Showing papers by "Center for Global Development published in 2004"

Aid, Policies, and Growth: Comment

Abstract: In an extraordinarily influential paper, Craig Burnside and David Dollar (2000, p. 847) find that “... aid has a positive impact on growth in developing countries with good fiscal, monetary, and trade policies but has little effect in the presence of poor policies.” This finding has enormous policy implications. The Burnside and Dollar (2000, henceforth BD) result provides a role and strategy for foreign aid. If aid stimulates growth only in countries with good policies, this suggests that (1) aid can promote economic growth, and (2) it is crucial that foreign aid be distributed selectively to countries that have adopted sound policies. International aid agencies, public policy makers, and the press quickly recognized the importance of the BD findings. This paper reassesses the links between aid, policy, and growth using more data. The BD data end in 1993. We reconstruct the BD database from original sources and thus (1) add additional countries and observations to the BD data set because new information has become available since they conducted their analyses, and (2) extend the data through 1997. Thus, using the BD methodology, we reexamine whether aid influences growth in the presence of good policies. Given our focus on retesting BD, we do not summarize the vast pre-BD literature on aid and growth. We just note that there was a long and inconclusive literature that was hampered by limited data availability, debates about the mechanisms through which aid would affect growth, and disagreements over econometric specification (see Gustav F. Papanek, 1972; Robert Cassen, 1986; Paul Mosley et al., 1987; Peter Boone, 1994, 1996; and Henrik Hansen and Finn Tarp’s 2000 review). Since BD found that aid boosts growth in good policy environments, there have been a number of other papers reacting to their results, including Paul Collier and Jan Dehn (2001), CarlJohan Dalgaard and Hansen (2001), Patrick Guillaumont and Lisa Chauvet (2001), Hansen and Tarp (2001), Robert Lensink and Howard White (2001), and Collier and Dollar (2002). These papers conduct useful variations and extensions (some of which had already figured in the pre-BD literature), such as introducing additional control variables, using nonlinear specifications, etc. Some of these papers confirm the message that aid only works in a good policy environment, while others drive out the aid policy interaction term with other variables. This literature has the usual limitations of choosing a specification without clear guidance from theory, which often means there are more plausible specifications than there are data points in the sample. We differentiate our paper from these others by NOT deviating from the BD specification. Thus, we do not test the robustness of the results to an unlimited number of variations, but instead maintain the BD methodology. This paper conducts a very simple robustness check by adding new data that were unavailable to BD. Thus, we expand the sample used over their time period and extend the data from 1993 to 1997. * Easterly: Department of Economics, New York University, 269 Mercer Street, New York, NY 10003, Center for Global Development, and National Bureau of Economic Research (e-mail: william.easterly@nyu.edu); Levine: Department of Finance, Carlson School of Management, University of Minnesota, 321 19th Avenue South, Minneapolis, MN 55455, and National Bureau of Economic Research (e-mail: rlevine@csom.umn.edu); Roodman: Center for Global Development, 1776 Massachusetts Avenue NW, Washington, DC 20036 (e-mail: droodman@cgdev.org). We are grateful to Craig Burnside for supplying data and assisting in the reconstruction of previous results, without holding him responsible in any way for the work in this paper. Thanks also to Francis Ng and Prarthna Dayal for generous assistance with updating the Sachs-Warner openness variable, and to three anonymous referees, Craig Burnside, and Henrik Hansen for helpful comments. 1 See, for instance, the World Bank (1994, 2001, 2002), the U.K. Department for International Development (2000), President George W. Bush’s speech (March 16, 2002), the announcement by the White House on creating the Millennium Challenge Corporation (White House, 2002), as well as a Washington Post editorial (February 9, 2002), a Financial Times column by Alan Beattie (March 11, 2002), and The Economist (March 16, 2002).

Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth

Abstract: Past research on aid and growth is flawed because it typically examines the impact of aggregate aid on growth over a short period, usually four years, while significant portions of aid are unlikely to affect growth in such a brief time. We divide aid into three categories: (1) emergency and humanitarian aid (likely to be negatively correlated with growth); (2) aid that affects growth only over a long period of time, if at all, such as aid to support democracy, the environment, health, or education (likely to have no relationship to growth over four years); and (3) aid that plausibly could stimulate growth in four years, including budget and balance of payments support, investments in infrastructure, and aid for productive sectors such as agriculture and industry. Our focus is on the third group, which accounts for about 53% of all aid flows. We find a positive, causal relationship between this “short-impact” aid and economic growth (with diminishing returns) over a four-year period. The impact is large: at least two-to-three times larger than in studies using aggregate aid. Even at a conservatively high discount rate, at the mean a $1 increase in short-impact aid raises output (and income) by $1.64 in present value in the typical country. From a different perspective, we find that higher-than-average short-impact aid to sub- Saharan Africa raised per capita growth rates there by about half a percentage point over the growth that would have been achieved by average aid flows. The results are highly statistically significant and stand up to a demanding array of tests, including various specifications, endogeneity structures, and treatment of influential observations. The basic result does not depend crucially on a recipient’s level of income or quality of institutions and policies; we find that short-impact aid causes growth, on average, regardless of these characteristics. However, we find some evidence that the impact on growth is somewhat larger in countries with stronger institutions or longer life expectancies (better health). We also find a significant negative relationship between debt repayments and growth. We make no statement on, and do not attempt to measure, any additional effect on growth from other categories of aid (e.g., emergency assistance or aid that might affect growth over a longer time period); four-year panel regressions are not an appropriate tool to examine those relationships.

From 'Hindu Growth' to Productivity Surge: The Mystery of the Indian Growth Transition

Abstract: Most conventional accounts of India's recent economic performance associate the pick-up in economic growth with the liberalization of 1991. This Paper demonstrates that the transition to high growth occurred around 1980, a full decade before economic liberalization. We investigate a number of hypotheses about the causes of this growth - favourable external environment, fiscal stimulus, trade liberalization, internal liberalization, the green revolution, public investment - and find them wanting. We argue that growth was triggered by an attitudinal shift on the part of the national government towards a pro-business (as opposed to pro-liberalization) approach. We provide some evidence that is consistent with this argument.

The Trouble with the MDGs: Confronting Expectations of Aid and Development Success

Abstract: The Millennium Development Goals (MDGs) are unlikely to be met by 2015, even if huge increases in development assistance materialize. The MDGs are a set of quantitative, time-bound targets for indicators such as poverty, education and mortality in developing countries adopted unanimously by the UN in 2000. However, the rates of progress required by many of the goals are at the edges of or beyond historical precedent. At the same time, there appear to be limits to the degree to which aid can contribute to development outcomes. Estimates of the ‘cost’ of reaching the MDGs are nevertheless frequently misinterpreted to mean that a certain quantity of aid—such as the oft-cited $50 billion—could cause the Goals to be met. Despite many benefits of the MDGs, there has been little discussion so far of potential costs of the specific form taken by these goals, especially the creation of unreasonable expectations about what is achievable in a short time frame and about the role of aid in the development process. Many countries making extraordinarily rapid progress on MDG indicators, due in large part to aid, will nonetheless not reach the MDGs. Unrealistic targets thus may turn successes into perceptions of failure, serving to undermine future constituencies for aid (in donors) and reform (in recipients). This would be unfortunate given the vital role of aid and reform in the development process and the need for long-term, sustained aid commitments. Though goal-setting can be useful, these particular goals might be better viewed not as practical targets but instead as valuable reminders of the stark contrast between the world we have and the world we want, and as a call to redouble our search for interventions to close the gap more rapidly.

Ngos and uneven development: geographies of development intervention

Abstract: Much research on nongovernmental organizations (NGOs) involved in international development has been case-study-based, with questions about the broader geographies of NGO intervention rarely asked....

