Public Lecture: Sustaining Inclusive Growth in Africa
On Monday 23 September, 6.30-8pm, Trevor Manuel (Minister in the Presidency and head of the South African National Planning Commission) spoke at the launch of Growth Week 2013 on the topic of Sustaining Inclusive Growth in Africa.
Francesco Caselli (LSE) acted as discussant and the chair was Jonathan Leape (IGC). Craig Calhoun (LSE) welcomed delegates to the event.
All public lectures were free to attend and took place in the Sheikh Zayed Theatre, New Academic Building, LSE (corner of Sardinia Street and Lincoln’s Inn Fields, London).
Public Lecture: Financing Infrastructure Investment in Africa
On Tuesday 24 September, 6.30-8pm, Paul Collier (Co-Director, Centre for the Study of African Economies and Professor of Economics and Public Policy at the Blavatnik School of Government, University of Oxford) spoke on the topic of Financing Infrastructure Investment in Africa.
Antonio Estache (European Centre for Advanced Research in Economics and Statistics) and Keith Palmer (InfraCo and Emerging Africa Infrastructure Fund) were discussants. Tony Venables (Oxford) chaired the session.
All public lectures were free to attend and took place in the Sheikh Zayed Theatre, New Academic Building, LSE (corner of Sardinia Street and Lincoln’s Inn Fields, London).
Public Lecture: Transforming the Economic Lives of the Ultrapoor
On Wednesday 25 September, 6.30-8pm, Robin Burgess, Professor of Economics at the London School of Economics and Political Science, and Abhijit Banerjee, Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology led a discussion regarding Transforming the Economic Lives of the Ultrapoor.
Chaired by Oriana Bandiera (LSE), Burgess and Banerjee were joined by two discussants: Dean Karlan (Yale University) and Mushtaque Chowdhury (BRAC).
All public lectures were free to attend and took place in the Sheikh Zayed Theatre, New Academic Building, LSE (corner of Sardinia Street and Lincoln’s Inn Fields, London).
Ideas for growth session 1: Urbanisation
Chaired by Enrico Moretti (Berkeley and IGC), this session discussed urbanisation and, more specifically, various ways in which the agglomeration of production can speed up industrial development and increase productivity. The first presentation by Richard Dobbs (Principal, McKinsey Global Institute) introduced urbanisation as the major economic force of our times and described the contribution of large enterprises in shaping the economic landscape. Dobbs predicted that, by 2025, half the large corporations will be from emerging markets. Those trends will profoundly affect labour demand and will need to be accompanied by appropriate political and social responses.
The second presentation by Ana M. Fernandes (World Bank) pertained to the importance of agglomeration and entrepreneurship for growth. Fernandes presented the results of a study in which she finds that the presence of skilled labour is a very important determinant of firm location. Indeed, skilled labour appears to be the least substitutable input in the production process, and is therefore critical for firms’ location choices.
Our third presenter, David Atkin (Yale), talked about the adoption of technology, as well as the way in which technological knowledge flows between producers. Entitled “Spillovers in Technology Adoption”, his presentation described an experiment he conducted in Pakistan, during which he developed a cost-saving way to produce footballs and encouraged a small number of firms in Sialkot, Pakistan, to adopt the production method. He found that few firms adopted the technology despite the potential for savings. His hypothesis is that worker resistance due to adverse wage incentives is the main reason behind the low uptake. Atkin is planning to do more research in order to find out, among other things, whether it might be a good idea for governments to provide research and development grants for firms to upgrade their technology.
Finally, at the end of the session, Moretti made concluding remarks on the importance of clusters all around the world. He reassured the audience that, in the future, IGC experts would carry out even more innovative research related to urbanisation.
Audio is unavailable for this session.
Ideas for growth session 2: Trade
The Trade research session was chaired by the IGC Trade Research Programme Director, Andrés Rodríguez-Clare (UC Berkeley). Nina Pavcnik (Dartmouth College) spoke about labour allocations across heterogeneous firms in Vietnam. Her paper makes use of an exceptionally large decline in the United States’ tariff rates towards Vietnamese products that occurred in the early 2000s. This occurred as a result of Vietnam’s trade status with the USA being reclassified, leading to an average tariff decline of approximately 20% (although the individual tariff changes varied dramatically). The transformative effects of this were highlighted, as labour began to shift away from small household-run businesses into larger, more productive firms outfitted for export to the USA and global markets.
Paula Bustos (Center for Research in International Economics) presented on the effects of increases in agricultural productivity in Brazil. She found that the effects of these productivity increases vary depending upon the underlying structure of the specific crop’s market. For example, the effects of productivity increases had significantly differing effects on the amount of labour employed and wages for the soy and maize industries. Part of the underlying reason for this is that these differing crops use different mixes of labour and capital inputs in their productions. Some are more heavily dependent on labour while others are more heavily dependent on capital input (e.g. machinery), which are their respective “factor biases”.
Lorenzo Casaburi (Stanford Institute for Economic Policy Research) presented a paper on road rehabilitation in Sierra Leone looking at the effects of improving the quality of roads on the prices found in local markets. The driving force behind this is the increased linkages between centres of trade as a result of easier travel and transport in between them. He highlighted that, based upon the observed behaviour in these market prices, there appears to be significant costs (“frictions”) associated with comparing prices in between various markets and shopping around. He therefore highlighted that policymakers should work to incentivize traders to visit multiple market centres regularly, allowing for easier comparisons between prices at separate markets. He also noted that improving the quality of these roads did not always lead to price decreases, and the direction of the resulting price movements actually depended upon the structure of the local market, especially with regards to the dynamics of trade between the nearby market centres.
