Foreign Aid and Corruption

I have posted a few times (here and here and here) on the effectiveness of foreign aid in general and in Nepal. Most recently I wrote about it in the Op-Ed forThe Kathmandu Post (CLICK HERE). Most of these posts relate to the systemic issues with foreign aid, however, I do think that corruption adds to the ineffectiveness of foreign aid. This news article (CLICK HERE) published on MyRepublica points out  that "a report of Ministry of Finance says that the level of corruption in the country has increased over the last 10 years and it has gone on to hurt the development results badly. Rise in corruption has mainly led to reduced cost effectiveness and efficiency of the development programs, states the Nepal Country Evaluation Report of the Paris Declaration that the national evaluation team submitted to the government recently."

Labor v Leisure in Kathmandu

The wealth of the richest 20 % in Nepal, mostly concentrated in Kathmandu valley, has been growing over the last decade (CLICK HERE). Also, the labor force participation rate for women 15 and older has been steadily increasing (CLICK HERE). This economic shift has increased the opportunity cost of event planning, especially big ones like weddings. This article (CLICK HERE) on ekantipur.com points to an interesting shift of wedding celebrations in Kathmandu. People have started to hire catering services rather than doing it themselves. According to the article "the caterers say the business is growing by ten to fifteen percent."
Mehdi lagake rakhna, doli sajake rakhna, lene tujhe oh gori aayenge tere sajna... at the Party Palace! 

Happy Holidays!

A story from lala land...

The hypothetical example used in this article (CLICK HERE) to demonstrate the negative impact of a cap on CEO salary is just that- a hypothetical scenario! The various numbers and strong assumptions made could (but not necessarily) lead to the outcome presented; however, to suggest that this action will create “bloated financial institutions with the management’s mandate to seek total asset growth irrespective of other factors” is ludicrous!
The fallacy of the argument lies in the direction of the causality. It is the NRB’s action that is the effect here not the other way around. Also, if a management is looking for a short term salary benefit then they need to increase and sustain the average salary of their employees as well, because the NRB’s rules suggests “the BFIs to limit the fixed annual salary and allowances for chief executives to less than 5 percent of the average staff expenses incurred over the previous three fiscal years or less than 0.025 percent of the company´s total assets at the end of the previous fiscal year, whichever is lower." (CLICK HERE) If true this will be financially difficult and possibly a long-term suicide.

"Of Penguins and People"

I was reading about social businesses in Creating a World Without Poverty by Muhammad Yunus (CLICK HERE) this morning and it reminded me of what penguins do to survive through the harsh winter of Antarctica.

A series called Planet Earth (CLICK HERE) on the Discovery channel shows how penguins deal with four months of extreme winter weather. The females head for the ocean in search for food leaving the males behind with the task of protecting the egg. The scheme that the penguins come up with is quite fascinating! They form a big tight circle that rotates ensuring that the penguins on the perimeter move towards the center and vice versa. This allows them to preserve valuable body heat.

This in turn reminded me of a bar scene in the movie A Beautiful Mind (video below) where John Nash (Russell Crowe)  says--  “The best result will come where everyone in the group doing what’s best for themselves and the group.”


Instead of extremes the best outcome might be a middle ground-- where market based practices are conducted with social benefit in mind.
Should we call it Buddhanomics?

Joseph Stiglitz on The World Bank

"Jamindari Microfinance"

It may not be common knowledge but a source tells me that microcredit lending programs, including major INGOs, have used Jamindars and other local loan sharks that have been in the business for generations, because of their “experience” in lending activities. One cannot ignore the fact that there is a deep rooted disregard for these village lenders, and rightfully so. The vile practices of the past that forced people into perpetual debt and a life of servitude will not be washed away easily. This feeling amongst borrowers gives rise to mistrust of the lender. Moreover, the system becomes very fragile and a slight voice of decent could quickly escalate into a community backlash similar to the recent events in India (CLICK HERE).


Isn't it time to learn that same old practices do not yield different results?

"Girl Power!"

When I logged in to Facebook this morning, I read something that my young cousin (7yrs old) had posted on her profile. I am sure it was innocent, yet it was powerful enough to remind me that the patriarchal society in Nepal is alive and well--a sad reality! She wrote: "serving man is serving god"--needless to say my jaw hit the floor! 

Here is a video for her and others like her...

