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.

Proving I'm Alive: Big Bag of Blogs

Bellemare on Swinnen's paper on who wins and loses from high food prices and on the benefits to rural smallholders of joining marketing chains.

Tabarrok showing me why I should be very, very afraid: Kucinich and co. try a real life enactment of Atlas Shrugged.

Sumner discovers a second career as Bernanke's shrink, showing how his psychology  helps determine the fate of this recession. (If you wanted to be more sensational about it, you could talk about the discovery of the sinister figure in the shadows: Vincent Reinhart. That would be overdoing it a touch.)

The early impacts of AGRA's investment in Ghana, combining fertilizer subsidies, market access, and variable loan structure depending on outcome (essentially removing downside risk).

I was getting ready to run some proper experiments out here, only to learn that my very presence might bias the games. Of course, now this proposes that I need to replicate this (preliminary) finding itself. How general is the result? (HT: Aid Thoughts and Roving Bandit)

Urbanization in Africa is mostly about population growth rather than migration.

Create Value, Not Jobs? How about AND?

Gurri makes a very good point (HT: Cafe Hayek), but one that wouldn't be immediately embraced by people the way it is regularly framed. (It's also not the only good point to be made on the subject, either, but that's another day's lecture.) The issue not "Create value. Not jobs." It is to create jobs of value. It is to enable people to create value and jobs will follow, sustainably. Partly this is semantics, but I think the semantics are important in terms of effecting policy.

It's easy enough to create make-work jobs. Keynes opted for digging holes and filling them up again. Germany (and many others) have expensive humans repave roads poorly that machines could do much better, much faster, and less expensively. While I do believe in the principal of having someone work for what they gain to avoid idleness and the evils of a dole, it ought to be work that makes at least one other person's life better off.

Slightly more tricky is creating make-work jobs that produce something more. India has a number of good programs that create jobs that also produce something of value, for instance.

The Lighter Side of Poverty and Unemployment

Some of these are a touch old, but it's one of those "the more things change" things.

Big Bag of Africa: Agriculture and Millennium Villages

A new paper is out that finds almost zero impact from the Millennium Villages Project. Wanjala and Muradian surveyed Kenyan MVP recipients and their non-recipient neighbors in the district and found that while "the project caused a 70% increase in agricultural productivity among the treated households, tending to increase household income, it also caused less diversification of household economic activity into profitable non-farm employment, tending to decrease household income." To say Clemens cheers would not do his sentiments justice, but Blattman certainly has a more skeptical take on the paper. He shows that there may be a problem with their evaluation strategy, effectively matching away the most important gains. If so, then "MVs actually raise incomes by 10% and assets by a third." The cordial debate between Clemens and Blattman on the latter's blog is impressive and worth reading. (HT: The .Plan that got it from MR, who got it from CGD, which is where I ought to have read it in the first place.)

Record heat in Zimbabwe killed several hundred livestock recently due to lack of water and good grazing land. Climate change is of course suspected to have contributed. The difficulty is in identifying how many cattle would have died had temperatures been just 1 degree Celsius less, or how much more likely this event was as a result of climate change.

In Nigeria, there are increasing tensions between cattle-herders and farmers in Abia as cattle are reported to have destroyed crops worth millions of Naira (tens of thousands of US dollars). Note, the article has a heavy pro-farmer bias.

Closer to my home, a new national government program in Adamawa State hopes to increase farmer yields by 300% with improved varieties of sorghum. The project is led by Prof. Babtunde Obilana, who plans that the government will buy more of the sorghum to use for its school feeding program.

Meanwhile, the LDS Church has a third stake in Port Harcourt. A stake is a group of congregations, and this means that church membership in and around Port Harcourt has grown by around 50% since 2002 when the last stake was created. It is very likely that new stakes will also be formed in Benin City, where the three current stakes have grown to some of the largest in the Church worldwide and could easily be split into 5-6 stakes.

Mozambique's national statistics arm has a new report showing that 99.9% of their agriculture is for subsistence only.

