In new Urban-Brookings Tax Policy Center analysis of Earned Income Tax Credit (EITC) take-up at the county level, Benjamin Harris, a fellow in Economic Studies, and Research Assistant Lucie Parker use zip-code level data on taxes and demographics to take a "fresh look" at the EITC. "Since its creation in 1975," they write, "the Earned Income Tax Credit has played a major role in the U.S. safety net." Earlier this year, Harris presented EITC take-up using IRS data from 2007. Compare that to the new list of ten counties with the highest share of EITC recipients below:

"The regional variation EITC claiming is stark," Harris and Parker conclude. "The counties with the highest share of taxpayers claiming the EITC are overwhelming located in the Southeast. ... [O]ver half the taxpayers in a large share of counties in Alabama, Georgia, and Mississippi claim the EITC. With few exceptions, almost all counties with high EITC claiming are located in the South. Relative to the South, the Northeast and the Midwest have much lower claiming rates. Moreover, average EITC benefit closely follows the pattern for share of taxpayers taking up the credit: in counties where more taxpayers claim the credit, the credit is larger on the whole."

Visit this U.S. map interactive to get county level data on share of taxpayers claiming EITC as well as average EITC amount, in dollars, per county.

From its modest beginnings in 1975, the Earned Income Tax Credit has grown into one of the nation’s most effective anti-poverty programs. Each year, the EITC supplements low-income workers’ earnings, encouraging work and lifting millions of people out of poverty.¹ It has positive lasting effects for parents, who have shown longer-run earnings increases and better health outcomes. At the same time, their children exhibit a host of benefits, from better school performance and higher rates of college enrollment to more hours worked and higher incomes in adulthood.² 

Moreover, the EITC supports economic stability in communities throughout the country where filers collectively receive millions of dollars in earnings supplements annually.³ These successes stem from a series of targeted expansions—supported by both Republicans and Democrats—over the EITC’s 40-year history, transforming it from a small credit into a significant income supplement for low-income working families.⁴

Yet more can be done to preserve and build on the effectiveness of the EITC, and a growing number of elected officials and policy experts have proposed  strengthening the credit. Three main recommendations have emerged from these proposals.

Preserve two key provisions of the EITC that are set to expire in 2017;

Expand the credit for workers without qualifying children; and

Offer filers options to receive a portion of the credit outside of tax time.

In this brief, we consider the first two recommendations, using our MetroTax model and detailed microdata from the 2014 American Community Survey to estimate the impact of these potential changes on workers and on the metropolitan areas and states where they live.⁵ A new analysis by Steve Holt will take an in-depth look at the issue of periodic payment.

If two key EITC provisions expire in 2017, 7.4 million filers would lose part or all of their EITC.

In 2009, Congress and the Obama administration enacted two targeted, but temporary, expansions to the EITC. The legislation reduced the “penalty” for married couples filing jointly by extending their eligibility for the credit $5,000 beyond that for unmarried filers, and it boosted the credit for families with three or more children (who are more likely to be low-income even when working).

If those provisions expire in 2017, the EITC would shrink for 6.7 million taxpayers, while a little under 700,000 filers would lose eligibility altogether. Two-thirds of filers who would be affected are married couples, 1.8 million of whom are also raising more than two kids (meaning they would be subject to both cuts). The remaining third are unmarried workers with at least three children. Most of these taxpayers (58 percent) have a high school diploma or less, and they are most likely to work in manufacturing, construction, and retail. The typical adjusted gross income of these filers is $28,000 a year, just above the poverty line for a family of four (roughly $24,000 in 2014).

States and metro areas in the Midwest and West would see the steepest cuts if these provisions expire. 

Every state stands to lose millions of dollars if these EITC provisions are not made permanent. States and metro areas with higher-than-average shares of married couples and larger families would be hardest hit. In the Intermountain West, Idaho and Utah could see a 10 percent drop in federal EITC dollars coming into the state (Table 1). The major population centers in those states—including metropolitan Provo and Ogden in Utah and Boise, Idaho—top the list of major metro areas that would experience the biggest cuts if these provisions expire.

While larger states like California and Texas would see their EITC claims drop by smaller percentages, the size of the EITC-eligible population in these states mean that the expiration of these two provisions would translate into a loss of more than half a billion dollars in California ($538 million) and over $400 million in Texas. Taxpayers in the Los Angeles metro area stand to lose an estimated $185 million in EITC receipts, while those in Dallas would forfeit nearly $100 million. (For detailed state and metro data see the appendix.)

Expanding the credit for workers without qualifying children would benefit more than 14.4 million filers. 

The EITC for childless workers is significantly smaller than the credit for families with children. In tax year 2013 (the most recent year for which detailed data are available), workers with qualifying dependents received $2,794 on average through the EITC, compared to the meager $281 claimed by the average childless worker.⁶ In fact, low-wage earning childless adults are the only group of taxpayers actually taxed into (or deeper into) poverty by the federal tax system.⁷

Both President Obama and House Speaker Paul Ryan have proposed expanding the EITC for these workers, as have legislators—including Sen. Patty Murray (D-Wash.), Rep. Richard Neal (D-Mass.), and Rep. Barbara Lee (D-Calif.)—and Republican presidential candidate Jeb Bush.⁸ (Republican presidential candidates Ted Cruz and John Kasich have also called for the EITC to be expanded but have not specified whom that expansion would target.⁹)

The proposals put forward by Obama, Ryan, Lee, and Bush are strikingly similar (although they differ considerably in how they would pay for it). These expansions would double the size of the credit for childless workers and the pace at which the credit phases in and out (Figure 1). They would also lower the minimum age of eligibility from 25 to 21.¹⁰

Together, these changes would boost the value of the credit for 8 million filers and extend eligibility to 6.4 million more taxpayers, increasing EITC dollars for these workers by $6.9 billion.¹¹

The filers who would benefit from these changes are largely unmarried workers (87 percent) who are most likely to be employed in service industries (retail, accommodation and food service, administrative services), health care, and construction. Half of these workers have a high school diploma or less. The typical adjusted gross income for these workers is just $8,300, well below the poverty threshold for individuals and married couples without children (e.g., $12,316 and $15,853, respectively, in 2014).

Several states and large metro areas in the Midwest and Northeast would see the number of childless workers eligible for the EITC more than double if the credit were expanded. 

The District of Columbia and Utah, each of which has above-average shares of the population between 21 and 24, would experience the largest percentage growth in the number of childless workers eligible for the EITC (135 and 134 percent, respectively). However, the bulk of states that would double their pool of eligible filers without qualifying children fall in the Midwest (North Dakota, Iowa, Nebraska, and Wisconsin) and Northeast (Rhode Island, Massachusetts, and Vermont), and tend have higher-than-average shares of one-person households and households without children.

Similarly, while the number of EITC-eligible childless workers in the Provo metro area would more than triple if the credit were expanded, most of the major metro areas that would at least double the number of eligible workers without qualifying children are in the Midwest (e.g., Grand Rapids, Milwaukee, and Toledo) and Northeast (e.g., Bridgeport, Boston, and Springfield) (Map 1).

In this era of partisan gridlock in Washington, it is rare to find a policy with the kind of bipartisan support the EITC has received—a testament to its effectiveness in encouraging work, alleviating poverty, and improving outcomes for workers and their children. By preserving key provisions of the EITC for working families and by making the EITC work better for workers without qualifying children, millions of Americans across the country stand to benefit.

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This speech focuses on the issue of affordable housing. It is a tough issue that is misunderstood and often maligned. It doesn't receive the kind of national or even local attention that it deserves. It is rarely discussed in a metropolitan context, even though many people realize that housing markets are metropolitan not local.

And it is not just about shelter or social justice. It is about economic competitiveness. It is about quality neighborhoods. It is about rewarding work and building wealth. And it is about community cohesion and continuity.

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Situated in the heartland, Missouri reflects the full range of American reality.

The state is highly urban yet deeply rural. It contains two bustling metropolises, numerous fastgrowing suburbs, and dozens of typically American small towns. Elsewhere lie tranquil swaths of open country where farmers still rise before dawn and the view consists mainly of rich cropland, trees, and sky.

Missouri sums up the best of the nation, in short.

And yet, Missouri also mirrors the country’s experience in more problematic ways.

The spread of the national economic downturn to Missouri, most immediately, has depressed tax collections and increased the demand for social services, resulting in a troublesome state and local fiscal moment. This has highlighted pocketbook concerns and underscored that the state must make the most of limited resources.

At the same time, Missourians, like many Americans, have many opinions about how their local communities are changing. They are divided—and sometimes ambivalent—in their views of whether their towns and neighborhoods are developing in ways that maintain the quality of life and character they cherish.

All of which explains the double focus of the following report by the Brookings Institution Center on Urban and Metropolitan Policy. Intended to speak to the simultaneous concern of Missourians for fiscal efficiency and communities of quality, "Growth in the Heartland: Challenges and Opportunities for Missouri" brings together for the first time a large body of new information about both the nature and costs of development patterns in the Show-Me State.

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Lynn Neary: I'm Lynn Neary in Washington, sitting in for Neal Conan.

John Kerry may not have clinched the Democratic nomination for president in yesterday's primaries and caucuses, but his victories in five of the seven races certainly completed his rehabilitation from an also-ran to a front-runner. John Edwards and Wesley Clark also won last night, Edwards in South Carolina, Clark in a tight race in Oklahoma, where Edwards came in second. Joe Lieberman dropped out of the race altogether. Howard Dean vowed to fight on despite a dismal showing. So did Al Sharpton, who placed third in South Carolina. Dennis Kucinich barely registered with voters. All the candidates now have their eyes on the future with contests in delegate-heavy states now up for grabs.

...

...

Lynn Neary:...With us to talk about money in politics is Anthony Corrado. He's a professor of government at Colby College in Waterville, Maine, and is spending this year as a visiting fellow at The Brookings Institution here in Washington.

Thanks for being with us.

Anthony Corrado: Well, thanks for inviting me, Lynn.

Lynn Neary: Do we know exactly how much money's been spent so far by the candidates?

Anthony Corrado: Well, so far the Democrats have raised about $170 million in private donations and public funding all together, and all of that money's now been spent. This very competitive contest has proved to be very expensive so that as we enter this crucial part of the nominating process, no candidate really has a large reservoir of cash that's available to be spent.

Lynn Neary: Yeah. Both Dean and Kerry used the same strategy, focusing on Iowa and New Hampshire, but came up with very different results, didn't they?

