Who's Who in Development Economics: Alice Amsden

I'm starting this series of Who's Who in Development Economics because it's always good to have heard about the important names in the field we're interested in.

Dr. Amsden got her PhD at the London School of Economics and was awarded in 2002 the Leontief Prize, conjointly with Dany Rodrik. She's a specialist on East Asian late-developers and author of the influential book The Rise of "The Rest": Challenges to the West from Late-Industrializing Economies (2003). In it she gave a simple but meaningful definition of economic development by saying that it's "a process of moving from a set of assets based on primary products, exploited by unskilled labor, to a set of assets based on knowledge, exploited by skilled labor" (p. 2).

In that book one can also learn about the outstanding performance of the Brazilian Development Bank, BNDES, as an example that not all government agencies in that country fall under the Neoliberal view of rent-seeking and corruption.

Her latest book was published in 2007 and it's called Escape from Empire: The Developing World's Journey through Heaven and Hell

Instituciones y desarrollo

En el estudio del desarrollo económico también encontramos una versión del debate ¿quién fue primero, la gallina o el huevo? Muchos economistas entran en combates encarnizados sosteniendo que los países en desarrollo nunca podrán desarrollarse si no cuentan con las instituciones adecuadas, mientras que en el otro bando se dice que eso del cambio institucional es un proceso largo y que no necesariamente determina el desarrollo de los países.

Me imagino que por motivo del reciente golpe de estado ocurrido en Honduras muchos periódicos en línea latinoamericanos han publicado una lista de los principales golpes de estado en los últimos diez años. Un breve análisis a la lista arroja los siguientes resultados: el 78,6% de los golpes de estado ocurrieron en los países de bajo ingreso, la clasificación que da el Banco Mundial a los países más pobres del planeta; 14,3% ocurrieron en países de ingreso medio-bajo, 7,1% en países de ingreso medio-alto y ninguno en países de alto ingreso.

Como la interpretación de los hechos depende del cristal con el que se miren, los institucionalistas argumentarían que estos resultados respaldan la hipótesis de que mientras más inestabilidad politíca exista en un país, más pobre será. Por otro lado, los que se oponen a la explicación institucional dirán al contrario que es precisamente la mayor pobreza presente en los países menos desarrollados la que propicia una mayor frecuencia de golpes de estado en esos países.

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Can the Resource Curse Hypothesis Explain Regional Disparities?

Apparently it does, at least that's Ms. Li's explanation for regional disparities within China. In a nutshell she argues that the reason why the western regions of China are poorer is because they have been resource-reliant economies.

Although this fact might explain to certain degree why these regions are poorer, perhaps one should not forget that the richest regions of the east, that are not so well natural-resource endowed, have a much better location for when it comes to international trade, i.e. they are closer to the coast.

If we consider that we are living in the "ocean age", according to Liang Qichao's historical ages, in which trade is mainly maritime, maybe this locational fact is as or even more important for determining regional development disparities within a country than resource endowments.

"In 10 years time Ghana will be a very prosperous nation"

According to Ghana's finance minister, Mr. Duffuor...

This is type of enthuiasm authorities in that country give to the recent discovery of offshore oil reserves. This type of optimism is further sustained when the minister argues:

"...We've seen what others that have found oil have gone through and we've looked at their mistakes..." (BBC, 3 June 2009)

One could argue that these type of bold arguments is what fuels the general public hope for a radical and sudden quality of life increase that will precisely play against any type of policy preventing Ghana to be another example of the resource curse. Better argue that in 2020 Ghana's development level will reach that of Nigeria or Côte d'Ivoire's, countries that are richer now than Ghana in terms of GDP per capita, so people will actually know what to wait of this oil discovery in the short run, i.e. almost nothing. That was the case of Norway when it discovered its oil fields in the 1960s. The main challenge the country faces now, if it really wants to be prosperous in the medium run, is not to loose its non oil export sectors. If oil exports increase so fast that they crowd out the rest of the exporting sectors, the long term growth perspectives in Ghana will be seriously endangered.

Ghanaian Policymakers Beware of the Dutch Disease!

An excellent account, done by Nana Adjoa Hackman, on how to prevent Dutch Disease problems that can arise from the recent discovery of an offshore oil reserve of more than 3bn barrels in Ghana is available here.

