Forecasting Rain in India

Mark Rosenzweig and Chris Udry have an interesting new NBER working paper called “Forecasting Profitability.” As a side note, the title really needs work though in terms of catchiness–the current one sure doesn’t hook potential readers.  If it wasn’t for Marc Bellemare, I would have passed the paper right up.

So..what makes this paper interesting is it studies whether rainfall forecasting ability affects Indian farmers decision to invest.  According to their calculations, uncertainty causes “Indian farmers to under-invest by a factor of 3 compared to optimal investment levels.”  Some of this uncertainty is reduced when the farmers can rely on good weather forecasters.  Now forecasting is not equally precise in all parts of the country and farmers know this.  When forecasters are good, farmers pay more attention and are more likely to respond by increasing investment.

indian_farmer

An attitude adjustment

Howard French, once a New York Times journalist and now an associate professor at Columbia has a great new post on AfricaPlus called “The China-Africa Convergence: Can America Catch Up?”  He wrote one of my favorite books on Africa a couple of years ago called A Continent for the Taking: The Tragedy and Hope of Africa.  I’d highly recommend it for anyone interested in development.

He has been working more on China (and the China-Africa connection) these days and has a new book coming out in 2014 called “China’s Second Continent: How a Million Migrants Are Building a New Empire in Africa.”  He makes some great points in the blog post on the issue of Chinese versus American attitudes about Africa.  He writes:

“More than a million Chinese have moved to Africa in the last decade, largely because they see the continent as an arena of almost limitless opportunity. This holds true from big company executives to mom and pop entrepreneurs from China’s inland, second tier cities. Americans, meanwhile, despite their far deeper historical associations with the continent, including 13% of the population that traces its ancestry to Africa, cling to deeply engrained attitudes toward this part of the world, as a place of war, of misery, of strife, etc. For this reason, and because we cannot get over a long-running sense of Africa as a place to be aided, we are ill equipped to see or appreciate the opportunities that Africa offers.”

He goes on to note that American embassies across Africa are shutting down their “commercial sections, which historically have researched African economies and provided helpful information and contacts to American businesses looking for opportunities.”

He makes a good argument that the US needs an attitude adjustment about Africa and I couldn’t agree more.

 

Is honesty always the right policy?

Uruguayan President José Mujica met with hundreds of potential Spanish investors in Madrid this week and gave an exceptionally frank sales pitch.  I’m not sure if the honesty impressed the investors, but it certainly must have been different from the usual dog and pony show they hear.

mujica_ur

Among the best tidbits, Mujica noted that:

1. Uruguayans aren’t known for being hard workers.  We are pretty lazy; we don’t like to work.  No one dies by working too hard in Uruguay, but we aren’t corrupt, we are a decent country (this reminds me of Oklahoma’s former license plate motto: Oklahoma ok.)

Geez, one of these statements would have been shocking enough but he just went on and on and on.  We get the point Mujica–Uruguayans don’t like to work.  I’m just not sure why that’s supposed to attract investment.

2.  Mercosur is important, but it suffers from numerous difficulties because of the weaknesses of its members.

3.  They’re working with Brazil on bringing down tariffs, although he admitted that negotiations were going “sector by sector, with sweat.” I don’t know the exact translation in English, but the literal translation is pretty clear.

4. Uruguay suffers from a lack of infrastructure but investors have legal guarantees and it is worth it to invest.

These are all rough translations by me; the original is much better if you read Spanish.