Research Methods 101

A simple question about how much your country gives in development assistance to poor countries could result in different answers. The problem could be in the way one asks the question. Xavier Marquez, a political science lecturer in NZ, points out in his blog (CLICK HERE) that "European public opinion turns out to be uncannily accurate at determining the answer to that question, far more than Americans."

"I Dream of Gini"

According to the World Bank data for Nepal, the Gini-index, a measure of income disparity, stood at 38 in 1996 and increased to 47 in 2004—an increase of about 24 percent (INTERACTIVE GRAPH HERE). Joseph Stiglitz argued in his post on Real Clear Politics (CLICK HERE) that the "growing inequality in most countries of the world has meant that money has gone from those who would spend it to those who are so well off that, try as they might, they can't spend it all." This will then lead them to make risky ‘investments,’ which may fuel asset prices, giving rise to  bubbles.

Does this answer the recent real estate and banking volatility in (Kathmandu) Nepal?

Reducing Poverty-- One Catwalk at a Time!

In my recent Op-Ed for The Kathmandu Post (CLICK HERE) I did mention the lavish office spaces aid agencies occupy in developing countries' capitals. However, I was not aware of these kinds of activities that were also 'eating up' the funds allocated for poverty alleviation and other socio-economic programs. I came across this news at DEVEX (CLICK HERE), which refers to this (CLICK HERE) blog post by Alex Singleton for The Telegraph. Your tax Dollars (Euros) at work!
 
Source: (CLICK HERE)

Salary Cap for CEOs in Nepal

Nepal Rastra Bank (The Central Bank of Nepal) recently made public its guidelines to limit CEO pay. According to My Republica (HERE) "NRB has asked the BFIs to limit the fixed annual salary and allowances for chief executives to less than 5 percent of the average staff expenses incurred over the previous three fiscal years or less than 0.025 percent of the company´s total assets at the end of the previous fiscal year, whichever is lower."

In response to this news Mr. Prakash Shrestha and Ms. Kalpana Khanal have written an interesting Op-Ed in The Kathmandu Post (CLICK HERE) titled "Through the Roof." They point out that "financial institutions are not like private industries," but rather "public institutions by nature."  They argue that "the ever-growing perks and salaries of CEOs tend to bring anomalies in the financial sector."

"The Poverty Lab"-- Part Deux!

On November 18th, 2010, I talked about an article (CLICK HERE) titled "The Poverty Lab" published in The New Yorker that lauded the work of MIT professor Esther Duflo. The article wrote that Ms. Duflo "runs field experiments that measure different ways to save the world, " which she compares to various scientific experiments that take place in the field of medicine every day.

A similar experiment is about to be implemented in NYC. The experiment is applying same methodology applied by Ms. Duflo, to study the effectiveness of a program to prevent homelessness. The New York Times reports (CLICK HERE) that "half of the test subjects — people who are behind on rent and in danger of being evicted — are being denied assistance from the program for two years, with researchers tracking them to see if they end up homeless."

I did wonder about the ethical issues with the involvement of human subjects in the experiments conducted by Ms. Duflo in India. However, I quickly dismissed them when I read that the experiments had to be approved by MIT's ethical board. Well, the NYT article (which quotes Ms. Duflo) reports that the experiment planned for NYC is receiving some resistance and "some public officials and legal aid groups have denounced the study as unethical and cruel, and have called on the city to stop the study and to grant help to all the test subjects who had been denied assistance."

Is there a double standard with the ethical level applied to the West vs. the East/South?

The Reading List

"The Reading List" compiles some interesting business and economic news from Nepal and the  field of development.

• "Center of Confusion"  The Kathmandu Post (CLICK HERE)
• "Realtor's Cut Prices" My Republica (CLICK HERE)
• "ADB's Regional Transportation Plan" My Republica (CLICK HERE)
• UNDP Mid-Level Job for Nepal- Application due December 9th, 2010 (CLICK HERE)
• 

Engineered Seeds-- Vandana Shiva

In the light of this (CLICK HERE) story posted on The Kathmandu Post last month about infertile seeds distributed to the farmers in Nepal, I thought it might be interesting to listen toVandana Shiva. If you would like to listen to the entire talk--Part 2 is available here (CLICK HERE) and Part 3 is available here (CLICK HERE)

Sad Reality...

