Development Centre

OECD Development Centre Policy Insights - 2006 - 2011


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Policy Insights is a series of policy-oriented occasional papers drawn from the Development Centre's Work Programme. All titles are generally available in the two official languages of the OECD: English and French.




The Middle-Income Trap: Comparing Asian and Latin American Experiences

Policy Insight No. 96 by Anna Jankowska, Arne J. Nagengast and José Ramón Perea

Chinese Taipei; Hong Kong, China; Korea and Singapore (the East Asian Newly Industrialised Countries or NICs) have been successful in attaining income convergence with high-income countries while Latin American countries remain caught in the Middle-Income Trap. Comparing the experience of the NICs to Latin American economies reveals that successful diversification and upgrading of a country’s export structure requires coherent and complimentary policies in the areas of education, infrastructure, innovation and access to finance.




The privatisation of infrastructure: One size does not fit all

Policy Insight No. 95 by Alexis Maingard and Laura Recuero Virto

There is no unique model of reform for infrastructure that is equally applicable to all countries. Fixed-line privatisation has often failed due to weak economic and institutional endowments. Governments and International Financial Institutions (IFIs) should consider alternative options to privatisation to increase fixed-line performance.


Should ASEAN Countries Embrace Carbon Labelling as a Means to Reduce Emissions?

Policy Insight No. 94 by Ana Santillana

ASEAN countries should play a more active role in the international standard-setting process for carbon labelling. Fragmented, bottom-up approaches to carbon labelling may lead to a proliferation of different labelling schemes, acting as a constraint to ASEAN exports. Carbon labelling should be part of ASEAN countries’ environmental sustainability plans.




Latin America’s Middle Sectors: Key Players in a Renewed Social Contract?

Policy Insight No. 93 by Anna Pietikainen

A strengthened social contract in Latin American countries relies on the improved quality of public services

such as health and education, which would build a constituency for a broader tax base. Latin American middle-income sectors express strong support for democracy but they are critical of how it works, largely due to the low quality of public services.  Fiscal policy is at the heart of the state’s relationship with its citizens – all the more so in Latin America, given the weak social contracts and the consolidation of its democracies.


Education Policies for Upward Social Mobility in Latin America

Policy Insight No. 92 by Christian Daude

Income is very unequally distributed in Latin America – but so too are opportunities for upward mobility. Early childhood development is a powerful mechanism to level the social playing field. More and better secondary education is key. Better administration of schools, combining greater flexibility with more accountability, a modern system of evaluation and incentives for school administrators and teachers are important ingredients for reforms.


Social Protection for All: How to Cover Middle-Sector Workers with Informal Jobs

Policy Insight No. 91 by Ángel Melguizo

Informality remains pervasive in Latin American and Caribbean labour markets. Many “middle-sectors workers” (around the middle of the income distribution) are employed informally and contribute irregularly to a public or private pension. Governments should consider extending social pensions and stimulating (even financially, via defined matching
contributions) individual savings.



Regional Integration in Southeast Asia: Better Macroeconomic Co-operation Can Mitigate Risks (02/2009) (Other languages: FR)
Policy Insight No. 90 by Kensuke Tanaka

The ten member states of the Association of Southeast Asian Nations (ASEAN) have created one of the most dynamic developing regions. They have unveiled the Blueprint for the ASEAN Economic Community (AEC) to achieve a “single market” by 2015. More recently, the full ratification of the ASEAN Charter in December 2008 has provided an institutional framework for what had been de facto regional integration underway since the 1980s. Realising the end goal of economic integration enshrined in the association’s blueprint and in the charter poses a major challenge to the region facing the global economic downturn. This Policy Insight suggests possible ways forward.


Sovereign Debt Crises and Early Warning Indicators: The Role of the Primary Bond MarketExtracting More From EITI (02/2009) (Other languages: FR)
Policy Insight No. 89 by Sebastián Nieto Parra

During the 1990s and the 2000s a variety of crises affected the stability of international capital markets: from the European Monetary System crisis in 1992-93 and the emerging market crises to today’s financial crisis have been present in the arenas of capital markets.


Extracting More From EITI (02/2009) (Other languages: FR)
Policy Insight No. 88 by Dilan Ölcer and Helmut Reisen

The Extractive Industries Transparency Initiative (EITI, aims to improve transparency and accountability by the full publication and verification of company payments and government revenues. The revenues flowing from natural resources extraction are huge. EITI is one of the international soft-law tools most supported by the international community to curb corruption and help the 3.5 billion people – half the population of the planet – living in resource-rich countries to benefit from the sale of their natural resources.




The Fallout from the Financial Crisis (5): The End of Public Support for Development Aid? (12/2008) (Other languages: FR)

Policy Insight No. 87 by Robert Zimmerman

Over the past 20 years, public attitudes towards aid in OECD countries have remained steadily positive throughout economic ups and downs. At the same time, polling data shows that voters continue to strongly support aid to developing countries, despite the financial crisis.


