Development as Burritos

This one has been sitting in my drafts folder for months, but Hausmann just got me thinking about it again.

"Meze Fresh" is probably one of the best places to eat in Kigali. Certainly one of the fastest. It's a Chipotle-style Mexican place, with a range of salads, meats, salsas, and sauces in a bar at the front that are thrown together in a tortilla in no time at all. Plus they do margaritas. The owner, I'm told, is a young American guy in his 20s who worked in a Chipotle back home in California, and basically borrowed the entire concept and replicated it here. A similar thing is going on with the Office, or with the young Americans in Kigali setting up their own gyms and solar energy businesses.

To some extent, that is what development is. Borrowing ideas. At least that's what catch-up growth is. At the world technological frontier you need to invent new ideas to get economic growth, but for most developing countries you can get a long way just copying other ideas.

Hausmann's point is that it takes people to transfer ideas, because it's really hard to teach people things that depend upon learning by doing. Which resonates with the experience of all these expats in Kigali who came to do traditional aid work, decided they liked living there, and started spotting all these business opportunities based on ideas from back home. The policy implications of this? For developing countries, one is to make it really easy for people to come visit and live in your country. Rwanda is doing this. The kind of bureaucracy and visa fees you find in many other countries is just incredibly short-sighted.

I'm also reminded of another Hausmann contribution - growth diagnostics. In a place like Rwanda, having got the basics of physical security, macroeconomic stability, decent government administration, and infrastructure under control, one of the things that might start to bind as a constraint to growth is "information externalities."

Any suggestions for what any of this implies for donor policy? Can we and would we want to increase subsidies for foreign investment?

The Mr. Miyagi Theory of Economic Development

Very interesting hypothesis from Ricardo Hausmann on Project Syndicate.

The bottom line is that urbanization, schooling, and Internet access are woefully insufficient to transmit effectively the tacit knowledge required to be productive. That is why today’s emerging markets are so much less productive than rich countries were in 1960, even though the latter were less urban, had higher birth rates and less formal schooling, and used much older technologies. 

The policy implications are clear. Knowhow resides in brains, and emerging and developing countries should focus on attracting them, instead of erecting barriers to skilled immigration. They should tap into their diasporas, attract foreign direct investment in new areas, and acquire foreign firms if possible. Knowledge moves when people do.

The Karate Kid reference is from the very entertaining powerpoint here.

South Sudan: Safer (for aid workers) than detroit?

"There are 17,000 aid workers in South Sudan, making it one of the largest aid operations in the world. In 2012 there were 25 major attacks on aid workers ... With 9 murders of aid workers, that puts the aid worker murder rate in South Sudan at 53 per 100,000. How does this compare to the murder rates of other places?" 

From Aid Leap

How to fix education in developing countries

Annie Lowrey interviews Lant Pritchett in the NYT, who argues

1. We need to think about the whole system rather than just single interventions
2. We need clear goals in terms of learning outcomes, what we are trying to achieve
3. We need local flexibility to come up with solutions to achieve those clearly agreed goals

I'm struck that if we believe this (and I think I do), then effective management of systems of public service delivery looks a lot like effective management of individual people - set clear outcome goals but don't micromanage the process.

Well worth reading in full.

On private schools, Lant has this to say:

"You can get local control by increasing the number of private schools — I’m not advocating privatization as a solution, but those private schools are freed from being in a top-down bureaucracy, and in India and Pakistan, they do better with less resources."

Some of my best friends are knee-jerk leftists

I wrote a thing for the Guardian blog defending aid in support of private schools in developing countries. Which is very exciting because I've been reading the Guardian every day since I was 16. Some of the comments are a bit colourful, so for the record I feel I should burnish my lefty credentials (even though this feels really lame as it's exactly the kind of thing that annoys me when the likes of Goodhart and Collier do it before they go on to support mainstream Conservative party opinion).  

But for what it's worth, I started my lefty career when I was 6, when my "Dennis the Menace fan club says no Gulf war" poster made it to the local news. I went campaigning door-to-door for the Labour party when I was 8. I wrote to the Green party asking for a copy of their manifesto when I was 10. When I was 15 I vandalised the Conservative party billboard in my neighbourhood, and volunteered for a local Labour MP when I was 17.

I'm proud of having attended my local comprehensive school in Leeds. I'm proud that my fiercely liberal granddad sent my mum to the local comprehensive school on principle, instead of the more conveniently located selective school. I'm proud of my mum who was a school teacher for 20 years, and my aunt and uncle and grandparents, who all work or worked for the NHS (which yes, I'm also proud of).

I worry a lot about private schools in the UK, and the consequences for social mobility and segregation. 

So I'm not a natural supporter of private schools. But I care about evidence - and my reading of it is that there is a great potential to do good by experimenting with private sector service provision in education in developing countries. (Many other intelligent people, including several colleagues - none of whom are knee-jerk leftists - disagree with me, but thankfully none of them have yet accused me of "plain bullshit", "neo-con mantra", being a Mugabe-apologist, or a "twat.")

India fact of the day

In India, remittances are larger than the country’s earnings from IT exports.

From Dilip Ratha 

A naked man in a tie

My favourite description of the country came from Souleiman Youssouf, a 35-year-old Somalilander who lives and works in Canada but tries to visit every year. “Somaliland is a naked man in a tie,” he told me, in a vivid reference to the way the country spans extremes of development. Ageing nomads still walk the plains with their camels, but they can also call the US at cheap rates on the territory’s extremely competitive and successful mobile telephone networks. And although no other territory in the world recognises it, Somaliland strives to run itself as any other nation-state. It holds elections, passes laws and collects taxes - however meagre - and has developed an impressive clutch of commercial mobile phone, mobile internet and money transfer services.

