Incentives and Values in Conflict-Prone Countries


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One of the most extraordinary examples of the use of economic principles comes from the beginning of the 19th century, when England used to send a huge number of prisoners to Australia. The government originally paid the ship captain a pre-determined amount for each prisoner that boarded the ship, but half of them would die during the journey. In 1862, Edwin Chadwik, knowing that people respond to incentives, told the U.K. government to pay captains according to the number of prisoners that actually disembarked in Australia. With this adjustment, the survival rate increased from 50% to 98.5%.

This example illustrates how incentives can do wonders in some circumstances. Yet, human actions are not always guided by the same calculations made by a profit maximizing ship captain. Behavioral economists have emphasized that we respond to a deep ingrained sense of fairness. Culture and values are crucial in understanding human behavior and promoting healthy and stable societies.

Sándor Márai, a Hungarian writer, had one of his heroes asking a friend if she had ever tasted olives filled with tomatoes.As in the case of olives, he explains, the combination of the innumerable tiny tastes forms the extraordinary dish that we call culture. He was trying to make his friend understand that culture (this virtual structure that guides our reflexes and is the source of our happiness) was about to expire in the ruins of besieged Budapest.

Márai’s reflection comes to mind as I read about incessant destruction in Afghanistan and Pakistan and begin to work as an economist in countries torn by violent conflicts. How can we help promote peace and development in South Asia?

People in the region identify jobs as high in the list of their priorities, a good reason to have the South Asia Flagship Report for fiscal year 2010 discussing how to get more and better jobs in the region. Employment has a social value in conflict prone societies that goes well beyond income generation. Like everywhere else, the work we do contributes to our sense of dignity and inclusion. But beyond this, job creation in conflict prone societies can help prevent armed-conflict from shifting towards crime, burglary and drug related violence, thus stopping the deterioration of human values which is key for the well functioning of peaceful societies.

What do you think?


Eliana Cardoso

Former Acting Chief Economist

Join the Conversation

Cynthia Malta
November 03, 2009

I’m a journalist, working in Brazil. I agree with the idea that the answer is on more and better jobs. And, if I may, have a question: what about more and better schools?

November 03, 2009

I agree that employment for someone in conflict prone societies is paramount. As Cardoso says, a job provides more than an income. In developed societies, unemployment causes mental and physical illness, family conflicts, etc. If we want to have peace, we must first provide people with a decent living: that often requires structural reforms: land reforms, breaking up of the power of some groups in society.
Raja Junankar
Emeritus Professor
University of Western Sydney

Bob Spencer
November 03, 2009

For me, this is a perplexing question. It is perplexing to me because people have multiple needs. From my personal experiences, low income people want good jobs. At the same time, they, especially younger people, have a strong need to bond with others and gain respect from others and they want to have pride in their chosen self-identity. Also, young alienated people tend to be the ones that commit crimes and otherwise disrupt society.

Jobs by themselves often do not prevent crime. In many cases, criminals are not socially competent or do not have other skills that they need to obtain a job. So, if we can help them with their multiple barriers, and then provide a job, then we can expect a healthy integration into society.

Another large item is the often strong desire to find a bonding replacement for a lost or destroyed family and community. In these cases, young people may form gangs or join an ideological movement so that they can find a replacement for their lost families and lost identities. I am thinking about the many refugees.

I have, on several occasions, had extensive conversations with gang leaders and gang members. Their peer association was almost always a higher priority than obtaining a job. Actually, having the chance to talk to an older person (me) that gave them respect seemed to be more gratifying than a job. Or, in many occasions, gang members and criminals already had jobs, but they wanted to do the illegal stuff too. They were not the ones that had social competency barriers, but they were alienated. It’s complex.

So, job development and job placement needs to be integrated with individual multiple issues, and it needs to be part of a wider effort to build social integration and a sense of belonging.

Oh—one other thing---when you set-up the job programs, do it individually with each participant. Each one has multiple needs and probably somewhat different priorities. They greatly need that individual attention. I can assure you that you will have a much better success rate than if you conduct classes as your primary or only mode of participant contact. I cannot emphasize that enough. Your evaluations will show much better results for the funds spent on each person.

Thank you!
Bob Spencer

Majbritt Thomsen
November 03, 2009

Indeed you are right, incentives based on culture and positive values can lead to actions, which promote healthy and stable societies. Creating jobs in unstable and developing countries is one of the best long-term solutions. But how to get this process started?

In my point of view long-term solutions must come from the local society and focus on creating sustainable sector development. What is often needed is a sustainable development strategy based on knowledge and cooperation. Inspiring, helping, supporting, guiding and assisting such a development is possible through knowledge and network services.

My personal experience in this regard is the tourism sector in Bangladesh and my own project started in December 2008.

