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Conflict and Development: Where is Conflict Concentrated in South Asia?

Ejaz Ghani's picture

After Iraq, South Asia is the second most violent place on earth. Conflict has increased in South Asia during the last decade. Where is conflict concentrated? What can be done about it?

Conflict is a very broad term, which is often defined differently in different contexts and data sets. We can, however, consider two broad classes of conflict. The first category includes conflict against the State. Examples of this include civil war or terrorism, which is an extreme manifestation of conflict, and it reflects a certain degree of organization of conflict. It is carried out by a relatively organized group of non-state actors, and directed against the State. Some researchers choose to focus on terrorism as a measure of conflict, because it has implications for the overall stability of the state itself, and therefore its ability to implement any developmental policy. The second category includes people-to-people conflict, rather than directed against the State. Examples of this include localized land conflicts, religious riots, homicides or other crimes. They too have adverse implications for development, but are probably less severe, compared to terrorism.

Results’ Agenda and Economists

Eliana Cardoso's picture

In the book, The Idea of Justice, Amartya Sen motivates the discussion on the importance of processes and responsibilities by relying on an example. In the Gita (part of the Mahabharata), on the eve of the crucial battle episode in the epic, Arjuna expresses his doubts about leading the fight which will result in so much killing. Lord Krishna, tells him that he, Arjuna, must perform his duty, that is, to fight. And to fight, irrespective of the consequences.

Krishna’s blessing of the demands of duty is meant to win the argument from a religious perspective. But most of us would share Arjuna’s concerns about the fact that, if the war were to occur, with him leading the charge on the side of justice and propriety, many people would get killed. He himself would be doing a lot of the killing, often of people for whom he had affection.

Financial Reform and Fiscal Discipline

Eliana Cardoso's picture

It was in 1714 that Bernard de Mandeville defended his view of the economic world in a long poem with pretensions to uncovering the moral basis of modern society – The Fable of the Bees: Private Vices, Public Benefits. According to him, industrialists, businessmen and politicians are like pimps, quacks, pickpockets and forgers: tireless professionals who, through their cunning, use the work of others for their own purposes. Mandeville claims that it matters little if every trade and place is tainted by trickery and every profession, by chicanery. What does matter is that everyone, whether saint or sinner, contributes to producing the comforts progress provides, by looking after their own interests.

But you and I believe that where people live off ill-gotten gains the community will suffer and, thus, we reject the poem’s cynical view of the world. Yet, the lesson of The Fable of the Bees (that civilization advances in the measure that individuals seek to satisfy their needs and desires) is still alive and kicking.

Is India's Fiscal Consolidation at Hand?

Eliana Cardoso's picture

“What you don’t touch, for you lies miles away. (…) What you don’t coin, you’re sure is counterfeit.” These sophisms are voiced by Mephistopheles, under the guise of the Court Fool, in Goethe’s Faust. He aims to convince the Emperor to mint more coins, for money buys everything: parks and palaces; breasts and rosy cheeks. The Commander-in-Chief accompanies the scene and speaks his mind: “The Court Fool is wise, for he promises benefits to all.”

Economic theory, in contrast to the Commander-in-Chief, the Court Fool and other populists, states that all government handouts come at a cost – regardless of whether they are distributed in the form of subsidies or direct transfers. Financing them is only possible by raising taxes and getting into debt (or creating more money… and inflation).

Food Prices and the Inflation Tax

Eliana Cardoso's picture

Oscar Wilde, suspecting that the relationship between price and value hides reasons that reason itself ignores, observes in the Lady Windermere’s Fan that a cynic is “a man who knows the price of everything and the value of nothing”. The economist will laugh at Wilde’s one-liner. But after a brief moment, she would protest. Theory tells her that value and price is one and the same thing. And she will insist that what matters for South Asians today is the difference between an increase in the price level and an increase in the inflation rate.

The price level increases when there is a supply shock, such as an increase in food and fuel prices. The initial increase in the price level tends to transmit itself to other prices when the economy operates close to capacity. If the price increase is accommodated by monetary policy, the supply shock transforms itself in a spiral of prices and wages and inflation goes up. Monetary authorities do right by not tightening monetary policy in response to the primary impact of supply shocks, but have to be attentive in case the increase in food prices begins to encourage secondary inflationary effects.

