British debates about welfare reform have often been influenced by American ideas. The Clinton-era welfare reforms were echoed in some of Tony Blair’s alterations to British benefits. Gordon Brown, as Chancellor, introduced a new Working Tax Credit as a direct result of studying the Earned Income Tax Credit. Brown particularly liked the political advantages of a ‘tax cut for hard-working families’, as opposed to a ‘benefit handout to welfare families’.

But now the transatlantic traffic in ideas on welfare is going the other way. The U.K.’s introduction of a single, unified system of transfer payments – the Universal Credit – is getting quite a bit of attention in the wonkier regions of D.C. politics. Paul Ryan, at a Brookings summit on social mobility, mentioned the Universal Credit (UC) as a possible inspiration for a new round of welfare reform. (Ryan is giving a speech at AEI in a couple of weeks: we’re likely to hear more about his thinking then.) When the architect of the UC, Iain Duncan Smith, visited D.C. recently, he held a series of meetings with leading Republicans to discuss his reforms.

The main attractions of the Universal Credit are fourfold:

1. Simplicity. By unifying five cash benefits and an ‘in kind’ benefit (Housing Benefit) into a single, monthly payment, the complexity of the system from the point of view of the recipient will be greatly reduced.
   
   
2. Cost control. Housing Benefit is paid directly to the landlord, which reduces the tenant’s incentive to control costs.  Add that to the crazily overheated U.K. housing market, and should come as no surprise that Housing Benefit has become a major strain on the system, quintupling in cost in real terms over the last two decades to hit £24 billion a year (c. $41bn), to become the second-biggest element of the U.K.’s system, after pensions.  By including an allowance for housing in the single cash payment in UC, the recipient will be incentivized to control their own housing costs.
    
3. Stronger work incentives. The UC has a flatter ‘taper’ than existing benefits, meaning that cash payments are reduced more slowly as earnings rise. In particular, the UC will allow benefit recipients to work part-time (less than 16 hours a week), and still keep claiming. On the downside, incentives for second earners in two-adult families will be reduced. 
   
   
4. Tighter and more targeted work requirements. The UC will contain stronger requirements to seek work than existing benefits, and importantly, has a ‘sliding scale’ of requirements, depending on the position of the recipient. For example, parents with children under the age of 1 will be exempt from work requirements; those with children aged between  1 and 5 will be obliged to attend for interviews with a case worker to prepare for a return to work; those with children at school will be required to ‘actively seek work’.

Sounds pretty good, doesn't it? And in fact it is, on paper at least. In practice the introduction of UC has been marked with huge overspend and delay on the required new IT system. The whole exercise has also been made much harder by cuts in many of the relevant cash benefits, as well as the introduction of a ‘household cap’ on total welfare receipts. The Universal Credit as an idea has a lot of support. As so often, it has been putting the idea a reality that has been difficult.

What—if anything—can the U.S. take from the UC? Short answer: not much. 

Many of the problems the UC addresses do not really apply in the U.S. Work incentives are already pretty strong in the U.S., thanks to the relative generosity of the EITC, and the relative meanness of out-of-work welfare supports. Also, there are already much stronger work requirements in the U.S. system. Some want to go further, and add work requirements to the receipt of food stamps, for example. But this would not require a major overhaul.  As Melissa Boteach and her colleagues at the Center for American Progress write,“the primary problem that the Universal Credit is supposed to address in the United Kingdom—the lack of incentive for jobless workers to enter the labor force—is far less of an issue in the United States”.

The UC also further centralizes an already highly centralized system, by getting rid of Housing Benefit, which is currently administered by Local Authorities. The U.S. system is much less centralized, with states and cities having a high degree of control over the way TANF and SNAP are administered. It is hard to see how anything like a UC could work in the U.S. at anything higher than State level. A Wisconsin Universal Credit makes sense in a way that a U.S. Universal Credit does not.  But if shifting towards block grants to states is really what this is about (see Marco Rubio’s ‘flex fund’ idea),that’s a whole different debate.

A final point. Simplicity and ease of use for the recipient is a key goal of the UC, and a worthy one. The stress and difficulties faced by low-income families just in applying for assistance is unacceptable in the 21st century. But it is not clear that the whole system has to be upended to achieve this goal. Technology ought to allow a single access point to the system, with the complexity out of sight of the user. 

In the U.K. the Universal Credit has a strong rationale, despite the implementation challenges. In the U.S., it is a solution in search of a problem. 

      

Policy Brief #184

The Leahy-Smith America Invents Act (AIA) approved in September 2011 constitutes the most significant overhaul of the American patent system in decades. This policy brief examines some key patent law changes and studies mandated by the legislation, and provides recommendations for companies on successfully navigating the new landscape. [Editor's Note: the legislation was signed into law by President Obama on September 16, 2011.]

Perhaps most notably, the new law will move the United States away from a “first to invent” system and closer to the “first to file” approach used in much of the rest of the world. Other important changes include a new proceeding in the U .S. Patent and Trademark Office (PTO) for third-party challenges to the validity of a recently issued patent, an expanded mechanism for a third party to provide information to the PTO that could be used to narrow or eliminate claims in a pending patent application being prosecuted by a commercial rival, and the introduction of a new, broadly applicable patent infringement defense based on prior commercial use.

	RECOMMENDATIONS
	Under the “first to file” provision of the AIA, companies should be more careful when producing pre-filing disclosures for venues such as conferences and trade shows, with the understanding that under the AIA those disclosures may play a much larger role than in the past with respect to patentability of the associated IP.   Under the AIA, rights to an invention prior to a filing date will depend more on the history of relevant disclosures and less on nonpublic, internal company documents such as laboratory notebooks. All companies—large and small—should consider how to modify their procedures for protecting, evaluating, and filing patents on their inventions accordingly.   The AIA provides a grace period during which inventors can disclose their invention without losing the right to patent it, but leaves uncertainty regarding the definition of “disclosure”. Companies should carefully monitor case law and PTO actions that will undoubtedly help clarify this issue in the coming years.   Companies should reevaluate the extent and manner to which they use provisional patent applications to preserve IP rights.   In light of the increased number of mechanisms available to challenge the validity of pending and issued patents, companies engaged in patent prosecution should reconsider the tradeoffs of performing their own thorough prior art searches during patent prosecution. By finding and disclosing relevant prior art to the PTO, companies may reduce the likelihood that the disclosed prior art will be used successfully against them in future validity challenges.

In addition, there are several other aspects of the AIA that do not change patent law, but may have far reaching consequences. For example, an AIA mandated study by the Government Accountability Office promises to furnish vitally important information on the economic impact of patent litigation by non-practicing entities, and will almost certainly influence future patent legislation. Under the AIA, the hurdles small businesses face in protecting their patents internationally will also receive attention through a PTO study.

It will take many years to develop a mature body of case law and legal scholarship on the full impact of the AIA. What is clear today is that it will profoundly impact the ways that patents are filed, prosecuted, and litigated in the coming years. Companies and other entities that retool their patent strategies to address these changes will be in a much stronger position to maximize the value of their intellectual property (IP) portfolios.

First Inventor to File

One of the most significant components of the AIA concerns the move from a first to invent system to a first to file system. Under this provision, which takes effect 18 months after the AIA is enacted into law, an inventor may win the race to create the invention but lose the race to file the corresponding patent application, and thus lose the right to patent the invention.

However, the AIA includes an important exception in the form of a grace period allowing an inventor or others who obtained information from the inventor to make disclosures regarding the invention in advance of filing a patent application, as long as the application is filed within one year after the first disclosure. Some form of grace period has been a feature of the U.S. patent landscape since the 19th century, and allows an inventor time to examine the commercial practicability of the invention, engage in discussions with potential partners and customers and secure the resources necessary to draft a patent application.

The inclusion of both first to file language and a grace period in the new patent law creates what could amount to a hybrid between first to invent and first to file. For example, in the case of two inventors who independently disclose the same invention immediately following its conception, both the pre-AIA “first to invent” law and the post- AIA “first to file” law can favor the earlier discloser, who is by definition the earlier inventor if the disclosure is truly immediate. However, in the absence of disclosure in advance of a patent filing, pre-AIA law favors the earlier inventor, while the AIA “first to file” provision will favor the earlier filer.

As a result, under the AIA inventors and the companies that employ them must think much more carefully about how to manage pre-filing disclosures. Put simply, silence can be costly. To the extent that a company remains quiet about an invention while contemplating whether or not to pursue patent protection, it stands exposed to the possibility of losing the right to do so if a competitor files first. A company wishing to avoid this risk faces the additional challenge that the AIA does not specifically define what constitutes “disclosure” sufficient to preserve patentability. The use of provisional patent applications, which offer advantages including a more formalized way to document the dates and content of disclosures than activities such as presentations at trade shows, should also be reevaluated in light of the AIA.

Some companies may find themselves targeted by competitors’ disclosures engineered specifically to foreclose patent opportunities. To reduce vulnerability to such attacks, companies can engage in preemptive “defensive” disclosures, but must be mindful of the impacts of these disclosures on their own patent filing deadlines.

In addition, employees engaged in intellectual property creation can be made aware that there is an increased need to pursue timely steps to secure patent protection on new inventions. Internal company systems for documenting, reporting, and rewarding innovations can be modified to better match the provisions of the AIA. Companies should also consider the budgetary impact of the AIA in terms of the amount and timing of expenditures.

It is important to recognize that the AIA leaves substantial differences between the patent laws in the United States and those in other countries. For example, unlike in the United States both pre- and post-AIA, in Europe an inventor’s own public disclosures in the year prior to a patent filing can be invalidating prior art. To the extent that for financial or other reasons a company needs to defer filing a U.S. patent application to a future date, in one sense the systems have actually moved farther apart. This is due to what amounts to a newly incentivized option to buy some measure of protection in the U.S. by disclosing in advance of a filing at the cost of losing patentability in Europe. This requires careful consideration of disclosure plans.

Best Mode and Invalidity

The AIA does not alter the requirement that a patent application must “set forth the best mode contemplated by the inventor of carrying out” the invention. However, somewhat paradoxically, for proceedings commenced on or after the date of its enactment, the AIA eliminates the alleged failure to follow this requirement as grounds for asserting invalidity.

