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IMF News

Blog: Five Actions to Strengthen the Euro Area Banking Union

1 hour 17 min ago

IMF Staff Completes 2018 Article IV Visit to Fiji

12 hours 58 min ago

IMF Executive Board Completes Third Review of the Extended Credit Facility Arrangement for Cameroon

13 hours 26 min ago

IMF Executive Board Approves US$2.97 billion for Morocco Under the Precautionary and Liquidity Line

13 hours 34 min ago

IMF Executive Board Concludes 2018 Article IV Consultation with Cambodia

15 hours 11 sec ago

Looking Ahead to Chart Today’s Course: The Future of Work in sub-Saharan Africa

1 day 2 hours ago

Blog: Chart of the Week: Sub-Saharan Africa’s growth: a tale of different experiences

1 day 3 hours ago

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

1 day 6 hours ago
Country Report No. 18/369

The Future of Work in Sub-Saharan Africa

1 day 6 hours ago
Departmental Paper No. 18/18

IMF Research Perspectives, Fall/Winter issue

3 days 12 hours ago

Belgium: 2019 Article IV Consultation Concluding Statement

3 days 15 hours ago

Peru : Financial Sector Assessment Program-Detailed Assessment of Observance - Basel Core Principles for Effective Banking Supervision

4 days 6 hours ago
Country Report No. 18/366

Assessing the Macroeconomic Impact of Structural Reforms in Chile

4 days 6 hours ago
Working Paper No. 18/285

Cote d'Ivoire : Fourth Reviews Under the Arrangement Under the Extended Credit Facility and Under the Extended Arrangement Under the Extended Fund Facility, and Request for Modification of Performance Criteria-Press Release; Staff Report; Debt Sustainabil

4 days 6 hours ago
Country Report No. 18/367

In Search of Information: Use of Google Trends’ Data to Narrow Information Gaps for Low-income Developing Countries

4 days 6 hours ago
Working Paper No. 18/286

Blog: Top 5 Blogs on Climate Change

4 days 13 hours ago

IMF Staff Concludes Visit on Yemen

4 days 17 hours ago

IMF Executive Board Completes Fourth Reviews under an Extended Credit Facility and Extended Fund Facility for Côte d’Ivoire and Approves US$133.7 Million Disbursement

4 days 19 hours ago

IMF Staff Completes 2018 Article IV Mission to Nepal

5 days 2 hours ago

Republic of Armenia : Financial Sector Assessment Program-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Armenia

5 days 6 hours ago
Country Report No. 18/361

Regional Labor Mobility in Spain

5 days 6 hours ago
Working Paper No. 18/282

IMF-Supported Programs and Income Convergence in Low-Income Countries

5 days 6 hours ago
Working Paper No. 18/284

Drivers of Spain’s Export Performance and the Role of the Labor Market Reforms

5 days 6 hours ago
Working Paper No. 18/283

The Future of Work in Sub-Saharan Africa

5 days 6 hours ago

Islamic Republic of Mauritania : Second Review Under the Extended Credit Facility Arrangement, and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Islamic Republic of Mauritania

5 days 6 hours ago
Country Report No. 18/365

Benin : Third Review Under the Extended Credit Facility Arrangement and Request for Waiver of Nonobservance of Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Benin

5 days 6 hours ago
Country Report No. 18/364

Uruguay: Staff Concluding Statement of the 2018 Article IV Mission

5 days 15 hours ago

IMF Staff Completes 2018 Article IV Visit to Myanmar

5 days 16 hours ago

IMF Staff Concludes Visit to Costa Rica

5 days 16 hours ago

IMF Staff Completes 2019 Article IV Consultation to Malaysia

5 days 16 hours ago

Togo : Third Review under the Extended Credit Facility Arrangement and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Togo

6 days 6 hours ago
Country Report No. 18/362

Mali : Tenth Review under the Extended Credit Facility Arrangement and Request for Waiver of Nonobservance of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Mali

6 days 6 hours ago
Country Report No. 18/360

Brazil : Financial Sector Assessment Program-Technical Note on Fund Management: Regulation, Supervision and Systemic Risk Monitoring

6 days 13 hours ago
Country Report No. 18/358

Is Latin America Prepared for an Aging Population?

6 days 19 hours ago

Why a New Multilateralism Now?

1 week 2 hours ago

Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China

1 week 6 hours ago
Working Paper No. 18/276

China’s High Savings: Drivers, Prospects, and Policies

1 week 6 hours ago
Working Paper No. 18/277

Can Good Governance Lower Financial Intermediation Costs?

1 week 6 hours ago
Working Paper No. 18/279

Trade Uncertainty and Investment in the Euro Area

1 week 6 hours ago
Working Paper No. 18/281

Saudi’s Growth and Financial Spillovers to Other GCC Countries: An Empirical Analysis

1 week 6 hours ago
Working Paper No. 18/278

Slovenia: Staff Concluding Statement of the 2018 Article IV Mission

1 week 6 hours ago

Republic of Belarus : Technical Assistance Report-Work of Mission on Development of Potential in Area of Government Finance Statistics

1 week 6 hours ago
Country Report No. 18/261

IMF Executive Board Completes the Third Review under the Extended Credit Facility Arrangement and Approves the Fourth US$34.9 Million Disbursement to Togo

1 week 14 hours ago

Statement by IMF Managing Director Christine Lagarde at the Conclusion of a Meeting with CEMAC High-Level Delegation

1 week 14 hours ago

IMF Executive Board Approves the US$19.5 Million Disbursement to Niger to Strengthen Macroeconomic Stability

1 week 15 hours ago

IMF Executive Board Completes Tenth Review under the Extended Credit Facility Arrangement for Mali and approves US$43.85 Million Disbursement

1 week 16 hours ago

Building Resilience to Natural Disasters in the Caribbean Requires Greater Preparedness

1 week 18 hours ago

IMF Staff Concludes Visit to The Bahamas

1 week 20 hours ago

IMF Staff Completes First Review under the Staff-Monitored Program for Somalia

1 week 21 hours ago

Republic of Croatia: Staff Concluding Statement of the 2018 Article IV Mission

1 week 21 hours ago

Archeologist Sir Barry Cunliffe on the Origins of Trade

1 week 1 day ago

Republic of Poland : Technical Assistance Report-Revenue Administration Gap Analysis Program—The Value-Added Tax Gap

1 week 1 day ago
Country Report No. 18/357

How Should GCC Countries Diversify Their Economies And Promote Inclusive Growth?

1 week 2 days ago

IMF Staff Concludes Visit to Barbados

1 week 3 days ago

IMF Staff Concludes Visit to Jamaica

1 week 3 days ago

Financial Inclusion and Bank Competition in Sub-Saharan Africa

1 week 4 days ago
Working Paper No. 18/256

Structural Quarterly Projection Model for Belarus

1 week 4 days ago
Working Paper No. 18/254

Pouring Oil on Fire: Interest Deductibility and Corporate Debt

1 week 4 days ago
Working Paper No. 18/257

The Intensive Margin in Trade

1 week 4 days ago
Working Paper No. 18/259

The Scarcity Effect of Quantitative Easing on Repo Rates: Evidence from the Euro Area

1 week 4 days ago
Working Paper No. 18/258

Overfitting in Judgment-based Economic Forecasts: The Case of IMF Growth Projections

1 week 4 days ago
Working Paper No. 18/260

China's Bond Market and Global Financial Markets

1 week 4 days ago
Working Paper No. 18/253

Expenditure Conditionality in IMF-supported Programs

1 week 4 days ago
Working Paper No. 18/255

Blog: The Uneven Path Ahead: The Effect of Brexit on Different Sectors in the UK Economy

1 week 4 days ago

IMF Executive Board Concludes the United Republic of Tanzania’s 2018 Financial System Stability Assessment

1 week 4 days ago

Angola Implements the IMF’s Enhanced General Data Dissemination System

1 week 4 days ago

IMF Executive Board Concludes 2018 Article IV Consultation with Bolivia

1 week 4 days ago

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

1 week 4 days ago

Gulf Cooperation Council: How Developed and Inclusive are Financial Systems in the GCC?

1 week 4 days ago

Gulf Cooperation Council: Trade and Foreign Investment—Keys to Diversification and Growth in the GCC

1 week 4 days ago

Kingdom of the Netherlands: Staff Concluding Statement of the 2019 Article IV Consultation

1 week 5 days ago

Martin Wolf on Global Cooperation and Why Truth Matters

1 week 5 days ago

United Republic of Tanzania : Financial Sector Assessment Program-Press Release; Staff Report; and Statement by the Executive Director for the United Republic of Tanzania

1 week 5 days ago
Country Report No. 18/346

Botswana : Technical Assistance Report-Government Finance Statistics

1 week 5 days ago
Country Report No. 18/349

Age of Ingenuity: Reimagining 21st Century International Cooperation

1 week 6 days ago

Ethiopia: Remarkable Progress Over More Than a Decade

1 week 6 days ago

IMF Executive Board Concludes 2018 Article IV Consultation with the Federal Democratic Republic of Ethiopia

1 week 6 days ago

OECD News - Corruption

Strengthening the Anti-Bribery Convention: Review of the 2009 OECD Anti-Bribery Recommendation

6 days 20 hours ago
The OECD Anti-Bribery is the first and only international anti-corruption instrument focused on the ‘supply side’ of the bribery transaction. To ensure that it continues to respond to the challenges of fighting foreign bribery, the OECD has launched a review of the 2009 OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery Recommendation).

2018 OECD Consultation on Fighting Foreign Bribery

6 days 20 hours ago
This Working Group on Bribery consultation with the private sector and civil society will focus on topics suggested by the stakeholders themselves and launch the OECD study, 'Foreign Bribery Enforcement: What Happens to the Public Officials on the Receiving End?'.

2018 OECD Consultation on Fighting Foreign Bribery

6 days 20 hours ago
This Working Group on Bribery consultation with the private sector and civil society will focus on topics suggested by the stakeholders themselves and launch the OECD study, 'Foreign Bribery Enforcement: What Happens to the Public Officials on the Receiving End?'.

Internship opportunities working on anti-corruption at the OECD

2 weeks 18 hours ago
The OECD Anti-Corruption Division offers short-term internships of 2-6 months for qualified students. These internships provide students with the experience of working in an international organisation on anti-corruption issues and more specifically the OECD Anti-Bribery Convention.

OECD launches project to support Uzbekistan’s anti-corruption reforms

2 weeks 5 days ago
The OECD and the Uzbekistan Government, with the support of the U.S. Department of State Bureau of International Narcotics and Law Enforcement Affairs (INL), has launched a project to strengthen Uzbekistan’s capacity to fight corruption and boost its implementation of OECD Istanbul Anti-Corruption Action Plan (IAP) recommendations.

Monitoring the OECD Anti-Bribery Convention: Call for contributions

3 weeks 4 days ago
In 2018, the OECD Working Group on Bribery launched its fourth phase of monitoring of Hungary and Japan's implementation of the OECD Anti-Bribery Convention. To assist this evaluation process, the OECD calls for interested parties to provide written submissions on the evaluated countries.

OECD News - Economy

GDP Growth - Third quarter of 2018, OECD

4 weeks 2 hours ago
OECD GDP growth slows to 0.5% in third quarter of 2018

Regulatory framework for the loan-based crowdfunding platforms

4 weeks 23 hours ago
In a growing number of OECD countries policymakers are designing specific regulations for lending-based crowdfunding platforms.

To what extent do policies contribute to self-employment?

4 weeks 23 hours ago
Using cross-country time series panel regressions for the last two decades, this paper seeks to identify the main policy and institutional factors that explain the share of selfemployment across European countries.

OECD, BSR and Danone launch 3-year initiative to strengthen inclusive growth through public-private collaboration

5 weeks 23 hours ago
Business and government should work more closely together to reduce inequality and foster inclusive growth. To help achieve this, at the Paris Peace Forum, Gabriela Ramos, OECD Chief of Staff, G7/G20 Sherpa and leader of the OECD’s Inclusive Growth Initiative, and Emmanuel Faber, Chairman & CEO of Danone, launched the Business for Inclusive Growth (B4IG) Platform.

Composite Leading Indicators (CLI), OECD, November 2018

5 weeks 1 day ago
CLIs continue to signal easing growth momentum in the OECD area

Growth and economic well-being: second quarter 2018, OECD

5 weeks 5 days ago
OECD household income growth slows to 0.3%, lagging behind GDP growth in second quarter of 2018

OECD News - Finance

2019 Workshop of the G20/OECD Task Force on Long-term Investment

0 sec ago
30 January 2019, Singapore - This Workshop will bring together academics, public stakeholders and industry experts to discuss data collection and benchmarks for quality infrastructure investment and blockchain and innovation in sustainable infrastructure.

Initial Coin Offerings (ICOs) for SME Financing

0 sec ago
This report analyses the emergence and potential of ICOs as a financing mechanism for start-ups and small and medium-sized enterprises (SMEs), examines the benefits and challenges of this mechanism for small businesses and investors, and discusses policy implications of ICO activity for inclusive financing of SMEs and the real economy.

The Contribution of Reinsurance Markets to Managing Catastrophe Risk

22 hours 50 min ago
This report makes use of a unique set of data on premiums and claims provided by global reinsurance companies to examine the contribution that reinsurance has made to enhancing the capacity of the primary insurance market to manage catastrophe risk and to reducing the economic and insurance market disruption that often follows catastrophic events.

Launch of the OECD Pensions Outlook 2018

2 weeks 1 day ago
3 December 2018 - Every two years, the OECD Pensions Outlook provides an analysis of the main policy issues affecting pensions in OECD countries and assesses trends in retirement income systems. It discusses policy initiatives for strengthening pension systems, funded private pension systems in particular.

The World Bank - Blog

What did 200 African incubators learn from our webinar on open innovation?

0 sec ago
Entrepreneurs participating in the e-Takara competition to address specific challenges expressed by Nigerien public administrations. Credit: Niger DigitalThe training has completed my knowledge about open innovation. I can now go and talk to potential clients to identify their needs and show what we can offer them.” -- Mariem Kane, Hadina RIMTIC incubator
 
[[tweetable]]Distributive, participative and decentralized, open innovation programs can pave the way for start-ups to access larger markets and business opportunities.[[/tweetable]] They also allow corporate partners to respond quickly to changing market dynamics and test out new products or target new audiences.
 
African incubators, however, have yet to capitalize on the potential of open innovation. Often lacking the necessary knowledge and expertise to set up and implement such a program, incubators are missing out on a crucial opportunity to foster partnerships between their start-up clients and other stakeholders in the ecosystem, including large businesses and government.
 
Conscious of the need to fill this gap, our team, in collaboration with Afric’innov, AfriLabs, and ScaleChanger hosted a webinar through the World Bank’s Opening Learning Campus (OLC) titled  African incubators: how to leverage the potential of open innovation.
 
The session, presented in both English and French, was open to the incubator network of the Bank, Afric’innov and AfriLabs, as well as World Bank staff.
 
[[tweetable]]More than 300 participants from over 30 countries took the training to better understand the concept of open innovation and the role incubators can play in fostering collaborative innovation.[[/tweetable]] Over 300 participants from 200 support structures in 30+ African countries  
Speaking during the session, Senior Private Sector Development Specialist, Alexandre Laure, emphasized that this was also a chance for World Bank staff to assess existing incubators’ capacity to implement open innovation programs. “This will help inform WBG projects and improve our institution’s ability to support private sector development.”
 
The role for incubators in facilitating partnerships between their clients and other stakeholders in the ecosystem — before, during and after — was the webinar’s central theme. Focusing specifically on corporate open innovation, the session included best practices for collaboration between larger firms and start-ups.
 
To inspire participants, the webinar presented real-word examples:
  • Open innovation takes many forms and is not limited to the private sector. The e-Takara competition, for example, was launched in 2017 by the Public Agency for ICT in Niger and implemented by the incubator CIPMEN. Startups were trained and coached to develop solutions for challenges facing Nigerien public administrations. If the solution was judged relevant, startups had the opportunity to a memorandum of understanding with the respective agency. As of today, four entrepreneurs have been working closely with the Ministry of Higher Education, the Directorate-General for Taxation, the Directorate of Civil Defense, and the City of Niamey, to improve concrete public services. 
     
  • Nigeria’s acceleration program Startup Connect was also discussed. Sponsored by Union Bank, Nigeria’s second-oldest bank, and delivered by Co-Creation Hub Nigeria (Cc-HUB), this smart sourcing program links Nigerian tech companies with the Union Bank brand to create next-generation technology solutions for the African market. 12 shortlisted startups participated in a two-day workshop to prepare their pitch and clarify their value proposition before three winners were announced
Overall, the webinar was well-received by participants, with more than 90% giving positive feedback. They particularly appreciated the opportunity to gain insights through concrete examples of open innovation that came from similar contexts, as well as to connect with different incubators and hubs.
 
At the end of the session, participants were awarded a certificate, which some of them used to get a first meeting with potential corporate partners! The image below shows a list of incubators that followed up with the trainers and the World Bank to start their open innovation engagement in their respective countries. Snapshot of incubators that follow up after the training to start their open innovation engagement in-country Candide Leguede, national coordinator of INNOV’UP (Togo’s women-based incubator), urged for more such initiatives. “We need concrete support for our open innovation programs, particularly on how to adapt the methodologies to different sectors and circumstances.”
 
If you missed the webinar, you can watch the recording here: African Incubators: how to leverage the potential of open innovation? And you can help others learn too by sharing the webinar link through your social media channels.

Artificial intelligence, big data: Opportunities for enhancing human development in Thailand and beyond

5 hours 38 min ago

The use of artificial intelligence (AI) and big data can offer untapped opportunities for Thailand. Particularly, it has enormous potential to contribute to Thailand 4.0, a new value-based economic model driven by innovation, technology and creativity that is expected to unlock the country from several economic challenges resulting from past economic development models (agriculture – Thailand 1.0, light industry – Thailand 2.0, and heavy industry – Thailand 3.0), the “middle income trap” and “inequality trap”. One core aspect of Thailand 4.0 puts emphasis on developing new S-curve industries, which includes investing in digital, robotics, and the regional medical hub.

Today, the digital economy – with extensive use of AI and Big Data – is growing at a pace that far exceeds the global economy. We have witnessed the following phenomena: First, AI systems can currently handle enormous amounts of data, do computation at incredible speeds and deal with utmost complexity. Data that are in larger volumes and wider variety than ever before have been generated and captured – terabytes (1 TB is equal to 1,000,000 MB) of data are being generated every 60 seconds globally. Second, the costs of IT infrastructure have been declining. Thirty years ago, it costed over US $560 to store 1 GB of data; now it costs less than 1 US cent. Third, data processing has been much faster and with better analytics capability than ever before.

AI has already been used extensively by the private sector for commercial and profit-making purposes, including forecasting demand, predicting churns, suggesting advertisements on social media platforms, recommending products to potential buyers. However, not many people may have realized that we can use AI and big data to enhance human development and to address many development and social challenges.

How can it enhance human development? Here are some examples:
  • AI can analyze vast quantities of healthcare data, leading to scientific breakthroughs.
  • AI can predict and identify optimal budget allocation for effective and cost-effective interventions to achieve a government’s goal.
  • AI can revolutionize classrooms by providing individual learning pathways and virtual mentors.
  • AI can map poverty from space, enabling real-time resource allocation.
  • AI can predict and identify optimal production levels to reduce waste.
  • AI-based solutions make available Uber-like sharing of services for tractors and refrigeration, providing poorer farmers with access to the services that they need only at certain times of the year
  • AI-powered climate modelling can help predict climate-related disasters.
  • Pattern recognition can track the movement of fishing boats to combat illegal fishing.
  • Sensors can predict consumption patterns for efficient and safe water provision.
  • AI can drive more balanced hiring practices and spotlight gender inequality.
While we know that AI and big data can help drive exponential innovation, their use is currently very limited. As terabytes of data are being generated every minute, only 1% of this data is being used or analyzed. Public sector use of big data analytics and AI is the lowest.

The World Bank has been supporting the use of AI and big data to achieve our goals of decreasing poverty and increasing shared prosperity, and recently launched the AI for Development initiative and an Artificial Intelligence Lab. Boosting capacity is key in achieving these goals. In this regard, the World Bank organized a 5-day skills-building program focusing on big data, AI, and decision science in health and nutrition in Bangkok, featuring the participation of World Bank country teams as well as government and academic partners from Bangladesh, India, Indonesia, Lao PDR, Myanmar, Nepal, Pakistan, Papua New Guinea, Rwanda, Samoa, Tajikistan, Thailand, Uzbekistan, Vietnam, and Zimbabwe. Similar trainings were also held in Bucharest, Romania, and Pretoria, South Africa, engaging decision makers in public health from Latin America, Europe, Central Asia, and Africa.

Besides elaborating on the landscape for utilization of AI and decision science in health and nutrition, this training workshop also aimed to build the skills sets of decision makers by training them on various tools that utilize these technologies and aid in decision making processes. Participants got to practice on real-world scenarios, many of which were from their own regions or countries, and learned how to utilize tools such as Optima HIV, Health Service Prioritization tool, as well as broader big data techniques, in addressing challenges facing decision making in public health today.

The workshop was successful in creating awareness of the need for analytics to improve decision and delivery choices in health and development, and building capacity on analytical optimization tools that can answer pertinent policy and implementation questions for sectors. The team in Thailand, comprising of both government officials and World Bank staff, specifically aims to apply their newfound knowledge in improving the efficiency of resource allocations to support the national roadmap for ending the AIDS epidemic as a public health threat in Thailand by 2030 – specifically this is to further reduce annual new HIV infections from 6,500 to less than 1,000, cut AIDS-related deaths from almost 13,000 to under 4,000 and reduced HIV-related discrimination in health-care settings by 90%.

South Asia's new superfood or just fishy business?

13 hours 43 min ago
Across South Asia, four known species of indigenous, fully mature, small food-fish – now dubbed ‘NutriFish’ have nutritional and health benefits for pregnant and lactating women and young children when consumed over the first one thousand days. Here, children from Kothi, Odisha in India show their curiosity and share their excitement with a new kind of harvest happening in their village. Credit: Arun Padiyar Kale, Kefir, and Quinoa have now joined the ranks of better-known foods like Blueberries, Orange Sweet Potato, and Salmon on family dinner tables across the world.

Considered superior for their health and nutrition benefits, these so-called ‘Superfoods’, often considered “new” by the public are now ever-popularized by celebrity chefs and have become all the rage of foodies from San Francisco to Singapore.   

We live in a world of paradox, where old world and almost forgotten food like Quinoa (which dates back as a staple food over three thousand years to Andean civilization but largely disappeared with the arrival of the Spanish) is now back on the menu.  

Salmon, a staple part of Nordic diets from paleolithic times and woven into the culture of native populations across northwestern Canada and many other superfoods share comparable stories.

And, there are many other old world foods, indigenously known, disappearing but not fully forgotten, yet to be re-discovered.

[[tweetable]]Food is also now advancing to the front-line of the war on poverty[[/tweetable]]. 

[[tweetable]]A health and human capital crisis is now sweeping the world, and a lack of diverse, accessible, affordable, and available nourishing foods is increasingly blamed.  [[/tweetable]]

For example, [[tweetable]]obesity, from poor diet and poor exercise has tripled since 1975 to almost two billion people today[[/tweetable]].  

[[tweetable]]Undernutrition contributes to 45 percent of all deaths of children under five years old (3.5 million each year), much of it avoidable, but difficult to detect as it remains “hidden.”  [[/tweetable]]

[[tweetable]]Policy makers and stewards of national economies are starting to wake up to the fact that poor nutrition has massive economic implications too, reducing GDP by 3-11 percent, depending on the country. [[/tweetable]]

While economies such as Bangladesh, India, and Pakistan may look strong, just as bellies look full, [[tweetable]]critical micronutrients and vitamins, essential for healthy physical and cognitive development over the first 1,000 days of life are largely missing from diets of many developing countries and are a proven drag to educational attainment and economic prosperity.  [[/tweetable]]

And parents, from both rich and poor nations alike, seem to know something is not quite right. 

If healthier food choices that are accessible, affordable, and readily available are better known, would parents purchase such food from the market for their families?     

With a small grant from the World Bank-administered South Asia Food and Nutrition Initiative (SAFANSI) supported by the EU and the United Kingdom, a partnership with WorldFish was established to test this premise.  

A 60 second TV spot, a collaboration between scientists, economists, a private sector digital media company, broadcasters and the Government of Bangladesh, was created and broadcast across the nation on two occasions and watched by over 25 million people.  

A parallel radio program was also developed and aired reaching millions more, particularly the rural poor and marginalized communities.
  NutriFish1000 TV

 

Both TV and radio spots were intentionally designed drawing on behavioral economics and as a mini-musical, the storytelling a song sung by two children, a girl, and a boy, to the tune of an age-old nursery rhyme, well known across Bangladesh, and parts of the Bengali-speaking population in India.

The musical story focuses on the nutritional benefits of four known species of indigenous, fully mature, small food-fish – now dubbed ‘NutriFish’ by a growing community of scientists and practitioners – and informs families of the health benefits to pregnant and lactating women and young children when consumed over the first one thousand days. 

The work tapped into historical and cultural sentiments to influence the purchase and consumption of an old world, but now scientifically validated, and not yet forgotten superfood – ‘NutriFish1000’.  

Since its first airing, a movement has coalesced around this now increasingly recognized superfood as a solution. The SAFANSI-supported TV spot supported by this growing movement is changing mindsets, influencing policy and investment in three visible and measurable ways:
 
First, with respect to mindsets, the broadcasts had impact and provided plenty of food for thought.  Within a week, small fish were sold out across the nation’s fish markets with prices shooting up between 10-100 percent or more.
We witnessed that both fathers and mothers were equally likely to purchase these fish for their families; Status quo behaviors and food purchase patterns were disrupted.   
 
Second, with respect to policy, Bangladesh announced its commitment to expand production of small fish in 45,000 homestead ponds by 2020, estimated to benefit five million households and over fifteen million women and children. 

In addition, [[tweetable]]Bangladesh, India, and Pakistan have now included nutrition-sensitivity of fisheries as key strategies and new policy to meet their food and nutrition targets.[[/tweetable]]
 
Third, with respect to investment, a shift is on the horizon.  A SAFANSI-supported World Bank Flagship Report, Ending Undernutrition in South Asia (forthcoming in 2019) will feature evidence on “new” fish agri-food solutions to improve human capital outcomes, particularly food and nutritional security.   
 
Finally, the TV spot and its key messages, viewed at World Economic Forum (WEF) events at the EAT-Stockholm Food Forum, the 45th World Committee on Food Security (CFS45), and promoted by key Action Networks to support the aquatic food space is stimulating conversation and sparking healthy debate.   
 
There is still some way to go to ensure fish and other aquatic foods become a regular feature of food and nutrition policy and investment dialogue, which is too often dominated by terrestrial foods, despite the evidence.  

Nonetheless, small food fish solutions such as NutriFish1000 are demonstrating that they can transcend just fishy business and enter the realm of superfoods.

feeding Pakistan means eating more fish in the future – these young and next-generation scientists showcase their work in Karachi, Pakistan on the importance of fish for the future of Pakistan. Credit: R.S.N. Janjua
      
 

Why investing in health is critical for addressing gender-based violence in fragile settings

16 hours 14 min ago

Globally, over one-third of women report having experienced some form of physical or sexual violence. Many cases of violence, such as domestic abuse and rape, are underreported, so the true incidence of gender-based violence (GBV) is actually much higher.  

This risk is amplified in fragility and conflict affected situations where there is a breakdown of law and order and institutions that protect the vulnerable. Based on the limited data available, it is clear that GBV is a pervasive issue for displaced and refugee populations. One of the most comprehensive surveys of South Sudanese refugees, for example, found that 65 percent of women and girls had experienced some form of physical or sexual violence. 

Addressing GBV in fragile and conflict affected situations requires a strong understanding of the added complexities of people on the move or in transient camps that may end up becoming long-term living situations. The challenges, and consequently solutions, in different situations are obviously varied, but the health sector plays a pivotal role in managing and preventing GBV across all settings.  

For example, first aid and emergency health workers are among the first points of contact for victims of violence in most cases. These personnel should be aware of the signs of gender-based violence (including sexual and domestic violence); and are equipped to provide support to these people. In more settled camps, community-level interventions may be adapted to reach large groups of populations that have been exposed to violence. In the Democratic Republic of Congo, for instance, community-based health services have had success in reaching victims of violence in South Kivu, where access to health and social services has otherwise been limited.  

Investing in health and social services that address GBV is therefore critical to improving the health and well-being of refugee and displaced populations. This not only helps to restore and maintain people’s basic human rights, but, as a public health measure, it reduces the risk of unnecessary deaths and morbidity and can help improve social conditions and economic opportunities among displaced populations. This is critical to bolster their emotional health and improve their rehabilitation experiences. 

But where should we focus our investments in health? What are some critical areas for strengthening the health sector’s response to GBV? GBV interventions in fragile and conflict affected settings should be able to respond to short- and long-term needs. Some essential interventions include:  

  • Training health personnel and emergency responders to recognize signs of GBV and its treatment.  
  • Provision of reproductive and maternal health services as well as “dignity kits” to women and girls. Dignity kits are care packages targeted to women and girls and include items such as menstrual pads, clean underwear, and soap.  
  • Provision of GBV-related health services to victims including emergency contraception, post-exposure prophylaxis for HIV, administration of rape kits, emergency counselling, and referrals for more comprehensive mental and physical health services. 

When devising these GBV interventions, there are some key things to consider. According to the Inter-Agency Standing Committee’s (IASC) updated guidelines, it is important to:  

  • Develop and/or standardize protocols and policies for GBV-related programming.  
  • Engage all stakeholders, especially victims/survivors, in designing policies and programs.  
  • Enable inter- and intra-agency information-sharing on GBV incidents and take a multi-sector, cross-cutting approach.  
  • Ensure confidentiality, compassion and quality of care for survivors of GBV, and referral pathways for multi-sectoral support.  
  • Implement monitoring and evaluation throughout the project cycle. 

There has been a growing acknowledgement of and attention to GBV in fragile and conflict affected settings in recent years, and with it growing questions. There are several excellent sources of information available to practitioners. Among these resources is a recent World Bank Group brief that answers key questions for the health sector and highlights the best practices in designing, implementing and evaluating a project involving addressing GBV in conflict and fragile situations. The brief is intended to provide an overview of the main issues and identifies knowledge resources to help the field practitioner.

Digitizing to succeed in MENA

16 hours 15 min ago

The Middle East and North Africa region have some of the best educated, unemployed people in the world. High-skill university graduates currently make up almost 30 percent of the unemployed pool of labor in MENA, many of them women. In Tunisia, slightly more than half of the working age population is out of work, the vast majority being women. Part of the problem is that, despite some economic growth, not enough new jobs are being created.

The digital economy, particularly through platform firms, presents an opportunity to create the additional jobs needed. As elaborated by the 2019 World Development Report, The Changing Nature of Work, platforms enable people and firms to exploit underused physical and human capacity, transforming dead capital into active capital. For example, Careem, the #1 ride-hailing app in the Middle East and North Africa (MENA), provides a way for individuals to advertise their free time and spare vehicle capacity—be it a luxury vehicle, a moped, or a tuk-tuk—to generate income. Freelancing websites such as Upwork enable unemployed computer programmers and other highly skilled individuals to find online work with companies abroad. For most platforms workers set their own hours, which helps more women to work.
 
Platform firms are growing rapidly in many regions around the world, including in MENA. Jamalon, the online book retailer from Jordan, and Tutorama, based in Egypt, are two examples. Yet much more remains to be done to ensure the digital economy can reach its full potential.
 
Most discussions on how to prepare countries to succeed in the digital economy focus on investment in ICT infrastructure, which is essential. And those living in the MENA region are some of the most underserved. Governments also need to encourage digital businesses to form and thrive by creating the right business environment. Burdensome business regulations in MENA have led to smaller, less productive, and more likely informal firms. Creating a level-playing field for businesses must be a top priority.
 
Two additional components are essential if countries from MENA are to succeed.
 
First, policymakers need to think beyond traditional, firm-centric policy reform.  To foster a thriving digital economy, policies need to support individuals, too. Strong social protection can help people to adapt to the more flexible labor markets created by digital technology. Furthermore, between 40 and 70 percent of workers in MENA receive no social or legal protection in the so-called informal sector. Likewise, non-wage employment and self-employment, characteristic of the gig economy, also do not fall under the traditional social insurance schemes that dominate in the region. Flexibility raises concerns around income instability and protections connected with standard employer-employee relationships, such as pension plans, health insurance, and paid leave. Social safety nets are insufficiently developed in the region and institutions are still weak, despite important progress in some countries such as Egypt, Jordan, Morocco and Palestine.
 
The 2019 World Development Report discusses a universal package of programs that includes expanded non-contributory schemes, complemented by flexible retirement savings schemes that extend to all people irrespective of their form of work. This package would provide basic protection to everyone when faced with hardship and respond to changing labor markets.
 
Updating social protection will come at a cost, but it is a cost people are more likely to be willing to pay if they have faith in the institutions and systems being funded.
 
This brings us to the second component: governments need to better align domestic revenue mobilization strategies (the generation of public and private savings from domestic resources for productive investment) with the balance of risks in digitizing economies.
 
Corporate tax regimes could be updated to ensure governments capture a portion of digital profits. In the digital economy, physical presence is no longer a requirement to do business. Digital platforms often generate income from the capital of others. Identifying where value is created is not always straightforward, particularly when it comes to the collection and monetization of user data. And digital companies can locate assets (and subsequently profits) in just one country, even though they are supplying goods and services globally via the internet. As a result, little to no tax on the income generated goes to the government where consumers are located. Yet it is often the consumers who make the transaction possible, so economic logic suggests some portion of the tax should be paid in their jurisdiction.



Governments may also wish to rethink their spending on energy subsidies. Average spending on energy subsidies in the MENA region is three times higher than on social assistance (figure 1). Any efforts to remove energy subsidies would have to go through a welfare impact analysis. However, replacing them with a more robust, universal social protection could compensate.
 
The political economy of tax reform is a challenge for all governments. But as part of a broader policy package that fosters digital business, extends social protection to all in society, and guards against risks, such reforms may just stand a chance.

Improving service delivery through citizen service centers

17 hours 9 min ago
Photo: Nugroho Nurdikiawan Sunjoyo / World Bank

The trope of a government office worker, discontent with their work, grumbling about paperwork and administrative tasks, is a cliché. An equally ubiquitous figure is the discontent citizen dissatisfied with long lines, complicated bureaucratic processes and inefficient service delivery, wondering why their governments can’t do better.
 
The World Bank supports governments across the world who strive to serve citizens better. One of the most powerful tools to do so are Citizen service centers[1] (CSCs).

Modeled after one-stop shops, which were introduced to facilitate government-to-business interactions and to expedite processes such as business registration, CSCs focus on government-to-citizen services. Citizens can access a variety of national, state, or municipal services (e.g. social services, tax-related services, services for refugees, land-related services, etc.) in one single location.

In Kenya for instance, a total of 66 services are offered at the Huduma Centers. They can be divided into a fixed menu of public services offered by the national government—such as the issuance of national identification cards or filing tax return applications. Other services that can vary depending on the county’s specific socioeconomic context are also offered by the county government, such as the issuance of single business permits and seasonal parking tickets.

In Vietnam, 13,000 CSCs or one-stop shops operate at all levels of government, from provinces and districts to commune, ward, and township levels, ensuring that all citizens are in a few kilometers range of an access point to public administrative services.   
 
In 2016, a study conducted by the World Bank found at least 77 countries that are developing or strengthening physical and digital CSCs. The most significant developments in the design and functioning of CSCs over the past decade are linked to technological advances. Four themes —access, personalization, speed, and interaction— shape the newest innovations in CSC design.

In many cases, this means shifting from a primary reliance on brick-and-mortar centers to include the use of digital channels; reengineering processes and procedures to increase speed and ease of use for citizens; providing more targeted information; and shifting from only providing information and services to also receiving feedback and input from the citizens.
 
The integration of service delivery into a single CSC has the potential to increase trust between citizens and the state and to improve the efficiency and quality of service delivery. For implementing agencies, key benefits also include lowering administrative costs through economies of scale, restructuring of business processes by effectively using technology, as well as improving revenue collection.
 
The CSC in Pancevo, a medium-sized city in Serbia with a population of 130,000, for example recorded 117,929 visits in 2016 alone. That year, the average waiting was 2 minutes and 51 seconds while the average transaction time was only 9 minutes and 11 seconds. Furthermore, a January 2017 public perception survey revealed that the CSC ranked high (4 points out of 5; 5 being the highest score) in citizens’ opinions regarding quality of communication and satisfaction with services provided.

By enhancing citizens’ access to government services and designing service delivery mechanisms that cater for all sections of society, including vulnerable groups, CSCs can also be instrumental in fulfilling essential human rights and reducing corruption.  
 
[[tweetable]]CSCs promote a citizen-centric perspective and have the potential to dramatically improve service delivery.[[/tweetable]] Therefore, they are central to the good governance agenda. Has your city, region or country recently introduced CSCs?

[1] CSCs are also known by other names such as Citizen Service Points, Citizen Assistance Service Centers, Single Window Centers, One-Door Service Centers, etc.

Power to the Plan. Guest Post by Clare Leaver, Owen Ozier, Pieter Serneels, and Andrew Zeitlin

19 hours 22 min ago

The holidays are upon us. You might like to show off a bit by preparing something special for the ones you love. Why not make a pre-analysis plan this holiday season? You’re thinking, I do that every year, but we want to tell you about a new twist: using a dash of endline data!

Make a *what* this season?

Only slightly-less-well-known than the menorah, yule-log, and festivus pole, the pre-analysis plan is fast becoming a tradition. The merits and costs associated with such plans have been much-discussed, for example by Olken (2015) and Coffman and Niederle (2015). A well-agreed-upon merit of these plans is to keep various research misdeeds (of a p-hacking flavor) in check. (In line with your obvious goal for the holidays, not being naughty.) So, if you are feeling up to the task, how do you do it? A pre-analysis plan has many ingredients. Christensen and Miguel’s 2018 JEL article provides detailed guidance, but in this blog post we focus on a decision of under-appreciated importance: how to test hypotheses. Better still, we provide a recipe (and, as with any good cookbook, a couple of nice pictures to enjoy in case you don’t get a chance to try this yourself.)
 
What about what to test?

Decisions about what outcome to examine, and what hypotheses to test for that outcome, are of course important, but not the focus of this blog. These 'what' questions are typically guided by theory, policy relevance, and available data. They include an economic statement of the hypothesis, a choice of outcome variable and treatment, and a statement of the relevant null against which to test.
 
Didn’t we already know how to test?

No, you see. In economics, much of the thinking about the 'how' question has focused on choices of covariates and subgroups (see for instance Belloni, Chernozhukov, and Hansen, as well as the previously blogged Fafchamps/Labonne and Anderson/Magruder papers).  But that is not all there is to choose. Choices of test statistic are equally important for power, as Athey and Imbens (2017) recently discussed. Guidance is less well-established for researchers wishing to choose test statistics. This is where we come in.
 
Don’t you usually study development economics?

Yes, and that’s what led us here. In a recent experiment that tests the recruitment, effort, and retention consequences of pay-for-performance schemes in Rwandan education, we tried a relatively new approach: using blinded endline data to make these decisions. (For an earlier implementation of a similar idea in political science, see Humphreys, de la Sierra, and Windt.) The study allows us to test for pure compositional effects of (advertised) pay-for-performance contracts on the applicant pool, as well as effects on the characteristics and value added of placed teachers; because we apply a second randomization, it also allows us to compare the effort-margin response of these teachers to their realized contracts. We wrote down a simple theoretical model to help us understand these hypotheses, registered the trial, and then turned to blinded endline data to decide how to implement tests of these hypotheses.
 
Oh, do tell!

Well, the details of our experiment are not our focus here, so we’ll mention just enough to put our analytical approach in context -- full details are available in our registered pre-analysis plan. The experiment is a two-tiered randomization. At the advertisement stage, we randomized job openings for civil service teaching positions to either receive pay-for-performance (“P4P”) or fixed-wage contracts. This was randomized at the (district) labor-market level. Then, after these teachers were placed in schools, we re-randomized contracts at the school level for both new recruits and incumbent teachers (buying out recruits' expectations with a universal recruitment bonus; this second re-randomization is inspired in some ways by the design in Karlan and Zinman’s “Observing Unobservables” paper). This design allows us to compare value added among teachers recruited under different contracts, but who teach in the same contract -- disentangling the compositional and effort-margin consequences of performance contracts. 
 
Okay, fine. What part of that will help with this holiday project?

Our blinded pre-analytical work uncovered two decision margins that could deliver substantial increases in power: changing test statistics used and putting structure on a model for error terms. Because the value of these decisions depends on things that are hard to know ex ante -- even using baseline data -- they create a case for blinded analysis of endline outcomes. We argue that there are circumstances in which this can be done without risk of p-hacking, and in which the power gains from these decision margins are substantial.
 
