Tuesday, 21 August 2012

Is ‘separate but equal’ really development?

By Noshua Watson

The Saudi Industrial Property Authority is developing an industrial city for women workers, planned to open in 2013 in Hofuf, near Al-Ahsa.

The zone will likely have light industrial and clean manufacturing  projects. The city will not be women-only, but the factories will have special sections and production halls for women and it will be located close to residential neighbourhoods. It has been reported that the intention is to increase employment and income among Saudi women, while continuing to maintain traditions of gender segregation.

In development, it seems that we accept ‘separate but equal’ policies in employment, education, health and so on, when the objective is to increase economic, political or social equality. To its credit, the Saudi government ministry has resisted firms’ demands that the women be single or not pregnant if married.

In the OECD, there is considerable gender segregation in professions, despite relatively high female labour force participation. Gender segregation, plus time away from the workforce for care-giving, leads to the persistence of the wage gap between men and women. In order to evaluate the Saudi case, we need to see what happens. Does the disparity between male and female employment and wages decrease? Is there an increase in female ownership or entrepreneurship? What effect will this have on female schooling or maternal and child health? 

The real question is, is this a stop-gap to preserve power or a genuine step towards societal wellbeing?

Thursday, 16 August 2012

Education and profits: a troubled relationship

By Carlos Fortin

As I left Chile for the UK last month, an intense public debate was taking place on the issue of profit in higher education. Mass student demonstrations were demanding the banning of universities run for profit.

The issue has a specific connotation in the Chilean context. Chilean law already forbids profit in higher education; any surpluses generated by the operation of universities must be reinvested. However, many private universities have circumvented this through creating separate companies that own the buildings and facilities and rent them to the university; profits are then transferred to the linked company through the leasing arrangements. Universities also outsource services such as computing, transport and security to firms controlled by the owners of the university. The students are demanding an end to these legal subterfuges.

But the debate is more general. It has to do with whether the profit motive is acceptable at all in the field of university education. Some defenders of the neoliberal economic model in place in Chile are arguing that, far from closing the legal loopholes, what should be done is to authorise explicitly the existence of for-profit universities. They maintain that the ban runs contrary to the principles of freedom of education and freedom of enterprise. Furthermore, they point out that it has been the possibility for universities to operate with commercial criteria, including outsourcing, which has led to a spectacular growth in their numbers; from fewer than ten in the 1970s to nearly 60 today, thus opening up higher educational opportunities for large sections of the youth previously unable to attend university.

The counter argument is that the mission of universities is educational and formative, and their goal is academic excellence as distinct from money making. If commercial interests are allowed to intervene, they are likely to end up dominating decisions with the consequent erosion of academic quality. This is particularly likely if, as is the case in Chile, some of the universities have been purchased and are run by international investment firms attracted by the country’s large academic market which has a yearly turnover of about $2 billion, realising profits that could reach 18 or 20 per cent.

There is some evidence for the proposition that universities run for profit in Chile have lower academic standards, even to the point of their graduates finding it difficult to have their qualifications recognised in the labour market. The evidence is, however, essentially anecdotal. By contrast a recent report by the Health, Education, Labor and Pensions Committee of the United States Senate provides harder proof of the shortcomings of the for-profit system in the US.

The Committee carried out an in-depth investigation of 30 for-profit colleges and found that there were significant problems in the way of substandard academic offerings, high tuition and executive compensation, low student retention rates and the issuance of credentials of questionable value; and that they are related to the for-profit status. Specifically:
  • large numbers of students at for-profits colleges fail to earn credentials - 64 per cent dropout rate in associate degree programmes - and this is linked to the small amount of money those colleges spend in teaching;
  • for-profits colleges devote substantial resources to non-education related spending, in particular marketing and dividend distribution. In 2009, the examined companies spent $4.1 billion or 22.4 per cent of all revenue on marketing, advertising, recruiting and admissions staffing. Profit distributions accounted for $3.6 billion or 19.4 per cent of revenue. In contrast, the companies spent $3.2 billion or 17.7 per cent on teaching;
  • particularly bad is the performance of publicly traded chains and colleges owned by private equity companies, which accounted for 76 per cent of the sector’s enrolment in 2009, because investors in those colleges often seek quick returns. Tuition increases are often implemented to satisfy company profit goals, and internal discussions among for-profit executives regarding tuition often revolve around how best to justify tuition increases.
The report concludes that, unless there are significant reforms, the sector will continue to turn out hundreds of students with debt but with no degree or a nearly worthless degree. It gives strong ammunition to those of us who feel that when it comes to profits and higher education – with apologies to Kipling - never the twain shall meet.

