Archive for the ‘Developing countries’ Category

Helen Hughes’ strong critique of Pacific aid

July 4, 2010

Because of (or despite) her huge experience (she is 80+ years old), Emeritus Professor Helen Hughes has launched a stinging critique of efforts to address poverty, poor health and education levels in the South Pacific. Her latest views, consistent with her longstanding analysis, include:

  • Living standards in villages are worse than when the first Europeans arrived. All measures of development have deteriorated. Independence sowed the seeds of the Pacific nations’ demise because aid flows per capita became the highest to any developing region.
  • By the 1990s, MPs and senior public servants were appropriating all the gains – disproportionate shares of aid went to pay Western expatriates and the rest was absorbed by the urban elites.
  • Egregious corruption became the norm, mirrored by high crime and rural violence.
  • Once it was obvious that aid agencies were central to Pacific economic stagnation and political collapse, Alexander Downer, then Australian foreign affairs minister, sought to push AusAID back to the growth policies that had led to the remarkable economic-social development of East Asia.
  • The World Bank, ADB, UNDP and other multilateral & bilateral aid agencies have failed to persuade Pacific politicians to make the decisions essential for economic development.
  • Refuge has been taken in the hyperbole of the Millennium Development Goals: “end poverty; universal education, gender equality, child health; maternal health; combat AIDS; environmental
  • The Millennium Development Goals were initiated by NGOs with social entitlement agendas. They believe growth-oriented economies such as Hong Kong, Taiwan, Singapore, South Korea, Malaysia, Thailand, Indonesia, Botswana, Mauritius, Chile etc. set a bad example.
  • sustainability and global partnership”.
  • The final irony is that Guam, New Caledonia and French Polynesia – so-called imperial administrations – have delivered much higher standards of education, health, infrastructure etc.

(Helen has a reputation for calling a spade a shovel. We hereby offer the right of reply to our colleagues in the UN! – Editor)

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Pacific Islands challenge

May 25, 2010

The Free Trade Agreement between Australia, NZ and Pacific Island nations is moving ahead, but not without some angst. Known as PACER Plus, the FTA has drawn criticism. For example, Adam Wolfenden (self-styled critic of the FTA) says that PACER Plus was less about economic development and “more about getting Australian and New Zealand services to invest in the Pacific.”

Wolfenden goes on to say ‘If the development interest of the Pacific is at the heart of the intentions of Australia and New Zealand, like they continually say it is, why must it look like a free trade agreement? The global economic crisis as well as others like the food and climate crisis have shown the failure of the free market. The Pacific so far has been somewhat slow to embrace the neo-liberal ideology and given the global crises it would seem like the time to start exploring other options.”

Well we know the free market isn’t perfect, but surely getting A-NZ companies to invest in the Pacific is the ONLY way to go! We have started talks with the Australian Government (DFAT) to shape some initiatives. In this regard, Wolfenden’s concerns are a useful reference point. Anyone interested in these talks should contact us at apdcockatoo@iprimus.com.au

UNIDO work on international JVs

June 18, 2009

The OECD holds centre stage in the West as regards pushing best practice in economic development.

But the United Nations Industry Development Organisation (UNIDO) has been quietly consolidating its reputation as a real player in this field.

Further evidence is provided by its recent publication of “Patterns of Internationalization for Developing Country Enterprises (Alliances and Joint Ventures).”

This UNIDO work argues that foreign direct investment (FDI) and related aspects of MNE activity – subcontracting, original equipment manufacturing (OEM), global value chains, global manufacturing networks, joint ventures – are the key source of technological-economic progress for developing countries.

 Success stories are highlighted in this work – the authors emphasise that successful experiences cannot be simply transplanted. MNEs take their strategic and locational decisions in their stakeholders’ interests, including risk perception, profit expectation, pursuit of market share.

Host countries however have their own values and endowments, cultural/social patterns, and development policy options. And the characteristics of industry competition and factor markets are constantly changing, which adds to the complexity.

