Research Fellow
Education: B.A. in theoretical mathematics, Harvard College, magna cum laude, Phi Beta Kappa, 1990.
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David Roodman is a research fellow at the Center for Global Development currently focusing on microfinance. He is writing a book on the subject through an "open book" blog, through which he shares chapter drafts. The book asks bottom-line questions about what we know about the benefits of microfinance, and what that implies for how we support it. His earlier Microfinance as Business report, with Uzma Qureshi, shows that financial imperatives can explain much about how microfinance is conducted, from the emphasis on credit to the focus on women.
David has been architect and manager of the Commitment to Development Index since the project's inception in 2002. The Index ranks the world's richest countries based on their dedication to policies that benefit the 5 billion people living in poorer nations; it is widely recognized as the most comprehensive measure of rich-country policies towards the developing world.
David has written several papers questioning the capacity of common cross-country statistical techniques to shed light on what causes economic development. He co-authored a 2004 American Economic Review paper that challenged findings of World Bank research that aid works in a good policy environment. His non-technical "Guide for the Perplexed" builds on analysis of methodological problems and fragility in other studies. Among econometricians David is best known for his computer program xtabond2, which implements the Arellano-Bond and Blundell-Bond generalized method of moments estimators. xtabond2 is one of the most downloaded add-ons ever for the commercial statistics program Stata.
David previously worked at the Worldwatch Institute, where he wrote three monographs on environmental issues, and one on debt, Still Waiting for the Jubilee: Pragmatic Solutions for the Third World Debt Crisis. He authored the book The Natural Wealth of Nations: Harnessing the Market for the Environment. The Japanese edition garnered him a selection as one of "The Outstanding Young Persons" of 2003 by the Osaka Junior Chamber, which included an audience with the Emperor and Empress.
David spent academic year 1998–99 on a Fulbright in Vietnam. Upon returning, he became interested in financial markets and has since beaten his benchmark by 74 percentage points (61 after inflation adjustment). David has never taken a course in economics or statistics.
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My guest on this week’s show is David Roodman, a research fellow here at CGD who has spent the past year writing a book on microfinance. He has shared this experience online through his open book blog, posting chapter drafts, analyzing ongoing research in the field, and soliciting comments and suggestions. I ask David why he decided to write his book in such a public way, and what he’s learned over the last year.
David replies that when it comes to policy research, people write books for four reasons. “One is to help you think through a complicated process… Another is to provide a basis for shorter spin-off pieces… Another is to signal that you’re an expert about something. And then the last is, oh yeah, to write something for people to read.” David says blogging about the book-writing process has helped him to partially accomplish the first three goals even before the book is complete. It has also, somewhat unexpectedly he says, changed his writing style, something he discussed recently on the blog.
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This course explores the role of microfinance in economic development. It will discuss how poor people in poor countries use financial services such as credit and savings; the history and practice of delivering such services; what is known about their contribution to development; and how stories and statistical studies shape public perceptions of microfinance.
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In Benchmarking America, our second Global Prosperity Wonkcast, I ask CDI architect David Roodman to tell us why Sweden ranks first, why the United States gets such a mediocre score, and why Japan and Korea once again fall at the bottom of the list.
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The 2009 Commitment to Development Index ranks 22 of the world's richest countries on their dedication to policies that benefit the five billion people living in poorer nations. Moving beyond simple comparisons of foreign aid, the CDI ranks countries on seven themes: quantity and quality of foreign aid, openness to developing-country exports, policies that influence investment, migration policies, stewardship of the global environment, security policies and support for creation and dissemination of new technologies.
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In 2008, the United States finished 17th in the Index. Did it do any better in 2009? How did the other wealthy countries fare? To find out, and to understand the data behind the rankings, watch the Webinar that took place on Oct. 20. The Webinar includes an overview of the Index and the 2009 results from CGD research fellow David Roodman. CGD senior fellow Steve Radelet, a former deputy assistant secretary of Treasury for Africa, the Middle East and Asia, will discuss the implications of the Index results for the ongoing debate over reforming U.S. development policy.
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CGD fellow David Roodman and Jonathan Morduch reexamine three landmark, but contradictory, evaluations of the impact of microcredit on poor households in Bangladesh. They replicate the studies’ statistical analysis and put an end to the controversy surrounding them by showing that all fail to rule out reverse causation. A positive association between microcredit and household spending, for example, may merely indicate that richer families borrow more. With these studies in doubt, solid academic evidence that microcredit reduces poverty is even scarcer than previously understood.
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This working paper by CGD research fellow David Roodman provides an original synthesis and exposition of the statistical theory behind one of the most influential studies of the impact of microcredit on borrowers (Pitt and Khandker, Journal of Political Economy, 1998). The present paper also documents Roodman’s program, called cmp which for the first time makes it easy for other researchers to apply these methods. The program implements a "maximum likelihood" estimator for "fully observed, recursive, mixed-process systems of equations," and runs in the commercial statistical analysis package, Stata.
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In this telephone press conference, CGD research fellow David Roodman teases out the some trends from the 2008 Commitment to Development Index.
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This CGD brief summarizes the results of the 2008 Commitment to Development Index (CDI), which ranks 22 of the world's richest countries on their dedication to policies that benefit the five billion people living in poorer nations. The Netherlands comes in first on the 2008 CDI on the strength of ample aid-giving, falling greenhouse gas emissions, and support for investment in developing countries. Close behind are three more big aid donors: Sweden, Norway, and Denmark.
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How committed are the world's richest countries to the development of Africa, the world's poorest continent? Rich countries are usually compared on how much foreign aid they give as a percentage of their GDP, but helping Africa involves much more than aid. CGD's Commitment to Development Index has long compared 21 rich countries on aid, trade, migration, and other policies that affect the entire developing world. In the new CDI for Africa, research fellow David Roodman trains the CDI methodology on rich countries' links to this one continent. While the results may not be what you expect, one message is clear: all rich countries could do much more to foster development in Africa.Learn more
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CGD fellow David Roodman and Jonathan Morduch reexamine three landmark, but contradictory, evaluations of the impact of microcredit on poor households in Bangladesh. They replicate the studies’ statistical analysis and put an end to the controversy surrounding them by showing that all fail to rule out reverse causation. A positive association between microcredit and household spending, for example, may merely indicate that richer families borrow more. With these studies in doubt, solid academic evidence that microcredit reduces poverty is even scarcer than previously understood.
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This course explores the role of microfinance in economic development. It will discuss how poor people in poor countries use financial services such as credit and savings; the history and practice of delivering such services; what is known about their contribution to development; and how stories and statistical studies shape public perceptions of microfinance.
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Microfinance is a widely celebrated strategy for helping poor people in the developing world. Leading microfinance institutions, including the Nobel Peace Prize-winning Grameen Bank, reach millions of clients. CGD research fellow David Roodman and Uzma Qureshi analyze why some microfinance institutions succeed in covering costs, earning returns, attracting capital, and scaling up. They conclude that financial imperatives can explain much about how microfinance products are designed, for example, the common emphasis on group lending to women. Thus the business acumen of microfinance innovators is underappreciated. But more rigorous study is needed to understand when and where these design choices help clients.
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This working paper by CGD research fellow David Roodman provides an original synthesis and exposition of the literature on a particular class of econometric techniques called "dynamic panel estimators," and presents the first implementation of some of these techniques in Stata, a statistical software package widely used in the research community. Stata is designed to encourage users to develop new commands for it, which other users can then use or even modify. In this paper, Roodman introduces two commands, abar and xtabond2, which is one of the most frequently downloaded user-written Stata commands in the world. Learn more
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The Burnside and Dollar (2000) finding that aid raises growth in a good policy environment has had an important influence on policy and academic debates. We conduct a data gathering exercise that updates their data from 1970-93 to 1970-97, as well as filling in missing data for the original period 1970-93. We find that the BD finding is not robust to the use of this additional data. (JEL F350, O230, O400)
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David Roodman, creator of the Commitment to Development Index (CDI), has devised a measure of foreign aid flows that takes into account the interest payments that developing countries make to rich country creditors. The Net Aid Transfers data set, which is a component of the CDI, is now available for download.
Learn more
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The argument about whether foreign aid "works" rages on. Recently, Paul Collier sought a practical middle path between William Easterly's development pessimism and Jeffrey Sach's development boosterism. How can smart people draw such contradictory conclusions from the same data? This new working paper by CGD research fellow David Roodman answers this question by describing consensus where it exists and identifying sources of controversy. Roodman concludes that, while aid has eradicated diseases, prevented famines, and done many other good things, given the limited and noisy data available, its effects on growth in particular probably cannot be detected.
Learn More
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*REVISED Version May 2007Recent literature contains many stories of how foreign aid affects economic growth: aid raises growth in countries with good policies, or in countries with difficult economic environments, or mainly outside the tropics, or on average with diminishing returns. The diversity of these results suggests that many are fragile. I test 7 important aid-growth papers for robustness. The 14 tests are minimally arbi-trary, deriving mainly from differences among the studies themselves. This approach investigates the importance of potentially arbitrary specification choices while minimizing arbitrariness in testing choices. All of the results appear fragile, especially to sample expansion.
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*REVISED Version May 2008In development economics, statistical analysis usually begins with data from many observational units--households, companies, or countries--over just a few time periods. Two analysis techniques are becoming popular for studying causal relationships among variables in this "short panel" setting but their implementation may produce false results. In this new working paper CGD research fellow David Roodman shows how inaccurate results can skew the development debate and offers some simple techniques for reducing the risks.
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Each year since 2003, the Commitment to Development Index (CDI) has ranked 21 rich countries on their dedication (or not!) to policies that benefit the five billion people living in poor countries. The CDI moves beyond simple comparisons of aid funding and in so doing embodies the mission of CGD, which addresses all government policies that affect poorer countries. This report summarizes the results of this year's Index, discusses key ideas that underpin each component and shows how countries' scores have changed over time.
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Introduction to Microfinance for Development (Syllabus)
- Dec 7, 2009
This course explores the role of microfinance in economic development. It will discuss how poor people in poor countries use financial services such as credit and savings; the history and practice of delivering such services; what is known about their contribution to development; and how stories and statistical studies shape public perceptions of microfinance.
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Commitment to Development Index 2009
- Oct 22, 2009
The 2009 Commitment to Development Index ranks 22 of the world's richest countries on their dedication to policies that benefit the five billion people living in poorer nations. Moving beyond simple comparisons of foreign aid, the CDI ranks countries on seven themes: quantity and quality of foreign aid, openness to developing-country exports, policies that influence investment, migration policies, stewardship of the global environment, security policies and support for creation and dissemination of new technologies.
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The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence - Working Paper 174
- Jun 18, 2009
CGD fellow David Roodman and Jonathan Morduch reexamine three landmark, but contradictory, evaluations of the impact of microcredit on poor households in Bangladesh. They replicate the studies’ statistical analysis and put an end to the controversy surrounding them by showing that all fail to rule out reverse causation. A positive association between microcredit and household spending, for example, may merely indicate that richer families borrow more. With these studies in doubt, solid academic evidence that microcredit reduces poverty is even scarcer than previously understood.
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Estimating Fully Observed Recursive Mixed-Process Models with cmp - Working Paper 168
- Apr 7, 2009
This working paper by CGD research fellow David Roodman provides an original synthesis and exposition of the statistical theory behind one of the most influential studies of the impact of microcredit on borrowers (Pitt and Khandker, Journal of Political Economy, 1998). The present paper also documents Roodman’s program, called cmp which for the first time makes it easy for other researchers to apply these methods. The program implements a "maximum likelihood" estimator for "fully observed, recursive, mixed-process systems of equations," and runs in the commercial statistical analysis package, Stata.
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The 2008 Commitment to Development Index: Components and Results
- Dec 4, 2008
This CGD brief summarizes the results of the 2008 Commitment to Development Index (CDI), which ranks 22 of the world's richest countries on their dedication to policies that benefit the five billion people living in poorer nations. The Netherlands comes in first on the 2008 CDI on the strength of ample aid-giving, falling greenhouse gas emissions, and support for investment in developing countries. Close behind are three more big aid donors: Sweden, Norway, and Denmark.
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The Commitment to Development Index for Africa: How Much Do the Richest Countries Help the Poorest Continent?
