President Obama arrived in Panama for the seventh Summit of the Americas with a clear mission: restore the feel-good atmosphere of his first regional summit in Trinidad. There he received plaudits as the first African-American president, a post-unilateralist leader for a more multipolar world. Six years later, and with a complicated record to defend, he had to work harder for the ovations. But his administration’s efforts paid off, and he left Panama a winner. The President’s decision to remove Cuba from the dreaded U.S. list of state sponsors of terrorism is further demonstration that Obama is convinced that U.S. interests in Cuba are best served through constructive engagement and not onerous sanctions. Now he must persuade Congress.

First and foremost, the Panama Summit will be remembered for cementing the historic process of normalization of ties between the United States and Cuba launched by Presidents Obama and Raúl Castro on December 17. The Panama meeting offered a chance not only for the rest of the region to ratify Obama’s overture to Castro, but to close the books on the Cold War and open a new chapter in inter-American relations. Bill Clinton led the way on this track in the 1990s, but the train got derailed in the 2000s under George W. Bush. The ghosts of Washington’s heavy-handed past, on matters such as the war on drugs, immigration, counter-terrorism, and the hangover of the “Washington consensus,” returned to haunt Obama’s second summit in Cartagena in 2012. The White House was determined to re-set course before sitting through another series of harangues against the sins of the past by delivering important progress on several policy fronts in the months leading up to Panama. 

No issue was more representative of U.S. bullying in the region than the decades-old embargo against Cuba. When the region’s presidents said they would not come to Panama unless Cuba was invited as a full participant, the White House was forced to fish or cut bait. Correctly, President Obama chose to fish. The breakthrough of December 17 was rewarded with widespread praise by his counterparts and by publics in both the United States and Cuba. The president’s main task for Panama, then, was to deliver a winning message for the first face-to-face meeting in over five decades of hostilities.

Source: REUTERS/Jonathan Ernst

No image better captures the competing narratives of the deep historical differences between the United States and Cuba than the one above. The elder Raúl Castro, who does not have to worry about his state-controlled media, plugs his ears to drown out the clamor of journalists asking questions after the two leaders’ first meeting, while the younger Obama is ready to engage the press, a customary stance for leaders in a democracy.

The contrast between old and new continued in the plenary where Obama gave a focused presentation  about moving beyond “the old grievances that had too often trapped us in the past” to a future based on shared responsibility and mutual respect. “We’re looking to the future and to policies that improve the lives of the Cuban people.”

Castro, on the other hand, multiplied his allotted eight minutes of remarks to 48 (to make up for the six summits Cuba was not invited to, he joked) to recount a long litany of transgressions by previous U.S. governments dating back to 1800. He reminded the audience of Washington’s overthrow of the democratically-elected government of Guatemala in 1954 as the precursor to Cuba’s own popular revolution and invoked his brother Fidel in blaming global poverty on the aggressions of colonial and imperialist powers. Remarkably, however, Castro specifically absolved President Obama from any responsibility for such actions, an important gesture that opens the door for more progress. “President Obama is an honest man…I admire his humble origins,” Castro said, and urged others to support his efforts to eliminate the embargo. Castro also said Cuba was prepared to work with the United States on such issues as climate change, terrorism, drug trafficking, organized crime, and poverty eradication.

With the removal of Cuba from the U.S. list of state sponsors of terrorism, and the last-minute softening of U.S. rhetoric toward Cuba’s chief ally, Venezuela, the Americas may be entering an unprecedented era of peace and cooperation. That leaves respect for democracy and human rights as the chief area of conflict between the United States and Cuba (and a few other countries).

Here again, the contrast between the behavior of pro- and anti-government Cuban activists emerged in sharp relief in Panama. Highly aggressive actions by “official” Cuban nongovernmental organizationss against dissidents from Cuba and Miami, including physical and verbal insults and attacks, were completely out of tune with the modern era of inclusion and respect of independent civil society voices at such meetings. Their orchestrated disruptions of what should have been a robust but civil debate laid bare the real threat Cuba’s rulers face—from its own public tired of the regime’s broken economic system and closed politics—and the heavy challenge they face in opening economically while maintaining political control. President Obama spoke to this issue when he told the press: “On Cuba, we are not in the business of regime change. We are in the business of making sure the Cuban people have freedom and the ability to…shape their own destiny.” The primary way to do this, Obama added, is through “persuasion” and not sanctions. Cuba’s behavior “does not implicate our national security in a direct way,” foreshadowing this week’s decision to de-list Cuba from the terrorism sponsor category.

