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Anne Riter
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The article from the World Bank was disheartening to say the least. It painted a grave picture of the direction our world is going in due to the emissions of greenhouse gasses and climate change. I immediately thought that if we don't change our ways, we're going to do irreparable harm to our world, but sadly, many people will never come to this conclusion. I had initially done some research on the effects of climate change, but I wasn't aware that it impacted the world in so many different ways, from severely decreasing crop yields, diseases moving around more rapidly, and extreme weather patterns like hurricanes or wildfires. Also, the fact that it affected every part of the world in similar ways means that this issue is not just localized. It is up to every country to implement legislation that will protect their environment while decreasing their carbon emissions. China and India produce the most of these gasses, but it's not just them who feel the effects. The impact this has on development is severe as well. Countries that find it difficult to become developed due to a myriad of reasons will find those reasons compounded due to the environmental impact of climate change. Since poor people don't have insurance, when a natural disaster occurs or even less rainfall or more rainfall ruins their crops, they really feel the effect. It's not even the poor people of developing nations that are emitting these greenhouse gasses, yet they bear the brunt of the consequences. Much like the article we read for class on Tuesday, it's not necessarily up to us to leave the world as we found it. That being said, it is up to us to leave future generations something to work with. At the rate we're going, we will completely destroy the environment and I think we all have an obligation, as citizens of a developed nation who have the resources available, to do everything in our power to prevent the obliteration of our world.
Toggle Commented Dec 4, 2019 on Last Blog Post for the Year at Jolly Green General
Susan Parker and Tom Vogl's "Do Conditional Cash Transfers Improve Economic Outcomes in the Next Generation? Evidence from Mexico" attempts to analyze the data from the Progresa program in Mexico and estimate the long-run impacts. After looking at the data and running several tests, they found that exposure to the Progresa program did improve the well-being of the people who used it. I found this paper to be interesting, since they were able to look so closely at a program in Mexico and see the direct results. I also found the program itself to be a clever way to improve economic and social well-being of those living in poverty. The idea of the conditional cash transfer is that the program will allocate cash payments to families as long as the children regularly attend schools and the family members regularly visit health clinics for check ups. It places an incentive for people to continue their education as well as focus on their health and well-being, which are two of the most important (and endogenous) factors in development. The results from this study were clear: kids who received the full benefit of this program, meaning that they began school as it was implemented, attended school more regularly and for longer and were healthier. I thought it was important that this study was a generational study, and that they looked at how these student's educations positively impacted their work-force participation. Labor force participation was high and rose with age, and the impact for women was even larger. They also worked more hours, were more productive, and their labor earnings rose. Conditional on participation in the program, "men [saw] significant increases in paid work, decreases in agricultural work, and increases in weekly hours," while women "[saw] significant increases in paid work, marginally significant increases in labor income, and insignificant increases in hours." Clearly the impacts of such a program are powerful enough. A program like Progresa clearly has positive impacts on households living in poverty. It incentivizes focusing on education and health and well-being, and keeps children in school for longer. When more people are able to be productive members of a country's labor force, the country will see a rise in GDP and hopefully an improvement in poverty. I think it would be interesting to see a study like this done in a different country and to compare the results to see if these results are actually because of the program itself.
Toggle Commented Nov 19, 2019 on Next Week at Jolly Green General
In "Interest Rates in the North and Capital Flows to the South: Is There a Missing Link?" by Barry Eichengreen and Ashoka Mody, the authors analyze data from different countries to come to the conclusion that there is a statistically significant correlation between interest rates in developed countries, like the United States or Japan, and capital flow to developing countries. What sticks out to me when reading this article is that developed countries like the United States have such a large affect on developing countries. It's not entirely within a developing country's hands how fast it develops. When interest rates are high, the capital flow is small, and vice versa. I will admit that I didn't quite understand the technical side of this paper, since I haven't had the necessary background in econometrics, and I've had very little statistics background; however, along with everything we've been talking about in this class and all the articles we've had to read over the semester, this article falls into the same category that the answer is "it depends." There isn't an answer as to how to best maximize capital flow to developing countries while maintaining interest rates, and there isn't an answer as to why the Asian Tiger countries were successful in capitalizing on favorable market conditions but Latin America was not. It depends. What's most important is that the United States and Japan and other developed nations affect developing nations without meaning to, and that can have adverse affects on how developing nations progress and develop. Economic crises in the United States and Europe cause economic crises in developing nations. I would be curious to look into ways to protect developing nations from these adverse affects and ways to alleviate that dependency.
