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Finance policy

One of the Eldis RSS newsfeeds on major development issues

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Fiscal policies for diet and the prevention of noncommunicable diseases

11 Oct 2016 04:29:29 GMT

The Global Action Plan for the Prevention and Control of Noncommunicable Diseases 2013–2020, endorsed by the World Health Organization, provides a roadmap and a menu of policy options for Member States and other stakeholders to take coordinated and coherent action to reduce mortality from noncommunicable diseases (NCDs) and exposure to risk factors.

To address the increasing number of requests from Member States for guidance on how to design fiscal policies on diet, WHO convened a technical meeting of global experts in fiscal policies on 5–6 May 2015 in Geneva. The main objectives of the meeting were to review evidence and existing guidance, discuss country case studies and provide considerations with regards to the scope, design and implementation of effective fiscal policies on diet. The meeting consisted of presentations and discussions during plenary and in working groups on the evidence, country experiences and technical aspects of policy design and implementation.

It was concluded that there is reasonable and increasing evidence that appropriately designed taxes on sugar-sweetened beverages would result in proportional reductions in consumption, especially if aimed at raising the retail price by 20% or more. There is similar strong evidence that subsidies for fresh fruits and vegetables that reduce prices by 10–30% are effective in increasing fruit and vegetable consumption. Greater effects on the net energy intake and weight may be accomplished by combining subsidies on fruit and vegetables and taxation of target foods and beverages. Vulnerable populations, including low-income consumers, are most price-responsive and, in terms of health, benefit most from changes in the relative prices of foods and beverages.

Consistent with the evidence on tobacco taxes, specific excise taxes – as opposed to sales or other taxes – based on a percentage of retail price, are likely to be most effective. In countries with strong tax administration, taxes that are calculated based on nutrient content can have greater impact. A proper situation analysis, good political advocacy, appropriate objective setting and evaluation, should be part of the multidisciplinary development and implementation of such policies.

There are evidence gaps that could be addressed, with more countries developing and implementing such fiscal policies. Lack of standards or criteria for determining exactly what to tax is a challenge experienced by countries and the development of a nutrient profile model for designing and implementing fiscal policies was recommended. In addition, there was a call for a manual on developing and implementing fiscal policies for diet.

It is recommended that:

  • the report of the meeting be disseminated for use by countries as information to assist in the development and implementation of fiscal policies as appropriate
  • the current evidence gap – including the impact of SSB tax on improving weight and health outcomes, and ultimately the prevention of NCDs – be addressed through research and evaluation in countries
  • a nutrient-profiling tool be developed for use by countries for the implementation of fiscal policies
  • an implementation manual be developed to provide further guidance to countries on the development and implementation of fiscal policies for diet

The State of African Cities 2014: re-imagining sustainable urban transitions urban transitions

07 Oct 2016 03:42:44 GMT

The overarching challenge for Africa in the decades to come is massive population growth in a context of wide-spread poverty that, in combination, generate complex and inter-related threats to the human habitat. The main premise of this report is that successfully and effectively addressing the vulnerabilities and risks to which the African populations are increasingly being exposed may, perhaps, require a complete re-thinking of current urban development trajectories if sustainable transitions are to be achieved. This report is the third in The State of African Cities series.
It is not only Africa’s largest urban population concentrations that are becoming more prone to vulnerabilities and risks; these are actually increasing for all African settlements. This will add to the already significant social, economic and political hazards associated with Africa’s still pervasive urban poverty. The
combination of demographic pressures, rapid urbanization, environmental and climate change now appear to reinforce a host of negative urban externalities.
Ubiquitous urban poverty and urban slum proliferation, so characteristic of Africa’s large cities, is likely to become an even more widespread phenomenon under current urban development trajectories, especially given the continuing and significant shortfalls in urban institutional capacities. Since the bulk of the urban population increases are now being absorbed by Africa’s secondary and smaller cities, the sheer lack of urban governance capacities in these settlements is likely to cause slum proliferation processes that replicate those of Africa’s larger cities.
This report argues for a radical re-imagination of African approaches to urbanism, both to strengthen the positive impacts of Africa’s current multiple transitions and to improve urban living and working conditions. Africa’s population is still well below the 50 per cent urban threshold. This implies that a major  reconceptualization of its approaches to urban development can still be undertaken. Given the rapidly changing global conditions, especially those associated with environmental and climate change, looming resources scarcity and the dire need to move towards greener and more sustainable development options, Africa has the opportunity to take a global lead in innovations towards greener, healthier and more sustainable urban societies

Scoping Report: current status of index-based insurance in Bangladesh

07 Oct 2016 01:19:41 GMT

With current and anticipated increases in magnitude of extreme weather events and a declining consistency in weather patterns, particularly challenging for agriculture, there has been a growing interest in weather index-based insurance (IBI) schemes in Bangladesh. A number of weather index-based insurance products have already been tested and applied across Asia and Africa, with varying degrees of success, as a mechanism to improve livelihood security by enabling vulnerable populations to transfer risk associated with climate change, extreme weather events and other hazards. In the process, these efforts have generated important new knowledge on how these schemes can be designed and implemented for optimal results.

However, the practice of index-based insurance is still limited in Bangladesh, and the experience and knowledge generated by the different stakeholders involved needs to be better communicated.

To identify and facilitate the diffusion of knowledge and best practices in this unique field, Worldfish will hold a two-day workshop for experts and practitioners who are working on this issue in Bangladesh. This event aims to map past and present index-based insurance schemes that have been undertaken in Bangladesh, and to facilitate knowledge sharing and capacity building among relevant organizations. Prior to this event, the International Centre for Climate Change and Development (ICCCAD) has conducted this scoping study to inform the design and objectives of the two-day workshop.

China’s African infrastructure projects: a tool in reshaping global norms

06 Oct 2016 11:33:41 GMT

The resilience of China’s investments in African infrastructure has been called into question in the light of its own economic slowdown. The substantial reduction in Chinese demand for African commodities has resulted in a significant drop in commodity prices, causing an adverse economic outlook in many commodity-dependent African economies and potentially decoupling the African growth story from China’s influence and economic engagement.
This policy insights paper argues that China’s infrastructure-based economic statecraft in Africa has shown and will continue to show resilience in the face of new economic realities in the China–Africa relationship, as these projects fit into China’s broader goals of reshaping global norms.

Costs of non-cooperation in South Asia: an illustration and way forward

06 Oct 2016 01:37:17 GMT

The South Asian economic integration has remained afflicted with a narrative that is more often than not a negative one. As a part of this, the arguments put forth include the assertion that the region lacks in trade complementarities due to similarities in production structures. Therefore, the region can only compete in
products and there is limited scope for intra-regional trade.
The effect of such an argument is enormous. It has apparently led to a tendency to neglect trade integration in South Asia let alone adopting a comprehensive approach towards it, whereby trade in goods, trade in services and investment are sought to be regionally integrated simultaneously. Pakistan’s consistent postponement of Most Favoured Nations (MFN) status to India and Sri Lanka’s ever evasive approach towards Comprehensive Economic Partnership Agreement (CEPA) are but two glaring examples. The examples of Pakistan and Sri Lanka are deliberate as they both are the only two non-LDCs (Least Developed Countries) apart from India in the region.

Realising income security in old age: A study into the feasibility of a universal old age pension in Malawi

04 Oct 2016 12:15:51 GMT

Many governments in developing countries are setting up non-contributory programs to assist older people, most of whom are not covered by formal pension schemes. Malawi is no stranger to the international advancement of social security and social protection. That said, further analysis on the implementation and the role of social pensions in tackling old-age poverty was needed to inform government policy and practice.

The aim of the study was to address the knowledge gap of social pension reforms in Malawi. The study examined what has been learned from the programs operating in different African countries, and highlights the key policy and budgetary issues that arise. The study has concluded that social pensions represent an important component of an institutional foundation for old-age social protection.

There are affordable options for Malawi to begin expanding a universal pension in the coming years. Various scenarios exist for universal pensions costing a fraction of GDP, which could be financed through wider efforts to increase revenue for social protection spending. Malawi could then seek to
increase the coverage and adequacy of a universal pension as more revenue can be secured, and as the economy grows.

