City of Golden Opportunities and Broken Dreams: How Dubai’s Midas Touch Is Transforming the World

The Burj Al-Khalifah soars above almost a kilometer into the air, towering over the skyline of Dubai. The skyscraper is a testament to soaring ambitions of Sheikh Mohammed bin Rashid Al Maktoum and the elite that surrounds him. A century ago Dubai’s primary industry was pearl diving, and few outside of the region had heard of it. Today, unlike it’s neighbors that are dependent on oil wealth, has a flourishing economy and the center of global networks of trade and finance. In today’s podcast episode, will be charting the spectacular rise of Dubai and examine the factors that have led to its success. I will be focusing on the rise of Dubai as a center of trade and logistics, the role of immigration in providing the manpower for development, and the country’s ability to import institutions that generate wealth for the city’s elites.

In 1853 the Sheikh of Dubai signed a treaty with the British Empire promising to stamp out piracy in return for cash payments and a promise of autonomy. Dubai became a coaling station for British steamships, and became an entropot where merchants from throughout the region traded pearls, spices and gold. After the independence of India, the government of India banned the import of gold to conserve on foreign exchange. A massive smuggling trade almost immediately. By 1970, Dubai was importing 370 tons of gold a year, one fifth of the global total and Dubai’s first international airport was built to service this trade.

Massive infrastructure projects gained an economic logic of their own. Nearly 16,000 Ton Equivalent Units of cargo pass through the Jebal Ali port every year, making it the busiest port in the middle east and the sixth busiest in the world. 90 million passengers pass through Dubai International Airport every year making it the third busiest in the world. The United Arab Emirates earned $27 billion in direct export revenues from transportation exports. More importantly, Dubai has leveraged it’s position as a logistics hub through the creation of Free Zones. Free Zones are areas in which foreigners are allowed to start companies without local partners, repatriate 100% of profits, avoidance of tariffs and customs duties, and bureaucracy and infrastructure specifically built to suit the needs of business. The Jebel Ali Free Zone generates over $80 billion of trade a year, and is the home to 7,300 international companies.

Dubai’s booming economy could not function without the city’s massive immigrant labor force. In 2005, 90% of Dubai’s population was non-Emirati and the percent has likely only increased since then. Immigrants make up 96% of Dubai’s labor force, and over 99% of the private sector labor force. The overwhelming majority of migrants in Dubai are low skilled manual workers from South and South East Asia. One quarter of Dubai’s population comes from Dubai, especially from the state of Kerala, and there are twice as many Indians in Dubai than Emiratis. The overwhelming majority of these people work as housemaids, construction workers, and retail staff. It is the opportunity to earn high wages that attracts millions of workers to Dubai. A housemaid in Dubai earns around $450 a month, and construction workers can earn slightly more than that. While this is abysmal pay by developed world standards, it is far higher than what can be earned in India or Pakistan. Migrants to the United Arab Emirates on average save 70% of their income in order to send approximately $24 billion to their home countries every year.

However, labor conditions for migrant workers can be harrowing. Hundreds of migrant construction workers die every year thanks to lax safety standards, domestic servants regularly suffer sexual abuse, and despite the fact it is illegal, many workers have their passports confiscated. These abuses must be understood in the context of Dubai’s Kafala employment system. Migrants must gain sponsorship from a Emirati employer, and can only work for this employer. An employee cannot leave an abusive employer, and employers have the power to place major roadblocks for those employees trying to leave Dubai. The result is a system where potential for abuse is rife.

Finally, Dubai has succeeded by replicating the institutions of wealth generations. Dubai has emerged as a hub of business for entrepreneurs from nearby countries where doing business is hard. Dubai’s predictable laws, and pro-business regulation offers a stark comparison to the chaos of Somalia or the stifling bureaucracy of pre-reform India. The Somali airlines, and largest telecommunications company are operated from Dubai. Similarly, Dubai currently has 10 billionaires born in India, as many of India’s entrepreneurs find Dubai a more congenial place to do business. Similarly, as I mentioned earlier, Dubai has created Free Zones with rules favorable to international business. One example that epitomizes this the Dubai International Finance Centre. The DIFC does not operate on Dubai law, but instead on Common Law based upon Anglo-American precedent. The judges in the DIFC come from the United States, and in principle function identically to judges in New York City or London. To be clear, Dubai is not a democracy or anywhere close. However, the rulers of Dubai have found that institutions that constrain their power under specific circumstance strengthen their overall power.

