This policy brief covers a discussion on finance for sustainable development held during a full day conference at the Stockholm School of Economics on May 11, 2015. The event was organized jointly by the Stockholm Institute of Transition Economics (SITE) and the Swedish Ministry for Foreign Affairs, and was the fifth installment of Development Day – a yearly development policy conference. With the Millennium Development Goals (MDGs) expiring in 2015, the members of the United Nations are now in the process of defining a post-2015 development agenda. The Sustainable Development Goals (SDGs) build on the eight anti-poverty targets in the MDG but also include a renewed emphasis on environmental and social sustainability. Whatever targets or goals will be agreed upon in the end, we know for certain that reaching the objectives will require substantial financial resources, far beyond the current levels of official development assistance (ODA). To discuss this issue, the conference brought together a distinguished and experienced group of policy-oriented scholars and practitioners from government agencies, international organizations, civil society and the business community.
Although there exists a vast literature on aid efficiency (the effect of aid on GDP), and that aid allocation determinants have been estimated, little is known about the minute details of aid allocation. This article investigates empirically a claim repeatedly made in the past that aid donors herd. Building upon a methodology applied to financial markets, this article finds that aid donors herd similarly to portfolio funds on financial markets. It also estimates the causes of herding and finds that political transitions towards more autocratic regimes repel donors, but that transitions towards democracy have no effect. Finally, identified causes of herding explain little of its overall level, suggesting strategic motives play an important role.
The recent focus on impact evaluation within development economics has lead to increased pressure on aid agencies to provide "hard evidence", i.e. results from randomized controlled trials (RCTs), to motivate how they spend their money. In this paper I argue that even though RCTs can help us better understand if some interventions work or not, it can also reinforce an existing bias towards focusing on what generates quick, immediately verifiable and media-packaged results, at the expense of more long term and complex processes of learning and institutional development. This bias comes from a combination of public ignorance, simplistic media coverage and the temptation of politicians to play to the simplistic to gain political points and mitigate the risks of bad publicity. I formalize this idea in a simple principal-agent model with a government and an aid agency. The agency has two instruments to improve immediately verifiable outcomes; choose to spend more of the resources on operations rather than learning or select better projects/programs. I first show that if the government cares about long term development, then incentives will be moderated not to push the agency to neglect learning. If the government is impatient, though, then the optimal contract leads to stronger incentives, positively affecting the quality of projects/programs but also negatively affecting the allocation of resources across operations and learning. Finally, I show that in the presence of an impatient government, then the introduction of a better instrument for impact evaluation, such as RCTs, may actually decrease aid effectiveness by motivating the government to chose even stronger incentives.
This report is designed to help social entrepreneurs benchmark their organisation against fellow social enterprises in Sweden. We hope the report can help social enterprises to better place their organisation (e.g. what makes it distinct; readily spot differences and similarities with their peers). The report will also be useful for support organisations and policy makers to obtain an overview of social enterprises in Sweden. If this report can be put to any other good uses, we would be most delighted. Of course a rich database like ours contains many more insights and policy implications, which will soon be published on www.seforis.eu.
This paper takes a systematic look at the economic impact of the crisis that started in earnest in the fall of 2008 across countries and regions. Despite warnings of growing domestic and external imbalances in many countries years ahead of the crisis, the massive impact of the crisis came as a surprise to most. By correlating economic performance in the crisis with an extensive set of early warning, country insurance, and policy indicators, this paper provides some lessons on crisis prevention and management for the future. Although significant efforts have been made to develop robust early warnings systems, the paper shows the mixed success of some commonly analyzed indicators in predicting economic outcomes in this crisis. The only robust early warning indicator was increases in real estate prices while international reserves seem to have insured against the worst crisis outcomes on average. However, much work on building a robust early warning system remains and the analytical and empirical challenges in this area are substantial. The issues confronting early warning systems are also relevant to the more recent field of macro prudential supervision and regulation. Nevertheless, the cost of crises is massive and preventing future ones with better regulation, policies and supervision based on solid research must be a top priority among policy makers and academics alike.
In this paper we argue that aid effectiveness may suffer when partnerships with new regimes need to be established. We test this argument using the natural experiment of the break-up of communism in the former Eastern Bloc. We find that commercial and strategic concerns influenced both aid flows and the urgency of entry into new partnerships in the first half of the 1990s, while developmental objectives became more important only over time. These results hold up to a thorough sensitivity analysis, including using a gravity model to instrument for bilateral trade flows. We also find that aid fractionalization increased substantially, and that aid to the region was more likely to be tied, more volatile and less predictable than to aid to other recipients at the time. Overall, these results suggest that the guidelines for aid effectiveness agreed upon in the Paris Declaration are likely to be challenged by the current political transition in parts of the Arab world. Hopefully being aware of these challenges can help donors avoid making the same mistakes.
This paper studies determinants of income inequality using a newly assembled panel of 16 countries over the entire twentieth century. We focus on three groups of income earners: the rich (P99-100), the upper middle class (P90-99), and the rest of the population (P0-90). The results show that periods of high economic growth disproportionately increases the top percentile
income share at the expense of the rest of the top decile. Financial development is also pro-rich and the outbreak of banking crises is associated with reduced income shares of the rich. Trade openness has no clear distributional impact (if anything openness reduces top shares). Government spending, however, is negative for the upper middle class and positive for the nine lowest deciles but does not seem to affect the rich. Finally, tax
progressivity reduces top income shares and when accounting for real dynamic effects the impact can be important over time.
Version of March 25, 2009. Please check for updates https://www.elsevier.com/
Read more research publications at: https://www.hhs.se/site
Although there exists a vast literature on aid efficiency (the effect of aid on GDP), and that aid allocation determinants have been estimated, little is known about the minute details of aid allocation. This article investigates empirically a claim repeatedly made in the past that aid donors herd. Building upon a methodology applied to financial markets, this article finds that aid donors herd similarly to portfolio funds on financial markets. It also estimates the causes of herding and finds that political transitions towards more autocratic regimes repel donors, but that transitions towards democracy have no effect. Finally, identified causes of herding explain little of its overall level, suggesting strategic motives play an important role.
