Author Archives: Lauren Citrome

Proud to Pay

Posted on 17 April, 2012 | Comments Off

(Photo credit: Dave Dugdale)

Today, April 17, is the deadline for those of us in the U.S. to file our taxes. This morning I awoke to the following topical comment on Twitter:

@Jenbo1:  I was positive that today would be a cranky day, and then I remembered it’s tax day! We take care of each other en masse today. #proudtopay 

As former U.S. Chief Justice Oliver Wendell Holmes, Jr. put it,  taxes are what we pay for a civilized society.

Around the world, however, this economic relationship is not a given. In many developing countries, poorly designed tax policies both decrease funds available to finance development projects as well as create burdens for small and medium enterprises.

Among actors in the private sector, it is difficult to collect taxes from informal entrepreneurs and multinational companies alike. Informal entrepreneurs are, by definition, not officially registered and thus tax authorities have no record of them. It is likely true, however, that paying taxes would create such pressure on their small businesses that they might not be able to survive. Furthermore, the amount they would contribute to their national treasuries is relatively small.

On the other hand, large scale tax avoidance is a common practice among multinational companies operating around the world.  Offshore financial centers – also known as tax havens – provide destinations for multinational companies looking to minimize their tax burdens. It is estimated that developing countries lose three times more money to tax havens every year than they receive in official development assistance. In some cases tax administrations do not have the capacity to prevent this behavior, but many tax policies often allow this to occur. Indeed, tax avoidance (unlike tax evasion) is perfectly legal – it just has detrimental effects for raising revenue for public services.

While it might seem that allowing tax avoidance helps attract the foreign investment that developing countries so often seek, tax incentives are not what ultimately drive investment. According to the International Monetary Fund:

…[F]oreign investors, the primary target of most tax incentives, base their decision to enter a country on a whole host of factors (such as natural resources, political stability, transparent regulatory systems, infrastructure, a skilled workforce), of which tax incentives are frequently far from being the most important one.

The structure of tax systems is about more than business decisions or public revenue. Unproductive tax policies entail a failure in the relationship between states and stakeholders. A lack of tax revenue decreases funds for important public services such as hospitals, schools, and roads. In other words, ineffective tax systems impede the ability of people to take care of each other.

Of course, the problem is not just in tax systems – a lack of transparency in public procurement can make taxes unsavory. If governments are not efficiently providing public services, why would anyone want to pay taxes for them? Some even consider taxes a violation of private property rights. Therefore, it is clear that there has to be a balance between tax collection and the perceived benefits that taxes bring.

Each country has its own unique tax challenges, and their significance cannot be underestimated. Tax revenue has the potential to decrease developing countries’ reliance on foreign aid and thus it could lead to economically sustainable development. I would argue that this is one of the most pressing challenges facing development today.

On Tax Day in the U.S., I am proud to pay because I believe my tax dollars have the power to advance the development of my country. I happily pay for the infrastructure and public goods that my compatriots and I use every day. I hope that one day this sentiment will be shared more broadly around the world.

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Does Dr. Kim Hold the Cure?

Posted on 29 March, 2012 | Comments Off

Jim Yong Kim, President of Dartmouth and nominee to be the next President of the World Bank. (Photo: Develop Economies blog)

On March 23, President Obama nominated Jim Yong Kim, physician, anthropologist, and current president of Dartmouth College, to be the next president of the World Bank following Robert Zoellick’s resignation. At first glance, it seems that Kim lacks expertise in the fields typically associated with the bank, such as finance, economic growth, diplomacy, or politics. (More information about past World Bank presidents and their backgrounds can be found here)

But could Kim’s atypical background benefit the Bank?

In 1987, Kim helped establish Partners in Health (PIH), an organization that developed a model of community-based healthcare to treat drug-resistant tuberculosis and HIV/AIDS. Among the other co-founders is Paul Farmer – an outspoken advocate in the field of global health who asserts that “structural violence” is a fundamental barrier to poverty alleviation.

Farmer’s view of structural violence purports that there are structures – such as bureaucracy, class, and gender –  that allow some to thrive while others suffer in poverty. Underlying the theory of structural violence is the idea that environmental conditions, whether historically determined or economically driven, ensure that violence, observed as poverty, will ensue. As such, the social ills of poverty result from structural violence, not from a lack of natural resources or from the actions of individuals.