The path chosen will depend on the political will of the government, but a potential option would be:


  • make a start but introducing a relatively low cost scheme, such as benefit of MWK 3,720 to over 70s (a cost of 0.4 per cent of GDP). This would be in line with current levels of fiscal space, and would also allow for administrative systems to be developed gradually before rolling out to national level
  • as soon as possible, expand the scheme to all older people aged 60 years and over. This would recognise the relatively short life expectancy in Malawi, and that many of the challenges of old age can kick in relatively early
  • in the longer run, move towards a benefit level at the level of the national poverty line (approximately MWK 8,750 in 2016 prices), to ensure that no older person lives in poverty. This higher level of adequacy can be achieved both through growth of the economy, and also by devoting increased revenue to the scheme

Gone with the wind: demographic transitions and domestic saving

30 Sep 2016 09:26:57 GMT

Demographic factors are important determinants of a country’s saving behaviour. In Asia, for example, a favourable demographic transition over the last half century has supported high saving and investment rates.This study explores the relationship between demographic factors and saving rates using a panel dataset covering 110 countries between 1963 and 2012. In line with predictions from theory, this paper finds that lower dependency rates and greater longevity increase domestic saving rates. However, these effects are statistically robust only in Asia. In particular, Latin America, which is a region that has undergone a remarkably similar demographic transition, did not experience the same boost in saving rates as Asia. The paper highlights that the potential dividends arising from a favorable demographic transition are not automatically accrued. This is a sobering message at a time when the demographic tide is shifting in the world.

Deepening trade and investment relations post-AGOA: three options for South Africa

30 Sep 2016 02:39:29 GMT

As the US and Africa look to engage at the 2016 annual African Growth and Opportunity Act (AGOA) Forum under the theme of ‘Maximizing AGOA Now While Preparing for the Future beyond AGOA’, two pertinent issues come to the fore: leveraging AGOA until this programme of trade benefits expires in 2025, and considering the nature of trade relations post-AGOA.

The US is an increasingly important economic partner for South Africa: total trade has nearly doubled since the inception of AGOA in 2001, as has US foreign direct investment (FDI) into South Africa. Considering the changing global conditions over this period, such as the stalemate in World Trade Organization (WTO) negotiations, the slump in global commodity demand and prices, domestic economic stagnation and priorities of promoting export-led growth, South Africa needs to consider its future relations with the US.

This briefing highlights key measures South Africa can take to maximise the benefits extended under AGOA until its expiration. At the same time, three options are offered towards a more formalised trading arrangement with the US post-AGOA: a ‘simple’, ‘moderate’, and more comprehensive approach. These options are discussed in a prescriptive manner, highlighting the strengths and weaknesses of each approach, in the hopes of facilitating further research and discussion.

Private investment in clean energy, inclusive agribusiness and financial inclusion: evidence of impact

29 Sep 2016 12:41:17 GMT

This report, commissioned by DFID, seeks to identify what evidence exists that private investments made in clean energy, inclusive agribusiness and financial services lead to good development outcomes for the poor, especially women – with a particular focus on Asia. This paper is a rapid literature review, before deciding on whether or not to commission more detailed work. DFID is particularly interested in (a) specific suggestions that are made for how to strengthen the investments – for example, through complementary TA – so as to improve the likelihood of strong outcomes for the poor, especially women (b) gaps in the evidence base. The evidence of links between clean energy and good development outcomes for the poor was strong, although the review identified only very few rigorous impact studies. The literature highlighted the need for certain conditions to be met in order for those positive outcomes to be achieved. Financial sustainability was cited as a primary driver of development outcomes. Several studies indicated the importance of public sector intervention in clean energy investment alongside the private sector, to increase provision in poorer and rural areas and to ensure that proper standards are followed in the construction and operation of plants. For small-scale clean energy projects, the evidence indicated the importance of activities to promote their uptake, including financial services. Clean energy was seen to be of particular benefit to women but women are not properly represented in the design and implementation of small-scale clean energy projects. The evidence of links between inclusive agribusiness and good development outcomes for the poor was largely case study-based and anecdotal. The literature identifies many factors affecting the impact of inclusive agribusiness on the poor, including the assets available to the poor in value chains (including land and water) and the process of land acquisition. The literature identified elements of the design of successful inclusive agribusiness including the presence of producer organisations; innovative partnerships to help link producers to markets; pre-commercial investment to transfer assets and building capacity; and giving producers (especially women) a voice in governance and investment. Given the need for careful design, several sources emphasised the importance of ‘patient’ investment in this sector. The evidence for the impact of financial inclusion on the poor was considerably more robust than in the other two sectors, and many more rigorous impact evaluations were available. The evidence is strong for positive impacts for the poor through several different channels for private investment including savings products, improved banking technology and access to credit. In terms of barriers to successful financial inclusion, there is evidencethat farmers’ credit constraints are an important bottleneck in expanding agricultural output, and interventions that ease these constraints may be effective in reducing rural poverty and increasing agricultural production. The overall evidence on the impact of financial inclusion is mixed, as some studies show no effect on women while others associate it with positive impacts. The review showed that there is very limited robust evidence on the impact of particular private sector investments in these sectors. The evidence shows clearly that private sector investors, even when supported by development finance institutions (DFIs) rarely report on the impacts of their activities. Some of the more progressive companies and investors report on their reach to beneficiaries and some include an analysis of their beneficiaries by gender, but the review found no evidence of systematic reporting of impact by any private sector investors in clean energy, inclusive agribusiness [...]

The Funded Pension Scheme and economic growth in Nigeria

27 Sep 2016 04:57:12 GMT

In Nigeria however, life after retirement is dreaded by most workers. The fears of facing the future after retirement create an ambiance of disturbance among employees. Retirement is seen by workers as a transition that could lead to psychological, physiological and economic problems.

This study provided evidence on the effect of the operation of the funded pension scheme since its inception in 2004 on economic growth in Nigeria using error correction mechanism (ECM) and Ordinary Least Square (OLS) methodologies.

Findings revealed that the pension fund contributions from both private and public sectors in Nigeria increased greatly and constituted a huge investment fund in the capital and money markets. This increased liquidity in the economy and created employment opportunities as well as improvement in the investment climate.

The study concluded that with good risk and portfolio management by pension fund administrators and custodians, the contributory pension has the capacity to boost the Gross Domestic Product (GDP) in Nigeria and very convenient to retirees compared to the previous defined benefit scheme.

The study however recommended the removal of delay payment, administrative bottlenecks and corruption in the management of the pension fund in order to boost economic growth in Nigeria.

Bridging the risk modeling gap: expanding climate-related risk insurance through global risk assessment

27 Sep 2016 03:18:13 GMT

In 2015, more than 1,000 natural disasters inflicted some $100 billion worth of economic damages around the world. These natural disasters included severe storms, flooding, extreme temperatures, droughts, and wildfires—all of which are expected to increase in frequency for years to come as a result of climate change. The annual number of such extreme weather events has been increasing, with almost three times as many occurring worldwide from 2000 to 2009 as in the 1980s.
Of the total economic losses endured last year from natural disasters, insurance covered only 30 percent. The majority of uninsured losses occurred in developing countries across Africa, Asia, and South America.
In Asia, only 8 percent of losses from natural disasters were insured in 2015, and in Africa, only 1 percent of such losses were insured.
Without such risk management tools, governments and individuals are less able to prepare for, respond to, cope with, and recover from climate-change-fueled weather events and natural disasters. While insurance can take many forms, risk management in particular includes a lack of access to innovative insurance instruments - such as parametric risk insurance, which is specifically designed to pay out quickly in the aftermath of a natural disaster. This gives countries a rapid injection of capital that can be vital in the early window before overseas assistance is effectively ramped up and delivered.
To help address this shortfall, the private sector, national governments, and international financial institutions and organizations are working to build new partnerships aimed at enabling countries that are particularly vulnerable to climate change and related natural disasters to gain access to climate-related risk insurance.
These efforts were given a boost in 2015, when at its annual meeting, the G7 announced a goal of expanding access to climate-related risk insurance to 400 million additional people in the most vulnerable developing nations by 2020.
This would quintuple the current level of coverage throughout the developing world from 100 million people to half a billion people. In order to meet this goal of making innovative insurance and climate risk-management tools available to so many millions of new people, a critical gap in high-resolution data and cutting-edge modeling needs to be bridged.

Macroeconomic policy in times of slow growth and crisis

27 Sep 2016 02:36:34 GMT

South Africa faces a series of macroeconomic challenges in the coming months that will strain its ability to address its most pressing need – more jobs. The macroeconomic policy approach taken in the recent time period largely adheres to mainstream tenets, emphasising low inflation and fiscal restraint. Since the Great Recession of 2008, however, those tenets have come under scrutiny, even by organisations such as the IMF.

High global levels of unemployment persist seven years after the onset of the crisis, underscoring the relevance of an alternative macroeconomic framework for both developed and developing countries in which the jobs deficit is the utmost priority. Among policymakers and scholars, the urgent need to stimulate employment coupled with multiple additional macro-level challenges has resuscitated attention to the importance of identifying a wider array of macroeconomic tools beyond the standard ones used in the past 25 years.

This policy brief discusses the recent macroeconomic approaches employed by the South African government with an emphasis on examination of the monetary policies adopted by the South African Reserve Bank. Their impact on the goals of employment creation and growth will be discussed. This will be followed by a review of alternative strategies potentially available to the South African government to address these challenges.

