Tag Archives: economic reform

To Escape From Violence, Iraq Must Tackle Its Economic Problems As Well As ISIL

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Smoke billows from a key oil refinery damaged by ISIL attacks in northern Iraq in June. Repairs are expected to take more than a year.

After months of political wrangling in Baghdad and advances made by the Islamic State of Iraq and the Levant (ISIL) – also known as IS or ISIS – the Iraqi Parliament finally approved a new, more inclusive government led by a new prime minister, Dr. Haider al-Abadi, in early September.

At a recent roundtable event with Iraqi and U.S. experts, held under the Chatham House Rule, participants expressed cautious optimism over the new government. However, in the uphill battle to confront immediate threats to the country’s security, Iraq’s economic crisis has largely been ignored.

According to one participant, the fact that the new cabinet of ministers included members of Iraq’s various minority groups, and that three leading political rivals – former Prime Ministers Nouri al-Maliki and Iyad Allawi and former parliament speaker Usama al-Nujaifi – were given posts as vice presidents, was a good sign.

Another in the room pointed to the moderate leadership of Iraq’s new Prime Minister. Dr. Abadi, who belongs to the Shi’ite Islamic Dawa party, has a reputation as a political moderate, was educated in the UK, and has served on various Iraqi parliamentary committees since 2006, including those for finance and economics. A change in political leadership at the top, the participant argued, could rebuild trust between the central government in Baghdad and Iraq’s marginalized communities. More importantly, Abadi has pledged to foster national dialogue, political reconciliation, and decentralization.

Iraq’s economic challenges – high unemployment, poverty, rising prices, and food shortages – will only contribute further to the security crisis if they are not addressed. More than 50 percent of the goods imported into Iraq – including raw materials and food – have been blocked at the only official border crossing with Jordan, which is now under the control of ISIL. Iraq’s final budget for fiscal year 2014 remains unapproved by the Iraqi Parliament, and since the economy is dominated by the public sector – the government and state-owned enterprises employ about half of Iraq’s total workforce – the lack of government spending has ground the entire economy to a halt.

At the end of the day, ordinary citizens in Iraq are bearing the brunt of economic damages caused by the regional insecurity and the political process in Baghdad.

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Training Political Parties for Democracy

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A new Congress is inaugurated in Colombia.

Strong and well-functioning political parties are an essential component to any thriving democracy.  Political parties link citizens and their governments, represent the interests of constituents, and influence economic policymaking. In any political system, a party’s capacity to influence policy determines its success, so party platforms are instrumental for parties to participate effectively in the discussion and implementation of policies.  The party platform outlines a set of policy alternatives that the party seeks to implement.  The economic component of a party platform is crucial to create and implement policies that deliver economic growth and opportunities to people.

The ideas presented in political party’s economic platform will influence the operation of businesses and shape national economic policy. These platforms are not static documents as they continually evolve and respond to the challenges a country faces at a particular moment in time.  Successful political parties will be ready to revise and adapt the economic component of their platforms to changing economic conditions. Training political parties to not only develop solid economic platforms but to revise and respond to ever changing economic conditions is an important initiative in the efforts to support thriving market oriented democracies.

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Case Studies on Democratic Reform in Yemen and Paraguay

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Democracy is a process of governance most often based on compromise, grounded in broad-based inclusiveness of differing viewpoints and the representation of diverse constituency interests. While free and fair elections are certainly one of the most recognizable hallmarks of the democratic process, a vibrant dialogue between political candidates preceding an election makes a vitally important contribution to the quality of governance.

Candidate debates serve multiple purposes. First, debates inform the electorate of the issues being considered. Second, televised debates offer an opportunity for voters to form an opinion and differentiate between candidates based on the substance of their policy positions. Third, debates promote transparency and improve the quality of democratic governance as candidates are able to directly express their views to the electorate, engage with their colleagues, and elevate certain issues over others in the national consciousness. Similarly, input from the private sector and civil society in the formulation of economic and social policy is another characteristic of a vibrant democracy as broad-based participation in the policymaking process ensures that proposed legislation represents the interests of all constituents.

CIPE possesses over thirty years of experience in strengthening democracy worldwide and promoting market oriented reforms in various country contexts. In the forthcoming publication Strategies for Policy Reform, two case studies from Paraguay and Yemen represent distinct approaches to ensuring that democracy delivers economic and political freedoms to citizens. 

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The Democratic Alternative from the South

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Each year on September 15, the UN observes the International Day of Democracy to celebrate efforts to promote and consolidate democracy around the world.  Despite these efforts however, the realization of consolidated democracy continues to be a struggle for many reformers.  This year, the UN has chosen a theme of “Engaging Young People in Democracy” and acknowledges that “study after study show declining faith among young people…with declining levels of participation.”  Compounding this declining faith in democracy is a rising ideological competitor in the form of economically successful authoritarian regimes.

As much as young people are recognized as dreamers and agents of change, these characterizations tend to be the result of youth wanting to see an improvement in their quality of life.  In emerging countries such improvements are often delivered through economic growth, and in cases such as China and Singapore youth populations can honestly say their standard of living has gotten better year after year.  These examples can lead youth to become disillusioned with democracy, especially at a time when the world’s major democracies are suffering the aftereffects of a major financial crisis. Meanwhile, in the developing world, kickstarting growth in democratic regimes often takes time due to a need to build consensus and develop proper policies.

Quality of life, however, is not measurable only in terms of indicators such as income levels, consumption, and GDP — though almost all of the world’s most prosperous countries are democracies.  Other, arguably more important aspects such as human rights, liberty, and freedom are also vital components.  Since 2012, CIPE has been part of a consortium seeking to analyze the development paths of three emerging democracies (India, Brazil, and South Africa) in order to create an argument in support of democratic development.

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Mongolia Must Improve Its Institutions to Avoid the Resource Curse

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By Dash Enkhbayar

The West tends to illustrate Mongolia as an “example of a developing country that, despite the odds, managed to accomplish a peaceful transition to democracy.” However, simply achieving an electoral democracy does not complete a country’s democratic transition. Recent years have shed light on the major institutional flaws that still exists in the country’s public and private sectors.

Sandwiched between China and Russia, Mongolia has been attracting significant attention for the past couple of years due to its rapid economic growth and burgeoning mining sector. It recorded the world’s fastest GDP growth rate in 2011 at 17 percent, which put Mongolia in the international spotlight for investment opportunities.

But corruption, poor governance, and unstable government regulations threaten Mongolia’s economic potential. In 2013, due to unfriendly investment laws such as the Strategic Entities Foreign Investment Law, foreign direct investment (FDI) in Mongolia plummeted by 48 percent, which effectively scared away many investors interested in the nation. Mongolia is, in fact, not a model democracy that it seeks to invoke. Instead, the last few years have demonstrated that unless Mongolia seriously starts tackling its institutional weakness it may succumb to the “resource curse,” in which a country with an abundance of natural resources experiences poor economic growth and a worsening political climate.

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Not Invited to the Party

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Zimbabwean economist Daniel Ndlela shares his thoughts on economic recovery as part of a conference hosted by the Southern Africa Political Economy Series Trust and the National Endowment for Democracy in May 2014. The conference, entitled “Zimbabwe Going Forward” featured Zimbabwean think tanks, private sector representatives, government and civil society. (l-r: Kupukile Mlambo, Deputy Governor of the Reserve Bank of Zimbabwe, Ndlela, and Abdulwahab Alkebsi, Regional Director for Africa, the Center for International Private Enterprise).

While 50 African heads of state prepared to visit Washington for the U.S.-Africa summit held earlier this month, one president who wasn’t invited decided to throw a party of his own. In Zimbabwe, President Robert Mugabe invited dignitaries and government officials to the State House on July 31 to mark the one year anniversary of his party’s victory over the opposition in national elections whose legitimacy was questioned by domestic and foreign observers alike.

The 90-year-old Mugabe, restricted from entering the United States due to targeted travel and financial sanctions, welcomed government friends to his official residence in Harare with a banquet and live music. Unfortunately, given Zimbabwe’s economic outlook, throwing a party is the last thing the President should be doing.

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How Youth Are Working to Solve Global Problems

Youth around the world are agents of change. They are political and economic leaders and participants in their communities, and have many thoughts on how to shape their nation’s future.

As part of celebrating such individuals on International Youth Day, two recent CIPE-Atlas Corps Think Tank LINKS alumni – Fayyaz Yaseen from Pakistan and Iryna Fedets from Ukraine – analyzed two issues young people care about in their communities: youth unemployment and anti-corruption. In this week’s Economic Reform Feature Service articles, the two authors explore how to bring about democratic and economic reform changes in their respective countries.

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