Friday, 31 January 2014

Studying Globalisation and Development at IDS - a graduate's perspective

By Maria del Mar Maestre Morales

Just over a year ago I was beginning my MA Globalisation & Development; two days ago I formally graduated (see very happy photo below - I'm the one on the far left) and today, I am working as a Research Assistant with the Globalisation team at IDS.

Credit: R. Coleman - IDS

While the building is the same, new students have replaced the faces I knew. Today I see those new faces with envy (and a bit of relief!).

When I was amongst those new students, we all had different expectations of the year ahead. Having previously worked for a few years, I came to IDS to strengthen my knowledge in development, to find answers that would enable me to find better solutions, to do my job better.

As expected I learnt about the global economy and its interconnectedness; its main actors, their dynamics; and the tools to drive countries towards sustainable and equitable growth.

However, IDS offered more than I anticipated.

In addition to learning from leading development experts I had the opportunity to interact with more than 100 students, from more than thirty countries, with different professional backgrounds, opinions and perspectives, all interested in development. Lectures became the place to learn, discuss, express opinions and debate.

It's not just quality teaching...IDS offers a unique learning environment

Beyond the lecture room, IDS is a place to explore any topic, organise workshops and, most importantly, interact with a wide network of students and researchers. The fact that all students have previous professional background helps create this environment, and meant that I not only learnt from theory but from my own or my colleagues’ real experiences.

I found IDS a unique environment to learn - I was not just a student, but part of a community determined to learn and work together to create change.

Last year was a journey of self-reflection and discovery. I engaged in amazing conversations and debates, not only with Globalisation colleagues, but with other students and researchers. My time was filled with presentations, term papers, lunchtime seminars - there was always something happening - seeing this year’s students brings back the memories.

As my fellow students are again spread around the world implementing the changes we learnt about at IDS, I continue, with my former teachers to explore and research how businesses can contribute to development.

For those of you who want to broaden your knowledge and reflect on how to improve your work, IDS is ideal. But beware, if you are looking for answers, you might discover those answers only lead to more questions! Your assumptions and current knowledge will be constantly challenged, but in the end, that is probably what you are looking for, right?

Maria del Mar Maestre Morales is a Research Assistant with the IDS Globalisation Team.  She has previously written on this blog about business and unpaid care work

Thursday, 23 January 2014

The international trade regime at a crossroads? From liberalisation to global regulation

By Carlos Fortin

Dirk Willenbockel’s thoughtfully balanced blog assessing the import of the outcome of the WTO Bali Ministerial Conference summed it up by reference to Jagdish Bhagwati’s characteristically clever dictum: ‘Doha Lite and Decaffeinated’.

The deal in effect fell well short of the original expectations in terms of advancing the trade liberalisation agenda; perhaps even more seriously from the viewpoint of developed countries and transnational corporations, it did not begin to address the harmonisation agenda, the effort at introducing global regulatory uniformity based on the rules and regulations of developed economies. This is arguably the first priority for the US and the EU in the international economic field today: to move in the direction of creating a unified global economic space with common rules of the game that would facilitate the expansion and penetration of transnational capital.

The impression is growing among analysts that developed countries have come to the conclusion that such an objective is simply unattainable in the WTO - the dynamics of the organisation are such that they allow the opposition of developing countries to become effectively a veto. Confronted with that reality, so the analysis goes, the US and the EU have shifted their efforts towards the bilateral, regional and plurilateral levels, where their chances are better.

A current controversy surrounding the negotiation of the so-called Trans-Pacific Partnership seems to lend credibility to this analysis. This is a trade agreement being negotiated by 12 countries (Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam) which covers all areas already included in the WTO and several additional others, notably investment, environment, labour conditions and financial flows. While the negotiations are being conducted in secrecy, documents obtained and published by Wikileaks suggest than in a number of areas the proposals being discussed go considerably beyond existing commitments in the WTO and could entail a significant loss in the ability of national governments to formulate and implement development policy.

Two sets of proposals in particular have been singled out for criticism on this score. In the field of intellectual property, Nobel Prize laureate Joseph Stiglitz in an open letter addressed to the negotiators described the current TPP proposals as an attempt ‘to freeze into a binding trade agreement many of the worst features of the worst laws in the TPP countries, making needed reforms extremely difficult if not impossible.’

