SBS DBIA Day 1

The African Century
Duggan SBS DBIA 2023

Real GDP Growth, 2023
Duggan SBS DBIA 2023 IMF

The highest stakes.

The greatest opportunities.

The hardest problems.

No easy answers.

Leadership on the grandest possible scale.
Stories matter. Many stories matter.
Stories have been used to

dispossess and to malign, but
stories can also be used to
empower and to humanize.
Stories can break the dignity of a

people, but stories can also repair
that broken dignity.
Chimamanda Ngozi Adichie

Duggan SBS DBIA 2023 Photo: Google Earth
Real GDP per capita, 1960 - 1980
500
450
400
350
Constant 2000 USD
300
Nigeria
250 India
200 China
150
100
50
0
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
Source: World Development Indicators

2000
1800
1600
1400
Constant 2000 USD
1200
Nigeria
1000 India
800 China
600
400
200
0
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006

2000
1800
1600
1400
Constant 2000 USD
1200
Nigeria
1000 India
800 China
600
400
200
0
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006

Main Economics Concepts in this Course
1. GDP Identity
2. Savings and Investment
3. Institutions and Transaction Costs

GDP
The monetary value of final goods and services

produced in a country in a given period of time.

GDP Identity
GDP = Consumption + Investment + Gov’t Spending + Exports – Imports

GDP Identity
Spending by households

GDP Identity
Spending by firms on things that will last

GDP Identity
Spending by government on salaries, infrastructure, schools etc.

GDP Identity

GDP Identity
GDP = C + I + G + X – M

GDP Identity
GDP = C + I + G + X – M
(“Net Exports”)
NX

GDP Identity
GDP = C + I + G + X – M
“CIGNX”

How do countries grow?
How

Make stuff, sell it to people
Make more stuff, sell it to more people
Make more and better stuff more efficiently, sell it to more people at higher prices
A country can grow by:
Adding capital…

…or adding labour…

…or by improving the way it uses what it has, through allocation, technology, education
(“Total Factor Productivity” or “TFP”)

Savings-Investment Balance
GDP = C + I + G + X – M
Investment = Private Savings + Public Savings + “Foreign Borrowing”

GDP = C + I + G + X – M


(~income – consumption) (~taxes – gov’t spending) (~other people’s money)

GDP Per Capita 1960-2010 (constant 2000 US Dollars)
35000
30000
25000
Singapore
20000 OECD members
Latin America & Caribbean
East Asia & Pacific
15000 Middle East & North Africa
South Asia
Sub-Saharan Africa
10000
5000
0
60
62
64
66
68
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
Source: World Development Indicators.


Singapore Savings and Investment, 1970-2001
70
60
50
46
40 40 42
38 39 37
34 33 32 32
30
25
% GDP
20
10
0
1970 1975 1980 1985 1990 1996 1997 1998 1999 2000 2001
-10
-20
-30
Gross National Saving Net Funds from Abroad Gross Capital Formation

70
60
50
46
40 40 42
38 39 37
34 33 32 32
30
25
% GDP
20
10
0
1970 1975 1980 1985 1990 1996 1997 1998 1999 2000 2001
-10
-20
-30

70
60
50
46
40 40 42
38 39 37
34 33 32 32
30
25
% GDP
20
10
0
1970 1975 1980 1985 1990 1996 1997 1998 1999 2000 2001
-10
-20
-30



Types of Other People’s Money
Foreign Direct Investment (FDI)
Ownership (more than 10% stake), stability, spillover effects
Portfolio Investment (“Hot Money”)

Stocks, bonds, financial instruments (less than 10% stake)
Other Investments
Liquid, short-term, bank deposits, trade credit, and bank loans

GDP = C + I + G + X – M


Nigeria GDP Components (Percent Singapore GDP Components (Percent
of GDP), 1985-2014 of GDP), 1970-2001
90 90
80 80
70 70
OECD Average: 61%
60 60
BRINCS Average: 58.2%

50 50
Percent of GDP
40 40
30 30
20 20
OECD Average: 21%
10 10
0 0
1985
1990
1995
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
70
75
80
85
90
91
92
93
94
95
96
97
98
99
00
01
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
-10
Consumption Gross Fixed Investment
Consumption Gross Fixed Investment

