Global Young Social Entrepreneurs Contest

The contest is open to anyone under thirty years old and is organized by the Youth Social Enterprise Initiative, which offers fellowships and start-up financing to youth social entrepreneurs.

The new deadline is September 9, 2007.

Microfinance & Development Technology Partnership

ACCION International, a pioneer and leader in global microfinance, recently announced that its Gateway Microfinance Infrastructure Fund (GMI) has completed an investment in United Villages, Inc. of Cambridge, Massachusetts.

Excerpt:

United Villages, Inc., a rural Internet Service Provider, provides people in the developing world with a lifetime phone number, email address, Internet access, and a stored-value account for under $1 per person in cost to the company. By installing its low-cost Mobile Access Points (MAPs) on existing vehicles (e.g. buses and motorcycles) that pass through rural areas, United Villages enables access for WiFi-enabled kiosks along village roads. Customer transactions are stored on kiosk computers that transfer information to the MAPs whenever they are in range. Then, the MAPs upload and download all of the data from and for those kiosks once they are connected to the Internet, creating a store-and-forward "drive-by" WiFi network.

Created in 2006, GMI is a unique equity fund designed to invest in technology and information service companies that support the microfinance industry. GMI's investment in United Villages will be accompanied by a board observer role for ACCION. In addition to the investment, ACCION and United Villages will work together to identify synergies between remote-access technology and the financial products and services offered by ACCION's 35 partner microfinance institutions throughout Latin America, Africa, and Asia.

"United Villages' technology is a compelling platform that provides the rural poor with connectivity to economic opportunities that, until now, they've been unable to access," said Matt Thomas, senior director and manager of ACCION's GMI Fund. "This investment is an ideal fit for GMI, which seeks to develop companies that can help the microfinance industry achieve greater scale and efficiency."

Amir Alexander Hasson, founder and CEO of United Villages, added, "We look forward to working with ACCION to provide millions of villagers living in poor rural areas with access to locally-relevant products and services that can help them save time and money. The combination of United Villages' business model and ACCION's global microfinance expertise will create new opportunities for our customers as well as for microfinance institutions seeking to expand their reach to clients."

Venezuela Pledges 9 Billion in Foreign Aid

During 2007, Venezuela has pledged $8.87 billion in aid, financing, and energy funding to nations in the Caribbean and Latin America. Priority is given to socialist oriented economies.

Nicaragua received the most aid with a receipt of nearly $4.5 billion. Bolivia received the second most aid with approximately $800 million and Haiti with $320 million. Argentina received over $150 million in aid along with a $1 billion Argentina bond purchase by Venezuela which was included in the total.

The itemized list of funding can be found here.

In contrast, the OECD reports United States’ net ODA in 2005 was USD 27.6 billion, a rise of 36.5% in real terms. Its ODA/GNI ratio rose from 0.17% to 0.22%, its highest level since 1986. Apart from debt relief, most of the increase was due to reconstruction and other aid to Iraq (USD 6.9 billion), reconstruction and anti-narcotics programmes in Afghanistan (USD 1.3 billion) and aid to Sub-Saharan Africa (USD 4.2 billion). The combined ODA of the fifteen members of the DAC that are EU members rose 28.5% in real terms to USD 55.7 billion.

The bulk of Venezuela's aid, $6.4 billion, was targeted towards raising petrol production. It seems that Venezuela may be succeeding in creating significant and quantifiable economic returns from their aid. They are essentially vertically integrating their oil production through cross country aid agreements. Additionally, rather than creating a market for political corruption which is occurs when foreign aid is available to rogue nations, Venezuela is creating concrete investment projects that can help expand poor partner nation's ability to tap into natural resources.

Increasing Girls Enrollment Boosts School Performance

A new paper on the Mechanisms and Impacts of Gender Peer Effects in Schools indicates that "a higher proportion of girls in the classroom lowers the level of classroom disruption and violence, and improves inter-student and teacher-student relationships as well as students’ satisfaction with school. It also significantly alters teaching methods and lessens teachers’ fatigue and feelings of burnout..."

The improvements are measurable when the proportion of girls enrolled is above 55% and positively affects male student attitudes and performance at all levels at much higher rates than female achievement.

The data on school environment was based on self-reporting panel data.

On the subject of female v. male individual achievement, female students on average matriculated at a 22% higher rate and earned 10% more credits. Although in the early years covered in the study male students were more likely to enroll in advanced courses, after four years female enrollment eclipsed the number of males in difficult courses.

Thanks to Michael for finding this paper.

Roberto's Entries into the CGAP Microfinance Photo Contest

His full competition entry can be found here, but I have posted a few examples. These are all student who have received a Peacework education micro-loan.

As Roberto says, cheers.

Damien Alvarez

Whitney Obodozie

Rakeem Flowers

Peacework Micro-loan Initiative Success

We've successfully implementing our micro-loan program in Belize City, Dangriga and Independence.

