Wednesday, May 6, 2009

When the divorce comes, how much should the South get?

Damien Helly reminds me of a paper by Ali Abdel Gadir Ali written back before the CPA...:
On the basis of the MDG on poverty section (II) presents the proposed analytical framework.
In a nutshell the idea behind the framework is that of minimizing poverty in a two region economy (South and North) by allocating a given total of resources between the two regions. With poverty summarized by the head count ratio the resulting allocation formula depends on a number of poverty magnitudes such as the head count ratios for the two regions, the growth elasticity of poverty in each region and the elasticity of the per capita expenditure of the South to that of the North.
I am not enamored by this kind of overly utilitarian approach; if the North is very effective at reducing poverty (because more people are close to the poverty line, or because poor people are more accessible- after displacement they are living in shantytowns or IDP camps, or because of a legacy of more administrative capacity), is it right that the North gets more poverty-reduction funding? My ethics sense says no.

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