Finally, the session moved onto a lively discussion about the Trade research programme going forward. There was a presentation where the programme’s priority areas were highlighted, which were: (i) product composition, (ii) externalities, (iii) evaluation of industrial policies, (iv) internal trade costs, (v) measurement, and (vi) the winners and losers of trade. In the discussion that ensued, many interesting topics were further raised, such as World Trade Organization (WTO) considerations, regional integration, the secondary effects of trade (e.g. the transfer of knowledge and processes between trading partners), the costs of trade, and various others.
Ideas for growth session 3: State Capabilities
Johannes Spinnewijn (LSE) kicked off the state capabilities session by presenting his findings from his paper, ‘Production vs Revenue Efficiency with limited Tax Capacity: Theory and Evidence from Pakistan’. His research paper highlighted that existing literature on optimal design of tax systems is not applicable for developing countries, where perfect tax enforcement does not exist. With enforcement gaps, tax evasion occurs and introduces a trade-off between production efficiency and revenue efficiency. In Pakistan, a minimum tax scheme was implemented where firms are taxed either on profits or turnover, whichever liability is larger, giving rise to a jump in tax rates and tax base at a certain threshold of profit. Exploring Pakistan’s administrative tax data, Spinnewijn found significant and real incentives for firms to bunch around the minimum tax discontinuity. Hence this paper argues that the large estimates of evasion responsiveness in Pakistan justify tax policy architecture that deviates from the productive efficient profit tax theory.
Oriana Bandiera (LSE) presented her research paper ‘Do gooders or doctors?’ which studies the optimal strategy to recruiting, motivating and retaining public agents, in the context of community health assistants (CHAs) in Zambia. There is severe shortage of health staff in Zambia and her research evolved directly from demands by the Ministry of Health to address this gap. She advertised for CHAs with 2 different advertisements – one to attract individuals interested in serving their local communities (community mission) and another designed to attract individuals interested in a career in the civil service (career mission). CHAs were trained centrally at the ministry, thereafter sent out to their local villages to be CHAs. Bandiera and her team found that CHAs hired under the advertisement of the community mission made 20% less visits to their communities, whilst a stronger performance was found by the CHAs recruited under a career mission. There were no differences in retention rates of both groups after the first year. Although there did not seem to be a trade-off empirically between community attachment and skill levels, Bandiera caveats that the community mission CHAs may perform better on unobservable aspects.
Imran Rasul (UCL) shared his research titled ‘Management of Bureaucrats and Public Service Delivery: Evidence from the Nigerian Civil Service’, exploring the effects of managerial practices on public service delivery. This study utilised data on 4700 Nigerian public sector projects, responsible public sector organisations as well as independent assessments of project completion rates. Professor Rasul’s team also conducted a survey to elicit management practices from public sector officials within the responsible public sector organisations involved. They found that a greater degree of autonomy is associated with significant increases project completion rates, whilst a greater degree of performance related pay and relevant monitoring is associated with a decrease in the rate of project completion. This was found to be particularly binding in projects with higher complexity, where it is was more difficult to align incentives to the aim of projects.
Ideas for growth session 4: Firm Capabilities
Rocco Machiavello (Warwick University) presented his preliminary research on the financing of coffee washing stations – the type of firms at the 1st stage of processing coffee subsequent to harvesting. His results suggested that farmers within the coffee production chain were credit constrained. Possible remedies could be improving trust between farmers and other firms up the value chain – unit costs of washing stations were associated with higher local trust between parties in the value chain. Possible policy implications are government regulation and management of the types of contracts, downstream buyers paying collateral for the upstream constrained producers, vertical integration and other models.
Nick Bloom (Stanford University) explored the question –‘Are developing countries held back by their management practices?’ Building on much of his body of studies on international management practices data and surveys he explains that management practices have been found to play an important role in economic growth, via increasing the productivity of firms. He carried out a randomised experiment, with the results suggesting that poor management practices may be attributed to competition being restricted in many developing countries (protectionist policies) as well as information on best practices not being available to these local managers. Possible policies to remedy this could be better laws allowing firms to expand, export etc, as well as promotion of trade and FDI which will bring the good management practices to light and pushing better firms to the frontier through competition.
Chris Blattman (Columbia University) presented preliminary results from an on-going study on the effects of industrialisation on workers in Africa. Full results will be available by mid-2014.
In the second half of the session, Chris Woodruff (IGC) discussed the plan for Phase II of IGC’s firm capabilities research programme and a panel discussion ensued. John Sutton (LSE) brought up the dearth of research in 3 areas: the effect of national investment agencies on growth and the particular mechanisms, local content units’ effectiveness and, further investigation in FDI data research at the actual plant level. Khairuzzaman Mozumder (Ministry of Commerce, Bangladesh) highlighted the lack of capacity in firms and in lending institutions as a common restraint to productivity, anti-export biases in policy and a lack of fiscal incentives for firms as well as other regulatory barriers. Sajid Minhas (Delta Garments) also mentioned a lack of sophisticated regulatory framework that differentiates garment manufacturers vs textile ones and the implementation of VAT refunds being lacking. A lack of R&D in technology and management practices was cited as a possible challenge.
