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Xavier Sala-i-Martin: Economic Method Man
Sala-i-Martin is associate editor of the Journal of Economic Growth.

Spend just a few minutes talking with Columbia economist Xavier Sala-i-Martin, and it becomes obvious that he is passionate about economics, education, world poverty and the Muppets.

For him, world poverty is a particularly thorny issue. Sala-i-Martin created a firestorm in 2002 when he published a paper announcing a methodology for calculating world poverty rates that differed substantially from then-prevailing wisdom. His method stood at odds with the time-tested principles of analysis used by the World Bank, whose economists have traditionally held sway over the tracking of world poverty rates. Despite the initial misgivings of some of his colleagues, Sala-i-Martin was pleasantly surprised by the response of the press. "The reaction was extraordinarily positive," he says.

His work also has been recognized by other peers. A native of the Catalonia region of Spain, he was awarded the King Juan Carlos I Prize in economics in December. The award is given to an economist in Spain or Latin America who has made great contributions to the field. With other economists, including those at the World Bank, beginning to change their methodology in response to his, Sala-i-Martin's contributions are clear.

Both Sala-i-Martin's method and that of the World Bank indicate that global poverty rates have declined sharply since the early 1980s. However, the economic devil in these details is the twin issue of the definition of poverty and how to track it. Differing viewpoints add up to divergent conclusions about whether globalization has a net positive or negative effect on economic development.

Both supporters and critics of globalization are waiting for the bottom line, but they may be in for a long wait. The jury is still out on whether global poverty has gotten worse or improved. Some economists -- most notably Nobel Prize winner Joseph Stiglitz, University Professor of Economics at Columbia Business School -- agree with Sala-i-Martin's methodology but arrive at a different conclusion about its implications for globalization. But as Sala-i-Martin notes, "Research is a dynamic process, and future researchers will improve upon my work."

Perhaps some of those improvements will come from other economists at Columbia. Sala-i-Martin is one of several stars in the field at the University. In addition to him and Stiglitz, Columbia is home to such renowned economists as Jagdish Bhagwati, University Professor and Senior Fellow at the Council on Foreign Relations; R. Glenn Hubbard, dean of the Business School; and Jeffrey Sachs, director of The Earth Institute.

One of the most interesting ideas to come out of Sala-i-Martin's work is the concept of an emerging global middle class. According to Sala-i-Martin, in 1970, the concept of a world middle class didn't exist. Now, there is a growing middle class in Asia, primarily in China and India, whose people were once among the world's poorest and now have roughly the same standard of living as those in a European country such as Greece. Those who in 1970 were living on $2 a day, says Sala-i-Martin, are now living on $10,000 a year, a profound difference in living standard. In his view, this suggests that globalization has not been the economic disaster that some critics charge it would be.

Despite the fact that his most recent work indicates that global poverty is declining, Sala-i-Martin knows first-hand that not everyone shares in that prosperity. In several countries on the African continent, the number of people living below the poverty line is growing, a statistic he hopes to change through Umbele Foundation, an organization he founded in 2003 to channel money from donors in wealthy nations directly to the poor in Africa.

"Four things drive globalization: foreign investment, mobility of the populatio n, and trade and technological diffusion across countries" and several countries in Africa lack all of these, he laments. Crucial elem ents for growth, he notes, include an educated populace, nonrestrictive tariff laws and transparency of governmental operations. Discrimination is also a factor. "Gender, ethnic and racial discrimination hinder growth because significant portions of the talent pool are prohibited from full participation in the economy," he explains.

Another factor is health. AIDS and malaria present a public health crisis that prevents large numbers of people from participating in the economy.

Education, Sala-i-Martin believes, is the key to dismantling this downward spiral. In Kiswahili, a language spoken throughout Africa, “umbele” means “future.” Several countries in Africa have education models that experts say even developed nations should follow. Pointing to an example he hopes to emulate, Sala-i-Martin singles out Tanzania. In the early 1990s, the country stopped charging tuition fees that were a barrier to education for much of its population. “Millions of people showed up to attend school after the fees were eliminated, Sala-i-Martin says, excitedly.

Umbele pays salaries to students to provide them with a means to support themselves and their families while they attend school. Without money to live on, says Sala-i-Martin, many children opt to work rather than attend school. Umbele has operations in Cameroon, Mozambique, Sierra Leone, Central African Republic, Tanzania, Senegal and Kenya, and would like to expand to all of Africa's countries. In an effort to avoid the pitfalls that other charitable groups have fallen into, Umbele guarantees transparency and efficiency by having its supporting foundations pay all administrative costs. All donations go directly to people in need. The organization's Web site says, "Our motto is 'one Euro equals one Euro.'"

Teaching keeps Sala-i-Martin running at full speed, but he still finds the time to travel on behalf of Umbele, making frequent trips to countries where the organization operates. He believes that decades of protectionist policies enacted by wealthy nations have contributed to much of the poverty in sub-Saharan Africa. Those policies, he argues, must change. But regular people also can help. Umbele was born out of that belief -- and the hope it brings through education.

Published: Mar 03, 2005
Last modified: Mar 03, 2005

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