S4 Ep20: How equitable are taxes in LMICs?

Many of us can recall when we first discovered there were more than a billion people in the world who lived on “a dollar a day”. This extreme poverty line been effective at raising awareness of the goals of development. But, if we want to eradicate poverty rather than describe it, is it a useful tool – and what could improve on it? Charles Kenny discusses how the line is drawn, and how it could be improved, with Tim Phillips.

In developing countries, we know comparatively little about how well the elderly cope with problems like depression and loneliness. There are few policies to support sufferers, partly because of this lack of data. Maddie McKelway and Garima Sharma tell Tim Phillips about some of the surprising revelations of a new cross-country study and suggest ways in which policy can improve the mental health of seniors.

“There’s only so much adapting you can do with so few resources.” That’s a warning from Asif Saleh, the executive director of BRAC, about the impact of the climate crisis in Bangladesh. Changes in the climate are causing severe problems already for millions of the world’s poorest people. A combination of ingenuity and hard work is staving off disaster for now – but for how long?

How does new evidence influence the beliefs of policymakers, and when do hidden biases of beliefs lead to bad policy decisions? There is more rigorous empirical evidence on which interventions work than ever. But that doesn’t translate into better policy unless a policymaker acts on it. Eva Vivalt and Tim Phillips offer advice to researchers on how to present their insights.

In both high- and low-income countries, taxes are the main source of government revenue. They fund roads, schools, and social programmes. But the average tax-to- GDP ratio in a developing country is less than half of the ratio in the global north. Oyebola Okunogbe tells Tim Phillips about the innovative ways that many LMICs are using to collect the taxes that will finance their growth.

Inequality is high in many LMICs, and progressive taxation is a policy tool that would reduce it. But would a personal income tax or a consumption tax redistribute in the same way as in a high-income country? Lucie Gadenne of Queen Mary University of London and the IFS tells Tim Phillips that one of these taxes may be less progressive, and one may be more progressive, than we expect.

In a world of economic nationalism rather than integration, the export-led pathway to development that transformed China, Vietnam and other countries might no longer be effective. Instead, Penny Goldberg tells Tim Phillips, policies for poverty reduction now also need to answer the question of where demand will come from, and that may require more emphasis on creating a domestic middle class.

Agriculture makes up a large share of employment and GDP in Africa, but crop yields remain stubbornly low. VoxDev has published Issue 2 of Agricultural Technology in Africa, which reviews what the published literature can – and cannot – explain about this stagnation. Chris Udry, one of the editors, tells Tim Phillips about the impact of this stagnation on living standards in Africa, and insights from recent research that can potentially make a difference. Read the VoxDevLit: https://voxdev.org/voxdevlit/agricultural-technology-africa

How can we take what we learn in educational RCTs and apply it at scale to many schools, maybe in many countries? Adrienne Lucas talks to Tim Phillips about the project she was part of to improve learning in Ghana, the difference between small- and large-scale trials, and the challenge of implementing policies results without perfect compliance or daily monitoring.

In high-income countries, we take a reliable electricity supply for granted. But in parts of the world where that reliable electricity supply isn’t available, what is the effect of frequent power outages on employment? Justice Tei Mensah of The World Bank tells Tim Phillips about how power cuts translate to job cuts.