Cautious welcome to the World Bank's rejection of old orthodoxies

The one-size-fits-all development strategy is dead, says Robert Zoellick. But will the World Bank therefore be run differently? - asks The Guardian newspaper in its PovertyMatters Blog [link]:

The World Bank provided one of the three pillars of the Washington consensus. Along with the International Monetary Fund (IMF) and the US Treasury, it was the source of an economic orthodoxy exported, often ruthlessly, from America to the rest of the world.

Put simply, the Washington consensus provided a one-size-fits-all solution to the problems of development. Countries were told to privatise and to liberalise, to slim down the size of the state, bear down on inflation, reduce their budget deficits and concentrate on exports. "We know what works", the advocates of the consensus said. "Free markets work."

So it was fascinating yesterday to find the World Bank's president, Robert Zoellick (pictured), acting as the gravedigger for the once-all powerful dogma. Urging a rethink of development economics, Zoellick said in a speech in Georgetown: "This is no longer about the Washington consensus. One cannot have a consensus about political economy from one city applying to all. This is about experience regarding what is working – in New Delhi, in Sao Paolo, in Beijing, in Cairo, and Accra. Out of experience may come consensus. But only if it is firmly grounded – and broadly owned."

Some might say this is simply bowing to the inevitable, since one big casualty of the crisis has been the economics profession, with its over-elaborate mathematical models and its messianic belief in the invisible hand of the price mechanism. But, as Zoellick rightly noted, even before the crisis broke there was a questioning of the orthodoxy and a sense that development economics needed to be rethought.

Critics such as the Cambridge economist Ha-Joon Chang said that no country in history had ever based a successful development strategy on the free-trade model: all protected their fledgling industries. It was also noted that the countries most successful in riding out the economic storm, India and China, were those that had defied the Washington consensus and kept controls on capital flows in place.

There is, though, a bit more to it than that. The rapid growth of the bigger emerging nations – China, India and Brazil in particular – has given them added clout on the world stage. The first manifestation of this was at the World Trade Organisation, where it is no longer possible for the US and the European Union to cook up a private deal and then present it to the rest of the world on a take-it-or-leave-it basis.

Now the developing world wants a bigger say in the running of the World Bank and the IMF. Change to the anachronistic governing structure – which reflects the world as it was in 1944 rather than as it is in 2010 – is happening, even if at a somewhat glacial pace. Developing countries are also reluctant to see the World Bank take charge of a new fund that will help poorer nations adapt to climate change, and want it to be run out of the United Nations instead. So when Zoellick says, as he did yesterday, that a multi-polar economy requires multi-polar knowledge, a cynic might say he was trying to ingratiate himself with the policy makers in Beijing and New Delhi.

There was a sense of genuine humility in Zoellick's speech. "We need to democratise and demystify development economics, recognising that we do not have a monopoly on the answers. 

"We need to throw open the doors, recognising that others can find and create their own solutions. And this open research revolution is underway. We need to recognise that development knowledge is no longer the sole province of the researcher, the scholar, or the ivory tower."

All absolutely true, and very welcome. Talk, of course, is cheap. The real test is whether Zoellick's openness to new ideas makes a difference to how the World Bank is run and how it acts.

Important news for our current understanding of how the World Bank operates in the present-day world—vital insights for World Economic Governance in Unit 3D, particularly in regard to criticisms that have been made of the past approach to economic development and governance by the World Bank!

Economist - Reform in Saudi Arabia: At a snail's pace

Saudis have gained a bit more freedom but still await fundamental change


http://www.economist.com/node/17149062

A recent report on political reform in Saudi Arabia by Human Rights Watch, a New York-based lobby group, argues that although gradual changes are welcome, unless they are properly institutionalised the kingdom risks sliding backwards again, as it has done many times before. “Newly gained freedoms are, for the most part, neither extensive nor firmly grounded,” the report concludes. “The limited reform that has taken place suggests the elite is still floating trial balloons, undecided about the type of government and society it wants to steer towards.”