Anthony Corrado: Yes, they did, and it was particularly problematic for Howard Dean because what Dean decided to do was use the large store of cash that he had raised in 2003 to spend lots of money in the states that would be voting in February, as well as in Iowa and New Hampshire, and as a result spent over $3 1/3 million on television in states that were voting after New Hampshire. Whereas John Kerry basically took all of the money he had and put it into Iowa and New Hampshire and was able to get the victories he needed to spur additional fund-raising so that he right now is in the best position even though he ended up raising much less than Howard Dean prior to New Hampshire. He's now in the best position to raise and spend money in this next stage of the race.

Lynn Neary: Yeah. And what about Dean? Has he been able to--he was so well-known for his fund-raising. How has his fund-raising been since he has started losing?

Anthony Corrado: Well, his fund-raising has actually held up very well. He's raising about a million dollars a week. He's raised about $3 million since that now-infamous night in Iowa. But one of the problems that he has is that he built such a large organization that it's very expensive to maintain. And as a result he has not had money for television advertising this week. He's not doing any television advertising in the states this weekend. And he probably won't do any television advertising in Tennessee and Virginia. So he's basically gone off of the airwaves in terms of paid television, with the exception of looking towards Wisconsin, which isn't until February 17th.

...

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Municipal elections in Ferguson, Mo. are fast approaching. Amid the backdrop of the US Department of Justice identifying systemic racial bias by law enforcement and an over-reliance on traffic fines and court fees for revenue, there are great challenges to overcome.

It would be one thing if Ferguson was unique. It is not.

Ferguson (containing just over 21,000 people) is one of 91 jurisdictions in St. Louis County, each with its own governments to run, services to provide, and budgets to balance. This kind of governmental fragmentation, a product of state law, is repeated in many metropolitan areas across the country. Suburban fragmentation makes providing public services inefficient; complicates regional planning; and, according to a recent OECD report  diminishes economic growth, productivity, and social mobility.

The problems wrought by fragmentation have only been compounded in recent years by rapid economic and demographic changes. In the 2000s, suburbs in the nation’s largest metro areas became home to more poor residents and more African Americans than cities for the first time. Since 2000, the number of high-poverty neighborhoods (with poverty rates above 20 percent) more than doubled in the suburbs, while the number of majority-minority neighborhoods grew by almost half.

Many suburban communities dealing with rising poverty and new populations are ill-equipped to address growing and changing needs. That’s particularly true in places like Ferguson, where population and jobs have declined over the years. According to new Brookings research, residents of Ferguson lived near 14 percent fewer jobs in 2012 than they did in 2000. The resulting strains on local tax bases amount to one reason that local governments throughout the St. Louis region came to rely heavily on revenue-raising tactics like traffic fines and court fees.

Part of the mandate of the Ferguson Commission convened by Missouri Governor Nixon is to address the issue of governance, which will require confronting the region’s fragmented landscape. The commission can learn from states that have encouraged the sharing of services across municipalities or regions that are pursuing more collaborative approaches to respond to shared challenges around issues like housing, transportation, or community development.

But while these strategies can reduce the typically competitive approaches employed by neighboring suburbs, they still come up against deeper structural limitations that collaboration alone cannot overcome. The commission should consider a bolder response to the region’s fragmentation and fiscal challenges.

One model the commission can learn from is Minneapolis-St. Paul’s regional revenue sharing structure.

Established in 1971 by the Minnesota Fiscal Disparities Act, Minneapolis-St. Paul’s regional tax base sharing mechanism gives residents access to adequate resources for local services like public safety, irrespective of where they live. According to a study by Myron Orfield and Nicolas Wallace, the law has dramatically reduced tax disparities between high and low-income areas, allowing for reinvestment in the central cities and in fiscally challenged communities. And it has reduced the incentive for municipalities to “steal” revenue-generating land uses from neighbors (very frequently a waste of taxpayer dollars), promoting more integrated regional economic development.

The model works by mandating that each municipality within the designated seven-county area contribute 40 percent of its annual growth in commercial-industrial tax revenues to a regional pool. These resources are then redistributed to the participating municipalities based on local capacity. The mechanism helps equalize local available resources, filling local budget gaps where they exist, without undermining local autonomy.

For the vast majority of communities, the sharing program has meant lower taxes and better services. A 2012 study concluded that without the program, nearly 80 percent of the region’s 186 municipalities would have to raise taxes to maintain their current level of services. Revenue sharing has enabled the cities of Minneapolis and St. Paul to invest in higher quality public services like policing and education over the decades since the law was enacted. Many older suburbs bear less of the public burden for repairing old infrastructure, renewing public facilities, cleaning up brownfields, upgrading neighborhood housing, or dealing with abandoned properties. Even many developing bedroom suburbs have benefited from revenue sharing since these places often lack a strong commercial tax base, leading to shortages in infrastructure or education funding.

These results indicate that regional revenue sharing can enable at-risk suburbs like Ferguson to pay for basic services like public safety without relying excessively on fining their small citizenries.

The path to creating revenue sharing programs in our metropolitan areas runs through state legislatures. The Minnesota law was passed in the 1970s with “a unique coalition of central-city and suburban legislators working together to ensure the future economic vitality of the entire state.” The same case should be made today in Missouri to rural, urban, and suburban representatives alike. With better services and lower taxes for the vast majority of municipalities, the political math adds up.

As Orfield and Wallace put it, regions facing growing economic, social, and fiscal disparities have a choice: “allow the disparity to deepen or work to find solutions that can benefit all.” If we are serious about fixing Ferguson and other places like it, states across the country, starting with Missouri, must address the structural governance and fiscal flaws that lie at the heart of the matter. 

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On Thursday, July 7, the International Monetary Fund (IMF) revised its economic outlook for South Africa. Despite “considerable economic and social progress” since 1994, the IMF report cited high income inequality, among other factors, in its projection of slow growth and increased unemployment in the medium term. Earlier this year, in the Brookings Africa Growth Initiative’s Foresight Africa 2016, we explored this pressing problem—high income inequality—across the continent. The initial takeaway was that sub-Saharan Africa has greater in-country income inequality than other developing countries around the world. However, after separating seven outlier economies—Angola, the Central African Republic, Botswana, Zambia, Namibia, Comoros, and South Africa—we noted that income inequality, measured by the Gini coefficient, in the rest of the region actually mirrors the rest of the developing world, which currently stands at 0.39. All seven outlier economies have Gini coefficients above 0.55, a level reached by only four other countries worldwide: Suriname, Haiti, Colombia, and Honduras. 

It is important to explore precisely why this disparity exists. Notably, sub-Saharan Africa is not only an outlier in income inequality, but also in the relationship between economic growth and poverty reduction. Generally, in the developing world, every 1 percent of growth reduces poverty 4 percent. In sub-Saharan Africa, however, every 1 percent of growth only reduces poverty by 3 percent. In Foresight Africa 2016, Brookings Nonresident Senior Fellow Haroon Bhorat suggests that this disparity may be because of the commodity booms that have sustained growth periods in African economies, which bring extraordinary returns to capital but limited job growth. Alternatively, these commodity booms may have accompanied a fall in manufacturing output; growth is thus concentrated in the low-productivity services sector. In any case, this graph forces us to consider exactly what type of structural transformation is necessary for continued economic growth and acknowledge that inequality in sub-Saharan Africa might require different solutions in different countries.

For a more in-depth discussion on this issue, see Foresight Africa 2016 and Bhorat’s discussion of African inequality in relation to the Sustainable Development Goals.

Omid Abrishamchian contributed to this post.

Event Information

The Risk Evaluation and Mitigation Strategies (REMS) program has become an important tool of the U.S. Food and Drug Administration (FDA) in ensuring that the benefits of a given medical product outweigh the associated risks, and has enabled FDA to approve a number of products that might not otherwise have been made available for patient use. Since the implementation of the REMS program, however, concerns have been raised regarding its impact on patient access to products and the associated burden on providers and health care systems. In an effort to address these concerns—and as part of its commitments under the Prescription Drug User Fee Act reauthorization of 2012—FDA has undertaken efforts to standardize and improve the effectiveness of REMS, and to better integrate REMS programs into the health system. As part of this broader initiative, the Agency is currently assessing the feasibility of integrating accredited continuing education (CE) programs and activities into REMS programs that have been developed for a single drug.

Under a cooperative agreement with the FDA, the Center for Health Policy held an expert workshop on May 18, titled “Incorporating Continuing Education into Single-Drug REMS: Exploring the Challenges and Opportunities”. This workshop provided an opportunity for pharmaceutical manufacturers, regulators, CE providers, accreditors, and other stakeholders to explore the ways that CE can be a valuable addition to the REMS toolkit, discuss potential barriers to the development and implementation of REMS-related CE for single products, and identify strategies for addressing those barriers.

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The Risk Evaluation and Mitigation Strategies (REMS) program has become an important tool of the U.S. Food and Drug Administration (FDA) in ensuring that the benefits of a given medical product outweigh the associated risks, and has enabled FDA to approve a number of products that might not otherwise have been made available for patient use. Since the implementation of the REMS program, however, concerns have been raised regarding its impact on patient access to products and the associated burden on providers and health care systems. In an effort to address these concerns—and as part of its commitments under the Prescription Drug User Fee Act reauthorization of 2012—FDA has undertaken efforts to standardize and improve the effectiveness of REMS, and to better integrate REMS programs into the health system. As part of this broader initiative, the Agency is currently assessing the feasibility of integrating accredited continuing education (CE) programs and activities into REMS programs that have been developed for a single drug.

Under a cooperative agreement with the FDA, the Center for Health Policy held an expert workshop on May 18 titled, “Incorporating Continuing Education into Single-Drug REMS: Exploring the Challenges and Opportunities”. This workshop provided an opportunity for pharmaceutical manufacturers, regulators, CE providers, accreditors, and other stakeholders to explore the ways that CE can be a valuable addition to the REMS toolkit, discuss potential barriers to the development and implementation of REMS-related CE for single products, and identify strategies for addressing those barriers.

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Under the Food and Drug Administration Amendments Act (FDAAA) of 2007, the FDA has the authority to require pharmaceutical manufacturers to develop Risk Evaluation and Mitigation Strategies (REMS) for drugs or biologics that carry serious potential or known risks. Since that time, the REMS program has become an important tool in ensuring that riskier drugs are used safely, and it has allowed FDA to facilitate access to a host of drugs that may not otherwise have been approved. However, concerns have arisen regarding the effects of REMS programs on patient access to products, as well as the undue burden that the requirements place on the health care system. In response to these concerns, FDA has initiated reform efforts aimed at improving the standardization, assessment, and integration of REMS within the health care system. As part of this broader initiative, the agency is pursuing four priority projects, one of which focuses on improving provider-patient benefit-risk counseling for drugs that have a REMS attached.

