World News – BORGEN http://www.borgenmagazine.com Humanity, Politics & You Tue, 17 Jul 2018 08:30:14 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.7 How US Trade Protectionism Threatens Developing Countries http://www.borgenmagazine.com/protectionism-threatens-developing-countries/ Tue, 17 Jul 2018 08:30:08 +0000 http://www.borgenmagazine.com/?p=128258 WASHINGTON D.C. — The trade policies of a country as powerful as the U.S. can have global repercussions, and Trump’s recent use of protectionism has come to threaten developing countries. Over the course of this year, Trump has put steep tariffs on steel and aluminum imports from Canada, Mexico and the European Union. Most recently, the [...]

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WASHINGTON D.C. — The trade policies of a country as powerful as the U.S. can have global repercussions, and Trump’s recent use of protectionism has come to threaten developing countries. Over the course of this year, Trump has put steep tariffs on steel and aluminum imports from Canada, Mexico and the European Union. Most recently, the president implemented 25 percent tariffs on $34 billion worth of Chinese imports.

Global Trade War

Each of these economies has retaliated with similarly steep tariffs that target American producers, effectively putting the U.S. at the center of a global trade war. In addition to tariffs, the Trump administration has backed out of the Trans Pacific Partnership (TPP) and is in the midst of renegotiating the North American Free Trade Agreement (NAFTA). However, the recent tariffs on America’s neighbors could complicate these negotiations.

Some analysts argue that there are no winners in a trade war. The tariffs and termination of trade deals will merely raise costs and limit choices for consumers, dampening economic progress around the world.

Protectionism’s Impact on Developing Countries

History shows that protectionism threatens developing countries and the global economy. The Smoot-Hawley Act of 1931 increased tariffs on around 20,000 imports by an average of 20 percent. It resulted in retaliation by the targeted countries, inciting a trade war, and global trade decreased by 67 percent.

The U.S. had another bought with protectionism in the 1970s and 80s. Several wealthy nations, including the U.S. implemented non-tariff barriers to trade. These included tighter restrictions on textiles and clothing, and subsidizing agricultural exports. Such actions decreased the ability of developing countries to export goods, especially agricultural products. As a result, many countries had limited ability to import the resources they needed.

Trade is especially important to the smaller economies of developing countries, so any restrictions could have devastating effects. The way protectionism threatens developing countries goes beyond the implicated sectors; it really affects use of resources and distribution of resources. In addition, protectionism limits foreign investment, which decreases growth opportunities.

Then after the global financial crisis, the U.S. implemented new trade restrictions. Between 2008 and 2010, one study found that 692 new trade barriers had been enacted, primarily by G20 members. This caused a significant decrease in global trade. But the resulting loss of trade was disproportionately felt by some of the poorest countries. Of the total decrease in trade caused by the new protectionist measures, 40 percent hit the least developed countries.

All of the classified least developed countries (except Tuvalu) suffered from these new policies; in fact, 141 of measured trade barriers caused detrimental effects for these countries. The ones impacted the worst included Tanzania, Ethiopia, Yemen, Bangladesh and Senegal.

The Global Economy and Economic Nationalism

Trump’s recent actions pose similar threats to the global economy and developing countries. Implementing tariffs and terminating trade deals disrupts the world trade system and undermines America’s commitment to the World Trade Organization (WTO) and free trade system.

Major economic organizations warn of the potentially catastrophic outcomes of Trump’s economic nationalism. If worldwide tariffs continued to rise up to the levels permitted by the WTO, global trade is predicted to decrease by nine percent. But again, it will be the developing countries that suffer the worst. This is because the income of developing nations is closely tied to the strength of the wealthier economies.

A recent speech by Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), warned of the global effects of protectionism by highlighting the benefits of multilateral trade agreements. The multilateral system has decreased living costs and created millions of jobs with higher wages over the past generation.

The increased trade played a crucial role in halving the proportion of people living in extreme poverty. Multilateral trade agreements and the rules implemented by the WTO also help protect developing countries. These agreements limit the ability of powerful countries to dictate terms of trade that benefit them at the expense of the poorer country.

Fueling Positive Change

The WTO also includes special treatment for developing countries so as to provide more freedom in agreement implementation and national commitments, as well as accommodate nations’ limitations.

Multilateral cooperation and trade negotiations have decreased the average value of tariffs by 85 percent since 1947. This, combined with technological advances, has rapidly increased global trade to account for nearly 60 percent of the world’s GDP. In turn, this has fueled economic growth of developing countries and influenced positive social changes.

But a trade policy that undermines this multilateral system and advocates protectionism threatens developing countries. The trade war that Trump has started could lead to average tariffs on developing countries increasing from three percent to 37 percent. But some of the poorest countries, such as Costa Rica, Sri Lanka, Ethiopia and Bangladesh, may face tariffs around 40 to 50 percent.

Trump has incited a trade war by raising tariffs and terminating trade agreements. This could have catastrophic effects on the interconnected global economy, but ultimately, this protectionism threatens developing countries the most.

The tariffs and trade barriers will decrease developing nations’ ability to export, which lowers the import capacity and investment. Abandoning trade deals and undermining the world trade system leaves developing countries vulnerable to the power of larger economies dictating terms of trade.

Protectionism threatens the significant development and progress made under the cooperative world trade system of the last 20 years; thus, it will take concentrated effort to ensure developed and developing nations’ economic cooperation.

– Liesl Hostetter
Photo: Flickr

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China’s 2020 Anti-Poverty Project: A Shift from Rural to Urban http://www.borgenmagazine.com/chinas-2020-anti-poverty-project/ Fri, 06 Jul 2018 14:30:55 +0000 http://www.borgenmagazine.com/?p=128156 SEATTLE — The People’s Republic of China is the world’s second-largest economy, home to a booming middle class and over 100 Fortune 500 companies. Its crown jewels, Beijing and Shanghai, shimmer with the lights of countless high-rise hotels and financial offices. Even so, 43 million citizens still live under the national poverty line in the [...]

