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IMF Executive Board Concludes 2018 Article IV Consultation with the Kingdom of Bahrain

21 hours 40 min ago

Argentina’s Economic Recovery: 8 Answers to Explain the Plan

2 days 13 hours ago

IMF Executive Board Concludes Article IV Consultation with Guyana

2 days 17 hours ago

IMF Staff Concludes Visit to Barbados

2 days 19 hours ago

IMF Staff Concludes Visit to Nigeria

2 days 21 hours ago

Tax Spillovers from US Corporate Income Tax Reform

3 days 7 hours ago
Working Paper No. 18/166

Still Attached? Are Social Safety Nets Working? Labor Force Participation in European Regions

3 days 7 hours ago
Working Paper No. 18/165

Is the Cycle the Trend? Evidence From the Views of International Forecasters

3 days 7 hours ago
Working Paper No. 18/163

Argentina: Request for Stand-By Arrangement-Press Release and Staff Report

3 days 7 hours ago
Country Report No. 18/219

Fundamental Drivers of House Prices in Advanced Economies

3 days 7 hours ago
Working Paper No. 18/164

Transcript of IMF Press Briefing

3 days 13 hours ago

Staff Report for the 2018 Article IV Consultation and Establishment of Performance Criteria for the Second Review Under the Stand-By Arrangement for Kenya

3 days 14 hours ago

Togo Implements the International Monetary Fund’s Enhanced General Data Dissemination System

3 days 19 hours ago

Statement by the Managing Director on the Work Program of the Executive Board

3 days 21 hours ago

Promoting the Inclusive Growth Agenda in the Arab Region

4 days 4 hours ago

Opportunity for All : Promoting Growth and Inclusiveness in the Middle East and North Africa

4 days 5 hours ago

Housing Price, Credit, and Output Cycles: How Domestic and External Shocks Impact Lithuania's Credit

4 days 7 hours ago
Working Paper No. 18/160

Bank Network Analysis in the ECCU

4 days 7 hours ago
Working Paper No. 18/162

Investment Slowdown in Denmark: Diagnosis and Policy Options

4 days 7 hours ago
Working Paper No. 18/161

Arab Republic of Egypt : Third Review Under the Extended Arrangement Under the Extended Fund Facility, and Requests for a Waiver of Nonobservance of a Performance Criterion and for Modification of a Performance Criterion-Press Release; Staff Report; and S

4 days 7 hours ago
Country Report No. 18/213

IMF Executive Board Concludes 2018 Article IV Consultation with Brazil

4 days 12 hours ago

IMF Executive Board Completes Third Review of Extended Credit Facility Arrangement for Madagascar and Approves US$44.25 Million Disbursement

4 days 13 hours ago

Statement at the End of an IMF Visit to Conduct the First Review of Equatorial Guinea’s Staff-Monitored Program

4 days 16 hours ago

Guidance Note on IMF Engagement on Social Safeguards in Low-Income Countries

4 days 20 hours ago

Tunisia : Third Review under the Extended Fund Facility, and Request for Waiver of Applicability and Modification of Performance Criteria

4 days 21 hours ago
Country Report No. 18/218

Benin : Second Review under the Extended Credit Facility and Request for Modification of Performance Criteria – Press Release; and Staff Report

5 days 7 hours ago
Country Report No. 18/217

IMF Executive Board Concludes the 2018 Article IV Consultation with Vietnam

5 days 12 hours ago

Bosnia and Herzegovina Implements the International Monetary Fund’s Enhanced General Data Dissemination System

5 days 17 hours ago

Central African Economic and Monetary Community (CEMAC) : Staff Report on the Common Policies in Support of Member Countries Reform Programs

6 days 7 hours ago
Country Report No. 18/210

Vietnam : 2018 Article IV Consultation-Press Release and Staff Report

6 days 7 hours ago
Country Report No. 18/215

Vietnam : Selected Issues

6 days 7 hours ago
Country Report No. 18/216

Who Pays for Financial Crises? Price and Quantity Rationing of Different Borrowers by Domestic and Foreign Banks

6 days 7 hours ago
Working Paper No. 18/158

Losing to Blackouts: Evidence from Firm Level Data

6 days 7 hours ago
Working Paper No. 18/159

Review of the Fund's Strategy on Overdue Financial Obligations

6 days 20 hours ago

IMF Executive Board Completes Third Review under the Extended Fund Facility (EFF) Arrangement for Tunisia

6 days 22 hours ago

Navigating Fiscal Policy in Uncharted Waters: What's Next for the CCA region?

6 days 22 hours ago

Central African Republic : Fourth Review Under the Extended Credit Facility Arrangement, Requests for...

1 week 7 hours ago
Country Report No. 18/214

Senegal : Sixth Review Under the Policy Support Instrument-Press Release; Staff Report; and Statement by the Executive Director for Senegal

1 week 7 hours ago
Country Report No. 18/211

IMF Executive Board Concludes 2018 Article IV Consultation with Oman

1 week 2 days ago

Tax Administration Diagnostic Assessment Tool TADAT—Reflections Event

1 week 2 days ago

Self-insurance Against Natural Disasters: The Use of Pension Funds in Pacific Island Countries

1 week 3 days ago
Working Paper No. 18/155

Commodity Price Movements and Banking Crises

1 week 3 days ago
Working Paper No. 18/153

Building Resilient Banking Sectors in the Caucasus and Central Asia

1 week 3 days ago
Departmental Paper No. 18/08

Estimates of Potential Output and the Neutral Rate for the U.S. Economy

1 week 3 days ago
Working Paper No. 18/152

Public Investment Efficiency in Sub-Saharan African Countries

1 week 3 days ago
Departmental Paper No.18/09

Lessons for Effective Fiscal Decentralization in Sub-Saharan Africa

1 week 3 days ago
Departmental Paper No.18/10

Central Bank Communication and Monetary Policy Surprises in Chile

1 week 3 days ago
Working Paper No. 18/156

Trend Inflation and Inflation Compensation

1 week 3 days ago
Working Paper No. 18/154

IMF Staff Completes 2018 Article IV Mission to Ecuador

1 week 3 days ago

Germany’s Economic Outlook in Six Charts

1 week 3 days ago

IMF Executive Board Concludes 2018 Article IV Consultation with Tuvalu

1 week 3 days ago

Germany : 2018 Article IV Consultation – Press Release; Staff Report and Statement by the Executive Director for Germany

1 week 3 days ago
Country Report No. 18/208

Mongolia : Fourth Review under the Extended Fund Facility Arrangement and Request for Modification of Performance Criteria – Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Mongolia

1 week 4 days ago
Country Report No. 18/204

Republic of Moldova : Third Reviews under the Extended Credit Facility and Extended Fund Facility Arrangements and Request for Modification of Performance Criteria – Press Release; Staff Report; and Statement by the Executive Director for the Republic of

1 week 4 days ago
Country Report No. 18/205

Tuvalu : 2018 Article IV Consultation – Press Release; Staff Report and Statement by the Executive Director for Tuvalu

1 week 4 days ago
Country Report No. 18/209

IMF Executive Board Concludes 2018 Article IV Consultation with Germany

1 week 4 days ago

IMF Executive Board Concludes 2018 Article IV Consultation with New Zealand

1 week 5 days ago

IMF Executive Board Concludes 2018 Article IV Consultation with Honduras

1 week 5 days ago

IMF Executive Board Completes Fourth Review Under the ECF Arrangement for the Central African Republic and Approves US$ 32.1 Million Disbursement

1 week 5 days ago

IMF Executive Board Concludes Article IV Consultation with the United States

1 week 5 days ago

United States : 2018 Article IV Consultation – Press Release; Staff Report and Statement by the Executive Director for United States

1 week 6 days ago
Country Report No. 18/207

New Zealand : Selected Issues

1 week 6 days ago
Country Report No. 18/203

New Zealand : 2018 Article IV Consultation – Press Release; Staff Report; and Statement by the Executive Director for New Zealand

1 week 6 days ago
Country Report No. 18/202

Honduras : 2018 Article IV Consultation – Press Release; Staff Report and Statement by the Executive Director for Honduras

1 week 6 days ago
Country Report No. 18/206

IMF Executive Board Completes Sixth Review Under the Policy Support Instrument (PSI) for Senegal

1 week 6 days ago

World Economic Outlook Update, July 2018

1 week 6 days ago

Egypt: IMF Executive Board Completes Third Review under the Extended Fund Facility (EFF)

1 week 6 days ago

Republic of Latvia: Staff Concluding Statement of an IMF Article IV Consultation

1 week 6 days ago

OECD News - Corruption

Multi-stakeholder sports integrity taskforces established

2 weeks 3 days ago
15/12/2017 - The International Partnership against Corruption in Sport (IPACS), a recently established multi-stakeholder platform, agreed to set up three taskforces to help tackle corruption in sport at its meeting at the OECD in Paris on 14 to 15 December 2017.

OECD News - Economy

Mr. Angel Gurría, Secretary-General of the OECD, in Prague on 16 July 2018

2 days 20 hours ago
Mr. Angel Gurría, Secretary-General of the OECD, will be in Prague on 16 July 2018 on an official visit. He will present the 2018 OECD Economic Survey and the Environmental Performance Review of the Czech Republic.

OECD economic scenarios to 2060 illustrate the long-run benefits of structural reforms

4 days 2 hours ago
Policy choices made today can have important positive effects on future living standards, according to new long-term economic scenarios released by the OECD.

Towards more inclusive growth in Tunisia

5 days 41 min ago
The average standard of living of the Tunisians has been steadily increasing for several decades, while poverty and inequality have been greatly reduced by the implementation of many social programs.

Brexit and Dutch Exports: Fewer glasshouses, more glass towers as agri-food shrinks and finance gains

6 days 3 hours ago
The Netherlands is likely to be one of the European countries that is going to be significantly affected by the United Kingdom’s planned departure from the European Union (Brexit).

To shorten or to lengthen debt maturity to lower debt servicing costs?

1 week 34 min ago
Low interest rates prevailing in many advanced economies in recent years have already helped to lower the debt servicing burden, but government debt and interest payments remain large in many OECD countries. Could a further reduction in interest payments be attained by "locking-in" current low interest rates?

Composite Leading Indicators (CLI), OECD, July 2018

1 week 3 hours ago
Stable growth momentum in the OECD area

Reforms in Lithuania are reinforcing economic growth but boosting productivity is still a challenge

1 week 4 days ago
Lithuania’s economy has grown faster than most other OECD economies over the past 10 years, unemployment continues to fall and public finances have stabilised after a long period of deficits and rising debt.

Structural policies to boost productivity and inclusion in Costa Rica

1 week 4 days ago
Owing to past structural reforms, Costa Rica has enjoyed robust GDP growth and productivity levels are gradually converging towards the OECD average.

Costa Rica: Restoring fiscal sustainability and setting the basis for a more growth-friendly and inclusive fiscal policy

1 week 4 days ago
Consecutive years of primary deficits have led to mounting public debt of almost 50% of GDP, one of the fastest increases in Latin America over the last decade.

The quantification of structural reforms: Taking stock of the results for OECD and non-OECD countries

1 week 5 days ago
This paper summarises earlier OECD work aimed at quantifying the impact of structural reforms on economic outcomes.

Economic Survey of the Netherlands 2018

1 week 6 days ago
The Netherlands is experiencing vibrant economic activity, with gross domestic product (GDP) at about 8% above its pre-crisis peak and the unemployment rate below 4%. Growth picked up to above 3% in 2017, which was well above the euro area and OECD averages.

Further reforms can foster more inclusive labour markets in The Netherlands

1 week 6 days ago
Economic performance in The Netherlands is vibrant and growth is expected to remain robust, underpinned by sound public finances, healthy job creation and high levels of confidence. The current economic expansion should be used to speed up implementation of reforms to ensure future stability and support more inclusive labour markets, according to a new report from the OECD.

The "Family 500+" child allowance and female labour supply in Poland

2 weeks 3 days ago
In 2016 the Polish government introduced a large new child benefit, called "Family 500+", with the aim to increase fertility from a low level and reduce child poverty.

OECD News - Finance

OECD-Russia symposium on financial literacy

0 sec ago
4-5 October 2018, Moscow, Russian Federation: The symposium will focus on innovative implementation approaches to deliver global progress on financial literacy.

Joint Seminar on Financing Quality Infrastructure for Long-Term Investment and Mobilising Private Sector Capital

0 sec ago
This joint Seminar on "Financing Quality Infrastructure for Long-Term Investment and Mobilising Private Sector Capital" is organised together with the Ministry of Finance of Japan and will place on 12-13 September 2018, in Tokyo, Japan

OECD Blockchain Policy Forum

0 sec ago
4-5 September 2018, Paris - The OECD Blockchain Policy Forum on "Distributed Ledgers: Opportunities and Challenges" will provide a forum for a discussion on the benefits and risks of blockchain for our economies and societies, and on the kind of policy and regulatory frameworks that are needed to unleash this potential.

The Global Forces Shaping Finance - Keynote address by Greg Medcraft

2 weeks 3 days ago
29 June 2018 - This keynote address focuses on the three main forces driving change in the financial sector: the growing importance of trust; the accelerating digitalisation of the economy; and the unprecedented interconnectedness of global markets. This keynote address was made by Greg Medcraft, OECD Director of Financial and Enterprise Affairs, at the Annual Conference of the Cambridge Centre for Alternative Finance.

The World Bank - Blog

Technology can help spring workers from the informality trap

2 days 8 hours ago
Women stitch handicrafts at Everest Fashion Fair Craft in Lalitpur, Nepal. © Peter Kapuscinski/World Bank

[[tweetable]]Technology and what it will do to change how we work is the driving obsession of the moment.[[/tweetable]] The truth is that nobody knows for sure what will happen – the only certainty is uncertainty. How then should we plan for the jobs that don’t yet exist?
 
Our starting point is to deal with what we know – and the biggest challenge that the future of work faces – and has faced for decades – is the vast numbers of people who live day to day on casual labor, not knowing from one week to the next if they will have a job and unable to plan ahead, let alone months rather than years, for their children’s prosperity. We call this the informal economy – and as with so much pseudo-technical language which erects barriers, the phrase fails to convey the abject state of purgatory to which it condemns millions of workers and their families around the world.

[[tweetable]]A worker is informally employed when she does not have a contract, social security, health insurance or any other protections. Informal work is a means of survival, nothing more.[[/tweetable]] From the rickshaw pullers in the streets of Dhaka to the mobile fruit vendors of Nairobi, the informal economy is omnipresent. Informal employment is more than 70 percent in Sub-Saharan Africa and South Asia, and more than 50 percent in Latin America. In Cote d’Ivoire and Nepal, it is more than 90 percent. As you can see in the graph below, which I have borrowed from the draft World Development Report 2019, informal work is more widespread for low income than high income economies.


[[tweetable]]In spite of improvements in the business environment, informality remains high.[[/tweetable]] Since 1999, India has seen its IT sector boom, become a nuclear power, broken the world record for the number of satellites launched in a single rocket and achieved an annual growth rate of nearly 6 percent. Yet, the size of its informal sector, by some estimates, has remained around 90 percent. In Sub-Saharan Africa informality remained around 75 percent between 2000-2016. In South Asia, it has increased from an average of 50 percent in the 2000s to 60 percent between 2010-2016.
 
[[tweetable]]Most informal workers tend to be engaged in low productivity activities, with little skill development and almost zero growth prospects.[[/tweetable]] In India, a year of work in the formal sector doubles wages compared with a year of informal work. In Kenya the picture is similar. The difference is potent. Informal businesses are the business of the poor. The small scale of their endeavors reduces the chances of moving out of poverty.
 
So, what can we do about it? Clearly there is no one-size-fits-all solution – but the answer involves a mixture, depending on the context, of improvements to the business environment, human capital investments and the promise of technology, which is so current in discourse.
   
[[tweetable]]Technology can reduce informality. Peru succeeded in creating 276,000 new formal jobs by the introduction of e-payroll[[/tweetable]] -  an electronic procedure through which employers send monthly reports to the National Tax Authority. The reports cover information on workers, pensioners, service providers, personnel in training, outsourced workers and claimants.
 
[[tweetable]]Investment in human capital helps. When young people are equipped with the right skills, they are more likely to obtain a formal job than an informal one.[[/tweetable]]
 
You can learn more about how technology helps people stuck in dead-end jobs by reading the draft of the World Bank’s World Development Report 2019.
 
Of course, the report doesn’t have all the solutions but, in a world with so much uncertainty, what it sets out is a way to think about the challenges ahead. [[tweetable]]Technology isn’t the only answer to many of the problems we face but by properly framing the right questions now there is a better chance that it will help more than hinder our progress.[[/tweetable]]

The shape of water for development

2 days 16 hours ago

This post originally appeared on High-Level Political Forum on Sustainable Development website on July 9, 2018.
 

