Inter Press ServiceTrade & Investment – Inter Press Service http://www.ipsnews.net News and Views from the Global South Thu, 18 Oct 2018 10:11:45 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.7 Developing Countries Losing Out To Digital Giantshttp://www.ipsnews.net/2018/10/developing-countries-losing-digital-giants/?utm_source=rss&utm_medium=rss&utm_campaign=developing-countries-losing-digital-giants http://www.ipsnews.net/2018/10/developing-countries-losing-digital-giants/#respond Wed, 17 Oct 2018 10:37:54 +0000 Jomo Kwame Sundaram and Anis Chowdhury http://www.ipsnews.net/?p=158224 A new United Nations report warns that the potential benefits to developing countries of digital technologies are likely to be lost to a small number of successful first movers who have established digital monopolies. According to the Trade and Development Report 2018 (TDR 2018), subtitled ‘Power, Platforms and the Free Trade Delusion’, while developing countries […]

The post Developing Countries Losing Out To Digital Giants appeared first on Inter Press Service.

]]>
By Jomo Kwame Sundaram and Anis Chowdhury
KUALA LUMPUR and SYDNEY, Oct 17 2018 (IPS)

A new United Nations report warns that the potential benefits to developing countries of digital technologies are likely to be lost to a small number of successful first movers who have established digital monopolies.

Jomo Kwame Sundaram

According to the Trade and Development Report 2018 (TDR 2018), subtitled ‘Power, Platforms and the Free Trade Delusion’, while developing countries need to invest more in digital infrastructure, they must also address the ownership and control of data and their use.

Developing countries will need to protect, and extend, available policy space to successfully integrate into the global digital economy. Stronger competition and regulatory frameworks will also require multilateral cooperation.

Digital concentration
Libertarian ‘light-touch’ regulatory frameworks have allowed powerful corporations to largely evade strict regulatory supervision and oversight, expand exclusively into lucrative related areas and limit policymakers’ influence. Digital monopolies have thus profitably ‘mined’ and processed data.

Of the top 25 big technology firms in terms of market capitalization, 14 are US based, with three in the European Union, three in China, four in other Asian countries and one in Africa.

In 2015, the top three big US technology firms had average market capitalization of more than $400 billion, compared to $200 billion in China, $123 billion in other Asian countries, $69 billion in Europe and $66 billion in Africa.
Apple recently became the first company in the world to be valued at more than $1 trillion, matching the combined economic output of Saudi Arabia and South Africa.

Anis Chowdhury

Such concentration and market dominance have ensured lucrative rents for the big players in the sector. For example, Amazon’s profits-to-sales ratio increased from 10 per cent in 2005 to 23 per cent in 2015, while Alibaba’s increased from 10 per cent in 2011 to 32 per cent in 2015!

These trends are largely due to the extraction, processing and sale of data. Digital platforms use their control over data to organize and mediate transactions along value chains. Network effects allow these platforms to expand these ecosystems utilizing feedback-driven processes.

The resulting market power, with stronger ‘property rights’ on the control and use of data, has enabled rentier and other uncompetitive practices. Thus, one cannot but be circumspect about the hype over ‘big data’ and ‘data revolution’. They rarely promote inclusive development, especially when left to ‘market’ or ‘self-regulation’.

Digital democracy?
TDR 2018 recommends active policies to check anti-competitive rent capture by digital platforms, and misuse of data. Antitrust and competition policies, historically concerned with market structure and behaviour, increasingly emphasize maximizing consumer welfare, using price-based measures.

In our increasingly digitized world, consumers receive services in exchange for surrendering their data, at zero nominal prices, i.e., for free. The control and use of such data enables the lucrative rentier activities associated with their use and abuse.

Policy options include stricter regulation of restrictive business practices and breaking up large firms responsible for market concentration. The digital world’s monopolistic tendencies should be regulated, and firms’ abilities to exploit their dominance restricted, e.g., the recent measures taken by the European Union against Google.

Developmental digitization?
For developing countries, the regulatory challenges to realize developmental gains from digitization are greater. Some countries are already using localization measures to develop domestic digital capacities and digital infrastructure.

But in most cases, data are owned by those who gather and store them, mainly digital super platforms, which then have full, exclusive and unlimited rights over the resource.

National data policies should be designed to address four major issues: who can own data, how data can be collected, who can use such data, and on what terms. They should also address the question of data sovereignty, e.g., which data can leave the country, and consequently are not governed by domestic law. South-South and regional cooperation can help small developing countries build their digital skills, capacities and capabilities.

Developing countries need to protect and expand available policy space to implement development strategies that should include digital policies with regard to data localization, data flow management, technology transfers and custom duties on electronic transmissions.

The international community is just beginning to discuss rules and regulations to improve them, before agreement is reached at the World Trade Organization and other multilateral bodies.

A premature commitment to rules with long-term impacts on fast-changing matters should be avoided, especially where powerful business interests remain influential and often dictate the very terms for discourse.

The post Developing Countries Losing Out To Digital Giants appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/developing-countries-losing-digital-giants/feed/ 0
What Accounts For Southeast Asia’s Phenomenal Success?http://www.ipsnews.net/2018/10/accounts-southeast-asias-phenomenal-success/?utm_source=rss&utm_medium=rss&utm_campaign=accounts-southeast-asias-phenomenal-success http://www.ipsnews.net/2018/10/accounts-southeast-asias-phenomenal-success/#respond Wed, 17 Oct 2018 09:47:01 +0000 Chang Yong Rhee http://www.ipsnews.net/?p=158222 Southeast Asia has made extraordinary strides in recent decades. Growth in per capita incomes has been among the fastest in the world, and last year the region was the fourth largest contributor to global growth after China, India, and the United States. Living standards have improved dramatically. Poverty rates are down sharply. What accounts for […]

The post What Accounts For Southeast Asia’s Phenomenal Success? appeared first on Inter Press Service.

]]>
By Chang Yong Rhee
WASHINGTON DC, Oct 17 2018 (IPS)

Southeast Asia has made extraordinary strides in recent decades.

Growth in per capita incomes has been among the fastest in the world, and last year the region was the fourth largest contributor to global growth after China, India, and the United States. Living standards have improved dramatically. Poverty rates are down sharply.

Chang Yong Rhee. Credit: IMF

What accounts for this record of success?

Openness to overseas trade and investment is a big part of the answer. Malaysia and Thailand have established themselves as global manufacturing powerhouses, churning out cars, consumer electronics, and computer chips.

Indonesia and the Philippines are among the world’s fastest-growing large, domestic-demand-led emerging markets. Singapore is a major financial and commercial hub.

Frontier economies such as Cambodia, Lao P.D.R, Myanmar, and Vietnam are exiting from decades of central planning after joining the Association of Southeast Asian Nations (ASEAN) and integrating with regional supply chains, particularly in China.

Sound economic management has also played a vital role. To be sure, the Asian crisis of 1997 was a setback, but Southeast Asia bounced back quickly and emerged stronger. Banks were restructured and financial regulation strengthened. Local currency bond markets were deepened to reduce dependence on volatile capital flows.

Rising prices and credit growth were brought under control as some countries moved toward adopting inflation targets and so-called macroprudential policies, which are designed to monitor and prevent risks to the financial system.

As a result, the region weathered the global financial crisis, but it will need to further strengthen its economies to handle short-term challenges, such as rising interest rates in the United States and other advanced economies, growing trade tensions, and slowing growth in China. It all adds up to greater uncertainty and more market turbulence for increasingly interdependent economies that have accumulated more debt.

In the longer term, though, more fundamental forces will test ASEAN leaders and populations. While Southeast Asia has significantly narrowed the gap separating it from the world’s richest nations, further progress is not preordained. The region cannot afford to rest easy; rising to the next level will call for a mutually reinforcing set of bold reforms.

Shifting demographics loom large among the coming challenges. In recent decades, the number of workers grew faster than the number of dependents, providing an impetus to economic growth. That demographic dividend is now starting to wane.

The working-age population continues to grow in Indonesia and the Philippines, but it is projected to shrink rapidly in other countries, including Thailand and Vietnam. Simply put, Southeast Asia risks growing old before it grows rich.

In response, Southeast Asian nations will have to beef up their pension systems and social safety nets to care for the growing ranks of older citizens. Bringing more people into the labor force, especially women, will help keep the growth engine humming.

With notable exceptions, such as in Vietnam, female labor participation rates remain low across Southeast Asia. Providing child care and flexible working arrangements can encourage more women to work.

Waning productivity growth is another obstacle. More advanced ASEAN economies are starting to lose some of their competitive advantage as wages rise. At the same time, automation and robotics are reducing demand for relatively unskilled labor; increasingly, manufacturing will require fewer, better-educated workers.

To move beyond middle- income status, the region will no longer be able to depend on the existing growth model of labor-intensive manufacturing for export.

Advances in artificial intelligence and machine learning, while creating opportunities, present additional challenges. Workers will need education and training to prepare for the jobs of the digital age. Governments should also improve the business environment by investing more in research and development and upgrading roads, ports, and broadband infrastructure.

Of course, all this requires money. Taxes as a proportion of GDP, at 13 percent, are below the global average of over 15 percent. That will have to change if the region is to finance essential investments, unlock productivity growth, and prepare for an aging population.

But raising more money won’t be enough: strong policies and institutions will be needed to make sure that precious taxpayer money is spent wisely.

As trade patterns and technology reshape the competitive landscape, Southeast Asia will have to rely more on domestic demand and less on sales of goods outside the region. To that end, further integration will be needed.

ASEAN has significantly reduced tariff barriers to trade in manufactured goods; it should further reduce trade costs and open its markets more fully to trade in services and the movement of labor.

The goal of completing an ASEAN trade in services agreement by 2025 will be a big step. If living standards are to rise further, the region cannot rely indefinitely on low-wage, low-skill service jobs in corner shops and restaurants; it will have to train more scientists and programmers, as well as professionals such as home health aides to care for the elderly. Investing more in its people and opening markets to expertise and technologies from abroad would advance that goal.

Of course, we must always remember that the goal of rapid growth is to improve living standards for the many, not the few. To be sustainable and command broad social support, economic policies must ensure inclusive growth. Governments should strengthen social safety nets, encourage competition, and challenge entrenched interests.

The region has made huge strides since the founding of ASEAN more than half a century ago, but significant challenges remain. Thankfully, with the right policies, Southeast Asia can rely on the creativity, resilience, and dynamism of its people to meet those challenges. The IMF has been an important partner in the region’s development, and it stands ready to continue serving its Southeast Asian members in the future.

The post What Accounts For Southeast Asia’s Phenomenal Success? appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/accounts-southeast-asias-phenomenal-success/feed/ 0
Women & Youth Key to Achieving Agenda 2030 in South-South Cooperationhttp://www.ipsnews.net/2018/10/women-youth-key-achieving-agenda-2030-south-south-cooperation/?utm_source=rss&utm_medium=rss&utm_campaign=women-youth-key-achieving-agenda-2030-south-south-cooperation http://www.ipsnews.net/2018/10/women-youth-key-achieving-agenda-2030-south-south-cooperation/#respond Mon, 15 Oct 2018 10:52:12 +0000 Siddharth Chatterjee http://www.ipsnews.net/?p=158159 Siddharth Chatterjee is the United Nations Resident Coordinator to Kenya.

The post Women & Youth Key to Achieving Agenda 2030 in South-South Cooperation appeared first on Inter Press Service.

]]>

India and Kenya signed agreements in the field of agriculture during Kenyan President Uhuru Kenyatta’s visit to New Delhi. Credit: G.N. Jha

By Siddharth Chatterjee
NAIROBI, Kenya, Oct 15 2018 (IPS)

By 2050 Africa will have 830 million young people. Many countries in the global south, India included are seeing a youth(men and women) bulge. To reap a demographic dividend countries in the global south need to share and exchange knowledge to leapfrog socio-economic transformation.

When the Buenos Aires Plan of Action for Technical Cooperation Amongst Developing Countries (BAPA) was adopted, few would have predicted that only 40 years later, developing countries would be accounting for the largest levels of global economic output.

It is an acknowledgement of the fact that new pillars of growth and influence have clearly emerged from the global south that the newly adopted Sustainable Development Goals (SDGs) stress the importance of South-South cooperation in implementing the 2030 agenda.

Goal 17 on revitalizing global partnerships for sustainable development stresses the role of South-South and Triangular Cooperation in achieving the SDGs.

South-South Cooperation (SSC) is on the rise in scale and scope. It is recognized as crucial in collective efforts to address challenges such as poverty eradication, climate change, food security, social protection, public health and infrastructure development.

SSC is seen by various development actors as a vital complement to North-South Development Cooperation. It may also represent the fertilization of a debate on how Overseas Development Aid flows relate to broader financing for development flows.

This year, 49 of the 55 member states of the African Union signed the African Continental Free Trade Area (AfCFTA) agreement, which will come into effect once 22 countries ratify it. It will be the largest free trade area that creates an African market of over 1.2 billion people with a GDP of US$2.5 trillion.

At the moment, infrastructure projects account for just over half of South-South cooperation, with China leading in this area. India is a considerable player, with projects such as the Pan African E-Network Project that will connect African countries by a satellite and a fibre-optic network for tele-education, tele–medicine, internet and videoconferencing.

Yet the feeling persists that the potential of this cooperation has not been fully leveraged, and a key topic of discourse being how south to south cooperation can contribute to sustainable development and what more needs to be done to scale-up and improve such cooperation for sustainable development.

How do we ensure that trade, investment, technology transfer and knowledge sharing address the needs of recipient countries as prioritized in their development strategies?

These are the kind of questions that will preoccupy organisations such as the United Nations Office for South-South Cooperation (UNOSSC) and United Nations Development Programme(UNDP). These two are leading efforts to establish the South-South Global Thinkers initiative that will enable joint research and knowledge sharing to inform global policy dialogues on South-South cooperation for the SDGs.

Mr. Achim Steiner, UNDP Administrator emphasized UNDP’s role in addressing the knowledge gap that many countries face when confronting their poverty challenges and emphasized that South-South Cooperation has become a “way we conduct business on a daily basis” because it has proven to deliver results on the ground.

