IPSU Student Forum 2013 Understanding Development in Africa – a policy perspective

1. IPSU Student Forum 2013Understanding Development in Africa – a policy perspective Nic Spaull www.nicspaull.com/teaching September 2013

2. Aims of the course • Be able to answer the following questions: • What is poverty? • How do we measure it? • Understand some of the issues around foreign aid to Africa. • What is social policy? • Why do we care about social policy (education, health, employment)? • How do we evaluate policies? (Understanding randomization) • Understand some of the developmental issues in Africa • Foreign aid and Africa • Education in South Africa and sub-Saharan Africa • Economics of health in Africa • Unemployment in South Africa • Be able to “think better” about Africa…

3. Hans Rosling TED talk http://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen.html

4. What is poverty?

5. What is poverty?How do we measure poverty?Why should we measure poverty?

6. Is Kaya poor? “Kaya, four, lives with her parents in a small apartment in Tokyo, Japan. Her bedroom is lined from floor to ceiling with clothes and dolls. Kaya’s mother makes all her dresses – Kaya has 30 dresses and coats, 30 pairs of shoes and numerous wigs. When she goes to school, she has to wear a school uniform. Her favourite foods are meat, potatoes, strawberries and peaches. She wants to be a cartoonist when she grows up.”

7. Is Indira poor? • “Indira, seven, lives with her parents, brother and sister near Kathmandu in Nepal. Her house has only one room, with one bed and one mattress. At bedtime, the children share the mattress on the floor. Indira has worked at the local granite quarry since she was three. The family is very poor so everyone has to work. There are 150 other children working at the quarry. Indira works six hours a day and then helps her mother with household chores. She also attends school, 30 minutes’ walk away. Her favourite food is noodles. She would like to be a dancer when she grows up”

8. Is Dong poor? • “Dong, nine, lives in Yunnan province in south-west China with his parents, sister and grandfather. He shares a room with his sister and parents. The family own just enough land to grow their own rice and sugarcane. Dong’s school is 20 minutes’ walk away. He enjoys writing and singing. Most evenings, he spends one hour doing his homework and one hour watching television. When he is older, Dong would like to be a policeman.”

9. Is Paballo poor?

10. Human rights • “The notion of human right builds on our shared humanity. These rights are not derived from the citizenship of any country, or the membership of any nation, but are presumed to be claims or entitlements of every human being. They differ, therefore, from constitutionally created rights guaranteed for specific people.” ― AmartyaSen, The Idea Of Justice

11. Poverty What is poverty? • “Poverty is the inability of an individual or a family to command sufficient resources to satisfy basic needs” (Fields Ch4) Money-metric or multi-dimensional framework? • Income and expenditure justified as poverty measure partly because of presumed correlation with well-being and empowerment. • Important to understand that money is not end in itself, but means to an end • $ correlated with food, shelter, nutrition etc but not well correlated with access to public services, safety, human rights etc • AmartyaSen = Godfather

12. What is poverty really? • When the poor are asked to characterise what it means to be poor, they use phrases like: • Isolation from the community • A lack of security • Low wages • A lack of jobs • Poor nutrition • Little access to water • Poor educational opportunities • (May, 1998 in Finn et al 2013)

13. Multidimensional poverty Figure 1: The composition of the Multidimensional Poverty Index (Finn et al 2013) Anyone who is deprived in more than 3 of the dimensions is classified as multidimensionally poor

14. MDP • For example, a household is classified as deprived in terms of: • Schooling if no household member has at least 5 years of education • Enrolment if one child of school-going age does not go to school • Water deprivation is defined as not having piped water on site • Deprivation in child mortality is indicated by a child having died before age 15 • Nutritional deprivation is indicated if one person in the household is seriously underweight • See Arden 2013 for full definitions • What are some of the problems with this method?

