Tag Archives: development economics

the ingredients of development

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I am in the middle of writing a piece contrasting a subset of African and non-African dictatorships over the last half century. As most of you might know, quite a number of African countries have been mournfully commemorating celebrating 50 years of independence from European empires. Many of them, including the behemoth and perennial under-achiever that is Nigeria, have almost nothing to show for over half a century of self-rule. Disease, endemic poverty, general political and socio-economic stuntedness are what come to mind when one thinks of these places, and with good reason. Look at the latest UN HDI report if you think that Africa’s bad press is nothing but unfair afro-pessimism.

And keeping with the theme of development, here is a blog post that I really liked about Botswana, a country that many like to cite as Africa’s success story.

Lastly, a brief lesson on the Political Economy of Development.

the mdgs

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Since everyone is currently talking about the MDGs and how they may or may not be achieved on time here is a nice piece from Bill Easterly.

According to an Oxfam study, eliminating US cotton subsidies would “improve the welfare of over one million West African households – 10 million people – by increasing their incomes from cotton by 8 to 20 per cent”.

I may not always agree with Bill but I think his basic approach to development is spot on. Just like in most human endeavors (politics, economics, sports) systems based on human goodwill are bound to fail while those based on self-interestedness thrive. There is no magic bullet in development, but there is definitely a better approach than is currently being employed. Lets not forget that aid is supposed to eventually lead to self-reliance.

It is already clear that the goals will not be met by their target date of 2015. One can already predict that the ruckus accompanying this failure will be loud about aid, but mostly silent about trade. It will also be loud about the failure of state actions to promote development, but mostly silent about the lost opportunities to allow poor countries’ efficient private business people to lift themselves out of poverty.

Bono has a slightly less realistic more hopeful take on the progress towards achieving the MDGs.

blair commission on african poverty recommends more billions in aid

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The Blair Commission set up to find British solutions to African poverty has recommended that the Continent get more billions in aid. There is no doubt that Africa needs all the money it can get, aid cynics’ criticisms notwithstanding. But that money, if it ever comes, should come with new ideas.

Perhaps for a change the money slated for development programs should be channeled as credit to the nascent African middle class. I have previously criticized pro-poor development initiatives for their habit of merely keeping the poor afloat (Think of your average mother of six selling vegetables in a generic African slum). What Africa and its development partners need to do is channel the little development money it has in releasing the talent and aspirations of the middle class to create more jobs. This is not to slight Africa’s poor for lack to talent. It is a mere acknowledgment of the fact that it is the middle class that oftentimes has the education and connections to grow their small start-ups into businesses that create even more jobs.

And in other news, Kenya has struck commercially viable gold. The hunt for oil and gas in the north and north east of the country is still on. One hopes that all the exploration craze will be accompanied by an even greater craze when it comes to investing in Kenya’s human capital.

And yeah, I appreciate the irony in writing about foreign aid and Africa’s vast mineral wealth at the same time.

debating africa’s growth prospects

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The Economist has an interesting debate going on about Africa’s growth prospects. The consensus appears to be that structural factors – such as institutions, culture, colonial history and what not – are the main culprits in the tragic tale of African underdevelopment. I agree. Bad governance, the historical accident of colonialism which halted the natural processes of state formation, among other things such as historical low population densities and a culture that mystifies most things are what continue to deter African nations from realizing their full potential.

Gilles Saint-Paul argues that:

“most African countries are trapped at a “low-trust” equilibrium where basic property rights are not enforced and corruption is rampant. Essentially if I do not expect others to fulfil their side of the contract, it is rational for me not to fulfill mine, and transactions eventually disappear“

One of my favorite economists, Daron Acemoglu, adds that:

“The economic problems of African nations are a consequence of their postcolonial institutions, which are themselves the continuation of the precolonial institutions.“

But Lant Pritchett is quick to remind us of the folly of lumping all the sub-Saharan African countries together, pointing out the stark differences between places like Botswana and Somalia or Cote d’Ivoire and Mozambique.

More here.

William Easterly’s Burden

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William Easterly continues his great crusade against the development establishment. I like his pitch for spontaneous development, but I remain skeptical of his quick dismissal of the role of the state in African development for two reasons:

1. The rest of the world has a massive head start which means that if the African entrepreneur is to survive the state must be there to provide the relevant public goods and some minimal protection from foreigners.

2. Let us not forget that stable societies are those in which capital and politics have a symbiotic relationship. The realities of the political economy of development are such that the state – and current holders of political power – must be brought on board if real and lasting development is to be achieved.

Also, check out Blattman’s Blog.

quick hits

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Check out the mind-boggling disparities in maternal mortality rates around the world here.

In other news, Uganda’s AIDS success story may be unraveling. How sad.

if a tenth the charities out to help “africa” were any good ….

