Atif Mian Profile picture
Aug 13, 2019 4 tweets 2 min read Read on X
What keeps poor countries poor? This picture always reminds me of one important reason: "Resource misallocation".

Here's the story.

Eager to help his young country, Dr. Abdus Salam, the future Nobelist, returned to Pakistan in 1951 as a 25 years old star of the Physics world.
He wanted to build a world-class Physics department at the university he joined.

But guess what job he was handed by the head of the university? ... A soccer coach!

Here he is sitting with the soccer players (and feeling out of place).
Disappointed and unappreciated, Abdus Salam went back to UK. There, at only 30, he was offered a chair and asked to head the center for theoretical Physics at Imperial College.

Here is a picture of him in London, sitting with Physicists as the chair of the department.
Abdus Salam would win the Nobel prize.

He would also succeed in his mission to build a world-class center for Physics.

To date, over 100,000 scientists have come through this center.

Salam wanted to build this center in Pakistan ... but he was made a soccer coach.

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Atif Mian

Atif Mian Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @AtifRMian

Feb 11
A🧵on what Feb 8 elections mean for Pakistan

Pakistan’s economy has consistently fallen behind globally – last year was one of the worse, with the economy actually contracting

Every macro fundamental is flashing red: inflation, growth, debt, investment, to name a few
1/n
The federal gov has no money

It cannot even afford to pay the salary of a peon or a soldier without borrowing

The entire tax revenue is consumed after paying provinces their share, pensions to retirees, and interest on debt
2/n
Inflation cannot be controlled when the entire government is run on deficit

Growth is impossible when government has no money to invest in the future

And lack of growth makes every problem worse.

The country is bankrupt. It is sinking deeper every year
3/n
Read 9 tweets
Aug 22, 2023
Are high interest rates likely to be more permanent?

The answer is often framed in terms of r*, the natural rate of interest

r* is the interest rate that balances supply and demand for loans, once near-term issues facing the economy, such as covid, have played out
(1/n)
If r* has inched up since the pandemic, then the new normal might have higher rates going forward

There's always great interest in what r* might be - e.g. markets keenly looking for clues from the upcoming Jackson Hole meeting
(2/n)
reuters.com/markets/rates-…
But can we measure r* in a statistically reliably way for making statements about the future?

Unfortunately not so far

There's been some terrific work and NY Fed publishes a real-time r* estimate

But these estimates are not reliable for two main reasons
(3/n)
Read 10 tweets
May 24, 2023
A 🧵comparing Ghana, Sri Lanka and Pakistan, and what it teaches us about dealing with crises ...

Ghana and Sri Lanka formally defaulted during the last two years, Pakistan did not

but currency devalued by 1/2 for both Pakistan and Ghana, and 1/3rd for Sri Lanka
So Pak currency has devalued significantly more than SL's

More importantly, let's compare Pakistan's trajectory with that of SL and Ghana after they default ...

here is SL, the red arrow starts post-default Image
And here is Ghana

Notice how both Ghana and SL currencies have stabilized post-default as they entered restructuring programs Image
Read 8 tweets
Apr 5, 2023
A dive into recent data suggests that Pakistan's economy is going off the rails

First, exports ... there was a global surge in exports post-covid, but around 2nd quarter 2022, Pak exports drop off relative to India and Bang - the gap is now over 20%
1/ Image
This happened despite the large currency devaluation and all "efforts" to boost exports given the severe balance of payment issue

What's going on? The export drop likely reflects serious supply-side disruptions in the economy
2/
Most notably the inability to get into an IMF agreement due to extreme gov mismanagement

I've spoken in the past about PTI's role in bringing the country to this situation


But what the PDM gov has done is on another level
3/
Read 12 tweets
Apr 4, 2023
Pakistan's economy is in a tailspin, going from crisis to catastrophe

The system is coming unhinged

We can see this in the increasing stagflationary forces: growth is rapidly falling, and prices are rapidly rising
🧵
These are very worrying signs

In effect, inflation is not only being fueled by large deficits and money printing, but foolish policy choices that have seriously impacted the productive capacity of the economy
I gave one example of poor policy choice back in January, and explained how it might lead to a contraction in the economy ... more recent data suggests that has indeed happened
Read 5 tweets
Mar 11, 2023
SVB collapsed because of their exposure to interest rate risk

A 🧵 on interest rate risk at the macro level - which deserves more attention in my view
1/
Interest rate risk refers to, (a) potential change in interest expense obligations, and (b) potential change in valuation, due to change in interest rates

This risk is now the highest it has ever been in recent history (if not ever) - Why?

because of the two graphs below
2/ ImageImage
The right graph shows that total debt to GDP is the highest it has ever been- it has more than doubled, currently well north of 250% of GDP

The left graph shows the large n steady decline in interest rates since 1980s- a fall of about 10 %age points to near zero till recently
3/
Read 12 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(