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November 2016

The start-up bubble: How abundant money is actually not helping

Victor Mulas's picture



A start-up office in New York.
Photo Credit: © Victor Mulas


We are in the grip of start-up hype. Today, every large city in the world aspires to become a start-up hub. New York City became a start-up role model; Berlin and London were the “go to” start-up hubs in Europe two or three years ago; Nairobi is the start-up darling in Africa; and Dubai promoted itself as start-up destination.

Start-ups are seen as the new solution for job creation in the emerging economy of the so-called “fourth industrial revolution.” Indeed, they can help produce the jobs of the future — those new employment opportunities that are created in brand-new industries or technology categories. For instance, this has already happened in New York City, where the connection with local industries has resulted in new jobs, new industries, and greater competitiveness for traditional sectors. And it is has not been only about jobs. Solutions for critical development challenges, such as online payments and access to energy in off-grid areas, have emerged from Nairobi and India’s ingenious start-up scenes.

As I visit these cities, however, I wonder if the actual — and potential — impact of these emerging start-up ecosystems is being exaggerated and if we are all collectively witnessing an overflow of attention and resources that cannot translate into “magic” solutions to unemployment and other global challenges.

Indeed, many of the ecosystems I visited and studied seem to be overinflated. Not many start-ups become sustainable businesses, and the few successful examples are cited over and over again. Start-ups are disconnected from local industries and there is little absorption of start-up innovation by the economy.

In some cases, the result is a massive, large-scale training program where a new generation of aspiring entrepreneurs can learn technical and management skills (this is a good outcome). On fewer occasions, the ecosystem becomes sustainable, producing successful new businesses that reinvest in new talent and connect with the local industry base (this is a better outcome).

But these seem to be a handful of cases, and it’s not easy to get there. I suspect this is the result of a lack of maturity of the infrastructure supporting the ecosystem, as well as the poor understanding of what we need to translate the energy of new entrepreneurs and innovators into productivity and business success.

Blog post of the month: In the custody of angst

Sina Odugbemi's picture
Each month People, Spaces, Deliberation shares the blog post that generated the most interest and discussion. For November 2016, the featured blog post is "In the Custody of Angst" by Sina Odugbemi. 
 


It has been building up for months… as events and data points have mounted. Now, in the global circles that I move in both physically and intellectually what people are experiencing can be summed up in one phrase and one phrase only: utter bewilderment. People are asking: What is happening to the world? Universities, schools, workplaces are organizing counselling and venting sessions. Families, particularly extended families, are being sundered by divisions over preferences in public affairs. The feeling persists that global affairs might have taken a dark turn, perhaps irretrievably. People look at the future with dread. They look at the global calendar of significant mass decisions and ask plaintively: Where is the next shock going to come from? Others, in utter despair, have given up all hope. They forecast a series of dominoes falling…and crashing.

In other words, we now have multitudes in the overmastering claws of angst. Existentialist philosophers describe angst as an unavoidable and ever present disquiet or dread or anxiety about life, the individual life. For, each human being on earth knows that tragedy is potentially just around every corner. There is so much about our lives that we cannot control and we know only too well that life can suddenly go awry. However, in this essay I use angst in a connected but slightly broader sense, as in the top definition of the word that Google offers: “a feeling of deep anxiety or dread, typically an unfocused one about the human condition or the state of the world in general.”

The question is: why are so many people angst-ridden? I would argue that we have to look beyond particular events since the condition has been created by a series of political developments and decisions around the world.

A good place to start is the stubborn belief in human progress. Now, in the history of ideas the doctrine of progress has had a rough journey. (For a good survey please see this). Many Enlightenment philosophers believed that with the rise of Science and the spread of Reason not only would human life would improve materially, human beings and human life would get better, saner, ever more civilized. It took the World Wars and the pogroms of the 20th century to discredit the idea. But then came 1989 and the seeming triumph of liberal constitutional democracy. The idea of progress escaped the tombs. Only the environmentalists kept warning us that humanity was hurtling towards catastrophe because of the unstainable impact of humans on the environment. Then came the Paris Accords and that pessimism was tempered somewhat.

