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A Seismic Shift in Improving the Behaviour of Large Companies? Guest Post from Phil Bloomer

Duncan Green's picture

PhilBloomerMy former boss, Phil Bloomer is now running the Business and Human Rights Resource Centre (check out its smart new multilingual website). Here he sees some signs of hope that the debate on corporate responsibility is moving beyond trench warfare over voluntary v regulatory approaches. Fingers crossed.



‘Mind the gap’ is a refrain that any visitor to London’s Underground trains will have had drilled into their brains. In development and human rights, one of the most controversial issues is how to deal with the dangerous governance gap that has opened up between the powerful globalising forces in our economies, often led by large companies, and the often weak capacity of societies to cope with the problems and damage these forces can create.

A fortnight ago came a seismic shift in this debate. The UN Human Rights Council adopted a resolution to create an international binding treaty for transnational corporations. This comes three years after the adoption, by consensus, of the more voluntary, UN Guiding Principles on Business and Human Rights. Most observers put this major tremor down to rising frustration at the apparent glacial pace of implementation of the Guiding Principles by governments (only the UK, Netherlands and Denmark have so far agreed National Action Plans), and few companies are stepping up. The age-old, and sometimes theological, divisions between opposing panaceas of state-regulation v voluntary codes may be returning.

Are We Measuring the Right Things? The Latest Multidimensional Poverty Index is Launched Today – What do You Think?

Duncan Green's picture

I’m definitely not a stats geek, but every now and then, I get caught up in some of the nerdy excitement generated by measuring the state of the world. Take today’s launch (in London, but webstreamed) of a new ‘Global Multidimensional Poverty Index 2014’ for example – it’s fascinating.

This is the fourth MPI (the first came out in 2010), and is again produced by the Oxford Poverty and Human Development Initiative (OPHI), led by Sabina Alkire, a definite uber-geek on all things poverty related. The MPI brings together 10 indicators, with equal weighting for education, health and living standards (see table). If you tick a third or more of the boxes, you are counted as poor.

The Things We Do: Will Money Make You Mean?

Roxanne Bauer's picture
In a TEDTalk published Dec 20, 2013, social psychologist Paul Piff shares the results of several research studies on how people behave when they feel wealthy. He concludes that while inequality is a complex and formidable challenge, there are bright spots, too. 
 
In the first study, two participants are asked to play Monopoly, but one player is given more money than the other.  Throughout the course of the game, the 'rich' player moved around the board louder, made sounds of dominance and non-verbal displays of power, and became ruder and less sympathetic to the 'poor' player.  After the game ended and the rich player won, the rich player talked about what he/she did and bought during the game to explain the outcome- they did not mention the unfair advantage they were given at the start of the game.

Piff believes that Monopoly can be used as a metaphor for many contemporary societies in which some people are born with more access to resources, money and power. 
 
TED Talks, Paul Piff

The Case for Democracy- A New Study on India, South Africa and Brazil (shame it’s not much good – missed opportunity)

Duncan Green's picture

The ODI is a 10 minute train ride from my home, so I’m easily tempted out of my lair for the occasional lunchtime meeting. Last week it was the launch of ‘Democracy Works: The Democratic Alternative from the South’, a paper on the three ‘rapidly developing democracies’ of Brazil, India and South Africa, co-authored by the Legatum Institute and South Africa’s Centre for Development and Enterprise (not ODI, who merely hosted the launch). I was underwhelmed.

Which is a shame, because the topic is great – China’s rise and the West’s economic implosion are undermining arguments for democratic and open systems around the world. The report quotes Jacob Zuma: “the economic crisis facing countries in the West has put a question mark on the paradigm and approaches which a few years ago were celebrated as dogma to be worshipped.”
 

Top New African Progress Report Focusses on Farms, Fisheries and Finance

Duncan Green's picture

The Africa Progress Panel (a group of the great and good, chaired by Kofi Annan) recently launched its 2014 Africa Progress Report. It’s an excellent, and very nicely written (heartfelt thanks) overview of some key areas: agriculture, fisheries and finance. Some highlights:

‘For more than a decade, Africa’s economies have been doing well, according to graphs that chart the growth of GDP, exports and foreign investment. The experience of Africa’s people has been more mixed. Viewed from the rural areas and informal settlements that are home to most Africans, the economic recovery looks less impressive. Some – like the artisanal fishermen of West Africa – have been pushed to the brink of destitution. For others, growth has brought extraordinary wealth.

There is much cause for optimism. Demography, globalization, new technologies and changes in the environment for business are combining to create opportunities for development that were absent before the economic recovery. However, optimism should not give way to the exuberance now on display in some quarters. Governments urgently need to make sure that economic growth doesn’t just create wealth for some, but improves wellbeing for the majority. Above all, that means strengthening the focus on Africa’s greatest and most productive assets, the region’s farms and fisheries. This report calls for more effective protection, management and mobilization of the continent’s vast ocean and forest resources. This protection is needed to support transformative growth.

Quote of the Week: Ha-Joon Chang

Sina Odugbemi's picture

“We have been led to believe that the market is some kind of natural phenomenon. But in the end, the market is a political construct.”

