PSD Blog - The World Bank Group

Responsible Finance: The Case of the Philippines

Yesterday I attended a presentation at CGAP on responsible finance, which featured three excellent guest speakers, including Fe de la Cruz, Director of Corporate Affairs, Central Bank of the Philippines (the other guests included a former member of the Brazilian Central Bank, and Daryl Collins, co-author of Portfolios of the Poor). The presenters discussed their interpretations of responsible finance, and outlined how specific government programs are spurring its development.

In essence, responsible finance is driven by three primary actors:

1. Governments, who provide consumer protection and regulation
2. Providers of finance
3. The clients themselves, who need to posses a certain degree of financial literacy

Fe de la Cruz outlined how the Philippine government is actively supporting the responsible finance agenda.

One third of Filipinos live in poverty, and only 30 percent of the total population have formal bank accounts. The government is attempting to address these issues by pushing financial education at an early age. Children in grades 1-6 (ages 6-11) are now given instruction in financial literacy. Because many of the country's poorer children drop out of school once they reach puberty, the government has decided to focus its financial education efforts on the very young. The result is that over 12 million students are given some sort of lesson in financial responsibility.

Rethinking the brain drain

An article in Foreign Policy last month asks us to rethink the brain drain. Authors Michael Clemens and David McKenzie (the latter an employee of the World Bank) argue that the movement of skilled labor is a boon to both developed and developing countries. They decry the term "brain drain" as a serious mischaracterization of the phenomenon. Perhaps they need an alternative catchy phrase to supplant the term—how about brain train?

Getting privatization right in higher education

As I blogged about not too long ago, public universities around the world are facing serious pressures due to the financial crisis. Perhaps the moment is ripe for reform—when the fiscal situation gets tough, it can help make possible what only recently seemed unimaginable. Emerging economies would do well to take advantage of the moment and carry out reforms that address not only the immediate pressures arising from the financial crisis but the longer-term issues that have built up in higher education over the last two decades.

A publication by the Institute for Higher Education Policy (Full disclosure: I am a former employee of  IHEP) takes the bull by the horns on this one. Privatization in Higher Education: Cross-Country Analysis of Trends, Policies, Problems, and Solutions lays out the problems that many countries are grappling with:

The development of private higher education and the introduction of cost-sharing at state institutions in many countries have led to an unprecedented increase in the number of students who have to pay their own tuition, as well as other costs of higher education. About 50 percent of students in Ukraine, 73 percent of students in Brazil, and most students in Mongolia pay for their higher education. Student financial aid in these countries has been disproportionately granted to students studying at state institutions. These students are eligible for tuition waivers, state scholarships, grants, state-subsidized loans, and other types of support. Meanwhile, students in private institutions are often left on their own, irrespective of their academic abilities or ability to pay.

The next casualty of the financial crisis: public universities

Roger Goodman of Moody's credit rating agency has a prediction:

With policies of limiting enrollment places and tuition fees, market pressure to add capacity, and government funding unlikely to increase, Moody’s expects unprecedented pressure on the current financial model of public universities.

While universities in the rich world have been early casualities of the crisis (Harvard and Yale have earned the moniker of Big Losers from the Wall Street Journal because of the performance of their endowments), public universities in emerging markets have been shielded by the longer cycle of public budgeting and the stimulus spending of some governments. But that won't last forever.

When the squeeze on their finances arrives, public universities will basically have two choices. They can either ration education by limiting the number of people gaining admission, or they can figure out ways to reduce the high (and often implicit) subsidies to middle and upper income students. (Actually, they have a third choice of providing lower quality education to the same number of students, but I see this as unlikely in most cases.) Goodman provides arguments for reducing subsidies:

Which gives more bang for the buck, deworming or OLPC?

A recent article by Timothy Ogden (Computer Error?) provides a pretty clear answer: forget the glitzy computers, and put your scarce resources into the provision of deworming pills. The One Laptop per Child (OLPC) program provides computers at around $200 a pop, while deworming pills cost between 50 cents and 4 dollars per student per year. All the control trials of computers in classrooms have given—at best—ambiguous results. But the available studies of deworming pills suggest improvements in student attendance in the range of 20-25 percent. I'm glad to see this argument get some publicity since I've been expressing skepticism of the OLPC program for some time.