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A lot of money has been poured in Africa (to use a Kenyan phrase) since the 1960s. Most of it has gone down the drain without much impact. If a tenth of the aid effort in Africa were effective things would be very different. Instead you have a cacophony of aid effort without much coordination. Yes there are the many hospitals, schools and business projects that have improved millions of livelihoods, and we applaud them. But there are also bizarre projects – like giving rape victims cameras to record their ordeals in the Congo or this crazy idea to send a million shirts to Africa.  As Aid Watch aptly puts it, a lot of aid is never about what the people in this mythical place called Africa need but what people want to give – and oftentimes what they want to give is a function of their warped notion of what life is like on the Continent.

And in other news, Sierra Leone has seen the light. As I noted here two years ago, the country’s HDI indicators belong in a time long gone. It is therefore encouraging that the Sierra Leoneans have decided to take HDI matters seriously.

Development and how to achieve it

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A while back I argued for a move away form small scale, “pro-poor” development strategies to more robust development strategies aimed at economic innovation and large-scale job creation. This is not to say that micro-development should be neglected. What I am saying is that jua kali kiosks will not increase Africa’s per capita income to 10,000 USD. The most they do is enable people to cope without really changing their standard of living.

Alkags, a blog I just discovered, deals with this debate.

Aid watch also has videos from a conference at the Yale law school on development. Chris Blattman and William Easterly are some of the featured development experts. Blattman makes some interesting comments about micro-finance, industrialization (medium to large farms) and development.

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

china in africa: getting the right picture

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Here is a new blog on this by Brautigam. I attended her talk at Stanford and kind of liked the book.

I am glad that a consensus seems to be emerging that one-sided and blind China-bashing is not productive, especially with regard to Chinese involvement in Africa.

And in other news, what is Kagame up to? The man appears to be turning into a paranoid autocrat. It’s been 16 years since 1994 and about time he started being more open to constructive criticism.

the “brain drain” debate

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The first time I saw this paper/chapter presented at a workshop last year it left me with more questions than answers. I have since been convinced. The paper makes intuitive sense. That said, I am still a little uneasy with some of the implications of the argument. For one, providing education with a foreign labor market in mind may distract us from trying to find solutions to local problems. If we follow this route we may end up with a lot of government trained cosmetic surgeons ready to move to London or Paris but very few specialists in tropical diseases.

The minor objection cited above aside, I am all for exposure through immigration (and eventual return, of course). This might just be what it will take to undo the isolationist effects of the Sahara (from the Eurasian land mass) from centuries past.

More on this here

a link that i liked

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One more case for why we should think of development and democracy in terms of statist/institutional solutions and not do-gooder initiatives. The game should be all about getting states to do what they are supposed to be doing, and not helping citizens exit the state, thereby even weakening the accountability channels between citizens and the state. Strong states, regardless of their Polity Score (how democratic they are), are better than weak states.

And in other news I think it is time Kenya and the rest of the EAC signed a defense pact with Southern Sudan instead of playing this silly game. Southern Sudan is a natural ally for the five states and potential member of the EAC.

Happy New Year!

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Happy New Year to all of you out there.

Let’s start off the year by looking at the one thing that the Continent needs really badly: economic growth. Uganda’s New Vision reports that African business people have positive expectations for the new year. Responding to a survey by Africa Practice most of them believed that intra-continental trade as well as FDI would increase in the coming year. Perhaps most crucially, a plurality of those polled believed that infrastructure development – ICT and what not – would be more influential to business development than politics. For a very long time Africa’s governance challenges have retarded economic development. May be economic development might be the key that will incentivise good governance. Angola, Namibia and Kenya, to some extent, are the countries that may prove this prediction right in 2010.

2010 will also be a footballing year for the Continent. From January 10 – 31 Angola will host the 27th edition of the Africa Cup of Nations (CAN). May the best team win, and I hope none of the Continental heavyweights will pick up injuries because come June South Africa is hosting the FIFA World Cup. The Continent has good teams in the World Cup and this might just be the year that an African team wins the coveted FIFA World Cup Trophy.

And in other news, South African president – Jacob Zuma – just got married for the fifth time and is engaged to at least one other woman. I still stand by my previous comments on this matter.

development issues

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My promise to write a post on African development is almost becoming like Dr. Dre’s promise to release the Detox album. I promise it will come soon, after I settle on an opinion that is robust enough to withstand more than a few critiques.

For now we should be content listening to much wiser development experts – like Blattman, TN Srinivasan (the man who taught me intermediate microeconomics) and cynic in chief Bill Easterly.

A few years ago I used to conflate economic development with modernization. I thought that all it took to make vibrant economies in the global south was the importation of technology, material goods and ideas of governance from the more developed parts of the globe. But time has taught me that historical lock-in effects matter. The global south’s geography, historical poverty and social structures have created path dependencies that will take a lot of time to undo. This is not to say that we should give up on the idea of accelerated development. What I am suggesting is that as we do this we should have it in mind that certain things take time to change and that short-term failures disappear when you look at the long-term picture.

In other news, the conflict in Darfur has become less sexy and so it is no longer all over the news. But Darfurians are still suffering. The same applies to the Congo. Here is yet another reminder that the madness in the land of Mobutu continues unabated.