Archive for the Trade Category

I’ve just finished reading From Poverty to Power*, Duncan Green’s recent book, whose tagline gives you the book’s big idea:

How active citizens and effective states can change the world

Expounding the theme he regularly returns to, he says, “states that can guarantee security and the rule of law, and can design and implement an effective strategy to ensure inclusive economic growth” are essential for driving and managing the development process and “people working together to determine the course of their own lives, fighting for rights and justice in their own societies, are critical in holding states, private companies and others to account.”

It’s a chunky book, aiming at a pretty comprehensive look at different dimensions of power and their interactions at different levels to either advance or inhibit the capacities and opportunities of the poor. It is full of argument and insight (as well as stories of outrage and hope), and is well worth a read.

What’s great about the book is that it takes power (and powerlessness) seriously in all its dimensions (personal, inter-personal, social, political, financial) as it relates to human development and the protection and promotion of human rights. It argues that the redistribution of economic, social and political power, or the creation of new centres and forms of power among the poor, are vital for overcoming inequality, tackling poverty, defending human rights, and calling for –and supporting – responsive, accountable and effective governance.

Looking at national and international policy issues, and following the work of economists like Ha-Joon Chang and Dani Rodrik (and incorporating environmental and gender concerns), the book argues that “economic growth is everything” approaches are not sufficient to tackle poverty and inequality, and that countries (particularly poorer, developing ones) need to retain “policy space” and flexibility when dealing with the trans-national corporations of developed countries, or the architecture of global trade and finance (such as the World Trade Organisation, International Monetary Fund and World Bank). The work isn’t geared to bashing these institutions, and it certainly isn’t anti-market or anti-business. On many occasions it acknowledges the vital role that small and medium, and even large, enterprises can play in creating wealth, generating employment and opportunity, contributing to gender empowerment, and driving economic growth and development. But it takes the rights and flourishing of the poorest as the benchmark for assessing policy, or the behaviour of an institution, or set of governance arrangements – a stance that leads to sharp critique of corporations, international financial institutions, and governments at times.

Along the way, there is plenty of material to fuel your ire, or fire some arguments – for example the discussion of the behaviour of pharmaceutical companies in relation to Africa’s AIDS crisis, the slow-burning tragedy of the crippling debt burden still borne by the world’s poorest people, or the “rigged rules and double standards” of WTO agreements. There are plenty of “killer facts” as well sprinkled throughout to bring out the sharp edge of the topic under discussion.

I really only have one complaint , which is that the book’s strength seems also to be its weakness. Examining so many different forms of power and tools of empowerment (education, citizenship, land and property rights, social protection, cash transfers,…), so many forms of risk and vulnerability faced by the poor (finance, health, food security, conflict and violence, climate change…) and examining stories at so many different levels (the personal, local, national and international) means that, inevitably, many of the sections are really only introductions to the topic at hand, with not quite enough detail to do justice to the issue (though the treatment of issues like the international trade and finance systems, or community organising for political change are very good introductions). Nor do they properly back up the few prescriptive passages in the book. For example, it’s not clear to me what would actually be done differently if we heeded Green’s call for a “new economics for the 21st Century”. He’s probably right about the ascendency of a certain, very blunt, form of neo-classical economics in political decision making. But when he says,

Decision-makers will always need to consult, identify trade-offs, and agree priorities: such discussions are the stuff of politics, which in the end should be served, and not ruled, by economics

I really can’t imagine that decision-makers currently do otherwise.

Related to this is that the kaleidoscopic view of power explored here ends up reading, at certain points, like a change of topic every 20 pages or so, which gets a bit tiring when read at one sitting (or, in a 6-hour stretch in an overcrowded minivan winding its way through the hills of Far Western Nepal!). It would probably have been better to dip in and out of several of the sections according to interest and my ability to concentrate.

Oh, and a minor gripe is that Oxfam’s marketing team seem to have been allowed pretty free play in the text. I have no issue at all with sentences like, “Oxfam has learned that…” or “In the experience of Oxfam’s partners…” The book, after all, was written by Oxfam GB’s head of research and these lessons confirmed by personal and organisational experience provide much of the book’s strength and authenticity.