On some specific human-rights issues, the report praises the kingdom’s progress: reform of the justice system, women’s rights and freedom of expression. Yet it notes with concern that, whereas legal reform is one of the areas where changes are under way, new courts have yet to materialise, and new, transparent procedures have yet to be put into practice. Greater freedom of speech is not codified, and so remains subject to arbitrary intervention by the state. Earlier this year, a newspaper editor made the mistake of printing a blunt critique of puritan religious beliefs, and was summarily fired. As for women’s rights, an official loosening of the ban against the mixing of the sexes in public places has not been widely implemented. The same goes for an ostensible liberalisation of rules that require women to have a male “guardian”. Women are still forbidden to drive.

As for other issues, the report discerns no real progress either in ending religious discrimination against the Shia minority or in improving the position of Saudi Arabia’s estimated 8m immigrant labourers. Gestures of tolerance to the Shia by the king himself have not been matched by a relaxation of restrictions on Shia worship. Shia dissidents still face harsh, systematic repression. Most foreign workers lack basic rights and, unlike other Gulf countries, Saudi Arabia has taken no steps to abolish the onerous kafala or sponsorship system, whereby Saudi employers take possession of expatriates’ passports, and can deny them the right to travel.

And there remains one big subject that the report leaves aside. Saudis have heard barely a whisper of one day setting the pace of change themselves, by winning the right to vote in elections.

CFR Backgrounder: NAFTA

The US think tank Council on Foreign Relations features a useful 'backgrounder' article on its website summarising their take on "The Economic Impact of NAFTA" (the North American Free Trade Agreement). Last updated on 7 July last year (2009), the article is highly informative and gives equal time to Canadian and Mexican perspectives.... Not just the American viewpoint!

http://www.cfr.org/publication/15790/naftas_economic_impact.html

More importantly, the article finishes with a brief discussion of the future of NAFTA, imporatnt for our understanding of future regionalisation worldwide.... Take a look! All in all, a very useful resource for your research on world economic governance and background knowledge of key institutions.

China's one-child policy - success or failure?

BBC News Online has published a useful article regarding the success - or otherwise - of China's "one-child only" policy:

http://www.bbc.co.uk/news/world-asia-pacific-11404623

Interestingly, the article cites evidence that China's population growth had actually started to slow well before the implementation of the controversial approach to multiple births in the early 1980s.

Overall, the estimate is that the one-child policy might have prevented 400 million births—not insignificant when it is considered that even now China has a population of 1.3 billion. But at what cost to the country as a whole? One trend that could damage China's future aspirations to rival America as an economic superpower now lies in its rapidly aging population, with too few young people to 'look after' the old.

An earlier BBC article points out that the preference for male children engendered by the policy is rapidly leading to a major demographic imbalance, with up to 24 million Chinese men unable to find a spouse by 2020:

http://news.bbc.co.uk/1/hi/world/asia-pacific/8451289.stm

Tea with the Economist: Richard Branson on Climate Change

The latest in a series of video interviews, Tea With The Economist presents Richard Branson, the UK entrepreneur, discussing the carbon war room, how to battle climate change and the clean-energy revolution ahead:

Economist: Meeting Targets - Millennium Development Goals

From The Economist Daily Chart today:

September 22nd and world leaders wrap up a three-day UN-sponsored summit in New York to discuss progress towards the Millennium Development Goals. These are broad development targets that were set at a similar meeting ten years ago. Most of the goals involved reductions by 2015 from 1990 levels, and there has indeed been progress towards them, at least on a global scale. But what happens globally can be dominated by what happens in one or two countries. For example, in 1990, 62% of the world’s poor people lived in just two countries, China and India. A dramatic fall in China’s poverty rate, from 60% to 16%, has therefore had a big impact on global poverty, which seems set to meet its 2015 target. But that is small comfort to the poor in many other countries where poverty has barely budged. Goals such as those involving primary enrolment and reductions in child mortality are unlikely to be met, though some, such as access to clean drinking water, are likely to be exceeded.

