China and India, living in perfect harmony

A week ago today I attended the Mahatma Gandhi-Daisaku Ikeda Peace Research Conference on “The Rise of China and India: Towards a Harmonious Region?” It was organized by NUS's East Asian Institute and held at the Hotel Parkroyal.

Why do we attend conferences and workshops? Is it to learn something new? Is it to showcase our own work? Is it to network and make connections that may lead to future collaborations? In many cases it would be all of the above. But I am especially keen to learn something new and not just new facts and figures but new ideas and new ways of thinking.

Professor Shih Choon Fong, the President of NUS, wrote in the forward message of the conference programme; “How will these two Asian giants tackle the issues of good governance, development, eradication of poverty, education, scientific and technological innovation? Are they able to act as two powerful engines of growth and serve as anchors for the peace and prosperity of the East Asian community?

The objective of the conference was to explore opportunities and obstacles to a harmonious region underpinned by the rise of China and India. The conference provided a platform for scholars from China, India, Indonesia, Japan, Malaysia, Philippines, Singapore and Thailand to present their perspectives.

The presentations ranged from the theoretical to a widely improbable scenario. One speaker outlined how Western international relations theory can help in understand the rise of China. He looked at the effectiveness of the realist, institutionalist and constructivism approach to explaining the rise of China and argues that there is a deep gap between economics study and international relations study yet provides no alternative.

Then there is the professor who is pessimistic about harmony in the region, believing that China’s rise in economic, military and cultural power will create conflict – perhaps to the extent of a major conflict between the USA and China.

Another professor noted that Japan is concerned about the possibility that the rise of China and India may result in the relatively less important role of Japan in the world political and economic order. And Japan is worried about the USA changing its attitude towards the country.

As a participant with limited knowledge of China and India, I felt each perspective and presentation give me a better understanding of the past and present of these two countries. Indeed I learned new facts and figures. Yet I was looking for more. I imagined the conference would shed some light on what the institutional arrangements of a harmonious region would look like. I thought it could provide more insight to the questions posed by Professor Shih Choon Fong. [Sandra]

Tomato spread to defuse Arab - Israeli tensions

CAG Research Fellow Tan Yeling is big on social entrepreneurship and is doing her "walk-the-talk" by co-teaching a leadership course to a group of students at Raffles Institution and Raffles Junior College in Singapore.

Yeling recently came across an inspiring article on Social Enpreneurship which profiles a "not-only-for-profit" business that has createed profitable joint ventures by putting together Palestinian and Israeli businesses. The man behind this is Daniel Lubetzky - the Mexican born son of a Holocaust survivor who founded PeaceWorks, a successful global business that promotes peace through commerical ventures among Israelis, Palestinians, Egyptians, Tukrs, Indonesians and Sri Lankans.

While in Israel, Lubezky came across a struggling local business that produces delicious sundried tomato spread. Lubetzsky later founded out that the company was importing expensive glass jars from Portugal and tomatoes from Italy. So he suggested the company owner to source the jars from Egypt and tomatoes from Turkey and Palestine. This led to a establishment of joint ventures between Israelis and Palestinians, set up by Lubetzsky's PeaceWorks. Today, tapenades and spreads under the labels Moshe & Ali's and Meditalia are sold in stores across the US. Read "Making Social Entrepreneurship Matter", published in BusinessWeek, 6 August 2008. [Sung]

Beyond the buzz of CSR

Corporate Social Responsibility (CSR) is currently the 'buzz' of Dhaka's business sector. Thus, it was no surprise during my recent trip to Dhaka to hear various interesting uses (and abuses) of the term. It was also interesting to hear that the government is taking an active interest in CSR, embracing the concept by considering a tax exemption for corporate spending on CSR. The fact that Bangladeshi business and government are even talking about doing things to assist the society is a good thing. However, the question I found myself asking each time CSR was mentioned, is whether the initiatives being discussed can really be considered CSR, or if what is passing as CSR is just a public relations gimmick that will ultimately tarnish the whole concept of CSR in Bangladesh.

