TOMS impact evaluation finds zero to negative effects in El Salvador

This is from the Economist:

The first of two studies found that TOMS was not wrecking local markets. On average, for every 20 pairs of shoes donated, people bought just one fewer pair locally—a statistically insignificant effect. The second study also found that the children liked the shoes. Some boys complained they were for “pregnant women” and some mothers griped that they didn’t have laces. But more than 90% of the children wore them.

Unfortunately, the academics failed to find much other good news. They found handing out the free shoes had no effect on overall shoelessness, shoe ownership (older shoes were presumably thrown away), general health, foot health or self-esteem. “We thought we might find at least something,” laments Bruce Wydick, one of the academics. “They were a welcome gift to the children…but they were not transformative.”

More worrying, whereas 66% of the children who were not given the shoes agreed that “others should provide for the needs of my family”, among those who were given the shoes the proportion rose to 79%. “It’s easier to stomach aid-dependency when it comes with tangible impacts,” says Mr Wydick.

For a litany of criticisms of TOMS before the study see here, here, and here. The original study is available here.

Also, would anyone ever think that donating shoes, or even mining hard hats, to rural Kentucky would be “transformative”?

Anyway, huge props to TOMS for daring to scientifically study the impact of their ill-advised in-kind aid initiative.

Pepinsky On Identity and Politics

The whole post is worth reading here.

Here is an excerpt:

My hunch is that the next big conceptual move for political economy is to take identity seriously. The task for political economists now is to integrate identity into our theoretical architectures as a conceptual primitive rather than as a nuisance, a behavioral distraction, or as merely a consequence of something else.

[If you are reading this and pounding the table, saying “I’ve been doing this for years,” please bear with me. I recognize that scholarship on identity and political economy has a long history. I am proposing that we need to do it more, and rather differently.]

What would this look like? Take, for example, the literature about preferences for economic integration. One view holds that people’s preferences are a function of their economic interests: in the simplest Stolper-Samuelson world, low skill workers in advanced economies should oppose trade, and high skill workers should favor it. In a world in which ideas are foundational, individuals favor trade because they have learned (or come to believe in) a cosmopolitan worldview in which trade is good—they possess a causal belief about what trade does. In a world in which identity matters, people oppose trade because they are part of a community that opposes trade.

The first thing to observe about this identity-based explanation is how vacuous it seems. “One does X because one is an X-doer” is infinitely generative claim, but that is because it is nearly tautological. Here is a more pointed way to think about identity in political economy. When people search for information about what they should do, how do they go about it? One view is that they consider costs and benefits, although not necessarily in a materialist or egoistic way. Another view is that they consider their existing beliefs about how the world works, and then try to apply them by analogy. The third is that they look for cues among the beliefs and actions of people whom they consider to be like them. That third possibility is an argument for identity in political economy.

A possible avenue for methodological advancement here would be to treat identity as encompassing a non-transactional political relationship between principals and agents, but with a lot more emphasis on what elites do. Materialist models of politics focus on what politicians give voters. Including identity would simply expand the scope of rewards to include identity affirmation as a central part of the principal-agent relationship (most current works relegate identity to the world of residual psychic benefits of having a co-ethnic or co-partisan in power).

One logical implication of this conceptualization is that elites (agents of voters) have loads of arbitrage opportunities under identity politics — and will likely under-provide populist promises of public goods and services.

By peddling identity politics, populist politicians can shirk on the delivery of real material benefits for their supporters; which implies further upward redistribution. Politicians will grant their voters honor and respect (by, for example, turning a blind eye to racists and other “anti-PC” movements) and do little else in terms of pro-poor policies.

In short, elites stand to gain the most in a world of identity politics.

Old Habits Die Hard: Rio Tinto allegedly bribed government officials in Guinea

Regular readers may recall that in Simandou Guinea has one of the richest iron ore deposits in the world; and that it is a development project that I have been following for a while.

You may also recall the infamous story of how Israeli tycoon Benny Steinmetz paid nothing for exploration rights in a half of Simandou, proceeded to invest about $160m in developing the mine, only to flip it a couple of years later for $2.5b. The Brazilian mining giant Vale was the unfortunate victim of Steinmetz’s scheme.