 
THE RECIPE (be sure to have your apron on; this is where it gets serious)
 
How can blinded data be used to assess power against specific alternative hypotheses? Consider, for example, a hypothesized additive treatment effect that is the same for all units in the sample. While the details of our experiment meant that we followed slightly different recipe variants for each of our outcomes (always have some caveats!), here is a general recipe:

1. HOW MANY PEOPLE ARE YOU PLANNING FOR?
 
(Ideally): If using data from only one arm of the study, such as the comparison arm, bootstrap a sample out of the available data, in order to work with a sample of the same size as the eventual analysis, and nest steps 2-3 below within repeated bootstraps. Otherwise, begin with the pooled data from all study arms, blinded. 
 
2. PREHEAT OWEN TO DESIRED NUMBER OF SIMULATIONS, THEN BAKE
 
For each of R simulations, r = 1, … R :

2a. Draw a feasible vector of treatment assignments, T_r.


2b. Apply the hypothesized treatment effect to the data to obtain outcomes Y(T_r). This delivers a simulation of the data that a researcher would have in hand, if the hypothesized model were correct.

2c. Calculate the proposed test statistic(s) for this simulation.
 
2d. INGREDIENT SUBSTITUTIONS ARE POSSIBLE

Make the accept-reject decision for this simulation:

  • If you are using an analytical distribution for testing (Z, Student’s t, Chi square, etc.), use that as the basis of your accept-reject decision.
  • If using randomization inference (as we are), the accept-reject decision for this simulation should be based on comparing the test statistic (from Step 2c) to the distribution of that same test statistic that a researcher conducting RI would have computed, if they held the presently simulated data in hand. So, for each of P permutations, draw yet another alternative treatment assignment but keep the data, Y(T_r), generated by treatment draw r. Calculate the test statistic(s) of interest for that permutation p. Use the distribution that results from the P permutations to make your accept-reject decision.  

 
3. LET COOL BEFORE SERVING
 
Power against the specific alternative hypothesis is approximated by the share of rejections across the R draws of the treatment assignment used to generate simulated data.
 
4. Add additional caveats; season to taste.
 
Caveats?  Do you have any favorites?

Sure. For example, notice that if you begin with all study arms of pooled, blinded data, then these data are a good simulation of the distribution of outcomes under control *only* if the sharp null of no treatment effect for any unit is actually true in the experiment.  Otherwise, the fact that they embed a mixture of potential outcomes from different treatments will make this an inaccurate representation--more so the more the treatment changes the distribution of outcomes; bootstrapping up from just the comparison arm might have been better.  On the bright side, under the sharp null, this would produce precisely the randomization inference distribution that will eventually be used.  Thanks to Macartan Humphreys for discussion of this point, in relation to this recent blog by Cyrus Samii.
 
Sounds delicious!

See? Easier than you thought. What kinds of things can be learned from such an exercise? (What is the nutritional value?) We illustrate this with two examples, with full details of each provided in our Pre-Analysis Plan

RESULT 1:  Kolmogorov-Smirnov (KS) tests can be better powered than OLS t-tests by a factor of four, even under additive treatment effects.
 
A first application for us is the effects of the advertised (randomized) contract terms -- P4P or fixed wage -- on applicant quality, measured by teacher training college exam scores.  Because hiring is (thankfully) not at random from the distribution of applicants, we knew from the outset that mean application quality was not the most policy-relevant statistic, so we planned to use a KS test to test for differences in distributions (which we might map through alternative hiring rules to potential qualities of hires). But power to detect differences in means remained important to us. This left us with a question: if the truth were an additive treatment effect (subject to exam scores being bounded between zero and 100 percent), would an OLS t-statistic outperform a KS test on these outcomes?
 
The answer, presented in Table 1 below, surprised us. Simulated rejection rates were much higher when using a KS test, even when the hypothesized treatment effect was additive. Because there are no comparable 'baseline' applications, we could not have learned this without access to endline data.
 

Table 1. Power of OLS and KS test statistics against changes in mean exam scores of applicants, for simulated treatment effects equal to 1, 2, 5, and 10 percentile ranks for the candidate at the median of the blinded data.
 
Will my plan turn out this way?

Maybe; the relative power of KS to reject additive treatment effects is not unique to our setting. As an example, it is easily shown that KS rejects an additive treatment effect at a rate higher than OLS when control outcomes are log normal.


Figure 1. OLS is more powerful with normally distributed errors, KS with lognormal.

 
For more general cases, the lesson we take away here is that the consequences of the distribution of outcome data for the relative power of alternative test statistics may be large and hard to anticipate.
 
We looked at data from Bruhn and McKenzie (2009), and saw that departures from normality are common across typical outcomes in development:
 

Figure 2. Quantile-quantile plots against normal distributions.

 
See also Rachael Meager’s approach to non-normally distributed microfinance profits. So what kind of outcome distribution are you cooking with? That’s for you to find out.
 
Yes, but my outcomes are normally distributed.  What is this recipe doing for me?

Ah yes. Traditionalists like to focus on cooking classic dishes.  We understand.  Read on!
 
RESULT 2:  Linear mixed-effects models sometimes outperform alternatives by expressly modeling unobserved variation.
 
Remember how machine learning is a way of getting a better fit using observables?  Imposing structure on error terms is a way of getting a better fit on the *unobserved* sources of variation.  That structure can take many forms: it can relate to the correlations between units, the distribution of residuals (normal? pareto?), or both.  Imbens and Rubin (2015, p. 68) observe that test statistics derived from structural estimates -- for example, expressly modeling the error term -- can improve power to the extent that they represent a "good descriptive approximation" to the data generating process. Blinded endline data allowed us to learn about the quality of such approximations, with substantial consequences.
 
In our setting, when we turned to look at effects on student outcomes, we intended to use a linear model (y = x beta + epsilon, but a little longer).  But there were still a number of potential correlations to consider: some students are observed at more than one point in time; each student has multiple teachers, and schools may have both incumbents and teachers recruited under a variety of contract expectations. Linear mixed-effects (LME) models provide an avenue for implementing this.
 
Our LME model, which assumes normally distributed error terms that include a common shock at the pupil level, delivers an estimator of the effect of interest that has a standard deviation as much as 30 percent smaller than the equivalent OLS estimator.  Because normality is a reasonable approximation to these error terms, the structure of LME allows it to outperform traditional random-effects. The gains from LME are conceptually comparable to an increase of 70 percent in sample size (because the square root of 1.70 is about 1.30 - and we’re the sort of people who get excited about square roots)!
 
 
SOME PARTING THOUGHTS (before you go out shopping for ingredients)
 
Is there something in this recipe my third cousin might find disagreeable?

Of course! This approach is not without risks. Some of these apply in other circumstances, too. For example, even when researchers submit pre-analysis plans based on baseline data only, they commonly have at least a qualitative sense of some issues, like compliance, that may inform choices. But some concerns are specific to the use of endline data. When the distribution of an outcome is known in one arm, even blinded, pooled data can allow researchers to update their beliefs about the treatment effect on a particular outcome; David McKenzie and Macartan Humphreys discussed this in a blog post and comments in 2016 here. There are likely to be solutions to these issues, such as registering outcomes prior to endline, using the blinded dataset only to inform the how question, or using data from a single treatment arm rather than pooled data. 
 
What have we learned?

Endline data are often far from normal and correlation structures across units are hard to know ex ante. A blinded endline approach can be a useful substitute for tools like DeclareDesign in cases where baseline data, or a realistic basis for simulating the endline data-generating process, are not available.
 
There is broad consensus that well-powered studies are important, not least because they make null results more informative. Consequently, researchers invest a lot in statistical power. Our recent experience suggests that blinded analyses -- whether based on pooled or partial endline data -- can be a useful tool to make informed choices of models and test statistics that improve power. 
 
 
Don your ugly sweater. On your marks, get set, bake!
 
(and over to someone else for dessert)
 
Thanks to Katherine Casey, Dean Eckles, Macartan Humphreys, Pam Jakiela, Julien Labonne, David McKenzie, Berk Özler, and Cyrus Samii, for helpful conversations and comments as we developed this blog post.
 
 

 

A light-touch method to improve accurate reporting of IDP’s food consumption

20 hours 39 min ago

To design effective and durable relief programs for refugees and internally displaced people (IDPs), it is essential to understand the nature and context of the challenges the people living in these situations face. That’s why we have recently started to measure consumption and estimate rates of poverty among displaced populations. Through understanding the most acute challenges that vulnerable populations face, relief can be targeted to where support is needed most.

Working in such demanding circumstances poses challenges. In a recent survey of IDPs in Somalia, 45 percent of IDP households reported food consumption below the survival rate, even in the short term. About 80 percent reported food consumption below levels that allow normal physical activities without negative health impacts.

The rationale for studying IDPs in Somalia is that they are living in extraordinarily harsh conditions. We worried, however, that the peculiarly low rates we observed may reflect misreporting and measurement errors. For example, respondents may wish to hide what they have fearing that it will be stolen. Or respondents – especially the ones depending on food aid – may expect that reporting lower consumption could lead to more aid. If this is true, it drastically undermines the quality of the data and our ability to design effective programs based on the data.

Given the sensitivity of the situation, we wanted to find a light-touch method for improving the accuracy of such surveys. To understand whether misreporting contributes to the very low levels of consumption, we designed a survey experiment as part of an IDP survey for selected South Sudanese IDP camps. While we measured consumption with traditional methods for half of the surveyed population, the other half was given a bundle of nudges that stressed on the need for accuracy in the reporting:

  1. We instructed the interviewer to thank the respondent for the participation while stressing how important accurate information is to understand the situation in South Sudan.
  2. We presented the respondent with a short vignette in which one person lies to another and ask the respondent to indicate whether the person did the right thing. By encouraging the respondent to think about the value of honesty, we hoped to improve accurate reporting, as shown in other studies.
  3. Finally, we introduced consistency checks by asking about consumption for broad food categories before item-specific consumption (e.g., have you eaten any grains in the last week) and double checking when people reported zero consumption. This form of investigative probing puts a higher salience on reports indicating zero consumption.
We expected this procedure to result in higher consumption reporting for households that otherwise report very low consumption. We investigated the impact of these nudges on four measures of food consumption: the number of consumed items, the consumed quantity in kilograms, the monetary value of consumption and consumed calories. We isolated the impact of the nudges relative to the survey population receiving the standard questionnaire. But because of our hypothesis indicating that the poorest households will increase reporting most when subject to the nudges, we estimated the impact depending on how poor households were.



Confirming our expectations, we found that especially households with lower consumption reported significantly higher consumption when being subject to the nudges. Our light-touch change in the questionnaire shifts 7 percent of respondents above the threshold of recommended daily intake, providing further indication that misreporting existed. Interestingly, we also find that the new interventions do not show significant effects among non-IDP populations, known to be less dependent on food aid. Furthermore, the treatment is more effective for IDPs previously relying on aid, thus, having stronger incentives to misreport.

Due to the low costs, this light-touch intervention can be easily implemented in surveys to improve accurate responses when incentives to misreport exist. Yet we believe that questionnaire design can be substantially improved if tailored and tested for a specific context before the implementation of the survey. Additional research could also help to disentangle the impact of each individual approach within the bundle, and ideally propose additional interventions.

Lessons from Malaysia: Linking government spending to performance

1 day 4 hours ago
Outside the Ministry of Finance of Malaysia where the National Budget Office operates. Malaysia’s experience in ensuring government spending contributes to better public services through reforms like performance-based budgeting is a learning point for other countries. (Photo: Phuong D. Nguyen/bigstock) Across the world, political leaders have sought to show how public spending contributes to concrete results like better public services, which citizens can experience and benefit from. Coupled with a steadily growing number of channels through which citizens can communicate their “voices,” political leaders are facing increasing pressure to do more with less resources.

In this context, how can civil servants and leaders holding office, particularly the ones who prepare budgets, manage this challenge?

In Malaysia, public finance specialists have turned to a sophisticated reform called “performance-based budgeting” to link the allocation of budgets with performance. This aims to shift the conversation from “How much did you spend?” to “How well did you spend it?” or “What did you achieve with it?

While the budget process can be a messy negotiation among competing interests, performance-based budgeting strives to be a more rational approach that links budget allocations to agreed targets and outcomes.

However, after several years of designing and implementing its performance-based budgeting reforms, Malaysia’s experience has proven mixed. On the one hand, it has helped integrate the previously disconnected national planning and budgeting processes under a unified performance framework. Yet, the tangible impact on service delivery in the country has been difficult to see.

For example, the Malaysia Ministry of Finance has since 2017 requested line ministries to link budgets to high-level national strategic outcomes found in the 11th Malaysia Plan. This approach represents an evolutionary step in Malaysia’s implementation of performance-based budgeting and is an example of how a country can successfully link high-level national strategies to specific budget programs and activities by using an integrated results framework. This was instrumental in enabling the government to re-orient budget preparation toward the achievement of clearly defined policy outcomes. However, there has been limited reporting on performance and little evidence that policy decisions were improved as a result.

Finding a credible way to assess the quality of spending and to make sure that all public actors are aligned remains important.

Public officials, therefore, need ways to discover which programs are working and which are not, and reallocate funds to those that merit their support. Moreover, governments need new ways to communicate for where money is going, for what purpose, and what it is expected to achieve. This becomes ever more important when there is a shift in political direction and policy priorities.

So, where does this leave us? Performance-based budgeting in many countries has been overly ambitious, and as a result difficult to administer. That does not necessarily have to be the case. There are insightful lessons from global experience that one can draw upon. Rather than throw out their efforts altogether, countries can adapt performance-based budgeting to new circumstances and fresh understanding of their administrative capacity and policy priorities.

The story of Malaysia’s experience is not yet fully written. The World Bank’s 2018 report on “Budgeting for Performance in Malaysia” highlighted a few actions that policymakers could consider to build a better foundation for linking budgets with performance and responding to citizen demands. Some of these actions include generating:
  •  Encouraging timely and accurate reporting on performance by ministries when and where it is most relevant
  • Developing the technical capacity to evaluate performance information and presenting it in ways helpful for senior level decision-making
  • Stimulating demand for performance information possibly by linking it to individual and institutional recognition/reward systems.  
In Malaysia, some first steps to improve performance-based budgeting have already been taken. The National Budget Office hosted a roundtable discussion with line ministries, think tanks, academic institutions, and international experts in August.  This offered an opportunity for officials from across the public administration to consider some of the lessons and challenges to assessing performance.

While one meeting is insufficient to agree on a new direction, participants did agree that improving the quality of spending should be a priority and that by working together it is possible to develop a more performance-oriented culture for national budgeting.

The new year provides an opportunity to think strategically about the 2020 budget process so that it contributes to transformations in public services for the benefit of all citizens.  For Malaysia and other countries, this is an important first step to a better future.

A few catch-up links

1 day 13 hours ago
Our links are on break until the new year, but here are a couple of catch-up links now our job market series has finished:
  • BITSS had its annual conference (program and live video for the different talks posted online). Lots of discussion of the latest in transparency and open science. Includes a replication exercise with all AEJ applied papers: “69 of 162 eligible replication attempts successfuly replicated the article's analysis 42.6%.  A further 68 (42%) were at least partially successful.  A total of 98 out of 303 (32.3%) relied on confidential or proprietary data, and were thus not reproducible by this project.” And slides by Evers and Moore that should cause you to question any analysis done using Poissons or Negative Binomials.
  • At the BITSS conference, Andrew Foster also gave an update of the JDE’s pilot of registered reports/pre-results review. Some points he noted:
    • They see this process as potentially encouraging people to take on riskier projects where there are states of the world in which the interventions might not work, or where there is a chance that someone else might scope the paper by doing something similar before you are done – so the insurance function could be useful.
    • To date they have had 21 submissions, of which 2 have been accepted, 10 rejected (in an average of 6 weeks), and 9 are under review. The main reasons for rejection are i) concerns that a null result will be imprecise or uninformative; ii) power calculations that seem too over-optimistic or insufficiently justified; iii) papers that fail to adequately justify what the contribution is to the literature – making clear that this is not just submitting your pre-analysis plan, but working hard as to make clear why we should care about the answer; and iv) not providing sufficient detail on research design.
    • He noted a couple of things that differ from registered reports in psychology and other sciences are i) the much longer timelines of many econ studies and all the associated implementation issues and delays outside the controls of researchers this brings; and ii) that researchers may want to avoid too much publicity about ongoing studies – something I have previously blogged about, and which I am pleased the JDE is being sensitive too.
    • He reiterated that they see this being of particular usefulness in helping young researchers, and that they do not want to close the door to people taking accepted stage 1 proposals and trying top general interest journals with the paper first (but they may at some point put a statute of limitations on how long you have to do this)
    • They will make clearer going forward that they will only consider papers in which at most baseline data has been collected at the time of submission – in the early stages they have had some submissions where data are being collected but not yet analyzed.
  • Vox talks with Mushfiq Mobarak on why programs fail to scale.
  • Dave Evans takes on the Economist’s claim that too often teachers are the problem (on the Let’s Talk Development blog).
  • Job opening with me: I am looking for a field coordinator with experience in running randomized trials and/or in supervising surveys and field implementation to work on a new project on migration from the Gambia. If you are interested, please see the job announcement for more details and apply here.

Calling all innovators! Help achieve ‘Good ID’ for the world’s invisible billion

3 days 6 hours ago
© Daniel Silva Yoshisato

An estimated one billion people around the world – half of which are in Africa – lack official identification to prove who they are. And many millions more have forms of identification that cannot be reliably verified or authenticated. More than 450 million of these are children who have not had their birth registered. Women and the poor in low-income countries are less likely to have official identification.

[[tweetable]]Without a trusted and secure way to prove their identity, the poorest and most vulnerable face challenges in accessing healthcare, education, and financial services, as well as opportunities that can improve their economic and social mobility.[[/tweetable]]

Take for example Miriam, a cross-border trader from Uganda, who makes her livelihood by buying and selling goods at markets on either side of the border with Kenya. Life was hard and risky for many women like Miriam who had no official proof of identity – let alone a passport. They had to cross borders irregularly to make a living, making them more vulnerable to exploitation, theft, and violence. In 2015, Miriam received her first national ID card through a mass registration that Uganda launched a year earlier. The following year, Kenya, Rwanda and Uganda entered into an agreement that recognized each other’s national ID cards as valid travel documents.
 
These changes transformed Miriam’s life. With an ID, she was able to open a bank account and cross the border through regular channels, which has helped her to grow her business. This has also reduced the costs of trade and enabled her to send her goods to other parts of East Africa. Because Miriam can reliably assert her identity, it is easier for her to access financial services, to obtain a mobile phone, to take part in the digital economy – opportunities that were out of reach before.
 
Mission Billion challenge
 
[[tweetable]]While there are tremendous benefits associated with digital identification, there are also data protection and privacy risks when it is not supported with sound legal and regulatory foundations and intentional design.[[/tweetable]] This is why the World Bank Group’s Identification for Development (ID4D) initiative has launched the Mission Billion innovation challenge.
 
The aim is to tap on the world’s innovators for new ideas to tackle some of the toughest challenges developing countries face when introducing digital identification and civil registration systems, in particular, protecting privacy and empowering people to control their personal data. [[tweetable]]The Challenge offers cash prizes totaling US$100,000 with the top prize of US$50,000 for the most promising solutions that are practical and relevant for developing countries[[/tweetable]] – which face circumstances such as low or unreliable connectivity or low levels of literacy.
 
Promoting ‘Good ID’
 
In 2014, the World Bank Group established the Identification for Development (ID4D) initiative, which helps countries to realize the transformational potential of digital identification and civil registration. The initiative already provides technical assistance and financing to more than 40 countries, and almost $1 billion have been mobilized for this work, working closely with partners such as the Bill & Melinda Gates Foundation, the Australian Government and the Omidyar Network, other development partners and the private sector.

Beyond reaching the invisible billion, the partners are committed to also strengthen privacy and provide people with control over their data, along with inclusion and choice. These are the tenets of the ‘Good ID’ movement, which promotes digital identification systems that maximize developmental impact while minimizing the risks.
 
The ID4D initiative continues to proactively walk the talk of the ‘Good ID’ movement: from bringing together a community to develop the 10 Principles on Identification for Sustainable Development which is a guiding framework that outlines what ‘Good ID’ looks like in practice; to supporting the development of comprehensive legal frameworks of data protection and privacy in our client countries; to helping countries adopt inclusive consultative practices for marginalized groups, including the disabled in the design and operations of digital identification systems; and publishing knowledge resources and advising government to adopt context appropriate and open standards with the aim of preventing vendor and technology lock-in.
 
Calling all innovators!
 
[[tweetable]]Digital identification is a key tool for ending extreme poverty and promoting the inclusion of the world’s invisible people.[[/tweetable]] This agenda will only gain pace, and the international community must keep up with this momentum, while also adapting in an ever-changing environment. While much has been done, much more remains. [[tweetable]]Mission Billion is an exciting opportunity to strengthen this work to realize the full potential of what ‘Good ID’ can accomplish.[[/tweetable]] However, we need your ideas to tackle these tough challenges. We call on all innovators, creative thinkers, engaged citizens and all those who are passionate about development to contribute to the Mission Billion Challenge, to help ensure that ‘Good ID’ is not only a principle, but also a reality for all.

Building safer roads through better design and better contracts

3 days 11 hours ago
Photo: Simply CVR/Flickr As part of the World Bank’s continued commitment to road safety, all Bank-financed road projects must now include specific measures to enhance safety standards and protect all road users—motorists, two-wheelers, pedestrians.
 
In that context. our ongoing road sector project in the Indian state of Tamil Nadu shows how relatively simple and affordable design improvements can make roads significantly safer, and bring other important benefits such as enhanced drainage and water conservation.
 
To illustrate this, let’s take a look at 10 key design features that have been included in the project:
  1. Treatment of highway sections passing through linear villages / semi-urban stretches with speed calming measures including signs and markings and active measures (rumble strips and speed humps), pedestrian facilities, drainage and paved parking, etc.
  2. Bus stops with ramps for passengers with disability, clearly marked out and channelized bus bays and other prominent signs and markings, active speed calming measures, pedestrian guardrails, etc.
  3. Combination of signage, metal beam crash barriers, rumble strips and hazard markers on all curves, embankments and approaches to bridges and cross-drainage structures, widening of all narrow cross-drainage structures so that entire roadway is carried on the structures,
  4. Improvement of all major and minor junctions with adequate signs and markings, channelization, traffic islands and improvement of crossroads up to 100 m away from the junction,
  5. Protection for all significant roadside hazards (e.g. electric utilities, trees) by crash-barriers,
  6. Use of illuminated raised pavement markers on center and edge lines, delineators, hazard markers, chevrons etc. to facilitate safe driving at night,
  7. On road stretches cutting through built-p areas, drain with covered footpath and use of paved tiles on the roadside for pedestrian / cyclist movement and parking,
  8. Environmental enhancement of cultural sites (e.g. temples) and community facilities (e.g. parks, ponds), rain water harvesting, tree plantation, shifting/removal and provision of new electrical poles and lines, water supply lines, etc.
  9. Treatment to side slopes and drainage, and
  10. Geometric improvements and overall quality of the highway
All these facilities combined increased construction costs by only about 10% ($100,000 per km)—a worthwhile investment in light of the safety and operational benefits.  However, implementing these would not have been possible without meticulous planning, a determined client, capacity building and learning from best practices in other countries, and an engineering, procurement, and construction contracting framework (EPC) with much higher ownership and accountability of the contractor.
 
The project consultants team included a road safety specialist responsible for flagging vulnerabilities, proposing relevant counter measures, and integrating them into the design of the highway. The International Road Assessment Program (iRAP) carried out a study to identify safety issues along the corridor, which was also used to inform the design of the project. To ensure these provisions are implemented, each is duly embedded in the scope of work of the contract. The EPC works contract required:
 
  • Road Safety Audit of all the design details that have bearing on the safety of users by an independent Safety Consultant. If the safety audit requires any additional work, change in scope will be instructed by the Authority Engineer;
  • Deployment of a Qualified Safety Officer and a Safety Supervisor available in the Contractor’s working team for the entire construction period;
  • Preparation and submission of a traffic management and safety plan covering safety of users and workers during construction;
  • Fulfillment of all required safety measures during construction as per the specifications of the Ministry of Road Transport and Highways;
  • Monthly submission of the filled-in Construction Safety Checklist;
  • Ensure safe conditions for the users and in the event of unsafe conditions, lane closures, diversions, vehicle breakdowns and accidents, follow relevant operating procedures;
  • Maintain and operate a round-the-clock vehicle rescue post to remove damaged vehicles and debris;
  • Report all accidents to the Police and to the Authority; and
  • Effect and maintain during the Agreement insurances to insure (a) the Contractor’s personnel and (b) any person against any damage, death or bodily injury;
 
The contracts also included the following provisions for ensuring effective implementation of the road safety measures:
  • If the construction work threatens the safety of users and pedestrians, the Authority Engineer can recommend suspension of whole or part of works. Until necessary rectifications are made, works will remain suspended;
  • Safety and traffic management is a paid item under the contract;
  • Time limits have been set for repair of damaged safety features such as road signs and markings, railing, parapets, crash barriers, pedestrian facilities, retaining walls, road lighting, removal of obstructions to sight, removal of fallen trees, etc. Authority Engineer will undertake site inspections to evaluate compliance; and
  • Provisional Certificate for substantial completion of works will not be issued if the project highway or any part thereof cannot be safely and reliably placed in operation.

Our infrastructure projects can help build many things—including stronger institutions

3 days 12 hours ago
Photo: Frederick Noronha/Flickr Working to finance major infrastructure projects, World Bank teams have seen time and again that the sustainability of investments depends ultimately on the efficiency and capacity of the agencies that manage them. 
 
For that reason, our interventions often have a dual goal: supporting high quality infrastructure, and, at the same time, supporting institutions’ efforts to modernize and become more efficient. That institutional development sometimes comes in the form of stand-alone project components that focus on modernizing processes, governance, and skills. But in other cases, infrastructure investment projects can also provide opportunities to initiate important institutional changes.
 
This is often the case with civil works contracts, and the Tamil Nadu State Road Sector project in India is illustrative of how contracting strategies implemented with Bank support helped a highway agency enhance its implementation capacity, the efficiency of its expenditure, quality of infrastructure, and system sustainability through significantly improved asset management.

Baseline: Low budget allocations; input-based contracts that place all risk and outcome responsibilities on the agency.
 
Circa 2000, the state’s highways department was managing a 18,375-km primary highway network. The average annual expenditure of $108 million covered less than 65% of the maintenance needs and left little for capacity expansion.
 
Contracts were oriented on specifying inputs that the contractor would provide based on the designs prepared by the agency. In the case of maintenance contracts, the agency typically provided plant & equipment and materials and specified labor requirements that contractors would provide. Works were carried out via traditional item-rate contracts where the agency specified a detailed bill-of-quantities and asked contractors to bid on those inputs; based on a detailed design and materials/labor estimate. The agency held all the risks related to change in actual quantities of materials used as well as any design changes.
 
Even as recently as 2011-12, $ 310 million was spent on upgrading thinly across 2,675 contracts and, nearly $76 million was spent on maintenance through 2,672 contracts! This highly-fragmented approach resulted in rapid road degradation and constant maintenance. These small-value item-rate contracts led to high transaction costs, offered limited scope for harnessing economies of scale/technology, and resulted in time and cost overruns. The improved/maintained stretches of highways were also of inferior quality as good construction equipment could not be deployed because of small sizes of the contracts. This approach also increased the workload of staff of the HD in terms of procuring, supervising and managing numerous contracts and the expenditure made little impact
 
Increment 1. Getting to scale – increased budget allocations and contract size.
 
The first road sector project encouraged the government to address the above issues resulting in a progressive increase in budget allocations and complete outsourcing of the maintenance works. It demonstrated the benefits of better project preparation, secured funding and large-size contracts.
 
A small Project Implementation Unit of the agency successfully implemented a $507 million program and upgraded 724 km of state highways through ICB contracts of size ranging from $50 to 150 million and covering 100 to 400 km and maintenance of another about 1,300 km of highways. The quality of these highways and, equally importantly, the improvement of an entire strategic corridor of 700 km were clearly perceptible and widely appreciated by all the stakeholders.
 
Increment 2. Contracting specifying outputs based on functional specifications and clubbed with longer maintenance period.
 
The second road sector project introduced Engineering Procurement Construction (EPC-lumpsum with 5-year performance-based maintenance post construction) contracts to upgrade 435 km of highways.
 
For these contracts, the agency specifies the output required, consistent with the country’s design guidelines. Contractors need more capacity and working capital to produce and implement an efficient design. The role of the agency starts evolving to that of a manager of quality and product. In this contracting modality, design risk is transferred to the contractor and thereby making it responsible for quality of construction, maintenance, and management of assets.
 
Another feature is that the agency’s transaction costs are significantly reduced, as there is no longer a need to do much of the detailing, measurement, and preparation of bills for various items of works.
 
The results so far of implementation of these works contracts have been encouraging. Almost all contracts are progressing well ahead of or as per schedule and nearing completion with no cost overruns.
 
Increment 3. Contracts specifying outcomes (Performance-based contracts) and innovations in financing (PPP).
 
The second road sector project further adopted better contracting approaches that encourage economies of scale, offer stronger incentives for performance, and bolster implementation capacity through harnessing the services of the private sector (e.g., Annity-based Build-Operate-Transfer and long-term Performance-Based Maintenance Contracts).
 
These are being implemented in several administrative blocks of the state so that several staff of the Highways Department receive hands-on experience. The performance-based maintenance contracts ensured that:
  • Maintenance interventions are thoroughly planned and implemented at the right time
  • Pavement failures such as ruts, cracks, and potholes are addressed in a time-bound manner
  • Monitoring of performance is carried out regularly on scientific basis
  • Emergencies are addressed immediately
  • Payments are made for providing a quality asset.   
Spurred by the positive experience, the Tamil Nadu Highways Department is mainstreaming these practices. About 3,000 km of non-project highways are now being maintained through performance-based maintenance contracts. The Highways Department also started procuring medium-value contracts for both capital and maintenance works. Consequently, the number of contracts that are procured has come down to 878 (year 2017-18) from 5,347 (year 2011-12), while the agency’s capacity has increased significantly: it is now managing a network of 29,000 km with a budget of $1.5 billion with fewer staff than 10 years ago. The ‘muscle’ developed in the use of modern contracting techniques, combined with initiatives to modernize HR and financial management, a range of governance initiatives to digitize the procurement process, as well as the development of scientific data-driven techniques to assess network quality and determine asset management priorities. These developments have come a long way in transforming the Department into an efficient, modern agency ready to meet the state’s aspirations,  including a programmatic approach to double-lane the entire 14000-km state highway network.
 

Why do people live in flood-prone areas? Reflections from Dar es Salaam

3 days 13 hours ago
Dar es Salaam’s growing population is increasingly at risk of flooding. Photo: Chris Morgan/World Bank

The Msimbazi River makes a volatile neighbor. With depressing regularity, the river breaks its banks and inundates houses built on its low-lying floodplains. During the 2014 rains, 600 houses were flooded in the riverine Kigogo Ward alone; thirteen of which were completely destroyed. Yet, as the floodwaters recede, people return.

“What is wrong with these people?” people often say. “They should not be there; they know it’s not safe!” Citizens, journalists, and policymakers, express disbelief that people relocated to safer parts of the city return to their former, flood-prone neighborhoods. So why do they do it?

Residents of these flood-prone areas are often among the poorest and most vulnerable. But they are not stupid. They make the best choices they can, given the constraints they face. It’s therefore important to ask a different question; what shapes their choices? Our ongoing research in Dar es Salaam suggests three interconnected factors: 

Lack of infrastructure can make safe locations hazardous.Eliza is an elderly resident of a flood prone ward. She built her house nearly 30 years ago, when the area was still mostly agricultural. In the rainy season, the land absorbed excess water. Over time, the neighborhood has become a dense, winding settlement. Land has become less permeable as housing structures increase. Drains often get blocked by garbage. To make matters worse, recently, some houses have been built in places that interrupt the path of rainwater runoff. Surging water now gets funnelled directly towards houses like Eliza’s, picking up garbage, debris, and human waste.

Eliza loves her house and values the position she has in the community as one of the first who arrived. She knows everyone; moving is unthinkable. Despite her upbeat demeaner, her anxiety about leaving these connections is revealed when she jokes that she would be mistaken for a witch if she went somewhere else. Many of the challenges she faces can be mitigated through improved management of infrastructure. So, the World Bank and the UK Department for International Development have partnered with the Tanzanian government to help flood-prone communities identify and prioritize infrastructure needs, as one of a set of coordinated activities to improve preparation and respond to climate related disasters under the Tanzania Urban Resilience Program (TURP).
 

Informal settlements with poor drainage infrastructure are particularly affected during the rainy seasons. Photo: Chris Morgan/World Bank

Lack of transport means that relocating requires finding a new job. Many people in flood prone areas walk to work. It may take an hour or more, but walking is free, and you can estimate the time it will take with confidence. People that live in the periphery not only spend hours on buses, but further rely on a boda boda (motorcycle taxi) to get from the main road to their plot.

Joseph currently rents two rooms in a flood-prone area, but he dreams of building his own house one day. He’d like to buy a nice plot in the periphery of the city, where the land is still cheap. But he knows that he wouldn’t be able to keep doing his current job if he ever managed to fulfil this dream.

The Tanzanian government has taken many important steps to address congestion in the city, including developing an internationally acclaimed Bus Rapid Transport (BRT) system that serves 160,000 passengers per day. But for the poorest, the BRT remains unaffordable. A commuter can expect to spend 26,000 Tsh a month on the BRT (return trip, five days a week). This is almost equivalent to the median monthly rent for a room in the city (Panman and Lozano-Gracia, forthcoming). 

Lack of affordable housing means high-risk areas are also cheap places to live. In flood prone areas, most tenants either pay month-to-month or three months in advance. In safer areas, pre-payment periods can be as high as one or two years. When owner-occupiers are expropriated and relocated, what happens to tenants? Without savings to pay rents in advance, they will have few options but to relocate to other equally precarious accommodation.  This may further feed into the cycle of vulnerable people returning to flood areas.

Living next to the Msimbazi River seems an almost hopeless proposition. Yet for many, there is little alternative. The Tanzanian government and its international partners are working to help those who have the Msimbazi as a neighbor a little less risky. 

Note: names have been changed for anonymity.

 

What can Netflix teach us about technology adoption?

3 days 15 hours ago

When video streaming services like Netflix, Hulu, and Amazon Prime offer a one month free subscription, they are offering potential users an opportunity to experience the benefits of having access to a wide range of entertainment options, weigh the benefits against the monthly subscription cost, and hopefully, promote adoption in the long run. Essentially, Netflix is providing us a short-run subsidy to promote long-run adoption. So, what can we learn from Netflix’s marketing strategy about promoting technology adoption in the field of development economics? We know that some technologies are experience goods and a one-time subsidy may promote experiential learning, leading to higher adoption in the long run. However, policymakers and practitioners often worry that providing large initial subsidies may set a wrong precedence, distort the expected price of a new technology and make people less likely to adopt and continue to use a technology once the subsidy is discontinued. What they are referring to is called reference dependence in prospect theory.

Given the competing effects of experiential learning and reference dependence, my job market paper asks whether short-run subsidies help in promoting technology adoption, and who benefits the most from them.  In a randomized experiment using Becker-DeGroot-Marschak (BDM) auctions, we provide farmers the opportunity to buy subsidized improved grain storage bags in India. Our study area covers 1429 households in 42 villages of the eastern state of Bihar in India. We find that using this technology for one year (or two agricultural seasons) has substantial food security benefits. We then conduct a second round of auctions and compare the changes in willingness to pay for technology among first and second-time (or experienced) buyers. We find a significantly higher willingness to pay for improved storage technology in the second round of auctions, along with strong evidence for experiential learning, but none for reference dependence. We further look at allocative efficiency and find that, interestingly, the largest beneficiaries of improved storage are the farmers with the lowest initial willingness to pay.

This paper builds on the work by Dupas (2014) and Carter et al. (2014) to look at the impact of one-time subsidy on later adoption of technology. Broadly, it makes the following three contributions:

Contribution 1: Quantifying the demand for and benefits of improved grain storage technology

Farmers in developing countries face potentially large economic and health costs due to the lack of access to proper storage methods for staple cereals. Smallholder farmers’ food security depends on reducing postharvest losses, getting better market prices for their grains, reducing toxic contamination of stored grains and being able to smooth consumption inter-temporally. Using BDM auction as a method for randomizing treatment assignment at the individual level allows us to directly elicit farmers’ willingness to pay for this new technology, and measure its impact. Among other outcome variables, we also test grain samples for aflatoxin - a toxic carcinogenic contaminant that poses a wide range of health risks including reduced immunity, low birthweight and stunting, among others. As shown in Figure 1, we find that using improved storage technology has significant health and food security benefits.

Figure 1: Impact of using improved storage technology on food security outcomes



Recent research suggests that farmers in developing countries seldom take advantage of inter-temporal arbitrage opportunities in the market due to credit constraints (Burke, 2014).  While credit constraints may certainly be one of the reasons for farmers’ under-utilizing arbitrage opportunities, our results suggest that lack of access to proper storage technology is also a part of the problem. We find that when given access to improved storage methods, farmers store for longer, and sell significantly more in the market than their peers in the control group.

Contribution 2: Examining the allocative efficiency of the subsidy

Using the auction design allows us to measure the impact of the treatment across the willingness to pay spectrum, and understand the allocative efficiency of the subsidies. We find that groups with low and medium initial willingness to pay derive the most benefit from using the improved storage technology. This is an interesting result because we tend to assume that unlike policymakers, individuals are aware of their private benefits and costs, and in the absence of credit or liquidity constraints, farmers who expect to receive the most benefits should have the highest willingness to pay for the technology. These results allow us to provide valuable inputs in terms of magnitude and targeting of subsidies needed to promote adoption to different groups of potential users. A policy that provides a low level of subsidy for technology may result in adoption only by individuals with high willingness to pay, who may not benefit as much from adoption. In such a case, a low level of subsidy might prove to be more expensive than a high level of subsidy, given the different user groups they target.

Contribution 3: Experiential learning versus reference dependence in technology adoption

This is an important question for policymakers who often have to decide between providing subsidies to promote technology adoption and allocating scarce resources to different welfare programs. As shown in Figure 2, our results suggest that experiential learning from a one-time use of the improved storage technology leads to around 26 percent increase in willingness to pay in subsequent purchase decisions.

Figure 2: Aggregate demand curve for improved storage technology (auction rounds 1 and 2)



Since the actual price paid for the technology is decided by a random draw (and is different from the willingness to pay estimate) in our design, it allows us to decouple the effect of experiential learning from reference dependence. We find no evidence of reference dependence supporting the idea that short-run subsidies can promote long-run adoption of any new technology that may be an experience good.

Our research suggests that experience drives adoption. After all, how many of us know people who discontinued using Netflix after their free one month subscription expired?
 

Ghana’s challenges: Widening regional inequality and natural resource depreciation

3 days 16 hours ago

The impact of growth on poverty in Ghana has slowed substantially over the years. Ghana’s largest fall in poverty, 2% a year, was experienced during 1991–1998. Between 2012 and 2016, the poverty rate declined by only 0.2% per year. The growth elasticity of poverty (percentage reduction in poverty for each percentage point in economic growth) has decreased, from −1.18 between 1992 and 1998 to −0.07 between 2012 and 2016. This may reflect the declining contribution of agriculture, in which the majority of poor households are engaged, the limited job opportunities for higher productivity in the services sector, and a largely capital-intensive industrial development.

In addition, Ghana has seen a persistent and increasing spatial inequality (Figure 1 ). Poverty rates have stagnated in the Volta, Northern, and Upper West regions and the absolute number of poor has increased. Poverty rates remain above 50% in the Northern, Upper East, and Upper West regions. Poverty rates also now vary widely across districts within regions. In the Northern regions, districts in the eastern part achieved significant poverty reduction while the western districts saw increase in poverty.

Figure 1: Concentration of Poverty across Districts

2000 2010

Sources: (Coulombe 2005) andGhana Statistical Service (2015).

The spatial inequities reflect both ecological conditions and disparities in service delivery. Agriculture remains the dominant employer in the three Northern regions, but the climate is not suitable for cocoa and some other cash crops. Farmers in these regions are mainly engaged in rain-fed, traditional subsistence agriculture: they use few modern inputs, receive inadequate extension services, and have limited access to irrigation. There is also a substantial difference between poor and rich districts in access to electricity, markets, and roads. And unsustainable farming practices have led to lower soil quality, higher erosion, and lower agricultural output in these regions.

