Jobs in Africa

The African Economic Outlook (here) came out this month. It predicts continued 5% growth overall, with about 7% in the west and only 3-4% in the north and south. For Nigeria, and my former students should pay attention, it points out that most of that growth is NOT in the oil sectors: agriculture, trade, and ICT growing fastest. It also advises countries to invest more in the value added industries. Given that the vast majority of my intro economics students and even the people on the street in Nigeria not only could but did tell me the same thing on multiple occasions, I'm less impressed. It's a right answer, of course, but more needs to be done to identify why it isn't happening when everyone already knows it's the right answer and to take the political economy more seriously.

Oh, and as an aside, take a look at this graph from the AEO:

I could be wrong, but I don't think that's how gears work. The bottom two would turn just fine, but the Human Rights gear is pushing the Unequal Access gear counter-clockwise while the Exclusion gear is pushing it clockwise. From a graph standpoint, this undermines the presumed point that each of them exacerbates the others. It suggests maybe that a poor human rights record makes unequal access not as bad, or that unequal access improves human rights...

Teal argues that the increase in education supply in Africa is a good thing, but only provisionally. The question is: why is more education good? It's good from a human rights/development perspective, clearly. But whether increased education will bring people out of poverty depends in part on whether or not there are jobs available that demand the increased skills.

"Without the factories the dramatic increase in the primary educated work force will indeed see little economic gain from their education. The recent increases in the demand for education beyond the primary level certainly suggests that both students, and their parents, are aware that low levels of education have little value in the job market place. Focusing on meeting that demand rather than focusing on why that demand has arisen may well be to miss the critical problem facing educational policy in Africa."

One of the informal jobs I saw often in Nigeria is that of the porter. People, usually boys, wandered the Jimeta market with wheelbarrows, offering to carry my purchases. The Sudanese government, however, has decided that it is in the public's interest to create a monopoly on wheelbarrows in Khartoum. Porters are not allowed to own their own wheelbarrow, but must rent them at high fees, ruining what little income they were getting from a pretty thankless job.

El Alaoui, Aicha, Elhadj Ezzahid, and Jallal Eladnani (2013). "Estimating NAIRU: The Moroccan Case", MPRA Paper No 56815.
In intermediate macro we are introduced to the Non-Accelerating Inflation Rate of Unemployment (NAIRU). The idea is that if the level of unemployment is lower than NAIRU, you can expect inflation to increase, and to decrease if unemployment is higher. They estimate that the NAIRU has decreased from around 13% in 1998 to about 9% today. There is no explanation for why this happened and the policy conclusion - Morocco needs looser monetary policy based on the fact that the unemployment rate was consistently higher than NAIRU - does not capitalize on the fact that inflation has been remarkably low and sometimes negative since late 2009 or discuss the bank's mandate, goals, or governance.

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

Happy Labor-tarian Day

Have solidarity with the working class and get the government off their backs. Many of the poorest pay over 100% marginal tax rates as benefits phase out in strange and unpredictable ways. It sets up strong counter-incentives to work. Employer payroll taxes reduce demand for labor across the board.

From Cafe Hayek:

taxes on corporations are taxes on people:

I remember that in addressing the issue in the 1980s, the late Herb Stein said that it’s as if people think that if the government imposed a tax on cows, the tax would be paid by the cows.

Labor and environmental regulations are actually preventing the government from producing Obama's sought-after clean tech jobs (HT: Newman).

Catalan at Mises discusses the moral and pragmatic consequences of Libertarianism for the poor:

As a “quasi”-consequentialist I tend to judge libertarianism by the outcomes of certain policies (or, better said, lack of policies). I honestly believe that the free market could better provide for the “less fortunate” than an interventionist economy, and that an interventionist economy will lead to the further impoverishment of the “less fortunate” over the long run. [My father] disagreed and I gave the example of the food industry. In more capitalistic countries, where regulation on food production and distribution is relatively minor, food is plentiful — there is a surplus that can be exported. There are some who are “malnourished”, but malnourishment in the United States is not the same as malnourishment in Sudan, for the most part. Yet, in countries where food is rationed there is widespread malnourishment and famine.

