2018/10/08: Upon closer inspection, GVCs and new technologies exhibit features that limit the upside to – and may even undermine – developing countries’ economic performance. One such feature is an overall bias in favor of skills and other capabilities. This bias reduces developing countries’ comparative advantage in traditionally labor-intensive manufacturing (and other) activities, and decreases their gains from trade.
Second, GVCs make it harder for low-income countries to use their labor-cost advantage to offset their technological disadvantage, by reducing their ability to substitute unskilled labor for other production inputs. These two features reinforce and compound each other. The evidence to date, on the employment and trade fronts, is that the disadvantages may have more than offset the advantages.
The usual response to these concerns is to stress the importance of building up complementary skills and capabilities. Developing countries must upgrade their educational systems and technical training, improve their business environment, and enhance their logistics and transport networks in order to make fuller use of new technologies, goes the oft-heard refrain.
But pointing out that developing countries need to advance on all those dimensions is neither news nor helpful development advice. It is akin to saying that development requires development. Trade and technology present an opportunity when they are able to leverage existing capabilities, and thereby provide a more direct and reliable path to development. When they demand complementary and costly investments, they are no longer a shortcut around manufacturing-led development.
Compare the new technologies with the traditional model of industrialization, which has been a powerful engine of economic growth in developing countries. First, manufacturing is tradable, which means domestic output is not constrained by demand (and incomes) at home. Second, manufacturing know-how was relatively easy to transfer across countries and, in particular, from rich to poor economies. Third, manufacturing did not make large demands on skills.
These three characteristics collectively made manufacturing a fantastic escalator to higher incomes for developing countries. New technologies present a very different picture in terms of the ease of transferring know-how and the skill requirements they imply. As a result, their net impact on low-income countries looks considerably more uncertain.
2018/10/03: If anything, rich countries are leapfrogging ahead of the poor, by benefiting from the expanded market and lower labour costs that they provide.
The latest technologies are almost always designed for advanced markets and the rich who live in them, and are well beyond the means of the poorest. Hence, if these technologies do indeed have benefits associated with them, these will accrue disproportionately to the rich. Poor countries and people are either left to pick up the scraps of remaining older technologies, or have to purchase inferior products at the lower end of the market. The Internet of Things and Artificial Intelligence are going to be used in the so-called Smart Cities of the developed world long before they are used at all widely in remote rural villages in Africa or Asia; big data are going to be used by large corporations with the expertise to analyse them, long before they are understood, let alone, used by people in the poorest countries of the world.
This is why terms such as “bridging the digital divide” or “digital leapfrogging”, although widely used, are so inappropriate. When the rich are designing and implementing technologies in their own interests, to move them further ahead of their competitors, the gap or divide between rich and poor becomes yet more difficult to reduce, or bridge; the horizon is always moving further and further into the distance… Moreover, the notion of a “divide” generally implies a binary divide, as in the gender divide, whereas in reality it is complex and multifaceted; it is not one divide, but many. The notion of leapfrogging is also problematic, since it implies benefiting from someone else; using a person’s back to lever an advantage ahead of them.
2018/07/26: almost 4.5 million people die each year from health problems caused by inhaling indoor smoke generated by burning solid fuel. Worldwide, 38 percent of the population – 2.7 billion people – cook with wood collected unsustainably from forest and farm landscapes.
In sub-Saharan Africa, the backbreaking process of gathering firewood by hand – often by women and girls – and carrying it home provides the main source of fuel for cooking and heating.
Although liquid fuels, solar energy and hydropower could offer possible alternatives, high costs, infrastructure shortcomings and local habits make sustainable use of wood fuel, including firewood and charcoal, a more viable option in the region.
As a result, researchers at the World Agroforestry Centre (ICRAF) and the Wangari Maathai Institute (WMI) in Nairobi, Royal Institute of Technology, Lund University, Swedish University of Agricultural Sciences, International Institute for Tropical Agriculture, Center for International Forestry Research are trying to find healthier, more efficient energy conversion technologies that emit less pollution and simultaneously produce biochar (biomass charcoal) for soil amendment to improve plant growth and health.
Not only is it strenuous work to gather wood, it detracts women from other pursuits such as agriculture or operating small businesses to generate income,” said Njenga. “Women spend about one working day per week in collecting firewood from forests. This implies that women are essentially living on a 20 percent pay cut as their productive days in a week are normally five as they spend Saturdays attending to domestic chores.”
2018/09/21: it is impossible to achieve absolute decoupling of resource use from GDP on a global scale, even with rapid efficiency gains and aggressive taxes on resource extraction. This is the conclusion reached by literally every existing study that has been conducted on the matter (you can follow links to the original research here). The reason is simple: the rate of decoupling is outstripped by the normal rate of GDP growth, even in high-efficiency scenarios. To make matters worse, there are physical limits to resource efficiency, and as we approach them the rate of improvement slows down, giving yet more force to the scale effect of GDP growth.
Unlike resource use, GDP can (thankfully) be dramatically decoupled from carbon emissions. But this solves only one dimension of our ecological poly-crisis. Even if we magically switched to a completely clean and renewable energy system tomorrow, we would be no closer to reversing our overshoot of all the other critical planetary boundaries: biodiversity collapse, chemical loading, deforestation, etc.
What are we going to do with all that clean energy? The same things we’re doing with fossil fuels: raze forests, intensify agricultural extraction, produce mountains of stuff, send waste to landfill – and do all of this at an ever-increasing rate, because our economic system is programmed to require endless expansion.
I have never said that poor countries shouldn’t grow – nor has anyone in this field of study (which Noah would know had he read any of the relevant literature). I have simply said that we can’t continue with aggregate global growth. What we need, then, is a fairer distribution of global income, with much more of it going to poor countries (and poor people within rich countries).
Is it politically impossible? Well, it would certainly require a struggle. But it’s far less impossible than Noah’s preferred alternative, namely, to transcend the laws of physics.
the real cause of lower fertility isn’t higher GDP but rather better girls’ education. GDP is a confounding factor.
While poor countries may need some GDP growth, that should never – for any nation, rich or poor – be the objective as such. The objective should be to improve human well-being: better health, better education, better housing, happiness, etc.
there is no evidence that relying on a switch to services, in and of itself, reduces the material throughput of the global economy.
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