The recent focus on impact evaluation within development economics has lead to increased pressure on aid agencies to provide "hard evidence", i.e. results from randomized controlled trials (RCTs), to motivate how they spend their money. In this paper I argue that even though RCTs can help us better understand if some interventions work or not, it can also reinforce an existing bias towards focusing on what generates quick, immediately verifiable and media-packaged results, at the expense of more long term and complex processes of learning and institutional development. This bias comes from a combination of public ignorance, simplistic media coverage and the temptation of politicians to play to the simplistic to gain political points and mitigate the risks of bad publicity. I formalize this idea in a simple principal-agent model with a government and an aid agency. The agency has two instruments to improve immediately verifiable outcomes; choose to spend more of the resources on operations rather than learning or select better projects/programs. I first show that if the government cares about long term development, then incentives will be moderated not to push the agency to neglect learning. If the government is impatient, though, then the optimal contract leads to stronger incentives, positively affecting the quality of projects/programs but also negatively affecting the allocation of resources across operations and learning. Finally, I show that in the presence of an impatient government, then the introduction of a better instrument for impact evaluation, such as RCTs, may actually decrease aid effectiveness by motivating the government to chose even stronger incentives.
This report is designed to help social entrepreneurs benchmark their organisation against fellow social enterprises in Sweden. We hope the report can help social enterprises to better place their organisation (e.g. what makes it distinct; readily spot differences and similarities with their peers). The report will also be useful for support organisations and policy makers to obtain an overview of social enterprises in Sweden. If this report can be put to any other good uses, we would be most delighted. Of course a rich database like ours contains many more insights and policy implications, which will soon be published on www.seforis.eu.
This paper takes a systematic look at the economic impact of the crisis that started in earnest in the fall of 2008 across countries and regions. Despite warnings of growing domestic and external imbalances in many countries years ahead of the crisis, the massive impact of the crisis came as a surprise to most. By correlating economic performance in the crisis with an extensive set of early warning, country insurance, and policy indicators, this paper provides some lessons on crisis prevention and management for the future. Although significant efforts have been made to develop robust early warnings systems, the paper shows the mixed success of some commonly analyzed indicators in predicting economic outcomes in this crisis. The only robust early warning indicator was increases in real estate prices while international reserves seem to have insured against the worst crisis outcomes on average. However, much work on building a robust early warning system remains and the analytical and empirical challenges in this area are substantial. The issues confronting early warning systems are also relevant to the more recent field of macro prudential supervision and regulation. Nevertheless, the cost of crises is massive and preventing future ones with better regulation, policies and supervision based on solid research must be a top priority among policy makers and academics alike.
In this paper we argue that aid effectiveness may suffer when partnerships with new regimes need to be established. We test this argument using the natural experiment of the break-up of communism in the former Eastern Bloc. We find that commercial and strategic concerns influenced both aid flows and the urgency of entry into new partnerships in the first half of the 1990s, while developmental objectives became more important only over time. These results hold up to a thorough sensitivity analysis, including using a gravity model to instrument for bilateral trade flows. We also find that aid fractionalization increased substantially, and that aid to the region was more likely to be tied, more volatile and less predictable than to aid to other recipients at the time. Overall, these results suggest that the guidelines for aid effectiveness agreed upon in the Paris Declaration are likely to be challenged by the current political transition in parts of the Arab world. Hopefully being aware of these challenges can help donors avoid making the same mistakes.
This paper studies determinants of income inequality using a newly assembled panel of 16 countries over the entire twentieth century. We focus on three groups of income earners: the rich (P99-100), the upper middle class (P90-99), and the rest of the population (P0-90). The results show that periods of high economic growth disproportionately increases the top percentile
income share at the expense of the rest of the top decile. Financial development is also pro-rich and the outbreak of banking crises is associated with reduced income shares of the rich. Trade openness has no clear distributional impact (if anything openness reduces top shares). Government spending, however, is negative for the upper middle class and positive for the nine lowest deciles but does not seem to affect the rich. Finally, tax
progressivity reduces top income shares and when accounting for real dynamic effects the impact can be important over time.
Version of March 25, 2009. Please check for updates https://www.elsevier.com/
Read more research publications at: https://www.hhs.se/site
On August 31 and September 1, 2015 the Stockholm Institute of Transition Economics (SITE) and the aswede network will host an academic conference at the Stockholm School of Economics to bring together researchers across all fields of economics contributing to the debate about corruption, its effects, and the optimal tools to fight it. The focus is on low and middle-income countries and the role of legal institutions, with one section in particular focusing on the experience of the transition countries in the CIS and CEE regions.
Despite a voluminous literature on the topic, the question of whether aid leads to growth is still controversial. To observe the pure effect of aid, researchers used instruments that must be exogenous to growth and explain well aid flows. This paper argues that instruments used in the past do not satisfy these conditions. We propose a new instrument based on predicted aid quantity and argue that it is a significant improvement relative to past approaches. We find a significant and relatively big effect of aid: a one standard deviation increase in received aid is associated with a 1.6 percentage points higher growth rate.
We use newly compiled top income share data and structural breaks techniques to estimate common trends and breaks in inequality across countries over the twentieth century. Our results both confirm earlier findings and offer new insights. In particular, the division into an Anglo-Saxon and a Continental European experience is not as clear cut as previously suggested. Some Continental European countries seem to have experienced increases in top income shares, just as Anglo-Saxon countries, but typically with a lag. Most notably, Nordic countries display a marked “Anglo-Saxon” pattern, with sharply increased top income shares especially when including realized capital gains. Our results help inform theories about the causes of the recent rise in inequality.
