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41. Through the Looking-Glass, and What OLS Found There: On Growth, Foreign Aid, and Reverse Causality

Author:
David Roodman
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
The cross-country literature on foreign aid effectiveness has relied on the use of instruments to distinguish causality from mere correlation. This paper uses simple non-instrumental techniques in the spirit of Granger to demonstrate that the main aid-growth connection is a negative causal relationship from growth to aid—aid, that is, as a fraction of recipient GDP. Coarsely, when GDP goes up, aid/GDP goes down. The endogeneity of aid, long-suspected, is real. Less understood is that adding certain common controls to regressions puts this relationship through the looking-glass, flipping both its sign and apparent direction: aid seems to cause growth. Ideally, instrumentation expunges the endogeneity shown here. In practice, estimates of aid's impact have run into problems. Autocorrelation in the errors is widespread, and can render endogenous lagged variables used as regressors or instruments. The pitfalls of “difference” and “system” include invalidity and proliferation of instruments. Multicollinearity in term pairs of interest, such as aid and aid or “project” and “program” aid, can amplify endogeneity bias. The combination of specification problems and widespread fragility (shown in earlier work) leads to pessimism about the ability of cross-country econometrics to demonstrate aid effectiveness. This does not rule an average positive effect, nor does it contradict the fact that aid has saved millions of lives, but it does suggest that the average effect on economic growth is too small to be detected statistically.
Topic:
Economics, Humanitarian Aid, and International Political Economy

42. Inexcusable Absence: Why 60 Million Girls Still Aren't in School and What to do About It

Author:
Marlaine Lockheed and Maureen Lewis
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
The images of girls returning to school in Afghanistan after the fall of the Taliban drew attention to the lack of educational opportunities for girls all too common in many developing countries. Girls' education is indisputably crucial to development, and the development community has worked hard to get more of them into school. The result: since 1960, there have been remarkable increases in primary school enrollment rates for both boys and girls in developing countries. In most countries, girls' participation has converged with that of boys, bringing gender equity to the educational systems of many poor countries. But the international community has largely overlooked a key issue: that out of the remaining 60 million girls ages 6-11 still not in school, 70 percent belong to socially excluded groups.
Topic:
International Relations, Education, Gender Issues, and Humanitarian Aid
Political Geography:
Afghanistan and Taliban

43. Cost-Effective Prevention of Diarrheal Diseases: A Critical Review

Author:
Michael Kremer and Alix Peterson Zwane
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
This paper critically reviews the existing research on the cost-effective prevention and treatment of diarrheal diseases, and identifies research priorities in this area aimed at finding ways to reduce the diarrheal disease burden. In contrast to the empirical knowledge base that exists for traditional child health programs to reduce diarrheal morbidity and mortality, evidence on the relative effectiveness and cost-effectiveness of various environmental health interventions is limited and subject to significant methodological concerns. There is a limited understanding of the determinants of long-term water and sanitation technology adoption and behavior change at the individual level. Even less is known about how collective action problems in water and sanitation infrastructure maintenance can be overcome. An agenda for future research includes evaluating alternative transmission interruption mechanisms, improving understanding of the determinants of individual-level technology adoption in the water and sanitation sector, and assessing the quality of infrastructure maintenance under different management schemes.
Topic:
Health, Human Welfare, Humanitarian Aid, and Poverty

44. Income Distribution: Effects on Growth and Development

Author:
Nancy Birdsall
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
I review the literature on the effects of inequality on growth and development in the developing world. Two stylized facts emerge from empirical studies: inequality is more likely to harm growth in countries at low levels of income (below about $3200 per capita in 2000 dollars); and it is at high levels of inequality (at or above a Gini coefficient of .45) that a negative association emerges. Between 15 and 40 percent of the developing world's population lives in countries with these characteristics, depending on the inclusion of China, whose level of inequality has recently been measured at almost .45. Theory and evidence suggest that high inequality affects growth: (1) through interaction with incomplete and underdeveloped markets for capital and information; (2) by discouraging the evolution of the economic and political institutions associated with accountable government (which in turn enable a market environment conducive to investment and growth); and (3) by undermining the civic and social life that sustains effective collective decision-making.
Topic:
Development, Humanitarian Aid, Political Economy, and Poverty
Political Geography:
China

45. Performance-based Incentives for Health: Demand- and Supply-Side Incentives in the Nicaraguan Red de Protección Social

Author:
Ferdinando Regalía and Leslie Castro
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
Nicaragua's Red de Protección Social (RPS) is one of the first conditional cash transfer (CCT) programs implemented in a low-income country. Demand-side incentives, in the form of monetary transfers, are provided to poor households on condition that their children attend school and visit preventive health care providers. The design of the program is unique among CCT programs because these demand-side incentives are complemented by supply-side incentives aimed at improving the provision of health care. Health care providers are paid on the basis of their performance against predetermined targets. Both private and nonprofit health care providers contracted by the government extend the coverage of services to previously underserved areas.
Topic:
Development, Health, and Humanitarian Aid
Political Geography:
Latin America

46. Performance-Based Incentives for Health: Conditional Cash Transfer Programs in Latin America and the Caribbean

Author:
Amanda Glassman, Jessica Todd, and Marie Gaarder
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
In order to support poor families in the developing world to seek and use health care, a multi-pronged strategy is needed on both the supply and the demand side of health care. A demand-side program called Conditional Cash Transfers (CCTs) strives to reduce poverty and also increase food consumption, school attendance, and use of preventive health care. Since 1997, seven countries in Latin America have implemented and evaluated CCT programs with health and nutrition components. The core of the program is based on encouraging poor mothers to seek preventive health services and attend health education talks by providing a cash incentive for their healthy behavior (with healthy behavior representing performance). Evaluations of these programs measured outputs in the utilization of services; health knowledge, attitudes, and practice; food consumption; the supply and quality of services; as well as outcomes in vaccination rates; nutritional status; morbidity; mortality; and fertility.
Topic:
Development, Health, and Humanitarian Aid
Political Geography:
Latin America

47. Performance-Based Incentives for Health: Six Years of Results from Supply-Side Programs in Haiti

Author:
Amanda Glassman, Jessica Todd, and Marie Gaarder
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
USAID launched a project in 1995 to deliver basic health services in Haiti. The project began by reimbursing contracted NGOs for documented expenditures or inputs. In 1999, payment was changed to being based partly on attaining performance targets or outputs. The project also provided technical assistance to the NGOs, along with opportunities to participate in an NGO network and other cross-fertilization activities. Remarkable improvements in key health indicators have been achieved in the six years since payment for performance was phased in. Although it is difficult to isolate the effects of performance-based payment on these improved indicators from the efforts aimed at strengthening NGOs and other factors, panel regression results suggest that the new payment incentives were responsible for considerable improvements in both immunization coverage and attended deliveries. Results for prenatal and postnatal care were less significant, perhaps suggesting a strong patient behavioral element that is not under the influence of provider actions.
Topic:
Development, Health, and Humanitarian Aid
Political Geography:
Caribbean and Haiti

48. 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 (CGD)
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

49. 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 (CGD)
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

50. 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 (CGD)
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