Lit in Review: Climate Change and Investment in Vietnam

Dang, Anh Duc (2012) "Cooperation makes beliefs: Weather variation and sources of social trust in Vietnam" ANU Working Papers in Economics and Econometrics #596.

Dang - a PhD candidate at ANU - begins with Durante's (2009) finding that large weather variation in medieval times led to more collective action in Europe and hence to more social trust. Applying a similar methodology to Vietnam's 1927-1995 regional rainfall variation (both monthly and maximal), Dang shows that regions that had higher weather variability also have higher social trust. Social trust is measured by surveys asking if respondents feel they can trust their community and if there is someone outside their household to whom they could turn for help in hard times. Oddly, while recognizing that migrants are part of an interesting dynamic with social trust, Dang excludes them completely, focusing only on households where at least one adult has lived in that community their entire life. I also find it odd that he is worried about unobserved non-geographic factors that would determine both rainfall and social trust among people who haven't migrated.

Among the implications of this work is that climate change is likely to impact individual adaptive behavior through changing levels of trust and social cooperation. This will tend to mitigate some of its negative effects on individuals.

Chinowsky, Paul, Amy Schweikert, Niko Strzepek, and Kenneth Strzepek (2012) "Road Infrastructure and Climate Change in Vietnam," UNU-WIDER Working Paper 2012/80.

They consider the tradeoff between expanding road access to more areas today and upgrading and maintaining existing roads to prepare for and respond to climate change. Even while assuming sea levels rise by one meter, they show that the large majority of cases involve costs in the lower end of the distribution. Despite that, it is cheaper in terms of foregone roads to adapt to future climate change than to await its eventual impact and rebuild roads once the uncertainty is resolved. In the minimum impact scenario, Vietnam would be no worse off for making adaptive investments.

Development Clashes in India

The Guardian on Polio: "If in India as a whole there are no more confirmed cases before 13 January, the country will have completed its first year without a new victim." That would leave only three countries where polio is endemic: Nigeria, Afghanistan, and Pakistan. IUPDATE: The Gates Foundation twitter feed informs me that it has taken two million volunteers' time each year to accomplish this. Misunderstandings and religious tension - including the War on Terror - have been heavily involved in why it has taken so long in India:

Equally important in overcoming the last bastions of the disease, as in many parts of the world, has been the consent of local religious figures.
Over the past decade one of the biggest obstacles to polio eradication in India, as in Pakistan and Nigeria, has been the resistance of poor, largely illiterate Muslim communities such as those in and around Moradabad.
Even as the first campaigns got underway in the area in the late 1990s, local clerics began telling congregations that the vaccinations were part of a government plan, backed by the west, to make Muslim women infertile. ...
Torabi said that he had attended immunisation clinics in clerical robes to show "that a common Muslim man is able to trust the programme".
He added: "I told them that in nowhere in the Qur'an is it written that we should be unhealthy, or not take care of our hygiene and that if tomorrow our children are suffering from polio then they will not be able to do the prayers properly. Slowly they understood my point."

NPR has details on a conflict between a South Korean steel company -- that has agreed to purchase a large amount of government land to build a steel mill, electric plant, and a port, all while providing training and jobs locally -- and a number of locals whose land is also being taken from them as part of the deal.

Meanwhile, the Economist reports on the private construction of roads and other infrastructure in India, which started out quite optimistic but is now showing signs of overly high debt and other financial distress:

Over the next five years it predicts that infrastructure investment will reach a new high relative to GDP, with some $1 trillion spent, half of it by the private sector. The trouble with this rosy prediction is that the balance-sheets of many Indian infrastructure firms are as potholed as the roads they resurface.

They argue first that firms need more equity, not more debt. Fair enough. The second argument, however, is that the government needs to untangle some of the business transactions. This is an incredibly dangerous suggestion overall. Government's job is to set the rules so that companies act in open, transparent ways, not to wade in and make business decisions. That is an open invitation to corruption and rent-seeking.

What is Development? -- Students' answers

At the start of my course on development economics this semester, I asked my students to ponder a question. Suppose you woke up from a long sleep and were told that Nigeria is now a developed country. What would that mean to you? What would be different? What the same?

I should put forward at once that this not a random sampling by any stretch of the imagination. This in no way purports to be what "average Nigerians" (whatever that means) think -- these are economics majors at a private university, with all those facts imply. It was fascinating nevertheless and I will also be interested to see if their idea of development changes over the course of the semester.

