The noble fight against poverty

The 2019 Nobel Prize in Economics to Abhijit Banerjee, Esther Duflo and Michael Kremer reaffirms the value of evidence-based policymaking in addressing intractable problems. Even as the pursuit of capital accumulation is underway in the international sphere, the world continues to be plagued with multiple distressing phenomena. Instances such as 700 million people trapped into poverty, or 50% children leaving schools without basic skills in literacy and numeracy are grim reminders of how policymaking at a macro-level could prove inadequate to address such crises.
 
Often, in instances such as global poverty, economists tend to rely on a macro-level understanding to alleviate poverty. Ideas related to immigration and economic growth are recognized as tools to improve the quality of life among the world’s poor. On the contrary, the relative narrowness of the scope of this year’s winner’s work is owed in part to their method of analysis. Mr. Banerjee and Ms. Duflo explicitly reject big thinking about big questions in their 2011 book “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.”
 
What is unique about the duo’s work is the employability of the approach; Randomized Control Trial (RCT) has been the buzzword among development economists for almost two decades. Inspired by the impact of the RCTs in medical science, the trio has used this technique to test the effect of small interventions on individual behavior. Such trials involve selecting two sets of individuals at random, out of which one is then exposed to policy intervention. The experiment examines the impact of such interventions, often over long periods of time, to gauge the impact of policy and whether or not, it justifies the costs associated with it.
 
This has proven exemplary in areas such as education and healthcare. For instance, the Nobel Committee highlighted how their “experiment-based approach has transformed development economics over the past decades.” They specifically mentioned the result of one such randomized trial wherein “more than 5 million Indian children have benefited from programmes of remedial tutoring in schools.” Further, the results of another experiment suggest that multi-topic medical training of informal healthcare providers may offer an effective short-run strategy for improved healthcare.
 
Nonetheless, the effect of such rigour in policy analysis is considerable and as a consequence, the RCT approach has taken over the field of development economics. For Duflo and Banerjee, an important part of their work has been ensuring that the agency of the beneficiaries, usually in developing countries such as India, is put at the centre of any policy design. This is a crucial method in which experimental results often provide better outcome than large-scale data-based inference.
 
However, this approach is not without its critics. For instance, Angus Deaton, who won the 2015 Nobel prize in economics noted that while RCTs can play a role in building scientific knowledge, they can do so only as part of a cumulative program. While the approach has enamored a large number of development economists for its simplicity, where inferences of what works or not are drawn from field experiments, it has also been criticized for reducing the study of poverty to small interventions unconnected to the life experiences of the poor. But, despite the conditional nature of these studies, it is difficult to deny that policy interventions require better understanding to ensure efficient outcomes, especially in countries with finite state capacities. Thus, in a country like India, where billions in money goes into formulating policies to help the poor, which are often unaccompanied with the real scenario, such research can be enormously valuable in informing public debate and can thus aid in policy making.
 
India Outbound
october 24, 2019
 
 

source https://indiaoutbound.org/the-noble-fight-against-poverty/

Brexit, deal or no deal?

The fact that even a long gloomy night breaks into dawn is nothing short of a miracle. Although, the word miracle might not sound apt here, but the Brexit conundrum that has been lingering for more than three years seems to have made some sort of a breakthrough. After months of confusion, the negotiating teams of the United Kingdom and the European Union have reached a consensus on what could transpire as a no-deal Brexit if this gets approved. Both the British Prime Minister Boris Johnson and European Commission President Jean Claude-Juncker have announced their mutual agreement over the deal, where Juncker reportedly stated that it is a “fair and balanced agreement for the EU and the UK.”
 
The deal after the announcement still must clear several hurdles, including getting approval from Europe’s leaders and most crucially passage in the British Parliament, where an agreement reached by Johnson’s predecessor May suffered three successive defeats in the Parliament. The Brexit deal comes just ahead of the two-day EU summit starting Thursday and holds the possibility of removing some of the uncertainties that have dogged the EU-UK relationship since 2016.
 
