Brookings: Projects - Development Assistance and Governance Initiative

The Final Countdown: Prospects for Ending Extreme Poverty by 2030 (Report)

Laurence Chandy, Natasha Ledlie and Veronika Penciakova — Mon, 29 Apr 2013 12:00:00 -0400

Editor’s Note: An interactive feature, highlighting the key findings from this report, can be found here.

Over a billion people worldwide live on less than $1.25 a day. But that number is falling. This has given credence to the idea that extreme poverty can be eliminated in a generation. A new study by Brookings researchers examines the prospects for ending extreme poverty by 2030 and the factors that will determine progress toward this goal. Below are some of the key findings:

1. We are at a unique point in history where there are more people in the world living right around the $1.25 mark than at any other income level. This implies that equitable growth in the developing world will result in more movement of people across the poverty line than across any other level.

2. Sustaining the trend rate of global poverty reduction requires that each year a new set of individuals is primed to cross the international poverty line. This will become increasingly difficult as some of the poorest of the poor struggle to make enough progress to approach the $1.25 threshold over the next twenty years.

3. The period from 1990 to 2030 resembles a relay race in which responsibility for leading the charge on global poverty reduction passes between China, India and sub-Saharan Africa. China has driven progress over the last twenty years, but with its poverty rate now down in the single digits, the baton is being passed to India. India has the capacity to deliver sustained progress on global poverty reduction over the next decade based on modest assumptions of equitable growth. Once India’s poverty is largely exhausted, it will be up to sub-Saharan Africa to run the final relay leg and bring the baton home. This poses a significant challenge as most of Africa’s poor people start a long way behind the poverty line.

4. As global poverty approaches zero, it becomes increasingly concentrated in countries where the record of and prospects for poverty reduction are weakest. Today, a third of the world’s poor live in fragile states but this share could rise to half in 2018 and nearly two-thirds in 2030.

5. The World Bank has recently set a goal to reduce extreme poverty around the world to under 3 percent by 2030. It is unlikely that this goal can be achieved by stronger than expected growth across the developing world, or greater income equality within each developing country, alone. Both factors are needed simultaneously.

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Authors

Laurence Chandy
Natasha Ledlie
Veronika Penciakova

The Final Countdown: Prospects for Ending Extreme Poverty by 2030 (Interactive)

Laurence Chandy, Natasha Ledlie and Veronika Penciakova — Wed, 24 Apr 2013 10:21:00 -0400

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Authors

Laurence Chandy
Natasha Ledlie
Veronika Penciakova

Why Congress Should Care About the International Aid Transparency Initiative

George Ingram — Wed, 17 Apr 2013 15:41:00 -0400

As the long-dreaded sequestration process begins to set in, U.S. government programs that have already been feeling the heat of budget pressures are now starting to feel the pinch. Across all agencies and departments, there has never been such heightened vigilance to determine the quality, value, and effectiveness of taxpayer-funded programs in order to save them from landing on the proverbial chopping block. U.S. foreign assistance is no exception, and in fact, is likely to be a popular target despite notable progress over the past decade in how aid is delivered.

One basic tool to help circumvent arbitrary and needless cuts is to make information related to foreign assistance transparent, accessible and comparable with the activities of other international donors. Congress has the important responsibility of choosing how much to allocate for activities that seek to lift millions out of extreme poverty, fight disease, spur growth and restore human dignity. In this challenging budget environment, that responsibility is of even higher consequence, with the potential to affect lives all around the world, either for the better or worse. But to make informed decisions, Congress needs to have at its disposal comprehensive, reliable data that is timely and up-to-date.

The Foreign Assistance Dashboard— a public website launched a little over two years ago by the Obama administration to examine this data— demonstrates a strong commitment to aid transparency. However, compliance from agencies involved in U.S. foreign assistance has been slow; the site still only has partial information (budget plans, obligations and expenditures) for a couple of agencies (USAID and Millennium Challenge Corporation) and just planning data for the State Department, leaving out more than a dozen others as well as critical program and project data that lie beneath the aid-flow surface.

The U.S. made another major commitment to the transparency agenda at the 2011 High Level Forum on Aid Effectiveness in Busan, South Korea, by joining the International Aid Transparency Initiative (IATI). Meeting the IATI commitments, particularly the publication of comprehensive and timely foreign assistance information, is incomplete and moving slowly.

Congress needs to understand that the dashboard and IATI are the tools it has been searching for. Members continuously complain about the opaqueness of foreign assistance – how much assistance is the U.S. providing, to what countries, for what purposes, in cooperation with whom, to what effect? Where is the information to explain to constituents how their tax dollars are being spent? Together the dashboard and IATI will provide this information.

Even more importantly, while there are varying opinions over the best uses and purposes for foreign assistance, members of Congress, Republicans and Democrats, are united in caring that foreign assistance dollars are used well – that tax dollars are not wasted and that the assistance does help lift individuals and countries from poverty and promote U.S. foreign policy interests.

IATI is a critical tool in contributing to the effective use of foreign assistance funds – and not just government provided assistance, but also that which is provided by private entities such as NGOs, foundations and corporations. It is currently the only place for comparable aid information. While the dashboard is a valuable domestic resource, IATI allows a wide range of stakeholders to know what the U.S. government is doing alongside what others are doing. This is the full aid picture and what recipients want to know on the ground.

As of April 2013, 39 government and multilateral donors, and over 100 private organizations, have committed to IATI. When fully operative and with timely and comprehensive data from all donors, we will have the ability through one website to find all donor activity in a particular sector and a particular locale in a country – a virtual one-stop-data-shop for foreign assistance. So how will this improve aid effectiveness?

Let’s say you are: (1) USAID contemplating investing scarce assistance funds in education in region X of country Y; (2) a congressional staffer whose boss has asked whether donors are helping to expand education opportunities in that region; (3) an NGO contemplating working in that region; (4) a finance ministry budget expert in country Y trying to figure out which school districts are in the greatest need of resources in the next fiscal year. IATI will provide the data to help answer these questions.

Through IATI, USAID will know which other donors are engaged in the region, at what level of funding, with what specific focus, and with whom it might coordinate. The congressional staffer can tell his member what donors and at what level education is being assisted. The NGO can tell if this region is overrun by its sister organizations or ignored and with whom it might partner. The ministry budget expert can better allocate scarce resources and query the education ministry staff as to whether it is integrating donor activity into national education plans.

The administration is to be commended for taking the leading in bringing U.S. assistance into the age of data transparency. It is now time for Congress to become involved, by supporting the administration but also by pushing for more robust implementation. Congressman Ted Poe does this in his bill, the “Foreign Aid Transparency and Accountability Act”, which passed the House in the waning days of the last Congress but was held up in the Senate. It is expected that he will soon reintroduce the bill. Congress should act swiftly to enact it into law and recommend that IATI be the standard by which all agencies in the aid space publish their data.

Authors

George Ingram

Image Source: © Philimon Bulawayo / Reuters

Transforming Foreign Assistance

Rev. David Beckmann, George Ingram and Jim Kolbe — Mon, 15 Apr 2013 16:41:00 -0400

The amount of good our nation has done for poor and hungry people around the world over the last ten years is astounding. We have saved and improved millions of lives through programs like the President’s Emergency Plan for AIDS Relief (PEPFAR), which was launched by former President George W. Bush to battle the disease in Africa, and the Feed the Future initiative, which President Obama started to support small farmers and the growth of local economies in developing countries.

Behind these big ticket initiatives, our foreign assistance approach has also been transformed into a more rigorously evaluated, strategic and selective one that is focused on helping developing countries and citizens take control of their own future. Completing this transformation must be a foreign policy priority for Obama and his successors because effective and robust development efforts will have to play a larger role in U.S. foreign policy if we are to maintain a strong global presence as our major military engagements end.

Recently, the United States Agency for International Development released the results of an extensive internal evaluation that provided the first evidence that reform is making the machinery of U.S. foreign assistance work better. The USAID Forward Progress Report provides a look at how the agency is implementing the reforms that Obama outlined in his landmark Policy Directive on Global Development (PPD) in 2010. The PPD, the first government-wide development policy reform guidance ever issued from the White House, mapped out the transformation agenda and highlighted a “long-term commitment to rebuilding USAID as the U.S. government’s lead development agency and as the world’s premier development agency.”

In the years since, USAID has focused on reforming key areas:

Evaluation and Selectivity: The creation of both the new USAID Bureau for Policy, Planning and Learning and the position of Chief Economist have had clear impact on the agency’s ability to plan and to measure programs and thus make more strategic decisions. The report notes that since 2011, 186 in-depth program evaluations have been completed and published for public review. Furthermore, thanks to a more concerted use of strategic planning, the agency reduced total numbers of program areas by 22 percent and phased out agricultural programs and global health programs in 21 and 17 countries, respectively, where local institutions are in position to take charge.

