Development Economics Flashcards
What is sustainable development?
Development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. (Burntland report, 1987)
What are the three components of sustainable development?
Economic, Environmental, Social
What are the actors in development economics?
- Civil societies, governments, NGOs, International organisations, development agencies
What are the current aims of the IMF and World Bank?
Fight against poverty, to bridge temporary imbalances
What are the approaches to development policies?
- Developmentalist approach (State as a lead actor)- developing national industry.
- Washington Consensus (Trust in the market).
- New consensus (market + state)
Why care more about poverty rather than GDP/capita?
- Limitations of the GDP per capita data (production for auto-consumption is not considered, informal sector not accounted, required high quality population estimates)
- Does not look of distribution of income, assets, resources.
How to measure poverty?
- With head-count
- poverty line z and you count the number of people under this line
Pros: easy to understand
Cons: it is binary, so improvements that are still under the line are not measured - Poverty gap: weighted average of poverty
Pros: reflects the depth of poverty
Cons: insensitive to severity of poverty (it fails the transfer axiom) - Foster-Greer-Thorebeck with an exponential of that has different weights based on the alpha
What are the desirable properties of a poverty measure?
- Focus: welfare of non-poor persons are not accounted
- Monotiniciy: if there is an increase in economic welfare for the poor, this must reduce the measure of poverty
- Sub-group monotonicity
- Transfer: a small transfer from a poor person to a poorer one will decrease the measure
What are the differences in costs between poverty gap and headcount based policies?
The minimum cost of eliminating poverty is to fill all the poverty gaps exactly, by knowing how much each person needs.
The maximum cost of eliminating poverty is when we know nothing about incomes: you indistinctly transfer all poor the amount needed to be sure they end up above z
The difference between the maximum and minimum represent the potential savings of the poverty alleviation
What is the World Bank’s approach to measuring poverty?
- monetary equivalent to reach a certain amount of calories clothing and shelter
- convert to ensure PPP
What is relative poverty?
The concept that a person’s well being also depends on the person’s income relative to their peers.
What is the Rawlsian approach?
An approach that focuses on the consumption floor - the lowest level of living. Inequality is acceptable if the poorest persons also benefit to some extent.
What have been the changes in poverty over the last decades?
While we have seen a reduction in poverty measures, the poverty floor remains largely unchanged.
Describe the solow model?
A model that explians the accumulation of capital, labor, technology and natural resources allow ti drive long term economic growth.
Assuming a Cobb-Douglass form:
GDP (Y) = Technological progress(A)*Capital stock(K)^alpha *Labor(L)^(1-alpha)
In the long run the economy converges to a steady state, where capital accumulation offsets depreciation and population growth.
If the steady state factors (A,K,L) increase, we have a growth in the steady state GDP.
What is the formula for the per-capita GDP growth?
= capital deepening + human capital accumulation + productivity growth
What are the two endogenous elements determining a nation’s income?
Endogenous: Endowments and Productivity
Partly endogenous: trade and institutions,
Exogenous: geography
What is a poverty trap?
A poverty trap occurs when the economy is stuck in a state of low income and capital accumulation and is unable to escape from it without external intervention. This concept extens the Solow model by incorporating situations where:
- The production function displays non-decreasing returns at low level of capital
- Economic agents face constraints that perpetuate their poverty
When does the economy fall into a poverty trap?
When the production function is below 45°.
What is ODA?
It is a flow to countries which are provided by official agencies (state, local governments) with the aim to promote economic development and welfare of developing countries. It is concessional in character.
What are the types of foreign aid?
Bilateral, Multilateral, Offial Development Assistance
What is the position of Jeffery Sachs on aid? How should governments intervene?
The poor lack 6 main types of capital:
Human, natural, institutions, business capital, infrastructure, knowledge.
Through natural monopolies, non-rival public goods, externalities.
Millennium Development Goals serve to create targeted investment plans.
Official Development Assistance is conditional on a public management plans and good governance.
Opinion: well-governed countries get too little help.
What is Moyo’s position on foreign aid?
African countries are poor because of all the aid they receive. Aid has the same effect as a natural resource:
- cuts government from the responsibility towards taxpayers
- discourages free enterprise
- encourages conflicts and corruption
What are the alternatives to foreign aid according to Moyo?
- Accessing the international bond market
- Large-scale direct investment in infrastructure
- Genuine free trade in agricultural products (end farmer subsidies in US/EU/Japan)
- Financial intermediation: microfinance, granting legal titles, remittances
What is Paul Collier’s position on foreign aid? What are the four traps/tools?
Traps:
1. Conflict trap: 73% of the bottom billion of people hare recently been or are living in a military conflict environment
2. Natural resource trap
3. Trap of landlocked countries with bad neighbors (30% of Africa is landlocked)
4. Trap of bad governance in a small country
Tools:
1. Aid
2. Military Intervention
3. Laws and charters
4. Trade Policy of rich countries (end subsidies in US/EU/Japan)
What is a field experiment?
Setting where the treatment was randomized by the researcher: hence selection bias is by definition zero; “field”means only that the treatment was manipulated by the researcher (subjects are observed while ‘living their lives’). Largely used Randomized control trials.
What is a lab experiment?
Setting where the treatment and the context of play is fully randomized by the researcher.
What is a natural experiment?
Natural setting with natural treatment: nothing is manipulated by the researcher; still one can plausibly argue there is no selection bias (e.g gender quotas in India’s Panchayats)
What are the steps in setting up a randomized experiment?
- Select an experimental sample of N individuals (from the population of interest)
- Randomly divide this experimental sample into two groups: the treatment group (Nt individuals) and the control group (Nc individuals)
- Treat the treatment group.
- The average treatment effect can be estimated as the difference in empirical means of Y between the two groups (Yt - Yc)
How can observables be used to control selection bias?
Observables are measurable characteristics of subjects that can be accounted for in the analysis, such as age, income, previous health status, etc.
By conditioning these observables, the treatment can be considered “as if” it were randomly assigned among the study subjects. This means that within groups defined by these observables, the treatment and control groups should be statistically similar except for the treatment.
What is an identification strategy?
An identification strategy is the details of the manner in which a researcher uses observational data (i.e., data not generated by a randomized experiment) to approximate an experiment.
it consists of an assumption (or set of assumptions) that will identify the causal effect of interest, by getting rid of the selection bias
What is difference in difference?
Idea: the treated and control group are different. But in the absence of treatment, they would have evolved similarly. Then, we can isolate the treatment effect.
What are some other types of difference-in-difference strategies?
- Triple difference - using a third dimension
- Event studies - staggered treatment introduction to the different observations.
- Propensity score matching - match each treated observation to the closest possible non-treated observation(s)
- Synthetic control - combine control observations to reach the best counterfactual to the treated observations of interest, based on key observations
Describe the instrumental variables strategy.
Idea: the treated and control group are different. But we know what determines the treatment. And it is otherwise unrelated to outcome. Then we can isolate the treatment effect.
IV is also called Two-stage Least Squares (2SLS) :
1. OLS regression of the endogenous (T) variable on the instrument (Z), with the corresponding predicted values computed (t)
2. OLS regression of the outcome (Y) on the endogenous variable while substituting by the predicted values (t) from step 1
Describe the regression discontinuity strategy.
Idea: the control and treated group are different. But the threshold of inclusion in the program is arbitrary, so if you stay close enough from the threshold, people just before and just after are comparable
What is internal vs external validity?
- Internal validity: When regression provides us an unbiased estimate of the relation we are interested in (e.g. textbook allocation)
- External validity
When the estimate of the impact is valid outside the sample under study
What are two characteristics of non-renewable resources?
- They are in specific places
- They are not renewed at a sufficient rate for a sustainable use
What what are the takeaways discovered by Mamo et al 2020?
Mineral deposits discoveries and exploitation
* Increase nightlight emissions after a few years
* We don’t know if this translates into local economic development of households
What are the results of the Argon and Rud paper? What research strategy did it use?
The paper examines the local economic impact of Yanacocha, a large gold mine in Northern Peru between 1997 and 2006.
- Positive effect of the mine’s demand for local inputs on real income. The effects are only present in the supply market and surrounding areas, and reach unskilled workers in non-mining sectors.
- Increase in the local price of housing and agricultural products.
Takeaway: There’s potential for extractive industries to create positive spillovers in less developed economies.
Is there a natural resources curse?
The economic effect of resource wealth on countries is hard to identify. But locally:
* Large-scale resource exploitation increase nightlight emissions, effects on households’ wealth are debated (discoveries and exploitation have different effects)
* Artisanal mines: have positive economic spillovers (both on households consumption and on nightlights)
Maybe not a ‘curse’ if he impact depends on the setting !