The structural violence argument puts poverty within the realm of institutional analysis. Institutions, such as formal laws and traditional practices, can be thought of as “the rules of the game.” Good institutions affect all actors by incentivizing behavior that will lead to positive outcomes. Not only do institutions affect poverty and health, but they also determine the successes or failures of democracies and market economies.  Therefore, working with institutions is essential for development in sectors beyond health.

Although PIH bases its work on the premise of structural violence, it does not focus on reforming the underlying institutions and structures behind the poor health conditions it seeks to reverse. That is not to say that the organization does not do good work. In fact, its approach is profoundly innovative: by providing primary care and general nutrition supplements as part of visits regarding specific treatments, PIH makes its programs more effective. Furthermore, PIH works with community health workers that accompany patients throughout their treatment and monitor their needs for food, housing, and safe water.

Still, this all means that PIH addresses the symptoms, not the institutional causes, of structural violence. In that case, Partners in Health more closely resembles humanitarian aid or relief than development as such. Indeed, some donors are reluctant to fund some of PIH’s programs, arguing that PIH’s assistance is unsustainable and will always require donor funding. It is likely true that without PIH, the countries in which it works would not be able to maintain the high quality care that PIH provides.

Looking at Kim’s experience with Partners in Health and other areas of his record, one of the criticisms that has emerged is that he may lead the World Bank to focus more on humanitarian aid or charity work, which is usually more palliative than transformative. In contrast, the World Bank has historically sought to help countries transition into prosperous economies with capable governments that provide law and order, education, healthcare, infrastructure development, and so on. The World Bank does this by providing loans, grants, and technical assistance – not by working directly with individuals living in poverty.

At the same time, others have commended Kim’s nomination based on his many other qualifications, such as his appreciation for evidence-driven interventions, the fact that he is not a “Washington insider,” and his multicultural background.

Kim’s experience with Partners in Health is only one aspect of his background. However, if Kim can translate the structural violence approach to poverty into an institutional approach to development, he may have the strategic vision that the World Bank needs to combat both the causes and symptoms of underdevelopment, as well as first-hand experience of what is necessary to alleviate the suffering of the world’s poor.

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Paving the Way

Posted on 8 March, 2012 | Comments Off

Paving the way. (Photo: Flickr user back to menu)

Given that women are half of the world’s population, there’s understandably a broad spectrum of issues to advocate on International Women’s Day, ranging from climate change to health outcomes. Many of these issues are interrelated.

Political and economic participation are significant for women because they have spillover effects into other areas of women’s lives, as well as into the wellbeing of their families and communities. In the political realm, women’s participation is necessary for ensuring that policies and regulations accurately consider the interests and perspectives of half of the population. In local, national, and global economies, women’s participation contributes to growth, a stronger labor pool, and innovation.

Political and economic participation also have crosscutting effects because they help women gain control over their own health outcomes, reproduction, and safety concerns. Therefore, understanding the institutions that affect political and economic participation can be useful for advocating reforms and other institutional changes to benefit women in all aspects of their lives.

It is timely that the Economist Intelligence Unit has recently put together an index to measure the status of some of these institutions in 128 countries. The Women’s Economic Opportunity Index 2012 (WEO) looks at laws, regulations, practices, customs, and attitudes that allow women to participate in the workforce, whether as wage-earning employees or business owners. One of the 29 indicators is political participation, but arguably many of the indicators that affect women’s economic opportunity also affect their opportunities to participate in politics.

On the road to women’s empowerment, we know where we want to go. By understanding and evaluating, we have a map of where we are. Getting the institutions right is like paving the way.

In this Economic Reform Feature Service article, I lay out some of the institutional factors that affect women’s political and economic participation. Though not exhaustive, it provides examples of what could be limiting women’s empowerment around the world, as well as what countries, communities, and women themselves can do to eliminate barriers to their participation.

Article at a glance:

  • Although gender equality is improving, gaps between men’s and women’s political and economic participation remain.
  • The reasons that women do not participate on the same scale as men are often institutional in nature.
  • By reforming the institutional environments in which women live and work, women will empower themselves and close the gender gap.

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Analyzing Returns on Investing in Women

Posted on 1 March, 2012 | Comments Off

Cartoon by Laura Noreikaite, Lithuania from the CIPE Global Editorial Cartoon Competition

Women are the ultimate drivers of their own empowerment, but there are many things the private sector can do to facilitate their progress.

In The Business of Empowering Women, McKinsey & Company researchers examine what companies can do to contribute to women’s empowerment at every stage of a woman’s life, “from infancy through adolescence, income readiness, employment, entrepreneurship, and ultimately to financial security and leadership.” They make many suggestions, including enabling access to safe on-site childcare for employees, supporting scholarships for girls, and providing vocational and business-skills training.