The subject of CSR is still a nascent one. As a concept, CSR is being defined and debated in business and academic circles around the globe. One definition that seems to be gaining credence is that CSR is the practice of a corporation internalising the externalities it creates through its business practices. In layman terms, CSR means corporations taking responsibilities for their actions and doing something about improving them.

With that in mind, it is important to differentiate CSR from corporate philanthropy or charitable work that is unrelated to the corporation's business. CSR is not the same as the work done by a corporation's foundation arm. CSR involves a conscious effort by the corporation to essentially operate differently to change its practices to improve their impact on society, or to actively seek to ameliorate any negative impacts they may have.

In Bangladesh I noticed that the philanthropic work of corporations was being labeled as CSR. Mislabeling philanthropic work as CSR does little to improve unsavoury business practices of a corporation. As a matter of fact, such mislabeling may give corporations a green light to behave as they wish without regard to their impact on society and then try to whitewash their bad behaviour by merely making a donation to an unrelated cause.

Don't get me wrong, I am not against corporate philanthropy; the more the better! What I am asking for is clear labeling; which leads to clear thinking. While corporate philanthropy is not CSR, it is still a good thing. Philanthropy can be (and is) used as a form of public relations or advertising. As Michael Porter and Mark Kramer argue in their Harvard Business Review article, a company can and should think of philanthropic acts in a strategic way. Such acts can improve the corporation's image and thus their standing in the competitive landscape. The key here is transparency.

Companies can make best use of their philanthropic contributions if they come out clear about what they are doing and how they are doing it and make clear that these contributions have nothing to do with their business practices.

Two examples from Bangladesh may help to illustrate the difference between corporate philanthropy and true CSR. British American Tobacco Bangladesh (BATB) has an extensive “CSR” programme; however, its CSR efforts seem to be out of sync with its business practices. British American Tobacco Bangladesh's website highlights its responsible business practices, which include supporting IT education and afforestation programs. While these may be laudable charitable programs, they have little to do with BATB's business. Sadly, nowhere on its website does BATB mention the ill effects (social, economic and health-related) of smoking or what BATB is doing about them.

By contrast, recently a Danish TV documentary showed that child workers were employed by a subcontractor for Grameenphone (another company touting its CSR programs in Bangladesh) and were handling dangerous heavy metals and chemicals with practically no protection. Following this disclosure, Grameenphone took steps to rectify the problems (related to this case). This is an example of modifying the corporation's business practices to improve its impact on society (albeit in a reactive manner).

It is a shame that Grameenphone took action to change its business practice only in response to pressure from the foreign media. How much better it would have been if Grameenphone had taken the initiative based on its own ethical principals; or even if the pressure had come from within Bangladesh. In the west, CSR is being driven by demands from consumers, employees, shareholders and other stakeholders for better business practices. Why shouldn't Bangladeshi consumers and citizens stand up and press our corporations to live up to standards that we dictate?

Rather than giving tax breaks to corporations for practicing CSR in Bangladesh, the government should set policies in place or empower entities to monitor and publish CSR practices of corporations. If a corporation embraces true CSR practices, if there is true transparency in the system, and if consumers have a say in the matter, then the corporation will be rewarded by the market system. These corporations then should have no qualms about publicising their good deeds and reaping the rewards of greater market share.

We as consumers in Bangladesh need to exercise more of a voice and we need to take responsibility in encouraging companies to embrace CSR and ethical practices. We have to demand that businesses 'embed' CSR in the core of their operations, making it part of their corporate DNA so that it influences decisions across the corporation.

We want our companies to succeed and do good deeds at the same time, and why shouldn't we? After all, we possess the ultimate purchasing power to make the company a success. It is about time we Bangladeshi consumers exercised our rights. [Durreen]

Durreen Shahnaz is the Regional MD of Asia City Publishing Group. This article was first published in The Daily Star - #1 ranked English daily of Bangladesh.

