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Category: Development

Spring Break Classic Posts: Pretending to Be Poor

(It’s Spring Break here this week, so I am taking the week off from blogging to work to revise a few articles and begin working on new research projects. As a result, I am re-posting old posts that some new readers might have missed but which were very popular the first time I posted them. The following was initially posted on September 8, 2011.)

This is the title of a new paper in Economic Development and Cultural Change by Jean-Marie Baland, Catherine Guirkinger, and Charlotte Mali. Because EDCC does not publish abstracts, here is the abstract of a previous version:

“From field observations of credit cooperatives in Cameroon, we find that a substantial number of members take loans that are fully collateralized by savings they held in the same institutions. 20% of the loans observed fall into this category. The price paid in terms of net interest payments is not negligible as it represents 13% of the amount borrowed. As traditional arguments such as credit rating or time inconsistent preferences cannot explain such behavior in our specific setting, we propose a new rationale based on in-depth interviews with members of the cooperatives. Those interviews indicate that some members systematically use credit as a way to pretend that they are too poor to have available savings. By doing so, they can successfully oppose request for financial help from friends and relatives. We develop a signaling model to analyze the conditions under which this behavior is an equilibrium outcome.”

Free Download of Calestous Juma’s “The New Harvest: Agricultural Innovation in Africa”

Calestous Juma’s most recent book The New Harvest: Agricultural Innovation in Africa is now available for free from the Kennedy School of Government website. Here is an overview of the book:

African agriculture is currently at a crossroads, at which persistent food shortages are compounded by threats from climate change. But, as this book argues, Africa faces three major opportunities that can transform its agriculture into a force for economic growth: advances in science and technology; the creation of regional markets; and the emergence of a new crop of entrepreneurial leaders dedicated to the continent’s economic improvement.

Filled with case studies from within Africa and success stories from developing nations around the world, The New Harvest outlines the policies and institutional changes necessary to promote agricultural innovation across the African continent. Incorporating research from academia, government, civil society, and private industry, the book suggests multiple ways that individual African countries can work together at the regional level to develop local knowledge and resources, harness technological innovation, encourage entrepreneurship, increase agricultural output, create markets, and improve infrastructure.

If you are like me and prefer to have the entire book in a single .pdf file, scroll down on the page for a link to the complete text of the book.

Calestous is also a prolific tweeter. You can follow him on Twitter by clicking here.

Does Labor Exploitation by Former Colonists Have an Impact on Development?

Looks like it does:

Levels of development vary widely within countries in the Americas. We argue that part of this variation has its roots in the colonial era, when colonizers engaged in different economic activities in different regions of a country. We present evidence consistent with the view that “bad” activities (those that depended heavily on labor exploitation) led to lower economic development today than “good” activities (those that did not rely on labor exploitation). Our results also suggest that differences in political representation (but not in income inequality or human capital) could be the intermediating factor between colonial activities and current development.

That’s the abstract of a forthcoming article in the Review of Economics and Statistics by Miriam Bruhn and Francisco Gallego.

Speaking of colonists, institutions, and colonial institutions, Daron Acemoglu and Jim Robinson have a started a blog to accompany the launch of their book Why Nations Fail, due out at the end of March.