A health worker marks a boy’s finger with ink to show that he has been vaccinated against measles in India’s Gujarat State. Credit: UNICEF/UNI133530/Pietrasik

By Bjorn Lomborg
COPENHAGEN, Denmark, Feb 7 2018 (IPS)

Antipoverty group Oxfam International got a lot of attention for claiming that there’s a global “inequality crisis,” but a far more important point is entirely neglected: globally, income distribution is less unequal than it has been for 100 years.

The best data on this comes from Professor Branko Milanovic, formerly of the World Bank, now at City University of New York. His research shows that, mostly because of Asia’s incredible growth, global inequality has declined sharply for several decades, reducing so much that the world hasn’t been this equal for more than a century.

Moreover, the conversation on inequality sparked by Oxfam fails to acknowledge that equality is about much more than money. Look at education and health. In 1870, more than three-quarters of the world was illiterate. Today, more than four out of every five people can read.

Focusing so narrowly on the topic does an injustice to the much more serious challenges affecting the world’s poorest, such as air pollution, tuberculosis, HIV, malaria, malnutrition and micronutrient deficiencies and barriers to equal and fairly distributed access to education.
Half of all of humanity’s welfare gains from the past 40 years come from the fact that we’re living longer, healthier lives. In 1900, people lived to be 30 on average; today, it’s 71. Over the past half-century, the difference in life expectancy between the world’s wealthiest and poorest countries has dropped from 28 to 18 years.

Oxfam almost entirely glosses over this reality, and instead points to wealth levels within individual countries. It’s true inequality on this measure has increased. But Oxfam overstates the case when it claims that the wealth of the world’s 42 richest people is greater than the bottom 50 percent of the planet (3.7 billion).

A little less than one-fifth of the “bottom half” are actually people with a collective debt of $1.2 trillion: likely mostly rich world citizens, like students with loans or people with negative equity in their houses. It is quite a stretch to classify such people among the world’s poor.

It would be fairer, then, to say that the wealth of the poorest 40 percent of the planet (excluding those with negative wealth) is equal to the wealth of the top 128 billionaires. But this wouldn’t be as catchy as claiming that just 42 people own as much as half the planet.

Oxfam’s repeated claim that the top 1 percent own more than half the planet’s wealth lacks historical context. Thomas Piketty looked at wealth for select countries and found a dramatic decline in the wealth of the top 1 percent from 1900 to about 1970-80, and a smaller increase since then. Thus, it’s likely that the world is more equal today in terms of wealth than it has been historically, apart from over the past three or four decades.

Looking at the United Kingdom for example, the top 1 percent of wealth has increased, yet the data show that the country was still more unequal every year before 1977.

More relevant than wealth, though, is the measure of income inequality, since this determines our lives from one year to the next. Inequality has indeed risen recently. But what of the bigger picture? Perhaps unsurprisingly, most diagrams used by Oxfam start in around 1980, at the historic low-point for income inequality.

The data show that the top 1 percent of income in English-speaking countries has returned to levels akin to those in the early 1900s, while in non-English countries it has declined dramatically.

Oxfam’s core purpose is “to end the injustice of poverty,” so it’s unfortunate that its simplistic narrative points to a need for redistribution within countries while overlooking the many things — like global free trade lifting hundreds of millions out of poverty, and vaccination campaigns that have nearly eradicated diseases like polio — that need to be maintained to continue recent dramatic global progress.

Too much inequality can reduce growth and stifle social mobility, so it should be kept in check. But it is wrong to ignore the bigger story of humanity’s progress against poverty and inequality.

Focusing so narrowly on the topic does an injustice to the much more serious challenges affecting the world’s poorest, such as air pollution, tuberculosis, HIV, malaria, malnutrition and micronutrient deficiencies and barriers to equal and fairly distributed access to education.

All of these challenges have cheap and effective solutions. And it’s on these solutions that we need to focus.

Excerpt:

By Bjorn Lomborg
PRAGUE, CZECH REPUBLIC, Oct 4 2017 (IPS)

The average American believes the US spends a whopping third of its federal budget on foreign aid. Consequently, a majority of people think that too much is spent on foreign aid. That is one reason US President Donald J. Trump, who has campaigned on putting the needs of Americans first, has proposed deep cuts to foreign aid in his 2018 budget.

The problem is, this common understanding is very wrong. US foreign aid in 2017 will cost $41.9 billion out of a total federal budget of $4.15 trillion or one percent. When informed of this, support for cutting aid halves, while support for increasing the budget more than doubles. The aid budget should be maintained. And the far more important question should instead be addressed: how do we get the most possible out of this spending?

We can look to recent history for reassuring evidence that US aid spending can achieve a great deal. A recent Brookings study revealed that the Millennium Development Goals (MDGs) – the development agenda set by the US and others for the first fifteen years of this century – were more successful than anybody knew.

From 2000, the world agreed on 18 key undertakings, including halving the proportion of people in poverty, halving the proportion of people going hungry, and cutting child mortality by two-thirds.

The study concludes, “especially on matters of life and death, 2015 outcomes were not on track to happen anyhow”. The MDGs ensured that more money went to the most important areas. Improvements sped up. At least 21 million more people are alive today as a result.

This tells us that the simple MDG approach worked; the U.S. and other, smaller donors helped save a number of lives equivalent to the entire population of Florida. We know more today than ever before about how to create meaningful change with each dollar spent. More transparency should be encouraged to reassure taxpayers about how money is spent.