In addition, rainfall patterns have become even more volatile, and crop failure is more frequent. Mean yearly rainfall fell from 11.7 mm per year in 1901–1910 to 6.3 mm in 2011–2015 in the poorest third districts. The northern savannas, where subsistence agriculture is the main employment for poor households, have also been affected by frequent droughts and flooding accompanied by high temperatures and intense heat (Figure 2). Catastrophic floods in 2007, which affected 317,000 people, were followed immediately by drought—indicative of the high variability in climate and hydrological flows in northern Ghana.

Figure 2: Drought Severity in Ghana

Number of floods (1985-2011) Drought severity (1901–2008)

Source: Hidden Dimensions of Poverty Dataset (HDD).

Climate variability and environmental degradation are also seriously affecting the urban poor, mining, and coastal communities. Flood risk has become one of the most pressing problems in Accra, where the number of those who live in flood-prone informal settlements has grown. Fast growing artisanal and small-scale mining (ASM) operations, fueled by destructive practices and weak government controls, affect 75% of the country’s water courses and contribute to deforestation. Marine fish stocks are being adversely affected by domestic and industrial waste, pollution from fertilizers, and mining. Coastal communities face erosion and other risk from rising sea levels.

Sustaining growth over the long term will require Ghana to invest better and more in its natural resources. Ghana has lost half its forest cover since 2000, soil erosion is widespread, fish stocks are declining, and the artisanal mining sector has resulted in widespread pollution of waterways. These impacts are largely due to an inadequate regulatory framework and weak enforcement—increasing acreage to cocoa production reflects limited incentives for rising productivity versus clearing new forests; overfishing is affected by a lack of transparency in the licensing of commercial trawlers, while illegal mining has persisted and expanded. The limited attention to natural systems has left Ghana susceptible to climate change as has been seen from the increasing frequency and impact of droughts and flooding that disproportionately affect the poor.

 

This blog is the second in a three-part series to present the key findings of the Systemic Country Diagnostic for Ghana, Priorities for Ending Poverty and Boosting Shared Prosperity, along three areas: achievements, challenges and opportunities and pathways for the future.

Please see the first blog in the series, Ghana’s growth history: New growth momentum since the 1990s helped put Ghana at the front of poverty reduction in Africa

Complements or Substitutes? State Presence and the Power of Traditional Leaders -- Guest post by Soeren J. Henn

3 days 22 hours ago

This is the twentieth in this year's series of posts by PhD students on the job market.

When we study how institutions affect development, we often focus on the characteristics of national institutions, such as whether a country is democratic, protects property rights, or has inclusive institutions. Yet villages in many developing countries contain almost no trace of these national institutions. Instead, life in rural villages is typically shaped by local leaders. In Sub-Saharan Africa, traditional leaders (namely village chiefs) are an important local institution. They control resources – most notably land – collect informal taxes, influence voting, and implement local development projects. The local importance of traditional leaders also concerns the nation-state. As national institutions attempt to increase their presence in the countryside, traditional leaders could act as complements or substitutes to state presence. They could either cooperate or compete with the public good provision by the state and thus enhance or weaken it.
 
In my job market paper, I study how local leaders and the national state interact. Specifically, I estimate the effect of state presence on the power, legitimacy, and effectiveness of village chiefs. In other words, do village chiefs become more or less influential when the national state is absent (or present) and how does this affect their public good provision? A key institutional feature in this context is that African states have used different strategies of dealing with traditional leaders that primarily vary on one dimension: whether chiefs are formally integrated into the state apparatus. I investigate how this institutional choice shapes the relationship between state presence and chiefs.


Studying the effects of state presence is challenging for two key reasons. i) It is difficult to find subnational data on the reach of national institutions that is comparable across countries and ii) state presence is typically correlated with other variables, making it hard to obtain causal identification. I use a spatial regression discontinuity design to overcome these challenges.
 
First, I measure the presence of the national state by looking at how far away a village is from its administrative headquarters, the state or district capitals. The relevance of this measure is intuitive in the context of the work performed by state institutions. Consider a police station, for example. Two main responsibilities of the police are patrolling and responding to emergencies. Both tasks will be easier to perform closer to the police station. Police will take a longer time responding to emergencies farther away and patrolling areas more distant from the police station is more difficult. This relationship between distance and the ability to implement policies is at work for most state agents, such as tax collectors, or officials tasked with overseeing infrastructure and service delivery. Indeed, I show in my paper that in 25 African countries, the distance to state and district capitals is strongly negatively correlated with a range of outcomes associated with state presence and capacity. Yet, the endogeneity concern remains. Distance to the state is correlated with other variables such as rurality or access to markets.
 
To obtain random variation in state presence, I compare villages at internal administrative borders. I look at villages within the same country, but within 5 kilometers to an administrative boundary, where one set of villages is far from their administrative headquarters and the other set is close. The intuition for this geographic regression discontinuity design can be seen in Figure 1, which shows state boundaries in Nigeria. The two villages (marked by triangles) should be fairly similar in terms of their characteristics, but they are in different states and have different distances to their respective state capitals (marked by squares). Whereas people, goods, and services can move across this internal administrative boundary with relative ease, the state — in the form of state administrators — is unlikely to cross it, thus creating a sharp discontinuity of state presence at the state border.
 


To implement this empirical strategy, I created an original data set of all administrative boundaries and headquarters in 25 African countries. I also track their changes over the last 20 years. The resulting data set contains over 5,500 administrative units in 47 administrative divisions and is available for other researchers on my website. I merge this data with geocoded responses to the Afrobarometer and Demographic and Health Surveys which contain measures on the local power of traditional leaders and public good provision, some of which traditional leaders often contribute to (e.g., schooling and access to water) and others where they have little input (e.g., healthcare). Restricting my sample to cases within 5km of an internal administrative boundary and with observations on both sides leads to a sample of 635 villages in 210 border regions for the Afrobarometer and 2,600 villages in 650 border regions in the DHS data (6-10 respondents per village) .
 
I find that the effect of the nation-state on village chiefs hinges critically on whether or not a country’s constitution formally integrates village chiefs into the country’s institutional structure. In countries in which village chiefs are integrated into national institutions (such as Ghana or South Africa), stronger presence of the state causes village chiefs to be more influential and to provide more public goods. By contrast, in countries in which village chiefs are not institutionalized (such as Mali or Nigeria), more state presence actually causes chiefs to be less influential and to provide fewer public goods. That is, if village chiefs are not integrated nationally, then national institutions and local institutions actually works as substitutes rather than complements.


 
The institutionalization of chiefs has surprising results on public good provision. Naturally, public good provision decreases with distance to the state. However, when chiefs are institutionalized, they are less able to compensate when the state is weak because they are themselves less powerful. As a result, public good provision (i.e., schooling and bore holes) decreases three times faster with distance to the state when chiefs are integrated nationally. My findings suggest that the institutionalization of chiefs is beneficial to public good provision when the state is present but counter-productive when the state is weak.
 
A key concern is whether there is a confounder that drives both whether traditional leaders are integrated via a country’s constitution and whether chiefs are complements or substitutes to state presence. I collect a range of historical, geographical and contemporary country level variables – such as colonial investments or the centralization of historical institutions  – to test this concern. All of these possible determinants of the institutionalization of traditional leaders neither confound these heterogeneous findings nor independently explain the local state-chief relationship.
 
The results have implications for the relationship between traditional leaders and state presence at the local and national level. At the local level, policy makers increasingly look to traditional leaders to support local efforts such ending child marriage or combating norms about Ebola. My findings can help policy makers understand which village chiefs are more influential and how cooperation with them (by the state or NGOs) will impact their local power and effectiveness. At the country level, the results shed light on why traditional leaders remain influential in some successful states (e.g., South Africa) in contrast to predictions by modernization theory while they have lost local standing in others (e.g., Rwanda). My work further adds to our understanding of the incentives motivating politicians and traditional leaders when they bargain over institutional arrangements between the state and traditional authority.
 
Soeren J. Henn is a PhD Candidate in Political Economy & Government at Harvard University. More details about his research can be found on his personal webpage.
 

Breaking down the barriers to mobilizing sustainable investment

4 days 6 hours ago
Closing Plenary of the Investor Forum. © World Bank

“Private capital is often an important source of sustainable finance. Public finance alone may not be sufficient to meet the demands for sustainable finance as the global economy continues to grow and poses increasing burdens on our resources and ecosystems. Mobilizing private investment in areas such as sustainable infrastructure, sustainable technologies and business model innovations, among others, can deliver substantive environmental, social, and economic benefits.”

This summary from the G20’s Sustainable Finance Synthesis Report was at the heart of the discussion at the Investor Forum, which was held on the sidelines of the G20 Summit in Buenos Aires in November. The event – hosted by the World Bank and the Government of Argentina – brought together investors holding over $20 trillion of assets as well as stakeholders and representatives from G20 governments. The goal was to identify steps for boosting long-term, sustainable, private-sector investments that tackle development challenges and promote economic growth in parts of the world that need it most.

The World Bank report prepared in the lead-up to the Forum highlighted that there is broad consensus that private sector investment can play a key role in addressing global development challenges. But there is also agreement that new solutions are needed to overcome obstacles to investment, particularly in infrastructure. As World Bank President Jim Kim put it when he addressed the G20 Leaders in Buenos Aires - [[tweetable]]“Aid alone won’t get us close to achieving the Sustainable Development Goals – the costs are in the trillions, but official development assistance is in the billions. We have no hope of ending poverty without private sector investment.” [[/tweetable]]

The list of leaders who addressed the Investor Forum is testimony of their support to mobilizing private sector investment and the importance that is increasingly being placed on partnerships with these investors. Speakers included Argentine President Mauricio Macri, Canadian Prime Minister Justin Trudeau, Japanese Deputy Prime Minister Taro Aso, European Commissioner Pierre Moscovici, and the UK Chancellor Philip Hammond.

[[tweetable]]When it comes to financing sustainable development we all know that we must move quickly.[[/tweetable]] But the Forum was not just about speeches. We initiated important discussions on how we are going to work together to move capital at scale. This is particularly important when it comes to using the power of invested capital to tackle climate change and to bring sustainable or “Environmental, Social, and Governance (ESG)” investing into the heart of capital markets.

The discussions focused on several key dimensions of sustainable investment, including fiduciary duty; avoiding short-term horizons; rationalizing reporting requirements; and impact investing. Clear, practical recommendations were made to drive the sustainable investment agenda.

  • For the “Fiduciary Duty” discussion led by Fiona Reynolds, Chair of the United Nations Principles for Responsible Investment (UN PRI), the group called for national and international regulators and supervisors of banking, insurance, securities, and pensions to work together with the private sector to clarify that fiduciary duty requires the integration of material environmental, social, and governance (ESG) factors within investment processes.
  • Sarah Williamson, from Focusing Capital for the Long-term, led a discussion on realigning incentives along the investment chain to encourage a long-term approach. The group’s recommendation was to address regulatory and reporting constraints that could limit advancement of long-term, sustainable investing. One concrete suggestion that emerged was to adjust capital charges to actual asset-risk profiles.
  • Lady Lynn Forester de Rothschild led a discussion focusing on the Embankment Project for Inclusive Capitalism (EPIC), which is building an integrated framework for reporting for both corporates and investors that will provide the standardized non-financial information that is needed to truly embed ESG into investment considerations. This group called for support for private-sector led efforts to rationalize corporate disclosure to promote long-term investing and value creation, eliminating regulatory barriers to such disclosure and, over-time, incorporating them into international accounting standards.
  • Finally, our International Finance Corporation (IFC) colleagues led a discussion on the Operating Principles for Impact Management, which have been developed by IFC to create a standard and common discipline for impact investing. The group called for an open dialogue between asset managers, asset owners, development finance institutions and policy makers, to advance the adoption of these principles.

These discussions led to clear commitments, which are enumerated in the Buenos Aires Call to Action. Our job now is to help drive these initiatives forward in our client countries – though our technical assistance, lending operations and convening power.  

The participants who took part in the Forum were not complacent – we are well aware of the challenges ahead and consequences of a lack of action. We need to continue to lead and spread the word, bringing on board remaining investors who need further support and guidance to embed sustainability into the heart of their operations – as business and investing as usual is no longer an option. I look forward to working with the leaders represented at the Investor Forum to take concrete actions that will boost long-term, sustainable private sector investments that help us meet our goals of reducing extreme poverty and boosting shared prosperity.

A WASH response to Yemen’s cholera outbreak

4 days 14 hours ago

Editor's Note: 
The global water crisis is a crisis of too much, too polluted and too little. At the World Bank, our job is to find and implement solutions to tackle this crisis. In the “Water Solutions” blog series, you’ll read about World Bank-supported projects in different countries which demonstrated solutions to the world’s most pressing water issues, to fulfill our vision for a water-secure world.


 
Since 2015, when armed conflict began, Yemen's water and sanitation infrastructure has suffered significant damages. Direct attacks on the infrastructure have been exacerbated by the lack of energy (electricity and fuel), spare parts, operation and maintenance funds, and three years of unpaid salaries of civil servant staff. This confluence of factors has undermined the robustness of water and sanitation systems in Yemen and contributed to the worst cholera outbreak in history. According to the World Health Organization, as of November 11, 2018, 1,300,495 suspected cholera cases and 2,609 deaths have been reported.
 
The upsurge of cholera cases is attributed to several risk factors, including a disruption of basic water and sanitation services, contaminated water sources in affected communities, an inability to treat sewage due to non-functional wastewater treatment plants, and the absence of garbage collection systems. More than 70 percent of the population (22 million people) requires assistance to access safe drinking water and sanitation. Basic water supply, sanitation and hygiene (WASH) infrastructure is on the verge of total collapse, and many internally displaced persons (IDPs) are at a particularly high risk, due to overcrowded shelters and settlements with inadequate water and sanitation facilities.


 
The highest numbers of cholera cases have been reported in places where wastewater treatment plants are non-functional. Without working wastewater treatment plants, raw sewage is often diverted to poor neighborhoods and agricultural lands. This, in turn, leads to contamination of the shallow aquifers and wells, where local civilians and private tankers collect drinking water. Private suppliers who use unregulated sources and transportation mechanisms to distribute water are reported to be a major source of contaminated water in the country. In addition, a recent World Bank study shows that prices charged by private tankers are several times higher than those charged by municipal services, making clean water less affordable to the poor. 
 
Amid the deepening crisis, there are unprecedented rates of malnutrition. Every ten minutes a child dies of preventable causes in Yemen. The health condition of the vulnerable population -- particularly malnourished children -- is already compromised by the deteriorating situation, increasing their susceptibility to cholera infection, associated complications, and death.
 
To ensure a comprehensive, appropriate and timely response to the prevailing cholera outbreak, an integrated package of appropriate health, water and sanitation interventions has been designed and funded by the Bank through an IDA grant of $200 million – The Yemen Emergency Health and Nutrition Project Second Additional Financing was approved in August 2017 under the umbrella of the Emergency Health and Nutrition Project in Yemen.
 
Despite all the challenges on the ground, key results have been achieved. Within just a few months of implementation, the project provided improved water services in cholera-affected areas to 1.6 million people.  Together with UNICEF and WHO which are implementing project activities on the ground, we’ve rehabilitated water and sanitation facilities in health centers, schools and communal gathering places.  Water treatment has been provided through bulk chlorination of water sources, piped networks and private water trucks, in addition to disinfection of water at the household level.  Hygiene kits have also been distributed to schools and homes, and in cholera-affected areas, 1.85 million people have been provided with improved access to sanitation.

The project provides improved water services in cholera-affected areas. 
 
In areas where local water corporations remain constrained, the project took an innovative approach in recognizing the role of private water tankers to fill the gap working with the National Water Resources Authorities to monitor water quality (NWRA). To regulate the private tankers and ensure some control of the water supplied to households, the project began an official registration process, managed by UNICEF.  So far, about 4,000 private tankers have been registered. The National Water Resources Authority (NWRA) is providing quality control at wells and along the distribution chain, with sanctions imposed on non-complying tankers.
 
The integrated nature of this project necessitated significant collaboration with multiple stakeholders, including partnering with UNICEF and WHO to implement the activities.  The World Bank team provided training to the staff of international and national partners implementing the project on Bank safeguards policies. The Bank continues to support the agencies to ensure that they have adequate resources in place to apply safeguard policies. To ensure smooth and effective coordination, we also formed a Technical Working Group involving all the partners and meet regularly to ensure best use of funds and avoid any duplication of activities
 
It was the first time that the Bank was supporting WASH interventions in a situation of ongoing conflict. The project is also an important step by the Bank to continue operations despite an ongoing conflict, thus ensuring a continued water portfolio in Yemen. Given the massive needs, a new water operation is currently under preparation to rehabilitate damaged water and wastewater assets in Yemen, continue building the capacity of local authorities and protect wells and water sources to ensure the sustainability of water resources.
  Distributing soaps and promoting hygiene in Yemen's cholera-affected areas  

Adding energy data to the World Bank’s data catalog

4 days 15 hours ago

The World Bank data catalog is an ongoing effort to provide a “one-stop shop” for all Bank data related to development. That aspiration took a big step forward this week as we completed the addition of datasets from the World Bank’s ENERGYDATA.INFO platform. ENERGYDATA.INFO continues to provide public access to hundreds of datasets from over a dozen organizations on topics such as solar and wind measurement data, electricity transmission networks and energy access. Users may now search for and download those same datasets from the Bank-wide catalog.

This integration is similar to previous efforts to provide greater data access. The World Bank’s finances platform, microdata platform, and open data catalog have all been added to the data catalog. For data users and Bank staff alike, there is a clear benefit in being able to search and access all available data from a single online location. The data catalog also provides a consistent approach to data licensing, so users can understand which datasets are open data, which are subject to third-party terms, and which may carry other restrictions.

There are also several benefits for Bank staff. For example, the data catalog’s support for metadata standards means that datasets are available in the newly released Google dataset search tool, which allows users to search the internet for datasets the same way they already do for websites and other information. And the common platforms help users see what data have been made available from different units and global practices throughout the World Bank, including geospatial data and household survey data. Bank staff can also use the data catalog to deposit datasets developed under individual projects, both for reuse by others and for archive purposes, including datasets classified as Public or Official Use Only under the Bank’s Access to Information policy.

For Bank staff in the Energy & Extractives global practice, the energy data integration means they will henceforth be using the Bank’s standard platform for dataset management. ENERGYDATA.INFO will continue providing access to Bank’s public energy related data and host datasets from its partner organizations. Updates and additions to the data catalog will be synchronized daily using the data catalog’s application programming interface (API).

“The World Bank’s data catalog gives our team a solid data curation and management platform to serve both our internal needs and those of our partners,” said Tigran Parvanyan, Energy Specialist and project lead for ENERGYDATA.INFO. “This is a tool we can use to implement an ‘open by default’  approach that will revolutionize how we leverage and disseminate data to deliver cutting-edge products, services, and analysis. For example, we’ve already developed the Global Wind Atlas to help users with energy planning; the data catalog and ENERGYDATA.INFO make the underlying raw data available for many additional purposes which we can only begin to imagine.”

Precious metals outlook: regaining lustre?

4 days 15 hours ago

This blog is the ninth in a series of ten blogs on commodity market developments, elaborating on themes discussed in the latest edition of the World Bank’s Commodity Markets Outlook. Earlier blogs are here.
 
The World Bank’s Precious Metals Price Index is forecast to decline marginally in 2019, following an expected 2 percent loss in 2018. Gold prices are projected to edge marginally lower and silver prices to tick slightly higher, while platinum prices are anticipated to rebound moderately. Key risks to this outlook are U.S. monetary policy, the strength of the U.S. dollar, and global demand.
 
Precious metals price index


U.S. monetary policy tightening and dollar strength

Gold is widely considered a safe-haven asset and a hedge against inflation. Contractionary U.S. monetary policy—the tightening of money supply and raising of interest rates to keep inflation in check—has reduced the attractiveness of gold as an investment asset. The appreciation of the U.S dollar has also made gold more expensive in domestic currency terms for the world’s most important consumers such as China, India, Iran, and Turkey. Rising short-term interest rate expectations and a strong dollar are anticipated to put a lid on gold price increases.
 
Gold prices and U.S. 10-year real interest rate


Gold prices and U.S. dollar index


Demand and supply fundamentals


While supply of gold remains strong and recycling is on the rise, demand in 2018 through the third quarter was at its lowest in nearly a decade (down 17 percent relative to the recent peak in 2011). Gold prices fell steadily from April to August but have since experienced a mild reversal as demand picked up, driven by Chinese and Indian jewelry demand, growth in Russia’s central bank gold reserves, Chinese and Iranian bar and coin investment, and to a lesser extent, technology applications.

Silver prices moved broadly in line with gold prices until August but since then have remained depressed due to the impact of U.S-China trade tensions on industrial activity and global trade (industrial use accounts for more than half of silver consumption). With robust demand from the renewables energy industry, particularly in solar applications (silver has the highest electrical and thermal conductivity and reflectivity among all metals), the current low silver prices point optimistically to a recovery in the near term.

After falling precipitously since the start of 2018, platinum prices partially recovered in September but retreated again in November. Demand for platinum, used extensively in the catalytic converters on diesel engine vehicles, has been deteriorating as diesel car sales fall substantially. In sharp contrast, palladium prices have been on an upward trend due to the metal’s wide use in the pollution-control catalytic converters on gasoline-powered cars. In addition, palladium supply shortages due to mine closures have kept prices high. Looking forward, the pivot to heavy duty vehicles with large hydrogen fuel cells, coupled with potential platinum substitution in gasoline vehicles induced by high palladium prices, could reinvigorate demand for platinum.
 
Gold production and fabrication in 2017


Silver production and fabrication in 2017

 
Platinum supply and demand in 2017

Sandbox or Quicksand?

4 days 17 hours ago
The financial system is going through a period of rapid innovation that is disintermediating the financial services value chain. This can have significant benefits for financial inclusion- providing access to, and enabling active usage of, affordable financial products and services to all individuals while supporting a diverse and competitive marketplace.

Financial regulators around the world are looking for more flexible ways to engage with fintech companies while being mindful of the inherent risks. Although the importance of interacting with this sector is widely accepted, the most appropriate instrument to do so is still being determined.

A tool that has become increasingly popular and synonymous with innovation is the ‘Regulatory Sandbox’. While nuances exist, they are fundamentally a regulator-controlled environment that allows participants to test their products, services and business models. However, Sandboxes are only one of several tools that regulators can use and have both benefits and challenges associated with them. Depiction of some of the different tools available to regulators to enable Fintech

Sandboxes are a signal to the industry that the regulators are willing to engage with them; they distill evidence-based results which could potentially influence future supervisory methodology or even have implications for the regulatory perimeter. For firms, Sandboxes offer a faster route to market and a better understanding of regulatory hurdles they need to cross.

However, the ability to successfully run a Sandbox environment depends on some variables including,

Legal Mandate- Sandboxes may not be as easy to set up in a civil law jurisdiction as compared to those operating under common law. Although there are cases of Sandboxes being set up in both types of jurisdictions, the competition mandate in jurisdictions such as Singapore and the UK have actively propelled the environments in those regions to promote market development.
 
Capacity- Sandboxes can be extremely resource-intensive. For example, the UK FCA’s Innovate has nearly 40 staff and while not solely involved in the running of the Sandbox alone, they provide policy and operational support to the framework.
 
Regulator Co-ordination: Often, there are several regulators within the same jurisdiction who are responsible for related but distinct supervisory activities. With the new business models introduced by fintechs, there is often uncertainty regarding the remit they fall into which can potentially be exacerbated if there is a lack of co-ordination between the separate regulators.
 
Maturity of Market: For a Sandbox to function effectively, the existence of a functioning and mature entrepreneurial environment is vital. Most Sandboxes will only admit those firms that have a viable product, enabling them to test the feasibility of their business model. For those markets where the fintech ecosystem is still nascent, other fintech tools might be a better fit.

At last count, over 30 jurisdictions had created, or announced their intention to create, regulatory sandboxes primarily for fintech, with more in the pipeline.

Source: CGAP, Accurate as on 31th July 2018


Before a jurisdiction decides to embark down the route of creating a Regulatory Sandbox, authorities should step back and objectively review the environment in which they operate, the maturity of the market and their primary objective (s); be it increasing competition, fostering an environment for innovation or increasing financial inclusion to understand the most relevant tool to achieve these outcomes.

Sandboxes can provide valuable insights based on empirical evidence and can support a fundamental transformation of the regulatory process, however there is a risk of them being viewed as the lone solution to enable fintech.

Sandboxes alone are not a complete solution for engaging with emerging technologies and regulators can learn a great deal simply by engaging collaboratively with the sector and being open to dialogue with new market players.  Proportional and judgement-based supervision supported by advice units and informal consultations can both engage with a wide cross-section of market players and can potentially sieve those products that might need further structured sandbox testing, hence bolstering and enabling the market for innovation.

What’s keeping Pakistan in the dark?

4 days 17 hours ago
Nearly  50 million Pakistanis still lack access to grid electricity. Power distortions cost Pakistan’s economy much more than previously estimated: $18 billion in fiscal year 2015—that is 6.5 percent of the country’s economy. Credit: Curt Carnemark/ World Bank

[[tweetable]]From 1990 to 2010, 91 million people In Pakistan received electricity for the first time.[[/tweetable]]
 
And power outages across the country have gone down drastically over the past few years.
 
Clearly, [[tweetable]]Pakistan has achieved much progress in expanding its electricity access and production in recent decades[[/tweetable]].
 
However, [[tweetable]]nearly  50 million Pakistanis still lack access to grid electricity and the country ranks 115th among 137 economies for reliable power.[[/tweetable]]
 
After peaking in 2006, per capita electricity consumption failed to grow for almost a decade, remaining only one-fifth the average for other middle-income countries in 2014.
 
[[tweetable]]To boost sustainable energy supply, Pakistan’s power sector needs urgent investments and reforms to target inefficiencies in the entire electricity supply chain.[[/tweetable]]
 
Fittingly, my new report [[tweetable]]In the Dark analyzes what lies behind these inefficiencies and suggests relevant actions to improve the operation of power plants, cut down on waste and costs, and increase electricity supply in a cost-effective manner.[[/tweetable]]
 
The study sheds new light on the overall societal costs — not merely the fiscal costs as in previous research — of subsidies, blackouts and other distortions in the power sector.
 
To that end, my team and I surveyed Pakistan's entire supply chain from upstream fuel supply to electricity generation, transmission and distribution, and eventually, down to consumers.
 
Put simply, the numbers we found are dire.
 
[[tweetable]]Power distortions cost Pakistan’s economy much more than previously estimated: $18 billion in fiscal year 2015—that is 6.5 percent of the country’s economy.[[/tweetable]]
 
Problems begin upstream, where gas underpricing encourages waste and reduces incentives for gas production and exploration.
 
And with no recent significant gas discoveries, higher gas usage has widened the gap between growing demand and low domestic supply.
 
On top of that, the volume of gas lost before reaching consumers reached 14.3 percent in fiscal year 2015. By comparison, this number is about 1 to 2 percent in advanced economies.
 
[[tweetable]]Public power plants use 20 percent more gas per unit of electricity produced than private producers.[[/tweetable]]
 
Poor transmission contributed to 29 percent of the electricity shortfall in fiscal year 2015, while weak infrastructure, faulty metering and theft cause the loss of almost a fifth of generated electricity.
 
Electricity underpricing and failure to collect electricity bills have triggered a vicious “circular debt” problem, leading to power outages.
 
A lack of grid electricity also leads to greater use of kerosene lamps that cause indoor air pollution and its associated respiratory infections and tuberculosis risks.
 
Lack of access to reliable electricity also adversely impact children’s study time at night, women’s labor force participation, and gender equality.
 
[[tweetable]]Connecting all of Pakistan’s population to the grid and increasing the supply of electricity to 24 hours a day would increase total household income by at least $4.5 billion a year and avoid $8.4 billion in business losses.[[/tweetable]]

Poor transmission contributed to 29 percent of the electricity shortfall in fiscal year 2015, while weak infrastructure, faulty metering, and theft cause the loss of almost a fifth of generated electricity. Credit: Tomas Sennett/ World Bank
As such,[[tweetable]] power sector reforms should be a top priority for Pakistan can yield huge economic gains toward a more sustainable future.[[/tweetable]]
 

Power sector reforms that restore market pricing and improve efficiency will complement traditional investments to increase power supply and expand access to reliable electricity.
 
However, in the absence of other reforms, too narrow a focus on liberalizing energy prices may be inadequate and, given the current inefficiencies in the sector, would lead to excessively high electricity costs, putting added stress on the poor and most vulnerable.
 
Rather, increasing efficiency should be the main priority, together with a gradual increase in energy prices and targeted assistance to mitigate the impact on consumers.
 
Addressing institutional distortions would yield huge efficiency gains. For example, allocating gas based on transparent market rules rather than administrative orders would promote a more productive use of fuel, and providing adequate incentives from adopting competition and regulations that links tariff with operating efficiency would improve the performance of utilities.
 
If well designed, these reforms will directly benefit all Pakistanis, especially the poorest, by increasing access, improving reliability and reducing cost emissions across Pakistan.
  What's Keeping Pakistan in the Dark
 

Missing in action: Where is the “demand” for jobs when we prepare for jobs?

4 days 19 hours ago

Are robots, friends or foes of the future of work? Automation is eliminating some routine jobs but, on the positive side, robots are good partners for workers engaged in tasks that demand analytical, interpersonal, and creative skills, as well as manual physical skills involving dexterity.

Many jobs today, and many more in the near future, will require skills that combine technological know-how, problem-solving, and critical thinking as well as socio-behavioral skills such as perseverance, collaboration, and empathy. We have already seen the share of jobs in occupations intensive in these skills increasing since 2001: from 19 to 23 percent in emerging economies and from 33 to 41 percent in advanced economies, according to the 2019 World Development Report.

But the days of staying in one job, or with one company, for decades is waning. Job tenures are becoming noticeably shorter. In the United States, the median job tenure for men aged 45-54 has fallen from 12.8 years in 1983 to 7.9 in 2016. In some European countries, it is younger workers who have seen their job tenures decline, linked to the rise of temporary contracts. Among workers aged 25-29, the share of workers with job tenures less than 12 months, increased from 16 to 24 percent in Austria between 2003 and 2015. In Ireland during the same period, job tenures among this age group increased from 19 to 28 percent; and from 19 to 24 percent in Italy.

Workers will have multiple careers, not just multiple jobs, over their lifetimes. Some will work exclusively in the gig economy. Many children entering primary school this year will work in occupations that do not yet exist. Even in low- and middle-income countries, many people are employed in jobs that didn’t exist three decades ago. India has nearly four million app developers; Uganda has over 400,000 internationally certified organic farmers; and China has 100,000 data labelers.

As the Changing Nature of Work report reveals, there is an acute shortage of workers equipped with the new skills that employers are increasingly demanding. In the STEM sector - science, technology, engineering and mathematics - hundreds of thousands of jobs remain unfilled.

How well countries are able to cope with the demand for changing job skills depends on how quickly the supply of skills shifts. One of the most obvious, yet rare, actions to take is to encourage systematic dialogue and close collaboration between supply and demand.

With 90 percent of employment in the private sector, skills need to be relevant and in demand by firms. It’s all too rare for educators to take part in private sector activities and vice versa.

More needs to be done to bring tertiary education and the private sector closer together by creating knowledge hubs. Knowledge hubs can be engines for developing new capabilities, innovation, and high-tech entrepreneurship. And they can help overcome challenges in the supply and demand of skills.

To prepare its students for the changing labor market, some tertiary institutes are offering entrepreneurship trainings, creating business incubators, or hosting venture capitalists. Since its establishment in 2000, SIDBI Innovation and Incubation Center at the Indian Institute of Technology (IIT) Kanpur has incubated 53 start-ups and disbursed seed funds of 50 Crores. Egypt launched its first university incubator, Venture Lab, in 2014.

Well-known examples of successful university innovation clusters, with active and systematic participation of the private sector, are located in the developed world— from Silicon Valley in the US to the UK’s Golden Triangle. But they are also emerging in middle-income countries. The University of Malaya in Malaysia has established eight interdisciplinary research clusters over the last decade, covering sustainability science and biotechnology. Peking University is building Clinical Medicine Plus X, a research cluster for precision medicine, health big data, and intelligence medicine. As part of the Startup India initiative, seven new research parks have been established on Indian Institute of Technology campuses to promote innovation through incubation and collaboration between universities and the private sector. In Mexico, the Research and Technology Innovation Park currently houses more than 30 research centers covering research and development in biotechnology, nanotechnology and robotics. Seven of the centers are led by universities.

Governments play a vital role in ensuring the best conditions for innovation clusters. Providing local infrastructure, supplying finance for research and development, connecting universities with high-quality researchers and private sector innovation, and easing rigid labor market regulations all help. It’s now up to political leaders to turn policies that embrace the changing nature of work into success stories for their citizens.

Higher education institutions as drivers of innovation and growth in Azerbaijan

4 days 20 hours ago


It’s a cold spring day in Baku, and several students from Azerbaijan State Oil and Industry University (ASOIU) are huddled around a laptop trying to project an image onto their classroom wall.
 
Once the image is projected, one of the students “writes” on the surface of the classroom wall – as he would on the computer screen – using customized software called CamTouch, which allows the user to turn any surface into an interactive “smartboard”. The student also selects an icon and virtually opens a document with the help of a special stylus.
 
Along with several other innovative apps, the CamTouch software was developed by ASOIU students, with support from the university’s eaziSTART innovation and start-up center. ASOIU is one of several universities in Azerbaijan that run innovation centers and business incubators to help students and researchers take their ideas from the drawing board to the marketplace.
 
Similar innovation hubs in Azerbaijan’s private sector include the Barama Innovation and Entrepreneurship Center and the High Technologies Park (at the National Academy of Sciences). In total, about 18 incubation centers currently operate throughout the country.
 
From Silicon Valley to Singapore, world-class research universities have been drivers of innovation and economic growth. In Azerbaijan, however, despite its budding innovation ecosystem, higher education institutions (HEIs) lag behind those of other countries in producing and commercializing impactful research.
 
A recent World Bank policy note identified a number of challenges facing HEIs and offered recommendations on how to strengthen their role as drivers of innovation and entrepreneurial growth.
 
One of the main obstacles facing HEIs in Azerbaijan is the relatively low level of expenditure on research and development (R&D). Since 2015, R&D investment accounted for only 0.2 percent of Azerbaijan’s GDP, compared to 1.1 percent in Russia, 2.5 percent in the OECD area, and 4.3 percent in Israel (the highest in the world).
 
Only 10 percent of Azerbaijan’s R&D spending goes to HEIs and only one-third of that amount finances applied research. In contrast, countries of comparable size - like the Czech Republic, Portugal, and Austria - allocate between 68 and 81 percent of R&D funding to applied research, which can be more readily commercialized than basic research.
 
One of the key recommendations in the policy note is that Azerbaijan expand its use of competitive funding mechanisms and direct more competitive research grants toward HEIs (or consortia composed of universities, research institutes, and industry). In Kazakhstan , Uzbekistan and Montenegro, for example, recent expansion of competitive research funding has been used effectively to enhance university innovation capacities.

Another recommendation is to set-up effective technology transfer offices (TTOs) within HEIs and encourage universities to develop their own “commercialization agendas”, which would go a long way toward supporting students and researchers in developing market-relevant solutions.
 
Policymakers in Azerbaijan can provide additional support for entrepreneurship education and innovation infrastructure, by promoting the use of “Fab Labs” within HEIs so that ideas can be turned into prototypes, setting-up a national research equipment registry, and promoting shared access to innovation equipment by multiple stakeholders.
 
Creating world-class research universities does not happen overnight, of course. Fortunately, many of the necessary building blocks are already in place in Azerbaijan, and the recent Decree of the President of Azerbaijan is a step in the right direction.
 
We look forward to continuing our support to the Ministry of Education in its goal to turn Azerbaijan’s universities into drivers of innovation and economic growth.

Do Sociable or Higher-Achieving Peers Matter? Guest post by Román Andrés Zárate

4 days 20 hours ago

This is the nineteenth in this year's series of posts by PhD students on the job market.

While sociable peers increase your social skills, higher-achieving peers do not improve your academic performance. That is the main conclusion of my job market paper.
 
As the world bends closer towards automation, social skills take a lead role on individuals' well-being and labor market success. According to Deming (2017), between 1980 and 2012, jobs demanding high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force. Similarly, a recent column by the Washington Post highlights the importance of social skills for team productivity and employment opportunities. It describes the results of Google’s Project Aristotle, which concludes that the best teams at Google exhibit high levels of soft skills, and particularly social skills. These include emotional safety, equality, generosity, curiosity towards the ideas of your teammates, empathy, and emotional intelligence
 
While there is extensive research on policies that improve academic learning, little is known about how social skills form. My job market paper addresses this challenge. I present the results of a large-scale field experiment at boarding schools in Peru. The intervention was designed to estimate social and cognitive peer effects. While other studies have exploited random assignment to dormitories and classrooms, I use a novel experimental design to generate large variation in peer skills. Specifically, I assign students to two cross-randomized treatments in the allocation to beds in a dormitory: (1) less or more sociable peers, and (2) lower- or higher-achieving peers. This design surmounts many of the challenges with traditional approaches to the study of peer effects (Manski, 1993; Angrist, 2014; Caeyers and Fafchamps, 2016).


To classify students as less vs. more sociable, I use the position in the friendship network the year before the intervention. A student with a better position has a greater influence in the network and therefore is more sociable. in the schools’ social network. In fact, in the context of my study, this indicator of sociability is highly correlated with other metrics introduced by psychologists to measure social skills. To classify students as higher vs. lower achieving, I use students’ scores from the schools’ admissions tests, which include math and reading comprehension scores.
 
Main Results
 
The allocation to beds influenced the social network formation in the schools. Students befriend, study, and play more with peers that were assigned to nearby beds; the closer the peer, the stronger the interaction (Figure 1). Being neighbors in a dormitory matters; it increases the likelihood of social interactions by 18 percentage points. The effect of proximity is no different for students assigned to higher- and lower-achieving peers, and it is slightly higher for students assigned to more sociable peers.
 
Figure 1: Impact of Distance in the Dormitory on the Likelihood of Social Interactions.

 
While social links can be relevant on their own, how do these links affect the formation of skills? I estimate the impact of each treatment on the formation of social and cognitive skills. To measure social skills, the primary outcome is a social skills index that includes psychological tests and the number of peers that perceive the student as a leader, or a popular, friendly, or shy person. By using peers’ perceptions to measure a student's social skills, I account for biases in self-reported psychological tests. I also present results for the two “Big Five” personality traits that are related to social skills: (i) extraversion, characterized by positive affect and sociability and (ii) agreeableness, the tendency to act in a cooperative and selfless manner (McCrae and John, 1992; John and Srivastava, 1999; Almlund et al., 2011). In the paper, I include several social skills measures to assess the robustness of the results. I use grades and test scores in math and reading comprehension to measure cognitive outcomes.
 
I find that sociable peers have a positive effect on a student’s social skills. Students that were randomly assigned to dormitories with more sociable peers have a higher social skills index—0.067 standard deviations—after the intervention (Panel A, Figure 2). In turn, Deming (2017) estimates that an increase in a one standard deviation of a similar social skills index increases wages in 3.7%. The positive effect on social skills in my study is mainly driven by the impact on students that were less sociable at baseline. These results are consistent with the impacts on the Big Five personality traits, and with the impacts on measures that account for biases in self-reported tests—less sociable students assigned to more sociable peers are perceived as more friendly and popular. I do not find that having more sociable peers affects a student’s academic scores.
 
By contrast, the results show that higher-achieving peers have no impact on the average student’s social or cognitive skills. Furthermore, my results suggest that higher-achieving peers decrease the academic achievement of lower-achieving students (Panel B, Figure 2). These effects are similar for grades and test scores, and for both math and reading comprehension.
 
Figure 2: Impact of Treatments on Students’ Outcomes
 

Mechanism: Self-confidence
 
I explore potential mechanisms that drive these results and show that changes in students' self-confidence in their skills is a valid mechanism. The idea behind this self-confidence story is that it is easier for less sociable students to engage in social activities with more—rather than less—sociable peers, and these interactions make students more successful. Success translates into more self-confidence in social skills, making students more likely to do well in future interactions with both roommates and other people. By contrast, lower-achieving students feel less accomplished when assigned to higher-achieving peers. If students think they are doing worse, they are less confident in their academic skills, driving down their investment and performance in academic activities. Hence, while more sociable peers make less sociable students feel better about their social skills, higher-achieving peers make lower achieving students feel worse about their cognitive skills
 
I find empirical evidence suggesting that changes in self-confidence are driving the results in my paper. Less sociable students report better social interactions with their roommates when assigned to more sociable peers. They are also more likely to say they are friendly and popular, and less being shy. By contrast, lower-achieving students show less self-confidence in their cognitive abilities when assigned to higher-achieving peers.
 