Country ownership: USAID’s launch of a process to develop Country Development Cooperation Strategies (CDCS) – which involve close and cross-sectoral collaboration with recipient countries to set goals and adapt programs – is an important step towards giving partners and citizens more responsibility and accountability within the development process. Twenty CDCS processes were completed in 2012. Efforts to expand country ownership were further strengthened by the agency’s efforts to direct more resources to local institutions. The report notes a 50 percent increase in funding to local organizations since 2010, from 9.7 percent in 2010 to 14.3 percent this year.

Economic Growth and Innovation: The report outlines that strengthening the Development Credit Authority (DCA) has allowed USAID to leverage more private capital – $524 million in 2012 alone – to support entrepreneurship and growth in developing countries. A premium has also been put on new technology: six USAID missions are now actively using and supporting mobile applications to catalyze development.

Partnership: In addition to strengthening relationships with recipient governments, institutions, and citizens, USAID has developed new partnerships with universities and other private sector organizations in order to build local capacity and improve program outcomes.

Transparency: USAID has established a rigorous, multi-step risk assessment mechanism for determining host country governments’ readiness to receive government-to-government assistance from the U.S. If at any point in this process a government fails to meet those eligibility criteria, it is disqualified from further consideration. Similarly, the Obama administration launched the Foreign Assistance Dashboard over two years ago to make information about U.S. assistance more accessible to both American citizens and those of recipient countries, and has committed to publish its assistance data with the International Assistance Transparency Initiative (IATI).

In addition to increased diligence and resolve by the Obama administration and USAID, congressional engagement is needed to solidify these reforms. The president’s budget includes strong reform elements, including a proposal to reshape the inefficient U.S. food aid system to reach more people and save more taxpayer dollars, and we urge Congress to support this and other proposals, like transparency legislation introduced by Rep.Ted Poe (R-Texas).

Completing the transformation of U.S. foreign assistance will reposition the U.S. as not just the most generous, but also the most strategic, innovative, and effective player in global development. We have saved and improved millions of lives over the last ten years and our efforts have helped strengthen our image abroad: a new field survey of aid recipient countries by Oxfam America finds that 83 percent of respondents believe the U.S. is a better development partner now than five years ago. The opportunity at hand for the next ten years is to turn progress into lasting change by helping those people take control of their own lives.

Authors

Rev. David Beckmann
George Ingram
Jim Kolbe

Publication: Politico

Getting to Scale : How to Bring Development Solutions to Millions of Poor People

Laurence Chandy, Akio Hosono, Homi Kharas and Johannes F. Linn, eds. — Mon, 15 Apr 2013 00:00:00 -0400

Brookings Institution Press 2013 240pp.

The global development community is teeming with different ideas and interventions to improve the lives of the world’s poorest people. Whether these succeed in having a transformative impact depends not just on their individual brilliance but on whether they can be brought to a scale where they reach millions of poor people.

Getting to Scale explores what it takes to expand the reach of development solutions beyond an individual village or pilot program, but to poor people everywhere. Each of the essays in this book documents one or more contemporary case studies, which together provide a body of evidence on how scale can be pursued. It suggests that the challenge of scaling up can be divided into two: financing interventions at scale, and managing delivery to large numbers of beneficiaries. Neither governments, donors, charities, nor corporations are usually capable of overcoming these twin challenges alone, indicating that partnerships are key to success.

Scaling up is mission critical if extreme poverty is to be vanquished in our lifetime. Getting to Scale provides an invaluable resource for development practitioners, analysts, and students on a topic that remains largely unexplored and poorly understood.

ABOUT THE EDITORS

Laurence Chandy

Akio Hosono

Akio Hosono is the director of the Research Institute of the Japanese International Cooperation Agency.

Homi Kharas

Johannes F. Linn

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Obama’s Budget and International Affairs: Level Funding but Noteworthy Changes

George Ingram — Thu, 11 Apr 2013 16:39:00 -0400

There has been lots of reporting and analysis of President Obama’s FY 2014 budget, particularly on key domestic elements and on defense, but little attention has been given to the international part of the budget.

The most thorough and careful analysis of the international affairs account was released yesterday by the U.S. Global Leadership Coalition.

No need to repeat the analysis here, but I will highlight several noteworthy elements in the budget:

Funding is straight lined from FY 2013 spending levels (includes sequestration), which is about a 15 percent reduction from 2010 levels.
Funding for a range of development activities would increase, including for the development assistance account, health, women and girls, food security, multilateral development banks, and disaster assistance.
Funding to engage the U.S. private sector in development is up significantly – funding for the Overseas Private Investment Corporation increases by one third and for the Trade and Development Agency by a quarter.
Selectivity is alive, with hard decisions being made to reduce the USAID presence in 11 countries, funding for agriculture and HIV/AIDS programs in select countries, and funding for frontline states (Iraq, Afghanistan, and Pakistan).
Embassy security would receive significantly higher funding.

While there are a number of significant changes proposed in the budget, the one that has received the most attention – beginning with leaked information six weeks ago and again with the release of the budget – is the proposal to bring greater efficiencies to food assistance. The heart of the proposal is to reduce the requirement to purchase U.S. commodities and to transport them on U.S. ships, which are costly in terms of time and money, and to allow greater flexibility in purchasing required food items on the open market. Another aspect of the change is to substitute cash payment for “monetization”. Under monetization, U.S. NGOS receive U.S. commodities, ship them to a developing country, and sell the commodities in the local market. The cash is then used to fund important development activities. But there are losses at the several steps in this process so it is an inefficient means of financing development. The same amount of cash directly to the NGOS would reach more beneficiaries.

The proposed reform of food assistance has engendered intense interest and debate within the NGO development community, with some strongly supporting the reform proposals and others more concerned resources could be lost in the legislative process. Two groups, the Modernizing Foreign Assistance Network and Interaction, released statements yesterday, both supportive of reform, but one emphasizing the benefits of reform and the other also seeking to ensure that benefits of the current system not be lost.

However, initial reactions on Capitol Hill have been mixed.

Authors

George Ingram

Image Source: © Kevin Lamarque / Reuters

USAID Sets Model for Transparent Policymaking

George Ingram — Wed, 10 Apr 2013 16:37:00 -0400

President Barack Obama entered the Oval Office in 2009 with a commitment to open government. As a freshman senator he sponsored legislation requiring transparency in government; he campaigned on open government; and, on day one in the Oval Office, he signed an executive order on open government.

Openness is not natural behavior for a bureaucracy, neither in the government nor the private sector. Staff is too busy carrying out normal duties and there is the fear that outsiders will disagree or misrepresent information. In addition, consultations with interested but external parties consume valuable time. Transparency is a typical case of NIMBY—“good for others but I don’t have the time or need.” However, this attitude may be changing in U.S. foreign assistance policymaking.

There have been a few past forays into transparent policymaking. In the late 1990s the Europe and Eurasia Bureau at the U.S. Agency for International Development (USAID) decided to write a strategy on small and medium enterprises (SMEs) in Central and Eastern Europe and the former Soviet Union. Instead of working behind closed doors, it invited some 35 individuals from organizations working in the SME arena to a meeting to help identify major issues. Following that conversation, the Bureau hosted an online discussion on the key topics with eventually some 250 participants, drafted a strategy, put the draft out for comment and then, afterwards, finalized the strategy. The result of this process was a better informed strategy that had community support. The big lesson here was that process matters.

In 2010, following President Obama's speech in Cairo, USAID was tasked with drafting a U.S. government policy guidance document on youth. After the policy was drafted and went through the interagency process, USAID invited some 50 knowledgeable people from the development community to a half-day discussion of the draft policy. Pursuant to the comments, USAID not only made several significant adjustments to the policy but also made public the summary notes from the meeting.

In recent years the Millennium Challenge Corporation (MCC) has significantly raised the bar for transparency—making public the criteria and data for selecting eligible countries and for its principal analytic methodologies. It also has been more open than other agencies in its policymaking process; for example, the MCC consulted outside experts when drafting its gender policy.

Now USAID has joined the new, more transparent world in a way that should be hailed. This move should become the standard practice in policymaking. In 2010, USAID, under the leadership of its new Bureau for Policy Planning and Learning (PPL), decided to draft a series of strategies and policy statements. The latest, a policy on urban services now in its final stages, has followed a process of transparency and openness that should become the model.

Early in 2012 PPL decided to write a policy to guide USAID involvement in urban services. It brought on an expert in the subject matter for two years to assist in the process. By the summer PPL staff decided to make urban services a candidate for a more open process and by the fall had agency leadership buy-in. In early 2013, before beginning to draft the document, PPL commenced a consultative process that included discussion sessions at the Woodrow Wilson Center, InterAction, the Professional Services Council, interagency and with staff at USAID missions. PPL staff then began to draft the policy in an iterative process that involved going back to the interested community to update them on progress and pose questions.

