Realsociology

A hyperreflexive blog focussing on critical sociology, infographics, Buddhism and extreme early retirement

Archive for the 'Aid or Trade' Category

Perspectives on the April 2013 Bangladesh Factory Collapse

Posted by Realsociology on 26th May 2013

The recent factory collapse in Bangladesh in which over 1100 workers died makes this the second worst industrial accident in world history – after the Union Carbide disaster in Bhopal, India.

For Sociology students studying Global Development this is a good example that seems to offer broad support for the continued relevance of dependency theory.

One article highlights the following factors which contributed to the 1000+ death toll -

  1. Bangladeshi factory workers cannot afford to not work when wages are only around the $50/ month mark.  Behind this, of course, lies Western demand for cheap and fast fashion – We only get £2 because of those low wages…..  
  2. The lack of long-term commitment to suppliers on the part of Corporate buyers – which means that it is economically irrational for many factory developers to invest in health and safety measures in their factories. As I see it behind this lack of commitment lies transnational firms’ desire to take advantage of the ‘race to the bottom’ – short contracts means the parent company can move out of Bangladesh at short notice to take advantage of cheaper labour elsewhere….  
  3. International Corporations effectively wash their hands of responsibility for monitoring health and safety through outsourcing – As a result, many of our high street shops have scant representation themselves in Bangladesh, leaving monitoring of health and safety to the Bangladeshi authorities, which basically means effective monitoring doesn’t take place.

However, The Ethical Trading Initiative takes a different approach, preferring to put responsibility on the Bangladeshi authorities, pointing out that…

‘A common reaction in the UK media and from NGOs has been to focus anger on brands sourcing from Bangladesh. But the view in Dhaka is rather different.  Newspapers here have concentrated almost exclusively on the failure by government agencies to implement the law on occupational safety and health (OSH) and the building code. This in turn is blamed on the nexus between garment factory owners and politicians – sometimes the same people.

According to the 2008 building law, any new structure, for any purpose, has to obtain an occupancy certificate from a government agency before it can be used; only six certificates have been issued since 2008, although it is estimated 4,000 – 5,000 new buildings come up every year.’

The ETI also aruges that the lack of unionisation of workers is an important contributory factor in these deaths – As the article above says, the workers could clearly see the cracks in the walls of the factory, but were forced to go in and work – Unionisation may have given them the sense of empowerment to stand up for their rights and stay alive.  

Of course both of these perspectives – one blaming the TNCs, the other blaming the Bangladeshi elite – still offer broad support for the continued relevance of Marxist Theory – At the end of the day this is still a situation where the poor and powerless are dying so the powerful can maintain their profits.

 

Posted in Aid or Trade, Global Development, Globalisation | No Comments »

Adidas – still responsible for sweat shop labour in Cambodia

Posted by Realsociology on 2nd May 2012

Garment workers’ unions and human rights groups recently held a people’s tribunal in Feburary to investigate the state of povery pay in the Cambodia garment industry.  The tribunal called for evidence from a wide variety of stakeholders  including over 200 workers who work for factories manufacturing clothes for Adidas and Puma.

All of this follows strikes involving 200 000 workers, dismissals of 1000 union leaders and mass faintings induced by malnutrition of garment workers.

The tribunal concluded that workers are not being paid sufficient wages to lift them out of poverty, one of the main causes being that massive inflation in Cambodia has seen a real wage of loss of over 14% in real terms.

The problem today is that “Despite experiencing sustained growth in the sector, Cambodia’s minimum wage allowance is US $66 a month and is currently the lowest of all its neighbouring states. This wage amounts to around half that required to adequately meet the average worker’s basic needs.”

It also concluded that despite their PR talk, big clothing manufacturers are still failing to do enough to sort out ‘supply side issues’

Just thought I’d post this briefly as a succinct update on the latests evidence of sweat shop labour – students can obviously use the example in any essay on the failure of TNCs,  the downsides of economic globalisation, or the continued relevance of dependency theory.

The above is summarised from an extract in the latest consumer magazine. 

