A note on economic development

“I think we have gone too far in the pro-poor direction…… we don’t necessarily have trade-offs. Factories are pro-poor.” Chris Blattman, Yale University

I am on record as not being too enthusiastic about “pro-poor growth” as it is currently practiced. Loans to the poor and other approaches that completely bypass those with a higher probability of succeeding at creating big business – the educated and middle class – will at best only keep the poor afloat and at worst divert resources from much needed long-term investment. I am not saying that the educated have a monopoly on entrepreneurship. All I am saying is that what we want is to create sustainable jobs. This requires scale. And scale comes with big business and industry.

Blattman neatly summarizes this point:

The difference between a country with $1,500 and $15,000 of income a head a head is simple: industry. All the microfinance and microenterprise programs in the world are not going to build large firms and import technology and provide most people with what they really want: a stable job, regular wages, and a decent work environment.

More on this here.

Liberian politics gone awry

Scholars of historical institutional economics place a lot of emphasis on cognitive states and beliefs about how the world works as central to understanding the evolution and persistence of good institutions. Countries that have emerged out of abject poverty also happen to be those that managed to harness technology and rational-scientific knowledge for the public good.

It is therefore disheartening to read that in Liberia politicians engage in acts that belong in the pre-modern era. Whether they do it merely to instill fear in their opponents or actually believe in what they do is secondary. These acts are simply intolerable.

The Economist reports:

In a case dating from March last year, due to come to court soon, a pregnant woman and her unborn baby were killed and body parts taken. Vials of blood were reportedly found in the house of a senior official in Maryland, a south-eastern county where superstitious beliefs are strong. But reports of such killings come from all over. And traditional “heart men” now include criminals who trade body parts for cash.

Liberia’s long civil war made such things seem less gruesome. In 2008 Milton Blahyi, a former warlord, admitted to eating children’s hearts before going into battle. Along with wearing female wigs and going naked, the practice was believed to bring victory.

More on this here.

A related story from last year can be found here.