These are some of the views and reports relevant to our readers that caught our attention this week.
Africa in 2030: drones, telemedicine and robots?
In 2000 the CIA’s national intelligence council made a series of pessimistic predictions about Africa. They suggested that sub-saharan Africa would become “less important to the international economy” by 2015; that African democracy had gone “as far as it could go”; and that technological advances would “not have a substantial positive impact on the African economies.” Clearly, predictions don’t always come true. Between 2000 and 2012, the number of mobile connections in Africa grew by 44%. In 2011, mobile operators and their associated businesses in Africa has a “direct economic impact” of $32bn, and payed $12bn in taxes. It made up 4.4% of sub-Saharan Africa’s GDP, according to a 2012 report. But the advances in communications are not the only element defining Africa’s future:
Good Governance: Well-Meaning Slogan Or Desirable Development Goal?
Corruption last year cost the world more than one trillion dollars. That is a trillion dollars we can’t use to get better health care, education, food and environment. And corruption is only part of the problem of poor governance – many countries are run ineffectively, lacking accountability, transparency and rule of law. Running countries better would have obvious benefits. It would not only reduce corruption but governments would provide more services the public wants and at better quality. It is also likely that economic growth would increase. In a recent UN survey of seven million people around the world, an honest and responsive government was fourth in the list of people’s priorities, with only education and healthcare and better jobs being rated higher. But how should we get better governance?
These are some of the views and reports relevant to our readers that caught our attention this week.
Metaphor of the month, via a deft dispatch from Davos: Thomas “Piketty was not in attendance this year – which was like putting on ‘Hamlet’ without the Prince” of Denmark, quipped Larry Elliott, the economics editor of The Guardian, as he needled ostentatious Davos-goers for only half-heartedly living up to the Davos dictum of being “ ‘committed to improving the state of the world,’ provided nothing much changes.”
Let’s shift the Shakespearean citation slightly, from “Hamlet” to “Macbeth”: Like Banquo’s ghost, the specter of Piketty’s analysis of inequality and injustice seemed to haunt many private-sector leaders at Davos this year – and thus the scholar from the Paris School of Economics didn’t need to be present in order to have a powerful impact at this year’s World Economic Forum.
Amid last week's self-exculpatory denialism from the unrepentant-oligarch wing of the Davos Man culture, one could almost hear the apologists for plutocracy and the free-market fatalists joining the conscience-stricken Macbeth in shrieking to Banquo's implacable apparition: “Thou canst not say I did it! Never shake thy gory locks at me!”
The Davos 2015 parade of plutocrats may have been worth all the time and trouble, after all – despite its customary spectacles of self-indulgence – if the pageantry helped pique the conscience of some of the One Percenters and their courtiers, at least momentarily. “Most of the conversations between chief executives here are about Piketty-type issues. They talk about things [at Davos that] they wouldn’t be talking about back in the boardroom,” one eminent corporate leader told Elliott of The Guardian. Piketty-inspired concerns about inequality – along with fears of chronic economic stagnation and an irretrievably despoiled planet – seem likely to inform this year’s top-level global policy forums, from Addis Ababa in July to the United Nations in September to Paris in December.
Signaling that many private-sector leaders have been awoken by, and are responding to, Piketty's landmark analysis of the intensifying concentration of capital in ever-fewer hands – which is provoking a more rigid stratification of society along hardening lines of social class – the World Economic Forum itself set the stage for Davos 2015 by publishing a 14-point agenda for promoting more inclusive growth. That analysis, searching for constructive solutions, is certainly a welcome contribution to the debate. Yet Piketty’s analysis of the widening gaps between the ultra-wealthy and everyone else – with Davos as perhaps an inadvertent self-parody of the cocooned Uber One Percent – suggests that there’s scant hope for mending a torn society unless policymakers enact policy changes on a vast scale: by (among other priorities) adopting greater progressivity in tax rates and enforcing a crackdown on cross-border tax evasion.
(An aside, regarding those who quibble with a point of Piketty-era terminology – and those who have attempted, and have conspicuously failed, to refute Piketty’s logic. Using a chicken-and-egg argument, some theorists lament the Piketty-inspired focus on the term “inequality,” insisting that inequality may be the outgrowth of, rather than the cause of, economic stagnation and social stratification. Fair enough. Yet such casuistry dwells on a distinction without a practical difference. Enacting pro-growth programs to avoid “secular stagnation” would surely be wise policymaking. Yet no serious plan would envision going back to a pre-2008-style “GDP growth at any cost” approach. The global financial crisis of 2008 revealed the recklessness of simplistic gun-the-engine, GDP-uber-alles policies that produce merely unsustainable, low-quality growth. Today’s pragmatists, instead, champion a more inclusive economy that eases social divisions and sustains broader opportunity – promoting what the World Bank Group calls “shared prosperity.”)
