Category Archives: Global

Does Democracy Still Matter?

Once among the poorest countries in the world, South Korea has grown into one of the richest since transitioning to democracy in the late 1980s.

Once among the poorest countries in the world, South Korea has grown into one of the richest since transitioning to democracy in the late 1980s after a series of popular uprisings.

In his June 1982 Westminster Address , which laid the groundwork for the creation of CIPE and the National Endowment for Democracy (NED), President Ronald Reagan established an emerging role for the U.S. as a leader in supporting democracy around the world:

 “It is time that we committed ourselves as a nation- in both the public and private sectors- to assisting democratic development…The objective I propose is quite simple to state: to foster the infrastructure of democracy-the system of a free press, unions, political parties, universities- which allows a people to choose their own way, to develop their own culture, to reconcile their own differences through peaceful means.”

Today that role is being questioned. At an October 20, 2014 conference hosted by the Kennan and Foreign Policy Research Institutes, academics and policymakers from around the world convened to dissect the question “Does Democracy Matter?”

Panelists and participants acknowledged a notable – and unprecedented – cynicism about democracy support: its track record, current viability, and future prospects. Worse yet, this cynicism among scholars, politicians, and practitioners in the U.S. and Europe is coupled with disillusion in nascent or would-be democracies from Central Europe to the Middle East to Latin America. Keynote speaker Larry Diamond reminded the audience that, in direct contrast to the 1990s, the last ten years have seen more countries increasing in authoritarianism than countries making democratic gains.

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The Role of Business Associations in Democracy

Network members attending the meeting in Abidjan.

Members of a CIPE-supported business association network attend a meeting in Abidjan.

Business associations contribute immensely to economic growth, development, peace, and prosperity.  They play a key role in building inclusive entrepreneurship ecosystems and can bolster the ability of firms of all sizes to grow and create jobs.

Business associations are integral to the democratic process, as they represent the entrepreneurial interests of the middle class, thereby making them essential vehicles for popular participation in a democratic society.

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“FCPA Professor” Discusses Corruption Law’s Enforcement

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Known as “The FCPA Professor” for his highly trafficked blog, Southern Illinois University Law Professor Mike Koehler spoke in Washington, DC on October 2, 2014 about what he sees as flaws in the way FCPA enforcement is carried out.

In his latest book, The Foreign Corrupt Practices Act in a New Era, Koehler dissects recent developments and trends related to the U.S. Foreign Corrupt Practices Act (FCPA) and its enforcement. Although often a critic of FCPA prosecutions, Koehler maintains that the law itself is sound and apt – even for today’s globalized corporate environment.

He submits, however, that a gap exists between the text of the FCPA statute and current DOJ and SEC enforcement. Koehler ties this gap to the large number of corporate actions, which almost always lead to out-of-court settlements, as opposed to actions against individuals which would require greater judicial review.

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Harnessing Markets to Reduce Extreme Poverty

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When “3 billion people on the planet making less than $3 a day, [are] effectively cut out of society, we are missing the opportunity of all those people to be our musicians, our Einsteins, and our professors- it is really all of us that lose.”

In an event on harnessing the power of markets to tackle global poverty, American Enterprise Institute President Arthur Brooks and Acumen founder and CEO Jacqueline Novogratz highlighted the role markets can play in enabling the poor to participate fully in society.

By treating the poor “as assets to society,” rather than liabilities, “we’re going to enliven their capital and that will also give them earned success and dignity,” said Brooks. Novogratz’s philosophy is to do just that – by investing in the poor through so-called “patient capital.”

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The Business Case for Putting Ethics at the Heart of Corporate Culture

Participants at Ethisphere

Participants at Ethisphere’s 2014 Europe Ethics Summit.

In today’s global business environment, corruption poses a risk that companies with operations around the world must understand and manage effectively. Those that do reap the benefits. As the Ethisphere Institute points out, the business case is clear: the five year annualized performance of the World’s Most Ethical (WME) Companies Index was 21 percent, beating S&P 500’s 18 percent. Similarly, the ten year annualized performance of the WME Index is, at 11.4 percent, significantly higher than that of S&P 500 at 7.4 percent.

The key to success in ethical business is placing ethics at the center of corporate culture and building strong compliance programs that can mitigate corruption risks. That was the overarching theme of the recent 2014 Europe Ethics Summit: Leadership through Ethics and Governance, hosted in London by the Ethisphere Institute and Thomson Reuters. The Summit was Ethisphere’s first such event in Europe and gathered nearly 150 compliance experts, professionals, and stakeholders.

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The Role of International Trade Agreements in Fighting Corruption

Cargo ships in Rotterdam Harbor. In 2013, trade between the U.S. and EU totaled more than $650 billion.

Cargo ships in Rotterdam Harbor. In 2013, trade between the U.S. and EU totaled more than $650 billion. (Photo: Wikimedia Commons)

This post was published in Corporate Compliance Trends, CIPE’s new blog focused on anti-corruption compliance issues in emerging and frontier markets.

The next year is shaping up to be a big one for multilateral free trade agreements and, by extension, efforts to fight corruption in international commerce.

First, there is the historic Trade Facilitation Agreement (TFA) that grew out of the World Trade Organization (WTO) accord reached in December 2013 in Bali. Under the TFA, all the WTO’s 160 members agreed to work toward reducing the red tape and corruption at ports of entry, so that goods can move more quickly and economically from country to country. Second, there is the Transatlantic Trade and Investment Partnership (TTIP), between the United States and the 28 nations of the European Union. Together, the U.S. and EU account for 60 percent of the world’s GDP.

What do trade agreements have to do with reducing corruption? Historically, not much. But these two agreements break new ground both in their scope and their potential for attacking corruption as a barrier to trade. This fact is often lost in media coverage that focuses on winners and losers within specific countries and economic sectors. Adding to the lack of attention paid to corruption issues is the fact that negotiations are complex, not always transparent and can take years to conclude.

To zero in on the role of corruption in disrupting free trade, American University’s Washington College of Law recently put together a panel of experts and advocates, headlined by former World Trade Organization Director General Pascal Lamy. The moderator of the “Addressing Corruption in Global Trade” session, Nancy Boswell, framed the issue concisely.

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Shaping the Post-2015 Development Agenda

In 2000, the United Nations laid out an ambitious global development agenda known as the Millennium Development Goals (MDGs), which sought to resolve some of the most pressing international challenges of our time: eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality, improving maternal health, reducing child morality and promoting environmental sustainability.

While the world has made progress on many of these objectives over the past 15 years, the deadline for developing the new set of global development goals is quickly approaching. The current goals will expire on December 31, 2015 and a new set of principles will replace them. The question of what these principles will look like is explored in detail in the latest Economic Reform Feature Service article Shaping the New Development Agenda.

Author James Michel argues that the post-2015 agenda will need to address an increasing number of complex issues and reconcile the goals of a diverse group of actors in the development landscape. While the concrete set of goals have yet to be outlined, what is becoming clear is that there has been a shift in thinking related to international development. Michel’s article explores the emerging consensus that the post-2015 goals will be based on advancing “human security, well-being, and dignity” and will incorporate the Busan principles of “developing country ownership, a focus on results, inclusive partnerships, and mutual accountability and transparency.”

Furthermore, the traditional relationship between donor countries and recipient states, characterized by North-South dependency, will be transformed to an active partnership with an emphasis on local ownership and South-South exchange of knowledge, expertise, and trade. The agenda will pay greater attention to “exclusion and inequality, urbanization, demographic challenges and the positive contribution of migrants” among others. The paramount challenge will be to incorporate these diverse concerns in a coherent policy agenda focused on sustained, inclusive growth.

To read more on the topic of the post-2015 development agenda, read the article here.

Teodora Mihaylova is a Research Coordinator at CIPE.