Cuba’s Fidel Castro once famously said about his country: “Even our prostitutes have university degrees”. While we don’t know about prostitutes, something similar could be said about Georgia. Virtually all Georgians have university degrees, and, as every frequent user of taxi services knows, there are Georgian taxi drivers who have two of them.

Until very recently Russia was considered by many foreign companies a somewhat difficult but promising country for investment, a “land of opportunity” that perhaps necessarily came with a hefty dose of a “riddle wrapped in a mystery inside of an enigma”. The difficulty was stemming primarily from Russia’s heavy-handed bureaucracy. Stories of corrupt practices, politically motivated court decisions, and questionable tax authorities’ tactics abounded.

Imagine arriving at a provincial airport in an unnamed Central Asian country. You leave the terminal and go straight to a row of waiting taxis. In your Lonely Planet, you read that you should pay about $10 for what is a short taxi ride to the city center. You ask the first taxi driver and are quoted a fantasy price of $50. You try to bargain, to no avail. You go to the next taxi, and once again you are quoted $50.

It is well known that government intervention, be it through taxation or regulation, can obstruct the functioning of markets. Yet there is another kind of influence that may also have strong effects on the efficiency of an economy but is much less discussed, namely the set of values, traditions, and moral standards a society subscribes to.

Do development projects reach their stated objectives, such as reducing poverty, improving skills, creating jobs, etc.? This turns out to be a complicated question about project impact that a simple before-and-after measurement would not help answer. Why?