Botswana's government tries to make sure that government subsidies don't go to farms that are not being actively used, a process called black listing. This article discusses blacklisting figures for the last few years and the costs involved.

Setting Poverty Lines

India recently moved its poverty line. The new poverty line said that anyone in a rural area who spent more than 50 cents (US) a day on food or 66 cents a day in urban areas was not poor. There was an immediate outcry of people worried they would no longer receive government support if they were no longer classified as poor. The government quickly went to reassure people that moving the poverty line would not impact their federal welfare help. Pictured is the distribution of poverty in India as of 2001. Some of have also admitted that the new line is not totally reflective of poverty:

Planning Commission Deputy Chairman Montek Singh Ahluwalia agreed that the norms were set at a low level. “It is clearly a rock bottom level of existence and we know very well that everybody at that level of existence is under significant stress. In fact, we know that even above that level, households are vulnerable,” said Ahluwalia.
Ahluwalia clarified that the norms had been based on the assumption that health and education would be provided free of cost to the poor. He said that has not happened in many states across the country.

The poverty of "high-fashion" models in developed countries:

She found that 20 percent of the models on the agency's books were in debt to the agency. Foreign models, in particular, seem to exist in a kind of indentured servitude, she writes, often owing as much as $10,000 to their agencies for visas, flights, and test shoots, all before they even go on their first casting call.

The amazing thing is that this poverty is one they choose. It is possible to have a lucrative career doing commercial modeling, but the social norms look down on this modeling. Many models prefer to accept poverty now in the hopes of winning of the lottery and becoming famous.


On a homework assignment, a lot of my students argued that poor countries set absolute poverty lines while rich countries set relative poverty lines because the line is a lot higher in the US than it is in Nigeria. While I'm going to try to convince them that the level of the line is not what makes it absolute or relative, I think I should also point out this thought from Matt at Aid Thoughts, who argues that all poverty lines are relative:

... the international measure of absolute poverty, i.e living on less than $1.25 (PPP) dollars a day, is not really an absolute measure. Consider this thought experiment: if we had first developed the international policy line 100 years ago or 100 years in the future, would it be the same as it was today? I doubt so – our perceptions of what poverty is change over time, and these perceptions are inherently relative to our own position. This means that even `absolute’ measures are, in some way, a measurement of inequality, just ones we’ve committed to for some unspecified period of time.

Big Bag of Africa: Statistics, Governance, and Food

Shanta at the World Bank discusses the importance of good statistics to understanding what goes on in Africa:

Today, only 35 percent of Africa’s population lives in countries that use the 1993 UN System of National Accounts; the others use earlier systems, some dating back to the 1960s. To show that this is not an arcane point, consider the case of Ghana, which decided to update its GDP last year to the 1993 system.  When they did so, they found that their GDP was 62 percent higher than previously thought.  Ghana’s per capita GDP is now over $1,000, making it a middle-income country. ... 
Only 11 African countries have comparable data for the same year. For the others, we need to extrapolate to 2005, sometimes (as in the case of Botswana) from as far back as 1993.
In short, even the economists’ celebratory estimate of poverty declining in Africa during a period of growth needs to be taken with a grain of salt.  In reality, there are many countries for which we simply don’t know.
What’s going on here?

The vice president of Zambia, Guy Scott, is, to not put too fine a point on it, white. Jayawardane argues that this will be most surprising to people who believe African countries are primarily divided along ethnic and tribal lines. For Zambians and many other countries, however, status and occupation are much more important dividing lines.

A very vocal critic of Nigeria's government, Richard Dowden, was invited to speak to the government. He reports his shock at seeing Pres. Jonathan nodding and smiling encouragingly as he and other speakers described what was wrong in the government, including being the highest paid government in the world. His assessment of the president is cautiously optimistic, though he also still has some real questions.

My impression of President Goodluck Jonathan is that he is Nigeria’s first intellectual president – a laid back former academic who wants to walk round a problem before deciding what to do about it. He likes to listen and ask questions – taking his time to understand and reframe the problem.

