Web browser for the developing world!

Daniel Altman has a nice piece about how Google's new web browser could be a hit in the developing world. So, this post is wholly outsourced to Altman!

Google’s coming out with a new, slimmed-down Web browser to compete with Microsoft’s Explorer, Mozilla’s Firefox and Apple’s Safari. The corporate spin says that it’s for Web-based applications that run off central servers rather than on desktop or laptop computers. Skeptics are saying that the browser is aiming for a niche that hasn’t yet developed. But I think I know where it may find a market.

Think about computer users in the developing world. Many use Internet cafes rather than having computers in their homes, and those cafes typically don’t have the latest machines. Their models run with slower processors and clogged connections on smaller screens. For them, a slimmed-down browser could be a godsend: fewer images to load, less drive space used and the convenience of those Web-based applications.

If your own computer is slow, what could be better than letting a central server - perhaps in a different country - do the processing for you? Web-based applications haven’t caught on too much in rich nations, but they seem like a natural for poor ones. There’s no need for fancy hardware, and no need to pirate software. Could emerging economies use Google’s new browser to leapfrog their wealthier counterparts?

Maoist's economic plan for Nepal

Here is what the newly appointed Finance Minister of Nepal, Baburam Bhattarai, the Maoist party's second-in-command, wants to do for the country to lead it into a high growth trajectory. His priorities are as follows:

1. "industrialization of agriculture"
2. infrastructure development and hydropower (Rs 300 billion liquidity in the banking sector plus Rs 100 billion annual remittances as a source of finance)
3. tourism development
4. health and education

In my latest Op-ed, I put a bet on #2 and #3 as the top most industries for prioritization in a new industrial policy. I believe Mr. Bhattarai's #1 choice can be solved from #2, #3, and manufacturing industry (which I would put in #3 on my list). My list of prioritization of industries as a short term fix to two main problems of the economy (sluggish economic growth and unemployment) would be, in order of preference, infrastructure and hydropower, tourism, manufacturing, health and education, and agriculture. I put agriculture at last because if we fix the other four industries, then the surplus labor would be automatically absorbed in these industries. This means that Nepal would not require prioritizing "industrialization of agriculture" (frankly, I don't know what Mr. Bhattarai exactly means by this) as a top most choice in economic policymaking. Agriculture sector alone would not sustain growth rate and increase employment. This industry is important but it is not just as important as we have been thinking for decades. A successful transition of labor from agriculture to other industries is needed to solve the two most pressing problems of Nepal's economy.

Industrial Policy for Nepal

That is the title of my Op-Ed (link here) published today in The Kathmandu Post. This piece is a bit longer than the usual Op-Eds I write. So, some sentences have be trimmed due to space constraints. Usually, proofreading of my Op-Eds in the newspaper desk turns out to be pretty good. But, this time there are  some glitches in proofreading economics jargons. In one of the sentences a vital information (number) is missing. The printed version is: "For instance, even if there are mega watt hydro power projects, it can easily generate 200,000 jobs." It should have been: "For instance, even if there are 100 mega watt hydro power projects, it can easily generate 200,000 jobs." This can make a lot of difference! Click here for an earlier discussion about this specific topic! Check below for a .pdf. file of the actual opinion page on today's newspaper. Click here for the full length Op-Ed I submitted on Sunday.

In this article, I basically argue for the need to redesign Nepal's Industrial Policy, which should re-prioritize industries that can best propel economic growth and increase employment in the short and medium term. This means that Nepal should prioritize hydropower and tourism industries ahead of manufacturing sectors as a short term fix to sluggish economic growth and unemployment (Why and how? read the full article!). A new industrial policy should facilitate investment, provide tax credits and other incentives, and ease cumbersome licensing regime in hydropower and tourism sectors. Rather than branding it a form of socialist agenda, think of the industrial policy in this way: Industrial policy is a form of prioritization of competitive economic policies, that can best deliver the macroeconomic needs of an economy, at the policymaking level. This means industrial policy comes with competition in policies and prioritization, which in turn can be determined through historical trends and experimentation. Those economic policies that can best deliver the macroeconomic goals should be first on the list in an industrial policy and the state should provide appropriate incentives and policy packages to boost investment of the prioritized sectors.  Click here for more on industrial policy.

...Nepal needs to update its IP, making it consistent with structural changes in the domestic and the global economy. Instead of adopting an imported policy experience, the new IP should be based on reality and pragmatism. This calls forth a hard fact that if our objective is to spur economic growth and to increase employment, banking excessively on the manufacturing sector is just not the right policy, especially after the decade of failed experimentation with this industry. We need to re-prioritize industries under a new IP.

What sectors can best propel and sustain economic growth and increase employment? What sectors have the least constraints given the present structural and geographic constraints? What sectors can best absorb surplus labor from the agricultural sector and the laid off workers in the garment and textile industries? What sectors can best adjust and assimilate the internally displaced population in the post conflict era? Note that the time frame is not long run but short and medium terms; time is of the essence here. Answering all these questions require a new IP that lays emphasis on the right sectors, at the right time, and in a right way. Also, IP should not always be centered at promoting export-based firms and manufacturing industries. Any industry that can help achieve our macroeconomic goals should be under the horizon of IP.

