Robert Osei

A multifaceted program causes lasting progress for the very poor: Evidence from six countries

Attacking the problem of extreme poverty A persistent concern about wellintentioned efforts to improve living standards for the 1.2 billion people who survive (if it can be called that) on less than

Does Aid Create Trade? An Investigation for European Donors and African Recipients

1.25 US per day is figuring out what works. A second concern is figuring out whether what works in one setting can be made to work in another. Banerjee et al. describe encouraging results from a set of pilot projects in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru encompassing 11,000 households. Each project provided short-term aid and longer-term support to help participants graduate to a sustainable level of existence. Science, this issue 10.1126/science.1260799 Helping people in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru to become self-employed enables the very poor to become less poor. INTRODUCTION Working in six countries with an international consortium, we investigate whether a multifaceted Graduation program can help the extreme poor establish sustainable self-employment activities and generate lasting improvements in their well-being. The program targets the poorest members in a village and provides a productive asset grant, training and support, life skills coaching, temporary cash consumption support, and typically access to savings accounts and health information or services. In each country, the program was adjusted to suit different contexts and cultures, while staying true to the same overall principles. This multipronged approach is relatively expensive, but the theory of change is that the combination of these activities is necessary and sufficient to obtain a persistent impact. We do not test whether each of the program dimensions is individually necessary. Instead, we examine the “sufficiency” claim: A year after the conclusion of the program, and 3 years after the asset transfer, are program participants earning more income and achieving stable improvements in their well-being? RATIONALE We conducted six randomized trials in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru with a total of 10,495 participants. In each site, our implementing partners selected eligible villages based on being in geographies associated with extreme poverty, and then identified the poorest of the poor in these villages through a participatory wealth-ranking process. About half the eligible participants were assigned to treatment, and half to control. In three of the sites, to measure within village spillovers, we also randomized half of villages to treatment and half to control. We conducted a baseline survey on all eligible participants, as well as an endline at the end of the intervention (typically 24 months after the start of the intervention) and a second endline 1 year after the first endline. We measure impacts on consumption, food security, productive and household assets, financial inclusion, time use, income and revenues, physical health, mental health, political involvement, and women’s empowerment. RESULTS At the end of the intervention, we found statistically significant impacts on all 10 key outcomes or indices. One year after the end of the intervention, 36 months after the productive asset transfer, 8 out of 10 indices still showed statistically significant gains, and there was very little or no decline in the impact of the program on the key variables (consumption, household assets, and food security). Income and revenues were significantly higher in the treatment group in every country. Household consumption was significantly higher in every country except one (Honduras). In most countries, the (discounted) extra earnings exceeded the program cost. CONCLUSION The Graduation program’s primary goal, to substantially increase consumption of the very poor, is achieved by the conclusion of the program and maintained 1 year later. The estimated benefits are higher than the costs in five out of six sites. Although more can be learned about how to optimize the design and implementation of the program, we establish that a multifaceted approach to increasing income and well-being for the ultrapoor is sustainable and cost-effective. We present results from six randomized control trials of an integrated approach to improve livelihoods among the very poor. The approach combines the transfer of a productive asset with consumption support, training, and coaching plus savings encouragement and health education and/or services. Results from the implementation of the same basic program, adapted to a wide variety of geographic and institutional contexts and with multiple implementing partners, show statistically significant cost-effective impacts on consumption (fueled mostly by increases in self-employment income) and psychosocial status of the targeted households. The impact on the poor households lasted at least a year after all implementation ended. It is possible to make sustainable improvements in the economic status of the poor with a relatively short-term intervention.

Bounded Entrepreneurial Vitality: The Mixed Embeddedness of Female Entrepreneurship

This article has a simple aim – to demonstrate that an empirical link between aid and trade may exist (for some donor-recipient pairs), but that the nature of this linkage is complex and can take a variety of forms. We challenge the commonly made assertion that aid creates trade. Theoretical considerations can be used to justify a link from aid to trade, from trade to aid, or in both directions together. Indeed, there may be no empirical linkage at all. We examine data on aid and trade flows for a sample of four European donors and 26 African recipients over 1969-95. Three broad findings emerge. First, a statistical link between aid and trade, of whatever form, is the exception rather than the norm. Second, there is very little evidence that aid creates trade; this argument for tied aid is unproven on our analysis of aggregate bilateral flows. Third, France, unlike the other donors examined, does appear more likely to use trade links as a criterion in determining aid allocations.

The Characteristics and Determinants of FDI in Ghana

abstract Despite the recent increased interest in female entrepreneurs, attention has tended to focus on dynamic individuals and generic incentives without considering the roles of gender and place in entrepreneurship. In this article, we draw on the notion of mixed embeddedness to explore how time-and-place–specific institutional contexts influence women’s entrepreneurship. Drawing on primary data collected in Ghana, where exceptionally more women engage in entrepreneurial activities than men, we examine the scale and characteristics of female entrepreneurial activity, exploring the factors that account for this strong participation of women, and examine whether this high entrepreneurial rate is also reflected in their performance and growth aspirations. The findings reveal a disjuncture between, on the one hand, the vibrant entrepreneurial endeavors of Ghanaian women and positive societal attitudes toward female entrepreneurship and, on the other hand, female business activities characterized by vulnerability and relatively low achievement. The article shows how regulatory, normative, and cultural–cognitive institutional forces, which have been transformed over time by local and global processes and their interaction, are concomitantly propelling and impeding women’s entrepreneurial activities. We propose that the study of female entrepreneurs within economic geography could be advanced by analyzing the differing effects of the complex, multiple, and shifting layers of institutional contexts in which they are embedded.

The Effectiveness of Aid in Improving Regulations – An Empirical Assessment

Foreign Direct Investment (FDI) can be a valuable tool for development. However, not all forms of FDI are equally beneficial for the host country. The paper analyses the characteristics and determinants of FDI in a typical developing country: Ghana. Moreover, key policy areas are indicated, in order to enable Ghana both to attract more FDI and to increase the benefits from these capital inflows. The analysis combines qualitative and quantitative methods and is partly based on data retrieved from the World Banks 2007 Enterprise Survey, and partly on our own survey of 54 multinational enterprises operating in Ghana.

Political Settlements, the Deals Environment and Economic Growth: The Case of Ghana

The paper empirically assesses the impact of foreign aid on the change in economic freedom, which is closely related to the quality of regulations. We build on a relatively large panel of 77 developing countries and examine the period 2002 to 2012 using different econometric methods, including an appropriate instrumental variable approach. We find that highly targeted aid can be a driver of change: Sector-specific Aid for Business has a significantly positive impact on regulations across developing countries, but we do not find any effects for overall aid or aid directed at broad governance areas.

The fiscal effects of aid in Ghana

The paper explores the extent to which political settlements, and consequently the deals environment, have influenced the growth and development outcomes for Ghana. This is done using a conceptual framework which tries to demonstrate how political settlements and the deals environment help explain sustained economic growth. Some of the key findings are summarised as follows. First, the paper notes that political settlements in Ghana have been largely personalised over the years, with electoral competition becoming a feature of the last two decades. Second, it notes that the product space for Ghana has remained largely unchanged over the years, reinforcing the argument that growth has not been structurally transformative. Third, it argues that the deals space in Ghana is largely a product of the nature of the political settlement and this in turn has contributed to growth without structural transformation of the economy. The paper concludes by noting that Ghana finds itself in a position where change to its deals space, in a way that promotes sustained accelerated growth, will be difficult.