Ideas for growth session 5: Governance
The session was chaired by Gerard Padro i Miquel (LSE; IGC) and organized around research on understanding and improving electoral accountability. The first speaker, Macartan Humphreys (Columbia), presented a case study on citizen empowerment and political accountability in Uganda. The main purpose of the study was to understand how accountability and transparency affect voters’ decisions and alters politicians’ behaviour, once the latter are aware that their performance is being scrutinized prior to elections. The results of the intervention suggest that peoples’ election was largely independent of the score a politician got, whereas the peer assessment of politicians was very predictive of whether they were getting elected. Furthermore, people who thought that their representatives were good but their performance scores turned out to be low reported a downward adjustment in their assessment.
The second speaker, Pedro Vicente (Universidade Nova de Lisboa) presented research on how an NGO-conducted campaign against electoral violence can help undermine violence, drawing on a case study of Nigeria. The main results include: the anti-violence campaign increased the sense of security of the general population; the campaign increased empowerment to counteract electoral violence; the campaign increased voter turnout by 7-11 percentage points, and; it decreased the intensity of violence as reported by journalists.
The session followed with Michael Callen’s (UCSD/UCLA) evidence from a field experiment in Afghanistan on institutional corruption and electoral fraud. His research showed that a lack of constraints on election officials may be a serious obstacle to free and fair elections; political connections facilitate access to impunity, and; there is strong evidence that suggests that reducing fraud increases popular support. The discussions were enriched by a more practical perspective given by Barbara Smith (Carter Center) and Miriam Golden (UCLA). They suggested that working with domestic observers, although underfunded is of paramount importance in reducing fraud. Furthermore, they expressed concerns stemming from the field that even if electoral violence and fraud are effectively eliminated, political corruption may continue to distort outcomes and accountability.
Ideas for growth session 6: Energy
The Energy session, chaired by Michael Greenstone (MIT, IGC) discussed various energy issues, ranging from access for the poor to emission trading schemes. During the first session, Robin Burgess (LSE, IGC, JPAL) presented his latest research project titled ‘Lighting Up Bihar’ aims to increase energy access in Bihar, currently a high political priority in this state of India. As a matter of fact, the state of Bihar is planned a three-fold rise in electricity supply over the next three years. However, to do so, distribution will need to be improved. Solutions include better meter readers and financial incentives for bill collectors, all of which will be evaluated using a randomized experiment.
After the presentation of this promising research, we heard from Sandeep Poundrik (Secretary, Department of Energy, Bihar) who joined us via videoconference from Patna, India. Mr. Poundrik described the challenges involved in increased revenue collection for electricity suppliers, as well as the efforts made by the Government of Bihar to invest in the infrastructure necessary to increase reliability of and access to electricity. He engaged with the audience and answered questions related to incentive schemes, alternative technologies and most important problems encountered.
Michael Greenstone and Hardik Shah (Member of the Gujarat Pollution Control Board) then talked about new approaches to regulating pollution. They started off by explaining that balancing economic growth and a clean environment is a real challenge. Their project focused on developing a reliable source of information for regulators, as well as developing more effective penalties for emissions permits. As part of their study, Greenstone and Shah selected 1000 firms, and are gathering evidence on the emissions, abatement cost and regulatory impacts of trading. This project is ongoing and more concrete results will gradually be made available over the next three years.
Finally, Oluniyi Robbin-Coker (Minister of Energy, Sierra Leone) provided a comparative perspective of the energy access issues faced by Sierra Leone, offering a useful and revealing contrast to the bihari perspective. He described the energy section as having a highly limited capacity. Sierra Leone has a medium-term plan to achieve middle-income status by 2035; this will require a lot of private growth, which will necessitate better, more reliable energy infrastructure. Minister Robbin-Coker described Sierra Leone’s plan for reform, and raised awareness on the need to consider the political cycle when planning such reforms.
Country Session 1: Ghana
In the first part of the Ghana session at Growth Week 2013, Jaun Pablo Rud (Royal Halloway) presented the findings from his study on Modern Industries and Pollution and Agriculture. The paper concludes that farms that are within a 20mile radius of a mine are likely to experience up to a 40% reduction in productivity, therefore explicit efforts need to be made to address the redistributive effects of mining to the local community. The discussant, Doris Dartey (Graphic Communications Group) was happy with the paper but asked for clarity on the methodology.
Greg Fisher (LSE) presented his paper on Exporting “Good” Human Resource Practices which finds that, contrary to expectations, workers in Ghana do not respond significantly to pay incentives. This finding motivates the question: are there cultural elements to how people respond to incentives across countries? The discussion for the paper was led by Quame Aboagye (University of Ghana Business School) with comments on the implication of the job type chosen for the field experiment; the effects of relative pay; the role of job security and culture.
The panel discussion in the second part of the Ghana session looked at key policy research questions that IGC-Ghana should focus on in the Country Strategy Note. Alhassan Iddrissu (Ministry of Finance) spoke on Macroeconomic stability. He called for studies that look at ways of expanding the tax net to cover informal sector which is estimated to be about 70% of the economy. Sam Dapaah (Ministry of Food and Agriculture) proposed a study on creating a financial product that enables/helps farmers to earn money outside agriculture by making regular payments into an investment account which then allows the farmers to borrow without collateral from the bank that manages the fund. Under the theme of Human Capital Development, Yaw Baah (Trade Union Congress of Ghana) spoke on the need to start collecting regular labour market data for Ghana. While John Hawkins Asiedu (Ministry of Trade and Industry) called for studies that evaluate the extent to which government is crowding out the Private Sector.