Overall, while the existing literature and most education policies have focused on peers’ academic achievement, this paper shows that in the context of selective boarding schools in Peru, the role of sociable peers is more important to improve students’ outcomes. Further research is needed to assess whether students can learn social skills from their peers in other settings.
 
Román Andrés Zárate is a Ph.D. Candidate at the Massachusetts Institute of Technology.
 

Risk models and storytelling – learning from past disasters for a more resilient future

5 days 14 hours ago



In the early afternoon of September 3, 1930, the San Zenon Hurricane struck Santo Domingo, the capital city of the Dominican Republic. With winds of up to 250 kilometers per hour, one of the deadliest hurricanes ever recorded in the Atlantic pummeled the coastal city, destroying entire neighborhoods and claiming the lives of as many as 8,000 people.
 
What would happen if a hurricane of a similar magnitude hit Santo Domingo today? Nearly 90 years on, only the oldest Dominicans have any direct recollection of the devastation. For most residents of present-day Santo Domingo, the consequences of another cataclysmic hurricane making landfall near their city are hard to imagine.
 
Be it hurricanes like San Zenon or volcanic eruptions such as that of Mount Vesuvius, analyzing natural events that led to the major disasters of yesteryear can help us get a fuller grasp of how similar events might impact today’s more populous, urbanized, and connected world. 

Regrettably, however, in preparing for the next disaster, we sometimes overlook what has happened in the past – often because it is just too difficult to comprehend. History is thus treated as an afterthought, rather than an important prologue into understanding what the future might bring.
 
Aftershocks: Remodeling the Past for a Resilient Future, a report and accompanying story map from the Global Facility for Disaster Reduction and Recovery (GFDRR), aims to help change this by using a combination of risk modeling and immersive storytelling to allow readers to better grasp the likely impacts of the iconic disasters of the past if they happened today.


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Created through a mix of science, technology, engineering and statistical data, risk models simulate the potential impacts of natural and man-made hazards, yielding invaluable insights into how we should prepare for and respond to disasters of all kinds.  For instance, in the case of the 1930 San Zenon hurricane, models project that losses from a similar event in Santo Domingo today would be around US$15 billion, well below the damage from the 1930 storm, estimated at US$18 million (in 1935 dollars). This is because in the 1930s, the value of total residential and nonresidential building stock was US$110 million, while today it is over U$150 billion.
 
However, when looking at relative losses, there was a decline in relative damages from almost 16 percent of the value of residential exposure damaged in 1930 to 10 percent today. This decline may be a result of the change in building construction practices; a new building code was introduced in 1980 to help prevent damage from earthquakes. Buildings which are structurally sound are more likely to withstand high winds as well as strong ground motion.
 
Valuable insights are revealed through risk modelling methodologies. The case studies in Aftershocks not only show how events from the past will impact today’s more populous and built world, but also demonstrate the benefits of building regulations, effective risk identification and early warning systems. Illustrating the value of risk modelling as a discipline, Aftershocks was produced by GFDRR’s Innovation Lab in partnership with the World Bank’s Disaster-Resilience Analytics and Solutions (D-RAS) team. The teams collaborated to deliver a report that brings about a better understanding of disaster risk to a wider audience. The accompanying story map is an attempt to make the results of the modelling more accessible through immersive storytelling.
 
Against the backdrop of rapid population growth and a changing climate, communities are increasingly vulnerable and exposed to hazards, and when disaster strikes, it is the poor who are often the most vulnerable and hardest hit. By better understanding the potential impacts of disasters before they happen, we are all much more well-positioned to plan and prepare ahead – thus saving lives and minimizing losses.  To build a more resilient future for all, it’s vital to take stock of the past – that’s the message of Aftershocks. Check it out and experience it for yourself!
 
Erika Vargas, Kerri Cox, and Lorenzo Piccio contributed to this blog post. 

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Technological progress, personal responsibility and the future of redistribution

5 days 15 hours ago


A person is caught stealing groceries from a supermarket. How should the justice system sanction such behavior?
 
In the modern system of criminal justice, the sentence imposed on such a perpetrator should prevent that person from repeating the crime, demonstrate to society that such behavior is undesirable hence punishable, penalize the person for the morally wrong deed, and try to rehabilitate the criminal. As analyzed by Becker (1968), deterrence relies on the postulate that the threat of criminal punishment alters the cost-benefit calculation of rational agents.
 
But what if it doesn’t?

A kleptomaniac, for example, steals because of some uncontrollable impulses. Punishing a kleptomaniac will seldom affect his future behavior as the urge of stealing goes beyond weighing costs and benefits. Besides, how does one justify punishing an individual for actions that go beyond his or her control? One rationale hinges on an assumption of asymmetric information, whereby an individual’s preferences are known only to him, so that the justice system cannot differentiate between kleptomaniacs and opportunistic thieves who claim they suffer from kleptomania. Thus, identical criminal acts perpetrated under identical and verifiable circumstances require identical punishment. The societal cost of deterring opportunistic behavior with criminal sanctions is the punishment of individuals who have no control over their actions.
 
An improvement could be achieved if kleptomania is reliably diagnosed. The criminal justice system is then able to apply sentences that take into account kleptomania as an additional verifiable circumstance. For example, a defendant who presents a verifiable proof of his sickness could receive medical treatment, while others are dealt with by the system of criminal punishment.
 
The advances of neuro-cognitive science and neuropsychiatry, MRT, and EEG generate a growing body of research linking brain dysfunctions and abnormalities in the neurobiological processes to violent and criminal behavior (e.g.,  Brower and Price 2000; Jemar et al. 2017). This evidence questions the rationale of criminal punishment for all perpetrators. If a person cannot foresee the consequences of his actions and does not desire the consequences to happen because of his brain abnormalities or injuries, the punishment loses its purpose. Better understanding of the causes of criminal behavior and the ability of new technologies to reliably verify illnesses will re-qualify many crimes. More and more criminal sentences will be replaced by medical treatments.   
 
A similar argument could be made for the principles of distributive justice. The individual’s outcomes (for example income), depend on that individual's endowments and the exerted efforts. An individual has no control over his initial circumstances (i.e., the wealth of his parents), but is responsible for his choices (how many hours to work per day). Dworkin (1981), and Sen (1985) consider that a just society might want to equalize, through redistributive policies, the initial endowments, giving each individual equal opportunities to achieve their goals. Inequality in outcomes, resulting only from differences in choices individuals make, is socially acceptable.
 
If one believes people should not be prosecuted for the crimes they committed because of some genetic predisposition, a poor disabled person should be subsidized, because his income, to a large degree, is determined by circumstances outside of his control. While the criminal justice system seeks to verify the motives of crime, the challenge in designing socially-just policies is to determine what part of an observed outcome is determined by exogenous conditions and what part is a result of choices. The literature on inequality of opportunity contrasts the compensation principle that requires elimination of “unfair” inequalities due to circumstances, and the reward principle that is concerned with preservation of “fair” inequalities due to differences in efforts (Fleurbaey 1995). For example, income inequality related to gender or race should be eliminated, while incomes of hard working individuals could and should be higher than average.
 
Studies of twins and emergence of genome-wide association studies in behavioral genetics indicate that nearly all types of human behaviors are determined by genes. Genes are found to influence creativity (Liu et al.2018), social interactions and isolation (Day et al, 2018), alcoholism (McGue 1999), cognitive abilities, self-control, academic difficulties, truancy (Wertz et al, 2018), financial risk taking (Kuhnen and Chiao, 2009), etc. We expect innovations in molecular genetics to provide further evidence linking personal outcomes to genotypes. And the answer to a question whether a person is more responsible for being lazy than he is responsible for being male will become much more nuanced.
 
These developments will shift the discourse on inequality and, in a broader sense, on social protection from the moral to the technical domain. The larger the share of “explained”, verifiable behavior, the less individual outcomes could be attributed to the voluntary efforts. At the limit, all inequalities in outcomes become inequalities of opportunities.
 
Does that mean all incomes will be equalized and society will move to the communist principle of redistribution - “from each according to his ability, to each according to his needs” (Karl Marx 1875)? No, because while prices have the role of providing incentives in a world of asymmetric information, their role is not limited to that. For prices, in the words of Hayek (1945), “can act to coordinate the separate actions of different people in the same way as subjective values help the individual to coordinate the parts of his plan.” Redistribution is then concerned about trading inequality of incomes against the efficient allocation of resources. For instance, some sectors of the economy need workers with specific attributes, which despite being genetically determined, will always need to rely on lucrative contracts to attract the appropriate labor force. A vivid illustration is the fashion industry, which explicitly considers physical attributes in hiring decisions, while in Michigan for example, height and weight discrimination is explicitly illegal.
 
As we collectively better understand human decision-making and reliably observe the internal and external circumstances underlying choices, individuals will become less and less responsible for their acts and more and more viewed as victims of their preferences. Social norms and the moral stigma attached to some behaviors will certainly evolve accordingly.

Shared Prosperity: A challenging but important goal to monitor

5 days 16 hours ago

Shared prosperity is one of the World Bank Group’s Twin Goals, introduced in 2013. Progress toward this goal is monitored through an indicator that measures the annualized growth rate in average household per capita income or consumption among the poorest 40 percent of the population in each country (the bottom 40), where the bottom 40 are determined by their rank in household per capita income or consumption. Chapter 2 of the 2018 Poverty & Shared Prosperity Report provides an update on the recent mixed progress on shared prosperity around the world in about 2010-15.

The shared prosperity indicator was proposed as a means to shine a constant light on the poorest segments of the population in every country, irrespective of their level of development. Shared prosperity has no target or finish line, because the aim is to continuously improve well-being. In good times and in bad, in low and high-income economies alike, the bottom 40 percent of the population in each nation would be monitored. Tracking the bottom 40’s absolute growth as well as their growth relative to the mean is a way to remind us to always consider distributional impacts and strive for equitable outcomes.

An important but challenging goal to monitor

Despite its importance and universal relevance, shared prosperity is more challenging to monitor than global poverty. While one household survey is sufficient to calculate poverty, shared prosperity measurement requires two recent comparable surveys.

The implication of this stronger data requirement is that 91 out of the 164 economies with an international poverty rate measured in PovcalNet are included in the 6th edition of the Global Database of Shared Prosperity (GDSP).

Data frequency is the biggest challenge to measuring shared prosperity

The data requirements for shared prosperity can be cascaded into three interlinked factors, which also helps to understand which requirements are the most restrictive.

  • Recent – at least one survey since 2008
  • Frequent – at least two surveys since 2008 and conducted near 2010 and 2015
  • Comparable – two surveys must be comparable
Number of countries represented in PovcalNet 164 Recent: with at least one survey from 2008 and onwards 151 and                     Frequent: with at least two surveys 101 and                                    Comparable: consistent methodology 91

The main constraint is frequency. Most countries in PovcalNet have a recent household survey after 2008, only 10 do not. However, among these, 50 do not have at least two household surveys that are recent. Among countries with at least two recent household surveys, most are comparable.

Often shared prosperity cannot be measured where we need to understand it the most

International Development Association (IDA) countries, small states, fragile and conflict-affected situations (FCS), and those experiencing crisis are less likely to have sufficient survey data to calculate shared prosperity. This is because household survey collection is costly and requires a certain level of statistical capacity. Many small Pacific island economies rely on international donor support to fund and implement household survey data collection. In conflict situations, unsurprisingly, survey collection can be too dangerous to be conducted regularly. Out of the 75 IDA economies, 24 have never had a shared prosperity indicator measured by the World Bank since monitoring began in 2014.

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Among the 164 economies with international poverty measures, 57 economies have a poverty rate higher than 10 percent in the 2015 global line-up. Of these, only 13 have a shared prosperity indicator. Given our desire to reduce poverty for all individuals in all economies, it is unacceptable that we do not know how the bottom 40 are faring in some of the economies where it is the most essential.

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The coverage of the shared prosperity indicator varies also by region, although progress has been made. A number of economies have never had a shared prosperity indicator calculated since the GDSP was first released in 2014 based on surveys around 2007 and 2012. Until this edition, the Middle East & North Africa region had a large concentration of economies without this indicator.

East Asia & Pacific appears to have adequate data on shared property by population coverage, but this region lacks sufficient country coverage. Many of economies lacking a current shared prosperity estimate are small island economies, although some large economies, such as Papua New Guinea, Myanmar, and Cambodia, are also lacking the recent, frequent, and comparable data needed.

In Sub-Saharan Africa, where the proportion of economies included in the sixth GDSP is low, most economies have had a shared prosperity indicator published at least once since its inception. In other words, surveys are being conducted in most African economies, but just not with sufficient frequency.

Progress is being made on data collection

One should not be discouraged by the challenges in coverage, indeed, shared prosperity is still relevant and incredibly informative. Knowing where household consumption is increasing or shrinking, and where it cannot be measured at all still contributes to the dialogue, stressing the relevance of the data agenda.

Despite these challenges, our ability to monitor shared prosperity is improving. Conscious efforts to reduce data deprivations will continue to improve the coverage of the shared prosperity indicator in the years to come. In 2016, the WBG started an initiative in IDA countries to complete household surveys every 3 years to narrow data deprivation. And in fact, the number of countries where shared prosperity can be measured has increased: In the previous 2016 Poverty & Shared Prosperity report, shared prosperity was calculated for 83 economies, compared to 91 economies today.

To learn more about shared prosperity, read the recently released Poverty and Shared Prosperity report 2018, “Piecing Together the Poverty Puzzle.”

A three-course meal in darkness: An ‘eye-opening’ experience for embracing inclusivity

5 days 18 hours ago
During a recent “Dinner in the Dark” social experiment, Kenya’s governors, policy makers and legislators experienced first-hand some of the same challenges as people living with disabilities. Photo: World Bank

 “That tastes like fish.”

“There’s some avocado and tomato in it too!”

“What is that?”

These are some of the exclamations I heard from participants of a recent social experiment dubbed “Dining in the Dark” in Nairobi on November 13th as they ate the first course of their meal.

Governors, policy makers, legislators and government practitioners were blindfolded throughout a three-course luncheon, designed for them to experience some of the challenges people living with disabilities face. It was a relief to me when moderator Dr. Reginald Oduor, a visually-challenged disability activist, apologized to the diners for not being given a choice of what to eat for the first course. He reminded us that many times, people with visual disabilities are not given the opportunity to choose, and we should work towards eliminating that.

This unique event epitomized the launch of the Braille version of the County Public Participation Guidelines, marking a milestone in Kenya’s journey towards the inclusion of citizens with visual disabilities in the governance and development processes. 

Basil and sage marinated roast chicken with zucchini and pineapple salsa sounded mouthwatering as Julie Gichuru, media personality and moderator for the event, announced the options for the main course. I have a great appetite for chicken, but I must admit the mystery and novelty of eating it in the dark left me wondering how huge the portion of chicken was! With affectionate abandon and because no one could see what the other was doing, I surrendered my plate to the waiter mid-poultry, something unheard of in the Kenyan village from where I hail. During the interesting excursion in the dark, I realized just how important it was to hear sound around me. Silence for over a minute set my nerves on edge. I learned that the sensory awareness journey had a profound impact on the other diners, too.

Kericho Governor Paul Chepkwony, the chief guest at the luncheon and a representative of the Council of Governors was captured on camera as he set aside his soup spoon and freely deployed his hands to hold his bowl of soup. Con Omore, a governance advisor at the Department for International Development, tweeted that his experience was humbling, with amazing practical lessons.

I found the event vital because it ignited fresh commitment from each duty bearer to do something differently or enhance their efforts towards inclusion of people with disabilities. Globally, it is estimated that approximately 1.3 billion people live with some form of vision impairment. In Kenya there are about 622,000 visually-impaired people, with 331,593 listed as completely blind, according to the country’s 2009 census report.

The Braille version of the guidelines—produced by the Kenyan government with technical support from World Bank’s Kenya Accountable Devolution Program—seeks to promote good governance, transparency, accountability and inclusivity in all levels of government. World Bank Program Leader Paolo Belli, staid the Bank has made a commitment to support inclusive development, particularly in the collection of disability data. He noted that empowering visually-impaired people through training and access to assistive technologies will boost their contribution to Kenya's socio-economic renewal.

The Ministry of Devolution and Arid and Semi-Arid Lands (ASAL) pledged to monitor and take affirmative action on the public procurement system at all the service delivery points to ensure that the one-third of opportunities are reserved and maintained for all persons faced by major disabilities.

While commending county governments for the progress they have made towards disability inclusion, such as facilitating their engagement in planning and budget formulation meetings, Governor Chepkwony urged them not to let the Braille version of the guidelines gather dust but utilize them. He said that the Council of Governors would constitute a team to monitor their implementation.

Juliana Kivasu, CEO of the Kenya Society for the Blind, urged government agencies to identify gaps and challenges in their policies and ensure disability mainstreaming in their strategic plans, and statutes and programs. For this to take place successfully, we as the World Bank will have to partner with other stakeholders, to build the capacity of county governments.

I was very impressed that an immediate response action arose four days after the event and was more-so championed by a youth group. The Youth Theatre Group based in Kibra, Nairobi’s most populous slum, had performed a poem at the launch titled “present but excluded.” Moses Omondi, who coordinates the theatre group, was inspired by “Dining in the Dark” to organize a forum for persons with disabilities in the slums of Kibra. The goal was to facilitate setting up a platform to articulate, address and be engaged in local social and economic issues affecting them.

The State Department of Planning under the Ministry of National Treasury and Planning has embarked on a process seeking to develop, publish and launch the braille version of the Kenya Vision 2030 popular version. Clearly the event, co-hosted by the Ministry of Devolution and ASAL, and the Council of Governors with the support from our Devolution Program had a great impact!  

New year with a fresh start: Addressing urban poverty in Bangladesh

5 days 18 hours ago


Although Bangladesh has achieved much in the way of poverty reduction and human development, progress has been slower in some urban areas.

Issues such as slow-down of quality job growth, low levels of educational attainment (notably among the youth), and lack of social protection measures have taken the wind out of the proverbial urban reduction “sail.” As the country starts fresh in the new year, it is an opportune time to reflect on some of the key issues affecting urban poverty.

Despite the steady growth in Gross Domestic Product (GDP), successive Household Income and Expenditure Surveys (2005 to 2010 and 2010 to 2016) suggest that [[tweetable]]the rate of poverty reduction has been slowing down while the absolute number of extreme poor have been increasing in urban Bangladesh. [[/tweetable]]Given the accelerating rate of urbanization, it suggests that more people live in extreme poverty in 2016 than they did in 2010. With nearly 44% of the country’s population projected to be living in an urban setting by 2050, this issue is only likely to intensify.  

Several factors may be driving this trend. Absence of education and skills dampen labor market participation and productivity. Among those who participate in the labor-force in urban areas, 19% of men and 28% of women are illiterate. For those who received at least some training, a recent study shows that only 51% of eighth-grade students met equivalent competency in the native language subject (Bangla). The figures were markedly lower for other subjects. Similar trends carry through to technical diploma and tertiary level institutes. As a result, many prospective employers report reluctance to hiring fresh graduates.

Due to the above factors, nearly three-quarters of the labor-force are employed by the informal sector, typically characterized by its more transient and insecure nature. This is exacerbated by the nearly-complete reliance of the urban poor on employment as a source of income given the absence of safety-nets.

Urban women are particularly disadvantaged. Due to a lack of public transport and concerns arounds safety, 87% of economically active women from the poorest quintile walk for an average of 40 minutes to work, thereby limiting their access to better quality jobs beyond that radius. As a result, labor market participation among women have been falling from 34.5% in 2010 to 31% in 2016.

Although the youth represent the largest cohort of working aged population, their unemployment rates are among the highest (11% versus 1% among older groups). Youth engage more in informal employment (89% versus 83%). Alarmingly, youth also represent the largest group relegated to the “discouraged job seeker” category (59% versus 39%). 

[[tweetable]]Urban households are susceptible to a variety of shocks, thereby leaving them vulnerable to falling back or becoming further entrenched in poverty[[/tweetable]]. These vulnerabilities include inadequate housing and living conditions and inaccessibility of basic services such as education, electricity and health and nutrition. The cumulative effects of these vulnerabilities are reflected in the fact that the rate of severe stunting among under-5 children is 8 percentage points higher in urban than in rural areas. But mechanisms allowing households to mitigate the risk or cope with the impact of shocks are scarce.

Job creation in industry and service sectors, the largest drivers of poverty reduction, has slowed and merit urgent policy action through renewed focus on investment to accelerate the quality and quantity to ensure the bottom 40% can take advantage of these opportunities. In addition, the growing youth demographic are disproportionately unskilled and under-employed.

To take advantage of the youth bulge, focus needs to be placed on increasing the labor force participation of this cohort by improving the quality of education and skill-development programs.

Economic involvement of women in the economy are similarly imperative and policies ensuring an encouraging environment must be put into place to encourage female labor force participation. [[tweetable]]As the country gears up to hit reset in 2019, it is imperative to implement far-sighted and effective urban policies to address issues such as migration, health, housing and human capital development.[[/tweetable]]

My top ten social protection resources for 2018

5 days 19 hours ago
2018 has been an exceptionally rich year for social protection research. As part of my weekly links, I reviewed some 300 papers published over the past 12 months, and with the calendar year coming to an end, why not compile my top 10 list? Easier said than done!
 


 

I had really a tough time choosing among the exceptional quality of and insights from the materials. But here is a proposed compilation, ordered alphabetically by author(s), including some major contributions to global knowledge and reflecting a certain diversity in contexts and themes.
 
Cash during childhood can bolster voting as adults. A working paper by Akee et al investigate how unconditional cash transfers affected voting across two generations of Eastern Cherokee household members. Cash increased children’s propensity to cast a ballot in adulthood among those raised in poorer families. However, transfers had no effect on parents, regardless of initial income levels.
 
What does social protection look like in a war-torn country? A discussion paper by Alawi Al-Ahmadi and De Silva provides a detailed set of lessons on practical issues combined with a thoughtful reflection of the author’s engagement in Yemen as frontline practitioners.
 
Looking at safety nets through an Africa lens. A report by Beegle et al takes stock of performance of social assistance in the region. Some select and tantalizing findings: over 2010-2015, an average of 14 new safety net programs were introduced annually; Tanzania had the highest rate of safety nets coverage expansion in the world; the administrative costs of managing safety nets was 17% of program budget; and 55% of programs are externally-funded.
 
How long do impacts last? An evaluation by Blattman et al followed the provision of cash grants to young-adults in Uganda over a 9-year period. About 4 years after inception, grants raised earnings by 38%, but after 9 years, these started declining. At the same time, incomes among those not receiving grants increased, hence control and treatment groups converged in employment, earnings, and consumption levels.
 
Universal cash, food, or energy? A working paper by Coady and Prady simulates the effects of a universal basic income (UBI) in India. It finds that a sizeable percentage of existing beneficiaries of food subsidies (PDS) would be worse-off with a UBI, including the poorest households. Instead, the replacement of regressive energy subsidies would deliver unambiguous distributional gains.
 
Time for myth busting! An article by Handa et al dispels key preconceived ideas around cash transfers. For example, cash transfers are not spent on alcohol and don’t increase fertility; they don’t spark inflation and can be fiscally sustainable; and they don’t create dependency. For instance, cash transfers generate between 27 and 152% returns in local economies across Africa.
 
What’s the global state of pensions? An ILO report shows that the working-age population contributing to a pension ranges from 6.3% in Sub-Saharan Africa to 76.2% in North America. Coverage of pensions increased from 2000, particularly via non-contributory pensions (e.g., Namibia) and mixed schemes (e.g., China). Yet most social pensions don’t provide enough cash to lift people out of poverty (e.g., Russia).
 
It’s not just about benefits. Lustig’s edited handbook on the Commitment to Equity Project provides tools and evidence for fiscal incidence and distributional impacts of social protection. This is key for a field that is often focused mostly on the benefits side of the tax-benefit equation. The volume also shows that the poorest in low-income countries can be net-payers – they pay more than they receive from the state.
 
Can we better connect humanitarian assistance and social protection? Only a tiny fraction (2%) of humanitarian aid is channelled via host governments. But national capacities are often unable to meet vast humanitarian needs alone. How are countries addressing this dilemma? The evaluation by Maunder et al shows how humanitarian support to refugees in Turkey was progressively aligned with national systems.
 
Is it better to guarantee income or jobs? Ravallion’s review argues that guaranteed jobs are hard to implement in poor places. Yet, switching to a universal basic income may not reduce poverty more than workfare or finely-targeted transfers: “… the final outcome for poverty will of course depend on many factors, including the information available for identifying poor people and the feasible means of financing, including the scope for identifying and taxing rich people. (…) [It] is very hard to come out unconditionally on either side”. 

Building human capital starts with health

5 days 20 hours ago
Mothers register their babies while seeking health care at the Primary Health Centre New Karu, in Karu Village, Nigeria on June 19, 2018. Photo © Dominic Chavez/GFF

Health is a foundational investment in a country’s human capital.   Will a child live to celebrate her fifth birthday and be ready to attend school? Will she actually be able to learn and thrive in school? Will she grow to be an adult who can productively contribute to the society in which she lives?  All of this depends on robust health and nutrition, at every stage in her life.

Universal Health Coverage (UHC) —ensuring that all people have access to the quality health services they need at an affordable cost—underpins all of the Health Nutrition and Population (HNP) investments at the World Bank.  Last year, these reached $15 billion—our highest ever for HNP.  This is a good indication of how much demand there is from countries at all income levels to invest in health.
 
UHC Day, being celebrated today, is especially important this year because it is being marked officially for the first time by the UN and celebrated around the world. For the World Bank, it is doubly important because it closely follows the launch of our Human Capital Project (HCP) -- an ambitious effort to accelerate more and better investments in people. 
 
For too long, investing in people’s health and education has been seen as a consumption expense and an anchor on growth.   The HCP reverses this unsubstantiated view by placing investments in people at the epicentre of a country’s plans for sustained and inclusive economic growth.   It thus represents a huge opportunity to elevate country demand for investments in health even further.
 
A growing body of evidence shows that without a healthy, educated and resilient population, countries cannot compete effectively in the global economy.  When investments in health begin in the early years of life and are sustained through the life cycle, they lay a strong foundation for the growth and competitiveness of nations.  Investing in health systems that ensure that all people have access quality, affordable health services so that they are healthy and productive throughout their lives – the essence of Universal Health Coverage-- is thus a key human capital investment.
 
Nations need to ensure that their people are healthy so they can not only thrive in school and arrive at their jobs ready to work—but also continue to be skilled and able to perform those ‘jobs of the future’ over a lifetime. Poor health and nutrition hold people back from achieving their fullest potential at any point in life.  Investments in prenatal care for women, early nutrition and vaccination against common diseases can ensure the best possible start to life for children – but what’s equally needed is a focus on infectious and non-communicable diseases which hold adults back from leading full and productive lives.
 
UHC Day is a time to face up to some big basic deficits.

  • Half the world’s population still lacks access to essential health services.  And as three global reports have emphasized this year, access to services is by no means a guarantee of quality care. For example, ten percent of patients in low income countries, and seven percent in high income countries, can expect to acquire an infection in a hospital. Our research in seven African countries, for example, has found that patients were being diagnosed correctly fewer than 75 percent of the time. 
  • Unaffordable healthcare costs push 100 million people into extreme poverty every year. 
  • 800 million people worldwide spend at least 10 percent of their household budget on health expenses—which means they are having to choose between their children’s health needs and other necessities like education, food or bus fares. 
A big reason for these startling shortfalls in UHC is the massive underinvestment in the health sector. A country that ensures essential health services for its people should be investing about $90 per person per year into health.   In 2015, 71 countries fell short of this level of investment. And in 41 nations with a combined population of 2.6 billion people, governments were investing just $25 per person per year in the health of their people—about a quarter of what is needed.

Moreover, across all health systems – poor and rich – endemic inefficiencies in expenditure estimated at between 20 to 40 percent plague the pursuit of better value for money.    Overcoming such inefficiencies – getting more health for the money --- is a top priority everywhere.   

The Human Capital Project drive to increase demand from countries forces us ask – how best to do that in the health sector? Here are three principles for more and better investments in health:
  • Commit to universality: A truly universal system, with a commitment to equity so that all people are entitled to and receive quality healthcare, is non-negotiable. “Putting the last mile first” to prioritize the most vulnerable is not only right, it is the only way to ensure population-wide health and protect countries and economies from major disease outbreaks.   
  • Ensure affordability: People cannot thrive as long as they are bankrupting themselves to pay for healthcare when they or their children are sick.  This is the most inequitable, expensive and inefficient way to pay for healthcare. Large scale systems that pre-pay and pool healthcare payments and cover the whole population are the best way to ensure affordability.  
  • Mobilize a “whole of government” approach to health: UHC cannot be achieved with just the expertise and resources of the health sector. For example, clean water and sanitation are essential to good health and nutrition.  The Agriculture sector is key to safe and nutritious food, and to ensuring veterinary and animal health that secures us all against disease outbreaks. And investments in road safety are essential to reduce one of the highest causes of adult mortality globally – road traffic accidents.
The clarion call of the Human Capital Project is a chance to build the demand to drive broad, deep and accelerated UHC reforms across countries at all income levels.   And while there is no one-size-fits-all prescription, there is no doubt that common challenges can be overcome through collective ingenuity, scaled innovation and joint learning  On this UHC Day, let’s embrace this opportunity to make #Healthforall by 2030 a reality. There is no time to waste.

Out of Power? Political Capture of the Indian Electricity Sector -- Guest post by Meera Mahadevan

5 days 21 hours ago

In 2012, 700 million people in India suddenly found themselves without power for over 10 hours. At the time of the incident, political parties blamed each other for mismanagement and failing infrastructure. Such incidents reflect the extensive dysfunction in the sector, with technical problems and billing leakages that are among the worst in the world, amounting to 20% of electricity generated. The poor quality of electricity supply imposes major costs on the Indian economy; electricity shortages, for example, reduce manufacturing plant revenues by 5-10%. Why do these problems persist despite exponentially growing power generation? My job market paper shows that political corruption is one of the root causes behind unreliable electricity supply.

What is the link between political corruption and poor electricity supply? In democracies, incumbent politicians may consolidate power by favoring their voters with better access or lower prices. In India’s electricity sector, where politicians do not have direct control over electricity pricing, they may resort to illicit means in order to do this. Lower prices may actually benefit targeted consumers.  But such patronage is costly: it hurts the revenues of electricity providers, inhibiting their ability to invest in infrastructure, and lowering electricity reliability for all consumers. While subsidies and increased access benefit consumers in targeted constituencies, the resulting underinvestment by providers may lead to unreliable supply.

Estimating the often-ambiguous welfare implications of corruption is, therefore, a challenge. Especially since detecting corruption is hard: corruption is frequently concealed, complicating the task of making causal inferences and identifying mechanisms of corruption. In this research, I develop novel methods to address these challenges, and find that political corruption in the electricity sector leads to large revenue losses for electricity providers, worsening their ability to reliably provide electricity.


1. Detecting Corruption

Leveraging a close election Regression Discontinuity (RD) design from West Bengal, India, I show that regions aligned with the governing party are rewarded with illicit electricity subsidies. I find that shortly after a state-level election, there is an increase in actual electricity consumption, as measured by satellite nighttime lights data, for regions that voted for the winning party in the state government (Figure 1, panel A). Alone, this evidence appears to indicate selectively higher electricity access for these regions, possibly owing to politicians redirecting electricity distribution. However, constituencies of the ruling party have discontinuously lower levels of billed consumption (Figure 1, panel B). Being one of the few studies to have novel consumer-level billing data, spanning over 17 million accounts and several consumer categories including residential and commercial, such evidence has not been highlighted before.

The conflicting patterns of electricity consumption are consistent with the systematic under-reporting of billed consumption in targeted constituencies, effectively constituting an indirect subsidy.  And, the magnitude of under-reporting is large, constituting a discount greater than 40% of billed consumption for consumers at the RD cutoff.

Previous work relied on satellite nighttime lights or aggregated data to show suggestive evidence that politicians increase electricity supply before elections, to sway voters. However, these data alone cannot distinguish between a reduction in provider revenue, which has significant implications for investment, and a simple reallocation of electricity from regions supporting the opposition to those aligned with the ruling party.

Given the magnitude of underreporting, is it any surprise that the combined leakages from under-collection of bills, electricity theft and poor infrastructure in West Bengal was as high as 28% of electricity generated?


​2. Mechanisms of Corruption

To address the revenue-draining patronage that undermines electricity provision in India, we must understand how this patronage is practiced.

Using the close-election RD framework, I find selective data manipulation in the ruling party's constituencies.  I test for manipulation using two measures.  First, examining the consumption distribution of each electoral region, I observe that a discontinuously higher number of bills in the winning party's constituencies are multiples of ten, reporting consumption amounts such as 20, 30, and 40 units. This is consistent with data-tampering to lower the billed consumption of accounts in the ruling party’s constituencies. I confirm this with a measure based on Benford’s Law, which is commonly used to detect fraud in surveys, elections, and other contexts. This measure also shows a greater magnitude of manipulation in areas where the ruling party won local elections.

In a context where electricity meter inspectors have poor incentives to conduct meter readings, and accurately record electricity consumption, there is opportunity for local billing centers to manipulate the consumption data downwards. These billing centers are under the purview of the locally elected representative, or Member of Legislative Assembly, who holds a lot of power.

3. The Welfare Implications of Corrupt Practices

After finding evidence of political corruption in electricity billing, the question now is – what effect does this have on overall welfare? The magnitudes of the welfare gains to consumers and the deadweight loss determine the distributive consequences and policy urgency of the corruption problem.

To identify the welfare implications on each of the parties involved, I measure both the gains to consumers from receiving subsidized electricity and the lost revenue to the provider due to under-reported bills. I estimate the size of the loss in producer surplus from RD estimates of bill misreporting.

Estimating the increase in consumer surplus requires computing the price elasticity of electricity demand, which is made difficult by bill manipulation; therefore, I develop a method for calculating price elasticities of electricity demand in the presence of data manipulation. I first divide the data into two sets -- the set of regions where the data are plausibly unmanipulated by political influence, and the set that contains underreported bills. Manipulated data were far more likely to be in winning party constituencies, but there was manipulated data in other constituencies as well. Similarly, unmanipulated data were seen in both winning and losing party regions. . I estimate the price elasticity of electricity demand for the regions with unmanipulated data by taking exogenous, policy-determined variation in electricity prices (as set by independent regulators) as instrumental variables. I then use machine learning methods to predict elasticities for all regions, including those where data is manipulated.

Using the estimated underreporting in consumption, and the elasticity estimates, I find that losses of producer surplus are more than double the gain in consumer surplus for regions near the RD cutoff. Simple calculations show that the net welfare loss is sufficient to power 3.7 million rural households.

4. The Implications for Policy

In  theory,  politicians  may  be  able  to  target  basic  services  to  their  voters  who  need  it  the most,  increasing  their  consumer  surplus.  Indeed,  democracy could  play  an  important  role  in  ensuring  the  efficient  allocation  of  government  inputs  in an  effort  to  garner  votes.  However, it could also result  in misallocation, electoral cycles and preferential access – as I  find in this case. These distortions exacerbate the already poor quality of electricity supply.
 
This is particularly relevant as we move towards a future with renewable sources of power, which have large fixed costs. Corruption may deter private players from providing these technologies.  My paper underlines the importance of transparency in electricity provision. For instance, universal smart metering would eliminate middle men (meter readers) who enable corruption to occur. Smart meters are often expensive; however given the large deadweight losses from corruption, they may be justifiable. Similarly, shifting away from increasing block prices in electricity would make it easier for consumers and auditors alike to detect anomalies in billing. These steps would make the system more transparent and are policy actions to explore in the future.
 
Meera Mahadevan is a PhD student at the University of Michigan working on Development and Environmental/Energy Economics.
 

Is GovTech the missing ingredient to curb corruption?

6 days 13 hours ago



Along with other leaders from the World Bank Group, I am traveling back from a trip to Silicon Valley where we explored the links between technology and government, or GovTech, and their impact on developing countries and curbing corruption.

One thing that seemed to unite everyone we spoke to in Silicon Valley, from the smallest start-ups to global tech giants, was the quest for a “secret sauce” – that innovative tech solution that sets a company apart from its competitors and gives it an edge.

So, is there a “secret sauce” in the fight against corruption? And is GovTech part of that recipe? 

There are three big areas where GovTech can make a difference. [[tweetable]]By leveraging the power of social networks, technology can change the balance of power between corrupt officials and citizens[[/tweetable]], like in India and Albania. It can create social pressure for change by crowdsourcing detailed, geo-localized data on where and how corruption is affecting the lives of people.



Second, [[tweetable]]the AI revolution is opening-up unprecedented opportunities to identify suspicious or corrupt patterns in apparently unconnected data.[[/tweetable]] This provides new tools for investigators and, provided they can safely access and process large amounts of data, really increases the likelihood of identifying complex fraud and corruption schemes. For instance, the World Bank is partnering with Microsoft to counter corruption by leveraging Microsoft AI technology with World Bank procurement data 

Third, digital transformation provides an opportunity to leverage the power of good design. This includes designing software, such as distributed ledger technology including blockchain, that makes it harder for corrupt activities to be hidden. If used well, this [[tweetable]]technology has the potential to positively realign the power dynamics between citizens and the state and improve transparency in the use of public funds so that beneficiaries prosper.[[/tweetable]]

Yet, at the end of the day, cooking is not just about the quality of the secret ingredient or the innovation of the technique – it is about creating valuable connections with others. Success in using technology to fight corruption is very similar – it boils down to creating the conditions that empower and incentivize people to make use of the amazing potential brought about by technological innovation.

Renaud Seligmann on the potential of GovTech #s7video_div.s7videoviewer{ width:100%; height:auto; } var s7videoviewer = new s7viewers.VideoViewer({ "containerId" : "s7video_div", "params" : { "serverurl" : "//worldbank-h.assetsadobe.com/is/image", "contenturl" : "//www.worldbank.org//", "config" : "/etc/dam/presets/viewer/Video", "config2": "/etc/dam/presets/analytics", "videoserverurl": "//gateway-na.assetsadobe.com/DMGateway/public/worldbank", "posterimage": "/content/dam/videos/ecrgp/2018/dec/Tech%20and%20corruption-.mp4", "asset" : "/content/dam/videos/ecrgp/2018/dec/Tech and corruption-.mp4" } }).init();

Finding gender-based violence solutions in humanitarian settings

6 days 13 hours ago

Every day, more than 44,000 people are forced to flee their homes because of conflict and persecution. [[tweetable]]Forced displacement increases the risks of gender-based violence (GBV), especially intimate partner violence.[[/tweetable]]  In some humanitarian settings, sexual violence—by both partners and non-partners—is also exacerbated.

Girls’ mobility is often restricted, and rates of child marriage may increase. Women and girls can experience violence at every stage of their journeys, including at camps, transit countries, when they reach their destinations, and when they return home to a war-ravaged setting.

Despite these challenges, to date there has been very little research to identify effective interventions to prevent and address GBV in humanitarian settings.
 

The World Bank Group and Sexual Violence Research Initiative (SVRI) are working to try to build the evidence base through the Development Marketplace: Innovations to Address Gender-Based Violence. Over the last three years, 30 research projects in 25 low- and middle-income economies have been awarded more than $3.4 million.

WAHA International's 2016 Development Marketplace proposal featured focus group discussions  with Syrian refugees in Greece. (Photo: Judit de Diego)
Among these, projects in Lebanon, Greece, Ethiopia, and Rwanda are building knowledge on the drivers that increase GBV in these settings, along with how to prevent and respond to GBV among refugees. During the 16 Days of Activism Against GBV, we’d like to shine a spotlight on them:
  • 2016 Development Marketplace award-winning researchers from Queen’s University and the ABAAD Resource Center for Gender Equality have investigated factors that contribute to child marriage among Syrian refugees. In addition to the profound negative impact on girls’ physical and psychological health, child marriage limits access to formal education and increases vulnerability to GBV. Girls who marry early are a greater risk of experiencing intimate partner violence, and tend to be less healthy, less productive and less empowered, which has far-reaching impacts that extend to the next generation. A 2017 report by the World Bank and the International Center for Research on Women found that by 2030, child marriage will cost developing countries trillions of dollars. The Lebanon study revealed that a complex myriad of factors is responsible for child marriage among Syrian refugees, including poverty, lack of educational opportunities, and concerns about harassment and GBV during displacement. Men and women in the group have different views about the most important causes of child marriage. This suggests that gender-specific strategies may be most effective. This year, Researcher Dr. Susan Bartels delivered a TED Talk, "Why the World Marries," on the study findings.
     
  • Also in 2016, Women and Health Alliance (WAHA) International won Development Marketplace funding to conduct in-depth interviews, focus group discussions, and participatory learning among Syrian women and men in numerous sites in Greece. Healthcare providers in refugee camps had reported seeing a shift from refugees presenting with acute physical health issues to them presenting with mental health disorders, and found there was a heightened risk of GBV. The resulting study showed  that among refugees in Greece, addressing mental health disorders and GBV should be prioritized, including psychosocial training for healthcare providers and strengthening referral mechanisms for specialized care. The findings also emphasize the importance of incorporating female healthcare providers and interpreters into medical teams, and highlighted a need for coordination between NGOs and health authorities.
     
