Tag: Development

Russia in Africa: What the Literature Reveals and Why It Matters

Posted on September 23, 2024 | Policy Brief

Industrial oil factory in Africa symbolizing Russia’s influence on Africa's resources and economy.

Following the full-scale invasion of Ukraine in February 2022, Russia has become increasingly isolated. In an attempt to counter Western powers’ efforts to suppress its economy and soft power impacts, Russia has tried to increase its influence in other parts of the world. In particular, Russia is increasingly active in Africa, having become a key partner to several African regimes, typically operating in areas with weak institutions and governments. Additionally, Russia’s approach has a different focus and objectives compared to other foreign actors, which may have both short and long term consequences for the continent’s development. Deepening our understanding of Russia’s distinct approach alongside those of other global actors, as well as the future implications of their involvement on the continent is, thus, of crucial importance.

Introduction

The new Foreign Policy Concept, adopted by the Russian government in March 2023, dedicates, for the first time, a separate section to Africa. The previous versions of the policy grouped North Africa with the Middle East and contained only a single paragraph, kept unchanged over time, about Sub-Saharan Africa. In the midst of its war against Ukraine, Russia is getting serious about Africa. What do we know about the reasons for and implications of this trend?

A relatively large literature in economics, political science, international relations, and other related fields has dealt with the Soviet Union’s engagement with African regimes (see overviews in Morris, 1973 and Ramani, 2023). However, the number of studies following the evolution of these relations since the collapse of the Soviet Union is significantly smaller, reflecting Russia’s strategic withdrawal from the region between 1990 and 2015. Following the full-scale invasion of Ukraine, Russia’s increased interest in and engagement on the African continent has been increasingly discussed by security analysts and think tanks (see for instance Siegel, 2021; Stanyard, Vircoulon and Rademeyer, 2023; Jones, et al., 2021). Primarily highlighted are Russia’s interest in mineral deposits, its large-scale arms’ exports to African regimes, its dominance on the nuclear energy market with resulting dependency on Russian nuclear fuels, and its ambition to undermine Western capacities by the spread of Russian propaganda and anti-Western sentiments (Lindén, 2023). Each of these dimensions carries potentially profound and far-reaching implications for the continent’s development, as underscored by various strands of literature. Research contributions on this specific new trend are however still very limited and predominantly of a qualitative and exploratory nature.

There is, however, substantial general knowledge about the various forms that foreign interests can take, including trade, investment, development aid, propaganda, election interference, and involvement in conflicts, and their potential consequences for development. This brief presents an overview of selected literature that most closely relates to foreign influence in Africa.

Background: Theories of Foreign Policy

Two contrasting approaches are used to describe the way countries engage with the international community. The first one is the so-called realist perspective, which emphasizes the role of power, national interests, and security in shaping foreign policy (Mearsheimer, 1995). In this model, countries act in their self-interest, and often in competition or even conflict with other countries. Strategic alliances and a willingness to use force to advance one’s interests are contemplated under this perspective. The second approach is the idealist perspective, in which foreign policy is used to promote democratic values, human rights, and international cooperation, prioritizing tools such as diplomacy, international law, and multilateral institutions (Lancaster, 2008). For countries at the receiving end of major powers’ foreign policy agendas, and particularly for developing countries, the implications from the contrasting approaches will be widely different. While even a realist foreign policy may ostensibly incorporate concerns about the welfare and development of its allies, these are often not more than a thin disguise for the ultimate objective of buying political support and commercial advantages. A genuine interest in the welfare and development of receiving partners only finds a place under the idealist perspective, although even idealism is at times claimed to “greenwash” state actors’ own interests (Delmas and Burbano, 2011). While this claim has some substance to it, such accusations can also stem from the anti-western rhetoric typically pursued by Russia and aimed at undermining the credibility of actors with good intentions.

In practice, most countries’ foreign policies incorporate elements of both realism and idealism, although the balance between the two may vary. Some countries may have a predominantly realist approach, while others may prioritize idealist goals. Additionally, the same country may shift its approach over time, depending on changing circumstances and priorities. Idealism may be more prominent during periods of stability and prosperity, when countries have the resources and political will to pursue more ambitious foreign policy goals. Realism tends to become more prominent in times of crisis, when countries face serious threats to their national security or economic well-being. Historical examples of the latter are the aftermath of World War II, the Cold War, and even the 2008 global financial crisis (Roberts, 2020).

Comparative Analysis of Foreign Influence

A few studies, recent enough to encompass Russia’s renewed interest in Africa post-2015 but not enough to cover the current day resurgence, explicitly compare the strategy of different actors and their long-term influence. Trunkos (2021) develops a new soft power measure for the time-period 1995–2015, to test the commonly accepted claim in the political science literature that American soft power use has been declining while Russian and Chinese soft power use has been increasing. In the author’s own words, “the findings indicate that surprisingly the US is still using more soft power than Russia and China. The data analysis also reveals that the US is leading in economic soft power actions over China and in military soft power actions over Russia as well.”

Castaneda Dower et al. (2021) take a longer-term perspective and categorize African countries into two blocs one Western-leaning and one pro-Soviet, based on a game-theoretical model of alliances. This categorization aligns well with UN voting patterns during the Cold War, but it does not predict alignment as effectively in the post-Cold War period. The study finds no significant difference in average GDP growth between the two blocs for the period from 1990 to 2016. However, the bloc with Western-like characteristics shows higher levels of inequality and greater reliance on the market economy – as opposed to the planned one. It also has higher human capital, more gender parity (in education), and better democracy scores, but lower infrastructure capital compared to the other bloc.

Another strand of literature has looked into the deep changes that have occurred over time within the global development architecture, highlighting changes in donor and partner motivations after the end of the Cold War (Boschini and Olofsgård, 2007; Frot, Olofsgård and Perrotta Berlin, 2014), through the Arab Spring (Challand, 2014), and more recently under the emergence of new actors, chiefly China (Blair, Marty and Roessler, 2021). Studies in this area aim to highlight what implications the varying ideologies and motivation for cooperation in the donor countries have for countries at the receiving end. Competing aid regimes generate soft power through public diplomacy, often in the form of branding (for instance through putting origin “flags” on aid projects or investments). This type of positive association has been shown to generate ‘positive affect’ toward donors (Andrabi and Das, 2010), and to strengthen recipients’ perceptions of the models of governance and development that such donors promote – liberal democracy, for example, or free market capitalism (Blair, Marty and Roessler, 2021).

Emerging Players on the African Stage

An extensive literature has examined the various facets of established power actors’ presence on the continent, spanning foreign aid, diplomatic relations, and military involvement, revealing significant impacts on local economic development through multiple channels. The United States, along with other former colonial powers and major Western donors, plays a particularly prominent role in this context. Against this background, recent research has increasingly focused on the rise of new actors, and in particular China’s expanding role as a donor and investor in Africa (Bluhm, 2018; Brautigam, 2008; Brazys, Elkink and Kelly, 2017; Dreher et al. 2018). While the consensus is still unclear on whether China’s approach to aid attracts support among African citizens (Lekorwe et al. 2016; Blair, Marty, and Roessler, 2021), recent research also shows that Chinese aid exacerbates corruption and undermines collective bargaining in recipient countries (Isaksson and Kotsadam 2018a; 2018b).

As mentioned, there are as yet very few recent articles concerned with the reasons for Russia’s renewed interest in Africa (see Marten, 2019; Akinlolu and Ogunnubi, 2021; Ramani, 2023), and even fewer analyzing the potential impacts from it. One working paper, not citable due to the authors’ wishes, has quantitatively mapped and explicitly analyzed the impact of Russian military presence (in particular, of the Wagner Group) in Africa. The study found that the infamous paramilitary group faces fewer repercussions for human rights violations and commits more lethal actions than the state actors that employ them. In another recent study on the Central African Republic (CAR), Gang et al. (2023) found not only mortality levels in CAR to be four times higher than what estimated by the UN but also that Wagner mercenaries have contributed to “increased difficulties of survival” for the population in affected areas. Pardyak, M. (2022) explores the communication strategies employed by the key actors in the war, specifically focusing on how these strategies are received in African societies. Based on the analysis of over 140 media articles published in several African countries up to 15 October 2022, complemented by street surveys in Cairo, and in-depth interviews with Egyptians and Sudanese migrants, the study concludes that Russia’s multipolar perspective on the international order is more widely supported in Africa than Western strategies.

When viewed in a historical context, however, Russia’s actions reflect a longstanding adherence to a realist approach in its foreign policy endeavors. Throughout its trajectory, Russia has consistently prioritized national security and economic interests, frequently leveraging military and economic means to safeguard these interests (Tsygankov and Tsygankov, 2010). Presently, amid mounting pressures from the Western democratic world following the full-scale invasion of Ukraine in February 2022, Russia finds itself increasingly reliant on a realist approach. While the Chinese engagement in Africa is also characterized by realist principles, it’s important to emphasize that the Russian approach diverges from that of China. China is focused on a long-term presence, infrastructure building and investments. It has no interest in democracy and human rights, is efficient and cheap though not always loved (Isaksson and Kotsadam, 2018b). Russia’s interest is more short term and opportunistic, seeking out countries rich in natural resources with unstable governments and weak institutions, such as Libya, Sudan, Mozambique, the Central African Republic, Mali, Burkina Faso and Madagascar. Russia typically targets undemocratic elites or military juntas, offering political support, military equipment sales, and security cooperation (in particular through the Wagner Group) in exchange for access to natural resources, concession rights and influence. State of the art research on a previous period (Berman et al., 2017, spanning 1997 to 2010), although not exclusively focused on Russia, finds that rents from mineral contracts, captured by swings in global mineral prices for a causal interpretation, lead to a higher likelihood of local conflicts, and furthermore that the control of mining areas by rebel groups can escalate violence beyond the local level.

Russia is pursuing a range of strategic goals that include diplomatic legitimization, media influence, military presence, elite influence, arms export, and shaping voting patterns in international organizations (Lindén, 2023). Like China, Russia is uninterested in democracy or human rights. Moreover, what Russia stands for is in stark contrast to the Western model. Russia embodies autocracy and backward revisionist values (for instance in areas such as attitudes to gender equality and the sustainability agenda) while the West generally promotes democracy and progressive inclusive solutions (Lindén, 2023). What also especially characterizes Russia is the particular attraction towards the presence of anti-West sentiment, which it fuels through populistic anti-colonial disinformation and propaganda. This approach has been criticized for potentially weakening democratic norms and sidelining African agency (Akinlolu and Ogunnubi, 2021). Additionally, Russia’s disregard for the socio-political realities in Africa, typically associated with a self-interested realist approach, can lead to ineffective engagement and unintended negative consequences, undermining the long-term sustainability of both social and economic developments in the region.

Conclusion

Many African countries find themselves in a delicate balancing act, as they cannot afford to push away Russia nor displease their historical Western partners. This attempt to balance between actors poses several risks and potentially detrimental consequences, including reduced development cooperation, slower democratization, limited progress on human rights, and increased conflicts. Additionally, Russia’s growing presence in Africa can have implications for the interests and policies of the European Union (EU) and its member states as well as global actors, including impacts on migration, terrorism, the energy sector as well as on trade and aid flows.

In light of the diverse strategies foreign powers use in their relations with African countries and the significant impact these strategies have, it is crucial to deepen our understanding of foreign engagements in Africa. By examining Russia’s distinct approach alongside those of other global actors, we can gain valuable insights into the complex dynamics shaping the continent’s political, economic, and social landscape, both now and in the future. Expanding research in this area is not only desirable but essential for informing policy and development strategies.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

A Gender Perspective on Financing for Development

Posted on May 29, 2024 | Policy Brief

Featuring scene with women walking between tall columns casting long shadows representing gender equality financing.