Judging by Piketty’s esteem among Davos 2015 participants, most leaders of the private sector – all but a recalcitrant few, some of whom dwell on the free-market fundamentalist fringe – have evidently gotten the message (at last): Chronic inequality and stifled social mobility have reached a socially intolerable and perhaps politically destabilizing intensity. Yet if all but an eccentric remnant in the private sector “get it,” do public-sector policymakers – many of whom seem ever-eager to do the bidding of the most self-aggrandizing monied interests? The Davos-style ideal of “capitalism for the long term” is motivated by “enlightened self-interest,” yet many boardrooms – and those politicians who are forever at their beck and call – apparently need still more enlightenment and less self-interest.
Charting the next steps beyond Piketty's “Capital in the Twenty-First Century" – advancing from academic analysis to social action – will be the next order of business in 2015, a year with parliamentary elections in several pivotal countries. Just in time for the post-Davos and pre-election season, a newly published book seems poised to pick up where Piketty left off: emphasizing that society needs a healthier balance between private-sector dynamism and public-sector activism, undergirded by a humane sense that an economy with truly shared prosperity should prioritize social fairness.
With their appetites whetted by early excerpts published this week in The Observer, many admirers of Piketty will be eager to read “How Good We Can Be: Ending the Mercenary Society and Building a Great Country” by Will Hutton, the principal of Hertford College, Oxford. Hutton – for all his gloom about the injustices inflicted on his native United Kingdom over the past 35 years – advances an optimistic agenda that might show the way toward correcting decades’ worth of policy errors.
“Inequality has become a challenge to us as moral beings,” declares Hutton, reinforcing Piketty’s view of a society starkly stratified by social class. A callousness toward social divisions has spilled over from the economic realm into political decision-making, resulting in an “amoral deficit of integrity” – and Hutton is not shy about pointing to a specific turning point, or about naming a specific name.
“Ever since [Margaret] Thatcher’s election in 1979, Britain’s elites have relegated concerns about inequality below the existential question of how to restore our capitalist economy to economic health, a matter deemed to transcend all other considerations,” writes Hutton. “The language of the socioeconomic landscape has been commanded by words like efficiency, productivity, wealth generation, aspiration, entrepreneur, pro-business and incentives. To the extent they are significant at all, preoccupations with inequality have been seen as of second-order importance.”
The “raw trends” of the weakened power of wage-earners and the strengthened dominance of capital-owners – the outgrowth of Piketty’s iconic formula, r>g – “are then exacerbated by the reduction of taxation on capital, companies and higher earners in the name of promoting incentives and 'wealth generation.' " No wonder, Hutton asserts, that the United Kingdom has suffered “a stunning increase in inequality, the fastest in the OECD.”
Readers who were drawn to Piketty’s logic – yet who were left by "Capital" with a despairing feeling of “where do we go from here?” – are likely to warm to Hutton’s work, which extends the logic of his influential 1995 analysis, “The State We’re In.”
“Indifference to the growing gap between rich and poor, in all its multiple dimensions, is the first-order-category mistake of our times," warns Hutton. "No lasting solution to the socioeconomic crisis through which we are living is possible without addressing it.”
Recalling his years of energetic columns in The Guardian and The Observer, Hutton’s activist economic prescription in “How Good We Can Be” seems likely to include a better-focused approach to industrial policy; targeted investment in innovation capacity; pro-entrepreneurship mechanisms to sharpen competitiveness; and pro-active tax policies that ease rather than intensify the wealth divide.
Many of those who missed this year’s Davos triumph of Piketty-style reasoning are now awaiting the arrival of Hutton’s new book on this side of the Atlantic. Piketty scored the scholarly sensation of 2014 with the publication of “Capital.” My early hunch is that Hutton, with “How Good We Can Be,” just might achieve a similar agenda-setting success in 2015.
Melinda and Bill Gates have made an annual tradition of publishing their thoughts on international development and its key challenges. Given the substance, I assume these letters reflect an annual manifesto for the organisation they head, the Bill and Melinda Gates Foundation (BMGF). Last year, I wrote about how the Gates Annual Letter was disappointing, perhaps not in the context of what the BMGF itself does, but what it ought to be doing, given its $42 bn muscle and its influential promoter, Bill Gates.
This year, the letter makes four “big bets” for 2030: child deaths will go down by half, and more diseases will be eradicated than ever before; Africa will be able to feed itself; mobile banking will help the poor radically transform their lives; and better software will revolutionise learning. In short, fast-tracking the identification technological fixes and expanding their reach over the next fifteen years will deliver a better world.
