Measles deaths down

Good news:

Measles deaths in Africa fell by 91% between 2000 and 2006, figures from the World Health Organization show. The drop, from an estimated 396,000 to 36,000, means the United Nations target to cut measles deaths by 90% by 2010 has been hit four years early.

But the WHO warned deaths were still far too high in South Asia, particularly in India and Pakistan.

The success follows concerted efforts to vaccinate all children against measles before their first birthday.

Overall global measles deaths fell by 68% - from an estimated 757,000 to 242,000 - over the six year period, a WHO report showed. WHO said the decline in measles deaths in Africa was made possible because governments had implemented robust immunisation programmes.

"This is a major public health success and a tribute to the commitment of countries in the African region," said Dr Margaret Chan, WHO director-general. "We need to sustain this success and intensify our efforts in other parts of the world, as there are still far too many lives lost to this disease."

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The law of one price, demonstrated

Bravo! This is brilliant, it's bloody beautiful. I don't think I've ever seen a more hit-you-right-between-the-eyes dataset in my life. If you are teaching economics 101 (or for that matter, econometrics 101) this is the definitive demonstration.

Here, ladies and gentlemen, for your education and amusement, lie the benefits of the market plain and simple, to see with your own eyes and believe. There shall be no doubt in your minds. Watch closely, for ye shall see how functioning markets are no less powerful than magic.

Here's the story. In Kerala, a state in south India, fishing is very important. There are more than 1 million fishermen, and fish is consumed by 70% of the population on a daily basis. The catch varies daily between the different fishing regions, and so does the price: the poor folk can never tell if they'll be able to afford fish on any given day, as it is lady luck who decides. Waste and shortages are common, as sometimes the fish caught are simply too many, or too few.

But in 1997, a miracle happens. Mobile phones are introduced, and one of the key ingredients of functioning markets - information - is in place. What follows is, as promised, nothing short of magic.

Three different regions, three different mobile telephony adoption dates. On the y axis is the price, on the x axis time. Fish now make their way to where they are valued more, and prices are stable. Fishermen profits increase by 8%, and the average price falls by 4%. Before, six fish in every hundred were wasted, with fishermen unable to find someone to sell them to. Now, all fish find their way to a happy customer.

Here is the Robert Jensen paper (free access), and here is a presentation. Hat tip to the Yorkshire Ranter, via the ASI blog.

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Development is mostly not about aid

Whether you believe aid is effective or not, it has always struck me that, as a quantitative matter, it is a drop in the ocean. I am not saying that we should abandon aid; I am convinced it mostly makes things better. What I am saying, however, is that given how little it is and how widespread poverty is, the effect on national-level indicators can only be very, very small.

While aid can realistically only ever be a small part of the solution, other policies pursued by rich countries can have very widespread effects, and have perhaps received less attention than is warranted. In other words, we may be giving x euros in aid, but how much are we taking back by pursuing a Common Agricultural Policy? How much aid would a country have to give to make up for the effect on the poor of tight immigration policies?

The excellent Owen Barder links to a worthwhile attempt to rank rich countries according to how well they perform on development along these dimensions:

Though the effects of aid on development are uncertain, there is a huge amount that industrialised countries can do – or not do – which affects how quickly countries develop.  The policies of rich countries on trade, investment, migration, the environment, security and technology can make a huge impact on how quickly poor countries are able to develop. Yet we tend to judge industrialized countries too much according to how much aid they give, and too little to how they behave in all these other ways.

The Center for Global Development provides an essential service by ranking the rich each year so we can see how we are doing.  They use a series of quantitative measures on all these dimensions to create a composite picture of how a country’s policies affect development. 

The 2010 results are now in. An excellent effort; I hope the next step is an attempt to monetize the value of the different policies pursued. However arbitrary this exercise may be, it will be another step in going beyond a qualitative understanding of the effect of aid, trade policies, etc, allowing us to better focus our collective efforts.

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Trade not aid, says coffee

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Lovely, lovely sentences on African poverty

If present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time.

And there's more, from a new NBER paper by Sala-i-Martin and Pinkovskiy entitled AFRICAN POVERTY IS FALLING...MUCH FASTER THAN YOU THINK!(I covered their previous related paper here):

1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic.

And there's some lovely graphs too - the style is unappealing, but the content is so sweet it's worth framing them and hanging them on every wall you can find:

And here's where I'll be going in a month's time:

Yes, there is such thing as an uplifting economic paper.

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I can't wait to lay my hands on one of those

Video (must watch),article, website. I really don't understand why the get one give one programme is limited both in number of pieces to be made available and location, but I can wait.

And yes, I think it's an amazing idea and will work wonders in the developing world - and beyond. More on this in an upcoming post.

