Is Green Growth Good for the Poor?

A new-ish paper from Stefan Dercon, Chief Economist at DFID;

The paper contrasts some common and stylized green-sensitive growth ideas related to agriculture, trade, technology, infrastructure, and urban development with the requirements of poverty-sensitive growth. It finds that they may well cause a slow-down in the effectiveness of growth in reducing poverty. The main lesson therefore is that trade-offs are bound to exist; they increase the social costs of green growth and should be explicitly addressed. If not, green growth may not be good for the poor and the poor should not be asked to pay the price for sustaining growth while greening the planet.

Immigration in the UK

The case for migration is a compelling one. And it needs to be made. The OBR estimates current levels of migration boost GDP by 0.5 per cent. Current levels of population growth are no higher then they were in the early 1900s. And only just over one in 10 new jobs created in the UK goes to migrants, rather than British nationals. These are the facts about immigration, and they have to be pushed vigorously and consistently.

Barbara Roche, former Immigration and Asylum Minister, in the Independent (via TH)

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

A theory of justice (except for dirty foreigners)

Apparently John Rawls, the most important political philosopher of the 20th century, wasn't that bothered about global inequality. He supported barriers to migration, and supported only minimal amounts of international aid. I feel so let down. It feels almost like Jeffersonian levels of hypocrisy.

"in a much later work, The Law of  Peoples, published in 1999, Rawls went further and addressed the issues of global governance and global justice. There Rawls, at times explicitly and at times implicitly, discussed global income inequality and global income distribution and rejected the application of the "difference principle" globally.

from Branko Milanovic, in The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality

Rwanda: The Trailer

This video is really great. Come and visit! Prepared for the Rwanda Tourism Board. Though why they decided to call it "Africa".... (they apparently changed the name to "Rwanda" - better!)


AFRICA from MAMMOTH on Vimeo.

There is no poverty in America...

... was the subject of a recent household debate. I'm talking, of course, about real, deep, absolute poverty, of the one dollar per day variety (at purchasing power parity, meaning already adjusted for the big price differences between rich and poor countries).

Exhibit A:

"By international standards the US poverty line of $23,050 corrected for exchange rates is around the average of world income, and is deemed a comfortably middle-class income in India" -- Deidre McCloskey.

Exhibit B:

A 1996 survey of users of homeless shelters and soup kitchens found a median monthly individual income of around $250 in inner cities in America (quite a lot higher than the $35 per month earned by about a billion people).

Exhibit C:

The housemate sent me a link to this paper which shows some quite shocking life expectancy outcomes for certain groups in America. If you pick out some of the very worst, you get life expectancy for black males in America of 68.7, or for Native Americans in South Dakota of 58 years. Compare this to the life expectancy of Rwandans, all Rwandans, not just those living in poverty, and you get 55 years.

And despite all this, it seems to be quite normal to feel more guilty about poverty in America or England.

Is there really poverty in America? Should we care? Can we just call it something different in America to be clear about the distinction?

---

Jina Moore's comments on this post below are excellent (though I think we still have some disagreements), as are her two articles in the CS Monitor about poverty in America here and here. 

Blood cheese

Leading politicians and military commanders on both sides of the conflict own the cows that Eugene needs to make his cheese. 

... 

'So, in a way, your cheese is helping fuel the conflict? In the same way that conflict diamonds are called blood diamonds, we could call your cheese "blood cheese"?' I ask him with a cheeky smile. 

He smiles, too, and, leaning back, draws his arm in an arc towards the lake.
'What do you see?' 

... 

Eugene gently points out that all those villas, all the petrol stations, truck companies, this hotel, belong to warlords with ties to different militias or to the Congolese army. Nothing has really changed. The UN peacekeepers are the biggest customers in town for villas and petrol and vehicles. They are pumping the most money into Goma's economy, which keeps all these armed groups in business.  

'I am not into politics', he says. 'I am just a businessman. You cannot make or trade anything in Congo that does not somehow put money in the wrong hands.'

Fascinating stuff from Ben Rawlence's new book 'Radio Congo: Signals of Hope from Africa's Deadliest War'

IAEA is hiring a cosmetics sales clerk, €30k tax free salary

...aaaaaaand back to your regularly scheduled programming of pointing and staring in slack-jawed, wide-eyed disbelief at something crazy that the UN has done. I don't know whether to laugh or cry or scream.

