• Chavez’s Legacy: As Venezuelan president Hugo Chavez lingers in uncertain health, a New Yorker piece explores the capital city he is leaving behind. “After decades of neglect, poverty, corruption, and social upheaval,” it says, “Caracas has deteriorated beyond all measure.” Crime is rampant, trash and pollution widespread, and housing scarce. The article focuses on the government’s nebulous attitude toward property rights. Groups of squatters have invaded hundreds of buildings, including a half-finished skyscraper called the Tower of David. Some 3,000 people now live there, led by a Chavez partisan who paints himself as a benevolent manager but whom others call a thug. As the article says, many Caracas residents see the tower as “a byword for everything that is wrong with their society: a community of invaders living in their midst, controlled by armed gangsters with the tacit acquiescence of the Chavez government.” Read more »

• China’s College Graduates: Last week I noted a paper suggesting that in order to avoid the middle-income trap, China must produce highly skilled college graduates. A New York Times piece this week explores that very challenge. Through vast investments in both public and private universities, China should have some 195 million “community college and university graduates” by 2020—more than the United States (which will have 120 million), though still a far lower percentage of the population. The question is whether China can foster “the world-class creativity and innovation that modern economies require.” According to the article, some believe college enrollments have “outstripped the supply of qualified professors and instructors.” It is also unclear whether “hierarchical” Chinese firms can make the best use of the country’s talent, and whether China’s economy can produce enough satisfying jobs for its “glut of college graduates with high expectations.” Read more »

• India’s Cash Transfers: The new year brought a new development program in India with revolutionary potential. Under the scheme, Voice of America reports, “245,000 people across 20 districts… are getting pension and scholarship money transferred directly into their bank accounts, instead of having to wait to receive it from post offices or bank officials.” The aim is to eliminate skimming. And the current effort could be just a start. The real test would be using cash transfers to replace India’s massive distribution of subsidized food and fuel. Some analysts enthusiastically support doing so. Others, including Nobel laureate Amartya Sen, caution that food rations tend to benefit families—especially girls—while cash might not. Scaling up cash transfers also requires giving bank accounts and reliable identification to hundreds of millions of Indians, which is no easy task. Read more »

Charles Landow covers stories on Africa, India, and the World Bank in the first Missing Pieces installment of the new year. I hope you enjoy the selection.

• Africa’s Outlook: What are the essential issues affecting Africa in 2013? In the Brookings Institution’s “Foresight Africa” report, scholars offer eight suggestions: employment, “energy poverty,” China-Africa relations, Kenya’s presidential elections, “discordant development,” education, infrastructure, and leveraging Africa’s diaspora. On employment, one essay argues that Africa’s “rapid growth has created few good jobs.” It calls for better education and training, along with more investment in industry. The piece on “discordant development” focuses on “how deepening inequalities and rapid progress juxtaposed with group distress can generate uncertainty and violent conflict.” Sounder governance is a big part of the answer, the piece says. Meanwhile, CFR’s Sebastian Mallaby writes in the Financial Times that Africa’s growth, often deemed unsustainable, is proving enduring. Though commodity prices, demographics, and technology are helping, he says, “better policy has also made a difference,” especially by enabling higher productivity. Read more »

As he did last year, Charles Landow draws highlights from a range of democracy and development indexes for this year-end edition of Missing Pieces. The UN Human Development Index and the Economist Intelligence Unit’s Index of Democracy are not included this time because they were not published in 2012. Enjoy the reading and the holiday season.

