ABCDE 2010 in Stockholm (Day 1)

The annual World Bank's conference on development economics (abbreviated as ABCDE) is currently held in Stockholm. I attended a couple of sessions and below is what I learned. Some are backed by solid evidence while others are speculation.

From Abhijit Banerjee's speech:

The failure of microfinance to have a large impact on firm creation and firm growth (Banerjee et al. 2009; Karlan and Zinman 2009; a summary by FT) may be due to its targeting of poor people and small-scale firms. It is medium to large scaled firms that are missing in less developed countries (LDCs) if the firm size distribution is compared to the one from developed countries (Hsieh and Klenow 2009), and that type of firms is probably the driver of economic growth. Governments in LDCs and development assistance agencies, however, have ignored these medium and large scaled firms.

The lack of evidence for the positive impact of education on economic growth may be due to the falling return to primary schooling relative to secondary schooling while education policies have been targeting primary school attendance in the past.

Evidence from conditional cash transfers shows just a small amount of cash incentives dramatically improve human capital investment. We do not have a good conceptual framework to explain this phenomenon.

The issue is how to get policy-makers to stop and think when we do not know at all how to change institutions as the fundamental cause of economic development.

From Geoffrey Heal's speech:

A solar panel power generator today costs 1.8 dollars per KW, cheaper than a diesel power generator. Like mobile phones which have revolutionized telecommunication in LDCs, solar panel may revolutionize power generation in LDCs in the near future.

From Keijiro Otsuka's speech:

Nigerians used to eat rice only on festivities like Christmas, wedding parties, and funerals. Now they eat rice every Sunday.

Back in the 1960s, rice yields were the same in Africa and in Asia. Now yields in Asia double while those in Africa stay the same.

The green revolution in Asia was initiated purely due to technological reasons, not driven by policy or institutions. Then the market and policy responds to promote the use of high-yielding varieties by selling fertilizer or by installing irrigation. In Africa, this didn't happen because of the price control imposed by the government.

Rice yield can be higher in some parts of Africa (Senegal, Tanzania, and Uganda) than in Asia. But rice farmers in Africa do not know even simple ways to increase yields such as creating bunds between fields and leveling fields (which are the norm in Asia).

From Sabine Bruntrup-Seidemann's speech:

In Benin in the 1990s, many civil servants were fired due to the structural adjustment programme. University students were no longer guaranteed government jobs upon graduation. These skilled, but unemployed people formed NGOs because it was when the international development assistance community started putting money to NGOs rather than the governments of LDCs.

From Tomoya Matsumoto's speech:

In a randomized experiment in Uganda (a joint work by Matsumoto and Takashi Yamano from GRIPS), giving fertilizer for free to maize farmers (and one-off 2 hour training of how to use fertilizer) increases the amount of fertilizer purchase in the following growing season. There was a similar intervention in Uganda several years ago. At that time, farmers didn't respond. What has changed in Uganda since then is the scarcity of land due to the rapid population growth and the opportunity to sell maize produce for good prices (merchants now come to rural areas to purchase produce). Maize farmers in Uganda, therefore, do care about how to maximize the amount of yields now.