In other news, nearly half of Zambia's maize production got soaked during the rains last week. While it does not have to be destroyed - the government is optimistic it will dry oat - it may well decrease the amount of maize for human consumption that would have been available after another bumper harvest.

Ghana is providing northern farmers with 110 combine harvesters as part of its agricultural subsidy programs that currently lower the price on 100-150,000 tons of fertilizer.

Banana wilt has already wiped out 20% of the crop in one Ugandan district and is threatening nearly all the rest. This is an area where bananas/plantains are a major staple food.

Growth Good for Poorest Nigerians

In preparation for my development economics class tonight, I sat down with my Gapminder data for Nigeria and examined how the distribution of income has changed in Nigeria between 1986 and 2004.

From 1986 to 1996 - to no one's great surprise - income inequality increased dramatically. The richest 10% of the population gained 7% more of the income while everyone else lost income share. Since there was very little economic growth at the time, it would be fair to say at least that the richest got richer and some people got poorer.

In 1996, however, things began to turn around in inequality terms, and for

the poorest 20% of the population that turn around happened in 1992. Even before democratic elections were restored, before the latest, long, stable run of economic growth started, income inequality has been on the decline. In the jargon, any Lorenz-consistent measure will agree that there is less inequality in 2004 than there was in 1996.

From 1996 to 2004, the richest 10%'s share of income has decreased, and everyone else's has increased. The poorest 20% gained income share from 1992-1996, but have remained steady since then.

From 1996 to 2004, per capita income increased a total of 11% in PPP terms. The income of the poorest 20% similarly went up 11%. The income of the middle 70% (20th percentile to 90th) increased by more than 11% in all groups. The income of the richest 10% went up by less than 11%.

Nigeria's last decade and a half of growth has been good for the poor and good for the middle class.

(In the graph, the top dark line shows the distribution in 1986; the bottom dark line shows the distribution 1996; the blue pencil line in the middle shows 2004. The straight line shows what the distribution would look like if we had perfect income equality.)

Random Observations: AUN and Nigeria

The campus has closed access to most blogspot blogs, so I haven't been able to work on this one. I'm going to have to talk to IT about this. On the other hand, I've been so busy with 5 classes, you've only missed a few posts.

Working at AUN is a little like being newlywed Jimmy Stewart in It's a Wonderful Life. Every day I come "home" to work and AUN plays the part of Donna Reed, asking me if I can guess what surprise she prepared for me today. Here are just a few of things that have happened in only the last two weeks:

• Yes, I saw you working on the drainage system in the parking lot yesterday. Is that done already? Wow.
• Oh my, is that hallway open to the public again? How nice.
• That bathroom has someone regularly checking to make sure it has toilet paper. I really appreciate that.
• The new logo looks wonderful over our building. Now it has a name everyone can see. Thank you.
• I like the paint job.
• New flowers? How lovely.
• Oh dear, I can tell you got that coffee machine working. Now the whole floor smells of coffee. Ah well, the Dean will be happy.

Every day is a surprise. Yes, it's still the old Buster House, or whatever its name was, but it's less and less like it every day.

I fully expected that the music in Nigeria would be heavily influenced by hip hop and electronica/techno/dance/pop. It is. I had not expected quite so much reggae.

I can also add that Nigerian pop relies much more heavily on Autotune than US pop and has a few other distinctly Nigerian stylings I have not been able to pinpoint.

The four TV shows I see regularly on the cafeteria monitors when I bother to glance up from my food and the work I brought with me:

1. Football. (No, the other one. The one Nigerians call football. As long as I'm out here, it gets the title.) Gooooooooaaaaaaaal!
2. Music videos. They look just like ours, more's the pity.
3. Reality TV shows, particularly of the Nigeria's Next Supermodel variety.
4. Moralizing Drama? Imagine Saturday morning specials rated M -- blood, gore, violence, bad language, and the potential for nudity, then at the end of the program they have a notice on the screen that "Many people in the real world actually have to deal with HIV/AIDS" or "sexual violence" or whatever the topic is today. "If someone you know ... call this hotline ..." It is a very curious phenomenon that I am doing my best to not find out more about.