For some bizarre reason, UN staff, including it seems the till person at the UN shop, are considered to be diplomats or something, and so don't have to pay any tax. On anything. So in addition to their tax-free salary, they get a special tax-free shop to do their shopping in. (Which is pretty great in Juba when you can sneak in with a friend and they have all sorts of amazing delights specially flown-in that you can't buy anywhere else in town).

Well. The International Atomic Energy Agency, in Vienna (perhaps not the world's worst hardship station), apparently has its very own cosmetics shop. And they need someone to stock the shelves and run the till. For thirty thousand tax free euros. That's more than I make. Clearly I'm in the wrong career. Don't bother with university kids, you only need high school to get a job in the UN shop. To be fair, it does sound quite stressful though.

"the incumbent actively sells the products in the Commissary sales areas, replenishes shelves and works at the cash register: all these tasks are physically strenuous since they involve long hours of standing, walking around the shop floor, bending and lifting of boxes and products."

I'm quite impressed with myself that I've made it this far with no profanity.

Apply here: Sales Assistant, Cosmetics (G-3)

Does Policy Work?

This might be my most popular tweet ever.

Next time you hear "does aid work?" think "does policy work?". It's a silly question, and obvious when you put it like that.
— Lee Crawfurd (@rovingbandit) January 8, 2025

So I thought it might be worth some elaboration. The idea of course, is from Duflo & Banerjee's "Poor Economics" and Karlan and Appel's "More Than Good Intentions", but I'm not sure they stated it so succinctly or hit upon the direct metaphor of domestic policy. It's also been further embedded in me from directly working on a wide range of aid-financed policy at OPM. And most proximately, inspired by yet another abysmal right-wing aid attack article in the Spectator (which I won't bother link to because it is awful and you shouldn't waste your time and frustration on it like I did).

The question "does policy work" is jarring, because we immediately realise that it makes little sense. Governments have about 20-30 different Ministries, which immediately implies at least 20-30 different areas of policy. Does which one work? We have health and education policy, infrastructure policy (roads, water, energy), trade policy, monetary policy, public financial management, employment policy, disaster response, financial sector policy, climate and environment policy, to name just a few. It makes very little sense to ask if they all collectively "work" or are "effective". Foreign aid is similar. Aid supports all of these different areas of policy. My colleagues and I at OPM work on aid-financed projects that support most of these different policy areas in different developing countries.

There are of course reasons that aid is different to domestic policy, and why we might want to think about it a bit differently. Classic concerns are about dutch disease, and undermining domestic accountability. But here there is actually not any really robust evidence pointing either way. The really robust evidence is all to be found at the project-by-project, policy-by-policy level.

A common concern is about the impact of aid on growth. But do we judge UK health policy by whether it has an impact on growth? Admittedly, we might expect an external infusion of spending to a poor country to have at least some temporary impact on growth regardless of what it is spent on. But is that really the outcome by which it should be judged? Some aid is specifically targeted at growth - such as financing infrastructure or private sector development. But much of it is not. One of the few papers which looks at the macroeconomic impact of aid and actually bothers to disaggregate even a little the different types of aid, finds that the aid that could be considered to have growth as a target, does increase growth. It's the aid that was never intended to impact growth at all, such as humanitarian assistance, which doesn't have any impact on growth.

So. Africa is not a country. It is many. And aid is not a policy. It is many.

Agonising over tiny moral problems

I take motorbike taxis to work most days here in Kigali. They are convenient, regularly roaming around the streets so you never have to wait long, they are fun, and they are cheap. A trip around town costs somewhere between 50p and £1, depending on how far you are going and what time of day it is. Which isn't bad compared to the £7 you can pay for a return tube trip in London if you forget your oyster card. It is so cheap I haven't bothered using my transport allowance (though perhaps I am under-pricing the small risk of accidents somewhat).

Most expats I speak to seem to worry about getting "ripped off" by paying a higher price than locals. As there is no set price or meter, you need to haggle. It isn't about the money (perhaps 20p), they say, but about the principle. And perhaps they are right. Perhaps they are all intuitive economists, who understand that it is their consumer surplus, and that the driver is engaging in price discrimination. "Consumer surplus" is the name in economic theory given to the gap between the maximum price that the buyer is willing to pay, and the minimum price that a seller is willing to accept. "Price discrimination" is where a seller tries to charge different prices to different customers (based on their ability to pay), in order to capture some of this surplus. Both phrases - consumer surplus, and price discrimination, suggest that maybe the expats are right to feel aggrieved at being conned out of their 20p. But does economic theory really tell us anything about the ethics of this situation?

For a concrete (and realistic) example, suppose the price for locals is about 50p, but the driver asks me for 70p. We are still a long way from the £2 it costs for that single tube trip in London (with the oyster card). Of the £1.50 consumer surplus, the taxi driver (who earns perhaps £2,000 a year at purchasing power parity - roughly the average income in Kigali*), is conning me out of 20p (13% of the surplus). I'm keeping £1.30 (87% of the surplus).

Is that really in any sense wrong? Or on the contrary am I wrong to keep so much of the surplus? Particularly given that the main reason I earn more than 10 times what the taxi driver does is not that I'm smarter or harder working, but that I was lucky enough to be born in a rich country not a poor one. What are the ethics of that?

Of course haggling can be fun. I often make a mock protest at the price, and then just leave a big tip and round up to £1. Thirty pence seems pretty cheap for a very big grin.

---

* Just realised that is average household income, so probably a substantial over-estimate of individual income. 

The Worst Hotel in the World?

“Woeful and disgusting”
“Don't Ever Stay Here”
“Thankfully it has burnt down!!”
“God awful place”
“it´s not even Juba-good”

From TripAdvisor.com (HT: TvV)

A few weeks after observing part of this place going up in thick black smoke from a window in the Ministry of Finance, I went there to watch some football or something, and saw the biggest scramble of wires and leads and adapters and extension cords suspended precariously down a wall, that I have ever seen. "Fire-hazard" doesn't even come close.

More on the Indian National Cash Transfer

Easterly announces the latest from the NYT with a "India finds cash grants to the poor are no panacea."

The article quotes Jean Drèze, a real Indian-social-policy expert, who notes

“An impression has been created that the government is about to launch an ambitious scheme of direct cash transfers to poor families,” Jean Drèze, an honorary professor at the Delhi School of Economics, wrote in an e-mail. “This is quite misleading. What the government is actually planning is an experiment to change the modalities of existing transfers — nothing more, nothing less.”

Now obviously far be it from me to disagree with Drèze, but the article also notes

“I think this is one of the biggest things to happen to India’s financial system in a decade,” Ms. Ananth [President of IFMR] said.

and

India spends almost $14 billion annually on this system, or nearly 1 percent of its gross domestic product, but the system is poorly managed and woefully inefficient ... Rajiv Gandhi, who served as prime minister for five years in the late 1980s before being assassinated in 1991 while running for office, once estimated that only 15 percent of the money spent on the poor actually reached them; his son Rahul Gandhi said recently that this level may now be as low as 5 percent.

Erm, if that is even close to correct, then getting an additional 85% of $14 billion into the hands of the poor is HUGE. And what kind of economist gives a damn about panaceas anyway? Aren't we supposed to celebrate marginal gains? Especially when those marginal gains could equate to billions of dollars getting into the hands of the poor.

And finally the criticism that this is just about vote-buying is the weakest of them all. If it is going to be a successful election strategy, it is because people value the transfers more than whatever they were getting before, and therefore it is a good policy idea. And if political parties are competing on who can provide the best social policy rather than caste or religion or whatever else, then that is fantastic. 

Policy job vacancies, South Sudan and Indonesia

International Advisor to the Presidential Economic Advisor South Sudan (full-time in Juba, to apply send CV to frenchwb at gmail dot com, deadline: 31st of January 2013)

Assistant Consultant, Oxford Policy Managament, Jakarta

Consultant, Oxford Policy Managament, Jakarta

Everything you need to know about Britain and the EU

When the crazy radicals at the White House and the Economist magazine think Britain would be worse off outside the EU... just get a grip Britain. Get a grip. That is all.