Also worrying in this connection is the US proposal in the investment area to introduce the ISDS regime (Investor-State Dispute Settlement) which entitles private foreign investors to seek compensation in international tribunals for any law, regulation or policy which can be construed as an unfair change in the rules of the game and detrimental to their profitability.

The leaked documents suggest that so far the participating developing countries have been opposing these proposals; but the unmistakable feeling is that the pressure to reduce the policy space available to them is intensifying and it might in the end be difficult if not impossible to resist.

Carlos Fortin is an IDS Research Associate currently working on the relationship between the emerging international trade regime and human rights.

Thursday, 16 January 2014

Russia's G8 presidency provides a unique opportunity to build bridges between developed industrial countries and emerging economies

By Yuriy Zaytsev

At the beginning of 2014, Russia assumed the presidency of the G8. In fact, Russia is in the unique position of holding triple and consecutive presidency in the G20, G8 and BRICS between 2013 – 2015.

On the one hand it gives to Russia a splendid opportunity to link the priorities of these three institutions and balance the expectations of both developed industrial countries and emerging economies with respect to further developments in interconnected and international economic systems. On the other hand, it helps Russia to improve the efficiency of global governance by strengthening the cluster approach, as well as contributing to division of labour among the institutions.

In international practice, the cluster approach is associated with particular spheres, which constitute the framework for global governance. These include development assistance, international finance, macroeconomics, global security, environment protection, health, water and sanitation, etc. Responsibility for each sphere is divided amongst global governance institutions. Traditionally, the division of labor attributes an economic and financial agenda to the G20, while development assistance, environmental and security issues remain with the G8.

The set of presidencies started with the G20, which gave Russia a chance to consider the interests of both emerging economies and developed countries when discussing such topics such as effective governance, investments for economic growth and jobs creation, and transparency.

How do the BRICS fit into the global governance agenda?

“The BRICS” has evolved as a separate institution and serves as a forum for emerging economies to work on a development-related agenda in more thorough way outside of the G20. Its global governance agenda is still being formulated, partly because emerging economies are still wrestling with the challenges caused by the economic and financial crisis of 2008-2009, partly because they still have development-related issues of their own to resolve.

However, the BRICS agenda will broadly cover the issues most relevant to emerging economies such as population growth, food security, oil and natural gas, agriculture products’ price volatility, scarce water and land resources management, as well as urbanisation control.

Russia’s priorities for its G8 presidency correlate with a BRICS agenda

Russia’s priorities for its G8 presidency in 2014 include counter-drugs cooperation, the fight against terrorism, coping with conflicts, managing the risks associated with environment and man-made disasters, and global health security. These correlate with the BRICS global agenda with its focus on socioeconomic challenges and global security. What is more, these priorities can be also be applied to the Russian presidency in BRICS next year, and so providing a consistency to Russia’s presidencies in the global governance institutions and ensuring that its 2014 G8 Presidency won’t take Russia far away from the BRICS.

In this regard, Russia can mediate between the G8 and the BRICS, translating the perspectives of both institutions to each other. This could also contribute to furthering a BRICS global agenda, as well as ensuring the effective division of labour in global economic and political governance. The established global governance agenda of BRICS would strengthen also the G8 and the G20.

An added bonus to Russia’s triple presidency is the consistency of its internal arrangements around policy decision-making and a system for national-level management. The system supports the engagement of key stakeholders, such as the Ministry of Foreign Affairs, the Ministry of Finance, the Ministry of Economic Development and federal sectorial ministries, which are responsible for managing the activities in three global governance institutions. In fact, this note on Concept of Russia’s participation in BRICS underlines this unique role of the institution for both the G8 and the G20.

Dr Yuriy Zaitsev is a Research Fellow at the Institute of Applied Economic Studies, The Presidential Russian Academy of National Economy and Public Administration. He was also a Teaching and Learning Fellow for the IDS Rising Powers in International Development programme.   