I was going through my daily reading of the Nepali newspapers when I ran across this Op-Ed (CLICK HERE) by Mr. Bihari Krishna Shrestha, an anthropologist and a previous member of the National Planning Commission-Nepal, published on The Kathmandu Post. It is an interesting and candid account of reality--economic, social, and political. If you enjoyed reading my Op-Ed (CLICK HERE) that I posted last week, you will enjoy this one! Here is an excerpt from the article.

"The many Andolans in Nepal have been useful only in restoring them to power. The Constituent Assembly itself has been the latest manna from heaven. Since its enormous horde of 601 members makes more than half a million rupees a year each in hard cash, the incentive is heavily stacked against writing the Constitution. The longer the delay, the larger the monetary intake both for the members and their parties. While democracy and development are mutually reinforcing and indispensable for the people, Nepal’s traditional socio-economic context demands a different methodology to them."

Yes They Can, The Kathmandu Post (CLICK HERE) for the full article.

Op-Ed on The Kathmandu Post

Here is the article that I promised I would post upon completion. I sent it to all major publications in Nepal. It was picked up by The Kathmandu Post and published on December 1, 2010. Please click on the link below to get to the article.

Something's Wrong The Kathmandu Post (CLICK HERE FOR THE ARTICLE)

"Kukhuree Kan" (Cocorico in French) Part Deux

I posted an article a while back (CLICK HERE) that appeared in MyRepublica's Business & Economy section which discussed the surge in poultry production. The article pointed to the fact that the "investment in poultry sector has shot up by over 30 percent."

At the time I asked the question "Does this mean a price relief is on the way for consumers?" Well, the chickens have come home to roast (wink)! This article (CLICK HERE) from The Kathmandu Post provides the answer.

I remember when everyone flocked towards mushrooms, carpets, garments and now chicken...what's next? Herd mentality is alive and well!

Microfinance Under Microscope

A few weeks ago I posted this article (CLICK HERE) from the New York Times talking about high interest charges, high default rates and the rough collection practices in India. The NY Times article also pointed to the fact that people were trapped in a debt cycle with multiple loans, which prohibited them from making any financial progress. There were talks about capping the interest rates that MFIs charge. The Economist in their issue dated November 20th-26th 2010 came out against the capping of interest rates arguing that it will "hurt the poor." It went on to suggest that MFIs may be able to allow very poor people to save by offering small amount savings accounts as "they already have existing relationships with the kinds of people who would use such basic savings accounts." The article concluded by saying that "fewer restrictions on microlenders, not new ones, would be the best way of helping the poor."

According to an article in The Kathmandu Post (CLICK HERE)  there is a conference on Microfinance going on in Kathmandu, Nepal. The conference "organized by the Rural Microfinance Development Centre (RMDC), Nepal and the Institute of Microfinance, Bangladesh in cooperation with the SAARC Secretariat, Nepal, the two-day regional conference entitled “Microfinance in SAARC Countries: Sharing Lesson and Way Forward” aims to present the state of microfinance in SAARC and discuss key issues of sustainability and regulation of microfinance institutions in the days ahead."

Let us wait and see what they say about the state of microfinance in Nepal and the region when they release their report at the conclusion of the meeting.

A Letter from the UNDP

A few days ago I got a request from Avi Sharma, an Indian volunteer with the UNDP, to post the following on my blog. I agree in principle with what follows and have therefore decided to post it. I have also added the mentioned website to the list of "Useful Resources" found on the left column.  If you have any further questions you can contact Avi Sharma at leisuresoul.avi@gmail.com

South-South Learning on Social Protection

When the world is connecting and exchanging ideas & knowledge through internet, then why Social protection topics should be left behind? We can never expect a country to generate correct and workable ideas to change the world. We need a platform, world needs a platform to exchange ideas and knowledge that have gained practicality in some part of the planet which can be implemented in others. Thus, United Nation’s International Policy Centre for Inclusive Growth (IPC-IG) has realized this requirement of mankind and recently launched a website named “South-South Learning on Social Protection”. This gateway is an initiative to foster south-south collaboration, aiming to expand the knowledge base and capacities of developing countries to design and implement nationally-owned poverty reduction strategies, bridging the gap between theory, policy and practice with accessible and diverse social protection information in print and online. It also provides a space where practitioners can share ideas, experiences and resources.

This new website has been set up as a “virtual bookcase” where there is a searchable database of social protection materials from across the world. The collection includes tools, case studies, policy papers and research. Another innovation of this gateway is that is that it fosters the interactive engagement of users, offering the possibility to participate by posting news, comments and suggestions, submission of recommendations for library inclusions, proposing new features and also participating in the Forum. The South-South Learning on Social Protection features more than 150 papers in the area and maps public policies of 94 nations - from Brazil to Madagascar, from India to Zimbabwe from South Africa to East Timor, from Mexico to the Cook Islands, from China to Trinidad and Tobago.

The idea of the website has its roots on the Africa-Brazil Cooperation Programme on Social Protection, which started in 2008 to support the development and implementation of effective social protection policies and foster South–South learning with partner African countries. Now, it’s our time to contribute i.e. youths, national policy makers, NGO’s and other organization who believe in serving and healing this world. This can provide a platform for youths to interact and design a policy in discussions with specialist by using roster feature of website and forum. As we, the people, are very energetic and have excessive interest to contribute to the society that can be contributed in the right directions. We can get ideas, policies and many publications that can lead us in contributing to the society around us which can result in a change, a change that world expect, a change which we all want to see in our lifetime. A world without poverty, without employment, without unavailability of basic necessities, that’s the kind of world I and we aim for.

Let’s hope we can change the world with clearer ideas to implement and seek guidance from people world believes on!!

Visit us at http://south-south.ipc-undp.org/

Failure of Foreign Aid

This article (Click Here) on Nepalnews points out that the United Nations Conference on Trade and Development concluded that there needs to be a mandatory "structural change in the international assistance and aid designed for the economic growth of LDCs." Duh!

Thanksgiving Break... Posts resume on Monday.

Maiti Nepal

Ms. Anuradha Koirala won the CNN's Hero award. The show is scheduled to be televised this evening on CNN in the U.S. I have already posted a YouTube video of her speech at the ceremony a couple of days ago (see below).  Here is the link (CLICK HERE) to the website of the organization that she is involved with.

Nepal Budget 2010/2011

This article from Telegraph Nepal (Click Here) summarizes the budget that was presented by the finance minister after he got assaulted in the parliament!  

                     

"Doodh Cha?"--Got Milk? --Part Three

I cannot believe this story posted here (Click Here) at Nepalnews.com and here (Click here) at MyRepublica.com! Are these officials serious when they justify the business venture of one man as "solution to the shortage of milk in the nation?" Call it what it is—a business expansion of a man (which I have no problem with) who has developed enough following from the Nepali population--now he wants to sell them his products, apparently made from dung and urine. That's right, dung and urine! 


Let us do the numbers...


The article in MyRepublica points out that the total number of milk producing cows and buffaloes currently stand under a million and 1.25 million, respectively. They also point out that only 15% of the milk is sold through formal markets. With the stated 400,000 liters of milk supply everyday in the nation, back of the envelope calculation spits out about 1.2 liters per cow per day. Now, let us accept the assertion that the donated cows will be highly productive than the current stock and will provide us with double the current amount—which comes out to about 2.4 liters per cow per day. With 50, 000 cows that is an increase of 120,000 liters per day, with an overall supply of 520,000 liters of milk per day. To be sure, this will help ease some of the shortage issues in the nation, but it is hardly enough to meet the industry stated demand of 800,000 liters per day. 


NepalNews points out that "the high breed cows being gifted by Ramdev, founder of Patanjali Yoga Peeth, will be used for acquiring dung and urine for the proposed drug company (see, I told you--a business venture) which can, with the aid of the cows, produce up to 22 litres of milk per day" I do not know where the 22 liters came from, however, if this number is true then these cows will add more than one million liters, which will not only solve the shortage issue but actually create a surplus! My head hurts....


The article points out that “State-owned Dairy Development Corporation (DDC), which commands more than 40 percent share in the domestic dairy market, has been importing around 40,000 liters of milk per day from India´s Bihar state. Similarly, big private dairies, which are running under 50 percent of their installed capacity due to shortage of fresh milk, are also sourcing weighing the possibility of sourcing fresh milk from the northern neighbor.”


Again, I have written a couple of posts before on this topic (Doodh Cha--Got Milk & Got Milk-Part Deux), where I have argued that this is a problem created mainly due to the direct involvement of the government in the production and distribution of milk. The government should limit its involvement to quality control of dairy products and move away from direct involvement in production. This will assure private investors of fair and free competition in the future, thus acting as an impetus for investment.


What's this proposed drug company? hmmm...

