Guatemala vs. El Salvador

by  Tyler Cowen

Guatemala has a slight edge on GNP per capita, according to World Bank sources $5762 vs. $5391, noting the gap has grown a bit since these 2023 measurements.

When I visited El Salvador, people spoke enviously of the economy of Guatemala.  Over the last twenty-two years, the gdp growth rate in Guatemala has averaged 3.5%, and the country still is growing in that range.  El Salvador recently was growing at 3.18%, but historically has had much lower growth rates.

Guatemala, with over eighteen million people, has greater scale.  El Salvador has somewhat over six million people.  Guatemala is above replacement rates with its TFR at 2.3, El Salvador is below replacement at 1.7.  Both countries lose people to the United States.

By most measures, Guatemala has a better economy than El Salvador, albeit to a modest degree.  You would put both countries at the same general level of economic development.  Overall democracy is in better shape in Guatemala.

One hears much more about El Salvador these days, partly for “culture war” reasons.  But putting aside Panama, it is Guatemala that has to count as the relative economic success story of Central America.  There is room for plenty more progress, but this is by no means a hopeless situation.

Who’s next?

by  Tyler Cowen in

The United Arab Emirates will introduce artificial intelligence to the public school curriculum this year, as the Gulf country vies to become a regional powerhouse for AI development.

The subject will be rolled out in the 2025-2026 academic year for kindergarten pupils through to 12th grade, state-run news agency WAM reported on Sunday. The course includes ethical awareness as well as foundational concepts and real-world applications, it said.

The UAE joins a growing group of countries integrating AI into school education. Beijing announced a similar move to roll out AI courses to primary and secondary students in China last month.

The Gulf state has invested extensively in data centers used to train AI models and has set up an AI investment fund that people familiar with the project said could swell to more than $100 billion in a few years.

Here is more from Sara Gharaibeh at Bloomberg.  Via Anecdotal.

Latin America is swinging to the traditional, non-Trumpian right

by  Tyler Cowen

With the far right ascendant in much of the west, it is notable that Latin America is not turning the same way, to a Trumpian closed economy. It is favouring leaders with more traditional agendas, based on free markets and open economies. This increases the region’s chances of escaping its damaging growth slump and attracting capital in this post-American exceptionalism world.

Here are plenty of details from Ruchir Sharma at the FT.

How are economics publications changing?

by  Tyler Cowen in

This study examines publications in three leading general economics journals from the 1960s through the 2020s, considering levels and trends in the demographics of authors, methodologies of the studies, and patterns of co-authorship. The average age of authors has increased nearly steadily; there has been a sharp increase in the fraction of female authors; the number of authors per paper has risen steadily; and there has been a pronounced shift to articles using newly generated data. All but the first of these trends have been most pronounced in the most recent decade. The study also examines the relationships among these trends.

That is from a new NBER working paper by Daniel Hamermesh.

Emergent Ventures, 9th India cohort

by  Tyler Cowen in

Ari Dutilh is a 19-year-old entrepreneur, community builder, and photographer.  This grant is to help continue our work on UltraRice, a project to solve malnutrition in India by using ultrasonic treatment to create cost-effective, nutrient-scalable rice.

Rukmini S is Founder and Director of Data For India. Rukmini is an award-winning data journalist and won her first EV prize for her pandemic podcast, ‘The Moving Curve’. Her first book, ‘Whole Numbers & Half Truths: What Data Can and Cannot Tell Us About Modern India’ awon literary awards.

Sworna Jung Khadka is an ESG entrepreneur. Stalwart International Private Limited is an agro startup funded by Emergent Ventures which leases unused government owned lands and non-agricultural but arable lands for the production of Cassava, drought resistant crops.

Suryesh Kumar Namdeo is a Senior Research Analyst at the Indian Institute of Science, Bengaluru, working on biosecurity policy and science diplomacy projects. He has received his EV grant to support his research and conference travels in biosecurity policy in India.

Susan Thomas – XKDR Forum aims to help litigants in India get more predictability about how their legal cases will progress in Indian courts. They propose to publish specific metrics of case progression, at a quarterly frequency, by developing a database of commercial cases from multiple courts in India.  You can read more about XKDR Forum’s work in this field here.

Jayesh Rohatgi is an entrepreneur and law student at LSE, with an educational startup, Dialogue Dynamics. Targeting top independent schools globally, Dialogue Dynamics focuses on the four most critical sub-skills of communication: presenting viewpoints, strategic questioning, identifying misinformation, and mastering persuasion.