The year that shook the rich: a review of natural disasters in 2011

22 Sep 2016 10:56:57 GMT

From the earthquake and tsunami in Japan to fourteen disasters causing over a billion dollars each in damage in the United States, 2011 was particularly damaging for developed countries. Reviewing 2011’s natural disasters, this report analyses the range of disasters and lessons to be learned from those that occurred in developed countries.

Key lessons:

  • 2011 was the most expensive year in terms of disaster losses in history, mostly because of a spate of disasters affecting developed countries. Globally, the economic cost of disasters in 2011 was $380 billion, of which $210 billion were the result of the earthquake and tsunami in Japan. This was 72 percent higher than the losses in 2005, the second costliest year in history of disaster-related losses
  • developed countries were particularly hard-hit by disasters in 2011 as evidenced by floods in Australia, earthquakes in New Zealand, an earthquake/tsunami in Japan and a series of disasters in the United States. While natural disasters result in higher economic losses in rich countries, fewer people tend to be affected and loss of life is less than in developing countries
  • the post-tsunami Fukushima nuclear accident in Japan poses serious questions about preparedness for technological and industrial accidents caused by natural hazards as well as questions about the safety of nuclear technology
  • several positive trends in international humanitarian response were evident in the course of 2011, including promising developments in international disaster law, greater emphasis on disaster risk reduction and preparedness, and better communications during crises, including the use of social media in disaster response
  • the first famine in twenty years was declared in Somalia in mid-2011, demonstrating the deadly interaction of conflict, political instability and drought that can result in a catastrophe with high human casualties
  • the interconnections between disasters (especially mega-disasters), media coverage and humanitarian funding means that humanitarian funding tends to be directed toward disasters that have higher media coverage rather than to those with disaster-affected populations in greater need of assistance
  • global population is ageing at an unprecedented scale and yet the special needs of older people in emergencies are often neglected. In disasters such as the earthquake/tsunami in Japan and Hurricane Katrina, older people made up a disproportionate percentage of casualties. Given the fact that developing countries are also experiencing an increase in the percentage of elderly people, it is likely that a lack of focus on older persons in all phases, from planning to emergency management to post-disaster reconstruction, can result in higher fatalities among older people, long-term chronic health issues, psychosocial trauma and isolation. Treating older people simply as “normal” disaster victims denies
    the specific vulnerabilities that many older people face
  • more work is needed to recognize the positive contributions which older people can make in reducing the risks from disasters, in disaster response and in recovery and reconstruction

Emergence of LoCs as a modality in India’s development cooperation: evolving policy context and new challenges

20 Sep 2016 03:15:10 GMT

Development cooperation is an integral part of India’s foreign policy and India has been extending cooperation to its fellow developing countries even before its independence in 1947. In present times, India’s development cooperation is manifested through its 'development compact' comprising five components, namely, capacity building and skill transfer, technology and related partnerships, development finance (which includes concessional loans and lines of credit), grants, and trade and investment. Off late, Indian extension of Lines of Credit (LoCs) through EXIM Bank of India have also become a prominent modality of Development Cooperation. However, in many a cases it has been seen that the projects faced a number of challenges for effective delivery.

This discussion paper explores these challenges and other issues related to quality and timely delivery of the projects. It also explains evolution of the scheme IDEAS and discusses new guidelines by EXIM Bank.

Economic repercussions of the Look East Policy in Zimbabwe

20 Sep 2016 02:59:10 GMT

In 2003, Zimbabwe formally announced the Look East Policy (LEP) in the face of economic sanctions by the West. This, coupled with the Forum on China Africa Cooperation (FOCAC) of 2000, has strengthened trade and bilateral investments between Zimbabwe and China. China is increasingly involved in Zimbabwe's agriculture, mining, construction and tourism industries. There is also an influx of Chinese entrepreneurs in Zimbabwe's retail industry. The repercussions of the LEP have been mixed. In this policy brief, the authors critically engage with three sectors: agriculture, mining and the informal sector; in order to provide an overview of the effects that LEP has had on Zimbabwe focusing on the period 2010-2016. They also propound some recommendations for more positive outcomes in the future.

It is likely that Zimbabwe will continue its strong relationship with China. This is notwithstanding, the fact that it is China that stands to benefit more from interaction with Zimbabwe in terms of natural resource wealth extraction and trade, as compared to the little financial aid being poured into Zimbabwe by Beijing. The evolvement of Sino-Zimbabwe relations will however, remain a matter of strategic interests at play. In this regard, it is noteworthy to highlight that the Chinese government has of late been reluctant to commit to financial investment given the political climate in the country. The recent introduction of the Indigenisation policy in Zimbabwe has also negatively affected Chinese companies particularly in the mining industry.

Means testing vs. universal targeting: assumptions of efficiency and affordability

20 Sep 2016 02:37:21 GMT

Whether social protection benefits should be assigned to all (universal) or kept only for those who meet certain criteria (targeting) remains one of the most contentious questions in social policy research. The purpose of this brief is to revisit two social policy assumptions around basic concerns of efficiency, affordability and sustainability of universal social pensions. Contrary to what many international organisations and scholars have argued, this brief forwards that universal social pensions are economically viable and efficient strategies to produce welfare and alleviate older-age income deprivations. The world clearly has the resources to implement basic social pensions on a global scale; the question is if there is also the political will to do it.

Key messages:

  • seventy-nine countries would be economically able to shift from targeted non-contributory pensions to basic universal non-contributory pensions with less than 1.2 per cent of the respective national GDPs
  • sixteen countries have means-tested/regional-tested non-contributory pensions more expensive than a hypothetical basic universal pension
  • an arbitrary threshold of “economic development” is not a limitation for implementing social pensions. At least 16 countries with a relatively low economic development have successfully implemented social pensions without targeting beneficiaries by means
  • universal social pensions are politically and economically viable and are efficient strategies to alleviate income poverty

After Paris: fiscal, macroeconomic, and financial implications of climate change

13 Sep 2016 04:58:24 GMT

The December 2015 Paris Agreement lays the foundation for meaningful progress on addressing climate change—now the focus must turn to the practical policy implementation issues. Against this background, this paper takes stock of the wide-ranging implications for fiscal, financial, and macroeconomic policies of coming to grips with climate change.Most immediate, and key, is the need to recognize and exploit the potential role of fiscal policies in implementing the mitigation pledges submitted by 186 countries in the context of the Paris Agreement. At the heart of the climate change problem is an externality: firms and households are not charged for the environmenta l consequences of their greenhouse gases from fossil fuels and other sources. This means that esta blishing a proper charge on emissions - €”that is, removing the implicit subsidy from the failure to charge for environmental costs - €”has a central role.Also critical are establishing a clear pathw ay to meeting complementary commitments on climate finance, effective adaptation, and ensuring financial markets play a full and constructive role. Fiscal policies are key to efficiently mobilizing both public and private sources of finance, while the need to adapt economies to clim ate change raises issues that have implications for the design of national tax and spending systems (for example, strengthening fiscal buffers and upgrading infrastructure in response to natural disaster risks). There is also a growing need to enhance the contribution of the financial sector to addressing climate challenges, by facilitating clean investments and pooling climate-related risks.For reducing carbon emissions ('€˜mitigation'€™), carbon pricing (through taxes or trading systems designed to behave like taxes) should be front and centre. These are potentially the most effective mitigation instruments, are straight forward to administer (for example, building off fuel excises already commonplace in most countries), raise (especially timely) revenues for lowering debt or other taxes, and establish the price signals that are central for redirecting technological change towards low-emission investments. The challenges lie in gauging appropriate price paths and dealing with the adverse effects on vulnerable households and firms, and the consequent political sensitivities.Moving ahead unilaterally with carbon pricing is likely to be in many countries' own interests, because of the domestic (non-climate) benefits of doing so, most notably fewer deaths from exposure to local air pollution. As national pricing schemes emerge, a natural way to enhance these efforts and address concerns regarding lost competitiveness would be through international carbon price floor arrangements, analogous to those developed to counter some cases of international competition over mobile tax bases.For climate finance, carbon pricing in developing countries would establish price signals needed to attract private flows for mitigation. Substantial amounts could also be raised from charges on international aviation and maritime fuels. These fuels are a growing source of emissions, are underpriced, and charges would exploit a tax base not naturally belonging to national governments.For adaptation, specific measures to strengthen resilience to climate change will depend on a country'€™s specific circumstances and vulnerabilities. Policies should be worthwhile across a range of scenarios for (uncertain) local climate effects and are particularly important for low-income countries and small states prone to climate-related natural disasters.In financial markets, increased di[...]

Public-private partnerships for climate finance

13 Sep 2016 04:25:02 GMT

Implementing the Paris climate agreement and the transition to a low carbon economy require adequate finance. Public finance plays a key role - whereas private finance is essential in developing and implementing new and innovative solutions. The Nordic countries are committed to further develop financial instruments and structures that can scale up such investments.

This report discusses the role of the public-private partnerships (PPPs) in scaling-up climate finance and how such partnerships should be designed to best fulfil this task. PPPs provide frameworks to ensure public leadership and accountability in tackling climate change, while enabling the ownership of certain components of climate finance to be transferred to private hands. The report proposes eight recommendations for climate negotiations and effective climate finance, and looks at some good case studies of PPPs worldwide.


  • PPPs should play a role in climate finance and support both mitigation and adaptation activities
  • for PPPs to play a role, public authorities should develop enabling frameworks to support climate finance PPPs
  • design of a PPP through a process of co-creation and early involvement of private financial institutions should be aimed for
  • mobility programs of staff between public and private financial institutions can be used to improve mutual understanding and communication
  • public financial institutions could support risk-taking initiatives to enlarge the scope of bankable projects
  • developed countries should support the emergence of PPPs in developing countries
  • robust stakeholder consultation processes should be established and implemented
  • systematic evaluation of implemented climate finance PPPs should be encouraged

Tracking climate co-finance: approach proposed by MDBs

13 Sep 2016 04:06:58 GMT

A consortium of Multilateral Development Banks (MDBs) has jointly reported their investments in climate change adaptation and mitigation projects (€œclimate finance€) on an annual basis since 2011, with the latest report published on June 2015. The objectives of this work are as follows:

  • improved transparency and better understanding of MDB's own and external resources channelled through the MDBs for climate finance
  • improved cooperation between International Financial Institutions (IFIs)
  • more and better climate change adaptation and mitigation financing

The approach outlined in this briefing document seeks to expand the MDB climate finance tracking to also estimate financial resources invested alongside MDBs by exte rnal parties. A Technical Working Group (TWG) compo sed of MDB representatives, supported by an external consultant (International Financial Consulting Ltd), launched work towards a common practice in early 2015.

The purpose of this briefing document is to define a common tracking and reporting practice for MDBs that:

  • defines a common approach on how to report on clima te co-financing flows that are invested alongside each MDBs'€™ climate finance activities
  • harmonize definitions and indicators that estimate climate co-financing alongside MDB-managed resources for climate projects

Namibia: towards a logistics hub for Southern Africa

09 Sep 2016 02:38:40 GMT

Foreign direct investment (FDI) is touted for its many benefits to developing countries. The skills and technology foreign investors bring with them can help to stem the huge skills and knowledge shortage that developing countries face until a well-trained labour force can be developed. FDI often boosts exports and earns much-needed foreign reserves while improving the competitiveness and efficiency of local producers. Until developing countries have the local capacity to do so, FDI can also facilitate the expansion of many of the fundamentals of growth, such as public infrastructure and information and communications technology.
Namibia’s new Investment Bill represents a new foreign direct investment (FDI) regime in line with a recent shift in the developing world away from liberal FDI regulation, which favours foreign investors and restricts the state’s right to regulate in the public interest. The bill creates provisions for reserving investment in certain sectors for namibian citizens and introducing performance requirements for foreign investors. Mandatory equity, joint ventures, and employment and skills development requirements can greatly increase the cost of FDI, particularly where local capacity and skills are in short supply. In sectors where the state does not have much bargaining power, these requirements can deter foreign investors. Incentive schemes can reduce this cost and increase Namibia’s attractiveness as an investment destination, but at the expense of forfeited state revenue. Whichever mix of regulation and incentives namibia chooses, the policy approach should be clearly articulated and legislated to minimise policy uncertainty. The bill provides an interesting platform for a discussion on FDI, its role in the namibian economy, and the impact FDI policy can have on development.

This paper uses FDI in Namibia’s logistics sector as a case study to investigate these issues. Logistics development is identified as a priority for inclusive economic growth in namibia, with a focus on the Port of Walvis Bay and its associated transport corridors. FDI has played an integral role in the construction and operation of the port and the transport corridors.

Policy briefing: SMEs and GVCs in the G20: implications for Africa and developing countries

09 Sep 2016 02:28:34 GMT

Increasing the participation of developing countries in global value chains (GVCs) is now an accepted G20 priority. However, there is disagreement over how multinational corporations (MNCs), which drive GVCs, can be persuaded to incorporate small and medium enterprises (SMEs) from developing countries into the GVCs they co-ordinate. The choices range from conscious industrial strategies oriented towards coercive measures designed to force MNCs to integrate SMEs into their value chains, to facilitative approaches designed to attract MNCs to invest and, over time, incorporate domestic suppliers into their value chains.

Nonetheless, there is consensus on the key constraints that inhibit the growth of SMEs in general, and their inclusion into GVCs in particular: transaction costs; access to network infrastructure; and the capacity of firms and supporting institutional arrangements. Accordingly, this brief offer a high-level framework of recommendations for G20 states’ consideration.


  • transaction cost reductions: G20 states should support the ratification and implementation of the WTO TFA and capacity-building initiatives in African countries designed to help their SMEs access logistics supply chains and the host states to reduce regulatory compliance costs; and task the Financial Services Board with investigating ways to reduce trade finance costs for SMEs
  • network infrastructure establishment: Building on the outcomes of the Brisbane summit, development partners should leverage Aid for Trade and broader external funding support for infrastructure development in Africa
  • capacity to participate in GVCs: G20 states should build support mechanisms to assist African SMEs, particularly medium-sized companies with the capacity to export, to integrate into GVCs, such as helping them to build capacities to meet international standards. Support for SME representative institutions, to enable their participation in international economic governance forums, should also be prioritised

SMEs and GVCs in the G20 implications for Africa and developing countries

09 Sep 2016 02:15:15 GMT

Increasing the participation of developing countries in global value chains (GVCs) is now an accepted G20 priority that features prominently on the Chinese government’s agenda for the 2016 summit. However, there is disagreement over a simple question: how can multinational corporations (MNCs), which drive GVCs, be persuaded to incorporate small and medium enterprises (SMEs) from developing countries into the GVCs they co-ordinate?

The debate over this question is first explored in broad outline. It comes down to a decision by each country on whether it wishes to utilise GVCs in its growth strategy and, if so, what measures it wishes to adopt to promote the incorporation of its firms into MNCs’ GVCs. The choice ranges from conscious industrial strategies oriented towards coercive measures designed to force MNCs to integrate SMEs into their value chains, to facilitative approaches designed to attract MNCs to invest and, over time, incorporate domestic suppliers into their value chains where it makes business sense to do so.

Next the paper turns to the analyses and prescriptions being proffered by key international institutions in relation to the evolving G20 agenda on including SMEs in GVCs. What clearly emerges is consensus on a number of key constraints that inhibit the growth of SMEs in general and their inclusion into GVCs in particular. These can be summarised in three broad areas:

  • transaction costs (import tariffs; border procedures; logistics; trade finance)
  • network infrastructure (information and communications technology [ICT]; transport; energy); and
  • capacity (of firms, to meet GVCs’ standards; and of supporting government institutions)


Agriculture and adaptation to climate change: the role of insurance in risk management: the case of Colombia

06 Sep 2016 03:49:46 GMT

Insurance can potentially play an important role in climate change adaptation for rural households in developing countries as part of the overall climate change adaptation strategy. However, agricultural insurance markets have many market failure s that inhibit their full development. In Colombia these market failures, namely information asymmetries and high transaction costs, are amplified by the country's difficult topography, poor infrastructure, and history of rural violence. Even though the government provides premium subsidies to increase coverage, it is still very low and important crops and small producers are not covered.

This paper analyses in detail the market constraints on the development of the agricultural insurance market in Colombia and provides recommendations so that it can fulfill its potential as a risk management tool in the country.

Policy recommendations:

  • as inadequate agricultural insurance represents one of the most important market failures in Colombia, there is scope for public support in terms of information generation and dissemination. The development and maintenance of agricultural and weather databases as public goods can help insurers properly design and price agricultural insurance contracts, thus reducing adverse selection and possibly prices
  • it is necessary to update the agroclimatic risk maps for different crops and regions, and to generate such maps at a lower scale so that insurance companies have up-to-date effective information for pricing policies and assessing risk
  • in terms of government subsidies, Colombian authorities should examine if current premiums are correctly priced or if subsidies are simply being transferred as profit margins for insurance companies
  • to generate a culture of insurance, the government and the private sector together have to undertake an expansive information and education campaign for producers and producer associations to explain what insurance is and how it can benefit them
  • to protect the emerging insurance market from unraveling because of large losses due to extreme weather events in Colombia, climate change mitigation and adaptation measures should be undertaken to reduce insurance losses. Some examples are the protection of mangroves, reefs, and wetlands, as well as land use planning that buffers storm surges and protect s against flooding and landslide risks
  • for the government, it is necessary to design and implement an integral risk management strategy where support for private insurance and disaster aid are aligned and not at odds with each other, particularly for producers with ability to pay insurance
  • regarding the new challenges climate change poses not only for the agricultural sector but also the insurance sector, it is necessary to create bridges between the scientific community and their climate change models and the actuarial offices in insurance companies so that climate change models can be used to assess and price risks


Introducing the Tunisia Labor Market Panel Survey 2014

18 Aug 2016 01:51:11 GMT

The Egypt Labor Market Panel Surveys (ELMPSs) of 1998, 2006, and 2012 and Jordan Labor Market Panel Survey (JLMPS) of 2010 have become well-recognised data sources for labour market studies in the Middle East and North Africa (MENA). These two surveys have been used in numerous research endeavors including peer reviewed academic publications, dissertations, and international organization reports. As part of the same series of surveys, the Tunisia Labor Market Panel Survey (TLMPS) of 2014 is the first wave of what will eventuallybecome a longitudinal survey of the Tunisian labor market.

This paper introduces the TL MPS of 2014, the first round of a publicly-available nationally representative longitudinal household survey. The authors provide a description of the sample and questionnaires. The paper discusses a number of data collection issues, such as non-response, as well as what was done to address these issues. The construction of sample weights is detailed. A comparison of the TLMPS to other Tunisian datasets is conducted to illustrate the representativeness of the data in terms of ke y demographic and labor market measures. Key features of the Tunisian labor market and potential avenues for research using the TLMPS are discussed.

Climate-smart investment potential in Latin America: a trillion dollar opportunity

16 Aug 2016 11:32:41 GMT

As a result of the successful United Nations Framework Convention on Climate Change’s (UNFCCC) 21st Conference of the Parties (COP21) in Paris in December 2015, the international community has committed to limit the level of global warming at or below 2° Celsius. The historic agreement made in Paris will be implemented through country-led greenhouse gas (GHG) reduction commitments known as Nationally Determined Contributions (NDCs), which to date have been submitted by 189 countries covering 95 percent of global GHG emissions. For the private sector, NDCs1 offer a clearer signpost of the investment direction countries intend to follow as the global economy travels down a low-carbon, climate resilient highway.

There is both an urgent need and an enormous opportunity for the private sector to help turn NDCs and the climate policies and plans that underpin them into climate-smart infrastructure investments. This report offers IFC’s assessment of how the formulation and adoption of NDCs by Latin American and Caribbean (LAC) governments presents the private sector with huge investment prospects of untapped climate-smart opportunities in a part of the world that is endowed with a wealth of natural capital and already is regarded as one of the great frontiers for climate smart investment.

Should Tanzania establish a sovereign wealth fund?

12 Aug 2016 06:32:40 GMT

Many natural resource abundant countries have established sovereign wealth funds as part of their strategy of managing the resource wealth. This working paper by Ragnar Torvik looks into different arguments used as reasons to establish such funds, discuss how these funds are organized, and draw some policy lessons. The paper then develops a theory of how petroleum funds may affect the economic and political equilibrium of an economy, and how this depends on initial institutions. A challenge with petroleum funds is that they may produce economic and political incentives that undermines their potential benefits. In conclusion, the paper suggests that the best way to manage the petroleum wealth of Tanzania may not be to establish a sovereign wealth fund, but rather use revenues to invest domestically in sectors such as infrastructure, education and health. Such investments may produce a better economic, as well as institutional, development.

“If you have only dust in your hands, then friends are far; when they are full, they come closer”: an examination of the impacts of Zambia’s Katete universal pension

21 Jul 2016 12:10:27 GMT

For the past 10 years or so, Zambia has been experimenting with a universal old age pension in the district of Katete, in the east of the country. It has provided a regular pension to 4,500 older people aged over 60 years, 63% of whom were women. The recipients of the pension belong to the Chewa tribe. In 2010, the author undertook a study of the pension and, at the time, it provided people with a regular transfer of 120,0001 Kwacha (around US$23.50) per month. The pension was funded by the United Kingdom’s Department for International Development (DFID) and managed by the Ministry of Community Development and Social Welfare.

The Katete pension has had a transformative impact on the lives of older people, as well as on their wider communities. It has also helped address discrepancies between the ideal and reality with regard to how older people view themselves and how they are viewed by society. It enables older people to delay the inevitable decline into dependency on others and enables them to retain their humanity – as expressed in Chewa ideals – for as long as they can. By maintaining active mutual sharing and caring relations, they keep kinship and love alive. The pension has particularly positive benefits for those that have been marginalised in old age to re-incorporate themselves within intimate communities, which offer them care, respect and support, which they, because of their possession of cash, can reciprocate.Moving towards a much simpler universal pension, as in Katete, would make a lot of sense. The vast majority of older people in Zambia live in poverty and attempting to exclude the richest appears to add little – if any – value, in particular when they cannot be accurately identified. Furthermore, it would be preferable to provide the benefit as an individual entitlement so that households with more than one older person can receive multiple benefits. If not, households may be encouraged to split while particularly vulnerable households – with more than one older person (or person with a severe disability) – could receive a higher income, which they surely need.

Demographic changes and fiscal policy in MENA countries

21 Jul 2016 02:50:43 GMT

Middle East and North Africa (MENA) region countries have unique demographic characteristics. Within the MENA region, Arab countries have higher fertility and population growth rates and a significantly younger age structure than other ountries and regions. This can be a “demographic gift or a demographic curse” depending on whether the high population growth and fertility can be transformed into economic growth.

In this study, the author examines the links between demographic change and fiscal policy in MENA countries, focusing specifically on the economic impacts coming from the conflict between social security and education, which are two of the most government programs in any country. The paper is unique as it incorporates a political economy model of education given expected increases in social security spending in the background. Labor movements and growth results are expected to depend significantly on the return to education. A sensitivity analysis on the parameter that shows the return to education spending reveals that MENA countries would suffer significantly from a lower return to education. 

This scenario highlights the importance of returns to education for the growth results in the MENA region. It is also important to note that the MENA region could potentially experience significant positive economic growth if it can maintain a high return to education and also attract more capital, despite a rising fiscal burden coming from the social security system. 

India-Africa: South-South trade and investment for development

14 Jul 2016 03:55:02 GMT

India and Africa's partnership has entered a new era. Close political relationships are being invigorated by a flourishing trade
and investment relationship. This new trade and investment relationship could be crucial in the struggle to lift millions out of

Africa-India trade has followed the upward trend in South-South trade and investments over the last decade. Bilateral trade has
grown at a robust 31.8% annually between 2005 and 2011, through the economic crisis. There has been a surge in Indian
private investment in Africa with 'big ticket' investments in the telecommunications, IT, energy, and automobiles sectors.

The Confederation of Indian Industry (CII) and the Export Import Bank of India (EXIM Bank) initiatives through the India-Africa Conclave and other Government of India initiatives are spurring on the burgeoning trade and investment relationship. In addition to more traditional development approaches, such as through Indian Technical and Economic Co-operation, the business oriented 'development compact' pioneered by CII and the EXIM Bank seems to be positively impacting directly on bilateral trade.

To understand the dynamics of this vibrant relationship, CII surveyed some 60 key Indian and African companies and business associations - a survey undertaken in collaboration with the WTO. Results highlight a number of factors getting in the way of expanded business and investment ties. Access to Indian buyers and trade finance emerges as major concerns for African traders. Transport and logistics costs and poor business environments are cited as major difficulties by Indian traders - a factor also cited as holding back further investment.

This joint CII-WTO report concludes with a series of recommendation on how development assistance and investments in tandem could help smooth out potential bottleneck towards a more sustainable investment-led trade growth relationship.

Indian Foreign Direct Investment in Africa

14 Jul 2016 03:19:10 GMT

The entry of Indian companies into Africa is largely market and resource seeking which offers much more potential in terms of promoting forward and backward linkages and in terms of impacting on competition in the domestic market. The increasing competitiveness of Indian firms and their interest to expand globally, particularly in IT-related services and pharmaceuticals, are driving its outward foreign direct investment (FDI) growth. Indian FDI to Africa is concentrated in oil, gas and mining in the primary commodities market. In the manufacturing sector, a dominance of automobile and pharmaceutical firms can be seen. Most of the Indian FDI in African countries is through greenfield investments (GIs) and joint ventures (JVs) that are desired by the host countries due to their contribution in creating new production capacity and generating employment, transfer of technology, etc. A number of factors have been identified that motivates Indian investors to invest in Africa. The factors are socio-cultural factors, host country policies, regional integration agreements, bilateral investment treaties (BITs), gross domestic product (GDP) growth and political economy factors. There is no denying that language, culture, presence of Diaspora does play a role in attracting FDI. The relationship between India and Africa exists and functions at all these multilateral levels as politics and commerce converge.

India and Africa - collaboration for growth

14 Jul 2016 02:39:16 GMT

The nature of India’s relationship with Africa is clearly evolving into a wider, deeper engagement that, while clearly in India’s advantage, also offers significant potential benefits to its African counterparts. This overview of Indian/African economic collaboration is a joint piece of work from KPMG and the Confederation of Indian Industry.  It specifically looks at:

  • infrastructure
  • energy and natural resources
  • agriculture
  • healthcare

An important caveat pertaining to India’s economic relations with Africa, is that they are not confined to the BRICS and India’s reach in Africa extends beyond the alliance. The surge into Africa is driven mainly by the Indian government, but the private sector has not been lagging and significant economic linkages have arisen due to the interventions of the private sector from India.

The overall conclusion is that Indian-African trade and economic relations are likely to continue to grow, even in the wake of massive increases over a relatively short period of time with no current indication that the relationships are likely to cool anytime soon. While global conditions dictate events, the fact that Indian-African trade and economic relations continued to grow even through periods of some economic crisis suggests potential that has yet to be fully exploited.

Community-based social protection in the dry zone

14 Jul 2016 01:57:44 GMT

HelpAge International (Myanmar Country Office), with funding from LIFT donor consortium, has embarked on a three-year project to expand social protection to vulnerable households in Myanmar’s central dry zone. The project seeks to strengthen community and government capacity to protect vulnerable groups such as disabled and older people, and will deliver cash benefits to vulnerable households. As part of the project, HelpAge also seeks to enhance informal and community‐based systems and practices that are already working to provide support and assistance in the dry zone. To inform project activities and  discussions of social protection generally, this research was undertaken to investigate community‐based mechanisms, structures, and practices in dry zone villages that might be providing forms of social protection for vulnerable people living in these communities.


  • there is real need in dry zone communities that is not being met through current informal and community‐based practices. Cash transfers will reduce vulnerability and, if administered sensitively, should strengthen existing informal systems
  • principles of social hierarchy will structure villagers’ interpretations of cash benefits: these are likely to be treated as a form of patronage, perhaps entailing return obligations
  • to select beneficiaries, it would be most straightforward to rely on categories that villagers have already identified as people deserving of assistance: the elderly and those with disabilities. Poverty targeting is not recommended, at least not until villagers become more familiar with the principles of social protection
  • high‐status individuals should be advisors for the program. Perhaps the village administrator and/or the sayadaw (senior monk) could make case‐by‐case decisions about extending grants to those in situations of extreme vulnerability or destitution, assuming the role of patron. They already play that role to some extent
  • expanding the amounts and extending the repayment periods for no‐interest loans would be helpful for vulnerable people who are afraid to take loans because they cannot repay. I do not recommend setting up more revolving loan funds, as these seem to encourage indebtedness



Transparency in corporate reporting: assessing emerging market multinationals

12 Jul 2016 10:38:52 GMT

This report evaluates the disclosure practices of 100 major emerging market multinationals headquartered in 15 countries and active in 185 countries. The report is part of a series on corporate reporting published by Transparency International since 2008. Initially focused on
the world’s top multinationals, the series was expanded to include a first report on emerging market multinationals in 2013.

To enhance comparability, the company sample for this report is primarily based on the 2013 edition of the Transparency in Corporate Reporting: Assessing Emerging Market Multinationals report. This report assesses the public disclosure practices of emerging market multinationals based on three dimensions: first, the reporting of key elements of their anti-corruption programmes; second, the disclosure of their company structures and holdings; and, third, the disclosure of key financial information on a country-b-ycountry basis. This information was gathered from corporate websites and other publicly available sources by a team of Transparency International researchers.

Despite some scattered signs of improvement since 2013, the overall results of the assessed companies remain weak, a clear indication that emerging market multinationals still practise low standards of transparency.

The overall average score for the 100 companies assessed in this report is 3.4 out of 10, a slightly weaker performance than in 2013 but almost on a par with the 3.8 overall score obtained in our 2014 report assessing
the world’s 124 largest multinationals. It is disconcerting to observe that emerging market multinationals, with an average score of 48 per cent, have barely registered improvement in the disclosure of their anti-corruption programmes since 2013, when their average score was 46 per cent. Once again, they trail behind the top global publicly listed companies assessed in 2014.

Overall index result:

  • emerging market multinationals continue to fall short of the corporate transparency standards that are expected of multinationals operating internationally
  • publicly listed companies perform better in all dimensions than state-owned enterprises and privately held companies
  • country-by-country reporting remains the weakest result for a majority of emerging market multinationals
  • The performance of Chinese companies continues to be disappointing overall, but there are a few notable exceptions, particularly with regard to the disclosure of anti-corruption programmes
  • Chinese entities have different standards of disclosure: levels of transparency for China-based state-owned parent companies are lower than those adopted for their publicly-listed foreign subsidiaries and associated entities

Does microcredit reduce gender gap in employment? An application of decomposition analysis to Egypt

12 Jul 2016 03:42:33 GMT

Although gender equality has received a great deal of attention from policymakers as well as researchers, there is still as a large gap between men and women in labor market, especially in Arab societies.
In this paper, the authors examine the impact of microcredit on labor supply of men and women and subsequently investigate whether microcredit can reduce employment gap between men and women in Egypt. Overall, they show no significant effects of microcredit on labor supply of men.

Yet, the paper finds a strong effect on employment of women aged 22 to 65. Borrowing from a microcredit source increases the probability of working for women by 0.071. Since the proportion of working of women was around 2.1%, it implies microcredit can increase the proportion of working of women by around 30 percent. Using decomposition analysis, the authors find that micro-credit can reduce the employment gap between men and women by 0.43 percentage points. If 20 percent of women obtain microcredit, the employment gap between men and women would be decreased by 4.3 percentage points.

Old-Age pension and extended families: how is adult children's internal migration affected?

12 Jul 2016 01:24:35 GMT

Old-age pension programs targeting the elderly may eventually benefit their extended families. However, no consensus has been reached on the growing body of literature that examines the potential impact of old-age pension on migration decisions of extended families.

This paper makes use of the most recent social pension reform in rural China to examine whether receipt of the pension payment equips adult children of pensioners to migrate. Employing a regression discontinuity (hereafter RD) design to a primary longitudinal survey, this paper overcomes challenges in the literature that households eligible for pension payment might be systematically different from ineligible households and that it is difficult to separate the effect of pension from that of age or cohort heterogeneity.

Around the pension eligibility age cut-off, results reveal large and significant increase among adult sons (but not daughters) to migrate out of their home county. Meanwhile, adult children are more likely to migrate out if their parents are healthy. Fuzzy RD estimations survive a standard set of key placebo tests and robustness checks.

Ageing in the Caribbean and the human rights of older persons: Twin imperatives for action

12 Jul 2016 01:15:54 GMT

Over the next twenty years, the Caribbean will see a rapid and dramatic ageing of its population. Over this period, the number of older persons will double: the number of persons aged 60 and over will increase from 1.1 million (or 13 per cent of the population) in 2015 to 2 million (or 22 per cent) in 2035.

The number of people aged 70 and over will increase from 500,000 (or 6 per cent) to 1 million (or 11 per
cent). The population will continue to age after 2035 albeit at a slowly diminishing rate. Over the next twenty years and beyond, all Caribbean countries and territories will see rapid ageing and significant increases in the proportion of older persons in their respective populations.
This study addresses the ageing of the Caribbean population and the situation with respect to the human
rights of older persons. It considers the implications for public policy of these ‘twin imperatives for action’. The first chapter describes and explains the changing age structure of the Caribbean population. Important features of the ageing dynamic, such as differential regional and national trends and the growing number of ‘older old’ persons, are also analysed.

The study then describes the progress that has been made in advancing and clarifying the human rights of older persons in international law. The core of the study then consists of an assessment of the current situation of older persons in the Caribbean and the extent to which their human rights are realised in practice. The thematic areas of economic security, health, and enabling environments – which roughly correspond to the three priority areas of the Madrid International Plan of Action on Ageing – are each addressed in individual chapters. These chapters evaluate national policies and  programmes for older persons and make public policy recommendations
intended to protect and fulfil the human rights of older persons. The report concludes by summarising
the priorities for future action both through the establishment of new international human rights
instruments as well as national policies and programmes.

Labor market effects of pension reform: an overlapping generations general equilibrium model applied to Tunisia

08 Jul 2016 12:16:47 GMT

The problem of the sustainability of pay-as-you-go systems is becoming a serious concern for developing countries characterised by rapid demographic transitions and this problem will grow exponentially if nothing is done in the near future. Tunisia is a good example since its pension system has been in deficit since 2000 for the public sector fund and 2002 for the private one. According to the Tunisian National Statistical Institute (2009), the share of retirees in the population will increase from 10% in 2010 to 20% in 2034 due to the rapid ageing of the population. The increase in the dependency rate puts a heavy pressure on the financial viability of the social security system. This issue is becoming highly sensitive in the Tunisian public debate.
This paper develops an overlapping general equilibrium framework to capture the interactions among pension reform, labour market and inter-generational distribution issues in Tunisia. The impact on the labour market is addressed at the aggregate level but also by distinguishing different age categories. The three reform scenarios implemented to reduce the social security deficit consist in increasing social security contributions, reducing the replacement rate and postponing the retirement age.
The main result obtained is that increasing contribution rates is the worst solution in terms of welfare and unemployment, particularly for the youth. The best option is postponing the retirement age. Contrary to the traditional wisdom, it does not entail an increase of youth unemployment. For the two scenarios where aggregate welfare increases, the middle -aged are those that benefit the most from the reforms.

Economics, governance and instability in South Africa

06 Jul 2016 02:31:47 GMT

FORTY YEARS AGO a combination of frustration against local government, the enforcement of Afrikaans  language policy, trade-union activism and the politicising impact of the black consciousness movement culminated in the Soweto uprising of 16 June 1976. In the weeks and months that followed, tens of thousands of South Africans from townships across the country took to the streets in a violent confrontation with the apartheid state. Although the National Party government was eventually able to restore a semblance of order by force of arms, several thousand young South Africans fled the country, largely to join the Pan Africanist Congress, then moving on to the African National Congress (ANC) when the former proved absent to fight apartheid. These events – combined with international activism, the fall of the Berlin Wall in 1989 and internal revolt within the governing National Party – would eventually force a historical compromise when Nelson Mandela was released from prison in 1990 and, in 1994, elected president of South Africa.

This paper examines the economic and social underpinnings of rising political instability in South Africa such as poverty, unemployment and inequality. The paper then reviews the patterns of violence across different categories before concluding with a brief analysis of the extent to which corruption, poor governance and lacklustre leadership exacerbate social turbulence. In this way, it presents the context for a separate paper, South African scenarios 2024, and a subsequent set of policy recommendations Rainbow at risk that set out the prospects and requirements for change.

Rainbow at risk: improving South Africa's prospects

06 Jul 2016 01:49:56 GMT

South Africa needs to build an inclusive economy where broad-based
economic growth creates productive jobs for the unemployed; increases
productivity and earnings for the employed; and leads to sustained poverty alleviation. South Africa must simultaneously invest in partnerships with the private sector to establish a knowledge economy, close the skills gap currently constraining development and create an enabling environment for growth, investment and innovation.

Drawing on two associated ISS papers, Economics, governance and instability in South Africa and South African scenarios 2024, this policy brief presents a set of recommendations to extricate South Africa from its middle-income trap and set it on a high-road Mandela Magic growth path.


  • South Africa needs a labourintensive, low-wage and less regulated growth path
  • government needs to continue but carefully manage its expansive social support programmes
  • government must strengthen South Africa’s domestic technological innovation capacity. Partnering with the private sector can close the skills gap currently constraining development and, among others,
    increased investment in research and development
  • focus is needed on smalland medium-sized business, the reduction of red tape, better access to low-cost finance, more business-friendly market regulations and a more flexible labour market
  • broad-based black economic empowerment ought to be replaced in favour of more specific race-based initiatives


Trade for all: towards a more responsible trade and investment policy

05 Jul 2016 12:16:40 GMT

The European Commission is proposing a new trade and investment strategy for the European Union: "Trade for All". A new strategy that will make trade agreements more effective and that will create more opportunities means supporting jobs in Europe.

The new approach is also a direct response to the current intense debate on trade in the EU - including on the Transatlantic Trade and Investment Partnership (TTIP). It is also an implementation of the Juncker Commission's pledge to listen and respond to EU citizens' concerns.

It will involve trade policy being more effective at delivering new economic opportunities; more transparent in terms of opening up negotiations to more public scrutiny; and address not just interests but also values. The new strategy addresses all these principles. It also lays out an updated programme of negotiations to put them into practice.


  • trade is not an end in itself. It is a tool to benefit people. The aim of EU trade policy is to make the most of those benefits
  • that means making sure that trade and investment policy is effective. It must tackle real issues based on an up-to-date understanding of the fact that the world economy is tightly linked by global value chains; that services — including those that require providers to move across borders — are increasingly important; and that the digital revolution is transforming the international economy. Trade agreements must tackle the barriers companies face in the modern global economy. They must also be effectively implemented and enforced, including for small- and medium-sized companies
  • trade and investment policy must equally take responsibility for supporting and promoting EU values and standards. The EU must engage with partners to promote human rights, labour rights and environmental, health and consumer protection, support development and play its part in stamping out corruption. Furthermore, key policies for the future of Europe’s integration into the world economy, like investment and regulatory cooperation, must support, not undermine, the EU’s broader objectives of protecting people and the planet. Any change to the level of protection can only be upward
  • essential to meet all of these objectives is a trade policy that remains ambitious in its effort to shape globalisation. Trade benefits people most when creating economic opportunity. That means action to support the multilateral system embodied in the WTO and a targeted strategy for bilateral and regional trade and investment agreements
  • the EU can only reach these goals if it speaks with one voice and ensures that all EU Member States, people and companies are treated equally. It has to be coherent across policy areas. These principles of unity and coherence must underlie the daily work of the Commission as, with the support of the Council and the Parliament, it seeks to implement this communication in the coming years

The New Development Bank: Moving the BRICS from an acronym to an institution

28 Jun 2016 10:27:51 GMT

The BRICS New Development Bank (NDB) is set to issue its first loans in the second quarter of 2016. The bank, the latest addition to the global development finance landscape, was initiated due to a number of factors in emerging economies. One of the key issues that emerging economies, including the BRICS group, struggle with is the slow pace of reform in existing global financial institutions to better reflect the current political and economic realities (which in some cases deviate significantly from when these organisations were created in the post-Second World War era).

Emerging economies also suffer from serious infrastructure funding deficits, which can be addressed by drawing on the significant domestic savings across developing countries. The NDB was thus born partly as a result of these factors. Since its conception in 2011 the bank has begun taking form, including finalising legal arrangements, assigning different roles and responsibilities among the five founding BRICS members, and setting up an office. Ahead of the extension of its first loans, some details have emerged on the bank’s operations.

This paper tracks the historical development of the NDB, investigates modalities around its operations, and looks towards the likely impact it will have in the development finance milieu.

The NDB has managed to go from being a concept to becoming a reality and extending loans within five years, which is a significant achievement. The set-up of the bank was driven by a number of factors, including the BRICS’s dissatisfaction with the pace of
reforms in existing IFIs and domestic economic factors, such as the need for infrastructure financing combined with the significant domestic savings that could be applied to meet this need.

As the bank is gearing up to extend its first loans in the second quarter of 2016, it has become clear that a number of characteristics will define the bank’s approach. These include a focus on renewable energy infrastructure (at least in the first round of loans); on bringing new and innovative ideas to the fore; on speeding up operations; and on co-operating rather than competing with existing DFIs.

While the NDB’s likely impact on infrastructure financing is difficult to assess at this early stage, it is clear that both challenges and opportunities exist for the bank. For example, while its capitalisation limits its scope, the infrastructure financing deficit is so enormous
that any additional funding would assist in decreasing the gap. And while it is unclear at this point what innovative methods the bank will look to introduce, there is certainly scope to influence other DFIs.

Disaster risk finance as a tool for development: a summary of findings from the Disaster Risk Finance Impact Analytics Project

28 Jun 2016 04:57:53 GMT

Disaster risk finance aims to increase the resilience of vulnerable countries to the financial impact of disasters as part of a comprehensive approach to disaster risk management. By increasing resilience, disaster risk finance offers the promise of protecting and promoting development.

Since 2013, the World Bank Group has partnered with the Global Facility for Disaster Reduction and Recovery and the U.K. Department for International Development to address gaps in evidence and methodologies in disaster risk finance.

Through a wide body of research, this report presents a compelling case for disaster risk finance as a tool for development. Key messages include: 

  • Increasing commitment through disaster risk finance
  • Timely reconstruction
  • Timely support to livelihoods
  • Saving money through disaster risk finance


How oil prices impact fiscal regimes

24 Jun 2016 03:45:16 GMT

Markets largely dictate how the relationship between international oil companies and host states will play out, with governments attempting to ensure they receive a ‘fair share’ of petroleum revenues. But with no clear definition of what a fair share is, particularly in relation to changes in oil prices, the perception of a fair share remains under near constant review. This results in a pendulum effect, whereby changing market conditions can place either governments or companies in more advantageous positions in negotiations.

In terms of policy-making by the Leanese government, these dynamics suggest that existing market conditions should be taken into consideration when launching the country’s first licensing round but this does not necessarily mean that the government should wait for oil prices to recover to pre-2014 levels, as that might take a while to happen. The fiscal regime should be internationally competitive and balanced.

This version is in both English and Arabic.


