24 February 2011

Good sentences

If I had a nickel for every time someone said to me, “I don’t think we should spend money helping starving people because I don’t give a toss about them,” I wouldn’t have any nickels at all.

Owen Barder on why we don’t need to make the case for development; we need to make the case for aid effectiveness.

23 February 2011

A Nice Cup of Tea: George Orwell's 11 Golden Rules

There was a bit of a debate on my Facebook page the other day (er, 34 comments) on the essential role of milk in a cup of tea. The best comment by far was the link to a George Orwell essay, published in the Evening Standard in 1946. George, you are my hero.
If you look up ‘tea’ in the first cookery book that comes to hand you will probably find that it is unmentioned; or at most you will find a few lines of sketchy instructions which give no ruling on several of the most important points. 
This is curious, not only because tea is one of the main stays of civilisation in this country, as well as in Eire, Australia and New Zealand, but because the best manner of making it is the subject of violent disputes. 
When I look through my own recipe for the perfect cup of tea, I find no fewer than eleven outstanding points. On perhaps two of them there would be pretty general agreement, but at least four others are acutely controversial. Here are my own eleven rules, every one of which I regard as golden:

Wobbly



I'm quite partial to unlikely cover versions. So versions of Joy Division with wobbly bass get my mark of approval. This is Control by Spoek Mathambo. [Cover of Joy Division's 'She's Lost Control'].

HT: Bombastic Element

22 February 2011

Revolution and the Resource Curse in the Middle East

Chris Blattman quotes Arvind Subramanian (writing in the FT)
Even if the people of Libya and Bahrain join those of Egypt and Tunisia in overcoming their cursed political systems, the economic manifestations of their rent curses will remain.
The case for the resource curse certainly sounds persuasive, but I just don’t think the evidence is really there any more, with more and more recent studies debunking it. As Charles Kenny writes in Foreign Policy,
The curse is the type of counterintuitive idea that makes for a great newspaper op-ed. Nonetheless, the curse is also the kind of counterintuitive idea where intuition may have been right to begin with.
To the extent that it does exist, the curse is not destiny, and movement towards more open societies is the best way of fighting it.

Hold tight Bahrain, hold tight Libya.

UPDATE: I found the link to some of the main research disputing the claims

18 February 2011

Wisdom on Oil in Sudan

The excellent John Ashworth (who should really start a proper website) writes:

Oil has the potential to destabilise the two new countries, North and South Sudan. The economies of both countries rely heavily on oil revenue; the South more so than the North, but nevertheless it is a significant percentage of the North's national income. If the North does not receive adequate oil revenue, its economy will suffer, and it is not in the interests of the South to have a northern neighbour with a collapsing economy. Worse still, if the North were to retaliate by refusing to allow southern oil to be exported via its pipeline, the South would have virtually no income, and both countries could potentially become bankrupt and unstable.

Thus at first glance Pagan Amum's statement that there will be no sharing of oil revenue ("The notion of sharing wealth will not be there. There is no continuation, whether 50 percent or anything") gives cause for concern. It appears to contradict statements by SPLM last year that there would be a revenue-sharing agreement.

However there is room for manoeuvre when he continues, "There’s going to be an agreement on the South continuing exporting its oil through the pipeline in Northern Sudan and to Port Sudan, and the South will be paying pipeline fees for transportation... We may be paying a transit fee". Southerners may not like the idea of "sharing" their wealth with a separate country, but may find it easier to accept a simple commercial transaction which is a normal process elsewhere in the world - to pay for the use of the pipeline and also to pay a transit fee. These "commercial" fees would of course have to add up to an amount which Khartoum finds acceptable, so after some hard bargaining it would be no surprise if it came close to the existing 50% in real terms. One area where the South will benefit financially is that they will now control the oil revenue; it is widely believed that Khartoum is currently giving them less than their true 50% share.

While searching for new export routes will definitely benefit the South (especially if routes can be found which are both economically and practically feasible within a reasonable time frame), it would not be beneficial for the North, and could thus be a destabilising factor in relations between the two newly independent countries.

Thankfully I don’t think alternative routes are at all economically viable, a new pipeline through Kenya would be prohibitively expensive. But don’t let that stop Southern politicians dangling Kenya as a bargaining tool.