Toggle Commented Nov 13, 2019 on For Thursday's Discussion at Jolly Green General
In "The Impact of AIDS Treatment on Savings and Human Capital Investment in Malawi," the authors discuss the impact of having ART facilities nearby on human capital. They assert that living close to an ART facility will increase life-expectancy which will then increase education which positively impacts income, health, and well-being in a cyclical nature. In "The Economic and Social Burden of Malaria," the authors talk about the negative influence of malaria on families and how it hinders a family's ability to improve socially and economically. Both articles emphasize a need for investing in health care. The first article found that for families who lived near ART facilities, their children were more likely to go to school longer, their life expectancy increased, and they also increased their savings. When children receive more education, their future prospects also improve and they're more likely to earn a higher income. Also, when girls are educated, their children's health will also improve. This reflects endogeneity and the fact that all of these factors are related and interconnected. In the second article, it points out that children are the worst affected by malaria. Also, the prevalence of malaria in low-income countries inhibits future development since life expectancy is lower. Families who think their children won't live as long won't invest in their children's education and thus, the cycle of endogeneity negatively affects these families. Children who aren't educated won't earn a higher income and their health is typically worse. Both of these articles to me stress the importance of not only investing in health care for low-income countries but specifically child health-care. Children are the future of these countries, and if they aren't living as long due to malaria or HIV, then what will become of those countries? There are so many positive spillover effects when children are healthy, such as attending school regularly, that their future incomes can rise, their future children will also be healthy, and their country will develop.
Toggle Commented Nov 6, 2019 on 3 readings for next week at Jolly Green General
In Schultz's "The Economics of Being Poor," he makes the claim that the misconceptions economists have about the poor in less developed/lower-income countries leads to issues when trying to improve development. He further claims that the economic importance of land is overrated and the importance of the quality of human agents is underrated. I find it interesting that he says that land is of less importance, because this could lead to the marginalization of agricultural needs when looking at policies that could improve quality of live and economic development over all. When talking about the importance (or lack thereof) of land, Schultz mentions the improved research and technology in developed countries. European countries were able to transform their land into a more productive resource while research has developed substitutes for cropland. It seems to me that modern economists ignore these technological advancements. If it is possible for developed countries to develop these ideas and put them into practice successfully, it should be possible for that same technology to apply to lower-income countries who are struggling with perhaps more arid climates. I can see how governments would take this to mean that it is not important to focus on the agricultural sector of a developing country and subsequently implement policies that focus on improving the urban sector, which further advances the urban bias in many countries. Schultz also talks about improving the quality of human capital. This seems like an obvious claim, since an improvement in health and education goes a long way to improving work productivity and quality. He uses the example of life span, stating that the increased life span over the past few years provides more incentives to get more education. Parents then invest more in their children, on-the-job training becomes worthwhile, and as a result people are able to participate in the labor force for longer and their productivity increases. This is a clear result of improving the quality of human capital, and serves to further Schultz's claim that we need to focus more on the quality of human capital instead of just land. Schultz takes issue with the neglect of economic history, which I agree is a mistake when looking at economic trends. At one point, every developed country was in the same position: they were primarily agricultural and were developing. The conditions early economists dealt with were similar to those that are in low income countries today. It seems to me that modern economists don't acknowledge the fact that developed countries were at one point developing countries. Schultz maintains that knowledge is the most important factor in development, and ignoring the history of developed countries reminds me of the movement of ignorance, when processes became more precise so things that were "common knowledge" were ignored. My big take away is that we cannot ignore where developed countries came from and how they became developed, and it's important to focus on improving quality of life.
