The IMF pronounces on the Robin Hood Tax

Yesterday, I discussed the IMF’s fascinating new proposals for two international taxes on the financial sector  – a ‘financial stability contribution’ (FSC) and a ‘financial activities tax’ (FAT). But the leaked interim report to the G20 also discussed the financial transactions tax (FTT), better known as the Robin Hood Tax. What did it say?

First the good news: ‘The FTT should not be dismissed on grounds of administrative practicality. Most G-20 countries already tax some financial transactions’. So could all those people who argue that the FTT is unworkable please shut up now?

But the IMF does not endorse the FTT for the purpose of the mandate set out by the G20, namely exploring ‘how the financial sector could make a fair and substantial contribution toward paying for any burden associated with government interventions to repair the banking system’.

Why not? The report’s author, Carlo Cottarelli, gives a succinct explanation in a blog on the IMF website:

“We don’t think this is the best way of meeting the two key objectives set out above. An FTT is not  focused on reducing systemic risk and it isn’t effective at taxing rents in the financial sector—much of the burden may well fall on ordinary consumers. [So the IMF disagrees with the recent finding in a paper by Sony Kapoor of Re-define that the Robin Hood Tax would be highly progressive].

Moreover, the financial services industry is very good at devising schemes to get around such a tax and (this is also true, to be fair, of the FSC and FAT, but we suspect to a lesser extent).

One way to think about the comparison is that just as a FAT is like a VAT, an FTT is like a turnover tax—and most countries have long found that the VAT is better at raising revenue: in the jargon, more efficient. All this doesn’t mean we rule out an FTT in other contexts—but it is not the most effective way to address the task at hand.”

That last sentence is important – the IMF is saying the FTT is workable, and could be applied in other contexts, like raising the hundreds of billions of dollars desperately needed to combat climate change and poverty. It just doesn’t think it’s the best way to tackle financial sector volatility (which is a view I share).

Oh, and the Robin Hood Tax campaign has clearly had an impact on the Fund – Carlo’s blog notes ‘the last few months have left us in no doubt as to the seriousness of the public support this enjoys.’

Stand back a bit, and I think the Robin Hood Tax campaign can allow itself several pats on the back. We now have the IMF feeling the heat and pushing international bank taxes, establishing important precedents on the financial and social responsibilities of a sector that has been allowed to get away with murder for far too long (and is now back to mega-profitability, leaving the rest of us to clear up the mess). The Fund is also acknowledging the practicability of FTTs for other purposes like financing for development (although we need to nail the issue of incidence). In the end, the acronym – FSC, FAT, FTT or whatever – matters little if it raises the cash for development and climate change. As Deng Xiaoping once remarked “It doesn’t matter whether a cat is white or black, as long as it catches mice.” I’m sure Robin Hood would echo the sentiment.

A global taxation system, as proposed by the IMF

IMF suggests
Global taxes on all banks
History is made

What have they put in the water supply at the IMF? First they see the light on capital controls, and now they’re putting out ground-breaking ideas on the international taxation of banks. I’ve been reading the supposedly confidential (but available on the BBC website – if you have problems with this URL, just search on BBC + title of report) interim report to last week’s IMF Spring Meeting with a growing sense of astonishment and delight. There are some potentially historic shifts in thinking going on. Apologies in advance for a long post, but I think it’s worth it for this issue. To keep some kind of ceiling on size, I’ll post tomorrow on what the report says about the Robin Hood Tax.

The report, titled ‘A Fair and Substantial Contribution by the Financial Sector’, was commissioned by the G20 ministers, who at their summit in Pittsburgh last year, asked it to ‘“…prepare a report for our next meeting [June 2010] with regard to the range of options countries have adopted or are considering as to how the financial sector could make a fair and substantial contribution toward paying for any burden associated with government interventions to repair the banking system.”

The mandate is important – the IMF effectively stretched it to include the indirect costs of the crisis in the rich countries – fiscal stimuli, quantitative easing and all the rest, as well as the direct costs of bank bailouts, but unfortunately, stopped short of extending it a bit further to include the indirect costs of the crisis on poor countries, in the shape of a large fiscal hole that will need to be filled. And it was never going to extend it all the way to the wider need for innovative financing to meet aid targets and the big money needed to deal with climate change.

