Tag Archives: india

The earth might be getting greener

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This is from NASA:

greening.png… the greening of the planet over the last two decades represents an increase in leaf area on plants and trees equivalent to the area covered by all the Amazon rainforests. There are now more than two million square miles of extra green leaf area per year, compared to the early 2000s – a 5% increase.

“China and India account for one-third of the greening, but contain only 9% of the planet’s land area covered in vegetation – a surprising finding, considering the general notion of land degradation in populous countries from overexploitation,” said Chi Chen of the Department of Earth and Environment at Boston University, in Massachusetts, and lead author of the study.

China’s outsized contribution to the global greening trend comes in large part (42%) from programs to conserve and expand forests. These were developed in an effort to reduce the effects of soil erosion, air pollution and climate change. Another 32% there – and 82% of the greening seen in India – comes from intensive cultivation of food crops.

H/T Max Roser

What do poor people think about direct cash transfers?

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Cash is great: more private consumption is better than less.

But societies organize out of poverty — through the provision of vital public goods and services. And low-income people know that.

This is from Khemani, Habyarimana and Nooruddin over at Brookings:

Screen Shot 2019-04-08 at 11.28.30 PMBuilding on prior work, we designed our survey questions to elicit views by presenting trade-offs: If the budget were spent on direct cash transfers targeted to poor people, it would come at the expense of other kinds of spending. Two different trade-offs with targeted cash transfers were presented in the allocation of (a hypothetical) additional budget for the block, a key local administrative unit in India. Respondents were told that since the (hypothetical) additional budget would be limited, the cash would come at the expense of either public health and nutrition services for children in their block or improving the quality of roads.

Of the approximately 3,800 respondents, only 13 percent chose cash if it came at the expense of spending to improve public health and nutrition (preferred by 86 percent of respondents). In contrast, if the cash came at the expense of improving roads throughout the block, the number rises to 35 percent of respondents choosing cash. These percentages are the same when we restrict the sample to respondents with little or no education, or to those who belong to historically disadvantaged caste groups. That is, the poor and less educated are overwhelmingly choosing public health over cash.

Read the whole this here.

Rural Bias in India?

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We all know about the phenomenon of urban bias. But in India, there appears to be strong political incentives for rural bias.

This is from Bloomberg:

It’s an election year in India, with the world’s largest polls expected in the spring. The focus of politicians is, as usual, on farmers and rural areas and competitive pandering to both — hardly surprising in a country that considers itself a nation of villages.

However, this narrative has one major flaw. India is, in fact, more urban than politicians know or acknowledge. This seriously affects India’s growth prospects, leading to inefficiencies and loss of productivity in both rural and urban areas. What’s worse, the resulting misallocation of resources is making India’s blossoming urban areas well-nigh unlivable.

…. The consequences of underestimating the urban share of the population are dire. Resources are badly misallocated: By one estimate, over 80 percent of federal government financing still goes to rural development. This reduces incentives for politicians, especially rural ones, to change the status quo. Tens of millions of Indians who live in dense, urban-like settlements are governed by rural governments that lack the mandate and the money to deliver basic services. In India, urban governments are constitutionally required to provide things such as fire departments, sewer lines, arterial roads and building codes. Local bodies in rural areas aren’t.

Read the whole thing here.

Things are different in Thailand. According to The Economist:

The World Bank reckons that over 70% of Thailand’s public expenditure in 2010 benefited Greater Bangkok, home to 17% of the country’s population. In no other economy with a comparable level of income is government spending as skewed, say the bank’s economists.

 

 

 

Memes on State-Led Industrialization

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click on image to enlarge

The graph on the right is popular among pop development economists. But it doesn’t tell us what most people think it does.

In addition to experiencing a different form of colonialism than Ghana or India did, receiving lots of Western aid for geopolitical reasons, and having access to markets in Japan and the US, South Korea also had a much longer history of ethnically and socially unified statehood than either Ghana or India before colonization.

