😬
Two minor updates, friends:
- As of 1 January 2026, I'm an Associate Professor.
- As of today, the first paper I started writing on palm oil, about a decade ago, is in print in the Journal of International Economics.
Read, share, cite. Open access: www.sciencedirect.com/science/arti...
congrats -- that was a long journey! Happy ending
2. Aid for economic growth is tantalizing but much harder. The new enthusiasm for redirecting billions in aid to subsidize private enterprise is way ahead of the evidence.
www.chat-gdp.org/development-...
Preview of my take:
1. Health aid saves millions of lives. There's still low-hanging fruit; it could save millions more.
www.cgdev.org/blog/malaria...
For folks at the AEA meetings...
Come hear us debate what we do and don't know about the impact of foreign aid.
While it's possible both are right -- the strikes were tactically incompetent, but strategically wise -- that seems to assume this miss (if indeed it was a miss) was an aberration. And we won't just be bungling along, blowing things up in a region we don't understand. TBD.
Two views of US strikes in Nigeria...
FT reporting: They killed nobody. In the wrong state.
WaPo editorial: Kudos to Trump for engaging, More, please!
@justsand.bsky.social and I have updated our estimates of lives lost based on cuts to US foreign assistance spending through the end of the fiscal year. They look similar or worse than they did back in June: in the range of 500,000 to 1,000,000 people.
www.cgdev.org/blog/update-...
My least popular (and most correct) view is that cars should be automatically limited to the local speed limit. Put the pedal to the floor and you still can't go over 25mph in a residential area.
(15 in Manhattan btw)
We end with some 'big think' speculation about deeper causes: the end of hyperglobalization, and the broader retreat from liberalism.
Will leave that florid prose to the full post, link below.
5/5
www.chat-gdp.org/we-were-wro...
This poses a bit of a puzzle: if 70% of LMICs are catching up, why no convergence? The answer is basically about magnitudes: the growth boom in low- and esp middle-income countries has collapsed -- reflected in the end of global poverty reduction that others have documented.
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One slightly more optimistic lens on this (2nd) reversal: if instead of a standard Solow-convergence metric, we look at the % of LMICs who are growing faster than the G7, that number remains high, around 70%. But it's also falling fast.
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To be precise, it's not so much that we were wrong, as that facts have changed. We're not the first to notice: see links in post to Soumaya Keynes, Olaberria & Reinhardt, and Jonathan Hartley. But having hyped the rise of convergence, we felt we should reflect on its fall.
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New from Dev Patel, @arvind2011.bsky.social & me:
"We were wrong about convergence."
A few years back, we wrote a paper pointing out that Solow convergence had finally arrived. The developing world was catching up. Alas, it seems all good things come to an end.
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Great thread touching on why *ONLY* using private inv is NOT the solution. To echo once again the msg: focusing solely on private inv does not create much room for other riskier options (which in many EMDEs means investing in long term sustainable solutions for climate change, gender equality, etc)
TOP: Household surveys ask women age 15-49 a lot more questions.
BOTTOM: So enumerators appear to drop them, non-randomly.
Adjusting for this "[calls] into question whether Africa’s fertility transition is as uniquely slow as previously thought."
economics.yale.edu/sites/defau...
Striking how uniquely exposed to Trump's tariffs India is:
- 33% effective tariff rate (among the highest now)
- 19% of exports went to US last year (not Mexico, but high-ish)
Manufacturing for export has been the major path for rapid growth in developing countries.
How is the World Bank's private sector arm the IFC doing in supporting that model?
Not so good.
Washington's new model of aid for growth has upsides if it can incubate new productive sectors. There's nothing wrong with development finance helping investors make money. But it also needs to help poor countries make stuff.
/end
The history of successful industrial policy, e.g., in East Asia, involved leaning against market pressure to invest in finance and real estate, and instead directing scarce subsidies to sectors deemed strategic for growth. In short, export discipline.
10/
Why the turn away from industrialization?
One factor seems to be that development finance institutions like the World Bank's IFC are profit driven, and investing in Togolese factories is just less profitable than investing in Turkish banks.
9/
Applying those sector characteristics to the industry composition of World Bank's private sector investments over time -- which is a bit of a leap, but is the best I can do with the data at hand -- what you see is basically a declining focus on jobs, exports, and growth.
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There's a reason economists obsess over manufacturing. It's been the engine of most big economic 'miracles' in modern history: exportable, labor intensive, and fast growing.
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There are counter examples -- I discuss a new garment factory in Togo that the World Bank helped finance (see 1st pic). But the modal project is a loan to a bank in Mexico or Turkey, ostensibly to expand credit in the economy -- a strategy with a limited evidentiary base.
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Second, and I think less discussed, very little $ goes to the sectors that are traditional growth drivers like manufacturing, and in particular exports.
Exporting isn't reported, but here's my attempt to scrape mentions of exports from World Bank (IFC) project disclosures.
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Is that so bad? God knows poor countries need investment. And there's nothing wrong with companies turning a profit. But two red flags:
First, as has been widely discussed, very little of that money goes to the poorest countries.
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Notice the trend to private sector deals:
USAID is dead. Meanwhile, the US DFC, which backs (preferably) American firms investing overseas, is growing. And down the street at the World Bank, private sector deals are on track to eclipse sovereign lending in a few years.
3/
Foreign aid is dead (not really, but it's been a rough year). In its wake, there's a healthy pivot to talking about economic growth in poor countries. But in DC, that manifests as a fixation on private finance & too little talk about the real economy.
www.chat-gdp.org/development...
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Hello! I'm starting a new blog/newsletter thing.
First post is about aid and growth, and what I think is missing from the renewed enthusiasm in DC to subsidize private investment in developing countries: i.e., export discipline.
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