S7 Ep57: Skipping the factory

Three in four people in Africa say elections are the best way to choose their leaders. Only 37% are satisfied with how their democracy works. In the US, 16% of people trust the federal government, and when asked to name the biggest problem with the political system, the most common answer is politicians. Voters have not lost faith in democracy, but they are less sure about the people it puts in charge.Rohini Pande (Yale) and Katherine Casey (Stanford) tell Tim Phillips about the experiments to fix that problem. Higher pay for politicians, better information about what citizens want for party gatekeepers, and quotas that put women into office have all had an effect, even if there's a long way to go to improve political selection, representation, voice, representation and inclusion.The research behind this episode:Casey, Katherine, and Rohini Pande. 2026. "Political Selection, Representation, Voice and Inclusion." Lecture 7, BREAD-IGC virtual PhD-level course on political economy, 20 October 2026. The course page also has the lecture reading list.To cite this episode:Phillips, Tim, Katherine Casey, and Rohini Pande. 2026. "Who enters politics?" VoxDev Talks (podcast).About the guestsKatherine Casey is the RoAnn Costin Professor of Political Economy at Stanford Graduate School of Business, faculty director of the King Center on Global Development, and a senior fellow at the Stanford Institute for Economic Policy Research. Her research spans the role of information in political accountability, the effects of foreign aid on economic development, and the provision of public infrastructure, much of it based on fieldwork in Sierra Leone.Rohini Pande is the Henry J. Heinz II Professor of Economics and director of the Economic Growth Center at Yale University, and faculty director of Inclusion Economics at Yale. Her research spans how formal and informal institutions shape power and economic and political advantage, including political representation, gender, accountability and environmental markets.Research cited in this episodeAfrobarometer. The pan-African survey network's first flagship report, African Insights 2024: Democracy at Risk, found that 75% of people in the 30 countries it has tracked for a decade see elections as the best way to choose leaders, down eight points over that decade. Across 39 countries surveyed in 2021/2023, only 37% said they were fairly or very satisfied with the way democracy works in their country.Trust in government in the US. Pew Research Center's 2023 report Americans' Dismal Views of the Nation's Politics found that just 16% of Americans trust the federal government to do the right thing always or most of the time. Asked in their own words to name the biggest problem with the political system, 31% criticised politicians, the most common answer.Trust in government in OECD countries. The OECD Survey on Drivers of Trust in Public Institutions (OECD 2024), carried out in 30 member countries in late 2023, found that 44% of respondents had low or no trust in their national government, against 39% with high or moderately high trust.Institutions and prosperity. Daron Acemoglu, Simon Johnson and James Robinson won the 2024 Nobel Memorial Prize in Economic Sciences for their studies of how institutions are formed and affect prosperity (Nobel Prize press release). Casey separates two things that are often bundled together. Political institutions decide whether leaders have incentives to act in the public interest; state capacity decides whether government can deliver. Rich countries tend to score well on both. China combines high capacity with little democracy, and much of sub-Saharan Africa scores low on both.Democratic backsliding. The Varieties of Democracy project (V-Dem), based at the University of Gothenburg, measures democracy across countries and over time. Pande's point is that electoral democracy has weakened faster than state capacity. With surveillance technology and AI, states may become more capable while becoming less accountable.Paying politicians more. In Italy, a mayor's pay rises by 33% when a town passes 5,000 inhabitants. Comparing towns either side of that line, Gagliarducci and Nannicini find that higher pay attracts better-educated candidates and that better-paid mayors run more efficient councils, mainly because of who is selected rather than the incentive to be re-elected. Gagliarducci, Stefano, and Tommaso Nannicini. 2013. "Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection." Journal of the European Economic Association 11 (2): 369-98.Paying legislators more in Brazil. Brazil's constitution caps the salaries of municipal legislators according to population. Ferraz and Finan use these caps to show that higher pay brings more candidates and better-educated ones, and that the legislators elected submit and pass more bills. Ferraz, Claudio, and Frederico Finan. 2009. "Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance." NBER Working Paper 14906.Extrinsic and intrinsic motivation. Pay is an extrinsic reward; the satisfaction of doing a job that matters is intrinsic. The worry Pande raises is that making public office more lucrative could deter people who would have served for its own sake. That trade-off has been tested more for bureaucrats than for politicians.Candidate selection in Sierra Leone. Before the 2018 parliamentary elections, Sierra Leone's two main parties, the All People's Congress and the Sierra Leone People's Party, each put 46 of the country's 132 constituencies into an experiment, with half randomly assigned to a new selection process. In those races, aspirants debated at party conventions broadcast on radio, and party leaders received a one-page summary of polling on which aspirant voters preferred. Nine in 10 party officials believed voters shared their first choice; about half did. In control races, parties picked voters' favourite 38% of the time. With the reports, that rose to 61%, and the candidates chosen had stronger records of providing local public goods. Casey, Katherine, Abou Bakarr Kamara, and Niccolo F. Meriggi. 2021. "An Experiment in Candidate Selection." American Economic Review 111 (5): 1575-1612.Report cards in Delhi. Two years before Delhi's 2012 municipal elections, about two-thirds of councillors learned they had been randomly chosen to have a report card on their performance published in a newspaper before the vote. Treated councillors in wards with many slum dwellers increased pro-poor spending. Incumbents barred from their home ward by gender quotas were more likely to run elsewhere if their report card showed a strong pro-poor record, and parties benefited electorally from such records. Banerjee, Abhijit, Nils Enevoldsen, Rohini Pande, and Michael Walton. 2024. "Public Information Is an Incentive for Politicians: Experimental Evidence from Delhi Elections." American Economic Journal: Applied Economics 16 (3): 323-53.Women in parliament. According to the Inter-Parliamentary Union, women held 27.5% of seats in national parliaments on 1 January 2026, up from 27.2% a year earlier (IPU 2026).Winning, conditional on running. In the US, women who run for office win about as often as men. Pande's point is that this does not show bias has gone. If voters and party selectors hold women to a higher standard, only the strongest women get party tickets. The test is whether a woman is as likely to be selected as a man of the same quality.Reserved seats in India's village councils. Since the 1990s, one-third of village council head positions in India have been reserved for women, with reserved councils assigned by rotation. In West Bengal and Rajasthan, women leaders invested more in public goods that mattered to rural women. Chattopadhyay, Raghabendra, and Esther Duflo. 2004. "Women as Policy Makers: Evidence from a Randomized Policy Experiment in India." Econometrica 72 (5): 1409-43. More women in local government also led to more reporting of crimes against women and a more responsive police. Iyer, Lakshmi, Anandi Mani, Prachi Mishra, and Petia Topalova. 2012. "The Power of Political Voice: Women's Political Representation and Crime in India." American Economic Journal: Applied Economics 4 (4): 165-93. In villages with a female leader for two election cycles, the gender gap in adolescents' aspirations narrowed and the gap in educational attainment disappeared. Beaman, Lori, Esther Duflo, Rohini Pande, and Petia Topalova. 2012. "Female Leadership Raises Aspirations and Educational Attainment for Girls: A Policy Experiment in India." Science 335 (6068): 582-86. Pande argues these spillovers, not a simple difference in policy preferences, are the case for representation.Do voters learn? In West Bengal, exposure to a female village head did not change villagers' taste for male leaders. It did weaken stereotypes and removed the bias among male villagers in how they rated female leaders' effectiveness. After 10 years of the policy, women were more likely to stand for and win unreserved seats in villages that had been reserved twice. Beaman, Lori, Raghabendra Chattopadhyay, Esther Duflo, Rohini Pande, and Petia Topalova. 2009. "Powerful Women: Does Exposure Reduce Bias?" Quarterly Journal of Economics 124 (4): 1497-1540.Violence against female politicians. Daniele, Dipoppa and Pulejo compare Italian towns where a woman narrowly won the mayoralty with towns where a man narrowly won. Female mayors are about three times as likely to be attacked, with no gender differences in policy, performance or corruption, and women who are attacked are less likely to run again. Daniele, Gianmarco, Gemma Dipoppa, and Massimo Pulejo. 2023. "Attacking Women or Their Policies? Understanding Violence against Women in Politics." CEPR Discussion Paper 18333 (gated). Daniele discussed the research on VoxTalks Economics.Reserved seats and candidate quotas. Reserved seats fix the outcome, because only women can stand. Candidate quotas fix the party list, and parties can respond by placing women low on lists or in seats they are unlikely to win. Pande cites this kind of backsliding in Latin America and Europe, and argues that changing voters' beliefs has proved easier than changing the preferences of gatekeepers who have something to lose.Sierra Leone's switch to closed-list proportional representation. Sierra Leone elected its 2018 parliament by first past the post in single-member constituencies. After a presidential decision in 2022, the June 2023 elections used closed-list proportional representation in 16 multi-member district constituencies, with an 11.9% threshold to win seats (IFES ElectionGuide). Voters choose a party, and the party decides who is on its list. Casey argues that in party strongholds this removes the parties' incentive to pick candidates voters like.Ideas still to test. Casey points to state support for election campaigns, through public funding or free airtime, as a way to reduce the role of private money and open politics to candidates from lower-income groups. Pande points to local media, from radio to local newspapers and community stringers, which she fears social media could wipe out in low-income countries.Youth protests and elections in Bangladesh and Nepal. In Bangladesh, a student-led uprising ousted Sheikh Hasina in 2024. In the election of 12 February 2026, the Bangladesh Nationalist Party won a landslide, returning to power under Tarique Rahman (Al Jazeera). In Nepal, youth-led protests in September 2025 forced KP Sharma Oli's government to resign. In the election of 5 March 2026, the three-year-old Rastriya Swatantra Party won 182 of 275 seats, and Balendra Shah, 35, was sworn in as prime minister on 27 March (Reuters).

