Wednesday, May 18, 2011

Blattman, Banerjee and Duflo Debate

On Chris Blattman's excellent blog a debate about development sprung up last week.

The question was basically this: What is the best first step for South Sudan as an emergent country?

The two sides are as follows: social spending (Duflo and Banerjee) versus security and private sector (Blattman).

Banerjee and Duflo champion social services for the poor (on the economix blog initially), including: schools, health care, health insurance and even a direct cash transfer system.

Blattman argues, given that South Sudan has little to no operational capacity for such bureaucracies, creating a welfare state would be too much of a burden. He advocates making peace with warlords, and creating invectives for them, and the rich in general, to invest in productive fixed assets such as factories or plantations. He also pushes for an operational police force. His point is that politics is primary and security is at the heart of it: maintain peace and support private sector development. Oh, and build roads.

Banerjee and Duflo respond, that pursuing redistributive policies that target the poor is essentially building the identity of the state. Hopefully, as they suggest, a virtuous cycle would start whereby the poor support the state for putting them first and therefor hold off special interest groups (eg. warlords, elites) from capturing the product of nation (oil mostly for now).

Finally, Blattman remains skeptical. With evidence from Sierra Leone he chops down the benefits of cash transfers. From his own experience in Uganda and Liberia, his opinion of the effectiveness of redistribution programs, as far as they spur development, is jaded.

Of course, we are tempted to think that this is an atrificial trade-off, and that the state of South Sudan can pursue both courses at once. While to some extent that may be true (eg. placating warlords could fit on both agendas) I think the notion that these respective policies build the identity of the state is accurate and useful.

Will the state grow akin to an enlightened version of African socialism of 1960's? Or more like the capitalist enterprise of the 90's plus security and sensibility? Perhaps it is unfair to cast upon them such shadows. In any case, let us all hope for Lant Pritchett's work to have some impact.

In the end, I must admit, I am convinced by Banerjee and Duflo. Perhaps because because of quixotry, perhaps because of this: