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DevelopmentISSues Also in this issue: Generation Text Local Government and Development Volume12/Number2/November 2010 1 ISS is the International Institute of Social Studies of Erasmus University Rotterdam Background photo Financial Crisis Montage by D.F. Shapinsky, October 2008 2
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1
DevISSuesDevelopmentISSues Volume12/Number2/November 2010
Also in this issue:Generation TextLocal Government and Development
Economic Crisis 2 years on
2
From the Editorial Board
ISS is the International Institute of Social Studies of Erasmus University Rotterdam
The Financial Crisis – 2 Years On
It was in the summer of 2008 that the first bank in the US fell, Lehman Brothers. At the time, both the general public and economists thought that it was an entirely American phenomenon. Within a few months, however, the crisis had spread across Europe, with banks falling or being taken over by the state, including devastating bankruptcies of Iceland’s main banks. Yet for most of 2009, the general view was still that the crisis would not hurt the developing world. It was seen as a rich men’s crisis, right at the heart of the financial centres of the world, from New York to London and from Reykjavik to Frankfurt. In her contribution to this special issue, Esther-Mirjam Sent emphasizes the word ‘men’ here, showing that the crisis emerged in a male-dominated financial sector. She argues, on the basis of available research outcomes, that management teams that represent a critical mass of women are better able to cope with risk and lead to better business performance. So, a stronger representation of ‘Lehman’s sisters’ may have prevented the crisis in its current form.
A narrow economic view may hold on to the wishful thinking that the negative effects of a financial crisis in the US would remain limited to the financial sector in the developed world. But those taking a wider economic perspective knew that this was a myth, desperately held on to by those who had no idea how vulnerable financial markets are in today’s financialized and globalized world. Prabirjit Sarkar shows in his contribution that stock markets and other forms of financial market development do not necessarily promote economic growth in developing countries. Rather, the financial sector seems to be a risk for development. While the financial system in the US and Europe almost collapsed, the wider economic perspective appeared to be the more realistic one. Governments in the developed world stepped in to nationalize banks that were considered too big to fail and thereby interfered heavily in the market. While the real economy – consumption, investment, exports, imports, employment – showed alarmingly sharp declines. Hence, it seems not good for the economy to have the financial market continuously spread.
As the crisis moved into its second year, it became clear that it was spreading to the developing world as well. First to its financial sector, with banks being affected through toxic derivatives they had bought from US and through the drying up of foreign capital inflows, which declined by a third in 2009. The effect of the crisis in the developing world was, however, not limited to the financial sector. It also hit the real economy, in particular through a reduction in exports as well as imports. These effects are described clearly in the paper by Peter van Bergeijk. Hence, there is an important lesson to be learnt about the extent of globalization of the world today: our world is even more strongly globalized than most of us thought. Not only through the spread of ICT and coca cola to every village across the globe, but also through the financial interconnectedness of the world’s banks and financial markets, and the increasing role of trade for a country’s development. Although Africa seems to have become more resilient to fluctuations in its growth over the past decade, the continent is still vulnerable to economic downturns elsewhere in the world, as Jorge Arbache argues in his contribution. Africa’s growth benefits are mainly due to exports of resources, which benefit only a few countries on the continent and still depend heavily on imports by the developed world and China.
This crisis has thus shown the vulnerability of the globalized economy, in which not only good things spread quickly, but also bad things can very easily contaminate every country around the world and, worse still, hit the weakest groups hardest, as Richard King points out in his article. He brings together indicative evidence that poor women are hurt particularly, due to their role as providers for household livelihoods and their communities.
Finally, this issue contains two fine papers by ISS participants that are not part of the theme. The first one, by Sergio Ferragut, applies an innovative local development perspective to the development of an open market in the city of The Hague. The other one, by Marie Angelie Resurreccion, focuses on youth mobilization in the Philippines, referred to as ‘generation text’, through mobile phones and internet. Both give hope for a better world to come after the financial crisis. And perhaps even more so for ideas from the developing world – where alternatives for Western white male financial innovations are more likely to come from – perhaps in text messages.
Irene van Staveren
The cover this issue is a collage in which we have tried to illustrate various aspects of the current global economic crisis. The background photograph is a Financial Crisis Montage by D.F. Shapinsky (see acknowledgement below) showing just some of the headlines and news reports resulting from the onset of the crisis. But economic crises, however they are started and whoever is to ‘blame’, affect real people: in their jobs, their homes and their lifestyles. The two superimposed photos show just two examples of this. One shows two Vietnamese women making hats for their local community. The younger woman is helping her mother as this is the only way she can make a living. The other photograph is part of a Brazilian bankers’ trade union poster making the point that ‘The gains of the bankers brings results.’ With thanks to Helen Hintjens, Lee Pegler and Karen Shaw.
Background photo Financial Crisis Montage by D.F. Shapinsky, October 2008
About the cover
Contents
Page 4 / The financial crisis, the import collapse and the
developing countries
PetervanBergeijk
Page 6 / How Have Global Economic Crises Affected Africa’s
Economic Growth?
JorgeArbache
Page 9 / Does the Stock Market Promote Growth?
PrabirjitSarkar
Page 12 / Gender and the Global Economic Crisis
RichardKing
Page 15 / The crisis as an opportunity for female leadership
Esther-MirjamSent
Page 18 / The Local Government as a Central and Leading
Actor of Local Development: The case of the
Herman Costerstraat Market in The Hague
SergioFerragut
Page 21 / Youth Power 2.0: Harnessing technology for youth
mobilization
MarieAngelieResurrecion
TheviewsexpressedinDevISSuesarethoseoftheoriginalauthorsanddonotnecessarilyreflectthoseoftheInstitute.
Theonlineversionsofallarticleswithfullbibliographycanbefoundatwww.iss.nl/devissues
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The financial crisis, the import collapse and the developing countriesPeter van Bergeijk
DespitegreenshootsintheOECDandstronggrowthratesinChinaandIndiatheworldeconomyisnotoutofthewoodsyet.In2007themostseriousglobaleconomiccrisissincethe1930sstartedandmanydevelopingandemergingeconomies(DEEs),thatsincethemid1990shadopeneduptotheworldeconomy,arenowexperiencingthedownsideofstrategiesthat-forgoodreasons-reliedheavilyoninter-nationaltradeandforeigndirectinvest-menttoachievenationaldevelopment.
What Was expected
Whenthefinancialcrisisburstoutin2007themajorityofeconomistswasnotexpectingtheDEEstobehithard.Afirst,often-mentioned,reasonwasthatdevelopingcountrieshadnotengagedinthekindoffinancialwhiz-kiddingthathadcreatedtheenormousbubbleintheOECD.ThusitwasassumedbymanyanalyststhattheDEEswouldnotsufferafall-outfromthebankingcrisiswhichafterallwasaproblemoftheOECDcountries.Asecondreasonwasthemythofdecoupling:thenonOECD,inparticulartheBRICcountries(Brazil,Russia,IndiaandChina)wereassumedtohavereachedsustainablemomentumintheirdevelopmenttrajectory.Itwasexpectedthattheexperienceofthedotcomcrisis(whentheBRICswereabletoshowcontinuousgrowthindepen-dentlyoftheweakeningOECDbusinesscycle)wouldberepeated.
Bothideasweredangerousandwrong(andactuallynotnewatallasthebeliefthattheperipherycouldescapethefinancialcollapseinthecentrewasalsowidelysharedintheearly1930swhenitprovedtobeerroneous).ItistruethatsomeoftheBRICscontinuedtogrowconsiderablybutthesustainabilityofgrowthin2010andbeyondisnotself-evidentbecausethemaindriverof
thoseexpansions(monetaryandfiscalstimulus)cannotbeexpectedtolastforever.Moreimportantly,smallerDEEsprobablydidnotexperiencethismo-mentumandmayhavebeenhithard.
What is happening
Wedonotyetknowwhathappenedinmanycountries,simplybecauserealtimedataforasufficientlevelofanalysisarenotavailable.ThismeansthatwehavetodosomeeconomicdetectiveworkandusethemethodofindirectobservationtoinferifandhowthecrisishitstheDEEs.Wecan,forexample,takealookatmoreaggregatedatainordertogleantheimpactofthecrisisontheDEEs.Intoday’sworldmanychannelsexistthroughwhicheconomiesarelinked.Internationalflowssuchasremittances,banklending,migrationanddevelopmentaidareinfluencedbythedownturninOECDeconomies.AnexampleistheamountofOfficialDevelopmentAid(ODA).LastyeartheOECD’s Development Co-operation Report 2009estimatedthattheunder-lyingtrendgrowthrateofthevolumeofaidneededtoincreaseto11percentperyearinordertoachievetheMillenniumgoals.Theresultsin2009were,however,disappointingastheamountofaidincreasedby0.7percentonly.Importantlythisisnottheresultofincreasedspendingbutofexchangeratemovementsthatcontributemorethan4percentagepoints.ActuallytotalODAincurrentpricesandatcurrentexchangeratesdecreasedfromUS$122billionin2008to119billionin2008(actually12OECDcountriesreducedODA).
Oftenthemeasurementoftheseflowsisimpreciseanddatabecomeavailablewithconsiderabledelay.BetterdataexistforForeignDirectInvestment(FDI)andespeciallyforinternationaltrade
andthereforewewilltakeacloserlookattheseinternationalflows.Aftersixyearsofuninterruptedgrowth,FDIflowstodevelopingandtransitioneconomies,accordingtoUNCTAD’srecentGlobal investment trends monitor,declinedin2009by35percentand39percent,re-spectively.Exportvolumesalsoshowedsubstantialdeclines.AccordingtotheWorld trade monitor(compiledbyCPBNetherlandsBureauofEconomicPolicyAnalysis)DEEsrealexportsatthestartof2010weresome12percentbelowtheirprevioushigh(thepeakofthetradecycleisin2008).Experiencesattheregionallevelshowedalotofvari-ation.Asiadefinitelydidbetter,butex-portsinLatinAmericahaddecreasedby19percentandthevolumeofexportsintheMiddleEastandAfricawaseven25percentbelowthepreviouspeaklevel(thetradecycleforthelatterregionap-pearstofollowadoubledippattern).
Somearguedthatthesedevelopmentscouldbeasymptomofaprocessofdeglobalization.Othersblamedaco-llapseoftradefinance(whichisparticu-larlyrelevantforDEEs)andanincreaseinprotectionismforthedeclines.Itis,however,importanttonotethatthetradeandinvestmentcontractionstookplaceinapolicycontextthatbyandlargeappearedtohavebeenwithstand-ingthetemptationsofprotectionismand,moreover,theG20madeadditionaltradefinancingofUS$250toUS$400billionavailable,includinginstrumentstomitigaterisksandliquiditysupport.Thecollapseofinternationalexchange,inotherwords,couldhavebeenmuchlargerifinappropriatepolicyresponseshadoccurred.
imports provide a good indication of crisis impact
Informativeassuchobservationsmaybe,theydonotyetprovideanindi-
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cationoftheactualimpactofthecrisisinindividualcountries.Ifwewanttoob-servetheimpactofthecrisisonaspe-cificcountry,oneofthebestmethodsistoobservethedevelopmentofthevolumeofimports.Thisissobecausetradeflows,unlikemorecomprehensiveandcomplexphenomenasuchas(na-tional)incomeareobservedreasonablyaccuratelyandpublishedwithoutmuchdelay.Exportsandimportsdonot,how-ever,providethesamesortofinforma-tionabouttheconditionoftheeconomyofDEEs.Actuallyexportsoftendonotprovideameaningfulpictureoftheimpactofacrisis.Adeclineindomes-ticdemandmay,forexample,inducefirmstofindnewmarketsabroadand,ifpolicymakersrespondwithdevaluation,onewouldexpectexportstoincreaseintheaftermathofafinancialcrisis.Thisisallthemoretrueaspolicymakerstypicallyoptforanexportledgrowthstrategytogetoutofacrisissituation.Resourcesarethusoftenre-allocatedtowardstheexportsectorinordertoen-surethathardcurrencycanbeearned,forexample,inordertobeabletomeetinternationaldebtobligations.Exportsthusactuallymaytendtogrowduringandafterfinancialcrises.Fromapoliti-caleconomyperspectivetheperceptionmayberelevantthatimportsentailanoutflowofhardcurrency.Thuspolicymakersmightnotbeinclinedtocometotheaidofimportingfirms(unlesstheimportsarecrucialfortheexport-ingindustry).Paymentriskisespeciallyrelevantfortheimporterwhowillexpe-rienceariseintransactioncosts,forex-ample,becauselettersofcreditorevenfullpaymentinadvanceisrequired.Thereductionineffectivedemandthatisaconsequenceofafinancialcrisisdirectlytranslatesintoareducedimportvolume.Finally,inascenariothatinvolvesade-preciationofthecurrency,thepriceofimportswillriseandthusexertanega-tiveinfluenceonthevolumeofimports.Allinalltheimpactofafinancialcrisisshouldbeexpectedtobemostvisibleandunambiguousinthedevelopmentofthevolumeofimports.
Where does the crisis hit?
Figure1analysesthedeclineinthevolumeofimportsinacross-countrysettingforagroupof45countriesovertheyears2007to2009.ThisgroupofcountriescoverstheOECDandthema-jorDEEs(Chinaisnotincludedbecausethedataareinsufficientlycomparable).
TheFigurecomparesthepeakandthetroughoftheimportcycleoverthispe-riod.Thefigurefirstofallillustratesthelargevariationincountryexperiences.TheNetherlandsregistersoneofthesmallestimportcontractions(ofabout-11percent);thelargestcontractionsofsome-45percentoccurinBelarusandVenezuela.Importantly,thefigurerelatesthisdeclinetothelevelofdevel-opment(whichisapproximatedbytheincomeperheadinUSdollars).Thedot-tedregressionlineindicatesthatlowerincomeperheadisassociatedwithstrongercontractionofthevolumeofimports.TheobservationthattheDEEs(haveto)reducetheirimportexpendi-turestoamuchlargerextentsuggeststhattheyarehitharderbythecrisisthantherichercountries.OfcoursethisisnotadirectobservationbutthefindingthatmanyDEEsareadverselyhitbythecrisis
iscorroboratedbyothermoreadvancedtechniquessuchastheWorldBank’sappliedmicrosimulationmodelswhichalsoshowthatthesemacroeconomiceffectstrickledowntothe(new)poorandespeciallyamiddleincomegroupof‘crisisvulnerable’withsubstantialpovertyanddistributionaleffectsandpotentiallyimportanteffectsonlongtermgrowth.ItisalsoimportanttonotethatimportsintheNationalAccountsaresubtractedinordertoarriveatGrossDomesticProduct.Acontrac-tionofimportswillthusparadoxicallyinfluenceGDPupwardly.ThismaymaketheNationalAccountfigureslookmore
positivelythantheactual‘underlying’developmentofconsumption,invest-mentandnetgovernmentexpenditure.TheupshotisthatarecoveryofGDPmaybelesssustainablethanexpected.
Allinall,theimportantconclusionofthisarticleisthatthedevelopingandemergingeconomiesparticularlyhaveexperiencedverysubstantialdeclinesinimportvolumes.Theimplicationisthatthesecountriesmusthavebeenhitrela-tivelyhard.Importantly,thecontractionofimportswilllimittheirprospectsoverthemediumterm,becausedevelop-mentrequiresimportsofcapitalgoods,rawmaterials,intermediategoodsandessentialconsumergoods.Thecontrac-tionofimportsmaythusactasafuturedrainondevelopmentandtheinfluenceofthecrisiswillgobeyondthedirecteconomicimpact,forexamplebecause
healthcarehastobecutdown.TheWorldBank/IMFGlobalMonitoringReport2010TheMDGsaftertheCrisisanalysestheimpactofdeceleratinggrowthonhumandevelopmentindica-torsfindingthatlifeexpectancyatbirthonaveragedeclinesby10percentasinfantandchildmortalityincreaseby50to75percentrespectively.AgainstthisbackgroundthedevelopmentofODAisevenmoredisappointing.
PeterA.G.vanBergeijkisProfessorofInternational
EconomicsatISSanddeputydirectorofCERES,
theDutchResearchSchoolforResourceStudiesfor
Development.
Source:P.A.G.vanBergeijk,OntheBrinkofDeglobalizationEdwardElgar, Cheltenham2010,Appendix7.1
Figure 1 Import reduction (volume change in per cent 2007-2009) and level of development (GDP per capita 2008)
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Howhastheglobaleconomiccrisisaf-fectedeconomicgrowthinsub-SaharanAfrica(Africa)?Thisisaparticularlyimportantquestionbecauseofthecon-tributiongrowthcanmaketoachievingtheMillenniumDevelopmentGoalsinthecontinent.Unlikepreviousinterna-tionalcrises,IwillarguethatthistimeAfricahasdonequitewelleconomi-cally,comparedwithotherregions,andhasshownsomeeconomicresilience.Africancountries’economicgrowthhasbeenrisinginparallelwiththerestoftheworldsincetheearly2000s;itstopperformersaredoingwellcomparedtofast-growingcountriesinotherregions.Furthermore,theregionquicklyre-sumedgrowthafterlastyear’seconomicshock:overall,Africaneconomiesareexpectedtogrow5percentthisyearand5.9percentin2011,abovetheworldaverage.
