Denvelopment

Interesting Links

2015-11-13T10:55:00.001+03:00

Interesting links this week:

- Pad Thai and state building (of Thailand that is).

- Self-government among pirates, prisoners and preliterates, (self)rule of law anyone? Peter Leeson is already known for his work on pirates, interesting how it spreads into other groups.

- A collection of papers on conflict and fragility in Africa from the World Bank blog

- Global Witness report on jade extraction in Myanmar

The Diversity of Land Institutions in Europe - Working Paper

2015-02-01T07:37:00.000+03:00

In previous reviews, we have already seen the importance of inheritance law and land titling on development outcomes. Swinnen, Van Herck and Vranken's paper "The Diversity of Land Institutions in Europe" looks at land institutions related to farming in EU context and shows both the large diversity within a single market and how policy decisions can have large effects in relatively short periods of time.

Abstract:

"The creation of optimal land institutions attracted renewed attention in the 1990s because of its central role in the transition process in former Communist countries in the former Soviet Union and Eastern Europe and more recently because of large-scale land investments in developing countries. This paper documents the existence of large variations in land institutions (markets and regulation) using current and historical data from Western and Eastern Europe. It then offers explanations for these differences and draws implications for the role and optimality of land institutions in development (with special reference to the current debate on large scale land acquisitions)"

It is interesting to see how much diversity there is among EU countries, both within the EU15 and former communist, specially in a setting where there is not only a common market but also a Common Agricultural Policy (CAP). These differences not only point at history but also to more recent policy decisions in land restitution (former communist), rental environment, and farmland regulatory framework. While the study does look at land institutions per se, it is a pity there has not been a deeper look at the impact of the CAP on those institutions, aside from a passing mention in the case of Greece (the requirement of rental agreements have led to an increase in formalization).

This also shows that there are many paths to a functional agricultural land market and that both institutional design and political/policy considerations loom large. Land reform is still in the agenda of many developing countries, although not as much in its traditional shape (social justice) and rather as economic (mostly export led) growth argument. The acceptance of multiple pathways with endogenous development within a common external framework reinforces the point that 'cookie cutter' policy proposals by external actors are a misrepresentation of the policy options at hand

Interesting to note that one of the largest countries both in farmland and agricultural production within the EU, Spain, is not part of the analysis. The authors do not give an explanation so we are left guessing. Selection bias? quality of data?

Temporary Protection and Technology Adoption: Evidence from the Napoleonic Blockade - Job Market Paper

2015-01-31T11:19:00.000+03:00

Industrial policy is always a contentious argument in development economics between free-marketers and state intervention. Réka Juhász's Job Market Paper "TemporaryProtection and Technology Adoption: Evidence from the Napoleonic Blockade" brings historical evidence to that debate through an interesting natural experiment from the early 19th century.

Abstract

"This paper uses a natural experiment to assess whether temporary protection from trade with industrial leaders can foster development of infant industries in follower countries. Using a new dataset compiled from primary sources, I find that in the short-run regions (départements) in the French Empire which became better protected from trade with the British for exogenous reasons during the Napoleonic Wars (1803-15) increased capacity in a new technology, mechanised cotton spinning, to a larger extent than regions which remained more exposed to trade. Temporary protection had long term effects. In particular, by exploiting the fact that the post-war location of the cotton industry was determined to a large extent by the historical accident of the wars, I first show that the location of cotton spinning within France was persistent, and firms located in regions with higher post-war spinning capacity were more productive 30 years later. Second, I find that after the restoration of peace, exports of cotton goods from France increased substantially, consistent with evolving comparative advantage in cottons. Third, I show that as late as 1850, France and Belgium - both part of the French Empire prior to 1815 - had larger cotton spinning industries than other Continental European countries which were not protected from British trade during the wars; this suggests that adoption of the new technology was far from inevitable."

Interestingly, the paper studies the effects of an event and policy that was not designed for industrial purposes: the Napoleonic Wars and the Continental Blockade. While the Continental Blockade had the foreign policy purpose of undermining Britain's trade advantage/power and not necessarily a protectionist measure for French industry (in this case cotton). Probably the most interesting case may be that of Belgium and not that of France. During the Napoleonic Wars, Belgium was under French control (1794-1815) until it became part of the Netherlands. However, cotton industry grew more in Belgium than in the Netherlands in the post-Napoleonic period.. pointing out to the second issue: Technology Adoption

The results show there may be some role to be played for protectionist policies for infant industries not only to establish productive capacity but also the be able to adopt/adapt new technologies more successfully. On the other hand, the temporary protection was not sector-specific but across the board, leading to the interpretation that industrial policy may be more effective by focusing on the general environment rather than specific industries, allowing for an efficient internal reallocation of resources.

To note that the study focuses on a successful case and does not look at the industries that may have been wiped out after the lifting of the blockade, so we should be careful in making general economic welfare interpretations at country level.

Interesting Links

2015-01-30T10:24:00.000+03:00

Interesting articles and links:

- Running surveys in warzones

- Does money buy Hearts and Minds? Mostly research in the Philippines but also elsewhere.

- Understanding the Civil Law, an interesting primer for people without legal background (and some interest in history)

Transtional Justice and Political Settlements - Working Paper

2015-01-29T07:19:00.002+03:00

Transitions are as hard, or maybe even harder, that the negotiated processes that originated them (peace and/or political agreements) Christine Bell's "Transitional Justice and Political Settlements" look into the role that transitional justice places both in the negotiating table and its aftermath.

Abstract:

"This draft article examines the role of transitional justice in societies emerging from conflict. Fundamentally, it addresses the ways in which the context of conflict resolution shapes the transitional justice mechanisms which emerge and constrains their implementation. The paper argues that transitional justice measures need to be understood as having a critical political settlement dimension, and as closely intertwined with the bargaining processes of political elites. These processes are important to non-repetition of human rights violations. The paper sets out the factors which influence design of transitional justice mechanisms, and in conclusion it suggests strategies for improving international intervention in the area."

