UP Links 22 October 2012

+ Brandon Fuller

Germs, Social Networks, and Growth – Alessandra Fogli and Laura Veldkamp

Does the pattern of social connections between individuals matter for macroeconomic outcomes? If so, how does this effect operate and how big is it? Using network analysis tools, we explore how different social structures affect technology diffusion and thereby a country’s rate of technological progress. The network model also explains why societies with a high prevalence of contagious disease might evolve toward growth-inhibiting social institutions and how small initial differences can produce large divergence in incomes. Empirical work uses differences in the prevalence of diseases spread by human contact and the prevalence of other diseases as an instrument to identify an effect of social structure on technology diffusion.

Can Agricultural Productivity Keep Growing?

Many places around the world are far behind the frontier of agricultural productivity, and thus continue to have considerable room for catch-up growth…The rate of output growth in agriculture hasn’t changed much, but the sources of that output growth have been changing from a higher use of inputs (machinery, irrigation, fertilizer) and toward a higher rate of productivity growth…Sub-Saharan Africa has perhaps the greatest need for a productivity surge, because of low incomes and expected rates of future population growth, but is hindered by a lack of institutional capacity to sustain the mix of public- and private-sector agricultural R&D that benefits local farmers…

Bloomberg View on Rules for Fracking

It doesn’t take a scientist to recognize that pumping chemicals underground to extract methane can pose risks. But there is little hard evidence to date that fracking, when done appropriately and safely, has a deleterious effect. Policy makers should look to science not to let them delay fracking but to help them craft strict regulations to prevent problems.

Chrystia Freeland on Growth in Africa

The consensus view among many students of the global economy is that investment decisions are about choosing, in the words of Mohamed A. El-Erian, chief executive of the fund manager Pimco, “the cleanest dirty shirt”: The United States faces a fiscal cliff and political gridlock, Europe is tenuously poised between years of painfully slow growth and outright collapse, and even go-go China is slowing.By contrast, in the view of Stephen Jennings, the Renaissance chief executive, Africa is on a tear. “It is the only region in the world where growth is accelerating,” he said by phone from Moscow. “If you strip out South Africa, the rest of the region is actually growing very, very quickly.”
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