  • In 2017, a multi-disciplinary team of physicians, academics, practitioners and journalists from Fondation Hirondelle, Harvard T.H. Chan School of Public Health, Addis Ababa University School of Public Health and Women and Health Alliance International Ethiopia received a Development Marketplace award to explore using podcasts to prevent intimate partner violence among Somali refugees in Dollo Ado, Ethiopia. The researchers are training men and women in refugee camps in digital storytelling and podcasting. Refugees are being empowered to develop podcast content that they believe will transform gender norms and behaviors in their community. These podcasts allow people to share their own stories, as well as create opportunities for community-based dialogue.
     
  • The 2018 Development Marketplace awards are helping Fundación Plan International España and Johns Hopkins Bloomberg School of Public Health to study whether empowerment training, delivered during the provision of efficient and clean cooking technology, can impact gender-based violence in a refugee camp setting in Rwanda. Targeted empowerment training, undertaken over 3-4 days, aims to improve mental health and increase personal agency, as well as improve uptake and use of clean fuels and cookstoves. This has already been shown to enhance productivity, self-efficacy, and fortitude. The next stage of this study, which is engaging men as well as women, will establish if it has an impact on GBV.

Globally, we are now seeing the highest levels of displacement on record. An unprecedented 68.5 million people have been forced from their homes, including nearly 25.4 million refugees. This adds extra urgency to the need to close evidence gaps and identify how to reduce and respond to the risks of GBV in humanitarian settings.

For more information about the impact of the Development Marketplace: Innovations to Address GBV, see our earlier blog, Innovative research has an impact against gender-based violence.

Scaling the use of Islamic finance for infrastructure: MDBs can help

6 days 17 hours ago



Using Islamic finance for infrastructure development attracted more attention recently in the quest to maximize finance for development.

At the recent World Bank-IMF Annual Meetings in Bali, the World Bank and the Islamic Development Bank (IsDB) co-hosted a symposium on Islamic infrastructure finance, building on the institutions’ strategic partnership. As we note in Mobilizing Islamic Finance for Infrastructure Public-Private Partnerships, the asset-backed, ring-fenced, and project-specific nature of Islamic finance structures and their emphasis on sharing risks make them a natural fit for infrastructure public-private partnerships (PPPs).

However, we see that concerns remain about using Islamic finance for infrastructure PPPs. At the Middle East and North Africa (MENA) PPP Forum in Dubai in September we fielded many questions from attendees that included PPP practitioners from the public and private sectors, leaders of MENA government PPP units, high-ranking ministerial representatives of Gulf Cooperation Council states, bankers, investors, and consultants.

Essentially, they can be reduced to two: [[tweetable]]How can we understand and access Islamic finance? And, how can we reduce its cost?[[/tweetable]]We believe the World Bank Group, with the help of IsDB and other development partners, can address these issues and raise awareness around the attractiveness of Islamic finance by tackling two of the major impediments to its deployment: lack of awareness and capacity, and the higher cost of Islamic finance.

 
An opportune moment
 
We are currently experiencing a defining moment in development finance. Over the past several years, the international community has acknowledged the need to gather all stakeholders and potential sources of finance in service of development; see the UN Conference on Financing for Development in Addis Ababa in 2015, the adoption of the 2030 Sustainable Development Agenda, and the 2017 Hamburg principles. These efforts have been translated at the World Bank Group through the Maximizing Finance for Development approach.

Multilateral development banks (MDBs) can play a two-fold role in this approach: they’re best placed to demonstrate to developing countries the value of the private sector by playing a bridge-building role; and MDBs can improve the risk-return profile of individual investments through an array of instruments—improving project viability, building markets, and thus attracting commercial capital at a lower cost.

The role the World Bank Group is taking towards the private sector—catalyzing resources for governments, and at a higher level to create an enabling environment for their access—is exactly the same role Islamic finance needs the World Bank to undertake and what we are on our way to do.

[[tweetable]]Now is the time to not only bring awareness to Islamic finance as an additional—and relatively untapped—source of financing, but also to facilitate its use.[[/tweetable]] There is a wide variety of Islamic finance structures, instruments, and actors to be explored that can work alone or combined with conventional financing in blended structures.

The Islamic Financial Services Board recently released the Flagship Islamic Financial Services Industry Stability Report 2018, which found that the Islamic capital market has grown 8.3 percent over the last year, with its total worth now surpassing the $2 trillion mark.

Building awareness and capacity

[[tweetable]]For Islamic finance to reach its potential, MDBs can render it more attractive and eventually scale its use by reassuring both client countries and commercial banks and reducing transaction costs.[[/tweetable]] This means building awareness and capacity among stakeholders, and some degree of standardization in terms of both access to Islamic finance and instruments used.

The World Bank Group has been involved in Islamic finance and its use for infrastructure PPPs for quite some time now, and has a role to play in demonstrating its value. Lessons learned from projects financed under Islamic modes or with an Islamic tranche can address the concerns of conventional lenders and show with specificity how this is accomplished. In that vein, we are continuing to develop case studies to enhance the body of knowledge on experiences where Islamic finance for infrastructure PPPs has been successful.

Standardizing instruments, reducing costs

As project-related documents and contracts become standardized, the higher cost of structuring attributed to Islamic finance will even out, creating a more equal playing field for conventional and Islamic finance actors. This is why our team is developing a Reference Guide for Islamic Finance and Infrastructure PPPs, a road map of sorts.

While each transaction is unique and its documentation must be tailor-made, a base level of standardization can help Islamic finance practitioners understand the most common credit and legal aspects they are likely to encounter. Our reference guide will include a portfolio of standardized contracts and other documents to offer a starting point and framework.

Stay tuned for more on the reference guide, with its release expected in 2019. In the meantime, please feel free to leave us a note below to start a dialogue.
 


Related Posts:

REPORT: Mobilizing Islamic Finance for Infrastructure Public-Private Partnerships


How Islamic finance can boost infrastructure development


2018 Dubai MENA PPP Forum: Key takeaways

 
Can Islamic finance unlock funds for development? It already is

 
A timely report on mobilizing Islamic finance for PPPs


Tapping into Islamic finance for infrastructure development
 

 

Road safety action pays off, and “demonstration corridors” are here to prove it

6 days 18 hours ago


Last year, road crashes claimed more than 150,000 lives in India, making road safety an essential element of any road project in the country.

In line with international experience and practice, the World Bank has progressively developed a comprehensive approach to road safety that doesn’t just consider infrastructure design but brings together all key stakeholders that have a stake in making and keeping roads safe, from police authorities to transport and health departments as well as infrastructure providers.

One example of this approach is the 138.6-km-long Kadapa to Renigunta safety demonstration corridor implemented by the Government of Andhra Pradesh under the Andhra Pradesh & Telangana Road Sector Project (APTRSP).
 
The corridor itself was chosen based on its poor safety performance in 2010 through an International Road Assessment Programme (iRap) survey. To enhance the safety of the demonstration corridor, the following measures were proposed:
  • Infrastructure improvements
  • The creation of a new fully-equipped trauma care center at a local hospital
  • Improved enforcement of traffic laws
  • Targeted initiatives focused on particular road users.
The Transport Department was designated the Lead Agency for implementing the Safe Road Corridor and a Road Safety Cell was set up within the Department.  When we started implementing these interventions back in 2014, this was one of the first deliberate multi-sectoral efforts to improve the safety of a road in the country. As the project is nearing completion, now is a good time to look at preliminary results. Between 2009 and 2017, the number of fatalities declined by 40%, from 0.26 to 0.16 per ten thousand vehicles. While these numbers are certainly encouraging, we know we can take this further, so let’s take stock of what worked and what could be improved.

Promising achievements

The impact of civil works.  Civil works were focused on the most vulnerable sections of the road, and involved interventions such as curve and junction improvements, widening, retro-reflective signage, lane markings, safe pedestrian crossings, crash barriers and road studs. The results were impressive:  locations where curves and junctions were improved saw a 53% reduction in road crashes and 42% reduction in fatalities.

Effective enforcement for safer driving. Two Highway Patrolling Outposts were created at Rajampet and Renigunta and equipped with tow-away cranes, patrolling vehicles, speed laser guns, breath analyzers etc. The focus of enforcement was on checking over-speeding and drunken driving, and accidents involving cars, auto-rickshaws and light commercial vehicles dropped.



Evidence-based interventions. The Transport Department took a close look at available data to understand the main risk factors that contributed to crashes on the corridor. The exercise revealed, for instance, that many collisions involving trucks occurred because many drivers did not take the time to rest and freshen up during their shift—which led to the development of the innovative Stop-Wash-Go Program. Using the same method, government officials also realized many drivers were speeding because they wanted to reach the holy town of Tirupati in time for early morning ceremonies.

Some room for improvement

Coordination with the Health Department has not always been seamless. As an example, the newly-built Trauma Care facility at Rajampet remains unutilized due to a lack of specialized staff.

The case for a more ambitious civil works program.  The targeted stretches accounted for only a small subset of accidents and fatalities.  The majority of accidents are spread across the rest of the corridor, which would have benefited from a more comprehensive treatment.

The issue of motorcycle helmet use. More than 90% of motorcycle drivers and pillion riders drive without a helmet—a blatant safety issue that remains largely unaddressed. Alternate strategies for behavior change and political championship will be essential.

Toward a bigger, bolder road safety program

The state has identified Road Safety as a priority and constituted a State Road Safety Council headed by the Chief Minister which convenes every month. This in turn is supported by District Road Safety Committees (DRSC) which also meet every month and are required to submit district level data regularly to the Council. The state has set itself a target of reducing fatalities by 15% by 2020 and 50% by 2025, and a suitably empowered and data-savvy Transport Department leads this effort.

Based on the experience on the Kadapa-Renigunta demo corridor, the Transport Department now plans a sizeable scale up of the programs in each of the 13 districts in the state. Some 1620 km of vulnerable road sections have been identified to be part of the next phase. Building on the success of the first demonstration corridor, the World Bank looks forward to expanding this approach—and saving lives across the state.

Teachers are not the problem

6 days 20 hours ago

The Economist recently published an article about the promise of technology to improve the quality of education in low- and middle-income countries. It gives a balanced view of technology’s potential: It isn’t “a substitute for well-qualified, motivated teachers” and in order to work, “tech innovations need the acceptance of teachers and administrators.” But it can help teachers to manage classrooms with students at dramatically different learning levels, and it can help administrators to monitor teacher performance. The examples in the articles are backed up by high-quality studies of the impact of educational technology on student learning.

Here’s what I believe the article gets wrong: “The big problem is teachers: often too few, too ignorant—or simply not there.” It goes on to cite evidence produced by the World Bank on high teacher absenteeism and low teacher knowledge. But the problem with this framing is that it casts teachers as the villains, when in fact underperforming teachers are the product of underperforming education systems. (The Economist is not alone in this framing. When the data show teachers underperforming, it’s easy to point to them as the problem.) I explain in more detail in this week’s Economist.

Your article on the promise of education technology asserted that in low-income countries, “the big problem is teachers” (“Teacher’s little helper”, November 17th). But all the examples you provided of effective technology require teachers to get on board. In the account of Kenya’s Tusome programme the teacher is delighted to receive better feedback from a coach. In South Africa a programme using technology to provide coaching to teachers from a distance was effective because the teachers engaged with it.

Moreover, why is it that teacher absenteeism is high? Teachers are not morally different from their peers in other professions. Indeed, many professionals would also register high rates of absenteeism if, for example, they were asked by their supervisors to canvass for political campaigns, or simply if no one cared about their absence. And the answer to why teachers often lack crucial knowledge and pedagogical abilities is that education systems often use criteria other than merit to hire them and neglect to train teachers with serious practical skills. The big problem is not teachers, but rather education systems that fail to select, prepare and support them.

I’m a professional economist, and I studied for years to be able to do the work that I do. If the World Bank had hired me without adequate training, and then I wasn’t qualified to do the job, who would be the problem? If my supervisor never seemed to care if I showed up – or worse, if she sent me to do chores unrelated to my job – and then I wasn’t in my office when inspectors came by, who would be the problem? I am able to do my job because I was trained to do it and then recruited based on that training. I show up to work because I believe I am valued, because I receive support to do my job, and because I know that there are consequences if I don’t.

Teachers have agency. But let’s not call them “the problem” until we’ve trained them well, recruited the best candidates, and provided them with both support and accountability. Otherwise, the problem is much bigger than any teacher.

Good Fathers & Lemon Sons: Why Political Dynasties Cause “Reversals of Fortune” -- Guest post by Siddharth George

6 days 20 hours ago

Aquinos, Bhuttos, Trudeaus, Yudhoyonos, Gandhis, Lees, Fujimoris: political dynasties remain ubiquitous in democratic countries.  Though many societies democratised to end hereditary rule, nearly half of democratic countries have elected multiple heads of state from a single family.  Politics is significantly more dynastic than other occupations in democratic societies.  Individuals are, on average, five times more likely to enter an occupation their father was in.  But having a politician father raises one's odds of entering politics by 110 times, more than double the dynastic bias of other elite occupations like medicine and law.  Despite their prevalence and influence, we know little about the economic effects of political dynasties.

Effects of dynastic politics are theoretically ambiguous

Economic theory makes ambiguous predictions about how dynastic politics affects development.  On the one hand, bequest motives might lengthen politicians’ time horizons  and encourage them to make long-term investments. These founder effects could be good for economic development.  However, if some political capital is heritable (e.g., a prominent name or a powerful network), dynastic politics may render elections less effective at selecting good leaders and disciplining them in office.  These descendant effects are likely bad for development.  The overall impact of dynastic politics is ambiguous, because it is the net result of founder and descendant effects.

 
India: our setting to study political dynasties
 
We study the economic impacts of dynastic politics in India, where legislators play a significant role in local economic development, and the merits of dynasties are publicly contested.  We identify family ties between politicians by compiling detailed biographical information on all members of India's national parliament (MPs) since 1862, when Indians were first allowed to serve in the British-era legislative assemblies.  We document that political dynasties are widespread in India: 10% of MPs are children of former MPs, which is nearly 2,500 times higher than random chance would predict, and over 35% of villages have been represented in the national parliament by at least one dynastic politician.

We employ three different empirical strategies to identify (i) descendant effects, (ii) founder effects, and (iii) the overall impact of a dynastic political environment on economic development.


 
Dynastic descendants are bad for development
 
First, we identify descendant effects using a close elections regression discontinuity (RD) design. We focus on close races between dynastic descendants (i.e., direct relatives of former officeholders) and non-dynasts, and compare places where a descendant narrowly won to those where a descendant narrowly lost. In these elections, descendants and non-dynasts have similar demographic and political characteristics, and they win in similar places and at similar rates. Nevertheless, we find that villages are poorer and have fewer public goods after being represented by a descendant for an electoral term.  Households are less likely to live in a brick house and to own basic amenities like a fridge or mobile phone.  An additional standard deviation of exposure to descendants lowers a village’s wealth percentile by 12 percentage points (i.e., a village at the median wealth level in a district would be at the 38th percentile after a term of descendant rule).
 
Reason descendants underperform: moral hazard

Moral hazard is one reason that descendants underperform. Descendants face moral hazard because they inherit voters loyal to their family predecessor (typically a father), dampening incentives to exert effort and perform well in office.  A significant fraction of political capital appears to be heritable: the parent-child vote share correlation is 0.23, about one-third as large as the correlation between a politician's own vote shares in different elections.  We isolate the effects of moral hazard on performance using constituency boundary changes, which affect the overlap between a descendant's electoral district and her predecessor's former electoral district.  Redistricting provides a shock to the number of votes a descendant inherits each election.  The same descendant earns 1.2pp more votes and completes 2.8pp fewer projects when redistricting increases the spatial overlap between her constituency and her father's former constituency by 10%. Overall, moral hazard explains about 40% of the performance gap between descendants and non-dynasts.
 


Bequest motives are good for development
 
Second, we show that bequest motives encourage politicians to perform better in office.  To test whether bequest motives affect in-office behaviour, we identify a shock to politicians' time horizons.  Women face significant barriers to enter politics in India (only 9% of candidates are women). As a result, conditional on the number of children, politicians who have a son are twice as likely to found a dynasty (relative to politicians with only daughters), even though they appear similar on most demographic and political characteristics. Politicians with a son exert more effort while in office: they are 2pp more likely to complete local development projects (even conditional on the same implementing agency), 6pp more likely to hold the stipulated quarterly meeting with local bureaucrats to take stock of constituency development work, and are assessed by voters to perform better in office.
 


Overall effect of dynastic politics: a “reversal of fortune” development pattern

If fathers are good and sons are bad, what is the overall effect of dynastic politics?  To estimate the overall effect of a dynastic political environment, we attempt to simulate the ideal experiment of going from a world where dynasties are not possible to a world where they are possible.  Recall that (i) having a son increases a politician’s chance of establishing a dynasty and (ii) sons typically run in their fathers’ constituency.  As a result, a place represented by an MP with a son in generation t is more exposed to founder effects in generation t and descendant effects in generation t+1.   Places “blessed” to be represented by an MP with a son thus initially develop faster than places represented by MPs with only daughters, due to positive founder effects.  But they fall behind once the second generation of politicians enters politics and the sons inherit their fathers’ constituencies, due to negative descendant effects.  In our sample, the negative effects of descendants so outweigh the positive effects of founders that by the end of our sample period, places represented by an MP with a son in generation one (the first three decades after India’s independence) are poorer and have fewer public goods at the end of generation two (in 2012).  Dynastic politics has an overall negative economic effects and results in a distinct “reversal of fortune” development pattern that is consistent with the lifecycle of a dynasty, but inconsistent with the most obvious confounding explanations (e.g., unobserved differences between politicians with sons and politicians with only daughters). Moreover, both the initial positive effect and the subsequent negative effect are absent in strongholds of parties with norms against dynasties, like the Communist parties. Overall, a standard deviation increase in exposure to dynastic rule lowers a village's wealth percentile rank by 7pp.



A simple theory of dynastic politics

These empirical facts are consistent with a simple theory of dynastic politics, whose key element is that  both human capital (e.g. governing ability) and political capital (e.g., name recognition, network) are heritable.  Heritable human capital creates signalling incentives for parents to perform well in office and signal that their descendant is competent.  But inherited political capital allows descendants to persist in power even when they underperform.

Policy implications

Our results imply that heritable political capital weakens the ability of elections to select talented leaders and discipline them while in office.  Our findings also suggest that a significant portion of inherited political advantages appear to be local.  Policy tools to limit the ability of children to run in their parents’ former constituency – such as those currently being considered by the Philippines Senate – may help discipline dynasties and perhaps even harness dynastic incentives for good. 
 
Siddharth George is a PhD student at Harvard University.
 

A bird’s eye view: supervising water infrastructure works with drones

6 days 20 hours ago
Aerial drones have zoomed their way into almost every aspect of the modern world, and the development sector is no exception. In Kinshasa, the capital of the Democratic Republic of Congo, drones have become an indispensable part of a major water project supported by the World Bank. The Bank is financing major infrastructure works to ensure that the city’s rapidly growing population is supplied with potable water.  Since the start of the Urban Water Supply Project, or PEMU, nearly two million Kinois have gained access to safe, clean drinking water.

With wide-ranging infrastructure works still taking place across the vast megacity, the project has deployed drones to plan interventions, supervise complex construction sites, and record progress. Simple supervision footage from Kinshasa’s Kikwit Road shows real-time progress during the construction of a main pipe providing water to around 800,000 people:


Drones have become much more cost-effective and easier to operate in recent years and are now able to record high-definition video at a very affordable cost (roughly $1,000). This technology represents an excellent opportunity for Bank teams, project implementation units, and supervisory consultants to improve planning and management, as well as to communicate progress to stakeholders and the public in a visually effective way. Drones can also be used in remote areas or FCV context where supervision missions or site visits are particularly difficult to organize (permits for filming with drones are needed in some countries and situations).

As the Bank continues to expand access to drinking water across Kinshasa, drone technology will remain an integral part of the project.
 

Ghana’s Growth History: New growth momentum since the 1990s helped put Ghana at the front of poverty reduction in Africa

1 week 12 hours ago

Ghana is a politically, economically, ethnically and demographically diverse country. The origins of economic and social inequality between the north and south of Ghana are largely due to geography and historical legacies of inequality established in colonial times. Still, the country had and has been successful in preventing tensions and conflicts, in part because Ghanaian government has maintained ethno-regional balances in representation.

The most recent Systemic Country Diagnostic for Ghana, Priorities for Ending Poverty and Boosting Shared Prosperity, analyzed the country’s historical development path to identify achievements and challenges and opportunities to establish potential pathways to the future. Ghana’s economic growth rate stabilized in the early 1990s and induced a development momentum that allowed the country to achieve lower middle-income status in 2011. Ghana grew at 1.9% per year on average between 1993 and 2005, and 4.5% per year after 2005 (Figure 1(a)), considerably above the averages for non-high-income Sub-Saharan African countries (2%) and for low-income countries (2.6%), and slightly above lower-middle-income countries (LMICs) at 4.4%. This acceleration was in part due to higher prices for Ghana’s main commodity exports, notably gold and cocoa, and the start of commercial oil production in 2011. After a peak in 2011, growth declined to a mere 1.6% in 2015 due to a combination of declining commodity prices, energy rationing, and a fiscal crisis in 2013. Since 2015, growth picked up, and the country’s gross domestic product (GDP) grew 8.5% in 2017.

This growth momentum helped place Ghana at the forefront of poverty reduction in Africa. The country achieved the first Millennium Development Goal (MDG) of reducing the national poverty rate by more than half, from 52.7% in 1991 to 24.2% in 2012., Ghana’s international poverty headcount, which was higher than the average LMIC poverty rate in the 1990s, is lower today at 13.6% compared to 18.3%. The national poverty rate declined by a record 12.2 percentage points during 1991–1998, by 11 points during 1998–2005, and by 7.7 percentage points during 2005-2012.  Then poverty reduction slowed dramatically to only by 0.8 percentage points during 2012–2016, reflecting a fundamental change in the pattern and drivers of growth.
 

Figure 1: Trends in GDP Growth and Poverty

(a) Ghana GDP (Constant 2010 US$), US$ billion

(b) Poverty rate using National Poverty Line (%), 1991–2012

Source: World Bank, World Development Indicators (WDI), and Ghana Living Standards Survey (GLSS3–6).


Faster growth after 1990 reflects increasing productivity and human capital accumulation, which overtook labor accumulation as drivers of growth. Human capital accumulation, in terms of labor and education, was the main factor contributing to growth in 1970–1990 ( Figure 2 ). Total factor productivity (TFP) growth has been particularly strong between 1991 and 2005; since 2005, fixed capital investment became the primary driver as investments in the natural resource sector soared.
 

Figure 2: Ghana Growth Accounting, 1970–2016

Sources: World Bank, WDI; Geiger, Trenczek, and Wacker (2018), based on Penn World Table (PWT) 9.0 and the WDI.


Increased agricultural production and human capital development helped deliver Ghana’s rapid and steady decline in poverty. Poverty rates among cocoa farmers declined from 60% in 1991 to 24% in 2005. Food production doubled during this period. Meanwhile, Ghana embarked on a major expansion in education. Primary school enrollment rose from 66 to 89% during 1990–2016; and secondary enrollment rose from 36 to 62%. Between 1991 and 2012, the share of workers without schooling almost halved, and by 2012 many workers had completed junior secondary education. Each additional year of education is associated with a 6–10% increase in earnings.

At the same time, Ghana went through a significant structural transformation and a rapid urbanization. The share of employment in agriculture fell from 62% in 1991 to 42% in 2015 as it rose from 28 to 43% in services. Service replaced agriculture as the largest sector of the economy. Meanwhile, industry saw its share decline to the level where it had been in 1960, just 5.5% of GDP. Ghana has also experienced rapid urbanization that is associated with the shift of labor into services. The share of the population living in urban areas rose from 36% to 55% during 1990–2016.

The country’s progress was reflected in improved indicators of human capital development. Life expectancy is now 62 years. Ghana’s Human Development Index rose 27% during 1990–2016. Fertility decreased from 6.2 births per 1,000 women to 4.2 during 1988–2014, reducing Ghana’s dependency ratio; the share of births attended by skilled personnel rose from 40 to 74%; under-5 mortality declined by more than half. Gender parity has been achieved in primary education. Just under 85% of the population has access to improved water sources and 81% to electricity in 2016/17 (up from 45% in 2005/06).

This blog is the first in a three-part series to present the key findings of the Systemic Country Diagnostic for Ghana, Priorities for Ending Poverty and Boosting Shared Prosperity along three areas: achievements, challenges and opportunities and pathways for the future.

How to define a metro area?

1 week 16 hours ago
[[tweetable]]How would you define the area of Indonesia’s capital city, Jakarta?[[/tweetable]]
 
a: Simply using the administrative boundaries of the Special Capital Region of Jakarta?
b: Based on the extent and density of population?
c: Using nighttime lights data?
d: Or, what about a definition based on commuting flows as used in the U.S. approach to defining metropolitan statistical areas?
  a. Administrative boundaries b. High-density population cluster c. Brightly-lit urban area d. Strength of commuting flows [[tweetable]]Globally, a growing number of cities spill across their administrative boundaries, meaning that many urban issues now need to be addressed at a metropolitan level. [[/tweetable]]However, to do this, it is first necessary to delineate the “true” extent of a metro area. How else, after all, will policymakers be able to identify which local governments need to work together to provide transport and other essential public services?  
But how to define a metro area?
 
Defining cities based on their administrative boundaries is often inadequate as these frequently over- or under-state true city areas – few would disagree, for example, that the “true” area of Jakarta is far greater than that of the Special Capital Region. Given the inadequacies of relying on administrative boundaries, experts from a range of disciplines – economics, human geography, and remote sensing – have attempted to develop alternatives, leveraging, in many cases, satellite imagery and high-resolution “gridded” population data sets such as LandScan or GHS-Pop that cover the entire planet.
 
Despite a proliferation of approaches, however, little is known about how different approaches compare in terms of the areas they define. Likewise, little is known about whether the choice of approach makes a difference to our understanding of key empirical relationships – such as the strength of agglomeration economies (i.e. the strength of productivity benefits associated with a city’s size and density) – relating to the working of cities.
 
In our recently published working paper, we compare the results from a benchmark “first-best” approach to defining metro areas based on commuting flow data with three other prominent approaches (see table below), which rely on satellite imagery and/or global gridded population data sets.
  Approach Source How to define metro area? Thresholds 1. Commuting flow approach Duranton (2015) A collection of districts with strong commuting ties which form a functional labor market. Commuting flow threshold, at every 0.5% between 7% – 27% 2. Agglomeration index Uchida & Nelson (2008) A group of relatively densely populated grid cells within a reasonable travel time of a sizeable “core” city. Core: Population ≥ 50,000
Density ≥ 150 people/ km2
Travel time from the core ≤ 60 min 3. Cluster algorithm Dijkstra & Poelman (2014) A spatially contiguous group of relatively densely populated grid cells, for which the aggregate population exceeds a threshold level. High-density cluster (HDC):
Density of each cell ≥ 1,500 people/km2
Aggregate population ≥ 50,000
Urban cluster (UC):
Density of each cell ≥ 300 people/km2
Aggregate population ≥ 5,000 4. Nighttime lights (NTL) thresholding   A spatially contiguous group of brightly lit grid cells. Brightness threshold at every 5th percentile within national range of NTL brightness (0 – 1,340.44) In doing so, we use Indonesia as a case study, taking advantage of the fact that, unlike most other developing countries, its labor force survey provides data on commuting flows between subnational areas. This allows us to assess how well other approaches do in defining metros compared to the “first-best” approach, which is useful to know for (the many) settings in which commuting data is not available.
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However, even with the “first-best” approach, it is necessary to select a threshold commuting flow level to determine whether two subnational areas are sufficiently strongly linked to be considered part of the same metro. Similarly, the other three approaches require their own choices of thresholds and so we also analyze how the choices of thresholds across the different approaches affects the metro areas defined.
 
Unlike the commuting approach, which directly aggregates subnational administrative units (districts) into metro areas, the three other approaches, which define cities as collections of grid cells of 1 square kilometer or less, require an additional step to map their results to Indonesian districts.
 
Although the definition of cities using high spatial resolution grid cells would seem to be a key advantage that the other approaches hold over the commuting approach, the reality is that most data, including that necessary to estimate the strength of agglomeration economies, is not available at such a fine spatial scale. Beyond producing pretty maps and generating basic statistics on population and area, this limits the practical usefulness of defining metro areas at the grid-cell level.
 
To map from metros defined at the grid cell level to the district-level, we always apply the same basic rule: namely, we associate two or more districts with a single urban extent and consider it to be a metro if at least 50 percent of each district’s population belongs to the urban extent. We also test the sensitivity of our results to higher population share thresholds, finding them to be largely robust.

[Download paper: Definition Matters: Metropolitan Areas and Agglomeration Economies in a Large Developing Country]
 
Three key results 
  1. Many smaller metros versus a few large ones.
One big difference between the commuting and other approaches is in how metros “grow” as thresholds (i.e. commuting flow, population density or nighttime lights brightness) are relaxed. The commuting approach steadily adds new metros as the commuting flow threshold is lowered.
 
But, except for Jakarta, it always keeps the area of each metro (relatively) small by never aggregating more than five districts. Hence, the number of metros grows from 2 to 39 as we lower the commuting flow threshold from 27 percent (which is when the first metro emerges) to 7 percent, while the average number of districts per metro remains below 3.
 
Thresholding of nighttime lights works in the opposite way. As the brightness threshold that defines a metro is lowered, new districts are aggregated to existing metros, resulting in the expansion of metros rather than the emergence of new ones. Hence, this approach keeps the number of metros roughly the same – between 8 and 10 – over a wide-range of brightness thresholds.
 
This results in some metros becoming implausibly large at lower thresholds. In the most extreme case, almost the whole of Java – Indonesia’s most populous island – forms one gigantic metro area. This is very similar to the results obtained when instead using the Agglomeration Index (AI), which was first introduced in the 2009 World Development Report, to define metro areas.
 
In the case of the cluster algorithm, switching from the high-density cluster (HDC) to the urban cluster (UC) set of thresholds increases both the number and sizes of metros. But a common feature of all three non-commuting approaches, particularly at lower thresholds, is that they yield a small number of very large metros on Java. 
  1. Strong agreement on cores, but not on peripheries.
For a more formal comparison of the maps of metro areas generated by the different approaches, we used the Jaccard index. This index measures the level of agreement between any given pair of maps.
 
Overall, the three non-commuting approaches that rely on satellite imagery and/or gridded population data show, at best, only a moderate level of agreement with the “first-best” commuting approach to defining metros. This moderate (or worse) level of agreement stems from how each approach defines the peripheries of metro areas. Different approaches show strong agreement around what most Indonesians would recognize as the metro cores. However, as the below figure shows for Surabaya, there is far less agreement on what constitutes a metro’s periphery.
  1. Definition matters for the estimated size of the agglomeration wage premium.
Finally, we assess whether the choice of approach matters for estimating the size of the agglomeration wage premium, which is a measure of how strongly the density of a city affects the productivity of its workers. The estimated size of this premium matters, for example, in evaluating the expected benefits from policies that are designed to counter sprawl and promote compactness (think of policies to promote transit-oriented development).

Following what urban economists consider to be a standard approach to estimation, we find that while the estimated agglomeration wage premium is always positive and significant, its estimate ranges from 4.7 percent to 6.6 percent depending on the precise definition of metros adopted. That is, all else being equal and depending on the definition adopted, a worker can expect to earn a 4.7 - 6.6 percent higher wage by working in a metro that is twice as large.
 
One key result is that, compared to the “first-best” commuting approach, adopting one of the three other metro definition approaches may lead to more biased estimates of the agglomeration wage premium than not doing anything at all to aggregate subnational areas into metros. Thus, in our baseline regression specification, defining metro areas simply as districts and doing nothing at all to aggregate gives an estimated agglomeration wage premium of 6.6 percent.
 
This is identical to the estimate obtained when using the commuting approach with our preferred commuting flow threshold of 7 percent. By contrast, other approaches yield smaller estimates of the agglomeration wage premium. This is especially so when the other approaches use relaxed thresholds that cause them to identify unreasonably large metro areas.
 
So, what is the best approach to defining metro areas?
 
To summarize, [[tweetable]]the definition of metro areas matters for the identification of their boundaries, which, in turn, matters both for policy and for the estimation of key empirical relationships that are fundamental to our understanding of how urban economies work.[[/tweetable]]
 
While a commuting approach is, in principle, to be preferred, its adoption is not feasible for the many developing countries for which commuting data simply does not exist. In this context, alternative approaches based on satellite imagery and gridded population data sets offer an enticing alternative.
 
Nevertheless, the alternative should always be chosen with great caution.
 
As our work shows, using a satellite imagery or gridded population data approach may well result in larger biases in estimated relationships, which, in turn, can affect our evaluation of the benefits of policies, such as transit-oriented development, which impact urban density, than simply relying on data for cities as defined by their official administrative boundaries. This is particularly so for densely populated countries such as Indonesia where such alternative approaches generate misleadingly large metro areas which fail to represent functional labor markets.
 
This blog post is based on the recently published working paper, "Definition Matters: Metropolitan Areas and Agglomeration Economies in a Large Developing Country” by Maarten Bosker, Jane Park and Mark Roberts. Click here to download the full paper.

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The impact of legal reforms on women and girls: Evidence from Bulgaria

1 week 18 hours ago
Gergana Ivanova is the first woman to serve in the national guards' unit in Bulgaria. Photo: bTV

A few years ago, Gergana Ivanova became famous in my country, Bulgaria. She became the first woman to serve in the national guards’ unit and the first guardswoman to stand in front of the presidency – not only a great honor but also a dream she has had since she was in first grade. She was featured on the front page of the newspapers and her story sparked debates on talk shows on national TV. 

Ivanova’s story, however, exemplified a complex reality: job opportunities are not equal for all and gender barriers are still normal in many countries around the world. 

Most of the countries examined in the latest edition of the  Women, Business and the Law report have legal restrictions on the type of jobs women can perform (map 1). This represents 104 out of the 189 economies surveyed. Sixty-five economies, for instance, restrict women from working in mining. Many economies also prohibit women from having the same access to employment as men in industries such as manufacturing (47 economies), construction (37 economies), energy (29 economies), agriculture (27 economies), water (26 economies) and transportation (21 economies). Laws that restrict women’s access to certain jobs and constrain their ability to work at night not only limit women’s employment opportunities but also contribute to an increase in the gender wage gap.

Map 1: 104 economies impose at least one legal restriction on women’s employment

Source: Women Business and the Law database Gender-based barriers for specific jobs or activities is not simply a matter of the number of countries involved. It is also significant in terms of the amount of restrictions. For instance, until recently, Bulgaria banned women from 35 specific jobs, including working as miners, divers and excavator operators. In addition, what made Gergana’s story so prominent on national media was the fact that until eight years ago, according to Ordinance No. 14 of 18 October 2005 of the Ministry of Defense, only men between 178 - 182cm tall and weighing no more than 85kg (criteria which Gergana, being 178cm and 63kg, complied with), were allowed to guard the presidency.

This all changed in the summer of 2010 when two female students filed a gender discrimination case against the Ministry of Defense for excluding women. This bold action acted as a turning point as it led to the passage of an ordinance that repealed restrictions on women’s ability to serve as guards. As a result, Gergana-- who never gave up -- was finally able to fulfill her dream. Her story, thus, illustrates how powerful the impact of legal reforms on women’s empowerment can be.

In this regard, the Women, Business and the Law report shows that change is possible: many countries passed new laws promoting gender equality at the workplace in recent years. During the past two years, Kiribati and Poland have also removed all restrictions on women’s employment. Moreover, Bosnia and Herzegovina and Colombia have lifted several restrictions on women’s employment, including jobs deemed hazardous and arduous. Women in Bosnia and Herzegovina can now work under water while women in Colombia can pursue a career in the mining industry.  Additionally, Tajikistan has abolished restrictions on night work by women. 

All these legal changes can make a difference in promoting more opportunities for women and increasing female labor participation in the long run. Moreover, the elimination of legal obstacles that prevent women from working in certain sectors or occupations should not be simply perceived as a gender policy. Rather, it should be viewed as an economically smart policy that has the potential to  spur substantial economic benefits such as increasing labor productivity by as much as 25%.

By removing legal restrictions on women’s employment, including job exclusions solely based on gender, these economies have moved a step closer towards creating the same opportunities for future generations. And we all can still push forward.

 
Follow the World Bank Jobs Group on Twitter @wbg_jobs.



 

Addressing tax avoidance

1 week 18 hours ago

The OECD base erosion and profit shifting initiative, aimed at closing tax avoidance gaps in the international system, is meant to be inclusive. Today roughly two-thirds of the initiative’s members are emerging economies. Yet, as discussions expand to questions regarding who gets to tax what in the digital economy, it is becoming clear that the OECD is an unlikely forum for the task. Instead, institutions like the World Bank or the International Monetary Fund are the obvious conveners. These institutions have the global membership required for such decision-making.

The allocation of taxing rights in the international system dates back to a 1923 report of the League of Nations, which addressed double taxation issues as international commerce grew. The study identifies source and residence jurisdictions as having the greatest economic connections to the income to be taxed. Source countries have primary taxing rights over the income from sales, which usually takes the form of indirect taxes such as the value-added tax. Residence countries tax multinationals’ and employees’ income. Which jurisdiction “goes first” depends on the relative economic ties of the taxpayer, but the existence of a permanent establishment is a prerequisite for taxation on income.
 
The first question is whether digital platforms should pay taxes at all. The logic of taxation is that some services are most efficiently supplied publicly, so citizens give up some portion of their income to the state in exchange for their provision. Obvious examples include security, both internal via the police and external through the army, basic infrastructure, as well as judicial services that protect private property. Do digital businesses benefit from such investments in countries where they generate profit, even if they are not physically present? They do, hence they should pay taxes. For example, road or internet infrastructure must be available for many online companies to supply reliable services in a country.
 
The second question is where digital companies should pay taxes. As illustrated in the World Bank’s World Development Report 2019, the digital economy eliminates the need to have a permanent establishment in order to do business in a country. Companies can provide online services from abroad or profit from intangible assets such as software and intellectual property. Digital platforms generate income from the capital of others. Identifying where value is created is not always straightforward, particularly when it comes to the collection and monetization of user data. Digital companies can locate assets (and subsequently profits) in just one country (be it a tax haven or not), even though they are supplying goods and services via the internet globally. Little to no tax on the income generated goes to the government where consumers are located. Yet it is the consumers who make the transaction possible, so economic logic suggests some portion of the tax should be paid in their jurisdiction.
 
Governments on the source side are eager to establish a claim over revenues generated in their countries, with or without a permanent establishment. However, some have labeled the recent digital tax proposals of the European Union and United Kingdom to be revenue grabs, with no foundation in international tax treaties.

The final question is which institutions can credibly mend the global tax architecture. The OECD has extensive tax expertise to bring to this discussion and has shown early leadership. It has experience as a convening forum, too. But the OECD is an institution set up by the world’s richest countries to advance their economic prosperity. The fact that Brazil, India, and China are “key partners” of the OECD is helpful, but not enough to ensure a fair brokering of the global tax debate.
 
Without consensus on a harmonized approach double taxation may again become a problem, as it did a century ago. This is why the World Bank or the International Monetary Fund should step forward to take the lead, as globally representative institutions.

Shining a light on asset-disclosure practices at the International Anti-Corruption Conference

1 week 18 hours ago



In October, hundreds of representatives of civil society organizations, public and private sector representatives, journalists and international organizations gathered in Copenhagen for the 18th International Anti-Corruption Conference. This annual conference is viewed by many as a leading forum in the field of anti-corruption.

The team that I’m part of—The Stolen Asset Recovery Initiative (StAR)—together with the Network for Integrity organized a joint session at the conference on promoting transparent and accountable institutions. This was an opportunity for us to share with the broad audience the findings of our publication: Getting the Full Picture on Public Officials: A How-to Guide for Effective Asset Declaration.

There are no international standards governing financial disclosure yet and frankly, it’s not a process that any public official relishes, but our handbook offers practical how-to guidance on implementing disclosure systems that are efficient and effective. It draws on the lessons we’ve learned and identifies key challenges that are consistent across all regions while also examining the intricacies of implementing financial disclosure systems in countries’ unique socioeconomic, historical and legal contexts.

It also covers mundane, but fundamentally important “do’s and don’ts” in developing asset disclosure systems. Even how you design the form matters. For example, in one country, an early version of an interest disclosure form read, “Please declare all your interests,” and provided a large blank space to be filled in by the public official. Staff who reviewed these declarations noticed the different interpretations that each filer had given to the same guidance.