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SEATTLE — The People’s Republic of China is the world’s second-largest economy, home to a booming middle class and over 100 Fortune 500 companies. Its crown jewels, Beijing and Shanghai, shimmer with the lights of countless high-rise hotels and financial offices. Even so, 43 million citizens still live under the national poverty line in the country’s rural underbelly. President Xi Jinping reiterated in October 2017 that China’s 2020 anti-poverty project remained a core agenda item of his administration’s realization of the Chinese Dream, a promise of higher living standards.

China’s 2020 Anti-Poverty Project Looks to Build on Past Accomplishments

The government has been largely successful thus far in its previous attempts to improve living conditions. The number of people living below the international poverty line ($1.90) has dropped from approximately 750 million in 1990 to less than a tenth of that in 2014. With the country’s economic growth benefitting both lower and middle-income citizens, life expectancy at birth has soared. Economic expansion and the liberalization of the Chinese market are believed to have been the primary catalysts of this success.

Yet with GDP growth dropping to the single digits in the last decade, poverty has become more and more difficult to definitively resolve. China can no longer rely on building coal factories and chemical plants to supply much-needed jobs. It finds itself fighting on two fronts as a signatory of the Paris Climate Accords and its declaration of war against pollution in 2014. The anti-pollution initiative, though wildly successful in saving the lives of many living in China’s chemical-polluted industrial zones, is not designed to lift them out of poverty.

Relocation and Urbanization Recent Trends in China’s Poverty Alleviation Efforts

While the country continues its forays into clean energy, government intervention and social incentives have found support in the party’s highest ranks as a way to combat poverty. China’s 2020 anti-poverty project is a government initiative largely characterized by the physical relocation of millions of rural denizens to urban communities using these tactics. Municipalities in China have long been evaluated on success in economic and social terms, with the practice originating in the Great Leap Forward during the late 1950s. Poverty alleviation has emerged as a new metric by which they can be judged.

Eager to rise in the rankings, local party officials have relocated many of their district’s rural constituents to massive unused urban hubs in an effort to improve their poverty alleviation index scores. Their rationale: urban equals wealthy. Urbanization is often associated with the reduction of poverty due to the lower unemployment rates and higher GDP per capita of China’s most successful cities compared to its countryside.

However, the inhabitants of these complexes of newly-constructed apartment blocks, complete with shopping centers and playgrounds, must confront major drawbacks. Oftentimes short-lived government contract jobs are the only employment they can find. Farming, once an unprofitable but steady source of income, is no longer a realistic option. Essential facilities like hospitals and schools are usually far away, and if they are in close proximity, the quality almost always suffers. The advantages of urban life are harder to come by these cities, as the towns sit at the bottom rung of China’s city categorization hierarchy. Those at the top, such as Shanghai and Beijing, receive the most government funding and host the best public facilities. 

The Importance of Moving Beyond Basic Needs to Aid the Impoverished

Recently-moved rural citizens are not the sole victims of poor location. The populations of the aforementioned two cities are burgeoning with an influx of migrant workers who come for the well-funded social services large cities are known for. Often pushed to the urban rim and forced to work in unappealing sanitary jobs, these migrants are viewed by governing officials as a weight that drags down average living standards. The frequent razings of outskirt infrastructure in the name of safety have evicted thousands of laborers, who are then relocated to cities that have little access to the very amenities the migrants initially sought by moving.

For China’s 2020 anti-poverty project to be a complete success, it will need to focus more on the multi-faceted nature of poverty. Providing basic human needs such as clean water, sustainable food and proper shelter is important but is not the cure for poverty on its own. China’s lack of job mobility and universally sufficient social services ironically cause many of its smaller municipalities, designed to eradicate poverty, to end up reinforcing it. 

Many government officials have recognized the cost and narrow focus of the program; Liu Yongfu, head of the state-sponsored Leading Group of Poverty Alleviation and Development, acknowledged this but told Reuters that the government’s current focus was “First we need to win this battle, resolve the current problems.”

While past policies have raised most of the country’s poor out of their dire straits, time (and money wisely spent) will tell if China’s 2020 anti-poverty project lives up to the vision of Xi Jinping’s Chinese Dream.

– Alex Qi
Photo: Flickr

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Infrastructure Investment: The Bedrock of Poverty Reduction http://www.borgenmagazine.com/infrastructure-investment/ Wed, 04 Jul 2018 08:30:57 +0000 http://www.borgenmagazine.com/?p=128099 SEATTLE — Infrastructure is the foundation for any country that wishes to generate jobs, improve the quality of life for those living below the poverty line and accelerate economic growth. Infrastructure investment enhances the human, social and financial capital of the poor and thus is a necessary step in alleviating poverty. Put simply, in order [...]

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SEATTLE — Infrastructure is the foundation for any country that wishes to generate jobs, improve the quality of life for those living below the poverty line and accelerate economic growth. Infrastructure investment enhances the human, social and financial capital of the poor and thus is a necessary step in alleviating poverty.

Put simply, in order for children living in rural areas to safely get to school, they need reliable, developed roads. Hospitals cannot function without a consistent electric grid. Adults cannot get to work without a functioning transportation system. Education, health and a source of income are all key indicators of success and wealth generation. Thus, infrastructure investment is integral to alleviating poverty, especially in developing countries.

