Posted by Ignacio on
Wed, 30/04/2008
Only about one-quarter of households living in developing countries have any form of financial savings with formal banking institutions. Even in countries that have experienced substantial development over the last decade or two, this statistic remains stuck stubbornly at a level that would not be acceptable for any other measure of socio-economic development: 10% in Kenya, 20% in Macedonia, 25% in Mexico, 32% in Bangladesh.
Access to financial services –whether in the form of savings, credit or insurance— is a fundamental tool for managing a family’s well-being and productive capacity: to smooth expenditure when inflows are erratic (occasional work, seasonality of crops), to be able to build up purchasing power when expenditures are lumpy (school fees, buying seeds), or to protect against emergencies (natural disasters, death in the family).
But in the same way as access to clean water is more than being able to buy a bottle of water, access to finance is more than being able to get the occasional loan. Much like the national grid, access to finance really involves being connected to a national payments system. Once I have a transactional account in a “payment grid”, I can receive and repay loans, save up and withdraw from a savings account, and use the proceeds to pay for what I need. This transactional account gives me a financial history, and is the basis from which I can manage my financial life.
Posted by Shanta on
Thu, 17/04/2008
Pakistan’s education indicators are abysmally low, especially when it comes to learning outcomes. Almost everyone you speak with has strong views on why the situation is what it is, and what should be done about it. Some advocate spending more money on public schools; others, improving accountability in the system; others, regulating private schools; and still others allowing private schools to flourish. Much of this debate occurs without much hard evidence on which proposal might improve education in Pakistan.
A four-year-long research project by some colleagues and friends, launched today in Lahore, seeks to fill this gap. The report documents the remarkable rise in private schools in Punjab, the quality differential between public and private schools, the relationship between outcomes and parental background, what makes teachers better teachers, and more. This painstaking analysis will continue to serve researchers, policymakers and the general public for a long time. Some people say it could be “the new Matlab,” a health and socio-economic survey of a region in Bangladesh that proved to be a mother lode of research and policy applications on health in poor countries.
Posted by Shanta on
Fri, 11/04/2008
First the good news. The Indian government has agreed to sell the originally-agreed 400,000 tons of non-basmati rice to the Government of Bangladesh at a price of $430 per ton. On March 30th, the Government of Bangladesh’s Purchase Committee approved the Indian offer of procuring the 400,000 tons of rice at $430 per ton by ship. The estimated time for the rice to reach Chittagong port is 75 days.
Now the rest. India still has an export ban on non-basmati rice. So do Vietnam, Cambodia, and Egypt. Argentina has a ban on beef exports. The Economist has criticized these policies from the viewpoint that they are self-defeating: “they de-motivate farmers, push them into growing the wrong crops and jeopardize their future access to markets.” A recent BBC report had farmers in Rajasthan complaining about the export bans. And the benefits of export bans don’t necessarily go to poor people, because the domestic price is lower for everybody. So export bans not only hurt your neighbors (or more generally global trade), but also your own people.
What can we do? Arvind Subramanian suggests that we need a multilateral agreement not to impose export bans, along the lines of the WTO.
Posted by Maitreyi on
Thu, 10/04/2008
My blog post on social audits as change agents has attracted more engagement than I would have expected. Some of it has been through conversation but a substantive part has also been in writing. Keshav Desiraju, a senior IAS officer writes:
You have raised several issues.
1. Everything depends on how social audit is institutionalized. If the intention behind social audit is to bypass the political system, it is not going to work. No political system will allow a “people’s initiative” that has been pushed as a more credible, more honest, alternative to itself. A public audit will need to be based either in the established political system (MLAs, Assembly, Assembly Questions, Calling Attention Motions, etc.) or in the PRIs, both of which have legal sanction.
2. In any case, we cannot presume that NGOs are better motivated or better trained or are better poised to be the voice from the grassroots than the peoples’ representatives or the PRIs. The record of NGOs (Orissa, Andhra, Manipur) is patchy.
3. Of course, there is the very salutary example in Rajasthan where, as you note, it is something of a movement. This is crucial. It is not simply committees, or NGOs or whatever, but a movement, driven by highly charismatic leaders.
Posted by Shanta on
Fri, 04/04/2008
In late February of every year, I get ready to be disappointed by the budget speech of the Indian Finance Minister. The reason is that, despite ample evidence that there are serious problems with the productivity of public spending in health, education and other areas, the budget speech always announces an increase in spending on these sectors, with little attempt—if any—at making that spending more efficient at reaching poor people. And this despite the fact that the Finance Minister himself was once quoted as saying, “You do not repair a leaking water supply pipe by stepping up the water pressure.”
