Instant Gratification

A few days ago, I was interviewed on the local television. In a fleeting appearance, I talked about the lack of correlation between some African stock markets and major exchanges as a hedging opportunity for foreign investors. The following day, amid the pats on the back from some colleagues, I was asked by a good friend and colleague of mine to explain the distinction between fixed and random effects in panel data estimates. I struggled.

Lessons from Sweden

As the battle for party nominations rages, potential candidates for the 2007 French presidential elections are looking abroad for their economic manifesto. Scandinavian countries, envied for their low unemployment, high growth and social security, are obvious destinations. A book entitled “Faut-il brûler le modèle social français?” by Dominique Méda and Alain Lefebvre, arguing for Scandinavian-style labour market reforms, has provided much inspiration to the photogenic, but policy-short and socialist hopeful, Ségolène Royal. Mr Lefebvre, who is an adviser on social affairs to the French Embassy in Sweden, keeps an excellent blog (in French). For the benefit English readers, here are highlights of a recent post on the public sector in Sweden.

Lessons from South Africa

Dani Rodrik has a fascinating paper on South Africa’s post-apartheid growth experience. He compares South Africa with Malaysia and concludes that the former’s strategy of trickle-down growth has failed and led to massive unemployment while the latter’s strategy of shared growth has borne fruits. For a small open-economy like Mauritius, there are lessons to be learnt. Here are highlights of the paper:

Facts

The success of the Mauritian economy has been truely remarkable (see here for some insights). Over the past 30 years, per capita income has grown by an annual 4.6%, making it the 10th fastest-growing economy in the world. Amid the current doom and gloom, the economy has proved resilient to external shocks and the initial public inaction to these shocks. In fact, it is set to grow by more than 4% in 2006, despite the poor performance of the tourism sector in the first two quarters. Here are some (known and not-so-well known) facts about Mauritius, compiled from Worldmapper:

Ideology over facts

In its recent country assessment letter on Mauritius, the International Monetary Fund (IMF) writes about the need for a “through review of labour laws and regulations…simplifying the regulations that govern firms’ ability to terminate and redeploy workers.” This is nothing but an ideological statement as there is no evidence that laws that make firing costly result in unemployment. In fact, against conventional ideas, OECD countries that have high employment protection tend to enjoy high productivity levels, low unemployment and high growth rates.

Rational Bitching

Those who have studied Economics but who’ve never had an office job may be forgiven to buy into one of its biggest lies: that people get paid their worth. If that were true, I suspect that some would have to pay to stay in their job (and David Brent in the BBC series, The Office, would need to rob a bank ever so often to pay his dues). Who else can shed more light on the complex, yet profound topic of office bitching (by men and women alike) than an economist?