Reading about the real affects of climate change was disheartening to say the least. To read how much of a negative impact a 2 degree change in the temperature of the world will have in all over the world is shocking. The world bank document really outlined how far-reaching the effect of climate change can be. Additionally, in Nepal you can see a lot of the effects that the authors talk about in the document. Every year you read in the Nepali news about floods, fire and drought happening all over the country. Nepal already naturally has a problem with flooding during the monsoon season, and if the monsoon pattern alters due to climate change then the country might face even more dire consequences. Additionally, due the the prevalence of sloping terrains in the hilly regions, there is a risk of landslide. We already witness a rising number of soil erosion, land slide and flood every year caused by climate change. Like the article outlined, this impacts the rural and poor population more as they are more likely to live in those regions. Another sad realization for me was that more than half of the population that lives in the hilly region of Nepal relies on agriculture, forest, livestock, and how these these are affected by climate change. Climate change does disproportionately affect the poor agriculture-dependent community in Nepal when unexpected flood during winter and drought during the monsoon season messes with the crop growth. Additionally, they have the least resources to deal with a climate-change related disaster. It is not clear to me to see what a poor developing country can do to fight climate change when majority of the people are depended on the natural resources to maintain their livelihood. Promoting sustainable agricultural practices is necessary, but like we talked about in class last week, how can we think about the poverished population of today as well as the future generation?

Parker and Vogl's paper on the effect of conditional cash transfers on economic outcomes was interesting to read because it attempted to measure the future effects of investment in human capital. Cash transfers clearly have positive effects on years of schooling, increase help labor participation rate, wages, wealth and the effect is higher for women. I think this is another example of how a policy targeted towards economic development helps empower women. Although the paper doesn’t discuss the pros and cons of conditional transfers versus unconditional transfers, I think that is something important to be discussed. One of the conditions that are mentioned in the paper are that if a student fails more than once, then the schooling benefits are taken away. This bit of information made me wonder if there are certain groups of students that are more likely to fail more than others due to some external factor outside of their control. I know that in rural areas in Nepal, due to lack of access to toilets, some girls miss out on school during the time of their menstruation. So, I wonder if there is a potential for another research to be done to find out if certain students with certain characteristics, or that come from a certain background, are more likely to fail, and what we should do in hand with cash transfers to help those students keep this benefit. The paper also talks about how sometimes the transfers came too late to prevent school dropout, which is a concern. Someone in the blog mentioned how in the Netherlands, families get unconditional cash transfers for every child they have. I know this is true also for other Scandinavian countries. These countries have high investment in human capital and there is a safety net in place for children born that ensures that their basic needs are met. There is just an immense need for early intervention, for both the short run and long run benefits.

I hadn't really considered the complexity regarding the push and pull factors in international capital until I read this weeks paper by Barry Eichengreen and Ashoka Mody. With the intermediate macrotheory knowledge I have, I knew that interest rates determined the capital inflow and outflow to and from a country. So the argument that the higher interest rate in the North leads to less capital flows to the south made sense. At the same time, we learn that investors are also concerned with risk, capital mobility and economic condition. But as the paper discusses, we don't really know how to assign weight on what is more important. And like we discussed with the past papers, we can't conclusively deny the effect of something on our outcome when we can't do a properly randomized experiment. Especially when we see a dichotomy in what we know qualitatively and what statistical analysis tells us, I think regardless of what numbers tell us, we should be wary of the conclusions we make. I also wonder, in the case where studies in the future find conclusive evidence that rates in the North impact capital inflows, what kind of policies (alongside capital inflow taxes) can go in effect to benefit the developing countries? The paper mentions the role of the IMF, but I wonder what that would look like. Additionally, because the North is also susceptible to economics shocks that change interest rates drastically, and in this capitalistic world people have their own profit maximization in mind, so how depended should a developing country be on the North? Another big finding of this paper was the importance of looking at both the supply and demand side to understand the relationship between the north and the south. Countries in the south issue less bonds at a time of high interest rate, driving up the bond prices. Can and should policy intervene to diminish the effect of this? This just highlights the complexity of the question that we are looking at. There is not a straight forward answer to big economics questions and everything is so contextual.