Transnationalims Reconsidered

Studies on transnational activities are often underlined by the binary framework of state and society, local/national and global, old actors (such as state agencies) and new ones (such as domestic activist groups, international organizations and transnational NGOs). Such approaches tend to obscure the fluid, open-ended and unpredictable character of the negotiating process in governance.

Yet the case of AIDS prevention in China paints a much more complex and diverse picture. Dr Wu Fengshi, Assistant Professor, Department of Government and Public Administration at the Chinese University of Hong Kong rightly points out in her case study that transnational relations are often in flux and existing categories cannot fully capture the myriad of players and stakeholders involved.

Take transnational NGOs, a core player (or groups of players) for instance. These are no longer mere pressure groups imposing their demands on the state. According to Dr Wu, “NGOs are very active in building diverse strategic relationship with domestic players. They are not simply allies of local social groups, nor are they purely governmental followers. They create new micro-mechanisms for state-society interaction, and help to facilitate and lead state and societal actors to practice such mechanisms”.

Fresh insights like these would do well to challenge conventional understandings of global public health governance, an issue which has risen rapidly on the international agenda over the recent years. [Yanchun]

G8: Between Aspiration and Reality

The best way to start is at the end.

“Is it perhaps a question of legitimacy and by what criteria are countries judged as eligible to become members of the G8, including those other countries aspiring to be included in this exclusive body?” This was the last question from audience to Masahiro Kuhno, Deputy Foreign Affairs Minister of Japan and “Sherpa” to the G8 summit during a lunchtime seminar series entitled "G8 – All Talk, No Action?"

At the heart of this question is a much-vaunted discomfort over G8’s continued existence amidst a world already besieged by numerous global institutions involved in the precarious responsibility of overseeing the global economy. And whether this task rightfully belongs to a coterie of countries who have no other common denominator except that they are the world biggest economies, and coincidentally, Mr. Kuhno himself charmingly admits, the world’s biggest emitters.

Robert Cox refers to the G8 as a “nebuleuse”, “a process of governance without government, involving a transnational process of consensus formation among the official caretakers of the global economy.” Unlike other global institutions, the G8 has no physical headquarters, no governing charter, no overseeing board. The only concrete manifestation that they exist at all is a collective photograph of all G8 heads of state who converge on the country hosting the annual meeting. And, quite disconcertingly, a digital posting of the elaborate G8 menu sneaked in by some enterprising blogger.

This year’s meeting held in Hokkaido, Japan, seems preoccupied with the issue of expansion and enlargement of membership. Should it include the G-5 (another loose coterie of countries on the rise --- China, India, Brazil, Mexico and Indonesia)? Who and how is that decision going to be made? Should the G-5 be treated as “outreach” activities or should the G-8 seriously deliberate the question of becoming G-13?

Are these are the critical questions that should preoccupy these global leaders? More pointedly, shouldn’t the issue of expansion and enlargement be re-framed in terms of including a wider representation of constituencies beyond those represented by the state? Shouldn’t the substantive issue of declining contributions to ODA raise red flags on these leaders’ commitment to reduce global poverty? [Tess]

SWFs: Known Unknown or Unknown Unknown

Donald Rumsfeld once said, “there are things we know we know. We also know there are known unknowns. But there are also unknown unknowns -- the ones we don't know we don't know."

Rumsfeld certainly wasn’t referring to Sovereign Wealth Funds (SWFs; see SWFs ranking) but these have certainly become one of the unknowns to many. The world saw a number of countries setting up their own SWFs to manage their accumulated wealth. The IMF estimated last year that SWFs now control nearly USD 3 trillion and that by 2012, the figure could reach USD 12 trillion. USD 3 trillion is significant when you consider that the total current value of traded securities in Africa, the Middle East and Eastern Europe combined is about USD 4 trillion.