Gender equality should be considered a global public good due to its extensive benefits for both society and the environment. Investing in gender equality as a global public good necessitates a coordinated international effort, which should be a focal point in discussions on the future of development financing. The upcoming Fourth International Conference on Financing for Development (FfD) in 2025 in Madrid, Spain, provides a crucial opportunity to assess the progress towards the Sustainable Development Goals (SDGs) and allow countries to refine their strategies. However, recent background documents lack an explicit focus on opportunities for advancing gender equality, which was also inadequately addressed in the Addis Ababa Action Agenda formulated at the previous FfD conference in 2015. This brief is based on the first of a series of roundtables, organized by the Center for Sustainable Development (CSD) at Brookings, aimed at providing inputs on this critical topic in the lead-up to the Madrid conference.

Financing for development relies on three main pillars: domestic resource mobilization; development assistance; and other sources of international financing. The latter category includes both private and public sources that emerge in response to the need for a global safety net and social protection system, especially in light of increasing risks from pandemics and climate-related shocks. This policy brief is an attempt to highlight how gender considerations may integrate into each of these pillars. It builds on insights from the first Center for Sustainable Development roundtable, discussing this important issue in preparation for the Fourth International Conference on Financing for Development in 2025.

Domestic Resource Mobilization

Fiscal policy plays a critical role in addressing gender gaps, particularly in low-income economies with limited fiscal space. Fiscal policies, including tax systems and public spending, must be designed to consider their gender-specific impacts. For the spending side, several initiatives are promoting tools like gender responsive budgeting, as has been recently discussed in a FROGEE policy paper by Anisimova et al. 2023, on the case of Ukraine.

One key area caregiving services. Caregiving, whether for children, the elderly, or other dependents, disproportionately affects women (see another FREE Network brief by Akulava et al. 2021) and remains largely invisible in economic policies. Many countries, especially outside of higher-income economies, lack universal caregiving services and infrastructure. This sector is significant for economic development and resilience, especially in the context of climate change, which is expected to increase the demands on caregiving due to displacement and health-related challenges. Therefore, integrating care into fiscal policy discussions is not only about gender equality but also about economic resilience and climate adaptation.

To address unpaid care work effectively, it is necessary to integrate care into public finance systems. This can involve developing public caregiving infrastructure and services that support both paid and unpaid caregivers. One first step in this direction would be the monitoring of household time-budgets, to start understanding and analyzing the supply of caregiving services that currently is largely undocumented.

Another policy area crucial for supporting women are social protection policies. In particular policies such as parental leave and childcare support can help reduce gender disparities in the labor market (see examples in the FREE Network brief by Campa, 2024). By providing a safety net, social protection policies enable women to participate more fully in economic activities without the constant threat of financial insecurity.

A specific challenge of the developing world in this respect is the fact that many women work in the informal sector and thereby lack access to social security benefits, leaving them vulnerable during economic hardships. Economic development alone does not solve this issue, as even many developed and wealthy countries lack comprehensive social protection systems. Therefore, a specific effort is needed to develop inclusive social protection systems that cover informal workers, ensuring women have access to benefits such as pensions, healthcare, and unemployment insurance.

Much less discussed is the integration of gender concerns in the taxation side of fiscal policy. Progressive taxation, where tax rates increase with higher income levels, is particularly beneficial for women, who are overrepresented in lower income quintiles. A progressive tax system can thus, besides helping redistribute wealth more equitably, also support gender equality.

Effective tax administration is crucial for improving compliance and maximizing revenue collection. However, it is particularly important in this context to design tax systems that minimize the compliance burden on low-income and informal sector workers, many of whom are women. This can be achieved by simplifying tax procedures and providing support for small and micro enterprises to navigate the tax system. The potential of digital tax systems is significant in this regard (Okunogbe, 2022). Digitalization can streamline tax collection, reduce administrative costs, and improve compliance. However, there are challenges associated with digital tax systems, particularly in ensuring accessibility for all citizens. Women, especially those in rural areas and with lower literacy levels, may face significant barriers in accessing and utilizing digital tax systems. Therefore, while digitalization offers many benefits, it must be implemented in a way that is inclusive and equitable. This includes providing digital literacy training and ensuring that digital tax platforms are user-friendly and accessible to all segments of the population.

Health taxes, such as those on tobacco, alcohol, and sugar-sweetened beverages, may also play a role in promoting gender equity. These taxes help reduce consumption of harmful products, which are disproportionately consumed by men and heavily affect household budgets. By discouraging the use of such products, health taxes can redirect household spending towards more beneficial areas, such as education and healthcare, which are often prioritized by women.

Moreover, health taxes can generate significant revenue that can be reinvested in gender-responsive public spending. For instance, funds raised from health taxes can be allocated to healthcare services, including reproductive health and maternal care, which directly benefit women. Additionally, excise taxes on harmful products address externalities, improving overall public health and reducing the burden on women who often provide unpaid health care.

Broader Sources of Financing for Social Services

The increasing risks from pandemics, climate-related shocks, food insecurity, and other economic shocks of a global nature highlight the need for a global safety net and social protection system. This in turn raises additional demand for effective financing for social services. One area in which new sources of international funding can be found is the emerging global infrastructure for climate finance.

Climate Finance and Gender Equality

Climate finance presents a unique opportunity to address gender equality, particularly in the context of climate adaptation and mitigation strategies. Due to (among others) resource constraints, unequal land ownership and unevenly distributed family responsibilities, women are often more vulnerable to climate impacts. Integrating gender considerations into climate adaptation and mitigation strategies ensures women are supported in building resilience.

One key approach is to use climate finance to promote economic diversification for women, especially in sectors like agriculture, where they play a significant role. For example, providing female farmers with access to capital, training, and resources to adopt climate-resilient agricultural practices can improve their economic security and reduce their vulnerability to climate shocks. This includes supporting transitions to sustainable farming methods, such as crop diversification, agroforestry, and improved irrigation techniques.

Additionally, climate finance can support the development of climate-resilient infrastructure that benefits women. This includes investments in clean energy, water management systems, and transportation networks that are essential for their daily activities and livelihoods. Ensuring that women have access to and can benefit from these infrastructures is crucial for their overall well-being and economic empowerment.

Women can play a pivotal role in natural resource management and environmental conservation. Research has shown that involving women in the management of natural resources, such as forests and water bodies, may lead to more sustainable and equitable outcomes. Women tend to prioritize long-term sustainability and community benefits, which can enhance the effectiveness of conservation efforts (see Agarwal, 2010. For a more nuanced view, see Meinzen-Dick, Kovarik and Quisumbing, 2014).

Climate finance can be used to support initiatives that empower women in natural resource management. This includes providing training and capacity-building programs that equip women with the knowledge and skills needed to manage resources effectively. Additionally, creating platforms for women to participate in decision-making processes related to environmental conservation ensures that their perspectives and needs are considered.

Innovative financing mechanisms can significantly enhance resources available for gender equality initiatives. Several potential sources of finance include Special Drawing Rights (SDRs), currency transaction taxes, and carbon taxes. Revenues generated from these sources can be directed towards climate and gender initiatives, such as supporting women’s participation in the green economy, funding renewable energy projects that benefit women, and investing in climate adaptation measures that protect vulnerable communities.

Development Assistance

Historically, development assistance explicitly targeted to gender equality initiatives has been insufficient. This has changed over time, but the overall financial support remains inadequate. Current ODA (Official Development Assistance) for gender equality often overestimates the actual financial support to such initiatives because it relies heavily on intention-based data rather than results-based financing. This means that the reported figures reflect commitments to gender-related projects without necessarily demonstrating their effectiveness or outcomes. As a result, the true impact of this funding for gender equality is difficult to ascertain.

In principle, development assistance should contribute to gender equality even beyond explicit targeting, simply through improving general economic conditions and generating opportunities. Economic development, after all, is good for gender equality (Duflo, 2012). The effectiveness of development assistance in promoting gender equality is however severely understudied, as discussed in Berlin et al. (2024) (and in a policy brief by Perrotta Berlin, Olofsgård and Smitt Meyer, 2023). We know that development assistance has a slight positive impact, and that gender-targeted aid projects tend to show somewhat larger impacts. But to learn more a more systematic reporting of donor activities is needed. This in particular when it comes to gender markers, i.e. the labeling of specific projects and programs as gender-oriented, that as of now are voluntary.

The effectiveness of gender-focused aid also heavily depends on local cultural dynamics and existing community norms. In some cases, aid aimed at improving economic opportunities for women can lead to negative reactions from men, a phenomenon known as backlash. Therefore, understanding and addressing these local cultural dynamics is crucial when designing and implementing gender-focused aid interventions.

Another critical aspect is the allocation of gender-targeted aid. It is essential to ensure that aid reaches the areas and communities where it is most needed. This requires a granular understanding of local needs and conditions, which is often lacking in broad, country-level data. More precise, geocoded data on aid distribution can help ensure that resources are allocated effectively and equitably. Improving the quality and granularity of data is also vital for monitoring and evaluating the impact of development assistance on gender equality. Current data collection efforts often fall short, lacking detailed, disaggregated information necessary for comprehensive analysis. National statistical agencies need more funding and support to collect this data, which is critical for understanding and addressing gender disparities.

Conclusions and Policy Recommendations

Advancing gender equality contributes to improved health outcomes, economic growth, and social stability. Moreover, gender equality plays a crucial role in addressing global challenges such as climate change, peacebuilding, and sustainable development. Therefore, it should be considered a global public good.

Investing in gender equality as a global public good requires a coordinated international effort. This includes mobilizing resources from various sources, including governments, international organizations, and the private sector. By recognizing the intrinsic value of gender equality and its contribution to global well-being, the international community can prioritize and allocate resources more effectively.

The discussion in this brief aims to highlight key areas that require focused efforts if the global community is to leverage gender equality to make progress toward the SDGs. In summary, enhanced data quality, integrated policies, innovative financing solutions, and gender-inclusive leadership are critical components of a strategy aimed at achieving lasting and meaningful progress in gender equality as well as broad sustainable development.

References

  • Agarwal, B. (2010). Does women’s proportional strength affect their participation? Governing local forests in South Asia. World development 38(1), 98-112.
  • Anisimova, A., Perrotta Berlin, M., Bosnic; M., Campa, P. Mych, M. Oczkowska, M. and Shapoval, N. (2023). Rebuilding Ukraine: the Gender Dimension of the Reconstruction Process. FREE Network Policy Paper.
  • Akulava, M., Babych, Y., Griogryan, A., Iarovskyi, P., Keshelava, D., Khachatryan, K., Król, A., Mikhailova, T., Mzhavanadze, G., Oczkowska, M., Pluta, A., Shpak, S. (2021). Global gender gap in unpaid care: why domestic work still remains a woman’s burden. FREE Network Policy Brief.
  • Perrotta Berlin, M., Bonnier, M., Olofsgård, A. (2024). Foreign Aid and Female Empowerment. The Journal of Development Studies, 60:5, 662-684, DOI: 10.1080/00220388.2023.2284665
  • Perrotta Berlin, M., Olofsgård, A., Smitt Meyer, C. (2023) Does Foreign Aid Foster Female Empowerment?. FREE Network Policy Brief
  • Campa, P. (2024). What Is the Evidence on the Swedish “Paternity Leave” Policy?. FREE Network Policy Brief
  • Duflo, E. (2012). Women empowerment and economic development. Journal of Economic Literature, 50(4), 1051–1079. doi:10.1257/jel.50.4.1051.
  • Meinzen-Dick, R., Kovarik, C., Quisumbing A., R. (2014). Gender and sustainability. Annual Review of Environment and Resources 39: 29-55.
  • Okunogbe, O., Pouliquen, V. (2022). Technology, taxation, and corruption: evidence from the introduction of electronic tax filing. American Economic Journal: Economic Policy 14.1: 341-372.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Does Foreign Aid Foster Female Empowerment?

