Posted by Shanta on
Thu, 17/04/2008
Pakistan’s education indicators are abysmally low, especially when it comes to learning outcomes. Almost everyone you speak with has strong views on why the situation is what it is, and what should be done about it. Some advocate spending more money on public schools; others, improving accountability in the system; others, regulating private schools; and still others allowing private schools to flourish. Much of this debate occurs without much hard evidence on which proposal might improve education in Pakistan.
A four-year-long research project by some colleagues and friends, launched today in Lahore, seeks to fill this gap. The report documents the remarkable rise in private schools in Punjab, the quality differential between public and private schools, the relationship between outcomes and parental background, what makes teachers better teachers, and more. This painstaking analysis will continue to serve researchers, policymakers and the general public for a long time. Some people say it could be “the new Matlab,” a health and socio-economic survey of a region in Bangladesh that proved to be a mother lode of research and policy applications on health in poor countries.
Posted by Shanta on
Fri, 11/04/2008
First the good news. The Indian government has agreed to sell the originally-agreed 400,000 tons of non-basmati rice to the Government of Bangladesh at a price of $430 per ton. On March 30th, the Government of Bangladesh’s Purchase Committee approved the Indian offer of procuring the 400,000 tons of rice at $430 per ton by ship. The estimated time for the rice to reach Chittagong port is 75 days.
Now the rest. India still has an export ban on non-basmati rice. So do Vietnam, Cambodia, and Egypt. Argentina has a ban on beef exports. The Economist has criticized these policies from the viewpoint that they are self-defeating: “they de-motivate farmers, push them into growing the wrong crops and jeopardize their future access to markets.” A recent BBC report had farmers in Rajasthan complaining about the export bans. And the benefits of export bans don’t necessarily go to poor people, because the domestic price is lower for everybody. So export bans not only hurt your neighbors (or more generally global trade), but also your own people.
What can we do? Arvind Subramanian suggests that we need a multilateral agreement not to impose export bans, along the lines of the WTO.
Posted by Shanta on
Fri, 04/04/2008
In late February of every year, I get ready to be disappointed by the budget speech of the Indian Finance Minister. The reason is that, despite ample evidence that there are serious problems with the productivity of public spending in health, education and other areas, the budget speech always announces an increase in spending on these sectors, with little attempt—if any—at making that spending more efficient at reaching poor people. And this despite the fact that the Finance Minister himself was once quoted as saying, “You do not repair a leaking water supply pipe by stepping up the water pressure.”
This year, however, I was not disappointed because, alongside the usual increase in spending, the budget speech announced, for the first time, the establishment of a Central Plan Schemes Monitoring System that would monitor and evaluate the large sums of money disbursed by the Central Government. The information generated by monitoring systems such as these could help build political support for the reforms needed to make public spending more effective. As Minister Chidambaram said, “I think we do not pay enough attention to outcomes as we do to outlays; or to physical targets as we do to financial targets; or to quality as we do to quantity.”
Posted by Shanta on
Wed, 19/03/2008
Rising--and even accelerating--world food prices are causing serious problems to South Asia’s net food importers such as Bangladesh. To make matters worse, the country lost about 2 million metric tons of rice (7.3 percent of domestic production) in the twin floods of July-August and cyclone of November. To make up for the shortfall, Bangladesh is importing rice from its immediate neighbors. However, one of its neighbors, India, has chosen to impose either a ban on rice exports or to raise the export price above the contracted price. Every time this happens, the price of rice in Dhaka spikes (see graph). While this shows that economics works, it is troubling that a large country like India, which has a greater ability to absorb food price shocks, is imposing costs on its poorer and smaller neighbor to the east.
Posted by Shanta on
Mon, 03/03/2008
Dear Shanta:
I want to clarify. My point was not that the World Bank stop or reduce lending to India per se. Rather that it focus on those areas where it has comparative advantage (how do we know what areas those are?), conditional on Indian states’ doing more on social sectors but using some output performance indicators rather than inputs.
I do not disagree with you that "For one thing, there is no guarantee that public services will improve if the Bank stops lending money for them," nor that "there is a good reason why the combination of knowledge and financial assistance can be more powerful than knowledge alone." But that justification can be used to continue lending in almost any circumstances, since how can we ever be certain that the alternative will not be even worse? I think you are underestimating the harm that is being done in continuing to give Indian states an external crutch when this is absolutely the basic responsibility of any state. Fundamentally, the financial and human resources are there in India. China and Cuba achieved this, as did Kerala, without fancy randomized trials, consultants, reports, and any external money.
