Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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Missing Pieces: China’s Economy, Africa’s Economy, and More

by Isobel Coleman
June 1, 2012

Newly constructed residential buildings (back) are seen next to a construction site in Xi'an, Shaanxi province, China, May 25, 2012 (Rooney Chen/Courtesy Reuters). Newly constructed residential buildings (back) are seen next to a construction site in Xi'an, Shaanxi province, China, May 25, 2012 (Rooney Chen/Courtesy Reuters).
Charles Landow highlights work on China, Africa, and global development issues in this edition of Missing Pieces. Enjoy the selection.
  • China’s Economy: This week’s Economist features a sanguine special report on China’s economy. The report “argues that China does face significant problems, but nothing it cannot handle.” While many believe exports power China’s economy, it says, the real engine is investment. And China has not overinvested. Some investments have been misguided, especially through local governments and state-owned enterprises, but the cash-rich banks and central government can handle any bad loans that result. Still, the report notes the need for daunting reforms, such as liberalizing the financial sector, boosting social spending, and scrapping the hukou system of residence permits. “The faster that China expands, the sooner it will outgrow the development model that has served it so well for so long,” the report warns.
  • Africa’s Economy: Following the recent Africa Human Development Report and Africa Progress Report, this week saw the launch of the African Economic Outlook from several regional and international organizations. The outlook projects average growth across Africa (both North and sub-Saharan) of 4.5 percent this year and 4.8 percent next, though population growth of over 2 percent will lower the per capita impact. The top performers should include Libya, Niger, Ghana, Liberia, and Angola. Among the striking findings in a chapter on financial flows is that aid dependency seems on the rise: 25 African countries received aid totaling more than 10 percent of their economy in 2010 compared to 19 countries in 2000. And in a special section on youth unemployment, the report notes a difficult dichotomy: “too many bad jobs in poor countries, too few jobs in middle-income countries.” A Guardian article summarizes the report.
  • Why Nations Fail: In the New York Review of Books, Jared Diamond offers both praise and criticism for Why Nations Fail by Daron Acemoglu and James Robinson. In a sweeping analysis familiar to readers of his 1997 Guns, Germs, and Steel, Diamond chides Acemoglu and Robinson for “brush[ing] off two entire fields of science, tropical medicine and agricultural science.” While Why Nations Fail identifies “inclusive” institutions as central to long-term prosperity, Diamond argues that lower agricultural productivity and more virulent disease have hindered the development of these very institutions in the tropics. Acemoglu discussed his book at a CFR meeting hosted by Isobel Coleman in April.
  • A View from UNICEF: UNICEF executive director Anthony Lake explains his views on development in a recent article and interview. First, on ForeignAffairs.com, Lake and his co-author, Robert Jenkins, argue that interventions targeting the poorest are not only moral but also cost-effective. Emphasizing “equity” in this way can, they contend, reap huge development returns. In the Financial Timesa column recounts a conversation with Lake in which he “seems to be with the new ‘randomistas,’” who favor randomized control trials (RCTs) to test development interventions. A review of the interview on “A View from the Cave” calls Lake “just a tad behind on the times.”  It calls on researches to “offer some suggestions on how to do better evaluations that” go beyond what RCTs can offer. This echoes a post on the NYU Development Research Institute’s blog summarizing a recent debate between two eminent economists on the merits of RCTs.

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