MKT3000:  Global Governance, International Institutions and Development

[Last update: 29.11.12]



Principal Global Governors:

United Nations.  The UN Charter (24.10.1945) established six principal organs of the United Nations: the General Assembly, the Security Council, the Economic and Social Council, the Trusteeship Council, the International Court of Justice, and the Secretariat. The United Nations family, however, is much larger, encompassing 15 agencies and several programmes and bodies. See, especially, UNCTAD, and their annual Trade and Development Reports

Reform of the UN's Security Council is becoming more pressing, but also more difficult, as the economic, and hence political power shifts eastwards - see, e.g. Economist, 13.11.10, See, also, Economist 2.12.10.  Special Report on China's Place in the world.

IMF: "an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.  Key IMF activities:
    * policy advice to governments and central banks based on analysis of economic trends and cross-country experiences;
    * research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets;
    * loans to help countries overcome economic difficulties;
    * concessional loans to help fight poverty in developing countries; and
    * technical assistance and training to help countries improve the management of their economies.
..The IMF's way of operating has changed over the years and has undergone rapid change since the beginning of the 1990s as it has sought to adapt to the changing needs of its expanding membership in an globalized world economy. Most recently, the IMF's Managing Director, Dominique Strauss-Kahn, has launched an ambitious reform agenda, aimed at making sure the IMF continues to deliver the economic analysis and multilateral consultation that is at the core of its mission—ensuring the stability of the global monetary system.

World Bank:  The World Bank Group comprises five major organisations:
    * International Bank for Reconstruction and Development (IBRD)
    * International Centre for Settlement of Investment Disputes (ICSID)
    * International Development Association (IDA)
    * International Finance Corporation (IFC)
    * Multilateral Investment Guarantee Agency (MIGA)
"We are not a bank in the common sense; we are made up of two unique development institutions owned by 187 member countries: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).  Each institution plays a different but collaborative role in advancing the vision of inclusive and sustainable globalization. The IBRD aims to reduce poverty in middle-income and creditworthy poorer countries, while IDA focuses on the world's poorest countries.  Their work is complemented by that of the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and the International Centre for the Settlement of Investment Disputes (ICSID). Together, we provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture and environmental and natural resource management."
For instance, the Bank's IFC now publishes an annual report on the ease of doing business round the world, which does appear to have an effect on pointless regulations - as reported in the Economist, October, 2011 (Doing Business).
The Bank's annual World Development Report (WDR) is widely regarded and respected as the principal report on the state of world's development. This key resource is now available on-line, and includes "Development Economics through the Decades : A Critical Look at Thirty Years of the World Development Report" by Shahid Yusuf.
"Since 1978, the World Bank’s annual World Development Report (WDR) has provided in-depth analysis and policy recommendations on a specific and important aspect of international development from agriculture, the role of the state, economic growth, and labor to infrastructure, health, the environment, and poverty. In the process, it has become a highly influential publication that is consulted by international organizations, national governments, scholars, and civil society networks to inform their decision-making processes.
In this essay, Shahid Yusuf examines the last 30 years of development economics, viewed through the WDRs. The essay begins with a brief background on the circumstances of newly independent developing countries and summarizes some of the main strands of the emerging field of development economics. It then provides a sweeping examination of the coverage of the WDRs, reflecting on the key development themes synthesized by these reports and assessing how the research they present has contributed to policy making and development thought. The book then looks ahead and points to some of the big challenges that the World Bank may explore through future WDRs. The essay is followed by five commentaries, each written by a distinguished economist or development practitioner, which further explore this terrain from different perspectives. Together, the contents of this volume provide an extraordinary and remarkably compact tour of development economics through, around, and beyond the WDR. It will be invaluable to anyone interested in the evolution of development economics over the past three decades as well as for students, scholars, and policy makers in the field of development."

WTO:  "the World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. ...At the heart  of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody’s benefit. The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business."
<>Developed from the GENERAL AGREEMENT ON TARIFFS & TRADE (1947) as part of the international reconstruction following WWII, which also saw the creation of the International Monetary Fund (IMF) as the International "bank" to support national banks; the International Bank for Reconstruction and Development (IBRD) - more popularly known as the World Bank, as a fund for development projects and programmes throughout the world; the United Nations organisation.

