Views of a Nepali Economist

A great piece on the French Cartels--the history and workings.

There is some fantastic detail in the 177 page report on the French cartel. The executives involved went to elaborate lengths to cloak their plans (both from their bosses and the regulators) to fix the prices charged to supermarkets. Each of the companies had a code name: “Pierre” for P&G, “Laurence” for Unilever, “Hugues” for Henkel and “Christian” for Colgate-Palmolive. The conspirators met in suburban Paris hotels for meetings termed “store checks”.

A new model of microfinance for the very poor is spreading

Most of the estimated 2 billion people who live on less than $2 a day do not have access to formal banks. Over the past 20 years, legions of microlenders have tried to extend financial services to them. But some communities—the poorest, the least densely populated and the most remote—are not attractive to traditional microlenders. And the poorest of the poor are often wary of racking up any kind of debt, even a small one. Some economists argue that what the poor really need, if they are to manage their cash better, is savings.

A village savings scheme typically involves a small group (perhaps 15-30 people) who pool their savings. Each buys a share in a fund from which they can all borrow. All must also contribute a small sum to a social fund, which acts as micro-insurance. If a member suffers a sudden misfortune, she will receive a payout.

Members select leaders and draft a constitution. The rules spell out how often the group will meet, what interest rates it will charge and what loans may be used for. At the end of a cycle (usually about one year), all the money accumulated through savings and interest is shared out according to members’ contributions, and a new cycle starts.

Once members have mastered the system, the groups they have formed can take on additional tasks such as providing training in agriculture, health, leadership and business.

Corruption makes economy expensive‚ less competitive--says Rameshore Prasad Khanal ...former finance secretary Rameshwor Prasad Khanal presenting his paper on ‘Anti corruption and Good Governance: Challenges from Bureaucratical Dimension,’ in an interaction on ‘Good Governance — Zero Tolerance to Corruption’ organised by Federation of Nepalese Chambers of Commerce and Industry (FNCCI) here in the Valley today. Some highlights from the news piece:

Petty corruption and rent seeking mentality create negative image of government employee but it doesnot hurt economy...public procurement, public post ‘auction’, and revenue cheating, however, hurt economy making the economy less competitive....

The world’s shadow economy or the illegal economic activities, that go untaxed, accounts for 17 per cent of the global economy. Nepal’s shadow economy is as big as formal economy that is not only bleeding the government coffer white, “but also channelising resources to the unproductive sectors widening the gap between the rich and poor,”...

Corruption is multi-pronged and due to massive corruption, Nepal is still in the group of Least Developed Countries (LDCs), whereas the ones in the same group with Nepal some three decades ago have upgraded...Apart from strong political will, some simplification in processes, usages of IT and transparency will help check the corruption...

Institutional corruption is much more dangerous than individual corruption...

The Center for Economic Policy Research (CEPR) has a great e-book out on The Future of Banking. A must read. (PDF)

How big is the North Korean Army?
The article also goes on to mention the way it figured out the total number of famine victims. Highlights regarding the army numbers:

One estimate from The Military Balance is formally used by the Japanese government. It suggests North Korea's military personnel are around 1,020,000 in the ground forces, 60,000 in the navy, and 11,000 in the air force. However, no clear explanation is provided as to how these figures were obtained....

The discrepancy in the 1993 census is of 691,027 persons, while in the 2008 census, it is of 702,373 persons. This means that roughly 700,000 people are not registered in administrative districts....This implies that the 700,000 discrepancy consists in part of those enlisted in the army....Looking at the demographic characteristics of these 700,000 persons, it is highly likely that a majority of them are in the Korean People's Army.

At best, this number of 700,000 persons forms the upper bound for estimates of the number of North Korean military personnel. And this, in turn, implies that the figure presented in The Military Balance is an overestimate.

Peace and Security: Indicators and Definitions. (PDF)