Saturday, July 02, 2005

Terrorists and milk supply, Markets and monsoon forecasts


Two examples of government meddling in dissemination of research findings.

Update (4 July 2005)

Henry's post takes you to an article that has gone behind the paywall. Here is a New Scientist article which, hopefully, you can access for free.

In the first, it is the US government citing concerns that terrorists may use this information. Via Henry at Crooked Timber, we hear that

The National Academy of Sciences has decided to publish a paper describing the vulnerability of the nation’s milk supply to terrorist attack (yes, it’s a serious paper), despite a letter from the Department of Health and Human Services saying that publication would provide”a road map for terrorists” and not be “in the interests of the United States.”

In the second, it is the Indian government, concerned by monsoon forecasts, saying that (a) they compete with 'official' forecasts, and (b) they might 'confuse' the markets that depend on the forecasts and research data. In his Hindu op-ed, Ramachandran points out that the competing forecasts are based on different modelling techniques (so, they are important and useful for tweaking all the monsoon models). He goes on to say that this sort of reporting is done routinely by foreign agencies and researchers; since they cannot be controlled by the government, all that we have achieved is in tying down our own researchers with such silly constraints.

Some links from the comments:

Though the FT story has gone behind the paywall, here is a Yahoo! report on the NCAER study and its implications. An earlier Herald Tribune report presents a more realistic view of the role of monsoons in Indian economy.

Abheek Barua has written recently in the Business Standard about why there is a growing disconnect between the monsoons and the industrial economy.

By the way, here is an interesting report in the Financial Times about how the Indian economy is slowly becoming decoupled from the monsoons (Read it in the next couple of days before it goes behind the paywall):

The figures released Thursday provide the latest evidence of the weakening link between rural incomes and industrial activity thanks to the rise of a mass affluent middle class, a booming export sector and the growing availability of rural credit.

The farming sector, which accounts for one-fifth of GDP and supports more than 600m Indians, has historically had a domino effect throughout the economy because of its influence on demand for manufactured goods such as motorbikes and tractors.

[...]

Economists at the National Council for Applied Economic Reasearch say the correlation between monsoon rainfall, a proxy for farm production, and the following year's industrial output, has fallen to 0.13 for 1999-2003 from 0.90 for 1994-98.

3 Comments:

  1. Anonymous said...

    I don't have acess to the ft article but i think these ncaer guys have got their data screwed up. a .9 to .13 drop in correlation is huge for a 4year gap. i am not convinced. a few red flags are:-
    1)no consideration of regional imbalances in rainfall, which can really skew the data.
    2)efficiency of water usage might have gone up.
    3)monsoons might have replaced/supplanted by tubewells running on free power.
    4)industrial output might have been produced using cheap ex-farm labour. in that case this drop in correlation is a bad thing.
    these are the ones i could up with up.

    abi,
    can u check the article for the exact varables they are correalting between,i.e industrial output vs rainfall or industrial o/p vs farm prodcution. farm production & rainfall aren't perfect substitutes.

  2. abi said...

    Hi, I think the only take-home message from the FT story is that rural prosperity is not a necessary precondition for industrial growth. The main reason, of course, is that agriculture's share of India's GDP is down to between 20 and 25 %. The second reason, which is specific to the past four years or so, is the fact that our exports are growing faster than our economy. There probably are other factors as well (for example, an ever increasing availability of rural credit is mentioned in the FT report); unfortunately, I have not been able to get the NCAER study itself.

    Though the FT story has gone behind the paywall, here is a Yahoo! report on the NCAER study and its implications. An earlier Herald Tribune report presents a more realistic view of the role of monsoons in Indian economy.

    (Abheek Barua has written recently in the Business Standard about why there is a growing disconnect between the monsoons and the industrial economy.)

    There is no doubt that failed monsoons will hurt the rural population, with a negative impact on the rest of the economy. The NCAER study only indicates that the other growth-inducing factors have managed to outweigh the negative impact of poor monsoons (in 2002, for example).

    Will these other factors continue to be favourable to India?

  3. Anonymous said...

    thanx for the links