ECO 303: Clarification on our need for imports

I have a suspicion my example in Development today was less than crystal clear, so please let me try again.

I posed the question why it was a mistake to think that shutting off all imports was a key to growth based on the claim that Y=C+I+G+EX-IM, so *obviously* lowering imports is good.

If you missed the quiz, take a moment to think about the answer before looking below the fold.

Lit in Review: Poverty and Livestock in Eastern Africa

Tsehay and Bauer, "Poverty Dynamics and Vulnerability: Empirical Evidence from Smallholders in Northern Highlands of Ethiopia," presented at the IAAE August 2012.

They study Yetmen and Shumsheha in rural Ethiopia. Between 1994 and 2010, the percent of households owning oxen increased from 5% to 75% and 46% and livestock assets more than tripled in value. Literacy has gone down, but school enrollments are up significantly.

The poverty dynamics are quite interesting. Half of the households are worse off, moving down from subjacent or medial poor to ultra poor (<$0.50/day) and 1/4 moved up - not out-of-poverty up, but up to slightly-less-poor. The worsening happened between 2004 and 2010, while 1994-2004 had seen significant improvement.

Table 5 shows the number of times out of 4 rounds that a household was poor:

          Yetmen             Shumsheha
0          9.8                   6.93
1         27.45                31.68
2         35.29                30.69
3         19.61                24.75
4          7.84                 5.94

Wainaina, Okello, and Nzuma, "Impact of Contract Farming on Smallholder Poultry Farmers' Income in Kenya," presented at the IAAE August 2012.

Their study of 180 smallholder farmers in Nakuru county finds that farmers contracting with Kims Poultry Care Center received roughly 27 percent more revenue per bird than independent farmers. They used matching propensities.

I'm uncertain whether they mean that "KPCC is the only large poultry farm that works with smallholder farmers in Kenya..." or the only one that works with smallholders in a contract that also provides inputs and interlinked credit. Markets for inputs and outputs tend to be quite thin, so partnering with KPCC improves market access significantly. So these results may not be typical of contract farming overall. Oddly enough, independent farmers have statistically larger birds than contract farmers, so the revenue per kg difference is slightly larger. Extension agents and higher education make farmers less likely to sign a contract, so they aren't explaining the difference.

Smallscale farmers have 100-500 birds, medium scale is 500-1000. The county has 40-45% poverty. It sells processed chicken and eggs to local tourist hotels and throughout East Africa.

They regularly reference Nyaga, 2007; poultry sector country review, FAO

Gelan, Engida, Caria, and Karugia, "The Role of Livestock in the Ethiopian Economy: Policy Analysis using a computable general equilibrium model for Ethiopia," also IAAE August 2012.

From the abstract: "We extend an existing dynamic recursive general equilibrium model for the
Ethiopian economy which better models the livestock sector. A separate herd dynamics
module enables us to specify stock-flow relationship, distinguishing between the capital role
of livestock and the flow of livestock products. We also improve the underlying system of
economic accounts, to better capture draft power and breeding stocks." What they look at is growth in total factor productivity (TFP) - how efficient or productive the sector is - comparing a positive shock to TFP growth in livestock, cereals, or cash crops. So imagine you wanted to invest in agricultural productivity in Ethiopia and ask which of those three you should invest in.

They find that an increase in livestock TFP growth from 0.5% to 3.1% would do as much to increase total agricultural GDP as an increase in cereal TFP growth from 2.2% to 4.3%. Livestock TFP growth would also improve export value more than cereal or cash crop TFP growth. Even though domestic prices for livestock decrease, labor income goes up fastest with livestock TFP growth, so the poor benefit the most from livestock TFP growth. Cereal TFP growth improves their caloric consumption by the most.

Ethiopian Bank Run Friday

There was a run on the bank today. I nearly missed it.

All of us at the conference were told to visit the bank to get refunds and daily stipends. We could only do so today, and we could only do so during one of two coffee breaks. To someone teaching Game Theory this semester, this sounded like a perfect set up for a simple coordination game.

I played a waiting game. I dislike waiting. When I observed most of my colleagues heading across during the first break, I decided the clear game solution was for me to wait to the second coffee break so I wouldn't have to wait so long in line. They indeed got back late, it taking more than 45 minutes to service them all.

When I eventually went with just three other colleagues, I was feeling pretty good about my choice. But then one of us told a joke: the bank was out of money and would only have enough for him and not for us.

I suddenly realized that if I were in a bank run game, I had played the entirely wrong strategy. Observing other people racing to get their money out in the early period, I ought to have gone early also. We covered that extensively in the Cornell macro group – sunspots determining bank runs, psychology determining bank runs, self-reinforcing beliefs, on and on. If you see other people running, run.