Posted on October 16, 2023 | Policy Brief

20231009 Foreign Aid Female Empowerment Image 01

Over decades much attention has been devoted to the relationship between foreign aid and economic growth, while few studies have focused on the effects of foreign aid on female empowerment. This despite the fact that empowerment of girls and women is a key driver of development, and often an explicit objective of foreign aid. Using geo-coded data on aid project placement and household-level survey responses, Perrotta Berlin, Bonnier and Olofsgård (2023), show that foreign aid has a modest but robust effect on several dimensions of female empowerment. This is the case for both aid in general and gender-targeted aid, highlighting the potential of foreign aid to reduce gender inequalities. It is also found, though, that the impact is contingent on the context, and that there can even be a backlash in male attitudes towards female empowerment in more traditional communities.

The donor community has long been invested in the empowerment of women and girls, and the 2030 Agenda for Sustainable Development also includes gender equality as an explicit goal. Yet surprisingly little quantitative research has tried to make a broader assessment of the effect of foreign aid on gender equality measures.

This policy brief summarises a study by Perrotta Berlin, Bonnier and Olofsgård (2023) which addresses this question by matching the location of aid projects with geo-coded household surveys in Malawi between 2004 and 2010. Analysing the community-level impact on five different female empowerment indices, the study finds foreign aid to affect positively women’s empowerment across several dimensions. Furthermore, the authors find that gender-targeted aid has an additional impact on an index measuring women’s control over sexuality and fertility-related decisions and an index focusing on violence against women.

When considering areas with patrilineal land inheritance traditions, the results however partly shift, especially in relation to men’s attitudes. This implies that the success of foreign aid and gender-targeted aid in reducing gender inequalities may be conditional on the community context.

Gender Equality and Foreign Aid in Malawi

Malawi is highly dependent on foreign aid. Net official development assistance (ODA) has exceeded 10 percent of gross national income yearly since 1975, reaching as high as 23.5 percent in 2016 (World Bank, WDI database).

In recent years, reforms have been undertaken by the Malawian government to improve gender equality. The minimum legal age of marriage was raised from 15 to 18 through the 2015 Marriage, Divorce and Family Relations Bill, and the 2013 Gender Equality Act strengthened the legislation concerning gender-based violence and included a universal condemnation of all types of gender-based discrimination. Yet, in 2020, Malawi was ranked 116 out of 153 in the World Economic Forum Gender Gap Report and 172 out of 189 in UNDP’s Gender Inequality Index. An area of concern regards the high rates of child marriage, with 9 percent of girls already married at age 15 and 42 percent by the age of 18. Alongside these numbers, 31 percent of women report to have given birth by the age 18.

Another aspect potentially influencing gender equality is the prevalence of matrilinear land tenure systems, particularly in the southern and central parts of the country (as depicted in Figure 1). While previous research has shown that land ownership empowers women and suggested that property rights affect decision power over key decisions, fertility preferences, age of marriage etc., less research has been devoted to analysing the effects on women’s empowerment outcomes in a matrilinear kinship setting. Some recent literature however suggests women in matrilinear societies have greater say in household decisions – including financial ones – and are less accepting of, as well as exposed to, domestic violence (Lowes, 2021; Djurfeldt et al., 2018).

Figure 1. Intensity of matrilineal tenure in Malawi.

Notes: The figure plots the geographic distribution of the authors’ matrilineal indicator. They base their definition of matrilineal societies on the ethnic identification of individual respondents. The intensity at the cluster level varies between 0 and 1 representing the share of respondents that identify themselves as belonging to one of the ethnic groups classified as matrilineal.
Source: Perrotta Berlin, Bonnier, Olosgård (2023).

Methodology and Data

For the analysis, the authors make use of geo-coded data on aid projects from the Government of Malawi’s Aid Management Platform (AMP) and match it to household-level data from the Malawi Demographic and Health Survey (DHS). The country of Malawi and the period 2004-2010 were chosen in order to maximize data coverage on aid disbursement. Malawi’s AMP covers 80 percent of all aid entering the country during those years, which gives a much more complete picture compared to only focusing on one specific donor.

To identify causal impact, the authors apply a difference-in-differences specification on survey clusters in proximity to aid projects implemented between 2004 and 2010. Proximity was identified as within a 10-kilometer radius from an aid project. Among those, households interviewed in 2004, i.e., prior to the implementation date of any aid project, were considered the control group, and households interviewed in 2010 formed the treatment group. The underlying assumption of parallel pre-treatment trends was confirmed with the use of earlier DHS surveys. The model specification includes individual-level controls (age, ethnicity, household size, a Muslim dummy, years of education and literacy) and also a geographic fixed-effect based on a grid of coordinates.

The analysis distinguishes between the impact of aid in general, and the additional impact of gender-targeted aid.  Gender-targeted projects are defined as projects that have any of the words woman, girl, bride, maternal, gender, genital or child, in the title, description or activity list. When estimating the effect of gender-targeted aid the authors control for overall aid intensity in the household’s vicinity. The estimated effect should therefore be interpreted as the additional effect from being exposed to a gender-targeted aid project while keeping the general number of aid projects in the area constant.

Figure 2. Map of aid projects and household clusters from 2004 and 2010 survey waves in Malawi.

Notes: The figure plots the geographic distribution of aid projects and of household clusters in the two DHS waves. The colour of the dots reflects whether the project has a gender component or not, while the shape of the household dot reflects the survey wave.
Source: Perrotta Berlin, Bonnier, Olofsgård (2023).

To capture female empowerment, the authors make use of thousands of responses to DHS survey waves from 2004 and 2010. From these responses, the authors construct four different indices. Two of these are modelled on indices used in different contexts by Haushofer and Shapiro (2016) and Jayachandran et al. (2023). The former captures experiences of violence together with men’s and women’s attitudes towards violence, and some measures of decision making and control over household resources. The more recent index by Jayachandran et al. (2023) focuses on female agency and includes questions on women’s participation in decisions on large household purchases and daily expenditures, decisions on family visits, and decisions concerning their own healthcare.

To also capture questions related to sexual and fertility preferences, often regarded as measures of female empowerment, the authors construct two additional indices. The women’s attitudes index is based on responses to questions about whether the respondent is able to refuse sexual intercourse with her husband and ask him to use a condom, age at first marriage, and age at first childbirth, among others. The men’s attitudes index is based on questions about whether the respondent thinks it is justified to use violence to force intercourse, if a woman is justified to refuse intercourse, as well as fertility and child spacing preferences. In addition, all four indices are weighted and combined into an aggregated general index.

Results

Considering all aid projects, the authors find that being exposed to an aid project in the 2004 to 2010 window has a significant positive impact on the agency index, the female attitude index and the combined general index (12, 11 and 31 percent of their respective means). When considering gender-targeted aid, the authors found the exposure to at least one such project to increase the women’s attitude index by 7 percent and the general index by 17 percent of their respective means. The impact is present for both a narrower and a wider exposure area, and quite persistent over time.

When breaking down the analysis for areas with matrilineal versus patrilineal land tenure systems the results diverge. In communities where the share of matrilineal ethnic groups exceeds the mean of 73 percent, the results are largely in line with those in the full sample. In patrilineal communities (< 73 percent matrilineal households), the results are however vastly different. Aid projects in general, and gender-targeted aid in particular, affect negatively the men’s attitudes index. In addition, gender-targeted aid seems to have no additional impact on the other indices.

Conclusion

In the paper underlying this brief, the authors study the effect of foreign aid on female empowerment, a frequent but understudied objective often set by donors. Looking at geo-coded aid projects in Malawi, the authors estimated such projects to positively impact girl’s and women’s empowerment across several indices. This is true for aid in general, and for some indices even more so when considering gender-targeted aid. Some of the positive results disappear or even change sign, though, in patrilineal communities, displaying the significance of pre-existing community norms for the effectiveness of development investments. Aid even generates a backlash when it comes to men’s attitudes towards women’s sexual and fertility preferences in these communities.

The takeaway from the study lies in foreign aid’s potential to empower women in targeted communities. This however hinges on pre-existing norms in recipient communities – something that aid donors should be aware of.

The authors emphasize the need for more research to better understand the role of pre-existing norms in the uptake of aid, to distinguish direct effects from aid from potential spillovers, and to understand what type of aid projects deliver the best outcomes in terms of female empowerment.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Green Concerns and Salience of Environmental Issues in Eastern Europe

Posted on June 7, 2021 | Policy Brief

Flooded street in Germany representing climate change risk perceptions

Changes in individual behavior are an essential component of the planet’s effort to reduce carbon emissions. But such changes would not be possible without individuals acknowledging the threat of anthropogenic climate change. This brief discusses the climate change risk perceptions across Europe. We show that people in Eastern Europe are, on average, less concerned about climate change than those in Western Europe. Using detailed survey data, we find evidence that the personal experience of extreme weather events is a key driver of green concern, and even more so in the non-EU Eastern part of Europe. We argue that this association might be explained by the relatively low quality and informativeness of public messages concerning global warming in this part of Europe. If information is scarce or perceived as biased, personal experience will resonate more.

Introduction

Climate change is one of the main threats to humanity. Tackling it entails a combined effort from all parts of society, from regulatory changes and industries adopting new greener business models to consumers adjusting their behavior. While an individual’s contribution to climate change may appear insignificant, research shows that the aggregate effect of mobilizing already known changes in consumer behavior may allow the European Union (EU) to reduce its carbon footprint by about 25% (Moran et al., 2020).

However, the first step for people to adjust their consumption patterns is to acknowledge the threat of anthropogenic climate change. Public ignorance about climate change’s impacts remains high across the world. Furthermore, citizens of more polluting countries are often relatively less concerned about climate change. This lack of awareness is not well-understood, in part due to the multi-dimensional local factors affecting it (Farrell et al., 2019).

This brief discusses the potential drivers of climate risk perceptions, focusing on the differences between Western Europe, Eastern European states that are part of the EU, and non-EU Eastern European countries. We first present the climate change concerns across these regions. We then discuss to which extent the country’s pollution exposure measures and individuals’ socio-economic characteristics can explain these differences. We show that the personal experience of extreme weather events is a key driver of green concern, and even more so in the non-EU part of Eastern Europe. We relate this result to the relatively low salience and informativeness of public messages concerning climate in this part of Europe and discuss potential policy implications.

Green Concerns and Pollution Exposure Across Europe

Figure 1 compares, across Europe, the share of poll respondents who see climate change as a major threat, based on the data from the Lloyd’s Register Foundation World Risk Poll 2020.  While there is a significant variation in climate risk perception within each region, respondents in Eastern Europe are, on average, less concerned about climate change than those in Western Europe. We observe a similar pattern between the EU and non-EU parts of Eastern Europe. 

