December 2008

The power of public opinion is the power of ordinary citizens; it is the power of aware, engaged multitudes. And there is a way of understanding the spectacular events of 2008 in terms of the power of public opinion. Let's take just a few.

1. The first is the crisis in financial markets and the global economy. Whatever technical experts eventually decide to be the origins of the crisis, there is no doubt that public opinion has played a role in intensifying the crisis. It has done so through the collapse of public confidence in financial institutions generally. For what is 'confidence' but the opinion widely shared that the financial system is sound and your savings and investments are safe? That collapsed in so much of the world in 2008, beginning in the United States. There is no doubt that restoring 'confidence' will be crucial to ending the crisis; that means, recreating majority opinion in the stability and secure management of the global financial system.

As usual on Fridays, from Raj Nallari and Breda Griffith's lecture notes.

Empirical Evidence on Impact of Globalization on Women

Available studies and data, which are rather limited, is arranged around some broad themes and discussed below and next week.  Little is known about the impact of macroeconomic policies on women, such as changes in exchange rates, interest rates, minimum wages, and commodity prices.

Exchange rate fluctuations

These are common in developing countries while responding to shocks usually emanating from policies in G-3 countries.  Exchange rate fluctuations impact upon domestic investment, prices of tradables, and wages, particularly in more competitive industries, such as textiles, garments, agro-processing, cut-flowers, and low value-added manufacturing goods.  Goldberg (2001) and Tracy find some evidence from the United States that exchange-rate shifts impact upon: (i) the wages of women who remain with their same jobs, (ii) the wages of women who change jobs, and (iii) the frequencies of job-changing.  For example, a 10-percent depreciation of the dollar, for example, is estimated to raise women's wages by roughly 1 percent. However, for women who have changed jobs, the estimated wage increase is over 2 percent, while for women who stay on their jobs the estimated wage increase is 0.75 percent. For both men and women, the strongest effects of exchange rate volatility are observed among the less-educated workers.
 

Factor Mobility

The Wall Against Hunger at the World Food Programme.

It happened again --or maybe for the first time, as in my case--: the holidays are here and you just don´t have a gift for everyone in your list. Turn procrastination or sincere lack of time into a win-win situation by getting your gift online, quickly, and benefiting a third party who´s in much more need than those friends and relatives who are so difficult to shop for precisely because they already have everything you can think of. Here are a few of my favorite options this year:

- Feed a child for a year (or more) through the World Food Programme´s Wall Against Hunger. Upload a photo of your loved ones to add a brick to that wall and join the hundreds already there.

- Purchase livestock for a family´s sustenance through Heifer International: sheep, llamas, even ducks, geese or chicks if you don´t have a lot to spend.

- Food, shelter, trees and medicines through Alternative Gifts International,   which lets you choose gifts by region (here´s Asia, listed along Europe and the Middle East)

Chinese farmers prospered under the return to the household responsibility system. Nationwide, grain production jumped 20 percent as a result of strengthened incentives.

Last week was the 30th birthday of the launching of China's reform and opening up. During the week I got to travel around rural Sichuan with World Bank President Bob Zoellick. The purpose of the trip was to visit the earthquake-devastated Beichuan town and to see the reconstruction efforts, which will be supported by a $710 million loan from the World Bank. Mara Warwick described our visit on her blog.

With our visit falling during the week of the 30th anniversary, I naturally thought of my first trip to rural Sichuan. After teaching at the Chinese Academy of Social Sciences in the spring of 1986, I traveled around the country by myself for about a month. The highlight was traveling by local bus through rural Yunnan and Sichuan.

It was a hectic time for human rights last week here in Paris because of the many initiatives to celebrate the 60th anniversary of the Universal Declaration of Human Rights, signed on 10 December 1948 in this very town, at Palais de Chaillot. And it was hectic here at UNESCO’s HQ as well, which among many initiatives opened its doors to the last living witness of the Declaration’s drafting group, lawyer Stéphane Hessel awarded with the UNESCO/Bilbao Prize.
 
But working myself in the “Freedom of Expression, Democracy and Peace Division”, of course my focus was on the Declaration’s Article 19, the right of every individual to “freely seek, receive and impart information through any media and regardless of frontiers”. A perfect formulation by those wise drafters Mr Hessel was part of. And a forward-looking one if we think that the wording “through any media and regardless of frontiers” was conceived in the aftermath of WWII, but it is even more of appropriate nowadays in the age of the Internet. Let’s repeat it once again: “freely seek, receive and impart information” - that is to say the essential prerequisite for two-way flow of information among public sphere’s three sectors: the media, the civil society and the State.

As usual on Fridays, from Raj Nallari and Breda Griffith's lecture notes.