As widely reported in the press last week, the paper proposes two kinds of tax: a ‘financial stability contribution’ (FSC) and a ‘financial activities tax’ (FAT – the IMF has even acquired a sense of humour). The FSC seems to be based on the US ‘Financial Crisis Responsibility’ fee, and the FAT on the British and French Governments’ bonus taxes.

In an excellent blog on the IMF site, the paper’s lead author Carlo Cottarelli explains the reasoning:

On the FSC: “One reason the crisis was such a painful mess was that many governments did not have the tools to wind down failing institutions in a quick and orderly manner. All too often their only options, both hugely unpleasant, were to either (1) let a systemic institution fail and bear the chaotic fallout or (2) pump in enough public support to keep it alive, so confirming the prior suspicion that these institutions were indeed too big to fail. Governments lacked a way to ‘resolve’—a new word even for many economists—large failing institutions.

Resolution means equity holders would be wiped out, management replaced, and unsecured creditors take a loss—a ‘haircut’—on their claims. All this should be nasty enough for owners and managers to reduce any problems of ‘moral hazard’ (taking too much risk in the expectation that someone else will bear the costs if things turn out badly). But most countries still don’t have such a mechanism. Financial stability requires creating them.

So where does the idea of a contribution come in? Resolution requires upfront cash, to reduce uncertainty for creditors (and the creditors’ creditors…) by quickly giving some value to their claims. And the industry should pay for this: it is, or should be, a cost of doing business just like paying for deposit insurance, or maintaining their information systems. This is what we call a Financial Stability Contribution (FSC).”

On the FAT: “FAT is just a tax on the sum of the profits and remuneration paid by financial institutions. Profits plus all remuneration is value added. So a tax of this kind would be a kind of Value-Added Tax or VAT. And that could make sense because current VATs don’t work well for financial services, which are largely VAT-exempt.

This means that a FAT of this kind could make the tax treatment of the financial sector more like that other sectors and so help offset a tendency for the financial sector, purely for tax reasons, to be too large—or too fat.

Now suppose that the base included only remuneration above some high level, and only profits above a ‘normal’ rate of return. Then the base of the FAT may not be a bad proxy for taxes on ‘rents’—return in excess of competitive levels—earned in the sector. Some might find taxing that excess fair.

Or one might include only profits above some level well above normal. Taxing away some of these high returns in good times may help correct for any tendency to excessive risk-taking implied by financial institutions not attaching enough weight to outcomes in bad times (whether because of limited liability, or because they think themselves too big to fail).”

Might have to adjust that message

Why does this matter?

1. The most orthodox of international financial institutions has just set out the basis for an international taxation regime

2. That sets precedents for how public goods other than financial stability could be funded – like climate change and development

3. The FAT explicitly aims both to shrink the financial sector, which has grown so large that minor fluctuations imperil the much smaller real economy, and to change behaviour to reduce excessive risk-taking.

4. The FAT’s idea of a windfall tax on rents could easily be extended to other sectors – like the suddenly super-profitable oil and gas industry (see BP’s latest jump in profits)

5. All this is a wonderful counterweight to widespread pessimism on financing for development following the crisis. If the IMF thinks we can rustle up 2-4% of global GDP as a resolution fund, suddenly 0.7% for international development doesn’t look such a big deal.

One big question that the IMF paper ducks (but will hopefully answer in its final version in June) is what level of rate (and thus revenue) a FAT could raise. For the FSC, 2-4% of GDP corresponds to $1.2-2.4 trillion, so to fill up the resolution fund over a five year period, it would have to raise about $400bn. Coincidentally, that’s how much the Robin Hood Tax campaign reckons is needed for climate change and development. So when the resolution fund hits its target, there’s a ready-made use for further revenue…..

The danger is that in the negotiations that follow, the FAT will be sacrificed to get the FSC. That would be a shame, as it’s the more interesting of the two proposals. The final version of the IMF’s paper will go to the G20 summit in Canada in June. In the UK, income tax was introduced in response to a crisis - William Pitt the Younger put it in his budget of December 1798 to pay for weapons and equipment in preparation for the Napoleonic wars. Could international taxation be the biggest legacy of the 2008-10 global crisis?