Exposure to pollution does not seem to clearly explain these differences. Moreover, the patterns of correlation between climate concern and pollution differ across regions and measures of pollution exposure. The left panel of Figure 2 presents averages across the regions for two pollution measures: carbon emissions (which is, perhaps, reflecting climate threat in general) and air quality (which is more directly associated with health risks). We can see that CO2 emissions are the highest in the non-EU part of Eastern Europe, the least environmentally concerned region. Still, the EU part of Eastern Europe has the lowest average emissions per capita across the three regions (this ranking likely results from the interaction between reliance on fossil fuels, industrial structure, and level of development across the three regions). At the same time, when it comes to the average air quality (measured as the percentage of population exposed to at least 10 micrograms of PM2.5/m3), the non-EU EasternEuropean region is doing better than its EU counterpart, which is more climate concerned. Here, better average air quality in the non-EU Eastern European region is due to its relatively low population density, and consequently, low PM2.5 exposure in large parts of Russia. (See, more on the air quality gap within the EU in Lehne, 2021).

Figure 1: Climate concerns in Eastern and Western Europe

Source: Authors’ calculations based on Lloyd’s Register Foundation World Risk Poll 2020, question 5 “Do you think that climate change is a very serious threat, a somewhat serious threat, or not a threat at all to the people in this country in the next 20 years?”. Averages are calculated with population-representative weights.

The right panel of Figure 2 shows correlations between (country-level) climate concerns and pollution. For CO2, the correlation is negative in all three regions, suggesting that, within each region, more emitting countries are less concerned. This negative correlation, however, is the strongest in the EU-part of Eastern Europe and almost absent in the non-EU part. The differences between the regions are even more striking for the correlation between climate concerns and air quality: both in Western Europe and in the EU part of Eastern Europe, citizens of countries with worse air quality are more concerned about climate change. However, in non-EU Eastern Europe, the relation is the exact opposite: lower concerns about climate change go hand-in-hand with worse quality of air.

Figure 2: Emissions vs. Climate concerns in Eastern and Western Europe, 2018

Source: Authors’ calculations based on www.climatewatchdata.org, OECD and World Risk Poll 2020. The climate concern variable is a country-level weighted average of answers “Very high risk” to the World Risk Poll 2020 question 5, see note to Figure 1.

Green Concerns and Socio-economic Characteristics

Lower climate concerns in EU-part of the Eastern bloc have been documented before; they are often explained by the Eastern-European economies’ high reliance on coal and other fossil fuels, low-income levels, and other immediate problems that lower the priority of climate issues (e.g., Lorenzoni and Pidgeon 2006, Poortinga et al., 2018, or Marquart-Pyatt et al., 2019). Additionally, the literature suggests that climate beliefs are linked to individuals’ socio-economic characteristics, such as level of education, income, or gender (see, e.g., Poortinga, 2019), which may be different across the regions.

However, the regional differences in climate beliefs also persist when we use individual-level data and control for respondents’ individual characteristics, as well as for country-level variables, such as GDP per capita, oil, gas, and coal dependence of the economies, and exposure to emissions (at the country level, as our individual data does not have this information). This is illustrated in Column 1 of Table 1.

Table 1: Climate change beliefs determinants, individual-level cross-section data.

Source: This is an outcome of logistic regression. Experience =1 if the respondent answered “yes” to the World Risk Poll 2020 question L8D “Have you or someone you personally know, experienced serious harm from severe weather events, such as floods or violent storms in the past TWO years?” Media Freedom is based on 2018 Freedom House data, and scores media between 0 (worst) and 4 (best). Controls include age, gender, education, personal feelings about household income, income quantile, urban/rural, size of household, number of children under 15, las well as log of GDP per capita, log of CO2 per capita, mean exposure to PM2.5, and oil, gas and coal rents as a share of GDP. Robust standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1

In what follows, we explore another key driver, the personal experience of extreme weather events. While there is a sizable literature on the effect of experience on climate beliefs, that factor was never, to our knowledge, considered to understand the difference in climate risk perception between the EU- and non-EU parts of Eastern Europe.  

Green Concern and Salience of Environmental Issues

In line with the recent climate risk perceptions literature (e.g., Van der Linden, 2015), we show that personal experience increases the likelihood of considering climate change as a major threat across all three regions (see column 2 in Table 1). The association is stronger in the EU part of Eastern Europe and even more so in the non-EU part (even if the difference between the last two is not statistically significant). This finding is confirmed when we control for (observable and unobservable) country-specific effects, such as social norms, via the inclusion of country-level fixed effects. In this case, extreme weather events make respondents more climate-conscious within each country (Column 3 of Table 1). In this specification, the effect differs statistically between the two groups of Eastern-European countries, even if only at a 10% significance level. To put it differently, the impact of personal experience with extreme weather events seems to close a sizable part of the gap in climate risk perceptions across the regions and more so in the non-EU part of Eastern Europe.

Our preferred explanation for this finding is that personal experience resonates with the quality and informativeness of public messages concerning global warming. If information is scarce or perceived as biased, personal experience will resonate more. The low political salience of environmental issues in Eastern Europe, inherited from its Soviet past (McCright, 2015), and lower media quality in Eastern Europe (see e.g., Zuang, 2021) are likely to affect the quality of public discourse concerning the risks of climate change, and, consequently, the information available to individuals.

The climate-related legislative effort across Eastern Europe reflects the low political importance of climate change in the region. According to the data from Grantham Research Institute on Climate Change and the Environment, non-EU transition countries, on average, have adopted 8 climate-related laws and policies, while the corresponding figure is 11.5 for EU transition countries and 18 for the countries in Western Europe. Further, Figure 3 shows a positive correlation between climate change concerns and the number of climate-related laws for Western Europe and the EU-part of Eastern Europe but a negative one for the non-EU part of Eastern Europe and Caucasus countries. One possible interpretation of these differences is that climate change is relatively low on the political agenda of (populist) regimes in the non-EU part of Eastern Europe, as climate-related legislative activity (proxied by, admittedly rough, a measure of the number of laws) does not reflect the intensity of population climate preferences.

Figure 3: Climate concern vs. Climate legislation

Source: Authors’ calculations based on climate legislation data from Grantham Research Institute on Climate Change and the Environment, and World Risk Poll 2020

Regarding the influence of media quality, column (4) of Table 1 shows that the effect of personal experience on climate change concern is negatively correlated with media freedom. One interpretation could be that individuals in countries with freer media infer less from their extreme weather experience because more accurate media coverage about climate risks improves the population’s knowledge on the issue.

Of course, the causality of the climate belief-experience relationship could also go in the other direction – people who are more concerned about climate change could be more likely to interpret their personal experience as weather-related extreme events. It is impossible to distinguish with the data at hand. However, Myers et al. (2013) show that both channels are present in the US, and the former channel dominates for the people less engaged in the climate issue. Stretching this finding to the Eastern Europe case, we argue that more precise information on the importance of climate change may partially have the same effect as experience – i.e., it will increase people’s awareness and concern about the consequences of global warming.

Conclusion

This brief addresses the differences in climate change beliefs between Eastern and Western Europe, as well as within Eastern Europe. It discusses the determinants of these differences and stresses the importance of personal experience, especially in the non-EU part of Eastern Europe. It relates this finding to the relatively low accuracy of information and quality of public discourse about climate change in the region.

We know already that tackling climate change requires reliable and accurate sources of information. This is especially crucial given what we outline in this brief. This issue resonates with the current social science analysis of the diffusion of climate change denial (see e.g., Farell et al., 2019, on the significant organized effort in spreading misinformation about climate change). Such contrarian information that relays uncertainty and doubt regarding the severity of the global climate change threat could have a severe impact, especially in situations with low political salience of climate change, like in non-EU Eastern Europe. A significant effort of both governments and civil society is needed to provide adequate information and mobilize the population in our common fight against climate change.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Enemies of the People

Posted on May 24, 2021 | Policy Brief

20210524 Enemies of the People FREE Network Image 04

From the early days of the Soviet Union, the regime designated the educated elite as Enemies of the People. They were political opponents and considered a threat to the regime. Between the late 1920s and early 1950s, millions of enemies of the people were rounded up and forcedly resettled to remote locations within the GULAG, a system of labor camps spread across the Soviet Union. In recent research (Toews and Vezina, 2021), we show that these forced relocations have long-term consequences on local economies. Places close to camps that hosted more enemies of the people among prisoners are more prosperous today. We suggest that this result can be explained by the intergenerational transmission of education and a resulting positive effect on local development, which can still be observed to this day.

Historical Background

Targeting the educated elite, collectively referring to them as Enemies of the People and advocating their imprisonment, can be traced back to the beginning of the Russian Revolution in 1917. After consolidating power a decade later, Stalin launched the expansion of the GULAG system, which at its peak consisted of more than a hundred camps with over 1.5 million prisoners (see Figure 1). A large number of historians extensively described this dark episode in Russian history (Applebaum (2012), Khlevniuk (2004), and Solzhenitsyn (1974)). During the darkest hours of this episode, the Great Terror, 1.5 million enemies were arrested in just about two years. While half were executed immediately, the other half were forcedly allocated to GULAG camps spread across the Soviet Union and mixed with non-political prisoners (see Figure 2). Enemies accounted for about a third of GULAG prisoners after the Great Terror. As a result, education levels were higher in the GULAG than in society. In 1939, the share of GULAG prisoners with tertiary education was 1.8%, while, according to the Soviet Census of the same year, only 0.6% of the population had tertiary education.

After Stalin’s death, labor camps started closing rapidly, but many ex-prisoners settled close to the campsites. New cities were created and existing cities in the proximity of camps started growing fast (Mikhailova, 2012). Enemies remained once freed for a combination of political, economic, and psychological reasons. Politically, they were constrained in their choice of location by Stalin-era restrictions on mobility. Economically, they had few outside options and could keep on working for the camps’ industrial projects. On the psychological level, prisoners had become attached to the location of the camp, as Solzhenitsyn (1974) clearly puts it: “Exile relieved us of the need to choose a place of residence for ourselves, and so from troublesome uncertainties and errors. No place would have been right, except that to which they had sent us.”.

Figure 1. Location and size of camps in the Soviet Gulag system

Notes: The circles are proportional to the prisoner population of camps. The data is from the State Archive of the Russian Federation (GARF) and Memorial

Enemies of the People and Local Prosperity

At the heart of our analysis is a dataset on GULAG camps which we collected at the State Archive of the Russian Federation (GARF). It allows us to differentiate between prisoners who were imprisoned for political reasons (Enemies of the People) and those arrested for non-political crimes. The share of enemies varied greatly across camps, and we argue that this variation was quasi-random. We back this up by the historical narrative, according to which the resettlement process was driven by political rather than economic forces, suggesting that strategic placements played little role in the allocation of enemies (Khlevniuk (1995) and Ertz (2008)). Moreover, while the forced nature of allocation to camps allows us to rule out endogenous location decisions, we also show that neither economic activities nor geographic attributes, such as climatic conditions, soil quality, or the availability of resources, predict the share of enemies across camps.

To estimate the long-run effects of enemies on local prosperity, we link the location of camps in 1952, the year before Stalin’s death and at the peak of the GULAG system, to post-Soviet data covering the period 2000-2018.

Figure 2. The rise and fall of the Gulag

Notes: The solid line shows the number of Gulag camps while the dashed line shows the total number of prisoners in the Gulag. The two vertical dash lines indicate the years that can define the start and end of the Gulag, starting with Stalin’s 5-year plan in 1928 and ending with Stalin’s death in 1953. The shaded areas show specific periods of marked change for the Gulag, starting with dekulakization in 1929, when when Stalin announced the liquidation of the kulaks as a class and 1.8 million well-off peasants were relocated or executed. The Great Terror of 1936-1938, also referred to as the Great Purge, is the most brutal episode under Stalin’s rule, when 1.5 million enemies were arrested, and half of them executed. The Gulag’s prisoner population went down during WW2, as non-political prisoners were enlisted in the Red Army, and as the conditions in camps deteriorated and mortality increased. Source: Memorial.

