I just came across a new paper in the JDE by Nicolai Kaarsen “Cross-country differences in the quality of schooling.” It is moving to the top of the ever-expanding pile. Here’s the abstract:
This paper constructs a cross-country measure of the quality of education using a novel approach based on international test scores data. The first main finding is that there are large differences in education quality – one year of schooling in the U.S. is equivalent to three or more years of schooling in a number of low-income countries. I incorporate the estimated series for schooling quality in an accounting framework calibrated using evidence on Mincerian returns. This leads to the second important finding, which is that the fraction of income differences explained by the model rises substantially when one includes education quality; the increase is around 22 percentage points.
ht to @ianbremmer for tweeting this nice illustration of major trading partners. Please click on the image to be able to actually visualize the visualization:
My first thoughts are:
1. the US image didn’t surprise me much
2. I had no idea that Brazil, Peru, Australia, and much of Africa had China as a trop trading partner
3. Germany is a regional powerhouse (duh!) but so is South Africa to a certain extent.
4. Almost no one has Russia as their top trading partner
5. Old colonial ties are indeed hard to break! Most of Francophone Africa still has France as their top trading partner
ABC News has some hard hitting analysis with a piece called “Top Mexico Cartel to Keep on Despite Capo Capture.” When I first saw this title in a tweet, I assumed that it was the Onion. But oh no, it’s a real headline of an article written by AP reporter Katherine Corcoran! It begs the question of what ABC expected the Sinaloa cartel to do? Just fold up and admit defeat because the top guy is arrested? Has that ever happened in the history of drug cartels? And even if it had, El Chapo has already escaped once from jail so maybe he’ll do it again. How pissed would he be if he managed to escape and then found that his crew had decided to call it a day.
Soon to be ex-president Nicky “Knuckles” Maduro has vowed to get rid of street protests “as one eradicates an infection”.
Taking him at his word, I expected to see water cannons filled with Neo-Sporin, Helicopter drops of anti-biotics, police using megaphones to advise protesters to drink plenty of fluids.
Or maybe they use rubber bullets and teargas in Venezuelan hospitals?
Do not let the door hit you in the butt on your way out, President Knuckles.
I just discovered an interesting paper by Sean Dougherty entitled “Legal Reform, Contract Enforcement and Firm Size in Mexico.” The abstract is a little dense, so I will quote excerpts from it and the introduction to give you an idea of what Dougherty studies:
“This paper uses the variation in legal system quality across states in Mexico to examine the relationship between judicial quality and firm size. Although the country has a single legal system, its implementation and procedures vary widely, while development outcomes there are more imbalanced and unequal than in any other country of the OECD.”
and what he finds:
“Firms in states with higher judicial quality tend to be substantially larger than those in remaining states, and this result is robust to a variety of alternative measures of firm size, as well as to instrumentation for the potential endogeneity of judicial quality. Additionally, we find that firms in more capital intensive industries are more likely to benefit from higher quality judicial systems, consistent with insights from the incomplete contracting literature, suggesting that hold-up problems may be limiting the scaling up of firms, and helping to explain the concentration of capital beyond geography.”
I’m learning that one of the main problems with entrepreneurship in Mexico is that almost all of the enterprises are tiny, meaning they can’t take advantage of economies of scale. While this paper isn’t directly about entrepreneurship, it can help to explain differences in firm size across the country. Good news MAIS students, I just found another paper for you to read!
One of my favorite tweeters, Laura Seay (@texasinafrica), posted an article by the AP entitled “Stop! Somali traffic police try to restore order.” The article is a good reminder of how the basics of creating a modern state might not be flashy, but they are important and they take time. As Laura put it, “The slow, painful, unsexy process of building the rule of law involves traffic control, too.”
Somalia doesn’t have traffic robots yet, but they do have some brave traffic cops trying to do a very difficult job: enforce traffic laws in a country that hasn’t had any in a long, long time. Here are some of the things the cops have to deal with on a daily basis:
1. When police officers try to get people to stop at red lights, most just keep on driving.
2. “Mogadishu recently began installing road signs for the first time..[for that reason]…Large parts of the country’s residents are unfamiliar with traffic laws.”
3. The traffic police have no cars of their own, nor are there any modern laws on the book to enforce. For instance, Somalia last passed traffic laws in 1962 and the fines listed in said law are in a currency that no longer exists.
4. Suicide bombings are still a regular occurrence. For that reason, “troops from the African Union do not stop for traffic signals or accidents they are involved in.”
5. Militants apparently are not amused by the traffic cops, killing 4 last year in targeted attacks.
Last month, Casey Cupp, a talented young graphic designer working on his GIS skills, created some tremendous maps of per-capita migration flows for CG. I just heard from Casey again with a new map he’s put together: this one is of yearly refugees accepted per million residents from 2009-2012.
This map is also excellent (please click the picture to better appreciate its excellency!)
I expressed surprise at how many refugees end up in the Dakotas (at least on a per-capita basis) and Casey wrote back with some interesting thoughts on the map:
“It is almost like the lack of a pattern is what is fascinating.. Montana and Idaho stink but are surrounded by rock stars.
There is definitely more variance in the smaller population states as would be expected somewhat… but not to that extreme. Of the medium to larger states, AZ, WA, GA, and MI are stand outs, probably even TX.”
Here’s Casey’s twitter address if you’d like to commission him to make you a cool map: https://twitter.com/csekcolorado
After scouring Quora for information on Mexican entrepreneurship (see last week’s post on this topic), I found an interesting interview with Jorge Madrigal. Jorge is the Founder and CEO of Aventura and has been in charge of various startup events in Mexico City. The interviewer is Cate Costa, who is the Founder of Venture Catalyst Consulting, described as “a small consulting firm that specializes in helping startup company founders plan and expand their new businesses.”
Given his background, I expected him to offer a very rosy view of entrepreneurship in Mexico. Instead, his thoughts seemed quite balanced and thoughtful. Here are some of my favorites:
1. What are some of the main problems with the state of Mexican entrepreneurship today?
“the most important thing lacking is a community of entrepreneurs and support for their endeavors. He doesn’t see people sharing and developing a sense of community despite major investment from the government including the creation of clusters, incubators, accelerators, etc.”
2. So why have the government’s efforts fallen short?
“The government is attempting to copy other countries’ models but, “Mexico has Mexican problems [to overcome] – not Chinese problems or U.S. problems – problems that are innate to Mexico. The biggest mistake is trying to do things exactly as they’re done in other countries.”
3. So what is an example of an obstacle specific to Mexico?
“Entrepreneurship is not accepted as a legitimate career choice. In fact, it’s often seen as a euphemism for not having a job. This is partly because there are not enough Mexican entrepreneurs serving as role models to show how you can actually make a great living through entrepreneurship and partly because the Mexican family is more economically dependent on all of its members across multiple generations than in, say, the United States, so the decision to try a startup will likely affect an entire family, not just the individual entrepreneur. Plus, when a young person is still living with his/her parents (which, different from the U.S., is often true until s/he gets married) it can be much tougher to break from this disapproval and give a startup a chance.”
Mexico, Colombia, Peru & Chile are on the way to creating a large single market (over 200 million people) with the recently ehanced Pacific Alliance. Costa Rica and Panama want in.
I think they call it the Pacific Alliance because Argentina, Venezuela and Brazil are Atlantic nations which are the backbone of the less ambitious Mercosur pact.
It may also be code for “hey Asia, we are open for business”, like our own likely still-born Trans Pacific Partnership.