While I tend to favor his overall sentiment when applied to the US, the malnourishment of Sudan is scarcely caused by too much government today. You can make the case that the problem is too much of really bad government in the past, but if even 15 years of no central government have not turned things around in a significant way, maybe there needs to be something more. A good part of the reason our markets function well includes significant amounts of public goods provided by our government. Could they also be supplied by the market? Perhaps. Experience around the world shows that where government does not provide them, markets have provided in insufficient quantities to get their market system where it could be.

On the bright side, at least one sector is hiring: the downward-pointing arrows manufacturers.

Post-liberation governance, aid effectiveness, and a less dismal science

On the difficulty of running a post-liberation government, with applications to Rwanda, Uganda, and South Sudan: 

the central challenge for power holders is often not economic, but political. Former rebels continue to use the informal mechanisms that suited them so well when conspiring outside government. Power consequently resides in a shadow state, characterised by the personal and reciprocal arrangements which developed in the struggle. … though optimists point to economic progress, the reality is one of intense intra-elite competition with incredible violent potential, as has been witnessed in all three countries in the past and as might soon occur again in Rwanda and South Sudan.

Last month’s violence in South Sudan between rebel groups and the government.   

“Satellite images released by US pressure group the Enough Project, appear to back up claims of troop reinforcements and northern ‘fortified encampments inside Abyei.’ … With the referendum over, [former peace] deals [between southern groups] are now falling apart as groups jockey for power.”

The ‘consensus’ still seems to be that outright war is unlikely, that enough people want to avoid it … but they don’t yet have the trust and social capital to make it a nonissue.

The Africa News Blog cynically posits that the lessons to be learned from Gbago’s fall are not the ones we might wish: don’t hold elections unless you know you’ll win, don’t let the news get out if they don’t, and do your election rigging well in advance (prevent opposition from getting out their voice) rather than trying to stuff ballot boxes.

How effective is aid in Madagascar? Aid doubled between 2008 and 2010 with few noticeable results.

How effective is aid in Haiti? Well, people would rather stay in the tent cities where conditions are much better thanks to the aid. Is that a good thing or a bad thing? It’s just a good thing we don’t have to actually talk to poor people to find out how to do this kind of work (/sarc)

Over lunch two weeks ago, I wondered at the fact that media don’t run more positive stories about Africa like the successful, peaceful, free, and fair elections that happened recently. After all, since the West expects bad news, reporting more bad news is just “dog bites man,” it’s not news. When things go right, why don’t we see more news announcements “Something Goes Right in Africa.” … Might make an interesting blog title, that. 

One answer to why not is because, among the people who have information about the continent, it’s in very few people’s interest to widely spread good news. Another name for it is the Tragedy of the Commons in Selling Tragedy by Kenny, who has a book out trumpeting development successes: Remember Tolstoy’s maxim: “happy families are all alike; every unhappy family is unhappy in its own way.” From its introduction, Kenny writes that

the proportion of the population of sub-Saharan Africa affected by famine averaged less than three-tenths of a percent. The proportion who were refugees in 2005 was five-tenths of a percent. The number who died in wars between 1965 and 2001 averaged one one-hundredth of a percent.

For instance, on the plus side the Somali government prevented the trafficking of a pair of endangered lion cubs. See, occasionally the news in Africa really is about lions!

Small bag between meetings

I have been actively job marketing this week, sorry for the few postings. While I wait for the airport, here are a few quick links to tide anyone over who has missed their daily dose of Derrill:

A one thought summary of what the left and right are missing out on by Kling in response to Cowen's longer lists of the same:

What I think left-leaning economists should do more:

Look for structural reasons for policy failure, rather than attribute it always to misguided ideology. Consider the implications of imperfect knowledge on the part of government actors. Also, consider that the existence and growth of special interests is at least partly endogenous with respect to policy.

