Category Archives: Development

LATIN AMERICAN DONORS’ DEVELOPMENT COOPERATION POLICIES

Last February, the Development Policy Centre at Crawford School of Public Policy of ANU hold the 2014 Australasian Aid and International Development Policy Workshop. The event had more than 50 papers spread over some 19 plenary and panel sessions, session topics include: changing aid frameworks, labour mobility, disaster management, health and aid, fragile states and governance, and more.

ANCLAS Deputy Director Dr. Sean Burges and Carmen Robledo, ANCLAS Associate and PhD candidate at the School of Politics of International Relations of ANU represented ANCLAS in the event.

Dr. Burges participated in the  a plenary panel session – Making their mark: the BRICS and aid with the presentation titled “Brazil’s international development cooperation: old and new motivations”. To read an abstract of Dr. Bruges’ presentation visit the DevPolicy blog.

Ms. Carmen Robledo participated in a panel on donors studies. Her presentation focused on the motivations driving developing assistance policies in Latin America. To see the slides of Carmen’s presentation click here and to read an abstract of this presentation see her contribution on the DevPolicy blog.

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Filed under Analysis, Brazil, BRICS, Development, Foreign aid, Uncategorized

MEASURING WELL-BEING IN A CONTINENT OF CONTRASTS

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A few days ago, Forbes magazine released the 2014 list of World’s billionaires. Seven Latin American billionaires made the top 100, with Mexican telecom tycoon Carlos Slim, in the second spot. In total, there are almost 100 billionaires in the continent and their combined fortunes add up to US$500 billion.  But on the other hand,  Latin America is still home of 160 million of poor, equivalent to 35% of the population in the region (World Bank data), despite intense governmental efforts to reduce poverty.

Furthermore, the OECD in the report How’s life in 2013 noted that countries, such as Mexico and Chile are way below the OECD average of GDP per capita and gini coefficient. However, the report also mentions that despite economic difficulties faced by the population, Brazil, Mexico and Chile have higher spreads of life satisfaction. In fact, out of range from 1 to 10, Mexico scored 7.3, Brazil got 6.7 and Chile scored 6.5 just below the 6.6 OECD average score.

The How’s life in 2013 report shows a new approach to quantify and understand poverty. At first well-being of population was measured only on the basis of material resources reflected on the GDP per capita. In the early 1990s, the UNDP Human Development Index (HDI) incorporated health and education. Today, several countries are shifting to more comprehensive forms of measurement. This new methodology seems to take on board the approach based on capabilities (functionings) that Amartya Sen fiercely defended.

In 2008, Mexico started using this method in its poverty measurements and included six basic social rights in the Law for Social Development. Also, Colombia, El Salvador and the Brazilian state of Minas Gerais have included multidimensional approaches to measure poverty. These governments sought to a better assessment of the capabilities and potential of citizens.

But what exactly is a multidimensional approach of poverty? Poverty itself has several aspects. Poverty measurements should include elements that could cause or further increase the situation of deprivation populations. El Salvador, for instance, identified eight dimensions to be observed and addressed as part of its poverty measurements: employment, housing, education, security, recreation, health, nutrition and income. Colombia chose to evaluate social and health conditions by measuring the following five conditions: education, childhood and youth, labour, health and access to household utilities. While Mexico selected educational, access to healthcare, social security, housing quality, access to basic services and nourishment. In turn, based on these elements the Mexican government classified deprivation in three categories: 1) food insecurity (extreme poverty), 2) obstacles to development of capabilities (access to education and health) and 3) material deprivation (access to adequate housing and transport).

This trend is not unique to Latin America; Bhutan, Malaysia and some areas in China have also adopted it. The most commonly known is the Gross National Happiness Index of Bhutan that includes nine dimensions.

The importance of a multidimensional poverty approach is based in the fact that it highlights aspects that are lagging behind and that require intervention. In other words, by having measurements of different dimensions of deprivation, decision-makers are able to identify elements that need immediate attention of public policies. Policy-makers can also observe progress of social policies and can reassess the continuation or reformulation of current strategies.