The article follows a long discussion between the peace imperative (ending the conflict) and the rights-based approach imperative (respect of human rights and justice) that has been going on for a while. These two imperatives are at odds mostly because they come about from different perspectives, one is a bargaining process among the stakeholders while the latter is a normative/principled process (with very little room for negotiation). While this discussion is not new, what Bell brings into the table is that transitional justice mechanisms are, in their design and implementation, also bargaining processes and a continuation of conflict objectives. The fact that the external appearance of the mechanism may similar across countries (Truth Commissions, Special Tribunals, etc..) should not blind us to the fact they represent a political dynamic and are shaped by the narrative of both the conflict and the aimed future.

Overall is a call to more contextual knowledge in both design and intervention, a point that everybody agrees with and yet we keep falling short time and again.

Pornography

2015-01-12T07:18:00.001+03:00

My ISP in Yemen has decided that VOX is pornography.

I wonder which criteria they have used to catalog a public policy website as pornography. They may be using the famous 'I know it when I see it' yardstick from US Supreme Court's Judge Stewart. What kind of 'pornography' does this website peddle? What can be so dangerous for Yemen citizens that merits the drastic measure of banning access? Public transportation articles? Health care policy? Political partisanship? Poverty reduction measures? All of them highly relevant to Yemen, so yes, open discussion of these topics can surely poison the peaceful policy discourse ongoing in Yemen.

On the other hand, one can easily access Dabiq,the magazine by the entity also known as Islamic State, or AQAP's Inspire, although for this one it may be an issue of pride... having been produced in Yemen, it is probably the most trending magazine the country has recently produced.

By the way, web proxies are also being blocked (under their own category).

Interesting links

2015-01-04T10:13:00.001+03:00

Links of the week:

- Salaries and NGOs (no, money ain't all). Study on incentives for NGO workers in Uganda

- 10 thing political scientist know that you don't (in the USA)

- Kony 2012 aftermath, Why did Invisible Children dissolve?

- Lobster fishing or lobster farming? 80% of Maine lobster diet is bait?

The Effect of HIV Infection Risk Beliefs on Risky Sexual Behaviors: Scared Straight or Scared to Death? - Job Market Paper

2014-12-20T15:07:00.000+03:00

Much of the development work is about behavior change, the assumption that with extra resources and knowledge people (also known as beneficiaries) will do things better in the future. Nowadays there is an increasing shift towards the 'at-risk' label (although 'vulnerable' is still going strong) to justify targeting: youth at-risk, women at-risk, children at-risk. However, Kerwin's job market paper "The Effect of HIV Infection Risk Beliefs on Risky Sexual Behaviors: ScaredStraight or Scared to Death?" suggests that we may be wrongly identifying both target groups and responses.

Abstract

"Economists typically assume that risk compensation is uniformly self-protective - that people become more careful as the health risks of their actions increase. However, risk-seeking, or fatalistic, responses can also be rational: increased risks can lead people to take fewer precautions. I extend the typical model of risk compensation to show that fatalism is a rational response to sufficiently high risks if people do not have perfect control over all possible exposures, and if the condition in question is irreversible. This result holds even for people who do not understand how to add up probabilities. I test this model's implications by randomizing the provision of information on HIV transmission risks to people in Malawi, a country with a severe HIV epidemic where there is qualitative evidence of fatalistic responses to the virus.

Average risk responses are self-protective and statistically significant, but small in magnitude: the mean risk elasticity of sexual behavior is roughly -0.6. To test the model of rational fatalism,I develop a method of decomposing 2SLS estimates of the risk elasticity of sexual behavior by baseline risk beliefs. Consistent with the predictions of my theoretical framework, I find that this elasticity varies sharply by baseline risk beliefs: the risk elasticity varies from -2.3 for the lowest initial beliefs to 2.9 for the highest initial beliefs. 13.8% of the population has a positive elasticity, suggesting they are fatalistic."

While the study focuses on HIV, how we handle 'at risk' groups is conceptually similar across the sectors. In most cases, targets are identified according to socioeconomic status, employment, location, age and other indicators of potential risk. The advantage of this method is that is relatively easy to identify people with this criteria. The study adds yet another criteria: fatalism, an indicator extremely relevant and yet very difficult to measure (somehow some behaviors can be used as proxy). A fatalist view will not attempt to mitigate the risks but rather embrace them and assume the worst already, making traditional risk education infective (as it tends to highlight negatives as a preventive methodology).

We see a similar issue regarding suicide bombers, gang membership and other high risk behaviors, where the at-risk profile is wide enough to include thousands (if not millions) and yet the actual number of joining are well below. Maybe what we need is better psychological profiling in order to be more precise in both identifying beneficiaries and tailoring the message.

HT to Development Impact

Give Everybody a Voice! The Power of Voting in a Public Goods Experiment with Externalities - Working Paper

2014-12-19T10:03:00.000+03:00

While, in general, I am not keen on social science results coming out of controlled lab experiments, Engel and Rockenbach's "Give Everybody a Voice! The Power of Voting in a Public Goods Experiment with Externalities" offer an interesting though with potential large implications (if proven by field testing) for development practitioners.

Abstract:

"We study the effect of voting when insiders’ public goods provision may affect passive outsiders. Without voting insiders’ contributions do not differ, regardless of whether outsiders are positively or negatively affected or even unaffected. Voting on the recommended contribution level enhances contributions if outsiders are unaffected and internalizes the negative externality by lowering contributions when outsiders are negatively affected. Remarkably, voting does not increase contributions when it would be most desirable, i.e. with a positive externality. Here, participants vote for high contributions, yet compliance is poor. Unfavorable payoff comparisons to the outsiders that gain a windfall profit drive contributions down."

In many development interventions, specially with the popularity of Community Driven Development (CDD), communities are asked to chose priorities and, in some cases, also contribute to them. Those priorities usually reflect public goods (or rather public services that can have a public good component, like schools, medical posts, markets, community centers) that do have externalities on other communities (or even within the community). Unfortunately, in development we tend to treat externalities either as a risk (other communities/actors reacting negatively, spoilers) or as a multiplier-effect (bonus points because there is a positive spill-over beyond the community) but rarely as something integral to the design of the decision-making process and the community contribution (both at initial stage and on running costs).

