Cell phones and tough stuff

You may often read in The Economist how cell phones are revolutionizing Africa. Don’t know why the government let this happen, but cell phones are now everywhere in Madagascar, and the poorest of the poor owns one. Zain, Orange and Telma share the market and it's super cheap… And there is a 3G network and evreyone is now on Facebook! Development is right across the corner.

Another ubiquitous sign on the roads is that of Tough Stuff. Tough Stuff sells personal solar panels that can power cell phones and other product such as led lamps. Not only do these cost less than €10, they are good for the environment… The products are made in China, of course... Not sure if that will work but I like their marketing.

The export premium

One reason why exports are a successful development strategy is that products reach higher prices aboard than in developing countries, i.e. there is an export premium. At the Andasibe national park in Madagascar, locals pay 1000 Ariary to visit, foreigners pay 25000 (€10). Hence, on one of its main exports, i.e. tourism, the export premium is of 2500%. A good development strategy indeed. If only the government would let tourism flourish…

How corruption leads to bad tasting beer

There is only one brewery in Madagascar. Its flagship beer is Three Horses Beer (THB). It’s a refreshing pilsner, a tad sweet, a bit chemical, and I got tired of it after a week. So why isn’t there any better beer on the island? Corruption, my friend.


A brewer from Mauritius has tried to enter the Malagasy market. It built a new brewery outside the capital and started a massive ad campaign to launch its beer. Two days before the opening of the factory, two official documents were missing and the factory could not start producing. Rumor has it THB gave a €2 million bribe to government officials to retain the beer monopoly.

The same process occurs in all sectors and development doesn’t happen. No need to look further to understand underdevelopment. The question is how do you root out corruption?

No such thing as the mystery of economic development

I just came back from 2 weeks in Madagascar. While some see it as a hopeless lost cause, with no government since the coup d’état and poverty and crime rising, I tend to believe more and more that there is no such thing as a mystery of economic development. Development is the default, and governments block it to various degrees across countries. Just don’t hassle businesses and the country will grow all by itself. Posts on Madagascar to follow this week.

Anonymous journal articles

Bruno Frey, a brilliant economist who has extended economics beyond standard neo-classics by including insights from political science, psychology and sociology, has a new paper complaining about the direction academic research is taking, namely the rankings mania, increased division of labor in research, intense publication pressure, academic fraud, and the dilution of the concept of “university”. One of his suggestions is to publish scientific contributions anonymously. "After all, it should not matter who wrote an article but only whether its content enlarges our knowledge."

Would that really work?

Krugman vs. Levitt

Krugman's theory of interstellar trade has just been published, 32 years after it's been written. Levitt saw it as a perfect opportunity to diss Krugman in public:

I did not think that Paul Krugman was still writing academic papers. Nor have I seen any evidence in the last decade that he still has any sense of humor... A quick look at the acknowledgments, however, clears things up. The original manuscript was written in July 1978, when Krugman was an active researcher and being a curmudgeon wasn’t part of his professional identity.

Wow! While some actually take the time to actually criticize the paper, this was one cheap shot by a brilliant pop economist on another. Chicago will always be Chicago I guess...

should we be happy for the Chilean miners?????

I have mixed feelings.

In one hand, of course I feel happy this people are been rescued and meeting with their families. But I'm fed up with all this media and propaganda. I do not exactly understand why this has been for months in the frontpage of BBC and other media around the world. The Chilean Government is using this as a reality show to cover all the other problems in the country... and particularly one big problem: This accident should have never happened. This is the real issue. Not the millions of dollars they have expend in saving these people, but the money and legislation that should be available to ensure decent working conditions. I'm glad that these 33 are alive, but the 400 a year that are 6 feet under are anonymous. And this is way worse in the rest of Latin-America and the developing world.

Wanna track inflation? Ask Google, not the government

Via Tyler Cowen:

Google is using its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics.Google has not yet decided whether it will publish its index, but "Mr Varian said that the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas." The full article is here.

IMF: The Movie

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