The Elusive Quest for Growth

In his 2002 published book The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, William Easterly (Senior Fellow at the Center for Global Development and the Institute for International Economics) covers some history of economists’ efforts to measure growth.  I have found this history of development economics interesting and enriching.  So, I thought I would begin some posts on this book by outlining some of the economic growth models which Easterly covers in his book that have driven policy decisions in the developing world throughout the Twentieth Century.

1.  Harrod-Domar Model 1946 – 2000:  Easterly argues that this growth model has been the most-widely applied model in economic history.  In this model, it is assumed that production capacity is proportionate to stock of machinery and thus a country’s Gross Domestic Product (GDP) growth is proportionate to the share of investment spending in GDP.  Consequences of this theory have been been rapid capital accumulation by poor countries and 1 trillion dollars of foreign aid from Western Countries between 1950 and 1995 to fill the “financing gap” (the gap between a poor country’s GDP and the required investment to raise GDP).

2. Rostow’s Stages of Growth (1960):  This model assumes that all countries need to go through 5 stages in the process of economic development:  traditional society, preconditions for take-off, take-off into self-sustained growth, drive to maturity, and age of mass consumption.

3. Exogenous Growth Model (pioneered by Robert Solow in 1957): Solow argued that investment in machinery was enough, but rather, that technological change was necessary for long-run growth.   Largely due to this model, efforts have been made in the last half-century to increase education, human capital, and savings in order to manufacture growth in developing countries.

4. Endogenous Growth Model (Paul Romer): this model gives an explanation for why poor countries are getting poorer while rich countries get richer (something that seems inconsistant with Solow’s growth model which assumes that poor countries should have higher returns to their scarcer capital) by attributing growth to spillovers and positive externalities that result from knowlege and technological innovations in developed countries.  Easterly seems to be somewhat sympathetic with this model.

Easterly concludes by saying, “At a minimum, if we learn nothing else from the quest for growth, we economists who work on poor countries should leave aside some of our past arrogance.  The problem of making poor countries rich was much more difficult than we thought.  It is much easier to describe the problems facing poor countries than it is to come up with work-able solutions to their poverty.  The recommendations I have just given are thmeselves no panacea – they will take patient incremental work and further money to implement.  Nothing would be sadder than to give up the quest altogether” (291).

I highly recommend this book to anyone interested in development economics!

Repatriation – A Durable Solution?

Voluntary repatriation is one of the UNHCR’s three ‘durable solutions’ for refugees (the other two are local integration and resettlement).  It is important to understand, however, why many refugees opt not to repatriate. In Karen Jacobsen’s analysis on reasons why refugees do not return home, she mentions among many reasons, the opportunity cost of leaving the safety, services, and economic opportunity of camps.  Other reasons why refugees choose to stay in protracted accommodation include: violence in their home country, economic insecurity in their home country caused by the destruction of infrastructure and social networks, and the possibility of resettlement in a third, prosperous country

Jacobsen, Karen (2005). The Economic Life of Refugees. Bloomfield, CT: Kumarian Press.

Characteristics of Protracted Refugee Accommodation

Source: Time magazine Pictures of the Week

Dr. Jeff Crisp, who has held the positions public information officer, senior evaluation officer, and senior policy research officer for the UNHCR, further informs the nature of prolonged refugee settlements as they are particularly found in Africa. He explains five common features of such situations: First, protracted refugee accommodations found in Africa are commonly found in poor, underdeveloped areas along the border of asylum countries. Second, they are often largely populated by those with special needs such as children and the elderly. Third, such situations are commonly also areas of great demographic growth due to increases in both the refugee population as well as “host-country nationals” who are attracted to the employment and economic opportunities available in areas of refugee accommodation. A fourth characteristic is that African refugee camps are often neglected. And a fifth common feature is refugees’ inabilities to attain basic human rights.

In the case of most settlements around the Great Lakes region, and certainly in the case of the Kivu region of the DRC, another common characteristic is the presence and activity of rebel forces which contest the state’s and relief organizations’ attempts to utilize resources refugees bring to a host country.

