Book review: Starved for Science

Along with Prime Movers of Globalization, I bought and read Starved for Science: How Biotechnology Is Being Kept Out of Africa after Tyler Cowen recommended it (although a colleague also mentioned it earlier the same day – the two together were motive enough for me). The thesis is that the under-penetration of GMO crops in Africa is a travesty, ultimately caused by the post-colonial export of rich-country attitudes from Europe to Africa’s urban political elites, who are then reluctant to take the risk of allowing GMOs, despite the tremendous potential benefits.

Author Robert Paarlberg is aggressive, even polemical, but one can sense his deep passion and anger on the topic, and his ample supporting evidence is hard to argue with. A few of his strong points are that proving the absence of risk is impossible (and in practice a selectively enforced double standard in regulation); rich-country citizens do not object to pharmaceuticals produced through GMO pathways, perhaps because they provide tangible benefits to the majority of the population, whereas higher crop yields do not; and that the safety standards applied to GMOs in the African countries that don’t allow them (all but South Africa) wildly exceed the level of other food safety standards in those countries (something like 700,000 people are estimated to die from food poisoning in Africa every year, and millions are affected by hunger and malnutrition).

Worth a read to hear an uncompromising and well-informed exposition of the pro-GMO position; although I believe there are multiple, interdependent paths to improve smallholder farmer productivity, I found myself swayed by his arguments. I would be interested to hear a critical rebuttal from the other side, though.

Resource primacy in African foreign investment

Interesting graphic on FDI in Africa from Afrographique (larger version at link):

Via Rachel Strohm, with the punch line:

Investment levels seem strongly correlated with natural resources (no surprise there), but don’t appear to have much relation to the ease of doing business in a country. Nigeria, Sudan, Angola, and the Republic of Congo are all major oil exporters, even though of the 46 African countries the World Bank included in its 2011 Doing Business rankings*, they were respectively rated #17, 25, 31 and 40. Chad, at #46, had more investment than Botswana at #3. And Somalia, a failed state that didn’t even make it into the Doing Business rankings, had only a touch less investment than vaunted reformer Rwanda. Fascinating stuff.

Nile water politics

This NYT article nicely captures the latest on Nile water politics. In sum:

• The current treaty guaranteeing 80% of the flow to Egypt and Sudan is a legacy of British colonialism


• Egypt views any reduction of flow to itself and its 80 million people as an existential threat, and rejects any such proposals out of hand


• Five of the seven upstream countries have signed a new Nile accord which requires a simple majority to approve projects, while Egypt insists on retaining veto rights over any project in any country


• Egypt believes it has the World Bank in its pocket on dam approvals, but worries that agricultural projects will not only soak up more water but also bring Arab and Chinese investors with their own clout into the fight


• Experts believe there is large water efficiency upside both upstream and downstream

It's hard not to be sympathetic to the seven countries who are still holding the short end of the stick imperialism handed them; on the other hand, in Egypt it's, if not life and death, a matter of the utmost political importance. Ethiopia's prime minister is right that it's not a zero-sum game, given the efficiency upside, but as in so many other parts of the world, at a market price of free, not enough stakeholders will be incentivized to capture it.

Do food prices cause "food riots"?

The usually outstanding Chris Blattman has posted some spotty analysis of the recent journalistic coverage of food riots in Mozambique, which he finds "shallow and alarmist." I would have commented, but many have already done so, so rather than pile on I'll just articulate my own take here. Like commenter @Jonomist, I think his punchline that we should be more careful attributing causality is probably defensible, but some of his arguments are not.

Here’s what a closer look at your economics and political science can tell you.

Expect price volatility to fall over time. Globalization and growth should reduce price spikes in future. More countries are producing crops. Climate shocks in Argentina are not that tied to climate shocks in Russia or China, and so price volatility from supply shocks should be going down. Falling transport costs also mean that more substitutes are available, further reducing price volatility. So things should be getting better over time, not worse, especially if trade allows countries to diversify their diet. Envision a future of diminishing instability.

This is a dangerously superficial argument, reminiscent of arguments that a more integrated global financial system would mitigate systemic risk - remember how that turned out? It's what a textbook analysis would say, but lacks grounding in the realities of these markets.

• Empirical data (most recently the price spikes of 2008 and now 2010) don't bear this out, at least in retrospect to date.


• Many agricultural stakeholders - including private companies both producing and buying food, as well as multi-laterals such as the FAO and the World Bank - are deeply concerned with price volatility in the future. (My own view is that we can't yet tell if average volatility will increase to a higher permanent plateau, but most players believe this is much more likely than the opposite.)