Anything I was warned about before I came here has come true. Anything I was told not to worry about hasn't. It's been nice to have expectations largely met.

Nigerian fashion is wonderful. The students wandering around campus are far more tastefully and fashionably dressed by large margins than students at Cornell. (That doesn't mean all are modestly dressed by my standards either, but there is no desire to look grungy.) Though most people around town clearly cannot afford the same scale of tailoring, a surprising percentage are very well dressed given what I know the poverty statistics to be.

I have had very little trouble identifying the Mosques, which you can find all over the town along the main roads scattered at semi-regular intervals. Churches seemed far fewer until this week when I found five congregated next to each other on one side road - Catholic, Anglican, Baptist, and a couple more. I would wager this has something to do with frequency of use and the availability of transportation, but I don't have enough data yet to speculate on the exact relationships.

Lit in Review: Nigerian Agriculture 2

Birol and many coauthors presented a paper a year ago on the place of poultry in African livelihoods. More specifically, they are "Investigating the Role of Poultry in Livelihoods and the Impact of HPAI on Livelihoods Outcomes in Africa: Evidence from Ethiopia, Ghana, Kenya and Nigeria." That is, what would happen to Africans who raise chickens if their flocks were hit by a Highly Pathogenic bird flu?

Most policies that deal with bird flu focus on the supply side problem (replacing the value of lost birds). "According to the records of the World Bank-funded Avian Influenza Control Program, between February 2007 and January 2008, N623,077,880 (US$4,215,683) has been paid to compensate farmers whose birds were culled." They point that there is also a demand side: less demand for the remaining birds whether or not HPAI actually happens when people are afraid it might happen. Even households with no sick birds lost more than two-thirds of their poultry income from the first outbreak in 2006. 75% of poultry farmers either bought no new birds or left the industry,

HPAI is "endemic" in Nigeria, and with Ghana on the migratory route, it has also had three outbreaks. However, because they find that poor people in Nigeria use a variety of livelihoods strategies, even a bad outbreak of HPAI won't affect them much in their total portfolio. Among their policy recommendations is to help increase livelihood strategy diversity - give people more opportunities to earn money.

However, I would point out that one of the reasons they pursue diverse livelihoods strategies is because of the risk involved in trusting in any one activity. They are unable to access better (more productive, more efficient, more remunerative) production strategies because something like HPAI would wipe them out. This keeps average incomes lower and perpetuates poverty and low mobility. Steps to reduce the uncertainty of any activity they already use would make it more attractive and reduce their loss aversion.

I was surprised at the Jimeta modern market this Saturday. I went to the corner where the broiler chickens are and spoke to a poultry seller. I asked him for seven of his nine chickens so my family would be able to get some food storage together. He refused to sell me more than one. It took some time and discussion before he realized that I was not trying to buy his one broiler for only N700 ("No, I want 7") and for me to realize that he would only sell me one for N1120. This being the first time I had ventured out to buy my own chicken, I don't know how much of a pattern this is. Had my Hausa or his English been better, I might have made some headway in understanding what was going on.

Some statistics:

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.

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.

Lit in Review: Child health

An excellent natural experiment: the electricity was cut from Zanzibar for 4 weeks in May, 2008. Families who had just gotten pregnant and wouldn’t have known about it yet wouldn’t have done anything to change their behavior, but families who did know they had a pregnancy would adapt behavior to safeguard the mother’s and child’s health. As a result, women who knew they were pregnant delivered babies within the usual distribution for Zanzibar, while women who had not known were 11% more likely to give birth to children with low birthweight, according to a new paper by Burlando. Food prices hadn’t changed. Also interesting is that there was a increase in babies born 9 months after the blackout (also about 11%). Friedman particularly highlights the long-lasting effects of temporary shocks.

