Get money, get aid.


Risky Business

Though I have much love for Professor Collier, he was deservedly taken down a peg for his suggestion that the international community encourage a coup in Cote d’Ivoire.

Of course, when an alternative is the much less sexy sounding idea that a declaration of non-transferability on contracts can force Gbagbo into a financial bind, maybe we can’t blame him. (Nope…actually we still can.)

This suggestion was recently blogged by Todd Moss at CGD.  Translation?  It’s the idea that Gbagbo needs cash (to pay the military) so no one should loan it to him.  Why?  Because he ain’t gonna pay it and whoever comes to power next will have to pay those leftover debts.  And, if anyone is in fact willing to give him money, this is pretty risky which means the reflected interest rates on that debt will be high.  Basically, this is a way of saying that the next administration shouldn’t be punished for Gbagbo’s irresponsible borrowing today, while Gbagbo will come under pressure when he doesn’t pay up to residents or foreigners.

The key issue here is that maybe this is unnecessary because no one will loan money anyways since the risk is too high and any contracts would be widely recognized as unenforceable.  Or, squeezing Gbagbo’s pocketbooks might have negative effects on the general population depending upon how long this standstill holds out.   EU assets are already frozen but Gbagbo has struck back by getting his cash via other means—seizing the central bank.

On top of this, his rival, Outtara, is urging cocoa importers to boycott Ivorian cocoa in order to cut off Gbagbo’s financial lifelines.  Though this may be damaging to Gbagbo, it will alternatively hurt the livelihoods of farmers and encourage cocoa smuggling to neighboring countries.

Just like everyone else, we’ll be waiting to see what happens next.


Terror in Tunis! The Tribulations of Terrified Tourists!

So Tunisia only makes the news when it affects British holiday plans?

Today’s headlines:

Britons tell of Tunisia Rioting (BBC)

Tunisia: Tourists tells of Chaotic Scene (Telegraph)

Shocked Hol Brits flee bloodbath (The Sun)

and my personal favourite: Holiday Britons’ war zone terror: 3,000 tourists trapped as Tunisia teeters on the brink of civil war (Daily Mail)

Nevermind the fact that an autocratic stalwart of the Maghreb (that lived for decades without any serious criticism from the global north) has fled the country. Only the Guardian and the FT has managed to keep a decent coverage of the actual ousting and the underlying tensions regarding the way forward for Tunisia… although even the Guardain can’t resist bringing Wikileaks into the mix…

(hat tip to Javad Langeroudi)

An Upside to Conflict?

The conclusion that civil wars are destructive to development shouldn’t come as much of a surprise.  But what if the opposite were true—that is, what if there was something positive that comes out of war’s devastation?  The idea certainly isn’t obvious, but it is just what Philip Verwimp recently presented in a new working paper.

The gist is this: Being directly affected by violence changes an individual’s preferences.  That is, people affected by conflict don’t think in the same way as before.  This might not seem like breaking news.  In fact, it’s pretty obvious.  But for economists, who generally accept preferences as more or less given, it’s relatively grey territory.

Using games to test for social, risk, and time behavior, the researchers evaluated villages in Burundi.  Due to the somewhat random and indiscriminate progression of violence during Burundi’s civil war, they were able to compare the responses of those who had been affected by conflict with those who had not.

What’s the take away? Those affected by conflict tended to be more altruistic but also more impatient and risk-seeking.

What does this imply? That exposure to violence could foster stronger social networks but also increase the likelihood for individuals to want immediate returns over longer term ones.  These ideas link up with psychological studies and some recent research by Chris Blattman and others.  It’s all very muddy, but understanding more clearly how behavior changes as a result of external trauma like conflict is an extremely important dimension in the structure of development interventions.

And what about the limitations? Ignoring more technical points, the overall positive or negative effect here is ambiguous.  There is also a distinction between behavior and preferences—here they assume that behavior changes reflect preference shifts but this isn’t always so.  But, from common sense, behavior changes are no doubt more complex than the basic experiments shown here can gauge.

It’s a good start but only a start.