According to The Intercept:

An investigation by the current government of Guinea found that a shell company controlled by BSGR paid at least $2.4 million to Mamadie Touré, a wife of the former dictator [Lansana Conte], in return for her help in acquiring the rights to the mine for BSGR. Earlier this year the government annulled BSGR’s stake in the mine, saying the firm had obtained it through corruption.

Others on the payroll included then Minister for Mines, Mahmoud Thiam, who preferred to spend his earnings on a Lamborghini, an apartment in Manhattan (%1.5m), and an estate in Dutchess County ($3.75m). All paid for in cash. After the death of President Lansana Conte and the election of Alpha Conde, the government of Guinea successfully repossessed the mine from Vale and vowed to clean up the mining sector.

But old habits die hard.

It now emerges that President Alpha Conde, who successfully managed to get the illegally acquired half of Simandou, was himself allegedly paid about $10.5m in bribes to secure Rio Tinto’s rights to the other half.  May be I am too naive, but are these side payments enough to give away billions of dollars worth of value? It is sad enough that Conde may have taken the bribe. But it is doubly disappointing that his price was so low.

Why don’t people like Conde and Thiam think of setting up their own mining companies, or contractors to the global giants?

How does one begin the process of inculcating a sense of an encompassing interest in an otherwise rapacious elite?

Here is the story from the FT:

Rio Tinto’s lawyers uncovered more than a year ago internal emails about a questionable $10.5m payment to a consultant, but the mining company did not alert law enforcement authorities and investors about the matter until last week. The Anglo-Australian group said on November 9 that it had notified authorities after discovering emails from 2011 that referred to the payment to the consultant, who helped head off a threat to Rio’s claim to the giant Simandou iron ore project in Guinea.

In the emails, seen by the Financial Times, Alan Davies, the executive in charge of Simandou, discusses with Tom Albanese, then chief executive, and Sam Walsh, then head of iron ore, paying a $10.5m fee to François Polge de Combret, a former top French banker and classmate of Guinea’s president. Following an internal inquiry begun in August, Rio said last week that it had referred the matter to law enforcement authorities in the UK, the US and Australia. The company now faces years of scrutiny and the risk of large fines if it is found to have broken anti-corruption laws.

In another section:

The dispute over Simandou dates back to 2008, when the Guinean dictator of the day stripped Rio of the rights to the northern half of the project and handed them to BSG Resources, the mining arm of Israeli diamond tycoon Beny Steinmetz’s family conglomerate. BSGR went on to agree a $2.5bn deal to bring in Vale of Brazil as its partner.

In 2011, Rio secured its claim to the remaining half of Simandou with a $700m payment to the then new government of President Alpha Condé — a deal which, the emails indicate, Mr de Combret helped to facilitate. The ex-Lazard banker declined to comment.

Is China ready for state-building duties?

This is from the Journal, reporting on the recent deaths of Chinese peacekeepers in South Sudan:

Inside China’s government, differences have emerged about how to use the military overseas, said people familiar with the discussions. The prevailing view in the foreign ministry, they said, is that China should rapidly expand peacekeeping activities to show global leadership, as Mr. Xi demands.

Many military commanders, they said, by contrast want to move more slowly, conscious of their troops’ lack of experience and sensitive to domestic and international criticism.

China’s foreign ministry declined to comment. A senior defense official denied there were differences within the government.

The tragedy speaks to a pillar of Mr. Xi’s political agenda. Last year, he pledged to build an 8,000-strong standby peacekeeping force, adding to 2,600 Chinese deployed today. China is the second-biggest funder of U.N. peacekeeping after the U.S. and the biggest troop provider of the five permanent Security Council members. U.N. insiders said China is lobbying for one of its officials to head the U.N. peacekeeping office next year.

This is the all-important paragraph:

One of Mr. Xi’s goals is to protect the nation’s expanding global interests and citizens abroad. China’s leaders were “stunned” by the deaths in Juba, said one senior Western diplomat involved in discussions with China on South Sudan. “They’re fast realizing you cannot be a commercial giant without being an imperial power in some way.”

If China follows through on Xi’s dreams, will Chinese interventions and state-building efforts be any different than what the EU and the US are already doing? Does China really believe that an 8,000 strong standby force will be enough (even just for South Sudan)?

