27 January 2014

Safety nets and economic growth

Stefan Dercon wrote a paper a couple of years ago about how cash transfers might boost growth - by focusing on investments in ECD, smoothing geographical mobility, or smoothing the school-to-work transition.

To those possible avenues, Harold Alderman and Ruslan Yemtsov (ungated) now add:
  • improving financial markets
  • improving insurance markets
  • improving infrastructure (through public works programmes), and
  • relaxing political barriers to policy change
I find the last one particularly interesting. So for example, Ghana recently tried to offset the removal of fuel subsidies with a doubling of the coverage of the still-small national cash transfer programme to 150,000 households - helping to avoid Nigeria-style protests. Alderman and Yemtsov note that Indonesia pulled a similar trick on subsidy reform, and Mexico's safety nets helped usher NAFTA in.

But this political point goes beyond relaxing barriers to policy change, to relaxing barriers to technological change. Otis Reid pointed out to me this paper by economic historians Avner Greif and Murat Iyigun which argues that:
"England’s premodern social institutions–specifically, the Old Poor Law (1601-1834)–contributed to her transition to the modern economy. It reduced violent, innovation-inhibiting reactions from the economic agents threatened by economic change."
To be crude - it's worth paying off the Luddites so they don't get in the way of growth-enhancing technological change.


Tom said...

Someone else is pretty sure she's reading it wrong as well: "David Cameron speaks compellingly about international aid. Eradicating poverty, he says, means certain institutional changes: rights for women and minorities, a free media and integrity in government. It means the freedom to participate in society and have a say over how your country is run. We wholeheartedly agree and were flattered to see the Prime Minister tell this magazine that he is ‘obsessed’ by our book on the subject, Why Nations Fail: The Origins of Power, Prosperity, and Poverty. But diagnosing a problem is one thing; fixing it another. And we don’t yet see the political will — in Britain or elsewhere — that could turn this analysis into a practical agenda." http://www.spectator.co.uk/features/9121361/why-aid-fails/

Schools in Hyderabad said...

It's a nice post over the primary education system of India.

Preschools in Bengaluru

Laura said...

The best bit about that map is that it's already out of date. UK troops (OK not many) involved in Operation Serval. Hence Mali crossed off the 'uninvaded' list.

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