Roads and Electricity Key Building Blocks of Infrastructure Investment

Improved roads are one such example of infrastructure having an impact on poverty. In India, roads alone are responsible for 7 percent of the growth in output in rural sectors. Quite literally, the rural poor have more avenues to sell their goods on the market. 

In Tunisia, 80 percent of all goods are transported by road. The country has recently stepped up investments in road infrastructure to give people in the rural interior areas better access to trade and services. Meanwhile, a feeder road project in Morocco, while instrumental in increasing agricultural production, also enabled increased access to schools. Girls’ enrollment in primary schools tripled and the use of healthcare facilities nearly doubled.

Electricity is another key component of industrialization that expands employment opportunities for the poor. In Costa Rica, a massive rural electrification initiative, made possible through electrification cooperatives, increased business growth. A single cooperative resulted in the number of major businesses rising from 15 to 86 after electrification.

Maximizing Infrastructure Benefits for Those Most in Need

However, it is important to note that investing in infrastructure can only successfully alleviate poverty if the poor have access to that infrastructure. After all, more roads are only helpful to the poor insofar as they are strategically located or there are transport services for them to utilize. Likewise, a powerful electric grid is only helpful to the extent that the poor can afford to connect to it.

Thus, location and pricing are key considerations for smarter infrastructure investment. With regard to location, accessibility ought to operate alongside quantity. The more roads that are accessible, the greater the opportunity for the economic development process to take root.

In order to maximize affordability, costs of various infrastructure services must be reduced. By facilitating competition in the private sector for the supply of infrastructure services, costs are driven down and often, the quality of service improves.

With a better understanding of the somewhat tenuous link between infrastructure investment and poverty alleviation, it will be easier to develop infrastructure policies that are tailored to the impoverished and their best interests.

A promising solution to the infrastructure disparity that plagues so many developing nations can be found in multilateral development banks. In order to reduce the long-term financing gap, China, Japan, Singapore, Canada and Australia, alongside the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank and the Inter-American Development Bank are all working to identify those specific areas of market failure and effectively incorporate the private sector accordingly.

By building from the ground up, infrastructure investment plays a fundamental role in affording the global poor the capital to accelerate economic growth. As the poor are afforded more opportunities to contribute to the economy and generate their own wealth, the likelihood of further investment grows.

– McAfee Sheridan
Photo: Flickr

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Everything to Know About China’s Migrant Poor http://www.borgenmagazine.com/chinas-migrant-poor/ Sun, 01 Jul 2018 08:30:41 +0000 http://www.borgenmagazine.com/?p=128006 SEATTLE — Imagine a world where the poor, the middle class and the rich are separated by a state-mandated sleep schedule, with each class only allowed to inhabit the city at its scheduled time. Resources are scarce and shared unequally. There is a constant air of hopelessness. This is the world of Folding Beijing, an [...]

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SEATTLE — Imagine a world where the poor, the middle class and the rich are separated by a state-mandated sleep schedule, with each class only allowed to inhabit the city at its scheduled time. Resources are scarce and shared unequally. There is a constant air of hopelessness. This is the world of Folding Beijing, an award-winning novella by Chinese author Hao Jingfang. According to a New York Times interview, Hao was inspired by the “invisible people” living in modern Chinese cities, including migrant workers. While the world of Folding Beijing is fictional, the challenges facing China’s migrant poor are real. 

China’s Migrant Poor a Result of Rapid Urbanization

Until recently, the majority of China’s population lived in rural villages. Over the past thirty years, however, the urban population has grown by 500 million people, propelled mainly by China’s modern economic growth. The Economist described it as “the biggest movement of humanity the planet has seen in such a short time”. While the Chinese government is working to build up infrastructure to accommodate this trend, there are still some growing pains.

Specifically, there are more than 200 million people who live in China’s megacities but do not have the hukou, or legal residence status, required to receive public services in those cities. Most of these people are workers who migrated from the countryside to work in cities like Shanghai, Chengdu and Beijing. Lacking a legal right to live in these cities, many of China’s migrant poor are unable to take advantage of local hospitals, schools and other services, leaving them without support in their new homes.

Even when migrant workers are able to access public services, they are underserved. One study found that only about 20 percent of schools for migrant children in Beijing were accredited by the government. Only a third of elderly migrants have pensions, and those who do are allocated too little to survive in urban areas.

Rights of Migrant Works Often Not Respected in Cities

Most migrant workers work in service industries like construction, manufacturing and the restaurant industry. About 48 percent work in transportation industries, meaning that migrant workers are an essential part of China’s domestic infrastructure. Despite the meaningful labor they do, on average migrant workers are only paid ¥3,500 a month, far below the amount needed to live in China’s urban areas. This is especially concerning considering that migrant workers make up almost 35 percent of China’s labor force.

Besides experiencing displacement, poverty and a lack of access to public services, China’s migrant poor are often discriminated against. As the need for migrant workers decreases in China’s coastal cities, migrants are being encouraged to return to their home villages, using both incentives and threats. After a fire in Beijing killed 19 people (17 of whom were migrants), the local government evicted thousands of migrants from “illegal structures”. Many residents were given minutes to pack and could only take what they could carry. While a representative of the Beijing Administration of Work Safety stated that claims the government targeted the poor for eviction were “groundless,” local activists and intellectuals decried the “ruthless” campaign.

Growth and New Initiatives a Boon to Migrant Workers

Despite these serious challenges, there are positive elements to the situation facing China’s migrant poor. For example, because of growth in China’s western provinces, many migrants are moving back to their home provinces, resolving the issues of hukou and scarce resources they face in the coastal cities. In 2016 alone, the portion of migrant workers in the western part of China grew by 5.3 percent. Besides helping migrant workers, this trend will relieve population pressure in the megacities and help develop rural areas.

