blog, Economics

The econoblogosphere

Recently there has been marked interest in the impact of blogs on teaching and research. David McKenzie and Berk Olzer of the World Bank have argued that there are benefits to the blogger and substantial positive externalities associated with good economics blogs.

I do not want to make the all the arguments for blogging now. One of my research leave dreams is to put together a presentation on why South African economists should start blogging and to travel the country, spreading the word. For now I want to mention David McKenzie’s recent blog on journal turnaround times to highlight the power of blogs.
His point is that it takes time to publish papers and few journals publish turnaround times. The AER is way out of my league but it is interesting to note that in 2011 a paper there was in review for an average of 37 weeks. From submission to acceptance took 69 weeks and from thereon a further 61 weeks to publication. This is not to say that AER is quick or slow, but that the latest issue of any journal does not present the latest research. And then a paper in the AER represents to pinnacle of a body of good work that was built up over years before that first submission.
So how does one get to know what is going on, or let others know what you are working on? Earlier this year Paul Krugman wrote about open science:

…the traditional model of submit, get refereed, publish, and then people will read your work broke down a long time ago. In fact, it had more or less fallen apart by the early 80s.Even then, nobody at a top school learned stuff by reading the journals; it was all working papers, with the journals serving as tombstones. 

You knew which working papers to read by being in the right conference loop. “Journal publication was so slow relative to the pace of ongoing work that it no longer acted as an information conduit”. Today it is all about online working papers and blogs.

A key part of the research process involves academic engagement: demonstrating and defending your work. Typically this occurs at seminars and conferences and eventually publishing working papers and journal articles. Blogs provide an additional outlet to disseminate ideas and receive feedback. The format holds a number of benefits:

  • The writing has to be accessible, which opens the discussion to non-specialists, policymakers and students.
  • The feedback is rapid.
  • It can foster a virtual community – you do not need to be in a large department with an active seminar series and can participate from anywhere.

This is my call to South Africa’s academic economists: Eat, sleep, blog, Economics.

agglomeration, Cities, creative class

More on creative cities

Last week I wrote a blog about creativity, growth and development and where South Africa ranks in the Global Creativity Index. Since then I seem to be reading about creativity and the creative class everywhere. The Mail and Guardian has asked “Can creativity fix South Africa?“, they mentioned the CGI and reported on an initiative called Culture Shift. The Future Cape Town blog asked “Why do we want to be a creative city?” and linked to an article at the Global Urbanist that argues that ranking creative cities is an exercise in futility. Oli Mould of the Globalisation and World Cities research network at Loughborough University states that:

The ‘creative city’ — the city of tolerance and cycle paths, gays and galleries — is qualitatively different from the creativity that Jacobs alludes to. The impulse to quantify the former is, unfortunately, usually to the detriment of the latter. In striving to climb to the top of the league tables, cities focus on how they can create the conditions that stimulate creativity quickly and cheaply (although it rarely ends up being either), missing or neglecting the role that individualised, neighbourhood creativity plays; and which is often already present in the city. ‘Creativity’ has been hijacked as a pseudonym for the promised land of economic prosperity, in effect reduced to marketing a city, creating a competitive city brand.

Though I agree that creative city branding may get to be too much, I do want to argue that there is a clear link between the nature of the local labour market and city growth and the creative class cannot be dismissed.

A thick city labour market allows for better matching between workers and jobs and there are two models in the literature. Helsley and Strange (1990) showed that a large city allows for a better match between different workers and firms’ job requirements and this enhances efficiency.  On the other hand, Duranton (1998) argued that a large market allows workers to become more specialised and, therefore, to be more efficient.  Either way, the better matching gives rise to increasing returns and growth. The cheerleaders for the importance of the creative class are thinking about these benefits and specifically for a subset of the labour force in high-skilled, high-value added occupations. There is enough evidence that innovation and creative destruction are key drivers of growth.

