One version of an old joke features a shipwrecked economist on a deserted island who, when asked by his fellow survivors what expertise he can offer on how they can be rescued, replies, “Assume we have a boat.” Economists have a well-deserved reputation for making their theories work only by making unrealistic assumptions about how the real world operates.
I was reminded of the joke often in the five years I traveled the world researching my book,Eating Tomorrow: Agribusiness, Family Farmers, and the Battle for the Future of Food. Policy-makers from Mexico to Malawi, India to Mozambique, routinely advocated large-scale, capital-intensive agricultural projects as the solution to widespread hunger and low agricultural productivity, oblivious to the reality that such initiatives generally displace more farmers than they employ.
China has become a leader in globalization, most visibly through its One Belt One Road initiative, which spans several continents and aims to build up infrastructure and trade between China and the rest of the world. While the program has, for the most part, remained controversial in the West due to a fear of Chinese imperialism, in March 2019, Italy broke with the G7 major economies and signed up for the program. Some analysts have expressed concerns that this move will allow China a back door into Europe’s heartland, while others see it as a shrewd move on the part of the Italians, allowing them to obtain much-needed financing for a number of endeavors. So, which is it, and is this a win-lose or a win-win situation?
If Africa as a continent does not have strategic objectives of its own, the history of impediments to African economic development will be repeated in its engagement with China, says Ethiopia’s Alemayehu Geda.
LYNN FRIES: It’s The Real News. I’m Lynn Fries. My guest on today’s show is Ethiopia’s Alemayehu Geda, who is a Professor of Economics at University of Addis Ababa. We are meeting at the UN Geneva, where Professor Geda just presented at anexperts meeting. Professor Geda, welcome.
The World Bank has successfully built a coalition to effectively advance its ‘Maximizing Finance for Development’ (MFD) agenda. The October 2018 G20 Eminent Persons Group’s (EPG) report includes proposals to better coordinate various international financial institutions (IFIs) in promoting financialization.
For those – like me – who worry that the world is sleepwalking into another crisis, it’s not reassuring. It confirms that global debt is at record levels and ‘financial fragilities’ have built up across the globe. It’s also disappointingly light on solutions that could reverse these trends.
What is the IATF report?
The IATF is a group of fifty major international institutions that work on finance issues, including various United Nations bodies, the International Monetary Fund, World Bank and World Trade Organization.
This report is its annual stocktake on progress towards meeting commitments to finance the Sustainable Development Goals (SDGs). It’s an impressive undertaking, covering all major financing sources, with a mandate to look at the global financial and economic system as a whole.
The World Bank has successfully legitimized the notion that private finance is the solution to pressing development and welfare concerns, including achieving the Sustainable Development Goals (SDGs) through Agenda 2030.
A recent McKinsey report estimates that the world needs to invest about US$3.3 trillion, or 3.8 per cent of world output yearly, in economic infrastructure, with about three-fifths in emerging market and other developing economies, to maintain current growth.
The world financing gap is about US$350 billion yearly. If new commitments, such as the SDGs, are considered, the gap would be about thrice the currently estimated gap as available public resources alone are not enough. Thus, for the Bank, the success of Agenda 2030 depends on massive private sector participation.
With the Washington Consensus from the 1980s being challenged, President Donald Trump withdrawing the United States from the Trans-Pacific Partnership (TPP), and China pursuing its Belt and Road Initiative (BRI), most notably with its own initiatives such as the multilateral Asian Infrastructure Investment Bank (AIIB), the political and economic landscape in East Asia continues to evolve. Jomo Kwame Sundaram was interviewed about likely implications for developing countries in the region and beyond.
IPS:What do you think of world growth prospects and China’s Belt and Road Initiative?
Jomo: Although there are some hopeful signs here and there, there are few grounds for much optimism around the North Atlantic (US and Europe) for various reasons. Unconventional monetary policies, especially quantitative easing (QE), have helped achieve a modest recovery in the US, but appears less likely to succeed elsewhere. Such measures have also accelerated massive wealth concentration, which is why a few of the world’s richest men own more than the bottom half of the world’s population.
The Green New Deal is desperately needed, and arguing about a price tag is like Henry Ford wondering if the country will be able to afford his brand new automobile. With the introduction of a House Resolution by Rep. Alexandria Ocasio-Cortez (D-New York) and Sen. Edward Markey (D-Massachusetts), a debate has surged across the country on the affordability of the Green New Deal. The sheer distraction of the affordability discussion is enough to ensure that very few people will pay attention to what is really at stake. For when the bigger fish eat up this little fish we will need to remember how we got here and what matters most. As the bright young critics have quickly observed, the Green New Deal could hardly be too green. Time is wearing thin and we need to make haste.
Privatization has been central to the ‘neo-liberal’ counter-revolution from the 1970s against government economic interventions associated with Roosevelt and Keynes as well as post-colonial state-led economic development.
Many developing countries were forced to accept privatization policies as a condition for credit or loan support from the World Bank and other international financial institutions, especially after the fiscal and debt crises of the early 1980s. Other countries voluntarily embraced privatization, often on the pretext of fiscal and debt constraints, in their efforts to mimic new Anglo-American criteria of economic progress.
As the possible implications of Britain’s self-imposed ‘no-deal’ exit from the European Union loom larger, a new round of imperial nostalgia has come alive.
After turning its back on the Commonwealth since the Thatcherite 1980s, some British Conservative Party leaders are seeking to revive colonial connections in increasingly desperate efforts to avoid self-inflicted marginalization following divorce from its European Union neighbours across the Channel.