November 3, 2011 § 1 Comment
November 3, 2011 § 2 Comments
This video is a basic introduction to microfinance.
How would Dambisa Moyo and Amartya Sen understand microfinance? Explain in two paragraphs, using each author’s argument and conceptual vocabulary, the role microfinance can play in developing countries.
November 2, 2011 § Leave a comment
Quite unsure if I understood the material correctly but to my understanding Amartya Sen highlighs various areas such as development economics (quality of life, basic needs), the concept of freedom and “unfreedoms”, human capabilities and human development in terms of gaining and expanding the freedom we have reason to value. Sen also stresses well-being on overcoming deprivation and other forms of freedom, the opportunity of collective action – collaborating with those who share common values, interests, goals to promote freedom of other sorts. In short, Sen points out how development should focus on freedom and how social institutions plays a role in contributing to social values ( how development, institutions, values, freedom work together). He also shares a distinction in freedom (intrinsic importance and instrumental effectiveness). Here’s a clip I found on Sen explaining his concept on capabilities:
November 1, 2011 § 2 Comments
In Moyo’s reading, she uses the fictitious country known as the Republic of Dongo to show the reality of many African countries today facing issues from HIV-AIDS epidemic to being a country freed of the European Colonial world then transformed into a socialist economy that underwent privatization in the 1970s, which resulted in acquiring a lot of debt. Since then, these African countries have been acquiring millions of dollars of aid every year but with aids comes the disenfranchised Africans, poverty, and lack of job creation. However, borrowing countries have been receiving more access to bond investors because of the credit rating agencies such as Standard & Poor’s, Moody’s Investors Service and Fitch Ratings giving high positive ratings in regards to the borrower’s ability and willingness to repay a debt. As we learned last week in Inside Job, these investments are based on derivatives generated. The agencies were found to be giving triple A ratings such as with Enron and then within a week, the company filed for bankruptcy. Regardless, the agencies still receive profit and the raters continue to receive large bonus checks while country such as “Dongo” suffer.
According to Moyo, these countries will never be able to thrive or develop as long as their dependent on “tied aid”. For these poor countries that are looking for the cheapest aid option end up with hidden costs from the rules and agreements implemented when borrowing the money. Throughout Dead Aid, Moyo argues that “aid has not delivered any meaningful or substantial economic performance” therefore Africa should seek alternatives to finance its development. Moyo proves her point by explaining that there is a decline in aid flows because of donor countries are now facing their on financial pressures especially the strains that the western economies face from the trillion dollars of debt that Bush’s war on terror in Afghanistan, Pakistan, and Iraq. Moyo have made a road map for the countries to break their “addiction” of aid and instead develop a growing social capital and economy. The Dead Aid proposal supports a gradual reduction in systematic aid over a period of ten years. During an appearance on Norway’s Grosvold show Moyo discusses Dead Aid and the strategies to make Africa become a more equal partner on the global stage. While debating with a Norwegian government official, Moyo mentioned that aid is providing negative incentives and fueling corruption (and other bad behavior) to take place within the African government has led to political instability, Instead provide a microfinance method in which the money will go to local entrepreneurs. She concludes that Africa will not strengthen without independence and being self-reliant, therefore the fundamental aspiration is that the African countries not be dependent on aid. Botswana and South Africa have already proved to be thriving countries its time for other countries to as well.
Video- Dambisa Moyo discusses Dead Aid with an MP
October 31, 2011 § Leave a comment
I thought this was an interesting and relevant video, so I thought I’d share it with the class. In it, Richard Wilkinson presents data detailing how income inequality in industrialized countries affect their societies.
October 27, 2011 § Leave a comment
In this article, James M. Cypher begins by describing that in 1983, the revolution of Chile’s economy to embrace the free market with greater abandon was a modern day miracle. However what Cypher fails to mention is the tremendous upheaval that occurred in the period of time between the coup d’etat, staged by General Augusto Pinochet, and the dramatic changes that occurred within the economy, largely due to influence of Milton Friedman, who preached that Chile needed to embrace the free market, instead of slowly trying to mold Chile into a free market economy, Friedman proposed a sort of neoliberal shock therapy. The result was a recession, that was intentionally induced, before a huge boom in Chile’s economy, that has been referred to as “Chile’s Economic Miracle.”
However, As is mentioned in both the article and the reading, the miracle was short-lived. The shock therapy had built in limits, and the article by James Cypher goes into great detail about the stagnation that occurred within the Chilean economy, after so many years of large amounts of growth. He also goes on to critique the attitude of economists within the country, who instead of attempting to create new ways for the economy to grow and evolve, still cling to the free market/ free trade style of running the economy. An attitude leftover after so many years of living in fear of a government that ruled through fear.
October 24, 2011 § 2 Comments
This video is of Johan Norberg arguing in defense of Milton Friedman against Naomi Klein’s Shock Doctrine. Norberg is a Swedish historian, and the author of In Defense of Global Capitalism. Klein asserts that free-market economists, most notably Friedman, advocate using disasters (such as natural disaster, war, and coup d’etat) to advance their free-market fundamentalissm, as a form of “shock therapy.” Norberg attempts to refute this interpretation of Friedman in this interview.