The Fallout from the Financial Crisis (4): Implications for FDI to Developing Countries (12/2008) (Other languages: FR)

Policy Insight No. 86 by Andrew Mold

Foreign direct investment (FDI) has been one of the principal beneficiaries of the liberalisation of capital flows over recent decades, and now constitutes the major form of capital inflow for many developing countries, including low-income ones like Chad, Mauritania, Sudan and Zambia. But while there are reasons to celebrate this success, the current financial turmoil does not bode well for the sustainability these flows in 2009.


The Fallout from the Financial Crisis (3): Will Aid Budgets Fall Victim to the Credit Crisis? (12/2008) (Other languages: FR)

Policy Insight No. 85 by Andrew Mold, Dilan Ölcer and Annalisa Prizzon

The financial crisis should give a new impetus to governments’ efforts to improve aid effectiveness.

Over the last few months, the governments of OECD countries have pledged trillions of dollars in loans, guarantees, capital injections, and other assistance in their coordinated effort to prop up the global financial system. In comparison, annual aid flows, currently standing at around $100 billion, are just “a drop in the ocean”, in the words of Robert Zoellick, President of the World Bank.


The Fallout from the Financial Crisis (2): External Debt Sustainability, Should More Be Done for the Poor? (12/2008) (Other languages: FR)

Policy Insight No. 84 by Annalisa Prizzon

Since the credit crisis first erupted, relatively little attention has been given to the consequences of the financial crisis on low-income countries’ indebtedness. Although in recent years developing countries as a group have benefited from increasing private flows (particularly FDI and remittances), many low-income countries are still heavily dependent on external official aid and debt flows.


The Fallout from the Financial Crisis (1): Emerging Markets under Stress (12/2008) (Other languages: FR)

Policy Insight No. 83 by Helmut Reisen

The contagion of the global credit crisis from the industrialised countries to the emerging markets has taken some time to develop. Then, in October 2008, it spread rapidly, afflicting all emerging markets, without any distinction or regard to their so-called “fundamentals”. For believers in “decoupling”, the high growth rates, massive foreign exchange (FX) reserves, balanced budgets and rising consumerism in the emerging markets at first reassured investors. It is now clear that the diagnosis of emerging-market policy performance suffered from hyperbole. In the end, all emerging market asset classes were hit: stocks, bonds and currencies.


Wikigender: Initiating Dialogue on Gender EqualityLiving with Duality: Fiscal policy and informality in Latin America (11/2008) (Other languages: FR)

Policy Insight No. 82 by Denis Drechsler

Have you ever wondered how many women are in paid employment compared to men? We know they get unequal wages, but just how unequal is their pay? Meanwhile, who are the managers, and what is their gender makeup? Are women and men entering the higher levels of state in equal numbers?

Living with Duality: Fiscal policy and informality in Latin America (10/2008) (Other languages: FR/ES)

Policy Insight No. 81 by Juan Ramón de Laiglesia

Although hard to measure, informality is by all accounts high in Latin America: about half of the region’s working population can be considered informal. In Mexico, the only Latin American country that belongs to the OECD, up to 60 per cent of non-agricultural workers – almost 22 million people – are employed informally or self-employed. These working people have opted out or have been shut out of the formal system of taxes and social protection. In that sense, they bear witness to a broken social contract between citizens and the state.

Public Spending on Education in Latin America: Does it pay? (10/2008) (Other languages: FR/ES)

Policy Insight No. 80 by Pablo Zoido

Education is one of the most important drivers of economic growth. The benefits of education go beyond the academic, contributing to economic objectives such as growth and productivity, as well as to social goals such as health and social cohesion. In a highly competitive, globalised world economy, public spending on education is more important than ever.


Taxes in Latin America: Do wealth and inequality matter? (10/2008) (Other languages: FR/ES)

Policy Insight No. 79 by Bárbara Castelletti

To meet pressing development challenges, Latin American states need fiscal resources. The good news is that in the last decade, favourable macroeconomic conditions and the design of better tax systems pushed up fiscal revenues in Latin America. Notably, tax revenues have increased by close to 1.8 per cent annually between 1990 and 2006, reflecting a widespread strengthening of taxes levied on income, profits and capital gains and general goods and services.


Public Debt Management and Political Cycles: Challenges for Latin America (10/2008) (Other languages: FR/ES)

Policy Insight No. 78 by Sebastián Nieto Parra

Over the last five years, most Latin American governments have made considerable strides in managing the composition of their public debt, while reducing their foreign-currency exposure. Issuing public debt in local currency is not new for Latin America; what is new, however, is the widespread issuing of local currency debt abroad. Indeed, while five years ago all Latin American sovereign external debt was denominated in foreign currency, today half the debt of countries like Brazil, Colombia, Peru and Uruguay is issued in local currencies.