ButdoesthismeanthatAfricanecono-mies,asagroup,havefinallyturnedthecorneronthepathtosustainedgrowth?Growthoverthepastthreedecadeshasbeenlowandevennegative.Goodtimeswereoftenfollowedbyverybadtimesandeconomicgrowthwasrarelysustained(withsomenotableexcep-tionslikeBotswanaandMauritius).Inlightofthisvolatilebackground,inthisshortpieceIseewhethergrowthhasreallyacceleratedinrecentyears.Ialsoaskabouttheunderpinningsofhighergrowthrates.And,finally,Iaskwhetherthemorerecenteconomicgrowthissustainableornot,inrelationtotheeconomiccrisis.Toconductthisexercise,IwillemploythemethodologyofArbacheandPage(2007)toidentifygrowthaccelerationanddeceleration.
ThereafterIuseGDPpercapitagrowthdatatakenfromtheWorldDevelopmentIndicatorsfortheyears1980to2008.
Overthepastthirtyyears,averageannu-algrowthrateacrosstheAfricanconti-nenthasbeenjust1percent.Thispoorperformancecanbeattributedmainlytoextremelylowandevennegativegrowthinthe1980sand1990s.Thiserawasmarkedbysevereeconomicfluctua-tions,negativegrowthandconflicts,aswellasglobalandinstitutionaldisrup-tion.Growthacceleration-aperiodcharacterizedbygrowthratesabovethetrendforatleastfiveyearsinarow(seeArbacheandPage2007formoredetails)-onlyoccurredin28percentoftheyearsbetween1980and1999.Thisfigurehasincreasedto57percentforthepost-2000period.ThismeansthatthechancesforanAfricancountrytoexperienceagrowthaccelerationhaveimproved,morethandoubling.Similarly,theprobabilityofagrowthdeceleration-aperiodcharacterizedbygrowthratesbelowthetrendforatleastfiveyears-reduceddramaticallyintheregionto10percentinthe2000s,from30percentin1980-1999.Table1showsthis.
Theregion’sgrowthhasnotbeenuni-formacrosscountries,withresource-richcountriesgrowingsignificantlyfasterinrecentyearsthantheaverage(Table1).
Resourceandmineral-wealthycountrieshaveprosperedeconomically,growingby5percentperannumonaveragesince2000,whichistwicetheAfricanre-gion’smeangrowthrateforthatperiod.Theresource-richgroupofcountriesalsoexperiencedmanymoreperiodsofgrowthacceleration(70percentcom-paredto26percentbefore2000).Bycomparison,non-resourcerichcountrieshavegrownonaverage1.5percentperannumsince2000andexperiencedgrowthaccelerations51percentofthetime,upfrom30percentbefore2000.Thesestatisticssuggestthattheregion’srecentmorerapidgrowthreliesstronglyonthegrowthperformanceinresource-richcountries.
What underpins recent groWth?
MuchoftheimprovementineconomicperformanceinAfricaneconomiessincetheyear2000canbeseenasbe-ingcausedbyasubstantialincreaseingrowthaccelerationscombinedwithasubstantialreductioninthefrequencyandseverityofgrowthdecelerations(Table1).AccordingtoArbacheandPage(2007),amongthemainfactorsexplaininggrowthvolatilityinAfricaneconomies,certainlyduringmuchofthepost-independenceera,areconflicts,naturaldisasters,commoditypriceshocks,termsoftradeshocksandpoorpolicies.Duringtheperiodsince2000,manyofthesefactorshavebecomemorefavourable:conflictshavegra-duallydeclined;therehavebeenfewernaturaldisasters;commoditypriceshavebeengenerallyquitehighandhighpricesfairlysustained.Itcanalsobearguedthatmacromanagementhasim-proved.Overall,Africancountrieshavebenefitedagreatdealfromfavourableeconomic,politicalandnaturalcon-ditions.Uptothepresent,theglobalcrisishasnotsignificantlychangedthepatternofcommodityprices.