Management of Influenza in Households: A Prospective, Randomized Comparison of Oseltamivir Treatment With or Without Postexposure Prophylaxis

Abstract: We determined the efficacy of postexposure prophylaxis (PEP) and treatment of ill index cases with oseltamivir, in an attempt to prevent influenza transmission in households, in a study conducted in 277 households with 298 index cases (62% with laboratory-confirmed influenza) and 812 contacts aged ≥1 year. Contacts were randomized by household to receive treatment (5 days; n = 402), if illness developed, or PEP for 10 days (n = 410), and the number of households with at least 1 contact developing laboratory-confirmed influenza was measured. PEP provided a protective efficacy of 58.5% (95% confidence interval [CI], 15.6%-79.6%; P =.0114) for households against proven influenza and 68.0% (95% CI, 34.9%-84.2%; P =.0017) for individual contacts, compared with treatment of index cases alone. No oseltamivir-resistant variants were detected in treated index cases or contacts. PEP of household contacts of those with influenza reduces the secondary spread of influenza in families when the initial household case is treated.

The Emergence of Supermarkets with Chinese Characteristics: Challenges and Opportunities for China's Agricultural Development

Abstract: The supermarket revolution is spreading faster in China than anywhere else in the world. Supermarket sales are growing by 30-40% per year, 2-3 times faster than in other developing regions. This development has been driven by factors shared by other developing countries as well as by China-specific policies. It presents opportunities for Chinese agricultural producers to diversify into activities with higher income prospects, and for procurement systems to move into dealing directly with farmers. However, supermarket managers face several unique challenges: average farm size is small and farmers are not well organised. Hence, the whole supply chain must be upgraded, and government agricultural policy and rural development programmes have an important role in this.

The Emergence of Supermarkets with Chinese Characteristics: Challenges and Opportunities for China's Agricultural Development

Abstract: The supermarket revolution is spreading faster in China than anywhere else in the world. Supermarket sales are growing by 30-40% per year, 2-3 times faster than in other developing regions. This development has been driven by factors shared by other developing countries as well as by China-specific policies. It presents opportunities for Chinese agricultural producers to diversify into activities with higher income prospects, and for procurement systems to move into dealing directly with farmers. However, supermarket managers face several unique challenges: average farm size is small and farmers are not well organised. Hence, the whole supply chain must be upgraded, and government agricultural policy and rural development programmes have an important role in this.

Making Sense of Global Standards

Abstract: A key feature of globalisation is the increasing economic and political importance of global standards. They have emerged to address a wide range of issues, from quality assurance, food safety, working conditions, to various ethical, environmental and social concerns. Compliance with global standards is a key policy concern, especially in developing countries. More gener-ally, understanding the making, working and implications of these standards is important for policy makers and researchers. But the task is a difficult one. A major problem lies in the proliferation of standards. This paper seeks to reduce the complexity and confusion. It pre-sents a typology of global standards in quality assurance, food safety, environment and social concerns. In doing so, it identifies the networks of actors engaged in the stages of formulation and implementation, and shows how distinguishing between different generations of stan-dards helps to understand the bewildering array of current standards and their evolution over time.

Exploring social capital debates at the World Bank

Abstract: This article explores the ways in which discussions of social capital have emerged within the World Bank, and how they interacted both with project practices and with larger debates in the institution. These debates are understood as a ‘battlefield of knowledge’, whose form and outcomes are structured but not determined by the political economy of the Bank. Understanding the debates this way has implications for research on the ways in which development discourses are produced and enacted, as well as for more specific discussions of the place of social capital in development studies. The article concludes with a reflection on implications of these debates for future research, policy, and practice.

