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Global Economy

Can the middle class really guarantee good governance?

Sina Odugbemi's picture
When social scientists and historians look back on the transformation in the quality of governance that took place in, first, Great Britain and, later, much of Europe in the course of the long 19th century, one explanatory factor often stands out: the rise of a large enough middle class.  What is large enough is, of course, a question of fact, and varies depending on the particular country context. This explanation is often contested, but it has stuck. People refer, for instance, to the revolts against monarchies that occurred across Europe around 1848 as the middle class revolutions. The sense that this explanation makes sense is so strong that when you attend seminars on improving governance in developing countries at some point or the other someone is bound to say: “Let’s be patient folks. Once these countries have a large enough middle class the pressure for improved governance will be unstoppable.”

I write about this now because I have just read an essay by Nancy Birdsall of the Center for Global Development that restates the view with some sophistication. Please see: “Middle –Class Heroes: The Best Guarantee of Good Governance.” The essay is worth reading in full. I am going to focus only on her core case. Key quote:
Having a large middle class is also critical for fostering good governance. Middle-class citizens want the stability and predictability that come from a political system that promotes fair competition, in which the very rich cannot rely on insider privileges to accumulate unearned wealth. Middle-class people are less vulnerable than the poor to pressure to pay into patronage networks and are more likely to support governments that protect private property and encourage private investment. When the middle class reaches a certain size – perhaps 30 percent of the population is enough – its members can start to identify with one another and to use their collective power to demand that the state spend their taxes to finance public services, security, and other critical public goods. Finally, members of a prospering middle class are unlikely to be drawn into the kinds of ethnic and religious rivalries that spur political instability. (Italics mine.)
 

The world’s top 100 economies: 31 countries; 69 corporations

Duncan Green's picture

The campaigning NGO Global Justice Now (formerly World Development Movement) have done us all a favour by updating the table comparing the economic might of the largest countries and corporations. Headline finding? "The number of businesses in the top 100 economic entities jumped to 69 in 2015 from 63 in the previous year’ according to the Guardian’s summary.

The last such table that I know of was produced by the World Bank, and became one of FP2P’s all time most read posts (it included cities as well as countries, which made it even more interesting).

People complained that the Bank table compared apples and pears – national GDP and corporate turnover. GJN have tried to do a better job by comparing government revenues (from the CIA World Factbook) and corporate turnover (Fortune Global 500 – ditto). That reduces the country figure – in the case of Argentina, revenues come to about 30% of GDP, generally a higher slice for developed, and lower for poorer countries, and so boosts the relative importance of transnationals. Is that a fairer comparison? Over to the number crunchers on that one.

Media (R)evolutions: Streaming into the future - Digital music increases its global share in the industry

Davinia Levy's picture

New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.

How do you get your music? This is such a relevant question nowadays, since there are many ways to enjoy our favorite melodies: Do you buy physical copies (i.e., CDs - or vinyl for the essentialists amongst us)? Do you download your songs and singles? Or do you stream it directly from the internet? The music market is constantly evolving, and the way we consume music has a large impact in the industry’s revenues.  

Last month, the International Federation of the Phonographic Industry (IFPI) launched its Global Music Report 2016, which outlines the state of the recorded music market worldwide. According to their own news release: “The global music market achieved a key milestone in 2015 when digital became the primary revenue stream for recorded music, overtaking sales of physical formats for the first time.”

Mark Mulligan, a media and technology analyst, put together in his Music Industry Blog, the following graph analyzing the numbers from the Global Music Report.

Quote of the week: Mariana Mazzucato

Sina Odugbemi's picture

Mariana Mazzucato“If we actually look at the few countries that have achieved smart, innovation-led growth, you’ve had this massive government involvement. How can we square that with the whole austerity discourse?”

-Mariana Mazzucato, an economist and author of The Entrepreneurial State: debunking public vs. private sector myths, which was featured on the 2013 books of the year lists of the Financial Times and Forbes. She is also the RM Phillips Professor in the Economics of Innovation at the University of Sussex, SPRU. She has also blogged for the World Bank in the past. 

#7 from 2015: 5 things you should know about governance as a proposed sustainable development goal

Vinay Bhargava's picture

Our Top Ten blog posts by readership in 2015.  This post was originally posted on June 8, 2015. It was also the blog post of the month for June 2015.

