Showing posts with label Foreign Aid. Show all posts
Showing posts with label Foreign Aid. Show all posts

Thursday, April 2, 2009

Is World Bank a pyramid scheme?

The Colbert ReportMon - Thurs 11:30pm / 10:30c
Dambisa Moyo
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Lunch with the FT: Dambisa Moyo;
And, as the historian Niall Ferguson (a contributing editor to the FT), notes in a foreword to Moyo’s book, she is venturing into a debate that has to date been colonised by white men – be they rock stars such as Bono, politicians such as Tony Blair or the academics Jeffrey Sachs and Bill Easterly...

Her book contains a damning assessment of the failures of 60 years of western development programmes, but also focuses on an alternative path. This blends micro-finance and changes to property laws with a grasp of the immense opportunity and freedom that shifting global trade patterns, Chinese investment in infrastructure and bond markets could represent for Africa.

“There has been more private capital coming into Africa; more African countries have been issuing bonds. There are the Chinese ... Africa has turned a corner. Now it’s about closing the deal,” she insists with characteristic optimism and a slice of Parma ham, delivered as an amuse-gueule between courses....

And what of the World Bank, where Moyo once worked for two years, and the International Monetary Fund? Do they and other donors not deserve some credit for helping lay the foundations in some countries of recent growth? Yes, they do, she says, in terms of the reforms they have promoted but they have not been aggressive enough about phasing out aid.

This might sound high-handed from someone who lives comfortably in London. But Moyo is not arrogant. She counts herself exceptionally lucky. When she was growing up as a young girl in Zambia her aspiration was to become a flight attendant. She never dreamed she would win the scholarships that took her to Harvard and Oxford, and then to Goldman Sachs. She mostly thanks her parents, who were among the first graduates at university in the Zambian capital Lusaka. They left Africa in search of further education in the early 1970s, when communications were rudimentary and leaving was a journey into the unknown. But when they could they hurried back to help build a future for their country.

Thursday, August 7, 2008

Do we Need another Good magazine

NEED magazine creates exposure for humanitarian aid via an educational, artistic, visual narrative of human stories.

Related; Good Magazine

Tuesday, August 5, 2008

Stolen Money Fact of the Day

According to one estimate, corrupt money flowing abroad from developing countries is now $40 billion per year which amounts to 40% of annual official development assistance funds.

-Putting the focus on Stolen Assets

Monday, August 4, 2008

What's the value added of World Bank?

"The bank thought it financed an electric power station, but in fact financed a brothel."

- Paul Rosenstein-Rodan, 1961 (source: The Rise and Fall of the World Bank Economic Department)


An interesting recent book on The World Bank;
The World Bank and the Gods of Lending by Steve Berkman

As a non-economist at the Bank, I was periodically reminded by my superiors of my obvious inability to grasp the full essence of economic development and all the nuances of the economic process. They were probably right, as I was, after all, just a technical specialist, and while specialists could only advise on their specialty, economists could advise on anything they damn well pleased because they were economists and had the inside track on everything. They were the economic managers, and their solution to the world’s problems was to produce more economic managers. And so the Bank would fund all sorts of training (Ph.D. degrees in economics being one of the more popular approaches), conferences, seminars, workshops, and whatever, to that end. The economists at the Bank were in essence cloning themselves, and they seemed to be quite pleased with the whole business...

I recall a regional management meeting in 1995 during which we were reviewing “problem projects” in our lending portfolio for Africa. We had at the time over five hundred ongoing projects in an $11 billion portfolio5 that required supervision by Bank staff to ensure that implementation was on track, loan agreement conditions were being met, and that project objectives would be achieved. As my PRT work had morphed into institutional development and public-sector management, and I had been doing skills-mix analyses for many of our borrower institutions, I decided, prior to our meeting, to examine the skills mix of our regional staff to see if this might have any correlation to our portfolio problems. Lo and behold, it seems that we had roughly 300 economists of various persuasions, 10 financial analysts, 10 public-administration specialists, and roughly 150 technical specialists (engineers, architects, educators, health services specialists, and so forth).