Dubai has grown from a minor trade depot to one of the world’s most important centers of trade and finance thanks to it’s investment in trade infrastructure, it’s openness to immigration, and it;s ability to adopt institutions that sustain growth. Dubai today is a nation of contrasts and paradoxes. Despite being located in the most oil rich region in the world, Dubai relies upon trade and finance for it’s economic success. It has created an environment where modern business can thrive despite a political system that has changed little over the last two centuries. It is a country where some of the wealthiest people in the world in man made islands alongside migrant workers living and working under the harshest conditions. Thanks to the economic success of Dubai, these contradiction are of immense importance to the world.

Selected Sources
The Geography of Present-Day Smuggling in the Western Indian Ocean: The Case of the Dhow, ESMOND BRADLEY MARTIN
Merchants’ role in a changing society: the case of Dubai, 1900–90, Fatma Al-Sayegh
Demography, Migration, and the Labour Market in the UAE , Françoise De Bel-Air

900 Million Voters, 100 Million Polling Stations, 2,293 Political Parties, 8,000 Candidates and 39 Days of Organized Chaos

On April 11th 2019, India commenced general elections that will determine the composition of India’s parliament and it’s Prime Minister. The elections are a mammoth undertaking that will be carried out over a period of one month. India is the largest democracy in the world, with over 900 million eligible voters, 100 million polling stations, 2,293 political parties, over 8,000 candidates spread out over a period of 39 days. The current incumbent Prime Minister, Narendra Modi, is a member of the BJP (Bharatiya Janata Party) , a conservative political party with ties to Hindu nationalist groups. The leading opposition candidate is Rahul Gandhi, whose father, grandmother and great-grandfather all served as Prime Ministers of India. He represents the Indian National Congress has ruled India for 49 of its 82 post-independence history. Moreover, there are a host of smaller regional parties that will win a substantial share of the vote.

In recent months, issues of national security have come to the forefront in the aftermath of the Pulwarna attack, where a militant associated with Pakistan based terrorist organization Jaish-e-Muhammad killed 40 Indian reserve police personnel. Nevertheless, the 2019 election will likely be determined on bread and butter issues. A recent survey of Indian voters found 28%, more than any other issue, considered jobs growth to be the most important issue to them. Although the Indian economy has consistently grown at over 7% a year under the Modi administration, it is difficult to say what extent the Modi administration deserves credit as India saw similar rates of growth under previous administrations. Although the current government has implemented major reforms such as the GST, a unified tax that should dramatically simplify and increase tax collection. However, other policies seem to have misfired .I would argue that Modi’s economic policies have been in line with an Indian policy consensus of cautious liberalization of the economy and modernizing the welfare status, rather than a major break with previous administration policy.

Most polls suggest that the BJP and it’s allies will win the slimmest of majorities in the Lok Sabha. Even if the NDA fails to win a majority, it is likely the BJP will be the largest party in parliament and Modi the most likely Prime Ministerial candidate. However, Indian polls have previously been off by wide margins in the past, and it is impossible to say who will win these elections. The general elections just starting today will have a massive impact on not only the 1.3 billion people that live in India. Moreover, India’s rapid economic growth and geopolitical rise that the results will matter for the rest of the world as well.

Apocalypse Later: Can the Developing World Adapt to Global Climate Change?

In 2017 global carbon emissions topped 38 million tons of carbon, a 2% increase from the year previous and. 2017’s carbon emissions will cause $7.2 trillion of harm of harm to the global economy and it seems more and more unlikely that the political will can be mustered to substantially reduce carbon emissions. While carbon emissions disproportionately originate in wealthy nations, it is the developing world that will bear the most severe consequences. In today’s podcast episode, I will be discussing how some countries in the developing world are adapting to climate change. I will discuss the Cape Town water crisis, the impact of climate change on agriculture in Russia, and Bangladesh’s management of cyclones and floods.

While most climate change models predict increased levels of precipitation, most climate change models that by 2050, levels of rainfall in South Africa will decrease by around 25%. Capetown suffered from severe drought between 2015 and 2017, and by mid-2018 people became afraid that Cape Town would reach day zero, the point at which the municipal government would be forced to close the taps and force people to queue for water at public water stations. The city government was forced to resort to drastic measures, including banning the watering of lawns, creating a water use goal of only 13 gallons (one 90 second shower, and four toilet flushes) of water per day and automatically shut off water to households that used more than 93 gallons and a public relations campaign to not flush toilets after urination. The government was able to reduce water consumption by 50%, and solid rainfalls in 2018 ended the crisis. A wide swathe of the world is expected to see substantial drying over the next 50 years, including the Mediterranean region, Central America and the American West, and western Australia, and cities in these regions will have to adapt “300 year” droughts happening more and more often.

