The plight of late industrializers: what if peasants do not want to move to cities? — Branko Milanovic

A very interesting post.

The author fails to discuss the the situation with China, however, perhaps owing to limited scope.  The Chinese situation is interesting in that prior to Deng's reforms, China was a country dominated by poor peasants. The way that the contemporary Chinese government is dealing this is is building cities and requiring people to move to them. There is apparently not much resistance owing to the extreme poverty of the countryside. This was inevitable in the move to industrialized agriculture, where peasant labor was made grossly inefficient.

Something similar happened in the US fairly recently. The industrialization of agriculture all but eliminated the family farm as a viable income source owing to efficiencies of scale and technology.

Global Inequality
The plight of late industrializers: what if peasants do not want to move to cities?
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

William Lacy Swing — How migrants who send money home have become a global economic force

More people are on the move around the world than ever before. An estimated 258 million people are currently living outside their country of origin. Every migrant chooses to leave home for different reasons, but they all bring their life experiences, knowledge, culture and ambitions with them. As they settle into life in their host countries, they acquire new skills and know-how. And they contribute to their families and communities in their country of origin by sending money home.

Financial remittances have been recognized as an important developmental vehicle associated with migration. Financial remittance flows have steadily increased in volume from the 1990s to the present day. In 2017, migrants sent an estimated $466 billion to families in developing countries. Money sent home from abroad is shown to be more stable than both private debt and portfolio equity flows, and several times larger than international development aid.…

However, apart from financial remittances, transnational communities also contribute by way of 'social remittances' - the flow of skills, knowledge, ideas and values that migrants transmit home. The impact of social remittances was most strongly felt in areas such as education, health, employment, business and aspects of governance, found a study conducted by IOM in Tanzania in 2014. There is also a broader development effect, as the recipients of social remittances extend beyond the migrants’ immediate circle of relatives and friends to the wider community beyond.

Taken together, financial and social remittances have an important role to play in the achievement of individual family goals, community and national development priorities, and the achievement of the SDGs more generally. However, to leverage the true development benefits of financial and social remittances, there is still work to be done....

World Economic Forum
How migrants who send money home have become a global economic force

William Lacy Swing | Director-General, International Organization for Migration (IOM)

A different view of Africa. A ways to go, but longer the global backwater, looking hopeless as development challenge.

By 2025, 97% of worldwide growth will occur in the world’s emerging markets, many of which are in Africa. Africans are watching technology develop and evolve in ways never seen before. The continent leads the way in mobile payments, with money transfer service M-Pesa serving 30 million users across ten countries. Africa isn’t just driving technology change for Africa, but for the world at large. By 2025, the population of Africa will exceed that of India and of China. Shortly after that, about 40% of the world's working-age population will be in Africa, a continent of 54 countries.

Africa's inspiring innovators show what the future could hold

Njideka Harry

CEO, Youth for Technology Foundation

Brad DeLong — Should-Read: Ian Morris (2013): The Measure of Civilization: How Social Development Decides the Fate of Nations

…The Measure of Civilization presents a brand-new way of investigating these questions and provides new tools for assessing the long-term growth of societies. Using a groundbreaking numerical index of social development that compares societies in different times and places, award-winning author Ian Morris sets forth a sweeping examination of Eastern and Western development across 15,000 years since the end of the last ice age. He offers surprising conclusions about when and why the West came to dominate the world and fresh perspectives for thinking about the twenty-first century....

WCEG — The Equitablog

Should-Read: Ian Morris (2013): The Measure of Civilization: How Social Development Decides the Fate of Nations

Brad DeLong

See also

Occasional Links & Commentary
Utopian socialism
David F. Ruccio | Professor of Economics, University of Notre Dame

Matias Vernengo — Why Latin American Nations Fail

Book has finally been published. I just got my copies. And yes it is a critique of New Institutionalist views and the title a play with the Acemoglu and Robinson's book title. From the back cover.

"The question of development is a major topic in courses across the social sciences and history, particularly those focused on Latin America. Many scholars and instructors have tried to pinpoint, explain, and define the problem of underdevelopment in the region. With new ideas have come new strategies that by and large have failed to explain or reduce income disparity and relieve poverty in the region. Why Latin American Nations Fail brings together leading Latin Americanists from several disciplines to address the topic of how and why contemporary development strategies have failed to curb rampant poverty and underdevelopment throughout the region. Given the dramatic political turns in contemporary Latin America, this book offers a much-needed explanation and analysis of the factors that are key to making sense of development today."

You can get it here.