Tuesday, 14 August 2012

After the hunger summit: Where does the private sector fit into the new agenda on undernutrition?

By Ewan Robinson

David Cameron’s plan to use the hunger summit at the close of the Olympics to direct attention to global child undernutrition seems to have worked. Mainstream media coverage featured snapshots of Cameron standing besides sport legends Mo Farah and Pele.

Campaign groups and analysts have begun to debate whether the summit amounts to a step towards the UK leading an international push on nutrition or simply ‘mouthwashing’ (Duncan Green’s re-coining of ‘greenwashing’).

So what came out of the hunger summit? According to DFID (also see Lawrence Haddad’s analysis), the UK has pledged support in three areas:

  • Agriculture, including creating and distributing biofortified crops enriched with micronutrients;
  • Working with the private sector (including corporations Unilever, Syngenta and GSK) to make nutritious food available and affordable to poor people;
  • Tracking undernutrition, and governments’ commitment to tackling it.

How do agriculture, private sector development and nutrition link up?
Many of the critiques of the hunger summit have focused on the involvement of the private sector, with particular anger about multinationals’ role in wildly fluctuating food prices and land grabs in Africa. These issues warrant serious attention. At the same time, these are not the only causes at the root of global undernutrition. Micronutrient deficiencies have been around much longer than food price speculation. And although we should be concerned about issues affecting farmers’ incomes, income alone isn’t enough.1 Even in places where households’ incomes have risen, this hasn’t necessarily led to better nutrition. Clearly there's much more we need to consider in order to assess the role of businesses in (under)nutrition.

Tackling undernutrition will require action on multiple fronts. We need direct interventions to help the neediest people, but also market-based approaches to make sure nutritious foods are produced, and all people have access to them. Aid or government action alone will not be enough.

Can value chains deliver nutritious food to people that need it?
Agencies and NGOs have been enthusiastically discussing how to make agriculture promote better nutrition 2. Much of this discussion has focused on encouraging small farmers to produce food for their own consumption. For many small farmers, being better able to grow more nutritious foods for household consumption would be a major benefit. But if we want to promote nutrition for the majority of the world’s poor, we need to consider that, from urban slum dwellers to dryland farmers, a majority of poor people do not grow all the food they eat - they buy it.

To understand how people get access to nutritious food (or don’t), we need to look at how food gets to consumers.

This is where a value chain approach is helpful. Looking at value chains draws our attention to the stages that connect crops on farms to the food that people eat, including how food is transported, processed, distributed and marketed to consumers.

As a starting point, here are four big questions we should ask about whether value chains are delivering nutritious food to the people that need it:
  • Is food available? Can it be purchased in places and markets that those who need it can access?
  • Is food affordable? Can poor and at-risk households afford nutritious food, if it is available?
  • How nutritious is food? When looking at nutrition, it’s not just the quantity and price of food that matters, but the nutrients that it contains. Are nutrients maintained or enhanced as food moves through value chains? Can consumers tell whether food is nutritious or not?
  • Is food acceptable? Is food available in forms that people find attractive or acceptable to buy, cook and eat? Do they understand its benefits and are they willing to pay for them? 
  • (These questions are adapted from a paper by Corinna Hawkes and Marie Ruel 3).

The challenges and opportunities of value chains for nutrition 
These are big challenges for businesses of all types, from the multinationals highlighted in the hunger summit to food processors and local shops in developing countries. So, what incentives and challenges do businesses face in building (and profiting from) value chains for nutrition?

Notes
1 See for example, evidence from a nationally representative survey in India.

2 For a synthesis of recent guidelines on linking agriculture and nutrition, see Herforth, A. (2012) Guiding Principles for Linking Agriculture and Nutrition: Synthesis from 10 development institutions, Rome: FAO

3 Hawkes, C. and Ruel, M. T. (2011) ‘Value Chains for Nutrition’, paper prepared the IFPRI 2020 international conference Leveraging Agriculture for Improving Nutrition and Health, 10-12 February

Friday, 10 August 2012

Going for gold: Looking beyond the farm to solve malnutrition

By Ewan Robinson

Here in the UK, the Olympics are filling the airwaves, hallways and pubs alike. And the UK Government and development community are hoping to use Olympic fever to spotlight the global problems of hunger and malnutrition, by hosting a ‘hunger summit’ on the last day of the Games.

Connecting the Olympics and malnutrition seems slightly incongruous. But Prime Minister David Cameron may hope to use both as examples of UK leadership on the international scene.

Although the details are scant, it’s said the summit will be attended by heads of state, international NGOs and business leaders. Cameron will host the summit alongside Brazilian Vice President, Michel Temer. In addition to hosting the next Summer Olympics, Brazil is also seen as a nutrition champion, making substantial inroads using an integrated approach. If this is anything to go by, it appears that the Summit may represent part of a big push on nutrition by UK policymakers in the next year.

Lawrence Haddad recently asked how we can sustain all this attention on malnutrition in the long run. In this post and upcoming ones, I’ll look into one angle on tackling long-run undernutrition: the role of agriculture.

How can agriculture address the challenges of undernutrition?
Agriculture is a big issue on the nutrition agenda. A number of large agencies, donors and International NGOs have recently gotten excited about agriculture’s potential for improving nutrition. It sounds obvious: people need to eat nutritious food, and we need agriculture to grow it. But, as John Humphrey suggested in an earlier post, getting nutritious food from farm to fingers (or forks) turns out to be more complicated than you might expect.

Much of the work so far on agriculture and nutrition has focused on what happens on farms. A number of donors are looking to make their agricultural projects ‘nutrition sensitive’ in addition to increasing yields and incomes. But is this the only way agriculture connects with nutrition?

Are there ways that agriculture can bring better nutrition to the majority of people who don’t grow enough food for themselves? The key here is the value chains through which we get our food. I’ll explore this in my next post.

Thursday, 9 August 2012

Our uncertain relations with commercial interests....at the Olympics and in international development

By Spencer Henson

One of the common complaints about the 2012 London Olympics, at least if you believe the media, is the ‘stranglehold’ commercial sponsors have over what you see, what you can eat and even what you can wear whilst at the Olympic Park. The underlying discourse is that some very large and powerful businesses have monopolised the Olympic experience. Certainly if you witnessed the torch relay, one of the most conspicuous (and unfortunately most memorable) parts was the large and very loud vehicles promoting the products of sponsors....Samsung, Coca Cola, Lloyds Bank and the like. These are all brands that we see (and buy and use) on a daily basis.  But evidently we sometimes feel that commercial sponsorship goes too far.

The IOC has long-established relations with ‘big business’, including the likes of Coca Cola and McDonalds. Further, in the case of the London Olympics a decision was made locally to court commercial sponsorship, at least in part to cut the cost to the public purse. We can question whether this is a sound (or even right) thing to do. However, once commercial money was taken, what did we expect?  Businesses might be willing to hand over some of their cash in order to be charitable and to ‘look good’, but they mainly engage with the Olympics because it furthers their broader commercial interests. This means getting their brands exposed to consumers, selling more of their products, and making a profit. We might have got a bigger and better Olympics as a result (although some may question this), but at the inevitable cost of greater commercialism.

There are interesting parallels with the role of business in international development. Increasingly, donors, NGOs and the like recognise business as critical to development.  Their expertise, commercial might and resources are seen as vehicles to economic growth and lifting the masses out of poverty. For example, both CARE International and Oxfam, well-respected development NGOs, now work quite closely with business, including some major multinationals. Some question whether this is a sound (or even right) thing to do, in principle (seeing it wrong to make a profit on the ‘backs of the poor’) or reflecting a belief that commercial pressure will inevitably drive down wages, bring about unsustainable practices, etc.

Even the proponents, however, must be realistic about what to expect if we ‘get in bed’ with business. Beyond their corporate social responsibility (CSR) agendas, businesses will engage because it means they sell more, cut costs and make a profit. The hope is that we will get quicker and ‘more’ development as a result. The job for those of us in development is to make ‘doing development’ profitable.