I raised this matter at the meeting and inquired how we could effectively handle the financial and institutional management issues, which were our major problem areas, with only ten financial and ten public administration specialists on our staff. I also asked what project-management expertise three hundred economists were adding to our ability to supervise our portfolio adequately.

Saturday, August 2, 2008

Rent-seeking Consultants?

Ashraf Ghani, the Alexander Hamilton of Afghanistan, blames World Bank for neglecting higher education in Afghanistan (emphasis added);
In Afghanistan in 2002, World Bank and UN officials insisted that the government should not invest in higher education and moreover should invest very little in secondary and vocational education despite the fact that Afghanistan had seen its professional class decimated by war, disease, and flight. Citing the focus of the millennium development goals (MDGs) on primary education, they considered higher education and vocational training a luxury that Afghanistan could ill afford. But without trained doctors, teachers, engineers, and managers, it was not clear at the time whether Afghanistan could get back on its feet. Five years later, the fact that the country’s operating budget is overshadowed by the cost for technical assistance (TA) to make up for the “poor capacity” of the government testifies to the debilitating expense of failures to invest in the training of professional staff, future leaders and administrators.

In many parts of the world, the neglect of higher education has to led to poor-quality administration and spiraling TA bills. The price for TA amounts to roughly $ 20 billion per annum, with consultants often paid around $ 200, 000 a year. Nor is this technical assistance provided by Westers donors of high quality in many cases.


- "Fixing Failed States", Ashraf Ghani and Clare Lockhart, p. 142

For Discussion: Should we try to rate the output quality of consultants? Who should rate it and how should we do it?

A Challenge to Chris Blattman: Create a consulting agency that delivers quality consulting services in the development field to low-income countries for FREE.

Tuesday, July 22, 2008

International Development Happy Hour?


I wonder what would Dani Rodrik, Chris Blattman and Easterly think of this crowd.

Thursday, July 17, 2008

Is the World Bank a Bank?

The World Bank's early reflections on development : a development institution or a bank?

Summary: Until the late 1960s, the World Bank presented itself as an institution devoted to making sound and directly productive project loans. Yet, during its very early years, some discussions developed inside the Bank regarding the possibility of issuing different types of loans, namely (i) loans aimed at tackling social issues ("social loans"), and (ii) loans aimed at providing foreign currency to address disequilibria in the balance of payments ("impact loans"). This paper brings together historical analysis and theories of organization development to study the housing issue as a case in point. The analysis reveals that the Bank was unwilling to lend for housing programs not because these were not sound - in fact, they were - but because they were geared toward achieving social welfare objectives and were not directly linked to productive investment projects, such as dams, power stations, and railroads. This early decision had a significant impact on the subsequent development of the Bank's view of policy-making: it locked the institution into a particular lending pattern, and deprived it of important intellectual resources. It was not until the late 1960s that the Bank began to take social issues into consideration, rather late compared with other multilateral institutions.

Friday, July 11, 2008

Quote of the Day



Chinese Ambassador Wang Guangya, whose nation is one of Zimbabwe's major trading partners, expressed similiar sentiments, saying Zimbabwe should be allowed to resolve its political crisis on its own.

''The development of the situation in Zimbabwe until now has not exceeded the context of domestic affairs,'' Wang said, adding that sanctions would ''interfere with the negotiation process.''

-Russia and China Veto U.N. Sanctions on Zimbabwe

Related;
Is it true what they say about the Chinese? The effects of China’s lending in Africa

Friday, May 30, 2008

Bottom Billion - a myth?



Related;
An Ivory Tower Analysis of Real World Poverty

Another Band Aid?


World Bank Launches $1.2 Billion Fast-Track Facility for Food Crisis

Related;
Trust the development experts – all 7bn of them By William Easterly;
The report of the World Bank Growth Commission, led by Nobel laureate Michael Spence, was published last week. After two years of work by the commission of 21 world leaders and experts, an 11- member working group, 300 academic experts, 12 workshops, 13 consultations, and a budget of $4m, the experts’ answer to the question of how to attain high growth was roughly: we do not know, but trust experts to figure it out.

This conclusion is fleshed out with statements such as: “It is hard to know how the economy will respond to a policy, and the right answer in the present moment may not apply in the future.” Growth should be directed by markets, except when it should be directed by governments.

