Does growth always depend on natural resources?

George Monbiot writes:

"Economic growth is an artefact of the use of fossil fuels."

Is this right? Actually most economists think that growth is driven by ideas and innovation not raw inputs. This 3 minute video by Deidre McCloskey provides a short economic history of growth since the beginning of time.

Can this really be true? Below are two charts showing energy consumption and GDP per capita from 1970 to 2012. In the UK, whilst our per capita GDP has doubled, our energy consumption has barely moved, and actually slightly decreased.

Of course there is a caveat to this story, and its a pretty big caveat. Whilst growth at the technological frontier (in advanced economies) can only be driven by innovation, in developing countries further away from the frontier, catch-up growth is possible by pure investment and copying existing technologies (such as, er coal-fired power plants). So whilst rich countries don't necessarily need to increase their overall energy consumption to grow, developing countries almost certainly do.

So the question for rich environmentalists is: was there one rule for us and another for everyone else? Or is it actually incumbent on us to invent some better technologies for the world to copy, rather than expecting them to choose between polluting the environment (like we did) or continuing to live on $3 a day for the rest of their lives?

DevBalls - Exposing the absurdities of the aid industry

Someone at DFID seems to have had enough.

"DevBalls is an online space for comment on the international development aid industry. 

DevBalls is here because the aid industry has - functionally and morally - lost its way. And those who should hold it to account - the media, researchers, politicians - don’t. DevBalls is here because aid can only become better when its absurdities and hypocrisies are open to view. 

DevBalls is compiled by a group of aid professionals who control its content. We welcome relevant contributions sent to [email protected]. Anonymity is guaranteed."

The blogosphere has been pretty light on cyncial scorn since the demise of Bill Easterly's AidWatch, so DevBalls looks like one to watch. Won't be comfortable reading for DFID or ODI or ASI.

The origins of "the dismal science"

"This viewpoint infuriates some critics of economics, to the extent that it earned the famous nickname of “the dismal science”. Too few people know the context in which Thomas Carlyle hurled that epithet: it was in a proslavery article, first published in 1849, a few years after slavery had been abolished in the British empire. Carlyle attacked the idea that “black men” might simply be induced to work for pay, according to what he sneeringly termed the “science of supply and demand”. Scorning the liberal views of economists, he believed Africans should be put to work by force."

That's Tim Harford.

Wikipedia has more:

"However, the full phrase "the dismal science" first occurs in Carlyle's 1849 tract entitled Occasional Discourse on the Negro Question, in which he was arguing for the reintroduction of slavery as a means to regulate the labor market in the West Indies: 

Not a "gay science," I should say, like some we have heard of; no, a dreary, desolate and, indeed, quite abject and distressing one; what we might call, by way of eminence, the dismal science. 

It was "dismal" in "find[ing] the secret of this Universe in 'supply and demand,' and reducing the duty of human governors to that of letting men alone." Instead, the "idle Black man in the West Indies" should be "compelled to work as he was fit, and to do the Maker's will who had constructed him."[4]"

In which case I'm proud to be dismal.  

Do teachers skip class because of low pay?

Teacher absenteeism is a huge problem in developing countries, wasting up to a quarter of all spending on primary education in developing countries.

The 2014 Education for All Global Monitoring Report, which was launched in London last week, puts the problem mainly down to the low pay and poor working conditions of teachers.

"While teacher absenteeism and engagement in private tuition are real problems, policy-makers often ignore underlying reasons such as low pay and a lack of career opportunities. ...  Policy-makers need to understand why teachers miss school. In some countries, teachers are absent because their pay is extremely low, in others because working conditions are poor. In Malawi, where teachers’ pay is low and payment often erratic, 1 in 10 teachers stated that they were frequently absent from school in connection with financial concerns, such as travelling to collect salaries or dealing with loan payments. High rates of HIV/AIDS can take their toll on teacher attendance."

The report includes this chart, showing that in a handful of countries teachers earn below $10 a day (which they have decided is not enough to live on).

Which seems jarring when the same week there was a conference on the economics of education in developing countries, where much of the literature is focused exactly on this issue of teacher absenteeism, and finds very little evidence that low pay is the main factor (as opposed to, say, weak or non-existent systems of accountability). In India it is well documented that whereas absenteeism is roughly similar in public and private schools, teachers in public schools are paid more than 5 times as much as private school teachers.

(See for example this chart from data from Singh 2013, or similar from Kremer et al 2005, Alcazar et al 2006 in Peru, or African data here)

Harry Patrinos of the World Bank writes:

"There is very little evidence that higher salaries lead to better attendance, however. Contract teachers have the same or higher absence rates. Compared to public school teachers, though, private school teachers are absent less, even though contract and private school teachers alike take home much less pay than their regular civil service public school teacher counterparts."