Under a cooperative agreement with FDA, the Center for Health Policy at Brookings held an expert workshop on July 24 titled, “Risk Evaluation and Mitigation Strategies (REMS): Building a Framework for Effective Patient Counseling on Medication Risks and Benefits”. This workshop was the first in a series of convening activities that will seek input from stakeholders across academia, industry, health systems, and patient advocacy groups, among others. Through these activities, Brookings and FDA will further develop and refine an evidence-based framework of best practices and principles that can be used to inform the development and effective use of REMS tools and processes.

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The emerging field of precision medicine continues to offer hope for improving patient outcomes and accelerating the development of innovative and effective therapies that are tailored to the unique characteristics of each patient. To date, however, progress in the development of precision medicines has been limited due to a lack of reliable biomarkers for many diseases. Biomarkers include any defined characteristic—ranging from blood pressure to gene mutations—that can be used to measure normal biological processes, disease processes, or responses to an exposure or intervention. They can be extremely powerful tools for guiding decision-making in both drug development and clinical practice, but developing enough scientific evidence to support their use requires substantial time and resources, and there are many scientific, regulatory, and logistical challenges that impede progress in this area.

On October 27th, 2015, the Center for Health Policy at The Brookings Institution convened an expert workshop that included leaders from government, industry, academia, and patient advocacy groups to identify and discuss strategies for addressing these challenges. Discussion focused on several key areas: the development of a universal language for biomarker development, strategies for increasing clarity on the various pathways for biomarker development and regulatory acceptance, and approaches to improving collaboration and alignment among the various groups involved in biomarker development, including strategies for increasing data standardization and sharing. The workshop generated numerous policy recommendations for a more cohesive national plan of action to advance precision medicine.  

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INTRODUCTION

In August, 2010 the government of Kenya adopted a new constitution. This followed a referendum in which an overwhelming majority of Kenyans voted for change. The decisive impetus for reform came from the widespread violence and political crisis that followed the 2007 election. While claims of electoral fraud provided the immediate catalyst for violence, the deeper causes were to be found in the interaction of a highly centralized ‘winner-take-all’ political system with deep social disparities based in part on group identity (Hanson 2008).

Provisions for equity figure prominently in the new constitution. Backed by a bill of rights that opens the door to legal enforcement, citizenship rights have been strengthened in many areas,including access to basic services. ‘Equitable sharing’ has been introduced as a guiding principle for public spending. National and devolved governments are now constitutionally required to redress social disparities, target disadvantaged areas and provide affirmative action for marginalized groups.

Translating these provisions into tangible outcomes will not be straightforward. Equity is a principle that would be readily endorsed by most policymakers in Kenya and Kenya’s citizens have provided their own endorsement through the referendum. However, there is an ongoing debate over what the commitment to equity means in practice, as well as over the pace and direction of reform. Much of that debate has centered on the constitutional injunction requiring ‘equitable sharing’ in public spending.

On most measures of human development, Kenya registers average outcomes considerably above those for sub-Saharan Africa as a region. Yet the national average masks extreme disparities—and the benefits of increased prosperity have been unequally shared.

There are compelling grounds for a strengthened focus on equity in Kenya. In recent years, the country has maintained a respectable, if less than spectacular, record on economic growth. Social indicators are also on an upward trend. On most measures of human development, Kenya registers average outcomes considerably above those for sub-Saharan Africa as a region. Yet the national average masks extreme disparities—and the benefits of increased prosperity have been unequally shared. Some regions and social groups face levels of deprivation that rank alongside the worst in Africa. Moreover, the deep fault lines running through society are widely perceived as a source of injustice and potential political instability.

High levels of inequality in Kenya raise wider concerns. There has been a tendency in domestic debates to see ‘equitable sharing’ as a guiding principle for social justice, rather than as a condition for accelerated growth and enhanced economic efficiency. Yet international evidence strongly suggests that extreme inequality—especially in opportunities for education— is profoundly damaging for economic growth. It follows that redistributive public spending has the potential to support growth.

The current paper focuses on a group of 12 counties located in Kenya’s Arid and Semi-Arid Lands (ASALs). They are among the most disadvantaged in the country. Most are characterized by high levels of income poverty, chronic food insecurity and acute deprivation across a wide range of social indicators.

Nowhere is the deprivation starker than in education. The ASAL counties account for a disproportionately large share of Kenya’s out-of-school children, pointing to problems in access and school retention. Gender disparities in education are among the widest in the country. Learning outcomes for the small number of children who get through primary school are for the most part abysmal, even by the generally low national average standards.

Unequal public spending patterns have played no small part in creating the disparities that separate the ASAL counties from the rest of Kenya—and ‘equitable sharing’ could play a role in closing the gap. But what would a more equitable approach to public spending look like in practice?

This paper addresses that question. It looks in some detail at education for two reasons. First, good quality education is itself a powerful motor of enhanced equity. It has the potential to equip children and youth with the skills and competencies that they need to break out of cycles of poverty and to participate more fully in national prosperity. If Kenya is to embark on a more equitable pattern of development, there are strong grounds for prioritizing the creation of more equal opportunities in education. Second, the education sector illustrates many of the wider challenges and debates that Kenya’s policymakers will have to address as they seek to translate constitutional provisions into public spending strategies. In particular, it highlights the importance of weighting for indicators that reflect need in designing formulae for budget allocations.

Our broad conclusion is that, while Kenya clearly needs to avoid public spending reforms that jeopardize service delivery in wealthier counties, redistributive measures are justified on the grounds of efficiency and equity.

The paper is organized as follows. Part 1 provides an overview of the approach to equity enshrined in the constitution. While the spirit of the constitution is unequivocal, the letter is open to a vast array of interpretations. We briefly explore the implications of a range of approaches. Our broad conclusion is that, while Kenya clearly needs to avoid public spending reforms that jeopardize service delivery in wealthier counties, redistributive measures are justified on the grounds of efficiency and equity. Although this paper focuses principally on basic services, we caution against approaches that treat equity as a matter of social sector financing to the exclusion of growth-oriented productive investment.

Part 2 provides an analysis of some key indicators on poverty, health and nutrition. Drawing on household expenditure data, the report locates the 12 ASAL counties in the national league table for the incidence and depth of poverty. Data on health outcomes and access to basic services provide another indicator of the state of human development. While there are some marked variations across counties and indicators, most of the 12 counties register levels of deprivation in poverty and basic health far in excess of those found in other areas.

Part 3 shifts the focus to education. Over the past decade, Kenya has made considerable progress in improving access to basic education. Enrollment rates in primary education have increased sharply since the elimination of school fees in 2003. Transition rates to secondary school are also rising. The record on learning achievement is less impressive. While Kenya lacks a comprehensive national learning assessment, survey evidence points to systemic problems in education quality. In both access and learning, children in the ASAL counties—especially female children—are at a considerable disadvantage. After setting out the national picture, the paper explores the distinctive problems facing these counties.

In Part 4 we look beyond Kenya to wider international experience. Many countries have grappled with the challenge of reducing disparities between less-favored and more-favored regions. There are no blueprints on offer. However, there are some useful lessons and guidelines that may be of some relevance to the policy debate in Kenya. The experience of South Africa may be particularly instructive given the weight attached to equity in the post-apartheid constitution.

Part 5 of the paper explores a range of approaches to financial allocations. Converting constitutional principle into operational practice will require the development of formulae-based approaches. From an equitable financing perspective there is no perfect model. Any formula that is adopted will involve trade-offs between different goals. Policymakers have to determine what weight to attach to different dimensions of equity (for example, gender, income, education and health), the time frame for achieving stated policy goals, and whether to frame targets in terms of outcomes or inputs. These questions go beyond devolved financing. The Kenyan constitution is unequivocal in stipulating that the ‘equitable sharing’ provision applies to all public spending. We therefore undertake a series of formula-based exercises illustrating the allocation patterns that would emerge under different formulae, with specific reference to the 12 ASAL focus counties and to education.

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EXECUTIVE SUMMARY

Parents, educators, government ministers and policymakers in all contexts and countries around the world are concerned with learning and how to improve it. There are many reasons for this, but none is more important than the fact that learning is at the heart of success at the individual, community and global levels. Learning First is the title of this report, with the strong implication that learning should be the foremost goal of education policies worldwide.

The present review seeks not only to explain why this is the case but also focuses on what we need to know—that is, what research is needed—in order to improve learning in the decades to come, particularly among those children most in need. This question is addressed in the following six sections.

1. Learning Goals and Research. The first section begins with a historical synopsis of international education goals put forward in 1990 at the World Conference on Education for All in Jomtien (Thailand), in 2000 at the Education for All conference in Dakar, and later in 2000 as a part of the UN Millennium Development Goals for 2015. In 2011, the Center for Universal Education at the Brookings Institution published A Global Compact on Learning: Taking Action on Education in Developing Countries, which stated that there is a “global learning crisis—which affects children and youth who are out of school with limited learning opportunities and those who are in school but not learning the skills they need for their futures.” The present review of learning research in low-income countries follows from that report. The overall purpose is to explore the most pressing learning issues today that require further research attention in the years to come.
    
2. Learning Definitions and Contexts. This section reviews how the field of education has defined learning over the years. Here, learning is defined as a modification of behavior due to experience—such as in knowledge, skills, attitudes and values. Three main principles of effective learning are suggested: individual active involvement, social participation, and meaningful engagement. As a way to emphasize the importance of learning contexts, three individual stories—Illa, a four-year-old Quechua-speaking girl in Peru; Pawan, an eight-year-old primary school student in urban India; and Rachida, a young illiterate woman in rural Morocco—are provided in order to better explain the importance of learning as a culturally specific phenomenon. These stories help to illustrate a more general learning framework, encompassing the relationship between two dimensions of learning—its processes and contexts. A discussion follows concerning the need to disaggregate learners and their learning contexts—between countries and within countries—as a way to overcome frequent and simplistic generalizations about how the “average” child learns.
    
3. Global Change and the Contexts of Learning. This section considers the issue of global change on how learning and learning contexts are being transformed around the world. For example, researchers need to pay more attention to the impact of migration on children’s learning and on educational systems more broadly. In each instance of translocation, children confront the challenges of adapting to a new environment that may include different languages, dialects or cultures within the nonformal learning contexts of daily life. Similarly, in formal education contexts, student migrants have to cope with contrasts in culture, lifestyle and language of schooling, and demonstrate skills and achievement that may vary dramatically with their culture of origin. Other changes due to globalization include increased multilingualism in schools, growing overcrowding in classrooms, inability to keep up with teacher training, changes in intergenerational learning, and the growing importance of 21st-century skills. Based on these observations, it is suggested that learning contexts and needs should be understood as a shifting target.

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WALK SCORE, a new Web site popular with urbanists and environmentalists (walkscore.com), rates places for their walkability—the ease of meeting daily needs on foot.

The popularity of the site is an indicator that how the American Dream plays out on the ground has been fundamentally changing over the last 10 to 15 years.

The Ozzie and Harriet drivable suburban version of the American Dream is being supplemented by the Seinfeld vision of "walkable urbanism." Led by late-marrying young adults and empty-nester baby-boomers, many households are looking for the excitement and options living and working in a walkable urban place can bring. With almost nine of 10 new households over the next 20 years being singles or couples without children, this trend promises to continue.

A recent Brookings Institution survey of the largest 30 metro areas in the country identifies the 157 walkable urban places that play a regionally significant role. It also ranks the Top 30 metros in per capita number of walkable urban places. The Philadelphia metropolitan area ranks as the 13th highest on the number of walkable urban places per capita.

Certainly the many already revived downtowns like those in Denver, Washington, Portland, Seattle and San Diego are the most visible signs of the walkable urban trend. But there are many other places you might not suspect.

This includes the emergence of "downtown-adjacent" places like Chelsea and Union Square in New York, suburban town centers like Pasadena and Long Beach in the L.A. area and even built-from-scratch spots like Reston Town Center near Dulles Airport, 30 miles outside Washington.

A major benefit of walkable urban development is that it keeps and attracts young adults to the metro area, many of whom willingly trade crushing car commutes and high gas prices for lively walkable places to live and work.

Walkable urban places seem to attract the well-educated, the so-called "creative class."

Approximately 26 percent of Americans over 25 have college degree - but 99 percent of the new residents moving to Center City this decade have a college degree.

Walkable urbanism increases the economic development potential of the metro area in the knowledge economy. If many of the Gen X-ers and the Millennial generations do not get this lifestyle, they'll move to New York or Washington, depriving Philadelphia of the entrepreneurs it needs to grow.

Walkable urbanism is also essential to create sustainable places to live and work, reducing greenhouse-gas emissions. It is probable that walkable urban households emit less than half the greenhouse gas as driving suburban households - they walk more and unavoidably share heat with upstairs neighbors.

Center City and Society Hill are the most obvious, though not the only, locations of this trend in the Philadelphia region. The recent emergence of University City around Penn and Drexel, Manayunk and New Hope are other significant walkable urban places in the Delaware Valley.

Missing are additional places in the suburbs, particularly around commuter and subway stations.

Rail transit is crucial for walkable urbanism places to emerge.

The investment has already been made for this comprehensive, if underfunded, rail system. Building high-density, mixed-use places around these stations will fulfill pent-up market demand, promote economic growth, lower greenhouse emissions and even give their suburban neighbors a great place for a restaurant within walking distance.

Over the next few years, Philadelphia metro will no doubt see its ranking in the Brookings survey rise while more households will see their Walk Score numbers soar. Seinfeld is coming to Philadelphia. *

Leinberger is a visiting fellow at the Brookings Institution, professor at the University of Michigan and a limited partner in Arcadia Land Co., which has projects in the Philadelphia and Kansas City areas. His most recent book is "The Option of Urbanism: Investing in a new American dream" (Island Press, 2007).

For over 100 years, the driving force of Ohio’s economy has been the state’s so-called Big Eight cities—Columbus, Cleveland, Cincinnati, Toledo, Akron, Dayton, Canton, and Youngstown. Today, though, the driving reality of these cities is sustained, long-term population loss. The central issue confronting these cities—and the state and surrounding metropolitan area—is not whether these cities will have different physical footprints and more green space than they do now, but how it will happen.

The state must adopt a different way of thinking and a different vision of its cities’ future—and so must the myriad local, civic, philanthropic, and business leaders who will also play a role in reshaping Ohio’s cities. The following seven basic premises should inform any vision for a smaller, stronger future and subsequent strategies for change in these places:

• These cities contain significant assets for future rebuilding
  
• These cities will not regain their peak population
  
• These cities have a surplus of housing
  
• These cities have far more vacant land than can be absorbed by redevelopment
  
• Impoverishment threatens the viability of these cities more than population loss as such
  
• Local resources are severely limited
  
• The fate of cities and their metropolitan areas are inextricably inter-connected
  

These premises have significant implications for the strategies that state and local governments should pursue to address the issues of shrinking cities.

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Paper on Shrinking Cities Across the United States »

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Advances in mobile technology have transformed the global marketplace, especially in emerging economies. How has mobile technology changed economic progress in emerging economies? Who has benefited and why? How can emerging economies further take advantage of the mobile revolution to propel growth? Which challenges and decisions do policymakers currently face?

On December 10, the Center for Technology Innovation hosted an event to discuss mobile technology’s role and potential future in developing economies as part of the ongoing Mobile Economy Project event series. A panel of experts discussed what is needed to ensure that emerging mobile economies continue to grow, and how intellectual property, spectrum policy, and public policies contribute to sector development.

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We tend to think of having a formal identity as an enabler for social and economic inclusion, but in fact identity can have entirely the opposite effect. Once socioeconomic interactions are based on a standardized notion of identity, it is likely that social status based on past achievements, family histories, personal connections, political backing, wealth and education levels will influence socioeconomic outcomes — thereby potentially reinforcing the established class hierarchy. Systems that are based on anonymity might in fact be the most equitable and inclusive, in the sense of ensuring equal participation by all, by systematically stripping out social status.

But anonymous systems carry a high cost in terms of efficiency. Reputations would be impossible to establish, contracts would be hard to enforce, and there would be more insecurity as it would be much harder to track and clamp down on illicit activities. It is therefore not at all certain that the poorer segments of the population would be better off in absolute terms if the economy worked on the basis of anonymity.

The need for digital identities for inclusive access

In fact, giving lower-income people digital identities would make it possible for them to participate in the modern digital economy in many ways: to open accounts and receive moneys from anyone, assert their rights over digital services they have contracted and digital assets they have purchased, settle disputes, etc. But establishing a formally recognized identity can be a major hurdle in itself, especially in countries that do not have digitized national ID schemes.

It is ironic that the difficulty of establishing formal identity in the first place often prevents so many lower-income, and especially rural, people from accessing digital services. Identity systems with selective coverage of the population create a double whammy of inequality: on the one hand, these partial systems help the haves to carry their social and economic status symbols and reputations into every market interaction they are engaged in, and on the other they negate digital visibility and access to digital services for the have not´s.

We argue in a new research paper that it should be the government´s responsibility to ensure that every citizen in fact has a digital identity, not merely to create a platform that enables people to have digital identities. The Indian government´s Aadhar push to provide everyone in India with a unique number ID linked to biometrics is a good example of such a policy.

The demands of identity verification systems

The problem is that different policy agendas converge on the issue of identity and have different requirements for a digital identity platform. What works as an identify standard for financial systems may not be good enough for law enforcement agencies. The risk is that governments adopt the highest standard, with the result that the inclusion agenda and the needs of the poor are ignored.

If there is no centralized government system for identity, then what we need is a system that:

1. Lets the issue of identity be resolved in the first instance within the communities where poor people live, shop and work (e.g. through attestation by known local figures)
2. Draws people into seeking and improving their digital identities over time, much in the way that they develop their social network over time.

This is the notion of social identity. Let people with meager resources help each other overcome their limitations: each may have very little voice, but collectively they represent a potentially vast information system for official identification purposes. That is hard to reconcile with the way governments and formal institutions tend to handle identity verification: in silos, contained within databases and cards. We need more flexible notions of identity, which build layers of identity information and verification through social networks – as well as bureaucratized ID-seeking processes.

Editor’s Note: This post is part of a series on the 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which were launched at a Brookings public event, “Measuring Progress on Financial and Digital Inclusion,” on August 26^th. Previous posts have highlighted five key findings from the 2015 FDIP Report, explored groundbreaking financial inclusion developments in India, and examined the financial inclusion landscape among FDIP countries in Southeast Asia, Central Asia, and the Middle East.

Today’s post highlights the 2015 Scorecard findings for five of FDIP’s nine African countries: Rwanda, Uganda, Tanzania, Zambia, and Malawi. To learn more about the remaining FDIP African countries, read Amy Copley and Amadou Sy’s recent post on Brookings’s “Africa in Focus” blog.

Rwanda: Significant financial inclusion progress over time, but room for expansion remains

• While Rwanda and Uganda were among the bottom four FDIP countries in terms of GDP in current US dollars as of 2013, both countries tied for 4th place on the overall FDIP scorecard, buoyed by their national commitment to and progress toward financial inclusion. For example, Rwanda has a comprehensive action plan for financial inclusion featured in the country’s Financial Sector Development Program (now in its second phase) and, as noted in the 2014 Maya Declaration, set up a working group to monitor the implementation of the program. As part of its commitment to promoting financial inclusion, Rwanda set a numeric target to increase access to formal financial services from 21 percent of the country’s adult population (as benchmarked in the 2008 FinScope survey) to 80 percent by 2017; it has since increased its goal to 90 percent by 2020. The National Bank of Rwanda serves as the country’s Maya Declaration signatory.
• On the mobile side, Rwanda received a higher score than Uganda for the percentage of unique mobile subscribers, achieving a score of “2” (out of 3 possible points), rather than Uganda’s “1.” Rwanda also scored higher than Uganda in terms of 3G mobile network coverage by population, receiving a “3” rather than Uganda’s “2.” Both countries received the highest scores possible for the mobile money deployment and offerings indicators in the scorecard (e.g., existence of bill payment and international remittance options through mobile money). Rwanda was one of the first countries in Africa to support mobile money cross-border remittances, enabling Tigo subscribers to transfer funds to counterparts in Tanzania.
• Rwanda performed strongly on the regulatory environment dimension of the 2015 FDIP Scorecard, ranking third. A 2012 International Finance Corporation (IFC) Mobile Money Scoping report praised Rwanda for its “highly proactive government” that instituted a comprehensive framework for e-payments, driven by its aim to facilitate a cashless financial ecosystem by 2017. Rwanda’s regulatory environment facilitates both mobile operator-led mobile money services and bank-led mobile banking models. As noted in the 2015 FDIP Report, a national ID is widely available, and specific provisions catering for tiered KYC requirements are underway as part of the draft e-payments legislation for non-bank entities.
• On the adoption front, Uganda received higher scores than Rwanda, ranking 6th in contrast to Rwanda (10th). Among the FDIP countries, Rwanda tied for the highest score in terms of the savings at a formal financial institution but did not receive top scores for any of the other 14 adoption indicators. The relatively low levels of formal financial services adoption should not discount the progress that has been made — as of 2014, the World Bank’s Global Financial Inclusion (Global Findex) database found that takeup of formal accounts had increased to about 42 percent of adults  — but in an absolute sense, Rwanda still has room for growth.
• With respect to further opportunities for improvement, the Economist Intelligence Unit (EIU)’s “Global Microscope 2014: The enabling environment for financial inclusion” report noted that some existing consumer protection issues in Rwanda are expected to be addressed in part by a financial consumer protection law expected to be fully implemented by 2016. Advancing platform interoperability could further incentivize adoption of digital financial services: According to the National Bank of Rwanda, interoperability across mobile money transfer services is in process, but not yet complete.