The last panellist, Emmanuel Akwetey (Institute for Democratic Governance) called for the need to try understanding the roots of corrupt practices and the incentives needed to reduce and eliminate them. He also called for studies that look at how decisions are made on policy options and how they are implemented. The session was very well attended with representation from Zambia, Sierra Leone, Liberia and Tanzania.
Country Session 2: Rwanda
The Rwanda session was chaired by Richard Newfarmer (IGC Rwanda). Rocco Macchiavello (Warwick University) presented preliminary results of IGC work in understanding the downstream structure of coffee value chains. Coffee washing stations play a crucial role in the coffee value chain in transforming commodity coffee into specialty coffee, a process that can grab up to 2.5 times higher prices. This presentation focused primarily on trust relationships between coffee farmers and washers and their effects on different players’ abilities to obtain necessary pre- or post-financing, and recommendation to include an integrated approach to washing station finance and using the role of downstream buyers as collateral.
Jit Bajpai (Columbia University) presented the urban sector review for Rwanda to highlight some of the long term implications of Rwanda’s visualised urbanisation strategy. Jit highlighted some key observations about the general states of Rwanda’s urbanization and housing markets as well as the key issues for Rwanda’s rural–urban transformation. Finally, he outlined a framework for action to ensure a successful and effective transformation for Rwanda. Some of these elements included further coordination across sectors to manage urban-rural transformation, synchronised national strategies, and increases in investments in affordable housing. Matthew Collin (Oxford University) also discussed urbanisation in Rwanda, noting the complexity of urbanisation issues and that the government focus should perhaps be on increasing Kigali’s ability to function effectively and absorb further residents rather than on how to prevent further movement into Kigali through fringe towns and satellite cities.
Doreen Kagarama from the Rwandan President’s office then responded to these two papers, highlighting that the expansion of the number of coffee-washing stations as well as the current and future gains in Rwanda’s urbanization has been and must continue to be a result of well thought-out, conscious decisions translated into effective government planning.
Lennart Flood (University of Gothenburg) discussed Rwanda’s tax policy, specifically the scope for the implementation of a flat tax. The primary advantage of a flat tax is its simplicity, leading to, under reasonably low tax rates, increased compliance, a widening of the tax base, and as a result, lowers the tax rates. This is especially pertinent for Rwanda as, as Flood pointed out, the vast majority of the country’s tax burden falls on the few wealthy individuals and companies and the tax base in Rwanda also remains quite small. However, Flood also noted that Rwanda would be required to set quite a high flat tax rate in order to maintain the same revenues collected currently. Nada Eissa (Georgetown University) discussed these findings, remarking that Rwanda’s skewed income and taxation profiles are massively important for policy. She also noted that Rwanda’s current taxation revenues remain too low and that, in addition to searching for optimal ways to achieve its current revenue takes, Rwanda needs to also focus on how to increase this amount by increasing compliance and registration.
Olivier Cadot (University of Lausanne) presented a paper on inter East-African Community (EAC) trade. He highlighted some trends observed in many other places around the world: (i) the firms that exported within the EAC region were very rarely also firms that exported to global markets (and vice versa), and that (ii) firms that export within the EAC region were generally smaller and more manufacturing based than global exporters. Using variations in the exchange rates within the EAC, this paper tests for the presence of significant concentrations in selling power (or ‘market power’) among sellers within the region, the results of which would be generally higher prices for consumers. His results are suggestive of excessive market power existing within the EAC and he notes that in the future, the scope and reach of this paper will increase. Andrew Zeitlin (Georgetown Public Policy Institute) was the discussant for this paper, highlighting the potential role of transportation costs in this trade and potential demand-driven effects of the observed exchange-rate fluctuations.
Country Session 3: Pakistan
Chaired by Ijaz Nabi (Country Director, IGC Pakistan), Session 3 on Pakistan was divided into two parts. The first half of the session based on Tax work in the country was opened by Asim Khwaja (Harvard University) who presented his work on property tax. He shared the findings from his study that gathered experimental evidence on incentive pays for tax collectors in the Punjab. His most important policy conclusion was that monetary incentives to the tax inspectors increased collection of property tax. He also presented preliminary evidence that collecting more property tax did not have any significant political cost.
Keeping with the theme, the next presentation was made by Michael Best (LSE) who shared his work on overcoming frictions in the labor market and looked at responses by firms and workers to taxes in Pakistan. His research has found that the income tax regime for the salaried individuals was creating frictions in the labor market. He research implies that tax evasion by salaried individuals can be reduced if the system is simplified.
The second half of the session concentrated on discussing work in garments manufacturing. Ijaz Nabi (IGC), Turab Hussain (LUMS) and Naved Hamid (IGC) shared their studies on understanding the under-performance of the garments manufacturing sector in Pakistan. The findings support the view that garments manufacturing can be critical to boosting exports, generating employment and maximizing value addition. Ijaz Nabi further elaborated on the subsequent deliberations by the government on formulating a workable strategy for the Punjab garments sector, as an excellent example of policy impact of evidence-based research by IGC.
The final round of discussion focused on the country strategy for IGC in Phase II. The country team stressed on deepening work in the key thematic areas that include macroeconomics, state capabilities, firm capabilities and urbanization. There was particular emphasis on expanding the urbanization program and also strengthen engagement with KP and Sindh, in addition to Punjab. IGC Pakistan now has an enhanced opportunity to engage in meaningful policy work, given the continuation of the democratic process and the 2013 electoral outcomes. Asim Khwaja (Harvard University), IGC Lead Academic, highlighted IGC’s mode of engagement on research that focuses on demand-driven policy oriented research hoping to strengthen linkages between researchers and policymakers. He also emphasised the importance of building local research capacity and promoting collaborations with international researchers.