15. MDI Comparing poverty measures for South Africa for 1993 and 2010 (Finn et al, 2013) “This means that the 8% who remained multidimensionally poor in 2010 were deprived in fewer dimensions of poverty than in 1993: roughly, in four areas instead of five (on average). When the changes in H and A are taken together, they indicate that in 2010 there were significantly fewer multidimensionally poor people; and that those who were still poor, were somewhat less poor than in 1993.” Severe poverty can be defined as being deprived in 50% or more of the indicators

16. Sources of deprivation?

17. Main areas of deprivation among the multidimensionally poor

18. Why do we care about poverty/inequality? • Political  political stability & democracy • Ethical  Human rights • Justice  Inter-temporal justice • Social justice  Religious motivations • Societal  Innate preference for equality • Survival  Wasted human capital • Philosophical  Ubuntu, egalitarianism

19. Duflo TED talk… Social experiments to fight poverty http://www.ted.com/talks/esther_duflo_social_experiments_to_fight_poverty.html

20. Randomization as a tool to evaluate policy- Marisa Coetzee

21. Foreign Aid

22. Angelina Jolie & Jeffrey Sachs

23. Questions… • What is foreign aid? • Who should give foreign aid? • Why should they give foreign aid? • What are the benefits of foreign aid? • What are the costs/downsides of aid?

24. The good… Aid – The ‘good’... • Sachs • ‘Poverty trap’  • Firemen logic • Big push • Conclusion? • BIG SOLUTION Health – Education - Infrastructure

25. Aid – The ‘good’...(cont) The good… • Initially = gap funding view of aid • Developing countries are poor because they have too little money • Consequently cannot buy sufficient capital, infrastructure and expertise • Associated with big push view of development • If developed countries can transfer sufficient goods/money, this should solve poverty and fuel growth in developing countries • Successes • ARV’s (40 000  1mil in 5 yrs) • Smallpox eradication • Measles (100 000  40 000) • River-blindness

26. But what does history say? But…what does history say? • Easterly - • $2.3 trillion over last 50 years • What do we have to show for it? • {Duflo counterfactual} • ‘Post-hoc ergo propter hoc’

27. Aid – The bad... The bad… • “Two years after the breakup of the Soviet Union, British economist Paul Seabright was talking with a senior Russian official who was visiting the UK to learn about the free market. “Please understand that we are keen to move towards a market system,” the official said, “But we need to understand the fundamental details of how such a system works. Tell me, for example: who is in charge of the supply of bread to the population of London?” The familiar but still astonishing answer to this question is that in a market economy, everyone is in charge. ” • What does the bread supply in London have to do with aid?! • PlannersvsSearchers(Easterly) • ‘Utopian social engineering’ vs ‘piecemeal democratic reform’ (Popper)

28. Aid – The bad... The bad… • “Two years after the breakup of the Soviet Union, British economist Paul Seabright was talking with a senior Russian official who was visiting the UK to learn about the free market. “Please understand that we are keen to move towards a market system,” the official said, “But we need to understand the fundamental details of how such a system works. Tell me, for example: who is in charge of the supply of bread to the population of London?” The familiar but still astonishing answer to this question is that in a market economy, everyone is in charge. ” • What does the bread supply in London have to do with aid?! • PlannersvsSearchers(Easterly) • ‘Utopian social engineering’ vs ‘piecemeal democratic reform’ (Popper) Conclusion? SMALL SOLUTIONS

29. Asking the right question? • If we want to end poverty in our lifetime, what does this require of aid? ? (Sachs) ________________________________ • What can aid do for poor people? ? (Easterly)

30. Easterly... • “The fallacy is to assume that because I have studied and lived in a society that somehow wound up with prosperity and peace, I know enough to plan for other societies to have prosperity and peace. As my friend April once said, this is like thinking the racehorses can be put in charge of building the racetracks” (p22)

31. Riz Khan & Bill Easterly… http://www.youtube.com/watch?v=WoV-wtxyQKY

32. Do we need more aid or less aid to Africa?(end of Day 1)

33. Social policy (Day 2)

34. Social Policy & Education Firstly, what is social policy? “Social policy primarily refers to the guidelines, principles, legislation and activities that affect the living conditions conducive to human welfare” “Public policy and practice in the areas of health care, human services, criminal justice, inequality, education, and labour” “Social Policy is defined as actions that affect the well-being of members of a society through shaping the distribution of and access to goods and resources in that society”

