Nandan Nilekani and Tom Friedman

Book recommendation; Imagining India: The Idea of a Renewed Nation

US Fact of the Day

How Are We Doing?

Rent-seeking Consultants?

Ashraf Ghani, the Alexander Hamilton of Afghanistan, blames World Bank for neglecting higher education in Afghanistan (emphasis added);

In Afghanistan in 2002, World Bank and UN officials insisted that the government should not invest in higher education and moreover should invest very little in secondary and vocational education despite the fact that Afghanistan had seen its professional class decimated by war, disease, and flight. Citing the focus of the millennium development goals (MDGs) on primary education, they considered higher education and vocational training a luxury that Afghanistan could ill afford. But without trained doctors, teachers, engineers, and managers, it was not clear at the time whether Afghanistan could get back on its feet. Five years later, the fact that the country’s operating budget is overshadowed by the cost for technical assistance (TA) to make up for the “poor capacity” of the government testifies to the debilitating expense of failures to invest in the training of professional staff, future leaders and administrators.

In many parts of the world, the neglect of higher education has to led to poor-quality administration and spiraling TA bills. The price for TA amounts to roughly $ 20 billion per annum, with consultants often paid around $ 200, 000 a year. Nor is this technical assistance provided by Westers donors of high quality in many cases.

- "Fixing Failed States", Ashraf Ghani and Clare Lockhart, p. 142

For Discussion: Should we try to rate the output quality of consultants? Who should rate it and how should we do it?

A Challenge to Chris Blattman: Create a consulting agency that delivers quality consulting services in the development field to low-income countries for FREE.

The Secrets of Growth success

Zambia Economist has more on the Growth Commission report

Related;
Growth Economics (book Review)by Asaf Razin

There's no secret to development

Books to Pre-order

Economic Gangsters Corruption, Violence, and the Poverty of Nations

* Chapter 1: Fighting For Economic Development
* Chapter 2: Suharto, Inc.
* Chapter 3: The Smuggling Gap
* Chapter 4: Nature or Nurture? Understanding the Culture of Corruption
* Chapter 5: No Water, No Peace
* Chapter 6: Death by a Thousand Small Cuts
* Chapter 7: The Road Back From War
* Chapter 8: Learning to Fight Economic Gangsters

Related;
The link between Corruption and Dating Economics

Econ Talks

From Singapore National University;

The Natural State
Douglass C. North


A View from the Outside: Why Good Economics Works for Everyone
Speaker: The Honourable P Chidambaram, Finance Minister, Government of India

Memo to Self- Books to Read

The Practice of Economic Management: A Caribbean Perspective
by Courtney Blackman

African Development: Making Sense of the Issues and Actors
by Todd J. Moss

Singapore's Success : Engineering Economic Growth
by Henri Ghesquiere

Rents, Rent-seeking and Economic Development: Theory and Evidence in Asia
By Mushtaq H Khan and Jomo Kwame Sundaram

Flat World, Big Gaps: Economic Liberalization, Globalization and Inequality
by Jomo K.S. , Jacques Baudot

The Secret to Economic Growth revealed

Commission on Growth and Development (inlcudes Solow, Rubin,and other eminent economists) has released their growth report.

“We are acutely aware that there are no silver bullets to create long-running, inclusive growth, and that no single paradigm exists,” says Commission Vice Chair Danny Leipziger

The industrial revolution and the democratic transition

The industrial revolution and the democratic transition. -- Aubhik Khan

In the 19th century, the United Kingdom began a period of economic transformation known as the Industrial Revolution. It’s commonly believed that this era opened as new inventions improved the technologies used to produce goods and provide services. However, we now know that such improvements affected only a relatively small part of the economy. Nonetheless, output rose during the first stage of the Industrial Revolution because of capital accumulation. One explanation for this increase in capital may be that another revolution occurred in Britain around the same time: the demographic transition. In this article, Aubhik Khan outlines some evidence on the Industrial Revolution and the demographic transition, then presents two economic theories that link the two phenomena.

Why Do Some Countries Remain Poor While Others Grow Rich?

Econ Talk of the Day- Dani Rodrik answers the question

Related;
Turkey Country Economic Memorandum

The twentieth-century experience: half empty or half full?