In particular, the camp level information is linked to the location of firms from the Russian firm census (2018), data on night-lights (2000-2015), as well as data from household and firm-level surveys (2016 and 2011-2014, respectively). Our results suggest that one standard deviation (28 percentage point) increase in the share of enemies of the people increases night-lights intensity per capita by 58%, profits per employee by 65%, and average wages by 22%. A large number of specifications confirm the relationship depicted in Figure 3, which illustrates the positive association between the share of enemies across camps and night-lights intensity per capita.

Figure 3. Share of enemies vs. night lights per capita across Gulags

Notes: The scatters show the relationship between the share of enemies in camps in 1952 and night lights per capita within 30 km of camps in 2000 and 2015. Each circle is a 30km-radius area around a camp, and the size of the circles is proportional to the camps’ prisoner populations. The biggest circle is Khabarovsk. The solid lines show the linear fit, and the shaded areas show the 95% confidence interval. Areas near camps with a higher share of enemies have brighter night lights per capita both in 2000 and 2015. The data on Gulags is from the State Archive of the Russian Federation (GARF) and the data on night lights is from the DMSP-OLS satellite program and made available by the Earth Observation Group and the NOAA National Geophysical Data Center. The data on population is from the gridded population of the world from SEDAC.

Intergenerational Transmission

We suggest that the relationship between enemies and modern prosperity is due to the long-run persistence of high education levels, notably via intergenerational transmission, and their role in increasing firm productivity. For the identification of the intergenerational link, we rely on a household survey collected by the EBRD in which interviewees are explicitly asked whether their grandparents have been imprisoned for political reasons during Soviet times. Exploiting this information, we show that the grandchildren of enemies of the people are today relatively more educated. We also find that grandchildren of enemies are more likely to be residing near camps that had a higher share of enemies of the people among prisoners in 1952. An alternative explanation for our results could be that the leadership of the Soviet Union may have strategically chosen to invest more during the post-GULAG period in locations that had received more enemies to exploit complementarities between human and physical capital. We find no evidence for this mechanism. We document that Soviet investment in railroads, factories of the defence industry, or universities was, if anything, lower in places with a large share of enemies.

Conclusion

We show that the massive and forced re-allocation of human capital that took place under Stalin had long-run effects on local development. Sixty years after the death of Stalin and the demise of the GULAG, areas around camps that had a higher share of enemies are richer today, as captured by firms’ wages and profits, as well as by night-lights per capita. We argue that the education transferred from forcedly displaced enemies of the people to their children and grandchildren partly explains variation in prosperity across localities of Russia. This can be seen as a historical natural experiment that identifies the long-run persistence of higher education and its effect on long-run prosperity. Sadly, it also highlights how atrocious acts by powerful individuals can shape the development path of localities over many generations.

Bibliography

  • Applebaum, A., Gulag: A History of the Soviet Camps, Penguin Books Limited, 2012.
  • Ertz, Simon. Making Sense of the Gulag: Analyzing and Interpreting the Function of the Stalinist Camp System. No. 50. PERSA Working Paper, 2008.
  • Khlevnyuk, Oleg, “The objectives of the Great Terror, 1937–1938.” In Soviet History, 1917–53, pp. 158-176. Palgrave Macmillan, London, 1995.
  • Khlevnyuk, Oleg, The History of the Gulag: From Collectivization to the Great Terror Annals of Communism, Yale University Press, 2004.
  • Mikhailova, Tatiana, “Gulag, WWII and the long-run patterns of Soviet city growth,” 2012.
  • Solzhenitsyn, Aleksandr, The Gulag Archipelago, 1918-56: An Experiment in Literary Investigation, New York: Harper Row, 1973.
  • Toews, Gerhard, and Pierre-Louis Vézina. “Enemies of the people.” (2021).

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Circular Economy in Belarus: What Hinders the Transformation?

Posted on December 14, 2020 | Policy Brief

20201214 Circular Economy in Belarus FREE Network Policy Brief Image 02

The transition towards a circular economy has accelerated in response to increasing environmental challenges and the need for more sustainable and cleaner production. Many countries are mainstreaming a circular economy into their policy agenda. In particular, the European Commission’s new Circular Economy Action Plan, adopted in March 2020, will be a key element of the EU Industrial strategy. In Belarus, similar policy agendas that promote circular economy have not been developed yet, however, this concept is now attracting increasingly more attention. Therefore, it is essential to identify barriers that hamper the implementation of circular economy business practices in the country. This policy brief presents the results of a survey that studied 452 Belarusian companies and their prospects and opportunities of circular transformation both within enterprises and at the national level. The findings show that high levels of capital and technology spending and lack of state-provided economic incentives are the most pressing barriers to circular economy development in Belarus. When it comes to enterprises’ own prospects for circular transformation, lack of funding is ranked as the main impediment.

Barriers to Circular Economy Development in Belarus

Despite the fact that there has been an increased interest in the circular economy, evidence suggests that its implementation has been hampered by a variety of barriers. Based on academic literature and business case studies, these barriers can be categorized into several groups (Rizos, et al., 2015; Rizos, et al., 2016; Kirchherr et al., 2018; Ritzén and Sandström, 2017):

  • Cultural barriers (e.g. social, behavioral, and managerial) – a lack of interest, environmental awareness, and/or existing differences in personal values, which hinder the development of a circular economy.
  • Information constraints – a lack of consumer and producer awareness about the key principles and best practices of circular economy implementation;
  • Inadequate regulatory environment – a lack of consistent legal framework, policy support, and incentives for circular economy transition (e.g., through tax relief, fiscal measures, or public procurement);
  • Technological barriers – an absence of a well-managed logistic infrastructure for the collection, extraction, and processing of secondary raw materials (SRM); the lack of standardization and, as a result, lower quality of goods produced from SRM; the absence of knowledge on how circularity can be implemented in a particular industry;
  • Economic impediments – barriers to circular economy transition that are due to low prices for primary raw materials and high investment costs for the implementation of circular business models, as well as lack of funding and restricted access to finance.

This categorization served as the basis for the development of our questionnaire. We surveyed enterprises on the prospects and opportunities relating to their own circular transformation as well as factors constraining the more general development of a circular economy in Belarus. The survey was conducted in 2020 by BEROC and IBB Dortmund and included 452 companies from the Belarusian regions of Brest and Mogilev. The results show that businesses view economic, regulatory, and informational barriers as the most hindering to a circular transformation of Belarus. In particular, the respondents stated that the main impediments are high levels of capital and technology spending (62.8% of respondents), as well as lack of state-provided economic incentives (50.4%). Information constraints are also important as enterprises are not aware of circular technologies and believe that they do not exist (50.4%). Furthermore, there is a lack of knowledge on how to implement circularity in their industry (33.8%) (see Figure 1).

Figure 1. Barriers to circular economy development in Belarus, % of respondents

Source: Figure compiled by the authors based on the survey results.

Respondents also identified barriers that hamper a shift of their own enterprise – rather than that of the entire Belarusian economy – from a linear to a circular business model. According to the survey, the lack of funding is considered as the main barrier to circular transformation among Belarusian companies, as 83.5% of respondents characterized its impact as high or medium. This impediment is followed by the absence of circular technologies that can be applied at the surveyed enterprise (64.9%) and the lack of information and best practice examples with regard to the implementation of circular business models (62.4%). Half of the respondents also indicated that the shift from a linear economy is hampered by the lack of consulting on how to implement circularity (see Figure 2).

Figure 2. Barriers to the circular transformation of the Belarusian enterprises, % respondents

Source: Figure compiled by the authors on the basis of the survey results.

Enterprises identified specific technical challenges associated with possible supply chain constraints. In particular, 40% of respondents raised concerns about the absence of an online database on waste and secondary raw materials, and 39.3% of them worried about possible interruptions in the supply of secondary raw materials.

Stimulus for Circular Transformation in Belarus

Respondents also expressed their views on potential stimulus measures that could be implemented to encourage a transition towards a circular economy in Belarus. Tailored support programs (83.9%), tax incentives (78.5%), and development of infrastructure for the processing of secondary raw materials (76.4%) were identified as the strongest motivators for enterprises’ decision to opt for a circular business model. Other important measures listed by the respondents were revisions of the legislative framework to prioritize the use of secondary raw materials, prevent waste generation, etc. (67.4%) as well as access to consulting on how to implement circularity in a business (62.8%) (Figure 3).

Figure 3. Stimulus for the circular economy development in Belarus, % of respondents

Source: Figure compiled by the authors on the basis of the survey results.

Surveyed enterprises stated that they had already incorporated some circular economy elements in their business model. More than 35% of respondents have used recycled materials in the production process, 19% have recycled products in the production of new materials or products, and around 19% have reused products or embedded raw materials. Moreover, more than 35% of enterprises would be ready to introduce reusage and recycling in their business within the next three years. However, they emphasized that existing regulations should be revised, and economic incentives provided in order to encourage these efforts.

Conclusion

The results confirm that Belarus has potential for circular economy development. Yet, its implementation might be hampered by economic, regulatory, informational, and technological barriers. In particular, the surveyed enterprises stated that high upfront costs, e.g., for technology and equipment, as well as the lack of state economic incentives, are the most pressing impediments to the circular transformation of Belarus. At the company level, lack of funding is seen as the main obstacle in shifting from a linear to a circular business model. Another important barrier is lack of information, as enterprises are not aware of circular technologies and best practice examples.

The results of our survey suggest that, in order to encourage a transition towards a circular economy in Belarus, a tailored support program should be developed, existing regulations revised, and economic incentives provided. The transition will not be possible without mainstreaming a circular economy into Belarus’ policy agenda.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

The Role of Partnerships in Economic Reforms of Fragile States: Perspectives from Somalia | Summary

Posted on November 30, 2020 | Policy Brief

Image of balancing stones representing Somalia as a fragile state and its reforms

Fragile states are particularly vulnerable to adverse economic shocks and in need of international support. Through constructive collaboration with international partners, however, fragile state governments can successfully pursue ambitious reform agendas for the short and long run. SITE and MISUM (Mistra Center for Sustainable Markets) invited the Minister of Finance of the Federal Republic of Somalia, Dr. Abdirahman Dualeh Beileh, and the Swedish ambassador to Somalia, Staffan Tillander, to discuss the role of international partnership in the recent development of economic reforms in Somalia. This policy brief provides a summary of the key points that were discussed in the webinar.

Introduction

Fragile states, characterized by poverty, weak governance, and conflict, now also have to confront additional challenges from the COVID-19 pandemic. Negative economic shocks arising from climate change, financial crises, conflicts, and pandemics are known to be particularly detrimental for these countries as the countries lack the resources to cushion the negative impact and are vulnerable to anything exacerbating latent socioeconomic challenges and conflicts. 

In these situations, international support becomes essential in reducing the immediate impact on human welfare and help sustain economic reforms that are necessary for long-run development. Somalia is a good case in point, where the recent consolidation of the country and an ambitious reform agenda together with international partners have set the country on a positive trajectory. This progress is challenged, though, by the pandemic, reinforced by drought and locust swarms.

From Independence to Civil War

Despite Somalia’s economically favorable geographical location and abundance of resources, the country has a turbulent history plagued by poverty, conflict, and humanitarian crises. Dr. Beileh provided thoughts on why the country failed to realize these opportunities and what factors led up to the civil war in 1991.

