Beyond GDP


 

December 6, 2018

 

Beyond GDP

ttps://www.project-syndicate.org/commentary/new-metrics-of-wellbeing-not-just-gdp-by-joseph-e-stiglitz-2018-12

What we measure affects what we do. If we focus only on material wellbeing – on, say, the production of goods, rather than on health, education, and the environment – we become distorted in the same way that these measures are distorted; we become more materialistic.

 

INCHEON – Just under ten years ago, the International Commission on the Measurement of Economic Performance and Social Progress issued its report,  Mismeasuring Our Lives: Why GDP Doesn’t Add Up.The title summed it up: GDP is not a good measure of well-being. What we measure affects what we do, and if we measure the wrong thing, we will do the wrong thing. If we focus only on material well-being – on, say, the production of goods, rather than on health, education, and the environment – we become distorted in the same way that these measures are distorted; we become more materialistic.

We were more than pleased with the reception of our report, which spurred an international movement of academics, civil society, and governments to construct and employ metrics that reflected a broader conception of wellbeing. The OECD has constructed a Better Life Index, containing a range of metrics that better reflect what constitutes and leads to wellbeing. It also supported a successor to the Commission, the High Level Expert Group on the Measurement of Economic Performance and Social Progress. Last week, at the OECD’s sixth World Forum on Statistics, Knowledge, and Policy in Incheon, South Korea, the Group issued its report, Beyond GDP: Measuring What Counts for Economic and Social Performance.

The new report highlights several topics, like trust and insecurity, which had been only briefly addressed by Mismeasuring Our Lives, and explores several others, like inequality and sustainability, more deeply. And it explains how inadequate metrics have led to deficient policies in many areas. Better indicators would have revealed the highly negative and possibly long-lasting effects of the deep post-2008 downturn on productivity and wellbeing, in which case policymakers might not have been so enamored of austerity, which lowered fiscal deficits, but reduced national wealth, properly measured, even more.

Political outcomes in the United States and many other countries in recent years have reflected the state of insecurity in which many ordinary citizens live, and to which GDP pays scant attention. A range of policies focused narrowly on GDP and fiscal prudence has fueled this insecurity. Consider the effects of pension “reforms” that force individuals to bear more risk, or of labor-market “reforms” that, in the name of boosting “flexibility,” weaken workers’ bargaining position by giving employers more freedom to fire them, leading in turn to lower wages and more insecurity. Better metrics would, at the minimum, weigh these costs against the benefits, possibly compelling policymakers to accompany such changes with others that enhance security and equality.

Spurred on by Scotland, a small group of countries has now formed the Wellbeing Economy Alliance. The hope is that governments putting wellbeing at the center of their agenda will redirect their budgets accordingly. For example, a New Zealand government focused on well-being would direct more of its attention and resources to childhood poverty.

Better metrics would also become an important diagnostic tool, helping countries both identify problems before matters spiral out of control and select the right tools to address them. Had the US, for example, focused more on health, rather than just on GDP, the decline in life expectancy among those without a college education, and especially among those in America’s deindustrialized regions, would have been apparent years ago.

Likewise, metrics of equality of opportunity have only recently exposed the hypocrisy of America’s claim to be a land of opportunity: Yes, anyone can get ahead, so long as they are born of rich, white parents. The data reveal that the US is riddled with so-called inequality traps: Those born at the bottom are likely to remain there. If we are to eliminate these inequality traps, we first have to know that they exist, and then ascertain what creates and sustains them.

A little more than a quarter-century ago, US President Bill Clinton ran on a platform of “putting people first.” It is remarkable how difficult it is to do that, even in a democracy. Corporate and other special interests always seek to ensure that their interests come first. The massive US tax cut enacted by the Trump administration at this time last year is an example, par excellence. Ordinary people – the dwindling but still vast middle class – must bear a tax increase, and millions will lose health insurance, in order to finance a tax cut for billionaires and corporations.

If we want to put people first, we have to know what matters to them, what improves their wellbeing, and how we can supply more of whatever that is. The Beyond GDP measurement agenda will continue to play a critical role in helping us achieve these crucial goals.

 

Anwar as Port Dickson MP


September 20, 2018

 Anwar  as Port Dickson MP

Opinion  |

COMMENT | If Anwar Ibrahim does make the cut, invariably, as the Member of Parliament of Port Dickson, perhaps something akin to a healthy rivalry with Langkawi island MP Dr Mahathir Mohammad will be immediately triggered.