Naked Keynesianism
Why Latin American Nations Fail
Matias Vernengo | Associate Professor of Economics, Bucknell University

Nick Johnson — Economic ‘distortions’, ideology and the role of government

Quote from Michael Hudson's Trade, Development and Foreign Debt (1992, 2009).

The Political Economy of Development
Economic ‘distortions’, ideology and the role of government
Nick Johnson

Travers Child — Reconstruction and conflict: Losing hearts and minds

The pervasive ‘hearts and minds’ theory guiding counterinsurgency doctrine contends that military-led reconstruction reduces violence in post-conflict settings.| Using rare data from Afghanistan, this column questions the theoretical and empirical basis of that perspective. Military-led projects in the health sector are found to successfully alleviate violence, whereas those in the education sector actually provoke conflict. The destabilising effects of education projects are strongest in conservative areas, where public opinion polls suggest education projects breed antipathy towards international forces.

Imposing liberal values creates conflict in traditional areas. Another paradox of liberalism.

Vox.eu
Reconstruction and conflict: Losing hearts and minds
Travers Child | PhD candidate in Economics, Tinbergen Institute and Vrije Universiteit Amsterdam

Ken Moak — Western critics should not be so skeptical of Belt and Road

Western critics continue to pour cold water on China’s Belt and Road Initiative (BRI), an ambitious and well-planned architecture connecting the massive Eurasian landmass through a system of roads, railways and ports. They complain that it lacks transparency, erodes trade standards set up by the West, is financially too huge for China to handle, is self-serving, and is a deceptive vehicle for China to dominate the world, just to name a few.

The reality is that the West has to destroy this initiative or face watching its dominance fake into oblivion. This could involve war if that is the last resort of a dying empire. This is obvious to anyone with a passing interest in geopolitics, geostrategy and history.

The window for the West to preserve its domination is closing. These are parlous times.

Asia Times
Western critics should not be so skeptical of Belt and Road

Ken Moak

Vitor Mello — Using Minsky to Better Understand Economic Development – Part 1 & 2

This year the global system has seen two major shocks: Brexit and Trump. What these events have in common is their populist rhetoric that promised to bring back jobs, while also making xenophobic statements. These elections have tapped into growing anxiety over job security, which has not been addressed by most governments and has given room for demagogues to tap into the anger of the people. They reflect a problem that transcends the boundaries of any single nation: the global economy has been in a slump for almost a decade. Governments need to create jobs, and public fiscal stimulus is the way to do so. To allow it, we must rethink that system.

The Minsky's

Using Minsky to Better Understand Economic Development – Part 1

Using Minsky to Better Understand Economic Development – Part 2
Vitor Mello

Raghuram Rajan — The changing paradigm for financial inclusion

Speech by Dr Raghuram Rajan, Governor of the Reserve Bank of India, at the National Seminar on "Equity, Access, and Inclusion - Transforming Rural India through Financial Inclusion", organised by the National Institute of Rural Development and Panchayat Raj, Hyderabad, 18 July 2016.

BIS
Raghuram Rajan: The changing paradigm for financial inclusion

Matias Vernengo — DisORIENT: Money, Technological Development and the Rise of the West

Link to paper by Matias and David Fields at Academia. It's a free download but may require (free) registration at Academia if you haven't done so.

Naked Keynesianism

DisORIENT: Money, Technological Development and the Rise of the West

Matias Vernengo | Associate Professor of Economics, Bucknell University

Neil Bhatiya — Climate Change as a Development & Security Threat

In his first answer at Saturday’s Democratic presidential primary debate, Vermont Senator Bernie Sanders reiterated his belief, even in light of Friday’s terror attacks in Paris, that climate change was the principal threat facing the United States:
In fact, climate change is directly related to the growth of terrorism. And if we do not get our act together and listen to what the scientists say, you're going to see counties all over the world...they're going to be struggling over limited amounts of water, limited amounts of land to grow their crops, and you're going to see all kinds of international conflict.

As someone who has written about the connection between the effects of climate change and its impact on human security, I am of two minds when politicians raise this issue. On the one hand, my hope would be that the more attention paid to potential climate change-conflict links the better, especially if it leads to more attention and political will to fight climate change in the first place. On the other hand, these links are highly complex, and it is easy to over-simplify the issue. Vox's Brad Plumer summarized this best when he wrote: “The truth about climate change and conflict is more complex and nuanced than a short soundbite can allow, but it's foolish to dismiss the entire topic out of hand.”

Bhatiya does the nuance.

