PSD Blog - The World Bank Group

Broken promises and new approaches to foreign aid

The Financial Times on its front page today speculates (subscription required) that the G8 may be backtracking on its commitments to Africa:

Leaders of the Group of Eight rich nations are set to backtrack on their landmark pledge at the Gleneagles summit in 2005 to increase development aid to Africa to $25bn a year...In a further retreat, the G8 is set to abandon its Gleneagles promise to provide universal access to Aids treament and prevention by 2010.

For some critics of the aid establishment, this will not provoke too many tears. I wait to see how many minutes pass before William Easterly intones on this latest broken promise. It probably won't be anything too nice if it bears any relation to what Easterly had to say in this biting critique of foreign aid from 2007:

Russian CSR - no longer a contradiction in terms?

As average Russians have seen steady improvements in their income for almost a decade, they have gotten a taste for luxury goods - you can see many in Moscow flaunting their Gucci and Prada, recently returned from a trip to Milan. But this is not the only thing their improved incomes are buying, at least according to a recent article in the Moscow News:

Being socially responsible is not simply an act of selfless generosity but can also be an important PR device for companies. [Russian] consumers are now choosing brands depending on how socially responsible the company is.

However, the Moscow News article doesn't cite any hard evidence that Russians are really being persuaded they should spend their hard-earned roubles on socially responsible products. Another factor seems to be at play.    

Privatizing health care in Georgia

Big changes are underway in Georgia's health sector. The central government is taking steps to privatize both publicly owned hospitals and health insurance. As it stands, the public health care system inherited from the Soviet era is bloated - only about 30 percent of its hospital beds are being used, and many of the 250 hospitals need renovation. An article in Transitions Online cites the Minister of Labor, Health, and Social Affairs on the current state of things:

It is absolutely impossible for [a] state like Georgia to retain...254 publicy owned hospitals...Therefore, private medical insurance and [a] private hospital network [are] something that we think is the only way out of the situation.

Podcasting for development

There seems to be a mania to take any new technology and apply it to the developing world, be it computers, solar panels, or, the next big thing, iPods. (Sorry, OLPC, you're no longer the cool new kid on the development block.) And the really next big thing is podcasting for the developing world. An article on scidev.net discusses one such initiative in Peru:

Practical Action has been working on podcasts for the Cajamarca region of northern Peru since 2006. A poor, rural area, most of the people there rely on agriculture for their livelihoods...Practical Action's local office in Peru surveyed local people about the type of information they needed to support their livelihoods - advice on grape cultivation or raising cattle for example. This information was then gathered from experts and recorded as digital audio files...

PSD Stories of Note: Weekly Roundup for June 23 to June 27

Arab Businesswomen: FT thinks this is a niche market with potential.

Root Capital: Funding the “missing middle” is better than Harvard Business School.

China’s Stock-market: Beijing lets the market take care of itself.

Spreading the Capitalist Ethos: Wall Street is Chinese tourists’ first stop in NY.

NYSE Euronext: Qatar continues in its bid to become a regional financial center.

Governing global FDI flows

The Council on Foreign Relations just raised a red flag on FDI flows with its recently released Global FDI Policy: Correcting a Protectionist Drift. (You can read a condensed version in an op-ed today in the FT.) David Marchick and Matthew Slaughter, the authors of the paper, offer up some numbers to show that the long-term global trend of increasing openness to FDI inflows is starting to reverse. While in the 1990s, most national regulatory changes around the world favored FDI, that is less and less the case. According to data from the United Nations Conference on Trade and Development, "37 of 184 policy changes—20.1 percent—were unfavorable to FDI [in 2006]." One of the most obvious examples of this has been the United States, which passed the Foreign Investment and National Security Act after debacles with Dubai Ports World and the China National Offshore Oil Corporation. Russia has also adopted a strategic industries law that allows government review of foreign investments.

Solar power makes it to Kenya

In a report last year called Selling Solar, the IFC admitted that its decade-plus engagement with solar power had not been as successful as hoped:

While IFC programs have been responsible for the installation of over 84,000 solar home systems (SHS), these programs have been less successful from a financial standpoint, IFC having been unable to significantly transform markets and create sustainable businesses as originally anticipated.

Just a few weeks ago, however, an article in the East African Standard suggested that demand for solar power is taking off in Kenya (Hat tip: SciDev).

Corruption in the water sector

Transparency International has just released its annual corruption report, and this year's focus is on corruption in the water sector. Undoubtedly, the 398-page tome will draw a lot of attention to what Transparency International makes clear is a crisis:

In developing countries, about 80 per cent of health problems can be linked back to inadequate water and sanitation, claiming the lives of nearly 1.8 million children every year and leading to the loss of an estimated 443 million school days for the children who suffer from water-related ailments.

The rich get richer

The global economy may have slowed down in the last year, but that hasn't stopped the rich from getting richer. Merrill Lynch and Capgemini just released their 12th annual World Wealth Report, and the results are stunning. (Hat tip: FT) The wealth of the ultra-rich (those with assets of $30 million or more) grew 14.5 percent between 2006 and 2007. It seems the rich keep getting richer, no matter what the international financial environment looks like. No surprise there, really. The big surprise, at least for me, is how the geographical distribution of the rich is rapidly changing. 

The view from Russian business

If you want to learn about the real challenges faced by Russia, you could do worse then surveying its captains of industry. This is exactly what the New Economic School did earlier this year in cooperation with Vedomosti and the Ministry of Economic Development of the Russian Federation. The results appear in a report called Challenges 2020: The View from Russian Business. (An aside: One of the true success stories of private higher education in the transition countries is that of the New Economic School. If you're looking to hire a bright economist in the know about Russia, this is your go-to place.)