My students at New York University would have been happy to supply statements like these to the World Bank for a lot less than $4m.

Why should we care about the debacle of a World Bank report? Because this report represents the final collapse of the “development expert” paradigm that has governed the west’s approach to poor countries since the second world war. All this time, we have hoped a small group of elite thinkers can figure out how to raise the growth rate of a whole economy. If there was something for “development experts” to say about attaining high growth, this talented group would have said it.

Friday, May 16, 2008

The Perfect Storm


Safia Ali, mother of five, has not eaten in seven days. Her 1-year old son, Farhan, has fallen ill.

The consensus now is that all the same elements of the early 1990s — high-intensity conflict, widespread displacement and drought — are lining up again, and at a time of the biggest spike in global food prices in more than 30 years. The United Nations says 2.6 million Somalis need assistance and the number could soon swell to 3.5 million, nearly half the estimated population. If there is excellent rain or a sudden peace, the crisis may ease. But weather projections and even the rosiest political forecasts do not predict that.

-Famine Looms as Wars Rend Horn of Africa

Sunday, April 6, 2008

World Bank: Fifty Years of Failure?


Dr. Benjamin Powell, Director of the Center on Entrepreneurial Innovation at the Independent Institute and assistant professor of Economics at San Jose State University

World Bank prediction on Burma, in 1958;
"made remarkable economic progress...[its] long-run potential compares favorably with those of other countries in South East Asia."

Monday, March 31, 2008

Assorted

Race and the Social Contract

A Reality Check on African Aid
Between 2000 and 2006, U.S. economic aid to sub-Saharan Africa increased from $2.1 billion to $5.4 billion (in constant terms). That is commendable. But it is also the case that Africa has become the focus of aid efforts by the global development community and aid from many other countries has also gone up, in some cases by even more. European Union countries, for example, gave $21.9 billion to Africa in 2006—four times as much as the United States. The United Kingdom on its own gave $5.2 billion to Africa, almost the same amount as the United States from a country whose economy is one-sixth the size.


‘With a Few More Brains ...’
From Singapore to Japan, politicians pretend to be smarter and better- educated than they actually are, because intellect is an asset at the polls. In the United States, almost alone among developed countries, politicians pretend to be less worldly and erudite than they are (Bill Clinton was masterful at hiding a brilliant mind behind folksy Arkansas sayings about pigs).


The Dismal (Climate) Science: On Marty Weitzman, Fat Tails, And How Economists Could Better Help Us to Overcome Global Warming

Students of Virginity

How and When Experience in a President Counts

Training Teachers


Policy Reduction Budget Support -- A DFID Policy Paper
Yes, the title of the post from IMF says policy reduction- which should be poverty reduction. Maybe the staff at the Fund are a bit stressed out from all the talk about downsizing.

Mark Thoma: Adverse Selection, Loan Defaults, and Credit Rationing

The Dilbert Strategy
- Krugman
Anyone who has worked in a large organization — or, for that matter, reads the comic strip “Dilbert” — is familiar with the “org chart” strategy. To hide their lack of any actual ideas about what to do, managers sometimes make a big show of rearranging the boxes and lines that say who reports to whom.


Bagehot, central banking, and the financial crisis

Dealing with Adverse Selection in the Mortgage Market

How to Cast a Mortgage Lifeline?- Blinder

Infrastructure is America’s best investment

Summers: Steps To Safeguard America’s Economy

Is Poverty Caused by Irrational Behavior?

The WSJ discovers Moral Hazard, and it involves choosing to sleep under bridges

Lessons from Japan Versus Wishful US Prescriptions (Summers/De Long Edition)

Press Coverage and Political Accountability

The 2007 US current account data

Fouling up finance: Same old questions, wrong old answers

Why Become a Pirate?

Myth # 3: Governance cannot be defined?

Old and New Wisdom in Finance


I [Heart] America's Trade Deficit!

Sunday, March 30, 2008

Picturesque Poverty and Monetary Policy in Haiti


For the picturesque poverty see the Tyler Cowen's post.

