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Although I was wary of some of the generalizations about the African continent, which was at times almost equated to a country, I actually found this paper one of the most interesting we have read this year, and I think it did offer informative insight into China’s development strategies. First, Ravallion begins by qualifying some of the differences between the continent of Africa and the country of China. He said that the primary differences “between China at the outset of its reform period and the typical African country today [are that] African countries tend to have higher inequality, higher dependency rates, and lower population density.” Because of the high inequality, Ravallion argues that many African countries need to have a higher growth in mean income to have the same amount of poverty reduction as China. Similarly, the high dependency rates may hinder growth and poverty reduction. As for the low population density, less proximity between people may slow technological innovation, make certain infrastructure more expensive per capita, and create less “inter-country conflict” that some say “forge stronger states in the long term.” Second, Ravallion discusses China’s progress against poverty. He talks about the huoku system that impeded rural migrants from moving to urban areas. Afterwards, he discusses the urbanization processes, FDI, and trade reform that actually did little to reduce poverty. These changes, he says, came after investments in human capital and agriculture—the investments that did the most to reduce poverty. Third, Ravallion discusses the rising inequality in China that might be problematic for African countries where inequality is already a bit high. However, he says that there is not necessarily a trade-off between equality and growth. Fourth, Ravallion discusses achieving pro-poor reform in China. In the 1980s, the Household Responsibility System in China redistributed land and required families produce a quota of production to the state, but these families were free to keep and sell everything they made beyond their quota. These procedures gained support because people were upset about the Cultural Revolution and policies of the recently-deceased Mao Zedong. Another important precondition for the success of development policies in China was that this Cultural Revolution had fostered “better communication across social divisions, so that the Chinese leadership could find out what worked on the ground.” Fifth, the paper draws conclusions about policy lessons from China’s success. The main conclusion is that development can be successful with the right balance of market-favoring policies and strong state institutions. Additionally, macroeconomic stabilization to avoid inflationary shocks was important for reducing poverty in China. Also, “internal market integration” was important. Then, Ravallion writes that asset and infrastructure-access inequalities will impede the ability of reforms promoting growth to have an effect on poverty. As for why China’s progress can be applied at least loosely to some African countries, the paper highlights that because so much of Africa’s population lives in rural areas, agriculture will be important for development. Ravallion then inexplicitly explains the Lewis 2-sector model. Lastly, the paper discusses the key messages for Africa. Primarily, it says that poverty reduction won’t come without “significant changes in economic policies and greater efficacy of state institutions for implementing those policies.” I did find the last paragraph curious in that it ended in a brief qualification that seemed to nullify the entire argument. It highlighted the fact that Africa is a continent of 48 distinct countries and governments. Therefore, it says the international community must play an important role in Africa’s development, but there is little explanation for how this can be done. It felt like this qualification made the international role seem like the most important role, but we were left hanging.
Toggle Commented Dec 4, 2013 on China and Africa (Econ 280) at Jolly Green General
Urdy’s discussion about how poor credit affects investments in education is an extension of a topic in the Economic Lives of the Poor paper. Poor credit denies households the opportunity to borrow money so that children may attend school—as the immediate benefit of a child’s income must be forgone for a child to attend school. An interesting point that Urdy made is that while the costs of child labor and forgone education are “long delayed and realized by the child…the benefits are immediate and directly affect decision makers within the household” (9), a reason that perpetuates child labor and low education even more. Because of the substitution in poor households of immediate income for future educational benefits—outcomes that have private and social benefits—Udry proposed targeted education subsidies as the best solution for child labor’s implications. He says that the subsidy method “addresses the root causes of child labor” by dealing with financial market problems and “balancing the current cost of moving a child out of the labor force and into school with a current grant” (11). Another important detail of the research cited is its randomization. Back to our discussion on the importance of randomization, we see why the randomized research was important in targeted education subsidy findings. However, I would like to know if there were any randomized studies used to examine the effects of other methods used to thwart the facets of child labor. If we use the subsidy randomized study as the best solution, don’t we need a counterfactual for THAT…meaning other randomized studies of other methods to thwart child labor?
