I heard Bill Easterly at the LSE last night, giving a talk in which he argued that "we do not know how to solve global poverty, and that is a good thing". His basic proposition is that decades of development economics have not served up any firm facts about economic growth. We are still, basically, in the dark. We are also plagued by problems of causality: does democracy improve economic growth, or the other way round?
Easterly is funny, I will give him that. And I like troublemakers, generally speaking. I think it is also important to make a case against Big Pushers like Sachs. But I have a real problem with the degree of generality on which Easterly bases his logic
He seems to be saying that we cannot find global, eternal rules for economic growth, and that, taking his cue from Hayak, growth comes when people solve the million little problems they are confronted with rather than being told to follow this or that formula. But actually, we know a great deal about growth when we look at development at a country or regional level. We know, for instance, that if it takes you 40 days to get goods out of customs you are unlikely to have a booming trade relationship with your neighbours. We also know that those sudden bursts of entrepreneurial activity, like Kenya's cut flowers trade with Europe, are dependent upon deliberate, conscious policies. The entrepreneurism may have been surprising and not amenable to planning, but the enabling trade conditions, in the form of the uniquely structured EU-ACP trade relationship, were deliberate. Entrepreneurism is not quite as anarchic as Easterly would have us believe. He also pointed out the absurdity of 'planning' markets, as part of a wider critique of the idea of development planning as a whole. But curiously, he is rather arguing against success. China's approach to markets has been highly conscious and highly eclectic. It adapts, and changes, but most of what China does has been done through a series of planning committees at the highest political level. Look back at all of the documents published, all of the forthcoming plans and then compare them to reality. Not an identical fit, but by no means anarchic. Look to South Korea, and how the government set out a vision for industry to move into IT, connectivity and related electronics in the 1990s to later become the nation with the fastest broadband and, in Samsung, one of the biggest players in that sector. Easterly is forced to put a lot of things down to coincidence.
By the same measure, he says that post-conflict reconstruction hasn't worked very well overall. "It sort of worked in Sierra Leone and Liberia, but not in Afghanistan or Iraq". But how can you compare Sierra Leone with Iraq or Afghanistan? These are completely different kinds of conflict, with completely different military interventions - for one thing, intervention in Sierra Leone - which was a civil conflict - took place after the failure of the UN to keep the peace. Intervention in Iraq followed an invasion made without the authorisation of the UN, and was tangled up with a whole host of geopolitical specificities stretching back a century. The fact that one intervention succeeded and the other one failed doesn't mean that each cancels out the other end leaves us with no conclusion. Surely, there are pretty clear reasons why it worked in Sierra Leone and has worked less well so far in Iraq or Afghanistan. Easterly wants us to look at all instances of military intervention together when we are evaluating its efficacy, just like he wants us to look at all instances of industrial policy. He argues this because, when we do that, we see no clear pattern. But surely, we should be comparing military interventions that are basically comparable, just like we should be comparing industrial policies that are comparable. How can you put the industrial policy of Nigeria alongside that of South Korea?
Finally, Easterly sought to categorise autocracy and democracy, and to argue against the use of the former in development. But the autocracy of Lenin is of a completely different order to that of the South Korean government, or indeed of Deng Xiaoping. I think it would be more accurate to think of a political continuum. Democratic states can suddenly spasm into autocracy, as occurs when there is a terrorist 'threat'. Autocratic nations can loosen into democracy, and then revert back to autocracy (witness Tiananmen Square). So his attempt to argue against autocracy in development is naive because autocracy is not a fixed state, and neither is democracy, and nations oscillate between the 2 to varying degrees.
Most frustrating of all, Easterly says the success of East Asia was not because of benevolent autocrats, but could well have been from 'other factors'. He doesn't go into any details as to what those factors were, just suggesting one - the role of Chinese merchants. He doesn't explain what they were, or how they bear responsibility for the rise of the East Asian nations. So he's basically saying no one has yet been able to explain the rise of East Asia, there were probably reasons for it but he doesn't really know what they are and neither does anyone else. Inspiring stuff.
Thursday, 20 May 2010
Friday, 14 May 2010
Say What?
Surprising news - the American Trucking Association doesn't support the Kerry-Lieberman bill because it will push up prices for gasoline. The kind folks at ATA call this a 'hidden tax' because they'll just have to pass it on to consumers. Plus they have to buy new vehicles. What a hassle man.
Tuesday, 4 May 2010
New Coal Plants in South Africa, much shouting
Lots of people angry about World Bank's decision to lend loads of money to help South Africa build new coals plants. My coverage of this issue is here and here.
My overall impression on NGO takes on this was a failure to think through the tension between the goals of democratising the World Bank and greening it, since it was the imperial European powers who wanted to stop the loan, and the colonised south that wanted to push it through. Sometimes, in trying to come down on the morally pleasant side of multiple issues, you end up being incoherent.
My overall impression on NGO takes on this was a failure to think through the tension between the goals of democratising the World Bank and greening it, since it was the imperial European powers who wanted to stop the loan, and the colonised south that wanted to push it through. Sometimes, in trying to come down on the morally pleasant side of multiple issues, you end up being incoherent.
Europe and Africa arguing
For all the single ladies (read: trade wonks), my article on the EU-East African Community economic partnership agreement - these deals [to replace the now illegal preferential trade agreements between the EU and its former colonies] are going very slowly, only the Caribbean has signed one.
I find the EU's institutional partnerships with its former colonies weird. Seems to be this rhetoric of intimacy which doesn't square too well with the realities. I'm ignoring Niall Ferguson's hideous revisionism, which even Channel 4 saw fit to air, that the West simply 'brought medicine' to Africa.
I find the EU's institutional partnerships with its former colonies weird. Seems to be this rhetoric of intimacy which doesn't square too well with the realities. I'm ignoring Niall Ferguson's hideous revisionism, which even Channel 4 saw fit to air, that the West simply 'brought medicine' to Africa.
Does Israel Belong in the OECD
The OECD wonders whether to let Israel join the Paris-based rich club. My op-ed for Foreign Policy in Focus says it probably should not largely because Israel isn't a democracy unless you take a very weird interpretation of democracy.
IMF Proposes 100-Billion-Dollar Climate Fund (IPS)
By Adam Robert Green
LONDON, Mar 25, 2010 (IPS) - The International Monetary Fund (IMF) has published the first details of a proposed financing framework, dubbed the 'Green Fund', intended to mobilise 100 billion dollars a year by 2020 to help developing countries cope with the consequences of climate change and mitigate further emissions.
Outlined in a staff paper by IMF economists Hugh Bredenkamp and Catherine Pattillo, the Green Fund could launch from a capital injection by developed countries, in the form of Special Drawing Rights (SDRs), a currency issued by the IMF to member countries.
The facility would eventually combine resources from investors, raised through 'green bonds' in global capital markets, with developed country subsidies. Contributors could scale their equity stakes in proportion to their IMF quota share.
Aid would then be extended in the form of grants or highly concessional loans to developing countries but the IMF would not finance or manage the Fund, according to the authors.
The IMF began working on the concept of a Green Fund following the talks at the United Nations Copenhagen Conference (COP15) in December because, while finance was discussed and various figures pledged, it was not clear where the money was going to come from.
"The risk is that, without a credible framework for delivering financing on the scale necessary, soon enough, and on the right terms, developing countries' response to climate change will be either insufficient or delayed, thereby endangering sustainable growth and increasing ultimate costs, or financed in ways that are inconsistent with maintaining fiscal and broader macroeconomic stability," the authors write.
IMF officials told IPS the Fund could enable faster and more reliable disbursement than uncoordinated aid pledges from rich countries, which often fail to materialise.
Thursday's report is the first time the IMF has directly implicated itself in the issue of climate-related financing efforts. However, the authors stress that the proposal is not a formal announcement by the IMF to create the facility.
Ilana Solomon, policy analyst at ActionAid, told IPS that she welcomed the IMF paper as "an interesting contribution to the debate", and that she supports the use of SDRs in climate financing and believes this proposal has broken through the barrier of using SDRs for finance.
"A consolidated, centralised Fund, as long as there is transparency, will also facilitate the tracking of commitments," she said.
But Solomon expressed concerns about "lack of clarity regarding where the Fund would sit, and the implicated role of the World Bank" in terms of funding management.
"ActionAid wants to see an explicit endorsement of the United Nations Framework Convention on Climate Change (UNFCCC) as the medium through which resources should flow," she told IPS.
Solomon also questioned the 100-billion-dollar per annum benchmark against which the Fund is framed, suggesting 200 billion dollars per year in public financing as a more appropriate figure, and pointed out that climate finance should consist entirely of grants, not loans, because the developed countries are responsible for the majority of emissions.
Peter Chowla, programme manager at the Bretton Woods Project, told IPS he was also pleased that the issue of using SDRs in climate finance was being raised, but that the IMF was stepping beyond its mandate.
