Is there a 'middle income trap?'

Development economists have spent a lot of time recently talking about various types of poverty traps -- conditions which function to keep countries locked in low-income positions. For example, Paul Collier, in The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It, identifies the following traps: conflict trap, natural resources trap, landlocked with poor neighbors trap, and the bad governance trap.

More recently, economists have identified the existence of a 'middle-income trap' -- the notion that many middle income countries are also locked into their structural position in the global economy (For additional details about the concept, see the citations at the end.)

These two 'traps' are shown diagrammatically in the figure to the left (see the bottom left quadrant and the middle quadrant). The figure plots each country’s income per person (adjusted for purchasing power) relative to that of America, both in 1960 and in 2008. In other words, countries such as Burundi, Brazil and the United States that fall into the quadrants along the diagonal running from the lower left to the upper right have 'stayed put' in the global economic order over a period of nearly 50 years. Barundi started out poor and remains poor. Brazil was a middle income country in 1960 and remained a middle income country in 2008.

Countries in quadrants to the left of the diagonal (e.g., Botswana, South Korea) have improved their relative economic status over the past 50 years. Botswana was a poor country in 1960 and rose to middle-income status by 2008. Similarly, South Korea improved from a middle-income country in 1960 to a high income country in 2008. On the other hand, countries in quadrants to the right of the diagonal (e.g., Niger, Argentina) have experienced a relative decline in their economic status over that 50 year period.

Interestingly, the figure doesn't identify the 'staying rich' countries of the upper right quadrant as experiencing a high-income trap. This is because economists operate with a progressivist bias -- they presume that all countries should be able to achieve economic growth if the proper policies are followed. Thus, remaining at the top is 'staying rich' or doing things right while failing to advance implies falling into some type of trap which limits the opportunities for economic advancement.

Stated another way, economists operate with a theoretically inconsistent view of stability and transformation. Stability is taken as desirable for one group of countries (those staying rich) while transformation (economic growth) is the goal for all others and remaining stable becomes the result of a 'trap.' Panarchy theory, by way of contrast, would render stability (no matter which quadrant along the diagonal a country was located) as the product of a set of factors controlling the stability state while transformation would result from disturbances leading to the shift to another, different stability state of the system that is controlled by a different set of processes.

One final note, even if you leave out the countries in the unlabeled high-income to middle-income quadrant (Argentina, Kuwait, etc.) because they are all clustered near the border with the high-income countries, the number of countries that are becoming poor (21%) exceeds the number experiencing relative economic growth (3% of the countries improved from low-income to middle-income status while 11% improved from middle-income to high-income status -- for a total of 14%). Counting by country rather than by population obviously isn't the best way to conceptualize the change but it is instructive none the less.

Or, to render the diagram in yet another way, the evidence it presents seems more consistent with the perspectives advanced by world systems theorists (i.e., that one group can only stay at the top by exploiting another) and ecology (e.g., not all animals can be at the top of the food chain) than that advocated by traditional economics (i.e., that all countries can rise to the top and their failure to do so is evidence of some sort of 'trap').

Additional resources:

• For additional information about the figure, see pages 11-12 of the World Bank report China 2030.
• The term “middle-income trap” was first defined on pages 17-18 of Gill, Indermit, Homi Kharas, and others. 2007. An East Asian Rennaissance: Ideas for Economic Growth. Washington, DC: World Bank. 
• The globalization of labor markets may make escaping the middle-income trap even harder according to Eeckhout, Jan, and Boyan Jovanovic. 2007. “Occupational Choice and Development.” Working Paper 13686, National Bureau of Economic Research, Cambridge, MA

Planet Under Pressure 2012

Welcome to the Anthropocene from WelcomeAnthropocene on Vimeo.


The Planet Under Pressure 2012 conference, which released the stunning video found above, is running from March 26-29 in London. Program information and access to the livestream are here. For those trying to sort out the time issue, Fredericton (Atlantic Time zone) is four hours earlier and, for our American friends, the Eastern Time zone would be 5 hours earlier.

The conference has a variety of interesting outreach mechanisms in addition to the livestream. They are nicely summarized, with relevant links, over at Resilience Science.

Surging Seas

Climate Central has a new project, Surging Seas, an interactive map that shows the threat from sea level rise and storm surge to all 3,000+ coastal towns, cities, counties and states in the Lower 48 of the US. I don't know of a similar map for Canada. If you do, please leave a comment with the relevant info.

Here's a write up about the research behind the map from the Washington Post:

Nearly 4 million people across the United States, from Los Angeles to much of the East Coast, live in homes more prone to flooding from rising seas fueled by global warming, according to a new method of looking at flood risk published in two scientific papers.

The cities that have the most people living within three feet (one meter) of high tide — the projected sea level rise by the year 2100 made by many scientists and computer models — are in Florida, Louisiana, and New York. New York City, often not thought of as a city prone to flooding, has 141,000 people at risk, which is second only to New Orleans’ 284,000. The two big Southeast Florida counties, Miami-Dade and Broward, have 312,000 people at risk combined.

All told, 3.7 million people live in homes within three feet of high tide. More than 500 US cities have at least 10 percent of the population at increased risk, the studies said.

“Southeast Florida is definitely the highest density of population that’s really on low coastal land that’s really most at risk,” said lead author Ben Strauss, a scientist at Climate Central. Climate Central is a New Jersey-based group of scientists and journalists who do research about climate change.

The studies look at people who live in homes within three feet of high tide, whereas old studies looked just at elevation above sea level, according to work published Thursday in the peer-reviewed journal Environmental Research and an accompanying report by Climate Central. That’s an important distinction because using high tide is more accurate for flooding impacts, said study co-author Jonathan Overpeck, a scientist at the University of Arizona’s Institute of the Environment. And when the new way of looking at risk is factored in, the outlook looks worse, Overpeck said.

“It’s shocking to see how large the impacts could be, particularly in southern Florida and Louisiana, but much of the coastal U.S. will share in the serious pain,” Overpeck said.

And it’s not just residents of coastal areas who will be hurt by this, said Sharlene Leurig, a senior manager for the insurance program at Ceres, a Boston-based investment network. Most coastal areas get flood insurance from the federal program and with more flooding, the program will have to spend more and that will come out of all taxpayers’ wallets, she said.

Sea level has already risen about 8 inches since 1880 because warmer waters expand, Strauss said. In addition to the basic physics of ever-warming water expanding, scientist say hotter climate will cause some melting of glaciers in Greenland and western Antarctica that would then cause seas to rise even more.
Flooding from Hurricane Irene last year illustrated how vulnerable coastal places such as Manhattan are with a combination of storms and sea level rise, Strauss said.

Using data from the latest census, Climate Central also has developed an interactive system that allows people to check their risk by entering a ZIP code.

Sea level rise experts at the U.S. Geological Survey and the National Oceanic Atmospheric Administration who weren’t part of the studies said the results make sense and were done by experts in the field.
“All low elevation places in the many urban areas along the coast will become more vulnerable,” said S. Jeffress Williams, scientist emeritus for the USGS, who wasn’t part of the studies. He pointed to Boston, New York City, Norfolk, Va., New Orleans, Charleston, S.C., Miami and Washington and its Virginia suburbs. “More people and infrastructure will be at increasing risk of flooding.”

Ottawa wants to bow out of regulating fish habitat

Canada has an interesting patchwork set of federal and provincial regulations covering waterways. In many cases both levels of government have a regulatory role but neither level does much to enforce the situation because they don't want to upset the other level of government.

It turns out, according to the Globe and Mail, that the federal government would like to download its role in regulating fish habitat in order to facilitate large scale development.

