Martha Ross spoke to the Advisory Board of the Community Foundation for Prince George’s County, describing research on the suburbanization of poverty both nationally and in the Washington region.

Despite perceptions that economic distress is primarily a central city phenomenon, suburbs are home to increasing numbers of low-income families. She highlighted the need to strengthen the social service infrastructure in suburban areas.

Full Presentation on Poverty in the Washington-Area Suburbs » (PDF)

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As the first decade of the 2000s drew to a close, the two downturns that bookended the period, combined with slow job growth between, clearly took their toll on the nation’s less fortunate residents.

Over a ten-year span, the country saw the poor population grow by 12.3 million, driving the total number of Americans in poverty to a historic high of 46.2 million. By the end of the decade, over 15 percent of the nation’s population lived below the federal poverty line—$22,314 for a family of four in 2010—though these increases did not occur evenly throughout the country.

An analysis of data on neighborhood poverty from the 2005–09 American Community Surveys and Census 2000 reveals that:

After declining in the 1990s, the population in extreme-poverty neighborhoods—where at least 40 percent of individuals live below the poverty line—rose by one-third from 2000 to 2005–09. By the end of the period, 10.5 percent of poor people nationwide lived in such neighborhoods, up from 9.1 percent in 2000, but still well below the 14.1 percent rate in 1990.

Concentrated poverty nearly doubled in Midwestern metro areas from 2000 to 2005–09, and rose by one-third in Southern metro areas. The Great Lakes metro areas of Toledo, Youngstown, Detroit, and Dayton ranked among those experiencing the largest increases in concentrated poverty rates, while the South was home to metro areas posting both some of the largest increases (El Paso, Baton Rouge, and Jackson) and decreases (McAllen, Virginia Beach, and Charleston). At the same time, concentrated poverty declined in Western metro areas, a trend which may have reversed in the wake of the late 2000s housing crisis.

The population in extreme-poverty neighborhoods rose more than twice as fast in suburbs as in cities from 2000 to 2005–09. The same is true of poor residents in extreme-poverty tracts, who increased by 41 percent in suburbs, compared to 17 percent in cities. However, poor people in cities remain more than four times as likely to live in concentrated poverty as their suburban counterparts.

The shift of concentrated poverty to the Midwest and South in the 2000s altered the average demographic profile of extreme-poverty neighborhoods. Compared to 2000, residents of extreme-poverty neighborhoods in 2005–09 were more likely to be white, native-born, high school or college graduates, homeowners, and not receiving public assistance. However, black residents continued to comprise the largest share of the population in these neighborhoods (45 percent), and over two-thirds of residents had a high school diploma or less.

The recession-induced rise in poverty in the late 2000s likely further increased the concentration of poor individuals into neighborhoods of extreme poverty. While the concentrated poverty rate in large metro areas grew by half a percentage point between 2000 and 2005–09, estimates suggest the concentrated poverty rate rose by 3.5 percentage points in 2010 alone, to reach 15.1 percent. Some of the steepest estimated increases compared to 2005–09 occurred in Sun Belt metro areas like Cape Coral, Fresno, Modesto, and Palm Bay, and in Midwestern places like Indianapolis, Grand Rapids, and Akron.

These trends suggest the strong economy of the late 1990s did not permanently resolve the challenge of concentrated poverty. The slower economic growth of the 2000s, followed by the worst downturn in decades, led to increases in neighborhoods of extreme poverty once again throughout the nation, particularly in suburban and small metropolitan communities and in the Midwest. Policies that foster balanced and sustainable economic growth at the regional level, and that forge connections between growing clusters of low-income neighborhoods and regional economic opportunity, will be key to longer-term progress against concentrated disadvantage.

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The United Nations will convene a major international conference on Financing for Development (FfD) in Addis Ababa, Ethiopia from July 13 to 16, 2015, to discuss financing for the post-2015 agenda on sustainable development. This conference, the third of its kind, will hope to replicate the success of the Monterrey conference in 2002 that has been credited with providing the glue to bind countries to the pursuit of the Millennium Development Goals (MDGs).

The analogy is pertinent but should not be taken too far. The most visible part of the Monterrey Consensus was the commitment by rich countries to “make concrete efforts towards the target of 0.7 percent of gross national product” as official development assistance (ODA). This was anchored in a clear premise that “each country has primary responsibility for its own economic and social development,” which includes support for market-oriented policies that encourage the private sector. While not all of the Monterrey targets have been met, there has been a considerable increase in resources flowing to developing countries, as a central plank of efforts to achieve the MDGs.

Today, aid issues remain pivotal for a significant number of countries, but they are less relevant for an even larger number of countries. The core principles of Monterrey need to be reaffirmed again in 2015, but if the world is to follow-through on a universal sustainable development agenda, it must address the multi-layered financing priorities spanning all countries. A simple “30-30-130” mnemonic helps to illustrate the point. There are 193 U.N. member states. Of these, only around 30 are still low-income countries (33 at the latest count). These are the economies that are, and will continue to be, the most heavily dependent on aid as the world looks to how it should implement the sustainable development goals (SDGs). Conversely, there are only around 30 “donor” countries (including 28 members of the OECD Development Assistance Committee, or DAC) that have made international commitments to provide more aid. For the remaining 130 or so emerging middle-income economies that have achieved higher levels of average prosperity, aid discussions risk forming a sideshow to the real issues that constrain their pursuit of sustainable development. The bottom line is that for most countries, the Financing for Development conference should unlock finance from many different sources, including but not exclusively aid, to implement the SDGs.

Addis will take place in the context of sluggish global growth, an upsurge in conflict, considerable strains in multilateral 2 political cooperation, and challenging ODA prospects in many countries.

There are other differences between Addis and Monterrey. Monterrey took place after agreement had been reached on the MDGs, while Addis will precede formal agreement on the SDGs by a few months. Monterrey was focused on a government-to-government agreement, while Addis should be relevant to a far larger number of stakeholders—including businesses, academics, civil society, scientists, and local authorities. Monterrey was held against a backdrop of general optimism about the global economy and widespread desire for intensified international collaboration following the terrorist events of September 11, 2001. Meanwhile, Addis will take place in the context of sluggish global growth, an upsurge in conflict, considerable strains in multilateral political cooperation, and challenging ODA prospects in many countries. In addition, regulators are working to reduce risk-taking by large financial institutions, increasing the costs of providing long-term capital to developing countries.

Against this backdrop, an Intergovernmental Committee of Experts on Sustainable Development Finance (ICESDF) crafted a report for the United Nations on financing options for sustainable development. The report provides an excellent overview of issues and the current state of global financing, and presents over 100 recommendations. But it falls short on prescribing the most important priorities and action steps on which leaders should focus at Addis.

This paper seeks to identify such a priority list of actions, with emphasis on the near-term deliverables that could instigate critical changes in trajectories towards 2030. At the same time, the paper does not aim to describe the full range of outcomes that need to be in place by roughly 2025 in order to achieve the SDGs by their likely deadline of 2030. Addis will be a critical forum to provide political momentum to a few of the many useful efforts already underway on improving global development finance. Time is short, so there is limited ability to introduce new topics or ideas or to build consensus where none already exists.

We identify three criteria for identifying top priorities for agreement in Addis:

• Priorities should draw from, and build on, on-going work—including the ICESDF report and the outputs „„of several other international workstreams on finance that are underway.
• Agreements should have significant consequences for successful implementation of the SDGs at the coun„„try, regional or global level.
• Recommendations should be clearly actionable, with next steps in implementation that are easy to under„„stand and easy to confirm when completed.

It is not necessary (or desirable) that every important topic be resolved in Addis. In practical terms, negotiators face two groups of issues. First are those on which solutions can be negotiated in time for the July conference. Second are those for which the problems are too complex to be solved by July, but which are still crucial to be resolved over the coming year or two if the SDGs are to be achieved. For this second group of issues, the intergovernmental agreement can set specific timetables for resolving each problem at hand. There is some precedent for this, including in the 2005 U.N. World Summit, which included timetables for some commitments. What is most critical is that the moment be used to anchor and advance processes that will shift toward creating a global financing system for achieving sustainable development across all countries. Committing to timetables for action and building on reforms already undertaken could be important ways of enhancing the credibility of new agreements.

In this paper, we lay out nine areas where we believe important progress can be made. In each area, we start from identifying a gap or issue that could present an obstacle to the successful implementation of the SDGs if left unattended. In some cases the gaps will affect all countries, in other cases only a subset of countries. But we believe that the package of actions, taken as a whole, reflects a balance of opportunities, responsibilities and benefits for all countries. We also believe that by making the discussion issue-focused, the needs for financing can be balanced with policy actions that will be required to make sure financing is effectively and efficiently deployed.

In addition to the nine areas listed below, there are other commitments already made which have not yet been met. We urge renewed efforts to meet these commitments, but also recognize that political and financial realities must be managed to make progress. Such commitments include meeting the Monterrey Consensus target to provide 0.7 percent of GNI in official development assistance (ODA), the May 2005 agreement of all EC-15 countries to reach that target by 2015, and bringing the Doha Development Round of trade talks to a successful conclusion. These remain important and relevant, but in this paper we choose to focus on new areas and fresh ideas so as to avoid treading over well-worn territory again.

       

       

       

       

Education is at a critical juncture in many nations around the world. It is vital for student learning, workforce development, and economic prosperity. For example, research in Turkey has found that raising the compulsory education requirement from five to eight years increased the percentage of women having eight years of school by 11 percentage points, and had a variety of positive social consequences.

Yet despite the emergence of digital learning, most countries still design their educational systems for agrarian and industrial eras, not the 21st century. This creates major problems for young people who enter the labor force as well as teachers and parents who want children to compete effectively in the global economy.

In this paper, Darrell West examines how mobile devices with cellular connectivity improve learning and engage students and teachers. Wireless technology and mobile devices:

• Provide new content and facilitate information access wherever a student is located
• Enable, empower, and engage learning in ways that transform the environment for students inside and outside school
• Allow students to connect, communicate, collaborate, and create using rich digital resources, preparing them to adapt to quickly evolving new technologies
• Incorporate real-time assessment of student performance
• Catalyze student development in areas of critical-thinking and collaborative learning, giving students a competitive edge

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Introduction

Guaranteeing the right to vote and to participate in public and political affairs for all citizens is an important responsibility. Given the precarious position that IDPs can find themselves in and considering the extent to which they may need to rely on national authorities for assistance, IDPs have a legitimate and a heightened interest in influencing the decisions that affect their lives by participating in elections.   

Internally displaced persons often exist on the margins of society and are subject to a number of vulnerabilities because of their displacement. For instance, IDPs face an immediate need for protection and assistance in finding adequate shelter, food, and health care. Over time, they can suffer discrimination in accessing public services and finding employment on account of being an IDP from another region or town. IDPs also face an especially high risk of losing ownership of their housing, property, and land, something which can lead to loss of livelihoods and economic security as well as physical security. Women and children, who often make up the majority of IDP populations, face an acute risk of sexual exploitation and abuse.  

In addition to influencing public policy, elections can also be about reconciliation and addressing divisions and inequities that exist within society. For these reasons and others, IDPs should be afforded an opportunity to fully participate in elections as voters and as candidates.   

As noted in a press release of the Representative of the Secretary General of the United Nations on the Human Rights of Internally Displaced Persons following an official mission to Georgia in December 2005, 

“[IDP] participation in public life, including elections, needs promotion and support. Supporting internally displaced persons in their pursuit of a normal life does not exclude, but actually reinforces, the option of eventual return. … Well integrated people are more likely to be productive and contribute to society, which in turn gives them the strength to return once the time is right."[1]

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[1] United Nations Press Release - U.N. Expert Voices Concern for Internally Displaced Persons in Georgia, 27 December 2005, available at http://www.brookings.edu/projects/idp/RSG-Press-Releases/20051227_georgiapr.aspx.

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To build on its longstanding interest in the evolving transatlantic relationship and to address the serious differences that have emerged between America and Europe after the September 11 terrorist attacks and throughout the ongoing war on terrorism, Brookings announces the launch of its new Center on the United States and Europe. The center offers a forum for research, high-level dialogue, and public debate on issues affecting U.S.-Europe relations.