The study shows that enforcement of decisions is key (nothing new there) but also that voting and the nature of the externality have an effect on contributions: If negative it lowers (acknowledgement of impact on others?), if positive it also lowers!! (why should we pay for those free riders?) and if neutral increases (it is all ours?).

In my view policy implications are multiple:

1) we need to field test this hypothesis,

2) we may need to tailor decision-making processes and corresponding contributions according to externalities (assuming we want to maximize community contribution). Of course this is easier said that done, specially in CDD settings where the prioritization outcome is not necessarily known beforehand (although the guessing can be quite narrow),

3) extend voting to all contributors. While this point is not looked into by the study, the fact that there might be contributor not participating in the decision-making (indirectly so, through the non-binding phase), we can assume that shifting them from semi-bystanders to decision-makers/contributors would increase the compliance (a point made in many studies in political science on broadening the voting franchise AND the tax base),

4) in stable systems, both and positive negative externalities are dealt by shifting the decision-making process to a higher level (district, region, nation) that can provide for a compensatory system (insurance, investments, balancing out positive and negative externalities). However, in many development settings a 'bump-up the ladder' is not an efficient option (and a whole different 'governance' debate). Clustering (identifying and including affected parties) for decision-making and contributions (in the case of positive externalities) would make the public good neutral (and raise contributions). For negative externalities it is much harder unless the potential damage has been pre-identified and a compensatory mechanism already established (i.e. another development project in the affected community, mitigation measures).

School Competition and Product Differentiation - Job Market Paper

2014-12-15T08:31:00.000+03:00

School competition is widely presented as a model for improving educational outcomes. Ongoing debates on school vouchers, charter schools and the role of private education show an increased focus on the use of market forces in the education sector. Bau's "School Competition and Product Differentiation" takes a slightly different approach, instead of the 'traditional' comparison between public and private schools, she looks into the effect of competition within the private sector.

Abstract

"Policies that encourage school competition in hopes of improving school quality are increasingly popular in both rich and poor countries. In this paper, I establish that schools may respond to increased competition by catering to wealthier students, at the expense of poorer students. I develop a model of school competition in the presence of differential information.

If (1) the match between a school and a student affects learning, and (2) wealthier students' enrollment decisions are more responsive to their match to schools, then schools cater more to the needs of wealthy students. Therefore, the entry of an additional school can reduce the quality of the match for poorer students. I show that the key mechanism of the theoretical model - that wealthier student are more responsive to their predicted test score gains when choosing schools - is consistent with the data by estimating a structural model of school choice in Pakistan. Exploiting the exit and entry of private schools and an instrumental variable that affects the cost of opening a private school, I find that competition increases private schools' targeting of wealthy students and reduces their targeting of poor students. An additional private school in the market increases within-school inequality in yearly test score gains by 0.1 standard deviations."

Many arguments promoting school competition are framed as pro-poor (elitist arguments are bad form these days), however the study shows that there might be diminishing returns and actually reduce learning for already enrolled poor students. Unfortunately the author does not follow up on one stark implication: the increased focus on wealthier students when the competition rises (as indicated in her own model). Therefore the issue does not seem to be informational (poor students choices are a worse match) as stated, but rather the schools own focus. These two issues might need to be disentangled further.

An interesting note, especially for fans of path-dependence, is that the presence of private schools is correlated to girls' government secondary school in the village (promoted mainly in 1980s through the Pakistan Social Action Program). Secondary-school educated young women are a key labor source for private school teaching, bringing on board another variable for education policy and territorial coverage of competition.

HT Development Impact

Interesting links

2014-12-14T06:58:00.000+03:00

Interesting links of the week

- Winning elections one knock at a time, the importance of ground work/canvassing.

- Skeptics guide to institutions, 4 parts so far.

- Spain ranks highest in financial access according to this new study

- Chinese military classics on the economics of peace and war

- The myth of Armchair Socialist debunked?

- Development professionals and their (our) behavioral biases

What is Title Guarantee Worth in Land Markets? Evidence from Bengaluru, India - Working Paper

2014-12-13T06:46:00.000+03:00

Land reform has been a constant topic not only on development literature but also in economics and politics for many years. Many popular movements (specially agrarian) have been focused on land distribution and ownership, although in later years the theme has been losing visibility (partly due to the diminishing role of agriculture in many economies, partly due to its association with 'marxist' movements vis a vis 'free market'). On the other hand the issue of titling urban settings, specially in relation to squatter/slums in developing countries has garnered more recent attention (probably it most well known leader being Peruvian Hernando De Soto). Venkataraman's "What is Title Guarantee Worth in Land Markets? Evidence from Bengaluru, India" falls in this last group by looking at the premium generated not only by a solid/guaranteed claim but also adequate planning in urban settings.

Abstract:

"Land reforms require urgent attention in emerging market economies, and there is a vast body of literature that deals with the economic impact land reforms, especially land titling (Acemoglu et al., 2001). India, like other developing economies, has a presumptive titling system which is notoriously inefficient: a law that is in the draft stages of consultation is the Draft Land Titling Bill, 2011, which seeks to replace presumptive titles with conclusive ones. However, there is no study that has looked at the cost of not having an appropriate titling system. In this study, I attempt to quantify the premium paid towards title by using a quasi-natural experiment on differential titles that is available in the Indian market, utilizing land prices in Bangalore, India. The differential title to land comes about as a result of State's activity in using eminent domain to acquire land parcels, conferring superior title on the parcels so acquired. A hedonic model is applied to a data set of 2263 observations of appraised land values to tease out the impact of guaranteed land title on land prices."

The paper finds that the land title premium represents, in this case, a 4.3% increase in price. While this increase might not be significant enough for a private owner, as the costs of securing rights may easily overcome any expected profits, it begins to become significant for larger private developers and governments. The author calculates that for Karnataka real estate alone the welfare loss (fancy word for the amount the % increase is not currently realized) is at least 430 million USD, while the cost to the state to deliver title guarantee is 6.6 million USD (although probably that budget would dramatically increase if it were to cover the whole state, I would imagine). A very large unrealized potential.

To note that, in the study, the solid title is produced through the use of eminent domain, wiping out potential competing claims through compensation and legal standing. A methodology that may be hard to scale up or replicate. Nevertheless, the study shows both the advantage of clear and uncontested land titles, and also the role of the state in providing a registration and guarantee service.