When I get back to AUN, I will be introducing my game theory class to risk and uncertainty. What if there is a probability p that I’m playing the bank run game and probability (1-p) I’m playing a waiting game? At what critical value of p should I go with the first group instead of with the second? I smell a midterm question. And if you’re in Eco 404 this semester, you’re welcome.

LDS Aid in Ethiopia - 1984

I've been reading up on how The Church of Jesus Christ of Latter-day Saints has grown in Nigeria. In the process, I found an interesting article from the 1988 August Ensign talking about the church's efforts during the 1984 Ethiopia famine and other aid projects. In response to the famine in Ethiopia, the Church sent out a special request for the entire membership to go without food or water for 24 hours (a fast) and give the money they would have spent or more specifically to help the people in Ethiopia:

Lit in Review: Ghanaian Agriculture

Egyir, Adu-Nyako, and Okafor examine how the "Made in USA" poultry label affects consumer choice in Ghana. Among the statistics they offer, domestic production accounts for 10% of the poultry market. In 2010, the local price was just under $4/lb while imports cost under $1.10/lb Costs could be brought down with better management and vaccine delivery. Two decades ago, fish provided 60% of the animal protein they consumed, but poultry has been growing in importance. Most of the chickens (60%) are bought directly from the farm, with supermarkets only serving the high income group. The poultry packing industry is in its extreme infancy.

500 consumers were surveyed about their attitudes on how likely they were to purchase domestic chicken, versus Tyson (US), Brazilian, European, or Asian chicken. 56% were likely to buy Made in the USA, and 72% to buy Ghanaian. Asian chicken did not score very highly. More than 80% recognized COOL chicken. (That's Country of Origin Labeling, not the fellow on the right.)

Here is Kris Klokkenga's description of the differences between trying to farm in Illinois and in Ghana:

Best of 2011

Time for some intense naval-gazing. I wasn't going to do one of these, but then I enjoyed others' so much for the posts I missed that it seemed much more interesting.

Top Ten Posts of 2011
1. Google's statement on AUN's amazing internet usage, got a lot of doubting comments and a few  defending and very plausible explanations.
2. Nutrition Labeling, describing the new requirement that meat include information on calories from fat.
3. Unemployment: Leads and Lags - Breaking unemployment into separate decisions to hire or fire will give us a better indicator of where the economy is going (has been) than total unemployment.
4. AEA session on agricultural export bans during the 07/08 food price crisis.
5. Microinsurance in Kenya via cellphone
6. My first visit to AUN. Classes will resume Thursday the 24th
7. Low saturated fat diet vs. low simple carbohydrate diet
8. QE2 and food prices - debunking the idea that the Fed is causing global food price inflation
9. Food safety, food movements, and paternalism
10. Lit in Review: Food Demand -- Ethiopia and Speculators
Honorable Mention (because I thought it was fun): The socially acceptable price of fried chicken, also known as the political economy of fast food markets in South Korea.

Top Ten Posts of 2010 (in 2011)

1. My pictures of the Thorvaldsen's Christus and apostles statues, mentioned in a Church lesson this year.
2. Lit in Review: Grossman and Helpman, there has been steady interest in summaries and other papers that make use of the "Pay to Play" model of lobbyists.
3. Food in Africa: Too much and too little discussing the problem of getting food from food-surplus states to food-deficit states. There was never a large spike, but a steady stream of interest throughout the year.
4. High Hopes for Rwandan Agricultural Development
5. Food Security in Nepal which has been of increasing interest lately
6. Cutting Costs Through ... Fonts?? Some fonts go easier on the printer's ink
7. Population Health vs. Individual Health - commentary on macro vs. micro in economics and health
8. Ethiopian Monetary Policy - combines monetary policy, food prices, Ethiopia's development goals (food self-sufficiency), and growth prospects
8. Five from vacation: education, hyperinflation, and Chinese food safety.
10. Fed governor: if we could guarantee 5% NGDP growth, it would be great - I'm glad this made the list because I think it was my most significant post, interviewing Governor Dudley about what they are targeting and Sumner's policy.

Where did my visitors come from in 2011?

Understanding Isaiah in South Sudan

* - This was originally posted January 9, 2011. That post had too many visits from spam engines, so I have reposted it hoping to clear my cache a little.



The referendum on Southern Sudanese independence is today. It is a good day to pray, for all sides.