We are currently interviewing our loan recipients and their families as well as executing the final loan contracts. We will be posting video interviews and individual student/family biographies soon.

The loans are made on a case by case basis to each student and their family and provide Belizean secondary school students with capital to pay for registration fees, tuition, uniform, and books at a 12 -12.5% interest rate for a period of up to 18 months. The money is directly deposited in the school for tuition and registration and checks are sent to uniform makers and book stores upon reciept of an invoice for the student's materials.

Priority is given to female students who are more stable loan candidates and for who the return on education is higher. For example, at Anglican Cathedral College where the most loans were issued 1 in 3 male student drops out during the first form (8th grade) while only 1 in 12 female students leaves school.

Currently, we have made 17 loans in Belize City, 1 loan in Dangriga, and 1 loan in Independence.

The Next Econ Nobel Prize...?

Dr. Greg Clark, believes that natural section is the explanation for the Industrial Revolution.

Basically, people with economic values gradually outlived those without them. He uses this thesis as a base to criticize "the 'cult centers' of the World Bank and International Monetary Fund as similar to prescientific physicians who prescribed bloodletting for ailments they did not understand."

Since, institutions are not responsible for economic growth, his work indicates that we should do nothing to fight poverty and let nature take its course.

I've attached also replies from Mervin Jebaraj and Michael Nicodemus.
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Well there are some faulty sweeping inferences about England's industrial revolution. Fully knowing that I am mostly speaking to a World Bank and IMF hating audience (and I do reserve a lot of criticism for them), let me say that Clark forgot an important piece to his analysis.

The Industrial Revolution coincided with the exploration and conquests of other continents. England led the way with the East Indian Company and many such establishments that traded (which in the day meant raped and plundered) with other countries. This was one of the most important reasons for the success of the industrial revolution( ie the emergence of new markets to supply raw materials and dump produced goods).

The same model was followed by the rest of Europe in subsequent years and the US (without any conquests) a few centuries later. So in reality, without absolutely dismissing Clark's thesis, much of Europe was enriched by trading (plundering), which further goes to say that people in modern developing and under developed countries helped lift Europeans out of poverty.

It sounds a little pretentious of Clark to assume that Europeans were the first to evolve out of poverty. If I remember correctly, they missed the ball on things like developing a number system, developing a calendar, complex architecture, irrigation etc.

Without sounding like a misguided idealist (and I was born 50 years too late to be bickering about colonialism), shouldn't the developed countries now turn around and help those who really helped them out of poverty. The bane of democracies are institutions and bureaucracies, but they are necessary for democracies to function so therefore, by extension the IMF and World Bank (as reform needy as they are) should not cease to exist.

-Mervin

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Mervin,

I would add that the increase in knowledge and rule of law had little to do with natural selection and more to do with improved communication through trade and society's trial and error with developing culture which had began to make legitimate gains during the enlightenment.

Trying to apply natural selection to human culture isn't practical since not only do self selecting biases occur, but it isn't feasible to judge evolution or universal paradigm changes in such a short chronological time period - it basically facilitate bigotry.

"Mankind's greatest error, the biggest deception of the past thousand years is to confuse poverty with stupidity...

Throughout history, religious leaders and other honorable men of conscience have always warned against this shaming confusion. They remind us that the poor have hearts, minds, humanity, and wisdom like everyone else. ...

People might feel sorry for a man who's fallen on hard times, but when an entire nation is poor, the rest of the world assumes that all its people must be brainless, lazy, dirty, clumsy fools. Instead of pity, the people provoke laughter. ...

In time the rest of the world may, some of them, begin to feel ashamed for having thought this way, and when they look around and see immigrants from that poor country mopping their floors and doing all the other lowest paying jobs, naturally they worry about what might happen if these workers one day rose up against them. So, to keep things sweet, they start taking an interest in the immigrants culture and sometimes even pretend to think of them as equals.

If I were in Germany, I'd worry that any man was looking down on me. I would instantly distrust him just for being a westerner. There's no escaping humiliation except by proving at the first opportunity that you think exactly as they do."

Excerpt from Snow by Orhan Pamuk
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Michael Nicodemus replies,

Mervin, first and foremost that was a very well written res ponce. However I think it is important to note that we are discussing Darwinism and not Buddhism. Survival of the fittest. Though Clark leads us to believe it was economic savvy, it is merely greed. Apparently the Europeans were the most greedy and therefore were the ones with the highest propensity to prosper, be it by the most disgusting in most unspeakable ways.

I also wonder what effect religion had on the "evolution." Because historically that is how man justifies his carnage. Christianity is a very capitalistic religion (see the parable of talents) and had just come out of the crusades; whereas the east was populated by nonviolent religions like Confucianism and the earlier mentioned. The parable of talents says God likes a man who profits and it is sinful to not engage in this behavior. Where as Confucius spoke of self denial and generally socialistic ideals.

