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Independent research & practical ideas for global prosperity
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Independent research & practical ideas for global prosperity
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 David Roodman is a research fellow at the Center for Global Development currently focusing on microfinance. He usually blogs at David Roodman’s Open Book Microfinance Blog. Full Bio Follow @davidroodman
Showing posts on the Views from the Center blog. View author posts on: Developmentistas Atwitter with LoveFebruary 14, 2012By David Roodman in Global Development
Did you see the Valentine’s Day humor flood Twitter over the last week? There were #FedValentines (as in The Board of Governors of the Federal Reserve System, not edible cardioids), #HealthPolicyValentines…and, to CGD’s everlasting credit (from the Latin credere “to trust, entrust, believe,” from the Indo-European kerd-, “heart”), there were #DevelopmentValentines. It was the health policy world that infected the development sphere with this love fever. My wife sent me a link to the #HealthPolicyValentines (whether as a token of affection, I’m not sure). After guffawing at tweets about not wanting to be single-payer no more and statistically significant others, I perceived the policy implications for CGD: we must do it. Characteristically, while I merely talked, CGD’s Lawrence MacDonald acted, putting out the first tweets on the tag and tweet-cruiting the likes of CGD’s master wordsmith Charles Kenny. Comment »2011 Commitment to Development Index Is OutNovember 1, 2011By David Roodman in Commitment to Development Index Tags: Commitment to Development Index
This post is coauthored with Julia Clark. Each year since 2003, the Center for Global Development has “ranked the rich”—assessing which wealthy nations do the most (for their size) to bring good government and prosperity to the rest of the world. Today, we released the 9th edition of this assessment, the 2011 Commitment to Development Index. The core idea of the CDI is that nations are linked in many ways: through foreign aid, trade and investment flows, movement of people, natural resources, military affairs, technology. Governments, through their policies and actions, influence these linkages for good and ill. In particular, helping poorer nations takes more than aid. 2 Comments »CGD’s New Data & Code Transparency PolicyAugust 1, 2011By David Roodman in Uncategorized Tags: Data Transparency
CGD has just adopted a policy that I believe will improve the quality and usefulness of our work. We have decided to become more transparent. Henceforth, the presumption will be that when authors post publications on cgdev.org that involves quantitative analysis, they will also post the data and computer code needed to fully reproduce their results. That way, any visitor to the web site will in principle be able to check our work. (Not that we never shared data before.) To quote from the policy (on which, comments welcome):
4 Comments »Obama Urges Trade, Investment to Support Arab Spring; U.S. Scores Not so HotMay 19, 2011By David Roodman in Commitment to Development Index, Global Development, Trade Tags: CDI, Egypt, Investment, Middle East, Trade, Tunisia
One passage in President Obama’s Middle East speech today caught my attention:
I hear an echo of a core message of the Center for Global Development and our Commitment to Development Index: nations are linked in many ways—through aid, commerce, migration, environment, technology. Governments influence all of these channels, meaning that there are many ways to help spread freedom and prosperity. Helping takes more than aid. Read More… Comment »Haiti Earthquake Aid FactsJanuary 12, 2011By David Roodman in Global Development Tags: HaitiLast year after the earthquake in Haiti, I posted graphs of aid and other financial flows to Haiti in recent years. This post continues in that tradition, focusing on post-disaster aid. A spreadsheet with all data and graphs is here.  6 Comments »Sustaining Dutch Commitment to DevelopmentNovember 10, 2010By David Roodman in Aid Effectiveness Tags: Aid Effectiveness, Commitment to Development Index
This is a joint post with Julie Walz and originally appeared on The Broker Website.