From July 9-18, more than 2,000 representatives from governments, businesses, civil society organizations and UN agencies gather for the High-level Political Forum on Sustainable Development. 


Water touches nearly every aspect of development. It flows through and connects the 17 Sustainable Development Goals (SDGs) by driving economic growth, supporting healthy ecosystems, cultivating food and energy production, and ensuring access to sanitation. We cannot achieve the SDGs without our collective action on water.

Yet today water represents a silent emergency and a risk to our goals of building shared economic progress and sustainable development. The challenges include gaps in access to water supply and sanitation driven by growing populations and rapid urbanization, more water-intensive patterns of growth, increasing rainfall variability, and pollution, among others. The forthcoming SDG 6 Synthesis Report on Water and Sanitation captures the current situation rather succinctly:[[tweetable]] “the world is not on track” to achieve our water goals embedded in SDG6.[[/tweetable]]

[[tweetable]]Billions of people around the world still lack safe water, sanitation and handwashing facilities. An increase in wastewater in many parts of the world is affecting quality.[[/tweetable]] National governance structures remain weak and fragmented. Rapid urbanization has put enormous stress on agricultural production and water supply. Financing remains insufficient and data gaps in monitoring are abundant.

The World Bank Group is working with our country partners in a number of ways to address these challenges and ensure that water is used wisely to help achieve the SDGs and a water-secure world for all.

To continue reading the blog post, visit HLPF website for the original post: “The Shape of Water for Development”.

Weekly links July 13th....Friday the 13th

3 days 19 hours ago
And here are the weekly links for your Friday the thirteenth:
  • Don't be afraid, we're just hiring:   DIME is looking for a field coordinator based in Peru, and two research assistants based in Washing (position one and two).  
  • Was that a whisper I heard?  Over at the CGD Blog, Sarah Rose goes hunting for signs of the use of evidence in RFPs from a large aid agency.   
  • Just don't look under the bed:  On Goats and Soda, a nice piece on Banerjee et. al's work on using postcards to reduce leakage from a huge social program in Indonesia.   
  • And should you really be afraid because it's the thirteenth?   Livescience debunks the odds that you'll be in the car wreck (British humor strikes again) and National Geographic explains why you need to leave the house...now.  So stop your triskaidekaphobia before you hurt yourself.  .
 

PPPs and agriculture: driving India beyond the Green Revolution

3 days 20 hours ago



India’s agriculture sector—including animal husbandry, forestry, and fishing—has always been one of the country’s core economic sectors, accounting for about 16 percent of India’s GDP and employing nearly half of the working population. Although India has the second largest arable land pool in the world, agriculture is still mired by challenges such as low effective yield and underemployment. Underinvestment in agri-infrastructure, fragmented land holdings, and lack of knowledge and skills among farmers, are some of the key causes. These challenges in turn have aggravated issues like inflation, farmer distress and unrest, political and social disaffection—all of which have severe socioeconomic ripple effects on other sectors. This significantly curtails the ability of India’s economy to touch double-digit growth. 

Considering the capacity and resource constraints of the government, there exists a pressing need to develop a more structured approach for increasing the number of bankable agribusiness and agri-infrastructure projects to facilitate long-term, private sector investment. India has a good record on public-private partnerships (PPPs) in the development of transportation infrastructure. Unfortunately, the PPP model has not been adopted in agri-infrastructure development with the same vigor.


Green Revolution 1.0, which introduced high-yield seeds in the 1960s, helped India become one of the world’s top grain producers. But it also exposed the shortcomings and challenges in the storage of food grains.

To address this, the government, through Food Corporation of India (FCI) and initiatives of various state governments, adopted a phased implementation plan to build modern steel grain silos with a capacity of 10 million metric tons by 2020 through PPPs. Although states use different PPP models, in most cases the concessionaire is responsible for construction, operations and maintenance, storage, and preservation of the food grains.

Beyond storage, another area of concern is the ineffective supply chain of perishable products in most regions. Products move in multiple channels, from the farm to the consumer, without automation or value addition. As a result, prices of commodities are inflated, with the margins taken by multiple layers of middlemen.

Availability of water for irrigation is another burning issue. In India, agricultural activities consume more than 80 percent of available fresh water. There is also excessive reliance on ground water and seasonal rains. The need to produce more food per drop of water requires water-efficient irrigation methods instead of conventional flood irrigation—for example, through micro-irrigation. According to the Ministry of Agriculture, the area under micro-irrigation as of 2016 was only about 8.6 million hectares—about 5 percent of the total area of cultivable land in India. A huge, untapped potential exists that requires a suitable intervention by the private sector and government. 

Acknowledging these gaps, the risks faced by India’s agricultural sector, and the appetite of the private sector, the government of India (including state governments), is considering suitable PPP models that optimize risk allocation. For example, it is developing pilot PPP projects that streamline post-harvest supply chains of major perishable agriculture and horticulture commodities. A “hub and spoke” model, consisting of farm collection points and primary processing centers, is being considered as part of an effective post-harvest supply chain infrastructure network, backed by institutional mechanisms for forward and backward linkages. The government has already formulated a plan to extend grant financing. 

Integrated micro-irrigation networks are also being developed through PPPs to integrate common infrastructure that provides water from canals to the farm gate with on-farm micro-irrigation infrastructure. The government is proposing that total project costs be funded under a modified annuity model.

Both models envisage pre-determined and regulated user charges from farmers that may be complemented with fixed fee payouts by the authorities to compensate for any revenue loss—due to risks such as the farmer’s willingness to pay.

Apart from these PPP frameworks, the government of India has created an institutional structure known as Farmer Producer Companies (FPCs). This structure facilitates participatory farming, provides better access to credit and capital markets, and limits the liability of beneficiary farmers. FPCs are proving to be a formidable tool for the project authorities to engage the private sector directly with end-beneficiary farmers. FPCs also provide a strong social-collateral on behalf of individual farmers and a platform for integrating various government subsidy schemes into the private sector.
 
India has set an ambitious goal of doubling farmers’ income in real terms by 2022–23 compared to 2015–16. Achieving these goals will require significant investment. Although a lot has been achieved, much more remains to be done. With agriculture being a state priority in India, a more concerted emphasis is warranted to engage the private sector in agriculture through PPPs. 

Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.
 
Related posts:
Stopping the Rot: Beating the Grain Storage Crisis in India
 

Côte d'Ivoire: Ensuring that tomorrow comes

3 days 20 hours ago
Photo: Mighty Earth


It is easy to be alarmed about climate change, and, unfortunately, with good reason.  Although experts cannot predict the future with certainty, they agree that Côte d’Ivoire will experience hotter temperatures and more variable, albeit more intense, rainfall, with masses of land being engulfed by rising sea levels. Deniers, the indifferent, or simply those who have little choice but to live in the present typically either advocate a wait-and-see approach or, at best, delayed action.

However, I’m not sure that Côte d’Ivoire can afford to wait any longer if it hopes to ensure that tomorrow comes. The World Bank estimates that the country has already lost more than one quarter of its natural assets over the past 25 years. While this statistic may be shocking at first glance, we need only recall that Côte d’Ivoire has one of the highest deforestation rates in the world (80% of its forests have been lost since 1970) and that many villages have already been swallowed up by the sea. Concurrently, many residents in Bouaké – the country’s second largest city – have been contending with a nearly depleted water supply for the past few months.
 
While a host of natural and man-made factors are definitely contributing to this unfortunate situation, there is now little doubt that climate change is one of the key drivers.
 
Our recently published seventh Economic Update for Côte d’Ivoire (FR) therefore advocates urgent, concerted action. Urgent action is needed because while most of the effects of climate change will be felt in the long term, decisions must be made now in order to mitigate them. The cocoa sector, which is currently the source of livelihood for more than five million Ivorians and accounts for almost 40% of the country’s export earnings, is threatened by rising temperatures and increasingly irregular rainfall patterns that could dry out the soil and reduce its fertility. Given that the solutions that need to be explored—such as the possible movement of crops to higher ground in the western part of the country—are not simple, an adaptation strategy must be devised as quickly as possible. Urgent action is also needed in urban planning, particularly in the Greater Abidjan area where two-thirds of the country’s economic activities are concentrated, owing to its proximity to the ocean, the risk of coastal erosion, and the damage caused by increasingly intense rainfall, as the deadly floods in recent weeks sadly demonstrate. It bears noting that Grand-Lahou city has already been partially swallowed up and Grand-Bassam – a UNESCO World Heritage site – is grappling with increasingly frequent floods.
 
Collective action is needed as it will require across-the-board behavioral changes that must be coordinated if they are to be effective. Acutely aware of the need for action, the government set ambitious targets in its recent plan that addresses climate change, particularly with regard to CO2 emissions reduction. More still needs to be done, especially in the area of adaptation. It would be futile, for example, to construct weather-resistant houses in a flood-prone area without adequate infrastructure in place. The action must be well informed, planned, and embraced by all stakeholders.
 
Like most African countries, Côte d’Ivoire is a victim rather than a perpetrator of global climate change. Owing to its geographic position and dependence on agriculture, its economy is also one of the most vulnerable (146th out of 166 countries). An adaptation policy will involve hard choices that will undoubtedly be costly in the short term, but undeniably beneficial in the longer term.  This policy will also pave the way for another economy—commonly known as the “green” economy—where prudent investments in renewable energy, resilient infrastructure, and a new agriculture can create a host of opportunities and jobs. It is incumbent upon Côte d’Ivoire to lay the groundwork and become a pioneer in this area on the African continent, because, as the late French philosopher Henri Bergson said, “our future is not what will happen to us, but what we will make happen for ourselves.”

InsureTech for Development

3 days 23 hours ago

Ventures that promise to make insurance more fun with technology attract considerable attention and funding. In mature markets, that is. More than half of the $2.3 billion InsureTech funding in 2017 went to the US and the UK, where the average person spends more than $5,000 on insurance every year (that includes newborns). In a country like Bangladesh, by comparison, insurance premium per capita is $8, and this statistic fails to show that most people have no insurance at all, so that insurable events such as accidents end the progress out of poverty for too many. The obstacles that prevent these people from including insurance in their risk management toolkit are surprisingly similar to the obstacles that InsureTech wants to remove to better serve American Millennials. They include lack of trust in insurance companies and lack of understanding of insurance, but also the frustration caused by annoying processes (think filling long forms and waiting for mailed responses) and products that don’t fit. 

But there’s an app for that.

Why fill paper forms if the data needed for an insurance contract can be provided by smartphone? Why key in data again that was already captured when the SIM card was registered? Why rely on cash for premium payment and checks for claims payment if money can be transferred via mobile banking channels? [[tweetable]]In places like Bangladesh and much of Africa, insurance companies have embraced the data and payment infrastructure provided by mobile telephony, revolutionizing the provision of insurance to first time buyers there. [[/tweetable]] In mature markets, where payment systems are less of a challenge, innovators are testing more ways in which mobile phones can change the relation between insurers and their customers for the better. 

Imagine an app that: 
•    Helps customers determine their insurance needs 
•    Helps them find the most suitable product from the most suitable provider
•    Automatically transfers the necessary data, which resides in the app
•    Uploads the insurance policy in a digital locker with the customer’s other policies
•    Points out redundancies among the different insurance policies and suggests streamlining
•    Allows to switch insurance cover on or off as needed
•    Clarifies any doubts the customer may have about scope and conditions of cover in simple language at any time
•    Reminds the customer of critical dates such as policy renewal and premium payment
•    In case of claim, provides GPS information and pictures to the insurer and facilitates the real-time dialogue with the claims handling staff – or bots - of the insurer, which may include innovative fraud detection components that speed up claims payment; which of course is done through the payment channels administered by the app.

This allows convenient one-click buy of insurance and puts the customer in a position to meet insurance companies at eye level and make informed choices of purchase and use. It reduces the cost of making insurance available – even for small covers, short periods and irregular payments - and increases market transparency so that efficiency gains benefit consumers. It addresses the fundamental factors that exclude millions from insurance markets: understanding, affordability, convenience, suitability and trust.

An app like this embodies various dimensions pursued by InsureTech: cost reduction through digitization, alternative distribution channels, new (e.g. smartphone GPS) and “big” (e.g. social media) data, artificial intelligence (advice via chatbots, new and unstructured data for indicators of insurability and fraud), insurance on demand, and customer centricity. Startups explore many other areas of insurance innovation. But to prove their inclusive potential, these innovations must find their way to more emerging economies and developing markets, where the business potential is not as bright as in the US but the developmental potential much brighter. Innovators should consider how their propositions can help end poverty in low and middle-income countries, making insurance work where it currently does not. Stakeholders in these countries need to be prepared when disruptive innovation arrives to their insurance markets. The imaginary app shows how ownership and protection of personal data needs to be reassessed so that markets remain fair, safe and stable as they become more inclusive. Applying artificial intelligence to big data allows more precise segmentation of risks, but too much granularity can conflict with the law of large numbers. Switching “insurance on demand” on and off may reduce the cost for the consumer, but creates new opportunities for fraud. Finding the right middle ground (or even finding a mechanism – like regulatory sandboxes - to find that middle ground) requires dialogue informed by expertise. The World Bank Group contributes to make InsureTech inclusive in many ways, e.g. with investment in innovators, technical assistance to regulators, and strengthening of consumer protection.

Find out more in the second of our FinTech Notes on “How Technology Can Make Insurance More Inclusive.” 

Remember to call your grandparents: Multigenerational mobility in the developing world

3 days 23 hours ago

A large body of literature has shown that the outcomes of children are tied to the outcomes of their parents or, in other words, that children face different life prospects based on their family background. But there is no reason to believe that such “persistence” of outcomes is limited to two generations. Social mobility (or lack thereof) depends not just on how parents influence the outcomes of their children, but also on how outcomes persist across multiple generations, from grandparents to grandchildren.

In many parts of the developing world, grandparents play a crucial role in the upbringing and development of their grandchildren, and their social status and connections can influence the life prospects of grandchildren. Although benefiting from the culture, values and wisdom of your grandparents is a good thing, the passing down of wealth, legacies and social status across generations can mean an added disadvantage for those children whose grandparents lack these endowments.

In any society where individuals’ outcomes are associated with the outcomes of their parents, grandparents will have an indirect impact on outcomes through the individual’s parents (who are in turn influenced by their parents). But consider a country in which grandparents’ outcomes directly influence the outcomes of grandchildren over and above the effect transmitted through the parents of these children. Such a country would exhibit more persistence of poverty and privilege across time than a country in which grandparents matter only to the extent that they influence the outcomes of the parents.

A recent summary of the handful of articles written about multigenerational mobility con­cludes that, for the most part, grandparents do not have any appreciable direct effect beyond the indirect effect through parents. Yet almost all the evidence is from high-income countries and evidence is limited in the developing world. One paper on rural China suggests that grandparents have a non-negligible effect on grandchildren if they reside in the same household.

With the launch of the report Fair Progress: Educational Mobility Across Generation Around the World and its associated database, for the first time, patterns of multigenerational mobility can be analyzed in dozens of countries spanning the developing world in a consistent manner. Particularly, the report examines whether the years of schooling of children depend on the years of schooling of their grandparents – above and beyond the effect channeled through the parents.



In 39 economies for which multigen­erational links could be established, in many of the cases, grandparents have a sizeable and significant effect on children’s educational outcomes. In panel (a), most of the estimated coefficients are located between the vertical line and the diagonal line (corresponding to the 45-degree line). This suggests that the educational attainment of parents and grandparents both have a positive effect on the education of the current generation, but that the effect of parents is stronger – often two to three times stronger – than the effect of grand­parents.  

The impact of grandparents tends to be larger in developing countries. Indeed, panel (b) shows that the impact of grandparents approaches zero for high-income countries. This might explain why the empirical literature on multigenerational mobility in high-income countries rarely finds that the effect of the education of grandparents is crucial for the education of the current generation.

These findings have important implications for intergenerational justice. The results imply that intergenerational mobility in education in developing economies may be even lower than suggested by the traditional measures that link two generations. Moreover, the disad­vantages of birth in a family with low educational attainment are more likely to persist across several generations in poorer countries than in richer countries. If everyone is to #inheritpossibility, it is vital that links of privilege and poverty across generations are broken such that everyone has a fair chance to flourish in life. The Fair Progress report points to several policies that may help overcome these intergenerational inequities.

GICA’s V2P2P: A helping hand in overcoming the challenges of developing connectivity infrastructure

4 days 6 hours ago



The task of preparing a viable, feasible, and sustainable infrastructure project can be a daunting one filled with many challenges. Throw in the need to incorporate an element of connectivity and the challenges only multiply in number and complexity. Indeed, during the annual meeting of the Global Infrastructure Connectivity Alliance (GICA), held in January 2018 at the OECD headquarters in Paris, GICA members identified several of these challenges, including the need to share best practices, ensure robust project preparation, and address the financing gap.
 