Some argue that SWFs are useful tools to diversify and strengthen their economies while others have pointed out the lack of transparency (very few disclose information about their assets, liabilities, investment strategies, etc) and potential abuse of power.

SWFs certainly challenge the traditional notions of governance within existing international financial institutions and this will be one of key issues that CAG’s Global Finance Governance study group will examine when it convenes in Singapore in December.

Edwin Truman, Senior Fellow at the Peterson Institute for International Economics explodes myths surrounding SWFs in his latest article titled “Sovereign Wealth Funds: Debunking Four Popular Myths” in which he outlines four popular myths: (1) about "them" not "us" (2) all the same in their opacity (3) a net benefit to the international financial system, and (4) not like hedge funds. Read Truman's article. [Sung]

More checks and balances

Today’s major financial issues have far-reaching implications traversing well beyond any national boundary. These issues are global in scope and thus require global solutions. As the global financial market faces unprecedented challenges on the one hand and rapidly decreasing resources on the other, greater cooperation is needed among states, private sectors and civil society groups around the world in order to work together through various institutional arrangements. These efforts must also be supported by the adoption and enforcement of binding rules at all levels of financial activities.

The concept of global governance – systems with global effect created and regulated by multilevel private and public actors in variegated institutional arrangements – thus becomes increasingly relevant as the globalisation of the financial market takes place. And CAG’s Global Governance project is looking into this very issue.

Many have argued in the recent years that the entire system for global financial regulation is in serious need of a major update. The question is, how. Kenneth Rogoff, Professor of Economics and Public Policy at Harvard and formerly chief economist at the IMF ponders whether more regulated financial markets with stricter rules and enforcements to curb what he calls “financial triumphalism”, would do the trick. He points out that historically the eras of heavy financial regulation tend to have significantly fewer financial crises than lightly regulated free-wheeling eras. He writes: “No one is suggesting that we go back to the ‘financial repression’ of the 1950’s…financial innovation ought to be allowed to flourish but not without better checks and balances. Otherwise, we will be forever trapped in a framework where taxpayers are forced to bailout banks in bad times, while wealthy shareholders reap huge profits in good times.” Read Kenneth Rogoff's article titled "The End of Financial Triumphalism" in PROJECT SYNDICATE. [Sung]

Professor Rogoff will deliever a talk titled "What do we know about exchange rates" at the LKYSPP on 18 August 2008. See details.

Death to feudalism, unleash the brain power

Kishore Mahbubani, the dean of LKYSPP, writes in “The New Asian Hemisphere” about the reluctance and difficulties on the part of the West to accept the rise of Asia today. With China about to host Asia’s third Olympiad, the entire world’s attention is once again on this part of the world - the home of more than 60% of world population and where the economic growth rates have consistently outstripped those of major Western countries for decades.

As the countries of Asia gain ever greater political, economic and social clout, international relations scholars and policy makers around the world have been trying to find out how the newly empowered Asian nations can take advantage of such opportunity and how can they claim a stronger position in defining and managing global affairs (Read "Is Asia ready for a bigger role" by Ann Florini, CAG Director).

In his latest lecture delivered at the Presidential Palace in Jakarta last week, Kishore Mahbubani shares his blue print on how an emerging, resource-rich country like Indonesia can take part in the great transformation China and India are going through now, and Korea decades before. "Asia always had the world's largest pool of brainpower. But it also had the world's largest pool of unused power. The simple reason why Asia is taking off now is that the unused brainpower is finally being used, " Kishore said. Expanding on this, he added, "China and India are succeeding and taking off because they are finally finding the right means of igniting the hundreds of millions of brains that they always had. After China and India, the third largest pool of brainpower is in the ASEAN region. The success of ASEAN will be determined by whether we follow China and India's pattern and unleash the brainpower of the masses or whether we follow the Latin Amercican path of nurturing the interests of the elite classes." Read Kishore Mahbubani's lecture. [Sung]

Beer, schnitzel and renewable energy

CAG’s Energy Governance Programme examines what policies and institutions are needed to bring about a shift to a more effective, efficient, and sustainable global energy system, with a focus on the role of Asia. It is mapping the existing institutions and comparing them to what is needed for global energy governance. The research includes investigation of regulatory barriers to the widespread adoption of renewable and distributed-generation systems in Asia, examination of the prospects for nuclear energy in the region and evaluation of energy options for India and China in a global context.

