Archive for category: Economy

Information and stories about economy.

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How Pumpkins Boost the Ugandan Economy

Ugandan EconomyThe fall season is the time of year filled with caramel apples, trick-or-treating, corn mazes and pumpkin carving. But beyond the excitement of children at Old McDonald’s pumpkin patch, what is the worth of a pumpkin?

In Uganda, the pumpkin is a source of income that has helped boost the economy.

According to ONE, “Pumpkins can be grown all over Uganda and are often grown adjacent to cash crops. During harvest time, these pumpkins become great to sell for extra income!”

Looking at the Ugandan economy, extra income is still in great need for the large majority of the population.

While the African Economic Outlook, AEO, shows that Real GDP, gross domestic product, or the value of all goods and services produced in a single year, has increased from 4.7 to 6.3 since 2013, there is still a lot of progress to be made.

The AEO has stated that “this recovery in economic activity is mainly supported by public investment on infrastructure, recovery in private domestic consumption and investment demand, and a rebound in agriculture.”

For many in Uganda, this rebound is taking place thanks to the innovative thinking of Henry Kasozi. As chairman of the Nkokonjeru Women Saving and Credit Project, Kasozi teaches women and children how to grow pumpkins.

Since 2009, over 200 women and children have benefited from learning to cultivate pumpkins. For these individuals, it has become their main source of income.

With a fast growth cycle and multiple uses, the pumpkins have proven to be quite the cash crop.

In an interview for The Daily Monitor he stated, “the idea to grow pumpkins was born out of the realization that they take few months to grow and serve several purposes. They can serve as food, sauce, animal feeds and medicine among others.”

According to Web MD, pumpkins are legitimate sources of medicine. Both pumpkin seeds and oils have proven health benefits that have aided in alleviating various diseases.

On their site they state that “the chemicals in the pumpkin seed cause an increase in urination (diuretic effect), which helps relieve bladder discomfort. Pumpkin seed also contains a chemical that might kill intestinal worms.”

With worms and bladder/kidney infections being a large threat to the health of Ugandan citizens, pumpkins have become increasingly popular for these medicinal treatments.

Pumpkins have also shown to be a good source of calories and nutrients for the malnourished, which is one of the leading causes of preventable deaths in countries in sub-Saharan Africa, such as Uganda.

Pumpkins are more than a squash to carve into, but also a poverty-fighting and economy-boosting cash crop.

– Katherine Martin

Sources: ONE, African Economic Outlook, Farm Radio Weekly, Daily Monitor, WebMD
Photo: Wikipedia

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Trees for the Future: Fighting Global Poverty

Fighting Global Poverty and Deforestation: Trees for the FutureTrees for the Future is an organization that is focused on restoring the environment as well as fighting global poverty. It recognizes the large effect trees have in economic, environmental and social improvement. The slogan of the organization is, “Planting Trees, Changing Lives.”

Dave and Grace Deppner founded the organization in 1989 after an eye-opening experience in the Philippines. It was there that they discovered they could restore communities while saving degraded land.

Roughly 80% of the developing world has health and nutritional needs met by non-wood forest products and there are approximately 100,000 acres of forest lost each day in the world. The Deppners were determined to help reverse to statistics.

One country Trees for the Future works in is Senegal. Senegal’s increased deforestation has led to the loss of more than half of the forests. They have helped farmers plant more than half a million trees and develop forest gardens.

Trees for the Future has also partnered with the Peace Corps and the Senegalese Ministries of Agriculture and Forestry throughout their time there.

Brazil is another country where Trees for the Future’s impact can be seen. The organization has helped rebuild communities through the development of education programs on effective agroforestry. The main purposes of reforesting in Brazil are to bring back the nutrition in soil as well as to provide a source of food for the livestock.

One tree in particular, has proved invaluable to the Brazilian communities that the organization works with. The moringa oleifera tree produces edible pods, leaves and flowers. These are high in calcium and Vitamin A. The powder that comes from ground seeds has also helped improve the quality of water due to its purifying qualities.

The trees planted in these countries are unifying communities as well as creating sustainable agriculture. Trees for the Future has planted more than 50 million trees in various parts of Africa, Asia and Latin America. Their influence has reached 58 different countries and 12,000 villages.

– Iona Brannon

Sources: Food and Agriculture Organization, Trees for the Future, Trees for the Future: Senegal, Trees for the Future: Brazil,
Photo: Google Images

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How the Richest Man in China Became its Top Philanthropist

Richest_Man_in_China
China’s rich men have been passionate about philanthropy. In the latest Hurun Report, China’s FORBES list, Ma Yun (Jack Ma), the richest man in China, is also the country’s most generous person.

