Development, Education, Labor Issues, Academia, and Teaching
Political Geography:
Global Focus