Developing Economies Seminar Series

Illicit Financial Flows - Definition, Measurement and Implications for Policy Making

June 12, 2018
Maya Forstater

M. ForstaterCombatting illicit financial flows has risen up the policy agenda in recent years and is included as a target of the  Sustainable Development Goals (SDGs). The idea of illicit financial flows is important because it highlights that crime and corruption are not just the problem of the country where they happen, but also involve 'spillover' impacts from other countries whose financial systems, goods trade and real estate markets are vulnerable to be used as getaway vehicles. However, there is no globally agreed upon definition for “illicit financial flows”, and much disagreement and confusion over this term. Debates are often shaped by impossibly raised expectations of hundreds of billions or even trillions of additional funds for development that might be unlocked through international action.

Financial Lives of the Poor

May 3, 2018
Jonathan Morduch

J. lMurdochThe lives of the poor are hidden in standard economic surveys of households. New studies with high-frequency data on cash flows, however, are revealing a new view of poverty—and of the importance of financial inclusion. The studies show that the volatility of income and the variability of needs are common and fundamental elements of poverty. As a result, poor families often lead active financial lives—not despite being poor, but because they are poor. They want to save, can save, and do save – though, often in improvised ways that challenge both behavioral and neoclassical economic assumptions. The private sector is responding with digital solutions and the public sector with regulation, putting new attention on economic insecurity as a policy concern. Examples and lessons are drawn from India, Bangladesh, South Africa, and the United States. 

The Economics of Conflict and Post Conflict

March 23, 2018
Rachel Glennerster

R. GlennersterOn current trends, by 2030, 80 percent of the extreme poor will be in countries that are currently fragile. This means the work of development will increasingly be about how to prevent conflict and how to achieve positive change in post-conflict and fragile states. Political science has much to say about the strategies to achieve pursue in these difficult situations. But what can economics add? A growing literature in economics carefully identifies contributors to conflict which range from rising temperatures to lower wages. Combatting climate change, helping labour-intensive sectors flourish, and building noncognitive skills are practical policy recommendations coming from this work. Economic studies of conflict itself find that hearts and minds approaches are much more effective in combatting insurgencies than violent repression. Given that growing economic opportunity increases the opportunity cost of conflict, how successful are post-conflict programs in generating these opportunities? A recent review of rigorous evaluations of Community Driven Reconstruction programs (a large proportion of spend in post conflict environments) suggests moderate success even in very challenging environments. We present new results showing these economic benefits can persist many years after the support is withdrawn.

Global Income Inequality: Results, Issues, Political Implications

February 26, 2018
Branko Milanovic

B. MilanovicThe talk will discuss the evolution in global inequality. It will present the most recent estimates, discuss methodological and measurement issues, and look at political implications of the changes that are taking place in global distribution of income. In particular, it will focus on the rise of the middle class in Asia, income stagnation of the rich countries’ middle classes, and the emergence of global plutocracy.

Informational Constraints on Antipoverty Policies: Evidence for Africa

January 11, 2018
Martin Ravallion

M. RavallionIt has often been said that the world’s aggregate poverty gap—the total monetary amount by which all poor people fall below the poverty line—is modest when one uses poverty lines typical of low-income countries. The implication is sometimes drawn that only a modest sum of money is needed to eliminate global poverty—to bring all poor people up to the international poverty line. However, eliminating poverty may well be a lot harder than the size of the aggregate poverty gap might suggest.  Identifying who is poor and by how much is challenging. The poverty gap calculation could be way off the mark.

The presentation will provide an overview of two recent studies that have tried to assess whether the data typically available and routinely used by policymakers in sub-Saharan Africa—the poorest region of the world by most measures—are adequate to reliably identify who is poor. It will be argued that even with a budget sufficient to eliminate poverty with full information, standard proxy-means tests do not bring the poverty rate below about three-quarters of its initial value. The prevailing methods are particularly deficient in reaching the poorest households. And even when poor households are reached, poor individuals are often missed. Indeed, roughly three-quarters of underweight women and undernourished children are not found in the poorest 20 percent of households, and around half are not found in the poorest 40 percent. Some potential improvements in targeting methods are considered, as is a universal basic income as a policy option.