Friday, August 10, 2007

Sachs on Africa


Jeffrey Sachs was in town yesterday. He came as a guest of the M.S. Swaminathan research foundation and talked about the lessons Africa could learn from India's successful tryst with economic development. The situation is pretty stark: extremely low per capita income, poor agricultural productivity, a near-zero level of technology percolation and a continent facing the brunt of a problem whose existence it hardly contributed to - environmental change.
That being said, there were some very interesting issues he brought up in the course of his talk. Something only people in the front lines would be privy to.
Ideology can kill: The World bank, IMF and other donors, gripped by an unshakable belief in markets, sought to institute fully functioning markets for agricultural output and inputs like fertilizer in these developing countries. Sachs insists that markets don't work in these situations. People do not have the money to participate in the market. Seems contradictory but a market created by aid, with inputs into the market coming as gifts from abroad will lead to less than optimum equilibrium market prices.
The scale of the problem: The population of the African countries he was talking about doubled in the last 25 years. The agricultural productivity grew at a negligible rate. Malthusian dystopia. This coupled with a population, extremely susceptible to a variety of disease, (and almost no health care) leads to further falls in productivity.
His solution: The millennium model village concept. This was a bit of a let down because he hardly spoke about how this model works. Although he gave us some pretty impressive results. Malawi going from famine-struck to food grain exporter in just a couple of years. All it needed was a structure to ensure technological progress percolates to the smallest of villages and reaches the poorest of farmers in small affordable packages with the help of public institutional funding.

The biggest surprise was the pentagon spending ($ 623 billion) viz-a-viz less than $1 billion in Aid to Africa last year. The warped priority is something he touched upon in his End of Poverty book.

Twisted.

1 comment:

Anonymous said...

Hi Dismal
Good work. Keep it up! I am sure interested parties will contribute to your discussion and help you learn and understand more about Economics.