- May 12, 2008
How committed are the world's richest countries to the development of Africa, the world's poorest continent? Rich countries are usually compared on how much foreign aid they give as a percentage of their GDP, but helping Africa involves much more than aid. CGD's Commitment to Development Index has long compared 21 rich countries on aid, trade, migration, and other policies that affect the entire developing world. In the new CDI for Africa, research fellow David Roodman trains the CDI methodology on rich countries' links to this one continent. While the results may not be what you expect, one message is clear: all rich countries could do much more to foster development in Africa.Learn more
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Net Aid Transfers data set (1960-2008) - Updated 1/20/2010
- Jan 25, 2008
David Roodman, creator of the Commitment to Development Index (CDI), has devised a measure of foreign aid flows that takes into account the interest payments that developing countries make to rich country creditors. The Net Aid Transfers data set, which is a component of the CDI, is now available for download.
Learn more
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Through the Looking-Glass, and What OLS Found There: On Growth, Foreign Aid, and Reverse Causality - Working Paper 137
- Jan 7, 2008
The econometric quest for evidence on aid effectiveness continues. Practitioners in the $80 billion-a-year aid enterprise care about their work and hanker for objective evidence that they are helping. In this working paper, CGD research fellow David Roodman argues that there is a clear aid-growth relationship, but instead of being positive and running causally from aid to growth, it is negative and runs from growth to aid--aid, that is, as it is usually measured: as a fraction of GDP. Roughly speaking (and not surprisingly!), when GDP goes up, aid/GDP goes down. Roodman argues that choices that economists commonly make in running the numbers often flip the apparent sign and direction of the aid-growth link, making it appear that aid is raising growth.
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Macro Aid Effectiveness Research: A Guide for the Perplexed - Working Paper 135
- Dec 10, 2007
The argument about whether foreign aid "works" rages on. Recently, Paul Collier sought a practical middle path between William Easterly's development pessimism and Jeffrey Sach's development boosterism. How can smart people draw such contradictory conclusions from the same data? This new working paper by CGD research fellow David Roodman answers this question by describing consensus where it exists and identifying sources of controversy. Roodman concludes that, while aid has eradicated diseases, prevented famines, and done many other good things, given the limited and noisy data available, its effects on growth in particular probably cannot be detected.
Learn More
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The Commitment to Development Index 2007 Report
- Oct 25, 2007
Each year since 2003, the Commitment to Development Index (CDI) has ranked 21 rich countries on their dedication (or not!) to policies that benefit the five billion people living in poor countries. The CDI moves beyond simple comparisons of aid funding and in so doing embodies the mission of CGD, which addresses all government policies that affect poorer countries. This report summarizes the results of this year's Index, discusses key ideas that underpin each component and shows how countries' scores have changed over time.
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L'etat c'est moi: Do State and Individual Donors Behave the Same?
- Oct 7, 2009
Until recently, most aid from rich to poor countries was transmitted through official bilateral and multilateral channels. However, the rapid growth in private development aid from foundations, charities, and philanthropic individuals raises a host of questions regarding the allocation of aid and its selectivity across recipient countries. Using data from private micro-lending institutions GlobalGiving and Kiva, authors Raj M. Desai and Homi Kharas analyze the lending preferences of private individuals in comparison to those of official aid agencies. Join us for a discussion of how private individuals donate to microcredit and grassroots projects, and how these aids flows are complementary to the goals of official development assistance.
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If It Doesn’t Get Counted, Does It Count? New Measures of Aid Quality for Microfinance, Humanitarian Aid, and Everything Else
- Dec 16, 2008
The last decade has seen a growing number of efforts to measure the quality of foreign aid, including part of CGD's own Commitment to Development Index (CDI). This event will showcase three new projects of this kind—projects that dramatize how the quality of aid matters as well the quantity, that point to specific ways to improve aid, and that create incentives for reform. The SmartAid for Microfinance Index of CGAP, an independent policy and research center dedicated to advancing financial access for poor people, scores donors and investors on how well they are set up to support microfinance. The Humanitarian Response Index of Madrid-based DARA International measures the quality of aid that responds to natural disasters, famine, and refugee crises. Finally, a new CGD project is assembling indicators of general aid quality, covering such aspects as aid volatility and use of independent evaluation. Come find out which donors do well and why—and develop your own measure of the value of such projects for gauging and improving aid quality.
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