While multilateral development banks (MDBs) and international financial institutions (IFIs)—including GICA members Asian Infrastructure Investment Bank (AIIB), Eurasian Development Bank (EDB), Asian Development Bank (ADB), and the World Bank Group (WBG)—have the experience and financial or analytical tools to help, actually finding or accessing these resources can be difficult.
 
Is there a way to bridge this knowledge gap?


Introducing V2P2P
 
Enter GICA’s Vision to Program to Projects, called “V2P2P” for short. Under V2P2P, we have developed an online resource to help plan and implement connectivity infrastructure through a five-phase framework. This framework is designed to assist policymakers, practitioners, and other sector professionals in navigating through and better managing the process of developing a vision, proceeding to a program and finally, preparing and implementing a project.

 

The five-phase V2P2P Framework

Let’s consider the three main elements of V2P2P: Vision, Program, and Projects, and the framework phases related to each.
 
Vision
Ideally, before even beginning the process of implementing a project, a policymaker considers the “vision,” or the overall government strategy for connectivity. What are the priorities, and why? What can be gained or lost from different policies?
 
Related framework phases: 1) Infrastructure Planning; and 2) Enabling Policy Environment
 

Program
Often, projects are undertaken on an ad hoc basis, with little planning or prioritization. However, a programmatic approach involves looking across all of the potential projects and prioritizing them to develop a pipeline of complementary projects that contribute to the overarching vision. In turn, a well-planned program saves on transaction costs while developing transparency and consistency in the market.
 
Related framework phases: 2) Enabling Policy Environment; and 3) Project Prioritization and Screening
 

Projects
With a program of projects in place, the next step is to develop these projects. At this stage, qualified transaction advisors work with the government to develop studies and structure the project. Once financial closure is achieved, project monitoring is essential to ensure the construction, operations, and maintenance continue smoothly.
 
Related framework phases: 4) Project Transaction Support; and 5) Project Implementation and Supervision
 
 
V2P2P resources
 
A vital component of GICA’s mission to support connectivity through cooperation and knowledge exchange, the V2P2P initiative currently offers two products:  1) a database of case studies on connectivity-related programs and projects and 2) a “toolbox” of resources gleaned from GICA members and other thought leaders to help progress connectivity infrastructure projects from inception through to implementation.
 
First, V2P2P provides curated case studies, organized into regional connectivity programs such as the Greater Mekong Subregion and the European Union, and projects such as airports and cross-border hydroelectric projects. While the regional case studies give examples of how programs can facilitate regional integration and initiate a pipeline of connectivity infrastructure projects, the project case studies showcase how connectivity infrastructure projects can be structured, to encourage private sector participation and bring about successful deal closure.
 
Second, V2P2P provides a directory of tools offered by GICA members and other MDBs and IFIs to help policymakers mobilize support for preparing and implementing connectivity infrastructure projects. We have organized the tools and products according to five phases of the connectivity infrastructure cycle (see framework graphic, above), beginning with infrastructure planning then moving through the processes of creating an enabling environment for infrastructure investments, prioritizing projects, and conducting the project transaction—before culminating in project implementation and supervision.
 
Our collection of V2P2P tools includes technical assistance to develop a connectivity master plan, diagnostics and benchmarks for ensuring an adequate legal and regulatory framework, project development facilities to help structure the transaction, or financial products to help finance the project. The directory also provides successful examples from the field showing how these tools are applied.
  Under each V2P2P phase, explore a selection of field-tested tools and other analytical products to boost infrastructure project planning and performance.

The way forward
 
GICA offers a helping hand in solving common infrastructure connectivity problems. Check back with GICA often, as we will continually update our website with new flagship tools and case studies—and watch for our upcoming V2P2P Project Screening Checklist—to guide your next infrastructure connectivity project to a successful, sustainable implementation.
 
Share your latest, most helpful resources with GICASecretariat@worldbank.org.
 

Family Planning: Investing in women’s health and empowerment to build human capital

4 days 18 hours ago



Investing in Universal Health Coverage (UHC) so that every person has access to quality, affordable health services is a critical step towards building a country’s human capital. And as part of UHC, every woman and child should be able to access quality health services at a price they can afford, and are able to use them when needed. This includes access to comprehensive reproductive, maternal, newborn child and adolescent health services, including family planning.  

At its core, modern family planning is managing when and how many children a woman will have over the course of her life. Family planning methods, which include modern contraceptives and voluntary sterilization (for either men or women), provide women, and their partners, greater control over their lives. In doing so, family planning especially allows adolescent girls and women the chance at better health, greater opportunities for higher education and productive employment, and ability to explore their own potential. 

Family planning saves lives. But how? Adolescents are twice as likely to die due to pregnancy related complications compared to women over 20 years of age. Children born to adolescents are also more likely to have a low birth weight, ill-health, stunting and other poor nutritional outcomes. Through giving all women (and their partners) a reliable way to space births, to allow women to decide what is best for them, and a family size that the household can provide for, family planning prevents unnecessary maternal and infant mortality, and secures better nutrition for newborns and other children in the household. A recent study on lives saved in South Africa estimates that a 0.7% annual increase in use of modern contraceptives would lead to 7000 fewer infant and child deaths and 600 fewer maternal deaths by 2030.

Family planning along with other interventions like delayed marriages and access to education, empowers women and girls to have more control over their lives and well-being. It helps them achieve their potential – academically, professionally, and in their personal lives. And this has a cascade effect – children of educated mothers, for instance, are more likely to get an education themselves – further building the human capital of a country. 

Modern contraceptives are not just a family planning tool. For girls and women who experience very long, irregular, or painful periods, monitored use of modern contraception by qualified health personnel can help to regulate periods, reduce pain, and shorten the duration of bleeding. This helps women to have better physical and mental health, miss less school, and be more engaged in daily life – further contributing to their empowerment and human capital potential.

Family planning interventions are also cost effective. The return on investment for meeting the demand for family planning and  maternal and newborn services is US$ 120 per every US$1 spent. The overall cost for unmet reproductive, maternal, child and adolescent health services combined with family planning services is much lower than when these services are implemented separately. At current estimated levels, this amounts to an additional investment of US$12.1 billion annually to completely meet the need for modern contraception for all women globally. A recent study focusing on India and Nigeria estimated that India could potentially reduce its overall household expenses by US$ 89.7 billion and Nigeria by US$12.9 billion by the year 2030 if the countries were to meet their Family Planning 2020 commitments.

The positive long-term consequences of family planning at the household levels holds the key for better health outcomes for women and their children, as well as their social and economic empowerment. 
 

 

Can information reduce anti-immigration biases?

4 days 23 hours ago
Let’s start with a little quiz.   Grab a piece of paper and pencil.   What’s the share of legal immigrants in the US population? (or you can choose the Germany, UK, Italy, Sweden or France).  A legal immigrant is defined as someone living legally in the country and born abroad. 
 
OK.  If the suspense is killing you on the answer, you can skip to somewhere below.   But if not, this question, and why so many people get it wrong, how it relates to information, and if information can offset it, are at the heart of a fascinating new paper by Alberto Alesina, Armando Miano, and Stefanie Stantcheva.  
 
Alesina and co. run a large scale set of surveys covering 22006 respondents in the six countries listed above during January to March of this year.   The surveys were run online and designed to be nationally representative.   In addition to the usual socio-economic characteristics, the survey focused on two main things.    First, it asked a set of questions about immigration.    These covered the question above, but also a range of factual questions about immigrants in the country where the survey was taking place: where do they come from, what religion are they, their employment levels, their education level, the share living below the poverty line, and the average (government) transfer that they get relative to someone born in that country.    Then they ask a set of attitudinal/perception questions about whether immigrants are poor because of lack of effort or circumstances beyond their control, a question where an immigrant (Mohammed) is compared to a native (John) in terms of paying taxes and receiving benefits, and then a set of questions on immigration policy.  Taken together these questions form what Alesina and co. call the immigration block.  
 
The second set of questions are about redistribution.  Here Alesina and co. work hard to separate out views on the the total size of government from how to raise funds (taxes) and how to spend them.   They also set up a mechanism to incentivize meaningful answers: respondents are told they have been entered into a lottery to win $1000, and before they can find out if they win, they have to decide how much of it (zero is an option) to donate to charity, where the charity is about low-income folks but not immigrants in particular.   Taken together, these questions form the redistribution block.  
 
Before getting to the results, one interesting methodological note.  Before they ask the immigration questions, Alesina and co. ask the respondents whether they have paid careful attention to the preceding questions and whether the responses should be used in the analysis.  Apparently, this is a tool from a paper by Meade and Craig (2012) and the answer doesn’t matter (most people say yes) but it gets people to pay more attention to the questions that follow. 
 
OK, so how do people respond?   To start with: the fraction of the population that are immigrants are as follows 10 percent (US), 13.4 (UK), 12.2 (France), 10 (Italy), 14.8 (Germany), and 17.6 (Sweden).   And people get this massively wrong – for example in the US the respondents think that the share is 36.1 percent (so don’t feel bad if you were off).   The Swedes do the best, but they’re still coming at 10 percentage points too high. 
 
There is some heterogeneity in how wrong people are, but as Alesina and co. note, it is important to note that no single group (taken across countries) actually gets closer than 15 percentage points to the actual estimate.   So who does worse?   People who have low education and also work in sectors with more immigrants, those without a college education, those who have an immigrant parent, the young and women.    Interestingly (at least for me with an immigrant parent), the folks with an immigrant parent have the largest over estimate of the share of population that are immigrants.   Also interesting is the fact that the political orientation of respondents does not correlate with how much they overestimate the share of immigrants.  
 
People are also pretty bad at guessing where the immigrants in their countries come from.  They are much more likely to say the Middle East, North African or sub-Saharan Africa than is actually the case (although there is a bit of cross-country variation in which of these three regions they overestimate for).   Folks (except the French) are also significantly likely to overestimate the fraction of immigrants who are Muslim.    The US does this the most.   On the flip side, folks significantly underestimate the fraction that are Christians.   Again, the misperceptions are higher among those without a college degree, women, and the less educated working in a high immigration sector.   In contrast to the fraction of the population question, here the older respondents and those who identify with right-wing political parties get it more wrong.  
 
Respondents are also more likely to believe that immigrants are poorer than they are (except for Sweden) and they also overestimate immigrant unemployment (even in Sweden).   These latter numbers are large – in the US it is overestimated by 25 percentage points, and by 35 percentage points in Italy.  Respondents also overestimate the share of low educated immigrants (not finishing high school) in all countries except Germany.    The heterogeneity in views here is similar to the region of origin of migrants.   In terms of saying whether migrants are poor because of a lack of effort, in three countries (the US, UK and Sweden), respondents pretty much have the same views of migrants and natives.   However, in Italy and France, respondents see this lack of effort as significantly more likely to cause poverty for migrants than natives.  
 
Actually knowing an immigrant is associated with significantly lower misperceptions across all measures, even when controlling for all individual characteristics.   It’s also associated with different views – these folks are less likely to say migrants are poor because of a lack of effort.  In the US, where the data will allow for this, Alesina and co. also look at whether or not the density of migrants in your commuter zone matters.   They find that folks in high migrant commuter zones have a higher degree of misperception about the share of migrants in the population.    So it seems it’s the personal connection which helps one get better information.  
 
In terms of attitudes towards immigration (e.g. is immigration a problem, when should immigrants get citizenship, etc) Alesina and co. find that the US is the country that is most supportive of immigrants, with France, German and Italy coming in as the least supportive.   There is some heterogeneity by respondent characteristics here as well: the left-wing folks have the most favorable attitudes among any group and the right-wing folks the least. 
 
Moving on to attitudes on redistribution, Alesina and co. find that support for immigration and redistribution are highly correlated (including conditioning on individual characteristics).   And this will be important in the neat experiments they run with their survey sample.    These are two: 1) they randomize the order of questions, showing some folks the redistribution question block first, others the immigration block first, 2) giving respondents a (randomized) information treatment.   This information treatment takes three forms: a) information on the actual share of immigrants in their country (with benchmarking within the OECD –who knew Switzerland had the highest share at just over 29 percent?), b) data on the origin of immigrants, and c) a vignette describing how hard an immigrant works (based on a composite of actual people).  
 
So, what do they find? 
 
First off, the order of questions matters.    The folks who get the immigration questions first are less excited about redistribution.   They are also less likely to think inequality is a big problem, and they donate less to charity (under the lottery mechanism described above).   Alesina and co. show us that the magnitude of these effects are meaningful.   They also show us that these effects are particularly pronounced for those affiliated with right-wing parties, non-college educated, and the low educated folks working in high immigrant sectors.  
 
The information treatments have the effects they are intended to (even if they don’t completely fix misconceptions).   Folks who get information on the share of immigrants end up 5 percentage points closer to the actual number.    The origin of immigrants information results in a big decline (42% relative to the control) in the reported share of migrants from the Middle East and North Africa, and a smaller, but meaningful decline in the over-reporting of the share of immigrants who are Muslim.  And the story of the hard-working immigrant results in a 5 percentage point drop (14% relative to the control group) in the fraction of respondents who say immigrants are poor because they don’t work hard.  
 
Does this information stick?   In the US, Alesina and co. do a second, follow-up survey a couple of weeks after the first one (and the information treatments).   They find that the hard work story and the origins of immigrants effects are persistent, but that the share of migrants isn’t.   They chalk this last (non)effect up to the fact that remembering an exact number is harder (10 percent in the US, in case you forgot).
 
Do these information treatments have any other effects beyond the directly related questions?   Information on the share of immigrants and the story of hard work significantly increase support for immigration.   And the story of hard work also moved the needle on redistribution – folks who got this information scored significantly higher (i.e. more in favor) on a redistribution index.   But, alas, there are two bits of grim news.   First, these effects are somewhat weaker for those who have less favorable views on immigration (e.g. the low educated folks in higher immigrant sectors of the economy).  Second, on average, the positive effects from the information treatments aren’t strong enough to offset the negative effects of shifting the order of questions.   So, information could help a bit, but it isn’t going to overcome the (negative) priming effects of reminding people about immigration before you ask about redistribution.  
 
OK, this has been a fairly long post.    Mostly that’s because this is a super interesting paper – there are a significant number of results and a nice literature review and theoretical discussion that aren’t included here.   And so, I urge you to take a look at the paper.   And then go out and meet an immigrant, if you don’t know one already

Indonesia pilot attracts entrepreneurs’ appetite to bring clean cooking technologies to households

5 days 2 hours ago



Bapak Kris manages a pellet production factory, located just outside Boyolali City in Central Java. Since its founding, he has started considering the domestic market- despite the fact that the produced pellets have mainly been for export- as the global markets have begun to cool down. When Bapak Kris learned that the Indonesia Clean Stove Initiative (CSI) had launched its Results-Based Financing (RBF) pilot in the Province, he registered and participated in the pilot. 

He combined his knowledge of the local pellet market with the pilot program incentives to expand his distribution network and test new pellet-based clean stoves. With each stove sold, the company provided the consumer 1 kg of wood pellets free of charge. With the experience of participating in the RBF pilot, Pak Kris sees the potential of the clean cooking market. He plans to continue selling clean stoves and hopes to set up his own pellet factory. 

Bapak Kris is not the only business owner to get involved. The RBF pilot has enabled 10 companies to either start or expand their clean stove business in a new geographic area. As a result, about 10,000 clean stoves of six distinct types, using wood or pellets, have been sold, benefiting households in the pilot areas in Central Java, Yogyakarta, and East Nusa Tenggara (NTT) who otherwise would not have been aware of or had access to clean stoves. 


Why the RBF pilot and how did it work?
The Indonesia CSI, a collaboration between the Government of Indonesia and the World Bank, launched the RBF pilot in 2014. It aimed to test a market-based mechanism to attract private investments and incentivize performance-based innovations. The RBF mechanism is different from the traditional government procure-and-distribute approach which often has mixed results due to likely mismatch of supply and demand. This is particularly important for the clean stove sector as cooking needs vary across regions and there is no one-size-fits-all solution.
 



The RBF mechanism disburses incentive payments against demonstrated, independently verified outputs or outcomes instead of payments for project inputs. This mechanism shifts investment and performance risks to the private sector. It also provides flexibility for the private sector to be innovative in the designing, producing, and selling of clean stoves. The overall conceptual framework for the RBF pilot design included three building blocks—defined clean stoves, results-based incentives, and a monitoring and verification (M&V) system—supported by the pillars of institutional strengthening/capacity building of key market players and awareness-raising campaigns to stimulate household demand. In the case of the Indonesia Pilot, to be qualified for a certain level of incentive, stoves needed to be tested based technical performance in terms of efficiency, emissions (air pollutants and carbon dioxide), safety, and durability. This incentive was then paid in three tranches, where each is connected to the verified results of stove stock, sales, or household continued usage.