Toggle Commented Oct 30, 2019 on Blog Post for Next Thursday at Jolly Green General
Similar to chapter 8 of Sen, Duflo's article contends that women's empowerment are both a means and and an end to economic development. She also points out that there is no one solution, whether directly investing in women empowerment or investing simply in economic development. I found it interesting that Duflo's paper focused on the standing of women within the family and how there's discrimination even within the family unit. When women had more agency and were able to make more choices outside of the household, on average, child mortality decreased and girls were healthier. That is not the case for every country (South Africa is the clear example, where when women had more agency, education was not pushed for girls), but for the most part when the mother was educated, the entire household benefitted. Duflo's focus on the difference between policies that advance women empowerment, such as focusing on getting girls to school, versus focusing on economic development, such as focusing on education for both boys and girls, pointed out that in some instances it was beneficial to focus solely on girls and in some instances it was beneficial to not focus on girls. When education was pushed for both boys and girls, and recruiters came to villages in India to encourage children attending school, the amount of girls who received an education increased. The recruiters were not focusing on getting girls to attend, rather they were focusing on getting children to attend. Yet, the increase in girls education was notable. I admire the fact that Duflo clearly states that policies that are geared solely toward women must be justified, because the goal is equality. There are costs of implementing quotas such as reserving a certain amount of seats in a government for women, and I think it's important that we not lose sight of the fact that if we implement policies that improve development, women's empowerment will also improve. However, I acknowledge that in certain situations, women's empowerment needs to be focused on. There are various barriers that prevent women from achieving some amount of financial independence or even agency, and lack of confidence is one. If women do not think that they can achieve more or participate more in the market, then they will be less likely to do so. I think we need to focus on improving women's confidence, because if their confidence in participating in the market increases, then perhaps women will be more vocal about requesting raises or promotions, or they will be more willing to withdraw money from an account their husband also has access to.
In Dani Rodrik's "Growth Strategies" provided a clear point of view that not every economic policy or suggestion that works for the western world works everywhere else. Essentially, no single policy is the correct policy, instead policy-makers, economists, and analysts must focus on the individual countries of focus. I think this was a good supplement to our discussion in class of how, throughout the years, there have been different suggestions about growth strategies. This paper also highlights the fact that neoclassical economics doesn't necessarily mean less government involvement; rather, it means that each situation must be analyzed as an independent situation. The economics of China aren't the same as the economics of Chile, thus they require different answers to their problems. I found it interesting that two countries could do the same thing but have different results, especially the Asian Tigers and the Latin American countries. South Korea, for example, relied heavily on public enterprises and used a series of industrial policies. According to the Washington Consensus, they did 5 out of 10 of the suggestions. South Korea experienced incredible growth. Argentina, however, did more liberalization, deregulation, and privatization than South Korea did. According to the Washington Consensus, they achieved a majority of the points. However, Latin America's growth rate is still below its pre-1980 level. This suggests to me that although the Washington Consensus provides a guideline for economic growth, it's not the end all be all. If a country does everything on the list, it doesn't guarantee success, or sustained success for that matter. I think it was a good starting point, since it provided a set of suggestions about the reforms needed to "establish property rights, put market incentives to work, and maintain macroeconomic stability" (7). I think the main point of this article is that for any suggestions to work, there have to be prerequisites in place. Just because a set of policies was successful in one country or even one part of the world doesn't mean that that same set of policies will be successful anywhere else. It's important to be aware of local culture, knowledge, and customs because all of those things influence the success (or conversely, failure) of the policies implemented.
Toggle Commented Oct 2, 2019 on Rodrik article for Thursday at Jolly Green General
In Krugman's article, "The Fall and Rise of Development Economics," he points out how strange the history of development economics truly is. Typically, all things that rise must fall, but in the history of development economics, it had to first fall in order for it to rise. I think Krugman's various analogies such as the Norwegian's and their folk tales about cloud shapes or the map of Africa becoming empty accurately describe the history of economics as a whole, not just the history of development economics. Before any of the math had been ironed out, economics relied on basic theories and graphs to describe phenomena economists observed. It also relied on a series of assumptions that attempted to boil down human action into "bite-sized" pieces. As the rigor increased and the techniques became more difficult, economists started to omit the information they couldn't explain away nicely. I find it sad and a little disheartening that so much in terms of development economics could have been achieved between the 1940s and the 1970s had people been willing to leave a few things left unexplained. Perhaps a lot of good could have been done to aid those developing countries stuck in the loop or the countries lagging behind (as the article last week described) had those economists not been worried about tying all the loose ends. What is also similar to the article last week is the high development theory itself. It's described as very cyclical, where one action begets another which begets another and in the end, the final action improves the original situation, which then starts the cycle all over again. The cycle doesn't have to be positive, either. Economies can be stuck in a "low-level trap" which reminds me of the developmental laggard countries described in the article from last week. Although it is possible for countries to escape the low-level trap, I think it is extremely difficult, and since development economics has only really recently (since the 1980s) developed itself, I think we have a little longer to go before people start to understand the difficulties poor countries face when trying to go from a primarily agrarian society to a manufacturing one. Probably the easiest way for this to be done is through technology, and if Google really did achieve quantum supremacy, then perhaps that technology can be used to improve the models put forth by Hirschman, or even to help the farmers in those lagging countries improve their situations.
