Tag Archives: economics

A note on economic development

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“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.

I like Hayek too

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OK, I have to admit, I am one of those who read “The Road to Serfdom” and totally loved it. Hayek was spot on about the folly of planned economies. The markets are not perfect. But having imperfect markets beats planned economies on any day. We just have to provide a reasonable amount of regulation and provide social safety nets that take care of those who end up taking one for the team because of the dynamics of the free market.

And that is why I thought this post by Easterly was kind of neat.

I also found this post kind of interesting and to be an important part of the debate on the viability of certain African states. I am not into the whole idea of blaming colonial “arbitrary” borders for holding Africa back. The fact of the matter is that Africa has been held back by Africans like Samuel Doe, Mobutu, Emperor Bokassa, Sani Abacha, Idi Amin, Omar al-Bashir and other crazies of their ilk. That said, I also think that certain states should either be split up (Nigeria, DRC, Sudan) or absorbed into other states (most of the Sahelian states. )

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.