What was achieved?
Over the pilot’s two-year implementation period of 2014-2016, a total of 10 diverse private business entities (stove suppliers)—including eight that were new to the clean stove business and five women-led businesses—participated in the pilot. About US$100,000 RBF funding was disbursed to these business entities as financial rewards based on verified stock, sales, and household continued usage of eligible clean stoves. The key innovations include:
  • Pioneered contextual stove testing method incorporating local cooking practice. Known as the Indonesia Clean Stove Initiative-Water Heating Test (CSI-WHT), this new testing method incorporated key variables that highly depended on local context (e.g., fuel moisture content, operating procedures, and types of cooking vessels). By developing a holistic, contextual technical test, outcome metrics could not only provide pertinent information regarding fuel efficiency and emissions; they could also reasonably predict in-home performance.
  • Stimulated local stove design and technology innovation. Among 15 stove types that are tested to be eligible for the pilot, 7 are locally designed and produced. The eligible clean stoves can reduce air pollutant (PM2.5) emissions by 90% and save fuels by 50% compared to the baseline traditional stoves. Overall, pellet stoves were more efficient and cleaner, confirming that processed fuels have better performance.
  • Promoted grassroots innovation in business models. Diverse business experiences and sizes enabled the pilot participating entities to create their own business models, which were often dictated by whether they could negotiate terms of payment for stove procurement from the producers, terms of payment they expected from stove buyers, and the level of risk they were willing to accept. Innovations included extending manufacturer credit to consumers through installment payments, partnering with microfinance institutions to offer consumer credit, offering bundling discounts for stoves/fuels, and partnering with cooperatives as fuel (pellet) distributors.
 
The Indonesia pilot demonstrates that market-based RBF incentives can indeed attract the private sector and stimulate local innovation. The pilot’s core value is the provision of a unifying framework for all key elements to develop the clean stove sector—policy, institution, technology, standards/testing, private-sector support, demand stimulation, and closing of the affordability gap—and sent clear signals to the private sector regarding expected performance and results. Aligning all the necessary interventions toward performance-based targets and results avoided fragmented interventions which characterized past stoves programs.

Lessons from the design and implementation of the Indonesia RBF pilot can be of interest to other countries considering applying this mechanism to promote the development of their clean stoves markets. More information and lessons learned from the RBF pilot can be found in the newly published report: Incentivizing a Sustainable Clean Cooking Market: Lessons from a Results-Based Financing Pilot in Indonesia.

Also, join the conversation in our Community of Practice.
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What will be the future of work?

5 days 8 hours ago


Do you wonder if the good fortune and opportunities that you’ve enjoyed in your professional life will be available to your children, and to their children? At a time of strong global economic growth, it may seem paradoxical that we face an existential crisis around the future of work. But the pace of innovation is accelerating, and the jobs of the future – in a few months or a few years – will require specific, complex skills. [[tweetable]]Human capital will become an ever more valuable resource.[[/tweetable]]

In short, the changing nature of work – and how best to prepare people for the jobs of the future – are some of the toughest challenges countries face, which is why they’re the subject of this year’s World Development Report.

Because the future of work matters to all of us, we decided to give this report an unprecedented level of transparency. For the first time since the World Bank began publishing the WDR in 1978, the report is completely transparent throughout the writing process. Every Friday afternoon, the latest draft is uploaded to the World Bank website, so that anyone with internet access has an opportunity to read it and engage with the team of authors. I can’t promise that the WDR won’t have changed a week from now, which is why I encourage you to keep revisiting it as we keep revising it.

For new readers, here are a few insights into the report’s contents that I hope will get you thinking about the future of work:

First, while the threat of imminent, widespread, technology-induced unemployment is a chimera, jobs are currently being lost and will be lost to automation. But technology also creates new opportunities and is constantly improving global living standards. The world is better connected, aspirations are rising, and disparate voices are more likely to be heard.

Second, the skills needed for work are changing, literally, every day. New jobs will require specific skills—a combination of technological know-how, problem solving, and critical-thinking skills, as well as soft skills such as perseverance, collaboration, and empathy. That means countries must invest much more – and more effectively – in their people to build human capital.

[[tweetable]]Investing in human capital is the key mechanism to ensure that the next generation is ready for the changing nature of work[[/tweetable]]; however, too many countries are under-investing in these critical areas—especially in the early formative years of childhood, when the ability to learn new skills quickly is decisively molded. When countries don’t invest to build human capital, it puts successive generations – especially the poorest – at a severe disadvantage, exacerbates inequalities that already exist, and threatens to create instability when rising aspirations are met with frustration instead of opportunity. 

Third, we should ensure that opportunity, like talent, is distributed equally throughout society. One of the primary ways we can ensure this is to protect people through social assistance and insurance systems that fit with the changing nature of work. The current model is broken in most developing countries and looks increasingly out of date for most advanced economies as well. 

Social contracts are also about inclusion, which means that the wealthy have to pay their share of taxes. With insufficient tax revenues, governments can’t deliver the current social contract. Countries in every region must do more to stop tax avoidance, and the only way they can, in the words of leaders of the world’s 20 largest economies, is to “put an end to the divorce between the location of profits and the location of real activities.”

There’s a lot more in the report that I hope you’ll explore as it continues to evolve in the coming weeks. I’m certain that when the final draft is launched in the fall it will make a significant contribution to the debate on the future of work. If you want to get involved, you can start by reading the work in progress here.

Originally published on LinkedIn

How to boost female employment in South Asia

5 days 17 hours ago


South Asia is booming. In 2018, GDP growth for the region as a whole is expected to accelerate to 6.9 percent, making it the fastest growing region in the world. However, fast GDP growth has not translated into fast employment growth. In fact, employment rates have declined across the region, with women accounting for most of this decline.

Between 2005 and 2015, female employment rates declined by 5 percent per year in India, 3 percent per year in Bhutan, and 1 percent per year in Sri Lanka. While it is not surprising for female employment rates to decline with economic growth and then increase, in what is commonly known as the U-shaped female labor force function (a term coined by Claudia Goldin in 1995), the trends observed in South Asia stand out. Not only has female employment declined much more than could have been anticipated, it is likely to decline further as countries such as India continue to grow and urbanize.

The unusual trend for female employment rates in South Asia is clear from Figure 1. While male employment rates in South Asia are in line with those of other countries at the same income level, female employment rates are well below. Source: South Asia Economic Focus (Spring 2018).

If women are choosing to exit the labor force as family incomes rise, should policymakers worry? There are at least three reasons why the drop in female employment rates may have important social costs. First, household choices may not necessarily match women’s preferences. Those preferences reflect the influence of ideas and norms about what is women’s work and men’s work as well as other gendered notions such as the idea that women should take care of the children and housework. Second, when women control a greater share of household incomes, children are healthier and do better in school. Third, when women work for pay, they have a greater voice in their households, in their communities, and in society. The economic gains from women participating equally in the labor market are sizable: A recent study estimated that the overall gain in GDP to South Asia from closing gender gaps in employment and entrepreneurship would be close to 25 percent.

What advice should one give policymakers in South Asia if the goal is to increase female employment? Many types of gender interventions to improve female employment and earnings have been tried and tested in the region—from support for female entrepreneurs to programs to facilitate access to finance, to specialized skills training. Yet, as we see from the falling employment figures, the programs do not seem to be working. At best, they have had modest impacts. Should policymakers keep trying new variants of gender-focused interventions until they finally find the right fit?

Continued experimentation and evaluation of gender–targeted interventions that aim to support female employment is important and necessary, if policymakers are to identify policies that work. Promising new interventions include, for example, personal initiative training to create an entrepreneurial mindset, which successfully increased incomes of female entrepreneurs in settings as different as West Africa and Peru. However, if the goal is to increase women’s employment, why not target the barriers that constrain employment (whether they are gender specific or not) rather than women themselves? In other words, instead of assuming that interventions should focus on women, try to focus on the interventions that make the biggest difference to women. Many of these may well appear to be gender-neutral in targeting but are not gender neutral in impact. Here are some crucial examples.



Electricity access.
Evidence suggests that rural electrification can have a strong positive impact on the living conditions and well-being of families, as well as a positive impact on local economic growth. The impacts are bigger for women, who face greater time constraints and bear the burden of household chores. In the book In the Dark: How Much Do Power Sector Distortions Cost South Asia?, Fan Zhang reports that women’s labor force participation in Bangladesh is 7 percentage points higher in households connected to the electricity grid than in comparable off-grid households. For Pakistan, the difference is 2 percentage points. Access to electricity improves the lives of women in other ways too—increasing the time they spend on studies, reducing the time spent collecting biofuel, and reducing the days lost to illness.

Trade. Lukewarm integration into the global economy in South Asia has led to an economic structure that does not match the countries’ comparative advantage, with their vast supplies of relatively unskilled labor. Greater openness and integration into global markets in labor-intensive sectors such as apparel and garments could have an enormous impact on employment in the region, and on female employment especially since these sectors tend to be intensive in female labor. The 2012 World Development Report: Gender Equality and Development found a strong correlation between openness to international trade and female employment in developing countries. Bangladesh, a country that has become a global powerhouse in garment exports, is the one country in South Asia that has not experienced a decline in female labor force participation. The comparative advantage of South Asia in unskilled labor goods should become even stronger as wages in China rise. In From Stiches to Riches, Gladys Lopez Acevedo and co-authors estimate that a 10 percent increase in apparel prices in China would increase female employment in the apparel sector by 8 percent in Pakistan, 7 percent in Sri Lanka, 5 percent in India, and 4 percent in Bangladesh.

Physical connectivity. Integrated and efficient transport networks can play a big role in stimulating economic development.  The impacts go well beyond the lowering of travel and transport costs, and work through changes in trade, migration, and agglomeration effects. Economic corridors can attract investment, facilitate the emergence of new jobs in manufacturing and services, and support exports. Through these channels, in turn, they create new, good jobs for women and prove beneficial to female employment. One recent study suggests that India’s Golden Quadrilateral accelerated women’s shift out of farms and into non-farm employment.

The bottom line is that the biggest boost to women’s employment and economic empowerment in South Asia may not always come from policies that focus specifically on women. Most likely, it will come from policies and investments that address key development constraints that often are especially detrimental to women. These policies and investments may well appear gender-neutral on the surface, but they are not gender-neutral in their impact. Bringing a gender lens to decision making around these policies and investments will not only increase their development impact, it will also put gender at the core of a country’s development policy instead of at the periphery.

The piece was originally published at Brookings. 

Automation and innovation: Forces shaping the future of work

5 days 18 hours ago

IT’S robots that mostly come to mind when you ask people about the future of work. Robots taking our jobs, to be specific. And it’s a reaction that’s two centuries old, in a replay of Lancashire weavers attacking looms and stocking frames at the start of the first Industrial Revolution. A secondary reaction, among a much smaller group, is the creation of new jobs in the coming fourth Industrial Revolution.

Professor Ed Glaeser at Harvard neatly summarizes this dichotomy in one figure:


 

On the left side are old industries, where some workers are being replaced by robots. This change is animating research and policy discussions in the United States and Europe. On the right are jobs in new sectors arising from innovation. In emerging markets like India or China these jobs easily outpace the jobs which are and will be lost as a result of automation. In these countries, creating the next new sector is the craze.

But automation and innovation manifest themselves in other ways too. One of the more exciting directions for economic research is the changing nature of firms. The WDR2019 (http://www.worldbank.org/en/publication/wdr2019) sets out some of the features of what’s happening: physical assets become a thing of the past (think of Yandex, the Russian share-ride company); the boundaries of the firm blur as start-ups quickly become global players by selling online (think of China’s Alibaba); consumer data are explored to open new markets (think JD Finance, China’s most innovative small business creditor).

These changes bring challenges too – and one of them is corporate governance. I single it out because I recently attended a conference on corporate governance at the Dutch Central Bank. Stijn Claessens, a mentor to me when he worked for the World Bank, was the host.

Let me list some of the ways in which new economy firms (often described as ‘platforms’) differ from traditional firms in corporate governance terms. First, their founders are typically both the CEO and the largest shareholder - and even the company’s marketing face (Jack Ma at Alibaba springs to mind). Company valuations are based to a large extent on their public personae. They often sport dual-class shares, further cementing the founders’ hold on decisions.

Second, platform companies typically tap money on private markets, using neither banks nor public capital until well into their growth binge. Many of these companies generate cash flows that are sufficient to fuel expansion without the need of creditors.

Third, employees are typically the second-largest shareholder bloc. But as their company shares get vested after a period of time, these employees are beholden to the founders’ vision. And, as a result, they do not provide an independent voice.

So what happens is that decision-making in platform companies is highly concentrated and transitional governance mechanisms are wanting. This is fine as long as outside investors’ money is not at risk. But when platform firms go public, risks abound.

The main risk comes from regulation. In most new economy sectors, regulation is scant to non-existent. Ant Financial, the financial arm of Alibaba, does not have a banking license. Yet its activities increasingly look like banking. If and when the regulator decides to step in, shareholders will face a different (and less positive) value proposition.

The second risk comes from changing tax policies. In most emerging economies (and in advanced economies too, as a matter of fact) platform companies’ profits are barely taxed. This is about to change, as a result of pressure from other sectors and governments’ needs to create fiscal space for more social protection. Again, valuations are likely to be affected. But that’s in the future.

For other risks and rewards, you can read more on this in chapter 6 of the #WDR2019 (http://www.worldbank.org/en/publication/wdr2019).

Automation and innovation: Forces shaping the future of work

5 days 18 hours ago

IT’S robots that mostly come to mind when you ask people about the future of work. Robots taking our jobs, to be specific. And it’s a reaction that’s two centuries old, in a replay of Lancashire weavers attacking looms and stocking frames at the start of the first Industrial Revolution. A secondary reaction, among a much smaller group, is the creation of new jobs in the coming fourth Industrial Revolution.

Professor Ed Glaeser at Harvard neatly summarizes this dichotomy in one figure:


 

On the left side are old industries, where some workers are being replaced by robots. This change is animating research and policy discussions in the United States and Europe. On the right are jobs in new sectors arising from innovation. In emerging markets like India or China these jobs easily outpace the jobs which are and will be lost as a result of automation. In these countries, creating the next new sector is the craze.

But automation and innovation manifest themselves in other ways too. One of the more exciting directions for economic research is the changing nature of firms. The WDR2019 (http://www.worldbank.org/en/publication/wdr2019) sets out some of the features of what’s happening: physical assets become a thing of the past (think of Yandex, the Russian share-ride company); the boundaries of the firm blur as start-ups quickly become global players by selling online (think of China’s Alibaba); consumer data are explored to open new markets (think JD Finance, China’s most innovative small business creditor).

These changes bring challenges too – and one of them is corporate governance. I single it out because I recently attended a conference on corporate governance at the Dutch Central Bank. Stijn Claessens, a mentor to me when he worked for the World Bank, was the host.

Let me list some of the ways in which new economy firms (often described as ‘platforms’) differ from traditional firms in corporate governance terms. First, their founders are typically both the CEO and the largest shareholder - and even the company’s marketing face (Jack Ma at Alibaba springs to mind). Company valuations are based to a large extent on their public personae. They often sport dual-class shares, further cementing the founders’ hold on decisions.

Second, platform companies typically tap money on private markets, using neither banks nor public capital until well into their growth binge. Many of these companies generate cash flows that are sufficient to fuel expansion without the need of creditors.

Third, employees are typically the second-largest shareholder bloc. But as their company shares get vested after a period of time, these employees are beholden to the founders’ vision. And, as a result, they do not provide an independent voice.

So what happens is that decision-making in platform companies is highly concentrated and transitional governance mechanisms are wanting. This is fine as long as outside investors’ money is not at risk. But when platform firms go public, risks abound.

The main risk comes from regulation. In most new economy sectors, regulation is scant to non-existent. Ant Financial, the financial arm of Alibaba, does not have a banking license. Yet its activities increasingly look like banking. If and when the regulator decides to step in, shareholders will face a different (and less positive) value proposition.

The second risk comes from changing tax policies. In most emerging economies (and in advanced economies too, as a matter of fact) platform companies’ profits are barely taxed. This is about to change, as a result of pressure from other sectors and governments’ needs to create fiscal space for more social protection. Again, valuations are likely to be affected. But that’s in the future.

For other risks and rewards, you can read more on this in chapter 6 of the #WDR2019 (http://www.worldbank.org/en/publication/wdr2019).

Let’s realize the potential of PPPs  

5 days 20 hours ago


Photo: rawpixel.com | Pexels

If the potential of public-private partnerships (PPPs) is to be realized, joint working within the public sector and between the public and private sectors needs to be improved. 