Tourism has since the 1990s been a small but rapidly growing sector of the national economy. Nevertheless, Bangladesh is still one of the countries in the South Asian region with the least arrivals and the lowest revenue earned from the tourism industry.

Several international players have highlighted Bangladesh positively as a tourism destination during the last couple of years. The worldwide New7Wonders of Nature campaign included mangrove forest Sundarbans and Cox’s Bazar beach among more than 440 candidate locations from 220 countries. Along with only 27 locations Sundarbans is still a part of the competition. World leading publisher of travel guides and guidebooks, Lonely Planet, last year recommended Bangladesh as one of the top ten interesting travel destination in 2009. New travel guides has been published on Bangladesh by international renowned publishers; Lonely Planet (2008, 5th ed.) and Bradt (2009, 1th ed.). There should be no doubt, national as well as international; the Bangladesh tourism sector has indeed potential!

Tourism is internationally often praised as an effective development tool, especially in rural areas and the developing world. The presence of tourism in any destination always brings with it economic, environmental and socio-cultural impacts. With the Bangladeshi developing status, a sustainable development would have a huge positive impact. But such a development is only achievable by balancing the needs of tourists with those of the destination.

In my point of view, a barrier to a positive development of the Bangladeshi tourism sector is the lack of a consistent strategy based on cooperation, knowledge and sustainability. To take advantage of the Bangladeshi tourism potential, the right long-term actions are needed from all players involved.
My conclusion is founded on my experience as Danish expatriate with a MA in tourism, two years of living and traveling in Bangladesh, a study on the potential of the national tourism sector and contact with a variety of people related to the local tourism sector.

To inspire a sustainable tourism movement the Views On Tourism Project has been developed, with an objective to facilitate Bangladeshi access to tourism knowledge and networking. Two services have been launched.

The web-page ‘Views On Tourism – Knowledge and Inspiration to the Bangladeshi Tourism Sector’ gather national, regional and international articles on the many topics related to a positive tourism development. Over 200 articles focus on themes like; Best Practices, Marketing, Management, Development, IT, Education, Policy, Market Knowledge, Cooperation and Customer Opinion.
Further research is made easy through an overview of the important national tourism players and more than 70 links to international knowledge sources.
The information has been carefully selected with the objective to support the Bangladeshi Tourism players with knowledge and inspiration. This being said the majority of information is also useful for an international audience facing similar tourism challenges. On a monthly basis the web-page now has readers from more than 80 different countries.

A second project is the LinkedIn group ‘Views On Tourism – Bangladeshi Network and Discussion’, which is a professional Bangladeshi tourism network. The potential of this network group is huge! Imagine a network where members can interact, national as well international, to exchange views, find new employees, develop sustainable destinations, start up innovative products or launch investment possibilities.

In the national media, tourism is often highlighted as a potential sector to develop and several positive initiatives are being proposed. It is not possible to estimate the exact short- and long-term impact that the Views On Tourism project has on the Bangladeshi tourism sector. Nevertheless articles have already been quoted by a national minister and the formation of a tourism related organization is inspired by this project.

Francis Griffin
November 04, 2009

The level of investment in South Asia is just too low to match the needs of the region. My experience is in power generation which is a fundamental requirement for wealth. The needs of Pakistan and much of the surrounding area could be fulfilled by renewable resources such as hydro power but the total World Bank investment worldwide is insufficient to fund even one of the three possible schemes currently being designed. If these schemes went ahead and provided the high levels of employment that would be required then people might have an alternative to shooting each other.

I realise that the issues are extremely complex but the levels of available funding are just too low for the needs of the region.

Ziaullah Khan Bangash
November 04, 2009

Dear All Regards
I am fully agreed with comments of Eliana Cardoso on end poverty in south asia. as far as concern with my Country Pakistan, i am highlighted the current situation of Pakistan. We faced a lot of problems due to un employment, non availablity of basic domistic things like sugar, wheat. most of the areas are suffering from the military operation against militants. a large number of people have displaced from their homes and living in the camps. no income oppurntunities to these IDPs, they are waiting for releif from govt or donor agencies. Youth are discourge and their minds are set for terrorism, the militants have hired these youngs for their terriost activities and giving them nominal charges.
Due to this practices most of youth have contacted the agents of these militants.
what is the reason of these youth behavier change?
yes due to no income oppurtunities, unemployment.
if Govt creates income and job oppurtunites, i think the youth will be play a positive role to change the present uncertainaty in the country.



Eliana Cardoso
November 04, 2009

To Cynthia: You are right, more and better schools are also a priority, especially when we look at skills workers need to get a good job.

Raja: Thank you for your comments.