CNN Hero Of The Year--Anuradha Koirala

"Anuradha Koirala and her group, Maiti Nepal, have helped more than 12,000 victims of Nepal's sex trafficking business." --CNN

Gender Equality in Education

I recently wrote about education and girls in Nepal and presented a graph demonstrating the trend over the years. You can find that post here (CLICK HERE). The graph showed that Nepal was moving in the right direction. However, a study (Click here for the article) conducted by Didibahini and Asia South Pacific Association for Basic and Adult Education (ASPBAE) finds that "Nepal stands fifth among South Asian countries on gender equality in education." --There are 7 countries in South Asia!

Time for a laugh!

The world's one and the only stand-up economist, Dr. Yoram Bauman, was at our college past week. It was a great show and the people (about 180 or so) who attended had a great time. If you are scratching your head and wondering how economics and humor can possibly go together, watch the video below.

"The Poverty Lab"

I was reading "The Poverty Lab" published by The New Yorker, May 17, 2010 about Esther Duflo, "a thirty-seven-year-old professor of development economics" at MIT, and thought that I should share the article with you. I could not get a hold of the article online, however, I have managed to get the video of her talk at Ted (see below). According to the article Ms. Duflo "runs field experiments that measure different ways to save the world." She compares her work to various scientific experiments that take place in the field of medicine everyday. She calls these experiments "a very robust and very simple tool" which help reduce statistical noise and allows us to "connect cause and effect."

Issues with Microcredit

Microcredit institutions have been growing in numbers in Nepal for some time, and private/commercial lenders have started to partake in the game. Here is a link http://nyti.ms/9ReO4i to a story about defaults in India on similar programs.

Crisis of Capitalism

Interesting RSA analysis of the present crisis. Is there anything here for the developing world to learn as they look for an economic system that fits them? Food for thought...

RSA Animate – Crisis of Capitalism

Invention of Foreign Aid

President Truman in his inaugural adress in 1949 spoke to the importance of foreign aid. He said "we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas…More than half the people of the world are living in conditions approaching misery….For the first time in history, humanity possesses the knowledge and the skill to relieve the suffering of these people…. And…we should foster capital investment in areas needing development.…this program can greatly increase the industrial activity in other nations and can raise substantially their standards of living."

(Click here for the entire article)

I am participating at the Regional Science Association International conference in Denver, CO. I am presenting my paper on dynamic dual sector model on Saturday's afternoon session.
I will resume posts on Monday.

"Nwaran"

The original name of this blog was "Economist Jetha." The name was picked because I am older than Shabda Gyawali, who runs the blog "Economist Kancha." However, without the context the name does sound haughty. Therefore, I have decided to change the name of my blog to "Ghintang Economics"-- Ghintang is the sound made by a traditional Nepali drum Madal.

Hope you are finding this blog interesting and helpful.
Niroj Bhattarai

Lecture On Newari Art

My dear friend Kerry Brown (PhD Candidate-Virginia Commonwealth University) will be giving a lecture on the Art History of Newar Buddhism on November 12, 2010 at 2:45 pm at the Rangjung Yeshe Institute, Boudhanath, Kathmandu, Nepal.

Commitment to Development Index 2010

This interactive map/chart shows the commitment level of developmed countries towards the developing world. The factors include: Aid, Trade, Investment, Migration, Environment, Security, and Technology.
Commitment to Development Index 2010 : Center for Global Development : Initiatives: Active

Innovation Around The World

This chart (Click Here To Enlarge) shows the total number of patent filings per research and development dollar spent. It is clear that the highest return on investment seems to be with South Korea.

Nepal's Monetary Policy 2010/11

Here (CLICK HERE) is the entire monetary policy for 2010/11 put out by Nepal Rastra Bank.

"Bhana Bhana Bhai Ho..."

Nepal--Jindabad!

"SINCE 1980 the country that has made the greatest strides in improving human development is Nepal, according to the UN’s annual Human Development Index (HDI)."-- (The Economist)
Good to hear that Nepal is moving in the right direction! (Click here for the article)

Inflation Averages for Nepal



Source: http://www.tradingeconomics.com/

 Yesterday I wrote about the various factors that the NRB mentioned in their Monetary Policy Report, which might be the factors for higher prices in Nepal. Obviously, there are supply side disturbances, including international factors, that might be adding to the pain as well. Keeping up with yesterday's theme, I have posted this chart showing inflation in Nepal since the late 1970s. This chart which includes data from the IMF shows prices falling and stabilizing at about 5% by 2016. Cross your fingers!