Aakash Agrawal is a neuroscience and AI researcher who investigates the neural mechanisms that enable fluent reading.  He aims to leverage his research and develop gamified cognitive tasks to help children improve their reading skills without adult supervision.

Ada Choudhry is an 18-year-old student from Bareilly, India, who received an EV grant to build AI supply chain platforms under the mentorship of Shell executives. The goal is to reduce supply chain risk and improve procurement data quality. She will be beginning her undergraduate studies at Minerva University in San Francisco, and you can look through her portfolio here!

Aditya Kedlaya is a hardware product designer and entrepreneur from Bangalore. He received his EV grant to develop prototypes of carbon capture modules through his startup. He founded Matterak Technologies to design, develop and deploy products related to decarbonization including carbon capture, infrastructure for carbon neutral fuels production and energy efficient hardware.

Adon Banker, is 16 years old and currently enrolled in the International Baccalaureate Diploma Program at Chatrabhuj Narsee School, Mumbai, with a major in Computer Science. His project, the Jewish Virtual Museum, aims to create a lasting legacy for the Bene Israel community in the history of India. He also will develop an application that analyzes antisemitism globally in real-time using Twitter data.

Aishwarya Das, from Bangalore, is the co-founder of Dirac Labs, a spin-off from the University of Wisconsin-Madison. His team is developing quantum magnetometers for GPS-free navigation.

Akash Kumar Seth, a software developer, is working on freeCodeProjects.org, which will help potential students become job-ready under the mentorship of experienced developers absolutely free.

Ayush Majumdar, 22, originally from Calcutta, is a writer and translator currently translating the works of Rabindranath Tagore.

Chetan Kandpal is works in computer science, cognitive science, and now neuroscience, and his research delves into human social dynamics, particularly how information transmission and normative assumptions are influenced by the presence of agents in multi-agent environments. Chetan received the EV grant for the opportunity to present his work on social dynamics at MIT.

Deepika Gopal, Balaji Bangolae Lakshmikanth, Dr. Lakshmi Santhanam, and Deepika Gopal are the founders of Renkube, a deep-tech solar startup to lower cost and increase safety.  The EV grant will support their efforts in creating a Fire Prediction and Prevention solution for rooftop solar installations, aimed at preventing fire accidents and improving overall safety.

Digvijay Singh is building large scale diagnostics (LSDs) at Drizzle Health to eliminate epidemics by testing large volumes of food, water, and eventually air in real-time.

Druhin Lamba is a BS-MS student in Mathematics and Computing at IIT Roorkee. He received his EV grant for education and career development.

Khushi Mittal is a 20-year-old from Lucknow and is interested in propulsion systems. She received an EV grant to take a gap year from University of Alberta in Canada and move to Bangalore to work on her projects related to aerospace and build a hardware community with the Wayfarers group.

Manas Goyal, a 23-year-old Impact Finance entrepreneur, is the founder of All Asia NetBanking, a platform dedicated to providing accessible and seamless banking solutions. He received an EV grant to develop a new, innovative model that simplifies access to unified banking solutions. Currently based in the US at MIT, Manas is focused on making banking easier and more accessible for everyone.

I thank Shruti Rajagopalan for the information and selection.  And here is Nabeel’s AI engine for other EV winners.  Here are the other EV cohorts.

Trump proposes 100% tariff on movies shot outside the United States

by  Tyler Cowen in

Here is one link.  Of course the proposal is not easy to understand.  If it is a Jason Bourne movie, do they add up the number of scenes shot abroad and consider those as a percentage of the entire movie?  Does one scene shot abroad invoke the entire tariff?  o3 guesstimates that about half of major Hollywood releases are shot abroad to a significant degree, with many more having particular scenes shot abroad.

Imagine the new Amazon release: “James Bond in Seattle.”  And it actually would be Seattle — do they have baccarat there?

Furthermore, virtually all foreign films are shot abroad rather than in the U.S.  The incidence in this case is interesting.  Assuming the movie would have been made anyway, most of the tax burden falls on the producer, not the American consumer, because the marginal cost of sending the extra units of the film to America is low.  Nonetheless lower American revenue will force those films onto lower budgets.  Possibly Canadian and also English movies will suffer the most, because they are most likely to have the U.S. as their dominant market.

Of course the U.S: is by far the world’s number one exporter of movies, so we are vulnerable to retaliation on this issue, to say the least.

