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From what I understand, this paper basically serves to reinforce previous findings that say interest rates in advanced countries play a big role in the pricing of external debt and the flow of capital into poor countries. This creates the possibility for countries like the US to utilize domestic monetary policies to benefit developing countries. This idea is fascinating because this method is so different from the previous topics we discussed in class. The paper states that "higher U.S. rates induce Latin American borrowers and East-Asian floating-rate issuers seeking to minimize their debt-servicing costs to slide down their supply curves," which ultimately "puts upward pressure on prices." I am interested in learning whether the US had taken advantage of its influence on prices in the past to benefit other countries and whether it had unintentionally hurt countries before. I think this paper was a bit difficult to read, so I look forward to reviewing important details tomorrow in class.
Toggle Commented Nov 6, 2020 on For Friday's Discussion at Jolly Green General
Parker and Vogl's paper provides us with a brilliant example of a program that invests in human capital and displays tangible outcomes that alleviate poverty in third world countries. It was highly interesting to see the theories we learned in class put to practice and encouraging to know that these policies are effective and even intergenerational. This paper builds off of previous research done with cash transfer programs to see if they have long term effects, which they do. This makes sense, as parents would try to "pass on" their values and prioritization of education to their children and would now have the means to expose their children to such opportunities. This suggests that similar policies and programs would create a wave effect that provides future generations with opportunities to better their lives through higher education, better income, more participation in the labor force, higher social status, etc. What I found most interesting in this paper is that the CCTs had a more noticeable positive effect on women than men, which connects to previous papers we read and the discussions we had in class. More women were able to participate in the labor force, and as we learned in previous classes, this has a plethora of positive effects (and spillover effects) as women start making their own income and become more financially and socially independent. I am highly curious as to how the cash transfer programs worked out in countries other than Mexico, such as those in Asia and Africa, and if the shift from agricultural to non-agricultural sectors is a universal effect (I am sure it is, but I am specifically curious about the shift in countries with economies that highly depend on agriculture).
Psacharopoulos and Patrinos's paper emphasizes the importance of investing in education to improve the overall life-qualities and capabilities of human capital. Poorer people get more value/better "returns" from investing in education, and this provides poor countries with an important direction they should take to escape poverty. However, the two authors fail to mention some obstacles countries might face while trying to achieve this goal. For example, in a country like Cambodia where about 40% of the population farms, education is not as prioritized and valued as it is in a wealthy country like the US or South Korea. Many of the people I interacted with shared these views: if they were just going to go back to their families' land to help out with farming, what was the point in pursuing a higher level of education? While 40% is a much better number than 80%, which Cambodia had in 1993, this view is a challenge that Cambodia will have to solve if it wants to advance on the world stage (of course, there are many factors that need to be taken into account, such as the fact that agriculture accounts for 22% of Cambodia's GDP so it is inevitable that several people will have this view). My point is, Psacharopoulos's and Patrinos's paper presents ideas that are progressive and critical in development economics, but it can be difficult to implement/take a long time to implement in some countries.
Toggle Commented Oct 23, 2020 on For Friday's Discussion at Jolly Green General
What I found most concerning in Duflo's paper is that economic growth is not enough to overcome gender discrimination, even in rich countries. The fact that the sex ratio at birth in South Korea is similar to that of China or India indicates that something is clearly wrong here. I know for a fact that there are still many conservative families in South Korea who invest less in their daughters (in terms of educational opportunities) because they can just be "married off." I also know for a fact that feminist ideologies are becoming more and more popular in South Korea today, as more people are realizing that gender inequality is the root of many problems in Korea (especially in the labor market, a problem that existed even during the "Miracle of the Han"). The fact that women inequality existed in South Korea during the process of its "Miracular" growth and has persisted until today suggests that this problem is either very difficult to solve, even in rich countries, or hard to properly address. Naturally, then, I was very interested in hearing what Duflo had to say about the policies needed to overcome these challenges and agreed with the statements she made (about women empowerment in families, women's ability to make decisions, property rights for women, etc). However, there are several glaring problems with Duflo's proposals, some of which she addresses. The first is that these policies, and even the resulting economic development and women empowerment, aren't "magic bullets" that are guaranteed to solve problems. Of course, that is because Duflo's proposals are just guides/outlines and actual implementation is much more complicated, but this fact makes way for more obstacles and concerns. One concern is timing: how long will it take for developing countries to reap tangible benefits at a large scale via women empowerment? If workplace inequality, a problem that existed in South Korea since the 1960s, still plagues the country in 2020, how long will it take for countries like Cambodia to treat women equally? How long will it take for much more conservative Asian and Middle Eastern countries to shift their cultural views and accept that their daughters can work and be as "valuable" as their sons if such views still exist in South Korea? Progressive and rich countries like the US still suffer from heat regarding gender realistic is it that third-world countries will overcome this glaring problem, and if they can, how long will it take?
Toggle Commented Oct 9, 2020 on Duflo for Friday at Jolly Green General
Epplin's struggles reminded me of what Professor Casey said to Stephanie Sezen during our last class, "Nobody listens to us economists..." Despite having the great potential to benefit many young people by providing them with a field that deviated from the few professional paths people took, Epplin's proposal got rejected by people left and right: the farmers did not find Epplin's plan appealing because they did not think a university education was necessary to farm; the professional class found the idea too foreign; people from the South feared that Epplin's proposal might bring slave-opposing people to their regions. Despite all of the opposition Epplin kept pushing for his ideas until finally, his efforts began to pay off, and land grant universities became established sustainable institutions. Public universities thrive today and thousands upon thousands of young men and women reap their benefits. So at the end of the day, Epplin was right; he understood that a private market for education was a horrible idea and that everyone would benefit from the efficiencies of public higher education. I know that many people in Cambodia today don't see the value in university education because they think that they will return to their small family farm after university anyway. Perhaps similar government intervention can take place in developing countries like Cambodia so that they can see and reap the benefits of education as well.
Toggle Commented Oct 2, 2020 on For Friday's Discussion at Jolly Green General
This piece by Krugman is ultimately a critique of the shortcomings of models. Reading this paper, I was reminded of the conversation we had in class, in which Professor Casey explained that some analysts fail to answer even the simplest questions regarding what happens when a variable is changed in a model, because instead of explaining what happens in real life due to the change in the variable, they basically just answer, "When this variable in the model changes, the variable changes." (._.) This phenomenon is the loss in knowledge that occurs, the "narrowing of vision imposed by the limitations of one's framework and tools, a narrowing that can only be ended [with tools that] transcend those limitations." Of course, I knew that economic models (especially the simple ones we learn in school) are full of flaws since the world isn't as simple as a couple of lines and two axes, but I was disheartened to learn that even in advanced fields of studies and professions, it is difficult to create a completely accurate model that doesn't omit any aspect of reality: "The only exact model of the global weather system is that system itself. Any model of that system is therefore to some degree a falsification..." I came to realize that this is why the observer's judgment and compromise are so important, and why it is so important for us to understand the process of what is happening in real life that the model represents. Without this skill, one will only be able to observe what happens in the graph itself, rather than explain how different variables are affecting real people and movement.
I couldn't help but find this piece's insight and analysis of South Korea's growth interesting. Growing up, I knew that South Korea went through a period of exponential economic growth in the early 1970s and that a mindset of diligence and "working hard for the future generation" became imprinted into the minds of the Koreans of this period. However, if someone had asked me to explain the economic phenomenon and the gears that propelled the country's growth, I wouldn't have been able to. I think reading Wang's piece helped me better understand what happened from an economic standpoint and better appreciate this field of study. A government with a good mission, the shift from import substitution to export-oriented industrialization, focus on manufacturing sectors, the adaptation of pre-existing Japanese systems, and appropriate policies all played a big role in making South Korea what it is today. I also found it interesting to compare the "formula" of South Korea's and similar countries' success to that of countries that have lagged behind. For example, it seems like many of the countries that Wang describes as the "laggards," such as Ghana, Argentina, and Brazil, have held on to the import substitution system (while S. Korea didn't). As Mercer explains above, import substitution isn't as fruitful in the long-run, and it seems its effects (or lack thereof) are showing in these countries. It was also interesting to see Brazil in the "laggard" party because the country has the largest GDP in South America, and yet it's failing economic policies and government corruption have put it on this list. (After some Googling, I learned that Cambodia's industrial policy also highly relies on import substitution (, and I already knew that the Cambodian government is pretty corrupt. It was cool to see these parallels and apply what I learned from this paper to better understand another country's economy. Maybe I really will write a paper on Cambodia) All in all, this paper was very insightful, and I enjoyed learning about my country's growth from an economic standpoint.
As someone who didn't have any previous exposure to MDGs and SDGs, I found Sachs' piece to be engaging and highly interesting. It was especially encouraging to see the world's nations shifting gears and learning to focus more on solving climate change and other environmental ills that could potentially devastate ill-prepared developing countries. As someone pursuing an actuarial career, I understand the effects climate change can have on poor countries. As our climate changes and natural disasters happen more frequently, it can become harder and harder to predict when the next storm/flood/etc. will strike and how much financial damage it will cause. This is where an actuary's expertise comes in, and a developed, wealthy country will be able to prepare for such financial damage to a certain extent. The real problems will lie within the underdeveloped countries, which often lack the financial resources and knowledge to prepare for large-scale natural devastation. The poorest countries will always be the most vulnerable to climate change, so it is great to see the world making an effort to achieve sustainable development and protect these countries. That being said, the steps Sachs presents to achieve this ambitious goal seems...well, too ambitious. In order for SDGs to work and foster economic development, environmental sustainability, and social inclusion, too many good things must happen. I think that, for a piece of literature that is very optimistic and hopeful, this paper provides too little detail and specifics of how to achieve these means. It is nice to know the different requirements that need be fulfilled in order for sustainable development to happen (SDG 1, SDG 2, SDG 3...), but how exactly should these requirements be fulfilled? And how likely is it that these requirements will be fulfilled? For example, at one point Sachs mentions the importance of a "good" government that lacks corruption. Yes, having a good government is a nice thought, but how does one turn a corrupt government good, and what happens if this step isn't completed? Many countries like Cambodia doesn't develop past their current states because of an incompetent government that doesn't care for their people as much as they should. What happens to these countries? Do they get left behind in this great pursuit of betterment? I just think Sachs could have made these optimistic ideas a little more realistic and doable by being more specific as to how to approach these sticky obstacles.
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Aug 28, 2020