At the inaugural conference to launch the new center, experts discussed the theme "The United States and Europe: One Year after the War in Iraq." Panelists at this special event included Javier Solana, Robert Kagan, Charles Grant, Klaus Scharioth, Andrew Moravcsik, Martin Indyk, Ulrike Guerot, Pascale Andreani, Cesare Merlini, Reuel Marc Gerecht, Gilles Andreani and others.

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On May 20, 2008, the Center on the United States and Europe held its fifth annual conference. As is in previous years, the Conference brought together leading scholars, officials, and policymakers from both sides of the Atlantic to examine issues shaping the transatlantic relationship and to assess the evolving roles of the United States and Europe in the global arena.

Gary Schmitt of the American Enterprise Institute; Sir Lawrence Freedman of King’s College, London; Gideon Rachman of the Financial Times; former Norwegian Foreign Minister Jan Petersen; and Strobe Talbott, President of The Brookings Institution joined other prominent panelists and CUSE scholars for this year’s sessions. The series of panel discussions explored transatlantic relations beyond the Bush presidency, Sarkozy’s plans for France’s EU presidency, and the future of Russia under Medvedev.

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Each year, one in five households filing a federal income tax return claims the Earned Income Tax Credit (EITC). Targeted primarily to lower-income workers with children, it is one of many credits and deductions filers take each year on their federal income tax forms. However, unlike typical credits and deductions, the EITC is a refundable credit, meaning that after offsetting what is owed to the government filers receive the remainder of the benefit as a refund.

By supplementing earnings for low- and moderate-income households, the EITC helps bridge the gap between what the labor market provides and what it takes to support a family. It encourages and rewards work and has become one of the nation’s largest and most effective anti-poverty programs. In contrast to other work support and poverty alleviation programs, it achieves this with very little bureaucracy beyond what otherwise exists to administer the tax code.

Although the EITC began in 1975 as a small credit (no more than $400), a number of targeted expansions in subsequent years mean that today the EITC’s assistance can be considerable. In 2015, a single parent with three children working full-time all year at the federal minimum wage ($7.25 an hour) is eligible for a credit of $6,242, a boost of more than 40 percent above her earnings of $15,080 (though combined it still leaves her 12 percent below the federal poverty level).

However, the only way to obtain these substantial benefits is to claim the EITC on the annual federal income tax return. While lump-sum payments have perceived benefits (such as being able to pay off debts, make larger purchases, or force savings), the EITC’s single annual disbursement can present a challenge for the working parent trying to make ends meet throughout the year. It can also be problematic for households wanting to stretch out their refund as an emergency savings reserve.

My 2008 paper, “Periodic Payment of the Earned Income Tax Credit,” proposed an option that would allow a family to receive a portion of the EITC outside of tax time, striking a balance between lump-sum delivery and the need for resources throughout the year. Specifically, half of the credit could be claimed in four payments spread out during the year, while the remaining credit would continue to be paid as part of the tax refund.

Since then, several significant developments have occurred. A little-used option for receiving some of the EITC in each paycheck ended in 2010. In 2014, the federal government initiated a new tax credit advance payment process to subsidize health insurance premiums through monthly disbursement of the Affordable Care Act’s Premium Tax Credit. Other countries providing assistance similar to the EITC have continued to innovate and offer access to benefits during the year. Finally, members of Congress and think tanks have proposed alternatives to a single lump-sum disbursement of the EITC, and others have begun to explore and experiment with alternatives, most notably in Chicago, where a 2014 pilot program made quarterly payments to 343 households.

In light of these developments, this paper reviews the author’s original EITC periodic payment proposal, examines emerging alternatives, and addresses the following key questions:

• What is the demand for periodic payment alternatives?
  
  
• What benefits will accrue from the availability of periodic payment?
  
  
• What risks are associated with periodic payment and how can they be managed?
  
  
• What is the administrative feasibility of periodic payment?

The emerging answers point a way forward for identifying different distribution options that would enhance the EITC’s value to low- and moderate-income working families.

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Editor's Note, Oct. 12, 2011: Congress has passed a trio of trade agreements negotiated during the George W. Bush administration and recently submitted by President Obama. The authors of this policy brief say the pacts with South Korea, Colombia and Panama will boost U.S. exports significantly, especially in the key automotive, agricultural and commercial services sectors.

Policy Brief #183

A trio of trade agreements now pending before Congress would benefit the United States both economically and strategically. Carefully developed accords with South Korea, Colombia and Panama will boost U.S. exports significantly, especially in the key automotive, agricultural and commercial services sectors.

Among the other benefits are:

• increased U.S. competitiveness
• enhancement of U.S. diplomatic and economic postures in East Asia and Latin America
• new investment opportunities
• better enforcement of labor regulation and
• improved transparency in these trading partners’ regulatory systems.

The pacts are known as Free Trade Agreements, or FTAs. The Korean agreement (KORUS) was negotiated in 2006-2007 and revised in 2010. The Colombian agreement (COL-US, sometimes known as COL-US FTA) was signed in 2006. The agreement with Panama (PFTA, sometimes known as the Panama Trade Promotion Agreement) was signed in 2007. All have the support of the Obama administration.

	RECOMMENDATIONS
	The three FTAs will substantially reduce these trading partners’ tariffs on U.S. goods, opening large markets for U.S. commerce and professional services. In combination, they will increase the size of the U.S. economy by about $15 billion. Furthermore, they will help reverse a slide in U.S. market influence in two important and increasingly affluent regions of the globe. Approval of all three agreements is in the national interest. To move forward, both Congress and the administration should take these appropriate steps: Congress should approve the trade agreements with Korea (KORUS), Colombia (COL-US) and Panama (PFTA) without additional delays.   To maximize the trade and investment benefits of KORUS, the administration should actively engage in the KORUS working groups, such as the Professional Services Working Group.   Similarly, the U.S. Trade Representative should participate in the Joint Committee’s scheduled annual meetings, in order to maintain a highlevel focus on U.S.-Korea trade, drive further trade liberalization and enable the committee to serve as a forum for broader discussions on trade in East Asia.   The Colombia-U.S. Joint Committee should include representatives of Colombia’s Trade and Labor Ministers with their US counterparts. The presence of the Labor minister should facilitate progress under the FTA through strengthened labor standards and timely implementation of all elements of the agreed-upon action plan. This Committee and specialized working groups could increase the pace of bilateral interaction and help officials identify important areas for discussion, negotiation and agreement.   Panama has ratified the Tax Information and Exchange Agreement which entered into force on April 2011. Panama and the US should strengthen bilateral communication so that collaboration in the battle against money laundering is pushed even further with greater cooperation.

Economic Effects of the Korea Agreement

The economic benefits to the United States from KORUS are especially significant, as the agreement will provide preferential market access to the world’s 11th largest—and a fast-growing—economy. In 2010, U.S.-Korea trade was worth $88 billion, comprising U.S. exports of $39 billion and imports of $49 billion, making Korea the United States’ seventh largest trading partner. According to the independent, quasi-judicial U.S. International Trade Commission (ITC), exports resulting from KORUS will increase the U.S. gross domestic product (GDP) by up to $12 billion. This constitutes a remarkable gain in both real and percentage terms.

To the United States, KORUS offers diverse economic advantages. Most strikingly, KORUS will open Korea’s service market to U.S. exports, allowing the United States to exploit its competitive advantages in financial services, education and information and communications technologies. The agreement also will lead to increased imports from Korea, which in turn will help the United States achieve greater economic specialization. The likely effects of more specialization—and of increased Korean investment in the United States—include greater U.S. efficiency, productivity, economic growth and job growth. Meanwhile, U.S. investors will gain new opportunities in the increasingly active Asia-Pacific region.

Lately, passage of KORUS has assumed enhanced importance with the impasse in the World Trade Organization’s Doha Round. No longer can the United States reasonably anticipate that Doha will lead to improved access to the Korean market. Moreover, an FTA between Korea and the European Union (EU) that took effect July 1st confers preferential access to European exporters, undermining the competitiveness of U.S. businesses in Korea. Even before the European FTA, the United States had been losing valuable ground in Korea. Between 2000 and 2010, the United States fell from first to third in the ranking of Korea’s trading partners (reversing positions with China), as U.S. products declined from 18 to only 9 percent of Korean imports. Failure to approve the agreement can be expected to lead to a further decline. These moves will strongly assist U.S. producers of electronic equipment, metals, agricultural products, autos and other consumer goods. For example, agricultural exports are expected to rise $1.8 billion per year.

On the services front, KORUS will increase U.S. businesses’ access to Korea’s $560 billion services market. Financial services providers, the insurance industry and transportation firms stand to benefit substantially. KORUS usefully builds on the link between investment and services by improving the ability of U.S. law firms to establish offices in Korea. In addition, the agreement establishes a Professional Services Working Group that will address the interests of U.S. providers of legal, accounting and engineering services, provided that U.S. representatives engage actively in the group. KORUS also requires that regulations affecting services be developed transparently and that the business community be informed of their development and have an opportunity to provide comments, which the Korean government must answer.

On the investment front, KORUS affords a chance to strengthen a bilateral investment relationship that probably is underdeveloped. In 2009, the U.S. foreign direct investment flow to Korea was $3.4 billion, while there was a net outflow of Korean foreign direct investment to the United States of $255 million. KORUS supports market access for U.S. investors with investment protection provisions, strong intellectual property protection, dispute settlement provisions, a requirement for transparently developed and implemented investment regulations and a similar requirement for open, fair and impartial judicial proceedings. All this should markedly improve the Korean investment climate for U.S. business. It will strengthen the rule of law, reducing uncertainty and the risk of investing in Korea.

On the governance side, KORUS establishes various committees to monitor implementation of the agreement. The most significant of these is the Joint Committee that is to meet annually at the level of the U.S. Trade Representative and Korea’s Trade Minister to discuss not only implementation but also ways to expand trade further. KORUS establishes committees to oversee the goods and financial services commitments, among others, and working groups that will seek to increase cooperation between U.S. and Korean agencies responsible for regulating the automotive sector and professional services. These committees and working groups, enriched through regular interaction between U.S. and Korean trade officials, should increase levels of trust and understanding of each county’s regulatory systems and help officials identify opportunities to deepen the bilateral economic relationship.

Strategic Effects of the Korea Agreement

Congressional passage of KORUS will send an important signal to all countries in the Asia-Pacific region that the United States intends to remain economically engaged with them, rather than retreat behind a wall of trade barriers, and is prepared to lead development of the rules and norms governing trade and investment in the region. KORUS will provide an important economic complement to the strong, historically rooted U.S. military alliance with Korea. It also will signal a renewed commitment by the United States in shaping Asia’s economic architecture.

The last decade has seen declining U.S. economic significance in Asia. Just as the United States has slipped from first to third in its ranking as a trading partner of Korea, similar drops are occurring with respect to Japan, Indonesia, Malaysia and other Asia-Pacific economic powers. In all of Northeast and Southeast Asia, the United States has only one FTA in effect, an accord with the Republic of Singapore. Passage of KORUS now would be particularly timely, both as a sign of U.S. engagement with Asia and as a mechanism for ensuring robust growth in U.S.-Asia trade and investment.

To illustrate how KORUS might affect U.S. interests throughout the region, consider regulatory transparency. The KORUS transparency requirements could serve as a model for how countries can set and implement standards. They might for example, influence the unfolding Trans-Pacific Partnership negotiations, talks that could set the stage for a broader Asia-Pacific FTA. U.S. producers, investors and providers of commercial and professional services could only benefit from a regional trend toward greater transparency and the lifting of barriers that would ensue. Other KORUS provisions favorable to the United States could function as similar benchmarks in the development of U.S. relations with Asia-Pacific nations and organizations.

Effects of the Colombia Agreement

COL-US will also strengthen relations with a key regional ally and open a foreign market to a variety of U.S. products. Bilateral trade between Colombia and the United States was worth almost $28 billion in 2010. COL-US is expected to expand U.S. GDP by approximately $2.5 billion, which includes an increase in U.S. exports of $1.1 billion and an increase of imports from Colombia of $487 million.