Experience across the world has consistently identified that organizations find it difficult to effectively work together both within and across sectors. Issues of organizational objectives and priorities, individual and organizational sovereignty, status, power, resources, and culture act as barriers. This too often means that the potential outputs and outcomes from PPPs are not maximized.

PPPs are often pursued as individual projects. Their effectiveness is consequently sub-optimal because they are not part of a larger PPP strategy.  Unless PPPs are seen within a strategic, and not just financial, context, their impact is limited by a given project’s boundaries. Both public and private sector organizations need to understand the strategic context for PPPs from both the macro sector and micro organizational perspectives. 
 
This means that public sector organizations must understand the strategic context of the private sector and vice versa. Public and private sector organizations need to share objectives, understanding of key terms, as well as know the needs and demands of each other’s contexts. They need to illustrate a willingness to move from relationships that are transactional to ones that are collaborative—and then to true partnership.
 
Public to public sector partnerships
 
How can joint working within the public sector, within the private sector, and between the public and private sectors help to realize the potential of PPPs? 
 
One approach is to build public to public partnerships, or P2PPs. Under this scenario, public sector organizations work together to determine the best way to identify and execute projects that deliver economic and social value. In relation to PPPs, public agencies collaborate among themselves to determine where private sector participation would further public sector objectives.

P2PPs are increasingly important for ensuring that public sector organizations work together to

  • achieve the desired outcomes
  • create PPPs within a strategic context that maximizes access to resources, competencies, capacity, and organizational capabilities within the public sector (before seeking to create PPPs with the private sector)
Where there is an asymmetry of power, access to resources, competencies, capacity, and organizational capability between public and private sector organizations—which can be caused by public sector organizations not working together within their organizations and within the larger sector—there is a danger that benefits that should flow from the relationship between the public and private sectors are not fully realized or equitably distributed.
 
Moving to true partnership
 
When creating relationships within and between sectors it is vital that their structures and governance support true partnership.  Failings in structure and governance too often create conflict and undermine performance.  Similarly, a shared understanding of, and commitment to, the definition of success within the PPP is important, and performance should be evaluated in that context.  We often see the definition of success vary among sectors.  These differences can remain unspoken and inhibit the evolution of relationships.
 
Much more can be achieved from PPPs. Public and private sector organizations need to share objectives, develop trust and confidence, understand each other’s contexts, and move to work in true partnerships. This would put PPPs in a strategic context so that they have the structures, governance, and performance to deliver their potential.
 
 
Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.
 
Related posts:
 
Developing Public to Public Partnerships (P2Ps) that improve infrastructure’s social and economic value
 
PPPs need PALS
 
The staircase of relationships—and P2P partnerships
 
 

Avoiding pitfalls between policy and pipes

5 days 21 hours ago

What motivates poor policy and investment decisions? Why do supposedly good policies not translate into practice? And how can we avoid perpetuating pitfalls between policy and pipes?
 
Our new paper ‘Aligning Institutions and Incentives for Sustainable Water Supply and Sanitation Services’, produced with the support of the Global Water Security and Sanitation Partnership (GWSP), examines precisely these issues. Through research, analysis, and case studies, the report posits that genuine, sustainable progress in water supply and sanitation service delivery is complex, iterative, and multi-faceted. Whether it’s expanding access, improving efficiency, or providing better services – all reforms require their own unique blend of policies, institutions and regulations and all take place in the context of their own unique enabling environment.


Let’s start by looking at policies. We studied the processes for defining sector and national policies, from decentralization to private sector participation, and found that while policies are well intentioned, they often fail because they are not harmonized with the reality on the ground. Policy is often set without aligning national objectives with the required resources. Ambitious sector strategies are developed with little consideration for how or by whom they will be implemented, nor how they will be financed.  
 
That brings us to the second focus area of our report: Institutions.  Institutions are commonly defined as the social, political, and economic relations governed by rules and norms. Simply put –[[tweetable]] institutions comprise the formal and informal rules of the game, which in turn impact the quality and sustainability of services.[[/tweetable]] There are many factors that determine whether a policy succeeds or fails, but weak institutional capacity is often chief among them. ‘Capacity is king’ is a well-worn expression in the water sector, and capacity-building is, of course, crucial for sustainable reforms.

When it comes to regulation, the third focus, we need to understand the emerging paradigms of regulating public service providers and creating incentives for achieving universal access. Regulation, which has traditionally aimed at protecting consumers from high prices and low service quality (natural to a monopoly like water) is also now needed to promote the financial sustainability of service providers, whether public or private. This balancing act between affordability and sustainability can be done through various models and is highly context specific. The key is to allow for regulation that promotes policy enforcement in an impartial manner, whether through tariff changes, allocating subsidies, or monitoring service quality.
 
And of course, [[tweetable]]because the water and sanitation sector is inherently complex, many issues fit in more than one type of mechanism.[[/tweetable]] For example, decentralization or privatization are policy decisions, but they also shape the institutional arrangements and regulatory framework. Recognizing these interlinkages and interplay is vital because delivering sustainable water and sanitation solutions is like trying to solve a Rubik’s Cube, where even one small tweak can produce a big change, and every part of the cube needs to fit appropriately with all the other parts of the cube to achieve the end goal.   
 

Maseru Maqalika Water Intake System

If institutions are the rules of the game, then incentives have a huge impact on how the game is played, and both these elements interact with and shape one another These motivating influences or stimuli (think carrots and sticks) drive actors – be they organizations, ministries, service providers, or individuals – to pursue certain objectives or behave in a certain way. They can emanate from the broader enabling environment, including political economy factors or governance structures. This means that the[[tweetable]] constraints to reform and the appetite for change often lie outside the water sector’s players, requiring that reforms are championed at a higher level or in harmonization with other sector stakeholders.[[/tweetable]] Another output of the PIR (Policies, Institutions, and Regulations) initiative compares the various outcomes of country incentive frameworks in South America. We will share more examples via this blog as the initiative develops.

These drivers for reform – and in turn, the types of reforms initiated – do not arise in a vacuum. They are instead influenced by different factors. These may be endogenous; drivers for reform that arise from political processes within the country in question. Or they may be exogenous; some sort of shock or another external driver.
 
Finally, the report examines the feedback loop between the enabling environment and the policy, institutional and regulatory reforms. This feedback loop is a real-time cycle where thoughtful planning, implementing, evaluating, learning and adapting helps us take the right lessons from both failures and successes. It allows us to test our ideas and then adapt them, depending on what the feedback loop tells us. The feedback loop has different pathways, will involve reversals as well as advancement and is an iterative, dynamic process. Much like development progress itself, in fact.
 
The report reflects much of the thinking around ‘Doing Development Differently’ – rapid learning cycles, working in problem-driven and context-appropriate ways and focusing on best fit as much as best practice. We hope it will help decision-makers and stakeholders think through how to incentivize effective and sustainable service delivery to achieve a water-secure world for all. 
 

Moving from financial access to health

6 days 21 min ago

Over the past decade, the push for financial inclusion has united governments, companies, technology entrepreneurs, and nonprofit organizations in dozens of countries on every continent — and with remarkable success. In 2011, only 51 percent of the world’s adults had a formal bank account. By 2017, as the World Bank recently reported in its new Global Findex data, we’ve reached 69 percent — that is 1.2 billion more people who are now connected to the modern economy.

As more people in emerging markets gain access to the formal financial system — fueled by the increased penetration of the mobile phone and associated digital financial services — the pace of financial inclusion is accelerating. At this rate, we're on track to reach universal financial access by 2020, a goal set by the World Bank, which is an important success milestone.  Access to basic financial services, such as a bank account, credit, and insurance, is a crucial step in improving people's social and economic outlook. 

As we move forward, however, we must concentrate on what comes next: Shifting our focus from creating access to improving financial outcomes for the hundreds of millions who have been excluded until now; making sure that people can use financial instruments to better weather economic shocks and invest in health, education, or in a business.

Even in the developed world, where access is nearly universal, a large cohort of people are not well served by the existing financial system. Many people who have transaction accounts but whose incomes are low or irregular, rely on expensive solutions, such as payday lending, check-cashing services, or informal moneylenders, to lead their financial lives.

Globally, account inactivity remains stubbornly high. About one in five accounts around the world are sitting idle. The reality is that access alone does not truly solve people’s financial struggles and set them up for long-term success.

There is a difference between financial access and financial health. The Global Findex has provided a valuable metric and a goal for us to strive toward: Ensuring everyone has access to financial mechanisms that many of us take for granted. But using these services must be affordable, and most importantly, fit people’s financial contexts. 

Promoting financial health means designing products and services that are relevant and address the real challenges that people face. Across ages, genders, income levels, and backgrounds, consumers have very different attitudes toward technology, levels of financial literacy, and appetites for risk. What works for a single mother in India, may not work for a cocoa farmer in Brazil or a micro-entrepreneur in Nigeria.

The obstacles are real. Increasing adoption among underserved consumers demands new approaches. Companies will need to employ cutting-edge human-centered design, the latest insights in behavioral science, and culturally-specific distribution — while pioneering new business models.

While no easy feat, several entrepreneurs around the world are already showing promising results leveraging these new approaches. The rise of neobanks is a good example. The digital-only, mobile-first banking experiences give consumers more personalization and smarter tools, often at dramatically lower costs. Neobanks can overcome many of the legacy and infrastructure costs of brick-and-mortar banking. They can take advantage of digital channels for distribution and marketing, while riding on the rails of smartphone proliferation and digital payments. They also offer the opportunity to “re-skin” a traditional bank for new languages, cultural contexts, and market segments.

As companies bring these and other new models to market, their success will depend on a policy environment that fosters innovation as well as consumer protection. Success will also rest on listening to consumers to understand their unique financial needs, values, and behaviors. 

The world has made incredible progress by uniting across public and private sectors toward universal financial access — a feat we will achieve sooner than could have been imagined just a decade ago. Let’s pursue the next challenge — widespread financial health — with the same unity of purpose, consumer-centric innovation, and focus.

Tilman Ehrbeck (@TilmanEhrbeck on Twitter) is a partner at the impact investing firm Omidyar Network and leads the firm's global investments in innovative solutions aimed at promoting inclusion and household financial health.

How data can benefit Nepal

6 days 20 hours ago
School children in Nepal. Graphic: Nicholas Nam/World Bank

[[tweetable]]Thirty years ago, almost everyone in Nepal — except for a few professionals and business people — would have been classified as poor by any international standard.[[/tweetable]]

In 2010, by contrast, 15 percent of Nepalis were considered poor.

Without a doubt, Nepal has made progress.

Now the 761 newly formed—local, provincial, and federal—governments in Nepal aim to provide all Nepalis access to essential public services, eliminate poverty, reduce gender and ethnic inequalities, and ensure environmental sustainability

[[tweetable]]The hope is that Nepal will reach middle-income status by 2030.[[/tweetable]] But tracking and monitoring progress against the goals articulated in Nepal’s development vision as well as the global Sustainable Development Goals (SDGs) impose significant demands on the country.

Unfortunately, the absence of disaggregated data by geography, sex, age, social groups and sub-national level, and more poses an enormous challenge for all levels of governments to properly plan and budget. As such, Nepal needs to urgently invest in its data and statistics capacity.

[[tweetable]]Data is the currency for decision making and helps us understand what works and what doesn't.[[/tweetable]] For instance, let’s consider a province in Nepal that is keen to improve learning for its public schools’ students. Without data on students, their gender, age, academic performance, or the number of schools and teachers, the provincial government cannot elaborate an informed plan for its students.

But were policymakers able to access timely and sufficient data, they could decide whether more teachers or more schools are needed. Without data, decisions are just like shooting in the dark and hoping for the best.   

I recently met with Nepali leaders from academia, businesses, civil society, and media to understand the availability of data in the country and what can be done to improve its quality, production, and utilization. Many leaders expressed optimism as to how data access has increased in recent years.

The leaders I spoke with also emphasized that public agencies in Nepal need to invest more in their data production and dissemination capacity. Nepal would benefit, they noted, if everyone treats data as a public good, uses and shares it widely. Notably, they talked about how access to quality data would help them conduct research and identify business opportunities and challenges facing the country. Data can also help media tell better stories to better inform the public.

Further, better and timely data can help all policymakers set priorities and respond to the needs and aspirations of their people. Data and statistics are also an essential tool for transparency, accountability and improving the quality of public services.

To accelerate development progress and engage with citizens, public agencies should make data publicly accessible, understandable, and machine-readable.

This process would not only help government agencies engage in evidence-based policymaking but also help media, researchers and civil society and businesses initiate a robust conversation about issues pertinent to Nepal’s future. Ultimately, this will inform and engage the general public who are the ultimate beneficiaries of these policies.

With more significant discussion of policies and program effectiveness, more evidence or data will be created on what works and what doesn’t, which in turn can help shape future policy conversations and guide policymakers to make smart choices.

Thus [[tweetable]]evidence-based policymaking has the potential to create virtuous cycles in Nepal and beyond.[[/tweetable]]

[[tweetable]]How do you think Nepal can use data to make better policies?[[/tweetable]] Tell us in the comments.

Editor's note: This blog post is part of a series for the ‘Partnership for Knowledge-based Poverty Reduction and Shared Prosperity’, a World Bank project with support from DFID to increase production and usage of data and statistics in Nepal. It was first published in the World Bank's End Poverty in South Asia blog platform here.

Unlocking Competitiveness: Why Invest in Rural Vietnam?

6 days 22 hours ago
For investors seeking opportunities in Vietnam, the rural province of Dong Thap may not be the first location that comes to mind. Located in the southwest corner of Vietnam, Dong Thap is remote – the nearest airport is a three-hour drive. Road infrastructure is relatively poor, and until recently was complicated by deficient bridges over the Mekong River. It was also known for delayed customs processes that could disrupt supply chains.
  DONG THAP, VIET NAM- SEPT 23, 2014: Asian man ride bicycle on country road at Mekong Delta with happy face, senior farmer with good health, smile friendly in Vietnam. Source: xuanhuongho, Shutterstock. With the backdrop of these challenges, why did Japanese firm Kameda Seika choose Dong Thap to establish Thien Ha Kameda, a joint partnership with Vietnam’s largest rice company? On our recent mission to Vietnam, we learned more about Dong Thap’s journey to becoming a favored destination for agribusiness production and exports.

Kameda Seika is not new to Vietnam. In fact, just a few years ago the investor had established a production facility in central Vietnam. However, weak infrastructure services, environmental safety issues related to fertilizer waste, and a sub-optimal investment climate led them to explore alternatives. Dong Thap offered ideal climactic and soil conditions for producing rice, but it was its investor-friendly business environment and active investment promotion that helped it emerge as the most competitive location.

There is little research documenting how local or sub-national investment policies impact jobs and growth. However, the story of Dong Thap suggests that targeted investment promotion efforts can give a location a distinct advantage over competitors, with local people directly benefiting from new investments.

The road to global competition

Beginning in 2014, the People’s Committee of Dong Thap worked with the World Bank Group to modernize the province’s approach to investment promotion. The collaboration helped overcome critical constraints to attracting and retaining investment in the region. In particular, three policy changes have contributed to positive results in Dong Thap:
  • Institutionalizing Investment Promotion and Investor Services
    Dong Thap formally instituted an investor desk, which serves as a focal point for investor targeting, investment facilitation, support for entry and investor aftercare.
     
  • Focus on Investor-State Relationships
    The province now actively fosters relationships with new and existing investors. Potential investors receive individual attention from the investor desk, and existing investors can take advantage of the province’s open (and innovative) investor response mechanism. Each morning the Vice-Chairman of the People’s Committee is available for one hour, where investors discuss business matters and grievances over coffee.
     
  • Orienting Towards Results
    Dong Thap systematically tracks investor enquiries and grievances, and carries out investor perception surveys. Data on actual investments and hurdles faced by new, potential, and existing investors allow the province to address critical operational constraints and informs areas of prospective reforms.
Dong Thap’s investment promotion efforts were instrumental in conveying its competitive advantage to potential investors, such as Kameda Seika. As the local government proactively addressed investor requests and concerns, investors gained confidence in the province as a viable location to do business. Overall, these reforms and the subsequent investment from Kameda Seika demonstrate how investors may be positively influenced by investment policy changes.
 
Results

Both domestic and foreign investors, like Kameda Seika, have taken notice of Dong Thap’s efforts to relate to investors.

Instituting investment promotion, facilitation, and aftercare services has helped the province generate significantly more interest among agribusiness investors. This is reflected in more than doubling of enquiries and several-fold increase in investment leads. Improved investor perceptions and confidence in the province’s competitiveness has resulted in entry of six new foreign and 42 new domestic investors. Dong Thap now hosts an additional $200 million in investments, of which $138 million is from domestic sources and $62 million is from foreign investors.