Uganda:Fairly robust mobile money adoption, but improvements regarding consumer protection and usage are key

• As noted above, Uganda tied with Rwanda for 4th place overall on the 2015 FDIP scorecard. A 2014 financial inclusion report by the Bank of Uganda (Uganda’s Maya Declaration signatory) noted on page iv that in 2011, the Bank of Uganda “adopted a new strategy for financial inclusion based on four pillars: financial literacy, financial consumer protection, financial innovations, and financial services data and measurement.” Like Rwanda, FinScope surveys have been carried out fairly regularly in Uganda, most recently in 2013. These financial services surveys help to identify areas of strength and room for improvement in terms of access to and usage of formal financial services among different demographics.
• On the mobile side, Uganda’s mobile capacity — specifically, its percentage of unique mobile subscribers and 3G mobile network coverage by population — could be improved. Regarding the latter indicator, Uganda’s score was among the bottom five FDIP countries (along with Tanzania, Malawi, and Zambia, also featured in this post). Still, Uganda’s mobile money adoption rates are quite robust: Uganda received a score of “2” for all mobile money account-related indicators under the adoption dimension, with the exception of the percentage of adults who pay bills regularly through a mobile phone, which achieved the top score of “3.”
• On the regulatory side, mobile money guidelines were developed in 2013 to provide some clarity to the industry. However, since these guidelines are not binding in the way that more formal regulations are, developing formal regulations could help ensure greater customer protection and clarity within the market. Uganda does not have a payments law to enable the Bank of Uganda to issues licenses to electronic money institutions, and only banks and other institutions regulated under the Financial Institutions Act can provide retail payment services. As noted in the 2015 FDIP Report, amendments to the Financial Institutions Act and the Micro-Finance and Deposit-Taking Institutions Act, along with new draft agency banking guidelines, are underway to facilitate agent banking.
• In terms of availability and adoption of financial services, a Helix Institute report published in 2014 noted that the products and services offered by agents in Uganda were somewhat limited. Expanding the services offered — such as credit, savings, and insurance — could provide individuals with more opportunities to increase their wealth. These services must be offered with careful regard to consumer protection. Uganda achieved 6th place on the adoption dimension of the scorecard, boosted by its above-average takeup of mobile money compared to other FDIP countries.
• In terms of next steps, moving away from a reliance on basic deposit and withdrawals conducted “over-the-counter” to encourage a greater diversity of offerings and services could strengthen the utility of mobile money for customers. However, providers will also have to build trust in digital financial services, particularly in light of ongoing issues with service down-time and recent fraud scandals such as the recent case against several former employees of MTN charged with defrauding the compnay of over $3 million.

Tanzania: Significant strides in regulatory environment and mobile money adoption, with further growth likely to follow

• Tanzania ranked 12th overall on the FDIP scorecard. As noted in the 2015 Report, Tanzania has demonstrated strong leadership in terms of its national-level commitment to promoting financial inclusion, which has contributed to its enabling regulatory environment for digital financial services. For example, Tanzania launched a National Financial Inclusion Framework in 2013, which contains a quantified target of 50 percent financial inclusion by 2016. These factors will likely drive greater financial inclusion in the future by facilitating the development and adoption of innovative, appropriate, and accessible products for previously underserved communities. However, quantitative data available as of 2015 regarding Tanzania’s overall mobile capacity and adoption of formal financial services indicate that room for growth remains.
• In terms of mobile capacity, Tanzania’s mobile money providers have been noted for offering an array of innovative products, including mobile operator Tigo’s interest-bearing mobile money service. Tanzania’s recent (and quite rare) implementation of interoperable mobile money platforms was also highlighted in the 2015 Report and Scorecard. However, as measured by 2015 GSMA Intelligence data, Tanzania’s score for the percentage of 3G network coverage by population was among the lowest of the FDIP countries, and its rate of unique subscribership was below the FDIP average.
• Tanzania’s regulatory environment has been lauded for enabling a diverse array of entities to offer competitive formal financial services. As noted in the 2015 FDIP Report, the Bank of Tanzania Act was amended in 2006 to permit non-bank entities to offer payment services, and the 2007 Electronic Payment Schemes Guidelines were used to enable mobile network operators to offer payment services. In 2013, agent banking guidelines were issued, and in March 2015, the National Payment Systems Act was passed by Tanzania’s parliament. These various regulations have provided the space and clarity for a variety of providers to enter the digital financial services market.
• On the adoption front, Tanzania has undoubtedly made great strides in terms of advancing mobile money adoption, even outnumbering the total number of mobile money transactions made in Kenya (according to figures noted by the Consultative Group to Assist the Poor in March 2015). However, in terms of the percentage of adults with a mobile money account, there was a difference of over 25 percentage points between Kenya and Tanzania as of 2014, according to the 2014 Global Findex.
  Out of 3 possible points achievable per indicator on the adoption dimension, Tanzania received 2 points for the adoption of mobile money accounts among adults, rural individuals, women, and adults making utility bill payments. However, Tanzania received a score of “1” for the other 11 adoption indicators. As a point of reference, Kenya received a full 3 points for each of the mobile account-related indicators on the adoption dimension, and it tied or exceeded Tanzania’s scores for the other adoption indicators.
• Moving forward, we fully anticipate that Tanzania’s increasingly competitive and robust mobile money environment, combined with strong coordination and financial inclusion leadership among the public and private sectors, will drive greater adoption of formal financial services.

Zambia: Commitment to increasing equity in access to financial services, but usage of available services is limited

• Zambia was ranked 14th overall on the 2015 FDIP Scorecard. As with three of the other countries featured in this post — Rwanda, Tanzania, and Uganda — Zambia achieved a score of 100 percent for country commitment. The Bank of Zambia serves at the country’s Maya Declaration signatory and houses the secretariat for Zambia’s Financial Sector Development Plan. As one of the Bank of Zambia’s Maya Declaration commitments, the country set a goal of ensuring access to financial services for at least half of its adult population by the end of 2016. As of 2014, the “gender gap” in terms of account ownership between men and women was about 5 percentage points in Zambia, according to the Global Findex, making Zambia among the five FDIP countries with the smallest disparity in terms of access to finance by gender. Still, account ownership among women was only about 33 percent in 2014; Zambia’s first lady, Esther Lungu, has emphasized the importance of promoting financial inclusion among women.
• In terms of mobile capacity, Zambia received a score of “2” for both the percentage of unique mobile subscribers and percentage of 3G mobile network coverage by population, as measured by the 2015 GSMA Intelligence database. Zambia received top scores for the other mobile capacity indicators, which focused on the number of mobile money deployments and the type of offerings. However, while about 62 percent of adults owned a mobile phone in Zambia as of 2014, according to a 2014 country brief, only about 5 percent of adults used their mobile phone to pay bills or send or receive money — about 11 percentage points below the average for countries in Sub-Saharan Africa.
• Regarding the country’s regulatory environment, Zambia finalized a draft framework on branchless banking in 2013 and has adopted a tiered approach to KYC requirements for e-money wallets. As noted in the 2015 FDIP Report, draft e-money directives are also undergoing review and are expected to include provisions regarding interoperability. Zambia began working toward a new financial inclusion strategy in advance of expiration of the Financial Sector Development Plan in June 2015, which may inform the direction of future regulatory initiatives.
• Challenges to the formal financial services sector in Zambia include high interest rates, fees, and other costs associated with banking. Further, a 2011 report noted that low literacy rates and high poverty levels have posed challenges to takeup of formal financial services. Efforts to expand access to financial services beyond brick-and-mortar banks have been quite successful, as demonstrated by the greater density (in terms of points of service) of mobile money agents than traditional banks in Zambia as of 2013. As of 2014, mobile money agents accounted for about 45 percent of all financial access points in the country.
• In the near future, Zambia is expected to finalize and issue draft e-money directives and approve draft branchless banking regulations. Increasing usage of more extensive financial services could help individuals reap the full benefits of mobile money — as noted in the FinScope 2015 findings, mobile money customers primarily use the service to send and receive money, purchase airtime, or pay bills.

Malawi: Limited infrastructure constrains adoption, but forthcoming regulations may enhance digital financial ecosystem

• Malawi ranked 19th overall on the 2015 FDIP Scorecard. Among the 21 FDIP countries, Malawi has the lowest GDP in current US dollars, according to the 2013 World Development Indicators database. Despite economic and infrastructural barriers, Malawi has engaged in a variety of efforts to promote digital financial services such as mobile money, including through its participation in the Alliance for Financial Inclusion and the creation of its Mobile Money Coordination Group.
• Regarding the mobile capacity dimension of the 2015 Scorecard, Malawi received the highest number of possible points for its deployment offerings. However, Malawi had the second-lowest rate of unique mobile subscribership among the 21 FDIP countries and the lowest score for the extent of 3G mobile network coverage by population, as measured by data provided in the 2015 GSMA Intelligence database. Expanding mobile networks and facilitating mobile subscribership could boost Malawi’s mobile money environment by increasing access to and incentivizing use of mobile services.
• In terms of Malawi’s regulatory environment, the 2011 Mobile Payment System Guidelines were developed to permit mobile network operators to provide mobile money services. Interoperability has been identified as an objective in these Mobile Guidelines, and the recently launched National Switch may facilitate interoperability. Draft e-money regulations developed by the Reserve Bank of Malawi (the country’s Maya Declaration signatory) are expected to be officially recognized by the Ministry of Finance in 2015; these regulations are anticipated to replace the Mobile Guidelines. As noted in the 2015 FDIP Report, a Payment Systems Bill was finalized in February 2015 and expected to be enacted in December 2015. This bill is expected to help provide greater clarity regarding oversight arrangements for payment services.
• Malawi received a score of “1” for each of the adoption indicators, which placed it among the three lowest-scoring countries for the adoption dimension of the 2015 Scorecard. Financial infrastructure in Malawi is very limited, which constrains adoption of formal financial services. For example, the 2014 International Monetary Fund Financial Access Survey found that there were only about 3 commercial bank branches per 1,000 km2 and per 100,000 adults in Malawi.
• Moving forward, the new regulations described above may even the playing field between banks and non-banks, both in terms of e-money and agent banking, and will permit tiered KYC for e-money service providers. Increasing competition among providers could enhance the diversity of available financial services offerings, which may in turn drive adoption.

