International Development and Economics


This past week I was able to go to a talk in the Dahnke Ballroom given by Dr. Devarajan, an economist and international development researcher. It was great because Dr. Devarajan talked about development and the intersection of politics and economics, specifically how governments love to feel like they are fixing social issues by having donors “solve market failures” and funding development projects in order to seem more powerful.
The goal, Dr. Devarajan said in his presentation, was for poverty to be reduced in many nations. His data showed that while this did happen superficially, on the actual development level these industries never took off and the development projects often remained stagnant. Even when big organizations such as the World Bank helped these projects take off, surprisingly, or unsurprisingly when looking at the data, they still failed.
The stats show that health and education enrollment are very high in many of these targeted nations for “development improvement” but the quality of care and graduation rates are alarming, which Dr. Devarajan described happens because the social and political goals are “met” but in idealistic ways. And even though there’s the best of intentions from these organizations, government failures also lend to much of the problem. For example, he discussed the problem of trade protection: instead of a trade boom and manufacturing boom, when a trade protection policy was placed in a nation there were no jobs created for the communities excepts for job that are “one person firms” (i.e. startups); all other job creation was negative and basically destroyed in these nations. Much of this idea can be applied to our next door neighbors Canada and Mexico, with the NAFTA agreement where we see very similar statistics produced.
Another issue created was the monopolization of firms, such as how the Ben Ali family in Tunisia have taken control of the telecommunications market and banking market without competition from any other group. These Ben Ali firms are part of the government and profit by running these monopolies, but the sad truth is that these markets produce only 0.08% of the nation’s total employment. These cozy relationships that mix the political and the social really negatively affect many impoverished nations.
In rural India for example, 80% of children in second grade cannot read a single word even though they are enrolled in school. This is because on average, 25% of the time the teacher is not there. Teachers in India are part of the knowledgeable and influential portion of the population and are often political campaigners (or even politicians themselves) and so these beneficial relationships allow the teachers to not to have to do their jobs because in return for getting politicians elected and politicians get the teacher a job with good pay but where there is no accountability so that the teacher never has to show up.
Much of the money in these sectors: education, health, and politics, is kept by the government and very few of it is invested in these fields. Changes in development assistance however are showing how putting political limits on loans has a mixed result because sometimes interests are selfish. What actually spurs action is getting the information to the public so that they demand what they are due. This can only come through education and advocacy.

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