For those who are unfamiliar with Biblical geography (as I was until I did some searching) when Isaiah was speaking about the land of Cush, he really was thinking about the same neighborhood - Eastern Africa, south of Egypt, Ethiopia in particular which is next door in our modern maps. Chapter 18, which the video cites, speaks mostly of the woe on the "land ... beyond the rivers of Ethiopia" until the last verse, which speaks of their suffering and finally being gathered "to mount Zion." Chapter 11, which references Cush more explicitly, speaks of a second, Millennial gathering of God's people out of Cush and assorted lands to Zion. Zephaniah 3 similarly speaks of people beyond the rivers of Ethiopia being gathered (vs. 10) and bringing offerings to God (vs. 12) in the last days. Any other reference to Ethiopia I find is about it being smitten by Assyria or getting ready to join Egypt in afflicting Israel. So I see a lot more about a gathering out of the area, rather than divinely ordained political independence, but it can't be denied that it's a regular theme of the Old Testament prophets for God's people. [Quick bias check: do you think of them as 'God's people' because the south is mostly Christian or because they could have intermingled with Ethiopian Jews, or can you see the Muslim north as also part of God's people who accept Isaiah as a prophet and are living in the same area?]

Hat tip: Poverty News Blog

Lit in Review: Case Studies about LDS in Africa

Martinich, author of the LDS Church Growth blog, has published a series of case studies on the growth of the Church of Jesus Christ of Latter-day Saints globally, including on opening new cities for missionary work in general and two case studies in Ghana and Ethiopia showing how that was done specifically. Of interest to me, he recommends leaders use cost-benefit analysis in determining where new cities should be opened as part of the "homework" required for the revelatory process.

In Sunyani, Ghana, there were previously no members of the church in late 2010 when 6 young missionaries and one senior couple were sent in to form three "groups" (very small congregations ... yes, very small) in a city of less than 100,000. In the course of one year they had not only turned two of them into "branches" (small, but self-sustaining congregations, in this case around 50 people attending each week) but a fourth congregation had also been formed. The branches are being led by local leadership instead of missionaries.

In Awasa, Ethiopia, one family had been meeting since 2003 but did not become a branch until 2008 (average attendance about 20). When full-time missionaries were assigned in mid-2010, attendance rocketed from 20 to 70 by the end of the year. There are now four congregations there, though attendance has been highly variable and most of the members appear to be under the age of 21. Some local religious leaders also joined the Church during this time period. The groups are still heavily dependent on the missionaries for leadership and training.

In other posts, Martinich reports on recent Church growth in Sierra Leone and the temporary removal of senior missionary couples from the Democratic Republic of Congo following the election violence last month.

LDS Aid

Two professors, one a Cornell-trained BYU professor of nutrition, have been working to improve the Atmit porridge that is often given out in LDS care packages. The hope is that it will be even better for small children with a better mix of micronutrients (particularly more iron) but without compromising on shelf-life. Another article describes its dissemination in poor areas of Peru.

A single serving provides 34 percent of the recommended daily allowance of protein, 43 percent of calcium, 99 percent of iron, and high percentages for a dozen vitamins and minerals for children under 5 years old. ... 
In 2010, 645,000 pounds of Atmit were shipped by LDS Charities to four countries. Depending upon the age and size of the children, that's enough to feed 100,000 to 130,000 children for one month. The cost? Less than $6 (USD) per child.

LDS efforts to help those suffering from the famine in the Horn of Africa:

In Ethiopia, projects to aid more than 100,000 refugees are under way, including water tanks, trucking services, sanitation supplies and hygiene training for 15 villages; supplementary food for 8,700 malnourished children; nutrition centers and sanitation facilities for Somali refugees in Dollo Ado; and 5,000 hygiene kits.
The Church also plans to provide water catchment and storage structures, as well as soap and washbasins to serve tens of thousands of other residents in the communities surrounding the Dollo Ado camps.

Other projects in Kenya, Uganda, and Somalia are also underway and briefly described at the link.



At the most recent General Conference, Church President Thomas S. Monson reminded members about the General Temple Patron Fund. Donations from members around the world are used to help members who live far from a temple travel there. A recent article highlighted some of the saints in southeastern Africa who have been blessed by the Fund:

Lit in Review: Food Demand -- Ethiopia and Speculators

K. Tafere, Taffesse, and Tamiru, with N. Tefera and Paulos, (2010) “Food Demand Elasticities in Ethiopia: Estimates Using Household Income Consumption Expenditure (HICE) Survey Data), IFPRI and EDRI, ESSP2 Discsussion Paper 011.

One of the difficulties of working with Ethiopian food data is that there are four staple cereals: wheat, maize, teff, and sorghum. Another difficulty is that this means there are a lot of zeroes in the data: 28 percent consume no sorghum, 22 percent no teff, 16 percent no maize, 9 percent no wheat, and 2 percent no animal products.

They come up with a fairly large group of significant own-price and expenditure elasticities (90% of the 230 possible price effects are significant). Most commodities are own-price unitary elastic, though maize (-.75) and sorghum (-.66) are the furthest from -1 and wheat closest (-.98) of the major cereals. Cross-price elasticities are relatively small, with complementarity between teff-sorghum and maize-sorghum, but substitution between teff and wheat. Own-price elasticities appear to be the same in urban and rural areas, but there are different cross-price effects.

Hailu and Weersink, “Commodity Price Volatility: The Impact of Commodity Index Traders,” CATPRN Trade Policy Brief 2011-04

While both sides agree that there is a correlation between CIT (commodity index trader) activity and commodity futures prices, the direct of causation is the point of contention. The empirical evidence is mixed with very limited support for the view that higher commodity prices draws in investment activity by index funds. … There is more empirical support for the claim that CITs are associated with greater market volatility. Khara in a Brookings report argues it is unpredictable price volatility that is the real problem for producers, consumers and governments, not the level of prices. … Thus, an increase in commodity market volatility may lead to greater costs for managing risk: more costly insurance premiums, higher options premiums, and greater margins for hedging. … The research conducted to-date suggests commodity index traders had little to do in driving prices upward but are one of the reasons for the significant increase in market volatility over the last several years, but are not the sole cause.

Harvard (et al) in Africa

The Oakland Institute is publishing a series of reports showing, among other things, that the "land grab" in Africa is not just about Middle Eastern countries, India, and China. US Universities are speculating that the value of land in Africa is going to go up, so they are buying low and selling high. Land is being bought at 1/2000th the price of land in Iowa and 1/1000th the price of land in Brazil. Note please that this is not a "market" price -- it is negotiated between government and (government, firm, institution, investor), usually with no input from or repayment for the people currently living and working the land. Eminent domain indeed: "a foreign investment group was able to acquire 100,000 hectares of fertile land in Mali for a 50-year term for free."

Researchers at the California-based Oakland Institute think that Emergent's clients in the US may have invested up to $500m in some of the most fertile land in the expectation of making 25% returns.

Emergent claims that it's not speculation or land grabbing, but that real investments are being made to make the land more valuable, and more productive to the extent it helps with it being valuable.

In Ethiopia, a process of "villagisation" by the government is moving tens of thousands of people from traditional lands into new centres while big land deals are being struck with international companies. [Ethiopia map source]

The largest land deal in South Sudan, where as much as 9% of the land is said by Norwegian analysts to have been bought in the last few years, was negotiated between a Texas-based firm, Nile Trading and Development and a local co-operative run by absent chiefs. The 49-year lease of 400,000 hectares of central Equatoria for around $25,000 (£15,000) allows the company to exploit all natural resources including oil and timber. The company, headed by former US Ambassador Howard Eugene Douglas, says it intends to apply for UN-backed carbon credits that could provide it with millions of pounds a year in revenues.

Meanwhile the Republic of Congo (not the DRC) is giving 80k ha to 40 of the white farmers ousted from Zimbabwe a few years back:

Simple Development Stories vs. Reality

The differences between what we want to do, what we are good at, and what we [maybe] need to do. (HT: Barder, Source)

 We’ll never really be free of simplistic development stories. But at least that means the rest of us can have jobs adding another layer of reality to the debate: No, Malawi’s fertilizer subsidies are not simply a glorious story of an African government bucking “the Man.” IMF austerity programs also made the fertilizer subsidies possible.

Zambia continues its fertilizer subsidy program and is encouraging a Russian firm to build a new fertilizer plant to help them do it.

Saudi Arabia in Ethiopia ($2.5 billion for rice) and Zambia ($125 million for pineapple): “Saudi Star plans to export 2/3 of the food it will grow on the Ethiopian land…” The Saudi government announced this year that there are 27 other countries in whose agriculture it hopes to invest.

Hungry families turning down a free lunch. “When India was poor, its failure to feed itself properly did not seem odd. Poverty was explanation enough. But after one of the most impressive growth spurts in history, the country’s inability to lift the curse of malnutrition has emerged as its greatest failure—and biggest puzzle. … Astonishingly, a third of the wealthiest 20% of Indian children are malnourished, too, and they are neither poor nor excluded.” After complaining that Indian plans to reduce hunger are insufficient given the structural and bureaucratic difficulties, however, the Economist’s answer of turning the program into a CCT that wouldn’t address them either seems odd.

Why? Try Banerjee and Duflo's explanation: "The poor often resist the wonderful plans we think up for them because they do not share our faith that those plans work, or work as well as we claim. We shouldn’t forget, too, that other things may be more important in their lives than food."