Crisp, Jeff. (2005). No Solutions in Sight: The Problem of Protracted Refugee Situations in Africa. From Displacement Risks in Africa. Eds. Ohta and Gebre. Kyoto University Press. Japan.

Jacobsen, K. (2002, December). Can Refugees Benefit the State? Refugee Resources and African Statebuilding. Journal of Modern African Studies, 40(4), 577. Retrieved November 16, 2008, from Academic Search Complete database.

Refugees and IDPs

In light of the violent outbreaks in the Democratic Republic of Congo, and because I am writing my SIP (Senior Integration Project) on the economic asset that protracted refugees can be to a host country, the next few posts are going to address the situation of refugees and displaced persons in the eastern Kivu Regions of the DRC.

Disclaimer:  I have never lived in or visited the DRC.  These posts are completely based on a preliminary review I have done on existing literature and field research.  Please comment and contribute, especially if you have personal experience living in or researching the DRC.

That said, what are some nuances that exist within displaced populations and what is the real situation in the DRC?

Definitions:

Internally displaced persons (IDPs) differ from refugees since they are forced out of their homes within their own country. IDPs are defined by The United Nations High Commission for Refugees’ (UNHCR) as follows:

“… persons or groups of persons who have been forced or obliged to flee or to leave their homes or places of habitual residence, in particular as a result of or in order to avoid the effects of armed conflict, situations of generalized violence, violations of human rights or natural or human-made disasters, and who have not crossed an internationally recognized state border” (Guiding Principles on Internal Displacement, 2004)

Also according to the UNHCR, refugees are defined as persons who:

…owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it. (Convention, 1967).

The UNHCR defines protracted refugee situation as a refugee population of 25,000 persons who have been in exile for five or more years.  Increasingly, however, protracted has nearly become synonymous with refugee situation, since the average duration of such settlements dramatically increased during the last decade of the Twentieth Century.

In 2007, The UNHCR estimated that 1.3 million DR Congolese were internally displaced and 177,400 foreigners were living as refugees from the following countries: Angola, Rwanda, Burundi, Uganda, Sudan, and the Republic of Congo. Although a peace treaty was signed in 2002 to end the five year civil war that involved six other African countries (the DRC, Namibia, Rwanda, Uganda, Zimbabwe and Angola), fighting between government troops and rebel forces has continued, resulting in millions forced from their homes. In 2003, internal displacement peaked at an estimated 3.4 million having left their homes and renewed conflicts in 2007 and 2008 have forced thousands more to displacement. In 2008, Oxfam International estimated there to be 1.1 million displaced in the North and South Kivu regions alone.

Prayer for the DRC

please pray for the Democratic Republic of the Congo.  The BBC reported today the camps sheltering 50,000 displaced people have been destroyed.

The situation in the DRC has been fragile and an estimated 5.4 million people have died since the beginning of a Civil War in 1998.  Although a peace treaty was signed in 2002, the humanitarian crisis has resulted in many of these millions of lives lost due to preventable diseases such as malaria, fever, and diarrhea.

Pray for the Congolese who have been forced out of their homes because of fighting.

Pray for the refugees from other African countries who are fleeing refugee camps which are being destroyed.

Pray that the church will be strengthened to minister mercy to those displaced

pray for peace

http://news.bbc.co.uk/2/hi/africa/7702099.stm

A Global Response to World Hunger

On October 25, Taoisech Brian Cowen told a summit at the seventh Asia-Europe meeting on the theme of food security and disaster preparedness that a global response is needed to end the “scandal” of world hunger.

It is estimated that 900 million people worldwide do not have enough to eat and this number is rising because of escalating food prices.

“At this rate, it is reasonable to assume that if we have not already reached the horrific figure of 1 billion of the world’s population living in hunger, that we will shortly do so. The very thought of this is deeply disturbing, the reality horrendous.”

irishtimes.com

and how do we respond?

Turmoil in markets: not an excuse to pull back on aid promises to the poor

The poorest and most vulnerable groups risk the most serious — and in some cases permanent — damage,” the development committee communique said.

ministers said big donor nations should not use the turmoil in markets as an excuse to pull back on aid promises to the poor.

