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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.
  • Credit or no credit? Is that really the question?



    By Mario González Flores* & Leonardo Corral**

    Is access to credit enough to improve welfare indicators at the firm or farm level?

    Mario Leonardo Credito EngIn recent years, a great deal of hope to promote development has been placed on the potential transformative power of financial access (World Bank 2007; Karlan and Morduch 2010).  At the firm or farm level, having access to credit can facilitate the purchase of necessary inputs in a timely manner, it can increase investments and adoption of new or improved technologies, it can decrease risk, and overall, it has the potential to improve production, productivity, and ultimately welfare for those receiving the credit.

    Yet, using credit to invest in a greater use of inputs or to invest on new machinery and equipment does not necessarily lead to the desired or optimal outcomes.  For example, farmers with no prior knowledge on the proper use of inputs—such as fertilizers or fungicides, may over or under use these in a way that their use leads to no improvements on yields or no improvements in damage abatement.  Similarly, a farmer that invests in a new technology, such as a modern irrigation system, may not obtain the optimal results in production or water usage (efficiency) if the farmer is not well trained on the appropriate way of using and maintaining her new irrigation system.

    Thus, if financial access facilitates input use, technology adoption, and investments in new machinery, the only way that greater financial access can have a development impact is by assuring that complementary training on the correct use of new inputs and technologies is provided to those unfamiliar with their use . This, in fact, is one of the key findings of a recent meta-evaluation published by IFC focusing on private sector interventions in agribusiness using Access to Finance (A2F) and farmers/business training. Read more…

    An informal Uber?




    At rush hour it is virtually impossible to get a cab ride in Bogota or Lima. The last time I went to Bogotá, the line for taxis at the airport was even longer than the queue for immigration. I was tired, it was 10:30 pm and it drizzled. I would have given my kingdom for an Uber, which does charge more if demand is higher. Finally, and after an hour long wait, I got into a dirty taxi after putting my bag in the trunk which was full of packages and at least three opened stale Coca-Cola bottles.

    In the regulated taxi market, the client has little choice, no matter that many are willing to pay more for a cleaner, safer, faster and more punctual service, even if the price fluctuates with the supply and demand tides.

    Taxi fares are typically set by regulation (Cab meters), and the driver cannot negotiate the fare.

    Unless (s)he can, because it is informal. Read more…

    Democratizing public transportation



    By Sergio Deambrosi*

    Despite the great benefits that Cali, Colombia’s new mass transportation system has brought to the city, low useage poses a challengefor its long-term sustainability.

    COLOMBIA - Users prepare to board the recently inaugurated MetroCali. Photo: David Alejandro Rendón-Wikicommons.

    COLOMBIA – Users prepare to board the recently inaugurated MetroCali. Photo: David Alejandro Rendón-Wikicommons.

    Just three years ago Cali, Colombia’s third city by population, had chaotic traffic. Streets and avenues were congested most of the day with a proliferation of buses, which contributed to long travel times, numerous accidents and high pollution.

    In 2006 the IDB gave the city a US $ 200 million loan through the federal government to implement an urban mobility improvement project. Its goal was to set up a modern, efficient and reliable public transport system that would connect the low and middle income population zones with areas  offering employment and social services. Read more…

    The Macho River: Source of Life, Electricity and Employment



    By Carlos Echevarría*

    Modernization of the Macho River hydroelectric plant in Costa Rica has created more than 300 direct jobs and will supply electricity to more than 228,000 homes.

    Macho River hydroelectric plant in Costa Rica. Photo: Project files.

    COSTA RICA – Macho River hydroelectric plant. Photo: Project files.

    Springing from the virgin forests of Cerro de la Muerte (Death Peak) in Costa Rica, crystal clear waters form a powerful outflow that creates the Macho River and are a source of energy for the residents of the Orosi River Valley, a region lush with vegetation and abundant wildlife on the Atlantic slope of the country.

    As a child growing up in the región, Efraín Arce Segura often played along the banks of the Macho River trapping shrimp. In 1959, Efraín witnessed the commotion set off in his community by the construction of a hydroelectric plant. Like him, many of the inhabitants wondered how the river could generate light.

    Despite Efraín’s bewilderment, the Macho River electric power production center forged ahead and built the plant, and for the last 50 years has supplied clean energy to Costa Rica. Read more…

    How far away is your water?



    By Jorge Oyamada* 

    More than 10,000 households in rural areas of Paraguay enjoy a safe drinking water system thanks to funding from the IDB and FECASALC.


    Access to drinking water in rural Paraguay remains a challenge.

    PARAGUAY – Access to drinking water in rural Paraguay remains a challenge.

    Paraguay’s Virgen del Rosario Community houses 111 families and until a little over a year ago it had no potable water, forcing villagers to walk long distances to fetch water every day.

    “I used to carry water with my family for 800 meters,” recalls Eleucadio Benítez. “We would fill up bottles and other containers and carry them on a wheelbarrow, or on a bicycle.” Eleucadio and many other members of this small rural community located 200 km northeast of Asunción carried water on a daily basis for 16 years.

    Through the Potable Water and Sanitation for Rural and Native Communities Program, funded by an Inter-American Development Bank loan and a generous grant from the Spanish Cooperation Fund for Water and Sanitation in Latin America and the Caribbean (FECASALC, after its Spanish initials), Paraguay’s National Service for Environmental Sanitation (SENASA) has built a drinking water system and promoted the creation of the Virgen del Rosario Sanitation Board, which manages the community’s drinking water service. Read more…

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