“A boy stands in a dried up pond near Moyale in the lowlands of Ethiopia's Oromiya zone. A devastating drought has left an estimated 737,000 Ethiopians struggling to survive without access to clean water. Beyond Ethiopia, the drought has spread out to affect more than 8.3 million people, including 1.2 million children aged under five, across the Horn of Africa.”
“One of thousands of goat carcasses at Goraye in Oromiya region.”
Photo credit: Andrew Heavens, Flickr
Although there exists a sizeable literature documenting the importance of ethnic networks for international trade, little attention has been devoted to studying the effects of migrants on foreign direct investment (FDI). The presence of migrants can stimulate FDI by promoting information flows across international borders and by serving as a contract enforcement mechanism. This paper investigates the link between the presence of migrants in the US and US FDI in the migrants' countries of origin, taking into account the potential endogeneity concerns. The results suggest that US FDI abroad is positively correlated with the presence of migrants from the host country. The data further indicate that the relationship between FDI and migration is stronger for migrants with tertiary education.
Full paper here. Here is a draft version
"A long time ago, this reporter was attending a gram sabha in Madhya Pradesh when some field coordinators from the MP Rural Livelihoods Project (MPRLP), a joint venture between DFID and the state government , walked in. What followed was educative. They came in late.Got aggressive when villagers alluded to the delay. Lectured the villagers on how they should stop relying on the government for everything. And on how they should create a central pool of cash, with each family contributing.`10 or so every month or week, and lend that out to whoever needs cash. That, said one coordinator , would reduce dependence on moneylenders.
This stunning suggestion betrayed the fact that the coordinators saw villages as united communities sans power dynamics. On the whole, the gram sabha threw up epiphanies. How could the team so freely dole out ignorant homilies on how to improve the village? How do they view the villagers in this part of the country? Like idiot children? And why were they getting away with all this preaching?
The event made one feel pessimistic about the developmental process. In that gram sabha, MPRLP fared poorly on three parameters — accountability, local understanding and respect for the villagers. And this critique can be extended across the entire ‘development mafia’ — starting from multilateral donors like the World Bank, their JVs with Indian central and state governments, India's gazillion NGOs and MFIs.
Nice article in The Economic Times. By quoting James Scott, the author alludes that this kind of incident is happening because of a “high modernist ideology”, which is “a technocratic belief that science (or other development interventions) can and will make the world a better place.” Development agencies often fail to take into account the role of practical local knowledge, informal processes, and improvisation in the face of unpredictability. The incident described in the article is nothing new.
Similar stories have been pointed out multiple times by aid critics. They have a point, but still they are missing other point by repeatedly arguing for more decentralized system and local ownership to the grind (usually comes from those that are ideologically opposed to the very concept of intervention). But, what if the intervention by locals in their own locality for development purpose yields sub-optimal result and they believe that this is the best optimal point (usually happens when you don’t have a point of reference, resulting in a situation where the most ignorant people feel that they are the most sagacious ones)? Educating them on what is optimal might need an intervention. If that is done, then the process of getting to that optimal point through whatever intervention by locals should be left to the locals themselves. Intervention should clear coordination failures and remove structural hurdles that the locals cannot remove by themselves. Sounds like lecturing? Sorry, I will stop here.
These charts show the evolution of top agricultural products produced in Nepal since 1961.
Overall, rice/paddy; whole fresh buffalo milk; fresh vegetables; indigenous buffalo meat are pretty much the most popular agriculture produces since the 1960s. Ginger is top ninth produce in 2008. Potato replaces maize as the fifth largest agriculture produce in 2000.
Indigenous buffalo meat gains popularity and replaces indigenous cattle meat in the 1990s; maize overtakes wheat in total production; goat meat is not in the top 9 list; potatoes make a comeback.
Vegetables replace maize as the fourth highest agriculture produce in 1980s. Wheat overtakes potatoes as the fifth largest agriculture produce in 1970s; mustard seed and chillies and peppers go out of top 9 produce list.
Nepali people love rice/paddy!
Note that Nepal is still a food deficit production country and is a net importer of food. The level of hunger is classified as alarming.
