development without aid in Somaliland

In “Peace-Building without External Assistance: Lessons from Somaliland,” Nicholas Eubank explores the second-order effects of state-directed foreign aid on political and economic development. Because foreign aid has worked its way into nearly ever corner of sub-Saharan Africa, there are few controls available to estimate these effects. Eubank isolates one such control in Somaliland, which has remained untouched due to the international community’s decision to make the state ineligible for aid after its unapproved secession from Somalia in 1991.

Eubank posits that because the Somaliland government did not benefit from aid revenues, it had greater incentive to reconcile with the local commercial interests, which, in turn, had a vested interest in peace and stability that served the country well. Somaliland indeed appears to have taken major steps forward since its decimation by civil war, rebuilding cities and towns, and increasing schooling and commercial activity. A UNDP/World Bank survey finds that Somaliland has significantly higher average income than Somalia proper, a reversal of the prewar distribution, with superior health statistics as well.

Filed under: General Welfare, World

help haitians (and haiti) through immigration

In the past, I have covered Lant Pritchett’s wonderful book on immigration, “Let Their People Come: Breaking the Gridlock on Global Labor Mobility.” In those posts, I addressed the morality, the positive development implications, and the benefits to host nations of increasing work visas. The tragedy in Haiti has pushed the question to the forefront, thanks in no small part to the work of folks like Michael Clemens (whose article includes many of the numbers included below).

Visa expansion is competing for airtime with debt forgiveness and disaster relief, and it’s worthwhile to restate the human value of greater immigration. As Michael Clemens and many others have reported, 50% of Haitians wanted to leave Haiti before the disaster. Last year, following an earlier natural disaster, the US refused to grant temporary protected status to Haitian immigrants and proceeded with deportation hearings. Thankfully, the US has granted TPS to immigrants in the wake of the latest disaster.

Yet the US could do significantly more good by taking the next step and opening its doors, even if on a temporary basis, to Haiti’s poor and huddled masses. Such a policy may even find broader support than TPS, which touched on the political nerve of protecting immigrants in the country illegally.

Filed under: Economic Policy, General Welfare

thinking small in development

Two years ago Brookings held an event, “What Works in Development? Thinking Big and Thinking Small,” which survives today as a source for excellent working papers from some of my favorite development economists. Today I read Abhijit Vinayak Banerjee’s Big Answers For Big Questions: The Illusions of Macroeconomics, and was struck by a passage seeking to explain the gap in Total Factor Productivity between the US and India:

At least a part of the answer to the TFP puzzle seems comes from massive misallocation of resources within the same economy, something that is not picked up by any of the macro aggregates that are used in growth accounting exercises. These misallocations are not the product of any one distortion but rather the cumulative effect of many, many individual distortions resulting from both government failures and market failures.

Filed under: 1

USAID needs outcome measures

The United States Agency for International Development (USAID) was established in 1961 with a mission of fomenting economic and social development through direct assistance. The State Department and USAID are currently operating off a strategic plan developed in 2007 for fiscal years 2007 through 2012. The plan presents seven strategic goals, including the promotion of economic growth and prosperity, with an emphasis on immediate, inclusive, and sustainable development.

Filed under: Economic Policy