Free the data; the purpose of aid; a geopolitical beauty contest; China in Africa; the Backward Classes Bureau; Colonialists through African Eyes and the ultimate metaphor: links I liked

Owen Barder celebrates the World Bank’s decision to set its data free (including World Development Indicators – formerly charged for) as part of the International Aid Transparency Initiative. More detail on Aid Watch.

Owen also ponders the evidence for, and links between, the two big ubernarratives for aid and development: aid helps transform the institutions and structures of poor countries v aid as a form of solidarity that provides immediate benefits (health, education etc) to people in need.

‘What determines success in industrial policy is not the ability to pick winners, but the capacity to let the losers go’. Dani Rodrik argues that Industrial Policy is not only back, but never went away, and sets out his thinking on what differentiates good policy from bad.

Since 2005, the BBC World Service has commissioned an annual global poll on how 15 key countries are viewed around the world.  Here’s the latest survey.

 ‘They rarely “poach” skilled staff from African ministries to work in their own offices. The focus on turnkey infrastructure projects is far simpler and doesn’t overstretch the weak capacity of many African governments faced with multiple meetings, quarterly reports, workshops, and so on. Their experts don’t cost much.’ Deborah Brautigam discusses her new book on China in Africa  with Laura Freschi. On the other hand, ‘The Chinese avoid local embezzlement and corruption by very rarely transferring any cash to African governments. There is almost no budget support, no adjustment or policy loans. Aid is disbursed directly to Chinese companies who do the projects.’ Errrm, isn’t that the tied aid we’ve been criticizing all these years?

Foreign Policy magazine picks five government agencies in need of a serious rebrand. My favourite is Saudi Arabia’s Committee for the Propagation of Virtue and the Prevention of Vice, although India’s Backward Classes Bureau runs it close. When I was at DFID a few years back, no-one could work out why the ‘Poor Performers Team’ was having trouble recruiting……

Colonialists through African eyes, the exhibition [h/t Chris Blattman]  

and finally, the ultimate metaphor for everything – Brickies [h/t Richard Cunliffe]

The World Bank breaks its promises on Africa’s voting power

The World Bank went backwards in Washington last week, when it announced a set of reforms on ‘voice’ (the different countries’ share of voting power at the Bank) that reversed many of the gains for African countries from the previous voice reform, at the Bank’s last Annual Meeting in Istanbul in September 2009.

In last week’s rejig, of 47 countries in Sub-Saharan Africa more than a third (18) lost share, 60% stayed the same, and only one (Sudan) gained. The biggest losers were Nigeria (-11.5%) and South Africa (-9.5%). Full country breakdown see Bank voting shares.

This apparently contradicts the Bank’s communique from the meeting – ‘In line with our Istanbul commitments, we endorsed voice reform to increase the voting power of developing and transition countries (DTC) in IBRD by 3.13%, bringing it to 47.19%. This represents a total shift of 4.59 % to DTCs since 2008’ 
 
The reasons for the difference?

1. The Bank is comparing with the pre-Istanbul voting shares, which were even worse (i.e. voice for Africa went two steps forward in Istanbul, then one step backward last week)
2. The reform reflects the shift in global GDP, and so benefits the big emerging economies like China and India, not the slower growing economies in Africa.

The Istanbul communiqué read ‘it will be important to protect the voting power of the smallest poor countries’, so it’s hard to see what happened last week as anything else but a broken promise. I am not privy to these discussions, but it looks to me like Africa got squeezed between the emerging powers and a Europe reluctant to cede any power in the Bank. Not good.

If anybody from the Bank or elsewhere wants to comment/set the record straight, feel free.

Keynes v Hayek: the rap version. Priceless(?)

The reader survey turned up a lot of people wanting more short posts and light relief, so to celebrate this blog’s 400th post, here’s a top youtube – Hayek v Keynes in a rather scholarly MC battle. Coincidentally, the number of people watching it on youtube is about equal to The Economist’s circulation – wonder how much overlap there was? Listen carefully to the lyrics ……

And they’re not bad likenesses either…. [h/t Claire Melamed]

What is the impact of aid on overall health spending?