Key government events should be held in Langkawi, either to brainstorm on the revival of Malaysia, or, the various ministries. Such events are bound to catch on in Port Dickson, too, which is just a short distance away from Putrajaya.

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Indeed, high-end hotels, over the last 15 years, have also sprung up on Langkawi island (pic above), including the globally renowned Four Seasons. From time to time, it is not rare to see Indian families touring in huge numbers in Langkawi, too, often booking all their suites and rooms at one go.

Although Langkawi has also catered to the tourists of Scandinavia and Germany, who can often be seen basking in the sun, no discernible (foreign) presence has been seen at Port Dickson’s beaches as yet.

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Port Dickson Chalets

This is where Port Dickson has to stand out. Making its seas and shorelines pristine would make Port Dickson an ideal destination for families and international group tours beyond what has generally been provided to Malaysians.

If Anwar Ibrahim does somehow attract more Chinese to the beach town, the facilities in Port Dickson would have to be significantly scaled up – without which, the residents of Port Dickson would be looking at immense traffic bottlenecks and congestion.

Such negative externalities of tourism cannot be ruled completely. Polluted air, crowded bazaars, shortage of proper food and medical facilities, too, can all be a turn off to well-heeled Malaysian tourists.

In fact, without an iconic landmark, Port Dickson would be at a disadvantage, compared to Langkawi island. Langkawi, for example, hosts one of the longest cable cars in Southeast Asia that allows thousands of tourists to enjoy a bird’s eye view of the whole island.

Port Dickson, being flatter, is only known for its small-town feel and delicious local food. Perhaps a high tower should be built that would permit Port Dickson visitors to peer into the Straits of Malacca, and the thousands of ships that pass through it. It would seem that such a service should be introduced, in order to allow Malaysians to take a peek into what goes on in one of the busiest straits in the world.

The depths of the quays in Port Dickson should be constantly dredged and deepened, to allow bigger ships and vessels to berth, ideally ships that can ferry passengers across to Sumatera, Indonesia, which is just across the shores of Malaysia.

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To be sure, friendly ecological themes have to be worked into the grand schemes for all arrangements. Otherwise, a tourism scheme that is merely heavy on sheer human traffic alone is bound to create many side effects, beyond overcrowding, noise pollution, and inadequate waste disposal.

Either way, it is first time in the history of Malaysia that a reigning Prime Minister is an MP of a touristy constituency, indeed a tax-free zone to boot, which is Langkawi island. Should Anwar win the Port Dickson seat, the eighth prime minister of Malaysia would have to transform Port Dickson into a major township.

Port Klang was previously known as Port Swettenham, in recognition of the tenure of Resident Frank Swettenham in the 19th century. Over the years, Port Klang has morphed into a seafood attraction and high-density port.

No one knows if Port Dickson can become the hub of “bunkering,” a business that caters to refueling the ships and vessels that traverse through the Straits of Malacca.

If it does, this is an economic sector that is worth no less than US$1 billion a year. At least that is the current size of the bunkering business in Singapore, an idea that was ironically coined by Dr Mahathir previously.

It would help if Anwar Ibrahim could come up with such an industry-relevant solution, beyond merely looking to boost tourist numbers in Port Dickson.


PHAR KIM BENG was a multiple award-winning Head Teaching Fellow on China and Cultural Revolution in Harvard University.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

The Paradox of Globalization: Development Cooperation at Risk


August 22,  2018

The Paradox of Globalization: Development Cooperation at Risk

by Dr. Jomo Kwame Sundaram

http://www.ipsnews.net/2018/08/globalization-enhanced-development-cooperation/

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Protracted economic stagnation in rich countries continues to threaten the development prospects of poorer countries. Globalization and economic liberalization over the last few decades have integrated developing countries into the world economy, but now that very integration is becoming a threat as developing countries are shackled by the knock-on effects of the rich world’s troubles.
Trade interdependence at risk
As a consequence of increased global integration, growth in developing countries relies more than ever on access to international markets. That access is needed, not only to export products, but also to import food and other requirements. Interdependence nowadays, however asymmetric, is a two-way street, but with very different traffic flows.
Unfortunately, the trade effects of the crisis have been compounded by their impact on development cooperation efforts, which have been floundering lately. In 1969, OECD countries committed to devote 0.7% of their Gross National Income in official development assistance (ODA) to developing countries. But the total in 2017 reached only $146.6 billion, or 0.31% of aggregate gross national income – less than half of what was promised.
In 2000, UN member states adopted the Millennium Development Goals to provide benchmarks for tackling world poverty, revised a decade and a half later with the successor Sustainable Development Goals. But all serious audits since show major shortfalls in international efforts to achieve the goals, a sober reminder of the need to step up efforts and meet longstanding international commitments, especially in the current global financial crisis.
Aid less forthcoming
Individual countries’ promises of aid to the least developed countries (LDCs) have fared no better, while the G-7 countries have failed to fulfill their pledges of debt forgiveness and aid for poorer countries that they have made at various summits over the decades.
At the turn of the century, development aid seemed to rise as a priority for richer countries. But, having declined precipitously following the Cold War’s end almost three decades ago, ODA flows only picked up after the 9/11 or September 11, 2001, terrorist attacks. The Monterrey Consensus, the outcome of the 2002 first ever UN conference on Financing for Development, is now the major reference for international development financing.
But, perhaps more than ever before, much bilateral ODA remains ‘tied’, or used for donor government projects, rendering the prospects of national budgetary support more remote than ever. Tied aid requires the recipient country to spend the aid received in the donor country, often on overpriced goods and services or unnecessary technical assistance. Increasingly, ODA is being used to promote private corporate interests from the donor country itself through ostensible ‘public-private partnerships’ and other similar arrangements.
Not surprisingly, even International Monetary Fund staff have become increasingly critical of ODA, citing failure to contribute to economic growth. However, UN research shows that if blatantly politically-driven aid is excluded from consideration, the evidence points to a robust positive relationship. Despite recent efforts to enhance aid effectiveness, progress has been modest at best, not least because average project financing has fallen by more than two-thirds!
Debt
Debt is another side of the development dilemma. In the last decade, the joint IMF-World Bank Heavily Indebted Poor Countries initiative and its extension, the supplementary Multilateral Debt Relief initiative, made some progress on debt sustainability. But debt relief is still not treated as additional to ODA. The result is ‘double counting’ as what is first counted as a concessional loan is then booked again as a debt write-off.
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At the 2001 LDCs summit in Brussels, developed countries committed to providing 100% duty-free and quota-free (DFQF) access for LDC exports. But actual access is only available for 80% of products, and anything short of full DFQF allows importing countries to exclude the very products that LDCs can successfully export.
Unfortunately, many of the poorest countries have been unable to cope with unsustainable debt burdens following the 2008-2009 financial crisis. Meanwhile, there has been little progress towards an equitable and effective sovereign-debt workout framework despite the debilitating Argentine, Greek and other crises.
Technology gap
In addition to facing export obstacles, declining aid inflows, and unsustainable debt, the poorest countries remain far behind developed countries technologically. Affordable and equitable access to existing and new technologies is crucial for human progress and sustainable development in many areas, including food security and climate-change mitigation and adaptation.
The decline of public-sector research and agricultural-extension efforts, stronger intellectual-property claims and greater reliance on privately owned technologies have ominous implications, especially for the poor. The same is true for affordable access to essential medicines, on which progress remains modest.
An international survey in recent years found that such medicines were available in less than half of poor countries’ public facilities and less than two-thirds of private facilities. Meanwhile, median prices were almost thrice international reference prices in the public sector, and over six times as much in the private sector!
Thus, with the recent protracted stagnation in many rich countries, fiscal austerity measures, growing protectionism and other recent developments have made things worse for international development cooperation.
Dr. Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

Economic Pragmatism and Regional Economic Integration: The Case of Cambodia


July 12, 2018

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Economic Pragmatism and Regional Economic Integration: The Case of Cambodia

by Chheang Vannarith

Chheang Vannarith, Visiting Fellow, ISEAS-Yusof Ishak Institute, explains that “International economic cooperation and regional integration are key principles of Cambodia’s foreign policy.”

Asia Pacific Bulletin, No. 429

Cambodia’s foreign policy strategy has been chiefly shaped and driven by “economic pragmatism,” meaning the alignment of foreign policy with economic development interests. The Cambodian government’s two main approaches to regional economic integration are (1) transforming the international environment into a source of national development and (2) diversifying strategic partnerships based on the calculation of economic interests. International economic cooperation and regional integration are key principles of Cambodia’s foreign policy, which emphasizes shared development and win-win cooperation.

