The hidden costs of index investing in foreign markets
Let’s Talk Development blog, 21 March 2017
Cross-border portfolio investments are increasingly important in global markets. Since 2001, the share of equity holdings by foreign investors grew from 19 percent of the world's stock market capitalization to more than 35 percent by the end of 2015 (IMF, 2016). Much of this recent growth has been in foreign index funds, that is, in funds that replicate the return of an index by buying and holding all (or almost all) index stocks in the official index proportions (Cremers et al., 2016). Notwithstanding their popularity among investors, little is known about how managers of these funds trade to accommodate flows, and how their performance compares to domestic funds with similar management style.
Read the blog by Alvaro Pedraza Morales, Fredy Pulga, and Jose Vasquez.
Social development and the global community: Why the legitimacy of the change process matters
People, Space, and Deliberation blog, 20 March 2017
This is the first post in a series of six in which Michael Woolcock, Lead Social Development Specialist at the World Bank and lecturer in public policy at the Harvard Kennedy School, discusses critical ideas within the field of Social Development.
Both globalization and international development bring a wide range of people into contact with one another, linking distant communities to transnational networks and opening up spaces to new ideas. Alongside the state, multilateral development banks (MDBs), intergovernmental organizations (IGOs), civil society organizations (CSOs), private contractors, and development professionals converge on project sites, often interacting directly with local communities.
Read the interview with Michael Woolcock.
Women, cities, and opportunity: Making the case for secure land rights
Let's Talk Development blog, 20 March 2017
Land and property lie at the center of many of today’s pressing development challenges. Consider that at most 10% of land in rural Africa is reliably registered. At this week‘s annual Land and Poverty Conference here at the World Bank, we will hear how this vast gap in documentation of land gap blunts access to opportunities and key services for millions of the world’s poorest people, contributes to gender inequality, and undermines environmental sustainability.
Read the blog by Klaus Deininger.
The Iron Law of ALMPs: Offer a Program to 100 People, maybe 2 get jobs
Development Impact blog, 20 March 2017
I have just finished writing up and expanding my recent policy talk on active labor market policies (ALMPs) into a research paper (ungated version) which provides a critical overview of impact evaluations on this topic. While my talk focused more on summarizing a lot of my own work on this topic, for this review paper I looked a lot more into the growing number of randomized experiments evaluating these policies in developing countries. Much of this literature is very new: out of the 24 RCTs I summarize results from in several tables, 16 were published in 2015 or later, and only one before 2011.
I focus on three main types of ALMPs: vocational training programs, wage subsidies, and job search assistance services like screening and matching. I’ll summarize a few findings and implications for evaluations that might be of most interest to our blog readers — the paper then, of course, provides a lot more detail and discusses more some of the implications for policy and for other types of ALMPs.
Read the blog by David McKenzie.
Climate change drives up river salinity in Bangladesh
thethirdpole.net blog, 10 March 2017
Already facing increasing river salinity due to climate change, parts of coastal Bangladesh could become zones of poverty with limited freshwater available in rivers.
Studies conducted by the World Bank, Institute of Water Modelling and World Fish–Bangladesh between 2012 and 2016 have quantified the effects of increasing salinity in river waters in coastal Bangladesh, including the areas in and around the Sundarbans — the world’s largest mangrove forest that straddles the coast of Bangladesh and India.
Read the blog by Susmita Dasgupta.
The potential gain from regional electricity trade in South Asia
Let’s Talk Development blog, 16 March 2017
Countries in the South Asia Region (SAR) face a number of operational and economic challenges as they seek to keep up with rapidly growing electricity demands. Our analysis finds that increased regional electricity trade facilitated by expanded cross-border transmission interconnections among SAR countries can contribute significantly to alleviating these challenges. Cross-border electricity trade could save as much as US$94 billion (in present value terms) in the region during the 2015-2040 period. It would reduce the regional power sector CO2 emissions during the period by 8% even without pro-active measures to reduce CO2 or harmful local pollutants. Moreover, significantly increasing cross-border interconnection and trade will necessitate taking steps that inevitably will reduce substantial existing inefficiencies in national power systems in the region, as well.
Read the blog by Mike Toman and Govinda Timilsina.
What’s new in education research? Impact evaluations and measurement – March round-up
Development Impact blog, 15 March 2017
Here is a curated round-up of recent research on education in low- and middle-income countries, with a few findings from high-income countries that I found relevant. All are from the last few months, since my last round-up.
If I’m missing recent articles that you’ve found useful, please add them in the comments!
Read the blog by David Evans.
Fact checking universal basic income: can we transfer our way out of poverty?
Development Impact blog, 27 February 2017
New York Times published an article last week, titled “The Future of Not Working.” In it, Annie Lowrie discusses the universal basic income experiments in Kenya by GiveDirectly: no surprise there: you can look forward to more pieces in other popular outlets very soon, as soon as they return from the same villages visited by the Times. One paragraph of the article drew my attention in particular: “One estimate, generated by Laurence Chandy and Brina Seidel of the Brookings Institution, recently calculated that the global poverty gap — meaning how much it would take to get everyone above the poverty line — was just $66 billion. That is roughly what Americans spend on lottery tickets every year, and it is about half of what the world spends on foreign aid.”
Well, I don’t know about you, but that paragraph makes me think that if we just were able to divert 50% of the current foreign aid budget towards cash transfers, we would eliminate extreme poverty. But, is that really true? The answer is: “not even close.”
Read the blog by Berk Özler.
Gross capital inflows to banks, corporates, and sovereigns
VoxEU blog, 24 February 2017
Capital flows play a key role in the transmission of real and financial shocks across countries, but empirical work on flows by sector is scarce. This column uses a newly constructed dataset of capital inflows for 85 countries, broken down by borrowing sector, to show that private debt flows are negatively correlated with global risk appetite, while borrowing by sovereigns is positively correlated with risk appetite. This and other results discussed show the importance of splitting capital inflows into their borrowing sectors when designing policy to manage macrofinancial risk.
Read the blog by Stefan Avdjiev, Bryan Hardy, Sebnem Kalemli-Ozcan, and Luis Servén.