In March 2013, USAID put the draft policy out for public comment, not just to those individuals and organizations that had been involved in the formal consultations, but also to the 227,000 USAID Twitter followers and other social media venues. And, it appears that USAID is listening. USAID has scheduled several public sessions to continue the comment period this month. Today (April 10) I attended the session at InterAction. PPL staff presented a summary of the more than 100 responses from the online consultations that identified critiques of the draft policy’s strength and weakness. That summary was followed by an hour discussion that solicited a number of suggestions.

This deliberative process of policy formulation should result in a policy that is better informed and has broad buy-in. This method should be the template for USAID policymaking moving forward and the standard to which the agency should hold itself accountable. This process would best be institutionalized in formal guidelines on policymaking.

Authors

George Ingram

Mobile Money: A Technology Game Changer for Tackling Global Poverty?

Laurence Chandy — Tue, 12 Mar 2013 13:00:00 -0400

Mobile money—the ability to store and transfer money using cell phones—is one of the most talked-about technologies in global development. Proponents believe it could redefine what it means to be poor by giving poor people access to basic financial services.

In Kenya, where two-thirds of the population live on less than $2 a day, mobile money is now ubiquitous and has enjoyed outstanding adoption rates among low-income customers. Early evidence indicates it is already changing lives. For Safaricom, the leading provider of the service in Kenya, mobile money—or M-Pesa, as its product is called—has contributed directly to the company’s bottom line, while strengthening its market share.

Mobile phone operators are now tripping over each other to roll out similar services in other developing countries, from Afghanistan to Zambia. Intuitively, we would expect these to match, if not better, M-Pesa’s record of success by learning from M-Pesa’s experiences. So far that hasn’t happened. While a number of offerings in different countries are now taking root, none have so far matched the speed and scale of M-Pesa in Kenya. Others have failed miserably.

The video above chronicles M-Pesa’s pioneering story in Kenya and delves into the question of why its success has not been easily replicated elsewhere. We discussed this and other technological innovations for development last year at the Brookings Blum Roundtable—a high-level conference held each summer to discuss solutions to global poverty. To read more about the challenges of replicating M-Pesa, and the propagation of other innovations in the developing world, please read the 2012 conference report.

Authors

Laurence Chandy

The United States and Global Development: An Approach in Transition

Tue, 19 Feb 2013 14:00:00 -0500

Event Information

February 19, 2013
2:00 PM - 3:30 PM EST

Saul/Zilkha Rooms
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

As President Barack Obama begins his second term, the U.S. global development community is taking stock of the reform efforts that began in 2010 to elevate development—joining defense and diplomacy—as a core pillar of U.S. national security and foreign policy, while advancing proposals for what the administration should focus on going forward. In January 2013, the Modernizing Foreign Assistance Network (MFAN), a reform-minded coalition that is focused on advancing the effectiveness and impact of U.S. global development efforts, submitted its recommendations to President Obama.

On February 19, the Development Assistance and Governance Initiative at Brookings and MFAN co-hosted a discussion on the current status and future of the U.S. global development reform agenda. Panelists included: Sheila Herrling, vice president, department of policy and evaluation at the Millennium Challenge Corporation; Steven Radelet, distinguished professor in the practice of development at Georgetown University; Susan Reichle, assistant to the administrator at the Bureau of Policy, Planning and Learning at the U.S. Agency for International Development; and Connie Veillette, former director of the Rethinking U.S. Foreign Assistance Program at the Center for Global Development. Brookings Senior Fellow George Ingram moderated the discussion.

Clicks into Bricks, Technology into Transformation, and the Fight Against Poverty

Laurence Chandy, Kemal Derviş and Steven Rocker — Tue, 12 Feb 2013 09:42:00 -0500

The last century has witnessed dramatic global improvements in the quality of life. Many of these improvements can be attributed to the discovery and spread of new technologies and ideas, ranging from vaccines and antibiotics, to improved hygiene, to the agricultural reforms of the Green Revolution. Today there is growing excitement about a new set of technologies that could further improve the lives of poor people around the world. Mobile technology is giving poor people the capacity to use their cell phones to send, receive and store money. Connection technologies such as open source software have allowed people in Haiti and Pakistan to collect and analyze information about, and then respond to, violence, corruption and natural disasters. “Green growth” innovations are expanding access to electricity and increasing agricultural yields around the globe while also reducing harmful emissions.

The 2012 Brookings Blum Roundtable was convened to discuss how the role of technology and innovation in global development can be promoted. Development practitioners and thought leaders from the public, private and non-profit sectors came together to examine the constraints that prevent the take up of creative technologies and how these constraints can be lifted. A critical question for the roundtable was what role the U.S. government should play in this agenda and how it can crowd in greater private sector activity.

This report highlights 10 issues raised at the roundtable where either particular proposals were advanced and debated, or new perspectives and analyses were shared. In each case, we summarize the roundtable discussion or explore the issues raised.

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The video below chronicles M-Pesa, the leading mobile money service in Kenya, and delves into the question of why its success has not been easily replicated elsewhere. For more information on M-Pesa, read Chapter 2 of this report.

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Authors

Image Source: © Reuters Staff / Reuters

How Effective Is the World Bank at Targeting Sub-National Poverty in Africa? A Foray into the Murky World of Geo-Coded Data

Laurence Chandy, Natasha Ledlie and Veronika Penciakova — Mon, 04 Feb 2013 14:11:00 -0500

How efficiently is aid allocated to reduce poverty? This question was explored over a decade ago in a paper by the economists Paul Collier and David Dollar. Their definition of a poverty-efficient allocation included, among other elements, the simple maxim that to maximize poverty reduction, “aid should be given to countries with large amounts of poverty.” When actual allocations were analyzed, it was shown that donor agencies paid heed to this rule. (Donors did less well at giving aid to countries with good policies, which, the authors argued, resulted in poverty-inefficient allocations overall.)

Intuitively, we would expect this maxim to apply at the sub-national level too: aid will contribute most to poverty reduction in a country when it is allocated to its poorest regions. An examination of sub-national aid allocations could therefore lead to greater understanding of donors’ commitment to poverty reduction. However, the limited availability of sub-national data on both aid and poverty incidence has precluded this level of analysis.

This is starting to change. As part of its “Mapping for Results” initiative, the World Bank has geo-coded its entire project portfolio of 2,900 active projects across 30,400 sub-national locations in 144 countries. Meanwhile, IFPRI’s Harvest Choice initiative has gathered together sub-national poverty data (using the international poverty line of $1.25 a day) from recent household surveys in 24 sub-Saharan African countries to draw detailed poverty maps covering half the continent. Both datasets contain, at a minimum, information at the first-order administrative level, meaning the province, state and governorate.

By combining these two datasets, we can begin to explore the allocative efficiency of aid with respect to poverty at the sub-national level—albeit for a single donor, in a subset of countries, at a particular point in time. The 24 countries we study contain 359 World Bank projects, which together are valued at nearly $19.3 billion.

By combining these two datasets, we can begin to explore the allocative efficiency of aid with respect to poverty at the sub-national level—albeit for a single donor, in a subset of countries, at a particular point in time. The 24 countries we study contain 359 World Bank projects, which together are valued at nearly $19.3 billion.

Our findings suggest that the World Bank rarely focuses its aid in the poorest regions in a country. However we refrain from casting judgment on the appropriateness of the Bank’s allocations due to unresolved questions concerning how targeting is measured, when targeting is appropriate, and how it can best be brought about.

Our point of departure is to consider the different ways in which aid can target the poor at the sub-national level. One approach is to devote aid to regions that have the largest number of poor people. At the country level, this would be equivalent to giving aid to India which is home to hundreds of millions of people living in extreme poverty. Alternatively, regions with the highest poverty rates could be prioritized. This compares to giving aid to Liberia where four in five people live below the poverty line.

For each approach we construct a poverty targeting index. This weights World Bank allocations within each country to generate a measure of how far they deviate from a poverty-neutral scenario in which aid is allocated equally across the country’s sub-national regions on a per capita basis. A positive score means that more aid is allocated to poorer regions within a country whereas a negative score implies a bias against poorer areas. (Note that allocations at a country level are assumed to be fixed; we do not consider the possibility of reallocating aid between sub-national units across national borders. We are also interested only in the incidence of poverty, not the distance of individuals from the poverty line.)

The results from the two indexes are illustrated in Figure 1a and 1b. As might be expected, the two sets of results diverge. For instance, in Kenya, the World Bank is effective at targeting sub-national regions with large numbers of poor people, but avoids those regions with the highest poverty rates.

While both these indexes capture something important, neither provides an adequate account of poverty targeting on its own. We therefore create a composite index which rewards aid allocations to regions where both the number of poor people and the poverty rate is high. At the country level, this would be equivalent to allocating aid to Nigeria, which accounts for the largest number of poor people in sub-Saharan Africa and has a high poverty rate of 68 percent. This index is illustrated in Figure 1c. In only 5 of 24 countries does the World Bank favor poorer regions as reflected by a positive score.

