Monthly Archives: December 2010

World Bank Pushes for Greater Transparency in Development

The World Bank Group is releasing a wide range of tools and technology applications to empower more collaborative and effective solutions to global challenges, as part of the institution’s commitment to “Open Development.”

“We are working to make data analysis and modeling tools more user-friendly, so that researchers, civil society, and local communities can come up with their own findings – and double-check ours,” said World Bank President Robert B. Zoellick. “We need to throw open the doors, recognizing that others can find and create their own solutions.” Current efforts include:

  • The Bank is doubling the number of development indicators available in its Open Data Catalog from 2,000 to 4,000 and providing them free of charge.
  • The number of indicators available with visualizations on the website data.worldbank.org, available in multiple languages, will triple to 1,200, with many new features for exploring and sharing the data.
  • Geo-coded project data will be available for the first time for over 1,000 World Bank projects.
  • A major upgrade to the DataFinder application for iPhone and iPad will allow users of those devices to access and visualize World Bank data.
  • A new data visualization tool, AidFlows, soon to be launched, will provide country-by-country data on aid flows, from donors to beneficiaries. For the first time, global totals and World Bank details will be presented together through this joint OECD-Bank effort.

Collaborations with commercial information providers Google and Microsoft, to be announced this week, will also broaden access to the Bank’s development data, said Shaida Badiee, Director of the Development Economics Data Group: “The new data tools and website improvements will make it easier for researchers and software developers to obtain, visualize and analyze data,” said Ms. Badiee. “This is about putting the ‘what’ and ‘how’ of development into people’s hands.”

The Bank is calling on others to join the quest for innovative development solutions by holding the first-ever global competition to develop new software applications using the newly open data. The Apps for Development Competition officially launches October 7.

Mapping for Results, an interactive platform set to launch as a pilot later this month, overlays poverty and Millennium Development Goal data, such as infant mortality rates, with the geographic location of over a 1,000 World Bank-financed projects.

The new applications are complemented by a series of software tools available on a new Open Development website (www.worldbank.org/open) which will allow researchers, government officials and citizens to crunch their own numbers.

  • ADePT for economic analysis of survey data
  • PovCalNet for estimating poverty incidence rates
  • NADA for archiving and cataloguing household surveys
  • iSimulate for designing forecasts and simulations
  • WITS for accessing trade data and analyzing trade barriers

WITS, for example, will enable a producer anywhere in the world with a laptop, an internet connection and an agricultural or manufactured product, to identify the trade barriers he or she will face in export markets all around the world.

The Bank’s open data initiative is part of a wider effort to increase transparency and access to information.  In July, the World Bank introduced a new Access to Information Policy, modeled on the US and Indian Freedom of information laws.

Source: Work Bank Website

 

World Bank: Protecting Land Rights

Using investments to strengthen rural land rights for small holder farmers is possible, the World Bank reports in this video. The video explains that property dwellers / owners with weak covenants to the land are the most likely to be targeted by investments, as are lands that have a high rate of cultivation.  Developing governments must be active players in working with investors to help small land holders to increase the sustainability (environmental and community) of land acquisition projects. The accessibility of information (i.e., making investment agreements and other contracts public) will be an integral ingredient in ensuring fairness in land transactions moving forward.

Streamlining Process and Procedure for Economic Development

In the area of human rights, the problem of violations usually isn’t about inadequacy of current laws.  Many developing countries with relatively new constitutions have laws that are even more protective of our own in the US, but they are not enforced. This can happen for a number of reasons, whether lack of institutional / agency capacity, political forces, corruption, etc.

In other fields that touch upon non-constitutional / basic “rights” issues, regulatory structures and laws conducive to economic development simply are not in place. In a McKinsey study cited by C.K. Prahalad, the cost of microregulations in the areas of import-export, labor laws, and transactions involving land can be as high as 2 to 3% of GDP growth. “Microregulations” are not the laws themselves, but are the often arbitrary bureaucratic interpretation of the laws and how they should be implemented. “Arbitrary” is a signal for unfairness. In the U.S., it invokes an Equal Protection question of unequal application of a law, and in the developing world, arbitrariness often is a precursor to corruption. Additionally, as Prahalad explains, “The consequence of proliferation of microregulations can be the same as not having laws in the first place. An informal sector emerges outside of the law of the land. The private-sector businesses remain small and local. For large firms, corruption becomes the cost of doing business.”