As a less developed country in the region, Cambodia has a strong interest in promoting and realizing a more inclusive, fair, and just process of regional community-building that narrows the development gap and implements people-centered regional cooperation. Linking regional integration with national economic policies is critical to sustaining dynamic economic development.  Key tasks include improving regulatory harmonization and harnessing and synergizing various regional integration initiatives.  It is particularly important to link ASEAN community blueprints with sub-regional cooperation mechanisms such as the Greater Mekong Subregion (GMS) program and Mekong-Lancang Mekong Cooperation (MLC).

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Samdech Prime Minister Hun Sen–Father of Cambodia’s Socio-Economic Development

The Cambodian government perceives regional integration as a means to further advance its national development interests. ASEAN, GMS and MLC are the main gateways for Cambodia to reach out to the region and beyond. The ASEAN Economic Community Blueprint 2025 aims to achieve five goals: (1) an integrated and cohesive economy; (2) a competitive, innovative and dynamic ASEAN; (3) enhanced connectivity and sectoral cooperation; (4) a resilient, people-oriented, and people-centered ASEAN; and (5) a global ASEAN. GMS operates under the principles of non-interference, consultation and consensus, mutual interest and equality, win-win cooperation, shared development, and common destiny. GMS gives emphasis to practical or functional cooperation, aiming at achieving concrete results in poverty reduction. MLC promotes regional connectivity, production capacity, cross-border economic cooperation, trade and investment facilitation, customs and quality inspection, financial cooperation, water resource management, agriculture, forestry, environmental protection, and poverty reduction.

In the Rectangular Strategy Phase III, issued in 2013, a five-year strategic development plan, the Cambodian government set out a vision that states, “by the end of the first half of the 21st century, Cambodia is to reclaim full ownership of its own destiny, while becoming a real partner in regional and global affairs.” It further states that Cambodia is now “actively integrating itself into the regional and global architecture, and playing a dynamic role in all regional and global affairs on equal footing and with equal rights as other nations.”

The Cambodian government stresses several key benefits of regional integration, including regional peace and stability, the development of both hard and soft infrastructure, energy and digital connectivity, free and effective movement of trade and investment, human capital development, the expansion of regional production bases and networks, and stronger regional cooperation and coordination in agricultural development. Strengthening regional cooperation — especially in the Mekong region in rice production and trade facilitation — would contribute to improving farmers’ standard of living. Creating an association of rice-exporting countries will strengthen the global position of the Mekong countries.

Although there have been remarkable achievements over the last two decades in forging regional cooperation, integration, and connectivity, there are several challenges that Cambodia needs to overcome. Those challenges include socio-economic inequality within the country and the region, weak institutions and governance, and the lack of national capacity in implementing regional projects. Income disparity within the regions and localities contributes to political instability, trans-boundary crimes, illegal labor migration, and human trafficking.

Institution-building based on good governance remains a key challenge to the effective implementation of regional policies. The national capacity of each member country of the GMS in transforming and integrating its regional development agenda into a national development action plan is limited. The lack of resources in realizing regional development projects requires more investment and participation from the private sector.

Local government plays a significant role in regional cooperation and integration. Recognizing the role of local government in socio-economic development, in 2008 the government adopted two Organic Laws and established a National Committee for the Democratic Development of Subnational Administrations. These measures are aimed at decentralizing power and creating a sub-national governance system. Delegating power and resources to local governments at the commune, district and provincial levels not only contributes to national development but also connects governments with neighboring countries, especially in the border areas.  For instance, the Cambodia-Laos-Vietnam Development Triangle was formed in 2002 to link 13 border provinces of the three countries.

A major challenge is that both the central government and local governments in Cambodia lack sufficient institutional capacity and resources to effectively implement the country’s regional cooperation and integration agenda which includes the budget infrastructure connectivity projects. It is therefore necessary to forge a closer partnership between the public and private sectors, especially in infrastructure development and connectivity.  Decentralization, delegating more authority to local governments, can facilitate public-private partnerships and stimulate national public administrative reform. Cambodia’s Ministry of Economy and Finance crafted a policy paper on public-private partnership for public investment project management, 2016-2020, which aims to “create an enabling environment for promoting the participation of the private sector and financial institutions in public investments.”