- Ha-Joon Chang, a leading heterodox economist and institutional economist who specialises in development economics. Chang has written several widely-discussed books on policy, including Kicking Away the Ladder: Development Strategy in Historical Perspective (2002).  Prospect Magazine ranked him as one of the top World Thinkers in 2013.

A Bird's Eye View Into the Mahatma Gandhi National Rural Employment Guarantee Act

Rumela Ghosh's picture

World Bank / Curt Carnemark
The 10th South Asian Economics Students Meet (SAESM) was held in Lahore, Pakistan, bringing together 82 top economics undergraduate students from the region. The theme was the Political Economy of South Asia, with a winning paper selected for each of the six sub-themes. In this post, Rumela Ghosh presents her winning paper on the political economy of social security. Posts from the other winning authors will follow over the next few weeks.


Employment is one of the burning problems affecting South Asia. India now has a diminished growth rate below 6% per year. In recent years although the living standards of the 'middle classes' have improved, reform for underprivileged groups has not been so exciting. According to National Service Scheme (NSS) data the average per capita expenditure rose at the exceedingly low rate of 1% per year in India. There has been a sharp decline in real agricultural wages also. A quantitative assessment of the impact of various rural wage employment schemes during the last two five-year plans and the current one shows that the results in terms of employment generated have been steadily decreasing.
 
My paper looked at schemes to tackle unemployment in India. A Bird's Eye View into Mahatma Gandhi National Rural Employment Guarantee Act firstly examines the Maharashtra Employment Guarantee Scheme (MEGS) introduced in the 1970s. It examines how at different time frames and contexts the elite managed to maintain their support base and reinforced its legitimacy by supporting a poverty alleviation program – the EGS. It also highlights the issue of gender concern and the problem of migrant workers.
 
Among various EGS, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is the flagship program implemented at the national level which achieved measurable success, though with some flaws. It guarantees every rural household up to 100 days of wage employment in a year within 15 days of demand for such employment. My study highlights the significant interstate differences in the supply of employment and tries to explore the reasons why. Supply falls far short of demand, particularly in low-income states, where the organizational capacity to implement the scheme is limited.

The paper examines the conceptual design and delivery of MGNREGA to assess its effectiveness against unemployment and poverty. I discuss existing labor laws applicable to workers in the unorganized sector covering wages, contract and poverty incidence. The paper also seeks to derive the short run and long run implications of a minimum wage law. A detailed empirical analysis of the spatial dimension of implementation, problems of funding, and budgetary incidence of MGNREGA.
 
A comparative study of MGNREGA scheme as implemented in Tamil Nadu where it is largely fair and corruption free with respect to that in Uttar Pradesh where the implementation has some serious flaws with corrupt practices of local officials paying wage payments to non-existing laborers has been illustrated. It studies the differences in utilization, extent of targeting, magnitude of income transfers and the cost-effectiveness of food subsidies.

I designed a game-theoretic model to design a near-perfect scheme with suggestions to eliminate the loop holes. Various falsified implementation strategies by contractors like fictitious names in muster rolls, commission to the contractor for partially/not working laborers has undermined the objectives of MGNREGA. This illegal money laundering from a subsidized scheme like MGNREGA digs a deep hole in India's economic pocket when the economy is reeling under inflation and rupee value depreciation pains. The model attempts a systematic game theory based solution approach for restricting these scheme implementation faults. A graphical presentation shows that, with such a policy laborers in the long run will have an incentive to deliver under MGNREGA only.

Economists Supply It on Demand

Michelle Pabalan's picture

This is for anyone who ever found themselves frustrated by numbers -- myself included.
 
Right before college, I remember my parents asking me what degree I wanted to pursue. Vaguely, I answered “Anything without math.” Even during my post graduate studies, I consciously picked a degree with less mathematics in its curriculum. The irony is, I now work in the World Bank Group and numbers is its core language. But there is good news, not only for rookies like me, but for everyone – numbers can be fascinating, insightful and even fun.  

‘My Favorite Number,’ is a YouTube series that shows how digits can give us unique insight into global development and humanity. World Bank Group’s economists share their stories on their favorite numbers – demonstrating how their brilliance (and humor) reaffirm that numbers are vital to everyday life. The videos show us that economists are not just about numbers. They bring passion and personal perspectives to relevant issues around the world. 

One Question: What Is Your Favorite Number?

Mehreen Arshad Sheikh's picture

My Favorite Number
We know that numbers are useful. We rely on them to analyze global economic trends, but also to count calories, create passwords, manage schedules and track our spending. Numbers give order to the chaos of our lives. And that means we can use numbers to reflect, learn, and re-discover ourselves.

We’ve launched a new YouTube series called ‘My Favorite Number,’ that shows how a single digit can give us unique insight into global development and humanity. A number can have a profound effect on human lives.

The Monty Python Guide to Aid and Development. Part Two - Economics

Duncan Green's picture
So another Friday comes round, we all need a break, so following the triumph of last week’s Monty Python guide to the politics of development, let’s move on to economics……

Redistribution is trickier than we thought [via Andrea Franco]
 
He steals from the poor and gives to the rich

 

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