What I wish that right-leaning economists would do more:

Look for structural explanations for the growth of the state, rather than attribute it always to misguided ideology. Consider the implications of urban density. Consider that as the economy becomes more complex, the potential dispersion in wealth due to differences in ability, information, and luck becomes very large, while the ability to overcome such differences with sheer effort probably declines.

Yglesias' comments on oil prices have some application to food prices as well: when moving supplies are short (as they were in 2007/08), supply becomes much more price inelastic in the short run. Again similar to his comments on oil, there are policies we and other countries could use to reduce susceptibility to food price swings or reduce their frequency.

Yglesias also points out that "a world where ten rich bankers pay the taxes to finance make-work jobs for ninety other people isn’t an alternative to a pity-charity version of economic justice it’s just a way of hiding the ball."

Blattman points us to some happy news: Tanzania has granted citizenship to 162,000 refugees who have been there since 1972 or who were later born there as refugees. They had close to 700,000 refugees and told them to either apply for citizenship or go back home.

I can see the children's book on development now: If you give a man a cellphone...   [if you don't get the joke, try here]   More on the project here.

More from Sudan

Blattman argues that pastoralists in Sudan are part of a reaction against statehood. He has a book on anarchist history to recommend. [Video on Sudan's pastoralists and their concerns about statehood below the fold]

FAO happily reports that food insecurity decreased in southern Sudan during 2010 thanks to favorable rains. Though food production is up 30% on 2009, there is still a sizable food deficit. People returning to the area following the referundum are expected to increase food demand further, increasing the deficit. The range of estimates suggest an increase of 40-170% in the number of food insecure people.

Texas in Africa on political stability:

My real worry for this situation is not that war will break out between north and south ... but rather than tensions within the South will be played out in the context of an extremely fragile state. Southern Sudan will immediately become one of the world's poorest, weakest states - albeit one with oil - with a plethora of ethnic groups who don't see eye-to-eye on everything. That's rarely a recipe for stability.

McDoom at the African News Blog on southern Sudan's ability to govern itself:

“Is (the south) ready to govern itself? That’s what they’ve been doing for the last six years, doing just that,” David Gressly, the top U.N. official in the south, said.
It has its own constitution, a separate central government,  10 state governments all answering to Juba, its own parliament and even its own laws.
The two regions even have different banking systems...Juba in fact kept an entirely separate immigration system.

According to the Economist, Arabs have viewed the separation in a much different light than other groups. Some have claimed it is part of a Western plot to isolate Arabs, while others have pointed out to the implications for Kashmir.

Blattman also discusses [below the fold] a few important points on thinking about using aggression and the threat of aggression to bring about peace. Granted, he's largely discussing Cote d'Ivoire, but the principles apply equally well to any future instability in or around southern Sudan. Also below the fold are two videos: one on the life of Sudan's pastoralists and The Daily Show on Clooney-vision.

Getting Ready to Vote: Sudan

Fun video (below the fold) trying to get out the vote in the Sudanese referendum Jan 9. Speaking of which, Friday is the last day to register to vote in NY.

In other Sudanese news, the fellow who proposed planning African cities into the shapes of animals has been transferred to ... the Ministry of Wildlife. Good one.

Big Bag o African Blog Links

So there's a plan for communities in Southern Sudan to arm their young men so they can fight off the LRA when it comes to town. Wronging Rights' poll on "what should I be yelling as I tear out my hair" is delicious.

The  Ask Your Government initiative asked governments where the development money goes. Researchers then measured how responsive governments were to the requests. Podcasts are available for the responses from Uganda, Kenya, Zambia, Malawi and South Africa. The relative winners in SSA are Egypt, Ghana, Uganda, Kenya, Zambia, Namibia, Botswana, and South Africa. South Africa was as forthcoming as the US, England, France, and New Zealand or more so.