"Mahangee Badyo"

I just got a chance to read some parts of the “Monetary Policy for Fiscal Year 2010/11” put out by Nepal Rastra Bank. (Click here for the entire report) The Rastra Bank reports that the government expenditure “increased by 20.2 percent” in 2009/2010. The report also points out that there was a 20.2% increase in recurrent expenditures driven mostly due to “an upward revision in the salary and allowances of civil servants” and an “increase in the expenditure on special security plan.”  The budget deficit was 13% higher in 2009/10 than in the previous fiscal year.  According to this report the total “number of banks and financial institutions licensed by the NRB has also increased in 2009/10”—in fact, it went up by 12.15%.  Given all these factors that increase liquidity in the economy, it should be no surprise that the NRB estimated the average inflation rate “to remain at 10.5 percent.”  

Pythagoras Theorem…Solved!

Should the student get zero or 100?

"Yo Man ta Mero Nepali Ho"

"Jaso gara, je bhana, jata sukai laijau malai---yo man ta mero Nepali ho" -- 1974 A.D. (Click here for the song)
 Over the last few years I have heard about western educated Nepalese returning back to Nepal. In fact, some of my friends and people close to me, including my cousins, have returned—and sometimes I find myself entertaining the thought. 
 This research (Click Here) sheds some light on similar phenomenon involving Indian-Americans returning back to India.

Dambisa Moyo On Aid!

I think Ms. Moyo is asking the right questions and pointing to the issues related to failed policies of foreign aid.

Nepal Ranks 146 / 178

Whenever one sits down to have a conversation about the development of Nepal, the talk quickly turns to the issue of corruption, and its stronghold on the government of Nepal. Engineers have ideas to build 21st century infrastructure, entrepreneurs have ideas to vitalize markets, economists have ideas to improve financial institutions, others have ideas to run NGOs dedicated to the alleviation of poverty; one could go on and on--all of these young Nepalese (at home and abroad) with such ideas would be an immense asset to the country. However, these ideas succumb to the culture of corruption, violence, extortion, and various anecdotes that attest to this reality.



Corruption Perception Index 2010 (click here to read the entire report) put out by Transparency International ranks Nepal 146 out of 178 with an embarrassing score of 2.2 out of 10. Other countries that have the same rank include Cote D’Ivoire, Haiti, Iran, Libya, Paraguay, and Yemen. Nepal ranks last amongst the member countries of SAARC!

"Didi, Bahini, Ra Sikchya!"-- Education & Kids/Women

I wanted to see what kind of a relationship existed between child per women and girls’ access to education in Nepal since 1991—introduction of multiparty system in Nepal. This graph (click here) does show a positive relationship. Note: this does not necessarily mean that one is the cause of the other—there could be other factors that may be influencing these two variables. However, it does mean it’s a movement in the right direction.

"Jhari Pareko Din..." --Wonkish

Here is an article where the authors tackle the question "[w]hy have some countries remained obstinately authoritarian despite repeated waves of democratization while others have exhibited uninterrupted democracy?"


Abstract: This paper(click here) explores the emergence and persistence of authoritarianism and democracy. We argue that settled agriculture requires moderate levels of precipitation, and that settled agriculture eventually gave birth to the fundamental institutions that under-gird today’s stable democracies. Although all of the world’s societies were initially tribal, the bonds of tribalism weakened in places where the surpluses associated with settled agriculture gave rise to trade, social differentiation, and taxation. In turn, the economies of scale required to efficiently administer trade and taxes meant that feudalism was eventually replaced by the modern territorial state, which favored the initial emergence of representative institutions in Western Europe. Subsequently, when these initial territorial states set out to conquer regions populated by tribal peoples, the institutions that could emerge in those conquered areas again reflected nature’s constraints. An instrumental variables approach demonstrates that while low levels of rainfall cause persistent autocracy and high levels of rainfall strongly favor it as well, moderate rainfall supports stable democracy. This econometric strategy also shows that rainfall works through the institutions of the modern territorial state borne from settled agriculture, institutions that are proxied for by low levels of contemporary tribalism.

Presenting a paper at the University of Utah. Will resume posts on Monday.

"Ghoosh"--Will this be possible for Nepal?

Will something like this work in Nepal? How about a website based in the U.S. (to circumvent the domestic pressure/censor) that exposes such corruption-- people can provide videos/recordings of such activities. Once authenticated, the webmaster can upload them for everyone to see. Just a thought. If you are a web-designer/host and would like to discuss this, please contact me. Enjoy!
 

