If the Asian Growth Model is not Working Anymore

In 1981 poverty rate in China was 64% of the population, in 2004 the rate was 10%: it means that 500 million people stepped out of poverty (look here and here). China and South-East Asia economies were propelled by export demand and by someone else’s debt. What now? In the words of FT columnist Michael Pettis

The assumption that implicitly underlay the Asian development model – that US households had an infinite ability to borrow and spend – has been shown to be false. This spells the end of this model as an engine of growth.

It seams like bad news for economists pointing at free trade and export-led growth as a practical receipt for development.  It seams like bad news for everybody. People in developing countries need to increase their income, and it is difficult to think how they could find the money in their neighborhoods.

Tuesday, 19 May 2009

Brain matters

Saying that education strengths economic growth sounds good old common sense. But proving and measuring this relation is not immediate and therefore interesting. A reasearch, published last year, does it. Eric Hanushek, Dean T. Jamison, Eliot A. Jamison and Ludger Woessmann estimate that

each additional year of average schooling in a country increased the average 40-year growth rate in GDP by about 0.37 percentage points. That may not seem like much, but consider the fact that since World War II, the world economic growth rate has been around 2 to 3 percent of GDP annually. Lifting it by 0.37 percentage points is a boost to annual growth rates of more than 10 percent of what would otherwise have occurred, a significant amount.

Nonetheless, the research suggests that what really matters for economic growth is the quality of education. In other words it is not enough to send children to school: you have to teach them something. Using test-score performances around the world to measure the cognitive skills of students appears

that countries with higher test scores experienced far higher growth rates. If one country’s test-score performance was 0.5 standard deviations higher than another country during the 1960s (…) the first country’s growth rate was, on average, one full percentage point higher annually over the following 40-year period than the second country’s growth rate. Further, once the impact of higher levels of cognitive skills are taken into account, the significance for economic growth of school attainment, i.e., additional years of schooling, dwindles to nothing. A country benefits from asking its students to remain in school for a longer period of time only if the students are learning something as a consequence.

These results are extremely important especially for the countries of the Bottom Billion. What they are saying is that it is better to invest on the quality of the education (where rate of return is much higher) rather than spending to keep students in schools longer.

Tuesday, 17 March 2009

Crisis from the South

According to Banco de Guatemala, for the first time since 1999, in January 2009 remittances from abroad decreased by 7.75% compared to the same month in 2008. In Guatemala remittance  flows represent 11.89% of GDP. According to the World Bank remittances can represent more than 50% of rurally-based family income and for the International Organization for Migration 30.4% of the population receives money from abroad.

Causes? Probably economic crisis and deportation of  illegal immigrants from the US.

Something is certain: remittances are a strong factor in reducing poverty in Guatemala. If flows continue to decrease is more than probable that poverty will rise in a country where, according to the government, 45,6% of children are already underweight.

Monday, 16 February 2009

tweets


Twitter: frbailo

links


blogroll


RSS r-bloggers.com

  • GooglyPlusPlus gets ready for ICC Men’s T20 World Cup
    It is time!! So last weekend, I turned the wheels, moved the levers and listened to the hiss of steam, as I cranked up my Shiny app GooglyPlusPlus. The ICC Men’s T20 World Cup is just around the corner, and it was time to prepare for this event. This ... Continue reading: GooglyPlusPlus gets ready […]
  • Applications open: The Seventh Summer School on Statistical Methods for Linguistics and Psychology, 11-15 September 2023
    Applications are open (till 1st April 2023( for the seventh summer school on statistical methods for linguistics and psychology, to be held in Potsdam, Germany.Summer school website: https://vasishth.github.io/smlp2023/Some of the highlights:&nbsp... Continue reading: Applications open: The Seventh Summer School on Statistical Methods for Linguistics and Psychology, 11-15 September 2023
  • Package dev with {fusen} & {attachment}: load all functions of a flat, manage qmd and auto-fill Remotes field
    You can read the original post in its original format on Rtask website by ThinkR here: Package dev with {fusen} & {attachment}: load all functions of a flat, manage qmd and auto-fill Remotes field One aim of our open-source packages at ThinkR is to make our development workflows easier. {attachment} and {... Continue reading: Package […]
  • Get Miles: using treemap to visualise running distances
    By 30th September 2022, I had clocked up a total of over 2000 km of running in 2022. This milestone was a good opportunity to look at how I got to this point. The code is shown below. First, we can make a histogram to look at the distance of runs. From this ... Continue […]
  • ggradar: radar plots with ggplot in R
    Businesses have tons of data. But 90% have no clue how to use it. Here’s what they are overlooking… Within-Group Analysis. Groups are important (think customer segments). But group-wise comparisons can be tricky. Thankfully an R package exists to hel... Continue reading: ggradar: radar plots with ggplot in R

RSS Simply Statistics

RSS Statistical Modeling, Causal Inference, and Social Science

  • (Now that faculty aren’t coming into the office anymore) Will universities ever recover?
    A few years ago I taught a course at Sciences Po in Paris. The classes were fine, the students were fine, but there was almost no academic community. I had an office in some weird building where they stuck visitors. … Continue reading →
  • What Nested R-hat teaches us about the classical R-hat
    (this post is by Charles) My colleagues Matt Hoffman, Pavel Sountsov, Lionel Riou-Durand, Aki Vehtari, Andrew Gelman, and I released a preprint titled “Nested R-hat: assessing the convergence of Markov chains Monte Carlo when running many short chains”. This is … Continue reading →
  • Not frequentist enough.
    I think that many mistakes in applied statistics could be avoided if people were to think in a more frequentist way. Look at it this way: In the usual way of thinking, you apply a statistical procedure to the data, … Continue reading →