Book Review: 'Why we Disagree About Climate Change', by Mike Hulme

April 15, 2010

The UK elections and international development

April 15, 2010

The World According to Robert Zoellick

April 15, 2010
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World Bank President Robert Zoellick always gives a big set piece speech ahead of the Robert ZoellickIMF/World Bank spring meeting. Yesterday at the Woodrow Wilson Center he spoke on ‘the End of the Third World’. Highlights (and comments from me in brackets):

‘2009 saw the end of what was known as the “Third World”: We are now in a new, fast-evolving multipolar world economy – in which some developing countries are emerging as economic powers; others are moving towards becoming additional poles of growth; and some are struggling to attain their potential within this new system – where North and South, East and West, are now points on a compass, not economic destinies. [Nice soundbite – think we may be seeing that one again]

The world economy is rebalancing. Some of this is new. Some represents a restoration. According to Angus Maddison, Asia accounted for over half of world output for 18 of the last 20 centuries. We are witnessing a move towards multiple poles of growth as middle classes grow in developing countries, billions of people join the world economy, and new patterns of integration combine regional intensification with global openness.

Africa as a Potential Pole of Growth: If Africans remove the barriers to producing goods domestically and to local entrepreneurship, while creating conditions for outside investors to shift production to Africa, then African development could begin to look very different. Unlike past failed efforts to favor import-substitution interests behind protectionism, this approach can capture benefits from regional integration within global markets. [So yes, Africa needs to produce more stuff, but no, it should not follow the infant industry path taken by virtually every successful economy in history! Zoellick showing his free trader default from his time as US Trade Representative at the WTO.]

What would it take? As a first step, the 80 percent of Africans earning $2 a day or less need to earn enough income so they will be able to buy basic consumer goods. Agriculture is the main source of jobs and an early opportunity to boost productivity and income. To do so, investment is needed all across the agricultural value chain: property rights; seeds; irrigation; fertilizer; finance; basic technologies; storage and getting product to market. Since about two-thirds of African farmers are women, we need to help them get legal and property rights, and access to services. [Good, he hasn’t forgotten the 2008 World Development Report on Agriculture]

Today’s shifts open new opportunities. As the global crisis hit, some Chinese recognized that it was time to move beyond toys and footwear; China could move up the value chain, increase wages and consumption, and expand its “harmonious society.” Chinese companies, in turn, could move lower value-added manufacturing elsewhere, including to Africa, following China’s resource developers and construction enterprises. [Really? How quickly is China likely to run out of cheap labour at home and behave like Japan and South Korea before it, offshoring low value manufacturing?]

The G20: In discovering a new forum in the G-20, we must be careful not to impose a new, inflexible hierarchy on the world. Instead, the G-20 should operate as a “Steering Group” across a network of countries and international institutions. It should recognize the interconnections among issues and foster points of mutual interest.

Modern multilateralism will not be a constricted club with more left outside the room than seated within. It will look more like the global sprawl of the Internet, interconnecting more and more countries, companies, individuals, and NGOs through a flexible network. Legitimate and effective multilateral institutions, backed by resources and capable of delivering results, can form an interconnecting tissue, reaching across the skeletal architecture of this dynamic, multipolar system. [Hmm, sounds very modern and groovy, but what happens to accountability?]

Climate Change: The danger is that we take a rule book from developed countries to impose a one-size-fits-all model on developing countries. And they will say no. This is not about lack of commitment to a greener future. People in developing countries want a clean environment, too. Developing countries need support and finance to invest in cleaner growth paths. 1.6 billion people lack access to electricity. The challenge is to support transitions to cleaner energy without sacrificing access, productivity, and growth that can pull hundreds of millions out of poverty.

World Bank Reform: We are urging our shareholders to keep their promise to move to 47 percent or more ownership by developing countries… shareholdings will be reviewed every five years. [This transfers 3% of voice to developing countries, but remember that at the World Bank, ‘developing countries’ includes the likes of Saudi Arabia and Israel, so it’s not quite as good as it sounds.]

3 comments

  1. D.

    Nothing can ever sound more creepy and unpleasant than IMF/WB meetings and resolutions… whatever they come to promise…

    C.

  2. Just in reference to your last paragraph – good point about how the Bank classifies ‘developing countries’ when counting World Bank voting share. I’ve just been crunching the numbers, and I think that the real figure for developing countries (i.e. those not classified by the Bank as ‘high income countries’) is 42%. Add to this the fact that the proposed formula for the next round of reforms is likely to be almost entirely based on economic growth, and the next round of reform will only be in 2015, and I think you can get the picture… wealthy countries will continue to dominate for some time to come. Bretton Woods Project have just written an article on this: http://www.brettonwoodsproject.org/art-566102

  3. Duncan,

    BWP’s research indicates a legitimate concern about country classifications and delays regarding parity, but at least the trend is in the right direction and over time greater parity can or may be achieved. I also think the dialogue involving additional reforms is moving in a productive direction (i.e. increasing public access to documents, changing the Board’s composition, making selections of future presidents merit-based). But while these reforms are important, perhaps Bank shareholders and stakeholders should begin another dialogue on the mechanics of the Bank’s internal structure. I say this because public debate about reforms has focused on the Bank and its external relationships. To implement change that will dynamically impact how the Bank works, my experience suggests one has to address internal structural inefficiencies and cultural disincentives that impede the institution’s effectiveness. Here’s an entirely new series of reforms is in order. I elaborate further on this theory in a recent article for the Center for Research on Globalization at http://www.globalresearch.ca/index.php?context=va&aid=17114

    David Shaman

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