This change has the potential to alter a fundamental compact between an inventor and the government that is at the core of the patent system, which grants a patent holder the right to exclude others from practicing an invention in exchange for disclosing the best mode contemplated by the inventor. The AIA eliminates the failure to make this disclosure as grounds for asserting invalidity. Some inventors may view this as creating an incentive to intentionally withhold information on how to best carry out an invention.

Supplemental Examination

The AIA creates a new supplemental examination procedure, effective one year after enactment, allowing a patent owner to request that the PTO perform a supplemental examination to “consider, reconsider, or correct information believed to be relevant” to a patent. Subject to certain exceptions, this process can prevent a patent from being “held unenforceable on the basis of conduct” relating to this information.

The supplemental examination provision is particularly relevant to inequitable conduct allegations that are frequently raised by defendants in patent litigation. Defendants often try to identify information relating to the prosecution of patents that have been asserted against them that, in their view, indicates inequitable conduct rendering the patents unenforceable. Supplemental examination provides a way for a patent owner to preemptively attempt to inoculate a patent against such allegations.

Pre-Issuance Submissions

Beginning one year after the AIA is enacted, third parties will have the option of providing pre-issuance submissions of prior art accompanied by “a concise description of the asserted relevance of each submitted document” to the PTO in connection with a pending application. Such submissions can be used, for example, to attempt to prevent or hinder the issuance of a patent that the submitting party views as detrimental to its interests. However, to the extent that a patent examiner finds the arguments provided through a pre-issuance submission unconvincing, the resulting patent might actually be strengthened, not weakened.

Prior Commercial Use Defense to Infringement

Since 1999, alleged infringers of business method patents have had access to a “prior use” provision that can constitute a defense against infringement, provided certain conditions are met. For patents issued on or after the date of enactment of the AIA, the prior use defense can be applied, subject to certain exceptions, to patent infringement claims covering a much broader range of subject matter “consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process.”

Post-Grant Review Proceedings

Post-grant review proceedings are conducted through the PTO in order to reconsider alreadyissued patents, and can lead to the confirmation, cancellation, withdrawal, or modification of patent claims. T he phrase “post-grant review” is sometimes used to broadly refer to multiple types of post-grant proceedings including the ex parte and inter partes reexaminations available under pre- AIA patent law, and sometimes to more narrowly refer to a specific new review option created by the AIA (in fact, in the AIA itself the phrase is used in both the broad and narrow meanings).

Under pre-AIA patent law, a requester wishing to initiate an ex parte or inter partes reexamination provides the PTO with one or more published prior art references and an explanation why those references, in the view of the requester, raise a “substantial new question of patentability.” The PTO can either grant or deny the request; if the request is granted, an ex parte reexamination proceeds without any further input from the requester (unless the requester is the patent owner), while in an inter partes reexamination the requester participates during the reexamination process.

Both types of reexaminations have proven to be highly effective ways for third parties to challenge the validity of issued patent claims, often in tandem with or as a lower cost alternative to challenges adjudicated through the Federal court system and the International Trade Commission. According to data released by the PTO in June 2011, 92% of the requests for ex parte reexamination filed since the proceeding was introduced in the 1980s have been granted, and fewer than one quarter of patents subject to ex parte reexamination have emerged without any claim changes or cancellations. Inter partes reexamination was introduced in 1999; since then 95% of inter partes reexamination requests have been granted, and only 13% of patents subject to inter partes reexamination have survived with all claims confirmed.

The AIA leaves ex parte reexamination in place, but a year after enactment will replace inter partes reexaminations with “inter partes review” proceedings adjudicated by a newly renamed Patent Trial and Appeal Board within the PTO. The pre-AIA threshold to grant an inter partes reexamination of a “substantial new question of patentability” will be replaced with a higher threshold requiring that the PTO find a “reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.” This higher standard will also be applied to inter partes reexaminations filed during the transition period immediately following enactment of the AIA and preceding the shift to inter partes review. Inter partes review requests must be filed no earlier than nine months (and in some cases longer) after the grant or reissue of the patent being challenged.

Additionally, the AIA creates a new “post-grant review” process through which a petitioner who is not the patent owner can request the cancellation as invalid of one or more claims of a patent granted or reissued within the previous nine months. The PTO can authorize a post-grant review if the information presented by the petitioner, “if not rebutted, would demonstrate that it is more likely than not that at least one of the claims challenged in the petition is unpatentable.” Under the AIA this threshold can be satisfied not only using traditional invalidity arguments based on settled law, but also by a petition that raises “a novel or unsettled legal question that is important to other patents or patent applications.” This language amounts to an invitation to address “novel or unsettled” legal questions through the PTO, raising a number of issues relating to respective roles the courts and the PTO will play in resolving them.

For companies engaged in or threatened with patent litigation or those that simply want to launch a pre-emptive strike at patents held by a competitor, post-grant review introduces a new way to challenge patents. The AIA contains estoppel and other provisions intended to prevent a requester from having two bites at the apple by challenging a claim in both a PTO post-grant (or inter partes) review and a civil action or International Trade Commission proceeding. However, in some circumstances these provisions may turn out to be largely toothless, since patent cases often involve multiple defendants who form joint defense groups and engage in coordinated attacks on patent validity. There is nothing in the AIA preventing one defendant from challenging claim validity through a post-grant or inter partes review and another from simultaneously or later asserting invalidity of the same claims in the federal court system or at the International Trade Commission.

The AIA also expressly provides that, starting one year after enactment, statements by a patent owner filed in a federal court or with the PTO regarding claim scope can be cited to the PTO for consideration in ex parte, inter partes, and post-grant review proceedings to determine claim meaning.

Other Provisions

In addition to codifying many changes to patent law, including those described above, the AIA contains other provisions that will likely have a significant impact on the operation of the PTO and on future patent legislation. Several of these provisions are discussed below.

Fee Diversion

One of the most controversial aspects of the patent reform debate has pertained to the practice of fee diversion, which arises because the PTO takes in an amount in fees that exceeds its appropriation. The Senate version (S. 23) of the AIA passed in March 2011 provided for the creation of a fund that would have allowed the PTO roll over excess funds into future fiscal years. However, in the House version (H.R. 1249) passed in June 2011 that became the template for the final legislation, this provision was removed and replaced with a newly established “Patent and Trademark Fee Reserve Fund” to be held in the treasury and into which excess fees will be deposited. This approach does not cleanly put the fee diversion issue to rest, and the details of how the reserve fund will be managed in future years remain unclear.

Studies Mandated by the AIA

The AIA mandates several studies, including one to be performed by the Government Accountability Office to examine the “consequences of litigation by non-practicing entities, or by patent assertion entities,” to gather data, among other things, on the volume of litigation, the number of cases found to be without merit, the costs to patent holders, licensees, licensors, and inventors, the economic impact of this litigation, and the “benefit to commerce, if any, supplied by non-practicing entities or patent assertion entities that prosecute such litigation.”

“Non-practicing entities” and “patent assertion entities” are terms that are sometimes used to describe companies that have little or no business other than the assertion of patents. Patent litigation involving these entities has grown significantly in recent years, in large part due to the potential for large judgments and settlements. The GAO study provides an opportunity for an unbiased examination of a significant aspect of the litigation environment, and is likely to produce information that will be valuable in drafting future patent legislation.

The AIA also mandates that the PTO perform a study on international patent protections for small businesses. T he financial burden of obtaining international patent protection is particularly heavy for small companies due to the combined costs of performing many different country-specific filings. As a result, many small companies either avoid foreign filings altogether, or perform foreign filings only for a small subset set of countries and only for the patents that they believe to be the most valuable. A goal of the AIA-mandated study is to determine whether to recommend establishing a loan or grant program to help small businesses defray the costs associated with international patent protection.

It is likely the study will conclude that such a program would be beneficial to small businesses, but it is just as likely that implementing it will prove to be extremely difficult in the current budgetary environment. However, the study may influence future patent legislation in the United States and abroad, and may be useful in multilateral discussions regarding international patent protection.

Conclusion

The AIA will reshape how United States patents are obtained, challenged, and valued in acquisition, licensing, and litigation settlement discussions. Companies that overhaul their intellectual property strategies in light of the provisions of the AIA will be in a better position to maximize the value of their patent portfolios and to strengthen their options in patent litigation matters.

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The Metropolitan Policy Program at Brookings, hosted The Political Geography of America's Purple States: Five Trends That Will Decide the 2008 Election, a briefing on a new series of reports on the political demography of "purple" states in the 2008 election.

Purple states-or states where the current balance of political forces does not decisively favor one party or the other-will play an undeniably pivotal role in the upcoming election and include: Virginia and Florida in the South; the Intermountain West states of Colorado, New Mexico, Nevada, and Arizona; Michigan, Missouri, and Ohio in the Heartland; and Pennsylvania.

On October 10, 2008 at the National Press Club in Washington DC, authors William Frey and Ruy Teixeira highlighted the political and demographic trends in these 10 battleground states, focusing not only on their role in the 2008 election, but their position as toss-ups in years to come.

The session opened with an overview of the demographic shifts shaping all the contested states studied, and evolved into a detailed presentation of the trends that are testing and reshaping the balance of their voting populations, focusing particularly on five trends that Frey and Teixeira believe will decide the 2008 election. Feedback from James Barnes, political correspondent for the National Journal, helped shape the conversation.

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As part of an ongoing cooperative agreement with the U.S. Food and Drug Administration (FDA), the Engelberg Center for Health Care Reform at Brookings has formed the Brookings Council on Antibacterial Drug Development (BCADD) to identify steps to address the major technical, regulatory, and financial barriers impeding antibacterial drug development. At the first meeting of the BCADD, stakeholders emphasized the importance of concentrating on discrete policy and program areas to revitalize the antibacterial drug development enterprise.

BCADD convened a diverse group of stakeholders, including FDA officials, industry and biotech representatives, payers, providers, clinicians, and academic researchers Wednesday, February 27, 2013, to discuss two of the economic challenges facing antibacterial drug development:

• Better understanding the potential role of incentives in drug discovery and development; and
• Identifying potential reimbursement models that can support both stewardship and expanded investment for antibacterial drug products.

