VoxDev Development Economics

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Hear about the cutting edge of development economics from research to practice. 

  1. 6 hr ago

    Is electricity a weak link in development?

    In many cities in low-income countries, the grid fails often enough that businesses keep a diesel generator out the back. So an unreliable electricity grid looks like it is holding poor economies back. In many countries, lenders are putting money behind that idea. But Martin Shu and his co-authors, Jonathan Colmer and David Lagakos, set out to test it. They assembled data on power plants, fuel, workers and imported generators in 89 countries, and measured how productive each electricity sector was. In the poorest countries, electricity was about three-quarters as productive as in the US — in other words, much closer tot he frontier than their economies. And in the economic model they built using their data, bringing every country up to the world frontier adds only about 1% to long-run GDP. Shu presented the research at STEG's sixth Annual Conference in Nairobi in January 2026. He tells Tim Phillips where the productivity gap in electricity lies, why a shoe factory that is better at left shoes than right shoes explains the small gains, and which part of the economy is the real bottleneck. The research behind this episodeColmer, Jonathan, David Lagakos, and Martin Shu. 2026. "Is the Electricity Sector a Weak Link in Development?" Working paper, January 2026 version presented at the STEG Annual Conference, Nairobi. An earlier version appeared as NBER Working Paper 32041 (2024). To cite this episodePhillips, Tim, and Martin Shu. 2026. "Is electricity a weak link in development?" Conversations on Transformation (podcast). About the guestMartin Shu is Assistant Professor of Economics at the School of Management and Economics and the Shenzhen Finance Institute of the Chinese University of Hong Kong, Shenzhen. His research spans macroeconomics, development and labour economics, including what household and firm data reveal about structural transformation, and why children in poor countries are more likely to follow their parents into the same occupation. He holds a PhD in Economics from Boston University and bachelor's and master's degrees from the Hong Kong University of Science and Technology. Research cited in this episodeWeak links are sectors whose problems hold back the whole economy. When inputs are strong complements, output depends heavily on the least productive link in the chain, so a small sector can matter far more than its size suggests. The idea draws on Albert Hirschman's The Strategy of Economic Development (1958), and Charles Jones formalised it in "Intermediate Goods and Weak Links in the Theory of Economic Development" (American Economic Journal: Macroeconomics, 2011), which uses electricity as a motivating example. Shu and his co-authors ask whether electricity fits that description in poor countries today. Total factor productivity (TFP) measures how much output an economy or a sector gets from its inputs. If two countries have the same capital and the same number of workers, but one produces more, it has higher TFP. Shu measures each country against the United States. The figures for whole economies come from the Penn World Table, hosted by the Groningen Growth and Development Centre and described by Robert Feenstra, Robert Inklaar and Marcel Timmer in "The Next Generation of the Penn World Table" (American Economic Review, 2015). The paper uses version 9.1; the current release, PWT 11.0, is supported by STEG. Agriculture's productivity gap is the comparison Shu uses to show why measuring TFP is not enough. Farming in poor countries is far less productive than the rest of the economy, as Francesco Caselli ("Accounting for Cross-Country Income Differences," Handbook of Economic Growth, 2005) and Diego Restuccia, Dennis Tao Yang and Xiaodong Zhu ("Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Journal of Monetary Economics, 2008) document. Farmers are also the majority of workers in many developing countries. Yet few economists call agriculture a weak link. Whether a sector is a bottleneck depends on how it connects to the rest of the economy, and answering that needs a model as well as data. The electricity data combine several sources. Generating capacity comes from S&P Global Platts' World Electric Power Plants database, which lists more than 200,000 plants; the authors use generating capacity alone because it tracks transmission and distribution capacity closely. Power output and fuel use come from the International Energy Agency, and employment from national statistics offices. To count power from private generators, the authors use imports of generators recorded in the UN Comtrade database, an approach inspired by Francesco Caselli and Daniel Wilson ("Importing Technology," Journal of Monetary Economics, 2004). It works because few poor countries make their own generators. On the authors' conservative measure, generators supply about 7.6% of capacity on average. Labour's share of revenue in electricity is about 7%, in rich and poor countries alike. The authors collected annual reports, financial statements and SEC filings for 69 privately owned electricity companies in 31 countries, choosing private firms because their decisions follow profit rather than government mandate. Labour's share shows no relationship with GDP per capita. A share that does not change with income points to a Cobb-Douglas production function, in which each input's share of costs stays constant, and that simplifies the TFP calculation. Transmission and distribution losses are power that leaves a plant but never reaches a customer, lost as heat in wires and transformers, or stolen. According to IEA data, they average 14% of output across the sample, 22% in the poorest quarter of countries and 7% in the richest. They are the strongest predictor of low electricity TFP; once they are taken into account, the link between electricity TFP and national income largely disappears. Shu points to upgraded transformers close to end users, and ultra-high-voltage transmission lines, as the investments that would close the gap. Complementarity describes inputs that work together and cannot easily replace each other, like left and right shoes. The model sets the elasticity of substitution between electricity and everything else at 0.2, following Ernst Berndt and David Wood ("Technology, Prices, and the Derived Demand for Energy," Review of Economics and Statistics, 1975). Strong complementarity sounds as if it should make electricity more important. Shu's shoe factory shows why it does not: when a sector is already efficient, making it more efficient frees few resources, and output still waits on the less productive partner. Hulten's theorem, from Charles Hulten's "Growth Accounting with Intermediate Inputs" (Review of Economic Studies, 1978), predicts the economy-wide gain from a productivity improvement in one sector: multiply the improvement by the sector's Domar weight, its sales as a share of GDP. The authors treat any gain above that prediction as the sign of a weak link. Raising electricity TFP to the world frontier, defined as the 90th percentile, means an average increase of 43%, and by Hulten's rule it would add 1.7% to GDP. The model delivers about 1%, and only six countries beat the benchmark. The biggest exceptions are Ethiopia and Kenya, where frequent outages make power expensive or halt production. The authors also test their results against David Baqaee and Hannes Malmberg's "Long-Run Comparative Statics" (NBER Working Paper 33504, 2025), which extends Hulten's approach to allow for capital accumulation. Raising productivity outside electricity is the counterpart experiment. When the authors raise TFP in the rest of the economy by the same proportion instead, every country gains more than Hulten's theorem predicts, and the capital stock grows by 75% on average. Shu's conclusion is about balance. With complementary sectors, pushing one to an extreme achieves little, and today it is the non-electricity sector that lags. More Conversations on Transformation episodesA Microeconomic Perspective on Misallocation. Eric Verhoogen explains how economists diagnose the wedges that keep resources from their best use, the same kind of distortion Shu's model uses to capture outages and costly self-generated power. Structural change in sub-Saharan Africa. Gaaitzen de Vries and Kei-Mu Yi ask whether African economies follow the familiar path of structural transformation, a wider view of the sectors that Shu argues are holding growth back. Further readingCan Mass Electrification (Still) Cause Structural Change?, a STEG synthesis paper by Eric Hsu and Mitchell VanVuren, reviews the mixed evidence on whether connecting people to power still raises productivity and incomes in low- and middle-income countries, as it appears to have done in the past. Under the Grid: Price and Informational Barriers to Grid Densification in Benin, a STEG working paper by Arnaud Dakpogan, Megan Lang and Alpha Ly, finds that a connection subsidy did not raise formal connection rates on average, but information on costs and procedures nearly doubled them among households with no connection at all.

