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?