Product RED, Brand Aid and Celebrity-Driven Development

Lisa Ann Richey and Stefano Ponte, Guest Bloggers

Bono’s Product RED is ‘a business model to raise awareness and money for The Global Fund by team­ing up with the world’s most iconic brands to produce RED-branded products.’ A proportion of the profits from the sale of RED products is donated to the Global Fund to Fight HIV/AIDS, TB and Malaria.  The Irish singer from the world famous rock band U2 is the front man for the first attempt to fund one of the largest providers of global AIDS treatment through the purchasing power of Western consumers.

In its first five years of operation, RED donated $160 million to the Fund. RED grants are made through the Fund’s standard disbursement processes and have been dedicated to the best-performing programs for AIDS in Africa–so far, RED funds have gone to Ghana, Lesotho, Rwanda, Swaziland, South Africa and Zambia.

Product RED is an innovative modality of international development financing, and one that is likely to spawn a variety of similar interventions of what we call ‘Brand Aid’. Brand Aid is the combined meaning of ‘aid to brands’ and ‘brands that provide aid’. It is ‘aid to brands’ because it helps sell branded products and improve a brand’s ethical profile and value. It is ‘brands that provide aid’ because, like other cause-related marketing initiatives, a proportion of the profit or sales is devoted to helping others. As a response to the crisis of legitimacy in international aid to Africa, Brand Aid also helps to re-brand aid itself and aid to Africa in particular.

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World Bank Energy Strategy Must Address Energy Poverty and Climate Change

Athena Ballesteros and Tom Nagle, Guest Bloggers, cross-posted with permission from the World Resources Institute

The World Bank is in the final stages of drafting a new energy strategy due late April 2011. The strategy has drawn so much attention because of its potential to address two major challenges confronting developing countries – energy poverty and climate change. While the strategy could be an opportunity for the institution to tackle both challenges simultaneously, some stakeholders are concerned that it may sway too much in one direction, addressing one challenge while undermining the other.

To balance these differing opinions, the World Bank embarked on an eight month consultative process with input from client and donor countries, civil society, the private sector, and others. We studied the reports of the consultations carefully to distill important messages emerging from the process. There appears to be some areas of resounding agreement, while in other areas, differing perspectives emerged. The overarching message delivered to the World Bank is a demand for investments in the energy sector that produce sustainable development outcomes.

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The “Chilean Model”: Market regulation, not just liberalization, key to success

Ricardo Ffrench-Davis, Guest Blogger

President Obama’s 4-day visit to Chile, Brazil, and El Salvador starts this Saturday and brings issues of trade and economic opportunity between Latin America and the U.S. to the fore. In this post, Ricardo Ffrench-Davis identifies the specific policies that have driven the Chile’s high economic growth since 1973, particularly the strict regulation of the country’s capital account in the 1990s.

Chile is frequently presented as a paradigmatic case of successful economic reforms, by quite different authorities. Usually, these accounts sustain the ill-informed belief that there is one “Chilean model” responsible for success in recent decades. The fact is that in the nearly forty years that have elapsed since 1973 there have been several sub-periods, with significantly different policy approaches, heterogeneous external environments, and notably diverse economic and social outcomes. There is neither only one model nor only one outcome, as we show in our recent book, Economic Reforms in Chile: From Dictatorship to Democracy.

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Green new deals, ecological scarcity and the lessons of history

Edward B. Barbier, Guest Blogger

The history of natural resource use and development, from the Agricultural Transition 12,000 years ago to the present, suggests that humankind has had to surmount successive scarcity problems:  From Malthusian population-land “traps” to fossil fuel scarcity, and now, ecological scarcity.

In any age of natural resource scarcity, there also appear to be winners and losers.  The winners adjust to the changing economic conditions imposed by scarcity, innovate before other economies do, and end up dominating trade and economic relationships as a result.  Over a thousand years ago, China, India and other Asian Empires were among the most powerful economies in the world, because their rulers adopted long-term strategies to parlay their vast agricultural and resource-based wealth into regional and then global dominance.  Today, modern China, South Korea and other Asian economies look to green and clean energy investments and technologies as propelling their economies to the forefront of global trade and development, as well as securing a more sustainable economic future.

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Pulling Away the Curtain: The U.S. Government’s Role in Technology Development

Fred Block, Guest Blogger

The Obama Administration and the House Republicans are engaged in an intense battle over spending that will likely lead to a shutdown of the federal government.  The immediate issue is funding the government for the remainder of the 2011 Fiscal Year that runs through September 30th.  If the two sides don’t reach an agreement, current funding runs out on March 18th.  But as soon as that issue is resolved, an even more momentous conflict will begin over spending levels for Fiscal Year 2012.  The Administration has made clear that in both cases, it wants to protect certain types of spending from Republican cuts, especially funds for infrastructure and innovation.

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Keynesianism and the Crisis

Lance Taylor, Guest Blogger

The only way to understand the Great Crisis and how to deal with it is through the economics of John Maynard Keynes and his closest followers. For the details see my new book, Maynard’s Revenge: The Collapse of Free Market Macroeconomics (Harvard University Press). Three ideas emphasized by Keynes 75 years ago are crucial for understanding the contemporary situation.

The first is that economic actors operate under fundamental uncertainty — at times they cannot predict or even imagine the nature of future developments. In the mid-2000s Federal Reserve Governor Ben Bernanke extolled a “Great Moderation” in macroeconomics. He did not, and probably could not, think about the tsunami that was about to strike. Rather, he accepted widespread market conventions that all was well. Keynes thought that such conventions might persist for a time, but then could rapidly break down.

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Commodity Market Reform: Wall Street versus the regulators

Steve Suppan, Guest Blogger

In contrast to the rapidity with which governments moved to use taxpayer funds to rescue the “too big to fail banks” in 2008, the pace of financial and commodity market reform since then has been agonizingly slow. One factor frustrating re-regulation is financial industry resistance to reform, aided in the United States by Republican Party efforts to reimburse the financiers of their November 2010 electoral victory with initiatives to defund the regulatory agencies responsible for implementing the “Dodd-Frank Wall Street Reform and Consumer Protection Act.”

Before dawn on February 19, the House of Representatives voted to slash the budget of the Commodity Futures Trading Commission by a third. “There would essentially be no cop on the beat,” CFTC Commission Michael Dunn said at a February 23 Senate hearing. CFTC Chairman Gary Gensler had told a House finance committee hearing that such a cut would not only cripple the CFTC’s ability to implement Dodd-Frank reforms, but would prevent his agency from investigating Ponzi schemes and market manipulation. The U.S. Senate is unlikely to support the House Republican assault on regulation, but the Obama administration’s proposal to levy a transaction fee to finance CFTC implementation and enforcement is facing stiff opposition.

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The Food Aid Convention: Feeding people or balancing budgets?

Jennifer Clapp, Guest Blogger

The week of February 28 is an important one for the future of international food aid. Negotiators from member countries of the Food Aid Convention (FAC) are meeting to hammer out details of a new agreement. The FAC is an obscure international treaty that dates back to 1967 under which donors pledge a certain amount of food aid. It is the only international agreement where donors pledge to provide a minimum amount of aid.

Last renegotiated in 1999, the FAC is now more than 10 years out of date. It was supposed to have been updated in 2001, but instead has limped from extension to extension on the hopes that the Doha Round of trade talks, which include new rules on food aid, would be completed first. Finally, following a major food crisis in 2007-08 and continued food price volatility, donors have realized that the FAC must be updated to take the new situation into account, even in the absence of a Doha agreement.

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Obama (and Congress) Can’t Cut the Budget Deficit

Ann Pettifor, Guest Blogger

The terrific hoo-ha around the US Budget Deficit is just that: hot air – predicated on the fallacy that President Obama and an ideologically-driven Republican Congress can cut the deficit.

They can’t.

It’s a delusion that arises because economists insist on applying microeconomic reasoning to macroeconomic conditions.  It’s a delusion that leads to broader misunderstanding as voters wrongly make the link between their own individual budgets and the government’s budget.

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The New Politics of Trade in the United States

Susan Ariel Aaronson, Guest Blogger

For many years the U.S. debate over trade has been a little like a sixth grade dance. Proponents from business, academia, and government squirm on one side of the room.  Meanwhile, opponents who include members of labor unions, civil society groups, academics, and local government officials, refuse to move. But on December 6, 2010, two unions joined the dance.  The United Autoworkers and the United Food and Commercial Workers expressed support for the US-Korea Free Trade Agreement (KORUS), arguing that the agreement will not only “protect” but according to the UAW “grow more jobs.” These unions became the first U.S. unions to publicly support a free trade agreement since the U.S.-Canada free trade agreement (FTA) of 1988.  Meanwhile, several other prominent unions including the AFL-CIO umbrella organization continued to signal their opposition to the KORUS and other trade agreements.

Does this development signal a new policy environment for trade? Perhaps. The UAW got special provisions to protect workers in the auto sector from import surges. But the politics of trade may be changing. The Obama Administration has made labor enforcement a top priority for trade policymaking and in so doing, has built trust with union leaders and members of Congress. Moreover, in recognition of changed economic and demographic conditions, some union leaders see opportunities in some of these agreements.

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