Philippe Legrain

Good news: African poverty is falling rapidly

New research by Maxim Pinkovskiy, Massachusetts Institute of Technology and Xavier Sala‐i‐Martin, Columbia University and NBER finds that

The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala‐i‐Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970‐2006. We show that: (1) African poverty is falling and is falling rapidly. (2) If present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time. (3) The growth spurt that began in 1995 decreased African income inequality instead of increasing it. (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral‐rich as well as mineral‐poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below‐ or above-median slave exports per capita during the African slave trade. 

Hat tip: Marginal Revolution

Remittances at risk

Jenny Abura on the benefits of migrants' remittances to Uganda

Remittances to Latin America are falling Ecuador, which receives most of its remittances from recession-hit Spain, suffered a 22% fall in the last three months of 2008.

Finland's former finance minister on the need to protect the world's poor from the consequences of falling remittances

Aid for immigration?

It is well known that the money that immigrants send home is the biggest - and best-targeted - source of development aid to poor countries. But immigration can also spur an increase in official government aid - in a bid to improve conditions in poor countries and thus deter their citizens from migrating.

El Pais reports that Spanish aid to Africa has soared in recent years in response to the rising numbers of Africans who risk their lives on flimsy boats to try to reach Europe's southern gateway.

Net profit

A fascinating article in this week's Economist explains how mobile phones can help promote development. The spread of mobile phones has allowed fishermen in the Indian region of Kerala to call while at sea to find out where their catch will fetch the highest price.

This more efficient market benefited everyone. Fishermen's profits rose by 8% on average and consumer prices fell by 4% on average. Higher profits meant the phones typically paid for themselves within two months. And the benefits are enduring, rather than one-off.