A summary of key findings on World Bank financed CDD operations
June 2022

Ashutosh Raina, Camila Linneman, Jana El-Horr, Parmesh Shah, and Susan Wong

Two years into the pandemic, growth in emerging markets and developing economies (EMDEs) is projected to remain substantially below the pre-pandemic trend, as noted in the latest World Bank flagship report - Global Economic Prospects. And while national governments have significant work ahead, local and regional governments will be on the frontlines of supporting long-term local economic recovery due to their close proximity to their constituents. 

The pandemic has underscored the need to invest in local economic development (LED) while teaching us important lessons about how to proceed:

1. It is important to complement emergency social protection investments that mitigate immediate impacts with comprehensive support to transform local economies and drive longer-term economic recovery and job growth.
2. To build a more inclusive recovery moving forward, special assistance needs to be targeted towards especially marginalized groups. By supporting marginalized groups and lagging areas, we can help build more equitable systems and economies with greater opportunities for the poor and vulnerable.
3. Community-driven development and LED projects emphasizing community control over planning decisions and resources can be leveraged to create jobs and deliver income support to informal workers, the poor, and small and micro enterprises. Projects like the Development Responses to Displacement Impacts Project (DRDIP) in Uganda scaled up support for savings groups and livelihood activities in host and refugee communities, supporting over 63,000 households across 1,212 villages as of May 2021.  
4. Donor financing alone is not enough to provide the necessary resources and partnerships, especially in rural, lagging, or conflict-affected areas. In contrast to metropolitan areas, these areas often have higher poverty and inequality rates, weaker economies, and fewer resources to respond to these challenges.
5. Non-traditional partners such as social and digital enterprises, foundations, impact investors, and financial institutions can play a powerful role in unleashing new financing and opportunities for underserved areas and populations. Under India’s National Rural Livelihoods Mission, partnering with commercial banks induced $40 billion in loans to women, 20 times more than World Bank-supported financing for the project.

How can we apply these lessons to support post-pandemic recovery?

Traditional LED interventions focus on strengthening local government and supporting value chains for different livelihoods to build an area’s economic capacity. Applying these lessons requires reimagining LED to be a more inclusive approach that mobilizes the power of partnerships and platforms to achieve long-term objectives. This involves broadening the network of actors working collaboratively to strengthen local economies, including non-traditional partners like digital enterprises, private sector actors, social enterprises, and financial institutions. Engaging a broader range of stakeholders can mobilize greater resources and technical expertise, create new economic opportunities, and facilitate last-mile service delivery. By supporting platforms where these stakeholders can engage with and learn from one another, this reimagined approach is expected to encourage faster recovery and catalyze greater impact by creating synergies and leveraging the strengths and resources of these stakeholders. 

To operationalize this vision, the World Bank is piloting LED platforms at the local and regional government levels in East Africa. Under the leadership of the local government, platforms will bring together committed stakeholders, both traditional and non-traditional, to increase the intensity and density of support to communities and local economies.

These platforms can be instrumental in maximizing development finance and enabling working at scale by facilitating coordination and collaboration among identified partners. This collaboration mobilizes more resources and expertise and facilitates the more efficient use of existing resources by avoiding duplication and identifying opportunities for complementary interventions. This approach prioritizes building on existing community institutions and investing in digital technologies and complementary productive infrastructure to deliver comprehensive and sustainable support in the form of financing and technical assistance. Importantly, by tackling economic recovery with a collaborative ecosystem of actors, local governments can take a longer-term and more holistic approach to local economic development, mitigating the siloed and shorter-term outcomes focus of traditional interventions. 

Building a community committed to green, resilient, and inclusive local economic recovery

In January 2021, the World Bank launched the LED Knowledge Silo Breaker (KSB) to develop and promote this reimagined approach. This community connects peers, thought leaders, and practitioners across governments, agencies, and academia to share their ideas and experiences related to LED. With the collective power of an expanded community of partners, we believe this inclusive approach to LED can be transformational in delivering green, resilient and inclusive local economic growth and accelerating COVID-19 recovery. 

RELATED:

-         Local Economic Development Resource Page

-         Community-Driven Development Overview

-         Community-Driven Development Community of Practice

Ashutosh Raina, Camila Linneman, Jana El-Horr, Parmesh Shah, and Susan Wong

Two years into the pandemic, growth in emerging markets and developing economies (EMDEs) is projected to remain substantially below the pre-pandemic trend, as noted in the latest World Bank flagship report - Global Economic Prospects. And while national governments have significant work ahead, local and regional governments will be on the frontlines of supporting long-term local economic recovery due to their close proximity to their constituents. 