China embraces environment challenge, US ignores it...

... or at least that's the opinion of respected commentator and regular New York Times Op-Ed contributor, Thomas L. Friedman:

Aren't We Clever? ("while America’s Republicans turned “climate change” into a four-letter word — J-O-K-E — China’s Communists also turned it into a four-letter word — J-O-B-S").

In his usual concise style, Friedman outlines China's practical approach to environmental challenges and warns America of the dangers of complacency:

... because runaway pollution in China means wasted lives, air, water, ecosystems and money — and wasted money means fewer jobs and more political instability — China’s leaders would never go a year (like we will) without energy legislation mandating new ways to do more with less. It’s a three-for-one shot for them. By becoming more energy efficient per unit of G.D.P., China saves money, takes the lead in the next great global industry and earns credit with the world for mitigating climate change.

A useful opinion piece: read it in full!

China Increases Its Global Reach

An interesting article from the Guardian newspaper, describing Chinese efforts to expand their global reach with regard to trade and access to resources:

Brazil's huge new port highlights China's drive into South America (15/09/2010)

The article outlines investments designed to guarantee Chinese access to soy, oil and other badly needed resources. Discussion is made of China's potential rise to rival the USA as an economic superpower.

Nine years ago today, Tuesday September 11th 2001, nineteen terrorists slammed three hijacked airliners into New York's World Trade Center and Washington DC's Pentagon building—a fourth hijacked airliner was brought down by its passengers before it reached the terrorists' target.

Produced in 2007, 102 Minutes That Changed America is a compelling documentary of the events that morning in New York, composed largely of eyewitness footage captured by the public and re-played virtually in 'real time'. Courtesy of one member, YouTube currently hosts the documentary (albeit in approx. 10 minute segments).

View with discretion—although not gratuitous, several scenes are of a disturbing nature—but definitely do view it, as witness to the largest act of terrorism perpetrated against the United States and as (one of) the defining events of the new century:



For ease of access, the remaining segments can be linked to via the following user page: http://www.youtube.com/user/zinkt#g/u

UN peacekeepers 'failed' DR Congo rape victims

BBC News Online has a report summarising the shocking findings that UN peacekeepers did little or nothing to prevent the mass rape of civilians by rebel troops in the Democratic Republic of the Congo:

http://www.bbc.co.uk/news/world-africa-11224656

The BBC's Thomas Hubert, in Goma, said the Congolese government was pleased to see the UN shoulder some of the responsibility for failing to stop human rights abuses, but disappointed that there was no stronger commitment to tackle rebel groups.

Government spokesman Lamert Mende called on the UN to support its national army more directly against the militias.

He urged peacekeepers to "do the dirty work" and "move to the front".

 An important and recent example of the difficult line UN peacekeepers have to tread...

Mexico's drug wars: interactive map (Guardian)

The Guardian has published a useful resource—an interactive map—for those interested in the Mexican Drug War:

Soon after taking office in December 2006, President Felipe Calderón launched a military offensive against Mexico's drug cartels. Between then and the end of July 2010, 28,353 people were killed in fighting between state forces and the traffickers, and in turf battles between rival criminal groups.

Assessing America's 'imperial adventure' in Iraq

As the last US combat units withdraw from Iraq, the BBC's World Affairs Editor has supplied a useful overview of America's experience in Iraq since 2003:

Assessing America's 'imperial adventure' in Iraq

Very interesting reading.

UPDATE: Simpson has also posted a video summary of his report.

The Big Picture: Afghanistan, August, 2010

The Big Picture, a series of photographic essays in large format published online by the Boston Globe newspaper, devotes its latest collection to looking at Afghanistan:

http://www.boston.com/bigpicture/2010/09/afghanistan_august_2010.html

This is not the first time The Big Picture has examined the war-torn country:

• 30 July 2010
• 1 April 2009

All most definitely worth a look, providing insights into the ongoing conflict and attempts to bring it to a halt. A picture speaks a thousand words!