One senator detailed every company he had an interest in, the number of shares, and their value, while another filer simply wrote, “I have agricultural interests.” This is an extreme example, but illustrative of the importance of precision when designing the form especially as deliberately submitting incomplete or inaccurate information in an asset declaration is a criminal offence in several countries.
Here are some additional highlights from our research:

  • Online filing of asset declaration has been successfully launched in countries in all regions and income levels. The electronic filing of declarations has liberated asset-declaration professionals from tasks such as distributing paper forms and organizing piles of paper, which are time consuming and reduce the time available for looking into their content. This also has the potential to provide more meaningful public access and unlocks analytical opportunities for civil society and investigative journalists. We still have progress to make though: While many countries have transitioned to electronic submissions, 69 percent of countries still accept handwritten submissions.
  • There is increased interest in moving beyond what officials and family members own directly toward what they own as ultimate beneficiaries. In most countries with asset-declaration systems, officials and family members are required to disclose only those assets that are registered in their own names, not assets that they hold as beneficial owners and might be formally registered under the name of a company or another individual. This can result in significant gaps – as numerous recent corruption cases and investigative journalists have shown that for example, high-value real estate would be registered in the name of a company or a nominal owner.
Beyond the technical discussions, the conference in Copenhagen was an opportunity to reconnect with the members of the anti-corruption community. In between sessions, there was almost as much to learn as during the sessions both on positive developments, but also on the early warning signs of backtracking on corruption reforms. These candid discussions with officials or members of civil society contribute to our understanding of how we can continue to be on the forefront of tacking corruption.

I invite you to continue to the discussion by reading our report: Getting the Full Picture on Public Officials: A How to Guide for Effective Asset Declaration, and sharing your thoughts below in the comments section on how to strengthen anti-corruption efforts globally.

Service delivery to the poor: A labor of love or just another job?

1 week 20 hours ago

When the going gets tough, do the tough need higher pay?
 
Many public policies and nearly all international aid aim to improve the well-being of the poor.  Front-line service providers may not embrace this goal, however.  Is this mismatch important? Can it be corrected?  These questions are crucial for the success of public policies meant to equalize services to the poor and non-poor.  Recent evidence suggests that money helps – but how we select service providers matters, too. 

Some beneficiaries are more difficult to serve.  From education and health to housing, their remoteness, complicated needs, communication difficulties or weak compliance make it harder to translate money and effort into better outcomes. The poor are more vulnerable to these characteristics, discouraging service providers from exerting effort on their behalf.  Simply equalizing the resources flowing to poor and non-poor beneficiaries may therefore be insufficient to eliminate inequity.  Indeed, some strategies to equalize resources may exacerbate inequity. 
 
Service providers also differ.  Ideally, they are highly capable, engaged by the task of service delivery, pro-social and, especially, pro-poor.  Rarely does a single individual have all these characteristics.  Service delivery organizations address this challenge in part with careful selection procedures and compensation schemes that use pecuniary compensation to motivate workers when intrinsic motivation is scarce.  But are these strategies compatible, and do they work? 
 
For example, researchers have shown that pro-social individuals work harder when they are matched to pro-social missions (Ashraf et al, 2014; Banuri and Keefer 2016; Carpenter and Gong 2016). However, when individuals are task-motivated, mission motivation may not matter (Banuri, de Walque and Keefer 2018). 
 
New research now examines the interaction of pro-poorness and pecuniary compensation in service delivery.  Nearly 400 doctors, nurses and midwives in rural Burkina Faso participated in a “lab-in-the-field” experiment to illuminate these issues (Banuri, de Walque, Keefer and Robyn, 2018).  Do pecuniary incentives to serve the poor work?  Does their effectiveness depend on whether service providers are intrinsically motivated to serve the poor – whether they are “pro-poor?”  A lab-in-the-field experiment proved ideal to answer these questions, allowing carefully controlled variation in compensation and precise measures of pro-poor motivation that would have been difficult to achieve in a non-laboratory context. 
 
The health workers reviewed video vignettes of medical cases involving poor and non-poor patients under a variety of bonus schemes.  They then answered questions about each vignette concerning diagnosis and treatment.  Mimicking real-world obstacles to serving the poor, the vignettes with the poor cases took longer to review and included extraneous information, raising the difficulty and effort needed to address them.  Figure 1 depicts a scene from one of the vignettes and an example of the questions that the health workers answered.

Figure 1:


How can we distinguish which health workers are more pro-social or pro-poor? Each participant in the experiments received a sum of money equivalent to the price of a lunch in a student restaurant.  They were told that they could keep all the money or distribute as much as they liked between two schools.  They were shown pictures of a classroom in each school, as in Figure 2.  It was clear to the workers that one school was poorer than the other.  More pro-social health workers were those who contributed a larger fraction of their total endowment to both schools.  The more pro-poor workers were those who gave a larger share of their contribution to the poor school. 




The health care workers were then randomly assigned to a series of different treatments.  In each, they chose whether to work on the shorter (non-poor) or longer (poor) vignettes.  Every question that they correctly answered yielded a donation to one of the schools.  When they worked on a short vignette, the non-poor school received a donation; correctly answered questions based on the longer vignettes triggered a contribution to the poor school. 
 
In the baseline treatment, the participants received a flat salary.  Another treatment reflects the conditions on the ground in poor countries:  non-poor patients can pay fees to health workers and that the poor cannot.  Hence, participants received a bonus payment for each non-poor vignette they saw.  The third treatment reflects typical public policies aimed at restoring equity to service delivery:  participants received an equal bonus payment for each vignette, poor or non-poor.  The final treatment reflects a new policy that Burkina Faso and other countries are introducing:  granting a double bonus for every poor patient and a bonus to non-poor patients. 
 
The experiment underlines the importance for public policy of accounting for both the extra effort needed to serve the poor and the pro-poorness of the service providers themselves.  Consistent with the greater effort needed to serve the poor, bonuses to serve the poor have less impact on effort than bonuses to serve the non-poor.  In fact, health workers who receive equal bonuses to serve poor and non-poor patients see fewer poor patients than workers who receive only a flat salary.  Moreover, bonuses operate largely through their influence on pro-poor workers.  In the absence of pecuniary incentives that offset the extra effort entailed in helping the poor, it is largely the pro-poor who choose to see poor patients.  Hence, in the presence of pecuniary incentives to serve the non-poor, it is the pro-poor who most reduce their case load of poor patients. 
 
The research yields lessons for recruitment.  On the one hand, the presence of pro-poor service providers can substitute for pecuniary bonuses to serve the poor.  On the other hand, pro-poor individuals recognize that pecuniary incentives might reduce the attention that they give to poor patients.  Pro-poor workers in Burkina Faso preferred the flat salary contract to an equal bonus contract that would have disincentivized their attention to the poor. 
 
Public policies should focus on closing the gap between the poor and non-poor in health, education, and other outcomes related to public services.  However, evidence from Burkina Faso indicates that it would be a mistake to ignore differences in the effort needed to serve poor beneficiaries – and differences among service providers in their willingness to exert extra effort on behalf of the poor. 

Moving Afghanistan’s Bamyan province forward

1 week 1 day ago
View of Bamyan city, Bamyan Province. Photo Credit: Rumi Consultancy​/ World Bank

When people think of Afghanistan, what comes to their minds are images of decades of war and insecurity.

True, Afghanistan has suffered a long history of upheaval

But there has been significant progress in rebuilding a strong, independent, and modern nation since 2001.

And in light of our nation’s turbulent history, it is sometimes easy to forget how far Afghanistan has come.

[[tweetable]]Just two month ago in October, over four million voters cast their ballots in parliamentary elections[[/tweetable]]—with millions more looking forward to voting in the upcoming presidential election in 2019.

Unforgettably, 2018 also brought the unprecedented three-day ceasefire during Eid, a rare glimpse of complete peace that continues to give hope to many of us.

[[tweetable]]As Governor of Bamyan Province, one of my goals is to present a different image of my country to the world[[/tweetable]]—one of progress and possibility in the face of adversity.

[[tweetable]]Many people have never heard of Bamyan[[/tweetable]]. Neither do they know its longstanding and well-deserved reputation as one of Afghanistan’ safest provinces.

Our residents take pride in the fact that we haven’t experienced chaos, war, or insurgency against the government in 17 years.

And as Governor, [[tweetable]]I have witnessed the importance residents put on civil society, which has been vital to implementing successful development projects[[/tweetable]] in the province.

A Bamyani villager is consulting a doctor in Bamyan Provincial Hospital. Photo Credit: Rumi Consultancy/ World Bank

In my three years at my current job, many of the government projects in Bamyan Province have received funding from the Afghanistan Reconstruction Trust Fund (ARTF), which is managed by the World Bank on behalf of 34 donors, as well as the International Development Association (IDA), the World Bank Group’s fund for the poorest countries.
 
These projects cover crucial areas of development such as agriculture and livestock, education, women’s empowerment, microfinance, infrastructure, healthcare, and more.
 
[[tweetable]]Given that 80 percent of Bamyan residents make a living from farming, agriculture-focused projects have contributed to the success of nearly all other development projects[[/tweetable]].
 
Case in point: [[tweetable]]A hospital is only useful if a person can reach it; a school is only beneficial if students can attend it[[/tweetable]].
 
So, raising farmers’ incomes and encouraging their self-sufficiency helps boost access to healthcare, schools, and other municipal services as locals can then afford safer transport and buy medicine and other necessities to improve their standards of living.
 
Projects such as the National Horticulture and Livestock Productivity Project (NHLP), the Afghanistan Agricultural Inputs Project (AAIP), the National Solidarity Program (NSP)  and Citizen’s Charter Afghanistan Project have promoted  rural facilities and agriculture as a source of income by helping farmers access efficient irrigation and learn and implement modern farming methods.
 
These projects also provide relevant tools and infrastructure such as micro greenhouses.
 
I believe these projects also effect change in other areas of society by lifting beneficiaries and their families out of poverty.
 
For instance, [[tweetable]]many women involved in the micro greenhouse project are satisfied with the new skills they have learned[[/tweetable]], saying it “has helped [them] earn an income and find jobs outside of the home.”

The National Horticulture and Livestock Project (NHLP) has helped farmers learn and implement modern farming methods. Photo Credit/ Rumi Consultancy/ World Bank

[[tweetable]]These projects will also help boost average household incomes in Bamyan and increase labor market participation rate[[/tweetable]], which was already higher at about 62 percent than the national average of 55 percent in 2013, according to World Bank estimates.
 
Others who have benefited financially from better harvests and more diverse crops say that with higher incomes, “[their] children can go to school and we can buy them the clothes, books, and paper to succeed.”
 
Being able to provide for their children will help improve our provincial net primary school attendance rate even further, which saw an increase of 13 percent from 2007 to 2013, according to the World Bank Provincial Briefs published in 2016.
 
At the same time, [[tweetable]]the health of many communities is improving in tandem with improved agricultural practices[[/tweetable]] as residents learn proper nutrition from information distributed by NHLP.
 
The NHLP Bamyan Outreach Coordinator said that “pregnant women especially are getting better nutrition because reports of night blindness and other deficiency related problems are decreasing rapidly after we began educating our beneficiaries on the benefits of growing a variety of vegetables.”
 
[[tweetable]]Thanks to the impact of this work, we are ready to develop new projects with support from the World Bank and ARTF[[/tweetable]]—and encourage our partners to support other projects in our province in the future. ‌
 
[[tweetable]]As Governor, I am pleased to see this success reflected in the lives of residents[[/tweetable]].
 
And while donors and development organizations have brought positive change and helped reform institutions, this success, however, belongs to Bamyan residents who are committed to moving their communities and Afghanistan forward and remain resolute in their pursuit of a better future.

Accelerated remittances growth to low- and middle-income countries in 2018

1 week 3 days ago
On the back of stronger growth in remittance-sending economies, remittance flows to low- and middle-income countries are expected to reach a new record of $528 billion in 2018, an increase of 10.8 percent from last year, according to the World Bank’s Migration and Development Brief released today.
 
The latest data shows remittances growth in all regions, led by Europe and Central Asia (20 percent) and South Asia (14 percent). Top remittance-receiving countries are India ($80 billion), China ($67 billion), Mexico and the Philippines ($34 billion each), and Egypt ($26 billion).
 
The growth in remittances is stronger than expected due to recent economic developments: an improved job market in the United States and a rebound in remittance outflows from some Gulf Cooperation Council (GCC) countries and the Russian Federation.
 
With projected moderate global growth and more restrictive immigration policies in some major remittance-sending countries, remittances to low- and middle-income countries are projected to grow more slowly, by 4 percent to reach $549 billion in 2019.
 
The Brief also publishes progress on the global average cost of sending remittances, drawing on the Remittance Prices Worldwide Database. The data shows that this cost has remained nearly stagnant at 6.9 percent, more than double the Sustainable Development Goal (SDG) of 3 percent. Main contributing factors to the high costs are de-risking practices by commercial banks, which lead to closure of bank accounts for remittance service providers. Exclusive partnerships between national post office systems and any single money transfer operator also keep fees high, as they allow the operator to charge higher fees to poorer customers dependent on post offices.
 
Reducing remittance costs to 3 percent by 2030 is a global target under SDG 10.7 for promoting safe, orderly, and regular migration. Increasing the volume of remittances is also a global goal under the proposals for raising financing for the SDGs.
 
The Brief also monitors progress toward reducing recruitment costs borne by employees, which tend to be higher for low-skilled migrant workers. Besides lowering workers’ actual received incomes, high recruitment costs can be a huge drain on remittance flows. Sometimes, recruitment costs amount to more than 2 years of a migrant worker’s income. Reducing recruitment costs by improving recruitment practices can significantly increase remittance flows to poor families. SDG indicator 10.7.1, which is focused on reducing the recruitment costs borne by employees, was upgraded to a tier-2 indicator, following the submission of guidelines prepared jointly by the KNOMAD and the International Labour Organization (ILO).
 
Read our detailed global and regional analysis in the latest Migration and Development Brief available at www.knomad.org

Related Links: Press Release, Data on Remittance Inflows, Data on Remittance Outflows
 
 

Energy prices fell 15 percent in November–Pink Sheet

1 week 3 days ago
Energy commodity prices plunged more than 15 percent in November, led by oil (-19 percent) and coal (-7 percent), the World Bank’s Pink Sheet reported.

Non-energy prices declined by 1 percent, due to losses in agriculture and metals.

Agricultural prices fell 1 percent—a 3 percent decline in oils and meals was offset by a marginal gain in beverages.

Fertilizer prices gained nearly 6 percent, led by a 13 percent increase in urea.

Metals prices declined 3 percent led by nickel (-9 percent) and zinc (-3 percent).

Precious metals prices changed little—a marginal gain in gold was balanced by a 2 percent decline in silver.

The Pink Sheet is a monthly report that monitors commodity price movements.
  Energy prices plunged in November if("undefined"==typeof window.datawrapper)window.datawrapper={};window.datawrapper["ntTVl"]={},window.datawrapper["ntTVl"].embedDeltas={"100":429,"200":378,"300":361,"400":361,"500":344,"700":344,"800":344,"900":344,"1000":344},window.datawrapper["ntTVl"].iframe=document.getElementById("datawrapper-chart-ntTVl"),window.datawrapper["ntTVl"].iframe.style.height=window.datawrapper["ntTVl"].embedDeltas[Math.min(1e3,Math.max(100*Math.floor(window.datawrapper["ntTVl"].iframe.offsetWidth/100),100))]+"px",window.addEventListener("message",function(a){if("undefined"!=typeof a.data["datawrapper-height"])for(var b in a.data["datawrapper-height"])if("ntTVl"==b)window.datawrapper["ntTVl"].iframe.style.height=a.data["datawrapper-height"][b]+"px"});   All three commodity price indexes fell in November if("undefined"==typeof window.datawrapper)window.datawrapper={};window.datawrapper["wHx0F"]={},window.datawrapper["wHx0F"].embedDeltas={"100":434,"200":417,"300":400,"400":400,"500":400,"700":400,"800":400,"900":400,"1000":400},window.datawrapper["wHx0F"].iframe=document.getElementById("datawrapper-chart-wHx0F"),window.datawrapper["wHx0F"].iframe.style.height=window.datawrapper["wHx0F"].embedDeltas[Math.min(1e3,Math.max(100*Math.floor(window.datawrapper["wHx0F"].iframe.offsetWidth/100),100))]+"px",window.addEventListener("message",function(a){if("undefined"!=typeof a.data["datawrapper-height"])for(var b in a.data["datawrapper-height"])if("wHx0F"==b)window.datawrapper["wHx0F"].iframe.style.height=a.data["datawrapper-height"][b]+"px"});
 
Most commodity prices fell in November
Nominal prices, percent changes, November over October

 

Fighting tax evasion: notes from the International Anti-Corruption Conference

1 week 3 days ago



The irony was hard to miss.

Last month, leaders from the public and private sectors, civil society, international organizations, academia, and the media met at the International Anti-Corruption Conference (IACC) in Copenhagen.

At this year’s conference, news broke that a network of banks, lawyers, and stock traders had engaged in a criminal form of tax evasion called CumEx. The price to European taxpayers: about EUR 55 billion. Denmark, the host of the IACC, was the hardest hit, suffering some EUR 2 billion in losses.

Thanks to a tip from another country, the Danes were able to stop the financial hemorrhage. They subsequently alerted the Norwegians, who were able to take preventive measures, losing “only” some thousands of Euros. The example shows the importance of interagency cooperation and the need for developing countries to be more aware of advanced tax fraud activities that may subsequently occur in their countries.

The value of interagency cooperation

In this context, the World Bank/OECD report Improving Co-operation between Tax Authorities and Anti-Corruption Authorities in Combating Tax Crime and Corruption was launched during the IACC. Moderated by the World Bank and the OECD, it formed the basis for a session with representatives of the governments of France, Ghana, and Kenya.

The report shows that more effective cooperation is needed between tax and corruption investigators. For example, only 55 percent of the developed and developing countries we surveyed require their corruption investigators to report suspected tax crimes. When it comes to information-sharing, even fewer countries mandate it—just 44 percent. The report also provides practical examples for how to overcome barriers to interagency cooperation.

Still, some countries are making good progress in fighting tax evasion and other fraudulent activities. A few years ago, for example, Kenya established a Multi-Agency Task Team (MATT) comprising all of the country’s enforcement agencies. The MATT reports directly to the president and has access to a central pool of funds. Its work has resulted in several convictions. This type of coordination is lacking in many developing countries—and even in some of the wealthiest OECD members.

Deborah Wetzel (Senior Director, Global Governance Practice, World Bank) and Kwaku Kwarteng (Deputy Minister of Finance, Ghana) speak at the IACC in Copenhagen on breaking down the silos between the enforcement agencies.


Corruption leads to tax evasion

The IACC concluded with a Joint Statement signed by 18 nations (Afghanistan, Argentina, Australia, Burkina Faso, Denmark, Finland, France, Ghana, Indonesia, Ireland, Kenya, Norway, South Korea, Sweden, Tunisia, Ukraine, the U.K., and the U.S.); several international organizations, including the World Bank Group; and businesses.

As noted in this excerpt, the Joint Statement explicitly recognizes the importance of fighting tax evasion: “Tax evasion undermines domestic resource mobilisation and sustainable development and disadvantages the law-abiding. We support decisive action against tax evasion and actions to explore coordination between anti-corruption and tax enforcement activities.”

This call to action is important. There are many types of financial crimes crippling developing countries, so why should we focus only on corruption? By recognizing financial crime more broadly, we expand the tools we have available. To me, it makes a lot of sense.
 
Practical takeaways

In collaboration with the East African Community, the Netherlands’s Fiscal Information and Investigation Service, the U.S. Internal Revenue Service (IRS), and the Danish Tax Agency (DTA), the World Bank is also crafting a program to help developing countries fight tax evasion—an “International Fusion Center” that will be launched sometime next year.  The idea is to leverage developed countries’ IT savvy, knowledge, and business smarts in support of the World Bank’s lending and technical-assistance work.

It’s invigorating to learn about progress made around the world. While I couldn’t attend every session at the IACC, I can offer a few practical takeaways:

  • Assess the threat of insurance products: [[tweetable]]The nature of tax evasion is changing, from the use of shell companies in secrecy jurisdictions to the purchase of insurance products that can be turned into cash quickly (in essence creating a tax haven in any country).[[/tweetable]]
  • Exchange information on customs: In his intervention, Ghana’s deputy minister of finance, Kwaku Kwarteng, said that governments should exchange information on customs. This would enable countries such as Ghana, which relies heavily on customs duties (40 percent of domestic revenue), to compare declared export value with declared import value to spot mis invoicing.
  • Be aware of discussions about bringing tax evaders before the European Court of Human Rights: In the corridors of the IACC, some members of the human-rights community discussed options for taking legal action against banks that engage in tax evasion. For those interested in the nexus between human rights and corruption, the Wallenberg Institute for Human Rights and Humanitarian Law just published a report on the topic.
  • Draw on the resources of tax-investigation bodies: The Uganda Revenue Authority, for example, is helping more and more agencies by furnishing them with information about beneficial ownership and forensic lab services.
  • Detect red flags in the extractive sector: The National Resource Governance Institute, headed by my former World Bank colleague Daniel Kaufmann, presented its report on corruption in the extractive sector. Identifying 12 “red flags” in over 100 cases from 49 resource-rich countries, it’s a must-read for anyone who works in the sector.
  • [[tweetable]]Use artificial intelligence (AI) to identify tax fraud: AI tools in Denmark, for instance, have shown an 85 percent hit rate, with 65 percent involving fraud.[[/tweetable]]

Strong link between education and earnings

1 week 3 days ago


Classical economists knew it. But it was only in the latter half of the 20th century that the link between education and earnings was established in theory and practice. The importance of the earnings benefit of schooling is vital for a variety of social issues. These include economic and social policy, racial and ethnic discrimination, gender discrimination, income distribution, and the determinants of the demand for education. This link between education and earnings is formally made in the calculation of the rate of return to investment in education.

There are literally thousands of estimates of the rate of return to education and several attempts to synthesize this rich literature. In a review of the literature going back 60 years, the lead article in the latest Education Economics is the paper we co-authored, Returns to Investment in Education: A Decennial Review of the Global Literature.” (The free working paper version is available here.)

This paper updates previous reviews on the latest trends and patterns based on more than 1,000 estimates in 139 countries between 1950 and 2014. It summarizes the main findings, and all the data is available online here.

The private average global return to a year of schooling is 9 percent a year

What is interesting is that despite rapid increases in the number of years of schooling, more recent estimates of the returns to schooling have increased. That is, estimates from before 2000 show that average schooling was 7.8 years, and returns to schooling were estimated at 8.7 percent.

However, reviews published since 2000 show schooling at 8.6 years on average and returns to schooling at 9.1 percent. Not a huge increase but bucking the long-term trend and suggesting that the demand for skills is high and might be increasing.





Women continue to experience higher average returns to schooling

This provides yet another reason why girls’ education should remain a priority. Private returns to education for women exceed returns to schooling for men by 2 percentage points, and this gap has increased since previous reviews when the advantage for women was 1 percentage point.



Estimation issues

Typically, returns to education are estimated using the earnings function –  which is, simply put, a single-equation model that explains wage income as a function of schooling and experience, which basically means that your labor market earnings depend on your level of education and amount of work experience. The most popular form is the Mincerian earnings function (named after the great economist Jacob Mincer). However, it has been the subject of controversy in the literature. The earnings premium associated with the level of education suggests that productivity increases as people acquire additional qualifications.

An alternative view is that earnings increase with education due to credential effects. This refers to the idea that higher levels of schooling are associated with higher earnings, not because they directly raise productivity, but because they certify that the worker is likely to be productive. In this sense, education merely sorts workers according to their unobserved attributes; it does not necessarily augment their intrinsic productivity.

For public policy reasons it is important to distinguish between the human capital (productivity) and screening hypotheses about returns to education. 
  1. Human capital hypothesis: Schooling imparts skills that enhance productivity. This means that increases in earnings are due to the increased productivity brought about by investments in schooling.
  2. Screening hypothesis: Employers select workers with higher qualifications to reduce their risk of hiring someone with a lower capacity to learn. In this case, higher earnings may not be due to productivity alone.
With these concepts in mind, if the only purpose of schooling is to sort prospective employees, then questions arise as to the appropriateness of public investment in the expansion or improvement of schooling.

Rigorous tests of the screening hypothesis reveal some evidence of weak screening, but overall education is generally associated with higher earnings due to productivity. Brinch and Galloway (2012) exploit a reform that increased compulsory schooling from 7 to 9 years in Norway in the 1960s to estimate the effect of education on IQ. The schooling reform, which primarily affected education in the middle teenage years, had a substantial effect on IQ scores measured at the age of 19. This suggests that schooling increases general ability, casting doubt on the pure signaling model. Also Schneeweis, Skirbekk and Rudolf Winter-Ebmer (2014) find a positive impact of schooling 40 years later on memory scores. The link between education and intelligence is strong, according to metanalyses of quasi-experimental studies. More recent evidence on education’s contribution to intelligence has been shown for Libya and Indonesia.

There is a clear message coming from the above research. Education is a contributor to many beneficial socio-economic outcomes. It is a pity that in many instances it is short-changed in budgetary allocations. The reason is that, whereas the results of building a new bridge are visible within a few years, education benefits accrue over a lifetime – too long a period for many politicians.
 

Time to adapt to changing climate: what does it mean for water?

1 week 3 days ago

As COP24 in Poland reaches its mid-point, it is becoming distressingly obvious that reaching the Paris Agreement goal of limiting global warming to well below 2 degrees Centigrade will be extremely challenging.  Recognizing that millions of people across the world are already facing the severe consequences of more extreme weather events, the World Bank Group’s newly announced plan on climate financing for 2021-2025 includes a significant boost for adaptation.

[[tweetable]]Climate change impacts water resources first and foremost.  [[/tweetable]]Its impacts are channeled through the hydrological cycle and propelled by water through the economy, society, and the environment. [[tweetable]]Water connects sectors – from energy and forests to agriculture and urban development and has a critical role in both climate mitigation and adaptation.[[/tweetable]]

[[tweetable]]As the world becomes hotter, wetter, and drier due to climate change, water security has become a global priority.[[/tweetable]] As many as 4 billion people already experience water stress at some point in the year.  In 2017, natural disasters—most of them weather related, affected almost 100 million people and cost an estimated $335 billion dollars. Water scarcity, exacerbated by climate change, could cost some regions up to 6% of their GDP, spur migration, and spark conflict.



The front line of climate adaption faces the new reality of dealing with too much or too little water, requiring new and more effective ways of managing this precious resource. [[tweetable]]Poor or absent water management policies will exacerbate the effects of climate change on water, while sound water management can neutralize many of the water-related impacts of climate change.[[/tweetable]]

What does this mean for our work related to both water resources and water services? How can we help bring new tools and practices to contribute to the broader adaptation agenda?

Most importantly, [[tweetable]]we should expand our view beyond traditional “integrated water resources management” and consider the whole hydrological cycle: weather, watersheds, and water.[[/tweetable]] This means reaching out and contributing to larger agendas including disaster risk management, sustainable landscapes, resilient cities, and climate smart agriculture. [[tweetable]]Water is the great connector across these agendas—in many ways water is to adaptation what energy is to mitigation.[[/tweetable]] We need to formulate water smart policies, build strong water resource management agencies, develop river basin plans, and invest in resilient water infrastructure. Water management is fundamental to climate adaptation by ensuring efficient and flexible water allocations, closing the water supply-demand gap, and ensuring environmental sustainability.

Weather, flood, and droughts drive water resources management and disaster risk management. We need to work across sectors to ensure our clients receive the best possible climate services. Healthy watersheds link weather and water resources and are at the heart of sustainable landscapes. For cities to be resilient, they also need to be water sensitive.



[[tweetable]]We should put more emphasis on water in agriculture, both for food security and resource management reasons. [[/tweetable]]Agriculture accounts for 80-90% of our consumptive water use, and much of it is used inefficiently. In the same way irrigation was key to the Green Revolution in the mid/late 20th century, it will also be the pivot point for climate-smart agriculture and dealing with water scarcity. We need a second revolution that improves the performance of the very same irrigation systems that were constructed during the Green Revolution. This requires not only the modernization of infrastructure, but also reformed institutions and new operational concepts to provide more flexible and efficient irrigation services. Our great challenge is finding a way to untie the Gordian knot of institutional reform in the irrigation sector.

Finally, [[tweetable]]we need to safeguard the water and sanitation systems that are the foundation of public health improvements and urban development—the motors of prosperity. [[/tweetable]]This means building a portfolio of water supply sources, including surface and groundwater, reuse, desalination; protecting source water quality; and managing demand through pricing and conservation. None of this will happen in many countries until the Achilles Heel of the WSS is addressed—improving the performance of water utilities.

With risk comes opportunity.  [[tweetable]]We have a chance to refocus on long-standing problems with the new urgency of climate adaptation. [[/tweetable]]As the Bank’s new Adaptation and Resilience Strategy implores: Do More, Do Better, and Do New. Let’s Go!

Related:
Facebook Live on Water & Climate featuring Greg Browder -- Watch the Replay Below!

Time to adapt to changing climate: what does it mean for water?

1 week 3 days ago

As COP24 in Poland reaches its mid-point, it is becoming distressingly obvious that reaching the Paris Agreement goal of limiting global warming to well below 2 degrees Centigrade will be extremely challenging.  Recognizing that millions of people across the world are already facing the severe consequences of more extreme weather events, the World Bank Group’s newly announced plan on climate financing for 2021-2025 includes a significant boost for adaptation.

[[tweetable]]Climate change impacts water resources first and foremost.  [[/tweetable]]Its impacts are channeled through the hydrological cycle and propelled by water through the economy, society, and the environment. [[tweetable]]Water connects sectors – from energy and forests to agriculture and urban development and has a critical role in both climate mitigation and adaptation.[[/tweetable]]

[[tweetable]]As the world becomes hotter, wetter, and drier due to climate change, water security has become a global priority.[[/tweetable]] As many as 4 billion people already experience water stress at some point in the year.  In 2017, natural disasters—most of them weather related, affected almost 100 million people and cost an estimated $335 billion dollars. Water scarcity, exacerbated by climate change, could cost some regions up to 6% of their GDP, spur migration, and spark conflict.



The front line of climate adaption faces the new reality of dealing with too much or too little water, requiring new and more effective ways of managing this precious resource. [[tweetable]]Poor or absent water management policies will exacerbate the effects of climate change on water, while sound water management can neutralize many of the water-related impacts of climate change.[[/tweetable]]

What does this mean for our work related to both water resources and water services? How can we help bring new tools and practices to contribute to the broader adaptation agenda?

Most importantly, [[tweetable]]we should expand our view beyond traditional “integrated water resources management” and consider the whole hydrological cycle: weather, watersheds, and water.[[/tweetable]] This means reaching out and contributing to larger agendas including disaster risk management, sustainable landscapes, resilient cities, and climate smart agriculture. [[tweetable]]Water is the great connector across these agendas—in many ways water is to adaptation what energy is to mitigation.[[/tweetable]] We need to formulate water smart policies, build strong water resource management agencies, develop river basin plans, and invest in resilient water infrastructure. Water management is fundamental to climate adaptation by ensuring efficient and flexible water allocations, closing the water supply-demand gap, and ensuring environmental sustainability.

Weather, flood, and droughts drive water resources management and disaster risk management. We need to work across sectors to ensure our clients receive the best possible climate services. Healthy watersheds link weather and water resources and are at the heart of sustainable landscapes. For cities to be resilient, they also need to be water sensitive.



[[tweetable]]We should put more emphasis on water in agriculture, both for food security and resource management reasons. [[/tweetable]]Agriculture accounts for 80-90% of our consumptive water use, and much of it is used inefficiently. In the same way irrigation was key to the Green Revolution in the mid/late 20th century, it will also be the pivot point for climate-smart agriculture and dealing with water scarcity. We need a second revolution that improves the performance of the very same irrigation systems that were constructed during the Green Revolution. This requires not only the modernization of infrastructure, but also reformed institutions and new operational concepts to provide more flexible and efficient irrigation services. Our great challenge is finding a way to untie the Gordian knot of institutional reform in the irrigation sector.

Finally, [[tweetable]]we need to safeguard the water and sanitation systems that are the foundation of public health improvements and urban development—the motors of prosperity. [[/tweetable]]This means building a portfolio of water supply sources, including surface and groundwater, reuse, desalination; protecting source water quality; and managing demand through pricing and conservation. None of this will happen in many countries until the Achilles Heel of the WSS is addressed—improving the performance of water utilities.

With risk comes opportunity.  [[tweetable]]We have a chance to refocus on long-standing problems with the new urgency of climate adaptation. [[/tweetable]]As the Bank’s new Adaptation and Resilience Strategy implores: Do More, Do Better, and Do New. Let’s Go!

Related:
Facebook Live on Water & Climate featuring Greg Browder -- Watch the Replay Below!

Of firms and profits

1 week 3 days ago

Last week I spoke at the World Bank’s Productivity Bootcamp, organized by Ana Cusalito, Bill Maloney, and Jan De Loecker. A psychologist might say that the professor in me could not let go of teaching. But the Bootcamp was about more than “productivity.” It covered firm profitability, competition, and market power – topics that lie at the heart of the raging debate on market concentration and firm profits, the declining labor share in the U.S., and rising inequality.

The origins of the debate can be traced to a graph in a recent paper by Eeckhout, De Loecker and Unger that shows a sharp rise in firm variable profits (or markups in the economics jargon) in the U.S. starting in the early 1980s:



Another recent paper by Autor and coauthors reinforces this message of rising profits by documenting the rise of highly profitable “superstar” firms that employ a low share of labor and dominate specific industries. Along the same lines, work by Caroline Freund and coauthors at the World Bank has emphasized the dominance of “superstar” firms in international trade.
 
While there is agreement on the fact of rising profits and industry concentration, the explanations for this phenomenon vary. Are the rising profits the result of anti-competitive behavior and lax antitrust? Or do they reflect the dynamism of a small number of highly efficient firms? What role has technology and globalization played in the emergence of the “superstar” phenomenon?
 
Before we go on, why should we, at the World Bank, care?  For two reasons.
 
First, the phenomenon is not confined to the U.S. In a recent paper on the Indian trade reforms, my coauthors and I documented a similar rise in the profits of Indian firms:



Second, we argue that globalization and, in particular the integration of low-wage developing countries in global value chains, has played an important role in increasing firm profits.
 
A firm’s variable profit is – by definition – the gap between the price the firm charges for a product and the per unit variable cost of production, such as the cost for materials and labor. So when profit goes up, it is either because the price went up or because the cost went down (or a combination of both). One would be hard-pressed to argue that prices facing consumers have gone up in the last three decades. On the other hand, there is substantial evidence that costs have been going down.
 
The literature seeking to identify the mechanisms behind shrinking variable costs deserves a blog post of its own.  There is excellent work showing contributions from both technology (e.g., the work by Acemoglu and Restrepo on automation or Ganapati on distribution centers) and globalization (e.g., our aforementioned paper or Amiti and Konings on the role of cheaper imported inputs in India and Indonesia respectively). Both mechanisms reduce the costs of production without necessarily increasing the price to consumers. Highly efficient, low cost firms make profits. And as a result, they may end up dominating the industry.
 
This is why it is misleading to use market shares or concentration indices as a measure of market power or competitiveness. It is the classic chicken and egg problem. Are profitable firms making profits because they use unfair methods to eliminate the competition? Or does the competition get eliminated because it cannot compete with the more efficient firms?  These questions are at the heart of the recent debate on the origins of firm “superstars”. By the way, if you want an excellent, in-depth coverage of the topic, see Steve Berry's Keynote Address at the FTC on market structure and competition.
 
No matter where one stands in this debate, one thing is certain. We cannot make progress unless we have methods that deliver credible estimates of firm costs and profits. This is harder than it sounds. Which is why the Bootcamp last week was so valuable!

Digital platforms in China

1 week 4 days ago

From the e-commerce site Taobao.com to the social media app WeChat, China has drawn global attention to its digital platform economy. A third of the top-200 digital platforms were born in China according to the Global Platform Survey 2016. They are also growing fast. A 2017 report published by Ali Research shows that the digital platform sector contributes to 10.5% of China’s GDP.

The World Development Report 2019 points out that digital platform firms increase market efficiency by matching producers and consumers. New business opportunities emerge. Take Pinduoduo, a Chinese e-commerce start up, as an example. It enables farmers in remote areas to sell fresh produce directly to customers in cities. More than 5.5 billion kilograms of agricultural products have been sold on the platform since 2015. Approximately 50,000 migrant workers returned from cities to their villages to engage in e-commerce activities via Pinduoduo. As another example, Meituan Waimai, an on-demand food-delivery platform connecting restaurants and customers, created more than 600,000 jobs of food delivery people since 2013. As a third example, from June 2016 to June 2017, 1.3 million unemployed citizens earned income from Didi Chuxing, a ride hailing platform.

Digital platforms show promise in creating jobs. Several lessons can be drawn from the Chinese experience. Internet connectivity and mobile phone penetration is the first prerequisite. Mobile cellular subscription is 104 per 100 people in China. Less expensive smartphone devices from smartphone manufacturers Xiaomi, Oppo and Vivo have brought many rural people onto the mobile internet. Second, logistics infrastructure is important for rural e-commerce. Collaborating with local governments, Alibaba launched the Rural Taobao Program in 2014 to improve rural logistics system through establishing service centers. Those service centers serve as one-stop shops for rural residents who are not very tech savvy to buy and sell products through Taobao.com. By 2017, Rural Taobao service centers are present in over 30,000 villages across 700 counties in 29 provinces.

Embedding mobile payments and social media into the platforms contributes to their rapid takeoff. The success of Pinduoduo results from its seamless integration of e-commerce, social networks and mobile payments. Pinduoduo, which means “the more you join together, the more you save”, allows its users to team up with e-friends to enjoy volume discounts directly from manufacturers. Users share the product link on social networks such as WeChat to attract other potential buyers to form a shopping team. Leveraging China’s largest social network WeChat which has more than 1 billion users, Pinduoduo attracted 350 million users in two years. Mobile payments embedded in the WeChat app enable instantaneous transactions.

Human capital is also essential to promote digital platforms. China ranks 46th on the Human Capital Index launched in the World Development Report 2019, ahead of the majority of emerging economies. A large group of talented young entrepreneurs with science, technology, engineering and mathematics knowledge bring creative solutions. JDD (previously known as JD Finance), a leading digital technology firm, has created an online platform for disabled people to receive training and tasks on data annotation. JDD has matched over 30,000 people with data jobs, many of them were unemployed disabled people.

Challenges arise as platforms take hold. Data protection is at the center of the discussion considering the large amount of data accumulated on platform businesses. According to a 2018 survey by the China Consumer Association, 85% of people had experiences with data leaks. Ant Financial, a fintech platform, was accused of enrolling users automatically to its credit scoring program (“Sesame Credit) which tracks social interactions and online behavior patterns. Regulators are catching up: in particular, by studying the General Data Protection Regulation (GDPR) adopted by the European Commission, which came into force in May 2018.

Does It Matter Who Answers the Survey to Identify Families in Poverty? Guest post by Adan Silverio-Murillo

1 week 4 days ago
Imagine that you receive a grant from the Bill & Melinda Gates Foundation to give money transfers to families living in poverty. Yet, the selected country does not have formal income records. As a consequence, you decide to collect income information through a household survey. On your way to collect the information, you find an economist who points out two problems: (1) income can be measured with a lot of noise; and (2) individuals may have incentives to sub-report income to participate in the program.
 
The economist suggests that instead of asking for income, an alternative is to ask for assets. The idea is simple. You can use information on assets to generate an index that allows differentiating between poor and non-poor households. For example, a family who has a car, refrigerator, and washing machine may be less poor than a family who does not own these items. More importantly, the use of assets has the advantage of reducing sub-reporting and measurement errors. Or at least, this seems to be the consensus among those who use information on assets to identify families in poverty.
 
How reliable is the information related to assets? My job market paper sheds light on this question. I use a survey applied to couples participating in Mexico’s PROGRESA program (currently PROSPERA). The survey is composed of four modules with the following order: (1) cognitive test; (2) psychological tests; (3) socioeconomic aspects; and (4) questions about childhood. The survey asks questions to the wife and to the husband, separately, about possession of 18 assets within the household. The 18 assets are presented in Table 1. Columns 1 and 2 represent the percentage of households that report ownership of the assets. The first represents responses from the husbands and the second from wives. The results are quite encouraging. There are no significant discrepancies between what couples reported. For example, 63.2% of husbands and 65.5% of wives reported possession of a refrigerator inside the home.


 
Yet, Column 3 tells a different story. Specifically, it shows the percentage of cases where there is disagreement in the information reported by the spouses. The disagreement ranges from 2.2% to 32.6% (Column 3). For example, there is disagreement in 21.5% of the couples on the possession of a refrigerator. In particular, the husband reported having a refrigerator and the wife did not in 9.6% of the households (Column 4). And, the husband reported not having a refrigerator and the wife having one in 11.9% of the households (Column 5). 
 
