Saturday, October 4, 2008

Easterly's lesson on development economics

As always, Easterly gibes at the development aid community (depression mindset of the development community) obsessed with for forever focusing big reforms from big governments in the developing countries. He is unhappy with the leftist leaders in Latin America for making stinging comments against capitalism. And, he offers a brief lesson on development economics; this time going after Arthur Lewis!

Development economics -- the study of how poor countries can become rich -- was forever cursed by the timing of its birth after the Great Depression. That gave development economics a bias toward relying on governments, rather than markets, to create growth. The early development economists ignored a century and a half of European and North American development through individual enterprise, remembering only that their governments forcefully intervened to stimulate output during the 1930s.

...the U.N.'s Depression mindset prompted them to ask an expert commission led by Sir Arthur Lewis in 1950 to prepare a report on unemployment in underdeveloped countries. Its report concluded that "economic progress depends to a large extent upon the adoption by governments of appropriate . . . action," and that political leaders must have a strategy for such growth, reflecting "the facts of each particular case."

Few at the time disagreed. Oxford economics professor S. Herbert Frankel wrote a rare protest in 1952. He believed poor, ordinary people had "peculiar aptitudes for solving the problems of their own time and place," a confidence later vindicated by homegrown success in Botswana, the East Asian tigers, India, Chile, Turkey and China.

Lewis later received a Nobel Prize in Economics. Poor Frankel was basically forgotten.

Development economics still bears the scars of the Depression.

XDR TB: The Forgotten Plague

The dangers of another health epidemic (Extensively Drug-Resistant TB). The good news is that it is preventable but more consolidated effort and funding/aid from the international community is needed. No time to debate the ideological differences between Sachs and Easterly; the danger is real, it is preventable, and it needs to be done now so that no more lives are perished. The methodology and supervision of effective use of funding/aid is, however, debatable. Sometimes sub-optimal outcomes can be better and can save lives while cruising on an ideological debate for optimal aid spending.

In 2005 the disease was diagnosed in 9.2 million more people, almost exclusively in the developing world, and 1.7 million people died from it. More alarming is a growing subset of TB cases, estimated at half a million, that are resistant to more than one of the handful of anti-TB drugs. While they still make up only 5% of the total annual TB burden, these cases of multidrug-resistant and extensively drug-resistant TB are mushrooming, fueled by the surge in AIDS and by health-care systems that have ignored the threat of TB for too long.

But it doesn't have to be this way. TB is an entirely preventable and treatable disease. And the drug-resistant strains beginning to emerge in Africa, Russia, China and India, say experts, are epidemics of our own making. Unlike HIV, the tubercle bacillus succumbs to powerful medications. But these drugs are not where they need to be, and when they are, spotty monitoring and poor health infrastructure make it hard to ensure that patients take their daily doses for the six months that are needed to eradicate the infection--all of which encourages drug-resistant strains to survive and keep the disease going.