The demise of CCTs in Nicaragua

This one pager published the IPC looks at why a popular Conditional Cash Transfers (CCT) program in Nicaragua, Red de Proteccion Social (RPS), was put to death bed despite initial success in education and health sectors.

In the CCT program, funds were channeled to female households in exchange for commitment to send children to school and administer regular medical check-ups at local health centers. This had positive impact on school enrollment and other education indicators and reduced stunting by 5 percentage points. Despite these successes, the program was discontinued by the Nicaraguan government in 2006, thus marking the demise of a successful 6 years of CCTs.

The end of the Nicaraguan experience with RPS is disappointing
in light of the programme’s achievements, but it provides relevant lessons to policymakers working with CCTs, particularly those receiving external funding. Even if a programme is deemed successful to the international community, domestic constituents must still approve of it. The support of both the non-beneficiary populace and government officials is important. Key domestic officials may change over time, and support cannot be provided solely by a few officials who may not remain in their positions. Frequent communication of a programme’s purposes, policies and results is important to gaining and maintaining support. Without steady domestic approval, even an excellent programme may lose support and eventually be discontinued. With such support, the programme is more likely to continue to function, improve and enjoy greater backing and influence.

Here is my earlier blog post on the need for CCTs during the financial crisis. And, here is a review of CCTs in Latin America and Sub-Saharan Africa.

How green are human rights?

There was an event held at my college yesterday. It was about the how human rights are connected with environment sustainability. There were three panelist- three professors from Mexico, Britain, and Cameroon.

I found this quote, by Professor Bruce (from UEA), interesting:

It is our human rights to use water. However, our choice/decision to use water affects the usage by others. Imports and waste of water, while exercising human rights in one part of the world, is in a sense exports of water (potential stream) from other part of the world. Hence, the very daily choices arising from exercise of human rights is not independent of how individuals use water for daily purposes.

Listening to the Poor: Voices from the Bottom Up

The WB has released a new book (Moving out of Poverty: Success from the Bottom Up), which contains findings from a study carried out in 15 countries and interview with 60,000 people, about poverty reduction. I am surprised why Nepal was not included in the list of countries from where “voices of the poor” were collected because Nepal is one of the poorest countries in Asia and 18th poorest in the world (in terms of GDP (PPP) per capita figure from the IMF). The report does not even mention the word Nepal. It looks like a follow up to the Voices of the Poor report, which incorporated voices of 60,000 people from 60 countries, published in 2000.

One of the main findings of the report is that when researchers asked respondents about how they can move out of poverty, almost all of them underscored “individual effort, self-reliance and initiative”. This is not new but still I can’t exactly figure out what this really means (or what the authors really meant by this).

I think it misses to mention an important assumption: ‘provided necessary tools such as credit, relevant infrastructure, healthcare, market access, education, and technology among others, individual effort, self-reliance and initiative could lead poor people out of poverty.’ I think the initiative factor (coming out of agents) and the necessary conditions (usually provided by external agents/exogenous factors) are complementary and have to be synchronize in order to get the biggest bang from a poverty reduction initiative.

… the focus of poverty reduction strategies must therefore shift to increasing economic, social and political opportunities in the local communities where the poor live. These local opportunities include the provision of business know-how, basic access to health and education and the improvement of local governance. Local governments that are responsive and accountable have a critical role in creating the local conditions for households to escape poverty.

One can also get a test of the love with ‘liberalization mindset’ in the report. The report recommends “poverty reduction efforts need a liberalization from below” that includes removing restrictive government regulations, expanding access to markets (especially by providing connectivity through roads bridges and telephones), and integrating poor people’s businesses on fairer terms in new business models”. Nothing new and surprising about these recommendations but still I would be interested in seeing policy experiments that validate these claims.

What I don’t understand is, despite knowing (and having a feel about) these solutions for a long time, why were/are not the development agencies and the aid industry synchronizing their initiatives to tackle the problems head on? It kind of baffles me more than anything else because the poverty reduction strategies we study in school are not in line with the actions of most of the development and aid agencies that are making high pitch noises voices about poverty alleviation for the last four decades.

That being said, the report is useful in knowing what the poor people (as opposed to experts from development agencies and development models) actually say about their condition of life. It also discusses the concept of poverty and how it has evolved over the years.

Self-initiative is considered is the most important factor for moving out of poverty.

Here is a generalized diagram of how to move out of poverty:

Wise Chinese stimulus stuff

The NYT reports:

The country is using its nearly $600 billion economic stimulus package to make its companies better able to compete in markets at home and abroad, to retrain migrant workers on an immense scale and to rapidly expand subsidies for research and development.

Construction has already begun on new highways and rail lines that are likely to permanently reduce transportation costs.

And while American leaders struggle to revive lending — in the latest effort with a $15 billion program to help small businesses — Chinese banks lent more in the last three months than in the preceding 12 months.

The Guangdong training programs are half in the classroom and half in the factory, usually the business that plans to employ the trainees. By increasing productivity, training programs can hold down corporate labor costs per unit of production for years to come.

China’s huge training programs may also help preserve social stability by keeping the unemployed off the streets, although Chinese officials deny that is their intention.

ABC clouds and climate change in Nepal

This kind of story scares me when it happens in developing countries, which severely lack manpower and firepower to deal with issues like  fires, wildfires and increasing accumulation of clouds above the skies of major cities, leading to rise in temperature.

According to this news piece, two major national parks in Nepal are burning creating Asian Brown Cloud (whatever that means!) over Kathmandu and other cities. This is compounded by increasing smoke emission from motor vehicle, factories, and cooking gas.

