This paper reports on the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. In 2005, half of 104 slums in Hyderabad, India were randomly selected for opening of a branch of a particular microfinance institution (Spandana) while the remainder were not, although other MFIs were free to enter those slums. Fifteen to 18 months after Spandana began lending in treated areas, households were 8.8 percentage points more likely to have a microcredit loan. They were no more likely to start any new business, although they were more likely to start several at once, and they invested more in their existing businesses. There was no effect on average monthly expenditure per capita. Expenditure on durable goods increased in treated areas, while expenditures on “temptation goods” declined. Three to four years after the initial expansion (after many of the control slums had started getting credit from Spandana and other MFIs), the probability of borrowing from an MFI in treatment and comparison slums was the same, but on average households in treatment slums had been borrowing for longer and in larger amounts. Consumption was still no different in treatment areas, and the average business was still no more profitable, although we find an increase in profits at the top end. We found no changes in any of the development outcomes that are often believed to be affected by microfinance, including health, education, and women’s empowerment. The results of this study are largely consistent with those of four other evaluations of similar programs in different contexts.
A new working paper (older, ungated copy here) by Duflo et al. The emphasis is mine.
This is consistent with another careful study (link opens a .pdf file) by Crépon et al. of the impact of microfinance in Morocco, where there authors also find that microfinance has no discernible impact on the usual development indicators (i.e., consumption, health, education, etc.)
To be sure, microfinance does appear to have some impacts, as the abstract above indicates — just not the miraculous impacts that are often touted by microfinance advocates.
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Jan 13
Quinoa Nonsense, or Why the World Still Needs Agricultural Economists
Cooked Red Quinoa. (Source: WikiMedia Commons.)
First came this post by Joanna Blythman on The Guardian‘s Comment Is Free blog:
Quinoa was, in marketing speak, the “miracle grain of the Andes,” a healthy, right-on, ethical addition to the meat avoider’s larder (no dead animals, just a crop that doesn’t feel pain). Consequently, the price shot up – it has tripled since 2006 – with more rarefied black, red and “royal” types commanding particularly handsome premiums.
But there is an unpalatable truth to face for those of us with a bag of quinoa in the larder. The appetite of countries such as ours for this grain has pushed up prices to such an extent that poorer people in Peru and Bolivia, for whom it was once a nourishing staple food, can no longer afford to eat it. Imported junk food is cheaper. In Lima, quinoa now costs more than chicken. Outside the cities, and fueled by overseas demand, the pressure is on to turn land that once produced a portfolio of diverse crops into quinoa monoculture. Continue reading →