The indexes described thus far invite comparisons between countries as to where the World Bank is most or least assiduous in targeting poverty. However, such comparisons must be made with care as a score recorded in one country may not be achievable in another. This is because the potential for sub-national poverty targeting—the scope for deviating from a poverty neutral scenario—varies from country to country.

This potential is determined by imagining two extreme scenarios in each country: where all aid is reallocated to the poorest sub-national region and the richest sub-national region respectively. The extent to which these two regions differ from others and the country as a whole determines what potential there exists for donors to differentiate themselves from a poverty neutral position.

In our final index, we take the scores from our composite index and express them as a share of the maximum or minimum possible targeting score in each country. This index is illustrated in Figure 2. In only 1 of the 24 countries—the Gambia—does the World Bank approach anywhere near the maximum degree of poverty targeting. Interestingly, we find no relationship between the potential for sub-national targeting and the degree to which that potential is fulfilled.

There remain a number of limitations to our analysis. Not least is that the significance of our findings hinges on the extent to which differences between sub-national units provide an effective lens for viewing the underlying level of inequity in each country. The risk is that our results are more indicative of the design of our indexes and the idiosyncrasies of the data that they capture.

Nevertheless, we believe that measures of poverty targeting can serve as a useful tool in supporting aid effectiveness and poverty reduction efforts. Furthermore, analyses of this kind are likely to become more common. We are on the verge of an explosion in publicly available geo-coded aid data as donors respond to demands for greater transparency and seek to harness information technology solutions for improved coordination and accountability. (The most immediate constraint for poverty data is procedural: standardizing the reporting and collection of sub-national data from household surveys, consistent with the treatment of country-level data.)

Rather than supporting sweeping judgments about donor intentions and performance, the value of poverty targeting assessments comes from their being combined with other sources of information and informing dialogue between donors and partner governments. However, even for this more modest purpose, there remain some significant challenges.

Our analysis points to a number of questions that are likely to emerge in future discussions regarding the use of aid to target the poor, which we outline below. In anticipation of more frequent, sophisticated and complete analyses of poverty targeting, we believe these deserve proper attention.

What is the salient level of analysis for assessing the allocative efficiency of aid? The ability to drill downwards in assessing the allocative efficiency of aid need not stop at the immediate sub-national level. In the future, better data could allow analysis at the village, household or individual level. Indeed governments and donors are taking advantage of breakthroughs in biometric identification and cell phone ownership to design increasingly sophisticated social protection schemes that target poor individuals—a feat that the aid community considered a pipedream only a few years ago. However, just because individual targeting is possible does not make it appropriate for all types of aid; neither is sub-national targeting always appropriate, even where aid projects can be accurately geo-coded (for instance, the creation of an industrial park). The aid community should avoid the reductionist view that poverty impact can be equated with proximity to the poor.

What level of inequality or poverty is necessary for targeting to be an efficient strategy? The case for sub-national targeting is greatest when there is a danger that the benefits of aid will be captured by the non-poor. This seems less likely in countries where poverty rates are very high or where inequality is very low. In these settings, the transaction costs incurred in micro-level targeting may exceed the efficiency benefits of discriminating between different beneficiaries.

How should poverty targeting efforts be coordinated? A true assessment of an aid agency’s allocative efficiency in a country requires an understanding of what other organizations are funding, including the partner government and other donors. The prospects for poverty reduction are almost certainly higher if aid agencies heed the wishes of the partner government rather than each unilaterally deciding to concentrate their efforts in the country’s poorest region. Poverty targeting measures should be used to promote, rather than to evade, a greater division of labor, led by partner governments.

Authors

Laurence Chandy
Natasha Ledlie
Veronika Penciakova

Image Source: © Omar Faruk / Reuters

Harnessing Technology and Innovation in the Fight Against Global Poverty

Wed, 10 Oct 2012 15:56:00 -0400

This collection of policy briefs was commissioned for the ninth annual Brookings Blum Roundtable on Global Poverty, held in Aspen, Colorado on August 1–3, 2012.

There is growing excitement among governments, international organizations, the private sector, philanthropic organizations and civil society about the potential of technology and innovation to dramatically improve the lives of poor people around the world.

Mobile technology is giving poor people the capacity to transact, borrow and save through their cell phones. Connection technologies such as open source software are allowing people in Haiti and Pakistan to collect and analyze information about, and then respond to, violence, corruption and natural disasters. Myriad ‘green growth’ technological innovations across the globe are expanding access to electricity, increasing agricultural yields while also reducing harmful emissions.

But innovation in the service of development goals is not just about achieving technological breakthroughs. Recent research shows that new business models often matter far more than the technology of a given product when serving poor communities. Moreover, promising technologies do not bring about improvements in the lives of the world’s poorest people unless they are adequately invested in, rigorously evaluated, and then brought to scale, which typically requires the collaboration of many actors, including the private and philanthropic sectors and government.

The following policy briefs explore these issues in detail, lay out the challenges, and offer a range of specific recommendations on what needs to happen and why.

Image Source: © Suhaib Salem / Reuters

Poverty in the Midst of Abundance: Governance Matters for Overcoming the Resource Curse

Daniel Kaufmann — Thu, 13 Sep 2012 13:30:00 -0400

In 1990, almost 600 million people lived on less than $5 a day in resource-rich countries. Today, it is estimated that poverty has increased to about 700 million people. Among this population, close to 300 million live in dire poverty, surviving on $2 a day or less. The majority of the poor in resource-rich countries live in Africa, where 80 percent of citizens in extractive-intensive countries live on under $5 a day, and over 50 percent live on under $2 a day.

In many countries the failure to harness natural resource wealth towards national well-being is in large measure linked to a failure of national governance. Of the hundreds of millions of citizens living on under $2 a day in resource-rich nations, 85 percent live in very poorly governed countries – countries which, according to the updated Worldwide Governance Indicators (WGI), rate very poorly in corruption control and other governance dimensions.

The WGI organize and synthesize data reflecting the views and reports of tens of thousands of stakeholders worldwide, including respondents to household and firm surveys and experts from nongovernmental organizations, public sector agencies and providers of commercial business information. The newest WGI dataset being released is based on dozens of different data sources from over 30 organizations around the world, and aggregates the data from hundreds of disaggregated questions. The indicators cover over 200 countries between the mid-1990s and the present, thus also allowing observers to monitor country trends.

Governance has political, economic and institutional dimensions. The WGI project defines governance as the traditions and institutions by which authority in a country is exercised. This includes how governments are selected, monitored and replaced; the government’s capacity to effectively formulate and implement sound policies and provide public services; and the respect of citizens and the state for the institutions that govern economic and social interactions among them. This definition drives the six core indicators of governance measured by the WGI:

1. Voice and Accountability: captures perceptions of the extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association and a free media.

2. Political Stability and Absence of Violence/Terrorism: captures perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including politically-motivated violence and terrorism.

3. Government Effectiveness: captures perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies.

4. Regulatory Quality: captures perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development.

5. Rule of Law: captures perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police and the courts, as well as the likelihood of crime and violence.

6. Control of Corruption: captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests.

With this updated WGI dataset, we can assess trends over time and ask whether governance has improved in extractive-intensive countries. Reviewing the past 10 years of WGI data, we see in Figure 1 that governance, in various dimensions, on average has not improved in these countries. To the contrary, we observe a somewhat declining trend in Control of Corruption among extractive-rich countries, contrasting the (mildly) improving trend for the rest of the world (non-extractive countries). Similarly contrasting patterns are suggested by the data on other governance dimensions in the WGI, such as in Voice & Accountability and Rule of Law.

Thus, not only has the level of poverty in extractive countries risen, but governance has also deteriorated. Yet this trend – the average of the full sample of 54 extractive-rich countries – masks differences across countries. While there are many nations facing enormous governance challenges, there are countries that show that natural resources can be a blessing. For instance, in Figure 1 we see for a group of extractive-rich states, governance performance is not only satisfactory, but has been improving over the past decade.

In fact, the WGI data suggests that governance has improved in extractive-rich countries that have not yet attained stellar standards of governance. Examples of countries that have achieved significant improvements in one or more dimensions of governance since 2000 include Ghana, Liberia, Sierra Leone, Indonesia, Namibia and Colombia, among others. These countries contrast sharply with other resource-rich countries that have experienced significant deteriorations in at least some key dimensions of governance over the same past dozen years, including (among others) Syria, Azerbaijan, Venezuela, Mauritania and, over a longer time span, Zimbabwe.

And we know that governance matters. Past research has pointed to a very high payoff for governance reforms, which we have characterized as the ‘300 percent development dividend of good governance’. Improvements in governance (by one standard deviation) have been causally associated with about a three-fold increase in a country’s income per capita on average.

