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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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Global Development: Views from the Center
Posts in: Private InvestmentNew and Improved: Much Ado (and To Do) about Innovation in DevelopmentJanuary 27, 2010Posted by Tom Bollyky in Economic Development, Private Investment Tags: ICT, Innovation, Private Investment, Technology“Innovation” is popping up everywhere you turn these days. In her recent speech at the Center for Global Development, Secretary Clinton cited “innovation” as one of the priorities of U.S. development policy. Both the White House Office of Science and Technology Policy and the Department of Treasury are exploring ways to more systematically include “innovation” in the development agenda. The G8 is rumored to be launching an “innovation and development” initiative for Africa at its next meeting. Increased attention on innovation is welcome – particularly when it’s in service of improving the economic opportunities of the world’s poorest and increasing their access to health care, clean water, education and other services. The trick will be, however, to ensure that the focus on “innovation” goes beyond the latest word-of-the-day and translates into real investments and results. 2 Comments »A Question for Raj Shah: How to bring Order to U.S. Support for Business Climate Reforms?November 17, 2009Posted by Todd Moss in Africa, Global Development, Private Investment Tags: Private Investment, USAIDGiven his background, Raj Shah is well placed to lead U.S. development efforts in the already-big areas of global health and agriculture. But I hope that a small portion of his attention can bring some strategic focus to another set of issues that may be even more critical to the long-term fight against poverty: business climate reforms. Read More… 1 Comment »Is China Losing Interest in Africa?May 22, 2009Posted by Vijaya Ramachandran in Asia, Global Development, Globalization, Governance/Democracy, Private Investment, Regions Tags: China, Corruption, Foreign Direct Investment, Governance/Democracy, Private Investment, RegionsLast week, the Aluminum Corp. of China, otherwise known as Chinalco, received regulatory approval to proceed with its investment of $19.5 billion in the Australian-based mining giant Rio Tinto, giving the Chinese access to a large and secure supply of iron ore, copper, aluminium and other resources in Australia and Latin America. Is this a signal that China is losing interest in Africa? Or that African governments are becoming disenchanted with their Chinese partners? If so, what are the policy implications, particularly with regard to investments in infrastructure? Read More… Comment »Stopping the Emerging Markets Contagion BoomerangNovember 10, 2008Posted by Todd Moss in Africa, Capitol Flows/Financial Crisis, Financial Crisis, Migration and Labor Mobility, Private Investment, Regions Tags: Private InvestmentThe U.S. rescue package is (rightly) focused on shoring up our domestic financial markets, ground zero in the global credit crisis. Even if this effort is successful, the United States and other global financial leaders cannot ignore the impact on emerging markets. As the crisis has now spread to Latin America, Asia, and elsewhere, we need to ensure that all available tools are used so that the downturn doesn’t eventually boomerang back to us. This makes the participation of China, India, Brazil, and others at the upcoming financial summit this weekend not just good optics, but substantively critical. Comment »Private Microfinance Investors Calling the Kettle Black?March 28, 2007Posted by David Roodman in Global Development, Microfinance, Private Investment Tags: Microfinance, Private InvestmentParts of the microfinance world are abuzz over a new report, Role Reversal (pdf), by Julie Abrams of Microfinance Analytics and Damian von Stauffenberg of Microrate, a rating agency for microfinance institutions (MFIs). (Economist coverage is here and here.) The authors document how in the last few years, official lenders such as the International Finance Corporation (IFC) have dramatically expanded their lending to the most established, creditworthy MFIs, but not to ones that are shakier but–one hopes–up-and-coming. What’s wrong with that?
Recent years, as the report documents, have seen a flowering of vehicles to channel private foreign capital into microfinance. But official lenders, they argue, are “crowding out” these investors by offering subsidized loans the private sector cannot match. Comment »G8 Summit and Advance Market CommitmentsJuly 5, 2006Posted by Administrator in Global Health, Global Health Policy, Private Investment Tags: Private InvestmentThe leaders of the eight most industrialized countries (the ‘G8′) meet on July 15-17. Development has not been at the top of the agenda for the Russian Presidency, and President Putin is likely to shift the emphasis away from Africa, which took top billing at the 2005 Summit hosted by Prime Minister Blair in Gleneagles. One issue that hangs in the balance is whether the G8 countries will stimulate commercial investment in vaccines for neglected diseases, such as malaria, HIV and tuberculosis, by promising to buy vaccines if they are developed. The G8 Finance Ministers concluded in April:
But according to Reuters progress on this among G8 members has been tied up by political horse-trading and domestic funding questions. In the last few days, there has been some interesting media coverage and commentary about this issue. Comment »How to Travel Africa On the CheapMay 20, 2002Posted by Administrator in Africa, Private Investment, Regions, Trade Tags: Africa, AGOA, George W. Bush, Investment, Private Investment, Regions, TradeBy Amar Hamoudi U2 Front Man Bono and US Treasury Front Man Paul O’Neill may have had a few differences during their Africa tour, but they clearly agree that Africa needs increased market opportunities. Therefore, it’s no surprise for example that earlier this week Secretary O’Neill touted the African Growth and Opportunity Act of 2000 (AGOA) as an important piece of US development policy. (AGOA is intended to allow African exporters to claim exemption from tariffs on most goods that they send to the United States.) Mr. O’Neill seems mighty proud of AGOA. The reasoning seems to be that aid is for naïfs who don’t understand how the market works, while schemes like this reflect the sleek new market-friendly approach to development for the 21st century. But if you think our aid policy is flawed, just have a look at AGOA—it’s at least as bad. It’s misnamed; there’s virtually no GO in it at all. Last year, 85% of the goods sent here under the AGOA program were oil or oil products. (In the first month of this year, that number was down a bit, to 56%, thanks in large part to a few European car manufacturers wising up to AGOA and exporting a few dozen cars out of South Africa). Were import duty exemptions for Exxon/Mobil or Royal Dutch Shell what Secretary O’Neill meant when he said that AGOA will “advance export-driven private sector growth”? In fact, AGOA seems to have had no impact on exports from Africa at all. Over the course of last year, exports from AGOA-qualifying countries fell by at least as much as exports from all developing countries. AGOA hasn’t worked because it has serious structural flaws. First, in order to qualify, countries must submit reams of complex paperwork—so much so that even 15 months after AGOA was put in place, about three fifths of the exports from qualifying countries were still being taxed, since countries couldn’t figure out how to go through the procedures to claim their benefits! And then there’s the fact that the law doesn’t give any protections to exporters against all the other trade barriers (other than standard tariffs) that the U.S. throws up. For example, take the recent case where a consortium of west coast fruit producers asked the Bush administration to suspend South Africa’s AGOA benefits on canned pears, arguing that competition by imported pears from South Africa had created a hardship. This was similar to the requests for protection, which steel producers and softwood lumber producers had successfully put to President Bush earlier this year. (The administration has not ruled on the pear issue yet.) (The response of fruit producers in South Africa, by the way, was revealing. They said AGOA did induce them to send exports to customers in the USA instead of other countries, but that it did not induce them to expand their production. Investing to expand production, they said, is too risky because the benefits can be revoked at any time. So much for AGOA’s promise to generate growth or opportunity.) Producers in Africa can expect that any time they succeed in taking advantage of AGOA, some special interest group here will demand that their benefits get taken away. They’ll have to hire expensive lawyers and promise that they’re not really growing or providing new jobs. If they have to make this claim, what was the point of the law in the first place? Of course private sector growth is necessary to improving livelihoods in Africa. After all, private firms are better at producing most things than governments are. But many of the impediments to private sector growth are exactly the sorts of things that aid is designed to address. Improvements in health, education, and infrastructure, for example, are essential precursors to private investment, and are underprovided by the market. O’Neill has insisted over and over that aid must have measurable results. How come his tool of choice—AGOA and similar initiatives to legislate increases in trade and investment flows— doesn’t have to pass the same tests? It’s not the use of public resources to affect market dynamics is anathema to the Bush administration. President Bush recently committed some 300-billion taxpayer dollars to protect U.S. farmers from the effects of market competition. He said this spending was justified because the livelihood of farmers “depends on things they cannot control: the weather, crop disease, and uncertain pricing.” In African countries, where on average over 85% of exports have been in agricultural products or other primary commodities, the principle is the same. Africans—just like U.S. farmers—don’t need lectures from the Bush administration. Instead, they need the sort of help, which neither AGOA nor our aid policies are providing right now. It’s time we do our part, and make some serious reforms. Amar Hamoudi was a Research Associate at the Center from October 2001 to August 2002. Comment »How much opportunity in the African Growth and Opportunity Act?May 20, 2002Posted by Administrator in Africa, Private Investment, Regions, Trade Tags: Africa, AGOA, Investment, Private Investment, Regions, TradeBy Amar Hamoudi AGOA took effect January 2001 to allow qualifying sub-Saharan African countries to export qualifying goods duty free to the US. The act was expressly designed to “increase trade and investment between the USA and SSA.” The evidence over the short time since it was enacted reveals that: · Most of the AGOA benefits have gone to oil exporters; · Most of the imports eligible for duty- free treatment are still being taxed, notwithstanding their eligibility. This is probably due to logistical difficulties in claiming AGOA benefits; · AGOA has not increased trade flows from eligible countries to the US (yet); · There are structural features of the law which threaten to reduce its developmental impacts. Access the full commentary (PDF) Comment »
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