Name a rich country that did not move its farm workers into factories, because Michael Peters says it would be hard to find one. Many years ago, Europe and the US took that road, then Japan and Korea, then China and Vietnam. But when workers in India, Kenya and Ethiopia leave the land, far fewer of them reach a factory. They are more likely to work in shops and restaurants, or sell from a street stall.Many of these countries, Peters argues, never industrialised in the first place, so there are fewer factories to go to. If services themselves become more productive, perhaps a country can grow without them. But hw do you measure the productivity of services?Peters presented the research at STEG's sixth Annual Conference in Nairobi in January 2026. He tells Tim Phillips why a better supermarket in Delhi does little for a rural family, whether a street vendor has a good job or a disguised form of unemployment, and what AI means for countries that hope to export services.The research behind this episodePeters, Michael, Youdan Zhang, and Fabrizio Zilibotti. 2026. "Skipping the Factory: Service-Led Growth and Structural Transformation in the Developing World." NBER Working Paper 34692, prepared for the Handbook of Development Economics. The authors summarise the research in a VoxEU column, "Skipping the factory: Service-led growth in sub-Saharan Africa."To cite this episodePhillips, Tim, and Michael Peters. 2026. "Skipping the factory." Conversations on Transformation (podcast).About the guestMichael Peters is Associate Professor of Economics and Associate Chair of the Department of Economics at Yale University. He is a Research Associate of the National Bureau of Economic Research and a Research Fellow of the Centre for Economic Policy Research. He holds a PhD from MIT, and taught at the London School of Economics before he joined Yale. His research spans economic growth, firm dynamics, the long-run effects of migration, and structural change, with a focus on inequality between people and places.Research cited in this episodeThe canonical model of structural change describes development in stages. Agriculture sheds workers, manufacturing grows, and services then overtake manufacturing, so that manufacturing's share of jobs rises and falls in a hump. Peters says this fits the US and Europe in the 19th and early 20th centuries, Japan and Korea after the Second World War, and more recently China and Vietnam. The countries in his paper look different. In 16 fast-growing East and West African economies that do not depend on oil, agriculture's share of employment fell by an average of 18 percentage points between 2000 and 2019. Services took 15 of those points and industry took 3.The agricultural productivity gap is one reason why moving workers off the land can raise output. W. Arthur Lewis described an economy split between a subsistence sector and a modern sector in "Economic Development with Unlimited Supplies of Labour" (The Manchester School, 1954), and shared the 1979 Nobel Prize in economics. Douglas Gollin, David Lagakos and Michael Waugh measured the gap in "The Agricultural Productivity Gap" (Quarterly Journal of Economics, 2014). In national accounts, value added per worker outside agriculture is about three times the level inside it. A large gap remains after they adjust for hours worked and human capital.Innovation in manufacturing is the second link that Peters draws between factories and growth. The 2025 Nobel Prize in economics went to Joel Mokyr, Philippe Aghion and Peter Howitt for explaining innovation-driven growth. If innovation matters most in manufacturing, Peters argues, a large manufacturing sector gives firms the right incentives to invent and adopt new technology.Premature deindustrialisation describes countries that lose manufacturing jobs and output at much lower incomes than the early industrialisers did. Dani Rodrik documented the trend in "Premature Deindustrialization" (Journal of Economic Growth, 2016). Rodrik notes that the term seems to have first appeared in a 2006 paper by Sukti Dasgupta and Ajit Singh.Non-tradable consumer services must be delivered where the customer is. Unlike software or a call centre, a shop in Nairobi cannot sell to a village far away. In their estimates, the authors count retail, leisure and health. In the six African countries with two comparable surveys, the share of private employment in these services rose from 4% to 13% in rural areas between about 2000 and 2010, and from 38% to 43% in cities.Growing like India is the earlier study that Peters wrote with Tianyu Fan and Zilibotti, "Growing Like India: The Unequal Effects of Service-Led Growth" (Econometrica, 2023). It covers 360 Indian districts between 1987 and 2011. By 2011, services that mainly sell to consumers employed almost 55% of India's service workers, while ICT accounted for less than 1% of all employment. Rising productivity in consumer services explains almost one-third of the rise in welfare. The average resident of the most urbanised fifth of districts would have given up 37% of their 2011 income rather than go back to the 1987 productivity level in these services. In the three least urbanised fifths, the figure is 13%.Service-biased and service-led growth are the two explanations that the authors try to separate. Growth is service-biased when productivity rises elsewhere, people get richer, and they spend more on restaurant meals, entertainment and travel. Services expand, but only as a result of growth. Growth is service-led when services themselves become more productive. Peters's example is refrigeration, which transformed retail and raised what each worker in it could produce.Baumol's cost disease is the pessimistic case for services. It comes from William Baumol's "Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis" (American Economic Review, 1967). If resources shift towards industries where productivity grows slowly, productivity growth in the economy as a whole falls.Measuring productivity from willingness to pay avoids price data. Prices of local services differ from place to place, and they mix efficiency with quality. The authors instead use a model of demand, the local income distribution, and the number of people who work in services. If many people work in services given local incomes, consumers must value what they buy. Peters is clear about the limits, because the method rests on a structural model and on assumptions about how labour markets work. The African exercise pools rural and urban data from Benin, Ghana, Malawi, Mozambique, Rwanda and Tanzania, and borrows key parameters from the Indian study. The authors present it as an illustration of the method rather than a full estimate. It puts productivity growth in consumer services at 3.3% to 3.5% a year, against 1.7% to 2.7% in tradable sectors. The same method finds little productivity growth in Vietnam's consumer services.Equivalent variation measures what a change is worth to someone, as a share of their income. The authors compare people at the 5th and 95th percentiles of local income. Poor rural households buy almost no market services, so productivity growth in those services does not reach them. Rich urban households gain more from it than from productivity growth in tradable sectors. Poorer households gain mainly from productivity growth in agriculture and manufacturing.Durable goods as a proxy for income fill a gap in the data, because the census samples do not record household income. Across 13 African countries, households headed by consumer service workers are 4.1 percentage points more likely than manufacturing households to have electricity, 3.3 points more likely to have piped water, and 2.7 points more likely to have brick or metal walls. These gaps shrink to 2.3, 1.4 and 1.2 points after the authors control for urban location and education. Flush toilets and good roofs show no significant difference, and service households are less likely to own a radio. Manufacturing in this comparison includes construction, utilities and mining.Disguised unemployment is the case against this optimism. Suppose that frictions in labour or financial markets ration good jobs. The people who miss out become self-employed street vendors, not because demand is strong but because they have no better option. A large service sector would then be a symptom of what stands in the way of manufacturing-led growth. Peters says that data such as Brazil's matched employer-employee records could show how much of the rise in service jobs comes from demand and how much from frictions.Formalisation moves workers from self-employment into organised firms. Peters suggests it as one way to make service-led growth reach poorer people, because the typical consumer service worker has skills much like those of the typical manufacturing worker. A street vendor could become a shop employee, and a self-employed rickshaw driver could join a more organised transport firm. The evidence so far comes mainly from Brazil, in work by Matthew Schwartzman. In many African economies, the authors note, informal production still dominates and broad-based formalisation has yet to occur.South Africa's unemployment rate is Peters's example of the size of the task for services. The official rate reached 33.6% in the second quarter of 2026, up from 32.7% in the first quarter, according to Statistics South Africa.More Conversations on Transformation episodesStructural change in sub-Saharan Africa. Gaaitzen de Vries and Kei-Mu Yi use macro and trade data to ask whether the region follows the familiar pattern of transformation, the same puzzle from a different direction.Moving to profitability. Carolyn Pelnik asks why Kampala's street vendors and motorcycle taxi drivers stay in less profitable parts of the city, a close look at the kind of informal service work that Peters studies at a national scale.Further readingFrom Street Markets to Shopping Malls: The Modern Service Multiplier, a STEG working paper by Matthew Schwartzman, uses local data from Brazil to show how supermarkets and restaurants replace street vendors and food hawkers, and how rising demand amplifies that shift.Self Employment, Micro-Entrepreneurship, and Development, a STEG synthesis paper by Austin Davis, Eric Hsu and Mitchell VanVuren, reviews why firms in low and middle income countries stay so small, and asks whether micro-entrepreneurship is a response to frictions that make wage work hard to find.

