Thursday, April 20, 2017

State capacity and resource constraints

State capacity weakness in developing countries is a favourite topic of this blog. An important, but less discussed, dimension of weak state capacity is that public systems run on very thin human, physical and financial resources. The scale of disproportionality would become evident if we match the time-task-effort to the available resources. And once we have such deficiencies, the other dimensions of state capacity weakness (corruption, incompetence, apathy etc) invariably follow. 

And this is no less true in developed countries. From a Times story on the hell-hole that is the over-crowded St Clair Correctional Facility, one of the six maximum security facilities in Alabama,
Mr. Dunn, the corrections commissioner, points to this as support for his conviction that the root problems at St. Clair and in the Alabama prison system lie in the numbers. “I still believe that the fundamental, systemic problem is a combination of lack of staff and overcrowding,” he said... The construction of modern prisons, he said, is the important first step to making changes that will last, allowing for safer facilities and more rehabilitative programming.
Whether it is fundamental or not, I cannot disagree with the Commissioner. And he echoes correctional officials in many developing countries. 

St Clair is acutely under-resourced - physical infrastructure, correctional man power etc. But St Clair is an exception to the norm of well-resourced correctional facilities in developed countries. 

Instead, St Clair is the norm in many developing countries. In fact, St Clair (at least from the photos) would even be considered one of the better endowed ones in many of these countries. And despite acute resource scarcity, most often far greater than St Clair, many correctional facilities in countries like India are run no worse than St Clair. 

This scenario of resource deficiency would repeat with building inspectors, bill collectors, surveyors, citizen charter counter operators, teachers, doctors, extension officers, police constables, clerks, and so on, and at all levels. 

In fact, I will not hesitate to argue that under the same same resource conditions and challenges, the State in developed countries would fare far worse than those in many developing countries. 

Wednesday, April 19, 2017

The problem with targeting outcomes in development

Outcomes-based payments has been a trend in international development for more than a decade-and-half, though with limited results to show. In fact, except for the deforestation programs, there may be no example of a pure outcomes project. Even the totemic examples skirt around outcomes and end up focusing, at best, on poorly specified outputs. In short outcomes-based financing itself has shown little evidence of outcomes. 

The fundamental premise with outcomes based approach to addressing development problems is the assumption that a financial incentive, adequate and appropriately structured, can force systems to get their acts together and achieve outcomes. The financial structure, it is believed, can help vault past inputs, processes, and outputs, to realize outcomes. 

Here is a listing of three important failings with this approach (assuming the focus being on outcomes and not outputs)

1. The assumption that a financial incentive is sufficient to overcome antecedent deficiencies and achieve outcomes betrays a very high degree of ignorance. In simple terms, the assumption is that financial incentive can ensure that processes are put in place, processes get adhered to, complementary inputs can be and are brought to bear, and execution is reasonably assured. And all this happens in scale. Take a break!

While it may be logical to target outcomes, in practice, the financial incentives alignment alone may not be sufficient to help leapfrog the process compliances that may be necessary to help achieve the objective. In most environments (places and sectors), just process compliance requirements (simple things like teacher attendance or individual student learning tracking, which are critical to achieving the objective) can be daunting enough, even if they are targeted directly. Now achieving them as an incidental benefit from an outcomes-based contract, may be expecting too much. 

2. The other assumption is that governments can afford to pay for outcomes. This, in turn, assumes that the same set of resources can be redeployed more efficiently to achieve the desired outcomes. 

But what if the real cost of achieving outcomes is much greater than the current expenditures? And what if the principles of government budgeting conflict with the requirements of outcomes-based budgeting? 

Answers to these can be found in the way government budgets are made. Logic would have it that allocations be made based on an objective assessment of the cost required to achieve the goals. But in the real world, allocations are made with another consideration as the foremost priority – balance and equity (in the coverage of geographies, sectors, and populations). 

The result is extensive skimping on the allocations, especially on maintenance, consumables, procedural compliances, newer types of activities, discretionary spending, and new investments. Nothing is sacrosanct except the salaries of employees and long-term contractual obligations. Spreading the limited fiscal butter thin, often to the point of being imperceptible (or seriously detracting from the objectives), becomes inevitable. 

Now imagine an outcomes-based project where procedural compliances, maintenance schedules, quality of engagement, rigour of monitoring, and so on are critical to its success. All this inflates the price tag for the actual achievement of outcomes. Governments will find the increment fiscally unsustainable. The option of a phased expansion, apart from raising several practical problems, would also be politically unacceptable. 

3. Finally, in case of private production, the assumption that the supply side is large enough to support outcomes based contracting in scale is most likely to be unrealistic. Forget education or health, try calling tenders for outcomes based water treatment facilities and, in most developing countries, within only a handful of tenders the no-response bids start to bind.

So, the argument would go that the markets take time to mature. We only need to catalyse it and will develop. But, as the far simpler and easier to contract market for infrastructure services has shown, such markets are more likely to remain elusive for a very long time. And, even plain simple outcomes contracts like long-term road concessions are rife with renegotiations and attendant moral hazard which distort contractual obligations. 

So, is it futile to target outcomes in development? It is realistic to target outcomes in at least two areas. One, logistics based activities, especially infrastructure services, are amenable to outcomes targeting. This is largely because, there is little difference between outputs and outcomes. Two, where there is private production and public provisioning of services, and where outcomes can be quantified without any of the standard challenges, it should be possible to hold private providers accountable and demand outcomes. Skill trainings linked to placement is an example.

Yet with even these limited areas, the aforementioned three problems will bind to varying degrees, hampering the achievement of outcomes. 

Similarly, it is unrealistic to target outcomes in cases of public production involving engagement intensive activities. I would define engagement intensive activities as those where outcomes depend intimately on the quality of engagement. Education and learning outcomes is the best example. In all such cases, especially when done in scale in developing countries, state capacity becomes the binding constraint.

Monday, April 17, 2017

How should we manage urbanisation?

Far too often debates on urbanisation has focused on supply-side measures that encourage growth of cities. Accordingly, we have policies to expand city boundaries, incentivise businesses and skilled migrants to locate to cities, and so on. 

But as Edward Glaeser and Wengtao Xiong write, we may be focusing on the wrong set of policy instruments,
If urbanization can play an important role in abetting economic growth, then one question is whether public policies should do more to increase city size. There are many reasons to be wary of explicit spatial policies that encourage migration to one region or another. Most obviously, it is unclear whether encouraging urbanization would enhance welfare overall. On average, workers in cities earn more, but they also pay more for housing and suffer other costs. The standard economic model of migration assumes a spatial equilibrium, so that the marginal migrant is indifferent between the city and the rural hinterland, which implies that there is no direct welfare benefit from encouraging migration. Certainly, there may exist externalities from moving to cities, but these can be both positive and negative and we currently cannot tell whether those external benefits on net favor cities.
Moreover, accepting a role for spatial bias in policies sets an uncomfortable precedent. Spatially biased policies may well be used to favor politically powerful regions, rather than regions that should be subsidized. Loud voices will clamor for support for poorer regions, even if economic development suggests that people should leave such areas. A principle of spatial neutrality would seem to be the safest course, which would force regions to compete for capital and workers rather than relying on largesse from the national government.
A more sensible policy alternative is to focus on reducing artificial barriers to urban growth and improving the quality of urban life. If cities have benevolent economic effects, then it can be quite costly to impose land use regulations that stymie urban construction, such as the stringent floor-area requirements that Mumbai has had for most of the past 50 years. In some cases, including Mumbai, these land use controls were imposed to limit the growth of the city. Often, they have only prevented legal, safe housing and left a back door for the growth of sprawling slums.
City governments can also bring urban growth by becoming more effective at improving urban quality of life. Most of the downsides of density, such as contagious disease and congestion, are negative externalities that become magnified when people live close to one another. By reducing these externalities, developing-world cities can attract immigrant entrepreneurs and allow more people to enjoy the added productivity in cities...
First, growing cities need infrastructure, but to get infrastructure right, we need to get institutions right. Second, incentives must accompany infrastructure. Third, property titling and the protection of private property are extremely valuable in urban contexts. Fourth, infrastructure, incentives and institutions must be adapted to local conditions.
This is a very profound insight, very easily missed. In simple terms, ease the demand-side constraints to urban growth and let cities grow on their own, rather than directly targeting urban expansion. Address the regular deficiencies - restrictive regulations, inadequate infrastructure, and poor governance - and allow cities to grow organically.

Far too often governments, at all levels, end up favouring the more immanent and tangible supply-side policies and ignore the more diffuse and deep-rooted demand-side ones. For sure, there are compelling political economy and administrative reasons for such distortions. But the result is the choking and sprawling cities that characterise much of the developing world.

A pivot towards improving urban governance, encouraging vertical and transit-oriented development,  simplifying the doing business regulations, investments to expand and increase the quality of human capital formation, general initiatives that enhance the quality of urban life, and plugging the deficiencies in infrastructure should be the agenda for city managers as well as provincial and national governments. Cities will then take care of themselves. 

Wednesday, April 12, 2017

Shenzhen and learnings for India

From Economist's fantastic survey on the Pearl River Delta (PRD), consider the trajectory of Shenzhen's emergence as an innovation hub,
Between 1980 and 2016 Shenzhen’s GDP in real terms grew at an average annual rate of 22% and today stands at 2trn yuan. The city’s Nanshan district, home to about 125 listed firms with a combined market value of nearly $400bn, has a higher income per person than Hong Kong... Shenzhen spends over 4% of its GDP on research and development (R&D), double the mainland average; in Nanshan the share is over 6%. Most of the money comes from private firms. Companies in Shenzhen file more international patents (which are mostly high quality, unlike many of the domestic Chinese ones) than those in France or Britain.
Local entrepreneurship, innovating both in products and services as well as their business processes in a closed economy, was critical to this success,
Early reformers pushed ahead with unauthorised investment deals with non-mainland companies and retroactively developed the legal framework needed to protect foreign firms. Time and again, grassroots innovators hit on better ways of doing things, even though strictly speaking they were not permitted. When their risk-taking proved successful, communist leaders typically took the credit... The common perception that China is incapable of innovation needs re-examining... a recent study by Britain’s University of Sussex and others for the European Commission... calculate that the average value China adds to its exports is 76% (the EU’s is 87%). The PRD’s companies, which account for a huge chunk of China’s innovation, have been moving up the value chain... Today, Shenzhen is attracting many entrepreneurs keen to develop new ways of making things. The innovators are transforming the entire delta into an advanced manufacturing cluster. Many multinationals have a listening post in the city to stay close to the latest trends... Shenzhen has become the world capital for hardware and manufacturing entrepreneurs.
The cluster effect has been a powerful force for PRD's success and will also be a reason why even with rising wages, not too many of these firms will relocate especially their more value added activities,
Another way Shenzhen is rewriting the rules is by embracing open innovation. In the West, corporate innovation has generally been a secretive, top-down affair. Many factories in the city started by making clever imitations of Western goods, which led foreigners to dismiss the locals as mere copycats. That was a mistake. David Li of Shenzhen’s Open Innovation Lab argues that the copycats have since morphed into a powerful ecosystem of collaborative, fast-learning suppliers and factories. “Anybody can come to Shenzhen with an idea and get it prototyped, tested, made and put on the market at a decent price,” he says. Silicon Valley is obsessed with rich-world problems, he thinks, but China’s open innovators work on affordable solutions for the masses on everything from health care to pollution to banking... 
One of Shenzhen’s most daring startups, Royole, is expanding its output of an extraordinary product: the world’s thinnest foldable full-colour touchscreen display. Liu Zihong, a mainlander, earned his doctorate in electrical engineering at Stanford University, where he dreamt of radical new ways for machines and humans to interact. When he started Royole, he says, he knew it had to be based in Shenzhen. Getting from early-stage research to manufactured product would require a massive amount of what he calls integrated innovation: “Materials, process, device design, circuit design—all needed to be innovated…if you changed one material, you had to change the process.” His team had to develop entirely new materials and factory tools, including custom-built robots, to make his screens, accumulating over 600 patents along the way. He insists this could not have been done even in Silicon Valley, because California cannot match Shenzhen’s ecosystem of “makers”...
Navi Cohen is the co-founder of Revols, a Canadian startup developing affordable, custom-fitted headphones. His firm raised a fortune on Kickstarter, a crowdfunding site. When it tried to develop its product in Montreal, it found things slow and expensive, so it moved to Shenzhen, where supplies were cheap and factories made prototypes quickly. It is now in production. Another promising startup that moved to Shenzhen is Wazer, an American firm. A conventional metal-cutting machine on a factory floor costs $100,000 or more. Shenzhen’s know-how helped Wazer perfect a way to cut any material precisely with pressurised water. Its desktop cutter costs about $5,000 and will disrupt the industry when it comes to market later this year.
It is surely not appropriate to compare Gurgaon and Shenzhen on many dimensions, especially given the locational advantages enjoyed by the latter. But the roles of government and local entrepreneurship may be worth examining. 

Like Shenzhen, Gurgaon emerged from nothing, maybe even around the same time. Unlike Gurgaon, Shenzhen flowered to become an innovation hub thanks to its enterpreneurs and governance. Farsighted local politial leadership contributed to the growth by providing world-class infrastructure and logistics facilities and by not interfering with the typical heavy handedness of government bureaucracies. Gurgaon had the exact opposite in both infrastructure provision and government bureaucracies.

Indeed Chinese bureaucrats are not immune from all the traditional failings of governments. In the context of a new plan to build a 2000 sq km greenfield satellite city, Xiongan, south of Beijing, to decongest the capital, the Economist writes,
Over the years China has tried to build numerous new cities, several of which have been costly failures. More than a decade ago the government declared that the Binhai New Area, a vast development in Tianjin, would be north China’s answer to Shenzhen and Pudong. It has never taken off. Another stillborn project was Caofeidian, an “eco-city” in the Bohai Gulf.
But governments cannot be reflexively blamed for everything. Unlike the spectacular success of companies like Foxconn, Huawei, BGI, Mindray and so on highlighted here, India's hardware entrepreneurial eco-system has not produced global champions. Chinese firms are today at the forefront of areas like consumer electronics, renewables, transportation, telecoms, and construction equipments, and are not far away from dominating markets like those for battery storage, electric cars, medical devices, drones, robotics, cloud computing, machine learning, and so on. 

Consider the example of India's software industry. It is difficult to refute the argument that the likes of TCS, Infosys, Wipro, Cognizant etc missed a great opportunity to build on their platform of success to establish themselves as leaders in emerging markets like artificial intelligence and cloud computing. It is even worse that they may have altogether missed the bus on these emerging technologies. 

Instead, there may have been a resource misallocation towards real estate and IT start-ups, in terms of physical and human capital and entrepreneurial talents. Here too while Baidu, Alibaba and Tencent have adapted western models and innovated to develop new features and services which are now becoming hits in developed markets, India's e-commerce firms have remained just copy-cats of well established western counterparts with little or no meaningfully significant innovation to address any of the country's several development challenges.

Tuesday, April 11, 2017

Are batting collapses becoming more common?

From a very good analysis of the surge in batting collapses at a time when batsmen are piling on the runs, these statistics stand out
Test teams are scoring huge totals much more often than they used to. Between 1960 (more or less the start of the current era of covered pitches) and the end of 1999, one in 18 innings would see a team rack up 500 or more. Since the start of 2000, that rate has almost doubled to one in ten. Last year, teams amassed 500 or more on 19 occasions: one in nine... sub-100 totals have also become much more frequent. From 1960 until 1999, the dreaded double-figures dig happened roughly once every 70 innings. Since 2000, that figure has jumped to one in 47... In the 1950s, the average sub-100 innings lasted 293 deliveries. Since then, the carnage has accelerated. In the 1960s, the average rout lasted 255 balls; in the 1990s, 221. Since 2010 it has taken an average of just 184 balls to end the misery. That's a full 18 overs fewer than 60 years ago.
Tim Eaton appears to trace the failing to the technical weaknesses of the No 6 batsmen (bully instead of being a bulwark, as he writes), especially for Australia and South Africa, the two countries surprisingly vulnerable to such collapses. The dominance of seam bowlers in the list of those responsible for such collapses is interesting and highlights the effectiveness of late movement. 

While those may be contributors, I am inclined to the argument that the defensive technique and temperaments of modern batsmen may be responsible. One way to statistically verify it may be to see how many of these wickets fell to defensive and attacking shots respectively over the different periods. My hunch is that getting out attacking the ball would predominate in recent years.

Also, we need to discount the much more number of tests being played in recent years, with more tours and more teams. It is now not uncommon to have players playing 100 tests over a 7-10 year career, something which would have taken twice that many years before the millennium. 

It may also be useful to do an examination of whether batting collapses in general have increased in recent years. If we assume losing 5 wickets for an addition or 10 runs or 8 wickets for an addition of 30 runs as collapses, is there an increasing trend of such collapses?

Monday, April 10, 2017

The failings of the best and the brightest

Behavioural psychologists point to certain cognitive biases that afflict human mind and spares none. Even among the smartest people I have interacted, there is at least one of the following three biases that deeply cloud their perceptions. Just a handful of people manage to escape this trap, being cognisant of these impulses and having the resolve to overcome them. I will call them genius. 

1. Induction bias

Human being are fundamentally inductive beings, prone to draw generalisable conclusions from their specific experiences. It is very difficult to recalibrate the lens of logic when applying inductive reasoning. Important dimensions get glossed over, most often because the context and its structure varies, often very widely. And without having been in that context, it is very difficult to appreciate the nuances. 

The most classic such inductive reasoning bias comes from those working in the private sector who tend to apply similar set of operational principles to public sector issues. They see outsourcing services, aligning incentives of agents, defining targets and efficiency parameters, making payments based on outcomes, work-flow automation and so on as natural accompaniments in the public sector. Truth to say, public sector could do with all of these, in varying degrees. But there is some distance between "could" and "would". 

Similar failings apply to other generalisations, especially when they involve tackling complex public policy challenges. And in most of these cases, difficulty in appreciation of the context is the major contributor to the difference in perceptions. 

2. Anecdote bias

Human beings suffer from representative and anchoring biases, which make us crystallize our views on an issue from a few personal experiences and the limited examples that immediately come to our mind while discussing that issue. Such biases prevent us from realizing that our exposure is but just one data point and the particular outcome may have been deeply influenced by its specific context.

People who travel widely and engage with experiences during these travels or who are integrated to the global seminar/conference circuits are especially vulnerable to this bias. Politicians belong to the former and international development cosmopolitans to the latter. An innovative approach or idea to overcome a supposedly intractable problem that you have seen either directly or in a presentation is likely to stick deep and long in our memory. 

Unfortunately, most often such success is circumscribed in place, time, supervisory effort, and context. In case of presentations, especially on complex public or social issues, they are most often half-truths. It may be presumptuous to generalize from such experiences.

3. Achievement bias

It is a common feature that people are strongly attached to their perceived personal ‘achievements’. It means that their comprehension of the particular issue is very deeply influenced, or clouded, by their prior experience. 

Two cognitive biases amplify the attachment to personal experiences. The availability bias anchors human mind to evaluate a topic based on the examples available and entrenched in our memory. The over-estimation bias makes us repose far higher subjective confidence on our own judgements (in this case of the 'achievement'), than their objective accuracy would suggest. Accordingly, in any such achievement, the ‘success’ elements get amplified even as the ‘failing’ dimensions are underplayed.

Policy makers and practitioners, especially the successful and competent ones, are vulnerable to this. Even the most successful ones are likely to have only a handful of 'successes' from among the several initiatives that they would have tried over a career. They invariably advocate either its particular replication or generalise inferences for application in other problems. Almost always, the contribution of the specific individual (the extraordinary 'personal' energy, unavailable in business as usual contexts) and confluence of favourable environmental factors to its success gets glossed over. The median public system is most likely to struggle to get the initiative past the post. 

While there is some overlap among the three biases, there are also subtle differences as reflected in the categories afflicted by each.

Sunday, April 9, 2017

Weekend reading links

1. Amidst all the negative news that surrounds Europe, we overlook the real successes. Spain's recovery from the binge growth of the last decade is outstanding. Even more impressive has been its resolve to push ahead with reforms to labour market, banking systems, and corporate bankruptcies. The wage restraint and flexibility given to companies under the 2012 labor market reforms have ensured that the country's unit labour costs have fallen by 14 per cent since 2010, thereby enhancing the country's external competitiveness.

But the chronicle of the  construction boom that built up the excesses is worth remembering,
That boom coincided with the arrival of millions of migrants from Latin America, eastern Europe and north Africa, fuelling demand for homes that eventually reached fantastical proportions. In 2007, Spain accounted for more housing starts than Germany, France, Britain and Italy combined and 2.7m Spanish workers were active in the construction sector — equivalent to 13 per cent of the national workforce.
In Valencia, the boom was even more pronounced, helped by two factors that had nothing to do with central bankers in Frankfurt. One was the decision by the regional and local government to sink billions of euros into one-off events and pharaonic architectural designs. The other was the proximity between political leaders and the cajas, or regional savings banks, under their control. Poorly run and poorly supervised, the cajas provided the rocket fuel for Spain’s housing boom, dutifully funding one unviable project after another... Local politicians had little incentive to urge restraint, if only because so many of them stood to benefit personally from the boom... But the combination of mismanagement, hubris and greed, coupled with a banking system that lent according to political not financial criteria, proved disastrous. As the bubble continued to inflate, it touched on the lives of more and more people: teenagers left school without any qualifications to work on building sites. Orange farmers pulled up their groves to build apartment blocks. Owners of family companies abandoned them to sell real estate. A region that once prided itself on its manufacturing industry succumbed to the dream of dinero f├ícil or easy money.
Construction booms, especially those fed by real estate prices, should count as the most pernicious forms of resource misallocation. This story plays itself out with surprisingly high frequency, including in developing countries.

And its banking sector clean up was instructive,
“Spain did a textbook bank rescue,” says Angel Ubide, a managing director at Goldman Sachs and until recently a senior fellow at the Peterson Institute for International Economics. “It shut down the banks that couldn’t survive and recapitalised the ones that could. And then it moved all the bad assets into a bad bank.” The overhaul killed off the cajas, which were either folded into larger private banks or forced to become normal lenders, free from political influence. But it also meant that markets regained trust in the broader banking system relatively quickly. Balance sheets were cleaned up, bad loan ratios fell and loan loss provisions started to decline.
Unlike the misallocation problem, I don't think the banking sector clean up is relevant to India.

2. Martin Wolf explains the massive deleveraging and rebalancing challenge facing China.
Annual gross savings in the Chinese economy amount to 75 per cent of the sum of US and EU savings, at over $5tn last year. China’s gross investment, at 43 per cent of gross domestic product in 2015, was still above its share in 2008, even though the economy’s rate of growth had fallen by at least a third. To sustain such high investment, the ratio of credit to GDP soared from 141 per cent of GDP at the end of 2008 to 260 per cent at the end of last year... China saves more than it can profitably invest at home. In 2015, gross national savings were 48 per cent of GDP. World Bank data show that households contributed only a half of this. The rest came from corporate profits and government savings. International comparisons suggest that economic growth of 6 per cent warrants investment of little more than a third of GDP. This indicates that China’s surplus savings — surplus, that is, to domestic requirements — may be as much as 15 per cent of GDP.
3. India has one of the highest trade tariff barriers among all major economies,
UberEats launched in London in June, promising “the food you want, from the London restaurants you love, delivered at Uber speed”. In a bid to recruit self-employed couriers to ferry food from restaurants to customers, UberEats initially offered to pay £20 an hour. But as customer demand increased, the company began to reduce pay. By August, the couriers were on a piece rate with a fiddly formula: £3.30 a delivery plus £1 a mile, minus a 25 per cent “Uber service fee”, plus a £5 “trip reward”. Then, one day, the couriers woke up to find the app had been updated again. The “trip reward” had been cut to £4 for weekday lunch and weekend dinner times, and to £3 for weekday dinner and weekend lunch times. Outside those periods, it had been cut altogether.
Not only does e-commerce firms benefit from regulatory arbitrage, they also have the flexibility of changing the rules of the game at their choice.

5. Fascinating graphic in the Times that captures the scale and speed of urbanisation in China's Pearl River Delta. Guangzhou, Shenzhen, and Dongguan have become bustling economic centres in Guangdong province over the last 35 years from being small backwater townships. The rapid growth has encroached into the wetlands, reclaimed water courses, and destroyed mangrove forests, making the region vulnerable to recurrent floods and sea water ingress. So much so that Guangzhou has been classified as the city most under risk from climate change.