Why would natural resources be a curse?
- They reshape the market
a. The Dutch disease
b. Investment eviction
c. Volatility - Rent windfalls and institutions
a. Good institutions allow to take advantage of resource rents
b. Resource rents may affect the quality of institutions - Pollution
What is the Dutch disease?
General idea : following natural resources exploitation, we observe a decline in other sectors like the manufacturing sector. Like what happened in the Netherlands in the 60’s.
What causes the dutch disease? What are the effects on trade?
-> exchange rate appreciation
-> increased demand for goods (traded and non-traded)
-> increase in wages & prices in the non-traded sector
Effects on trade:
-> it is harder to produce, as labor cost increased
-> it is harder to export, as the exchange rate increased
What are the factors needed for the Dutch disease to take place?
- The traded goods sector generates more growth than the other sectors
- Labor availability is constrained
- The exchange rate appreciates with exports from natural resources
What is investment eviction?
If all investment is absorbed by the primary sector (resource extraction) -> other sectors lack investment
How does volatility affect markets with natural resources?
Idea: uncertainty with respect to the future reduces investment in physical and human capital.
- Private sector: demands stability to carry out investments
- Governments: have irregular incomes if they depend on natural resources. Cannot plan long-term.
What is the Hartwick rule on the use of natural resources?
All capitals are substitutable: natural, human, physical. Only natural capital can be extinct, so it should be used to acquire the other types.
How should natural resources be invested according to Venables 2016?
- Sovereign funds- maybe best for richer countries
- Human capital in the country – poorer economies often lack capital & local investment stimulates the local economy
- Reducing countries’ foreign debt – and cost of repaying its interest
How can resources affect the quality of institutions?
- Concentrates large rents in a few firms, which raises the
return to rent-seeking by politicians - Fiscal windfall limit the accountability of politicians as the state revenues do not depend on taxing the population – a concern similar to the concern around aid windfalls. Thus:
- Reduces scrutiny over efficient use of public money
- Allows to buy social peace
- Allows to repress to remain in power
Can information break the political resource curse according to Armand et al. 2020?
Informing community:
- increases local mobilization
- decreases violence
Only informing local leaders:
- increases elite capture
- increases rent-seeking
What is the vicious cycle of resource depletion?
->Deforestation reduces rainfall->drought conditions increase the likelihood of fires->fires further reduce forest area->
What are the four types of goods?
Excludable, rival: private goods
Excludable, non-rival: low congestion goods
Non-excludable, rival: common goods
Non-excludable, non-rival: public goods
What type of good are renewable resources?
Common goods
What is the tragedy of commons?
The situation in which individual users, acting independently according to their own self-interest, behave contrary to the common good of all users by depleting or spoiling a shared resource through their collective action, thus causing externalities.
What are the three main ways to manage commons sustainability?
- Privatization
- Regulation
- Coordination
What features make collective action more efficient?
Communication, observable actions, repeated actions, similar users.
How do trees help cope with climate change?
- Capture carbon
- Stabilize soil
- Regulate precipitations and waterways
What is the general idea when modelling tree cover loss?
General idea: there is loss in forest cover when agricultural rent is higher than forestry rent.
The rents from each sector depends on:
- Prices
- Inputs: Labor and capital
- Transport: distance * cost
What are the central principles of payments for environmental services?
- Those who provide environmental services should be compensated for doing so.
- Incentivize landowners to protect or improve natural resources: a market-based mechanism
- Those who receive the services should pay for their provisionAcknowledge externalities.
- Shift the burden to the ones who benefit, not to the resource owners (poverty).
Discuss Mexico’s PSP design.
Payments for Hydrological Services Program
- started in 2003
- Funded through water use fees
Goal:
Protect forests to sustain:
- improved water quality
- reduced erosion and sedimentation
- reduced flood hazards
Mechanism:
- Cash transfers based on geographical features of land and applicant qualifications.
- $27-36 / hectare
- Conditional on maintaining forest cover
How can forest cover be measured?
Tree health: Normalized difference vegetation Index (NDVI)
- Uses satellite data to measure reflectiveness and “greenness” of vegetation
Was PSP successful?
