As with nearly all conclusions to rigorous economic (or any other social science) analysis, Eichengreen and Mody’s paper “Interest Rates in the North and Capital Flows in the South: Is There a Missing Link?” posits that the rigid hypotheses presented in the introduction are never the only answer, but instead a combination of multiple nuanced factors. In this case, the authors determined that capital flows to developing countries are neither solely the product of wealthy countries’ interest rates, nor solely the product of developing countries’ policies and behavior. The authors, as well as several of my classmates, acknowledge the potential economic impact that monetary policy decisions have on developing countries, so I will focus on a more moral question, and relate it to a class discussion I had while abroad in New Zealand. This was a global political economy course, and the article in question discussed countries who choose to “dollarize”, that is to peg their volatile currencies to the US dollar. Argentina has discussed this action before, and Ecuador, El Salvador, and Zimbabwe among others are currently dollarized nations. The article, written from a Latin American perspective, raised the issue of being at the whim of US monetary policy, and the struggles that can bring when the US has actively denied dollarized nations input in policy decisions. While one could argue these nations made a conscious choice to peg their currencies to the dollar, I would stop short by referencing the evidence for in Eichengreen and Mody’s article. Despite the fact they found US interest rates to not be the sole determinant of capital availability in developing countries, the decisions of the largest economy in the world have far reaching effects, and oftentimes acting in self-interest results in the phenomenon David Cohen described as “beggar-thy-neighbor policy”, in which demand is essentially stolen from other countries. I find too often Americans are so concerned with our domestic issues we fail to reflect on the impact our decisions have on those who live around the world; we tend towards the mindset that our decisions affect those of us within US borders, especially when it comes to decisions like monetary policy. I don’t mean to argue that Ecuador should suddenly have an equal say at the Fed simply because it relies on our currency’s stability, but I do think both the dollarization article, the Eichengreen article and even our recent Presidential election are evidence that more thought should be given to the ripple effect our decisions have. As the largest economy and most politically influential nation on Earth, it is naïve to assume our decisions and their effects are confined within US borders and to US citizens.

While reading Schultz’s lecture, I was struck by a paragraph under the header, Land is Overrated. Here, Schultz comments on the irony that the dismal science of economics can demonstrate that Malthus’ apocalyptic model of our planet’s supposed inability to sustain a growing population with adequate food resources is unlikely at best. He concludes this section with a rather poignant quote, “Mankind's future is not foreordained by space, energy and cropland. It will be determined by the intelligent evolution of humanity.” This reminded me of a quote I found prefacing the first chapter in Matt Ridley’s Book “The Rational Optimist”, one that related quite well to the above quote and our class discussions. Thomas Babington MaCauley was quoted saying, “On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?” While not an economic concept, it has wide reaching implications, and both observations should temper the often inflammatory and dramatic tone of predictions about the future. In his post, Alex Shields wondered when we might face the situation where our reliance on technological advancement to save us from ourselves will fail, and he is right to do so. Humanity has demonstrated throughout its history the ability to adapt when necessary, and especially in the past few centuries to drastically improve our productivity, and by extension the quality of our lives. While we cannot just sit idly and wait for technology to save us, I agree with Ridley’s overall argument that we should not be as terrified of the future as we tend to be. Keeping this in mind, we must remember to keep open all possible opportunities for those future technological advances to be realized, and this will be most efficiently achieved by promoting development through women’s agency, improved education and free flow of all forms of capital, human capital in particular.

Esther Duflo makes a number of compelling points in her paper, “Women Empowerment and Economic Development”, but one in particular stood out to me. Though I have studied poverty and development for several years at W&L, I had never considered, as Duflo presents it, that economic development goes hand in hand with a reduction in fertility, and as such is an indirect avenue to saving women’s lives. As citizens of a wealthy, developed nations, we rarely think about the danger that childbearing once posed, and still poses to the women of poor nations. The statistic Duflo offers is shocking; while 1 in 4300 women in developed regions die due to complications from childbirth, 1 in 31 Sub-Saharan African women do. That is a staggering difference, even though that region is likely to be the worst in the world. From this insight, I drew a connection to a class I am taking called Health Economics in Developing Countries, in which we just finished a paper by Paul Glewwe, which looked at data from Morocco to assess the impact of a mother’s education on child health outcomes. Glewwe’s work, and that of many researchers before him, found a strong positive correlation between increased mother’s education and improved child health, but he also found a strong connection between education and reduced family size. This is due to education increasing the opportunity cost of having children, and in a purely economic sense they become liabilities rather than productive assets, and fertility goes down. Economic development, women’s empowerment and better education for women all go hand in hand as goals within themselves, but the evidence presented by Duflo and Glewwe point to far more wide-reaching and positive outcomes beyond the direct impact to women. Education and development allow women to better access their full potential, participating in the workforce and endowing them with the resources and knowledge to better care for their children, which improves the outcomes of the children they already have, while reducing the chance they die in childbirth or cannot support a family.