The bottom line is that climate change as a “threat multiplier” can make a lot of pre-existing security issues worse, especially in states with weak governance, long-standing ethnic or sectarian tensions, or resource-dependent economies (in other words, states that were susceptible to conflict risk even outside of climate concerns).…

As important as climate change is as a security threat, it is much more immediately serious as a development problem.…

The Century Foundation
Climate Change as a Development & Security Threat
Neil Bhatiya

Brad DeLong — Must-Read: Wi Yen: The Making of an Economic Superpower–Unlocking China’s Secret of Rapid Industrialization

Download paper. Actually, it is a short book.

WCEG — The Equitablog
Must-Read: Wi Yen: The Making of an Economic Superpower–Unlocking China’s Secret of Rapid Industrialization
Brad DeLong

The BRICS Post — Xi announces $2bn South-South Fund to aid poor nations

At the UN General Assembly on Saturday, Chinese President Xi Jinping announced a $2 billion South-South Cooperation aid fund to help developing countries in their efforts towards sustainable development over the next 15 years.

“China will continue to increase investment in the least developed countries, aiming to increase its total to $12 billion by 2030,” Xi said the UN sustainable development summit in New York.

China will exempt the debt of the outstanding intergovernmental interest-free loans due by the end of 2015 owed by the relevant least developed countries, landlocked developing countries and small island developing countries,” he added.

China will also push for immediacy in operations of the newly launched BRICS Bank and the Asian Infrastructure Investment Bank, Xi said.…

The BRICS Post
Xi announces $2bn South-South Fund to aid poor nations

Also

India’s Modi lists poverty as challenge to SDG

“It is not just about fulfilling the needs of the poor and upholding their dignity, nor about assuming moral responsibility for this, but realising that the very goal of a sustainable future cannot be accomplished without addressing the problem of poverty,” he said.

Matias Vernengo — Material well being and morality

Is there a contradiction in the pope's condemnation of capitalism and the demonstrable fact that the developed world is capitalist and as poor countries adopt capitalistic economics they develop more quickly, so that everyone is better off. In other words is the pope wrong about trickle down, that is, a rising tide does lift all boats?

Only if TINA ("there is no alternative"), and that is an unproven assumption. It also disregards the effect of neoliberalism on the developing world though the attendant neo-imperialism and neocolonialism.

Naked Keynesianism
Material well being and morality
Matias Vernengo | Associate Professor of Economics, Bucknell University

See also

WCEG — The Equitablog
Plutocratic Self-Justification as a Dissipative Activity…
Brad DeLong

"The lady doth protest too much, methinks." — William Shakespeare, Hamlet

Nick Johnson — Standing on the shoulders of giants

Governments of all stripes across the world have, since the turn towards what are often termed ‘neo-liberal’ policies in the late 1970s, cut taxes for the richest individuals in society, ostensibly to encourage them to engage in more entrepreneurial activity and stop them leaving for lower tax nations. There is certainly no doubt that the incomes of the top 1%, and even moreso for the top 0.1%, have increased dramatically more than middle and lower income earners since that time.

But prosperity is not all down to those currently at the top of society. Those of us lucky enough to live in industrialised countries with a high standard of living and the prospects of continuing economic growth in between periodic recessions, are ‘standing on the shoulders of giants’, to coin a phrase. Whether rich or poor, we live in a society with capitalist institutions which, more or less between different countries, encourage continuous technological advancement and productivity growth. But we inherited these institutions which were established in the past and which continue to evolve. Markets, different kinds of business organisation, finance and the state, among others, all have a long history and, to greater or lesser degrees, create an environment in which wealth can be created.

The very highest earners never make their money in a historical or social vacuum. If they had been born in a very poor country without the kinds of institutions mentioned above, they would have found it impossible to earn nearly as much. Even some of the poorest people in rich countries would find that formal employment is absent and the prospects of improving one’s lot to a significant degree would probably be close to nil. The investor Warren Buffet has admitted as much….

The Political Economy of Development

Standing on the shoulders of giants

Nick Johnson

Niv Horesh — The West is blind to the appeal of China's model of authoritarian capitalism

This is a better criticism of the Western neoliberal model than of the Chinese model.

In the Chinese model, governance is based on the traditional Mandarin system that resembles corporate governance in the West because it has shown itself to be highly efficient and effective model in accomplishing objectives.

TINA is not the only way. The West has to get over itself.