But is there evidence that these initiatives help businesses themselves?

Indeed, helping women can help a company’s own bottom line. For example, the HERproject, led by Business for Social Responsibility (BSR), shows how women’s interests and company interests can overlap. In a study conducted by USAID and its partner Meridian Group International in four factories in Egypt and Pakistan, research found that the HERproject (HER stands for Health Enables Returns), a factory-based health initiative, has the potential to deliver $4 USD for every $1 invested in the project.

Using a peer-to-peer model to educate female factory workers on basic health issues, the program benefits businesses by leading to lower rates of worker absenteeism, early leave requests, and staff attrition; fewer mistakes in manufactured garments; improved recruitment; and an improved reputation for the factories among international buyers. According to BSR:

One factory manager in Karachi, Pakistan, told researchers that women now have access to a qualified health instructor. ‘They are able to discuss their health issues more openly, which is not very easy in our culture, where many things are considered taboo,’ he said. This has made his factory a desirable place to work. ‘Our labor pool has increased tremendously,’ he added.

The Women’s Empowerment Principles: Equality Means Business, launched in 2009, offers businesses guidance on how to empower women in the workplace, marketplace, and community. The Principles also emphasize the business case for private sector action to promote gender equality, using real business practices and input gathered from around the world. They are not intended to be prescriptive, but rather their goal is to identify best practices in good corporate citizenship for women’s equality.

On March 6th, executives from companies who have signed the CEO Statement of support for the Women’s Empowerment Principles will gather at the UN to discuss the progress of their initiatives. Then, on March 8th, with support from the U.S. Chamber of Commerce’s Business and Civic Leadership Center (BCLC) and the United Nations Office for Partnerships, attendees of “The Role of Business in Empowering Women” will hear from representatives from The Coca-Cola Company, Intel Corporation, FedEx, Demalogica, the Cartier Women’s Initiative Awards, Citi Foundation, UN Women, The World Bank, among others, about:

  • Financial inclusion for women
  • Equipping women with skills needed to succeed as entrepreneurs and facilitating entrepreneurial opportunities
  • Using supply chains as opportunities to provide pathways for women to participate in commerce while mitigating negative impacts on women and their communities
  • Identifying areas where business can further equip women for success particularly in the above listed areas
  • Understanding the barriers to progress in these areas of development and discuss potential mitigation strategies, particularly elaborating on areas where collaboration between sectors could aid those mitigation strategies

I will be attending and live-tweeting using the event’s hashtag #CSRwomen to see what’s next for company involvement in bettering women’s futures. I’ll also be paying close attention to how private sector initiatives can improve women’s political and economic participation, which will ultimately enable women to take control of the health, education, and other policies that affect their well-being.

Cross-sector collaboration can make a real difference for women. If everyone, including the private sector, can keep engaging women, asking questions, investing resources, and digging deeper, at the end of our work together women will truly be in control of their own empowerment.

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In Egypt, Women’s Political Empowerment Depends on Men

Posted on 8 February, 2012 | 1 Comment
The Al Nour party had a female candidate on its party slate. The party’s poster represents her using an image of a rose rather than showing her face. (Source: http://karakullake.blogspot.com/ 2011/12/female-candidate-in-egyptian-salafist.html)

Inclusive dialogue and awareness building are forerunners to lasting change and reform — invigorating democratic decision-making and leading the way for more reasoned politics. In Egypt, unfortunately, that pattern may not hold true for the discourse on women’s political empowerment.

As Nazra for Feminist Studies found recently, simply having female political candidates on party lists changed the nature of political debate and negatively affected women’s abilities to gain seats in office during the last round of elections.

With the appearance of women candidates on party lists, political discourse in Egypt transformed into socio-political discourse on the role of women in society. However, the focus on women’s social issues was disconnected from female candidates’ own efforts to portray themselves as representatives of their constituencies holistically.

That disconnect had negative effects for women’s political successes, particularly for women at the top of their party lists. To avoid polarizing voters, at least one female candidate yielded her spot on her party list to a male candidate, moving herself to the bottom.

Indeed, female candidates with husbands on their campaign teams gained more credibility among voters. According to Nazra, having men on a campaign “… portray[s] the candidate as first and foremost a successful homemaker who entered politics with the consent and encouragement of her husband, thus boosting her legitimacy, especially in rural areas.”