I do think we (not just the Bank but academia, etc...)are a vested interest group to some extent at least. We see self-interest everywhere except in ourselves -- which is why we are very reluctant to walk away. How would we get more papers and publications if we did that? Or the World Bank more lending and reports on how much it is doing for the MDGs and justifications for IDA?
Posted by Shanta on
Fri, 29/02/2008
Entitled “Making economics relevant again,” a recent article in the New York Times described the path-breaking work of Esther Duflo, Abhijit Banerjee and their colleagues at MIT’s Jameel Poverty Action Lab, who use evaluations based on randomized trials to determine what works and what doesn’t in various social programs. Much of their work has been on South Asia, as has some of the World Bank’s impact evaluations in education and health.
In his blog post on the New York Times article, Dani Rodrik asks how these impact evaluations can be generalized. This is precisely what the World Bank’s Development Impact Evaluation (DIME) initiative seeks to do by undertaking several evaluations of similar interventions, such as conditional cash transfers, and then aggregating them into a “meta evaluation” that provides guidance on the circumstances under which the intervention will and will not work.
Posted by Shanta on
Thu, 28/02/2008
My friend Devesh Kapur sent me his latest piece, “Perhaps the World Bank should stop helping those unwilling to help themselves,” with a note saying, “We may perhaps disagree on this.” On the contrary, much of what he says in the article echoes what we have been saying in this blog. While I agree with his diagnosis, that despite its many accomplishments, the Indian government is particularly weak at delivering essential services such as education, health, water and sanitation to the poor, I don’t agree with his conclusion that the World Bank should stop lending to India in these areas, and concentrate instead on knowledge assistance.
For one thing, there is no guarantee that public services will improve if the Bank stops lending money for them. For another, there is a good reason why the combination of knowledge and financial assistance can be more powerful than knowledge alone.
Posted by Shanta on
Tue, 26/02/2008
It’s always a student who asks the fundamental question that you never bothered to ask.
I gave a guest lecture in Arvind Subramanian’s class at Johns Hopkins School of Advanced International Studies recently on “Service delivery in India.” As I was going through the usual spiel about how service delivery in India is worse than in other low-income countries such as Bangladesh and Vietnam (both of which have lower child mortality rates) and Kenya (which has higher immunization rates), a student asked, “What is distinctive about India that leads to such poor service delivery?”
I offered a few answers off the top of my head. First, especially compared with Bangladesh, India is an extremely heterogeneous society, with many castes, ethnic groups, languages and religions. There is some evidence that polarized societies find it more difficult to build political support for public goods. Second, to the extent that these services are transactions-intensive (a teacher has to spend time with students, doctors with patients), caste or other differences may stand in the way of publicly-provided services working for some people. Low-caste people, for instance, have been excluded from some public schools and public clinics. They are able to obtain services in the private sector—because they pay for these services. Paradoxically, therefore, the fact that the Indian government mandated free and universal public education and health, and decided to finance and provide it from the public sector, may be the reason poor people are largely obtaining these services in the private sector.
Posted by Shanta on
Fri, 15/02/2008
 At The Brookings Institution yesterday, Arvind Panagariya launched his book, India: The Emerging Giant. The book shows convincingly that India’s economic growth was closely related to its economic policies, contradicting the first of the four inconvenient truths about India’s economic growth that we have discussed in this blog. Arvind also discusses the other three inconvenient truths (high fiscal deficits, rising inequality and poor social services), and concludes, as we have, that these too are associated with poor economic policies. In preparing my discussant’s remarks, it struck me that we may have been looking at the situation from the wrong end, by emphasizing the problems associated with India’s 8 percent economic growth. For if these problems can be solved, India could grow even faster—perhaps exceeding China’s 10 percent growth. What we used to call an inconvenient truth is really the audacity of hope.
Posted by Shanta on
Wed, 13/02/2008
In discussing how to end poverty in South Asia, we often get so caught up in the statistics and policy discussions that we forget that we are talking about the lives of real people. But a magnificent photography exhibit by my colleague Michael Foley displayed in the hall outside my office, serves as a constant reminder of whom we are working for.
Posted by Shanta on
Mon, 11/02/2008
Dear Shanta,
I feel honored to find space in your blog. There is no disagreement between us. Sorry, my article was not clear enough and led to confusion. When I recommended increasing the number of MBBS, I had in mind that they will work as private practitioners and not add to the rolls of absentee providers in the public sector. Foremost in my mind was Karnataka which has added medical colleges faster than any other state, expanding the supply of doctors in the private sector. The result has been the availability of medical services at prices well below most other states.
