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.

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.

How to Eliminate Malaria

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

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

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)

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.

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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

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.

Pockets of California amid sub-Saharan Africa?

Rant and rave alert. 

As an undergrad at Yale I took several classes in which professors, TAs and fellow students would casually say things that insinuated that all of Africa (read sub-Saharan Africa) was a cross between a hospice, a giant slum and a war zone. Let’s just say that it all made me a little bit uncomfortable, and sometimes forced me to over-compensate in discussions and with papers and homework. I was particularly disappointed in my professors for not knowing any better. It probably also played a big role in my choice to pursue a career as an academic in the social sciences. 

The quote below reminded me of those episodes:

Despite considerable economic growth and increasing self-confidence as a major global player, modern India is a disaster zone in which millions of lives are wrecked by hunger and by pitiable investment in health and education services. Pockets of California amid sub-Saharan Africa, sum up Sen and Drèze.

It’s one thing when an ignoramus who imagines Kenya to be a town in South Africa that does a mean giraffe barbecue says something nasty about an entire region and its people. But it’s quite another when it comes from a college professor or from people that you expect to know better. 

For instance, when we say California, are we talking Palo Alto or East Palo Alto? I must add here that because it is Sen (my beloved author of The Idea of Justice), may be he meant the “median Californian experience” vs the “median African experience” as opposed to simply comparing Palo Alto with Kibera. May be.

I admire Prof. Sen. Very much.  But I would like to register my disappointment over this offending line. The full article in the Guardian is actually quite illuminating regarding inequality in India. 

If you ever teach a class or write a book or newspaper article or give a talk, please know that it is not kosher to use the word Africa as short hand for everything that you imagine to be wrong with this world. Always remember that part of your audience might include real flesh and blood Africans. Spare us the awkwardness. Please. 

More on State Building and the International System

This is a guest post in response to a previous blog post by friend of the blog Matthew Kustenbauder.

Your post highlights the contradictions between today’s human rights regime (which is based on universal concepts of humanity and has its origins in European anti-slavery campaigns and traditions of humanitarianism, and before that debates in Christian theology) and the post-imperial international order (based on the nation state as the fundamental political unit).

Since the rise of nationalism after WWII, new states that were historically part of empires (and thereby incorporated under their systems of law, governance, and trade) have had to make their own way. For most of these states, and especially for the people living within them, the new era of national self-determination has been no more kind than was the Age of Empire. The withdrawal of imperial powers left a vacuum that today’s international system struggles to address with any effect. There are many reasons for this, not the least of which is that it is a fragmented and cumbersome system that gives the impression all states are “equal” — clearly they are not. It also tends to be a forum in which smaller and poorer states invoke language of victimhood in an effort, ironically, to get larger or more wealthy states to step in and do the work that states are meant to do for themselves — namely, govern those residing within their boundaries.

What do I mean by this last point? An illustration by way of anecdote may help clarify. I was recently frustrated watching a BBC World Report special (an outlet for the Bleeding Hearts Industrial Complex that you mentioned in your post) about multinationals and poor working conditions in the developing world. Cotton and chocolate were featured. The reporter investigated big cotton operations in India and cocoa plantations in Cote D’Ivoire. What registered as surprise to the BBC reporter was no surprise to me — He found lots of young women and children working there. But instead of asking why the local government didn’t regulate the industry or why they didn’t enforce the regulations already on the books, he ran off to Switzerland and the UK and America to ask why Nestle and Tommy Hilfiger, etc. don’t monitor their supply chains. I was baffled. This is a classic example of how an international system based on the sovereignty of individual nation states is at odds with universal notions of human rights. In many ways, it is the modern-day replacement for the old global-local tensions that existed between the imperial metropole and its colonies. We might ask, however, whether the current framework in which human rights activism operates is really any better suited to address the ongoing problems that plague developing nations. To my mind’s eye, the focus is on the wrong place … or is at least too focused on the role of businesses and advanced economies and not focused enough on working with multinationals in order to help citizens in poor countries put pressure on their governments to be accountable, competent, and truly sovereign.

The emphasis on human rights by Western governments and development work by NGOs in African countries have, more often than not, undermined the sovereignty of national governments since decolonization. More recently, however, China has emerged as the largest trading partner with many African countries. This is a game changer, not only because the Dragon does not hold human rights sacrosanct, but also because, unlike its Western counterparts, China considers economic growth and trade essential to establishing national sovereignty and the nation-state (not the international community) as the principal guarantor of the well-being of its citizens. The degree to which China can be ‘socialised’ in the ways of the international system, which was after all created by the Great Powers to replace the disintegrating world that western empires had made, remains to be seen. In any event, the long-standing tensions between universal principals of human rights, on the one hand, and the limits placed on intervention into the affairs of one state by another in the name of national sovereignty, on the other, will endure.

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Matthew Kustenbauder is a PhD candidate in history at Harvard University.