When the MDGs were being replaced in 2015 with a new development agenda called the Sustainable Development Goals (SDGs), my think-tank Copenhagen Consensus commissioned economists from around the world to analyze development priorities as they were proposed. The results are a body of work revealing what one aid dollar can achieve if spent in different ways.

I would be the first to argue that the SDGs are problematic: the simple 18 MDG targets were replaced with an impossibly long list of 169 targets. That’s just silly.

Targets such as the development of tools to monitor sustainable tourism or teaching the “knowledge and skills needed to promote sustainable development” don’t deserve priority when malnourishment claims at least 1.4 million children’s lives annually, 1.2 billion people live in extreme poverty, and 2.6 billion lack clean drinking water and sanitation.

But our research conclusively showed that among this list, there are 19 incredibly powerful development targets. If USAID focuses more on the most effective targets, the public could be reassured that every dollar is achieving the most possible.

The reduction of childhood malnutrition does deserve funds. Evidence for Copenhagen Consensus showed that every dollar spent providing better nutrition for 68 million children would produce over $40 in long-term social benefits.

Malaria, too, deserves attention. A single case can be averted for as little as $11. We don’t just stop one persons suffering; we save a community from lost economic productivity. Our economists estimated that reducing the incidence of malaria by 50% would generate a 35-fold return in benefits to society.

Tuberculosis is a disease that has been overlooked and under-funded. Despite being the world’s biggest infectious killer, in 2015 it received just 3.4 per cent of development assistance for health. Reducing TB deaths by 90 per cent would result in 1.3 million fewer deaths. In economic terms, this would bring benefits worth $43 for every dollar spent.

Among the myriad of well-meaning environmental targets, our research shows that protecting coral reefs deserves prioritization. In addition to biodiversity benefits, healthy reefs increase fish stocks, benefitting fishermen and tourism.

Another transformative target would be universal access to contraception and family planning. At an annual cost of just $3.6 billion, allowing women control over pregnancy would mean 150,000 fewer maternal deaths and 600,000 fewer children being orphaned.

There are 19 such targets that deserve prioritization, because each dollar would do a lot to achieve a safer, healthier world – a result that leads to lasting benefits for the US.

If common belief were right and foreign aid really did swallow one-third of all federal resources, it may indeed make sense to focus more on American needs.

But in a world where a few dollars can do a world of difference, spending just one percent of the budget on aid seems a sensible investment.

When it comes to development, everyone’s goal should be the same. Rather than slashing funds for development, the United States should maintain its global leadership by focusing on the areas where every dollar achieves the most good.

Excerpt:

Photo: www.tbalert.org

By Bjorn Lomborg
Apr 21 2016 (The Daily Star, Bangladesh)

Every hour, tuberculosis kills nine Bangladeshis. Another seven die each hour from arsenic in drinking water. Simple and cheap solutions are available to avoid almost all these deaths.

Bangladesh has made incredible progress over recent years on many health indicators. But the country continues to face great challenges, like tuberculosis (TB) and arsenic, two of the biggest killers. Many other grave health issues remain too, including factors that threaten mothers and their children.

Bangladesh Priorities can help identify the smartest solutions to national health challenges, as well as many other development issues.

TB kills 80,000 Bangladeshis each year, constituting about nine percent of all deaths. New research by Anna Vasssall, a senior lecturer in health economics at the London School of Hygiene and Tropical Medicine, outlines a cost-effective TB treatment strategy using community health clinics.

There are well-established ways to treat TB at low cost. Standard drugs for TB treatment and follow-up through community clinics cost Tk. 7,850 per patient. By treating one person for TB, you also prevent that person from infecting others, which makes treatment an even better investment. In total, each taka spent will do Tk. 21 of good.

Some strains of TB, however, are so-called “multi-drug resistant,” meaning that traditional treatments are not effective. Nationally, there are about 4,700 cases of this type of TB each year. The World Health Organization (WHO) is piloting a “Bangladesh regimen” trial in the country that shortens treatment time for these strains from 24 months to just nine months. But because multi-drug resistant TB is up to 45 times more expensive to treat, each taka spent will do just Tk. 3 of good. This shows that it can be much more effective to help the larger group of people who can be treated with conventional methods.

Even though 98 percent of Bangladeshis have access to either piped water or a well, 25 percent of households’ water sources contain arsenic levels that exceed the WHO guideline. New research investigates three water supply options that can largely prevent arsenic exposure: deep tube wells, rainwater harvesting, and pond sand filters. These options would cost between Tk. 1,250 to 1,850 annually per affected household and avert virtually all deaths related to arsenic. It would do about Tk. 7 of good per taka spent. Focusing efforts on the 20 percent worst affected, however, can do even more good—up to Tk.17 in benefits for each taka spent. And because much progress has already been made toward improving sanitation and hygiene, it turns out further investments in these areas would not be nearly as cost-effective as preventing arsenic exposure.

Another pressing health concern is child and maternal mortality. Even though Bangladesh has greatly reduced these deaths, the progress has been uneven. According to the World Bank, the mortality rates are nearly twice as high for infants and young children in the poorest 20 percent of the population compared to those in the richest 20 percent.

New research by Jahangir A.M. Khan, senior lecturer in health economics at Liverpool School of Tropical Medicine, and Sayem Ahmed, research investigator at The International Centre for Diarrhoeal Disease Research, Bangladesh, looks first at making births safer. Getting more women to deliver in medical facilities, which only half do now, could help.

