WORKING PAPER 38 - March 31, 2021
KEYWORDS: Consumer demand system, QUAIDS, carbon pricing, Sub-Saharan Africa, household welfare, distribution, sustainable development
Policy makers frequently voice concerns that carbon pricing could impair economic
development in the short-run, especially in low-income countries such as Uganda. We estimate
a quadratic almost ideal demand system (QUAIDS) for energy and food items to assess how
consumers’ welfare, energy and food demand, as well as nutritional intake, can be expected to
react to a carbon price of US$40/ton. The results suggest overall progressive welfare effects in
the range of 0.1 – 4.9% across the population. We further observe declines in the demand for
electricity, kerosene and transport in the range of 4 – 20%, with concomitant shifts within food
consumption baskets, due to complementarities with cooking fuels, and income effects.
Heterogeneous demand responses across expenditure terciles and rural-urban areas reveal
significant disparities in food and calorie consumption as well as protein and micronutrient
intake due to carbon pricing. The bottom third of households exhibit nutritional declines of up
to 16%, while middle-class urban households witness increases by around 9%. Complementary
social protection policies in conjunction with carbon pricing could ease potentially adverse
effects on economic development outcomes in Uganda.
WORKING PAPER 37 - March 26, 2021
KEYWORDS: ultimate investors, bilateral foreign direct investment (FDI), phantom FDI, multinational enterprises, ultimate investing country (UIC), foreign affiliate statistics, international development, international finance, United States Agency for International Development (USAID), United Nations Conference on Trade and Development (UNCTAD), International Monetary Fund (IMF), Bureau of Economic Analysis (BEA)
Official foreign direct investment (FDI) statistics track FDI via direct investing nation rather than ultimate investing country (UIC). If a FDI project is sourced through an overseas subsidiary, normal FDI metrics will register that investment as being from the third country, not the home country of the multinational. There is a growing awareness that the large amount of FDI channeled through special purpose vehicles and offshore financial centers therefore makes official statistics unreliable: investment from certain nations may be significantly under or over counted. According to official statistics, the United States ranks 11th in terms of total amount of foreign direct investment (FDI) in Vietnam. As Vietnam joins the ranks of lower middle-income countries, and becomes more integrated into global value chains, a more representative methodology for calculating FDI would help Vietnam thoughtfully engage with foreign investors and support Vietnam's development objectives. This report, commissioned by the United States Agency for International Development (USAID) in Hanoi includes: 1) A literature review of FDI databases and FDI tracking methods, 2) a comparative analysis of the existing methods for tracking FDI via UIC, 3) a discussion on the feasibility of implementing those methods for Vietnam, 4) a novel method for estimating Vietnam’s inward FDI via UIC, 6) recommendations to USAID for further research and analysis.
WORKING PAPER 36 - March 19, 2021
KEYWORDS: electricity, manufacturing, employment, renewable energy
Almost half of firms in South Asia identify electricity as a major constraint to operations. We investigate whether electrification in Nepal – via microhydro mini-grids – helped grow the manufacturing sector. Electrification led to a substantial and statistically significant increase in formal manufacturing establishments; yet the overall presence remains limited due to low baseline numbers. Labor shifts from self-employment and agriculture to employment for salary and wages. Increases in informal, nonagricultural household enterprises also contribute to labor changes. In more remote locations – farther from the historical electrical grid – the impacts of microhydro on manufacturing establishments are significantly muted.
WORKING PAPER 35 - March 8, 2021
KEYWORDS: Social Capital, Digital Capital, Digital Politics, Digital Democracy
This conceptual work dissertates the contesting theoretical underpinnings of political participation on social media platforms, challenges, and poses possible future research questions in digital politics. The study first briefly discusses the popular theoretical frameworks applied to digital politics research; and then builds upon the popular framework of social capital that can yield a generally applicable digital capital framework. The essay concludes with challenges and future research questions demanding scholars' attention in their broader internet politics discipline.
WORKING PAPER 34 - March 2, 2021
KEYWORDS: China, development, upper middle-income stage, transition to high income, anti-poverty strategies, poverty reduction, inequality, demography, human development, urbanization, rural migration
This paper summarizes what developing countries that are on the cusp of high income can learn from the approaches to poverty reduction adopted by the United States, Japan and the Republic of Korea. China is almost as well-off today as the United States was in 1960, Japan in 1980, and South Korea in 2000, when they reached high-income. China’s poverty reduction strategy is quite different from the approaches adopted by these countries. Relatedly, China’s performance in reducing poverty rates—using developmentally appropriate standards such as the official definition of poverty adopted by the US in the 1960s—is considerably less impressive than widely believed.
WORKING PAPER 33 - March 10, 2021
KEYWORDS: United States, economy 1920-1960, upper middle-income, high-income status, trends in national income, income inequality, demography, vulnerable groups, government spending, poverty reduction, human development, poverty reduction strategies, Great Depression, New Deal
This paper is one of three country studies of successful anti-poverty measures during upper middle-income levels, the other two being Japan and the Republic of Korea. Though the US did not advance an explicit anti-poverty agenda until the 1960s, assisting the economically distressed was a key priority of the New Deal. Average education, life expectancy and earnings all increased during 1920-1960. Poverty fell by two-thirds to around 22 percent as the mean income rose and income inequality fell beginning in the 1940s. Economic gaps among Black Americans, women, the South, and rural areas converged, though these gaps persist to this day. Migration, urbanization, and the structural shift away from agricultural jobs transformed the economy. These, along with factors such as strong collective bargaining and access to education, helped keep low incomes rising amidst overall growth. New Deal policies that impacted market incomes (labor laws, farm subsidies, education) fueled poverty reduction more than transfers (direct relief, work relief, social insurance). Though welfare programs helped lower the poverty gap and were important policy innovations, the payment levels were too low to bring people out of poverty—defined in a manner appropriate for a country on the cusp of high income—until well after 1960.
WORKING PAPER 32 - March 2, 2021
KEYWORDS: Japan, economic growth, upper middle-income phase, high-income, anti-poverty strategies, poverty reduction, welfare-through-growth strategy
This paper is one of three country studies of successful anti-poverty measures during upper middle-income levels, the other two being South Korea and the United States. Japan’s welfare-through-growth strategy appears to have worked through much of its development process, especially during its upper-middle income phase. But with suddenly slowing growth, higher unemployment and increased poverty among sections of Japanese society after the economy reached high income levels, the Japanese government was slow to adapt the country’s unemployment protections, labor market regulations, and social security in general. The paper describes what the Japan’s welfare-through-growth strategy entailed, why it worked through its upper-middle income growth phase and why it collapsed after the start of Japan’s high-income era. For upper middle-income countries like China, Japan represents an especially useful case study on the changes in policies and programs to reduce poverty and alleviate other social stresses that will inevitably become important in the decades ahead.
WORKING PAPER 31 - February 10, 2021
KEYWORDS: South Korea, economic development, middle-income countries, transition to high-income, anti-poverty strategies, human capital, export-oriented industrialization, poverty reduction
This paper is one of three country studies of successful anti-poverty measures during upper-middle-income levels, the other two being Japan and the United States. South Korea may well be the most successful case of economic development in recorded history. Within two generations, it was transformed from a post-conflict country to a post-industrial society that has low poverty rates, high per capita income levels, and close to the highest educational attainment, health outcomes and living standards in the world. The paper attributes South Korea’s success in reducing poverty to a sequenced combination of measures aimed at agricultural productivity and rural livelihoods, export-oriented industrialization and urbanization, and early and sustained investments in human capital. It provides details that may be useful for formulating anti-poverty strategies middle-income countries that are on the cusp of high-income.
WORKING PAPER 30 - March 8, 2021
KEYWORDS: health financing, universal health coverage, insurance, PM-JAY, India
India is a lower-middle-income country (LMIC) with 21% of its population living below the international poverty line. Yet, its government health expenditure in 2016 was only 1.17% of its ross domestic product (GDP), a share that is even lower than the average for low-income countries. India also faces a shift in disease burden, with non-communicable diseases (NCDs) emerging as top causes of mortality while infectious diseases and maternal, neonatal, and nutritional health remain areas of concern. To address these challenges and improve healthcare access and affordability for poor and vulnerable populations, India launched Pradhan Mantri Jan Arogya Yojana (PM-JAY) in 2018 as a successor to the Rashtriya Swasthya Bima Yojana (RSBY) scheme. To further inform policy development, we synthesized the early experiences of PM-JAY by conducting a narrative review, focusing on the three dimensions of universal health coverage (UHC): population coverage, service coverage, and financial risk protection.
WORKING PAPER 29 - March 9, 2021
KEYWORDS: Aid transition, aid dependency, donor dependency, donor concentration, global health, Kenya, PEPFAR, Aid for Health, health aid
As more countries move from low- to middle-income status, they are perceived as increasingly capable of financing their own health systems. Some donors have begun to transition their support out of such middle-income countries (MICs) to redirect their funds to countries with greater needs. However, this transition may leave a funding gap for MICs that could be difficult to fill when external resources decline. If not carefully managed, such financial shifts could lead to the loss of health gains that occurred while receiving substantial external financial support. Understanding levels of donor dependency (i.e., whether or not a country is likely to have capacity to fill a funding gap caused by donor transition) and donor concentration (i.e., when only a few donors make up the majority of aid) can illuminate areas of potential vulnerability for transition. In this study, we analyzed Kenya’s health system for donor dependency and donor concentration.