Towhatextentisthisturn-aroundas-sociatedwithchangesinthe‘growthdeterminants’thatarelinkedtolong-rungrowth?Iexaminegrowthdeterminants,suchasinvestment,savingsandtrade,beforeandafterthe2000s,tryingtoidentifywhethertheyhaveimproved.Althoughsuchanapproachdoesnotallowustoidentifycausalrelationshipsbetweenchangesingrowthdetermi-nantsandgrowthepisodes,fromthepointofviewofassessingsustainability,
How Have Global Economic Crises Affected Africa’s Economic Growth?Jorge Arbache
…the region’s recent…rapid
growth relies ..on..growth
in resource-rich countries.
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thisisnotnecessarilyalimitation:wedonotneedtoknowwhether,say,anincreaseintheinvestmentrateledtomorefrequentgrowthaccelerationsormorefrequentaccelerationsofgrowthpromptedariseininvestment.Regardlessofthedirectionofcausality,ifthereisevidencethatthestructuralcharacteristicsofAfrica’seconomiesstrengthenedduringtherecentperiodofmorefrequentgrowthacceleration,itincreasesourexpectationthattherecentgrowthaccelerationmaybesustained.
Table2showsthemeanvalueofgrowthdeterminantsduringgrowthaccelera-tionsbeforeandafter2000.Thefiguresindicatethatmostgrowthdeterminantshavenotchangedsignificantlysince2000:theonlyinvestmentvariablethatincreasedwasforeigndirectinvest-ment.Therewasareduction,notanimprovement,ininvestmentvariablesinresource-richeconomiesduringgrowthaccelerationsbeforeandafter1999,whereasthevaluesofthesevariablesremainedbasicallythesameinnon-resource-richeconomies.Inflationdropped,mostlyduetonon-resourcerichcountries,suggestinganimprove-mentinmacroeconomicpolicies.Allothergrowthdeterminantsexaminedremainedmostlyunchanged.
Theempiricalliteratureongrowthalsosuggeststhatpoliticalandinstitutionalreformscanleadtoacceleratedgrowth,evenincircumstanceswhereunderlyingeconomicvariablesremainlargelyun-
changed.Table2showsthatmeasuresofAfrica’sgovernanceremainedmostlyunchangedbetweenthetwoperiodsforbothresource-richandnon-resourcerichcountries:noimprovementsinthemeasuresofgovernance.
hoW durable is groWth in the face of crises?
WhatdoesthisanalysissuggestaboutthedurabilityofAfrica’srecentgrowthperformance?Althoughanumberofotherstudieshavefoundthatgrowthcanoccurwithoutcorrespondingin-creasesininvestmentrates,thelackofimprovementinaggregateandprivateinvestmentisworrisome.Theabsenceofanysignificantincreaseintheinvest-mentrate,asawhole,duringgrowthaccelerationssuggeststhatmuchofthegrowthsince2000consistsmostlyofincreaseduseofexistingproductioncapacityandofincreasedproductivity.Whilesuchmovementiswelcomeandmarksareversalfrompastlowyieldsoninvestment,itdoesraiseconcernsregardingthesustainabilityofgrowth.Africa’saggregateandprivateinvest-mentrateslagbehindotherregionsand,evenwithanimprovementinproductivity,thelackofimprovement
ininvestmentposesproblemsfromthepointofviewofthesustainabilityoffur-thergrowth.Thecurrentfinancialcrisisisnotlikelytobehelpfulinthisrespect.
Althoughtradehasexpandedoverallsincethemid1990s,itdoesnotappeartobeleadinggrowthinthe2000sasitisgrowingonlyslowly.ComparedtoLatinAmerica,theMiddleEast,NorthAfricaandSouthAsia,AfricahasalwayshadahighshareoftradeinitsnationalincomeandahighratioofexportstoGDP.However,Africanexportsaregrowingrelativelyslowlyandnon-tradi-tionalexportsareaverytinyshareoftheregion’soutput.MoreworrisomeisthatAfrica’sexportsremainheavilyconcen-tratedinafewtraditionalcommodities.Again,thecurrentcrisis,withitsnega-tiveeffectonworldtrade,isnotlikelytobehelpfulatall.
Theevidenceonpoliciesandinstitu-tionsalsoraisesconcernsforgrowthsustainability,asthesehavenotchanged,suggestingthateconomicgrowthhasnotbeenaccompaniedbyimprovedgovernance.
TherearethusalmostnosignificantchangesingrowthdeterminantsinAfrica.Theexceptionisforthoseofinvestmentintheresource-richcoun-tries,butthesewentdown,notup,andinflation,whichimproved.Atmost,thesechangescontributetoreducingthefrequencyandseverityofgrowthde-clines(ArbacheandPage,2010).