Many years ago, Tim Besley (LSE) had a "crazily simplistic" idea to categorise states by their capacity, and in his early work he suggested three groups. When ten years later, he gave an algorithm some data on the measures of state capacity, and left it to categorise states, it also found three groups.Which states are in which groups barely changes. Does that make a country's group its destiny? In the latest VoxDev Talk, based on his lecture in the IGC-BREAD series on political economy, Besley tells Tim Phillips why it does not. But he also explains why giving citizens the power to vote doesn't necessarily help solve the problems that create weak states. The lecture behind this episode:Besley, Tim. 2026. "State Capacity, Conflict and Development." Lecture 4, BREAD-IGC virtual PhD-level course on political economy, 29 September. Lecture slides. Watch the recording: [LECTURE RECORDING URL].The research behind this episode:Besley, Timothy, Chris Dann, and Torsten Persson. 2021. "Pillars of Prosperity: A Ten-Year Update." CEPR Discussion Paper 16256. Gated.Besley, Timothy. 2020. "State Capacity, Reciprocity, and the Social Contract." Econometrica 88 (4): 1307-35.Besley, Timothy, and Torsten Persson. 2011. Pillars of Prosperity: The Political Economics of Development Clusters. Princeton: Princeton University Press.Besley, Timothy, and Torsten Persson. 2010. "State Capacity, Conflict, and Development." Econometrica 78 (1): 1-34.To cite this episode:Phillips, Tim, and Tim Besley. 2026. "Why democracy alone does not build effective states." VoxDev Talks (podcast).About the guestSir Tim Besley is School Professor of Economics and Political Science and W. Arthur Lewis Professor of Development Economics at the London School of Economics and Political Science. He is known for research spanning political economy, development economics and public economics, with a focus on how governments can design and deliver economic policy more effectively. He served on the Bank of England's Monetary Policy Committee from 2006 to 2009 and was an academic director of the LSE-Oxford Commission on State Fragility, Growth and Development. He is a past president of the Econometric Society, the Royal Economic Society, the European Economic Association and the International Economic Association, and is affiliated with the Centre for Economic Policy Research.Research cited in this episodeState capacity. In Besley's work, state capacity has three dimensions. Fiscal capacity is the breadth of the tax system, legal capacity is the ability to enforce contracts and property rights, and collective capacity is the ability to provide services such as health and education. Besley and Persson (2011) built the first two on Adam Smith's recipe for prosperity, "peace, easy taxes, and a tolerable administration of justice".Quasi-voluntary compliance. Margaret Levi's term for what happens when people pay tax because they accept the arrangement, and not only because they fear punishment (Levi, Margaret. 1988. Of Rule and Revenue. Berkeley: University of California Press). Besley (2020) models this as a reciprocal contract; citizens pay their taxes and the state provides public goods.Circular causation. Gunnar Myrdal, who shared the 1974 Nobel Memorial Prize in Economic Sciences with Friedrich Hayek, described development as a system in which "if one changes, others will change in response" (Myrdal, Gunnar. 1974. "What Is Development?" Journal of Economic Issues 8 (4): 729-36). Besley uses the idea as a metaphor for state capacity and development. One does not cause the other; common processes lie behind both.Institutions. Acemoglu, Johnson and Robinson used differences in European settler mortality to estimate the effect of institutions on income (Acemoglu, Daron, Simon Johnson, and James A. Robinson. 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation." American Economic Review 91 (5): 1369-1401). Besley's addition is that state capacity moves more slowly than political institutions, and accumulates like a form of capital.Three kinds of state. Common interest states are peaceful and have strong capacities in every dimension. Special interest states, which Besley, Dann and Persson (2021) call redistributive states, are repressive and have some capacities; Besley's example is China. Weak states are conflictual and have weak capacities.Finding the clusters. Besley, Dann and Persson (2021) use six variables for 67 countries in 1990, 2000 and 2016. These are the income tax share of total tax, a legal quality index, a collective capacity index, the share of years since 1975 in repression, the share in civil war, and GDP per capita. They summarise the data with principal components and then apply hierarchical clustering, which lets the algorithm choose the number of groups. Eight of the 67 countries changed cluster between 1990 and 2016. Elections or executive constraints? Besley separates two stories of democratisation. One is the extension of the vote, which in Britain ran through the Reform Acts of 1832, 1867 and 1884 and the votes for women in 1918 and 1928. The other is the limit placed on what those in power can do. In the lecture slides, all three kinds of state score above 90% of years at maximum openness between 1950 and 2016. At maximum executive constraints, weak, special interest and common interest states score about 15%, 35% and 93%. Besley stresses that this is a correlation.Why rulers accept limits. Besley gives two accounts. In the first, elites give up power under the threat of revolution (Acemoglu, Daron, and James A. Robinson. 2006. Economic Origins of Dictatorship and Democracy. Cambridge: Cambridge University Press). The second is about ideas. Besley describes an early-stage paper, presented in Chicago, which finds common elements between speeches in the House of Commons and John Locke's Two Treatises of Government.War and common purpose. Besley and Persson argue that common interest public goods, such as fighting external wars, encourage investment in state capacity (Besley, Timothy, and Torsten Persson. 2009. "The Origins of State Capacity: Property Rights, Taxation, and Politics." American Economic Review 99 (4): 1218-44). Besley's post-war example is the National Health Service, founded on 5 July 1948 and kept by the Conservatives when they returned to power. He develops the wider argument in Besley, Timothy. 2021. "Is Cohesive Capitalism Under Threat?" Oxford Review of Economic Policy 37 (4): 720-33.Civil society. Besley's point that effective states are built from the ground up draws on Robert Putnam's study of Italy's regional governments, which links their performance to a tradition of civic engagement (Putnam, Robert D., with Robert Leonardi and Raffaella Y. Nanetti. 1993. Making Democracy Work: Civic Traditions in Modern Italy. Princeton: Princeton University Press).Pivotal moments. Besley was an academic director of the LSE-Oxford Commission on State Fragility, Growth and Development, whose 2018 report Escaping the Fragility Trap looked at moments of potential change, such as the end of a conflict. His example is Rwanda since the genocide, where he sees real progress while acknowledging that many questions will be raised about it.More VoxDev Talks episodesArmed groups as states: Taxation, security, and civilian support. Raul Sanchez de la Sierra on eastern Congo, the case Tim puts to Besley, where militias do much of what people expect from a state.Taxation, civic culture and state capacity. Besley's earlier VoxDev Talks episode on why people pay their taxes, and the reciprocal contract behind high compliance.No taxation without administration: What makes tax authorities work. Anders Jensen and Jonathan Weigel on how tax authorities are organised and staffed; their paper is on the reading list for Besley's lecture.Related reading on VoxDevState capacity and development clusters. Besley, Dann and Persson on 25 years of data, and why countries form persistent groups according to their levels of internal peace and state capacity.Does low state capacity set a ceiling on tax rates? Evidence from the DRC. Augustin Bergeron, Gabriel Tourek and Jonathan Weigel report the kind of field experiment on tax that Besley wants the next generation to run.

This is an episode from VoxDev's new podcast series, Ideas in Development. This series has a separate podcast feed, where you can find every episode of Oliver Hanney’s conversations on evidence.YouTube: https://www.youtube.com/watch?v=_DYOzIhbZlI Apple Podcasts: https://podcasts.apple.com/us/podcast/does-africa-need-development-economics/id1866874059?i=1000793373513 Spotify: https://open.spotify.com/episode/3naR6n03DiTzzokWqaJ6cs?si=-CrMmOO1RYi_spJwpm3HNA Audioboom: https://audioboom.com/posts/8960400-does-africa-need-development-economics Substack: https://ideasindevelopment.substack.com/p/does-africa-need-development-economics If every development economist stopped their research tomorrow, would Africa's growth rate in 2040 look any different?Ken Opalo, associate professor at Georgetown's School of Foreign Service and author of the Substack An Africanist Perspective, joins Oliver Hanney to argue that the constraint on African growth is not knowing what to do but knowing how to get it done. He also explains why Kenya's evidence boom has coincided with declining policymaking, and what happens when policymakers outsource their ambitions.In this wide-ranging conversation we cover: Why the SDGs are the wrong goal for an ambitious minister. How narrow evidence reshaped education policy in Tanzania and Kenya. The craft of policymaking. When a policymaker should actually listen to a development economist. How to learn the right lessons from growth success stories. What the third wave of philanthropy should fund. Ideas in Development is a VoxDev podcast on economic policy and research.

In parts of eastern Congo, the organisation that collects your taxes, settles your disputes and holds the monopoly on cigarettes is not the state.Raúl Sánchez de la Sierra (LSE) has spent years investigating how Congo's armed militias work. He tells Tim Phillips how he won the trust of its commanders without building the bomb they requested. He was allowed to see administrative records, and what they reveal about how the group raises and spends its money. He also interviewed recruits and their neighbours to find out who chooses to fight and why. It's a fascinating insight into a system of government that many economists never see.The research behind this episode:Sanchez de la Sierra, Raul, Louis Dunia, and Hilary Yu. 2025. "Moral Violence: At the Heart of One of Congo's Major Armed Groups." Working paper.Henn, Soeren J., Christian Mastaki Mugaruka, Miguel Ortiz, Raul Sanchez de la Sierra, and David Qihang Wu. 2025. "Monopoly of Taxation without a Monopoly of Violence: The Weak State's Trade-Offs from Taxation." Review of Economic Studies 92 (2): 1126-56.Sanchez de la Sierra, Raul, Kristof Titeca, Haoyang (Stan) Xie, Albert Malukisa Nkuku, and Aimable Amani Lameke. 2024. "The Real State: Inside the Congo's Traffic Police Agency." American Economic Review 114 (12): 3976-4014.Sanchez de la Sierra, Raul. 2020. "On the Origins of the State: Stationary Bandits and Taxation in Eastern Congo." Journal of Political Economy 128 (1): 32-74.Humphreys, Macartan, Raul Sanchez de la Sierra, and Peter van der Windt. 2019. "Exporting Democratic Practices: Evidence from a Village Governance Intervention in Eastern Congo." Journal of Development Economics 140: 279-301.To cite this episode:Phillips, Tim, and Raul Sanchez de la Sierra. 2026. "Armed groups as states: Taxation, security, and civilian support." VoxDev Talks (podcast).About the guestRaul Sanchez de la Sierra is Associate Professor of Management at the London School of Economics and Political Science. His research spanning political economy and development economics draws on sociology, anthropology and psychology to study the origins of the state, the internal organisation of armed groups, the hidden workings of state agencies and the psychology of the choice to use violence. He was one of the founders of Marakuja Kivu Research, a Congolese research organisation based in Goma.Research cited in this episodeCommunity-driven development in eastern Congo. Raul's first work in the region was as a research assistant on the impact evaluation of a large village governance programme funded by the UK's Department for International Development. It aimed to bring elected committees to villages run by chiefs. Villagers objected when chiefs were barred from standing, and objected again when a chief stood and lost. Humphreys, Sanchez de la Sierra and van der Windt (2019) report the results.Stationary bandits. Mancur Olson's idea: a roving bandit takes everything and moves on, but a bandit who stays has an interest in next year's harvest, so he taxes rather than plunders and keeps rivals out (Olson, Mancur. 1993. "Dictatorship, Democracy, and Development." American Political Science Review 87 (3): 567-76). Sanchez de la Sierra (2020) tested it in eastern Congo; his VoxEU column On the origins of the state: Stationary bandits and taxation in eastern Congo summarises the evidence.When the state takes back territory. Henn et al. (2025) study a Congolese army operation that stopped armed groups taxing villages they had controlled for years. Unable to tax, the same groups turned to pillage. Raul uses it to show how policy that looks only at the legal map can backfire.Who joins an armed group. Most studies of combatants interview veterans, who are survivors and have been changed by fighting. Sanchez de la Sierra, Dunia and Yu (2025) set up a phone alert with the armed group's 55 human resources commanders, so survey teams could interview recruits as they enlisted and, at the same time, a random sample of civilians in their home villages. Raul says the team spoke in person to about 300 new joiners.Measuring what people will not say. To limit misreporting, answers were given in private; the team also measured skin conductance, a physiological signal strongly associated with emotional arousal, collected supervisor and peer ratings seven months after enlistment, and asked second-order questions such as why respondents think others joined.Parochial altruism. A willingness to make sacrifices for your own group combined with hostility to outsiders. Choi and Bowles modelled how the two traits can evolve together through war (Choi, Jung-Kyoo, and Samuel Bowles. 2007. "The Coevolution of Parochial Altruism and War." Science 318 (5850): 636-40). Raul argues his setting goes further, because the act of being prosocial towards the group depends on fighting the enemy.Moral disengagement. Albert Bandura's term for the psychological steps, including dehumanisation, that let people harm others without feeling they have broken their own moral code (Bandura, Albert. 1999. "Moral Disengagement in the Perpetration of Inhumanities." Personality and Social Psychology Review 3 (3): 193-209).The economics of corruption. Shleifer and Vishny separate the question of whether bribery is wrong from the question of when it is less efficient than taxation (Shleifer, Andrei, and Robert W. Vishny. 1993. "Corruption." Quarterly Journal of Economics 108 (3): 599-617). Raul uses that approach in his study of Kinshasa's traffic police.Kinshasa's traffic police. Sanchez de la Sierra et al. (2024) follow bribes up the chain of command in Kinshasa's traffic police agency. Station commanders set officers quotas of cars to bring in, and most of the agency's revenue comes from payments made behind closed doors at the station, not from bribes on the street. The team randomly reduced the quotas and measured what happened to traffic jams, accidents and enforcement.Pitfalls of policy advice. Acemoglu and Robinson argue that advice which ignores the political equilibrium can backfire, because it changes who holds power (Acemoglu, Daron, and James A. Robinson. 2013. "Economics versus Politics: Pitfalls of Policy Advice." Journal of Economic Perspectives 27 (2): 173-92).More VoxDev Talks episodesNo taxation without administration: What makes tax authorities work. Anders Jensen and Jonathan Weigel on how tax authorities in developing countries are organised and staffed, from the formal side of the state Raul's militias imitate.Corruption in public procurement: How politicians co-opt bureaucrats. Sarah Brierley on why merit-based hiring alone does not stop corruption, a companion to Raul's work on the hidden structure of Kinshasa's traffic police.Related reading on VoxDevCan low-capacity governments work with local leaders to increase tax revenues? Evidence from the Democratic Republic of Congo. Pablo Balan, Augustin Bergeron, Gabriel Tourek and Jonathan Weigel find that city chiefs in Kananga raised more property tax than state collectors.Does low state capacity set a ceiling on tax rates? Evidence from the DRC. Augustin Bergeron, Gabriel Tourek and Jonathan Weigel find that, in a property tax experiment, lower tax rates raised compliance and revenue, and stronger enforcement raised the rate at which revenue peaks.

A tractor can plough an acre of Kenyan maize land in about an hour and a half. By hand, it takes a farmer nearly a week. Few smallholders can afford to buy a tractor, so they rent one. The tractor’s owner often lives in town, and employs an operator to drive the tractor to the fields and do business. To minimise risk, the owner keeps their tractor close to home, even when the best work is far away.Sophie Nottmeyer studied what changed when owners could observe exactly where the tractor was. She used GPS records from about 1,200 tractors fitted with a tracking app from the start-up Hello Tractor, covering close to a million fields, and satellite images of the land they worked. As owners learned to use the app, their tractors travelled further, finding better business opportunities. A year after adoption, they worked about 55 km further from home than in their first month.Nottmeyer presented the research at STEG's sixth Annual Conference in Nairobi in January 2026. She tells Tim Phillips what satellites reveal about the fields the tractors reached, and why a fuel subsidy that did the same job would cost hundreds of times more.The research behind this episodeNottmeyer, Sophie. 2025. "Trac(k)tors of Change: Monitoring, Tractor Mobility and Agricultural Mechanization in Kenya." Working paper, November 2025. A summary is available as a STEG policy brief: "Following the tracks: how digital monitoring expands access to agricultural mechanisation across space" (2026).To cite this episodePhillips, Tim, and Sophie Nottmeyer. 2026. "Tracking Kenya's tractors." Conversations on Transformation (podcast).About the guestSophie Nottmeyer is a Research Economist in the Directorate General of Economic Research at Banco de Mexico. She was previously a Postdoctoral Researcher at Universitat Pompeu Fabra in Barcelona, and holds a PhD in Economics from CEMFI in Madrid. Her research spans market access, organisational frictions and informal institutions, and how they interact with geography and climate. She has also worked with remote-sensing scientists to estimate maize yields in Kenya from satellite data.Research cited in this episodeHello Tractor is an agricultural technology company based in Nairobi. In 2018 it introduced a GPS tracking device for tractors, fitted by a mechanic, with a mobile and web app that shows owners where their tractor is in real time. The app reports how many jobs the tractor did, how many acres it worked, how long it ran and how far it drove, and it can replay the tractor's exact path across a field. In 2023 owners paid US$125 to install the device and US$60 a year to use the app. Nottmeyer's data cover every job done by tractors that adopted it between 2018 and 2025, about 917,000 in total.Moral hazard arises when one party cannot observe what another does on its behalf. Kenyan tractor owners hire operators, who are often paid from the revenue they collect. Because the owner cannot see how many acres were ploughed, an operator can under-report jobs, take unauthorised work or use fuel for other purposes. Owners respond with surprise visits, fuel checks and rules that the tractor must come home every night. All of these work only if the tractor stays nearby. The problem is sharper because many owners are not farmers at all; according to Kenya's 2019 census, 33% of tractor owners live in cities.Misallocation describes an economy in which capital or labour does not go where it would produce the most. Chang-Tai Hsieh and Peter Klenow showed in "Misallocation and Manufacturing TFP in China and India" (Quarterly Journal of Economics, 2009) how large the cost of such gaps can be. Nottmeyer measures misallocation as the spread in the returns that tractors earn in different places. If a tractor would earn more in a distant district than near home, but never goes there, the economy loses output.Counting Kenya's tractors is harder than it sounds. No official source records tractor ownership or use, Kenya's last nationwide agricultural census was in 1979, and the Food and Agriculture Organization stopped publishing its global series on agricultural machinery in 2009. The roughly 1,225 tractors in Nottmeyer's data represent between 1.73% of the tractors counted by the 2019 census and 8.75% of the last FAO figure, from 2008.Comparing each tractor with itself is how Nottmeyer deals with the lack of a control group. The data begin only when a tractor adopts the app, so she uses each tractor's first month as its baseline, on the assumption that owners take time to trust the information and change how they manage operators. The average distance from home was 70 km in that first month. It rose by about 30 km after six months, 55 km after one year and 112 km after two years. The pattern is similar for early and late adopters, for older tractors whose owners had run them before fitting the device, and for tractors that return home every night. Nottmeyer does not claim these estimates are strictly causal, but the alternative explanations she tests do not account for the pattern.Satellite measures of crop growth stand in for yields, which nobody records at field level in Kenya. Nottmeyer uses Sentinel-2 images from the European Union's Copernicus programme to calculate the Normalized Difference Vegetation Index (NDVI), which measures how green and dense vegetation is. Ploughing leaves a field bare at the start of the season, so the gap between the lowest and highest NDVI in a year captures both land preparation and crop growth. She matches 33,256 fields worked by monitored tractors with similar fields nearby. In the year of the visit, the gap rises by about 0.4 standard deviations more in the visited fields, and part of the gain persists in later years. Because some of the comparison fields may also have been ploughed by other tractors, this is a lower bound on what mechanisation does.A spatial model of tractor location turns these results into national figures. Owners choose where to send a tractor by weighing the returns in each place against the cost of distance, and monitoring lowers that cost. When all Hello Tractor tractors behave as if they had five years of experience with the app, the spread of returns across places falls by 15.9% and total output rises by 2.18%, compared with tractors that have just adopted it. If every tractor in Kenya had the technology, output would rise by 1.3%.A fuel subsidy is the obvious alternative policy, because it makes long trips cheaper. Nottmeyer calculates that to achieve the same gains, a subsidy would have to cover almost all the fuel a tractor uses per kilometre, at a total cost of about US$9.33 billion. Fitting all 70,930 tractors in the 2019 census with the device and a five-year subscription would cost about US$30.1 million.Monitoring in other industries follows the same logic wherever an owner hands a vehicle to someone else to operate. Thomas Hubbard's "The Demand for Monitoring Technologies: The Case of Trucking" (Quarterly Journal of Economics, 2000) studied the onboard computers that US trucking firms installed to track drivers. Erin Kelley, Gregory Lane and David Schonholzer ran an experiment with Nairobi's minibus owners, reported in "Monitoring in Small Firms: Experimental Evidence from Kenyan Public Transit" (American Economic Review, 2024), and found that tracking devices helped owners manage drivers and raised profits.More Conversations on Transformation episodesMoving to profitability. Carolyn Pelnik asks why street vendors and motorcycle taxi drivers in Kampala stay in less profitable parts of the city, another case in which mobile workers and assets do not go where they would earn most.Slack and economic development. Felix Samy Soliman explains why firms in Kenya leave labour and capital idle, and how much growth that unused capacity could deliver.Further readingMisallocation and Product Choice, a STEG working paper by Stepan Gordeev and Sudhir Singh, uses farm and crop data from India to estimate how much output is lost when inputs are spread unevenly between farms, and shows that the answer depends on which crops farmers can choose to grow.Tillers of Prosperity: Land Ownership, Reallocation, and Structural Transformation, a STEG working paper by Shuhei Kitamura, finds that when the land reform enforced by the Allies after the Second World War gave tenants ownership of their farms, they adopted low-cost farm technology, relied less on family labour, and more young people left for the cities.

Nearly every child in a low- or middle-income country now goes to school, but about 70% of 10-year-olds still cannot read or understand a simple text. Researchers have tested ways to fix the problem, and governments want them to work. So why has the needle not moved?Noam Angrist (Oxford) and nine co-authors argue that the missing piece is the study of implementation itself. In this week's VoxDev Talk, Tim Phillips asks Noam about their framework, just published in Science, that sets out how small tightly controlled experiments can scale to large real-world trials, then into government policy and finally into classrooms. As Noam describes, it's not easy to convert good intentions and a clear need to real change. Listen to this week's episode to find out why.The research behind this episode:Angrist, Noam, Tahir Andrabi, Stefan Dercon, Sharnic Djaker, James Habyarimana, Michelle Kaffenberger, Clare Leaver, Akshay Mangla, Nompumelelo Mohohlwane, and Abhijeet Singh. 2026. "An Agenda for Implementation Science in Education." Science 393 (6816): 1084-87.To cite this episode:Phillips, Tim, and Noam Angrist. 2026. "Implementation science in education: Scaling what works." VoxDev Talks (podcast). About the guestNoam Angrist is Academic Director of the What Works Hub for Global Education and a Senior Research Fellow at the Blavatnik School of Government, University of Oxford. He co-founded Youth Impact, an NGO headquartered in Botswana that scales and tests health and education programmes. His research spans the scale-up and implementation of education programmes, global learning data, and A/B testing in the social sector. He led key parts of the education pillar of the World Bank Human Capital Index.Research cited in this episodeLearning poverty. A World Bank measure: the share of children who cannot read and understand a simple text by age 10. A 2022 report by the World Bank, UNESCO, UNICEF, FCDO, USAID and the Gates Foundation estimated it at about 70% in low- and middle-income countries, up from 57% before the pandemic. It is the gap between schooling and learning in a single number.Structured pedagogy and teaching at the right level. Two of the approaches with the strongest evidence for improving learning cheaply. Structured pedagogy gives teachers detailed lesson plans, materials and coaching. Teaching at the right level groups children by what they can do, not by their age or grade. The Global Education Evidence Advisory Panel reviews this evidence for cost-effectiveness; Angrist led the research behind its first report.The economist as plumber. Esther Duflo's 2017 Richard T. Ely Lecture to the American Economic Association. She argued that economists who help governments design policy must work on the details of implementation, tinkering and adjusting as plumbers do. Duflo, Esther. 2017. "The Economist as Plumber." American Economic Review 107 (5): 1-26.The voltage effect. John List's term for the drop in impact when a programme that worked in a pilot is expanded. List, John A. 2022. The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale. New York: Currency.The What Works Hub for Global Education. A research centre based at the Blavatnik School of Government, funded initially by the UK Foreign, Commonwealth and Development Office and the Gates Foundation. It studies how proven education programmes can be implemented and sustained at scale. More at wwhge.org.Efficacy and effectiveness trials. Terms borrowed from health research. An efficacy trial asks whether something can work under controlled conditions. An effectiveness trial asks whether it works in the real world: at scale, delivered by government, at a cost governments can pay, and for different groups of children. Most education evidence today comes from efficacy trials.Adaptive trials and A/B testing. Instead of one large, static experiment, researchers run many small randomised tests, change the programme between rounds, and test again. Angrist's shorthand is three Rs: rigorous, as in a standard randomised trial, but also rapid and regular. Using data already in government systems keeps the cost of each round low.How research affects policy. An experiment with 2,150 Brazilian municipalities found that mayors will pay to learn research results, and that telling them about evidence on tax reminder letters made adoption of the policy more likely. Angrist cites it as an example of studying evidence uptake directly. Hjort, Jonas, Diana Moreira, Gautam Rao, and Juan Francisco Santini. 2021. "How Research Affects Policy: Experimental Evidence from 2,150 Brazilian Municipalities." American Economic Review 111 (5): 1442-80. Angrist also describes a forthcoming experiment in Bangladesh that showed policymakers different kinds of evidence; early results suggest global causal evidence carries more weight than many assume.Second-best policy. If the best policy is politically impossible, a workable alternative that still improves learning may be the better target. Angrist credits Stefan Dercon and Lant Pritchett with making this case. Part of the problem is visibility; a new school is easy to point at, and learning is rarely measured clearly.Outcomes funding. Funders pay providers for measured results, such as learning gains, rather than for inputs. The What Works Hub is studying two schemes: the Ghana Education Outcomes Project and the Sierra Leone Education Innovation Challenge, an $18 million programme across 325 schools from 2022 to 2025.The policy-practice gap. During COVID-19, governments adopted radio, television and phone-based teaching. Angrist and Dercon matched government policy data to household surveys to see who received it. Angrist says nearly all governments adopted new distance education policies, but just over 20% of households in Sub-Saharan Africa and about half in the Middle East and North Africa received them. Latin America did far better. Angrist, Noam, and Stefan Dercon. 2024. "Mind the Gap between Education Policy and Practice." Nature Human Behaviour 8 (12): 2261-63.Difference-in-differences at scale. Once a programme reaches every school, there is no control group for a randomised trial. Difference-in-differences compares changes over time between groups. Comparing districts or schools that did and did not get a programme does not work after a national rollout; comparing a cohort that received it with an earlier cohort that did not still does. Angrist says a recent review he worked on found more than 65% of such studies in education use the location design.Tusome. Kenya's national literacy programme, a structured pedagogy approach scaled to every public primary school from 2015. It improved learning at scale, but its effects did not last as many hoped. Piper, Benjamin, et al. 2018. "Scaling Up Successfully: Lessons from Kenya's Tusome National Literacy Program." Journal of Educational Change 19 (3): 293-321.Teaching at the right level in Uttar Pradesh. The approach, developed by the Indian NGO Pratham, was refined over years of randomised trials before government scale-up. Angrist says the Uttar Pradesh rollout reached more than five million children in over 100,000 schools, and that a new quasi-experimental evaluation finds it worked. The earlier scale-up trials: Banerjee, Abhijit, Rukmini Banerji, James Berry, Esther Duflo, Harini Kannan, Shobhini Mukerji, Marc Shotland, and Michael Walton. 2017. "From Proof of Concept to Scalable Policies: Challenges and Solutions, with an Application." Journal of Economic Perspectives 31 (4): 73-102.More VoxDev Talks episodesThe gap between education policy and practice. Angrist's previous visit, on the COVID-19 data behind the policy-practice gap.Schools are failing to deliver learning. Lant Pritchett on why schooling is not education, the conversation Tim refers to at the start of this episode.Increasing learning at scale in Ghana. Adrienne Lucas on testing four learning programmes at scale with the Ghanaian government.Related reading on VoxDevImplementation matters: Measure it and account for it. Noam Angrist and Rafe Meager show that implementation explains most of the variation in the effects of targeted instruction across studies.Educating children in emergencies: Global evidence from five randomised trials. Evidence on low-cost phone tutoring tested across five countries.