The pandemic has underscored the need to invest in local economic development (LED) while teaching us important lessons about how to proceed:

1. It is important to complement emergency social protection investments that mitigate immediate impacts with comprehensive support to transform local economies and drive longer-term economic recovery and job growth.
2. To build a more inclusive recovery moving forward, special assistance needs to be targeted towards especially marginalized groups. By supporting marginalized groups and lagging areas, we can help build more equitable systems and economies with greater opportunities for the poor and vulnerable.
3. Community-driven development and LED projects emphasizing community control over planning decisions and resources can be leveraged to create jobs and deliver income support to informal workers, the poor, and small and micro enterprises. Projects like the Development Responses to Displacement Impacts Project (DRDIP) in Uganda scaled up support for savings groups and livelihood activities in host and refugee communities, supporting over 63,000 households across 1,212 villages as of May 2021.  
4. Donor financing alone is not enough to provide the necessary resources and partnerships, especially in rural, lagging, or conflict-affected areas. In contrast to metropolitan areas, these areas often have higher poverty and inequality rates, weaker economies, and fewer resources to respond to these challenges.
5. Non-traditional partners such as social and digital enterprises, foundations, impact investors, and financial institutions can play a powerful role in unleashing new financing and opportunities for underserved areas and populations. Under India’s National Rural Livelihoods Mission, partnering with commercial banks induced $40 billion in loans to women, 20 times more than World Bank-supported financing for the project.

How can we apply these lessons to support post-pandemic recovery?

Traditional LED interventions focus on strengthening local government and supporting value chains for different livelihoods to build an area’s economic capacity. Applying these lessons requires reimagining LED to be a more inclusive approach that mobilizes the power of partnerships and platforms to achieve long-term objectives. This involves broadening the network of actors working collaboratively to strengthen local economies, including non-traditional partners like digital enterprises, private sector actors, social enterprises, and financial institutions. Engaging a broader range of stakeholders can mobilize greater resources and technical expertise, create new economic opportunities, and facilitate last-mile service delivery. By supporting platforms where these stakeholders can engage with and learn from one another, this reimagined approach is expected to encourage faster recovery and catalyze greater impact by creating synergies and leveraging the strengths and resources of these stakeholders. 

To operationalize this vision, the World Bank is piloting LED platforms at the local and regional government levels in East Africa. Under the leadership of the local government, platforms will bring together committed stakeholders, both traditional and non-traditional, to increase the intensity and density of support to communities and local economies.

These platforms can be instrumental in maximizing development finance and enabling working at scale by facilitating coordination and collaboration among identified partners. This collaboration mobilizes more resources and expertise and facilitates the more efficient use of existing resources by avoiding duplication and identifying opportunities for complementary interventions. This approach prioritizes building on existing community institutions and investing in digital technologies and complementary productive infrastructure to deliver comprehensive and sustainable support in the form of financing and technical assistance. Importantly, by tackling economic recovery with a collaborative ecosystem of actors, local governments can take a longer-term and more holistic approach to local economic development, mitigating the siloed and shorter-term outcomes focus of traditional interventions. 

Building a community committed to green, resilient, and inclusive local economic recovery

In January 2021, the World Bank launched the LED Knowledge Silo Breaker (KSB) to develop and promote this reimagined approach. This community connects peers, thought leaders, and practitioners across governments, agencies, and academia to share their ideas and experiences related to LED. With the collective power of an expanded community of partners, we believe this inclusive approach to LED can be transformational in delivering green, resilient and inclusive local economic growth and accelerating COVID-19 recovery. 

RELATED:

-         Local Economic Development Resource Page

-         Community-Driven Development Overview

-         Community-Driven Development Community of Practice

CDD What's Happening Newsletters FY21-22

LOUISE CORD, AUDREY SACKS, STEPHEN WINKLER

MARCH 30, 2022

Uganda’s northern district of Adjumani borders South Sudan and is home to around 244,000 refugees. If you visit, you may be surprised not to find the tell-tale signs of refugee quarters — fences, camps, and other kinds of demarcations. Instead, refugees live alongside locals, enjoying basic liberties like the right to work, freedom of movement, and access to critical basic services.  