It would cost an estimated Tk. 6,000 per delivery but is not practical for everyone, particularly in remote areas. The experts estimate that total spending of Tk. 8.94 billion (Tk. 894 crore) could move 80 percent of currently unattended births, or 1.5 million deliveries, into medical facilities. This would avert an estimated 3,260 maternal deaths and 34,467 neonatal deaths. Overall, each taka spent would do Tk. 8 of good.

An even more effective option is for community health workers to visit mothers at home both before and after birth. This option is very cheap – just Tk. 850 over the course of a pregnancy. Nearly 750,000 pregnant women could be targeted, and in all, homecare visits could save lives of more than 8,900 infants. Benefits for each taka of spending would be an impressive Tk. 27.

Lastly, the experts look at vaccinations. While 85 percent of children aged 12-23 months are fully immunised, that figure is just 51 percent for children in remote rural areas and just 43 percent for those in urban slums. Vaccinations cost Tk. 1,400-1,900 per child and could save more than 4,100 lives each year. Each taka spent immunising children would do Tk. 10 of good.

These new studies suggest some of the smartest solutions for the health challenges that still plague the country. Would these strategies be some of your top priorities for Bangladesh? Let us hear from you at https://copenhagen.fbapp.io/healthpriorities. We want to continue the conversation about how to do the most good for every taka spent.

The writer is president of the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit. He was named one of the world’s 100 most influential people by Time magazine.

This story was originally published by The Daily Star, Bangladesh

Bangladesh is ground zero for microfinance. Over the decades, since Sir Fazle Abed founded BRAC and Muhammad Yunus started Grameen Bank, the strategy of providing micro-sized loans to borrowers has helped increase income and consumption for the poor, ensured food security for many, created employment opportunities, and empowered women. According to the Credit and Development Forum, nearly 700 microfinance institutions operate in the country today, disbursing approximately Tk. 647 billion (Tk. 64,700 crore) to 3.4 crore active borrowers. The microfinance sector now contributes about 10 percent of GDP and generates approximately 250,000 jobs.

The early success of microfinance in many places around the world caused some to praise it as a panacea for economic development. More recently, however, critics have questioned some aspects of the model – their concerns include worries that poorer borrowers can become trapped in a spiral of debt. Moreover, they express concern that entry by for-profit entities has caused microfinance to lose its moral compass.

The truth lies in the middle. While microfinance may not be a cure-all that can eliminate poverty worldwide, it can produce positive – if modest – benefits. And new research from Bangladesh Priorities highlights an innovation in microfinance that promises to boost those benefits even more.

New research by Subir Bairagi, an agricultural economist at the Institute of Policy and Social Sciences (IPSS) and postdoctoral fellow at the International Rice Research Institute, and Wasel Bin Shadat, Executive Director of IPSS and lecturer of econometrics at the University of Manchester, shows that incorporating flexible repayment models into microfinance can increase benefits, particularly to borrowers. Each taka spent on these aims stands to do more than Tk. 2 of social good.

A recent set of reports by MIT’s Abdul Latif Jameel Poverty Action Lab garnered much attention. They studied the effects of microfinance in six countries using randomised evaluations. Such evaluations use random chance to determine if a person participates in, for example, microfinance or not, making it easy to see how well microfinance actually works. The MIT researchers found that the benefits are likely much more modest than some proponents had previously claimed (povertyactionlab.org).

Our experts have used a long-term study to examine Bangladesh specifically. They find that the benefits from traditional microfinance turn out to be Tk. 1.7 for each taka spent. So while microfinance may not deliver an incredibly high return, there are indeed positive net benefits of 0.7 after having paid off the one taka in costs. The microfinance institution captures about Tk. 0.4 of that benefit, leaving Tk. 0.3 in net benefits for the borrower.

One issue with traditional microfinance is that while it has been good for borrowers with continuous and predictable income flows, it can leave behind people whose income is lumpy, like farmers or certain entrepreneurs. Traditional microfinance can also fail to reach people at the most extreme levels of poverty, partly because of rigid repayment options.

So the researchers examined a strategy to overcome these hurdles: flexible repayment schedules that grant borrowers a grace period during the lean season. Introducing this tweak across Bangladesh could grow the microfinance market by approximately 2.5 percent, providing new opportunities for ultra-poor citizens, many of whom are farmers or labourers. Such a flexible system would mean borrowers wouldn’t have to repay loans until after they’ve received revenues from their harvest or production.

Since 2008, a programme through the Palli Karma-Sahayak Foundation has offered flexible microfinance options in Bangladesh. By June 2013, it had disbursed loans to 512,000 borrowers, totaling more than Tk. 9.6 billion (Tk. 960 crore). A 2012 study showed that under this flexible programme, the benefit to borrowers reflected in their incomes was 8 percent higher than with traditional microfinance.

Overall, the experts estimate that each taka spent on flexible microfinance does Tk. 2.2 of good. After having paid off the cost of one taka, the microfinance institution again captures about Tk. 0.4, but now the borrower gets Tk. 0.8, or almost three times as much in benefits.

Why would microfinance institutions agree to use flexible repayment strategies? Simply because delivering a new product opens a new market, allowing the institutions to reach people who have irregular income flows, while maintaining their profit share.

Flexible microfinance can do more than Tk. 2 of social good for each taka spent, improving upon the return from traditional methods. This result is one of many from the Bangladesh Priorities, showing us how much good we can do focusing on different solutions. I would love to hear your thoughts: should microfinance be one of the top priorities for the country? Let your voice be heard on https://copenhagen.fbapp.io/microfinancepriorities and help pick the top priorities for Bangladesh.