This year, however, I was not disappointed because, alongside the usual increase in spending, the budget speech announced, for the first time, the establishment of a Central Plan Schemes Monitoring System that would monitor and evaluate the large sums of money disbursed by the Central Government. The information generated by monitoring systems such as these could help build political support for the reforms needed to make public spending more effective. As Minister Chidambaram said, “I think we do not pay enough attention to outcomes as we do to outlays; or to physical targets as we do to financial targets; or to quality as we do to quantity.”
Posted by Maitreyi on
Wed, 02/04/2008
While international development practitioners debate and discuss the best tool for people’s monitoring, the Indian government takes a page out of the book of the Right to Livelihood and Right to Food movements and of the Mazdoor Kisan Shakti Sangathan (MKSS) and institutionalizes social audits by mandating them in the National Rural Employment Guarantee Scheme (NREGS). The onus is now on the state to ensure that its own performance is monitored and evaluated by the people. The implementation of these bi-annual audits has been patchy; states differ in their strategy of “rolling them out”. While Andhra Pradesh has established a large state machinery that facilitates social audits, Orissa has decided to appoint the National Institute of Rural Development (NIRD) as the coordinator. In Rajasthan, the seminal work of MKSS has made people’s monitoring and social audits into something of a movement. Other states have left it to NGOs. Still other states have taken minimalist steps. At some level, the relationship between social audits and the state reflects the relationship between grassroots NGOs and the government. State governments have thus variously circumvented NGOs, replaced them, co-opted them or ignored them in the conduct of social audits.
Posted by Shanta on
Wed, 19/03/2008
Rising--and even accelerating--world food prices are causing serious problems to South Asia’s net food importers such as Bangladesh. To make matters worse, the country lost about 2 million metric tons of rice (7.3 percent of domestic production) in the twin floods of July-August and cyclone of November. To make up for the shortfall, Bangladesh is importing rice from its immediate neighbors. However, one of its neighbors, India, has chosen to impose either a ban on rice exports or to raise the export price above the contracted price. Every time this happens, the price of rice in Dhaka spikes (see graph). While this shows that economics works, it is troubling that a large country like India, which has a greater ability to absorb food price shocks, is imposing costs on its poorer and smaller neighbor to the east.
Posted by Jishnu on
Thu, 13/03/2008
Given the recent bombings in Pakistan, it may be worth asking whether these are "special events" or indicators of a general upsurge in violence.
Here are 4 pictures showing what has happened to reported crime rates and the number of police stations in Pakistan between 1997 and 2006. The red line in each shows the year that Musharraf came to power. All crime as well as murder, attempted murder and kidnapping declined till 2001. Since then, they all started rising and increased particularly fast after 2003. The picture on the bottom right shows the increase in police stations in the four main provinces—Punjab, NWFP, Sindh and Balochistan; the number is normalized to 100 for each province in 1999. There is little or no increase in the first three, but in Balochistan the total number of police stations increased by 62 percent…
The pictures are all sourced from data presented in the Pakistan Statistical Yearbook, 2006, linked here.
Posted by Jishnu on
Wed, 12/03/2008
There has been active discussion about Arvind Panagariya’s column on improving health care in India. Shanta pointed out that increasing the number of trained medics is unlikely to solve India’s health problems if these medics don’t show up for work. Arvind responded that his recommendation of increasing the number of MBBS was based on the idea that they would work as “private practitioners and not add to the rolls of absentee providers in the public sector”. This assumes that the main constraint on good quality medical advice is doctor’s knowledge. What do the data say?
A new paper summarizes work on the quality of care in low-income countries that I and my colleagues Jeffrey Hammer (Princeton) and Ken Leonard (University of Maryland) have been engaged in over the last 5 years. Our approach has been to try and decompose the quality of medical advice into two components—what doctors know and what doctors do. What doctors know—measured by testing doctors—represents the maximum care that a doctor could provide. What doctors do—measured by watching doctors—represents the care they actually provide to real patients. We call the first “competence” and the second “practice quality”.
Posted by Maitreyi on
Fri, 07/03/2008
 Shanta has been writing about Bangladesh and its paradoxes. I guess you can’t call this a paradox, yet it blows me away how despite its so-called governance failures, alleged increase in conservatism and its low per capita income, Bangladesh is far from the “basket case” Kissinger infamously predicted. We have just completed a report to be launched in Dhaka on March 13th on gender and social transformation in Bangladesh which Aniqah Khan named “Whispers to Voices”.
Once the favorite citation for neo-Malthusians predicting a demographic catastrophe, Bangladesh actually halved its fertility rates between 1971 and 2004. Today, girls’ secondary school attendance exceeds that of boys. The gender gap in infant mortality has been closed. In each of these areas, India and Pakistan pale in comparison, as they do in the area of sanitation, immunization and diarrhea control. The micro-credit revolution continues to boost women’s solidarity groups and earning potential. And vast numbers of young women leave their villages to work in garment factories in a culture where ostensibly purdah had kept them from moving out of the house.