The program led to a substantial improvement of forest preservation
* Avoids an estimated 40–51 percent of the expected NDVI
loss
* No effect on households’ consumption
* Small magnitude effects on municipality-level poverty index
Key assumption: parallel trends
Takeaway : PES did help maintain the forest. It did not really decrease, but also did not increase poverty.
Talk about Eisenbarth 2020.
Can Community Monitoring
Save the Commons?
Method: RCT
On grown measurement, Surveys, Satellite data
Results:
Small Gains in Monitored Areas
Outweighed by the increase in unmonitored regions.
How does population growth relate to Solow’s growth model?
Population growth is bad news in the Solow growth model
Baseline model
- Population growth enters only in comparison to capital growth, as steady state is defined by steady state level of per capita capital.
- Higher population growth will (in general) imply a lower level of steady state capital per capita.
Extended model
- Innovation, brainpower or technology can ensure infinite growth!
what is the formula for per-capita GDP growth?
per-capita GDP growth = capital deepening + human capital accumulation + productivity growth
What is the child mortality metric?
The share of children that die before the age of 5.
What are the two main drivers of the demographic transition?
Reduction in:
- Mortality
- Fertility
What is the possible diversion within couples in relation to having children?
- The benefit of having a child is often for both parent
- The opportunity cost of having a child is born mostly by the mother
How does fertility relate to child mortality?
They have a positive correlation. Several studies found a causal link.
What explains declines in fertility?
A changing balance between costs and benefits.
Benefits: old age security, saving possibilities, child labor
Costs: opportunity costs of time that is spent taking care of the child, spending linked to child
What are the forces driving a declining fertility?
Women empowerment, education, labor force participation, culture and norms, access to family planning, contraception
Why do educated (empowered) women choose to have less children?
- more work opportunities, higher opportunity costs
- more bargaining power
- more likely to use contraceptives
How can we increase child well-being?
- Lower child mortality increases the incentives to invest more resources into each child
- Change child labor norms
- Grant old-age pension
Discuss the paper on Practical class demographics: Jensen and Oster (2009).
RQ: Does the introduction of cable TV in rural India lead to changes in women’s status?
Method: Difference-in-difference
Results:
- Large increase in autonomy
- Decrease in fertility
- Increase in school enrollment for girls
Why is health important?
- It is morally desirable
- One of the three components of the HDI
- Health is a form of human capital -> a healthier person is more productive
- Health is prone to snowball due to externalities: eg. COVID, HIV, Malaria
What are the 3 main factors driving improvements in health?
- Nutrition
- Public health
- Medical progress
What was the child mortality rate in 2022? How many of these were due to diarrhea?
4.9 million. 1 in 5.
Have the mosquito eradication campaigns in Sri Lanka and Paraguay been successful?
Lucas 2010
Yes
In Sri Lanka (and in Paraguay), regions with the highest preeradication malaria rates experienced the largest gains in education as measured by years of completed schooling or literacy.
The preferred estimates suggest that reducing malaria incidence by 10 percentage points leads to an increase in completed schooling of approximately 0.1 years and an increase in the probability of being literate by 1 percentage point
Issue? Requires persistence, large funding, and careful use.
DDT can be toxic for humans and the environment
What effects have ITNs shown?
Insecticide Treated Nets (ITNs) reduce overall child mortality by at least 20% in regions of
Africa where malaria is the leading cause of death among children under five (Lengeler 2004)
What do Cohen and Dupas find about how price affects use of ITNs?
Results:
- Uptake decreases drastically with bed net price
- Use is independent of price
- Bed nets improve health
Lucas estimates that the gains to education from a malaria-free environment alone more than compensate for the cost of an anti malaria treatment
Why is education great for development?
Education is :
* one of the 3 components of the human development index
* SDG 4: ensure inclusive and equitable quality education and
promote lifelong learning opportunities for all
Education is a form of human capital :
* Increases the stock of knowledge
* Increases the probability of taking adequate care of one’s health, etc
* Increases ability to learn in a changing environment
* Increases the probability of technological innovation
All these have positive externalities.
How is education connected to the Solow model?
y(t)=Ak(t)^alpha
Education increases A. Positive effects on technological advances.
How can we improve education?
Individual actions: sending children to school
Large-scale policies:
- Building and maintaining schools
- Providing study materials
- Recruiting, training, paying professors
What is the case of PROGRESA?