The writer is president of the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit. He was named one of the world’s 100 most influential people by Time magazine.

This story was originally published by The Daily Star, Bangladesh

More than six kilometres of water separate the southwest region from the rest of Bangladesh. The longstanding Padma Bridge project holds potential to span that gap both physically and economically, linking the region with Dhaka, Chittagong, and the rest of the country to the east.

After significant delays and cost overruns, however, the relevant question today is whether the project still makes overall social and economic sense. There is limited funding for infrastructure, and there are alternative transportation projects and many other proposals that could also produce benefits for Bangladesh.

New research by Ashikur Rahman, Senior Economist at the Policy Research Institute of Bangladesh, and Bazlul Khondker, Professor of Economics at the University of Dhaka, shows that even given the budget overruns from the project, the Padma Bridge is still cost beneficial. Every taka spent on the bridge would do about Tk. 2 of social good.

In 2010, the Bangladesh Bridge Authority assessed the economy-wide benefits of the Padma Bridge project with financial assistance from the World Bank. The BBA concluded that the project would be financially viable. But after allegations of corruption, the World Bank removed support from the project.

The project was interrupted, and its deadline was pushed back from 2015 to 2018. According to the BBA’s latest estimate, the total cost has risen to Tk. 28,793 crore – nearly three times higher than the original projected cost of Tk. 10,162 crore in 2007.

The recent research from Bangladesh Priorities updates the cost-benefit projections. One important factor that the analysis demonstrates is that price inflation and currency depreciation accounted for 91 percent of the cost increase from 2007 to 2015. And even with the cost increases, the Padma Bridge still makes financial sense.

Benefits of building road and rail transportation across the river would come from three main sources: decreased vehicle operating costs, increased time-savings, and a boost in GDP due to increased economic activities.

Currently, drivers have to use longer and poorer roads on alternate routes to cross the river. So once the bridge is complete, vehicle-operating costs will fall significantly. Plus, savings in travel time will account for nearly one-quarterof total benefits of the project. Over the 31 years following completion of the bridge, overall benefits to road users from these two sources are projected to be Tk. 130,000 crore.

The economists estimate that over that three-decade timeframe, the bridge will reach its full traffic capacity of 75,000 vehicles each day. One-third of those vehicles will be trucks, which carry cargo and boost trade. Due to that increased economic activity, the Padma Bridge stands to permanently increase GDP of the southwest region by up to 2.5 percent.

Even given delays and cost overruns, completing Padma Bridge has potential to do Tk. 2 of good for each taka spent. But when it comes to transportation within Bangladesh, there are additional options to consider.

Research by Kazi Mahmudur Rahman, Assistant Professor of Development Studies at the University of Liberal Arts Bangladesh, and Md. Tariqur Rahman, an economic consultant, examined the benefits that could come from vehicle agreements between nearby countries that are designed to encourage trade.

Bangladesh and its neighbours continue to forge stronger economic ties, but traffic bottlenecks and gaps in transport infrastructure have hindered progress. This presents an opportunity to increase trade and economic growth through better links with India, Nepal and Bhutan.

Currently, trucks that carry cargo internationally often have to offload their cargo once they reach a border, so that it can be reloaded onto a different truck on the other side. This is costly and logistically inefficient, and it also creates the potential for graft.

For these reasons, it can take more than six weeks for a 20-foot rail container to reach Dhaka from New Delhi, at a cost of Tk. 195,000. And the route is anything but direct – the container must first leave New Delhi and go to the port of Mumbai, then travel to Singapore by ship, before reaching Chittagong port. Finally, it would travel from Chittagong to Dhaka by rail. If there were direct rail connectivity between Dhaka and New Delhi, however, it would take at most five days for the same container to reach the intended destination, and at only about one-third the cost.

Enacting reciprocal trade agreements and improving cross-border transport infrastructure would increase international freight traffic by an estimated 2 percent per year for Bangladesh. Depending on the exact nature of the transport project and trade agreement, each taka spent on these efforts would do about Tk. 2-2.5 of good.

The Padma Bridge will still be cost-beneficial, and other improvements in transport infrastructure could improve trade and economic growth for Bangladesh. What transport strategies would you choose to help the country prosper? Join the conversation at https://copenhagen.fbapp.io/transportationinfrastructure, where you can also read about other exciting development opportunities for Bangladesh. We want to know what you think as we continue to search for how the country can prosper most.

The writer is president of the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit. He was ranked one of the world’s 100 most influential people by Time magazine.

This story was originally published by The Daily Star, Bangladesh

In Bangladesh, remittances from people living and working abroad added up to nearly Tk. 1.2 trillion last year—more than four times the nearly Tk. 250 billion that foreign aid agencies spent in the country.

Almost 5 percent of the total working age population is now migrant workers, and every year, roughly half a million more people leave the country to work overseas. Bangladesh Bank estimates that they send the equivalent of 7.4 percent of GDP back to family and friends, from 2001-2015; this totalled to Tk. 9.6 trillion.

Despite these remittances from overseas migrants, Bangladeshis reap fewer benefits from migration than they could. The informal process of migration is overly costly and has become riddled with expensive middlemen.

How can low-skilled migrant workers, the major contributor of remittance inflows to Bangladesh, boost their earnings and access better opportunities overseas? Bangladesh Priorities can offer solutions to this and many other challenges. The project, a partnership between the Copenhagen Consensus Centre and BRAC, has commissioned dozens of top economists from the country, region, and world to study how Bangladesh can do the most good for every taka spent on her development efforts.