Here is a summary of the mechanisms involved from Bockstette, Chanda and Putterman (2002):

A longer history of statehood might prove favorable to economic development under the circumstances of recent decades for several reasons. There may be learning by doing in the ways of public administration, in which case long-standing states, with larger pools of experienced personnel, may do what they do better than newly formed states. The operation of a state may support the development of attitudes consistent with bureaucratic discipline and hierarchical control, making for greater state (and perhaps more broadly, organizational) effectiveness. An experienced state like China seems to have been capable of fostering basic industrialization and the upgrading of its human capital stock even under institutions of government planning and state property in the 1960s and 1970s, whereas an inexperienced state like Mozambique sowed economic disaster when attempting to pursue similar policies a few years later. Such differences may carry over to a market setting — contrast, for instance, the late 20th century economic development of Japan and South Korea, modern countries with ancient national histories, with that of the Philippines, a nation that lacked a state before its 16th century colonization by Spain.

The role of elites in development (Danish Edition)

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Kenya’s founding president, Jomo Kenyatta, often reminded Kenyan elites of their roles as living examples of material “development” to the peasantry. Contra Oginga Odinga — who wanted to empower the masses through land redistribution, Kenyatta believed that an elite-driven developmental agenda was the quickest way to end the scourges of poverty, illiteracy, and disease in Kenya (yes, he had very selfish reasons for holding this belief. But that is beside the point).

Turns out he was onto something.

This is from a paper by Jensen et al. on the dairy industry in Denmark:

We explore the role of elites for development and in particular for the spread of cooperative creameries in Denmark in the 1880s, which was a major factor behind that country’s rapid economic catch-up. We demonstrate empirically that the location of early proto-modern dairies, so-called hollænderier, introduced onto traditional landed estates as part of the Holstein System of agriculture by landowning elites from the Duchies of Schleswig and Holstein in the eighteenth century, can explain the location of cooperative creameries in 1890, more than a century later, after controlling for other relevant determinants. We interpret this as evidence that areas close to estates which adopted the Holstein System witnessed a gradual spread of modern ideas from the estates to the peasantry. Moreover, we identify a causal relationship by utilizing the nature of the spread of the Holstein System around Denmark, and the distance to the first estate to introduce it, Sofiendal. These results are supported by evidence from a wealth of contemporary sources and are robust to a variety of alternative specifications.

We thus demonstrate econometrically that the pattern of adoption of cooperative creameries in Denmark followed the introduction of proto-modern dairies by agricultural elites on estate farms. In the Duchies of Schleswig and Holstein, ruled by the King of Denmark in personal union until 1864 when they were lost to Prussia, an intensified crop rotation system with an important dairy component was developed on the large manorial estates known as Koppelwirtschaft in German, or kobbelbrug in Danish. It became the dominant field system in the Duchies in the 1700s, and included unprecedentedly large herds of milch cows and the invention of an innovative new centralized system of butter production, the hollænderi, with unparalleled standards of hygiene and equipment (Porskrog Rasmussen 2010a). These innovations – collectively known as the above mentioned ‘Holstein System’ when the crop-rotation was combined with the dairy unit – came relatively late to Denmark, but when they did they gradually transformed Danish agriculture.

Denmark’s current status as an ‘agricultural superpower’ , dominated by massive firms such as Arla (a dairy cooperative) and Danish Crown (a food, especially meat, processing firm previously also a cooperative until 2010), is usually traced back to the aforementioned developments in the 1880s. As we will discuss in more detail below, at this point a new technology, the steam-powered automatic cream separator made it possible to use milk which had been transported over long distances to be processed in a central production facility, and the voluntary associations of Danish peasants, the cooperatives, sprang up to take advantage of this possibility. Thus, modern Denmark emerged based on a democratic, cooperative countryside, providing something of a role model to other agricultural countries around the world.

The whole paper is worth reading, as it provides a rather interesting rebuttal (if I may call it that) to the core ideas about the long-run effects of inequalities in initial endowments in Engerman and Sokoloff (on Latin America) as well as Banerjee and Iyer (on India):

By contrast, we stress that agricultural elites may spread knowledge, which then subsequently aids development in the agricultural sector. In other words, our work suggests that agricultural elites may also be knowledge elites, who facilitate later development. Recent work by Squicciarini and Voigtländer (2016) demonstrates that knowledge elites played a significant role in the industrialization of France by e.g. running businesses themselves or exchanging knowledge with entrepreneurs. Our work emphasizes the importance of knowledge spill-overs and agricultural enlightenment (Mokyr 2009, ch. 9), and shares some similarities with Hornung’s (2014) work on high-skilled immigration of Huguenots into Prussia. He shows that this led to higher productivity in the textile sector and interprets this as evidence of an effect of diffusion of technology. We focus on agricultural elites and their impact on the part of the agricultural sector that led to an economy-wide take-off.

