Wednesday, November 26, 2008

Poverty in Focus#16: All about creating jobs

Here is a new edition of Poverty in Focus#16: Jobs, Jobs, Jobs- The Policy Challenge. The IPC publishes excellent issues focusing on poverty. This issues is about creating jobs in the developing countries and the increasing role of informal economy in reducing poverty:

Eduardo Zepeda first summarises Mexico ’s recent experience, which includes periods of crisis, of rapid growth and of stagnation. These various episodes make for a good case study of employment with relevant policy lessons for all developing countries.

Marty Chen highlights the links between informality and poverty and presents a policy framework for addressing informality in ways that will help reduce poverty.

Denis Drechsler et al. find informality to be mainly due to insufficient job creation in the formal economy and to warped incentive structures, and discuss what policy makers should do about it.

Rafael Ribas and Ana Flavia Machado study employment and poverty dynamics in Brazil and find that the informal sector has helped people move out of poverty more than the formal sector.

Louise Fox and Melissa Sekkel examine the slow job creation in Africa and draw lessons for countries wanting to realise the aspirations of their growing, mostly urban, nonfarm labour forces.

Aziz Khan analyses the linkages between employment and the relevant MDGs and proposes policy interventions to promote job-intensive growth and public investment.

Terry McKinley advocates structural policies for poverty-reducing employment, as illustrated by an IPC Country Study of South Africa.

James Heintz considers an alternative approach to macroeconomic stability that is more cognizant of the performance of the real economy and includes a coherent employment policy.

Janine Berg and David Kucera revisit the issue of labour market institutions and employment, arguing that policy makers need to take on re-regulation as opposed to de-regulation.

Per RonnĂ¥s looks at labour migration and the case of Moldova , where poverty fell rapidly thanks to the dual impact of remittances and improved domestic job and income opportunities.

Erik Jonasson considers the role of rural non-farm jobs as a pathway out of poverty; investment in infrastructure and education stand out as the foremost policy measures.

Christoph Ernst highlights the importance of youth employment as developing countries struggle with the challenge of offering decent jobs for the large number of young men and women entering the labour market every year.

Joe Stiglitz on the financial crisis

Nice piece about the reasons of the financial mess, which is threatening the global economy into a recession, from Joseph Stigltiz. In short, it’s because of faulty ideology that rests on “self-regulation” of government!

A unique combination of ideology, special-interest pressure, populist politics, bad economics, and sheer incompetence has brought us to our present condition.

Ideology proclaimed that markets were always good and government always bad. While George W. Bush has done as much as he can to ensure that government lives up to that reputation—it is the one area where he has overperformed—the fact is that key problems facing our society cannot be addressed without an effective government, whether it’s maintaining national security or protecting the environment. Our economy rests on public investments in technology, such as the Internet. While Bush’s ideology led him to underestimate the importance of government, it also led him to underestimate the limitations of markets. We learned from the Depression that markets are not self-adjusting—at least, not in a time frame that matters to living people. Today everyone—even the president—accepts the need for macro-economic policy, for government to try to maintain the economy at near-full employment. But in a sleight of hand, free-market economists promoted the idea that, once the economy was restored to full employment, markets would always allocate resources efficiently. The best regulation, in their view, was no regulation at all, and if that didn’t sell, then “self-regulation” was almost as good.

OLPC and freedom

Here is a nice piece about how One Laptop Per Child (OLPC) has failed to live up to its expectations of providing free software. OLPC violates the following freedoms, according to the author:

Freedom 0: The freedom to run the program as you wish. Some proprietary software packages come with licenses that restrict even the use of authorized copies.

Freedom 1: The freedom to study the source code—the algebra-like statements that specify what the program does—and then change it to make the program do what you wish. For instance, you could add new features to suit your taste. Or, if the program has malicious features, as Windows and MacOS do, you could remove them.

Freedom 2: The freedom to redistribute exact copies when you wish. We call this the freedom to help your neighbor.

Freedom 3: The freedom to distribute copies of your modified versions when you wish. We call this the freedom to contribute to your community.

OLPC made a big news when it was initially announced. However, frequent news of shifts in software to increase in prices have been costly to its reputation. Also, there was no such enthusiastic response in terms of demand as it was targeted for a large scale, probably government buying tens of thousands of them. Someone needs to do an evaluation of the effectiveness of OLPC program on children’s education and other aspects. I don’t see that much of a connection between having a laptop and a child increasing his intelligence. Again, crude thought!