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

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    The fine folks over at @PacketTotal bequeathed an API token on me so I cranked out an R package for it to enable more dynamic investigations work (RStudio makes for an amazing incident responder investigations console given that you can script in multiple languages, code in C[++], and write documentation all at the same time... […]
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  • RQuantLib 0.4.8: Small updates
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    Following up on the 10th anniversary and the 1.0.0. release, we excited to share the news of the first update release 1.0.1 of Rcpp. package turned ten on Monday—and we used to opportunity to mark the current version as 1.0.0! It arrived at CRAN ov...
  • wrapr::let()
    I would like to once again recommend our readers to our note on wrapr::let(), an R function that can help you eliminate many problematic NSE (non-standard evaluation) interfaces (and their associate problems) from your R programming tasks. The idea is to imitate the following lambda-calculus idea: let x be y in z := ( λ […]

RSS Simply Statistics

  • 10 things R can do that might surprise you
    Over the last few weeks I’ve had a couple of interactions with folks from the computer science world who were pretty disparaging of the R programming language. A lot of the critism focused on perceived limitations of R to statistical analysis. It’s true, R does have a hugely comprehensive list of analysis packages on CRAN, […]
  • Open letter to journal editors: dynamite plots must die
    Statisticians have been pointing out the problem with dynamite plots, also known as bar and line graphs, for years. Karl Broman lists them as one of the top ten worst graphs. The problem has even been documented in the peer reviewed literature. For example, this British Journal of Pharmacology paper titled Show the data, don’t […]
  • Interview with Stephanie Hicks
    Editor’s note: For a while we ran an interview series for statisticians and data scientists, but things have gotten a little hectic around here so we’ve dropped the ball! But we are re-introducing the series, starting with Stephanie Hicks. If you have recommendations of a (junior) person in academics or industry you would like to […]

RSS Statistical Modeling, Causal Inference, and Social Science