Considering these objectives to be achieved in the short and medium terms, it would not be risky to bet on prioritization of hydro-power and tourism industries ahead of manufacturing industry. It is open for debate whether service, agro and forestry, engineering, and herbal industries, among others should come after hydro- power, tourism, and manufacturing sector in terms of prioritization.

Read the full article here or download .pdf file here.

The broken promises made at Gleneagles

This article is definitely not in line with what Easterly has been arguing. The reporter argues that aid can help slowdown spread of terrorism, new diseases, and save failed states. Is there a direct link between aid and terrorism? I have not yet seen one.

...From that high point in Gleneagles, today the aid industry stands on the brink of disaster. According to the Organization for Economic Cooperation and Development, net aid from most of the wealthiest nations actually dropped, year on year, in 2006 and again in 2007. If the new push for foreign aid collapses completely, it could do just as much damage to the West as it does to the countries that need its benefits. Indeed, the crisis in foreign aid could not only prolong the world's human suffering, but could spark one of the biggest security challenges we face in the coming decades.

...Despite the promises of Gleneagles, net aid handouts from the G-7 group of powerful nations fell by 1 percent in 2007, according to the Organization for Economic Cooperation and Development, a monitoring group. The nongovernmental organization Oxfam projects that by 2010, wealthy nations will fall short of their pledges by some $30 billion - more than the United States' entire annual aid.

...In the long run, this stinginess will backfire on everyone involved. It will have a disastrous impact on the citizens of poor nations, both because of reduced aid and less pressure on their governments for real political reforms. And aid has benefits for the rest of the world as well. It can prevent the kinds of failed states that harbor terrorism, crime, and other serious dangers.

Double digit growth in Nepal: How and from where?

The Confederation of Nepalese Industries (CNI) just held an economic summit, with focus on garnering a national commitment for achieving double digit growth, in the next ten years. Before speculating and commenting on whether Nepal can really achieve double-digit growth and increase income per capita, I want to read the whole paper presented in the summit. Given the success of India, China, Vietnam, and other countries that initiated economic reforms in the past decades, I am positive that Nepal can also attain a double-digit growth rate. But, it might come at a price: high inflation rate, investment volatility, strain in the pegged exchange rate and high risk and uncertainty filled with sectoral bubbles.

...Annual national investment has to rise to Rs 400 billion from Rs 176 billion in the next 10 years to increase per person monthly income to Rs 12,000 from the existing Rs 3,500.

...the summit was organized in a bid to explore ways to arrange additional Rs 225 billion annually, besides seeking political commitment and necessary policies to incorporate such investments in future.

...hydro power, tourism, agriculture and industrialization as tools for economic development.

Here is a good Op-Ed written by Binod Chaudhary, the head of CNI clarifying his position and the summit's intention. Sorry it is in Nepali!

On a different note, here is an interesting interview about corruption in water sector and a humanitarian disaster following flooding in Bihar and Eastern Nepal.

How to create more than 200,000 jobs in two years in Nepal?

This is kinda easy! If the government eases complex licensing regime and facilitates private sector involvement in small and medium sized hydro power projects, then creating over 200,000 jobs in just two years is perfectly achievable.

Here is how it works: A small scale one mega watt(MW) hydro power plant is considered financially viable and sustainable in terms of private business. The total investment required would be Rs 250 million. A 1 MW hydro power plant can create 200 low and semi-skilled jobs. Given the current wildly raging river in almost all parts of the country, starting 100 1MW hydro power plants is not that difficult, provided that the government substantially eases the licensing regime and extends some tax credits.

At present, it usually takes five to six years to get license for one such project. Technically, if bureaucracy is not embroiled in  corruption and commission games, then getting license should not take more than six months. The government should be careful in giving license though. Many companies take license but do not start work within a required time frame. License should be given only to those companies that are credible and can inject funds required to complete project. The total number of new jobs in just two years would be at least 200*100 = 200,000!

This would help absorb surplus labor from the agricultural sector. Meanwhile, if more small hydro power projects are initiated, then investors would be encouraged to invest in manufacturing machinery (turbines and other capital goods) required for such projects. This would help prop up one whole new sector and add more jobs in the economy. A strong multiplier effect would kick in and potentially up GDP growth rate.

What about funding source? Well, the government should encourage the banking sector to invest in this industry because the banking sector is awash with liquidity. The government should encourage NRNs to invest in hydro power by easing rules for investment and property rights. Also, the government should itself invest, with donor funding, heavily in this industry. Encourage FDI in the hydro power sector.

Learn from Bhutan, which generates 60% of state revenue from energy export. Hydro power export alone constitutes 25% of Bhutan's GDP. Prioritize hydro power sector ahead of other sectors by designing a progressive industrial policy.

Harvest the energy of wildly flowing river water. The is no point saving it! It just flows!!

Links of Interest

Crusader Sees Wealth as Cure for India Caste Bias

What Good are Economists?

France Vanishes from Africa

Economics is not a value-free science

Hey, Big Number, Make Room for the Rest of US

Journalism and science: Hepatitis B and missing women

The growth future- India and China

Relevancy of International Potato Year

HIV diagnostics and its status in Nepal