Visible and Invisible Hands

Here is a little blurb from an article titled "No Invisible Hands Here" written by Ms. Kalpana Khanal and Mr. Prakash Kumar Shrestha on The Kathmandu Post:

The developmental experiment in Nepal, and many studies done elsewhere, confirm that market-based development strategies alone do not work in countries like Nepal.
In the preliminary stage of development, the government should be instrumental in bringing the economy onto a path of development. The state can fail in many dimensions, but as Polanyi (1944) emphasised, it is the central economic actor.

I agree with the authors on most things they discuss in their article. However, I did have a slightly different view on the role of the government in the Nepali economy, which I expressed in my article "Of Growth & Visible Hands" published on Nepali Blogger. Here is a little blurb:

Yes, the government does have a role, an important one at that, to play for the development of a nation, especially when it comes to maintaining equity and addressing market failures. However, the economic problems of Nepal that the authors cite are mostly due to the ineffective government that Nepal has seen over the years, especially since the 1991 revolution. Giving more power and control to such dysfunctional government is a recipe for disaster!

Here is A Rose For You--Happy Valentine's Day!

While we all think about our loved ones on Valentine's day and run around town buying flowers, we seem to be oblivious to the process of how the flowers get to us. Well, I have put together a little story, thanks to Alex Tabarrok and Tyler Cowen of Marginal Revolution, on how the rose gets to a handsome young man in Chicago. You can put yourself in his place and think about how the flower gets to you in your city.

It is February 14th in Chicago and a handsome young man walks into the store to buy roses. As you may be aware, the weather has been brutal in the last few months in the Midwest and not ideal for growing roses. Do the local nurseries grow all of the roses sold in the windy city? Can they meet the demand in a city of about 3 million people? If not, where do the roses come from that our handsome young man buys for his beloved?

In the United States, for example, about 180 million roses are sold on Valentine’s day! Most of these roses are grown in Ecuador and Kenya. The roses are cut and flown to a small town named Aalsmeer in Holland. These roses are then sold in an auction where the price start off high and steadily fall until someone buys them.



Once bought the flowers are flown to wholesalers in the U.S. who then sell them to thousands of florists. This is where you come in. With a smile you walk in tall and buy a dozen roses which you later proffer to your valentine. Happy Valentine’s day!

Nepal Livelihoods & Forestry Program

Entrepreneurs For Nepal (E4N)

E4N, an organization that acts as a "platform for more than 3000 entrepreneurs, who have ideas and want to implement it in Nepal," has published a handbook of 'stories, advice and networks." This handbook prepared by Mr.Ujwal Thapa and Mr. Sagar Onta is a good read, not only for those of us with entrepreneurial spirit, but also for those with interest in Nepali businesses, leaders and success stories. This publication presents experiences of many prominent Nepali entrepreneurs, while providing tips and guidelines to those on the verge of embarking on a new venture. Please click here to get the entire book for FREE.

Ghintang Economics' Source: http://bit.ly/hyfcCP

Can’t Have It Both Ways!

A few people have written about the ineffectiveness of foreign aid in Nepal. As concerned citizens it is important for us to criticize the INGOs and the NGOs, institutions who are in control of the projects from the beginning, especially when these projects fail to meet the criteria set up to measure progress. This kind of discourse helps propel the debate on aid effectiveness forward and brings the issues to the forefront, which is important and could lead to solutions. A couple of articles (here and here) written on daily newspapers seem to have hit some nerves. People who are part of the aid machine in developing countries, especially the locals, seems to be resentful of any criticism. This is perfectly rational as from where they stand everything looks good--good inflow of funds, good wages, good office, sense of being an elite, self gratifying deeds--even though the macro picture looks grim. 
Here is an article written by Mr. Simon Galimberti, the deputy country director of CCS Italy (Nepal) and associated with the Association of International NGOs in Nepal (AIN), complaining about the criticism and frustration expressed in national media regarding the failures of these organizations on many fronts, including the alleviation of poverty.
Here is a graph that I created on Gapminder that shows the total aid received by Nepal over the years. We all know what has happened to income disparity, access to health care, clean water, electricity, etc., not just in Kathmandu, but also in other parts of the country. Now, it is not the NGOs or the INGOs actions that have brought a lot of pain to the Nepali people, however, it is their model and dispensing mechanism that has failed to do any good. So it is not only fair but also our responsibility to ask questions about the effectiveness of foreign aid in Nepal—it is the right thing to do!

In Florida for a conference--will resume posts soon.

FYI--Earthquake in Nepal

Getting Ready for the Next Big Quake in Nepal