Country Session 4: Ethiopia
Chaired by Alemayehu Seyoum Taffesse (IFPRI and IGC), Country Session 4 was opened by Professor John Sutton (LSE) who highlighted the progress IGC has made with reforming the Ethiopian Investment Agency as part of a two-year engagement. Building on the Enterprise Map Project, Professor John Sutton described key accompanying reforms currently being implemented. The first key reform is to refocus attention on making large firms operational. A key statistic was that only 23% of firms with 10 or more employees that were granted licenses became operational last year, while raising this figure to 50% would lead to a doubling in the number of jobs created. The other important reforms being undertaken are recruiting and training a competent professional staff, and building a proactive and personal relationship with companies.
Douglas Gollin (University of Oxford and IGC) raised a puzzling feature of urbanisation particular to Sub Saharan African countries, which is that traditional forms of industrialisation have not accompanied this process. Rather, exports of primary products may play a role in driving this pattern. He tied this phenomenon to that of youth unemployment and underemployment in Sub Saharan Africa, and highlighted that high dependence on export resource rents is not conducive to generating employment. An important policy implication is that economic diversification may be needed to address this issue.
Pramila Krishnan (University of Cambridge and the IGC) went on to focus on discussing whether it is a valuable exercise to undertake an evaluation of the Technical and Vocational Education and Training (TVET) programme in Ethiopia. Using theory and evidence from other evaluations of vocational education programmes, she argued that there is little reason to expect returns to the TVET in Ethiopia, and that a better strategy would be to first explore whether there are indeed skill deficits in the youth labour force that deter firms from either entering or expanding the Ethiopian market, before pursuing an evaluation of the TVET.
Tsegay Gebrekidan Tekleselassie (University of Sussex) added to the discussion on youth unemployment with a thorough description of statistics and trends relating to the Ethiopian labour market. Of particular note, he highlighted that Ethiopia does not have a problem of unemployment; rather, it is that low unemployment is coupled with high underemployment and informal employment. Accordingly, he suggests that structural change towards building a stronger manufacturing sector is a long-term solution to unemployment.
Country Session 5: Bangladesh
Chaired by Mushfiq Mobarak (Yale and IGC), Session 5 was opened by Oriana Bandiera (LSE) who using evidence from BRAC Targeted Ultra-Poor Programme, highlights the casual link between low capital and skill endowment with poverty. The programme providing asset and training to rural women in Bangladesh, successfully transformed the occupational choices from insecure wage labour to self-employment and increased livestock asset holding and household wealth.
Mushfiq Mobarak using data from a sanitation study finds evidence supporting voters’ rationality in rural Bangladesh. The study show how voters can distinguish skilled politicians and correctly assign them credit. Erica Field (Duke) presents a study that finds unintentional consequences of arsenic mitigation health campaign on infant mortality. The evidence show that switching from arsenic contaminated shallow tubewell to surface water increased the rate diarrheal disease among children in Bangladesh.
Yasuyuki Sawada (University of Tokyo) presents a paper on the determinants of Micro Finance institutions’ outreach in Bangladesh. Nasiruddin Ahmed (Former NBR Chairman) and Mushfiq Mobarak present the status of the ongoing tax-recognition study in Bangladesh. The intervention analyses the effectiveness of social incentives on VAT compliance. The program aims to increase tax revenues by offering non-monetary incentives such as rewards and recognition.
Country Session 6: Sierra Leone and Liberia
Chaired by Eric Werker (Harvard Business School) and Rachel Glennerster (MIT), Session 6 was opened by Katherine Casey (Stanford GSB) who explored how information about candidates and their political platforms translates into voting behaviours. In partnership with Search for Common Ground, they screened videos parliamentary candidate debates in 112 villages. The study’s key finding was an approximate 5 percentage point increase (over control) in votes for the candidate who performed better during the debate. Additionally, by varying what kinds of debate material voters’ saw, she found that the combination of personality and policy is more persuasive than personality or platform material alone. Ambrose James of SGC found that these debates mobilised political discussions at the village level, and that this popular response prompted candidates to increase campaign efforts in these villages.
Mounir Siaplay (IGC Liberia) examined the relationship between household wealth and public versus private school enrolment in Liberia. His results showed that child enrolment in government school in top quintile was less by 74% when compared to the lowest quintile. This suggested towards general apathy to government schools when one can afford private schools.
Eric Werker (Harvard Business School) then compared Liberia to a cross country sample of other double digit growth economies and their triggering factors. His findings show that double digit growers have higher real interest rates, lower consumption to income, higher FDI, higher resource rents to GDP, lower education spending, and worse business environments, infrastructure, and governance. Liberia is trying for double digit growth, but starting from a lower and more agrarian base than on average.
Jaime de Melo (FERDI) and Armela Mancellari (IGC) study the impact of Liberia’s adoption of ECOWAS’ common external tariff on households’ welfare and government revenues. One of the most important lessons is that the trade strategy for Liberia should be a two-pronged one: WTO membership is just as important as ECOWAS membership. Furthermore, maintaining the current waivers on staple commodities like rice and cement could be crucial to avoiding decreasing welfare, especially for rural and poor households.
