With the Bardo museum reopening, Tunis based writer Christine Petré takes a look at some of the creative strategies being used to bring back tourists.
“There has been a broad recognition amongst economists that “institutions matter”: poor countries are not poor because they lack resources, but because they lack effective political institutions”. Francis Fukuyama, the Origins of Political Order, Vol 1 (2009)
For development professionals, there is no getting away from the fact that politics shapes the environments in which we work—that our programs can and do fail when we don’t take politics into account. But despite growing evidence that political economy analysis (PEA) can contribute to new ways of working and ultimately better results, the politics agenda remains what Thomas Carothers calls an “almost revolution” in mainstream development practice.
There are many factors at play: limited staff capacity to engage with politics, bureaucratic incentives to meet lending targets, a preference for best practice solutions and institutional blueprints. Many continue to argue that it is not the business of development banks or aid agencies to analyse politics, let alone act on key findings. This resistance is posited on several arguments—or myths—which I address below.
“Ask anyone you meet on the street whether political risk has risen in the last few years, and you’d likely get a convincing yes,” a high official from Canada’s Export Development Center recently wrote.
Investors have always worried about the political landscape in host markets. But it’s true. Concerns over political risk are on the rise.
The most recent EIU’s Global Business Barometer shows that the proportion of executives that identified political risk as one of their main concerns increased from 36 percent in 2013 to 42 percent in 2014. MIGA’s Political Risk Survey tells a similar story: 20 percent of investors identified political risk as the most important constraint on Foreign Direct Investment (FDI) in developing economies. Indeed, according to risk management firm AON, political risk is now tenth on the list of main risks facing organizations today and is likely to rise in the ranking in the next few years.
With FDI from emerging markets also on the rise, are the concerns of these investors any different?
So what are disbursements? Disbursements are simply the amount of a loan commitment (the total amount of new loans to borrowers for which contracts were signed) that actually enter the borrower's account, in a given year. The reason I’ve decided to focus on disbursements is that this indicator offers a clear picture of developments in a given year while an indicator like external debt stock (which tell us how much a country owes its creditors – the entities that lend a country money) is a more cumulative measure as it is influenced by what happened in previous years.
In the analysis that follows, I’ve used 45 countries in Sub-Saharan Africa, excluding South Africa. Why? Simply because the size of South Africa’s external debt would mask the trends in the rest of the region. For some perspective, consider that the biggest economy in Africa (in terms of 2013 GDP), Nigeria, had an external debt stock of 14 billion USD in 2013 while South Africa (the second biggest African economy in terms of 2013 GDP) had one of 140 billion USD in the same year – ten times more.
Despite this exclusion, I think it’s important to note how huge this unit of analysis is. The 45 countries that I’ve used represent almost the whole African continent, with the exception of a handful of countries in the north of the continent. Therefore, I ask you to take these trends with a grain of salt, as they are aggregate trends and therefore some of the national differences are blurred out.
Disbursements to the region have doubled
First, the big picture: disbursements to Sub-Saharan Africa have increased sharply in the last few years. Between 2010 and 2013 they more than doubled (increased by 121%), while in the rest of the developing world disbursements went up by 42% (see figure 1). The increase in the region is particularly strong in the case of disbursements from private creditors (entities like bond holders and commercial banks), which increased almost sixfold (489%) since 2010 (compared to a rise of 52% in the rest of the developing world). In the same period, disbursements from official creditors (governments or other bilateral/multilateral entities) grew by 35% in the region (while they fell 13% in the rest of the developing world).
‘Arab Women’ are the subject of Western and Eastern curiosity and, often, fascination. However, most attempts to investigate ‘Arab Women’ reduce them to one entity, ignoring their multitude of experience. The fact is Arab women are very different from each other. Just like everyone else, their realities are shaped by different personal, social, economic, religious and political factors. Arab women are the products of their diverse societies. Yet, the impact of differences on women’s lives are rarely captured or studied, much less understood.
The World Trade Organization (WTO) Trade Facilitation Agreement (TFA) has been getting a great deal of attention since it was finalized at the 2013 Bali Ministerial Conference– and rightly so. As we’ve written before on this blog, trade facilitation is a powerful driver of increased competitiveness and trade performance in developing countries.
But last month, the spotlight at the WTO was on another important decision from Bali—how to maximize the impact of a waiver to support exports of services from Least Developed Countries (LDCs).
At a meeting on February 5, around 30 WTO Members, covering most major export markets for LDCs, set out in concrete terms what preferences they could provide. The preferences cover a wide range of services and modes of supply, as well as regulatory issues that LDCs have identified in a “collective request” to other WTO Members.
A few weeks ago, the UK’s Department for International Development (DFID) concluded a three-day visit to the Bank with a presentation by its Chief Economist, Stefan Dercon. ‘Aid is Politics’ traversed the big picture debates in economics, politics and development with ease, but the focus was the practice of aid.
Once we’re on the ground at scale, we become part of the politics. Not only do domestic politics shape the impact of our interventions, our programs today affect politics tomorrow. Economic policy, although seemingly about ‘removing market failures and correcting distortions’, impacts upon the distribution of rents or income, at times adversely affecting political equilibria by benefitting already powerful groups.
Since walking away from politically fraught environments is not an option (aid practitioners are “the intervention squad”), we need to constantly analyze, adapt programing to politics, be creative, make political engagement endogenous, and try to nudge aspects of the political settlement to a better place.
Although Stefan gave a lively presentation, what struck me was not the content -- over the last decade, a virtual consensus has formed in development praxis that political drivers shape development outcomes, and that effective interventions require both deep understanding of the distribution of power and resources in a given country and the flexibility to adapt to changing context. Most striking was the mission underlying Stefan’s comments.