In many cities in low-income countries, the grid fails often enough that businesses keep a diesel generator out the back. So an unreliable electricity grid looks like it is holding poor economies back. In many countries, lenders are putting money behind that idea.But Martin Shu and his co-authors, Jonathan Colmer and David Lagakos, set out to test it. They assembled data on power plants, fuel, workers and imported generators in 89 countries, and measured how productive each electricity sector was. In the poorest countries, electricity was about three-quarters as productive as in the US — in other words, much closer tot he frontier than their economies. And in the economic model they built using their data, bringing every country up to the world frontier adds only about 1% to long-run GDP.Shu presented the research at STEG's sixth Annual Conference in Nairobi in January 2026. He tells Tim Phillips where the productivity gap in electricity lies, why a shoe factory that is better at left shoes than right shoes explains the small gains, and which part of the economy is the real bottleneck.The research behind this episodeColmer, Jonathan, David Lagakos, and Martin Shu. 2026. "Is the Electricity Sector a Weak Link in Development?" Working paper, January 2026 version presented at the STEG Annual Conference, Nairobi. An earlier version appeared as NBER Working Paper 32041 (2024).To cite this episodePhillips, Tim, and Martin Shu. 2026. "Is electricity a weak link in development?" Conversations on Transformation (podcast).About the guestMartin Shu is Assistant Professor of Economics at the School of Management and Economics and the Shenzhen Finance Institute of the Chinese University of Hong Kong, Shenzhen. His research spans macroeconomics, development and labour economics, including what household and firm data reveal about structural transformation, and why children in poor countries are more likely to follow their parents into the same occupation. He holds a PhD in Economics from Boston University and bachelor's and master's degrees from the Hong Kong University of Science and Technology.Research cited in this episodeWeak links are sectors whose problems hold back the whole economy. When inputs are strong complements, output depends heavily on the least productive link in the chain, so a small sector can matter far more than its size suggests. The idea draws on Albert Hirschman's The Strategy of Economic Development (1958), and Charles Jones formalised it in "Intermediate Goods and Weak Links in the Theory of Economic Development" (American Economic Journal: Macroeconomics, 2011), which uses electricity as a motivating example. Shu and his co-authors ask whether electricity fits that description in poor countries today.Total factor productivity (TFP) measures how much output an economy or a sector gets from its inputs. If two countries have the same capital and the same number of workers, but one produces more, it has higher TFP. Shu measures each country against the United States. The figures for whole economies come from the Penn World Table, hosted by the Groningen Growth and Development Centre and described by Robert Feenstra, Robert Inklaar and Marcel Timmer in "The Next Generation of the Penn World Table" (American Economic Review, 2015). The paper uses version 9.1; the current release, PWT 11.0, is supported by STEG.Agriculture's productivity gap is the comparison Shu uses to show why measuring TFP is not enough. Farming in poor countries is far less productive than the rest of the economy, as Francesco Caselli ("Accounting for Cross-Country Income Differences," Handbook of Economic Growth, 2005) and Diego Restuccia, Dennis Tao Yang and Xiaodong Zhu ("Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Journal of Monetary Economics, 2008) document. Farmers are also the majority of workers in many developing countries. Yet few economists call agriculture a weak link. Whether a sector is a bottleneck depends on how it connects to the rest of the economy, and answering that needs a model as well as data.The electricity data combine several sources. Generating capacity comes from S&P Global Platts' World Electric Power Plants database, which lists more than 200,000 plants; the authors use generating capacity alone because it tracks transmission and distribution capacity closely. Power output and fuel use come from the International Energy Agency, and employment from national statistics offices. To count power from private generators, the authors use imports of generators recorded in the UN Comtrade database, an approach inspired by Francesco Caselli and Daniel Wilson ("Importing Technology," Journal of Monetary Economics, 2004). It works because few poor countries make their own generators. On the authors' conservative measure, generators supply about 7.6% of capacity on average.Labour's share of revenue in electricity is about 7%, in rich and poor countries alike. The authors collected annual reports, financial statements and SEC filings for 69 privately owned electricity companies in 31 countries, choosing private firms because their decisions follow profit rather than government mandate. Labour's share shows no relationship with GDP per capita. A share that does not change with income points to a Cobb-Douglas production function, in which each input's share of costs stays constant, and that simplifies the TFP calculation.Transmission and distribution losses are power that leaves a plant but never reaches a customer, lost as heat in wires and transformers, or stolen. According to IEA data, they average 14% of output across the sample, 22% in the poorest quarter of countries and 7% in the richest. They are the strongest predictor of low electricity TFP; once they are taken into account, the link between electricity TFP and national income largely disappears. Shu points to upgraded transformers close to end users, and ultra-high-voltage transmission lines, as the investments that would close the gap.Complementarity describes inputs that work together and cannot easily replace each other, like left and right shoes. The model sets the elasticity of substitution between electricity and everything else at 0.2, following Ernst Berndt and David Wood ("Technology, Prices, and the Derived Demand for Energy," Review of Economics and Statistics, 1975). Strong complementarity sounds as if it should make electricity more important. Shu's shoe factory shows why it does not: when a sector is already efficient, making it more efficient frees few resources, and output still waits on the less productive partner.Hulten's theorem, from Charles Hulten's "Growth Accounting with Intermediate Inputs" (Review of Economic Studies, 1978), predicts the economy-wide gain from a productivity improvement in one sector: multiply the improvement by the sector's Domar weight, its sales as a share of GDP. The authors treat any gain above that prediction as the sign of a weak link. Raising electricity TFP to the world frontier, defined as the 90th percentile, means an average increase of 43%, and by Hulten's rule it would add 1.7% to GDP. The model delivers about 1%, and only six countries beat the benchmark. The biggest exceptions are Ethiopia and Kenya, where frequent outages make power expensive or halt production. The authors also test their results against David Baqaee and Hannes Malmberg's "Long-Run Comparative Statics" (NBER Working Paper 33504, 2025), which extends Hulten's approach to allow for capital accumulation.Raising productivity outside electricity is the counterpart experiment. When the authors raise TFP in the rest of the economy by the same proportion instead, every country gains more than Hulten's theorem predicts, and the capital stock grows by 75% on average. Shu's conclusion is about balance. With complementary sectors, pushing one to an extreme achieves little, and today it is the non-electricity sector that lags.More Conversations on Transformation episodesA Microeconomic Perspective on Misallocation. Eric Verhoogen explains how economists diagnose the wedges that keep resources from their best use, the same kind of distortion Shu's model uses to capture outages and costly self-generated power.Structural change in sub-Saharan Africa. Gaaitzen de Vries and Kei-Mu Yi ask whether African economies follow the familiar path of structural transformation, a wider view of the sectors that Shu argues are holding growth back.Further readingCan Mass Electrification (Still) Cause Structural Change?, a STEG synthesis paper by Eric Hsu and Mitchell VanVuren, reviews the mixed evidence on whether connecting people to power still raises productivity and incomes in low- and middle-income countries, as it appears to have done in the past.Under the Grid: Price and Informational Barriers to Grid Densification in Benin, a STEG working paper by Arnaud Dakpogan, Megan Lang and Alpha Ly, finds that a connection subsidy did not raise formal connection rates on average, but information on costs and procedures nearly doubled them among households with no connection at all.