In discussing the importance of building transaction governance capacity (TGC), Prahalad outlines four essential criteria in eliminating systemic arbitrariness. (Government capacity is essential for legal economies to function):

  1. Access to information and transparency for all transactions
  2. Clear process so that selective interpretation by bureaucrats is reduced, if not eliminated
  3. Speed with which the processes can be completed by citizens
  4. Trust in the system (with its faults). Trust is a result of the first three criteria, and is a crucial component of TGC. (See my other writing on the importance of trust)

One exciting project in the Andhra Pradesh region of India integrated these principles in creating an e-Government system around property rights.  As government records, and processes were brought online, the property registration system (the same laws remained on the books) was dramatically streamlined. Again, Prahalad chronicles the key changes:

  1. All the steps that are required are now transparent and easy to access. The sequence of steps to be followed is also clear. All interdependent steps are completed automatically.
  2. In the old system, the officials calculated the value of the land and the associated fees for registration. There were opportunities for selective vale assessment. Now the entire process of calculation is automated with market value assessment algorithms built in. The documents are scanned and stored digitally, reducing the opportunities for them to be lost or displaced.
  3. The entire process of registration of land now takes one hour (from initiation to completion), compared to 7 to 15 days in the old system. Title searches over the past 20 years from 50 different offices can be done in 15 minutes versus 3 days. Certified copies of documents can be obtained in 30 minutes against the three days of the conventional system.

The key question this example brings to mind is what are the mechanisms that can be scaled to other regions? How can we share these best practices and figure out what project aspects can be applied to different areas were land formalization procedures can literally take years?

 

Why Governments and Legal Systems Matter

 

Whether clean water distribution and deliveryinfrastructure development in local communities, or educational programs to teach kids the virtues of hand washing, private endeavors often have innovative, agile business-oriented strategies that are conducive to quick and efficient implementation.

Taking a dynamist, often anti-government perspective to social change, author Virginia Postrel offers an interesting discussion of the role of trust in the evolution of modern societies. In the context of contract creation, Postrel explains, “a dynamic society, then depends not only on preserving fluidity, but on permitting permanence. To learn, we must experiment. But to experiment, we must commit ourselves. And we must find ways to cooperate with others, to extend trust.” By creating clear and predictable rules that are enforceable – i.e., through a legal system – people can take those risks to experiment and innovate.

Postrel (to my great pleasure) calls on the work of economist Hernando de Soto in speaking of the “virtual frontiers” of the third world. While “bad” legal systems often create impediments to business success (In Lima, creation of a small garment factory required 289 days, 11 permits and $1,231 – 32 times the monthly living wage), they are still necessary to create trust between strangers transacting at arms-length. Non-registered business owners will experience a limit on growth with the inability to enforce contracts, as many of them rely on family ties. Homeowners lacking title cannot sell their land, will be hesitant to make improvements, and cannot mortgage it to secure financing for a business.

In a 1989 publication of “What’s Wrong with Latin American Economies,” in Reason magazine (cited by Postrel), de Soto gives an illustrative example of the problem with informal economies in the context of two friends looking to start a button factory:

My friend goes very happily to his home and sees his wife. She says, “now wait a second. Think it over. This fellow, De Soto, you barely know him. This fellow, De Soto, after a year, will know who your clients are, whom to sell to, when to sell, and how to sell them. After a year, he won’t need you…”

As a result, my friend will choose instead to associate with a relative—someone in his extended family. And that person won’t produce buttons as good as mine. So they will have a little company that isn’t going to be very prosperous. I’ll have to do the same. I’ll have to find someone to sell buttons who trusts me because he happens to be family of mine. But he just doesn’t sell buttons the way my friend sells buttons. And, therefore, the two talents that were required to make a successful industry in Lima will not be able to merge. Then some anthropologists from Cornell University will come to Peru and say, “Look at Peruvians. They like to work in small family units.”

De Soto’s story demonstrates that without functioning governments, market efficiencies fail, because people will not contract outside of their trusted social networks. They do not have incentives to improve their land or create new economic opportunity because legal structures that offer protection are often ill-functioning or lacking entirely. While governments may be slow and cumbersome at times, they are an essential building block to sustainable economic development. By strengthening structures that respect property rights, private contracts and individual rights, private parties will be given a greater opportunity to thrive in the developing world.