However, local policymakers’ efforts to foster the creative class are often flawed. There are clear external benefits to having the creatives in your city, but will you be able to crowd them in with a flagship opera house or a bike sharing scheme? The relationship between creative places and agglomerations of technology, talent and tolerance probably runs both ways. But in a South African economy, competing on the world stage, it won’t hurt to have good bistro’s, or maybe some bike paths!
 
 

creative class, GCI, South Africa

Creativity, growth and development – where does SA rank?

We all know that South Africa faces significant challenges in low economic growth rates and high levels of unemployment, poverty and inequality. Recently the National Planning Commission produced a comprehensive diagnostic overview of the challenges and possible solutions (check out their cool Vision 2030 video here). In the Budget speech the Minister of Finance proposed large increases in infrastructure spending and industrial development measures.
Recently I have come across a different view of the possible drivers of economic growth and development in the form of the Global Creativity Index (GCI), compiled by the Martin Prosperity Institute in the U.S. It builds on Richard Florida’s work about the creative class and they argue that the GCI is a different way to look at issues of jobs, wages, inequality and sustainable prosperity: What you measure affects what you do. If we have the wrong metrics, we will strive for the wrong things”.
The Global Creativity Index evaluates and ranks 82 nations on Technology, Talent, and Tolerance. The technology index is broad assessment of the technological and innovative capabilities and from Schumpeter to the growth theorists economists have emphasised the importance of technology for growth. The CGI uses the standard educational attainment measure of human capital, but also includes the share of a country’s workforce in high-skill, high wage Creative Class jobs. That is the share of workers in the fields of science, technology, and engineering; business, management and finance; design and architecture; arts, culture, entertainment, and media; law, healthcare, and education. The argument is that these occupations, rather than university degrees, provide a more accurate measure of the key skills that comprise human capital. Finally, the ability to attract both talent and technology depends on openness to new ideas and openness to people. The tolerance index is as a combination of two variables, based on Gallup surveys of openness to ethnic and racial minorities and openness to gays and lesbians.
The full report is available here, so I just want to focus on South Africa’s scores. The table shows the measures and South Africa’s index rank.
Technology
Talent
Tolerance
R&D spending to GDP
34
Educational attainment
65
Openness to minorities
7
STEM researchers per capita
46
Creative class occupations
48
Open to gay community
21
Patents per capita
32
Technology index ranking
45/75
Talent index ranking
68/82
Tolerance index ranking
15/81

The above numbers clearly show that human capital challenges facing South Africa. We rank low in terms of the educational attainment and proportion of researchers. The creative class share 21.71 of employment is 21 per cent. Overall, South Africa has a Global Creativity Index score of 0.459 and ranks 45th of 82. This is below the emerging economies of central and eastern Europe, but above, Brazil, Chile and India (50th). China ranks 58th on the index.

The following graphs show the relationship between the GCI scores and other metrics of growth and development. The GCI score is a good predictor of South Africa’s economic output and Global Competitiveness Index score. However, in terms of entrepreneurship, HDI, happiness and inequality South Africa performs worse than the GCI score would predict.
  
Overall, I thinks this tells a familiar study from a different perspective: education and training matters if a country aims to pursue high-skilled, high-wage growth in a globalised economy. Maybe we need more private schools for the poor? Maybe we need more bad jobs? I would be interested to see how different places in South Africa would stack up in a Local Creativity Index.
 
industrial policy, SEZ

IDZ, SEZ and the place of industrial policy

I am still working on that that long-promised, much-cited blog post about industrial policy in South Africa, but in the meantime things are cropping up that needs a mention. 
The DTI’s proposed Special Economic Zones (SEZ) legislation is out for comment and The Engineering News Online posted an interesting article this morning. There are currently three operational Industrial Development Zones in South Africa at Coega, East London and Richardsbay. Since 2002/03 they have attraced investments worth R11.8 billion and created an estimated 33 236 jobs. That is approximately R355 000 per job. Over the past two financial years the DTI spent over R2 billion on the three IDZs. Other IDZs in the making were the OR Tambo IDZ next to the international airport in Kempton Park and the proposed Saldanha Bay IDZs, in the Western Cape. 
I will read up some more and report back, since the article does not explain how the SEZs will improve on the IDZ system. The DTI Director-General Lionel October did say that labour laws would not be relaxed in the SEZs.

