Linda Nowakowski (189)
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Comment by Linda Nowakowski
Author: Linda Nowakowski (189)
Date posted: Fri, 18 Jul 2008 01:59:59 PDT
Comment on: Development, globalization, culture and well-being (4)
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Economics
Describe four main categories of institutional requirements for markets.
- Individual ability to own property and make decisions
- Trust
- Good physical infrastructure
- Currency
Give several examples of ways in which trustworthiness can be established.
- One-on-one relationships
- Reputation
- Societal norms - expected ethical or religious behavior
- The existence of laws that can be enforced
Give several examples of the infrastructure necessary for market functioning.
Roads, phones, internet, rails, airports, postal and delivery services, media
These are 3 homework questions my students had earlier in the semester. Crucial questions even in neo-classical economics.
Looking at the African continent where the development and well-being problems are the most critical, one sees some immediate problems, even if you are not a development guru.
Starting at the bottom of those questions were things are easiest - Roads, phones, internet, rails, airports, postal and delivery services, media.
Infrastructure (per capita income: Uganda $300/year - Thailand $3192/year)
Phones
Uganda SIM cards and phone charges range from $06-.08 per minute local. (Thailand = $03-.06 per minute billed by the second and the US is at least $.10 per min) With these rates you really need to look at costs relative to income.
Electricity
When we were in Uganda, the electricity was down about 50% of the time and outages were unannounced. Makes it tough to run a business.
Water
Drink from a bottle.
Transportation
Public transportation Kampala to Gulu (332 km) $6+
Public transportation Bangkok to Ubon (629 km) $8+
Land ownership and Trust
Land in Uganda (and much of Africa) is by clan. Individuals do not own land so there is less incentive to invest in something that the clan can decide to redistribute.
Trust in institutions and individuals is low in Africa, perhaps in large part due to continued abuse of the trust by government leaders. Reading about political leadership in George Ayittey's books and pieces by William Easterly is sobering.
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