• Growth in both population and income is driving strong growth in agricultural demand that is unlikely to abate soon, and pushing the world toward the edge of its current supply capacity. Production can grow too (Ehrlich and Malthus were wrong) through increasing yields through research and bringing more land under cultivation, but the former is longer-term and the latter runs into seriously diminishing marginal returns. My personal belief is that we will be able to feed 9 billion people a more modern diet by 2050, but there will be bumps along the way, and any time demand nears supply capacity, the potential for price volatility increases significantly.


• Climate may become more unstable as climate change progresses, and climate change could also adversely affect baseline agricultural productivity, as Michael Roberts' excellent paper has shown and the market seems to believe.


• As several commenters noted, national policies play a substantial role in agricultural prices (notice how the wheat market responded to the Russian wheat export ban), and this intervention seems unlikely to diminish (especially in light of the above factors) - if anything it is likely to exacerbate any increases in underlying volatility caused by long-term demand growth and short-term supply shocks.

A few smaller nits:

Look to local policy, not global markets, for the real instability. Bread prices climbed 30% in Maputo, apparently due to Russian wildfires. But global wheat prices have only risen 5%. Why the disproportionate effect? I wish I knew, except I haven’t a single report from the ground that points out the disparity, let alone one that searches for an answer.

Yes, global wheat prices have risen 5% "during August" - and more than 50% since June, as commenter Bernhard Brummer points out. Some of the blame goes to the NYT writer for not picking a better baseline, but it's not a hard thing to double-check.

Chris: For riots, look to poor policing, not poverty.
@Jonomist: Are fires caused by insufficient fire marshaling?

Exactly.

Chris' track record is too strong for him to need to redeem himself, but he does so anyway (I'm not sure if intentionally) through his next post on the quality of his commenters (who came through rapidly here).

Sea rise not that scary?

That's the case that climate adaptationist Bjorn Lomborg (don't call him a skeptic) makes at Project Syndicate, because we've dealt with it already:

Imagine that over the next 70 or 80 years, a giant port city – say, Tokyo – found itself engulfed by sea levels rising as much as 15 feet or more... Without a vast, highly coordinated global effort, how could we possibly cope with sea-level rises on that order of magnitude?

Well, we already have. In fact, we’re doing it right now. Since 1930, excessive groundwater withdrawal has caused Tokyo to subside by as much as 15 feet, with some of the lowest parts of the downtown area dropping almost a foot per year in some years. Similar subsidence has occurred over the past century in a wide range of cities, including Tianjin, Shanghai, Osaka, Bangkok, and Jakarta. In each case, the city has managed to protect itself from such large sea-level rises and thrive.

Lomborg cites research research claiming that over 95% of the world's coastal population is urban, making rising oceans no big deal.

A 20-foot rise in sea levels (which, not incidentally, is about ten times more than the United Nations climate panel’s worst-case expectations) would inundate about 16,000 square miles of coastline, where more than 400 million people currently live... [and] the vast majority of those 400 million people reside within cities, where they could be protected relatively easily, as in Tokyo.

Off the top of my head, I'd challenge this with Bangladesh, which has 160 million people and is very low-lying:

Is it really fair to assume Dhaka has an easy out just because it's "urban"? Maybe Jakarta has coped with rising seas, but Indonesia's per capita GDP is still 3x that of Bangladesh.

Lagos and Karachi are two other poor coastal megacities that would be worth doing the same analysis for.

Update: I just had dinner with someone from Bangladesh who confirmed that the idea that rising seas won't hit Bangladesh hard is preposterous. First, there are millions of people living in low-lying, non-urban areas (especially hundreds of islands in the Ganges Delta). Second, much of the productive agricultural land is similarly low and is already suffering from soaring salinity in many areas. So it seems that the underlying analysis is weak, and Lomborg himself should be doing better quality control of the sources he chooses to cite.

Update 2: A few relevant numbers to refine our back-of-the-envelope: 46% of Bangladeshis live within 10 meters of the average sea level, and the country is only 27% urban. So it seems very unlikely that Lomborg's math that "only ~15 million people would need to be relocated [over the course of the century]" can possibly be right.

Cow on motorbike

Happy Friday!!

Hat tip Chris Blattman.

The undiversified economy

... is vulnerable, even if historically successful:

Botswana’s economy contracted by 6.7 percent last year as revenue from diamonds plummeted, Central Bank Governor Linah Moholo said.