If we are to keep our eyes on the overall goal of the SDGs – reduction of poverty – it is time to bring support to social sectors on the same level as infrastructure. It is time for investments to target the women and youth. Empowerment of these two groups provides the quickest pathway to poverty reduction especially in Africa, with agriculture-based investments the most promising sector.

Kenya’s economy is anchored on agriculture, where 70% of the population finds its upkeep. While in many regions crop yields have remained a step ahead of population growth, helping free them of hunger and famine, Africa has not managed to keep up with this trend; the impact of new technologies has been less apparent and agricultural productivity has stagnated, and even fallen in some areas.

In Africa’s agriculture sector, two-thirds of the labour force comprises women. Unfortunately, women farmers have less access to essential inputs—land, credit, fertilizers, new technologies and extension services. As a result, their yields tend to be less than optimum.

In addition, while African women are highly entrepreneurial and own about a third of all businesses across Africa, they are more likely to be running microenterprises in the informal sector, engaging in low-value-added activities that reap marginal returns.

If south-south investments are not deliberately designed for gender-responsiveness, the development course will continue to miss out on the multiplier effect that has been so well documented regarding women’s income. Women reinvest a much higher part of their earnings in their families and communities than men, spreading wealth and creating a positive impact on future development.

The World Bank says that agriculture will be a one trillion dollar business in Africa by 2030. Is there a better way to prepare to reap from part of this business than positioning the continent’s richest resource – the youth?

In his acceptance speech as the global champion of the youth agenda at the UN General Assembly 2018, President Uhuru Kenyatta said, “progress for the youth means progress for the entire humanity”.

In Kenya for example, one million young people join the work force every year. Of these young people, only about one in five is likely to find a formal job, with the rest either being unemployed or engaged in some non-wage earning occupation.

This means that Kenya needs a million new jobs every year for the next 10 years to keep up with the rapidly-expanding youth bulge. The median age of Kenyan farmers is 61, yet the median age of the population is 18. This is a potential force that must be involved in Agriculture.

To do this, creative and sustainable ways must be found to create opportunities that will present youth with the allure and career progression currently lacking in agriculture. With one of the fastest internet penetration rates, the youth in the country can be supported to exploit information technology for various value-addition ventures in agri-business.

This can be even more useful when focusing on areas with untapped potential, such as what is now known as the Blue Economy. Africa’s economies have continued to post remarkable growth rates, largely driven by the richness of its land-based natural resources, yet 38 of the continent’s 54 states are coastal.

India and Kenya have already made initial moves in this direction. Following the Indian Prime Minister Narendra Modi’s visit to Kenya two years ago, the two governments agreed to pursue initiatives in the sustainable management and extraction of ocean-based resources.

India will be sharing with Kenya expertise on space-based applications to address natural resources management and weather forecasting, expertise that can be exploited to improve food output in the country.

The rise of SSC introduces new dynamics to international development cooperation. SSC challenges traditional donor aid relationships inasmuch as it promotes economic independence and collective self-reliance of developing countries, and aspires for cooperation on the basis of equality, solidarity and mutual benefit.

There is a need to re-orient SSDC, along with international development cooperation more broadly, to adhere to norms and guidelines that consistently takes into account human rights, equity, gender equality, decent work, ecological sustainability, democratic ownership and other key elements of social justice.

As President Roosevelt said, “We cannot always build a future for our youth, but we can always build our youth for the future.”

The post Women & Youth Key to Achieving Agenda 2030 in South-South Cooperation appeared first on Inter Press Service.

Excerpt:

Siddharth Chatterjee is the United Nations Resident Coordinator to Kenya.

The post Women & Youth Key to Achieving Agenda 2030 in South-South Cooperation appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/women-youth-key-achieving-agenda-2030-south-south-cooperation/feed/ 0
Helping Ethiopia Achieve Green Growth and Avoid Industrialised Nations’ Environmental Mistakeshttp://www.ipsnews.net/2018/10/helping-ethiopia-achieve-green-growth-avoid-industrialised-nations-environmental-mistakes/?utm_source=rss&utm_medium=rss&utm_campaign=helping-ethiopia-achieve-green-growth-avoid-industrialised-nations-environmental-mistakes http://www.ipsnews.net/2018/10/helping-ethiopia-achieve-green-growth-avoid-industrialised-nations-environmental-mistakes/#respond Mon, 15 Oct 2018 09:14:42 +0000 James Jeffrey http://www.ipsnews.net/?p=158165 As Ethiopia undergoes a period of unprecedented change and reform, the Global Green Growth Institute(GGGI) is partnering with the Ethiopian government to try and ensure this vital period of transition includes the country embracing sustainable growth and avoiding the environmental mistakes made by Western nations. The basis of this effort comes from GGGI supporting the […]

The post Helping Ethiopia Achieve Green Growth and Avoid Industrialised Nations’ Environmental Mistakes appeared first on Inter Press Service.

]]>

Ethiopia is not an industrialised country but is looking at alternative economic activity that allows a low-carbon economy and means of living. Credit: James Jeffrey/IPS

By James Jeffrey
ADDIS ABABA, Oct 15 2018 (IPS)

As Ethiopia undergoes a period of unprecedented change and reform, the Global Green Growth Institute(GGGI) is partnering with the Ethiopian government to try and ensure this vital period of transition includes the country embracing sustainable growth and avoiding the environmental mistakes made by Western nations.

The basis of this effort comes from GGGI supporting the Ethiopian government in the development and implementation of its Climate-Resilient Green Economy (CRGE), a strategy launched in 2011 to achieve middle-income status while developing a green economy.

As elsewhere in Africa where GGGI is partnering with other member countries—Ethiopia was the first country to sign up among the current group of 10—the goal is to act now to enable countries to have a future comprising economic growth and poverty reduction while building resilience, promoting sustainable infrastructure and ensuring efficient management of natural resources.

“Countries like Ethiopia aren’t industrialised, so they have a chance to leapfrog in their development that means they wouldn’t follow us and make the mistakes we did when we industrialised,” Dexippos Agourides, GGGI’s head of programmes for Africa and Europe who is based in Addis Ababa, tells IPS. “We are talking about an alternative economic activity that allows a low-carbon economy and means of living.”

The global effort toward green growth gained momentum after the Paris Agreement in which signatories agreed to collectively tackle climate change through the mechanism of implementing nationally determined contributions (NDC), a country’s tailored efforts to reduce its emissions and enable it to adapt to climate change-induced challenges.

“The government has made big commitment and set very ambitious targets, so even if they only go halfway to their targets that would still be a significant achievement,” Agourides says. “There are big gaps in the plan, which is where we come in to accompany the government in this ambition.”

Hence GGGI’s 12-person team in Addis Ababa providing embedded expert and advisory technical support and capacity building to the Ethiopian government.

Their main effort is to ensure CRGE strategies and financing go toward six sectors identified as key for green growth: energy, reducing emissions from deforestation and degradation, agriculture (land use and livestock), green urbanisation and cities, transport, industry and health.

Ethiopia’s goal is to act now to enable it to have a future comprising economic growth and poverty reduction while building resilience, promoting sustainable infrastructure and ensuring efficient management of natural resources. Credit: James Jeffrey/IPS

One example of how this looks on the ground is Ethiopia’s programme of building industrial parks becoming greener, through schemes such as waste sludge from factories being used by other industries.

Another example is Ethiopia’s ambitious programme of reforestation and management of existing forest cover, which had reduced from covering about 35 percent of the country a century ago to around 3 percent in 2000—it’s now back up to around 15 percent.

GGGI is also working with the government on adaptation plans for areas prone to drought and flash flooding that appear increasingly volatile due to climate change.

“We look at past patterns and predict who suffers and how, so we can make plans so people are not hit,” says Innocent Kabenga, GGGI’s country representative for Ethiopia.

At the same time, Kabenga notes, methods such as reusing water, hydro-power, wind and solar are all being considered as means of mitigating Ethiopia’s carbon footprint. Such a plethora of renewable energy options comes from Ethiopia having one of the most complex and variable climates in the world due to its location between various climatic systems and its diverse geographical structure.

When it comes to the often-contentious issue of more foreign funds going to Ethiopia—already one of the world’s biggest recipients of overseas aid—those at GGGI point out that it is not necessarily a case of more funds but making sure existing funding go to the right place.

At the same time, there is no getting around the financial costs involved, both for Ethiopia’s green growth goals—in 2017, GGGI helped Ethiopia access USD 135 for its programme reducing emissions from deforestation and degradation, as well as access the Green Climate Fund—and for GGGI. Its budget comes from a mixture of developed and developing countries such as the United Kingdom, Australia, Mexico and Indonesia, a geographic spread reflecting the nature of the challenge that GGGI is engaged with.

“These are issues that have no boundaries, that no one country can solve, which is why we need to implement these national agreements that will help the world to survive,” Kabenga says. “Western countries have more money, and it their actions [contributing to climate change] that have affected the developing world.”

Despite governmental willingness, those at GGGI acknowledge much more is needed to turn words into concrete actions, especially within the complex context of Ethiopia’s federal democracy that devolves significant power to each region.

Furthermore, each ministry involved in the CRGE must do its job, and the government policy at the federal level must be successfully transmitted to Ethiopia’s regional governments—who must then do their bit.

Tying all that together—and as the country is going through one of its most significant political upheavals in 27 years as a new prime minister attempts to initiate significant reforms throughout government and society—is no easy thing, Agourides acknowledges. But if it can be done, then the economic and environmental benefits for Ethiopia could be huge, while allowing it to avoid the pitfalls elsewhere of growth at any cost that has done untold damage to this precious planet.

“Ethiopia stands at the top of least developed countries in terms of commitment, engagement and awareness,” Agourides says. “But implementation is the issue given the size and complexity of the country.”

The post Helping Ethiopia Achieve Green Growth and Avoid Industrialised Nations’ Environmental Mistakes appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/helping-ethiopia-achieve-green-growth-avoid-industrialised-nations-environmental-mistakes/feed/ 0
New Agreement with Canada and U.S. Is Win-Lose for Mexicohttp://www.ipsnews.net/2018/10/new-agreement-canada-u-s-win-lose-mexico/?utm_source=rss&utm_medium=rss&utm_campaign=new-agreement-canada-u-s-win-lose-mexico http://www.ipsnews.net/2018/10/new-agreement-canada-u-s-win-lose-mexico/#respond Tue, 09 Oct 2018 23:14:21 +0000 Emilio Godoy http://www.ipsnews.net/?p=158082 Following the fanfare of the countries’ leaders and the relief of the export and investment sectors, experts are analysing the renewed trilateral agreement with Canada and the United States, where Mexico made concessions in sectors such as e-commerce, biotechnology, automotive and agriculture. Karen Hansen-Kuhn, director of Trade and Global Governance at the U.S.-based Institute for […]

The post New Agreement with Canada and U.S. Is Win-Lose for Mexico appeared first on Inter Press Service.

]]>
The post New Agreement with Canada and U.S. Is Win-Lose for Mexico appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/new-agreement-canada-u-s-win-lose-mexico/feed/ 0
Improving Infrastructure Planning In Developing Countrieshttp://www.ipsnews.net/2018/10/improving-infrastructure-planning-developing-countries/?utm_source=rss&utm_medium=rss&utm_campaign=improving-infrastructure-planning-developing-countries http://www.ipsnews.net/2018/10/improving-infrastructure-planning-developing-countries/#respond Tue, 09 Oct 2018 10:44:46 +0000 Jomo Kwame Sundaram and Anis Chowdhury http://www.ipsnews.net/?p=158066 Infrastructure investment is necessary, but hardly sufficient to enable developing countries to transform their economies to achieve sustainable prosperity, according to this year’s UNCTAD Trade and Development Report: Power, Platforms and the Free Trade Delusion (TDR 2018), released in late September. For various reasons, infrastructure projects in developing countries are receiving broad endorsement. Multilateral financial […]

The post Improving Infrastructure Planning In Developing Countries appeared first on Inter Press Service.

]]>

Road networks facing dereliction in many African nations like Zimbabwe (Pictured) could receive a lifeline from the Programme For Infrastructure Development in Africa. Credit: Jeffrey Moyo/IPS

By Jomo Kwame Sundaram and Anis Chowdhury
KUALA LUMPUR and SYDNEY, Oct 9 2018 (IPS)

Infrastructure investment is necessary, but hardly sufficient to enable developing countries to transform their economies to achieve sustainable prosperity, according to this year’s UNCTAD Trade and Development Report: Power, Platforms and the Free Trade Delusion (TDR 2018), released in late September.

For various reasons, infrastructure projects in developing countries are receiving broad endorsement. Multilateral financial institutions – such as the Asia Infrastructure Investment Bank – are scaling up investment, and several international initiatives – such as the Belt and Road Initiative of China – prioritize infrastructure. Yet, such efforts may still not accelerate industrialization.

Nevertheless, most recent discussions still tend to ignore how infrastructure was central to successful industrialization, from eighteenth century Britain to twenty-first century China. The crucial link between infrastructure and industrialization has been largely lost in a discourse focusing on the bankability of projects, viewing infrastructure as a financial asset for international institutional investors.

Infrastructure as business opportunity
UNCTAD’s analysis of over 40 developing countries’ national development plans suggests too much emphasis on infrastructure projects – which appeared in 90 per cent of them – as business opportunities. But, there was too little emphasis on accelerating structural transformation.

Despite infrastructure spending being likened to traditional public goods such as highways, ports and schools, recent policy debate typically denigrates the public sector, instead favouring private finance. The prevailing bankability approach tends to avoid addressing how infrastructure can enhance productivity, structural transformation as well as economic and social change in much of the developing world.

But bankability will not close the financing gaps for infrastructure investment. The total annual financing needs for needed infrastructure were recently estimated at between $4.6 trillion and $7.9 trillion, requiring far more government investment than is currently the case.

Most developing countries must double current infrastructure investment levels of less than 3 per cent of gross domestic product (GDP) to around 6 per cent for significant transformational impact.

Infrastructure investment needs have been estimated at 6.2 per cent against actual spending of 3.2 per cent of the GDP of Latin America and the Caribbean in 2015. Projected needs in Africa are around 5.9 per cent of regional GDP in 2016-2040, more than the current 4.3 per cent. Current and projected investment needs in Asia during 2016-2030 are estimated at around 5 per cent of GDP.