Following Somali independence in 1960, the country was lacking a sufficient level of educated citizens to run a modern government. In addition, tensions with neighboring countries and community demarcations within Somalia led to conflict and a constant struggle over resources. Also, Dr. Beileh argued that the former colonial powers had an interest in keeping the newly independent African states economically reliant in terms of imports of goods and sourcing of raw materials.

Dr. Beileh suggested that the combination of these factors contributed to the fall of the military regime in 1991 whereby Somalia plunged into civil war. With no recognized government over the following 20 years, this power vacuum became a black spot in Somalia’s history, characterized by war and poverty.

Political Consolidation and Debt Relief

After decades of suffering, in 2012 the Provisional Constitution established a federal political structure, with a parliament and the Federal Government of Somalia. Meanwhile, African Union forces liberated the major cities of Somalia from the terror of Al Shabab. In 2013 the government re-engaged with the World Bank and the IMF, and since 2016 the government together with international partners has engaged in numerous structural reforms. The main objective of the reform agenda was to qualify for international debt relief through the Heavily Indebted Poor Country (HIPC) Initiative introduced by the IMF and the World Bank in 1996 to reduce debt levels to sustainable levels in the world’s poorest countries. In Somalia’s case, this required laws and regulations that strengthened rule of law and sustainable economic management as well as poverty reduction strategies.

In March 2020, Somalia became the 37th country to qualify for the first step of debt relief under the HIPC initiative (“the decision point “) which meant that the country’s national debt was significantly reduced. This successful result was commended by the international community and Dr. Beileh stressed that it would not have been achieved without both international partnership and the resilience of the Somali people. Now, with continued successful reforms Somalia is projected to receive further debt reduction in 2023 (“the completion point”).  

Structural Reforms

Besides significantly reducing the national debt, the HIPC program requirements have led to development in many areas and opened new possibilities for international cooperation.

Laws and regulations that institutionalize the rule of governance and strengthen the federal system are essential HIPC prerequisites. Both Dr. Beileh and Ambassador Tillander stressed that strong governance is not only important for a clear division of tasks and competent and honest conduct within government bodies, but also an important cross-cutting issue that influences the ability of the state to achieve other goals.  Dr. Beileh described how far Somalia has come in this regard. When he started at the ministry of finance in 2017, wages, responsibilities, and accountability were up for negotiation. Today, there are rules and regulations in place that guide the responsibilities and accountability of civil servants. For instance, a public procurement authority has been established with the task of scrutinizing all government procurement and disposal of assets. Ambassador Tillander added that the strained regional tensions caused by the civil war and surrounding conflicts have been eased and the improvements in governance have led to a more constructive dialogue between the federal government and the member states.

Drawing on his experience as minister of finance, Dr. Beileh gave insight into the path of economic reform brought about by the HIPC process. The reforms focused on raising domestic revenue to achieve fiscal sustainability, keeping public expenditures at a sustainable level, and promoting various financial sector reforms. Dr. Beileh discussed the challenges related to gaining popular support for some of these reforms implemented in recent years. It is well known that economic reforms that are beneficial in the long-run often entail short-run costs which make them politically difficult to implement. To regain trust of taxpayers is of particular importance for Somalia given the need to increase domestic fiscal revenues.  Efforts have been made to actively inform the public about government activity and spending in order to increase transparency and convince Somalis that they will benefit from the system.

Ambassador Tillander provided examples of how countries like Sweden can help promote democracy and human rights in Somalia. For instance, Sweden has been working closely with the Somali government to help organize elections and increase voting participation, particularly for politically marginalized groups such as women and young adults.

Looking Forward

Despite Somalia’s recent success with debt forgiveness, both speakers acknowledged that much remains to be done.

The value of high-quality educational institutions and long-term investments in human capital is crucial in Dr. Beileh’s view. Having an educated population gives a country not only the skills and knowledge required to run a government but also helps a diverse society to move in the same direction. Although the need for infrastructure and investments in other areas is crucial for economic development, he insisted that it is educated people who in the end bring wealth, build infrastructure, and run governments.

Ambassador Tillander advocated for further promoting inclusion and merit-based selection in politics and business. He argued that progress is not possible if half of the population are excluded based on gender or age. Also, Somalia needs to move away from the clan as a basis for political power and position. As part of the solution, Ambassador Tillander suggested that Somalia should replace its provisional constitution with a new one that more strongly enshrines democratic elections, human rights, media freedom, and freedom of expression.

Although both speakers recognized that the reforms have been necessary, they mentioned that some reforms have also led to unintended negative consequences. For example, regulations to curb money-laundering and anti-terrorism financing have restricted the ability to transfer money to and from Somalia. As a result, many organizations and NGOs have found it hard to access financing, and it has made it hard for the diaspora to send remittances. To solve this issue, Dr. Beileh suggested policies that would improve the transparency of money flows, focusing on creating a personal id system and on strengthening the domestic financial institutions.

Another central topic at the webinar related to how Somalia and its partners should encourage and facilitate investments beyond foreign aid. Ambassador Tillander explained how there is an international misperception of Somalia and that his visit to the Mogadishu tech forum in 2019 was an eye-opener for him in this regard. These types of high-profile events, organized to attract foreign investments and display the opportunities that exist within Somalia, have attracted numerous young entrepreneurs who interact with their foreign counterparts, and showcase a dynamic and growing Somali business sector which is generally ignored in media-depictions of the country. In the context of the Swedish-Somali partnership, Ambassador Tillander suggested that there are enormous unexplored cross-border business opportunities between the countries, where the Somali diaspora in Sweden could play an important role.

Both speakers suggested that the foundations for communication and exchange are already in place. At this stage, the key to increase private investment is to reduce uncertainty for entrepreneurs and improve the predictability of the Somali financial system. People need to have better access to credit and financing, the banking system needs to become more formal, and the rule of law needs to apply more widely than it does today. Thanks to the HIPC process and the Somali government, steps in this direction are already underway but they must continue in order to build faith in the system, so that entrepreneurs, investors, and innovators are willing to take on the risks that new investments typically entail.

Reflecting on the start of the HIPC process, Ambassador Tillander argued that few people had anticipated the extent of progress that Somalia has achieved in only 4 years. Concluding the event, Ambassador Tillander and Dr. Beileh agreed that the cooperation between Somalia and the international community has been instrumental in encouraging and driving a reform process that would have been extremely difficult otherwise.

 

Speakers at the Event

  • Dr. Abdirahman Dualeh Beileh, Minister of Finance of the Federal Republic of Somalia.
  • Dr. Staffan Tillander, Swedish ambassador to Somalia.
  • Dr. Anders Olofsgård, Deputy Director SITE (moderator)

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Covid-19 in LDCs: Assessing Resilience and Understanding How to Help

Posted on May 11, 2020 | Policy Brief

An image of narrow street in slum representing Covid-19 in LDCs

Poor and developing countries are now starting to be affected by the Covid-19 pandemic. Important differences in the setting need to be considered when thinking about their prospects, and the role richer countries may play in helping them face the challenge.

Introduction

Most of the focus in current analyses of the policy response to the Covid-19 crisis center on Western and East Asian countries that were hit first and hardest. Some initiatives are tracking the situation in transition countries of Eastern Europe (e.g., the FREE Network initiative and the Vienna Institute for International Economic Studies tracker).

However, poor and developing countries start also being affected by the pandemic, and richer countries have an important role in helping them face the challenge. Besides the moral obligation, in the presence of a global externality it would be extremely myopic not to do so. When thinking about this, it is important to reflect on the differences that will be relevant in these settings.

What is Happening? The Spread of the Virus

Currently, the spread of the contagion is still at substantially lower levels in low income countries (LIC) as compared to high income countries (HIC). There is not enough evidence yet to either support or reject the hypothesis that a lower spread could be due to differences in climatic zones (warmer temperatures and humidity). Younger populations might account for both a lower (observed) spread and lower mortality, but on the other hand the denser and multigenerational living arrangements with poorer hygienic conditions should be pushing in the opposite direction. Observing lower spread and lower mortality could also be put down to lower testing (and more generally, data availability and quality of information systems). Finally, we can’t exclude that this is simply a matter of timing. Many LIC are relatively less connected to global routes, and moreover were fast to close their borders: many opted for early lockdown. If this is the case, they are merely postponing the sharp increases in infections and fatalities observed in other countries. (At the time of writing, worrisome reports of a severe outbreak in Somalia are emerging.)

Figure 1: Total confirmed Covid-19 deaths.

Source: Our World in Data, downloaded on May 6, 2020.

Figure 2: Total Covid-19 tests per 1,000 vs. GDP per capita.

Source: Our World in Data, downloaded on May 6, 2020.

A number of factors related to the demographic structure as well as the public health systems are relevant as a base for our expectations on how the situation is going to evolve in these countries.  Since age plays an important role on how severely Covid-19 patients are affected by symptoms, the demographic structure of the population has consequences for the demands that will be placed on the health care system by an outbreak. This plays in favor of LICs, where only 3% of the population is above 65 years of age on average. The corresponding share is 18% in OECD countries. The state of the health care system is intuitively crucial once there is an outbreak. In Table 1, the Global Health Security Index (GHS) “Health Security Score” paints a dismal picture in terms of overall capacity “to treat the sick and protect health”, where the group of LICs (as defined by the World Bank) scores an average of 14,5 out of 100 (HIC average is 51,9).

Table 1: Public health.

Source: Over 65, share of total: WB, values for 2018 except Eritrea (2011); Health care spending % of GDP: WB, values for 2017, except Syrian Arab Republic (2012) and Yemen, Rep. (2015); Health care spending USD p/c: WB, values for 2017, except Syrian Arab Republic (2012) and Yemen, Rep. (2015); Health security score: GHS Index 2019, Health Overall Score “Sufficient & Robust Health Sector to Treat Sick & Protect Health”; Health security – response capability: GHS Index 2019, Response Overall Score, “Rapid Response to and Mitigation of the Spread of an Epidemic”.

This is clearly related to how wealthy a country is. The wealthier countries have better health care systems in general, and will do better if they experience an outbreak, while the poorer countries will do worse. Even if the average 6% of GDP devoted to health care spending in LICs looks comparable to the HIC average share (8,8%), these translate into very different figures in terms of per capita dollar spending: 40 USD per capita in the first group, to be compared to over 4,000 USD in the second. Even if costs do differ as well, a ventilator is unlikely to be two orders of magnitudes cheaper in Liberia than in Italy. Nevertheless, the “Health security – response capability” index, which includes things as emergency response plans and existing links between health and security authorities, averages 30,9 in LICs against 45,8 for HICs. The difference across income levels is much smaller in this case, reflecting both the more general lack of preparedness in this particular domain, but also the familiarity and experience of poorer countries with infectious diseases outbreaks, which might give an edge in an emergency. The World Health Organization reports over one hundred “public health events of varying magnitude and socio-economic effects” annually in Africa, for example. After the 2014-15 Ebola outbreak, an Africa Centre for Disease Control and Prevention was set up in 2017, which might have contributed to an upgrade in the index. The Centre has been quick to react in the present case, as discussed later in the policy response section.

What is Happening? Economic Impacts

It is hard for HIC to put numbers on forecasts of economic activity. For LIC, the challenge of forecasting is further compounded by the normally poor array of statistical systems and the larger informal sectors. Better indicators of economic activity and income distribution normally rely on surveys, and while surveys are still being conducted these days (see for example the relentless work of IPA affiliates  the focus at the moment is naturally on the health emergency and related behavior, rather than incomes and investments.