What started to irk me a little though was that whenever the words “International Non-Governmental Organisations…” cropped up, they were almost invariably followed by the words “… like Oxfam.” Now I know Oxfam is an example of one kind of INGO, and it’s probably worth pointing out once or twice on the way through, but surely not every time. First, it gets tedious and, second, you’d have a slightly warped view of INGOs if every time you thought about them you had to think of Oxfam (whose work, and staff, I really do like and admire).

Funnily enough, though, the words “like Oxfam” didn’t make it into the sentence that reads:

While activists from many developing countries appreciate the support that their organisations receive from INGOs, they often complain that INGOs are domineering…

But that’s definitely enough snark. You can see video of Duncan Green discussing the book here.

* From Poverty to Power is also the name of his excellent blog

While North Korea, bronze medal winner in the axis of evil, is no longer a “state sponsor of terrorism“, the poor old Communist Party of Nepal (Maoist),  single largest party in Nepal’s democratically-elected government, is still a Specially Designated Global Terrorist organization, according to the US State department.

Nonetheless, Maoist party chairman, and Nepali PM, Pushpa Kamal Dahal (aka Prachanda – the fierce one), was still allowed to enter the US recently to address the UN General Assembly in New York.  He kept a lid on the fiery rhetoric, and allusions to Marx, Lenin and Mao were absent as he focused on some of Nepal’s challenges: accelerating socio-economic development, ensuring human rights and building peace and reconciliation, and responding to climate change.

In fact, his call for greater Millennium Development Goal progress, for donors to live up to their commitments, for a genuine development round focused on the needs of the poor in the World Trade Organisation, and for support to meet the human development challenges of climate change, could almost have been delivered by Gordon Brown, or Make Poverty History… Communists!

A new, multi-author blog on international development issues. I particularly recommend Kemal Dervis’ post on Growth, Inequality and Global Development, for a concise summary of global income and distribution trends, and why inequality matters.

Hat-tip to Emmanuel for the link.

The United Nations Millennium Development Goals Report 2007 was released recently.

Recalling the commitment of world leaders in the Millennium Declaration of 2000 to,

Spare no effort to free our fellow men, women and children from
the abject and dehumanizing conditions of extreme poverty,

the report poses the question, “Are we on course to look back, in 2015,
and say that no effort was spared?” It finds that there has been substantial progress:

  • The proportion of the world’s population living in extreme poverty fell
    from nearly a third in 1990 to less than one fifth in 2004.
  • World-wide, primary school enrolement rates rose from 80% in 1991 to 88%
    in 2005, thanks mostly to debt cancellation and education-focused aid.
  • The number of child deaths is declining globally, through basic interventions,
    such as vaccinations, provision of insecticide-treated bednets and treatment
    of diseases such as measles (though this progress is not rapid enough to achieve the target of reducing the under-five mortality rate by two thirds by 2015).

However, there is much that remains to be done:

  • Over 500,000 women still die each year from preventable and treatable complications in pregnancy and childbirth.
  • HIV infections and deaths from AIDS continue to increase in all parts of
    the world.
  • 2.5 billion people still do not have access to basic sanitation, and the
    Goal to halve the proportion of people in this situation will be missed on current rates of progress.

The report makes clear that rapid and large-scale progress is possible, where
there is strong government leadership, policies that target the poor, and sufficient
financial and technical support from the international community. It challenges
wealthy nations to substantially increase aid, reform international trade rules,
and tackle climate change in order to maintain and accelerate Millennium Development Goal progress.

Update: David notes the time and the challenge as well.

Well, the G-20 wrapped up in Melbourne last weekend, and all the finance ministers and central bankers have gone home, so I really should have offered some reflections before now.

All I can say (in the interests of everyone keeping their breakfast down) is that reconnecting with my family after all the hectic Make Poverty History activities, included a 5 day bout of gastric ructions. Lovely.

Still, the G-20 met. They released a communique.

