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Colleen Paxton
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As others have previously mentioned, policy cannot be a blanket applied from one place to another. It requires understanding the culture and distinct challenges in each area. But as Ravallion says, this does not mean we can’t look at China as an example for Africa. China experienced high levels of inequality as development grew, while inequality is preventing Africa from growing and reducing poverty. Ravallion refers to this as a “double handicap”—but with the right policies success could come to Africa. Ravallion points out that African farmers could respond similarly to the Chinese in the case of market incentives, but the combination of strong institutions in necessary. Africa must develop the “capacity” to implement policies, and the fractured divisions within Africa must overcome this in order to develop. Ravallion also discusses pro-poor growth, or promoting agricultural development. As we have discussed this semester, this kind of growth can lead to benefits overall as the traditional sector increases output and labor can then go to the modern sector. The conditions in Africa are dependent on rain, and there is an amount of human capital needed to develop real results. Extension services could bring success to the agricultural sector in African countries. This kind of growth is hard without the right changes in policies and institutions.
Toggle Commented Dec 5, 2013 on China and Africa (Econ 280) at Jolly Green General
Like we talked about today in class, I arrived at W&L understanding the climate change was a real issue – not a myth or something that can easily be ignored. From a geology classes to journalism classes, I have seen even more evidence for the effects climate change has had and will continue to have on the earth. This Sunday, a tornado ripped through a town in Illinois, 5 minutes away and just across the Ohio River from my home in Kentucky. The destruction is devastating, and it is hard to say that climate change did not have something to do with rare tornadoes in this part of the year. Whether it’s in the U.S. or LDCs, the effects of climate change are real. The worst effects are felt by the poor; they end up bearing the cost of global climate change. In order to reduce poverty, we also have to work to reduce climate change. Solutions to protect or minimize effects could come in the form of institutional or technological changes. But there must be a way to make solutions work between the public and private sector as well as civil society, as the executive summary points out.
Toggle Commented Nov 20, 2013 on ECON 280 Updated Syllabus at Jolly Green General
Christopher Udry presents the benefits and costs of child labor as well as the reasons behind taking a child out of school and putting them into the workforce. One of the first aspects of development we discussed was that decisions by the poor may seem irrational, but that is because there is a lack of choice. Options are limited and there is a short-term focus. This is the case with child labor. The benefits of child labor are immediate—the family takes the wage and there is reduced education expenditure. But the costs are more long-term—the child who goes to work on the farm will have lower future earnings due to less education. There are also costs to that child’s future children, as their own children will not be as healthy as those of well-educated parents. How can this chain be broken? Udry calls it a “vicious cycle of poverty, in which the descendants of the poor remain poor because they were poorly educated.” Udry suggests the same causality can be used to sustain growth. But as we have learned from Dani Rodrik, igniting and sustaining growth are two different things. What could be done to turn a circle of poverty into one of prosperity? Udry presents policy options from bans to trade sanctions, but says the best option is subsidies for school enrollment. We have discussed the positive impact of the Progresa progam in Mexico, and it seems that the solution of a subsidy for sending children to school conquers the myopic, constrained decision-making faced by poor families. In the short-term, they are receiving extra income (or food as in Bangladesh). In the long-term, the investment in human capital for their children can bring greater returns to their descendants. Choices are no longer limited and the trade-off between education and work disappears.
Toggle Commented Nov 6, 2013 on Corel Office Document at Jolly Green General
Our discussion in class yesterday surrounded the truths about human capital investments. One of these is that investment in human capital has increasing returns. And as stated in Sachs and Malaney’s article this includes “total impact on economic growth being greater than the sum of the individual.” We talked about how raising income is necessary but not sufficient for improving health and education. The same issue arises with malaria—economic development is not enough to prevent malaria as seen in countries like Oman and the United Arab Emirates. Malaria affects more than just the health of a population. Sachs and Malaney show that it “affects almost every aspect” of social and economic life. From education to fertility rates to savings, the behavioral response in malarious areas threatens more than just health and has long-term consequences. Do poverty cause malaria or does malaria perpetuate poverty? The causality is undetermined but this discussion made me think of Esther Duflo’s TED talk. She posed the question of how to stop malaria. There are contagion benefits for bednets, like we talked about with flu shots. Will people pay for bednets if they must purchase them? If they get them for free, will they use them? Do free bednets discourage future purchases? Her social experiments showed that people do not get used to handouts; rather they get used to the bednets. A range of options gives a better opportunity to achieve goals. If the goal is ending malaria, perhaps funds and options from organizations like the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria could help stop both the disease and the effects on economics and society.
As we discussed in class on Tuesday, controlled microfinance studies can tell us how people use credit, what helps them save, and the constraints that block advancing. Though we do not know if the poor would be better or worse off without aid, we can see certain results that help understand how individuals behave. An interesting point about savings in the 2011 Dupas and Robinson study was that when women saved, it translated into other positive outcomes. It suggests that before access to savings accounts, women had difficulty saving for their businesses. There was increased spending on food. The study suggests that perhaps women could focus on their well-being and businesses when they had access to savings. The article points out that this should be explored further, but the results seem encouraging especially when compared with our discussion of women’s empowerment. In this study, savings accounts appeared to help advance women’s businesses and health. Could savings be the key to increasing women’s decision-making power? Would people surrounding women be better off if women were actively saving? More controlled studies could show the effects of women and savings and help understand behavior.