Infrastructure for structural transformation
TDR 2018 advocates putting infrastructure investment at the centre of national developmental strategies with more political will, experimentation and planning discipline. However, projects only aiming to maximize returns on investment rarely serve national development needs.

Albert Hirschman’s discussion of ‘unbalanced growth’ showed that sequencing and experimentation could better balance public infrastructure and private investment, thus breaking vicious circles standing in the way of development.

Although most plans were aligned with broader national strategies, they were not well developed or oriented to longer term strategic goals, with possible challenges and obstacles not well recognized.

The plans rarely specify how infrastructure development would enable industrialization, or identify tools to ensure infrastructure investments accelerate structural transformation, economic diversification and growth.

This ‘disconnect’ is mainly due to ascendant financial interests and related policy advice insisting on engaging the private sector in infrastructure development and planning and transforming Agenda 2030 to achieve the Sustainable Development Goals into lucrative private investment opportunities.

Policymakers are instead urged by UNCTAD to better plan how to accelerate structural transformation. Infrastructure and development are better connected when projects are well designed and integrated into a wider development strategy promoting positive feedback among infrastructure, productivity and growth.

The post Improving Infrastructure Planning In Developing Countries appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/improving-infrastructure-planning-developing-countries/feed/ 0
Going Full Circle for Growth and the Planethttp://www.ipsnews.net/2018/10/going-full-circle-growth-planet/?utm_source=rss&utm_medium=rss&utm_campaign=going-full-circle-growth-planet http://www.ipsnews.net/2018/10/going-full-circle-growth-planet/#respond Fri, 05 Oct 2018 14:04:02 +0000 Li Yong and Hong Joo Hahm http://www.ipsnews.net/?p=158017 LI Yong is Director General of the United Nations Industrial Development Organization (UNIDO)

Hong Joo Hahm is Officer-in-Charge of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

The post Going Full Circle for Growth and the Planet appeared first on Inter Press Service.

]]>

LI Yong is Director General of the United Nations Industrial Development Organization (UNIDO)
Hong Joo Hahm is Officer-in-Charge of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

By Li Yong and Hong Joo Hahm
Oct 5 2018 (IPS)

The business case for making our economy more sustainable is clear. Globally, transitioning to a circular economy – where materials are reused, re-manufactured or recycled-could significantly reduce carbon emissions and deliver over US$1 trillion in material cost savings by 2025.(1) The benefits for Asia and the Pacific would be huge. But to make this happen, the region needs to reconcile its need for economic growth with its ambition for sustainable business.

LI Yong

Today, the way we consume is wasteful. We extract resources, use them to produce goods and services, often wastefully, and then sell them and discard them. However, resources can only stretch so far. By 2050, the global population will reach 10 billion. In the next decade, 2.5 billion new middle-class consumers will enter the fray. If we are to meet their demands and protect the planet, we must disconnect prosperity and well-being from inefficient resource use and extraction. And create a circular economy, making the shift to extending product lifetimes, reusing and recycling in order to turn waste into wealth.

These imperatives underpin the 5th Green Industry Conference held in Bangkok this week, hosted by the United Nations Industrial Development Organization (UNIDO) in partnership with the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Royal Thai government. High-level policymakers, captains of industry and scientists gathered to discuss solutions on how to engineer waste and pollution out of our economy, keep products and materials in use for longer and regenerate the natural system in which we live.

The goal is to embed sustainability into industries which we depend on for our jobs, prosperity and well-being. Action in Asia and the Pacific could make a major difference. Sixty percent of the world’s fastmoving consumer goods are manufactured in the region. Five Asia-Pacific countries account for over half of the plastic in the world’s oceans. The region’s material footprint per unit of Gross Domestic Product is twice the world average and the amount of solid waste generated by Asian cities is expected to double by 2025.

Hong Joo Hahm

If companies could build circular supply chains to reduce material use and increase the rate of reuse, repair, remanufacture and recycling – powered by renewable energy – the value of materials could be maximized. This would cushion businesses, manufacturing industries in particular, from the volatility of commodity prices by decoupling production from finite supplies of primary resources. This is increasingly important as many elements vital for industrial production could become scarce in the coming decades.

With these goals in mind, the United Nations is working with governments and businesses to support innovation and upgrade production technologies to use less materials, energy and water. UNIDO is engaged across industrial sectors, from food production to textiles, from automotive to construction. Over the past twenty-five years, its network of Resource Efficient and Cleaner Production Centres has helped thousands of businesses to “green” their processes and their products. The Global Cleantech initiative has supported entrepreneurs to produce greener building materials. Industrial renewable energy use is being accelerated by the Global Network of Sustainable Energy Centres. New business models such as chemical leasing help reduce chemical emissions. And the creation of eco-industrial parks has contributed to the sustainable development of our towns and cities.

In Asia and the Pacific, the UN is intensifying its efforts to reducing and banning single use plastics. The Platform for Accelerating the Circular Economy is implementing programmes to reduce plastics consumption, marine litter and electronics waste, and encourage sustainable procurement practices. UNESCAP is identifying opportunities in Asian cities to return plastic resources into the production cycle by linking waste pickers in the informal economy with local authorities to recover plastic waste and reduce pollution.

The 5t h Green Industry Conference is an opportunity to give scale to these efforts. The gap between our ambition for sustainability and many business practices is significant. So it’s essential for best practice to be shared, common approaches coordinated, and success stories replicated. We need to learn from each other’s businesses to innovate, sharpen our rules and increase consumer awareness. Let’s step up our efforts to build a circular economy in Asia and the Pacific.

(1) World Economic Forum, Towards the Circula r Economy. Available from http://www3.weforum.org/docs/WEF_ENV_TowardsCircularEconomy_Report_2014.pdf

The post Going Full Circle for Growth and the Planet appeared first on Inter Press Service.

Excerpt:

LI Yong is Director General of the United Nations Industrial Development Organization (UNIDO)

Hong Joo Hahm is Officer-in-Charge of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

The post Going Full Circle for Growth and the Planet appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/going-full-circle-growth-planet/feed/ 0
Investing in Arab and Asian Youth For a Sustainable Futurehttp://www.ipsnews.net/2018/10/investing-arab-asian-youth-sustainable-future/?utm_source=rss&utm_medium=rss&utm_campaign=investing-arab-asian-youth-sustainable-future http://www.ipsnews.net/2018/10/investing-arab-asian-youth-sustainable-future/#respond Fri, 05 Oct 2018 11:08:16 +0000 Aniqa Haider http://www.ipsnews.net/?p=158002 As the youth population has increased to unprecedented levels in Arab and Asian regions, governments need to do more to invest in them. “We are proposing concrete ideas on the effective use of the natural environment in the Arab region to contribute food security and youth employment,” said Asian Population and Development Association (APDA) board […]

The post Investing in Arab and Asian Youth For a Sustainable Future appeared first on Inter Press Service.

]]>

Governments, particularly those in Arab and Asian regions need to leverage youth population for sustainable development instead of making them an element of social instability. Credit: Victoria Hazou/IPS.

By Aniqa Haider
MANAMA, Oct 5 2018 (IPS)

As the youth population has increased to unprecedented levels in Arab and Asian regions, governments need to do more to invest in them.

“We are proposing concrete ideas on the effective use of the natural environment in the Arab region to contribute food security and youth employment,” said Asian Population and Development Association (APDA) board of directors’ head and Japan Parliamentarians Federation for Population (JPFP) vice chair Teruhiko Mashiko.

According to Youth Policy, a global think thank focusing on youth, more than 28 percent of the population – some 108 million people – in the Middle East are youth, between the ages of 15 and 29.

“This is the largest number of young people to transition to adulthood in the region’s history,” the organisation states. In Asia the number is almost 10 times greater with over one billion youth.

Mashiko was speaking during a key regional parliamentary forum called “Asian and Arab Parliamentarians Meeting on Population and Development – Investing in Youth: Towards Regional Development and Achievement of the SDGs” held in Manama, Bahrian this week.

Growing population, food security, unemployment and investing in youth for sustainable future were the main topics discussed during the meeting.

It was hosted by Bahrain under the patronage of Shura Council chair Ali Saleh Ali, and organised by the APDA and the Forum of Arab Parliamentarians on Population and Development (FAPPD) and brought together Asian and Arab parliamentarians along with experts and government officials.

Mashiko said governments needed to leverage youth population for sustainable development instead of making them an element of social instability.

“While these ideas may not seem to be directly linked to the issues of population, expanded youth employment and education programmes in the workplace can promote their acceptance of population programmes, [and have] various other implications for bringing about improvements in the existing situation.”

He further said that many regional parliamentarians forums on population and development are unable to sufficiently fulfil their roles. He said 40 years after activities on population and development started, it was becoming difficult to share the underlying principles of these activities.

“We are communicating with the people and governments about the concept of development from an international viewpoint,” he said.

Jordan member of parliament (MP) Marwan Al-Hmoud told IPS that he has a strong belief and faith in the importance of the role played by the youth.

“We need to focus on educating youth and emphasise on reinforcing values necessary to combat attacks against the Arab region,” he explained.

The annual Arab Youth Survey shows that defeating terrorism, well-paying jobs and education reform were among the top properties of Arab youth. “Overall defeating terrorism is cited as
a top priority more frequently than any other issue, with a third (34 percent) of young Arabs selecting it as a top priority to steer the region in the right direction.”

Al-Hmoud added: “Our youth are taking a step back from the Arab reality and [are] influenced by globalisation and foreign cultures, resulting in a lot of our youth to [having] no identity.”

Indian MP Nadimul Haque told IPS that the youth are the energy of the nation.

“Finding solutions in the field of population and development which impacts all areas concerned with humans is important,” he added.

“It needs to be uniform and sustained otherwise the whole idea of SDGs will fall flat,” he said. He was referring to the United Nations Sustainable Development Goals (SDGs), a collection of global goals to end poverty, mitigate climate change and protect the planet and to ensure equity and peace, among others.

According to the U.N. the world’s population as currently 7.6 billion as of 2017 and is expected to reach 8.6 billion in 2030, 9.8 billion in 2050 and 11.2 billion in 2100 with “the upward trend in population size expected to continue, even assuming that fertility levels will continue to decline.”

Haque said this might lead to a multitude of problems, such as lack of access to resources, knowledge and health services.

“It can lead to resource depletion, inequality, unsustainable cities and communities, irresponsible consumption and production, climate change, conflicts, [and can] gradually lead to an erosion of the quality of life on land.”

Haque highlighted success stories from his home city of Kolkata.

“We have successfully installed rooftop solar power in individual dwellings/buildings,” he explained. “For waste management, we have set up compactor units and we are proud that India is self-reliant in producing its own food grains.”

A list of recommendations to achieve the SDGs was issued, which identified combating health issues, especially communicable diseases and expanding primary health care as an important step.

Recommendations included, among others:

  • universal access to reproduce health services;
  • further improvement in primary education;
  • comprehensive sex education;
  • eradicating gender-based violence;
  • and increasing employment opportunities for youth.

Bahraini MP Juma Al Kaabi said that his country’s legislative authority supported young people and mobilised their energies and strengths.

Al Kaabi further added that the government has made many sporting, cultural, humanitarian and scientific initiatives aimed at raising and developing Bahraini youth who are self-aware and capable of belonging to their homeland and participating in real and effective development and growth.

Al Kaabi said the Tamkeen Foundation has been established by His Majesty King Hamad bin Isa Al Khalifa to support young jobseekers through a variety of training programmes that would equip them in being skilled for the job market and to also help financial guidance and support.

“The King Hamad Award was launched to empower the world’s youth, which is the first of its kind at the global level to create the conditions for young people to participate in the development of creative and professional ideas that have reached the United Nations goals for sustainable development,” he told the IPS

While MP Amira Aser from Sudan told IPS: “Agriculture was one of the key sources of livelihood in the state and youth involvement would further boost agriculture activities.”

In some regions of Sudan, farming is largely characterised by rain-fed production, low fertiliser use, poor quality seeds, inadequate water management and low soil fertility.

The region has experienced some of the lowest per hectare crop yields in the world.

Japanese Ambassador to Bahrain, Hideki Iko, summed it up: “Investing in youth for their education, employment and welfare are important as they are an investment for a better future for all countries.”

The post Investing in Arab and Asian Youth For a Sustainable Future appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/investing-arab-asian-youth-sustainable-future/feed/ 0
Trade War Due To Deeper Malaisehttp://www.ipsnews.net/2018/10/trade-war-due-deeper-malaise/?utm_source=rss&utm_medium=rss&utm_campaign=trade-war-due-deeper-malaise http://www.ipsnews.net/2018/10/trade-war-due-deeper-malaise/#comments Tue, 02 Oct 2018 13:48:29 +0000 Jomo Kwame Sundaram and Anis Chowdhury http://www.ipsnews.net/?p=157923 The world economy remains tepid and unstable a decade after the 2008 financial crisis, while growing trade conflicts are symptoms of deeper economic malaise, according to a new United Nations publication. While the global economy has picked up since early 2017, growth remains hesitant, with many countries operating below potential. The year ahead is unlikely […]

The post Trade War Due To Deeper Malaise appeared first on Inter Press Service.

]]>

Workers stitch Hanes tee-shirts at a factory in the CODEVI free trade zone in Ouanaminthe, Haiti. Credit: Jude Stanley Roy/IPS

By Jomo Kwame Sundaram and Anis Chowdhury
KUALA LUMPUR and SYDNEY, Oct 2 2018 (IPS)

The world economy remains tepid and unstable a decade after the 2008 financial crisis, while growing trade conflicts are symptoms of deeper economic malaise, according to a new United Nations publication.

While the global economy has picked up since early 2017, growth remains hesitant, with many countries operating below potential. The year ahead is unlikely to see much improvement as the world economy is under stress again, with rising tariffs and volatile financial flows.

Underlying such threats to global economic stability is the failure to address fundamental weaknesses in global economic governance which have been fostering global economic inequities and imbalances.

Addressing new challenges
UNCTAD’s Trade and Development Report 2018: Power, Platforms and the Free Trade Delusion (TDR 2018) makes proposals to address recent economic trends and challenges.