Facts about robots

by  Tyler Cowen in

The robot is also just a fraction of the expense of integrating automation into a factory. A robot that stacks goods on to pallets can cost up to $150,000 to install when sensors, safety fencing, conveyors and other infrastructure are taken into account, according to Jorg Hendrikx, chief executives of robotics marketplace Qviro. Such costs put robotics out of the reach of many US manufacturers.

Just 20 per cent of factories with between 50 and 150 employees have a robot, half the rate of those with more than 1,000 staff, according to the US Census Bureau.

Here is more from Clara Murray and Rafe Uddin at the FT.

Not De Minimis

by  Alex Tabarrok in

Commerce Secretary Howard Lutnick:

Ending the “de minimis loophole” is a big deal. This rule allowed foreign companies to avoid paying tariffs on small shipments, giving them an unfair advantage over American small businesses. To small businesses across the country: we have your back.

The Value of De Minimis Imports by Fajgelbaum and Khandelwal:

A U.S. consumer can import $800 worth of goods per day free of tariffs and administrative fees. Fueled by rising direct-to-consumer trade, these “de minimis” shipments have exploded in recent years, yet are not recorded in Census trade data. Who benefits from this type of trade, and what are the policy implications? We analyze international shipment data, including de minimis shipments, from three global carriers and U.S. Customs and Border Protection. Lower-income zip codes are more likely to import de minimis shipments, particularly from China, which suggests that the tariff and administrative fee incidence in direct-to-consumer trade disproportionately benefits the poor. Theoretically, imposing tariffs above a threshold leads to terms-of-trade gains through bunching, even in a setting with complete pass-through of linear tariffs. Empirically, bunching pins down the demand elasticity for direct shipments. Eliminating §321 would reduce aggregate welfare by $10.9-$13.0 billion and disproportionately hurt lower-income and minority consumers.

In other words, eliminating the de minimis rule is a significant tax on poorer Americans.

Frankly, it’s also a pain in the ass to have your international shipments delayed at broker (who often charges you exorbitant rates, more than the customs tax) and then have to go down to the customs office to pay the stupid tax. Yes, I am speaking from experience.

Driverless trucks on their way?

by  Tyler Cowen in

Aurora Innovation, Inc. (NASDAQ: AUR) has successfully launched its commercial self-driving trucking service in Texas. Following the closure of its safety case, Aurora began regular driverless customer deliveries between Dallas and Houston this week. To date, the Aurora Driver has completed over 1,200 miles without a driver. The milestone makes Aurora the first company to operate a commercial self-driving service with heavy-duty trucks on public roads. Aurora plans to expand its driverless service to El Paso, Texas and Phoenix, Arizona by the end of 2025.

Here is the story, via Joe Brenton.

Has international travel to the U.S. really collapsed?

by  Tyler Cowen in

But despite some ominous signs, a close look at the data shows that travel to the United States is largely holding up — at least so far.

Nearly as many foreign travelers have arrived at American airports this year than during the same period last year, according to an analysis by The New York Times of entry data collected from every international airport in the country.

International arrivals did drop more than 10 percent in March compared with last year, but this was largely because Easter fell unusually late this year, pushing back a popular travel window for European tourists. More recent figures from April show that travel over the holiday looked similar to previous years.

Here is more from the NYT.  The main major difference is for Canadians, who are indeed more skittish, and their ticket sales are down 21 percent.

Buffett’s Alpha

by  Tyler Cowen in

Berkshire Hathaway has realized a Sharpe ratio of 0.76, higher than any other stock or mutual fund with a history of more than 30 years, and Berkshire has a significant alpha to traditional risk factors. However, we find that the alpha becomes insignificant when controlling for exposures to Betting-Against-Beta and Quality-Minus-Junk factors. Further, we estimate that Buffett’s leverage is about 1.6-to-1 on average. Buffett’s returns appear to be neither luck nor magic, but, rather, reward for the use of leverage combined with a focus on cheap, safe, quality stocks. Decomposing Berkshires’ portfolio into ownership in publicly traded stocks versus wholly-owned private companies, we find that the former performs the best, suggesting that Buffett’s returns are more due to stock selection than to his effect on management. These results have broad implications for market efficiency and the implementability of academic factors.

Here is the paper by Andrea Frazzini, David Kabiller, and Lasse Heje Pedersen.  Quite the run, now over.  Via J.