Category Archives: Middle East

Innovation and Growth in Africa

During the MIT-Sloan School Africa Business Conference, held the past 1st of April, Mr. Okonjio-Iweala (Managing Director, World Bank) gave a  speech on innovation, in his opinion the main ingredient to spur growth in Africa in the decades to come. Putting voluntarily apart the issue of endogeneity between growth and innovation, the speaker pointed 4 strategic sectors could make the African economy take off once and for all:

  1. Agriculture
  2. Pharmaceutical sector
  3. ICT sector
  4. Arts

‘With these four sectors I have tried to show you what opportunities exist in Africa for growth through product, process, organizational or marketing innovations. And I am sure you would agree with me that there are enormous. But Africa would only be able to benefit fully from these opportunities if the governments create the right incentive framework for innovation.  Africans need the freedom and space to think and innovate. For this to happen the following things must be in place; macro-economic stability, affordable and easy access to capital, openness to trade, the appropriate competition policy laws, a solid intellectual property rights and patent laws regime and an overall good governance regime’ (Okonjio-Iweala).

In other words, institutions and governments have to support the process. Easterly points out aid ineffectiveness and debt insolvency can be explained, ceteris paribus, by instable political elites who discount heavily the future, i.e. the high probability of being suddenly divested of power make them to think about their interests hic et nunc (here and now). Could we transpose the same argumentation for innovation? Which effect will have the Meddle East’s revolutions on the discount rates of the elites to come?

It is for posterity and smart analysts to judge.

“Democracy really is the worst system there is, except for all the others” (Paul Krugman 2011)

Rodrik on Egypt, Tunisia and China

Suggested by my friend and blogger Edgar Salgado, an article by Dani Rodrik, The Poverty of Dictatorship, on the events in Tunisia and Egypt. How do they relate with the situation in China? I believe that a direct parallelism is hard to do – Rodrik states clearly that – but social scientists cannot hold to play forecasting the future…By the way, it seems to me China is more dynamic than its reputation suggests. I have studied in UK and met Chinese students that are coming back to their much loved country, to contribute to change it, just like I would like to change in better my Italy. I warmly welcome comments by Chinese fellows, please tell me I’m getting it wrong…


A slide-show on protesters in Egypt (by Foreign Policy)

Have a look here…

Middle East crisis…a signal for China?

What are the popular revolutions in the Arab World teaching the elites of the world? I would say, that people cannot live forever in chains, without seeing hope for the future (a guts answer). Also, that in economic crisis times autocratic regimes are under high threat of rebellion, and that the opportunity cost of the revolt lowers significantly during downturns (a kind of economic answer). Scholars did not forecast the overturning current events (Mariz Tadros on IDS’ blog). A key-question now is “Who’s next?”. In China the Arab crisis did not find a lot of space on the media, not surprisingly (The Economist). Moreover, China is growing and people’s living standards are improving impressively. However, I believe that Chinese political elites are observing at the Arab revolutions with an interested eye…how should they react when China entered in a descending economic phase – with richer and more educated citizens?

What’s going on in the Middle East?…someone tells me please!

Many observers define events in Tunisia and Egypt as democratic revolutions and positive judgments are lavished on the happenings. However, how long and bloody could be a successful transition to democracy. In Hold the Applause, an article by David Mack on Foreign Policy, the worst scenario is hypothesized: shortages of food in the short run, the touristic sector heavily hit, the reduction in private sector’s investments, etc.: ‘Removing an unpopular dictator, however entrenched, is far easier than putting a stable political structure in place afterward. The success of this second step stands between passionate embrace of popular overthrow of an authoritarian ruler and prolonged chaos followed by embrace of a new tyranny or anarchy.’ (Mack 2011). William Easterly (Columbia University), in his “The White Man’s Burden”, uses Acemoglu’s (MIT) & Robinson’s (Harvard) analysis of a typical democratic process in “Economic Origins of Dictatorship and Democracy”. In their portrait, democracy is the result of a confrontation between a rich minority and a poor majority: ‘The rich prefer not to have democracy because of the threat of redistribution. However, an even worse threat to elite is total revolution by the poor, which would destroy the elite altogether. The poor can threaten revolution in order to try to extract democratic concessions from the rich. Often there is only a temporary revolutionary window of opportunity, such as during a war or a major economic crisis‘ (Easterly 2006). The game rules are crystal clear and – considering the current events in the Middle East – so extraordinarily true! Nobody knows what’s next. We just know partially what was…after quoting all those big guys, I feel that a combination of greed and grievance factors (in my opinion woven and inseparable one from each other) move human actions, together with a generous dose of foolishness.

Please debate, see you next post!

Dependency on oil: will China and Israel really quit?

An article by the Economist: full article

The topic is very charming. However, a major question remains unanswered: How to produce all that amount of electricity?