Is there a pattern that explains the disagreement in the information on assets reported by the spouses? There are many hypotheses about causes of misreporting in household surveys. Problems of misreporting can be related to cognitive process, social desirability, survey design, intra-household strategic behavior, and incentives (Bound et al. 2001). In this paper, I pay particular attention to the cognitive process. Responding to a survey requires a cognitive effort. To analyze this hypothesis, I use the number of unanswered questions to the first module of the survey (cognitive test module). The idea is that the number of questions not answered may predict the individual's accuracy throughout the rest of the survey. The results show that the number of non-responses in the cognitive test by men (not women) predicts disagreement in the information reported on assets. Yet, it is possible that this result is a consequence of omitted variables. Following the procedures proposed by Altonji, Elder, and Taber (2005) and Oster (2017), the observed relation is unlikely to be driven by unobservables.
 
Does disagreement in the information reported on assets affect the identification of families living in poverty? To answer this question, I use the Progress Out of Poverty Index (PPI) managed by Innovations for Poverty Action. This index uses 11 socioeconomic variables to identify families living in poverty. Among these variables are questions related to assets such as having a washing machine or a car. The results show that who answers the survey matters for poverty measurement. For example, 10.1% of households would be classified as non-poor if asked to the husband, but as poor if asked to the wife. And, 8.1% of households would be classified as poor if asked to the husband, but as non-poor if asked to the wife.
 
What can we learn from these results? First, the information on assets is not free of problems of misreporting. Second, non-responses have valuable information. I found that unanswered questions to a cognitive test predict disagreement in the information reported later on assets. Finally, different people in the same household can provide significantly and meaningfully different answers. As pointed out by Philipson and Malani (1999), economists pay much more attention to the consumption of data than to the production of data. Rather than accepting information from household surveys as truth, practitioners should think in mechanisms to incentivize individuals to reveal accurate information or other ways to triangulate information.
 
 
Adan Silverio-Murillo is the Diversity Academic Post-doctoral Fellow in the School of Public Affairs at American University. He holds a PhD in Applied Economics at the University of Minnesota. You can read about his research here.
 

Think behaviorally to boost impact

1 week 4 days ago
In Guatemala, Program Leader Marco Hernandez and his team tested behaviorally informed messages in letters to non-compliant taxpayers. © World Bank [[tweetable]]Behavioral science can provide creative solutions to difficult challenges, often at low cost.[[/tweetable]] Behaviorally informed policy emphasizes the importance of context for decision making and behavior, paying attention to the social, psychological, and economic factors that affect what people think and do.
Since the 2015 World Development Report on Mind, Society, and Behavior, behavioral science approaches have been spreading across the World Bank Group’s work. Several staffers recently gave “lightning talks” about how they’re applying behavioral science to seemingly intractable problems that matter to all of us. Here are a few takeaways from the speakers who offered important lessons on incorporating human behavior into program design:

Policy happens in context. [[tweetable]]Behavioral science can be used as a quick, effective solution where traditional methods, like reform and legislation, can take years.[[/tweetable]] In Guatemala, Program Leader Marco Hernandez and his team tested behaviorally informed messages in letters to non-compliant taxpayers, including messages emphasizing social norms, intentional choice, and national pride. The behaviorally informed letters worked – recipients of the social norms and intentional choice letters ended up paying four times as much in taxes as those in the control group.
But in Poland, where tax authorities also sent out behaviorally informed messaged to non-compliant taxpayers, hard-tone messages emphasizing sanctions for non-compliance and non-payment as an intentional and deliberate choice were more effective. While behavioral messages had big impacts in both scenarios, considering the country context – and testing before scaling – were key to creating cost-effective interventions.

Aspirations (within feasibility) can make all the difference. While behavioral science can be used to circumvent more time-consuming, traditional methods for policy change, the talks also emphasized its potential for increasing aspirations for beneficiaries and creating greater economic growth, globally. Senior Economist Bilal Zia described influencing the “entrepreneurial mindset” of micro-entrepreneurs using role models in the community to great effect – when the aspirational goalposts appeared achievable, rather than unreasonable.

Lead Economist Rafael De Hoyos Navarro described the positive impact on test scores by making salient the economic benefits of graduating high school for students in Mexico; and Lead Social Protection Specialist Andrea Vermehren described impressive impacts on food security and child development outcomes when CCT program recipients set goals in advance of receiving their cash. Similar work from the World Bank’s behavioral unit — the Mind, Behavior, and Development Unit — on increasing aspirations among women enrolled in a CCT program in Nicaragua makes clear that aspirations can be a powerful behavioral tool for effective policymaking.

Policymakers can benefit, too. [[tweetable]]Crucially, behavioral science can improve program design at the highest level[[/tweetable]] – impacting policymaker biases and regulation. As Alexandra Fiorillo with the Consultative Group to Assist the Poor described, in order to design inclusive policy, you have to unpack your own biases and judgments about consumers. By involving policymakers in the behavioral research process, creating opportunities for them to interact with consumers and teaching them about behavioral biases, her team both improved the design process for important consumer protection programs and built capacity among their policy counterparts.

Anyone looking for a fresh lens into their own work should watch the event recording in full — there are many more fascinating talks describing innovative ways in which behavioral science can be employed to provide solutions to development challenges beyond our standard operating procedure. [[tweetable]]From energy efficiency to gender equality to health and more, the work being done by the World Bank Group and others may inspire you to think behaviorally yourself.[[/tweetable]]

Reclaiming India's wastelands to fight climate change

1 week 4 days ago
Indian farmers showing off former wasteland that now produces crops. India's agriculture is highly vulnerable to climate threats. Reclaiming and bringing into production some of India’s wastelands could partially offset some of the projected crop production declines expected because of climate change. Credit: Abel Lufafa

About 15 minutes after we turn off the highway at Fatehpur, a roadside trading center located 120 km from Lucknow, the capital of Uttar Pradesh, a mild haze blankets the sky.

As we drive deeper into the increasingly bare and desolate landscape, the wind blows stronger, and the haze thickens into dust plumes.

I lower the car window and find the source of the dust:  patches of abandoned land, coated with very fine powder in various shades of white and grey.

We are in a village with salt-affected soils, part of the millions of hectares of India’s wastelands.

Characterized by dense, impermeable surface crusts and accumulation of certain elements at levels that are toxic to plants, these sodic wastelands no longer support crop growth – they have been abandoned by farmers.

Our journey continues for another 30 minutes, the wind still blows strong, but dust plumes have given way to clearer skies.

We have reached Mainpuri, where, with World Bank support, sodic wastelands have been reclaimed and brought back to life, rolling back the unsavory spectacle of ecological destruction that once was the hallmark of the village.

Now in its third phase, [[tweetable]]the Uttar Pradesh Sodic Lands Reclamation Project (UPSLRP) has supported the reclamation of over 400,000 ha of such sodic wastelands and 25,000 ha of ravinous wasteland[[/tweetable]].

Indian farmers showing off former wasteland that now produces crops. Credit: Abel Lufafa
“Before the project, nothing could grow on this plot; crops and grasses used not to germinate or would just burn away,” says Lalit, a farmer.

About 54 percent of the wasteland reclaimed under the UPSLRP is producing a crop for the first time, including 3.5 tons of paddy per hectare and 3.3 tons of wheat per hectare, amounts statistically at par with yields obtained on un-degraded land in the project area.

The total incremental crop production under the third phase project stands at 383,600 tons of rice and 350,900 tons of wheat.

Vegetables, oilseeds, and pulses are now also produced as part of the new management protocol for the reclaimed land, which emphasizes a cereal to non-cereal rotation.

All this from what was hitherto abandoned wasteland.  This incremental food production is yet another addition to India’s expanding food supply.

[[tweetable]]While India now produces sufficient amounts of food to meet its requirements, climate change has emerged as a serious threat to the country’s food security. [[/tweetable]]

[[tweetable]]If business were to continue as usual, it is projected that by 2040, India might experience a more than 25 percent reduction in crop production because of climate change. [[/tweetable]]

[[tweetable]]Both the Bank’s and Government’s strategies in support of adaptation to climate change have mainly focused on scaling up climate smart agriculture and risk insurance. [[/tweetable]]

This strategy, if pursued alone, could easily come up short in ensuring adequate adaptation in India - a country recently ranked the most vulnerable to climate change.

How about a more deliberate focus on reclaiming and bringing into production some of India’s wastelands to partially offset some of the projected crop production declines expected because of climate change?  
  Satellite images highlighting 105 ha of sodic wasteland, before reclamation in 2009 (top) and in 2014 (bottom) after reclamation. After reclamation, the once uncultivable 105 ha, now produces crops. By some estimates, [[tweetable]]India has about 68 million ha of land (more than 20 percent of the country’s geographical area) lying idle as wastelands: salt-affected, gullied and ravinous, waterlogged, or snow-covered.[[/tweetable]]

Fairly simple technology options already exist to reclaim at least 50 percent of these wastelands to make them cultivable, like in Mainpuri.

However, going to scale will require progress on many complementary fronts, including but not limited to:
  • Understanding the interaction between wastelands up for reclamation and climate change: By default, wasteland reclamation would create a new ecosystem. On one hand, it is possible to spend resources to reclaim land, only to have that land/ecosystem become either technically, or economically unsuitable for production in the future due to a changing climate. On the other hand, reclamation would alter the land surface which in turn influences the energy and material exchange between the reclaimed land and atmosphere as well as the biogeochemical cycle. Depending on scale this could exert an influence on climate. In this case, comprehensive climate modeling and landscape studies would be useful to inform decisions on which wastelands, if reclaimed, would not only remain productive under a changing climate, but also not exert negative influences on climate;
  • Strengthening knowledge services: Farm models based on reclaimed wastelands are bound to be knowledge-intensive as they require greater management of a wider range of factors. The most successful and sustainable interventions are likely to be those that build capacity, strengthen and improve producers’ access to appropriate knowledge services and products. This will require further strengthening of the increasingly weak advisory services in India;
  • Strengthening policies to promote improved and sustainable management of reclaimed land: Favorable policies, including those on land rights and tenure, input and output marketing/pricing, extension, etc., are needed to foster proper management of reclaimed wastelands and support the long-term sustainability of reclamation outcomes. In recent years, India has made commendable progress in strengthening the policy environment for improved land management. However, some gaps remain, for example, with respect to land markets, women’s rights to land and input and output pricing.  Closing these gaps should go a long way in ensuring that reclaimed lands would be sustainably managed; and
  • Better understanding of the cost, economic feasibility and “competitiveness” of reclamation: The cost and feasibility of wasteland reclamation can vary considerably depending on the type of wasteland, degree of degradation, location, climate and availability of relevant expertise. All other factors being equal, assessment of the feasibility of restoration can inform decisions on selection and prioritization from among the many wastelands. Such an understanding is also important to assess the “economic competitiveness” of reclamation efforts compared to other alternatives to securing food security e.g. relying on imports from other countries.
[[tweetable]]Climate change poses a serious threat to India’s future food security.[[/tweetable]]

Addressing the threat will entail thinking outside the box, which could include focusing on wasteland reclamation to offset anticipated crop production losses.

Besides augmenting production, investments in wasteland reclamation can also help restore ecosystem services such as climate regulation and aesthetics, and also increase biodiversity.

 

Reclaiming India's wastelands to fight climate change

1 week 4 days ago
Indian farmers showing off former wasteland that now produces crops. India's agriculture is highly vulnerable to climate threats. Reclaiming and bringing into production some of India’s wastelands could partially offset some of the projected crop production declines expected because of climate change. Credit: Abel Lufafa

About 15 minutes after we turn off the highway at Fatehpur, a roadside trading center located 120 km from Lucknow, the capital of Uttar Pradesh, a mild haze blankets the sky.

As we drive deeper into the increasingly bare and desolate landscape, the wind blows stronger, and the haze thickens into dust plumes.

I lower the car window and find the source of the dust:  patches of abandoned land, coated with very fine powder in various shades of white and grey.

We are in a village with salt-affected soils, part of the millions of hectares of India’s wastelands.

Characterized by dense, impermeable surface crusts and accumulation of certain elements at levels that are toxic to plants, these sodic wastelands no longer support crop growth – they have been abandoned by farmers.

Our journey continues for another 30 minutes, the wind still blows strong, but dust plumes have given way to clearer skies.

We have reached Mainpuri, where, with World Bank support, sodic wastelands have been reclaimed and brought back to life, rolling back the unsavory spectacle of ecological destruction that once was the hallmark of the village.

Now in its third phase, [[tweetable]]the Uttar Pradesh Sodic Lands Reclamation Project (UPSLRP) has supported the reclamation of over 400,000 ha of such sodic wastelands and 25,000 ha of ravinous wasteland[[/tweetable]].

Indian farmers showing off former wasteland that now produces crops. Credit: Abel Lufafa
“Before the project, nothing could grow on this plot; crops and grasses used not to germinate or would just burn away,” says Lalit, a farmer.

About 54 percent of the wasteland reclaimed under the UPSLRP is producing a crop for the first time, including 3.5 tons of paddy per hectare and 3.3 tons of wheat per hectare, amounts statistically at par with yields obtained on un-degraded land in the project area.

The total incremental crop production under the third phase project stands at 383,600 tons of rice and 350,900 tons of wheat.

Vegetables, oilseeds, and pulses are now also produced as part of the new management protocol for the reclaimed land, which emphasizes a cereal to non-cereal rotation.

All this from what was hitherto abandoned wasteland.  This incremental food production is yet another addition to India’s expanding food supply.

[[tweetable]]While India now produces sufficient amounts of food to meet its requirements, climate change has emerged as a serious threat to the country’s food security. [[/tweetable]]

[[tweetable]]If business were to continue as usual, it is projected that by 2040, India might experience a more than 25 percent reduction in crop production because of climate change. [[/tweetable]]

[[tweetable]]Both the Bank’s and Government’s strategies in support of adaptation to climate change have mainly focused on scaling up climate smart agriculture and risk insurance. [[/tweetable]]

This strategy, if pursued alone, could easily come up short in ensuring adequate adaptation in India - a country recently ranked the most vulnerable to climate change.

How about a more deliberate focus on reclaiming and bringing into production some of India’s wastelands to partially offset some of the projected crop production declines expected because of climate change?  
  Satellite images highlighting 105 ha of sodic wasteland, before reclamation in 2009 (top) and in 2014 (bottom) after reclamation. After reclamation, the once uncultivable 105 ha, now produces crops. By some estimates, [[tweetable]]India has about 68 million ha of land (more than 20 percent of the country’s geographical area) lying idle as wastelands: salt-affected, gullied and ravinous, waterlogged, or snow-covered.[[/tweetable]]

Fairly simple technology options already exist to reclaim at least 50 percent of these wastelands to make them cultivable, like in Mainpuri.

However, going to scale will require progress on many complementary fronts, including but not limited to:
  • Understanding the interaction between wastelands up for reclamation and climate change: By default, wasteland reclamation would create a new ecosystem. On one hand, it is possible to spend resources to reclaim land, only to have that land/ecosystem become either technically, or economically unsuitable for production in the future due to a changing climate. On the other hand, reclamation would alter the land surface which in turn influences the energy and material exchange between the reclaimed land and atmosphere as well as the biogeochemical cycle. Depending on scale this could exert an influence on climate. In this case, comprehensive climate modeling and landscape studies would be useful to inform decisions on which wastelands, if reclaimed, would not only remain productive under a changing climate, but also not exert negative influences on climate;
  • Strengthening knowledge services: Farm models based on reclaimed wastelands are bound to be knowledge-intensive as they require greater management of a wider range of factors. The most successful and sustainable interventions are likely to be those that build capacity, strengthen and improve producers’ access to appropriate knowledge services and products. This will require further strengthening of the increasingly weak advisory services in India;
  • Strengthening policies to promote improved and sustainable management of reclaimed land: Favorable policies, including those on land rights and tenure, input and output marketing/pricing, extension, etc., are needed to foster proper management of reclaimed wastelands and support the long-term sustainability of reclamation outcomes. In recent years, India has made commendable progress in strengthening the policy environment for improved land management. However, some gaps remain, for example, with respect to land markets, women’s rights to land and input and output pricing.  Closing these gaps should go a long way in ensuring that reclaimed lands would be sustainably managed; and
  • Better understanding of the cost, economic feasibility and “competitiveness” of reclamation: The cost and feasibility of wasteland reclamation can vary considerably depending on the type of wasteland, degree of degradation, location, climate and availability of relevant expertise. All other factors being equal, assessment of the feasibility of restoration can inform decisions on selection and prioritization from among the many wastelands. Such an understanding is also important to assess the “economic competitiveness” of reclamation efforts compared to other alternatives to securing food security e.g. relying on imports from other countries.
[[tweetable]]Climate change poses a serious threat to India’s future food security.[[/tweetable]]

Addressing the threat will entail thinking outside the box, which could include focusing on wasteland reclamation to offset anticipated crop production losses.

Besides augmenting production, investments in wasteland reclamation can also help restore ecosystem services such as climate regulation and aesthetics, and also increase biodiversity.

 

The ‘authentic travel experience’ should be a boon for Africa, but it’s not. Why?

1 week 4 days ago

Since 2016, tourism market trends have shifted away from “get-a-way” travel to traveling for ‘authentic’ experiences.  This transformation is driven by the world’s largest consumer group—millennials—and amplified by digital platforms and social media but is also echoed across other segments. Destinations and entrepreneurs are catching on and developing ‘off-the-beaten-path’ products that provide travelers greater interaction with local people.

African countries, with their abundant wealth of natural and cultural assets, are perfectly positioned to capitalize on this shift, just as the rise of digital platforms are reducing market access barriers for such products. However, in our new World Bank Group report, we found that while demand for experiencing ‘life like a local’ in Africa is set to outpace growth of arrivals, there are still many supply-side challenges that need to be addressed.
  • Standards: Africa’s market share lags other regions, and many products are not of sufficient standard. 
  • Exclusion and the digital divide: Marginalized groups, often best placed to deliver the product, are at risk of further exclusion. 
  • Community Impact: Bringing tourism into communities also brings other risks which need to be managed. 

In this report titled, Demand Analysis for Tourism in African Local Communities, we explore tourism based in or delivered by communities in Africa—community-based tourism (CBT). This type of tourism includes homestays (hosted accommodation) and experiences like guided walks, cooking classes and story-telling. Our research found that bookings for these products is projected to grow 10% by 2023, almost double the expected 5-7% increase in overall arrivals to Africa. For 2018, the estimated number of visitors is 2.8 million — and could top 3 million in five years. 

While small, these numbers spotlight the potential for marginalized and remote communities across Africa. The fact that there is market demand for experiences that in many cases can only be delivered by those excluded from the mainstream tourism industry is promising for the inclusion agenda. The rise of digital platforms like Booking.com or Airbnb reduces market access barriers and can help level the playing field for any tourism service provider who wants to sell directly to consumers. However, the challenges to fully realize this potential are well defined.

Africa is well behind its competitors in developing this tourism niche.  The opportunities are not equal and scaling them can drive greater inequality. In addition, development of CBT needs care to avoid the pitfalls of ‘invasive voyeurism’ and other risks to the community.   

Despite the abundance and diversity of communities and culture, Africa has the smallest market share of CBT supply (except Australasia) at only 13%. In our research, we found that this is largely due to a lack of awareness (travel bloggers have played a key role in growing this market in other places, particularly in Asia), but also due to a lack of adequate quality. While experiences (for example, a half-day tea-picking) capture about 18% of demand in Africa, homestays account for less than half of that. The tour operators interviewed for our report, stated that standards of comfort, security and cleanliness in homestays were often not acceptable.

While the tourism sector can be highly impactful, the economic and social benefits are not spread equally between destinations, demographics or communities. Much of this depends on the distribution and quality of underlying natural and cultural assets, as well as access (visas, infrastructure, transport services), investment climate and other factors. Market access is critical and the opportunities to participate in the tourism economy depend to a large degree on whether providers can reach their target consumers. The digital economy plays an increasingly important role and can help level the playing field. However, it can also further ‘the digital divide’ and exclude those who are least able to participate. 

With the absence of digital infrastructure and literacy, the tourism industry, particularly in less developed countries (LDCs), faces a challenge in bringing many of its suppliers online. Only 15% of households in LDCs have Internet access at home, compared to 84% in developed countries. In Africa, women are particularly disadvantaged—the proportion of women using is the internet is 25% lower than men using it.

Ironically, the digital divide and its potentially exclusionary impact disproportionally affects those who can offer the craved-for authentic experience. 

The challenge of how communities engage with the tourism sector is not a new one, but the risks are perhaps accelerated with the advance of digital platforms bringing more products to the market at an unprecedented rate. The CBT niche has often been criticized for voyeurism, with many documented examples of community resentment, unmet expectations and social conflict. Engaging with this niche needs to be done with care to mitigate against these risks and should be always driven by the community itself. Successful examples of this type of tourism usually includes a third-party, such as an NGO, who can support the community in self-organization, decision-making and benefit distribution.  

The World Bank Group is exploring how to harness the growing demand for these products and ensure greater inclusion. We are working with digital platforms in the tourism space, including Airbnb and TripAdvisor. Airbnb has committed to invest $1million in developing and training hosts in underserved communities. They are building inventory of this product, training hosts through their Airbnb Academy, and piloting co-hosting models to overcome some of the digital literacy issues that remain a barrier to scaling up across Africa.

Does the digital economy provide tourism opportunities for local communities in Africa?

1 week 4 days ago

The authentic travel experience should be a boon for Africa, but its missing the mark.

Since 2016, tourism market trends have shifted away from “get-a-way” travel to traveling for ‘authentic’ experiences.  This transformation is driven by the world’s largest consumer group—millennials—and amplified by digital platforms and social media but is also echoed across other segments. Destinations and entrepreneurs are catching on and developing ‘off-the-beaten-path’ products that provide travelers greater interaction with local people.

African countries, with their abundant wealth of natural and cultural assets, are perfectly positioned to capitalize on this shift, just as the rise of digital platforms are reducing market access barriers for such products. However, in our new World Bank Group report, we found that while demand for experiencing ‘life like a local’ in Africa is set to outpace growth of arrivals, there are still many supply-side challenges that need to be addressed.
  • Standards: Africa’s market share lags other regions, and many products are not of sufficient standard. 
  • Exclusion and the digital divide: Marginalized groups, often best placed to deliver the product, are at risk of further exclusion. 
  • Community Impact: Bringing tourism into communities also brings other risks which need to be managed. 

In this report titled, Demand Analysis for Tourism in African Local Communities, we explore tourism based in or delivered by communities in Africa—community-based tourism (CBT). This type of tourism includes homestays (hosted accommodation) and experiences like guided walks, cooking classes and story-telling. Our research found that bookings for these products is projected to grow 10% by 2023, almost double the expected 5-7% increase in overall arrivals to Africa. For 2018, the estimated number of visitors is 2.8 million — and could top 3 million in five years. 

While small, these numbers spotlight the potential for marginalized and remote communities across Africa. The fact that there is market demand for experiences that in many cases can only be delivered by those excluded from the mainstream tourism industry is promising for the inclusion agenda. The rise of digital platforms like Booking.com or Airbnb reduces market access barriers and can help level the playing field for any tourism service provider who wants to sell directly to consumers. However, the challenges to fully realize this potential are well defined.

Africa is well behind its competitors in developing this tourism niche.  The opportunities are not equal and scaling them can drive greater inequality. In addition, development of CBT needs care to avoid the pitfalls of ‘invasive voyeurism’ and other risks to the community.   

Despite the abundance and diversity of communities and culture, Africa has the smallest market share of CBT supply (except Australasia) at only 13%. In our research, we found that this is largely due to a lack of awareness (travel bloggers have played a key role in growing this market in other places, particularly in Asia), but also due to a lack of adequate quality. While experiences (for example, a half-day tea-picking) capture about 18% of demand in Africa, homestays account for less than half of that. The tour operators interviewed for our report, stated that standards of comfort, security and cleanliness in homestays were often not acceptable.

While the tourism sector can be highly impactful, the economic and social benefits are not spread equally between destinations, demographics or communities. Much of this depends on the distribution and quality of underlying natural and cultural assets, as well as access (visas, infrastructure, transport services), investment climate and other factors. Market access is critical and the opportunities to participate in the tourism economy depend to a large degree on whether providers can reach their target consumers. The digital economy plays an increasingly important role and can help level the playing field. However, it can also further ‘the digital divide’ and exclude those who are least able to participate. 

With the absence of digital infrastructure and literacy, the tourism industry, particularly in less developed countries (LDCs), faces a challenge in bringing many of its suppliers online. Only 15% of households in LDCs have Internet access at home, compared to 84% in developed countries. In Africa, women are particularly disadvantaged—the proportion of women using is the internet is 25% lower than men using it.

Ironically, the digital divide and its potentially exclusionary impact disproportionally affects those who can offer the craved-for authentic experience. 

The challenge of how communities engage with the tourism sector is not a new one, but the risks are perhaps accelerated with the advance of digital platforms bringing more products to the market at an unprecedented rate. The CBT niche has often been criticized for voyeurism, with many documented examples of community resentment, unmet expectations and social conflict. Engaging with this niche needs to be done with care to mitigate against these risks and should be always driven by the community itself. Successful examples of this type of tourism usually includes a third-party, such as an NGO, who can support the community in self-organization, decision-making and benefit distribution.  

The World Bank Group is exploring how to harness the growing demand for these products and ensure greater inclusion. We are working with digital platforms in the tourism space, including Airbnb and TripAdvisor. Airbnb has committed to invest $1million in developing and training hosts in underserved communities. They are building inventory of this product, training hosts through their Airbnb Academy, and piloting co-hosting models to overcome some of the digital literacy issues that remain a barrier to scaling up across Africa.

The jobs train now departing from platform ...

1 week 4 days ago

We have been living with digital platforms for about a decade now and their impact on changing how we work is beginning to make itself felt. Even so, it merits much greater attention and investigation, but until now the spotlight has been trained firmly on robots and automation.

Digital platforms are disrupting traditional business models. Physical presence is no longer a prerequisite for doing business. Platform firms do not produce end-products or services, they simply connect people, companies and places.

Think of a platform as a matchmaker, but turbo-charged by digital technology – a familiar business model bestowed with super-powers by new digital tools. And these digital platforms are connecting at a global scale.

Digital technologies allow for fast scaling. Jamalon, an online book retailer since 2010 in Amman, Jordan, has been able, with fewer than 100 staff, to establish partnerships with over 3,000 Arabic-language and 27,000 English-language publishers, delivering 10 million titles to the Middle East. Platform-based businesses are on the rise across the globe, providing new opportunities to trade goods and services.

Digital platforms provide access to goods and services across the world within seconds; they lower transaction costs as well as expenditure for the allocation of resources; they are a driving force for economic innovation and dynamism; and they enable a variety of new services.

Best of all, digital platforms create jobs. Since 2009 many clusters of rural e-tailers have opened shops on Taobao.com Marketplace, creating “Taobao Villages”. These Taobao Village merchants produce consumer goods, agricultural products and handicrafts based on their particular skills. Taobao Villages have created more than 1.3 million jobs, luring young people who migrated to cities back to their places of birth to start up enterprises.

But that’s just the start.

Increasingly, platforms for creative, well-educated online workers, are conquering labor markets. Workers are hired to perform tasks that are complex, demanding and technical, ranging from marketing, to writing and engineering. Upwork, a typical “crowdsourcing platform”, has twelve million registered freelancers, five million registered clients and three million jobs posted annually.

Digital work will play an increasingly important role in the current and future jobs agenda. Take the case of the Middle East and North Africa (MENA) region, where high-skill university graduates currently make up almost 30 percent of the unemployed pool of labor. The region needs to create more than ten million jobs a year just to keep up with its demographic bulge. Providing the opportunity to work with crowdsourcing digital platforms may offer an effective solution.

These platforms are not yet that well known. Their workers mostly come from the US and India. To harness the job opportunities presented by digital platforms, it is important to rethink the enabling environment more broadly, in a way that includes social protection and IT infrastructure.

Platform-based work, besides the lack of job security, does not provide social protection under current systems. In fact, social safety nets and labor institutions are still conceived around long-term employer-employee relationships, which are increasingly challenged by the changing nature of work (2019 World Development Report). More fluid and dynamic labor markets demand rethinking social protection while ensuring that firms and workers can respond to changes in technology and product markets.

Providing social assistance and social insurance needs to be decoupled from how and where people work. These safeguards must be coordinated with labor market institutions to jointly provide protection and promote employment. To implement this change we need to reconsider the fundamental elements of the enabling business environment, which should have social protection at heart.

Broadband access is a prerequisite for business in the digital era - many firms depend in part or even exclusively on the internet. Mobile phone access alone is no longer sufficient; broadband technologies push down transaction costs even further in remote markets that lack transport infrastructure.

The MENA region hosts some of the most under-served internet users, with fewer than ten broadband subscriptions per 100 inhabitants (in stark contrast to the 120 mobile phone subscriptions for every 100 inhabitants). Bandwidth per subscriber is also limited.  The result is that, while many citizens are active on social media, digital finance has barely any presence.

MENA lags behind on digital payments despite its middle-income status and that is a huge impediment to the advent of platforms and e-commerce. When it comes to mobile money, for example, East African countries outperform their MENA counterparts.

Jumping on this platform will need greater investments to build the digital highways for tomorrow’s job-seekers and workers.

Join us on the geospatial way to a better world

1 week 4 days ago
Kris Krüg Flickr CC

[[tweetable]]Disruptive technology, supported by location-based – or “geospatial” – databases, is on track to change our lives, transform economies, and shake up big and small businesses. [[/tweetable]]In fact, this is already happening in cities and communities around the world, thanks to fast-developing mobile technology and the growing speed of mobile communications.

For example, a Cairo-based startup called “Swvl” is disrupting commuting in the In the Middle East and North Africa region by mapping out commuters’ travel directions and enabling app-based, affordable bus rides that can compete with on-demand ride-hailing.

Location-based data is a major factor contributing to success stories like this. Simply put, geospatial information is a foundation for:  

  • e-government applications, including smart cities, property registration, and utility management;
  • the commercial sector, including companies such as Amazon, Uber, Alibaba, Didi, etc.; and
  • our daily life – to navigate where we go, shop, and eat.
Making geospatial information more useful for a sustainable world was the subject of the first United Nations World Geospatial Information Congress (UNWGIC) held by the United Nations and the government of China in Deqing, Zhejiang Province, China, November 19–21. I attended the conference along with more than 1,000 participants from 83 countries, various international organizations, and many geospatial technology and information industry leaders.



One of the important subjects discussed at the conference is how to implement the Integrated Geospatial Information Framework in development programs and projects. Jointly developed by the World Bank and the United Nations, the framework aims to help countries bridge the “geospatial digital divide” by providing guidance on building a geospatial information infrastructure. While many advanced economies have been successful in developing such infrastructure, sadly, very few low and middle-income countries have achieved that goal.
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The framework includes nine pillars, together which complete the puzzle of a solid foundation for the geospatial information infrastructure. The pillars include: governance and institutions, policy and laws, finance, data, innovation, standards, partnerships, capacity and education, as well as communication and engagement. An Implementation Guide will provide detailed guidance to countries on implementing the various pillars of the framework. The Implementing Guide will be finalized by the Ninth Session of the United Nations Committee of Experts on Global Geospatial Information Management (UN-GGIM) in New York in August 2019.
  Source: Integrated Geospatial Information Framework (World Bank and United Nations) In parallel, the World Bank has started supporting countries to implement the framework at the national and local levels. Action plans were completed in the Palestinian territories at the national level and Albania for the city of Tirana, with more to come. Once the governments develop and approve their respective action plans, the World Bank will prepare to finance the implementation of such plans.

Country-level action plans include:
  • preparing draft laws and implementing regulations on geospatial information infrastructure;
  • establishing an institutional coordination mechanism;
  • creating data standards and data-sharing protocol;
  • building a national geo-portal to allow geospatial data sharing among government agencies and to private entities, taking into consideration privacy and data security as required by the law;
  • establishing a Geodetic Reference Framework and permanent Global Positioning System (GPS) core stations to allow for accurate measurements; and
  • collecting fundamental datasets that are necessary for the entire economy, such as street maps and addresses, cadastre/property data, topography, surface water, land use, protected areas, among others.
The action plan also addresses financing needs, including what should be funded by the government and what would make financial sense for private sector financing.

It may take years to establish the infrastructure for geospatial information, even for most advanced economies. For instance, the INSPIRE Directive, which regulates geospatial data in the European Union (EU), was adopted in 2008 and gives EU countries till 2022 to comply. Many of the countries are still far away from full compliance. Making progress may be a lengthy process, but we need to start somewhere.

This is the moment. The World Bank and the United Nations are committed to working together to advance the important agenda of geospatial information and technology for development. We have challenged ourselves to assist at least 30 countries in three years. We call on other partners in development to join us in this effort!

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FinTech Adoption and its Spillovers. Guest post by Sean Higgins

1 week 4 days ago
During my last trip to Mexico, I bought tamales from a street vendor and paid by card—something that would have been impossible not long ago. The vendor, who had a Bluetooth card reader connected to his cell phone, told me that his potential customers are not always carrying cash, and as a result, accepting card payments has increased his sales. This anecdote illustrates a broader trend: as the adoption of financial technologies (FinTech) increases on both the supply and demand sides of the market (see Figure 1), both consumers and small retail firms benefit. Consumers benefit through lower transaction costs—such as the costs of traveling to a bank branch or ATM to withdraw cash (Bachas, Gertler, Higgins, and Seira, 2018)—and reduced risk of crime (Economides and Jeziorski, 2017). Retailers benefit by attracting customers who prefer these payment technologies and may not carry cash.
 
My job market paper studies how retailers respond to consumers’ adoption of a particular financial technology—debit cards—and how this supply-side response feeds back to the demand side, affecting other consumers’ FinTech adoption and consumption decisions.  I exploit a natural experiment that created a shock to FinTech adoption on one side of the market: between 2009 and 2012, the Mexican government disbursed about one million debit cards to existing beneficiaries of its conditional cash transfer program, Prospera (formerly Progresa/Oportunidades).
 

Figure 1. Adoption of debit cards and point-of-sale (POS) terminals over space and time

 
I find that this shock to consumers’ FinTech adoption leads corner stores to adopt point-of-sale (POS) terminals to accept card payments, and that this increase in FinTech adoption by retailers has two types of spillovers on other consumers (i.e., consumers who are not Prospera beneficiaries). First, other consumers adopt cards: the number of other consumers with debit cards rises by 21 percent. Second, richer consumers who already had cards substitute 12 percent of their supermarket consumption to corner stores. This, in turn, results in an increase in corner store sales and profits.
 
The policy shock I exploit has two notable features that make it ideal for studying supply-side responses to consumers’ financial technology adoption, as well as spillovers on other consumers. First, the shock was large: in the median locality, it increased the proportion of households with a debit card from 36% to 54%. Because retailers likely only benefit from FinTech adoption once the fraction of consumers who have adopted surpasses a certain threshold, small-scale randomized control trials (RCTs) on financial technologies with network effects may not provide a large enough shock to study spillovers between the supply and demand sides of the market. Second, unlike some policy changes that affect the cost of adoption for all participants on one side of the market, this shock reduced the cost of debit card adoption only for a subset of consumers (beneficiaries of Mexico’s cash transfer program), which allows me to isolate spillover effects on other consumers.
 
I combine administrative data from Prospera on the debit card rollout with a rich collection of microdata consisting of seven additional data sets on both consumers and retailers. The key data set on supply-side FinTech adoption is a confidential data set on all POS terminal adoptions by retailers over a twelve-year period, accessed on-site at Mexico’s Central Bank. I combine this with transactions-level data on the use of POS terminals from another confidential data set, which includes all debit and credit card transactions at POS terminals in Mexico (over six billion transactions).
 
To measure spillovers on other consumers, the two key data sets that I use are quarterly data on the number of debit cards by bank in each municipality from Mexico’s National Banking and Securities Commission and consumption data from a nationally representative household survey. Importantly, the consumption data takes the form of a consumption diary that includes the type of store at which each good is purchased. I complement these with three additional confidential data sets: transactions-level data from the bank accounts of Prospera beneficiaries, a panel on store-level sales, costs, and profits for all urban retailers, and high-frequency price data at the store by barcode level from a sample of stores.
 
Result 1) Retailers adopt POS terminals in response to consumer debit card adoption
Firms respond to the policy-induced shock to consumers’ adoption of financial technology by adopting POS terminals to accept debit and credit card payments. I find that the number of corner stores with POS terminals increases by 3% during the two-month period in which the shock occurs. Adoption continues to increase over time: two years after the shock, 18% more corner stores use POS terminals in treated localities (relative to localities that have yet to be treated). There is no effect among supermarkets, which already had high levels of POS adoption.
 
Result 2) Other consumers adopt cards
The shock to consumer card adoption and subsequent adoption of POS terminals by small retailers has spillover effects on other consumers' card adoption. Using data on the total number of debit cards issued by banks other than the government bank that administered cards to cash transfer recipients, I find that other consumers respond to the increase in FinTech adoption by increasing their adoption of cards. Two years after the shock, 28% more consumers (excluding Prospera beneficiaries) have adopted cards (see Figure 2). In the paper, I rule out that this spillover is due to either Prospera beneficiaries and their household members adopting cards at other banks, or that the spillover happens purely through word-of-mouth learning, rather than because more corner stores now accept card payments.
 

Figure 2. Spillover effect on other consumers’ card adoption

 
Result 3) Richer consumers substitute consumption from supermarkets to corner stores
The adoption of POS terminals by small retailers also affects the consumption behavior of consumers who did not directly receive a card from Prospera. The richest 20% of all consumers substitute about 12% of their total supermarket consumption to corner stores. This is driven by a change in the number of trips to supermarkets and corner stores: households in the richest 20% make, on average, 0.2 fewer trips per week to supermarkets and 0.8 more trips per week to corner stores after the shock (relative to equally rich households in not-yet-treated localities).
 
Result 4) Corner stores sell more, and profits increase
Over the five-year period between Economic Census survey waves, corner store profits increase by about 15% more in localities that experience the debit card shock. Examining the effect of the shock on different components of profits, corner stores increase the amount of merchandise they buy and sell but do not change their other inputs such as number of employees, wages, rent, or capital.
 
Policy implications
Governments around the world are increasingly fostering the financial inclusion of their poorest citizens, striving to increase the adoption and use of financial technologies (Demirgüç-Kunt et al., 2018). The benefits that households reap from FinTech such as debit cards or mobile money depend on adoption of the corresponding technology on the other side of the market. Policies that create large shocks to adoption on one side of the market—for example, by paying government welfare payments into bank accounts tied to debit cards or into mobile money accounts—can spur dynamic FinTech adoption on both sides of the market, benefiting both consumers and entrepreneurs.
 
Sean Higgins is a Post-Doctoral Fellow at the University of California, Berkeley.
 

California, here we come!

1 week 5 days ago

“California, here we come!” I was singing this phrase in my head all morning a few weeks ago as I flew from Washington DC to Los Angeles to accompany a Government of Botswana study tour delegation. The phrase comes from a song by the group Phantom Planet and is the anthemic intro for the mid-2000s television series “The OC” (OC, standing for Orange County).

I know it’s cheesy, but I really love this song. So do my children. They obsess over the melody as we gear up for our annual trip to visit extended family in the great Golden State. To them, it represents a new world, different landscapes, excitement, and that all-too-familiar pull of the western USA…possibility.

To me it represents many of the same things, but for this trip it was ringing in my ears for related, albeit slightly different reasons. On that flight I was still thinking of this lure of the possible, but specifically related to the topic of water. The possibility to thrive with very little water in a semi-arid desert climate. California has mastered this skill, and we were there to learn from some of the very best examples that the state has to offer. Botswana faces many similar threats to water security, such as increasing droughts from climate change, growth in demand, and significant infrastructure needs.

The World Bank Water Global Practice organized this technical exchange at the request of Botswana’s Honorable Kefentse Mzwinila, Minister of Land Management, Water, and Sanitation Services. To meet their request, we organized three strategic stops in California, as well as subsequent meetings with World Bank and IFC staff in Washington DC.

First up, the OC. We jumped right into the heart of where this tune’s associated television series is set. Along the coast, just to the south of Los Angeles county, Orange County is known for its expansive sand beaches, surfing culture, and Disneyland. But we were there for different reasons. Mainly, to visit the Orange County Water District’s Groundwater Replenishment System (GWRS). As a 378,500 m3/day advanced water purification system, the GWRS stakes its claim as the largest potable reuse facility in the world. We toured the plant and learned about the process of taking treated sewer water, purifying it to near distilled water quality, and then recharging it back into the groundwater basin for future extraction and treatment as drinking water. The delegation was particularly intrigued by the potential of this approach, given the similar underlying geologic formations in Botswana, and the attractiveness of utilizing wastewater as an “asset”. There was broad recognition however that significant outreach would be needed in Botswana (as is the case with most countries) to shift public perception, as the “yuck” factor can be a major barrier to the success of a potable reuse project.
 

Michael R. Markus, General Manager of the Orange County Water District, and members of the Botswana delegation tasting the final product of the Groundwater Replenishment System.
Next, we made our way up to Los Angeles, thankfully in the opposite direction of the infamous traffic jams, to meet with water resources planners from the Metropolitan Water District of Southern California (MWD). MWD is the regional water wholesaler to 26 member agencies, which service approximately 19 million California residents with drinking water; half of the state’s entire population. Here, the delegation learned about the intricate network of conveyance infrastructure that transports water into the Los Angeles region from all over the state and Colorado River Basin. The focus of discussion during this stop though was the iterative integrated water resources planning process that the MWD has implemented for the past two decades that helps them prioritize investments and diversify their water portfolio. The Botswana team is now very keen to initiate a similar process, in part supported by the World Bank’s Botswana Emergency Water Security and Efficiency Project.
  Examining the reverse osmosis technology used at the Carlsbad Desalination Plant. The final stop was San Diego, with visits to meet with officials and technical staff of the San Diego County Water Authority and the City of San Diego, and to tour the Claude “Bud” Lewis Carlsbad Desalination Plant. The most interesting part of this day was by far the visit to the plant itself. It is technically interesting in that it is the largest seawater desalination plant in North America, but it is also interesting from a project finance perspective. It has utilized a unique PPP framework to construct and operate the plant. Key take-aways for the delegation were that to make this PPP successful, it required risk transfer to the private sector, price certainty through a water purchase agreement, buy-out provisions for the public sector, and an eventual transfer to public ownership.

After an intense two days, we left for Washington DC with many insights and ideas to take back to Botswana and support the country in its pursuit of long-term water security. I personally came away with the affirmation that California, and more broadly the western United States, is indeed the land of the possible. The opportunities for us to support our clients through learning exchanges like this are boundless.

And as the follow up lyric in the song suggests, “California here we come…right back where we started from”, I hope we can bring many more clients back to this region in the future, perhaps through a more structured study tour/exchange program, to learn how to better thrive in the face of water stress, climate change, and myriad similar challenges facing our clients around the world.
  The delegation touring the City of San Diego’s Pure Water pilot facility.

Rebound in metal prices? All eyes on China and trade

1 week 5 days ago

This blog is the eighth in a series of ten blogs on commodity market developments, elaborating on themes discussed in the latest edition of the World Bank’s Commodity Markets Outlook. Earlier blogs are here.
 
The World Bank’s Metals and Minerals Price Index is forecast to remain broadly unchanged in 2019, following a projected 5 percent increase in 2018. However, volatility is anticipated to remain elevated due to China’s environmental policies, tariff negotiations between the United States and China, and Chinese policy responses aimed at stimulating the economy and cushioning the impact of trade tensions.

Despite supply disruptions and falling inventories, metals prices retreated in the third quarter on softening global demand and U.S.-China trade tensions. The Index declined by about10 percent in Q3 (q/q), partially offsetting its bullish ride over the past couple of years.
 
Metals and minerals price index


Copper

Copper prices are often considered a global economic barometer due to the importance of the metal in infrastructure and manufacturing. Fiscal stimulus from the Chinese government to spur infrastructure projects could provide a boost to copper demand, and a moderate recovery of copper prices is expected in 2019.

Prices fell 11 percent in 2018 Q3 (q/q), reflecting gloomy market sentiment as trade tensions escalated. In addition, fears of supply disruptions due to labor strikes in the world’s largest copper mine, Escondida in Chile, did not materialize. Although production remains robust and mine expansions are expected in the Democratic Republic of Congo and Zambia (in part driven by electric vehicle demand), markets remain relatively tight.
 
World copper stock-to-consumption ratio and LME copper price

 
Aluminum

Aluminum prices are anticipated to recover in 2019, with consumption outstripping production outside of China and rising alumina prices.

Aluminum prices have been volatile throughout the year on persistent concerns about alumina supply (alumina is extracted from bauxite and is then used to produce primary aluminum). The world’s largest alumina refinery, Alunorte in Brazil, has been operating at half capacity since March due to an environmental dispute. Sanctions on Russian aluminum producer Rusal in April and labor strikes at Alcoa in Western Australia that lasted more than six weeks starting in August led to price spikes. Meanwhile, U.S. tariffs on aluminum imports have resulted in a divergence between the United States price and the London Metals Exchange benchmark. However, trade tensions in the second half of 2018 have outweighed supply disruptions and tight inventories, with aluminum prices declining by 9 percent in 2018 Q3 (q/q).

World ex. China aluminum stocks and LME aluminum price
 

Nickel

Nickel prices are foreseen to increase in 2019.

Prices fell by about 9 percent in 2018 Q3 (q/q) but were still 26 percent higher than 2017 Q3. Strong demand for stainless steel and electric vehicle batteries have supported prices, along with a lack of nickel pig iron (NPI) supply in China. Nickel inventories at exchanges, particularly in Shanghai, have been falling precipitously. New supply from Indonesia should support stockpiling as there is long-term electric vehicle demand for nickel.
 
Nickel stocks at exchanges

 
Zinc, lead, and tin

On balance, lead and zinc prices are forecast to be slightly lower on average in 2019 than 2018, while prospects for tin look positive.

Despite critically low stocks, the “sister metals” zinc and lead saw the sharpest fall in prices in 2018Q3, by 19 and 12 percent respectively, as trade tensions weighed heavily on market expectations for future demand. With the electric vehicle revolution, lead, inextricably linked to batteries in internal combustion engines, emerged as a casualty (the main electric vehicle batteries are lithium-ion based, with nickel, cobalt, and manganese used for the cathode and a graphite anode). In addition, an expected supply surge in refined zinc has kept prices low. However, market tightness points to a gradual recovery in prices from their current low levels in the near term.

As the “glue” for all things in the form of solder, tin is expected to be an important component in the technology supercycle. Over the past few years, refined tin consumption has been outpacing production. Stocks are falling, exacerbated by supply disruptions in Indonesia and Myanmar. Tin prices are projected to increase modestly in 2019.
 
LME zinc, lead, and tin stocks


Iron ore

A well-supplied seaborne market, supply additions from Brazil, and a rising share of scrap-based steel production point to lower iron ore prices in 2019.

Unlike base metals, iron ore prices have been spared most of the negative impacts of trade tensions, increasing by 2 percent in 2018Q3 (q/q). This may be because the prices of bulk commodities, such as iron ore and alumina, primarily reflect actual physical demand while base metals prices are indicative of market sentiment. However, such divergence is not expected to persist as the fundamental drivers—especially demand—of both bulk and base metals prices are similar. Steel production in China remains constrained by strict environmental policies and iron ore imports have declined. Prices began to fall in November.
 
Longer-term trends in metals demand

Over the past 20 years China's demand for metals has grown dramatically, and it now accounts for around 50 percent of global demand for most metals. This increase in the share of demand has come largely at the expense of advanced economies such as the United States and the European Union.
 

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Against All Odds: 16 Inspiring Heroes from Nepal

1 week 5 days ago
As the 16 Days of Activism Against Gender-Based Violence is marked worldwide, [[tweetable]]we present to you stories of 16 inspiring heroes from Nepal[[/tweetable]]. They are crusaders and pioneers, leaders and visionaries who share one common trait – a remarkable journey in their path towards equality and empowerment. The women belong to diverse backgrounds, cultures, castes and groups. Yet all of them have stood against odds and managed to make a difference in many lives.

[[tweetable]]Each of the personalities is carefully chosen as a representative character with experiences that motivate and resonate with us[[/tweetable]]. These Nepali heroes deserve to be read about, known and lauded for their efforts.
 



[[tweetable]]16 Days of Activism Against Gender-Based Violence is an international campaign to challenge violence against women and girls.[[/tweetable]]

The campaign runs every year from 25 November, the International Day for the Elimination of Violence against Women, to 10 December, Human Rights Day.

The World Bank Group believes that no country, community, or economy can achieve its potential or meet the challenges of the 21st century without equal participation of women and men, girls and boys.

So [[tweetable]]here we bring to you stories of 16 heroes that have contributed more than their share in empowering themselves, their communities and nation.[[/tweetable]]

Creating an Identity of her Own: Society can be harsh and difficult to those who are ‘different’ from the society’s perception of ‘normal’. [[tweetable]]Read about the transformation of Bhumika Shrestha-a transgender activist who has created a strong identity of her own.[[/tweetable]].

Campaigning for Women's Land Rights in Nepal: In Nepal. women are less likely than men to own a home or land alone or jointly. Among women, 8% own a home and 11% own land alone or jointly. Among men, 19% own a home and 21% own land alone or jointly, according to Demographic Health Survey, 2016. In a country where land is still considered as a major asset and a piece of land registration makes a huge difference in a woman’s life, [[tweetable]]read about Kalpana Karki from Sindupalchowk, a land rights activist struggling to ensure women’s rights to land.[[/tweetable]] Her story is here.

From Food Security to Innovative Agriculture: [[tweetable]]Karsangma Lama, a vegetable farmer from Humla, battled adversities to enhance food security for her family and entire community.[[/tweetable]] Read her story here.

Bringing Hope to the Lives of Visually-Impaired Children: With an alarming increase in the rate of rape cases of minors being reported in the media, [[tweetable]]Keshari Thapa, former principal at Purbanchal Gyan Chakshu High School, Dharan believes that visually impaired boys and girls at higher risk of sexual assault. Find out more about her being a ‘ray of hope’ for them.[[/tweetable]]

From Kamlari to Provincial Deputy Speaker: [[tweetable]]Meet Krishni Tharu, who beat all odds to become a Provincial Deputy Speaker.[[/tweetable]]

Exercising Power to Benefit Women: A woman mayor can make a world of difference. [[tweetable]]Read how Manju Malasi, Mayor of Doti Silgadi Municipality is exercising power to benefit women.[[/tweetable]]

An Exemplary Conservationist: [[tweetable]]Do you want to know how Nanda Devi Kunwar from Kailali was physically attacked for being an exemplary conservationist? [[/tweetable]]Read more about Kunwar, who is an epitome of courage and willpower.

Engaging with Social Change through the Visual Medium: [[tweetable]]Meet NayanTara Gurung Kakshapati, a young journalist-turned visual artist who is pushing boundaries to end inequality and all kinds of discrimination existing in Nepali society. [[/tweetable]]

A Woman of Substance: [[tweetable]]From facing society’s wrath for being unable to bear a child to become an authoritative voice in the society - Meet Ramkali Devi Thakur (Lohar), a woman of substance.[[/tweetable]]

The Acid Attack Survivor who Fought to Change the Law: [[tweetable]]The new civil and criminal code has the provision of providing immediate financial support to cover treatment for acid attacks and increasing the penalty to 10 years from three years of imprisonment. All thanks to Sangita Magar - who dared to change the law.[[/tweetable]]

A Pioneer Dalit Campaigner: [[tweetable]]Breaking all barriers at the decision-making level and putting an end to the discrimination will be the ultimate win for Sannani Pariyar, a Dalit campaigner from Dhading.[[/tweetable]]

Transforming Lives through Music: Imagine the situation of a child who is separated from her family at a young age of seven, just because she is a girl.[[tweetable]] Tabla player Sarita Mishra’s attempt to transform such troubled lives through music is worth reading.[[/tweetable]]

Taking Nepali Skils to Global Heights: An empowered woman empowers a society. [[tweetable]]Shyam Badan Shrestha, an entrepreneur, has trained hundreds of women and established women’s groups in nine districts who provide their products to her company. [[/tweetable]]

A Fearless Voice: Imagine being subjected to humiliation, isolation and insult in the name of caste-based discrimination at an early age. [[tweetable]]Journalist Sona Khatik has transformed those painful experiences into a learning experience and become a fearless voice for deprived community.[[/tweetable]]

Dreaming Big to Save Mothers During Childbirth in Remote Nepal: Only 44 % births are delivered in a health facility in rural Nepal and 44 % birth are assisted by a skilled provider.[[tweetable]] Yangzom Sherpa is in pursuit of fulfilling her dream of saving the lives of mothers in remote Nepal. [[/tweetable]]

Epitome of Inspiration: [[tweetable]]Yagya Kumari Ruchal, Deputy Chairperson of Chaubise Rural Municipality, is an epitome of inspiration. Read all about the woman who has opened up financial avenues for women.[[/tweetable]]




 

Against All Odds: 16 Inspiring Heroes from Nepal

1 week 5 days ago
As the 16 Days of Activism Against Gender-Based Violence is marked worldwide, [[tweetable]]we present to you stories of 16 inspiring heroes from Nepal[[/tweetable]]. They are crusaders and pioneers, leaders and visionaries who share one common trait – a remarkable journey in their path towards equality and empowerment. The women belong to diverse backgrounds, cultures, castes and groups. Yet all of them have stood against odds and managed to make a difference in many lives.

[[tweetable]]Each of the personalities is carefully chosen as a representative character with experiences that motivate and resonate with us[[/tweetable]]. These Nepali heroes deserve to be read about, known and lauded for their efforts.
 



[[tweetable]]16 Days of Activism Against Gender-Based Violence is an international campaign to challenge violence against women and girls.[[/tweetable]]

The campaign runs every year from 25 November, the International Day for the Elimination of Violence against Women, to 10 December, Human Rights Day.

The World Bank Group believes that no country, community, or economy can achieve its potential or meet the challenges of the 21st century without equal participation of women and men, girls and boys.

So [[tweetable]]here we bring to you stories of 16 heroes that have contributed more than their share in empowering themselves, their communities and nation.[[/tweetable]]

Creating an Identity of her Own: Society can be harsh and difficult to those who are ‘different’ from the society’s perception of ‘normal’. [[tweetable]]Read about the transformation of Bhumika Shrestha-a transgender activist who has created a strong identity of her own.[[/tweetable]].

Campaigning for Women's Land Rights in Nepal: In Nepal. women are less likely than men to own a home or land alone or jointly. Among women, 8% own a home and 11% own land alone or jointly. Among men, 19% own a home and 21% own land alone or jointly, according to Demographic Health Survey, 2016. In a country where land is still considered as a major asset and a piece of land registration makes a huge difference in a woman’s life, [[tweetable]]read about Kalpana Karki from Sindupalchowk, a land rights activist struggling to ensure women’s rights to land.[[/tweetable]] Her story is here.

From Food Security to Innovative Agriculture: [[tweetable]]Karsangma Lama, a vegetable farmer from Humla, battled adversities to enhance food security for her family and entire community.[[/tweetable]] Read her story here.

Bringing Hope to the Lives of Visually-Impaired Children: With an alarming increase in the rate of rape cases of minors being reported in the media, [[tweetable]]Keshari Thapa, former principal at Purbanchal Gyan Chakshu High School, Dharan believes that visually impaired boys and girls at higher risk of sexual assault. Find out more about her being a ‘ray of hope’ for them.[[/tweetable]]

From Kamlari to Provincial Deputy Speaker: [[tweetable]]Meet Krishni Tharu, who beat all odds to become a Provincial Deputy Speaker.[[/tweetable]]

Exercising Power to Benefit Women: A woman mayor can make a world of difference. [[tweetable]]Read how Manju Malasi, Mayor of Doti Silgadi Municipality is exercising power to benefit women.[[/tweetable]]

An Exemplary Conservationist: [[tweetable]]Do you want to know how Nanda Devi Kunwar from Kailali was physically attacked for being an exemplary conservationist? [[/tweetable]]Read more about Kunwar, who is an epitome of courage and willpower.

Engaging with Social Change through the Visual Medium: [[tweetable]]Meet NayanTara Gurung Kakshapati, a young journalist-turned visual artist who is pushing boundaries to end inequality and all kinds of discrimination existing in Nepali society. [[/tweetable]]

A Woman of Substance: [[tweetable]]From facing society’s wrath for being unable to bear a child to become an authoritative voice in the society - Meet Ramkali Devi Thakur (Lohar), a woman of substance.[[/tweetable]]

The Acid Attack Survivor who Fought to Change the Law: [[tweetable]]The new civil and criminal code has the provision of providing immediate financial support to cover treatment for acid attacks and increasing the penalty to 10 years from three years of imprisonment. All thanks to Sangita Magar - who dared to change the law.[[/tweetable]]

A Pioneer Dalit Campaigner: [[tweetable]]Breaking all barriers at the decision-making level and putting an end to the discrimination will be the ultimate win for Sannani Pariyar, a Dalit campaigner from Dhading.[[/tweetable]]

Transforming Lives through Music: Imagine the situation of a child who is separated from her family at a young age of seven, just because she is a girl.[[tweetable]] Tabla player Sarita Mishra’s attempt to transform such troubled lives through music is worth reading.[[/tweetable]]

Taking Nepali Skils to Global Heights: An empowered woman empowers a society. [[tweetable]]Shyam Badan Shrestha, an entrepreneur, has trained hundreds of women and established women’s groups in nine districts who provide their products to her company. [[/tweetable]]

A Fearless Voice: Imagine being subjected to humiliation, isolation and insult in the name of caste-based discrimination at an early age. [[tweetable]]Journalist Sona Khatik has transformed those painful experiences into a learning experience and become a fearless voice for deprived community.[[/tweetable]]

Dreaming Big to Save Mothers During Childbirth in Remote Nepal: Only 44 % births are delivered in a health facility in rural Nepal and 44 % birth are assisted by a skilled provider.[[tweetable]] Yangzom Sherpa is in pursuit of fulfilling her dream of saving the lives of mothers in remote Nepal. [[/tweetable]]

Epitome of Inspiration: [[tweetable]]Yagya Kumari Ruchal, Deputy Chairperson of Chaubise Rural Municipality, is an epitome of inspiration. Read all about the woman who has opened up financial avenues for women.[[/tweetable]]




 

The Perils of Being a Firstborn Child Amidst Forest Cover Loss in Indonesia: Guest post by Averi Chakrabarti

1 week 5 days ago

This is the thirteenth in this year's series of posts by PhD students on the job market.

Our planet is currently experiencing substantial environmental degradation. The resulting depletion of resources and climate change patterns endanger the prospects for human life on earth in the long run, but there are often detrimental consequences that materialize sooner. While governments might have little incentive to reign in dangerous practices if the effects are not expected to emerge until the future, the recognition of concurrent costs might provide more urgency to the need to stem environmental harms. In my job market paper, I document an immediate human health impact of the rapid rates of deforestation in Indonesia, one that arises due to forest loss-induced spikes in malaria.
 

Indonesia is an important setting to study this issue. The country has one of the largest stretches of tropical forests, but it has recently come to exhibit the highest global increase in deforestation (Hansen et al., 2013). Between 2000 and 2008, the time period I examine in this study, Indonesia lost almost 50,000 square kilometres of forests, or double the area of the US state of Vermont (Burgess et al, 2012). Given that Indonesia is the fourth most populous nation in the world, any detrimental health effects of forest loss are likely to be substantial.  

Deforestation and malaria

Deforestation can influence malaria prevalence through various channels. For example, forest loss tends to engender biodiversity losses, and the resulting reduction or elimination of species that feed on mosquitos and/or mosquito larvae leads to the proliferation of malaria vectors. Deforestation can also increase ground temperatures, thus aiding malaria transmission (Pattanayak and Pfaff, 2009). In line with evidence from different parts of the world (Olson et al., 2010; Fornace et al., 2016; Berazneva and Byker, 2017), studies in Indonesia have found a positive relationship between deforestation and malaria incidence in protected forest regions (Pattanayak et al., 2010; Garg, 2017). However, it isn’t clear whether malaria increases due to forest loss in the country have been severe enough to bring about mortality, which is what I probe in this analysis and I do so specifically with regard to infants.

Research strategy

Forest loss is likely to be accompanied with various changes and these could shape health in different ways. Forests are often cleared with fires and the resulting air pollution is detrimental to health (Frankenberg et al, 2005; Jayachandran, 2009). On the other hand, the expansion of palm oil cultivation, which is responsible for much deforestation in Indonesia, has been found to have poverty-reduction effects (Edwards, 2018) and could thus improve health outcomes.

In order to separate out the mortality effects of malaria from the potential impacts of other mechanisms, I use a difference-in-differences approach that contrasts two groups of infants who are likely to react similarly to everything that occurs concurrently with forest loss but who differ in their propensity for being affected by malaria. Pregnant women, who are very vulnerable to malaria, are at a higher risk for poor birth outcomes, such as low birth weight, because of the disease. These outcomes, in turn, increase the likelihood of infant mortality. While individuals in malaria-endemic nations (such as Indonesia) are likely to develop some resistance to the disease due to recurrent infections, the placenta that is created during a woman’s first pregnancy is a new organ with no exposure to the disease and so women are most susceptible to malaria at this time. During subsequent pregnancies, women benefit from antibodies created in previous pregnancies and the malaria risks decline. As a result of this pattern, firstborn children are much more likely to experience the brunt of maternal malaria’s effects than later born children (Steketee et al., 2001; Lucas, 2013). Importantly, of all the potential consequences of deforestation (such as air pollution and poverty reductions), only malaria is known to have differential effects by birth order.

Combining the variation in maternal malaria’s consequences for first and later born children with forest cover variation over time allows me to use a difference-in-differences framework for my analysis. Essentially, I compare the change in firstborn mortality when districts go from having high to low forest cover with the same change for later born children. This approach likely underestimates the total infant mortality costs of deforestation-induced malaria since it is unable to capture the costs borne by later born children, which while lower than that for firstborn children, are unlikely to be zero.

Pulling child-level data from several rounds of the Demographic and Health Surveys in Indonesia, I link each child to the forest levels that prevailed in the district and year in which the child’s mother was pregnant with the child. The 2000-2008 annual forest data that I use is from Burgess et al. (2012) and is available for all districts in Indonesia’s forested regions. The highlighted regions in Figure 1 are those covered by this data.



Results


I find that a firstborn child is more likely to die than a later born child when forest cover declines. When district forest cover falls one standard deviation below mean forest levels within the district during the study period, first infant mortality increases by one percentage point. Back-of-the-envelope calculations indicate that the loss of a standard deviation of forests in all study districts in a year is responsible for 7,463 deaths among live first births in Indonesia (or 35% of all annual deaths in this sub-group). Since only malaria imposes a disproportionate burden on firstborn children, these deaths can plausibly be attributed to the disease.  

Results depicted in Figure 2 suggest that some groups might be especially vulnerable to malaria increases from deforestation—the poor, rural residents, and those who live in districts with high initial forest levels—presumably because they live in close proximity to and/or are dependent on forested areas for their livelihoods or sustenance. I also find that deforestation during the prenatal period might be more harmful for boys than girls, likely due to the former’s higher susceptibility to in utero shocks (Kraemer, 2000). Furthermore, I observe that malaria risks emerge when deforestation occurs in the primary forest regions (dense forests that are supposed to be conserved) but not when it takes place in secondary forest regions (fragmented forests where some logging is permitted), which is consistent with past evidence (Pattanayak et al., 2010; Garg, 2017).



Alternative explanations


I explore whether other contemporaneous changes in Indonesia shape firstborn and later born children differently. A disparity in survival odds could emerge, for example, if any birth order-specific differences in health care access (such as receipt of vaccines) track forest cover changes. I do not find evidence of such systematic differences.

Policy implications

Edwards (2018) finds that the expansion of palm oil production in Indonesia has brought economic benefits to the country, but has also been responsible for substantial forest cover declines. The results of my analysis underscore the mortality and morbidity costs that this kind of environmental degradation imposes on local populations. These detrimental effects should be factored into policy decisions regarding the use of forest resources.
In order to address the threats to health emerging due to forest deterioration and disappearance in Indonesia, there is need to scale up anti-malaria programs such as bed net distribution. Since my results suggest that malaria due to forest loss increases mortality for firstborn infants, these initiatives should target young women around the mean age at first birth in areas being deforested.  

Averi Chakrabarti is a PhD Candidate at the University of North Carolina at Chapel Hill.

The ongoing impact of ‘nudging’ people to pay their taxes

1 week 6 days ago
© Maria Fleischmann/World Bank

Sustainability is the holy grail of development. There are many interventions that yield positive results in the short term but somehow fail to be sustained over time. This is why the experience in Guatemala that we are about to describe is worth paying attention to. In short, it shows that behavioral insights can lead to lasting change.

It all began in 2012 in the United Kingdom, with simple changes in the reminder letters sent to taxpayers that were late in their income tax payment. The changes were very successful, inducing payments of 4.9 million pounds (around $6.5 million) in a sample of almost 120,000 delinquent taxpayers, which would not have been raised without the intervention. The then-nascent institution called the "Behavioral Insights Team" (BIT) became known around the world with this effective and very low-cost intervention that was based on modifying the messages of the letters sent to delinquent taxpayers. The message that was most effective said: "Nine out of ten people in the U.K. pay their taxes on time. You are currently in the very small minority of people who have not paid us yet." [[tweetable]]Behavioral science experts have been able to show that telling people what most people do, especially when it comes to positive behavior, is a good technique to change behavior.[[/tweetable]]

Inspired by this intervention, the Superintendence of the Tax Administration (SAT) of Guatemala, in collaboration with the World Bank and BIT, wondered if it would work in a context as different as Guatemala, where tax collection is a challenge and where the tax compliance is not 90 percent, as in the United Kingdom, but closer to 65 percent. [[tweetable]]In Guatemala, tax collection is so low that between 2011 and 2015 it was only 12 percent of GDP, less than half the average in Latin American countries.[[/tweetable]] There was only one way to see if this would work in Guatemala, where there was little to lose - the cost was very low — and instead, if it went well, much to gain.

Thus, in 2015, they decided to design a simple nationwide intervention in Guatemala to measure the impact of specific messages included in the letters that the SAT sent to taxpayers who were delinquent in the payment of income tax. The messages referred to social norms, deliberate choices or even national pride, among others. The objective of this experiment was not only to increase the number of taxpayers filing their taxes and the total collection of income tax, but also to learn, through impact evaluation methods, what the most effective message in the Guatemalan context was.

Did it work? Indeed. Not only did more Guatemalans filed their taxes, but those who did paid higher values. Those who received the letter with the social norm message — where it was highlighted that they were part of a minority that had not yet filed their taxes — and the message that referred to the non-filing as an intentional choice — where they were warned of a potential audit — paid four times more in taxes relative to those that received the original letter (see Table 1).

Source: Kettle, Hernandez, Ruda, and Sanders (2016), Behavioral Interventions in Tax Compliance: Evidence from Guatemala. World Bank Policy Research Working Paper No. 7690. Washington, D.C.: The World Bank. The collaboration between these entities resulted not only in an increase in tax collection, but also in changes to how SAT officials thought and acted; once the collaboration with the World Bank and BIT ended, SAT officials were convinced by the impact of the experiment and internalized and adapted behavioral science methods to their day-to-day operations and communication with taxpayers.
It has been almost four years since they collected the results of that first experiment, and it is very good news to see that the process continues to date. In all subsequent years, the SAT repeated the experiment using different transmission mechanisms. In addition to sending physical letters, they used emails and text messages. With each experiment, the total income tax collection not only continued to increase, but the effects were sustained over time, up to 12 months after sending the initial messages and without the need to send a reminder.

The SAT team has been able to observe firsthand the effects of the application of behavioral techniques on income tax collection, and they are currently exploring how to scale up this intervention and apply it to other business areas. Today, they are working on ideas to increase the collection of other taxes, such as VAT, and options to increase collection of the vehicle circulation tax.

This experience of using behavioral techniques began with timely support from the World Bank and BIT and is now ingrained in day-to-day operations at the fiscal authority of Guatemala. It serves as an example for other countries with similar challenges created by relatively low tax compliance rates. Traditional measures to increase tax collection are costly, require changes in legislation, and do not always yield positive results. In Guatemala, we have a very powerful, simple, and inexpensive example of the effectiveness and sustainability of behavioral science.

Accessibility and Inclusion: Two Key Factors for Disabled Individuals

1 week 6 days ago
Globally, over one billion people – 15% of the population – live with some form of disability,  according to the World Health Organization’s World Report on Disabilities. Beyond their physical, mental or sensory impairments, people with disabilities face barriers for inclusion in different aspects of life. They tend to have fewer socioeconomic opportunities, more limited access to education and higher poverty rates. Stigma and discrimination are sometimes the main barrier to their full, equal participation.

How can this situation be addressed?

Accessibility is a key factor. The definition may vary, but basically accessibility means the possibility of an individual, with or without problems of mobility or sensory perception, to understand a space, integrate in it or interact with its content.

In Peru, for example, people sensitive to inadequate accessibility (including disabled people, the elderly, children up to age five, pregnant women and family members of individuals with a disability) represent 33% of the total population. Despite advances, much remains to be done.

Peru celebrated its Day of Persons with Disabilities on October 16, and December 3 is International Day of Persons with Disabilities. In commemoration of this important date in Peru, the World Bank, with support from the Sociedad y Discapacidad (SODIS), organized an encounter to discuss the current situation of persons with disabilities in the country.

José Taco, current director of the Executive Office on Accessibility and Technological Development of the Ministry of Housing, Construction and Sanitation, sat down with us to discuss the recently approved Plan Nacional de Accesibilidad para 2018-2023 [2018-2023 National Accessibility Plan]. This plan establishes policies and actions to ensure that the infrastructure and equipment of cities guarantees the equal access of people with disabilities to the physical environment, transportation, information and communications.  

What commitments has the World Bank made to this issue?

One of the main commitments of the World Bank Group is to invest in people to prepare countries for the economy of the future. The development of human capital, in other words, the accumulated skills, knowledge and experience of individuals, should include people living with disabilities.
Unfortunately, this remains a major challenge given the limited awareness about and inclusion of people with disabilities, especially in developing countries.  To promote the inclusion of people with disabilities in the labor market, it is essential to have inclusive education that considers the needs of these individuals and that offers them the same opportunities as the general population to receive a quality education.

How can we contribute to the inclusion of people with disabilities?

The following recommendations were made during the discussion:
  • Involve people with disabilities and civil society in all phases of policymaking and the implementation of projects and programs. Participation and consultation of all users and people with different disabilities are required from the beginning given that these individuals are the best allies for identifying and eliminating the main barriers that occur.
  • Develop instruments designed to improve accessibility in the urban environment. Creating inclusive cities requires legal frameworks and effective standards that foster accessibility in all aspects of daily life.
  • Promote a crosscutting approach among the different ministries to ensure that their policies work together to support the needs of people with disabilities.
  • Strengthen controls for the enforcement of current instruments. Authorities should guarantee the proper application of these instruments and ensure that the country does not continue to invest in works that are not accessible to all citizens.
  • Raise awareness of and train public servants responsible for implementing these instruments, as well as the public in general. We need greater social awareness that allows us to put ourselves in someone else’s shoes to understand that accessibility is not something that concerns only people with physical disabilities, but that it is an attitude of solidarity that enables the free access of citizens to all the services and opportunities our society offers and the exercise of all of their rights as citizens.
  • Promote accessibility: For people with disabilities – and for people in general – accessibility is the point of entry to their human rights.
 “Building a sustainable, inclusive world for all requires the full engagement of people of all abilities,” Ban Ki-moon, 8th Secretary-General of the United Nations (2015).
  Accessibility and Inclusion: Two Key Factors for Disabled Individuals

Changing the lives of Egyptian people left behind for a long time: Taha’s Story

1 week 6 days ago
"It was the first time we talked while the officials listened. Not as in the past, when they used to talk and we just listened."

With this simple statement, Taha Al-Leithi, a young Egyptian man from the village of Rawafei al-Qusayr in Sohag in Upper Egypt, described the fundamental change introduced by the local development forums to citizens’ participation in the development process in Sohag, and the relationship between government officials and citizens. 
 

Al-Leithi and his peers have never participated in any development decision concerning their village or its markaz (center). They had never been invited to develop or even discuss the annual investment plan for the markaz or governorate. Taha says he, like other young people in the village, had believed that planning and selecting projects were tasks done in closed rooms, and that the central government in Cairo alone decided the needs of villages and towns in Sohag governorate, 500 kilometers south of the capital. 

Local development forums are one of the most important institutional arrangements established by the World Bank’s Program-for-Results Project in Sohag and Qena. The program is designed to raise the competitiveness and economic efficiency of local units to enable them to deliver basic services in a framework of decentralization while supporting youth participation and creating more job opportunities. 

The basic idea of the forums is to provide a sustainable platform through which local stakeholders, especially those marginalized for a long time such as young people and women, can take part in public affairs, and systematically participate in the planning, design, and follow-up of local development projects. The program has so far succeeded in setting up 23 forums at all the administrative marakez (centers) in Sohag and Qena governorates. The forums have about 1,200 members, 30% of whom are women, and more than 50% are young people. 

"I felt that I became more important to the government than a member of parliament or local council," said Al-Leithi, recalling the practice of developing annual investment plans in his province controlled by a minority of the elite. Before, consultations were limited to influential members of parliament or members of local councils belonging to large families, while the vast majority were denied participation in planning projects and identifying urgent priorities. 

Those old practices contributed to significant distortion in the structure of public services in the governorate of Sohag as well as other governorates. This resulted in the loss of citizens' confidence in local and central bodies responsible for the planning and development process. That, in turn, led to the reduction of the role of citizens, who became negative recipients of the output of their governorate development. 

"I thought that it was a foregone conclusion," said Al-Leithi, when he first read on a social network page of Sohag city and the markaz that a public participation session would be held to discuss the FY17-18 plan. The plan had already been developed and the consultation was just a token formality process, Al-Leithi told himself. But out of curiosity, he decided to participate in the session, where he heard different statements for the first time and saw people in their simple galabiyas (traditional dress) talking more than the officials sitting at the podium. 

When the local development forums were formed, Al-Leithi joined as a representative of youth for the village of Rawafei al-Qusayr. “As a member of the local development forum, I developed a different view of matters after I attended the first session of consultation." 

Now, Al-Leithi sees his volunteer membership in the forum as influential in developing plans and following up their implementation. He sees his role as vital to shaping the present and future not just of his village and governorate but for his family, as well. 

Recently, forum members chose Taha as coordinator of the community communication committee, one of the forum’s specialized committees, through which citizens can participate in the planning, design, and follow-up of the implementation of projects on the ground. 

Al-Leithi and other committee members have benefited from specialized training workshops on community aspects of the program; knowledge and skills required to deal with grievance systems; the management of consultation sessions; follow-up of contractors to ensure compliance with occupational health and safety requirements of workers and the community; and information dissemination systems including the "signboard" which emphasizes citizens’ right to know project facts. 

"I am responsible for a public project! I stand with the engineers, contractors and workers, and do things I had only done [before] when building my own house. "

This was Al-Leithi’s feeling when he decided to go on a field trip to follow up on a project being implemented in Sohag city and its markaz, where he wrote down his remarks and shared them with forum members and officials at the local implementation unit. Here, Al-Leithi smiled saying, "The government is only now convinced that its citizens know their communities better than anyone else." 

This bottom-up planning process through the forum platforms has fundamentally changed the nature of projects in the governorates of Sohag and Qena and how they are followed up on the ground. In a pioneering step to maximize the role of the community, the Ministry of Local Development in Egypt has adopted the initiative to mainstream public participation in the governorates of Egypt by activating a “community participation guide” in investment plans. The guide was prepared and tested in the governorates of Sohag and Qena within the local development program in Upper Egypt. The ministry and the program hope that this step will lead to a qualitative leap in creating bridges of trust with citizens, integrating them into planning processes, and stimulating their ownership of public projects. 
   

Why are relatively poor people not more supportive of redistribution? Guest Post by Christopher Hoy

1 week 6 days ago

This is the twelfth in this year's series of posts by PhD students on the job market.

Social commentators and researchers struggle to explain why, despite growing inequality in many countries around the world,  there is often relatively limited support among poorer people for policies where they are set to benefit (such as increases in cash transfers or in the minimum wage). Recent research drawing on surveys from the United States and Europe has identified a potential reason for why poorer people are not more supportive of redistribution: they don’t realise they are poor. These studies illustrate the majority of people tend to think they are positioned around the middle of the national income distribution regardless of whether they are actually rich or poor.

Conventional theories of preferences for redistribution, such as the Meltzer-Richard Hypothesis, imply that if poor people were made aware they were relatively poorer than most other people in their country, they would become more supportive of redistribution. Yet there is little empirical evidence that evaluates this prediction. There has only been one survey experiment (of 1054 people in Buenos Aires) that directly tests the effect of informing people they are poorer than they thought and it showed this led to greater support for redistribution. However there is also some related research that suggests the effect could be in the opposite direction for a number of reasons. For example, laboratory experiments have shown `last place aversion' can exist, whereby relatively poor people often prefer when there are people who are poorer than them. As such more empirical evidence is needed to understand how poorer people’s misperceptions of their relative position in the national income distribution effects their support for redistribution.
 
How I approach answering this question
 
I conducted the first cross country survey experiment on preferences for redistribution in the developing world (paper available here, which is co-authored with Franziska Mager). The experiment involved over 16,000 respondents in five developing countries that make up almost 25% of the global population (India, Nigeria, Mexico, South Africa and Morocco). In each country, there were around 3200 people that make up a representative sample of the population with internet access (we used the Canadian firm RIWI which conducts online surveys using random domain intercept technology). This meant respondents were younger, on average, and more likely to be male than a truly nationally representative sample. A limitation of the study is the findings are only generalizable to the population with internet access (although I show in the paper the results weighted by age and gender to match the national population are qualitatively similar).
 
To test whether informing poor people of their relative position in the national income distribution makes them more supportive of redistribution, I randomly allocate half of the respondents in each country to be told which quintile their household belongs to in the national income distribution (based upon their reported household income and the number of household members). Prior to the treatment, respondents were asked where they perceived their household is positioned in the national income distribution, what they thought the level of inequality is in their country, and what they would prefer the level of inequality to be. After the treatment they were asked if they thought the gap between the rich and poor was too large and whether the government was responsible for closing this gap. Our survey experiment is better placed to test the channels through which information is having an effect than previous studies because our sample size in each country is around three times larger (i.e. more statistical power to examine heterogeneous treatment effects) and we more extensively solicit people’s prior beliefs.
 
A ‘median bias’ exists: People disproportionally think they belong to the middle of the income distribution
 
Figure 1 shows where respondents’ positioned their household on the national income distribution. People tend to think they are in the middle of the income distribution, regardless of whether they are rich or poor. Only between 15-22% of respondents correctly estimated their household’s quintile in the national income distribution and the correlation between actual and perceived position ranges from 0.16-0.26. This finding mirrors previous work in Europe and North America.
 

 
The questions asked prior to the treatment illustrated that poor people who perceived themselves to be in the bottom two quintiles of the distribution were between 15 to 28 percentage points more likely to prefer lower levels of inequality than poor people who perceived themselves to be in the top two quintiles. This begs the question, would informing poor people who overestimated their relative position (i.e. they are actually poorer than they thought) of their true position make them more supportive of redistribution?
 
Surprisingly, telling poor people that they are poorer than they thought makes them less concerned about the gap between the rich and poor in their country
 
This is shown in Figure 2 below. Respondents in the treatment group are between 3.9 to 6.7 percentage points less likely than those in the control group to agree the gap between the rich and poor in their country is too large. This effect is driven by respondents who had expressed prior to the treatment that they prefer low levels of inequality in all countries (except Morocco) and is mainly attributable to respondents in the lowest quintile.
 

 
However, there was no effect from the treatment on these people’s support for the government to close the gap between the rich and poor. In addition, there was no effect on poor people who accurately estimated their position in the distribution.
 
People appear to be benchmarking their own standard of living as a reference point for what they consider to be acceptable for others
 
A plausible channel that is causing this effect is people using their own living standard as a ‘benchmark’ for what they consider acceptable for others. In the paper, I modify Fehr and Schmidt’s seminal model of other regarding preferences to illustrate how people update their beliefs in the way I observe. Put simply, prior to the treatment the subset of respondents we focus on stated they thought their household’s standard of living would position them in the middle of the national income distribution (or even towards the top in some cases). Upon receiving the treatment this led people to realise two points. Firstly, there are fewer people in their country with a living standard they considered to be relatively poor than they had thought. Secondly, what they had considered to be an ‘average’ living standard (their own standard of living) is actually relatively poor compared to other people in their country. I show how both of these points would lead people to respond by being less likely to be concerned about the gap between the rich and poor in their country.
 
Importantly, ‘benchmarking’ means there are opposing channels through which poorer people’s preferences for redistribution respond to information about their relative position. On the one hand, poorer people may be more supportive if they are set to benefit from redistribution. However, on the other hand they may be less supportive if they are less concerned about the absolute living standard of people who are relatively poor. This can help to explain why poor people are not as in favour of greater redistribution as what you might expect.
 
Christopher Hoy is a PhD student at the Australian National University

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