GATT consisted of: GATT History: GATT Principles: Current MTN Round:  Doha (2001 - ?) with the most ambitious agenda to date, and dealing with issues which have resisted negotiated agreement so far - i.e. quite likely to take considerably longer than the previous (Uruguay) round.   Russia joined the WTO in 2012, after protracted negotiations which completes the major country membership of the organisation.

G-20: which has taken over from the G-7 as the most important grouping of the world's largest and most economically powerful countries -> "promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability. By contributing to the strengthening of the international financial architecture and providing opportunities for dialogue on national policies, international co-operation, and international financial institutions, the G-20 helps to support growth and development across the globe."


Development Prospects:

Commission on Growth and Development 2009. "The Growth Commission Report identified “five striking points of resemblance” among all 13 highly successful countries in the world, that, for more than 25 years, had grown at rates exceeding 7 percent a year:
  1. openness to the global economy,
  2. macroeconomic stability,
  3. high saving and investment rates,
  4. reliance on a functioning market system,
  5. and credible leadership and good governance
However, (WB, 2010: “World Bank (2010d) Research for Development: A World Bank Perspective on Future Directions for Research. Policy Research Working Paper No 5437.) there remain important questions:
According to The Day After Tomorrow: A Handbook on the Future of Economic Policy in the Developing World, (World Bank) almost half of global growth is currently coming from developing countries. As a group, it is projected that their economic size will surpass that of their developed peers in 2015. “Developing countries have come to the global economy’s rescue,” said Otaviano Canuto, World Bank Vice President for Poverty Reduction and Economic Management (PREM), and co-editor of the book. “They are the new locomotives of growth which will move global growth forward while high-income countries remain stagnant.”
Diverging growth prospects are seen as continuing in the medium term.
Five factors account for it:
“The economic horizon of the developing world is promising,” said Marcelo Giugale, World Bank’s Director for Poverty Reduction and Economic Management in the Latin America and Caribbean Region, and co-editor of the study. “The rebalancing of global growth toward a multiplicity of engines will give the developing countries new relevance. It will also change their policy agendas: on average, economic management will be stronger, governments will be better, and the beginning of the end of poverty will be within reach.
The study notes that developing countries should take advantage of their relatively healthier fiscal positions to foster inclusive growth. This means better targeting of social programs, more emphasis on giving people the same opportunities, and business environments that facilitate the creation of formal jobs.
Other upcoming, developing-country trends identified in the book include the recovery of remittances, an increase in South-South trade, rising investment by sovereign wealth funds, more conservative debt management, and progress by many governments in gaining public trust."

The book has four key messages:
For more detailed information and analysis - see the World Bank's World Development Reports. - e.g. 2013 - focusing on Jobs. For a snapshot on urbanisation and incomes, see here.
and also a recent report on global urbanisation (McKinsey) including an intersting/illuminating graphic of the shifting centre of (economic) gravity of the world.

See, also, a recent (2012) World Bank report on China's development prospects to 2030 (overview) - including a usueful synopsis of China's recent history, the importance of saving (and investment) - overview, p. 11 - and an account of the middle income 'trap' (overview, p. 12)
Capital inflows to LDCs  - FDI flows suffering following credit crunch, but aid and remittances holding up.

What Makes the difference between Developed and Developing?
Doing business around the world - see the World Bank's data.

Does GDP measure anything useful?

OECD Better Life Index.  & Economist's summary, Or Global Competitieness? (with link to the World Economic Forum data)  [UK ONS National Wellbeing Index] [100 years of E&W population stats - the spreading middle?]