While developing countries have made significant efforts to better understand and find solutions to address poverty, results are meager and governments still face enormous challenges. The multidimensional index is a photographic representation of the reality of poverty. To change the socio-economic landscape of the continent of contrasts, coordinated public and private efforts, along with civil society engagement, are in most need to eradicate poverty and reduce inequality.

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Filed under Analysis, Countries / Regions, Development, Macroeconomics, Uncategorized

Peña Nieto on the front cover of TIME magazine

TIME EPN

Last 16 February, Mexican President Enrique Peña Nieto made the front cover of TIME magazine. This issue spark off a heated debated in social media in Mexico, criticising Michael Crowley, the author, and TIME for allegedly “selling out” themselves to the Peña Nieto government.

As Crowley rightly points out, Peña Nieto only won the presidential election with 38% of the votes and therefore it is evident that his detractors react this way. I agree that perhaps the title of the story would have been better with an interrogation mark at the end: “SAVING MEXICO?”, but I must concede that the author presents both sides of the same coin. He highlights achievements and strengths of the country, but also points out the numerous challenges that the current government still has to overcome.

At the same time, I must recognise the sharp Mexican humor to transform the cover into this one.

In any case, I strongly invite you to read the article (or Spanish version) and make your own judgement.

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Filed under Corruption, Democracy, Development, Foreign investment, Macroeconomics, Mexico, News brief, Security, Uncategorized

‘RELAUNCHING’ CHINA-MEXICO RELATIONS: President Xi Jinping visit to Mexico

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Last week, Chinese President Xi Jinping visited Mexico, as part of his first trip to the Americas. Earlier this year, during a trip to China to participate in the Boao Forum for Asia, President Peña Nieto extended an invitation to the Chinese President to visit Mexico. China and Mexico established diplomatic relations in 1972, but bilateral contacts are much older than that. In the XVIth Century, during the Spanish colony ships sailed the Pacific loaded with precious metals, cacao grains, avocados, tomatoes and other articles from the Americas that were exchanged for Asian spices, Chinese tea, porcelain and fabrics, especially silk.

For most of the last 40 years, the relations between the countries were quite cordial, during the last ten years. However, diplomatic mishaps and a policy that sought to bring Mexico closer to the US, during the Fox and Calderon administrations, provoked the Mexican neglect of strategic partners in other parts of the world, and in particular in Asia. Despite regular high-level encounters in international fora, such as APEC or G20, and the signing of cooperation agreements in numerous sectors, trade rivalry overshadowed  Sino-Mexican bilateral relations.

Unlike the rest of Latin-America, the economic relationship with Mexico has not been based on Chinese investment to ensure the flow of raw materials to fuel China’s industry. In fact, cheap Chinese labour made Mexico and China direct competitors in the US market;  in some cases, Chinese manufactures displaced national production in the Mexican domestic market. Furthermore, the bilateral trade deficit is heavily favorable to China; in 2012 Chinese exports to Mexico accounted for USD$57 billion, while Mexican exports to China were USD$5.7  billion (according to the Mexican Ministry of Trade, www.economia.gob.mx).

The occasion to relaunch the bilateral relationship could not be better. Each President has recently taken office and both countries seek to reaffirm their positions as global actors. On the domestic side, President Peña Nieto’s administration started a series of structural reforms to increase economic productivity, while China seeks to maintain its economic momentum. The increase of Chinese wages and international oil prices has narrowed down the productivity gap between Chinese and Mexican products. China’s products are not as cheap as they used to, in some cases, it is cheaper and certainly quicker to import from Mexico than from China for US companies. These elements helped Mexico to leave aside fears and realise the economic potential of complementing, rather than competing with, Chinese partners.

With the aims to enhance mutual trust, expand cooperation and deepen friendship, Peña Nieto and Xi Jinping announced the Comprehensive Strategic Partnership. This agreement aims to push for comprehensive, in-depth and mutual cooperation between the two countries and to make positive contributions to world peace, stability and prosperity. A permanent bilateral commission and working groups will follow the commitments established in the Partnership by the leaders.

