Missing Pieces: India’s Uncertainty, Aid and Growth, and More
June 22, 2012
Indian Prime Minister Manmohan Singh (C) speaks with Finance Minister Pranab Mukherjee (L), as Chief of India's ruling Congress party Sonia Gandhi watches, during a function held on the completion of the government's three years in office in New Delhi, May 22, 2012 (B. Mathur/Courtesy Reuters).
Charles Landow covers news from India and Pakistan, as well as work on state failure and the effects of aid, in this installment of Missing Pieces. Enjoy the selection as always.
- India’s Uncertainty: Is India, the emerging giant whose GDP growth topped 10 percent in 2010, on the ropes? An article by Pratap Bhanu Mehta in the July/August Foreign Affairs says it is. Growth is down while the deficit and inflation are up. “Plans to build a more inclusive nation are in disarray,” with inequality on the rise. Part of the problem is simply overheated expectations, Mehta says. But he largely blames India’s politics. Opaque policymaking, coddling of big businesses at the expense of small ones, inefficiency, and corruption scandals have eroded leaders’ authority. The governing Congress party “is out of touch with grass-roots movements and demands.” And today’s officials must operate under unprecedented scrutiny. But Mehta’s conclusion is upbeat: “Indian politicians have shown a remarkable capacity for reinvention.”
- Aid and Growth: An article in the Economic Journal tests a longstanding question: does aid boost growth? According to the authors, past studies have produced divergent results. The authors reanalyze data from three studies, using a new lagged measure of aid to capture its effects over time. They also limit their analysis to “early-impact aid,” which could plausibly cause short-term growth. This includes such things as budget support and investments in infrastructure and agriculture; it excludes education, health, and humanitarian aid, among other items. The analysis finds that aid modestly boosts growth. On average, an increase of 1 percentage point in the aid-GDP ratio “is typically followed several years later” by an increase of 0.1-0.2 percentage points in yearly real growth of per capita GDP. This shows diminishing returns, though; positive growth effects taper off when aid reaches 15-25 percent of GDP. Though it may do some good, aid cannot be “the main driver of growth,” the authors conclude.
- Skewed Sex Ratios: An Atlantic article explores Pakistan’s troubling preference for boys. Sons, with their earning potential, are viewed as valuable pension plans. Daughters, by contrast, require a dowry, and low workforce participation means that few can support their parents in old age. This has produced a terrible toll of sex-selective abortion, infanticide, and neglect of young girls. According to the piece, though, no one knows the problem’s scale because Pakistan last conducted a census in 1998. Back then, Pakistan’s sex ratio was 108 males for every 100 females, compared to about 97 males for every 100 females in the United States in 2010. An NGO official quoted in the Atlantic says that the situation is deteriorating; as fertility rates decline, the desire for sons only grows. CFR’s Gayle Tzemach Lemmon and Josh Kurlantzick hosted a meeting on the preference for sons in February.
- State Failure: Foreign Policy and the Fund for Peace released their 2012 Failed States Index. It ranks countries on twelve dismal factors, from refugees to inequality to conflict. Somalia, the Democratic Republic of the Congo, Sudan, Chad, and Zimbabwe top the list; Afghanistan and Iraq both make the top ten as well. This group has hardly changed in the last four rankings. Some provocative articles accompany the index. Among them, Daron Acemoglu and James Robinson offer ten reasons Why Nations Fail, to use their recent book title. Paul Collier examines the chronic instability of Somalia, while the president of the Somali state of Puntland requests international support for his region. Robert Kaplan argues that Pakistan’s troubles are anchored in its geography. And Hussein Ibish considers whether the Arab upheavals have caused more trouble than they’re worth.
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