Fungibility
makes aid complicated. Where
does the money go?

The Lancet has put the cat among the aid pigeons with its recent piece on the arcane, but important issue of ‘aid fungibility’. This claims that for every $1 given in health aid, the recipient government shifts between 43 cents and $1.14 of their own spending to other priorities. (If the aid goes to NGOs, by contrast, government health spending appears to increase.)

The Lancet paper falls into a familiar pattern. Number crunchers assemble a data set, however flaky (eg these guys had to impute nearly half the data points for low income countries, because the data were missing). Then they crunch it to find some correlations between A and B. They then argue that A causes B, but being number crunchers, give only passing attention, if any, to why/how that causation might occur. They then lob it into the public arena and stand back. A similar process followed publication of a paper by Xavier Sala-i-Martin  arguing that poverty was falling fast in Africa, and of course, more or less everything ever written by Paul Collier.

Frequently, the ensuing debate doesn’t reflect very well on anyone involved, with people imputing each other’s methods, motives (‘the Gates Foundation/World Bank/some other hate figure funded it, so you can’t possibly believe it!’) and belittling their academic credentials (or entire discipline). 

This time around, however, there have been some interesting exchanges. Owen Barder accepts the results at face value and thinks that actually, they could be a sign of progress- ‘yes, that’s what country ownership looks like’.  If we believe that effective states are essential to development, then surely they should be encouraged to take the difficult decisions on resource allocations.

Well yes, but the health advocates don’t like that idea much. As Laura Freschi on Aid Watch remarks:

‘The problem is that aid agencies have long used the argument that earmarking aid for a specific project or sector is a credible way to force recalcitrant recipient country priorities into line with donor priorities—to coerce bad governments into making good decisions.

If governments that don’t prioritize their people’s welfare respond to an influx of aid money by simply shifting their existing resources around to circumvent donor priorities (and we don’t know what is happening to the resources shifted away from health—they could be going to private jets and presidential palaces, or to education, infrastructure, or loan repayments, or really anything at all), then the aid agency argument for project aid falls apart.’

Others question the quality of the research on several important methodological aspects (see Aid Thoughts for a discussion). Some think it has confounded correlation with causality.  As David Roodman at CGD argues “It is really hard for cross-country statistical analyses to prove what causes what. Maybe aid is indeed reducing spending by the receiving governments. Maybe governments with lower domestic health spending attract more health aid (reverse causality). Maybe third factors simultaneously affect both variables.” Some point out that given the well-known volatility of aid, it is hardly surprising if governments seek to smooth out health spending when they get an aid windfall, rather than use it to train loads of new medical staff only for the money to run out in a couple of years’ time.

Other critics point towards a usual suspect that is strikingly absent from the Lancet paper – the IMF. They argue that the IMF has historically pursued reduced public spending, increased privatization (including of health), and wage and other budget ceilings.  More particularly, it has argued that increased donor funding, even for health can be inflationary. I don’t quite get the logic of this– that argument would work if for every dollar in aid to health, the government reduced other spending, whether on health or other things, but it doesn’t explain the diversion of money between ministries.

As usual, I end up stuck somewhere between the various camps. Let’s assume the findings are fairly robust (I haven’t the stats to check, although the authors themselves admit there are huge holes in the data). Surely it is not right for donors to say ‘we are going to pump money into your health service, and you’re not allowed to spend a single dollar of your existing health spending on anything else, ever’. That does not build effective states. On the other hand, it does matter how much is spent elsewhere and on what (water and education are one thing, presidential palaces quite another).  

A compromise could be for donors and governments (who often negotiate an overall agreement on health spending anyway) to agree a floor or overall target for government spending (eg African governments have publicly committed to spending 15% of their budgets no health – why not stick to that?). Malawi offers a possible model – its SWAp agreement with donors had a clause specifying that the government had to increase its own health spending, and its health spending has rocketed compared to its neighbours, (see map – Malawi is the blue one on the bottom right hand side, surrounded by red. Blue indicates the highest rate of growth in health spending).