Cuban officials claim they are practicing a form of popular democracy that is just as legitimate as representative democracy. But few honestly believe this can be squared with core universal norms like free speech and association. For his part, Castro acknowledged that “[w]e could be persuaded of some things; of others we might not be persuaded.” Patience, he added, is needed, signaling yet again that progress toward normalizing relations will be slow. He then proceeded to instruct his closest assistants to “follow the instructions of both Presidents,” a telling reminder of the continued resistance to change from his own bureaucracy. Obama will now have to persuade his colleagues in Congress that Cuba is no longer the threat it was in the past.

Introduction

Ohio has already taken important steps to address the state’s ongoing foreclosure crisis, yet the crisis continues, causing distress for thousands of families and individuals, and destabilizing cities, towns and neighborhoods across the state. Therefore, the state, its local governments and private stakeholders need to do still more to deal more effectively with the crisis and its impacts on the state’s housing stock, cities and neighborhoods.

What is often termed the “foreclosure crisis” is actually a multi-dimensional crisis, in which the collapse of the housing bubble, the devastation caused by the lax and often irresponsible credit practices that accompanied and perpetuated that bubble, the resulting freeze on commercial and consumer credit, and the worldwide recession are interwoven, and can only with great difficulty be untangled. In Ohio, those forces are further exacerbated by profound changes to the state’s historical economic underpinnings. Ohio cannot solve the crisis by itself, but it can significantly mitigate its impact on people, neighborhoods, and towns and cities. These mitigating efforts will also help preserve the value of homes and neighborhoods in the state, and place Ohio in a stronger position to benefit from the future economic recovery.

The paper begins with a short summary of current conditions and the actions the state has already taken to address the wave of foreclosures, followed by a discussion of areas for future action. This discussion will address mitigating both the individual and community impacts of foreclosure, but will give particular emphasis to the critical issue of softening the blow of foreclosure on communities, which up to now has been less of a focus for state action.

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Expanding formal financial services—including traditional services (offered by banks) and digital services (provided via mobile money systems)—to individuals previously excluded from their access can improve their capacity to save, make payments swiftly and securely, and cope with economic shocks. Importantly, having access to financial services is also considered a critical component of women’s full economic participation and empowerment. Many countries, therefore, are working to increase accessibility to and usage of formal financial services as important strategies to improving individuals’ financial stability and, at a macro-level, supporting inclusive development and growth.

In sub-Saharan Africa, where the provision and uptake of traditional financial services is limited due to a wide range of factors (including poverty, lack of savings, and poor infrastructure, among others), a number of governments are working to promote digital financial service offerings by creating an enabling environment for various entities (including bank and non-bank formal providers) to offer them. In turn, the region is leading global progress in the adoption of digital financial services: 12 percent of sub-Saharan African adults have a mobile money account (nearly half of whom exclusively use digital services) compared with only 2 percent of adults at the global level. In fact, in five African countries (Cote d’Ivoire, Somalia, Tanzania, Uganda, and Zimbabwe) more adults have mobile money accounts than have conventional bank accounts.

In the first of a series of publications exploring and sharing information that can improve financial inclusion around the world, the Brookings Financial and Digital Inclusion Project (FDIP) takes stock of progress toward financial inclusion in 21 countries from various economic, political, and geographic contexts and scores them along four key dimensions of financial inclusion: country commitment, mobile capacity, regulatory environment, and adoption of traditional and digital financial services. The interactive rankings and report were launched on Wednesday, August 26 at an event entitled, “Measuring progress on financial and digital inclusion.” According to the report’s findings, four out of the five top-scoring countries are located in sub-Saharan Africa. On the other hand, some of the lowest ranked countries were also African, demonstrating regional diversity in the pathways toward financial inclusion and their subsequent outcomes.