Realized capital gains are typically disregarded in the study of income inequality. We show that in the case of Sweden this severely underestimates the actual increase in inequality and, in particular, top income shares during recent decades. Using micro panel data to average
incomes over longer periods and re-rank individuals according to income excluding capital gains, we show that capital gains indeed are a reoccurring addition to rather than a transitory component in top incomes. Doing the same for lower income groups, however, makes virtually no difference. We also try to find the roots of the recent surge in capital gains-driven inequality in Sweden since the 1980s. While there are no evident changes in terms of who earns these gains (high wage earners vs. top capital income earners), the primary driver instead seems to be the drastic asset price increases on the post-1980 deregulated financial markets.
Anders Olofsgård (with A. Boschini).
Published in Journal of Development Studies.
In this paper, we test the argument that the sizeable reduction in aggregate aid levels in the 1990’s was due to the end of the Cold War. We test two different models using a dynamic econometric specification on a panel of 17 donor countries, spanning the years 1970-1997. We find aid to be positively related to military expenditures in the former Eastern bloc during the cold war, but not in the 1990’s, suggesting that the reductions in aid disbursements are driven by the disappearance of an important motive for aid. Our results also suggest that aid allocation may have become less strategic in the 1990’s.
Foreign Aid and Economic Growth in the West African States: A Panel Frameworkinventionjournals
This paper examines the impact of economic variables namely, foreign direct investment (FDI), investment, export, foreign aid and broad money supply on economic growth, approximated by gross domestic product (GDP)using annual data covering a period 1981-2008 on a group of West African countries. The impact of variables on GDP is estimated using three panel estimation models: pooled model (pooled), fixed effects model (FEM) and random effects model (REM). We explore the hypothesis that foreign aid can promote growth in developing countries. We test this hypothesis using panel data series,while the findings of previous studies are generally mixed, our resultsindicate that foreign direct investment has purely positive effects on economic growth in West African countries
We use a novel approach to address the question of whether a union of sovereign countries can efficiently raise and allocate a budget, even when members are purely self-interested and participation is voluntary. The main innovation of our model is to explore the link between budget contributions and allocation that arises when countries bargain over union outcomes. This link stems from the distribution of bargaining power being endogenously determined. Generically, it follows that unstructured bargaining gives an inefficient result. We find, however, that efficiency is achieved with fully homogenous countries, and when countries have similar incomes and the union budget is small. Moreover, some redistribution arises endogenously, even though nations are purely self-interested and not forced to participate in the union. A larger union budget, however, entails a trade-off between equality and efficiency. We also analyze alternative institutions and find that majority rule can improve efficiency if nations who prefer projects with high public good spillovers are endogenously selected to the majority coalition. Exogenous tax rules, such as the linear tax rule in the EU, which is designed to increase efficiency on the contribution margin, can also improve overall efficiency despite decreasing the efficiency of the allocation of funds.
In this paper I examine the development effects of military coups. Whereas previous economic literature has primarily viewed coups as a form of broader political instability, less research has focused on its development consequences independent of the factors making coups more likely. Moreover, previous research tends to group coups together regardless of whether they overthrew autocratic or democratically-elected leaders. I first show that coups overthrowing democratically elected leaders imply a very different kind of event than those overthrowing autocratic leaders. These differences relate to the implementation of authoritarian institutions following a coup in a democracy, which I discuss in several case studies. Second, I address the endogeneity of coups by comparing the growth consequences of failed and successful coup as well as matching and panel data methods, which yield similar results. Although coups taking place in already autocratic countries show imprecise and sometimes positive effects on economic growth, in democracies their effects are distinctly detrimental to growth. When overthrowing democratic leaders, coups not only fail to promote economic reforms or stop the occurrence of economic crises, but they also have substantial negative effects across a number of standard growth-related outcomes including health, education, and investment.
Read more: https://www.hhs.se/site
We argue that the tilt towards donor interests over recipient needs in aid allocation and practices may be particularly strong in new partnerships. Using the natural experiment of Eastern transition we find that commercial and strategic concerns influenced both aid flows and entry in the first half of the 1990s, but much less so later on. We also find that fractionalization increased and that early aid to the region was particularly volatile, unpredictable and tied. Our results may explain why aid to Iraq and Afghanistan has had little development impact and serve as warning for Burma and Arab Spring regimes.
Poverty is associated with political conflict in developing countries, but evidence of individual grievances translating into dissent among the poor is mixed. We analyze survey data from 40 developing nations to understand the determinants radicalism, support for violence, and participation in legal anti-regime actions as petitions, demonstrations, and strikes. In particular, we examine the role of perceived political and economic inequities. Our findings suggest that individuals who feel marginalized tend to harbor extremist resentments against the government, but they are generally less likely to join collective political movements that aim to instigate regime changes. This potentially explains the commonly-observed pattern in low- and middle-income countries whereby marginalized groups, despite their political attitudes and high-levels of community engagement, are more difficult to mobilize in nation-wide movements. We also find that arenas for active political participation (beyond voting) are more likely to be dominated by upper-middle income groups who are committed, ultimately, to preserving the status quo. Suppressing these forms of political action may thus be counterproductive, if it pushes these groups towards more radical preferences. Finally, our findings suggest that the poor, in developing nations, may be caught in a vicious circle of self-exclusion and greater marginalization.
Anders Olofsgård (with R. Desai and T. Yousef).
Presentation by Dóra Györffy at the OECD Workshop on “Joint Learning for an OECD Trust Strategy” on 14 October 2013. Ms. Györffy discusses trust in-depth including its relationship with decision-making, economic policy, popularity of government and its influence on the crisis.
Remittance levels and entrepreneurial activity in post soviet countriesAzer Dilanchiev
ABSTRACT Each individual entrepreneurial action has a more than proportional impact on economic growth, however less
works are dedicated to investigate the impact of the remittance on entrepreneurial activity. This paper examines the impact of
remittance level on entrepreneurial activity in 14 post-soviet countries over the period of 2006-2016. Panel data is employed
to analyze the impact of remittance on entrepreneurial activity. Study found statistically significant impact of remittance on
entrepreneurial activity for the post-Soviet countries in the sample.
Inna Shkolnyk, Viktoriia Koilo
http://dx.doi.org/10.21511/imfi.15(1).2018.32
The relationship between external debt and economic growth: empirical evidence from Ukraine and other emerging economies
The article examines the relationship between external debt and economic growth in emerging economies for the period 2006-2016. The authors used different econometric tools, e.g., ADL model and correlation analysis. The regression results showed that the original values had no significant impact on the estimation of the parameters. Thus, there was made an assumption that emerging economies have a non-linear impact on macroeconomic parameters, including external debt that has a non-linear type of influence on economic growth. The authors established that high level of external debt, in conjunction with macroeconomic instability, impedes economic growth in such countries. The regression model also showed that there is a critical level of debt burden for emerging economies, where the marginal impact of external debt on economic growth becomes negative.
The results of the study highlighted the significance of the problem of effective public debt management strategy implementation in Ukraine. This issue is predetermined by the appropriate organizational support. The study recommends improving a public external debt management model. In this paper, the authors proposed a new structure with the participation of new element – independent agencies. The unified external debt management system should integrate all state institutions and executive power structures in this area.
Abstract:Savings are necessary if investment, and hence economic growth and development are to be stimulated. The paper looks at the broad set of possible determinants of private savings in Lesotho using annual time series data for the period 1980-2010. The paper estimates the saving rate function and Error-Correction modelling is used to avoid spurious results. The results indicate that public savings are important in explaining changes in private savings, both in the short-run and long-run and that the terms of trade negatively influence private savings in Lesotho in the long-run.
This study empirically investigates the impact of human development on bank development in WAEMU countries. Over the period 1990 to 2014, empirical results have shown a positive relationship between banking development and human development. Credit to the private sector and the size of the economic system have a positive and significant impact on human development, but this impact remains small. Moreover, the growth rate of GDP per capita and the level of inflation have a positive impact on human development.
The rapid growth of the US financial sector has driven policy debate on whether it is socially desirable. I propose a heterogeneous agent model with asymmetric information and matching frictions that produces a tradeoff between finance and entrepreneurship. By becoming bankers, talented individuals efficiently match investors with entrepreneurs, but do not internalize the negative effect on the pool of talented entrepreneurs. Thus, the financial sector is inefficiently large in equilibrium, and this inefficiency increases with wealth inequality. The model explains the simultaneous growth of wealth inequality and finance in the US, and why more unequal countries have larger financial sectors.
by Kirill Shakhnov, EUI †
JOB MARKET PAPER
First version: January 2015
This version: November 2014
Read more: https://www.hhs.se/site
This document aims at raising awareness of college students who receive their first introductory training course on international development. At the end of this course, the students will understand the need for synergies between the public and private sectors in order to increase available fund to fulfill the Sustainable Development Goals (SDGs). It is of the utmost importance that the international community mobilizes itself towards the fulfillment of the SDGs within the next 15 years. The self-explanatory figure explains the process of financing for development while the short text brings an overall explanation.
On August 31 and September 1, 2015 the Stockholm Institute of Transition Economics (SITE) and the aswede network will host an academic conference at the Stockholm School of Economics to bring together researchers across all fields of economics contributing to the debate about corruption, its effects, and the optimal tools to fight it. The focus is on low and middle-income countries and the role of legal institutions, with one section in particular focusing on the experience of the transition countries in the CIS and CEE regions.
Despite a voluminous literature on the topic, the question of whether aid leads to growth is still controversial. To observe the pure effect of aid, researchers used instruments that must be exogenous to growth and explain well aid flows. This paper argues that instruments used in the past do not satisfy these conditions. We propose a new instrument based on predicted aid quantity and argue that it is a significant improvement relative to past approaches. We find a significant and relatively big effect of aid: a one standard deviation increase in received aid is associated with a 1.6 percentage points higher growth rate.
We use newly compiled top income share data and structural breaks techniques to estimate common trends and breaks in inequality across countries over the twentieth century. Our results both confirm earlier findings and offer new insights. In particular, the division into an Anglo-Saxon and a Continental European experience is not as clear cut as previously suggested. Some Continental European countries seem to have experienced increases in top income shares, just as Anglo-Saxon countries, but typically with a lag. Most notably, Nordic countries display a marked “Anglo-Saxon” pattern, with sharply increased top income shares especially when including realized capital gains. Our results help inform theories about the causes of the recent rise in inequality.
Realized capital gains are typically disregarded in the study of income inequality. We show that in the case of Sweden this severely underestimates the actual increase in inequality and, in particular, top income shares during recent decades. Using micro panel data to average
incomes over longer periods and re-rank individuals according to income excluding capital gains, we show that capital gains indeed are a reoccurring addition to rather than a transitory component in top incomes. Doing the same for lower income groups, however, makes virtually no difference. We also try to find the roots of the recent surge in capital gains-driven inequality in Sweden since the 1980s. While there are no evident changes in terms of who earns these gains (high wage earners vs. top capital income earners), the primary driver instead seems to be the drastic asset price increases on the post-1980 deregulated financial markets.
Anders Olofsgård (with A. Boschini).
Published in Journal of Development Studies.
In this paper, we test the argument that the sizeable reduction in aggregate aid levels in the 1990’s was due to the end of the Cold War. We test two different models using a dynamic econometric specification on a panel of 17 donor countries, spanning the years 1970-1997. We find aid to be positively related to military expenditures in the former Eastern bloc during the cold war, but not in the 1990’s, suggesting that the reductions in aid disbursements are driven by the disappearance of an important motive for aid. Our results also suggest that aid allocation may have become less strategic in the 1990’s.