COULD WE PLEASE STOP SELLING GUNS TO DICTATORS

Despite long-running concerns among activists over Bahrain's human rights record, British firms were last year granted licences, unopposed, to export an arsenal of sometimes deadly crowd control weapons. Licences approved included exactly the kind of weapons and ammunition used by Bahraini riot police to clear the Pearl Roundabout protest encampment, including shotguns, teargas canisters, "crowd control ammunition" and stun grenades…

Sales to both Bahrain and Libya were actively promoted by the UK government's arms promotion unit, the UK Trade & Investment Defence & Security Organisation. (The Guardian).

How on earth is this still an issue? It is utterly despicable. What person in their right mind is ok with this? There are no good reasons for allowing let alone encouraging arms exports to dictators. We cannot be surprised when these weapons are later used against civilians.

You can join the Campaign Against the Arms Trade here.

16 February 2011

The New Capital of Southern Sudan

How things are going in the USA: Quantified

usa_uk_flag

Just over 4 months ago I moved to America. It is basically pretty similar to England in many ways, which is perhaps why I notice the small differences so much. Naturally I decided to keep score.

I’m focusing on my entirely subjective experience of living here, and particularly on non-tradables, so there will be no thorny discussion of who has the best pop music or anything like that. I will gladly take suggestions but can’t guarantee to acknowledge or give any credence to them. And this is basically just a list of random stuff tapped into my phone over the weeks, with no reflection or analysis.

Without further ado:

Points for Great Britain

  • Ubiquitous chip-and-pin security for credit cards. Seriously America you can’t manage that?
  • (A decent) Minimum Wage. Meaning proper salaries for waiters, meaning I don’t have to worry so much about tip-maths in restaurants.
  • Universal (and simple!) healthcare coverage. Ugh, paperwork, thank god I never actually go to a doctor.
  • Sensible politicians. You all make the Conservative Party look really really nice. My first week here, the first bar I went to, O’Donnell was on the TV talking about closing the Department the Education.
  • Sensible people. Generally speaking, people get the representatives they deserve right? Far fewer crazies in England.
  • Liberalism. The proper, fully evolved grown up variant which includes social liberalism as well as economic liberalism.
  • Location. Being geographically closer to the rest of world, and foreign cultures.
  • Towns. That are walkable.
  • Public transport. The tube is way better than the NY subway in my opinion. And so are the buses. And there is a Congestion Charging zone.
  • Mobile phone contracts. For some reason there is fierce competition in the UK driving down prices but not in the US. What’s going on defenders of capitalism?
  • Better date formats. It obviously makes far more sense to start with the day than the month.
  • Better sports. We are not the only country who play our sports, therefore they are better. This is almost a tradable as its pretty easy to follow the Premiership over here, but not quite. You can’t enjoy reading the sports pages of a physical newspaper here.
  • Bank ATMs. Somehow Britain managed to get rid of fees for using other bank’s ATMs. It’s good.
  • No flags. Seriously, why are there so many flags everywhere? Are you worried about forgetting which country you are in?

Points for the Unites States of America

  • Turning right at stop signs. Definitely a winner.
  • Better usage of the phrase "public school." I could go on forever about grammar and spelling but that would be really boring. Here is a case where the American version is clearly objectively better.
  • Better weather. Hotter, colder, either way, at least there is actual weather rather than just cold grey drizzle.
  • Food. Enough said.
  • Ubiquitous Pizza. It is everywhere, and it is good. So good that it gets its own point in addition to the point for food above.
  • Automatic cars. Why do we still bother with manual transmissions? Aren’t automatics just a better technology?

Which makes it;

Great Britain 14

United States of America 6

Pretty damning. But I am genuinely trying to be agnostic here. Show me the evidence America! What else do you have going for you!

15 February 2011

Everything you probably never wanted to know about the Washington Consensus

So apparently Jonathan Glennie

asked a leading World Bank economist how he could explain why South Korea and other countries (including today's developed countries) that had protected their fledgling industries had done so well.

Yawn. Good point Jonathan. Now can you explain how Nigeria and many other countries (including many of today’s still developing countries) protected their fledgling industries and did so badly.

You can’t just cherry-pick the winners and ignore all those who tried the same strategy but failed. The reason most of those economists you spoke to are so skeptical of the infant industry is that they are social scientists who like to pay attention to systematically collected data rather than anecdote. Systematically collected data does not suggest that infant industry protection is a successful strategy (there are some cross-country regressions out there somewhere…).

And here’s the thing; the Washington Consensus basically was not an evil neoliberal conspiracy, it was a reaction against reckless governments pursuing ill-advised statist policies the like of which would look pretty unrecognizable today. These are humdrum bread and butter suggestions for sound macroeconomic management, with perhaps an emphasis on limiting the ability of poorly skilled and often corrupt governments with weak accountability to do damage and mischief.