From the simple depiction in Figure 2 we see that high levels of corruption control are linked with higher income levels. It is noteworthy that this link applies both to resource-rich countries and others. In other words, an overall higher standard of governance matters for countries rich in natural resources at least as much as it matters to the rest of the world. High standards of governance and natural resources are not contradictory notions.

Yet particular attention to governance challenges is needed in extractive-rich countries, not only because of the particular governance and management problems associated with the industry, but also because most of these countries still struggle with national-level governance challenges. As we see in Figure 2, 55.6 percent of resource-rich countries rate poorly on corruption control (bottom third in corruption), while 33.3 percent rate in the average range (middle third).

For years, a central question for resource-rich countries has been whether they are destined to be cursed in terms of governance standards and thus development prospects, or whether it is possible to turn natural resource abundance into a blessing. In other words, is it the case that natural resources themselves result in worse institutions, or, is it that subpar governance and institutions result in worse natural resource management outcomes?

If the former is the case, namely that resources foster misgovernance, then extractive intensive countries are deterministically cursed. Fortunately, much of the literature and evidence point more strongly to the latter – that there is nothing predetermined about the resource curse. Instead, it seems that resources become a curse where governance and institutions are already weak.

Yet at the same time there is little room for complacency since the evidence also suggests that excessive dependency on natural resources can exacerbate governance challenges when they already exist. Concentrated natural resources can be a magnet for rent-capture, which in turn can contribute to: i) the elite capturing those rents and fighting to maintain control over them; ii) disincentives for regular political transitions; iii) instability more generally, as competing groups fight for control over resources; iv) ability by the elite to buy supporters and placate opponents by distributing resource rents, thus silencing opposition; v) unaccountability to citizens due to overreliance on extractive revenues rather than taxes, and, vi) macro-economic instability due to the ‘Dutch Disease’ (an overvalued exchange rate resulting from overreliance on extractive exports), and the instability of oil and mining revenues.

This is a daunting list of challenges, faced by many countries to varied extents, but the outcome is not predetermined. Countries that are led with integrity and that invest in good governance not only can mitigate the resource curse, but can turn it into a blessing. Highly industrialized countries like Norway are not the only the only illustrations of how resource abundance can be compatible with high governance standards; well-governed emerging countries, like Chile and Botswana, are also illustrative (as are those countries experiencing improved governance, highlighted above).

It is difficult to see the future. But we can suggest that whether the hundreds of millions mired in poverty in resource-rich countries will see their prospects deteriorate further, or instead improve, will depend on the quality of governance, and within it, the extent to which transparency, accountability and corruption control reforms take hold at the national level, as well as within the extractive industry in each country. Ultimately in these resource-rich countries, it is governance what will determine development success or failure.

Overcoming the resource curse is not only a major task for governments, but also for civil society and the private sector, both at the national and international levels. But multinational oil, gas and mining companies also bear an important responsibility in helping improve governance standards worldwide, as illustrated by the major debates surrounding the Dodd-Frank (Section 1504) natural resource disclosure rules (just passed by the SEC), as well as the pending EU disclosure rules. In short, collective action by key stakeholders will be essential.

Note: The updated Worldwide Governance Indicators (WGI), a joint research project between Brookings Institution and the World Bank, are now available on the new Brookings Development, Aid and Governance Indicators and at the World Bank. The WGI is prepared by Daniel Kaufmann, Aart Kraay and Massimo Mastruzzi, who are responsible for views and errors. The poverty data utilized in this analysis was drawn from the paper by Kharas and Rogerson, and this article benefitted from the assistance from Natasha Ledlie and Veronika Penciakova.

Authors

Daniel Kaufmann

Image Source: © Handout . / Reuters

The Money Trail: Ranking Donor Transparency in Foreign Aid

Homi Kharas and Anirban Ghosh — Thu, 09 Aug 2012 11:31:00 -0400

Editor's Note: The following piece appeared in Transparency and Public Procurement, a thematic supplement to the 2011 Annual Statistical Report on United Nations Procurement.

Introduction

There is growing consensus that aid transparency must be improved in order to increase aid effectiveness. According to Moon and Williamson, aid transparency can be defined as “the comprehensive availability and accessibility of aid flow information in a timely, systematic and comparable manner that allows public participation in government accountability.”

This includes not just how much money is given, but how that money is spent, and as such is of great importance when studying the public acquisition of goods and services in countries which receive Official Development Assistance (ODA). In this paper, we look at elements of transparency that are needed to improve aid coordination and accountability, from the donor to the procurement officer.

The Accra Agenda for Action, a document summarizing the deliberations of the 3rd High Level Forum on Aid Effectiveness held in 2008, called on all donors to disclose aid information in a timely manner. The International Aid Transparency Initiative (IATI) was launched at the same forum. IATI brings together donors, recipients, aid experts and non-governmental organizations to create a common and universally agreed method of sharing aid information between all stakeholders.

Importance of transparency in aid effectiveness

Complete transparency means that everyone can see how much aid is being given by each donor, to whom, for what projects and when.

Over the last ten years, the number of new aid projects has skyrocketed, and their average size has shrunk drastically. This fragmentation of ODA makes it even harder for aid agencies to coordinate their activities and duplication and waste could be growing.

Transparency is also valuable in combating corruption. In one beneficiary country in Africa a public expenditure tracking survey found that only 20% of donor-funding for education programmes was actually reaching schools. As a result of an information campaign making transparent what each school was supposed to receive from the ministry, the funds flow increased to more than 80%.

Greater transparency affects all major stakeholders in development assistance programs:

Donor country taxpayers can understand how their taxes are being used, and thus become more engaged in and supportive of aid.
Donor country governments can evaluate their aid programmes more effectively.
Recipient country citizens can hold their governments to account over any discrepancies between aid received and aid spent on the public procurement of goods and services.
Recipient country governments can plan their budgets and their procurement needs better. This is especially true for aid dependent countries, where ODA forms a large part of their budget.

Improving transparency will require additional investment and organizational changes by donors. These costs are mainly administrative, adapting IT and reporting systems to global standards and also staff time spent on training and the reporting of aid activities. But the savings on automating provision of aid data alone would more than offset the costs of investing in better transparency systems. The case against transparency thus seems to be fundamentally political - a reluctance to automatically release information that could potentially be damaging to an organization.

The need for a transparency index

A transparency index serves as a quantitative measure that is comparable across countries or agencies. A benchmarking system assesses a donor against what others are actually doing in practice rather than against an abstract notion of ‘good’ behaviour. A secondary purpose is to enable research to document the importance of making progress on the transparency agenda.

Almost everyone pays lip-service to the importance of transparency but without specific indicators it is hard to hold donors and implementing agencies accountable for putting their commitments into practice. A transparency index fills this gap by generating a dialogue on which donors are putting a transparency agenda on aid into place and how aggressively they are moving to implement such an agenda.

The transparency index data and methodology

To create a useful transparency index, we need to focus on data that agencies provide to publicly available, comparable databases.

There are three defining characteristics of a strong transparency index. First, it should only use data that donor agencies proactively put in common databases, such as IATI, so that it can be accessed and compared with other donors. The notion is that transparency implies data that is readily available, useful to others and comparable across donors so that it can be a tool for greater coordination and accountability. Information buried in an agency’s annual report or web-site does not meet the requirement of crossdonor comparability.

The second important characteristic of an index is that it differentiates between complete and partial reporting. In this way, we are able to make judgments on the overall quality and comprehensiveness of aid information and make more nuanced judgments on the degree of transparency.

Third, it should explicitly compare donors to each other, thereby creating a ‘best in class’ measure and a base year measure of transparency.

The data for the transparency index can be taken from two main sources: the Development Assistance Committee’s Creditor Reporting System’s database; and AidData, a data source for aid activities launched in March 2010 as an independent organization not affiliated with any donor group.

The existing datasets are poor in a number of regards. First, the datasets are incomplete, especially with regard to coverage of the most important donors from emerging economies and of private aid. Also, variables like disbursements cannot be accurately matched with commitments, so it is hard to know if projects are actually implemented. Second, the datasets are not timely, with up to two years’ delay. Third, there are areas which could be important for transparency but where all donors do poorly. Two such examples at the time of writing in 2011 are geo-coding and beneficiary feedback.

