Islamic finance can connect millions around the globe to the economy (Credit: The Reboot, Flickr)
In the wake of the global financial and economic crisis, the need for a new development model which is more sustainable and also fosters inclusive growth has become more apparent. Could Islamic finance be the answer? Islamic finance promotes risk-sharing, connection to the real economy and emphasizes financial inclusion and social welfare. Can these dimensions contribute to inclusive growth and sustainable development?
Islamic finance is based on two intrinsic features: risk-sharing and the link between financial transactions and the real economy. Because all financial contracts are backed by real sector assets and risk-sharing among partners, including financing institutions, Islamic financial instruments have relatively more stability than conventional instruments and tend to be more flexible against unanticipated shocks. This critical link brings prudence to the system, promotes equity relative to debt, broadens financial participation, and minimizes overall vulnerability.
Ace IDS researcher Naomi Hossain introduces the first results of a big Oxfam/IDS research project on food price volatility
If the point of development is to make the Third World more like the First, then we aid-wallahs can pack our bags and go home. Job done.
The most striking finding of Squeezed, the first year results from the four year Life in a Time of Food Price Volatility research project, is how like the people of the post-industrial North the people from the proto-industrial South now sound:
- Stressed and tired
- Juggling work and home
- Surrounded by selfish individualists, led by uncaring politicians
- In strained relationships
- Constantly pressed for time
- Never enough money, even for the basics.
These are some of the views and reports relevant to our readers that caught our attention this week.
Google Blimps for Disaster Response
"A blimp is a floating airship that does not have any internal supporting framework or keel. The airship is typically filled with helium and is navigated using steerable fans. Google is apparently planning to launch a fleet of Blimps to extend Internet/wifi access across Africa and Asia. Some believe that "these high-flying networks would spend their days floating over areas outside of major cities where Internet access is either scarce or simply nonexistent." Small-scale prototypes are reportedly being piloted in South Africa "where a base station is broadcasting signals to wireless access boxes in high schools over several kilometres." The US military has been using similar technology for years." READ MORE
Since when do the hard-nosed folks who work at the World Bank on boosting private sector performance in the Middle East and North Africa go off to conferences to discuss ANGELS? Well, that’s just what we did last month when a team from the finance and private sector unit went to San Francisco to attend the Angel Capital Association (ACA).
About a month ago two colleagues (Greg Kisunko and Steve Knack) posted a blog on “The many faces of corruption in the Russian Federation”. Their post, based on the elegant analysis of the 2011/2012 Russian BEEPS, underscores a point that many practitioners and researchers are now beginning to appreciate because of the availability of new, disaggregated data: corruption is not a homogenous phenomenon, but rather a term that encompasses many diverse phenomena that can have profoundly different impact on the growth and the development of a country. If we delve deeper into this disaggregated data, we observe that within the same country can coexist significantly different sub-national realities when it comes to the phenomenon we label “corruption”.
What do discussions about aid modalities and institutional change have in common?
A lot, very little, would you expect them to? Clarifying these somewhat nebulous terms may be a first step to address this question.
An aid modality (or aid instrument), describes a way of delivering ODA. Different modalities are defined according to how funds are managed and disbursed: Is the funding ‘on budget’? Who signs off on the funding releases? The concept says nothing about the content of a given aid programme; it is purely concerned with the process used to transfer the funds. While budget support and project aid are the most common types of aid modality, the term also encompasses a host of other funding mechanisms, including funding for skills transfer.
I spent last Wednesday morning taking drugs seriously. OK that’s the last of the lame do/take drug jokes. What I actually did was have a coffee with Danny Kushlick and Martin Powell of the Transform Drug Policy Foundation, and then attend a Christian Aid seminar on drugs and development. Both conversations addressed the same questions: are drugs becoming an un-ignorable development issue and if so, what should we (INGOs, aid agencies etc) do about it?
The answer to the first question is pretty obviously ‘yes’. In the rich countries the ‘war on drugs’ is getting nowhere, stymied (among other reasons) by the basic laws of supply and demand – any success in the war reduces supply, so prices rise, so supply recovers. In the producer countries, the vast sums involved ($330bn a year, by one estimate) poison politics. And increasingly, the divide between producer and consumer countries is being eroded, as drugs spill over into the slums and alleyways of the developing world – including West Africa, where transhipment and consumption are becoming major issues. Everyone gets dirty, trust is destroyed, communities turn bad. As Christian Aid’s Paul Valentin said, ‘the drugs trade cuts across everything we do – inequality, tax havens, access to services, HIV. Over half the countries we are working in are directly affected.’
My previous blog ended with a question about the usefulness of anticipating the long-term future if that future is highly uncertain. Ever since the 1982 article on “Trends and random walks in macroeconomic time series” by Nelson and Plosser, there has been a debate about the long-term statistical properties of GDP and other macroeconomic variables. Nelson and Plosser could not reject the hypothesis of a random walk (with drift), which means that random shocks have a permanent impact on the level of GDP and that the uncertainty interval around forecasts becomes wider and wider with every year you try to peek farther into the future. The message seems to be: If next year’s world is already very uncertain, don’t even bother forecasting the world in 2030.
Others found that “macroeconomic time series are best construed as stationary fluctuations around a deterministic trend function”, if you allow for a few structural breaks in the trend. The consequences for long-term forecasting are huge because, in this case, random shocks are transitory, there is mean reversion, and it is in fact easier to analyze long-term trends than short-term fluctuations.
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 differently from today's, and will have very little resemblance to yesterday's.
This week's Media (R)evolutions: Only a Third of the World's Population is Online.