  2. 1 day ago

    The critical minerals scramble

    King Leopold II of Belgium told his envoy in London that he did not want to lose his slice of "this magnificent African cake". The cake was the Congo Free State. Today the Democratic Republic of Congo holds 70% of the world's cobalt reserves, and so the cake is back on the table. Christopher Adam (Oxford) is one of the editors of a special issue of the Oxford Review of Economic Policy on the new scramble for critical minerals. The minerals lie mostly in the Global South, and the demand comes mostly from the North. In this week's VoxDev talk, Chris explains why a mining boom may create few jobs, why it might not last, and why hiring the best lawyers could be the smartest way to use an aid budget. The research behind this episode: Adam, Christopher, Rabah Arezki, and Frederick van der Ploeg. 2026. "The scramble for critical minerals." Oxford Review of Economic Policy 42 (1): 1-13. Open access. The introduction to Volume 42, Issue 1, a special issue on critical minerals. To cite this episode: Phillips, Tim, and Christopher Adam. 2026. "The critical minerals scramble.” VoxDev Talks (podcast). About the guestChristopher Adam is Professor of Development Economics at the Oxford Department of International Development, University of Oxford. He is managing editor of the Oxford Review of Economic Policy, an associate editor of the Journal of Development Economics, a Lead Academic for the International Growth Centre, and a Visiting Scholar at the International Monetary Fund. His research spans the macroeconomics of low-income countries, monetary economics and public finance, and growth and structural change, including the response to climate change and natural disasters. Research cited in this episodeLeopold II and the "magnificent African cake". The opening quotes a letter from King Leopold II of Belgium to his envoy in London, in the English translation used by Adam Hochschild in King Leopold's Ghost (Houghton Mifflin, 1998). Leopold went on to rule the Congo Free State as a personal possession. Chris uses the comparison to ask whether today's scramble will end any better for the people who live on top of the minerals. What makes a mineral critical. There is no single list. The usual working definition, from the US National Research Council (2008), is that a mineral must be both essential to a modern technology and subject to supply chain risk. In the same special issue, geologist Jon Blundy compares the critical mineral lists of 12 countries and finds that only lithium and the rare earths appear on all of them. Demand to 2040. The International Energy Agency (IEA 2021) projects that demand for minerals for clean energy technologies will rise at least fourfold by 2040 if the world meets its climate goals. Chris adds two further sources of demand, digital infrastructure and defence. China's grip on processing. Mining is spread across many countries; refining is not. China controls between 60% and 80% of final global supply of processed critical minerals (Leruth et al. 2022, cited in the paper). Chris argues this concentration is what makes the current scramble different from the earlier one for oil and gas. The presource curse. A term from World Bank economist James Cust and David Mihalyi (IMF 2017). Governments and citizens start spending in anticipation of a resource boom, before any revenue arrives, and growth can fall as a result. Chris warns against the same over-exuberance about local processing of critical minerals. Battery substitution. Lithium-ion batteries dominate today, but sodium-based alternatives are in development (Vu 2025, cited in the paper). High prices raise the incentive to find substitutes, so a producer country cannot assume today's price will hold. Take-or-pay contracts. In a take-or-pay contract, the buyer pays for a minimum quantity of output whether or not it takes delivery. The paper proposes such long-term contracts, used in natural gas, as one way to share the risk of technological change between mining companies and producer governments. Taxing value that sits downstream. In the special issue, Gregoire Rota-Graziosi argues that the rent from critical minerals is moving away from the mine and towards processing plants and intangible assets. His proposals include anchoring prices to international benchmarks to limit transfer pricing abuse. Chris stresses the role of royalties. Indonesia's nickel export ban. Indonesia banned exports of raw nickel ore from 2020. It is now the world's leading nickel producer and processor, but the paper notes that the main impetus came from Chinese firms and investment in industrial parks. Chris raises it as a success with a caveat. The double dividend. In the special issue, Mathieu Couttenier and Dominic Rohner argue that the green transition could reduce conflict as well as emissions, if governance, transparency and multilateral institutions are strong enough. Chris says he would like to share their optimism. Dutch disease. A resource boom drives up the real exchange rate and makes other exports less competitive (Eastwood and Venables 1982). Because mining creates few jobs, Chris argues that industrial policy beyond the mining sector must address this risk directly. More VoxDev Talks episodesNo taxation without administration: What makes tax authorities work. Royalties and transfer pricing rules are only as good as the tax authority that enforces them. Rethinking development cooperation: The case for a 'balance sheet' approach. A proposal to treat low and middle-income countries as managers of their own assets, which is the position a mineral-rich government is in. Related reading on VoxDevMining booms move workers from farms to services, not factories, by Qing Huang, Victoria Wenxin Xie and Wei You. Evidence from 33,262 mines on what resource booms do to local employment. Who owns the mine matters for deforestation, by Victoria Wenxin Xie, Wei You and Ran Goldblatt. Mineral price booms increase deforestation near mines, and investor origin changes the size of the effect. The downstream impacts of mines: How pollution hits agriculture, by Lukas Vashold, Gustav Pirich, Maximilian Heinze and Nikolas Kuschnig. In Africa, crops are less healthy downstream of mining sites.