Taxes and Spending in Latin America: First stability, now development (10/2008) (Other languages: FR/ES)

Policy Insight No. 77 by Jeff Dayton-Johnson

Latin America has not neglected fiscal policy. Since the end of the debt crisis of the 1980s, governments in the region have tightened their belts assiduously. Fiscal deficits have fallen from 11 per cent of public revenues in the 1970s and 1980s, to only 8 per cent since 2000. The year-to-year volatility of taxes, spending and deficits – long a feature of fiscal policy making in the region with harmful effects for economic performance – has likewise fallen: an index of deficit volatility calculated by the OECD Latin American Economic Outlook 2009 shows a fall of a third from 1990-94 to 2000-06, with Latin America standing just 6 per cent above the volatility levels in OECD countries in the latter period.

Are the Financial Markets Politically Correct? (09/2008) (Other languages: FR/ES)
Policy Insight No. 76 by Sebastián Nieto Parra and Javier Santiso

Are the financial markets politically correct? In other words, do they have preferences when it comes to political regimes or partisans? This issue has often been explored with regard to foreign direct investment (FDI) or public development aid, but rarely in relation to portfolio flows in emerging countries.


The Curse of Raw Materials?A Farewell to Policy Conditionality?En Route to Accra: The Global Development-Finance Non-SystemHome-owned and Home-grown: Development Policies that Can Work (09/2008) (Other languages: FR/ES)
Policy Insight No. 75 by Gøril Havro and Javier Santiso

In the short term, surging raw materials prices are a windfall for many developing countries that are dependent on them. However, in the longer term, this dependence on low-value-added products becomes problematic, as noted insistently by economists and political experts, who point to a myriad of perverse effects induced by these unexpected windfalls.

A Farewell to Policy Conditionality?En Route to Accra: The Global Development-Finance Non-SystemHome-owned and Home-grown: Development Policies that Can Work (08/2008) (Other languages: FR)
Policy Insight No. 74 by Andrew Mold and Felix Zimmermann

The official languages of next month’s Accra High-Level Forum on Aid Effectiveness are French, English and Spanish. However, participants in discussions will also need to master the new aid lexicon, which includes concepts like “ownership” and “harmonisation” and is embodied in the 2005 Paris Declaration on Aid Effectiveness.

A Paris Declaration for International NGOs?En Route to Accra: The Global Development-Finance Non-SystemHome-owned and Home-grown: Development Policies that Can Work (08/2008) (Other languages: FR)
Policy Insight No. 73 by Dirk-Jan Koch

In the 2005 Paris Declaration on Aid Effectiveness, governments agreed that aid works better when it respects the priorities of recipients (alignment) and when donors co-ordinate their activities with one another (harmonisation). Three years later, international non-governmental organisations (INGOs) remain the harshest critics of ineffective official development assistance (ODA). What about the effectiveness of INGOs’ own aid activities?

En Route to Accra: The Global Development-Finance Non-SystemHome-owned and Home-grown: Development Policies that Can Work (08/2008) (Other languages: FR)
Policy Insight No. 72 by Helmut Reisen

Measuring the contribution of specific multilaterals to the MDGs could promote accountability and reduce the complexity of the global development-finance non-system.

Home-owned and Home-grown: Development Policies that Can Work (08/2008) (Other languages: FR)
Policy Insight No. 71 by Felix Zimmermann

To put the "ownership" principle into practice, governments need to attack the barriers to local knowledge production and enforce local legal frameworks for participation. Donor agencies should review their use of conditionality: policy conditions don't work.

>The Two Faces of Informal Employment in Romania (07/2008) (Other languages: FR)
Policy Insight No. 70 by Denis Drechsler and Theodora Xenogiani

Many jobs in Romania – as many as half the total – are not subject to labour legislation. Employees often lack access to social protection or employment benefits, and untaxed envelope payments are frequently the rule.

>International Labour Mobility Opportunity or Risk for Developing Countries?Migration (06/2008) (Other languages: FR/DE)
Policy Insight No. 69 by Denis Drechsler

Migration is an integral part of globalisation. In the OECD, the percentage of people living outside their home countries more than doubled between 1985 and 2005. About half of this migration concerns movements from one industrialised country to the other. However, migration from developing to developed countries has also increased markedly.

Transition, Globalisation and Labour in the Black Sea Economic Co-operation and Central Asian Regions (06/2008) (Other languages: FR)
Policy Insight No. 68 by Loukas Balafoutas

The end of central planning meant that BSEC-CA countries had the opportunity to “open up” and become part of the global economy. The speed and the extent to which they chose to do so was a function of several political, economic, historical, geographical and cultural factors idiosyncratic to each country. Opening up to the global economy has provided new opportunities for trade and migration, but exposure has imposed a harsh discipline on producers with repercussions for the labour market.

