Enhancing Youth’s Political Participation in Pakistan

pakistani-youth-reclaim-national-anthem-world-record-1508x70

By Fayyaz Bhidal, Research Manager at Sustainable Development Policy Institute

Internationally, the average age of eligibility for election to national parliament starts at 25 years old. According to a UNDP 2012 Global Parliamentary Report, approximately 1.65 percent of parliamentarians globally are in their 20s, while 11.87 percent are in their 30s. However, the global average age of parliamentarians is 53 years old.

In Pakistan, youth represent 60 percent of the total population, but their voice is largely unrepresented in the political system. The youth population is not only a dynamic source of innovation and creativity, but has contributed to and even catalyzed important changes in political systems, power-sharing dynamics, and economic opportunities since Pakistan was created. One leading force for these changes is the Youth Parliament of Pakistan which was created in 2007 to engage youth in dialogue on important issues affecting Pakistan. Within local government, youth are also taking an active role in achieving implementation of work. In the recently held local government polls of Khyber Pakhtunkwa Province of Pakistan, 3,339 seats were devoted for the youth.

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A Trinity of Trade: Africa soon to Launch TFTA

Map of TFTA

By Otito Greg-Obi

Recently, African heads of state gathered together in Egypt to sign the Tripartite Free Trade Area agreement (TFTA) which will join the forces of the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC).

Free trade is crucial to global economies because it reduces tariff barriers which in turn results in trade creation. The benefits of trade for developing nations in general are numerous. To name a few: first and foremost, trade allows for specialization meaning countries can build a comparative advantage by focusing on producing goods with low opportunity costs. Secondly, trade encourages healthy competition which incentivizes businesses to increase efficiency and cut costs. Lastly, trade can reduce dependence on existing markets and stabilize countries affected by seasonal changes in markets.

The TFTA agreement has been long awaited – negotiations began in 2005 and were expected to conclude in December 2013. Major components of the trade agreement include the promotion of socioeconomic development and the free movement of goods and services. A customs union is also in the works to be implemented at a future date. But, the TFTA addresses more than just trade, it promotes the upward mobility of business people and advances the cause of social justice.

Although the creation of the TFTA is an exciting development in the world of business, there are still hurdles to overcome during its implementation. Economic integration can be a slow, demanding process, especially since many African countries in this new trading bloc are at varying stages in economic development and trade activity. Furthermore, transportation costs pose a major impediment to the integration of TFTA. Connecting these 26 countries will be a difficult task because the land is vast and requires large infrastructure projects. It will be difficult to ensure that domestic African businesses reap substantial benefits from the new trade area. And lastly, some countries such as Swaziland, Uganda, Tanzania and Zambia are concerned about the loss of revenue that will come from customs unions.

The promotion of the free market is a major stimulant for economic development. However, in order for the free market to run smoothly, it is important for African countries to continue working on other important issue areas such as corporate governance, transparency, and public-private dialogue. CIPE has engaged with TFTA countries such as Ethiopia and Kenya on these issues. These issues must remain at the forefront so that the new TFTA can operate effectively and remain beneficial to all parties involved.

Challenges aside, there is still plenty for businesses and governments in the new African free trade area to look forward to. This trade powerhouse totals $1 trillion in GDP. This is big news for African businesses because it will enhance enterprise ecosystems in the region immensely. With the implementation of this new agreement, trade is expected to increase from 12 percent to 30 percent, meaning economic activity will reach more than 600 million people. This could be a major step towards a Continental Free Trade Area, which the African Union aims to complete by 2017.

Otito Greg-Obi is a CIPE intern for Knowledge Management. She is a rising junior at University of Pennsylvania. 

Feature Service Highlight: Ronald Coase’s Views on the Conduct of Economics

Mary Shirley delivering her speech at  the "The Next Generation of Discovery: Research and Policy Change Inspired by Ronald Coase" conference in March 2015.

Mary Shirley delivering her speech at the “The Next Generation of Discovery: Research and Policy Change Inspired by Ronald Coase” conference in March 2015.

Ronald Coase would often say that if Darwin were to come back to earth today, he would be amazed at how much biology has progressed since The Origin of Species. Whereas if Adam Smith came back today and looked at economics, he would be amazed at how little has changed since he wrote The Wealth of Nations.

– Mary Shirley, President of the Ronald Coase Institute

CIPE’s latest Economic Reform Feature Service article features President of the Ronald Coase Institute Mary Shirley’s speech delivered at a conference co-hosted by the Ronald Coase Institute and CIPE on the topic “The Next Generation of Discovery: Research and Policy Change Inspired by Ronald Coase.” The conference, which was held in March this year, honored Ronald Coase – one of the most influential economists of the 20th century – and celebrated his important contributions to the field of economics. 

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CIPE Launches First Annual Photo Competition

Photo: © 2011 Swapping aid for trade in northern Uganda, Pete Lewis/UK Department for International Development

Photo: © 2011 Swapping aid for trade in northern Uganda, Pete Lewis/UK Department for International Development

“There is one thing the photograph must contain, the humanity of the moment.” – Robert Frank

Show us your best story-telling photo

Do you like to tell stories through photography? Then show us your best work! The first annual Center for International Private Enterprise (CIPE) Photo Competition is now open for submissions.

Open to participants of all ages, including student, amateur, and professional photographers, the inaugural photo competition will focus on the theme of Entrepreneurship.

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Riinvest Institute Celebrates 20 year Anniversary

Riinvest 20th Anniversary 2

CIPE’s long term partner Riinvest Institute for Development Research is celebrating their 20th anniversary this year. To mark the occasion, Riinvest held a conference on May 15 and 16 titled, “Activating the Sources of Economic Growth in Kosovo”. The conference brought together an impressive audience— the President and the Prime Minister of Kosovo*, the Deputy Minister of Finance, the World Bank Country Manager, other high level public officials, academics, business people, NGO leaders, the donor community, and members of the media.

*Kosovo’s newly-elected Prime Minister, Isa Mustafa, is the former President of Riinvest.

Riinvest leaders presented awards to a number of partners, individuals, and organizations who have supported the organization since its inception. CIPE had the honor of being presented the first two awards, one for Executive Director John Sullivan and one for the organization as a whole. CIPE Senior Consultant Carmen Stanila kindly received both awards on behalf of John and the organization.

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Are Remittances Really Remiss?

Remittances in Somalia

By Otito Greg-Obi

It is a popular opinion in the international development community that remittances – money transferred by a foreign worker back to someone in his or her home country – can have a negative effect on economic growth because recipients tend to spend cash flows on day-to-day subsistence. However, research shows that the opposite is true. A study on the effect of remittances on growth in Africa reveals that remittances seem to have an overall positive effect on Gross Domestic Product (GDP). When compared to foreign aid and Foreign Direct Investment (FDI), a 10 percent increase in remittances leads to a 0.3 percent increase in the GDP per capita income.

The Migration Policy Institute (MDI) points out that remittances are less volatile than international aid and FDI. For example, when the global economic crisis of 2009 hit, remittances in developing countries declined by only 5.27 percent whereas FDI declined by 32.94 percent. MPI also asserts that remittances allow for investment in human capital. For example, research shows that children in remittance households in Sri Lanka and Mexico have higher birthweights and lower rates of infant mortality. In Burkina Faso, Ghana, Uganda, Kenya, Senegal, and Nigeria, households that receive remittances are more likely to have a higher number of individuals with a secondary education. But, remittances are not just about human capital. In the Philippines and Mexico, there is a positive correlation between remittances and high levels of small business investment, as well as high levels of self-employment.

Remittances are a pressing issue in light of the current crisis in Somalia. Somalia boasts a population of 10.4 million people with forty percent of the population relying on remittances to meet basic needs. The country’s current GDP stands at around $2.37 billion. According to Oxfam, Somalia gets $1.3 billion dollars from its diaspora population each year, amounting to 56.5 percent of Somalia’s GDP. Somalia has no formal banking system. Instead, citizens depend upon Hawala, an informal currency transfer system run by money brokers. Increasingly strict money laundering policies threaten to topple the Hawala system and make life more difficult for many Somali citizens. These stricter laws result from a recent global effort to combat the risk of funding terrorism and the drug trade.

The anti-money laundering system is clearly connected to the remittance crisis in Somalia. The question is whether or not the system itself needs to be overhauled to solve the crisis. I had the opportunity to attend a talk given by Peter Reuter at the Center for Global Development. Reuter asserts that meaningful comprehensive reform is necessary and can begin by adopting a “do no harm” model.

Left to right: Jean Pesme of the World Bank, Peter Reuter of RAND, and Justin Sandefur CGD research Fellow

Left to right: Jean Pesme of the World Bank, Peter Reuter of RAND, and Justin Sandefur CGD research Fellow

He suggests conducting research-based cost benefit analyses so that countries can assess the extent to which avoiding risks is cost effective. If findings suggest that costs outweigh benefits, de-risking could be a viable option. He also suggests the controversial Tobin Tax as a possible method for dissuading money speculators.

I cannot say for sure if and how the anti-money laundering system should be reformed. However, I do have recommendations for the remittance crisis in Somalia itself.

In the short term:

  • Promote an increase in transparency between foreign banks, Somali money transfer operators, and citizens.
    • There needs to be a system in place that maintains a sense of trust between banks and citizens who are just trying to help their families survive.
  • Shift perspective on the issue of national security in Somalia.
    • Countries should strive to view remittances as a security stabilizer rather than a destabilizer. It is entirely possible for the sudden removal of remittances to incentivize citizens to join terrorist groups as an alternate source of goods/income.

In the long term:

  • Rebuild a formal banking system in Somalia that can slowly replace Hawala.
    • Bearing in mind the political instability of Somalia, is it necessary to gradually create a more formal economic landscape that offers an alternative to the Hawala money transfer system.
  •  Promote economic growth through capital other than remittances.
    •  Somalia should seek forms of alternative foreign capital (such as FDI) in order to create a larger role for diverse foreign capital for the sake of sustainable growth.

It is imperative that we continue to actively seek solutions to the remittance crisis in Somalia. Almost half of Somalia’s population will be negatively impacted by it. Two major preconditions for economic development are resources and stability. If remittances are protected, they can help to provide these preconditions and in turn contribute to the economic growth of Somalia as a country.

Otito Greg-Obi is a Knowledge Management Intern at CIPE. She is a rising junior at the University of Pennsylvania. 

The New Middle East: An Uncertain Future

Map of Middle East Region

By Bahaa Eddin Al Dahoudi, CIPE-Atlas Corps Think Tank LINKS Fellow

What future awaits the Middle East? This question remains pivotal following the outbreak of the Arab revolutions four years ago. It keeps popping up as regional developments arise, especially with the decline of democracy and presence of revolutionary forces in many Arab countries. The region’s resort to military tools is increasing due to the rise of terrorism, violence, and political polarization, a decline of charismatic leaders, and a lack of support for institutional structures and democratic transitions. In a Middle East where “there is no winner,” two vital questions emerge: Is the Arab revolution the reason behind the chaos and collapses? And, what are the future scenarios for this inflamed region?

I would argue that the Arab revolution is not the reason behind the current chaos. Knowing the history of revolutions, it can be understood that the development of a revolution is subject to consecutive waves of ups and downs. Resistance from old patterns against new revolutionary movements seeking a change are to be expected. In other words, what happened in the Arab world was historic but also unavoidable. Regimes that refused to change and reform – and instead accepted the equation of corruption and the status quo— had to fall one day. If it hadn’t happened in 2011, it would have happened another time. Thus, it is not beneficial to simply look back at the past and remember the good old days. Instead, one must look to the future and start preparing for what will come next. Thus, the real question we must ask is: What future awaits us in the Middle East?

What future awaits the Middle East? It is a region where Syria has collapsed, Iraq and Yemen are divided, Libya is shattered, and Egypt and the Gulf countries face huge security, economic, and political challenges. What future awaits countries where oil is the main determinant of the principles and rules of political games? All while international statistics say the region is witnessing explosions in population, rising unemployment rates, and declining quality of health and education services.

Are we about to witness an Islamic Middle East ruled under a Caliphate model? Will there be a democratic Middle East where people will again revolt against dictatorship in hope of creating a change? Or will the Middle East become a sectarian region filled with disputes, conflicts, and divided small states?

There are many outstanding questions and no one can definitively predict the outcomes. Undoubtedly, the years to come will carry more ambiguity in the political, socioeconomic, and cultural spheres in that region. In the meantime, we can continue to support freedom of speech of the people with the hope that the ultimate outcomes reflect the choices of the people of this region.

CIPE-Atlas Corps Think Tank LINKS Fellowship brings talented young professionals with strong research backgrounds to shadow researchers and experts at leading U.S. think tanks for six months. Bahaa Eddin Al Dahoudi is serving at Project on Middle East Democracy (POMED).