Happy 2013!

Next week I’ll experience my third New Year’s Day here in Hyderabad.  It’s amazing how quickly time passes.  I’ve become such a confirmed Hyderabadi that I can even contemplate the possibility of staying up with friends celebrating New Year’s Eve and making it until breakfast is served at 4 am.  (I’m not sure that I’ll actually achieve it, but at least I can contemplate it!)

Happy New Year!                             

As we prepare to usher in 2013, it seems as though the world is drowning in bad news.  Horrific crimes in the U.S. and in India create a pervasive sense of insecurity and highlight the fact that man is capable of unspeakable evil as well as of good.  Discussion of the U.S. economy is focused on the threats of debt and rising inequality, while in India growth has moderated and power woes have intensified.  Turmoil continues to afflict many parts of the world, with the Central African Republic presenting the latest crisis.  There are plenty of reasons to engage in negative thinking.

In this context, the resolution I am making for the New Year is to think and act positively.  By that, I don’t mean ignoring the negative, but refusing to let it immobilize me.  As an individual, it is hard to feel powerful in the face of bad news, but by acting positively, one fosters hope and offers encouragement.  And concerted positive action makes change possible.  Indians and Americans both share this experience; the civil rights movement in the U.S. and the independence movement in India were two of the greatest examples of peaceful citizen activism of the 20^th century. 

What is true about momentous social events is also true on a personal level.  If things go wrong in the office, I remind myself that I love my job, and the minor obstacles that arise don’t get me down.  I’m not perfect, and there are times I let negative emotions affect me, causing me to behave in ways I’m not proud of and affecting both my own happiness and the enjoyment of others.  For example, it happens sometimes when I make a couple of really bad shots on the golf course.  If I get mad at myself and think negatively, I start playing worse, I become much worse company for my playing partners, and I stop enjoying myself.  If instead I take the bad shots in my stride, I generally recover my usual standard of play and I enjoy the game. 

It’s a long way to go from my golf game to the mobilization of citizens to fight violence against women, but in both cases, despair is not helpful.  Envisioning a more positive future provides the energy to make it happen.  And you never know how big a difference your individual decision might make.  A recent editorial column by Nicholas Kristof described how a casual thought of Ted Turner’s transformed millions of lives.  Read it and it’ll make you smile—a great way to start 2013. 

Happy New Year!

What does Developmental Economics mean to India?

One of the things I find exciting about being in India is the vitality of the Indian economy.  It’s great to live and work in a country where people are optimistic about the future—and have good reason to be.  But although India is a middle income country experiencing rapid growth, there is no question that many Indians are still poor.  Policy-makers in India are very aware that they can’t just wait for growth to eliminate poverty all by itself—they know they need to take steps to ensure that growth is inclusive. One of the places policy-makers look for advice on how to design anti-poverty programs is to the field of development economics. Over the last few decades, though, the policy prescriptions of mainstream development economists have changed several times, reducing the credibility of its practitioners.

Although when I trained as an economist, I never studied development economics, my experience as a diplomat has been entirely in countries that were in lower or middle income categories: Mexico and Gabon are classified as upper middle-income, the Republic of Congo as lower middle income, and Guyana, the Democratic Republic of Congo (DRC), Zambia and Zimbabwe as low income.  These countries are all sometimes referred to as “the developing world.”  (Of course, calling them “developing” is not accurate in every case—the economies of the DRC and Zimbabwe have generally moved in a negative direction over the last twenty years.)  In several countries, I’ve worked closely with colleagues from the U.S. Agency for International Development as they sought to use funds provided by U.S. taxpayers to fight poverty and bring about development.  While I might not have the classroom education, I now have both a strong interest and a great deal of direct experience of development, and underdevelopment, as both conditions and as processes. 

In the last decade, development economists have engaged in a vigorous debate about whether foreign aid is helpful for the elimination of poverty.  Jeffrey Sachs, Bill Easterly, and Paul Collier are the most prominent scholars who have debated each other in books and newspaper columns.  Among the people I’ve discussed this subject with, it seems that most gravitate to one school of thought or another based on their existing inclinations, or recent experience.  Pessimists agree with Easterly (who says large scale development programs funded by donors are generally futile), as do those whose recent experience has been with intractable problems.  Optimists agree with Sachs (who says we can eliminate poverty if we dedicate more resources to foreign aid), as do development workers.  Policy-makers have problems with both, since they don’t have the resources Sachs calls for, but they have a mandate to eliminate poverty, which Easterly says can’t be done by planning.  I’m also in between in many ways: it’s hard to leave Zimbabwe without becoming a pessimist, but I’m an optimist by inclination and India is a very hopeful place.

What works and what doesn’t work in the battle against poverty is something I’ve heard people talk about a lot in Hyderabad.  The pros and cons of micro-finance have been front page news in Andhra Pradesh.  (I discussed visits to women’s self help groups in an earlier blog.)  I’ve also heard discussions of whether NREGA hurts rural private sector employment by driving up wages, or acts as a safety net for the poor.  These are real questions without easy answers. 

I’ve just started reading a book that looks at these questions from a different perspective, and I find it quite exciting.  Abhijit Banerjee and Esther Duflo have written a book called “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” about their research in development economics and the lessons they’ve learned.  They approach development hypotheses scientifically, with randomized controlled trials, instead of relying on preconceptions. This is radical in a way; development professionals don’t want to withhold from a control group an intervention, like vaccinating children, that they believe saves lives.  But Banerjee and Duflo point out that even providing free vaccination doesn’t necessarily result in high rates of inoculation coverage.  That’s a strong argument for trying different approaches and comparing the results.  I haven’t gotten very far into the book yet, but I’m looking forward to learning more about what works.  I look forward to being able to be pragmatic and optimistic at the same time.  

Indian Americans - Ambassadors of Hope

Consul General Katherine Dhanani distributing loans to beneficiaries of a local bank 

Since I arrived in Hyderabad, I’ve been amazed by the number of Indian-Americans I’ve met and by the tremendous contributions they’re making.  They tend to describe their own odyssey humbly, suggesting that now that India is transformed, it’s natural that they would bring back and invest in their birthplace the rewards they accumulated during decades in the U.S.  But that greatly understates their accomplishments.  It’s not easy to make a living in the U.S., and even harder in one generation to save a substantial amount.  And the investments they are making in India are certainly not passive, secure or easy.  Many of them have created companies from scratch that now employ thousands.  The same ingenuity and entrepreneurial intelligence that helped them succeed in the United States is at work here in India.  I greatly respect their undertakings.

During my visit to Vijayawada I got an up-close look at two undertakings where Indian-Americans are investing with a philanthropic side, supporting the communities from which they came—and which may end up proving to be good investments as well.  One involved a shareholder’s insistence that the local bank he chaired should make microfinance loans at low interest rates.  I blogged about the results of that for the borrowers last week; it has also turned out to be a good, though modest, business for the bank. The second is the NRI Medical College and Hospital. Some thirty Indian-American doctors from the Vijayawada area each contributed a million U.S. dollars to establish this new institution.  It is now providing top notch medical education for students and low cost state-of-the-art medical care for villages outside Guntur. 

I’m proud that my fellow Americans are remembering their roots and changing the lives of so many Indians.  I’d like to think their actions reflect what they learned in the United States but I know that their Indian roots have influenced them just as much.  Whatever has influenced these philanthropic individuals, both India and the United States have benefitted.