NY Times Essay Contest Entry

The following is my response to "What's the Matter With College" according to the NYT's essay guidelines. This version of the essay has been modified. I felt some social narrative accounts that are not present in this version were relevant to my rebuttal of Mr. Perlstein's essay, but not to the more important discussion of international opportunities.

"Fortunately, College Has Changed."

This spring, Mervin Jebaraj, a University of Arkansas student from Dubai, stayed up all night to write the Arkansas Legislature a Sudan divestment letter. He handed his note to Arkansas State Senator Sue Madison the next morning during their introductory hand shake at an on-campus political awareness bar-b-que. His note went on to become Senate Bill SCR20 which was passed and signed last April as an announcement to managers of all state retirement accounts that they should divest from genocidal activities and to provide socially aware retirement options for state employees. Of course, Mervin did not invent the state’s divestment campaign, although he logged a full time job’s worth of lobby hours to pass the bill. Instead, he helped develop the idea at a Washington D.C. student summit on genocide which he attended earlier during the winter term.

I learned about the divestment campaign’s details this summer while hanging in a hammock in Dangriga, Belize where the University of Arkansas along with Peacework International created and sent a development team with a delegation from each of the University’s colleges. We spoke during my fourth week in Belize where I was working to establish a University micro-credit fund. It has since become the first institution to specifically create educational loans on an organizational level. As I write this essay, I am again in Belize and living in Peacework’s commune with three female agricultural students from the US and a doctor researching a policy paper on waterborne illnesses.

My experience this summer illustrates why college campuses are no longer the center of American social movements. Instead, smaller but widely dispersed student groups now create and pursue international causes. The rise in both higher education funding and enrollment has facilitated a competitiveness that leads any motivated college student to spend at least a summer semester abroad. Look around the college campuses domestically and usually they are calm. This is because many of our nation’s developing leaders are in places that are not calm. A short list of my friends’ current locations includes Croatia, China, India, Vietnam, Peru, Nicaragua and Nigeria.

Although they are distant, these students are not quiet. They agitate for international equality and make their voices heard through electronic mediums. Instead of letter writing and marches, Facebook is the collegiate culture’s informational source for social causes (where our microfinance fund information was quickly published) as well as economic and political debates. In thirty or forty years, when students from my generation are campaigning for political office, discovering their political passions during their college years will not be an anomaly such as with Hillary Clinton’s letters, but will likely be available with a few mouse clicks on the “Facebook dataset.” This phenomenon was apparent recently when Caroline Giuliani, Rudy’s daughter, was identified as a Barack Obama supporter by the Harvard Crimson and later major news outlets based on her Facebook profile.

Students still spend most of their time debating issues in coffee shops. However, these coffee shops are no longer only down the street from campus. Instead they are in our residence hall basements and libraries in multiplying numbers, and we commonly rendezvous in cafés in Johannesburg, Antigua and Prague. However, our nation’s educational achievements mean that there is some consolidation in shared knowledge. College students no longer debate easily defined and educationally clarified issues such as race and gender equality, but instead focus on related, but more technical arguments, which are usually difficult to riot over.

Since students have become broadly informed and more rational, it is becoming harder to rally around specific youth causes, which makes college much calmer. Similarly, it’s correct to say that the discrepancy between youth and adulthood has rapidly disintegrated as internships proliferate and job recruiting starts earlier. However as we’ve matured, college students now recognize that we are global patrons who must advocate not only for their local causes, but for international ones. Issues and rallies are less consolidated on a physical level, but our efforts are more acute and we reach large and diverse audiences. Students are equally aware that with accessible personal information we will likely be held responsible for any hooligan actions that arise during college, which breeds mature demonstrations and practical rather than revolutionary approaches to attract an audience.

Admissions offices around the nation have embraced students’ international ambitions with equal enthusiasm. Thirty years ago, studying abroad was for the intellectual elite, primarily language based, and limited to western regimes. Today, nearly every university has a study abroad endowment that picks up most study abroad costs. Recruiters promote these opportunities with pitches similar to “join the Navy, see the world.” I was told, “your education is now global, and we’ll help you travel the world while you complete your degree.” This trend reached a new milestone last year when the Institute of International Education, which tracks study abroad statistics, reported that the number of US students abroad topped 200,000 for the first time which has increased 145% in the last decade.

As college opportunities proliferate, competition for the best students is no longer between the top twenty-five institutions and a few unique privates. A growing majority of the nation’s elite 1% are entering what were once less glamorous public schools and their honors colleges because these large institutions have used state as well as private resources to attract the nation’s best. Many state schools now lead the international trend with elaborate pitches that include international service and research opportunities as well as provide individual fellowship applications that ask for not just student’s resumes, but their music and literary interests, photography portfolios and use interviews that identify their humor and curiosity.