Once you accept that it is okay to work with business in principle, there are perhaps even trickier questions over which businesses it is okay to work with. In the case of the Olympics, there are concerns that businesses that produce soft drinks and fast food are incompatible with an event that is supposed to promote sport, and by implication fitness and health. Parallel debates in international development relate to businesses engaged in arms, mining, tobacco and agribusiness. One approach to this conundrum is to deem ‘off limits’ all businesses in particular sectors; maybe soft drinks in the case of the Olympics and tobacco in the case of development? This is the way many ‘ethical’ investment funds work. However, whilst such an approach is quick and easy, presumably all businesses potentially have some positive development impacts to the extent that they buy things from local businesses, employ people, pay taxes, etc. At the same time, businesses operating in sectors that are deemed acceptable may at time do things we don’t like, such as paying low wages or polluting the environment.

An alternative approach is to look at business on a firm-by-firm basis and to assess whether it meets certain minimum standards, on respect for local laws and customs, labour practices, protection of the environment and the like, that are in line with sustainable development. But what minimum standards should be required, and who should determine whether a particular firms meets them or not? The history of global governance in this context is not great.  It is difficult to get autonomous nation states (with differing interests) to agree on what practices should and should not be allowed, and even more so to then do something about the practices deemed ‘off limits’.

Inevitably, therefore, we have become reliant on private modes of business governance whereby firms regulate themselves and/or one another.  This is where we come back to commercial interests. Private governance only works when there is a solid business case for firms to comply, by selling more, cutting costs and making a profit. Again, the job for those of us in development is to make ‘doing development’ profitable.

This begs the question, how do we make ‘doing development’ profitable for business? There are various ways in which those who work in development can contribute here. Just a few are noted ‘for starters’:
  1. Help make businesses aware of their impacts on development, both positive and negative.  This requires the use of rigorous approaches to impact assessment and communication of the results in a manner that will attract the attention of business decision-makers. 
  2. Create demands for actions by businesses that are ‘good’ for development amongst consumers, investment institutions, public procurement agencies and trade unions.  Again there is a major role for development communication here.  
  3. Help businesses work in developing countries, both in general and in a manner that is ‘inclusive’ of the poor.  Those who work in development have a wealth of knowledge regarding the situation on the ground and on what works and what doesn’t.  The challenge is creating the willingness and incentives for development practitioners and researchers to share this knowledge with businesses who wish to make investments.

Wednesday, 1 August 2012

Stopping the Race to the Bottom

By Hubert Schmitz

We have just launched a research report on ‘Who drives economic reform in Vietnam’s provinces?’.  Vietnam continues to surprise the world with the speed and depth of its economic transformation. Our project finds that the decentralisation of economic power from central to provincial government has contributed to this success. It explores who drives the economic reform in the provinces, by studying the role of business, government and public-private alliances. We found that the private sector played an important role, not against government but with government.  In the provinces which made most progress in reform the private sector was very much involved. Other positive things came out of this investigation:  For example the provinces competing with each other and learning from each other has contributed a great deal to Vietnam’s progress.

The web story on the websites of IDS and our partner organisation VCCI  give you some of our other findings. However, let me report here on a negative thing we found. In order to make themselves attractive to big investors, provincial governments offer tax exemptions. The effect is well known, it undermines the financial capacity of their governments. Such races to the bottom are also known from other countries.
 
Granting tax exemptions also seems to undermine policy processes. Good policy making requires collaboration between government and business. For this to happen the private sector needs to be organised and develop business association.  This is where tax exemptions have an undermining effect.  They drive a wedge between small and large business. When tax-paying small enterprises see that large enterprises are exempt from tax it is very difficult to join forces in an organisation. This is not the only difficulty in establishing effective associations but in our interviews with small firms it came up as a stumbling block. 

In my view the most effective measure is to stop all tax exemptions. The effect on actual investment is likely to be small. Investors are attracted by business opportunities. If this business opportunity can be pursued in several provinces, the investors will of course shop around and negotiate the lowest tax rates. If no tax incentives are available they are unlikely to abandon the business opportunity. In Vietnam such a measure might even be politically feasible because the Communist Party continues to be powerful. But is abolishing tax incentives too drastic from an economic point of view? It would be great to have reactions, especially reactions from countries struggling with similar problems.