Apr 18

Connecting Women with Development

In my post on Monday I discussed the key takeaway that I got from sitting in on the education and development panel at the International Development Conference last Saturday. I also had the opportunity to listen to a panel of esteemed speakers talk about women in relation to international development. A quote that was noted during the discussion is one that I think should be heard and engraved in people’s minds around the world:

“women’s rights are human rights.”

Too many people in far too many countries do not hold women at the same standard as they do men. A point that emphasized this statement was the fact that not nearly enough women are involved in peace agreements around the world. A story was told about a group of men who wrote a peace agreement, only to later realize that they had left out some crucial points- these aspects were brought to light by women. We too often let 50% of the world’s brainpower go to waste by not addressing women’s ideas and innovations.

Another aspect discussed was how investing in women actually directly relates to investing in children as well. Women living in poor conditions, be it poverty or violence, still have to take care of their children. Studies have shown that when a woman is invested in, her children see better living conditions as well. If a woman is abused, her son or daughter is much more likely to become a victim of violence as well. However, if a woman is empowered to fight back against and avoid abuse altogether, her children will see the same results. In other words, if a nation will not support its women, it is not helping its children either.

How do we solve our problems with development and women, though? There are shelters all around the world, groups are constantly fighting and struggling, money is being donated, and women are unendingly trying to progress. So what else should we do? Well, a key point brought up by the panelists was to start making better use of social media outlets. Brenda Gael McSweeney, who served with the UN for thirty years and is now a professor at Boston University, continuously asked the panel audience, “Where is your anger?” Women are being abused around the world; in the United States, women still only make 77 cents for every dollar that a man makes; women see far fewer rights around the globe than their male counterparts. All of this is happening, but what are we all doing about it?

The point of Ms. McSweeney’s repeated question was to help us realize that we can do more to fight for the opportunity to involve women in the development of our nations. Instead of turning to another organization to donate toward women’s rights, perhaps, why not raise your own voice? We all use social media for one reason or another. You likely connected to this blog using some form of social media. By utilizing this vast resource, we can Continue reading

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Apr 18

Latin America and U.S Disagree Over Cuba

This April, the Sixth Summit of the Americas was held in Cartagena, Colombia.  Not only was an array of topics discussed at the Summit, including Shakira’s speech on education and early childhood development, but many questions were left unsettled.  One of these is whether Cuba should be invited to the Summit next time around (held in 2015 in Panama).  When President Barack Obama attended the Summit, he received a surprising response from many Latin American countries.  After Colombian President Juan Manuel Santos put the topic on the table for discussion between the member countries, some expressed the need for Cuba to be included in the Summit next time around.  Although Santos concluded that the majority (32) of the countries “supported the participation of Cuba”, President Obama and Canadian Prime Minister Stephen Harper made it clear they did not agree with this.  When we look at international organizations that are solely created by member states, we need to ask whether unanimity really achieves much or whether a majority consensus should be applied.  That is, the mission of bodies like the Organization of American States (OAS) is to facilitate discussion and to mobilize agreements between countries.  But does this really work when there can be no agreements among all the member countries?

Although President Obama stated that he doesn’t want to look to the past but to the future in dealing with Cuba, he also made it clear that he will not welcome Cuba because it “has not yet moved to democracy, has not yet observed basic human rights”.  Yet on the other hand, we have Latin American countries who have explicitly demonstrated that this is not a requirement for the inclusion of Cuba in the next Summit.  In Fact, Ecuador’s President Rafael Correa refused to attend Sunday’s Summit in protest against Cuba’s OAS expulsion.  Alongside, the ALBA bloc of nations, including Venezuela, Bolivia, Nicaragua and some Caribbean nations, said they will not attend future Summits without Cuba’s presence.  Although Obama responded that there have been some initiatives done in regards with US-Cuba relations, there seemed to be a stern consensus on this issue between these countries.  O.K, so there are disagreements between Cuba’s participation in the next Summit.  What does this mean?

I think one of the important points to highlight here is that this Summit has been described as a rebellion of Latin America against U.S. diplomacy.  That’s a bit radical for my taste.  However, I do believe that this Summit has demonstrated stronger viewpoints opposing U.S. diplomacy than usual.  Some point out a degree of isolation Latin American countries have experience from the U.S., where China has taken a strong hold of trading with these counties.   What I think is interesting is that we can see a less U.S-reliant Latin America, where voicing their opinions is not subject to American approval.  Although there was no declaration signed during this Summit because of lack of unanimity, there seems to be a strong majority voice.  This leads to many important questions on the efficiency of such organizations and their ultimate outcomes.  Looking at such context, do you believe the Latin American countries will yield to U.S. anti-Cuba desires or do you think that the U.S will allow Cuba in the next Summit?  And if neither of these occur, what will happen to U.S-Latin American relations?

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Apr 18

Al Fin ¿Quién Valida Las Regulaciones Hídricas?

Read this post in English

A menudo tendemos a hacer generalizaciones y simplificaciones sobre cuestiones mundiales. Mi área de investigación referente a la privatización del agua ha dado lugar a muchas preguntas interesantes, más que respuestas concretas. En parte, creo que estas preguntas pueden conducir a enangostar decisiones políticas para obtener resultados más adecuados. Lo que he visto es que estas generalizaciones pueden producir decisiones políticas ineficientes en todos los ámbitos. Los diferentes casos que he investigado me han llevado a muchas conclusiones inciertas. Ellos han demostrado que la privatización del agua no es una respuesta absoluta para el problema del agua. La conexión entre la privatización y la eficiencia tiene mucho que ver con el cumplimiento de los contratos. Muchos países de América Latina no han visto mejoras en su estructura de sistema de agua después de su privatización. En su lugar, esto ha conducido a un ciclo de problemas sin dirección y con falta de soluciones.
Podríamos señalar con nuestro dedo a la mayoría de estos gobiernos corruptos como responsables de la incapacidad de administrar los problemas de saneamiento básico. Después de todo, los gobiernos crean el camino de sus países a través de la formulación de políticas. Sin embargo, el concepto de los gobiernos es demasiado grande para tratar si queremos encontrar soluciones para los problemas actuales. Para algunos países, la privatización ha sido una decisión correcta debido a las mejoras en la disponibilidad y la gestión del agua. Sin embargo, el problema es que esta política no puede ser implementada en todos los países. En concreto, la privatización del agua no pueden sobrevivir donde no hay cumplimiento de contratos. Suez, la empresa de agua más grande del mundo, ha reconocido este concepto donde prefieren invertir en países más desarrollados. El ambiente político de los países en desarrollo trae incertidumbre y genera resultados ineficientes. Incluso, aunque las empresas decidan exponerse al riesgo de la inestabilidad política de esos países, esto también resulta en la violación de contratos (de parte de las empresas del agua). Aquí es donde la privatización puede afectar directamente a la gente. Debido a que algunos gobiernos implementan un mercado libre en su sector del agua, la responsabilidad cae en la compañía de agua, Aguas Argentinas en Argentina por ejemplo.
Lo que se pone en papel, sin embargo, no se traduce en lo que se ve en las pequeñas ciudades como en Berazategui, Argentina. En la región del Río de la Plata, la privatización ha demostrado ser tan ineficiente como en otros países de América Latina, que he mencionado antes. Presionado por el Banco Mundial y el Fondo Monetario Internacional (FMI), el gobierno argentino privatizó el agua de esta región en 1993. Además del aumento del 88,2% entre mayo de 1993 y enero de 2002 (sin incluir la tasa de inflación del 7,3%), no hubo ninguna mejora en el saneamiento del agua. En cambio, el agua contaminada, no apta para el consumo humano, persiste, donde sólo el 12% de los recursos hídricos totales reciben tratamiento completo de alcantarillado.
Esta ineficiencia, por supuesto, fue protestada por el pueblo. Como resultado, los tribunales argentinos exigieron que Aguas Argentinas cumpliese con su contrato y construyan una planta de purificación de agua en Berazategui en un plazo de 18 meses. En respuesta, la compañía primero respondió que “técnicamente, esto no es una responsabilidad de la empresa, sino del gobierno”. Después de que este argumento fue refutado, la empresa dijo: “estamos cumpliendo con los deseos del juez, pero las mejoras medioambientales requieren más que una planta de tratamiento: se requiere un plan mucho más amplio”.
La pregunta constante de ejemplos como éste es si la empresa se ajustará plenamente a los acuerdos contractuales. Esto no se puede lograr cuando la culpa se desplaza entre la responsabilidad de la empresa y del gobierno. Cuando miramos a los gobiernos, sus ineficiencias se pueden ver en diferentes sectores. La privatización suele ser bien recibido en esfuerzos para manejar el agua de manera más directa (y, teóricamente, de manera más eficiente). Pero esto no se traduce cuando los contratos se quedan en el polvo después de que la privatización se toma a cabo. A medida que investigo más a fondo esta idea de la privatización del agua, encuentro información más alfando sobre las razones fundamentales de esta ineficiencia. Lo que quiero subrayar es que hay una falta de cumplimiento contractual intrínseca en muchos países en desarrollo. Esto juega un papel muy importante en derribar la idea errónea de que la privatización del agua es buena para todos los países. Cuanto más nos fijamos en el mundo en cuestión de globalización, más cuidado tenemos que tener en la generalización de “soluciones” para todos. Como pueden ver, diferentes económico-políticos ambientes dan diferentes resultados. Creo que tenemos que conseguir más informado no sólo sobre temas globales, sino también sobre problemas locales que tienen su propio ambiente. Todos podemos ser activistas de diferentes áreas de política y de derechos. Sin embargo, llegar a conocer realmente a un tema específico de un área local parece ser más difícil y ha demostrado perjudicar en ocasiones a personas de esa área.

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Apr 17

A New Look at Corporate Social Responsibility: Webinar

The week of April 12th I  presented a webinar on Corporate Social Responsibility as part of the Institute for Social Change’s Research and Learning Series.

The webinar followed the themes I presented in my post “What Kind of Change are Companies Really Trying to Make?”. Social responsibility and humanitarian activism have become new concepts explored in the for-profit sector. Companies are increasing their involvement in charity work especially in developing countries, but how much of this increase can be attributed to altruistic motivations and how much can be linked toward profit-seeking incentives?  The 21st century consumer demands a new marketplace for more charitable organizations, but when we explore the benefits of donation-based campaigns, it becomes evident that social corporate responsibility in the form of in-kind donations is creating greater profits for companies and creating bigger problems for the developing communities these companies are claiming they help.

 

In the presentation we considered the marketing strategies and outcomes of big corporations’ donation campaigns as well as explored the pros and cons of start-up companies’ one-for-one donation mantras.  The presentation offered insight into how social responsibility and humanitarian aid can play an effective role in for-profit organizations.  If the appropriate balance can be struck then companies as well as developing communities can benefit.
If you’re an entrepreneur or just a socially conscience consumer, you should check out the webinar, or look more into some of the articles I’ve posted below.

To view the recording of this webinar CLICK HERE

To access the slides from the webinar please CLICK HERE

 

Michael Porter and Mark Kramer’s article in the Harvard Business Review “Strategy & Society: The Link between Competitive Advantage and Corporate Social Responsibility”
Strahilevitz, Michal and John G. Myers.  “Donations to Charity as Purchase Incentives: How Well They Work May Depend on What You Are Trying to Sell.” Journal of Consumer Research, Vol. 24, No. 4 (March 1998), pp. 434-446.

“Warm glow or cold, hard cash? Social identity effects on consumer choice for donation versus discount promotion.” Journal of Marketing Research. Vol. XLVIII (Oct 2011), pp. 855-868.

Jenkins, Heledd, “Small Business Champions for Corporate Social Responsibility.” Journal of Business Ethics, Vol. 67, No. 3 (Sep 2006), pp. 241-256.

Frazer, Garth. “Used Clothing Donations and Apparel Production in Africa.” Economic Journal: 2008. Vol 118 (532). p1764-1784.

 

To learn more about the ISC and the Research and Learning series visit http://sisgigroup.org/isc

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Apr 17

Rethinking ASHA: The Frontline of India’s Maternal Health

India’s National Rural Health Mission was launched in 2005 with the goal to “improve the availability of and access to quality health care by people, especially for those residing in rural areas, the poor, women and children.” With the ASHA (Accredited Social Health Activist) program, the country has been making remarkable strides in the improvement of women’s and maternal health.

The ASHA Program works by providing every village in India with a trained female community health activist volunteer.  Each of these community health workers, referred to as ASHAs, are between the ages of 24-45 and literate, with a minimum level of 8 years of formal education. Then, each ASHA undergoes regular training and continuing education. This enables them to empower women in their own communities to make healthy decisions and understand determinants of health, such as nutrition, and sanitation and hygiene.  The ASHAs are also able to connect community members to existing services, which promotes timely use of those services.

The health focus for ASHAs is diverse but all related to women’s health and maternal health.  For example, each ASHA is adequately prepared to provide advice on labor and delivery, breast-feeding, immunizations, contraception, prevention of common infections, and care for newborns and young children. These community health advisors are also a resource for tangible items like oral rehydration therapy (ORT), iron folic acid tablets, and contraceptive materials, items that are invaluable to newborn and child health, maternal health, and family planning methods.

Maternal and newborn health indicators in India are not nearly low enough to achieve national or global targets.  According to an interagency report named Trends in Maternal Mortality: 1990 to 2008, in 358,000 maternal deaths occurred in 2008; 99% of those occurred in developing countries, and more than 17% of maternal deaths took place in India.

Although each ASHA is working on a volunteer basis, there are incentives for positive health indicators. For example, for each woman who delivers a child in a hospital, the ASHA is reimbursed 600 Rupees ($11.70 USD); the mother who delivers at a hospital is reimbursed 1400 Rupees ($27.30 USD). There are also incentives for getting children timely and complete immunization.

Despite the Indian Government’s touting of the program successes, there are many who argue that the ASHA program needs to be improved. For example, studies have found that ASHAs are not being chosen based on specified criteria, and may therefore not be fully qualified to serve that function. The quality and training levels of ASHAs is also not up to standards; this leads to unsatisfactory knowledge of health issues, incomplete understanding of job functions, and other problems. Even the concept of providing financial incentives has been shown to be problematic in some cases.  However, there are clear suggestions for how to improve the program and therefore the health outcomes of women all over India.

For example, more complete training would provide a greater sense and understanding of responsibilities, roles, and value in the community. It would also provide for higher level of knowledge related to maternal health, newborn heath, and related issues. To further enforce stronger baseline knowledge, potential ASHAs should be tested for their knowledge on maternal and child health needs. Innovations have been seen in some parts of India for their ASHAs, such as ASHA radio. This has been a creative way to provide a sort of job training. Finally, recognizing ASHAs and giving them a greater role in activism, advocacy, and giving them some kind of public certification would provide them with greater recognition in their communities.

There is immense potential for success in this project. Many countries, including Iran, have seen great successes in their community health worker programs.  They have instituted strong training programs, regular reviews of their programs, and choose qualified community health workers.

These suggestions could all bring more credibility and legitimacy to India’s ASHA program, and bring the country closer to it’s target for decreased maternal deaths.

Flickr photographs via DFID (photo 1, photo 2)

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Apr 16

Creating the Common Core

When we think about the core of America, what do we think?  Maybe the core of America is hard work, commitment to family, or values like freedom and liberty.  There are a lot of things in our American society that link us together to core American standards.  In recent years, the idea of a “core” has been extended to education.  With a common core of standards for students, children across the country will be linked by the same curriculum and expectations in their public schools.

The Common Core Standards Initiative calls for a uniform curriculum for students grades K-12 in all fifty states and the District of Columbia.  The goal of the common core standards is to ensure that all students are being prepared by their public school for entry into a secondary education institution or into the workforce.  The movement for common core standards has been circulating throughout the country for twenty or so years, usually referred to as the “Accountability Movement”.  Educators and policy makers realized the need for state-by-state education to be more standardized.   The National Governors Association and the Council of Chief State School Officers sponsored the movement.

Several reasons motive this movement including the U.S.’s falling position in world rankings in education.  This grander plan for the U.S. to keep its competitiveness as an economic super power is incredibly relevant in the education sector.  Without excellent education, U.S students will not be able to compete with the world’s rising developing countries.  The common core standards will ensure that students from different states will all be prepared not only for high school graduation but for college or a professional career.

The Obama Administration used the common core standards as one of the centerpieces of their education reform.  In their Race to the Top plan, President Obama and Secretary of Education Arne Duncan, made the adoption of common core standards a required prerequisite to apply for Race to the Top funds.  With this monetary incentive, forty-five states and the District of Columbia have adopted the common core standards model.

These common core standards would definitely have helped me out when I entered college.  I so often found myself saying, I never learned this in high school! When students come from different standards in high school it is not only challenging for college admissions persons to compare one 4.0 GPA to another, but it’s also hard for students from totally different educational backgrounds to study in the same classroom.  While my public high school in central Pennsylvania had a really successful writing program, we did not have a probability and statistics class, so my freshman year of college I sat bored through my University Writing program while I struggled with my Statistics.

When I studied abroad at the University of Cape Town, South Africa, the importance of common standards in their university curriculum became extremely evident.  In my upper-level microeconomics course, all the South Africans had been tracked on a specific combination of calculus and economics courses.  Being an outsider, I did not have these same courses and was therefore highly confused when the professor referenced specific speakers or lectures that I had never been a part of.

I’ve seen how some commonly established standards could specifically help establish a more equal playing field in college courses, but in general, the common core standards system is met with wide criticism.  The common core standards apply to basic subjects such as Math and Language Arts from grades K through 12.  One of the most prominent concerns with such a program’s development is the lack of attention it pays to English Language Learners.  By standardizing such things as reading comprehension skills, children that are coming from a non-English speaking home are placed on the same standards as children who have been exposed to English since birth.

Stanford assembled a team of English-language learner experts to create teaching resources for teachers trying to adapt the common core standards to be taught to English language learners.  The group launched a website Understanding Language this week to assist teachers around the country with understanding the complexities and difficulties English Language Learners will face when trying to meet the common core standards.

With the changing dynamics of our country’s demographics it is important that our education system is appreciating the changes and adapting to accommodate all children of our country.  When so many children are trying to adapt to a totally new language, it is unrealistic to expect them to perform at an identical standard as natural English speakers; however, it is our responsibility to demand high, achievable standards for all our students so that everyone in our country is prepared for high school, college, and the professional workforce.

Extended resources to teachers to assist them in the specialized teaching methods for English language learners can really help lessen the disadvantaged position these students find themselves in.  We need more of these resources as well as more attention paid, on the policy end, to the growing diversity and needs of our students.

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Apr 16

Education and the International Development Conference

Harvard’s 18th annual International Development Conference was held in Cambridge on Saturday. I had the opportunity to attend and sit in on some great panels about education, women, and corruption- all related to development. Speakers from the UN, the World Bank, USAID, and even one of Time Magazine’s top 100 most influential people in the world were there to speak about the ways in which we can and either are or aren’t pushing for development in world whose population has exceeded 7 billion people.

A previous post I wrote, addressed the 2015 Millennium goal of achieving universal primary education access for every child in the world. I wrote about the fact that this vision is far reaching, and the post addressed ways in which certain organizations were working toward accomplishing it.

A new idea was brought to light as I sat in on the education and development panel and listened to some very esteemed speakers discuss the problems that we are seeing today. A key idea that was raised was the fact that achieving universal primary education for all is simply not enough. While this might seem like a pretty simple and straightforward claim to make, there is good reasoning for it. The main idea for the current goal can be summed up by saying “quantity over quality.” We’re shooting for worldwide access, but how truly effective is it?

By focusing solely on providing education, more children are being sent to school. However, success rates have barely budged. The percent of school children who score well on basic skills tests is most definitely not rising at the same rate that access to education is. Yes, kids are being sent to school, but why put so much effort into making that happen when there is no follow up? Moreover, getting the most marginalized populations of children into school is still as much of a challenge as it ever has been. The rise in rates of rural, poor, and especially female school-age children has also not risen at the same rate as overall access has.

One question raised during the panel was why we are not focusing as much on secondary school as we are on primary school. The answer is that not enough children receive a full primary education to make putting time and effort into secondary school access worthwhile. This just reinforces the fact that without quality, quantity really does not make that much of a positive change.

The panelists noted that changes are being thought out for what the next education related millennium goal might be. The most worthwhile idea that is being pressed is moving the goal from being “education for all” to becoming “learning for all.” We need access plus learning. Without focus on the overall picture, we will never move forward. Instead of simply looking at the numbers of children in school, we need to assess attainment, student test scores, skills, and competencies within each community. Looking for learning results rather than enrollment numbers alone is what will bring education and development in general to the next level.

I will be interested to see how the new millennium goals develop and play out. Will universal education access be changed to universal learning for all? Will we see better results if that happens? I have confidence in the proposed goal and I hope to see it brought up again in the future.

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Apr 16

Reservation for One

California community college introducing a two-tiered tuition system for a spot in class

Higher education is perhaps one of the most controversial and hot button topics that come up on an almost perennial basis.  The current debate revolving around universities and colleges hones in on high tuition rates and budget cuts.  While students feel frustrated by annual tuition hikes, universities feel the heat of stringent budget cuts.  It appears as though a compromise between students and university officials is not on the horizon, especially for Santa Monica College in California.  The community college has decided to offer a two-tiered tuition system that will allow certain classes at higher prices.  Students who are antsy to get into popular classes will get in without a hitch if they pay more.

The proposed two-tier system has caused a severe backlash within the student body of Santa Monica College.  Thousands of students have flocked to protest the changes the community college has settled upon.  Core classes, such as math and English, are some of the most sought after courses, so the college has decided to offer two rates.  The standard fee for a class is $36, but students who are willing to pay more may secure a spot at $200 per course.  College officials hope that student enrollment will increase with the two-tier system ever since California community college enrollment numbers declined in 2009.  Many believe that a shortage of openings in key courses are at fault for a lack of enrollees, and believe the tuition system may be able to attract more students.

However, the glaring reason why students are protesting the tuition changes at Santa Monica College is the fact that community colleges are supposed to be affordable.  Many students attend community colleges because they do not have the financial means or grades to attend a four year university, but still wish to pursue a higher education.  The two-tiered tuition system jeopardizes the stabilizing effect community colleges have in society as well as in the lives of students.  Young people who are unable to attend a four year institution feel a sense of security and happiness because community colleges are an affordable means of continuing their education for a future career.  In this economy, statistics show that some kind of higher education is needed because by 2018 a college education is going to be needed to attain most jobs.

On the other hand, state budget cuts have proven to be a difficult pill to swallow for most community colleges and universities across the United States.  Combined with the fact that student enrollment has declined, Santa Monica College must be feeling the heat to raise money.  Though I have no remedy to solve budget cuts, there is a key point Santa Monica College has failed to take into consideration.  What will happen to students who are unable to pay $200 per course if some of their peers begin to shell out the money to secure a spot?  There is already a shortage of seats in many core classes, and it will lock out hundreds of students from their classes because they cannot pay for a reserve seat.

Santa Monica College needs to rethink the two-tiered tuition system because the negatives appear to outweigh the positives.  It is difficult for me to believe that the college thinks it will attract more students by introducing a two-tier system.  If anything, more students will feel disadvantaged and disheartened by a system that allows those with more money to buy a classroom seat.  Community colleges are supposed to encourage students to continue their education at an affordable price if they are unable to attend a four year institution.  It seems counter-productive to allow students with more financial leeway to secure a class seat while leaving others feeling helpless.

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Apr 13

Who’s Enforcing Water Regulations Anyway?

We often tend to make over-generalizations and over-simplifications in addressing global issues.  My research area of water privatization has lead to many interesting questions, more so, than concrete answers.  Partly, I think that these questions can lead to narrowing down policy decisions for more suitable results.  What I’ve seen is that these over-generalizations can lead to inefficient policies across the board.  The different case studies I’ve researched have led to many uncertain conclusions.  They have shown that water privatization is not an absolute answer to our water problem.  The connection between privatization and efficiency has a lot to do with contracts enforcement.  Many countries in Latin America have not seen improvements in their water system structure after its privatization.  Instead, this has led to a cycle of unaddressed issues and lack of solutions.

We could point our finger at most of these corrupt governments for the inability to address basic sanitation issues.  After all, governments form the path of their countries through policy making.  However, the concept of governments is too large to tackle in order to find solutions for the problems at hand today.  For some countries, privatization has been a right move because of improvements in water availability and management.  However, the problem is that this policy cannot be implemented in all countries.  Specifically, water privatization cannot survive where there is no contract enforcement.  Suez, the largest water company in the world, has recognized this concept in preferring to invest in more developed countries.  The political atmosphere of developing countries brings uncertainty and yields inefficient results.  Even if companies risk the political instability of these countries, this also results in the violation of contracts.  This is where privatization can directly affect people.  Because governments implement a business market in their water sector, liability is left to the water company, for example Aguas Argentinas  in Argentina.

What is on paper, however, doesn’t translate to what is seen in the small towns like in Berazategui, Argentina.  In the region of Rio de la Plata (Silver River), privatization has shown to be as inefficient as in other countries in Latin America, I’ve mentioned before.  Pressured by the World Bank and the International Monetary Fund (IMF), the Argentine government privatized this water region in 1993.  Besides the 88.2% increase between May 1993 and January 2002 (not including the 7.3% inflation rate), there was no improvement in water sanitation.  Instead, contaminated water unfit for human consumption persists, where only 12% of the total water resources received full sewage treatment.

This inefficiency, of course, was protested by the local people.  As a result, the Argentine courts demanded that Aguas Argentinas fulfill its contract and construct a water purification plant in Berazategui within 18 months.  In response, company spokespeople first responded by stating that “technically, this is not a responsibility of the company, but of the government”.  After this argument was refuted, the company said “we are complying with the judge’s wishes, but environmental improvements require more than a treatment plant: they require a much wider plan”.

The ongoing question for examples like this one is whether the company will fully comply with the contract agreements.  This may not be achieved when the blame is passed around between company and government responsibility.  When we look at governments, their inefficiencies can be seen throughout different sectors.  Privatization is often welcomed in efforts to manage water more directly (and theoretically more efficiently).  But this is not translated when contracts are left in the dust after the privatization goes through.  As I research more in depth this idea of privatizing water, I dig further into some of the main root causes for its inefficiency.  What I want to highlight is that Continue reading

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Apr 13

New Presidency of the World Bank

Recently, the World Bank has received attention from the media because they are about to appoint the new president. This is the first time that the World Bank has been subject to a competitive process. Previously, the U.S. president selected it. There are currently three candidates for the position, Ngozi Okonjo-Iweal, Jose Antonio Ocampo and Jim Yong Kim. The World Bank comprises two institutions managed by 187 member countries: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD aims to reduce poverty in middle-income and creditworthy poorer countries, while IDA focuses exclusively on the world’s poorest countries. These institutions are part of a larger body known as the World Bank Group.

All the candidates have different backgrounds and different suggestions. But will this bring any significant change to the work of the institution? I have previously written about the International Monetary Fund and how it functions. I claimed that no matter what candidate was elected, the structure of the IMF would not allow for any relevant changes or democratization. The IMF and the World Bank have very similar structures. The responsibility for the oversight of the day-to-day operations of the World Bank rests with a Board of 25 Executive Directors (EDs), who work at the Bank’s headquarters in Washington, DC. Five Executive Directors are appointed by the members with the five largest numbers of shares (currently the United States, Japan, Germany, France and the United Kingdom). The other Executive Directors are elected by the other members.

As any commercial bank, the country that gives more money is the one who has the greatest voting power and gets to appoint the executive directors. Even though the institutions are not democratic, they are experiencing a serious shift of power but it is coming slowly and progressively. Several countries have more recently acquired enough shares in order to have single representation on the Bank’s Board (e.g. China, Saudi Arabia), while the majority still participates in multi-country chairs.  The two pillars of the international economic system have been run by the wealthiest nations of the world. Indeed, there has been a historical trend were the president of the World Bank is American and the President of the IMF is European.

Given that they have such similar structures and have such high levels of cooperation, what is the difference between the World Bank and the IMF? Most people have only the vaguest idea of what these institutions do, and very few people indeed could, if pressed on the point, say why and how they differ. Even John Maynard Keynes, a founding father of the two institutions was confused by the names: he thought the Fund should be called a bank, and the Bank should be called a fund.

The fundamental difference is this: the Bank is primarily a development institution; the IMF is a cooperative institution that seeks to maintain an orderly system of payments and receipts between nations. Each has a different purpose, receives its funding from different sources, assists different categories of members, and strives to achieve distinct goals through methods peculiar to itself. However, even though the IMF’s goal is solely to regulate international financial markets, it still gives out loan when countries are experiencing a difficulty in their balance of payments (i.e. international debt). Of course, the loans are provided with many conditions. This forces the IMF to interfere in the development policies of the countries, and thus the differences between the World Bank and the IMF become more blurry.

In matters of finance, the World Bank is an investment bank, intermediating between investors and recipients, borrowing from the one and lending to the other. The IBRD obtains most of the funds by market borrowing through the issue of bonds (which carry an AAA rating because repayment is guaranteed by member governments) to individuals and private institutions in more than 100 countries. Its concessional loan associate, IDA, is largely financed by grants from donor nations. Despite Lord Keynes’s profession of confusion, the IMF is not a bank and does not intermediate between investors and recipients. Nevertheless, it has at its disposal significant resources, presently valued at over $215 billion. These resources come from quota subscriptions, or membership fees, paid in by the IMF’s 182 member countries. While the Bank borrows and lends, the IMF is more like a credit union whose members have access to a common pool of resources (the sum total of their individual contributions) to assist them in times of need.

I think that no matter who’s appointed as director, the World Bank will continue to run as it has done in the past, because it depends heavily on the actions of others international organizations, especially the IMF. Any significant change will come progressively, as more developing countries acquire voting power and representation. The five leading countries will no longer be able to run the bank as they wish; they will be forced to cooperate with China, the Middle East and some Latin American countries such as Argentina and Brazil. We are moving into a multipolar world, and this will be more and more representative as the years go by. For now, we can expect the development assistance of the World Bank to continue as it is.

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