Quantitative estimates of the impacts of climate change on economic outcomes are important for public policy. We show that the vast majority of estimates fail to account for well-established uncertainty in future temperature and rainfall changes, leading to potentially misleading projections. We reexamine seven well-cited studies and show that accounting for climate uncertainty leads to a much larger range of projected climate impacts and a greater likelihood of worst-case outcomes, an important policy parameter. Incorporating climate uncertainty into future economic impact assessments will be critical for providing the best possible information on potential impacts.
Shanker Satyanath, Marshall Burke, John Dykema, David B. Lobell, Edward Miguel

Why does the United States regulate bribery of foreign public officials? Don’t U.S. authorities have more than enough corruption to tackle at home without worrying about the misdeeds of public officials in far-off lands? There are several plausible answers to these questions . . . 
Kevin E. Davis

The use of indicators is a prominent feature of contemporary global governance. Indicators are used to compare and rank states for purposes as varied as deciding how to allocate foreign aid or investment and determining whether states have complied with their treaty obligations. This article defines the concept of an indicator, analyzes distinctive features of indicators as technologies of governance, and identifies various ways in which the use of indicators has the potential to alter the topology and dynamics of global governance. Particular attention is paid to how indicators can affect processes of standard setting, decisionmaking, and contestation in global governance. The World Bank Doing Business indicators and the United Nations Human Development Index are analyzed as case studies.
Kevin E. Davis, Benedict Kingsbury, Sally Engle Merry

There is great need to consider how the limited resources available can be used most efficiently to increase the number of lives saved and to ensure that these resources also benefit health systems. Improving efficiency is much more than just improving the productive efficiency and also about ensuring that resources are going to where they will be the most beneficial and making investments that are the most efficient over time. These choices may be essential to achieving the goal of universal access to treatment as well as the sustainability of these programmes.
Karen Grépin

This paper examines the equilibrium price effects of the privatization of housing assets that were previously owned and allocated by the state. I develop a theoretical framework that shows that privatization can have ambiguous effects on prices in the private market, and that the degree of misallocation of the assets prior to privatization determines the subsequent price effects. I test the predictions of the model using a large-scale housing reform in China. The results suggest that the removal of price distortions allowed households to increase their consumption of housing and led to an increase in equilibrium housing prices.
Shing-yi Wang

The development establishment today tolerates a shocking double standard on democracy for the rich versus democracy for the poor. . .  
William Easterly

Armed conflict within nations has had disastrous humanitarian consequences throughout much of the world. Here we undertake the first comprehensive examination of the potential impact of global climate change on armed conflict in sub-Saharan Africa. We find strong historical linkages between civil war and temperature in Africa, with warmer years leading to significant increases in the likelihood of war. When combined with climate model projections of future temperature trends, this historical response to temperature suggests a roughly 54% increase in armed conflict incidence by 2030, or an additional 393,000 battle deaths if future wars are as deadly as recent wars. Our results suggest an urgent need to reform African governments’ and foreign aid donors’ policies to deal with rising temperatures.
Shanker atyanath, Marshall Burke, Edward Miguel, John Dykema, and David Lobell

The absence of reliable network connectivity in the developing world has resulted in the use of paper receipts remaining the de facto standard for tracking transactions of various types. This includes both cash transactions (microfinance-related disbursements and repayments, purchases, money transfers) and noncash goods (food commodities to/from godowns or warehouses). Such receipts are susceptible to loss, damage and alteration . . .
Michael Paik and Lakshminarayanan Subramanian

Electoral clientelism and vote buying are widely perceived as major obstacles to economic development. This is because they may limit the provision of public goods. In this paper, we review the literature on clientelism and vote buying and propose the use of field experiments to empirically evaluate the consequences of these phenomena. We summarize the results from two field experiments conducted by the authors in West African countries. Clientelism and vote buying seem to be effective and to enjoy widespread electoral support . . . 
Leonard antchekon and Pedro Vicente

Consistent with the provocative hypothesis of Engerman and Sokoloff (1997, 2000), this paper confirms with cross-country data that agricultural endowments predict inequality and inequality predicts development. The use of agricultural endowments –specifically the abundance of land suitable for growing wheat relative to that suitable for growing sugarcane -- as an instrument for inequality is this paper’s approach to problems of measurement and endogeneity of inequality. The paper finds inequality also affects other development outcomes . . . 
William Easterly

To analyze the prospects for expanding financial access to the poor, bank professionals assessed 1,438 households in six provinces in Indonesia to judge their creditworthiness. About 40 percent of poor households were judged creditworthy according to the criteria of Indonesia’s largest microfinance bank, but fewer than 10 percent had recently borrowed from a microbank or formal lender . . . 