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Phnom Penh, Cambodia

To enhance Cambodia’s competitiveness, and thereby to improve the depth and quality of its participation in regional economic integration, Prime Minister Hun Sen said at the GMS Business Summit in Hanoi in March 2018 that it was necessary to strengthen efforts in regional economic integration and connectivity through prioritized areas of finance, economy, e-commerce and cross-border trade.

The seize the opportunities arising from fourth industrial revolution and digital integration in ASEAN the Cambodian government is focusing on four pillars.  According to a speech by Prime Minister Hun Sen at the 2018 Cambodia Outlook Conference in Phnom Penh, these are:

(1) Developing a skilled workforce by emphasizing education in science, technology, engineering, and mathematics (STEM) and technical and vocational training, supporting linkages between education and enterprises, and creating a national accreditation system.

(2) Promoting a research and development network, a high-quality physical infrastructure, and a public-private partnership mechanism to support the establishment of research and development, the facilitation of information sharing and technology transfer, and the penetration of foreign markets.

(3) Further strengthening institutional, policy and regulatory frameworks by bolstering the implementation of intellectual property law, related regulations, and other regulatory frameworks in order to encourage and support entrepreneurs and scientists to innovate and sell their technology products and services.

(4) Inspiring public participation in the science and technology sector, promoting public awareness of the importance of STEM, and nurturing the talents of its population.

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Young and Better Educated Cambodians

As a small and open economy, Cambodia has taken a proactive approach in promoting regional integration based on the principle of win-win cooperation.  The government has taken measures to diversify the sources of growth by investing in knowledge-based economy and strengthen public-private partnerships. However, the lack of institutional capacity at both national and local levels remains a key constraint.

Snatch The Match From That Monkey Najib Before He Burns Down The Village


April 19, 2018

Snatch The Match From That Monkey Najib Before He Burns Down The Village

M. Bakri Musa
www.bakrimusa.com
It would take more than just a monkey with a match to burn down a village, despite the dwellings being made of wood and having flammable thatched roofs. Those homes have withstood generations of indoor wood-burning stoves and nightly mosquito-repelling ambers underneath their floors. There would have to be more, as with a long spell of dry hot weather and mountains of ignitable garbage strewn around.
      Yet when the kampung does get burned down, everyone would be shocked. The immediate reaction would be to blame the idiot with the match, and the fury heaped upon that poor soul would then be merciless.
      Consumed with vengeance and with little inclination or intelligence for reflection, the necessary probing questions would never get raised. As with who gave the idiot the match or why was he not supervised. Few would notice much less ponder why the strewn garbage was allowed to accumulate and thus pose a fire as well as health and other hazards.
      The kampung that is Malaysia has not burnt down, at least not yet. Malaysians are still smug and remain blissfully unaware of the long dry spell and the tinder dried debris that has been stacking up. Nor do they realize the danger posed by the idiot running around with a match in his hand and threatening more mischief. God knows he has wrecked enough damage already.
Being in the tropics, Malaysians are used to hot weather but the current hot political climate is very recent. The 1969 “incident” excepted, political riots and turmoils are not yet the norm. Malaysia has been thankfully spared such scourges as the assassinations of leaders and politicians, the staple of Third World politics.
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The BERUKs of Malusia
If Najib and his Barisan coalition were to prevail in the upcoming general election on May 9, 2018, however slim their victory, that would be akin to giving the village idiot a match, and then encouraging him to continue playing with it amidst the flammable debris and the high-voltage political atmosphere.
     The flammable debris are our failing institutions. Malaysias are also now deeply polarized, lending to the current highly-charged political climate. The last time Malaysians were stridently divided was during the 1969 election. Then the ruling coalition’s defeat in a few states and its loss of a supra majority at the federal level triggered a horrific race riot that killed thousands and maimed many more. Parliament had to be suspended and the nation ruled by decree. The scar of that national tragedy has now thankfully been sealed with a thick scab. It is unlikely that it would be rubbed open again despite the mischievous attempts by many.
     The polarization then was interracial, between Malays and Chinese to be specific, and the outbreak of violence was localized only to Kuala Lumpur. Today the schisms and polarizations are widespread but not interracial despite crude attempts by many to make it so, rather intra-racial, among Malays. Only East Malaysia is spared. As such Malaysians, in particular Malays, do not or refuse to recognize or even acknowledge this new threat to the nation. Therein lies the danger.
     Yet the evidence is glaring. I have never seen more ugly or blatant displays of vicious and visceral hatred directed at Najib and Mahathir. The two leaders themselves have set the pace and tone. Others too like their HRHS The Sultans and ulamas have taken sides. Their revulsion, as well as that of their followers, is so open. Such gross and uncouth displays are so un-Malay. I fear that should something untoward were to happen to Najib or Mahathir, that would trigger a vicious civil war among their fanatic followers, meaning, Malays.
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     Throughout history the most savage conflicts are intra rather than interracial. Witness the ongoing carnage in the Middle East. I am referring not to the Arab-Israeli dispute but the continuing savageries among the Arabs. The Korean Peninsula is still a tinderbox, ready to explode and taking the world with it. Then there was the earlier Chinese civil war. It would be a futile exercise to venture whether the Chinese suffered more under the Japanese or during their own civil war. It would not be an exaggeration to assert that the Japanese Occupation at least interrupted the brutalities the Chinese inflicted upon each other.
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They are partial to UMNO Malays, thanks to Najib’s “cash is king” lure.
What is so volatile about the current threat facing Malaysia is the absence of any restraining element to buffer or dampen this intra-Malay schism. Our institutions–from the sultans and the Election Commission to the Armed Services and the police–have failed us. The Sultans and Agung are not the “protectors” of Islam and Malay customs as they claim, or as tradition and the constitution would have it. They are partial to UMNO Malays, thanks to Najib’s “cash is king” lure.
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     The Chief of the Armed Forces had to retract his earlier statement proclaiming his troops’ and officers’ loyalty to Najib. That General forgot his oath of office, to serve King and country. Likewise the Registrar of Societies; she did her “job” in a single blow (pardon the pornographic pun) by denying the registration of Mahathir’s new party, a powerful opposition force. Meanwhile that clown Prince and Sultan wannabe in the southern tip of the Peninsula thinks he can titah (command) his fantasized “Bangsa Johor” as to which party to vote for! His father the sultan had gone even further.I would have expected Malaysian minorities to buffer or dampen this dangerous intra-Malay rift if nothing else for their (non-Malay) own self-interest. Instead they are sucked in by their own miscalculations into this perilous undertow.
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A sliver of hope is Sabah and Sarawak. Perhaps because everyone there is a minority, Malaysians there are inclusive and tolerant. They have gone beyond; they have not let their ethnic and cultural identities define or limit them. It is sad that their exemplary collective stance is lost on their fellow Malaysians in the peninsula.
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 Sarawakians must honour Tan Adenan Satem
The fact that UMNO, a national party otherwise, does not have a beachhead in Sarawak, explains why the particularly virulent racist virus that has infected UMNO’s body and mind in the Peninsula has not spread east across the South China Sea. I hope East Malaysians will keep it that way.

Malaysians have a crucial task in this upcoming May 9 General Election. They must snatch that dangerous match away from that idiot Najib and his band of mischievous UMNO monkeys. He and they have done enough damage to Malaysia. Stop them before they burn the whole country down.

 

The sharp power of development diplomacy and China’s edge


April 12, 2018

 

https://www.orfonline.org/expert-speaks/sharp-power-development-diplomacy-china-edge/

Chinese development diplomacy not only offers alternative sources of finance, but also presents a model that seems to overcome the major criticisms of traditional aid. However, such power relations are rarely horizontal, and often come attached with significant geopolitical implications.

Development Diplomacy,The China Chronicles

This is the fifty third part in the series The China Chronicles.

Read all the articles here.


Military might and economic coercion have traditionally been the preferred tools for the pursuit of geopolitical ambitions with soft power playing a supporting role. For the first time in contemporary geopolitics, we witness this accepted norm turn on its head. The experience of China being a classic example — where, in several cases, we see development diplomacy assume a central role in reinforcing Beijing’s hegemonic ambitions. Beijing’s conduct calls into question not only established understanding of geopolitics, but also that of global development.

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The sphere of global development will increasingly be the arena where geo-strategic tensions play out. As such, perhaps it is time to give development cooperation some serious consideration in the larger study of geopolitics.

