baby, baby, where does our aid go?

The Guardian’s datablog has a cool post where they attempt to estimate how much of OECD countries’ ODA (official development assistance) is actually transferred to a developing country.

I expected the US to do pretty poorly here, but we manage to get 89.5% of our money out of the country (note the chart lists the % NOT transferred).

Japan is the champ at 92.6%, the average is right around 82%, and everyone but Austria gets at least 50% of their money out the door.

Note that this doesn’t evaluate the amount of aid, just where the ODA money goes.


Entrepreneurship in Mexico

I’m teaching a master’s level class called Global Political Economy for the first time this semester.  We are participating in a project on Mexican entrepreneurship with the State Department’s Diplomacy Lab.  I had never heard of the Lab before a couple of months ago, but the department is experimenting with crowd sourcing research topics it would like to see answered (note to self: must try this!).

Even though I know a fair amount about the Mexican economy, the current state of entrepreneurship in the country is not something I’m familiar with.  Fortunately, it is something I would like to know more about, so this project will be a good learning experience for me and the students.

I’ve had students gathering sources on the topic and I have done the same.  I decided to see if anyone has asked and answered questions on Mexican entrepreneurship on Quora and found some fascinating answers.  At least in Mexico City, it sounds like the state of entrepreneurship is thriving.  Here are a couple of my favorite Q & As from the site:

Q1: “What is the entrepreneurial ecosystem like in Mexico City? I’ve recently started a trip through Latin America trying to get a feel for the entrepreneurial ecosystems in the region. I started in Mexico City and have posted two of my four interviews there so far. Both interviewees so far have said that they feel Mexicans lack role models and mentors and that there isn’t a vibrant culture of entrepreneurship in Mexico.Is this true? If yes, what do you think can be done to help build such a culture and should those steps be taken?”  

The most popular answer was written by M. Chris Johnson, Founder of

He starts by stating something that I think is really important to recognize: “We need to define our terms here — what I assume you’re talking about is tech entrepreneurship (this is my interest as well).   If we’re talking about general entrepreneurship, that’s a different story.  There’s really no shortage of entrepreneurial zeal in Mexico; Mexicans are a hardworking lot and you can see all sorts of entrepreneurship, from people selling things on the street to the ubiquitous abarrotes that are generally mom & pop shops.  However, most Mexicans that are in these businesses don’t seem to consider themselves emprendedores.  They’re just making a living.”

Definitely worth reading his whole answer, but the short version is that he believes the “ecosystem is growing fast, and business conditions in Mexico are also evolving quickly (for the better).”  He points specifically to an event called Startup Weekend, writing that “Last year Mexico had more Startup Weekend events than any country other than the United States. Great companies don’t come from Startup Weekend but it’s a great educational opportunity and I think this is a good indicator of how the level of enthusiasm for technology entrepreneurship is growing.”


Q2: What’s the future for the Mexican Startup Environment?”

The most popular answer notes that “Mexico is attracting the attention of reputable Silicon Valley investors and funds. Evidence of this was Dave McClure and his partners at 500 Startups agreeing to team up with MexicanVC (The Discovery Fund for Mexican Startups)” and that MexicanVC evolved from an ambitious idea to a fully functional discovery and investment fund for the most promising startups and entrepreneurial talent in Mexico, in just a few months. They are already finding, nurturing and graduating startups with real potential into the marketplace.”

Some other good Q&As on the topic that are worth exploring:

What are the coolest startups in Mexico? 

What venture capital / Angel investor firms exist in Mexico?

What are the active startup meetups in Mexico City?

An NGO that “does nothing”

The blog “Africa is a country” has a good interview with Hussein Kurji, the creator of a Kenyan mockumentary of aid NGOs. The show is called Samaritans and it chronicles the daily travails of working at an NGO called Aid for Aid.  Like Seinfeld was a “show about nothing,” this NGO is an organization that “does nothing.”

Here’s Kurji talking about one of the stories of Season 1 that sounds particularly funny: “The major story arc of Season 1 is that Aid for Aid is about to apply for the largest grant that the Nairobi field office has ever applied for. In Episode 2, their first task is to come up with an acronym before figuring out what the grant’s about.”

My favorite part of the interview though was when the blog asked him for the craziest story he’s heard about an NGO.

He replies: “I heard from someone in the US that an organization was having a charity auction to raise money for endangered rhinos and the prize for this charity auction was to go hunt a rhino in Namibia.”