 This report is designed to help firms in developing countries to improve their competitive position by linking with foreign partners, leveraging the relationships etc. Particular attention is given to JVs and alliances, including the motivations of the participating enterprises, opportunities for partnerships and their negotiation, implementation and management.

This is of great interest to the Cockatoo Network because it aligns 100% with our objectives. We propose follow-up talks with UNIDO. If you are also interested, please contact us.

Patterns of Internationalization for Developing Country Enterprises (Alliances and Joint Ventures)  Language: English, French, Order No.: ID/436, Price: Euro 30.00 (Go to www.unido.org)

Asia Pacific Technology Exchange wins global attention (BEST PRACTICE)

April 13, 2008

 

The unstinting efforts of Cockatoo member, Geoff Mullins, were rewarded on 28 March with the launch of the Asia Pacific Technology Exchange by local federal member Maxine McKew MP. She said that ‘this is the innovation economy at work.’

 

The Exchange is designed to help establish a Silicon Valley-style business cluster in northern Sydney.

 

The launch also attracted global attention – excerpt of the article in the International Herald Tribune follows.

 

SYDNEY — A new Australian exchange, aiming to emulate the U.S. Nasdaq index with a focus on technology and innovation stocks, was established Wednesday with plans to become fully operational by the second half of 2008.

 

The Asia Pacific Technology Exchange, or Aptex, is a joint venture of the National Stock Exchange of Australia and Enterprise Pacific, a not-for-profit company. Based in Sydney, the venture plans to start with a minimum of 20 listed companies. The chairman of Enterprise Pacific, Geoff Mullins, said the new exchange expected to have 200 to 300 companies listed within its first 2-3 years. Mullins said he was not concerned about liquidity on the new exchange, which had been a problem in earlier attempts to establish exchanges in Australia, because of support from brokers and from connections being forged in the Asia-Pacific region. ”We are absolutely certain that this is under way. We have stakeholders signing up, we have companies signing up and we are ready to go.”

 

NSX had held discussions with stock exchanges in Korea, Malaysia, Thailand, Singapore, PNG and Fiji on their possible participation. Inquiries had also been received from companies in Taiwan and Korea, and it was possible that 5 of the first 20 companies on the exchange could be Asian. Mullins estimated the total market capitalization of companies listed on the exchange to initially be between $350-650 million.

Contact Geoff at gmullins@ventureaxess.com

Mauritius – from hungry and hopeless, to a success story

October 16, 2007

A recent IMF working paper (Etienne B. Yehoue) regarding a Brazilian footwear cluster also provided interesting insights on Mauritius. Paraphrasing follows.  

Why, given two countries with almost the same level of risk, does one attract clusters of foreign investment, while the other fails? Mauritius and Senegal are both former French colonies, which benefit from preferential arrangements with the EEC under the Lome conventions.

Both initially engaged in the same type of policy reforms and established export processing zones (EPZs). Both are poor but not landlocked. Senegal has a comparative advantage from its larger size, greater amount of arable land, and has a higher population.  Yet it was Mauritius that managed to attract considerable foreign investment, to become one of the few African countries with relatively high per capita income. It has transformed itself from a hungry, hopeless nation to one of the impressive success stories in the postcolonial era.

Senegal has not achieved this.  Some say that the geographical location of Mauritius is the key determinant of its success, but islands such as Seychelles or Comoros in the same region have not achieved Mauritius’s results.   

Mauritius (population less than 2 million) successfully moved from a mono-crop culture (sugar) to one diversified into manufactured exports and tourism. The agricultural sector now accounts for only 10% of GDP – manufacturing accounts for 29% and services for 61%. The success of the manufacturing sector has critically depended of the establishment of EPZs in 1970. Eleven EPZs were already in operation in Sub-Saharan Africa (e.g. Ghana, Liberia, Senegal and Togo) but have not been as successful as Mauritius.   

