New Sources of Development Finance

The Lottery, with its weekly pay-out of enormous prizes, was the one public event to which the proles paid serious attention. It was probable that there were some millions of proles for whom the Lottery was the principal if not the only reason for remaining alive. It was their delight, their folly, their anodyne, their intellectual stimulant. Where the Lottery was concerned, even people • who could barely read and write seemed capable of intricate calculations and staggering feats of memory. There was a whole tribe of men who made a living simply by selling systems, forecasts, and lucky amulets.

The chapter starts by considering the extent to which development benefits from philanthropic effort, showing that a great deal of philanthropy in rich industrialised countries is aimed at domestic concerns, and may vary with household income; the super‐rich are treated here as a special case. The next question asked is why development may command only a small share of charitable donations and how people determine the objects of their giving; here the economic literature on philanthropy provides only limited help and the discussion draws on the literature on donor behaviour from other disciplines, notably marketing. The special case of private donations to the UN agencies is then considered, looking at the particular problems faced by the UN, and focusing on the United Nations Children's Fund (UNICEF), which is by far the most successful UN agency at collecting money from private individuals; the question is asked as to whether private donations are crowded‐out by governmental c...

The United Nations Research Institute for Social Development (UNRISD) is an autonomous agency engaging in multidisciplinary research on the social dimensions of contemporary problems affecting development. Its work is guided by the conviction that, for effective development policies to be formulated, an understanding of the social and political context is crucial. The Institute attempts to provide governments, development agencies, grassroots organizations and scholars with a better understanding of how development policies and processes of economic, social and environmental change affect different social groups. Working through an extensive network of national research centres, UNRISD aims to promote original research and strengthen research capacity in developing countries.

Using panel data information from The WLA Global Lottery Data Compendium this paper estimates aggregate demand functions for lottery tickets in order to examine variation in the income elasticity of lottery tickets worldwide. The analysis uses a panel data quantile regression approach. The estimated elasticities are compared across income quartiles and world regions. The results provide evidence that a significant variation in the income elasticities across both geographic areas and the income distribution exists. Also, a clear heterogeneity in the incidence of lottery expenditures is observed. Overall, it is found that lottery is a normal good.

The principal objective here is to assess the potential of currency transactions taxes (CTTs) – the celebrated Tobin tax – to raise revenues that can be used for developmental purposes. Thus, though Tobin proposed and others assessed CTTs in terms of reducing exchange rate volatility and improving macroeconomic policy environments, this chapter considers the CTT first and foremost from the standpoint of revenue and treats its potential to achieve valuable double dividends (such as the promotion of financial stability and policy autonomy) as a subsidiary objective. With a view of establishing the ‘permissible’ range of tax rates to obtain realistic estimates of revenue potential from CTTs, the debate on the effects of CTTs on market liquidity and the efficiency of foreign exchange markets is reviewed, and the P. B. Spahn proposal for a two‐tier currency tax briefly assessed. Next, a number of issues raised in the debate on the technical and political feasibility of CTTs are discussed...

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Efforts to realize the issue of development-focused Special Drawing Rights (SDR) by the International Monetary Fund (IMF) have been ongoing for many years. Recently, however, the campaign first gained a new momentum immediately after the Asian financial crises with the new liquidity problems of developing nations following the collapse of private capital markets. Currently the search for financing options towards the achievement of the Millennium Development Goals drives the interest in development-focused SDRs. Extending the uses to which SDR can be put is derived from the growing demands on the international financial system to respond to the development finance needs of poor nations. Apart from the need to provide emergency funds in times of crises and the whole area of crisis prevention, increasingly the facilitation of development in poor countries and assistance to make the best policy decisions is considered crucial.

The world lottery market now amounts to at least US$126 billion in sales. World market sales for all gaming products (public, charitable and commercial) total some US$1 trillion, of which Internet gambling accounts for US$32 billion. This paper assesses the prospects for harnessing this large and growing market for the purposes of development finance by means of a global lottery and a global premium bond (with the successful UK scheme providing a model for the latter). Each has different strengths: the global lottery can add to the supply of grant finance for development, while the global premium bond could be an attractive savings instrument for ethical investors. The paper concludes that global versions of both a lottery and a premium bond are viable and complementary in mobilizing more development finance.

Lotteries as sources of public funding are of particular interest because they combine elements of both public finance and gambling in an often controversial mix. Proponents of lotteries point to the popularity of such games and justify their use because of the voluntary nature of participation rather than the reliance on compulsory taxation.