Is Development Economics a Good Investment?: Evidence on Scaling Rate and Social Returns

Is Development Economics a Good Investment?: Evidence on Scaling Rate and Social Returns

We develop a method to establish a lower bound on the benefit-cost ratio of development innovation funds by comparing the benefits of a subset of innovations which scaled to the cost of the entire portfolio. Applying the method to the early USAID Development Innovation Ventures portfolio suggests each dollar spent generated at least $17 in social benefits. Predictors of innovation scaling include low unit costs, distribution through existing large business or government, and rigorous A/B tests or Randomized Control Trials (RCTs) in collaboration with development economics researchers. A model accounting for these results suggests that funders seeking social returns can exploit arbitrage opportunities by investing in innovations for which expected social returns likely exceed private returns.

* Time: 5:30pm Gulf Standard Time
             9:30am Eastern Daylight Time

Speakers
Michael Kremer, Nobel Laureate; University Professor and Director of the Development Innovation Lab, University of Chicago
Arlie Petters, Provost, NYUAD
Yaw Nyarko, Professor of Economics, NYUAD
Torsten Figueiredo Walter, Assistant Professor of Economics, NYUAD

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