A Nobel-Worthy Economic Research

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A Nobel-Worthy Economic Research

Would 20 years of research be sufficient to help eliminate the arduous social issue of poverty? Economic Sciences Nobel Peace Prize laureates Abhijit Banerjee and Esther Duflo from MIT and Michael Kremer from Harvard University attempted to answer this exact question. Their devoted work to the continuously evolving field of development economics has produced practical solutions through “experimental approaches”, which ensure a more optimistic future with regards to the alleviation of global poverty.

The numbers are striking: 700 million people still live under extreme poverty conditions and  more than 5 million children under the age of 5 die due to diseases that could have been potentially treated with the rightly developed national healthcare system. Even the word “striking” may be an understatement to describe the immensity of the social issue that has been plaguing the international community for the past decades.

The laureates attempted to approach the question of poverty through surveys, meticulous research, region-adopted methods and skilfully crafted economic models. Focusing among other factors on education deficiencies, national healthcare provision, child health etc., the laureates aimed at detecting inefficiencies and “loopholes” which could be resolved through intervention. More specifically, third party involvement in the resolution of national social provisions through targeted direct or indirect investment was considered to be a practical method to eliminate the issue of poverty to scale.

Their research methods soon proved to be solid and rightly fact-based, when more than 5 million Indian children benefitted directly from effective tutoring, while their surveys and relevant publication met the interest of the public healthcare industry. Scientists agreed that part of the success of Banerjee, Duflo and Kremer approach is due to the real-world observations that were used in the development of the economic models, rather than purely theoretical perspectives. The Prize laureates achieved the unimaginable: producing practical and tangible applications for the elimination of an internationally critical social issue, which has been at the core of most leaders’ agenda for the past decades.

Not surprisingly, the elimination of the multidimensional social issue of poverty is the first objective on the Millennium Development Goals list of the United Nations. The far-reaching effects of this phenomenon are not just limited only to the immediate implications of low wages and insufficient pensions, poor social infrastructure and high unemployment. On the contrary, poverty affects the well-being and immediate future of nations. The Nobel Prize winning research successfully managed to redirect leaders’ attention to the ever-contemporary world issue.

Some scepticism around the issue has been raised, as always. Controversial social questions that touch upon fundamental sides of political and economic structures are bound to be drawn to the debate table, where leaders discuss about their ranking in the list of prospective problems to be dealt with, rather than accept them as facts that ought to be analysed and dealt with sooner rather than later.

Scientists and researchers argue that poverty should be seen as one of the issues with which NGOs, governmental bodies and the UN itself should be concerned with, due to the necessity to address other important issues such as severe conflict resolution, the restoration of international peace and climate change. Yet, the recent Nobel winning research drew the spotlight again towards the elimination of poverty, a long forgotten yet unimaginably severe social matter.

Ever since the term “Second Development Decade” was adopted, referring to the 1970-1980 period, the field of development economics has been more focused on finding practical solution to reduce or, best case scenario, eliminate poverty. The redirection of governments’ and organizations’ attention towards the concerns of those unable to provide for themselves stems from each nation’s desire to increase growth and achieve macroeconomic prosperity in the long run. As a matter of fact, the World Bank’s ambitious desire to end extreme poverty by 2030 is valued greatly and the path that was suggested has been closely followed and has produced positive results in countries like Sri Lanka, South Africa and Uganda.

Strategies that were previously considered effective means to end poverty, such as international aid, are re-examined and, instead, scientists are trying to draw parallel lines between the suggested economic models of the Laureates with existing economic theory and adjust it to the needs of countries with striking figures of poverty. Though foreign aid was once considered the best response to the issue, it is now seen as a tool with which governments can attract private investment both from organizations and individual firms. What is more, the re-examining of existing market intervention policies, relating to market regulations and the operation of the public sector, also need to be re-addressed in order to secure the effective and transparent government performance.

Concerns and questions on such trivial social issues will always remain contemporary. The world revolves around the escalation and resolution of such issues, which will remain at the centre of governments’ agendas for the decades to come. However, one thing is for certain: the recent Nobel Peace Prize laureates successfully managed to resurface an unresolved yet potentially fatal for the future of the international economy issue. Studies and researches have already been drawn up and their attention has again been turned towards the possible alleviation of poverty. One can only hope that the future seems brighter and less grim to the scientists and economists tasked with coming up with effective, tangible and applicable solution. Quoting Robert Lucas, American economist and Nobel Prize laureate, “once you start thinking about economic growth, it is hard to think about anything else.”

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Originally published at Trai i Leoni (https://www.traileoni.it/2019/12/a-nobel-worthy-economic-research/)

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Tags: , , Last modified: February 13, 2021