New research suggests strategies that can make migration cheaper and make migrants more productive. The researchers – Wasel bin Shadat, Lecturer of Econometrics at the University of Manchester, and Kazi Mahmudur Rahman, Assistant Professor of Development Studies at the University of Liberal Arts Bangladesh – examined various proposals. The most promising was to formalise the migration process with existing union digital centres or UDCs.

The average cost to migrate ranges from about Tk. 168,900 to 216,600 – equal to three years of income for many Bangladeshis. It often takes two years of working abroad for migrants to recover these costs. One reason the costs are so large is that multiple layers of middlemen force migrant workers to pay inordinate fees for visas and other expenses. They take advantage of the fact that most lower-skilled migrants have very little information about either the process of migrating or the country they are moving to.

Using UDCs to formalise the process, however, could yield tremendous benefits. There is already much interest in formal migration – in 2013, after the national government signed an agreement with Malaysia to formalise the process through a government-to-government (G2G) arrangement, nearly 1.4 million people registered online through UDCs. The G2G process has been extended to G2G plus, engaging the private sectors of both countries, and the present research examined the role that UDCs could play in connecting millions of less-skilled migrant workers with the formal migration process.

More than 4,500 UDCs currently operate across the country, providing public and private services to millions of Bangladeshis. Adding migration services would be inexpensive and straightforward, given the experience UDCs have in providing such services. You would simply have to add a migration “department” – a few more desks and workers – to UDCs to bring formal migration services closer to the people who need them most, especially in rural areas.

At a UDC migration desk, which could be funded either by government subsidy or revenue earnings of UDC entrepreneurs, aspiring overseas workers would get services that range from basic forms and photo identification to employment information and visa processing to printing and internet services. And conveniently, UDCs can collect fees on behalf of the government.

The experts estimate that it would require Tk. 172,800 of initial investment to set up a migration department in each UDC, and annual operating costs would be Tk. 44,500. The total cost across Bangladesh’s 4,500 UDCs would be Tk. 785 million upfront, plus Tk. 203 million per year in operating costs.

But the benefits would be substantial. Services offered by UDCs would allow a conservative estimate of 50,000 people – about 11 people per UDC – to migrate to Malaysia in the first year of operations, with 5,000-10,000 additional workers in subsequent years. As a result, the cost for one person to migrate would fall to Tk. 36,500 – a savings of up to 83 percent. More than three quarters of the remaining migration cost would be for air fare. Thanks to the elimination of middlemen and their exorbitant fees, visa costs would fall from over Tk. 117,000 to just Tk. 1,092 – the actual cost of the visa.

With the most optimistic aspirations, each taka spent toward formalising international migration through UDCs could produce Tk. 40 worth of benefits. It is also clear, however, that the current process with Malaysia has delivered less than originally hoped. Currently, it looks likely that each taka has done much less good. That is why the researchers expect that realistically, improving the process to streamline international migration through the UDCs could generate Tk. 22 of good for every taka spent.

Using UDCs could help get more people to migrate, but you could also focus on increasing the skill levels of the people who migrate. Migrants from Bangladesh predominantly work in positions such as labourers, cooks, or security guards. From 2005-2012, for example, about three-quarters of migrant workers to Saudi Arabia were “less-skilled,” and only 4 percent were in the so-called “semi-skilled” category. Lower-skilled workers not only earn less but also have less bargaining power with employers.

Helping migrants move up the skill ladder would equip them with knowledge and qualifications to gain access to better jobs. Training could allow them to work as painters or carpenters, for example, or perhaps even become supervisors or nurses with enough education. Spending on training programmes for migrant workers would do an estimated Tk. 3 of benefits per taka spent.

What do you think is the best way for Bangladesh to realise her development goals? Join the conversation at https://copenhagen.fbapp.io/overseasmigrationpriorities, where you can also read about other exciting opportunities for Bangladesh. We want to know what you think as we continue to search for how the country can prosper most.

This story was originally published by The Daily Star, Bangladesh

Bangladesh’s public sector faces serious challenges. Poor infrastructure is one of the main factors that hold back economic growth. Government-funded health clinics struggle to provide the population with quality, specialised services. And beyond primary school, quality public education opportunities are extremely limited. These are just a handful of the challenges, and they are partly due to a stark fact: the country has one of the lowest tax-to-GDP ratios in the world.

Government tax revenue is equal to just 11 percent of the size of the entire economy. So despite the fact that Bangladesh has great potential to boost revenue earnings, much of it goes untapped.

Over the next five years, the government aims to increase this tax-to-GDP share to 14 percent. What are the best ways to accomplish this, providing the government with resources to improve public services that the people rely upon?

Bangladesh Priorities aims to answer this question, along with many others that relate to the country’s development efforts. Our teams of economists have researched dozens of topics to find which solutions will do the most good for Bangladesh for each taka spent.

When it comes to strengthening the tax base, the VAT is a crucial issue, because revenues collected from it and income tax combine to account for 70 percent of all tax revenue. Bazlul H. Khondker, Professor of Economics at the University of Dhaka, and Biplob Kumar Nandi, Senior Lecturer of Economics at East West University, find that modifying the VAT and its collection is one of the most promising strategies to mobilise more resources for government.

