If a trade economist were abruptly woken up by somebody shouting, “preferential trade agreements” (PTAs), their first thought is likely to be “trade creation among participants and trade diversion away from those left out.” That is a measure of the influence of Jacob Viner’s classic book The Customs Union Issue on the profession, on the policy debate and on our attitude towards PTAs.
Brexit and the renegotiation of NAFTA have renewed interest in the impact of trade agreements and the consequences of undoing them. In a recent paper, Mattoo, Mulabdic and Ruta (2017) and column (VOXEU), we use new information on the content of PTAs to examine their trade effects.
Is poverty absolute or relative? When we think of (one-dimensional) income poverty, should we define the threshold that separates the poor from the non-poor as the cost of purchasing a fixed basket of goods and services that allows people to meet their basic needs? Or should we instead think of it as relative deprivation: as earning or consuming less than some given proportion of the country’s average living standard?
Could a parent’s decision to vaccinate a child depend on a free bag of lentils? The premise seems implausible:immunization can be a matter of life and death, and a bag of lentils is worth only a dollar. Yet a randomized controlled trial in India showed that a gift to parents of a 1 kg bag of lentils and a set of plates can dramatically raise the percentage of children protected against major disease (Banerjee et al. 2010). Providing a quality immunization camp alone increased the percentage of fully immunized children from 6% to 18%. The addition of the lentil and plate ‘incentives’ raised the figure to a whopping 39%. How can we explain the outsize effect of a gift of everyday household items?
Monday’s announcement of the 2017 Nobel Prize for economics, to Richard Thaler, for his groundbreaking work incorporating psychology into economic theory, was a victory not only for the University of Chicago Professor and co-author of Nudge: Improving Decisions about Health, Wealth, and Happiness, but for behaviorally-informed policy worldwide.
In a recent exhibition at the American Museum of Natural History in New York City, “Dinosaurs Among Us,” paleontologists use prehistoric fossil records of bones, feathers, and nests to show that some dinosaurs did not go extinct but, rather, evolved into the creatures we see today. The links they trace show how avian dinosaurs (ones that fly) evolved into modern-day birds. Paleontologists argue that avian-dinosaurs’ swift aerial mobility played a key role in determining their survival while their land-based relatives failed to thrive. Flight enabled them to relocate and adapt to drastically changing environments—a skill that their land-based relatives lacked.
Figure 1. Paleontologists argue that avian-dinosaurs (left) adapted to the changing environment quickly and evolved into birds (right).
One of the most storied topics in agricultural economics, dating back to Chayanov’s work on Russian peasants published nearly a century ago, is the inverse relationship between scale (in terms of farm or plot size) and (land) productivity - commonly known as the IR.
Non-energy prices rose modestly. Agriculture prices climbed a little over 1 percent, led by strong upturns in most edible oils and wheat.
The outlier to the trend of increases, beverage prices, fell 1 percent due to weakness in coffee prices. Fertilizer prices surged over 6 percent, led by a 16 percent jump in Urea.
The 2018 World Development Report (WDR), Learning to Realize Education’s Promise, launched this week. While it draws on research and collective experience—both from within and outside the World Bank—it also draws on the personal experience of the team members, including the two of us. What inspires the focus on learning for all is that we both have seen the possibilities of widely shared learning, but we’ve also seen what happens when those possibilities aren’t fulfilled.
Equality of opportunity is a popular policy objective around the world. It is deeply embodied in the American Dream and has resonated with politicians ranging from Margaret Thatcher to Nelson Mandela. It is also connected to the World Bank’s goal of shared prosperity; individuals with low opportunities should have a chance of growing and prospering in life.