Nigeria GDP Components (Percent China’s GDP Components (Percent
of GDP), 1985-2014 of GDP, 1997-2011)
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
1985
1990
1995
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
97
00
01
02
03
04
05
06
07
08
09
10
11
19
20
20
20
20
20
20
20
20
20
20
20
20
Consumption Gross Fixed Investment Private consumption Gross fixed investment
Government spending Net Exports

Nigeria GDP Components (Percent United States’ GDP Components
of GDP), 1985-2014 (Percent of GDP, 1980-2009)
90 90%
80 80%
70 70%
60 60%
BRINCS Average: 58.2% OECD Average: 61%
50
50%
40
40%
30
BRINCS Average: 22.4% 30%
OECD Average: 21%
20
20%
10
10%
0
1985
1990
1995
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0%
1980
1984
1988
1992
1996
1998
2000
2001
2002
2003
2005
2007
2008
2009
Consumption Gross Fixed Investment -10%
Private Consumption Gross Fixed Investment

Nigeria GDP Components (Percent
Singapore GDP Components (Percent
of GDP), 1985-2014
of GDP), 1970-2001
90 90
80 80
70 70
60 60
50 50
Percent of GDP
40 40
30 30
BRINCS Average: 15% OECD Average: 18.5%
20 20
10 10
0 0
1985
1990
1995
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
70
75
80
85
90
91
92
93
94
95
96
97
98
99
00
01
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
-10
Government Spending Government Spending

Nigeria GDP Components (Percent
Singapore GDP Components (Percent
of GDP), 1985-2014
of GDP), 1970-2001
90 90
80 80
70 70
60 60
50 50
Percent of GDP
40 40
30 30

20 20
10 10
OECD Average: -.2%

0 0
1985
1990
1995
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
70
75
80
85
90
91
92
93
94
95
96
97
98
99
00
01
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
-10
Net Exports
Net Exports

Nigeria: Fates in the Balance

The Resource Curse
Mechanical
The Dutch Disease
Prices: exchange rates, exports, imports
Rational response by citizens to market pressures
Solutions require good management by government
Incentive-based
The Rentier State
Unchecked incentives of leaders: power, money
Bargains that are hard to change
The potential for zero-sum mindsets
If men were angels, no government would be
necessary. If angels were to govern men, neither
external nor internal controls on government would
be necessary…
James Madison, Federalist 51
In framing a government which is to be administered by

men over men, the great difficulty lies in this: you must
first enable the government to control the governed; and
in the next Duggan
place oblige it to control itself.
SBS DBIA 2023
Duggan SBS DBIA 2023 Graph: Washington Post
We must look at the world with new eyes.

We must look at ourselves differently.

We are freer than we think.

We haven’t begun to live yet.

The man whose light has come on in his head, in his
dormant sun, can never be kept down orSBSdefeated.
Duggan DBIA 2023
We can redream this world and make the dream real.
--Ben Okri
We can redream this world and make the dream real.
--Ben Okri
Main Economics Concepts in this Course
1. GDP Identity
2. Savings and Investment
3. Institutions and Transaction Costs

Babban Gona: Growing
Amidst Uncertainty in
Rural Nigeria

Risk Aversion

Transaction Costs

If you want to buy fruit, what do you do?
What about a new spare tire for your vehicle?

What happens to a dream deferred?
Does it dry up
like a raisin in the sun?...
LangstonDuggan
HughesSBS DBIA 2023
Or fester like a sore--
And then run?

Does it stink like rotten meat?
China, 2014
Or crust and sugar over--
like a syrupy sweet?
Maybe it just sags
like a heavy load.

Or does it explode?

“I wanted to hire youths that didn’t have jobs; these boys
didn’t have any money, so I would hire them.”
Wecyclers paid riders a flat salary—it was often their first

salaried job, perhaps a stepping stone to something more.

In groups, please ask:
If I were an employee or customer, how would I cheat

Wecyclers?

“Because we started out small, we did not put in lots of tests and checks—so
much of what we did was based on trust. But we quickly found out that it’s not
a good idea always just to trust people.”
“People wouldn’t show up to work on time, they would leave early, they
wouldn’t collect the recyclablesDuggan
theySBSwere supposed to collect.”
DBIA 2023
“They would say, ‘Oh, I have Mrs. Aweyo, and she has 2,000 points, and she said that
she wants an iron,’ So we would give him an iron for Mrs. Aweyo. But there is no Mrs.
Aweyo—he’s the one who wants the iron. And they’re really smart! He’ll write things
down every Thursday as though he is collecting from her, making sure he puts down
numbers that make sense. So rather than putting ‘2 kg’ he would write ‘2.8kg.’ They
would figure out the system, and then they would cheat.”
When they were caught, “they wouldn’t lie; they would confess,”—they did it because
they knew they would not be caught.

Bought a commercial scale for the sorting facility and paid based on weight
Once agents knew everything was being checked, they did not try to cheat.
She also began to recruit new workers by approaching reliable ones and telling
them to bring their friends and family members. Agents who demonstrated a
poor work ethic or tried to take advantage of the system were fired.
Red Teaming
1. Gather people on a team who are not familiar with the plan/model, etc.
2. Have them approach the plan as though they were competitors or customers
Ask: “How can I take advantage of this for my own gain?”
(One strategy: “How could I cheat this system?”)
Challenge assumptions, ask “what if?”
3. Think about the who/how/why

Who might take advantage
How they might do it
Why—what motivates them; what do they care most about?

In first two years of operation:
Expanded workforce from 28 to 52 people
Had about 7,000 subscribing households

85% women, 50% above the age of 50
Distributed nearly $40,000 in goods and cash

Leapfrogging

Image capture: Apple UAE YouTube

“’Will you walk a little faster?’ said a whiting to a snail,
‘There’s a porpoise close behind us and he’s treading on my tail.’"
“’See how eagerly the lobsters and the turtles all advance!
They are waiting at the shingle--will you come and join the dance?’"
“You can really have no notion how delightful it will be
When they take us up and throw us, with the lobsters, out to sea!"
But the snail replied, “Too far, too far!” and gave a look askance—
Said he thanked the whiting kindly, but he would not join the dance.
“What matters it how far we go?” his scaly friend replied.
“There is another shore, you know, upon the other side.
The further off from England the nearer is to France—
Then turn not pale, beloved snail, but come and join the dance.”
— Lewis Carroll, Alice in Wonderland

SBS DBIA Day 1

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

SBS DBIA Day 1

Uploaded by

Copyright:

Available Formats

The African Century

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023 IMF

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Stories have been used to

Stories can break the dignity of a

Chimamanda Ngozi Adichie

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

2. Savings and Investment

3. Institutions and Transaction Costs

Duggan SBS DBIA 2023

The monetary value of final goods and services

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Spending by firms on things that will last

Duggan SBS DBIA 2023

Spending by government on salaries, infrastructure, schools etc.

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

(“Total Factor Productivity” or “TFP”)

Investment = Private Savings + Public Savings + “Foreign Borrowing”

Duggan SBS DBIA 2023

Investment = Private Savings + Public Savings + “Foreign Borrowing”

Duggan SBS DBIA 2023

Investment = Private Savings + Public Savings + “Foreign Borrowing”

Duggan SBS DBIA 2023

Investment = Private Savings + Public Savings + “Foreign Borrowing”

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

Investment = Private Savings + Public Savings + “Foreign Borrowing”

Duggan SBS DBIA 2023

Portfolio Investment (“Hot Money”)

Duggan SBS DBIA 2023

Investment = Private Savings + Public Savings + “Foreign Borrowing”

Duggan SBS DBIA 2023

BRINCS Average: 58.2%

Consumption Gross Fixed Investment

Duggan SBS DBIA 2023

Government spending Net Exports

Private Consumption Gross Fixed Investment

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

BRINCS Average: 4.3%

OECD Average: -.2%

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023

In framing a government which is to be administered by

Duggan SBS DBIA 2023

Duggan SBS DBIA 2023