Make Poverty History called for 5 things from the G-20 discussion:

  • Ensuring aid is sufficient and effective to achieve the Millennium Development Goals.
  • Cancelling debt for countries requiring it in order to achieve the MDGs.
  • Calling for a renewal of the World Trade Organisation Doha round negotations, with a genuine human development agenda at their heart.
  • Taking further action to reform the governance and activities of the IMF and World Bank.
  • Ensuring that discussions about energy use also take climate change into account.

(MPH’s policy brief is available here (160kb pdf.) The G-20 itself, said last year that it had a:

firm commitment to achieving the MDGs through intensified cooperation aimed at overcoming severe challenges

and a desire to:

play an active role in addressing critical development issues.

It seems only fair to ask just how well these excellent desires translated into concrete policy proposals and resource allocations. On Make Poverty History’s analysis, this meeting didn’t achieve much at all.

Aid:

Rating: (no stars)

What they said:

Building on the G-20 Statement on Global Development Issues in 2005, we welcome recent increases in aid and debt relief and underscore the importance of pledges of further aid increases being fulfilled, along with renewed efforts to improve the quality of aid. We also underscored the importance of helping countries reap the benefits of higher aid and debt relief, and avoid a new build-up of unsustainable debt. Increased development financing must be accompanied by improved aid effectiveness to achieve the Millennium Development Goals. All G-20 members have pledged their support for the Paris Declaration on Aid Effectiveness. We agreed that the G-20 will work toward improving aid effectiveness and good governance in the period ahead.

This sounds very much like nothing much at all. While the emphasis on aid effectiveness is important, and the endorsement of the Paris Declaration is welcome, they’re just coasting on past achievements. No new commitments by those G-20 members that haven’t committed to invest 0.7% GNI in aid (including Australia), no specific reference to MDG progress or planning, no additional support for effective (but underfunded) global partnerships like the Global Fund to fight AIDS, TB and Malaria or the Education For All – Fast Track Initiative and no new action on innovative means for financing development.

By the way, the emphasis on aid effectiveness and the Paris Declaration would have been a whole lot more believable (and I would have awarded a half star rating) if donors hadn’t already conspired to conceal their names in an OECD report on aid effectiveness.

Debt:

Rating: (no stars)

What they said: see above. So, basically nothing. Nothing at all.

Trade:

Rating: (half a star)

What they said:

Stable global economic growth depends on open trade. G-20 members warned of the threat to global prosperity from rising protectionism in trade and investment. The success of the Doha Development Round is essential to securing freer, more open trade, reducing the risk of economic and financial instability, and achieving faster economic growth, development and sustained reductions in poverty. G-20 members call for an early resumption of WTO negotiations and the achievement of an ambitious outcome for the benefit of all.

Maybe this is as good a statement as we could have gotten from the G-20. The missing ingredient is a recognition that the development interests of poor countries are actually threatened by the recent direction of trade talks. Pro-poor growth facilitated by more open trade requires a genuine ‘development agenda’ for trade negotiations.

Reform of the World Bank and IMF

Rating: (half star)

What they said:

We are committed to the successful completion of a comprehensive set of reforms… To this end, we identified key issues on which agreement needs to be achieved in order to implement second-stage reforms, including: the main considerations underlying a new, transparent and simple quota formula which captures IMF members’ relative economic positions; how to implement the new quota formula; and agreement on the increase in basic votes and how the share of basic votes can be protected over time…

We reiterated the position expressed in our October 2005 Statement that the selection of senior management of the IMF and World Bank should be based on merit and ensure broad representation of all member countries. We welcomed consideration of any steps to ensure a fully transparent process for the selection of the IMF Managing Director and the World Bank President.

All well and good, but it should be noted that the G-20 members control more than 50% of the votes in the IMF. Surely, if they were serious about ending the absurd practice of always having a European as Director of the IMF and an American as President of the World Bank, then that wouldn’t be too hard for them to manage or have managed already.

Facing up to climate change in talks about energy

Rating: (half star)

What they said:

We welcomed further work on principles for the efficient and effective governance of extractive firms, both private and state-owned. We noted the benefits of the Extractive Industries Transparency Initiative (EITI), a voluntary initiative to strengthen transparency, governance and investment-led development in resource-rich countries, and encourage governments and firms to support the initiative. We support continued progress on the World Bank-led Clean Energy Investment framework.