Country Session 7: India Bihar
The Bihar session opened with a welcome note by Shaibal Gupta (IGC, ADRI) who highlighted the strong linkage of the Bihar program with the state’s policymakers. Anjan Mukherji (IGC, NIPFP) chaired the first half of the session, introducing Maitreesh and Chinmaya who analysed Bihar Government’s Cycling Scheme to understand whether people preferred cash to in-kind transfers.
Rohini Somanathan (IGC, DSE) discussed whether the provision of a ‘Vikas Mitra’ (‘development mate’) to one of Bihar’s most disadvantaged groups, the ‘Mahadalits’, work in practice, and demonstrated that results suggest that while the Vikas Mitra does not exclusively work for the Mahadalits, their help is still targeted more towards disadvantaged households of various kinds. Anjini Kochar (Stanford) presented an evaluation of Bihar’s programme of providing health checkups through schools, and found that the coverage of the programme was still quite low, mostly owing to high student absenteeism and resource constraints. She found that essentially, coverage of the program is constrained by the lack of sufficient number of health personnel, a constraint that cannot be reduced by shifting the delivery point from health institutions to schools.
Robin Burgess (IGC, LSE) chaired the second half of the session, introducing Bihar’s Minister for Water Resources, Vijay Kumar Chaudhary who spoke about Bihar’s turnaround growth story. He mentioned that today, Bihar is a reference point for innovation, and the administration has been reaching out to the marginalized masses, attending to health issues (especially for girls and women), and generally working of improve the quality of life for its citizens. He also mentioned that a number of entitlement based programmes have been launched by the government. He concluded by saying that inclusive development isn’t an electoral strategy, but is a social commitment for the Government of Bihar.
Lord Karan Bilimoria started by talking about his successful business strategy in launching Cobra beer to the UK market. From his experience as an investor in Bihar, he expressed confidence in the state’s recent growth and showed optimism about further private investment in the state. He mentioned that law and order matters not only to the investors but also to common citizens, and the current Bihar government has done a good job in improving safety for everyone. He concluded by saying that Bihar needs more of its growth to come from manufacturing and high value added agriculture.
Navin Kumar, a senior bureaucrat within the Indian government talked about what is needed to sustain Bihar’s growth going forward. He said that although the state is today a turnaround story, two aspects need more attention: private investment and urbanisation.
Adnan Khan (IGC and LSE), the last discussant, said that Bihar’s growth due to change in political institutions give hope to the rest of the world. He said that Bihar had surmounted the first set of challenges: catching up with the rest of India, setting institutions right, getting basic infrastructure-now, it needs to sustain that growth.
Country Session 8: Tanzania
The Tanzania Country Session was chaired by John Page, the Country Director for IGC Tanzania. In the first session, John Sutton (LSE) discussed the Enterprise Map of Tanzania, and the enterprise policy challenges and opportunities presented by natural gas. Sutton set out a range of concrete policy recommendations government can implement to support the integration of local firms in to supply chains of international oil firms. A key measure is to set up a Local Content Unit, with associated support for building up the capacity of local firms.
Stephen O’Connell (Swarthmore College / Visiting Scholar IMF) presented the IGC’s work in support of modernising the monetary policy framework in Tanzania. Tanzania currently operates a reserve money programme – in which controlling the money supply is the main focus of monetary policy operations – within a regional context where the focus of monetary policy is shifting towards more explicit targeting of inflation. O’Connell presented evidence on the relative success of Tanzania’s policy framework to date, and the arguments for, opportunities and challenges with modernising this framework.
Finally, John Page and Chris Adam (IGC Tanzania Lead Academics) presented the key economic challenges facing Tanzania, and set out future directions for IGC’s work, which include: extending the macro research program; new directions in public finance; expanding work on industry (domestic content and SMEs); and pursuing new initiatives on agriculture, growth and employment, natural resources, and urbanisation.
Country Session 9: Mozambique
Chaired by Claudio Frischtak (Inter. B – Consultoria Internacional de Negócios S/C and IGC), session 9 was opened by Catia Baptista (Nova School of Business and Economics) who highlighted the magnitude of the impact of introducing mobile money in rural Mozambique based on a field experiment. Her main conclusions were that (i) 66% of respondents made transactions via mobile in the 12 months following initial dissemination efforts; (ii) there was also evidence of the willingness of respondents to send remittances via mobile money and/or using the latter as an alternative for formal financial service providers. One of her policy implications was that mobile money can help the financial services get closer to people especially in the rural areas where financial services are either minimal or absent.
Esselina Macome (Central Bank, Mozambique) showed that mobile financial service providers are key pillars of financial inclusion. However, it was important to ensure that people trust the system. She also added that there are challenges and opportunities in the provision of mobile financial services. The challenges the need to establish and efficient and operable agent network for cash-in and cash-out; the establishment of a comprehensive risk management methodology and compliance with approved regulations. The major opportunity was to expand the mobile finance services.
John Sutton (LSE and IGC) presented preliminary findings of research which studied the enterprises map of Mozambique. He argued that although Mozambique has been experiencing average economic growth rates of about 7% over the past two decades or so, not more than 30 big private sector firms contributed to this growth. Exports, in particular are driven by a very limited number of multinational firms with limited linkages with the local small and medium enterprises due to limited industrial capabilities of the latter. His major preliminary policy conclusion is that there’s a need to strengthen industrial capabilities of local firms.
