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Can Businesses Help Create Political Stability?

Zahid Hussain's picture

 © Simone D. McCourtie/World BankBusinesses generally stand little chance of doing well when politics is not stable. Political stability is a necessary condition for an enabling business environment. What can the business community do to help achieve sustained political stability? Experience shows more often than not they fail to do so. What keeps the private sector divided even when both their collective and personal interests are directly at stake? Such an apparent puzzle can be explained by the soft budget constraint syndrome interacting with cronyism.
 
The term “soft budget constraint” (SBC) was originally conceived by the economist, Janos Kornai. The concept has since been regularly invoked in the literature on economic transition from socialism to capitalism. Now the concept is increasingly acknowledged to be pertinent well beyond the realm of socialist and transition economies. A host of capitalist phenomena, ranging from the collapse of the banking sector of East Asian economies in the 1990s and the business rescue packages seen in the midst of the recent global financial crises can be usefully analyzed in SBC terms.
 
The syndrome is at work only when organizations can expect to be rescued from trouble, and those expectations in turn affect their behavior. The more frequently financial problems elicit support in any part of the economy, the more organizations will count on getting support themselves. The government may from time to time announce they will break with past practice and refrain henceforth from bailouts. But such announcements have little effect unless combined with some institutional change that lends credibility to their claims.
 
SBC syndrome alone cannot explain why business groups do not react collectively to political adversities. The divisive force in this process comes from cronyism.
 
Cronyism normally means some of those close to political authorities receive large economic favors. The most visible ones usually entail ownership of a business or its operation, such as the privatization of state-owned enterprises (SOEs). More frequently, however, economic entitlements are provided through privileged access to governmental favors. The most valuable are the provision of monopoly or quasi-monopoly positions and the extension of domestic credit at highly subsidized terms. Favoritism in awarding government contracts is also important and may be as significant as the others. 

The Tale of Minara Begum

Jahirul Islam's picture

Minara Begum is a very special lady in Amtoli Upazila of Barguna district, well known for her courage and hard work. Her determination to lift herself out of extreme poverty to a stable financial position has drawn the attention of many people in the locality. Her strength and resilience is evident in how she survived the devastating cyclone ‘Sidr’, which hit the coast of Bangladesh in 2007, and rebuilt her life afterwards.

Minara’s life had never been easy. Her first husband divorced her for not being able to bear children and her second husband was too ill to earn much. So she had to take up most of the burden of the family. With money she had received from her first husband, Minara bought a cow and slowly she was able to increase her livestock up to nine, which she sold in order to buy land. But misfortune struck her when cyclone Sidr destroyed her standing crops and smashed the roof of her house, which fell on her husband. Since then her husband has been suffering from back pain, unable to work as a day laborer in the field and has become totally dependent on Minara’s income.

Cyclone Sidr left Minara in a hopeless state - she had lost everything she had worked so hard for. She had no clothes; she could afford only one meal a day. Fortunately, she was selected as a beneficiary of the Livestock subcomponent of the Emergency Cyclone Recovery and Restoration Project (ECRRP) in 2010 and given training in the Livestock Farmers’ Field School (L-FFS). She received a livestock package of ten ducks, poultry feed and an improved poultry shed. At the time of delivery of the package, she had no livestock and the yearly income of her family was only Tk. 12,000 ($150) mostly from her wages as a day laborer. She had only 40 decimals of land, including her homestead.

A ‘Losing Prospect’ Argument for Changing Sanitation Behaviour

Nidhi Khurana's picture

Sabrina Haque/World BankFact #1: One in six people still defecate in the open. 
Fact #2: Most of them are not entirely convinced that a toilet does any good.
Fact #3: Many of the recent toilet adopters still like to go in the open.

I don’t mean to be alarmist, but these signal a need for a shift in thinking about the complex problem of addressing behaviour change with respect to toilet adoption.

Explaining the Recent Decline in Remittances in Bangladesh

Zahid Hussain's picture

Migrant workers sent $6.77 billion home to Bangladesh in July-December, down 8.41% from the same time a year ago. For the first time in recent memory, Bangladesh has experienced a decline in remittances in the first half of the fiscal year.

There are four factors that can potentially account for the decline in remittances: the stock of Bangladeshi migrants abroad, earnings per migrant worker, their average propensity to save, and their average propensity to remit money home out of those savings.

The standard refrain appears to be that the flow of remittance has declined because the stock of Bangladeshi migrants abroad is not growing like it used to. This is because of two reasons. First, Bangladesh is failing to send more workers abroad to traditional markets and exploring new markets. Only 450,000 migrants managed oversees jobs in 2013, down by more than 33% from 680,000 in 2012. Second, the number of migrant workers returning to Bangladesh has also increased because the government could not resolve problems related to the legal status of Bangladeshi migrant labors in Saudi Arabia, the United Arab Emirates and Kuwait through diplomatic channels. Unfortunately, there is no reliable time series on the annual number of migrant returnees from abroad.

Is that the full story?  I doubt it although it is generally assumed that the current migrant workers are sending money home as per their maximum capacities and have little capacity to increase the flow.

Loyabi’s Story: Where There is a Will, There is a Way

Santanu Lahiri's picture

The author captured the story of Loyabi, in Chhaor Union Parishad. This is her story of how she provided her family with access to better Mariam, Loyabi's daughter, studies in Grade IXsanitation and improved their futures.

“I will teach my children how to read and write regardless of my difficulties in doing so.”

My name is Loyabi and I come from a very poor family of Mahadanga village in Chhaor Union Parishad. I was married to Abul Hassan, a man from my own village, at the age of 15. For several years our poverty did not prevent us from being happy. We were blessed with two daughters and two sons. However, when my husband was diagnosed with gallstones, I found I had to raise Taka 50,000/- ($630) for his operation.