Households in Transition: The BSEC-CA Experience (06/2008) (Other languages: FR)
Policy Insight No. 67 by Loukas Balafoutas

The transition to market economy has brought with it a snowball of socioeconomic changes for all BSEC-CA countries. To cope with an environment of rising insecurity and diminishing state support, households and individuals were forced to adopt strategies to enable them to resist negative shocks.

Higher Food Prices – A Blessing in Disguise For Africa? (05/2008) (Other languages: FR)
Policy Insight No. 66 by Denise Wolter

In the face of rising food prices, calls for emergency plans and food aid are becoming louder. Certainly, the desperate situation of poor households requires short-term relief measures; however, handouts are not a viable long-term solution.

Combating Under-five Mortality in AfricaHow to Spend It: Sovereign Wealth Funds and the Wealth of Nations (05/2008) (Other languages: FR/PO/XR)
Policy Insight No. 65 by Audrey Verdier-Chouchane
Where there has been progress towards the Millennium Development Goals (MDGs), including towards MDG No. 4 which aims to “Reduce by two thirds the mortality rate among children under five”, it has been when strong government leadership and good policies are combined with adequate financial and technical support.


Africa in 2008: Breaking Down the GrowthHow to Spend It: Sovereign Wealth Funds and the Wealth of Nations (05/2008) (Other languages: FR/Percepcoes 64: África em 2008: detalhar o crescimento/XR)
Policy Insight No. 64 by Kenneth Ruffing

For four consecutive years, Africa has experienced record economic growth. Overall in 2007 the continent registered 5.7 per cent GDP growth and a per capita increase of
3.7 per cent. Indications are that growth will only accelerate in 2008 and remain buoyant in 2009.


More trees have fallen…but the forest is still growing: Recent trends in African politics (05/2008) (Other languages: FR/PO/XR)
Policy Insight No. 63 by Federica Marzo
While stability and democracy in Africa are improving, the 2007 snapshot shows fragile democratic institutions that are often unrepresentative, even after elections. Freedom of the press, the rule of law and government transparency remain weak and corruption is widespread at all levels of politics and the economy. Political and social instability also grew, even in countries thought to be traditionally stable.


Investing in Africa’s YouthHow to Spend It: Sovereign Wealth Funds and the Wealth of Nations (05/2008) (Other languages: FR/PO/XR)
Policy Insight No. 62 by Lucia Wegner
Some 133 million young people (half of Africa’s young) are illiterate. Many young people have few or no skills. Over 20 per cent of young people are unemployed in sub-Saharan Africa. Such figures tell their own story: Africa’s youth needs vocational training.


Evaluating the Effects of Vocational Training in AfricaHow to Spend It: Sovereign Wealth Funds and the Wealth of Nations (05/2008) (Other languages: FR/PO/XR)
Policy Insight No. 61 by Christian Kingombe
The impact of vocational training on economic growth and poverty reduction in African countries is unknown. Without such knowledge, however, countries and donors cannot formulate appropriate policies. Even the 35 countries surveyed in the 2008 African Economic Outlook can only supply approximate data.


Private Equity: An Eye for Investment under African Skies? (05/2008) (Other languages: FR/PO/XR)
Policy Insight No. 60 by Thomas Dickinson

Private equity is not a new phenomenon in Africa but it is drawing increasing attention as a nimble and innovative vehicle for private-sector development on the continent. Improvements in African investment environments and a series of spectacular African business successes (such as the private-equity backed African telecommunications pioneer Celtel’s USD3.4 billion buyout in 2006) have fuelled an unprecedented boom in the size and breadth of African private equity funds.


How to Spend It: Sovereign Wealth Funds and the Wealth of Nations (02/2008) (Other languages: FR)
Policy Insight No. 59 by Helmut Reisen
Development economics can explain both saving sources and motives that have led to the recent SWF boom, thus helping avoid investment restrictions in OECD countries. As the economics underlying funds from oil exporting countries are different from the economics of East Asian funds, so are the appropriate policy answers.


Sovereign Development Funds (02/2008)  (Other languages: FR / SP)
Policy Insight No. 58 by Javier Santiso
Financial actors from developing countries are playing with other OECD financial giants as equals through their Sovereign Wealth Funds (SWFs). SWFs could become major actors of development finance if they chose to allocate 10 per cent of their portfolio to emerging and developing economies over the next decade, generating inflows of $1 400 billion, more than all OECD countries’ aid to developing economies put together.