Ma Yun is the founder and executive chairman of Alibaba Group, a family of highly successful internet-based businesses. In 2014, according to the Bloomberg Billionaires Index, with an estimated net worth of $29.7 billion, he was listed as the richest man in China and the 18th richest person in the world.

In 2014, Ma Yun donated 14.5 billion RMB to the improvement of the environment, medicine and health care, as well as education and culture. Thus, it’s the first time in China that the richest guy is also the most generous one.

Recently, donation for philanthropies has been popular among China’s wealthy businessmen. Cai Chongxin, the second largest shareholder in Alibaba Group donated 6.2 billion RMB to philanthropies and thus become the top philanthropist in the region of Hong Kong, Macao and Taiwan.

The new record of the donated funding has been reached recently. The donation made by the first 100 philanthropists on the Hurun Report of Philanthropy has increased 264 percent compared with that in the last year.

Except Ma Yun, the rest of the philanthropists on the list have donated 8.6 percent more than last year on average. The level of being nominated for the list has increased 1 million RMB than last year. On the list, there are 71 newly nominated philanthropists.

Most philanthropists donated to the educational area, which occupied 27 percent in all the philanthropic donations. The second popular area that people donated was social charity. At the same time, disaster relief and poverty alleviation are also the main donated areas.

In 2014, Ma Yun and Cai Chongxin established two charitable trust funds based on their share holdings in Alibaba Group. After the Initial Public Offering, these two charitable trust funds are worth over $2 billion.

According to Ma, these two trust funds will be dedicated to pollution control and medical industry in China.

“I want to live in a world with bluer sky, cleaner water and better health care. I concern a lot about the environment, medical care and education in China, but only concerning can’t help. I’m passionate about contributing into and solving those problems.” Said Ma, a founder of charitable trust funds.

The establishment of two charitable trust funds made Ma Yun and Cai Chongxin known among worldwide famous philanthropists. In the press conference, Ma Yun received congratulations from many celebrated philanthropists, such as Bill Gates, Warren Buffett and Michael Bloomberg.

“Their donations set the new standard for the philanthropy in China, and other businessmen and business leaders are very likely to follow them.” Said Bloomberg.

– Shengyu Wang

Sources: Sina, Hurun Report, Financial Times China
Photo: Wikimedia

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In India Silkworms are an Economic Boon to the Poor

In India Silkworms are an Economic Boon to the Extremely Poor
Silk has always been a highly coveted material. While silk production is said to have begun in China several thousand years ago, the vibrant and expensive material also has a long history in India. Today, silk production may represent a pathway out of poverty for India’s rural poor.

In the eastern state of Bihar, India, women like Munia Murmu are expanding their economic opportunities by farming silkworms and producing silk. Like much of rural India, Murmu lived in extreme poverty until she started raising the worms.

She belongs to a tribal community, generically referred to as an Adivasi, who suffer some of the worst scores on most development indicators such as income, life expectancy and health in India.

Fortunately, silkworm rearing and silk production, also known as sericulture, allow these rural, tribal communities to lift themselves out of poverty.

A local NGO called Pradan (short for Professional Assistance for Development Action) provides livelihoods and training to these communities, teaching them advanced techniques to efficiently rear and sell silkworms and silk.

This is especially attractive for rice farmers in the state of Bihar and nearby Jharkhand, who do not have irrigated crops and must depend on unreliable monsoon rains. Sericulture provides a much-needed buffer against the uncertainty of growing traditional crops but probably doesn’t represent a stable year-round source of income itself.

Demand for silk is enormous in India alone, which is the world’s largest consumer of silk as well as the second largest producer after China. Silk products are also highly valued in western markets like the U.S. and Europe, making sericulture a very lucrative option for farmers like Murmu who are subject to seasonal uncertainty.

During silkworm breeding season, lasting three months per year, Murmu earns about $770, an amount that clearly goes a long way in improving her quality of life. A global annual demand of 1500 tons of raw silk also eliminates any worries about overproduction. As long as rural villagers are willing to raise silkworms, they will be able to find a market for their products.

Though silkworm production isn’t a new phenomenon in eastern India, Murmu and her tribal community have managed to increase yields from the techniques introduced to them from Pradan. For example, the NGO showed her community how to inspect eggs for disease using microscopes, as well as how to plant trees that host worms and moths.

