An editorial in Nature criticizes the Millennium Development Goals for projecting a “pseudoscientific” image:

Every year, the UN rolls out reports with slick graphics, seemingly noting with precise scientific precision progress towards the goals. But the reports mask the fact that the quality of most of the underlying data sets is far from adequate. Moreover, the indicators often combine very different types of data, making aggregation and analysis of the deficient data even more complicated.

There are decent data for just a handful of indicators, such as child mortality, but for most of the 163 developing countries, many indicators do not even have two data points for the period 1990–2006. And few developing countries have any data for around 1990, the baseline year. It is impossible to estimate progress for most of the indicators over less than five years, and sparse poverty data can only be reliably compared over decades. To pretend that progress towards the 2015 goals can be accurately and continually measured is false.

[Hat tip: Ruth Levine at CGD]

IMF managing director Rodrigo De Rato is upbeat on Africa.

A pair of CGD papers on aid and institutions recently caught my eye:

In “Do No Harm: Aid, Weak Institutions, and the Missing Middle in Africa,” Nancy Birdsall argues that Africa is better characterized as being in an institutional trap than a poverty trap, and that aid donors need to consider their impact upon recipients’ aid dependency, fiscal management, and government hiring of skilled personnel.

In “An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa,” Todd Moss, Gunilla Pettersson, and Nicolas van de Walle summarize literature describing the negative impact of foreign assistance upon long-term institutional development and recommend that donors avoid directly funding poor governments so as to preserve their incentives to build more effective public institutions. Development assistance could instead fund the eradication of endemic diseases, peacekeeping activities, and global public goods.

Voice on America posted excerpts from an interview with CGD fellow Todd Moss yesterday:

“Single solutions (to poverty in Africa) are tempting: more aid, more democracy, eradicate corruption, get prices right, get better leadership. But inevitably, these single answers leave true believers disheartened. In the book I call Africa ‘the graveyard of silver bullets’,” quips Todd Moss, a respected international economist and author of the recently-released book, ‘African Development: Making Sense of the Issues and Actors’…

“The saintly reputation in some circles of NGO’s is sometimes underserved. Many NGO’s loudly demand to be heard and claim to speak for the people, but are themselves often accountable to nobody.”…

Moss labels the aid industry in Africa a “mess of confused ideas” and “dysfunctional agencies” that is in itself part of Africa’s problem.

Much of the data on which efforts at development in Africa are based is of “pretty bad quality”, says Moss.

“Even very basic information such as GDP, exports, number of children in school, or how much a particular country spends on hospitals, is little more than an educated guess. Sometimes formal surveys are done – through a census or other formal agencies – but these are a lot more infrequent than you would think,” he warns…

“As a whole there is still no clear way to turn Africa around. Even if its recognized that external efforts can only do so much, and that change must come from within, the development community still really does not know how to encourage that process. In short, we simply do not know how to make Chad more like South Korea.”

It’s not all bad news. Read more. Unfortunately, the audio link is broken at the moment.

The NBER has posted a summary of a project on globalization and poverty edited by Berkeley’s Ann Harrison.

Oh dear:

Advertising Age calculates that around $100million has been spent blanketing billboards and magazines with images of Bono and other “celebrities”, while the total sum raised for Africa is $18million.

Zimbabwe may be slowly imploding. Obsidian Wings highlights a plethora of bad news from the country, all within the last ten days. Hat tip: DeLong.

Daron Acemoglu & Ufuk Akcigit:

What form of intellectual property rights (IPR) policy contributes to economic growth? Should technological followers be able to license the products of technological leaders? Should a company with a large technological lead receive the same IPR protection as a company with a more limited lead? We develop a general equilibrium framework to investigate these questions… We prove the existence of a steady-state equilibrium and characterize some of its properties. We then quantitatively investigate the implications of different types of IPR policy on the equilibrium growth rate. The two major results of this exercise are as follows. First, the growth rate in the standard models used in the (growth) literature can be improved significantly by introducing a simple form of licensing. Second, we show that full patent protection is not optimal from the viewpoint of maximizing the growth rate of the economy and that the growth-maximizing policy involves state-dependent IPR protection, providing greater protection to technological leaders that are further ahead than those that are close to their followers. This form of the growth-maximizing policy is a result of the “trickle-down” effect, which implies that providing greater protection to firms that are further ahead of their followers than a certain threshold increases the R&D incentives also for all technological leaders that are less advanced than this threshold. [emphasis added]

Given the credentials of the authors, I’m sure the theoretical work is outstanding (non-gated version here). But state-dependent IPR protection strikes me as implausible in practice. How adept are government bureaucrats at identifying technological leaders and the size of their lead? How resistant are they to regulatory capture?

