Development Assistance’s Dilemmas

A frequent demand by NGOs that deal with developing countries’ affairs is that rich countries (i.e., mainly the European Union, the US, Canada and Japan) increase the levels of their ODA (=official development assistance). In fact, developed countries commited (40 years ago) to raise their ODA to a level of 0,7% of their respective GDPs. So far, only a handful met this obligation. Meanwhile, there are many arguing that ODA is doomed to failure, so it is a wastage of time and money to engage in development assistance at all. I think that the problem is rather more complex. It is not just about whether and how much to invest in ODA – the matter is, actually, how we do it. And there are many problematic issues in this area. Continue reading

Climate Change, Backstop Technology and Thanksgiving

There is a whole class of economic models of climate change that reach the conclusion that we can (and, indeed, should) wait with climate protection measures, and reduce greenhouse gas emissions slowly in presence. In the future (after some 20-30 years), when “optimal, efficient technologies” have been developed and we will be able to invest in climate protection at less cost – then we should engage heavily in mitigation of climate change (this approach is sometimes called the “climate policy ramp”). The most influential models of this class – William Nordhaus’s DICE and Richard Tol’s FUND – reach their conclusion as a consequence of two factors mainly: their discounting practice (which I wrote on recently), and the assumption that there exists a so-called backstop technology (a concept going back to… William Nordhaus). Meanwhile, there are reasons to fear that there make come a Thanksgiving for this technology optimism. Continue reading