Easterly asks, Why are we not concerned about the brain drain in North Dakota? I don’t know where he was during the previous gubernatorial election, but in the great state he and I share the brain drain out of New York State was a major debating topic. While it’s true no one proposed putting a wall around the state to keep people in, it was still a topic of concern.

Success, Disaster, and One or the Other in the Making: African Agriculture

LDS Charities has been working wth IITA (a Nigerian charity) inLuputa,  DRCongo on a project to increase cassava yields and processing. The local members who devised the project [right] and Brother Squires, director of Agriculture Production Services for LDS Charities, are very pleased with the results:

Families also grow their own cassava, then process it in exchange for a small fee used to maintain the equipment. They often have enough flour to use, preserve for food storage and sell for a small profit in the marketplace. Any surplus is used to help care for the poor and needy.

"This project offers sustainability at its best," said Brother Squires. "These subsistence farmers have improved their self-reliance through increased production, improved marketing and better processing. They have given back to those in need with their surplus product. It's a great success story."

The site supervisor for the project, Nestor Ilunga, is featured in a second article this week as he and his family prepare to visit the LDS temple in South Africa, after a 7 hour bus ride to a plane to the DRC capital to a plane for the 1730 miles trip south. The story was the first time I had heard mention of a "General Temple Patron Assistance Fund" to assist families at great distance to attend the temple. "To date, only one family in the Luputa district has been sealed in the temple: the district president and his wife. Full-time missionaries called from the district have also been to the temple."

Southern Africa has meanwhile been facing floods which have damaged local crop production in "portions of Botswana, Lesotho Mozambique, Namibia, Zambia, Zimbabwe and South Africa." Over 60% crop losses are reported in Lesotho while Mozambique and South Africa have declared a state of emergency.


The Ethiopian government has agreed to allow private Indian farmers to set up shop to crow pulses and edible oils to export back to India. The Indian government for its part is providing assistance with watershed development and other commercial agricultural investments. More on land grabbing.

Roving Bandit brings to our attention a call for papers on food market systems planning, with an emphasis on the planning. The call also includes plans made by NGOs and landscape architects, but the intro paragraph makes pretty clear their interest in meeting "the official who is in charge of ensuring bread supplies to London."Oh dear.

Big Bag of Africa

One of my better-visited posts dealt with Ethiopian monetary policy. The question is: what is the chance of another Birr devaluation? One vote for pretty good based on pretty simple trends. The currency stays relatively stable against the dollar for 5-6 months, then is devalued. The hope with the last one, though, was that it would be large enough to stave off another such episode for a longer period of time. Blattman ponders:

The under-qualified macroeconomist in me expected Ethiopia’s recent devaluation to actually spur rather than slow the manufacturing sector. In time that may be so. But in a place where inputs and machinery are imported, a devaluation is a mixed blessing. Existing firms must be adding real value to production to succeed. The agricultural export sector, where few foreign inputs are needed, seems to have a brighter future.

South Africa is starting its own development agency. "development assistance for the year 2006 is estimated between $363 – $475 million.  This is 0.18% of South Africa’s GDP from 2006 – which matches the figures for US development assistance as a share of the economy."

People seem to enjoy ranking Africa's leaders. Here is the latest (Hat tip: Africa is a Country)

The Economist does Nollywood (Nigerian Hollywood).

How helpful is fairtrade chocolate? One journalist's opinion is here

World cocoa prices easily exceed the Fairtrade minimum. Kuapa has built schools and clinics but competition for beans is fierce and many other buyers offer farmers incentives, such as loans or machetes or insecticides.  Some farmers are loyal to Fairtrade but many have good reasons to sell their beans elsewhere.

Farmers are an important lobby in Ghana, which has seen two government changes in the last five elections, and hence

Ghana has fixed a minimum farm gate price of 3200 cedis, or $2165, roughly two thirds of the world market price.  It is unusual for farmers to be this well rewarded.  During the late 1970s, producers received just 10 per cent of the world market price.

This means fair trade matters less in Ghana than it used to now that the alternative is not as bad.  Here is another good article on the subject.

Speaking of chocolate exporters, there's a new article on Cote d'Ivoire which "traces the civil war to the politicization of citizenship and ethnicity during the democratization process."

Another big bag of development

 Haddad argues that agricultural development could help spur and push Ethiopia's high growth rates into the future, but only if done right. He recommends growth-diagnostic-like tools to identify where the bottlenecks are by agroecological zone. Different reports come to different conclusions about the extent to which government money is spent for political purposes rather than development. Government officials appeared to be knowledgeable about the problems of fast growth and to be asking good questions.