The elite student diaspora to public schools and the number of students who are abroad has affected the physical centrality that once existed on college campuses. However, this has not diminished the student experience, but instead has spread the ability to learn across the globe. Students are now able to satisfy their intellectual curiosity internationally, and in a more cosmopolitan atmosphere when at US institutions. Along with recruiting key speakers to campus, students are now encouraged to use school funds to visit other institutions to hear guest lectures. Similarly, along with a school newspaper, most campuses have added a student run literary magazine, business review, alumni magazine, photography and art journals, and an economics periodical. Student voices are heard more loudly than ever before through these mediums since it is students who handle the state’s economic data and are more likely than ever to freelance for major news organizations.

Unfortunately, excitement about change is far from universal and many institutions such as the University of Chicago have not adapted. Mr. Perlstein’s sample case is widely known to be among the most sedated campuses in the US. The campus is famous for not only its uncommon application, which is not special at all, but for its widely worn student t-shirts, which say, “The University of Chicago, where fun comes to die.” However, we can hope that change will ultimately be fully accepted as the market forces that Perlstein mentions fully reach campus. The growth in competition and increase in opportunities has made college a more intense and creative experience than ever.

Belize Day Three - Meeting with Parents from ACC

This morning I opened an official Peacework – Microcredit account at Scotia Bank with the ACC Vice-Principal Diane Vasquez and Anglican School Superintendent Carol Babb. I spent the rest of the afternoon discussing how to facilitate future loans and more details about the program with both Diane and Carol.

The ACC parent-teacher-student-association (it’s the PTSA in Belize too) meeting started promptly at 4:30. There were nearly 100 families attending the enrollment informational for first year high school students. The meeting was held in the 250 year old Anglican church next door to the high school. The nation claims that it is the oldest established church in the western hemisphere. Its age is evident in the crumbled exterior bricks, but the inside is extremely well maintained. There are nearly 300 seats available and the church pews were almost completely packed when I walked inside. I passed out our programs flyers and took one of the only empty seats on the front row.

I was soon introduced as a “microfinance expert” by the vice principal. I walked to the simple pulpit where Anglican ministers have evangelized for the last three centuries and began to speak. Directly behind me was a thirty foot stained glass panel depicting the crucifixion. Since I was only a 20 year old college student from Arkansas speaking to a nearly entirely black Kriol speaking audience, I felt that the image was appropriate. I introduced myself as a Peacework volunteer and spoke quickly. After about five minutes I was through and I was followed again by the vice principal. She made a second appeal to the parents to take a loan rather than not register.

The school officials concluded the meeting about thirty minutes later and I waited at the front of the church for the four or five individuals I was expecting. Instead, I was soon mobbed by over half of the audience. I began answering questions from every direction - twice in Spanish - as parents demanded whether they were approved or not, when the payments would begin and how they could secure a tuition loan for their child. One mother shouted that if there was a loan available that she would “stay past midnight,” which was followed by a shout from the emerging crowd. I ran out of the fifty applications that I had printed in the first few frantic minutes.

Since there have been over fifty applicants since yesterday, I will spend today sorting through grades and making decisions on who will receive a loan. We only have available funds for about sixteen more students. Selection will be primarily on grades and gender. We are committed to at least half of the loans being made to female students, and I expect the final proportion to be even higher. However, difficult questions remain. Should the loans should be made to families that have three, four, or five children in school? What is their ability to pay back the loan? What about single mothers, especially those with more than one child? They are more likely to repay based on responsibility, but have less income. Finally, there are many families that have multiple children at ACC. Should we provide a loan to their daughter, but not their son? Is it responsible and equitable to provide a loan for two students from the same family?

These are the questions that make microfinance difficult – especially for educational microfinance since we are selecting student recipients, but base our selection on their family status and parents, which are areas where students have little control. We have limited credit histories from which to glean information. Many families do not have past credit or even bank accounts, which is why a corollary project goal has been to establish a credit history and comfort with financial institutions for students. The final and most important question is whether we should reach the poorest and least likely families, which have the most significant need, or whether we should follow a more financially successful path and choose students from families which are more likely to repay.

Belize Day Two - Our First Loan

Last night I stayed in the Anglican Diocese’s guest house. It is about two blocks from Anglican Cathedral College and the school offices where I am working. Currently, I am the only visitor so the other fourteen beds are empty and I have the luxury of all six fans in the house. There is cable that picks up all the Denver channels and I was able to use the internet from a stray signal last night that has disappeared tonight. If this is development work, I can’t complain.

I spent most of the day printing and folding brochures for tomorrows meeting with entering high school students. We made our first loan today for $211.50 which will provide the registration fee for a second form, male student. I spoke for about thirty minutes to his mom who is a single parent and works as both a beautician and part time office cleaner. She has a monthly income of $350, which makes an upfront payment of $261.50 nearly impossible to make. Instead, she is now able to pay $22.31 a month for twelve months with an interest charge of less than $18 so that her son can attend high school. Once he graduates, he can expect to command more than double the salary that he would earn without a secondary diploma.

Belize Day One - Belize City

Belize City is a painfully hot, trashy, poor city that feels and looks like prison. Everything is rundown, but expensive. The cost of the taxi ride from the airport for five miles is $25. Fuel is $5 a gallon. Even though Belize is a net oil exporter, it does not have the infrastructure to refine petrol. Belizean fuel is piped to Texas and refined oil is purchased from Venezuela. Nearly every item at the grocery store is imported from the US, even some agriculture such as apples and peaches. The key products created in Belize are bottled water – there are at least two major competitors, a few agriculture products such as citrus, hot sauce and a unique sweet and syrupy yogurt from the Cayo district, and Belikin “The Beer of Belize,” which tastes like darkened and diluted rubbing alcohol.

Belize City itself is crowded, dilapidated, and abandoned. There is a port where cruise ships dock and a five mile strip along the coast called “Old Belize” for cruise patrons to visit. The few visitors who do fly into Belize City quickly make their way to either Flores, San Ignacio, Caye Caulker and Placencia or this small section of the city.

I wondered around the downtown for about an hour last evening. There are two or three homeless males outside of each store. The homeless in Belize City seem much younger and potentially more productive than the homeless that I’ve seen in other places. Also, they don’t beg – they threaten and demand. Nearly every block I hear a “big man give me a dollar; what, why not bitch?” This is usually followed with something like, “I’m gonna fucking kill you. You have no friends here man.” Twice already I have been uncomfortably followed. I’d like to add that there are little or no street people that I have seen in other Belizean cities. A partial explanation for its problems it that Belize City is on the cocaine route to Miami, which means drugs are cheap and abundant – supposedly drug filled missiles are shot into the coast every morning, although this is not something that I have personally encountered. There is no industry in Belize City itself and tourism jobs are limited, which means that most people either work in limited private or government service industries. There are three principal types of business in downtown Belize City, bank branches, run-down and frequently closed small restaurants, and open aired vendors which sale a combination of high margin fashion and basic appliances. Also, there is Payless Shoe Store and a boutique with shaded windows and double security that claims to sell Ralph Lauren. Outside nearly every store is a sign written in sloppy sans serif, which when in red and from a short distance looks exactly like a sign written in blood. Additionally, there are many heckling taxi drivers who sit on sidewalks and are usually not discernable from vagrants. This town was partially destroyed twenty years ago and it looks like no one bothered to rebuild.

The Guardian Debates the Creation of a Proper Government

LSE scholar John Gray argues that the best forms of government today are relics of monarchy and imperialism and that a stern despot is the safest government. I think Machiavelli would be proud.

The comment section and its rebuttals are even better...

Excerpt
The point about the bloodiness of nation building is well made. It is a process which has often had little to do with democracy in its early days. The type of monarchy Gray is referring to here, I think, is composite monarchy, whether under the Habsburgs, Britain, or Spain, where a visible central crown diverts attention from ethnic rivalries and competition. Monarchy, when limited, is not incompatible with democratic institutions, as has been obvious to British liberal thinkers from Locke to Mill. It certainly is no less a guarantor of democratic government than republics, as the Dutch, Swedish and Danish will testify.
There have, however, been successful models for incorporating multiple identities outside monarchy, and it is not quite true to state that attempts to frame written constitutions inevitably come unstuck. The United States is perhaps the most obvious model of a durable system, though, as Tocqueville noted, it is probable that the success of democratic models over such a large territory owed much to the separation of religion from government. Switzerland is a more ancient example, where a federal system has provided remarkably stable, but one could argue that this was a result of geopolitical situation in which the component cantons were surrounded by much larger potential enemies.

Excerpt
Well, it could be argued that monarchs are in fact the reason why these "national conflicts" continue in Spain and the UK. There are as many "nations" in France as in Spain (Basques, Gascognes, Occitanes, Bretonnes, Corsicans, Alsatians). France even has the largest Jewish community in Western Europe, a nation in itself. National problems there are politically irrelevant though. "La Republique" has been more successful than any monarch to unite them all as FRENCH.
A better case is the Italian, where "nations" can be found as well. The German speaking Sudtirol, the Greek Speaking Taranto, Sicily, etc. have a "national" character of their own (they eat differently, speak a different language, have a very diverse political history and customs). They even have a nationalist separatist party (Lega Nord), which is politically laughable in comparison to the Spanish nationalist parties or its Scottish and Welsh counterparts.

Financing Secondary Education in Developing Nations

UNESCO and International Institute for Education's massive report on the challenges and strategies for financing secondary education, which are growing due to the lack of investment for secondary schools that is coupled with the growing demand for a high school education due to improvements in primary school enrollment and completion.