The transparency index we designed is one component of a broader effort at assessing aid quality introduced by Birdsall and Kharas that is continually being updated. In its initial construction, our transparency index was an equally weighted average of six indicators, each of which is directly actionable. They were chosen to reflect what can best be thought of as a ‘culture of transparency’ that we believe is linked to aid effectiveness. The indicators are defined as follows:

Whether the donor is a member of the international aid transparency initiative (IATI) - an initiative to agree on common standards and reporting to facilitate sharing of aid information.
Proportion of projects for which the project title, its long description and its short description are filled out in the AidData database.
Average character count of the project long description in AidData. Although lengthy descriptions are not needed, in general the more detail on the aims of the project is better.
Percent of projects reporting the aid delivery channel. It is important to know whether a project is to be implemented by the government, an NGO, a multilateral or another agency.
Completeness of project level commitment data. In our analysis, we have found a discrepancy between the reported amount of aid at the aggregate level (what the donor claims to have donated in total to a given beneficiary in a given period) and the sum of aid at the disaggregated, project level (reported disbursements for all individual projects taken together in the same period). The missing or unaccounted aid is not transparent by definition.
Share of net ODA that donors give to recipients with a good monitoring and evaluation framework. This indicator rewards donors that support countries with good monitoring and evaluation frameworks.

Useful findings revealed by a Transparency Index

Based on these indicators, it is possible not only to rank and compare donors but also to spot overall trends. For example, in our initial compilation in 2011 there did not appear to be any strong, systematic difference between multilateral agencies and bilateral donors on transparency. There was a very low correlation between the size of donors and the transparency of their activities. Several large donors were also poor performers on transparency. By 2012, we found that some donors had made a forceful effort and overall global transparency was being improved at a faster pace than any other dimension of aid quality.

Donors who are members of the IATI score higher on other dimensions of transparency as well, suggesting that IATI members are broadly committed to transparency. Indeed, 13 of the top 15 most transparent donors in 2011 were also members of the IATI. View the full ranking and other related research on www.aiddata.org.

Conclusions

It is not straightforward to measure transparency, partly because norms and standards are still not universally accepted and partly because transparency is an elusive and shifting concept that resists an easy definition.

This paper proposes an index of transparency based on six indicators. We hope that the benchmarking provided by these indicators will help to ‘move the needle’ in the transparency of agency activities. The downside of the chosen indicators is that we are restricted to available information, which is currently limited in scope.

Greater transparency in aid would help reduce overlap, waste and the lack of coordination between donors. It would also help beneficiary countries plan their public procurement needs and hold their procurement officers, and other holders of the purse strings, to account. Lack of transparency also leads to a lack of opportunities to learn what really works in aid, thus inhibiting rigorous research on aid effectiveness. Because aid is increasingly fragmented, norms and formalized systems of transparency are becoming more important. Informal knowledge sharing among a few large players is no longer a viable alternative, as ever more players need to know what others are doing.

Authors

Homi Kharas
Anirban Ghosh

Publication: United Nations Office for Project Services

Image Source: Nayef Haslamoun / Reuters

Brookings Blum Roundtable: Innovation and Technology for Development

Wed, 01 Aug 2012 08:40:00 -0400

Event Information

August 1-3, 2012

Aspen, Colorado

Global development challenges are of massive scale: 61 million children out of school and many more failing to learn basic literacy and numeracy skills; 850 million facing hunger; 1 billion living in slums and 1.3 billion without access to electricity. Yet remarkably little is understood about successful strategies for designing scalable solutions, the impediments to reaching scale, or the most appropriate pathways for getting there.

However, a batch of new technologies offers the promise of a breakthrough by encouraging innovative business models, pushing down transaction costs and disintermediating complex activities. Mobile money could realistically reach over 1 billion poor people in the next decade and directly connect millions of rich individuals with millions of poor people. Real-time data can allow resources to be better targeted and managed. New media can sharpen accountability and reduce waste and overlap.

On August 1-3, Brookings Global Economy and Development hosted the ninth annual Brookings Blum Roundtable on Global Poverty in Aspen, Colorado. This year’s roundtable theme, "Innovation and Technology for Development", brought together global leaders, entrepreneurs and practioners to discuss how technology and innovation can be seized to help solve some of the world's most pressing global development challenges.

ROUNDTABLE AGENDA

Wednesday, August 1, 2012

Welcome: 8:40AM - 9:00AM
Brookings Welcome
• Strobe Talbott, Brookings

Opening Remarks
• Richard C. Blum, Blum Capital Partners, LP and Founder of the Blum Center for Developing Economies at Berkeley
• Mark Suzman, Bill and Melinda Gates Foundation
• Kemal Derviş, Global Economy and Development, Brookings

Session I: 9:00AM - 10:30AM
Framing Session: Translating Technological Innovations into Transformational Impact
In this opening discussion, participants will explore the overarching questions for the roundtable: If the poor can readily be identified and if they have access to financial services and participate in technology-driven communication networks, how does this change the development paradigm? How can effective partnerships be forged to combine the efforts of different international and local actors (businesses, governments, foundations, NGOs, and universities) in propagating solutions? Can scalable technologies raise the profile and potential of new business models, approaches and partnerships?

Moderator
• Homi Kharas, Brookings

Introductory Remarks
• Thomas A. Kalil, White House Office of Science and Technology
• Michael Kubzansky, Monitor Group
• Lalitesh Katragadda, Google India
• Smita Singh, Independent

Session II: 10:50AM - 12:20PM
Mobile Money and Mass Payments
Participants will explore the following questions for the rountable: Is the rapid uptake of mobile money/payment technology throughout the developing world assured and if not, what (or whom) are the impediments? What is required to enable successful mass payments systems that employ mobile money technology? What is the optimal role of government, non-profits and private actors in supporting mobile money services? How can mass payments systems be used to implement national safety nets?

Moderator
• Gillian Tett, Financial Times

Introductory Remarks
• Neal Keny-Guyer, Mercy Corps
• Mwangi Kimenyi, Brookings
• Mung Ki Woo, MasterCard Worldwide Group Executive Mobile

Dinner Program: 7:30PM - 9:15PM
Aspen Institute Madeleine K. Albright Global Development Lecture

Featuring
• Rajiv Shah, Administrator, United States Agency for International Development

Click here to read Rajiv Shah's remarks »

Thursday, August 2, 2012

Session III: 9:00AM - 10:30AM
Mass Networks: Leveraging Information from the Crowd
Participants will explore the following questions for the rountable: What are the most promising examples of using social media, crowdsourcing and “big data” to advance development and humanitarian outcomes? How can traditional foreign assistance make use of virtual networks to support transparency, democratic governance and improved service delivery? How can technologies be used to understand clients, promote beneficiary feedback and learning to fine tune business models in base of the pyramid markets?

Moderator
• Walter Isaacson, Aspen Institute

Introductory Remarks
• Anne-Marie Slaughter, Princeton University
• Juliana Rotich, Ushahidi
• Robert Kirkpatrick, UN Global Pulse Initiative
• Rakesh Rajani, Twaweza

Session IV: 10:50AM - 12:20PM
Innovation and Technology for Green Growth
Participants will explore the following questions for the rountable: How advanced is green growth technology vis-à-vis the scale and urgency of the global climate challenge? What is the role of pricing and intellectual property and push and pull mechanisms in speeding up propagation within developed and developing markets? How can the goal of “sustainable energy for all” be achieved, and is it feasible in all countries?

Moderator
• Al Gore, The Climate Reality Project

Introductory Remarks
• Mary Robinson, Mary Robinson Foundation - Climate Justice
• Helen Clark, United Nations Development Programme
• Arthur Njagi, International Finance Corporation
• Viswanathan Shankar, Standard Chartered Bank

Lunch Program: 12:30PM - 2:00PM
Partnering with Academic Research Institutions
This discussion will explore partnerships between public sector development institutions and academic research institutions to support global development goals. Topics will include the constraints to research; how to make research more relevant to developing country problems; issues around incentives for scientists and universities; and relationships between universities, financiers and implementers.

Moderator
• Javier Solana, ESADE

Panel
• Richard C. Blum, Blum Capital Partners, LP and Founder of the Blum Center for Developing Economies at Berkeley
• Luis Alberto Moreno, Inter-American Development Bank
• Shankar Sastry, University of California, Berkeley
• Alex Deghan, United States Agency for International Development

Friday, August 3, 2012

Session V: 9:00AM - 10:30AM
Business Solutions and Private Sector Development
Participants will explore the following questions for the rountable: What role can the new breed of socially conscious private actors (e.g., social enterprises and impact investors) play in overcoming finance and delivery constraints and scaling up development impact? Where is the need for investment finance most acute, and who or what can fill these gaps? How are management approaches evolving to suit base of the pyramid markets? What are the impediments to the adoption or adaptation of scalable technologies by developing country enterprises, and are southern innovations being efficiently spread? What is constraining private sector development in Africa, and is technology a key bottleneck?

Moderator
• Laura Tyson, University of California, Berkeley

Introductory Remarks
• Rob Mosbacher, Mosbacher Energy Company
• Mathews Chikaonda, Press Corporation Limited
• Elizabeth Littlefield, Overseas Private Investment Corporation
• Amy Klement, Omidyar Network

Session VI: 10:50AM - 12:20PM
Delivering U.S. Leadership: Role for the Public Sector
Participants will explore the following questions for the rountable: What is an appropriate role for the U.S. government in promoting technological solutions for development and scaling these up? How should the government leverage new private sector players? What are the best examples of, and lessons learned from, earlier and on-going public private partnerships? How can the U.S. government work more effectively to support local innovation and technology in developing countries?

