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Vincent Kim
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As others have mentioned stability political stability and public safety are pressing issues that need to be addressed in some African countries, not to mention corruption. Ravallion explains how developing countries might benefit from building up the agricultural sector since the populations of many of these countries largely consist of subsistence farmers. I believe that improving agricultural practices by improving technology and giving incentives to produce more food would prevent instability and violence. In many cases, addressing the basic needs of their populations by improving agriculture should take priority over favoring the development of major cities or trying to develop high-end service sectors. Once a substantial amount of basic needs are met, I think institutions will be easier to maintain. Then, to add to the previous comments about education, I do not believe countries have to build up their educational systems and R&D sectors from scratch. I think information and communication technology (ICT) has progressed enough that countries can readily adopt much of the already proven basic education systems, city planning, methods of creating infrastructure, as well as established best practices in various service industries. In International Development (POL 215) we read “The Elusive Quest for Growth” by Easterly, who discusses this a bit. Furthermore, as countries adopt this knowledge, there are the details of modifying them to accommodate culture and specific society values as well as the issues of knowledge distribution and providing incentives for knowledge creation. As to whether African countries should learn from China and adopt its policies instead of say, the Washington Consensus, I would agree with those who say there is no straightforward answer. African countries are too diverse politically, socially, etc.—the conditions in each are different so one political economic model will be too general to be useful. Some countries will have to tackle government transparency more than others, while others may have to focus more on ending violent insurgency. Some countries may be in a position to better accommodate more open markets while other countries might need to have more control over their economies to prevent the turbulence of the global market from hindering domestic development policy efforts.
Toggle Commented Dec 5, 2013 on China and Africa (Econ 280) at Jolly Green General
The executive summary mentions that rising temperatures will rapidly increase the risk of crop yield reductions (page xvi). We have been talking about agroforestry and farmers choosing slash-and-burn method instead. I see a connection to not choosing the optimal way to use resources while those resources are diminishing rapidly. For instance, I wonder if lower crop yields caused by increased temperatures would influence farmers to be more expansive to offset the increased risk of failure. I would think they would clear more land so that the lower yield would still equal the yield of the smaller field with lower risk. However, I wonder if there is data that suggests that diminishing resources would encourage farmers to use land more optimally, or more generally, if the problems caused by global warming will cause households to use resources more efficiently. This seems like an important issue because if climate change does not encourage households to use resources more efficiently, governments might have to enforce better practices. Knowledge of the extent to which diminishing resources give influence efficient use would help governments gauge how much intervention would be needed. This relates to tragedy of the commons, since climate change is such a large externality. We already mention the study that CO2 emissions will rise far beyond acceptable, sustainable levels until developing countries are satisfied, but I wonder if this is the case for other resources such as potable water and farmland.
Understanding how educated farmers can increase the human capital of their neighbors by teaching better farming practices is a hopeful prospect in helping jumpstart development. The paper details how increasing human capital makes farmers place more weight on agroforestry methods which are more sustainable than the traditional slash-and-burn method. Professor Casey specifies three key investments that influence farmers to adopt/invest in agroforestry: informal specific on-the-job training, formal training, and formal education. The model of adopting agroforestry used on page 512 (Empirical procedures, model specification, equation 6) uses the dichotomy of 0 and 1 to measure agroforestry adoption, and the right side of the equation includes variable rates and constants related to how human capital investment influences the decision to adopt. This reminds me of the Ising model of ferromagnetism used in statistical mechanics, which explains the orientation of magnetic dipole moments of atomic spins (which can kind of be thought of as small bar magnets that have a positive and negative pole). There are two allowed values of spin which can be called -1 or +1, but the model can incorporate two states being named 0 and 1 like in the paper. Furthermore, the model can be used in cases where neighbors influence the state of an individual, such as the spread of disease (0 is not sick, 1 is sick) or even voting (0 is voting for once party, 1 is voting for another party). I would imagine this model could be used to statistically predict how farmers would adopt agroforestry. While the paper focuses on formal education and informal/formal training of specific skills, the Ising model might be able to add to the model used in this paper by explaining the informal influence neighbors have on each other. This informal influence may not just be the informal training of specific skills, but also the effects of seeing the success from neighbors implementing agroforestry. They may give more weight to relevant information if their neighbors have done the same or have adopted agroforestry. Neighbors could be defined by various factors such as geographical proximity or extended family member relations. People see others on adjacent farms adopt agroforestry or hear how they weigh information or people hear about them from extended family members, some of whom could have adopted agroforestry. If incorporated, the Ising model may predict the evolution of adoption in a population overtime based on the initial conditions (who has adopted agroforestry vs. who has not). Different initial conditions lead to difference evolutions; our understanding of the model could allow us to choose critical areas in which to invest human capital such that the population would evolve most rapidly (agroforestry would be adopted throughout the population more quickly). That would help resources be used efficiently in development efforts.
