tag:blogger.com,1999:blog-4039434.post11108215630547101..comments2024-02-26T06:46:53.171-05:00Comments on Rajiv Sethi: East Asian Tigers and African LionsRajivhttp://www.blogger.com/profile/13667685126282705505noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-4039434.post-83003778657653369212010-08-05T03:10:49.819-04:002010-08-05T03:10:49.819-04:00Rajiv, "coordinated optimism", I like th...Rajiv, "coordinated optimism", I like that idea! I think it is spot on, and at the very root of issue... <br /><br />To the extent that such coordination is key (and I think it is), and leaving aside for the moment why it is (look at Hausmann’s paper presented at a Brookings Conference in May 2008 entitled “High Bandwidth Development Policy), what are the key characteristics that the "coordinator" has to have? Confidence? Credibility? Knowledge (which would rule out most bureaucracies in developing countries) or just the ability to try a lot, and drop mistakes? What does it mean for a Govt. to be that "coordinator"?<br /><br />Last time I worked in Africa was some 8/9 years ago, in Cape Verde (for 3 months only) and a bit in Mozambique. But for the past 7 years I've divided my time between Southeast Asia and Central West Asia. I'm pretty sure Africa will show the same country differences in Govt's ability to trigger coordinated optimism ("risk-taking") as we can readily observe for example between Kazakhstan and Pakistan, Cambodia and Vietnam, etc...<br /><br />As me and my colleagues dwell into "why things fail where we try to get public and private to seriously coordinate actions without generating dependence and accommodation, ingredients for pessimism" (with the tales of the Asian Tigers in the background, as a benchmark), I realize how important it was last year to read "The Miracle - The Epic Story of Asia's Quest for Wealth", written by Michael Schuman. The Economics in it is... ok... but most importantly I think, it gives us a very valuable glimpse into the “obsessive” (not only confident) and "optimist" character of the policy-makers behind the miracles of Japan, Taiwan, South Korea, etc... and how public-private coordination triggered much more systematic effort and risk-taking behavior than the accommodation and dependence we observe elsewhere when Govts get too close to businesses, etc... <br /><br />(a colleague/friend of mine once referred me to a book by Jacobsson and Alam on “Liberalization and Industrial Development in the Third World” that compares India and South Korea industrial policies, see Box 2 on Page 53 of this document for an example: http://www.adb.org/Documents/RRPs/PAK/42163-PAK-RRP.pdf )<br /><br />Now, neither I, or (I think) the author of the book subscribe to the idea of "cultural" determinants of development, but getting to know the human characters behind those amazing growth stories gives, I think, an idea of the key characteristics of successful bureaucracies. Especially when success is measured in the ability to “coordinate optimism” and trigger sustained structural transformation.<br /><br />Again, this got too long… I (we) look forward for that new post of your… Best, JoaoAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4039434.post-56801425968978229872010-08-03T13:47:59.613-04:002010-08-03T13:47:59.613-04:00Joao, thanks for this comment - I want to post som...Joao, thanks for this comment - I want to post some more on Africa, and your remarks are very helpful to me in organizing my thoughts. <br /><br />One thing the speech reminded me of is the "history versus expectations" dichotomy. I think that the process of development may involve a zone of uncertainty, a point at which coordinated optimism about growth prospects can lead to a radical shift in economic trajectory due (for instance) to investment spillovers. I wonder whether some countries in SSA are now in or approaching this zone. Would like to hear your thoughts on this.Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-50118475747223225782010-08-01T23:29:36.829-04:002010-08-01T23:29:36.829-04:00Dear Rajiv, thanks for the speech... lets hope the...Dear Rajiv, thanks for the speech... lets hope the forecast is right...<br /><br />But I still think much of the long-term outcome is going to be country-specific (I wonder about the value of making these arguments in terms of a regional grouping), and above all determined by each country's economic policy practices and effectiveness. <br /><br />We have seen how short-lived episodes (5-10 years) of FDI inflows (led by privatizations and liberalization in non-tradable sectors, i.e. low hanging fruit) have nurtured unjustified cheer and confidence about a country's future growth prospects (as well as dangerous macroeconomic booms), only to discover at a later stage (when there's a bust, or FDI inflows gradually come to an end) that nothing much had changed in countries' patterns of specialization (sometime we actually observe deindustrialization).