Economic Structure and Poverty in Africa

For students in EC310 this Winter, the current special issue of the Journal of African Economies on industrialization, poverty and inequality is a great resource for those of you interested in African countries, or developing countries more generally.

Journal of African Economies – Special Issue

The role of industrialization in the growth process is an important question – is industrialization necessary for growth? In addition, are the effects of growth on poverty and inequality different in the absence of industrialization?

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Ten Commandments for Economists

Dani Rodrik posts his Ten Commandments for Economists, and for non-Economists – fully agree with all of it.

Two points worth reiterating, that I find relevant to teaching Introductory Economics classes:

  1. We spend a lot of time talking about various forms of efficiency, but we spend almost as much time talking about how efficient does not mean good.
  2. Models require assumptions to be simple enough to understand – but it can be very difficult to know which assumptions are critical. A good reason for simple mathematical models in economics is to help clarify what effect each assumption might have.

Dani Rodrik’s Blog Post

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A Change in Role

As of July 1st, I am no longer the Undergraduate Program Director in Economics at Laurier, and later this summer, I will also end my term as Undergraduate Program Director in Business.

My primary focus this year is the redevelopment of our first-year Economics courses to work even more effectively within a large class setting. I will be using this website to link to related articles, blog posts and other material that students in those courses may find interesting, but that is not specifically part of the Economics courses. Students will find the primary content on the Laurier MyLearningSpace page.

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Intrinsic Motivation and Health Care

When do extrinsic and intrinsic motivation conflict? Health care seems like a natural spot to look for – though it may be reasonable to think about this as image motivation having a larger effect than extrinsic motivation.

“Information and Quality When Motivation is Intrinsic: Evidence from Surgeon Report Cards”, by Jonathan Kolstad

“If profit maximization is the objective of a firm, new information about quality should affect firm behavior only through its effects on market demand. I consider an alternate model in which suppliers are motivated by a desire to perform well in addition to profit. The introduction of quality “report cards” for cardiac surgery in Pennsylvania provides an empirical setting to isolate the relative role of extrinsic and intrinsic incentives in determining surgeon response. Information on performance that was new to surgeons and unrelated to patient demand led to an intrinsic response four times larger than surgeon response to profit incentives.”

Paper available from the NBER (gated).

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Taxation and Development

A new paper by Besley and Persson illuminating the relationship between development and patterns of taxation.

A quick summary from the conclusion of the paper:

“As a state moves from collecting a low level of public revenue of around 10%
of national income towards collecting around 40%, tax bases typically shift
from trade taxes and excises towards labor income and other broad bases
such as value added. To study this process is a challenge of appreciating
incentives and constraints.”

Paper available (ungated) through the LSE

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Assessing Trustworthiness

Why are some people more trusting than others? From a new CEPR paper by Jeff Butler, Paola Giuliano and Luigi Guiso:

“we show that individuals extrapolate from their own type when forming trust beliefs about the same pool of potential partners”
Link to Abstract at CEPR

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Determinants of Democracy

From Nathan Nunn and Paola Giuliano

We provide evidence that a history of democracy at the local level is associated with contemporary democracy at the national level. Auxiliary estimates show that a tradition of local democracy is also associated with attitudes that favor democracy, with better quality institutions, and higher level of economic development.

Paper available from IZA

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Technological Diffusion

In Economic Growth, we are focusing on technology, efficiency and productivity tomorrow. Here is a current related paper from the Centre for Economic Policy Research.

From the Abstract
“We find significant evidence that technology diffuses slower to locations that are farther away from adoption leaders. This effect is stronger across rich countries and also when measuring distance along the south-north dimension.”

Link to CEPR abstract.

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Insuring Against the Weather

Possibly of interest to students in both micro theory (insurance) and the MIPP program (food security), this short brief from IFPRI looks at the effects of micro-insurance in Ethiopia.

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Research and Conservative Talking Points

The connection between culture and economic growth is a complicated one – made particularly difficult by the fact that cultures change far more slowly than patterns in economic growth. Regardless, this column is remarkable for being a concise argument for why conservative culture drives economic growth. It would be fair to call me a skeptic.

H/T to Dan Herman, PhD student at the Balsillie School of International Affairs.

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