Out of 12 students, 8 mentioned improved standard of living with a few using words like "economic growth" and one who even whipped out "GDP and GNP."

But how does that improved standard of living manifest itself? In order of mentions:
1 - Better infrastructure (sometimes as a catch-all term, sometimes with examples listed - roads and power being the top two)
2 - More job opportunities
2 - A stable and constant supply of electricity. During our discussion, with half the evening class spend without power, this got the widest noise of approval from the group. As Hans Rosling said, if you give people the right to vote, they will vote for the washing machine.
2 - Other public goods, which they mostly called "amenities," listing schools and hospitals most frequently.
5 - Lower poverty
6 - Lower corruption

Two students mentioned monetary factors: the Naira exchange rates would be more stable and would appreciate compared to other currencies. One mentioned food, but it was less clear whether food security, food safety, food quality, or food variety were implied. One voted for a high life expectancy, another for sport facilities, another for a balanced economy. Among other interesting comments were that Nigeria would then truly be independent, that former government leaders had all "died or were caught", and one person averred that nothing would change - "Nigeria is the same."

There was a general agreement that their culture would not be changed by development. I'm scarcely a sociologist, but coming from Cornell and a culture that fears Americanization, and right after a conversation with political scientist about how development changes a people's sense of priorities and timeliness, it was odd. It shouldn't have felt that way, though - America will always be America, right? I mean, sure, we've drifted a little from 19th century - or even 1950s - ideals over the course of our development, but that's all for the best, right??? /sarc

The other thing that would be the same? People who won't work continue to set up conditions that lead to  suffering.

Big Bag of African Agriculture

Fair trade coffee in Uganda, which liberalized coffee export in the 1990s: Prices remained low initially, leading to reduced supply and quality. Organizers of a free trade initiative with 7500-15000 farmers claim that they have known how to produce high quality coffee but haven’t had incentives. The price premium is roughly 25% plus investment in community public goods.

Also in Uganda: mud quarries. “what we get is a fascinating portrait of a village doing the best it can with an informal land system, yet obviously still in need of some sort of formality.” The mud is a valuable building material locally.

South Africa plans that agroprocessers will add 500k jobs over the next ten years and are providing capitalization funds. The funds are coming from the court payments required of Pioneer Foods for collusion and price-fixing. The government also hopes to increase the number of smallholder farmers from 200k to 250k by providing training and extension services. Employment in agriculture and agroprocessing has been declining.

Zambia’s president is not predicting turmoil from the north spilling in, crediting good multiparty elections for his confidence.

Learning African English via Wikipedia

FAO estimates that if rural women had equal access to land, technology, financial services, education, and markets , agricultural production could increase enough to feed an additional 100-150 million people, 12-17 percent of the world’s total. Diouf has called for equality as a means to “win, sustainably, the fight against hunger and extreme poverty.” Again, the question is if we pursue equality as a right, or because it is morally right, or because it pays us to do so.

On the infrastructure constraints in African agriculture:

Statistics indicate that only 34% of sub-Saharan Africa’s rural population lives within two kilometers of a paved road. In most of Africa, poor road infrastructure accounts for investors deciding to look elsewhere. “Every fifth African needs at least five hours to get to the nearest market….” Beavogui says.

Reasons to be optimistic about Africa, video below the fold. Among the interesting points he makes is that vehicle operating costs in Africa are no higher than in price, but the prices to put goods on ships are the highest in the world. Only 1% of the money allocating for non-wage health support actually gets where it was intended. Yes, this is why he is optimistic. It means that there are obvious problems that can be readily solved. As a result, implementing some simple remedies reduced Rwandan child mortality by 33%.

A good day for sentences

"A 79% self-financing tax cut means that the state can give 5$ to the private sector with only a loss of 1$ for the public sector. Only fools or committed socialists would defend this rate of taxation." - Super Economy on the government revenue maximizing level of taxation

"a good synonym for picturesque is desperate." - Blood and Milk on poverty tourism

"Nigeria’s government will buy three new jets for the president at a cost of 155 million dollars, officials said Wednesday, even as the oil-rich country seeks financing to provide adequate electricity." - via Owen Abroad at a link that is no longer working, but he got it from here.

"‘im in ur temple, stealin ur relix,’ I whispered." - How to Write Badly Well, Indiana Jones being modern and accessible