Perhaps it is a stretch, but I see an analogy with the growing debate around microfinance. Just as Yunus is receiving the Presidential Medal of Freedom, more and more studies are casting doubt on the benefits of microlending. (Just to be clear, most of the studies look only at microlending, while microfinance encompasses a wider range of services, e.g. savings, insurance, etc.) So perhaps we need a rule that the more celebrity status a development initiative gets, the more skeptical we should be. 

(Hat tip: Michael Trucano)

Update: Allana Shaikh over at UN Dispatch reiterates the point: "It’s time to call a spade a spade. OLPC was a failure."

A Grameen group for education (and the end of knowledge management for development)?

Yesterday Dave Snowden published on his blog what is currently just an intriguing snippet - the idea of a Grameen group for learning (look forward to him expanding on the concept):

The basic idea is that you get your bursary as a progressive series of payments only if you form a learning group with other people in your community and you all take responsibility for each other group members completion of whatever education programme you take.

Today, Dave followed up with an insight into what "horizontal knowledge transfer" and innovation might mean in a development context:

The World Conference on Higher Education

Paris in July will always serve as an excellent motivator for participants to attend a World Conference. True to form, over 1500 government Ministers, policy makers and academics have gathered this week at the UNESCO Headquarters in Paris for the second World Conference on Higher Education. The first took place in 1998 and attracted an even larger crowd and the discussions from that event have provided the point of departure for this year's debates. The conference title is The New Dynamics of Higher Education and Research for Societal Change and Development and effectively explores global developments in higher education over the past decade. The discussions are driven by three themes:

• Internationalization, Regionalization and Globalization
• Equity, Access and Quality
• Learning, Research and Innovation

The smart economics of educated women

Editor's Note: Jennifer Yip is a consultant for the World Bank Group's Doing Business team.

At an age when mothers admonish their children to finish their brussels sprouts, my mother issued warnings about the importance of getting a PhD if I wanted to gain the respect of my future husband. Those warnings were followed by the oft-repeated reminder that I should "marry well, so you don’t have to work if you don’t want to."

Twenty years and a couple of degrees later I’ve often wondered how those two pieces of advice go together. What is the point of getting an advanced degree if I eventually decide not to work? 

Thinking the unthinkable in Indian higher education

Greater financial autonomy for Indian universities? I can almost hear an audible gasp. Nevertheless, that's what Santosh Mehrotra, a senior adviser of India's Planning Commission, has recommended in a recent article in International Higher Education:

...The pace of expansion in the new few years may well turn out to be frenetic. The most serious problem that this sudden expansion will entail is finding faculty of appropriate quality in the public higher education system. Therefore, an initiative to be seriously considered involves giving greater financial autonomy to universities, to enable them to mobilize resources from sources other than the government—partly to attract Indian academics teaching abroad back to India. Salaries have risen sharply recently, thanks to the Sixth Pay Commission’s recommendations to make returning home attractive for nonresident Indians. However, the requisite autonomy of universities is also needed to encourage them to attract faculty back to India.

Evaluating the OLPC pilots

Michael Trucano of the World Bank's EduTech blog has posted a valuable round-up of various evaluations of One Laptop Per Child (OLPC) pilots around the world. Michael warns that many of the evaluations are of short-term and small-scale pilots, which limits our ability to extrapolate.

However, the Inter-American Development Bank and others have started evaluations of much larger OLPC implementations, most notably in Peru. But here's another question for the evaluators out there (and one that Michael asks, albeit very nicely, in his post) - can you really get an accurate evaluation of a high-profile project when so many parties have a vested interest in seeing it succeed? Not that there's anything wrong with wanting a project to succeed, but what happens when the next development fad comes around, and the OLPC is no longer the cool new kid on the block? The same question would seem to apply to a whole range of interventions (the Millennium Villages immediately come to mind).