Long-term resource security and dealing with key global challenges, such as climate change, require effective international policy frameworks and actions. Well-functioning markets—characterised by clear price signals, open trade and investment, market transparency, good governance, and effective competition among firms—will support investment in new supply, bring forth efficiencies and new technologies, encourage the use of alternative and renewable energy sources, and allow knowledge and resources to flow across borders… We agreed that the G-20 will work toward articulating these principles. We discussed the links between energy and climate change policy, including the role of market-based mechanisms, and agreed that the G-20 would monitor this issue.

They scraped a half star by the skin of their teeth, because climate change wasn’t even on the agenda, until UK G-20 representative Stephen Timms put it there. It still looks like something of a footnote in conversation that ran largely along the lines of, “Give us more coal, give us more oil…”

Support for the EITI – and any other measures that enhance transparency around the activities and money from extractive industries – is a good thing.

Overall, this meeting of finance ministers and central bankers from 19 developed and developing countries, the EU, the IMF and the World Bank largely failed to grab hold of any opportunities to ‘achieve the MDGs through intensified cooperation aimed at overcoming severe challenges

Via TEAR’s own Adam George come these two thought-provoking links:

Breathing Earth – a simulation of births, deaths and CO2 emissions for every country on the globe.

Simsweatshop – it’s tough. Very tough. How will you go, trying to make shoes, put food on the table, pay for medical expenses and join a union?

Eldis weblog usefully highlights (and links to) different takes on the demise of the Doha round trade talks – is it a good thing? a bad thing? have rumours of the trade round’s death been greatly exaggerated?

Eldis weblog usefully highlights (and links to) different takes on the demise of the Doha round trade talks – is it a good thing? a bad thing? have rumours of the trade round’s death been greatly exaggerated?

The WTO trade negotiation round launched in Doha in 2001 has, not unexpectedly, met an undignified end.

While our trade minister Mark Vaile says that it’s “not dead… just resting”, it does seem pretty final. Nothing left to do but to assign blame (Was it… India in the conservatory with a failure to drop industrial tarrif barriers? The US in the ballroom with massive farm subsidies? The EU in the study with outrageous tariff barriers?*) and move on.

We do need to clear up one thing though. Mark Vaile is just wrong when he says,

The real price to be paid is by the least developed countries who are going to get nothing out of this.

Apart from the rhetoric of a development agenda and round for free for poor countries, there was never really much in the round for least developed countries. Recent analyses of the Doha round by the Carnegie Endowment and the Global Development and Environment Institute at Tufts University have demonstrated that the gains from likely liberalisation scenarios under Doha would have been very modest and the costs would outweigh the gains for many countries, particularly the poorest. The Carnegie report put the potential gains at a one-time increase in world income of $40 billion – $60 billion, which is less than 0.2% of global GDP. It also notes that Sub-Saharan Africa stood to see its income fall by just under 1%.

There are both net winners and net losers under different scenarios, and the poorest countries are among the net losers under all likely Doha scenarios.

As well as offering little or no gains to poor countries, the costs of liberalisation can be higher on developing countries than on developed countries. A great deal of pressure was put on developing countries to liberalise faster and deeper in services and industry sectors, in exchange for developed countries reducing their subsidies and market access barriers in agriculture. Quite apart from the jarring disconnect between this pressure and the WTO’s development agenda rhetoric, across-the-board liberalisation would impose economic and social costs difficult for poor countries to bear and restrict their range of policy options to promote sustainable development. For this reason, many NGOs argued that no deal in the Doha round was better than a bad deal.

Jim at Our Word Is Our Weapon neatly sums up the reasons why liberalisation might impose a heavier burden on poor countries.

