Experts from international institutions such as the World Bank, the University of Oxford and King’s College London discussed poverty and development in the framework of an academic meeting in Madrid, which was organized by the Navarra Center for International Development (NCID) of the Institute Culture and Society at the University Of Navarra and the Ramón Areces Foundation.

The workshop started with a session from Xavier Giné of the World Bank's Development Research Group. His presentation was entitled “Profits and Mission: Performance Incentive in a Multi-goal Development Organization.”

In his presentation, Giné explained that the impact of performance pay in institutions with multiple goals depends on the degree of complementarity between tasks achieving each goal.

He presented a study carried out on employees of a development institution focused on microcredit, who were randomly assigned one of two bonus programs, either credit and social. The study found that the credit bonus improved credit-related outcomes but it undermined the mission. In contrast, the social bonus advanced the mission without compromising the microcredit program. The study concluded that a fixed wage is the optimal contract if the institution cares both about sustainability and its mission.

Sanjay Jain of the University of Oxford (UK) then spoke about his paper on, “Redistributive Promises, Transfers to Special Interests, and the Political Economy of Reform with Limited State Capacity.”

According to Professor Jain, a fundamental issue in political economy relates to why economic policies aimed at improving efficiency are often difficult to adopt politically. In his talk, he presented a paper examining how the presence of special interest groups and limited taxation capacity on the part of the state affects the sorts of redistributive policies that are necessary to win support for reform from potential losers of that reform.

Voters recognize that the government, in compensating losers, has an incentive to misuse this redistributive mechanism to disproportionately steer compensation towards its supporters, or to other special interest groups. This analysis suggests that this is particularly damaging in countries with low state capacity, where popular support for the adoption of efficiency-enhancing reforms is likely to be the lowest in any case.

Experts from universities in Switzerland and the USA

Subsequently, Roland Hodler, of the University of St. Gallen (Switzerland), spoke on “Oil Spill and Infant Health in Nigeria.” The study showed the development impact of oil deposits at the local level in Nigeria. The study uses geo-localized survey data to construct various development and wealth indicators for localities within and outside of oil regions.

The study found that price increase tends to harm communities in oil-producing regions relative to other regions, which is evidence for an oil curse at the local level in Nigeria. These negative effects do not spill over to neighboring regions. Rather, there is evidence for at least some positive spillovers of the oil price surge.

Achyuta Adhvaryu, of the University of Michigan (USA), led the last session of the morning. He focused on “The Skills to Pay the Bills: Returns to On-the job Soft Skills Training.”

According to the researcher, the willingness of firms to provide general training to workers depends on the productivity gains from training and the likelihood that workers are retained. The study analyzes the impacts of training in soft skills development on the work place out comes of female garment workers in Bengaluru, India.

It was found that despite a high overall turnover rate, more treated workers are retained during the training period; this difference disappears after training is complete. In addition, these employees are 12% more productive.

Pairing the study’s point estimates with program costs, Professor Adhvaryu calculated that the net return to on-the-job soft skills training for garment workers is large – about 250 percent 9 months after program completion.