The economists first analysed the effects of changing the way that the 15 percent VAT is calculated. Currently, the National Board of Revenue (NBR) sets tariff values for all goods and services, and these values consequently determine VAT revenues. If you are a vendor who sells soybean oil for Tk. 105 per litre, for instance, the VAT is not calculated on Tk. 105 – the actual price paid for the litre of cooking oil. Instead, the 15-percent VAT is calculated based on what the NBR decided the value of soybean should be, which is only Tk. 43.

The economists examined the effects of abolishing those tariff values and replacing them with actual market prices. Because the NBR undervalues many goods and services, the effect would be great – the change would more than double VAT revenue, adding Tk. 76.4 billion in extra tax revenue.

The second part of the strategy relates to automating the system by which the government collects the VAT. If you are that soybean-oil vendor, then you have to calculate and pay the VAT each year based on your revenues. But this process can be fraught with difficulty and is also very costly.

The research proposes streamlining this process to make it much easier to comply with tax regulations and to file returns. Instead of having to navigate paperwork, vendors would be able to use an electronic submission and return process. This would lower the costs of complying with the tax code, encouraging more compliance. The researchers estimate that the number of registered online VAT payers would increase from 35,000 to 85,000 – fully 50,000 more companies would voluntarily pay their taxes.

Automating the system would raise tax revenue by Tk. 24.2 billion. And vendors would also benefit, because they save money on expensive auditors and other accounting services needed to comply with the currently convoluted tax code.

The two-part solution – abolishing the tariff-setting process and automating VAT collection – would raise the nation’s tax-to-GDP ratio by nearly 1 percentage point. That’s still short of the government’s five-year goal of 14 percent, but its progress is equivalent to Tk. 100.4 billion of additional tax revenues per year.

The true benefits of mobilising more government resources, however, would depend entirely upon what the extra tax revenue accomplishes. If the money is not spent wisely, then the efforts to raise revenues could be for naught. But wise spending can yield great results.

Our analysis assumes that the additional funds are most likely to be spent on infrastructure projects that Bangladesh greatly needs – road and rail transportation, the electrical grid, and water supply systems. But implementing the tax reforms will cost money. And while raising revenue may benefit the government, it raises prices for consumers, so it has to be counted as a cost for citizens.

It turns out, however, that when you calculate the net effects of the tax reforms, plus the benefits from infrastructure spending, the strategy has respectable results – every taka spent toward making the VAT system more efficient and effective in this way would do almost do Tk. 6 of good, assuming the revenues are spent on infrastructure projects.

Mobilising more resources for government could help improve many public services and goods, including the massive infrastructure needs of the country. But is mobilising more government resources the best way to help Bangladesh? And how could the government best use extra revenue that it does raise? Let us hear from you at https://copenhagen.fbapp.io/financepriorities. We want to continue the conversation about how Bangladesh can do the most good, and which solutions she should prioritise for her future.

The writer is president of the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit. He was ranked one of the world’s 100 most influential people by Time magazine.

This story was originally published by The Daily Star, Bangladesh

When it comes to cooking indoors over open fires, the harmful health effects can be equal to smoking two packs of cigarettes a day. This indoor air pollution plagues nearly nine out of every 10 Bangladeshi households, which use wood and other biofuels to cook inside.

Over time, exposure to smoke from indoor cooking leads to deadly diseases such as lung cancer, stroke, and heart disease. This is why it’s the most deadly environmental problem in the world. In Bangladesh, such indoor air pollution is responsible for 10-15 percent of all deaths.

It may seem obvious to say that we need to focus on cutting household air pollution. But such policies compete with many other potentially beneficial proposals for how to use scarce resources from the national budget or international stakeholders.

So what are the very best policies? This is what the Bangladesh Priorities – a cooperation with BRAC and dozens of the world’s top economists – promises to help answer.

Our research suggests two principal ways to help decrease deadly air pollution inside the home: People could either burn the same biofuels that most Bangladeshi households currently use, but with smarter cook stoves that emit much less pollution, or they could change to liquefied petroleum gas (LPG), which burns much more cleanly.

The cheapest way to quality indoor air is to get widespread investment in an improved biomass cook stove. This is simply an enclosed stove, often with a chimney, that reduces heat loss, protects against the wind, and transfers heat to a cooking pot more efficiently than traditional stoves or open fires. It burns the fuel – often biomass – more effectively and hence with less pollution. In Bangladesh, the cost of such a stove with two burners and a chimney that will last three years is about Tk. 1,000 per year. This is both to cover the aggregate that needs replacement every third year, as well as some maintenance. And almost a third of the cost goes to promoting awareness of the opportunity in the first place.

But the benefits are many. If all 30 million households switched to improved cook stoves, it would save more than 33,000 lives each year. Each life will live on average another 28 years, which is worth about Tk. 79 billion or Tk. 2,600 per household each year. Moreover, each family will get slightly fewer sick days, worth another Tk. 260.

But the families would also save 15 minutes per day in cooking time, because the improved cook stoves are faster, and because less fuel is needed, it will reduce fuel collection time by half each day. In total, that benefit is worth another Tk. 2,000. For each Tk. 1,000 spent on a better cook stove, a family will get almost Tk. 5,000 in health and time savings benefits: every taka spent will do Tk. 5 of good.

This is an important step to improve household air quality. But it still leaves most of the problem in place – we will “only” save 33,000 of 150,000 deaths each year.

That is why we could consider a more thorough option. LPG burns very clean – almost like an electric stove. Adoption of these stoves would produce much higher benefits: it would save 91,000 lives, a total value of Tk. 218 billion, or Tk. 7,300 per household. It would also avoid some Tk. 700 of disease per household, speed up cooking by 40 minutes, and save all fuel collection time, at a net worth of Tk. 5,200.