King Leopold II of Belgium told his envoy in London that he did not want to lose his slice of "this magnificent African cake". The cake was the Congo Free State. Today the Democratic Republic of Congo holds 70% of the world's cobalt reserves, and so the cake is back on the table.Christopher Adam (Oxford) is one of the editors of a special issue of the Oxford Review of Economic Policy on the new scramble for critical minerals. The minerals lie mostly in the Global South, and the demand comes mostly from the North. In this week's VoxDev talk, Chris explains why a mining boom may create few jobs, why it might not last, and why hiring the best lawyers could be the smartest way to use an aid budget.The research behind this episode:Adam, Christopher, Rabah Arezki, and Frederick van der Ploeg. 2026. "The scramble for critical minerals." Oxford Review of Economic Policy 42 (1): 1-13. Open access. The introduction to Volume 42, Issue 1, a special issue on critical minerals.To cite this episode:Phillips, Tim, and Christopher Adam. 2026. "The critical minerals scramble.” VoxDev Talks (podcast). About the guestChristopher Adam is Professor of Development Economics at the Oxford Department of International Development, University of Oxford. He is managing editor of the Oxford Review of Economic Policy, an associate editor of the Journal of Development Economics, a Lead Academic for the International Growth Centre, and a Visiting Scholar at the International Monetary Fund. His research spans the macroeconomics of low-income countries, monetary economics and public finance, and growth and structural change, including the response to climate change and natural disasters.Research cited in this episodeLeopold II and the "magnificent African cake". The opening quotes a letter from King Leopold II of Belgium to his envoy in London, in the English translation used by Adam Hochschild in King Leopold's Ghost (Houghton Mifflin, 1998). Leopold went on to rule the Congo Free State as a personal possession. Chris uses the comparison to ask whether today's scramble will end any better for the people who live on top of the minerals.What makes a mineral critical. There is no single list. The usual working definition, from the US National Research Council (2008), is that a mineral must be both essential to a modern technology and subject to supply chain risk. In the same special issue, geologist Jon Blundy compares the critical mineral lists of 12 countries and finds that only lithium and the rare earths appear on all of them.Demand to 2040. The International Energy Agency (IEA 2021) projects that demand for minerals for clean energy technologies will rise at least fourfold by 2040 if the world meets its climate goals. Chris adds two further sources of demand, digital infrastructure and defence.China's grip on processing. Mining is spread across many countries; refining is not. China controls between 60% and 80% of final global supply of processed critical minerals (Leruth et al. 2022, cited in the paper). Chris argues this concentration is what makes the current scramble different from the earlier one for oil and gas.The presource curse. A term from World Bank economist James Cust and David Mihalyi (IMF 2017). Governments and citizens start spending in anticipation of a resource boom, before any revenue arrives, and growth can fall as a result. Chris warns against the same over-exuberance about local processing of critical minerals.Battery substitution. Lithium-ion batteries dominate today, but sodium-based alternatives are in development (Vu 2025, cited in the paper). High prices raise the incentive to find substitutes, so a producer country cannot assume today's price will hold.Take-or-pay contracts. In a take-or-pay contract, the buyer pays for a minimum quantity of output whether or not it takes delivery. The paper proposes such long-term contracts, used in natural gas, as one way to share the risk of technological change between mining companies and producer governments.Taxing value that sits downstream. In the special issue, Gregoire Rota-Graziosi argues that the rent from critical minerals is moving away from the mine and towards processing plants and intangible assets. His proposals include anchoring prices to international benchmarks to limit transfer pricing abuse. Chris stresses the role of royalties.Indonesia's nickel export ban. Indonesia banned exports of raw nickel ore from 2020. It is now the world's leading nickel producer and processor, but the paper notes that the main impetus came from Chinese firms and investment in industrial parks. Chris raises it as a success with a caveat.The double dividend. In the special issue, Mathieu Couttenier and Dominic Rohner argue that the green transition could reduce conflict as well as emissions, if governance, transparency and multilateral institutions are strong enough. Chris says he would like to share their optimism.Dutch disease. A resource boom drives up the real exchange rate and makes other exports less competitive (Eastwood and Venables 1982). Because mining creates few jobs, Chris argues that industrial policy beyond the mining sector must address this risk directly.More VoxDev Talks episodesNo taxation without administration: What makes tax authorities work. Royalties and transfer pricing rules are only as good as the tax authority that enforces them.Rethinking development cooperation: The case for a 'balance sheet' approach. A proposal to treat low and middle-income countries as managers of their own assets, which is the position a mineral-rich government is in.Related reading on VoxDevMining booms move workers from farms to services, not factories, by Qing Huang, Victoria Wenxin Xie and Wei You. Evidence from 33,262 mines on what resource booms do to local employment.Who owns the mine matters for deforestation, by Victoria Wenxin Xie, Wei You and Ran Goldblatt. Mineral price booms increase deforestation near mines, and investor origin changes the size of the effect.The downstream impacts of mines: How pollution hits agriculture, by Lukas Vashold, Gustav Pirich, Maximilian Heinze and Nikolas Kuschnig. In Africa, crops are less healthy downstream of mining sites.

This is an episode from VoxDev's new podcast series, Ideas in Development. This series has a separate podcast feed, where you can find every episode of Oliver Hanney’s conversations on evidence.YouTube: https://www.youtube.com/watch?v=R8eCnQy5fF4 Apple Podcasts: https://podcasts.apple.com/us/podcast/givedirectlys-quest-for-scale/id1866874059?i=1000791048981 Spotify: https://open.spotify.com/episode/2ffbhYkt9bYNiWUc5KPIuZ?si=13787b330c604508 Audioboom: https://audioboom.com/posts/8955404-givedirectly-s-quest-for-scale GiveDirectly started out as a small nimble team founded by PhD economists, who had a novel approach to ending poverty – just give cash. But they are no longer the new kids on the block, and have been scaling their operations rapidly in recent years, a trend that could intensify if the third wave of American philanthropy materialises.That’s a huge opportunity, but the potential of operating across entire countries is a radically different proposition. So what does an evidence-driven organisation research when it's trying to go from moving millions a year to billions?Caitlin Tulloch, Senior Director for Research, Learning and Product at GiveDirectly, joins Oliver Hanney for a wide-ranging conversation on cash transfers at scale. We cover running a research portfolio like the treasury, the macro forecasting work around a new Malawi project, the trade-off between fraud and reach, building a global emergency response capability, and the politics of putting a lot of cash into someone else's economy.Ideas in Development is a VoxDev podcast on economic policy and research. Find us wherever you get your podcasts, and read the full write-up on our Substack: https://ideasindevelopment.substack.com/