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What Does Piketty’s Capital Mean for Developing Countries?

Gabriel Demombynes's picture

The economics book that has launched a thousand blog posts, Thomas Piketty’s Capital in the Twenty-First Country, tells a grand story of inequality past and present. One would expect that a book on global inequality would have much to say about development. However, the book has limited relevance for the developing world, and the empirical data he marshals for developing countries is weak.

Piketty’s central story is that convergence in the developed world and slower population growth will leave us with a permanently modest economic growth rate (g). Coupled with a constant return to wealth (r), concentration of capital ownership, and high rates of savings among the wealthy, the low g leads to rising wealth inequality over a longish run—something like the second half of the 20th century.

A low-g future for the developed world is a mostly uncontroversial assumption. (He assumes future GDP per capita growth of 1.2 percent for the U.S.) But Piketty draws conclusions for the world as a whole, and we are a long way from global convergence. As Branko Milanovic noted in his review, catch-up growth could fend off Piketty’s inequality dystopia for some time.
 

May 30, 2014: This Week in #SouthAsiaDev

Mary Ongwen's picture
We've rounded up 20 tweets, posts, links, and +1's on South Asia-related development news, innovation and social good that caught our eye this week. Countries included: Afghanistan, Bangladesh, India, Maldives.

Can we see ‘a’ patient with tuberculosis?

Dr. Shelly Batra's picture

 World Bank Photo CollectionBack in the 1970s, I was a medical student ready to take on the world. We had a student exchange program, where students from across the world would come to India to visit and learn. One year, there was a group of young doctors from the UK who were excited to be somewhere they could observe ‘rare diseases.’ Seeing the packed hospitals on rounds, they eagerly asked the Professor of Internal Medicine, “May we see a patient with tuberculosis?” The Professor, uncertain of their excitement, replied frankly, “Of course. We don’t just have one, we have wards and wards full!” Tuberculosis (TB) – the infectious disease that primarily targets the lungs - was, and continues to be, anything but a rare disease in India.

The Case for Democracy- A New Study on India, South Africa and Brazil (shame it’s not much good – missed opportunity)

Duncan Green's picture

The ODI is a 10 minute train ride from my home, so I’m easily tempted out of my lair for the occasional lunchtime meeting. Last week it was the launch of ‘Democracy Works: The Democratic Alternative from the South’, a paper on the three ‘rapidly developing democracies’ of Brazil, India and South Africa, co-authored by the Legatum Institute and South Africa’s Centre for Development and Enterprise (not ODI, who merely hosted the launch). I was underwhelmed.

Which is a shame, because the topic is great – China’s rise and the West’s economic implosion are undermining arguments for democratic and open systems around the world. The report quotes Jacob Zuma: “the economic crisis facing countries in the West has put a question mark on the paradigm and approaches which a few years ago were celebrated as dogma to be worshipped.”
 

How to be a Great Mayor in South Asia

Jon Kher Kaw's picture


Image: Author's Illustration

Freakonomics Radio recently aired a podcast entitled “If Mayors Ruled the World”, based on Benjamin Barber’s new book of the same title, which contends that cities are a good template for governments to rule by, largely due to their mayors who are often uniquely positioned and focused on solving actual city problems. So much so, that he argues for the formation of a “Global Parliament of Mayors” to solve the world’s problems.

Even so, being a mayor of a South Asian city is no easy task. The challenges of city management in South Asia are compounded by its burgeoning urban population. In fact, according to the UN, roughly 315 million people are expected to be added to urban areas in the region by 2030. That number weighs in close to the entire population of the US today. It is no surprise that the theme of managing the challenges of urban transformation was at the top of the agenda at the recent South Asia Regional Workshop and Mayors’ Forum, hosted in Kandy, Sri Lanka.
 