This, on the other hand, is a gadget I will be getting soon - and fellow owners will find the information in the video very, very useful.

And while we are at it, David Pogue's podcasts at the NYT are simply amazing; unless you hate gadgets and technology with a passion, don't miss it.

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Aleka's shoes

One of my parents' good friends is a very successful (and rich) lawyer in her late fifties who grew up near Nafpaktos in western mainland Greece.

Back in the 60's when she was graduating from primary school, pupils needed to pass a challenging set of exams if they were to proceed to high school. Aleka almost didn't make it, and the reason was this: her father was dead worried that, if she failed the exams, the family wouldn't have any use for a girl's pair of shoes - and he refused to make the investment up to a few days before the exams. Aleka had no shoes up till then, and shoes were necessary to be allowed in the exam hall.

Going further back to the 1930's, my grandfather also passed his high-school exams, one of only two people in his entire (very large) village to achieve the feat that year. To get to the school, he had to walk 40 kms (a full marathon) every Sunday to get to the city, and 40 kms every Saturday to get back to his village. My great-grandfather made sure shoes were provided, but there was never any thought of my grandfather wearing them during his twice-weekly marathon: that would wear them out, and with no shoes there would be no school.

Fast-forward to the present, and I'm tutoring 15-year olds in economics. The subject turns to economic growth (shockingly, not part of the syllabus), and I ask them whether they think people today are better off in material terms than they were 40 or 60 years ago. They usually hesitate to answer economics questions, and they often disagree with each other. This time, there was no need to pause for thought: they all confidently told me that people today are much, much poorer.

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Charter cities

This economist thinks that Paul Romer's charter cities are an amazing idea, one that is very likely to speed up the process of eradicating poverty across the planet. I also think that they they will be easier to establish, politically, that perhaps even Romer believes. I may be naive, but I can very easily picture a Nobel-Peace-Prize-winning Obama ceding control of Guantanamo to the Canadians or the Norwegians for a limited time period before it is returned to Cuba. (for background on Charter cities and the US-Canada-Cuba scenario, see after the jump at the end of this post)

Chris Blattman disagrees:

Fundamentally, I think this is a problem not of economy, but political economy. Even if we know what an ideal Charter City looks like, have we mapped out how to get there amidst the lobbyists, big business, and international interests?

I think the crucial thing Chris is missing here is that, unlike say health-care reform, there really isn't any powerful constituency that would oppose Charter Cities. Lobbyists of all and any colours have no reason to fight them. Big business - all big business - has much to gain and nothing to lose. I find it hard to think of many scenarios where 'international interests' take offence.  There are gains from Charter cities that can be split between stakeholders so that everyone's happy.

Even if you think there are cases where some interest group objects, Charter Cities are small enough to ensure no-one stands to lose so much that they can't be brought around. 

Maybe it's time someone started tracking membership of the Charter City club (modeled along the lines of the Pigou club). In that case, count me in.





Here is Paul Romer's excellent TED talk on the promise of charter cities. The Charter Cities website summarises the concept and offers some indicative examples:

All it takes to grow a charter city is an unoccupied piece of land and a charter. Action by one or more existing governments can provide the essentials. One government provides land and one or more governments grant the charter and stand ready to enforce it. What might a charter city look like?

Case 1: Canada helps a Hong Kong blossom in Cuba

For decades, the Unites States and Cuba have been parties to a treaty that gives the United States administrative control over a portion of Cuban territory straddling Guantanamo Bay. In a new treaty signed by the United States, Cuba, and Canada, the United States could give up its treaty rights, and Canada could take over local administration for a defined period of time.

An administrator appointed by the Canadian prime minister would be responsible for setting up and enforcing the rules that apply in this special territory. The legal protection and institutional stability that the Canadians provide would attract foreign investors and foreign citizens to the city. As the city grows, the Cuban government would gradually allow freer movement of people and goods between the land it governs and the charter city. At the same time, supporting cities and suburbs would grow up on the Cuban side of the city’s boundaries. The charter city itself would eventually return to Cuban control.

In this case, a treaty creating a special administrative arrangement already exists and Hong Kong provides a model for how a city might be governed. An interesting variant would be one in which several countries (e.g. Canada, Spain, Norway, Mexico, and Brazil) stand in place of Canada alone.