Pradan has also provided instruction in the rearing of higher-value varieties of silkworms, such as Tasar, which is particularly productive in the large forests of Bihar. These developments have allowed villagers to maximize their profits by using only the most productive worms.

Thankful for the extra income they provide, Murmu simply says, “Silkworms have changed our lives,” pointing out her newly-built house, water pump and indoor plumbing. With proper training, rural farmers in other parts of India could also supplement their income and potentially grow out of extreme poverty.

Like what the ancient philosopher Maimonides said about teaching a man to fish, teaching the rural poor how to raise silkworms can help them support themselves and their communities in a generational, inexpensive and sustainable manner.

– Derek Marion

Sources: Global Post, Academia, Pradan
Photo: Google Images

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Colombian Farmers Expand Their Markets

Colombian Small-holder Farmers Expand their Markets
Whoever uttered the phrase “it’s not what you know, it’s who you know” wasn’t kidding. In today’s times, connections are key, and for Colombians trying to make a living in farm-based agriculture, the size of your market makes a significant impact on your income.

In fact, many challenges exist for small-holder farmers in Colombia. Hindrances such as low productivity, distorted information about pricing and selling prospects, and limited marketing access all remain obstacles for this group of farmers who end up selling their goods at open-air markets where there is more competition.

This automatically decreases a seller’s profits, furthering a cycle that seems inescapable.

Being a small-holder farmer can prove to be a difficult existence, at times feeling closed off from the evolving international markets of the world.

Other setbacks faced by farmers include selling through intermediaries, steep transaction costs to reach distant markets, and finally, a lack of means to produce the “volume, quality, and timely delivery” which large agricultural producers are able to generate.

Ultimately, the inability to expand and grow has contributed to poverty in this rural sector.

However, significant strides have been taken for those who fall under this title. An article from the World Bank addresses the solutions underway to improve the livelihoods of these farmers.

“In an effort to support Colombia’s smallholder producers to build entrepreneurship and compete more effectively, the Rural Productive Partnerships Project has been addressing the above-mentioned challenges by establishing, strengthening, and promoting productive alliances between rural producer organizations and private agribusinesses.”

Since the Rural Productive Partnership Project’s launch in 2002, many groups have received support through a process where partnerships are formed by competitive bidding partnered with an independent evaluation procedure. Today, this program continues to flourish and build from where it started.

The World Bank describes the program’s goal as one which involves keeping “production, sales and productivity” up through “investment grants, technical assistance and business development training.”

Aside from financial assistance, this project also seeks to dispel inequality however it can by reaching people who may have been neglected within the system, such as women, indigenous people and Afro-Colombians.

Colombia’s Ministry of Agriculture and Rural Development (MADR) reports that between 2002-2014 more than 820 successful partnerships have been formed helping 55,000 households, with 72 percent of the productive partnerships continuing to work together after the conclusion of the program.

With the second phase of the program ending in June 2015, targets have been reached within the project with more than 9,900 female-headed households benefiting in the first phase, and more than 9,250 indigenous peoples and Afro-Colombian households receiving assistance.

These successes have not only helped one small sector of farmers—but have reached far-away consumers and provided support for the vulnerable who live in Colombia, ultimately endeavoring to keep both their community and the world’s economy thriving.

– Nikki Schaffer

Sources: World Bank, YouTube
Photo: Google Images

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Services Addressing Wealth Inequality in Africa

Services Addressing Wealth Inequality in AfricaMore mobile phones than ever before have been making their way to countries in need and enabling financial inclusion, which is so essential to eliminating poverty.

In Africa, periods of drought can take a significant toll on communities that depend on their agricultural workers and cause widespread wealth inequality. Thanks to the distribution of mobile technologies, farmers can now open accounts.

Wired’s Marguerite McNeal reports, “In Kenya, a whopping 59 percent of the adult population actively uses mobile money services, with transactions of $2.2 billion per month”.

Also, out of the 89 countries in the world where money services are available, the greatest impact is being made in Africa where roughly 12 percent of adults now have mobile bank accounts creating greater financial stability.

World Remit

This money transfer company was the brainchild of Ismail Ahmed. The idea of World Remit came to him while at university. He was always having to travel long distances and pay fees to send money to his family in Africa. In 2010, World Remit became a reality.

“Subscribers send and receive payments directly on their phones, and pay far less in transfer fees — about 4 percent, compared to as much as 12 percent through a traditional service like Western Union.” This system allows for better transfer services and gives families greater income stability.

