Chart of the Day: What do Africans think their governments should be doing?

Afrobarometer asked over 33,000 Africans between 2010 and 2012 what the most important problem facing their country that government should address is. Here are their answers. With apologies for the tiny font, but it's worth reading down the full list (I left off a few of the country-specific responses at the bottom).

Data from: Benin 2012, Botswana 2012, Burkina Faso 2012, Burundi 2012, Cape Verde 2011, Ghana 2012, Kenya 2011, Lesotho 2012, Liberia 2012, Malawi 2012, Mali 2012, Mauritius 2012, Namibia 2012, Nigeria 2012, Sierra Leone 2012, South-Africa 2011, Tanzania 2012, Togo 2012, Uganda 2012, Zimbabwe 2012 (Base=33598; Weighted results)


I'm quite surprised by how high up water supply is, but less surprised by the top 3 of unemployment, the economy, and poverty. The public policy challenge is still, first and foremost, about broad-based inclusive economic growth. Interesting to compare this with Justin Sandefur's analysis of what African researchers care about (jobs).

The tragedy is that we don't really have a clue what policy instruments can create jobs. For most of sub-Saharan Africa the challenge is a lack of demand for labour. What is needed is a way of linking African workers with consumers who have money - who are mostly in rich countries. This link could come in 3 ways:

1: Trade. Africans stay where they are and export things to rich countries. This one looks difficult in most countries, which are uncompetitive with poor Asian countries in manufacturing, and don't yet have the skills or infrastructure for high-tech service exports. Gains to agricultural productivity holds some promise, but faces serious barriers to getting going.
2: Migration. The Africans come to rich countries. An economic no-brainer, and a political non-starter.
3: Tourism. The rich people go to Africa. Tourism? Really?

There will probably be marginal improvements in all 3 areas, but its hard to see where the really big shift that could get millions of Africans up to rich country poverty lines of around $12.50 per day over the next generation is going to come from.

The very easy to use online Afrobarometer data analysis tool is here.

[and before anyone says it, of course Africa is not a country, but actually the patterns look pretty similar when you look at the country-level data, I just couldn't figure out a good way of showing that data visually - very open to suggestion]

When rigorous impact evaluation *does* make quite a big difference

If you care at all about unemployment and labour market policy, or really about much of social policy, this new paper from Esther Duflo and co-authors should have you quite worried.

The policy - pay a private provider for each unemployed person that they get into a job.

The result (part 1) - the policy was successful at getting unemployed participants into jobs.

The result (part 2) - almost all of these jobs were just taken from other people who would otherwise have got them. Pure displacement. No net change in unemployment.

Most impact evaluations don't measure such "spillover" effects or "externalities", because they are really hard to measure (neither do most non-randomised evaluations.., this is not a criticism of RCTs).

Ignoring externalities, we would have thus concluded, for example, that 100,000 euros invested in the program would lead 9.7 extra people to find a job within eight months. Since the eff ect disappears by 12 months, this already appears to be quite expensive, at about 10,000 euros for a job found on average four months earlier. But at least, it is not counterproductive. With externalities, investing 100,000 euros leads to no improvement at all.

Bruno Crepon, Esther Duflo, Marc Gurgand, Roland Rathelot, and Philippe Zamoray (2012), Do labor market policies have displacement effects? Evidence from a clustered randomized experiment

WDR 2013: Jobs (but no migration please)

I went to the UK launch of the WDR this afternoon at the shiny new ODI offices in London. The bottom line is similar to but less poetic than something the Nigerian Central Bank Governor said in Oxford a few months ago:

"If a politician tells you that they are going to create a job, throw them out of the window. Fix the roads, fix the power, fix the security, and the people will create their own jobs."

Or in the report's words "Labor policies matter less than assumed" (as an aside, Kathleen referred a few times to this page (38) as their "tweets" which jarred for some reason - but its a good summary of the arguments).

