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Development that Works
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    This blog highlights effective ideas in the fight against poverty and exclusion, and analyzes the impact of development projects in Latin America and the Caribbean.
  • How to avoid building more bad roads?

    22
    Jul
    2014

    By

    By Graham Watkins*

    Dead Cattle Stranded on a Road by Flooding in Beni Bolivia

    Dead cattle stranded on a road by flooding in Beni, Bolivia.                  Photo: Graham Watkins.

    A month ago I was bumping along a dusty road in the Beni (Bolivia) from San Borja to San Ignacio de Moxos. Someone in the car said that this road had been named as the “worst road in the world.” That reminded me of a 36 hours trip on the Georgetown-Lethem road (Guyana). We only had to travel 60 kilometers in an old British Army Bedford truck, but the trip included a broken femur, eight hours in axle deep mud, and a 10 km walk in the middle of the night with singing nightjars.

    These kinds of roads connect people through remote areas. The people who live along these roads suffer the negative consequences –hurtling minibuses, cultural and lifestyle change, reduced security, land use by outsiders, stream pollution, commercial fishing and hunting, and even floods when the roads block natural water flows. The challenge in building these roads is how to ensure that the road provides a service to all people rather than being a service for some and a burden for others. Here are three suggestions as to how to better address this challenge.

    Read more…

    Errors: the simpler the better?

    15
    Jul
    2014

    By

    By: David Alfaro Serrano*

    error_eng

    Proper estimation of the standard errors of the estimators of regression coefficients is important. These estimates are needed when analyzing statistical significance, which is the basis of the interpretation of the results of an econometric analysis. In impact evaluation practice, analysis of statistical significance is what allows the researcher to say whether there is evidence for the effectiveness of an intervention.

    In this post I tell you something I discovered recently about the calculation of estimators’ standard errors: there are cases in which the correlation of the errors of the regression model can be ignored when calculating them. Moreover, these cases arise frequently with experimental data. Read more…

    Can incentives improve our habits?

    1
    Jul
    2014

    By

    By Sebastian Galiani*

    Blog Galiani Ejercicio

    No doubt, we economists believe that incentives matter. Recently, it has been argued that incentives could be used to encourage desirable habits, such as getting regular exercise or having a healthy diet. This has become particularly important in Latin America given its demographic and epidemiological situation (Galiani and Weinschelbaum, 2014).

    If the welfare created by consuming or undertaking some activity today depends on that same level in the past, or in more technical terms, if the marginal utility of consumption today is positively correlated with past consumption, then providing monetary incentives to undertake an activity could lead to us to do that same activity in the future, thus changing behavior. This hypothesis is known as “habit forming.” However, it has also been noted that granting of rewards can be counterproductive, as it provides an extrinsic motivation for a task or activity that can displace the intrinsic motivation. This hypothesis is known as “crowding-out”. This effect could be particularly important in the medium term, when economic incentives are withdrawn and the individual may have lost her initial motivation for the activity in question.

    Read more…

    Do We Practice Climate-Smart Agriculture?

    17
    Jun
    2014

    By

    By Nancy McCarthy* | nmccarthy@leadanalyticsinc.com | Senior Researcher, Lead Analytics

    Despite the need for practices that counteract the effects of climate change on agriculture, Latin America is lagging behind. Credit: Istock photos.

    Despite the need for practices that counteract the effects of climate change on agriculture, Latin America is lagging behind. Credit: Istock photos.

     

    The Intergovernmental Panel on Climate Change, established by the United Nations Environmental Programme and the World Meteorological Organization , in its Working Group I report, confirmed that it is extremely likely that human activity has contributed to increases in global average surface temperatures through the release of greenhouse gases.

    The report also states that it is very likely that human activity has contributed to increased frequency of extreme weather events.  Given current trends in emissions, further climate changes and frequency of extreme weather events is projected to continue through the 21st century.  This underscores the importance of developing and implementing adaptation strategies, particularly for vulnerable sectors.  

    The  Working Group II report documents current evidence on vulnerable sectors, likely impacts in the absence of adaptation, and more limited evidence on adaptation strategies.  As documented in this report, a particularly vulnerable sector is agriculture.  Those dependent on agriculture for their livelihoods are also often those with limited resources to adapt to climate changes, including expected increases in the frequency of weather extremes.  This then presents a double challenge, supporting those with limited resources to adapt to climate change in a sector particularly vulnerable to such changes.

    A recent IDB study synthesizes current empirical evidence on a number of agricultural practices that have been posited to increase yields and reduce yield variability by building soil quality, increasing water use efficiency, and reducing soil and water erosion.  

    Read more…

    Do non-contributory pensions work?

    10
    Jun
    2014

    By

    Credit: Inter-American Development Bank's photo gallery.

    Credit: Inter-American Development Bank’s photo gallery.

    Undoubtedly, pensions are one of the most important components of a social security system.

    Pensions improve welfare by facilitating individuals to be able to smooth consumption over the life-cycle. By contributing to a pension, an individual consumes today less than what she produces, so as to consume more after she has retired and is no longer producing. Pensions allow individuals to retire from the labor market without the fear of falling into poverty or impoverishing their relatives.

    The most common form of pensions in the United States and many other high-income countries is contributory plans that are financed by taxing own labor earnings. However, contributory plans have proved difficult to fully scale in economies with highly informal labor markets (Dethier 2007, Galiani and Weinschelbaum 2012, and Levy 2008). As a result, in the developing world, large fractions of the population are not covered by contributory pensions. In Latin America, contributory pension coverage ranges between 10% to about 60% (Dethier et al., 2010). In Mexico, coverage is only 23%. Most of these countries have instead turned to non-contributory pension systems (NPS) targeted by age and income (Holzmann et al. 2010, and McKinnon and Sigg 2006).

    How can a non-contributory pension scheme work in a less developed country?http://blogs.iadb.org/desarrolloefectivo_en/wp-includes/js/tinymce/plugins/wordpress/img/trans.gif

    Read more…

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