“Mining was hard-hit, with its share of gross domestic product dropping from 41.2 percent to 24 percent,” she said.

This succinctly summarizes the problem for Botswana. Although its growth record for decades has been impressive, it remains too undiversified. Diamonds and cattle remain large sectors of the economy. When diamond revenues plummet, the economic consequences are severe. Add in the HIV/AIDS situation with a contracting economy can quickly turn an African success story into another African Growth Tragedy.

Now, a 7% downturn amidst the greatest economic crisis in generations is not the end of the world, especially if you managed to average 9% annual GDP growth for over three decades. On the other hand, even the staunchest efficient market skeptics and industrial policy promoters would have to concede that "happen to have and focus your economy on a small basket of commodities that will outperform over the coming decades" is not a viable (or at least generalizable) economic development strategy to start with.

From the Stationary Bandit, via the Roving Bandit.

Volcanic ash and high-value exports

This was one of my first thoughts when I heard of the flight disruptions in Europe, and now both Tyler Cowen and Owen Barder have picked up on it - the impact on high-value agricultural exports from East Africa to Europe (especially horticulture and floriculture). Owen provides the local perspective:

This evening here in Addis Ababa I bumped into the owner of one of the big flower-exporting businesses. He was looking pensive. Unseasonal rain had damaged part of his crop, and now he is unable to get his roses into European markets. A whole container had had to be destroyed because there was nowhere for them to go. On the back of an envelope, he calculated that the blockage of rose exports is costing Ethiopia about €200k a day. This may not sound very much but it is a big chunk of the export earnings of a poor nation.

On the other hand, seems like local European producers should have been making arguments around supply chain security rather than food miles.

Scary to think that this volcano's last eruption lasted two years. If anything like that happens again, the effect on the world economy via both agricultural production and logistical disruption could be profound.


Update: FP Passport weighs in with some numerical estimates:

- In Kenya, flower growers have lost and estimated $12 million so far, or about $2 million a day. 6.5 tonnes of roses were dumped yesterday, for example. The loss is particularly devestating with Mother's Day coming up -- a big day for flower markets across the European continent.

- In Ethiopia, horticulture exports have lost an estimated $1.75 million Euros so far.

Hard to be transparent about oil when...

... you don't know how much is being produced:

The Nigeria Extractive Industry Transparency Initiative (NEITI) has described the records of the country’s crude production and export as unclear, saying that after 58 years of oil production, the country does not know exactly the quantity it produces.

Speaking at the presentation of a research report on the Nigeria Extractive Industry in Abuja weekend, Chairman of the Board of NEITI, Prof. Asisi Asobie, said despite all the inroads made by the country to expand operations in the oil industry, it had not been able to get operators to tell the truth about the actual oil volumes produced.

“After 58 years of producing oil, Nigeria does not know how much was being produced. It is regrettable that we have not been able to get oil companies to tell Nigerians exactly what they produce. The sector is shrouded in secrecy,” he said.

I find it quite surprising the that the government wouldn't be able to strong-arm this information from oil companies who depend entirely on the continued legitimacy of their concessions. Have they tried?

Pirate capital structures

I’m not in the Horn of Africa right now, so Somalia is no longer next door, but this elucidation of the economics of pirating is really outstanding, e.g.

To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.

The punch line is:

When ransom is received, fixed costs are the first to be paid out. These are typically:
• Reimbursement of supplier(s)
• Financier(s) and/or investor(s): 30% of the ransom
• Local elders: 5 to 10 %of the ransom (anchoring rights)
• Class B shares (approx. $15,000 each): militiamen, interpreters etc.
The remaining sum — the profit — is divided between class-A shareholders.

African growth rates and oil

Looking at this chart from Roving Bandit, the first thing that jumps out at me (by design, to be fair) is that oil countries pretty much straddle the spectrum.
Which of these is sustainable is of course another question, and one on which I will soon post a new point of view I recently read.

Wind power in Africa

Interesting – I wasn’t aware of Africa’s largest wind project.

Kenya’s Lake Turkana Wind Power project – set to become Africa’s largest wind farm – looks to be back on track after securing financing through a new shareholding structure.

The project now appears to be co-funded by private sector firms and the African Development Bank.

The 300-megawatt, $625 million project is expected to begin providing 50 megawatts of power to the Kenyan national grid by June 2011. Once in full operation, the project could provide roughly a third of Kenya’s current peak demand of 1,089 megawatts.

Not at the scale of Desertec, of course, but worth keeping an eye on. I predict that if it does get up and running, the intermittency will nevertheless frustrate some locals.

Via Green Inc.

Political economy of boreholes

Via Roving Bandit, the political economy of boreholes:

“Boreholes are the cause of frequent fights amongst women. There are simply not enough bore holes to go around the population and thus it is the principle of first come first served which can create great injustice. There is nobody responsible for order at the bore holes. Often the neighborhood will only hear shouting and insults coming from the boreholes with people whose houses are near by using the shouts as their daily alarm clocks.”

As I commented, this type of water development is really hard, with many more failures than successes.

Update: I enjoyed reading Daniel Rogger’s stylized account of building a borehole in Banglageria, which rings true with my own experiences.

Quote of the day

You wouldn’t want to be inside the sausage factory that is the GDP calculation in Chad.

That's Chris Blattman on how fast African poverty is falling (or not) and the reliability of data on developing countries.

Where China’s investing

Statistics shmutistics... while the research apparently says China doesn’t invest disproportionately in resource-rich African countries, a top four of DR Congo (minerals), South Africa (coal and iron ore), Nigeria (oil) and Niger (uranium, and a fresh coup) makes me dubious.

Note also that Australia is number one overall (e.g. here, here, here).

By the way, critical mass has inspired me to add a new label for China in Africa.

Update: OK, on second thought... how is "aid" defined here? If narrowly, then perhaps I buy that Chinese aid specifically is not targeted toward resource-rich Africa countries... but who's to say where building a road, a railroad, a port, an airport becomes investment rather than aid? Building infrastructure frankly has more economic impact than most other foreign aid anyway, in all likelihood.

Update 2: Speaking of Niger, cannot help but pass on this outstanding haiku:

Another colonel
Thinks it’s his turn to spring clean
The big boss – hi coup!

Reassessing brain drain

Aid Watch compiles "four ways brain drain out of Africa is a good thing":

1. Gains to migrants themselves. Why is this often ignored in brain drain discussions? Perhaps it reflects a neglect of the rights and well-being of individuals and an overemphasis on the nation-state as the object of development. The migrant is better off with higher living standards, not to mention satisfying her revealed preference to live in a country other than where she was born.

2. Gains to migrants’ families. Remittances is the most obvious and commonly-cited benefit of the brain drain. Even using official figures, which likely far undercount the value of remittances by excluding informal channels, remittances sent back by Africans abroad outweigh the cost of educating them at home. Why pass up a high return opportunity (Africans earning high incomes abroad and remitting) and insist on a low return activity (educated Africans underemployed at home)? Not to mention that families also get satisfaction from seeing their offspring realize their dreams.

3. Brain circulation. Brains don’t just leave Africa, never to return. Africans who have been educated or worked abroad do come back to their home countries to visit, to establish dual residence, to start businesses and universities, and, sometimes, to stay. These people bring back new ideas and skills—crucial ingredients to economic growth. Similar processes brought enormous benefits already to Asia and Latin America, so why would donors want to shut down this motor of opportunity only for Africa?

4. Stimulation of skill accumulation (“brain gain”). The possibility of migration and the example of role models who find success abroad (the Kofi Annan factor) provide incentives for young students to work hard and gain skills that will help them overcome the hurdles to migration. The authors argue that the new human capital created through these incentives offsets the loss of skilled people who do eventually leave.

These are all plausible positives, and I'm unsympathetic to most efforts to keep talented and/or educated residents of poor countries from emigrating. It remains to be shown, though, that these benefits outweigh the shorter-term, acute in-country capacity challenges to which brain drain contributes.

Does the oil curse exist?

The oil curse is a generally accepted truth - there are is no shortage of anecdotes from countries with oil (e.g. Brazil, Nigeria) and concern from those who might discover it (e.g. Greenland). The comparative growth trajectories of Latin America and China/India draw a striking (if not statistically rigorous) contrast between natural resource wealth and economic growth.

But at Aid Watch, Adam Martin questions whether the curse does in fact stand up to analytical scrutiny. He argues that empirical work on the oil curse confuses abundance with dependence and cites three recent papers that show that "even natural resource dependence does not undermine democratization." He later clarifies for commenters:

- I’m not claiming there are no ill effects associated with natural resources. I’m saying these studies failed to find evidence that resources systematically effect democracy, growth, or development, and most of the popular studies that do have fundamental flaws.

