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Luke Myer
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A common theme thus far in class has been the lack of access to capital in LDC’s to grow their economies. This paper talks about how the rise and fall of interest rates in financial centers, or “creditor countries” such as the United States affect foreign investment. If interest rates in the U.S. rise, it becomes more difficult to stimulate growth in the LDC’s. This causes problems for those who emphasize the importance of governments’ policies to grow their countries’ economies. Because the exogenous variable that is U.S. interest rates have such an impact on them, it is difficult for them to effectively improve their economy. It will be interesting to monitor how the impending changes in U.S. interest rates will affect the flow of financial capital in LDC’s.
Toggle Commented Nov 19, 2015 on ECON 280 for Thursday at Jolly Green General
The issue of global climate change is hotly contested between journalists and politicians, likely because Al Gore was the person who first prominently brought the issue to the American public. As I learned in Professor Greer’s class, however, about 99% of scientists believe that human activities have led to global climate change. This article points out the vast array of problems that global warming can have, and is already having, on the world. From the most obvious effects like the melting of the polar ice caps and sea level rise to increased drought and aridity, this article describes the challenges we face moving forward. These problems disproportionately affect the poor because a large percentage of the world’s poor live in tropical and subtropical areas, which are likely to incur more drastic negative effects from global warming. The rising sea levels put island countries at serious risk and increased drought truly stress poor farmers’ ability to consistently grow successful crops. From tourism to agriculture, the economic impacts of these changes would be incredibly disastrous to the world’s poor, rendering their ability to earn money even more difficult. Global climate change, while more disastrous for the world’s poor, also poses a big problem for developed, wealthy countries. The article mentions that the economic losses from a 2010 heat wave in Russia was about US$15 billion, about 1% of their GDP. Similar problems arise in the United States with increased prevalence of wildfires in California due to lack of rainfall. Global climate change is an incredibly serious problem facing the world’s leaders and actions must be taken in order to slow the trend of warming temperatures. The article states a change of 4 degrees Celsius would put the global mean temperature at the same it was before the last ice age. It is imperative to take measures to prevent this from happening, as it affects us all.
Toggle Commented Nov 12, 2015 on ECON 280 for next Thursday at Jolly Green General
Rodrick’s article illustrates how difficult it can be to determine entirely what the reason for a nation’s economic development was. Often times there are policy changes in that country’s government that directly lead to growth, but they are rarely massive plans for change imported from another country’s ideas for success. These strategies, Rodrick points out, rarely are applicable to multiple countries. In other words, just because something worked for China, does not mean it would work for Ghana. She also mentions how often times a country’s plan for economic development is not one huge push that is a large, coordinated plan but rather small implementations of policies that are judged on a trial-and-error basis. She points out that countries like China and South Korea in the 1970s and 1960s, respectively, implemented slow, gradual changes that eventually led to their huge growth as economies. Rodrick also discusses how there is a huge difference between policies designed to promote growth and policies designed to sustain growth. She mentions that economic development in sub-Saharan Africa was very significant in the 1970s, but has since completely stagnated. Whereas countries like the Asian Tigers have sustained growth over the past thirty years because of their policies and superior health. Rodrick describes the challenges in nailing down a few key reasons why development policies are so difficult to implement successfully, but also why small, gradual development can lead to significant growth.
For people who live in developed nations, it is very difficult to conceptualize how people in poor countries live on one or two dollars per day. This article does a good job of conveying what the extremely poor in different areas of the world spend their money on and what their lives are like. In class on Tuesday, Professor Casey mentioned that there have been students in other universities who have tried to live on two dollars a day in order to see what such a lifestyle is like. That made me think immediately about how one can afford to eat on such a low salary. I immediately assumed that food would be the main source on expenditure for these families. I was surprised to read in this article that food only accounts for 56-74% of the budget of extremely poor urban families and 56-78% of rural poor families. It would seem that people in these countries would spend more of their money not only on more food, but more nutritious, calorie packed food. It was shocking to read that while two-thirds of food expenditure in India in 1983 was on high-calorie grains called millets but that in 2005 that number has gone down to nearly zero. As a result, families are consuming far fewer calories than they used to. This seems backwards to me, as I assumed they would simply try to maximize their calories with the little money they have. I was also surprised to see how high spending was on luxuries such as alcohol, tobacco, and festivals. Spending on alcohol comprises 8% of the budget of the extremely poor in Mexico, which is shockingly high. While we assume those living under $2 per day have little to no options for what they spend their money on, Banerjee and Duflo illustrate that they do indeed have choices, and they do not make the same decisions you might automatically assume they would.
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Sep 23, 2015