Editor’s Note: This post is part of a series on the 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which were launched at a Brookings public event in August. Previous posts have highlighted five key findings from the 2015 FDIP Report, explored financial inclusion developments in India, and examined the rankings for selected FDIP countries in Southeast and Central Asia, the Middle East, and Africa.

The 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard were launched in August of this year and generally reflect data current through May 2015. Since the end of the data collection period for the report, countries have continued to push forward to greater financial inclusion, and international organizations have continued to assert the importance of financial inclusion as a mechanism for promoting individual well-being and macroeconomic development. Financial inclusion is a key component of the United Nations’ Sustainable Development Goals, signaling international commitment to advancing access to and use of quality financial products among the underserved.

We discussed one recent groundbreaking financial inclusion development in a previous post. To learn more about the approval of payments banks in India, read “Inclusion in India: Unpacking the 2015 FDIP Report and Scorecard.”

Below are four other key developments among our 21-country sample since the end of the data collection period for the 2015 FDIP Report and Scorecard. The list is in no way intended to be exhaustive, but rather to provide a snapshot illustrating how rapidly the financial inclusion landscape is evolving globally.   

1) The Philippines launched a national financial inclusion strategy.

In July 2015, the Philippines launched a national financial inclusion strategy (NFIS) and committed to drafting an Action Plan on Financial Inclusion. The Philippines’ NFIS identifies four areas central to promoting financial inclusion: “policy and regulation, financial education and consumer protection, advocacy programs, and data and measurement.”

 As discussed in the 2015 FDIP Report, national financial inclusion strategies often serve as a platform for identifying key priorities, clarifying the roles of key stakeholders, and setting measurable targets. These strategies can foster accountability and incentivize implementation of stated initiatives. While correlation does not necessarily equal causation, it is nonetheless interesting to note that, according to the World Bank, “[o]n average, there is a 10% increase in the percentage of adults with an account at a formal financial institution for countries  that launched an NFIS after 2007, whereas the increase is only 5% for those countries that have not launched an NFIS.”

2) Peru adopted a national financial inclusion strategy.

With support from the World Bank, Peru’s Multisectoral Financial Inclusion Commission established an NFIS that was adopted in July 2015 through a Supreme Decree issued by President Ollanta Humala Tasso. The strategy contains a goal to increase financial inclusion to 50 percent of adults by 2018. This is quite an ambitious target: As of 2014, the World Bank Global Financial Inclusion (Global Findex) database found that only 29 percent of adults in Peru had an account with a formal financial services provider. The NFIS also commits the country to facilitating access to a transaction account among at least 75 percent of adults by 2021.

Peru’s NFIS emphasizes the promotion of electronic payment systems, including electronic money, as well as improvements pertaining to consumer protection and education. Advancing access to both digital and traditional financial services should boost Peru’s adoption levels over time. As noted in the 2015 FDIP Report, while Peru’s national-level commitment to financial inclusion and regulatory environment for financial services are strong, adoption levels remain low (Peru ranked 15^th on the adoption dimension of the 2015 Scorecard, the lowest ranking among the Latin American countries in our sample).

3) Colombia updated its quantifiable targets and released a financial inclusion survey.

The 2015 Maya Declaration Progress Report, published in late August 2015, highlights a number of quantifiable financial inclusion targets set by the Ministerio de Hacienda y Crédito Público de Colombia (Colombia’s primary Maya Declaration signatory) relating to the percentage of adults with financial products and savings accounts. For example, the target for the percentage of adults with a financial product is now 76 percent by 2016, up from a target of 73.7 percent by 2015. The goal for the percentage of adults with an active savings account in 2016 is now 56.6 percent, up from a target of 54.2 percent by 2015. To learn more about concrete financial inclusion targets among other FDIP countries, read the 2015 Maya Declaration Progress Report.

In July, Banca de las Oportunidades, a key financial inclusion stakeholder in Colombia, presented the results of the country’s first demand-side survey specifically related to financial inclusion. As noted by the Economist Intelligence Unit, previous national-level surveys conducted by entities such as the Superintendencia Financiera and Asobancaria have identified supply- and demand-side indicators pertaining to various financial services. As discussed in the 2015 FDIP Report, national-level surveys that focus on access to and usage of financial services can help identify areas of greatest need and enable countries to better leverage their resources to promote adoption of quality financial services among marginalized populations.

4) Nigeria’s “super agent” network enables greater access to digital financial services.

In September 2015, telecommunications company Globacom launched a “super agent” network, Glo Xchange, which can access the mobile money services of any partner mobile money operator. The network has been launched in partnership with four banks. Globacom was given approval in 2014 to develop this network; since then, the company has been recruiting and training its agents. About 1,000 agents will initially be part of this system, with a goal to recruit 10,000 agents by September 2016. Expanding access points to financial services by building agent networks is hoped to boost adoption of digital financial services.

Despite having multiple mobile money operators (19 as of October 2015, according to the GSMA’s Mobile Money Deployment Tracker), Nigeria’s mobile money adoption levels have not reached the degree of success of some other countries in Africa: The Global Findex noted that less than 3 percent of adults in Nigeria had mobile money accounts in 2014, compared with over 30 percent in Tanzania and about 60 percent in Kenya. Nigeria’s primarily bank-led approach to financial services, which excludes mobile network operators from being licensed as mobile money operators, is one factor that may have constrained adoption of mobile money services to date. You can read more about Nigeria’s regulatory environment and financial services landscape in the 2015 FDIP Report.

We welcome your feedback regarding recent financial inclusion developments. Please send any links, questions, or comments to FDIPComments@brookings.edu.

Editor’s Note: This post is part of a series on the 2015 Brookings Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which were launched at a Brookings public event in August. Previous posts have highlighted regional findings from Southeast and Central Asia, the Middle East, and Africa, as well as selected financial inclusion milestones from FDIP countries. This post focuses on key financial inclusion achievements and challenges regarding the five Latin American FDIP countries: Brazil, Chile, Colombia, Mexico, and Peru.

Financial inclusion growth and opportunities in Latin America

With its well-developed banking infrastructure and growing mobile ecosystem, Latin America presents a unique set of opportunities and obstacles with respect to promoting greater financial inclusion. From 2011 to 2014, there was a 12 percentage point increase in the number of adults in Latin America and the Caribbean with formal financial accounts, according to the World Bank’s Global Financial Inclusion (Global Findex) database. As noted in the 2015 GSMA report “Mobile financial services in Latin America & the Caribbean,” in 2014 Latin America and the Caribbean saw the fastest growth of any region in terms of new registered mobile money accounts.

Moreover, these accounts are often used for more advanced transactions that go beyond simple transfers: As stated in a 2015 post published by the GSMA, “ecosystem transactions (transactions that involve third parties, e.g. bill payment, merchant payment or bulk payment) already make up 27% of transaction volumes in Latin America & the Caribbean.” In contrast, only 6 percent of transaction volumes over the same period were considered ecosystem transactions in East Africa, where mobile money has been most widely adopted and used.

Moving forward, facilitating greater adoption of a suite of digital financial services (e.g., savings) will be a vital component of promoting sustainable financial inclusion in the region. Recent regulatory changes in several Latin American countries designed to promote a greater diversity of service providers should propel financial inclusion growth, although a need for regulatory clarity persists in some places. Financial inclusion strengths and challenges germane to our five Latin American FDIP countries are explored below.

Brazil: Branchless banking leadership combined with dynamic mobile market

Brazil achieved the highest ranking of any Latin American country on the Brookings 2015 FDIP Scorecard, ranking 3^rd overall with a score of 78 percent. Brazil’s economy is the largest in Latin America, with a GDP (in current US dollars) of about $2.3 trillion as of 2014; for comparison, Mexico, the Latin American country with the second largest economy, had a GDP of about $1.3 trillion within that same period.

Brazil received strong country commitment and mobile capacity scores (89 and 83 percent, respectively) in the 2015 FDIP Scorecard and earned the highest regulatory environment score among the Latin American FDIP countries, which also included Chile, Colombia, Mexico, and Peru. As noted in the 2015 FDIP Report, Brazil launched a National Partnership for Financial Inclusion in November 2011, which has supported the development of a number of enabling financial inclusion initiatives. In 2013, Law 12865 and associated regulations permitted non-banks to issue e-money as payments institutions. Brazil boasted the largest mobile market in Latin America as of 2014, with a unique subscribership rate of about 57 percent in 2015 (a lower unique subscribership rate than Chile’s by about 7 percentage points, but otherwise higher than that of any of the other Latin American FDIP countries).

Brazil received 4^th place on the 2015 FDIP Scorecard for adoption of selected traditional and digital financial services. As with many other countries in Latin America, branchless banking (i.e., access to formal financial services beyond a traditional brick-and-mortar bank) through “agents” is popular in Brazil — as of 2014, Brazilian banks’ agent networks had a presence in all of the country’s approximately 6,000 municipalities, contributing to formal account growth. Chile was the only Latin American country that received a higher ranking for the adoption dimension, placing 2^nd. In terms of account usage, government-to-person payments comprise a significant source of activity for formal accounts: The 2014 Global Findex report noted that among recipients of government payments in Brazil, 88 percent received their transfers directly into an account.

Yet according to the Global Findex, about 32 percent of Brazilian adults age 15 and older still do not have accounts with a formal financial institution or mobile money provider. As with the other Latin American countries in the FDIP sample, mobile money adoption in Brazil has remained low: Brazil received the lowest score (one out of three possible points) for all six mobile money indicators included in the 2015 FDIP Scorecard. However, given that as of 2014 Brazil had the fifth-largest global smartphone market in the world in terms of subscribers, a combination of growing smartphone penetration and an increasingly enabling regulatory environment should drive greater adoption of digital financial services in the future.

