The ADB’s revised PPP estimates for China and India are now confirmed by new World Bank estimates that reduce the two economies by approximately 40%.

William Easterly has a new paper exposing silly development bureaucracy numbers: the Millennium Development Goals.

Measuring social and economic progress is not at all as straightforward as the discussion of the MDGs makes it seem. Setting targets in a particular way will make some regions look better and others look worse depending on a number of choices that any target-setting exercise must make. These choices include the following:

1. Choice of benchmark year

2. Linear vs. nonlinear relationships with time or per capita income

3. Absolute changes versus percentage changes

4. Change targets versus level targets

5. Positive vs. negative indicators

There has been very little discussion of these choices that were made in setting the MDGs. Sometimes, the choices made just seem a priori to make no sense; other times, they seem arbitrary and it is unclear on welfare grounds which measure to prefer; finally, the choices do not seem consistent across the seven MDGs. Unfortunately, as this paper will argue, many of the choices made had the effect of making Africa’s
progress look worse than is justified compared to other regions.

For example, for the poverty goal, countries are given credit when a citizen exits poverty, but met with silence if a citizen moves from near-poverty to a comfortable life. And why are the targets set vis-a-vis 1990, when the grading was announced in 2000? To meet targets, “17 African countries… would need 6 percent per capita growth over 2005-2015”: failing to meet the target is merely failing to produce a miracle.

Read the full paper. See a prior installment in arbitrary development numbers.

[HT: Pienso]

The NYT reports that some members of Congress are unhappy with the Millennium Challenge Corporation’s rate of progress – it hasn’t spent fast enough. They want to grab the MCC’s unspent billions and make it come back to Congress when it needs money. This attack on the MCC’s independence undermines its founding purpose and has serious consequences:

If the agency gets the lesser Senate amount, under the current rules requiring the money up front, Burkina Faso, a West African country that has spent more than two years qualifying for and drafting its $560 million to $620 million plan, will get nothing, agency officials said. Tanzania and Namibia are ahead of it in line…

In small, poor countries like Burkina Faso, every burp and hiccup of an aid agency like the Millennium Challenge Corporation is news — and often front page news. David Weld, the agency’s country director for Burkina Faso, said he did not know how he could face people there if Congress did not come through with enough money to help them.

“What type of message does that send to Burkina Faso, a country that has spent a huge amount of political capital and money on this process?” he asked. “What does that tell the Togos, the Nigers that want to become eligible? It tells them: Do everything like Burkina Faso, make all these reforms, spend millions of your own money, and then maybe at the end we might be able to sign a compact with you — or maybe not.”

Steve Hanke thinks Zimbabwe should adopt a new monetary regime by allowing competition between privately issued currencies. Given the current disaster, with inflation exceeding one thousand percent, that sounds quite reasonable. But the reason the country is in the midst of hyperinflation is that Robert Mugabe is not reasonable, so there’s little reason to call for free banking in Zimbabwe.

Is Africa turning the corner?

The acting director of the US Treasury department’s Asia Office says that the world just gained a few hundred million poor people:

In a little-noticed mid-summer announcement, the Asian Development Bank presented official survey results indicating China’s economy is smaller and poorer than established estimates say. The announcement cited the first authoritative measure of China’s size using purchasing power parity methods. The results tell us that when the World Bank announces its expected PPP data revisions later this year, China’s economy will turn out to be 40 per cent smaller than previously stated…

The number of people in China living below the World Bank’s dollar-a-day poverty line is 300m – three times larger than currently estimated… The ADB’s announcement also indicates that the number of dollar-a-day poor in India is closer to 800m than the current estimate of 400m.

Calculating the number of poor people is a difficult task, and disagreements about methodology abound, so I don’t take this FT piece as authoritative, but the issue warrants renewed attention.

I believe this ADB report is the one mentioned, though I cannot find any figures describing the number of people below the poverty line.

Jagdish Bhagwati did a Q&A session with the IHT. Here’s his comment on Jeff Sachs:

My worry is that such a technocratic approach will – if aid flows are increased precipitously (right now, there is no evidence that they will), and aid is seen to be wasted and misused – turn the spring in aid into winter. He will then have done for Africa, in the public eye, what he did for Russia with his technocratic shock therapy: an outcome that every serious Africanist scholar I have talked to fears.

Read the full interview for his thoughts on Africa’s absorptive capacity and other issues.

Greg Mills sees Paris Hilton and “white, generally loud” humanitarians in “a shabby-chic uniform of T-shirt, jeans and sandals” heading to Africa and decries them as “the new imperialists“:

It perpetuates perceptions of helplessness and a victim mentality. At a time when many have realized that African development depends on Africans determining their own policies and making those choices, such actions transfer power and emphasis away from the continent’s decision-makers.

[HT: Tom Palmer]

Greg Mills sees Paris Hilton and “white, generally loud” humanitarians in “a shabby-chic uniform of T-shirt, jeans and sandals” heading to Africa and decries them as “the new imperialists“:

It perpetuates perceptions of helplessness and a victim mentality. At a time when many have realized that African development depends on Africans determining their own policies and making those choices, such actions transfer power and emphasis away from the continent’s decision-makers.

[HT: Tom Palmer]