2008: Rice/paddy; buffalo milk, whole fresh; vegetables freshness; potatoes; indigenous buffalo meat; wheat; maize; cow milk, whole fresh; ginger
2000: rice/paddy; buffalo milk, whole fresh; vegetables freshness; indigenous buffalo meat; wheat; potatoes; maize; indigenous cattle meat; cow milk, whole fresh
1990: rice/paddy; buffalo milk, whole fresh; vegetables freshness; indigenous buffalo meat; wheat; maize; potatoes; indigenous cattle meat; cow milk, whole fresh
1980: rice/paddy; buffalo milk, whole fresh; vegetable freshness; indigenous cattle meat; indigenous buffalo meat; maize; wheat; cow milk, whole fresh; indigenous goat meat
1970: rice/paddy; buffalo milk, whole fresh; maize; indigenous cattle meat; cow milk, whole fresh; wheat; vegetables freshness; potatoes; indigenous goat meat
1961: rice/paddy; buffalo milk, whole fresh; maize; indigenous cattle meat; cow milk, whole fresh; potatoes; mustard seed; indigenous buffalo meat; chillies and peppers, dry
Nepal was the fourth highest recipient of remittances (measured as % of GDP) in 2009. Remittances amounted to 23 percent of GDP in 2009. In terms of total amount received, migrant remittances was the highest in India in 2010, amounting to an estimated US$ 55 billion. It is followed by China (US$ 51 billion), Mexico (US$ 23 billion), the Philippines (US$ 21 billion), France (US$ 16 billion), Germany (US$ 12 billion), Bangladesh (US$ 11 billion), Belgium, Spain and Nigeria (US$ 10 billion each). See this blog post for more discussion on the new estimates of remittances.
Latest migration stats about Nepal:
Emigration, 2010
Skilled emigration, 2000
Immigration, 2010
Net ODA received was US$0.7 billion, exports of goods and services was US$1.5 billion in 2008. Remittances inflows are almost two times the size of exports of goods and services and five times the size of official development assistance. Outward remittance flows is decreasing—it was US$ 26 million in 2003, but only US$ 12 million in 2009.
| Remittances, US$ millions | ||||
| Year | Workers remittances | Compensation of employees | Migrants' transfer | Total inward remittances flows |
| 2003 | 744 | 27 | - | 771 |
| 2004 | 793 | 30 | - | 823 |
| 2005 | 1126 | 85 | - | 1212 |
| 2006 | 1373 | 80 | - | 1453 |
| 2007 | 1647 | 87 | - | 1734 |
| 2008 | 2581 | 146 | - | 2727 |
| 2009 | 2858 | 127 | 1 | 2986 |
| 2010 (e) | - | - | - | 3513 |
Nepal was the fourth highest recipient of remittances (measured as % of GDP) in 2009. Remittances amounted to 23 percent of GDP in 2009.
In terms of total amount received, migrant remittances was the highest in India in 2010, amounting to an estimated US$ 55 billion. It is followed by China (US$ 51 billion), Mexico (US$ 23 billion), the Philippines (US$ 21 billion), France (US$ 16 billion), Germany (US$ 12 billion), Bangladesh (US$ 11 billion), Belgium, Spain and Nigeria (US$ 10 billion each).
The latest Migration and Development Brief 13 shows that remittances remained more resilient compared to private capital flows during the global economic crisis. It has begun to recover in 2010. It estimates that officially recorded remittances flows to developing countries would be US$ 325 billion in 2010. It will be an increase by 6 percent after a fall by 5.5 percent in 2009. The WB economists forecast that remittances flows to developing countries will increase by 6.2 percent in 2011 and 8.1 percent in 2012 to reach US$346 billion in 2011 and US$ 374 billion in 2012. There are about 215 million migrants (3% of world population) in the world.
Remittances flows to South Asia are estimated to have grown by 10.3 percent in 2010 and are expected to grow at relatively slower rates of 5.1 percent and 6.3 percent in 2011 and 2012 respectively. The brief notes that flows to South Asia are facing the risk of a lagged effect of the slowdown in construction on the GCC countries.
The brief points out three major trends:
Very nice summary of the developments in the field of development by Shanta Devarajan!
In the old days—that is, the 1950s and 1960s—development was about correcting market failures. Influenced by the “big push” theories of economists like Rosenstein-Rodan, post-war Keynesian economics and the apparent success of the Soviet Union, policymakers in developing countries saw the role of government as providing public goods (bridges, roads and ports), addressing externalities (protecting “infant industries”) and redistributing income to poor people (by, for instance, keeping food prices low). Donors supported these countries by financing some of the public goods—a bridge, say. Knowledge assistance consisted of helping to identify the market failure, and then designing the “optimal bridge”.