Here are some of our main takeaways from four of the nine African case studies featured in the report: Ethiopia (ranked #21 overall), Kenya (ranked #1), Nigeria (ranked #9), and South Africa (ranked #2). Kenya and Ethiopia are the highest- and lowest-ranked African countries in the report, respectively, while Nigeria and South Africa represent the continent’s two largest economies, which have achieved disparate outcomes in terms of financial inclusion. (For the overall rankings of the nine African countries included in the report, see Figure 1.)

Figure 1. Overall FDIP rankings of African countries

• Ethiopia’s overall financial and digital inclusion score was low due in large part to its poor mobile capacity and the low adoption rates of formal (particularly digital) financial services. The World Bank’s Global Financial Inclusion Index (Findex)—one of the major datasets highlighted in the report—reveals that only 22 percent of adults in Ethiopia had a formal financial account and about 0.03 percent of adults had a mobile money account in 2014.
• In addition, limited development of the information and communications technologies (ICT) sector and mobile communications infrastructure have inhibited mobile and digital access, reducing the array of financial products and services available to underserved populations.
• However, Ethiopian digital financial inclusion has the potential and political support to grow: The government is taking steps to address shortcomings in the enabling environment for digital financial service provision, for example, by adopting a mobile and agent banking framework in 2013. This framework sets the foundation for allowing banks and microfinance institutions to provide services through mobile phones and agents. The government is also in the process of developing a dedicated Financial Inclusion Council and secretariat in order to enhance participation from non-financial institutions (namely, mobile network operators) in developing policies for achieving greater digital financial inclusion.

Kenya: Mobile money innovations drive uptake

• Kenya scored highest in the overall rankings due to its highly accessible mobile networks, regulatory framework conducive to the development of digital financial services, and products that cater to consumer needs and so promote adoption. Kenya also has the highest rate of financial account penetration among women.
• Between 2011 and 2014, Kenya increased its levels of formal financial and mobile money account penetration by 33 percentage points owing mostly to robust take-up within the country’s vibrant mobile money ecosystem. Nearly 90 percent of Kenyan households reported using mobile money services as of August 2014, and the M-Pesa system (operated by Safaricom) is widely considered the leading driver of success in adoption of mobile money usage.
• Innovative services that have helped spur financial inclusion among marginalized groups have been developed within Kenya’s mobile network operator-led (MNO-led) approach: For example, in 2012, the Commercial Bank of Africa and Safaricom partnered together to provide the M-Shwari service, which offers interest-bearing mobile money accounts and microfinance.
• Still, one aspect of the mobile money system upon which the Kenyan government could improve is consumer protection of clients of credit-only institutions, such as microfinance institutions (MFIs) and savings and credit cooperatives (SACCOs). Lack of oversight could potentially leave users without adequate consumer protection as these institutions are not adequately regulated and supervised.

Nigeria: A stalled bank-led approach

• Nigeria achieved a moderate score in the FDIP rankings because, despite a number of country commitments in recent years, low levels of adoption persist. In fact, Nigeria’s increase in financial inclusion has not been driven by uptake of mobile money services: While the proportion of adults age 15 and older who have a mobile money or traditional bank account increased from 30 percent in 2011 to 44 percent in 2014, only 0.1 percent of adults had a registered mobile money account in 2014 and had used it at least once in the 90 days prior, according to an Intermedia survey.
• The Central Bank of Nigeria (CBN) has taken a bank-led approach to mobile money, in which banks promote their traditional services via the mobile network. This is an alternative approach to the MNO-led approach seen in Kenya, where MNOs provide the network of agents and manage customer relations. Some experts have noted that in cases where a bank-led approach is adopted, for example in India, the financial incentives are not strong enough for banks to expand their services to the unbanked, while mobile network operators on the other hand have greater “assets, expertise, and incentives” to launch and scale mobile money services.