For the monetary policy see the Letter of Intent of Haitian government- they're promises the Haitian government has to keep in return for IMF's assistance;

The Government believes that the policies set forth in the attached Memorandum of Economic and Financial Policies (MEFP) are adequate to achieve the objectives of its program, but it will take any further measures that may become appropriate for this purpose. Haiti will consult with the IMF on the adoption of these measures, and in advance of any revision to the policies contained in the MEFP, in accordance with the fund’s policies on such consultation...

The program envisages attaining an inflation rate of 9.0 percent by end-September 2008. This rate slightly exceeds the FY2007 outcome, as a result of higher international prices for food and petrol. To ensure that these increases do not translate into broader inflationary pressures, base money growth will be kept slightly below that of nominal GDP, with an indicative target for the year of 9.6 percent. The bulk of monetary expansion will come from an increase in net international reserves, with a program floor of US$40 million. This will boost gross reserves coverage to 2.7 months’ worth of imports. Recognizing that appreciation of the real exchange rate is a reflection mainly of changing fundamentals, the BRH will maintain exchange rate flexibility, limiting interventions to purchases for the achievement of the program NIR target and temporary smoothing of excessive market volatility...

Building on the cessation of non-essential activities in the first program year, we will strengthen the institutional foundation for our monetary policy framework through further reinforcement of the independence of the BRH, including through strengthening its balance sheet. A strategy to divest the BRH’s interest in the state telephone company, Teleco, is currently being prepared (PC for end-March 2008), with support from the IFC. Taking into account the expected proceeds from that operation, the BRH will, together with the MEF, devise a plan for the recapitalization of the central bank (PC for end-March 2008). The plan will contain steps to revert the BRH’s quasi-fiscal losses, and put its balance sheet on a sound financial footing.

Friday, March 28, 2008

Technology trap in Africa- World Bank

Technology trap and poverty trap in Sub-Saharan Africa;
Summary: Since the industrial revolution, advances in science and technology have continuously accounted for most of the growth and wealth accumulation in leading industrialized economies. In recent years, the contribution of technological progress to growth and welfare improvement has increased even further, especially with the globalization process which has been characterized by exponential growth in exports of manufactured goods. This paper establishes the existence of a technology trap in Sub-Saharan Africa. It shows that the widening income and welfare gap between Sub-Saharan Africa and the rest of world is largely accounted for by the technology trap responsible for the poverty trap. This result is supported by empirical evidence which suggests that if countries in Sub-Saharan Africa were using the same level of technology enjoyed by industrialized countries income levels in Sub-Saharan Africa would be significantly higher. The result is robust, even after controlling for institutional, macroeconomic instability and volatility factors. Consistent with standard one-sector neoclassical growth models, this suggests that uniform convergence to a worldwide technology frontier may lead to income convergence in the spherical space. Overcoming the technology trap in Sub-Saharan Africa may therefore be essential to achieving the Millennium Development Goals and evolving toward global convergence in the process of economic development.


Related;
New Limits to Growth Revive Malthusian Fears


State of Planet '08

Jeff Sachs on water policy

Monday, March 17, 2008

Assorted on Budget Support

Is Providing Budget Support to Developing Countries Effective? -- Evaluation of DFID's Direct Budget Support by UK's National Audit Office


Budget support as more effective aid? Recent experiences and emerging lessons


Making Aid More Effective Through Budget Support
Shantayanan Devarajan, Bank Chief Economist, posed a question: given that public sector reform is needed, that old-style conditionality doesn’t work, and that aid is more or less fungible, what is the best instrument to achieve development and poverty reduction? He also illustrated these three facts with his experiences in the Punjab, Pakistan. Andrew Lawson, Head of the Centre for Aid and Public Expenditure, made the case for providing budget support in a coherent way and in the right context. Steve Radelet, Senior Fellow at the Center for Global Development, suggested a ratings method to encourage countries to improve overall policy and governance stance and quality of public financial management to qualify for budget support. Nicolas van de Walle, Associate Dean for International Studies at Cornell University, pointed out that a critical mass of support is needed. Scholar then asked panelists how they would select appropriate circumstances for budget support, and how they derive the most benefit from it. Panelists also responded to audience questions. Scholar summed up by noting that budget support offers benefits, but the circumstances must be chosen correctly.