COL-US offers four major advantages:

• It redresses the current imbalance in tariffs. Ninety percent of goods from Colombia now enter the United States duty-free (under the Andean Trade Promotion and Drug Eradication Act). COL-US will eliminate 77 percent of Colombia’s tariffs immediately and the remainder over the following 10 years.
   
• It guarantees a more stable legal framework for doing business in Colombia. This should lead to bilateral investment growth, trade stimulation and job creation.
   
• It supports U.S. goals of helping Colombia reduce cocaine production by creating alternative economic opportunities for farmers.
   
• It addresses the loss of U.S. competitiveness in Colombia, in the wake of Colombian FTAs with Canada and the EU as well as Latin American sub-regional FTAs.

With respect to trade in goods, U.S. chemical, rubber and plastics producers will be key beneficiaries of COL-US, with an expected annual increase in exports in this combined sector of 23 percent, to $1.9 billion, relative to a 2007 baseline according to the ITC. The motor vehicles and parts sector is expected to see an increase of more than 40 percent. In the agriculture sector, rice exports are expected to increase from a 2007 baseline of $2 million to approximately $14 million (the corresponding increases would be 20 percent for cereal grains and 11 percent for wheat).

These and other gains will result from the gradual elimination of tariffs and from provisions that reduce non-tariff barriers as well. Among the latter, the most important changes would be increased transparency and efficiency in Colombia’s customs procedures and the removal of some sanitary and phytosanitary (or plant quarantine) restrictions. With respect to trade in services, Colombia has agreed to a number of so-called "WTO-plus" commitments that will expand U.S. firms’ access to Colombia’s $166 billion services market. For instance, the current requirement that U.S. firms hire Colombian nationals will be eliminated, and many restrictions on the financial sector will be removed.

On the investment front, the potential advantages to the United States also are substantial. In 2009, the U.S. flow of foreign direct investment into Colombia was $1.2 billion, which amounted to 32 percent of that nation’s total inflows. COL-US improves the investment climate in Colombia by providing investor protections, access to international arbitration and improved transparency in the country’s legislative and regulatory processes. These provisions will reduce investment risk and uncertainty.

COL-US presents significant improvements in the transparency of Colombia’s rule-making process, including opportunities for interested parties to have their views heard. COL-US also requires that Colombia’s judicial system conform with the rule of law for enforcing bilateral commitments, such as those relating to the protection of intellectual property. In addition to access to international arbitration for investors, COL-US includes dispute settlement mechanisms that the two governments can invoke to enforce each other’s commitments. Taken as a whole, these provisions offer an important benchmark for further developments in Colombia’s business environment. The transparency requirement alone could reduce corruption dramatically.

Labor rights have been a stumbling block to congressional approval of COL-US. The labor chapter of the agreement guarantees the enforcement of existing labor regulations, the protection of core internationally recognized labor rights, and clear access to labor tribunals or courts. In addition, in April 2011, Colombia agreed to an Action Plan strengthening labor rights and the protection of those who defend them. In the few months the plan has been in effect, Colombia has made important progress in implementation. It has reestablished a separate and fully equipped Labor Ministry to help protect labor rights and monitor employer-worker relations. It has enacted legislation authorizing criminal prosecutions of employers who undermine the right to organize or bargain collectively. It has partly eliminated a protection program backlog, involving risk assessments. And, it has hired more labor inspectors and judicial police investigators.

Besides economic benefits, COL-US offers sizable strategic benefits. It would fortify relations with an important ally in the region by renewing the commitment to the joint struggle against cocaine production and trade. Under the agreement, small and medium-sized enterprises in labor-intensive Colombian industries like textiles and apparel would gain permanent access to the U.S. consumer market. With considerable investments, Colombia would be able to compete with East Asia for these higher quality jobs, swaying people away from black markets and other illicit activities.

While Congress deliberates, the clock is ticking. Colombia is also looking at other countries as potential trade and investment partners in order to build its still underdeveloped infrastructure and reduce unemployment. Complementing its FTAs with Canada, the EU, and several countries in the region, Colombia has initiated formal trade negotiations with South Korea and Turkey and is moving toward negotiations with Japan. A perhaps more telling development is China’s interest in building an inter-oceanic railroad in Colombia as an alternative to the Panama Canal: on July 11th President Juan Manuel Santos signed a bilateral investment treaty with China (and the UK) and is expected to meet Chinese President Hu Jintao in the fall.

Effects of the Panama Agreement

Although Panama’s economy is far smaller than Korea’s or even Colombia’s, the PFTA will deliver important economic and strategic benefits to the United States. Considerable gains will take place in U.S. agriculture and auto manufacturing. Moreover, the PFTA will strengthen the U.S. presence in the region, allowing for the stronger promotion of democratic institutions and market-based economies.

U.S. merchandise exports to Panama topped $2.2 billion in 2009. The PFTA’s elimination of tariffs and reduction in non-tariff barriers will cause this figure to grow. For example, rice exports are expected to increase by 145 percent, pork exports by 96 percent and beef exports by 74 percent, according to the ITC. Exports of vehicles are expected to increase by 43 percent. The PFTA also guarantees access to Panama’s $21 billion services market for U.S. firms offering portfolio management, insurance, telecommunications, computer, distribution, express delivery, energy, environmental, legal and other professional services.

Panama’s trade-to-GDP ratio in 2009 was 1.39, highlighting the preponderance of trade in Panama’s economy and the international orientation of many of its sectors. Following passage of the PFTA, Panama will eliminate more than 87 percent of tariffs on U.S. exports immediately. The remaining tariffs will be removed within 10 years for U.S. manufactured goods and 15 years for agricultural and animal products.

PFTA protections to investors—similar to protections accorded under KORUS and COL-US—are especially valuable, as Panama receives substantial investments associated with sectors that will benefit from both from the expansion of the canal and from other infrastructure projects. A fair legal framework, investor protections and a dispute settlement mechanism, all features of the PFTA, are almost certain to increase U.S. investments in Panama. Panama’s Legislature also recently approved a Tax Information Exchange Agreement with the United States and amended current laws to foster tax transparency and strengthen intellectual property rights. These are crucial steps in preventing the use of Panamanian jurisdiction as a haven for money laundering activities.

Panamanian laws and regulations prohibiting strikes or collective bargaining were a concern that initially delayed implementation of the PFTA. But, these laws have been changed, with the exception of a requirement that 40 workers (not the recommended 20) are needed to form a union; the 40-worker requirement has been kept partly because labor groups in Panama support it. The PFTA’s labor chapter protects the rights and principles outlined in the International Labor Organization’s 1998 Declaration on Fundamental Principles and Rights at Work.

Besides offering economic advantages to the United States, the PFTA is a strategic agreement. Strengthening economic links with Panama should bolster the U.S. capacity to address cocaine trafficking in the region, in light of Panama’s location as Colombia’s gateway to North America. The importance of the canal, now undergoing an expansion that will double its shipping capacity, further underscores the U.S. need to strengthen bilateral relations with Panama.

The time to act is now. Like Colombia, Panama has been negotiating with economic powerhouses other than the United States. It recently signed a trade agreement with Canada and an Association Agreement with the EU. Delaying passage of the PFTA would generate a loss of market share for a variety of sectors of the U.S. economy.

Conclusion

All three FTAs encourage trade by removing tariff and non-tariff barriers. All the agreements provide access to large services markets, foster transparency and offer significant strategic advantages to the United States. Congress should approve each of them now.

The authors would like to thank Juan Pablo Candela for his assistance with this project.

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EXECUTIVE SUMMARY

A few influential Americans have begun to suggest that the United States should reduce its long-standing security commitment to Taiwan. Some say that Taiwan itself has chosen to improve relations with China, so the island has less need for advanced U.S. weaponry and a defense pledge. Others argue that Washington, to avoid unnecessary tensions with a rising China, should accommodate Beijing on the most neuralgic issue—Taiwan.

The first group overstates the limits of the ongoing Taiwan-China détente. True, progress has been made in normalizing, liberalizing, and institutionalizing the economic relationship. But, to the disappointment of many Chinese, none has occurred on political and security issues, because the Taiwan public is not ready to go there and serious conceptual differences exist on how to get there anyway. So the prospects for cross-Strait relations in the near-term are for modest, incremental progress only, or a stall.

The second group misunderstands the benefits and costs of a significant American accommodation to China regarding Taiwan (e.g. by sharply cutting back arms sales). In fact, Washington has frictions with China on a growing list of issues. Conceding to Beijing on Taiwan will not help us elsewhere. Moreover, our friends and allies (e.g. Japan and Korea) will worry that the United States might sacrifice their interests next for the sake of good relations with China. Finally, the primary reason China has failed to incorporate Taiwan on its terms is not U.S. arms sales but because its negotiating position is unacceptable to the Taiwan public.

As China rises and seeks to reshape East Asia more to its liking, how the United States responds will be a critical variable. It needs the right mix of accommodation and firmness. Giving way on Taiwan will neither pacify Beijing nor assure our allies.

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Introduction

Should the United States abandon Taiwan? Until recently, even to pose such a question would have been unthinkable in Washington. While the U.S. relationship with Taiwan may have had its ups and downs over the past six decades, but the strong American commitment has endured. But now, individuals who previously served in senior positions in the U.S. government are calling it into question. Theirs is not a modest proposal, and it deserves careful examination.

Some observers believe that Taiwan has become a strategic liability. They remind us that China regards the settlement of the Taiwan problem as its internal affair, yet the United States continues to provide the island with advanced weaponry and at least an implicit pledge to come to its defense. They echo Chinese diplomats who argue that our arms sales are the major obstacle to good U.S.-China relations. (These diplomats also assert that U.S. arms sales both discourage Taipei to negotiate seriously with Beijing and encourage Taiwanese politicians who have separatist agendas.) Therefore, it is argued, the United States needs to reconsider fundamentally its security support for Taiwan.

The most prominent voice for this point of view is Zbigniew Brzezinski, Jimmy Carter’s national security adviser. He argues that the hostility that arms sales foster in Beijing precludes whatever strategic cooperation a declining United States can secure from a rising China. Moreover, he says, “it is doubtful that Taiwan can indefinitely avoid a more formal connection with China,” and points to some version of the unification formula Beijing used for Hong Kong as a possible basis. That in turn would end the island’s need to depend on the United States for its security.[1] Others in this camp, more or less, include retired admiral Bill Owens, retired ambassador Chas Freeman, Charles Glaser of George Washington University, and the members of a policy panel assembled by the Miller Center of the University of Virginia.[2]

To make the conversation even more interesting, there are two other versions of this abandonment idea, ones that start with how Taiwan has changed since 2008:

• At least one conservative Congressman, a long-time supporter of Taiwan, believes that Taiwan was now working with an “autocratic China,” and since he opposes autocracy, the island’s government no longer deserved his support.[3] That is, Taiwan has abandoned U.S. values, which is bad, so he has abandoned Taiwan.
   
• A Portland State University scholar has argued that Taiwan seems to have decided that its own best interests require it to accommodate to China and rely much less on the United States (as Finland accommodated the Soviet Union during the Cold War). But in his view, this is good for Washington because it eliminates a long-time burden.[4]  And a Taiwan scholar recently argued that it was in the island’s own interest to get out of the middle of the China-U.S. rivalry.[5]

In the abstract, it should not be surprising that some Americans are rethinking U.S. support for Taiwan. We live in a new world. China’s power and international role are growing. It is in the interest of the United States to maximize areas of cooperation and mutual benefit with Beijing where possible, even as we demonstrate firmness when it overreaches (as it has). It is not in the U.S. interest to act in ways that lead Chinese leaders to conclude that America pursues a policy of containment. So, this logic goes, perhaps Washington should end commitments that are so offensive to China that it will not cooperate with the United States on projects of strategic value to us. Moreover, as the People’s Liberation Army (PLA) becomes more capable, America may find it harder operationally to honor its commitments to Taiwan, even if it wished to do so.