The answer didn’t lie in political instabilities, since Ghana and Senegal have been as politically stable. At the core of the Mauritius success was its government, which provided the support institutions and a dynamic entrepreneurial class. The trigger was the 20-fold surge in sugar prices from 1970 to 1974, which led to a record sugar production and a markedly improved balance of payments situation. This helped overall investment, and domestic entrepreneurs clustered their investment mostly in the textiles sector.

Combined with aggressive marketing of EPZs, it led to impressive FDI inflows. A campaign was launched to attract FDI from Europe and Southeast Asia. The Mauritius Export Development & Investment Authority promoted Mauritius as a base for complementary services or externalities necessary for the manufacturing industries.

Consequently, Mauritius’s GDP per capita (current prices) rose from US$270 in 1970 to US$3,640 in 1997.  To summarize, the interplay of government leadership (via incentives and institutions) and the dynamism of domestic entrepreneurs provided positive externalities for the clustering of foreign investment, which further stimulated FDI. This interplay seems to have not been present in many other African countries.

Solomon Islands rebuilding

October 16, 2007

The Testament of Solomons: RAMSI and International State-building.

The paper describes the innovative Australian-led state-building exercise, the Regional Assistance Mission to Solomon Islands (RAMSI). The mission has made significant progress since its deployment in 2003, securing law and order, arresting the country’s perilous decline and placing it on a new trajectory.

The next important tests for the mission will be the national election in Solomon Islands on 5 April 2006 and the formation of a new government thereafter.  RAMSI’s design is unique – preventive; permissive; regional in nature; nationally led; supported by the United Nations; non-sovereign; police led; and light in touch.

This Analysis examines these characteristics and the implications for international state-building and surveys RAMSI’s future challenges. 

The paper can be downloaded at www.lowyinstitute.org

‘Cluster cages’ in Malaysia (BEST PRACTICE)

October 16, 2007

 Tony McLennan, editor of ‘Growfish’ has sent us a very timely article from the Straits Times. 

Small-scale fish rearers along Sungai Pahang, Malaysia’s biggest river, face logistical difficulties marketing their produce. Wholesalers have been reluctant to buy fish from them due to insufficient quantities and their scattered locations. The problem has eased since most of the 32 fish rearers have regrouped into four clusters, each with its own “transit cage” supplied by Federal Agricultural Marketing Authority (Fama).

 

Under the “cluster-cage” concept, Fama will obtain its fish supply only at selected locations near the road. Fish rearers will be informed a few days before we come so that they can bring their fish to the transit cage.

Although there are about 200 fish cages there, most of the rearers own just two or three. The cluster-cage concept enables the rearers to concentrate on improving their produce. “We don’t have to think about the marketing aspect anymore. The most important thing for us now is to produce high-quality fish.” said a local, who owns 10 cages. He previously had to go to Kuantan or Kuala Lumpur to sell his fish.  A Fama official said the concept had been expanded to Maran and Kuantan. “We can’t go and buy fish from individual rearers. That is why we have to treat them as a big group supplying more than 400kg of fish each time we come to collect their produce,” he said.
 

There are 219 fish rearers in Pahang with 1,636 cages. Fama also plans to formulate a new type of fish feed so that rearers can harvest their fish every four months instead of 6-9 months at present.

New emphases in aid field

October 16, 2007

 

 

 

The Annual World Bank Conference on Development Economics (ABCDE) in Tokyo in May 2006 highlighted some VERY timely issues worthy of contemplation by economic development practitioners.     

§          A call for new analytical and evaluation tools to help infrastructure choices in energy, transportation, water. ”Our approach to infrastructure must focus not just on economic growth or human growth,” said Bank President Paul Wolfowitz in his opening address “It must also focus on ‘smart’ growth…growth that is economically sound, environmentally friendly, socially acceptable, locally desirable, and most important, growth that makes a difference in people’s lives.


§          Infrastructure investments have often failed the test, said Japanese Finance Minister Tanigaki. “Hasn’t donor support simply left ‘white elephants’ behind? Have we paid enough attention to adverse environmental and social impacts? Have we had sufficient dialogue with stakeholders?”

§          WB Chief Economist Bourguignon argued for better understanding of linkages between infrastructure investments and growth; getting the right balance between public and private involvement; dealing with cross-border issues and externalities – shared road and rail links, shared pollution; establishment of systems to deliver better data and evaluation.

§          JICA will merge with the ODA lender Japan Bank for International Cooperation in 2008, forming “the world’s second-largest integrated development agency after the World Bank.” 

§          Richard Manning (DAC Chairman) noted that “emerging donors” – Russia, Korea, Poland, Turkey, Brazil, China, South Africa, India – are using aid to position themselves to transform their relations with other countries. This could result in a slowdown in developing-country reform efforts.

§          Manning applauded moves by the UK, Ireland, Norway, and Australia to untie 100% of their aid, and Canada’s decision to allow 50% of its food aid to be procured in the beneficiary region.  

 

MNEs and innovation systems – Swedish findings

October 16, 2007

 

IKED has been engaged in a number of projects addressing the internationalisation of economies and impacts of globalisation, notably as regards the connection between flows of foreign direct investment (FDI) and innovative capabilities.

This includes a study commissioned by the Swedish Investment Agency (ISA) which, in collaboration with UNCTAD and WAIPA, recently published the anthology “What’s Next”.  

The work makes it clear that the impacts of FDI cannot be taken for granted, but depend on circumstances, including a range of institutions and policies. The same insights are now making an impact on a range of countries. It is striking that governments in some of the poorest countries want not merely the advice how to attract FDI, but require that emphasis is placed on how to create a sensible link between FDI and domestic capacity-building.

IKED has been engaged in several such discussions over the past months (1996), including in Africa (Ethiopia, Morocco), Asia (in the context of ASEM) and the Middle East (Dubai, Saudi Arabia). 

The insight that new technologies represent a critical part of the agenda for development has not yet “sunk in” with regard to most development work. International organisations as well as bilateral donor agencies have a lot more to do to raise their own awareness of the opportunities at hand.

It was interesting to read a recent Bangladeshi report criticising a Poverty Reduction Strategy Paper by the World Bank, which was deemed thoroughly unhelpful due to the lack of inclusion of such perspectives. Developed countries remain much interested in these agendas as well.

A recently completed Nordic project (Nordic Innovation Centre, NIFU-STEP in Oslo with IKED) addressed the significance of Domestic Multinationals. It explored the how the role of domestic multinationals is changing in the Nordic economies, and the policy implications, the determinants of entrepreneurship and innovation, and the implications in terms of significance of national ownership or policy strategies adapted to globalization.  

Read more at the Domus website. 

Artisans in Africa

October 16, 2007

Following on from our dialogue with Indonesian officials about JVs in artisan work in third world countries, we sought advice from Graeme Simmons, a longstanding travel and lifestyle writer. He reports as follows: 

A good example I know of is Zambia, where some amazing crafts are being produced. However, business development is hampered by the unavailability of mortgage finance – Africans have no traditional system of land titles, so find it very difficult to get bank finance. Just lately, “microfinance” and “small scale development” are the buzz words in Zambia, with a number of lending institutions trying to get around the “no land titles” problem. 

With regard to marketing indigenous crafts to the West, it is vital to ensure that the sales proceeds get back to the people. Otherwise you get the situation that applies with some Aboriginal paintings, where the artist gets a small fee for a piece that will later fetch thousands of dollars in a top gallery in New York. One way around this might be to introduce training programs in marketing, and to develop joint ventures between local artisan communities and reputable galleries in the global cities.’ 

Contributed by simmo@globaltravelwriters.com