Transcript Zimbabwe 2010

Zimbabwe 2010
THE CHALLENGES FACING DEVELOPING
ECONOMIES
Those who the system has missed
 Paul Collier calls them the bottom billion
 Obvious economic and social problems
 But what of security?
 Maghreb
 Somalia
 Others
 Marginalised, disenfranchised
 Need to address these
 Post conflict resolution, capacity building,
empowerment etc
Some of the issues
 The Conflict Trap – the true and lasting cost of war
 Civil Wars – the disruption to economic efficiency
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can be very long lasting
Resource dependent economies
Autocracies
Development status of neighbouring economies
Bad governance
How do failing states turn around?
With whom and how do the bottom billion trade?
Food for thought?
 Foreign Direct Investment
 Multi-national Corporations
 Population movements – ethnic divisions and
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tensions
Will the richer countries continue to give aid?
If not, what will happen?
Will richer countries intervene to stop conflict?
Let’s think about possible solutions
Is Aid the answer?
 Post recession who will reach UN target of .6% of GDP?
 How will the systems of recipient cope and how much
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reaches the intended target/
Aid fatigue amongst some of the most generous of givers
Allocative problems as nations ‘balance’ their fiscal books
PIIGS within EU and Euro zone
The interdependence and integration of global trade
Is it all ‘good news’?
Post Conflict Zones – some facts
 The causes and justification of those who begin conflict –
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1000 combat dead is an agreed definition of a civil war –
risk is highest where incomes are lowest
The more the economy grows the lower the risk of civil
conflict
The faster the rate of growth falling the greater the
increase of conflict
The dependence on resources – mainly for export – this
increases the chance of conflict
Manipulation of incoming funds, including those from
‘diaspora’
Post Conflict problems
 Civil war tends to reduce economic growth by 2.3%
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p.a.
So, the average war, which lasts approximately 7
years reduces economic potential by over 15%
The migration movements and increase in post
conflict disease has a profound affect on society –
often heightened by ethnic differences
Political legacy – trust, talent, structures
It may take one or even two generations to re-build
the economy
The natural resource trap
 Already noted it is not necessarily the advantage
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countries think it will be
Rent driven corruption – political elite
30% of the bottom billion live in resource rich countries
Dutch disease
Volatility of externally determined market prices
Elasticity of demand for exports and imports
Democracy, patronage and simple temptation
It is thought to cost half a million US dollars to run for
Nigerian Senate!
Is the only way through this an autocracy?
Your neighbours do count!
 Just think about Switzerland/Austria v Burkina Faso or
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Zambia – landlocked
Efficiency of infrastructure, cost disadvantages, route times,
delivery schedules – all cause economic problems
You do best when you serve and use the markets adjacent to
yours – around 30% of Africa’s population live in landlocked
countries
Intra-regional trade – reduce trade barriers, regional trade
blocks – the land locked must seek the lowest external tariffs
Improve coastal access – Mozambique?
Look to technology – e-commerce/e-marketing
Encourage remittances, transparency ( encourages aid flows),
build feeder roads and develop policies aimed at inclusive
economy
Governance – a difficult choice
 Causes?
 Bangladesh – export processing zones – take immediate management out
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of politicians hands and give to experts, may be some will be expatriates
NEPAD and other ways on auditing that has international respect
Tobin Tax, develop systems of assistance perhaps more based on technical
expertise and less on money – more radical = end aid after a 5 year period
of notice
Turnaround seems to be more achievable the more educated and fast rising
your population and perhaps surprisingly if you have just emerged from a
period of civil conflict – the agencies do arrive in force!
UK government has now re-appraised its overseas funding to build ‘peace’
though justice, access and opportunity.
The cost of one failing state is put at $100 billion for its and its immediate
neighbours – but Iraq has already cost over $500 billion and it’s not yet a
done deal!