Posted in Aid or Trade, Global Development, TNCs | No Comments »

A summary and criticism of Dambisa Moyo’s assertions in Dead Aid

Posted by Realsociology on 4th March 2012

In this blog post I summarise Dambisa Moyo’s views on the problems with Aid as a strategy for development – she is talking about Official Development Aid rather than Emergency relief aid.

I’m mainly drawing from her writing at the end of chapter 3 and the whole of chapter 4 – and I offer up a few criticisms all the way through – before you read this through – please note my main criticism of Moyo’s work –

The main criticism I have of Moyo is that she uses statistics that show correlations between a high level of aid receipts and poor economic growth and then attempts to imply causality (aid causing poor growth) by using emotive, highly selective, anecdotal and even hypothetical (she invents a country – Dongo) ‘evidence’ to back up her assertions.

I say ‘imply causality’ because she never actually uses the word ‘cause’ – but the reader is left with the impression that this is what she is driving at. The end result for the less well informed reader is that they are stuck with a number of ‘easy to understand memorable case studies’ which imply that aid causes poverty – even though Moyo never actually says as much – possibly because she might think that there is actually insufficient evidence to make the case which she alludes to.

Anyway, here is my interpretation of the criticisms Moyo makes about the role of aid in development and a few criticisms that some people might make of Moyo’s work.

Criticism 1 – Aid does not bring about economic growth

At the end of chapter 3 – Aid is not working, Moyo starts to outline her basic criticism of Aid – This basic criticism being that aid has not effectively promote economic growth in Africa – Over 1 trillion dollars has been pumped into Africa over the past 60 years and there is little to show for it. In fact, according to Moyo, aid is malignant, it is the problem!

Moyo explains this through the following hypothetical example

 ‘There’s a mosquito net maker in Africa. He manufactures around 500 nets a week. He employs 10 people, who each have to support upwards of 15 relatives. However hard they work, they cannot make enough nets to combat the malaria-carrying mosquito.

Enter vociferous Hollywood movie star who rallies the masses, and goads Western governments to collect and send 100, 000 mosquito nets to the affected region, at a cost of $1 million, the nets arrive, the nets are distributed and a good deed is done.

With the market flooded with foreign nets, however, our mosquito net maker is promptly out of business. His ten workers can no longer support their dependents. 

Now think of what happens 5 years down the line when the mosquito nets are torn and beyond repair, we have now mosquito nets, and no local industry to build any more. The long term effect of the ‘aid injection’ has been to decimate the local economy and make the local population dependent on foreign aid from abroad.

Backing this up with some stats, Moyo goes on to point out that ‘even the most cursory look at the data suggests that as aid has increased over time, Africa’s growth has decreased with an accompanying higher incidence of poverty. Over the past thirty years, the most aid-dependent countries have exhibited growth rates averaging minus 0.2 % per annum.

Moyo also argues that a direct consequence of aid-driven interventions has been a dramatic descent into poverty – citing Zambia as an example, and the fact that when aid flows were at their peak between 1970 and 1998 – poverty in Africa rose to a staggering 66%.

The problem Moyo has here is that she fails to present sufficient evidence to make her case – it’s well known that the later part of the period above was a time of global economic slowdown compared to the previous 20 years, which itself could play a major role in Africa’s poverty, as could be the case with the debt crisis. One could also simply cite Botswana and Ghana as case studies of aid-recipient countries that have grown to counter her one example of Zambia.

Criticism 2 – Aid Encourages Corruption, which in turn retards growth

Unlike the previous section, Moyo does use a reasonable amount of statistical (drwn mainly from Transparency International) and case study evidence in this section…

According to Moyo – If the world has one image of African statesmen, it is one of rank corruption on a stupendous scale. One of the best examples of this is Mobutu, who is estimated to have looted Zaire to the tune of $5 billion. He is also famous for leasing Concorde to fly his daughter to her wedding in the Ivory Coast shortly after negotiating a lucrative aid deal with Ronald Regan in the 1980s.