Following the reform initiative, investment flows have increased to $21 million per year from a modest $3 million in pre-reform years. New investments, accompanied by new technological improvements, help primary producers and out growers integrate with international agri-food value chains and create new, good quality jobs.



The Thien Ha Kameda joint venture went on to establish a modern industrial complex in Dong Thap, which stands out in the rural Mekong landscape. The state-of-the-art production facility transforms domestic high-quality rice into rice crackers for export to the Japanese, South Korean, Chinese, and European markets. The establishment has emerged as a significant contributor to the local economy, adding more than 300 good jobs and locally sourcing production inputs such as rice and oil. In addition to manufacturing for export markets, the firm also features an exclusive production line that manufactures rice crackers for the Vietnamese market, adjusted to consumer preferences and demand. Meetings with the plant manager and team revealed that the firm plans to further expand its production in response to export growth, thereby generating an additional 200 jobs.

Photo: WBG Team Preparing for a Tour of Modern Rice Crackers Production Facility
 
According to cross-country survey data from the Global Investment Competitiveness (GIC) Report (2017/2018),  investment promotion and investor services are important for economies that face higher hurdles in attracting investors. The report also suggests that investors place more value on operational services rather than start-up assistance. Dong Thap’s experience demonstrates the relevance of these findings. For this remote province in the Mekong delta, proactive investment promotion has lowered information barriers and has translated into competitive positioning among foreign agri-processing investors. The province’s approach to proactive investor services and relationship management, in addition to entry and establishment support, has allowed it to emerge as a preferred investment destination. A result that would have been unimaginable less than four years ago.
 

The Global Compacts and Environmental Drivers

1 week 6 hours ago
The Global Compacts on Safe, Orderly and Regular Migration and on Refugees hold the potential for addressing the causes of and improving responses to migration, displacement and relocation across borders as a result of sudden- and slow-onset natural disasters, environmental degradation, and the adverse effects of climate change. The compacts reference and, in the case of the migration compact, provide specific commitments to address the drivers of environmental mobility and to develop policies aimed at ensuring greater protection for those affected by these movements. KNOMAD has released a policy brief based on the findings of the Thematic Working Group on Environmental Migration. It outlines the ways in which the compacts address environmental issues, including climate change; identifies gaps and weaknesses in the current drafts of the compact; and makes recommendations to enhance the compacts’ provisions on environmental mobility.
 
In short, we note the paucity of references to internal movements, which are likely to be the vast majority of those driven by environmental factors. A recent World Bank report, Groundswell: Preparing for Internal Climate Migration, projects that “without urgent global and national climate action, Sub-Saharan Africa, South Asia and Latin America could see more than 140 million people move within their countries’ borders by 2050” as a consequence of slow onset effects of climate change We recommend that the compacts should expand on the relationship between internal and international migration and displacement, committing, at a minimum, to bring states, experts and other stakeholders together to identify mechanisms to improve protection of the rights of internal migrants and displaced persons.
 
The compacts should also identify ways to enhance international cooperation in identifying solutions for those who may otherwise become trapped at home, unable to find protection elsewhere from dangerous situations. Options to be considered include resilience building programs for those who could remain in situ with greater resources and assistance as well as planned relocation initiatives for those who need to move but cannot do so on their own. Special focus should be given to addressing the needs of the elderly, disabled, separated children, those living in extreme poverty and other vulnerable populations.
 
Similarly, better systems are needed for identifying and, where necessary, providing protection and assistance for those in mixed migration situations who cannot return home because of environmental or other life-threatening situation. Without new legal standards at the national, regional or global level that identify under what circumstances those fleeing or threatened by life-threatening environmental drivers will be protected from forcible return (refoulement in refugee terms), many thousands of those now labeled as migrants, not asylum seekers, may remain at risk. Both compacts should address this issue, as it falls into the gap between the two instruments.
 
Further, the migration compact should expand on the ways in which safe, orderly and regular migration can be an effective component of a toolkit to help communities reduce the risk of disasters and adapt to the slow-onset effects of climate change. The focus presently is on humanitarian admissions rather than labor migration, education and training, and family reunification—the likely vehicles through which migration can promote adaptation and enhance disaster risk reduction.
 
Finally, the compacts should expand on the role, relationships, and funding mechanisms to be used in building the capacity of States to implement their commitments that relate to environmental drivers of migration. At a minimum, both compacts should reference the various funding mechanisms for climate adaptation and mitigation and disaster risk reduction to ensure that they fund the type of activities addressed in the compacts.
 

Can impact evaluations help deliver projects? Guest post by Anna Crespo

1 week 6 hours ago
Anna Crespo is an Economist Senior Specialist at the Inter-American Development Bank’s Office of Evaluation and Oversight
 
Development agencies are in a privileged position to encourage a better understanding of the results of programs and the channels through which those results are better obtained. This, in turn, improves their own ability to sponsor effective interventions. This is the rationale behind the increasing use of impact evaluations: they can isolate and measure the effect of an intervention. In addition, methodological advances and greater availability of high-quality data have allowed for an increase in the types of questions these evaluations can answer. But could impact evaluations go beyond their well-known role in contributing to knowledge and accountability, to a much broader role of supporting policy makers in executing projects?
 
The Inter-American Development Bank (IDB) is no newbie on the use of impact evaluations. In fact, its first step towards their use dates back 20 years, when the government of Mexico sought IDB’s support for the first evaluation of its conditional cash transfer program. After this experience, the IDB understood the power of this new tool and started to urge that similar programs in its borrowing countries include an impact evaluation on their monitoring and evaluation arrangements. As time passed, the organization slowly set different instruments to promote the use of impact evaluations. This has resulted in hundreds of evaluations being proposed over the years.
 
What have we learned from conducting so many evaluations? The IDB’s Office of Evaluation and Oversight (OVE) decided to take stock of the organization’s experience so far (full report is here). Rather than focusing on the results and the learning opportunities from each evaluation, OVE’s focus was on the lessons that could be learned from conducting evaluations in organizations like the IDB. By reviewing all operations approved between 2006 and 2016, including technical assistances, OVE identified 531 proposed impact evaluations. Among them, less than 20% (94) had been completed and a little over half (286) were still ongoing and potentially concluding in the next five years. Among the ones completed and ongoing, a clear - and steep - learning curve could be identified; i.e., over time IDB has increased its capacity and engaged in better quality evaluations, which are resulting in more robust knowledge pieces.


However, knowledge is not only obtained from the successfully completed evaluations: the organization has also learned a lot from the large share of cancelled evaluations, which comprise about 30% of the cases. Among the leading causes for cancelling an evaluation, when the loans and technical cooperations were not themselves cancelled, appear to have been political challenges (30%) and implementation and design issues (34%). Political challenges go beyond the capacity of IDB to address and are usually related to changes in governments and the focus of policies. However, many lessons have been drawn from issues with implementation and design. For instance, we know that having an ex-ante well-defined method is associated with a lower probability of cancellation. Currently no operation with an impact evaluation is approved unless the evaluation method proposed meets minimum quality standards. Also, more often IDB has sought an earlier engagement with authorities in the field, ensuring they have full understanding of the costs and benefits of committing to the impact evaluation and are in full agreement with the necessary steps, therefore avoiding unnecessary midcourse adjustments.



Since IDB impact evaluations are heavily financed through loans, cost has been a real concern among borrowing countries, and a reason for cancelations as well. While 57% of the evaluations had budgets below US$250,000, some evaluations can be very costly and 9% of them had budgets above US$1 million.  The main determinant is the nature of the data used, rather than the methodology applied. In response, since 2011 more evaluations have used administrative data and the number of RCTs proposed have been declining, decreasing costs. The average cost of an impact evaluation based only on administrative data is US$74,000, compared to US$468,000 for those for which data are collected, which are similar to what is suggested in the literature and observed in other organizations. The main determinants of costs include the degree of dispersion of the beneficiaries and the country.
 
Going beyond knowledge: can impact evaluations support implementation?
One would imagine that there would be less concern about costs and higher political commitment to the impact evaluations if they were not only thought of as a tool for learning, but rather as a tool for project implementation. A recent study from DIME argues that impact evaluations, when properly planned and implemented, can actually help in delivering projects. The authors of the study used information from World Bank projects to show that those with an accompanying impact evaluation disburse faster. They attribute this finding to several factors. First, impact evaluations could lead to better planning and evidence-based design. Second, they can increase implementation capacity through training and the support of the research team and field staff. Third, the process of preparing impact evaluations should increase the amount of data for policy decisions, and finally, “observer effect and motivation” may arise, as impact evaluations can generate expectations about the results of the interventions.
 
OVE’s study replicated some of the analyses done by DIME, using information from all IDB investment operations approved between 2009 and 2016. While OVE’s study is a much more simplified version, due to data constraints, similar evidence was found as we measure the difference in disbursement rates of projects with and without impact evaluations. There are some drawbacks to this type of analysis - discussed in the paper - and no causality can be attributed, but it is intended to be informative in relation to the  potential of impact evaluations for speeding up projects.
 
OVE’s study found that while loans with and without impact evaluations have no significant differences in the ex-ante expected duration, projects with an impact evaluation have faster disbursements after the second year and are completed three months earlier. One potential explanation for this result is that projects with impact evaluations are better designed, as the process of preparing such projects seems to be more involved and takes on an average of 300 more IDB staff hours to be completed. Also, projects with an impact evaluation seem to reach approval in a more mature way, taking less time to reach eligibility; i.e. to begin disbursing once the project has been approved.



In addition, by comparing projects with impact evaluations and those whose impact evaluations have been cancelled or are on hold, OVE found a significant difference. In fact, projects with cancelled impact evaluations or impact evaluations that are on hold behave similarly to those that did not propose an impact evaluation to begin with. This may be an indication that the impact evaluations can play a role in the field as they are being conducted.
 
A better understanding of the channels through which impact evaluations contribute to project implementation could help establish them as a policy making instrument in their own right.
 

What does it take to achieve universal and equitable access to water and sanitation in Guatemala?

1 week 2 days ago
See the full infographic on key findings of the Guatemala Water Supply, Sanitation, and hygiene (WASH) Poverty Diagnostic.

Water and sanitation data figures in Guatemala show a challenging reality. Nationally, 91 percent of the population has access to improved drinking water, an increase of 14 percent points since the establishment of the MDGs.
 
Despite the improvement in coverage in relative terms, in absolute terms there are still a significant number of Guatemalan households using water from precarious or unimproved sources such as unprotected wells, rivers, or lakes. In addition, water quality is a concern -- from the monitoring of 20% of the water systems in the country, 54% reported to be at high and imminent risk for human health.

As part of the Water Supply, Sanitation, and Hygiene (WASH) Poverty Diagnostic Initiative, implemented by the World Bank’s Water, Poverty, Governance, Health, Nutrition & Population teams in 18 countries, our work in Guatemala seeks to provide a careful examination of trends in access to water and sanitation and in corresponding linkages to poverty and health. It also reviews the governance structure and expenditure plans underpinning service delivery in the water supply, sanitation and hygiene (WASH) sectors in Guatemala. 
 
Recently, the World Bank held an event in Guatemala City, Guatemala to share the findings and recommendations of the WASH Poverty Diagnostic of Guatemala. The event was co-chaired by the Government of Guatemala and the World Bank with introductions and commentary provided by the Minister of Finance and the Vice Minister of Health. Over 110 people representing government institutions, local governments, donors, NGOs, among others attended the event.
 
The report was well received. The cross-sectoral analysis between poverty levels, water and sanitation, and their relationship with nutrition indicators resonated with the participants a lot, given the importance and extensive awareness of the challenging context in Guatemala – one of the countries with highest chronic malnutrition rates in the world.  There was a substantial agreement about the key challenges facing the Guatemalan WASH sector. We already mention some of them, but the following are also worrying:

  • Almost half of all Guatemalans lack access to improved sanitation. While important gains have been made in expanding sewerage coverage, and open defecation is decreasing, only three departments met the national MDG target for sanitation. As public investments in the WASH sector have favored drinking water, sanitation coverage has fallen far behind, particularly in rural areas where coverage rates are still too low to ensure an adequate quality of life. In addition, it is also a concern that only 5% of sewage is treated.
  • The disparity in access to improved drinking water and sanitation between geographical areas is evident, and the rural population remains disproportionately disadvantaged. This suggests there are variables that constrain the access to WASH services, such as geography, income levels, ethnicity, education of head of households and other household characteristics.
  • Guatemala is an outlier in the region in terms of chronic malnutrition (stunting), and almost half of all children are stunted, an indication of the high levels of poverty and inequality in the country. The persistently high, chronic malnutrition rates in Guatemala indicate a lack of the most basic type of human capital–good health–driven in part by a lack of access to basic services. The report presents evidence that the access to and type of WASH services has an effect on children health.
  • Average capital expenditure and spending efficiency in Guatemala is inadequate to meet current demands. Total expenditure as a share of national gross domestic product (GDP) in the WASH sector in Guatemala averaged significantly less than in the health and education sectors.
  • Current institutional and organizational arrangements reveal multiple constraints to service delivery in Guatemala that affect the pace of increasing access to safe water and improved sanitation for the poorest. Specifically, the regulatory and management model governing the provision of WASH services in Guatemala is hindered by incomplete regulations and gaps and duplications in the roles and responsibilities assigned to actors at various levels of government, most notably a lack of national leadership and support to rural areas.
See the full infographic on linkages among WASH, nutrition, and health sectors in Guatemala  After discussing about these challenges, the recommendations from the study were presented: 
  • Addressing the needs of the most vulnerable populations and achieving the SDGs will require major institutional reforms at the national and subnational levels.
  • Closing the geographical gap and achieving the SDGs will require a dedicated sector policy that clearly defines the provision and quality of services in rural areas, with an emphasis on rural sanitation and hygiene. However, the policy must be aligned with sector planning instruments and budget to make sure the policy can be implemented.
  • Combatting childhood disease will require multi-sector engagement and coordination to improve hygiene, accompanied by a rigorous service-provision program and a knowledge agenda.
  • Providing sustainable delivery of public services and meeting the SDGs will require increased levels of investment and greater budget execution. First and foremost, from a public expenditure perspective, the government should prioritize the WASH sector and maximize public investment in it.
  • Increasing accountability within the sector and improving decision-making to better inform policy will require access to timely, relevant, accurate, and transparent information. Strengthening and consolidating SIGSA (the National Health Management Information System) and SIVIAGUA (the National Water Quality Monitoring System) could enable sector stakeholders to better respond to the needs of the sector, to improve decision-making processes, to better inform policy, and to increase the accountability and oversight of service providers.
High-level decision makers acknowledged the strategic relevance of the report since it provides roadmap to begin preparing a strategic route to develop adequate water and sanitation policies and reforms, including the possibility of establishing a Vice-Ministry of Water and Sanitation to strengthen sector coordination.
 
Participants also advised the Bank to conduct follow-up dissemination meetings with Congress Commissions, to inform current and future initiatives linked to any of the sectors involved.  As the WASH services in Guatemala are decentralized, the Bank was also advised to disseminate the results to the subnational and local levels, particularly departmental councils (CODEDEs), municipal mayors, and communities. 
 
Download a copy of the report here.  



Related: News articles about the report :

Data quality in research: what if we’re watering the garden while the house is on fire?

1 week 3 days ago

A colleague stopped me by the elevators while I was leaving the office.

“Do you know of any paper on (some complicated adjustment) of standard errors?”

I tried to remember, but nothing came to mind – “No, why do you need it?”

“A reviewer is asking for a correction.”

I mechanically took off my glasses and started to rub my eyes – “But it will make no difference. And even if it does, wouldn’t it be trivial compared to the other errors in your data?”

“Yes, I know. But I can’t control those other errors, so I’m doing my best I can, where I can.”

This happens again and again — how many times have I been in his shoes? In my previous life as an applied micro-economist, I was happily delegating control of data quality to “survey professionals” — national statistical offices or international organizations involved in data collection, without much interest in looking at the nitty-gritty details of how those data were collected. It was only after I got directly involved in survey work that I realized the extent to which data quality is affected by myriad extrinsic factors, from the technical (survey standards, protocols, methodology) to the practical (a surprise rainstorm, buggy software, broken equipment) to the contextual (the credentials and incentives of the interviewers, proper training and piloting), and a universe of other factors which are obvious to data producers but usually obscure and typically hidden from data users.

Many data problems are difficult to detect Figure 1: The share of households responding positively to three categories of questions declined with the progression of the survey. For example, the share of households that experienced any accidents over the last year dropped by half by the fifth month of the survey being in the field.