Above that level, governments would be free to consider rival demands on scarce resources and make the best decisions possible. Do aid donors really think they are better placed to decide between, say, clean water and new clinics?

The findings that funding to NGOs is associated with extra government health spending definitely deserves study – is it because NGOs invest in things like community health organizations which then generate demand on public health systems? Or because NGOs flock in greatest numbers to countries where health is already a government priority? Or less positively (as the authors speculate), because NGOs inflate local wages and prices by poaching staff and increasing demand for drugs and other materials? And before NGO readers declare victory, please remember what happens when too much health spending is channeled through NGOs – a health system that is chaotic, fragmented, and frequently ignores the poorest. I remember talking to doctors in Bolivia a while back, when 600 different healthcare providers were in charge of the country’s health system– no-one knew what on earth was going on.

Update: Aid Watch has another critique of the methodology and ‘mirages of fungibility’ by David Roodman, plus more links

How will the UK election change the development sector?

‘British elections’ and ‘exciting’ don’t usually make it into the same sentence, but the TV debates between the party leaders have changed all that. Tonight’s second debate will focus on foreign policy, so development may even get a mention. That would be good, because so far the media perception seems to be that so much consensus makes the issue too boring to cover.

But underneath the consensus there are some deep differences in philosophy and policy that are worth thinking about. Last night I spoke at an Overseas Development Institute meeting on what ‘doing development’ in the UK might feel like under the next government. Tricky, as for the first time in 20 years we really have no idea who’s going to win, but here are some thoughts.

What won’t change
All parties have pledged to retain DFID (the Department for International Development) as a separate government department, and see the Millennium Development Goals (MDGs) as sacrosanct. All parties have agreed to increase aid to 0.7 of Gross National Income (GNI) by 2013, and to enshrine this in law (in the first parliamentary session, under a Conservative government). That said, fiscal pressures will be intense and we are bound to see attempts to move the goalposts on the definition of aid (to allow other spending to be counted against the target), and may even see a serious attempt to do a U-turn, especially if a suitable aid scandal provides a pretext.

Whoever wins, the push for everyone (including NGOs) to measure impact and prove effectiveness will grow, partly to shore up public and parliamentary support for aid. I have really mixed feelings about the ‘cult of measurement’ – it distorts the business of aid towards building stuff, not changing systems, but it also helps you identify successes and drop losers.

Major Post election faultlines

1. National interest/national security: Coherence is good, right? Up to a point Lord Copper. The problem is that everyone wants to coordinate, but no-one wants to be co-ordinated.

A Conservative-led government will establish a National Security Council, chaired by the Prime Minister and a resurgent Foreign and Commonwealth Office. The idea behind this is to make sure departments talk to each other and all work towards the same strategy, but it remains to be seen how DFID under this structure will ensure that poverty eradication is at all times its number one priority. In places like Afghanistan, it is important that development is not subordinated to other priorities.

2. Geopolitics: The Conservatives’ manifesto talks of a ‘Beyond Europe’ foreign policy, giving more priority to relations with the Commonwealth and US in a party traditionally sceptical about the UK’s role in the EU. Labour is more pro-EU, and should the Lib Dems end up in charge, for example in a hung parliament, Nick Clegg, their leader and come-from-nowhere politician of the hour, is a fervent pro-European and former MEP and adviser to Britain’s Trade Commissioner, Leon Brittan in Brussels during the 1990s. What’s not clear is whether there are major differences in attitudes towards the new global centres of power, particularly the G20.

3. What drives development – states or markets? Sounds a bit 1990s, but there are still fundamental differences in the parties’ underlying frames on how development happens. Labour instinctively looks to public and state solutions; the Tories (as the Conservatives are known) lean towards market solutions. That will influence policies on things like health and education (Labour stressing the need to abolish user fees, the Tories the importance of guaranteed access, even if it comes at a cost); financial and other regulation; or the importance of state-building in ‘fragile contexts’.