- It’s also not the case that these studies (or I) claim that there are NO countries that fit the Curse story, but that it’s not the systemic phenomenon other studies had argued for.

It's quite an interesting and counterintuitive finding. I am inherently skeptical of cross-country regressions, especially when they run counter to things that so many people have seen firsthand in practice. But it is good to keep an open mind, and I applaud Martin for arguing the other side of the story.

China and African resources

Apparently lots of folks (me included) are guilty of parroting the conventional wisdom on China's actions in Africa... which turns out not to stand up to scrutiny.

A few examples of China myths and partial truths:

1) China targets aid to African states with abundant natural resources and bad governments

Actually, China gives money to almost every single country in Sub-Saharan Africa, excluding only those that don’t acknowledge the One China policy. There is little evidence that China gives more aid to countries with more natural resources or specifically targets countries with worse governance. [emphasis mine] China is not alone in its interest in natural resources in Africa, and natural resources are not the primary motivating factor for Chinese aid: like all donors, US definitely included, China is motivated to give aid by a mix of political, commercial, and social/ideological factors.

Via Aid Watch.

Update: Or not?

Readings on Somalia

This isn’t exactly on topic, but I can’t help but be interested in the neighborhood in which I’m working, and furthermore I recently visited the Somali region of Ethiopia, upriver from Mogadishu (fascinating). So in that vein, here are a series of interesting recent reads on Somalia, al-Shabaab and piracy.

• Chilling NY Times profile of "The Jihadist Next Door", a good ol' Alabama kid cum al-Shabaab guerrilla leader and recruiting rock star.
  

  Despite the name he acquired from his father, an immigrant from Syria, Hammami was every bit as Alabaman as his mother, a warm, plain-spoken woman who sprinkles her conversation with blandishments like “sugar” and “darlin’.” Brought up a Southern Baptist, Omar went to Bible camp as a boy and sang “Away in a Manger” on Christmas Eve. As a teenager, his passions veered between Shakespeare and Kurt Cobain, soccer and Nintendo. In the thick of his adolescence, he was fearless, raucously funny, rebellious, contrarian. “It felt cool just to be with him,” his best friend at the time, Trey Gunter, said recently. “You knew he was going to be a leader.”

• The hypothesized link between al-Shabaab and Somali pirates is confirmed - the Islamic militants are training pirates in exchange for a share of the booty.


• In "capital markets everywhere" news, pirate capital Haradheere now has a thriving stock exchange.
  

  Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.
  
  "I am waiting for my share after I contributed a rocket-propelled grenade for the operation," she said, adding that she got the weapon from her ex-husband in alimony.
  
  "I am really happy and lucky. I have made $75,000 in only 38 days since I joined the 'company'."

• Somali pirates are driving up Kenyan real estate prices.


• In breaking news, Al-Shabaab has declared war on Kenya.


• I was also surprised and interested to learn from National Geographic that Somaliland is its own unrecognized but largely functioning state.


• Finally, on the fiction side, I will leave the reams of Ethiopia books I’ve been plowing through for another post, but I have to mention The Zanzibar Chest here. A non-fiction novel/memoir by war correspondent Aidan Hartley, it is harrowing and compelling. The man was truly in the middle of some historical happenings in Africa. My favorite line from his account of seeing the overthrow of Somali dictator Siad Barre in Mogadishu in 1991:

  As a correspondent, I suppose my job was to excite the sympathy of the world for this forgotten and reviled people [the Somalis], but all I can say now is that I have felt it a privilege to observe a people who shot themselves in the foot with such accuracy and tumbled into the abyss in such style.

Ethiopian Airlines is safe

Owen Barder stands up for Ethiopian Airlines and inspires me to do the same.

I was very upset to hear of the loss of an Ethiopian Airlines plane from Lebanon to Addis Ababa this morning.

Many Ethiopian and Lebanese families will be grieving.

Ethiopian Airlines has an outstanding safety record. The staff are professional, courteous and efficient. I will be flying from the UK to Addis on Friday on Ethiopian Airlines and, despite today’s tragedy, I am looking forward to it.

I'm flying Ethiopian from Addis to Europe soon and feel the same way.


Update: OK, I need to temper my praise. Flight was two hours late getting off the ground, simply because it took that long to get everyone through security and on to the plane (and not the first time that has happened to me). And second, the flight attendants are astonishingly incapable of not waking you up for breakfast 2.5 hours before landing, despite clear and copious appeals in advance (and also not the first time).