How Powerful is Rouhani in the Islamic Republic? - Research Paper

2014-11-27T10:16:00.000+03:00

Iran's Nuclear talks have recently been extended, whether because Rouhani's engagement or the late rapprochement between USA and Iran due to Daesh/ISIL still remains to be seen. Bastani's "How Powerful is Rouhani in the Islamic Republic?" has a look at the power dynamics within the Iranian government around two key points: President Rouhani's standing vis a vis Supreme Leader Khamenei, and secondly the how the nuclear talks shape does dynamics.

This is an interesting paper that reminds us that while leadership is important, aligning interest groups (in a wider sense) and coalition building are fundamental for actual policy change.

Introduction

"One of the key questions being asked about the negotiations over Iran’s nuclear programme is how powerful President Hassan Rouhani really is within Iran’s unique political system. In other words, in a country where the key power-holder is the Supreme Leader, do Rouhani and his colleagues have the ability to advance their agenda and implement an international nuclear agreement despite their powerful opponents? This question is of particular importance because during the presidency of pro-reform Mohammad Khatami, Rouhani was in charge of the nuclear talks and reached an important arrangement with the international community, suspending uranium enrichment and opening nuclear facilities to International Atomic Energy Agency inspections; a few years later, however, Ayatollah Khamenei, who was unhappy with the attitude of the Western powers towards Iran, halted the implementation of these arrangements.

With this historical perspective in mind, an examination of the balance of power in Iran under Rouhani’s presidency, and a review of the tools at his disposal and those in the hands of his powerful rivals, is critical. This paper examines Rouhani’s chief priorities in the domestic and foreign domains; analyses the factors that help, and those that impede, his administration in attaining its goals; and assesses the relationship between the president and Iran’s other institutions of power, including his influence on the country’s security apparatus. Finally, the effects of the possible success and failure of the Rouhani administration, particularly in respect of the nuclear dossier as its most important priority, will be examined.

It should be noted that the focus of this paper is on the power balance within the Iranian regime. An examination of the role of the elite and of the discontented masses in the overall picture would require a separate study"

Summary from the paper below the fold

- One of the key questions about the negotiations over Iran’s nuclear programme is how powerful President Hassan Rouhani really is within Iran’s unique political system, and whether he and his colleagues have the ability to implement an international nuclear agreement despite their powerful opponents. As the country’s chief nuclear negotiator in 2003–05, Rouhani agreed to suspend uranium enrichment and open nuclear facilities to International Atomic Energy Agency inspections, but Ayatollah Ali Khamenei, unhappy with the attitude of the Western powers towards Iran, halted the implementation of these arrangements.

- Rouhani and his associates emphasize that their objective is the resolution of the economic, administrative and international crises arising from Mahmoud Ahmadinejad’s two presidential terms. In this context, they regard their highest priority as being the conclusion of an agreement with the international community over the nuclear dossier – which has been, in their view, the major source of Iran’s economic problems in the past few years.

- However, the president is faced with opposition within the ranks of some of the most influential state institutions: the Iranian Revolutionary Guards Corps and Basij volunteer militias, the intelligence - security apparatus, the judiciary and the parliament.

- There is no doubt that Ayatollah Khamenei expects Rouhani to strive to achieve the removal of the sanctions against Iran, but he does not seem interested in sharing responsibility for any retreat from the nuclear programme. If he comes to the conclusion that the political costs of nuclear talks far outweigh the economic benefits they can bring, he will once again put an end to them.

- Should that happen, it will strengthen Ayatollah Khamenei’s convictions about the dangers of any rapprochement with the West and about the potential for moderation in foreign policy. This impact could be even stronger than that of the failure of the 2003–05 nuclear talks.

- Ultimately, if those in Iran – such as President Rouhani – who favour interaction with the international community again fail in their efforts to strike a face-saving deal, they will never be able to return to the sphere of foreign policy in Iran. The departure of Rouhani’s team from the political scene during the most sensitive stage of the nuclear issue would lead to the return to Iran’s foreign policy apparatus of forces that oppose external engagement.

Rouhani and his associates emphasize that their objective is the resolution of the economic, administrative and international crises arising from Mahmoud Ahmadinejad’s two presidential terms. In this context, they regard their highest priority as being the conclusion of an agreement with the international community over the nuclear dossier – which has been, in their view, the major source of Iran’s economic problems in the past few years.

However, the president is faced with opposition within the ranks of some of the most influential state institutions: the Iranian Revolutionary Guards Corps and Basij volunteer militias, the intelligence-security apparatus, the judiciary and the parliament.

There is no doubt that Ayatollah Khamenei expects Rouhani to strive to achieve the removal of the sanctions against Iran, but he does not seem interested in sharing responsibility for any retreat from the nuclear programme. If he comes to the conclusion that the political costs of nuclear talks far outweigh the economic benefits they can bring, he will once again put an end to them.

Should that happen, it will strengthen Ayatollah Khamenei’s convictions about the dangers of any rapprochement with the West and about the potential for moderation in foreign policy. This impact could be even stronger than that of the failure of the 2003–05 nuclear talks.

Ultimately, if those in Iran – such as President Rouhani – who favour interaction with the international community again fail in their efforts to strike a face-saving deal, they will never be able to return to the sphere of foreign policy in Iran. The departure of Rouhani’s team from the political scene during the most sensitive stage of the nuclear issue would lead to the return to Iran’s foreign policy apparatus of forces that oppose external engagement.

- See more at: http://www.chathamhouse.org/publication/how-powerful-rouhani-islamic-republic?dm_i=1TY8,307RS,F7NKV5,ATEFF,1#sthash.GB6lvkNP.dpuf

One of the key questions about the negotiations over Iran’s nuclear programme is how powerful President Hassan Rouhani really is within Iran’s unique political system, and whether he and his colleagues have the ability to implement an international nuclear agreement despite their powerful opponents. As the country’s chief nuclear negotiator in 2003–05, Rouhani agreed to suspend uranium enrichment and open nuclear facilities to International Atomic Energy Agency inspections, but Ayatollah Ali Khamenei, unhappy with the attitude of the Western powers towards Iran, halted the implementation of these arrangements.