Bob: Thank you for your thorough response. I agree that reintegration into society is tricky stuff. I would add to your list the "cost x benefits" equation. When the cost of illegitimacy becomes higher than the benefits, peer pressure can be turned into an incentive as well.

Mitch: Congratulations on your project!

Francis: Indeed needs are big. The World Bank alone does not have an envelope deep enough to match, let alone fulfill them all. We need to help foster an environment for private enterprise to flourish hence creating a virtuous cycle of investments and job creation.

Ziaullah: Thank you. Government's role is mostly to foster an environment conducive to job creation and opportunities. In times of crisis it is also to step in and provide better safety nets. But this is not a long-term solution.

November 04, 2009

Based on the posting, Eliana Cardoso wants to look for answers from cultural and social values to curb instability in conflict-prone countries. Employment carries both the material and spiritual value, which not only help people earn their bread, but also make them have a sense of fulfillment. Therefore, I think increasing employment is an effective way to reconstruct conflict-torn countries. However, the problem is that how to increase employment. For example, if the governments in such countries are capable to devise policies to create jobs. But more often than not, poor governance is one of the factors contributing to the conflicts. So, the idea of increasing employment is good, but we need to figure out how to realize it.

November 05, 2009

To Ms Eliana Cardoso:
Perhaps, you have identified only half the problem to a gigantic problem in South Asia. The problems are more complex and vicious. Yes, jobs are the need of the hour but what about creation of jobs in a region where poverty levels are high and acute. There is a need for infrasturcture strengthening, more developmental activity and the need to tap vast irrigation potential. With majority of the states dependent on agriculture, the need for rural infrastructure is key for all-round growth and job creation in this region. Unlike in the developed countries, where the infrastructure is more or less in private hands, here the State has control over job creation, with host of conditions like reservation of jobs on the basis of communities, religion and other caste configurations.
This is where the crux of the problem lies. If in India the private sector goes for cream of the human resource in recruitments, the Government puts spokes by insisting on recruiting manpower based on their caste backwardness and social ladder in society.
Perhaps this must be the case in most of the troubled zones in Asia where the majority-minority imbalances stagnate job creation and opportunities.
Added to the abject levels of poverty, the frequent disturbances, internal and external, leave a permanent scar on develipment process and declerates growth by some decades. If natural calamities like drought and floods are one reason for failure to provide sustainable growth and job creation, the perennial conflict between the haves and have-nots on other fronts have robbed the region of putting its best foot forward.
Pakistan, Bangladeshm, Nepal and Maldives are the four countries where the scope for providing jobs is next to impossible with their per captia income is at its abysmal low.India, the only sleeping Asian giant is slowly trying to shed its lethargy and make a mark in the international market, giving some sleepless ngihts to China. For that matter, even China cannot be considered as a country which has succeeded in creating jobs totally. There are high levels of unemployment but mercifully, it does not face neither an internal unrest nor any outside threat giving it ample scope to tackle the problem in the near future.
Private enterise coupled with State help can arrest this growing unemployment in the region. A judicious mix is what is required now.

New Delhi

Eliana Cardoso
November 05, 2009

To Kun:
Yes. The big question is "how". And this is the question the forthcoming flagship on "more and better jobs in South Asia" will be researching.

Eliana Cardoso
November 05, 2009

To V. Sriharsha:
Great comments. A judicious mix is good advice. Virtue is in the middle...

denis bogere
November 07, 2009

The problems in conflict prone areas run deep and the creation of jobs alone cannot solve the issues in conflict prone regions. The reality is the gross economic injustice allowed to persist, in terms of control of resources such as water, land, and minerals that breed conflict in the first place. However, these regions require building central governments that have the ability to protect and provide for their people and make a real difference in people's lives. This includes security, basic services and job creation, which in turn undermine conflict.

Eliana Cardoso
November 09, 2009

To Denis:
Sure. Jobs alone will not end conflict, but will help deliver stability and a peace dividend through development. And not all conflicts are generated by grievances and injustices. One week from today, I will go back to the discussion of conflict and jobs, because today I want to discuss inflation in South Asia in a blog coming up soon.

Bob Spencer
November 06, 2009

For the incentives to have an appeal, the alienated young person needs to believe that no matter what, they can make it. They have to believe that life can become stable and fair or that they have the power enough to obtain an opportunity. For many, they were born and raised in poverty and have no experience of incentives except what they see in their isolated neighborhood. The neighborhood criminal or ideologue may have more appeal because they are personal acquaintances that demonstrate a higher level of affluence and prestige.

In these cases, the person to person collaboration between the worker and the person needing work is essential. The personal approach fits the context of how many isolated poor people live, and we can use that appeal to tug them along until they see the incentives and begin to believe.

I have seen research about this for western societies, but only my personal experiences in Asia support what I am saying here.

Thank you-- Bob