Also, this anecdote suggests that China will need to build a robust pension system before it can deploy large numbers of troops in dangerous hotspots abroad:

The cohort comprises mostly children raised under China’s one-child policy, so fatalities are likely to leave parents with no one to support them in old age.

Quick Thoughts on President Donald J. Trump and U.S. Foreign Policy in Africa

The Republican Party will, for the first time since 2006, control all branches of government. That means that the only institutional speed bump faced by Republican policymaking will be parliamentary rules in the Senate. But even then there is nothing to stop Republicans from going nuclear and rewriting the rules with a view of limiting the Democratic Senators’ capacity to stall the legislative process. If we’ve learned anything from the last eight years is that the more unconventional and anti-institutionalist wing of the Republican party has a lot of power.

Which means that the institutional expression of American politics over (at least) the next two years will depend A LOT on moderate institutionalists within the Republican Party.

So what does this mean for U.S. foreign policy in Africa?

  1. Power Africa, PEPFAR, AGOA, MCA, and other aid initiatives are likely going to be on the chopping block. There will likely be a lot of money for security, but those will largely be channeled through AFRICOM and may not be so great at achieving the same outcomes as the normatively preferable non-security development assistance.
  2. U.S. Exports to Africa may also see a decline. The Republicans do not like the EXIM Bank. The EXIM Bank helps finance U.S. exports to Africa. In theory President Trump might see the EXIM Bank as good for U.S. companies like Boeing. But this will only make sense if Boeing is still able to compete with Airbus after “it brings the jobs back home” (quick aside, Airbus is in Europe, where the French and the Germans will vote soon, so there is that….)
  3. Democracy promotion will see a rollback. President Trump is likely to go back to the old-fashioned purely interest-based engagement with foreign governments. This will be a sucker punch against democracy activists everywhere. Expect more term limit violations. The so-called democratic recession may finally arrive.
  4. A few gold producing countries — Ghana, South Africa, Tanzania and others — will benefit from the rush to gold occasioned by (hopefully) short-term economic uncertainty. Other commodity producers will be hit hard by global economic uncertainty. I would really hate to be the Finance Minister of Nigeria, Zambia, or Angola right now.
  5. Lastly, U.S. foreign policymaking through the IMF, the World Bank and the UN will be less stable. All the potential picks to head the State Department are on record as being not too enthusiastic about these multilateral institutions.

It’s not all doom and gloom though.

On balance, Republican foreign policymakers may actually achieve better outcomes than Democrats in Africa (as I think is the case over the last two decades). Less moralizing, they may focus on hard-nosed self-interested engagements — via trade for example — that are, on balance, good for Africans. Less handholding may even force African governments to realize that they are on their own, especially as Europe recedes inward as well. It may also force reformist pockets on the Continent to focus on feasible solutions to general problems of political and economic underdevelopment that are consistent with their domestic political economies; rather than constantly chasing aid dollars and euros. Such developments would actually enhance political development in such African states.

Even the potential escalation in the global rivalry between US and China (and possibly Russia) might be good for Africa. Everyone is gonna need allies in their corner for fights at the UN (of course conditional on African policymakers being strategic, rather than acting as mere water carriers for global powers).

Of course the wildcard in all of this is whether the right people will step up to the plate and agree to serve in a Trump administration.

Here at the Africanist Perspective the official line is that if asked to serve, and if you have the knowledge and expertise, please go ahead and join the administration. President Donald Trump’s Secretary of State and head of USAID will need you.

U.S. allies around the world need you.

India scraps high denomination notes

India’s Economic Times reports:

In a move to curb the black money menace, PM Narendra Modi declared that from midnight currency notes of Rs 1000 (Kshs. 1500) and Rs 500 (Kshs. 750) denomination will not be legal tender. People can deposit notes of Rs 1000 and Rs 500 in their banks from November 10 till December 30, 2016.

…. However, he said that all notes in lower denomination of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 and all coins will continue to be valid.

This is an interesting move that will likely improve the Indian government’s ability to monitor cash movements in the economy. A while back Kenya’s central bank introduced rules requiring paperwork for any cash transaction above US $10,000. India’s move goes well beyond this.