Likewise, the two Presidents agreed to move forward, solving the long standing conflicts on pork, tequila and textiles trade. They committed to increase trade and investment and established a high-level business forum. Mexico and China also signed memoranda of understanding to improve cooperation in energy, biotechnology, mining, financial services and sport.

Additionally, President Peña Nieto and President Xi Jinping will encourage deeper people-to-people links. To start, the Chinese government will increase the number of scholarships offered to Mexican students from 40 to 300 per year. To increase cultural and academic exchanges, a Mexican cultural centre in Beijing and a centre specialising on Chinese studies in the National Autonomous University of Mexico (UNAM) will be opened. Finally, as symbol of the two countries’ endeavours to boost tourism flows, during the last day of the visit, President Xi Jinping and his wife visited the archaeological site of Chichen-Itza.

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Some specialists point out that the Chinese visit to Latin America is a sign to the US. China is pointing out that it has interests in other parts of the world, and is not afraid to contest US hegemony, even in the its back yard. Similarly, the US could interpret the visit as a payback for the recent increase in US engagement in Asia, China’s back yard. In any case, this is a perfect environment for Mexico’s diversification, since it could help to break the Mexican trade dependency on the US and to reaffirm itself as a key global player.

As said by President Xi Jiping in his address to the Mexican Senate*, China has a population of 1,300 million, is the second largest importer, expects to invest overseas more than USD$500, and more than 400 million of Chinese tourists will travel around the world in the next few years. This is an incredible opportunity for countries in Latin America, and of course for Mexico. The Comprehensive Strategic Partnership has opened the path for a promising future for Sino-Mexican relations.

 Mexico cannot waste this opportunity…


* I do encourage you to read President Xi Jinping’s speech to the Mexican Senate.

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Filed under BRICS, Development, Foreign investment, Mexico, News brief, Trade, Uncategorized

WEF Latin America 2013

WEF

Since yesterday, more than 400 personalities, including heads of states and representatives from the private sector, academia and civil society, are gathered in the Peruvian capital, Lima, to participate in the 2013 World Economic Forum (WEF) Latin America. They will  discuss about challenges and  opportunities around the topic of “delivering growth and strengthening societies”.  Latin America has registered constant rates of economic growth in recent years.  However, there are big challenges ahead in terms of inequality and exclusion, and especially insecurity.

The program of the  event is organised around the following three pillars:

1) Modernizing economies for growth.

2) Strengthening society through innovation.

3) Building resilience for sustainable development.

Follow live panel discussions on: http://www.wto.org/english/thewto_e/dg_e/dg_selection_process_e.htm

Program:  http://www.weforum.org/events/world-economic-forum-latin-america-2013/programme

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Filed under Development, News brief, Security

Industrial policy, Bolivian style

Bolivia has a long history of producing the commodities that the world wants, but not gaining much from their export. (For a sense of the problem, take a look at the book “From Silver to Cocaine. Latin American Commodity Chains and the Building of the World Economy, 1500-2000“). The latest twist in this pattern is the Bolivian government’s decision to not so much nationalize vast swathes of the country’s resource extraction industry as change the contract terms so that Bolivia becomes a more important partner and more processing of the resources takes place in Bolivia. Is it working? To some extent, according to an interesting blog entry from the Financial Times. Bolivia is growing well and investment is still flowing in. It is a very interesting new public policy experiment that seems to have antecedents in Brazil’s (non)privatized major resource companies.

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Filed under Bolivia, Development, Foreign investment, News brief

Unravelling Brazilian privatization mysteries?

Is Dilma privatizing vast swathes or the economy, or is she not? The messaging is confused. A useful article from Reuters draws together some of the commentary being published in Brazil to explain why Dilma is taking such as schizophrenic attitude towards the private sector and infrastructure.

