Archive for the ‘Economic Development’ Category

Proposal Accepted

September 10, 2007

Today, Becca and I had our first meeting with my thesis committee:  Humphrey, Greenlaw, and Hansen.  I admit feeling a bit worried about how it would turn out because I have never had a class with Hansen before, and I had a feeling he would be the person that needed the most convincing.

In a strange twist, Hansen effectively talked us into doing precisely what we proposed to do:  develop a methodology.  Not to say he and the other professors did not help us narrow down the topic a bit more, rendering it more manageable; rather, the qualitative difference between what was proposed and what was decided would be a worthy thesis topic was not very significant. 

The thesis proposal, in its nearly final form, did not spend a great deal of time developing a model because that was never the intended focus of my thesis on political corruption.  The intention was to develop a schematism for translating the heavily descriptive work of anthropologists into the language of, at the very least, political economy, for the purposes of working out the ways in which social networks come into conflict with the state.  Humphrey, my main advisor for the thesis, seemed to think that the basis for desiring to develop this methodology needed more clarity, and so suggested that I spend more time formally developing and critiquing the model that characterizes the mainstream literature. 

It would appear, however, that this distracted unnecesarily from the main point: an alternative model is useless if it can not be tested, and since alternative models of corrution based on social networks appeared to lack an associated methodology, to even talk about testing  is premature.  We were proposing to develop that methodology, but with half the pages of the proposal devoted to developing models, the focus of the thesis was rendered unclear.  It struck Becca and I both as funny that in the end, Greenlaw, and Hansen especially, cared a lot less about models and a lot more about methods, and effectively talked us into focusing on the latter (our original plan), rather than the former.    

I have been warned, as mentioned before, that developing methodology does not provide the fame and fortune that an ambitious economist might seek.  Certainly my economics education these past four years has not explored alternative approaches (not so much a complaint – methods are rightly secondary to concepts in undergraduate work, methinks, and traditional methods are more than adequate for most of the problems that undergrads will take up).  Still, there is something to spending a class period or two to demonstrate that great strides are not always made in the synthesis of new concepts, but also in new approaches to familiar problems.  Stagnation of or dogmatic commitment to either concepts OR methods will doom any quest for knowledge.     

The Cancer of Corruption

June 28, 2007

Last weekend, my research partner and I agreed that we would work collaboratively on a thesis that deals with corruption, especially in the third world.  Political corruption, which gets defined in numerous ways, receives a great deal of blame (not necessarily unwarranted) for the failure of many aid programs, as elites and authorities siphon funding and resources into their own coffers for personal use. 

So we make a rather radical suggestion:  Suppose that corruption, as we call it, is integral and functional within the system; that is, were a “corrupt” official or institution to be suddenly removed from the equation, this would create a gap that would actually act to interrupt otherwise positive-growth activities.  Furthermore, corrupt practices are manifestations of the universal phenomenon of a person or organization that uses its vested power to prevent access to resources unless payment is made to them.  Under this perspective, whether you are paying a bribe or an income tax, you are participating in the same generalized system where access is restricted to those who pay the bribe/tax/fee/etc.

Taxes as glorified bribes?  In a sense, yes.  If you don’t pay your taxes, do you still get access to the system?  No.  In extreme cases you go to jail.  Analogously, if you don’t pay the armed officer on the road in Kenya a bribe to get through his roadblock, will you still get your goods to market?  No — or yes but only with a great deal of effort (travelling off road, which will take longer, be more dangerous, and make market activities less profitable). 

We grant there are differences, but the analogy is too valid to be ignored. 

The possibilites for research are three:

1) Fit corrupt practices into a more general theory of state formation, such as the roving/stationary bandit model developed by Mancur Olson and other institutional economists.

2) Identify particular practices that are labeled as corrupt and demonstrate that they are not.

3) Develop a methodology for testing the theory utilized in 1).

 More on these later.

Geography: Meaningful for Modern Economic Growth?

May 9, 2007

Chances are you’ve at least heard of Jared Diamond and his book Guns, Germs, and Steel (originally published in 1997).  It won the Pulitzer Prize and does a stand up job of refuting most implicitly or explicitly racist or ethnocentric explanations for the disparate levels of development and stability across nations and continents.  Diamond’s theory is founded on the idea that different ancient societies began making technological leaps and bounds at different times depending on the contemporary geography that attended.  In general, the orientation of the continent (east-west vs. north-south), the availability of domesticable animals and plants and the relative nutritive content of the latter, the climate, the macro- and microfauna – all these factors, which lie outside the scope of the human equation – vary from region to region.  That one modern group of humans is richer or has more power than another, says Diamond, is ultimately determined by the prehistoric, unfair distribution of natural resources and favorable accidents of birth and settlement. 

And the theory is pretty sound, or at least appears so upon a cursory examination of the data.  Leave it to a modern economist, however, to take a good theory and stretch well beyond reason.  I speak of a paper by Douglas Hibbs and Ola Olsson, in which they develop a methodology to explain modern GDP/capita via a series of measurements of a nation’s “prehistoric biogeographical endowment.”  They find strong correlations between modern GDP/capita and things like prehistoric climate, axis, available domesticable plants and animals, etc.  Perhaps most provocative is their assertion that the quality of a nations institutions is explicable in large part by the attending prehistoric biogeography.

It is at this point in reading the paper that I became quite perturbed.  It is very misleading to use modern nation-states, none of which existed in any way shape or form until just a  few hundred years ago (and that at best – most modern African and near East nations did not exist until the middle of this century!), as an analytical unit when measuring the effect of a series of events that occurred as much as 10000 years ago.  Modern political boundaries were not determined by geography.  In fact, most borders on the impoverished continents of South America and Africa were imposed haphazardly and arbitrarily by the colonial powers, regardless of the ethnic makeup of the regions that were split up.  As a consequence, you have many ethnic groups that are split up into two different states, others which were forced to live together under the same flag who would not otherwise choose to do so.  Dense populations are suddenly created in areas unconducive to dense population, leading to proliferation of disease, poverty, and conflict. 

My point is simply this:  Prehistoric Geography has about as much causative effect on present day GDP/capita as the Big Bang does.  It is very hard to make the case that the system that produced modern day circumstances was entirely predetermined.  That is, the power of cultural interaction to determine present circumstances has long outstripped the effects geography would have.  It would be one thing to expalin Mesopotamia’s cropping-up with reference to geography.  It’s entirely misleading to say that Sudan (for example) is poor because of its prehistoric biogeographical predispositions.  Geography vested power, perhaps, but it is the use of that power towards destructive ends that gives us our current situations.