Taiwan Shifts Strategy

To sort through these competing ideas, it is necessary to understand how U.S.-China-Taiwan relations have changed in the last five years and what it means for U.S. policy.

For twenty-five years, Taiwan has faced a serious dilemma. On the one hand, many Taiwan companies benefit from investing in China to produce goods for the Chinese and international markets. On the other hand, China wishes to end Taiwan’s separate political status on terms similar to that used for Hong Kong, which most Taiwan people oppose. From around 1995 to 2008, Taiwan’s response to China’s political goals was to emphasize the island’s sovereignty, which only led Beijing to fear that Taiwan’s leaders intended to create a totally independent country. China in turn built up military capabilities to deter what it feared, which only made Taiwan more anxious. Washington worried that this action-reaction spiral might lead to war, and it periodically opposed some of Taipei’s initiatives.

Ma Ying-jeou won Taiwan’s 2008 presidential election by articulating a different vision: that the island could better preserve its prosperity, freedom, dignity, and security by engaging China rather than provoking it. Engagement would focus first on enhancing economic cooperation, thus avoiding contentious and unproductive political arguments. Expanding business ties would yield concrete benefits for both sides of the Taiwan Strait. Opening Taiwan universities to Mainland students would fill out enrollments and expose Chinese young people to a democratic society. In short, Ma believed, Taiwan could give China such a large stake in peace that it would not dare to risk that stake by coercing the island into submission. He made significant progress during his first term in removing obstacles to business and liberalizing trade, most notably in reaching an Economic Cooperation Framework agreement with China in 2010, the first step toward creating a free-trade area. Taiwan bounced back fairly quickly from the global economic crisis and had 4 percent growth in 2011. A growing stream of Chinese tourists buoyed some sectors of the Taiwan economy, and the number of Mainland students grew steadily.

Ma had another reason for engaging China: the United States. Taipei’s relations with Washington had suffered before 2008 because U.S. officials feared Taiwan’s political initiatives would spark a Chinese over-reaction, creating a conflict that might require American intervention. The reduction of tensions that Ma’s policies brought about calmed Washington’s fears and increased U.S. confidence that Taiwan’s intentions were constructive. The Bush and Obama administrations responded by improving U.S.-Taiwan relations, by approving three large arms-sales packages and extending other benefits.

Yet Ma’s China policy was not a total accommodation to Chinese wishes. Even though Beijing in 2009 exerted pressure on Taiwan to move toward political and security talks, Ma pushed back, and for good reason. The Taiwan public was not yet ready to support them, particularly the approximately 25 percent who retain the goal of total independence. In any case, there were serious conceptual differences between the two sides, specifically whether Taiwan was a sovereign entity for purposes of cross-Strait relations and the island’s international role. On the security side, China continued to build up its military capabilities relevant to Taiwan—particularly ballistic and cruise missiles. According to one think-tank’s analysis, an intensive missile barrage by the PLA can now ground Taiwan’s air force in the very early stages of a conflict, and Taiwan’s current defense strategy depends on its aircraft getting off the ground.[6] So Ma has spurned Chinese proposals for a peace accord because he does not see how it would improve Taiwan’s security, and his caution has persisted to this day.

In effect, Ma has pursued a mixed or hedging strategy toward China: engage it in areas that both benefit Taiwan and encourage Chinese restraint (economics and education); deflect Beijing on proposals that are not in the island’s interests (politics and security); and preserve a good relationship with the United States (to guard against the worst). A significant part of the Taiwan public—known as the Green Camp—was not happy with Ma’s mix of engagement and firmness. They feared he had put the island on a slippery slope to subordination and unification on China’s terms. The Greens would have preferred more firmness and less engagement. Yet so far, Ma’s strategy has the backing of the majority of island’s public, usually known as the Blue Camp. In the last election apparently, around 55 percent of voters approved of his approach while 45 percent remained skeptical or deeply opposed. 

Back to the Question of Abandonment

The fact that Ma is hedging the island’s bets should be reassuring to Americans who worry that Taiwan is, in effect, “abandoning the United States” for the sake of relations with China. Such strategic appeasement would only be happening if Taipei were willing to concede to Beijing on political and security matters. Yet Taiwan has been unwilling to abandon its claim that it is a sovereign entity and accept a solution similar to that applied to Hong Kong. Instead, it asserts what Ma calls “the sovereignty of the Republic of China.” Moreover, Taipei sees a continuing need for a deterrent against China’s use of its growing military capabilities. Even as it sees the value of enhancing Beijing’s stake in peace, it does not fully trust statements of peaceful intentions. And it is certainly not prepared to terminate its special security relationship with the United States.[7]

The more difficult question is whether the United States, for the sake of its own relationship with China, should, in effect, abandon Taiwan. China believes that U.S. political and security support for Taiwan is the primary reason it has not achieved its unification goal, because it fortifies the confidence of the island’s leaders that they can get away with refusing to negotiate on PRC terms. So Beijing believes that if it could induce Washington to end arms sales to Taiwan’s military, drop even an implicit commitment to defend the island if attacked, and support unification, its problem would be solved. So China would be very pleased if the United States abandoned Taiwan, and has suggested that if only Washington ended arms sales, U.S.-China relations would be problem free.

American analysts have offered several compelling reasons why the United States should not dissociate itself from Taiwan as long as Taiwan desires American support:[8]

• Although Taiwan has at times been the most important source of U.S.-China conflict, it is not the only one. For example, Beijing’s goals in East Asia are not limited to bringing the island back into the PRC fold. In addition, it seeks to expand its security perimeter away from its eastern and southern coast, where it was for decades. That in turn has meant that the PLA navy and air force are operating increasingly in the traditional domain of U.S. and Japanese forces.[9] Removing Taiwan as a problem would in no way end or reduce this mutual impingement; it would only change its location. Taiwan aside, Beijing would still regard American “socialization” as negative.
   
• U.S. allies and partners—Japan, the Republic Korea, and others not necessarily in the Asian region—have have much at stake in Washington’s future approach to Taiwan. Simply put, a United States that would abandon Taiwan could abandon them. Of course, there may be hypothetical reasons why America might withdraw support that stem from Taiwan’s policies rather than its own commitment. So the reasons for any abandonment would be important. But the fear remains.
   
• Whatever China says, U.S. arms are actually not the reason that Beijing has been unable to bring Taiwan “into the embrace of the Motherland.” More to the point, China has not been able to persuade Taiwan’s government and public to accept its formula, which is called “one country, two systems” and was the one used for Hong Kong. If China were to make an offer that was actually to Taiwan’s liking, it would not refuse because of U.S. arms sales. Of course, a weak and friendless Taiwan might conclude that it had no choice but to settle on whatever terms it could extract. But that is not an outcome to which Washington should be a party (nor is it really in China’s interest to gain Taiwan through intimidation).
   
• Finally, how a status quo United States and a reviving China cope with each other—their key foreign policy challenge for the rest of the century—will be played out over the next few decades in a series of test cases. North Korea, maritime East Asia, and Iran are a few of them. Taiwan is another. While active U.S. opposition to Taiwan’s unification with the Mainland would understandably lead Beijing to infer that our intentions are hostile across the board, supporting Beijing’s approach when Taipei objects would be a serious demonstration of weakness.

Should the United States concede to China on Taiwan, the lessons that Beijing would learn about the intentions of the United States would likely discourage its moderation and accommodation on other issues like Korea or maritime East Asia; in that respect, America’s friends and allies are right. Continuity of U.S. policy toward Taiwan will not guarantee that China’s actions in other areas will support the status quo, but it increases the likelihood that it will. Conversely, a China that addresses its Taiwan problem with creativity and due regard to the views on the island says something positive about what kind of great power the PRC will be. A more aggressive approach, one that relies on pressure and intimidation, signals reason for concern about its broader intentions. In this regard, Taiwan is the canary in the East Asian coal mine.

A Slippery Slope?

Even if Taipei does not make a proactive strategic decision to appease Beijing, and even if Washington does not seek to curry Chinese favor by sacrificing Taiwan’s interests, there remains the possibility that Taiwan might undermine itself through inattention or neglect. That is, Taiwan might assume that Beijing’s intentions are so benign that it is prepared to accept some version of the status quo over the long term. Yet China has a different objective—ending Taiwan’s de facto independence more or less on its terms—and it may not have infinite patience. The danger is, therefore, that a frustrated China might seek to exploit the power asymmetry between the two sides of the Strait and intimidate Taiwan into accepting “an offer it can’t refuse.”

So what can Taiwan do to forestall that day? The first thing is to not create the impression in Beijing that the door on unification is closing forever—which Taiwan is currently doing. In addition, there are things it can do at the margin to strengthen itself and therefore increase the confidence needed to resist PRC pressure.

• Economically, sustain the island’s competitiveness in shifting to a knowledge-based economy, and by liberalizing its economic ties with all its major trading partners, not just China. This will require eliminating some protectionist barriers, but the structural adjustment thus created will work to Taiwan’s benefit.
   
• Politically, reform the political system so that it does a better job of addressing the real challenges that Taiwan faces (rather than focusing on relatively superficial issues).
   
• Also politically, foster a clearer sense of what it means to say that Taiwan or the ROC is a sovereign entity, not just for its role in the international system but also regarding cross-Strait relations.
   
• Militarily, enhance the deterrent capabilities of Taiwan’s armed forces in ways that raise the costs and uncertainties for Beijing if it were ever to mount an intimidation campaign.

None of these forms of self-strengthening will be easy. But they will buoy Taiwan’s psychological confidence and reduce the chances of PRC pressure in the first place.

Because the United States has an interest in China approaching its Taiwan “test case” in a constructive manner—that is, avoiding intimidation and accommodating Taiwan’s concerns—it should help Taiwan where it can to improve its odds. The most obvious ways are economically, by drawing Taiwan into the circle of high-quality liberalization, and militarily, by supporting innovative and cost-effective ways to enhance deterrence.

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Missouri's population is spreading out, adding to the costs of providing services and infrastructure across the state, according to a new study released today by the Brookings Institution Center on Urban and Metropolitan Policy.

The 84-page study, Growth in the Heartland: Challenges and Opportunities for Missouri, reports that Missouri's population is quickly dispersing, with smaller metropolitan areas experiencing some of the state's fastest growth and residency in unincorporated areas on the rise. Though new residents and jobs fueled prosperity in the 1990s, the report finds that growth has slowed in the past year, and suggests that the state's highly decentralized development patterns could become troublesome as Missouri contends with a slowing economy and serious budget deficits.

Sponsored by the Ewing Marion Kauffman Foundation, Growth in the Heartland provides the most comprehensive and up-to-date body of research and statistics yet assembled analyzing the direction, scope, and implications of development in Missouri. In addition to assessing the consequences of those trends for the state's fiscal health, economic competitiveness, and quality of life, the report addresses the potential role of state and local policy in shaping those trends in the future. Specific findings of the report conclude that:

• Growth in the Columbia, Springfield, Joplin, and St. Joseph metropolitan areas strongly outpaced that of the Kansas City and St. Louis metropolitan areas in the 1990s. Altogether the four smaller areas captured fully one-quarter of the state's growth and doubled the growth rate of the Kansas City and St. Louis areas.
  
  
• Population and job growth also moved beyond the smaller metro areas and towns into the state's vast unincorporated areas. Overall, residency in these often-outlying areas grew by 12.3 percent in the 1990s—a rate 50 percent faster than the 8.1 percent growth of towns and cities.
  
  
• Most rural counties reversed decades of decline in the 1990s, with eight in ten rural counties experiencing population growth and nine in ten adding new jobs. By 2000, more rural citizens lived outside of cities and towns than in them, as more than 70 percent of new growth occurred in unincorporated areas.

"Missouri experienced tremendous gains during the last decade, but the decentralized nature of growth across the state poses significant fiscal challenges for the future," said Bruce Katz, vice president of Brookings and director of the policy center. "The challenge for Missouri is to give communities the tools, incentives, and opportunities to grow in more efficient and fiscally responsible ways."