Both articles highlight how important it is to invest in health specially in developing countries. Using difference in difference model Baranov and Kohler show that ART availability not only saves lives but also has positive effect on investment and saving in children’s human capital, which directly transforms to investment and savings in the future. The cost of having an epidemic such as Malaria is great not just for a household, but for the entire nation. I see it vital to invest in public health and medical technology for malaria control. Along with that, knowing that bednets, sprays and environmental control measures are successful measures to control for prevention, I wonder how successful countries in Africa have been in spreading this knowledge and awareness in the most malaria-prone regions. Spreading knowledge and awareness is the most cost effective prevention measure and if done effectively I think can create a change in behavior. I know in Nepal, where Malaria epidemic has been a national problem, I know that along with investment in public health, malaria awareness programs and campaigns advocating behavior change has played a role in decreasing number of cases. It was also interesting to read how malaria affects women, and pregnant women particularly, and contributes to higher fertility, which has additional costs associated with it.

My favorite line from "The Economics of Being Poor" is "In agriculture poor people do respond to better opportunities." This article reiterates a theme that we have seen in the past papers we have read: just because people are poor, it doesn't mean that they are any less rational. If given the right opportunities, if people could pull themselves out of poverty, they would. But there are things prohibiting them from doing so. One of the inhibiting factors that Schultz mentions is government distortions that "reduce the economic contribution that agriculture is capable of making". We have read a little about how urban bias is a problem when it comes to development and Schultz reiterates this too. The government promotes urban growth at the expense of the poor people working in the agricultural sector. It is sad that the hard work that people do is not being valued, and in place of giving farmers incentive and opportunities to expand their entrepreneurial talent. I wonder how exactly the incentives are distorted? Another thing I found striking in this piece by Schultz was him stating that land was overrated, and the potential of finding substitutes. I don't know how long the substitutes would sustain us for and how far we can develop technology.

Esther Duflo's paper on women empowerment and economic development sketches the importance along with the complexities in improving the wellbeing of women and bringing about gender equality. She gives examples of cases where economic development programs have brought about women empowerment unintentionally. However, she also highlights that economics development is not sufficient to ensure the empowerment. In many of the examples that were given where increase in income allowed women access to resources and opportunities, leading to better outcomes for them, we don’t know if those changes brought about changes in peoples’ perceptions, and implicit biases against women. To fully empower women, we need to also be able to change the mindset of people who do not view and value women as equals and constantly doubt their capabilities. Men hold power in society and I so not think any amount of development policies aimed at growth only will be sufficient to transfer this power to being about equality. While economic development programs may lead to better outcomes in terms of education, health and fertility for women, I wonder how successful they are in bringing about a greater change in social norms and conservative views that still hold women back in developing countries. Dufflo also talks about the importance of women empowerment, not just as a means to an end, but as an end in itself. Empowering women and allow them to expand their capacities and opportunities so that they can live the life they value is important in its own right. I think to combat the years of inequality, mistreatment and lack of opportunities for women, the steps we have to take, policies we have to put in place, to bring about empowerment and equality might have to be radical, even if they serve only for women because women are the ones that are the most behind. Yes, I do think it is important to take an economic approach, think about the cost and benefit, the opportunity cost even, when thinking about policies aimed at women empowerment, but equally important is to recognize that to undo years of oppression and mistreatment, we have to make women empowerment a priority and first and foremost an end in itself.

We read about false paradigm for class on Tuesday and Dani Rodrik's 'Growth Strategy' really brought the concept to life. Rodrik discusses how economic development doesn't require one particular institution. He writes that growth is not only dependent on privatization and open market, there are other policies, other institutions, sometimes completely unorthodox, that can drive growth e.g. China. He brings forward a very important point that the developing countries should not be blindly replicating the institutions of the western world. Developing nations already have institutions set up. What needs to be done is that they need to be worked on. Without considering the historical, social and political context, we cannot say that a policy or institution framework that worked in one country will work in another and will not cause dire consequences. A country that is poor, like Nepal, is also very susceptible to political influence from other powerful countries, like China and India. I wonder how neighboring countries and adjoining power politics that comes with it has influenced countries like Nepal in the past to replicate/not replicate a policy/strategy. Rodrik also distinguishes between igniting and sustaining growth. He says that sustaining growth is much harder than igniting because sustaining requires formation of institutions that 'maintain productive dynamism and generate resilience to external shocks'. Since we have been discussing in class how developing nations are stuck in a trap, I wonder if getting out of the trap implies that counties have found a way to sustain growth.

In the article, Kruger highlights the importance of building a model in economics, while at the same time acknowledging that there are limitations to modeling. There are so many factors that play a role in an economics phenomenon and models tend reduce the complexity, that is society, to a math equation, or graph, that cannot always capture what is happening. But at the same time, modeling is a place to start understanding the social world, because we do not always have the deep insights we need. I remember reading in this week’s reading something along the lines of ‘something being necessary doesn’t mean that it is sufficient’, and I think that Krugman in this article is alluding this in some ways. A model that we create based on unrealistic simplifications is necessary but not sufficient to understand the complexity that is our world. From what I understand, Krugman is stating that although models are not the true reality, they are necessary, but not sufficient to make a conclusion about what is. But this raises the question: how do we determine how far this ‘metaphor’ is from the true reality? How do we calculate the worth of an economic analysis then? If we simplify too much, then don’t we run into the problem of external validity?

While last week we read about how poverty looks different at a micro level, it was interesting to read this week’s article regarding how similar laggards and economies stuck in the poverty gap are. We saw in the previous reading that while people from poor households across the world allocated money differently than expected, they all relied heavily on agriculture. And not surprisingly, the common feature of laggards and countries stuck in the poverty gap is that they mostly export agricultural goods. On the other hand, the economies that have been doing well have focused on industrialized products, IT and research and development. I understand that at a macro level things like industrialization, corruption, and open market impact the economic growth of a country, but I wonder if we can conclude that it impacts all the countries the same way without considering other cultural, social and political factors that hinder growth or the resources available in each country. For instance, could we just rely on institutional change and reformed economics policies to allow a country stuck in a poverty trap to advance where we also observe extreme inequality, political instability, civil unrest, or any country-specific struggles. Since we have been learning that poverty is not just a measure of the national income, I also wonder how the growing wealth has been distributed in the countries that have observed economic growth?

The Economic Lives of the poor was eye-opening in many regards. I hadn't really thought about how different poverty, or living on less than $1 a day, would look like in different developing nations. The facilities and services, and even how people choose to spend their money differs quite significantly amongst the 13 nations. The resources available in the country and the cultures and society people were brought up must also play a role in what poor people prioritize in terms of spending. Many questions and thoughts came to mind while reading this peace. A lot of the problems that people faced seemed to be because the system in place was not accountable or reliable. While people living in poverty do have the autonomy to choose how they spend their limited income, the lack of developed infrastructure makes it difficult for them to really improve their living standards. When taking about the quality of education, the authors try to speculate why parents would choose to keep their children in public schools that were not providing quality education. But would parents moving their kids elsewhere really solve the deep-rooted problem regarding the quality of education in rural areas? Would migrating elsewhere really solve the problem? Because in the schools and places people left, the problems would persist. Also, there is already so much burden on people who have to survive on less than $1 a day, I wonder how much time and effort they are able to put on making decisions that were discussed on the paper? And regarding problems people living in poverty face with land ownership and access to credit from formal institutions, people do not have the power or infrastructure to combat that, so how can the government intervene? I wonder what the government is doing currently to combat those issues?