While climate change will make South Africa more inhospitable to humanity, the opposite is true in Russia. Climate change is expected to increase temperatures by around 5 degrees Celsius (9 degrees Fahrenheit) over the next 50 years and levels of precipitation are expected to increase by more than 25%. While higher temperatures and precipitation will allow the extension of agriculture northwards and allow for a longer growing season, it is unclear what the impact of climate change will be in the log run. Agriculture in Russia is concentrated in southern Russia, where highly fertile Chernozerm black soils allow for some of the most productive soils in the world and most climate change models project reduced rainfall and increased drought in this region. Russia in 2017 produced 86 million tons of wheat, making it the 3rd largest wheat-producer in the world. Russian wheat production increased by 76% over the last ten years, and in 2018 Russia became the largest wheat exporter in the world. Global warming will dramatically reduce agricultural yields in much of the world. The only way to avoid catastrophic hunger is for countries such as Russia where climate change will improve agricultural potential to increase agricultural production.

While climate change has created opportunities in some countries, it poses an existential risk to others. Bangladesh has always suffered severe weather events. Cyclone Bhola in 1970 killed 500,000 people, and Bangladesh has suffered from seven of the ten deadliest cyclones in world history. Bangladesh suffers from deadly floods every year with one fifth of the country inundated every year. Flooding is exacerbated by increased levels of rainfall and rising sea levels from global warming. Bangladesh has been able to dramatically reduce cyclone mortality thanks to the Cyclone Preparedness Program. The CPP is a volunteer force of 55,000 people that organizes educational campaigns and maintains shelters before cyclones, coordinates evacuation programs during cyclones, and provides first aid and rescue services after cyclones. Between 1991 and 2009 the government doubled the number of public cyclone shelters to 3,976. Bangladesh has suffered three Category 5 cyclones since 1970. Cyclone Bhola in 1970 killed 500,000 people and Cyclone Gorky in 1991 killed 140,000 people, while Cyclone Sidr in 2007 killed only 3,000 people. Bangladesh has been similarly proactive in dealing with floods. The government distributes millions of Water Purification Tablets, and Oral Rehydration Solution before floods. The government has subsidized the construction of tubewells to ensure access to clean water during floods, so as to minimize levels of cholera and other water-borne illnesses. Thanks to these pro-active actions, Bangladesh did not have a single flood induced diarrhea death despite massive flooding in 2017.

In today’s podcast episode, I have discussed how Capetown, Russia and South Africa have adapted to climate change. I often hear climate change described as an apocalypse that will destroy our ability to survive. The experience of the three countries in this podcast suggests it is possible to adapt to climate change. However, not all places have institutions as adaptive as those of South Africa and Bangladesh, and there are limits to human ingenuity. Unless political leaders in high carbon emitting countries figure out how to curb emissions, we may discover these limits with catastrophic consequences.

Selected Sources:
The Social Cost of Carbon Revisited, Robert S. Pyndick
Climate change, food stress, and security in Russia , Nikolai Dronin , Andrei Kirilenko
Northern Eurasian Heat Waves and Droughts, Sigfried Schubert, Hailan Wang, Randal D. Koster, Max J. Suarez, Pavel Ya Groisman
Robust negative impacts of climate change on African Agriculture, Wolfram Schlenker, David Lobell
Why relatively fewer people died? The case of Bangladesh’s Cyclone Sidr , Bimal Kanti Paul

Flood, Disease, and Famine: How Cyclone Has Devastated Mozambique, Zimbabwe and Malawi

On March 15th, 2019 Cyclone Idai made landfall in Beira . The cyclone had formed earlier in March, impacting large swathes of Northern Mozambique before gathering strength and circling back to devestate Beira. Beira, a city with a population of over 500,000 people, suffered winds of 120 miles (195 km) per hour, and a storm surge 14 feet high. 90% of Beira was destroyed by the cyclone, all roads leading to Beira have become impassible, and all 17 of cities hospitals severely damaged. An estimated 15,000 people are still stranded and in need of rescue. Many people have lost access to clean water, and cases of cholera have broken out. Flooding has created large pools of stagnant water that are excellent ground for malaria bearing mosquitos. It is likely that many babies and small children will lose their lives due to diarrhea due to shortages of Oral Rehydration Solution. Over 600 casualties have been identified in Mozambique, Zimbabwe and Malawi, but given that hundreds of corpses were visible alongside road sides, it is likely the true death toll is much higher.