A former federal scientist has obtained internal documents that show the government is trying to get out of the business of regulating fishing habitats, which would allow for speedier approval of megaprojects like the proposed Northern Gateway pipeline.
Meanwhile, the Conservative-dominated Commons environment committee on Tuesday recommended downloading much of the job of environmental assessment to the provinces and imposing timelines so the development of big projects won’t be delayed.
....
Mr. Langer has obtained documents – he would not say from whom – that show the government intends to remove the requirement in the Canada Fisheries Act to protect fish habitats and any fish that is not of “economic, cultural or ecological value.”
“Probably the main reason why the oil industry, especially in the Prairie provinces, wants it out of the act is its use triggers [a review under] the Canadian Environmental Assessment Act. If you are going to do harm to habitat, you have to do an environmental review and that takes time and money,” Mr. Langer said in an interview.
...
Enbridge’s proposed Northern Gateway pipeline, which would bring bitumen from the oil sands to the Pacific Coast for transport to China and other Asian markets, will have to cross 600 different rivers and streams, Mr. Langer said. Bodies of water that do not contain fish that are of human value would not need to be assessed under this legislative change, he said.

Drill Baby Drill for that $2.50 a gallon gas!

The American can-do attitude crops up in peculiar ways. Every four years -- just in time for the election -- US politicians, playing on the belief that a competent President is near omnipotent,  fixate (unrealistically) on the ability of a single country with oversized demand and sagging supplies to bring down gas prices.

In this election cycle, first it was Michelle Bachman.

More recently, it was Newt Gingrich.
For a humorous take, here's how Dummies respond

OECD Environmental Outlook to 2050: The Consequences of Inaction

On March 15 the OECD will release their Environmental Outlook to 2050. Those who can't wait, can preview the water chapter here. The Table of Contents and a brief description of the entire volume follow:

Table of Contents

Executive Summary (see Other languages) Chapter 1. Introduction Chapter 2. Socioeconomic Developments Chapter 3. Climate Change Chapter 4. Biodiversity Chapter 5. Water Chapter 6. Health and Environment Annex: Modelling Framework

Humanity has witnessed unprecedented growth and prosperity in the past decades, with the size of the world economy more than tripling and population increasing by over 3 billion people since 1970. This growth, however, has been accompanied by environmental pollution and natural resource depletion. The current growth model and the mismanagement of natural assets could ultimately undermine human development.

The OECD Environmental Outlook to 2050 asks “What will the next four decades bring?” Based on joint modelling by the OECD and the Netherlands Environmental Assessment Agency (PBL), it looks forward to the year 2050 to find out what demographic and economic trends might mean for the environment if the world does not adopt more ambitious green policies. It also looks at what policies could change that picture for the better.

This Outlook focuses on four areas: climate change, biodiversity, freshwater and health impacts of pollution. These four key environmental challenges were identified by the previous Environmental Outlook to 2030 (OECD, 2008) as “Red Light” issues requiring urgent attention. Based on model projections, this edition of the Environmental Outlook paints a possible picture of what the environment might look like in 2050. It focuses on four areas which were identified by the previous edition of the Outlook as needing urgent attention: climate change, biodiversity, water, and health and environment.

Oil Prices

Interesting graphic showing the disconnect in current US policy rhetoric over gasoline prices. In contrast to what is being suggested, prices are largely unrelated to US production. Not surprisingly to anyone familiar with the industry, oil is a global market largely unaffected by the production dynamics of relatively stable countries like the US.

A more detailed discussion is here, other charts are here. 

Limits to Growth Revisited

It was forty years ago today,
Donella Meadows taught the band to play
They've been going in and out of style
But they're guaranteed to raise a smile.
So may I introduce to you
The act you've known for all these years,
Donella Meadows' Limits to Growth.


.... Well, truthfully, it was forty years ago on March 1, but close enough.