WalMart in Africa, a hopeful perspective.

Social entrepreneurs protecting Kenyan topsoil by encouraging the growth of micro-forestry:

After each harvest cycle, KOMAZA processes the lumber from farmers' trees into a variety of products including firewood, electricity poles, sawn lumber and even luxurious floorboards. The company then sells the products on markets that would normally be completely inaccessible to smallholder farmers. KOMAZA projects that each microfarm will return over $3,000 to each family at the final harvest, a huge sum for families accustomed to living on less than $300 a year.

Happy belated 50th birthday, Mali. Fun song.

Would Obamacare cover this traditional doctor's services? Everything from diabetes and TB to not being liked at work, bad luck, STDs, and court cases.

Kraft is encouraging Ghanian cocoa farmers to become fair trade certified.

A less than positive piece on Zimbabwe's land reform at machete point. Best quote from the Southern African Confederations of Agricultural Unions research report cited in the article: "tenure reform is more important than land reform in many countries." It applies this to Zimbabwe's and South Africa's very different land reform systems.

Sudanese Monetary Policy

Sudan's Central Bank is now paying southern Sudan in local currency instead of international, reducing southern Sudan's ability to import.

The Minister of Finance in the South has publicly stated that “It is an attempt by the National Congress Party to stifle the southern Sudanese economy” (AFP). 

Roving Bandit, however, believes it may just be monetary economics at work: the Central Bank seems to have temporarily set up a fixed exchange rate that has grown more and more expensive to maintain. Abandoning sending foreign exchange to the south may be part of stabilizing the exchange rate. The evidence below:





I point out, however, that it could be the constellation of reasons that is important. If you want to weaken the South without looking bad, this is one way to do it, for example.

Political will: measured while you wait

I have a paper making the rounds that measures the political will to reduce hunger. One part of that index is based on what people talk about when they attended the World Food Summit and its follow up meetings. Now this is a little qualitative/poli-sci for some economists' tastes. But it's really quite easy to see in practice:

Africa News Blog:

Britain’s new coalition government made its priorities on Sudan very clear as Henry Bellingham, the minister for Africa, used 90 percent of his opening remarks at his first press conference in Khartoum to outline how Britain could increase trade with Sudan.
The other 10 percent dealing with the run-up to the south’s referendum on secession... and the International Criminal Court arrest warrant for President Omar Hassan al-Bashir for genocide all seemed like just an afterthought.

IRIN:

At the end of the three-hour long session we had to put together the key messages for political leaders. When the AU assembly opened the following day, no political leader mentioned nutrition in their address. The main theme - maternal and infant health - got little mention. A substantial portion of the speeches were devoted to the conflicts raging in the continent. ... Mkandawire [head of NEPAD's Comprehensive Africa Agriculture Development Programme] added optimistically, "We just need the political will to drive the process, and it can happen."

Big Bag o Blog Links

Darfur in Brooklyn, picture highlights.

If only it were so easy: soap to clean politicians: Sudan edition.

If you are disgusted don’t worry there is Girifna soap bar!
It would not be easy after 20 years with out change
You will have to scrub, scrub and scrub then squeeze, squeeze, squeeze, squeeze, squeeze and squeeze,
But you will like the result
girifna soap bar for the future of Sudan!

You can comment on using market pull forces to encourage agricultural development research

John Cleese on the benefits of extremism, done back in the 80s.

Robin Hanson Statements, not all of which I agree with:
Food isn’t about Nutrition
Clothes aren’t about Comfort
Bedrooms aren’t about Sleep
Marriage isn’t about Romance
Talk isn’t about Info
Laughter isn’t about Jokes
Charity isn’t about Helping
Church isn’t about God
Art isn’t about Insight
Medicine isn’t about Health
Consulting isn’t about Advice
School isn’t about Learning
Research isn’t about Progress
Politics isn’t about Policy
I didn't actually tip my hit to Marginal Revolution for this one.