Stefan Dercon had a great line on the WDR as a valiant attempt to construct a coherent narrative from an incoherent literature. He also pointed out the lack of any political economy analysis. Which leads to the obvious criticism about migration.

I thought I'd wait until I'd actually read the thing before commenting, but yeah, its pretty weak. Here is the WDR explaining "Global patterns of migration":

The decline of transportation costs, the growth of Persian Gulf economies following surges in oil prices, and the entry into world markets of developing countries with large populations have all stimulated a surge of migrant workers worldwide. 

Differences in expected earnings between the country of origin and the country of destination are an important reason for people to migrate. Earnings gains, however, are offset to varying degrees by the direct costs of migration (such as transportation fees and intermediation services) as well as by indirect costs associated with the difficulties of adapting to a different culture and society and leaving family and friends behind. These costs also help explain aggregate migration flows.

As well as those "costs" there's also the whole global apartheid thing, in which a person's right to choose where to live and work is determined by the country of their birth and not by their talents or aspirations. There are 700 million people who would like to permanently move to another country - including over 38% of the population in every sub-Saharan African country surveyed (the WDR does cite the Gallup World Poll, just not this particular finding).

Gabriel Demombynes notes that the 2009 WDR (Economic geography) was much stronger on migration. As from a quick glance was the 1995 WDR (Workers in an integrating world). Perhaps the problem is just fatigue?

New media, new work

So Newsweek has announced that it is closing its print edition, a few days after Alan Rusbridger was forced to deny that the Guardian has similar plans. Andrew Sullivan, who blogs at the Newsweek-owned "Daily Beast" reflects

The shift in my own mind has happened gradually. Even up to a year ago, I was still getting my New York Times every morning on paper, wrapped in blue plastic. Piles of them would sit in my blog-cave, read and half-read, skimmed, and noted. 

Until a couple of years ago, I also read physical books on paper, and then shifted to cheaper, easier, lighter tablet versions. Then it became a hassle to get the physical NYT delivered in Provincetown so I tried a summer of reading it on a tablet. I now read almost everything on my iPad. And as I ramble down the aisle of Amtrak's Acela, I see so many reading from tablets or laptops, with the few newspapers and physical magazines seeming almost quaint, like some giant brick of a mobile phone from the 1980s. Almost no one under 30 is reading them. 

I sympathise. I look at the Guardian website almost every day, but I can't remember the last time that I actually bought a paper copy. Sullivan continues

I also began to wonder what a magazine really is. Can it even exist online? It's a form that's only really been around for three centuries - and it was based on a group of people associating with each other under a single editor and bound together with paper and staples. At The New Republic in the 1990s, I knew intuitively that most people read TRB, the Diarist and the Notebook before they dug into a 12,000 word review of a book on medieval Jewish mysticism. But they were all in it together. You couldn't just buy Kinsley's perky column. It came physically attached to Leon Wieseltier's sun-blocking ego. 

But since every page on the web is now as accessible as every other page, how do you connect writers together with paper and staples, instead of having readers pick individual writers or pieces and ignore the rest? And the connection between writers and photographers and editors is what a magazine is. It defines it - and yet that connection is now close to gone. Around 70 percent of Dish readers have this page bookmarked and come to us directly. (If you read us all the time and haven't, please do). You can't sell bundles anymore.

Which is exactly how I read these days. The Guardian website is basically the only "bundled" media I consume. The rest is a personally selected collage wrapped up in my Google Reader account, consisting of all the important economics, development, and Africa bloggers, academics, with a couple of comics (Dilbert, XKCD), and my favourite Guardian and FT weekend columnists thrown in. This is quite a natural progression, given that it is almost (marginally) costless for me to do this. [Warning: Descent into wild conjecture and ill-thought out theory rapidly approaching]. Coase's theory of the firm bases the existence of companies on the role of transaction costs. As transaction costs external to the firm disappear, so does the reason for the firm. Which leads to an atomised media economy, where individuals are firms.

