Development Economics

Why Doesn’t the U.S. Invade Burma?

[caption id="" align="alignright" width="347" caption="Thingyan in Yangon: the best party in the world"][/caption] I write quite a bit in this journal about Burma (you might know it as Myanmar).  That is because when I traveled there a while back the country left a strong impression on me.  My last day in the country was the first day of Thingyan, the water festival that marks the Buddhist New Year.  362 days of the year the people are repressed, but during these three days they all seem to cut loose.  I knew a few ex-pats working in the country and spent the day with them, going from stage to stage (called “pandals”), which line the streets and pump in so much water from the lakes that, by the end, they are practically drained. Regrettably, I decided not to change my ticket and left after the first day. [caption id="" align="alignleft" width="347" caption="The festivities cut short by a bomb blast"][/caption] It turned out to be the right decision, because, two days later, the festival was rocked by a massive bombing not far from where I’d spent the my afternoon.  The government blamed it on rebel groups trying to disrupt the festival, but most people suspect the government itself was responsible, implicating the rebels in order to drum up support for the generals in the upcoming democratic election – the first in twenty years. The funny thing is that the elections have already been rigged in advance, so an action like this seems more sadistic than anything else. (more…)

Development Economics

Aid vs. Investment: Stop Sending Your Old Shoes

At a blog called "Friends of Ethiopia," a fellow by the name of R. Todd Johnson has a serious bone to pick with the aid crowd in Africa:

Outside of direct relief aid and some of the amazing health and education research and development, much (perhaps most) of what is done in the developing world through non-profits and NGO's, could actually be accomplished through a business model, even if it would be harder to raise investment funding. Instead, someone begins selling tax subsidized and donor subsidized water pumps in Africa, because it is easier to raise the funding through tax deductible donations rather than through the rigors of proving out the business model for investment dollars, with the great result of increased deployment of inexpensive water moving technology in the developing world to aid rural farmers, but the negative results of (1) killing the market for future indigenous entrepreneurs attempting to sell water pumps at a profit and (2) locking a potentially valuable distribution channel in a non-profit, making it difficult for other for-profits to use.
Yikes.  I agree and disagree.  I think that a lot of aid to Africa and other places is bloated, inefficient, and counterproductive. (more…)

Development Economics

China’s Governing Philosophy

A window into China's approach to politics and governance:

Confucian reformers generally favor more freedom of speech in China. What they question is democracy in the sense of Western-style competitive elections as the mechanism for choosing the country’s most powerful rulers. One clear problem with “one person, one vote” is that equality ends at the boundaries of the political community; those outside are neglected. The national focus of the democratically elected political leaders is assumed; they are meant to serve only the community of voters. Even democracies that work well tend to focus on the interests of citizens and neglect the interests of foreigners. But political leaders, especially leaders of big countries such as China, make decisions that affect the rest of the world (consider global warming), and so they need to consider the interests of the rest of the world. (more…)

Development Economics

China in Africa: Maybe the West Is Wrong

For decades, the Western world has viewed Africa as a basket case in need of charity, giving huge amounts of aid to corrupt dictators who steal much of the money and squander the rest.  Critics of aid say it creates dependence, undermines the competitiveness of local industries, and keeps cruel dictators in power by giving them the financial wherewithal to secure their position.  Aid is a $40 billion a year business in Africa, and there isn't too much to show for it.

China, on the other hand, has taken a different approach.  By investing in Africa to gain access to its rich natural resources, China might be helping Africa in a more dignified and some might say effective way:

Development Economics

Pastor Rod: A Christian Evangelist’s Strange Role in the Sudan

A month ago I got cable television for the first time in 8 months so that I could watch the World Cup, which airs in the Philippines at 2:30 AM.  And lately, I find myself stopping at Daystar - "faith-based TV for today's generation" - for a lot of different reasons.  For one thing, it is difficult to comprehend just how easy it is for these guys to ask for huge amounts of money.  For another, whenever I see these guys I can't help but think of Bill Paxton, AKA Simon, in True Lies ("let's face it Harry - the 'vette gets 'em wet").  There is one in particular, a fellow by the name of Pastor Rod Parsley, who is particularly intriguing, in part because of what he is doing in southern Sudan. (more…)

Development Economics

The Development Umbrella: Systems Trump Solutions

William Easterly is a development economist who runs the blog Aidwatchers.   When I read his posts, I imagine an exasperated and pragmatic man who has had it up to here with people misunderstanding and oversimplifying the problems he has devoted his life to solving.  His latest post, titled "The Answer is 42! Why Development is About Problem-Solving Systems, Not Solutions" fits this category well.   He explains exactly why some things work and some things don't, and reveals the key to creating long-term solutions.

Here’s why direct solutions to problems cannot foster development. Each direct solution depends on lots of other complementary factors, so the solutions can seldom be generalized across different settings; Solutions must fit each local context. Solutions that generate the highest payoff in each setting should be a higher priority than the lowest payoff solutions. Since there is little or no feedback on how well each solution is working in each local situation, there is little possibility for any such adjustments. (more…)

Development Economics

Golfing in Burma’s New Capitol

Burma is a strange country.  It feels like the clock stopped in the 1950’s, and most forward progress along with it.  In the capitol city of Rangoon, everything is old – the cars, the buildings, the infrastructure, the money.  And this is the capitol, where most of the wealth in the country is concentrated.  Very little has been invested in modernization, mostly because it is tightly controlled by an authoritarian military junta that keeps the country isolated from the rest of the world.  Foreign Policy just included the country in its list of the 20 least free places on earth.  With the exception of other reclusive nations and kindred spirits, like North Korea, and trading partners trying to gain access to the country’s abundant natural resources, Burma keeps its distance.  A fraction of the money coming from the lucrative contracts with neighboring Asian countries for oil and gas exploration is reinvested in developing the country.  Despite money coming in, the country has its share of problems. (more…)

Development Economics

China and Poverty Alleviation: The Case for a Strongman

On Monday, the Philippines will hold a national election.  It is the first time the country will be using an automatic voting system, and nobody knows what is going to happen.  It seems appropriate to include this post before the election is over.  For more on the candidates, check out this BBC News primer. Over the last four decades, the economic landscape in Southeast and East Asia has shifted.  After World War II, the Philippines had the second largest economy in Asia (behind Japan).  Years of mismanagement, corruption, and poor government policies dragged the economy down during the 70’s and 80’s.  The policies of Ferdinand Marcos, a strongman who imposed martial law on the country until 1981, depressed economic growth during his years in power.  Isolated incidents, including a severe recession in 1984 and the Asian financial crisis in 1997, put further downward pressure on the economy, hampering progress after reforms in the 1990’s.  Even now, the period of optimistic economic growth which President Gloria Arroyo has attributed to herself is, in reality, a result of remittances from abroad, which account for 11% of GDP.  All of this has led to a national poverty incidence of 40%. Compare this with China.  In the 1981 the poverty incidence in East Asia was 85%.  Over the last 30 years, China has enacted economic reforms designed to drive the poverty level of the country down.  As of 2005, the poverty incidence in East Asia had fallen to 16%.  This decline of 600 million people is attributable almost exclusively to China.   The chart to the right shows something amazing: when you remove China from the picture, the percentage of people living on $1 and $2 per day has remained essentially flat over the last 20 years.  Since 1990, China has accounted for almost all of all of the poverty alleviation in the world.  Why has China done such a good job of pulling its people out of poverty, while the number of poor seems to stay relatively consistent in the Philippines?  The system of governance espoused by the two countries over the last 30 years is at least part of the answer. (more…)