South Sudanese prepare for independenceVinay Bhargava, the chief technical adviser and a board member at Partnership for Transparency Fund, provides five takeaways on governance and development interactions from a recent panel discussion hosted by the 1818 Society.

On May 27, I had the pleasure of serving as a panelist at an event organized by the Governance Thematic Group of 1818 Society of the World Bank Group (WBG) Alumni.

The panelists were: Mr. Homi Kharas, Senior Fellow and Deputy Director for the Global Economy and Development program at the Brookings Institution; Ms. Heike Gramckow, Acting Practice Manager, Rule of Law and Access to Justice at the Governance Global Practice at the World Bank Group; Mr. Brian Levy, Professor of the Practice, School of Advanced International Studies (SAIS), Johns Hopkins University; Mr. Jerome Sauvage, Deputy head of UN Office in Washington DC. Mr. Fredrick Temple, currently Adviser at the Partnership for Transparency Fund, moderated the workshop. 
 
The panel presentations and discussion were hugely informative and insightful. I am pleased to share with you my five takeaways that anyone interested in governance and development interactions ought to know.

The Origins of Political Order: Review of Francis Fukuyama’s impressive history of the state

Duncan Green's picture

Origins of Political Order by Francis FukuyamaRicardo Fuentes has been raving about this book for months, so I packed it in my holiday luggage. Actually it’s two books – The Origins of Political Order takes us from pre-history up to the French Revolution/American Revolution, and the subsequent Political Order and Political Decay brings us up to the present day. They each weigh in at around 500 pages, so hope you won’t mind me taking two posts to review them.

Fukuyama is notorious for his ‘End of History?’ post-Cold War triumphalism, but he’s older, wiser and considerably more nuanced these days. The ambition of the two books is astonishing – nothing less than a history of the birth, evolution and current condition of the state worldwide, with fascinating potted histories of the states both obvious (China, England, Germany, US) and less so (Hungary, Poland, Nigeria).

The starting point is that ‘Poor countries are poor not because they lack resources, but because they lack effective political institutions. It asks (and tries to answer) wonderfully big hairy questions like:

  • why are some countries (eg Melanesia, parts of Middle East) still tribally organized?
  • why is China historically centralized, while India isn’t?
  • why is East Asia so special in its path of authoritarian modernization?
  • what explains the contrasting fortunes of the US and Latin America?

Fukuyama’s big idea is that political order is based on three pillars: effective centralized states, the rule of law, and accountability mechanisms such as democracy and parliaments. ‘The miracle of modern politics’ is achieving a balance between them, which is difficult both to achieve and then to maintain, with many states having one disproportionately stronger than the others, while others achieve it, and then lose it. Its achievement is often accidental, rather than deliberate. Analysing each state’s unique combination of the three pillars helps us understand the strengths, weaknesses and historical trajectories of different countries and empires.
 

Have technology and globalization kicked away the ladder of ‘easy’ development? Dani Rodrik thinks so

Duncan Green's picture

Dani RodrikEconomic transformation is necessary for growth that can lead to poverty reduction. However, economic transformation in low-income countries is changing as recent evidence suggests countries are running out of industrialization options much sooner than once expected. Is this a cause for concern? What does the past, present, and likely future of structural transformation look like? Read on to find out why leading economist Dani Rodrik is pessimistic and what some possible rays of light are. 

Dani Rodrik was in town his week, and I attended a brilliant presentation at ODI. Very exciting. He’s been one of my heroes ever since I joined the aid and development crowd in the late 90s, when he was one of the few high profile economists to be arguing against the liberalizing market-good/state-bad tide on trade, investment and just about everything else. Dani doggedly and brilliantly made the case for the role of the state in intelligent industrial policy. But now he’s feeling pessimistic about the future (one discussant described it as ‘like your local priest losing his faith’).

The gloom arises from his analysis of the causes and consequences of premature industrialization. I blogged about his paper on this a few months ago, but here are some additional thoughts that emerged in the discussion. He’s also happy for you to nick his powerpoint.