Tigo Wekeza

The 3.5 million customers that rely on Tigo Pesa money services can now receive interest on their funds through Tigo Wekeza. “Customers do not need to register separately in order to benefit and any returns due are paid directly into their Tigo Pesa wallet.

If a customer so chooses, they can nominate a nonprofit beneficiary instead.” Customers are offered interest rates between 7 and 9 percent, and no other financial authority has offered like provisions. President and CEO of Millicom, Hans-Holger Albrecht, commended the company on its extension of financial inclusion.

EcoFarmer

Since its 10 year recession, 70 percent of residents of Zimbabwe depend on agricultural workers for economic recovery. EcoFarmer is the first micro-insurance policy in Zimbabwe, and it ensures inputs against both drought and high rainfall.

“Using mobile money, subscribers pay 8 cents a day for 125 days and are guaranteed a harvest or at least $100 for every 10 kilograms of seed they plant, regardless of weather conditions.” Farmers also receive tips, such as technical information, market information, weather conditions, and so much more that they can use in order to produce the greatest yield.

Bima

Based in Stockholm, this insurance provider allows its customers in Ghana to register for life insurance at 2 cents a day and also manage risk to prevent financial instability all from mobile devices. Bima provides family care, hospital stays and more recently, telemedicine services.

“We believe that every consumer deserves choice, value and quality of service, regardless of their income level.” Also, this company doesn’t run on just technology. It also provides essential education for consumers, and more than 90 percent of registrations are made in person in order to prevent error.

– Anna Brailow

Sources: BIMA, Econet Wireless Zimbabwe, Millicom, Wired, World Remit
Photo: Flickr

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Public-Private Partnerships in Africa

Public-Private Partnerships in Africa
While over the last few decades the economies of Africa have, as a whole, grown quite substantially, the economic problems Africa faces are still monumental in scope. On a continent that supports around a billion people, nearly 600 million lack access to electricity and almost 300 million have no access to safe water.

A promising solution to help combat these vast problems concerning infrastructure and service delivery is Public-Private Partnerships (PPP). Although there are many distinct models for PPPs, in essence, they are contracts between the public sector and a private party in which both entities share their skills and assets in delivering a service or facility for the use of the general public.

Each party shares in the risks and rewards of the venture. PPPs have taken place mainly in economic infrastructures such as power, transportation, telecommunications and water and sanitation.

Unsurprisingly, the most developed country in Africa, South Africa, has had the most experience with PPPs. Fifty PPPs have occurred on the national or provincial level and 300 at the municipal level between 1994 and 2005.

Furthermore, between 1992 and 2012, there were a total of 51 PPPs in the water and sewage sector in Africa, with a total investment during this period totaling a little more than $3 billion. This limited number of PPPs in these sectors are due to certain constraints that hinder the further success and development of PPPs in Africa.

These constraints include: inadequate legal and regulatory frameworks for PPPs, lack of technical skills to manage PPP programs and projects, unfavorable investor perception of country risk, Africa’s limited role in global trade and investment, small market size, limited infrastructure, and limited financial markets.

More simply, many companies believe the potential reward of a PPP venture into Africa is outweighed by the potential risk. Yet encouragingly, the belief that Africa is an attractive investment destination is much more likely held by a company, if it has already ventured in Africa.

According to data gathered from the Ernest Young 2014 Africa attractiveness survey, while only 39 percent of respondents without businesses in Africa thought that Africa’s attractiveness has improved over the past year, 73 percent of those with businesses in Africa thought the continent’s attractiveness improved over the past year.

It seems that the perception of Africa that many businesses hold does not match what is actually happening in the continent.

The likelihood that those numbers are primarily fueled by a mismatch of perception and reality rather than positive bias by companies willing to venture into Africa in the first place, greatly improves in light of another encouraging finding.

According to the same EY 2014 survey, Africa was the second most attractive region in the world to invest in. In 2010 it was the eighth most attractive region out of the world’s 10 regions and in 2012, the fifth.

While comprehensive, holistic data on PPPs in Africa is scarce, it is fair to think that their potential is vast on the continent. A World Bank report on PPPs found in Uganda’s 10-year experience in small town water PPPs, water connections have almost tripled since PPPs introduction in 2002. More than 1.5 million people are now served through PPPs in small Ugandan towns.

The report aptly concluded, “Involving the private sector has proven worthwhile even if the private party isn’t bringing much money in. Small-scale PPPs have a significant role in reaching the poor.”