Toggle Commented Sep 25, 2019 on Reading for next Thursday at Jolly Green General
The article "Institutional Barriers and World Income Disparities" analyzes the income disparities between two groups of countries, those with fast-growing economies, and those they call "developmental laggards." Within each category, they looked at countries in Asia, Africa, and South America. Interestingly, all of the countries faced similar issues such as economic downturns, however the main difference between the fast-growing countries and the developmental laggards is their ability to overcome those difficulties. What stuck out to me was the fact that the countries with fast-growing economies typically had export-based economies with open policies. The developmental laggard countries all had some level of governmental protectionism, which protected those within the market well enough but didn't promote any productivity or competition. For example, in South Korea, the Five Year Economic Development Plan focused on shifting their energy from primary exports to the manufacturing sector, which promoted investment in high-tech exports. In Côte d'Ivoire, however, the economy is heavily focused on cocoa output and export, which led to a structural problem of their economy due to the dependence on cocoa production. When cocoa prices collapsed (and never fully recovered), Côte d'Ivoire was left with a serious problem. What I noticed was that countries who experienced this type of problem are unable to divert resourced to the manufacturing and technology industries. A hallmark of the fast-growing economies is the importance that is placed on tech. Not only were the economies in developmental laggard countries primarily agriculturally based, but many of those countries face serious corruption. Government allocation is then inefficient, and as a result, these economies are unable to shift from agricultural societies to manufacturing ones. What was interesting to me were the South American countries, which are categorized as developmental laggard countries, yet they're not primarily agriculture based. They showed initial growth relative to the United States and seemed to be doing well, but they all more or less suffered from the same issues: accelerated inflation, foreign debt, and corruption. Chile, on the other hand, pursued a free market reform. I think Chile could be an interesting country to delve deeper into, since Chile is now one of the healthiest economies in Latin America. Why is Chile still considered a developmental laggard country if their exports grew rapidly, per capita income took off, inflation declined to single digits, wages increased substantially, and the incidence of poverty plummeted? What is the cut off between fast-growing and developmental laggard, and has Chile reached this point?
The Economic Lives of the Poor posed a series of interesting questions that suggested that the status of the poor and the extremely poor (and whether or not they were likely to remain poor) relies not only on economic factors of the country but also on different social and familial issues. I thought it was interesting how they analyzed the data from countries such as India, Pakistan, Mexico, Cote d'Ivoire, etc... and how many of their spending habits and their priorities were very similar. It was also interesting for me to compare how people who live on less than $1 or $2 a day in those parts of the world to what my grandmother's experiences growing up in a poor rural area of Denmark were. They were by no means extremely poor, but they had a paltry income to support themselves. Much like the poor families of the countries analyzed in this paper, her family was very large (11 kids, 2 parents, plus aunts and uncles that lived nearby) but what her family chose to spend their income on differed. A lot was spent on the farm and for the family, and her parents were specialized. While in places like Udaipur, Mexico, and Pakistan the adults of the family would work part-time on the farms and part-time doing some other work, in Denmark it was important that the work be 100% on the farm at all times. The adults were not able (or perhaps not willing) to have the flexibility to work in different places, as ones status within the Danish rural communities rested heavily on where your farm was and how it was doing. There is a large sense of pride attached to the family farms in Denmark, and whether or not you could afford to buy "frivolous" items was secondary. A huge form of stress for my grandmother's family was the farm. School was also not a priority for my grandmother, and since she was neither a boy nor one of the oldest children, she completed 8th grade and no more. What stood out to me was the contrast between public and private schools in India and how, while private school teachers showed up to class more often than public school teachers did, they were not as educated (or had the proper certification). Same with the health care providers. Private providers offered more care and attention, but they weren't as well trained. On the economic side of things, it did seem like those living off of $1 or $2 a day knew they would make impulsive decisions with their money and used it as an excuse not to save. Instead of saving up and buying something for their business or their farm, they would spend the money on alcohol or tobacco or entertainment. It also seemed that the lack of specialization hindered their abilities to make any significant strides within their community. Instead of focusing on farming or focusing on running a business, they would split their time between both and never really advance in either. I think it would be interesting to focus on the poor or the extremely poor families where one of the adults did choose to specialize, and to see how their economic standing changes, whether their income or happiness increases or if their values change.
Toggle Commented Sep 11, 2019 on Readings for next week at Jolly Green General
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Sep 11, 2019