Dani identified two fundamental engines of growth. The first is a ‘neoclassical engine’, consisting of a slow accumulation of human capital (eg skills), institutions and other ‘fundamental capabilities’. The second, which he ascribed to Arthur Lewis, is driven by structural differences within national economies – islands of modern, high productivity industry in a sea of traditional low productivity. Countries go through a ‘structural transformation’ when an increasing amount of the economy moves from the traditional to the modern sector, with a resulting leap in productivity leading to the kinds of stellar growth that has characterized take-off countries over the last 60 years.

Simulated Manufacturing Employment SharesManufacturing has been key to that second driver. It is technologically dynamic, with technologies spreading rapidly across the world, allowing poor countries to hitch a ride on stuff invented elsewhere. It has absorbed lots of unskilled labour (unlike mining, for example). And since manufactures are tradable, countries can specialize and produce loads of a particular kind of goods, without flooding the domestic market and driving down prices.

But that very dynamism has produced diminishing returns in terms of growth and (especially) jobs. Countries are hitting a peak of manufacturing jobs earlier and earlier in their development process (see graph). And it could get much worse – just imagine the impact if/when garments, the classic job-creating first rung on the industrialization ladder, shift to automated production in the same way as vehicle production.
 

5 things you should know about governance as a proposed sustainable development goal

Vinay Bhargava's picture

South Sudanese prepare for independenceVinay Bhargava, the chief technical adviser and a board member at Partnership for Transparency Fund, provides five takeaways on governance and development interactions from a recent panel discussion hosted by the 1818 Society.

On May 27, I had the pleasure of serving as a panelist at an event organized by the Governance Thematic Group of 1818 Society of the World Bank Group (WBG) Alumni.

The panelists were: Mr. Homi Kharas, Senior Fellow and Deputy Director for the Global Economy and Development program at the Brookings Institution; Ms. Heike Gramckow, Acting Practice Manager, Rule of Law and Access to Justice at the Governance Global Practice at the World Bank Group; Mr. Brian Levy, Professor of the Practice, School of Advanced International Studies (SAIS), Johns Hopkins University; Mr. Jerome Sauvage, Deputy head of UN Office in Washington DC. Mr. Fredrick Temple, currently Adviser at the Partnership for Transparency Fund, moderated the workshop. 
 
The panel presentations and discussion were hugely informative and insightful. I am pleased to share with you my five takeaways that anyone interested in governance and development interactions ought to know.

Media (R)evolutions: The mobile industry's multiplier effect on the global economy

Roxanne Bauer's picture

New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.

The global mobile technology industry continues to grow and is now a major source of employment generation.  When mobile operators purchase inputs and services from their providers in the supply chain, they generate sales and value added in other sectors and industries, creating a multiplier effect on the rest of the economy.  Accordingly, employment in the mobile technology industry can be directly tied to the product, like engineers, managers, and sales staff that work for mobile operators and manufactures, but it can also be indirectly tied to the product, like application development, content provision, and call centers that serve not only mobile operators and manufacturers but also third-party content and device producers. In some developing countries, outsourcing of mobile content development creates significant numbers of indirect employment opportunities.

In 2014, it was estimated that the mobile technology industry directly employed approximately 12.8 million people globally and 11.8 million people indirectly, bringing the total impact to just under 25 million jobs.
 
Global mobile ecosystem employment impact

Campaign Art: 805 million names with Zlatan Ibrahimović

Roxanne Bauer's picture

People, Spaces, Deliberation bloggers present exceptional campaign art from all over the world. These examples are meant to inspire.

There are around 805 million people facing hunger around the world, according to the State of Food Insecurity in the World 2014 report by the Food and Agriculture Organization of the United Nations. Of this total, more than 50% live in Asia and the Pacific, and around 25% live in Sub-Saharan Africa.  However, as a percentage of the population that are hungry, sub-Saharan Africa has the highest prevalence hungry people. Despite these startling figures, many people are unaware of the hunger many people face.

Zlatan Ibrahimović, one of the biggest stars in football, is working with the United Nations World Food Program to change that. On February 14, 2015, after playing against Caen, Zlatan removed his jersey to reveal 50 names he had (temporarily) tattooed on his body of people he’d never met but kept close.  They were the names of a few of the 805 million people suffering from hunger.  The World Food Programme campaign shows the detailed stories of victims of war, civil conflict and natural disasters through the personal stories of those named on Ibrahimović.   
 
805 Million Names with Zlatan Ibrahimović

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