Bruce Dyers (ECDPM) argued that the enterprise map is equally useful for policymakers e.g. elaboration of provincial budget policies in a context where there’s a limited number of contractors. Carlos Guanziroli (Universidade Fluminense (Brazil and IGC) showed that agricultural yields of cereals in Mozambique currently stand at 0.8 ton/ha, one the lowest not only in Africa but also in the world. This was partly explained by the low levels of fertilizers/ha. This is having a negative impact on total agricultural output as well as on food security. So, devising policies and strategies to improve the use of fertilizers was crucial.
Country Session 10: Uganda
Richard Newfarmer (IGC) and Sarah Ssewanyana (Economic Policy Research Centre) chaired the Uganda session. Robin Burgess (LSE and IGC) presented the results of the impact evaluation of a BRAC ‘adolescent club’ programme designed to empower adolescent girls against both health and economic challenges. While both components (knowledge building on risky health behaviours and vocational training) had both positive effects, the findings suggest that combining both interventions might yield sizeable improvements in girls’ lives.
Based on relatively optimistic assumptions about the general outlook in Uganda, John Hassler (IIES) argues for letting current generations share in the prosperity promised by the future oil revenues. Yet he emphasized that future income is uncertain and requires that many challenging choices be made successfully and temptations be avoided systematically. He added that the large current account deficits need to be addressed and government deficits should not be allowed to grow too fast. Transparency when it comes to spending oil revenues will be crucial.
Jakob Svensson (IIES and IGC) presented his on-going project on the market of (sake) seeds and fertilizers in Uganda to try to understand for the low intake of agricultural technology. Pilot exercises in Eastern Uganda suggest that all tested samples of fertilizers are lower in nitrogen content that they should have and 30 % of the seeds tested were identified as fake hybrids seeds that are two-fold less productive than authentic ones. Results from the full study will be available soon.
Ibrahim Kasirye (EPRC) and Clare Leaver (Oxford) discussed their research on how to best improve teacher attendance in Ugandan primary schools. Varying designs of monitoring mechanisms along two dimensions: (i) the identity of the monitor and (ii) the stakes attached to the report, the authors highlight that local monitoring improves teacher attendance but only when the head teacher is responsible for monitoring and there are financial incentives for teachers at stake. Findings also show that monitors understate teacher absenteeism, and parents even more so than head teachers. Preliminary results suggest that combining both head teacher and parents monitoring might be a cost effective way to improve teacher presence. Adam Mugume (Bank of Uganda), Albert Musisi (MoFPED, Uganda) and Peter Serneels (East Anglia) provided valuable insights on the various papers. Tessa Bold (IIES and IGC) presented the current IGC country programme and ideas for the way forward.
Country Session 11: South Sudan
South Sudan is a unique engagement for the IGC and the Growth Week 2013 session on the country reflected that. The country’s challenges have a strong political economy nexus at its root, and Peter Ajak, IGC South South Sudan Co-Country Director, began the session by exploring these issues and the centrality of oil to the economy and the role of leadership in navigating political and economic barriers to growth. Although many thought the oil shut-down would be an opportunity for constructing better institutions under a period of effective austerity, it frustrated the use of revenues to construct stability. The increased uncertainty over the durability of political settlements has placed growth on a lower gear: resolution of political issues is paramount for growth.
Following Mr Ajak’s overview of these crucial dynamics, the session heard from Jaime De Melo (University of Geneva) and his analysis of trade opportunities and constraints for South Sudan. The striking characteristic of South Sudan is that geography matters enormously in a sparsely populated country with under-developed infrastructure networks. The goal is a stable, ‘competitive’ exchange rate and reduced transport costs, and building institutions which are WTO compatible, as well as ones compatible with potential EAC or COMESA membership as a way to reduce behind border trade costs.
Eric Verhoogen (Columbia University)’s presentation built upon the discussion of trade, drawing attention to the importance of agriculture in exports – not just in the economy. Perhaps the absence of institutions already in place to handle rents is possibly a blessing in disguise as it allows for Norwegian style off-shore institutions to avoid some of the risks of Dutch disease by leaving money abroad.
The bulk of the session focused on explaining the high level of foreign workers in the South Sudanese context. Utz Pape, former country economist, presented evidence from field research which indicates that the higher employment of foreigners is due to a skills gap: foreign workers have higher skills and these are demanded. Interestingly, Nada Eissa, IGC South Sudan Lead Academic, presented her own research which also noted that the nationality of an employer is associated with the nationality of the employees. Understanding the demand for higher skills and the division along lines of nationality is a call for future research, and indeed, the discussion which followed was focused on how we could understand whether employers’ hiring practices of people like them is due to a preference for similar people or simply because they need to trust them.
Country Session 12: India Central
Chaired by Dilip Mookherjee (IGC; Boston Univ.), the first part of the session began with Sheetal Sekhri (Virginia Univ.) presenting her IGC project which finds that public college graduates earn more because of connections formed, and not academic value added, at colleges. Anjini Kochar (Stanford) remarked that the findings are relevant given the increasing share of the private sector in the number of higher education institutions and student enrolments in India, and concerns regarding quality of higher education.
Karthik Muralidharan (UCSD) presented ongoing work that analyses a ‘Smartcard programme’ in Andhra Pradesh involving electronic transfers to beneficiaries of key welfare programmes, and use of biometric authentication. Increased efficiency in transfers and reduced corruption are found. Sandip Mitra (ISI) said the study is timely as the government is planning to link beneficiary transfers to unique IDs across India. Targeting issues and availability of appropriate technology are key problems.
Michael Greenstone (MIT) presented his IGC project that tests the impact of a modified audit scheme in Gujarat wherein independent environmental auditors are assigned to firms. This leads to more truthful reporting of pollution levels. Hardik Shah (Gujarat Pollution Control Board) said that Gujarat has a strong foothold in polluting manufacturing such as chemicals and environmental regulation is crucial. The findings have been incorporated in the policy framework.
Dilip Mookherjee briefly talked about ‘Ideas for India’ – an economics and policy portal launched in July 2012.
Finally, Vijay Joshi (Oxford) chaired a discussion on ‘Monetary management of the growth-inflation trade off with fiscal constraints’. Joshi posed three questions – with low growth, high inflation and flexible fiscal policy, should fiscal and monetary policy move in the same direction, what monetary policy should be if fiscal policy is inflexible, and how the objective of keeping current account deficit reasonable will affect policy. Sitikantha Pattanaik (RBI) said that key challenges are assessing potential growth rate and a consistent threshold inflation rate. Inflation expectations and output gap affect inflation, and these cannot be managed by monetary policy in the presence of fiscal dominance. Transmission of monetary policy can be improved without a huge growth sacrifice if there is fiscal consolidation. Rathin Roy (NIPFP) said it will not be politically possible for any government to being down fiscal deficit below 7% in the current situation; although quality of deficit can be improved. The RBI’s focus should be maintaining a stable inflation rate, not growth or exchange rate volatility.
Country Session 13: Zambia
The Zambia Country session was co-chaired by Alan Hirsch and Bob Liebenthal who are the Country Directors for IGC Zambia. The session began by Bob (IGC) providing an overview of the Country Strategy Note (CSN) as well as an overview of projects in Phase I. Alan (IGC) later gave a background to Phase II and outlined the main areas of focus which have remained to be domestic resource mobilization; infrastructure investment and services; and economic diversification and integration. Alan (IGC) also highlighted how the IGC intends to engage with the wider policy networks in Zambia to ensure research is transformed into policy. Closely related to this was IGC’s plan to strengthen partnerships with local research and policy organizations such as the Zambia Institute for Policy Analysis and Research (ZIPAR) and the National Economic and Advisory Council (NEAC).
When commenting on the country strategy, Michael Gondwe (Governor at Bank of Zambia (BOZ)) and Bernard Kampasa (Permanent Secretary to Cabinet), the senior-most representatives of the Zambian government at Growth Week 2013 commended the IGC for prioritizing the areas that are of current interest to the Zambian government. The two have pledged to support the IGC work in Zambia.
Presenting a paper on ‘Short Run Determinants of the Nominal Kwacha: Implications for Exchange Rate Policy’, John Weeks (University of London) pointed out that the exchange rate in Zambia has been relatively stable and consistent with economic trends. However, there have been some substantial changes since the Highly Indebted Poor Countries (HIPC) period. John (University of London) also noted that the Kwacha has been relatively stable over the last two years, partly due to the BOZ intervention in the foreign exchange market.
In a related paper on ‘Copper Price and Diversification: Are they Kwacha Fundamentals?, Oswald Mungule (NEAC) indicated that the country is following a path of diversification, moving away from depending on copper, and implementing an industrial clustering programme (value-chain based). In his conclusion he agreed with John Weeks (University of London) that after HIPC the Kwacha started appreciating and has remained smooth since.
Austin Land (IPA) gave a presentation on an RCT; ‘Food Constraints, Yield Uncertainty and Ganyu Labor: A Pilot Study in Zambia’. The main focus of the presentation was to assess why small-scale farms fail to achieve higher yields. Further investigation into whether the part time jobs (Ganyu Labor) that small scale farmers get in big farms during the rainy season could be affecting the farm productivity was suggested.
Country Session 14: Myanmar
Myanmar’s country session at Growth Week provided an overview of the country’s recent reforms and economic challenges, with directions for potential future IGC research highlighted. The session brought together researchers from the Myanmar Development Resource Institute’s Centre for Economic and Social Development (MDRI-CESD) and members of the IGC network.
Robin Burgess (LSE, Director, IGC) chaired the discussion, emphasizing Myanmar’s status as the newest country for IGC’s work and the site of potentially fast-paced economic development. The first half of the session then began with a presentation on “Challenges for Myanmar’s Public Administration Reform” from Tin Maung Than, (Director, MDRI-CESD). Tin Maung Than outlined events from the country’s constitutional reform in 2008 through today, and then described the current policy-making process and the government bodies tasked with overseeing different aspects of reform. As a number of significant policy changes are on the table, which could create a need for rigorous assessment—and an opportunity to track the effect of the new reforms. Robert Conrad (Duke University) then discussed “Public Finance and Natural Resource Management, Gaps and Challenges Facing Myanmar.” Conrad analysed the problem of Myanmar’s low rate of revenue collection and advocated clarifying current rules, simplifying the tax system, and creating better incentives to pay tax and manage natural resources transparently.
Paul Minoletti (Research Coordinator, MDRI-CESD) covered “Opportunities for IGC Engagement in the Context of President Thein Sein’s Reform Agenda.” A recent speech by the President laid out an agenda including five main areas where IGC collaboration could be fruitful: Electricity, Agriculture, SMEs, Trade, and Financial Sector Reform. Finally, Andrea Smurra, IGC Country Economist in Myanmar, led a discussion of Myanmar’s Country Strategy Note. The session was well attended, and members of the IGC research network expressed strong interest in areas including the garment sector, microfinance, trade, and decentralization reforms.