Antibacterial development has moved slower than other therapeutic areas in part due to the challenges of achieving a return on investment under the current reimbursement system. New models are needed to incentivize research and development of antibacterial products and to separate reimbursement from unit sales in order to help preserve the effectiveness of existing and new antibacterial drugs. The workshop’s objectives are to support the development of pragmatic proposals for the larger stakeholder community to consider.

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Editor's note: This article is part of a series marking International Women's Day, on March 8, 2016. Read the latest from Global scholars on bridging the gender inequality gap, women’s well-being, and gender-sensitive policies in sub-Saharan Africa. 

This Tuesday, March 8, marks the first International Women’s Day since world leaders agreed last September to launch the Sustainable Development Goals (SDGs) for 2030. A more rounded conception of gender equality marks one of the SDGs’ most important improvements compared to their predecessor Millennium Development Goals (MDGs). Two SDG targets help to illustrate the broadening geopolitical recognition of the challenges. They also help to underscore how much progress is still required.

A new target: Eliminating child marriage

The inclusion of SDG target 5.3 adds one of the most important new priorities to the global policy agenda: to “eliminate all harmful practices, such as child, early and forced marriage, and female genital mutilation.” Until only a few years ago, the child marriage portion of this target had received only scant international attention. The driving force advancing the issue has been Girls Not Brides, a fast-gelling coalition that now includes more than 550 civil society organizations from over 70 countries. The initiative was first spearheaded by Mabel van Oranje, the dynamic international policy entrepreneur.

At a practical level, ending child marriage faces at least two major challenges. First, it is largescale. Every year, an estimated 15 million girls around the world are married before the age of 18. Second, it is highly complex. There are no simple solutions to addressing cultural practices with deep roots. Impressively, Girls Not Brides has already published a thoughtful theory of change to inform policy conversations, accompanied by a menu of recommended indicators for measuring progress. Regardless of whether this specific theory turns out to be correct, the coalition deserves significant credit for advancing public discussions toward practical action and outcomes. One can only hope that every constituency that lobbied for an SDG target presents similarly considered proposals soon. The advocates for ending child marriage have already registered some early gains. In 2015, four countries raised the age of marriage to 18: Chad, Guatemala, Ireland, and Malawi.

A renewed target: Protecting mothers’ lives

The SDGs are also carrying forward the previous MDG priority of maternal health. Target 3.1 aims as follows: “By 2030, reduce the global maternal mortality ratio to less than 70 per 100,000 live births.” Formally this falls under Goal 3 for health and wellbeing, but it certainly represents a gender equality objective too. Part of that is by definition; mothers are female. Part of it is driven by the need to overcome gender bias; male decision-makers at all levels might overlook key health issues with which they have no direct personal experience.

As of the early 2000s, maternal mortality was too often considered a topic only for specialist discussions. One of the MDG movement’s most important contributions was to elevate the issue to the center stage of global policy. For example, former Canadian Prime Minister Stephen Harper made it a centerpiece among his own foreign policy priorities, including at the G-8 Muskoka summit he hosted in 2010.

Figure 1 shows an initial estimate of the gains across developing countries since 2000, as measured by maternal mortality ratios (MMR). The solid line indicates the actual rate of progress. The dotted lines indicate how things would have looked if previous pre-MDG trends had continued as of 1990-2000 and 1996-2001, respectively. (This is the same basic counterfactual methodology I have previously used for child mortality trends here and here, noting that maternal mortality data remain considerably less precise and subject to ongoing updates in estimation.)

The graph shows that developing countries’ average MMR dropped from approximately 424 deaths per 100,000 live births in 1990, down to 364 in 2000, and further to 233 in 2015. That works out to a 36 percent decline over the past 15 years alone, driven by acceleration in progress during the mid-2000s. Importantly, the value in 2015 was also at least 12 percent lower than it would have been under pre-MDG rates of progress—287 under 1990-2000 trends and 266 under 1996-2001 trends.

Figure 1: Developing country progress on maternal mortality, 1990-2015

A long road ahead

Whereas the MDGs focused on developing countries, the SDGs apply universally to all countries. In that spirit, and slightly different from the previous graph, Figure 2 shows an estimate of the current global MMR trajectory for 2030, extrapolating the rates of progress from 2005 to 2015. Drawing from available data for 174 countries with a current population of 200,000 or more, the world’s MMR is on course to drop from approximately 216 in 2015 to 163 in 2030. This would mark a 25 percent improvement, but falls far short of the global MMR target of 70. (These calculations follow a similar methodology to my assessment last year of under-5 mortality trajectories.)

Figure 2: Global maternal mortality - current trajectory to 2030

The mothers of nations

Although the SDG for maternal mortality is set at a global level (unlike the country-level target 3.2 for child mortality), it is worth assessing how many individual countries are trailing the MMR benchmark of 70. The geographic nature of the global challenge is underscored in Figure 3. It lists the number of countries with MMR above 70 across the respective years 2000, 2015, and—on current trajectory—2030. As of 2000, 90 countries still had MMRs greater than 70. By 2015, this was down to 77 countries. By 2030, on current rates of progress, the relevant figure drops only slightly to 68 countries.

Most notably, the figure for sub-Saharan Africa remains unchanged between 2015 and 2030, at 44 countries, even though most of the region is already experiencing major mortality declines. Rwanda, for example, saw its MMR plummet from 1,020 in 2000 to 290 by 2015. It is on track to reach 106 by 2030. Meanwhile, Sierra Leone saw a decline from 2,650 in 2000 to 1,360 in 2015, on a path toward 768 in 2030. The challenge is not a lack of progress. Instead, it is simply that these countries have huge ground to cover to reach the ambitious goal. On current trajectory, 11 African countries are on course to have MMRs of 500 or greater in 2030.

Figure 3: Scoping progress on SDG 3.1

Number of countries with maternal mortality ratios > 70

Women and girls deserve more

Although these two targets for child marriage and maternal mortality embody only a small portion of the SDGs’ broader gender equality imperatives, they reflect crucial aspects of the overall challenge. On the positive side, they provide inspiration for the ways in which long-overlooked issues can rapidly gain political and policy traction. But they also underscore the scale of the task ahead. The global challenges of gender inequality—ranging from discrimination to violence against women to inequalities of opportunity—all require dramatic accelerations in progress. On this International Women’s Day, we all need to recommit to break from business as usual. Our mothers, sisters, daughters, and partners around the world all deserve nothing less. 

Note: The maternal mortality figures presented above have been updated subsequent to the original post in order to correct for a coding error discovered in the original country-weighting calculations for global trajectories.

      

In 2010, Africa’s leaders gathered at the African Union in Addis Ababa to celebrate 50 years of independence. In Washington, President Barack Obama marked the occasion by hosting a town hall meeting of young African leaders from nearly 50 countries.

What looked at the time to be a curious way to mark a significant moment in the continent’s history was in fact the genesis of what could become the most innovative Obama initiative in Africa. 

When asked during the session by a young woman from Mali why he had convened such a meeting, Obama said that he wanted “to communicate directly to people who may not assume that the old ways of doing business in Africa are the ways that Africa has to do business.” The president added that he wanted the young leaders to meet each other, to develop a network of like-minded people working for a better future, and to reinforce each other’s goals and aspirations.

That town hall marked the launch of the Young African Leaders Initiative (YALI). Over the next two years, YALI engaged Africa’s youth, principally through events coordinated by U.S. embassies throughout the region. Then, during a speech in 2013 in South Africa, Obama announced the establishment of the Washington Fellowship. Subsequently renamed the Mandela Washington Fellowship (MWF), the program initially was designed to bring 500 young leaders to the U.S. for six weeks of executive leadership training at U.S. universities and four days in Washington to meet with each other, leaders in the administration, and to have a town hall with the president. In 2016, the program was increased to 1,000 fellows.

The fellows

When USAID put the application online for the first class of fellows in December 2013, the response was extraordinary. Nearly 50,000 applied for 500 slots. Similar numbers have applied for the two subsequent classes. Over the course of three classes of fellows, there have been 119,000 applications for 2,000 openings.

The U.S. government kept the qualifications relatively simple. Young men and women from each of sub-Saharan Africa’s 49 countries are eligible to participate, including from countries on which the U.S. has sanctions, such as Sudan, Eritrea, and Zimbabwe. Applicants generally have to be between 25 and 35, proficient in English, possess a proven record of leadership, and have a commitment to return to the continent. Fellows apply for one of three tracks: business and entrepreneurship, civic leadership, or public management.

A review of the program found that in the first cohort, the gender split was 50/50, nearly 40 percent owned a business, and a similar number ran a nonprofit organization. Eighty percent of the class had never traveled to the U.S., and more than half grew up outside capital cities.

The key element of the fellows’ program occurs during the specialized six weeks of leadership training that takes place at nearly 40 universities across the U.S. At the universities, the fellows, in cohorts of 20, are exposed not only to programs tailored specifically for their interests, but to other young Africans who share a passion for making a difference in their communities and countries. For most fellows, meeting other young Africans from different countries is one of YALI’s key benefits, as is forging genuine ties with Americans and U.S. institutions.

The narratives of the 2,000 Mandela Washington Fellows illustrate some of the most compelling stories and realities on the African continent today.

Importantly, the MWF program is cost-efficient, as the average cost of a fellow coming to the U.S. is $24,000. At least half is paid by the participating U.S. universities and a host of companies, including Coca-Cola, IBM, the MasterCard Foundation, AECOM, Microsoft, Intel, McKinsey & Company, GE, and Procter & Gamble, who have made grants or in-kind contributions to the fellowships and the YALI program.

YALI’s broader impact

YALI is having an impact on its participants. An initial assessment by IREX, USAID’s implementing partner, found that over 80 percent of male and female fellows who owned businesses reported an increase in earnings in the year following their fellowship in the U.S. Business fellows also leveraged more than $3 million in new sources of support through loans, grants, equity financing, and in-kind contributions.

