Foreign Policy

The Strategic Value of Burma

Myanmar’s state newspapers ran commentary warning Aung San Suu Kyi, the leader of the opposition democracy movement, that her continued political activity is unlawful and that her plan to tour the country could provoke chaos. The last time she toured the countryside her motorcade was attacked by a mob, apparently Read more…

Development Economics

The Development Matrix: Wake Up

Two World Bank economists scientifically prove that first-world countries pay more than third-world countries:

Ask most people to name the most effective means of raising incomes of people in poor countries, and what would they say? Microfinance? Perhaps not after the recent experimental assessments. Deworming? It increased primary school participation and improved health, but in the short-term at least seems unlikely to raise household income. Conditional cash transfers? This might be a popular answer, with evidence from a number of countries that they have increased household expenditure , schooling, and health outcomes. But even though Governments devote significant resources to such programs, the absolute annual increases in household income and expenditure are still at most US$20-40 per capita for participating households. I bet that facilitating international migration is not very high up the list of interventions people think of. But it should be. In a new working paper, John Gibson and I evaluate the development impacts of New Zealand’s new seasonal worker program, the RSE. The figure below compares the per-capita income gain we estimate to those from microfinance, CCTs, and from my previous research giving grants of $100-200 to microenterprises. It is simply no contest!
Really?  The finding here is that seasonal migrant workers who move to developed countries make much more money than they could were they to participate in economic development projects?  The fact that this is even worth the ink it is printed on seems crazy to me.   (more…)

Development Economics

Do Elections Improve Economic Policy? Democracy in Burma

Today, the people of Myanmar for the first time in twenty years will elect a new government.  Actually, they will simply participate in a rigged election process that will legitimize the repressive military regime that has controlled the country by force for the past half-century.  Under pressure from the West and perhaps craving a bizarro sense of legitimacy, the military is holding elections for the first time in twenty years, yet it has effectively guaranteed that the country will remain under its control.  No matter what, the military will maintain 25% of the seats in parliament and will control three key cabinet posts (defense, interior, and border).  The two main political parties are offshoots of the military.  And the ethnic regions in the east and north will not even be given the chance to vote, as it is "too dangerous" to man polling stations in these regions.   No foreign journalists or elections monitors will be allowed in the country and the flow of information has been stifled as the Internet is all but crippled.   Not exactly ideal conditions for creating a fair and truly participatory democracy.

This is the reality of these types of elections.  But this kind of outrageous and brazen election-rigging is not uncommon in countries like Myanmar.  Unfortunately, holding elections in countries that are not ready to have them is a core component of our foreign policy.  According to the theory, when leaders are voted into office in free and consistently-held elections, they have greater accountability in terms of supporting sensible economic policies that benefit the country.  This theory is true...in theory, but not always in practice The belief that elections are a necessary tool for creating economic growth is too simplistic, and lacks an understanding of the institutions that make democracies successful.  In order for elections to actually translate into positive policy reforms and economic growth, a country requires a system of checks and balances that prevents the incumbent party from using illegal means to secure its place in government.  What is happening in Burma right now is a perfect example of how a country without these necessary checks and balances is basically f-ed. (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…)