There is an interesting link to a blog post by the Centre for Cities about the place for industrial policy in the UK. Joe Sarling reports on an the event “Developing an Industrial Strategy for the UK” hosted by the IPPR, the Resolution Foundation and New Economics Foundation. There they made the distinction between horizontal and vertical policies. The horizontal policies are not sector specific such as education, taxation and regulation. It was emphasised that there is a need to understand how these influence firms and how they can improve productivity. The vertical policies could be rewards for firms (not clear what) who are delivering on key long-term objectives such as research and development, employee training and up-skilling or long-term investment growth plans. The part that I liked best was:

A key rhetoric change to come from the event was the recognition that 21st century industrial policy needs to be more spatially aware if it is to be successful – there is no industrial policy without regional policy.

We definitely need more discussion on all of this in South Africa.

climate change, education, willingness to pay

Concerned about climate change?

Yesterday I received a link via our local statistician to an interesting post on the Getstats blog. It reports the result of a survey by the U.K.’s Department of Transport which shows that public concern about climate change is falling.

The proportion of adults saying they are willing to change their behaviour to limit climate change fell from 77 per cent in 2006 to 65 per cent last year.

Interestingly they find that higher levels of education is associated with greater concern about the environment and willingness to change behaviour to limit climate change.

This mirrors local work that I have been doing with the research area: Tourism Research in Economics, the Environs and Society (TREES). Below the cross-tab of data from our 2011 survey at the Two Oceans Marathon shows the following:
  • Reading down the column, within the group that indicated that they are willing to pay to mitigate climate change, 23% had Matric, 36% a diploma or degree and 25% a post-graduate qualification.
  • Reading across, of those with Matric 59% were willing to pay, of those with a diploma or degree 69% were willing to pay and of those with a post-graduate qualification 66% were willing to pay.
  • But, fewer professionals were willing to pay than any of the above groups.

This weekend at the Cape Argus Pick ‘n Pay Cycle Tour we will be asking cyclists what they think needs to be done (and what they are willing to do) to make the race greener!


Willing to pay to mitigate climate change
Total
Skipped
No
Yes
Level of education
Skipped
Count
8
4
5
17
% within education
47%
24%
29%
100%
% WTP
15%
3%
2%
3%
No schooling
Count
4
1
5
10
% within education
40%
10%
50%
100%
% WTP
7%
1%
2%
2%
Matric
Count
13
37
71
121
% within education
11%
31%
59%
100%
% WTP
24%
27%
23%
24%
Diploma, degree
Count
9
42
112
163
% within education
6%
26%
69%
100%
% WTP
16%
31%
36%
32%
Post-graduate
Count
11
30
78
119
% within education
9%
25%
66%
100%
% WTP
20%
22%
25%
24%
Professional
Count
9
20
36
65
% within education
14%
31%
55%
100%
% WTP
16%
15%
12%
13%
Other
Count
1
1
5
7
% within education
14%
14%
71%
100%
% WTP
2%
1%
2%
1%
agglomeration, Cities

SERC: Spatial Economics Research Centre: Rethinking our cities; density or size?

I am only now discovering the SERC blog. They are based at the LSE and aims to provide high quality independent research to further understand why some regions, cities and communities prosper, whilst others do not. Just the stuff I’m interested in. Have a look at the latest post:
SERC: Spatial Economics Research Centre: Rethinking our cities; density or size?: Will Hutton bemoans the quality of the first London Mayoral debate arguing that the candidates shouldn’t focus narrowly on transport and and the police, but should address the wider issue of what makes London great and what could make it greater?