July 2008

A slowdown in the growth of remittances to Mexico has been a cause for concern as these flows (mostly from the United States) provide a lifeline to a large number of Mexican families.

Migrant remittances to Mexico declined by 0.1 percent in June compared to the same period the previous year, according to the latest official data. This represents an improvement over the significantly larger 3.3 percent decline the previous month.  Also, this article from the WaPo states that overall in the first six months of 2008, remittances to Mexico have declined by 2.2 percent compared the first half of 2007.

In the current climate of negative news, it’s worth taking a step back to see if the pessimistic picture is justified.

Monthly data show that officially reported remittance flows to Mexico in the first six months of 2008 followed a very similar trend to that of the previous two years, and they have remained almost unchanged from 2007. Monthly remittances to Mexico show strong seasonality, reaching a peak during May on account of Mother’s Day. The official data shows at best a flattening since early 2007, especially coming after 20 percent average annual growth during the previous five years, and after taking into account seasonal fluctuations.
 
Moreover, Mexican migrants are still sending money home, if necessary by taking up whatever jobs they can find, postponing consumption, or drawing on savings. There are also anecdotal reports that stringent immigration enforcements have encouraged some remittances to shift to hand carry or informal channels.

After seven years of fitful trade negotiations, the WTO’s Doha Round has collapsed, and the post mortems have already hit the newsstands.  Writing in the International Herald Tribune, Keith Bradsher points to a new alliance between China and India, both pushing for so-called “safeguard” rules for agriculture, translating into uncapped tariffs on food imports from rich countries, ostensibly to support farmers in developing countries. 

A new paper coauthored by fellow PSD blogger Thorsten Beck entitled Who Gets the Credit? offers up some new insights on what effect credit availability has on GDP growth. Using data on 45 countries between 1994 and 2005 on the relative share of enterprise vs. household credit, the authors conclude:

We find that it is bank lending to enterprises, not to households, that drives the positive impact of financial development on economic growth.

I find this a startling conclusion; most of the literature on human capital suggests that credit constraints play an important role in dampening growth. Student loans - one of the products that the IFC has been involved in - should help overcome this credit constraint and give a boost to growth in the long run. Even in the absence of formal student loans, other forms of household credit can help keep students in primary and secondary education longer, thereby improving human capital outcomes.

One question I have concerning the study, then, is whether the effects of household credit on growth could take longer to appear than that of enterprise credit. Studying takes years; whereas, new equipment can be put to use immediately. Beck et al. do note that the issue of time horizon still needs to be addressed: "More research is needed. First, expanding the existing data towards panel data sets with a longer-time series dimension will allow more rigorous testing of both determinants and effects of credit composition." I look forward to their next contribution to this topic.   

Image credit: CPI at Flickr under a Creative Commons license.

I thought the most innovative way to detect land mines was, to date,  the use of sniffing rats (light enough not to set off the explosive). But scientists in South Africa (a team set up by the University of Stellenbosch and the Danish biotechnology firm Aresa) are now turning to vegetables.

According to EcoWorldly, they have developed the "Red-Detect" bio-sensor technology in a weed that changes color from green to red when when it detects the nitrogen dioxide that leads from buried mines. The weed, Thales Cress, is too small to be seen from a safe distance, however, so the scientists are now betting on using the tobacco plant instead, which has large leaves and grows easily in most parts of the world.

Field trials are already underway in Serbia, but scientists keep researching the plant's response to drought and extreme temperatures, as well as the risk of environmental contamination coming from this genetically engineered tobacco. In East Asia, projects to clean the land from mines are currently underway in Vietnam, Cambodia, and Myanmar (at least).

In a previous job, I was asked to organize media training for senior technocrats in international development who would, in the course of their jobs, have to face the media from time to time to answers questions about their areas of responsibility. As I set about doing a learning needs assessment and organizing the training, I noticed a dynamic I had not reflected on before. It is this: when working in headquarters most senior technocrats working in bilateral or multilateral development organizations are really anonymous bureaucrats. In fact, in bilateral donor organizations they tend to be part of the civil service; as a result, they are not meant to be seen or heard. That is the job of Ministers. Thus, although they take decisions that affect millions of lives, these technocrats are not used to public questioning by the media. 