- See more at: http://www.chathamhouse.org/publication/how-powerful-rouhani-islamic-republic?dm_i=1TY8,307RS,F7NKV5,ATEFF,1#sthash.GB6lvkNP.dpuf

The Knowledge and Policy Limits of New Institutional Economics on Development - Paper

2014-11-24T07:10:00.000+03:00

Institutions have become the buzzword in development int the past decade, more and more books, articles and Noble Prices go to the field of study where culture and economics interact. Tamanaha's paper "The Knowledge and Policy Limits of New Institutional Economics on Development" wades into the debate by not only highlighting the different interpretations of 'institution' but also the limits that this new institutionalist drive encounters.

Abstract:

"New Institutional Economics (NIE) has secured impressive achievements in academia and policy circles. The World Bank and other development organization in the past two decades have expended billions of dollars on efforts to build “good governance” and the “rule of law” informed by the NIE theory that economic development requires supportive political and legal institutions. NIE appears to be the new consensus view of development thinking, supplanting the neo-liberal Washington Consensus that dominated global development policy in the 1980s and 1990s. NIE scholars interested in development are currently engaged in an effort to map and measure the institutional terrain with the expressed purpose of producing policy advice on how to improve economic performance through institutional reform.

This essay elaborates on the barriers that stand in the way of the knowledge and policy goals of NIE. Foremost is the “interconnectedness of society:” cultural, technological, legal, political, and economic activities all affect one another and are affected by one another, often in ways that are subtle and all but invisible; each situation unique in its constellation of social forces and is dynamic, constantly changing in reaction to surrounding influences. To show why these aspects cannot be overcome by NIE scholars, I explore the ongoing struggle to identify a shared conception of “institution” — and I explain why this cannot be solved. For reasons I go on to elaborate, NIE scholars also will not be able to get a precise grip on the surrounding institutional influences that affect economic development. This incapacity shows up time and again in NIE research. The same barriers that stand in the way of knowledge also promise to stymie the policy ambitions of NIE scholars who seek to promote economic development. NIE scholars today, it turns out, are repeating lessons announced five decades ago in the law and development field. The problems were insuperable then and will remain so. Owing to these barriers, little advice can be offered beyond commonsense recommendations — pay attention to local circumstances, experiment to find out what works, don’t apply a “one size fits all” model. Interconnectedness, dynamism, and uniqueness are behind this advice. While critical of NIE knowledge and policy objectives, this essay is not negative in orientation. NIE research is illuminating. Greater awareness of the limits will help orient future work in the field in the most fruitful directions."

I am not so sure NIE has fully supplanted the Washington Consensus, but it is true that the language around development has shifted towards governance, institutions, rule of law and the like. Whether this represents a larger shift in global thinking remains to be seen, as many discussions around global economic social and political relations are still stuck in the old paradigm (i.e. austerity, organized crime, migration)... and these have as much impact (or more) on development than the development sector itself. While NIE does acknowledge the importance of informal institutions, the greater focus on formal/legal ones does a disservice to the discipline and undermines its utility for practitioners.

The author also points out something that anybody coming into economics from another academic area realizes really quick: economic tools are very, very abstract and inadequate to deal with actual social dynamics. While there is more interest in behavioral economics and other attempts to bridge that gap, there is always a nagging feeling that economists are reinventing the wheel and catching up with discussions that other subject had, at least, a couple of decades ago.

Overall the paper is a good primer on where New Institutional Economics is and the debate on what an institution is.

Militias as sociopolitical movements: Lessons from Iraq's armed Shia groups - Paper

2014-11-18T07:14:00.001+03:00

Thurber's "Militias as sociopolitical movements: Lessons from Iraq's armed Shia groups" highlights the issue of labels and trying to fit everything into an specific world view does not actually help in understanding conflict dynamics, or state formation/legitimacy for that matter. This paper can be read together with the previously commented "Organization and Community: Determinants of Insurgent Military Effectiveness"

Abstract

"The Shia militia has emerged as one of the most powerful and important actors in the Middle East security environment. Despite this trend, they remain poorly understood by scholars and policymakers alike. This article seeks to expand our understanding of the militia as a type of non-state armed group through an examination of Shia militia movements in Iraq between 2003 and 2009. More than simply warlords, paramilitaries, or foreign proxies, Shia militias in Iraq enjoyed substantial popular legitimacy, pursued a broad social and political agenda, and participated actively in the formal institutions of the state. Understanding the triangular relationship between the militia, the state, and the population is essential in explaining the rise and fall of the Shia militias during the US occupation as well as in developing strategies to deal with their most recent resurgence"

By labeling militias as warlords, paramilitaries or foreign proxies (or terrorist, if it fits the political agenda), we are simplifying the role that some of them play. While historically some militias have been part of statebuilding process, the view nowadays is that they are rather an indicator of state's weakness and lack of full sovereignty. As the author points out, militias with a strong sociopolitical foundation do have a representational/political role to play on behalf their communities. Instead of dealing with them just with military means, a wider approach that takes into account the community aspirations is much needed. Hence, sociopolitical militias life cycle is part of an ebb and flow of relations between the state and the community: when the state addresses community needs, then the militia weakens. However, if the state is weak, the militia gains importance as provider of security and social services. The paradox comes when the militia replaces the state, as they tend to over-reach (abuse of violence, fundamentalist policies, lack of adequate checks and balances) and increase the discontent among the community (breaking the internal coalition of support), therefore bringing another militia or the state back into play. From this perspective, militia's strengths and structure as an opposition group does not prepare it for a governing role.

I find interesting that the author's focus on the Shia seems to sideline the fact that a similar dynamics of Sunni sociopolitical militias might be growing in response to the Shia preponderance within the government and the role of Shia militias.

The paper also gives an interesting primer on Iraq Shia dynamics. I thought there were only two Sadrs, but if fact there are three.

Fragile States: A Donor-serving Concept? Issues with Interpretations of Fragile Statehood in Afghanistan - Paper

2014-11-15T09:43:00.000+03:00

The term 'fragile state' has become common currency in development circles since 9/11, especially as seen through a security lens as shown by Barakat and Larson's "Fragile States: A Donor-serving Concept? Issues with Interpretations of Fragile Statehood in Afghanistan".