    The critical minerals scramble

  3. 6 days ago

    Ideas in Development: GiveDirectly's journey to scale

    This is an episode from VoxDev's new podcast series, Ideas in Development. This series has a separate podcast feed, where you can find every episode of Oliver Hanney’s conversations on evidence. YouTube: https://www.youtube.com/watch?v=R8eCnQy5fF4 Apple Podcasts: https://podcasts.apple.com/us/podcast/givedirectlys-quest-for-scale/id1866874059?i=1000791048981 Spotify: https://open.spotify.com/episode/2ffbhYkt9bYNiWUc5KPIuZ?si=13787b330c604508 Audioboom: https://audioboom.com/posts/8955404-givedirectly-s-quest-for-scale  GiveDirectly started out as a small nimble team founded by PhD economists, who had a novel approach to ending poverty – just give cash. But they are no longer the new kids on the block, and have been scaling their operations rapidly in recent years, a trend that could intensify if the third wave of American philanthropy materialises. That’s a huge opportunity, but the potential of operating across entire countries is a radically different proposition. So what does an evidence-driven organisation research when it's trying to go from moving millions a year to billions? Caitlin Tulloch, Senior Director for Research, Learning and Product at GiveDirectly, joins Oliver Hanney for a wide-ranging conversation on cash transfers at scale. We cover running a research portfolio like the treasury, the macro forecasting work around a new Malawi project, the trade-off between fraud and reach, building a global emergency response capability, and the politics of putting a lot of cash into someone else's economy. Ideas in Development is a VoxDev podcast on economic policy and research. Find us wherever you get your podcasts, and read the full write-up on our Substack: https://ideasindevelopment.substack.com/