Chile: Opportunities for enhanced e-money regulatory clarity

Chile tied with Colombia and Turkey for 6^th place on the overall 2015 FDIP Scorecard. Chile’s financial inclusion environment is characterized by a firm national commitment to financial inclusion (earning a country commitment score of 89 percent) but a less developed mobile money environment than the other Latin American FDIP countries. While Chile’s unique mobile subscribership rate and 3G network coverage rate by population are higher than and on par with other countries in the region, respectively, Chile’s mobile money offerings are limited. The lack of a robust mobile money market contributed to Chile’s mobile capacity score of 72 percent, the lowest score among the FDIP Latin American countries.

Chile’s regulatory environment score (67 percent) was also the lowest of the Latin American FDIP countries, primarily due to a lack of regulatory clarity surrounding digital financial services. Developing or clarifying regulations pertaining to electronic money in particular could potentially drive more engagement with the sector and advance the diversity of mobile money providers and offerings. Further, supporting the interoperability of digital and traditional financial services could enhance the utility of these products for customers.

Given that 37 percent of adults in Chile did not have an account with a formal financial provider as of 2014, there is also room for growth in terms of expanding financial inclusion. However, it should be noted that Chile earned the highest adoption ranking of any Latin American country featured in the 2015 FDIP Scorecard. While Chile’s adoption levels with respect to mobile money services were limited, adoption rates of other formal financial services were among the highest of the FDIP countries. Chile received three out of three possible points for all but one indicator (savings at a formal financial institution) related to traditional financial services. Chile’s performance on the adoption dimension of the scorecard contributed to its 6^th place ranking overall.

While Chile’s mobile money adoption rates are low, use of other digital financial services is increasingly popular. For example, as noted in the “2015 Maya Declaration Progress Report,” since 2012 the number of CuentaRUT accounts (accounts that feature debit cards associated with a savings account provided by Chile’s BancoEstado) has increased by about 47 percent. As of 2014, there were over 7 million active CuentaRUT cards in Chile.

Colombia: Regulatory advancements coupled with sustained country commitment

As noted above, Colombia tied with Chile for 6^th place on the overall 2015 FDIP Scorecard. Colombia has demonstrated strong commitment to financial inclusion, including through involvement in multinational organizations such as the Alliance for Financial Inclusion (AFI). An example of Colombia’s national-level financial inclusion commitment is the 2006 establishment of Banca de las Oportunidades, an entity charged with fostering regulatory reforms conducive to financial inclusion. Another key player in the financial inclusion space is the Intersectoral Economic and Financial Education Committee, created in February 2014 under Decree 457.

In terms of the country’s regulatory environment, Law 1735 of 2014 permitted new institutions, called Sociedades Especializadas en Depósitos y Pagos Electrónicos, to offer mobile financial services. As part of the law, proportionate “know-your-customer” (KYC) requirements were also instituted for under-resourced customers in order to facilitate greater access to financial services among low-risk populations. In July 2015, Decree 1491 implemented Colombia’s financial inclusion law and highlighted the regulatory regime for the mobile money market. Colombia’s regulatory environment earned a score of 89 percent, ranking it 2^nd among the Latin American FDIP countries in this dimension.

On the supply side, banking correspondents (also known as agents) have been utilized to extend financial access to underserved populations.  As of 2015, all of Colombia’s 1,102 municipalities had at least one financial access point, defined as bank branches, banking correspondents, and ATMs. Another innovative approach to branchless banking in Colombia is bank Davivienda’s initiative to use DaviPlata mobile wallet accounts to distribute government transfers to more than 900,000 recipients of welfare program “Familias en Accion.”

With respect to demand side figures, Colombia tied with Mexico for 7^th place on the adoption dimension. As of 2014, about 38 percent of adults in Colombia had an account with a formal financial institution, and about 2 percent of adults were mobile money account holders. In terms of advancing future mobile money use, Colombia received the highest score of the Latin American countries on the mobile capacity dimension; thus, Colombia is well-positioned to advance access to and use of mobile money services in the future. Promoting usage of appropriate, quality financial services is critical, as dormancy rates have been identified as an obstacle to financial inclusion; about half of accounts in Colombia (including savings accounts, simplified accounts, and electronic deposits) were identified as dormant in 2014.

Mexico: Recent reforms may enhance competition and drive digital takeup

Mexico ranked 9^th on the overall 2015 FDIP Scorecard, with adoption of traditional and digital financial services as its highest-ranked dimension. Among the Latin American FDIP countries, Mexico features the greatest parity in terms of formal financial account ownership rates among men and women, at about 39 percent each.  In terms of national-level commitment to financial inclusion, Mexico tied with Peru for the highest ranking among the Latin American countries. AFI’s Maya Declaration was signed at the 2011 Global Policy Forum held in Riviera Maya, Mexico, signaling Mexico’s public commitment to financial inclusion.

With respect to mobile capacity, as of the first quarter of 2015 Mexico’s unique subscribership rates were the lowest of the Latin American countries. Mexico tied with Chile and Brazil for 3G network coverage by population. In terms of mobile money, Mexico’s market is still developing; several providers were available as of May 2015, but the extent of offerings was somewhat limited. As noted in the GSMA’s “Mobile Economy: Latin America 2014” report, new telecommunications reforms recently passed in Mexico are expected to affect the mobile market and potentially increase competition among the telecommunications sector. This increased competition could in turn drive the development of a greater array of innovative, affordable mobile money products.

Regarding Mexico’s regulatory environment, the country has been lauded for its risk-based KYC requirements that enable underserved individuals to access low-value accounts without fulfilling the full array of traditional identification processes, which can sometimes be burdensome for under-resourced groups. Under Mexico’s four-tiered KYC system (introduced in 2011), “level one” (very low-risk) accounts feature monthly deposit limits and a maximum balance limit of about 400 dollars; accounts can be opened at a bank branch, banking agent, over the internet, or by telephone. Higher-tier accounts have more stringent KYC requirements. A 2015 AFI article noted that Mexico's banking and securities regulator, the Comisión Nacional Bancaria y de Valores, indicated about 7.5 million new accounts were opened between August 2011 and September 2012, including over 4 million “level one” accounts.

Mexico tied with Colombia for 7^th place on the adoption dimension of the 2015 FDIP Scorecard. About 39 percent of adults in Mexico held accounts with a formal financial institution as of 2014, while about 3 percent of adults held mobile money accounts. As with other countries in Latin America, debit card and credit card use were much higher than mobile money use as of 2014, although usage of both kinds of cards was lower in Mexico than in several other Latin American FDIP countries such as Brazil and Chile. Initiatives such as the Saldazo debit card, which enables customers to use a debit card associated with a savings account and does not require a minimum balance, have helped drive adoption of digital financial services in Mexico.

Peru: Enabling regulatory environment, but constrained adoption of financial services

Peru presents perhaps one of the most interesting paradoxes among the FDIP countries. While Peru’s regulatory environment has been consistently recognized as among the best in the world for enabling financial inclusion, adoption of formal financial services remains quite low. Peru received 17^th place overall on the 2015 FDIP Scorecard, which can primarily be attributed to its low adoption score: Peru received a 15^th place ranking on the adoption dimension, the lowest score among the Latin American FDIP countries. However, we anticipate that recent regulatory changes in Peru, coupled with increasing smartphone penetration rates (Peru’s 2014 adoption rates were about 12 percentage points below the Latin American average), will facilitate adoption of digital financial services and drive greater financial inclusion in the future.

With respect to the supply side aspect of financial inclusion, as of 2014 about 92 percent of Peru’s population lived in a district with access to financial services, according to the Superintendencia de Banca, Seguros y AFP (SBS) del Peru. Nonetheless, demand side figures lag behind: The Global Findex found that only about 29 percent of adults had an account with a formal financial provider as of 2014. Peru received a “1” for two-thirds of the non-mobile money indicators on the adoption dimension of the 2015 FDIP Scorecard, and mobile money adoption was negligible. Moreover, as of 2014 there was a 14 percentage point disparity in financial account ownership between men and women, the highest financial inclusion “gender gap” among the Latin American FDIP countries.

However, given Peru’s strong national commitment to financial inclusion (reflected in Peru’s country commitment score of 94 percent) and legislative initiatives designed to promote an enabling regulatory environment, we fully anticipate that financial inclusion growth will accelerate in the future. For example, Peru recently finalized its national financial inclusion strategy, as discussed in our earlier post. Moreover, Peru has adopted laws and regulations that permit a greater diversity of players to enter the financial services market. Law 2998 of January 2013 allowed both banks and non-banks to issue e-money, and October 2013 regulations issued by the SBS enabled e-money issuers to follow a simplified account opening process. These initiatives should facilitate greater access to and usage of formal financial accounts in the future.

In terms of electronic payments specifically, diversifying the mobile money market and increasing unique subscribership could help facilitate greater adoption of mobile money services. Demand side factors, such as ensuring that services are a good fit for customers, are also critical — as evidenced by the fact that Mexico, which had comparable smartphone adoption rates to Peru and lower unique subscribership rates as of 2014, features significantly higher rates of mobile money adoption across all demographics than Peru. Peru is making a concerted effort to develop innovative electronic platforms — for example, the Peruvian Association of Banks (ASBANC) is working on the creation of an electronic money platform accessible by both financial institutions and telecommunications companies. Implementation of this interoperable platform is expected to promote further adoption of digital financial services.

Businesses, citizens, and law enforcement officials are discovering innovative new uses for drones every day. Drones have a distinctively menacing reputation because TV footage typically depicts them flying over a faraway battlefield launching missiles. In the popular imagination, drones have replaced the black helicopters of the 1990s and the satellite images of the 2000s as the primary surveillance tool. For this reason many perceive the drone as a threat to civil rights and safety in the United States. Privacy advocates have called upon lawmakers to pass legislation that keeps drones out of American skies. Others see a potentially beneficial role from drones if effective regulations are developed. In a recent paper titled Drones and Aerial Surveillance: Considerations For Legislators, Gregory McNeal proposes a model for how Congress should regulate drones.

Editor's Note: This piece originally appeared in Foreign Policy.