Case 2: Australia and Indonesia create a new regional manufacturing hub

In a treaty that Australia could sign with Indonesia, Australia would set aside an uninhabited city-sized piece of its own territory. An official appointed by the Australian prime minister would apply Australian law and administer Australian institutions, with some modifications agreed to in consultation with the government of Indonesia.
People from Indonesia, many of them lower-skilled workers, could come live as temporary or permanent residents in this zone, but would remain citizens of Indonesia. A portion of their labor income could be taxed and return to the government in Indonesia. Levels of free public services and welfare support would be comparable to those in Indonesia. As citizens of Indonesia, the Indonesian inhabitants of the city would have no claim on residency or citizenship in Australia proper. They would be subject to the same immigration controls whether entering Australia from this zone or from Indonesia.
Highly skilled workers from all over the world would be welcomed as well, but would be subject to the same immigration controls they would face from their home countries. Australian citizens and firms would be able to pass freely between Australia proper and the new charter city.
As part of the treaty, the Indonesian government could agree to award the chance to move to the new city preferentially to residents from a small number of rural areas where people practice environmentally harmful forms of subsistence agriculture and forestry. The government could designate part of the land to be freed up in this way as a nature preserve, setting aside a much smaller portion of the now uninhabited land for a charter city of its own.

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Efficiency gains vs. government contacts in China

We document the market response to an unexpected announcement of proposed sales of government-owned shares in China. In contrast to the "privatization premium" found in earlier work, we find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect in response to the announced cancellation of the government sell-off [Empasis DC]. [...] the positive effects on profits of political ties through government ownership outweigh the potential efficiency costs of government shareholdings.

Companies with former government officials in management have positive abnormal returns, suggesting that personal ties can substitute for the benefits of government ownership. The "privatization discount" is higher for firms located in Special Economic Zones, where local government discretionary authority is highest.

From a new NBER paper describing what happens when the 'grabbing' and 'helping' hands of the Chinese state meet the invisible hand of the market.

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Nobel laureates behaving badly

James Watson (discoverer, with Francis Crick, of the double helix structure of DNA) comments on development policy. From the Independent:

One of the world's most eminent scientists was embroiled in an extraordinary row last night after he claimed that black people were less intelligent than white people and the idea that "equal powers of reason" were shared across racial groups was a delusion.

James Watson, a Nobel Prize winner for his part in the unravelling of DNA who now runs one of America's leading scientific research institutions, drew widespread condemnation for comments he made ahead of his arrival in Britain today for a speaking tour at venues including the Science Museum in London.

The 79-year-old geneticist reopened the explosive debate about race and science in a newspaper interview in which he said Western policies towards African countries were wrongly based on an assumption that black people were as clever as their white counterparts when "testing" suggested the contrary. He claimed genes responsible for creating differences in human intelligence could be found within a decade.

Dr Watson told The Sunday Times that he was "inherently gloomy about the prospect of Africa" because "all our social policies are based on the fact that their intelligence is the same as ours – whereas all the testing says not really". He said there was a natural desire that all human beings should be equal but "people who have to deal with black employees find this not true".

I won't comment on the thing that most needs commenting on (I may return on this tomorrow, and I'm sure there is going to be ample talk elsewhere on the blogosphere), but I can't help but notice that his words show a deep appreciation for economists. Assume you drop a 'dump' bomb on Cameroon or Belgium and everyone's IQ falls by 20 points. As an economic adviser to Cameroon or one of the countries that want to see Cameroon become rich, how on earth would you change your tune to reflect that? Are 'good economics' different for clever and for dumb nations? Politician: 'Hey, I have new data here, average IQ fell from 124 to 104. What should we do to maximise our growth prospects? Economic Adviser: 'Gosh, I had given you the right policy prescription for clever people. For dumb people, you need to raise the marginal rate of income tax to 30%, impose tarrifs on imported goods and start subsidising your farmers.'

(I am not saying that there are clever and dumb nations, so don't attack me in the comments for that. I know, the post does not deal with the important aspect of the matter here, but hey, that's what I felt like commenting on)

Postscript: Oh no, not again - a book is behind this too?

His views are also reflected in a book published next week.

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Deworm the world

Deworming is the most cost-effective way to improve school attendance and performance in developing countries:

The simplest and least costly of these programs is deworming. Nearly 2 billion people around the world are affected by parasitic worm infections, with children disproportionately affected.

Harvard economist Michael Kremer has studied the impact of mass deworming in Kenya and India. Delivering deworming medication costs 50 cents per child per year in Kenya but yielded a 25 percent increase in school attendance; a similar program in India cost $4 per student per year and yielded a 20 percent attendance gain. "This is a simple, cost-effective and yet tragically not-done program. It's a scandal that [deworming] hasn't been addressed," Kremer says. There are spillover effects as well. "The most surprising thing about the study in Kenya was the widespread impact," Kremer says. The program drove down infection rates for several kilometers around the schools, he says, and there were significant improvements in attendance for untreated students, in the treatment schools as well as in nearby schools not in the program.

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