The Brookings Institution Center on Urban and Metropolitan Policy is committed to shaping a new generation of policies that will help build strong neighborhoods, cities, and metropolitan regions. By informing the deliberations of state and federal policymakers with expert knowledge and practical experience, the center promotes integrated approaches and practical solutions to the challenges confronting metropolitan communities. Learn more at www.brookings.edu/urban.

      

In a lively and wide-ranging debate that aired earlier this month on Al Jazeera English, Brookings Executive Vice President Martin Indyk sparred with Head to Head presenter Mehdi Hasan about American efforts to resolve the Israeli-Palestinian conflict and the United States’ relationship with Israel.

Indyk began by stressing that American support for Israel is what gives the United States an influential role in the peace process and the leverage to encourage Israel to move towards peace. Indyk added that this does not mean that the United States should act as “Israel’s attorney” in the negotiations, and cited a promise he made to Palestinian leaders during the 2013-2014 peace talks led by Secretary of State John Kerry that Washington would not coordinate positions with Israel in advance. 

Brookings Executive Vice President Martin Indyk in a Head to Head interview with Al Jazeera English's Mehdi Hassan.

He pointed out that the United States has traditionally relied on its close relationship with Israel to encourage its leaders to take steps for peace and make offers to the Palestinians, and that no other potential mediator has been able to produce serious offers from Israel. “[The United States is] not neutral, we don't claim to be neutral. We have an alliance with Israel,” Indyk said. “But in order to achieve another interest that we have, which is peace in the region…and a settlement that provides for the legitimate national rights of the Palestinians, we need to be able to influence Israel.”

In responding to questions from Hasan and the audience, Indyk explained that he believes that both Israelis and Palestinians had made important concessions for peace, citing Israel’s acceptance of the Clinton Parameters in 2000, and the Palestinian Liberation Organization’s historic recognition of Israel as part of the Oslo Accords. Indyk also described the dramatic shifts in the way the United States has addressed the Palestinian issue over the past few decades, “from treating it only as a refugee issue and insisting that it be dealt with through Jordan to recognizing Palestinian national rights.” 

When asked about U.S. support for Israel at the United Nations, Indyk responded that this support is definitely warranted given the history of hostility towards Israel at the UN. However, he added that he personally wouldn’t oppose a carefully-worded resolution condemning Israeli settlements “so that the settlers in Israel understand that [settlement expansion] isn’t cost free.” Indyk rejected the notion that Israel has turned from a U.S. strategic asset in the Middle East into a burden, but explained that “making progress on the Palestinian issue enhances America’s credibility in the region and failing to make progress…hurts America’s credibility in the region.” 

Indyk concluded the discussion by reiterating his commitment to achieving Israeli-Palestinian peace and emphasizing that he would “never give up on trying to resolve this conflict in a way that meets Palestinian legitimate national aspirations to an independent and viable contiguous state living alongside Israel, a Jewish state, in peace.” 

       

       

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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Employment is down among everyone between the ages of 16 and 64—particularly among teens, but with a great deal of variation by geography, race, and education. The disparity between blacks and whites is especially stark. For example, unemployment among white young adults peaked at 14% in 2010—still considerably lower than unemployment rates for black young adults at any point in the 2008 to 2014 time period. Unemployment for black 20- to 24-year-olds rose to 29.5% in 2010 and fell to 22.3% in 2014, compared to 10.3% among whites in 2014.

While there is no silver bullet, higher levels of education and work experience clearly improve job prospects down the line for young people. There are multiple strategies local and regional leaders can use to build more structured pathways into employment.

Teens and young adults (referring to 16- to 19-year-olds and 20- to 24-year-olds, respectively) are not monolithic populations. Age is an obvious differentiator, but so are a number of other factors, such as educational attainment, skill level, interests, parental support, and other life circumstances.  Schools, families, and neighborhoods all play a role in a young person’s trajectory—both positive and negative. But at the most basic level, a program for a 17-year-old high school student is likely not appropriate for a 23-year-old, regardless of educational attainment. Successful programs integrate education, training, work-readiness, and youth development principles, but the particular blend of these elements and settings vary: more school-based and educationally focused programs for younger youth, and more community-based and career-focused programs with strong ties to education for older youth.

An admittedly non-comprehensive review includes the following types of promising and proven programs:  

For high school students:

• Paid internship programs, such as Urban Alliance and Genesys Works
• High school programs that bridge school and work with occupationally-focused courses and career exposure, such as Career Academies, Linked Learning, High Tech High, Advanced Career, Alamo Academies, and P-Tech, some of which also incorporate post-secondary courses and credentials into their programs
• Youth apprenticeships, such as state programs in Georgia and Wisconsin 

For out-of-school youth and young adults:

• Highly structured programs offering work readiness and technical skills development, often in partnership with community colleges, and coupled with paid internships, such as Year Up, i.c.stars, npower, and Per Scholas
• Programs that offer stipends and combine academics, job training, mentoring, and supportive services while carrying out community improvement projects, such as YouthBuild and Youth Corps

The sobering fact is that promoting employment and economic security among young people is not a straightforward proposition. To succeed in today’s economy and earn middle-class wages, a young person needs to complete several steps: graduate from high school or earn an alternate credential; enroll in and complete some post-secondary education or job training; preferably gain meaningful work experience; and enter the labor market with in-demand skills. (A decent economy and some luck help, too.) There are many points along that path from which a young person can get off-track, particularly young people of color and those from high-poverty neighborhoods. And while high youth unemployment is increasingly in the news these days, the difficulties youth without college degrees face in finding good jobs has been a problem for decades.

Programs such as the ones listed above are part of the solution. But they are not enough, given the magnitude of the problem. In order to produce better employment outcomes at scale, leaders from all sectors and levels of government need to make broader shifts in how education and workforce programs are designed, and how they interact with each other and employers. That is a heavy lift, but it is worth it to address the high costs imposed by the status quo: high unemployment, poverty, and untapped potential.  

      

During his presentation at the University of Michigan/Urban Land Institute Real Estate Forum, Christopher B. Leinberger discusses the impact walkable urbane places has and will have on metropolitan development patterns, the market reasons for this change and how to strategically manage it.

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It is hard to find good news these days, especially coming from Sacramento, the capital of one of the most hard-pressed states in the country. Yet an evolving model of development is emanating from the metropolitan area that is being watched carefully around the country.

This model could inspire sweeping national transportation, energy and climate change legislation and future infrastructure investment and real estate development.

The model started with the much-admired Blueprint Project, led by the Sacramento Area Council of Governments. Next came Senate Bill 375, calling for regional transportation and development plans that minimize auto dependency, reduce climate change gas emissions and encourage walkable urban development. The next steps are the Sacramento Regional Transit Master Plan and Transit-Oriented Guidelines, to be released in May. Taken together, they offer a bold effort to give the market what it wants: the choice of the well-known drivable suburban or walkable urban development, the basis of the next American Dream.

For the past half-century, American households demanded and got only one way of living and working, the suburban way that meant driving. Basically, California invented this way of life and exported it across the country and around the world. We all reveled in it. The songs of the Beach Boys and Jan and Dean still echo through my mind, reminding me of a way of life and a way of developing our communities that was seductive at the time.

Little did we know of the unintended consequences of drivable suburban development pattern, including:

• Land consumption eight to 12 times that of population growth.
• Significant increase in car-miles driven and foreign oil consumed, mostly from hostile countries.
• The onset of the obesity, diabetes and asthma epidemics related to a car-dependent lifestyle, especially among our children who cannot even walk to school anymore.
• Household income diverted from wealth building to paying for a fleet of depreciating cars, taking at least 25 percent of income vs. less than 5 percent a century ago.
• The quality of life for the community goes down when more drivable suburban development occurs, such as the next strip mall. This leads to not-in-my-backyard opposition. According to a soon-to-be-released Brookings Institution study, car-dependent households emit three times the climate change gases, such as carbon dioxide, as a walkable urban household.

Yet these consequences, which evoke much hand-wringing, do not tend to motivate behavioral change. That change comes when consumers vote with their pocketbooks; this they have done. There is pent-up demand for walkable urban development, with evidence everywhere you look. This includes research of consumer preferences and market research showing that walkable urban housing has held its value during this recession while the bulk of price declines occurred in fringe suburban housing.

Unfortunately, many metropolitan areas enforce zoning laws that prohibit building higher-density, walkable urban development. There is great NIMBY opposition to it. And the necessary infrastructure for a choice of transportation options from walking and biking to riding transit, along with cars, is generally not available.

Yet Sacramento is showing the rest of the state and nation how to do it. The Blueprint is widely regarded as a state and national model of regional development planning. The proposed Regional Transit Master Plan, along with the Transit-Oriented Development Guidelines, will provide the extension of the transit system while helping to make walkable urban development acceptable around the stations.

Another step is to provide management to each of these walkable urban, Transit-Oriented Development places, such as Station 65, a proposed 500,000-square-foot mixed-used project to include residential units, office and retail space, and a hotel and restaurants. These management organizations would be modeled on the Downtown Sacramento Partnership. In fact, many of these Transit-Oriented Development places can subcontract with the partnership to provide services in the early years.

Finally, these walkable urban, transit-oriented places need to develop a conscious affordable housing strategy. The current affordable housing strategy in Sacramento is "drive until you qualify" – which is obviously bankrupt. It is crucial to have a conscious strategy since it is going to take a generation to catch up with the pent-up demand for walkable urban housing and commercial development.

According to Brookings Institution research, there should be eight to 12 regionally significant, walkable urban, transit-oriented places in the region. Today there are only three: downtown, midtown and Old Sacramento. The opportunity for locating and building five to nine additional walkable urban, transit-oriented places and building far more development in the existing three would be worth billions of dollars and would represent a more sustainable way of living.

Sacramento can provide a model for the country, one that we certainly need.

       

       

Event Information

The Brookings Doha Center (BDC) hosted a panel discussion on April 21, 2015 regarding Libya’s displacement crisis amid the country’s ongoing violence. The panelists were Houda Mzioudet, a journalist, researcher, and commentator on Libyan and Tunisian affairs; Megan Bradley, a non-resident fellow at the Brookings-LSE Project on Internal Displacement and assistant professor at McGill University, and Ibrahim Sharqieh, the deputy director of the BDC. Sultan Barakat, the BDC’s director of research, moderated the event, which was attended by members of Qatar's diplomatic, academic, and media community.

Sultan Barakat opened the discussion by explaining that the main difference between refugees and internally displaced persons (IDPs) is whether they are able to cross a border. By doing so, refugees gain access to certain types of status and assistance. Otherwise, both groups’ experience of being uprooted is similar, as they are likely to lose their livelihoods, friends, family, and end up in a difficult environment where they are at the mercy of others. Barakat argued that the international community has proven it cannot deal with these challenges, especially in a dignified way, and called for a reexamination of the 1951 Refugee Convention.

Ibrahim Sharqieh then described the displacement crisis within Libya, starting with the 2011 revolution that removed Gadhafi from power. He reported that the number of IDPs in the wake of the fighting reached 550,000, most of whom fled for political reasons, as they were Gadhafi supporters. He said that most IDPs returned to their homes after Gadhafi’s defeat, with the numbers falling to 56,000 by early 2014, though some groups such as the Tawerghans and the Mashashya tribe continued to face difficult situations. Sharqieh noted that due to Libya’s current civil war, the number of IDPs has now increased to 400,000. Many of them are scattered over 35 towns and cities, often lacking shelter due to the small number of available camps. He added that Libya’s IDPs often get caught in crossfire between militia groups, particularly in Benghazi and near Tripoli’s airport, and their movements have been restricted. He found that IDPs from Tawergha at the Janzour camp near Tripoli faced discrimination when they left the camp, which extended to their children that attend area schools.

According to Sharqieh, the ultimate solution is a successful transition where there is national reconciliation and the establishment of a transitional justice law, but he noted that this is not very likely because of the ongoing civil war and presence of rival governments. In the meantime, he expressed that parties to the conflict have an obligation to protect IDPs, providing humanitarian support and education as well. Sharqieh also advocated for IDPs being represented in the ongoing U.N.-sponsored negotiations to ensure that their situation is addressed. He reported that the Tawerghans are highly organized, in communication with the state, and have been able to forge some agreements with Misrata, while more recently displaced IDPs are basically just on the run.