Public, Private Partnerships are a valuable tool in solving Africa’s vast infrastructure deficits. Mitigating the impediments for these contracts would be an important step in providing basic services to hundreds of millions of Africans. But maybe more importantly, companies should dip their toes in the water holes of Africa, as they may be surprised with what they find.

– Connor Bohannan

Sources: African Development Bank, Earnest Young, National Treasury of South Africa, OECD, Venture Africa, The World Bank
Photo: Flickr

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Surprises in the Social Progress Index Rankings

Social_Progress_Index_Rankings
The gross domestic product (GDP) has become the primary way to evaluate how countries are doing. However, the Social Progress Index, launched in 2014 by the Social Progress Imperative, aims to provide a more comprehensive picture.

By only looking at the monetary value of goods and services produced within a country, it is easy for data to be skewed or not reflect the full picture. The GDP could be easily skewed by income inequality; consequently, developing countries with high levels of corruption or income equality would be seen as doing better than they actually are.

Purchases made on the black market and payments for cars and appliances besides original down payments are not included, even though this money is used for goods and services. Furthermore, goods produced but not necessarily sold are counted into the GDP, even if the products are sitting in a company warehouse.

The Social Progress Index looks at twelve different components within three different categories: Basic Human Needs, Foundations of Well-Being and Opportunity. In comparison with the GDP rankings, there are a few rankings that shouldn’t be a surprise: Norway, Sweden and Switzerland are the top three; all of the Scandinavian countries are in the top ten.

However, there are countries that, based on GDP, one might expect to be more highly ranked. The United States is sixteenth, China doesn’t break the top seventy and no Middle Eastern oil-producing country is ranked above 35.

Countries many consider to be more developing, such as Panama, Colombia and Malaysia, are in the top fifty countries. Ghana is ranked significantly higher than Nigeria, although they have similar GDPs.

To better understand these rankings, the Social Progress Index also includes scorecards for each country and categorizes elements of the data as either relative strengths or weaknesses.

China, for example, has many relative weaknesses in factors contributing to opportunity, including perceived criminality, political freedoms, average years women spend in school and private property rights. For the United States, freedom over life choices, maternal and child mortality rates and community safety net were among the relative weaknesses.

The Social Progress Index Rankings have much to offer organizations at all levels with regards to information and comparison building. This information can be used to help shape policy, guide partnerships and raise awareness on what can be improved in different countries.

Regardless, the Social Progress Imperative’s Social Progress Index, like other indices such as the OECD Better Life Index, raises important questions as to what individuals consider developed versus developing.

Looking at the Social Progress Index and the GDP, the differences between the more holistic Social Progress Index and the money-focused GDP are vast, thus supporting previous research and theories that place well-being at an individual or community level at equal or greater value to economic output.

Priscilla McCelvey

Sources: Quora, Social Progress Imperative, TED
Photo: Pixabay

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Global Peace Index Offers Critical Poverty Insights

Global Peace Index Offers Critical Poverty Insights
The Institute for Economics and Peace, or IEP—a think tank with offices in New York, Mexico City and Sydney—has released the ninth edition of their Global Peace Index. The Index makes use of 23 qualitative and quantitative indicators in an effort to illustrate the levels of peace around the world, highlight trends and inform policymakers.

Safety and security in society, the extent of domestic and international conflict, and the degree of militarization are the three facets that the IEP uses to gauge where global peace stands.

IEP views peace as a prerequisite to solving the major issues facing humanity. “It is a cross-cutting facilitator of progress, making it easier for individuals to produce, businesses to sell, entrepreneurs and scientists to innovate and governments to effectively regulate.”

Therefore, they study what makes societies peaceful in order to contribute to the debate on meeting the challenges facing a 21st century world.

They have identified eight pillars that are hallmarks of peaceful societies. A sound business environment, good relations with neighbors, high levels of human capital, acceptance of the rights of others, low levels of corruption, good governance, free flow of information and an equitable distribution of resources all help to establish peaceful societies. These pillars have complex interactions and “are both interdependent and mutually reinforcing, such that improvements in one factor would tend to strengthen others and vice versa.”

So, how is the world doing? The overall trend since the first edition, in 2008, has been a downward one. Although external conflict has significantly dropped, refugees and internally displaced persons, internal conflict, terrorism and violent demonstrations have more than taken up the slack, setting the stage for a less peaceful world.

