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What lessons does India offer for other countries? What is the appropriate role for outsiders in addressing continued poverty and widening inequality in a country that has regularly clocked about 7 percent annual per capita GDP growth with foreign reserves close to $300 billion? And what can the world reasonably expect such a nation, with ample financial resources but a huge poor population of its own, to contribute to solving global problems? The Center for Global Development’s research explores these issues and more.
India’s reform of household subsidies for the purchase of LPG cooking gas stands out for a several reasons. The paper provides a detailed picture of the reform through its various stages, including how the process was conceptualized, coordinated, and implemented. It analyzes how such a reform must be able to adapt to concerns as they arise and to new information, how digital technology was used and how it is possible to use a voluntary self-targeting “nudge” to defuse potential resistance to income-based targeting.
Expectations were low for the eleventh World Trade Organization (WTO) ministerial meeting in Buenos Aires, and on most accounts it still managed to under-deliver. This time around, US and Indian negotiators refused to compromise in service of achieving a consensus agreement in any area. Roughly three quarters of WTO members endorsed a precedent-setting, albeit hortatory, declaration on women and trade; the United States and India did not. And there were statements from varying groups of “like-minded” countries to pursue work in areas that could eventually lead to “plurilateral” agreements. Still, it is not clear these efforts are any more likely to overcome the sharp differences that have prevented compromise among the broader membership. And if they do, they could end up marginalizing smaller, less powerful developing countries.
India’s tax revenue distribution reform creates the world’s first ecological fiscal transfers (EFTs) for forest cover, and a potential model for other countries. In this paper we discuss the origin of India’s EFTs and their potential effects. In a simple preliminary analysis, we do not yet observe that the EFTs have increased forest cover across states, consistent with our hypothesis that one to two years of operation is too soon for the reform to have had an effect. This means there remains substantial scope for state governments to protect and restore forests as an investment in future state revenues.
This paper covers qualitative case studies from Iran, Nigeria, and India to illustrate a series of lessons for governments implementing subsidy reform policies. From these three country experiences, we find that fostering public support to implement lasting reform may depend on four measures: (1) forming a public engagement plan and a comprehensive reform policy that are then clearly communicated to the public in advance of price increases; (2) phasing in price adjustments over a period of time to ease absorption; (3) providing a targeted compensatory cash transfer to alleviate financial impacts on low- to middle-income households; and (4) capitalizing on favorable global macroeconomic conditions.
India's biometric ID system Aadhaar has provided over a billion people with digital IDs, and changed how the country's government provides services and subsidies. But opponents of the system say that Aadhaar erodes people’s privacy. Nandan Nilekani, the chief architect of the platform, joins the CGD podcast to address these concerns, discuss the platform's progress, and share his vision for future uses of "societal platforms."
How do you give over a billion people a digital ID within five years? How do you improve learning for 200 million children in India and countless millions worldwide within a decade? How do you improve health outcomes for billions of poor people and achieve the goals of Universal Health Coverage within a generation? How do you solve the world’s most pressing challenges, not incrementally, but with the urgency they demand?
A central issue in designing performance incentive contracts is whether to reward the production of outputs versus use of inputs: the former rewards efficiency and innovation in production, while the latter imposes less risk on agents. Agents with varying levels of skill may perform better under different contractual bases as well—more skilled workers may be better able to innovate, for example. We study these issues empirically through an experiment enabling us to observe and verify outputs (health outcomes) and inputs (guideline adherence) in Indian maternity care.
This morning (Thursday) came the news that Arvind Subramanian, a joint fellow at CGD and at the Peterson Institute for International Economics, is being appointed Chief Economic Advisor to the government of India. This appointment (for our American readers), is more or less equivalent to being the head of the US President’s Council of Economic Advisors. The current Chief Economist of the World Bank, Kaushik Basu, is a former CEA in India, and the current head of India’s Reserve Bank, Raghuram Rajan is a former CEA. (In Arvind’s case, I dearly hope he will be back at CGD—and yes PIIE—here in Washington within a few years.)
This paper finds that end-user financing (i.e. consumer subsidies and tax rebates) is relatively ineffective at enhancing sales of off-grid solar technologies in India. If the government is to make meaningful progress toward its national goal to extend a constant supply of electricity to every household in the coming years, it will need to learn from and adapt its current financing structures for off-grid solar (and other renewable energy) technologies.
For global producers of consumer products, the rise of a middle class in India is great news. Dunkin’ Donuts, Starbucks, and IKEA have all recently announced they will move into the Indian market. The Swedish furniture maker plans to invest up to €1.5 billion over the next 15 to 20 years. A growing and more economically secure middle class in a country that, for all its troubles, is expected to continue to grow at a healthy if not torrid pace, ensures a healthy consumer market for years to come.
Last week saw the release of the new 2011 Purchasing Power Parity (PPP) rates for GDP produced by the International Comparison Program (ICP). The ICP is a major global statistical operation. The Global Office is housed in the World Bank but the ICP is implemented separately in each region by designated regional counterparts.
Health is a state rather than national subject in many countries (as we’ve discussed here and here), and in India this tendency has just become more pronounced. Based on the 14th Finance Commission’s recommendations (more here), money coming from the Central government to states will be less tied up and states more free to spend that money in whatever way they want.
Arvind Subramanian testified before the United States International Trade Commission on February 12, 2014. Subramanian shared his thoughts on India’s trade, investment, and industrial policies and offered policy recommendations from both an economic and strategic perspective.