According to NASA, wildfires appear to be raging in or very close to some of the national parks and conservation areas, including Langtang National Park and Makalu Barun National Park, located along the northern border of the country. The forest fire raging in Langtang National Park in Rasuwa district for the last seven days is said to be the worst of all.

According to a NASA report today, there was a reduction of solar radiation to the surface by as much as 15 per cent in Kathmandu. Thirty-seven domestic flights were delayed due to poor visibility caused by hazy weather on Sunday.

A weatherman also blamed the dust particles passing through the northern Indian and Pakistani cities coupled with thick wildfire smoke for the ABC. Apart from Kathmandu, Biratnagar, Pokhara, Dhangadhi and Bhairahawa have also been affected by the ABC, which is concentrated three km above the earth’s surface and can travel halfway around the globe in less than a week.

Can the aid agencies and climate change advocates do something about this? Oh well, who cares about the change going on above in the skies over Nepal. I have not heard of any such international effort to tackle such issues happening in real time in Nepal, at least not since the time I became aware of these issues!

Higher education and development

Nice series of articles about the role of science and technology (higher education) in achieving economic development on SciDev.

Anyone seeking to tackle the problems facing the developing world must remember two simple facts of life. First, none of these problems — from food shortages and the spread of disease, to achieving sustainable economic growth — can be addressed without the use of science and technology.

Second, harnessing science for development depends on the skills of a country's people. And that in turn requires a robust and effective higher education system — the only mechanism that can produce and sustain these skills.

But in the recent past, many governments overlooked this critical information. Few developing countries, for example, refer to either science or higher education in their Poverty Reduction Strategy Plans — the documents that guide donors, and others, on a country's investment priorities.

Here is an interesting article that argues for more donor funding on improvement in research activities in the developing countries rather than commissioned studies in specific areas.

If donor agencies genuinely want to recognise 'ownership' in the development dialogue, then funding institutional research capacity should be an essential ingredient of bilateral development cooperation.

Developing countries and the financial crisis

The developing countries face a financing gap of $270-$700 billion (that’s a pretty wide range!) due to the financial crisis, according to a new report by the WB. It argues that developing countries are likely to face higher spreads and lower capital flows than over the past seven years, leading to weaker investment and slower growth. The low income countries are still feeling the burnt of fuel and food crisis, which depleted international reserves. Then the ensuing global financial crisis led to lowering of commodity prices, especially primary goods- the main export items of LICs, leading to lowering of terms of trade. This is likely going to increase deficit. All the problems occurring at the same time or in sequence will put enormous pressure on fiscal stability.

One of the main worries for the developing countries is the decline in remittances, the life blood of small economies like Nepal which has more than a million citizens working abroad. Remittances contribute to approx 20% of GDP. Surprisingly, remittances inflows have been increasing until recently in Nepal. No one knows how long it will last until the crisis cripples remittances inflow. But, it is expected to decline soon. The World Bank estimates that remittances will nosedive in 2009 and will recover in 2010.

The paper said that 94 out of 116 developing countries have experienced a slowdown in economic growth. Of these countries, 43 have high levels of poverty. The most affected sectors are those that were the most dynamic, typically urban-based exporters, construction, mining, and manufacturing. Cambodia, for example, has lost 30,000 jobs in the garment industry, its only significant export industry. More 500,000 jobs have been lost in the last three months of 2008 in India, including in gems and jewelry, autos and textiles. The ILO predicts that global job losses could hit as much as 51 million people and affect 30 million workers.

The WB says that financial crisis will have long-term implications for developing countries. Debt issuance by high-income countries is set to increase dramatically, crowding out many developing country borrowers, both private and public.Developing countries that can still access financial markets face higher borrowing costs, and lower capital flows, leading to weaker investment and slower growth in the future.

In order to aid stimulation of developing economies, the WB has launched an Infrastructure Recovery and Assets (INFRA) program (among other programs), which, it says, will channel investment in infrastructure so that badly needed investment is not completely dry. This is a form of fiscal stimulus ($15 billion) in the developing countries.

What’s amazing is that the whole argument for investment on infrastructure to stimulate the economy began with American Recovery and Reinvestment Act, launched by the Obama administration. Most of the development agencies have been arguing for similar stimulus in the developing countries. What I don’t understand is that why were these development agencies waiting for this disaster (and for so long) to channel in investment on infrastructure projects in the developing countries? For decades it was known that there is deficient supply of infrastructure in the developing countries. Still, there was no such aggressiveness in improving on this front by providing aid and expertise to the developing countries.

For instance, the most binding constraint on growth in the Nepali economy is bad infrastructure. You don’t need a sophisticated analysis to realize that it is the most binding constraint on growth (actually, I tried it myself in a recent paper!). People know that there is deficient supply of infrastructure and markets and production sites are not linked. Still, the development agencies did not invest on this crucial sector that would have produced the biggest bang for a buck.

All of a sudden, there is a renewed vigor to pour in investment on infrastructure sector in the developing countries. Everyone wants to ‘follow the herd’. Nothing wrong with this initiative but I think it is too late and too little to stimulate developing economies by focusing investment in infrastructure only. Widen social safety nets, free them of some of the harsh conditionality on lending so that countries can use funds in the sectors that they think are going to be affected the most, provide them expertise (not command the actions) on prudent and productive investment, and so on.

Anyway, here are addition discussion about the impact of financial crisis on the poorest countries. Duncan Green discusses this issue here. Here is Shanta Devarajan’s views on if Africa needs a fiscal stimulus, largely dependent on foreign aid (he says, it depends). Here is a post based on UNU’s paper on the impact of financial crisis on the developing countries. And, here is a post about the need for social protection safety nets like CCTs during this financial crisis.