South Africa: Strong mobile capacity, yet room for growth in adoption

• South Africa was ranked highest of all countries in the report in mobile capacity for its robust mobile infrastructure and large proportions of the population subscribing to mobile devices (70 percent) and covered by 3G mobile networks (96 percent). It also tied for the highest score of formal account penetration, including among rural, low-income, and female groups.
• In the past decade, financial inclusion (as measured by the proportion of the population using financial products and services—formal and informal) has increased dramatically from 61 percent in 2004 to 86 percent in 2014. This uptick can be partially attributed to the increase in banking and ownership of ATM/debit cards. Disparities in penetration exist, however, among gender and race, with women and white populations being more likely to be banked than men and black populations.
• As cited in the Brookings FDIP 2015 report, the 2014 Global Findex found that 14 percent of adults (age 15 and older) possessed a mobile money account in 2014. The top 60 percent of income earners were more than twice as likely to have accounts as the bottom 40 percent of the income scale. So despite strong mobile capacity, there is still room for growth in terms of mobile money penetration especially among low-income adults.

The FDIP case studies offer a number of insights into the policies and frameworks conducive to the uptake of formal financial services. In several of African countries considered to be mobile money “success stories,” for example, in Kenya (also see the Rwanda country profile in the report), mobile network operators play a substantial role in spearheading the drive toward financial inclusion and have collaborated closely with central banks, ministries of finance and communications, banks, and non-bank financial providers. Ensuring the participation of all stakeholders—not just governments and banks—in setting the national financial inclusion priorities and agenda, then, is critical. Furthermore, actively participating in multinational financial inclusion networks can enhance knowledge-sharing among members and lead to further country commitments. Finally, leading surveys of the national financial inclusion landscape can also help governments and financial service providers better target their strategies and services to the local needs and context.

Editors’ Note: According to a new Pew poll, half of Israeli Jews have come to seek not only a Jewish majority but even Jewish exclusivity in Israel. That doesn’t bode well for Arab-Jewish coexistence in Israel, writes Shibley Telhami—even aside from what happens in the West Bank and Gaza. This post originally appeared on the Monkey Cage blog.

When U.S. leaders and commentators warn that the absence of a two-state solution to the Israeli-Palestinian conflict will make it impossible for Israel to be both a Jewish and democratic state, they generally mean that a Jewish democracy requires a Jewish majority; if Israel encompasses the West Bank and Gaza, Arabs will become a majority. What they may not have realized is that, in the meantime, half of Israeli Jews have come to seek not only a Jewish majority but even Jewish exclusivity.

That is one of the most troubling findings of a new Pew poll in Israel. And it doesn’t bode well for Arab-Jewish coexistence in Israel—even aside from what happens in the West Bank and Gaza.

This major study was conducted from October 14, 2014, to May 21, 2015, among 5,601 Israeli adults ages 18 and older. (Disclosure: I served as an adviser to the project). It found that 48 percent of all Israeli Jews agree with the statement “Arabs should be expelled or transferred from Israel,” while 46 percent disagreed. Even more troubling, the majority of every non-secular Jewish group, including 71 percent of Datim (modern orthodox Jews) agreed with the statement.

While age is not much of a factor when it comes to attitudes toward expelling Arabs from Israel, younger Israelis are slightly more likely to agree with the statement that Arabs should be expelled than older Israelis.

These attitudes are anchored in a broader view of identity and of the nature of the Israeli state. Overall, only about a third of Israeli Jews say their Israeli identity takes precedence over their Jewish identity, with the overwhelming majority of every group, except for secular Jews, saying their Jewishness comes first.

This view has consequences for citizen rights. Not surprisingly, the overwhelming majority of all Jewish Israelis (98 percent) feel that Jews around the world have a birthright to make aliya (immigration to Israel with automatic Israeli citizenship). But what is striking is that 79 percent of all Jews, including 69 percent of Hilonim (secular Jews) say that Jews deserve “preferential treatment” in Israel—so much for the notion of democracy with full equal rights for all citizens.