Houda Mzioudet then discussed the Libyans who have crossed into Tunisia, noting that Tunisians historically have not considered Libyans refugees because of their close relations. She said that in 2011 these Libyans’ presence was not considered a major problem, as many found refuge with Tunisian families in the south and Tunisia received U.N. support. She noted, however, that a new wave of Libyans last summer had complicated matters, as these communities were more politically and ideologically diverse. Asked by Barakat whether refugees were bringing Libya’s politics with them, Mzioudet said the Libyans were accused at one time of trying to stir up trouble, but the government took a firm stance against them getting involved in Tunisia’s politics.

Mzioudet argued that the main concern now is how Libyans can be assisted, as many of them have lost trust in the Libyan authorities and are fearful of approaching the Libyan embassy. She reported that Libyans are now living in a state of limbo: they do not need visas, which enables them to live underground, but also prevents them from getting jobs. Mzioudet described this as a challenge for Tunisian authorities, as clear information about these Libyans is hard to come by. She cited estimates of their numbers ranging from the government’s 1.5 million (roughly 10 percent of Tunisia’s population) to a recent study’s 300,000-400,000.

Mzioudet noted that the U.N. High Commissioner for Refugees (UNHCR) has encouraged Libyans to come forward and register, but many have refused to do so. She also recounted that the Tunisia’s extradition of ex-Libyan Prime Minister Al-Baghdadi Al-Mahmoudi caused an uproar and frightened many Libyans. Though Mzioudet noted that civil society groups have done much to help Libyan refugee communities, the U.N. has prioritized other needs and Tunisia is not recognized as a host country by international community. She added that at this point some Libyans are not able to make ends meet and some women have turned to prostitution as a result.

Megan Bradley’s presentation stressed the need for a holistic approach to Libya’s displacement crisis and the importance of thinking about the relationships between the refugee and IDP populations. She explained that the accepted durable solutions for each were similar: local integration in the country of asylum or community where they are sheltering, resettlement to a third country or community, or voluntary repatriation in conditions of safety and dignity. Bradley noted that the expectation generally seems to be that repatriation and return will be the predominant approach for Libyan refugees and IDPs, as occurred remarkably quickly following the revolution. She said this was possible largely because Libyans were able to finance their own returns—rare in displacement situations. Similarly, many displaced Libyans are continuing to depend on their own resources, which Bradley warned is not sustainable.

Bradley went on to make four specific points. First, she emphasized that under international law, the return of displaced persons must be voluntary. She argued that the vast majority of Libyan exiles have legitimate security concerns and should benefit from protections against refoulement, defined as the expulsion of vulnerable individuals. Secondly, Bradley said it was time to think about resources and increased donor contributions, challenging as it may be. She then turned to transitional justice and reconciliation, noting how the overly punitive nature of Libya’s political isolation law and the concept of collective responsibility had needlessly increased displacement. Lastly, Bradley called for delivering current support in ways that can lay groundwork for durable solutions, such as getting Libyan children in schools, providing adequate healthcare, and bringing them out of the shadows.

When Barakat asked about European support for Tunisia, Bradley noted that these countries have a huge potential role to play. At the same time, she suggested that the Tunisian government has not forceful enough in requesting their assistance. With regards to the migration crisis in the Mediterranean, Bradley and the other panelists urged the international community and especially the European Union to put greater emphasis on resolving the political vacuum in Libya and elsewhere on the continent, while allowing for resettlement and legal labor migration in the meantime. In response to a suggestion from an attendee that Libyans should not be considered refugees because they are all still receiving stipends from Libyan institutions, Bradley countered that refugee status has nothing to do with financial resources, but the need for protection. Mzioudet added that some Libyans have reported that their salaries have been withheld, perhaps for past misdeeds, pushing them into destitution.

Sharqieh condemned the failure to recognize what are clearly refugees in Tunisia as such, suggesting that it is convenient for the UNHCR and government of Tunisia because it limits their obligations. Still, he held that many IDPs would return home given effective rule of law and a reliable judicial system, though otherwise they could not risk it. Barakat closed the discussion by suggesting that, considering the trend of intractable conflicts, it was time for a regional approach to handling the resulting displacement issues.

Video

• Uprooted, unprotected: Libya’s displacement crisis
• المقتلعون غير المحميين: أزمة النازحين في ليبيا

Transcript

• Event Transcript (.pdf)

Event Materials

• libya transcript

      

       

       

On Friday, June 3, S&P Global Ratings announced that it would not downgrade South Africa’s credit rating to junk, letting South Africa breathe a sigh of relief. The outlook, however, remained negative. While some experts were confident that the rating would not be cut, most continued to warn that future economic or political turmoil could spark a downgrade later this year. The South African Treasury agreed, but remained positive releasing a statement saying:

Government is aware that the next six months are critical and there is a need to step up the implementation [of measures to boost the economy] … The benefit of this decision is that South Africa is given more time to demonstrate further concrete implementation of reforms that are underway.

South Africa, whose current rating stands at BBB- (one level above junk), has been facing weak economic growth—at 1 percent—over past months. The International Monetary Fund has given a 2016 growth forecast of 0.6 percent. Many feared that a downgrade could have pushed the country into a recession. Borrowing by the government would have also become more expensive, especially as it tackles a 3.2 percent of GDP budget deficit for the 2016-2017 fiscal year.

Other credit ratings agencies also are concerned with South Africa’s economic performance. Last month, Moody’s Investors Service ranked the country two levels above junk but on review for a potential downgrade, while Fitch Ratings is reviewing its current stable outlook and BBB- rating.

For South African Finance Minister Pravin Gordhan’s thoughts on the South African economy, see the April 14 Africa Growth Initiative event, “Building social cohesion and an inclusive economy: A conversation with South African Finance Minister Pravin Gordhan.”

Former Chadian President Hissène Habré is sentenced to life in prison by African court

This week, the Extraordinary African Chambers—located in Dakar and established in collaboration with the African Union—sentenced former Chadian President Hissène Habré to life in prison. Habré seized power in 1982, overthrowing then President Goukouni Oueddei. He fled to Senegal in 1990 after being ousted by current Chadian President Idriss Deby. After he fled to Senegal, the African Union called on Senegal to prosecute Habré. In 2013, the Extraordinary African Chamber was created with the sole aim to prosecute Habré. The Habré trial is the first trial of a former African head of state in another African country.

Habré faced a long list of charges including crimes against humanity, rape, sexual slavery, and ordering killings while in power. According to Chad’s Truth Commission,  Habré’s government murdered 40,000 people during his eight-year reign. At the trial, 102 witnesses, victims, and experts testified to the horrifying nature of Habré’s rule. His reign of terror was largely enabled by Western countries, notably France and the United States. In fact, on Sunday, U.S. Secretary of State John Kerry admitted to his country’s involvement in enabling of Habré’s crimes. He was provided with weapons and money in order to assist in the fight against former Libyan leader Moammar Gadhafi. Said resources were then used against Chadian citizens.

Also this week, Simone Gbagbo, former Ivorian first lady, is being tried in Côte d’Ivoire’s highest court— la Cour d’Assises—for crimes against humanity. She also faces similar charges at the International Criminal Court though the Ivoirian authorities have not reacted to the arrest warrant issued in 2012. In March 2015, Simone Gbabgo was sentenced to 20 years in jail for undermining state security as she was found guilty of distributing arms to pro-Laurent Gbagbo militia during the 2010 post-electoral violence that left 3000 dead. Her husband is currently on trial in The Hague for the atrocities committed in the 2010 post-election period.

Despite Mozambique’s debt crisis and low global gas prices, energy company Sasol will continue its gas investment

On Monday, May 30, South African chemical and energy company Sasol Ltd announced that Mozambique’s ongoing debt crisis and continuing low global gas prices would not slow down its Mozambican gas project. The company expressed confidence in a $1.4 billion processing facility upgrade stating that the costs will be made up through future gas revenues. In explaining Sasol’s decision to increase the capacity of its facility by 8 percent, John Sichinga, senior vice president of Sasol’s exploration and production unit, stated, “There is no shortage of demand … There’s a power pool and all the countries of the region are short of power.” In addition, last week, Sasol began drilling the first of 12 new planned wells in the country.

On the other hand, on Monday The Wall Street Journal published an article examining how these low gas prices are stagnating much-hoped-for growth in East African countries like Tanzania and Mozambique as low prices prevent oil companies from truly getting started. Now, firms that flocked to promising areas of growth around these industries are downsizing or moving out, rents are dropping, and layoffs are frequent. Sasol’s Sichinga remains positive, though, emphasizing, "We are in Mozambique for the long haul. We will ride the waves, the downturns, and the upturns."

       

What do Americans think about U.S. natural gas? 

The answer depends on who you ask. Presidential candidates, Washington think tank analysts, and ordinary citizens all give widely different answers to that question. In the United States, natural gas is sure to play an important role in the energy mix for the foreseeable future and has yielded several major economic, environmental, and health benefits in the short- and medium-term. Despite this, the image of natural gas has deteriorated in recent years, particularly within the environmental community. 

In a new policy brief, "Natural gas in the United States in 2016: Problem child and poster child," Tim Boersma discusses the various sentiments surrounding the debate over natural gas, analyzing the data supporting or refuting these varied points of view. Additionally, Boersma discusses the role that natural gas can play as a bridge fuel to a low-carbon economy, outlining a policy and research agenda for the utilization of natural gas going forward.

Downloads

• Natural gas in the United States in 2016

       

       

       

The terrible attack in Nice on July 14—Bastille Day—saddened us all. For a country that has done so much historically to promote democracy and human rights at home and abroad, France is paying a terrible and unfair price, even more than most countries. My colleagues Will McCants and Chris Meserole have carefully documented the toll that France, and certain other Francophone countries like Belgium, have suffered in recent years from global terrorism. It is heart wrenching.

From what we know so far, the attack was carried out by a deeply distraught, potentially deranged, and in any case extremely brutal local man from Nice of Tunisian descent and French nationality. Marital problems, the recent loss of his job, and a general sense of personal unhappiness seem to have contributed to the state of mind that led him to commit this heinous atrocity. Perhaps we will soon learn that ISIS, directly or indirectly, inspired the attack in one way or another as well. My colleague Dan Byman has already tapped into his deep expertise about terrorism to remind us that ISIS had in fact encouraged ramming attacks with vehicles before, even if the actual manifestation of such tactics in this case was mostly new. 

This attack will again raise the question: Why France? On this point, I do have a somewhat different take than some of my colleagues. The argument that France has partly brought these tragedies upon itself—perhaps because of its policies of secularism and in particular its limitations on when and where women can wear the veil in France—strikes me as unpersuasive. Its logical policy implications are also potentially disturbing, because if interpreted wrongly, it could lead to a debate on whether France should modify such policies so as to make itself less vulnerable to terrorism. That outcome, even if unintended, could dance very close to the line of encouraging appeasement of heinous acts of violence with policy changes that run counter to much of what French culture and society would otherwise favor. So I feel the need to push back.

Here are some of the arguments, as I see them, against blaming French culture or policy for this recent string of horrible attacks including the Charlie Hebdo massacre, the November 2015 mass shootings in Paris, and the Nice tragedy (as well as recent attacks in Belgium):

• Starting with the simplest point, we still do not know much about the perpetrator of the Nice killings. From what we do surmise so far, personal problems appear to be largely at the root of the violence—different from, but not entirely unlike, the case with the Orlando shooter, Omar Mateen.
• We need to be careful about drawing implications from a small number of major attacks. Since 2000, there have also been major attacks in the Western world by extremist jihadis or takfiris in New York, Washington, Spain, London, San Bernardino, Orlando, and Russia. None of these are Francophone. Even Belgium is itself a mixed country, linguistically and culturally.
• Partly for reasons of geography, as well as history, France does face a larger problem than some other European countries of individuals leaving its country to go to Syria or Iraq to fight for ISIS, and then returning. But it is hardly unique in the scale of this problem.
• Continental Europe has a specific additional problem that is not as widely shared in the United Kingdom or the United States: Its criminal networks largely overlap with its extremist and/or terrorist networks. This point may be irrelevant to the Nice attack, but more widely, extremists in France or Belgium can make use of illicit channels for moving people, money, and weapons that are less available to would-be jihadis in places like the U.K. (where the criminal networks have more of a Caribbean and sub-Saharan African character, meaning they overlap less with extremist networks).
• Of course, the greatest numbers of terrorist attacks by Muslim extremists occur in the broader Muslim world, with Muslims as the primary victims—from Iraq and Syria to Libya and Yemen and Somalia to South Asia. French domestic policies have no bearing on these, of course.