Welfare payments in Mexico conditional on:
- children regularly attending school
- children seeking preventive health care
Founded: 1997
- Focused on girls
- The payments became larger as children got older
Results:
- Small improvements in primary school enrollment
- Larger results for secondary school enrollment
Why should governments intervene in education?
- Social returns to education are higher than private returns; if
only because innovations often come from educated workforce - Credit market imperfections
- Asymmetric information
Is school building effective at improving education?
Duflo 2001 concluded:
Results
* Children aged 2-6 in 1974 received 0.12 to 0.19 more years of education for each school constructed per 1,000 children in their region of birth
- The estimates also suggest that the program led a 1.5 to 2.7 percent increase in wages.
Do textbooks increase education?
- No significant results for the average student
- Textbooks increased scores only for students with high initial academic achievement
- Textbooks increased the probability that students would go on to secondary school
Can monitoring and financial incentives reduce teacher absence and improve students learning?
Duflo et al. 2012:
Results:
– improvement in attendance : over the 30 months, teachers at treated schools had an absence rate of 21 percent, compared to 44 percent baseline and 42 percent in the comparison schools.
– children’s test scores increased by 0.17 standard deviations
Why are poor households more exposed to risks?
Agriculture incomes vary a lot
- within the year
- from year to year
Business, casual labor or self-employment also vary
- depend on demand and work capacity
- investment risk
What are some risk coping strategies?
- Limit risky behaviour
- Diversify location of plots and types of crops planted
- Diversify activities
- Temporary migration
- Marriage
- Relying on one’s informal local network
What is the case of state-led banking expansion in India?
Rule: A bank must open four branches in unbanked locations to be eligible to open one branch in an already banked location
Time frame: between 1977 and 1990 (financial liberalization)
Results:
* In 21 years, over 30,000 new branches opened in rural unbanked locations
* Equalized bank branch
presence across and within Indian states.
* A one-point increase in per capita branch openings in rural unbanked locations is associated with a 4.74% reduction in rural poverty.
* Evaluated at the sample average, results imply that rural branch expansion in India can explain a 17% reduction in the poverty headcount ratio.
* In contrast, the rural branch expansion program left urban
poverty outcomes unaffected (causal results?).
What were the cons of the state-led banking expansion in India?
Cons:
- High subsidies required from central bank
- Very high default rates
- Lending driven by political concerns
Describe the financial market in developing countries.
Credits, savings and insurance markets are supposed to provide an intermediation between savers and borrowers.
In theory should be the most efficient way to :
* finance fixed capital acquisitions
* finance working capital
* allow consumption smoothing, avoid a nutrition poverty trap or cure illness, etc.
Statistics about informal borrowing:
- On average in developing countries, less than 5 percent of the rural poor have a loan from a bank and less than 10 percent of the urban poor do.
- In India, a fruit would be charged around 5% interest by farmers
What are some of the issues that lead to very high interest rates in developing countries?
- Imperfect information (collecting information is costly and fixed no matter the loan size) => greater impact on interest rates for small loans.
- No framework of legal enforcement.
- Typical borrower has no collateral
How do micro finance institutions tackle the market issues associated with developing markets?
- Gather ex-ante information on the borrower -> to tackle selection
- Make frequent visits -> to tackle moral hazard
- Get means of pressure on the borrower, in particular, by lending to a group -> to tackle moral hazard and selection
How does joint liability work?
In many cases, joint liability means the MFIs do not care about who repays in the group.
But if a repayment misses or is insufficient, the entire group may be penalized.
Joint liability means that borrowers have a strong incentive to
* screen other clients so that only trustworthy individuals with good projects are allowed into the program -> borrowers selection
* make sure that funds are invested well -> reduce moral hazard
* make sure that effort is exerted -> reduce moral hazard
* enforce repayment through peer pressure -> reduce moral hazard
What are the results of joint vs individual liability?
Gine and Karlan 2014:
group to individual liability:
- No change in default rates.
- Higher client growth.
- Loan sizes are smaller.
loan canters with group or individual liability form the start
- no signifficant differences in repayment rates
* credit officers are less likely to create groups under individual liability - bias
What are institutions?
Institutions are “the rules of the game in a society”: they include:
- Formal Institutions: Laws, regulations, and government structures (e.g., police, judiciary
- Informal: Social norms, trust, cultural attitudes, and traditions (e.g., savings groups).
Why do institutions matter?
Institutions Matter because they:
- Structure incentives for behavior (e.g., investment, property rights enforcement)
- Influence outcomes such as equal opportunities or perpetuation of discrimination.
Countries with better institutions tend to have higher investments in physical and
human capital and achieve greater income levels.
How applying the Solow model to reveal the importance of exogenous factors such as variation?
By the law of diminishing returns to inputs, poor capital-scarce countries should exhibit higher rates of return to capital. It suggests that if the savings rate (s) and population growth rate (n) are consistent across countries, poorer countries should grow faster than richer ones. (convergence)
If disparities between rich and poor countries persist over time, it must be because other things, such as s and n, are not equal. This hypothesis allows for persistent differences. But the cause of such differences are laid at the door of “fundamental” or “exogenous” variation across countries.
If saving rate or population growth change with the level of income, they are endogenous to the model, not simple parameters. So, the model equilibria will depend on how the saving rate, or fertility, responds to the levels of income, creating multiple possible equilibria depending on institutional and policy dynamics.
What is the concept of complementarity?
Actions taken by more individuals encourage even greater adoption by others, leading to either virtuous or vicious cycles. Some examples: Corruption, as High evasion leads to fewer audits, encouraging more evasion, and Discrimination: Marginalized groups may not invest in education due to limited opportunities, perpetuating inequality.
What is the issue with persistent complementarity?
Pervasive complementarities can lead to a situation where an economy is stuck in a “low-level equilibrium trap”. This low-level equilibrium is stable, although at the same time there is another, better equilibrium which could be reached. But only if all agents could appropriately coordinate their actions to reach this better equilibrium.
How does the concept of complementarity relate to history?
Multiple equilibria or steady states arising from complementarities
imply that history matters, telling the initial allocation of individuals across the two sectors.
Why do expectations matter?
A change in expectations can have permanent effects by switching equilibria, if the shifts are fast enough. Temporary policies – or other shocks to expectations – can have permanent effects by switching equilibria.
Discuss ancient societies & economies in Africa.
Ancient African societies had a high level of social and economic development compared to those in other continents. Taking urban population as a proxy of Development level, the 15th century had large cities and high urbanization rate.
How did colonization impact ancient societies and economies in Africa
The slave trade disrupted social and economic structures, fostering violence and reducing productive activities. European colonizers established institutions to maximize their own benefit, often expropriating resources and imposing extractive systems. Colonial borders ignored ethnic and cultural divisions, leading to fragmentation and conflict post-independence. Slavery was a global institutional shock, as well as colonization.
What is Africa’s post-colonial legacy?
Newly independent nations inherited weak institutions, artificial borders, and limited infrastructure. Regions prosperous pre-colonization often became underdeveloped due to exploitative colonial practices.
What is Max Weber’s opinion on states?
Max Weber says that a state holds the monopoly on violence, enabling it to enforce laws, collect taxes, and protect property rights.
What are the sources of endogeneity related to institutions?
Institutions are endogenous to development. There are several sources of endogeneity:
- Perceptions (institutions may wrongly be perceived to be better in richer countries);
- Measurement error (the explanatory variable is measured with noise, and assessment may be more positive in developed countries) - Reverse causality (richer countries can afford better institutions);
- Omitted variables (some other factors may move both outcomes).
How can we deal with endogeneity?
A possible solution: identification strategies, and the most commonly used in this literature is instrumental variables, using external factors (e.g., historical events) that influence institutions but not directly modern economic outcomes.
What did Acemoglu to be the leading cause in creating an “extractive” or “neo-Europe” colony?
The type of institutions which were built hundreds years ago have persistent effects on economic development today: The mortality rate of 1st settlers influenced the construction of “extractive” or “Neo-Europe” types of institutions, which correlate with current levels
of risks of expropriation and GDP/capita.
What were the effects of the landolord vs individual tax colonial systems run by the British?
It was shown that landlord zones exhibit lower agricultural productivity, infrastructure, and literacy, with higher infant mortality. Even after the abolition of landlordism, these areas struggled with class-based conflicts, limiting collective action.
Discuss the case of the Mining Mita System in Peru.
With the Mining Mita System:
indigenous communities were forced to send workers to mines, reducing household consumption and increasing stunting rates. Areas under the mita system lacked stable land tenure, discouraging investments in public goods like roads, while non-mita areas with haciendas developed better infrastructure and enjoyed long-term benefits.