Access to financial capital is an important determinant of the prospects for development of poor countries. This short essay makes the case for treating the legal aspects of financing development as an important field of study. It begins by describing the kinds of transactions that might be of interest and highlights the role that law and lawyers play in shaping the terms that govern them . . . 
Kevin Davis

Over the past two decades there has been a resurgence of interest, on the part of both academics and practitioners, in using law to promote development in Latin America, sub-Saharan Africa, Central and Eastern Europe, and Asia. The level of academic interest in the topic is reflected in the publication of three recent books on law and development by prominent American scholars . . . 
Kevin Davis and Michael Trebilcock

Microfinance institutions have proved the possibility of providing reliable banking services to poor customers. Their second aim is to do so in a commercially-viable way. This paper analyzes the tensions and opportunities of micro nance as it embraces the market, drawing on a data set that includes 346 of the world’s leading micro nance institutions and covers nearly 18 million active borrowers. The data show remarkable successes in maintaining high rates of loan repayment, but the data also suggest that pro t-maximizing investors would have limited interest in most of the institutions that are focusing on the poorest customers and women . . . 
Jonathan Morduch, Robert Cull, and Asli Demirgüç-Kun

A large research program in economics has established a persuasive link between institutions and economic development. But what does this imply for development policymaking? Can a political leader or aid agency seeking to pro- mote development readily change institutions? This article starts off wildly general, and then moves to specifics . . . 
William Easterly

When growth-promoting spending is cut so much that the present value of future gov- ernment revenues falls by more than the immediate improvement in the cash deficit, fiscal adjustment becomes like walking up the down escalator. Although short-term cash flows matter, too tight a focus on them encourages governments to invest too little. Cash-flow targets also encourage governments to shift investment spending off budget by seeking private investment in public projects, irrespective of its real fiscal or economic benefits . . . 
William Easterly, Luis Serven, and Timothy Irwin

Microfinance promises to reduce poverty by employing profit-making banking practices in low-income communities. Many microfinance institutions have secured high loan repayment rates, but, so far, relatively few earn profits. We examine why this promise remains unmet. We explore patterns of profitability, loan repayment, and cost reduction with unusually high-quality data on 124 institutions in 49 countries. The evidence shows the possibility of earning profits while serving the poor, but a trade-off emerges between profitability and serving the poorest. Raising fees to very high levels does not ensure greater profitability, and the benefits of cost-cutting diminish when serving better-off customers.
Jonathan Morduch, Robert Cull, and Asli Demirgüç-Kunt.

This article analyzes a number of yearly reports from the World Bank’s Doing Business project, an ambitious international effort to measure various aspects of law and development, analyze their interrelationship, develop benchmarks for assessment of legal systems, and suggest legal reforms. After describing the methodology used, we analyze the strengths and limitations of the project, both as a scholarly enterprise and as a set of proposals for legal reform. Our analysis highlights the challenges associated with measuring legal variables in the face of legal complexity and uncertainty . . . 
Kevin Davis and Michael Kruse

Development assistance is the combination of money, advice, and conditions provided by rich nations and international financial institutions, such as the World Bank and International Monetary Fund (IMF), which is designed to achieve economic development in poor nations. This article argues that development assistance was based on three assumptions that, with the benefit of hindsight (although a wise few also had foresight), turned out to have been mistaken . . . 
William Easterly

Only for the recipients of foreign aid is something akin to central planning seen as a way to achieve prosperity. The end of poverty is achieved with free markets and democracy—where decentralized “searchers” look for ways to meet individual needs—not Poverty Reduction Strategy Papers (PRSPs) to achieve Millennium Development Goals (MDGs). The PRSPs and MDGs create lots of bureaucracy but hold no one specific agency in foreign aid accountable for any one specific task. Planners in foreign aid use the old failed models of the past . . .
William Easterly