Unfortunately, these bets seem to me to be wildly optimistic. I may be quibbling, but from what we have learnt from research, there seem to be many reasons to suggest that we should be cautious with our optimism regarding what we can achieve with technology. The complexities of working on power, politics and implementation find no mention in the letter. Let us look a little more closely at each one of the bets to find out why that matters so much.
Consider that as much as $1 trillion vanishes from the developing world’s economies every year, according to an estimate by the non-profit group Global Financial Integrity. Now consider that, according to OECD figures, in 2012-2013 Net Overseas Development Aid was $134 billion. These figures underscore why the fight against corruption and ending impunity are critical to the goals of ending poverty and achieving shared prosperity.
In December of 2014 the World Bank hosted the 3rd Biennial International Corruption Hunters’ Alliance meeting focused on fighting corruption - and the vast illicit outflows generated by corruption - to share know-how and experiences in the use of both traditional and alternative corruption fighting approaches.
Though there were many examples of the successful use of technology to fight corruption presented at the meeting, a report (pdf) published from one of the sessions raises questions about whether technology always supports anti-corruption efforts.
Dr. Anne Thurston of the International Records Management Trust spoke about problems that are arising as governments become more reliant on the use of ICTs: digital media deteriorate, software changes, and hardware becomes obsolete. The risk is that if digital records are not managed professionally, their integrity and value as legal evidence can become compromised.
Reforms of public financial management (PFM) systems – pursued by many countries and supported by development partners -- have attracted quite a bit of debate and analysis in recent years. Significant variation in progress achieved and lack of broad-based and sustained improvements in metrics of PFM performance, as reflected in CPIA ratings and PEFA scores, suggest to many observers that outcomes have not matched reform efforts and expectations.
This has led to a search for better solutions in two directions. First, grounding reform efforts in stronger problem analysis, and based on this, developing a better fit of reform approaches to specific country circumstances. Second, seeking a better understanding of non-technical aspects and, in particular, the role of political economy drivers in influencing which PFM reforms are pursued where and with what degree of success. ‘Doing things differently’ along these lines sounds promising – but reformers and development partners may well question whether we know enough to pursue such alternative approaches on a wider scale.
During a recent trip to India, we met with Professor Anil Sahasrabudhe, a dynamic, positive man who will likely remind you of a favorite uncle. In 2004, he was in the less satisfactory position of being director at the College of Engineering in Pune (COEP), located 150 km southeast of Mumbai. At that time, the institution had no financial or academic autonomy, no governance structure, and no administrative freedom. Ten years later, in 2014, the institution had turned around, garnering national awards and recognition. What helped spark the change? While several factors made an impact, Professor Sahasrabudhe mentions good governance first.
In January 2015, the leader of the pack was Leszek Sibilski's post, "Quest For Green, Clean, and True Sport For All", which covers the corruption of international sport.
Leszek elaborates that, "Due to its size and global reach, two types of corruption plague contemporary sport:
- On-the-field corruption by athletes, team officials, referees, and the entourage, for example through hooliganism, doping, and match fixing; and
- Off-the-field corruption by sport managers, sponsoring organization officials, and operators through, for example, bribed decisions, rigged contracts, misuse of authority, influence peddling and insider information."
He believes that "both types of corruption are detrimental to the integrity of sport and create unacceptable situations for states and society at large, including money laundering, kickbacks, illegal betting, public health issues, and human trafficking."
So what can be done to alleviate this problem? Read the post to find out!
Open governance is about ensuring that citizens are able to engage with their governments and that those governments are then willing and able to respond to citizen demands. This, in turn, should lead to socially-inclusive economic development and more effective and efficient service delivery, improving the lives of citizens. But how can citizens fully hold their governments accountable without access to—and comprehension of—government data?
The real challenge for fostering open governance lies in promoting transparency among the various sources of funding that make up a country’s public investment portfolio. Without a clear breakdown of their governments’ resources, citizens cannot engage in informed policy or decision-making discussions.
These are some of the views and reports relevant to our readers that caught our attention this week.
Discarding Democracy: A Return to the Iron Fist- Freedom in the World 2015
For the ninth consecutive year, Freedom in the World, Freedom House’s annual report on the condition of global political rights and civil liberties, showed an overall decline. Indeed, acceptance of democracy as the world’s dominant form of government—and of an international system built on democratic ideals—is under greater threat than at any point in the last 25 years. Even after such a long period of mounting pressure on democracy, developments in 2014 were exceptionally grim. The report’s findings show that nearly twice as many countries suffered declines as registered gains, 61 to 33, with the number of gains hitting its lowest point since the nine-year erosion began.
Digital Inclusion: The Vital Role of Local Content
Innovations, MIT Press
The journal features cases authored by exceptional innovators; commentary and research from leading academics; and essays from globally recognized executives and political leaders. The current issue contains lead essays entitled “Building a Foundation for Digital Inclusion”, “Inequitable Distributions in Internet Geographies”, and “To the Next Billion”. It also includes case narratives entitled “A Mobile Guide Toward Better Health” and “A Social Network for Farmer Training” and more.
Should trust be something that policymakers need to worry about? I started reflecting on this question after I came across the 2015 Edelman Trust Barometer. It suggests that 80% of the people surveyed in 27 markets distrust governments, business or both (see figure 1).
A staggering number, to say the least. The year 2014 did not spare us from economic, geopolitical and environment turmoil. Nonetheless, the trend over the last few years has been a growing distrust in our leadership, despite the fact that progress has been made in the three main pillars of trust: integrity, transparency and engagement. More needs to be done, it seems.
Figure1. Trust in business and government, 2015
As Ralph Waldo Emerson, the American essayist and poet, wrote: “Our distrust is very expensive.” The lack of trust in our government affects policies and reforms, and thus damages the overall economic environment. Investors will lack confidence and shy away. Growth will stagnate, sustainable jobs won’t be created, and trust in government will erode even further. A vicious circle is being created.
Professor Dennis A. Rondinelli, lately of Duke University, argues: “What are called 'market failures' are really policy failures. The problems result from either the unwillingness or inability of governments to enact and implement policies that foster and support effective market systems.” Distrust thus influences policymakers in multiple ways: They will either adopt bad policies, or overregulate. A study published in The Quarterly Journal of Economics shows that “government regulation is strongly negatively correlated with measures of trust.” “Distrust creates public demand for regulation, whereas regulation in turn discourages formation of trust. . . . Individuals in low-trust countries want more government intervention even though they know the government is corrupt” (see figure 2).
Figure 2. Distrust and regulation of entry. Regulation is measured by the (ln)-number of procedures to open a firm.
Sources: World Values Survey and Djankov et al. (2002).
The evaporation of trust in government institutions requires that governments and development agencies rebuild trusted institutions. However, it also behooves all of “society’s stakeholders” to rebuild trust among themselves and “engage.”
Integrity and transparency are two of the pillars of trust that have received a lot of attention during the past decade. Indeed, tackling corruption and ensuring transparency have been at the top of the institutional and corporate development agenda. The third pillar, engagement, has been more rhetorical or grossly underestimated.
A prerequisite for inclusive and responsive policymaking is that citizens use their voice and engage constructively with government institutions. As we have seen, increasing social and political trust helps market economies function more effectively. In turn, sound economic policies foster social and political trust. In recent years, the practice of structured public-private dialogue (PPD) has helped the private sector and other stakeholders engage in an inclusive and transparent way with governments. PPD mechanisms have resulted in better identification, design and implementation of good regulations and policy reforms intended to create an improved investment climate and increase economic growth. As a result, this process has built mutual trust between institutions and business.
Confidence-building has been most critical in post-conflict and conflict-affected states where deep mistrust among stakeholders is prevalent. That topic will be discussed in greater depth at our 2015 Fragility Forum’s session on public-private and multi-stakeholder dialogue, coming up on February 13. Foreshadowing the Fragility Forum, a panel discussion in Preston Auditorium on Monday, February 2 – featuring, among others, Sarah Chayes of the Carnegie Endowment for International Peace, who is the author of “Thieves of State: Why Corruption Threatens Global Security” – will focus on "Corruption: A Driver of Conflict."
In an age of distrust, this type of policy reform – through multi-stakeholder engagement – is not an obvious exercise. The economist Albert Hirschman claims that “moving from public to private involvements is very easy because any single individual can do it alone. Moving from private to public involvements is far harder because we first have to mobilize a lot of people to construct the public sphere.” But the increase of PPD platforms across the world – the WBG Trade & Competitiveness’ Global PPD Team currently supports 47 PPD projects worldwide – suggests that there is an appetite for engagement among citizens, business and governments alike.
Trust can be slowly restored by, among other things, designing adequate interventions such as PPD mechanisms. By their inherent iterative process of discovery, collaborative identification of issues and joint problem-solving, PPDs can activate favorable mental models of stakeholders. According to the 2015 World Development Report on "Mind, Society and Behavior," these “mental models can make people better off.” I would argue that these mental models drawn from their societies and shared histories can help build trust as well.
Trust matters for policymakers. Ultimately, it matters for all citizens. Designing interventions and offering a safe space where stakeholders can engage with governments in an inclusive and transparent fashion will go a long way toward restoring that valuable trust.
- open government; accountability; transparency; collaborative governance; collaboration
- fragile states
- fragile countries
- fragile and conflict affected states
- Fragile and Conflict Afflicted States
- Public Private Partnerships
- public private dialogue
- Law and Regulation
- Private Sector Development
- Public Sector and Governance