International Director Li Zou shares CSD’s vision for a global Child Development Account policy
Li Zou has given many presentations on Child Development Accounts (CDAs) in other countries, but this one was different.
The international director for the Center for Social Development (CSD) was at the World Bank to deliver invited remarks on the bank’s plan to evolve its mission and operations. The bank’s roadmap affirms commitments to poverty reduction and shared prosperity while calling for changes to better meet global challenges.
At the bank’s April 11 Evolution Forum, Zou sketched a strategy for meeting all three of those goals, a strategy for developing a global CDA policy based on research by the Center for Social Development.
“Everyone, everybody in the world, no matter where you come from”
CSD’s vision, Zou told forum participants, is for “every newborn on the planet to start life with a Child Development Account and an initial deposit.” She added, “The whole population – everyone, everybody in the world, no matter where you come from.”
CDAs are designed to accumulate assets for education and other developmental goals. Originally proposed by CSD Founding Director Michael Sherraden in the 1991 book “Assets and the Poor,” the accounts are typically opened automatically at or near the beneficiary’s birth and seeded with a substantial deposit. As a child grows, the account builds value through investment earnings and contributions from multiple sources, public, private and philanthropic, with greater deposits for disadvantaged children.
Sherraden and colleagues have conducted extensive research on CDA policy through SEED for Oklahoma Kids (SEED OK), a randomized experiment that has followed the outcomes of children who received accounts shortly after their birth in 2007. Their research and consultations have informed numerous CDA policies in the United States, Singapore, the United Kingdom, Korea, Israel, and elsewhere. Globally, over 15 million children have assets in CDAs.
“Our research in SEED OK shows that CDAs have financial and nonfinancial effects that are shaping the lives of parents and children in several beneficial ways,” said Sherraden, the George Warren Brown Distinguished University Professor at Washington University in St. Louis.
“In developing countries, the accounts have the potential to reduce poverty by enabling investments in education and broadening financial inclusion,” Sherraden said.
Creating an international structure
In the United States, CDAs are built upon state 529 college savings plans, which share features through a common framework specified in federal law. There is no similar policy apparatus in many countries where social policies and financial structures are still developing.
“Serving children in those settings will require an international policy structure and commitments from international development organizations,” Sherraden observed. ”This international infrastructure is yet to be designed and implemented, but it seems likely to evolve in the years and decades ahead. Information-age finance will make this possible, even likely.”
At the forum, Zou pressed the bank’s administration: “What can World Bank do?”
“The World Bank can be the global leader,” she said, “acting as the global asset manager and building the global financial structures that support CDA development and sustainability.” The bank also can advance a global CDA policy, Zou said, by making commitments to
• strengthen country-level CDAs,
• establish CDAs in more developing countries,
• spur regional and global dialogues to support CDAs,
• spearhead cross-national collaborations, and
• create global financial structures that support CDA development and sustainability.
New conversations
“The proposal was well received,” Zou said. “Bank administrators and forum participants were open to innovative thinking as the roadmap’s new priorities come into focus. A global CDA policy offers potential on multiple fronts.”
Zou sees the World Bank presentation as an important beginning. “The opportunity to participate at the World Bank – IMF Spring Meetings opened doors and started conversations,” she said. “CSD is committed and engaged, and we will be energetic. But global CDA policy is a large vision. A great deal of work lies ahead.”
Video from the Evolution Forum and Zou’s presentation can be streamed here.