    Ideas in Development: GiveDirectly's journey to scale

  4. 7 Oct

    Evidence-based policy: Why one good trial isn't enough

    Medicine has run rigorous clinical trials since the 1940s. Development economists borrowed the structure of the trials during the credibility revolution. Chris Cotton (Queen's University) argues that they misunderstood an important part of this revolution. One successful study is not a mature evidence base, and policies built on too little evidence tend to disappoint at scale.  His answer is a framework of Policy Evidence Readiness Levels, or PERLs, just published in Science. PERLs 1 through 4 categorise the weight of evidence behind an intervention, and are inspired by the scale NASA uses to judge whether a technology is ready for a space mission. He tells Tim Phillips which development programmes have already climbed to the top rung, which were implemented at scale on too little evidence (and what happened when they were), and why his framework, by his own admission, is still a modest PERL level 1. The research behind this episodeCotton, Christopher. 2026. "Rigor Is Not Readiness: The PERL Framework for Evidence-Based Policy." Science 393 (6810): 463-465. To cite this episodePhillips, Tim, and Christopher Cotton. 2026. "Evidence-based policy: Why one good trial isn't enough." VoxDev Talks (podcast).About the guestChristopher Cotton is Professor of Economics at Queen's University in Kingston, Ontario, where he holds the Jarislowsky-Deutsch Chair in Economic and Financial Policy and directs the John Deutsch Institute for the Study of Economic Policy. He is cross-appointed to the School of Policy Studies and the Department of Medicine. His research spans evidence-based policy, the economics of science, education and public health, and how organisations use expertise when they make decisions. He is a co-owner of and research adviser at Limestone Analytics, a policy advisory firm, and has advised on impact evaluation and evidence-based policy for the UK and US governments, the World Health Organization, and others. Research cited in this episodeEvidence-based medicine. The movement that took hold in the 1990s, decades after the clinical trial became standard. Its classic statement is Sackett, David L., William M. C. Rosenberg, J. A. Muir Gray, R. Brian Haynes, and W. Scott Richardson. 1996. "Evidence Based Medicine: What It Is and What It Isn't." BMJ 312 (7023): 71-72. It set out how clinicians should combine the best research evidence with clinical judgement. Cotton's point is that medicine's evidence hierarchy puts systematic reviews above any single trial; the social sciences adopted the trials but not the hierarchy. Technology Readiness Levels. NASA's nine-level scale for the maturity of a technology, from basic principles observed (TRL 1) to flight proven on a successful mission (TRL 9). It gives engineers a shared vocabulary for readiness without dictating how each component is tested. PERLs borrow the idea and apply it to claims about policy. The four PERLs. PERL 1 is a hypothesis, backed by theory or observational data. PERL 2 is efficacy, shown in controlled trials under favourable conditions. PERL 3 is targeted adoption, with at least one rigorous causal evaluation under real-world implementation. PERL 4 is generalised guidance, built on systematic reviews that address how effects vary across contexts. Cotton's examples of PERL 4 evidence in development include insecticide-treated bed nets for malaria, cash transfers for school enrolment, and iron and folic acid supplements for pregnant women. The science of scaling. A growing literature on why promising pilots disappoint at scale; Cotton cites Rasul, Imran. 2026. "From Field Experiments to Policy Interventions at Scale." Science 391 (6790). Much of this work asks researchers to test programmes under real-world conditions. In PERL terms, that moves evidence from level two to level three; Cotton argues it is necessary but not sufficient. Evidence synthesis organisations. Cochrane produces systematic reviews in health; the Campbell Collaboration does the same for social policy; 3ie, the International Initiative for Impact Evaluation, funds and synthesises impact evaluations in development. Together with J-PAL's evidence reviews and WHO guidelines, Cotton identifies them as where PERL 4 evidence lives. Microcredit. Cotton's main cautionary tale. Early pilots produced promising causal evidence under specific conditions, and donors, NGOs, and the media turned it into a claim that microcredit would transform global poverty. The later randomised evidence is summarised in Banerjee, Abhijit, Dean Karlan, and Jonathan Zinman. 2015. "Six Randomized Evaluations of Microcredit: Introduction and Further Steps." American Economic Journal: Applied Economics 7 (1): 1-21. Across six countries, the studies found some increase in business activity but no evidence of a reduction in poverty. The graduation approach. A package of a productive asset, training, coaching, savings, and consumption support for ultra-poor households, first developed by the Bangladeshi NGO BRAC in 2002. The landmark multi-country study is Banerjee, Abhijit, Esther Duflo, Nathanael Goldberg, Dean Karlan, Robert Osei, William Parienté, Jeremy Shapiro, Bram Thuysbaert, and Christopher Udry. 2015. "A Multifaceted Program Causes Lasting Progress for the Very Poor: Evidence from Six Countries." Science 348 (6236): 1260799. J-PAL's Policy Insight now draws on 20 randomised evaluations. Cotton uses it as an example of evidence that matured as implementation expanded. The reading wars. Cotton's example from outside development. Many education systems adopted whole-language and three-cueing approaches to reading, based on appealing theory and small, heavily resourced studies, and pushed phonics aside. The evidence is reviewed in Castles, Anne, Kathleen Rastle, and Kate Nation. 2018. "Ending the Reading Wars: Reading Acquisition from Novice to Expert." Psychological Science in the Public Interest 19 (1): 5-51. Quasi-experimental methods. Techniques such as difference-in-differences, which compare changes over time between places or groups that did and did not receive a policy. Cotton argues that macro policies and institutional reforms, which cannot be randomised, can still climb to PERL 3 and even PERL 4 by combining such studies with well-tested theory and the historical record. More VoxDev Talks episodesHow do policymakers interpret different types of evidence? Eva Vivalt on how policymakers update their beliefs when they see new evidence, and the biases that get in the way. Rethinking evidence and refocusing on growth in development economics. Lant Pritchett makes the sceptic's case against relying on RCTs and systematic reviews as the main guide to policy. How AI can put 20 years of development evidence to work. Iqbal Dhaliwal of J-PAL on building AI programmes on the existing evidence base, and the scaling problems AI inherits. Related reading on VoxDev.orgScaling policy ideas in developing countries, in which John List argues that researchers should generate policy-based evidence before decision-makers commit to scale. Insights from first generation of microcredit RCTs, from the VoxDevLit on microfinance, which reviews seven randomised evaluations of microcredit programmes.

