Polar Land Reform?

An interesting issue about land reform that we didn't discuss in class is the difference between communal and individual property rights.

In recent decades, most instances of land reform and land titling projects in the developing world have been driven by the belief that communal property rights do not provide the right incentive structure for the efficient use of land. This belief was expressed by Aristotle over 2,000 years ago:

What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others. (Aristotle)

And yet, recent work in economics and political science by Elinor Ostrom has challenged this account. Her work shows that neither form of property rights can by itself secure the best outcomes in all situations.

It is often thought that concerns about communal vs individual property rights are a problem only for the developing world, as communal property rights are a sign of underdeveloped markets and institutions.

Think again

Capital controls: is the IMF changing its tune?

An article in this week's Economist Magazine discusses the evolving view of capital controls within the IMF. This case is also, I think, an interesting example of how policy prescriptions at organizations like the IMF and World Bank can and often do evolve (albeit with a lag) to reflect information from new data and observations as well as theoretical innovations from academic research.

Rogue donors, Development and Growth

Keeping with the China theme, this was in my inbox today requesting a comment. What are your thoughts?

Here are some additional thoughts on this issue. Some are strongly against rogue donors in general or only against those who blatantly violate human rights, even if indirectly, while others offer a more nuanced view of the conditions under which Chinese aid to Africa is taking place. It is interesting to see in this last article that the conditions imposed by China when providing aid to Zimbabwe - securing preferential access to infrastructure projects for Chinese companies and requiring the purchase of Chinese fertilizer- sound awfully familiar....

I came across this article on China on the CNN money site and found it remarkable for containing, in my opinion, the highest density (and maybe the highest absolute number) of errors of economics analysis in any article written by (presumably) specialist economic reporters that I have ever seen!! There is hardly anything at all here I would agree with!! For those of you are interested why, I will post my lecture notes on transition economies on the Moodle page (macro section), and after reading both please feel free to comment. What do you think; could China escape the effects of an asset price implosion by controlling prices?

Time inconsistent promises, fiscal illusions, high discount rates ... its Europe!

This story has been all over the news the past few days and illustrates that the principles of limited liability (intrinsic inability to enforce a contract), time inconsistency, and high discount rates are problems that apply to rich as well as as poor countries. What was/were the contract (s) involved here? Why can't they be enforced? Is the inability to enforce the contract related to the issue of ex ante threats that were time inconsistent in the first place? Why did Greece cook the books? If Germany bails them out, will Greece see the light and mend its ways? Why does this story sound so familiar?!

The Missing Middle

It seemed like a lot of you were extremely interested in the missing middle problem regarding the distribution of firms in developing countries (or could it just be a "problem set effect"? hmm) Here are some thoughts on the issue and examples of organizations that are already trying to address this problem...

But by far the biggest surprise I had today was this! The problem set was designed to reflect a hypothetical situation and the names of the organizations were randomly picked...we were thrilled to find out that this was a more real and pressing issue than even we thought!

Enjoy!

Mis-Targeting Aid in the War on AIDS...

A recent article in the Wall Street Journal reports a gloomy view on the war on AIDS. War on AIDS

Several of the arguments used seem straightforward in hindsight: there was way too much emphasis on treatment and very little on prevention. With scarce resources (this includes "celebrity capital" to champion a cause), even if the expansion of treatment manages to slow down growth in prevalence rates, it is not surprising that many poor countries are incapable of providing treatment to all those infected. As treatment expansion rates are lower than the rates of new infections, most countries are now in a difficult position of having to ration life-saving treatments.

Earlier in the term we discussed the political economy of global health policies and how this can distort the allocation of resources both between diseases (eg: malaria, AIDS, diarrhea) and between preventive and curative approaches.

Why has it been so difficult to allocate resources to preventive care in HIV-AIDS in order to address the real source of the problem and contain it?

Can Microcredit Make Poverty History?

How much do we really know about how microcredit works, and why is this important? While there is a fair amount of empirical evidence on how the poor are credit constrained, when we design a microcredit program, should we think about it as a tool for credit and business productivity alone, or could it be a tool for empowerment of certain groups, for increasing welfare through investments in health and education, or to spur innovation and growth? Do these effects reinforce each other, or do they cancel each other out?

Understanding the mechanisms through which microcredit can impact the poor, and who it can help the most, is critical for the design of more targeted and more cost-effective policy.

As an example, here is some dissent on the promise of microfinance driven by the lack of rigorous empirical evidence on these issues. Dissent may come in the form of challenging whether the program reaches its goals, whether it reaches the population it should

or in the form of challenging the accountability, cost-effectiveness and transparency of the industry that delivers these programs. On this last point, here is a recent controversy on a microcredit scheme that you may be familiar with, Kiva, and on whether it mis-represents the way the financial contributions they receive reach the poor.

A great contribution to the debate suggested by your colleague Antoine

The Davos Health Effect

This is perhaps one of the most important pledges coming out of Davos this year. http://ibnlive.in.com/news/bill-gates-promises-10-billion-for-vaccines/109406-17.html

This poses an interesting question about markets and how they work to develop public goods like vaccines. For years, pharmaceuticals have had the capacity to develop vaccines that would have prevented millions of deaths in the developing world. So why hasn't this happened?

Pharmaceuticals had little incentive to develop these vaccines as they would be serving a low-income segment of the market that would not be able to afford high-priced preventive care.

This is one area in which the work of economists has been highly influential in policy circles!

Michael Kremer from Harvard University has advocated for years that we need to intervene in this market to align the incentives of pharmaceuticals (profit), with those of policy-makers and donors (promoting well-being in the developing world). Michael has suggested that donors pledge to guarantee the demand for vaccines aimed at "developing country diseases", to create incentives for the pharmaceuticals to develop them. You can check out his work here:

http://www.economics.harvard.edu/faculty/kremer/files/AMCHealthEconomicsFinal.pdf

http://www.economics.harvard.edu/faculty/kremer/files/innovationsFinal.pdf

http://www.bepress.com/ev/vol3/iss3/art1/