This book, which sold over ten million copies in various languages, was one of the earliest scholarly works to recognize that the world was fast approaching its sustainable limits. Forty years later, the planet continues to face many of the same economic, social, and environmental challenges as when the book was first published. Suitably, the event has spawned a number of retrospectives. The most fulsome occurred at the Smithsonian where the Club of Rome sponsored Perspectives on Limits to Growth: Challenges to Building a Sustainable Planet. Among the presentations were the following:

• Dennis Meadows It is too late for sustainable development
• Jørgen Randers Lessons of forty years of promoting limits to growth
• Lester Brown World on the Edge
• Doug Erwin Biodiversity: past, present and future
• Richard Alley Climate change and energy; challenges and opportunities
• Neva Goodwin Labor’s declining share and future quality of life
• Panel discussion moderated by Eva Pell, Under Secretary for Science, Smithsonian Institution 

The full nine hour program -- including 10 minutes watching the audience mill about before the first presentation -- is archived at the above link.

For those who would like their celebration served up in a more time efficient manner, journey on over to Resilience Science where Garry Peterson has two interesting posts: Forty Years of Limits to Growth and Paul Gilding talks about Limits to Growth which includes Gilding's recent Ted Talk.

Wallerstein on the University

This short post by Immanuel Wallerstein looks at the history of the University in market economies. As members of an academic institution, it's important for us to reflect on its role in the world and the forces that shape the University. Furthermore, Wallerstein connects the University with it's role in facilitating a 'transition' to a less chaotic world system.

". . . the universities were supposed to play the role of one major locus (not of course the only one) of analysis of the realities of our world-system. It is such analyses that may make possible the successful navigation of the chaotic transition towards a new, and hopefully better, world order. At the moment, the turmoil within the universities seems no easier to resolve than the turmoil in the world-economy. And even less attention is being paid to it."

Higher education under attack

by Immanuel Wallerstein

For a very long time there were only a few universities in the world. The total student body in these institutions was very small. This small group of students was drawn largely from the upper classes. Attending the university conferred great prestige and reflected great privilege.

This picture began to change radically after 1945. The number of universities began to expand considerably, and the percentage of persons in the age range that attended universities began to expand. Furthermore, this was not merely a question of expansion in those countries that had already had universities of note. University education was launched in a large number of countries that had few or no university institutions before 1945. Higher education became worldwide.

The pressure for expansion came from above and below. From above, governments felt an important need for more university graduates to ensure their capacity to compete in the more complex technologies that were required in the exploding expansion of the world-economy. And from below, large numbers of the middle strata and even of the lower strata of the world's populations were insistent that they have access to higher education in order to improve considerably their economic and social prospects.

The expansion of the universities, which was remarkable in size, was made possible by the enormous upward expansion of the world-economy after 1945, the biggest in the history of the modern world-system. There was plenty of money available for the universities, and they were happy to make use of it.

Of course, this changed the university systems somewhat. Individual universities became much larger and began to lose the quality of intimacy that smaller structures provided. The class composition of the student body, and then of the professorate, evolved. In many countries, expansion not only meant a reduction in the monopoly of upper strata persons as students, professors, and administrators, but it often meant that "minority" groups and women began to have wider access, which had previously been totally or at least partially denied.

This rosy picture came into difficulty after about 1970. For one thing, the world-economy entered its long stagnation. And little by little, the amount of money that universities received, largely from the states, began to diminish. At the same time, the costs of university education continued to rise, and the pressures from below for continued expansion grew even stronger. The story ever since has been that of the two curves going in opposite directions - less money and increased expenses.

By the time we arrived at the twenty-first century, this situation became dire. How have universities coped? One major way was what we have come to call "privatization." Most universities before 1945, and even before 1970, were state institutions. The one significant exception was the United States, which had a large number of non-state institutions, most of which had evolved from religiously-based institutions. But even in these U.S. private institutions, the universities were run as non-profit structures.

What privatization began to mean throughout the world was several things: One, there began to be institutions of higher education that were established as businesses for profit. Two, public institutions began to seek and obtain money from corporate donors, which began to intrude in the internal governance of the universities. And three, universities began to seek patents for work that researchers at the university had discovered or invented, and thereupon entered as operators in the economy, that is, as businesses.