(a) Income from trade taxes often accounts for up to 30% of government revenues in very poor countries, revenues which almost never recover following liberalisation and which thus have to be replaced using taxes on labour or consumption, which are more likely to fall on poorer households;

(b) Poor countries tend to specialise more in a few key products – suddenly exposing these industries to competition could have a much greater proportional impact on employment than we see in the far more diversified rich countries;

(c) It’s no fun losing your job in the UK or another rich country, but it is very rarely life-threatening because we have relatively lucrative safety nets, quality education and re-training facilities, and usually relatively tight labour markets. In many poor countries, none of these apply, so losing your job can be catastrophic;

(d) Finally, selective protection can allow firms to build up their competitiveness rather than simply being immediately flattened by globally dominant companies. Getting over this first hurdle can allow them to develop an advantage in higher value-added niches not accessible from the word go.

As Stiglitz and Charlton argue in Fair Trade For All, a real development agenda in this trade round would have looked very different to the round we ended up with. If development was really on the agenda:

  • Rich countries would rapidly and unconditionally reduce barriers and subsidies on goods and services of most interest to developing (and especially least developed) countries.
  • The policy options of poor countries to use some measures of protection to promote sustainable human development, develop industries and service sectors, protect livelihoods and preserve food security would be explicitly acknowledged and protected.
  • Packages of aid to assist poor countries participate in global trade would be drastically increased.
  • WTO negotiation and dispute processes would be reformed to address the power and resource imbalances between rich and poor countries.

I wonder what’s on the agenda for the next trade round?

* In an eerie echo of the classic game Cluedo, the death of Doha occurred under the gaze of 6 players in a locked room. 6 trade representatives (EU, US, India, Japan, Australia and Brazil) were charged with coming up with the round’s life-saving deal… and failed.

I’m posting from Perth, so my body is saying blog quickly and go to bed, but the clock on the wall says take all the time you need, the night is still young

The UN recently released the Millennium Development Goals Report 2006, which is also summarised in a handy chart – accessible from the same page – that visually depicts regional progress (and lack of) towards the MDGs. As you’d expect, it’s a mixed picture.

I think it’s important to acknowledge and celebrate the successes, even where they are falling short of what could be achieved. However, I think it is equally important to maintain constructive engagement and critical pressure on policy makers to ensure that the world doesn’t proceed with business as usual. These are not unrealistic goals, but they will not be achieved without effective coordinated action.

Equally, the global focus on tackling poverty and contributing to development is not something to take for granted, and we must ensure that it does not slip off government’s agendas. Whatever the debates about aid effectiveness, debt cancellation, trade justice, corruption, governance and so on might be, the fact that so many governments and civil society groups are focusing research, discussion, action and funds around these things is a good thing.

Goal 6 (To halt and reverse the spread of HIV/AIDS, malaria and TB) stands out as the goal with the least progress. While there has been success in some countries (such as Zimbabwe or Uganda) in reducing HIV prevalence rates, and rates of new infections – largely due to increased use of condoms, education and changed behaviour – high mortality rates also play a part in the decline, and these successes are dwarfed by the scale of the pandemic’s progress.

In our own neighbourhood, PNG accounts for 90% of all HIV infections in Oceania, according to UNAIDS

As for Goal 5, the world will also be a long way off reducing by 2/3rds the number of women who die in childbirth and pregnancy – even in regions that are making substantial progress towards reducing the number of people living in extreme income poverty (such as South-East Asia). I found it odd that in the Progress Report, this target did not feature in a graph, as all other MDG targets had. Instead, there was simply this note:

ratios of maternal mortality seem to have changed little in
regions where most deaths occur (sub-Saharan Africa and Southern Asia).
Unreliable data and wide margins of uncertainty make it difficult to tell
for sure.

I appreciate the statistical difficulties, but I would have thought that unreliable data and wide margins of uncertainty would apply to measuring several of the other targets. I found it unhelpful that the report didn’t give a visual representation of progress towards this goal – even with an acknowledgement (if it is needed) about the difficulties of measurement.

And – related but different – viewing the MDGs at a local level, Nature magazine also has a good article (pdf) on how one of Jefferey Sachs’ Millennium Villages in Rwanda is faring. The article made me quite hopeful, but sensibly raised concerns about sustainability and scalability of this approach, which is working to apply inter-related interventions to achieve the MDGs at a village level.