Toggle Commented Nov 7, 2013 on Corel Office Document at Jolly Green General
Something I found particularly intriguing about the malaria article was the discourse about how globalization has exacerbated the detrimental effects of malaria. Sachs and Malaney wrote about how although malaria’s isolating effects used to be beneficial in “[protecting] malarious countries from European colonizers,..the isolation has more negative effects” in today’s globalized economy. Although I initially thought that malaria could not have such a large effect on foreign investment, the article says that the relationship between malaria and foreign investment in malarious countries “is sadly well grounded in reality.” The article cites the experience of the London Billiton’s investment that caused 7,000 malaria cases and 13 deaths of employees in Mozambique. This discussion is particularly interesting in light of some of the GapMinder visuals we saw today in class, as well as globalization topics we’ve been discussing in my Global Communications class. For instance, although causality cannot be determined, we saw through GapMinder how income disparity between countries has grown along with cell phone use disparity. My globalization class has talked a lot about the digital divide and how, in a world becoming so dependent on connectivity for technological development, those countries without connection to the outside world fall behind. In the same way, the isolation that malaria creates can hinder development.
There are a few ethical controversies that might arise regarding the evaluations in the PAL article. When we discussed the Rise and Fall of Development Economics, we briefly touched on the ethical issues related to providing a form of relief, aid, etc. to one group and not another. This method is precisely what is done in these randomized studies. However, I think the usefulness of the studies outweighs these arguments. Most importantly, the value of findings from randomized studies theoretically will benefit the “greater good” in the future. And in addition, in Duflo’s TED talk, she mentioned that positive externalities can be generated by the one group’s benefits. In the context of microfinance schemes, giving finances to some families might theoretically help them grow businesses to benefit local economies at large. Also, in POV101, we discussed the ethical issues of paternalism in designing policy. Usually, this paternalism debate is concerned with practices like incentivizing. Similarly, some might label the research methods and evaluations communicated in the article as paternalistic. For instance, the commitment savings accounts were imposed to restrict withdrawals for defined periods. However, I argue that the line between helping and being paternalistic is by nature blurred, and the conclusions drawn from these studies are more important than the paternalism debate. So, although randomized studies in economic development have their imperfections, their value renders them worthwhile.
Toggle Commented Oct 24, 2013 on Microfinance (econ 280) at Jolly Green General
In Chapter 8 of Development as Freedom, Amartya Sen described the difference between the well-being and agency approaches of women’s empowerment: the well-being approach emphasized empowering women for the sake of empowering women, while the agency approach emphasized empowering women so that all of society—both men and women—could benefit (Sen 189). Esther Duflo’s paper, Women Empowerment and Economic Development, seemed to take the well-being approach the first half and the agency approach the second. And while Duflo and I agree that empowering women is a worthy goal in of itself, I think the “pervasive stereotypes against women’s ability” (1076) will hinder any policies targeted at helping women’s outcomes unless the agency approach is stressed. Duflo expounds upon ways that educating women can empower them to better raise their children, for which women are usually the primary caregivers. Although evidence on causality is not sound in this realm, there is an association between mother’s education and child welfare, including health (1065). In addition, educating women can empower them within the household, so that the household may function more efficiently; for instance, Duflo gave the example of Burkina Faso, where imperfect negotiation within the household lead to inefficient economic allocation of land for harvest between male and female (1069). Also, giving women the opportunity, be it through education and (arguably) quotas, can add a new dimension to policy decisions, because women tend to have different preferences in policy (1070). While women’s policy decisions should not necessarily dominate over men’s, their focus on things like child health and nutrition should certainly receive a voice for the betterment of society as a whole. The effect of microcredit policies and quotas targeted towards women are debatable, but they could be steps to help women be the agency of social change on a macro scale. And as Duflo said, ”policies targeted toward women can have immediate consequences.” Looking back at Rodrick’s discussion on growth strategies, we can at least propose the idea that the effects of women-targeted policies may have the immediacy needed to kickstart economic growth, even if sustenance is more complex.