Discussion of a recent paper by Enrico Spolaore and Romain Wacziarg:

Wacziarg’s most recent work relates genetic distance between populations to differences in economic outcomes, such as their income per capita, to better understand the process by which innovations diffuse from one culture to the next. He found that countries whose populations are the most remote genetically from the populations that developed major innovations over the past 200 years are the least well off. While geographical remoteness also plays a role, it is genetic distance that most strongly correlates with how rich or poor a nation will be. The research also suggests that the main way genetic distance hinders the diffusion of development is by creating cultural barriers. The greater the genetic distance, the greater the cultural barriers are to the flow of ideas and technologies…

Genetic distance is therefore a good indicator of how long ago two groups went their separate ways. “Greater time apart corresponds with greater cultural differences between these groups also, because they’ve had a longer period in which to develop different languages, customs, norms, and habits,” Wacziarg says…

Wacziarg is adamant, however, that such findings do not mean that certain groups are more genetically prone to wealth or poverty. “We’re not looking at what kind of genes are involved, we’re just looking at genetic distance between groups,” says Wacziarg, who has conducted one study on the diffusion of development with Enrico Spolaore of Tufts University. “There have been tremendous reversals in fortune over time. A thousand years ago the richest countries were China and India. Europe was a mess—in the middle of the Dark Ages. If there were something genetic about being European that made you rich, one would suspect it would have made you rich consistently throughout time.”

The relationship between genetic distance and economic status is a function of the closeness of a given group to the locus of an innovation or new invention—something he discerned by comparing the wealth of various groups in different time periods. “Europe in the 19th century benefited economically from developments that led to the Industrial Revolution, for example,” he says. “People in China, say, who didn’t have the same language, norms, habits, and values, took 150 years to start benefiting from those developments. They were physically and culturally far from the invention.”

Hat tip to Pienso.

Contra the Washington Post’s editorial, Svetlana Demidova, Hiau Looi Kee, and Kala Krishna provide additional evidence that trade preferences aren’t obviously beneficial to development in their newest NBER working paper:

This paper models the responses of firms that are heterogenous in productivity to the different types of trade policies they face in different product and export destinations. It presents direct evidence supportive of the model’s predictions using a dataset of Bangladeshi garments exporters. In particular, it focuses on the effect of differences in trade polices, trade preferences, and the rules of origin (ROOs) needed to obtain them, on the pattern of firm exports and performance…

[O]ur work suggests that trade preferences granted to developing countries that favor more capital intensive sectors can distort their pattern of investment and trade. While such preferences tend to spur investment and exports of the more capital intensive sectors, they also reduce the average productivity of exporters and bias export away from the direction of natural comparative advantage. Consequently, even liberal preferences may be far less effective in promoting development than expected…

Thus, the contribution of this paper is as follows. First, our heterogenous firm model shows how differences in trade policy of the EU and US and in the preferences granted by them to Bangladesh, in combination with the ROOs needed to access them, act as a sorting mechanism for firms. This results in productivity differences between firms that differ in their product lines and markets. We are able to capture both how firm productivity differs according to the toughness of the exporting market, and how the toughness of the market depends on ROOs and trade policy. The former channel is missing in homogenous firm models… Finally, in the area of trade policy-for-growth, our paper suggests that liberal preferences given by the EU to Bangladesh, while spurring exports of the non-woven sector, may reduce its average productivity. Given that the non-woven sector is twice as capital intensive as the woven sector, our result further implies that exports of Bangladesh are biased away from the direction of its natural comparative advantage, and as a result, may be less effective in promoting development.