Aid Thoughts is concerned about DfiD's new plan to democratize aid by letting people vote on where the money goes. He argues that "This kind of approach will just increase the skew of development financing away from the economy and towards social development, and reduce the use of General Budget Support, the option that most respects the idea of country ownership of the development process. Still, it’s a consultation, so whether you agree with me or not, let them know."

Tales from the Hood ends its series pondering what we've learned about development in Haiti this year by proposing what it has taught about the kind of transparency initiatives that need to happen: "We’ve let our ordinary citizen supporters believe that we can and will solve any problem – from rubble-removal to general world poverty. But one year later, it is painfully obvious in Haiti at least that we can’t. And they’re mad." Being more honest about the difficulty of aid has long been one of their regular themes.

Lots more below the fold.

Land Grab

The so-called African land grab grabbed a lot of headlines at the end of 2009: Guardian, NYTimes, BBC, not a bad collection, all available through the African Agriculture blog.

Malibya, the Libyan government's development company in Mali, has built one of the largest canals in Africa. The largely critical article from The Guardian [who apparently failed to ask permission to be on the company's land] notes that 150 families were forced off their land for the canal with minimal compensation and worries that this is only the beginning.

"The government are bandits. What they are doing is completely against every law," says Ibrahim Coulibaly, president of the Coordination Nationale des Organisations Paysannes, which has been organising protests. "Even if the land does belong to the government, the people living on it still have rights, and we will do everything to fight against this injustice."

Mapping systems are said to be quite poor, causing construction workers to dig up several cemeteries which led, very understandably, to further local opposition. There are also serious concerns about water rights issues. A NYTimes article mentioned that " 'In Mozambique, one investment company discovered an entire village with its own post office on what had been described as vacant land,' said Olivier De Schutter, the United Nations food rapporteur. ... The agreement signed with the Libyans grants them the land for at least 50 years simply in exchange for developing it."

Kofi Annan, former UN secretary general, says that “The food security of the country concerned must be first and foremost in everybody’s mind. Otherwise it is straightforward exploitation and it won’t work. We have seen a scramble for Africa before. I don’t think we want to see a second scramble of that kind.”

Of course, statements like this from the state-funded companies do little to help:

Kassoum Denon, the regional head for the Office du Niger, accused the Malian opponents of being paid by Western groups that are ideologically opposed to large-scale farming. “We are responsible for developing Mali,” he said. “If the civil society does not agree with the way we are doing it, they can go jump in a lake.”

One US project is supporting 800 farmers to acquire title to about 12 acres of land each.

How large are the parcels of land being transferred to foreign governments? The World Bank estimates that, between Jan-Nov in 2009 alone, enough land to match California and West Virginia combined, more than 10 times the size of annual land transfer deals worldwide before the food price spike. In Mali, the range is between 600k [as reported by the foreigners] and 1.5 million hectares.

BBC reports that Ethiopia is selling off an area the size of Belgium populated largely by ethnic minorities at about $10/yr/ha. "The Ethiopian government stipulates that foreign investors will have to satisfy domestic food needs before they can export." The government claims that the land is unused, but there are millions of pastoralists in the country, many of whom pass through that area and none of whom are being compensated.

More posts on the Africa "land grab," and a general article mentioning several of the larger deals and concerns. Senegal is reportedly in talks with Saudi Arabia about a parcel of land 4 times the size of Manhattan.

Big Bag o Blog Links to start the new year

China in Africa meets Micro-livestock: a new research program is introducing Chinese weaver ants to African fruit trees to combat pests. The researchers note that if this works, it is: green and organic, another source of income and jobs (rearing ants to sell farmers), and a viable protein source for people who don't mind eating ants.

Half of a charter city: Dijbouti, Ethiopia. The charter city part comes at the end of a lengthy musing on Ethiopian political history, wondering why democracy has taken so little hold.

A policy entrepreneur in India is using Facebook to increasing citizen access to government (ie - complain here) and improve information sharing between government sectors.

GMOs meet Florida orange juice to prevent an insect-borne bacteria which causes "greening" that wipes out the crop and the tree. "Most scientists who have studied the problem seem to agree that genetic modification, and the cultivation of trees resistant to the bacteria that causes "greening" disease, currently hold out the only real long-term hope of fighting it." That was the conclusion of a report sponsored by the Florida Department of Citrus and U.S. National Academy of Sciences

Obama is signing the food safety bill today ... but where will the money come from?

A defense of large incomes for people in finance: "As long as we have an economy that is increasingly dominated by “idea companies,” where the idea is really, really hard to discover and really easy to implement once discovered, finance will earn huge gains." (Response to the responses)

On the gains from having a single currency in the US. To Libertarians, this is called the transaction cost side of private currency creation.