Jomo Kwame Sundaram

The report examines how economic power is increasingly concentrated in fewer big international firms, its impact on the ability of developing countries to benefit from the international trading system, and the distribution of gains from new digital technologies.

TDR 2018 notes that since 2008, many advanced countries have shifted from domestic to external sources of growth, with the eurozone becoming a trade surplus region.

While advanced economies have not done enough to rebalance the global economy, ‘normalizing’ unconventional monetary policies could rile capital and currency markets, with potentially vicious economic consequences in the more vulnerable emerging market economies.

Among countries relying on domestic demand, too many depend on higher debt and asset price bubbles, instead of raising wages. Meanwhile, growth is constrained by the omnipresent threat of financial instability, although the bigger emerging market economies are doing better this year, and commodity exporters can benefit while prices are high.

Anis Chowdhury

While Brazil, India, China and South Africa depend heavily on domestic demand, many other developing economies do not. With downside, including financial risks rising in several countries, TDR 2018 warns of gathering economic storm clouds.

The current $250 trillion debt stock – 50 per cent higher than a decade ago – is thrice the size of annual global output. Private, particularly corporate debt has been mainly behind this borrowing spree, but without financing corresponding real investments. Meanwhile, growing indebtedness has increased inequality through the financial markets.

Horns of trade dilemma
International trade remains dominated by large firms through their control of global value chains, with the top one per cent of each country’s exporting firms accounting for more than half its exports.

The spread of such chains accelerated trade growth from the end of the 20th century until the 2008 financial crisis, with some developing countries growing fastest. But the ratio of trade to growth has been rising, with much more trade associated with the same output increase. This has mainly benefited large firms by increasing market concentration and intellectual property.

Meanwhile, except for China, manufacturing’s share of value added has generally declined as the shares of pre- and post-production activities have risen. Such rents captured at both ends of the value chain have affected income distribution more generally.

Recent tariff increases are disrupting a trading system increasingly involving such value chains, although trade growth in 2018 is likely to reach 2017 levels. However, heightened uncertainty and reduced investment could have more damaging medium term consequences, particularly threatening for countries already facing financial distress.

Distributional consequences
By changing the profitability of firms in tradeable sectors, tariff hikes have distributional consequences affecting demand. After decades of disruptive trade liberalization, tariff war will not restore the status quo ante, but could cause massive disruptions.

Instead, UNCTAD argues that through global policy coordination, governments could avert continuing deterioration of income distribution and employment, at the root of recent economic crises. Hence, while globalization has rarely produced ‘win-win’ outcomes, neither trade nationalism nor further trade liberalization are appropriate.

After all, free trade has limited policy space for developing countries and reduced protections for working people and small businesses, while further enriching big firms.

TDR 2018 deems trade wars symptomatic of the deteriorating economic system and multilateral architecture, due to corporate political capture and rising inequality, with money used to gain political power and political power used to make money. As inward-looking options do not offer a way forward for most, the challenge is to make multilateralism work for all.

To avoid the errors of the 1930s, UNCTAD urges addressing new challenges while referring to the 1948 Havana Charter, the first multilateral effort to create a managed international trading system.

This must involve trade promotion contributing to both full employment and rising wages, restricting rentier corporate behaviour, while ensuring sufficient policy space to achieve the Sustainable Development Goals.

The post Trade War Due To Deeper Malaise appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/10/trade-war-due-deeper-malaise/feed/ 1
Europe Leads the Way in Development Index 2018http://www.ipsnews.net/2018/09/europe-leads-way-development-index-2018/?utm_source=rss&utm_medium=rss&utm_campaign=europe-leads-way-development-index-2018 http://www.ipsnews.net/2018/09/europe-leads-way-development-index-2018/#comments Thu, 27 Sep 2018 12:27:16 +0000 Anita Kappeli and Lee Robinson http://www.ipsnews.net/?p=157810 Anita Käppeli is European Outreach Director at the Center for Global Development (CGD) & Lee Robinson is a researcher at the Center for Global Development.

The post Europe Leads the Way in Development Index 2018 appeared first on Inter Press Service.

]]>

Anita Käppeli is European Outreach Director at the Center for Global Development (CGD) & Lee Robinson is a researcher at the Center for Global Development.

By Anita Käppeli and Lee Robinson
WASHINGTON DC, Sep 27 2018 (IPS)

We just published the Commitment to Development Index (CDI) 2018, which ranks 27 of the world’s richest countries on how well their policies help the more than five billion people living in poorer countries.

European countries dominate this year’s CDI, occupying the top 12 positions in the Index and with Sweden claiming the #1 spot. Here, we look at what these countries are doing particularly well in the past year to support the world’s poor, and where European leaders can still learn from others.

Each year, we look at policies beyond aid (only one of seven policy areas included in our analysis). We also measure policy efforts of rich countries in the areas of finance, technology, environment, trade, security and migration.

Within each of these seven components, countries are measured on how their domestic policies and actions support poor countries in their efforts to build prosperity, good governance, and security. We encourage you to explore the detailed results with our interactive tool below.

 

RELATED EXPERTS

Anita Käppeli
Director of Policy Outreach, Europe

Sweden shows biggest commitment to development
Sweden makes it to the top this year, a first since 2011, relegating its neighbors Denmark and Finland to second and joint-third (with Germany) respectively. Sweden’s top performance was driven by excellent scores on foreign aid quantity and quality, environment, and trade.

It also led the migration ranking, with a high share of refugees and strong policies to help integrate migrants. By accepting a relatively large share of migrants from poorer countries, Sweden contributes to poverty reduction and income redistribution as working abroad enables migrants to earn higher incomes and gain valuable skills, while at the same time filling gaps in the local labor market.

Migrants contribute to Sweden’s booming economy, which has the highest share of employment among EU-countries (Eurostat data, 2004-2017). However, as the recent election demonstrates, while Sweden’s integration policies are among the best of all the countries evaluated by the Migrant Integration Policy Index (MIPEX), challenges remain and the country’s openness to migrants has resulted in a political backlash. It remains to be seen how this will affect the country’s migration policies moving forward.

Denmark comes second in this year’s CDI, performing very well on aid and leading on the security component. It demonstrates that even small countries can support peace and international security beyond their borders.

Denmark punches above its weight on the international stage by contributing disproportionately to international peacekeeping and sea lanes protection. Further, it fully supports the international security regime through ratification of all treaties assessed in the CDI and acts coherently by having very low arms exports to poor and undemocratic countries.

However, it could learn from its neighbor Sweden by putting in place a more open and welcoming migration policy. This also applies to Finland, which comes joint-third with performances above average on all components except migration.

Germany proves economic powers can also be development drivers
For the first time since the Center for Global Development started producing the CDI in 2003, a G7-country has made it to the top three. Germany comes joint third with Finland, demonstrating that even the largest economies in the world can put domestic policies in place that also benefit poorer countries.

The country’s top score was driven by its development-friendly policies on trade and migration. Germany ranked second in migration due to the acceptance of an exceptional number of migrants from poorer countries. It also came second on trade, with the most efficient trade logistics of all CDI countries and by being a leader on openness to services trade.

Still, it is penalized for its relatively large EU agricultural subsidies, and has room to learn from its G7-peers Canada (ranking 17th overall) and the United States (ranking 23rd overall) which each provide significantly smaller agricultural subsidies. Germany was held back from the top overall position by its moderate scores on aid and security policies.

European development policies are among the best
European countries take up the first 12 positions on the CDI, highlighting European leadership on development issues. France comes in seventh this year, being one of the few countries to increase its aid spending (by 0.05 percent to 0.43 percent of gross national income [GNI]).

This development conforms with President Macron’s pledge to increase ODA-spending to 0.55 percent/GNI by 2022, which he renewed this past August. While France still has room for improvement on aid quality, it does particularly well on security and finance. Ranking third on the finance component, France demonstrates that a successful and powerful economy can at the same time be a transparent financial jurisdiction.

The United Kingdom, coming in eighth place, is the third G7 country in the top 10, scoring especially well on trade and security. The UK is one of the few countries meeting the international commitment of 0.7 percent of GNI spent on aid, but still ranks in the lower end of the table on migration and technology.

On the latter, it could learn from Portugal, ranking ninth overall and third on technology, with its heavy investments in Research and Development (R&D). The “Benelux” trio—Belgium, Netherlands, and Luxembourg—complete the top 10.

The Netherlands and Luxembourg share position five and Belgium ranks 10th. All three countries have smart policy designs in place: Luxembourg tops the aid component; the Netherlands the trade component; and Belgium the finance component.

Australia and Japan: two countries on the rise
Australia and Japan are among the countries which have improved notably since the 2017 publication. Australia ranks 14th in this year’s CDI, with good migration policies and a top-three position in the trade ranking. Australia is a CDI leader in providing equal access to goods from developing countries.

It has the second-lowest income weighted tariff rate and the second-lowest agricultural subsidies. Its improvement by four positions from last year was propelled by improvements in its foreign aid policy. However, Australia lags on environment, having the highest greenhouse gas emissions of all 27 CDI-countries. By increasing its gasoline taxes, which are currently the second lowest after the United States,

Australia could take a simple step to help fighting climate change—an issue with a disproportionately damaging effect on people in poorer countries.

While it comes in 24th this year, it is worth noting that Japan rose 10 slots in this year’s trade ranking to 15th place. Japan scored well on measures of customs speed and trading infrastructure. And while Japan’s tariffs are high relative to other advanced economies, they are reduced for many lower income trading partners. More on how this year’s trade component and Japan’s results can be found here.

The CDI demonstrates how we all benefit from good policies.
In times of fading commitment to multilateralism and the threat of increasing protectionism, this year’s CDI findings demonstrate that all countries can do more to put coherent, development-friendly domestic policies in place. They also serve as a reminder that advanced economies’ policies across a wide range of sectors have a lasting impact on people in poorer countries and that their well-being is in everyone’s best interest.

Many European countries have recognised the benefits of mutual development, but with billions left in poverty worldwide, high inequality levels and insufficient provision of global public goods, there’s still plenty of room for improvement.

More trade, innovation, and investment, but also a reduction in damaging spill-overs of instability in other parts of the world—triggered by violence, conflict, and climate change—will benefit us all directly.

The post Europe Leads the Way in Development Index 2018 appeared first on Inter Press Service.

Excerpt:

Anita Käppeli is European Outreach Director at the Center for Global Development (CGD) & Lee Robinson is a researcher at the Center for Global Development.

The post Europe Leads the Way in Development Index 2018 appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/09/europe-leads-way-development-index-2018/feed/ 1
New Trade Realities Cause Concernhttp://www.ipsnews.net/2018/09/new-trade-realities-cause-concern/?utm_source=rss&utm_medium=rss&utm_campaign=new-trade-realities-cause-concern http://www.ipsnews.net/2018/09/new-trade-realities-cause-concern/#comments Wed, 26 Sep 2018 10:41:10 +0000 Jomo Kwame Sundaram and Anis Chowdhury http://www.ipsnews.net/?p=157776 Trade liberalization, a key dimension of recent globalization, has failed to promote broad structural transformation in developing countries and has instead contributed to increased worldwide inequality, a new United Nations report shows. The Trade and Development Report 2018: Power, Platforms and the Free Trade Delusion (TDR 2018) suggests that the profits surge and growing concentration […]

The post New Trade Realities Cause Concern appeared first on Inter Press Service.

]]>

The majority of Cambodia’s exports to the European Union (EU), are textiles such as garments and shoes. Credit: Michelle Tolson/IPS

By Jomo Kwame Sundaram and Anis Chowdhury
KUALA LUMPUR and SYDNEY , Sep 26 2018 (IPS)

Trade liberalization, a key dimension of recent globalization, has failed to promote broad structural transformation in developing countries and has instead contributed to increased worldwide inequality, a new United Nations report shows.

The Trade and Development Report 2018: Power, Platforms and the Free Trade Delusion (TDR 2018) suggests that the profits surge and growing concentration of large transnational corporations, have depressed labour’s global income share, worsening income inequality.

The UN report also finds that policies that helped China to successfully develop, diversify and upgrade are now being discouraged, if not blocked, by developed countries influenced by transnational corporations threatened by such policies.

Despite long-standing concerns in developing countries about the international trading system, heightened recent anxiety in developed countries has strengthened scepticism about the supposedly shared benefits of trade liberalization.

Jomo Kwame Sundaram

More positive attitudes to trade liberalization will require more than seductive, but also deceptive slogans such as ‘freer trade lifts all boats’. Instead, a new momentum based on a more inclusive and developmental trade agenda is needed, reflecting the raison d’etre of the United Nations Conference on Trade and Development (UNCTAD), the TDR’s author.

Trade-induced structural change?
While the growing role of developing countries in international trade has been important for recent globalization, the ‘rise of the Rest’ – mainly developing countries or the ‘South’ – is a mainly East Asian story.

TDR 2018 shows that rapid export growth mainly came from the first-tier East Asian newly industrialized economies, and then China. Meanwhile, developed countries’ share of world exports declined, from nearly three-quarters of gross merchandise exports in 1986, to just over half in 2016. Export shares in most other developing countries remained constant or declined, except when commodity prices rose.

China stands out among the BRICS, whose share of world income soared from 5.4 per cent to 22.2 per cent during this period. Without China, the share of Russia, India, Brazil and South Africa in global output only rose from 3.7 per cent in 1990 to 7.4 per cent in 2016.

Anis Chowdhury

In 2016, East Asia accounted for about 70 per cent of all developing countries’ manufactured exports. Only East Asian developing economies have headquarters of leading transnational corporations. Of the world’s top 2,000 transnational corporations, transnational corporations’ share of profits rose from 7 per cent in 1995 to over 26 per cent in 2015.

More exports, less diversity
As developing countries increasingly rely on global market access, their exports have generally become less diverse. TDR 2018 associates these trends with spreading global value chains and the challenges of ‘catching up’ without a strong ‘developmental state’.

In fact, such value chains have long characterized commodity trade. Since 1995, 18 of the 27 developing countries with the relevant data had increased shares of extractive industries in export value added.

