Units of measurment in development and economics

I’m new to blogging and had a lot to say today. Is one allowed to post twice in the same day? I don’t know...

The "great recession" (I only recently heard that that's what they're calling it) showed us that economic powers of the "north" are not unapproachable, while the top-dogs are still struggling to re-attain their pre-crisis GDP levels, many of the "poor countries" are thriving with levels well higher than their pre-crisis situation.

You could have gotten that from the Economist article I referenced in my last post, in much better wording. What they don't mention in this article, is the differentiation of which countries weather the crisis amongst the "poor". While many LDCs (less developed countries) did come out okay and are now growing relative to the richer players, many got hit hard and are continuing to struggle.

While overall, some did better than others, the more important change that occurred because of the recession is the changes within countries. Rather than saying poor COUNTRIES did or did not do well relative to rich countries...its more useful to say the POOR did or did not do well relative to the rich. When you take out the "country" dimension, we see that the poor did take a hit, everywhere.

I was recently discussing aid in a class (Chatham house rules here) when it was noted how Bill Easterly has effectively argued against the concept that aid facilitates growth, noting that statistically speaking, the effects of aid have been negligible. This is problematic, especially given the billions of dollars that have been funnelled into developing countries for this very reason.

However, instead of thinking of development as growth, it might be more helpful for us to think of development as things we need to do for people. That is, rather than looking at the whole picture, we need to think of development as providing a well in one village, or providing a tractor to a farmer, or giving nutritional supplements to infants to prevent stunting. Looking at the unit of the person or community for our unit of measurement is perhaps where we need to go.

Okay…recession…right. My point is that this principle doesn’t just apply to aid and development but needs to apply to our understanding of economics in general. The recession caused some countries to grow (China grew nearly 11 percent in 2008 according to the CIA world factbook) but this says nothing to the poorest people, especially in rural communities who faced astronomical food prices through 2008. The point is, we need to start judging our economic successes in different ways. Not just for the LDCs but even for ourselves, stability in the US financial sector is useless if the millions who lost their jobs, lost their retirement funds or lost their homes aren’t provided for. It requires us to reconsider our assumptions of what is beneficial and why.