sources of development domestic economy trade—imports and exports development requires capital...
TRANSCRIPT
Sources of development
• Domestic economy
• Trade—imports and exports
• Development requires capital
• Comes from international banks
• Comes from “official development
assistance”
• Comes through “foreign direct
investment”
• From “nongovernmental organizations”
Domestic economies
• Severely limited
• Focused on subsistence
• Capital generation limited
• Demand side limited—small market
• Supply side limited—lack of capital,
expertise, technology
• Government policy often prohibits
growth
• Foreign participation a must to succeed
Private & ODA debt in LDCs
Source: UNCTAD
Not as bad as it looks
Source: UNCTAD
Poverty distribution
Source: UNCTAD
NGO spending
Lack of NGO data
• No centralized source on how big
• No central source on what they’re doing
• OECD estimates $26.9 billion in 2005
• $16.5 billion from private donations
• $10.4 billion from governments
• Ireland, Norway: large % to NGOs
• Japan, France: small % to NGOs
• % means of total ODA spending
Biggest NGOs
• World Vision International: $2+ billion/yr
• Gates Foundation: $1+ billion/yr
• Save the Children: ~$500 million
• Care USA: ~$500 million
• Oxfam: <$500 million
• Plan International: <$500 million
• Catholic Relief Services: <$500 million
• Soros Foundation: <$300 million
The role of big business
Leaving profits in LDCs
FDI growing easier
The world’s largest TNCs
The world’s largest TNCs
Largest TNCs from dev. countries
TNCs: Exploiters or partners?
• History of exploitation, disaster
• Shell in Nigeria
• Union Carbide in India
• Nike in Indonesia
• Assumption: TNCs are bad
• Reaction is “corporate social
responsibility”
• Reaction is “resource nationalism”
CSR
• Companies adopting rules, policies on:
• Human rights
• Health care
• Environment
• Education
• Job health and safety
• Labor rights
Examples of CSR
• Extractive Industries Transparency
Initiative
• Construction Sector Transparency
Initiative
• Medicines Transparency Alliance
• Critics call all this “greenwashing”
• Many government requiring CSR
• Hey, it can’t be all bad
FDI in perspective
• Official development aid is diminishing
• Bank credit is hard to find, expensive
• FDI is growing in importance
• Development=foreign direct investment
• How to balance costs and benefits?
• How to ensure developing countries get
their share from FDI?
• Major issue in coming years
Doha again
• Doha round of WTO will define FDI rules
• Failure of Doha means not many rules
• Agriculture remains at core of disputes
• Meanwhile, TNCs go their own ways
• Resource nationalism causing conflict
• Global industry not united
• Some for, some against
The impact of financial crisis
• Protectionism on the rise
• LDC export earnings fell 44% in last year
• FDI down as much as 50%
• Millenium Development Goals look iffy
• Recent FAO conference considered a
failure
• U.N.: 1 billion people going hungry
• Crisis hurting poorest the most