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Sally Ennis
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I really enjoyed this article as it clearly demonstrated the impacts of microfinancing on developing countries and lower income families. Something that I found really interesting was in the Grameen-style lending had different effects on rural and urban areas. More specifically, they reported that those that had access to microlending led to "the probability of starting a business increased by 1.7 percentage points relative to comparison areas, implying that approximately one in five of the additional MFI loans in treatment areas was associated with the opening of a new business." However, in the rural areas they did not see the implementation of these microloans to lead to an increase in new businesses. There are two points of discussion that came to mind: one being that I am curious as to what the success rate is for the new businesses in the urban areas are and the other being that this difference in the formation of new businesses makes sense because there are more opportunities in urban areas than there are in rural areas, making it easier to create a new business. This highlights that the purpose of the microloans matters as different families face a wide range of needs, so having a definitive goal for the use of microloans is not effective.
With very little knowledge in the bond market and international fiscal policy, I found the article interesting as it opened my eyes up to something I do not understand very well. I feel like there was little focus on explaining what certain technical terms meant, especially ones that showed up throughout the research. For example, I would love if you could clarify the meaning behind spreads and how they can be seen in different markets. Are they just a metric for regression analysis, as in the traditional definition of a spread in statistics? However, based off of what I interpreted, the role of US interest rates plays a crucial part in international developing countries borrowing rates. In the paper they state, “In addition, there is a tendency for relatively poor credit risks to drop out of the market in periods of relatively high U.S. rates”. This concept makes sense as when there are higher interest rates, the countries that are struggling the most will have a limited borrowing amount as they do not have the means to take the risk for repaying the debt.
Toggle Commented Nov 19, 2021 on ... at Jolly Green General
I really enjoyed looking at the results from this regression. Some of the results are what you would expect but some of them are very surprising. For example, Figure 4 shows the relationship between returns to schooling and economic growth in Argentina, and the rate of return was relatively stable while growth was extremely volatile. The article mentions that there is tension between education and technology, but what is the potential missing variable in the graph that could explain how the returns remained so stable, as I would think it would ebb and flow with the growth projections? In the section that is focusing on the social returns for education and income, I think that the findings, largely supporting that the social rate of return on education is very high, are completely in line and support what we have been talking about in class. Not only because education is a positive externality, however the data suggests that taking that into account the return could be 50% higher than normal, but also the idea of assortative matching. Overall, I found the conclusions fascinating and seeing the relationship between education with income and other variables in developing countries.
Toggle Commented Nov 11, 2021 on For Friday's Discussion at Jolly Green General
I think that Duflo does a great job at reinforcing what we have already discussed in class about the role of women, but also shines important insight on what women in countries other than our own are facing. To start with what is happening in the US, I found the implicit association test to see the bias towards women in the workforce vs. family was fascinating. It shows that there is deep-rooted bias towards women and that subconsciously makes women think of them as inferior, resulting in women to be less likely to take a leadership role or role of high importance. This is where the theme that has been present in our class the entire year comes in: educating women. I want to mention a different point that I found interesting that seemed to be prevalent in the United States but not nearly as prevalent in other countries. This is the concept that women are extremely meticulous in who they marry and which women are able to marry certain men. The paper shows evidence that this has numerous outcomes for the women that tend to be wealthier and marry into a wealthy family. However, in many of the experiments this creates a bias and complication based on the women’s marriage preferences. To conclude, Duflo states, “Contrary to what is claimed by some of the more optimistic policymakers, it is, however, not clear that a one-time impulsion of women’s rights will spark a virtuous circle, with women’s empowerment and development mutually reinforcing each other and women eventually being equal partners in richer societies,” and I think that is so important to keep in mind that it is not a one time policy or educational program that will bring about change, rather, it is a continuous improvement in standards for women that will then have spillover effects in all parts of the economy.
Toggle Commented Oct 29, 2021 on For Friday's Discussion at Jolly Green General
Although it is largely a product of our creation, this is an extremely eye opening article. Many people hear about the effects of climate change and what is will do to us in the future, but this demonstrates that consequences are already happening and are going to get continuously worse. Something that caught my eye when looking at the different factors is the importance of water and glaciers. For glaciers, it mentions that “in Central Asia hydropower generation has the potential to play a major role in the future energy mix however the predicted changes in runoff distribution will mean that there will be less water available for energy generation” which poses an upsetting dilemma because it demonstrates that we have the means and technology to move towards better energy uses and ways to provide, but we might not be able to because we are too late in shifting energy production. I also want to mention the impacts of developed countries consumption and wastefulness on developing countries. Staying with the importance of water, we see that sea-levels rising is extremely detrimental to all coastal towns around the world, but particularly for the developing ones that have a large industrial community on the coast. These countries are taking steps to try and develop and grow their economy, however the rising sea-levels that are caused from outside countries are inhibiting them to develop. With the rising levels, this leads to increased storms and potential pollutants in freshwater aquifers. It reports that in Haiti 70% of people live in informal settlements in high-risk zones are causing negative effects because when they have to move it weakens the rural and agricultural resources of the country. In closing, I think that this report not only demonstrates the impact of our behavior on society as a whole, but how we are actively hurting others that are far worse off.
