Brazil’s success in reducing poverty and income inequality has been widely reported in recent years.
As the Carnival in Brazil kicked off last weekend, Brazilians were ready for a party. They have reasons to celebrate. Despite a lackluster GDP performance in the last two years, unemployment rates remain at record low levels.
From a theoretical and empirical standpoint, the contribution of infrastructure capital to aggregate productivity and output has been extensively researched. Public capital has been modeled as an additional input in Ramsey-type exogenous growth models and in endogenous models as well. On the empirical front, the literature has witnessed a proliferation of research over the last 20 years following Aschauer’s (1989) seminal paper on the effects of public infrastructure capital on US total factor productivity. His finding of excessively high returns to infrastructure, however, has not held up. Subsequent research using a large variety of data and more robust econometric techniques has yielded widely contrasting empirical results. For instance, Bom and Ligthart (2008) find that estimates of the output elasticity of public capital range from -0.175 to +0.917 in a wide set of empirical research for industrial countries.
Last weekend, I was fortunate to be at the same dinner party as Jeff Puryear, co-director of PREAL and a luminary in the education field. We got talking about his PhD thesis from 1977, which I later found out, was perhaps the first serious study of the impact of job training in Colombia's SENA industrial training programs in Bogotá.
First, to analyze the socioeconomic characteristics of people who enrolled with SENA relative to those who did not, with a view to identifying the kind of candidates that the programs attracted; second, to estimate the impact of SENA training on the wages of a randomly-chosen individual who had undergone no training before taking part in a SENA program; and third, to calculate the private and social benefits of the SENA program.
What is the relationship between education and geological processes? At first glance, some might think: Not much. One concerns the opening and enlightenment of the mind; the other is as old, rock-solid and unpredictable as the Earth itself.
But the collapse of so many buildings and homes that killed more than 200,000 people in the Haiti earthquake was in large part due to an utter "lack of qualified architects, urban planners, builders and zoning experts," points out a recent article in the New York Times.
In the tragedy of these moments it becomes painfully clear what a lack of adequate education and training has meant. Even worse, such revelation shines a light on very hard questions for posterity. What will the future of a country look like that has lost so many of its doctors, teachers and future leaders?
The title of this post may seem a bit odd. What can an island of 20 million people and a diverse continent of 47 countries have in common? The answer: Both were thought to have initial advantages that would generate rapid economic growth; instead, they have fallen painfully short of expectations.
In the African case, the advantage was its rich natural resources such as oil and minerals. But instead of exploiting this potential ticket to poverty reduction, Africa’s natural resource producers have seen their per capita income grow more slowly than that of non-mineral countries. Nigeria is a case in point. Its per capita income in 1970 (before the oil boom) was $913; today it is $454.
Sri Lanka’s asset is its human resources—reflected in the high levels of literacy and low levels of child and maternal mortality that have stood out since the 1960s. Like Africa, Sri Lanka has been an exercise in disappointment. In fact, there is no other country with a lower infant mortality rate and a lower per capita income than Sri Lanka.
The question for Africa and Sri Lanka is therefore how to manage the enormous assets they posses in a way that translates into sustainable wellbeing for their populations?