Tool to rationalize hometown investment by overseas Filipinos eyed

Alvin Ang and Jeremaiah Opiniano

During the GDNet Awards and Medals Finalists Presentation Skills Training that took place on the 11-12 January, participants were asked to write a blog to capture the key issues underpinning their work.

We feature here a blog written by Alvin Ang and Jeremaiah Opiniano, from the University of Santo Tomas Research Cluster on Culture, Education and Social Issues in the Philippines, who were last night declared the winner of the Japanese Award for Outstanding Research on Development (ORD).

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La segunda plenaria de la 12va Conferencia de Desarrollo Global del GDN abordó el tema de replantear las micro-finanzas

Victor Murinde

Victor Murinde

Durante muchos años, las micro-finanzas se han percibido como una especie de “varita mágica” que permite elevar el ingreso y el consumo de los individuos de bajos ingresos, ayudando así a hacer frente a la pobreza. Sin embargo, para algunos de sus partidarios, las micro-finanzas no se tratan de ingresos o consumo, sino más bien de  libertad y autonomía (Rich Rosenberg CGAP). No obstante, la percepción de las micro-finanzas está evolucionando.

Un estudio desarrollado sobre el impacto de las micro-finanzas en el sur de la India, presentado por el Prof. Dean Yang, profesor asociado de la Universidad de Michigan, muestra que el impacto de los esquemas de microcrédito son diferentes entre poblaciones. Él encontró que aquellos que ya tienen empresas deben invertir en bienes duraderos y restringir su consumo, mientras que los que no tienen o quieren invertir en negocios pueden consumir más. Lo anterior prueba que las micro-finanzas no son la “varita mágica” como sus partidarios argumentan. Read more of this post

Financial Inclusion for Development: How to get Banking to the Poorest?

Guillermo Perry

The panelists in the third Plenary Session of GDN’s 12th Annual Conference addressed how the financial sector can support the achievement of the Millennium Development Goals (MDGs), by means of improving financial depth and access, while paying close attention to the formulation of relevant policies and the role played by its main actors.

The first panelist, Fabrizio Coricelli, Associate Researcher of the Paris School of Economics, said that poverty in developing and transitional economies can be alleviated by widening people’s access to financial services. He suggested that there are two dimensions to the problem: demand and supply and he proposed that the greatest potential for widening access lies in better supply. One promising approach is connecting social cash transfers programs to financial services, which would lower administrative costs for the banks, thereby increasing the attractiveness of carrying out business with lower income groups.

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The second plenary of GDN’s twelfth Global Development Conference addressed the issue of “Rethinking Microfinance”.

Victor Murinde

Victor Murinde

For many years, microfinance has been perceived as a kind of ‘magic bullet’ that raises the income and consumption of the poor and helps them cope with poverty. For its supporters, microfinance is not about income or consumption, but rather freedom and empowerment (Rich Rosenberg CGAP). But the perception of microfinance is changing.

A study on the impact of Spandana microfinance in South India presented by Professor Dean Yang, Associate Professor at the University of Michigan, shows that the impact of microcredit schemes differ by subpopulation. He found that those who already have businesses invest in durables and restrict their consumption, while those who do not have or want a business consume more. Proof perhaps, that microfinance is not quite the magic bullet as its supporters propose.

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The emerging landscape of development finance: the Bourguignon perspective

Francois Bourguignon speaking in the Plenary Session

Francois Bourguignon

Is the global financial crisis at the heart of the emerging landscape of development finance? Francois Bourguignon, at the opening plenary of GDN’s Annual Conference, says not. Bourguignon, Director of the Paris School of Economics, speaking in the session ‘Financing Development in a Post-Crisis World: The New Agenda’ believes that the changes in the global economy had already been set in motion before the crisis. This was underpinned by a shift over time from a focus on the quantity to quality of development finance.

For many years, policy makers and academics talked about a two gap model, which saw development countries as lacking investable resources and foreign currency. The solution to this problem was seen as increasing foreign flows, and this led to a focus on North-South flows of finance.

The quantity of development finance is no longer seen as the primary restraint on development. Bourguignon was keen to point out that this shift is linked to the evolution of the global economy, and the acceleration of growth rates in the South.

Emerging Economies

In the majority of emerging economies, finance is not seen as a problem because of advances in international capital markets, countries and their financial sectors. It was also outlined how this situation has been enhanced by domestic saving rates, which have increased by around 3.5% since the 1970s in low and middle-income countries (increasing from 20% to 23.5%).

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Conferencia anual de GDN 2011: Amplio cubrimiento de la prensa local a la ceremonia de apertura

La ceremonia de apertura de la conferencia anual de GDN 2011 tuvo un amplio cubrimiento por parte de los medios locales e hizo parte de los titulares del día en la prensa escrita y los noticieros de televisión. Los periodistas estuvieron specialmente atraídos por las intervenciones del Presidente Santos y el Ministro de Hacienda, en lo que la prensa llamó “una reunión de los economistas más importantes del mundo”. A principio de semana el principal diario financiero de Colombia dedicó una entrevista al Presidente de GDN Gerardo della Paolera.