Here are those Washington Consensus ten broad recommendations in full, from Wikipedia. They all still sound like pretty sensible advice for the poorest countries with the weakest governments to me.

  1. Fiscal policy discipline;
  2. Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
  3. Tax reform – broadening the tax base and adopting moderate marginal tax rates;
  4. Interest rates that are market determined and positive (but moderate) in real terms;
  5. Competitive exchange rates;
  6. Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;
  7. Liberalization of inward foreign direct investment;
  8. Privatization of state enterprises;
  9. Deregulation – abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions;
  10. Legal security for property rights.

I used to be much more enthusiastic about the proactive role of government in the economy before I actually worked for one. That goes for the British government as well as the Southern Sudanese government. Let them get the basics right first. The basics are difficult enough; providing security, core infrastructure, social safety nets. Leave the crystal-ball gazing and high-strategizing to someone else.

10 February 2011

How to Get a Job in International Development

I just spoke on a panel to some Yale undergrads on this very subject, along with some real people, as if I was some kind of real person too! Mainly because about 12 of my more accomplished colleagues couldn’t make it, but I will totally grab almost any opportunity to blather about international development.
My main message was basically “study economics.” Not only is it a fun gratifying subject which will teach you lots about the world, and specifically about the question of why some people are rich and some people are so poor, but it also happens to be quite good for getting jobs.
Specifically, economics degrees can get you jobs with the British Government, the Government of Southern Sudan, and Innovations for Poverty Action, just like me, amongst many other glittering career options.
My other message was, “ok fine, if you don’t want to study economics, then a) learn some kind of useful skill, and b) just go.”
“Just go” sounds a bit scary but I know so many people for whom it has worked out, in all sorts of different jobs, and really what do you have to lose?
Thankfully the panel all pretty much agreed. With perhaps the exception of my passion for economics.
For more good advice, go and read through Dave Algoso’s collection of career advice from smart people like Chris Blattman and Alanna Shaikh.

08 February 2011

South Sudan to build new capital

via a blog post, and about 14 different people on twitter (THIS is how I get my news these days??!!!).
In the resolution passed on Friday in the Council of Ministers meeting chaired by President Salva Kiir Mayardit, the government reached the decision to relocate the capital to a "befitting" new location elsewhere in the South.
I mainly think this is a terrible idea because I have spent a lot of time staring at Ministry budgets which manage to fit in little else besides brand new buildings and salaries. And they will now have to start all over again with the new buildings. Will they be able to find buyers for all the old ones? Probably not from the private sector but perhaps some of the aid organisations still working from containers?

Hopefully this new capital will be on the outskirts of Juba as a friend suggested, which would at least save having to build new roads (a brand new tarmac road - the first highway in Southern Sudan - is also currently being built from Kampala to Juba).

I blame America, and Washington D.C., for giving Salva bad ideas. 

Evaluation in Sudan

The OECD has just released

Aiding the Peace: A Multi-donor Evaluation of Support to Con´Čéict Prevention and Peacebuilding Activities in Southern Sudan 2005–2010

Firstly that is a terrible terrible pun.

Secondly not having read it yet, I'm guessing you would not call this a rigorous or quantitative evaluation as such. Still, probably worth a read for anyone interested in aid and Sudan.

07 February 2011

Brain Gain


The hypothesis goes something like this: first imagine you are born in a poor African country where the financial returns to education are low. Getting yourself qualified isn’t going to magic up any new jobs.

Now imagine there is a chance you might be able to escape to a rich country, where education does matter and has a big impact upon earnings.

The amount you choose to invest in your education depends on your chances of emigrating in the future.
So that’s at the individual level – but here’s the thing; at the national level the promise of emigration might actually increase the stock of educated people rather than reduce it if everyone decides to try and get more education than they would otherwise. 

That’s the hypothesis.

Now for some evidence:
This paper explores a unique household survey purposely designed and conducted to answer this research question. We analyze the case of Cape Verde, a country with allegedly the highest ‘brain drain’ in Africa, despite a marked record of income and human capital growth in recent decades. Our micro data enables us to propose the first explicit test of ‘brain gain’ arguments according to which the prospects of own future migration can positively impact educational attainment. According to our results, a 10pp increase in the probability of own future migration improves the average probability of completing intermediate secondary schooling by 8pp. Our findings are robust to the choice of instruments and econometric model. Overall, we find that there may be substantial human capital gains from lowering migration barriers.
Catia Batista, Aitor Lacuesta, and Pedro C. Vicente, Forthcoming in the Journal of Development Economics, ungated version here

In Praise of Slums: Part 2

Some wisdom from David Week on his architecture for development blog:
Urban migration is a necessary and good thing.
It’s essential to rural development, to urban development, and poverty reduction in an era in which people are being helped to live longer, but have not yet begun to reproduce less.
However, it cannot in itself create rural development, urban development or poverty reduction. It has to be steered by policies which accept it as fact, and base rural, urban and economic development on that fact.
The fact that migration creates slums is not the fault of the migrants, and the solution does not lie in attempting to prevent their arrival: a Quixotic goal akin to stopping a river.
Rather: Accept these immigrants, and welcome them by planning for their arrival through tenure, services, public transport, planned neighbourhoods, and the creation of economic opportunities.

05 February 2011

Socialism makes a come-back

By @thrh
“Food Systems Planning is a nascent field in the planning profession. Until recently, planners have largely ignored the food production, distribution, and consumption sectors, considering them to be issues of the free market. However, bolstered by growing societal concerns about the equity and environmental sustainability of the global food system, planners are becoming increasingly engaged in local efforts to analyze and address food system challenges and opportunities.”
A call for papers from The Journal of Agriculture, Food Systems, and Community Development. Apparently they did not hear about the Russian officials who were taken to London to see how a free-market economic worked and said “It is very important for us to meet the official who is in charge of ensuring bread supplies to London”.

02 February 2011

The China Problem


"Alright then smart-arse, if democracy is so good for development, then what about China eh?"

Well, I see your canny Rodrik-rebuttal and raise you......more Rodrik.....who I will quote at length.
For every Lee Kuan Yew of Singapore, there are many like Mobutu Sese Seko of the Congo.
Democracies not only out-perform dictatorships when it comes to long-term economic growth, but also outdo them in several other important respects. They provide much greater economic stability, measured by the ups and downs of the business cycle. They are better at adjusting to external economic shocks (such as terms-of-trade declines or sudden stops in capital inflows). They generate more investment in human capital – health and education. And they produce more equitable societies.
Authoritarian regimes, by contrast, ultimately produce economies that are as fragile as their political systems. Their economic potency, when it exists, rests on the strength of individual leaders, or on favorable but temporary circumstances. They cannot aspire to continued economic innovation or to global economic leadership.
At first sight, China seems to be an exception. Since the late 1970’s, following the end of Mao’s disastrous experiments, China has done extremely well, experiencing unparalleled rates of economic growth. Even though it has democratized some of its local decision-making, the Chinese Communist Party maintains a tight grip on national politics and the human-rights picture is marred by frequent abuses.
But China also remains a comparatively poor country. Its future economic progress depends in no small part on whether it manages to open its political system to competition, in much the same way that it has opened up its economy. Without this transformation, the lack of institutionalized mechanisms for voicing and organizing dissent will eventually produce conflicts that will overwhelm the capacity of the regime to suppress. Political stability and economic growth will both suffer.
Absolutely worth reading in full; The Myth of Authoritarian Growth.

All of which is completely besides my original point, which I will paraphrase as such; we know very little about how to take developed societies to where the poor people are, but we know a great deal about how to bring the poor people to where the developed societies are*, and yet we spend the majority of our time thinking about the former. 

*It's really pretty easy. A boat. Or a plane.

**If you noticed my use of TWO semicolons within the space of TWO sentences there, well this is absolutely to blame.

01 February 2011

One Rule to Rule Them All



Ranil makes the important point that whilst we may be good at describing good institutions ex post, we ain’t so good ex ante.
the reality of how rules emerge and are enforced is far more complex than Romer and many advocates of good governance and institutional approaches to economics recognise. I’ve seen a lot of people write some variation of ‘we know what good rules are’ or ‘we have a good understanding of what institutions stimulate development’. Despite this, I’ve never seen anyone actually set down on paper exactly what the correct legal framework and institutional makeup for development is. If we really did know what worked, surly someone would have written a fairly uncontroversial but best-selling book about this, right?
Here’s the thing – we don’t need to set out the exact legal framework because as Rodrik has said, we have the “meta-institution” of democracy. I’m going to go out on a wild limb and make a universal prescription: constraints on the executive, an electorally accountable legislative, and rights and protections for individuals and minorities are always and everywhere good things.
Trouble is, as the Egyptians are ably demonstrating, and in the words of Claude Ake (via Cblatts),
Democracy is never given, it is always taken.”