Moderator
• Sylvia Burwell, Walmart Foundation

Introductory Remarks
• Rajiv Shah, Administrator, United States Agency for International Development
• Sam Worthington, InterAction
• Henrietta Fore, Holsman International

Closing Remarks: 12:20PM - 12:30PM

• Richard C. Blum, Blum Capital Partners, LP and Founder of the Blum Center for Developing Economies at Berkeley
• Kemal Derviş, Global Economy and Development, Brookings

Lunch Program: 12:30PM - 2:00PM
A Conversation with Michael Froman and Thomas Nides
This conversation will focus on the politics and finance of the US government’s efforts on global development, including its specific initiatives regarding technology and innovation for development.

Moderator
• Madeleine K. Albright, Albright Stronebridge Group

Live Webcast Event: 4:00PM - 5:30PM
Brookings and the Aspen Institute Present: "A Conversation with Former World Bank President Robert Zoellick"

Global Economy and Development at Brookings and the Aspen Strategy Group will host Robert Zoellick, who recently stepped down as president of the World Bank after serving in that office for the past five years. Mr. Zoellick has held several senior positions in the U.S. Government, including deputy secretary of state and U.S. trade representative under President George W. Bush. This event will be webcast live on the Brookings website. Click here for more details.

Introduction
• R. Nicholas Burns, Director, Aspen Strategy Group and Professor of the Practice of Diplomacy and International Politics, Harvard Kennedy School of Government

Moderator
• Strobe Talbott, President, Brookings

Event Materials

How Selective is Donor Aid? Governance and Corruption Matter and Donor Agencies Should Take Notice

Daniel Kaufmann and Veronika Penciakova — Tue, 17 Jul 2012 16:41:00 -0400

Over the years, bilateral and multilateral donors have become increasingly concerned about delivering more effective aid. The determinants of successes and failures in development assistance are varied and complex; yet, experience and analysis point to weak and corrupt institutions as important contributing factors to poor outcomes. Examples of failed projects due to mismanagement and corruption include the Morogoro Shoe Factory in Tanzania during the 1980s, and more recently, heath sector projects in India and the oil pipeline in Chad.

It is therefore important to ask whether donor aid has become more selective over the years. There certainly have been declarations and explicit writings about the need for greater selectivity, and some donors have implemented internal procedures to address the issue. But have these declarations and procedures resulted in increased sensitivity to misgovernance and corruption in recipient countries? In a forthcoming Brookings research report, we explore these and related questions.

Relying on the most up-to-date and comprehensive foreign aid dataset available from the OECD Development Assistance Committee (DAC), we explore the aid disbursement patterns of 41 donors (23 bilaterals and 18 multilaterals), and review whether since 1995 large groups of donors (bilaterals and multilaterals) have taken into consideration the extent of corruption and overall governance in recipient countries when allocating aid. Further, we explore whether there has been a rise in such governance selectivity over the past 15 years.

Our inquiry combines simple cross-tabulations with multivariate econometric analysis, controlling for such factors as population size and income per capita. In addition to reporting results for all donors on average, and for large groups of donors, we also construct donor-specific indexes that measure how vulnerable each dollar of aid is the corruption and misgovernance in recipient countries. We call these indexes the Corruption Vulnerability Aid Index (CVAI) and the Governance Vulnerability Aid Index (GVAI), respectively. These indexes are showcased in our forthcoming report, as well as in the interactive data platform we are launching today (the Development, Aid and Governance Indicators, or DAGI).

In our study, we first look at how much aid is going to the recipients with satisfactory, mediocre and unsatisfactory control of corruption. It appears that over the years a lion’s share of aid has been disbursed to countries facing serious corruption and governance challenges, such as Afghanistan, Iraq, Nigeria and the Democratic Republic of Congo.

Moreover, aid selectivity has tended to deteriorate, particularly in recent years. In the mid-1990s (1995-1998), countries on the two tail ends of governance performance (satisfactory and unsatisfactory corruption control) received nearly the same amount of aid (around $16 billion, or about 30 percent each of overall aid). But over time, the amount of aid going to each group diverged substantially. As we see in figure 1, in recent years (2008-2010) the most corrupt recipients received about $32.7 billion a year on average (43 percent of overall aid), while countries with satisfactory control of corruption, such as Botswana, Brazil, El Salvador, Ghana and South Africa, among others, received only $12.5 billion (16 percent of overall aid).

These selectivity trends are also confirmed by econometric tests. In fact, we find that the deterioration in selectivity over the past 15 years has been statistically significant. In recent years, significantly more aid has flowed to countries with subpar control of corruption and overall governance. Furthermore, the results suggest that both bilateral and multilateral donors have experienced deteriorating selectivity (the fall having been slightly higher for the bilaterals group on average).

In order to fully explore these apparent differences in governance selectivity across donors, we also construct two indexes (Corruption Vulnerability of Aid and Governance Vulnerability of Aid, CVAI and GVAI, respectively) that capture the vulnerability of development assistance to corruption and misgovernance in recipient countries.

We find that over the past 15 years, the vulnerability of aid among some donors has risen more sharply than for others. As a result, as we see in figure 2, aid disbursed by donors today, including European Union Institutions, Spain and the African Development Fund, while still relatively high, is somewhat less vulnerable than that disbursed by the United States and the Asian Development Bank Special Fund.

Specifically, the aid disbursed by the United States, on average, ends up in a recipient country with corruption in the 75th percentile rank of corruption (100 indicating the most corrupt country in the world). In comparison, aid from EU Institution is channeled toward countries that on average rate in the 65th percentile.

It may, however, be argued that some donors allocate aid to recipients with initially very low quality governance (fragile states, for instance), with the expectation that these countries will improve their governance performance. From this perspective, initially low levels of aid selectivity may not be inconsistent with eventual aid effectiveness. To test this claim, we assessed whether greater volumes of development assistance have a payoff in terms of improved governance performance, thus possibly resulting in reduced future donor vulnerability of aid.

Overall, we found that that aid to countries experiencing governance challenges does not result in improved governance in subsequent years. But, there is evidence that some bilateral aid channeled to lower-income countries and recipients with initially very low corruption control and governance ratings may contribute to improved control of corruption and overall governance in the long-term.

In particular, there is some evidence suggesting that several donors were better at targeting aid to reform-prone recipient countries, including the Netherlands, Norway, the United Kingdom, EU Institutions and the Global Fund to Fight AIDS, Tuberculosis and Malaria. On the other hand, for many donors— including the United States, the International Development Association (at the World Bank), Australia, France and Japan— aid did not appear to spur governance improvements. It should be noted, however, that these results are based on the past 15 years, and thus cannot be generalized for the longer term.

An overarching implication of our study is that the international aid community ought to take a serious look at the extent of aid selectivity with respect to governance and corruption. Aid selectivity matters for the fiduciary accountability of donor agencies since the aid they disburse may be subject to inordinate risks related to misgovernance. And, at least as importantly, it also matters for aid effectiveness. Aid funds channeled to projects where misgovernance and corruption prevail are more likely to fail.

Risk-taking is certainly part and parcel of development, and thus of development assistance. However, these risks need to be managed, and there needs to be greater emphasis placed on working with developing countries on programs and reforms that improve governance and corruption control. Many countries continue to struggle with governance reforms, despite having received significant volumes of aid over the years.

Some aid donors that are subjecting their governance and anti-corruption programs to internal or external evaluation are finding that these strategies and programs are less effective than initially hoped. Our findings regarding declining aid selectivity further heighten the need for donors to review their aid strategies, emphasizing afresh the governance challenges.

Over the years, in response to concerns about the detrimental impact of corruption on development, a number of donor aid agencies created units to investigate possible fraud and corruption in the projects they fund. Several of these investigative units have detected and investigated some corrupt projects (at the “micro” level).

However, by design, these units cannot be expected to address the “macro” challenge of systematic public sector misgovernance and corruption in recipient countries. In fact, these investigative units cannot even focus on the mismanagement of budgetary support aid provided by donor agencies, for instance.

Such “macro” governance challenges require a “macro” response, one which takes seriously the importance of aid selectivity (vis-à-vis countries, NGOs vs. government, central vs. local government, etc.), and addresses the challenge of utilizing development assistance to promote good governance and anti-corruption more effectively.

In this context, the new leadership in important donor aid agencies, such as the World Bank, AusAid (Australia’s Aid Agency) and JICA (Japan International Cooperation Agency) creates new opportunities to address these important and sensitive challenges afresh.