India Development Fact of the Day

India is foregoing as much as 2% of its GDP by accumulating reserves instead of employing resources in alternative uses

-Cost of Holding Excess Reserves: The Indian Experience

Related;
An Account of India’s Growth

Explainer of the Day

Growth Rate Question & Answer

World Bank: Fifty Years of Failure?

Dr. Benjamin Powell, Director of the Center on Entrepreneurial Innovation at the Independent Institute and assistant professor of Economics at San Jose State University

World Bank prediction on Burma, in 1958;

"made remarkable economic progress...[its] long-run potential compares favorably with those of other countries in South East Asia."

China Fact of the Day

Official statistics indicate that between 1978 and 2001, there was a 300 percent increase in crime. Between 1990 and 2000, the total number of crimes reported by Chinese police rose from 2.2 million to 3.6 million. In that same period, the number of recorded assaults doubled and recorded robberies tripled. And between 1995 and 2000, the Chinese police recorded a five-fold increase in the number of burglaries. Drug abuse has also sharply escalated; in 2006, for example, Chinese officials put the number of registered drug addicts at 1.16 million, about double what it was in 1995 (some analysts believe the actual number is closer to 15 million). A majority of registered addicts are heroin users, which has led to an alarming rise in the rate of hiv infection.

-Religion and Social Order, Amitai Etzioni

Which Nobel Laureate was rejected by The Economist magazine?

Arthur Lewis. The Economist (around 1937) gave the following reason;

They said that they could not hire a black journalist since he would have to interview people who might refuse to see him because of his color.

The British Colonial Office also refused as the positions in the colonial service were reserved for persons of European parentage.

The Liverpool University rejected him and suggested that he visit Liverpool several times during the next academic year so that the faculty, students and community could get to know him. In other words, as Lewis says;

“so that public may be able to look at me and decide whether they can stand my appearance”

During his time at LSE, one of the faculty pushed for greater recognition of him.

Hayek wrote the director about Lewis’s “anomalous” position on the faculty". He argued that Lewis deserved an “exceptional promotion” since he was doing the work of senior members of the department “and doing it with conspicuous success”. In Hayek’s view, Lewis was “one of the best teachers,” who at the least, deserved formal recognition in the form of a teaching citation, for “uncommon versatility and by his teaching, ranging over practically the whole field of economics.”

Source; W. Arthur Lewis and the Birth of Development Economics, By Robert L. Tignor

Related;

I got into the history of the world economy because Frederick Hayek, then Acting Chairman of the LSE Department of Economics suggested that I teach a course on "what happened between the wars" to give concreteness to the massive doses of trade cycle theory which then dominated the curriculum. I replied to Hayek that I did not know what happened between the wars; to which he replied that the best way of learning a subject was to teach it.

So I lectured on this subject for some years, and published a book on it in 1949. Among the questions that the book did not answer was whether the great depression of 1929 was sui generis, or one of a cycle stretching back into the nineteenth century. This I was determined to find out. However, data for the years before 1914 were sparse and unreliable, and I could not proceed faster than additions to the data and revisions would permit. I spent a lot of time with the data, and, between 1952 and 1957, published a stream of articles on world production, prices and trade from 1870 to 1914. However, I could never get the book done. In 1957, just as I was ready to start, I went off into administration for six years, never touching the subject. I returned to it in 1963, in my new professorship at Princeton University, to find that the four or five researchers of 1952 had now multiplied into a crowd of writers on this subject. I returned to improvement of the data and was just about ready to write my book when I went off to Barbados for four years setting up the Caribbean Development Bank. Returning to Princeton in 1974, I finally published in 1978 my account of growth and fluctuations in the world economy between 1870 and 1914. My Nobel Lecture derives from this sector of my intellectual interests.

St.Lucia Nobel laureates

Econ Talks

Ian Ayres talks to Owen Bennett-Jones of BBC

McCloskey on Capitalism and the Bourgeois Virtues

How not to give economic policy advice to governments

Per Kurowski, a former World Bank executive director writes in a comment on Rodrik's blog;

What should a World Bank economist know about governance and growth?

Easy answer!

The importance of being very clear about: the governance by whom, and the growth for whom.

The biggest confusions that I have seen in this respect is when World Bank economists have teamed up on the government side, which is anyhow quite logical given that they are their direct bosses, but ending up working against the interests of the people.