But I have always felt that the true plinth of the idea of progress is an unvarying one: our deeply ingrained optimism. Which is why movie makers (Bollywood, Nollywood or Hollywood) concoct happy endings even when the logic of the story makes the denouement silly.

Nine takeaways from the 2015 Trends in International Math and Science Study Results

Marguerite Clarke's picture
The highest performing countries are paying extra attention to the quality of their teachers. (Photo: Dominic Chavez / World Bank)

The International Association for the Evaluation of Educational Achievement (IEA) released the results of its latest Trends in International Mathematics and Science Study (TIMSS) yesterday, November 29. TIMSS 2015 assessed more than 600,000 students in grades four, eight, and the final year of secondary school across 60 education systems.

Making the future of work more inclusive and equitable

Siddhartha Raja's picture
Public policies could shape how the costs of digitization can be managed, to counter inequality and mitigate the costs for the poorest. Photo: Dominic Chavez/World Bank

There is much speculation about what share of jobs might be automated by increasingly smart machines. One estimate suggests that countries such as the U.S. would see almost half of today’s jobs disappearing, while another estimate suggests that this might be just about one in ten jobs. But less is known about who will lose their jobs due to these transitions. And more critically, what might happen to the bottom 40 percent of the population of emerging countries that have only recently been exposed to basic digital technologies? Will they gain from technological progress, or will they face the negative effects of both exclusion and of others—countries or the better off—pulling ahead?

Chart: What are the Average Number of Students per Teacher?

Tariq Khokhar's picture

In Sub-Saharan Africa and South Asia, there are more than twice as many students per teacher than in Europe and North America. The pupil-teacher ratio is different but related to class size, and is often used to compare the quality of schooling across countries.

Can cash transfers and training reduce intimate partner violence? Learning from Bangladesh

Melissa Hidrobo's picture

This blog post draws on material from "Can cash transfers prevent intimate partner violence?" which was published on the International Food Policy Research Institute (IFPRI) blog in May.

Intimate partner violence (IPV) is the most pervasive form of violence globally—with 1 in 3 women physically or sexually abused by a partner in her lifetime. Despite knowing a lot about prevalence and detrimental impacts of IPV, we are still at the infancy of knowing what works to prevent violence. Recently, development economists have begun exploring the potential of anti-poverty programming, including cash transfers. Cash transfers are a widely used policy tool for decreasing poverty and improving human capital, reaching up to 1 billion people across Latin America, Africa, and Asia. Cash is often given directly to women, thus potentially changing power dynamics within the household. Their scale and reach to the most vulnerable populations have led many to ask, "If cash can change household well-being and power dynamics within households, can cash transfers also be used to decrease IPV?"

Photo: Scott Wallace/World Bank

Recent studies from Latin America and Sub-Saharan Africa have shown that several cash transfer programs have decreased physical violence against women. A mixed methods study in Ecuador found that key factors there were decreases in poverty-related stress (leading to less tension and fewer arguments over women needing to ask men for money to buy food) and increases in women’s empowerment due to being targeted (which improved their bargaining power in the household, self-confidence, and freedom of movement). However there is still a lot we do not know. For example, many cash transfer programs—including those in the existing studies—combine transfers with other components, such as nutrition trainings and conditions related to education and health, which may affect women’s social or human capital distinctly from the transfers. So far, no study has been able to disentangle the impacts of cash versus the other components on IPV.

Moreover, the evidence to date on cash transfers and IPV has come from limited contexts. Given that the effects on IPV may depend on gender norms that vary by context, we need to collect evidence from other regions before concluding that transfers can reduce IPV globally. Importantly, we still do not know enough about whether in specific contexts or sub-groups, women might actually be put in danger from receiving cash, due to men utilizing IPV as a method to extract the cash or due to male backlash if men use IPV to re-assert their authority after a shift in power dynamics.