Seinfeld's Hidden Messages

Do you love Seinfeld? Do you love Economics? If you answered 'yes' to at least one, you will enjoy this website-- a website dedicated to finding the hidden economic messages in various episodes of Seinfeld.
Click here for the site.

Aid Received & GDP/Capita for Nepal

Some of you asked me for aid and GDP over time for Nepal. Here is a graph that I created on GAPMINDER. Click "PLAY" once the graph loads up. Remember, correlation does not imply causation! :)

Are NGOs Addicted to Misery?

I have been spending some time writing an article on the effectiveness of foreign aid. I will post it when I am done. At this point, however, I wanted to share something that caught my attention. Those of us from under-developed countries are aware of the countless number of NGOs that are active in our respective countries. There are plenty of organizations that do good work, but one cannot be naive and overlook the ones that are set up to generate funds for the administrative professionals. Are the incentives lined up in such a way that these organizations stand to lose if they succeed in their mission? This article addresses this question.

Got Milk? Part Deux

MyRepublica.com reports (cick here for the article) that there is a shortage of milk and the state-owned dairy producer- Dairy Development Corporation, “the major player in domestic dairy market – has started importing 50,000 liters milk worth over Rs 1.5 million per day from Patna Dairy Project – an undertaking of India’s Bihar State – to fulfill increasing milk deficit.”


A few days ago this article, which I wrote about on my blog here, painted a gloomy picture of the dairy industry in Nepal. It pointed to the various programs designed by the government to solve the issues plaguing the industry. However, this promising article from the Nepali Times demonstrates that the private industry can innovate to thrive and meet the demand of the marketplace. Entrepreneurial minds will always look for solutions when there are barriers surrounding the industry.

Thus far, it seems like we are pointing towards the market participants as the problem child and suggesting various solutions to these “problems.” Is this the right diagnosis? Or, is it the government’s involvement in production of milk the real culprit?

There seems to be, without a doubt, volatility in milk production, sometimes with shortages of up to 40%. So, why are the investors reluctant to get into the market with promising returns? Why are existing private producers hesitant to expand? Well, could the answer be found in the state’s involvement in production? Does the government-run dairy production create uncertainty for investors?—what if private investors cannot compete with the heavily state supported/subsidized DDC in the future, especially after having invested millions? Does this provide an impetus for private producers to make large financial investments?--I do not think so! It seems like the misplaced incentives are the impediment to a flourishing dairy industry in Nepal. Therefore, a gradual privatization of the DDC, and tax incentives for farmers/private dairy producers for long run investments, might reduce uncertainty, strengthen the industry, and create a reliable and less volatile market for dairy products.

Rap Song!--Randy Moss :)

You never know what you come across on YouTube!

Do YOU make $100K?

This is how a gross income of $100,000 is taxed around the world. You think you pay too much?--think again!

"Ghar Aaja Pardesi Tera desh Bulayere..." NOT

This article posted on myrepublica.com today points out what most of the NRNs have wanted for a long time. I do not understand what the rationale is behind having to give up Nepali citizenship when one becomes an American, Briton, Australian, etc. I agree with Mr. Hom Nath Acharya, chairman of NRNA, on the fact that huge amounts of capital investments will flow into the country if people are allowed dual citizenship.

I have heard from a high-level source that politicians understand and support such a move behind closed doors, but are scared of voicing it in public. What is there to fear?

$36 a cup! You want one?

Here is an article I wrote for the college newspaper about a year ago (Fall 2009). Since then the law has passed and now banks have to offer customers an option to "opt out" of the overdraft fees. Yeah!


I committed a “card”-inal sin! Despite being a graduate student in Economics, I have allowed myself to overdraw funds from my checking account at First National Bank; the CSU Ram’s bank, the bank where I am “always first!” There cannot be any excuse for my irresponsible behavior; my inability to balance my checkbook even though it was due to extraneous circumstances. The thing that really bothers me is not that the bank has charged me with such scandalous fees but that they are getting away with such actions.