Education spending and minorities: it's easier/more cost-effective to educate a homogeneous population. Tino shows that once you remove immigrant populations from the analysis, the relationship between education spending and outcomes is large and positive. It only looks like additional spending worsens or has no effect on outcomes in the full sample because it's much more expensive to educate more diverse groups, who have lower outcomes for a variety of reasons. Within minority groups too, there is evidence of the same positive effect. The 0-effect sometimes observed is an artifact of lumping groups together.

Which shipping company is best for your package? Depends on the type of package. USPS is gentlest with packages but worst with Express Mail. All carriers were less careful with Fragile boxes.

Random Acts of Development

Randomization the easy way: Fantasy Development. Pick your projects, players, books and duke it out with your colleagues to see who can develop the greatest development team.

A call to make the World Development Report a Wikipedia project so that all the (internet-connected) world can participate - also known as Development 3.0

Novel microfinance: goats replace money.

Current world population, updated every second.

Taiwan ($34,700/capita) surpasses Japan ($33,800) in PPP but not market exchange rates.
Review of a "pre-economics" book on How an Economy Grows, Libertarian style. Or, if you prefer, the account of the rise of two Indian corporate leaders "in the thick of the sweatiest corporate wrestling matches."
The first digital images of records from Ghana have been published on beta.FamilySearch.org

NAFTA gives Mexico some advantages (against China) in trading with the US, but needs to do more to take advantage of them. But the former trade minister who negotiated NAFTA "points out that the multiplier effect of exports in Mexico is unusually low. Each export dollar generates only $1.80 at home, compared with $2.30 in Brazil and $3.30 in the United States." Contrary to most trade discussions that argue that developing countries need to focus on building processing plants, the article argues Mexico needs to concentrate on building more of its own inputs so it can gain more from its exports and get access to more markets.

The effect of unconditional cash transfers on London's longest-term homeless. "Of the 13 people who engaged with the scheme, 11 have moved off the streets. ... The outlay averaged £794 ($1,277) per person ... [while] the state spends £26,000 annually on each homeless person in health, police and prison bills."

The difference between quantity education and quality education in Uganda. Private educators are perceived as offering a much better product: 90% of university students were privately educated [students - find the selection bias in that sentence]. The interviewee believes universal education was still a good idea just for getting the culture to believe in universal education and the policy is being followed up with universal secondary education. By way of comparison: building a school in Ethiopia.

Fair Trade Waylaid

Supermarket | United Kingdom

Customer: “Excuse me, where is the tea?”
Me: “Right this way.”
Customer: “Do you have any tea that isn’t fair trade?”
Me: “Excuse me?”
Customer: “Do you have any tea that isn’t fair trade? It’s more expensive!”
Me: “I’m sorry, but I think you are missing the point.”
Customer: “It’s more expensive! That isn’t very fair to me!”

Big Bag of African Politics

In addition to the US midterm elections, a number of African countries are holding their own elections. An eye-witness account of peaceful goings on in Zanzibar.

Ethiopia and the UK both deny the implications of a recent Human Rights Watch report. Based on interviews with 200 people, they find that people are denied food aid, agricultural subsidies, university slots, and other government programs if they are not members of the ruling party.

Freschi reviews the review of a new book on Ethiopia's mid-1980s famine. The conclusion: totally man-made - "the direct and in all likelihood inevitable result of deliberate policies in Addis Ababa by the Stalinist government of Mengistu Haile Mariam." The post also includes this delightful picture of Ethiopia, land "where nothing ever grows/ no rain nor rivers flow."

Mauritius has accomplished most of the MDGs, an underappreciated achievement. But part of being a developmentalist is never believing amazing progress is actually progress: "Charan is worried the government will use the positive MDG figures as an excuse to ignore other social problems"

The Economist discusses Kenya's growing importance economically and politically in Africa, designs on South Sudan, and the various factions. While that piece is only cautiously optimistic, Zutt believes that Kenya's new (August 2010) constitution will do a lot of good:

It subjects the presidency to more checks and balances.  It strengthens parliamentary oversight of the executive.  It devolves power to 47 elected county governments, introducing for the first time in Kenya a meaningful decentralization.  It protects the rights of citizens, and particularly women and vulnerable groups, through an ambitious bill of rights.  It requires all sitting judges to be vetted to determine their eligibility to continue to serve.

Only 1/5 of the projects undertaken by foreign governments to grow food in Africa (aka land-grabbing) have actually started growing food and even where they have, yields have been 1/4 of expectations. Despite this, more businesses are also beginning to look at increasing African agricultural production.