The cyclone brought massive rains alongside the initial wave of destruction. Beira received more than 8 inches of rainfall, and the worst impacted regions have received 24 inches of rain. This rainfall caused severe flooding, with some regions flooded under 20 ft of water. The Buzi and Pungwe rivers flooded several days after the cyclone, creating a vast inland lake that can be seen from outer space. It is estimated that 500,000 hectares of farmland have been destroyed by flooding, and it is likely hundreds of thousands of people will need food aid. The flooding only exacerbates existing stresses on food production in southern Africa. The region has suffered from major infestations of African Armyworms that has effected 356,000 hectares of cropland in southern Africa. Moreover, southern Africa has been suffering a drought that has both made food insecurity a larger problem in and of itself, and exacerbated flooding by making the soil harder and less able to absorb water.

This combination of drought and cyclone is likely to become more and more common as climate change intensifies. Most climate change models predict long term declines of rainfall of around 10-20% over the next century. The rainfall that does come will likely be in the form of extreme bursts of rainfall as warmer weather leads to both higher levels of evaporation and warmer air is able to hold more moisture. The cyclone season of 2018-2019 in the south western Indian ocean has already proved to be the most severe with 8 intense cyclones, and it is likely this record will be broken time and time again. International organizations such as the UN and WHO are mobilizing resources to help Mozambique, Zimbabwe and Malawi. However, it will be necessary for these countries to strengthen their institutions of preparation and resilience if similar tragedies are to be avoided going forwards.

A Clutch of Silicon Dragon Eggs: How Beijing is Incubating the Next Generation of Tech Giants

Since the beginning of China’s economic reforms in 1978, China has conquered the world of low cost manufacturing. Shenzhen has emerged as the epicenter of the global electronics industry, and even inland cities have become export hubs. The next step for China’s economy is its ascent in hi-tech industries. Over the last decade, Beijing has emerged as the Silicon Valley of China. Beijing is the home of Baidu, the google of China, and more unicorns than any other city in China. In today’s podcast episode, I am going to be discussing the historical roots of modern Beijing’s tech industry, the role of the state in promoting technology in China, and some of the innovative companies produced by Beijing’s tech cluster. 

Beijing has become China’s most important tech cluster because it is the home to a disproportionate share of Beijing’s most elite universities. China’s two most prominent universities, Tsinghua and Peking, have their origins in the late 19th century, China’s “Century of Humiliation” and are the most elite Chinese universities. Tsinghua and Peking University are the Ivy League of China, and Tsinghua , and Tsinghua produces more high quality academic citations in STEM subjects than any other university aside from MIT. Moreover,  13 of China’s top 65 universities are located in Beijing, according to the Times Higher Education supplement making Beijing China’s greatest concentration of human capital. Chen Chunxian, a leading physicist at the Chinese Academy of the Sciences was the first to see the potential of Beijing’s university district after an official trip to Boston and San Fransisco. Due to his lobbying, the CAS created the Service Department which allowed entrepreneurs to use CAS labs and equipment at below market rates. The CAS helped fund many of the pioneering Chinese tech companies, the most important of which is Lenovo, which was founded by 10 CAS engineers with equity funding by the CAS.

Active intervention by the Chinese state has accelerated the growth of Beijing’s tech industry. The Great Firewall acts not only as a tool for censorship but also restrict American tech companies to operate in the United States. In December of 2009, Google controlled just under 45% of China’s market share. However, an intensification of Chinese censorship laws forced Google to leave the Chinese market, allowing Baidu to gain dominance in China.  China’ strict data localization policies force all data storage and cloud computing to happen within China, and only allow Chinese companies to run data centers. The Chinese government is also active in financing the countries tech industry. including a $47 billion fund for advanced semiconductor manufacturing, and various provincial governments have invested billions into AI. Many of China’s leading AI companies are closely intertwined with the state. For example, SenseTime, a Beijing based startup with cutting edge visual processing tools is helping design many tools for China’s surveillance state. 

While the Chinese government has assisted the rise of the Chinese tech industry, the driving force has been market forces and a new class of entrepreneurs. Chinese companies are increasingly not just copy-cats but innovators in their own right. An example of this is ByteDance, Bytedance is today the highest valued startup in the world, with a valuation of $75 billion. ByteDance’s primary business is Toutiao, a internet news and content aggregator that is ubiquitous in China. However, TikTok, a popular video sharing platform has surged to over 6 million downloads over the last month. In the case of dockless bycicle and scooter sharing, a Chinese firm, Ofo, was the pioneer. Ofo was founded by students from Peking University with assistance of an alumni funder. Ofo’s idea of dockless scooters and bikes was incredibly popular in China, and quickly expanded to the United States. Firms such as Bird and Lime in the United States are following a business model first pioneered in China. Beijing is the home to one of the most dynamic tech ecosystems in the world. It is the home to more unicorns than any other city in China, and any other except than Silicon Valley and its environs. 

Nicolas Maduro Fiddles While Venezuela is Plunged into Darkness

On March 7th, 2019 Venezuela was plunged into a massive blackout leaving the overwhelming majority of Venezuela’s people in darkness. The immediate cause of the blackout was the failure of the Guri Dam, and outages at the substations that transmit electricity from the dam to the rest of the country. According to the government of Nicolas Maduro, the outages were caused by an EMP attack orchestrated by the United States and opposition leader Juan Guaido. It is more likely that the outages were caused by a lack of maintenance of the electricity grid by the current government. Rolling blackouts have become the norm in Venezuela as low water levels in Guri Dam due to drought have compounded the governments incompetence in managing the power sector. As March 12th, the Venezuelan government has only been partially successful in restoring electricity as much of western Venezuela continues to lack electricity, and electricity has only been partially restored to Caracas. It is unclear how long it will take to fully restore electricity.

The effects of the power outage have been devastating to Venezuela. The most immediately impacted are those requiring kidney dialysis and babies in neonatal units and dozens of people have lost their lives due to a lack of electricity in hospitals. Many Venezuelans have been forced to scavenge for water in sewage drains because water pumping stations cannot work without electricity, There are growing reports of looting and chaos, and more and more people are taking to the streets to protest the lack of electricity. The oil industry has been hit hard by the power outages as well. Oil rigs in the Orinoco belt require massive amounts of electricity, and many of Venezuela’s traditional oil rigs are located in the parts of the country most impacted by the blackouts, and total oil output has plunged as total oil output is less than half of what it was before the power outages. Moreover, the upgraders that refine the heavy crude oils into lighter varieties cannot operate without electricity, nor can many of the ports that ship oil to export markets.

Venezuela’s economy stuck in a downward spiral where problems only compound other problems. Oil can only be produced if electricity generation is restored. Venezuela needs skilled workers and expensive foreign manufactured equipment to black start electricity generation. However, the collapse of the Venezuelan oil economy means the country no longer has the money or skilled manpower that it needs to restart oil production. Venezuela’s electricity crisis needs to be understood in the context of its broader political crisis. Since January of 2019, the regime of Nicolas Maduro has been challenged by a reinvigorated opposition under Juan Guaido. The United States has dramatically escalated sanctions on Venezuela, and most major powers and Venezuela’s neighbors have recognized Juan Guaido as the legitimate president of Venezuela. However, the government of Maduro has co-opted the military, the only group capable of removing Maduro from power. Venezuela today is stuck between a rock and a hard place. More and more pressure is being put on the government of Venezuela, but there is no mechanism to force Maduro to step down. Venezuela’s politics, even if electricity is restored, will remain mired in darkness until this political crisis is resolved.

“Just Fall, That is All” : Will Omar Al-Bashir Leave Power?

On December 19th, 2018 public discontent over rising inflation, cutbacks in bread subsidies and lack of employment over into mass protests in the city of Atbara. The protests spread like wildfire because they were not just about specific grievances but driven by a broader disgust against an oppressive and dictatorial regime. Omar Al-Bashir has been the dictator of Sudan since 1989, and over the last 30 years the country has seen brutal civil conflict, genocidal violence and a stagnation of standards of living. In today’s podcast episode, I will be exploring the deeper causes of the protests in Sudan. I will discuss the historic origins of the center periphery conflict in Sudan, the process through which a narrow elite closely connected to the military has come to dominate the economy, and how Omar Al-Bashir has balanced growing international support against his narrowing domestic political base.

