Showing papers by "Paul Mosley published in 2001"

Microfinance and Poverty in Bolivia

Abstract: Both in its institutional range and in its penetration of financial markets, the microfinance sector in Bolivia rivals any in the world, and has played a major part in extracting the macro-economy from meltdown since the mid-1980s. We seek specifically to assess its impact on poverty, and do this through small-sample surveys on four microfinance institutions, two urban and two rural, using a range of poverty concepts: income (generated both through the borrower's enterprise and through the labour market), asset holdings and diversity, and various measures of vulnerability. All the institutions studied had, on balance, positive impacts on income and asset levels, with income impacts correlating negatively with income on account of poor households choosing to invest in low-risk, low-return assets. Microfinance may, however, augment vulnerability: average debt-service ratios of microfinance clients are disturbingly high, and if the coping mechanisms used by borrowers fail, borrowers may be forced out of the ...

Aid policies and growth: in search of the holy grail

Abstract: In this paper we consider the hypothesis that aid effectiveness can be linked to ‘good policies’ and thus that aid, if it is to have maximum impact, should be directed at countries following good policies. This is an idea which we have considerable sympathy with in principle and have built upon in the past. Indeed at one level it is almost a truism and yet in practice we find little empirical evidence in support of it when we restrict good policies to mean free market policies. ‘Good policies’ appear to matter in stimulating growth, but they do not appear to impact on aid effectiveness. Unlike much of other recent work the analysis is of a simultaneous system of equations of which growth is just one. The results suggest a complex interaction between macroeconomic variables and good policies, but it also suggests the need to widen our definition of good policies to increase both the theoretical and empirical relevance of the hypothesis. Copyright © 2001 John Wiley & Sons, Ltd.

Making Globalisation Work for the Poor

Abstract: For nearly 40 years overseas development has been one of the key territories in which Labour governments in Britain have sought to distinguish themselves from the Conservatives. Actual expenditure on overseas development, including aid, may be only a small part of government spending—less than 1 per cent—but apart from defence it is government’s largest item of spending in the international Ž eld, and potentially a major instrument by which to achieve redistribution on a global scale. We may not have heard much about it during the June 2001 election in Britain, but, when we did, it was to reinforce the message that the Labour Party, contrary to many allegations, has a quite distinct political programme from the Conservatives. These two White Papers aim to repackage the international component of that message for the twenty-Ž rst century. How successfully have they done this? The two White Papers were born of a period of quite serious disillusionmen t with the ability of states—in both North and South—to produce international development. There was a time when it was possible for a US president to urge generosity in the giving of overseas aid ‘not in order to win commercial advantage, not because our political rivals are giving it, but because it is right’, but those days have long gone, not least because the end of the Cold War makes it impossible to buttress aid allocations with national security arguments. As with welfare state systems, the criterion for allocating money is no longer that it is ‘right’, but that it is effective in hitting its target; and the target, latterly, has not been hit: there has been, until very recently, little correlation between aid  ows

The IMF After the Asian Crisis: Merits and Limitations of the ‘Long-term Development Partner’ Role

Abstract: We examine the view, espoused by a number of commentators in recent months, that the International Monetary Fund (IMF) should seek to withdraw from its long-term lending operations, in the wake of the recent financial crisis in Asia and elsewhere, and restrict itself to its ‘core competency’ of preventing and where necessary lending into financial crisis. This view is based on a belief that such long-term lending crowds out both private sector operations and short-term IMF lending; and that it is ineffective, because of weaknesses in the IMF’s conditionality. Both of these propositions, we argue, can be challenged. In the poorer developing countries there is virtually no private sector to crowd out, and Enhanced Structural Adjustment Facility (ESAF) operations have been conspicuously successful, not only at promoting growth, but also at achieving structural changes not at all achieved by aid donors such as strengthening the tax base. Such changes inevitably require a longer time-period than the standard three years of an IMF standby, not only in order to induce a production response but also in order to achieve the necessary measure of stabilisation and economic reform without imposing social pressures which wreck the production response. The latter argument is particularly powerful in middle income countries, and provides an argument for IMF support to these countries also whilst they are temporarily excluded from international capital markets. Often also a long-term presence is needed to achieve effective leverage in short-term operations. In such cases the IMF’s long-term lending should be seen as preconditional to the success of, and not as an alternative to, its short-term operations. We therefore argue for the retention of the Fund’s long-term lending function; and for this function not to be transferred to the World Bank, which has less credibility in global financial markets and less comparative advantage in macro-economic management. Measures are indeed needed to reduce the level of the IMF’s exposure to risk in poorer developing countries, but those, we believe, should consist of the preventive measures currently going on, and measures to increase the ratio of equity to debt, rather than measures which would jeopardise the progress in long-term poverty alleviation capacity achieved by the Fund over recent years

Attacking Poverty and the ‘post‐Washington consensus’

Abstract: Has the increasingly pro-poor stance of the World Bank, as manifested in particular in its most recent World Development Report (WDR), caused it to abandon its traditionally free-market attitudes ? The answer is ‘yes and no’. The pursuit of ‘security’ espoused by the WDR has forced the Bank to acknowledge widespread market failure in the provision of security, both social and financial; and this has caused the Bank to espouse some measures very inconsistent with the Washington consensus, such as international capital controls. On the other hand, the old agenda of rolling back the frontiers of the state remains, and is given a new twist in WDR 2000 by the revelation that the ‘voices of the poor’ are arrayed against bureaucratic abuses. Debate within the Bank has become much more open and transparent, and this has exposed long-persisting internal differences about what markets still need to be liberalized in what environments. Copyright © 2001 John Wiley & Sons, Ltd.

Insurance against poverty? The 'new-generation' agricultural microinsurance schemes

Abstract: Insurance has often been proposed as a remedy for risk, which in turn is a major cause of poverty (World Development Report 2000/2001). However, the history of insurance schemes (especially crop insurance schemes) in developing countries is unpromising with relation to both financial sustainability and poverty reduction. Is it possible to do better? As part of the diversification of microfinance, some new schemes aim to make progress by way of cost-covering premiums, poverty targeting and a range of defences against moral hazard of which the best known is restricting the insurance to climatic hazards in lieu of a yield or income guarantee. We examine three of these schemes (BASIX Andhra Pradesh, India; CERUDEB Uganda; and the proposed WIA in Ethiopia) and, with respect to CERUDEB, describe the process of premium setting, the results of sensitivity analyses and the determination of the optimal 'excess' or deductible. Serious impact analysis is premature, but the portents for filling a gap in the market and...

A simple technology for poverty-oriented project assessment

Abstract: The challenge confronting sponsors of aid is to design tools which will enable rational decisions to be made at lower financial and organisational cost than those which caused orthodox economic and social cost-benefit analysis to fail. This paper presents a framework for the assessment of distributional impact and illustrates the impact measurement tool and its method of calculation. This tool reconciles the requirements of low cost and reasonable accuracy. It focuses on those below the poverty line and recommends the guiding criterion of ‘poverty-elasticity of aid expenditure’.