The Mayors’ Forum, attended by a number of mayors and city leaders from South Asian countries and around, provided insights to what some successful mayors have done for their cities. By being visionary, and at the same time pragmatic problem solvers, mayors have seized opportunities to transform their cities, and quite often out of necessity and within highly constrained environments. Mayors took the opportunity to show how, despite significant institutional and financial limitations, they were able to take proactive initiatives to transform their cities. These were what they had to say:

May 23, 2014: This Week in #SouthAsiaDev

Mary Ongwen's picture
We've rounded up 20 tweets, posts, links, and +1's on South Asia-related development news, innovation and social good that caught our eye this week. Countries included: Afghanistan, Bangladesh, India, Nepal, Pakistan, Sri

Digital Libraries for the Poor

Parmesh Shah's picture

Facilitating Bottom-Up Innovation through Video-based Learning Platform


Local villagers being trained to shoot videos

American Idol, a television show in the United States, has inspired thousands of people to make videos for stardom in music, dance, cooking and more. Can this phenomenon be applied in development? Digital Green, a non-profit, is doing exactly that by using a similar approach to improve agriculture development in South Asia and Sub-Saharan Africa. It uses participatory video as a medium to create star farmers and facilitates a rural library of digital videos providing decentralized and localized agriculture solutions to farmers, using the thrill of appearing "on video" to amplify the organization’s reach within their social networks.
 
Digital Green’s mission is to solve one of the intractable problems of the agriculture sector – lack of localized knowledge and extension services. For instance, in India alone, the agriculture extension system employs more than 100,000 people but very few access it (less than 6 percent), and only 40 percent get information from other sources. Tackling this information gap is critical to enhancing the livelihoods of small and marginal farmers in India, who have low productivity and constitute over 80 percent of India’s farmers. Digital Green is offering an innovative solution, and initial results are promising.

Quote of the Week: Arvind Kejriwal

Sina Odugbemi's picture

"I used to hate politics and politicians."

- Arvind Kejriwal, an Indian politician and former civil servant. He leads the Aam Aadmi Party (translation: Common Man Party), which he launched in 2012. He is well-known for his efforts to enact and implement the Right to Information Act (RTI) and in drafting a proposed Jan Lokpal Bill (Citizen's Ombudsman Bill) that sought the appointment of a Jan Lokpal, an independent body, to investigate corruption cases.  In the 2013 Delhi Legislative Assembly election, the Aam Aadmi Party won 28 seats, propelling him to serve as the chief minister in Delhi from December 28, 2013 to February 14, 2014.

 

May 16, 2014: This Week in #SouthAsiaDev

Mary Ongwen's picture
We've rounded up 18 tweets, posts, links, and +1's on South Asia-related development news, innovation and social good that caught our eye this week. Countries included: Afghanistan, Bangladesh, India, Nepal, Pakistan, and Sri Lanka.

Putting more women to work in South Asia

Shobha Shetty's picture


Sewing Floor, Armana Apparels, Dhaka. Photo: Shobha Shetty

Contradictory trends in female labor force participation in South Asia continue to pose a puzzle for policymakers. On the one hand, Bangladesh’s ready-made garment industry, one of the mainstays of the national economy, has a high female labor participation rate of 85%. On the other hand, the female labor force participation rates continue to fall in India in spite of recent high economic growth. During my recent visit to Dhaka, I was once again reminded about the enormous challenges of tackling these issues.
 
I was in Dhaka to attend the 7th Meeting of the BEES (Business, Enterprise and Employment Support for Women in South Asia) Network. Founded in May 2011, the BEES network, facilitated by the World Bank, brings together 15 civil society organisations that work for the economic empowerment of poor women across South Asia. Currently, the network represents women at the bottom of the economic pyramid, with a collective reach of over 100 million. It was a sombre coincidence that the week of our visit marked the first year anniversary of the horrific Rana Plaza disaster in which over 1,100 perished.
 
The rise of the ready-made garment industry in Bangladesh in the last decade has been stunning by every measure. By 2013, about 4 million people - almost 85% women - were working in the US$22 billion-a-year industry. The industry now contributes to over 75% of Bangladesh’s export earnings and accounts for over 10% of GDP, making it the world's second-largest apparel exporter after China.   
 
But what does it mean for the millions of women employed in this industry? Thanks to Manusher Jonno Foundation (MJF), one of the Bangladesh BEES network members and co-host of the Dhaka meeting, I was lucky to visit the Awaj (“voice”) Foundation to understand this issue better.  Founded in 2003, the organisation focuses on empowering female RMG workers. We got an opportunity to meet Nazma Akter, the feisty General Secretary of the foundation and a former garment worker. After spending 7 years in the ready-made garment industry as a young girl, she turned to activism on behalf of her fellow women workers. She is now a well-recognised national name and Awaj has a direct outreach to 60,000 women workers (and 600,000 indirectly).


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