Well, that is about to change! The Wall Street Journal reports that the FED, the central bank of the U.S., has put into place rules that will curtail banks ability to “hit customers with fees for overdrafting their accounts” (Fed Slaps Curbs on Overdraft Fees, www.wsj.com, Nov 13th, 2009). This rule will go into effect on July 1st of next year. I have already paid dearly for my error. So, I am writing this merely to inform my fellow Rams of the danger that lurks in the shadows of the Lory Student Center. Here are a few facts that you need to know about your accounts:

• Your debit card will go through even if you have no money (or not enough money) for transactions. In other words, the card will not be declined because of NSF (nonsufficient funds).

• So, if you bought a coffee for $1 then the bank will automatically enroll you in an “overdraft program” and charge you $36. In fact the Federal Deposit Insurance Corporation (FDIC) found in their research that “75% of banks automatically sign customers up” for such programs (see Executive Summary at http://www.fdic.gov/bank/analytical/overdraft/). The research found that in some cases “customers were not given the choice to opt in or out of the automated program.” An educated guess says that we are part of those “some cases.”

• FDIC reports that the “automated overdraft fees assessed by banks ranged from $10 to $38, and the median fee assessed was $27.” I guess we, with a First National Bank account, get the short end of the stick there as well. The NSF fee for First National Bank is $36. Note that this fee is applied to each transaction. So, if you used the card to buy a cup of coffee for $1 in the morning before class, in the afternoon at the library, and then a cup of decaf in the evening, your total for that day is $108 in fees and $3 for coffee. That coffee better taste good as the taste of the letter you will receive in a week will be bitter!

• The FDIC research finds that “a minority” (about 8%) of banks did inform consumers that funds were insufficient,” which allowed the customers to avoid these high fees. This courtesy call, clearly demonstrated by my ordeal, is not provided by First National Bank. We can’t blame them for thinking about their bottom line, even though the burden falls on the customer. After all, the WSJ article reports that banks bring in “$38 billion a year when customers overdraw their accounts.”

I think because of a few bad apples, banks and businesses get unfairly criticized. However, blatant robbery at the student center, in broad daylight, directly underneath everyone’s nose, does provide fodder for the criticism of the ethical disdain shown by these businesses. Actions such as this are not only startling but also disingenuous. It makes me question my allegiance to First National Bank as a CSU-RAM and doubt the slogan below the big smiling face of the Bank’s President that reads, “You’re Always First With Us.” Really?

OOPS!

The New York Times reports (Click here for the article) that "in August, Senator Richard C. Shelby, Republican of Alabama, asserted that Professor Diamond did not have enough experience for the position, saying, “I do not believe that the current environment of uncertainty would benefit from policy decisions made by board members who are learning on the job.” "

The Nobel Committee writes “The Laureates’ models help us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy,”

The Nobel Prize in Economics was announced earlier this morning and was awarded to 3 individuals, including Dr. Diamond from MIT.

Global Debt Clock

An interactive global debt clock by The Economist.

False Advertising!

This article reminded me of this commercial that has been running in the U.S.

Sambanomics--"Money"tary Policy

Students of Economics/Business--Scholarship Opportunity

A five minutes video could win you up to $1,000 U.S. Savings Bond.

No Need to Workout--Just Pray for Expensive Gas!

Interesting relationship! --Wonkish

"Doodh Cha?"---"Got Milk?"

It is always a little unsettling when the government involves itself in the production of goods and services; gross inefficiencies, rent seeking behavior, etc. come to mind. In this case the government has decided to support the dairy production. The article states that “[a]ccording to dairy companies, more than 300,000 farmers across the country supply around 500,000 liters of milk every day. The daily demand for milk hovers around 800,000 liters a day.” If this is true, shouldn’t the price of milk sky rocket?—that’s a shortage of about 40%! Also, to fill such a shortage why aren’t the private producers increasing production?  The plan, as the article points out will provide “different incentives like free distribution of semen of improved varieties of cows to boost milk production at lower cost.” Isn’t a 40 % shortage in the market enough of an incentive?

"Nobel Predictions" Part 2-sponsored by Duff!

No comment.

"Thinking outside the box!"

Well,
we will see what really happens or if this actually transpires into actual deeds on the ground; but..its a start!

An Amazing Story!...and a Colorado State Alum

Here is something that will blow you away! Things that we take for granted....

"Nobel Predictions"

Who do you think will win the next Nobel prize in Economics? Bet here and you might win something as well.

"Kukhureee Kan"

Interesting article on the rise of chicken producers. Does this mean a price relief is on the way for consumers?

First Entry

I have decided to start a blog with things that interests me and occasionally respond to various economic issues.