Jeffrey Sachs is the economics profession’s leading advocate of mega-reform. Whether it is stabilization of hyperinflation in Bolivia, shock therapy to leap from Communism to capitalism in Poland and Russia, or a “Big Push” to end world poverty , Sachs’ recommendation throughout his career has been to do it fast, do it big, do it comprehensively, and do it with lots of Western money . . .
William Easterly

Numerous analyses have been conducted on how political institutions affect economic performance. In recent years the emphasis has been on a causal logic that emphasizes institutional obstacles to policy change, such as those presented by multiple veto points. This has especially been the case when it comes to the important question of how political institutions influence governments’ responses to exogenous economic shocks. We make the case for a substantial broadening of focus and show that when it comes to a major type of exogenous shock, a forced exchange-rate devaluation, variations in the breadth of accountability of the chief executive are more robustly associated with the post-shock growth recovery than variations in obstacles to policy change . . . 
Shanker Satyanath, Allen Hicken, and Ernest Sergenti

This paper examines the market for advice and the underlying perception that advice is useful and informative. We do this by first providing a theoretical examination of the informational content of advice and then by setting up a series of experimental markets where this advice is sold. In these markets we provide bidders with a demographic profile of the “experts” offering advice . . . 

The IMF uses its well-known “financial programming” model to derive monetary and fiscal programs to achieve desired macroeconomic targets in countries undergoing crises or receiving debt relief. This paper considers under what conditions financial programming would work best, and then tests those conditions in the data. The key restrictions of financial programming are assumptions about exogeneity of some components of identities with respect to others, and the assumption of stable and “reasonable” parameters for some very simple behavioral relationships. In at least the literal applications of the framework, financial programming does not do well in forecasting the target variables, even when some components of the identity are known with certainty.

Analysis of adjustment loans often overlooks their repetition to the same country. Repetition 10 changes the nature of the selection problem. None of the top 20 recipients of repeated adjustment 11 lending over 1980–99 were able to achieve reasonable growth and contain all policy distortions. 12 About half of the adjustment loan recipients show severe macroeconomic distortions regardless of 13 cumulative adjustment loans. Probit regressions for an extreme macroeconomic imbalance indicator 14 and its components fail to show robust effects of adjustment lending or time spent under IMF 15 programs. An instrumental variables regression for estimating the causal effect of repeated 16 adjustment lending on policies fails to show any positive effect on policies or growth . . . 

Political theorists from Machiavelli to Huntington have denied the possibility of popular government arising out of the chaos of civil war, instead prescribing an intermediate stage of one- man rule by a Prince, Leviathan or a military dictator. Based on recent empirical evidence of post civil war democratization in El Salvador, Mozambique and elsewhere, I show that democracy can arise directly from anarchy. Predatory warring factions choose the citizenry and democratic procedures over a Leviathan when (1) their economic interests depend on productive investment by the citizens; (2) citizens' political preferences ensure that power allocation will be less biased under democracy than under a Leviathan; and (3) there is an external agency (e.g. the United Nations) that mediates and supervises joint disarmament and state-building. Ultimately, I discuss the implications of this argument for the basic intuitions of classical political theory and contemporary social theory regarding democratization and authoritarianism . . . 
Leonard antchekon

Estimating the impact of economic conditions on the likelihood of civil conflict is difficult because of endogeneity and omitted variable bias. We use rainfall variation as an instrumental variable for economic growth in 41 African countries during 1981–99. Growth is strongly negatively related to civil conflict: a negative growth shock of five percentage points increases the likelihood of conflict by one-half the following year. We attempt to rule out other channels through which rainfall may affect conflict. Surprisingly, the impact of growth shocks on conflict is not significantly different in richer, more democratic, or more ethnically diverse countries . . . 