Example:
“Dear government privatize this electrical distribution company and offer some future high rate adjustments (defended on the based of this questionable model) and that way you can obtain a very good price for it; and thereby get your hands on plenty of resources to spend on your favorite projects… and not having to worry about repaying loans or such nonsense… as the electrical consumers will take care of that for you by paying the higher than needed tariffs. Of course, please make sure though that the tariff increases occur somewhat down the line, since we do not want to be so transparent that the consumer, following the dots, makes the connection.”

Technology trap in Africa- World Bank

Technology trap and poverty trap in Sub-Saharan Africa;

Summary: Since the industrial revolution, advances in science and technology have continuously accounted for most of the growth and wealth accumulation in leading industrialized economies. In recent years, the contribution of technological progress to growth and welfare improvement has increased even further, especially with the globalization process which has been characterized by exponential growth in exports of manufactured goods. This paper establishes the existence of a technology trap in Sub-Saharan Africa. It shows that the widening income and welfare gap between Sub-Saharan Africa and the rest of world is largely accounted for by the technology trap responsible for the poverty trap. This result is supported by empirical evidence which suggests that if countries in Sub-Saharan Africa were using the same level of technology enjoyed by industrialized countries income levels in Sub-Saharan Africa would be significantly higher. The result is robust, even after controlling for institutional, macroeconomic instability and volatility factors. Consistent with standard one-sector neoclassical growth models, this suggests that uniform convergence to a worldwide technology frontier may lead to income convergence in the spherical space. Overcoming the technology trap in Sub-Saharan Africa may therefore be essential to achieving the Millennium Development Goals and evolving toward global convergence in the process of economic development.

Related;
New Limits to Growth Revive Malthusian Fears


State of Planet '08

Jeff Sachs on water policy

A New 'Guided Democracy' made by the King

It will be interesting to hear Bryan Caplan's views on this new experiment in a tiny country.

For Discussion: Who's a genuine Bhutanese Citizen?

Related;
Voting on the king's orders;

Yet the king's decrees—formulated into an overarching policy of “Gross National Happiness”, as opposed to economic growth at any cost—have not always helped alleviate poverty. Stringent checks on the exploitation of Bhutan's timber, for example, have helped ensure that rapid economic growth has created relatively few jobs. Though furnished with free medicine and education, some 20% of Bhutanese live below the poverty line.

A big minority—Nepali-speakers from the country's south—have deeper grievances. Under pressure in the late 1980s to adopt the culture of the majority, some arose violently. In response, the government drove around 60,000 (including, it says, many illegal immigrants) into Nepal. More than 100,000 still languish there in UN-run camps; America has offered sanctuary to 60,000.

This will not end the worries of the 100,000-odd Nepali-speakers who remain in Bhutan. Thousands have allegedly been denied citizenship because of their association with those in exile. For the southerners, at least, democracy promises something better. Nine of the DPT's winning candidates were Nepali-speakers. Officials in both parties said that resolving the southerners' grievances was a priority.

In general, candidates promised voters more of the benefits the king gave, including roads and electricity. Some villagers quietly complained about the former regime. By tradition, the king gives land to the landless and timber for house-building. Yet in the remote village of Miseytang, a poor landless trader said that after a month spent presenting her petition in Thimpu, a nine-hour drive away, she had received half an acre of protected forestry land. “It's useless to me,” she lamented, standing outside her fine house, facing a school where her three children were educated free, next to a health clinic, also free.

Most Bhutanese applaud the king's rule. But his decision to impose democracy on them looks canny. There is enough social change evident in Bhutan to suggest a political change was in store. In Thimpu, a city of 100,000, unemployment, and disgruntlement, is rising among educated youths. “Bad Boyz!” exclaims graffiti on a Thimpu building-site. The former regime's success in education, and failure to boost Bhutan's tiny private sector, is partly to blame for their frustrations. So is a fresh limit on civil-service hiring; last year around a third of the country's new 1,200 university graduates found no state job.

The new government will have to find jobs for the boyz. In the short term, tourism is the best hope. A plan to double the number of tourists (20,000 last year) aims to create a total of 100,000 jobs in the sector. This will require a new international airport; the current one, at Paro, is shunned by every national carrier except Bhutan's because of its terrifying hilly approach.

More important, to improve the lot of poor peasants, the government will have to lead them out of subsistence farming. To bring their goods to market, alas, many more roads must no doubt be bulldozed through pristine forests. And the last of the hidden kingdom will come into view.