There are also several programs run by NGOs designed to support migrants who do not move inland. Some are domestically formed and serve a union-like role, working to protect the legal rights for migrant workers in the face of China’s authoritarian state. Others, such as the China Migrant Initiative, were started by foreign organizations like the Legatum Foundation. They have implemented after-school care and vocational programs to improve the lives of migrant workers living in underserved urban areas.

Ultimately, while the situation facing China’s migrant poor, like the story of Folding Beijing, seems to foretell a grim future of inequality in China’s cities, there is potential for development and growth. A continued focus on providing opportunities for migrant workers will help them better meet their needs and rise out of poverty.

– Lydia Cardwell
Photo: Flickr

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Combating the Water Crisis in India Through Collaboration http://www.borgenmagazine.com/water-crisis-in-india/ Fri, 29 Jun 2018 08:30:14 +0000 http://www.borgenmagazine.com/?p=128059 SEATTLE — India is currently undergoing its worst water crisis in history, with more than 600 million people facing acute water shortages. One of the largest contributors to the water crisis in India is the undermanagement and over-depletion of India’s groundwater supply; 54 percent of India’s groundwater wells are in decline, accounting for 40 percent [...]

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SEATTLE — India is currently undergoing its worst water crisis in history, with more than 600 million people facing acute water shortages. One of the largest contributors to the water crisis in India is the undermanagement and over-depletion of India’s groundwater supply; 54 percent of India’s groundwater wells are in decline, accounting for 40 percent of India’s total water supply. This rapid decline is due in part to a poorly defined legal framework for groundwater that rests ownership with landowners and leads to unchecked extraction of the groundwater supply.

While agriculture accounts for 80 percent of all water use and groundwater is utilized for 63 percent of all irrigation water, 70 percent of Indian states have achieved scores of less than 50 percent on managing farm water effectively. This is especially critical since 70 percent of India’s population (700 million people) lives in rural areas. At this rapid rate of depletion, by 2030 the country’s water demand is projected to double its available supply. While this bleak trajectory is a major obstacle in India’s development, structural policy changes that have already taken place spell hope for improvement.

The History of Indian Groundwater Regulation

Rules for groundwater allocation were originally established during the 19th century while India was still a British colony. The landmark 1843 English court case Acton v Blundell established that a landowner owns everything under their land and can take and dispose of these underground resources at will. This claimant of ownership pertaining to underground sources of water was further bolstered by the 1859 court case Chasemore v Richards which established that water which percolated to the surface from underground was to be treated as a separate legal entity from other sources of surface water.

The consequences of these regulations began to be seen decades after independence with the introduction of large-scale pumping mechanisms in the 1960s, resulting in a surge of groundwater extraction and plummeting water reserves. In response, the government of India prepared a Model Bill to Regulate and Control the Development and Management of Ground Water for adoption by the states in 1970, which is still enforced today.

While the reform bill ultimately gives jurisdiction over groundwater regulation to each individual state, it has numerous shortcomings that nullify it as an effective regulatory instrument despite being revised as recently as 2005. The issues include failing to tackle existing overuse of groundwater since it had measures which grandfathered in of existing uses, failing to move beyond issues of individual appropriation and inadequately addressing water quality standards. It is a top-down measure that lacks provision for institutional regulation at local levels. The failure of the reform bill to adequately address these main underlying issues was the conclusion reached by the Indian Planning Commission in a 2011 report, in which they found that “model groundwater legislation is simply not adequate to deal with the steadily worsening situation that we face.”

Water Crisis in India a Tragedy of the Commons

This inadequacy of the original English case law and the subsequent 1970 reform bill to account for the long-term consequences that continue to exacerbate the water crisis in India makes this situation a modern tragedy of the commons. Coined in a famous 1968 paper by ecologist and philosopher Garrett Hardin, the tragedy of the commons is an economic problem where, in a shared-resource system, individuals out of self-interest exploit a common resource to the extent that demand overwhelms supply. This creates a situation of scarcity where every individual who consumes an additional unit of that resource directly harms others who can no longer enjoy the benefits.

Fred Pearce, an English author and journalist, poignantly illustrated this issue within the context of the water crisis in India in his visit to Tirupur in 2003, a town in the southern state of Tamil Nadu. Pearce spoke with the wife of one the town’s farmers drilling for water on his property to sell, like many other landowning farmers in the region, as opposed to using the water for irrigating his own farm. Pearce asked, “Why not get back to farming before the wells finally run dry? ‘If everybody did that, it would be well and good,’ [the farmer’s wife]agreed. ‘But they don’t. We are all trying to make as much money as we can before the water runs out. If we stopped pumping on just this farm, it wouldn’t affect the outcome’…Nobody can afford to miss out on the boom, because they will all share in the eventual bust.”

Revitalizing India’s Commons Through Localized Participatory Practices

As Pearce’s encounter demonstrates, the social consequences of a legal framework that promotes unchecked individual consumption lead to a community response that is similarly self-interested. However, current efforts to reshape water management policy more collaboratively have started to create improvement. One of the biggest efforts in this shift has been the emergence of localized Water User Associations (WUA). They are groupings of local water users, largely farmers, that pool together financial and operational resources for the maintenance of irrigation systems.

Rajasthan, a northern Indian state bordering Pakistan, has emerged as a leader in this movement towards participatory irrigation, with 75 percent of the irrigation areas in the state utilizing WUAs. The high level of implementation of WUAs is in part because it is a measure of Rajasthan’s Mukhya Mantri Jal Swavlambhan Abhiyan (MJSA) project, “which aims to make the remotest of the villages in the state water-sufficient by focusing on reviving water bodies, increasing groundwater levels and providing clean drinking water for all.” As a result of these measures, Rajasthan has restored 81 percent of the irrigation potential of identified water bodies through community involvement and technology use.