But I still read the Guardian. I suppose that there is a role for organisations to provide the raw news - the unknown unknowns that I don't know I might be interested in, and thus wouldn't search for or subscribe to. Someone who has a culture and values that I think I can trust. 

What does all of this mean, if anything, for the rest of the economy? In my line of work, we already have a similarly atomised economy. Many consultants are independent, and assemble into temporary teams for specific projects, establishing "mini-firms" that come together for a particular task and then disperse. At present the process of assembling these teams is a costly one. Searching for potential team members for very specialised roles and then assessing their quality is time-consuming. These are Coase's transaction costs, and provide a strong case for the existence of consulting firms - transaction costs can be minimized through a centralized process of quality assessment ("recruitment"), which doesn't have to be repeated for every project. This is also why networking is so important. Diamond, Mortensen, and Pissarides won the Economics Nobel Prize in 2010 for developing new models of "frictional" unemployment, driven by this process of search and matching. So this is a costly process with relevance to the wider economy and significant macroeconomic implications. But this large problem also presents a large opportunity. There are big gains to be made from improving this search and matching process. Already some of the biggest firms in the world are ones in the business of search and information sharing. Whether it be through linkedin or some other kind of online database or network - will further reductions in frictional transaction costs lead to further atomisation of the firm? Presumably there is still a role for a "Guardian" - a multi-purpose provider who can tell you about the unknown unknowns - the things that you wouldn't think to search for to begin with, and whose values and culture you can trust. 

Whether any of this makes any sense, and what the implications of this are for youth unemployment, well, you tell me.

Oxford University Africa Conference [Videos]

Think Africa Press have just posted a bunch of videos from the Oxford Africa Society conference a few weeks ago.

The highlight for me was a quote from Nigerian Central Bank Governor Sanusi Lamido Aminu Sanusi.

[paraphrased from memory]

If a politician tells you that they are going to create a job, throw them out of the window. Fix the roads, fix the power, fix the security, and the people will create their own jobs.

The Arab Spring: Too much education and not enough jobs

Its always nice to have your priors confirmed by some systematic data. Here is Campante and Chor in the Journal of Economic Perspectives with a nice chart showing that Arab countries do generally have higher than average unemployment and more recent growth in education than other countries.

They also find some evidence (correlation is not causation etc) that it is the interaction between unemployment and schooling that has led to political change, and not either by them self.  

When the counterfactual *really* matters

Jonathan Portes, the Director of Britain's National Institute of Economic and Social Research has a great post up discussing the slightly controversial mandatory work experience placements in supermarkets for unemployed youngsters. Whether the scheme constitutes slave labour or not, it would be interesting to think for a second about its effectiveness.

The Minister in charge of the scheme has proudly trumpeted:

The fact is that 13 weeks after starting their placements, around 50 per cent of those taking part have either taken up permanent posts or have stopped claiming benefits.

Mr. Portes, formally a Chief Economist at the same government department, considers the counterfactual: claimants of job-seekers allowance (JSA) who do not participate in a work experience placement:

Off-flows from JSA remain high - almost 60% of claimants leave within three months

So you have a 60% chance of leaving benefits in 3 months unless you take part in this scheme, after which you only have a 50% chance. Awk-ward. Of course:

Now this is not definitive - without a proper control group and a counterfactual, we do not know what would have happened to the participants without the programme. Maybe I am wrong, and in fact those who go on the programme have very poor characteristics, and would have done even worse without it. Without proper evaluation, we just don't know. But certainly the evidence and analysis so far published by DWP does not make a good case.

Bottom line #1: if you're interested in smart and well-presented UK economic policy analysis you should really be reading Jonathan Portes.

Bottom line #2: There is probably a very good business case to be made for sending Mr. Iain Duncan Smith on the J-PAL Exec Ed course on evaluating social programs. Training budgets must be tight with all the cuts going on and that though, so - genuine offer - if you're interested Mr. Smith I'll pay your tuition fees out of my own pocket :)