The key difference in Denmark, of course, was that the social conditions permitted easy diffusion of ideas and practices from the knowledge elites to the masses, despite the inequalities in initial endowments. The situation might be different, for ex when race, ethnicity, or caste gets in the way.

Is Asia Aging Prematurely?

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This is from the FT:

China’s working-age population peaked in 2011 but its per capita income was just 20.7 per cent of the US level. Thailand was a little wealthier, at 28.9 per cent, when its working-age share peaked in 2013, but Vietnam was far poorer still, at 10.4 per cent of the US level, when it reached the same point a year later. Malaysia, Indonesia, India and the Philippines are projected to be somewhat better off when they reach peak working-age share, probably between 2020 and 2056, but still some way below the income levels reached in the west, as the third chart shows.

In February of this year, projections by Standard Chartered suggested that, by 2050, the likes of South Korea, Singapore, Thailand and China would have a higher share of pensioners in their population than most developed countries, depicted in the second chart [see below].

Screen Shot 2017-05-17 at 10.25.56 AM.png

These are pretty sobering figures. Basically (East) Asia’s dependency ratios will quickly begin to look a lot more like what obtains in low-income as opposed to high and upper middle income states. And that means a stagnation or even decline in per capita income.

It will be interesting to see how these countries — most of which have historically been averse to immigration — will deal with this demographic challenge.

In addition to the obvious economic challenges, Asian countries will also have to figure out how to take care of the medical needs of an aging population that will likely be living longer.

More on this here.

On the Haitian Revolution

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This is from Michel-Rolph Trouillot’s Silencing the Past: Power and Production of History:

The Haitian revolution therefore entered history with the peculiar characteristic of being unthinkable even as it happened. Official debates and publications of the times, including the long list of pamphlets on Saint-Domingue published in France from 1790 to 1804, reveal the incapacity of most contemporaries to understand the ongoing revolution on its own terms. They could read the news only with their ready-made categories, and these categories were incompatible with the idea of a slave revolution [p. 73]

The discursive context within which news from San-Domingue was discussed as it happened has important consequences for the historiography of Saint-Domingue/Haiti. If some events cannot be accepted even as they occur, how can they be assessed later? In other words, can historical narratives convey plots that are unthinkable in the world within which these narratives take place? How does one write a history of the impossible?

As the power of Louverture grew, every other party struggled to convince itself and its counterparts that the achievements of black leadership would ultimately benefit someone else. The new black elite had to be, willingly or not, the pawn of a “major” international power. Or else, the colony would fall apart and a legitimate international state would pick up the pieces. Theories assuming chaos under black leadership continued even after Louverture and his closest lieutenants fully secured the military, political, and civil apparatus of the colony….. [p. 94]

I read Silencing the Past right after reading C. L. R. James’ The Black Jacobins, and strongly recommend reading both together.

As I read both books I couldn’t help but wonder why my high school history had nothing on the Haitian revolution (which proves Trouillot’s point). It seems like the Haitian revolution, even if in sanitized form, would have been a good fit with the sanitized versions of the Mau Mau insurgency and the Algerian and Malaya wars that I was exposed to as a teenager.

More broadly, it seems like the teaching of decolonization in Kenya could benefit from more Haiti and Fanon, side by side with Mandela, Gandhi, and MLK. It is not a stretch to imagine that the threat of violence made the successes of the Mandelas of history more likely. To talk about the ANC without mentioning Umhonto we Sizwe is to stick one’s head in the sand.

TOMS impact evaluation finds zero to negative effects in El Salvador

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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.

India scraps high denomination notes

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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.

How to Eliminate Malaria

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Sri Lanka is the latest country to be declared malaria free by the WHO.

How did they do it?

According to the New York Times:

In 2000, outside the rebel-controlled areas in the northeast, malaria cases began dropping as the government, with donor help, deployed a mix of indoor spraying, bed nets, rapid diagnostic kits and medicines that combined artemisinin, an effective treatment, with other drugs.

