Abhijit Banerjee, winner of the Nobel Prize in Economics: “In Europe it is worrying, but we are not facing a new global economic order”

abhijit banerjee (Bombay, 1961) won the 2019 Nobel Prize in Economics for his experimental approach to alleviating global poverty. He was awarded together Esther Rufoyour partner and Michael Kremer thanks to the new perspective from which they deal with the lack of resources. They run away from generic, from big solutions, and design specific actions for each of the areas of poverty. Health and education form the backbone of a good part of Banerjee’s analysis. His speech focuses on the subjects he has command of and avoids voicing on general economic issues that he does not seem to be comfortable with. Never mind the gurus who are ready to step into every puddle. A native of India, he ordered a cup of tea before the interview began. Yesterday he was in Galicia to participate in the Global Summit organized by the Vigo Free Trade Zone.

— Is foreign investment important for developing countries?

“It’s kind of interesting. Right now, foreign aid money makes up a very small portion of developing countries’ budgets. If we think of bigger countries, like Kenya, it is minimal. But it is important to maintain innovation and develop special programs. Ideas are more important than money. But money dedicated to ideas can contribute in those countries. In many cases, these territories preclude spending this budget on idea development. That is why it is important to direct the money coming from abroad to support innovation.

— And political actions, are they important in poor areas?

— What is really important is to analyze indications and evidence, whether support for a policy, for example support for entrepreneurship, had an impact. From 2005 to today, there has been a change in mentality in sub-Saharan Africa. Governments paid the price for a vaccine to fight malaria and eradicate it. In the last twenty years, they have invested and developed in this area. Countries have confirmed that there is a reduction in malaria cases thanks to these investments, resulting from policy actions.

— In your essays, you also approach education in poor countries from the teacher’s point of view.

—One of the programs we are developing is Teaching at the right level (in Spanish, to be taught at the appropriate level). I am well aware that some school departments in African centers were not entirely sensitive to the level of students. They studied, period. But teaching at the right pace for students has proven to be more effective on a pedagogical level. So there is a long list of countries I work with, like Zambia, Mali, Malawi… Again, in this case, the idea exists, it has been implemented and its tests have been developed.

— We suffered a global health crisis, and now the conflict in Ukraine is also suffering. Are we witnessing a new world economic order?

– The answer is no. Perhaps that possibility is being assessed and there is concern, especially in Europe, about what kind of change it is and what it will be. But we’re not there yet. We are gathering evidence.

India has overtaken China as the most populous country in the world. It is also one of the countries with the highest poverty rate, close to 20%. I guess his specialization was no accident.

“It was something natural. While studying economics there, my interest in solving problems such as poverty, health, education or finance was evident.

“The US spends more than twice as much as Spain on health care and life expectancy is lower»

Economist Banerjee was in charge of closing the Global Summit congress in Vigo. He did so at noon yesterday, with a conference focused on the health systems of Europe, the United States and India. The Nobel laureate, who lives in Boston, criticized the North American model. “The United States spends 20% of its gross domestic product (GDP) on healthcare management. This is more than twice as much as in Spain and the surrounding countries”, he compared. Despite this large expenditure, the model installed in the United States is “very ineffective” because life expectancy in this area (76 years) is “lower every day and seven years less than that registered in the Spanish system”, he argued.

He explained that such spending is due to overprescribing by doctors, “because insurance will pay the costs, and thus the hospitals will make more money.” He believes that Americans overconsume consultations at medical centers due to the fact that they have health insurance.

He also compared the situation in the US with that of India, the most populous country in the world. He described the service in this Asian region as inadequate and expressed concern that there are specialists diagnosing illnesses without medical training.

Quality

Regarding the quality of the service offered, Banerjee pointed out that the US has “the most advanced hospitals in the world” and that they are the most favorable for those who can pay for consultations and treatments.