India’s Turn

Eliana Cardoso's picture

An Ideal Husband, the play by Oscar Wilde, tells a story of unrealistic expectations. Lady Chiltern, a woman of strict principles, idolizes her husband, a rising star in politics. Their life is filled with nectar and ambrosia, until the appearance of Mrs. Cheveley. She comes with a letter – one that proves Sir Robert Chiltern’s fortunes were made on the back of privileged information during the construction of the Suez Canal. In exchange for this letter, she seeks support for the construction of a new canal in Argentina.

What are Key Areas for Regional Cooperation in South Asia?

Ejaz Ghani's picture

As discussed in my last two entries, South Asia's Infrastructure Deficit and Integrating the two South Asias, regional cooperation can be a key instrument in meeting the development needs of South Asia. In this piece, I will discuss specific areas that will bring the most region-wide benefits in my view.

The three priority areas for regional cooperation include telecoms and internet, energy, and transport. A regional telecom network and a high-bandwidth, high-speed internet-based network could help improve education, innovation, and health. A regional network would facilitate better flow of ideas, technology, investments, goods and services. It would facilitate greater interactions between knowledge workers in areas such as high-energy physics, nanotechnology, and medical research. There are untapped positive synergies at the regional level that would come from information sharing and competition in ideas among universities, non-university research and teaching entities, libraries, hospitals, and other knowledge institutions.

More and Better Jobs

Eliana Cardoso's picture

Forget the Homo Sapiens and the Homo Economicus. The guy who traces our destiny is the Homo Ludens, the man who plays. Johan Huizinga, a professor of history and linguistics, in his 1938 book, says that art and culture originate from our propensity to dance and have fun. But to enjoy life, play and build a peaceful world, you need a productive job that removes you from the daily struggle of making ends meet.

South Asia is unique in the multiplicity of its challenges and opportunities to generate productive employment. Start counting: many workers are stuck in low productivity agriculture and informal employment; there is low female labor force participation; the skill base is low; the countries in the region struggle with pervasive vulnerability and uncertainty, large economic and social disparities, and persistent conflict and violence.

Yet, there is no work that looks at all these factors in an integrated manner for the region. This is the reason why the World Bank’s first South Asia Region flagship report will focus on More and Better Jobs. This blog will keep readers informed on the progress of the report during next year.

How Can South Asia Overcome its Infrastructure Deficit?

Ejaz Ghani's picture

Last week, I discussed the two very different South Asias and the need for regional cooperation to bring the lagging regions up to the standards of thriving regions. However, increased market integration by itself will not be sufficient to accelerate growth and benefit the lagging regions. South Asia suffers from a massive infrastructure deficit. Infrastructure is like second-nature geography, which can reduce the time and monetary costs to reach markets and thus overcome the limitations of physical geography.

Improved infrastructure that enhances connectivity and contributes to market integration is the best solution to promoting growth as well addressing rising inequality between regions. The Ganga Bridge in Bihar in India is a good example of second-nature geography. The bridge has reduced the time and monetary costs of farmers in the rural areas in north Bihar to reach markets in Patna, the largest city in Bihar. The Jamuna Bridge in Bangladesh is another good example of spatially connective infrastructure. The bridge has opened market access for producers in the lagging Northwest areas around the Rajshahi division. Better market access has helped farmers diversify into high value crops and reduced input prices.

South Asia suffers from three infrastructure deficits. First, there is a service deficit, as the region’s infrastructure has not been able to keep pace with a growing economy and population.

How to Make a Billion Dollars Work

Parmesh Shah's picture

Large-scale public services and expenditure, especially those specifically designed for the poor, are vulnerable to leakages. Whether it is access to quality health care or education, clean water or entitlements under a development scheme; the poor face many barriers in accessing the public services and programs that are intended for them.

Social accountability interventions aggregate citizen voice and strengthen their capacity to directly demand greater accountability and responsiveness from public officials and service providers. Such interventions include the use of tools such as community scorecards, citizen report cards and social audits.

In 2007, three social accountability interventions were introduced in India in public programs on a pilot basis, representing budgets that run into the billions of dollars. With social accountability as the common denominator, three different states with three different service delivery contexts have been able to precipitate a series of impacts in just one year.

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