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Rachel Baer
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After our class discussions and reading this week’s paper, “Turn Down the Heat” from the World Bank, it is hard to ignore the reality of the rapid change in global climate. The first sentence in the foreward of the paper explains: “It is my hope that this report shocks us into action.” I believe that is it easy for us to think that climate change is happening so slowly that it will not have an impact on us during out lifetime. But I think that this mindset can change with a knowledge and understanding of what is happening to the world, and result in more immediate action and change. The World Bank attempts to do so in this paper by reporting multiple statistics on how our lives would be different in a “4°C world” One of the most concerning statistics presented in the paper was the about heat waves in Russia during the summer of 2010. The head wave resulted in a death toll of 55,000, a 25% annual crop failure, burned more than 1 million hectares of land, and the overall economic loss added up to approximately $15 billion dollars, or 1% of GDP (3). Keeping these impacts in mind, when I continued to read the paper and the following prediction was especially concerning to me: “Recent extreme heat waves in Russia in 2010 are likely to become the new normal summer in a 4°C world”(4). While it feels like climate change is occurring too slowly to effect my generation, knowing that these heat waves happened only 6 years ago and are expected to be the new normal in the future drives me to want to change the way we are treating the environment now, and hopefully further slow or reduce the climbing global temperature. To conclude, I believe that the best way to encourage change in our generation and promote sustainable growth is to spread awareness of the problems that our environment is experiencing, and the huge impacts they could have. It is important to consider the impacts of climate change in both our own lives here in the U.S. and in the poor, less developed countries. Perhaps we don’t feel the impacts of an increase in global climate as quickly or fully because we have access to markets and resources, and because of this it is even more important to consider the disproportionate negative impacts in those poor countries.
Before reading this paper, given my basic understanding of micro and macro economics, I would have assumed that more liberalized trade would be an effective strategy in improving economic conditions and welfare for the poor in developing countries. However, after yesterday’s class and reading Le Groff and Singh’s paper “Does trade reduce poverty,” I realized that most of the assumptions that the models are based around do not apply to the real world. 
Le Groff and Singh’s paper “Does trade reduce poverty?” discusses the ambiguity in the results of trade liberalization. They argue that freer trade is not an automatic fix for poverty reduction in poor developing countries, and explore the variation based on some country characteristics. The paper also argues that these policies can be more effective with the implementation of different complementary policies. When reviewing this paper, I am brought back to an idea that has applied to most of the topic that we have discussed this semester: it depends. One part of the argument that I found particularly interesting was how complementary policies can be implemented in order to yield higher reduction in poverty. The paper explains how these policies should “encourage investment, allow effective conflict resolution, and promote human-capital accumulation” (Section 2). I also found this paper to be relevant to recent policy because of the comments that Donald Trump has made to renegotiate/eliminate NAFTA. I found an interesting article on Business Insider that explains how “The key to NAFTA’s liberalizing effect on trade is that is eliminates a lot of taxes on imports and exports between the three partner countries, which makes trading cheaper” (http://www.businessinsider.com/trump-nafta-us-jobs-2016-11). After this week’s discussion and reading, I have a better understanding of the impacts that closing US tread could potentially have. While we have discussed how trade liberalization is not always the answer to poverty reduction, we have also discussed how important it can be to increase productivity and allow countries with a comparative advantage to specialized its trade.