Here is Tyler Cowen’s reaction over at MR:

This is a big deal as these notes account for at least 80% of all cash in circulation! Ken Rogoff has argued for eliminating cash but this doesn’t seem to be a move in that direction since the notes will be replaced with new Rs 500 and Rs 2000 notes. Rather it seems to be a wealth tax on the black market. Old notes can be turned into a bank for replacement so ordinary people won’t lose money. People in the black market, however, probably have a lot of cash that they are unwilling to turn into a bank because they don’t want to reveal their wealth. Imagine walking into a bank and depositing a million dollars in cash–that is going to create a record that the tax authorities can follow. The wealth tax on the black market interpretation is consistent with the surprise–if people knew that this was coming they could have laundered the money but that is going to be more difficult and costly now.

It’s impressive that a government could pull off this level of secrecy. Good for Modi’s image as competent, uncorrupt and technocratic. Indians are calling it a “surgical strike on black money” which is the imagery Modi wants. But what will happen tomorrow when people don’t have enough cash to buy goods and services?

Would the Kenyan government be able to successfully pull off a surprise policy move like this? Certainly the country would probably benefit given all the bags of cash floating around.

War on Terror, War on Poverty?

Those of us who fight global poverty share a guilty secret: our cause got more attention and resources after September 11, 2001. It soon became clear that there would be an alliance between the “War on Poverty” and the “War on Terror.”

But this boost for the cause of the world’s poor came at a price for the values of global humanitarian efforts—the loose alliance of private charities, international organizations, and government aid agencies that give aid to poor countries. The connection between the wars on poverty and terror had two unintentional negative consequences that are becoming more evident as time passes. First, it deepened negative stereotypes about the poor that contribute to the current wave of xenophobia against refugees and immigrants in the US and Europe—attitudes suggested by the Brexit vote and the rise of Donald Trump and other far-right leaders. Second, in justifying support for dictatorial regimes, the connection discredited Western advocacy of the ideals of democracy worldwide. We have Trump expressing admiration for authoritarian rulers like Vladimir Putin and in some ways aspiring to be an autocrat himself.

….. As a result the US and UK governments have increased foreign aid to fight the poverty that was allegedly the root of terrorism. The same aid cemented alliances of the US and UK with frontline states in the War on Terror. The unintentional effect was to encourage a stereotype of poor people as terrorists. One well-known economist advising US and UK policy was Paul Collier, whose book The Bottom Billion (2007) conveyed what has become typical of the image of poor countries: “The countries at the bottom coexist with the twenty-first century, but their reality is the fourteenth century: civil war, plague, ignorance.”

That is William Easterly making the case for an end to “the alliance of the War on Poverty with the War on Terror.”

Read the whole thing here.

Is Africa water scarce?

Not really. At least according to this piece from the Economist.

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The problem has always been getting the water to the people. Too bad good old-fashioned water and sanitation cannot be leapfrogged.

 

State of Capture: Corruption in Jacob Zuma’s South Africa

This is from Quartz Africa: 

The 355-page report detailing corruption in South Africa’s ruling party offers one rare uplifting moment. In the report, deputy finance minister Mcebisi Jonas reveals more details of how he turned down an offer by the powerful Gupta family of 600 million rand (about $44 million) to be the country’s finance minister.

Jonas, in an interview with Thuli Mandonsela, the country’s former anti-corruption chief who spearheaded the report released today, said he had agreed to meet with president Jacob Zuma’s son Duduzane Zuma on Oct. 23 last year, a few months before then finance minister Nhlanhla Nene was dismissed, kicking off a hailstorm of corruption allegations against the president.

Jonas met the younger Zuma at the Hyatt Regency hotel in the Johannesburg suburb of Rosebank where Zuma asked if they could move to a more private location for discussions “with a third party.”

Jonas was then taken to the Gupta compound in the suburb of Saxonwold where they were joined by Ajay Gupta, the eldest of the Gupta brothers, who briskly informed the deputy minister that “they had been gathering intelligence on him and those close to him.” Gupta informed Jonas that they were going to make him minister of finance, to which Jonas said that only the president could make that decision.

You can download the full State of Capture report here (pdf).

For more on the history of corruption in South Africa see here.