But, the cost of LPG is also significantly higher. It would cost about Tk. 10,000 each year, plus Tk. 2,000 in cooking fuel costs. In total, you would pay about Tk. 12,000 for about Tk.13,200 in benefits. So spending on LPG stoves would not be a loss.

This shows that the most expensive option is not necessarily the best option. Cheaper options, despite helping less, can be a much better way to help everyone. In the long term, however, the more expensive options can be solutions. Many countries at similar income levels as Bangladesh have adopted modern cooking fuels such as LPG at substantially higher rates.

But there are challenges to implementing smarter stoves. With some prior efforts, it has proven difficult to get households to adopt new stoves. And widespread adoption is crucial given the community-based nature of fighting air pollution. If not everyone in a community adopt improved cook stoves, there would be more local air pollution leading to fewer benefits.

Well-targeted information campaigns about the benefits of cleaner cook stoves could help spread the message about their benefits, and projects should also tailor stoves to customers’ preferences. And, ideally, households would be allowed to pay for stoves over the course of multiple installments, making them more affordable.

Last week you saw how poverty policies can help do Tk. 2 of good for each taka spent. Making cook stoves cleaner can help fight household air pollution with about Tk. 5 of good for every taka spent. Are these some of the best investments for Bangladesh? Let your voice be heard on https://copenhagen.fbapp.io/indoorairpriorities. Let’s start the conversation about where Bangladesh can do the most good.

The writer is president of the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit. He was ranked one of the world’s 100 most influential people by Time magazine.

This story was originally published by The Daily Star, Bangladesh

When it comes to the biggest challenges facing Bangladesh, surely poverty is one of the most crucial. And there is still much work to be done.

Despite cutting the rate of extreme poverty from 34 percent in 2000 to just 13 percent today, 20 million Bangladeshis still live in conditions considered to be ultra poor. Living on less than Tk. 43 per day can be immensely difficult, and for some, it can create a trap that’s almost impossible to escape.

The ultra poor generally do not own land and are caught in the low-wage activities of day labourers. They are on the brink of subsistence. And when you are struggling just to maintain your level of subsistence today, you do not have the luxury of worrying too much about—or saving for—tomorrow.

The Bangladeshi government recently committed itself to pulling six million more people out of extreme poverty by 2020. Similarly, one of the United Nations’ development targets for the year 2030, the Sustainable Development Goals, is to eradicate extreme poverty entirely. Either goal would take a lot of work. How do we fight extreme poverty in the most effective way?

Our project, Bangladesh Priorities, examines a range of different possibilities for the country. Two of our economists, Munshi Sulaimanof BRAC International and Farzana Misha of Erasmus University Rotterdam, have examined three of the most important ways to tackle poverty in Bangladesh.

In recent years, cash transfers have become quite popular in countries such as Kenya and Uganda, and this was the first method our economists examined. Such programmes involve a one-time transfer to recipients, often micro-entrepreneurs, with no conditions on how the money can be used.

Why no-condition transfers? It turns out that much academic research shows that this is the most efficient method, which is one reason it has become so popular. The cash transfers we studied, however, which cost Tk18,096 (the paper reports per-household costs in USD only. I have converted this figure and all others in this op-ed using the rate: 1 USD = Tk. 78) per recipient household, did just Tk. 80 of good for every Tk. 100 spent.

One reason they weren’t effective relative to other strategies is that the impacts diminished over time—a one-time stipend for someone in extreme poverty may help for a little while, but the effect is fleeting.

The second strategy focuses what most poverty-alleviation strategies have traditionally done: give people a livelihood “boost,” so that they can prosper on their own. So-called “livelihood programmes” might give agronomic training and growing inputs such as improved seed to farmers, for example.

Some of the livelihood interventions our researchers studied were more promising than others, and the costs for one such programme were cheap—less than Tk. 7,800 per household. But the return on spending devoted to these efforts was merely one-to-one.

Another way out of poverty, and the most promising of the three we examined, is what is called graduation. It involves helping recipients through a variety of methods and over a particular time sequence.

In graduation programmes, participants first receive a small gift of cash or food, which eases the stress of daily survival and allows them to start saving. After that, they receive an asset, maybe a cow or a goat, along with basic financial and technical education. This component often involves animal-husbandry training delivered by a veterinarian. Many graduation programmes also provide healthcare support so that participants will not be forced to sell assets in the event of an emergency. Finally, participants get a confidence boost through social training – an important factor for escaping poverty that is often overlooked.

The assistance in the form of money, assets, and financial and social support allows participants to “graduate” out of extreme poverty over a set timeframe.

Our analysis shows that the cost of such a programme would be relatively expensive, approximately Tk. 23,400 per household. But the benefits would be substantial too. Graduation programmes would increase recipients’ incomes by at least one-third. And it’s likely that household benefits are somewhat understated, because the analysis has only estimated the income benefit but not the improved nutrition status of children.

In total, each taka spent on graduation programmes in Bangladesh could do Tk. 2 of social good, allowing participants to save for the future and, ultimately, escape extreme poverty. Much of the gains come from beneficiaries shifting occupations, progressing out of casual day labour and into self-employment. And importantly, we found evidence that the positive graduation effects can last for years after the programmes end, meaning that participants have the potential to pull themselves out of poverty for the long term.

This is a respectable return when it comes to helping the ultra poor. Our experts believe that there should be more study of the long-term impacts of livelihood and cash transfer programmes in Bangladesh. But based on our research, graduation seems the most promising of these three strategies.

