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Omicron is an ominous development for lower and middle income countries

If Omicron evades immunity acquired from prior infection and two-dose vaccinations (as the early evidence suggests it does), countries that have not yet administered boosters are likely to a see waves larger than those that will be experienced by developed countries with booster programs. The Economist has a nice graphic that shows which countries are best vs. least prepared to face Omicron.

Derek Thompson of The Atlantic describes the issue facing the developing world as follows:

Booster shots aren’t as available to most low-income countries, and the full-vaccination rate across Africa is pitiful. In Cameroon, it’s less than 3 percent. In Nigeria, it’s less than 2 percent. In Chad, it’s less than 1 percent. Even if Omicron is inherently less severe, cases could still overwhelm some of these countries’ hospitals and cause major disruptions.

Unfortunately, Omicron will set back recovery efforts and have adverse effects on a range of development outcomes (nutrition, education, etc). Strengthening disease surveillance, testing and emergency healthcare capacity are among the measures countries should take now to prepare for the coming wave.

Distributing the Vaccine in South Africa and Issues with COVAX

This NYTimes piece does a good job discussing some of the challenges South Africa is facing in its efforts to secure a COVID-19 vaccine as it battles a resurgence of the virus. The article highlights several issues with COVAX, an international vaccine purchasing and allocation facility which South Africa has contributed to. COVAX uses advanced market commitments to speed up the development of vaccines and secure guaranteed (but limited) access for poorer countries.

A key issue COVAX faces is price transparency: countries do not know exactly what they are paying for. The NYT article notes:

South African medical advisers say the Covax system is vital but also deeply frustrating. Governments must pay up front without knowing what vaccine they will receive or getting any guarantees on when the doses will arrive. Covax estimates the price per dose but offers little recourse if the cost is ultimately much higher. Countries must assume all of the risk if the vaccine fails or if anything goes wrong.

Given the devastating consequences of waiting to vaccinate in South Africa and existing resource constraints, individual philanthropists/organizations with deep pockets and tolerance for uncertainty around price could step in with an expansive commitment. The Oxford-Astra Zeneca vaccine, which was approved by the UK’s regulator today and is relatively easier to distribute, would be a prime candidate for an agreement.

Most Important Problem in Development Right Now?

Is figuring out a way to finance and rapidly distribute the COVID-19 vaccination in developing countries the most important problem in development today?

COVID-19 has caused a significant slowdown in growth/economic activity in developing countries. That slowdown requires a robust macroeconomic response (typically stimulus). Countries that have not done so need to focus on putting stronger COVID-19 mitigation measures (masks, etc) in place so that economic activity can resume (and children can go back to school where they have not already).

Certainly, macroeconomic responses and mitigation measures are the most pressing “near-term” development priorities but people with expertise and money (both in developing world and developed world) should be working on figuring out logistics and financing of vaccine distribution now.

It is heartening to see Bill Gates and international agencies (GAVI) applying their expertise to the problem.

COVID-19 and the relative importance of development interventions/priorities

As a result of the COVID-19 crisis, I find myself questioning and in some cases, revising some of my long-held views about the relative importance of various development goals or interventions. This is not to say that I had a set of completely stable beliefs about how policymakers, practitioners, and donors should allocate resources prior to the crisis but rather that I assigned more value to certain development priorities/goals relative to others. For example, I believed (and still believe) that for most low-income countries, finding ways to boost agricultural productivity is more important than increasing households’ access to electricity. (I think recent evidence suggests that electricity is essential for business/firm operations but has more muted effects at the household level).

Below is a list of development objectives or interventions that I think I had either undervalued (relative to all others) or alternatively, had not considered prior to COVID-19. I do not yet have a good sense of exactly where these priorities end up in a relative ranking only that they are now higher on the larger list of priorities than they were previously.  

Undervalued

– Government to person (G2P)  payments infrastructure

– Access to fast internet/connectivity

– Cash Transfers (and digital infrastructure to make transfers)

– Interventions that bolster the security of food supply chains (and food security, more generally)

Not Considered Prior to COVID-19

– Pandemic preparedness/planning

– Politically independent public health authorities

Bringing History (Back) In

Nathan Nunn recently authored a review [gated] of research that attempts to answer a big, fundamental question in development: How do historical factors shape development outcomes? In other words, if we want to explain the large variation we see in economic conditions today (between regions of the world, countries, etc and within them), how useful is history?

Why is this review (and the literature it summarizes) an important contribution? After all, that history would matter for development seems both obvious and intuitive to a non-expert. However, Nunn notes that until recently, development economics has not taken history seriously.

He writes:

“Development economics, which studies the economic conditions of people in less well-developed countries, has traditionally taken a perspective that is fairly ahistorical. The sources of poverty have been hypothesized to lie in low levels of investment in land, machines, education or health. In the early models of economic development, history plays no real role.”

Nunn observes that with few exceptions, the approach taken by economic historians has also been limiting:

“Connections between disparate time periods were infrequently made, and the dynamics or cultural evolution of societies (particularly over longer time horizons) was not commonly studied.”

Nunn then surveys academic work that examines the impact of events that occurred during the period of European expansion and colonialism on long-term development outcomes. This section is followed by an interesting discussion of how economic conditions may have contributed to the evolution of, cultural norms and behaviors that in turn impact development outcomes (e.g. areas that adopted plow agriculture in pre-industrial times show restrictive attitudes towards women working outside the home and tend to have a “gendered division of labor” today).

After showing that history does in fact matter (in a big way), Nunn offers his own take on how development policy can respond to, and not be constrained by, historical factors. He offers the example of researchers who designed a medical intervention targeted to the black community in Oakland that was explicitly aimed at overcoming the lack of trust in medical system, a result of historical abuses such as the Tuskegee experiment.

For me, there are a few implications of the finding that history shapes long-term development outcomes on development practice. As a development community, we need to do more of the following:

  1. Think harder about how to integrate the study of history and culture (not just via economic history courses) into development economics and public policy education
  2. In general, place a much higher value on context-specific knowledge (language training, time spent living and working in a particular country/region) in public policy work and research. This means a much more prominent role for local experts, policymakers and historians in the public policy process.
  3. Tone down the rhetoric around the universal promise of specific technocratic solutions. Before adopting a “cut and paste” approach, policymakers should think carefully about the appropriateness of the solution for the particular context –  in particular, how historical factors may influence the solution’s impact.

 

Is China helping African countries industrialize?

Noah Smith published a column on Bloomberg earlier this week about the importance of industrialization to Africa’s future. Smith argues that both international aid programs and policy interventions have been inadequate at transforming African economies and improving living standards on the continent.

The article focuses on the role that Chinese entrepreneurs and firms are playing in spurring industrialization. Smith reviews a new book by Irene Yuan Sun that highlights the phenomenon of Chinese entrepreneurs setting up factories in Africa.

It is refreshing to see a prominent journalist such as Smith draw attention to the issue of economic development in Africa. Smith is particularly good when he discusses the moral stakes of economic development in Africa (i.e. Why we should care).

However, Smith’s argument about why African industrialization is likely to continue is not very compelling.

For example, he writes,

Rising labor costs in China, and the threat of U.S. tariffs, are finally causing manufacturers to diversify their supply chains. Some of their factories will go to Vietnam and Bangladesh, two rising stars of the developing world. But those countries won’t be big enough to replace China, which means that if manufacturers really want to keep costs down, many will have to look to Africa.

While it is true that manufacturers are searching for other bases due to high labor costs in China, it is not clear that sub-Saharan African countries are attractive destinations for this investment. For example, this study by the Center for Global Development highlights high labor costs in sub-Saharan Africa as a threat to manufacturing competitiveness.

However, it is important to consider the mechanism(s) by which increasing Chinese investment in manufacturing could help accelerate the industrialization process and economic growth.

As this paper by Dani Rodrik, Xinshen Diao, and Margaret McMillan points out, unlike in Asia, growth in Africa has been driven by increased productivity in agriculture and the movement of workers from agriculture to non-agricultural sectors but not by increased productivity in non-agricultural (“modern”) sectors. The paper discusses why increased productivity in the modern sector is essential for sustained economic growth.

My takeaway is that if Chinese firms in sub-Saharan Africa continue to grow and increase productivity in the nonagricultural sector, that transformation could help sub-Saharan African countries achieve a growth trajectory similar to Asian countries.

This Week in International Education

Below are a few education and development pieces I found interesting this week.

  1. This CGD note by Lant Prichett discusses the all too common practice of using metrics which are not directly related to student learning/ability to assess progress in basic education. Prichett cites the example of data collected during the rollout of a large-scale government-led education initiative in India, the Sarva Siksha Abhiyan (SSA). Pritchett writes, “As part of this scheme an EMIS (Education Management Information System) program called DISE (District Information System for Education) was launched. This was called a “report card” on schools and contains, for each district of India (aggregated up to state level) a huge “dashboard” of data about schooling. In the current State Report Cards 2016-2017 there are, by my count, 977 distinct numbers reported. Not one of those numbers is any direct measure of student learning (and interestingly, a previously included measure of learning, pass percentages, was dropped from the “report card”).”
  2. World Bank researcher David Evans highlights the impressive body of education research co-authored by RTI International’s Director of Education for Africa, Ben Piper. Evans notes that Piper and his co-authors do not let the perfect (clean causal identification) serve as the enemy of the good (answering questions that policymakers care about in a reasonable timeframe)
  3. At Marginal Revolution, Tyler Cowen summarizes a new paper by economist Juan Sebastian Munoz which suggests that upwards of 50% of the gender gap in math achievement in Colombia is driven by lower-achieving males dropping out of school. It turns out the opportunity cost of staying in school is higher for this group.
  4. Uganda is reforming its school inspection program to focus more on student learning, teaching, and teacher attendance. The government worked with DFID and Ark Education Partnerships group to pilot the new approach. (Via Lee Crawfurd). Lee Crawfurd highlighted the importance of school inspections as a mechanism for improving accountability in this blog post.

 

High Returns to Schooling – Driven by Productivity or Screening?

The Economist summarizes a new World Bank literature review on the returns to education by Harry Patrinos and George Psacharopoulos. Patrinos and Psacharopoulos find that the returns to education are consistently high, an extra year of schooling yields an average annual private return of 8.8% across 139 countries. The paper shows that there are significant differences in returns across regions of the world, between high-income and lower-income countries, and for men vs. women.

The  researchers calculate the “social” (i.e. non-private) returns to education, an essential datapoint for those interested in the question of how much governments should invest in education.

Another key policy question that the authors address is the mechanism through which eduation impacts wages. Here is how Patrinos and Psacharopoulous frame the debate:

The earnings premium associated with the level of education suggests that productivity increases as people acquire additional qualifications. An alternative view is that earnings increase with education due to credential effects. This refers to the idea that higher levels of schooling are associated with higher earnings, not because they directly raise productivity, but because they certify that the worker is likely to be productive.

I was surprised to learn that the academic literature does not provide much support for the credential effects thesis; rather, positive labor market outcomes seem to be driven by increases in productivity.

 

 

This Week in International Education

Below are links to a few education-related pieces I read this week:

  1. Low Performance and High Satisfaction: The Information Paradox of Bad Schools This blog by Susannah Hares of Ark Education highlights  findings from the Varkey Foundation’s Parent Survey. The survey reveals that parents in countries that perform poorly in education (such as India, Kenya, and South Africa) are more satisfied with their children’s education than parents in high-performing countries such as Korea. The piece explores several potential explanations for this phenomenon and examines whether providing parents with performance information is an effective strategy for improving education outcomes.
  2. Facing Forward: Schooling for Learning in Africa – The World Bank’s new report assesses the current state of education in sub-Saharan Africa and suggests ways to improve both access and quality.
  3.  Are Our Children Learning? This Twaweza report summarizes the results of basic learning assessments conducted in three East African countries: Kenya, Uganda and Tanzania from 2011-2015. My main takeaway from the report is that all three countries have seen little to no improvement in basic learning outcomes over the last five years.