Toggle Commented Nov 14, 2013 on ECON 280 Paper for Thursday at Jolly Green General
Christopher Udry explains that school enrollment conditional cash transfers are effective at reducing child labor because they target the cost-benefit analysis regarding long-term returns to education and short-term benefits of wages or increased household production. Towards the end of the paper, Udry mentions that “more careful cost-benefit analyses should be completed on an urgent basis,” which implies that the factors of cost-benefit analysis depend on the region or community in focus. Some of these variable factors are the types of prevalent jobs, available credit, what types of children have access to certain jobs (based on gender, race, ethnicity, disability), and social norms. These differences most likely produce differences in the demographics of child labor. Knowing these demographical discrepancies in child labor, maybe governments should target certain groups of children a larger proportion of available cash transfers in order to maximize development. By development, I mean reducing child labor, giving more agency to children (in the form of expanded job opportunities after receiving education), and the increased future incomes to grow the economy. I am interested in knowing how many governments have implemented programs like this, and if current programs such as Opportunidades have various demographical targets based on gender, ethnicity, or region. Furthermore, if they countries that have implemented these types of programs have randomized data specific to race, gender, etc. and the effects of varying relative cash transfers to different groups based on varying incentives in cost-benefit analysis among the groups.
Toggle Commented Nov 7, 2013 on Corel Office Document at Jolly Green General
This article, as other students have mentioned, explains the gravity of global malaria in terms of human capital loss and the resulting loss in potential GNP per capita growth. Solutions presented include draining swampland to destroy mosquito breeding grounds, indoor spraying of residual insecticides such as DDT, and improved housing/screening (including the insecticide-treated nets) to keep mosquitos away from people. While these may be effective solutions, Sachs and Malaney suggest that not enough aid is committed to these solutions. However, am curious to know whether environmental concerns also inhibit implementation. For instance, maybe some communities reject the usage of insecticides such as DDT because they believe its benefits do not outweigh the harm done to the other species and the environment. Also, have some countries opposed draining swamplands for conservation reasons? Aside from environmental concerns, there have been issues with unintended consequences such as communities using the mosquito nets for fishing. I would like to know more about how people implement these solutions at the political level, the ground level, and how academics such as Sachs and Malaney further try to aid in their implementation after conducting economic research.
This paper enriches Chapter 11 of the Todaro and Smith text, especially the section “Problems of Plan Implementation and Plan Failure.” The text mentions that LDCs often struggle to implement successful growth policies because of external economic disturbances, and this paper explains those disturbances in quantitative terms. While Eichengreen and Mody mention the current qualitative explanations of how interest rates in the developed countries in the global North affect capital flows to the less developed countries in the global South, their main contribution is their regression analysis. Interestingly, they find that different types of loans, whether they are fixed-rate or floating-rate loans, should be treated separately in studies. Furthermore, in a sense, this paper tries to help solve the problem of insufficient and unreliable data which can make development policies inaccurate and flawed. If countries could understand more quantitatively how global interest rates affect capital inflow in LDCs, countries and institutions such as the World Bank and the International Monetary Fund could take part in better development plans that achieve their desired outcomes of injecting capital into LDCs more precisely. Under current conditions, the lack of information and unanticipated economic disturbances discourage LDCs from enacting costly, long-term development policies, so these issues could be a major areas of interest in trying to solve development problems.
Duflo mentions that in the long run, investments in empowering women will create more productivity and grow the economy. However, he also explains that developing countries with small budgets face a trade-off between investing in the empowerment of young women and investing in the development of men and women (1063). This brings up the issue of when and with what extent to invest in women’s empowerment. I agree that countries need to achieve gender equality through public policies (such as affirmative action, discrimination laws, public campaigns, etc.), and I believe that the equality is an end goal as well as a function of development. That being said, I believe focusing on economic development may be as important (or more important) to countries than focusing on gender equality for two reasons. First, I believe some countries’ incomes may be so low that the increasing incomes may have more value than increasing equality (in terms of income and social equality). In other words, the poverty reduction is would be more valuable to the country than the increase social equality. Secondly, while Duflo is somewhat pessimistic about the magnitude with which economic development empowers women, she shows that there are correlations. Even if economic development increases gender equality slightly, that increase could have value that, when combined with the other benefits of economic development, justify the focus on economic development over gender equality. At this point, I would be interested in studies that focus more on this time-sensitive trade-off between investing in gender equality and focusing on economic development. I would like to see how the optimal combinations of focus vary from country to country.