The Effects of Education on Macroeconomic Growth

Teulings & van Rens debate the determinants of macroeconomic growth and consider the discrepencies between private and social human capital returns as well as the methods of createing economic growth through educational investments in their paper Education, Growth and Income Inequality.

Highlights from the paper -

Regression studies show that education does not affect the level of an economy’s GDP, but does affect the growth rate.

For every year of education the rate of private return decreases by two percent. There is a paradox since the return to human capital decreases when education levels rise because the relative scarcity of an educated worker becomes less and the relative scarcity of an uneducated worker rises.

This is further explained by the inverse relationship between the aggregate supply of education and its return. For example, only the most complex jobs have the highest return for education. When total levels of education rise, workers are forced to take less complex jobs, which decreases the human capital return.

Social return also does not equal the private return. This is, according the article, only because of endogenous technological progress, which reaches higher returns with higher education levels because of the increased profitability of skill biased technologies. This process reignites the return to human capital, but only on a social level. Consequently, the social human capital return is higher. Corollary criticism is that if the role of education is for technological diffusement, there is a negative return to experience and only newly educated workers should be desired. Also, because private returns to education don’t rise in the long term there is an argument about how much technological progress is skills biased.

Composition effect of education – unequal education results in larger income discrepancies.

Compression effect of education – higher average levels of education result in less income inequality.

On causality between economic growth and education, education most directly affects GDP growth because there is about a 10 year lag between the effects of economic growth on education while the inverse happens much quicker.

The paper raises the question of whether it is effective for a developing nation to attempt to import capital through an industrialization strategy, which was the essential method of growth for the Asian Tigers during the sixties and seventies and is is a strategy currently propulgated by some development experts?

Does the GDP to education lag affect the merits of this strategy?

Is technological progress really skill biased?

Is there an incentive for educated workers to limit others educational opportunities? It would keep their own wages higher and keep other labor inputs cheaper. Is this "descrimination" and does it happen?

How do nations combat the education lag and make investments in education most efficient? Should a developing nation import technology now and invest in education later?

BONUS - Methods of calulating educational returns, i.e. Mincer Function.

Delhi Kid's Bank

In Delhi, street children operate a microfinance bank for their peers. CSM highlights the excellent fiduciary responsibility of lenders and lendees but mentions critisicm that the children who take loans are not improving their long term earnings and graduating from poverty. It seems that the small nature of the student's projects, even by microfinance standards. Whether the income graduation of the Delhi Children's Bank loan recipients is less than adult micro-bankers has not been determined. Critics may just doubt the abilities of youth entrepreneurs more than adults. A more important question may be if the local community and regulators give similar respect to youth micro-businesses.

BBC reports on the same program and offers a few more background details about the bank.

Belize & Dangriga

I'm blogging from Dangriga, Belize where the University of Arkansas Walton College of Business and Peacework International are implementing a program called the Village Business Initiative. There are four working groups each of which has a separate development project. One teaches small business development classes, another economics and business math in local primary schools, and a third provides consulting for established Dangrigan businesses. Additionally, my team is working on to develop microfinance programs for Dangriga and the Stann Creek District.

I've decided that my attitude before arriving in Dangriga was overly optimistic. Although Belize as a whole seems to have a enthusiastic entrepreneurial culture and quickly developing financial and property rights systems, Dangriga's personality is far more stubborn and there is a prevailing sense of suspicion and a hesitancy to cooperate with foreign aid workers along with a reluctance to embrace the risk that accompanies greater economic opportunities.

The town is about 14,000 people large and is homogeneously Garinagu, which is a hybrid West African and Black Carib culture. The language spoken at home is Belizean Kriol which is a form of English that uses an inverse grammatical structure and far more slang. However, every Dangrigan speaks English, although proficiencies differ greatly. There is a strong Rastafarian sub-culture within the city that adds to town's vibrant Garifuna personality and the town maintains the majority of their cultural traditions. The town's greatest anomaly is the Taiwanese population which runs every store as well as the majority of the restaurants in town. Most Garifuna business owners view the Taiwanese and having an extra advantage because of their access to cheaper capital from Taiwan and there is an underlying antipathy between the two groups.

From my experience with interviewing business owners, part time artisans and students, it does not seem that Dangrigans want to develop a significant tourist economy. The income gap is high, health services are not adequate, and HIV/AIDS affects 5% of the town's residents, but most people continue to live comfortably, resources are sufficient which keep basic goods cheap, and family relationships are strong. This provides most people with economic security and a high form of subsistence living. As a result, the perceived opportunity cost of promoting tourism is much higher than in other parts of Belize because of a prevalent attitude that traditional ways of living will be corrupted and the lack necessity to take entrepreneurial risk since all basic needs are met.

