In reviewing Dambisa Moyo’s Dead Aid in Foreign Affairs, Jagdish Bhagwati takes an interesting look at the history of development aid. He traces the changes in the way economists viewed aid as well as changes in the tactics used by aid advocates. He goes on to note that while many development debates are still aid-related, the most recent development success stories, such as those in India and China, have a very different relation to aid—almost none at all.
Jagdish Bhagwati on Development Aid
Charter City Basics
Because we often tell the story of Hong Kong’s success, the model of a charter city that comes to mind for many people is one in which the government from a developed country administers the rules in a zone hosted and populated by people in a less-developed country. Partnerships between developed and less-developed countries are certainly feasible, but there are many other possibilities. For example, Shenzhen is the dual to Hong Kong and another illustration of the potential for charter cities.
To get a better sense for the flexibility of the concept, it helps to keep the essential ingredients of a charter city in mind. The creation of a charter city requires three basic elements and three national roles, all of which are based on the key dynamic of choice.
Which Parts of Globalization Matter for Catch-up Growth?
Paul’s latest working paper is available on the NBER website.
Abstract:
Economists devote too much attention to international flows of goods and services and not enough to international flows of ideas. Traditional trade flows are an imperfect substitute for flows of the underlying ideas. The simplest textbook trade model shows that a welfare-enhancing move toward freer flows of ideas should be associated with a reduction in conventional trade. The large quantitative effect from the flow of ideas is evident in the second half of the 20th century as the life expectancies in poor and rich countries began to converge. Another example comes from China, where authorities dramatically reduced accident rates by adopting rules of civil aviation that were developed in the United States. All economists, including trade economists, would be better equipped to talk about international flows of technologies and rules if they adopted a consistent vocabulary based on the concepts of nonrivalry and excludability. An analysis of the interaction between rules and technologies may help explain important puzzles such as why private firms have successfully diffused some technologies (mobile telephony) but not others (safe municipal water.)
Deborah Brautigam on Sino-African Development Partnerships
In Africa’s Eastern Promise, a recent article in Foreign Affairs, Deborah Brautigam writes of the two-part development strategy that China pursues with a select number of partner countries in Africa. The strategy consists of loans backed by natural resources and special economic zones—ideas that come directly from China’s development experience at home.
China Eximbank issues market-rate loans that finance infrastructure projects such as roads, railways, hydropower, schools, water systems, and hospitals in Africa. Borrowers repay the loans with natural resources—oil in countries like Angola, Nigeria, and the Republic of the Congo, cocoa beans in Ghana, and copper in the Democratic Republic of the Congo. More often than not, Chinese firms receive the infrastructure contracts, but the agreements typically contain provisions that specify a competitive bid process and a degree of subcontracting to local firms.
Charter Cities in Prospect Magazine
“We know from history that the competitive pressures created by migration can boost economic growth. But strong opposition to immigration in the world’s richest economies prevents many people from moving to better systems of rules. Charter cities bring the good systems of rules to places that would welcome migrants. Indeed, charter cities offer the only viable path for substantial increases in global migration, while lessening the contentious political frictions that arise from traditional migration flows.” —Paul Romer (Prospect)
Paul writes about charter cities in the February edition of Prospect. An ungated version of the article is now available.
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