But, except for China, spreading global value chains have seen declining shares of domestic value added in gross exports. Except in East Asia, there is little evidence of ‘upgrading’ in these chains. While growing demand from China has stimulated growth in many developing countries in recent decades, it has not enhanced or diversified their export profiles.

Unfair trade
Size matters for corporate behaviour, both at home and abroad. Trade has been dominated by big firms, especially since the mid-1990s. Among exporting firms, the top percentile accounted for 60 per cent of exports, while an average of ten firms accounted for 40 per cent of exports.

Unsurprisingly, new entrants and smaller exporters have low survival rates, with three quarters giving up exports after two years, with developing country firms faring worse than their developed country counterparts.

Besides ‘hollowing out’ due to ‘offshoring’ from advanced economies, the income shares of low and medium skilled production workers in most developing country value chains besides China have been declining due to fabrication’s falling share of value added.

Size also matters for profitability, with the rapid profit growth of the top 2,000 firms depressing global labour income share. Worsening inequality attributed to trade is due to more profits from ‘intangible assets’, higher headquarters’ incomes, and cutting production costs.

Many big international firms engage in trade resulting in greater income flows to low-tax or no-tax jurisdictions. Payments for intellectual property have risen sharply in the last two decades in countries such as Ireland, Luxembourg, the Netherlands and Switzerland. Transnational corporate incomes in such locations have been rising far more than where their products are made or sold.

Policy space
TDR 2018 concludes that the problem is not with trade per se, but rather with its management and regulation. Rhetoric about ‘win-win’ solutions typically obscures how benefits can be more broadly shared.

UNCTAD argues that South-South trade agreements are less susceptible to such abuses of corporate power and influence. In contrast, policy space has been increasingly constrained by typical free trade agreements, reflecting powerful corporate influences via opaque negotiations.

Such agreements augment corporate profits, especially through ‘non-trade’ provisions. Inter alia, such clauses enhance intellectual property rights, cross-border capital flows, investor-state dispute settlement procedures, and harmonization of regulatory standards.

The post New Trade Realities Cause Concern appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/09/new-trade-realities-cause-concern/feed/ 1
Seize the Opportunity Offered by Africa’s Continental Free Trade Area, says UNIDO Chiefhttp://www.ipsnews.net/2018/09/seize-opportunity-offered-africas-continental-free-trade-area-says-unido-chief/?utm_source=rss&utm_medium=rss&utm_campaign=seize-opportunity-offered-africas-continental-free-trade-area-says-unido-chief http://www.ipsnews.net/2018/09/seize-opportunity-offered-africas-continental-free-trade-area-says-unido-chief/#respond Mon, 24 Sep 2018 13:03:28 +0000 Li Yong http://www.ipsnews.net/?p=157733 LI Yong is Director General, United Nations Industrial Development Organization (UNIDO)

The post Seize the Opportunity Offered by Africa’s Continental Free Trade Area, says UNIDO Chief appeared first on Inter Press Service.

]]>

LI Yong is Director General, United Nations Industrial Development Organization (UNIDO)

By Li Yong
VIENNA, Sep 24 2018 (IPS)

Since the turn of the millennium, Africa has experienced a steady and unprecedented economic growth.

However, poverty continues for people across the continent, especially in the sub-Saharan region. Unemployment and inequality have remained high. The rural population and the urban poor, women and youth, have not benefited from economic growth.

African policymakers realize that, for the benefits of growth to be shared by all, there needs to be a structural transformation of the economy. Specifically, there is an acknowledgement that its composition should change, with increased shares of manufacturing and agro-related industry in national investment, output, and trade.

Manufacturing, thanks to its multiplier effect on other sectors of the economy, has always been one of the most important drivers of economic development and structural change, especially in developing countries. Manufacturing is an “engine of growth” that enhances higher levels of productivity and greater technical change, thus creating more jobs with higher wages for both women and men.

Recognizing this, the United Nations has proclaimed the period 2016-2025 as the Third Industrial Development Decade for Africa (IDDA III) in order to increase global awareness and encourage partnerships to achieve inclusive and sustainable industrialization.

Today, Africa has exceptional opportunities for industrialization.

In the next few decades, Africa will become the youngest and most populous continent in the world with a working age population expected to grow by 450 million people. Or close to 70 per cent of the total, by 2035.

With a rapidly growing population, and one of the world’s highest rates of urbanization, the middle class is on the rise too. This will drive consumption of consumer goods, creating a market worth USD 250 billion, set to grow at an annual rate of 5 per cent over the next eight years.

Industrialization, diversification and job creation in Africa, however, cannot happen without continental economic integration. The recent signing of the historic agreement for an African Continental Free Trade Area (AfCFTA) by 49 out of 55 countries creates an opportunity for inclusive and sustainable economic development, moving away from structural stagnation and commodity-based economics.

The AfCFTA agreement will create the world’s largest single, integrated market for goods and services, and a customs union that will enable free movement of capital and business travelers in Africa.

This will provide great business opportunities for trading enterprises, businesses and consumers, unlocking trade and manufacturing potential and further enhancing industrialization in Africa.

With the AfCFTA agreement, exports of processed or intermediate goods will increase rapidly, further opening the way to Africa’s economic transformation to dynamically-diversified economies and globally competitive industrial production locations.

Higher trade among African countries will also strengthen African regional value chains, making it easier for local small and medium-sized enterprises, which account for around 80 per cent of Africa’s businesses, to build competitiveness, supply inputs to larger regional companies, and participate in and upgrade to global value chains.

This will give unprecedented opportunities to exploit the full agri-business potential of the continent. Strengthening the continent’s agro-industries can generate high social and economic returns, create jobs in rural areas and for young women and men, as well as responding to the urgent need to ensure food security and poverty reduction.

By taking bold actions in advancing the agenda of the AfCFTA, using it as one of the best means of promoting industrialization, African countries are well-positioned to build an Africa that can become a strong link in today’s interdependent global economy.

Structural transformation, however, is never automatic. Political goodwill and commitments are a first important step; but a multi-pronged, action-based approach with partnerships at the heart, along with concrete industrial policies, is needed for this to become a reality.

That is why UNIDO has developed an innovative country-owned, multi-stakeholder partnership model to provide governments with a platform to bring together various stakeholders, including development finance institutions and the private sector, to mobilize large-scale resources, accelerate industrialization and achieve a greater development impact.

Using this Programme for Country Partnership (PCP) approach, and helping governments to identify priority sectors based on prospects for job creation, strong links to the agricultural sector, high export potential and capacity to attract investment, UNIDO has already started assisting Ethiopia, Senegal, Morocco and other countries in Asia and Latin America in achieving their export goals and enabling the manufacturing sector to compete on the increasingly globalized market.

Now more than ever, such innovative schemes and mechanisms for enabling partnership building and resource mobilization for sustainable industrial development are needed to address the urgent need for structural transformation in Africa and seize the opportunities offered by the AfCFTA.

The post Seize the Opportunity Offered by Africa’s Continental Free Trade Area, says UNIDO Chief appeared first on Inter Press Service.

Excerpt:

LI Yong is Director General, United Nations Industrial Development Organization (UNIDO)

The post Seize the Opportunity Offered by Africa’s Continental Free Trade Area, says UNIDO Chief appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/09/seize-opportunity-offered-africas-continental-free-trade-area-says-unido-chief/feed/ 0
The Cambodian Port City on China’s 21st Century Silk Road That’s Becoming the New Macauhttp://www.ipsnews.net/2018/09/cambodian-port-city-chinas-21st-century-silk-road-thats-becoming-new-macau/?utm_source=rss&utm_medium=rss&utm_campaign=cambodian-port-city-chinas-21st-century-silk-road-thats-becoming-new-macau http://www.ipsnews.net/2018/09/cambodian-port-city-chinas-21st-century-silk-road-thats-becoming-new-macau/#respond Wed, 19 Sep 2018 10:17:25 +0000 Kris Janssens http://www.ipsnews.net/?p=157639 Kris Janssens is a Belgian reporter based in Phnom Penh, Cambodia. His goal is to tell extraordinary stories about ordinary people throughout Southeast Asia.

The post The Cambodian Port City on China’s 21st Century Silk Road That’s Becoming the New Macau appeared first on Inter Press Service.

]]>

The little shop owned by Leean Saan, close the monument with the lions. "Business is going down, Chinese people don't buy from me," she says. Credit: Kris Janssens/IPS

By Kris Janssens
SIHANOUKVILLE, Cambodia, Sep 19 2018 (IPS)

The new Macau. That’s what the Cambodian coastal city Sihanoukville is called nowadays. Chinese investors are building casinos there on a massive scale.

The southern port city lies on the new Silk Road (the so called ‘One Belt, One Road’) and is therefore interesting for China.

The Cambodian government is happy to accept the money. And Beijing never asks difficult questions.

“Things are happening so fast in Sihanoukville; the city has changed completely in only a few months time,” a friend tells me.

My last visit there was in December.

And so I wanted to see these ‘spectacular changes’ with my own eyes.

My friend was right. When you enter the city, you see casinos everywhere. There could be about a hundred by now, and new ones are constantly being built. Some of them are big showy palaces, but there are also obscure gambling houses.

Alongside those casinos you still find the typical Cambodian shops, where people drink tea and where food is skewered and cooked on the barbecue.

Tourists at the beach enjoy their cocktails or take a dip in the gulf of Thailand.

But all those elements are in disharmony with one another.

There is clearly no urban planning here.

It seems the builders got carte blanche to satisfy the hunger for gambling.

Gaudy lions

The statue of two golden lions, at a roundabout close to the sea, is a beacon in the city. Leean Saan (76) has a tiny little shop close to the lions. She sells soda water, cigarettes and fuel for motorbikes.

Ten years ago, when the tourists came, she started selling drinks. “But the business is going down,” she says. “There are more and more Chinese people and they don’t buy in my shop.”

“They are gangsters!” says a tuk-tuk driver who comes to buy fuel. “They promise for example to pay three dollars, but when we get to the destination they only give two. And when I complain, they threaten me with violence. They always travel in groups, so they feel superior.”

Making good money

I walk down the street and see some Cambodian youngsters who are queuing to buy coffee. They are more positive about the recent developments.

Rath (22) has been working for five years as a receptionist in a hotel casino. “My first salary was 80 dollars a month. Two years ago it was raised to 200 dollars and since last year I make 500 dollars a month. They need experienced staff.”

But there is a flip side to the coin: prices have gone up in a short period of time. “I used to pay 30 dollars a month to rent a room, nowadays they ask up to 250. But at the end of the day I still earn more than before.”

O Fortuna

It is time to get an inside look into one of those casinos, ‘Golden Sand’. I am the only white person and the security staff watches me closely.

At the entrance of the hall the song ‘O Fortuna’ taken from ‘Carmina Burana’ is being played repeatedly. A screen shows an animated movie with Chinese dragons and philosophers.

The game room is big but feels cold, in spite of the wall-to-wall carpet and the leather and fabric seats. There are Chinese wall ornaments.

Croupiers in red costumes are sitting at big card tables. You see a lot of security agents here as well. Young girls in blue outfits wander down the hall carrying fly swatters to kill annoying insects.

Remarkable: Cambodians are not allowed to gamble, by law. So all customers are Chinese.

Also remarkable: they don’t come dressed in suits and ties, but are dressed in shorts and t-shirts.

“Most customers here are builders,” says Wu, who works himself at one of the numerous construction sites in Sihanoukville. “They come here to spend the money they just earned.”

Wu is here for six months. He earns 700 dollars a month. He could make as much money in China, but here he has more job security.

Recruiting

Srun (28) works as a recruiter. He’s Cambodian but has Chinese roots and works as a tour guide for Chinese tourists. “They often asked me where they could go to gamble.” So Srun went to talk to several casino managers and he has an agreement to work on commission.

“You have to talk face to face to Chinese people,” he says. “I understand some Cambodians think they are gangsters, because they always talk so loudly. But that is simply their way of negotiating.”

Srun gets one percent of the money customers spend on gambling. “That doesn’t seem much, but in some cases we are talking about 10,000 dollars for a group of four people. The casino opens a special VIP-room and I get a 100 dollars.”

Rental prices

It is lunchtime. I decide to go for a noodle soup in a…Chinese restaurant.

“We only have Chinese people,” says manager Zong, “I don’t even speak Khmer.” She followed her husband about one year ago, coming from Hangzhou, in the eastern part of China. “Customers pay about seven times more here for the same dish. So the decision was easily made.”

She pays 3,000 dollars in rent for her restaurant. “That’s a lot of money, but it still is an interesting deal. That also goes for the owner. He could never get this amount of money from locals. So everyone is satisfied.”

This house owner is actively helping the Chinese settlement in Sihanoukville. His fellow citizens, who might have been born here, have no other option than to leave the city and try to find affordable business premises elsewhere.

As long as money talks here, the Chinese population will continue to grow.

Maybe I should make the same trip in another six months from now, to document the new changes to this area.

*The views expressed in this article are the author’s own and do not necessarily reflect those of IPS. 

The post The Cambodian Port City on China’s 21st Century Silk Road That’s Becoming the New Macau appeared first on Inter Press Service.

Excerpt:

Kris Janssens is a Belgian reporter based in Phnom Penh, Cambodia. His goal is to tell extraordinary stories about ordinary people throughout Southeast Asia.

The post The Cambodian Port City on China’s 21st Century Silk Road That’s Becoming the New Macau appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/09/cambodian-port-city-chinas-21st-century-silk-road-thats-becoming-new-macau/feed/ 0
Another global financial crisis for developing countries?http://www.ipsnews.net/2018/09/another-global-financial-crisis-developing-countries/?utm_source=rss&utm_medium=rss&utm_campaign=another-global-financial-crisis-developing-countries http://www.ipsnews.net/2018/09/another-global-financial-crisis-developing-countries/#respond Tue, 18 Sep 2018 09:05:35 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=157656 George Soros, Bill Gates and other pundits have been predicting another financial crisis. In their recent book, Revolution Required: The Ticking Bombs of the G7 Model, Peter Dittus and Herve Hamoun, former senior officials of the Bank of International Settlements, warned of ‘ticking time bombs’ in the global financial system waiting to explode, mainly due […]

The post Another global financial crisis for developing countries? appeared first on Inter Press Service.