This is a formidable example of how reframing policy towards more participatory management is a powerful tool for development. But while this is an impactful start in tackling the water crisis in India, in order to comprehensively approach an issue of this scale an overhaul of the entire regulatory framework is needed that comprehensively expands on these decentralized, collaborative measures.

– Emily Bender
Photo: Flickr

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Promoting Self-Reliance Through Foreign Aid http://www.borgenmagazine.com/promoting-self-reliance/ Thu, 28 Jun 2018 14:30:37 +0000 http://www.borgenmagazine.com/?p=128054 SEATTLE — Foreign aid serves a number of different purposes. Countries can use foreign aid to increase their national security, such as through establishing military bases on foreign soil. Foreign aid is also a good example of soft power, the goal of which is to persuade others without resorting to force or coercion, and helps [...]

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SEATTLE — Foreign aid serves a number of different purposes. Countries can use foreign aid to increase their national security, such as through establishing military bases on foreign soil. Foreign aid is also a good example of soft power, the goal of which is to persuade others without resorting to force or coercion, and helps countries achieve diplomatic goals. Additionally, foreign aid can be used as a palliative, short-term measure after natural disasters or during national crises.

Another objective of foreign aid is to increase recipients’ self-reliance and eventually reduce the overall amount of foreign aid. USAID plans to shift its focus and start promoting self-reliance with the release of its new Policy Framework in the fall of 2018.

The Importance of Self-Reliance

The Community Empowerment Network (CEN), a U.S.-based NGO, asserts that promoting self-reliance is vital for developing countries’ continued growth. Countries that rely too heavily on others for too long become dependent on foreign aid. Reliant countries often give up decision-making abilities and control over their natural resources. Many developing countries have more than enough resources to take care of their citizens, but extended foreign interference often increases foreign exports, leaving insufficient resources and citizens living in poverty.

A lack of self-reliance not only affects political decisions and the availability of natural resources, it also impacts citizens’ mindsets and economic growth. CEN references a small village in the Brazilian Amazon, Suruacá, where a German organization built a kitchen for women to use to make marketable sweets and generate income. However, the women in the town did not use the kitchen at first because, while they knew how to make the sweets, they were waiting for the German organization to tell them how to sell their product. CEN calls this “learned helplessness.”

Is Foreign Aid Promoting Self-Reliance?

There is extensive debate over whether or not foreign aid can actually increase self-reliance or whether it simply creates learned helplessness. Self-reliance is heavily connected to economic prosperity, and one way to evaluate a country’s level of self-reliance is to look at its economic growth. A paper published by the National Bureau of Economic Research (NBER) in 2016 sought to establish a link between foreign aid and economic growth.

The NBER paper’s study used eligibility for support from the International Development Association (IDA), an organization within the World Bank, as an instrument for foreign aid. The IDA provides loans and grants for programs that reduce inequalities and boost economic growth. Eligibility for IDA support depends on a country’s gross net income per capita, which defines a country’s relative poverty level. In the end, the study involved 35 countries and data spanning from 1987 to 2010.

The study found a positive, statistically significant and economically sizeable effect of foreign aid on economic growth. The researchers acknowledged the link between economic growth and self-reliance and argued that, for foreign aid to be a long-term success, aid providers should improve aid allocation, especially toward the quality of a country’s governance and institutions. In other words, the researches argued that foreign aid can increase a country’s self-reliance if allocated effectively.

USAID’s New Policy Framework

In the fall of 2018, USAID is set to implement a new Policy Framework centered on a broader self-reliance approach. In late 2017, USAID started collecting self-reliance metrics, a cornerstone of their Transformation Effort and their journey toward ending the need for foreign assistance. The agency will use these metrics to create country-specific plans for aid allocation.

USAID acknowledges that every country has different needs and hindrances on their road toward self-reliance and the agency has set about creating what it calls Self-Reliance Country Roadmaps using the self-reliance metrics. The roadmaps use 17 metrics to measure a country’s progress in achieving self-reliance. The indicators are separated into two categories: commitment and capacity. There are seven commitment indicators that measure policy choices, actions and behaviors. The remaining 10 capacity indicators measure how much a country has developed so far.

The agency hopes to have roadmaps ready for every low- and middle- income country by the time it implements its new Policy Framework in the fall. USAID notes that its roadmaps will not be perfect immediately, but they will be an important element of the agency’s efforts toward promoting self-reliance in developing nations.

­– Kathryn Quelle

Photo: Flickr

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The Benefits of Hybrid Tribunals in Prosecuting War Crimes http://www.borgenmagazine.com/benefits-hybrid-tribunals/ Thu, 28 Jun 2018 08:30:55 +0000 http://www.borgenmagazine.com/?p=128048 SEATTLE — Crimes against humanity, war crimes and acts of genocide are all crimes that fall under international jurisdiction. The prosecution of these crimes, however, still remains a complex, contentious and multidimensional process 70 years after the first international tribunals in Nuremberg and Tokyo. During the 1990s, ad hoc (meaning arranged for a particular purpose) tribunals [...]

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SEATTLE — Crimes against humanity, war crimes and acts of genocide are all crimes that fall under international jurisdiction. The prosecution of these crimes, however, still remains a complex, contentious and multidimensional process 70 years after the first international tribunals in Nuremberg and Tokyo.

During the 1990s, ad hoc (meaning arranged for a particular purpose) tribunals were instituted to prosecute crimes that occurred during the Bosnian War and the Rwandan genocide. The International Criminal Tribunal for Rwanda and the International Criminal Tribunal for the Former Yugoslavia continue as active bodies today, operating out of The Hague in the Netherlands. Although many precedents have been set by the actions of these courts, most notably with respect to the prosecution of sexual assault during genocide, their effectiveness has been criticized by champions of state sovereignty and others. The distance and third-party involvement make the scope of ad hoc tribunals limited, and only top-level offenders can be prosecuted.