From Old-Donor Debt Relief to Emerging Lenders in Africa (01/2008) (Other languages: FR)
Policy Insight No. 57 by Helmut Reisen
China helps growth and debt sustainability in Africa through debt relief, infrastructure investment and higher exports. China and other emerging lenders should engage in a debt transparency initiative that considers such growth effects. This will encourage emerging lenders to co-operate with the ‘international community’ on Africa’s debt sustainability.


Informal Employment: Can We Tame the Beast? (01/2008) (Other languages: FR)
Policy Insight No. 56 by Jante Parlevliet, Johannes Jütting and Theodora Xenogiani
Informal employment persists, even when the economy is growing. Understanding the phenomenon is necessary to “tame the beast” of informality. Coherent policies are needed to create decent jobs and provide social protection.


Africa: A New Frontier for Emerging Markets? (12/2007) (Other languages: FR)
Policy Insight No. 55 by Javier Santiso
Fast-growing African countries are attracting private equity and risk capital as never before. The conditions attracting private investors are likely to improve.

Does taxation rhyme with democracy? (11/2007) (Other languages: SP/FR)
Policy Insight No. 54 by Pablo Zoido
Latin America has put its faith in democracy and the market economy. Efficient, fair and equitable fiscal policy can help foster development and consolidate democracy.
* This Policy Insights is based on the Latin American Economic Outlook 2008.

Latin America’s Asian Opportunity (11/2007) (Other languages: SP/FR)
Policy Insight No. 53 by Rolando Avendaño and Gøril Bjerkhol Havro
Growing trade with China and India offers new export opportunities for Latin America. Latin American countries need to invest in infrastructure and innovation.
* This Policy Insights is based on the Latin American Economic Outlook 2008.

Telecommunications in Latin America: can multinationals fill the gaps? (11/2007) (Other languages: SP/FR)
Policy Insight No. 52 by Juan R. de Laiglesia
Foreign investment in telecommunications in Latin America has amounted to over $110 billion since 1990, more than for all other developing countries combined. Only one in four of the poorest Latin Americans has a telephone line; competitive markets and policies promoting access can help narrow the connectivity gap between rich and poor.
* This Policy Insights is based on the Latin American Economic Outlook 2008.

Has Pension Reform Failed Latin America? (11/2007) (Other languages: SP/FR)
Policy Insight No. 51 by by Charles Oman and Waldo Tapia
Pension reform in Latin America has helped deepen capital markets, but with mixed results in terms of increasing national savings. Private pension funds have a still untapped potential to help to improve corporate governance of the companies in which they invest.
* This Policy Insights is based on the Latin American Economic Outlook 2008.

Africa in 2007. Multifaceted Growth (05/2007)  (Other Language : FR)
Policy Insight No. 50 by Daniel Cohen, Thibault Fally and Sébastien Villemot
Poor countries will remain vulnerable to external shocks from export prices or from natural disasters for some time. Indeed, the lowest income countries have an even higher incidence of such adverse events than other developing countries and tend to suffer larger damages when they occur.

Africa in 2007. Multifaceted Growth (05/2007)  (Other Language : FR)
Policy Insight No. 49 by Federico Bonaglia and Andrea Goldstein
Technological change and organisational advancements have made possible the greater participation of developing country producers in international trade, in a wide range of goods and services. However, firms based in industrial countries often determine the scope for insertion and upgrading of those producers in global value chains (GVCs).
* This Policy Insights introduces the Business for Development: Fostering the Private Sector report.

Private Sector Development in Poor Countries: Seeking Better Policy Recipes? (05/2007) (Other Language : FR)
Policy Insight No. 48 by Federico Bonaglia and Kiichiro Fukasaku
Private business activity, by creating and using “ideas”, drives economic growth in both rich and poor countries. Creating an enabling business environment is necessary but not sufficient for fostering the private sector in poor countries. Open dialogue, transparency, accountability and evaluation make private sector development policies more effective.
* This Policy Insights introduces the Business for Development: Fostering the Private Sector report.

Africa in 2007. Multifaceted GrowthPolicy Insights 40: Facing Complexity in Development Finance: Challenges for a Donor Darling (05/2007)  (Other Language : FR)
Policy Insight No. 47 by Kenneth G. Ruffing
Growth will accelerate for net oil exporters and weaken slightly for oil importers, strengthening the trends projected in African Economic Outlook 2006. For the oil importers, moreover, inflation is moving to double-digit levels. Budget deficits in oil-importing countries appear to have stabilised. The current account deficits of these same countries have increased from 2 % in 1998-2004, to about 4 % since 2005.
* This Policy Insights introduces the African Economic Outlook 2007.

Africans Need not Miss Out on the Benefits of GlobalisationFacing Complexity in Development Finance: Challenges for a Donor Darling (05/2007)  (Other Language : FR)
Policy Insight No. 46 by Federico Bonaglia, Nicolas Pinaud and Lucia Wegner
Strong commodity prices are driving Africa’s growth, which should be about 6 % in 2007 and 2008. External vulnerability is a function of its limited integration into international trade and investment flows. Africa should mobilise external sources more strategically. In this respect, aid for trade can be import.
* This Policy Insights introduces the African Economic Outlook 2007.

Politics in Africa in 2006: Fewer Bullets, More Ballots?Facing Complexity in Development Finance: Challenges for a Donor Darling (05/2007)  (Other Language : FR)
Policy Insight No. 45 by Andrea Goldstein and Federica Marzo
The long-term decline in political instability continued in 2006 and armed conflicts, though still widespread, have diminished. Multiparty elections have taken place in several African countries and progress towards participative democracy is encouraging. Progress in economic governance is still insufficient, with corruption continuing to hamper socio-economic development.
* This Policy Insights introduces the African Economic Outlook 2007.

Forgive Debt, but Keep Lending  (05/2007)  (Other Language : FR)
Policy Insight No. 44 by Daniel Cohen, Pierre Jacquet and Helmut Reisen
Cancelling of poor-country debt does not mean that the best way to give aid is through grants only. Aid through loans may often prove superior, provided that it maintains debt sustainability. A new scheme for soft loans is suggested, with higher interest rates and cancellation provisions if bad shocks occur, to minimise moral hazard and strengthen debt sustainability.

Africa’s Private Sector: Ready to Seize Business Opportunities?Facing Complexity in Development Finance: Challenges for a Donor Darling (05/2007)  (Other Language : FR / アフリカの民間セクター開発支援 (Fostering Africa’s Private Sector Development))
Policy Insight No. 43 by Yoshiko Matsumoto-Izadifar
The recent expansion of African horticultural exports has proven that business is changing on the continent. The experience of Senegal and Mali suggests that the two countries are facing major challenges in strengthening policy co-ordination, improving business environment and realising market opportunities. Deepening public-private dialogue will help address these challenges.
* This Policy Insights introduces the African Economic Outlook 2007.

Facing Pro-poor Design of Subsidies for Drinking Water and Sanitation Services in Africa  (05/2007)  (Other Language : FR)
Policy Insight No. 42 by Georg Caspary and Céline Kauffmann
Limited capacity to pay, large infrastructure needs and a huge backlog in the construction of sanitation facilities make recourse to cross-subsidies and government-funded subsidies a necessity in Africa.
* This Policy Insights introduces the African Economic Outlook 2007.

Access to Drinking Water and Sanitation in AfricaFacing Complexity in Development Finance: Challenges for a Donor Darling (05/2007)  (Other Language : FR)
Policy Insight No. 41 by Céline Kauffmann
Africa is unlikely to reach the drinking water and sanitation Millennium Development Goals. Disparities among countries are large, and the deficit in sanitation is greater than that for drinking water. Serious reforms in institutions, legal frameworks, and policies are needed.
* This Policy Insights introduces the African Economic Outlook 2007.

Facing Complexity in Development Finance: Challenges for a Donor Darling (04/2007)  (Other Language : FR)
Policy Insight No. 40 by Felix Zimmermann and Denis Drechsler
Despite growing aid volumes, financing development is becoming more difficult, not less. Better information on private finance flows will help developing-country governments craft more effective policies. Without stronger government leadership, well-intentioned but diverging donor approaches risk cancelling each other out.
* This Policy Insights introduces Financing Development: Aid and Beyond 2007.

Successful Emerging Domestic Bond Markets in the Global Financial Landscape (04/2007) (Other Languages : FR)
Policy Insight No. 39 by Hans Blommestein and Javier Santiso
Risk-based public debt management and liquid domestic bond markets are important mutually reinforcing strategies for emerging financial markets and developing countries in general.

The Democratic Banker (03/2007)  (Other Languages : FR / ES)
Policy Insight No.38 by Javier Santiso
Banks contribute not only to the economic development of emerging countries but also to political development. International bank flows in an emerging country tend to grow during the three years immediately following transition to a democratic regime. New instruments are needed to continue to confirm bank preference for democratic regimes. For instance, it would be useful to have an indicator to measure the level of banking activity in countries that respect human rights.

In Search of a Better World: Financial Markets and Developing Countries (02/2007)  (Other Language : FR)
Policy Insight No.37 by Sebastián Nieto Parra and Javier Santiso
Bond financing has replaced bank loans and other sources of capital flows as a major source of funding for emerging markets. This shift has been particularly impressive in Latin America. Disentangling the dynamics of emerging bond markets and the information flow about them has attracted the attention of the OECD. Are decisions about bond market investments based on good and neutral information, or is something else driving investors’ choices?

How to Lend to African Countries after a Decade of Debt Relief? (01/2007)  (Other Language : FR)
Policy Insight No.36 by Hélène Djoufelkit-Cottenet
The total amount of debt relief accorded to African countries in the framework of the Multilateral Debt Relief Initiative is expected to reach $43 billion concerning 33 countries. The 15 African countries presently qualified for this Initiative will benefit from restored creditworthiness. Moreover, faced with considerable financing needs, African countries are prepared to take on new debts. Development partners can support this process of re-indebtedness provided that they employ extremely concessional, even counter-cyclical lending instruments, and also by strengthening co-ordination within the Debt Sustainability Framework.


Culture, Family Ties and the Saving Hand (12/2006)
Policy Insight No.35 by Juan de Laiglesia and Christian Morrisson
Different cultures entail both a great diversity of household structures and different saving patterns. The diversity of family relations and saving patterns creates different incentives for physical and human capital accumulation. Policies can alter saving incentives and create the conditions for household structures themselves to change.

The Importance of Traditions for Development: Why Sometimes “Good Enough Is Enough” (12/2006)
Policy Insight No.34 by Johannes Jütting, Denis Drechsler and Indra de Soysa
Sustainable development requires well co-ordinated and functioning formal and informal institutions. In developing countries, courts, regulations and formal conventions are often observed in the breach or fail to function. By default, informal institutions – tradition, culture, family structures and general social norms – play a crucial role. Trust, solidarity and social cohesion make up the tripod of community identity which can even promote development, as the Nobel Committee recognised by awarding its 2006 Peace prize to the micro credit pioneering Grameen Bank and its founder Muhammed Yunus.

Governance Indicators for Development (11/2006)
Policy Insight No.33 by Charles Oman and Christiane Arndt
The use of governance “indicators” is booming. These indicators are supposed to quantify the quality of a country’s governance institutions by considering, for example, the extent of corruption in the economy, the quality of public and private regulatory systems, the prevalence of “rule of law”, the level of political stability, and the effectiveness of government.

> Poverty reduction and social development  (11/2006)
Policy Insight No.32 by Charles Oman and Christiane Arndt (only in German)
Die Studie des Entwicklungszentrums dient Entwicklungshilfegebern, Investoren und Akademikern als Wegweiser durch den Dschungel der  zahlreichen Governance-Indikatoren, die Länder nach der Effizienz ihrer Verwaltung, ihres Korruptionsniveaus, ihrer politischen Instabilität oder der Qualität ihrer Regulierungen bewerten. „Uses and Abuses of Governance Indicators“ zeigt, dass Governance-Indikatoren bei der Erstellung von internationalen Vergleichen und bei der Beurteilung der Veränderung der Regierungsführungsqualität einzelner Länder häufig fehlerhaft angewendet werden.

Microfinance: How Bankers Could Buy Back Their Soul (11/2006)
Policy Insight No.31 by Lucia Wegner
In order for microfinance institutions to reach more poor people they should become an integral part of the financial sector, and develop as sound domestic intermediaries. They should go commercial, broadening their client basis and scaling up their loans to small enterprises. Will it mean that they will loose their soul? Actually no; on the contrary, they will inject more soul into formal banking practices.

The Cotton Sector in Mali: Realising its Growth Potential (10/2006)
Policy Insight No.30 by Claudia Behrendt
How can Mali and the donor community enhance competitiveness of the Malian cotton sector and realise its growth potential? Mali is already promoting the abolition of cotton export subsidies in Northern nations in the current WTO Doha Round. To enhance the cotton sector’s competitiveness and growth, strengthening cotton farmers’ skills, developing infrastructure and investing in research and development is also key. 

> Migration: a Negative or a Positive Driver for Development? (9/2006)
Policy Insight No.29 by Louka T. Katseli and Theodora Xenogiani
The effects of migration on development depends on who leaves, where they go, and how home countries adjust to their leaving. Migration and development policies are comlements, not substitutes. Smart visa policies, coupled with capacity building at home can maximise the positive impact of migration.

> Dragons and Elephants in Latin America (9/2006)
Policy Insight No.28 by Javier Santiso
China's growing influence on Africa and on Latin America has, to some extent, overshadowed the rise of another emerging market giant in the East: India. This other Asian emerging presence is also symbolic of the rapid redesigning of the global economic map.  Europe, Japan and the United States are seeing their positions as omnipotent economic centres declining, opening new opportunities and threats for developing areas of the world.

Democracy in (Latin) America (9/2006) (Other Languages : De la democracia en América Latina)
Policy Insight No.27 by Javier Santiso
Latin American Countries vary widely in their institutional capacity to conduct economic policy analysis. Capacity for policy analysis is a necessary condition for economic reform but capacity for implementation is also needed. The point of contact between these two capacities - to analyse and to implement - is undoubtedly one of the central levers on which international co-operation can act.

El triángulo China, España y América latina (9/2006)
Percepciones No.26 by Javier Santiso (in Spanish only)
China se ha convertido en un actor de primer plano en América latina. Esta irrupción también presenta oportunidades para las empresas europeas, y en particular españolas. Éstas podrían convertirse en enlaces entre China y América latina de la mano de sus franquicias latinoamericanas.

> Tigres y Dragones en América latina (9/2006)
Percepciones No.25 by Javier Santiso (in Spanish only)
China e India están recomponiendo el ajedrez mundial, irrumpiendo incluso en regiones remotas como África y América latina. Este rediseño del mapa internacional es una oportunidad pero también un reto para África y Américalatina. El auge comercial conlleva el riesgo de que ambas regiones queden encerradas en una especialización internacional de bajo valor añadido.

> Aid and Coherence of OECD Country Policies (8/2006)
Policy Insight No.24 by Denis Cogneau and Sylvien Lambert
Foreign aid flows disproportionately to the poorest among the developing countries. Countries that account for the poorest fifth of world’s population receive more than a fifth of aid spending from OECD countries. Similarly, the benefits of trade flow likewise to more prosperous countries: the poorest countries export very little to the OECD and consequently earn very little in export earnings.

> China: A Helping Hand for Latin America? (8/2006)
Policy Insight No.23 by Javier Santiso
China’s trade impact on Latin America is positive via an export boom and indirectly better terms of trade. Its emergence is also a wake up call for the region: more reforms are needed, especially in infrastructure, in order to maintain Latin America’s comparative advantage. The Chinese windfall brings risks of exclusion in a “raw materials corner” out of global value chains.

African Economic Outlook 2006: A Two-speed Continent? (5/2006)
Policy Insight No.22 by Céline Kauffmann, Nicolas Pinaud and Lucia Wegner
Africa’s economic progress now seems on a firm footing after a third straight year of satisfactory performance in 2005, with overall growth of 5 per cent, average per capita income up 3 per cent and inflation steady at under 10 per cent. Two-thirds of the 30 countries surveyed in the Africa Economic Outlook report showed a net growth ininvestment that was by far the best in seven years.

> Is More Money Enough to Fix Africa's Transport Infrastructure? (5/2006)
Policy Insight No.21 by Andrea Goldstein and Céline Kauffmann
Transport infrastructure has been dangerously neglected in recent times. Lack of transport infrastructure impedes economic integration and poverty reduction.  Involving the private sector in financing the transport infrastructure is proving harder than anticipated.

> African Economic Outlook: Moving Towards Political Stability? (5/2006)
Policy Insight No. 20 by Lucia Wegner and Henri-Bernard Solignac Lecomte
The focus on war and anecdotal evidence hides real progress towards more stable and open political systems in Africa.  This is demonstrated by a new indicator based on a systematic screening of political events and decisions over the last ten years. The diagnosis for 2004 and 2005 is more positive than may have been thought.

> The Rise of China and India: What's in it for Africa? (5/2006)
Policy Insight No.19 by Andrea Goldstein, Nicolas Pinaud and Helmut Reisen
China’s and India’s strong appetite for energy and metal has boosted international prices and the volume and value of African exports. China in particular has become the main trade partner for a number of African countries providing cheap manufactured goods and reducing Africa's dependence from its traditional trading partners.  Despite the push for exports, terms of trade and growth that the Asian giants provide to Africa, risks for sustainable poverty reduction are visible in higher raw material dependence and rent-seeking activities.

> Decentralisation in Asian Health Sectors: Friend or Foe? (5/2006)
Policy Insight No. 18 by Hiroko Uchimura and Johannes Jütting
Decentralising health services – the transfer of power and responsibility from the central to the local level – should help the poor if local resources, accountability and governance are in good shape.  The process in China and India had negative effects because local governments remained under-funded and health was not seen as their priority. Contrary to this, decentralisation in Indonesia and the Philippines produced better health outcomes because they reformed healthcare funding. This is key to successful pro-poor decentralisation.

> Do Institutions Block Agricultural Development in Africa? (4/2006)
Policy Insight No. 17 by Juan R. de Laiglesia
A coherent institutional framework that supports investment, exchange and representation mechanisms is a key precondition for agricultural development. The importance of customs and traditions for the process of agrarian transformation has been overlooked.  Changes in formal institutions must be complementary to cultural norms and accommodate or foster the evolution of customary practices.

> The Gender, Institutions and Development Data Base (3/2006)
Policy Insight No. 16 by Johannes Jütting, Christian Morrisson, Jeff Dayton-Johnson and Denis Drechsler
This Policy Insights introduces the Gender, Institutions and Development Data Base: a new tool to determine and analyse obstacles to women's economic development.


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