The new Dutch government plans to cut spending on foreign aid from 0.8% to 0.7% of gross national income. Of course, by international standards, the Netherlands will remain one of the most generous nations when it comes to foreign aid: only a handful of countries even come close to 0.7%. Still, the prospective cut raises questions: Is the Netherlands shirking its responsibilities to the developing world? We would answer: It need not, even if aid is cut. Read More… Comment »Truthiness and Justiness at the Haiti Debt HearingMarch 15, 2010By David Roodman in Debt Relief Tags: Haiti
When I was writing about third world debt a decade ago, I watched Jubilee 2000 and other debt cancellation campaigners pound their way to victory with simplistic claims about the importance of debt cancellation, such as that principal and interest payments were diverting enough government revenue from poor countries’ health budgets to kill 19,000 children per day. I wondered: are they naive or am I? On the one the hand, they appeared to misunderstand the accounting, financial, and political realities that govern (and muffle) the impacts of dropping the debt. On the other, I still favored cancellation and admired the campaigners’ prowess in making it happen. One movement leader told me that if you want to make a difference, you have to choose a simple message and repeat it over and over (implicitly: fine points be damned). Maybe I was naive in my qualms about this effective tactic for a good cause. Memories of those days flooded back two weeks ago when I attended a hearing at the U.S. House of Representatives on canceling Haiti’s debt. Before I show you video highlights, let me sketch my thinking on canceling the debt of poor countries generally and Haiti in particular. Comment »What We Talk About When We Talk About DevelopmentMarch 11, 2010By David Roodman in Global Development Tags: Evaluation, MicrofinanceYou might know that I am writing a book about microfinance in public, via blogus. I’m working on the last chapter now, and that has me in a reflective mood. Here, I’d like to share one big idea that I discovered by writing the book. I am fired up about it, and I’d appreciate feedback on whether it is dumb, old, useless, or all three. Here’s how I explained it last December:
4 Comments »For Haitians’ Sake, Drop the “Drop the Debt”January 29, 2010By David Roodman in Aid Effectiveness, Debt Relief Tags: Foreign Aid Reform, Haiti, IMF, World BankAs I blogged Monday, the Haiti government owes the rest of the world about $1.25 billion. Seems like a lot of money. Inevitably, groups such as the One Campaign, Oxfam International, and the Jubilee Debt Campaign have seized the moment to call on Haiti’s creditors to cancel the debt. And they have a point: can you imagine a metaphorical debt collector from the IMF knocking on the door of the Haitian finance ministry (if it still has one) asking for a few million dollars please? That’s why I called debt relief, meaning at least a suspension of debt collection, a no-brainer. The question is whether to go further than debt service suspension, to drop Haiti’s debt outright, as non-governmental organizations, members of Congress, and others have demanded. Actually, the practical question for citizens, officials, politicians, campaigners, and other players is whether to push for that. On a few days’ reflection, I say no. I would go so far as to describe such pressure as harmful. 10 Comments »Suspend Haiti’s Debt—And Take Official Lenders beyond LendingJanuary 25, 2010By David Roodman in Debt Relief, Global Development Tags: Haiti, IMF, World BankMore Fresh Ideas for Haiti
See also[Update: For a more opinionated take on debt cancellation, see For Haitians' Sake, Drop the "Drop the Debt".] Haiti and international debt go way back, and it is a sad history. The circumstances of Haiti’s birth seem auspicious in retrospect: it was the second republic in the Western Hemisphere, founded in 1804 by slaves of African descent who had wrested freedom from their masters, then defeated Napoleon’s navy. But after France gave up on enslaving Haiti’s people, it enslaved the whole nation. In 1825, it exploited its superiority on the high seas to ransom the country’s ability to export sugar and coffee. The price: 150 million francs in gold, some $22 billion in today’s dollars. Not until 1947 did Paris declare Haiti’s debt cleared. A century of intense pressure to export commodities and extract profit by pressing plantation workers into conditions tantamount to slavery goes far to explain Haiti’s human and ecological poverty today. The latter is symbolized by satellite photos of the border between Haiti and the Dominican Republic, its twin-separated-at-birth on the Hispaniola island. The DR has trees. Haiti has none. Today, Haiti owes foreigners $1.25 billion. Inevitably, many are calling for the cancellation of that debt. The question of whether to give Haiti debt relief is at once easily distorted and misunderstood—and a no-brainer. When the world is struggling to channel resources through damaged air and water ports to a nation that has suffered such a blow, sending bills for debt service due would be practically and morally absurd. Since rebuilding Haiti will take time, a sensible formulation is that at a minimum, Haiti’s creditors should cancel all principal and interest payments for the next five years. This debt relief could be accomplished by, but would not require, debt cancellation. Why not go for complete cancellation? For some creditors, the political and financial costs would be high. And the benefits for Haiti would be lower than you might guess. Notably, persuading the Inter-American Development Bank (IDB) to swallow a $411 million loss in Haiti would be hard. Persuading it to forbear for a time on Haiti’s $8.6 million/year in debt service, or even arranging for the U.S. and other donors to reimburse that loss, would be a more realistic and expedient response to the emergency. 2 Comments »Haiti Aid FactsJanuary 15, 2010By David Roodman in Global Development Tags: HaitiMore Fresh Ideas for Haiti
See alsoNote: David Roodman usually blogs at his Open Book Microfinance Blog. CGD does not have data on how much public and private aid is responding to the Haiti earthquake. (But see this.) As background, here are a charts on recent patterns in Haiti’s aid, debt, and remittance receipts. Post comments to request others. The graphs and data shown here are in this spreadsheet (2006–08 version). Aid figures come from the Paris-based Development Assistance Committee (DAC), which collects its data from donor governments. The latest aid figures—just released—are for 2008. 7 Comments »Does Aid Cause Dutch Disease?December 18, 2009By David Roodman in Aid Effectiveness, Global Development Tags: Foreign Aid[Update: Arvind Subramanian has replied on Aid Watch to this post, and I have commented there.]
That’s a simplified picture of the impact of aid on a receiving economy. One can imagine many hidden complications: Uganda might stash the money in a New York bank, deferring the spending. Or it might buy yen with the dollars so that Japan would import California wines while Uganda got Sony TVs. Most of these complications do not change the essential picture, however. Aid is free imports, so while making the recipient richer, it also compresses the recipient’s production of tradeable goods. This compression is known as Dutch Disease because something like it happened to the Netherlands after natural gas was discovered there. Suddenly foreigners were clammoring to hand foreign currency to the Dutch in exchange for the gas. The country’s hydrocarbon industry grew, and since there were only so many workers and so much capital, other industries got squeezed down, disrupting the lives of many. You can imagine the channels through which these changes played out. The natural gas company started hiring, for example; that bid up wages; that forced other companies to lay off people or completely shut down. Other ripples ran through exchange rates. 2 Comments »South Korea Joins the Donor ClubNovember 23, 2009By David Roodman in Commitment to Development Index Tags: Commitment to Development Index, Foreign AidThe Korea Times reports that the Paris-based Development Assistance Committee is set to endorse South Korea’s application for membership on Wednesday. DAC is the official club of Northern government donors. Korea will join Australia, Canada, New Zealand, Japan, the U.S., Western European nations and the European Commission in one of the world’s most exclusive clubs. Meanwhile, Korea and the U.N. Development Programne (UNDP) have just agreed to start a new UNDP branch with the felicitous name, “Seoul Policy Center for Global Development Partnership”:
Both bits of news are indeed signs of South Korea’s graduation from receiver of aid to giver. I hope they will also mark a progression in Korea’s conception of something broader than aid, development policy. Last year, anticipating South Korea’s entry into DAC, we added the country to the Commitment to Development Index (CDI), which ranks wealthy nations on a spectrum of policies that affect poorer ones, from aid to farm subsidies to gasoline taxes. A key message of the CDI is that development policy embraces far more than aid. Korea now ranks last on the CDI, with a profile similar to that of Japan: little aid for its size, and high entry barriers to goods (read: “rice”) and workers from other countries. On the other hand, it scores a 2.5 in 2009 (where 5 is average), a level Japan did not surpass until 2006, so it is not far behind for a new entrant. (See the Korea CDI report in English or Korean.) Before releasing the CDI last year my colleague Cindy Prieto and I visited the Korean embassy here in Washington to brief officials. We were impressed with their constructive attitude, which blended respect for the CDI and hope that Korea would improve as it took its place among donors. We congratulate South Korea on its new status and wish it the best as it accepts the attendant responsibilities. 4 Comments »Yes Bill, No Owen: Why I Still Doubt Aid-Growth RegressionsNovember 5, 2009By David Roodman in Aid Effectiveness, Capitol Flows/Financial Crisis Tags: Foreign Aid, Foreign Assistance[Update: I posted slides from my turn as a discussant for this paper at the Brookings Institution on January 25, 2010.] In the last few days, Bill Easterly and Owen Barder, two respected bloggers who spent time at CGD, looked over a new paper and (at least provisionally) reached opposite conclusions about whether aid has at long last been shown to boost economic growth on average. Also in the last few days, I whacked Bill; now I’ll back him. The new paper by Channing Arndt, Sam Jones, and Finn Tarp (I’ll call them “AJT”) contains two statements I largely endorse:
The first quote says that unless you experiment on poor countries, randomly giving aid to some and not others, you have to make arguable assumptions about the world in order to infer anything from country-level data about whether foreign aid causes growth. The second quote might overreach slightly but is true in spirit: this is an impressively careful analysis. The authors work with a data set from a widely cited paper by Raghuram Rajan and my colleague Arvind Subramanian that concludes that there is no clear evidence of a systematic impact of aid on growth. Reanalyzing, AJT conclude that—on the contrary—it is reasonable to believe that aid worth 1% of a country’s gross domestic product (GDP) raised economic growth by 0.1%/year on average during 1970–2000. That is a small but helpful impact. While I cannot prove AJT wrong, I remain skeptical. In a new CGD paper, Blunt Instruments, Michael Clemens and Samuel Bazzi powerfully express my main concern. I’ve explained it less technically on my microfinance open book blog with reference to studies of the impact of microcredit, and will adapt that writing here. 5 Comments »The Moyo Criterion: Is Easterly a Truer Scholar than the Gateses?October 28, 2009By David Roodman in Aid Effectiveness Tags: Easterly, MoyoYesterday, Bill Easterly and Laura Freschi took Bill and Melinda Gates to task for building an aid success story on dubious African malaria statistics. Perhaps, Easterly and Freschi suggest, the leaders of the largest private endowment ever are stubbornly clutching questionable statistics because they conveniently support the conclusion that “The money the US spends in developing countries to prevent disease and fight poverty is effective, empowers people, and is appreciated.” Easterly and Freschi humbly express hope that they themselves meet a higher standard, letting the evidence determine their conclusions rather than the other way around. Whether a person meets this standard of objectivity, they point out, can be judged
I’d like to suggest another test of commitment to the pursuit of the truth: whether one challenges the reasoning of one’s supporters and dissenters with equal enthusiasm. By this standard, I think Easterly has fallen short. (Disclosure: The Bill & Melinda Gates Foundation is a major funder of the Center for Global Development.) 7 Comments »Cross-post: First Randomized Trial of MicrocreditMay 29, 2009By David Roodman in Global Development Tags: David Roodman, MicrofinanceOver on my microfinance “open book” blog, I posted a digest of what is arguably the first gold standard evaluation of a storied anti-poverty intervention, microcredit. Given the paper’s historic nature and its resonance with CGD themes of impact evaluation and finance, the post may particularly interest those who follow the present blog, Voices from the Center. Comment »Review of Portfolios of the Poor: How the World’s Poor Live on $2 a DayMay 23, 2009By David Roodman in Global Development Tags: Microfinance, PovertyIf you want to understand how poor people in poor countries manage money, invest in Portfolios of the Poor. The new book’s four authors—Daryl Collins, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven—took up an idea of David Hulme, to compile financial diaries of poor households. A researcher visits a poor household repeatedly, say, every fortnight for a year, and gathers detailed information on what its members earned, spent, borrowed, and saved since the last visit. Through the data collection and the associated conversations she pieces together an intimate portrait of the household’s financial life. “[F]inance is the relationship between time and money…to understand it fully, time and money must be observed together.” (Disclosure: I am coauthoring a CGD paper with Morduch.) Comment »Does Aid Crash During Crises? A Sharper LookMay 13, 2009By David Roodman in Global DevelopmentLast fall, as stocks tumbled and credit froze, I blogged on how much foreign aid has fallen in past financial crises. I found that in four previous cases—Finland, Japan, Norway, and Sweden, all in the early 1990s—foreign aid fell 10—62%. The bigger drops happened in bigger crises. The analysis was easy to understand, but crude. One factor it ignored was that the Cold War rationale for foreign aid had just crumbled, so many countries were cutting aid anyway. Emmanuel Frot of the Stockholm Institute of Transition Economics just performed a more careful analysis. He adds two more crises: South Korea in 1997 and the United States in 1988. (The U.S. stock market did crash in ’87, but I don’t know that that constituted a financial crisis…) And he uses more sophisticated statistical techniques to remove broad time trends such as the ending of the Cold War. He corroborates my simple findings, but comes in at the optimistic end. Past experience suggests to him that the global aid could fall 13 percent this time around. Comment »Dambisa Moyo Discovers Key to Ending PovertyMarch 25, 2009By David Roodman in Aid Effectiveness, Global Development Tags: Corruption, ZimbabweLast month I blogged a New York Times interview with Dambisa Moyo, whom the paper aptly dubbed the “Anti-Bono.” A youngish woman who grew up in Zambia and holds degrees from Harvard and Oxford, she launches a frontal assault on foreign assistance in her new book, Dead Aid. For her, ODA is DOA. I worried in my post about her simplistic interview answers, which implied that aid has nothing to do with microfinance even though donors helped make it what it is today. I ended carefully:
Well, I did, and she doesn’t. (Her publicist sent us a copy, so we got the Anti-Bono pro bono.) The book is sporadically footnoted, selective in its use of facts, sloppy, simplistic, illogical, and stunningly naive. Read More… 9 Comments »Who Will Index the Indexers? Think Tank Ranking in Foreign Policy MagazineJanuary 12, 2009By David Roodman in Commitment to Development Index, Global Development Tags: Commitment to Development Index, Corruption, Governance/Democracy, On the HillOn January 5, the University of Pennsylvania’s International Relations Program and Foreign Policy magazine released a first-ever ranking of think tanks. Penn’s James McGann, the author, calls it the “The Global Go-To Think Tank” index and Foreign Policy, simply the “The Think Tank Index.” A think tank, in case you were wondering, is a “a group or an institution organized for intensive research and solving of problems, especially in the areas of technology, social or political strategy, or armament.” The irony did not escape us at CGD: our own Commitment to Development Index was born in the pages of FP; now FP would rate us. 3 Comments » |
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If the United States gives Uganda a billion dollars, Uganda becomes richer. However, Uganda can only enjoy that money by spending it; and since the money is dollars Uganda must buy goods and services from the United States. So when the United States gives Uganda a billion dollars, exports follow. With enhanced access to products easily tradeable across national borders, Uganda can devote more economic energy to making non-tradeables such as restaurant meals and bicycle repairs. With the wealth, then, comes economic change.