4. Who gets to talk to the minister? NGOs have enjoyed an unprecedented degree of access in previous years. That will continue (the Tories are very pro-NGO – see below), but I would expect access for other actors, like private sector and churches, to rise, and ministers only have so many hours in the day.

5. Role of NGOs: Overall, the Labour government has seen NGOs as valuable formers of public opinion, with the occasional fairly clumsy attempt to use us as cheerleaders for government policy (lots of ‘reverse lobbying’ from government advisers phoning us up and telling us what to campaign on – don’t worry, we usually ignore them). The Conservatives, on the other hand, see NGOs as a good alternative to state provision in areas like health and education, and are instinctively pro voluntary action (all that faintly patronising stuff about Burke’s ‘little platoons’). But neither party particularly prizes what NGOs increasingly see as their role – advocating for changes in public policy.

Then there’s an overall question, which is hard to answer by reading the manifestos: how much bandwidth will exist for development issues? Will it become less prominent? Since the creation of DFID in 1997, a combination of prime ministerial, government and civil society activism has given development an unprecedentedly high public profile in the UK and its foreign policy. That is not a given under any future government, especially as the inevitable austerity starts to bite.

Finally, for NGOs and other denizens in the UK development jungle, it’s a mistake to think ‘the government is changing but we will remain the same’. Pressures on service delivery, access and lots of other areas will (and arguably should) change us as well. Not the principles, I hasten to add, but the language and alliances we make as we go about our work.

For more information, check out Vote Global, and for a good comparison of the various party manifestos from 2005 and 2010, see Lawrence Haddad’s analysis on his Development Horizons blog.

[Update, 22 April: international development, poverty, hunger etc got not a single mention last night. Foreign Policy, it seems, is about war and Europe. Let's hope any future National Security Council takes a broader view]

Even volcanic clouds have silver linings

[h/t Antonio Hill] Plus everyone in the office is in a really good mood because lots of meetings have been cancelled and we can all spend more time with our families, catch up with our emails, do the housework etc - whoopee! And it looks really pretty from space……… [h/t Global Dashboard]

Ending energy poverty in India is part of tackling climate change

Energy for all
Is vital in India
Can outsiders help?

NGOs don’t often talk about energy poverty and they should. Electricity means kids are more likely to do their homework; dirty energy for cooking fills the houses of the poor with smoke and does terrible damage to health. Two recent items in my inbox brought this to mind. Firstly a post on the the excellent new blog Political Climate:

‘Climate negotiations tend to focus on whether countries such as India can be persuaded to take on some form of quasi-binding emissions limitation target. Our view is that it would be far better to engage in a technology-specific negotiation. With 300 clear sunny days per calendar year, solar is the obvious priority (although there would and should be others). So the key India question is; what can international cooperation achieve in dramatically reducing the unit cost of electricity from solar?

Until the climate negotiations or other global processes focus in on the aspects of the debate that really matter to the political economy of major emitters (and those with the potential to become so, which is how India would see itself), they are unlikely to be moved. Why would they be?’

That arrived about the same time as email from our office in New Delhi, reporting a discussion on some new research from the Vasudha Foundation “Shifting of goal posts: rural electrification in India” (can’t find a URL for the paper, but would love to receive it).

In India, 54% of rural households have no access to electricity. Progress on electrification in rural areas has been very slow over the last two decades. Kerosene is the main source of energy used for lighting in rural households without access to electricity.

let the sun do the cooking

Even in the rural villages with electricity, supply is very limited, from 3 to 6 hours a day (in the villages surveyed for the research). Most of this supply comes at night (sometimes even after 10 p.m., so not very useful). Quality of the supply is also an issue, as voltage varies a lot (which can damage equipment, especially pumps used for irrigation). As a result, many villages prefer diesel irrigation pumps and are using electricity only as a back up system.

Vasudha Foundation is calling for a shift from a centralized production model (i.e. villages connected to a grid where electricity is produced by massive power plants using coal or nuclear) to a decentralized model, based on small units at village level using renewable energies (solar, micro-hydro, wind, bio-mass).