Toggle Commented Oct 23, 2013 on Microfinance (econ 280) at Jolly Green General
Duflo says that economic development alone cannot guarantee improving the position of women, while on the other hand; women’s empowerment offers improvements in some areas such as children’s welfare but not in others. Duflo believes policy measures that favor women are the key to bring equality to women. Amartya Sen in Development as Freedom also points out that women’s empowerment leads to significant increases in child survival and decreases in fertility rates, and the agency of women should not be overlooked in the development arena based on the contributions women can make to overall growth. Duflo discusses women being overlooked in health and education when they do not participate in jobs outside of the home. Duflo referenced studies in China and India where job opportunities for women in lead to better outcomes. I have previously researched women in areas of India for where time is not spent on jobs or in the home, but rather walking for three to four hours per day to collect water, and according to Isha Ray, this captures 30% of their daily energy. In one state in India, Maharashtra, water is located up to 3 kilometers away. Women carry water because they are not seen as equals and deprived of their decision-making rights. Ray describes the Women in Development theory, which explains the inequality due to lack of resources: “These resources
included healthcare, education, voting rights, employment opportunities, credit, and also
basic services such as water and sanitation.” Human capital is wasted when women are walking hours a day to secure water, which results in billions of hours of lost productivity. But when women are given the
resources to improve their communities in combination with development programs, the results are encouraging. One study in Gujarat, India, showed that women spent their time on microenterprises when there was reliable access to water. This example speaks to Duflo’s ideas on women empowerment and economic development. The combination of policy and empowerment through resources could lead to a better position for women. Source: Ray, Isha. “Women, Water, and Development.” Annual Review of Environment and Resources, Vol. 32: 421-449 (Volume publication date November 2007).
Dani Rodrik discusses the challenges faced by implementing policy in LDCs. While policies cannot be transferred from location to location, they can be used as examples to experiment with. But successful policy requires understanding the people and the realities of the area and frequently unconventional elements lead to growth. While growth can be jump started in the short run, it often will fail in the long run without a strategy. I thought Rodrik’s ideas about entrepreneurship and government were particularly interesting. There must be a balance between government doing too much and doing too little in order for entrepreneurship to occur. In Tuesday’s class, we discussed how savings and investment are necessary for growth in reality. Rodrik explores how to spur entrepreneurship activities when there is a low return on investment. He discussed the incentives used in South Korea and Taiwan of credit subsidies and tax incentives, respectively. The success of implementing growth comes from understanding the details and looking closer. South Korea and Taiwan look strategically alike from afar but upon closer understanding the incentives met the opportunities available.
Toggle Commented Sep 25, 2013 on Growth Strategies - Econ 280 at Jolly Green General
Krugman’s writing has helped me better understand economics in the past, and this article is no exception. Just as Krugman lays out ideas in a way that are easier for me to understand, models do the same for development economics. While he points out the limitations of models, whether it’s narrow-mindedness or modeling perfect competition in an imperfect world, models are an extremely valuable, if simplistic way, to gain insight into the world of development. This article reminded me of the black box we discussed in class on Tuesday. High development theory helps us make sense of economies but it is also dependent on assumptions. As Krugman discussed, physical science welcomes models to represent grander, more complex ideas but many balk at models in social science. The assumptions made in models of development economics are hard to hold onto in the black box between scientific modeling and policymaking. And, as Krugman mentioned, political beliefs can get in the way of analysis. Reality requires seeing past a myopic view in order for theories to work, or for theories to be adapted to meet the realities of a society. As we discussed in class, this leads to the importance of truly understanding the realities of development economics through field work. It is hard to disagree that 16 months in Ghana would change perspectives and give us a deeper understanding of what models present. The map story showed that “improved technique actually led to some loss in knowledge” and in development economics, filling in the blanks became feared. The blanks are indeed there, and it’s a matter of using models as a starting point to fill them in.
A point discussed in this paper and in the textbook is the freedom of choice. The paper says that the poor do not see themselves "having a significant amount of choice." Whether it's the choice of spending money on food or entertainment or the choice of profession, the options are limited. The textbook discusses the importance of what a person can be and can do, and self-esteem is limited in poverty. The lack of specialization limits advancing a certain career or becoming efficient in one area. If the poor cannot advance themselves individually or become more efficient in one area to increase their income, how can they advance as a country? The textbook also points out that wealth does not necessarily bring about happiness, but rather it brings about an abundance of choice. The stress of choosing between your children's education or skipping meals should not be considered under a form of "insurance." This insurance reverses development. The paper says, “In several ways, the poor are trading off opportunities to have higher incomes." What if there were ways to increase specialization and opportunities now in order to increase income in the future rather than choosing a temporary higher income? The power to choose changes the conversation.
Toggle Commented Sep 11, 2013 on Economic Lives of the Poor at Jolly Green General
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