Research Fellow Benjamin Sovacool has just returned from the land of sunshine, solar energy, and schnitzel. After presenting research at the Tenth Annual World Renewable Energy Congress in Glasgow, Scotland, Benjamin headed over to Germany to learn more about renewable energy and tour some solar panel manufacturing facilities.

Meetings with Enercon, the largest German manufacturer of wind turbines, the German Ministry of Environment (or Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit if you’re German), and the German Solar Industry Association confirmed that using feed-in tariffs—schemes that give renewable power providers guaranteed access to the electricity grid and then pay them a premium for their electricity—is the best way to accelerate the growth of renewable energy technologies.

Researchers at the Zentrum fur Sonnenenergie-und Wasserstoff-Forschung Baden-Wurrtemberg in Stuttgart, Germany, also noted that Singapore could itself rapidly become a world leader in solar panel manufacturing if they decided to take the lead in promoting renewables.

In Frieburg, Germany, a small town that has more installed solar power than the entire United Kingdom, researchers at the Fraunhofer-Institut für Solare Energiesysteme, a research laboratory, and Solar Fabrik-AG, a solar panel manufacturer, explained that cutting edge R&D continues to reduce the cost of solar energy and improve efficiency.

Finally, in Hamburg, Stefan Schurig and Bianca Barth from the World Future Council talked about what Singapore could do if it wanted to model the success Germany, Spain, and Denmark have had in developing renewables: craft a stable, strong, and consistent regulatory policy. [Ben]

Related article: "Renewable energy technologies: Just as reliable as fossil fuel plants", Ben Sovacool

Picture: Solar paneled building in Frieburg, Germany

Can we proclaim Doha dead yet?

This week’s collapse of the trade negotiations in the so-called Doha round (which has been running for over seven years) signalled the most recent instalment in a story that has not had anywhere near as many ups as it has downs. If the Doha round was animal, it would have surely been euthanized years ago.

The failure of the negotiations is to be expected. The problem is that liberalising reform creates winners and losers – something that even the best spin doctors cannot conceal. Subsequently, pressures to liberalise create their very own constituencies of resistance – one of the great contradictions of liberal economic reform.

In 2003, Doha round talks collapsed in Mexico over farming subsidies and issues pertaining to market access. In 2006, negotiations took a dive, once again, over issues of market access. In 2007, the talks fell in a heap over the very same issues, with the EU, the US, India and Brazil unable to reconcile their differences. And this year, the divergence between the US, India and China over agriculture could not be bridged.

Trade liberalisation measures in an increasingly unequal and politically fractured world were always going to be a very difficult undertaking. This is because the costs and benefits attendant to trade liberalisation measures are asymmetrically dispersed; the benefits of comparative advantage are far from appreciated by the worker who used to make a protected product but is now unemployed because their job has moved from one country to another. Nor are they appreciated by the protected farming conglomerate who receives hearty subsidies.

Likewise, in the underdeveloped world the savvy use and abuse of particular trading arrangements by the developed world has made many cynical about the potential for trade opening measures to improve their lot. In the end divergent interests often shape policy outcomes.

So, the question is should the defibrillator be charged and applied to the depressed chest of Doha? While ‘true-believer’ liberal reformers will undoubtedly say ‘yes’ (Pascal Lamy has already stated that the round is still alive), the reality is that the trajectory of the global political economy is largely beyond responding to the desperate, yet technocratic pronouncements of global bureaucrats.