Foreign Aid and Economic Growth in the West African States: A Panel Frameworkinventionjournals
This paper examines the impact of economic variables namely, foreign direct investment (FDI), investment, export, foreign aid and broad money supply on economic growth, approximated by gross domestic product (GDP)using annual data covering a period 1981-2008 on a group of West African countries. The impact of variables on GDP is estimated using three panel estimation models: pooled model (pooled), fixed effects model (FEM) and random effects model (REM). We explore the hypothesis that foreign aid can promote growth in developing countries. We test this hypothesis using panel data series,while the findings of previous studies are generally mixed, our resultsindicate that foreign direct investment has purely positive effects on economic growth in West African countries
We use a novel approach to address the question of whether a union of sovereign countries can efficiently raise and allocate a budget, even when members are purely self-interested and participation is voluntary. The main innovation of our model is to explore the link between budget contributions and allocation that arises when countries bargain over union outcomes. This link stems from the distribution of bargaining power being endogenously determined. Generically, it follows that unstructured bargaining gives an inefficient result. We find, however, that efficiency is achieved with fully homogenous countries, and when countries have similar incomes and the union budget is small. Moreover, some redistribution arises endogenously, even though nations are purely self-interested and not forced to participate in the union. A larger union budget, however, entails a trade-off between equality and efficiency. We also analyze alternative institutions and find that majority rule can improve efficiency if nations who prefer projects with high public good spillovers are endogenously selected to the majority coalition. Exogenous tax rules, such as the linear tax rule in the EU, which is designed to increase efficiency on the contribution margin, can also improve overall efficiency despite decreasing the efficiency of the allocation of funds.
In this paper I examine the development effects of military coups. Whereas previous economic literature has primarily viewed coups as a form of broader political instability, less research has focused on its development consequences independent of the factors making coups more likely. Moreover, previous research tends to group coups together regardless of whether they overthrew autocratic or democratically-elected leaders. I first show that coups overthrowing democratically elected leaders imply a very different kind of event than those overthrowing autocratic leaders. These differences relate to the implementation of authoritarian institutions following a coup in a democracy, which I discuss in several case studies. Second, I address the endogeneity of coups by comparing the growth consequences of failed and successful coup as well as matching and panel data methods, which yield similar results. Although coups taking place in already autocratic countries show imprecise and sometimes positive effects on economic growth, in democracies their effects are distinctly detrimental to growth. When overthrowing democratic leaders, coups not only fail to promote economic reforms or stop the occurrence of economic crises, but they also have substantial negative effects across a number of standard growth-related outcomes including health, education, and investment.
Read more: https://www.hhs.se/site
We argue that the tilt towards donor interests over recipient needs in aid allocation and practices may be particularly strong in new partnerships. Using the natural experiment of Eastern transition we find that commercial and strategic concerns influenced both aid flows and entry in the first half of the 1990s, but much less so later on. We also find that fractionalization increased and that early aid to the region was particularly volatile, unpredictable and tied. Our results may explain why aid to Iraq and Afghanistan has had little development impact and serve as warning for Burma and Arab Spring regimes.
Poverty is associated with political conflict in developing countries, but evidence of individual grievances translating into dissent among the poor is mixed. We analyze survey data from 40 developing nations to understand the determinants radicalism, support for violence, and participation in legal anti-regime actions as petitions, demonstrations, and strikes. In particular, we examine the role of perceived political and economic inequities. Our findings suggest that individuals who feel marginalized tend to harbor extremist resentments against the government, but they are generally less likely to join collective political movements that aim to instigate regime changes. This potentially explains the commonly-observed pattern in low- and middle-income countries whereby marginalized groups, despite their political attitudes and high-levels of community engagement, are more difficult to mobilize in nation-wide movements. We also find that arenas for active political participation (beyond voting) are more likely to be dominated by upper-middle income groups who are committed, ultimately, to preserving the status quo. Suppressing these forms of political action may thus be counterproductive, if it pushes these groups towards more radical preferences. Finally, our findings suggest that the poor, in developing nations, may be caught in a vicious circle of self-exclusion and greater marginalization.
Anders Olofsgård (with R. Desai and T. Yousef).
Presentation by Dóra Györffy at the OECD Workshop on “Joint Learning for an OECD Trust Strategy” on 14 October 2013. Ms. Györffy discusses trust in-depth including its relationship with decision-making, economic policy, popularity of government and its influence on the crisis.
Remittance levels and entrepreneurial activity in post soviet countriesAzer Dilanchiev
ABSTRACT Each individual entrepreneurial action has a more than proportional impact on economic growth, however less
works are dedicated to investigate the impact of the remittance on entrepreneurial activity. This paper examines the impact of
remittance level on entrepreneurial activity in 14 post-soviet countries over the period of 2006-2016. Panel data is employed
to analyze the impact of remittance on entrepreneurial activity. Study found statistically significant impact of remittance on
entrepreneurial activity for the post-Soviet countries in the sample.
Inna Shkolnyk, Viktoriia Koilo
http://dx.doi.org/10.21511/imfi.15(1).2018.32
The relationship between external debt and economic growth: empirical evidence from Ukraine and other emerging economies
The article examines the relationship between external debt and economic growth in emerging economies for the period 2006-2016. The authors used different econometric tools, e.g., ADL model and correlation analysis. The regression results showed that the original values had no significant impact on the estimation of the parameters. Thus, there was made an assumption that emerging economies have a non-linear impact on macroeconomic parameters, including external debt that has a non-linear type of influence on economic growth. The authors established that high level of external debt, in conjunction with macroeconomic instability, impedes economic growth in such countries. The regression model also showed that there is a critical level of debt burden for emerging economies, where the marginal impact of external debt on economic growth becomes negative.
