Graphic from infosthetics.com

As a follow-up to Eric Beinhocker’s The Origin of Wealth, I recently downloaded and read The Atlas of Economic Complexity by Ricardo Hausmann, Cesar Hidalgo et al. It was a good chaser after Beinhocker’s massive introduction to complexity economics. Hausmann and Hidalgo are influenced by the idea that the economy is a complex adaptive system. Therefore they reject the idea that you can easily sum up an economy in a single number like GDP. Instead, they try to analyze all the different products produced in the economy in an attempt to get a grasp on how complex it is rather than just how big it is in dollar terms. Their results are interesting.

Hausmann and Hidalgo assume that the economy is based on productive knowledge–bits of knowledge necessary to make the products that we consume. These units of productive knowledge they call capabilities. They also assume that many products have overlaps in the capabilities needed to make them. So if you make shirts, there is a high probability you can make blouses too. These relationships should show up in a visualization of the product space. Countries that makes shirts will show a tendency to produce products with overlapping capabilities: blouses, pants, etc.

Hausmann and Hidalgo calculate a country’s economic complexity by measuring the diversity of products a country is capable of producing, and by also calculating the ubiquity of the products they do produce. So if a country produces only a few products and those products are ubiquitous throughout the world it is pretty certain the country has a fairly non-complex economy. The amount of capabilities present in that economy must be pretty few. For example, here’s an infographic of the economy of Tajikistan:

Taj exportsAluminum, raw cotton and dried fruit dominate the Tajik economy. And each of these items are ubiquitous enough in the world that it does not take a high degree of scarce knowledge to produce them. On the other hand, here’s Thailand’s exports:

tree_map_export_tha_all_show_2010Notice the increase in the number of products, but also of the kinds of products produced. It takes many more capabilities to produce electronics than it does to produce raw cotton. Here the difference between an emerging economy like Thailand and an underdeveloped economy like Tajikistan is pretty stark.

The interesting thing about the measure of economic complexity is that Hausmann and Hidalgo have found it to be a strong indicator of future economic growth. The economies which are highly complex but with a lower-than-expected current GDP can be expected to grow quickly, while countries that have a high GDP relative to their complexity can be expected to grow slowly, if at all. This gives a new dimension to the “resource curse” hypothesis in that it displays growth based on natural resource exploitation is unsustainable, unless it is invested in expanding other productive capacities.

According to the Atlas of Economic Complexity, the economies whose level of complexity  most predict growth in GDP per capita are China, India and Thailand. Next in the rankings come Belarus, Muldova and Zimbabwe. All of these countries have economies which currently lag behind their potential.

Using GDP instead of GDP per capita, the top slots all go to Sub-Saharan Africa: Uganda, Kenya and Tanzania take the top slots, with Zimbabwe, Madagascar and Senegal following. Though their high levels of population growth keep income per capita down, these will all likely be fast-growing economies over the next decade.

The Atlas of Economic Complexity brings to life the incredible diversity within the world economy. It offers a new metric of development: the Economic Complexity Index, or ECI, which may prove to be a more important indicator than more simplistic metrics like GDP per capita. Time will tell how Hausmann and Ricardo’s predictions turn out. But their approach seems bound to be imitated as development theorists absorb and make use of the insights of complexity science.

For a brief introduction to economic complexity from Cesar Hidalgo himself, check out his talk at TEDx Boston:

And for more cool data visualizations visit the Observatory of Economic Complexity.

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Every once in a while I read a book that totally revolutionizes my conceptual categories. Eric Beinhocker’s The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics did that form me in the field of economics.

Some background: economists have known for some time that there are some pretty big caveats to the models we’ve been using to understand the economy. These models are hugely contingent on some key assumptions including:

-the rational decision-making of (perfectly) informed economic agents.

-the tendency of markets to reach equilibrium, unless shocked from some exogenous source

Unfortunately, in the real world, these assumptions are largely wrong. And recent events, including the Great Recession and euro-zone crisis–both of which were not foreseen by most mainstream economists–have significantly increased the skepticism with which many view the models that come from these assumptions.

But what is the next step for economics? Behavioral economics has long been punching holes in the vision of the rational, perfectly informed agent. But the mainstream view is still of an equilibrium economy, with caveats for market failures. There has been little in the way of a new synthesis.

But Eric Beinhocker thinks it’s coming. His book advocates a bundle of related insights he  calls collectively “Complexity Economics.” I would venture to bet these insights will be the source of economics’ new mainstream.

Complexity Economics, as Beinhocker frames it, arises out of the mathematical revolution that brought us chaos theory. This is the mathematics of unpredictable, turbulent, emergent behavior, sensitively dependent on initial conditions and subject to amplifying feedback loops that defy strictly Newtonian attempts at analysis. This is the world of turbulence, fractals, emergent intelligence, population dynamics and a whole host of other phenomena which math had no tools to understand until the 1980s. If you want a readable introduction to this stuff, I recommend James Gleick’s Chaos: Making a New Science.

These mathematical innovations are finally coming home to roost in economics, the study of the most massively complex emergent system humankind has ever created. And Beinhocker’s book is a manifesto of sorts for this new approach.

So what is Complexity Economics? Beinhocker distinguishes it from what he calls “Traditional Economics,” (his term for pre-complexity equilibrium economics) using the following categories:

Dynamics: Traditional Economics tends to depict “closed, static, linear systems in equilibrium.” Complexity economics favors “open, dynamic, nonlinear systems, far from equilibrium.”

Agents: Traditional Economic agents are “modeled collectively” and tend to “make no errors and have no biases; have no need for learning or adaptation.” On the other hand agents in Complexity Economics are “modeled individually” (this matters because their behavior gives rise to macroeconomic phenomena in an emergent manner, rather than according to immutable laws of supply and demand as in Traditional Economic theories) and “are subject to errors and biases; learn and adapt over time.”

Networks: Traditional Economic models “assume agents only interact indirectly through market mechanisms (e.g., auctions),” while Complexity Economics “explicitly models interactions between individual agents; networks of relationships change over time.”

Emergence: In Traditional Economics, “Micro and macroeconomics remain separate disciplines,” while in Complexity Economics “macro patters are the emergent result of micro-level behaviors and interactions.”

Evolution: Traditional Economics offers “no mechanism for endogenously creating novelty, or growth in order and complexity.” Complexity Economics proposes an “eveolutionary process of differentiation, selection, and amplification” as an explanation for the process of economic development.

Taken together, these distinctions create a whole new way of looking at economics. Economists tending toward this school of thought tend to create models of individual agents, and then watch what structure emerges–like a whirl in a turbulent stream–from their interaction. This is in contrast with typical models that assume everyone is totally self-interested and perfectly rational, then create laws that bring the model to an equilibrium where utility is maximized in the system–more like a marble coming to rest in a bowl.

For those on the edge of the field, this change has a few important implications:

1. The market is neither rational nor predictable. This has been well-demonstrated by the past 100 years of economic history, but until now we haven’t had the math to describe a non-equilibrium, non-linear, complex adaptive market. Now we do.

2. The market is adaptive, as are the agents in it. Previous thinkers have compared the market to the survival-of-the-fittest world of nature. But now economists are actually modeling firms and business plans as if each is subject to the same selection pressure as a bacteria in a competitive ecosystem. In other words, each firm is competing for energy. Literally. Every firm demands energy in some form, and uses it to create useful order. How useful the orderly stuff is determines whether the firm gets more energy to keep creating useful, orderly stuff. This is not a metaphor. The complexity models are literally placing economics within the constraints of the second law of thermodynamics. Either a firm adapts, or it is collapses into high entropy.

3. We might not be able to predict the economy, but we may be able to give it boundaries. Though the economy is a shape-shifting emergent phenomena involving billions of agents and trillions of goods, like an eco-system, it has its boundaries. There is a “fitness function” to which all firms conform: the demand of consumers. And if we, as flawed but self-conscious actors in this complex system, demand (either through uncoordinated action, or political will), an economy whose effects on the environment and the poor are less deleterious, we may get it. But it will be difficult, and our actions will be plagued by unintended consequences.

The Origin of Wealth gave me a lot to think about. And its titular proposition: that wealth is the result of low-entropy order emerging from social conditions favorable to the fostering of complex, dynamic systems, is an interesting one.

It dovetails with Why Nations Fail, which I wrote about some time ago. But while Acemoglu and Robinson could be frustratingly mono-causal in their discussion of political institutions, Beinhocker is frustratingly vague on the actual mechanisms for creating the conditions required for complex, dynamic, wealth-creating systems to get working for humanity. But, as Beinhocker readily admits, this is a new turn for economics.

Perhaps more insights will be forthcoming as the field progresses. A number of development thinkers I follow, including Oxfam’s Duncan Green and Owen Barder of the Center for Global Development, have begun writing about the implications of complexity theory for development, and Ben Ramalingam has a fascinating blog compiling research from the intersection of aid and complexity.  I’ll likely write more as I learn about it.

Sad as it is, the time has come for me to return to the United States. The folks at the seed bank and Chiang Mai treated me to farewell dinners, and I said my farewells. I will miss Thailand, and all the people I met there. I learned a lot about seeds, food, agriculture, development, and Southeast Asian culture while I was there. It was a remarkable, interesting place to live and work.

But there is an end to everything. Fortunately, I didn’t have to fly straight back. Instead, I took the train from Chiang Mai to Bangkok and had a whirlwind two-day tour of Thai art and culture. Here are some photos of the adventure:

Some wilted lotus buds at a shrine in the Temple of the Emerald Buddha.

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A child looks at some lotus flowers in front of a lovely example of Ficus religiosa, the Bhodi tree, under which the Buddha is said to have received enlightenment.

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Some students taking a tour of the Temple of the Emerald Buddha.

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A lock in the Grand Palace, bedecked with a small garland of flowers, for reasons mysterious to me.

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A crucifix in the Silpakorn University gallery of sculpture. Behind it, Buddha’s head.

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A profile of Florentine sculptor Silpa Bhirisri (born Corrado Feroci), the namesake of Silpakorn university, and the man most responsible for introducing modern art to Thailand. He was made the King’s official sculptor in 1924, and went on to train most of the prominent artists of Thailand. His motto, “Vita brevis, ars longa” (“Life is short, art is long”–or perhaps, “life is brief, art endures”) adorns the entrance to the university.

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Chinatown at dusk.

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Looking over Salvador Dali’s shoulder at an installation at the Bangkok Museum of Contemporary Art.

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The most striking piece I saw at the MOCA: like many examples of Buddhist art, it contemplates mortality in vivid, if not grotesque, detail. But something about the attention paid to the old man in this painting strikes me as loving. An example, perhaps, of the ethic of compassion in Buddhist thought which, to an outsider like me seems to run counter to the idea of detachment. The artist seems to say that detachment from the self allows compassion for the other–even if all things are as insubstantial as the old man’s grasp on life. But you’re free to draw your own conclusions.

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A silk-weaving loom at the late Jim Thompson’s house. Thompson, like Corrado Feroci, entered Thailand at a pivotal point in its transition to cultural and economic openness. He visited during the Vietnam war (in which he may have participated as a CIA operative), and stayed when the war ended. Thompson played an important part in marketing Thai silk abroad, and assembled a remarkable collection of Thai art and architecture in his home. This brought him a peculiar mixture of respect, gratitude and resentment in Thai society, as described in this article in the Paris Review. He disappeared in 1967 under mysterious circumstances while hiking in Malaysia.

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Artists preparing an installation outside the Bangkok Arts and Cultural Centre.

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A closer look at an artist at work.

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Culture is a protean thing, and music seems to be among the most adaptable, remixable, recombinable elements in this stew we call the arts. So maybe I shouldn’t have been surprised to see elements of the familiar in a New Year’s Eve church service at a Karen village in the mountains of Northern Thailand. Or maybe I should never stop being surprised. To recreate my moment of recognition, first watch this clip:

Then listen to these songs I recorded in the village where P’Wah (ECHO Asia’s seed bank manager) is from:

Do you hear the resemblance? When I took these videos I didn’t realize that this kind of singing is considered the traditional hymn style of hill-tribe Christians. And yes, Christianity has been among these people for long enough for words like “traditional” to make sense. This next year the Myanmar Baptist Convention will celebrate its 200th anniversary.

According to Rick Burnette, many of the early missionaries to Burma (now Myanmar) hailed from rural Missouri, and they brought with them a form of hymn-singing known as shape-note singing, or the Sacred Harp.  Sacred Harp is a choral tradition that used to be common across the Appalachians and the rural South in America. It was actually the first music to be composed in America.

This video, a trailer for a recent documentary on Sacred Harp, explains the history a bit more:

I fell in love with the sound of this music when I picked up the soundtrack to the above documentary, Awake, My Soul. So to hear a direct descendent of that sound in a remote part of Thailand was a shock, but a delight.

What are we to think of this kind of thing? Is it cultural imperialism? If so, on whose part? By now the Karen have so appropriated this singing into their culture that they consider it theirs–even as the tradition nearly died out in the twentieth century in America. You could read imposition on one side or expropriation on the other, if you were so inclined. But is that the most helpful way to analyze this kind of transmission?

The world of culture is full of such exchanges. For example, what are we to make of the fact that the traditional repertoire of shashmakhon, a Persian musical style, would have been lost to the world during the Soviet period if not for its appropriation by Bukharan jews? Or how about Brian Eno’s claim that Arabic singing gave birth to nearly everything, via trade routes, slave ships and Irish immigration? A claim which I heard, by the way, from Ezra Koenig’s blog, who’s been guilty of/celebrated for a good bit of cultural appropriation himself.

My conclusion: people share music. And they steal it, and force it on others, and trade it about while doing all sorts of horrible things to each other. But as a rule, something like this doesn’t stick unless it resonates. And the Sacred Harp must have resonated with the hill-tribes of Burma and Thailand because they’re still singing it, 200 years later. Maybe the mountain people of Missouri and the mountain people of Thailand connected culturally on a level a city kid like me can’t quite understand. Or maybe it’s because Sacred Harp singing was designed to be easy to teach and easy to pass on. I don’t know. But regardless, I think it’s a beautiful thing.

Someone should get an Appalachia-Southeast Asia hymn singing convention together. Call it Hill-tribes and Hill-billies Hymn Sing. You heard it here first.

As you might have read on my previous post about the science of seed storage, one of the most important ways to increase the longevity of stored seeds is to limit the moisture level. Seeds can be dried down to an acceptable level with warm air, whether outside on a screen or in a forced-air dryer. But over time, the seeds will tend to come to an equilibrium with the air around them, so the seed moisture will typically rise in storage. Unless you put something else in the package to absorb the moisture from the air.

That something else is a desiccant. The packet of silica that says “do not eat” in bags of chips is one kind of desiccant. But silica gel is likely not cheap or available enough for a small scale farmer to use. So at ECHO Asia we’ve been looking at other options.

The one described in this video (starring yours truly and posted on the ECHO Asia youtube channel), is parched rice. All you have to do is put rice in a hot wok and cook it until it pops. The resultant puffed rice stuff is more absorptive than regular non-treated rice. In my experiments I found it can absorb up to 10% of its own weight in moisture.

So, next time you’re putting your seeds in storage (whether you’re in Southeast Asia or elsewhere), consider packaging them with a handful of parched rice. Even better, store some with a desiccant and some without and see if it makes a difference.

It’s all about experimentation.

 

Why Nations Fail by Daron Acemoglu and James Robinson is the book of the hour in development theory. I decided I had to read it  after seeing Bill Gates’ harsh review and the authors’ adept response. I figured anyone who’s got an on-line flame war going on with the world’s richest man must have written something pretty interesting. And I was right.

Why Nations Fail purports to explain the inequalities between nations. Fans of Jared Diamond will recognize this as the question addressed in his book Guns, Germs and Steel, probably the most widely read book to attempt to answer this question. Diamond’s answer is that inequalities in wealth between nations can be explained by differences that boil down to geographical luck: natural resources, prevalence of certain infections diseases and the availability of productive crop species. Acemoglu and Robinson beg to differ.

The authors of Why Nations Fail argue that geographical differences are ultimately swamped in the post-industrial era by differences in institutions. Their basic theory is that more inclusive political institutions and open, competitive economic institutions are the prerequisites for growth, and these factors dominate the fates of nations far more fully than other factors. On the other hand institutions which Acemoglu and Robinson call “extractive”–because they serve the interests of a narrow few–contribute to national poverty.

Acemoglu and Robinson illustrate their point with a host of historical narratives. Perhaps most compelling are examples like North and South Korea, or Nogales, Mexico and Nogales, United States, where recent borders have created differing institutions in places that have otherwise identical cultures and natural resource endowments. The way Acemoglu and Robinson tell the story, every such case results in greater wealth where political institutions are more inclusive to participation and responsive to citizens.

In its broad application, I think in broad strokes the premise of the book is correct. Political institutions are obviously important in creating an environment conducive to economic growth. But it has been attacked in some of its particulars. Jared Diamond predictably fired back in defense of geography as an important factor. And other thinkers contend that it is possible that wealth comes first, then political openness. The best critique I have read so far is by the historian Peer Vries, who argues that inequality can be better explained by a complex of interrelated proximate causes rather than one ultimate cause like Institutions with a capital I.

My problem with the book is that it fails to answer some of the more interesting questions its premise creates. Most frustratingly, when talking about inclusive institutions they fail to ask, inclusive to whom? They place the level of analysis squarely on the nation-state, failing to look at either international institutions or local institutions.

To my mind every institution is inclusive to someone, and exclusive to others. So some nations have institutions that are inclusive of their citizens, but all nations are exclusive to citizens of other countries, which is a problem if their policies effect those other citizens. One might even say that many times in history one nation’s inclusive institutions have acted as extractive institutions to those in other nations. The Dutch East India Company, the slave trade and the United Fruit Company are just a few potential examples.

In other words, inclusivity and exclusivity are always side by side. The most interesting application of Acemoglu and Robinson’s analysis might be to ask how inclusive the systems within international corporations might be. How about the World Trade Organization? Given the significant weight given to rich countries’ preferences in the WTO, one might categorize it as more extractive than inclusive by Acemoglu and Robinson’s standards. But they don’t ask that question.

The other big, much discussed hole in Why Nations Fail is the treatment of China. The authors offer two options for China: democratize or fail. Other analysts wonder if the question is so stark. Maybe China has found a kind of sustainable autocracy. Or maybe their progress toward democracy will take a lot longer than optimists might hope. I for one hope Acemoglu and Robinson are right, or at least, I hope that China will indeed move toward a more inclusive government. But at this point, it’s hard to say.

(side-note: I really want to read this book about Deng Xiaoping and reform in China, but who knows when I’ll find to time to tackle 1000 pages of Chinese history)

To wrap up, I would recommend reading Why Nations Fail, if only as a helpful counter-weight to the geographical determinism that Jared Diamond has foisted on the popular consciousness. But be aware there’s more going on in the world of development theories and the economics of inequality.

Also, check out this interview with Acemoglu and Robinson on Development Drums. Worth a listen.

 

This week I put into motion the major research project I’ve been working on during my time here at ECHO Asia. As I wrote in a post a little while ago, ECHO is comparing different methods for controlling oxygen, temperature and moisture in stored seeds. These methods vary from the fairly high-tech to the pretty low-tech. Here’s a run-down.

We’re testing four different desiccants in this experiment: zeolite beads, zeolite powder, silica beads and parched rice.

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IMG_4130Zeolite beads are a relatively expensive new product, which is in development in cooperation with USAID. Silica beads is a somewhat cheaper technology, perhaps familiar to you by its presence in potato-chip bags. Zeolite powder is a product bought on the local market here in Thailand and marketed primarily as a soil amendment, though it also has desiccant properties. Parched rice is simply rice cooked briefly in a dry wok until it puffs up a bit. Some brown parched rice is pictured above.

In addition to the desiccants, we’ve got three kinds of containers: vacuum sealed bags, glass jars sealed with a bicycle pump and bamboo canisters:

IMG_4114IMG_4123P1070960Finally we used two different storage rooms, one is the seed bank’s cold room, refrigerated by an A/C unit and insulated with styrofoam. The other is an earth-bag house, built from soil and fertilizer bags, which though not refrigerated does passively modify temperature.

DSC07535So we’ve placed all the treatments in their place, to be stored for 12 months. After that we’ll test the seeds’ viability and see which combination of storage technologies is most effective.

ECHO’s hope is that this experiment will reveal that some inexpensive local technologies, like the parched rice, bamboo canisters, jars sealed by bicycle pump and the earth-bag house, will form part of a package of technologies for small-scale seed banks.

It’s an honor to be part of this experiment, and it feels good to get it kicked off!