An analysis of a recent survey generated some interesting findings: the proportion of households reporting chronic diseases declined by more than 30 percent over the course of the fieldwork (Figure 1). With few exceptions, the characteristics of households interviewed in the beginning of a survey should not differ from those interviewed towards the conclusion of the survey period. Were I a skeptical person, I might wonder whether the interviewers gradually came to understand that positive answers to specific questions generated a lot more work to do (a range of follow-up questions about history of illness, treatments, medical expenses, and more). Accordingly, these interviewers might have learned that nudging respondents to give a different answer might minimize their workload (“Come on, my blood pressure is twice as high as yours and I’m fine!”) or else simply mis-record respondents’ replies (“no” instead of “yes”) to free up the rest of the day. This may be a caricature, but errors like these are difficult to catch even if you check data in real time and apply sophisticated validation algorithms.

There are many similar situations when the quality of data is seriously altered by substandard interviewer training, insufficient supervision, and interviewers shirking their responsibilities. For obvious reasons, many (if not most) data producers are typically unwilling to reveal information about problems in the field to the agencies which fund surveys and to the people working with the data.

Poor data can be amplified into bad policy

This problem is well recognized by the leading statistical institutions in developed countries who use sophisticated econometric techniques to better understand how data collection progresses through the enumeration cycle, to identify strategic opportunities, to evaluate new collection initiatives, and to improve how they conduct and manage their surveys (i.e., Groves and Heeringa, 2006).

Unfortunately, developing country statistical offices lack the resources to establish such practices. As such, survey data quality can become suspect. Imagine being the researcher analyzing a relationship between the presence of chronic disease and poverty. The economic model is complex, with a highly non-linear econometric specification that relies on an instrumental variable approach to address the issue of reverse causation. Even small errors in the data could lead to large divergences in the estimation results. Unless a researcher is directly involved in the fieldwork, they might never realize the magnitude of the problem with the data. They might write a paper based on this incorrect data, which might then generate a report with policy recommendations, which may next justify a large investment in that country’s health care system to implement the reform — a cascade of causation on the basis of faulty data.

It is hard to say how damaging this situation is for a particular program. The effectiveness of economic policies is a result of complex interactions of many factors, of which empirical justification might not be the most important one. A positive result bias of economic publications, common sense, political interests, and bureaucracy will likely dampen the negative effects of incorrect conclusions. However, the impact of systematic errors in multiple surveys could be extremely serious and lead to the adoption of concepts which might be otherwise difficult to refute.

Data quality is unglamorous, but economists need to take it seriously

Recent efforts to improve the replicability of economic research (i.e, Maniadis and Tufano, 2017) focus on empirical methodology and algorithms, which miss the potential errors coming from data. Trying to replicate results of economic analysis using new data could be expensive and problematic because of intertemporal consistency problems (i.e., Siminski at al, 2003). Papers could still be published in good journals based on erroneous data. Journal referees usually have little means to validate the quality of micro-data coming from developing countries.

Survey work is, unfortunately, not always considered a “brainy” activity. All too often, it is delegated to less experienced staff. For example, among almost 400 World Bank staff registered as users of the Survey Solutions data collection platform, 87% are the institution’s most junior staff or consultants. We see a similar demographic among the attendees of the seminars and workshops that are focused on survey design and logistics of the fieldwork.

If quality data is indeed important for policymaking, the status quo (and the attitudes which inform it) must change. The economics profession must acknowledge and own the responsibility to provide informed advice to practitioners in developing countries and propose better mechanisms for data quality validation and replication of results. Nothing less than a serious appraisal of the reality of these hidden data quality issues—and clear actions to countermand them—is needed to end the potentially pervasive problem of bad data and to mitigate any resultant consequences.

The good news is that data quality can absolutely be improved through the right combination of resources and human capital, including mainstreaming proper survey supervision, randomly repeated interviews, the use of advanced technologies to monitor interviews in the field, and more broadly through efforts to strengthen statistical capacity more holistically in developing countries (Statistics Canada 2008). Understanding the problem is the first, key step.

What do private companies look for in a performance-based non-revenue water project?

1 week 3 days ago



Recent estimates
place global annual non-revenue water (NRW), i.e. water produced but not billed because of commercial or physical losses, at 126 billion cubic meters. This translates to nearly $40 billion in annual losses on waste and foregone revenues—a sum, that even if a fraction could be recovered, would underpin a compelling market opportunity for private service companies and a boost to public water utilities’ sustainability.

A new joint initiative is aiming to drive declines in NRW faster, cheaper, and more sustainably by assisting water utilities to engage private companies in performance-based contracts (PBCs). The World Bank’s Public-Private Infrastructure Advisory Facility (PPIAF) and the Bank’s Water Global Practice, in partnership with the International Water Association, analyzed 43 projects and determined that NRW initiatives supported by PBCs are 68 percent more effective compared to those undertaken by utilities alone, (see for example, Using Performance Based Contracts to Reduce NRW) and are systematically faster at reducing the rate of loss.


Who are the private companies that work in this space? Are their motives and expectations aligned with those developing the project from the public sector? A market survey of 42 companies globally reveals that private companies are as concerned about finding a fair deal as are utilities.

The companies participating in the survey engaged in a range of activities: engineering design, consulting, utility operation, civil works/construction and supply of technology, commercial systems, and materials. Companies have a local, regional, or international reach and their annual turnover has a large variance—from $100,000 to $10 million, which naturally affects their outlook and expectations. 

[[tweetable]]Here are six things private companies are looking for in performance-based contract opportunities for non-revenue water reduction in emerging markets: [[/tweetable]]
1. Robust project internal rates of return (IRRs)
Whether contractors are expected to bring financing or not, median expectations for project IRRs is around 18 percent, with some companies looking for up to 35 percent. While NRW projects make huge economic sense, careful consideration of project cashflows is needed. For example, many utilities charge well below cost recovery tariffs and have a backlog in maintenance, not uncommon where leakage is high, which could mean large capital outlays, both of which drag on cashflows.
 
A strong IRR usually means a tangible financial reason for the government/utility to stay committed to the project. Companies’ expectation on returns is tempered by risk perception. As one company puts it, “If contract risk is reduced, a lower IRR would be acceptable.” 
 
2. Fair risk allocation
Our survey identified four of the most common risks related to PBCs for NRW:
  • Time and cost overrun
  • Efficacy of interventions
  • Financing of materials and supplies
  • Payments linked to an increase in billings
We wanted to find out whether companies considered these as high or low risks and how many would assume the risk versus seeking mitigation from the utility/public counterpart. Ninety-four percent of respondents considered pre-financing of materials and supply as being ‘high,’ compared, for example, to only 44 percent that considered efficacy of interventions to be a high risk. This is consistent with the very few number of companies (12 out of 40) interested in projects that would require them to bring financing. Seventy-two percent and 66 percent of companies considered time and cost overruns and payments linked to billings, respectively, as ‘high.’

This is notable: while most companies considered at least three of the risks as being ‘high’, there were almost an equal number of companies considering that they would assume the risk as those that expected the utility to mitigate them, indicating that some companies are looking for more balanced deals, while others had an appetite for taking on risks, for which, presumably they expect to be compensated.
 
3. To understand PBCs and the local context
Although the majority of companies (65 percent) have been involved in NRW projects, many were not familiar with how PBCs work and a substantial portion (44 percent) seek training on performance-based contracts. A bit more than one-third of the companies also indicated the need to better understand the local water and regulatory context. Working in partnership with local companies is not a perfect solution to overcome the lack of local knowledge, as it brings up other considerations for companies. While a large majority are open to working with local companies, more than 70 percent would only do so where roles and risks are clearly identified and allocated between the partner companies.
 
4. Sufficient scale and time
Respondents had a wide range of expectations on project size. Expectations on minimum project size correlate well to the size of the companies themselves as well as their view of the opportunity cost of deploying a relatively limited number of expert staff to what they consider as ‘small’ projects. The range that companies were looking for as a minimum were projects that covered at least 7,000 to 125,000 connections. This wide range also translated to expected minimum contract sizes: the lowest minimum threshold was around $500,000 while on the upper end, an average of $5.5 million was considered attractive. Companies expected projects to be, on average, implemented within 20­–48 months.
 
5. To work in collaboration with utilities
Perhaps contrary to the expectation of utilities, a high portion of potential PBC companies (71 percent) believe that utilities need to be involved in the project and only a few think contractors need to work fully independently. Utility involvement can come in the form of providing access to data, participation in leak detection and repair, identification of illegal connections, to supporting on legal issues, etc. What seems to be an important feature of utility involvement is timeliness. Time is of the essence in NRW control, thus, assuring responsiveness of the utility is important for contractors.
 
6. To be supported by multilaterals
Companies would like to see development institutions, such as the World Bank, involved in project funding.  They see this involvement as a sign of credibility in the project preparation. They also sought support from development institutions to ensure payment by the utility. Timely payment must be ensured to keep the project on schedule. Considering the performance basis of payments, companies are wary of delays in payments linked to slow project progress that is caused by government actions or inaction.

For more on the role of multilaterals in PPPs, see the State of PPPs (1999 to 2015).
The insights from this market survey are informing a new wave of NRW performance-based contracts being developed by the World Bank Group and partners.  Lessons, tools and resources are also being made available through a new portal on “PBCs for NRW” on the PPP Knowledge Lab.
 
Related posts:
In the market for good practices on performance-based contracts for non-revenue water management
 
Kigali Water: Lessons from one of sub-Saharan Africa’s first water PPPs (3/18)
 
Water PPPs that work: The case of Armenia (1/18)

No more “business as usual” in Benin’s water sector (2/16)

5 trends in public-private partnerships in water supply and sanitation    

Delivering quality health services: A patient’s perspective

1 week 3 days ago

The vignette below was originally published in a new joint report from the World Bank, WHO and OECD, Delivering quality health services: A global imperative for universal health coverage.  

Eight years ago, when she was diagnosed with rheumatoid arthritis, an autoimmune disease that causes inflammation, swelling and acute pain in the joints, Cecilia Rodriguez was Director of a primary health care facility. “I had very bad rheumatoid arthritis and spent a lot of time in bed,” says Rodriguez, who was in her thirties when she first experienced the painful symptoms. “I realized that what I had been promoting as a health administrator was very different from what I needed as a patient.” 

Rheumatoid arthritis touches people of all ages. Its exact causes are not known, but genetic and environmental factors may play a role. Up to 1% of the world’s population is affected. In Chile, where Rodriguez lives, 100,000 people are living with this lifelong condition.
 
For people with chronic diseases, quality health care can be defined as “an accurate equilibrium between clinical best practices and what is best for the patient, determined with the patient,” Rodriguez explains. “We don’t always need doctors who have all the answers. We need people who understand how we are coping with our condition.”
 
Above all, she believes patients suffering from chronic conditions that have a huge impact on daily life need to feel in control of their treatment. “As a patient, I know what I want to achieve. Clinicians can help me understand if I can achieve it and help me do so. For me, that’s the best quality of health care.”
 
Cecilia Rodriguez and her sister Lorena, who had been diagnosed with rheumatoid arthritis a few years earlier, established a non-profit organization to support people affected by the same condition and advocate for improved patient care. “We called the NGO ‘Me Muevo’ (‘I move’) because we learned that with this condition you have to keep your body moving, but also because ‘I move’ means ‘I take action’”, she says.
 
‘Me Muevo’ is part of a growing movement of patient-led organizations in Chile. Rodriguez acted as spokesperson for an alliance of associations that successfully lobbied to make prescription drugs more affordable. In 2016, Chile adopted the ‘Ricarte Soto Law’ on high-cost treatments. “Now I only pay US$ 200 a year for all my medications, instead of US$ 1500 per month,” Rodriguez says.
 
“Health care systems tend to be geared towards treating acute illnesses, and are rarely organized to help patients with lifelong diseases overcome the hurdles of daily life,” Rodriguez explains.
 
She cites the example of her sister who works and has to travel to three locations – a process that takes at least five hours – to collect her monthly prescription drugs. “In this case, quality of care would mean being able to pick up all her medications from the primary health care facility near her house, on a Saturday morning,” she says.
 
Rodriguez also promotes enabling patients to enter notes into their medical records between medical appointments to help physicians adjust their treatment. “If I could write that I had had a flare-up and say how I had dealt with it, my doctor would have that on record when I saw her three or four months later,” she says.
 
After Rodriguez attended a chronic disease self-management course in the United States, which helped her better cope with the effects of her disease, her organization worked to make the program available to patients in her own country. “Investing in teaching self-management can reduce overall costs. That is why we are bringing this program to Chile,” she says. As a result, 700 people benefited from this training through the public system, last year.
 
Full report is available here.
 

Water flows from the spring of Kyrgyzstan’s snowy mountains

1 week 4 days ago
Togotoi is a small mountainous village in the south of the Kyrgyz Republic. Last month, some colleagues and I traveled there to participate in a ceremony to mark the opening of a newly-built water supply system. Mr. Askarov, Vice-Prime Minister of the Kyrgyz Republic and Mr. Sarybashov, Governor of Osh Oblast, opened the celebrations, signifying the high importance of this event for the local population.

The new water supply system at Togotoi is the first project to become operational under the Government’s National Rural Drinking Water Supply Program, which was launched last year and was called “Ala-Too Bulagy” – meaning “spring of snowy mountains.” Togotoi villagers and school children celebrate the opening of their new water system.   With Vice-Prime Minister Askarov, we symbollically opened a water tap. The 2,000 residents of Togotoi village will benefit from the new water supply. During the celebrations, we heard from several of them what the difference it will make to their lives. The Mamashov family invited us to visit their home, where they showed us their new washing machine – they said it would save them time in the future. The couple also installed a boiler, so that hot water is now available in the bathroom and kitchen.  Their neighbors are looking to do the same in their homes, the couple told us with broad smiles.    
  A couple invited us to visit their home.
That same day, we also visited a children’s day-care center in the village. The children welcomed us with singing and dancing – they looked amazing in their traditional outfits! These children are now able to benefit from a reliable water supply and indoor toilet facilities! Thankfully, they will no longer have to fetch water from irrigation canals, open ditches, or water posts far from their homes. Instead, they can play and learn and enjoy their childhood.
  Children in the day-care center surprised us with a lovely performance.
While celebrating, I was thinking that there is still much more work to be done in this village and in many other villages around the country. There is an urgent need to provide significantly more indoor toilets in schools, to promote sanitation and hygiene, and to disseminate practical solutions to improving household sanitation facilities. Rural administrations and local water service providers need to be enabled to deliver quality and sustainable services to the entire population, and professional training needs to be provided at all technical levels – from designers to technicians and mechanics.

The World Bank has provided US$ 60 million in support to the “Ala-Too Bulagy” program, through the Sustainable Rural Water Supply and Sanitation Development Project. This project will help about 100 villages, 99 schools, and over 200,000 people across the country with access to safe drinking water. The project is implemented by the Community Development and Investment Agency, in very close partnership with the Department of Drinking Water Supply and Waste Water Disposal, rural administrations, water service providers, local communities, and schools.

The trip into the mountains to the village of Togotoi left me and my colleagues with very strong emotions. It was a real pleasure for me to talk with the villagers and to hear about the development. And, by the way, the water from the “spring of snowy mountains” tasted great!

Face to face with William Maloney, Chief Economist, Equitable Finance and Institutions

1 week 5 days ago

[[tweetable]]Returns on technological adoption are thought to be extremely high, yet developing countries appear to invest little, implying that this critical channel of productivity growth is underexploited.[[/tweetable]] A recent World Bank study – The Innovation Paradox: Developing-Country Capabilities and the Unrealized Promise of Technological Catch-Up – sheds light on how to address this paradox. [[tweetable]]In this interview, William Maloney Chief Economist, Equitable Finance and Institutions Practice Group, World Bank Group, calls upon developing country public and private-sector leaders to pursue a more focused approach to innovation policy.[[/tweetable]]



What is the new study Innovation Paradox all about?

The potential gains from bringing existing technologies to developing countries are vast, much higher for poor countries than for rich countries. Yet developing-country firms and governments invest relatively little to realize this potential. That’s the origin of what we are calling ‘The Innovation Paradox’.

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Why do firms in developing countries lag behind when it comes to innovation?

The Innovation Paradox, argues that developing country firms choose not to invest heavily in adopting technology, even if they are keen to do so, because they face a range of constraints that prevent them from benefitting from the transfer.

Developing country firms are often constrained by low managerial capability, find it difficult to import the necessary technology, to contract or hire trained workers and engineers, or draw on the new organizational techniques needed to maximize the potential of innovation. Moreover, they are often inhibited by a weak business climate. For example, small and medium enterprises (SMEs) are constantly in a situation where they are putting out fires, they don’t have a five-year plan, they don’t have somebody keeping track of what new technology has come out of some place that they could bring to the firm.

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[[tweetable]]How can developing economies catch up with the developed world on innovation?[[/tweetable]]

The rates of return to investments and innovation of various kinds appear to be extremely high, yet we see a much smaller effort in these areas.  In the developing countries, we need to think not only about barriers to accumulating knowledge capital, we have to think about all the barriers to accumulating all of the complementary factors—the physical capital. So, if I have a lousy education system, it doesn’t matter if I get a high-tech firm because there won’t be any workers to staff it.

Innovation requires competitive and undistorted economies, adequate levels of human capital, functioning capital markets, a dynamic and capable business sector, reliable regulation and property rights. Richer countries tend to have more of these conditions. This is at the root of Paradox. Even though follower countries have much to gain from adopting existing technologies from the advanced countries, in practice, missing and distorted markets, weak management capabilities and human capital prevent them from taking advantage of these opportunities.

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How is India placed?

India is well placed to avoid some of these pitfalls. For instance, its educational and research institutions are capable of generating very high human capital. More such institutions, and better linkages between them and the private sector, would further enhance this capability.

[[tweetable]]Recent improvements in India’s Doing Business rankings suggest that the legal and regulatory environment for investment is becoming more favorable to innovative firms.[[/tweetable]]

In other areas, however, the available indicators paint a mixed picture. Although Indian businesses invest more in R&D – 0.7 percent of GDP – than most countries at India’s income level, this is far below the levels of advanced countries, which typically invest 2-to-4 percent of GDP. And, while patenting has been rising sharply—a good sign—recent analysis suggests that in both India and China, much of the patent surge, and hence R&D, is driven by foreign multinationals. How much of this investment ends up benefiting the local economy is unclear.
Further, data from the MIT-Stanford World Management Survey finds that Indian firms employ poor management practices on average, impacting their productivity and ability to innovate.  While India has a broad range of companies, ranging from basic SMEs to true global leaders, even India’s better-managed firms trail the better-managed companies in the United States.

*********

What role can the private sector play?

[[tweetable]]Our research suggests that a sophisticated, highly capable private sector is essential for R&D centered initiatives to succeed. [[/tweetable]]Firms need to have the ability to respond to market conditions, identify new technological opportunities, develop a plan to exploit them, and then cultivate the necessary human resources. They need to be able to walk before they can run.

East Asian ‘miracle economies’ emphasized learning and raising the capabilities of the private sector. In Japan and Singapore, productivity movements made the people conscious of the need to improve quality to promote growth and generate good quality jobs.

India has shown that such programs work. A study of 20 textile firms showed that firms which received management consultancy services reported a dramatic increase in the adoption of good management practices, and of productivity. After just one year, these firms saw a ten percent rise in productivity, enough to cover the full costs of the consultancy.

*********

Face to face with William Maloney, Chief Economist, Equitable Finance and Institutions

1 week 5 days ago

[[tweetable]]Returns on technological adoption are thought to be extremely high, yet developing countries appear to invest little, implying that this critical channel of productivity growth is underexploited.[[/tweetable]] A recent World Bank study – The Innovation Paradox: Developing-Country Capabilities and the Unrealized Promise of Technological Catch-Up – sheds light on how to address this paradox. [[tweetable]]In this interview, William Maloney Chief Economist, Equitable Finance and Institutions Practice Group, World Bank Group, calls upon developing country public and private-sector leaders to pursue a more focused approach to innovation policy.[[/tweetable]]



What is the new study Innovation Paradox all about?

The potential gains from bringing existing technologies to developing countries are vast, much higher for poor countries than for rich countries. Yet developing-country firms and governments invest relatively little to realize this potential. That’s the origin of what we are calling ‘The Innovation Paradox’.

*********

Why do firms in developing countries lag behind when it comes to innovation?

The Innovation Paradox, argues that developing country firms choose not to invest heavily in adopting technology, even if they are keen to do so, because they face a range of constraints that prevent them from benefitting from the transfer.

Developing country firms are often constrained by low managerial capability, find it difficult to import the necessary technology, to contract or hire trained workers and engineers, or draw on the new organizational techniques needed to maximize the potential of innovation. Moreover, they are often inhibited by a weak business climate. For example, small and medium enterprises (SMEs) are constantly in a situation where they are putting out fires, they don’t have a five-year plan, they don’t have somebody keeping track of what new technology has come out of some place that they could bring to the firm.

*********

[[tweetable]]How can developing economies catch up with the developed world on innovation?[[/tweetable]]

The rates of return to investments and innovation of various kinds appear to be extremely high, yet we see a much smaller effort in these areas.  In the developing countries, we need to think not only about barriers to accumulating knowledge capital, we have to think about all the barriers to accumulating all of the complementary factors—the physical capital. So, if I have a lousy education system, it doesn’t matter if I get a high-tech firm because there won’t be any workers to staff it.

Innovation requires competitive and undistorted economies, adequate levels of human capital, functioning capital markets, a dynamic and capable business sector, reliable regulation and property rights. Richer countries tend to have more of these conditions. This is at the root of Paradox. Even though follower countries have much to gain from adopting existing technologies from the advanced countries, in practice, missing and distorted markets, weak management capabilities and human capital prevent them from taking advantage of these opportunities.

*********

How is India placed?

India is well placed to avoid some of these pitfalls. For instance, its educational and research institutions are capable of generating very high human capital. More such institutions, and better linkages between them and the private sector, would further enhance this capability.

[[tweetable]]Recent improvements in India’s Doing Business rankings suggest that the legal and regulatory environment for investment is becoming more favorable to innovative firms.[[/tweetable]]

In other areas, however, the available indicators paint a mixed picture. Although Indian businesses invest more in R&D – 0.7 percent of GDP – than most countries at India’s income level, this is far below the levels of advanced countries, which typically invest 2-to-4 percent of GDP. And, while patenting has been rising sharply—a good sign—recent analysis suggests that in both India and China, much of the patent surge, and hence R&D, is driven by foreign multinationals. How much of this investment ends up benefiting the local economy is unclear.
Further, data from the MIT-Stanford World Management Survey finds that Indian firms employ poor management practices on average, impacting their productivity and ability to innovate.  While India has a broad range of companies, ranging from basic SMEs to true global leaders, even India’s better-managed firms trail the better-managed companies in the United States.

*********

What role can the private sector play?

[[tweetable]]Our research suggests that a sophisticated, highly capable private sector is essential for R&D centered initiatives to succeed. [[/tweetable]]Firms need to have the ability to respond to market conditions, identify new technological opportunities, develop a plan to exploit them, and then cultivate the necessary human resources. They need to be able to walk before they can run.

East Asian ‘miracle economies’ emphasized learning and raising the capabilities of the private sector. In Japan and Singapore, productivity movements made the people conscious of the need to improve quality to promote growth and generate good quality jobs.

India has shown that such programs work. A study of 20 textile firms showed that firms which received management consultancy services reported a dramatic increase in the adoption of good management practices, and of productivity. After just one year, these firms saw a ten percent rise in productivity, enough to cover the full costs of the consultancy.

*********

Face to face with William Maloney, Chief Economist, Equitable Finance and Institutions

1 week 5 days ago

[[tweetable]]Returns on technological adoption are thought to be extremely high, yet developing countries appear to invest little, implying that this critical channel of productivity growth is underexploited.[[/tweetable]] A recent World Bank study – The Innovation Paradox: Developing-Country Capabilities and the Unrealized Promise of Technological Catch-Up – sheds light on how to address this paradox. [[tweetable]]In this interview, William Maloney Chief Economist, Equitable Finance and Institutions Practice Group, World Bank Group, calls upon developing country public and private-sector leaders to pursue a more focused approach to innovation policy.[[/tweetable]]



What is the new study Innovation Paradox all about?

The potential gains from bringing existing technologies to developing countries are vast, much higher for poor countries than for rich countries. Yet developing-country firms and governments invest relatively little to realize this potential. That’s the origin of what we are calling ‘The Innovation Paradox’.

*********

Why do firms in developing countries lag behind when it comes to innovation?

The Innovation Paradox, argues that developing country firms choose not to invest heavily in adopting technology, even if they are keen to do so, because they face a range of constraints that prevent them from benefitting from the transfer.

Developing country firms are often constrained by low managerial capability, find it difficult to import the necessary technology, to contract or hire trained workers and engineers, or draw on the new organizational techniques needed to maximize the potential of innovation. Moreover, they are often inhibited by a weak business climate. For example, small and medium enterprises (SMEs) are constantly in a situation where they are putting out fires, they don’t have a five-year plan, they don’t have somebody keeping track of what new technology has come out of some place that they could bring to the firm.

*********

[[tweetable]]How can developing economies catch up with the developed world on innovation?[[/tweetable]]

The rates of return to investments and innovation of various kinds appear to be extremely high, yet we see a much smaller effort in these areas.  In the developing countries, we need to think not only about barriers to accumulating knowledge capital, we have to think about all the barriers to accumulating all of the complementary factors—the physical capital. So, if I have a lousy education system, it doesn’t matter if I get a high-tech firm because there won’t be any workers to staff it.

Innovation requires competitive and undistorted economies, adequate levels of human capital, functioning capital markets, a dynamic and capable business sector, reliable regulation and property rights. Richer countries tend to have more of these conditions. This is at the root of Paradox. Even though follower countries have much to gain from adopting existing technologies from the advanced countries, in practice, missing and distorted markets, weak management capabilities and human capital prevent them from taking advantage of these opportunities.

*********

How is India placed?

India is well placed to avoid some of these pitfalls. For instance, its educational and research institutions are capable of generating very high human capital. More such institutions, and better linkages between them and the private sector, would further enhance this capability.

[[tweetable]]Recent improvements in India’s Doing Business rankings suggest that the legal and regulatory environment for investment is becoming more favorable to innovative firms.[[/tweetable]]

In other areas, however, the available indicators paint a mixed picture. Although Indian businesses invest more in R&D – 0.7 percent of GDP – than most countries at India’s income level, this is far below the levels of advanced countries, which typically invest 2-to-4 percent of GDP. And, while patenting has been rising sharply—a good sign—recent analysis suggests that in both India and China, much of the patent surge, and hence R&D, is driven by foreign multinationals. How much of this investment ends up benefiting the local economy is unclear.
Further, data from the MIT-Stanford World Management Survey finds that Indian firms employ poor management practices on average, impacting their productivity and ability to innovate.  While India has a broad range of companies, ranging from basic SMEs to true global leaders, even India’s better-managed firms trail the better-managed companies in the United States.

*********

What role can the private sector play?

[[tweetable]]Our research suggests that a sophisticated, highly capable private sector is essential for R&D centered initiatives to succeed. [[/tweetable]]Firms need to have the ability to respond to market conditions, identify new technological opportunities, develop a plan to exploit them, and then cultivate the necessary human resources. They need to be able to walk before they can run.

East Asian ‘miracle economies’ emphasized learning and raising the capabilities of the private sector. In Japan and Singapore, productivity movements made the people conscious of the need to improve quality to promote growth and generate good quality jobs.

India has shown that such programs work. A study of 20 textile firms showed that firms which received management consultancy services reported a dramatic increase in the adoption of good management practices, and of productivity. After just one year, these firms saw a ten percent rise in productivity, enough to cover the full costs of the consultancy.

*********

Dominica’s path to resilient recovery after Hurricane Maria

1 week 6 days ago


Located in the warm waters of the Eastern Caribbean, Dominica is no stranger to tropical storms and hurricanes.  Yet Hurricane Maria, which battered Dominica last September, was unlike anything the island nation had ever seen. Packing winds of over 160 miles per hour, the Category 5 hurricane claimed the lives of 30 people and caused total damages and losses exceeding US$1.3 billion.

Determined to build back better and become the world’s first climate-resilient nation, the Government of Dominica, in partnership with the World Bank, has set in motion a resilient recovery plan. The plan’s key priorities include helping farmers adopt climate-smart practices and encouraging resilient building practices in the housing sector.

“Dominica still has a long way to go in its reconstruction efforts nearly a year on, but the country is now on a steady path to recovery,” says Lucien Blackmoore, Permanent Secretary for the Ministry of Housing and Lands of the Commonwealth of Dominica.

Check out our video interview with Mr. Blackmoore from the 2018 Understanding Risk Forum, hosted by the Global Facility for Disaster Reduction and Recovery (GFDRR) and the World Bank, to learn more about Dominica’s path to resilient recovery in the aftermath of Hurricane Maria.
 
RELATED:

Socio-Emotional Skills Wanted! – New Big Data Evidence from India

1 week 6 days ago
We all hear about the importance of “socio-emotional skills” when looking for a job. Employers are said to be looking for individuals who are hardworking, meet deadlines, are reliable, creative, collaborative … the list goes on depending on the occupation. In recent years, it seems, these skills have become equally important as technical skills. But do employers really care about these soft skills when hiring? If so, what type of personality do they favor?

To answer these questions, the World Bank partnered with an online job portal in India called Babajob (acquired by Quickr Jobs in June 2017) to conduct a Randomized Control Trial (RCT) experimentation directly on their web portal leveraging their big data, including1.29 million job ads posted by 524,000 employers for 8 million registered job seekers.

We asked their job applicants to take a Big-Five type personality test using Babajob’s chat message software called “chatbot”. An 11-item version of the Big Five inventory was used: 3 questions on agreeableness, 2 questions on conscientiousness, 2 questions on openness to experience, 2 questions on emotional stability (neuroticism), and 2 questions on extraversion. The survey link was sent out via SMS messages through a chatbot. Applicants responded to a survey voluntarily. After job seekers completed the assessment, they got to see their scored results immediately. The results of the test were also automatically uploaded to their Babajob profiles, and were shown on their applications to various jobs if they were in the treatment group of the experimentation.   Sample Image of “chatbot” on the job seekers’ mobile phone
Outcomes of this experiment were measured by whether a potential employer assesses a seeker by opening (unlocking) his/her application and background information. We compared outcomes between those for whom the personality test results were shown and not shown to analyze the impact of non-cognitive skills on hiring.

Results

A total of 2,870 applicants filled the survey, of which 51.5% constituted the treatment group. We observed that the disclosure of personality test results (treatment) had a positive and quite significant impact on the number of employers clicking the profile of potential workers to show their interest. We also found a significant impact on the individuals who identified themselves as organized, calm, imaginative and/or quiet applicants. There was no effect on those who described themselves as easy-going, sensitive, realistic and/or outgoing applicants, which seems to indicate (typical) employers’ preference. We observed small differences between men and women but this finding is not very conclusive. Another interesting observation is the fact that some job categories (such as office clerk, sales, receptionist) seem to require non-cognitive skills more than other professions (at least, from the employers’ viewpoint).

Conclusion

The results show that socio-emotional skills play potentially important roles in the hiring process and that employers seem to have certain (stereotypical) preference when looking for employees. In other words, information on noncognitive skills is usually quite private, thus, employers generally do not have such knowledge on job applicants and may have to imperfectly guess their preference from available data. Thus, provision of socio-emotional skills information can be a significant source of improving efficiencies in the labor market.

Furthermore, this innovative experiment using Big Data by directly introducing experimentation on the online job portal adds value to the growing volume of big data research. Using big data from such online job portal has a low marginal cost on extra information acquisition and the accurate results become available right away. We can also easily test and adjust the parameters of the experiment if needed to improve the accuracy of the design and can easily collect the data overtime as it will be automatically stored in the portal. Given the interesting outcomes of this first experiment, we hope to leverage the potential of big data in labor market analytics more in the future.

For more details of this experiment, please access our publication: Asymmetric Information on Noncognitive Skills in the Indian Labor Market: An Experiment in Online Job Portal.

Find out more about World Bank Group Education on our website and on Twitter.
 

Founded in 2000, the Parliamentary Network is an independent, non-governmental organization that provides a platform for Parliamentarians from over 140 countries to advocate for increased accountability and transparency in development cooperation. Jeremy Lefroy is the current Chair of the Parliamentary Network.

 

The Network – via its international secretariat, regional chapters and country chapters – reaches over 1000 Parliamentarians in Africa, Asia, Europe and the Americas. It strives to increase transparency and accountability in the development cooperation process by fostering the oversight role of parliaments and civil society. The Network has a specific focus on multilateral aid and a sub-focus on the work and modus operandi of the World Bank Group and the International Monetary Fund (IMF), the world’s largest multilateral funders.

 

It provides a platform for MPs and civil society to hold to account their own governments, as well as International Financial Institutions (IFIs), for development outcomes.

Membership is free of charge and open to elected parliamentarians who currently hold a mandate. As a member, you will receive The Parliamentary Network on the World Bank and International Monetary Fund’s policy materials, including the quarterly Network Review publication and the Parliamentarians and Development series.

You will also be eligible to attend the Annual Conference and participate in discussions with senior World Bank and IMF leadership. You can also be invited to take part in the Parliamentarians in the Field country visit programme.
In addition, the The Parliamentary Network on the World Bank and International Monetary Fund often invites partner organizations to join its activities.
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