Authors

Daniel Kaufmann
Veronika Penciakova

Image Source: Adriane Ohanesian / Reuters

Development, Aid and Governance: Connecting the Empirical Dots

Daniel Kaufmann, Homi Kharas and Veronika Penciakova — Tue, 17 Jul 2012 17:58:00 -0400

In today’s discussions about global development often insufficient attention is paid to what we can learn from the data. What we can observe about trends over time, differences across countries, and relationships between various dimensions of development, such as how corruption impacts growth, is critical in helping us find solutions to some of today’s most pressing development challenges.

Anyone committed to evidence-based policy analysis needs to have access to data in an easy-to-manage form. Public access empowers students, experts, civil society advocates, and champions of reform within government who monitor development progress and promote further change.

It is in this spirit that we are launching the Development, Aid and Governance Indicators (DAGI), an interactive platform and databank that features indicators developed by scholars from the Brookings Global Economy and Development program. Some of these indicators on aid quality and governance have been developed in collaboration with partners (the Center for Global Development and The World Bank, respectively).

Our new interactive platform includes data on the following indicators:

Country Programmable Assistance (CPA), which measures the amount of foreign aid available to developing countries to implement projects and programs that contribute to long-term development;
Quality of Official Development Assistance (QuODA, produced with Center for Global Development), which assesses four dimensions of aid quality for each DAC donor country;
Vulnerability of Aid Indexes (VAI), which measure the risk that each dollar of development aid disbursed ends up in corrupt or misgoverned recipient countries;
Worldwide Governance Indicators (WGI, produced with the World Bank), which assess the quality of governance in economies on six dimensions of governance;
Middle Class measures, which provide historical estimates and forecasts of the number of people living in the middle class, and the consumption expenditure of this group
Poverty measures, which provide historical estimates and forecasts of the number of people living below a poverty line of $2 and $5 a day.

A number of commonly used and readily-available development variables— such as GDP per capita, maternal mortality ratios and primary school enrollment rates— have also been selected to increase the scope for analysis and to highlight the links between the indicators above and conventional development variables.

An important aim of this tool is to allow users to see and show, in interesting, powerful and graphic ways, how development indicators interact with each other, differ across countries, and change over time. Here are some examples of what can be done with this new interactive database:

You may be interested in seeing where the world’s poor might reside in 2025. In our baseline scenario we find that high growth and demographic change in dynamic middle income countries will help them make significant progress against poverty in the coming years. However, as we see in the world map, in fragile countries, concentrated mostly in Africa, poverty will remain a critical challenge. Consequently, the global poverty problem might increasingly become an Africa problem by 2025. This growing concentration of poverty in fragile developing countries will undoubtedly have important consequences for issues like foreign aid.

You may have been surprised by the upheavals in Tunisia, Egypt, Libya, Syria and elsewhere in the Middle East. Perhaps we would all have been less taken aback had we paid closer attention to the extremely low and deteriorating quality of governance in many countries in the region. The Worldwide Governance Indicators show that on the eve of the Arab Spring there was a growing democratic governance deficit in the countries where protests emerged. The column chart shows just how quickly democratic accountability and citizen voice deteriorated from already low levels in Tunisia between 2000 and 2010. If we look closely at other countries experiencing unrest, such as Egypt, Libya, Syria and Yemen, we observe the same trend over the past decade. It was in large measure this growing democratic governance deficit that spurred unrest in the Middle East.

If you are interested about the increasingly important role of mobile technology and social media in global events, aspects of this can be explored in our interactive databank. We often consider mobile technology and social media as resources in countries with a well-developed middle class. Yet, we saw the power of these tools during the Arab Spring in countries with relatively small middle-class populations, such as Egypt, Syria and Yemen. As we see from the graph, mobile technologies have also penetrated countries where the middle class is just now developing. We can probably therefore expect these types of technologies to play an important role in future events in developed and developing countries alike.

These examples are just a small sampling of the many questions that can be analyzed using new indicators available through the DAGI interactive platform and databank. Which donors allocate the greatest share of aid as country programmable assistance? How effective is the aid disbursed by the largest donors, and how vulnerable is it to corruption and misgovernance in recipient countries? Can significant changes in governance happen in the short term? Which countries are expected to experience the sharpest declines in poverty and greatest increases in the middle class in coming years? This new empirical tool enables any student, scholar, policymaker and advocate to ask these types of questions and explore possible answers by using the data. After all, as Lord Kelvin once said, “if you cannot measure it, you cannot improve it.”

Authors

Daniel Kaufmann
Homi Kharas
Veronika Penciakova

The Global Partnership for Effective Development Cooperation

Homi Kharas — Thu, 21 Jun 2012 14:51:00 -0400

INTRODUCTION

These are important times for how the world manages the annual flow of around $200 billion in development cooperation assistance to developing countries. A number of changes in global international development cooperation are in the offing: within a one month span, development issues will be taken up by the G-20 at the Leaders’ Summit at Los Cabos, by the United Nations at its Rio+20 Summit, and by Jim Kim upon taking over as the first ever development professional to become president of the World Bank. The key issues on the table are implementation of the Millennium Development Goals, building consensus on a new set of post-2015 Sustainable Development Goals, implementing a New Deal on fragile states, and closer integration of environmental, security, trade, investment and development agendas.

There is now an opportunity to establish a new paradigm and governance structure for coordinating the many state and non-state actors engaged in development cooperation. A new Global Partnership for Effective Development Cooperation is taking shape, backstopped by the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) and the United Nations Development Program (UNDP). Establishing this partnership was one of the key outcomes of the Busan High Level Forum on Aid Effectiveness held in December 2011.

On June 28-29, 2012, the Working Party on Aid Effectiveness, a DAC-supported international partnership for aid effectiveness, will hold a plenary meeting in Paris which should conclude with three consequential outcomes: (i) it will bring into being a new Global Partnership for Effective Development Cooperation with a governance structure that truly reflects the multi-stakeholder nature of development today; (ii) it will dissolve itself, marking one of the first times that a multilateral structure is actually replaced by a more suitable mechanism; and (iii) it will adopt a set of indicators for monitoring global progress towards more effective development cooperation.

Already, the outlines of the new partnership are becoming clear, thanks to a transparent process of meetings and dialogue. There is much to be encouraged about, but as with most efforts for institutional change, the devil is in the details. At first glance, while the Global Partnership promises to deliver substantial and significant improvements in governance, its proposed new monitoring indicators are still rooted in the past and do not reflect the new style of development cooperation that is expected in the next decade. This policy paper explores the approach to building indicators and suggests improvements to ensure better development cooperation.

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Homi Kharas

The Development Effectiveness Agenda in Asia

Tue, 22 May 2012 14:00:00 -0400

Event Information

May 22, 2012
2:00 PM - 3:30 PM EDT

Saul/Zilkha Rooms
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

The Fourth High Level Forum on Aid Effectiveness in Busan, South Korea last year was seen by many as a turning point for development cooperation and effectiveness. The Asian Development Bank (ADB) was the first multilateral development bank to adopt a corporate-wide results framework in 2008. At the first post-Busan ADB Annual Meeting held earlier this month, Managing Director General Rajat Nag launched ADB’s Development Effectiveness Review 2011, which applies the results framework to assess the bank’s progress toward meeting its 2020 targets on development effectiveness. ADB intends to revamp the framework in 2012 through a consultative process. The outcomes of the high level forum and the findings of the ADB report have broad implications for development effectiveness throughout the Asian continent.

On May 22, the Development Assistance and Governance Initiative at Brookings hosted a discussion on development effectiveness in Asia. ADB Managing Director General Rajat M. Nag provided brief remarks, followed by a panel discussion, including: Keiichiro Nakazawa, Chief Representative of the U.S. Office of the Japan International Cooperation Agency; Paul O’Brien, vice president for policy and campaigns of Oxfam America; and Tony Pipa, deputy assistant administrator of the Bureau of Policy, Planning and Learning at the U.S. Agency for International Development. Brookings Senior Fellow Homi Kharas, deputy director of Global Economy and Development at Brookings, moderated the discussion.

After the program, the panelists took audience questions.

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Homi Kharas

Rajat M. Nag

Managing Director General

Paul O'Brien

Vice President for Policy and Campaigns

Tony Pipa

Deputy Assistant Administrator
Bureau for Policy, Planning and Learning

Brookings: Projects - Development Assistance and Governance Initiative

The Final Countdown: Prospects for Ending Extreme Poverty by 2030 (Report)

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Getting to Scale : How to Bring Development Solutions to Millions of Poor People

ABOUT THE EDITORS

Laurence Chandy

Akio Hosono

Homi Kharas

Johannes F. Linn

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How Selective is Donor Aid? Governance and Corruption Matter and Donor Agencies Should Take Notice

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Development, Aid and Governance: Connecting the Empirical Dots

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The Global Partnership for Effective Development Cooperation

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The Development Effectiveness Agenda in Asia

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