Having provided a couple more examples of ‘classic African Dictators’, Moyo then cites that classic statement made in n 2004 by the British envoy to Kenya, Sir Edward Clay,  who complained about rampant corruption in the country, commenting that Kenya’s corrupt ministers were ‘eating like gluttons’ and vomiting on the shoes of foreign donors. In February 2005 (prodded to make a public apology), he apologised, saying he was sorry for the ‘moderation’ of his language, for underestimating the scale of the looting and for failing to speak out earlier

Moyo further argues that at least 25% of World Bank Aid is misused. One of the worst examples is in Uganda in the 1990s – where it is estimated that only 20% of government spending on education actually made it to local primary schools.

According to Moyo, while it is not the only cause ‘aid is one of the greatest aides to corruption’ – arguing (Actually it might be more accurate to say ‘asserting’ given the lack of evidence in this section of her book) that ‘with aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid’.

However, Moyo now drifts from the data and starts implying causality by asserting that growth cannot occur in an environment where corruption is rife, citing the following (un-evidenced) reasons (among others).

  • Corruption leads to worse development projects – corrupt government officials award contracts to those who collude in corruption rather than the best people for the job. This results in lower-quality infrastructure projects.
  • Foreign companies will not invest in countries where corrupt officials might siphon off investment money for themselves rather than actually investing that money in the country’s future.
  • Aid is corrosive in that it encourages exceptionally talented people to become unprincipled – putting their efforts into attracting and siphoning off aid rather than focussing on being good politicians or entrepreneurs.

Criticism 3 – Aid Corrupts Civil Society

Dambisa Moyo: Spreader of Neoliberal Hegemony?

OFFERING NO CONCRETE EXAMPLES OR EVIDENCE TO SUPPORT HER POINT, in this section Moyo asserts that Africa needs a middle class which trusts each other in order for development to occur. The problems is that in an aid environment, governments are more interested in lining their own pockets rather than encouraging entrepreneurs, meaning that the middle class cannot expand until it reaches that ‘critical mass’ which leads to sustained growth.

Criticism 4 – Aid undermines social capital

ONCE AGAIN OFFERING NO CONCRETE EXAMPLES OR EVIDENCE TO SUPPORT HER POINT, here Moyo argues that… In an aid dependent environment, there is no need for you to trust your neighbour and no need for your neighbour to trust you… Foreign aid weakens social capital by thwarting accountability mechanisms, encouraging rent-seeking behaviour, siphoning off scarce talent from employment positions and removing pressures to reform inefficient policies and institutions.

On the above two points it is also worth noting that these criticisms are really just fusions of the previous two criticisms of aid – that it prevents economic growth and breeds corruption.

Criticism 5 – Aid and Civil War

Moyo points out that there are three fundamental truths about conflicts today: they are mostly born out of competition for control of resources; they are predominantly a feature of poorer economies; and they are increasingly internal conflicts.

She then goes on to say that ‘this is why foreign aid foments conflict. The prospect of seizing power and gaining access to unlimited aid wealth is irresistible’. Unlike in the previous two sections, here she offers up one example to support her argument (Sierra Leone) before reminding us that aid also causes conflict more indirectly by reducing the prospects for economic growth.

The Economic Limitations of Aid

Having outlined five downsides of aid, Moyo then outlines its economic limitations – suggesting that there are four – once again lacking examples

  • Aid reduces savings and investment – assertion, no examples
  • Aid can be inflationary – assertion no examples
  • Aid chokes off the export sector (Dutch Disease) – cites unreferenced IMF studies
  • Aid causes bottlenecks due to low absorption capacity – Uses Uganda as an example

Aid and Aid Dependency

The end result of all the above is that aid leads to Aid Dependency – to the extent that aid makes up 13% of the average African country’s GDP. According to Moyo, this throws up the following problems

  • It makes Africans lazy
  • It leads to low tax revenues (no need to tax the citizenry if money is flooding in from outside!)
  • Citing Boone (1996) – it leads to bloated inefficient public sectors.
  • Finally, it leads to Western donors being able to call the shots.

In the final section of the chapter, Moyo pays homage to Peter Bauer, and briefly mentions that both William Easterly and Paul Collier disagree with the ‘one size fits all’ aid approach to development – before introducing the next sections of the book which are devoted to explaining why Africa should adopt free market (encouraging FDI/ Issuing bonds etc.)  rather than aid driven solutions to underdevelopment.

Criticisms of Moyo

Really, I’d just like to go back to what I said at the beginning and say that…

The main criticism I have of Moyo is that she uses statistics that show correlations between a high level of aid receipts and poor economic growth and then attempts to imply causality (aid causing poor growth) by using emotive, highly selective, anecdotal and even hypothetical (she invents a country – Dongo) ‘evidence’ to back up her assertions.

I say ‘imply causality’ because she never actually uses the word ‘cause’ – but the reader is left with the impression that this is what she is driving at. The end result for the less well informed reader is that they are stuck with a number of ‘easy to understand memorable case studies’ that imply aid causes poverty – even though Moyo never actually says as much – possibly because she might think that, really, there is insufficient evidence to make the case which she alludes to.

One has to reflect on why Moyo is so selective – I think it unilekely that an Oxford and Harvard Graduate has failed to read widely enough for this to be innocent – Especially when the author has 8 years at Goldman Sachs under her belt….so could it be that this is simply an overt attempt to promote a neoliberal anti aid agenda?

Posted in Aid or Trade, Global Development, Globalisation | 9 Comments »

Why I’m running a half marathon to raise money for Water Aid

Posted by Realsociology on 13th February 2012

Water Aid works in 23 countries in Asia and Sub-Saharan Africa, with a total of 606 staff. Its mission is to ‘transform lives by improving access to safe water, hygiene and sanitation in the world’s poorest communities’

To give you an idea of what water aid does – watch this video

According to this 2010-11 annual review - Last year they spent about £50 million – of which £32 million went to water and sanitation delivery service, £11 million on fundraising and £6 million on governance. You might criticise the £11 million on fundraising, but given that nearly 3/4 of their income comes from donations (the rest mainly from grants – which still need to be chased) – one imagines that without this, they’d have considerably less to work with…

The stats really add up – Last year Water Aid  helped 1.5 million people gain access to clean water, and improved sanitation for 1.6 million people.

I think this type of aid is crucial – the UN recognises the importance of aid for clean water and to improve sanitation - A few facts to further convince you….

Incidentally, I’m raising money for water aid by running a half marathon this coming Sunday – You should sponsor me – £15 saves a life!

 

Posted in Aid or Trade, But what can I do?, Global Development, My 'life' | No Comments »

A Brief History of International Development Aid

Posted by Realsociology on 7th February 2012

I’m in the middle of writing a critique of Dambisa Moyo’s Dead Aid - mainly because the book uses highly selective evidence to promote neo0liberal ideology – but I will concede that the way Moyo conceptualises the history of development aid from the 1940s is a fairly useful teaching tool for A level Global Development – so here’s a brief summary of the second chapter of the book – (NB I said useful conceptually for A level, I’m not actually implying that her account is factually accurate – thankfully when you’ve got an exam board that lives in a 1980s timewarp, the actual facts aren’t necessarily that important for the exam)

Moyo splits ‘the history of aid’ up into ‘seven phases’ – starting with the earliest days of Bretton Woods in the mid 1940s – which saw the establishment of institutions such as the IMF, then outlines details of the Marshall Plan in the 1950s – but I’m going to start my brief summary with the third phase in the 1960s -which are followed in each successive decade with next four phases.

The 1960s – The decade of Industrialisation -

The Kariba DamHere there was a shift to to the development of large scale industrial projects, with funding going directly to governments in African countries and coming primarily from the  USA, but also from European governments.

A good example of this is the Kariba hydroelectric dam that straddles the boarder between Zambia and Zimbabwe – began under British colonial rule in the 1950s and finally completed in 1977 at a cost of $480 million.

While pointing out that records from the 1960s are not perfect, Moyo sites the following stats for country receipts of aid by the mid 1960s -

  • Ghana – $90 million
  • Kenya, Malawi and Zambia – all having recieved an averge of about $315 million

The 1970s – the shift to a poverty focus

This historical period starts with the 1973 Arab embrago on oil, which lead to oil price rises, followed by food price rises and recession across Africa. In 1975, for example, Ghana’s eGDP contracted by 12% and inflaction had risen to more than 100% by 1977.

In practical terms this lead to aid being redirected away from large infrastructure projects and towrds rurual projects in agriculture and rural development and social services – such as innoculation programmes, housing and literacy campaigns. By the end of the 1970s, the proportion of aid allocated to social service had increased from 10% (in the previous decade) to over 50%. Much of this aid came in the form of concessional loans which would need to be paid back.

Moyo also notes that despite the increasing inflows of aid, increasing numbers of people in Africa were falling into poverty.

The 1980s: Neoliberalism, Structural Adjustment and the lost age of development

Moyo begins – By the end of the 1970s, Africa was awash with aid. In total, the continent had ammassed around $36 billion in foreign assistance. This decade saw a shift away from governments giving aid and towards multilateral aid – with the World Bank and the IMF playing a more central role. Also, aid became focussed less on poverty reduction and more focussed on assisting (some may read coercing) developing world governments to adopt free-market policies.

The 1979 oil spike, precipitaed by the Iran-Iraq war lead to more financial problems for Africa as Western financial institutions responded to the corresponding price increases by raising interest rates – which meant that Africa’s debt service payments reached around $8 billion in 1982, while at the same time, worldwide recession meant declining income from exports, meant that in the 1980s, 11 African countries were eventually defaulted on their debts.

The solution to this crisis was to ‘restructure the debt’. Thus the IMF formed the Enhanced Structural Adjustment Facility – to lend more money to defaulting nations to help them. Of course this in itself did little to actually alleviate Africa’s problems – it was still dependent on concessionary loans from the West.

At the same time as this restructuring – there was also an ideological shift amongst donors – towards ‘neoliberalism’ – and aid now shifted so that when governments received it they had to agree to instigate ‘free-market reforms’ – minimising the role of the state, privatising previously nationalised industries, liberalising trade (less restrictions on private companies and exports/ imports) and reducing the number of government employees.)

Between 1986 and 1996 six African countries – Benin, the CAR, Guineas, Madagascar, Mali and Uganda shed more than 10% of their civil workforce, and overall across Africa, many industries were privatised.

The 1990s – A question of good governance

By the end of the 1980s, emerging-market countries’ debt was at lest $1 trillion — and the cost debt servicing had become so substantial that from 1987-1989 there was a net outflow of money from poor to rich countries of $15 a year.

Having seen the failure of aid in previous decades, donor institutions now laid the blame for Africa’s economic woes at the door of weak political leadership and institutions and there was an increased focus on the need to link aid to the promotion of good governance – in other words, credible institutions, transparent rule of law and freedom from corruption. There was also a growing belief that African countries needed a dose of Western Democracy in order to develop.

Moyo also notes that the increasing link between aid and democratic accountability was aided by that fact that in the 1990s, the cold war was thawing, which meant an end to the US and Russia providing aid to politcally dubious regimes in Africa for military purposes.

Finally, the later part of the 1990s saw the rise of ‘donor fatigue’ – ODA peaked in 1992 at a high of $17 billion and then fell to £12 billion in 1999.

The 2000s – the rise of glamour aid

While I think her overview of the preceding decades of development aid is useful, her casting of ODA in the most recent decade is flippant. She

Bono (pronounced Bohnoh) 'feeding the world'

fails to even mention that aid targetting came to be better informed by the 8 Millennium Development Goals, or the new philanthropy headed up by Bill Gates. Instead Moyo simply casts the 2000s as the era in which a new army of moral campaigners took to our TV screens – most noteably Bono, who not only wrote the forward to Jeffrey Sach’s 2005 ‘End of Poverty’ but also met with world leaders to discuss development issue and campaing for more aid to combat Africa’s problems. The only other substantive example she mentions about aid in the 2000s is the ‘Jubilee debt campaign.

So there you have it – with the exception of the last decade, a useful, if somewhat generalised account of the history of Western Development aid over the last half century.

Posted in Aid or Trade, Book reviews, summaries and excerpts, Global Development | No Comments »

I run half marathon, therefore you give money to water aid

Posted by Realsociology on 2nd February 2012

No I don’t see the logical connection between running half marathons and donating to charity either, but its tradition, so why not just do it!

I am actually running the Brighton half marathon at the end of February – In the time it takes me run it, 250 people would have died due to lack of access to clean drinking water or sanitation. I’d much appreciate it if you’d sponsor me on this link! (the text at the link is just the same as this btw!)

I’m running for water aid because, Irrespective of the development model you subscribe to (1), the simple fact of the matter is that aid-funded projects focussed specifically on providing clean drinking water and improving santiation are one of the most effective ways (2) at not only saving lives, but improving the quality of life for millions of people the world over.(3)

Globally 884 million people live without access to safe drinking and 2.6 billion live without sanitation - together these result in 4,000 preventable child deaths every day- or nearly 1.5 million every year.

To put it in stark terms £15 is the average amount of money it costs to provide clean water for one individual for life, but any donation would be much appreciated! And thanks to everyone who has donated!

The rest of the material is a brief bit of info on development theory, relating to the footnotes above – well I do teach this stuff you know! 

(1) For those of you not aquainted with development theory – It’s a useful 
starting point to distinguish between two general models of development -Firslty – state-lead industrialation-with-a dose-of-selective-protectionism style models of  development (you know – the model that works – the model Western Europe used in the 19th , America in the 20th and and China used in the 21st century to develop) or neoliberalisation (you know – the ideology of the IMF and the World Bank - that’s lead to Corporations getting hugely wealthy, a few people in developing countries getting richer and the poor stagnating)
 
(2) I must stress at this point that this stands agains the poisonous, selective neo-liberal anti-aid agenda of Dambisa Moyo in her recent book ’Dead-Aid’ – if you’ve any respect for objectivity in data selection don’t read it. 
 
(3) Aid itself isn’t of course enough - it is also up to us in the West to 
address our over-consumption. ! 

 

Posted in Aid or Trade, My 'life' | No Comments »

Statistical Overview of the Food Crisis – useful links

Posted by Realsociology on 22nd August 2011

Click on the map for link to interactive version

 

What with the UK news focussing on the riots and the financial crisis, you may also have missed the fact that 12.5 million people are in need of urgent humanitarian assistance in Somalia, Ethiopia, Kenya and other countries in the region.

The World Food Programme has put together a very useful web site  to provide information on the famine with lots of links to how you can help – the most easiest way being to donate by text message

This Guardian Development Post looks at what countries are donating to the humanitarian relief effort – Unsurprisingly The USA is the biggest relief donor – having committed to provide approx. $0.5 billion but the UK as committed to providing around $160 million in humanitarian aid – making us one of the biggest donors per head of population.

This may sound like a lot of money – bur keep in mind that this is money committed not money yet spent, and also the UN notes that another $2.5 billion is needed to prevent half a million people from starving.

If you want to know more about hunger around the world – the World Hunger Index provides details of percentages of malnourished children around the world.

 

 

This Guardian podcast focusses on Somalia and provides details of what it’s like for some of those suffering from famine and the problems with mounting large scale aid programmes in the area.

Posted in Aid or Trade, Global Development | No Comments »

Global Giving – Ebay meets Global Development

Posted by Realsociology on 30th May 2011

Half Term – means i’ve got time to discover all those things I really should’ve known about years ago – I just listened to a great podcast of an interview with William Easterly, I am much more sympathetic to his views than when I saw him speak at LSE last year – anyways, he plugged an orgasation called global giving - It’s basically ebay meets global development – some details from the web site

You can browse projects from all over the world, give to the ones you are most passionate about, and see the impact of your donations.Most of the projects on GlobalGiving.co.uk are in the developing world where a small amount of money usually goes a long way, benefiting communities that wouldn’t otherwise have access to supporters in the UK.

Over £17 million has now been raised for 1,500 projects, across GlobalGiving’s US and UK websites. GlobalGiving.co.uk launched in the UK in September 2008, and the website has been averaging 300,000 annual unique visitors.

This might sound completely random, and not that I’ve anything against the man, but Lewis Hamilton has about ten times as many followers as Global Giving on Twitter – Which maybe suggests why charities spend so much time courting celebrities – I think in addition to the obvious coin-jar and vote on a project to sponsor thing, I might start a class project to try and get this global charity more followers than Lewis, I’m sure he won’t mind…

Posted in Aid or Trade, Global Development | No Comments »