 Impact of Globalization on Gender

Globalization is defined as the increasingly free flow of ideas, people, goods, services, and capital across countries, both North and South. It therefore deals with policies related to trade, finance, flow of information, technology, management know-how, outsourcing of jobs, and immigration and remittances. As a result of globalization, the difference between local and international markets is blurred, and this is impacting upon the structures of employment and a host of other institutions, including household structure and relationships. There are three main hypothesis as to why and when women find more employment opportunities: (i) during periods of labor shortages as during economic expansions only to be released during recessions (buffer or reserve army hypothesis), or (ii) during periods when output in the sectors in which women are over-represented could be rising more rapidly than output in rest of the economic sectors (segmented market hypothesis) or (iii) over time women gradually replace males into what until then were ‘"male jobs" (substitution hypothesis).

Transmission mechanisms

There are several transmission channels through which globalization impacts upon the living standard of both men and women. It is not possible to detail the complex interactions between all the elements of globalization and impact on women but a few observations are in order:

On this International Migrants Day, I would like to focus on female migrants and labor migration policies that affect them.

I took a one day field trip to Arlington, Virginia last summer to observe how international migrant women contribute to development in their home countries, particularly through remittances and tapping the skills of diaspora communities.

It is evident that women (young and old) send remittances often to their home countries. Several of my younger friends from El Salvador, Guatemala, Honduras and other Latin American countries do this. In the case of African countries, I noticed that older women tend to send money to their countries.  They continue to work in order to support their families, even though it might be time for them to retire. 

Case study evidence of migrant labor market performance in receiving countries shows that most immigrants from developing countries, regardless of their destination, suffer an earnings penalty and higher inactivity levels and unemployment rates than nationals.  Additionally, recent arrivals from developing countries to developed ones face lower earnings and greater competition in labor markets, relative to more established immigrants. Unemployment rates for immigrants originating from developing countries are uniformly higher than those from more developed economies. This gap is more pronounced for women than men across all skill levels. The highest unemployment rates are encountered by immigrants from Africa, the Middle East, and Turkey.

Today is International Migrants Day. Standing in the middle of a global crisis, worried that many countries facing harsh economic realities might make matters harsher for migrants, let me reiterate a few points that I have made before:

1. By and large, people don’t like moving, so let’s not worry that they will flood our gates.
2. Migration benefits all parties. So, if people do come through our gates, we will benefit as a result. 
3. We can do a few things to increase the benefits and reduce the costs associated with migration.

First, by and large, people don't like moving. Most people prefer to live and die where they are born. Worldwide, international migrants number about 200 million. That is only about 3% of the world's population. Migration is rather painful for the migrants and their families. Therefore, migration is more an exception than a rule.

Contrary to popular perception, most of these migrants are not living in the rich countries of the so-called “North”. Indeed nearly half of the migrants from the developing countries live in other developing countries. Such “South-South” migration is actually larger than the size of migration from developing countries to the high-income OECD countries.

Also, contrary to the perception that migrants are mostly asylum seekers or refugees, over 90% of the migrants are economic migrants. People don’t like to move; but when faced with severe poverty and unemployment, a minority of them might move to find employment in foreign countries. By moving, the migrants not only help themselves and their families back home, but also they help their employers in the country of destination.

In my last post, I discussed how emerging Asia is getting hit by the financial storm and the early signs of stress in the financial systems across the region. The intensity of this storm appears to be getting worse, but governments across East Asia are taking a wide range of measures to bolster their financial systems.

After the jump, I discuss the actions taken by governments so far include and what needs to happen next.

PBS recently ran a Frontline documentary entitled “Heat”, on climate change. A section of the movie describes the status of Carbon Capture and Storage (CCS) in the US, a technology that both the IPCC and the IEA consider necessary to achieve emissions reduction. I note that no tests have been run so far in the US to verify the technical feasibility, economic viability and safety of this option. Purely from the technical point of view, the task could be feasible, although extremely challenging. It’s the idea of storing huge amounts of CO₂ underground or in the deep seas (less likely) that makes me doubtful. CO₂ will need to be sealed away in carefully selected sites, but safety issues are only part of the picture.

Sea-level rise is not a phenomenon of increasing frequency, but rather increasing magnitude in a persistent and continuous way. The effect of climate change is most palpably felt in small, low-lying island states such as Panza Island, the southernmost island off Pemba in Tanzania. Farming and fishing are the main means of livelihood. Significant parts of the island, especially the lower elevation southeastern side, are inundated by seawater bimonthly, during the spring cycles and most prominently during the diurnal flood tides. The local residents report up to four feet of water in some areas, which have only become vulnerable in the past year. Previously agricultural land can no longer be farmed. The area near the local school has been flooding for the past 15 years. Salt water has intruded into all the wells on the island, so drinking water has to now be piped in from a neighboring island.