Vasilakis also has a new working paper on poverty and child malnutrition, using an overlapping generations framework to generate malnutrition-induced multiple equilibria and poverty traps. He models several different World Food Program policies. In his model, a school feeding program “locks” poor countries into a poverty trap by increasing fertility and lowering human capital, but the country could escape. A school feeding program increases efficiency and human capital accumulation in middle-income countries. WFP food price subsidies or investments in local agriculture and food industry allow poor families to increase human capital in their children and increase incomes, helping the country out of poverty. Clearly the body is buried in the adopted and adapted Becker model of fertility decisions (parents face a quantity/quality tradeoff). Since my read of the literature has made me skeptical of the fertility model, I end up skeptical of these results, but the rest of the set up (2 period OLG with poverty traps) is quite interesting.

Glewwe, Park and Zhao (HT:MR) have a work in so much progress there are still notes from the authors to each other in the pdf: 

after one year, making eyeglasses available increased average test scores by 0.09 to 0.14 standard deviations (of the distribution of the test scores). For those students who accepted the glasses, average test scores increased by 0.12 to 0.22 standard deviations….

Cowen asked who refused the glasses and why. About 30% of the children who were eligible were not outfitted. “The stated reasons for not accepting them are not very informative, the two most common reasons being 'child refused' and 'parents refused.'” Running some simple regressions, acceptance is correlated with eyesight (worse eyesight means more likely to accept), already having eyeglasses (more likely to accept a new pair), “children of schoolteachers 22.4 percentage points less likely to accept eyeglasses, and children of party cadres 35.2 percentage points less likely to accept them”, and higher income towns were more likely to accept.

Lit in Review: Impacts of thte 2010/11 Surge in Food Prices

Ivanic, Maros, Will Martin, Hasan Zaman. (2011). “Estimating the Short-Run Poverty Impacts of the 2010-11 Surge in Food Prices.” World Bank Development Research Group, Policy Research Working Paper 5633, Apr

In the 2007/08 price increase, most of the price increase was concentrated in staple cereals. This meant the effects were concentrated on the poor who had few outside options to shift to. In the current price shock, however, food prices have increased in many more commodities and by less overall. This means there are more substitutions available and much of the hit has affected foods the poor consume less of anyway. As a result, they estimate that only 44 million more people are poor instead of the 105 million more in 07/08.

However, it appears that price transmission is higher this time than last.

Advice for South Sudan

Remembering that free advice is worth what you pay for it, I enjoyed the debate over the last two weeks on what South Sudan should prioritize. Of course, this debate is not due to any request from anyone actually in South Sudan, but the armchair politicians are having a little fun.

Duflo and Banerjee got in the first response at Leonhardt’s request, advocating social welfare policies designed to reduce poverty.

Blattman countered rather forcefully: “These would be my last priorities for the new government. … The long term welfare of its citizens means sustained stability and security and order. Without it, all the anti-poverty impacts, no matter how great, will evaporate in months.” His most intriguing point: “3. Next, give every incentive for elites, especially the ones apt to war, to invest in fixed assets whose value depends on stability and growth. Make them entrepreneurs. Oil rigs don’t count. Property in Juba does. So do plantations and small factories, even if they need subsidies to operate at first. This is hard, and will require attention and dedication.”

Blattman also surrenders to the point made by Roving Bandit and others: Most of his points are already high priorities for the government. He responds that he’s less trying to convince the government of South Sudan and more trying to convince the donor community to not put undue emphasis on funding the other things.

B&D respond that there isn’t so much distance between their approaches as it might appear: “An effectively implemented redistributive policy is a very good way to give a new state a clearer identity in the minds of the voters. This can create ownership and start a virtuous cycle where the majority has a stake in fighting against the take over the state by one group.”

Blattman is skeptical that the evidence to support a strong chain is there and adds: “Even so, it may help to explain my vantage point: several years in post-conflict African countries watching justice and security sacrificed for premature social programs, a growing worry that large scale social programs weaken rather than strengthen a fragile state, and a doleful skepticism that national identity is fostered through redistributive aid.”