"No institution other than the UNFCCC should run climate finance. That is the only legitimate forum where everyone has a say," he said. He added that before they can play a constructive role in climate financing, IFIs needed to undergo radical reform.
"You cannot take an institution with a lop-sided governance structure and expect it to be trusted," he said. "To base any new institutional arrangement on the IMF quota formula is backward looking."
The IMF paper is published just days before the first meeting of the newly formed U.N. High-Level Advisory Group on Climate Change Financing, which takes place on Monday, Mar. 29 in London.
The advisory group is chaired by British Prime Minister Gordon Brown and Ethiopia's Prime Minister Minister Meles Zenawi, along with other heads of state including Jens Stoltenberg, prime minister of Norway. Trevor Manual, South Africa's respected minister for national planning, the philanthropist George Soros and Nicholas Stern, the climate change economist, are also members of the group.
LONDON, Mar 25, 2010 (IPS) - The International Monetary Fund (IMF) has published the first details of a proposed financing framework, dubbed the 'Green Fund', intended to mobilise 100 billion dollars a year by 2020 to help developing countries cope with the consequences of climate change and mitigate further emissions.
Outlined in a staff paper by IMF economists Hugh Bredenkamp and Catherine Pattillo, the Green Fund could launch from a capital injection by developed countries, in the form of Special Drawing Rights (SDRs), a currency issued by the IMF to member countries.
The facility would eventually combine resources from investors, raised through 'green bonds' in global capital markets, with developed country subsidies. Contributors could scale their equity stakes in proportion to their IMF quota share.
Aid would then be extended in the form of grants or highly concessional loans to developing countries but the IMF would not finance or manage the Fund, according to the authors.
The IMF began working on the concept of a Green Fund following the talks at the United Nations Copenhagen Conference (COP15) in December because, while finance was discussed and various figures pledged, it was not clear where the money was going to come from.
"The risk is that, without a credible framework for delivering financing on the scale necessary, soon enough, and on the right terms, developing countries' response to climate change will be either insufficient or delayed, thereby endangering sustainable growth and increasing ultimate costs, or financed in ways that are inconsistent with maintaining fiscal and broader macroeconomic stability," the authors write.
IMF officials told IPS the Fund could enable faster and more reliable disbursement than uncoordinated aid pledges from rich countries, which often fail to materialise.
Thursday's report is the first time the IMF has directly implicated itself in the issue of climate-related financing efforts. However, the authors stress that the proposal is not a formal announcement by the IMF to create the facility.
Ilana Solomon, policy analyst at ActionAid, told IPS that she welcomed the IMF paper as "an interesting contribution to the debate", and that she supports the use of SDRs in climate financing and believes this proposal has broken through the barrier of using SDRs for finance.
"A consolidated, centralised Fund, as long as there is transparency, will also facilitate the tracking of commitments," she said.
But Solomon expressed concerns about "lack of clarity regarding where the Fund would sit, and the implicated role of the World Bank" in terms of funding management.
"ActionAid wants to see an explicit endorsement of the United Nations Framework Convention on Climate Change (UNFCCC) as the medium through which resources should flow," she told IPS.
Solomon also questioned the 100-billion-dollar per annum benchmark against which the Fund is framed, suggesting 200 billion dollars per year in public financing as a more appropriate figure, and pointed out that climate finance should consist entirely of grants, not loans, because the developed countries are responsible for the majority of emissions.
Peter Chowla, programme manager at the Bretton Woods Project, told IPS he was also pleased that the issue of using SDRs in climate finance was being raised, but that the IMF was stepping beyond its mandate.
"No institution other than the UNFCCC should run climate finance. That is the only legitimate forum where everyone has a say," he said. He added that before they can play a constructive role in climate financing, IFIs needed to undergo radical reform.
"You cannot take an institution with a lop-sided governance structure and expect it to be trusted," he said. "To base any new institutional arrangement on the IMF quota formula is backward looking."
The IMF paper is published just days before the first meeting of the newly formed U.N. High-Level Advisory Group on Climate Change Financing, which takes place on Monday, Mar. 29 in London.
The advisory group is chaired by British Prime Minister Gordon Brown and Ethiopia's Prime Minister Minister Meles Zenawi, along with other heads of state including Jens Stoltenberg, prime minister of Norway. Trevor Manual, South Africa's respected minister for national planning, the philanthropist George Soros and Nicholas Stern, the climate change economist, are also members of the group.
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