Fellows who participated in the civic leadership training reported that the impact of their nonprofit organizations nearly tripled to over 1.6 million beneficiaries, with an average contact per fellow increasing from less than 3,000 to just fewer than 15,000 beneficiaries.

Over 80 percent of the fellows reported that they remained in contact with other fellows during the course of the year, and 70 percent indicated they continued to be involved with their host university. The ongoing connectivity is helped by the three regional conferences in Africa that USAID convenes for program alumni, more than 200 internships on the continent—most sponsored by corporate partners—as well as funding for fellows to attend conferences and other programs after they have returned to Africa.

As part of YALI’s broader reach, USAID created four Regional Leadership Centers (RLCs)—in South Africa, Kenya, Ghana, and Senegal—that offer distance and in-class leadership training to about 3,500 participants annually.

The YALI Network (Figure 1) was established in 2013 as a means to stay connected online to the tens of thousands of young Africans who applied for the fellowship but were not selected as well as others interested in the initiative. The network, which provides access to global leaders in relevant fields and opportunities for collaboration on a range of activities, has attracted nearly 250,000 members. Participants in the RLCs and the YALI Network can earn certificates in various courses, including climate change, women’s empowerment, and the election processs.

Figure 1.

Source: YALI Network

YALI, of course is not without its challenges. Recruiting from 49 countries can be exceedingly difficult, and the quality of Skype and telephone connectivity can vary significantly, which impacts the interview process. Due to the high volume of applicants, embassies have learned that they need more time to review applications. Extra efforts have been needed to accommodate fellows with disabilities. YALI’s biggest challenge, though, is winning the support of African leaders who generally have yet to embrace the program due to its unilateral launch.

What’s next?

YALI is a cost-efficient and effective way to invest in Africa’s future, especially as it concerns deepening trade and commerce with the region, strengthening democratic institutions and empowering civil society. If the next administration continues to invest in the program, YALI could become an enduring legacy program of the Obama administration much like the African Growth and Opportunity Act (AGOA) and the President’s Emergency Program on AIDS Relief (PEPFAR) are, respectively, for the Clinton and Bush administrations. Over time, YALI inevitably would contribute to a new generation of transformative African leadership and deeper ties between the U.S. and Africa in a way that few other programs do.

       

       

       

       

       

       

Two years after Hamas and Israel agreed to a cessation of hostilities, reconstruction in Gaza has been painfully slow. This was the focus of a panel discussion at the Brookings Doha Center on April 19. As Senior Fellow and Director of Research Sultan Barakat explained, rebuilding has stalled in part because the distribution of aid money pledged by donor countries during the October 2014 Cairo Conference has slowed; according to the World Bank, donor countries had dispersed only 40 percent of the pledged money as of the end of March. At this rate, the pledged funds will not be dispersed until 2019, two years after the target date.

Moreover, construction materials only enter Gaza through one border crossing and must be cleared by layers of bureaucracy. As Omar Shaban—director of Pal-Think, a research institution in Gaza—explained, money for Gaza reconstruction is funneled through the PA’s ministry of finance in Ramallah, which transfers it to the U.N. office in Gaza. The United Nations composes a list of people in Gaza that require construction materials, and the Coordination of Government Activities in the Territories (Cogat)—an Israeli administrative body in the ministry of defense—must approve the names on the list. The U.N. then distributes construction materials. Shaban emphasized that the bureaucratic nature of this process has slowed reconstruction considerably, adding that the process isn’t transparent enough, since neither Hamas officials nor members of Gaza’s civil society oversee any aspect of aid distribution.

As a result of the sluggish rebuilding process, Barakat said, only 9 percent of totally damaged houses and 45 percent of partially damaged houses in Gaza have been repaired, leaving over 14,800 families internally displaced. Meanwhile, promised job opportunities in construction projects have failed to materialize, exacerbating feelings of desperation and frustration among Gaza’s population.

[T]he process isn’t transparent enough [said Shaban], since neither Hamas officials nor members of Gaza’s civil society oversee any aspect of aid distribution.

Shaban agreed that people in Gaza feel neglected. With high levels of frustration, he expressed fear that a new round of hostilities between militants and Israel could begin at any time. Previous conflicts were easily ignited—by a kidnapping, a cross-border raid, an assassination, or continuous rocket fire. Shaban argued that the volatility of the situation may be heightening fatigue among donors, who do not want to see their support go to waste in another round of destruction.

Naglaa Elhag, head of rehabilitation and international development at the Qatar Red Crescent Society (QRCS), discussed the difficulties of implementing aid projects in Gaza. She argued that international agencies do not always address the main problems and typically take shortcuts, saying of her own organization and others: “We don’t treat the wounds, we cover it with a bandage.” She highlighted various factors slowing reconstruction, including the lack of accountability on the part of international agencies, fears of renewed conflict, and the Palestinian political stalemate. Since 2008, according to Elhag, QRCS invested $100 million in housing units and other aid projects in Gaza, but some were destroyed during the 2014 war. As a result, QRCS shifted its focus away from physical reconstruction and towards food security, education, and health. 

A related problem is the Palestinian political stalemate. According to Shaban, neither Hamas (the de-facto governing authority in Gaza) nor the Palestinian Authority (PA, based in Ramallah) provides economic opportunities for Gazans, and those nominally on Palestinian government payrolls often do not receive their salaries. Reconciliation talks have failed to establish a unity government, making Egypt, Israel, and the United States reticent to negotiate. Egypt has indicated that if the PA does reach an agreement with Hamas, it would open its border with Gaza at Rafah (presuming the PA has a security presence there). This could increase the flow of construction materials into Gaza, allow for the increased export of commercial goods, and enable Gazans to come and go more frequently. But while opening another crossing for Gaza would temporarily ease the burden faced by the people there, Shaban stressed that a long-term political and economic solution is needed. Elhag, too, emphasized that a resolution to the Gaza crisis isn’t about the distribution of money—rather, she believes a joint Israeli-Palestinian solution is needed to end the suffering in Gaza. 

In the past, tensions between some Arab states and Hamas have also hampered progress in Gaza, but the panelists agreed that some of these relationships—especially with Saudi Arabia—are on the mend. Regional actors like Egypt, Qatar, Saudi Arabia, and Turkey could help push a reconciliation deal between Fatah and Hamas, which would help improve the situation in Gaza. And as Barakat stressed in conclusion, there is an urgent need for donors to fulfill aid pledges and for the Gaza reconstruction mechanism to become more inclusive, so that Gazans themselves can more fully participate in rebuilding their neighborhoods. 

       

Many proposals to accelerate and improve medical product innovation and regulation focus on reforming the product development and regulatory review processes that occur before drugs and devices get to market. While important, such proposals alone do not fully recognize the broader opportunities that exist to learn more about the safety and effectiveness of drugs and devices after approval. As drugs and devices begin to be used in larger and more diverse populations and in more personalized clinical combinations, evidence from real-world use during routine patient care is increasingly important for accelerating innovation and improving regulation.

First, further evidence development from medical product use in large populations can allow providers to better target and treat individuals, precisely matching the right drug or device to the right patients. As genomic sequencing and other diagnostic technologies continue to improve, postmarket evidence development is critical to assessing the full range of genomic subtypes, comorbidities, patient characteristics and preferences, and other factors that may significantly affect the safety and effectiveness of drugs and devices. This information is often not available or population sizes are inadequate to characterize such subgroup differences in premarket randomized controlled trials.

Second, improved processes for generating postmarket data on medical products are necessary for fully realizing the intended effect of premarket reforms that expedite regulatory approval. The absence of a reliable postmarket system to follow up on potential safety or effectiveness issues means that potential signals or concerns must instead be addressed through additional premarket studies or through one-off postmarket evaluations that are more costly, slower, and likely to be less definitive than would be possible through a better-established infrastructure. As a result, the absence of better systems for generating postmarket evidence creates a barrier to more extensive use of premarket reforms to promote innovation.

These issues can be addressed through initiatives that combine targeted premarket reforms with postmarket steps to enhance innovation and improve evidence on safety and effectiveness throughout the life cycle of a drug or device. The ability to routinely capture clinically relevant electronic health data within our health care ecosystem is improving, increasingly allowing electronic health records, payer claims data, patient-reported data, and other relevant data to be leveraged for further research and innovation in care. Recent legislative proposals released by the House of Representatives’ 21st Century Cures effort acknowledge and seek to build on this progress in order to improve medical product research, development, and use. The initial Cures discussion draft included provisions for better, more systematic reporting of and access to clinical trials data; for increased access to Medicare claims data for research; and for FDA to promulgate guidance on the sources, analysis, and potential use of so-called Real World Evidence. These are potentially useful proposals that could contribute valuable data and methods to advancing the development of better treatments.

What remains a gap in the Cures proposals, however, is a more systematic approach to improving the availability of postmarket evidence. Such a systematic approach is possible now. Biomedical researchers and health care plans and providers are doing more to collect and analyze clinical and outcomes data. Multiple independent efforts – including the U.S. Food and Drug Administration’s Sentinel Initiative for active postmarket drug safety surveillance, the Patient-Centered Outcomes Research Institute’s PCORnet for clinical effectiveness studies, the Medical Device Epidemiology Network (MDEpiNet) for developing better methods and medical device registries for medical device surveillance and a number of dedicated, product-specific outcomes registries – have demonstrated the potential for large-scale, systematic postmarket data collection. Building on these efforts could provide unprecedented evidence on how medical products perform in the real-world and on the course of underlying diseases that they are designed to treat, while still protecting patient privacy and confidentiality.

These and other postmarket data systems now hold the potential to contribute to public-private collaboration for improved population-based evidence on medical products on a wider scale. Action in the Cures initiative to unlock this potential will enable the legislation to achieve its intended effect of promoting quicker, more efficient development of effective, personalized treatments and cures.

What follows is a set of both short- and long-term proposals that would bolster the current systems for postmarket evidence development, create new mechanisms for generating postmarket data, and enable individual initiatives on evidence development to work together as part of a broad push toward a truly learning health care system.

