August 2008

In front of the Birds' Nest stadium.

Before, during and after the Olympics there has been an avalanche of news articles around the world asking the question: “Will the Olympics change China?”  In my experience, the Olympics provided ordinary Chinese with a chance to contribute to their society and experience it in a different way than ever before.  While the change this has brought may only be incremental, it is important nonetheless.

The volunteer organization at the Beijing Olympics was China’s largest volunteering effort ever: 600,000 volunteers in total, including 100,000 at the Olympic sites.  I worked more than 100 hours during the Games’ 16 competition days as a volunteer at the Olympic Green, the site of the main arenas and where most of the spectator crowds gathered.  My team comprised a group of young, dynamic university students from all over the country, most aged between 19 and 22.  As “guides” on the site, we helped spectators find the way into and out of stadiums, took photos of excited family groups and had hundreds of photos taken of us, helped the elderly and disabled navigate their way, and located lost children (and the occasional lost wife). 

A few days ago, The New York Times published a story on a new online approach to selecting and funding investigative journalism pieces.  A nonprofit called Spot Us calls it “community funded reporting.”  The concept is really quite simple.  It has two main components: 1) ask people for story ideas, and 2) ask them to provide funds to defray the costs of producing the story.  In cyberspeak, the two components are called “crowdsourcing” and “crowdfunding”, respectively.

August 25, 2008. I didn’t see it, but I heard it. Everybody heard it. On the last day of the Olympics, Mongolia won its second gold medal. When Badar-Uugan Enkhbat, a 23-year old boxer, slammed Cuba on Sunday afternoon, Ulaanbaatar simply erupted. It seemed that the entire city celebrated: shouting, cheering, honking horns, and flag-waving. Young men stood on moving cars, holding flags, and somehow managing to keep their balance.

It is wonderful to see the entire country so happy. Ten days ago, when Tuvshinbayar Naidan won the gold in judo, the entire country celebrated its first-ever Olympic gold. The second gold medal puts Mongolia either at or near first place in gold medals per capita. Chuck Culpepper pointed out in the Los Angeles Times that for Mongolia, with only 2.9 million people, to win gold means much more than the United States or China, with their large populations, to win their 30+ gold medals. Spot on.

Despite the current economic climate, a recent Standard & Poor's research report found that remittance securitization and securitization of other future flow receivables in emerging markets are performing well, bucking the trend in global credit markets.

In a 2005 paper by Suhas Ketkar and Dilip Ratha, the authors found the securitization of future remittances and trade, tourism, credit card and other future receivables (together called "Diversified Payment Rights" or DPRs) are a useful tool that can help developing countries maintain access to international capital markets especially in times of crisis.

Dilip’s research as well as the World Bank’s 2006 Global Economic Prospects report, emphasizes that one of the reasons for the robust performance of this asset class is the "countercyclical" nature of remittances.

The S&P report backs this up by stating, "Some of these, such as worker remittances, also offer the benefit of countercyclical performance: that is, their flows often increase when domestic economies weaken...Investors often value worker remittances for their countercyclical nature: that is, workers typically send more money home during periods of economic crisis in their native countries."

At least that's the new finding from PREM in a paper on Rising Income Inequality in China. Coauthors Xubei Luo and Nong Zhu do a lot of number crunching using the China Economic, Population, Nutrition and Health Survey and find that while inequality has risen rapidly in China, strong growth has meant that all income groups have seen pretty substantial economic gains. Figure 1 provides a pretty clear picture of the rise in inequality as measured by the Gini coefficient:

The Wall Street Journal had an article today on a little-known narcotic plant called Qat. It is popular in Yemen, Ethiopia, and a few other places, but most authorities don't look too kindly on the use of the plant. Qat causes a mild narcotic euphoria - think way too many espressos. Erowid, a directory of information about psychoactive substances, describes the experience of chewing the leaves of Qat like this:

The experience of khat chewing is often compared to other stimulants, similar to a strong dose of caffeine or a low dose of cocaine. Commonly reported effects include an increase in energy and alertness, increased physical endurance, mild euphoria, increased talkativeness, and cheerful mood. Physiological effects include increased heart rate, blood pressure, and wakefulness.

The international community has endorsed the Millenium Development Goal of reducing the poverty rate in the developing world by 50% over the 25 years, 1990-2015.  While the target is arbitrary, it is nonetheless important to have a stretch goal like this to challenge us all to make the world a better place.  To measure progress, naturally we need pretty good estimates of global poverty.  The World Bank is the leading bean counter in this exercise.  It just today released new estimates of global poverty that have the potential to illuminate the progress, but also the potential to confuse a lot of people.  The research department of the World Bank has changed its global poverty line from $1 per day to $1.25 per day and has found about 468 million more poor people than it had previously estimated.  About 135 million of these newly found poor are in China.  How does one make sense of these new numbers?  Here are some pointers:

Adding to my earlier post about card based technologies, m-banking services are far cheaper than brick and mortar banks, but these can be costly compared to a poor person's income.  The Consultative Group to Assist the Poor (CGAP) has a head-to-head comparison of how the prices of the top branchless banking service -- GCash, Smart Padala, M-Pesa, Wizzit and MTN -- stack up against the top four banks in South Africa. The Filipino m-banking services and M-Pesa come out on top in terms of cost and affordability for the poor, while the South Africans providers are relatively more expensive.

A few years ago in London, I was part of a circle that included quite a few Pakistani Brits, all top professionals. And I became aware of efforts by some of the great powers to broker a deal between the late Benazir Bhutto and General Musharraf. The aim? To keep the general in power. I used to ask: what about the role of public opinion in Pakistan in all this?

A new paper available from the National Bureau of Economic Research called Is The Washington Consensus Dead? attempts to resurrect the Washington Consenus, or at least the bit of it that argued for trade liberalization. Authors Antoni Estevadeordal and Alan Taylor let it be known that this was no easy task: "[W]e painstakingly collect new and more detailed tariff data on consumption, capital, and intermediate goods from primary sources, using easy digital sources for recent years, but with recourse to some extremely cumbersome and hitherto unused archival sources for the 1980s." In other words, econometrics is not for the faint of heart. Here is what their hard work has led them to conclude:

We think these results show that there is quite strong support for the trade policy prescriptions of the 1990s Washington Consensus. The WC claimed that lowering tariffs would promote growth in the developing world. Theory suggests a mechanism: lower tariffs will lead to cheaper capital and intermediate goods imports.

The Olympics closing ceremony. Photo courtesy of rich115 under a Creative Commons license.

The closing ceremony for the Beijing Olympics was as impressive as the opening.  In between, China put on an amazingly well-organized set of games.  China also won the greatest number of gold medals and came in second behind the USA in total medal count.  This splashy performance definitely caught the attention of people in the West and set off a lot of speculation in the press about what it all means.  Robert Samuelson discusses in a recent column the Beijing Olympics as a metaphor for China overtaking the U.S. as the world's biggest economy.

What struck me most during the last week of events and at the closing ceremony is that we really are living in a new, multi-polar era without one single dominant country.  I was fortunate to see Guo Jingjing win her springboard diving gold; Russia-USA men’s volleyball semifinal; Argentina-Nigeria soccer gold medal game; Jamaican runners dominate the sprints; Ethiopian and Kenyan runners dominate the long distances; and American runners sweep a couple of middle distance events. And while the Americans and Chinese can be justifiably proud of their medal totals, don’t forget that the member states of the EU won vastly more medals and gold medals than either of those countries.  (My informal count as of mid-day Friday was that EU states had won 234 medals including 74 gold.)