The soft power of attractiveness and persuasion has often been treated as the stepsibling of coercive hard power. As Joseph Nye Jr. argues, diplomacy and economic assistance programmes are generally underfunded as they rarely show immediate visible results. Take the case of the United States — with arguably the largest strategic influence across geographical clusters, foreign aid makes up less than 1 percent of the American federal budget. In addition, when budget cuts take place aid faces the axe first, creating the perception that development aid is dispensable, particularly when compared to military spending. Yet, it is development diplomacy that has come to China’s advantage in securing its interests abroad.


 

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The soft power of attractiveness and persuasion has often been treated as the step sibling of coercive hard power.


China’s development assistance model — much like those of other emerging powers — are based on two fundamental pillars articulated in the two White Papers on foreign aid. First, it stresses non-interference and respect for the sovereign rights of partner countries. Articulated as a direct contradiction to the controversial conditionalities prescribed by traditional aid donors — most particularly the International Monetary Fund and the World Bank — the Chinese development approach provides recipient countries with the agency to choose their independent growth and development trajectories based on individual requirements.

Second, Chinese development finance follows the win-win principle. Identifying itself as a country still struggling with its own domestic development challenges, China’s economic assistance must bring benefits for the Chinese state — in addition to development gains recipient countries reap. The mutual-benefit principle also brings with it another aspect — the perception of a horizontal partnership and equal power dynamic. Thus, Chinese development diplomacy not only offers alternative sources of finance, but also presents a model that seems to overcome the major criticisms of traditional aid. The issue, however, is that such power relations are rarely horizontal, and they often come attached with significant geopolitical implications.

While it would be impossible to decipher the motivations behind China’s development diplomacy programme — other than those stated in the White Papers — development assistance has allowed China to secure a range of strategic gains. Beijing’s engagement with the African continent showcases many such instances. Beijing — through the People’s Bank of China, the China Development, the Export-Import Bank of China and the China-Africa Development — has provided Africa with a considerable volume of aid in the form of investments and loans. As per calculations by SAIS-CARI, Chinese loans to Africa amount to USD 86 billion in the 2000-2014 period. A major portion of these going to resource-rich countries such as Angola, the Democratic Republic of Congo and Sudan. Today, Africa is the second largest source of crude oil to China. More important, however is the increasing Chinese military presence in Africa. China’s contribution of military personnel to peacekeeping missions in Africa has seen a sharp rise — with more than 2,500 troops and experts committed to six such UN missions, according to the Council on Foreign Relations. Further, in 2015 Beijing promised the African Union military aid worth USD 100 million; and China’s first overseas naval base has recently been constructed in Djibouti.


Beijing — through the People’s Bank of China, the China Development, the Export-Import Bank of China and the China-Africa Development — has provided Africa with a considerable volume of aid in the form of investments and loans.


Asia too offers several such examples. The latest and most controversial one being Sri Lanka’s Hambantota port. In 2010, Beijing provided a loan of USD 1.5 billion for the construction of the Hambantota port — a project that many deemed economically unviable from the start. This loan, in addition to many other Chinese loans for various other infrastructure projects, has meant a monumental debt. The turn of events has been well covered — Sri Lanka signing a 99-year lease with Chinese state-owned firms for the Hambantota port. This also raises alarm bells for the rest of the infrastructure projects financed by Beijing — for instance, the many segments of the Belt and Road Initiative, which are unlikely to provide any significant commercial returns. Further, Beijing has invested in the construction of the strategically located Gwadar port in Pakistan; it has pledged USD 7.2 billion to develop a deep-sea port in the Straits of Malacca; and has entered into an agreement to develop the international airport of Maldives.

A country’s development policy and economic assistance programme can, thus, lead to more than the mere creation of global goodwill. In fact, such diplomacy figures as a useful instrument for a revisionist power to further its geopolitical ambitions. Consequently, the conventional categorisation of development diplomacy within soft power no longer holds. Considering this, then, does the study of soft power in international relations require a revision that reflects current geopolitical realities? Secondly, is there an added urgency in reconciling the existing ideological differences between traditional and emerging providers of development assistance — in order to develop an internationally accepted normative framework that is conducive to development and geopolitical stability? Lastly, will the threat of becoming a global outlaw be enough to bring an increasingly confident Beijing within the boundaries of such a normative framework?

The views expressed above belong to the author(s).