    Evidence-based policy: Why one good trial isn't enough

  5. 1 Oct

    Follow the paper trail

    In Uganda, every sale between two VAT-registered firms reaches the tax authority twice. The seller reports it, and so does the buyer. But the two numbers rarely match. In Turkiye, a supplier that installs its first industrial robot doesn’t make an announcement, but the administrative records can track when the firms automate, and what happens next. Justine Knebelmann and Nuriye Melisa Bilgin tell Tim Phillips how they used those records to find out more about the choices firms make, and the effects on the firms around them. Justine and her co-authors worked with the Uganda Revenue Authority to send letters to firms whose reports did not match their trading partner’s, to find out under what conditions the firms amended their tax returns. Nuriye mapped robot adoption across Turkiye's firm-to-firm network, to find out the competitive effects. They also discuss how researchers can access administrative data, and how simply compiling it can change policy. The research behind this episode: Almunia, Miguel, David J. Henning, Justine Knebelmann, Dorothy Nakyambadde, and Lin Tian. 2023. "Firm Networks and Tax Compliance: Experimental Evidence from Uganda." CEPR Discussion Paper 18151, revised October 2025.  Bilgin, Nuriye Melisa, Ester Faia, and Gianmarco Ottaviano. 2024. "Technology Spillovers, Diffusion and Rivalry in Firm Networks." CEPR Discussion Paper 19804.  To cite this episode: Phillips, Tim, Justine Knebelmann, and Nuriye Melisa Bilgin. 2026. "Follow the paper trail." PEDL (podcast). Centre for Economic Policy Research. About the guestsJustine Knebelmann is an Assistant Professor in the Department of Economics at Sciences Po, Paris, and an Associate at the Institute for Fiscal Studies. Her research spans state capacity in developing countries, tax administration, digitalisation and land. She has worked with tax administrations in Sub-Saharan Africa since 2015. Nuriye Melisa Bilgin is a Lecturer in Economics at Koç University and a Senior Fellow at the Microsoft AI Economy Institute. Her research spans technology adoption, from industrial robots to generative AI, and how new technologies and shocks travel through production networks and global value chains, using large-scale firm-to-firm transaction data from Turkiye. She held postdoctoral positions at Bocconi University and the University of Turin. About PEDLPrivate Enterprise Development in Low Income Countries (PEDL) is a joint research initiative of the Centre for Economic Policy Research (CEPR) and the Foreign, Commonwealth & Development Office (FCDO), and part of CEPR's Growth Research Platform. Established in 2011, it funds research on private-sector development in low-income countries. Find out more at grp.cepr.org/pedl. Research cited in this episodeValue-added tax (VAT). Firms charge VAT on their sales and reclaim the VAT they paid on inputs bought from other registered firms. Because every business-to-business sale appears on two returns, one from each side, the tax authority can in principle check one report against the other. Economists call this the VAT's self-enforcing property. In Uganda the VAT raises about 30% of total tax revenue, according to IMF figures cited by Almunia and co-authors; the IMF puts Uganda's VAT compliance gap at around 60% of potential VAT revenue. Seller shortfall. The Uganda team's term for a transaction in which the seller reports a smaller amount than the buyer. It lowers the tax bill and often signals evasion. In the 10 months before the experiment, from March to December 2017, seller shortfall appeared in 41.4% of monthly seller-buyer observations, and in more than 92% of those cases the seller had not reported the transaction at all. Almunia, Hjort, Knebelmann and Tian (2024). "Strategic or Confused Firms? Evidence from 'Missing' Transactions in Uganda," Review of Economics and Statistics 106 (1): 256-265. This earlier study measured the scale of the problem. Sellers and buyers reported different amounts for the same transactions 79% of the time, and the authors estimate that unilateral misreporting cost Uganda about USD 383 million in VAT revenue between 2013 and 2016. Randomising pairs, not firms. In a dense trading network, a letter sent to one firm can reach its partners by several routes and blur the results. The Uganda team randomised at the level of the seller-buyer pair instead, and selected 1,235 pairs so that no two shared a firm. Of these, 741 received letters, sent to the seller only, the buyer only, or both; the remaining 494 formed the control group. Because treated pairs were kept apart in the network, a correction by a firm that did not receive a letter points to communication between the two partners. The final sales loophole. Sales to consumers and to unregistered firms appear on a Ugandan VAT return as a single total, with no second report to check against. Sellers used this margin. When treated sellers amended their returns to add missing business-to-business sales, they cut their reported final sales by about 60% of that amount. The net gain in VAT was modest, but the letters still raised more than six times what they cost to send. Electronic invoicing in Uganda. After the 2018 experiment, the Uganda Revenue Authority expanded its data cross-checks. In 2021 it launched EFRIS (electronic fiscal receipting and invoicing), which requires input claims to be matched to VAT invoices, and in 2022 it began rolling out electronic billing machines that record transactions at the point of sale. The reflection problem. Charles Manski named it in "Identification of Endogenous Social Effects: The Reflection Problem" (Review of Economic Studies, 1993). When connected firms perform alike, it is hard to tell whether one influenced the other or whether similar firms simply chose to trade together. Nuriye's point about productive firms sorting into relationships with other productive firms is this problem in a supply chain. Her team addresses it by using the precise timing of each first-time robot purchase and checking for trends that predate it. Knowledge spillovers and product market rivalry. A firm can gain when a partner adopts a new technology and lose when a competitor does. Nicholas Bloom, Mark Schankerman and John Van Reenen set out the difficulty of separating the two effects in "Identifying Technology Spillovers and Product Market Rivalry" (Econometrica, 2013). Bilgin, Faia and Ottaviano separate them by the direction of the link. Suppliers pass gains down to their customers; rivals that sell to the same customers compete them away. Turkiye's matched firm data. The robot study links VAT returns covering firm-to-firm transactions, collected by the Ministry of Finance, with employer-employee records from the Social Security Institution, customs records from the Ministry of Trade, and registry and balance sheet data from the Ministry of Industry and Technology. The data run from 2007 to 2019. Robot purchases are identified by matching firms' fiscal codes with members of ENOSAD, the Turkish industrial automation manufacturers' association, and imported robots by their customs code, which also records the country of origin and whether an intermediary was involved. Robot quality and technical support. Robots from Switzerland and Germany, which sell at higher prices than those from China, generate larger spillovers to the adopter's customers. Robots bought through intermediaries that also provide technical support produce the largest effects. Four years after a supplier's first purchase, its customers' productivity is 14% higher when the robot came through an intermediary, against 6.3% when it came from a domestic producer. Linking surveys to administrative records. Justine mentions separate work by her co-author David Henning, who surveyed Ugandan firms and linked their answers to their tax returns. The combination reveals informal activity that administrative data alone cannot see, including among firms that had left the formal tax system. Listen nextNo taxation without administration: What makes tax authorities work, a VoxDev Talks episode in which Anders Jensen and Jonathan Weigel review the evidence on how tax authorities are organised, staffed and run, and why third-party data has limits where informality is high. Related readingTechnology spillovers, diffusion, and rivalry in firm networks, a VoxEU column in which Bilgin, Faia and Ottaviano summarise the robot study. Strategic or confused? Firm behaviour and missing millions in Uganda's VAT, a VoxDev article on the earlier study that showed how often Ugandan sellers and buyers disagree about the same transaction. VAT in developing countries: flawed, but irreplaceable, a VoxDev article by Anne Brockmeyer, Giulia Mascagni, Mazhar Waseem, Miguel Almunia and Vedanth Nair, which draws on VAT administrative data from 11 countries to show where the tax falls short of its textbook design.

    Follow the paper trail

  6. 29 Sept

    How politicians co-opt bureaucrats

    How can we cut corruption in government, procurement that generates kickbacks for local politicians? We could hire officials on merit. Across the developing world, many governments now do exactly that. So why do public contracts still go to political friends? In this week's VoxDev Talk, Sarah Brierley (LSE) tells Tim Phillips why merit-based hiring is not enough. If politicians cannot choose who gets the job, they can often control what happens next: where officials work, and whether they are promoted. This power may be sufficient to co-opt them. In Ghana, where she did much of her research, nearly half of senior local officials say contracts in their district go to firms that fund the ruling party.  The research behind this episode: Brierley, Sarah. 2026. The Co-opted State: How Politicians' Control Over Bureaucrats' Careers Threatens Governance. Cambridge: Cambridge University Press. Open access. To cite this episode: Phillips, Tim, and Sarah Brierley. 2026. "How politicians co-opt bureaucrats.” VoxDev Talks (podcast).About the guestSarah Brierley is Associate Professor of Comparative Politics in the Department of Government at the London School of Economics and Political Science. Her research spans the state, corruption, bureaucracy, and election campaigns, with a focus on sub-Saharan Africa. She holds a UKRI Future Leaders Fellowship for a project on political finance in Africa. Research cited in this episodeClientelism. Politicians hand out public resources, such as schools, jobs or contracts, in return for votes. Most research assumes that officials simply do what politicians ask. Sarah argues that officials have real control over who gets what, so politicians must first win them over. Hiring on merit. Sarah checks whether senior local officials in Ghana are hired on merit in three ways: expert surveys, a survey of the officials themselves, and staff records. Of those hired between 2010 and 2016, 67% sat an exam. When the governing party changed after the 2008 election, the kind of people hired into professional jobs did not change. The kind of people hired into low-skilled jobs did. Randomised response technique. A way to ask survey questions that people would rather not answer. Each person rolls a die where the interviewer cannot see it. On one number they must say "yes", on another "no", and otherwise they tell the truth. Nobody knows what any one person meant, but the odds of each roll are known, so the true share of "yes" answers can be calculated across the whole survey. Using this method, Sarah found that 46% of 864 senior officials in 80 local governments say contracts go to firms that fund the ruling party. Career control tools. Sarah's name for the ways politicians can shape an official's career after hiring: promotions, the work they are given, and where they are posted. Transfers are the main tool in Ghana. Officials who think their mayor can easily move them are more likely to report corruption. In a second survey question, 58% of officials said that exposing misconduct would likely get them transferred. Whistleblower protection. Ghana's Whistleblower Act, 2006 (Act 720) protects people who report wrongdoing from punishment, including unwanted transfers, and can pay them a reward. But in a small local office it is almost impossible to stay anonymous, so the protection counts for little in practice. Local electoral competition. Competition between parties at national level is usually good for reform. Sarah finds that close contests at local level have the opposite effect. When seats are won and lost on small margins, campaigns cost more, and politicians have more reason to get money out of public contracts. India and Indonesia. Both countries hire senior officials through competitive exams. In India, members of the Indian Administrative Service change jobs on average every 16 months, and transfers become more likely when state leadership changes (Iyer and Mani 2012). Proposals to set a minimum time in post have not been adopted. In Indonesia, politicians also interfere in promotions. Promotion panels. In Ghana's local government service, promotions are decided by panels that include professional officials, so politicians rarely use them as a threat. Sarah suggests using similar panels to approve transfers, so no single politician can move an official at will. Campaign spending caps. Limits on how much candidates can spend. Many countries in sub-Saharan Africa have none. India has them, but candidates routinely spend far more (Chauchard 2018). Sarah points to the UK's Corrupt and Illegal Practices Act of 1883, which set strict limits that were enforced in court. Total campaign spending fell by 40% between the 1880 and 1885 elections (Rix 2008). More VoxDev Talks episodesWhy civil service reform fails (and what actually works). Martin Williams looks at 131 attempts to reform the civil service in six African countries, and why none fully succeeded. Related reading on VoxDevBureaucracy, the VoxDevLit review of the evidence on how officials are selected, paid and managed. Autonomy, incentives, and the effectiveness of bureaucrats, on evidence from Nigeria and Ghana that civil servants with more freedom complete more of their projects. Should civil servants be allowed to serve in their home areas? Evidence from India, on what happens when officials are posted close to home.

    How politicians co-opt bureaucrats

  7. 25 Sept

    Ideas in Development: How BRAC partners with governments to fight poverty

    This is an episode from VoxDev's new podcast series, Ideas in Development. This series has a separate podcast feed, where you can find every episode of Oliver Hanney’s conversations on evidence. YouTube: https://www.youtube.com/watch?v=zpOCMtfSF1A Apple Podcasts: https://podcasts.apple.com/us/podcast/how-brac-partners-with-governments-to-fight-poverty/id1866874059?i=1000788403797 Spotify: https://open.spotify.com/episode/5lTrMYBVrQkAXoDrIOeEVa?si=Xu5hb5XnQWitnY5NoCmzrg Audioboom: https://audioboom.com/posts/8949627-how-brac-partners-with-governments-to-fight-poverty  The ultra-poor graduation approach has one of the strongest evidence bases in development. Almost all of that evidence comes from NGO delivery – but true scale normally means government delivery. Stephanie Brockerhoff, Director for Programme Design and Impact at BRAC's Ultra-Poor Graduation Initiative, joins Oliver Hanney to explain why anti-poverty pilots often fall apart at handover, how BRAC partners with governments, and the bottlenecks to scale that remain. Ideas in Development is a VoxDev podcast on economic policy and research. Find us wherever you get your podcasts, and read the full write-up on our Substack: https://ideasindevelopment.substack.com/

    Ideas in Development: How BRAC partners with governments to fight poverty

  8. 23 Sept

    No Taxation without Administration

    Research on how to collect more tax in developing countries has focused on how information, especially administrative data, can help. But in Uganda for example, buyers and sellers report different amounts for the same VAT transaction in 79% of cases. The invoices exist ... but nobody in the tax administration is comparing them. In this week's VoxDev Talk Anders Jensen (Harvard Kennedy School) and Jonathan Weigel (UC Berkeley) argue that information needs an administration that is able to use it. They have examined the research evidence on how tax authorities are organised, who they hire, where they send their staff, and how much freedom those officials get. To maximise revenues they find that many of Max Weber's century-old rules for how to run a bureaucracy still apply, but others often need to bend a little.  The research behind this episode: Jensen, Anders, and Jonathan L. Weigel. 2026. "No Taxation without Administration: Bringing the State Back into the Public Finance of Developing Countries." Journal of Economic Literature 64 (1): 246-280. The working paper version is available as NBER Working Paper 34729. To cite this episode: Phillips, Tim, Jonathan Weigel, and Anders Jensen. 2026. "No Taxation without Administration." VoxDev Talks (podcast).About the guestsAnders Jensen is Associate Professor of Public Policy at Harvard Kennedy School, a Faculty Research Fellow at the National Bureau of Economic Research, and research co-director of the State programme at the International Growth Centre. His research spans the rise of modern tax systems, informality and consumption taxes, and how governments with limited capacity can improve tax administration and enforcement. He works with governments in Ghana, Zambia, Liberia and Brazil. Jonathan Weigel is Assistant Professor of Business and Public Policy at the Haas School of Business, University of California, Berkeley, and a Faculty Research Fellow at the National Bureau of Economic Research. His research spans state capacity, taxation, corruption, and the links between religion and institutions. His fieldwork is based mainly in the Democratic Republic of Congo, where he runs the research organisation ODEKA. Research cited in this episodeNo taxation without information. Dina Pomeranz's study of Chile's value-added tax showed how the paper trail between firms helps to enforce the tax; each firm has a reason to demand an invoice from its supplier, and the tax authority can use those invoices to detect evasion. Pomeranz, Dina. 2015. "No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax." American Economic Review 105 (8): 2539-2569. Third-party reporting in Denmark. Henrik Kleven and co-authors ran a randomised tax audit experiment in Denmark. Evasion was close to zero on income that employers and banks report to the tax authority, and substantial on income that taxpayers report themselves. Kleven, Henrik Jacobsen, Martin B. Knudsen, Claus Thustrup Kreiner, Soren Pedersen, and Emmanuel Saez. 2011. "Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark." Econometrica 79 (3): 651-692. Missing transactions in Uganda. The 79% figure comes from VAT reports in Uganda, where sellers and buyers declare different amounts for the same transactions. The gap suggests that the tax authority does not systematically cross-check the reports, or that firms act as if it does not. Almunia, Miguel, Jonas Hjort, Justine Knebelmann, and Lin Tian. 2024. "Strategic or Confused Firms? Evidence from 'Missing' Transactions in Uganda." Review of Economics and Statistics 106 (1): 256-265. The US tax gap. Even a high-capacity administration struggles without third-party data. For tax years 2014 to 2016, the Internal Revenue Service estimated that 55% of income subject to little or no information reporting, such as sole proprietor income, was misreported, compared with 1% of wages and salaries. Internal Revenue Service. 2022. Tax Gap Estimates for Tax Years 2014-2016. Publication 5364. Washington, DC: IRS. "In developing countries, tax administration is tax policy." The paper's epigraph comes from Milka Casanegra de Jantscher, who co-edited an IMF volume on tax administration with Richard Bird. The line sums up an older policy consensus that building the tax authority matters more than setting the right rates. Bird, Richard M., and Milka Casanegra de Jantscher, eds. 1992. Improving Tax Administration in Developing Countries. Washington, DC: International Monetary Fund. Weber's ideal bureaucracy. Max Weber described a "rational" bureaucracy with a single chain of command, specialised departments, recruitment by examination, promotion by seniority and decisions governed by rules rather than discretion. Jensen and Weigel use his categories to organise the evidence, and show how developing countries adapt them to local conditions. Weber, Max. 1978 (first published 1921). Economy and Society: An Outline of Interpretive Sociology. Berkeley: University of California Press. The sinews of power. The phrase comes from John Brewer's history of the British state, which credits a professional, specialised Excise Office with raising the revenue that paid for Britain's 18th-century wars. Brewer, John. 1990. The Sinews of Power: War, Money, and the English State, 1688-1783. Cambridge, MA: Harvard University Press. Medium taxpayer offices in Indonesia. Indonesia created dedicated offices for medium-sized corporate taxpayers, which sharply cut the number of taxpayers per auditor. Revenue from the firms in these offices rose by 64% in the short term and by 128% after six years. Basri, M. Chatib, Mayara Felix, Rema Hanna, and Benjamin A. Olken. 2021. "Tax Administration vs. Tax Rates: Evidence from Corporate Taxation in Indonesia." American Economic Review 111 (12): 3827-3871. Transfer mispricing and the arm's length principle. Multinationals can shift profits by setting the prices of transactions between their own subsidiaries. Tax authorities test these prices against the arm's length principle, which asks what unrelated firms would have charged each other. Staff in large taxpayer offices must learn to apply it; staff who deal with small firms never need to. The Pendleton Act. The US Civil Service Reform Act of 1883 introduced competitive examinations for federal jobs, to limit patronage appointments. Abhay Aneja and Guo Xu find that the reform improved public sector performance. Aneja, Abhay, and Guo Xu. 2024. "Strengthening State Capacity: Civil Service Reform and Public Sector Performance during the Gilded Age." American Economic Review 114 (8): 2352-2387. City chiefs as tax collectors. In Kananga, in the Democratic Republic of Congo, neighbourhoods were randomly assigned to property tax collection by state agents or by local city chiefs. Chiefs raised revenue by more than 40%, mainly because they knew which households were more willing to pay. Balan, Pablo, Augustin Bergeron, Gabriel Tourek, and Jonathan L. Weigel. 2022. "Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo." American Economic Review 112 (3): 762-797. Assigning tax collectors. The same tax campaign randomly assigned collectors to teams and to neighbourhoods. Simulations suggest that pairing the best collectors together, and sending them to the neighbourhoods with the highest revenue potential, would raise compliance by 37% compared with random assignment. Weigel, Jonathan, Pedro Bessone, Augustin Bergeron, Gabriel Tourek, and John Kabeya Kabeya. 2025. "Supermodular Bureaucrats: Experimental Evidence from the DRC." American Economic Review. Discretion, technology and bribes. In Ghana, property tax collectors equipped with tablets and digital maps spent less time finding properties and more time deciding whom to revisit; collections rose by 103% relative to the control group. In Tajikistan, electronic filing removed face-to-face contact with inspectors, and firms at high risk of evasion paid more tax, probably because they could no longer bribe the inspector. Dzansi, James, Anders Jensen, David Lagakos, and Henry Telli. 2023. "Technology and Tax Capacity: Evidence from Local Governments in Ghana." NBER Working Paper 29923. Okunogbe, Oyebola, and Victor Pouliquen. 2022. "Technology, Taxation, and Corruption: Evidence from the Introduction of Electronic Tax Filing." American Economic Journal: Economic Policy 14 (1): 341-372. Public goods and tax compliance. Several studies test whether a government can persuade citizens to pay more tax by providing public goods first. In Acayucan, a small city in Mexico, randomised street paving raised property tax compliance. Programmes in Mexico City, Pakistan and Freetown, Sierra Leone, found small or mixed effects. Fernandez, Manuel, Marco Gonzalez-Navarro, and Climent Quintana-Domeque. 2025. "Local Public Goods and Property Tax Compliance: Evidence from Residential Street Pavement." Working paper. Khan, Adnan Q., Asim I. Khwaja, Benjamin A. Olken, and Mahvish Shaukat. 2023. "Strengthening the Social Compact: Experimental Evidence from Pakistan." Working paper. The demand-driven social contract. Douglass North and Barry Weingast argued that 17th-century English taxpayers agreed to pay more tax in exchange for a greater say in government. In Kananga, citizens in neighbourhoods assigned to door-to-door property tax collection became more likely to attend town hall meetings and to evaluate government performance. North, Douglass C., and Barry R. Weingast. 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England." Journal of Economic History 49 (4): 803-832. Weigel, Jonathan L. 2020. "The Participation Dividend of Taxation: How Citizens in Congo Engage More with the State When It Tries to Tax Them." Quarterly Journal of Economics 135 (4): 1849-1903. Procedural justice. Citizens are more likely to accept a

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