Workshop in Rio on Development Impact Evaluation

On June 6-10, 2011, I participated in a World Bank seminar in Rio de Janeiro on "Development Impact Evaluation in Finance and Private Sector", where I gave a presentation on "Public Support for Entreprise Innovation Policy" based on the innovation project that the World Bank is working on together with the Polish Ministry of Economy.

The workshop itself was surprisingly productive too, not only because it was held in Rio: it presented the state-of-the art methods for evaluating impact of policies using randomization and control group framework.

The take away from the workshop is that countries do not do enough of proper impact evaluations, which are needed to establish the true effect of policy interventions as well as the direction of causality. Without the new impact evaluations methods, policy interventions are likely to be much less informed/less efficient/and even plainly harmful.

For Poland, rigorous impact evaluations, subject to the availability of data, would be desperately needed to properly assess the efficiency of hundreds of public and EU-supported spending programs, worth billions of euros a year, whose efficiency is likely to leave much to be desired (to put it mildly)

Books read in 2010

Here is a list of (most) books I read in 2010, together with the assessment of their quality ranging from "*" - don't bother to "***" - you can't miss it!

1. The Beijing Consensus: How China's Authoritarian Model Will Dominate the Twenty-First Century - Stefan Halper*
2. The War of the World by Niall Ferguson***
3. I'm a Stranger Here Myself: Notes on Returning to America After 20 Years Away by Bill Bryson***
4. Paris 1919: Six Months That Changed the World by Margaret MacMillan***
5. Mismeasuring Our Lives: Why GDP Doesn't Add Up by Joseph E. Stiglitz, Amartya Sen and Jean-Paul Fitoussi***
6. The Long Walk: The True Story of a Trek to Freedom by Slavomir Rawicz**
7. Freefall: America, Free Markets, and the Sinking of the World Economy by Joseph E. Stiglitz**
8. Wrong: Why experts* keep failing us--and how to know when not to trust them *Scientists, finance wizards, doctors, relationship gurus, celebrity CEOs, ... consultants, health officials and more by David H. Freedman***
9. Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan***
10. The Spirit Level: Why Greater Equality Makes Societies Stronger by Kate Pickett and Richard Wilkinson***
11. Prosperity without Growth: Economics for a Finite Planet by Tim Jackson **
12. The Plundered Planet: Why We Must--and How We Can--Manage Nature for Global Prosperity by Paul Collier**
13. The Big Short: Inside the Doomsday Machine by Michael Lewis***
14. Truth, Errors, and Lies: Politics and Economics in a Volatile World by Grzegorz W. Kolodko***
15. Bloodlands: Europe Between Hitler and Stalin by Timothy Snyder***
16. Ill Fares the Land by Tony Judt**
17. When Markets Collide: Investment Strategies for the Age of Global Economic Change by Mohamed A. El-Erian**
18. By Force of Thought: Irregular Memoirs of an Intellectual Journey by János Kornai**
19. W Pogoni za Straconym Czasem Wzrost Gospodarczy w Europie Środkowo-Wschodniej by Orłowski Witold M.***
20. Stulecie Chaosu. Alternatywne Dzieje XX Wieku by Orłowski Witold M.**
21. Czas Wrzeszczących Staruszków by Ziemkiewicz Rafał A.**
22. Świat na Wyciągnięcie Myśli by Kołodko Grzegorz***
23. Globalizacja, Kryzys – i co Dalej? by Kołodko Grzegorz (eds)***
24. 20 Lat Transformacji. Osiągnięcia Problemy Perspektywy by Kołodko Grzegorz and Jacek Tomkiewicz (eds)***
25. On Economic Transformation in East-Central Europe: a Historical and International Perspective by Andres Solimano*
26. Cień Wiatru by Zafon Carlos Luis**
27. Koniec świata menadżerów? By Koźmiński Andrzej K.***
28. Trzecia Strona Medalu By Baliszewski Dariusz*
29. Transformacja Nieoczywista. Polska jako kraj imigracji by Agaty Gorny and others*
30. W Pogoni za Europą by Tazbir Janusz***
31. Protokóły Mędrców Syjonu by Tazbir Janusz*

Panel in Wroclaw on "Social Europe and the Economic Crisis", May 14

Last Saturday, May 14, I spoke on a panel during a conference on "Social Europe and the Economic Crisis" organized by the Ferdinand Lasalle Center of Social Thought in Wroclaw. More info here

FX interventions can work

IMF admits that FX intervention can be effective (a significant change in Fund's views - heretofore FX interventions were anathema), as argued in an interesting paper and an accompanying article on the efficiency of FX interventions in Latin America published on the IMF's blog.

The article's conclusions are that while "results do not detect an immediate impact of interventions on the rate of appreciation, but do find statistically significant effects on the pace of appreciation: on average, increasing interventions by 0.1 percent of GDP will produce—in one week and in comparison to a country that does not intervene—a 0.3 percent slowdown in the pace of appreciation."

In addition, authors find that FX "effectiveness is not dependent on the use of rules or discretionary frameworks, or on the degree of transparency. However, greater financial integration may significantly reduce the effectiveness of interventions. In fact, intervention is more effective in Asia than in Latin America, which is consistent with the differences in financial integration across the two regions" and that "interventions are most effective when there are signs of the currency being overvalued compared to its recent history. This is especially noticeable in Latin America and highlights the importance of intervening “when the time is right,” and never “too early”."

Something for our policymakers to ponder?

IMF sees bright economic spots in New Europe

The IMF has just published its Regional Economic Outlook for Europe. It emphasizes the resilience of New Europe (EU-10) and its strengthening economic recovery. It summarizes the message in a text on the blog.

I could not agree more - this is what I have been saying all along (see my recent CEPA paper), ie that the global crisis has hardly weakened the sound long-term growth fundamentals of New Europe and that it will continue fast convergence with Western Europe, heralding the arrival of New Europe's Golden Age.

On happiness and GDP

Samuel Brittan, a columnist at the Financial Times, has an interesting take on the issue of happiness and the role of economic growth. Worth reading. Conclusions below:

What then is the alternative? It might come as an anti-climax; but I still think it is the choice utilitarian one of maximising the range of opportunities open to each individual. And I see the task of policy largely in negative terms; to remove obstacles to the exercise of individual choice rather than lots of fussy interventions on our behalf. But I must be frank and say that even such negative policies involve in my view a degree of income transfer towards the poor and less fortunate, which not everyone in this audience might welcome.

For about three quarters of the world's population a measure of success will still be real GDP per head, corrected for the worst absurdities, and supplemented by a few simple social indicators. But for the more affluent populations of North America and western Europe, economic growth in this sense is no longer a sensible objective of policy. It is much better that the growth rate should emerge from peoples own choices. So it would not be a disaster if after the recent traumatic events Americans adopted a quieter lifestyle with more emphasis on leisure and reflection, and working to live rather than living to work.

We should not throw out the baby with the bath water. GDP statistics will still remain useful for economic management and for looking at the way the national product is divided between different activities and different groups. Information on these matters should not take us along the road to serfdom. Indeed I have heard American friends observe that the social scientists who have been least tempted by collectivism are those who have the most detailed knowledge of the relevant facts and figures.

My conclusion is that the pursuit of happiness is and should remain a personal matter; and the people most likely to achieve this are not those who keep on asking themselves whether they are happy or unhappy, but who find worthwhile purposes and activities and concentrate on them. By all means make use of attitude surveys and similar devices; but let us do so first and foremost to satisfy our curiosity and not imagine that we have found the magic lodestar which has eluded thinkers of the past.

"Europe and the World in 2030" workshop in Rome

This is to note that I presented a paper on "The Inexorable Rise of Chimerica: The Long Term Scenario" during a workshop in Rome on May 3-5, 2011, organized within an EU-funded multi-institutional AUGUR project on "Europe and the World in 2030".