In forthcoming articles, Bangladesh Priorities will look at what else we can do with foreign and national development money. These poverty policies are only three of 78 policies that the country could focus on. What do you think? Are these some of the best investments for Bangladesh? Let your voice be heard on facebook.com/dailystarnews. Let’s start the conversation about where Bangladesh can do the most good.

The writer is president of the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit. He was ranked one of the world’s 100 most influential people by Time magazine.

This story was originally published by The Daily Star, Bangladesh

Worker on a farm in Felicity, Chaguanas, Trinidad, harvesting sweet potatoes. Climate change has brought drastic changes in the weather of this twin-island Caribbean nation. Credit: Jewel Fraser/IPS

By Bjorn Lomborg
COPENHAGEN, Feb 13 2015 (IPS)

Right now, the United Nations is negotiating one of the world’s potentially most powerful policy documents. It can influence trillions of dollars, pull hundreds of millions out of poverty and hunger, reduce violence and improve education — essentially make the world a better place. But much depends on this being done well.

In the year 2000, the U.N. laid the foundation for the Millennium Development Goals, which comprised 21 mostly sharp and achievable targets in eight areas, including poverty and hunger, gender equality, education, and child and maternal health.Imagine sitting in a high-end restaurant with a menu lacking prices or sizes. You do not know whether the pizza costs two dollars or 2,000 dollars, or whether it will feed just you or your entire party.

These goals have been hugely successful, not only in driving more development funding but also in making the world better. For instance, the world promised to halve the proportion of people hungry counting from 1990. And the progress has been remarkable.

In 1990, almost 24 percent of all people in the developing world were starving. In 2012, ‘only’ 14.5 percent were starving, and if current trends continue, the world will reach 12.2 percent in 2015, just shy of the halving at 11.9 percent.

Likewise, we promised to cut by half the proportion of poor. In 1990, 43 percent of the developing world lived below a dollar a day. In 2010, the proportion had already been more than halved at 20.6 percent – on current trends the proportion will drop below 15 percent by 2015, showing spectacular progress.

With the MDGs ending this year, we have to ask what’s next. The U.N. has started an inclusive process from the 2012 Rio Earth summit to define so-called Sustainable Development Goals (SDGs) for 2016-2030.

So, over the coming months, countries, missions, U.N. organisations and NGOs will perform a complex dance to determine – and hopefully whittle down – the next set of targets. But that’s easier said than done. Last summer, 70 U.N. ambassadors in the open working group proposed a vertiginous 169 targets. Clearly we need priorities.

The SDGs will determine a large part of the 2.5 trillion dollars in development aid the world will spend until 2030. In order to spend the money most effectively and help as many people as possible, negotiators now need to zero in on the targets that promise the biggest benefit for the investment.

My think-tank, the Copenhagen Consensus, has asked 60 teams of top economists, including several Nobel laureates, to identify which targets will do the most good for each dollar spent. Imagine sitting in a high-end restaurant with a menu lacking prices or sizes. You do not know whether the pizza costs two dollars or 2,000 dollars, or whether it will feed just you or your entire party.

This is where the U.N. is today – lots of well-intentioned targets with no prices or sizes. Our economists have taken the 169 targets and evaluated the social costs and benefits of each.

The best ones – the targets that have economic, social and environmental benefits 15 times or higher their costs – are painted bright green. Less good ones are light green, mediocre ones yellow and the poor targets – the ones that cost more than the good they do – red. Backed by thousands of pages of peer reviewed economic research, such a simple colour scheme will hopefully help the world’s busy decision makers focus on picking the most effective targets.

Reducing malaria and tuberculosis, for example, is a phenomenal target. Its costs are small because solutions are simple, cheap and well-documented. Its benefits are large, not only because it avoids death and prolonged, agonizing sickness, but also improves societal productivity and initiates a virtuous circle.

Similarly, we should focus on at least halving malnutrition, because there is robust evidence that proper nutrition for young children leads to a lifetime of large benefits – better brain development, improved academic performance, and ultimately higher productivity as adults. For every dollar spent, future generations will receive at least 45 dollars in benefits.

But at what point do goals simply become aspirations? While many ambitious goals are commendable, they may be unrealistic in practice – and could hinder instead of help progress.

For example, setting an absolute goal of ending global malnutrition, warn the economists, may sound alluring, but is implausibly optimistic and inefficient. We cannot achieve it, and even if we could, the resources to help the last hungry person would be better spent elsewhere.

At the other end of the scale, some proposed targets are ineffective. The doubling of the renewable energy share by 2030, for example, sounds great in theory but practically is an expensive way to cut just a little CO₂. Instead, the focus should be on providing more energy to poor people, a proven way of inclusive growth and poverty alleviation.

And in order to reduce carbon emissions, removing fossil fuel subsidies in third world countries promises much higher benefits. Reducing these subsidies in countries where gasoline is sometimes sold for a few cents per liter would stop wasting resources, send the right price signals, and reduce the strain on government budgets, while also cutting emissions.

Of course, the ultimate decision for the Sustainable Development Goals is a political one. No doubt, economics is not the only measure of what the global society should ultimately choose as its development priorities, but costs and benefits do play an important role.

But if well-documented economic arguments can help even just to swap a few poor targets for a few phenomenal ones, leveraging trillions of dollars in development aid and government budgets in the right direction, even small adjustments can make a world of difference.

Edited by Kitty Stapp

Excerpt: