Stephen Jennings, former economic official in New Zealand, now leads urban development projects in Africa, notably the Tatu City special economic zone in Kenya; I found this whole interview fascinating; some of it is economics, Cowen's speciality, so he asks great questions, but it gets beyond economics into societies, cultures, people.
Here is Jennings, in response to a question about the literature on development:
I think I’ve read just about everything in development. There’s nothing I really like very much. Development is a black box. I don’t think there’s anything that has much predictive power. There’s a lot of ex post explanations, whether they be policy settings, location, culture. I think 90% of them are ex post; very few of them are predictive. Some of them are just tautologies. I really like factualization.
It’s descriptive more than analytical, but it just makes it clear that most of the world has been on a very similar development trajectory. It’s just not sequenced. Sweden started early; Ethiopia started late. But the nature of the transition and the inevitability of that transition, other than very extreme circumstances, is kind of the same. . . .
I don’t think we really understand development at all, because if we could, we could predict it. We can predict virtually nothing. It’s just too complicated. It’s too connected with politics. I think there’s a lot of feedback loops and elements of development that we don’t understand properly. We certainly can’t quantify them because the development’s happening in such a wide range of settings, from communist dictatorships through to very liberal systems and with all different kinds of industrial — on every dimension, there’s a huge range of variables.
In terms of his Kenya project, Jennings identifies the biggest obstacle as finding the right people:
Biggest constraint we face is human capital. We’re obviously not land constrained. We’re unleveraged, we have very good cash flow, we have very, very good financing partners. We’re absolutely not capital constrained in any way. We’re trying to do some world-class infrastructure, world-class execution, world-class buildings, world-class technology. And by definition, a lot of the human capital to do those things doesn’t exist in this market. City scale, landscaping, urban realm — these schools don’t exist. You either have a lot of foreign consultants fly in, fly out; they’re not particularly focused; they’re not necessarily the best consultants in the world; and it’s just extremely inefficient. The constraint is embedding world-class technical people within a Kenyan team.
The issue in creating a modern economy is changing how people live, usually from a peasant or herder way of living to one focused on acquiring new skills and getting a steady job. The biggest obstacle to building a city in Kenya, says Stephens, is the lack of people who know how to plan and build a city.
I am doing a little work these days on a project to build a new light rail line through an older city, and the amount of knowledge needed to do this makes my head spin. To take just one example, the proposed line crosses a pipeline that carries aviation fuel to a nearby airport, and I thought relocating this pipeline might prove to be a major obstacle. But there are people on this team who know how to do that: how to approach the pipeline owner, how to get regulatory approval, how to overcome the engineering challenges involved in moving a mile of active pipeline without any major interruptions in flow, what kind of measures have to be taken to make sure the operation of the rail line never damages the pipeline, or that a pipeline leak doesn't stop the rail line. etc., etc.
To picture the team involve in this project, imagine that knowledge base multiplied by a thousand: people who can convene and run a public meeting about a new transportation project, who design the project web site, who keep local political leaders up-to-date on developments, who know the price of land in this market, who know the electrical demands of a light rail line or a station and whether the local grid will support it, who know how to drain stormwater away from a rail station or a tunnel, who know what the impact of a busy train line will be on old bridges nearby, and so on and so on.
Development means producing people with all of those skills; and yet, who would go to school to get those skills until the economy exists to provide them jobs? And how can they acquire experience? That is the challenge of development.
Here is Jennings on how he recruits people – I think he is talking about non-Africans here – to work on his project:
Interviews are a very inaccurate way of selecting and evaluating people. . . . We’ll check their prior work in a lot of detail, and we’ll spend a lot of time with them, and we’ll put them in a lot of situations without their actually knowing that we’re deliberately doing that, to see how they will react with our local staff or without. It might be a dinner after a long day when they think it’s time to relax, but we’re actually looking to see how they interact with our clients. Do they listen? Are they respectful?
Are they really interested, or are they just going through the motions? A lot of the recruitment information comes [when they’re] away from the interview process. How do they behave when you’re actually negotiating their deal? Are they timely? Are they honest? Do they play games? Do they change their position? We rely on a lot of those kinds of data points.
So, you know, never relax around a potential employer.
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