Rethinking anti-corruption for COVID-19 – From Poverty to Power blog

Here is an interesting recent post from the Oxfam blog From Poverty to Power, written by Mushtaq Khan and Pallavi Roy of the SOAS Anti-Corruption Evidence Consortium (SOAS-ACE).

This brief article draws on the research of the authors and the ACE to outline some general principles for developing countries to use in their response to the Covid-19 pandemic, particularly in scaling up the overall response via a coordinated effort from a variety of agencies.

The authors write:

“the reality is that in many countries, corruption and governance constraints will limit the rapid scaling up of responses to COVID-19. As we explain in a SOAS-ACE policy brief, this will not only undermine treatment responses, but result in cycles of unsustainable lockdowns and massive economic deprivation.”

“…The enormity of the crisis justifies thinking in terms of a wartime response and asking how the different parts of this strategy could be provided by mobilizing different delivery agencies to achieve the most cost-effective and rapid scaling up.”

They conclude:

“[D]eveloping countries could temporarily mitigate corruption and low capacity by involving public, private and third sector actors to enable scaling up on the basis of revealed competence. This does not get rid of corruption but reduces its level to maximize scaling up. This is very different from the optimization strategy of standard economics.

…[In addition] we were deliberately suggesting building in redundancy. In a storm, even if you are building a small hut, you would do well to build some redundancy into each wall. A leaner approach may look more cost effective, till the storm blows it away. It is only if developing countries have an effective strategy of strengthening their health responses in the storm can lockdowns be relaxed in a sustainable way.”

The causes of poverty: individual or structural failure?

Chang EconomicsUsersGuide“Starting from the Disney animations that we watch as young children telling us that if we believe in ourselves, we can achieve anything, we are bombarded with the message that individuals, and they alone, are responsible for what they get in their lives. We are persuaded to accept what I call the L’Oréal principle – if some people are paid tens of millions of pounds per year, it must be because they are ‘worth it’. The implication is that, if people are poor, it must be because they are either not good enough or not trying hard enough.

Individuals are in the end responsible for what they make out of their lives. Even if they are from broadly the same backgrounds, different people end up in different positions because they have different talents in different things and make different levels and types of efforts. It will be silly to blame everything on the ‘environment’  or luck. Attempts to suppress the effects of individual talents and efforts too much, as in the former socialist countries, can create societies that are ostensibly equal but fundamentally unfair…There are, however, causes of poverty that are ‘structural’ in the sense that they are beyond the control of the individual concerned.

Inadequate childhood nutrition, lack of learning stimulus and sub-par schools (frequently found in poor neighbourhoods) restrict the development of poor children, diminishing their future prospects. Parents may have some control over how much nutrition and learning stimulus their children get – and some poor parents, to their credit, make great efforts and provide more of those things than do other parents in similar situations – but there is a limit to what they can do. They are by definition under great financial stress. Many of them are totally exhausted from juggling two or three insecure jobs. And most of them had a poor childhood and poor education themselves.

All of this means that poor children start the race of life already weighed down by sandbags on their legs. Unless there are social measures to at least partially compensate for these disadvantages (eg., income support for poor parents, subsidized childcare, greater investments in schools in poor areas), those children won’t be able to fully realize their innate potentials.

Even when they overcome childhood deprivation and aspire to climb the social ladder, people from poorer backgrounds are likely to meet more obstacles. Lack of personal connections and a cultural gap with the elite often mean that people from underprivileged backgrounds are unfairly discriminated against in hiring and in promotion. If those people also happen to have other ‘wrong’ characteristics – in terms of gender, race, caste, religion, sexual orientation and what not – they will have an even harder time to get a fair chance to demonstrate their abilities.”

Ha-Joon Chang (2014), Economics: The User’s Guide, Penguin books, p.336-8.

The Promise – and Pitfalls – of State-led Development in Resource-rich Countries: Resource Nationalism in Latin America and Beyond — Developing Economics

The eclipse of neoliberalism in 2000s coincided with the so-called commodity ‘super cycle’ that lasted between 2002 and 2012. In search of a new model, resource-rich states began to articulate resource nationalism as a development strategy. While ownership and control of minerals and hydrocarbons are intricately tied to claims of state sovereignty and exercise of […]

via The Promise – and Pitfalls – of State-led Development in Resource-rich Countries: Resource Nationalism in Latin America and Beyond — Developing Economics

For the least developed countries, revitalising multilateralism is life or death — Emergent Economics blog

By Daniel Gay and Kevin Gallagher

Few would deny that the international system governing the environment and economy is under pressure. Globalisation itself is wobbling, to the chagrin of governments in rich and emerging economies. What’s less talked about is the effect on the world’s 47 least […]

via For the least developed countries, revitalising multilateralism is life or death — Emergent Economics

Convergence and divergence – emerging markets, global value chains and industrial policy

Containers are loaded onto a container ship at a shipping terminal in the harbour in Hamburg

According to a recent piece in The Economist, economic convergence with the US among so-called emerging markets has slowed in the ten years since the great recession. The difference in the growth rate of GDP per capita has slipped since the 2000s from an average of over six percent in emerging Asia to about four percent. Emerging Europe has slowed less, but from a lower rate, while Latin America, North Africa, Sub-Saharan Africa and the Middle East are now beginning to fall behind again, at least on average.