What is corruption.
Corruption is the abuse of entrusted power for private gain.
What is the political resource course?
The resource sector is thought to be particularly pernicious to political institutions for two main reasons: Concentrates large rents in a few firms, and fiscal windfall limit the accountability of politicians, allowing to buy social peace and repress to remain in power, encouraging extractive institutions, which hinder development.
What are some case studies of the resource curse?
Brazil and Oil Windfalls=> Municipalities with offshore oil resources received royalties
significantly boosting revenues. Research indicates that there was increased municipal spending, but a significant gap between spending and actual benefits could be observed
India and Mineral Resources=> Research on resource-rich districts shows elections favoring criminal politicians; Increased corruption among elected officials; No direct fiscal windfalls, yet behavior reflects resource-related corruption.
How many people are living in conflict areas today?
Two billion people are living in conflict areas today, and the world is facing the highest number of violent conflicts since 1945.
What are the different types of conflict?
- Social conflict: inter-group antagonism
- Civil conflicts: Involves the state, has significant scale, and is widespread.
- International Wars: Involves multiple states and significant scale.
What are the causes of war?
Irrational: Behavioral biases, joy of destruction, or overconfidence, and
Rational: Commitment
problems, grievances (economic or not), or greed (purely economic motivations).
What was the Rwandan genocide?
1994 event where extremist Hutu attacks led to 800,000 deaths (maily Tutsi).
Reasons:
- Social Status and Historical Grievances: Tutsi’s higher social status and collaboration with colonial rulers.
- Economic Stress and scarcity of land
- Propaganda
What is the effect of the income level on conflicts?
Income changes have ambiguous effects:
Opportunity Cost Effect (higher income raises opportunity costs of fighting, reducing conflict) and Rapacity Effect (higher income raises the value of contested resources, increasing conflict).
How were he opportunity cost and rapacity effects seen in Colombia’s civil war?
- Opportunity cost effect: (Labor Intensive) higher coffee prices reduced conflict
- Rapacity effect: As oil (Capital Intensive) prices increased conflict increased
What are the two views on inequality’s effect on conflict?
- What matters is vertical inequality (inequality between groups). If one group is richer and the other poorer, the poor will have reasons to fight with the rich, to extort the prize.
- What matters is horizontal inequality (inequality within groups). If there are rich and poor people within each group, the rich may provide financial support (buying weapons or providing wages) while the poor may provide labor (given the low opportunity cost of their time), allowing complementarity in the “production function” of the fight.
Empirical Evidence of Huber and Mayoral show that Within-group inequality (horizontal) predicts conflict intensity better than between-group inequality (vertical). This suggests feasibility of conflict stems from complementary roles within groups (e.g., financiers and laborers).
What is gender equality?
Equal access to resources, opportunities, and representation.
What are some examples of the relevance of gender?
- key driver in demographic transition
- recipients of most CCT
- recipient of mosquito bed nets
- recipient of most microcredits
What are some examples of gender inequalities?
Male-biased sex ratios at birth, Female genital mutilation (FGM), High prevalence of teen mothers, Women perform most unpaid labor and have less participation in paid work and politic.
Why are women the main recipient of many development programs?
Most funding agencies
pursue a double goal: empower women through access to finance and paid work, and increase human capital in the next generation, as women who gain access to more money may be more likely to allocate this money to health and education of their children.
Do women act differently?
In the early 1990s, South Africa expanded its old age pension program, leading to a study by Esther Duflo that found children living with female pension recipients were more likely to be well-nourished. The benefits were significant enough to help girls close nearly half the developmental gap with American girls. This aligns with research showing that women in power often make decisions that favor human capital development and are more likely to invest in health and education, demonstrating a strong aversion to unfairness.
Where do gender norms come from?
Gender norms have historical roots in agricultural practices. Societies that used plough-based agriculture assigned domestic roles to women, influencing today’s gender norms. Descendants from these societies still exhibit less gender equality and reduced women’s public and economic participation.
What are the two main drivers of discrimination?
- Taste-Based (prejudice leading to costly avoidance)
- Statistical (group identity
used as a proxy for ability due to lack of information).
What are examples of actions or policies that shape cultural norms and institutions?
- Conditional cash transfers
- Medias and edutainment
- Legal requirements
- Information (transparency)
