Month: June 2018

The safety net in Ethiopia

They are participants in Ethiopia’s Urban Productive Safety Net Project, which was launched in 2017 and is among the largest social programmes in sub-Saharan Africa (outside South Africa) designed specifically for urban areas. About 400,000 poor Ethiopians in 11 cities are already enrolled. The government hopes it will eventually help 4.7m people in almost 1,000 towns. Beneficiaries are selected by a neighbourhood committee based on how poor and vulnerable they are. In addition to the paid work, they also receive training. Those who want to start their own businesses are given grants.

Safety-nets, in one form or another, have proliferated across Africa in recent years. Spending on them in sub-Saharan Africa now amounts to about 1.5% of GDP (see chart). In Tanzania 10% of the population is covered by its safety-net (at a cost of just 0.3% of GDP)…

Ethiopia’s programme is a step towards building a national social-security system that will, in time, replace a hotch-potch of small ones. It builds on Ethiopia’s flagship rural safety-net, which is the largest of its kind on the continent and covers some 10m poor people in the countryside (out of a total population of about 102m). The government has committed $150m to fund the new scheme and the World Bank has stumped up the remaining $300m needed for the first five years. Ethiopia hopes that within ten years it will no longer need help financing the programme.

Here is more from The Economist.  You can think of this as further evidence of state capacity in Ethiopia.

The internet and inflation

From Austan D. Goolsbee and Peter J. Klenow:

We use Adobe Analytics data on online transactions for millions of products in many different categories from 2014 to 2017 to shed light on how online inflation compares to overall inflation, and to gauge the magnitude of new product bias online. The Adobe data contain transaction prices and quantities purchased. We estimate that online inflation was about 1 percentage point lower than in the CPI for the same categories from 2014–2017. In addition, the rising variety of products sold online, implies roughly 2 percentage points lower inflation than in a matched model/CPI-style index.

I call this “the gains from better matching,” as discussed in The Complacent Class.

Is there a Chinese salamander bubble?

Bizarrely, only 3 percent of the animals raised by the farms are eventually sold to restaurants. The rest are sold to more start-up farms. This absurd amphibian Ponzi scheme so inflated the worth of the salamanders that a small, 2-kilogram individual could sell for around $1,500. As a result, people began supplementing the farmed stock by illegally collecting the animals from the wild. “The high prices created a sort of salamander rush,” says Jing Che from the Kunming Institute of Zoology, who was involved in the recent study.

That is from Ed Yong, via Brian Slesinsky.