David Roodman, at CGD, has some interesting data to add to the discussion about what effect will the current financial turmoil have on Africa. I posted the other day that, as yet, African banks, specifically, seem largely removed from the chaos, as they were not highly involved in the mortgage-backed securities at the heart of the problem. Still, I wrote, there might be a less direct impact, as living costs rise and foreign aid disbursements fall.
The point is that in the long march of development, some financial crises amount to rounding error relative to the real economy, and the real economy affects welfare. A more important question is why Thailand has managed to reduce poverty by so much more than Cambodia or Guinea. Nothing that happened to South Korea in the Asian Financial Crisis came within a light-year of producing as much poverty, even transitorily, as North Korea has managed to produce sustainably. Now, as ever, the big forces shaping the lives of the poor are not in the headlines.