Nice idea, but can it work? The seminar gave a mixed answer for the following reasons (in no particular order):

Centralised versus decentralised is not the right question. Villages need both and both systems can complement one another. Production of electricity at village level based on renewables needs to be connected to the grid to be a sustainable business model (capacity to sell electricity surplus when too much production and capacity to get electricity from the grid when generation falls). That means that the power purchase agreements between the firms managing the grid and the small units at village level are very important. In India, this market is weighted against small/decentralized production units.

Each kind of renewable has its own problems: solar needs large storage capacity; micro hydro is often seasonal (example in India of villages in Himalayas getting micro hydro during part of spring, and summer and autumn but nothing during winter time, as rivers/streams are frozen); bio-mass is renewable and year-round but comes at a cost.

Massive scale up of small-scale renewables will only happen if it is seen as a successful business model. There’s evidence that is happening, notably, beginnings of mass production of really reliable, robust, bright and cheap – hence desirable – solar lanterns.
However – in India at least – renewables face unfair competition. Electricity generated from coal or nuclear (nuclear is marginal in India, anyhow) is heavily subsidised.

In India, both the government and the private sector (despite what they claim) are not really interested in a model of decentralised renewable energy. The private sector would be interested if it was making a profit, meaning if these systems were connected to the grid to sell surplus and these surplus were bought at an adequate price. Interest from the government is more in large units using renewables rather than small scale village level production.

However, most people in rural India are happy to pay for access to quality energy. So solutions could be explored. But problems of scale will remain.

Putting the two together, could the international community do more to help turn small scale renewables into a viable business proposition in India? For more background, see Greenpeace’s ‘Energy [r]evolution: A Sustainable India Energy Outlook’. The Ashden Awards for Sustainable Energy had a conference on this in New Delhi in February – skimming the presentations they seem to focus on technologies, acceptability issues and finance. Finance is crucial and Indian organisations like Selco have been pioneers in advocating wide-ranging financing reforms, from micro-credit to the willingness of banks to lend to energy entrepeneurs. Why not earmark international carbon finance (e.g. the Clean Development Mechanism) for a massive international push to provide mass-produced efficient stoves and solar lanterns? But before we get too captivated by technical solutions, maybe we should look further at the public policy issues that may be behind the reluctance to act.  

Anyone got other info on what’s already happening?

Will aid collapse?; best blogs; China demystified; green flying toilets; good news on maternal mortality; telly not twitter; new film competition; Coca Colla and revenge of the pixels: links I liked

Owen Barder ponders ‘the coming collapse of the aid system’ and gives his league table of the best development blogs (and yep, he likes this one, so his judgement is clearly impeccable). Try and find half an hour to browse – well worth it.

Justin Lin, chief economist at the World Bank, demystifies the Chinese miracle.

Ever read about Kibera’s ‘flying toilets’ (no latrines, lots of plastic bags – use your imagination), well now someone has decided to work within the existing system. A Swedish entrepreneur is trying to market and sell a biodegradable plastic bag that acts as a single-use toilet for urban slums in the developing world. Once used, the bag can be knotted and buried, and a layer of urea crystals breaks down the waste into fertilizer, killing off disease-producing pathogens found in faeces. The bag, called the Peepoo, is the brainchild of Anders Wilhelmson, an architect and professor in Stockholm. [h/t Bill Easterly] Doesn’t feel right to me – what do people think? [Update: people think it stinks (sorry) - see comments]

Oh dear, more good news. Karen Grepin reports on new research published in the Lancet that suggests that maternal mortality rates, traditionally seen as the worst performing of the Millennium Development Goals, may actually be improving (but the scandal is we don’t know for sure, because data is so bad that much of this is guesswork).

Bill Easterly reminds technofrothers that it is telly, not twitter, that is really changing the world

Fancy entering a competition for short films that expose the true cost and impact of arms trade and armed violence on development? Not sure how many film makers read this blog, but if you know any, direct them to the ’shooting poverty’ site.

Bolivia thumbs its nose at a certain soft drinks giant by launching ‘Coca Colla’ – the real real thing.

A pixellated world  – aka revenge of the space invaders. Clever, but is it just me, or is it also slightly depressing? [h/t Alex Evans]

PIXELS by PATRICK JEAN.
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