Enhancing India-Myanmar border trade: policy and implementation measures

24 Jun 2016 02:49:30 GMT

India and Myanmar are geographically proximate countries with strong historical, cultural and economic linkages. With recent economic dynamism and changes in their respective political regimes, the overall bilateral relations between India and Myanmar are poised to be taken up to its next higher level.

This study has tried to address the question as to why the situation fails to improve despite the knowledge of the issues. It finds that the ambiguity at the conceptual level, a lack of information trickle-down at the operational level and narrow interests at the stakeholders’ level are primarily responsible for such a

With India’s unilateral Duty Free Tariff Preference (DFTP) Scheme and ASEAN-India Trade in Goods Agreement (AITGA) now in place, the bilateral trade and economic relations face a new reality, especially with important changes in the policy framework relating to Border Trade Agreement.

It is in this context that India-Myanmar border trade assumes a new meaning and significance. It may be emphasised that the issues relating to border trade would have to be situated in a policy framework which is much broader in its canvas so that relevant policy and practical implementation measures could be identified.

Social protection for sustainable development: dialogues between Africa and Brazil

24 Jun 2016 02:32:47 GMT

Social protection programmes are among the most successful development experiences the world has seen in recent years. They have proven to be key in developing countries’ efforts to fight poverty and hunger, as demonstrated by the substantial progress countries such as Brazil, Ethiopia and Senegal have made in poverty reduction through the adoption and expansion of social protection schemes. These and other examples clearly show that social protection has the potential to contribute significantly to long-term sustainable development, especially when built under a broader, more integrated framework.

The International Seminar on Social Protection in Africa held in April 2015 in Dakar, Senegal created an important space for sharing such experiences and for promoting a social protection agenda as a key building block for human development. This Social Protection for Sustainable Development (SD4SD) report is based on the contributions and  recommendations of the International Seminar.

The convergence in the technical debate and the repercussion of the discussions in Dakar on high-level political forums within the African Union show that there are exceptional opportunities for cooperation between Brazil
and African countries and, more importantly, within Africa.

Tiyani Vavasati: empowerment and financial education intervention

23 Jun 2016 10:25:49 GMT

Specifically aimed at females between the ages of 18-24 years-old, this training manual was produced to guide a series of training sessions which were designed to empower young women. Part of a Sonke Gender Justice project implemented in South Africa, the four one-day long training sessions, are meant to:

  • "empower young women to set goals for their lives
  • increase young women's knowledge of correct reproductive health and HIV information, as well as promote HIV testing
  • help young women learn to recognise and address gender-based violence
  • teach young women how to make sound financial decisions; and
  • reinforce and promote attitudes and behaviours that will lead to a better quality of life for the young women"

Hosted over the course of a month, each training day consists of a morning classroom-based session where young women engage in both informative learning and interactive exercises, and then an afternoon session where they participate in a field trip. These morning sessions "are designed to be engaging, interactive, and make use of best practice young adult learning principles - that is games, small group work, etc., while focusing on pertinent topics to the lives of the young women." The afternoon sessions build on information learned in the morning and give the young women a chance to visit a local resource in the community, such as a clinic.

This manual is divided into four modules:

  • Module 1: Introduction, Self-Esteem, and Goal Setting
  • Module 2: Reproductive Health, HIV
  • Module 3: Gender-Based Violence
  • Module 4: Financial Education

According to Sonke Gender Justice, "young, rural, South African women are faced with many challenges that can impede a healthy transition from young person to adult. These include age-specific social pressures, lack of correct health knowledge, and lack of safe, economic opportunity." Tiyani Vavasati aims to intervene on some of these root issues, instilling useable assets into the young women. This manual was adapted, in part, from the 2013 Adolescent Girls Empowerment Program, Health and Life Skills and Financial Education Curricula published by Zambia YMCA, UKAID, and Population Council. Additional materials come from Sonke Gender Justice, South Africa.


The impact of fiscal subsidy on China's new rural pension system: a natural experiment

21 Jun 2016 02:02:54 GMT

The China’s New Rural Pension Scheme (NRPS) has rapidly expanded since its first implementation in 2009,
and has covered all counties of China since 2012.
This paper studied the impact of fiscal subsidies on the participation rate and contributions of the rural residents in the China’s New Rural Pension Scheme (NRPS) program, where the fiscal subsidies include the incentive pension and the matching subsidy. The results showed that incentive Pension can significantly improve the rural residents' participation rates, but participation rate of young residents are less than the older residents. The authors also showed that matching subsidy does not affect the rural residents' participation significantly. Results suggestthat the current fiscal subsidies play an important role in the establishment and expansion of the NRPS program, but have not increased the participation rate of younger people, which was one of the initial goals of NRPS.

Can China's bold new plans make the difference in Pakistan

17 Jun 2016 03:46:10 GMT

Ever since the 1955 Bandung Conference of Afro-Asian states, China has been active in civil engineering projects around the world, especially in Africa, as a sign of its commitment to the world emerging from colonialism.
In 2016, there are three key differences:
  • these projects have spread well beyond Africa
  • infrastructure and a huge range of community facilities are now being built alongside roads and railways
  • and projects are now less about redressing colonialism and more about China becoming a major player in the world
When it comes to Pakistan, will Chinese plans help it to both develop and move away from rebellion and fundamentalism? How much will these plans take into consideration the magnitude of the social problems in the provinces where their roads and railways cut through? There is a risk that the new provisions could become targets of insurrection instead of benefiting the local communities.

Paving the road ahead - China-Africa co-operation in the infrastructure sector

17 Jun 2016 02:58:44 GMT

China has launched a number of initiatives regarding infrastructural development globally, with a specific focus on scaling up infrastructure throughout the African continent. The BRICS New Development Bank and Chinese infrastructure initiatives such as the China-led Africa Growing Together Fund (AGTF) are expected to play a significant role ranging from financing to technology transfer. In January 2015, China and the Africa Union (AU) signed a memorandum of understanding (MoU) on infrastructural development. China and the AU have agreed to put collective effort into improving Africa’s infrastructure including high speed railways, aviation, and road highways.

Against this background, the Second Forum on China-Africa Cooperation (FOCAC) Summit will be a platform accelerating the co-operation between China and African states at multiple levels in the infrastructure sector. Prior to the Summit, we should scrutinise Sino-African co-operation in infrastructure both in the past and present in order to map out the future relationship and determine what opportunities and challenges lie in the future.

This policy brief offers an overview of Chinese engagement in Africa, with a specific focus on East Africa. In recent years, the East African region in particular has been one of the most prominent beneficiaries of this development, with mega projects including Kenya’s Port Lamu, the Southern Sudan-Ethiopia Transport (LAPSSET) corridor and the construction of a Standard Gauge Railway in Kenya. The brief examines the transport sector and its potential to connect African countries by reducing the costs of moving people and goods, and integrating markets.

China's economic slowdown: assessment and implications for Africa

17 Jun 2016 02:52:46 GMT

Three decades of average double digit growth has helped propel China into the world’s second largest economy with global economies increasingly reliant on China to drive economic growth. As China transits from an investment-based economy to a consumer-based economy, its de-mand for raw materials is declining, affecting commodity prices, impacting on commodity sellers and exerting pressure on currencies around the world. With China’s position as Africa’s biggest trading partner, fears persist that the economic slowdown in China is being widely felt in Africa due to the huge trade volume between China and Africa, thus exposing African econo-mies to spillages from the Chinese economy.This policy brief examines the current state of the Chinese economy and its impact on African economic growth and recommends a blend of poli-cy measures aimed at curtailing the impact of the Chinese slowdown on Africa's economy.Given the demographic estimation of Africa’s population growth, with a projected estimate of the labour force (20-65 years) exceeding the rest of the world combined by 2035 (Bloomberg, 2015), China’s economic slowdown can create opportunities for African economies with its comparative labour advantage and abundant resources if properly addressed. Africa's destiny is dependent on its economic structure and more importantly, how it readjusts to China's shift towards a new regime. To ameliorate the impact of the slowdown, the following measures are suggested:Africa's policy-makers should undertake and implement deep structural reforms for the transformation needed for increased productivity and growth in all sectors of the economy with particular emphasis on agricultureAfrica can be a major beneficiary of China’s outsourcing if it undertakes reforms and invest in infrastructure. In Ethiopia, Chinese investment is creating a new global hub in the leather and shoes sector due to cheap labour, availability of raw materials and favourable government policiesAfrica can take advantage of China's transition by selling goods and services to China such as the Western Cape provincial government’s “Project Khulisa” strategy of promoting the province’s wine and fruits to new markets like ChinaAfrican economies can consider engaging in currency devaluation as suggested by the IMF. A weaker currency will have the effect of reducing demand for import goods in favour of domestically produced goods, and boost exports, which in turn will reduce unemployment and set in motion economic growth. Devaluation, however, has inflationary tendenciesAfrican economies should move towards diversification from primary commodities to accelerate economic growth. Botswana’s decline in diamond sales and the government’s r[...]