Failure to develop exit strategies and these should contain audit visits
Developing market competence
 Look at South Korea – moved quickly to market levels of
cost efficiencies, processed goods – considerable
advantages once this is reached – not immediate riches
for all but an improvement
 Tax receipts begin to increase – government can play a
more important role in people’s lives and they in turn
become more interested in what politicians stand for.
Ideologies not ethnicity – look for alternative sources of
capital e.g. China, Diaspora, regional development banks
and the people themselves. How to reward risk and so
build the capital base that supports an industrial drive
 Restore and protect property rights
Developing competence
 Keep money in the country
 Make leakage difficult
 Encourage saving
 More accessible banking system
 Try to reduce migration of the youngest and best
 Look at schemes to promote low level, localised
business schemes, develop talents of women,
introduce money management into schools
 Look to rewarding risk
Breaking the vicious circle
 Build post conflict partnerships – Security BUT small
domestic army and short stay international force
 But what of pre-conflict prevention – low income, slow
growth, primary products, low capacity – all are obvious and
all are a potent mixture + very long serving governments
 Transparency in resource transactions – Kimberley Process –
it’s been inaction on all our behalf's that has led to the current
situation – global business needs regulating, else it deals with
crooks
 Addressing land locked states – aid(yes), but does aid cause
coups? Reduce transport costs, build infrastructure at local as
well as national levels. Make trade fairer with such
organisations as European Union.
Breaking the vicious circle (2)
 It will need brave people to stand up against vested
interests
 Transparency, accountability etc are familiar mantras –
less money and more technical assistance, less military
aid, ploughs not guns, make NGO’s leaner and focused
on long-term social development NOT fancy pictures in
brochures and web sites – debt relief is essential, vested
interest groups have to be confronted
 Public opinion – Blair knew this. Look at Kossovo and
Sierra Leone BUT he got it wrong with Iraq.
 How does the developed world perceive the problems of
the poorest people on earth?
Breaking the vicious circle (3)
 Make the UN the official body in delivering peace –
enlarge P5 to include India, Brazil and one large
African countries plus others.
 Look ay Haiti – who was actually in charge in the
days after the earthquake? Too many egos, too few
critical decisions.
 Encourage local/neighbour dialogue, mutual
problem solving, joint operations – see the region
and its success as being beneficial to all
What else can we do?
 Aid has to be channelled where it is actually needed – too
many photo opportunities
 Have a pre-pared military intervention – could be
continent based – that Africa controls Africa
 Charters that have teeth – extractive industries
transparency – post conflict funds linked to actual
progress to an open, dual system of politics, encourage
regional associations as happens in parts of Latin
America. Build the need for interdependence/ bilateral
co-operation and mutual beneficiaries
 Work for fairer trade – rich country protectionism, Asian
markets and their growing power, make trade policy
more transparent(WTO).
What else can we do?
 Co-ordinating strategy – too many government
departments in developed economies involved in
‘aid’ decisions, look at MDC’s – great idea but who is
co-ordinating their implementation – agency empire
building and power struggles – not just aid what of
security, trade and standards?
 When you provide public goods you will get free
riders but that is a risk you have to accept
 Focus – are the efforts spread too thin – ‘what abut
my career’ – don’t just present shopping lists to
donors make certain the priorities are right
What else can we do?
 Poverty is not romantic – it has a smell of its own
 We came through the Cold War, eased Eastern
Europe into the EU, we can build fair free market
structures, the left’ sees aid as the panacea of success
the right sees it as giving lazy/corrupt people money
– what’s the mid course?
 Do electorates get the politicians they deserve? The
political business cycle – 4 years in US.
 One billion people are stuck in a time vacuum and
the risks associated with this are too big too ignore
What else can we do?
 It is a struggle of moral extremes and the cost of
losing is high
 We have the talent, the resources but does the so-
called developed world have the political will?
 The World Bank is beginning to listen
 BUT what will we do and what do we want to see?
 Let’s debate some ideas.
Contact
 [email protected]
 [email protected]
 We can continue our dialogue after I have left
Zimbabwe