6. Incidentally Economist has a feature on the Pearl River Delta (PRD), comprising nine cities of Guangdong province and Hong Kong and Macau. Its significance,
The World Bank recently declared the PRD the world’s biggest megacity, surpassing Tokyo. With over 66m residents, it is more populous than Italy or, just, Britain... Its GDP, at more than $1.2trn, is bigger than that of Indonesia, which has four times as many people. It has been growing at an average of 12% a year for the past decade. As a global trading power the region is outranked only by America and Germany. For China itself, the PRD is crucial. Though it accounts for less than 1% of the country’s territory and 5% of its population, it generates more than a tenth of its GDP and a quarter of its exports. It soaks up a fifth of China’s total foreign direct investment and has attracted over a trillion dollars-worth of FDI since 1980... Most remarkably, a region once known for copycat products is emerging as a world-class cluster for innovation. 

7. City Lab has this nice video of how existing road patterns can be rationalised to squeeze in bike lanes and parking, without reducing vehicle volumes and carrying capacity and while increasing safety. 
Not sure of its relevance to developing countries like India where lane driving comes at a premium and bike usage unlikely to take-off for practical reasons. 

8. The latest version of inequality analysis by Piketty-Saez-Zucman is out. 
For the 117 million US adults in the bottom half of the income distribution, growth has been non-existent for a generation, while at the top of the ladder it has been extraordinarily strong... From 1980 to 2014, for example, none of the growth in per-adult national income went to the bottom 50%, while 32% went to the middle class (defined as adults between the median and the 90th percentile), 68% to the top 10%, and 36% to the top 1%...
Because the pre-tax incomes of the bottom 50% stagnated while average national income per adult grew, the share of national income earned by the bottom 50% collapsed from 20% in 1980 to 12.5% in 2014. Over the same period, the share of incomes going to the top 1% surged from 10.7% in 1980 to 20.2% in 2014... these two income groups basically switched their income shares, with about 8 points of national income transferred from the bottom 50% to the top 1%. The gains made by the 1% would be large enough to fully compensate for the loss of the bottom 50%, a group 50 times larger. To understand how unequal the US is today, consider the following fact. In 1980, adults in the top 1% earned on average 27 times more than bottom 50% of adults. Today they earn 81 times more.

9. A new paper points to the sustained and much faster economic expansion since the dawn of the 20th century to "less shrinking in recessions",
Stephen Broadberry of Oxford University and John Wallis of the University of Maryland have taken data for 18 countries in Europe and the New World, some from as far back as the 13th century. To their surprise, they found that growth during years of economic expansion has fallen in the recent era—from 3.88% between 1820 and 1870 to 3.06% since 1950—even though average growth across all years in those two periods increased from 1.4% to 2.55%. Instead, shorter and shallower slumps led to rising long-term growth. Output fell in a third of years between 1820 and 1870 but in only 12% of those since 1950. The rate of decline per recession year has fallen too, from 3% to 1.2%.
10. Finally, the best read comes from a fantastic article in the Economist about how parking norms influence the urban form and growth 
In 2004 London abolished minimum parking requirements. Research by Zhan Guo of New York University shows that the amount of parking in new residential blocks promptly plunged, from an average of 1.1 spaces per flat to 0.6 spaces. The parking minimum had boosted supply far beyond what the market demanded.
The cost of parking mandates invariably gets passed on across the economy,
Donald Shoup, an authority on parking economics, estimates that creating the minimum number of spaces adds 67% to the cost of a new shopping centre in Los Angeles if the car park is above ground and 93% if it is underground. Parking requirements can also make redevelopment impossible. Converting an old office building into flats generally means providing the parking spaces required for a new block of flats, which is likely to be difficult. The biggest cost of parking minimums may be the economic activity they prevent.
Free parking is not, of course, really free. The costs of building the car parks, as well as cleaning, lighting, repairing and securing them, are passed on to the people who use the buildings to which they are attached. Restaurant meals and cinema tickets are more pricey; flats are more expensive; office workers are presumably paid less. Everybody pays, whether or not they drive. And that has an unfortunate distributional effect, because young people drive a little less than the middle-aged and the poor drive less than the rich. In America, 17% of blacks and 12% of Hispanics who lived in big cities usually took public transport to work in 2013, whereas 7% of whites did. Free parking represents a subsidy for older people that is paid disproportionately by the young and a subsidy for the wealthy that is paid by the poor.