Entries tagged with “GDP”.

I just witnessed a fascinating twitter exchange that beautifully summarizes the divide I am trying to bridge in my work and career.  Ricardo Fuentes-Nieva, the head of research at Oxfam GB, after seeing a post on GDP tweeted by Tim Harford (note: not written by Harford), tweeted the following:

To which Harford tweeted back:

This odd standoff between two intelligent, interesting thinkers is easily explained.  Bluntly, Harford’s point is academic, and from that perspective mostly true.  Contemporary academic thinking on development has more or less moved beyond this question.  However, to say that it “never has been” an important question ignores the history of development, where there is little question that in the 50s and 60s there was significant conflation of GDP and well-being.

But at the same time, Harford’s response is deeply naive, at least in the context of development policy and implementation.  The academic literature has little to do with the policy and practice of development (sadly).  After two years working for a donor, I can assure Tim and anyone else reading this that Ricardo’s point remains deeply relevant. There are plenty of people who are implicitly or explicitly basing policy decisions and program designs on precisely the assumption that GDP growth improves well-being. To dismiss this point is to miss the entire point of why we spend our time thinking about these issues – we can have all the arguments we want amongst ourselves, and turn up our noses at arguments that are clearly passé in our world…but if we ignore the reality of these arguments in the policy and practice world, our thinking and arguing will be of little consequence.

I suppose it is worth noting, in full disclosure, that I found the post Harford tweeted to be a remarkably facile justification for continuing to focus on GDP growth. But it is Saturday morning, and I would rather play with my kids than beat that horse…

Todd Moss at the Center for Global Development has a post about Ghana and the Millennium Challenge Corporation (MCC).  Overall, he makes some good points about the purpose of MCC compacts, and whether or not it makes sense to re-up with Ghana in 2012 for a second compact.  While Moss makes a number of good points in his post (including the fact that Ghana has a lot of capital incoming from oil, and a ready market for its debt, both of which seem to negate the need for continued grants), I was brought up short by one stunning statement:

Ghana is (suddenly) just barely “low income”.  A recent rebasing of its GDP found the country was 63% richer than everyone thought.  Ghana might still technically qualify for the MCC but the rationale for another huge compact drops pretty significantly.

Now, to be fair to Moss, he has an excellent post here on the implications of such rebasing.  Importantly, the second lesson he takes away from this sudden revaluation of Ghana’s economy is:

Boy, we really don’t know anything. Over the past thirty years Ghana has been one of the most scrutinized, measured, studied, picked-over economies in Africa. (yes, I too did my PhD on Ghana…) Yet, we were all taking as gospel a number that was off by a tremendous margin. If we are nearly two-thirds wrong on Ghana’s GDP, what hope can we possibly have in stats for Chad? Everyone knows that data is dubious, but this seems to add a whole new level of doubt.

His fourth point is closely related:

I’m still confused… but it probably doesn’t matter. The Reuters article quotes the government statistician as estimating GDP per capita at $1318 instead of $753. This doesn’t add up to the total GDP figures also given since this implies a 75% increase. If the $1318 is correct, then that either implies that the government thinks there are only 19.4 million people instead of the normal estimates of about 24 million. Or, if the total GDP number of $25.6 billion is right, then per capita GDP is really $1067 per capita. (I think I’m already violating my lesson from #2.)

I have a chapter in my book dedicated to understanding why our measurements of the economy and environment in the Global South are mostly crap, and even when the data is firm it often does not capture the dynamics we think it does.  I then spend a few chapters suggesting what to do about it (including respatializing data/data collection so that it can be organized into spatial units that have social, economic, and ecological meaning, and using basic crowdsourcing techniques to both collect data and ground truth of existing statistics).  Even better, this is rooted in a discussion of Ghana’s economy.  I give Moss credit for being willing to point out the confusing numbers, and acknowledge that they confuse him.  They should.

But Moss gets it totally wrong here:

Ghana has long aspired to be a middle-income country by 2020, and this now seems like it will happen many years early. Accra certainly feels like a middle-income city.

This statement explains how he can label Ghana “barely low-income”, even after he has called the very statistics that make such a claim possible into question: he’s focused on Accra.  Accra has very little to do with how the bulk of the Ghanaian population lives – and most of that population is very, very poor.  Ghana is not barely low income – it is still quite low income, with some pockets of extreme wealth starting to distort the national statistics.  It doesn’t matter how Accra feels – that city is home to at best 10% of the population.  Kumasi is home to between 5-8% more.  Generously including Tamale and Takoradi in the middle-income city categories (this is very generous) nets you probably 25% of the population – nobody else is living in a middle income country.  Like Moss, I did my dissertation work in Ghana.  I still work there.  The difference is that I did my work in rural villages, and still do.  $1 a day beyond subsistence is a common income in the rural areas of the Central Region, even now – and the Central Region has a lot more infrastructure than most of the Northern, Upper East and Upper West Regions.  This population remains poorly educated – failed by poor rural schools.  They cannot support a transformation of the Ghanaian economy.  Most of Ghana is still a very low income country, not ready for any sort of sustained economic growth.  The country has seen enormous success in recent years – I am stunned by what I have seen in the past 13 years – but the fruits of that success are not distributed evenly.  While the cities have boomed, the villages are nearly unchanged.  This is Ghana’s new challenge – to spread this new wealth out and foster a diverse, resilient economy.

This is not to say that an MCC compact is the right tool to foster this, or that Ghana is the best place to be putting MCC money.  However, declaring “success” too soon creates its own set of risks – let’s use some nuance when considering how a country is doing, so we can identify the real challenges to overcome and successes to build on moving forward.