The history of modern Sudan begins with Muhammad Ali’s invasion of Sudan in 1820. Muhammad Ali was, the face of western imperialism, attempting to modernize the Egyptian state. He wanted to recruit and arm a large army of slaves to use against his neighbors, and slaves to work his factories and cotton plantations. Merchants based from along the Nile river would organize groups of Arab nomads into slave trading parties deep into the south of the country. While the onset of British colonialism in 1899 would end the slave trade, many of the exploitative patterns would remain. The more developed Muslim and Arab North and impoverished Christian and Animist South Sudan have been at loggerheads ever since independence, fighting civil war from 1955 to 1972, and 1983 to 2005. The discovery of oil in South Sudan in 1979 has only exacerbated the crisis. On paper, the Sudanese Army is a mighty force with more than 100,000 men and could successfully hold the major urban areas. However, the SAF struggled in the impassable swamps of much of South Sudan. The Sudanese government was forced to arm local Arab militias, often of the same tribes once pivotal to the expansion of the slave trade, to control the territory. Civilian massacres and mass captive taking became normal. Over 1 million people have lost their lives, mostly from starvation. The independence of South Sudan in 2011 has not led to the demilitarization of Sudanese society. Militia groups similar to those in South Sudan were central to the genocidal violence in Darfur. and active in ongoing conflicts in South Kordofan and the Blue Nile. Many of the militias have proved impossible to control creating further conflict. It is important to emphasize that the current movement has unified opposition movements in the capital and all the outlying regions of the country. but also that the constant conflict between the central Sudanese state and the country’s peripheries is a feature of the country’s institutional history.

The history of conflict in Sudan has necessitated a large that consumes an immense share of the country’s resources. . By some estimates as high as 70% of Sudan’s national budget is dedicated to the military, and the armed forces. The Sudanese government spends 10 times more on the military than it does on healthcare and education. The Sudanese military’s reach extends beyond it’s budget allocation. The Sudanese military either directly owns, or indirectly through prominent generals and officers, own large swathes of the economy. The armed forces control everything from arms manufacture to operating airlines. By some estimate, 60% of large business transactions involve a member of the military-political elite. On paper, it might appear that military regime of Omar Al-Bashir has been a good steward of the economy. GDP PPP Per Capita has increased by 49% since 1989. However, this development was largely driven the country’s natural resource wealth. Sectors unconnected to natural resources such as agriculture have fared much worse. The British colonial government build the Al-Gezira Scheme, one of the largest and most sophisticated irrigation systems in the world to produce cotton for Great Britain’s industries. However, the government has not invested sufficient amount to maintain the irrigation networks resulting in mass siltation. Cotton production has declined from 132,000 tons to only 44,000 tons as farmers have shifted to less irrigation intensive crops. Moreover, the governments interventions into agriculture have often been kleptocratic. Sudan transferred 4,000,000 hectares of land into the hands of wealthy domestic and foreign investors, despite the fact such policies have a long and negative track record in Sudan.

It should hardly be surprising that the Sudanese government has only limited support among the people of Sudan. Mass protests by the people of Sudan have overthrown dictatorships in 1965 and 1984, and Sudan saw massive protests during the Arab Spring in 2011. The current wave of protests for the first time is uniting upper middle class professionals in Khartoum, poor farmers in farming towns, and the rebel movements from Darfur and Kordofan. Omar Al-Bashir has alienated all but a small minority from his regime. However, this small elite has been bolstered by growing international support and recognition. Sudan has been isolated since 1993, after the US placed sanctions on Sudan in the wake of the first World Trade Center bombing and under sanctions that have hit the country’s economy hard. However, President Donald Trump has been willing to overlook past human rights abuses in return for cooperation against terrorists and has removed sanctions. Moreover, Saudi Arabia has emerged as a major donor to Sudan. In return, Sudan has sent 8,000 fighters, many of them children, to the war in the Yemen. Moreover, Sudan emerged as a major corridor for refugee flows to Europe. In response to the refugee crisis, the EU through the euphemistically named, EU Emergency Trust for Africa, has disbursed $200 million to ex-Janjaweed to act as border guards along Sudan’s northern border.

Sudan is today tipped at the precipice of major change. The protesters have stayed on the streets despite a brutal crackdown that has resulted in the death of 37 people, and the arrest of thousands. Omar Al-Bashir has declared a state of emergency, and shows no signs of cracking down. It is likely the fate of Sudan will lay in the hands of the elite that surrounds Omar Al-Bashir. It is impossible to say if Sudan will get a truly democratic government, a continuation of Omar Al-Bashir’s regime, or the type of strife and breakdown seen in Libya, Yemen and Syria in the wake of the Arab Spring. Whatever the results, today’s protests will have a major impact on the people of Sudan and the geopolitics of the region.

The Cotton Boom and Slavery in Nineteenth-Century Rural Egypt, Mohamed Saleh The Hydro-Political Economy of Al-Ingaz: Economic Salvation Through “Dams are Development” , Harry Veerhoeven
The Sudan Armed Forces and Prospects of Change
Rising Global Interest in Farmland CAN IT YIELD SUSTAINABLE AND EQUITABLE BENEFITS? Klaus Deininger, Derek Byerlee, Jonathan Lindsay, Andrew Norton, Harris Selod, and Mercedes Stickler

Two Useless Peas in a Pod: Can Nigeria’s Next President Deliver Change

On February 23rd, 2019 Nigeria held elections for the National Assembly, Senate and Presidency. The elections pit the incumbent Muhammadu Buhari of the APC (All People’s Congress against Atiku Abubakar of the People’s Democratic Party (PDP). On paper, both candidates offer different visions for Nigeria’s future. Muhammadu Buhari has a reputation for personal integrity, and has promised strong action against Boko Haram and other insurgencies in Nigeria. Atiku Abubakar has promised a more free-market approach to Nigeria’s economy, promising to float the Nigeria’s currency, the Naira, and partially privatize the state owned oil company although he suffers from more than whiff of corruption. However, the similarities between the two candidates are more important than the differences. Both are Muslim septuagenarians from the north of the country. More importantly, both Buhari and Abubakar and the political parties they represent are enmeshed in the same networks of patronage and corruption .

The elections themselves have been deeply flawed. INEC (Independent Nigerian Electoral Commission) was forced to delay elections by one week due it’s own unpreparedness , although some fear this will give the incumbent more opportunities to rig the election. Over 39 people have lost their lives in pre-election violence, and a 128 people have been arrested on election related crimes ranging from vote buying to murder. Elections, as of 10 PM 2/25/2019 still trickling, but it appears Muhammadu Buhari has taken a solid lead, controlling 52% of the vote. It is unclear if serious election flaws or if the losing candidate will be willing to accept the results.

Whoever wins the election will more than have their work cut out for them. The combination of low oil prices and a rapidly expanded population have put serious strain on the Nigerian economy, as GDP Per Capita has fallen 8% over the last 5 years. The Nigerian government is struggling in its fight against rampant corruption. The government is struggling in it’s fight against Boko Haram, while the conflict between farmers and herders in the country’s volatile middle belt claimed more than 2,000 lives in 2018, and is only intensifying this year. Whoever wins the 2019 election will face an immense task ahead of them.

Does a Little Really Go a Long Way: Why Micro-Credit Brings Only Modest Returns

Everyday, Sufiya Begum, a 22-year old mother of 3, borrowed 22 cents from local moneylenders to buy bamboo with which she made furniture. All of her profits went back to those same moneylenders as she had to borrow at interest rates of 10% a day. Lack of access to capital and financial services has locked hundreds of millions of the most vulnerable in poverty. Many have touted microcredit as an intervention that can pull these people out of poverty, but it is unclear how effective it is in fighting poverty. Today’s podcast will be exploring the effect of microcredit on global poverty, focusing on the success of the Grameen Bank in Bangladesh, the microcredit financial crisis of India, and an examination of the empirical evidence on microcredit.

Muhammad Yunnus, winner of the 2006 Nobel Peace Prize, began his career as banker to the poor in the village of Jobra, Bangadesh. He was inspired by the story of Sufiya Begum to make small loans to 42 women. To his surprise, all 42 women paid back their loans. Banks showed little interest in adopting Muhammad Yunus’s idea, so in 1983 Muhammad Yunus created the Grameen Bank. The Grameen Bank’s model centered on organizing groups of poor women. Each individual in a group is mandated to save small amounts of money everyday, and receives financial coaching from Grameen Bank employees. Average loans are small around $170, and generally intended for small business creation. While loans are made to individual members, liability for loans are share at the village level among groups of groups. The microlending relies upon social pressure by group members and the fact most members have few borrowing choices beyond microcredit to ensure extremely high levels of repayment, Microcredit has grown at a spectacular rate in Bangladesh. Approximately 25 million Bangladeshis, about one seventh of the population, borrow $5 billion from microredit financial institutes every year, and microcredit has been credited for one tenth of poverty reduction in rural Bangladesh.

The initial success of micro-credit in Bangladesh led to it’s rapid expansion. However, as is the case in Andhra Pradesh, India, the result was overexpansion. Vikram Akula, a long time admirer of the Grameen Bank, founded SKS Microcredit in 1995, quickly turning it into one of the regions largest microcredit lenders. Akula argued that microcredit needed to attract private, profit seeking capital if it was to reach all of the poor. Vikram Akula worked to attract venture capitalists such as Seqouia Capital, the venture capital firm behind Google and Apple. The company’s expansion accelerated in 2009, as the company moved towards an IPO. SKS added 100 branch banks, trained 1,000 workers and added 400,000 borrowers in just work. Loan officers were given incentives such as expensive watches and cash bonuses for signing up as many people as fast as possible. Unsurprisingly the quality of loans dropped rapidly, and SKS loan officers had to resort to drastic tactics to coerce repayments. SKS officers threatened borrowers with violence. Scores of suicides by desperate borrowers have been documented. The public turned against SKS bank, and it’s employees were attacked if they attempted to collect loans. Eventually, the government of Andhra Pradesh stepped in, dramatically increasing regulations on microcredit and effectively shutting the for profit microcredit industry down.

Given Bangladesh and Andhra Pradesh’s opposite experiences with microcredit, it is incredibly difficult to say if microcredit has a positive impact on fighting poverty. The original research on microcredit was highly promising. Studies consistently found large positive impacts on income, especially for poor women. However, these studies were observational rather than experimental. While economists try to control for education, income and other observable variables in their analyses, it is impossible to control for everything. As a result, developmental economics is coming to use experimental methods such as randomized control trials to understand what works. In 2005, researchers created a microcredit experiment in Hyderabad. They partnered with a local microcredit lender to open branches in 52 neighborhoods, and selected 52 other neighborhoods to act as a control and collected a series of survey over the next three years. The researchers found that although households in neighborhoods with a new microcredit branch borrowed substantially more and invested more in small businesses than control neighborhoods, the impact on poverty were modest. RCTs in Ethiopia   , Bosnia ,Morocco and other places have consistently found disappointing results.

The best empirical evidence suggests that microcredit does not live up to the high hopes of the Grameen Bank, nor does it usually result in impoverishment as among many who borrowed from SKS Bank. It is instead a tool in the fight against global poverty that is useful in some circumstances. Unfortunately, there are no easy solutions to the problems of underdevelopment.

Selected Sources:

Grameen Bank, Microcredit and Millennium Development Goals, Muhammad Yunnus
The Creditworthiness of the Poor: A Model of the Grameen Bank , Michal Kowalik, David Martinez Miera
In credit we trust: Building social capital by Grameen Bank in Bangladesh, Asif Dowla
Beyond Ending Poverty : The Dynamics of Microfinance in Bangladesh, World Bank
Rise and Fall of Microfinance in India: The Andhra Pradesh Crisis in Perspective, Phillip Mader
The miracle of microfinance? Evidence from a randomized evaluation ,

Graveyard of the American Empire: Is Peace With the Taliban Possible?

On October 7th 2001, the United States invaded Afghanistan in response to the Taliban’s hosting of Osama Bin Laden and Al-Qaeda. This marked the beginning of a conflict that has the lives of 2,400 US soldiers, The toll on the Afghan people has been even higher, with over 30,000 casualties as of 2016, and 4,000 civilian casualties in 2018 alone. There is growing fatigue to this conflict in the both Afghanistan and the US, and increasing calls for a negotiated settlement with the Taliban regime. Since late 2018, Zalmay Khalizad, Special Representative for Afghanistan Reconciliation, has been trying to negotiate a peace agreement. President Donald Trump has signaled his own eagerness to dramatically reduce the number of US soldiers in Afghanistan with the hopes of a complete eventual withdrawal. There are currently parralel negotiations with Taliban representatives in Moscow  and Islamabad.

However, there are massive hurdles to achieving a long term peace agreement. The single largest is that both the Taliban and the current Afghan regime see each other as illegitimate and the Afghan government is not participating in talks about it’s own future. The Taliban have been gaining in strength for some time, and the central government only has complete control of a third of all districts in the country. While the Taliban might promise to any number of concessions to allow the US to save face, it is difficult to see what incentive they would have to follow through. The Taliban was infamous for it’s mistreatment of women and ethnic Hazara.  Moreover, it isn’t obvious that a peace deal with the Taliban will end violent conflict as the powerful warlords that dominate the government will likely be unwilling to cede any power to the Taliban.

To understand how we got to the point where we are seriously talking about the return of the Taliban, we have to understand the failure of the current Afghan political elite in building a capable state. The current elites origins lie in the Mujahideen the US armed in the insurgency against the Soviet occupation of the country between 1979 and 1989. The fighters we financed set themselves up as warlords , and between 1989 and 1996 various armed groups fought a series of brutal internecine conflicts. The ex-Mujahideen gained a reputation of brutality and corruption, and were loathed by the people. The Taliban used the failure of the warlords to sweep into power in 1996, relegating the warlords to a small corner of northeastern Afghanistan. The Northern Alliance (the remaining warlord forces) were key US allies in taking down the Taliban administration and the administration of post-Taliban Afghanistan. Men like Abdul Rashid Dostum were given power and authority. Unsurprisingly, this elite has misused it’s power to the detriment of Afghan people.