The Ultimate Resource is Peaking

A CGD Working Paper. Julian Simon argued that more people were associated with more prosperity: human talents were the “ultimate resource” and the force behind rising living standards. The last 30 years have been consistent with that view. But, globally, we are making fewer workers—and, more importantly, fewer potential innovators. In rich countries, human capital is growing considerably more slowly than in the past. Meanwhile innovation per researcher appears to be dropping as the population of researchers ages, while it takes longer to get to the knowledge frontier and more collaboration to expand it. Combined with the fact we are increasingly intolerant of risk and increasingly desirous of innovations in sectors where it is particularly hard to increase productivity, it is little surprise that productivity growth is indeed declining. To extend our two-century era of comparatively rapid progress, we need radically reduced discrimination in the global opportunity to innovate.

An End to the Investment Project?

This is an *old* paper  (2012) that I submitted to CGD for peer review and it got shot down. I can't remember why, and I re-used some of the material in Results not Receipts but it has some interesting data in it and I still think I broadly agree with it so, with that caveat lector, here it is.  For many donors throughout most of their history, the major assistance model has involved the tool of the investment project.  This is based on a theory of aid and development that the key constraint facing developing countries seeking rapid growth is lack of investment and that donor financing to overcome that ‘investment gap’ can be overseen through the project process to ensure that it is efficiently spent to generate high returns.  In reality, filling an ‘investment gap’ is neither an empirically well justified nor a practically well-implemented aid strategy.  Furthermore, procurement oversight mechanisms appear to be doing a poor job at ensuring the average effectiveness of an investment portfolio in a country is significantly enhanced, or transferring knowledge, or building institutions.  The procurement-focused project investment model should be limited in use to in cases where (i) a project design is significantly innovative and/or delivers regional or global public goods and/or aid is a large percentage of country investment and no agreement can be reached between donors and government on overall investment priorities in that country and (ii) alternate project approaches like output-based or cash on delivery models are deemed inappropriate.

The Simple Math of Development Finance

A CGD Note. In short: we want lots of investment in developing countries; it has to be financially sustainable; direct private project investment is very expensive, indirect private finance through multilateral development banks is a lot cheaper; so scaling through WB/AfDB/ADB/IADB is the sustainable (affordable) model.

Technology and Development: An Exploration of the Data

Co-authored CGD working paper with George Yang. We present data on the global diffusion of technologies over time, updating and adding to Comin and Mestieri’s "CHAT" database. We analyze usage primarily based on per capita measures and divide technologies into the two broad categories of production and consumption. We conclude that there has been strong convergence in use of consumption technologies with somewhat slower and more partial convergence in production technologies. This reflects considerably stronger global convergence in quality of life than in income, but we note that universal convergence in use of production technologies is not required for income convergence (only that countries are approaching the technology frontier in the goods and services that they produce).  Dataset here.

Why Do Some Donors Give More Aid to Poor Countries?

A CGD note.  Donors vary considerably in how much they focus their spending on poorer countries. There are good reasons to believe that the utility-maximizing allocation is focused heavily on the world’s poorest countries, where an extra dollar is likely to make the greatest difference to welfare. However, donors may also allocate resources towards humanitarian causes: particularly seeing disadvantaged subgroups within countries including refugees fleeing violence or natural disasters as deserving particular attention. In addition, donors might believe their aid will achieve more in democratic or ‘well governed’ countries. Perhaps less legitimately, donors might prefer to allocate more aid to countries with closer political or economic ties: ex-colonies, allies, supporters in the UN, or trade partners. Similarly, they might choose to focus their aid on the ‘near abroad,’ as a tool of diplomacy or reflecting higher immediate self-interest. This paper uses some of the indicators highlighted as significant by that literature to examine if they can help explain the variation in poverty focus of donor aid.

IFC 3.1?

A CGD note.  The International Finance Corporation (IFC) is in the process of a considerable transformation, designed to grow its operations and expand their development impact. This paper discusses the rationale and elements of a continuing change agenda, focused on ensuring the IFC best serves its ultimate clients --people in developing countries.

Can Africa Help Europe Avoid Its Looming Aging Crisis?

A CGD working paper with George Yang.  There will be 95 million fewer working-age people in Europe in 2050 than in 2015, under business as usual. This will cause significant fiscal stress as well as slower economic growth. Potential responses include: (a) raising labor force participation by women and older workers; (b) automation; and (c) outsourcing. But none will be sufficient. This leaves immigration: while migrants create demand for jobs as well as fill them, they can help rebalance the ratio of working to non-working populations. The paper compares business as usual estimates of inflows to 2050 with the size of the labor gap in Europe. Under plausible estimates, business as usual will fill one-third of the labor gap. This suggests a need for an urgent shift if Europe is to avoid an aging crisis. Africa is the obvious source of immigrants, to mutual benefit.  Here's a short video presenting the paper.

Unpacking Gender Gaps and Data Gaps in Public Sector Employment and Pay

A CGD Policy Paper with Ugonma Nwankwo and Megan O'Donnell.  We look at available sources to ask (i) Where is data available on employment and wages allowing for comparisons between women and men, and the public and private sectors? (ii) How do women’s employment, compensation, and seniority compare with men’s in the public and private sectors? (iii) How do gender gaps vary by countries’ income level, education levels, and other factors? What are the policy implications of the data we analyze? (iv) Which countries’ efforts can be modeled by others, and how else can global gender gaps in employment and compensation be narrowed? We suggest the Open Government Partnership as a promising platform through which governments can commit to increased transparency around disaggregated employment and wage data, in turn improving policy decision-making aimed at closing gender gaps (or those rooted in other forms of inequality and discrimination). We suggest the Open Government Partnership as a promising platform through which governments can commit to increased transparency around disaggregated employment and wage data, in turn improving policy decision-making aimed at closing gender gaps (or those rooted in other forms of inequality and discrimination).

Promoting Women’s Economic Empowerment in the COVID-19 Context

A CGD Working Paper with Megan O'Donnell Mayra Buvinic Shelby Bourgault George Yang.  When health crises like COVID-19 emerge, the shocks to economic, social, and health systems can have different implications for women and girls, with gendered impacts across various dimensions of wellbeing. This paper, part of a series documenting the gendered impacts of the pandemic, focuses on women’s economic empowerment. It begins with a conceptual framework illustrating how the pandemic, associated response measures, economic contraction and different coping strategies intersect with underlying gender norms and inequality in ways that differentially affect the wellbeing of women and girls. It then synthesizes the existing evidence on how the COVID-19 crisis and associated response measures have impacted women’s paid and unpaid work, entrepreneurship, and earnings across sectors in low- and middle-income countries. The paper proceeds to outline economic response measures from national governments and multilateral development banks and the extent to which gender inequalities have been considered in these measures to date. The paper concludes with recommendations aimed at donors and policymakers to ensure the COVID-19 recovery does not exacerbate pre-existing gender gaps in the economy.

Principles for Paris-Alignment and Climate Finance in Development

A CGD note with Ian Mitchell and Atousa Tahmasebi. As ministers and officials meet in the coming year, they will make new financing commitments on climate and promise to ensure all of their activities are “Paris-compatible”—against the backdrop of a global pandemic. Any new commitments on climate finance will need to balance existing development challenges with the pressing need to tackle climate-related risks. This note outlines a set of principles to guide climate-related commitments so that they do more for both climate and development.

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