This is disappointing for champions of economic theories of convergence resting on the globalisation of the world economy. It is also bad news for those still living in poverty in the countries slipping back. Of course, slowing convergence need not mean that absolute poverty is no longer falling. But it does mean that the prospects for reducing inequality between rich and poor nations and more widely-shared prosperity are for now receding. Given that the US has not grown particularly fast since it emerged from recession, it means that only emerging Asia continues to be a truly dynamic region in economic terms. And even this mantle may be under threat as growth slows in China, affecting supply chains throughout Asia. Continue reading

Asia’s ‘other communist dynamo’ – Vietnam and economic transformation

Moneyweek magazine recently ran a piece extolling the virtues of the Vietnamese economy and pinpointing it as an emerging market worth investing in. Perhaps as an unintended consequence of Trump’s trade war, Vietnam may benefit from US-China tensions as production and exports shift away from China to some extent. However this outcome remains highly uncertain, since Vietnam itself may also become a victim of US tariffs.

The story of Vietnam since it began its own version of China’s ‘opening up’ and path of development as a ‘socialist-oriented market economy’, called Doi Moi, literally meaning ‘renovation’, has to date been pretty successful. This began in 1986, and since 1990 the country “has notched up the world’s second fastest growth rate per person after China”. This has led to dramatic falls in poverty as wages have kept up with or exceeded productivity, which has itself grown fairly rapidly. Continue reading

Economic development in Palestine and beyond – via Developing Economics blog

An interesting and timely piece by Patrick Kaczmarczyk on promoting economic development in Palestine, via the excellent Developing Economics blog. The first two paragraphs are below.

Successful economic development in Palestine will require an adequate theory of development, industrial policy, and institutional reforms.

Recently, the Palestine Economic Policy Research Institute (MAS) published a comprehensive study on Palestinian economic development. In this report, co-authored by my colleagues Heiner Flassbeck, Michael Paetz, and I, we explore possible solutions as to how Palestine could sustainably finance its deficits. Now, after the Israeli elections, Jared Kushner, the US President’s son-in-law and senior advisor, is set to announce the details of the US Peace Plan for the Israeli-Palestinian conflict. Given that the Peace Plan is expected to include a large economic component to solve the conflict, it will be interesting to see to what extent it addresses the fundamental problems we identified in our research.

Our results suggest, succinctly, that under current conditions of excessive imbalances in the external sector (trade and current account), any issuance of debt securities requires fixing these imbalances first, for which, in turn, strategic public intervention is critical. This finding may come as a surprise to most policymakers, as orthodox economic theory suggests that the most efficient ways for countries to develop is through market led (as opposed to state led) policies. Historical evidence demonstrates that none of the advanced countries followed this path in their own development, yet the idea of ‘the market’ as the most efficient development tool is still widespread. Based on this belief, Western institutions wreaked havoc in developing countries during the 1980s and 1990s, and continue to do so (although some institutions, notably the IMF, show significant progress in learning from past experiences).

Jason Hickel on global poverty and neoliberalism

Jason Hickel is an anthropologist who has written extensively on global poverty and inequality, as well as political economy. Here is a recent post of his, discussing the nature and measurement of, and trends in, global poverty, as a response to a critique by Steven Pinker.

Hickel strongly disputes the idea that falling poverty, where it has occurred, has been due to neoliberal globalisation. Rather, the successful industrialisation and economic development that are necessary for sustained poverty reduction have been achieved with state intervention, industrial policies, and strategic integration with the global economy in countries such as South Korea, Taiwan, Singapore and China.

There is a huge literature on this, but Ha-Joon Chang is perhaps one of the best known academics to have written popular books on how particular forms of state intervention have promoted capitalist development. 23 Things They Don’t Tell You About Capitalism is the easiest read and I have posted a number of excerpts from it over the last few years. Bad Samaritans is also good value. For a more academic discussion see Kicking Away the Ladder.

Thanks to the excellent blog The Case For Concerted Action for posting on this first and drawing my attention to Hickel’s work.

The good governance illusion

Democracy, accountable and transparent government, low levels of corruption, the rule of law, stable property rights, pluralism: we tend to think that these are all highly desirable in any society.

In poor countries, they are often absent, but at least some of them are present in many rich ones. It seems to follow that they should be encouraged in the former as a way to encourage development. After all, if richer countries have these characteristics, they may be part of the development process.

This wishful thinking provides a foundation for the ‘good governance’ agenda propagated by the World Bank and other international institutions during the 1990s and into the 2000s. It was argued that domestic political reforms in the direction of good governance in poor countries would provide the institutional environment conducive to the efficient working of markets and thereby promote development. Continue reading

Instability: poverty and low skill push Britain to Brexit — via INCOMESCO blog

A report on the causes of BREXIT has been published. According to this report, Brexit was the reason of ‘Poverty, Low Skills and Lack of Opportunities’. The research was accomplished by Goodwin, M, and Heath, O (2016) for the JRF Organisation. ‘This report provides unprecedented insight into the dynamics of the 2016 vote to leave […]

via Instability: Poverty and low skill push Britain to Brexit — INCOMESCO