Abstract

"Current conceptions and models of fragile statehood in conflict-affected contexts can serve the purposes of international donor governments over and above reconstruction and statebuilding. First, despite remaining ill-defined, the fragile state concept is widely utilized by donors to oversimplify analysis of complex political environments, such as that of Afghanistan, leading to inadequate bureaucratic responses. Second, current models of fragile statehood are unable to capture contextual or temporal dynamics, and invariably omit the contribution of international intervention to entrenching fragility. This is particularly the case in Afghanistan where the effects of international militarized stabilization responses have not been systematically included in fragility assessments, leading to increased insecurity. This article calls for a more nuanced approach to fragility and greater acknowledgement of the role donor governments can play in its entrenchment."

The underlying assumption of fragility in which weak central government = terrorism/regional contagion has meant that much of the focus has been centered on security responses. Moreover, the definition of fragility also assumes a definition of state (termed Weberian by the authors) that does not necessarily match the affected populations view. Fragility as a concept is very anchored in a nation-state system, in which it is both undermined (by acknowledging that the central government is not fully sovereign/legitimate) and reinforced (by making statebuilding around the central government).

Is the concept actually useful for anything? the label helps donors frame priorities by highlighting the sense of impending doom, crisis-prone, destabilizing the status quo and bringing a yet new haven for terrorist and criminals. However, from the 'recipient' point of view, this label is barely helpful (aside from bringing extra donor funds) as it tends to focus more on the container (the visible role of the state) rather than the content (the underlying political economy and cultural/social dynamics that may be the source of that weakness)

The authors, by using the case of Afghanistan, also put forth the claim that international assistance, by the way the understand and address this concept, are actually promoting fragility rather than diminishing. It is interesting how both donor and development community are promoting bottom-up (Community Driven Recovery) and top-down (Statebuilding) in parallel with a vague hope that they will meet at some point in the middle rather than acknowledging that fragile states are in that situation because of an ongoing multilevel societal crisis that may not fit the ready-made nation state model.

Interesting links

2014-11-15T08:10:00.001+03:00

Recent interesting articles:

- Mathematically defining Hipsters?

- How can Scandinavian countries tax so much?

- Distance to the equator and economic development, explanation for the reversal of fortunes?

- Compensating civilians during war, individual victims under International Law?

Another Humanitarian Crisis in Somalia?: Learning from the 2011 famine - Interim Paper

2014-11-13T06:40:00.000+03:00

An interesting paper looking at the 2011 Somalia crisis, Maxwell and Majid's "Another Humanitarian Crisis in Somalia?: Learning from the 2011 famine" goes straight to the point. An easy read that serves also as a primer for humanitarian dynamics in the country.

Intro:
"In July 2014, humanitarian agencies and the government of Somalia warned of a new severe drought in Somalia, only three years after more than 250,000 people died in a deadly famine. In a report for Tufts University and the Rift Valley Institute, Daniel Maxwell and Nisar Majid examine the lessons arising from the international response to the famine in 2011 on how to prevent and mitigate a similar crisis."

Key points from the paper:
- Early Warning was there despite some recent complains on the quality/reliability of the data. The failure points more to the humanitarian framework, that has a bias towards response rather than prevention/mitigation. How much is forecasting really integrated into planning and funding still remains to be seen, and as we have seen in previous papers, take up of forecasting is different by sector (El Nino oscillations) even if the potential positive preventive effects are quite high (Violence in Liberia). In some cases we do enter in a Chronic Early Warning that lead to an institutionalization of preparedness, mitigation and response (a humanitarian example is Haiti and the Hurricane Season), but I don't believe Somalia is there yet.
- Risk Management, Access... and of course Al-Shabaab. While Al-Shabaab's behavior (internal taxes and blocking of external aid) did exacerbate the crisis, the risk management mechanisms of international actors also limited the response. Reliance on local organizations of variable quality and allegiance coupled with limited direct implementation/monitoring capacity, has meant that many of the interventions were/are shaped by risk management rather that needs and effectiveness.
- Us, us , us. Most of the discussions around the 2011 crisis are around the international response; yet, in a time were resilience is the buzzword of the day, very little attention is given to the Somali response and how it can be further strengthened. The paper also points out the reinforcement of marginalization for certain clans through the crisis (that further feeds into Somalia's instability by clan competition and Al-Shabaab comparative appeal).

Following Amartya Sen's thinking, we can say that famine is not a food failure but rather a political failure (in the wider sense of governance and allocation of resources).

Just How Important Are ‘Hearts and Minds’ Anyway? Counterinsurgency Goes to the Polls - Paper

2014-11-12T17:13:00.000+03:00

'Hearts and Minds' is a much used term in counterinsurgency discussions, originating from a now famous sentence by Gerald Templar on the Malayan Emergency. The battle for local public opinion becoming as important, or more, as military operations. Cohen puts that assumption to the test in "Just How Important Are ‘Hearts and Minds’ Anyway? Counterinsurgency Goes to the Polls" by analyzing local perceptions during three conflicts: Vietnam, Iraq and Afghanistan.

Abstract

"Despite all the talk of ‘hearts and minds’ being the key to counterinsurgency, local public opinion is rarely studied and when it is, it often yields surprising conclusions. Through analyzing polling data from Vietnam, Iraq and Afghanistan, this article shows that public opinion is less malleable, more of an effect rather than a cause of tactical success, and a poor predictor of strategic victory. As a result, modern counterinsurgency doctrine’s focus on winning popular support may need to be rethought"

What the paper shows is that changes of perception actually follow and are not a precursor to effective military operations, even more, in some cases those changes in public opinion do lag behind in time even if important improvements in security have taken place (by objective indicators). While it has always been difficult to measure both psychological warfare and 'hearts and minds' approaches in times of conflict, the author's analysis does indicate the need, at least, of successful military operations/outcomes in order to turn public opinion. However, I do find the interpretation of 'hearts and minds' somewhat restrictive as it goes beyond the media/community engagement part of it and also includes how military operations are conducted (specially in relation to the community). Also the criticism against the concept of 'uncommitted third' (the section of the population sitting on the fence between two contenders) feels more of nitpicking (should it be the 'uncommitted fourth' or 'fifth'?) rather than actually making the case against it. The fact (even as per the polling analyzed by the author) that there is a section of the population that over time changes alignments and allegiances (whether previously committed or not) has been shown in each human conflict. The 'uncommitted third' concept at the end of the day is a simplification of the acceptance that there is a dynamic environment and competition for the space.