As little as teachers might make in some countries, they are still doing well relative to most other people. In many countries public primary school teachers are the 1%.

I thought I'd take a quick look at the data presented in the GMR and see what those teacher salaries are presented as a % of GDP. In OECD countries, average teacher salary is roughly around the same level as GDP per capita. In African countries, the average teacher salary is 3 - 4 times GDP per capita.

Karthik Muralidharan summarised the state of public schools in India as facing two problems; governance and pedagogy. This probably generalises to much of the developing world. What this GMR comes across as doing is focusing almost entirely on the pedagogy problem, and sweeping the governance problem under the carpet (receiving roughly 10 pages attention out of a 300 page report). Perhaps this is a welcome counterbalance to prominent World Bank research which focuses much more on the governance problem. But really shouldn't a major flagship state of the sector report aspire to properly tackle both? Of course fixing the pedagogy problem means working with teachers to improve their capabilities and not demonising them or calling them all lazy slackers. But neither can we just ignore the reality of skiving on a massive scale (or: Don't hate the player, hate the game). 

You won't believe these 8,000 children who are actually going to starve to death today

I'm trying to write a pithy summary or pick a smart quote from Abhijeet Singh's new blog about malnutrition up on Ideas for India but it's hard not to just be deeply depressed when thinking about malnutrition. We apparently live in the 21st Century where flying robots and self-driving cars are real things, yet we aren't collectively bothered enough to do anything about the 8,000 children who starve to death every single day (three million a year). And that's partly because as humans we're more interested in what is interesting than what is true or what is important. 8,000 children starving to death everyday is just something that happens. It isn't new or counterintuitive or surprising.

So Abhijeet's paper is interesting and tells us something different, which should be applauded really just for finding a new angle to bring some attention to one of the most important but dull outrageous injustices there are. The conventional wisdom is that stunting in the first thousand days of life is irreversible. Abhijeet presents evidence to the contrary that giving children a meal every day at age 5 can fully make up for malnutrition due to a drought at age 1. So the policy conclusion is what - don't write-off malnourished children after a thousand days? Or how about maybe how on earth are we still letting children starve in the first place? Enjoy your lunch.

What do (cutting-edge, leading, academic) development economists do?

Apparently not what developing country policy-makers want to know about. Jeffrey Hammer has a fairly damning report from the recent IGC conference in Lahore on the World Bank blog. The IGC funds research by many of the world's top development economists, and apparently none of them are answering the kind of policy questions that were posed at the conference by the Chief Minister of Punjab, Pakistan (a state of more than 100 million people). He wanted to know about how to allocate resources across sectors (which requires value for money and cost-benefit analysis, not just impact evaluation), and how to raise more revenues. What he got was precisely identified studies on the impact of policy tweaks, without any costing. 

"The Chief Minister posed serious questions that have traditionally been the bread and butter of the economics profession. Unfortunately, we are not even trying to answer them any more. The specific question was “Should I put more money into transport? Infrastructure (power, roads, water)? Law and order? Social services? Or what? And where am I going to get the money?” What questions could be more solidly part of the core of economics than these? Unfortunately none of these were even remotely the focus of the “evidence-based” policy making discussed. 

Almost all of the cases analyzed were single, simple policy “tweaks” that were, first of all, isolated from the broader market context in which they occurred and, second, had no conception of opportunity cost - what we would have to give up to pursue these things?"

What do development economists do?

A series of youtube interviews profiling the careers of 6 development economists; Angela Ambroz (IGC, former ODI fellow & JPAL), Luca Pellerano (OPM and IFS), Peter D'Souza (DFID), Sarah Lilley (Save the Children), Henry Mphwanthe (ODI fellow), and Aarushi Bhatnagar (Phd student and World Bank consultant).

The new childcare subsidy in the UK

The IFS:

"Today’s announcements indicate that the Government’s main motive is to help parents move into work. As we pointed out in the IFS 2014 Green Budget, we know remarkably little about the impact of the policies to support childcare that have been introduced in England in recent years. And there is no consistent evidence from other countries that childcare support has large effects on parental labour supply. While today’s announcements bring welcome simplifications to the new Tax-Free Childcare scheme, and an increase in generosity that will certainly be welcomed by families on Universal Credit using childcare, and better-off families who spend more than £6,000 a year on childcare, the extent to which it will deliver its intended goals is essentially unknown."

and Chris Dillow:

"It's fitting that Nick Clegg should have announced an increase in the state subsidy for childcare, because the policy is a sanctimonious front for something that is inegalitarian and economically illiterate."

What should DFID do internationally (i.e. not in client countries)?

