Victoria Levin

Sowing and Reaping: Institutional Quality and Project Outcomes in Developing Countries

Much of the academic debate on the effectiveness of foreign aid is centered on the relationship between aid and growth. Different aid-growth studies find conflicting results: aid promotes growth everywhere; aid has a zero or negative impact on growth everywhere; or the effect of aid on growth depends on recipient-specific characteristics, such as the quality of institutions and policies. Although these studies fuel an interesting debate, cross-sectional macroeconomic studies cannot be the last word on the topic of aid effectiveness. In this paper, Dollar and Levin introduce microeconomic evidence on factors conducive to the success of aid-funded projects in developing countries. The authors use the success rate of World Bank-financed projects in the 1990s, as determined by the Operations Evaluation Department, as their dependent variable. Using instrumental variables estimation, the authors find that existence of high-quality institutions in a recipient country raises the probability that aid will be used effectively. There is also some evidence that geography matters, but location in Sub-Saharan Africa is a more robust indicator of lower project success rate than tropical climate. The authors proceed to disaggregate the success rate of World Bank projects by lending instrument type and by investment sector, finding that different institutions are more important for different types of projects. The finding of a strong relationship between institutional quality and project success serves to provide further support to the hypothesis that aid effectiveness is conditional on institutions and policies of the recipient country.

The Crisis Hits Home : Stress-Testing Households in Europe and Central Asia

The Europe and Central Asia (ECA) region has been hit by a crisis on multiple fronts. Countries in ECA are facing major, interrelated, external macro-financial shocks. The first is the global growth slowdown leading to falling export market demand. In addition, the prospects for inflows of remittances to low-income countries have been downgraded as economic activity in migrant host countries has declined. The second is the financial deleveraging by major banks and other financial institutions in developed economies, which has markedly reduced the availability, and increased the cost, of external finance across public, corporate, and financial sectors. The third is the recent commodity price changes, which have involved a reversal of much of the commodity price boom of 2007 and 2008. The main objective of the study is to understand the impact of these macroeconomic shocks on household well-being. In particular, it seeks to understand the key macroeconomic shocks confronted by the region and the impact of such shocks on household welfare, including the effect on household income flows, consumption levels, and liabilities. It will also assess possible strategies to cope with the crisis and manage the adverse social impact.

Global redistribution of income

The actual distribution of world income across countries is extremely unequal, much higher than the within country inequality faced by most countries. The question studied in this paper is: How do international policies on aid, trade, and factor movements affect the international distribution of income? To begin to answer this question, the authors calculate the impact by decile of the actual level of aid flows and the effect on potential income of merchandise trade restrictions by high-income countries. They find that aids distributional impact is equality enhancing. While it is extremely small in terms of changes in standard inequality measures, it is of some importance for the lowest decile of the worlds income distribution. The authors also find that some of this impact is counteracted by lost potential income in the lower deciles from merchandise trade barriers imposed by high-income countries. In brief, there is a contradiction in international policies where aids equality-enhancing effect is somewhat offset by protectionism. They also discuss some of the analytical difficulties with extending this analysis of redistribution to other forms of international factor flows-more specifically, migrant worker and profit remittances. The analysis presented is partial and static and ignores within country distribution. As such, the authors suggest that future research should explore the distributional consequences of the broader general equilibrium effects, dynamic effects, and externalities associated with aid, trade, and factor flows. Future research should also analyze the within country distributional impacts of international policies.

Trust in government and support for redistribution

In many countries safety nets consist predominantly of universal subsidies on food and fuel. A key question for policy makers willing to shift to targeted safety nets is under what conditions middle-class citizens would be supportive of redistributive programs. Results from a behavioral experiment based on a nationally representative sample in Jordan reveal that increasing transparency in benefit delivery makes middle-class citizens (particularly among the youth and low-trust individuals) more willing to forgo their own welfare to benefit the poor. Moreover, increasing transparency enhances the relative support for cash-based safety nets, which have greater impact on poverty compared with in-kind transfers, but may be perceived as more prone to elite capture.

Why Should We Care about Care?: The Role of Childcare and Eldercare in Former Yugoslav Republic of Macedonia

This note examines the provision of childcare and eldercare in FYR Macedonia with an emphasis on the availability, price, and quality of care, and suggests policy priorities that address the identified challenges. The analysis in this note is based on a study aimed at exploring childcare and eldercare in the Western Balkans region, drawing primarily from a new mixed-methods dataset, described in the following section, and building on relevant quantitative surveys and data sources specific to Western Balkans countries. The note is structured as follows: section two introduces the new, independent mixed methods data set that is the basis for the analysis and findings presented. Section three describes the use of formal care arrangements in FYR Macedonia, based on the analysis of perspectives both from families with care needs and from care providers and discussing the role of norms and perceptions of childcare and eldercare use, the following sections are dedicated to the description of supply and demand of childcare and eldercare, respectively. Sections four and five focuses on the supply and demand of childcare, and sections six and seven describe supply and demand of eldercare. Section eight concludes by examining what we know in terms of policies that can support families in informal care provision in a sustainable and incentive-compatible manner.