The government also screened blood samples drawn — for any reason — in public clinics and hospitals for malaria infection, and officials established a nationwide electronic case-reporting system.malariaeradication

In war-torn areas, the disease retreated more slowly, although the Tigers often cooperated with malaria-control teams because their villages and fighters also suffered.

Nonetheless, in a population of 20 million, it took years to get rid of the last few hundred annual cases. Most were soldiers and itinerant laborers, often from India, who worked in remote slash-and-burn farming areas and in logging and gem-mining camps.

Someone tell African policymakers that bed nets and behavior change are not enough.

Every other region of the world appears to be willing and able to combine vector (mosquito) control with other strategies of containing malaria with success (and enthusiastic donor support). But for some reason mosquito control is still lagging in Africa, even in otherwise strong and stable states. In some instances this has been due to environmental concerns while in others it has been due to the misplaced priorities of public health officials, donors, development agencies, and academic researchers.

The result:

About 3.2 billion people – nearly half of the world’s population – are at risk of malaria. In 2015, there were roughly 214 million malaria cases and an estimated 438 000 malaria deaths. Increased prevention and control measures have led to a 60% reduction in malaria mortality rates globally since 2000. Sub-Saharan Africa continues to carry a disproportionately high share of the global malaria burden. In 2015, the region was home to 89% of malaria cases and 91% of malaria deaths. 

214 million malaria cases amount to lots and lots of lost productivity. Also, losing one Miami every year in deaths is simply unacceptable.

More on this here. 

Fighting Legislators

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As if legislative studies wasn’t exciting enough, there is an entire website dedicated to curating clips of legislators exchanging blows while at work.

This is from Turkey (not yet on the website):

This is from India:

And this is from the Alabama Senate (in the United States):

H/T Kimuli Kasara.

Data Problems Everywhere

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This is from the Economist:

GOVERNMENT statisticians shun the limelight, which only ever finds them when things go awry. So it is with India’s national bean counters, who are struggling to convince the world that an economy with idle factories, sagging exports and ailing banks grew by 7.5% in 2015, as their models purport to show. Ever since a new methodology for calculating GDP was adopted last year, India has appeared to be the world’s fastest-growing big economy, outpacing China. But scepticism about the data is growing even faster.

… Investors, at any rate, roundly disbelieve India’s growth figures. Nevsky Capital, a hedge fund, cited dodgy data from India, among other places, as a reason to shut up shop at the start of the year. Even the government’s own chief economic adviser has admitted he is sometimes flummoxed by the data. A cottage industry has sprung up to cater to the sceptics, blending various indicators of economic activity to produce new gauges of growth.

Such home-brewed statistics have been common in China for some time: Li Keqiang, now the country’s premier, admitted as a provincial governor that he all but ignored “man-made” economic statistics in favour of hard-to-fiddle data such as railway-cargo volumes, electricity consumption and loans made by banks. The Economist began publishing a “Keqiang Index” when his habits became known in 2010.

Ambit Capital, a broker based in Mumbai, now computes its own “Keqiang Index” for India, which implies a real growth rate of 5.4%. Economists at HSBC, a bank, think 5.9-6% is closer to the truth.

More on this here.

Turns out oil prices are so low it’s cheaper to sail 9,000km around Africa than cross the newly expanded Suez Canal

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This from the Mail & Guardian:

Essentially, it makes more business sense to sail the longer distance – even though the Suez Canal shortens the Europe Asia trade route by at least 9,000 km – and burn more fuel by increasing speeds.

With oil touching $30 a barrel, a recent analysis by SeaIntel, a maritime monitoring group suggests that if shippers can accept an extra week of transit time by sailing south of Africa, it would save them an average of $17.7 million a year per vessel, in transit fees.

According to the analysts the Suez Canal would need to reduce fees by around 50% – and the Panama Canal which similarly affected by 30% – for crossing to be commercially viable for long-haul ships.

Also:

That’s bad news for Egypt, which spent $8 billion on expanding the Suez Canal, opened with much fanfare last year. The expansion, accomplished in a record one year, was intended to reduce waiting times from 18 hours to 11 hours. Authorities said they expected canal revenues to more than double from the annual $5.5 billion in 2014 to $13 billion by 2023.