Lunch with Lord Robin Butler

On April 25, I had lunch with Lord Butler, the Baron Butler of Rockwell, Master of University College Oxford and distinguished British civil servant, with a small panel from the University of Arkansas Honors College. Lord Butler's most recent work of note was leading the British Government's inquiry into pre-Iraq War intelligence, which came to be called the "Butler Report."

Our conversation was to be primarily on the topic of law and intelligence and the corrupt data that predicated the joint US-UK invasion of Iraq in 2003. As we sat down over a simple meal of pasta primavera and salad, Mr. Butler introduces himself by promoting Oxford and expressing his excitement to be managing University College where he studied. For a politician, his British accent is warm and his voice commands the room without any sound of confrontation. With his rosy complexion, Lord Butler has almost a grandfatherly energy.

After our introductions, he turns to the topic of pre-Iraq intelligence. He places responsibility for the government's assertion that Saddam Hussein possessed weapons of mass destruction on a combination of confirmation bias, a belief between intelligence agencies that each had secret and superior intelligence confirming WMDs, and an assumption that if Mr. Hussein previously owned a WMD arsenal he must have retained it until 2003.

Another dinner guest asks why Mr. Hussein simply didn't expose his lack of WMDs. Lord Butler responds that "the Iraqis weren't the type to make reasonable decisions" and related a story he discovered, when interviewing a farmer, of the Iraqi casualness in burying objects in the desert, including a MIG fighter jet which when uncovered was completely inoperable from literally sand desertification. He leaves open the possibility that WMD's may exist along with other government secrets somewhere in an Iraqi sand dune.

I turn the subject to the consequences for British government, specifically soon to be Prime Minister Gordon Brown. Lord Butler argues that Brown has successfully separated himself from any intelligence debacles and that he believes it will not harm Brown's ability to govern. Brown, he calls, an "inward looking and deeply conscientious man" but Butler worries that "Brown does not have personality to craft foreign policy." Butler than goes on to describe Tony Blair as a trivial thinker, although a charismatic speaker, as a contrast to Brown. At this point, I've become aware of Butler's conservative political leanings, which again surfaced when we moved off topic to the subject of the French Election. On which, He voices his intellectual support for Nicholas Sarkozy and calls Ségolène Royal's policies "widely empty, although she is attractive, (pause) physically, I mean."

Not wanting to be stuck in a European political debate, I turn the conversation back to Britain's international involvement. I ask if "Brown's reconciliation and development policy of increasing foreign aid is authentic and effective at engaging terrorism and rogue nations." In his response, Butler avoids the question of effectiveness, but says that Brown is "completely authentic and believes in improving Africa" and thinks that Britain's focus will move away from East Asia and the Middle East during Brown's administration. A policy that Butler seems to believe will be a symptom of weakness from Brown and factor into an inability to confront more serious international problems.

I ask if reducing poverty is a key to confronting the fundamental basis of terrorism "why don't the forces in Afghanistan allow farmers to grow opium with regulations and taxes, instead of burning their sole source of economic income? "Its true, says Butler as he negatively shakes his head and forks another bite, that British soldiers will not be as likely die in Afghanistan if opium was legally grown and that the Taliban would lose their economic power, but permitting opium crops is just not a solution that the UK or any other nation can allow.

Finally, Butler introduces the topic of immigration into the UK. He says that immigration has been positive for Britain, and that the publics' opinion is not against more immigration, even from Turkey. "Brown will work to get Turkey into the EU, unlike the French, which should be good for everyone," said Butler. I am pleased to see his positive opinion on EU enlargement and to hear about the UK's optimism towards Turkey's entrance. I ask if he expects secular Turks to help moderate the political climate where fundamentalist North African immigrants have polarized the nation. He shakes his head in agreement, but seems to be a little tired and more concentrated on his food. Our table's conversation begins to drift and Dean McMath interrupts to thank Lord Butler. Before we go, Lord Butler energy picks up and he takes a few photographs. As we shake hands and leave the table, I feel a little more like the world's policy makers, while experienced and intelligent, make decisions with nearly the same information that is available for the rest of us.

The Economist Overviews the Latest Foreign Aid Statistics

Highlights from the Economist article are that wealthy governments are not maintaining aid promises, aid groups are overly intrusive, and recipient governments hoard aid for reasonable as well as corrupt purposes.

Financial Times Has Lunch with Jeffrey Sachs

Sachs comments on the lack of sufficient aid being given by nations and insinuates that William Easterly has hurt development through his criticism of large aid donations.

Developing Nations Face Severe Climate Change Risks

Today's New York Times article "Poor Nations to Bear Brunt as World Warms" reports on the changing perception of how to enact sustainable development solutions.