From the Development Studies Association:

DFID is discussing what their priority international actions should be over the next 2-5 years and beyond. By international actions they mean actions that use their spending, effort and influence to cause something to happen outside the borders of the intended beneficiary countries, but which indirectly benefits them. This broad definition includes global public goods, such as international financial regulations or a global climate deal; but also spending to alleviate problems with high spillover effects across many poor countries such as via peacekeeping efforts or communicable disease; or actions which improve the actions functioning of global markets. In short, they aim to refresh their possible international policy agenda with new or better ideas. 

Stefan Dercon has been asked to lead an initial consultation both within and outside DFID to set up a focused set of priorities and to ensure that DFID concentrates on those international actions that are both the most important for poverty reduction and where DFID could have the most impact.Please download a short note that sets out the task and the context.

Development as... a better postal service

Francis from Oregon writes:

"I am a young postcard collector working on a geography project. For this project, I would really love a postcard from Sudan or South Sudan. 

Do you know of anyone who would be happy to send me one? I would be so happy and grateful for your help. 

Of course in return I would be more than happy to send the sender a beautiful postcard (or anything else they might need) from Oregon in the U.S. 

Francis from Oregon http://the-geo-nerd.blogspot.com"

So if anyone in South Sudan wants a penfriend, there you go. All I can offer is some post-related development marginalia.

First, the speed and reliability with which post services deliver letters is a reasonably reliable indicator of state capacity more generally. Countries which are members of the International Postal Union agree to return any misaddressed letters to the sending country within 30 days. So a team of economists sent letters from the US to fictitious addresses in 159 countries (10 letters per country), to see how fast they came back. The results tally pretty well with expectation, Finland and Norway sent them all back, Sudan and Somalia sent back none. And the time it took correlates with other measures of government capacity. They go on to make an important point:

"we used these measures to argue that an important reason for poor government in developing countries is not corruption or patronage, but rather the same basic low productivity that plagues the private sector in these countries as well.   Such low productivity is related to inputs and technology, but also to management.    In some ways, it is not surprising that a measure of the quality of government constructed to be free of political influences in fact correlates with standard determinants of productivity; yet it is still important to recognize that not all bad government is caused by politics."

In addition to furthering our understanding of governance and state capacity, post offices play an important immediate role in providing financial access in many countries, particularly for the poor, the less educated, those not working for a wage, and those living in rural areas.

Coach Zoran and his African Tigers

A new documentary, about the first ever manager of the first ever South Sudanese national football team. His name is Zoran, and he swears like a trooper. It's an entertaining story, filmed in 2012 and set against the backdrop of some beautiful footage of Juba amidst the excitement and optimism of independence (in 2011). Particularly poignant due to the recent return to conflict.

It's available on the BBC iPlayer for the next month, watch it while you can (there are free VPN solutions for those not in the UK).

The political economy of why flights are so expensive in Africa

Andrea Goldstein of the OECD emails an old but very interesting paper (ungated here) in response to my post on the AfDB blog about African Airlines.

He makes two points and offers two recommendations

First, in the experience of OECD countries, "liberalisation delivers in terms of quantity, quality, and cost of air transport."

Second, what allowed liberalisation to take place was a political dynamic, driven by interest groups (trade associations and organised consumers) pushing for reform.

So what can or should the OECD do to support policy reform?

One, establish an international authority capable of enforcing safety standards (the ICAO is an obvious candidate).

Two, aid could be used to accelerate the restructuring and privatisation of African airlines.

Neither of these address the issue of opening the skies, which is down to African governments, and African consumers and trade groups to lobby for.

Development as... no measurable increase in happiness

Recent Chinese economic growth has led to half a billion people being lifted out of poverty, without doubt just an amazing wonderful story. The poverty rate halved in just over a decade. Human development - measuring not just income but also health and education, has also leapt.



And happiness? Nothing. No change at all. Maybe a bit of a drop. Measured across three different surveys. Chew on that one.

Data from a new CSAE working paper by John Knight and Ramani Gunatilaka. 

Why are there so few blogs by British academic economists?

In the US, to name just a few, you have

Mankiw
Krugman
DeLong
Acemoglu/Robinson
Becker
Thoma
Cowen/Tabarrok
Easterly
Blattman
Rodrik
Landsburg
McKenzie/Ozler et al
Caplan

In the UK I count

Simon Wren-Lewis
Henry Overman
Danny Quah
Matt Collin

Hypotheses:

1. The bandwagon effect - Mankiw and Krugman are really high profile and have been blogging for years - when the leading textbook author and a Nobel prize winner are blogging then its probably ok (although this bandwagon effect could also effect UK academics)

2. Differences in administrative/teaching burdens?

3. A selection effect - in the UK terminal masters programmes are more common, so natural writers quit before then complete a phd and get sucked into academia

4. A simple quantity effect - some fixed % of academics are likely to be interested in blogging, and there are just many more top economists in the US than the UK (about 6 times more according to this list).

What am I missing?