This integrative approach toward refugee hosting has been a cornerstone of Uganda’s domestic policy since the 1960s. A new policy research working paper on Inclusive Refugee-Hosting in Uganda Improves Local Development and Prevents Public Backlash by Yang-Yang Zhou, Guy Grossman and Shuning Ge, part of a broader new series of research on Forced Displacement, further reiterates that the presence of refugees has significantly improved access to social services, such as education and healthcare, for host communities in Uganda , shattering popular stereotypes of refugees as a source of tension, protests, or economic drain for a country. Uganda’s approach to hosting 1.6 million refugees—the largest refugee settlement in Africa and the fourth largest in the world—has also helped quell insecurities or negative sentiments towards migrant presence in the nation, mitigating the likelihood of backlash against them.  

Almost 12,000 miles away on a different continent, Peru is seeing similar gains with the large arrival of Venezuelans, according to a new policy research working paper on  Immigration, Labor Markets and Discrimination: Evidence from the Venezuelan Exodus in Peru by Andre Groeger, Gianmarco León-Ciliotta, and Steven Eric Stillman. The presence of more than a million Venezuelans has helped Peru improve local labor market conditions, reduce crime rates, increase levels of trust between neighbors, and improve satisfaction with public services. These improved economic conditions have helped to decreased anti-immigrant discrimination.  

These findings align with new analysis of nearly 100 refugee camps across Africa. In the policy research working paper titled The Geography of Displacement, Refugees’ Camps and Social Conflicts, authors Nicola Daniele Coniglio, Vitorocco Peragine, and Davide Vurchio show that, while the initial shock of refugee arrivals can at first increase social tension, refugee arrivals contribute to improved economic conditions in the medium and long term in host communities with no negative impacts on social cohesion.  

Forced Displacement Today 

UNHCR estimates that 84 million people were forcibly displaced by the middle of 2021, including over 20 million refugees and a growing number of internally displaced people (IDPs). In just ten years, the share of the world’s population that has been forcibly displaced due to conflict, violence, and persecution, as well as political, economic, and environmental crises, has grown from 1 in 159 to 1 in 95.  

Despite the magnitude of displacement around the world, including the 3.7 million people recently displaced from Ukraine, there is a remarkable lack of research on the topic to inform policies and development investments. To fill this gap, the World Bank together with UNHCR and the UK Foreign, Commonwealth and Development Office (FCDO) commissioned a series of studies to understand how to prevent conflict and promote cohesion among communities experiencing displacement. A finding that’s consistent across the board in the studies highlighted above on Uganda and Peru is, yes, forced displacement is a global crisis that poses significant developmental challenges. Yet, if managed effectively with inclusive policies and development investments, forced displacement can bring about social and economic prosperity . These programs and policies can assume many forms, including multi-sectoral development investments in services and infrastructure; social assistance (i.e., cash transfers, vouchers, workfare programs, grants to communities); educational scholarships; skills training programs; mental health support; and public messaging to evoke empathy towards refugees and preempt xenophobia. 

Working Toward Collective Social and Economic Prosperity   

Understanding and carefully studying the conditions under which host communities are successful at integrating people who have been forced to flee their home is critical for the international community . Here are some lessons emerging from this new series of studies:  

• Large arrivals of refugees do not necessarily have a negative effect on the attitudes of host communities or on economic outcomes of a region or country.  

• In Peru, the inflow of Venezuelans who have a right to work is associated with positive labor market effects and more positive attitudes towards refugees.  

• Humanitarian assistance and development investments should be directed both to refugees and host communities to mitigate negative effects of displacement.  Investments in infrastructure and services are key to meeting the increased demand of the population shocks generated by the arrival of displaced people and to avoid tensions over limited resources.  In Uganda, areas exposed to more refugees experienced better access to public and private schools, health centers, and roads as a result of resources allocated from aid, reducing tensions between refugees and host communities. 

• Investments paired with high-quality facilitation can help ensure that benefits reach refugees and host communities and promote social cohesion.  Facilitated refugee–host interactions can improve host communities’ perceptions of refugees and internally displaced persons. Community Driven Development approaches that bring refugees and host residents together for joint planning, decision making, and oversight of investments in essential infrastructure and services can foster positive interactions. 

It’s said that the best way to predict the future is to invent it. Countries have much to gain economically and socially from thinking magnanimously and innovatively about how to integrate displaced people into mainstream society. The positive effects may take time to emerge but can be well worth the wait and enable all citizens to thrive in dignity and prosperity.   

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Thank you Anastasiia Krasilnikova  this is an excellent CDD FY21 End of the Year Report, contratulations to you, your team and to the members of your commuinity of practice, well done. - Bruce

Thank you Anastasiia Krasilnikova  this is an excellent CDD FY21 End of the Year Report, contratulations to you, your team and to the members of your commuinity of practice, well done. - Bruce