The Limitations and Benefits of Hybrid Tribunals

Hybrid tribunals adjudicate international crimes by blending domestic actors while respecting international norms, such as human rights statutes and the Geneva Conventions. By involving state and local penal codes, judges and legal professionals, state sovereignty is respected while cultural and political expectations are retained. The benefits of hybrid tribunals are vast, most specifically for the rights of victims. The crime is not distanced from where it occurred, and justice remains within the jurisdiction of the state. In addition, the decisions are more likely to be respected and upheld if they are made within a country. The precedents set by local courts also have the possibility to make waves in future legislative decisions.

There are caveats to the benefits of hybrid tribunals, however. A lack of universal jurisdiction occurs when different tribunals are constructed for every conflict. There is less consistent treatment of international crimes, since criminal bodies that incorporate more domestic law will vary from state to state. In addition, different sociocultural standards and interpretations could enable punishment to be legislated according to the state, rather than international law. If a state viewed rape, for example, as a less severe offense, the punishment would be lessened. International standards were created for a reason; these laws exist because universal ethical standards deserve to be in place and serve a purpose for justice. Hybrid tribunals could compromise the adjudication of these principles.

Syria an Example of Where a Hybrid Tribunal Could Be Effective

In a modern context, prosecution of war criminals in Syria calls for the creation of some kind of international body. The multidimensional conflict situation in Syria remains volatile and unresolved almost eight years after its Arab Spring, and many war crimes and crimes against humanity have been committed. Three avenues exist for prosecution: the International Criminal Court could launch an investigation, a hybrid tribunal could be created or foreign national courts could prosecute and create an accountability process.

Unfortunately, none of these options are extremely viable at this point, due to existing structures of international governance and the complex nature of the situation. In order for the International Criminal Court to prosecute, a U.N. Security Council resolution would have to be passed giving them jurisdiction. Currently, any proposed resolutions that aim to enable this have been vetoed by Russia and/or China. Unless these governments sever ties with the Assad regime, this avenue is impossible.

The benefits of hybrid tribunals have been argued; however, the solution is currently not feasible, because the host state must consent. An international buffer zone has also not been successfully established, and security concerns combined with high costs would not be worth the limited positive effects. A neighboring country could host, but Turkey and Jordan are unlikely to agree to that. One strong possibility is that the Special Tribunal of Lebanon could expand its purview to include Syrian war criminals, but sovereign and state immunities create obstacles for high-level officials.

In light of the current circumstances, it is important to reflect on the successes of international prosecution and revel in the knowledge that, as time passes, justice will be served. When the time comes, and the situation in Syria becomes approachable, a hybrid court can be established that will deliver justice to victims.

– Jilly Fox

Photo: Flickr

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An Opportunity to Reassess the Effects of NAFTA on Mexico http://www.borgenmagazine.com/effects-of-nafta-on-mexico/ Wed, 27 Jun 2018 08:30:18 +0000 http://www.borgenmagazine.com/?p=128031 SEATTLE — In his third campaign for president, Andrés Manuel López Obrador seems certain to finally capture Mexico’s top job. After decades of meager economic growth and rampant corruption at the highest levels, many Mexicans see López Obrador as the most viable option for real change and prosperity. From regaining a sense of economic self-sufficiency for [...]

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SEATTLE — In his third campaign for president, Andrés Manuel López Obrador seems certain to finally capture Mexico’s top job. After decades of meager economic growth and rampant corruption at the highest levels, many Mexicans see López Obrador as the most viable option for real change and prosperity. From regaining a sense of economic self-sufficiency for rural farmers to addressing the purported negative effects of NAFTA on Mexico, López Obrador’s concerns have played well with the poor, the working class and well-educated youths alike.

Rather than reinventing himself to the times, López Obrador has benefited from a wave of anti-system and anti-government sentiment. His possible election to the presidency reflects the evolution of the country rather than a monumental shift in his ideology. In this sense, “the country has changed more than him,” as polling firm head Francisco Abundis told U.S. News.

While a win is far from certain, if he decides to keep his promises on revamping the Mexican economy, López Obrador’s victory will provide him with a platform to implement new ideas on alleviating poverty, inequality and corruption in Mexico.

A victory for the populist former mayor of Mexico City would also reignite the debate surrounding renegotiations of the North American Free Trade Agreement (NAFTA). López Obrador’s campaign rhetoric has prioritized creating opportunities and protections in the domestic economy. One of the centerpieces of this policy is addressing the efficacy of the trilateral trade deal and its usefulness to poor Mexicans, an important group of constituents supporting López Obrador.

NAFTA and Mexican Farming

Commonly referred to as NAFTA, the trade agreement between Canada, Mexico and the U.S. has been repeatedly assailed by the Trump administration. The front-runner in the Mexican elections, although less vociferous in his denouncements of the deal, is also skeptical of its benefits to small farmers. If López Obrador becomes president, this protectionist mood could spread south of the border.

Although a total repeal would be devastating to the export industry—on a value basis, more than 73 percent of Mexico’s total exports in 2016 went to the U.S.—there would likely be mixed reactions throughout Mexico. The poorest states might prefer a return to a pre-NAFTA era. Since it went into effect on January 1, 1994, rural peasant farmers, especially corn growers in the poverty-stricken southern states, have seen firsthand the effects of NAFTA on Mexico.

At the onset of NAFTA, while tariffs on agricultural goods were removed, subsidies were left in place. The highly subsidized U.S.-grown corn, with higher average productivity levels, quickly outstripped the capacity of small Mexican farmers. Rural farmers with small plots of land were devastated by the U.S. competition in corn. As of last year, Mexican imports of corn totaled 14.7 million tons, making Mexico the largest market for U.S. corn exports.

Agricultural employment in Mexico was also affected. Between 1991 and 2007, there was a 19 percent drop, equivalent to roughly two million jobs, in the agricultural sector. Much of this decline has come from family labor and other workers not paid in cash.

Poverty and Emigration

Inextricably connected to the effects of NAFTA on Mexico is the flow of migrants to the U.S. looking for work and the prospect of extreme poverty due to the elimination of peasant farmers’ livelihoods. Official numbers put poverty levels in the Mexican countryside at 61 percent. One of the motivating factors in the surge in emigration of recent years is undoubtedly the prospect of better opportunities up north.

Reflecting this trend was the prevalence of increasingly poor households in the rural farmland of Mexico immediately after NAFTA came into effect. From 1994 to 2000—the first six years of NAFTA—there was an annual increase of migrants to the U.S. of 79 percent.

Regional Inequality One of the Effects of NAFTA on Mexico

Perhaps more important for López Obrador, should he win, is dealing with the divide in prosperity between the northern and southern Mexican states. Again, NAFTA has played a prominent role in determining the outcomes of both the states closest to the U.S. border and those farthest south.

While the regions closest to the U.S.-Mexican border have generally prospered since NAFTA’s inception, communities farther south have suffered. According to official statistics, 80 percent of those living in Chiapas—a poor southern state bordering Guatemala—remain entrenched in poverty. Conversely, in Nuevo León, which borders Texas and is Mexico’s most affluent state, 60 percent of the population is considered middle class.

An Opportunity

Even with the impact on small production farmers in Mexico, proponents of the trade deal still claim the benefits outweigh the costs. Backing their pro-trade gusto is evidence of the beneficial effects of NAFTA on Mexico, such as helping to lift millions of Mexicans into better-paying factory jobs over the last two decades, thus offsetting the decrease in lower-paying farm work.

Regardless of one’s stance on the trade deal, the Mexican election creates a unique opportunity to reassess the benefits and costs of NAFTA on a regional basis. Finding the best approach for Mexico’s next president will likely be a balancing act between embracing more trade liberalization and further modernization of the economy and protecting more impoverished southern states from the highly efficient competition of their northern neighbor.

– Nathan Ghelli

Photo: Flickr

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How to Make Urbanization More Effective at Reducing Poverty http://www.borgenmagazine.com/make-urbanization-more-effective-at-reducing-poverty/ Mon, 25 Jun 2018 08:30:57 +0000 http://www.borgenmagazine.com/?p=127995 SEATTLE — Urbanization is rapidly occurring across the globe. If managed properly, these urbanization projects can be a successful strategy for reducing poverty. However, oftentimes this is not the case. The eradication of Turkish slums is a particularly apt example of these shortcomings. That being said, there are several ways to make urbanization more effective [...]

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SEATTLE — Urbanization is rapidly occurring across the globe. If managed properly, these urbanization projects can be a successful strategy for reducing poverty. However, oftentimes this is not the case. The eradication of Turkish slums is a particularly apt example of these shortcomings. That being said, there are several ways to make urbanization more effective at reducing poverty.

A Brief Background of Turkish Slums

Turkish slums, or gecekondus, originated as a solution to the state’s inability to accommodate the large numbers of rural laborers that migrated to urban centers in the 1950s. This mass migration was a result of post-WWII industrialization in Turkey. As technology advanced, the demand for rural labor decreased and the demand for urban labor increased. However, there was not enough housing to accommodate this influx of much-needed workers. Therefore, rural migrants occupied vacant lots and built housing accommodations for themselves.

As a result of urban expansion, by the late 1980s the gecekondus that used to be located on the outskirts found themselves incorporated into the city core. As the value of the property became apparent, Turkish municipalities adjusted their stance towards gecekondus in order to promote urbanization projects.

Urbanization’s Effects on the Poor

In its urbanizing mission, the state began demolishing entire gecekondu communities in order to make way for apartment housing. In exchange for forgoing their claim to the land, developers offered some gecekondu dwellers accommodations in these new apartment buildings. As such, the urbanization projects were presented as an opportunity for socioeconomic mobility among the impoverished.

Dr. Alex Papadopoulos, a professor of sustainable urban development at DePaul University,  argues that the notion of seamlessly transitioning from slum dwellings to high rise apartments is impractical. Dr. Papadopulos told The Borgen Project, “You are taking a population that lived in the extended family setting and in a historic neighborhood setting [of]very high density without full integration into the formal economy — most without education and really high levels of illiteracy. You are going to move these people into high rise rental apartments and you think that they will be integrated into the formal economy by magic? You know, I don’t think so.” The solution? “It requires substantial investment in social capital. In educating and training.”

What would make urbanization more effective at reducing poverty? According to policymakers at the Swedish International Development Cooperation Agency, the focus should be on administration, accessibility and accommodation.

Better Administration Can Make Urbanization More Effective at Reducing Poverty

In order to properly account for the interests of the poor, local governments need to work transparently with actors from the private sector and NGOs, as well as representatives of the impoverished. At the moment, the impoverished are attributed aid based on documented proof of poverty. This welfare includes much-needed quarterly food packages and annual rations of coal. The necessary documentation is distributed based solely on the discretion of local officials. If a gecekondu dweller decided to move into a new apartment, local officials could revoke the resident’s impoverished status without considering the resident’s continued reliance on this welfare.

