Archive for February 6th, 2012

Seven learnings about transition from communism

February 6, 2012

Andrei Shleifer of Harvard draws his list of lessons learnt from transition:

  1. The main lesson of this experience is for reformers not to count on an immediate return to growth. Economic transformation takes time.
  2. have faith – capitalism really does work.
  3. a reformer should fear not populism but capture of politics by the new elites.
  4. do not over-plan the move to markets, but, more importantly, do not delay in the hope of having a tidier reform later.
  5. you cannot teach an old dog new tricks, even with incentives.
  6. This experience bears a profound lesson for reformers, who are always intimidated by the international financial community: do not panic about crises; they blow over fast.
  7. middle-income countries eventually slouch toward democracy, but not nearly in as direct or consistent a way as they move toward capitalism.
Very interesting points esp lesson 3, 5 and 7.

 

How microfinance regulation is different from normal finance regulation?

February 6, 2012

An interesting paper from M. Sahoo, Renuka Sane, Susan Thomas.

They say there are two basic differences between normal and micro-finance.  These differences are credit recovery and the credit risk of the Microfinance institution (MFI), when credit access is enabled  through the structure of the joint liability group (JLG).

First, the issues wrt credit recovery.  In normal credit things are clear,  borrower has the obligations and the service provider (the lender) has the rights. So regulation looks at two issues – of consumer protection and debt collection. In microfinance because of JLG, things get complicated:

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The Simpsons explain impact of inequality on growth….

February 6, 2012

This blog always welcomes new ways to explain economics. And simpler the better.

Dani Rodrik’s paper on impact of inequality on growth remains a very popular one ( I havent read it though). Rodrik points to two students who have used the Simpsons cartoon in a ppt strip to explain the paper.

I still do not fully understand it though. But still a really useful way to explain some key papers/concepts…Cartoons always help..


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