Toggle Commented Nov 30, 2016 on Reading for Thursday at Jolly Green General
As an Accounting and Business major, I found “The Latest Findings from Randomized Evaluations of Microfinance” to be particularly interesting. I appreciate the importance of keeping up to date records of financial transactions, and believe that it can help in improving business in developing countries. The paper discusses the role of financial institutions and microcredit in improving the well being of the poor. One aspect of the paper that I found to be particularly interesting was the Evaluation of Product Features- Design Matters. In my finance class, we learned that a safe dollar is worth more than a risky one, and decreasing risks associated with borrowing and lending money in poor and developing countries could be beneficial for both lenders and borrowers. The paper proposed an interesting question on risk management: “does increased repayment flexibility correlate with increased profit and still allow the lender to manage default risks adequately”? (pg. 11) One example described in the paper was a study conducted in West Bengal. Those who were provided with loans that had longer grace periods invested 6% more of their loans in their businesses and they saw 30% higher average profits (pg. 12). While these results were only relevant to this particular area, they lead me to believe that providing loans with a grace period could improve well-being of borrows and lenders in poor countries. It could perhaps provide more of an incentive to invest and grow businesses, since investing in a business produce very long-term benefits. Another part of the paper that I found interesting was this idea of the “missing middle”. This concept reminds me of our discussions of Sen’s Development as Freedom. These small, formal firms are unable to grow and be successful due to their lack of freedoms, in this case, access to capital and formal financing. To tie this back to our discussions earlier in the class, providing access to markets and secure financial institutions from which to borrow could give individuals living in poor countries access to these freedoms and more opportunity to grow successful businesses and improve overall quality of life.
Toggle Commented Nov 14, 2016 on Readings for this week at Jolly Green General
After reading “The Economics of Being Poor” and “The Economic and Social Burden of Malaria”, I feel more informed on the impacts of health on economic growth and development. While we have discussed many times in class how health is one of the main indicators of economic development and improving the well-being of those living in poverty, I had not really considered both the micro and macro effects that health has on an economy as a whole. While the economic and financial burdens of wide spread disease might seem obvious, it is also helpful to consider the social and cultural impacts of widespread disease, as is discusses in Sachs’ article on malaria. I also thought it was interesting to read more about the role of agriculture in economic development. We have discussed how in many poor, rural areas of the world, farming in what many people do for a living. And while this is the case, there are often situations of inefficiency on these farms. In Schultz's article, when describing how human capital in agriculture is shaped by new opportunities and incentives, Schultz explains how “these incentives are greatly distorted in many low income countries” This reminds me of our discussion of efficiency in farming. It makes me wonder, is there is something that the government can do to provide more incentives for farmers to be more productive by reducing the risk of loosing a harvest? There are different dimensions to solving this issue. One aspect that makes this problem of inefficiency is cultural and social norms. In the reading from a few weeks ago about women’s agency and empowerment, I remember reading a section about men’s and women’s ownership of land, and how women would rent portions of their to their husbands in order to avoid working with them, causing inefficiency. This leads me to believe that, while government policy might be useful in increasing the incentive to be efficient in some poor countries, certain social norms might prohibit these policies from being effective. This also leads me to believe that perhaps increasing women's agency and empowerment in the cultural and social setting could be part of the solution to this problem of inefficiency and spur economic growth.
Toggle Commented Nov 2, 2016 on Readings for Thursday at Jolly Green General
Duflo conducts an interesting investigation on the relationship between empowerment and development in both her ted talk that we watched in class and her paper “Women Empowerment and Economic Development.” She proves multiple different points to show how economic development can improve the well-being and social status of women throughout the world, particularly focusing on studies conducted in countries such as India, Bangladesh, and Afghanistan. One aspect of the paper that I found to be particularly interesting was how it examined both sides of the relationship between empowerment and development. Much of the paper is spend explaining and providing examples of how different forms of economic development (mortality rates, immunization rates, political power, insurance, access to markets, education, etc.) can lead to the empowerment of women. Duflo also makes the important observation, which is sometimes overlooked, that while these developments can provide empowerment for women, there are always going to be set-backs or trade-offs. I believe that both sides of the argument are important to consider when making decision on economic policy and development. I also think this ties in with Sen’s idea of development as freedom. Sen argues that improving women’s agency improves women’s well-being, which brings me back to Duflo’s argument of how if women had more opportunities to participate in the labor market they would be better off. I think that one of the most important take-aways from this week’s readings and discussions is that it is more effective for women have the ability to participate and act on their own accord in order to improve their social status and overall well-being, rather than simply providing passive aid to women. Improving women's agency is a long term solution in reducing gender inequality, and it allows women to help themselves and to help other women, while passive aid is short term solution to a long term problem. I also believe that the best way to help get rid of the biases against women is providing them with the same level of opportunity and power as men both in the labor market and at home.
