Sunday, April 30, 2006

Two Quotes

Below are two quotes, one from new growth theorist Paul Romer, the other from two anthropologists studying development processes in Ethiopia. In both examples a simple energy saving is made, but the outcome is quite different, in the former case living standards per capita rise, in the second more children are produced, and the nutritional status of each surviving child deteriorates. The difference between the Mathusian-regime and the modern economic growth one couldn't be more clearly illustrated.

Romer, Paul, 2007: "Economic Growth," The Concise Encyclopedia of Economics, David R. Henderson, ed. Liberty Fund (Forthcoming)

"Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material".

"Take one small example. In most coffee shops, you can now use the same size lid for small, medium, and large cups of coffee. That wasn’t true as recently as 1995. That small change in the geometry of the cups means that a coffee shop can serve customers at lower cost. Store owners need to manage the inventory for only one type of lid. Employees can replenish supplies more quickly throughout the day. Customers can get their coffee just a bit faster. Such big discoveries as the transistor, antibiotics, and the electric motor attract most of the attention, but it takes millions of little discoveries like the new design for the cup and lid to double average income in a nation."

An Energy-Saving Development Initiative Increases Birth Rate and Childhood Malnutrition in Rural Ethiopia, Mhairi A. Gibson, Ruth Mace

"In the villages of Hitosa and Dodota subdistricts......Water shortages, particularly during the dry season months (December to April) can be severe. Mean precipitation is less than 700 mm and there are no perennial rivers. Traditionally, women have borne the brunt of water collection, some transporting the water on their backs in clay pots (insera) for distances of up to 30 km. However, between 1996 and 2000 some villages benefited from a water development scheme (the Hitosa Gravity Water Supply Scheme), which has reduced both the energy and time women spent carrying water following the installation of village-level tap stands (Table 1). Women state their time spent carrying water has been reduced from around three hours to 15 minutes during the driest months. This time is now employed in more social activities, as well as standing in line at the tap stands."

"This study is the first, to our knowledge, to demonstrate a link between a specific technological intervention and an increase in birth rate and decrease in mortality at the village level. The increased birth rate is likely to be mediated by improvements in women's workloads, brought about by reducing energetic expenditure on water collection, since women's nutritional levels, breast feeding practices, and health do not vary (Table 5). Female health outcomes (nutritional status and morbidity levels) do not appear to be influenced by reduced workloads, lending support to the idea that women's surplus energy is diverted towards reproduction. Increased levels of child survival are likely to relate to improvements in the quality and quantity of water supply [47,48] and greater opportunities for direct maternal childcare. We propose that the energy saved by a new development technology is being diverted to enhance fertility and reduce mortality; however, since the underlying resources in the system are limited, this comes at the cost of an increase in childhood malnutrition."

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