Urban Violence and Insecurity: An Introductory Roadmap

Abstract: IN 1992, WHILE I was living once again in the suburbios (low-income settlements) in Guayaquil, Ecuador, local community members explained to me how serious a problem local violence had become in their daily lives. Violent robbery on buses was so ubiquitous that, over a six-month period, one in five women had been attacked by young men armed with knives, machetes or hand guns. The streets were no longer safe after dark, so girls and young women were dropping out of night school, exacerbating their social isolation. The cost of upgrading housing had expanded to include security grilles on windows, and doors designed to deter burglars. Certainly, there had always been known ladrones (robbers). These had been pointed out to me when I first lived there in 1978 – mainly young men, often also marijaneros (marijuana smokers). But in those days, they never burgled in their own neighbourhood. Although houses with their split cane walls were vulnerable to break-ins, local community social capital was strong enough to hound out wellknown criminals if they got too close for comfort. Of course, there was always violence inside the household, particularly men beating up their wives and partners, especially when they were drunk. But this was accompanied by silent fear that prevented women from addressing the problem either individually or collectively. Over the 15-year period, however, the nature of the violence had changed considerably. So 1992 was my real introduction to urban violence as a development constraint that eroded the assets of the poor and affected their livelihoods and well-being. Like many others writing in this volume, my background is not in criminology, social work or psychology – three of the disciplines traditionally most associated with violence as an issue of individual criminal pathology. Rather, I am an urban anthropologist. In the past decade, as lethal violence and its associated fear and insecurity have been recognized increasingly as a critical problem in urban areas, so the range of researchers, policy makers and practitioners focusing on this issue has expanded. Today, economists, political scientists, transport planners, architects and NGO community workers, among others, all grapple with the ubiquitous presence of urban violence in their work in cities. Despite the growing attention to urban violence, we are faced with an important contradiction. On the one hand, we are still on a slow learning curve. This is reflected in the fact that this is the first volume of Environment and Urbanization devoted solely to this issue – although there have been notable self-standing articles in earlier issues. On the other hand, as we seek to comprehend the complex, multi-layered nature of violence, the phenomenon itself is not static. Along with newer preoccupations, such as globalization, post 9/11 fears and insecurities, international migration and “failing” states, not to mention long-term difficulties of exclusion, poverty and inequality, the face of urban violence itself is also rapidly, dramatically changing. This issue of Environment and Urbanization seeks to understand better the phenomenon of urban violence and insecurity, to document the causes, costs and consequences, and to highlight community-based innovative solutions to the problem. This introduction, therefore, has the challenge of simultaneously reconciling these two aspects – it needs to provide a basic roadmap of urban violence as a background to the papers in this volume – while also highlighting some of the concerns raised in the articles themselves. These include new insights into long-known violence-related problems, as well as newer “cutting-edge” issues.

Why did the Tariff–Growth Correlation Change after 1950?

Abstract: This article uses a new database to establish a key finding: high tariffs were associated with fast growth before World War II, while they have been associated with slow growth thereafter. The paper offers explanations for the sign switch by controlling for novel measures of the changing world economic environment. Rejecting alternative explanations based on changing export market growth or transportation cost declines, it shows how the modern negative correlation could be reversed in a world environment characterized by a moderately higher generalized tariff protection such as that which prevailed before 1914. We show that an increase in average tariff rates among trading partners by just one third might suffice to reverse any negative relationship between an average country's tariffs and its growth. An increase in own tariffs after 1950 hurt or at least didn't help growth, but it might have helped growth in a world where average trading partners' tariffs were moderately higher and retaliation was the best strategy. The world environment matters. Leader-country reaction to big world events matters.

Pharmacokinetics of adjusted-dose lopinavir-ritonavir combined with rifampin in healthy volunteers.

Abstract: Coadministration of lopinavir-ritonavir, an antiretroviral protease inhibitor, at the standard dose (400/100 mg twice a day [BID]) with the antituberculous agent rifampin is contraindicated because of a significant pharmacokinetic interaction due to induction of cytochrome P450 3A by rifampin. In the present study, two adjusted-dose regimens of lopinavir-ritonavir were tested in combination with rifampin. Thirty-two healthy subjects participated in a randomized, two-arm, open-label, multiple-dose, within-subject controlled study. All subjects were treated with lopinavir-ritonavir at 400/100 mg BID from days 1 to 15. From days 16 to 24, the subjects in arm 1 received lopinavir-ritonavir at 800/200 mg BID in a dose titration, and the subjects in arm 2 received lopinavir-ritonavir at 400/400 mg BID in a dose titration. Rifampin was given at 600 mg once daily to all subjects from days 11 to 24. The multiple-dose pharmacokinetics of lopinavir, ritonavir, and rifampin were assessed. Twelve of 32 subjects withdrew from the study. For nine subjects lopinavir-ritonavir combined with rifampin resulted in liver enzyme level elevations. Pharmacokinetic data for 19 subjects were evaluable. Geometric mean ratios for the lopinavir minimum concentration in serum and the maximum concentration in serum (C(max)) on day 24 versus that on day 10 were 0.43 (90% confidence interval [CI], 0.19 to 0.96) and 1.02 (90% CI, 0.85 to 1.23), respectively, for arm 1 (n = 10) and 1.03 (90% CI, 0.68 to 1.56) and 0.93 (90% CI, 0.81 to 1.07), respectively, for arm 2 (n = 9). Ritonavir exposure increased from days 10 to 24 in both arms. The geometric mean C(max) of rifampin was 13.5 mg/liter (day 24) and was similar between the two arms. Adjusted-dose regimens of lopinavir-ritonavir in combination with therapeutic drug monitoring and monitoring of liver function may allow concomitant use of rifampin.