In a situation in which money was scarce, or at least seemed scarce, universities began to transform themselves into more business-like institutions. This could be seen in two major ways. The top administrative positions of universities and their faculties, which had traditionally been occupied by academics, now began to be occupied by persons whose background was in business and not university life. They raised the money, but they also began to set the criteria of allocation of the money.

There began to be evaluations of whole universities and of departments within universities in terms of their output for the money invested. This might be measured by how many students wished to pursue particular studies, or how esteemed was the research output of given universities or departments. Intellectual life was being judged by pseudo-market criteria. Even student recruitment was being measured by how much money was brought in via alternative methods of recruitment.

And, if this weren't enough, the universities began to come under attack from a basically anti-intellectual far right current that saw the universities as secular, anti-religious institutions. The university as a critical institution - critical of dominant groups and dominant ideologies - had always met with resistance and repression by the states and the elites. But their powers of survival had always been rooted in their relative financial autonomy based on the low real cost of operation. This was the university of yesteryear, not of today - and tomorrow.

One can write this off as simply one more aspect of the global chaos in which we are now living. Except that the universities were supposed to play the role of one major locus (not of course the only one) of analysis of the realities of our world-system. It is such analyses that may make possible the successful navigation of the chaotic transition towards a new, and hopefully better, world order. At the moment, the turmoil within the universities seems no easier to resolve than the turmoil in the world-economy. And even less attention is being paid to it.

[Copyright by Immanuel Wallerstein, distributed by Agence Global]

Current rate of ocean acidification may be unprecidented

The current issue of Science includes The Geological Record of Ocean Acidification, the first summary of the geologic record for evidence of ocean acidification over the past 300 million years. The article suggests the world's oceans may be turning acidic faster today from human carbon emissions than they did during four major extinctions in the last 300 million years, when natural pulses of carbon sent global temperatures soaring. The complex set of processes examined in the article are summarized in the diagram below.

The press release has a nice summary:

The oceans act like a sponge to draw down excess carbon dioxide from the air; the gas reacts with seawater to form carbonic acid, which over time is neutralized by fossil carbonate shells on the seafloor. But if CO2 goes into the oceans too quickly, it can deplete the carbonate ions that corals, mollusks and some plankton need for reef and shell-building.

That is what is happening now. In a review of hundreds of paleoceanographic studies, a team of researchers from five countries found evidence for only one period in the last 300 million years when the oceans changed even remotely as fast as today: the Paleocene-Eocene Thermal Maximum, or PETM, some 56 million years ago. In the early 1990s, scientists extracting sediments from the seafloor off Antarctica found a layer of mud from this period wedged between thick deposits of white plankton fossils. In a span of about 5,000 years, they estimated, a mysterious surge of carbon doubled atmospheric concentrations, pushed average global temperatures up by about 6 degrees C, and dramatically changed the ecological landscape.

The result: carbonate plankton shells littering the seafloor dissolved, leaving the brown layer of mud. As many as half of all species of benthic foraminifers, a group of single-celled organisms that live at the ocean bottom, went extinct, suggesting that organisms higher in the food chain may have also disappeared, said study co-author Ellen Thomas, a paleoceanographer at Yale University who was on that pivotal Antarctic cruise. "It's really unusual that you lose more than 5 to 10 percent of species over less than 20,000 years," she said. "It's usually on the order of a few percent over a million years." During this time, scientists estimate, ocean pH—a measure of acidity--may have fallen as much as 0.45 units. (As pH falls, acidity rises.)

In the last hundred years, atmospheric CO2 has risen about 30 percent, to 393 parts per million, and ocean pH has fallen by 0.1 unit, to 8.1--an acidification rate at least 10 times faster than 56 million years ago, says Hönisch. The Intergovernmental Panel on Climate Change predicts that pH may fall another 0.3 units by the end of the century, to 7.8, raising the possibility that we may soon see ocean changes similar to those observed during the PETM.