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Legislative proposals to accelerate and improve the development of innovative drugs and medical devices generally focus on reforming the clinical development and regulatory review processes that occur before a product gets to market. Many of these proposals – such as boosting federal funding for basic science, streamlining the clinical trials process, improving incentives for development in areas of unmet medical need, or creating expedited FDA review pathways for promising treatments – are worthy pursuits and justifiably part of ongoing efforts to strengthen biomedical innovation in the United States, such as the 21^st Century Cures initiative in the House and a parallel effort taking shape in the Senate.

What has largely been missing from these recent policy discussions, however, is an equal and concerted focus on the role that postmarket evidence can play in creating a more robust and efficient innovation process. Data on medical product safety, efficacy, and associated patient outcomes accrued through routine medical practice and through practical research involving a broad range of medical practices could not only bolster our understanding of how well novel treatments are achieving their intended effects, but reinforce many of the premarket reforms currently under consideration. Below and in a new paper, we highlight the importance of postmarket evidence development and present a number of immediately achievable proposals that could help lay the foundation for future cures.

Why is postmarket evidence development important?

There are a number of reasons why evidence developed after a medical product’s approval should be considered an integral part of legislative efforts to improve biomedical innovation. First and foremost, learning from clinical experiences with medical products in large patient populations can allow providers to better target and treat individuals, matching the right drug or device to the right patient based on real-world evidence. Such knowledge can in turn support changes in care that lead to better outcomes and thus higher value realized by any given medical product.

Similarly, data developed on outcomes, disease progression, and associated genetic and other characteristics that suggest differences in disease course or response to treatment can form the foundation of future breakthrough medical products. As we continue to move toward an era of increasingly-targeted treatments, this important of this type of real-world data cannot be discounted.

Finally, organized efforts to improve postmarket evidence development can further establish infrastructure and robust data sources for ensuring the safety and effectiveness of FDA-approved products, protecting patient lives. This is especially important as Congress, the Administration, and others continue to seek novel policies for further expediting the pre-market regulatory review process for high-priority treatments. Without a reliable postmarket evidence development infrastructure in place, attempts to further shorten the time it takes to move a product from clinical development to FDA approval may run up against the barrier of limited capabilities to gather the postmarket data needed to refine a product’s safety and effectiveness profile. While this is particularly important for medical devices – the “life cycle” of a medical device often involves many important revisions in the device itself and in how and by whom it is used after approval – it is also important for breakthrough drugs, which may increasingly be approved based on biomarkers that predict clinical response and in particular subpopulations of patients.

What can be done now?

The last decade has seen progress in the availability of postmarket data and the production of postmarket evidence. Biomedical researchers, product developers, health care plans, and providers are doing more to collect and analyze clinical and outcomes data. Multiple independent efforts – including the U.S. Food and Drug Administration’s Sentinel Initiative for active postmarket drug safety surveillance, the Patient-Centered Outcomes Research Institute’s PCORnet for clinical effectiveness studies, the Medical Device Epidemiology Network (MDEpiNet) for developing better methods and medical device registries for medical device surveillance and a number of dedicated, product-specific outcomes registries – have demonstrated the powerful effects that rigorous, systematic postmarket data collection can have on our understanding of how medical products perform in the real-world and of the course of underlying diseases that they are designed to treat.

These and other postmarket data systems now hold the potential to contribute to data analysis and improved population-based evidence development on a wider scale. Federal support for strengthening the processes and tools through which data on important health outcomes can be leveraged to improve evidence on the safety, effectiveness, and value of care; for creating transparent and timely access to such data; and for building on current evidence development activities will help to make the use of postmarket data more robust, routine, and reliable.

Toward that end, we put forward a number of targeted proposals that current legislative efforts should consider as the 2015 policy agenda continues to take shape:

Evaluate the potential use of postmarket evidence in regulatory decision-making. The initial Cures discussion draft mandated FDA to establish a process by which pharmaceutical manufacturers could submit real-world evidence to support Agency regulatory decisions. While this is an important part of further establishing methods and mechanisms for harnessing data developed in the postmarket space, the proposed timelines (roughly 12 months to first Guidance for Industry) and wide scope of the program do not allow for a thoughtfully-, collaboratively-considered approach to utilizing real-world evidence. Future proposals should allow FDA to take a longer, multi-stakeholder approach to identify the current sources of real-world data, gaps in such collection activities, standards and methodologies for collection, and priority areas where more work is needed to understand how real-world data could be used.

Expand the Sentinel System’s data collection activities to include data on effectiveness. Established by Congress in 2007, Sentinel is a robust surveillance system geared toward monitoring the safety of drugs and biologics. In parallel to the program for evaluating the use of RWE outlined above, FDA could work with stakeholders to identify and pursue targeted extensions of the Sentinel system that begin to pilot collection of such data. Demonstration projects could enable faster and more effective RWE development to characterize treatment utilization patterns, further refine a product’s efficacy profile, or address pressing public health concerns – all by testing strategic linkages to data elements outside of Sentinel’s safety focus.

Establish an active postmarket safety surveillance system for medical devices. Congress has already acted once to establish device surveillance, mandating in 2012 that Sentinel be expanded to include safety data on medical devices. To date, however, there has been no additional support for such surveillance or even the capability of individually tracking medical devices in-use. With the recently finalized Unique Device Identifier rule going effect and the ability to perform such tracking on the horizon, the time is now to adopt recent proposals from FDA’s National Medical Device Postmarket Surveillance System Planning Board. With Congressional authorization for FDA to establish an implementation plan and adequate appropriations, the true foundation for such a system could finally be put into place.

These next steps are practical, immediately achievable, and key to fully realizing the intended effect of other policy efforts aimed at both improving the biomedical innovation process and strengthening the move to value-based health care.

      

Event Information

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

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

Event Materials

• REMS_PBRC_Meeting_Agenda
• REMS BR Speaker Bios
• REMS BenefitRisk Meeting Summary
• REMS BenefitRisk communication white paper

       

May’s jobs gains, released this morning, show that only 38,000 new jobs were added this May, down from an average of 178,000 over the first four months of the year, and the least new jobs added since September 2010.

This year’s monthly job gains and losses can indicate how the economy is doing once they are corrected to account for the pattern we already expect in a process called seasonal adjustment. The approach for this seasonal adjustment that is presently used by the Bureau of Labor Statistics (BLS) puts very heavy weight on the current and last two years of data in assessing what are the typical patterns for each month.

In my paper “Unseasonal Seasonals?” I argue that a longer window should be used to estimate seasonal effects. I found that using a different seasonal filter, known as the 3x9 filter, produces better results and more accurate forecasts by emphasizing more years of data. The 3x9 filter spreads weight over the most recent six years in estimating seasonal patterns, which makes them more stable over time than in the current BLS seasonal adjustment method.

I calculate the month-over-month change in total nonfarm payrolls, seasonally adjusted by the 3x9 filter, for the most recent month. The corresponding data as published by the BLS are shown for comparison purposes. According to the alternative seasonal adjustment, the economy actually lost about 4,000 jobs in May (column Wright SA), compared to the official BLS total of 38,000 gained (column BLS Official).

In addition to seasonal effects, abnormal weather can also affect month-to-month fluctuations in job growth. In my paper “Weather-Adjusting Economic Data” I and my coauthor Michael Boldin implement a statistical methodology for adjusting employment data for the effects of deviations in weather from seasonal norms. This is distinct from seasonal adjustment, which only controls for the normal variation in weather across the year. We use several indicators of weather, including temperature and snowfall.

We calculate that weather in May had a negligible effect on employment, bringing up the total by only 4,000 jobs (column Weather Effect). Our weather-adjusted total, therefore, is 34,000 jobs added for May (column Boldin-Wright SWA). This is not surprising, given that weather in May was in line with seasonal norms.

Unfortunately, neither the alternative seasonal adjustment, nor the weather adjustment, makes todays jobs report any more hopeful. They make little difference and, if anything, make the picture more gloomy.

a. Applies a longer window estimate of seasonal effects (see Wright 2013).
b. Includes seasonal and weather adjustments, where seasonal adjustments are estimated using the BLS window specifications (see Boldin & Wright 2015). The incremental weather effect in the last column is the BLS official number less the SWA number.

      

       

Hong Kong has seemed quiet for the last four months. The foreign media moved on to other stories once last fall’s protest movement came to an end. But locally the debate over a new system to elect the territory’s chief executive has continued non-stop, and the situation is about to heat up again. On Wednesday Hong Kong time, the government will announce its proposal for electoral reform. Once it does, the pro-democracy opposition will face some difficult choices.

Here, in not too much detail, is a quick review of the background.

In 2007, the government of the People’s Republic of China, which has sovereignty over Hong Kong, announced it would accept an election of Hong Kong’s chief executive (CE) through universal suffrage for the 2017 election. It also said that candidates would be picked by a Nominating Committee. Pro-democracy politicians and the public at large, a majority of which supports a more democratic system, welcomed the universal suffrage part of this pledge but suspected that Beijing would use the Nominating Committee to restrict who got to run. What good is a one-man-one-vote election, they asked, if voters had to choose between candidates who are from the territory’s conservative establishment camp and will likely accommodate Beijing? (Good question.)

The following ensued:

• After several years of public debate, the Hong Kong government began a formal process consulting the public in December 2013. The key point of disagreement was over whether election candidates could emerge only through a Nominating Committee vote or through other mechanisms as well. Those who wanted other mechanisms believed that the Committee’s membership would be friendly to Beijing and pick candidates accordingly. Some of these skeptics were prepared to engage in civil disobedience to try to get their way.
• In late June 2014, the Hong Kong government announced the results of the consultation and the incumbent CE, C. Y. Leung, made a formal report to Beijing. This was the first step in a five-step process for constitutional revision, a process set by China. There is general agreement that Leung’s report understated the opposition to a nomination system that relied exclusively on the Nominating Committee.
• On August 31st, the Standing Committee of China’s National People’s Congress (NPC-SC) announced a decision on basic parameters for the new system (step two). Sure enough, it ruled out any supplementary nominating mechanisms. It also strongly suggested that the Nominating Committee would be constituted the same way as the 1,200-person Election Committee that had heretofore selected the CE and whose members were mostly friendly towards Beijing. The NPC-SC also limited the number of final CE candidates to two or three and dictated that each had to receive majority support from the Nominating Committee to become a candidate.
• The public response to the decision was sharply negative. The logical conclusion seemed to be that the new system was rigged in a way that Hong Kong voters have to pick among establishment candidates only, and that a pro-democracy aspirant had no way of getting nominated.
• In late September, students began a civil disobedience campaign that was marked by episodes of violence, and resulted in the occupation of three sets of major roadways in the territory. These lasted until early December, but the campaign did not persuade the government to back down on its basic approach.
• At the same time, the Hong Kong government, staying within the parameters Beijing announced on August 31st, began a second consultation process on its more specific reform proposals.