Posted by Praful on
Tue, 04/03/2008
 Four hundred million people--if it were a country, it would be the third largest in the world--rely on the Ganges River and its tributaries for their livelihood. Six thousand rivers provide a perennial source of irrigation and power to one of the world’s most densely populated and poorest areas. The Himalayas, “the water tower of the Ganges,” provide 45 percent of the annual flow. These facts represent the potential payoffs to the populations of Bangladesh, India and Nepal as well as the threat that climate change poses to poor and already vulnerable people of these countries.
Posted by Shanta on
Mon, 03/03/2008
Dear Shanta:
I want to clarify. My point was not that the World Bank stop or reduce lending to India per se. Rather that it focus on those areas where it has comparative advantage (how do we know what areas those are?), conditional on Indian states’ doing more on social sectors but using some output performance indicators rather than inputs.
I do not disagree with you that "For one thing, there is no guarantee that public services will improve if the Bank stops lending money for them," nor that "there is a good reason why the combination of knowledge and financial assistance can be more powerful than knowledge alone." But that justification can be used to continue lending in almost any circumstances, since how can we ever be certain that the alternative will not be even worse? I think you are underestimating the harm that is being done in continuing to give Indian states an external crutch when this is absolutely the basic responsibility of any state. Fundamentally, the financial and human resources are there in India. China and Cuba achieved this, as did Kerala, without fancy randomized trials, consultants, reports, and any external money.
I do think we (not just the Bank but academia, etc...)are a vested interest group to some extent at least. We see self-interest everywhere except in ourselves -- which is why we are very reluctant to walk away. How would we get more papers and publications if we did that? Or the World Bank more lending and reports on how much it is doing for the MDGs and justifications for IDA?
Posted by Shanta on
Fri, 29/02/2008
Entitled “Making economics relevant again,” a recent article in the New York Times described the path-breaking work of Esther Duflo, Abhijit Banerjee and their colleagues at MIT’s Jameel Poverty Action Lab, who use evaluations based on randomized trials to determine what works and what doesn’t in various social programs. Much of their work has been on South Asia, as has some of the World Bank’s impact evaluations in education and health.
In his blog post on the New York Times article, Dani Rodrik asks how these impact evaluations can be generalized. This is precisely what the World Bank’s Development Impact Evaluation (DIME) initiative seeks to do by undertaking several evaluations of similar interventions, such as conditional cash transfers, and then aggregating them into a “meta evaluation” that provides guidance on the circumstances under which the intervention will and will not work.
Posted by Shanta on
Thu, 28/02/2008
My friend Devesh Kapur sent me his latest piece, “Perhaps the World Bank should stop helping those unwilling to help themselves,” with a note saying, “We may perhaps disagree on this.” On the contrary, much of what he says in the article echoes what we have been saying in this blog. While I agree with his diagnosis, that despite its many accomplishments, the Indian government is particularly weak at delivering essential services such as education, health, water and sanitation to the poor, I don’t agree with his conclusion that the World Bank should stop lending to India in these areas, and concentrate instead on knowledge assistance.
For one thing, there is no guarantee that public services will improve if the Bank stops lending money for them. For another, there is a good reason why the combination of knowledge and financial assistance can be more powerful than knowledge alone.
Posted by Shanta on
Tue, 26/02/2008
It’s always a student who asks the fundamental question that you never bothered to ask.
I gave a guest lecture in Arvind Subramanian’s class at Johns Hopkins School of Advanced International Studies recently on “Service delivery in India.” As I was going through the usual spiel about how service delivery in India is worse than in other low-income countries such as Bangladesh and Vietnam (both of which have lower child mortality rates) and Kenya (which has higher immunization rates), a student asked, “What is distinctive about India that leads to such poor service delivery?”
I offered a few answers off the top of my head. First, especially compared with Bangladesh, India is an extremely heterogeneous society, with many castes, ethnic groups, languages and religions. There is some evidence that polarized societies find it more difficult to build political support for public goods. Second, to the extent that these services are transactions-intensive (a teacher has to spend time with students, doctors with patients), caste or other differences may stand in the way of publicly-provided services working for some people. Low-caste people, for instance, have been excluded from some public schools and public clinics. They are able to obtain services in the private sector—because they pay for these services. Paradoxically, therefore, the fact that the Indian government mandated free and universal public education and health, and decided to finance and provide it from the public sector, may be the reason poor people are largely obtaining these services in the private sector.
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Ignacio Mas
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