• Freedom in the World: In Freedom House’s 2012 report, 26 countries showed “declines” in their level of political freedom while only 12 made “gains.” As the report says, “this marks the sixth consecutive year in which countries with declines outnumbered those with improvements.” The Middle East saw the biggest strides but also serious regression. Eurasia declined, and the report sees “danger signs for new democracies,” including South Africa and Turkey. Asia, though, experienced a moderate rise in freedom. Overall, there are 87 “free” countries and 60 “partly free” countries, both equal to last year. Forty-eight countries are “not free,” an increase of 1 because of South Sudan’s independence. Niger, Thailand, and Tunisia joined the ranks of electoral democracies. Nicaragua dropped off. Read more »

• Microfinance and Profits: Are for-profit microfinance institutions (MFIs) good for the poor? The question has sparked intense debate in recent years. An article in World Development weighs in by examining the relationship between MFIs’ “profit orientation” and the interest rates they charge. It finds that MFIs with strong for-profit characteristics (such as formal for-profit status and board members with banking expertise) charge higher rates. Moreover, these MFIs have “significantly higher” costs, including operating expenses and losses from bad loans. There is thus “absolutely no evidence” that a for-profit stance brings greater efficiency. Why, then, do MFIs operate as for-profit entities? The author posits that their owners are not greedy, but instead that “MFIs that project a more business-like orientation” can better attract capital to grow. Read more »

In this edition of Missing Pieces, Charles Landow features stories on Mexico, India, Africa, and the Millennium Development Goals. I hope you enjoy the selection.

Mexico’s Prospects: The Economist features a largely sanguine report on Mexico. “Many of the things the world thinks it knows about Mexico are no longer true,” it says. Economic growth is strong as higher global shipping costs and rising Chinese wages boost Mexico’s manufacturing competitiveness. Social services are expanding; as the report says, “free universal health care became more or less a reality this year.” Education spending is also up, though opaque teachers unions seem to swallow much of the money. Perhaps the darkest cloud is governance. The report says Mexico’s ban on reelection makes politicians more accountable to “party bosses” than to voters, and some of the country’s states remain hotbeds of corruption. On her blog, CFR’s Shannon O’Neil weighs the record of President Felipe Calderon, who left office on Saturday; she also wrote on Mexico last week in USA Today. Read more »

• The World in 2060: Currently the United States produces 23 percent of global GDP against 17 percent for China and 7 percent for India. By 2060, says an OECD report, these shares will be flipped: China will account for 28 percent, India 18 percent, and the United States only 16 percent. Likewise, while China and India today combine for less than half the G7’s GDP, in 2060 their economies will total more than 1.5 times the G7’s. With this growth, GDP per capita in China and India stands to increase by more than seven times, the OECD says. But strikingly, this will not erase “significant gaps in living standards between advanced and emerging economies.” According to an Economist analysis of the OECD’s figures, GDP per capita in China will be just 59 percent of the U.S. level in 2060. For India the figure will be 27 percent, for Brazil about 40, and for Mexico about 50. Read more »

Charles Landow highlights developments in Africa and Asia in this edition of Missing Pieces. Enjoy!

• South Africa’s Struggles: As South Africa’s labor unrest finally seems to abate, two Economist articles (here and here) survey the country’s unsettling scene. “After 18 years of full democracy,” the magazine says, “South Africa is one of the most unequal countries in the world.” A leading culprit is education. Despite healthy spending, outcomes lag: just 15 percent of 12-year-olds reach minimum proficiency in language, and 12 percent do so in math. Unemployment is officially 25 percent—but 29 percent for blacks against 6 percent for whites. The Economist says that “economic malaise and the chronic failure of government services are an indictment of South Africa’s politicians.” Many view positions with the African National Congress (ANC) as “a ticket for the gravy train.” Officials, generally elected on party-controlled lists, “have little incentive to provide for their voters.” Despite these failings, the magazine reports, the ANC’s dominance is not yet in doubt. Progress might not come until it is. Read more »

• Commitment to Development: The Center for Global Development last week released its 2012 Commitment to Development Index. The index measures wealthy countries “on their dedication to policies that benefit the 5.5 billion people living in poorer nations.” These include the quantity and quality of foreign aid, openness to trade and migration, promotion of investment in developing countries, environmental policies, contributions to peacekeeping and other security efforts, and more. Read more »