35. Social Policy & Education • Secondly, how does education fit into it? • Most areas of social policy influence education (in some way), and are influenced by education (in some way) • Bidirectional causality  • Multiple benefits of education…

36. $ Benefits of education Ed H S Ec • Improved human rights • Empowerment of women • Reduced societal violence • Promotion of a national (as opposed to regional or ethnic) identity • Increased social cohesion • Lower fertility • Improved child health • Preventative health care • Demographic transition • Improvements in productivity • Economic growth • Reduction of inter-generational cycles of poverty • Reductions in inequality Economy Health Society Specific references: lower fertility (Glewwe, 2002), improved child health (Currie, 2009), reduced societal violence (Salmi, 2006), promotion of a national - as opposed to a regional or ethnic - identity (Glewwe, 2002), improved human rights (Salmi, 2006), increased social cohesion (Heyneman, 2003), Economic growth – see any decent Macro textbook, specifically for cognitive skills see (Hanushek & Woessman 2008)

37. Social Policy & Education • Secondly, how does education fit into it? • Education itself affects society & the individual in real and meaningful ways: • Transforms individual capabilities, values, aspirations and desires (see Sen) • Allows individuals to think, feel and act in different ways • Enables new ways of organizing and supporting social action that depend on numeracy and literacy, technologies of communication and abstract thinking skills (Lewin, 2007). Democratic participation, knowledge creation etc. • Education increases peoples ability to add value (productivity) • “Modernising societies use educational access and attainment as a primary mechanism to sort and select subsequent generations into different social and economic roles” (Lewin, 2007: 3) Distribution of income

38. Not all schools are born equal ? Pretoria Boys High School SA public schools?

39. Education and inequality? • IQ • Motivation • Social networks • Discrimination

40. Labour Market • University/FET • Type of institution (FET or University) • Quality of institution • Type of qualification(diploma, degree etc.) • Field of study (Engineering, Arts etc.) • High productivity jobs and incomes (17%) • Mainly professional, managerial & skilled jobs • Requires graduates, good quality matric or good vocational skills • Historically mainly white High quality secondaryschool Unequal society High SES background +ECD High quality primary school Minority (20%) Some motivated, lucky or talented students make the transition • Vocational training • Affirmative action • Big demand for good schools despite fees • Some scholarships/bursaries Majority (80%) Quality Type Attainment Low quality secondary school • Low productivity jobs & incomes • Often manual or low skill jobs • Limited or low quality education • Minimum wage can exceed productivity Low SES background Low quality primary school cf. Servaas van der Berg – QLFS 2011

41. Poverty - SA • Impact of social grants on poverty? • Labour market – focus for solving inequality? (SVDB).brief explanation of Human Capital Model

42. Poverty - SA • “Wage inequality, deeply rooted in South Africa’s history, plays a central role in overall income distribution, and patterns of human capital development are fundamental to the future growth path and therefore to poverty and income distribution. The paper therefore concludes that reducing inequality substantially is currently unlikely without a massive increase in the human capital of those presently poor, but that prospects in this regard are inauspicious” (Van der Berg, 2010) • Impact of social grants on poverty? • Labour market – focus for solving inequality? (SVDB)

43. Poverty SA • Has poverty in SA declined? • It depends who you ask • Survey method vs National accounts • Which poverty line? • Which distribution?

44. Poverty measurement - sidebar

45. Poverty - SA

46. Money-metric poverty – SA, the gist • Poverty has not gone up since the transition • Differing views on when and how much it came down • Depends which surveys you use, also which method (Survey-method or national accounts anchoring) • Common-sense methods are helpful • Hunger decreased

47. Inequality

48. Inequality • Calculating the Ginicoeficient • Gini = (Blue) / (Red) • Total equality? Total inequality?

49. Inequality • (Leibbrandtet al, 2010)

50. Inequality - SA