It must be understood that an improvement in housing does not constitute an instantaneous change in socioeconomic status. Integrating the poor into the middle class is a gradual process. Therefore, local governments need to maintain an open dialogue with gecekondu dwellers during the urbanization process.

Accessibility of Utilities Integral to the Urbanization Process

Accessing basic utilities such as water, electricity, transportation and waste management is critical for the world’s poor. Even in cases in which gecekondu communities had access to physical infrastructure, the cost was a major barrier to utility access. This cost only increases in an apartment setting. Many residents fear that although they may have physical access to these utilities in their apartment, they would still be economically barred from these resources.

Providing utility infrastructure to impoverished communities is only a first step in poverty reduction through urbanization. The next step is to remove the economic barriers that prevent access to these utilities. Be it through state welfare or privatized aid, it is imperative that the world’s poor be granted access to these utilities if they are to have a chance at being integrated into the middle class.

Social Integration into New Accommodations Important for Success

Viable and affordable housing alternatives to urban apartments are an important part of helping the impoverished transition to urban living. Gecekondu living is noticeably different from middle-class living. In the gecekondu community, neighbors are familiar friends, often referred to with familial titles such as sister and brother. Neighbors helped each other construct their houses. They stood in solidarity against demolition teams and shared in a collective economy based on trust. As such, gecekondu dwellers have been socialized for communal living, not the individualism of apartment living.

Rather than displacing impoverished populations that are not accustomed to middle-class lifestyles, urbanization projects should invest in the social integration of these populations. This entails providing affordable housing in familiar environments while ensuring access to educational and vocational training. These alternatives need both security founded on improved property rights as well as access to a community.

By addressing these oversights in current urbanization projects, the poor have a better chance at successful integration. These are only three suggestions as to how to make urbanization more effective at reducing poverty. It is important that urban planners keep looking for more.

– Joanna Dooley

Photo: Flickr

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Effective Alternatives to Food and Energy Subsidies in Egypt http://www.borgenmagazine.com/subsidies-in-egypt/ Wed, 20 Jun 2018 08:30:46 +0000 http://www.borgenmagazine.com/?p=127909 SEATTLE — In the 2016-17 financial year, Egypt spent 3.3 percent of its GDP on fuel subsidies and 1.4 percent on food subsidies. These sizable outlays are intended to help the poorest of its population, but in fact tend to aid the better off. Energy and food subsidies are not a new phenomenon in the [...]

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SEATTLE — In the 2016-17 financial year, Egypt spent 3.3 percent of its GDP on fuel subsidies and 1.4 percent on food subsidies. These sizable outlays are intended to help the poorest of its population, but in fact tend to aid the better off.

Energy and food subsidies are not a new phenomenon in the Egyptian economy. Subsidies in Egypt, and other price controls, have been used in Egypt since the 1920s. However, the government’s renewed focus on repairing an ailing economy has drawn attention to both the efficacy and equity of subsidies. Historically, the primary aim of these subsidies has been to assist the lowest income part of the population. In actuality, the benefits go disproportionately to higher income households.

Subsidies in Egypt Struggle to Target Poorest Egyptians

Energy subsidies in Egypt are an example of this. Price controls on fuel allow all motorists, wealthy or poor, to fill up their cars and pay only 59 percent of the cost. Since the poorest of the population cannot afford cars, the majority of fuel subsidies flow to the relatively more prosperous. The top 40 percent of the population receives about 60 percent of the energy subsidies, while the bottom 40 percent receives only 25 percent of these subsidies. Urban inequality of petrol subsidy distribution is even more pronounced. In the cities, the top 20 percent of the urban population gets eight times more than the bottom 20 percent.

Food subsidies are also widely used in Egypt. Citizens can afford to buy loaves of bread for a mere tenth of its cost. Again, these subsidies in Egypt are intended to protect the poorest citizens from price rises. In practice, the subsidies on bread reach as much as 70 percent of the population. The people truly in need of such assistance, however, only make up 30 percent of the population, and yet this is a benefit the majority of the nation receives.

While not perfect, the removal of such programs without an accompanying social protection component to replace it would be devastating to the poorest Egyptians. The welfare effect of removing the fuel subsidies specifically would be most disruptive for the neediest Egyptians, since a greater share of their total income is spent on energy costs.

Cash Transfers Offer More Direct Benefits to Those Most in Need

Alleviating the costs to the most vulnerable would require a plan to replace the current subsidy scheme. One recent trend gaining traction has been the shift towards direct cash transfers.

Following Brazil’s lead, conditional cash transfer programs could replace the large financial commitments of subsidies in Egypt. Since 2003, Bolsa Familia, a direct cash transfer scheme for the poor, has already reached more than 46 million Brazilians under the poverty line. Households receive a modest benefit of about $55 a month on average, depending on their income. In this way, those most in need of assistance are targeted, and on a far more progressive basis than subsidies alone.

Switching to a similar direct cash transfer scheme in Egypt could provide better assistance to the poor than existing subsidies. In 2013, the Cato Institute, a Washington think tank, estimated that incomes for the bottom 25 percent could more than double in Egypt with a simple switch away from food and energy subsidies.

Though promising, this does not mean a transition away from subsidies would be swift. Previous governments have tried to rid themselves of food subsidies with almost immediate public discontent and social upheaval. In the late 1970s, former Egyptian Prime Minister Anwar Sadat attempted to eliminate subsidies on flour, rice and cooking oil. Riots broke out across the state, and hundreds of thousands of poor Egyptians vehemently protested the end to basic food staple subsidies. After hundreds of injuries and scores of deaths, the government reversed the proposed reductions.

Finding the balance for Egypt will be difficult. At least for now, there is one element of subsidy reform that should garner universal support: directing any possible future savings towards the truly poor.

– Nathan Ghelli

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