Political economists point to the levels of economic development, poverty, and income inequality as the most important determinants of political regimes. The authors present empirical evidence suggesting a robust and negative correlation between the presence of a sizable natural resource sector and the level of democracy in Africa. They argue that resource abundance not only is an important determinant of democratic transition but also partially determines the success of democratic consolidation in Africa. The results illuminate the fact that post–Cold War democratic reforms have been successful only in resource-poor countries such as Benin, Mali, and Madagascar. The authors argue that resource-rich countries such as Nigeria and Gabon can become democratic only if they introduce strong mechanisms of vertical and horizontal accountability within the state.
Leonard antchekon and Nathan Jensen

The Burnside and Dollar (2000) finding that aid raises growth in a good policy environment has had an important influence on policy and academic debates. We conduct a data gathering exercise that updates their data from 1970–93 to 1970– 97, as well as filling in missing data for the original period 1970–93. We find that the BD finding is not robust to the use of this additional data . . . 

We provide new measures of ethnic, linguistic and religious fractionalization for about 190 countries. These measures are more comprehensive than those previously used in the economics literature and we compare our new variables with those previously used. We also revisit the question of the effects of ethnic, linguistic and religious fractionalization on quality of institutions and growth. We partly confirm and partly modify previous results. The patterns of cross-correlations between potential explanatory variables and their different degree of endogeneity makes it hard to make unqualified statements about competing explanations for economic growth and the quality of government . . . 

The widely publicized finding that “aid promotes growth in a good policy environment” is not robust to the inclusion of new data or alternative definitions of “aid”, “policy” or “growth”. The idea that “aid buys growth” is on shaky ground theoretically and empirically. It doesn’t help that aid agencies face poor incentives to deliver results and underinvest in enforcing aid conditions and performing scientific evaluations. Aid should set more modest goals, like helping some of the people some of the time, rather than trying to be the catalyst for society-wide transformation . . . 
William Easterly

Does economic development depend on geographic endowments like temperate instead of tropical location, the ecological conditions shaping diseases, or an environment good for grains or certain cash crops? Or do these endowments of tropics, germs, and crops affect economic development only through institutions or policies? We test the endowment, institution, and policy views against each other using cross country evidence. We find evidence that tropics, germs, and crops affect development through institutions. We find no evidence that endowments affect country incomes directly other than through institutions, nor do we find any effect of policies on development once we control for institutions . . . 

A group of well-meaning national and international bureaucracies dispensed foreign aid under conditions in which bureaucracy does not work well. The environment that created aid bureaucracies led those organizations to (a) define their output as money disbursed rather than service delivered, (b) produce many low-return observable outputs like glossy reports and “frameworks” and few high-return less observable activities like ex-post evaluation, (c) engage in obfuscation, spin control, and amnesia (like always describing aid efforts as “new and improved”) so that there is little learning from the past, (d) put enormous demands on scarce administrative skills in poor countries. To change this unhappy equilibrium, policymakers in rich and poor countries should experiment with decentralized markets to match those who want to help the poor with the poor themselves freely expressing their needs and aspirations . . . 
William Easterly, Alberto Alesina, Arnaud Devleeschauwer, Sergio Kurlat, and Romain Wacziarg.

omparative politics scholars have long considered electoral politics in Africa to be systematically and inherently clintelist. African rulers, whether self-appointed or democratically elected, rely on the distribution of personal favors to selected members of the electorate in exchange for ongoing political support.1 This observation relies on the implicit assumption that African voters invariably have a much stronger preference for private transfers than for public goods or projects of national interest. This article reports on the use of experimental methods to test several hypotheses pertaining to electoral clientelism in Benin in order to investigate the determinants of the voters’ demand for public goods . . . 
Leonard antchekon

While many analysts decry the lack of sufficient investment in Africa, we find no evidence that private and public investment are productive, either in Africa as a whole (unless Botswana is included in the sample), or in the manufacturing sector in Tanzania. In this restricted sense, inadequate investment is not the major obstacle to African economic development . . . 

The North American Free Trade Agreement (NAFTA) was formally implemented on 1 January 1994 by the United States, Canada, and Mexico. This treaty instantly gained global notoriety following the initiation of formal negotiations in 1991, not only because the initiative represented one of the most comprehensive trade agreements in history, but also because it seemed to be a breakthrough in establishing free trade in goods and services among developed and developing countries . . .