Africa is a Country points out that the average age of African leaders is 76, while the average age in OECD countries is 51. Penn  notes

I am not sure what to take away from this: whether this is a representative sample, then we’re talking about different kinds of political systems (with rules about term limits or the extent of pressure from civil society groups), different ideas about the links between age and experience, various types of regimes (including life presidents and dictators for the African countries cited), and, finally,  it is not like having younger leaders have led to better policies (whether social, economic or political) in the ‘First World.’

CGD encourages the inclusion of Nigeria in the G-20 because of its large population size. The Economist is bullish on African economic growth, predicting a number of countries with more than 5% GDP growth in 2010 and 2011.

In response to the debate about how to evaluate the progress of the Millennium Villages, Blattman proposes a different baseline comparison: the Institutions and Accountability package. The increased attention caused by the MV project gets national and state governments working ... in those areas. States learn by doing and get better at delivering their public goods to everyone.

By this argument, the kind of research we need to get built around the Millennium Villages are process consultants (to learn how to deliver services better) or people who think about how policy and institutional change actually happens, so the lessons and examples can spread beyong the example villages. We also need lots of close observation so that we can see why some interventions work well together, and why some don’t.

These questions are beyond and in addition to the questions of positive externalities, whether there are results in economic levels or economic growth, and how rigorously we can identify the causal effets.

Big Bag ... too big

Adam Smith is quoted by Thought du Jour on inequality

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.
Adam Smith, Wealth of Nations (1776), Book I, Chapter 8, paragraph 35.

I don't think this has that much to do with inequality ("fair share" or "equal share") per se as it is about poverty. You could say it's about a living wage, but the ability of working people to meet their needs "tolerably well" hardly says anything about preventing the wealthy from buying multiple McMansions.

A different view of trade vs. aid: which one do you want as your friend?

Mr Meles’s contempt for what he calls the “neoliberalism” of the West is as plain as his admiration for “generous” and “dependable” China. ... The Europeans and Americans find this galling, since they continue to pay for many of Ethiopia’s hospitals and schools, as well as handing out free food. But trade between Ethiopia and China is increasingly what matters. It was worth $800m in the first six months of this year, up by 27% on last year. China has invested $2.5 billion in Ethiopia, mostly in infrastructure.

Easterly's logic test (a test that has offended a surprising number of commenters)

2. Some nut somewhere is a fan of the economist Friedrich Hayek. Therefore it follows that: (a) since I like Hayek, I am a nut, (b) you can logically prove that Hayek  is a talk show host (c) Hayek’s ideas make possible a free society in which nuts say nutty things, but you can ignore them.

Speaking of whom, the IMF is starting to sound remarkably Austrian:

The seeds of the crisis were sown, in large part, in the five years before the crisis. Between 2003 and 2008, much of the region experienced a boom in bank credit, asset prices, and domestic demand. ... while the influx of capital boosted growth, it also led to rising imbalances and vulnerabilities.... Boom-bust credit cycles can be very costly, so it is essential to prevent credit booms from getting out of hand.

They have yet to adopt Austrian solutions, however.

In an increasingly rare moment of solidarity, the New York Senate and Assembly unanimously passed an autism insurance bill. I am uncertain of the details, but the press blurb is that it should "require coverage of evidence-based treatments like speech therapy, occupational therapy, physical therapy and applied behavior analysis. S7000B also insures that coverage for behavioral therapy cannot be denied because it is deemed educational or habilitative in nature." Gov. Paterson became the second governor after Mark Sanford to veto such legislation. Sanford was overridden. There's some good money on the second and soon to be former governor being overridden as well.

On the difficulty of trying to please everybody, or the problem with being a pragmatist, or The Obama Paradox.

Cato (via Newmark) on the impacts of McCain-Feingold:

Kenneth Vogel offers an unexpected insight into the nature of campaign finance regulation:

“[Wisconsin Senator Russell] Feingold faces an uphill battle against a novice opponent, who, perhaps ironically, has been the beneficiary of hundreds of thousands of dollars in ads attacking Feingold that would have been prohibited had McCain-Feingold remained intact.”

In other words, if Feingold’s campaign finance law had not proven to be contrary to the U.S. Constitution, he might well not be facing “an uphill battle” to serve a fourth term in Washington. The political speech that is causing Feingold problems would have been prohibited in that situation.

"Satellite dishes amid the tin-roofed shacks of El Salvador. So much for Maslow's hierarchy."


Courtesy Mankiw, Hennessey fights Goolsebee's statistics with other statistics. It makes me want to see Iron Chef Statistician: Whose descriptive methodologies will reign supreme? Video below the fold: