The World Bank: Unmatched at “Delivering” BS

People this is almost self parody by Jim Kim and his bank. Filling the investment gap didn’t work, getting the prices right didn’t work, increasing school enrollment rates didn’t work, fighting corruption didn’t work, so now the Bank wants to practice “the science of delivery”.

Deep in the West Village, in an obscure hipster coffee shop, Bill Easterly’s head must be exploding.

Deliverology seems to be a fancy way of saying “just do it”. Here’s the Head Deliverologist, Sir Michael Barber:

“It is a very simple process, but if you go through things rigorously you will make progress. What are the priorities for the World Bank Group as a whole? Kim has been clear: ending poverty and achieving shared prosperity.  What does that mean in a particular country? . . . At the moment there is insufficient connection between the World Bank headquarters and aspirations and what happens country by country. That is the delivery chain. How do you need to change the delivery chain — the line of sight between the front line and here [Washington]? Kim is aware of that as a major issue.” 

Can I get an LOL? What a steaming pile of jibberish.

And what exactly is Jim Kim doing to enact change at the Bank?

Kim also has tried to tame the bureaucracy by first creating more of it. He’s set up the Office of Change Management, created a new vice president’s post to run it and appointed 30-year bank veteran Pamela Cox to the job. She is now coordinating the work of perhaps a dozen task forces.

Ah yes, the office of change management. Good move. Nothing creates change in a hidebound bureaucracy like more bureaucracy.

The plain truth is that the World Bank has been a colossal failure when it comes to development or even poverty alleviation (Grandpa Deng’s market reforms in China have done more for poverty reduction than all the WB programs over the same time period combined).

Embracing pseudo-scientific mumbo-jumbo will neither change or hide that fact.

Willingness to work?

One of my favorite writers on migration issues, Michael Clemens, just released a study  called “International Harvest: A Case Study of How Foreign Workers Help American Farms Grow Crops – and the Economy.”  A Washington Post article (“North Carolina needed 6,500 farm workers. Only 7 Americans stuck it out”) does a good job of summarizing it’s main findings, although the entire study is well worth reading.

2 of the most striking findings are that (1) American workers won’t take the type of farm jobs that immigrants often work.  Take this table, for example:

northcarolina_table

 

In 2011, the unemployment rate in North Carolina was quite high at 10.51%, which meant that there were more than 489,000 American workers in the state actively looking for a job. Of that group, only 268 were asked to be referred to manual labor jobs with the  North Carolina Growers Association (NCGA).  And of those 268, only 163 showed up for work.  This gets us to striking finding #2.  Of the Americans that did start work, only 7 finished the season.  Here is another excellent figure showing the willingness of native workers versus immigrants to tough it out over the season.

northcarolina_attrition

Now, I’m not making fun of the American workers who didn’t last the full season.  I think I’d be more like this guy, who didn’t even make it more than a day (chronicled in the LA Times with the apt title “A day in the strawberry fields seems like forever”).  But then again, I am all in favor of immigration.

 

A banner week for the good guys

si_hubo_genocidio

Last week, Guatemala finally made international headlines for something positive.  Former President Efraín Ríos Montt, who was president only from 1982-83 but still managed to   was convicted of genocide and crimes against humanity during his term.  Mr. Montt is said to have “ordered his troops to rape, torture, and murder thousands of indigenous Maya.” While the 80 year prison sentence is unlikely to be too binding on the 86 year old general, it is a really a landmark conviction for the Guatemalan judiciary and hopefully a sign of things to come there.

Then, in more positive news, Jorge Videla, ex-dictator and leader of the Argentine ‘Dirty War,’ died in prison for his crimes against humanity.  This got me wondering what the status was of other Latin American strongmen.  Helpfully, I found this article, called “Latin America’s ‘rogues’ gallery of ex-leaders.”  It provides a great list of those that remain:

Argentina: Reynaldo Bignone: Now 85, the last head of Argentina’s 1976-1983 military junta was sentenced to life in prison for crimes against humanity in 2011. He is serving his sentence in a regular prison.

Bolivia: Luis Garcia Meza: One of the early “narco-dictators,” Garcia Meza was sentenced to 30 years prison in 1995 for abuses committed during his 1980-1981 rule. He is serving time at a Bolivian maximum security prison.

Chile: Manuel Contreras: Augusto Pinochet, who ran the country from 1973-1990, escaped justice despite a flurry of legal cases and died in 2006. However, Contreras, the head of his feared secret police, was sentenced to life in prison for his role in murders and abductions during Pinochet’s rule.

Haiti: Jean-Claude Duvalier: Jean-Claude “Baby Doc” Duvalier ruled Haiti from 1971 until he was overthrown in a popular revolt in 1986. Now 61, he returned from exile in France two years ago and faces charges of corruption and human rights abuses.

Panama: Manuel Noriega: Overthrown by US forces in 1989, Noriega served time in US and French prisons until he was returned to Panama in December 2011, where he is serving three 20-year prison sentences for those killed during his 1983-1989 rule.

Peru: Alberto Fujimori: Peru’s President 1990-2000, Fujimori was convicted of human rights violations for abuses committed during his crackdown on leftist guerrillas in 2009. He is serving a 25 year prison sentence in an specially built prison at a Lima police station.

Francisco Morales Bermudez: This ex-general is known for ousting Juan Velasco (1968-1975) from power and returning Peru to democracy in 1980. However last year an Argentine judge accused Morales Bermudez, now 91, of being part of Operation Condor, a scheme in which regional dictators helped hunt down each other’s opponents. Morales Bermudez rejected the accusation and faces no charges in Peru.

Uruguay: Gregorio Alvarez: The ex-dictator (1981-1985) was sentenced to a quarter century prison in 2009 on charges of “especially aggravated homicide” that took place within the framework of Operation Condor.

 

 

Africa’s growth prospects: a view from the trenches

One of my favorite (non-academic) articles on development was in last year’s NY Times Magazine’s profile of Andrew Rugasira, a Ugandan coffee entrepreneur.  The article is titled “Can Coffee Kick-Start an Economy?” and it was fascinating throughout.

It turns out that Rugasira has just published a book called A Good African Story  that I will definitely be purchasing.  In an article about the book and its author, Rugasira offers various nuggets about trade, African development, fair trade, and non-trade barriers.  I couldn’t possibly say it better than him, so I will just quote him on the various topics.  The whole article is worthwhile though.

The need to hear from real African entrepreneurs: “I was really surprised at the extent to which entrepreneurs on the continent don’t publish their business experiences, yet everybody talks about the private sector being the engine for growth and no one ever visits the engine room and sees what’s really going on. The first reason I wrote the book was to really get it written because African business people don’t write. Secondly, it was to really bring a kind of empirical perspective to the debate. Lastly, it was to encourage other entrepreneurs and to show them the pains other entrepreneurs, like themselves, were facing. I don’t think it’s very helpful if you write with hindsight and with reflection that allows you almost to be able to revise.”

The real obstacles to development: “The governments say they have removed all the tariff barriers, but what about the non-tariff barriers?  “How about access to market issues? How about the failure to raise capital? People talk about agriculture being the next big thing, they say Africa’s growth is at 6% or 7%, but hang on a minute, I mean, I have visited 36 banks but none of these financial institutions wanted to lend me money, it wasn’t just even me.”

“I went to school here in the UK,” he replies, “so in theory it should be easy for me. I have some networks, I know the culture. But it took me two-and-a-half years to be able to sell my product. It took 14 trips back and forth. Imagine an SME [small and medium scale enterprise] in Africa without the inherent advantages I have. So with all the talk from the Commission of Africa, I said, no, I really have to document this stuff in a book.”

“For example, the governments are not delivering services efficiently. Capital for young entrepreneurs isn’t available, infrastructure is poor and there is no reliable energy. All these things are lacking, and are constraining young people from doing business. The cost of importing a container from Dubai to Mombasa is $1,800, and taking that same container from Mombasa to Kampala costs $3,800.”

Fair trade: “Fair Trade is not a sustainable model,” Rugasira insists. “It is a Western kind of charity model that cannot work. It cannot develop or claim to be developing, growing farming communities by adding pennies to pounds of coffee, and then doing all the roasting and packing overseas. Smallholder coffee farmers are poor because they don’t have an access to the inputs that will get them to a higher level. They are at the lower end of the value chain, that’s why they are poor. They don’t diversify their crops and they have insecurity in terms of their finances.

“So to turn around and say that [fair trade] is a solution, I can’t accept that. If anything, it becomes like an unintended obfuscation and distracts the conversation from the real issue. Agriculture has been proven to have two to four times more potential to bring about prosperity than any other sector. But fair trade is not the solution. Dealing with the structural issues is.”

The poverty of World Bank poverty reduction

The World Bank’s latest PR campaign is that “for the first time in history” we can “eliminate extreme poverty” (for the hubris of this claim and the many times it’s been said before see here).

Lost in the fine print is the disclaimer that “extreme poverty” is defined as $1.25 / day.

And there has been some progress on that front (clic the pic for a better image):

Image

However, since virtually all the decline from 1981 to 2009 is from China, I’d give the credit largely to “state capitalism” and not to any top down multilateral agency development program.

And, if we raise the bar on extreme poverty to, say, $2.00 per day, the situation is far from rosy (clic the pic for a better image):

Image

At $2.00 China’s progress is not as great, India is regressing, as is SSA and overall, the number barely budges in the last 25+ years.

So, yes, there are a lot fewer people under the $1.25 level today than in 1981, which means it’s easier to lift the rest of them. However, in my opinion, the World Bank will have very little to do with any of the actual lifting.

Overall though, the number of very poor people living on less than $2.00 is rising outside of China, and China’s progress here is not large enough to drive the global number down much at all.

No wonder China feels like it can push the Bank around.  If it wasn’t for China, the Bank couldn’t make up ANY arbitrary poverty reduction statistics to rationalize their continued existence. Even with the Chinese miracle, the Bank has to be very selective in picking a number to make it look like things are improving at the global level.

The graphs come from here, and the hat tip goes to “Mr. Inequality”, @BrankoMilan.

Turning Japanese?

In a widely praised speech, Christina Romer referred to the “regime change” at the Central Bank of Japan as, “one of the most exciting developments in monetary policymaking since the 1930s.”

She compares recent Japanese policy favorably to recent Fed policy, saying that based on the lesson of 1933, a regime change that raises inflation expectations is needed to break out of the zero-bound / liquidity trap.

Could a Japanese style regime change happen in the USA? Should it?

It’s important to note (as Romer does),  that the change in Japan was political and electoral. Shinzo Abe ran on a platform of getting Japan growing and getting out of deflation. He threatened the Bank of Japan. The Head of the Bank ultimately resigned and Abe got his guy, Kuroda, in there with an aggressively expansionary policy brief.

So the answer to could this happen in the USA I think is no. Can you imagine the reaction if a Presidential candidate threatened the Fed Chair (phone call for Rick Perry)? Can you imagine the reaction if Presidential pressure forced Bernanke to resign? Can you imagine the Senate confirmation hearings on Paul Krugman’s candidacy for Fed Chair? Can you imagine what the FOMC meetings and votes would be like when Richard Fisher and Charles Plosser butted heads with Chairman Krugman?

We don’t have a parliamentary system of government, we do have a now quite strong norm of no overt, heavy handed political pressure on the Fed, and the Fed chair is not a monetary policy dictator. In principle, the Chair has one vote on a 12 person voting committee.

Now the question of should this happen in the USA is trickier.

On the affirmative side, we still have a big output gap, an unacceptably high unemployment rate, too few people in the labor force, and some theoretical evidence that the “expectations channel” could work.

On the negative side, there isn’t much empirical evidence that such a regime change actually will work. The jury hasn’t even been selected yet in the Japanese case, so we have one case, the US in 1933, which is not uncontroversial. I mean, the US economy was in terrible shape well after 1933. Unemployment in 1938 was 19% (yes I know about the “mistake of 1937”and all but the point is that the monetary regime change was not decisive in sustainably fixing the US economy).

Roosevelt took us off gold. That was bold. What would be a comparable present day analog? What if we adopted the Venezuelan Strong Bolivar as our currency. That might work!

Language and Learning

One of the first articles that I published was called “Colonial Legacies and Economic Growth.”  It was a paper that came directly from my dissertation, and in it I explore whether the level of education at the time of independence can help explain the development gap between former British and French colonies in Sub-Saharan Africa.  I found that the British had a totally different philosophy of education than the French.  The British tended to have women from the local community (often without a lot of education themselves) teach children in their native language.  The French, on the other hand, had a more elitist vision of education, where a select few were sent to boarding school to eventually form part of the colonial government.  All instruction was in French.

Apparently, Haiti has tried several times in the past 50 years to move more towards creole in schools rather than French.  All of those reforms failed, but a recent article called “How Science, Math and Creole Education Can Lead to Prosperity in Haiti” discusses an interesting new collaboration between MIT Linguistics Professor Michael DeGraff and the Haitian government.  DeGraff received an NSF grant to try to “promote the use of Creole via technology in Haiti’s school system.”  Here is a link to DeGraff’s work on the topic.  I haven’t read his work yet but it looks fascinating.  Here’s hoping that this reform works better than the previous ones!

h/t Tate Watkins (@tatewatkins), a great person to follow on Twitter if you are interested in Haiti.

Africa round-up

1. China’s EXIM Lend More to Sub-Sahara Africa Than World Bank

2. How reliable are employment statistics in Africa? (hint: not very)

3. How China is educating Africa – and what it means for the West

4. Evaluating antipoverty transfer programmes in Latin America and sub-Saharan Africa: Better policies? Better politics? (pdf)

5. The Making of Middle Class in Africa: Evidence from DHS Data (pdf)

Why is New Jersey so corrupt?

Filipe Campante and Quoc-Anh Do have a fascinating new working paper called “Isolated Capital Cities, Accountability and Corruption: Evidence from US States.”

They find strong evidence that states with geographically isolated capital cities are also more corrupt (we’re talking about you Albany, Annapolis, Jefferson City, Trenton, and Springfield).  On the other hand, they do not find evidence that isolation prevents political capture. They note that “isolated capitals are associated with more money in state-level campaigns…[and]…that isolation is linked with worse public good provision.”

In short, having an isolated capital city offers a triple whammy of bad repercussions: more corruption, less public good provision, and more capture.  Could this be a reason why autocratic rulers are so fond of building new capital cities in the boondocks?

 

Interesting links

1. Mexico’s Brain Drain

2. Streetlights bring normality in Mogadishu (normal is clearly relative)

3. Two good book reviews in the WSJ (sorry, gated). The first is a review of Paul Theroux’s The Last Train to Zona Verde: My Ultimate African Safari by the excellent Rian Malan. The second is a review of one of my favorite authors writing on China, Peter Hessler.  He has a new book called Strange Stones: Dispatches from East and West.

4. An interview with Iranian-American writer Amir Soltani, who has put forth a fictional middle age woman for president in Iran’s upcoming election.  Here is more in (another) gated article by the WSJ.  My favorite line is when Mr. Soltani responds to criticisms that his candidate is fictional.  He states, “She’s fictional fine, but so is the Islamic Republic. So is the position of the ‘supreme leader.’ So are Ahmadinejad’s votes in the last election.  So why not counter fiction with fiction.”  Excellent.

5. And, finally, in the department of uh-oh, there’s this chilling headline: “Mexican Drug Cartel Courts Civilians With Parties for Kids”  Apparently it’s not all that uncommon for Mexican drug cartels to throw parties for kids as a way to bolster social support, but this is the first foray into this kind of thing for the Zetas, who are primarily known for “extortion, murder, and kidnapping.”  I guess it’s a low bar then in terms of improving their image amongst the Mexican public.

Here is an amazing summary of the event:

Last weekend, hundreds of kids in the Mexican state of Tamaulipas danced to bands and played with clowns hired by the Los Zetas cartel. As entertainers welcomed kids to games and trampolines, cartel members set up notices throughout the city, urging the population to rethink Los Zetas’ role, and thanking children for bringing joy to their homes. “May God bless you all and always guide you on the good path to righteousness that you must follow to be men and women of good. God bless our little ones. Att. Los Z,” the message read.

I’ve always found clowns to be scary and creepy, but I cannot imagine how freaked out I would have been as a kid meeting a Zeta clown.  I may never have slept again.