Rodrik’s assertion that countries need to acquire high-quality institutions to ensure a high standard of living (pg. 25) also interests me. In table 11, he lists some examples: property rights, contract enforcement, regulatory bodies, monetary and fiscal institutions, and social insurance. My questions would be these: how can a less developed country with a corrupt government build up these institutions effectively? Would the country need to invest in a large bureaucracy to implement these institutions such as in the case of South Korea? Rodrick also cited studies that indicated that countries build more resilient institutions when they modify their current ones rather than adopting the laws and systems from other countries (pg. 27). Does this mean countries should focus more on building up an educated workforce for government bureaucracy rather than getting consulting from the experts of other countries? Also, how should countries gauge “socially desirable behavior on the part of economic agents” (pg. 25). Often there is conflict between the government and citizens on the issue of socially-desirable behavior. What comes to mind is how the South Korean government suppressed labor uprisings and protests in order to ensure savings and economic growth. Was it right that the government subdued protests for higher wages to secure economic growth in the long run? It is important how governments move forward and create and sustain institutions while keeping the citizens involved in the process.
Toggle Commented Sep 26, 2013 on Growth Strategies - Econ 280 at Jolly Green General
While physics and economics both use simplistically false models to provide insight, I think people are more likely to attack simple models used in the economics because they think the stakes are higher for their well-being. Over time, scientific theory and engineering have been fairly stable in providing a higher standard of living. We as humans have gotten better at surviving and living more enjoyable lives by developing models and running experiments to create technology. These discoveries have largely been about how people can better harness the resources of the world around us. Theories can be tested without worrying about people being harmed, and the consequences of having a false or over-simplified assumption usually does not make us worse off than where we were without the assumption. Economics, however, studies how people make decisions and allocate scarce resources. As others have mentioned, it is harder for experiments to have controls, etc. However, when politicians or bureaucrats use economics to make policy, the consequences may be unemployment, a tax, losing a certain freedom, poverty, or death. These decisions economists study are made by people, so questions of ethics and justice comes into play—both of which make people very passionate. The stem-cell research controversy can attest to this. We as humans struggle with knowing how we make decisions (reason vs. emotion/intuition). This makes it difficult for people to accept theories about decision (psychology faces these difficulties as well). While economic models often describe the real world very well and help countries flourish, they do deserve scrutiny from the public. Economics is a science that should be driven by useful models, but it is a tool to be used with other areas of knowledge (politics, ethics, mathematics, psychology). Its models may be simplistic, and it is ok that they receive, more scrutiny because it is a relatively new science that will most definitely become even more accurate predictive over time.
I am uneasy about how Banerjee and Duflo use the word “temptation” (pg. 22) to describe consumables that the poor should forgo for a potentially higher income and standard of living. Banerjee and Duflo are right to point out that relatively wealthy people often take those temptations for granted. However, in the next paragraph, I disagree that the poor are aware of their vulnerability to temptation. Only 28% of the poor in the Hyderabad survey listed at least one item they would like to cut from their total expenditure, so I believe this suggests a majority of the poor do not want to cut an item from spending. Therefore, since much of the poor in the survey did not want to cut these items, they should not be considered temptations—they are desired goods that contribute to a desired standard of living. This distinction between temptation and desired goods is important, because it influences our understanding of the kind of development we want to realize. How we understand development affects how we work to achieve development. For instance, festivals and eating certain foods may be more important to both short term happiness (physical nourishment, taste, camaraderie, etc.) and long-term happiness (fond memories of celebration that brightens someone’s day). Many people in this blog have already mentioned how the poor can be happier spending their extra money on festivals, or tobacco instead of more calories. This understanding of happiness might influence people to decide that it might not be in poor people’s best interest (or in the interest of development) to save money and forgo festivals or cultural rituals. I ultimately think that some of these value premises (term used in the textbook) should be decided by communities at a more local level, because people’s values and culture vary significantly across countries and communities. This way, I believe development can be defined more locally and implemented more efficiently than it could by the UN development goals or other international goals alone. @Sagemtimberline: I am also interested in knowing why the poor in Ivory Coast save so much more relative to the poor in the other countries surveyed. Is it easier to save money there? What institutions make it easier to save? How much do those savings benefit the poor there?
Toggle Commented Sep 12, 2013 on Economic Lives of the Poor at Jolly Green General
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Sep 11, 2013