Rodrik’s point about the importance of democracy in selecting institutions to aid development was intriguing. He stressed the significance of democratic institutions and civil liberties “as meta-institutions that help society make appropriate selections from the available menu of economic institutions” (26). In light of his argument about how each country needs a different model of development based on its economic and political structures, letting the people who best understand a country’s workings decide what would be best for it makes sense. However, the ill-management of democratic structures can hinder the long-term sustaining of economic growth of which Rodrik spoke. Rodrik said that while igniting growth is easy, sustaining it is both essential and more difficult. To the extent that democracy can interfere with the centrality and focus necessary to sustain economic structural changes, it could be pose challenges to sustained development. For instance, Rodrik described some of the institutional changes necessary for sustainable growth: monetary, fiscal, and other arrangements to deal with the business cycle and the problems of unemployment/inflation…[as well as] social protection, social insurance, and democratic governance” to legitimize market outcomes, to name a few (26). The high complexity and coordination necessary for such endeavors might become difficult when too many forces are able to work against each other. It is therefore a challenge for a democratic society to work together and be deliberate about how complex policies will work not just now but also 10 years from now.
Toggle Commented Sep 26, 2013 on Growth Strategies - Econ 280 at Jolly Green General
I have found consistent intersections between my readings for Development Economics and Global Communications. My Global Communications readings this week, in fact, studied the media’s role in development and illustrated the current backlash against Cold-War-era theories of development communication. Krugman’s article provides a possible aid to the debate in my readings from GC. Daniel Lerner wrote in the 50s that countries should use media for development in the same model, as did the Americans. Later, Srinivas R. Melkote wrote that media might play a different role in a country’s development depending on the country’s economic, political, and cultural contexts. However, while Melkote did reject Lerner’s narrower model, he still used different theories and sequences to describe how countries with different contexts might respond to or use media in development. While his essay, “Toward a Communication Theory of Modernization: A Set of Considerations,” only had only one physical diagram, Melkote’s discourse expounded upon different structural frameworks and criteria that can explain media’s role in a country’s development. By their frameworks and criteria, both Lerner and Melkote acknowledge the importance of methodology in argument. But after Krugman’s argument, I think it might be more beneficial for the discussion to have physical models about the possible and previously observed effects of media introduction in developing countries. It seems that physical models provide a visual structure of theory, a provision that is beneficial for visual learners. But, as Krugman wrote, we sometimes have the tendency to restrict our minds to models and be close-minded. He said, “During the process of model-building, there is a narrowing of vision imposed by the limitations of one's framework and tools.” It is therefore our duty to be considerate and skeptical of a model’s application to a scenario.
Caring for the physical, mental, and emotional well-being of others seems like it would be at the center of social responsibility debates. The discourse in Banerjee and Duflo’s paper that most touched on this concept was that about stress. The world’s poor report high levels of financial and psychological stress, an emotion with the most frequently cited reasons being health problems, lack of food, and death (9). All of these reasons are physical, and thus focusing on health and nutrition improvement policies/initiatives, by reducing stress, may be one of the best moves for addressing not only the physical but also the mental and emotional tolls that I think are the most urgent results of world poverty. (Another related point the paper noted was that “cutting meals [has been] strongly correlated with unhappiness” (9).) Stress can have detrimental physical, mental, and emotional side effects— 12% of those living under $2.16 in Udaipur report recent periods of being “’so worried, tense, or anxious’ that it interfered with normal activities like sleeping, working, and eating” (9). So in addition to reducing psychological and physiological tolls for the world’s poor, a focus on health and nutrition improvement could actually improve productivity, an improvement that might benefit the economy on the macro scale. For example, in class we looked at the productivity increase that was the result of China’s investment in healthcare.
Toggle Commented Sep 12, 2013 on Economic Lives of the Poor at Jolly Green General
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Sep 11, 2013