The killing of Nasir al-Wuhayshi, reportedly via U.S. drone strike, is not just another notch in the belt of America’s long campaign against al-Qaida and its allies. Wuhayshi was one of al-Qaida’s top remaining leaders, and he is the highest-level death the organization has suffered since Osama bin Laden was killed in 2011. Wuhayshi headed al-Qaida’s most active affiliate, the Yemen-based al-Qaida in the Arabian Peninsula (AQAP), and was the designated successor of al-Qaida leader Ayman al-Zawahiri. His killing adds one more element of uncertainty to the turbulence in Yemen and may set AQAP on a new path. Which path, however, remains an open question.

Wuhayshi helped transform AQAP from a fractious organization on the edge of defeat to one that menaces both Yemen and the United States. A decade ago, Yemen’s jihadi movement seemed near defeat. In the aftermath of 9/11, the Yemeni government rounded up jihadis and imprisoned Wuhayshi, and it was Saudi Arabia, not Yemen, that was the focus of jihadis in the Arabian Peninsula. In 2003, al-Qaida sponsored the original AQAP’s uprising against the Saudi government. Several years later, most of AQAP’s Saudi members were dead or in jail, and its remnants had fled to Yemen. There, they mixed with Yemeni jihadis, including important figures like Wuhayshi, who had escaped from Yemen’s jails in 2006. In 2009, two regional Islamist groups merged and formally anointed themselves AQAP, basing their operations in Yemen and trying to unseat the government. As Osama bin Laden’s former secretary, Wuhayshi became the group’s leader and embraced al-Qaida’s emphasis on attacking Western targets.

The group made fitful progress, at times taking territory but often losing it quickly after alienating locals and proving vulnerable to government counterattacks. But when the government of Yemeni President Ali Abdullah Saleh fell in 2012 during the Arab Spring, AQAP tried to step into the void. Saleh’s successor, Abed Rabbo Mansour Hadi, pursued AQAP vigorously, but his weak government was unable to score any lasting successes.

In addition to its prowess in Yemen, AQAP has long been al-Qaida’s most active affiliate when it comes to taking on the West. The organization was behind the 2009 Christmas Day attempt to down a U.S. airliner over Detroit, a near-miss only foiled by the bomber’s incompetence and the quick thinking of the plane’s passengers. AQAP tried again in 2010, this time attempting to down U.S. cargo planes. The organization also attacked Western targets in Yemen, and puts out Inspire, a stylish English-language online publication that is one of al-Qaida’s more effective attempts to influence Western jihadis.

These AQAP efforts to attack the United States and the West, in general, led to a greater U.S. focus on Yemen and more drone attacks there. In 2011, the United States killed Anwar al-Awlaki, a U.S. citizen and AQAP member who helped lead the terrorist group’s campaign against targets in the United States and Europe. Awlaki has continued to inspire terrorists after his death, with Boston Marathon plotters downloading his sermons before their attack. Awlaki also inspired the Fort Hood shooter in 2009 and the attacks on the Charlie Hebdo office in 2015.

Wuhayshi’s death, however, comes as Yemen is falling apart. Earlier this year, Hadi’s government fell to the Houthi rebels, Yemeni Shiites who oppose both Yemen’s traditional order and the Sunni fanatics of AQAP who see Shiites as apostates. Alarmed by Houthi ties to Iran, Saudi Arabia has led an intervention in Yemen on Hadi’s behalf, bombing the Houthis and trying to reverse their gains. AQAP seems to be flourishing amid the chaos, as its enemies turn on one another.

But with Wuhayshi’s death, AQAP may find it difficult to further exploit the Yemeni civil war. Personal connections, reputation, and charisma play a bigger role in leadership in the jihadi cause than do formal rank, and it is not clear if Qasim al-Raimi, the designated new leader, can retain the support of the AQAP rank and file. There is always a chance, of course, that Raimi proves an even more effective leader than Wuhayshi, and some observers see him as “more dangerous and aggressive.” (Lest we forget: In 1992, the Israelis killed Hezbollah’s Secretary-General Abbas al-Musawi, one of the group’s most competent leaders. Musawi was replaced by Hassan Nasrallah, who has proven one of the most effective terrorist and guerrilla leaders in modern times.)

The bad news is that Raimi and AQAP may seek revenge, both out of genuine anger and to score points within the jihadi community. Al-Qaida’s chief bomb-maker, Ibrahim al-Asiri, may still be out there and has likely passed his sophisticated techniques on to others in Yemen.

The bad news is that Raimi and AQAP may seek revenge, both out of genuine anger and to score points within the jihadi community.

Over time, however, Wuhayshi’s death may push AQAP to focus even more on Yemen and less on the West. His close, personal ties to the al-Qaidacore may have been part of why AQAP was a steadfast ally of Zawahiri in his power struggle with the Islamic State. The opportunities and risks in the civil war are both tempting and frightening for AQAP. On the one hand, by taking up arms against the hated Shiites, AQAP can position itself as the defender of Yemen’s Sunnis, a strategy that has worked well for the Islamic State in Iraq and Syria. AQAP might gain more recruits and local support, while drawing foreign fighters and money from Sunnis eager to find yet another Shiite-Iran axis to oppose. Not surprisingly, AQAP has stepped up its operations against the Houthis in recent months.

AQAP also has an opportunity to govern. And the bad news for the West is that it has learned from its own many mistakes on this front. In the past when AQAP made gains, it tried to impose a strict version of Islamic law that alienated local communities. Now when its fighters seize territory, theywork with local tribal figures and other elites, avoiding the most controversial measures and trying to portray themselves as guardians, not overlords.

Wuhayshi’s death also comes at a time when the broader jihadi movement is split between backers of al-Qaida and supporters of the Islamic State, a struggle in which AQAP has long played an important role. As al-Qaida’s most active anti-Western affiliate, AQAP was important to Zawahiri’s claim that he was leading the struggle against the United States. Its strength in Yemen, moreover, also expanded al-Qaida’s presence and prestige to an important part of the Arab world. Islamic State supporters have already conducted attacks in Yemen, and the death of Wuhayshi offers them a chance to expand their influence there. The core leadership of AQAP is not likely to join the Islamic State, but some of its cells and supporters could break off if Raimi proves a weak leader.

For now, Wuhayshi’s death means the United States has another point in the struggle against the jihadi movement. In the long term, successful disruption is more likely if the United States and its allies can keep the pressure on AQAP, forcing its leaders to go on the run and hindering their ability to communicate — particularly difficult challenges for a group in transition under new leadership. Wuhayshi’s death also comes on the heels of the deaths of several other AQAP members, including its top ideologue and spokesman. Having to hide also makes it difficult for the group to govern, as its exposed leaders run the risk of being killed. But AQAP has lost many leaders before, yet remains a force to be reckoned with. So at best, this should be seen as winning a battle, not the war.

Technically, all of the Star Wars films occur a long time ago in a galaxy far, far away, but there are countless gadgets featured in the films that human beings in this galaxy can find here on Earth. Here are a handful of gadgets you will see this weekend when the seventh Star Wars film, "The Force Awakens," blasts into theaters.

Drone surveillance

The evil Galactic Empire has long employed drones and machines to do their dirty work. Way back when the empire was just a glint in Darth Sidious' eyes, his merciless apprentice Darth Maul used autonomous drones to search the desert landscape of Tatooine for fugitive Jedi. Later, when Darth Vader tirelessly searched the galaxy for Luke Skywalker and the Rebel Alliance, he sent similar autonomous drones to countless worlds such as the ice planet Hoth.

Sure, the Empire may call them droids, but on the planet Earth these instruments are essentially remote drones you might see flying in cities or around your neighborhood. In the U.S. the use of unmanned drones to aid law enforcement is on the cutting edge of technology and sparks a spirited debate among privacy advocates. Should fear law enforcement as we would a Sith lord and thus burden them with a warrant-based, technology-centric approach to drone surveillance that might curtail the beneficial use of drones?

Gregory McNeal wrote last year in a Brookings report that a property rights-centric approach with limits on surveillance would best appease privacy advocates and law enforcement, enabling drones to protect privacy in ways even manned surveillance can't achieve. By crafting simple, duration based surveillance legislation, law enforcement would only be permitted to surveil a person for a limited amount of time. Additionally, data retention guidelines could limit the amount of time that surveillance would be accessible to law enforcement.

"Legislators should reject alarmist calls that suggest we are on the verge of an Orwellian police state," McNeal writes, as privacy advocates almost always invoke the the novel 1984 when technology makes surveillance more widespread and pervasive.

As McNeal points out, the police state is hardly as nefarious as Darth Vader, so sensible legislation may be enough in this case to keep law enforcement from falling to the dark side.

Holography

In the first Star Wars film, Princess Leia recorded a short holographic message for Obi-Wan Kenobi asking for his help delivering the Death Star plans to the Rebel Alliance. The droid R2-D2 recorded the message almost as succinctly as many of use record short videos on our cell phone. But when can we expect to send and receive holographic messages ourselves?

Barring some laughable election night hologram shenanigans on CNN, there have been some notable uses of holography in this galaxy. In 2012, the late rapper Tupac Shakur took the stage at the Coachella Festival with contemporaries Snoop Dogg and Dr. Dre. At the 2014 Billboard Music Awards, Michael Jackson performed on stage—five years after his death. These holograms were made possible by artful projections and reflections, creating convincing illusions suitable only for crowded concert halls. The technology is especially popular in South Korea where K-Pop performers regularly "perform" at virtual concerts to adoring fans.

But a bona fide hologram? Researchers at Swinburne University this year used lasers and a specialized graphene mesh to project 3D objects in the air very much like you would see in Star Wars. As TIME Magazine reported, "It’s not quite Princess Leia-quality, and researchers say it has a long way to go before commercialization, but it’s a step."

BB-8 Droid

Since the first teaser for the new Star Wars films, fans have had questions about the new droid character BB-8. Rather than resort to computer animation to bring the droid to life, director J.J. Abrams and Lucasfilm designers sought to produce a live prop that could portray the droid on film.

The filmmakers demoed the droid on stage at Comic Con to the roar of audience applause and delight—"It was the first official confirmation that BB-8 was not a CG creation, but rather, a practical effect."

The use of practical effects in "The Force Awakens" is a return-to-form for the filmmakers who have shunned the special effects and digital artistry of the Star Wars prequel trilogies and instead embraced the kinds of practical effects and puppetry that made the original trilogy so beloved.

The droid BB-8 even has a cousin here on Earth—the robotic ball toy Sphero. Inventors Ian Bernstein and Adam Wilson have adapted their smartphone-controlled spherical toy into a BB-8 toy that performs many of the same practical effects the screen version of BB-8 does in "The Force Awakens."

As the new sequel trilogy continues, filmmakers are sure to wow audiences with amazing technologies—some we may even recognize from planet Earth.