Taub at Wronging Rights puts forward some additional points in her usual enjoyable style:

Of course, my first piece advice for the new government of South Sudan would be "don't take advice from some random lawyer in New York who's never set foot in your country or, come to think of it, even seen very many photos." If they stuck around, I'd probably try my one-size-fits-all advice for all situations, which is "hydrate, and don't let anyone boss you around."

However, if for some reason I had to give governance recommendations - which I can only imagine would occur during some sort of state-building drinking game at South Sudan's statehood shower - I would probably explain that as far as I'm concerned, states are supposed to do these four things:

take care of "poop," monopolize violence, establish functioning food markets, and make citizenship meaningful.

Education and health care aren't on this list. That's not because I don't think they're important. On the contrary, I love that stuff! It's just that education and health care are easier for people to get from the private sector or NGOs than the stuff on my list.

On monopolizing violence, she emphasizes small claims courts based on judges “who already occupy positions of authority in the community instead” and make sure the police are the good guys, or at least get punished when they’re not.

The Faces of Development

Development in Mexico, according to its census (HT: MR via Andrew Sullivan):

In 1990, one in five dwellings had a bare-earth floor. Now only 6% do. … More interesting still is what Mexicans put in those homes. More houses have televisions (93%) than fridges (82%) or showers (65%).

In part that is because of the impressive Mexican work ethic: “Mexicans work an average of ten hours a day, paid and unpaid labor, even though the country is far from the world’s poorest.  Belgians work the least number of hours a day, at seven."

I was quite surprised, though, when searching through Google Images for a good shot of a bare-earth floor. There were more pictures of Westerners deliberately installing earth floors than there were of people too poor to get a proper floor. Searching for "dirt floor" scored somewhat better. So here's another development paradigm for you: Westerners use earthen floors, everyone else uses dirt floors.

Development in Zimbabwe over the last two years of national unity government and dollarization

The economy grew at nine percent in 2010, following on six percent in 2009. Government revenues climbed to 29 percent GDP in 2010; they were just three percent of GDP in 2008. … This good performance starts from a low base; the economy had contracted by more than 45 percent from 1999-2008. Furthermore, world prices of commodities, such as platinum, tobacco and gold, which are Zimbabwe’s main exports, have been on the rise. Weather has been good in the past two years. But the point is that Zimbabwe was able to make good use of these conditions. There was a supply response to high prices in agriculture and mining, and manufacturing showed signs of life.

Development in Africa: “The African Development Bank says that one out of three Africans are considered to be middle class” – that is to say, earns $2-20/day. Of the 313 million in that range, 180 million are between $2-4/day. “Tunisia, Morocco and Egypt had proportionately the biggest middle classes in Africa, while Liberia, Burundi and Rwanda had the smallest.”

Development through sweatshops, consensual market transaction edition: “Field interviews reveal that subjects perceive their alternatives, including agricultural work and street vending, as less desirable when compared to sweatshop labor. Non-monetary benefits are an important part of this appraisal.” Yglesias puts a different spin on it, based on Duflo and Banerjee’s new book on poverty that surveyed poor people and asked what they aspired to. Mostly what they want for their children is a government job, not entrepreneurship: “What the very poor want, overwhelmingly, is a job where you show up, do as you’re told, and get a guaranteed paycheck at the end. Given the fact that the prospects for government employment are always limited, I assume this explains a lot of the appeal of super low wage sweatshop work when it becomes available in poor countries. “

The opportunity costs of cheap food

Our food costs more than the price at the grocery store. In addition to the environmental costs, M. Nestle worries about food safety costs that would be much cheaper to prevent than cure. While the argument made by companies and Nestle is that prevention shows up in consumer costs while clean up doesn’t, I would argue that private clean up does show up in consumer costs. It’s only when government and public health systems bear the costs that they don’t show up directly in food costs. She worries also about human costs, including obesity caused in part by cheap, subsidized calories and expensive, unsubsidized vegetables, and:

I was reminded of externalized food costs when reading about the remarkable efforts of a Salinas teacher to educate children of itinerant farmworkers. The kids are trying to learn under disrupted, impoverished, crowded living conditions. If their parents were paid and housed better, we would pay more for food. …
The CEO of a large U.S. meat company told me that if he raised wages by $3, he could hire locals and not have to deal with immigrant labor. But then he would have to raise the price of his meat by 3 cents per pound (I’m not kidding). That amount, he claimed, would price him out of competitiveness. …

Speaking of which, Florida tomato pickers (mostly immigrants) have recently been awarded a much better contract, including higher wages, being informed about their legal labor rights, and many are cheering that the industry is really beginning to turn around. Expect some of the hidden costs of tomatoes to be less hidden.

In support of this notion of the unseen costs of our food system, Batz and colleagues at the University of Florida’s Emerging Pathogens Institute identify the 10 pathogen-food combinations that cost us the most in terms of public health (medical care, lost productivity, chronic disabilities including permanent physical and mental damage to infants, etc.):

Campylobacter in poultry — costs $1.3 billion a year [sickens more than 600,000 Americans annually]
Toxoplasma in pork — costs $1.2 billion a year
Listeria in deli meats — costs $1.1 billion a year
Salmonella in poultry — costs $700 million a year
Listeria in dairy products — costs $700 million a year
Salmonella in complex foods — costs $600 million a year
Norovirus in complex foods — costs $900 million a year
Salmonella in produce — costs $500 million a year
Toxoplasma in beef — costs $700 million a year
Salmonella in eggs — costs $400 million a year

Another source Nestle misses is the taxes needed to pay for government food policies in the form of taxation.

An example of unusual environmental costs of a food system comes from Zimbabwe, whose justice department has decided to solve undernutrition in overcrowded prisons by adding elephant meat to the menu. The government’s position is that there are three times as many elephants as conservation groups think, so they have “an elephant overpopulation crisis.”

Interactive Maps

Interactive third world America in maps: which areas have the highest levels of poverty, unemployment, low health, low education that we associate with low human development index (HDI) scores? My own congressional district scores in the second quintile (that's bad). The neighboring district that includes Ithaca proper is a full quintile ahead of us, largely because school enrollment is much higher and they have many more PhDs.

Mapping poverty, food security, health, and agriculture in Yemen.

Mapping food security programs by country. (HT: Poverty News Blog) You can see, for instance, that 103 of the 104 projects in Haiti work in Port-au-Prince, 20 in the Artibonite, and so forth.

What countries are as productive (total GDP) as Chinese provinces (interactive)? A nice companion to the earlier map updating this for the US. I note that central countries stand out: Middle East, central Asia, and central/Eastern Europe.

Mapping America: see the breakdown of ethnic diversity by census track for anywhere and everywhere in the US. HT: Clark Taylor

Catching Up: Development

I appear to be stuck in La Guardia overnight, so let's see what thoughts are in the big bags tonights...

A remarkably detailed depiction of how one city block developed over several hundred years.

Some excellent thoughts from Moss on the difficulties with the current aid model and where trends are going. My favorite:  “With only a few dozen really poor countries left, and still large pockets of poor people in middle-income countries, the big value in aid will be investing in solutions that have impacts beyond a single country’s borders.  This means investing more in new vaccines, agricultural technology, clean energy, regional infrastructure,  and other things that cannot be done by designing narrow country programs for Mali or Cambodia. “

India is turning to cash handouts to combat the corruption in its in-kind welfare programs. Well, electronic cash that they can access by bank or cellphone, anyway.

“Maybe, just maybe, we are all benevolent autocrat wannabes?” If you’re willing to drop the benevolent part, the list of things to keep in mind is always worth reading.

Rodrik tries to retell an inverted Kuznets curve (a U shape) for agriculture productivity (high in overall low-productivity and high-productivity countries, but lower in the middle as workers leave but before the remaining farmers invest in technology). In fact, he uses Kuznets’ methods: his “within country” U-curve is really three countries strung together, not one of which shows a U. I would think that the panel research on the Kuznets curve itself should provide a good guide for testing this hypothesis as well.

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.