The results of the study highlighted the significance of the problem of effective public debt management strategy implementation in Ukraine. This issue is predetermined by the appropriate organizational support. The study recommends improving a public external debt management model. In this paper, the authors proposed a new structure with the participation of new element – independent agencies. The unified external debt management system should integrate all state institutions and executive power structures in this area.
Abstract:Savings are necessary if investment, and hence economic growth and development are to be stimulated. The paper looks at the broad set of possible determinants of private savings in Lesotho using annual time series data for the period 1980-2010. The paper estimates the saving rate function and Error-Correction modelling is used to avoid spurious results. The results indicate that public savings are important in explaining changes in private savings, both in the short-run and long-run and that the terms of trade negatively influence private savings in Lesotho in the long-run.
This study empirically investigates the impact of human development on bank development in WAEMU countries. Over the period 1990 to 2014, empirical results have shown a positive relationship between banking development and human development. Credit to the private sector and the size of the economic system have a positive and significant impact on human development, but this impact remains small. Moreover, the growth rate of GDP per capita and the level of inflation have a positive impact on human development.
The rapid growth of the US financial sector has driven policy debate on whether it is socially desirable. I propose a heterogeneous agent model with asymmetric information and matching frictions that produces a tradeoff between finance and entrepreneurship. By becoming bankers, talented individuals efficiently match investors with entrepreneurs, but do not internalize the negative effect on the pool of talented entrepreneurs. Thus, the financial sector is inefficiently large in equilibrium, and this inefficiency increases with wealth inequality. The model explains the simultaneous growth of wealth inequality and finance in the US, and why more unequal countries have larger financial sectors.
by Kirill Shakhnov, EUI †
JOB MARKET PAPER
First version: January 2015
This version: November 2014
Read more: https://www.hhs.se/site
This document aims at raising awareness of college students who receive their first introductory training course on international development. At the end of this course, the students will understand the need for synergies between the public and private sectors in order to increase available fund to fulfill the Sustainable Development Goals (SDGs). It is of the utmost importance that the international community mobilizes itself towards the fulfillment of the SDGs within the next 15 years. The self-explanatory figure explains the process of financing for development while the short text brings an overall explanation.
The author presents the finance needs of Nigeria for development. He also went further to show main source of finance that are sustainable in the long-term and the mode of accessing them.
In identifying the difficulties that exists when raising finance, he proposes measures through which the government can eliminate barriers to raising finance.
Public Sector finance as a catalyst for Private Investment for DevelopmentPhilip Ansong
This is an informative digital artifact aimed at enlightening people new to the development financing agenda and people with interest in acquiring knowledge on how development projects are financed and given direction. Here we look at how domestic and international Public Sector finance can be used as a catalyst to crowd in private financial flows for Private Investment for Development. we look at how risk/return considerations of private finance can achieve a social impact if leveraged properly by public sector finance measures.
Paris 5th of December: officials from around the world agreed on a draft climate change deal. Providing additional long term funding created a lively debate that sends a clear signal: reaching SDGs by 2030 will depend on world nations and societies ability to engage in strong global partnerships.
Innovative funding blending public sector funding and private sector financing allows numerous flexible financial support solutions tailored to the purpose (i.e. the 17 SDGs); the social return and financial return objectives as well as to the beneficiaries needs and requirements.
But this doesn’t go without challenges which this presentation tries to address!
The project is aimed to present to the general public the Sustainable Development Goals and to highlight that delivering of SDGs should be the common vision for the future for all the mankind
INSTITUTIONAL FUNDING AND FUNDING MODELS DURING & AFTER COVID-19MzN International
Broad update on Institutional Funding Opportunities
What are their priorities and strategies?
What does that mean for funding strategies?
What to do now?
Similar to Finance for Sustainable Development (20)
Presented by Anastasia Luzgina during the conference "Belarus at the crossroads: The complex role of sanctions in the context of totalitarian backsliding" on April 23, 2024.
Presented by Erlend Bollman Bjørtvedt during the conference "Belarus at the crossroads: The complex role of sanctions in the context of totalitarian backsliding" on April 23, 2024.
Presented by Dzimtry Kruk during the conference "Belarus at the crossroads: The complex role of sanctions in the context of totalitarian backsliding" on April 23, 2024.
Presented by Lev Lvovskiy during the conference "Belarus at the crossroads: The complex role of sanctions in the context of totalitarian backsliding" on April 23, 2024.
Presented by Chloé Le Coq, Professor of Economics, University of Paris-Panthéon-Assas, Economics and Law Research Center (CRED), during SITE 2023 Development Day conference.
This year’s SITE Development Day conference will focus on the Russian war on Ukraine. We will discuss the situation in Ukraine and neighbouring countries, how to finance and organize financial support within the EU and within Sweden, and how to deal with the current energy crisis.
This year’s SITE Development Day conference will focus on the Russian war on Ukraine. We will discuss the situation in Ukraine and neighbouring countries, how to finance and organize financial support within the EU and within Sweden, and how to deal with the current energy crisis.
The (Ce)² Workshop is organised as an initiative of the FREE Network by one of its members, the Centre for Economic Analysis (CenEA, Poland) together with the Centre for Microdata Methods and Practice (CeMMAP, UK). This will be the seventh edition of the workshop which will be held in Warsaw on 27-28 June 2022.
The (Ce)2 workshop is organised as an initiative of the FREE Network by one of its members, the Centre for Economic Analysis (CenEA, Poland) together with the Centre for Microdata Methods and Practice (CeMMAP, UK). This will be the seventh edition of the workshop which will be held in Warsaw on 27-28 June 2022.
The (Ce)2 workshop is organised as an initiative of the FREE Network by one of its members, the Centre for Economic Analysis (CenEA, Poland) together with the Centre for Microdata Methods and Practice (CeMMAP, UK). This will be the seventh edition of the workshop which will be held in Warsaw on 27-28 June 2022.
The (Ce)2 workshop is organised as an initiative of the FREE Network by one of its members, the Centre for Economic Analysis (CenEA, Poland) together with the Centre for Microdata Methods and Practice (CeMMAP, UK). This will be the seventh edition of the workshop which will be held in Warsaw on 27-28 June 2022.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
1. The Forum for Research on Eastern Europe and Emerging Economies (FREE) is a network of academic experts on economic
issues in Eastern Europe and the former Soviet Union at BEROC (Minsk), BICEPS (Riga), CEFIR (Moscow), CenEA
(Szczecin), KEI (Kiev) and SITE (Stockholm). The weekly FREE Policy Brief Series provides research-based analyses of
economic policy issues relevant to Eastern Europe and emerging markets.
FREE Policy Brief Series
Finance for Sustainable Development
Evelina Bonnier and Anders Olofsgård, SITE
June 2015
This policy brief covers a discussion on finance for sustainable development held during a full day
conference at the Stockholm School of Economics on May 11, 2015. The event was organized jointly
by the Stockholm Institute of Transition Economics (SITE) and the Swedish Ministry for Foreign
Affairs, and was the fifth installment of Development Day – a yearly development policy conference.
With the Millennium Development Goals (MDGs) expiring in 2015, the members of the United
Nations are now in the process of defining a post-2015 development agenda. The Sustainable
Development Goals (SDGs) build on the eight anti-poverty targets in the MDG but also include a
renewed emphasis on environmental and social sustainability. Whatever targets or goals will be
agreed upon in the end, we know for certain that reaching the objectives will require substantial
financial resources, far beyond the current levels of official development assistance (ODA). To discuss
this issue, the conference brought together a distinguished and experienced group of policy-oriented
scholars and practitioners from government agencies, international organizations, civil society and
the business community.
The Millennium Development Goals
(http://www.un.org/millenniumgoals/) were
established in year 2000. At that time about
half of the UN assembly were middle-income
countries. Today, the share has grown to two
thirds. If this positive development is
continued, only five percent of the world’s
population is estimated to live in poverty by
2030. Although remarkable progress has been
made in many respects, the achievements vary
significantly across countries and regions. In
Asia, many countries have experienced high
economic growth and achieved a large
reduction of the proportion of people living in
poverty. In Africa, on the other hand, the
greatest improvements can be found in terms
of lower child mortality.
Furthermore, the financial landscape of
developing countries has changed dramatically
during the last decade. While the relative share
of ODA from OECD-DAC members has
diminished (although not necessarily for all
recipient countries), foreign direct investments
(FDI), remittances, south-to-south financial
flows, and private aid have become more
important. Thus, in the coming negotiations of
the post-2015 development agenda, the
challenge is to make sure that these diverse
flows contribute to a development agenda, and
that they do not all go to the same destinations
leaving citizens in more challenged
environments to fight for themselves. It is also
important that credible commitments are made
at the international as well as the domestic
level, and by both public and private actors.
Private Aid
Foreign aid was for a long time almost
exclusively associated with bilateral aid from a
small set of OECD countries, and multilateral
aid from large International Finance
2. 2 Forum for Research on Eastern Europe and Emerging Economies
Institutions (IFIs) such as the World Bank.
This picture is quickly changing as new
bilateral donors, multilateral funds (e.g. the
BRICs New Development Bank and the Asian
Infrastructure Bank), and private donations are
growing in significance. While it is difficult to
know exactly how much private development
assistance (PDA) is being disbursed, estimates
suggest that some 45-65 US billion dollars
were disbursed in 2014. This can be compared
to the World Bank’s commitment of 40.8 US
billion dollars. Moreover, if we restrict
attention to what is referred to as country
programmable aid, then PDA and OECD-DAC
aid are in comparable amounts.
The new actors in development finance offer
new sources of revenues and (at least the
private actors) have been found to make more
use of local knowledge, and to have lower
overhead and administrative costs. PDA is also
believed to be less susceptible to leakage as it
often can bypass public sectors in recipient
countries, and do not tend to allocate aid based
on country strategic alliances.
However, there are also challenges with PDA.
The presence of more actors creates a risk of
increased duplication costs, aid volatility and
competing agendas. It is therefore important
that the PDA community develops its own
agreements on effectiveness, commitments,
targets and indicators, and that a global
initiative is taken to gather, analyze and map
private-aid flows and their impacts.
Incentivizing Private
Investment in Developing
Countries
With the current discussion of a new post-
2015 development agenda, a lot of attention is
given to the question of how to attract more
private capital into development finance,
particularly in the areas of infrastructure, and
social sectors such as education and health.
The question is what kind of instruments and
incentives can attract private companies and
institutional investors into what are largely
public goods and services, in relatively high-
risk environments.
During the conference, it was argued that one
of the reasons that we see underinvestment in
these sectors in developing countries is that the
risk-adjusted returns are too low. To create
incentives for more private investments, the
public sector and aid agencies arguably have
two options: they can (i) shoulder part of the
risk of these investments, or (ii) reduce the
costs through subsidies.
An example of an instrument that lowers the
financial risk of an investment is credit
guarantees. This is used by for example the
Swedish International Development
Cooperation Agency (Sida), and means that
Sida steps in as a guarantor for commercial
loans taken by a partner for a certain
investment. Aside from lowering the financial
risk, guarantees allow for a utilization of the
partner country’s own capital market, which
can contribute to development and
strengthening of this market to better meet
local needs. The problem is that the aggregate
risk is only reduced if we believe that the
public sector is better informed than the
private sector about the investment’s
likelihood of success. If this is not the case, the
risk is simply shifted from the local loan
provider to the guarantor’s taxpayers.
The second option through which the public
sector can create incentives for private
investment is to reduce the costs of
investments. This can be achieved by for
example offering concessional loans. This
instrument carries costs to the donor country’s
taxpayers, just as guarantees, but has the
benefit of avoiding moral hazard in project
selection, and creating incentives for better
performance management.
