Yeast rolls and Garbage Village

Just a situation to ponder, I suppose.  Tuesday, we are sitting in a chain restaurant enjoying  more beef than we should have, consuming more bread than we should have, and get an email from a friend in Cairo.  This email detailed the events of that hour…interreligious fighting in the area known to English speakers as Garbage Village.  An area where a large portion, if not all, of Cairo’s garbage goes to be recycled by hand; and quite efficiently, at that.  The folks there are, as one imagines, on the lowest part of the social ladder and are very kind, inviting people to be around.  It does seem, though, that even their community is not immune to the anti-Christian, anti-Muslim sentiments that permeate our news today.  We miss the drives (not the driving) out to Moqattam and the Ring Road and Orubba…

Not sure…

…if this can be classified as a ‘real’ post.  However, real or not, I did want to refer you to Chris Blattman’s latest post.  His is one of my favorite blogs.  There are several I follow–Easterly’s AidWatch, compassioninpolitics, and others. Professor Blatmann’s latest entry touches on Esther Duflo’s and Abhijit Banerjee’s forthcoming book with a handy link to pre-order.  The post is worth a read, and I’ll be reading the book, as well.

Lesotho, the World Bank and Nadia Comăneci

So, Mr. Ricardo Inzunza regaled the class with tales of his adventures with the U.S. Immigration and Naturalization Service and the opportunities he has had to help improve the state of some of the world’s developing economies. We are fortunate to have a professor who has traveled and worked in a number of the countries we’ve studied (and whose economies reflect some of the problems we’ve examined). We are further advantaged by having Mr. Inzunza as our guest; a real, live, World Bank consultant that could give us insight on several of Africa’s troubled economies from the perspective of an immigration specialist.

Equally important as the troubles of a few of those Sub-Saharan economies, Mr. Inzunza was able to share successes and continuing challenges of some of those countries.  Ghana’s airport and Mali’s tourism were his examples of pure successes.  It is a bit disheartening to know that countries are able to make forward steps in economic development only to see those changes slowly erode—Mozambique’s customs service or Lesotho’s hotels were Mr. Inzunza’s examples. However, it is very useful to hear of small successes and learn about the practical results of private sector development. He seems to agree that aid is useful but needs more coordination and is more effective when it is implemented with a more concentrated focus. It was also particularly encouraging to hear that all of the governments embrace private sector development in theory. Hopefully, practice will follow theory.

Even for a person that may have negative feelings about illegal immigration, Mr. Inzunza had stories to elicit sympathy. He has experiences that date back as far as the people the media called ‘boat people’ of the post-Vietnam era to Nadia Comăneci of the 1980s and later. It is rare that we get to enjoy someone with such broad experiences. Thanks to Dr. R for inviting him.

Nonprice Competitiveness in Mauritius

Two pieces of information right away (just in case you didn’t know)—Mauritius is an island nation, east of Madagascar and south of the Seychelles archipelago, in the Indian Ocean. Also, WAEMU stands for the West African Economic and Monetary Union; comprised of 8 nations in, you guessed it, West Africa. Chapter 3 of the IMF’s Regional Economic Outlook for Sub-Saharan Africa looks specifically at the WAEMU and its growth prospects. Several areas that may help explain growth differences—between WAEMU and the rest of SSA, and between SSA and the world—are examined on page 48 and following. A case study of Mauritius (Box 3.3 on page 53) takes a closer look at one of those areas, competitiveness.

Trade policies and a country’s competitiveness stance relating to exports, imports, tariffs, etc., usually have a ‘price’; that is, they can normally be quantified in dollar amounts. Nonprice competitiveness concerns those factors and policies that may be more difficult to quantify. Specifically, in this case study, Mauritius is held forth as an example of being a country in which it is easy to do business. This topic has been discussed in class as one of the factors that may encourage investment in general; and foreign direct investment, particularly. The World Bank has a “Doing Business Indicator” and from 2008 to 2010, Mauritius has been listed as the “best place to do business in sub-Saharan Africa. In 2010, it ranked among the top 20 countries in the world.”

The reforms that Mauritius implemented (see especially the paragraph on structural reforms and the next paragraph on property rights) in response to the external trade shocks has led to strong economic responses and increased foreign direct investment. The last sentence of the case study highlights the topic of structural transformation that the class covered earlier in the semester. You can almost see the graphs coming alive…”sugar into textiles, then tourism, and recently information and communication services and financial services.” Incidentally, if you want a closer look at how this ease of doing business might be affecting growth in Mauritius, look here.

This post was originally published on a course blog for Theory of Economic Development at MSU.

Comments on “The Economics of Poverty in Poor Countries”

This article was written by Partha Dasgupta in 1998 and presented by David Brinton this past Monday. The article highlights poverty/inequality and some of its causes in poor countries; tackling positive feedbacks, poverty traps, fertility, and local and global commons.

Dasgupta explores some of what he calls dichotomies of development economics. In the realm of institutions, markets versus state; public property rights versus private property rights; and the suppression of markets versus distributional failure as a cause of poverty and hunger. Dasgupta aims to dismantle these dichotomies and explain some of the real reasons behind poverty in two of the most prominently poor areas of the world. So, it’s no surprise that Sub-Saharan and the Indian subcontinent are discussed as two of the most well-known seats of poverty. These areas seem to encompass all of the issues that interest Dasgupta.

Rather than simply summarize the remainder of the article, I’d urge a reading of it for anyone with a particular interest in the topics we just covered in class. We often fail to realize that some of the same problems that plague these countries now are not so distant memories for our grandparents and great-grandparents; some of the discussion of poverty traps seems particularly relevant to current American society.

The article covers the issue of positive feedback and poverty traps in a way that makes the reader think. The effects of a positive feedback (a change tends to cause more change in the same direction—think “richer getting richer and poor getting poorer”) for a poor farmer who does not have access to credit or insurance that might save his crop for the year will likely lose the crop and then not have the available resources to grow a better crop the following year; resulting in an even further degraded state of poverty.

Briefly, another noteworthy paragraph in the article concerns the negative effects of a rising middle-class on the poor. As the ranks of the better quality food, protein-demanding middle class rise, farmers that once concentrated wholly on grains and staples are now attracted by the better prices of this new consumer demand. The subsequent decline in supply of staples causes the price to rise and puts adequate amounts of those staples further out of reach of the poor.

Again, take a look at the article. While we struggle with the ‘why does it cost so much to eat healthy?’ question, many struggle with ‘why does it cost so much to eat?’

This article originally appeared on under a private blog for the “Theory of Economic Development” course at MSU.