Why, you may ask, doesn’t Beijing just impose the system it wants? The reason is that it already committed that in step three of the five-step constitutional revision process, the government would introduce a bill in the Hong Kong Legislative Council reflecting its final proposal and that the legislature would have to approve it by a two-thirds margin. Even though the legislature is constituted in a way that gives disproportionate power to interests aligned with Beijing, the establishment camp currently does not have enough votes for a two-thirds majority. Consequently, the government must win over four or five moderate legislators from the democratic camp. In response, the more radical democrats have worked hard to keep the moderates committed to rejecting any government that is based on Beijing’s parameters, because it means that China gets to screen who gets to run. 

In light of this problem, the Hong Kong government did a clever thing. In the consultation document, it included the option of “democratizing” the Nominating Committee while remaining within Beijing’s basic parameters. It proposed to do this first by making the body more representative of Hong Kong society and reducing the proportion of seats held by business interests and groups otherwise linked to China. Second, it suggested a two-stage process of selection. In the first stage, the Nominating Committee would consider more “potential candidates” than the two or three that would ultimately be nominated to run in the election. To be picked as a potential candidate, an individual would need the support of only a minority of Committee members (how low was unspecified). This could increase the possibility of one or more democratic politicians emerging as potential candidates and then, in the second stage, at least one of them being selected as a final candidate. The result would be a competitive election.

Last week, Raymond Tam, the Hong Kong government’s secretary for constitutional and mainland affairs, indicated that something along these lines would be proposed by the government this Wednesday. He talked of using “the necessary legal room to maximize the democratic elements” and making the “entrance requirement" for potential candidates no higher than one-eighth of the membership. Additionally, there would be greater openness, transparency and accountability in the process of reviewing potential candidates within the Nominating Committee.

The devil, of course, will be in the details of the proposal (more on that later in the week). Moreover, Tam said nothing about making the Nominating Committee more representative of Hong Kong society. Did that element get set aside, and if so, what are the implications? If the membership of the committee is still biased in favor of the political status quo, would it matter if the process within the Nominating Committee is more competitive and transparent?

Whatever the proposal, the ball will then be in the pan-democrats’ court. Do they vote as a block to reject any process that allows the Nominating Committee to screen candidates? Do they then want to expose themselves to near-certain criticism that their recalcitrance denied the Hong Kong public the opportunity to vote for the CE? Or, do they take a chance on the more flexible approach that Tam is proposing, in the hope and belief that a pan-democrat will be screened in, which in turn would seem to set up a competitive election?

Read Richard Bush's response to the Hong Kong government's proposal for electoral reform »

      

William Galston and E.J. Dionne, Jr. make the case for universal voting – a new electoral system in which voting would be regarded as a required, civic duty. Why not treat showing up at the polls in the same way we treat a jury summons, which compels us to present ourselves at the court? Galston and Dionne argue that universal voting would enhance the legitimacy of our governing institutions, greatly increasing turnout and the diversity of the American voter base, and ease the intense partisan polarization that weakens our governing capacity.

Citing the implementation of universal voting in Australia in 1924, the authors conclude that universal voting increases citizen participation in the political process. In the United States, they write, universal voting would promote participation among citizens who are not likely to vote—those with lower levels of income and education, young adults, and recent immigrants. By evening out disparities in the electorate, universal voting would put the state on the side of promoting broad civic participation.

In addition to expanding voter participation, universal voting would improve electoral competition and curb hyperpolarization. Galston and Dionne assert that the addition of less partisan voters in the electorate, would force candidates to shift their focus from mobilizing partisan bases to persuading moderates and less committed voters. Reducing partisan rhetoric would help ease polarization and increase prospects for compromise.. Rather than focusing on symbolic, political gestures, Washington might have an incentive to tackle serious issues and solve problems.

Galston and Dionne believe that American democracy cannot be strong if citizenship is weak. And right now, they contend citizenship is strong on rights but weak on responsibilities. Making voting universal would begin to right this balance and send an important message: we all have the duty to help shape the country that has given us so much.

Galston and Dionne recognize that the majority of Americans are far from ready to endorse universal voting. By advancing a proposal that stands outside the perimeter of what the majority of Americans are likely to support, Galston and Dionne aim to enrich public debate—in the short term, by advancing the cause of more modest reforms that would increase participation; in the long term, by expanding public understanding of institutional remedies to political dysfunction. 

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• Dionne and Galston discuss their paper on universal voting

      

In a new research paper—The case for universal voting: Why making voting a duty would enhance our elections and improve our government—Brookings scholars E.J. Dionne, Jr. and William Galston make the case for universal voting—an electoral system in which voting would be regarded as a required, civic duty. Why not treat showing up at the polls in the same way we treat, say, a jury summons? Dionne and Galston argue that universal voting’s benefits would include enhancing the legitimacy of our governing institutions, increasing turnout and the diversity of the American voter base, and easing the intense partisan polarization that weakens our governing capacity.

What do you think of Dionne and Galston’s proposal? Specifically, if voting and registration rules were made easier, should voting in national elections be universal and mandatory for all eligible citizens?

To voice your opinion, click the image below and vote. We will share the results on social media.

       

       

       

Five years pass so quickly. It seems like only yesterday that EU leaders were emerging from an unseemly and apparently ad hoc appointment process to announce that Catherine Ashton, a member of the British House of Lords and a recently appointed European trade commissioner, would be the first-ever high representative for foreign affairs and security policy -- a sort of EU foreign minister. One existential currency crisis and two Russian invasions of Ukraine later, the EU is picking her successor.

With the passage of time and the rush of events, the stakes have become much higher. Yet the EU continues to select its leaders as if its postmodern continental paradise were not under siege from the south, because of the disintegration of the Arab world, and to the east, thanks to Russian aggression. Just like last time, the selection of the new high representative, Federica Mogherini, was undignified, full of haggling, and more focused on her gender, party affiliation, and nationality than on her actual qualifications for the job. And those are few: Mogherini emerged from obscurity just a few months ago to become Italy’s foreign minister.

Critics look at Mogherini’s lack of experience and assume that the EU’s underperformance in foreign policy will continue. This is a real possibility, and with crises brewing to Europe’s east and south, this is a particularly bad moment for the EU to descend into a bout of internal squabbling. But Mogherini can transcend the process that selected her and be the foreign policy representative the EU needs if she learns a few lessons from the recent past.

Back in 2009, pundits were filled with hope about the new EU foreign policy chief. The post was new and newly empowered to set up a diplomatic corps, the European External Action Service (EEAS). Against this backdrop, the choice of Ashton, an unknown British politician with no foreign policy experience, came as a cold shower. Her appointment reinforced the perception that the EU leaders’ stated resolve to raise the union’s foreign policy profile was rhetorical rather than real.

Although understandable, both the high expectations and the subsequent disappointment were misplaced. Even a high representative with an impeccable résumé would not have turned the EU into a foreign policy juggernaut. After all, the EU high representative is not a U.S. secretary of state with plenty of space to set U.S. foreign policy, but a bureaucrat operating within the much narrower limits of intergovernmental decision-making. In the EU, it is the member states -- not Brussels -- that make decisions on the most consequential issues of foreign policy.

Ashton has operated well within this limited sphere and carefully picked her issues. She has understood that the role of the high representative must change depending on the degree of agreement among the states. When there is a strong consensus, the high representative’s role most closely resembles that of a normal foreign minister -- he or she has great leeway to devise and implement policies. The 2013 normalization of relations between Serbia and Kosovo is a good case in point: there was sufficient consensus among member states that Ashton was able to spearhead an agreement between the two countries, for which she deservedly earned credit.

If there is a lack of consensus but also an imbalance of interest among member states, ad hoc groups of interested member states tend to take the initiative -- as did the United Kingdom, France, and Germany in 2003 on Iran’s nuclear program and Poland and Lithuania during Ukraine’s 2004 Orange Revolution. The high representative’s task here is not to lead but to help devise a policy course acceptable to all member states and, once the policy has been created, lend it the political weight of the whole EU. Ashton has carefully interpreted this role in the nuclear talks with Iran, which she has conducted on behalf of the P5+1 (the five permanent members of the UN Security Council plus Germany).

Finally, when member states have conflicting interests and all care about a particular issue, as they often do with regard to Russia, the high representative is limited to proposing lowest-common-denominator options that, however unsatisfying, represent what the EU can reasonably do. Ukraine, for better or for worse, is an example in which it would serve the EU little for the high representative to try to lead the member states to a destination that they have not (at least yet) agreed they want to go.

The high representative’s job description thus includes policy shaping, consensus building, and conflict management skills. The measure of his or her success is less a function of foreign policy chops than of the interpersonal skills the representative brings to the job. Measured against these requirements, Ashton’s record is decent. By the same token, there might be less reason to worry about Mogherini than some expect.

Mogherini is the high representative that EU leaders want. She is a woman, she is from the center-left, and she compensates the Italians for their recent losses in the international ranking of influential countries. Perhaps most significant, thanks to her lack of experience and high profile, she is unlikely to be able to challenge the member states’ principal role in EU foreign policy. Attesting to this is the fact that a number of EU member states agreed to her appointment despite having expressed concerns about Italy’s tendency to seek accommodation with Russia at a moment when Russia is invading its neighbor. However unhappy these countries may be with Mogherini’s selection, they are confident that her personal opinion on Russia will not affect the EU’s consensus-based foreign-policy-making process.