See Paul Ormerod's answer (February, 2011), which has a useful link to Simon Kuznet's Noble Prize lecture (1971):
"A country's economic growth may be defined as a long-term rise in capacity to supply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands. All three components of the definition are important. The sustained rise in the supply of goods is the result of economic growth, by which it is identified." ..."Mass application of technological innovations, which constitutes much of the distinctive substance of modern economic growth, is closely connected with the further progress of science, in its turn the basis for additional advance in technology. While this topic is still to be studied in depth, it seems fairly clear that mass-uses of technical innovations (many based on recent scientific discoveries) provide a positive feedback. Not only do they provide a larger economic surplus for basic and applied research with long time leads and heavy capital demands, but, more specifically, they permit the development of new efficient tools for scientific use and supply new data on the behavior of natural processes under the stress of modification in economic production."
Kuznets (1971) identifies two key omissions from GDP:
Kuznets makes two important points:
"First, the negative effects of growth have never been viewed as so far outweighing its positive contribution as to lead to its renunciation - no matter how crude the underlying calculus may have been.
Second, one may assume that once an unexpected negative result of growth emerges, the potential of material and social technology is aimed at its reduction or removal. In many cases these negative results were allowed to accumulate and to become serious technological or social problems because it was so difficult to foresee them early enough in the process to take effective preventive or ameliorative action."

On the development process, Kuznets also makes two important points:
"First, as already suggested, such growth demands a stable, but flexible, political and social framework, capable of accommodating rapid structural change and resolving the conflicts that it generates, while encouraging the growth-promoting groups in society. Such a framework is not easily or rapidly attained, as evidenced by the long struggles toward it even in some of the presently developed countries in the nineteenth and early twentieth centuries."
"Second, the increasingly national cast of organization in developed countries made for policies toward other parts of the world that, while introducing some modern economic and social elements, were, in many areas, clearly inhibiting. These policies ranged from the imposition of colonial status to other limitations on political freedom, and, as a result, political independence and removal of the inferior status of the native members of the community, rather than economic advance, were given top priority."
As a result: "Generalizations about less developed countries must be carefully and critically scrutinized in the light of this wide variety of conditions and institutions. To be sure, their common failure to exploit the potential of modern economic growth means several specific common features: a low per capita product, a large share of agriculture or other extractive industries, a generally small scale of production. But the specific parameters differ widely, and because the obstacles to growth may differ critically in their substance, they may suggest different policy directions."




FOOD SECURITY AND  GLOBAL FOOD MARKETS

There is a major global concern about whether or not we are about to experience a Malthusian disaster - as a consequence of human demands for food (a function of population and income) outrunning global capacities to produce and provide food. For example:
UK Foresight report on Global Food and Farming Futures (The Future of Food & Farming, 2011) "The global food system will experience an unprecedented confluence of pressures over the next 40 years. On the demand side, global population size will increase from nearly seven billion today to eight billion by 2030, and probably to over nine billion by 2050; many people are likely to be wealthier, creating demand for a more varied, high-quality diet requiring additional resources to produce. On the production side, competition for land, water and energy will intensify, while the effects of climate change will become increasingly apparent.The need to reduce greenhouse gas emissions and adapt to a changing climate will become imperative. Over this period globalisation will continue, exposing the food system to novel economic and political pressures."
Any one of these pressures (‘drivers of change’) would present substantial challenges to food security; together they constitute a major threat that requires a strategic reappraisal of how the world is fed. Overall, the Project has identified and analysed five key challenges for the future. Addressing these in a pragmatic way that promotes resilience to shocks and future uncertainties will be vital if major stresses to the food system are to be anticipated and managed.The five challenges, outlined further in Sections 4 – 8, are:
A. Balancing future demand and supply sustainably – to ensure that food supplies are affordable.
B. Ensuring that there is adequate stability in food supplies – and protecting the most vulnerable from the volatility that does occur.
C. Achieving global access to food and ending hunger.This recognises that producing enough food in the world so that everyone can potentially be fed is not the same thing as ensuring food security for all.
D. Managing the contribution of the food system to the mitigation of climate change.
E. Maintaining biodiversity and ecosystem services while feeding the world."
"In view of the current failings in the food system and the considerable challenges ahead, this Report argues for decisive action that needs to take place now."

Economist Intelligence Unit:  Global Food Security Index. & relationship with Womens' Economic Opportunities.