'Hearts and Minds' strategist may have fallen into their own rhetoric by allowing their perceptions shape reality. Maybe they have become a case of successful 'hearts and minds', where the behavior is changed by the mind rather than force. In my opinion, this doesn't undermine 'hearts and minds' as a concept but rather show the difficulty of a full understanding and implementation. Finding the balance between the coercing and convincing is not easy, and, as the study shows, maybe there has to be some coercing before the convincing works.

Inheritance Law Reform, Empowerment, and Human Capital Accumulation: Second-Generation Effects from India - Working Paper

2014-11-11T11:03:00.005+03:00

Policy effects across generations are sometimes difficult to measure, however "Inheritance Law Reform, Empowerment, and Human Capital Accumulation: Second-Generation Effects from India" by Deininger et al. does offer an interesting example.

Abstract:

"This paper uses evidence from three Indian states, one of which amended inheritance legislation in 1994, to assess first- and second-generation effects of inheritance reform using a triple-difference strategy. Second-generation effects on education, time use, and health are larger and more significant than first-generation effects even controlling for mothers' endowments. Improved access to bank accounts and sanitation as well as lower fertility in the parent generation suggest that inheritance reform empowered females in a sustainable way, a notion supported by significantly higher female survival rates."

Inheritance Law is inter-generational by definition (unless it has a strong bias towards widows, but then it becomes a question of patience). India, with its different speed of adoption of the law, allows for a interesting natural experiment, that the authors take a step further by measuring impact on second generation. The study finds large effects on multiple variables, probably due to an increased intra-household bargaining power by women (first generation) that benefit their offspring (second generation). While there are potential indicators for sexual selection (the cost of a female born increases), the survival rates and welfare effects on daughters are noticeable.

The fact that second generation effects are not only measurable but also large, should lead to a rethink on how to time and expect results from such policies. This further adds to the female empowerment literature, the potential for sustained change through policy reform and its welfare related effects.

Naw Bahar District 2010–11: A case study of counterinsurgency Conducted by Naval Special Warfare in Afghanistan - Article

2014-11-10T08:55:00.000+03:00

Us, development types, rarely look at the military's experience in stabilization and counterinsurgency (COIN). It is unfortunate because many of the dynamics and constrains they face are not that dissimilar from our work in Community Driven Recovery and local peacebuilding. Briggs' article "Naw Bahar District 2010–11: A case study of counterinsurgency Conducted by Naval Special Warfare in Afghanistan" is a case in point where cross-learning may be of use.

Abstract

"This article provides a critical analysis of counterinsurgency in Afghanistan at the tactical level. The efforts of several Naval Special Warfare detachments deployed to Naw Bahar district in Zabul Province, Afghanistan are examined in detail to identify key successes and failures in planning and execution. It defines the operating environment in which the detachments worked and identifies the goals and outcomes of the first and second phases of the counterinsurgency effort. The article concludes by placing the tactical effort in the context of the overall strategy in Afghanistan and suggests that time is the limiting factor to success"

Key take-away notes.

Know your context: Tribal governance, relations with both insurgents and central government, and conflicts within the district are key to understand what is going on.

Population? which population?: COIN claims that is population centric, and that is fair enough. However, as the article points out, the center of gravity regarding insurgency in the district was actually not at the district center. We tend to focus on visible sources of 'power' like concentration of houses, markets or official buildings around which we build our activities... and while this locations may serve multiple purposes for the community, it may not be as relevant for the issue at hand (be that counterinsurgency or building a water well). Also depending on how we define population (and their representatives) we run the risk of mis-identifying or ignoring key stakeholders.

Local Economy: While local sourcing seems like a great idea, in practice it can lead to inflation and higher costs for local population (let alone dependence). How external resources are injected into a local economy is very important.

Governance: There are already governance mechanisms in place, however many of the linkages are broken and are a source of mistrust and conflict. Reestablishing those links, specially around dispute/grievance resolution, dialogue and information flow is paramount.

While this article per se is not telling us much new (if I were to venture a guess, the major outcome of this is bonus points for the author for publishing), even from the military point of view (how relevant is Naval Special Warfare to the article, I still don't know); it also highlights common issues that we encounter in conflict or post-conflict areas. This requires us to design and implement with very context-based lens (that allegedly we already do!!).

The article also shows that the military, like the development business, keeps reinventing the wheel time after time... but that is whole different debate regarding organizational learning, mission setting and leadership.

Getting teachers back to the classroom. A systematic review on what works to improve teacher attendance in developing countries - Paper

2014-11-09T07:44:00.001+03:00

Education remains one of key pillars of development, and indicators like literacy rate and school attendance are regularly used as a measure. "Getting teachers back to the classroom. A systematic review on what works to improve teacher attendance in developing countries" by Guerrero et al, looks more specifically at one component of education: teacher attendance.

Abstract

"This article reports on a systematic review of research on the effectiveness of interventions aimed at increasing teacher attendance in developing countries. After a comprehensive search process, nine studies met the inclusion criteria. Pooled effects sizes of included studies were estimated (with the exception of three studies that had unavailable information to calculate their effect sizes). Results show that direct interventions coupling monitoring systems with incentives and indirect interventions involving the community and parents in students’ education had statistically significant effects on teacher attendance, suggesting that close monitoring and attractive incentives are mechanisms of high potential to reduce teacher absenteeism".

To note that this paper looks at a very limited set of studies (9), as it only reviews rigorous impact evaluations within their parameters. The findings themselves are not groundbreaking and fairly intuitive: both direct and indirect interventions have a positive effect. Those that already following educational issues will not be surprised, but it may be useful as a quick overview on teacher attendance for newcomers.