Mogherini’s weaknesses are real, but if she concentrates on what the EU high representative can realistically do, she can turn them into strengths. Her lack of defined policy positions on most issues will allow her to reflect consensus when it exists and to rely on the EEAS, which Ashton so assiduously built, to implement policies. This might make her an effective bridge builder between member states that disagree and also allows her to be more supportive than someone with a more established profile when vanguard groups of interested states want to move forward on specific issues on their own. Her lack of gravitas is more an issue of relative inexperience than a lack of personality. If she interprets correctly the multitasking role of the high representative, her standing will grow accordingly, as has happened with Ashton. Even on Russia policy, Mogherini has a unique opportunity. Although EU members are divided on what to do, Russia’s escalating aggression in Ukraine is slowly bringing them together. As an Italian associated with a relatively pro-Russian stance, her eventual calls to confront the Kremlin could be all the more effective.

The EU and the United States need a more unified and effective European foreign policy. But the EU is what it is. A U.S.-style secretary of state with a strong vision and lust for the spotlight would not transform the union because he or she would lack the legal authority and political legitimacy to do so. But a good high representative can still move the EU in the right direction, as long as he or she understands the subtleties of the role. And with the support of skilled advisers from the EEAS, Mogherini can be the high representative the EU needs.

This piece was originally published in Foreign Affairs.

      

Editor’s note: This post is part of a series on the Brookings Financial and Digital Inclusion Project, which aims to measure access to and usage of financial services among individuals who have historically been disproportionately excluded from the formal financial system. To read the first annual FDIP report, learn more about the methodology, and watch the 2015 launch event, visit the 2015 Report and Scorecard webpage.

Convenient access to banking infrastructure is something many people around the world take for granted. Yet while the number of people outside the formal financial system has substantially decreased in recent years, 2 billion adults still do not have an account with a formal financial institution or mobile money provider.¹

This means that significant opportunities remain to provide access to and promote use of affordable financial services that can help people manage their financial lives more safely and efficiently.

To learn more about how countries can facilitate greater financial inclusion among underserved groups, the Brookings Financial and Digital Inclusion Project (FDIP) sought to answer the following questions: (1) Do country commitments make a difference in progress toward financial inclusion?; (2) To what extent do mobile and other digital technologies advance financial inclusion; and (3) What legal, policy, and regulatory approaches promote financial inclusion?

To address these questions, the FDIP team assessed 33 indicators of financial inclusion across 21 economically, geographically, and politically diverse countries that have all made recent commitments to advancing financial inclusion. Indicators fell within four key dimensions of financial inclusion: country commitment, mobile capacity, regulatory commitment, and adoption of selected traditional and digital financial services.

In an effort to obtain the most accurate and up-to-date understanding of the financial inclusion landscape possible, the FDIP team engaged with a wide range of experts — including financial inclusion authorities in the FDIP focus countries — and also consulted international non-governmental organization publications, government documents, news sources, and supply and demand-side data sets.

Our research led to 5 overarching findings.

1. Country commitments matter.

   Not only did our 21 focus countries make commitments toward financial inclusion, but countries generally took these commitments seriously and made progress toward their goals. For example, the top five countries within the scorecard each completed at least one of their national-level financial inclusion targets. While correlation does not necessarily equal causation, our research supports findings by other financial inclusion experts that national-level country commitments are associated with greater financial inclusion progress. For example, the World Bank has noted that countries with national financial inclusion strategies have twice the average increase in the number of account holders as countries that do not have these strategies in place.

2. The movement toward digital financial services will accelerate financial inclusion.

   Digital financial services can provide customers with greater security, privacy, and convenience than transacting via traditional “brick-and-mortar” banks. We predict that digital financial services such as mobile money will become increasingly prevalent across demographics, particularly as user-friendly smartphones become cheaper² and more widespread.³

   Mobile money has already driven financial inclusion, particularly in countries where traditional banking infrastructure is limited. For example, mobile money offerings in Kenya (particularly the widely popular M-Pesa service) are credited with advancing financial inclusion: The Global Financial Inclusion (Global Findex) database found that the percentage of adults with a formal account in Kenya increased from about 42 percent in 2011 to about 75 percent in 2014, with around 58 percent of adults in Kenya having used mobile money within the preceding 12 months as of 2014.

3. Geography generally matters less than policy, legal, and regulatory changes, although some regional trends in terms of financial services provision are evident.

   Regional trends include the widespread use of banking agents (sometimes known as correspondents)⁴ in Latin America, in which retail outlets and other third parties are able to offer some financial services on behalf of banks,⁵ and the prevalence of mobile money in sub-Saharan Africa. However, these regional trends aren’t absolute: For example, post office branches have served as popular financial access points in South Africa,⁶ and the GSMA’s “2014 State of the Industry” report found that the highest growth in the number of mobile money accounts between December 2013 and December 2014 was in Latin America. Overall, we found high-performing countries across multiple regions and using multiple approaches, demonstrating that there are diverse pathways to achieving greater financial inclusion.

4. Central banks, ministries of finance, ministries of communications, banks, non-bank financial providers, and mobile network operators have major roles in achieving greater financial inclusion. These entities should closely coordinate with respect to policy, regulatory, and technological advances.

   With the roles of public and private sector entities within the financial sector becoming increasingly intertwined, coordination across sectors is critical to developing coherent and effective policies. Countries that performed strongly on the country commitment and regulatory environment components of the FDIP Scorecard generally demonstrated close coordination among public and private sector entities that informed the emergence of an enabling regulatory framework. For example, Tanzania’s National Financial Inclusion Framework⁷ promotes competition and innovation within the financial services sector by reflecting both public and private sector voices.⁸

5. Full financial inclusion cannot be achieved without addressing the financial inclusion gender gap and accounting for diverse cultural contexts with respect to financial services.

   Persistent gender disparities in terms of access to and usage of formal financial services must be addressed in order to achieve financial inclusion. For example, Middle Eastern countries such as Afghanistan and Pakistan have demonstrated a significant gap in formal account ownership between men and women. Guardianship and inheritance laws concerning account opening and property ownership present cultural and legal barriers that contribute to this gender gap.⁹

   Understanding diverse cultural contexts is also critical to advancing financial inclusion sustainably. In the Philippines, non-bank financial service providers such as pawn shops are popular venues for accessing financial services.¹⁰ Leveraging these providers as agents can therefore be a useful way to harness trust in these systems to increase financial inclusion.

To dive deeper into the report’s findings and compare country rankings, visit the FDIP interactive. We also welcome feedback about the 2015 Report and Scorecard at FDIPComments@brookings.edu.

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¹ Asli Demirguc-Kunt, Leora Klapper, Dorothe Singer, and Peter Van Oudheusden, “The Global Findex Database 2014: Measuring Financial Inclusion around the World,” World Bank Policy Research Working Paper 7255, April 2015, VI, http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/04/15/090224b082dca3aa/1_0/Rendered/PDF/The0Global0Fin0ion0around0the0world.pdf#page=3.

² Claire Scharwatt, Arunjay Katakam, Jennifer Frydrych, Alix Murphy, and Nika Naghavi, “2014 State of the Industry: Mobile Financial Services for the Unbanked,” GSMA, 2015, p. 24, http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/03/SOTIR_2014.pdf.

³ GSMA Intelligence, “The Mobile Economy 2015,” 2015, pgs. 13-14, http://www.gsmamobileeconomy.com/GSMA_Global_Mobile_Economy_Report_2015.pdf.

⁴ Caitlin Sanford, “Do agents improve financial inclusion? Evidence from a national survey in Brazil,” Bankable Frontier Associates, November 2013, pg. 1, http://bankablefrontier.com/wp-content/uploads/documents/BFA-Focus-Note-Do-agents-improve-financial-inclusion-Brazil.pdf.

⁵ Alliance for Financial Inclusion, “Discussion paper: Agent banking in Latin America,” 2012, pg. 3, http://www.afi-global.org/sites/default/files/discussion_paper_-_agent_banking_latin_america.pdf.

⁶ The National Treasury, South Africa and the AFI Financial Inclusion Data Working Group, “The Use of Financial Inclusion Data Country Case Study: South Africa – The Mzansi Story and Beyond,” January 2014, http://www.afi-global.org/sites/default/files/publications/the_use_of_financial_inclusion_data_country_case_study_south_africa.pdf.

⁷ Tanzania National Council for Financial Inclusion, “National Financial Inclusion Framework: A Public-Private Stakeholders’ Initiative (2014-2016),” 2013, pgs. 19-22, http://www.afi-global.org/sites/default/files/publications/tanzania-national-financial-inclusion-framework-2014-2016.pdf.

⁸ Simone di Castri and Lara Gidvani, “Enabling Mobile Money Policies in Tanzania,” GSMA, February 2014, http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/03/Tanzania-Enabling-Mobile-Money-Policies.pdf.

⁹ Mayada El-Zoghbi, “Mind the Gap: women and Access to Finance,” Consultative Group to Assist the Poor, 13 May 2015, http://www.cgap.org/blog/mind-gap-women-and-access-finance.

¹⁰ Xavier Martin and Amarnath Samarapally, “The Philippines: Marshalling Data, Policy, and a Diverse Industry for Financial Inclusion,” FINclusion Lab by MIX, June 2014, http://finclusionlab.org/blog/philippines-marshalling-data-policy-and-diverse-industry-financial-inclusion.

       

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

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

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

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

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

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

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

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

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

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

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

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

       

       

       

       

       

       

       

       

       

       

Renewable energy is an important source to tackle against climate change, as the latest IPCC report has pointed out. However, due to the existence of multiple market failures such as negative externalities of fossil fuels and knowledge spillovers of new technology, government subsidies are still needed to develop renewable energy, such as solar photovoltaic (PV) cells. In the United States, there have been various forms of subsidies for PV, varying from the federal level to the state level, and from the city level to the utility level. California, as the pioneer of solar PV development, has put forward the biggest state-level subsidy program for PV, the California Solar Initiative (CSI). The CSI has planned to spend around $2.2 Billion in 2007–2016 to install roughly 2 GW PV capacity, with the average subsidy level as high as $1.1/W. How to evaluate the cost-effectiveness and incentive pass-through of this program are the two major research questions we are pursing.