FAO's Data Visualiser page. FAO's Food Price Index (since 1990)

But - consider how much progress has been made in the last half-century:
In 1960, the world’s population reached 3 billion, and was still growing without apparent limit. Paul Ehrlich, 1968, predicted that rapid population growth would lead to increased famines and “a substantial increase in the world death rate” (p xi). The Club of Rome declared in 1972 that “If the present growth trends in world population, industrialization, pollution, food production and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years” (Meadows et al. 1972, p. 23). The Malthusian proposition that food demands, growing exponentially both with population and income growth, would necessarily exceed food supplies, which appear only to grow arithmetically, seemed probable, if not inevitable. Yet in the last 50 years, world population has more than doubled, growing by an additional 4 billion people, but the number of world’s starving has not increased, albeit still remaining obscenely large. Chen and Ravallion, 2012, “find evidence of a continuing decline in the incidence of absolute poverty in the developing world. The overall percentage of the population living below $1.25 a day in 2008 was 22%, as compared to 52% in 1981. We find that 1.3 billion people in 2008 lived below $1.25 a day, as compared to 1.9 billion in 1981. Progress has been uneven across regions, but (encouragingly) all regions have seen falling poverty counts in the 2000s” (p 22). The FAO, 2011, reports that the proportion of undernourished people in developing countries fell from 33% in 1969/71 to less than 20% in the first decade of this century.
Despite the dire predictions about the world’s capacity to cope with 7 billion people fifty years ago, we appear to have managed pretty well, without subjecting increasing numbers of people to starvation or malnutrition (though present levels of malnutrition and chronic food shortage are by no means acceptable). Our net food production per head has generally increased (Figure 1) and the prices of food have not (so far) shown any substantial tendency to increase  – as they will when our global self-sufficiency comes under more serious threat, which perhaps they have already begun to signal (Figure 3)
Refs:
Chen, S. and M. Ravallion, 2012, “More Relatively-Poor People in a Less Absolutely-Poor World.” Policy Research Working Paper 6114. Washington D.C.: World Bank
FAO, 2011, The State of Food Insecurity in the World, 2011 edition, Food and Agriculture Organization of the United Nations, Rome.
Meadows, D.H., D.L. Meadows, J. Randers and W.E. Behrens III. 1972, The Limits to Growth: A Report for the Club of Rome's Project on the Predicament of Mankind. New York: Universe Book.

Figure 1:  FAO Per capita Net Production Index (source: FAO Stat)
FAO Per Capita Net Production Index 

Figure 2: World population, agricultural output and land in agriculture, 1960 and 2009 (Source:  Pardey et al., 2012)
World Population, agric. output & land in agriculture

Figure 3:  FAO Food Price Index (real terms) 1961 - 2010 (Source: FAO HLPE report, 2011 on Price Volatility and Food Security)
Figure 3


We have managed to increase the value of food production per head of the population, with most of this increase happening in the upper middle income countries (Figure 2b above). However, food production per capita remains stubbornly static.  This impressive global performance has been associated with a substantial shift in global production, exemplified by wheat. In 1961/3, Russia accounted for 15% of global wheat production and was the world’s largest producer, but by 2008/10, Russia only accounted for just over 8% of global production, with India and China together accounting for almost 29% (up from 12% in 1961/3).
The capacity of the planet (and the people on it) to provide enough food for all in the future depends on our capacities to:
As Hertel, 2011 notes, quoting Bruinsma (2009), 77% of the growth in global crop production over the last half century resulted from increased yields, 9% from increased cropping intensity, and only 14% from expansion of crop area.
See above and  Change in Global Crop land (1961 - 2008)  (From FAO's SOLAW - State of the World's Land & Water Resources for Food & Agriculture - summary report, site includes some interactive maps & Notes/comments on the main maps.) We have, effectively, grown our extra food 'out of the fertiliser bag':
Food and Fertiliser
Source: FAO HLPE, 2011, p. 34.