Business Insider
The West is blind to the appeal of China's model of authoritarian capitalism

Niv Horesh, South China Morning Post

See also Mamta Badkar, Chinese Communist Party Publication Says Capitalism Is Approaching Its End And The World Has 'Marxist Fever'

As the Chinese leaders see it (and Russian leaders, too), they are winning, especially with the West sabotaging itself. The only response the West seems to be able to mount is putting obstacles in China's way. That is interpreted as a sign of weakness rather than strength.

Tony Wikrent — “If You Are Not Building a Nation, Then What the Fuck Are You Doing?”

May good points but I think that Tony is confused about the role of political and economic geography, geopolitics, and geostrategy. While the points he makes about development are well taken, they are largely orthogonal to the points that Alfred McCoy make about position relative to Halford Mackinder, and he might have included Nicholas Spyckman, too. Now, development is coming together with geographical position in Eurasia. This is likely to have much greater impact on much greater land space than the US has had owing to the relatively isolated position of the US geographically, which required amassing sea power like England previously.

The point is that if one doesn't understand how the players view the game as a set of rules on a particularly configured board, then one is not going to understand the moves that they are making and liable to make based on objectives and tradeoffs. It's therefore essential to understand the "grand chessboard," whatever one thinks of it. It is a high stakes game that the players take very seriously.

Naked Capitalism
“If You Are Not Building a Nation, Then What the Fuck Are You Doing?”
Yves Smith
Guest post by Tony Wikrent

Paul Robinson — Institutions Rule, But Which Ones?

A couple of pieces published last week – one by John Herbst, director of the Dinu Patriciu Eurasia Center of the Atlantic Council, and the other by Forbes’ Russian affairs blogger Mark Adomanis – provide a neat contrast which aptly displays the illusions of many Western liberals about the prerequisites of economic progress. Before getting to them, however, we first need to make a little digression into economic history.

As I explained in my book Aiding Afghanistan, in the 1950s, 60s, and to a lesser extent 70s, economists on both sides of the Iron Curtain tended to believe that economic development was a simple matter of capital accumulation. The reason why underdeveloped states were poor was thought to be that they lacked the capital to get the process of accumulation going. Development assistance therefore consisted of providing them with financial capital (normally in the form of loans) or physical capital (dams, roads, factories, etc) in order to kick-start the process.

By the 1980s it had become blindingly obvious to almost all concerned that this wasn’t working. Economists therefore had to revise their theories. Rather than capital, what matters, some concluded, is ‘institutions’, a word which is somewhat misleading as it includes not just what ordinary people consider to be institutions (government, banks, etc), but also less tangible matters such as laws and culture. You can pour almost any amount of capital into a country, but if the correct institutions are not in place, it won’t make a jot of difference.

But which institutions? To those in the West, the answer was evident – Western ones. Clearly, the prerequisite for economic growth must be the establishment of a set of institutions similar to those in Western Europe and North America. That meant that in order to prosper, underdeveloped states first had to introduce democracy (multi-party elections, a free press, transparent government, etc), liberalize their economies (via privatization, elimination of price controls, the opening of borders, etc), and liberalize their societies (granting equal rights to women, racial minorities, etc). Success would surely follow.

What could possibly go wrong?

Following the collapse of communism, the purveyors of institutional economics found a market for their ideas in Eastern Europe. Things did not quite work out as planned. Institution-building is a slow process and inevitably involves a transition period in which some institutions are present and others are not. This can create some strange incentives as well as significant distortions in the economy. Meanwhile, the establishment of a new set of institutions requires the destruction of the old set, but if these are destroyed too rapidly before the new ones are in place, economic and social collapse may ensue. This is indeed what happened in many post-communist countries....

Did reason and common sense prevail?

At that point, the logical response might have been a pause to reflect whether one size really does fit all. Instead, the West has by and large chosen to redouble its efforts in the same direction as before. If institution-building hasn’t worked as planned, then that must be because it wasn’t pushed hard enough.....

Irrussianlality

Institutions Rule, But Which Ones?
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa

Dean Baker — China Can Develop a Drug for Just 3 Percent the Cost in the United States

That would be an implication of research by Tufts University professor Joseph DiMasi. He found that it cost an average of $2.6 billion to develop a new drug in the United States. By contrast, the Wall Street Journal reported that a company in China developed a new cancer drug for just $70 million, less than 3 percent of DiMasi's estimate....

Beat the Press
China Can Develop a Drug for Just 3 Percent the Cost in the United States
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, DC

Cultural Development at 31st Week of Democracy

Cultural Development at 31st Week of Democracy

Are we past the 2nd Trisequester yet?

Or still in the fetal position?