Egypt’s reformed election law abolishes the Mubarak-era requirement that 64 seats in parliament be reserved for women. Instead, the new law mandates that every party list include at least one female candidate. In the recent elections, however, most parties did not place women very high on their party lists.

Perhaps women’s lack of political credibility is a result of Egypt’s political past. Previously, only women from the ruling National Democratic Party (NDP) had enough resources to win the seats that were reserved for them in parliament. Many Egyptians resented those women’s political participation as a tactic designed to bolster the NDP’s dominance. “State feminism” undermined women in political positions.

The success of Sana Said, a female candidate who was high on her party’s list and won a seat in the recent elections, shows that Egyptians will vote for a woman if they think she is a worthy candidate. Nevertheless, Nazra  recommends that political parties materially and technically support their female candidates’ campaigns on a mandatory basis, preferably with at least one male staff member so that female candidates are presented as politicians rather than representatives of women’s issues exclusively.

Egypt’s transition to democracy is far from over, and it seems that women’s participation in political offices will depend on men until women’s social issues are no longer a divisive factor to the electorate. It’s impossible to erase memories of a women’s agenda hijacked for the political interests of the NDP, but women will have to find a way to participate in decision-making bodies if Egypt is to have a truly inclusive democratic society.

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Think Tanks and Policy

Posted on 6 February, 2012 | Comments Off

Diversity of ideas in policy discussions is a hallmark of democracy. While that has frustrated citizens and policymakers when opinions differ, the process of debating and discussing policy options ultimately leads to stronger, more effective policy decisions. Unfortunately, sometimes debates become embroiled with individual personality traits rather than discussions of substantive issues.

It is essential that stakeholders have access to information and research so that they can realistically weigh the implications of various policy solutions, rather than judge options based on the individuals espousing them. “Think tanks add value by supplementing political debate with policy analysis,” writes Kim Bettcher in this Economic Reform Feature Service article. Indeed, that raises the quality of policymaking, because when policy is grounded in objective research it is bound to be more effective.

Article at a glance:

  • Economic think tanks strengthen democratic governance by raising new issues, voicing alternative viewpoints, and expanding policy options.
  • Think tanks acquire policy relevance when they engage in advocacy. They must take measures, however, to preserve their credibility.
  • By observing the practices summarized in this article, think tanks can win success, balance competing pressures, and promote the public good.

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Growing through Governance

Posted on 20 January, 2012 | Comments Off

Growth is a major objective for countries around the world. An expanding GDP signals that people have more income, are buying more products and services, and overall are living better lives. Economic growth should also lead to increased employment and more taxable income for states.

Economic growth by itself, however, will not necessarily improve the lives of the world’s poor. Growth in a few sectors, like resource extraction, can increase gross domestic product but most of the benefits flow to a few people at the top. Income inequality eventually breeds resentment, and at extreme levels can be dangerous for countries’ security, perhaps even leading to civil unrest.

So how do countries make economic growth work for everyone? Some point to improving access to quality education and other programs that level the playing field for those born with fewer opportunities in life. More than specific social policies, however, are necessary to sustain inclusive economic growth over extended periods of time. Democratic governance in economic decision-making is essential.

Too often economic policies exclude those with few resources at their disposal and cannot make their voices heard. For example, complicated and costly business registration procedures prevent many from participating in the formal economy and reaping the full benefits of economic growth. Small businesses facing extortion often do not have the ear of policymakers, making it difficult to reform corrupt local agencies at great detriment to their livelihoods.

New challenges to economic participation continually emerge, and policymakers cannot always detect them without stakeholder input. Therefore, to ensure inclusive and sustainable economic growth, all actors should have a say in the process of regulatory rule-making and other economic policies. As CIPE Executive Director John D. Sullivan writes in this latest Economic Reform Feature Service article:

“It is the process of democratization that is the key because it is based on the active participation of entrepreneurs, civil society, labor, and others. But what really is democracy? Democratic governance is more than free and fair elections. Selecting leaders is only one component. How decisions are made is equally important and gets at the governance component of democratic governance.”

Article at a glance:

  • Democracy plays a key role in a country’s socio-economic development and economic reform is inseparable from the surrounding political climate.
  • For economic growth to be sustainable over long periods of time, it has to be inclusive, based on the rule of law, relatively free of corruption and grounded in prudent macroeconomic policy.
  • For democracy to be sustained it has to deliver tangible benefits and economic growth and opportunity to all members of society.

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