Probably the most interesting fact is that they could not link teacher attendance and student achievement (although the study was not specifically looking at that). While school may have other social benefits (i.e. socialization, keeping youth contained), the main stated objective is educational outcome. However, increased teacher attendance does not necessarily lead to improved educational outcomes. Probably the leading advocate these days on this issue is Lant Pritchett, but also others have highlighted time and again the disconnect between educational inputs (focus on teachers, buildings, materials) and actual educational outcomes.

How Islamic is al-Qaeda? The politics of Pan-Islam and the challenge of modernisation - Paper

2014-11-08T19:30:00.000+03:00

Although both ISIL and Boko Haram have recently taken the spotlight, the Al Qaeda franchise remains a recognizable actor. Hellmich's paper "How Islamic is al-Qaeda? The politics of Pan-Islam and the challenge of modernisation" looks into Ben Laden's ideology and how it fits into the wider contemporary Islamic discourse.

Abstract

"This article investigates the contested ideology of al-Qaeda through an analysis of Osama bin Ladin’s writings and public statements issued between 1994 and 2011, set in relation to the development of Islamic thought and changing socio-political realities in the late nineteenth and twentieth centuries. Challenging popular conceptions of Wahhabism and the “Salafi jihad”, it reveals an idealistic, Pan-Islamic sentiment at the core of his messages that is not based on the main schools of Islamic theology, but is the result of a crisis of meaning of Islam in the modern world. Both before and after the death of al-Qaeda’s iconic leader, the continuing process of religious, political and intellectual fragmentation of the Muslim world has led to bin Ladin’s vision for unity being replaced by local factions and individuals pursuing their own agendas in the name of al-Qaeda and Islam."

The demise of the Ottoman Empire (and the sense of unity it carried), secularism/modernization and the expansion of literacy have opened up the Muslim world to an internal crisis/revolution. As individual Muslims increasingly interpret Islam for themselves, without making reference to the traditional schools of Sunni law (Hanafi, Maliki, Shafii or Hanbali) a divergence within develops. Pan-Islamism, with its core message of Muslim solidarity and the unity of umma, is the message that Ben Laden would send over the world. The appeal he represented was not a radical political/religious ideology (the actual political structure of the future is quite vague) but a social message of solidarity, personal responsibility and victimhood that many Muslims could relate to.

Even before Ben Laden's death, we could see the fragmentation of Al Qaeda along more locally driven agendas under the banner of global action.The fact that most of the victims of Al Qaeda are actually Muslims, the increase fighting along sectarian lines and the more limited objectives of affiliates and franchises show the drift away from Pan-Islamism. Although the rhetoric remains important in order to appeal for funds, foreign fighters and support from the Muslim community, what remains, to paraphrase the known sentence about politics, is that 'all insurgencies are local'. While Al Qaeda's position in the global ranking has diminished, some of the root causes for its appeal are still current and part of the ongoing debate within the Muslim world.

Drivers of Entrepreneurship and Post-Entry Performance of Newborn Firms in Developing Countries - Working Paper

2014-11-07T06:21:00.000+03:00

Quatraro and Vivarelli offer us a review of the latest research in "Drivers of Entrepreneurship and Post-Entry Performance of Newborn Firms in Developing Countries", that I believe bring some interesting questions around livelihoods and local economic development and also tags along nicely to my previous post on "Non-Farm Enterprises"

Abstract:

"The aim of this paper is to provide an updated survey of the "state of the art" in entrepreneurial studies with a particular focus on developing countries (DCs). In particular, the concept of "entrepreneurship" is critically discussed, followed by a discussion of the institutional, macroeconomic, and microeconomic conditions that affect the entry of new firms and the post-entry performance of newborn firms. The reviewed literature bears some policy implications for the support of the creation new firms, such as the targeting of policy measures to prospective entrepreneurs who possess high education levels, long previous job experience, and innovative skills. Specifically, for DCs, tailored subsidies and support should be coupled with framework and infrastructural policies that are able to improve the business environment such that new ventures can start and grow."

Findings of relevance for programming are:
- Minimum Efficient Scale (Size matters). Risk of failure dramatically drops once it gets to its MES. Programming could be built around benchmarks like MES that allow for reallocation of resources towards more at risk business, instead of a fixed/same across the board timeline. This would also imply that each business may have a different growth objective/requirement (and not just slightly above break even) depending on the sector.
- Previous experience in the sector. While this may seem an obvious, sometimes selection criteria for interventions are based on needs rather than chances of success. Programme design has to be clear on what is aiming for (temporary relief or longer term livelihood) and act accordingly.
- Financial. Credit constrains may have been overplayed as an obstacle to enterprise survival and maybe the focus should be more on savings rather than borrowing. Microfinance user may actually using it in that manner, as some studies have shown negative returns (they may actually be losing money) but positive savings (they save money in comparison with the previous situation). There is an increasing shift towards savings but the rethoric still remains around credit constrains.
- Education is a mixed bag. Higher level education reduces the chances of starting up, probably because the first preference is salaried labour (and seeking to avoid defensive entrepreneurship) that education gives access to. On the other hand, education is a high predictor of business growth and survival. It is interesting to note that there is a "threshold effect" depending on context/location, were there is a minimum level of education that leads to faster growth. Being able to identify that level for the target area may help in yielding better results. Then again we encounter the issue of selection criteria and programming priorities.
- Unemployment is negatively correlated with enterprise survival. Previous unemployment increases the risk of failure and tends to be linked to lower economic outcomes and job creation. Much programming is built around entrepreneurship for unemployed youth, wouldn't it be better to have a two staged/tiered system where unemployed would initially be waged labour (and gaining sector experience at the same time) before start-up is considered?
- Minorities. I am troubled with their recommendation of specific support to entrepreneurial minorities. While this may make sense from an economic point of view (building on an existing strength), the political and social risks of such actions can be large. Business minorities have been violently targeted even in recent times, and a policy that singles them out in a sector they may already have a comparative advantage will only fuel negative perceptions.

Interesting links

2014-11-06T05:03:00.000+03:00

Latest round of interesting articles:

- Separatism meets Charter Cities, in Sardinia via Switzerland

- Missionary printing presses in Africa and contemporary newspaper readership

- Privilege and higher interest rates in the Ottoman Empire