How we tried to change the World Bank (at least a little bit)

A radical idea

In 2001, Tony Blair decided that asking polite questions and seeing what comes back was not a suitable system for delivering policy. He set up the Prime Minister’s Delivery Unit (PMDU), a small team drawn from the private and public sector, accountable directly to him, relentlessly monitoring the implementation of national priority projects. Progress was reported through a traffic light system and heavily informed by actual data analysis.

The innovation didn’t go unnoticed: Heads of governments in around 25 countries are supported by similar teams and several…


Building an animated visualisation of financial transactions in the Eurozone

Motivation

The motivation for drawing an animated map of the Eurozone financial system stems from trying to understand what happened during QE. The policy is aimed at stimulating investment and consumption in the Eurozone to bring inflation back to 2%. Numerous econometric models covering the topic exist, but, as discussed in this paper by the Bundesbank, the result of those models is heavily dependent on their internal structure and the underlying assumptions.

The visualisation

click on the image for the dynamic version

The visualisation shows quarterly net transactions in the Eurozone financial system and its link to the real economy between 2013 and 2017. Valuation effects are excluded. Data is taken…


Liberalism has recently been attacked by Trumpists and Brexiteers. And, surprising nearly everyone, those attacks were successful despite proposing policies which can hardly be called beneficial for anyone except the Koch brothers & friends. While Francis Fukuyama’s phrase the end of history was never to be taken literally, the 1990s and 2000s were dominated by the thought that at least the fundamental questions had been answered. But the end of history is obviously over, and dominance of liberalism doesn’t seem within immediate reach. Assuming the ideas aren’t completely off, what’s the issue? (When we say liberalism we mean a broad…


Private Equity funds use this ingenious trick where you buy a company, massively increase the financial resources deployed and back comes some pretty significant revenue growth. While that is nothing new, I was a bit surprised to be reminded of this when looking at the balance sheet of the US economy: Pre-1980s, growth of national income and the balance sheet, i.e. resources deployed to make this growth happen, increase pretty much on par. But suddenly that all changes: From roughly 1983 onwards, more and more resources are required to maintain the upwards trajectory.


And why international development efforts are not the determining variable

Ask for the passport. It better be Chinese. Eight in ten Chinese living in extreme poverty in 1990 no longer did so in 2010*. In Sub-Saharan Africa, not only were you probably still poor in 2010, but your children might be so as well (this excludes South Africa). The number of people living of less than $ 1.90 per day in the region increased by 40% from 1990 to 2010.

While the jury on aid and international development is out, it is remarkable that 73% of the reduction in global poverty over the last 20 years comes from a country…


When it comes to Africa, the US and China share more than a healthy dose of pragmatism

Danakil depression, Ethiopia

In 2009, the clash of giants finally seemed to happen. No lesser battleground than the Democratic Republic of Congo, largest country in Sub Saharan Africa and home to rebels, guns and vast amounts of natural resources was chosen. On the one side the Chinese, armed with a US$ 9bn infrastructure for minerals deal. On the other side, the US controlled World Bank promising debt relief of US$ 12bn (2/3rds of Congolese GDP). …


…you are very unlucky indeed. Getting to McDonald’s involves driving about 4,148 kilometres to Morocco, crossing a few rivers on makeshift rafts, navigating closed borders, a desert and, if unlucky, landmines.

While the remainder of the world is covered in golden arches, only four African countries have outlets: Morocco, Egypt, South Africa and Mauritius. They contribute 1% to McDonald’s global revenues, despite 16% of the world’s population living in Africa.

Data: http://www.aboutmcdonalds.com/mcd/country/map.html; Map: http://www.presentationmagazine.com/world-maps-vector-editable-507.htm

The high cost of electricity, complex supply chains and the uncertain political environment are often blamed for this. While there is certainly some truth to this, it might not be…


Price of a Liberian jungle chicken and one helicopter flight as offered by Helicopter Wucher in Lech am Arlberg calculated as percentage of monthly GDP per capita in the respective country. Sources: Helicopter Wucher, World Development Indicators, own research

They both cost a little more than 10% of the average monthly income in their respective countries. But admittedly the comparison is a little bit of a cheat: The Liberian chicken comes from the forest in the South were they are particularly cheap at 5 dollar for a large one. To go from there to Monrovia where about half the population lives, it is still a 10 hour car ride. By the time it arrives, the price will have increased significantly.


(Picture by the Opte Project [CC BY 2.5 (http://creativecommons.org/licenses/by/2.5)], via Wikimedia Commons)

Its the humans behind artificial intelligence, not the machines we should focus on now

Elon Musk recently called AI our “biggest existential threat”. Almost every week there are more news about robots winning one game or the other. Finally, it seems they have even mastered Go, which was seen as one of the last remits of human superiority (to the great displeasure of my little brothers, who quite liked to claim playing a game even too hard for super computers). So should we all prepare for the coming rule of the robots?

We could, but in the meantime there might be something even more urgent: Apple’s CEO Tim Cook just gave a vivid account…

Philippa Sigl

Computer Science Imperial College, former Ministry of Finance in Liberia and World Banker. Wondering whether economics could work for the people. Views mine.

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