These attitudes spell trouble for Arab citizens of Israel who constitute 20 percent of Israel’s citizens. It’s true that attitudes are dynamic; they are partly a function of Jewish-Arab relations within Israel itself, but also outside, especially within the broader Palestinian-Israeli conflict. Like their Jewish counterparts, Arab citizens of Israel (mostly Muslim, but also including Christians and Druze), identify themselves with their ethnicity (Palestinian or Arab) or religion above their Israeli citizenship. And these ethnic/religious identities intensify when conflict between Israel and the Palestinians in the West Bank and Gaza intensifies. There is no way to fully divorce the broader Palestinian-Israeli conflict from Arab-Jewish relations within Israel.

In recent years, this latter linkage has become central for two reasons: loss of hope for a two-state solution, and the rise of social media that has displayed extremist attitudes that used to be limited to private space. In the era of Facebook and Twitter, Arab and Jewish citizens post attitudes that deeply offend the other: An Arab expresses joy at the death of Israeli soldiers killed by Palestinians, while a Jew posts a sign reading “death to Arabs.” Hardly the stuff of co-existence. Leave it to opportunist politicians, extremists and incitement to do the rest.

But there is also an American responsibility—not so much with regard to failure of diplomatic efforts, but with the very positing of the nature of the conflict itself, and the nature of the state of Israel. As President Obama considers steps he could undertake on the Israeli-Palestinian conflict before leaving office, he may contemplate addressing what has become a distorting and detrimental discourse that serves to give a pass to non-democratic attitudes, and diversion of attention from core problems.

First, there is something wrong with positing the possibility of Arabs as constituting a demographic problem for Israel. It legitimizes the privileging of Jewishness over democracy. It also distorts the reason why Israel is obligated to end occupation of the West Bank and Gaza; it has nothing to do with the character of Israel as such, but with international law and United Nations resolutions.

Second, while states can define themselves as they wish (and are accepted by the international community accordingly), the American embrace of the “Jewishness” of Israel, cannot be decoupled from the Palestinian-Israeli context, or from the overarching American demand that all states must be for all their citizens equally.

In part, this is based on the notion that the UN General Assembly (Resolution 181) recommended in 1947 dividing mandatory Palestine into an “Arab” and a “Jewish” State. In part, it’s based on the notion that the Palestinian-Israeli conflict is a political conflict that can be resolved through two states, one manifesting the self-determination of Jews as a people, and one manifesting the right of self-determination of Palestinians as a people. The two were bound together. An embrace of a Jewish state that excludes a Palestinian state defeats the principle.

If two states become impossible, America chooses democracy over Jewishness. In fact, this has been consistently reflected in American public attitudes across the political spectrum, most recently in this November 2015poll; in the absence of a two-state solution, 72 percent of Americans would want a democratic Israel, even if it meant that Israel ceases to be a Jewish state with a Jewish majority.

More centrally, even with two states—one manifesting Jewish self determination and one Palestinian self-determination—an overarching, principled American position takes precedence: If Israel is a state of the Jewish people, it must also be above all a state of all its citizens equally; (and if Palestine is to be a state of the Palestinian people, it must also be a state of all its citizens equally). This democratic principle, highlighted front and center in a reformulated American position, can help avoid legitimizing undemocratic attitudes in the name of Jewish identity.

Recent reports have highlighted how mobile-based financial services are transforming banking and payments in Kenya, Bangladesh, and Peru, and all the hype about how they are about to explode everywhere else. For all of the promise that digital financial systems have for lowering costs and helping people all over the globe, it is unfortunate that their development is hampered by regulation that protects the interests of the largest providers. These regulations create significant barriers and raise the total costs to achieve universal financial inclusion.

It is indeed conceivable that purely digital financial transactions could be handled at vanishingly small unit costs, from anywhere. But the cost that won´t go away is that at the interface between the new digital payment system and the legacy payment system – hard cash. Cash in/cash out (CICO) points are like tollgates at the edge of the digital payments cloud.

Cash is Still King

Even in areas with flourishing mobile banking usage, people tend to cash in every time they want to make a mobile payment, and to cash out immediately and in full every time they receive digital money. Rather than displacing cash, digital platforms have made local cash ecosystems more efficient. Without full backward compatibility with cash, digital payment systems could not take root.