]]>
By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY & KUALA LUMPUR, Sep 18 2018 (IPS)

George Soros, Bill Gates and other pundits have been predicting another financial crisis. In their recent book, Revolution Required: The Ticking Bombs of the G7 Model, Peter Dittus and Herve Hamoun, former senior officials of the Bank of International Settlements, warned of ‘ticking time bombs’ in the global financial system waiting to explode, mainly due to the policies of major developed countries.

Anis Chowdhury

Recent events vindicate such fears. Many emerging market currencies have come under considerable pressure, with the Indonesian rupiah, Indian rupee and South African rand all struggling since early this year. Brazil’s real fell sharply in June, and Argentina has failed to stabilize its peso despite seeking IMF aid. As Turkey struggles to stabilize its lira, many European banks’ exposure has heightened fears of another global financial crisis.

Why the vulnerability?
Some fundamental weaknesses are at the core of this vulnerability. These include the international financial ‘non-system’ since the collapse of the Bretton Woods system in 1971, and continuing to use the US dollar as the main international reserve currency.

This burdens deficit countries vis-à-vis surplus countries and ensures near-universal vulnerability to US monetary policy. Thus, most countries accumulate dollars as a precaution, i.e., for ‘protection’, eschewing other options, such as investing in socially desirable projects.

Policy makers not only failed to address these weaknesses following the 2008-2009 global financial crisis (GFC), but also compounded other problems. Having eschewed stronger, more sustained fiscal policy interventions, monetary policy virtually became the sole policy instrument. Major central banks, led by the US Federal Reserve, embarked on ‘unconventional monetary policies’, pushing real interest rates down, even into negative territory.

Jomo Kwame Sundaram

Emerging and developing economies (EDEs) offering higher returns temporarily experienced large short-term capital inflows. The external debt of emerging market economies has grown to over $40 trillion since the GFC. The combined debt of 26 large emerging markets rose from 148% of gross domestic product (GDP) at the end of 2008 to 211% in September 2017, according to the Institute of International Finance (IIF).

Easy money raised household and corporate debt, fuelling property and financial asset price bubbles. According to the International Monetary Fund (IMF) April 2018 Fiscal Monitor, global debt peaked at $164 trillion in 2016, or 225% of global GDP, compared to 125% before the GFC. The IIF reported that global debt rose to over $247 trillion in early 2018, i.e., equivalent to 318% of GDP.

Rising debt levels pose serious downside risks for the global economy. With easy money coming to an end, as the Fed continues to ‘normalize’ monetary policy by raising the policy interest rate, capital flight to the US is undermining emerging market currencies. When debt defaults increase with interest rates while income growth remains subdued, the world becomes more vulnerable to financial crisis.

Diminished capacities
Both developed and developing countries have less policy space than during the GFC. Most governments are saddled with more debt following massive financial bail outs followed by abandonment of efforts to sustain robust recovery.

According to the IMF’s April 2018 Fiscal Monitor, average public debt of advanced economies was 105% of GDP in 2017, constraining fiscal capacity to respond to crisis. Meanwhile, monetary policy options are exhausted after a decade of ‘unconventional’ monetary policies.

General government debt-to-GDP ratios in emerging market and middle-income economies almost reached 50% in 2017 — a level only seen during the 1980s’ debt crisis. The 2017 ratio exceeded 40% in low-income developing countries, climbing by more than ten percentage points since 2012.

Playing With Fire
by Yilmaz Akyuz, former South Centre chief economist, has highlighted the self-inflicted vulnerabilities of developing countries. Public debt-GDP ratios in EDEs are likely to rise due to falling commodity prices and stagnant global trade, while they have almost no monetary policy independence due to deeper global financial integration.

Weaker global growth
While corporate sectors have been busy with mergers, acquisitions and share buybacks with cheap credit, instead of investing in the real economy, the financial sector has successfully portrayed sovereign debt as ‘public enemy number one’.

Held hostage to finance capital, governments around the world have wasted the opportunity to improve productive capacities by investing in infrastructure and social goods when real interest rates were at historic lows. At around 24% of global GDP, the global investment rate remains below the pre-crisis level of around 27%, with investment rates in EDEs either declining or stagnant since 2010.

Failure to address the falling wages’ share of GDP, rising executive pay and asset price bubbles, due to ‘easy’ monetary policy, have continued to worsen growing income inequality and wealth concentration. Meanwhile, deep cuts in government spending and public services, while reducing top tax rates, cause anger and resentment, often blamed on ‘the other’, contributing to the spread of ‘ethno-populism’.

In turn, growing inequality limits aggregate demand, which has been maintained by unsustainably raising household debt, i.e., perverse ‘financial inclusion’.

Perfect storm?
Turbulence in currency markets is due to developing countries’ limited economic policy space. A decade after the GFC, developing countries still experience lower growth and investment rates.

Financial sectors of emerging market economies now have more and deeper links with international financial markets, also reflected in high foreign ownership of stocks and government bonds, with large sudden capital outflows causing financial crises.

Meanwhile, recent commodity price drops have accelerated the rising indebtedness of low-income countries. According to the IMF, 24 out of 60 (40%) are now either already facing debt crises or are highly vulnerable—twice as many as five years ago, with a few already seeking Fund bail-outs.

The problem is compounded by declining concessional aid from OECD countries. Also, more creditors are not part of the Paris Club, obliged to deal with sovereign debt on less onerous terms. Meanwhile, growing trade and currency conflicts are worsening the woes of those already worse-off.

The post Another global financial crisis for developing countries? appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/09/another-global-financial-crisis-developing-countries/feed/ 0
South-South Cooperation in a Transformative Erahttp://www.ipsnews.net/2018/09/south-south-cooperation-transformative-era/?utm_source=rss&utm_medium=rss&utm_campaign=south-south-cooperation-transformative-era http://www.ipsnews.net/2018/09/south-south-cooperation-transformative-era/#respond Thu, 13 Sep 2018 07:11:58 +0000 Jorge Chediek http://www.ipsnews.net/?p=157594 Jorge Chediek is Director, UN Office of South-South Cooperation (UNOSSC) and Envoy of the Secretary-General on South-South Cooperation.

The post South-South Cooperation in a Transformative Era appeared first on Inter Press Service.

]]>

Jorge Chediek is Director, UN Office of South-South Cooperation (UNOSSC) and Envoy of the Secretary-General on South-South Cooperation.

By Jorge Chediek
UNITED NATIONS, Sep 13 2018 (IPS)

On 12 September, the international community commemorated the UN Day for South-South Cooperation. This is an important acknowledgement of the contributions of Southern partnerships in addressing the many development challenges that confront the international community, such as poverty, climate change, inequality, contagious diseases and humanitarian crises.

Jorge Chediek

South-South cooperation is a unique arrangement where two or more developing countries share technical skills, exchange knowledge, transfer technologies, and provide financial assistance. These collaborations are built on the principles of solidarity, respect for national sovereignty, non-conditionality, national ownership, and mutual respect.

This year’s commemoration was particularly significant, as it marked the fortieth anniversary of an important milestone in international cooperation – the adoption of the Buenos Aires Plan of Action for Technical Cooperation Amongst Developing Countries (BAPA). BAPA institutionalized cooperation amongst developing countries, creating a strategic framework for furthering cooperation in technical and economic areas.

But cooperation amongst developing countries did not begin forty years ago – it traces its origins to the anti-colonial solidarity movement of the twentieth century. The practice gained further popularity in the 1950’s and 1970’s as newly independent States with limited capacities looked for independent ways to accelerate their development, away from the Cold War dichotomy of the day.

Forty years after the adoption of BAPA, the international system is undergoing a major systemic transformation, with new pillars of growth and influence emerging from the global South. Through collective voice and action, developing countries are actively contributing to the building of a more prosperous and peaceful world.

Developing countries today account for the largest share of global economic output and are playing an active, constructive role in traditional institutions of global governance as well as creating new institutions that are Southern-led.

In a noteworthy trend, development solutions increasingly originate from developing countries themselves. Harnessing the abundance of innovative solutions, brought about by its economic growth and advances in technical competencies, the global South now charts its own unique development path.

Developing countries are now drivers of innovation in ICT, renewable technologies, infrastructure development and social welfare. Pooled medical procurement is lowering costs and increasing access to life saving medicines. Southern-led mediation mechanisms for conflict prevention continue to prove especially effective in reducing violent conflicts.

Technical cooperation in agriculture is greatly improving the yields in agricultural output. Transfer of technologies and vast interregional infrastructure investments are facilitating access to international markets for medium and small-scale enterprises.

Southern-based centres of excellence and knowledge hubs have become key vehicles for promoting mutual learning, leading to reduction of poverty and the growth of an emerging middle class.

With this newly formed confidence, the global South progressively looks within itself for ideas, knowledge and skills for tackling many of its common challenges. This enhances its national and collective self-reliance, a major objective of BAPA.

As the capacities of developing countries have improved, there has been a corresponding expansion of the scope of South-South cooperation beyond technical cooperation to other areas. South-South cooperation today includes, amongst other instruments, technological transfers, knowledge exchanges, financial assistance, technical assistance as well as concessional loans.

As a consequence, interregional forums and summits for dialogue amongst developing countries have become an important platform for enhancing South-South policy coordination, launching joint initiatives, and committing resources for infrastructure development, trade and investments – vital for ensuring sustainable development.

Triangular cooperation – Southern-driven partnerships between two or more developing countries, supported by developed countries or multilateral organizations – is increasingly playing a role to ensure equity in partnership and scaling up of success.

In light of this, the United Nations General Assembly has decided to commemorate the fortieth anniversary of the adoption of BAPA by convening a High-level conference (BAPA+40) to be held from 19-21 March 2019 in Buenos Aires, Argentina. BAPA+40 provides a great opportunity for the international community to further strengthen and invigorate cooperation amongst developing countries.

Although great strides have been made by developing countries in improving the living conditions of millions of its people, complex development challenges still persist. Global economic transformations and its corresponding consequences on production patterns present a particular challenge to developing countries.

Automation poses a great risk to job creation in the South; climate change has particularly adverse effects on Small Island Developing States and Least Developed Countries; traditional partnership models are re-evaluated and inequality continues to rise. The global South will play an important role in overcoming these challenges.

The United Nations system continues to support the collaborative initiatives of developing countries by advocating, catalysing, brokering and facilitating such collaborations across many spheres.

Drawing on its vast presence across the global South, the United Nations is well placed to identify development capacities and gaps existing in developing countries while collecting, analysing and disseminating best practices and lessons learned towards the implementation of the 2030 Agenda for Sustainable Development and other internationally agreed development goals.

As the international community enters the third year of the implementation of the 2030 Agenda, concrete development solutions and resources from the global South are critical to achieving the Sustainable Development Goals. Effective development solutions that have worked in a few countries of the global South can be scaled up through South-South cooperation and triangular cooperation to accelerate sustainable development, particularly in countries that are lagging behind.

More and better South-South cooperation is essential to building a better world that leaves no one behind.

The post South-South Cooperation in a Transformative Era appeared first on Inter Press Service.

Excerpt:

Jorge Chediek is Director, UN Office of South-South Cooperation (UNOSSC) and Envoy of the Secretary-General on South-South Cooperation.

The post South-South Cooperation in a Transformative Era appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/09/south-south-cooperation-transformative-era/feed/ 0
Great Recession, greater illusionshttp://www.ipsnews.net/2018/09/great-recession-greater-illusions/?utm_source=rss&utm_medium=rss&utm_campaign=great-recession-greater-illusions http://www.ipsnews.net/2018/09/great-recession-greater-illusions/#comments Tue, 11 Sep 2018 08:01:04 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=157551 In 2009, the world economy contracted by -2.2%. Growth in all developing countries declined from around 8% in 2007 to 2.6% in 2009 as the developed world contracted by -3.8% in 2009. The collapse of the Lehmann Brothers investment bank in September 2008 symbolized the US financial crisis that triggered the Great Recession of 2008-2009. […]

The post Great Recession, greater illusions appeared first on Inter Press Service.

]]>
By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Sep 11 2018 (IPS)

In 2009, the world economy contracted by -2.2%. Growth in all developing countries declined from around 8% in 2007 to 2.6% in 2009 as the developed world contracted by -3.8% in 2009. The collapse of the Lehmann Brothers investment bank in September 2008 symbolized the US financial crisis that triggered the Great Recession of 2008-2009.

Demonstrations against austerity measures in Athens (May, 2010). Credit: Nikos Pilos/IPS

Demise of Keynesian consensus
In its immediate aftermath, a new consensus reversed the neoliberal Washington Consensus of the last two decades of the 20th century. Proclaimed by the G20’s London Summit of 2 April 2009, it envisaged return to Keynesian macroeconomic policies, including large-scale fiscal stimulus, supported by expansionary monetary policy.

The new policies were largely successful in tempering the recession, although much more should have been done. But with modest recovery, public debt, not economic stagnation, was soon sold as public enemy number one again.

G20 leaders at the June 2010 Toronto Summit turned to ‘fiscal consolidation’, with monetary policy accommodation to ‘contain’ its contractionary consequences, and ‘structural’ (mainly labour market) reforms, ostensibly to boost growth, especially in advanced economies. Meanwhile, despite G20 leaders’ pledges eschewing protectionism, trade restrictions grew.

Synchronized fiscal consolidation precipitated some Eurozone sovereign debt crises. Soon, several Eurozone countries experienced double dip recessions, as unemployment in Greece and Spain rose well over 25% following punitive policies required to qualify for European Union and International Monetary Fund (IMF) funding which mainly went to creditors.

Economists’ complicity
Misleading, ideologically-driven empirical analyses claimed to support the new policy reversal. Alesina and his associates promoted the idea of ‘expansionary fiscal consolidation’, that contractionary government expenditure cuts would be more than offset by private spending expansion due to boosted investor confidence.

Then, Reinhart and Rogoff exaggerated the dangers of domestic debt accumulation. Although soon exposed for major methodological flaws and suppressing relevant information, these studies had served their purpose.

The IMF Fiscal Monitor ahead of the June 2010 G20 Summit grossly exaggerated public debt’s destabilizing effects, advocating rapid fiscal consolidation instead. Later, the IMF admitted it had underestimated the fiscal multiplier and hence potential growth from such debt!
Faltering recovery and rising unemployment in the Eurozone caused the public debt-GDP ratio to rise instead. Meanwhile, supposedly unavoidable short-term pain caused prolonged suffering for millions without the promised medium- and long-term gains.

UN ahead of the curve
Besides the Bank of International Settlements’ legendary William White, the United Nations was ahead of the curve, not only in warning of the impending crisis, but also by providing appropriate policy advice, albeit largely ignored.

For example, the United Nations 2006 and 2007 World Economic Situation and Prospects (WESP) warned of instability and growth slowdowns due to disorderly adjustment of growing macroeconomic imbalances among major world economies. WESP warned that falling US house prices could cause defaults to spike, triggering bank crises.

The IMF and the OECD simply ignored such warnings, projecting rosy futures, and a ‘soft landing’ at worst. The April 2007 IMF World Economic Outlook (WEO) emphatically dismissed widely held concerns about disorderly unwinding of global imbalances, claiming economic risks had subsided. The July 2007 issue claimed: “The strong global expansion is continuing, and projections for global growth in both 2007 and 2008 have been revised up”.

The OECD June 2007 Economic Outlook insisted that the US slowdown was not heralding a period of worldwide economic weakness. “Rather, a ‘smooth’ rebalancing was to be expected, with Europe taking over the baton from the United States in driving OECD growth… Indeed, the current economic situation is in many ways better than what we have experienced in years.”

Although the IMF’s November 2008 WEO belatedly acknowledged the crisis’ severity, it forecast global recovery of 2.2% in 2009, suggesting the worst was over, thus supporting the reversal from fiscal expansion to consolidation. Depicting the ‘green shoots’ of recovery as self-sustaining, fiscal stimulus was abandoned after selective financial bailouts.

The IMF and OECD recommendations of structural reforms and fiscal consolidation have since failed to provide the long awaited, sustained global economic recovery.

The President of the UN General Assembly set up a commission led by Nobel laureate Joseph Stiglitz to study the crisis’ impact, especially for development, and recommend policies to prevent future crises. Yet, most remain unaware of its wide-ranging findings and policy recommendations, including international financial architecture reforms and reregulating finance to better serve the real economy.

The UN Secretary-General proposed a Global Green New Deal in 2009 to accelerate economic recovery and job creation while addressing sustainable development, climate change and food security. It envisioned massive, multilateral, cross-subsidized public investments in renewable energy and smallholder food production in developing countries.

The UN also consistently advocated policy coordination and warned against prematurely ending recovery efforts.

Missed opportunity, heightened vulnerability
With UN and similar policy advice largely ignored, global economic recovery has remained tepid for the last decade. This has prompted the ‘secular stagnation’ thesis obscuring the role of political and policy failures and missed opportunities.

Unconventional monetary policy, e.g., ‘quantitative easing’, has also widened income and wealth gaps besides fuelling financial asset bubbles. Earlier capital inflows are now exiting following monetary policy normalization in the West and new fears of emerging market vulnerabilities.

Having failed to ensure robust recovery despite accumulating more debt, both developed and developing countries have less policy and fiscal space to address the looming problems threatening them.

Meanwhile, the redistributive potential of fiscal policy has been weakened by reducing progressive direct taxes and increasing regressive indirect taxes, while cutting social expenditure. Also, powerful vested interests have blocked attempts to limit obscene executive remuneration and enforce minimum wages, arguing that such measures discourage business and job creation.

Also, the hyped notion of ‘inclusive inequality’ has served to justify rising economic disparities, by arguing that deregulation has enabled wealth accumulation and middle class expansion.

The post Great Recession, greater illusions appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/09/great-recession-greater-illusions/feed/ 1
Demonizing State-Owned Enterpriseshttp://www.ipsnews.net/2018/08/demonizing-state-owned-enterprises/?utm_source=rss&utm_medium=rss&utm_campaign=demonizing-state-owned-enterprises http://www.ipsnews.net/2018/08/demonizing-state-owned-enterprises/#respond Tue, 14 Aug 2018 12:28:11 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=157208 To make the case for privatization from the 1980s, their real problems were often caricatured and exaggerated.

The post Demonizing State-Owned Enterprises appeared first on Inter Press Service.

]]>
Privatization has not provided the miracle cure for the problems (especially the inefficiencies) associated with the public sector. Credit: IPS

Privatization has not provided the miracle cure for the problems (especially the inefficiencies) associated with the public sector. Credit: IPS

By Jomo Kwame Sundaram
KUALA LUMPUR , Aug 14 2018 (IPS)

Historically, the private sector has been unable or unwilling to affordably provide needed services. Hence, meeting such needs could not be left to the market or private interests. Thus, state-owned enterprises (SOEs) emerged, often under colonial rule, due to such ‘market failure’ as the private sector could not meet the needs of colonial capitalist expansion.

Thus, the establishment of government departments, statutory bodies or even government-owned private companies were deemed essential for maintaining the status quo and to advance state and private, particularly powerful and influential commercial interests.

Jomo Kwame Sundaram. Credit: FAO

SOEs have also been established to advance national public policy priorities. Again, these emerged owing to ‘market failures’ to those who believe that markets would serve the national interest or purpose.

However, neoliberal or libertarian economists do not recognize the existence of national or public interests, characterizing all associated policies as mere subterfuges for advancing particular interests under such guises.

Nevertheless, regardless of their original rationale or intent, many SOEs have undoubtedly become problematic and often inefficient. Yet, privatization is not, and has never been a universal panacea for the myriad problems faced by SOEs.

 

Causes of inefficiency

Undoubtedly, the track records of SOEs are very mixed and often vary by sector, activity and performance, with different governance and accountability arrangements. While many SOEs may have been quite inefficient, it is crucial to recognize the causes of and address such inefficiencies, rather than simply expect improvements from privatization.

First, SOEs often suffer from unclear, or sometimes even contradictory objectives. Some SOEs may be expected to deliver services to the entire population or to reduce geographical imbalances.

Other SOEs may be expected to enhance growth, promote technological progress or generate jobs. Over-regulation may worsen such problems by imposing contradictory rules.

Privatization has never been a universal panacea. One has to understand the specific nature of a problem; sustainable solutions can only come from careful understanding of the specific problems to be addressed.

To be sure, unclear and contradictory objectives – e.g., to simultaneously maximize sales revenue, address disparities and generate employment — often mean ambiguous performance criteria, open to abuse.

Typically, SOE failure by one criterion (such as cost efficiency) could be excused by citing fulfillment of other objectives (such as employment generation). Importantly, such ambiguity of objectives is not due to public or state ownership per se.

Second, performance criteria for evaluating SOEs — and privatization — are often ambiguous. SOE inefficiencies have often been justified by public policy objectives, such as employment generation, industrial or agricultural development, accelerating technological progress, regional development, affirmative action, or other considerations.

Ineffective monitoring, poor transparency and ambiguous accountability typically compromise SOE performance. Inadequate accountability requirements were a major problem as some public sectors grew rapidly, with policy objectives very loosely and broadly interpreted.

Third, coordination problems have often been exacerbated by inter-ministerial, inter-agency or inter-departmental rivalries. Some consequences included ineffective monitoring, inadequate accountability, or alternatively, over-regulation.

 

Hazard

Moral hazard has also been a problem as many SOE managements expected sustained financial support from the government due to weak fiscal discipline or ‘soft budget constraints’. In many former state-socialist countries, such as the Soviet Union and Yugoslavia, SOEs continued to be financed regardless of performance.

Excessive regulation has not helped as it generally proves counter-productive and ultimately ineffective. The powers of SOEs are widely acknowledged to have been abused, but privatization would simply transfer such powers to private hands.

Very often, inadequate managerial and technical skills and experience have weakened SOE performance, especially in developing countries, where the problem has sometimes been exacerbated by efforts to ‘nationalize’ managerial personnel.

Often, SOE managements have lacked adequate or relevant skills, but have also been constrained from addressing them expeditiously. Privatization, however, does not automatically overcome poor managerial capacities and capabilities.

Similarly, the privatization of SOEs which are natural monopolies (such as public utilities) will not overcome inefficiencies due to the monopolistic or monopsonistic nature of the industry or market. The key remaining question is whether privatization is an adequate or appropriate response to address SOE problems.

 

Throwing baby out with bathwater

SOEs often enjoy monopolistic powers, which can be abused, and hence require appropriate checks and balances. In this regard, there are instances where privatization may well be best. Two examples from Britain and Hungary may be helpful.

The most successful case of privatization in the United Kingdom during the Thatcher period involved National Freight, through a successful Employee Stock Ownership Plan (ESOP). Thus, truck drivers and other staff co-owned National Freight and developed personal stakes in ensuring its success.

In Hungary, the state became involved in running small stores. Many were poorly run due to over-centralized control. After privatization, most were more successfully run by the new owners who were previously store managers.

Hence, there are circumstances when privatization can result in desirable outcomes, but a few such examples do not mean that privatization is the answer to all SOE problems.

Privatization has never been a universal panacea. One has to understand the specific nature of a problem; sustainable solutions can only come from careful understanding of the specific problems to be addressed.

 

Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

The post Demonizing State-Owned Enterprises appeared first on Inter Press Service.

Excerpt:

To make the case for privatization from the 1980s, their real problems were often caricatured and exaggerated.

The post Demonizing State-Owned Enterprises appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/08/demonizing-state-owned-enterprises/feed/ 0
Which Way Now for Zimbabwe as Constitutional Court Receives Petition Against Election Results?http://www.ipsnews.net/2018/08/way-now-zimbabwe-constitutional-court-receives-petition-election-results/?utm_source=rss&utm_medium=rss&utm_campaign=way-now-zimbabwe-constitutional-court-receives-petition-election-results http://www.ipsnews.net/2018/08/way-now-zimbabwe-constitutional-court-receives-petition-election-results/#respond Mon, 13 Aug 2018 07:12:06 +0000 Busani Bafana http://www.ipsnews.net/?p=157186 Many in Zimbabwe are questioning whether the country can break with its horrid past or embrace a new future after a watershed election that saw Emmerson Mnangagwa win the presidential race by a narrow margin and the opposition lodge a formal petition challenging the results in the Constitutional Court. Mnangagwa–a trusted and past enforcer of […]

The post Which Way Now for Zimbabwe as Constitutional Court Receives Petition Against Election Results? appeared first on Inter Press Service.

]]>

Voters queuing ahead of Zimbabwe's Jul. 30 general elections. The election saw Emmerson Mnangagwa win the presidential race but the opposition has lodge a formal petition challenging the results. Courtesy: The Commonwealth/CC By 2.0

By Busani Bafana
BULAWAYO, Zimbabwe, Aug 13 2018 (IPS)

Many in Zimbabwe are questioning whether the country can break with its horrid past or embrace a new future after a watershed election that saw Emmerson Mnangagwa win the presidential race by a narrow margin and the opposition lodge a formal petition challenging the results in the Constitutional Court.

Mnangagwa–a trusted and past enforcer of former president Robert Mugabe–won the vote by 50.8 percent against the 44.9 percent garnered by Nelson Chamisa of the Movement for Democratic Change (MDC-Alliance).

Mnangagwa’s 2.46 million votes, against Chamisa’s 2.15 million, gave him the mandatory 50+1 percent required to be declared winner.

But the MDC-Alliance on Friday afternoon, Aug. 10, lodged a petition with the Constitutional Court of Zimbabwe challenging the results, halting the inauguration of Mnangagwa that had been slated for Sunday, Aug. 12.

The Constitutional Court will consider the matter over 14 days but political watchers say that what the ruling will be, remains unclear. The court could reject the MDC-Alliance petition and confirm Mnangagwa’s win, or it could confirm Chamisa’s presented evidence and rule in the opposition’s favour. The court could also order another election, which could be held within the next 60 days.“The future of Zimbabwe lies in a negotiated settlement now because of what the country stands to lose [rather] than gain if a political resolution is not found soon.” -- Political analyst and human rights activist, Effie Ncube.

Political analyst and human rights activist, Effie Ncube, says that should the court rule in favour of Chamisa and order a rerun, this could stoke tensions. He says that a preferred solution would be inclusive discussions out of court between Mnangagwa and Chamisa.

“Keeping away from a re-run is the best solution for Zimbabwe because the tension on the ground now is not ideal for an election without triggering violence,” Ncube tells IPS. “The future of Zimbabwe lies in a negotiated settlement now because of what the country stands to lose [rather] than gain if a political resolution is not found soon.”

Mugabe may have been ousted, but his brutal legacy lingers over a country desperate for a fresh start. Zimbabwe’s Jul. 30 elections–the first since Mugabe was toppled last November–did not disappoint on the dearth of harmony. Violence, in all its forms, has been emblematic of Mugabe’s rule and is something that president-elect Mnangagwa sought a clean break from.

But violence, intimidation, killings and disputed results soiled the elections.

Two weeks ago police clashed with opposition supporters who staged a demonstration outside the offices of the Zimbabwe Electoral Commission (ZEC) over the delayed announcement of the presidential election results. The army fired on protesting supporters, killing six people and injuring scores more. The tragedy stained the polls despite pleas from both the ruling Zimbabwe Africa National Union-Patriotic Front (Zanu PF) and the opposition MDC for a violence-free election.

“Mugabe’s legacy of brutality has returned to haunt us again but at least it was clear who was in charge,” Dumisani Nkomo, director of Habakkuk Trust, a civil rights advocacy organisation, notes. “Right now it is not clear who is charge and many centres of power seem to have emerged and even within the army there appears to be many centres of command as evidenced by the mystery of who deployed soldiers in Harare.”

Nkomo says the credibility of the electoral process has been severely eroded by issues around the voters roll, postal voting and election results.

“This is a really complex situation because contested election outcomes have been an issue since 1980 and more visibly in 2000, 2002 and 2013 and we seem to be moving in circles,” Nkomo tells IPS. “The election result cannot in all honesty be termed free and fair because of the uneven playing field and the clampdown on civil liberties after the announcement of the results.”

The elections had a semblance of being free on many fronts; the polls were relatively peaceful, there was a new biometric voters’ system, a well-organised and resourceful ZEC, and a plethora of candidates and parties vying for power.

