Friday, May 8, 2009

Kagame on creating Africa’s own road to prosperity

Rwandan President Paul Kagame’s very sensible advice to the rich world and multilateral aid agencies:

We who live in, and lead, the world’s poorest nations are convinced that the leaders of the rich world and multilateral institutions have a heart for the poor. But they also need to have a mind for the poor.

Aid has not only often failed to meet its objectives; it has also rarely dealt with the underlying issues of poverty and weak societies. We see this with our neighbour, the Democratic Republic of the Congo. There, 17,000 United Nations peacekeepers – the largest and most expensive presence of its kind in history – treat the symptoms rather than addressing the issues of capacity, self-determination and dignity.

No one should pretend that they care about our nations more than we do; or assume that they know what is good for us better than we do ourselves. They should, in fact, respect us for wanting to decide our own fate.

And, a need for government role in fostering entrepreneurship in the African economies:

Government activities should focus on supporting entrepreneurship not just to meet these new goals, but because it unlocks people’s minds, fosters innovation and enables people to exercise their talents. If people are shielded from the forces of competition, it is like saying they are disabled.

Good piece from an African head of state who is successfully leading the genocide-torn country out of the past quagmire (impressive growth rates of 10.5% between 1996-02, 5.6% between 2003-2007, 7.9% in 2007, and 8.5% in 2008). He emphasizes entrepreneurship as the main driving force for Rwanda to move up the stages of prosperity. Will the donors and multilateral aid agencies listen to him?

Undergrad life is over!

I finished the last exam of my undergrad life today. I will be officially graduating next week and will head to DC for a year for this. Below is a pic  taken for READ poster to be put in Dickinson College's library. :)

Chandan Sapkota '09 READ

Political opposition and wages

A very interesting paper (downloadable link here) on how the leftist government in Venezuela is using wages in the public sector as a tool to punish opponents (those who did not vote him in the last election).

In 2004, the Chávez regime in Venezuela distributed the list of several million voters whom had attempted to remove him from office throughout the government bureaucracy, allegedly to identify and punish these voters. We match the list of petition signers distributed by the government to household survey respondents to measure the economic effects of being identified as a Chavez political opponent. We find that voters who were identified as Chavez opponents experienced a 5 percent drop in earnings and a 1.5 percentage point drop in employment rates after the voter list was released. A back-of-the-envelope calculation suggests that the loss aggregate TFP from the misallocation of workers across jobs was substantial, on the order of 3 percent of GDP.
Alex Tabarrok writes:

What the authors find is shocking, albeit not surprising. Before the recall election, petition signatories and non-signatories look alike. After the election, the employment and wages of signatories drop considerably, about a 10% drop in wages relative to non-signatories. Survey evidence conducted by the authors is consistent with retaliation by Chavez supporters especially in the form of job losses in the public sector. The authors estimate that the retaliation was so widespread, many workers were pushed into informal employment, that the Venezuelan economy was significantly damaged.

Will we see similar trend in Nepal as well? The leftist Maoist led government is shedding its true color...