However, the latest onslaught came from the Democratic Unionist Party (DUP) in Ireland who refused to support the deal as “things as stand.”Their concern is over the backstop arrangement, which if made redundant, would establish a hard border between the Northern Ireland (part of the UK) and the Republic of Ireland. Currently, there are no physical borders between the two parts. Johnson, a hard Eurosceptic in a sense, apparently junked the vexed backstop arrangement that had fluttered Brexiters all along. For Tories of that school, the purpose of Brexit is liberation from a regulatory yoke, imposed by the Brussels bureaucracy. Hatred of the backstop has its origin in the ambition to extricate the UK economy from the social protections preferred by many European countries. The theory is that a competitive edge is achieved by reducing the cost of doing business in Britain.
 
Mr. Johnson’s frantic rush to strike a Brexit bargain by October 31 has forced a focus on technicalities of withdrawal, but it also serves his agenda to distract his attention from the bigger picture. Largely, Johnson has portrayed himself as the man who would get Brexit done, a phrase he had often used as a weapon to stir the hysteria of Brexit and play down Theresa May’s deal.
 
But, it is important to remember that Brexit is not a game or a play to advance one man’s ambitions. Though Brexit was conceived and supported by the people who want the EU to fail, a government that seeks to uphold the notions of multilateralism will want the EU to survive. An outcome of the deal will shape the strategic direction of the country for generations and affect millions of livelihoods. What matters is for Johnson and his government to not play poker with the deal and strive towards an outcome that would co-opt both the UK and the EU in a favourable manner.

source https://indiaoutbound.org/brexit-deal-or-no-deal/

Why India needs a female boardroom revolution?

Over the years, the issue of gender diversity in business organizations has become particularly relevant in the international corporate governance arena. For proponents of more women to secure seats at the boardroom table, this marks a remarkable moment of the shattering of the glass ceiling. Here, the glass ceiling is used as a metaphor to represent an invisible barrier that prevents a given demography, in this case women, from rising beyond a certain level of hierarchy.
 
Research on gender diversity has often invoked sundry perspectives on how to efficiently solve problems that companies face. To this end, India had this epiphany only back in 2013 where the 2013 Companies Act made it mandatory for listed companies as well as companies with a turnover of INR 300 crore to appoint atleast one woman director. But often, companies would induct a women member from their promoter families to meet the requirement. This was largely tied to the objective of protecting business interests.
 
While this broadened women’s representation, this also led to a small cohort of women accumulating directorships. So, to ameliorate this concern and to make the boardroom truly diverse, in October 2017, Securities and Exchange Board of India (Sebi) mandated that there should be atleast one independent woman director in all listed companies.
 
Research evinces that companies with truly diverse boards perform better than their peers over a long period of time. So far, the legal provisions have managed to trigger off a right trend where according to Prime Database (which explored and analysed data for the boards of 500 top companies listed on the National Stock Exchange or Nifty500) found that female representation increased to 13.8 % in 2017, from 5% in 2012, indicating a 8.8% increase. However, the gain is not significant as per data shown by the 2019 edition of the Credit Suisse Gender 3000 report wherein Indian female representation in boardrooms has risen to 15.2% in 2019, falling below the global average of 20.6 %.
 
Apart from the normative argument that suggests both men and women should have an equal opportunity to attain leadership positions, what explains the logic of having a gender-diverse boardroom? Simply put, does investment in women actually translate to better financial results for firms? The broad answer is yes. There is a significant body of research, which suggests that gender diversity can have a positive impact on financial performance as well as brand perception.
 
Further research shows that companies with atleast one woman on board have a higher return on equity, higher earnings and stronger growth in stock price than companies with all-male boards. In fact, the evidence abounds. According to a research brief produced by Mckinsey, companies in the top quartile of gender diversity are 15% more likely to financially outperform those in the bottom quartile. Similarly, multiple surveys have also linked companies with more women on their boards to better corporate governance and more ethical behavior.
 
Meanwhile,another survey published in the International Journal of Business Governance and Ethics pointed out that firms with at least one woman on the board have a 20% lower risk of bankruptcy. These stark figures should in themselves serve as an incentive for businesses to see female representation as a commercial imperative.
 
The quota for female representation, albeit motivated by both ethical and social responsibility also produces better economic yields. Since boards appoint and monitor the executive positions such as the Chief Executive Officer (CEO) and guide the firm’s strategy, boardroom composition has a strong impact on firm performance. Naturally, a gender diverse boardroom will positively affect the economic performance of the firm and Indian businesses would do well to co-opt women in boardrooms to ensure a successful business.
 
India Outbound
October 16, 2019
 
 

source https://indiaoutbound.org/why-india-needs-a-female-boardroom-revolution/