On a related note, if you are interested in shipping and global trade be sure to read Marc Levinson’s The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. I recently picked it up and really like it so far.

H/T Charles Onyango-Obbo

 

This graph doesn’t tell us what you think it does (Because stateness matters)

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You probably saw this graph in your undergraduate development class — almost invariably as a demonstration of South Korea’s massive growth relative to countries that were allegedly at similar levels of “development” in the early 1960s.

Screen Shot 2016-01-28 at 3.39.29 AM

But were these countries really at the same level of development as South Korea?

The simple answer is no.

And to know why you need to read States and Markets: The Advantage of an Early Start:

A longer history of statehood might prove favorable to economic development under the circumstances of recent decades for several reasons. There may be learning by doing in the ways of public administration, in which case long-standing states, with larger pools of experienced personnel, may do what they do better than newly formed states. The operation of a state may support the development of attitudes consistent with bureaucratic discipline and hierarchical control, making for greater state (and perhaps more broadly, organizational) effectiveness. An experienced state like China seems to have been capable of fostering basic industrialization and the upgrading of its human capital stock even under institutions of government planning and state property in the 1960s and 1970s, whereas an inexperienced state like Mozambique sowed economic disaster when attempting to pursue similar policies a few years later. Such differences may carry over to a market setting — contrast, for instance, the late 20th century economic development of Japan and South Korea, modern countries with ancient national histories, with that of the Philippines, a nation that lacked a state before its 16th century colonization by Spain.

Development is not just about income. It also involves a lot of intangible socio-political variables. Going back to the graph, a key difference in 1960 between Ghana, India, and South Korea was the degree of coherent stateness. On this measure South Korea was way ahead of its developing country peers.

For more on this Dani Rodrik has a delightfully concise take on how South Korea and Taiwan grew rich.

Even within Africa, historical stateness makes a difference in development outcomes. A neat recent example can be found in Ethiopia’s ability to build a light rail in Addis in record time as Nigeria floundered.

The case for well-planned infrastructure mega-projects

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No one likes white elephants. But some mega-projects are simply unbeatable. One example is India’s Golden Quadrilateral highway project, constructed between 2001-2012. In a new paper, Ghani, Goswami and Kerr write:

Golden_Quadrilateral

Source: Wikipedia

We exploit a large-scale highway construction and improvement project in India, the Golden Quadrilateral (GQ) project. The analysis compares districts located 0-10 km from the GQ network to districts 10-50 km away, and we utilize time series variation in the sequence in which districts were upgraded and differences in the characteristics of industries and regions that were affected. Our study employs establishment-level data that provide new insights into the sources of growth and their efficiency improvements.

The GQ upgrades stimulated significant growth in organized manufacturing (formal sector) in the districts along the highway network, even after excluding the four major cities that form the nodal points of the quadrangle. Long-differenced estimations suggest output levels in these districts grew by 49% over the decade after the construction began. This growth is not present in districts 10-50 km from the GQ network nor in districts adjacent to another major Indian highway system that was scheduled for a contemporaneous upgrade but subsequently delayed. We further confirm this growth effect in a variety of robustness checks, including dynamic analyses and straight-line instrumental variables (IV) based upon minimal distances between nodal cities. As the 0-10 km districts contained a third of India’s initial manufacturing base, this output growth represented a substantial increase in activity that would have easily covered the costs of the upgrades.

Decomposing these aggregate effects, districts along the highway system experienced a significant boost in the rate of new output formation by young firms, roughly doubling pre-period levels. These entrants were drawn from industries intensive in land and buildings, suggesting the GQ upgrades facilitated sharper industrial sorting between the major nodal cities and the districts along the highway. Despite a substantial increase in entrant counts, the induced entrants maintained comparable size and productivity to control groups. The young cohorts, moreover, demonstrated a post-entry scaling in size that is rare for India and accounted for an important part of the output growth.

Of course these findings should not come as a surprise to anyone who has seen the rapid growth along the $360m Thika Superhighway in Nairobi and Kiambu counties in Kenya — the African Development Bank (a key financier) estimated the project to have an internal economic rate of return of 30%. Which is precisely why Harambee House ought to consider fast-tracking the construction of a dual carriageway linking Mombasa to Busia and Malaba.