There is no doubt that good work by counterterrorism and intelligence forces is crucial to preventing future attacks. France has done well in this regard—though it surely can do better, and it is surely trying to get better. There is also no doubt that promoting social cohesion in a broad sense is a worthy goal. But I would hesitate, personally, to attribute any apparent trend line in major attacks in the West to a particular policy of a country like France—especially when the latter is in fact doing much to seek to build bridges, as a matter of national policy, with Muslims at home and abroad. 

There is much more to do in promoting social cohesion, to be sure, even here in America (though our own problems probably center more on race than on religion at the moment). But the Nice attacker almost assuredly didn’t attack because his estranged wife couldn’t wear a veil in the manner and/or places she wanted. At a moment like this in particular, I disagree with insinuations to the contrary.

         

       

A central function of the United States Congress is oversight of the executive branch. Congressional oversight, as exercised from the beginning of the nation, is an essential tool in making the separation of powers real by empowering Congress to check the executive. In recent years, however, as polarization has reached paralyzing levels, Congress has largely gotten out of the business of routine and prospective “police-patrol” oversight.  In the absence of the will and the capacity to do prospective oversight, Congress is at risk of losing its power to the executive branch and thus failing one of its most important constitutional roles.

This paper assesses whether or not anything can be done to get Congress back into the oversight business. Specifically, author Elaine Kamarck examines the following question: Assuming that future Congresses develop the political will to conduct oversight, do they have the capacity to do oversight of a large, modern, and complex executive branch?

As Kamarck illustrates, mismatched resources may make it difficult for Congress to resume its oversight function. The modern federal government is a complex and enormous enterprise. But as the executive branch has grown considerably over the past decades, Congress has adopted budget cuts that make the legislative branch less and less capable of undertaking the kinds of systemic oversight that can solve or prevent problems. Congress employs a mere 17,272 professional staff to oversee an executive branch consisting of 4.2 million civil servants and uniformed military. 

“The existing infrastructure that is supposed to help Congress be on top of the executive branch has fallen prey to a mindless dumbing down of Congress,” Kamarck states. She details the five entities that are meant to support Congress in its oversight role: committee staff, the Congressional Research Service, the Government Accountability Office, the Congressional Budget Office, and the Inspectors General, all of which are understaffed and under-budgeted. Kamarck recommends the first thing Congress should do to fix its oversight problem is to properly staff the agencies it already has and to stop nickel and diming and degrading its own capacity.

Furthermore, Kamarck calls for a “Congressional Oversight Office,” a body charged with evaluating governmental performance before a crisis arises. This office should be staffed by implementation professionals who can gather the signals from all the other oversight organizations annually and in sync with the budget cycle.

“Congress needs to get back into the business of productive executive branch oversight,” concludes Kamarck. A Congressional Oversight Office is certainly a step in that direction.

Downloads

• Download the paper

      

A recent blog suggested that CMS’ efforts to standardize assessment data was based on a goal of “….creating a functional measurement tool that could be used throughout the industry.” In fact, CMS has been working since 2005 to meet the Congressional directive to standardize assessment information at hospital discharge, and post-acute care (PAC) admission and discharge for payment and quality reporting purposes (Deficit Reduction Act of 2005). The CARE tool was developed as part of the national Post-Acute Care Payment Reform Demonstration (PAC PRD). The conceptual domains and items were selected with the input of the wide range of stakeholder communities working with PAC populations. Clinicians from acute hospitals and each of the four PAC settings, including long term care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs), and home health agencies (HHAs) identified items to test in four areas: medical status, functional status, cognitive status, and some social support factors. Input was given by physicians, nurses, physical therapists, occupational therapists, speech and language pathologists, social workers and case managers working in each of the different levels of care. Initial item selection was based on a review of existing assessment items, including those in the three Federally-mandated instruments, (the IRF-PAI, MDS 2.0, and OASIS-B which were in effect at this time) and the input of each of the scientific communities working in these areas.

Developers of proprietary systems such as the UDS-MR©, Inter-RAI ©, and AM-PAC ©, as well as public domain items tested in clinical trials such as the PROMIS items, were all reviewed as part of this process. The selected items needed to be in the public domain so the measures could be modified as science advanced practice.

Over 200 providers participated nationwide to submit over 53,000 CARE assessments over the course of the PAC PRD. Participating clinicians also provided feedback during training and exit interviews. In general, positive feedback was provided on most items. Feedback showed that almost all items were commonly collected on existing instruments in hospitals and PAC providers, although some of the information may have been informally noted in charts rather than provided in the structured form of the CARE items.

The items were tested for reliability so they could be applied consistently across populations and settings. Most of the items were previously tested and found reliable in at least one of the five levels of care. Two types of reliability tests were conducted on the final CARE tool item set used in the PAC PRD. The results showed that most items when applied to the other four settings were at least as reliable as the existing Federal assessment items (Kappa scores of 0.6 or better) ensuring their reliable use in future quality measures or payment models would reach consistent results. Complete reports on item reliability and PAC PRD results can be found here.

Data standardization is critical to allow providers to exchange information as they follow the patient. The Deficit Reduction Act of 2005 directed CMS to use standardized assessment items at acute hospital discharge and PAC admission and discharge to allow for empirical comparisons of key questions arising out of changing incentives in the Medicare payment policies. The standardized CARE items are consensus-based versions of the items already collected by clinicians. These and additional items being incorporated into CMS’ assessment item library represent the “best in class.” The team developing the CARE item set represented the leading experts in each of the areas – Dr. Margaret Stineman of the University of Pennsylvania, developer of the function-related groups associated with the proprietary FIM©, Dr. Deborah Saliba, UCLA, lead developer of the MDS 3.0, and Dr. Chris Murtaugh of the Visiting Nurse Service of New York. Team members included Drs. Anne Deutsch and Trudy Mallinson of the Rehabilitation Institute of Chicago. Input was also given by Dr. David Hittle, of the University of Colorado who has worked closely with the OASIS tool, Dr. Samuel Markello, formerly of the UDS-MR©, and Dr. Patrick Murray of Case Western University.

The blog suggested that, “the early reviews of the CARE tool have been poor.” While this clearly is not true, it is worth pointing out that the author owns one of the key proprietary assessment instruments. The CARE items have been evaluated for reliability and they meet the national standards; they allow providers and others the opportunity to download the e-specification of the items without charge and to have the clinicians trained for free under CMS’ regular assessment training initiatives. CMS is currently developing quality measures using the “best in class” assessment items which all meet scientific standards. The quality measure development process already requires CMS to submit measures for endorsement by the National Quality Forum. The “loophole” identified by the UDS-MR© author is non-existent. The Measures Application Partnership is part of the existing NQF process included in the IMPACT legislation. Further, use of uniform data elements across settings, such as those used in the currently collected pressure ulcer measure, allows for exchangeability and improves communication across the system, finally creating a “data follows the person” system.

      

      

       

A clamor is rising against "short termism"—judging a company by its performance over the past quarter, rather than the past few years. BlackRock CEO Laurence Fink and Delaware Supreme Court Chief Justice Leo Strine, for example, recently joined the Business Roundtable and others in decrying the strong pressures for short-term results exerted by daily stock traders and activist hedge funds. Critics claim that these pressures prevent executives from making long-term investments needed for sustainable corporate growth.

There are pressures on and incentives for corporate leaders to put the short term ahead of the long term, but not necessarily from activist hedge funds or stock trading. And some proposed remedies for short-termism would undermine the economic interests of shareholders.

The current attack on short termism is premised on the sharp increase in the average daily trading volume of stocks over the past few decades. The primary cause has been a relatively small group of day traders, including the notorious high-frequency traders who buy millions of shares and sell them a millisecond later. These traders care not a whit about corporate fundamentals or business plans; they are trying to exploit slight pricing anomalies that arise because of technical differences in securities markets. Thus corporate executives should not be pressured by higher daily trading volumes to avoid good long-term investment spending.

Critics of short-termism are even more alarmed about activist hedge funds that may lobby corporations to pay higher dividends, for example, or sell unprofitable divisions. They claim these funds push for a quick boost in corporate earnings in order to sell their shares for a quick profit.

The data do not support this uniformly negative view. Activist hedge funds display a broad array of strategies and time horizons. On average, they hold a company's stock for one or two years, according to various empirical studies. Yet according to a recent McKinsey study of 400 activist campaigns over the past decade, the median campaign was launched when the company was on the decline and led to higher shareholder returns relative to peers for at least three years.

To win proxy contests, activist hedge funds must persuade other shareholders to support the changes they advocate. The funds usually hold a relatively small percentage of a company's shares; the overwhelming majority are owned by institutional investors such as mutual funds and pension plans.

Activist hedge funds have won roughly half of the proxy contests they've entered, as institutional investors have carefully distinguished among long-term plans depending on a company's specific circumstances. These institutions backed activist campaigns to increase dividends at companies like Apple with huge hoards of cash. But they've also supported multi-year research programs of biotech firms like Amgen that have shown they can deliver.

To thwart the perceived threats of short-termism, critics have proposed measures that would reduce the legal rights and economic interests of all shareholders. Martin Lipton, a prominent opponent of activist hedge funds, has recommended that U.S. corporate law adopt a new norm—that corporate directors be elected to five-year terms, rather than the usual one-year term. Such long tenure, combined with existing anti-takeover defenses, would effectively insulate the leadership of chronically under-performing companies.

There is a better approach: Boards should measure and reward the efforts of corporate executives and portfolio managers by looking at the organization's performance over the past three years. At present, most firms distribute cash bonuses and stock grants on the basis of the prior year's results. This approach does encourage top executives to favor short-term results over long-term growth.

At the same time, the top executives at both public companies and asset managers should be required to retain for three to five years half of the shares they receive through stock grants and options. At present, these people can usually sell all their shares as soon as they vest or the options are exercised. This is an inducement for top executives and managers to push up the company's stock price for a few months so they can sell at a temporary high.

While there are reasonable concerns about corporate short-termism, their remedies should be narrowly tailored. Most of these concerns can be addressed by adopting longer periods for executive compensation. But we should not overreact to day traders or hedge funds by dramatically reducing the legitimate rights and financial interests of all shareholders.

      

Millions of Egyptians took to the streets in January 2011 chanting “‘ish, hurriyya, ‘adalah ijtima‘iyya,” or bread, freedom, and social justice. This simple chant captured protestors’ desire for a new Egypt defined by economic, political, and social change. Five years later, however, the attainment of those demands seems more elusive than ever. In the economic sphere, Egypt still faces the major challenge of high unemployment, particularly among educated youth. Why do so many of Egypt’s young university graduates struggle to find employment?

Read "Educated but unemployed: The challenge facing Egypt’s youth"

In this policy briefing, Adel Abdel Ghafar analyzes the roots of Egypt’s youth unemployment crisis, starting with the structural issues plaguing the country’s educational system. He then examines other contributing factors including neoliberal economic reforms, gender inequality, and the lack of entrepreneurship. Abdel Ghafar warns that failing to address the unemployment issue will increase the likelihood of another uprising.

Abdel Ghafar thus argues that the Egyptian government must urgently undertake reforms and devote extensive resources to dealing with youth unemployment. Specifically, he recommends ways in which Egypt can revamp public university funding, promote vocational training, stimulate entrepreneurship, and increase the participation of women in the workforce.

Downloads

• English PDF
• Arabic PDF

       

       

       

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Australia's mandatory Superannuation Guarantee requires its citizens to save at least 9 percent of their income towards retirement. In many Asian nations, economic growth has spurred reexamination of pension systems to meet the needs of rapidly evolving societies. Would a mandatory savings plan be more effective than the current U.S. voluntary system? How have Asian nations have restructured their pension systems to deal with legacy costs? And what can Americans learn from the way Australia uses both employer and employee representatives to shape investment choices?

On September 17, the Retirement Security Project at Brookings and the AARP Public Policy Institute hosted a discussion of what the United States might learn from retirement savings systems in Australia and Asia. Opening speakers included Nick Sherry, who helped shape the Australian system as a cabinet minister and ran a Superannuation fund in the private sector, and Josef Pilger, an advisor on pension reform to both the Malaysian and Hong Kong governments and many industry providers. Steve Utkus, David Harris and Benjamin Harris, retirement experts from both the United States and the United Kingdom, considered how reforms in Australia and Asia can shape the American debate and whether this country should adopt key features from those foreign systems.

 

Audio

• Retirement Savings in Australia, Asia and Beyond: What are the Lessons for the United States?

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20130917_retirement_savings_transcript

      

American experience strongly suggests that the coming UK pension freedoms sound better in theory than they will work in practice. After nearly a decade where the UK has been the gold standard for retirement savings policy, it is about to take a step that it may regret.

As annuity purchases are not required, very few Americans buy them, feeling that they are spending a great deal of money for a comparatively small monthly income. Even those in traditional DB pension plans usually take a lump sum if they are allowed to do so. As a result, many US retirees spend unwisely, trust the wrong financial advisor, or make other financial mistakes.

Many people greatly overestimate how long their savings will last. Most others assume (often wrongly) that they can manage their own money as well as anyone else or that they can live comfortably on Social Security alone. U.S. Social Security pays a benefit that depends on the retirees’ individual income history. The average annual amount is about $13,000 (GBP 8,700).

One survey found that in West Virginia, a state with a relatively low average income, 78% of those near retirement and 67% of those at retirement would likely outlive their financial assets. Workers with lower incomes are most at risk. A recent national study found that by the 20th year of retirement, more than 81% of Americans with incomes up to $27,000 would run short of money, as would 38% of those earning up to $42,000, and 19% of those with incomes up to $65,000.  Even 8% of those with the highest incomes could not meet their expenses.

Advice alone is not likely to help. US experience shows that literally every minute that passes after general advice is given reduces the chance that the consumer will act on it – even when they have decided to do so. And even a significant number of those who consult with a financial planner fail to act on that guidance.

What does show promise is income illustration. In a 2014 U.S. survey, 85% of plan participants found estimates of the income they could anticipate from their retirement savings useful, and 35% said that they would save more. Income illustrations change the framing of retirement saving from gross amounts saved to retirement income.  Annuity-like products become insurance against running out of money, something Americans are increasingly concerned about.

Two other potential developments may help. One is longevity insurance, an annuity that provides income only after a set age. Purchasing a policy defines how long one must make retirement savings last, and the retiree is protected against running out of money. Because longevity insurance is deferred, one can receive higher amounts of monthly income for a lower cost.  In 2014, $50,000 would buy $275 a month at age 65 or $1200 a month starting at age 80.

Another idea is an automatic enrollment trial annuity. As developed by several Brookings Institution colleagues and me, new retirees would automatically use part of their savings for a two year annuity unless the retiree refused it. The rest of their savings would be available as a lump sum. After the trial period, the annuity would become permanent if they did nothing or they could cancel it and take the rest of their money as a lump sum.

The many annuity horror stories from the UK show a definite need for change, but the coming reforms go too far. US experience suggests that too many UK retirees are likely to see their savings exhausted all too quickly. There are alternatives that could do a better job of protecting retirees.

       

The final months of Obama’s historic terms of office as America’s first black president are taking place against the backdrop of an ugly Republican nominating race, and to the sound of ugly language on race from Donald Trump. Progress towards racial equality is indeed proceeding in faltering steps, as the president himself made clear in a commencement speech, one of his last as president, to the graduating class of Howard University.

“America is a better place today than it was when I graduated from college,” the president said. But on the question of progress on closing the race gap, he provided some mixed messages. Much done; more to do. The president picked out some specific areas on both sides of the ledger, many of which we have looked at on these pages.

Three reasons to be cheerful

1."Americans with college degrees, that rate is up.”

The share of Americans who have completed a bachelor’s degree or higher is now at 34 percent, up from 23 percent in 1990. That’s good news in itself. But it is particularly good news for social mobility, since people born at the bottom of the income distribution who get at BA experience much more upward mobility than those who do not:

2. "We've cut teen pregnancy in half."

The teen birthrate recently hit an all-time low, with a reduction in births by 35 percent for whites, 44 percent for blacks, and 51 percent for Hispanics:

This is a real cause for celebration, as the cost of unplanned births is extremely high. Increased awareness of highly effective methods of contraception, like Long Acting Reversible Contraception (LARCs), has certainly helped with this decline. More use of LARCs will help still further.

3. "In 1983, I was part of fewer than 10 percent of African Americans who graduated with a bachelor's degree. Today, you're part of the more than 20 percent who will."

Yes, black Americans are more likely to be graduating college. And contrary to some rhetoric, black students who get into selective colleges do very well, according to work from Jonathan Rothwell:

Three worries on race gaps

But of course it’s far from all good news, as the president also made clear. 

1. "We've still got an achievement gap when black boys and girls graduate high school and college at lower rates than white boys and white girls."

The white-black gap in school readiness, measured by both reading and math scores, has not closed at the same rate as white-Hispanic gaps. And while there has been an increase in black college-going, most of this rise has been in lower-quality institutions, at least in terms of alumni earnings (one likely reason for race gaps in college debt):

2. "There are folks of all races who are still hurting—who still can’t find work that pays enough to keep the lights on, who still can’t save for retirement."

Almost a third of the population has no retirement savings. Many more have saved much less than they will need, especially lower-income households. Wealth gaps by race are extremely large, too. The median wealth of white households is now 13 times greater than for black households:

3. "Black men are about six times likelier to be in prison right now than white men."

About one-third of all black male Americans will spend part of their life in prison. Although whites and blacks use and/or sell drugs at similar rates, blacks are 3 to 4 times more likely to be arrested for doing so, and 9 times more likely to be admitted to state prisons for a drug offense. The failed war on drugs and the trend towards incarceration have been bad news for black Americans in particular:

Especially right now, it is inspiring to see a black president giving the commencement address at a historically black college. But as President Obama knows all too well, there is a very long way to go.

      

       

“This is about governments using data for performance rather than compliance” was a resounding message coming out of the U.S. Department of Education’s conference on June 10 on the use of Pay for Success contracts in education. These contracts, known globally as social impact bonds, continue to be at the forefront of global conversations about results-based financing mechanisms, and have garnered significant momentum this week with passage of the Social Impact Partnerships for Pay for Results Act in the U.S. While limitations certainly exist, their potential to revolutionize the way we fund social projects is tremendous.

A social impact bond (SIB) is a set of contracts where a government agency agrees to pay for service outputs or outcomes, rather than funding defined service inputs, and an investor provides upfront risk capital to the service provider. The investor is potentially repaid principal and interest contingent on the achievement of the predetermined outputs or outcomes.

In our research on impact bonds at the Center for Universal Education, we have analyzed the use of SIBs for education in the U.S., other high-income countries, and low- and middle-income countries. Practitioners in each of these contexts are having far more similar conversations than they may realize—all are united in their emphasis on using SIBs to build data systems for performance. There is tremendous potential for lessons learned across these experiences and across the broader discussions of results-based financing mechanisms for education globally.

Current SIBs for education globally

There are currently five SIBs for education worldwide: two in the U.S. for preschool education, one in Portugal for computer science classes in primary school, and one each in Canada and Israel for higher education. In addition, a number of countries have used the SIB model to finance interventions to promote both education and employment outcomes for teens—there are 21 such SIBs in the U.K., three in the Netherlands, and one in Germany. There is also a Development Impact Bond (DIB), where a donor rather than government agency serves as the outcome funder, for girls’ education in India. The Center for Universal Education will host a webinar to present the enrollment and learning outcomes of the first year of the DIB on July 5 (register to join here).

U.S. activities to facilitate the use of SIBs for education

At the June 10 conference at the Department of Education, the secretary of education and the deputy assistant to the president for education said that they saw the greatest potential contribution of SIBs in helping to scale what works to promote education outcomes and in broadening the array of partners involved in improving the education system. Others pointed out the value of the mechanism to coordinate services based on the needs of each student, rather than a multitude of separately funded services engaging the student individually. In addition to using data to coordinate services for an individual, participants emphasized that SIBs can facilitate a shift away from using data to measure compliance, to using data to provide performance feedback loops.

The interest in data for performance rather than compliance is part of a larger shift across the U.S. education sector, represented by the replacement of the strict compliance standards in the No Child Left Behind Act of 2002 with the new federal education funding law, the Every Student Succeeds Act, signed into law in December of 2015. The law allows for federal outcome funding for SIBs in education for the first time, specifically for student support and academic enrichment programs. The recently passed Social Impact Partnerships for Pay for Results Act also allows for outcome funding for education outcomes. The Department of Education conference explored potential applications of SIBs across the education sector, including for early home visiting programs, programs to encourage completion of higher education programs, and career and technical education. The conference also analyzed the potential to use SIBs for programs that support specific disadvantaged populations, such as dual language learners in early education, children of incarcerated individuals, children involved in both the child protection and criminal justice systems, and Native American youth. Overall, there was a focus on areas where the U.S. is spending a great deal on remediation (such as early emergency room visits) and on particular levers to overcome persistent obstacles to student success (such as parent engagement).

To help move the sector forward, the Department of Education announced three new competitions for feasibility study funding for early learning broadly, dual language learners in early education, and technical education. The department is also facilitating connections between existing evaluation and data system development efforts and teams designing SIBs. The focus on early childhood development by the Department of Education is reflective of the national field as a whole: Programming in the early years is becoming a particularly fast-growing sector for SIBs in the U.S. with over 40 SIBs feasibility and design stages.

SIBs for education in low- and middle-income countries

There is only one DIB for education in low- and middle-income countries; however, there are a number of SIBs and DIBs for education in design and prelaunch phases. In particular, the Western Cape Province of South Africa has committed outcome funding for three SIBs across a range of health and development outcomes for children ages 0 to 5.

Though the number of impact bonds may be relatively small, a significant amount of work has been done in the last 15 years in results-based financing for education. The U.K. Department for International Development (DfID), the Dutch Ministry of Foreign Affairs, the Asian Development Bank, the World Bank, the Global Partnership for Output-Based Aid, and Cordaid had together funded 24 results-based financing initiatives for education as of 2015. Of particular interest, DfID is funding results-based financing projects through a Girls Education Challenge and the World Bank launched a new trust fund for results-based financing in education in 2015. As with impact bonds in the U.S., a primary aim of results-based financing for education in low- and middle-income countries is to strengthen data and performance systems. Early childhood development programs and technical and vocational and training programs have also been identified as sub-sectors of high potential. Here are a few final takeaways for those working on results-based financing for education in low- and middle-income countries from the U.S. Department of Education conference:

1. The differences between the No Child Left Behind Act and the Every Student Succeeds Act should be analyzed carefully to ensure other data-driven education performance management systems promote both accountability and flexibility.
2. In building data systems through results-based financing, ensure services can be coordinated around the individual, feedback loops are available for providers, and data on early education, child welfare, parent engagement, and criminal justice involvement are also incorporated.
3. There are potential lessons to be learned from the U.S. Department of Education’s effort to conduct more low-cost randomized control trials in education and the U.S. Census Bureau’s data integration efforts.
4. SIBs provide an opportunity to work across agencies or levels of government in education, which could be particularly fruitful in both low- and middle-income countries and the U.S.

As the global appetite for results-based financing continues to grow and new social and development impact bonds are implemented throughout the world, we’ll have an opportunity to learn the true potential of such financing models.