Since last year, 81 countries have become more peaceful while 78 states have slipped. European countries continued their peaceful trajectory, while peace levels in the Middle East and North Africa have deteriorated significantly. The United States ranks 94 behind 21 African nations, and Iceland is the most peaceful country.

What is more shocking is that, by IEP calculations, violence cost the world $14.3 trillion in 2014, or 13.4 percent of global GDP. This cost has increased by 15.3 percent since 2008.

If the world was able to decrease violence by a meager 10 percent, enough money would be freed up to decuple (multiply by 10) the current level of official development assistance. This is important because IEP has also identified how closely aligned the Sustainable Development Goals are with the eight pillars of peace, implying that an increase in official development assistance would further reduce violence, putting into motion a virtuous cycle.

Although the idea that peace is beneficial for societies does not offer a radical new insight, IEP and their reports help quantify and illustrate just what type of violence is happening where, and why that may be.

For instance, IEP has found that high income inequality is associated with an increase in violence in urban environments, and that murder rates and urbanization are inversely correlated. These findings lay out a roadmap for policymakers to properly respond to and develop interventions that can help make the world a safer place.

– John Wachter

Sources: Vision of Humanity 1, Vision of Humanity 2
Photo: Visionofhumanity

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How Economists Are Using Social Programs to Fight Global Poverty

Social ProgramsEncouraging immunization has long been a major focus for development organizations working to improve conditions in poor regions. But for households in many communities, a lack of time and money can pose major obstacles, making it difficult for families to send their children to health clinics.

In an effort to combat this trend, economists are testing incentive programs to see whether or not communities can be encouraged to immunize on a larger scale.

Across the Indian subcontinent, scientists and economists are using randomized controlled trials (RCTs) as part of a massive trial, testing whether incentives such as food can increase the “stubbornly low” immunization rates for children in impoverished areas. As part of the experiment, 70 local health clinics in the Indian state of Haryana provide parents with a free kilogram of sugar if a child begins a standard series of vaccinations and a free liter of cooking oil if they complete it.

Researchers randomly assigned clinics in the seven Haryana districts with the lowest immunization rates to either provide incentives or not. While initial results of the experiment are not expected until next year, similar experiments suggest that results are likely to be positive. In a study conducted in India and published in 2010, monthly medical camps caused vaccination rates to triple, and offering incentives increased the rate of vaccination by six times.

“We have learned something about why immunization rates are low,” said Massachusetts Institute of Technology economist Esther Duflo, who notes that for families in poor communities, sending their children on a trek to a faraway clinic can carry high opportunity costs. “And you can balance that difficulty with a little incentive.”

According to a 2011 study on vaccination rates in India, the country is home to one-third of the world’s unimmunized children, despite being a leading producer and exporter of vaccines. Nearly half of Indian children do not receive the full schedule of immunizations.

Among the leading causes of the vaccine deficit are “little investment by the government; a focus on polio eradication at the expense of other immunizations; and low demand as a consequence of a poorly educated population and the presence of anti-vaccine advocates.”

The implementation of RCTs has come at a time when people are raising doubts as to the efficacy of foreign development aid provided by countries like the United States. While some $16 trillion of aid has flowed to the developing world since World War II, there is little empirical data as to whether, and to what extent, that money has improved recipients’ lives. Scientists see these tests as the answer to that question and hold that such studies will help development organizations better target areas of need in developing countries.

Research organizations are primarily interested in implementing tangible policy changes and hope to do so by demonstrating empirical research regarding development aid. Such is the aim of the Global Innovation Fund, which offers funding for organizations looking to conduct similar tests.

The fund has received nearly 2,000 applications for projects in 110 countries, and it will announce the first wave of grant recipients later this year. The amount of funding provided by such organizations, however, is tiny, and even at major lending institutions, the portion of investments backed by rigorous and empirical research is small.

The World Bank started a Development Impact Evaluation division in 2005, and the number of projects receiving “formal impact evaluations”—by means of RCTs, for example—increased from 20 in 2003 to nearly 200 in 2014. But that only accounts for 15 percent of the bank’s projects. This is largely because of the up-front costs of such evaluations, which carry average funding requirements of nearly $500,000.

While expensive and time-consuming, the more empirical research is conducted on social programs and development aid, the more effective those initiatives will become in remedying the conditions that drive global poverty rates. As this information is presented to donor governments in the developed world, and as aid allocation becomes more transparent, development experts will be better able to target areas of need in poor and developing countries.

– Zach VeShancey

Sources: Nature, NIH
Photo: Nature