Rainfall and the probability of conflict

Antonio Ciccone argues that a 5% income shock (say by drought) raises the likelihood of civil conflict by 15 percentage points.

To see whether impoverishment causes the onset of civil conflict, I take a detailed look at data on rainfall levels in years before the outbreak of civil conflicts in Sub-Saharan African countries between 1980 and 2006. It is well known that living standards in these countries tend to be below trend in drought years and above trend when rainfall levels are above average. If civil conflict is triggered by sudden impoverishment, civil conflict onset in Sub-Saharan Africa should therefore have been more likely following drought years.

…If civil conflict onset is partly driven by sudden impoverishment, conflict outbreak in Sub-Saharan Africa should be more likely following below-average rainfall years. I find this to be the case. This result, combined with the effect of rainfall on income, allows me to estimate the effect of sudden impoverishment on the probability of civil conflict onset. My estimates indicate that a negative 5% income shock raises the likelihood of civil conflict by 15 percentage points.

More here

This is consistent with Fisman and Miguel’s argument that in Africa an income drop of 5% increases the risk of civil conflict in the following year to nearly 30%.

However, Simeon Djankov and Marta Reynal-Querol disagree by arguing that poverty does not have an effect on civil wars.

In Nepal, during the Maoists rebellion (1996-2006), the GDP growth rate averaged 4.1% which is barely different from the average growth rate of one decade before. However, head count poverty rate declined by more than 11 percentage points. This means that conflict did not substantially affect GDP growth rate. This can be explained by the rise in remittances inflow, even during peak time of conflict. This means declining poverty did not affect the likelihood of conflict in Nepal during 1996-2006. The effect of remittances far outweighed the negative effect of conflict on poverty and growth (though growth rate did plunged to –0.1% in 2001).

The figure below shows the increase in remittances:

Financial crisis in one package

Global financial crisis 2008: All the discussions and links summarized here

Lobbying nomads in Nepal

The only “nomadic” tribesmen in Nepal, Rautes, are lobbying to keep their tradition and livelihood alive.

… The Raute tradition comprises of three salient features: they leave the forest looking for a fresh place to settle on immediately after someone in their tribe dies; they don’t cultivate land; and they hate education. The Rautes hunt monkeys for food. And, to get food grains, they fell trees to make wooden utensils that they then barter for grains in the villages near the forest where they live. They use wooden nails in their products and the tools they use to build the products are also very traditional.

… The Rautes, who are in Kathmandu, say they would like to live like that, but want state support as their livelihood is being threatened both by the popularity of plastic utensils, and by the hindrance posed by villagers with regards to their use of forest wood.

Financial loss and best soccer goals in 2008

From the NYT:

All told, about $7 trillion of shareholders’ wealth — the gains of the last six years — was wiped out in a year of violent market swings.

Billionaire blowups of 2008:

More than 300 of the 1,125 billionaires we tallied on our annual list last March have since lost at least $1 billion; several dozen lost more than $5 billion. The 10 richest from our 2008 rankings dropped some $150 billion of wealth, dragged down by steel tycoon Lakshmi Mittal, estranged brothers Mukesh and Anil Ambani and property baron K.P. Singh, who together dropped $100 billion. America's 25 biggest billionaire losers of 2008 lost a combined $167 billion.

This video is quite amazing!

 

Now, the best 2008 football goals:

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Nepali economy in 2009

My former colleague Prem Khanal writes:

The year 2008 ended further cementing historic changes in the political front but little enthusiasm the economy saw to turnaround deepening economic woes. Instead, topsy-turvy policy often contradicting with market-based economic principals, acute power shortage and shattered private sector’s confidence all have emerged as major headwinds that the Maoists-led government will be confronting to lay groundwork to achieve a ‘double-digit growth’ in 2009.

My main worries: gradual wiping off of the industrial base due to load-shedding, negative impact on the service sector, rising general price level (14% inflation rate is one of the highest in South Asia) and stalemate in hiring (low-skilled jobs abroad) by foreign companies. All could lead to social unrest!

Eight best economists of the next generation

The Economist magazine names the eight best economists of the next generation:

1. Esther Duflo, MIT
2. Jesse Shapiro, University of Chicago
3. Roland Fryer, Harvard University
4. Amy Finkelstein, MIT
5. Raj Chetty, Harvard University
6. Ivan Werning, MIT
7. Xavier Gabaix, New York University
8. Marc Melitz, Princeton University

Clearly, Esther Duflo is the star in the list!

Esther Duflo of the Massachusetts Institute of Technology (MIT) received more recommendations than any other economist. Some who didn’t nominate her thought she was too established to count as “new”.

With her colleague, Abhijit Banerjee, Ms Duflo and Mr Kremer have remade development economics, nudging it away from its concern with policies, towards a preoccupation with projects. They study economic development as seen from the field, clinic or school, rather than the finance ministry. They might be called the “peace corps” of economists, bringing the blessing of their investigative technique to the neglected villages of India or the denuded farms of western Kenya.

Ms Duflo has made her name carrying out randomised trials of development projects, such as fertiliser subsidies and school recruitment. In these trials, people are randomly assigned to a “treatment” group, which benefits from the project, and a “control” group, which does not. By comparing the average outcome of each group, she can establish whether the project worked and precisely how well.

More about Duflo here. She answered my question here in September.

Possibilities of global recession and regime change in Zimbabwe in 2009

The FT sketches some of the main upcoming events in 2009. Hot in the list are recession in 2009, rock-bottom interest rates, exchange rate renminbi vs. other currencies, price of oil, the role of state, New Deal, Cuba, Mugabe, and artificial life, among others.

Will the recession end in 2009?

No, as far as the US, the UK, Spain and Ireland are concerned; possibly Yes for other European economies and Japan. Whatever happens, 2009 will not be pleasant. For all the cuts in interest rates and taxes, higher unemployment will be the dominant issue of the first half of the year, outweighing gains to real incomes from these policies and lower commodity prices. Uncertainty will be the watchword for the year, making any prediction precarious, but there is still a good chance that rising incomes will become powerful forces in the continental European and Japanese economies later in the year. For those economies that need much bigger rises in household savings rates to adjust for the recession, recoveries will be delayed. There is also a good chance the world will enter a debt-deflation trap, although I hope the authorities will do everything to avoid this. But even if we experience genuine green shoots of recovery, as I expect, 2009 will be a year to forget. Chris Giles

Will Mugabe go in 2009?

“Only God who appointed me will remove me.” Thus spoke Robert Mugabe after refusing to bow to the ballot box earlier this year. Tragically, there is no reason yet to think he is wrong.

No amount of huffing and puffing in London and Washington will bring about regime change. Nor will southern Africa take decisive action, although images of starving Zimbabweans stumbling across the border will force Pretoria to toughen up its talk.

Starving people, though, make poor revolutionaries and Mr Mugabe still exercises a mesmerising authority over the better fed members of his own coterie, which militates against a palace coup. Low as it is already, Zim­babwe can fall much lower in 2009. Only natural or divine causes will remove the man so determinedly taking it down. William Wallis