Some five years ago, I fell down in Bangalore and was taken to a private hospital by my host institution ISEC. I was first examined by a physician, given an anti-tetanus shot, had x-rays taken of knee and arm, and then seen by an orthopedist. The orthopedist explained using the x-ray, just as in the U.S., that I had a hairline fracture in the arm. They then gave me an arm sling and a bunch of pain killers. All that cost just Rs. 600 ($15 at the current exchange rate)! If this had happened in Jaipur, my hometown, the cost would have been at least four times. Unsurprisingly, Rajasthan has had no more than two medical colleges added in the last twenty years!
Arvind
Posted by Shanta on
Wed, 06/02/2008
Arvind Panagariya’s recent column in the Economic Times, “The crisis in rural health care,” captures the horrible state of health services facing India’s poor. His diagnosis is impeccable, and echoes the problems about health services in general made in this blog. Two of his prescriptions--health vouchers for poor people so they can choose between public and private providers, and training of paramedics to treat routine illnesses--are also spot on, and follow from his analysis. However, he then goes on to advocate training many more qualified doctors (“to replace unqualified ‘doctors’). But Arvind himself cites the statistic that these qualified public doctors are absent from rural health clinics 40 percent of the time. Worse, there is some evidence that, in poor neighborhoods in Delhi, qualified public-sector doctors give worse service than unqualified private sector doctors. The reason of course is the different incentives facing public and private sector doctors. Unless there are changes in the incentives for public sector doctors to show up to work, and provide courteous and appropriate service to their patients, especially poor patients, it is not clear that training more doctors will significantly improve the quality of health services for India’s poor.
Posted by Shanta on
Mon, 04/02/2008
 How is the quest to end poverty in South Asia going? Parts of the subcontinent, such as the Maldives, the Western Province of Sri Lanka or some Indian states have already “eliminated” abject poverty (in the sense of having poverty rates below 10 percent). Other parts of South Asia such as Afghanistan or northern Sri Lanka are so mired in violent and escalating conflict that ending poverty seems a remote dream; providing basic security seems much more important.
The reality is that South Asia is a heterogeneous region. The per capita income of the richest part is ten times that of the poorest part (see Table). Sustained economic growth and increasing globalization is propelling several Indian states, Bhutan, Maldives, and parts of Sri Lanka into middle-income environments.
Posted by Shanta on
Fri, 01/02/2008
Baburam Bhattarai and I are very different. He studied Marxist analysis at Jawarhalal Nehru University; I studied neoclassical economics at the University of California at Berkeley. He founded Nepal’s United People’s Front and went underground during the Maoist rebellion; I taught at Harvard and now work at the World Bank. He has a picture of Che Guevara on his car’s gas cap; mine has the logo of my daughter’s soccer team.
Nevertheless, based on our speeches and writings as well as an afternoon together in Kathmandu recently, we found much common ground. We are both concerned about the high and rising inequality in South Asia in general, and Nepal in particular. We agreed that among the causes of this inequality are: (i) slow growth in agriculture; and (ii) lack of employment growth, especially in manufactured exports. I then pushed the envelope a bit by suggesting that the reasons for both (i) and (ii) were government policies which, although introduced with the best of intentions, are backfiring and hurting the poor. For instance, in Sri Lanka, government policy forces farmers to grow rice, a highly vulnerable and not very profitable crop. And the lack of manufactured-export-led employment growth in South Asia in general is associated with extremely restrictive labor regulations in the subcontinent.
Posted by Shanta on
Wed, 30/01/2008
South Asian countries have been experiencing macroeconomic problems during the past year: inflation in Sri Lanka is over 17 percent, in Bangladesh 11 percent; Pakistan’s current account deficit is at 5 percent of GDP; the Maldives’ fiscal deficit is likely to be about 12 percent of GDP; and the Indian economy showed signs of overheating in mid-2007, with inflation rising above 6 percent. Although the rate has come down since then, capital flows remain buoyant, posing challenges for macroeconomic management. India’s trade deficit is forecast to be 8 percent of GDP.
Meanwhile, the sub-prime mortgage crisis in the U.S. is threatening to lead to a global credit crunch and a recession in the country. Will these global developments exacerbate South Asia’s macroeconomic problems and reduce its chances of ending poverty in a generation?
The short answer is “No.”
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Mariam Claeson
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