Toggle Commented Oct 19, 2016 on Reading for Thursday at Jolly Green General
I found Rodrik’s article both intriguing and honestly, a bit confusing. HIs article, as the title suggests, does a nice job of diving into the world of development economic growth strategies. I thought that Roderik made a strong argument backed with detailed examples, and I agree with this idea that economic policy must consider the political, cultural, and social aspects of an economy in order to achieve success in growth. As mentioned in many of the previous posts, Rodcik’s main argument is that there is not one single version of policy or strategy that works for every economy, and as we often talk about in class, “it depends.” I found this quote to be particularly helpful in understanding his point: when discussing differences in reforms in China and the West, Roderik explains, "while this particular reform program represents a logically consistent way achieving these end goals, it is not the only one that has the potential of doing so”(9). This idea reminds me of two other readings that we have discussed in class. The first was our reading in Sen’s book "Development and Freedom" where Sen argues that there is not one standardized strategy in assessing the well-being of certain areas of the world. The second is the reading from last week, Kreugman’s “Fall and Rise of Development Economics” where he argues that most economic modeling does not consider enough external factors to accurately implement policy into an economy, further enforcing this reoccurring theme we have discussed through out this term, where in almost all cases, “it depends.”
Toggle Commented Oct 5, 2016 on Reading for Thursday at Jolly Green General
Before reading “The Fall and Rise of Development Economics”, I had never really given much thought into the development and history of economic thought. One aspect of the article that I found particularly interesting was Krugman's explanations of the role of economic modeling. In the Econ classes that I have taken in the past (macro and micro), we were taught a number of different models. But while we were learning these models, I never really questioned where they came from or how accurate they were. This article really made me consider the evolution of economic modeling, and how it is important to remember what key assumptions are being made to form these models. I think this ties in nicely with our class discussion on foreign policy and decision-making. It is crucial to remember that while these models can be useful, they are built upon a number of important assumptions that are not always true in the real world. I also found it interesting how the author related economic modeling to other types of scientific modeling (such as meteorology and physics). It was an interesting way to think about economic modeling, and reminds us again that models only work under a certain set of assumptions and conditions that are not always true in the real world. I also thought it was interesting to learn more about how economic models were become less mathematical. This makes me consider the accuracy of these models. They are often simplified and only make sense under a specific set of assumptions that are often unrealistic in the real world economy. This makes me wonder what other components we might consider in order to make our modeling more accurate and realistic when studying trends in the economy.
After reading the first two chapters of Sen’s Development as Freedom”, I found myself questioning the true definition of “freedom”. It is interesting to consider how differently “freedom" is interpreted within different countries and societies. In these two chapters, Sen explores the many different meanings of “freedom” and how they impact a person’s quality of life. His argument, which I agree with, is that it is both important and necessary to think about poverty on a much deeper level than simply a measure of income. It is crucial to consider the different aspects of a person’s life when formulating ideas on economic policy. While income levels do indicate an important statistic, they do not give any insight to the quality of life. I found it interesting how Sen focused on both developing countries and developed countries, further proving the point that poverty goes way beyond income levels. One concept that Sen touches on in the first chapter is this idea that some economic changes could effect traditions and cultures. I think it is easy assume that growth in the economy and in levels of income is always the best solution. Because of this, I think the cultural and societal effects from changes in economic policy are often overlooked. Sen argues that certain individuals or families are sometimes forced to decide between being “rich and happy” or “impoverished and traditional” (78). This is not an easy decision to make, and I believe that it should be decided by the individuals impacted by these changes (rather than the government or whoever hold power who are making these changes). After reading this section of the chapter, I now have a better understanding of the importance of considering every aspect of society and culture before implementing political/economic policy in a country or region. These two chapters are very relevant to our class discussion of poverty and freedom. Considering multiple different aspects of an individual’s ability to lead a life that they value is important when discussing ways to improve the living conditions in an impoverished country. Thinking about these different aspects of poverty and means of freedom allows us to better understand how quality of life can perhaps be improved.
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Sep 21, 2016