Tuesday, November 8, 2011

Big Bag of Development: Signalling commitment and WWGD

How do you signal your commitment? This is one of the big questions in my own research, and there are two interesting recent answers:

1. Pakistan has begun to normalize trade relations with India. India had granted most favored nation (MFN) status to Pakistan in the mid-90s. In addition to the real effects from open trade, this is a costly signal of, I hope, better things in the future.

2. The Center for Global Development has an index measuring developed countries' commitment to development. I had heard of the index before, but it is now apparently more interactive, allowing you to see at a glance why countries scored what they did, comparing where each is strong and weak. Factors that go into it include amount and quality of foreign assistance (aid), trade, allowing in migrants, not selling weapons to unstable states, and others. Also handily, you can break the index down not only by component, but by region: how committed is this country or that to development in Africa vs. in Southeast Asia?  Barder and Roodman discuss.

A glorious World Bank paper that is almost certain to make its way into my intermediate microeconomics final this year (if you're a student reading this, you're welcome and thanks for reading) uses the language of income and substitution effects to demonstrate the different impacts that conditional cash transfers have vs. if they were only unconditional cash transfers. That is, how much more do we get for our conditions? By their argument, the cash transfer is an income effect and the conditionality is a substitution effect. Part one of a two part series by the authors of the paper.

Barder also shares some thoughts on an interesting development question: What Would Google Do? Specifically, how would Google run aid coordination/collaboration/correlation efforts? The answer is remarkably obvious when framed that way: set up one repository like a Google document or map to which every aid agency contributes. Instead of trying to hound down every possible aid agency that might or might not be working in your area before you deploy, you go to the one website and see if your planned measles vaccination project has already been done or is being planned by another group. More resources go where they are more needed and there is greater accountability.

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