We had no land of our own and lived on common land. I was able to collect some money by asking for assistance in different villages. I worked as a mid-wife for humans as well as cattle, bathed dead bodies before their burial and somehow put together the required amount of money to get my husband’s operation done.

Nepal aims to be “open defecation free”

Johannes Zutt's picture

The open toilet along the river in Nangkhel villageWe rarely give the toilet a second thought. We use it when we need to, and we flush and forget. We are also able to conveniently wash our hands afterwards. But imagine if you are on a long hiking trip or a bus ride with no stops in sight and had no access to a toilet or running water. It’s a situation most people would dread.

In poorer parts of the world, this is the daily reality for many. The humble toilet—perhaps the most important contributor to improved human health in history—is a luxury item which relatively few people enjoy. Without a toilet, the poor have to go in the open, behind bushes, or next to streams. They cannot flush their waste away or wash their hands afterwards if they wanted to. In poorer countries, managing human waste remains a major challenge, and failure to meet that challenge exposes millions of children and adults to waste-borne diseases that can have deadly consequences.

In Nepal, a country of approximately 26 million people, nearly 40% of the population do not have toilets. In parts the Terai or lowland areas, this number climbs to a staggering 75%. To be sure, the Government of Nepal has achieved remarkable progress in improving sanitation coverage in the last two decades. In 1990, only 6% of Nepalis had access to a toilet. By 2011, 62% had access, with the sanitation Millennium Development Goal (MDG) achieved ahead of the 2015 target. However, that achievement still leaves a large population—more than nine million people—without toilets. So the Government decided to aim for a new and more ambitious target—universal access by 2017. And it may get there.

Chaturman and Nyuchemaya outside the new toilet on their back porchLast month, I visited Nangkhel, a Newari village near Bhaktapur in the eastern corner of the Kathmandu Valley, to see how one village succeeded in bringing the luxury of a toilet to all 181 households (or about 900 people).
 

The Delhi Rape Case, One Year Later

Maria Correia's picture

See also: Anniversary of the New Delhi Attack Reminds Us that Tackling Violence is Urgent

December 16, 2012 will in the foreseeable future be remembered as the day in which six men savagely gang raped a 23-year old female student on a bus in New Delhi. The young woman died from her injuries 13 days later. The event shocked the nation and sparked unprecedented uprisings in the Indian capital and across the country. It put the international spotlight on India and reminded us that violence against women remains a leading cause of female mortality worldwide.
 
Today, on the one-year anniversary of what is simply referred to as the “Delhi Rape”, we are compelled to pause and reflect.  Four men were sentenced to death for the crime in September – did this bring closure? Beyond the protests and public appeals for change, has there been meaningful change in India?

The Day that Changed My Life

Haris Khan's picture

I will never forget October 8, 2005, a day that changed my life forever as it did for hundreds of thousands of Pakistanis.
 
I remember my house shaking violently like never before and my instinctive reaction to get myself and my family to safety outside the house. This was an earthquake that felt distinctly different from others. Things were shaking and moving too much and for too long. When we started seeing plumes of smoke rising from where a high rise apartment building had once stood, we knew this was really bad. Watching the terrified look of affected people on TV shook me inside and forced me to think about difference I could make. When I went back to my job and my life, the question kept nagging at me. When I was presented with the opportunity to work on the earthquake reconstruction project for the World Bank, I took it and have never looked back.

How Can We Promote A More Entrepreneurial Environment Together?

Siddhartha Nanayakkara's picture

 CAAYE Facebook“If you cannot do great things, do small things in a great way.” - Napoleon Hill
 
Eight Commonwealth Asian Nations joined hands to discuss the contemporary needs of young entrepreneurs in the region at the Commonwealth Asia Alliances of Young Entrepreneurs (CAAYE) Summit held in Colombo, Sri Lanka from the 9th - 11th of November, in parallel to the Commonwealth Heads of Governments Meetings (CHOGM). The theme of the summit was highlighted as “Profit with a Purpose” which argued around its key objectives in promoting an ecosystem that supports the development of young entrepreneurs who contribute to economic, social and environmental sustainability across CAAYE countries. CAAYE 2013 was hosted by the Federation Chamber of Commerce and Industry Sri Lanka (FCCISL) in partnership with the Commonwealth Secretariat
 
South Asia concurrently holds the greatest opportunities and the risks of been responsible for the world’s largest youth populations in transition, therefore facing reality and addressing those contemporary needs should be key to those respective stakeholders such as governments, for a more stable and prosperous economy. Common challenges faced by young entrepreneurs in Asia are “fundamentals” concerns, which could easily been eliminated if there is right focus and continuous review by the relevant authorities in these countries. Those concerns that caught my eye included the need for updated knowledge and curriculum development at all level, need to not jail but celebrate failure, revamping of “extensive” government and organizational procedures allowing to reduce the lead time.

Empowering Youth with Disabilities in Bangladesh: Providing ICT Skills

Vashkar Bhattacharjee's picture

In Bangladesh, youth with disability often have difficulty transitioning to work, as they lack the necessary skills to perform competitively in the job market and also face discrimination from employers on the basis of their disability. When the World Bank and Microsoft announced the regional grant competition “Youth Solutions! Technology for Skills and Employment”, we decided to submit a proposal to address this from the Young Power in Social Action (YPSA) in Bangladesh.
 
Our proposed project titled “Empowering Youth with Disabilities through Market Driven ICT Skills” sought ideas from youth on how to use innovative and creative methods to promote ICT skills amongst youth with disabilities to help them secure gainful employment.

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