
This is one in a gallery of 54 pictures from North Korea published earlier this month by the Boston Globe.
(HT: Michael Clemens.)
Agricultural Economics—Without Apology
This is one in a gallery of 54 pictures from North Korea published earlier this month by the Boston Globe.
(HT: Michael Clemens.)
My wife’s a Mennonite, and they had programs in Bangladesh. It had hit me between the eyes that homeless people in Denver were living on $500 a month, but there were people overseas living on $30 a month. So I took a trip to Bangladesh.
Some farmers were using hand pumps, but biomechanically, that’s a lousy way to raise water. A Mennonite guy had invented a rower pump that would pull up enough to water a half-acre of vegetables. They had installed 2,000 over five years, and those farmers seemed to be making a lot of money, so I said, “Why don’t we do a project, with an objective of selling 25,000 a year?”
We hit that pretty quickly. One or two Mennonites objected — they considered the idea of selling something to poor people immoral. But we kept at it, and then we found the treadle pump. It was brilliantly simple, it could be manufactured by local workshops, and a local driller could dig a 40-foot well and install it for $25. Studies showed that farmers made $100 in one season on that investment.
That’s from a New York Times interview with Dr. Paul Polak, an inventor who has spent a good amount of time creating devices to improve the lives of the world’s poorest individuals. Here is his answer, when asked about the biggest mistake made by aid and development agencies:
As we were developing our pump, the World Bank was subsidizing deep-well diesel pumps that could cover 40 acres. The theory was that you’d get a macroeconomic benefit, but it was also very destructive to social justice. The big pumps were handed out by government agents; the government agent was bribeable. The pump would go to the biggest landholder, and he’d become a waterlord.
Interesting throughout, as they say. I am a bit skeptical about the “studies show” bit above — skeptical about what the studies show, not that the studies actually exist — but selling 25,000 units is a reasonably good test of the welfare impacts of Polak’s treadle pump.
From a new working paper by Xavier Giné, Jessica Goldberg, and Dean Yang:
We report the results of a randomized field experiment that examines the credit market impacts of improvements in a lender’s ability to determine borrowers’ identities. Improved personal identification enhances the credibility of a lender’s dynamic repayment incentives by allowing it to withhold future loans from past defaulters and expand credit for good borrowers. The experimental context, rural Malawi, is characterized by an imperfect identification system. Consistent with a simple model of borrower heterogeneity and information asymmetries, fingerprinting led to substantially higher repayment rates for borrowers with the highest ex ante default risk, but had no effect for the rest of the borrowers. The change in repayment rates is driven by reductions in adverse selection (smaller loan sizes) and lower moral hazard (for example, less diversion of loan-financed fertilizer from its intended use on the cash crop).