The bigger issue is not the size of the CICO toll, but the fact that small players cannot expect to have the transaction volume to sustain a widespread CICO network. The incumbent banks and telecommunications firms have built in competitive advantages. They can quickly form agreements with brick and mortar shops, attract users from the current customer base, threaten new entrants, and aggregate enough transactions to induce CICO outlets to maintain sufficient liquidity on hand.

Therefore, the competition in digital financial services will not be determined primarily by what happens within the digital payments market itself, but rather by what happens in the contiguous cash market. The power of digital services is their ability to transcend geography, and yet success in the digital payments space will go to whoever has the best physical CICO footprint.

Regulators treat the digital payments service and the CICO service as conjoined twins: each digital financial service provider must have its own base of contractually bound CICO outlets. When the two services are bundled it is not surprising that the tough economics of CICO —and, therefore, the incumbent— dominates.

A Two Market Regulatory Approach

In a recent paper, I argue it is necessary to split up these two markets, from a regulatory point of view. The market for effecting electronic payments (issuing payment instructions and debiting and crediting electronic accounts accordingly) is logically distinct from the market for exchanging two forms of money (hard cash versus electronic value).

Most regulators approve of stores receiving electronic money from customers in exchange for packs of rice on a store shelf. But, if that same electronic money was exchanged for cash then it would violate the law in many countries.

In the latter case, the store is presumed to be an agent of the customer’s financial service provider, and the store cannot offer the CICO service without an agency contract from that provider. But why? The cash that was offered was the store’s as is the account that would receive the electronic payment, and the transaction would have occurred entirely through a secure, real-time technology platform that banks offer all their clients.

A Regulatory Fix

Of course, purely financial transactions are usually held to higher consumer protection standards than normal commercial transactions. My proposal is not to deregulate CICO, but to create a new license type for CICO network managers. Holders of this license would carry certain consumer protection obligations (such as ensuring that tariffs are explicitly posted at all CICO outlets, and that they have a call center to handle any complaints that customers may have on individual CICO outlets) – entirely reasonable expectations for retailers, even if we normally don´t ask them of rice sellers.

But once you have a CICO license, then you could sign up any store you wanted and crucially, offer CICO services on the platform of any financial institution in which you have an account. In other words, you wouldn’t have to beg the incumbent to give you a special agent contract. All you would need to do is to open a normal customer account with them, which the incumbent couldn´t deny you.

This one little change would completely shift the competitive dynamics of digital financial services. Under the current direct agency model, incumbent firms have no incentive to make it easier for competitors to create CICO outlets. Whereas under the independent CICO network manager model, all licensed CICO networks would have the incentive to offer CICO services for all providers, no matter their size: with a full suite of available services, they will find it easier to sign up stores to work for them, and these stores will find it easier to convince more users to walk into their stores.

Incumbents would still be free to establish their own proprietary CICO networks, as today. But they would have to compete with independent CICO networks that are now able to aggregate business from all financial service providers, creating true competition.

All players could then claim a comparable physical presence as the incumbent. They would all benefit from the same branded competition between CICO networks. They could compete strictly on the basis of the quality of their digital financial services offering.

Unbundling the regulatory treatment of digital financial services would help competition reach every segment of the business; the current integrated model only serves the interests of the largest telecommunication companies and banks in the land.

EXECUTIVE SUMMARY

Fragile states present one of the greatest challenges to global development and poverty reduction. Despite much new learning that has emerged from within the development community in recent years, understanding of how to address fragility remains modest. There is growing recognition that donor engagement in fragile states must look beyond the confines of the traditional aid effectiveness agenda if it is to achieve its intended objectives, which include statebuilding, meeting the needs of citizens, and managing risk more effectively. Current approaches are constrained by relying heavily on small-scale interventions, are weakened by poor coordination and volatility, and struggle to promote an appropriate role for the recipient state.

Scaling up (i.e., the expansion, replication, adaption and sustaining of successful policies and programs in space and over time to reach a greater number of people) is highly relevant to fragile settings, both as an objective and as a strategic approach to development. As an objective, it reinforces the logic that the scale of the challenges in fragile states demands interventions that are commensurate in purpose and equal to the task. As a strategy, it encourages donors to identify and leverage successes, and to integrate institutional development more explicitly into projects and programs. In addition, scaling up can assist donors in addressing the priority areas of improved project design and implementation, sustainability and effective risk management.

Successful scaling up in fragile states almost certainly occurs less often than is possible and does not always involve a systematic approach. Donors should therefore look to more systematically pursue scaling up in fragile states and evaluate their performance with specific reference to this objective. This can be done by incorporating relevant elements of a scaling up framework into operational policies, from strategy development through to program design and monitoring.

Contrary to expectations, there are compelling examples of successful scaling up in fragile states. While the conditions prevailing in fragile states create serious obstacles in terms of “drivers” (the forces that push the scaling up process forward) and “spaces” (the opportunities that need to be created, or potential obstacles that need to be removed for interventions to grow), and in terms of the operational modalities of donors, these can be overcome through the careful design and delivery of programs with a clear focus on creating scaling up pathways, and through close partnership and sustained engagement of governments, communities and foreign partners.

Case study evidence suggests that the pathways taken to reach scale in fragile states demand different approaches by donors. Donors need to adopt greater selectivity in determining which areas or sectors for scaling up are justified—a strategy that has also assisted some donors in managing risk. More investment and time are required in upfront analysis and building the evidence for successful scaling up pathways. In some cases, donors require longer time horizons to achieve scale, although demand from government or beneficiaries has sometimes forced donors to move immediately to scale, allowing little or no time for piloting. Regardless of the pace of scaling up, donors that were most successful were engaged early and then remained engaged, often far beyond the replication phase of scaling up, to increase the likelihood of interventions being sustained. Other common characteristics of successful scaling up were simple project design and a focus on the institutional aspects of the scaling up pathway.

Case studies also point to the crucial role of drivers in moving the scaling up process forward in fragile states. Proven ideas and practical models have often been picked up in fragile states, contrary to the expectation that actors may be less responsive to recognizing and acting on the utility of promising results. Leaders undoubtedly have a role to play in supporting scaling up, although there are clear dangers that must be avoided, including avoiding the perception that donors are picking (political) winners by nominating leaders, and tying the survival of projects too closely to the fortunes of a leader’s political career. Incentives were found to be one of the most important drivers in fragile states, and there is a good case to be made for donors introducing new inducements, greater transparency or similar reforms to strengthen the role incentives play. Finally, and in contrast to the standard scaling up framework, community demand was found to be an important driver in many fragile states, both in demanding the expansion of small-scale projects and by facilitating the community’s own resources to support the scaling up process.

The greatest challenge to scaling up in fragile states is the limited spaces these environments provide. This is especially the case in respect to those spaces which concern aspects of governance: political, institutional and policy spaces. When working in fragile states, donors must recognize that spaces for scaling up are almost always more constrained, but look for ways to expand upon them. Some of the most successful examples of scaling up used creative approaches to build space quickly or used existing capacity to the fullest possible extent. Also relevant are the lessons of robust analysis, greater realism and cost control. The case studies confirm the importance of two additional spaces in fragile states. For example, security space often imposed horizontal obstacles to scaling up which could not realistically be overcome while ownership space served as a good indication of the perceived legitimacy of the scaling up process and the likelihood that interventions would be sustained longer term.

Case studies also affirm the importance of emphasizing robust project design and implementation, and the close linkages between the scaling up agenda and the role of risk management and sustainability in fragile states. While sustainability presented a significant problem for many of the projects and programs reviewed, a more focused approach around scaling up may assist donors in addressing sustainability concerns. This would entail adopting a longer-term perspective beyond the immediate confines of any individual project, looking for available drivers and supportive spaces, and focusing on effective implementation and consistent monitoring and evaluation (M&E). Any intervention introduced on a small scale that scores well in sustainability serves as a possible candidate for scaling up.