<br /><br />I believe there's plenty of work out there backing-up the idea that a country's ability to systematically accumulate "new" exports and change its pattern of comparative advantage towards more "sophisticated" products is what we call "development", and that it depends above all on particular combinations of economic policy and Government support practices (industrial policy, explicit or through surrogates). Aside from all of the work coming from the IADB on export-discovery recently, or from the Kennedy School at Harvard (Rodrik/Hausmann, etc), here are three interesting discussions on this: <br /><br />http://www.voxeu.org/index.php?q=node/5236<br /><br />http://www.voxeu.org/index.php?q=node/5333<br /><br />http://www.voxeu.org/index.php?q=node/5365<br /><br />Now, often I agree with Easterly's lack of trust in development experts' ability to advise Govts on what they can do to accelerate growth. Brown's speech above, I think, highlights how dangerous bad advice can actually be, even if it only endorses MGI as one of "the World's leading companies and analysts", or makes a strange argument about what Africa's consumer spending is going to be in 2020 IF the trend continues... <br /><br />I was born in Africa, Angola, and I wish I could see behind Angola's growth spurt episode a lot more than just a resource boom made possible by internal peace and stability. Mozambique and Kenya are totally different stories, I agree... and I guess there's plenty of sheer catch-up growth to be made now across the continent, as peace and political stability set in, but how much confidence can we really have in saying that what happened in the last 5 years will repeat itself for the next 10-15 years?<br /><br />Ups, this got long, sorry...<br /><br />JoaoAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4039434.post-47406514372730028612010-07-30T21:40:12.972-04:002010-07-30T21:40:12.972-04:00Joao, you're right, the analysis in the report...Joao, you're right, the analysis in the report is extremely superficial. But there is data there that I think is quite interesting.<br /><br />You might find <a href="http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/0,,contentMDK:22586962~menuPK:258660~pagePK:2865106~piPK:2865128~theSitePK:258644,00.html" rel="nofollow">this speech</a> by Ngozi Okonjo-Iweala worth looking at: she argues that SSA could be the next BRIC.Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-50844977790994147612010-07-30T05:37:01.560-04:002010-07-30T05:37:01.560-04:00I agree with Professor Sethi here... but I had the...I agree with Professor Sethi here... but I had the misfortune of printing and going through the McKinsey Global Institute report (MGI) that you linked: and it is a disgrace! Not a single insight! Full of cliches! Think an Economics undergrad would flunk if he presented that report as a summer assignment...<br /><br /><br />I know it doesn't taint your last point Professor Sethi (on the update 7/25), but I needed to share that I expected MGI to be a lot better than the McKinsey teams that now go around the globe with a "CEO approach" (which they can't even define), advising Governments on what economic strategies (and industrial policies) they should adopt...<br /><br />Has anyone gone through the report? How is it possible that these things don't affect their reputation? How can they be trusted to advise Govts on what is the new sector the country can thrive on? (btw, that's what the McKinsey consultants are doing now, around the Globe)<br /><br />Joao (ADB)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4039434.post-65010581690809301242010-07-26T17:56:33.513-04:002010-07-26T17:56:33.513-04:00Andrew, you might be interested in the following p...Andrew, you might be interested in the following paper by Ashraf and Galor:<br /><br />http://ideas.repec.org/p/bro/econwp/2010-7.html<br /><br />Oded believes that some degree of cultural homogenization is a necessary prerequisite for economic development; your comments seem consistent with this.Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-10310505309208927912010-07-26T17:50:56.679-04:002010-07-26T17:50:56.679-04:00One of the economically important things going on ...One of the economically important things going on in sub-Saharan Africa right now is Christian conversion among formerly animist populations. It is almost invisible to international economic organizations, because it isn't directly visible in economic statistics.<br /><br />While the differences in metaphysical religious belief probably don't make a dime of difference, the church organization is a very dynamic force (if sometimes a virulent force, e.g. persecuting suspected witches and taking very socially conservative stances like the call for death to gays in Uganda - although the same legislature made the most dramatic improvement in the legal status of women in a short time period ever seen) in developing civil society and linking groups of people in Africa across intra-Africa divisions of pre-colonial tribe and ethnic affiliations. These churches make the revivals of the Great Awakening in the American South look like quiet little knitting circles.<br /><br />For example, in Tanzania, this movement has given rise to the nation's first private college and more generally to a counterbalance to state power.<br /><br />It is hard to overestimate how transformative this movement is culturally in turning disorganized local communities into highly organized communities.<br /><br />Parallel charismatic Christianity movements in Latin America (which is predominantly Roman Catholic, a church which was historically the established church), involving a much smaller percentage of the population, have been at the center of the growing small business sector in those countries.<br /><br />None of changes the fact that many countries have legacies of war, authoritarian regimes and double digit AIDs infection rates, or evolving violent conflicts between Muslim pastoralists and animist/Christian horticulturalists across the Sahel.<br /><br />But, the bland description of what is going on by Gordon Brown flows from an economic model that misses the point to a great extent.Andrew Oh-Willekehttps://www.blogger.com/profile/02537151821869153861noreply@blogger.com