Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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Missing Pieces: Incentivizing Aid, Brazil’s Economy, and More

by Isobel Coleman
March 12, 2012

Students walk to school at Sanghiang Tanjung village in Lebak regency, Banten village, Indonesia, January 19, 2012 (Beawiharta Beawiharta/Courtesy Reuters). Students walk to school at Sanghiang Tanjung village in Lebak regency, Banten village, Indonesia, January 19, 2012 (Beawiharta Beawiharta/Courtesy Reuters).

In this week’s Missing Pieces, Charles Landow ranges from Indonesia to Brazil and Colombia, with stops in Turkey and Russia. I hope you enjoy the selection.

  • Incentivizing Aid: Indonesia’s Generasi program gives villages grants to improve health and education. To encourage strong results, part of each year’s grant is allocated based on villages’ performance on 12 indicators the previous year. A new paper from the National Bureau of Economic Research tests this incentive by randomly selecting some villages to receive the normal program and others to receive non-incentivized grants. The authors find that incentives improve performance on health indicators, with prenatal visits 5 percent higher and immunization rates 3 percent higher than in non-incentivized villages. The incentives do not boost educational performance. The paper suggests this is because incentives cause midwives but not teachers to work more hours; the former are often paid fee-for-service while the latter are not.
  • Brazil’s Halting Growth: Brazil’s government announced last week that its GDP grew by only 2.7 percent in 2011, with GDP per capita up 1.8 percent. This represents a major slide from rates of 7.5 percent overall and 6.5 percent per capita in 2010. A Financial Times blog post blames the slowdown on high interest rates meant to combat inflation, a strong Real (which hurts exports), and “negative sentiment from the Eurozone crisis.” Without reform of its “bloated government budget” and tax system, the piece concludes, Brazil will not consistently boost growth. The central bank slashed rates following the GDP report, sparking fears of renewed inflation.
  • Improving Public Services: A McKinsey Quarterly piece explores two innovative government programs. First, an Indonesian system called LAPOR lets citizens send text messages, emails, and photos to the government about problems with infrastructure, illegal activity, and more. A dedicated team monitors the messages and follows up. The team can also send messages proactively to seek citizens’ views, say on whether water is flowing through newly installed pipes. Second is a Colombian program where government agencies partner with industries to improve business conditions and boost economic activity. Working with corporate leaders, government officials address legal or regulatory concerns, pitch Colombian products abroad, offer business training, and forge partnerships to improve market knowledge. Not every sector has seen success, the article notes, but the approach shows promise.
  • Questions in Turkey: A New Yorker article explores Prime Minister Recep Tayyip Erdogan’s face-off with Turkey’s “deep state”—the collection of military officers, politicians, corporate and academic leaders, and criminals who for decades upheld the country’s traditional secularist order, often through violence and coups. The piece explores Erdogan’s unceasing campaign against a group called Ergenekon, which prosecutors say has plotted the government’s overthrow. Many believe the case has morphed from a potentially justified investigation into a sprawling attempt to silence critical journalists, repress dissent, and cement Erdogan’s power. CFR’s Steven Cook analyzes the situation in a recent blog post.
  • Russia’s Dire Demographics: As Prime Minister Vladimir Putin’s savors his election victory, a Washington Post piece explores a less visible Russian phenomenon: teenage suicide. “On an average day,” the piece notes, “about five Russians under age 20 take their own lives,” a rate more than triple America’s. “Alcohol abuse, domestic violence, and rigid parenting” are all factors, along with pressure to conform, isolation, and scarce mental health care. This can only exacerbate Russia’s demographic decline, chronicled in a recent Foreign Affairs article. The country’s population fell by almost 5 percent between 1993 and 2010; life expectancy was lower in 2009 than in 1961. Reasons include alarming levels of infectious and cardiovascular disease, as well as rates of “injury and violence” similar to Liberia’s. The consequences for Russia’s economy and security, the article concludes, will be serious.

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