Even without exact numbers, we can nevertheless expect that LICs’ economies are going to be hit harder, for two main reasons:

  • They are more sensitive to the global shock(s), through commodity prices and exports, and also because of the limited access to international financial markets
  • They start from worse structural conditions, in terms of fiscal capacity and governance capacity, which makes them less resilient.

Again, a number of fiscal and macro factors are relevant for our expectations on how the situation is going to evolve, such as the trade and fiscal balance, and the composition of exports. Besides concerns for long-term growth prospects, the most immediate threat is that to people’s livelihoods, in particular poor people’s, due to the slowdown of economic activity. While this can’t be fully avoided due to the dependence on international linkages, it is made radically worse in case of domestic lockdown. The combination of large populations living below or at the margin of the poverty threshold and the slim fiscal capacity for compensation and redistribution results in much sharper trade-offs associated to different policy measures.

Some of these countries, heavily dependent on external trade and in particular on commodity exports, are at the moment facing a double shock, due to the collapse of commodity prices and the disruptions to global value chains, on top of the epidemic itself. This is dramatically reducing the fiscal space for response, which was already limited to start with. Therefore, even though a number of LICs have formulated response plans, as will be discussed in the next section, the question remains how to finance them.

Table 2: Macro factors.

Source: External Trade as % of GDP: WB, Trade (% of GDP) for 2018 except Afghanistan, Malawi, Tajikistan, Tanzania (2017); South Sudan (2015); Eritrea (2011); Commodity Exports, %: UNCTAD, 2017, Commodity exports (as a share of total merchandise exports); Population Under Poverty Line: WB; Foreign Aid % of GDP: WB, Net official development assistance received (current US$) / GDP (current US$) for 2018; Tax revenue: WB.

What is Happening? Policy Response

With few exceptions, most countries in this group were quick to react in at least two dimensions: closing borders and closing schools. While the first was probably a very wise choice and might have delayed significantly the entry of the virus in the countries, not enough thought has been given to the consequences of school closures. Less than one in four countries is providing some form of distance learning; and even where this is available, access will be very unequal, for a number of reasons: access to internet and suitable devices, need to compensate for parent’s lost income, responsibility for younger siblings are just some of the factors, in addition to the inequality in parental socioeconomic and educational background which is common also to HICs. Based on experiences from the Ebola epidemic in 2014-15 in West Africa, the protracted lack of schooling is liable to leave deep long-lasting consequences.

A quarter of the countries (8 out of 31) entered lockdown or very strict social distancing. Few of them, with help from the international community, support the enforcement of a lockdown with food distribution (for example Liberia and Uganda). This is not possible everywhere, due to financing and logistic issues, and in its absence, livelihoods are put at risk. Because of this, in many areas people defy the rules, in some cases notwithstanding enforcement by the military. Another quarter of countries opted for curfews rather than lockdown, to limit the frequency of interactions without halting completely economic activity. Very few countries explicitly chose much more limited interventions in terms of social distancing (Burundi, Mozambique, Tanzania), while most of the rest do not have the governance capacity for intervention, in some cases due to other preexisting crises (Yemen, Mali, Guinea-Bissau).

The quality of the country’s health care system and the resources that can be invested in testing will determine for how long containment measures will be needed. Two thirds of the countries have already enacted emergency interventions in the health sector, meant to strengthen the general capacity for care and in particular the infrastructure for testing.  All in all, though, half of the countries have opted for either strict public order measures or fiscal interventions. Most of the remaining half have neither, while very few have both. In most cases, the health-related emergency measures are financed by small reallocations of current spending that amount to few per-mille points of GDP. With fewer resources to cure and test, countries will need to maintain longer containment measures to avoid the spread, once the contagion reaches them. However, as mentioned above, the cost of lockdown is very different in these countries, where almost half of the population (48% on average) lives below the international poverty line. Stricter and longer lockdowns will call for broader fiscal interventions in support of households’ (food) consumption and SMEs. The few countries that planned such interventions, and/or to increase health sector spending by more than 1% of GDP, are counting on donor financing. At the same time, all are suffering contractions in their fiscal space, as noticed above, and the same can be said of most donor countries too. The question of how to finance this gap looms therefore large.

A Role for Rich Countries

In normal times, the relative importance of different financial flows entering developing countries could be phrased as follows: foreign aid is small, remittances bigger, trade and investments biggest. ODA receipt accounts for 12% of GDP in the average LIC. While almost all donor countries fall short of the pledge to give 0,7% of their annual GDP, even if they did, thus trebling the current aid bill (152,8 billion USD in 2019), this would still not reach the level of remittances flows, estimated at 551 billion USD in 2019. The FDI flows, estimated at 671 billion USD (in 2018) are more important in the aggregate, although their distributional implications are very different. The importance of trade is also substantial, as shown in Table 2.

Given the situation, though, with a global recession looming, we can expect substantial contractions in trade and FDIs at least in the short run, but more likely for a protracted period. The limitations to international mobility will also imply severe reductions in remittances flows, as migrant workers have either returned to their countries, or are more likely to lose employment in the host countries even if they stay. Clearly this implies a continued role for international support.

Without going in the merit of an optimal policy mix recommendation to developing country governments, which others have done (for example, the International Growth Centre COVID-19 guidance note), rich countries that want to play a role in this should keep in mind a few points. Aid budgets should at the very minimum not be reduced, notwithstanding the domestic fiscal squeezes. More than ever, the same amount of money has a much larger life-saving potential in a poor country than domestically. Besides quantity, the type of support will be important. During the health crisis, the priority needs to be to finance emergency expansion of health care spending, but for this to be sustainable it needs to be paired with a strong effort to limit the spread. This includes two elements: i) testing and tracing, or in absence of tests at least keeping track of the geographic spread of symptomatic outbreaks; and ii) supporting livelihoods to enable social distance or lockdown. The first includes, besides the medical material and infrastructure for the testing itself, which might not be the most cost-effective way of using resources, enabling safe and reliable public communication, which needs to go two-ways: from authorities to citizens, avoiding fake news and potential stigma attached to the contagion, and from citizens to the authorities to collect policy relevant data. Since internet is not widespread enough, and the radio only allows for one-way communication, the best shot at this is leveraging mobile telephone networks. Technical assistance in this could be valuable, as well as analytical capacity for the processing of the data.

It goes without saying that all the progress happening in rich countries, in terms of understanding of the virus spread, efficacy of different policies and behaviors, development of treatments and in due time vaccine should be promptly shared.

When it comes to consumption support, it is debatable whether cash transfers or in-kind distributions should be the preferred option. This will of course vary depending on the situation: cash is logistically easier and more flexible – but it will not help if and where the markets shut down.

In the aftermath, it is important to keep in mind that poor countries will not be able to borrow (in particular, issue domestic public debt) to finance fiscal stimuli and other recovery measures. There will be again an important role for international lenders. At the same time, a swift recovery of global economic activity must be considered as the all-over superior solution.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

The Learning Crisis: Combining Incentives and Inputs to Raise Student Achievement

Posted on May 27, 2019 | Policy Brief

20190527 The Learning Crisis

As school enrolment in low- and middle-income countries has increased substantially in the last couple of decades, attention has instead turned to the poor quality of education. This ”learning crisis” (UNESCO 2013) manifests itself in primary school students without basic skills in language and mathematics, and high school students being vastly outperformed by their peers in high-income countries (World Bank 2018). In this policy brief, I give a very brief background to the learning crisis and report on a research project we have implemented and evaluated in the Democratic Republic of Congo (DRC) with the aim of improving student learning in primary education. The intervention consisted of an incentivized program to stimulate more usage of existing textbooks for self-study, and the impact was evaluated through a randomized experiment (Falisse, Huysentruyt and Olofsgård 2019).

Education systems in many low- and middle-income countries fail to deliver actual learning at the level necessary for people and societies to thrive. According to leading international assessments of literacy and numeracy, the average student in low-income countries performs worse than 95 percent of the students in high-income countries. According to an assessment of second-grade students in India, more than 80 % could not read a single word from a short text or conduct two-digit subtraction. Students perform poorly also in some European middle-income countries; more than 75 % of students in Kosovo and the Republic of North Macedonia perform worse than the 25th percentile in the average OECD country (World Bank 2018). The reasons behind the learning crisis are of course many, ranging from poorly trained and absent teachers, lack of financial resources for infrastructure and learning material, malnutrition and lacking early childhood development, and sometimes weak demand.

Textbooks for Self-Study in the DRC

The learning crisis is particularly evident in fragile, low income countries. This is also where the major challenge to achieve the 2030 Sustainable Development Goal 4 of quality education to all lies (World Bank, 2018). Yet, very few interventions targeting student achievement have been evaluated in the most fragile countries of the world (Glewwe and Muralidharan 2016). This is a concern, since interventions that work in poor but stable environments may not be feasible or effective in even more resource constrained and violent environments (Burde and Linden 2013). In particular, there is an extra value in identifying interventions that are not only cost efficient, but also low cost in absolute terms and simple and transparent.

Projects focusing on school inputs have often yielded surprisingly disappointing results (Glewwe and Muralidharan 2016). One example is interventions focusing on textbook distribution despite belief in their effectiveness and investments from donors and governments (Glewwe, Kremer and Moulin 2009; Sabarwal et al. 2014). One major challenge with textbooks is that they for different reasons are often not used by teachers or pupils, and certainly not to their potential (e.g. Sabarwal et al. 2014). This raises the question of whether the potential of textbooks can be leveraged through incentives on their usage. A couple of recent papers have found that it is indeed the combination of inputs (including textbooks) and incentives that is critical to yield a significant impact on student test scores (Mbiti et al. 2019; Gilligan et al. 2018).

Following up on this idea we collaborated with the Dutch NGO Cordaid that is running a program in primary education in South Kivu, in eastern DRC, in 90 schools. We designed an intervention that encouraged 5th and 6th grade students from 45 randomly selected schools to regularly take home textbooks and use them for self-study. We used a mix of financial and non-financial incentives focused on the students, such as a public display of stars assigned to each student that brought math and French textbooks home and back in good condition, and an in-kind gift of pens and pencils for all students in classes regularly participating in the routine. We also offered participating schools a small flat compensation to compensate for lost and damaged books. The main goals of the intervention were to increase student achievement and to affect their aspirations for further study and more qualified careers.

To measure student achievement, we rely on self-conducted tests in the French language and math, but also high stakes national exam scores that determine eligibility to secondary education. Following the literature, we analyze test results using a model that assumes that baseline test scores capture student learning up to that point, so once this is controlled for end line results capture cleanly the added value of the intervention introduced. We also carefully address potential statistical problems due to slight unbalance between treatment and control groups, students from baseline not present at end line and poor compliance with the intervention in a small set of schools. The results are generally robust across different specifications of the details of the model.

We emphasize three main sets of results. First, we find that the students in the treatment schools (those selected to receive the books) scored significantly better than those in control schools on the French language tests. The estimated improvement was 1/3 of a standard deviation, which compares favourably with other interventions in developing countries targeting student test scores (Kremer et al. 2013). On the other hand, we found no significant impact on math scores. We cannot tell for sure why we observe this difference between French and math, but it should be noted that both textbooks were in French, suggesting that language could be learned from both books. It has also been suggested that math requires more supervision than language and that math is more ”vertical” in terms of skills progression while language is more ”horizontal”. That is, if students are far behind the curriculum in the textbook, they don’t have the necessary basic building blocks to understand the math problems. But for language, this matters less, as progress can be made in different areas more independently.