Encounters with Violence in Latin America: Urban Poor Perceptions from Colombia and Guatemala

Abstract: Latin America is both the world's most urbanized fastest developing regions, where the links between social exclusion, inequality and violence are clearly visible. The banal, ubiquitous nature of drug crime, robbery, gang and intra-family violence destabilizes countries' economies and harms their people and social structures.Encounters with Violence & Crime in Latin America explores the meaning of violence and insecurity in nine towns and cities in Columbia and Guatemala to create a framework of how and why daily violence takes place at the community level. It uses pioneering new methods of participatory urban appraisal to ask local people about their own perceptions of violence as mediated by family, gender, ethnicity and age. It develops a typology which distinguishes between the political, social, and economic violence that afflicts communities, and which assesses the costs of consequences of violence in terms of community cohesion and social capital. This gives voice to those whose daily lives and dominated by widespread aggression, and provides important new insights for researchers and policy-makers.

An assessment of privatization

Abstract: Mounting empirical evidence of privatization’s benefits coincides with increasing dissatisfaction and opposition among citizens and policymakers. This dissatisfaction reflects the growing questioning of the benefits of privatization, the general downturn of global markets in the past few years and the resulting swing of the pendulum back towards increased governmental supervision, the overselling of privatization as a panacea for all economic problems, and the concern that privatization does not produce macroeconomic and distributional gains equivalent to its microeconomic benefits. This article takes stock of the empirical evidence and shows that in competitive sectors privatization has been a resounding success in improving firm performance. In infrastructure sectors, privatization improves welfare, a broader and crucial objective, when it is accompanied by proper policy and regulatory frameworks. The article argues that despite the growing concerns privatization should be neither abandoned nor reversed. Rather, there should be a strengthening of efforts to privatize correctly: by better tailoring privatization to local conditions, deepening efforts to promote competition and regulatory frameworks, enforcing transparency in sales processes, and introducing mechanisms to ensure that the poor have access to affordable essential services.

The Long Walk to School: International Education Goals in Historical Perspective

Abstract: Raising school enrollment, like economic development in general, takes a long time. This is partly because, as a mountain of empirical evidence now shows, economic conditions and slowly-changing parental education levels determine children's school enrollment to a greater degree than education policy interventions. A succession of international meetings has nevertheless adopted a litany of utopian international goals for universal school enrollment and gender parity in education based on the idea that a correct education policy backed by sufficient cash could achieve the goals in short order. The latest of these, the Millennium Development Goals, call for universal primary schooling and full gender parity by 2015. This work quantifies how long it has taken countries rich and poor to make the transition towards high enrollments and gender parity. There are three central lessons. First, there is a remarkable uniformity of experience in the rates of enrollment increases, a reality from which the various rounds of goals appear entirely detached. Second, many countries that have not raised enrollments fast enough to meet the goals have in fact raised enrollments extraordinarily rapidly by historical standards and deserve celebration rather than condemnation. The very few poor countries that have raised enrollment figures at the rates envisioned by the goals have done so in many cases by accepting dramatic declines in schooling quality, failing large numbers of students, or other practices that cast doubt on the sustainability or exportability of their techniques. Third, aid-supported education policies can help within limits, and their performance should be judged in the context of country-specific, historically-grounded goals. But a country's broader development strategy outside the classroom matters much more than education policy.

Wealth bias in the first global capital market boom, 1870¿1913

Abstract: Why do rich countries receive the lion's share of international investment flows? Although this wealth bias is strong today, it was even stronger during the first global capital market boom before 1913. Very little of British capital exports went to poor countries, whether colonies or not. This paper constructs panel data for 34 countries that as a group received 92% of British capital. It concludes that international capital market failure had only second-order effects on the geographical distribution of British capital. The three local fundamentals that mattered most were schooling, natural resources and demography.

Microbicidal properties of a silver-containing hydrofiber dressing against a variety of burn wound pathogens.

Abstract: Partial-thickness burns are often characterized by microbial contamination and copious exudate produced during the early postburn period. Consequently, topical wound management often relies on the use of antimicrobial agents and absorbent dressings, and an AQUACEL Hydrofiber Dressing containing ionic silver has been designed to meet such needs. To assess the antimicrobial properties of the AQUACEL Hydrofiber dressing, samples were challenged with a wide variety of recognized burn wound pathogens in a simulated wound fluid model. Dressing samples were inoculated with the challenge organisms at time zero and then reinoculated on days 4 and 9 to mimic the worst-case clinical scenario. The dressing was shown to be microbicidal against aerobic and anaerobic bacteria (including antibiotic-resistant strains), yeasts, and filamentous fungi during a 14-day test period. Based on our results, the silver-containing dressing is likely to provide a barrier to infection, in addition to providing proven fluid-handling benefits of the AQUACEL Hydrofiber dressing, in the management of partial-thickness burns.

Seven Deadly Sins: Reflections on Donor Failings

Abstract: In the face of continuing development challenges in the world's poorest countries, there have been new calls throughout the donor community to increase the volume of development aid. Equal attention should be given to the reform of the aid business itself, that is, to the practices, processes, procedures and politics of aid. This paper discusses the shortcomings of that business using new research that has not been adequately or explicitly incorporated into the donor community's reform agenda. It outlines seven of the worst sins or failings of donors, including impatience with institution building, collusion and coordination failures, failure to evaluate the results of their support, and financing that is volatile and unpredictable. It suggests possible short-term practical fixes and notes the need ultimately for more ambitious and structural changes in the overall aid architecture.

Relocating Participation Within a Radical Politics of Development: Critical Modernism and Citizenship

Abstract: In response to (and in sympathy with) many of the critical points that have been lodged against participatory approaches to development and governance within international development, this article seeks to relocate participation within a radical politics of development. We argue that participation needs to be theoretically and strategically informed by a notion of ‘citizenship’, and be located within the ‘critical modernist’ approach to development. Using empirical evidence drawn from a wide range of contemporary approaches to participation, the paper shows that participatory approaches are most likely to succeed where (i) they are pursued as part of a wider radical political project; (ii) where they are aimed specifically at securing citizenship rights and participation for marginal and subordinate groups; and (iii) when they seek to engage with development as an underlying process of social change rather than in the form of discrete technocratic interventions. However, we do not use these findings to argue against using participatory methods where these conditions are not met. Finally, the paper considers the implications of this relocation for participation in both theoretical and strategic terms.

Empowering Squatter Citizen: Local Government, Civil Society and Urban Poverty Reduction

Abstract: © Diana Mitlin and David Satterthwaite, 2004. All rights reserved. With the rapid growth in urban poverty in Africa, Asia and Latin America, most cities now have 30 to 60 per cent of their population living in shanty towns. The civil and political rights of these people are either ignored or constantly contravened. They face multiple deprivations, including hunger, long hours working for inadequate incomes; illness, injury and premature deaths that arise from dangerous living conditions and inadequate water supplies, sanitation and healthcare. Many face the constant threat of eviction and other forms of violence. None of these problems can be addressed without local changes, and Empowering Squatter Citizen contends that urban poverty is underpinned by the failure of national governments and aid agencies to support local processes. It makes the case for redirecting support to local organizations, whether governmental, non-governmental or grassroots.. The book includes case studies of innovative government organizations (in Thailand, Mexico, Philippines and Nicaragua) and community-driven processes (in India, South Africa, Pakistan and Brazil), which illustrate more effective approaches to urban poverty reduction. Such approaches include strengthening the organizations of the poor and homeless so that they are accountable to their members, are able to develop their own solutions and have more capacity to negotiate with the institutions that are meant to deliver infrastructure, services, credit and land for housing. Such support for local processes is crucial for meeting the Millennium Development Goals in urban areas.

The markets for non-deliverable forwards in Asian currencies

Abstract: Trading in non-deliverable forwards on Asian currencies has grown in recent years. The offshore interest rates implied by these contracts differ significantly from onshore interest rates and suggest upward pressure on most Asian currencies.

Globalisation and Poverty: How can Global Value Chain Research Inform the Policy Debate?

Abstract: Globalisation and its relationship to poverty reduction is a subject of intense debate among academics, policy actors and street protestors. Globalisation can be understood as the lowering of transaction costs associated with the international movement of goods, capital, information, culture and (to a lesser extent) labour. A central plank of economic globalisation has been trade liberalisation. This has facilitated complex patterns of global production of goods and services and transformed local markets into global trading arenas. Those who argue that such processes work to reduce poverty state that trade liberalisation and foreign investment enhance efficiency, lower costs, provide access to know-how, and promote growth, thereby raising incomes for the poor (Dollar and Kraay 2000). Thus, a recent World Bank report argued that countries that reduced trade barriers and integrated effectively into the global trading economy also experienced substantial improvements in exports and economic growth (World Bank 2002: 32–39). Among the “globaphiles” dominating the Bretton Woods institutions, making markets work more efficiently through macroeconomic, trade and regulatory reforms is seen as the key policy instrument for fast track economic growth. The success of many East Asian economies are often cited as examples of the potential gains of adopting such economic strategies (World Bank 1993). While the economic logic of the “market-oriented” globaphiles can be strong, the evidence on the ground, according to many critics is less persuasive. Strong arguments are put forward by those more sceptical of the inherent benefits of globalisation, that globalisation has resulted in sharply disparate gains across countries (Milanovic 2003). The share of global trade accounted for by the least developed countries fell from 0.8 per cent in 1980 to 0.4 per cent by 2000. Moreover, while the East Asia region, and especially China, has been successful in engaging through trade in the global economy, much of sub-Saharan Africa has been left out. In addition, many of the Asian success stories were either displaying significant levels of growth prior to engaging in a reform process, or maintained considerable protective trade barriers while expanding their exports (Rodrik 2001). Discussions on the link between globalisation and poverty have largely concentrated on the macro evidence, drawing on country comparative data. There have been, at best, only limited attempts to bring meso (sectoral) and micro (firm, workers, and household) level evidence to the debate. This paper seeks to address that gap. It draws on findings from various studies undertaken by a project that examined the link between globalised production systems and local employment and poverty impacts. This focused on the export-oriented horticulture, garments and textiles industries in two Asian (Bangladesh and Vietnam) and two African (Kenya and South Africa) countries. The studies use a common conceptual framework in global value chain (GVC) analysis. A key feature of globalisation is the increasingly complex networks of global suppliers who produce in dispersed locations to the exacting demands of global lead firms. The GVC model focuses on the nature of relationships within such networks. The GVC framework provides a

Food Security and Economic Growth: An Asian Perspective

Abstract: Food security is an elusive concept. Many economists doubt that it has any precise meaning at all. Having enough to eat on a regular basis, however, is a powerful human need, and satisfying this need drives household behavior in both private and public markets in predictable ways. Indeed, the historical record suggests that policy initiatives by central governments to satisfy this need for food security - at the level of both households and national markets - can speed economic growth in countries where a substantial proportion of the population does not get enough to eat. Paradoxically, in most successfully developing countries, especially those in the rice-based economies of Asia, the public provision of food security quickly slips from its essential role as an economic stimulus into a political response to the pressures of rapid structural transformation, thereby becoming a drag on economic efficiency. The long-run relationship between food security and economic growth thus tends to switch from positive to negative over the course of development. Because of inevitable inertia in the design and implementation of public policy, this switch presents a serious challenge to the design of an appropriate food policy.

The Road to Pro-Poor Growth: The Indonesian Experience in Regional Perspective

Abstract: "Pro-poor growth" is the new mantra of the development community. Most donor agencies have active research programs underway to understand the pro-poor process, and the World Bank, with British, French and German bilateral support, is already studying how to operationalize the concept (USAID, 2004; World Bank, 2004). Definitions vary, but they all revolve around connecting the poor to rapid economic growth so there is a concomitant rapid reduction in poverty. What is new is the focus on economic growth as the primary vehicle for sustainable reductions in poverty,distributional initiatives and processes playing a secondary role. This exploratory essay, commissioned by the Indonesia Project at Australian National University (ANU), places this new interest in pro-poor growth in regional perspective and then attempts to draw historical and policy lessons for Indonesia. The main challenge is to link our relatively robust understanding of the growth process with much more limited understanding of distribution processes. A panel data set of eight Asian countries provides grist for the empirical mill.

Seven Deadly Sins: Reflections on Donor Failings

Abstract: In the face of continuing development challenges in the world's poorest countries, there have been new calls throughout the donor community to increase the volume of development aid. Equal attention should be given to the reform of the aid business itself, that is, the practices and processes and procedures and politics of aid. This paper sets out the shortcomings of that business on which new research has recently shed light, but which have not been adequately or explicitly incorporated into the donor community's reform agenda. It outlines seven of the worst "sins" or failings of donors, including impatience with institution building, collusion and coordination failures, failure to evaluate the results of their support, and financing that is volatile and unpredictable. It suggests possible short-term practical fixes and notes the need ultimately for more ambitious and structural changes in the overall aid architecture.

Aid Effectiveness and the Millennium Development Goals

Abstract: This paper focuses on key ways in which donors can improve the quality of foreign assistance and make it more effective in achieving the Millennium Development Goals (MDGs). The paper makes three central arguments. First, donors should be much more goal and results oriented in their assistance programs, and should work with low-income countries to ensure that poverty reduction strategies (PRSs) have specific, well-defined goals both in the short-run and long-run. PRSs should be expected to specifically refer to the MDGs, even if governments choose to adopt goals that do not exactly coincide with the MDGs. PRSs should provide both a "baseline scenario" with targets consistent with the most likely policy changes and levels of financing and a "high achievement" scenario with much more ambitious targets which lays out the additional policy, institutional, and financing changes needed to reach these goals. Second, donors must go beyond the rhetoric of "country selectivity" and actually begin to allocate aid more seriously to poorer countries with strong and moderate governance. Although there has been some improvement in aid allocation in recent years, much more can be done. Donors should establish basic rules for allocating aid based on the extent of poverty and the quality of governance, not to be dogmatic and rigid, but to provide some defenses against other forces that push aid allocations towards political and commercial considerations. Third, country selectivity should be conceived as much more than simply allocating more money to countries with stronger governance: it should change the way donors deliver aid to different countries. Well-governed countries should have a much greater say in designing aid programs, should receive more of their aid as program funding, and should receive longer-term commitments from the donor community. In these countries, foreign assistance should finance a broader set of activities, with most (but not all) of the funding channeled through the recipient government. Poorly governed countries should not only receive less money, they should receive more of it as project aid, it should come with a shorter time commitment, should be focused on a narrower set of activities, and much of it should be distributed through NGOs.

Industrial Clusters and Poverty Reduction: Towards a Methodology for Poverty and Social Impact Assessment of Cluster Development Initiatives

Abstract: 1 L’Unido a axé depuis longtemps une partie de son travail sur la constitution de districts industriels pour favoriser le développement du secteur privé et des PME. Avec l’émergence des objectifs pour le millénaire, elle a approfondi la question en portant sa réflexion sur la manière dont les programmes pour le développement de districts industriels peuvent contribuer à la réduction de la pauvreté. Elle nous propose dans ce texte une approche méthodologique pour évaluer l’impact sur la pauvreté de ces programmes en vue de leur amélioration future.