In an excerpt, "Robert O. Mendelsohn, an economist at Yale focused on climate, said that in the face of warming, it might be necessary to abandon the longstanding notion that all places might someday feed themselves. Poor regions reliant on unpredictable rainfall, he said, should be encouraged to shift people out of farming and into urban areas and import their food from northern countries."

An awareness of global warming trends may affect the University's development plans in Belize. The National Academy of Sciences published data from UCLA researchers in April 2006 that indicates that "parts of the Caribbean and Central America are likely to experience a significant summer drying trend by the middle of this century, ... The majority of the computer models calls for a substantial decrease in tropical rainfall to occur by 2054."

Belize's Education System Criticized

A recent editorial from the Belizean newspaper Amandala attacks the lack of separation between religion and education in Belize.

"Such an educational system as we have in Belize, is therefore an elitist system. A small percentage of our children do very well. ... Belizean education has become so dominated by religion that the question of education efficiency cannot be considered without the angst of religious faith."

The independent online Belizean News Source comments on the nation's ethnic relations and the question of a Mayan homeland. "The essence of the Maya’s case is true. But whatever injustice was suffered by the Mayas was at the hands of the British." In neighboring Guatamala the Economist reports on the rising popularity of ethnic Mayan and Noble Peace Prize recipient Rigoberta Menchú's presidential campaign.

GMU Microfinance Research

George Mason University's MERCATUS Center offers an argument against microfinance as a sustainable solution for reducing poverty. The paper titled "Microfinance in Action: The Philippine Experience" argues that microfinance often supports short-term consumption needs rather than providing long-term income security. Instead of microfinance initiatives, the paper makes the case for improving property rights as a more efficient method of small business finance.

The paper provides a convincing argument that microfinance can be a "band-aid" solution. However, the idea of the poor obtaining financing from mortgaging a land title is less appealing. Land is seldom titled among the poor because it is not economically efficient to do so. Although there is a large dollar value in the collective land value of any poor region, there is little economic benefit in the cost of researching title and perfecting a security. Additionally, land is often collectively owned by extended families or clan groups which delegate ownership rights by a means that is often different than is done by Western or National legal systems.

MIT Research Paper Describes Consumption Habits of Abject Poor

New research titled "The Economic Lives of the Poor" from MIT describes the consumption habits of people living on an income of $1 per day (the abject poor) and $2 per day (poor). A key finding is that the poor are not limited to purchasing subsistence goods, but rather have a significant amount of discretionary income.

The research data additionally somewhat discredits the concept that extreme poverty is defined by insufficient subsistence goods such as food. For a typical family surveyed spending on food consumption ranged from 56% - 74% (the researchers speculated that the large difference in consumption on food is in part based on the relative discrepancy in domestic consumer goods. For example, India produces low cost electronics) followed by a median expense of 10% of income on festivals (including weddings, funerals, or celebrations) and alcohol and tobacco which ranged from a median of 4.1% in Papa New Guinea to 8.1% in Mexico. Spending on education averages 2% of income across the households surveyed.

For every 1% increase in income, the average amount of increase on food spending is .067% (Deaton & Subramanian, 1996). Additionally, the amount of television ownership increases from 14% to 45% across nations surveyed when income increases from $1 to $2.

The data compiled in the paper is based on the World Bank's Living Standards Measurement Survey (LSMS) and the Rand Foundation's Family Life Survey.

The paper raises concerns about the effectiveness of foreign aid. Based on MIT's research, direct food aid may contribute to a higher level of discretionary spending among the poor rather than raising levels of health. However, a micro-credit initiative may see mixed results. The lack of entrepreneurial opportunities likely is constrained by the absence of productivity supplies. Although, the significant amount of luxury purchases by even those who are considered abjectly poor likely creates a large pool of potential consumers for a small entrepreneur.

Arkansas Divestment Campaign's Success in State Legislature

On Monday Bill SCR20 to encourage state retirement companies to identify companies operating in Sudan and divest from those companies received a do pass recommendation from the state joint committee on Public Retirement and Social Security Programs. The current status of the bill can be viewed online.

We would like to congratulate the students at the University of Arkansas who began and managed a successful divestment campaign.

Although we are concerned about the ideology of legislating what is an appropriate investment practice, we do feel that state retirement plans have a responsibility to to clearly indicate what activities an investor's funds support and to offer alternative fund options when their is a serious question of harm. We commend the state legislature in simply encouraging fund operators to become transparent about their portfolio activities rather than going so far as to define a moral investment by statute. It is clear that state retirement accounts have a social and legal responsibility to define their investment holding's conduct in Sudan and offer a divested fund option for pensioners.

In the future, we hope to see more publicity given to the Darfur genocide and an initiative to inform the state's investors about their ability to divest personal funds from companies that are complicit in the genocide.

Visit the Arkansas STAND website for more information on the Arkansas Student's divestment campaign and their platform against the Darfur genocide. Further information can be found at the international Sudan Divestment Taskforce website.