From Katrina Manson's notes on her visit to the 6th Annual Hargeisa International Book Fair. My favourite short story about economics set in Hargeisa is here.

How to switch careers into international development

A 6-part guide from Rachel Strohm (formerly of IPA and other things):

1. What is development
2. What interests you
3. Building transferable skills
4. Unpaid internships
5. What to do if you can't go unpaid
6. CVs and cover letters

And whilst I'm on the subject - a plug for an exciting new job for a social science PhD to work with OPM and the University of Bath to develop better ways of integrating quantitative and qualitative methods in development policy impact evaluation.

Advice for new ODI fellows

Some assorted advice for this year's crop of ODI fellows who will be heading out soon (former fellows - what else should they know?).

1. Your main job (should) be translating economic theory and evidence into English. (see for example, Portes or Coats)

2. Your main job will actually be poring over spreadsheets.

3. Be nice and focus on building good relationships with your colleagues. 

4. You can probably give up on the idea of building much capacity.

5. But that's ok. The ODI fellowship is as much about gap-filling as capacity building. (As an aside, even with stratospheric levels of growth, poor countries will remain poor for a while. If you have 10% annual income growth but only start with $500, it takes 32 years to get to $10,000, the "rich country poverty line". Poor countries will need external assistance for a while. Worrying too much about the short-term sustainability of projects is over-rated. African success stories such as Botswana and Rwanda have relied heavily on external assistance over long periods).

6. Don't wear flip-flops to the office.

7. Don't take any crap about the fellowship. A 2009 review concluded that:

"it has spawned hundreds of careers in economic development as well as launched prominent scholars and distinguished civil servants. It had done so with very modest resources and a management that has stretched itself to fit and to cover, earning the praise of its Fellows, current and former, and the grateful recognition of its delivery of quality service by host governments. There is very little that needs to be done to maintain and sustain this successful partnership. What has been recommended in this review are simply steps to ensure its continuity and survival. There is no need to provide extended encomiums—the alumni, DFID and the satisfied client countries already said what needs to be said. The ODI Fellowship Scheme is a success."

How to quit your job in style

HT: Scott

South Sudan macro update

A friend writes:

"Sudan Tribune today reports that Sudanese Dinar is today at 8.2 to the USD in KRT, street, 4.4 official. SSP meanwhile at 4.something to the USD, street, and 3.2 official."

So whilst the Government of South Sudan continues to lose money to corruption through the fixed artificially strong exchange rate (last year Chris Adam and I estimated the cost to be around 12-15% of government spending), they aren't losing as much as North Sudan, who are really taking the piss.

And at least inflation seems to have stabilised this year after a huge increase in prices through 2011 and 2012.

Source: SSNBS

What will it cost to eliminate poverty?

Development Initiatives have a new report out today with, complete with some good-looking charts, reviewing the global picture of financing for development.

A couple of charts really stand out.

First this one, showing the depth of poverty. Ending "extreme" poverty - the 1.2 billion below $1.25 a day is feasible by 2030, but there are 5.2 billion living on less than $10 a day, which is roughly the poverty line in most rich countries. 

Second, this one, showing the level of per capita government spending. 82% of the world's poor live in countries with annual spending below $1,000 per person. I'm not so sure what to make of this. For those in countries with spending below $500, which looks like around half of the global poor, this puts paid to the notion that the poor all now live in middle income countries that should be funding their own social programmes without aid.

For those closer to the $1,000 mark, this is still really a pittance, but it's also more than enough to bring individuals above the poverty line with a direct cash transfer. How does it feel to live on less than $1.25 a day in a country where the government spends twice that much for you on public services?

Where has all the education impact come from?

Lant Pritchett wrote an important paper back in 2000 called "Where has all the education gone." Despite a big increase in schooling in developing countries, there had been little increase on average in productivity.

Now I feel like we have the opposite problem - evidence that going to school has all sorts of wonderful impacts transforming lives

(- saves lives
- improves child nutrition
- increases job opportunities
- reduces child marriage
- reduces early birth
- makes people more tolerant
- leads to economic growth
- leads to more concern with the environment)

alongside evidence that many kids never actually learnt anything at school.

What's the deal? Are the positive impacts driven entirely by the kids who did learn something (the average treatment effect on both learners and non-learners), or is there something special and intangible (non-cognitive skills and character?) which kids can pick up from just sitting in a school even if they don't pick up any reading skills?

Any evidence?

Do iPhones increase gender inequality?

DFID have just published a new "topic guide" (quick evidence review?) on low cost private schools by Claire Mcloughlin of the University of Birmingham.

This isn't a criticism necessarily of Claire, but I am struck by how strange it is that the focus of the debate leads with how private schools affect equity. We are talking about countries such as Nigeria and Pakistan with net primary enrolment rates of less than 75%. I struggle to see how it could be a bad thing in such a context if some parents choose to spend their own money on private schools for their kids, even if no poor parents could afford it and all girls were totally excluded. Doesn't that just mean fewer kids for the state sector to fund? Of course in reality the data suggests that private schools in many countries have roughly similar gender access as public schools, and many poor people (though perhaps not the very poorest) also access private schools. 

Of course when we are talking about aid or government-funded places at private schools then equity should be a key concern, but for privately funded places, who cares? Isn't this totally missing the point? Do we worry about the equity implications of the new iPhone 5s for access to smartphones in the UK (actually I shouldn't be so hasty, soon being smart-phone-less probably will be the official definition of relative poverty). And when did I become so conservative?