Development Economics

The Role of the Celebrity Activist

Aaron Burr vs. Alexander Hamilton.  Nas vs. Jay-Z.  And now, Easterly vs. Bono.  In an attack reminiscent of Jon Stewart’s epic takedown of the sheepish Jim Cramer after the financial crisis, Bill Easterly, a well-known development economist who favors bottom-up approaches to development rather than top-down technocratic solutions, uses the Read more…

Development Economics

The Aversion to Government-Run Development Programs

Andrew Sullivan of The Altlantic writes a popular blog about politics, economics, culture, and anything else he finds interesting or relevant at the moment.  With 20-30 posts today, it has the depth of a traditional blog and the breadth of a link aggregator. The relative exposure he gives a subject depends on how much he likes the people who are writing about it.  He is a fiscal conservative and likes the idea of market-driven, bottom-up development.  Over the past year, international aid and economic development have been getting a lot more play after he discovered Aidwatch and Texas in Africa, two popular blogs written by development economists.  Most recently, Sullivan linked to an article in the NY Review of Books by William Easterly, author of the former blog, about the misuse of aid dollars to generate political support:

Human Rights Watch contends that the government abuses aid funds for political purposes—in programs intended to help Ethiopia’s most poor and vulnerable. For example, more than fifty farmers in three different regions said that village leaders withheld government-provided seeds and fertilizer, and even micro-loans because they didn’t belong to the ruling party; some were asked to renounce their views and join the party to receive assistance. Investigating one program that gives food and cash in exchange for work on public projects, the report documents farmers who have never been paid for their work and entire families who have been barred from participating because they were thought to belong to the opposition. Still more chilling, local officials have been denying emergency food aid to women, children, and the elderly as punishment for refusing to join the party.
This is a bit like saying that Miss Lippy's car is green.  This dynamic is not new, and it is certainly not undocumented.  Easterly has been arguing for years that foreign aid in the hands of the local government is misdirected.  But this is on Andrew Sullivan's blog, which is generalist, and it may well be a new concept, or at least a new example, to his readers.  But this is a concept I have seen in action and heard anecdotally often.  Two cases, in particular, come to mind. (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

The Volatility of $2 a Day

Portfolios of the Poor: How the World Lives on $2 a Day has become one of the most talked-about book in the world of development.  It is an analysis of how poor - specifically, the poorest - people live.  The authors chronicle how people make and spend their money - tracking the inflows and outflows to better understand the daily routine.  The subjects keep detailed financial diaries of everything having to do with money in their lives.  The results are as illuminating as they are beneficial in the practice of development.  Here is the description from the website:

Portfolios of the Poor: How the World's Poor Live on $2 a Day (Princeton University Press, 2009) tackles the fundamental question of how the poor make ends meet. Over 250 families in Bangladesh, India, and South Africa participated in this unprecedented study of the financial practices of the world's poor. These households were interviewed every two weeks over the course of a year, reporting on their most minute financial transactions. This book shows that many poor people have surprisingly sophisticated financial lives, saving and borrowing with an eye to the future and creating complex "financial portfolios" of formal and informal tools. Indispensable for those in development studies, economics, and microfinance, Portfolios of the Poor will appeal to anyone interested in knowing more about poverty and what can be done about it.
The reason research like this is so useful and even groundbreaking is that it blows the doors off the misconception that the poor live on $1-2 a day, everything. (more…)