El día 18 deJunio de 2008 se aprobó la directiva de retorno en el Parlamento Europeo. Esta directiva constituye el primer paso hacia una política común de inmigración para inmigrantes ilegales procedentes de países no comunitarios. La directiva entraría en vigencia el año 2010.

La mayoría de los países latinoamericanos, los bloques comerciales regionales y organismos internacionales han expresado su rechazo y preocupación por la reciente medida aprobada por la Unión Europa (UE). La directiva atenta bloquear la oportunidad de muchos países latinoamericanos de seguirse globalizando, accediendo a mercados cada vez mas grandes no solo a través del movimiento de bienes, servicios, capital, si no a través del movimiento de personas.  
(Ver resumen de noticias en Ingles)

Entre los efectos posibles de esta directiva se encuentran:

Brazilians have earned a reputation around the world for their beauty, boosted by fashion icons like Gisele Bündchen. But a recent article from the Science and Development Network sounded an alarm about the state of things in Brazil. Jonathan Wells, a reader in childhood nutrition at the UCL Institute of Child Health in London, commented on the alarming growth of obesity in Bündchen's homeland:

In Brazil, between 1973 and 1996, obesity increased from 2.4 to 6.9 per cent in men and from 7.0 to 12.5 per cent in women. In simple terms, obesity arises when people consume more energy than they expend, either by eating too much or exercising too little.

It may seem strange to sound an alarm about obesity while so much attention is being directed at rising food prices. (See, for example, this piece by Martin Wolf.) Obesity, however, is a serious problem in many middle-income countries, perhaps outstripping the number of undernourished individuals. A slightly dated article in Foreign Policy suggests that China, Mexico, Brazil, and Togo all have higher rates of obesity than undernourishment.

While higher food prices may put a dent in this trend, that's not entirely clear in advance. It will depend on how individuals at risk for obesity respond to price changes - and they may opt for cheaper, less healthier food if that's what is available. So what should be done about this serious health threat?

According to this article in Globe and Mail, new data from the Canadian government shows that four in 10 Canadians are sending money to family and friends abroad.  Also interesting to note:

"In Canada, where one in five people are born outside the country, about $5-billion is sent in remittances a year, according to Western Union, one of the world's largest money transfer firms."

This data will definitely help fill in some blanks as we update and publish the next Migration and Remittances Factbook.

In the last post on this Blog, my colleague, Anne-Katrin, discusses John Kingdon's Agendas, Alternatives, and Public Policies, a very influential study of the policy process in the United States. In the study, Kingdon shows how the three streams of problems, policy solutions and politics converge to move an issue to 'the decision agenda'; that is, governmental action.

The discussion over at Creative Capitalism continues, and the most recent offering is from Esther Duflo. (Duflo is well known because of her work promoting the use of randomized evaluations in development economics.) In part, she responds in her post to criticisms from Bill Easterly directed at the notion of creative capitalism. Easterly argues strongly for the primacy of what he calls "traditional capitalism" in raising the poor out of poverty. Duflo, on the other hand, argues in support of creative capitalism:

There is, however, a fundamental difference between producing goods or services to sell on the market, and producing them to improve the lives of the poor. This difference creates a fundamental difficulty for creative capitalism. In their day jobs, capitalists make money and stay in business only because consumers like their products enough to pay a price high enough to allow the capitalist to make money. This ensures that businesses add value on a sustained basis...This automatic feedback loop is generally missing in the social sector...

Duflo's support for creative capitalism derives from her belief that there are ways to create this feedback loop.

Kiev, July 2008. The kids jumped all over me as soon as I arrived, my son jabbering excitedly in English and my daughter in Russian. It’s hard to believe they grew up in the same household. This is one of the consequences of my spending two years in Aceh, Indonesia, which was a non-family post when I went there in 2006. While I was there I parked my family in Kiev, where my wife is from. With the school year over, I’m back in Kiev to pick them up and move them to Ulaanbaatar.

The contrast between Ulaanbaatar and Banda Aceh is huge and required a lot of adjustment when I moved there last May. One day I was in a lush, hot, humid, jungle climate, with endless ocean, the next I was wearing jackets and sweaters and surrounded by Soviet architecture. I was astonished that in mid-May there were still no leaves on trees, and that the mountains around the city looked brown and parched. I almost wept when, on the morning of May 28, I opened the curtains of the hotel and saw a city covered in snow.