A third alternative that was discussed at the
Development Day conference is the funding
model referred to as pay for success (PFS).
3. 3Forum for Research on Eastern Europe and Emerging Economies
This means that the funder (e.g. a development
agency or an IFI) and its project partner enter
an agreement in which the project partner is
rewarded financially if it achieves some
agreed-upon targeted outcomes, rather than
benefitting from reduced costs irrespective of
achievement. Thereby, this instrument has the
potential of achieving better targeting,
promoting contestability, and of reducing
monitoring and evaluation costs. At the same
time, the negative risk remains with the partner
and is not transferred to the donor country’s
taxpayers.
Fragile States
Another challenge discussed at the event was
development finance in fragile states. A fragile
state is typically defined as a low-income
country characterized by weak state capacity
and/or weak state legitimacy leaving citizens
vulnerable to a range of shocks. It is true that
most poor people now live in middle-income
countries such as India and Nigeria, but
according to projections made by the OECD,
most of the extremely poor will soon live in
fragile states. Hence, if we want to eliminate
extreme poverty, securing development
finance to fragile states is crucial.
Unfortunately, this is also very challenging, as
private commercial capital and private
foundations have been said to shun fragile and
conflict-ridden environments, while domestic
capacity to raise revenues tends to be limited.
ODA can fill part of this void, but not all.
A more promising source of finance to fragile
states, then, is remittances. These flows have
been increasing in relative importance, and are
now comparable in magnitude to FDI and
exceed ODA (an estimated 436 billion US
dollar in 2014). Remittances are typically sent
with great regularity, and allow receiving
households to increase their consumption,
invest in human capital and small businesses,
and can serve as an insurance against negative
economic shocks.
The question is how to stimulate migrants to
remit even more, and how to leverage its
development impact. Moreover, the
decentralized nature of remittances poses a
challenge for policy. However, recent research
suggests that providing migrants with a certain
degree of control, and an opportunity to
monitor their remittances, can have a positive
effect on how much migrants remit. Other
alternatives that have proven effective include
providing financial literacy training to the
migrants and their families, and reducing the
costs of remitting by either providing subsidies
or increase competition among the financial
wire transfer providers.
While remittances are an important flow of
capital to some fragile states, they generally
tend to be concentrated to the most populous
countries, and come from migrants who have
migrated voluntarily. Migrants from fragile
states, however, have often left their countries
for other reasons than to seek better labor-
market opportunities, which means that for
many fragile states, ODA remains the most
important source of development finance. The
problem is that development assistance to
fragile states tends to be allocated in the same
manor as in other developing countries –
ignoring the fact that the most pressing
challenges for fragile states may be very
different than for other developing countries. It
was therefore recommended at the conference,
that development agencies focus more
attention on programs oriented towards
providing peace and security, as well as
improving institutional quality. To achieve
long-term improvements in living conditions,
including reductions in poverty and
improvements in health and education,
development assistance to fragile states may
initially have to be shifted away from these
sectors and instead focused on establishing
peace and justice.
4. 4 Forum for Research on Eastern Europe and Emerging Economies
Conclusion
The need for development financing is large.
For the post-2015 development agenda to be
credible, commitments must be made at both
international and domestic levels. During the
Development Day conference, several
participants stressed that there is a great need
for more cooperation and coordination
between different actors – public as well as
private, donors as well as partner countries.
Moreover, development agencies can serve as
a bridge between partner countries and the
private sector in the developed world, by
channeling information about commercial
opportunities and by providing incentive
schemes such as guarantees and concessional
loans, or by paying for success.
▪
Participants at the Conference
Torbjörn Becker, SITE
John McArthur, Brookings Institution
Raj Desai, Georgetown University and Brookings
Institution
Adis Dzebo, Stockholm Environment Institute
Helen Eduards, Ministry for Foreign Affairs
Charlotte Petri Gornitzka, Sida
Sadia Hassanen, Mångkulturellt Centrum
Kerstin Hessius, Tredje AP Fonden
Anneli Rogeman, We Effect
Per-Ola Mattson, Ministry for Foreign Affairs
Gary Milante, SIPRI
Kathryn Nwajiaku-Dahou, IDPS-OECD
Anders Olofsgård, SITE
Jolanda Profos, OECD
Annika Sundén, Sida
Amadou Sy, Brookings Institution
Theo Talbot, Centre for Global Development
Dean Yang, University of Michigan
Presentations from the conference and interviews with
some of the speakers are available at SITE’s homepage:
hhs.se/site/.
5. 5Forum for Research on Eastern Europe and Emerging Economies
Evelina Bonnier
Stockholm Institute of
Transition Economics (SITE)
Evelina.Bonnier@hhs.se
http://www.hhs.se/site
Evelina Bonnier is a Ph.D. candidate at the
Stockholm School of Economics, and research
assistant at the Stockholm Institute of
Transition Economics (SITE). She has a M.A
in Economics from Stockholm University. Her
research interests lie primarily in development
economics, and applied microeconometrics.
Anders Olofsgård
Stockholm Institute of
Transition Economics (SITE)
Anders.Olofsgard@hhs.se
http://www.hhs.se/site
Anders Olofsgård is currently Deputy Director
at the Stockholm Institute of Transition
Economics (SITE), and Associate Professor at
the Stockholm School of Economics. Before
that he was Associate Professor at the Edmund
A. Walsh School of Foreign Service,
Georgetown University. He earned his Ph.D.
in Economics from the Institute for
International Economic Studies (IIES), at
Stockholm University, in 2001.
Olofgård’s primary research areas are political
economy, development and applied
microeconomics, and he has published widely
in both economics and political science
journals. He has also been a visiting scholar at
the research department of the IMF, and done
work for among others the World Bank,
USAID and the Swedish Parliament.