Toggle Commented Oct 21, 2021 on For Friday's Discussion at Jolly Green General
As we have already talked a little about South Korea during class time, I really enjoyed getting to know the deeper history behind their fascinating growth story. What I first want to discuss is the role that the chaebols had in the turn of the economy. These are described as large family-owned conglomerates that later were the main powerhouses of the economy that seem like they were close to functioning as oligopolies. I particularly want to note that although these were extremely effective and not uncommon to focus on certain industries through the use of big conglomerates, the relationship between the state and the firms lead to potential ethical concerns: “Firms engaged in enterprises not favored by the development plans found it difficult to gain access to credit: nor could they receive special discounts and exemptions. Each chaebŏl leader found it necessary to work closely with the government and contribute generously to pro-government political campaign coffers and to pet projects favored by regimes of Park and his successor Chun Doo Hwan.” This unorthodox way of coercing the firms to follow governmental campaigns is how the large chaebols remained in power because no other firms were given special treatment unless they followed the certain developmental plans. I also want to mention the level of corruption that was allowed in the developmental process, as the chaebols success fluctuated based on the idea that corruption wasn’t tolerated only if it reduced the efficiency of the firms. This leads me to question how much of these policies and reforms that were put in place actually the determinants of the rapid growth, or did it stem more from behind the door deals and special relationships between the chaebols and the government? After the shift in reducing the size of the chaebols in 1997, we see that there was a brief period of extreme growth again, then it began to plateau.
I really enjoyed the approach that the authors took in explaining the different income disparities in the varying countries. I first want to point out the use of the graphs as a way to support the argument of institutions providing barriers in development between the different countries, especially in the separation of the fast-growing, trapped, and lagging countries. One particular country I want to focus on is India because it really shows what the impact of institutions have on the development of the country. If you analyze the graph you see that they were behind in growth largely because of the government’s role in the economy as it restricted trade and other policies. However, when the government began to become less involved in the restriction and investing more in an open market for trade and capital, they saw extreme growth. Lastly, I think that the IMF’s emergency loan pushed out the last remnants of the restrictive institutional barriers on the economy. I also found it interesting that in the findings from each of the groupings of countries there are distinct differences in their approaches to growth. If we go back to last weeks discussion about the high development theory and the concept that modernization requires modernization, the trends in these countries roughly follow that model: in the fast-growing countries they focused on increasing exports and shifting to more industrialized economies rather than traditional. On the other hand, we see the countries that are stuck in the trap largely use agriculture as their main form of income, but when there are conflicts that arise in either the government or the global market, the exportation of goods fluctuate and negatively impact the countries economy. This demonstrates that in countries that experience corruption, government misallocation, or solely utilize their agriculture leads to much higher levels of financial instability.
Toggle Commented Sep 30, 2021 on For Friday's Discussion at Jolly Green General
I think that the comparison and use of the "dish-pan" model is a great example of how almost everything can be applied to a model or theory. For this reason, I agree with the article that it is surprising that something as simple as the high development theory could not be transformed into a model that would then be more widely accepted and supported at the time. The article pushes our understanding of models and highlights that although models provide an oversimplified way of understand complex concepts, it neglects crucial information that may influence economic decisions. This reminds me of the use of ceteris paribus and how it is particularly useful in modeling and theories, but relatively unlikely to happen in the real world as one can't hold certain variables constant while manipulating others outside of a model. I really enjoyed the backstory and history behind the map making in Europe of African countries because it shows that the development of ideas ebbs and flows as new information is being processed. It does raise the question of what else has been left out or disregarded because it hasn't followed the traditional format for displaying information? In a field that is still developing and is relatively new, I wonder if there are other concepts that have fallen through the cracks.
Toggle Commented Sep 23, 2021 on Krugman for Friday at Jolly Green General
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Sep 16, 2021
To start off, I really enjoyed this article and the way that Sachs organized it in order to best explain the importance of these goals. I had very little knowledge of Millennium Development Goals before reading this and I had no idea about SDG's. First and foremost, I think that placing more of an emphasis on sustainability and the wellbeing of the entire planet is the proper approach because it will benefit everyone in the long-run while providing support for low income economies. I think that the approach they are taking for the SDG's will allow for success, particularly because they are able to use the downfalls and strengths of the MDG's. In the creation of the SDG's, having the triple bottom line approach as the focus in creating the goals and standards will function as a collective mindset for all of the countries to maintain and this will hopefully make them more successful. In this same vein, I think that making the SDG's relatively short and to the point - something that they found success in with the MDG's and failure in the Agenda 21 - will ensure that the countries have a clear and concise vision that they are working towards. Getting a little more into the global context, something that I found promising was the discussion on the importance of the private, public, and civil sectors needing to unify in order to reach these goals. This is opposite of the MDG's, where it is noted that "Only a handful of countries have abided by their promises to give 0·7% of their gross domestic product as official development assistance," so implementing quotas, assessments, and levies will provide adequate funds to meet the goals. Going back to the different sectors being involved, the use of the public sector and governance capabilities coupled with the private sector will result in new standards for technological advancements going forward. This certainly will apply to the sustainability field but also hopefully pave the way that we view any advancements in groundbreaking fields. Lastly, I want to mention the contents of SDG 3, with the focus on wellbeing and life satisfaction. Like we discussed in class about why those in extreme poverty don't allocate all of their income to food, we can say the same about the concept of mainly looking at GDP and income to make conclusions about countries. We have to put more emphasis on what it means to be human and what is require other than the necessities to live, so the goal of introducing a new multidimensional measure of wellbeing will take more pressure off of the economic factors of life and put more importance onto the mental factors of life.
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Sep 16, 2021