Tag Archives: Asia

Notes from the field: Tilting at Asian Windmills

We’ve arrived in Manila for our first-ever partner conference in SE Asia. CIPE partners from all around the region—China, Mongolia, Indonesia, Philippines, Burma—have gathered to share experiences and refine strategies for moving forward in their countries. Already on the first morning, one word that has been used several times by partners to describe their initial efforts is “quixotic.” They feel strongly about the issues they address, and in many cases are making great strides, but many of them undertook their efforts initially as a leap of faith—based on a belief that something had to be done, though it may have seemed like tilting at windmills to do so.

Just on arrival here in the Philippines, it doesn’t take long to see that, even as an active democracy, Philippines nonetheless faces serious challenges. The issues appear front and center in the daily papers and link directly to the issues CIPE addresses: corruption, governance, and access to information, among others. On the first day of our partner meeting, one of the presentations was from Melinda de Jesus, who has worked for years on press freedom issues in the Philippines.

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Urbanization and Decentralization

During the Cold War, countries throughout the developing world, especially in newly-independent South Asia and Sub-Saharan Africa, implemented socialist and statist economic models. However, as the public institutions in these fledgling nations were ill-equipped to administer state-centric economic structures, the adoption of such governance systems had, in the overwhelming majority of cases, devastating results.

In addition to setting back national economies by several decades, the rapid expansion of central government  power and responsibility brought about the public sector pathologies still felt today, such as corruption, mismanagement and inadequate services. In recent decades, the vast majority of these countries have attempted to reform their economies to rely more on private sector enterprise and capital.

More recently, in an attempt to improve efficiency and service quality, many of these governments initiated decentralization programs wherein the burden of service delivery is shifted to sub-national levels of government. To be effective, decentralization requires increased capability and administrative capacity on the part of local governments. Within the international development community, therefore, there is a growing emphasis on public sector reform and capacity-building, especially at sub-sovereign levels of government.

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Unlocking Economic Potential Through Urbanization

At the start of the 20th century, 1 out of 8 people in the world lived in urban areas, and by the 1950s, it was nearly 1 in 3. Now, it is 1 in 2. In the coming decades, virtually all population growth will be in urban areas. In East Asia, the urban population is expected to increase by about 450 million people over the next two decades, meaning that a city the size of Paris will be added every month.

In South and Central Asia, the increase is expected to be nearly 350 million, and in Sub-Saharan Africa almost 250 million. Yet unlike the industrialized world where urbanization unfolded over many decades (thereby allowing public and private sector institutions to mature gradually), the process in developing nations is far faster and is unfolding against a backdrop of rapid population growth, lower incomes, and fewer opportunities for international migration.

While urbanization is a long-studied concept, it remains poorly understood. For increases in population density give rise to social, environmental and administrative challenges that are easily recognizable, such as public sanitation problems, inadequate supplies of formal housing, traffic congestion and crime. In other words, the “costs of grime, time and crime”.

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Two steps forward, one step back: The media in Indonesia

Yesterday, I attended a roundtable discussion on the state of the media in Indonesia after Soeharto, held by the Center for International Media Assistance of the National Endowment for Democracy.  Some interesting points relating to different types of media:

 Print: Janet Steele (George Washington University School of Media and Public Affairs; author of a book on Tempo, an independent magazine during the Soeharto years), praised the relatively free regulatory environment instituted by the post-Soeharto government and noting that the last remaining great obstacle is the civil defamation law and its enforcement. Citing a poorly educated judiciary with little understanding of press freedom, she told one story of how, when a rival print news outlet’s conglomerate owner was logging illegally in a protected area, Tempo Magazine’s front cover story on the subject wrought a defamation law suit upon them. Curiously, the plaintiff was not the conglomerate, but rather the president of the conglomerate himself, who claimed that “a trial should not occur by press.” No one was surprised when Tempo lost the lawsuit.

Radio: Munarsih Sahana is a senior reporter for Radio Republic Indonesia, the government-owned station now converting into public radio.  He noted that over 1,200 registered commercial stations now broadcast across different regions of the country; however, registration remains the problem. Indonesia’s uniquely decentralized democratic structure gives frequency allocation powers to regional governments, while licenses are issued federally by the Ministry of Information and Telecommunication.

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The land of bouncy balls

Malaysia is rubber country. Since the British Empire introduced rubber trees into Asia during the mid-nineteenth century, Malaysia has become the world’s number one supplier of foley catheters, latex thread, and rubber gloves –  nearly one in two pairs of rubber gloves worldwide come from Malaysia. It is the world’s third largest producer and fourth largest exporter of natural rubber. Recent advancements in breeding and biological techniques have raised yields, from 769,000 tons in 1999 to 1.3 million tons in 2006; the highest level since 1996 (when more individuals lived and worked in rural areas), according to the Economist Intelligence Unit’s Malaysia Country Profile 2007. The same profile noted that smallholders continue to be the primary source of raw rubber output.

Combined with robust manufacturing sector growth through exports of rubber goods, smallholder dominance of raw rubber indicates a vibrant local economy that remains globally connected – typical of Southeast Asian economies, and an attraction to migrant workers because of consequential high wages across all sectors. Waves of recognized and unrecognized immigrants raise fears of racial conflict, in a country whose 1969 race riots still raise deeply powerful and painful memories.

In this tense environment the fluidity of power can rattle elected officials and bring them to use any means necessary to solidify their places of privilege, such as when Malaysia’s deputy prime minister Anwar Ibrahim was jailed on charges later overturned:

Anwar’s ouster in September (1998) traumatized Malaysia’s political system, which had been a model of stability for decades. Soon after being expelled from the government, Anwar was detained without trial and beaten in custody by the country’s chief of police, sustaining injuries that a government doctor described as near-fatal. He was then charged with sodomy and corruption. Find the rest of the story in the Washington Post archives…

But Malaysia is rubber country, and even though rubber wasn’t originally part of Malaysian culture, many have adopted its characteristics.

Experts hail Malaysia’s recovery from the East Asian Tigers’ late 1990s collapse as one of the strongest in the region. Part of that strength came from reforms adopted under Ibrahim’s leadership as finance minister. Besides weeding out corruption and cronyism, Ibrahim’s recovery policies slashed ministerial salaries 18 percent, and put major infrastructure projects on hold. Then-prime minister Mahathir bin Mohamad took these actions as an affront to his power, and the handcuffs cuffed. But Ibrahim is Malaysian, and after being released earlier this year from a second false sodomy charge, he bounced back.

China’s Environmental Due Coase

It is not uncommon for high school history classes to introduce China as the world’s longest standing state. Aside from a short stint under the Mongol empire (and maybe British opium merchants), it has carried different names but the political entity that we know as China has existed independently and continuously for over six thousand years. Such continuity is remarkable, given China’s officially recognized 56 ethnic groups and numerous dialects – which are incomprehensible to each other in spoken form.

What’s even more remarkable is that all those dialects share a single, common writing system, the Han Zi. All 5,000-plus characters.

This context presents an interesting test for the famed Coase theorem, which states that as long as property rights are assigned, accompanied by rule of law, and easily transferable, only transactions costs prevent a society from reaching its optimum resource distribution. In today’s China, the country’s oldest lifeline is under threat of dissolution.

Few waterways capture the soul of a nation more deeply than the Yellow, or the Huang, as it’s known in China. It is to China what the Nile is to Egypt: the cradle of civilization, a symbol of enduring glory, a force of nature both feared and revered. From its mystical source in the 14,000-foot Tibetan highlands, the river sweeps across the northern plains where China’s original inhabitants first learned to till and irrigate, to make porcelain and gunpowder, to build and bury imperial dynasties. But today, what the Chinese call the Mother River is dying. Stained with pollution, tainted with sewage, crowded with ill-conceived dams, it dwindles at its mouth to a lifeless trickle. There were many days during the 1990s that the river failed to reach the sea at all. Read more from this article in National Geographic >>

The tilling and irrigation hasn’t stopped. Instead of feeding the million soldiers guarding the Great Wall, today’s Huang He Valley feeds the skyrocketing urban populations around Beijing, Tianjin, and across northern China. What’s missing from this picture, are formal property rights for the farmers in the region, to leverage against state- and privately- owned factories that threaten to wipe out their crop yields.

The common writing system melps to mitigate the typical transactions cost barrier of organizing such a wide diversity of ethnicities and dialects. The coase theorem predicts that in such an environment, the introduction of clear, transferable property rights will lead either to factories adopting cleaner technologies for fear of legal retribution, or to the farmers communally covering the cost of adopting cleaner technologies for fear of losing crop yields. Again, all that’s assuming a healthy Huang He is best for China.

Just pawns in their game?

From 1997 to 2004, one particular country’s economy grew an average 6.8 percent, and it has accelerated since then. Its real GDP per capita has almost tripled since 1990, and is now estimated at $2,300 – two figures that, if you’ve studied growth economics, indicate it is still in transition and far below the global growth frontier based on technology. On the other hand, you might care more about the fact that 15 percent of this country’s population lived below the World Bank’s dollar-a-day line in 1993, but by 2002 that figure was only 2 percent. Consider also that this growth was achieved while maintaining a Gini coefficient [measuring distribution of income] of .37; far more equitable than America’s .45, China’s .47, or Brazil’s .57. Or perhaps you care about infant mortality – cut in half from 1993 to 2002.

This country… is Vietnam.

According to the Economist Intelligence Unit (EIU), over 252,000 small and medium-sized enterprises (SMEs) are formally registered in this former communist economy, including 43,000 new SMEs in 2006 alone. An estimated 85 percent operate profitably year round. Together, EIU claims, these SMEs account for 39 percent of GDP and 32 percent of investment. What do these SMEs do, exactly? Vietnamese exports grew from $15.1 billion in 2001, to $39.6 billion in 2006. Whether directly involved or not, Vietnam’s SMEs rely on income generated by international trade.

That’s why it’s so frustrating to read stories like one from the BBC about the ongoing Doha Round negotiations of the WTO. Perhaps the most disheartening exchange was:

In another area of contention, former European colonies have threatened to block a trade deal to reduce the EU’s controversial tariffs on Latin American banana imports. The African, Caribbean, and Pacific (ACP) trade grouping said the 35 percent cut agreed by EU and Latin American officials on Sunday was unacceptable.

That’s one group of developing economies pitted against another – nothing new, of course, but considering it was a European idea to cultivate bananas from Latin America, where European colonizers imported the region’s first banana trees, the irony of that tariff is tragically comic.

While it was good news that negotiations are back on, lack of political will threatens progress in Vietnam and many other developing economies, progress toward eliminating poverty, and progress toward eliminating one-party rule – as economic pluralism leads to political pluralism. There is no instant, easy process; it is very much a struggle, but it is not made easier by politicians, in developing and developed economies, continuing to play trade like a chess game with the poor as their pawns.