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Margaret Klein
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Casey evaluates how uncertainty affects the adoption rate of agroforestry in Central American and how the differences in weight of this information based on a farmer’s situation can affect decision-making and adoption of the practice. While the data shows that the innovative practice can increase financial and nonfinancial benefits for farmers, some are still reluctant to adopt based on future and predicted income rather than immediate benefits. Because of the subsistence aspect in the industry, it is hard for farmers to give up their old, less productive practices because they know it will produce enough food for survival. In turn while the new practice may be more profitable in the future, the risk of starvation limits poor farmers who lack confidence in the information and the stock of human capital relative to other farmers in the area. The decision-making process that occurs for farmers and agroforestry is similar to that of parents deciding between sending a child to school or to work. While the long-term costs of child labor are evident, it is much easier to understand the short-term benefits of the extra wages for the family. The problem of uncertainty shows the lack of infrastructure and lack of access to credit and insurance in these areas. Because uncertainty and risk is a foreign topic to the farmers due to lack of access, they put less weight on the information of future potential profits and have little confidence in the new technology. Farmers with increased human capital on the other hand, were more likely to adopt the practice due to increased weight put on the new information. This point was very interesting to me as it drew together many of the other topics that we have discussed with human capital and its importance to economic development. The farmers were less likely to adopt the practice of agroforestry even though it could increase potential profits, and lack of human capital played some, if not a large, role in this decision process
Toggle Commented Nov 14, 2013 on ECON 280 Paper for Thursday at Jolly Green General
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Oct 3, 2013
In this paper, Rodrik argues the importance of local knowledge on top of traditional economic growth strategy. He uses the Washington Consensus including its reforms as the structure for economic policy. While he agrees that this structure is extremely useful and successful, he also shows multiple examples of countries that use bits and pieces of this reform strategy and still manage to exhibit significant growth. He even cites unorthodox strategies, or strategies that contain some unorthodox components as successful economic reform. China is a major example in this paper because it instituted partial liberalization to many areas of its economy after seeing success in the agriculture sector, showing that the principles outlined in the Washington Consensus do not apply to all situations. There are certain institutions that must be in place in order for some of the policy recommendations outlined in the plan. I think with this idea that one reform outline does not work for every developing country. Policymakers must look at the institutions in place and determine which combination of reforms will work for that specific nation. This can help solve short-term economic reform, while giving way to additional reforms as outlined in the Washington Consensus for the future once the economy develops and the nation becomes more sustainable.
Toggle Commented Sep 26, 2013 on Growth Strategies - Econ 280 at Jolly Green General
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Sep 12, 2013