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Archive for September, 2010

Why should we care about economic development in some poor country thousands of miles away? Usually, we choose from three reasons:

  1. Third World development serves American economic interest. This vein of thinking represents the classic liberal argument for globalization: a rising tide lifts us all. Its essence is captured in the following phrase prevalent in the business world: emerging markets. In other words, first and foremost, developing countries are markets, destinations for goods and services from the United States and other industrialized economies.
  2. We have a moral responsibility. Peter Singer made this argument famously in a 1972 article. This responsibility comes from the fact that we have the power to reduce harm, and not using that power is immoral. Singer shows the immorality of the British government’s choice to spend more money to develop the supersonic Concorde jet than to help people suffering from famine. Another moral argument, by Thomas Pogge, is that we are “causally deeply involved in their [i.e., the poorer parts of the world] misery” — through colonialism, through lopsided use of common natural resources, and through their exclusion from major decisions about global economic governance.
  3. Our security is at stake. There are two variants of this argument. One is the bold assertion, made explicit in the 2002 US National Security Strategy, that poverty provides an enabling context for terrorism. This assumed link fuels US interest to spread political and economic liberalism around the world. The second variant involves the human security approach. The argument that poverty is a main source of human insecurity. Therefore the security of the world cannot be established only by making states secure; everyday humans must be made secure in their lives.

The first two provided the classic rubric of development since the Second World War, from the Marshall Plan to the bi- and multilateral foreign aid programs. The rhetoric during the current round of global development talks, i.e., the discussion of the MDGs during the most recent UN General Assembly meetings, increasingly involves the third logic.

MDGs must be met, we are told, because of the political risks of poverty. Jeffrey Sachs, for instance, relates the urgency to fund (calling it an “investment in peace”) and implement the MDGs to a set of vivid political risks:

… increasing disarray in the drylands of Africa, the explosive violence in the horn of Africa, the militarisation of Yemen, the ongoing bloodshed in Central Asia, the mass migration and obvious crises that are showing up all over the world [that] are going to cause cascading calamities

The notion of “reduce poverty for peace” provided the context of Dr. Muhammad Yunus, the founder of Grameen Bank in Bangladesh, winning the 2006 Nobel Peace Prize. In his Nobel Prize lecture, he said:

Half of the world population lives on two dollars a day. Over one billion people live on less than a dollar a day. This is no formula for peace … terrorism cannot be won over by military action … I believe that putting resources into improving the lives of the poor people is a better strategy than spending it on guns.

You see a similar logic in a micro-scale, too. The Economist recently highlighted what it feels is one of the biggest political risks of not doing enough about Pakistan’s floods: “Washed-up paupers may provide hands for the jihadists bombing its cities.”

And this is what New York Times columnist Nicholas Kristof argues the UN should do more: market poverty reduction as the path to reducing security risks.

[T]he most effective way to market antipoverty work in coming years will be by rebranding it, in part, as a security issue. Rich country budgets are so strained that it’s unrealistic to think that governments will approve much new money — or endorse the excellent suggestion of a financial transactions tax to pay for global health programs — just to ease suffering … But hundreds of billions of dollars will be spent fighting terrorism and bolstering fragile countries like Afghanistan, Yemen and Pakistan. We should note that schools have a better record of fighting terrorism than missiles do and that wobbly governments can be buttressed not just with helicopter gunships but also with school lunch programs (at 25 cents per kid per day). International security is where the money is, but fighting poverty is where the success is.

As a student of globalization and political risk, I agree with the marketing strategy. But with two crucial footnotes: let’s not forget the moral part entirely, for to forget that is to wipe out four centuries of troubling history in North-South relations. And, let’s also not forget the political (rather than developmental) conflicts that continue to engender political violence. Terrorism, after all, is not a monopoly of the least developed countries.

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Fall is here, and we’re shifting focus back to general topics on globalization and political risk. Let’s start with a hypothesis about risk and hunger, the most basic of human needs.

Ending hunger is the first priority of the Millennium Development Goals. Conceptually, ending hunger should be the easiest to achieve: it is as easy as having/providing access to food. It should be easier than achieving, for example, an increase in life expectancy, which requires a host of variables to come together. It should be easier than increasing literacy or achieving gender parity or eradicating HIV/AIDS.

But ending hunger is where progress has been particularly elusive. Since 2000-2002 there has been no percentage gain in fighting hunger: 15-16% of the world’s population has remained undernourished. The actual number of undernourished people grew from 805 to 830 million by 2007. How could this have happened during a period of increasing global affluence?

No matter how you analyze it, the fundamental reason that access to food is complicated–beyond natural phenomena like drought or floods–is due to two things: (1) market dynamics (profit motive + private distribution + wage economy + loss of land) and (2) decisions about political risk.

Now I’m not a Marxist, but that doesn’t mean I exonerate capitalism from all sins. When it comes to feeding people, globalized capitalism has proven indefensible (at worst) and inequitable (at best). Case in point: lack of progress on the hunger front around the same time that global agriculture expanded rapidly into developing countries.

Since 2007, things have taken a sharp downward turn.

A spike in world food prices in 2007-8 wreaked havoc on poor populations. Globalized commercial food markets (which do have other benefits) transmitted the spike fairly rapidly. After all, if you are a commercial land user in Brazil, wouldn’t you rather be producing corn for biofuels and meat for the US, in which profit margins are higher, instead of corn for food?

Many developing countries, including the ones in South Asia that I’m most familiar with, experienced violent protests from food shortages. Demand for government subsidies and outlays increased.

Just when governments began to divert resources to feed people, the world plunged into a finance-led recession in 2008. Both aid and tax receipts declined, severely compromising the ability to fight hunger. In other words, capricious financial schemes of the very wealthy ended up pushing the very poor over the brink. The World Bank estimates that by the end of 2010, 64 million additional people will suffer extreme poverty (income<$1.25/day) as a result of the financial crisis.

Hunger, of course, is the most basic manifestation of the overall poverty situation. But government response, especially in times of crisis, is shaped foremost by the demands of groups that pose the greatest political risk. The top priority is the newly unemployed, especially in organized or unionized sectors in urban areas. The chronically malnourished in the rural areas are politically less urgent to most governments, even in signficantly rural democracies, such as India.

Now, here’s the good thing: urban populations are growing rapidly. Between now and 2050, world population will increase by 28% (from 7 to 9 billion), but urban population will increase by roughly 100%. That means greater political risk for governments, not just in times of economic crisis, but also from a general shift in the locale of hunger from rural to urban settings. Urban folk can do more damage more quickly and more visibly. Government ministers are urban creatures; government offices are predominantly urban. My consequent prediction: urbanization will force governments to deal with hunger more earnestly than they have done so far.

Of course, some have dreams of hunger being eradicated through production boosts and technological innovation (food replicator, anyone?). The Economist recently marvelled at Brazil’s record of increasing agricultural output (see here and here). If the past is any guide, technology + global markets will continue to direct agriculture in developing countries to prioritize people with pocketbooks; and local hunger will persist. In this situation, political risk from a rapidly growing urban poor will be a greater spur to do something about hunger than leaving matters in the invisible hands of the market.

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