I don’t know how I missed this unbelievable story, but the blog assures readers that this did indeed happen, linking to the Colbert Report and CNN.

Another case of truth being stranger than fiction, or the real world sounding a lot like the Onion.

It’s a clown show, bro

I am on record as an overall admirer of The Ben Benank’s work as Fed Chair. I believe that the Fed acted decisively at the height of the crisis and that QE, if nothing else, did stave off deflation.

But my oh my oh my, the Fed has really made a bollux out of forward guidance. This however, I do not blame on Bernanke. I feel like it was pushed on him by outside economists and other FOMC members (Evans and Yellen, you know I’m talking about you!). I just can’t believe Ben would think such cheap talk would seriously move the economy.

First they went with calendar based guidance. You know, the Fed promising to keep interest rates low until the rivers run dry. But the economy did not really respond. So the Fed, under intense pressure to “do more”, switched to outcome based guidance. You know, the Fed promising to keep interest rates low until unemployment fell below 6.5%.

Well, we now sit on the cusp of a 6.5% unemployment rate, but we’ve gotten there largely for the wrong reason, namely a persistent decline in labor force participation. Employment has still not hit pre-crisis levels and nobody is very happy with the state of the economy, least of all Evans and Yellen of the 6.5% pronouncement.

Now they have a big problem, which is rationalizing not raising rates when the 6.5% threshold is crossed. We are getting mired, Bill Clinton-like, in a maze of Talmudic interpretations of what words mean and what can be weaseled on without losing the Fed’s vaunted credibility.

I guess someone should have read Williamson on incomplete contracts? Or any right wing public choice nut on unintended consequences of government policies?

Maybe some folks on the FOMC should stop worrying about how to rehabilitate forward guidance and start thinking more humbly about what monetary policy can actually do.

Ghan(a) in 60 seconds

Ghana is one of the star performers of Sub-Saharan Africa. It recently revised its GDP accounts and now, “Ghana is recognized as a lower-middle-income country rather than a poor country as it had previously been classified (World Bank 2011).”

And it’s starting to have middle income country problems!, its current account deficit was 12.3% of GDP last year, and inflation is running well over its not-too-stringent target of 9.5%.

Given the surge of foreign financial investment into Ghana (the flip side of the big CA deficit and the probably welcome emerging market problem I referred to), its currency should probably be appreciating.

But it isn’t, and the Central Bank has curbed currency trading and raised its discount rate to 18% to defend the Cedi.

Welcome to the world of being an emerging market, Ghana. For all the headaches that come with it, I wish more SSA countries achieve this status very soon.

“Poverty starts bad and stays bad”

I just came across an interesting new working paper called “Adaptation to Poverty in Long-Run Panel Data” by Andrew Clark, Conchita D’ambrosio, and Simone Ghislandi.

Here is the abstract:

We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 45,800 individuals living in Germany from 1992 to 2011 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any causes of poverty entry which are unambiguously associated with adaptation to poverty.

So apparently being poor doesn’t get any less sucky over time.

More map fun, African edition

Thanks to IncredibleMaps and @hofrench for this nice illustration of African empires before colonialism (click on the map for a much better view):



I’ve read about these empires a bit but I have a better understanding of the regions they spanned when when I see them laid out on the map in techno-color.

You want fries with that murder?

In a round-up on violence in Latin America last June, we wrote about how 900 bus drivers had been killed in Guatemala City.  I just read this morning that police have made arrests of the groups extorting large sums of money from the bus drivers.  InSight Crime reports that a group of 10 charged bus owners around $2,000 monthly between 2009 and 2013, extorting a total of over $125,000. Two other extortion groups have also recently been convicted, with the three groups together charging bus owners and drivers over $6,400 monthly.”  That’s a lot of extortion–it’s no wonder bus owners were having trouble coming up with the dough.

The interesting part of the story (besides the fact that the extortioners were tracked down and are now facing justice) is the fact that the extortions and killings weren’t done directly by the powerful gangs in the city.  Instead, the extortioners seemed to have contracted with the gangs–that is, “paying them a quota in order to operate.” 

The article notes that while this is characteristic of the Mafia, it is also becoming increasingly used by the Zetas in Mexico: “The Zetas also used a “franchise” model, collecting fees from criminal groups which are allowed to use the Zetas name and reputation to conduct their own activities.”

Yikes, that’s just what we need, McZetas!