While observers from the Southern African Development Community and African Union have endorsed the elections as free and fair, the European Union has pointed to irregularities.

Economist and lawmaker, Eddie Cross, says he expects the presidential ballot to stand up to the court challenge.

“Any legal challenge should therefore be short lived,” Cross said in post-election commentary on his website. “The big challenge facing Emmerson Mnangagwa is now to unite the country under his leadership and heal the wounds of past battles–the struggle for independence… the struggle against the MDC since 2000 with 5,000 abductees, tens of thousands beaten and tortured, hundreds of deaths and the near total destruction of the economy, all in the name of fighting the restoration of real democracy.”

Time to build bridges

Mnangagwa has scoffed at the idea of a government of national unity, an arrangement his predecessor, was forced to enter into in 2008 with the opposition MDC, which had been led at the time by the late Morgan Tsvangirai.

“I have two-thirds majority and you are talking about me abandoning my two-thirds majority to set a government of national unity?” Mnangagwa commented on Skye News television during an interview last week.

“Not that it’s a bad idea, but it doesn’t show that there is any need. I am saying politics should now take the back seat because the elections are behind us. We should now put our shoulders to the wheel for purposes of modernising our economy, growing our economy together. Those who have voted against me, those who voted for me, we say Zimbabwe is ours together.”

In spite of the violence that has marred the election outcomes, Zimbabwe was banking on a smooth assumption of power as a ticket into the fold of the international community.

However, in a move set to pile pressure on the new government to double its effort to reengage the international community and institute a raft of political and economic reforms, the United States last week renewed sanctions on Zimbabwe, which have been in place since 2001.

The economy remains a key challenge Mnangagwa has to address swiftly.

Mnangagwa has been on an international investment charm offensive, promoting Zimbabwe’s new open business approach.

The country needs an economic vision to ensure growth, unlock business opportunities, jobs, restore trust in the banking sector and hopefully bring back a local currency.

“Mnangagwa has the opportunity to turn the country round, he has made the right pronouncements on the economy that he needs to follow up with action. I think he wants to play a [Nelson] Mandela come in as a person who transforms the country and moves it to democracy and move away from the dictatorship,” says Ncube.

“Should the court confirm Mnangagwa as the winner, there could be less tension. But the credibility and legitimacy of the regime will be questioned and that will challenge its ability to organise international investment and undermine political stability.”

The post Which Way Now for Zimbabwe as Constitutional Court Receives Petition Against Election Results? appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/08/way-now-zimbabwe-constitutional-court-receives-petition-election-results/feed/ 0
Going Cashless, Led by Swedenhttp://www.ipsnews.net/2018/08/going-cashless-led-sweden/?utm_source=rss&utm_medium=rss&utm_campaign=going-cashless-led-sweden http://www.ipsnews.net/2018/08/going-cashless-led-sweden/#respond Fri, 03 Aug 2018 12:45:34 +0000 Stefan Ingves http://www.ipsnews.net/?p=157045 Stefan Ingves is the governor of Sveriges Riksbank, the central bank of Sweden, described as the world’s oldest central bank.

The post Going Cashless, Led by Sweden appeared first on Inter Press Service.

]]>

Stefan Ingves is the governor of Sveriges Riksbank, the central bank of Sweden, described as the world’s oldest central bank.

By Stefan Ingves
STOCKHOLM, Aug 3 2018 (IPS)

Sweden is rapidly moving away from cash. Demand for cash has dropped by more than 50 percent over the past decade as a growing number of people rely on debit cards or a mobile phone application, Swish, which enables real-time payments between individuals.

More than half of all bank branches no longer handle cash. Seven out of ten consumers say they can manage without cash, while half of all merchants expect to stop accepting cash by 2025 (Arvidsson, Hedman, and Segendorf 2018). And cash now accounts for just 13 percent of payments in stores, according to a study of payment habits in Sweden (Riksbank 2018).

Stefan Ingves

Digital solutions for large payments between banks have existed for some time; the novelty is that they have filtered down to individuals making small payments. And my country isn’t alone in this regard.

In several Asian and African countries—for example, India, Pakistan, Kenya, and Tanzania—paying by mobile phone instead of cards or cash is commonplace.

Given that the role of a central bank is to manage the money supply, these developments potentially have wide-ranging consequences. Are central banks needed as issuers of a means of payment in a modern digital payments market?

Are banknotes and coins the only means of payment for retail payments that should be supplied by a central bank? Is there a risk of future concentration in the payments market infrastructure that central banks should be monitoring?

In Sweden, clearing and transfers between accounts are concentrated in one system, Bankgirot. Once the payments market infrastructure is in place, the marginal costs for payments are low and positive externalities are present. What do we mean by “positive externalities”?

A classic example is the telephone. Having the first telephone is not very valuable, as there would be no one to call. However, as more people eventually connect to the telephone network, the value of the phone increases.

The same is true for the payments market—the value of being connected to a payments system increases as more people join. Moreover, payments can also be regarded as collective utilities.

Considering this, my view is that the state does indeed have a role to fill in the payments market—namely, to regulate or provide the infrastructure needed to ensure smooth functioning and robustness.

Citizens can expect a payments market to meet a few basic requirements. First, its services should be broadly available. Second, its infrastructure should be safe and secure. Sellers and buyers should be convinced that the payment order will be carried out—a necessary condition for people to be willing to use the system. Third, it should be efficient: payments should be settled fast, at the lowest possible cost, and the system should be perceived as simple and easy to use.

Do we fulfill these requirements? I am becoming increasingly uncertain whether we can respond with an unequivocal yes.

If banknotes and coins have had their day, then in the near future, the general public will no longer have access to a state-guaranteed means of payment, and the private sector will to a greater extent control accessibility, technological developments, and pricing of the available payment methods.

It is difficult to say at present what consequences this might have, but it will likely further limit financial access for groups in society that currently lack any means of payment other than cash. Competition and redundancy in the payments infrastructure will likely be reduced if the state is no longer a participant. Today, cash has a natural place as the only legal tender. But in a cashless society, what would legal tender mean?

In this regard, one might ask whether central banks should start issuing digital currency to the public. This is a complex issue and one central banks will likely struggle with for years to come. I approach the question as a practical, not a hypothetical, matter.

I am convinced that within 10 years we will almost exclusively be paying digitally, both in Sweden and in many parts of the world. Even today, young people, at least in Sweden, use practically no cash at all.

This demographic dimension is also why I believe that cash’s decline can be neither stopped nor reversed. While the Nordic countries are at the forefront, we are not alone. It is interesting to see how quickly the Chinese payments market, for instance, is changing.

And then there is the emergence of crypto assets. I do not consider these so-called currencies to be money, as they do not fulfill the three essential functions of money—to serve as a means of payment, a unit of account, and a store of value. This view is shared by most of my colleagues.

Crypto assets’ main contribution is to show that financial infrastructure can be built in a new way with blockchain technology, smart contracts, and crypto solutions. Although the new technology is interesting and can probably create value added in the long run, it is important that central banks make it clear that cryptocurrencies are generally not currencies but rather assets and high-risk investments.

The clearer we are in communicating this, the greater the chance that we can prevent unnecessary bubbles from arising in the future. We may also want to review the need for regulatory frameworks and supervision for this relatively new phenomenon.

It is worth mentioning that digitalization, technical improvements, and globalization are positive developments that increase our collective economic welfare. We can only speculate on what new payments services may be developed in the future. But there are several challenges ahead.

One key issue we face is whether central banks can stop supplying a state-guaranteed means of payment to the general public. Another is whether the infrastructure for retail payments should be transferred to a purely private market. The state cannot entirely withdraw from its social responsibility in these areas. But exactly what its new role will become remains to be seen.

The link to the original article follows:
http://www.imf.org/external/pubs/ft/fandd/2018/06/central-banks-and-digital-currencies/point.htm?utm_medium=email&utm_source=govdelivery

The post Going Cashless, Led by Sweden appeared first on Inter Press Service.

Excerpt:

Stefan Ingves is the governor of Sveriges Riksbank, the central bank of Sweden, described as the world’s oldest central bank.

The post Going Cashless, Led by Sweden appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/08/going-cashless-led-sweden/feed/ 0
Global Economy Vulnerable a Decade Afterhttp://www.ipsnews.net/2018/07/global-economy-vulnerable-decade/?utm_source=rss&utm_medium=rss&utm_campaign=global-economy-vulnerable-decade http://www.ipsnews.net/2018/07/global-economy-vulnerable-decade/#respond Mon, 30 Jul 2018 14:32:37 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=156954 Ten years ago, deteriorating confidence in the value of US sub-prime mortgages threatened a liquidity crisis. The US Federal Reserve injected considerable capital into the market, but could not prevent the 2008-2009 global financial crisis (GFC). The 2008 meltdown exposed the extent of finance-led international economic integration, with countries more vulnerable to financial contagion and […]

The post Global Economy Vulnerable a Decade After appeared first on Inter Press Service.

]]>
By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY & KUALA LUMPUR, Jul 30 2018 (IPS)

Ten years ago, deteriorating confidence in the value of US sub-prime mortgages threatened a liquidity crisis. The US Federal Reserve injected considerable capital into the market, but could not prevent the 2008-2009 global financial crisis (GFC).

The 2008 meltdown exposed the extent of finance-led international economic integration, with countries more vulnerable to financial contagion and related policy ‘spillovers’ exacerbating real economic volatility. It also revealed some vulnerabilities of the post-Second World War (WW2) US-centred international financial ‘architecture’ – the Bretton Woods system – modified after its breakdown in the early 1970s.

Jomo Kwame Sundaram

Robert Triffin, the leading international monetary economist of his generation, had long expressed concerns about the use of a national currency as the major reserve currency. International liquidity provision using the greenback required the US to run balance-of-payments deficits, ensuring US monetary policy spillovers to the world economy while eroding confidence in the greenback.

The Bretton Woods system was under increasing strain from the late 1960s, as US President Johnson funded the increasingly unpopular Vietnam War by issuing debt, rather than through higher taxes. The system finally broke down when the Nixon administration unilaterally cancelled the US commitment to dollar (gold) convertibility in August 1971.

What emerged was a ‘non-system’ for Triffin. Since then, the US dollar, issued by fiat, has relied on the greenback’s own credibility and legitimacy to continue as de facto world currency.

Current ‘non-system’
In 1985, Triffin identified three systemic problems of the international financial ‘non-system’. First, “its fantastic inflationary proclivities, leading to world reserve increases eight times as large over a brief span of fifteen years” since the breakdown of the Bretton Woods system.

Second, “skewed investment pattern of world reserves, making the poorer and less capitalized countries of the Third World the main reserve lenders, and the richer and more capitalized industrial countries the main reserve borrowers of the system”.

Anis Chowdhury

Third, “crisis-prone propensities reflected in the amplitude” and frequency of financial crises such as the 1980s’ debt crisis causing developing countries’ ‘lost decades’. Other critics have identified further flaws.

First is the ‘recessionary bias’, due to the asymmetric burden of adjustment to payments imbalances. While deficit countries are under great pressure to adjust, especially when financing dries out during crises, surplus countries do not face corresponding pressures to correct their own imbalances.

Second is the cost of the perceived need of emerging and developing countries to ‘self-insure’ against the strong boom-bust cycles of global finance by building up large foreign exchange reserves and fiscal resources, especially after the 1997-1998 Asian financial crisis.

Such precautionary measures enabled emerging market economies to undertake strong counter-cyclical measures during the GFC. But they have huge opportunity costs as such reserves are generally held as presumably safe, liquid, low-yielding assets, such as US Treasury bonds.

Hence, Triffin complained that “the richest, most developed, and most heavily capitalized country in the world should not import, but export, capital, in order to increase productive investment in poorer, less developed, and less capitalized countries… [The] international monetary system is at the root of this absurdity.”

Reform appeals
There were renewed calls for reform of global economic governance in the wake of the GFC, especially by the 2009 UN Conference on the World Financial and Economic Crisis and Its Impact on Development.

Governance reform of the IMF and World Bank should ensure fairer, more equitable representation of developing countries. This should improve the accountability and credibility of the Bretton Woods institutions, enabling them to better address current financial and economic challenges in the world.

The UN also called for a “multilateral legal framework for sovereign debt restructuring”. Without a fair, legally binding, multilateral sovereign debt work-out mechanism, developing countries remain vulnerable to private creditors, including vulture funds.

There were renewed hopes for trade multilateralism and early successful completion of the Doha Development Round of the World Trade Organisation (WTO), giving developing countries better access to external markets, seen as vital for balanced global recovery and development. The promise to keep international trade open echoed G20 leaders’ unfulfilled commitment to eschew protectionism.

However, only a few of the modest promised reforms have been implemented, with limited changes in international financial governance, still dominated by G7 economies. After all, every financial crisis is followed by appeals for reforms, with complacency setting in with hints of recovery.

Less coping capability
Most developed country governments are now more heavily indebted than in 2008, when they bailed out large financial institutions, but failed to sustainably revive the world economy. Major monetary authorities do not have much policy space left after long pursuing unconventional expansionary policies.

Meanwhile, developing countries have been subject to increasing international integration, e.g., through global value chains, foreign financial institutional investments and increased short-term capital flows induced by the unconventional monetary policies of the US Fed, ECB and Bank of Japan, while debt-sustainability concerns for some are growing again.

These vulnerabilities have been compounded by growing trade protectionism, and dwindling precautionary reserve holdings of many developing economies as global trade has slowed. Even before President Trump’s election, developed countries had effectively killed the Doha Development Round, not least by opting for bilateral and plurilateral, instead of multilateral free trade deals.

Trump’s more explicit rejection of multilateralism in his efforts to eliminate major US bilateral trade deficits are now expected to further set back prospects for world economic recovery. Despite pious declarations to the contrary, most national policymakers typically turn from rhetoric about international cooperation to focus on domestic issues.

It has not been different this last time. A decade after the worst economic downturn since the 1930s’ Great Depression, the world economy remains vulnerable.

Anis Chowdhury, Adjunct Professor at Western Sydney University (Australia), held senior United Nations positions in New York and Bangkok.
Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

The post Global Economy Vulnerable a Decade After appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2018/07/global-economy-vulnerable-decade/feed/ 0