Giving Compass’ Take:
· In part one of this four-part series on future development, Shanta Devarajan takes a look at a number of pressing global issues and the failing policy development process behind them.
· How can philanthropy help inform the public about link between public policies and outcomes?
When people are not voting in their economic self-interest, how should development policy be designed? By emphasizing redistribution over efficiency, to signal that government is delivering to the public, thereby helping to restore people’s confidence in government.
Notwithstanding remarkable progress in reducing poverty, including in the last decade, the developing world enters the 2020s in a precarious state. India is running out of water. Much of the Middle East is mired in civil war or violent conflict. The number of African countries in debt distress has more than doubled. Climate change is already affecting the Sahel, home to some of the world’s poorest people. The trade war between the U.S. and China, if it escalates, could disrupt a main engine of poverty reduction. Rich countries are putting up barriers to migration, stifling opportunities to increase productivity sixfold and to provide aging societies with young people.
Most, if not all, of these problems are the result of public policies that are politically attractive but eventually end up hurting everybody, including the poor. India has resisted charging for water on grounds that water is essential for life and the poor will not be able to pay for it. As a result, the country is running out of water and the poor have the least access to what is left. The crises in the Middle East stem from policies such as fuel subsidies and guaranteed public-sector jobs that were not sustainable. African countries borrowed for infrastructure without the necessary policy reforms, leading to little improvement in infrastructure services and hence growth. The U.S.’s tariffs on Chinese imports have hurt American producers and consumers. Migration restrictions, aimed at reducing unemployment in the host country, have the opposite effect because migrants and indigenous workers are typically complementsnot substitutes.
Despite the harmful effects of these populist policies, politicians who advocate them get elected and reelected. Efforts at reforming the policies are met with resistance and potentially destabilizing protests (the civil war in Yemen broke out the day after they cut fuel subsidies). Why, in a world that is becoming increasingly democratic, do people vote for politicians who are not delivering for the majority? Why do they oppose reforms that could leave them better off?
Read the full article about future development by Shanta Devarajan at The Brookings Institution.
Global Development is a complex topic, and others found these selections from the Impact Giving archive from Giving Compass to be good resources.
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