Elsewhere there are interesting changes afoot in the fiscal structure for financing new infrastructure. New monetary changes will now allow the various banks in Brazil to issue Letras Financeiras, which are medium and long-term debts below current market rates. These financial instruments are intended for financing public-private-partnership style infrastructure development and outright private infrastructure ventures.

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Filed under Brazil, Development, News brief

Franco reportedly governing Paraguay well; election set for April 2013

Irrespective of your personal take on what happened in Paraguay to oust Fernando Lugo from the Palacio de López, it does appear that his successor Federico Franco is taking the job of president very seriously. Boston.com is reporting that Franco has succeeded in pushing through a number of key policy items that have alluded previous presidents.

  • Paraguayans earning more than US$4,000 a month are now going to have to pay income tax, which is a major change for a country that previously had no personal income tax in place.
  • Vague suggestions of progress on land reform and security provision in the north are mentioned.
  • Franco is also pushing talks with Rio Tinto/Alcan to build an aluminum smelter.

While Yves Engler has deplored the aluminum project as an example of something akin to Canadian imperialism, these sort of reactionary ideological readings fail to account for Paraguay’s abject failure to use its hydroelectric potential for national development. The $3.5 billion project represents the first serious attempt to use Paraguay’s massive electricity surplus from the Itaipu dam as a boon to national development rather than as a de facto gift to Brazil. Fox News (yes… a right wing ideological network as a counter to Engler is possibly not good form, but look at the data points in the link, not the invective, or try UPI for something similar) is reminding us that under the Itaipu treaty Paraguay has to sell from the dam that it does not use to Brazil at the very low rate of $25/MWh. Paraguay gets 50% of the binational project’s output, but only uses a scant 14%. Although Engler is right that the price being floated to Rio Tinto / Alcan is still low, but at $43/MWh is nearly twice what Paraguay is earning now. More to the point, the smelter project offers a possibility of industrial development and economic expansion that has simply failed to appear after two decades in the trade bloc Mercosur. This is the same bloc which suspended Paraguay’s political rights after Lugo’s impeachment, but left trade (and presumably energy trade) rights in place.

What Franco is doing is an important step for Paraguay. The aluminum project is a Major deal for Paraguay and a significant headache for Brazil, which relies on cheap Itaipu surplus electricity to keep the lights on in São Paulo. Even so, Brasília will likely happily deal with this headache if it will help bring further stability to Paraguay.

The stability and democratic consolidation question remains the big one in Paraguay. A presidential election date of 21 April 2013 has now been announced. More importantly, Franco has been crystal clear that he will honour the constitution, which precludes a president from ever running for reelection. So far there are no indications that Franco will follow some other regional leaders and look for favourable readings of the constitution or new magna cartas to allow a reelection bid. This leaves the question of whether or not Franco will use his position to ensure that the 2013 vote takes place without any of the explicit and implicit spending sprees and manipulations that have formed the backdrop to ballots since Andrés Rodriguez was quickly elected in 1989. We will be watching.

–Sean Burges

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Filed under Analysis, Brazil, Democracy, Development, Foreign investment, MERCOSUR, News brief, Paraguay

Estadão columnist Carlos Alberto Sardenberg hang’s up his pen

Over the last fifteen years one of the most important voices on Brazilian political economy has been Carlos Alberto Sardenberg, publishing a weekly column in the newspaper O Estado de São Paulo. In his last column “Foi bom, mas acabou” he hung up his pen and bowed gracefully from his newspaper’s pages with a neat summary of what he has seen and, more interestingly for current debates, what he sees as the big problem facing Brazil today: the lack of public and private investment. He points to the rise of economic stability in Brazil and the concomitant increases in public spending on social programs, but not infrastructure. The result is a logistical nightmare and a major part of the notorious custo Brasil, or Brazil cost. Sardenberg’s parting shot is on the mark and something we can expect to hear a lot more about as the world turns its attention to how Brazil will manage the transportation challenges of the 2014 World Cup and 2016 Olympic Games, not to mention the hurdles that the government must clear if it is to succeed in its efforts to create an export-oriented manufacturing base.

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Filed under Brazil, Development, News brief