Probably the most important reminder of the article is that the "...government would have to come up with proactive policies to promote industrialization and diversification to ensure that the local economy can obtain maximum benefit through backward and forward linkages with the new industry..."

Do you think that Ghana will be up to the challenge and join the list of resource curse escapers? My guess is that if Ms. Hackman's pledge is followed by Ghanaian policymakers, then the country has a chance.

Financial repression and furniture

Many people take for granted that when they are going to the bank to open a savings account, of whatsoever type, the interest rate that its investment will yield won’t be inferior to the rate of inflation. This would at least assure the savings’ purchasing power over time. Another thing that many take for granted is the fact that from time to time some neighbor can leave furniture or a house appliance in the street -because she moved and couldn’t take it with her, couldn’t sell it or has bought something newer and no longer it needs it- hoping that other person that could need it will take it.

Depending where one lives these facts can sound not so familiar. In many countries, in where some form of financial repression exists, savings accounts generate interests almost always below the rate of inflation. It is then when the options of saving for the poor and middle segments of society tend to depart from what financial institutions offer. This is so common that many persons live their entire life without a savings account, although they have saved.

I proceed to present some modalities of saving in urban zones. In countries with this problem there’s usually an informal dollarization, that’s why the first option for saving tends to be the purchase of the North American currency to keep it at home, commonly underneath the mattress. When one has saved enough, one can embark in the following alternative for saving, i.e. buying house appliances or furniture. Chairs, tables, refrigerators, music systems, television sets and other articles in good state will almost never be found laying in the street so that some other person can take them for free because these goods are means for saving and will be sold to the maximum possible price when liquidity is needed. The following stages for saving are buying cars (without concerning the antiquity or state) and finally real estate (even the humblest hut can be bought for this purpose). Only the well off segments of society will be able to escape from the financial repression saving in foreign accounts.

Technorati Tags: Dollarization, Financial+Repression, Inflation, Interest+Rates, Less+Developed+Countries, Liquidity, Savings

Represión financiera y muebles

Muchas personas dan por sentado que cuando van al banco a abrir una cuenta de ahorro, en cualquiera de sus versiones, la tasa de interés que debe reportar su inversión no debería ser inferior a la tasa de inflación, para al menos asegurar el poder adquisitivo de los ahorros en el tiempo. Otra cosa que muchos dan por sentado es el hecho de que de vez en cuando algún vecino deje algún mueble o electrodoméstico en la calle, porque se mudó y no se lo pudo llevar o vender o se ha comprado algo más nuevo y ya no lo necesita, a la espera de que otra persona que lo necesite se lo lleve a su casa.

Dependiendo de dónde se viva estos hechos puede que no resulten tan familiares. En muchos países en desarrollo en donde existe alguna forma de represión financiera las cuentas de ahorro generan intereses casi siempre por debajo de la tasa de inflación. Es entonces cuando las opciones de ahorro para los estratos pobres y medios de la sociedad tienden a distanciarse de las instituciones financieras. Es una práctica tan extendida que mucha gente pasa una vida entera sin jamás haber tenido una cuenta de ahorro, a pesar de que si haya ahorrado.

A continuación una enumeración, no exhaustiva, de modalidades de ahorro en zonas urbanas. En países con este problema suele existir una dolarización informal por lo que la primera opción de ahorro suele ser la compra de la moneda norteamericana para tenerla en casa, popularmente debajo del colchón. Cuando ya se tiene suficiente dinero acumulado se puede pasar a la siguiente alternativa de ahorro, que son los muebles o electrodomésticos. Sillas, mesas, neveras, equipos de sonido, televisores y demás artículos en buen estado casi nunca serán dejados en la calle para que alguna otra persona los tome gratis porque estos bienes son medios de ahorro y serán vendidos al precio máximo posible a la hora de necesitar liquidez. Las siguientes categorías de ahorro son los carros (sin importar la antigüedad o estado) y por último los bienes raíces (hasta el rancho o la choza más humilde cumple esta función). Tan sólo los estratos pudientes de la sociedad podrán escapar la represión financiera ahorrando en cuentas en el exterior.

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