Secondly, students in treatment schools were more likely to sit and pass the national exam. This is important as this is a requirement for the continuation of schooling at a higher level. More qualified jobs, and jobs that require more French language skills, typically require at least secondary schooling. This is also consistent with the finding that students exposed to the intervention were more likely to aspire to non-manual jobs. Finally, the intervention was low cost and cost-efficient. In particular in fragile environments with very limited resources, this is essential. The intervention is also easy to implement and transparent and does not give raise to incentives to cheat as has been the case in some interventions linking incentives directly to student test performance.

Conclusions

The current key challenge in education policy in low- and middle-income countries is to improve student achievement while continuing the successful increase in enrolment despite often serious constraints in complementary inputs in the education production function. Financial resources for school infrastructure and material are limited, competent and motivated teachers are in short supply, and weak parental support and little early childhood development leaves children unprepared for sometimes too ambitious curricula. In such circumstances simple and low-cost interventions that make better use of existing resources are particularly valuable. In this project we designed and evaluated such an intervention, using incentives to stimulate more usage of existing textbooks, in a particularly challenging environment, Eastern DRC. We find a positive impact on French language skills and higher student aspirations as shown through greater participation in national exams required for continued education. On the other hand, we find no impact on math test scores. Serious sustainable improvement in student learning in a country like the DRC requires wholesale reforms to the education sector and substantially increased financial resources. Realistically, this is a long-run ambition. In the meanwhile, small low-cost interventions that match incentives with existing resources can significantly increase student achievement also in the short run.

References

  • Burde, Dana and Leigh L. Linden, 2013. “Bringing Education to Afghan Girls: A Randomized Controlled Trial of Village-Based Schools.” American Economic Journal: Applied Economics, 5(3), 27-40.
  • Falisse, Jean-Benoit, Marieke Huysentruyt and Anders Olofsgård, 2019. “Incentivizing Textbooks for Self-Study: Experimental Evidence on Student Learning from the Democratic Republic of Congo”, Working Paper.
  • Gilligan, Daniel O., Naureen Karachiwalla, Ibrahim Kasirye, Adrienne M. Lucas, Derek Neal, 2018. “Educator Incentives and Educational Triage in Rural Primary Schools.” NBER WP 24911.
  • Glewwe, Paul, Michael Kremer, and Sylvie Moulin, 2009. “Many Children Left Behind? Textbooks and Test Scores in Kenya.” American Economic Journal: Applied Economics, 1(1): 112-35.
  • Glewwe, Paul and Karthik Muralidharan, 2016. “Improving Education Outcomes in Developing Countries: Evidence, Knowledge Gaps, and Policy Implications”, in Handbook of the Economics of Education, pp. 653-743. Elsevier.
  • Kremer, Michael, Conner Brannen, and Rachel Glennerster, 2013. “The Challenge of Education and
  • Learning in the Developing World.” Science 340, 297-300.
  • Mbiti, Isaac, Karthik Muralidharan, Mauricio Romero, Youdi Schipper, Constantine Manda, Rakesh Rajani, 2019. “Inputs, Incentives, and Complementarities in Education: Experimental Evidence from Tanzania.” NBER WP 24876.
  • Sabarwal, Shwetlena, David K. Evans, and Anastasia Marshak, 2014. “The permanent input hypothesis: the case of textbooks and (no) student learning in Sierra Leone”, Policy Research working paper, no. WPS 7021. Washington, DC: World Bank Group.
  • UNESCO, 2013. “The Global Learning Crisis: Why every child deserves a quality education”, UNESCO, Paris.
  • World Bank, 2018. “World Development Report 2018: Learning to Realize Education’s Promise”, Washington DC: World Bank.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

The Polish 1999 Administrative Reform and Its Implications for Inclusive Regional Development

Posted on March 25, 2019 | Policy Brief

20190325 The Polish 1999 Administrative Reform Image 01

On 1 January 1999, four major reforms took effect in Poland in the areas of health, education, pensions and local administration. After 20 years, only in the last case does the original structural design remain essentially unchanged. We examine the implications of this reform from the perspective of the distance of municipalities from their regional administrative capitals. We show that despite fears of negative consequences for municipalities which ended up on the periphery with respect to their post-reform administrative centres, the reform did not result in slower socio-economic development in these regions. We argue that regional inclusiveness in the process of development is likely to be an important factor behind the stability of Poland’s administrative design.

Introduction

Four major reforms took effect on 1 January 1999 in Poland, substantially changing the structure of healthcare, education, the pension system and local government administration. The extent of the changes and the fact that all four reforms were implemented on the same day could in fact be considered as representing a symbolic final step of the Polish socio-economic transition which had started nearly ten years earlier. However, in 2019, twenty years after the reforms took effect, the originally introduced structural design remains unchanged in only one of the four areas – local government.

In a recent paper (Myck and Najsztub, 2019) we take a close look at the implications of the 1999 administrative reform treating it as a form of a “natural experiment” and analysing its consequences for socio-economic development dynamics in municipalities, which ended up on the periphery with respect to their post-reform administrative capitals. Using a broad set of indicators we find that the reform did not have significant negative consequences for these municipalities and ensured inclusive development at the regional level. This might be an important factor which has determined the longevity of the administrative design implemented in 1999.

The local administrative design in Poland before and after 1999

Major administrative reforms are relatively infrequent, which makes the scope and scale of the one implemented in Poland on 1 January 1999 a rather unique point of reference for analysis of potential implications of administrative restructuring. The reform went far beyond the administrative rearrangement of local government, as it was the culmination of a process that reintroduced local autonomy to the Polish political system.

The goal of the reform was to further decentralise political power and increase public finance transparency. The middle tier of local government – the counties (powiats) – was reintroduced as a body responsible for the administration of institutions beyond the scope of a single municipality (e.g. hospitals, secondary schools, public roads, unemployment). At the same time the number of top tier administrative regions – the voivodeships – was reduced from 49 to 16, and their responsibilities were focused on overall regional development, higher education, regional infrastructure and the prospective management of EU funds. In the end, the reform resulted in the formation of 16 voivodeships, 308 counties, 66 towns with county status and 2478 municipalities. This administrative division of Poland has been in place, with minor modifications, since 1 January 1999 (for details and comments, see Blazyca et al. (2002), Regulski (2003) and Swianiewicz (2010)).

The reform implied the loss of regional administrative capital status for 31 cities (administration in two voivodeships, Lubuskie and Kujawsko-Pomorskie, is split between two capitals), and for nearly 60% of municipalities it resulted in an increase in the distance to their regional administrative centre compared with the pre-reform arrangement. These features of the reform are illustrated in Figure 1. Cities marked in blue used to be administrative capitals before 1999, while those marked in red maintained their status after the reform. The blue rays show the distance of municipalities from their respective administrative capitals before 1999, with the post-1999 distances marked in red. In the case of the two new voivodeships where two cities received capital status (Lubuskie  and Kujawsko-Pomorskie), we measure the distance to the city that became the site of the regional government (sejmik wojewódzki), which is the key institution responsible for regional development.

Figure 1. Administrative arrangements in Poland before and after the 1999 administrative reform: voivodeships, capitals and distance from municipalities to regional administrative centres.

Notes: Blue rays show the distance of municipalities to their respective administrative capitals before 1999; the post-1999 distances to regional administrative centres is marked in red. Distances (in straight lines) between centroids of municipalities.
Source: BDL, own calculations.

Identifying implications of the reform for regional capitals and peripheral municipalities

An important concern related to the introduction of the reform was first, its consequences for the voivodeship capitals which lost this status due to the reduced number of top-tier regions. Secondly, at the level of municipalities, the question was whether the redesign of the administrative network would result in any negative changes of development dynamics in municipalities, which as a result of the reform landed on the periphery with respect to the new voivodeship capitals. In Myck and Najsztub (2019) we consider both of these concerns looking at a number of indicators of socio-economic developments, including population dynamics, local government finances as well as the intensity of nighttime lights measured by satellites, which has recently been treated in the literature as an overall proxy for economic development (Henderson et al., 2012; Pinkovskiy and Sala-i-Martin, 2016). We look at each of these problems using the difference-in-differences approach. In the first instance we compare the developments before and after the reform for voivodeship capitals, which maintained the status and those which did not, and in the latter we look at municipalities for which the distance to their administrative capital increased relative to those for which it remained unchanged or fell.

In the case of voivodeship capitals, due to the obvious differences between the two groups of pre-1999 capitals which in the end determined their post-reform status, our estimates can only be treated as descriptive. In the second case though, since municipalities had little choice with regard to their assignment to the new voivodeships, the results can safely be interpreted as causal. To address the differences between the two groups of municipalities, we apply the entropy balancing method of matching to ensure pre-reform uniformity in the distribution of the analysed municipality characteristics (Hainmueller, 2012; Adda et al., 2014). A summary of the results of both sets of estimations is presented in Table 1 where we show the difference-in-differences coefficients for six socio-demographic outcomes. The estimation period covers the years 1995-2012.

As we can see in Table 1 the only consistently negative and significant coefficient which we find in the two main specifications concerns net migration. Other than that, the results seem to go against the initial concerns with positive coefficients on own revenues, which are statistically significant in the case of the voivodeship capitals, though not in the case of peripheral municipalities. Results for the intensity of nighttime lights are negative in both cases but are not statistically significant. Particularly in the case of peripheral municipalities – where as we argued we can treat the results as causal – we find no evidence of major negative implications of the reform for socio-economic dynamics. This result, as we show in Myck and Najsztub (2019) is confirmed in a number of robustness tests.

Table 1. Diff-in-diff regression estimates for voivodeship capitals and municipalities

Outcome Voivodeship capitals: effect of loss of regional capital status Municipalities: increased distance to administrative capitals
  Coeff. t-stat. Signif. Coeff. t-stat. Signif.
Population
Births, log -0.139 (-5.718) *** -0.000 (-0.027)
Deaths, log 0.020 (1.339) 0.002 (0.160)
Net migration, pers. -1.902 (-2.906) ** -12.579 (-2.372) *
Finances
Own revenues, p.c. log 0.076 (1.872) + 0.024 (1.028)
Own non-capital revenues, p.c. log 0.136 (2.307) * 0.033 (1.246)
Economic indicators
Total lights, p.c. log -0.028 (-1.396) -0.002 (-0.049)
Number of observations: 882 43218


Note: + p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001; standard errors clustered at the municipality level. Monetary values in real 2005 PLN terms. Values in log in cases where the dependent variable is log-normally distributed. Per capita estimations (p.c.) weighted by population size. All estimations include capital/municipality and time fixed effects.
Source: Authors’ calculations using data from the Local Data Bank (Bank Danych Lokalnych, BDL; data on population and finances) provided by the Polish Central Statistical Office (GUS) and nighttime lights data provided by the National Oceanic and Atmospheric Administration (NOAA) (Elvidge et al., 2009; National Geophysical Data Center (NGDC), 2010). Data for years 1995-2012.

The socio-economic development in central and peripheral municipalities with respect to the new voivodeship capitals seems therefore to be unaffected by the reform. Importantly also, despite concerns about the marginalization of the cities which lost the voivodeship capital status in 1999, their socio-economic performance has not been much worse compared to those which remained capitals and received greater administrative responsibilities and budgets to manage. From this point of view, the stability of the structure of Poland’s local government and the longevity of the administrative design implemented in 1999 should not be surprising. The claims of the need to change the Polish administrative design and promises of changes resurface at each parliamentary election. These promises have so far been left unmet and inclusivity of socio-economic development at the regional level that followed the reform is likely to be an important factor behind this.

Acknowledgements

The authors gratefully acknowledge the support of the Polish National Science Centre through project no. 2016/21/B/HS4/01574. For the full list of acknowledgments see Myck and Najsztub (2019).

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