The incentives of poor-country politicians and rich-country donors were aligned. Politicians could take credit for correcting market failures—government was doing what it was supposed to do—while donors could make sure their money was well-spent. This was Development 1.0.
Starting in the 1970s, it became clear that these government interventions were not delivering the intended results. Protected industries were so insulated from world markets that they never produced efficiently (the Morogoro shoe factory in Tanzania never exported a single pair of shoes). Roads were built but not maintained to the point that they were not passable. Low food prices led to food shortages and increased poverty in rural areas. In correcting market failures, we created a set of government failures: well-intentioned interventions that fail to deliver the intended results.
To rescue these economies from distress, donors made their financial assistance “conditional” on governments’ reversing these policies. The previously harmonious relationship began to fray. Politicians resisted—mostly because their friends and family were benefiting from the distorted policies—and complied half-heartedly—often blaming the donors went things went awry. And knowledge assistance focused on estimating the costs of the previous interventions (as if the only thing standing in the way was the politician’s lack of knowledge about these costs). You might call this Development 2.0.
Today, although many of the egregious distortions have been removed, we find ourselves still faced with government failures, but in a more insidious form that directly hurts poor people. Many of the failures are in infrastructure, education and health—the sacred cows of government intervention. Correcting them invites the criticism that we are trying to undermine government, harking back to the days of conditionality.
A classic example is water tariffs. Subsidized or free water leads to water scarcity. Politicians, who control the utilities through these subsidies, ensure that the scarce water goes to neighborhoods where their clients live. Poor people meanwhile have to pay 5 to 16 times the meter rate to buy water from vendors. But no politician can run on a platform of raising water tariffs (even if it will help the poor) and hope to get elected. Other examples include absenteeism of teachers in public primary schools—25 percent in India, 27 percent in Uganda. Or the leakage of public funds in health—that reaches a staggering 99 percent in Chad.
These government failures do not happen by accident. Rather, they arise from two kinds of imperfections in the public sector (much like market failures arise from imperfections in the private sector).
In this situation of government failure, the traditional instruments of financial and knowledge assistance are not very effective. Politicians will resist conditionality, and refuse the financial assistance if it could lead to electoral defeat. Providing financial assistance without conditionality makes it easier to continue with distorted policies. Reports about the costs of distortions are of little value (not to say irritating) to the politician who is the cause of the distortions. Even if he is not the cause—and is instead a reform champion—then by definition he already knows the costs. The reports are still of little value.
So what can we do? Our understanding of government failure has coincided with two other developments. One is the rise of civil society’s voice in public discourse. The second is the technology revolution in poor countries. There’s a message here. Can we use technology and the voice of civil society to address these government failures? Rather than imposing conditions, we can empower poor people to monitor service providers. With some 80 percent of Africans having access to a cell phone, it is not difficult to have parents (or the students themselves) send an SMS message if the teacher is not in school, or there are no drugs in the clinic or the purported road maintenance program is not happening. This could do more for helping governments and donors get value for money than all the fiduciary controls we put in place. While we are at it, why don’t donors (including the World Bank) use technology to have the beneficiaries monitor and supervise development projects?
We can also use technology to alleviate the information problem. Rather than writing reports on the costs of distortions (and whispering them in the Finance Minister’s ear), we could disseminate these results—in digestible form—to poor people through their cell phones. Get the information out about who benefits from infrastructure subsidies, which districts have the highest teacher absentee rate, etc. This is information about poor people’s daily lives; they should be the first to receive it. As better informed voters, they may then start voting for politicians who advocate in their interest. Going further, why not prepare these reports in collaboration with poor people? After all, the analysis is about them.
Each year, the World Bank produces a World Development Report. While there is an extensive consultation process with the draft, the Report is essentially written by a core team of Bank staff. Why not produce the report like Wikipedia, and invite the whole world to write it? As one of my colleagues put it, “Then it will be the World’s Development Report.”
And a fitting symbol of Development 3.0.
It sounds like Dani Rodrik’s Capitalism 3.0
“Just as Smith’s minimal capitalism was transformed into Keynes’ mixed economy, we need to contemplate a transition from the national version of the mixed economy to its global counterpart.
This means imagining a better balance between markets and their supporting institutions at the global level. Sometimes, this will require extending institutions outward from nation states and strengthening global governance. At other times, it will mean preventing markets from expanding beyond the reach of institutions that must remain national. The right approach will differ across country groupings and among issue areas.
Designing the next capitalism will not be easy. But we do have history on our side: capitalism’s saving grace is that it is almost infinitely malleable.”
More here