June 13, 2007

Interesting snippets

1. Professor Jalal Alamgir writes a very interesting piece in the Daily Star today about the record of our two parties. He cites studies that find no difference between their records on economic growth, but finds the Awami League government's record on human rights and quality of governance a lot better.

What interests me is that he does not look at the state of income distribution across time, through the reign of military and political governments. It's a widely accepted fact that Bangladesh's unprecedented growth rate has been due to the falling of trade barriers worldwide following the fall of the Berlin Wall. So the presence of a political government overseeing high growth rates is a happy coincidence at best. Military governments can achieve as much growth as civilian ones (e.g. Ayub). No one asserts that they can achieve the same level of development. Decreasing inequality has everything to do with development.

I'll probably have more to say about Professor Alamgir's choice of indicators for "human rights" and "quality of governance indicators". Nevertheless, an important piece and a timely reminder not to be swayed by "fashions in thought". You reading this, DS columnists? Just a tiny reminder to Prof. Alamgir though: stereotyping an entire 150 million group of people (our cousins in Calcutta are of course NOT hujugey, they're still stuck with notions of superiority!) to prove that stereotyping an elite sub-set is wrong, sounds ridiculously like saying "all white people are racist". If all Black people in the U.S. were rich and powerful that is.

2. Interesting addition to the microcredit scheme in India as reported here. An Indian economist and activist has opened up a school for rural women where they can take courses "in entrepreneurship, accountancy, bank finance, marketing skills and confidence-building for a piffling Rs150 (US$3.70) for a three-month basic course and Rs600 for a six-month advanced one." A degree also ensures automatic eligibility for receiving loans. Name: Udyogini Business School. I'd say that translates well.

7 comments:

M said...

I disagree that "decreasing inequality has everything to do with development" -- if everyone in the economy benefits equally from economic growth (at least the lowest fifth benefits one-on-one with the aggregate rate of the economy's growth, if you believe Dollar and Kraay 2000), there's no reason why everyone isn't better off, ie. "more developed". On the contrary, if the richest 10% simply donate part of their wealth to the lowest 10% (who would perhaps still be below the poverty line even after the donation), and the rest of the economy stays stagnant, one can hardly make the case that the country has developed more.

I'm too lazy to look up figures, but rrom memory, the Gini coefficient hasn't moved much over the past 20 or so years for Bangladesh. I don't think any tests on the Gini will have enough power to reject any null of equal coeffs across regions, maybe that's precisely why Jalal's ignored it.

I totally agree, however, that Jalal's indicators suck, on the face of it. However, I don't know his control variables or the source of his data. At any rate, if you've read Acemoglu, Robinson, Johnson, anything is kosher for an indicator nowadays.

m said...

oops, that's 'across regimes' not 'across regions'

Anthony said...

An equal distribution of poverty is not better than an unequal distribution of wealth.

This is not to say that distribution doesn't matter. It does. People care about relative income, and that means some distributions are better than others in welfare terms.

Much more relevant for development is not inequality per se but intergenerational mobility. It's not 'I'm so much poorer than you', it is 'given I'm so much poorer than you, what are my chances of becoming as rich as you?'. Given starting inequality, democracies arguably give the poor better odds at becoming rich.

asif said...

M, Anthony,

It seems to me that both of you are assuming I am advocating sacrificing growth for equality, Marxist-style. I am not. I was just hoping that someone as knowledgable as Prof. Alamgir would not set "growth" to be the yardstick by which we measure our governments. Inequality was a suggested factor to look at.

M, yes statistically there is no reason why everyone isn't better off under the one-to-one model. However, like every good economist, you are holding other things constant. Those other things, like access to tertiary education, access to quality healthcare, access to information etc. etc. are part of the whole "development" picture. Not least, of course, Anthony's intergenerational mobility factor.

Here, I must confess, I found your statistical treatment to be going wayyyy over my head :). Sorry man, econometrics was wayyy too many coffee cups ago!

I don't think Alamgir's indicators "suck', just that he should have chosen ones that are more convincing for his variables.

Anthony, my friend: inter-generational mobility! You've hit it right on the head. Then it could simply be argued that it's still too early for BD, don't you think? Also, how would you apply that criteria to our politics?

Jalal said...

Thanks for the comments on this essay. Let me address some of these concerns.

(1) Of course this is not a comprehensive analysis, which would run for pages, as I've said in the article. My goal was to simply take what I thought to be the first 3 things that come to mind about ec. and pol. performance and compare on that basis. Hence, growth, human rights, democratic governance. Within rights, the most glaring thing is extrajudicial deaths (in wars, for example, one first counts the dead to get an idea of its impact, and then on to other things). Within democratic governance, I took free elections as given, and then looked at 2 other indicators which I think are quite reasonable. All of these are aspects, not a comprehensive criteria, but they do point to a critical difference between BNP and AL.

(2) Analysis of inequality was not the purpose of this. I dont think addressing inequality should be the foremost economic concern of the government (but that's me). And I agree with M that gini coeff. probably has not seen that much change since 91.

(3) Great point about removal of trade barriers and general liberalization that has contributed to growth since the fall of the Berlin Wall. I agree. Note that both BNP/AL pursued a liberalization agenda more than Ershad or Zia did, so growth due to liberalization is their credit, and therefore endogenous. There's no point in isolating its effect from other contributors to growth.

(4) This is not a regression analysis or experiment, so control variables are immaterial. It is a straightforward comparison on three criteria.

(5) The econ. data come from UN Stats Office and ADB. The extrajudicial death counts come from annual reports of Amnesty through 91-2005. The governance data come from peer-reviewed and published research by Nizam U. Ahmed, as stated in the article.

Thanks again for excellent (and challenging!) comments.

asif said...

Professor Alamgir,

First and foremost, thank you very much for taking the time to answer what are in the end my personal reservations about your article.

Of course, no one is expecting a peer-reviewed journal style article in the Daily Star (pity though!).

Yes, growth can be a very accurate indication of economic performance. However, it is not an argument for or against a military regime, which is how you present it in your essay. I've stated already that Bangladesh's increased growth rate has simply coincided with it's civilian regimes, not caused by the latter. If we look at Pakistan, I think we see the similar picture. However, on other indicators such as inequality and spending on health and education, military governments lag behind significantly, and a comparison between BD and Pakistani civil and military regimes will most likely show that. Now, I'm absolutely sure that NONE of this is news to you, in which case I suspected you of dumbing down the news for public consumption. Which, IMHO, is somewhat sad.

#3 seems like we're getting into the structure-agent debate in IR, and let's face it, we're not going to settle that on this blog!:) I'll just point out here that politicians/military strongmen rarely make economic decisions, so giving them the credit for the liberalization or its timing is essentially equal to giving them credit for having stood out of the bureaucrats' way as the latter went about their business. Also, one may point to the whole region's liberalization to figure out the timing of it.

I agree with your indicators for democratic governance. The BNP's reliance on executive privilege is in keeping with its ideological affinity for authoritarian practices/ideologies/figures (e.g. Tareque was billed as Bangladesh's Mahatir, not as say Bangladesh's Mandela). However one hoped that you would have taken press freedom for democratic governance as well. I don't know what the results would have been on the comparison between the parties. It would have also highlighted the differences between civil and military regime.

On human rights, I felt that a focus on illegal detention under the SPA would have been a good complementary indicator given its long history of abuse. Yes, extra-judicial killings affect the right to life, but the scope of the SPA abuse is farmore. Once again, I don't know who would have come off better. But this I'll admit, given BNP-Jamaat's record over the last 5 delirious years, it probably wouldn't be them.

Once again, let me repeat: a timely reminder not to get duped by the propaganda emanating out of the "highest halls". I don't think you took my criticism personally at all (and thank you for that!), but let me just say that I wouldn't have written about it at all if I didn't think that as an expert your views mattered and set benchmarks for others such as myself.

Jalal said...

Dear Asif,

Agreed: growth is not an argument for or against a military regime. But it is one of the justifications often given for military regimes.

I disagree that politicians do not make economic decisions. Liberalization was a decision (more accurately a series of decisions) made by both technocrats and politicians. Politicians could have chosen a more populist agenda with heavy state investment. Some times politicians made disastrous economic decisions. Reagan's economic agenda varied from Roosevelt's. Narasimha Rao and Manmohan Singh in the 90s took a political decision to liberalize Indian economy against very strong opposition from most of their own party. Bangladesh's economic program since the 90s were policy choices that were made/continued by parties that came to power, with a lot of involvement from domestic and foreign technocrats.

The SPA point is well taken. I actually did some research on SPA numbers a while back. I was able to get numbers for only some years not all. It would be a very good indicator to look at, if I can get all SPA figures.

Thanks for the very thoughtful discussion.