Bruinsma (ibid) projects that only 9% of future output increases (to 2050) will need to come from extensification, reflecting increasing constraints on further cultivation and relying instead of further yield improvements. Although much of irrigated agriculture around the world, and much of developed country agriculture (including Brazil) show rather small yield gaps, the gaps remain very substantial (of the order of 50%) in rain fed agriculture, in much of Africa and still in much of Eastern Europe. If these gaps could be closed, at least some analysts conclude that we can feed another 2bn with present technologies, and with present cultivated land areas. As Godfrey et al., 2010, note “Substantially more food, as well as the income to purchase food, could be produced with current crops and livestock if methods were found to close the yield gaps” (p 813)
Refs:
Hertel, T., 2011, “The Global Supply and Demand for Agricultural Land in 2050: A perfect storm in the making?”, Am. J. Agr. Econ.,93 (2), 259 – 275
Godfray, H C J, Beddington, J R, Crute, Ian R, Haddad, L, Lawrence, D, Muir, J F, Pretty, J, Robinson, S,  Thomas, S M and Toulmin, C (2011), Science 327 , 812 – 18, DOI: 10.1126/science.1185383
Meeting the challenge of providing enough, for all, forever, requires more than simply generating the capacities and capabilities of supplying food. It also requires adaptation and innovations in what we consume, and in our abilities to generate sustainable incomes to nourish both our capacities and to continually recreate worthwhile livelihoods. Aside from the impressive growth in global food production over the past half century, a major factor in the reduction of relative food insecurity has been the growth in incomes – providing the previously poor with the wherewithal to purchase food (among many other things). Economic growth is therefore seen as a necessary requirement for both food and livelihood security, and will lead inevitably to both greater demands on our increasingly scarce land resources (for cities and infrastructure) as well as to substantial changes in diets and associated food requirements. In addition, as fossil fuels become relatively more expensive (both because of the increasing costs of finding and mining existing reserves, and because of the reflection of environmental costs and GHG emissions in the cost of their use), so the use of biofuels will become more attractive, further potentially increasing the demands on our scarce land until or unless third generation biofuels and other sustainable energy sources become viable.

See Fuglie and Wang, (USDA, ERS, 2012). New Evidence Points to Robust But Uneven Productivity Growth in Global Agriculture
See, also, FAO HLPE report on Food Security & Climate Change, June, 2012.
Other important data:    OECD/FAO Agricultural Outlook, 2012 - 2021. (Summary) and FAO's Statistical Yearbook, 2012 - Food and Agriculture (or here, as an alternative entry point), and also, the FAO's State of Food and Agriculture (annual).
And Canwefeedtheworld.org.
See, also Jo Swinnen on The Right Price of Food (May 2010)  - see: "Only a few years ago the widely shared view was that low food prices were a curse to developing countries and the poor. The dramatic increase of food prices in 2006-2008 appears to have fundamentally altered this view. The vast majority of analyses and reports in 2008 and 2009 state that high food prices have a devastating effect on developing countries and the world’s poor. This reversal of opinion raises questions about the old and the new arguments and about the proposed remedies. It also raises questions about the causes of this dramatic turnaround in analysis and policy conclusions. In this paper I document these changes in perspective and I discuss potential implications and offer hypotheses on the cause of the change in views."  & also a more recent analysis of self-reported food insecurity during the 2008 food price crisis: Verporten et al, 2012, LICOS discussion paper 303.

ENVIRONMENTAL FOOTPRINTS & CONSEQUENCES
Ecological Footprints by Country (Economist, May 2012) & the data from The Global Footprint Network. & the Ecological Footprint Atlas, 2010

Who cares and does something about it? - The Greendex Score and Guilt (Economist) and the National Geographic Survey data "Consumer Choice and the Environment—A Worldwide Tracking Survey” measures consumer behavior in areas relating to housing, transportation, food, and consumer goods. Greendex 2012 ranks average consumers in 17 countries according to the environmental impact of their consumption patterns and is the only survey of its kind.
Meanwhile, GHG emissions continue to rise, while the international community seems unwilling to commit to any serious reduction (Doha, 2012), while a recent Chatham House report (2012) on global resource futures, and associated graphics pages (Resources Futures), are worth a visit, and follow their links - e.g. international investment in (agricultural) land (Land Portal Info), and IFPRI's report on the 'land rush'.

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