Our cost-effectiveness analysis is based on a constrained optimization model that we developed, where the objective is to install as much PV capacity as possible under a fixed budget constraint. Both the analytical and computational results suggest that due to a strong peer effect and the learning-by-doing effect, one can shift subsides from later periods to early periods so that the final PV installed capacity can be increased by 8.1% (or 32 MW). However, if the decision-maker has other policy objectives or constraints in mind, such as maintaining the policy certainty, then, the optimally calculated subsidy policy would look like the CSI.

As to the incentive pass-through question, we took a structural approach and in addition used the method of regression discontinuity (RD). While in general, the incentive pass-through rate depends on the curvature of the demand and supply curve and the level of market competition, our two estimations indicate that the incentive pass-through for the CSI program is almost complete. In other words, almost all of the incentive has been enjoyed by the customer, and the PV installers did not retain much. Based on the RD design, we observe that PV installers tend to consider the CSI incentive as exogenous to their pricing decision.

The relative good performance of the CSI in terms of both the cost-effectiveness and the incentive pass-through aspect are tightly related to its policy design and program management. International speaking, the biggest challenge for the design of any PV subsidy program is the quick running out of the budget, and in the end, it looks like customers are rushing for the subsidy. Such rushing behavior is a clear indication of higher-than-needed incentive levels. Due to the policy rigidity and rapid PV technological change, the PV subsidy policy may lag behind the PV cost decline; and as a result, rational customers could rush for any unnecessarily high subsidy.

Due to the high uncertainty and unpredictability of future PV costs, the CSI put forward a new design that links the incentive level change and the installed capacity goal fulfillment. Specifically, the CSI has designed nine steps to achieve its policy goal; at each step, there is a PV capacity goal that corresponds to an incentive level. Once the capacity goal is finished, the incentive level will decrease to the next lower level. Furthermore, to maintain the policy certainty, the CSI regulated that every step-wise change in the incentive level should not be higher than $0.45/W, nor smaller than $0.05/W, together with other three constraints.

A good subsidy policy not only requires flexible policy design to respond to fast-changing environment, but also demands an efficient program management system, digitalized if possible. For the CSI, the authority has contracted out a third-party to maintain a good database system for the program. Specifically, the database has documented in detail every PV system that customers requested. Key data fields include 22 important dates during the PV installation process, customers’ zip code, city, utility and county information, and various characteristics of the PV system such as price, system size, incentive, PV module and installer. All information is publicly available, which to some extent fills in the information gap held by customers and fosters the market competition among PV installers. For customers to receive the incentive, their PV systems have to pass the inspection of the local government, and also to be interconnected to the grid. On the supply side, the CSI has also certified and created a list of PV installers that every customer can choose from.

Although the CSI has ended in 2014 due to fast PV cost reduction starting from 2009, its experience has been transferred to other areas in the United States and in Europe. It is highly possible that other similar new technologies and products (e.g. the electric car and the battery) can adopt the CSI policy design, too. In summary, a good and successful policy may need to be simply, clear, credible, foreseeable, flexible, end-able, and incentive-compatible. The PV subsidy policy in China still has a long way to go when compared to the CSI.

       

       

       

       

       

        

       

       

       

       

Editors’ Note: Terrorist groups don’t emerge out of nowhere, and wars are perhaps the richest soil for seeding and growing violent groups of all stripes, writes Dan Byman. This post originally appeared in the Washington Post.

Study after study has found no common profile of a terrorist. It is hard to explain why, say, almost four times as many recruits leave Sweden to fight with the Islamic State as from neighboring Norway, though Sweden’s population is only twice Norway’s. Pundits and politicians alike speculate on why individuals might embrace terrorism, but such a question risks missing one obvious point: Having a terrorist group around in the first place is one of the most important factors in influencing an individual’s choice to join.

Terrorist groups don’t emerge out of nowhere, and wars are perhaps the richest soil for seeding and growing violent groups of all stripes. Without the wars in the Middle East there would be no Islamic State, and it is not the only one: al-Qaida, Hezbollah, and other extremist groups all emerged out of regional civil wars. The formation of such groups is a political phenomenon, and so, too, is the radicalization of foreign fighters from the West.

Terrorist groups are rarely the cause of civil wars. Iraq’s civil war began in 2003 after the U.S. invasion and occupation; Syria’s civil war began with peaceful protests against a brutal dictator in 2011; and Libya’s strife came after a terrorist-supporting dictator was toppled in the same year.

Rather, such wars beget and foster terrorism in several ways. Terror itself is often a tool in war, used to sow an atmosphere of fear and undermine governments. Assassinations of rival political leaders, bombs for police and military recruits and random violence against civilians—these are all methods learned from Insurgency 101.

Groups such as al-Qaida and now the Islamic State exploit new wars wherever they can. Terrorist groups linked to civil wars seek supporters in the United States, Europe, and other areas outside the theater for reasons both obvious and obscure—and these factors generate more terrorists. This pull is especially strong when identities cross borders—as does a religious identity like Islam—and when local ties are weak or the community as a whole is poorly integrated, as the Muslim community is in many European countries.

Foreigners might join these groups for altruistic reasons, to help the genuinely oppressed (the Syrian people facing Bashar al-Assad, or the Afghans facing the Soviets). Yet often the oppression is a myth, or at least greatly exaggerated: One powerful narrative of the Islamic State is that Sunni Muslims are facing a global Shiite conspiracy led by Iran and Hezbollah.

Still others join because they are true believers and want to live the dream. In different ways, the war takes them out of their humdrum or depressing present, giving them a new life: “I’m the most content I have ever been in my life,” tweeted one young American woman who had gone to live in the Islamic State, ending the tweet with a heart emoji. Many are merely thugs who spent time in jail or otherwise led delinquent lives: Joining the Islamic State or a similar group gives them a license to kill and torture.

Because there is no single profile, terrorist groups such as the Islamic State seek to appeal to many different ones. Propaganda stresses the good life in the caliphate, the glory of fighting for God, the oppression the community is facing, and glorified ultra-violence. Religion matters, but only as a badge of meaning and belonging rather than for its specific ideological content. By professing religious beliefs, a young Muslim male can go from marginalized and alienated in his home country to part of God’s army, defending his people with his own sex slaves to boot. Yet one study of the European foreign fighters found that most were theologically illiterate. Omar Mateen, the Orlando shooter, may not have understood the difference between the theologies espoused by the Islamic State, al-Qaida and Hezbollah.

As long as these wars rage, the problems they generate will not stay confined to the Middle East. Only a fraction of a fraction end up fighting, and even fewer engage in terrorism, but only a small number need to respond for the problem to be serious.

        

       

Introduction

The global community has set itself the challenge of meeting the Millennium Development Goals (MDGs) by 2015 as a way to combat world poverty and hunger. In 2007, the halfway point, it is clear that many countries will not be able to meet the MDGs without undertaking significantly greater efforts. One constraint that needs to be overcome is that development interventions—projects, programs, policies—are all too often like small pebbles thrown into a big pond: they are limited in scale, short-lived, and therefore have little lasting impact. This may explain why so many studies have found that external aid has had weak or no development impact in the aggregate, even though many individual interventions have been successful in terms of their project- or program-specific goals.

Confronted with the challenge of meeting the MDGs, the development community has recently begun to focus on the need to scale up interventions. Scaling up means taking successful projects, programs, or policies and expanding, adapting, and sustaining them in different ways over time for greater development impact. This emphasis on scaling up has emerged from concern over how to deploy and absorb the substantially increased levels of official development assistance that were promised by the wealthy countries at recent G8 summits. A fragmented aid architecture complicates this task; multilateral, bilateral, and private aid entities have multiplied, leading to many more—but smaller— aid projects and programs and increasing transaction costs for recipient countries. In response, some aid donors have started to move from project to program support, and in the Paris Declaration, official donors committed themselves to work together for better coordinated aid delivery.

The current focus on scaling up is not entirely new, however. During the 1980s, as nongovernmental organizations (NGOs) increasingly began to engage in development activities, scaling up emerged as a challenge. NGO interventions were (and are) typically small in scale and often apply new approaches. Therefore, the question of how to replicate and scale up successful models gained prominence even then, especially in connection with participatory and community development approaches. Indeed, the current interest among philanthropic foundations and NGOs in how to scale up their interventions is an echo of these earlier concerns.

In response to this increased focus on scaling up—and its increased urgency—this policy brief takes a comprehensive look at what the literature and experience have to say about whether and how to scale up development interventions.

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Abstract

Scaling up of development interventions is much debated today as a way to improve their impact and effectiveness. Based on a review of scaling up literature and practice, this paper develops a framework for the key dynamics that allow the scaling up process to happen. The authors explore the possible approaches and paths to scaling up, the drivers of expansion and of replication, the space that has to be created for interventions to grow, and the role of evaluation and of careful planning and implementation. They draw a number of lessons for the development analyst and practitioner. More than anything else, scaling up is about political and organizational leadership, about vision, values and mindset, and about incentives and accountability—all oriented to make scaling up a central element of individual, institutional, national and international development efforts. The paper concludes by highlighting some implications for aid and aid donors.

An annotated bibliography of the literature on scaling up and development aid effectiveness was created by Oksana Pidufala to supplement this working paper. Read more »

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The Roosevelt House Public Policy Institute hosted a forum with Ted Piccone and Ambassadors Hardeep Singh Puri and Antonio de Aguiar Patriota as they discussed his new book, Five Rising Democracies and the Fate of the International Liberal Order.

While the spread of democracy over the last three decades has inspired hope for an international liberal order, recent shifting power balances and democratic backsliding are shaking this foundation. In his new book, Brookings Institution Senior Fellow Ted Piccone discusses how five pivotal countries—India, Brazil, South Africa, Turkey, and Indonesia—could play a critical role as examples and supporters of liberal ideas and practices. 

Mr. Piccone, Hardeep Singh Puri, former Ambassador of India to the U.N. and Secretary General of the Independent Commission on Multilateralism, and Antonio de Aguiar Patriota, Ambassador of Brazil to the U.N. and former Minister of External Relations, discuss the ways in which these countries stand out for their embrace of globalization and liberal norms on their own terms—and how, in a multipolar world, they may impact our shared future.