African finance leaders pointed to the speed with which the U.S. and Europe have raised billions of dollars for faltering banks but are behind in aid commitments to poor countries.Higher food and fuel prices have added to the budget squeeze of poor countries. The World Bank has a watch list of 28 countries facing financial strains which spans from Jordan, Lebanon, Cambodia, Sri Lanka to Jamaica, Haiti, Ethiopia, Rwanda, Malawi, Nepal, Fiji and Ivory Coast.

Rising food prices have caused 75 million more people to go hungry, the Food and Agriculture Organization said. Similarly, the World Bank has said food price increases may swell the ranks of the world’s poor by 100 million people.

read the full article by Reuters AlertNet on how the global financial crisis is impacting small banks, emerging markets, and especially overdue aid promises in some of the poorest countries.

Modern Day Slavery in Soccer Ball Production in India

Yesterday International Labor Rights Forum (ILRF) and Bachpan Bachao Andolan (BBA) released a detailed report on the use of bonded child labor in the production of soccer balls in Jalandhar and Meerut, India.  According to ILRF’s blog:

In mid September, HBO’s Real Sports with Bryant Gumbel confirmed ILRF’s findings and even has video footage of Mitre soccer balls being stitched by child laborers with a UPC symbol that indicates the balls are bound for the US.  HBO was able to find that same code on balls on the shelves of Wal-Mart.  ILRF also found regular shipments through import records of Regent Sports Corporation, a company that imports Mitre balls to the US.

ILRF and researchers in India have found other companies like Beltona (a Dutch company) using child laborers to produce their balls. Other companies that we haven’t been able to find much information on include Star Soccer and Greenland Sports.

click here to read the press release and here to see pictures.

Hopeless Migration

This bbc story explains a terrible “brawn drain” of young Senegalese discouraged at the few and low-paying employment options in Senegal.  The town where I lived this summer has been and still is a “launch pad to reach Europe by sea” for so many hopeless migrants.

Many of these migrants die of starvation or drown at sea and if they do beat the odds at sea, they will be deported once arriving at the Canary Islands or Spain.

click here to read about this desperate response towards the lack of employment opportunity in Senegal.

Some Myths about Immigrants

1.  Immigrants don’t pay taxes. false.  Immigrants pay taxes in the form of income, property, sales, and taxes at the federal and state level.

2. Immigrants come here to take welfare. Actually, immigrants often come to work and reunite with family members.  Immigrant labor force participation is consistently higher than native-born, and immigrant workers make up a larger share of the US labor force (12.4%) than they do the US population (11.5%).

3. Immigrants send all their money back to their home countries. In addition to the consumer spending of immigrant households, immigrants and their businesses contribute 162 billion in tax revenue to US federal, state, and local governments.  While it is true that immigrants remit billions of dollars a year to their home countries, this is one of the most targeted and effective forms of direct foreign investment.

4.  Immigrants take jobs and opportunity away from Americans. Immigrant entrepreneurs create jobs for US and foreign workers, and foreign-born students allow many US graduate programs to keep their doors open.

5. Immigrants are a drain on the US economy. During the 1990s, half of all new workers were foreign-born, filling gaps left by native-born workers in both the high and low skill ends of the spectrum.  Alan Greenspan points out that 70% of immigrants arrive in prime working age.  The US has not spent a penny on their education, but they are transplanted into the US workforce to contribute to social security.

6.  Immigrants don’t want to learn English or become Americans. Actually, more than 75% of immigrants speak English well within 10 years of their arrival.

7.  Most immigrants cross the border illegally. Around 75% of today’s immigrants have legal permanent (immigrant) visas; of the 25% that are undocumented, 40% overstayed temporary (non-immigrant) visas.

8. The war on terrorism can be won through immigration restrictions. No security expert since September 11, 2001 has said that restrictive immigration measures would have prevented the terrorist attacks.  Most of the hijackers were here on legal visas.  Since 9/11, the measures targeting immigrants in the name of national security have netted no terrorism prosecutions.

(sources: Learn the Issues. Justice for Immigrants: a journey of hope. pamphlet distributed by the HDRC on 25 September, 2008, cato institute, DHS Immigration statistics,)