New Kid on the Block

A new blog to watch out for: AdamSmithee, which intends to concentrate on the important field of development economics. It's already off to a good start, judging by posts like this one:

Common Knowledge reports on a new 'opacity index' which is "based on the risks associated with unclear legal systems, regulations, economic policies, corporate-governance standards and corruption." Perhaps most surprising: Nigeria doesn't come bottom. It is beaten by Indonesia, Venezuela and China. That China is up there suggests that opacity is no necessary barrier to huge inflows of FDI...

I bet you wouldn't have guessed that was true, would you? Nigeria's score is still far too high for my taste, but it's enlightening to learn that it only scores marginally worse than India and Egypt, while beating out almighty China. Yet another stereotype falls by the wayside ...

One thing China does enjoy, and which Nigeria lacks, is proximity to close neighbors with highly developed domestic economies. The importance of Hong Kong to China's early takeoff is well-enough known, but the impact of investment by the Taiwanese, the Koreans and the Japanese is easily overlooked. Distance isn't completely dead, and all else equal, investors will prefer to invest closer to home than further away.