The most likely outcome in the current global environment is the continuation of two processes that liberalisation measures have actually assisted in facilitating: the continued strengthening of protectionist and nationalist responses to the contradictions of globalisation and the further negotiation of select bilateral and other trade deals, where mutual interest is more readily accommodated.

To be sure, both processes have been in motion for some time. While you would think by now that the politics of economics would be more than apparent to neo-liberals, ideology is a powerful thing – so powerful that it even leads some to believe that they can revive the dead.

Let’s accept that the dead can’t be revived. What next? Perhaps out of Doha’s death can come new life for an entirely different beast, an entity underpinned by popular support across national boundaries that seeks to place issues of social justice – that is, socially sustainable development – before those of profit?

Given the assault that individualism has waged on the collective imagination in the last couple of decades this is sure to be a real challenge. However, such challenges are best tackled when the dominant paradigm is under siege, its legitimacy in tatters.

In this regard, nascent potential resides in social forces such as the Fair Trade movement, which has only fairly recently begun to make waves, albeit modest ones. Certainly, there are critics to this movement: the right see it as a subsidy, the left as a sell-out to capitalism. But its success in providing an alternative approach to commerce is surely not to be dismissed. Against the seemingly impenetrable forces of government and big business is an array of small producers who have been enrolled in the market in a way that can better reward the efforts of the marginalized by shortening trade chains and guaranteeing better prices.

Alternatively, solutions stemming from marginalised actors themselves could also generate positive social change. The point is that under globalisation technocratic liberal policy, such as that of the WTO, has benefitted the few at the expense of the many. Indeed, in part as a result of this, such approaches have now reached a political impasse, where they have no broad-based legitimacy in either the developed or the developing world. As such, its potential to be further implemented is virtually non-existent, without the use of brute force.

Subsequently, it’s time for more popularly-supported, trans-national approaches to development to take to the global stage. Doha’s terminal condition is not necessarily a mournful thing but the vacuum that it leaves must be filled by something of substance or else we will descend into the nationalism and protectionism that has plagued the world at previous points in history.

It’s time to put equity into development. [Tess & Toby]

The wrong way to fight AIDS

CAG has recently launched a multidisciplinary global governance project which will look at how state, the private sector and civil society can better organize strategies to address the deficiencies in global governance. One focus is on global health governance which over the past several years has risen rapidly on the global agenda. Thanks to the Gates Foundation and new resources from various donors, substantial funds have become available, particularly for HIV/ AIDS. However, have the funds been used effectively?

Laurie Garrett, a Senior Fellow for Global Health at the Council on Foreign Relations and one of the most respected intellects on global health, points out in an article published in the International Herald Tribune that the fight against AIDS today has been all about “treatment”, rather than finding a long-term cure. She laments: “the slogan of the first 15 years of the pandemic was 'until there is a cure!'. Today it seems the global health leadership of the world is satisfied with, ‘until there is lifelong drug therapy for everybody, and no prevention strategy!'." Laurie warns that “a dangerous sentiment is sweeping over the AIDS establishment, calling for elimination of all funding for HIV vaccine research and prevention programs, shifting those dollars. euros and yen to expanding HIV treatment”. Read Laurie Garrett's article "The wrong way to fight AIDS"

To make things worse, the standard HIV drug treatment given to new patients in poorer countries in Africa is developing alarming levels of resistance ("When the drugs don't work", FT, 1 August, 2008). This warrants a serious concern given the escalating economic burden of HIV treatments and the lack of options in using alternatives. Compounding this problem is that there is only little data available on resistance. The article points out that many donors and HIV drug treatment companies have spent a lot of efforts and funds in accelerating drug-based treatment but not much in monitoring the resistance. Most of them lack the capacity to carry out appropriate resistance studies, the article finds. Clearly, there is an urgent need to build in appropriate governance mechanisms for long-term capacity building in monitoring resistance. Read "When the drugs don't work". [Sung]