Friday, 10 January 2014

Is Mexico 'the new China'? A closer look at inequality, business and development

By Jodie Thorpe

Two recent discussions on Mexico have got me thinking about inequality, business and development.  The first was part of the BBC Radio 4 series on the ‘MINT’ countries (Mexico, Indonesia, Nigeria and Turkey) - presented by Jim O’Neill, the ex-Goldman Sachs economist who coined the term ‘BRICs’.  The second was a thoughtful article in El Pais which considered Latin America’s future, based on a dialogue between two prominent Latin American thinkers, Mexico’s Enrique Krauze and Mario Vargas Llosa from Peru.

O’Neill’s broadcast, while acknowledging the challenges that Mexico faces, including appalling problems of crime and insecurity, was upbeat.  Mexico was ‘the new China’ and the growing, youthful population and renewed export opportunities created by a decline in China’s competitiveness means Mexico has a great future.  In contrast, Enrique Krauze painted a more dismal picture – of whole regions of Mexico under the power of organised crime, unending political discord and lost opportunities.   

The issue which lies behind Krauze’s observations, and which O’Neill largely glossed over, is inequality.  Mexico is a highly unequal country – by far the most unequal in the OECD, according to that organisation’s own figures.

There is a growing consensus that rising levels of inequality are a massive problem – not just in Mexico, but globally.  An excellent lecture by Jan Vandemoortele at IDS recently laid out the mounting evidence.  High inequality slows economic growth, creates more instability and leads to low efficiency, compared to more equal countries which have greater chances of sustained growth.  Countries with high inequality have low health outcomes and significant social problems - and these negative impacts hit everyone in unequal countries, not just the poor.  In other words, the rich in unequal countries have worse health outcomes than the rich in more equal countries.

The System is Unfair

While the trend in much of the rich world until roughly 1980 was one of falling inequality, this trend has resoundingly reversed.  This turn around coincides with a period in which the free market and neo-liberalism have dominated, and in which the returns to capital have increasingly exceeded the returns to labour.  While this trend has been with us now for three decades, it has come into sharp focus with the economic crisis.  As the Economist pointed out in its special report on the world economy, the crisis showed us the unfairness of a system in which affluent bankers were bailed out whereas ordinary folk lost their houses and jobs.

I work on business and development, so for me the question is where does inequality fit in our analysis of business and its impacts on development?  If we accept, as the Economist, the IMF, the OECD and others do, that inequality is a brake on growth and significant driver of social problems, then it matters a great deal.  (There is also a massive issue around social justice which I won’t focus on here).

Few people, whether from business or the development community, have really grappled with this question. However, Peter Utting at UNRISD is one of the few who has, publishing a thoughtful paper in 2007.  In it he pointed out that business efforts (as well as efforts aimed at incentivising business interventions) primarily target social and environmental ‘protection’.  It is a technical approach that seeks to improve working conditions, for example, but not to empower workers or improve the overall position of labour.
His paper points to two main areas in which inequality could be tackled in the context of business and development:
  • Empowerment: increasing the voice and influence of weaker groups in society and creating accountability and other mechanisms that keep corporate power in check.  
  • Redistribution: This could include progressive shifts in the distribution of income within enterprises and value chains - to favour labour, small producers and other low-income stakeholders; fair and transparent fiscal policies and practices conducive to progressive taxation; and lobbying for redistributive policies (or at least not lobbying for regressive policies that have perverse economic and developmental impacts).
Such steps might feel unpalatable or politically uncomfortable to companies, as well as government and donors that see the private sector as a potential driver of development.  However, not tackling these issues leaves the world locked into a pathway of rising inequality, with all the negative economic impacts and social discord this brings.  It also perpetuates mistrust of business and, in the eyes of many, undermines their legitimacy as potential development actors. 

It is this perception of business and capitalism that both the optimistic O’Neill and pessimistic Krauze identified in Mexico.  Many in this highly unequal country see the current government, as well as the broader economic system, as beholden to the rich and, in particular, those linked to international capital.  As inequality rises across the globe, this is a view not unique to Mexico.

Jodie Thorpe is a Research Fellow with the Globalisation Team at the Institute of Development Studies.