According to Dani Rodrik there are three ways that most people conceptualize development economics:

1) One group believes the problem with developing countries is lack of resources. So the solution is a vast increase in foreign aid.

2) A second group believes the real problem if lack of incentives. So the solution is more and better markets.

3) The third group thinks the problem is lousy governments, so the answer lies with improved governance.

Rodrik claims to have always strayed from all three groups-- instead preferring to judge each case individually. He argues that increasingly this tendency to examine each case separately is an emerging paradigm in development economics. In this view we don't know the solution and it can only be determined in the context of each country.

Generalizations are hard to make when you are looking at a global scale. Rodrik's view argues that our knowledge is still very limited and there is still very much to learn. It makes sense to me that development tactics for Liberia will be different than Cambodia, and likewise different between Bhutan and Bolivia. Your thoughts?

Today's Business Week reports that a disagreement between the EU and South Africa is threatening the unity of the Southern African Customs Union, the world's oldest customs union. Last year several countries broke rank with South Africa, signing a trade agreement with the EU. It is feared that South Africa may use this as a reason to disband the union entirely.

If South Africa does break ranks with other participating countries including Botswana, Namibia, Swaziland and Lesotho, tariffs protecting Namibian beer makers from European beer would not apply to countries like South Africa. The result would be the inability of Southern African countries to effectively protect certain industries (and in this case a significant loss to the global beer supply as well as domestic economies).

It seems counter intuitive-- how can higher oil prices possibly make oil rich countries like Saudi Arabia worse off? Well, these prices are certainly hurting the middle class.

Today's New York Times article is a must read on the subject:

Here in Jordan, the cost of maintaining fuel subsidies amid the surge in prices forced the government to remove almost all the subsidies this month, sending the price of some fuels up 76 percent overnight. In a devastating domino effect, the cost of basic foods like eggs, potatoes and cucumbers doubled or more.

In Saudi Arabia, where inflation had been virtually zero for a decade, it recently reached an official level of 6.5 percent, though unofficial estimates put it much higher. Public protests and boycotts have followed, and 19 prominent clerics posted an unusual statement on the Internet in December warning of a crisis that would cause “theft, cheating, armed robbery and resentment between rich and poor.”

The inflation has many causes ranging from a weakening dollar to global commodity demand, but the fact is that average citizens in many oil rich countries are not benefiting from high oil prices. From Yemen to Morocco, the higher food prices and shrinking government subsidies have resulted in protests and demonstrations with people blaming corrupt officials for higher prices.