El anuncio hecho por el Presidente Santos de una meta de crecimiento del 5% del PIB para 2011 fue ampliamente mencionado en la prensa, (La República, Portafolio, RCN, El Espectador) y también los comentarios que al respecto de este anuncio hizo el Profesor Guillermo Perry (del Comité de la Conferencia). Más tarde, cuando el Ministro de Hacienda (antiguo decano de economía de Los Andes) Juan Carlos Echeverry hizo comentarios acerca de la posibilidad de incrementar los controles a los servicios financieros para incrementar la bancarización de los colombianos más pobres, los medios estuvieron prestos a reportarlo (La Republica, RCN, Caracol, El Espectador, Portafolio).

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Financing development in a post-conflict world: The new agenda

Panel plenary session 1 - Financing development in a post-crisis world: The new agenda

Panel plenary session 1 - Financing development in a post-crisis world: The new agenda

The panelists in the first Plenary Session of GDN’s 12th Annual Conference agreed that financing has become widely available for developing countries in the past few years, and that the main issue has become how to allocate it.

Francois Bourguignon, Director of the Paris School of Economics, claimed that financing has increased significantly in the last years and the main issue has become finding the most suitable finance scheme to maximize social return and avoid a poverty trap. Asli Demirguc-Kunt, Chief Economist of the Financial and Private Sector Network in the World Bank, pointed out that there are some undesirable effects of having such a wide availability of financing, including the irresponsible expansion of access to credit. But at the same time, she acknowledged that financial systems, and financing in general, are still crucial to developing economies because they underpin economic development. She suggested that in order to attain sustainability, the State must play a clear and defined role and that regulations have to be well formulated and enforced.

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Expanding the reach of financial services

Audience at the 12th GDN Annual Conference

Audience at the 12th GDN Annual Conference

The discussion held during the session, Financial Crisis and Financial Inclusion: What we know, and what can be done? shed light on potential alternatives for financing development in a post-crisis scenario. The event showcased various case studies from Latin America and Asia on policy options carried out to promote credit access to a wider spectrum of the population. In the session, determinants and alternatives for financial inclusion were thoroughly examined, as well as potential obstacles which countries could face when implementing credit-promoting processes.

Luis Ballesteros, Project Specialist and Researcher at Mexico’s National Civil Protection System, delivered compelling evidence on increased participation of poor households in the financial system. His investigation of India and Mexico conveyed an important message on the role of social capital in household decisions about insurance service purchases. Ballesteros argued that both countries had in place a range of feasible alternatives which hold potential for extending financial services to the poor.

He argued that the existence of social capital among the poorest populations might encourage them to access financial services such as insurance. His research in Kalhandi, India showed how low-income groups presented above-average insurance acquisition rates due to their being part of tightly-knit social groups.

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12th GDN Annual Conference: Major coverage of the opening ceremony in local media

The Opening Ceremony at GDN’s 2011 Conference  received major coverage from the local media, making headlines in written press and TV news. The journalists were specially attracted by the President Santos and Minister of Finance appearances, on what they called “a meeting of the most important economists of the world”. Previously, GDN’s President Gerardo della Paolera was interviewed by the leading financial newspaper of Colombia.

The President Santos announcement of a 5% GDP growth goal for 2011 was widely reported (La República, Portafolio, RCN, El Espectador), and also the comments about this announcement by Professor Guillermo Perry (Conference Programme Committee) . Later, when the Finance Minister (former Dean of Economics at the Universidad de los Andes) Juan Carlos Echeverry talked about his efforts to tighten controls over the retail banking sector, in order to benefit poor Colombians , the media was also eager to report (La Republica, RCN, Caracol, El Espectador, Portafolio).

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The Future of Aid

As 2010 comes to an end, the effectiveness of the fundamental mechanisms of the current foreign aid system has become a much discussed and ever more pertinent issue. Robert Riddle in his 2007 book Does Aid Really Work? highlights the traditional principle that underpins all foreign aid as:

Those who can should help those who are in extreme need…What could be simpler?

However, as Riddle elaborates, the realities of foreign aid are far from simple. Indeed, the current global financial crises, climate change challenges, natural disasters and political volatility are all contributing factors in an increasingly complex international concern.

These issues have resulted in an extensive diversity in both the attitude and approach to aid.  Some, such as William Easterly and Dambisa Moyo, argue that foreign aid has stunted the growth of countries in Africa and instead created a circle of aid dependency, corruption and further poverty.

Other aid practitioners believe that aid can be successful, but only if delivered correctly.

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