Similarly, many of the methods used by donors for managing risk—an emphasis on analysis, scenario planning, realism and making use of specialized aid instruments—are equally relevant for supporting scaling up in fragile countries. A persuasive argument can be made that the adoption of a more explicit scaling up approach by donors can form part of a risk management strategy in fragile states. Scaling up can enable donors to more ambitiously tackle development risks without allowing institutional and project risks to grow unchecked. Ultimately, a donor approach that combines good risk management and scaling up requires strong leadership and well-aligned incentives.

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Introduction

Ohio has already taken important steps to address the state’s ongoing foreclosure crisis, yet the crisis continues, causing distress for thousands of families and individuals, and destabilizing cities, towns and neighborhoods across the state. Therefore, the state, its local governments and private stakeholders need to do still more to deal more effectively with the crisis and its impacts on the state’s housing stock, cities and neighborhoods.

What is often termed the “foreclosure crisis” is actually a multi-dimensional crisis, in which the collapse of the housing bubble, the devastation caused by the lax and often irresponsible credit practices that accompanied and perpetuated that bubble, the resulting freeze on commercial and consumer credit, and the worldwide recession are interwoven, and can only with great difficulty be untangled. In Ohio, those forces are further exacerbated by profound changes to the state’s historical economic underpinnings. Ohio cannot solve the crisis by itself, but it can significantly mitigate its impact on people, neighborhoods, and towns and cities. These mitigating efforts will also help preserve the value of homes and neighborhoods in the state, and place Ohio in a stronger position to benefit from the future economic recovery.

The paper begins with a short summary of current conditions and the actions the state has already taken to address the wave of foreclosures, followed by a discussion of areas for future action. This discussion will address mitigating both the individual and community impacts of foreclosure, but will give particular emphasis to the critical issue of softening the blow of foreclosure on communities, which up to now has been less of a focus for state action.

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Tomorrow, President Obama unveils his last budget, and we’re sure to see plenty of proposals for spending on education and skills. In the past, the Administration has focused on investments in early childhood education, community colleges, and infrastructure and research. From a budgetary standpoint, the problem with these investments is how to capture their benefits as well as their costs.

First step: find out what works. The Obama Administration has been emphatic about the need for solid evidence in deciding what to fund. The good news is that we now have quite a lot of it, showing that investing in human capital from early education through college can make a difference. Not all programs are successful, of course, and we are still learning what works and what doesn’t. But we know enough to conclude that investing in a variety of health, education, and mobility programs can positively affect education, employment, and earnings in adulthood.

For example:

1. Young, low-income children whose families move to better neighborhoods using housing vouchers see a 31 percent increase in earnings;

2. Quality early childhood and school reform programs can raise lifetime income per child by an average of about $200,000, for at an upfront cost of about $20,000;

3. Boosting college completion rates, for instance via the Accelerated Study in Associate Programs (ASAP) in the City University of New York, leads to higher earnings.

If such estimates are correct (and we recognize there are uncertainties), policymakers are probably underinvesting in such programs because they are looking at the short-term costs but not at longer-term benefits and budget savings.

First, the CBO’s standard practice is to use a 10-year budget window, which means long-range effects are often ignored. Second, although the CBO does try to take into account behavioral responses, such as increased take-up rates of a program, or improved productivity and earnings, it often lacks the research needed to make such estimates. Third, the usual assumption is that the rate of return on public investments in human capital is less than that for private investment. This is now questionable, especially given low interest rates.

A hot topic in budget politics right now is so-called “dynamic scoring.” This means incorporating macroeconomic effects, such as an increase in the labor force or productivity gains, into cost estimates. In 2015, the House adopted a rule requiring such scoring, when practicable, for major legislation. But appropriations bills are excluded, and quantitative analyses are restricted to the existing 10-year budget window.

The interest in dynamic scoring is currently strongest among politicians pushing major tax bills, on the grounds that tax cuts could boost growth. But the principles behind dynamic scoring apply equally to improvements in productivity that could result from proposals to subsidize college education, for example—as proposed by both Senator Sanders and Secretary Clinton. Of course, it is tough to estimate the value of these potential benefits. But it is worth asking whether current budget rules lead to myopia in our assessments of what such investments might accomplish, and thus to an over-statement of their “true” cost.