Our ongoing Bangladesh study with co-authors John Hoddinott and Akhter Ahmed, recently awarded funding from the World Bank Group and the Sexual Violence Research Initiative, will help to fill some of these knowledge gaps. First, the intervention has both transfer-only arms and combined transfer-and-child-nutrition-training arms. Since the intervention arms are assigned randomly, we can disentangle whether a transfer is enough for impacts on IPV or whether adding training is really necessary. Second, the study comes from a context where IPV is very high—about 53-62 percent of women in Bangladesh report experiencing it in their lifetimes – and where gender norms are very different from Latin America or Sub-Saharan Africa. For example, female seclusion (women staying inside the home) is a strong sociocultural norm in rural South Asia. This could limit how much power dynamics shift when transfers are given to women, since women may have restricted mobility to use the transfers independently; on the other hand, it could increase the benefits of trainings for women, since trainings provide rare opportunities to leave the home and build social capital.  Patriarchal norms in Bangladesh could also plausibly contribute to backlash if large transfers to women subvert traditional power dynamics.

Media (R)evolutions: The world of messaging apps

Darejani Markozashvili's picture

New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.

The number of people using messaging apps continues to rise. In fact, traditional global telecoms are scrambling to compete and maintain relevance. In some parts of the world messaging apps have become the most used apps overall.

According to data (using Android App Data: April 2016) from Similar Web out of 187 countries examined, WhatsApp was the most popular messaging app, becoming the global leader by claiming the top spot in 109 countries. Findings from Global Web Index (GWI) suggest that 3 in 4 WhatsApp users use the service daily, helping this messaging app claim the title for the highest usage frequency of all the messaging apps tracked by GWI. Although Facebook Messenger came in second place, claiming 49 countries, it remains to be one of the most powerful platforms for companies to reach their customers. Third in line was Viber, with 10 countries. LINE messaging app took fourth place.
 

Source: SimilarWeb
 

Using viral load and CD4 data to track the HIV response in South Africa

Nicole Fraser's picture



Sergio Carmona and Tendesayi Kufa-Chakezha are guest blog contributers from South African National Department of Health: National Health Laboratory Services and South African National Department of Health: National Institute of Communicable Diseases, respectively.

South Africa has the largest HIV treatment program in the world with over 3 million people currently on antiretrovirals. Every year, millions of VL and CD4 count tests are carried out to check treatment eligibility for new HIV cases (CD4 count) and treatment success in those on antiretroviral therapy (ART). A VL test monitors viral suppression, the goal of ART given to a HIV-infected person.  The CD4 count checks whether the patient suffers from immune deficiency due to low CD4 counts and tracks recovery of the immune system during ART. In 2014, close to half of all VL tests carried out in lower-middle income countries were done in South Africa. In addition, large numbers of CD4 cell counts have been done routinely to predict patients’ risks for opportunistic infections and provide preventive therapy where indicated. While VL and CD4 testing are essential to monitor individual ART patients, the data is also useful in tracking the impact and performance of the ART program as a whole.
 

What Drives Technology Adoption in Agriculture? Disentangling regulation and rising wages in Brazil: Guest Post by C. Austin Davis

This is the fifth in our series of posts by Ph.D. students on the job market this year
Something dramatic happened in Brazilian agriculture between 2007 and 2013: the previously-steady labor intensity of a major crop, sugarcane, fell by 70 percent (see Figure). This drop was the result of the rapid, widespread adoption of mechanical harvesting.  My job market paper, “Why Did Sugarcane Growers Suddenly Adopt Existing Technology,” studies how mechanization was achieved.

Introducing a cultural trade index

Patrick Kabanda's picture

A few years ago, when Craigslist was just “The List,” a friend circulated an ad posted on Craigslist Vancouver.  It went like this:
 
We are a small & casual restaurant in downtown Vancouver. We are looking for solo musicians to play in our restaurant to promote their work and sell their CD. This is not a daily job, but only for special events, which will eventually turn into a nightly event if we get positive response. More jazz, rock, & smooth-type music around the world and mixed cultural music. Are you interested in promoting your work? Please reply back ASAP.
 
And one of the responses received was:
I am a musician with a big house looking for a restauranteur to promote their restaurant and come to my house to make dinner for my friends and me. This is not a daily job, but only for special events, which will eventually turn into a nightly event if we get positive response. More fine dining & exotic meals and mixed ethnic fusion cuisine. Are you interested in promoting your restaurant? Please reply back ASAP.
 
It’s perhaps unfair to conclude that the restauranteur didn’t mean well.  But what does this exchange suggest?  How are the arts normally valued, consciously or unconsciously, in our social order?


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