Table 1: GDP per capita growth rate and frequency of growth acceleration and deceleration – Africa
1980-2008 1980-1999 2000-2008
GDPgrowth(%) 1.01 0.25 2.55
GDPgrowth(%)-resourcerichcountries 1.93 1.97 5.01
GDPgrowth(%)-non-resourcerichcountries 0.63 0.40 1.53
Frequencyofgrowthacceleration(%)-allcountries 39.0 28.4 57.1
Frequencyofgrowthdeceleration(%)-allcountries 22.4 29.6 10.3
Frequencyofgrowthacceleration(%)-resourcerichcountries
42.4 25.8 70.4
Frequencyofgrowthacceleration(%)-non-resourcerichcountries
37.7 29.5 51.5
GrowthaccelerationanddecelerationdefinitionsaccordingwithArbacheandPage(2007).
Thedefinitionofresource-richcountriesisfromtheRegionalEconomicOutlook2010,IMF.
Calculationsbasedon1,189country-yearobservations.
…political and institutional
reforms can lead to
accelerated growth.
8
conclusions
ThecurrentglobalfinancialcrisishasnotchangedAfrica’srecentgrowthpat-tern,whichhasremainedstrongsincethebeginningofthedecade.Empiricalevidencesuggeststhattheimprove-mentineconomicperformanceturnsouttobeduelargelytotwofactors:asubstantialreductioninthefrequencyandseverityofgrowthdeclinesinalleconomiesandanincreaseingrowthaccelerations,especiallyinmineral-richeconomies.Thereissomeevidence
ofmodestimprovementsingrowthdeterminants,andanindicationthatthegrowthsurgewaspropelledmainlybytherapidgrowthindemandfornatu-ralresourcesandbyimproveduseofexistingproductioncapacityandfactorsofproduction.Theconcentrationofgrowthaccelerationintheresource-richeconomiesraisesthepossibilitythatgrowthisvulnerabletodeclinesincommoditypricesandtothenaturalresourcecurse.Africancountrieshavetotakeadvantageofthegoodtimesto
acceleratesocialprogress,todiversifytheireconomies,and,aboveall,tostrengthentheireconomicfundamen-tals,asthesearethepillarsofsustainedgrowthandarelessvulnerabletocrises.
JorgeArbacheissenioreconomicadvisoratthe
BrazilianDevelopmentBank(BNDES).Heisafor-
merdirectoroftheAfricaDevelopmentIndicators,
WorldBank(2005-2009).Email:jarbache@gmail.
com.
Table 2: Differences of means of economic fundamentals and institutional variables during growth acceleration - Africa
AllcountriesResource-rich
countries Non-resourcerich
countries
Variable 1980-1999 2000-2008 1980-1999 2000-2008 1980-1999 2000-2008
Investment(%GDP) 24.7 22.6 30.6 22.8 22.9 22.1
Privatesectorinvestment(%GDP) 14.6 14.4 21.8 13.9 12.4 14.6
Foreigndirectinvestmentnetflow(%GDP) 1.73 4.35 2.54 6.73 1.41 3.45
Savings(%GDP) 10.2 11.6 25.8 23.0 5.32 5.65
Trade(%GDP) 73.9 75.8 84.9 85.1 69.9 70.3
CPI(%) 16.2 10.4 24.0 15.2 14.2 7.8
Politicalstability(-2.5—2.5) -0.44 -0.59 -0.92 -1.1 -0.30 -0.29
Voiceandaccountability(-2.5—2.5) -0.43 -0.49 -1.0 -0.89 -0.25 -0.27
Regulatoryquality(-2.5—2.5) -0.47 -0.56 -0.68 -0.93 -0.41 -0.36
Ruleoflaw(-2.5—2.5) -0.65 -0.66 -0.97 -1.08 -0.56 -0.42
Governmenteffectiveness(-2.5—2.5) -0.60 -0.63 -0.86 -1.02 -0.52 -0.42
InstitutionalvariablesarefromKaufmann,D.,Kraay,A.andMastruzzi,M.(2009),Governance
MattersVIII:AggregateandIndividualGovernanceIndicators,1996-2008.WorldBankPolicyResearchWorkingPaperNo.4978.
Ratingscalerangesfrom-2.5(weakperformance)to2.5(veryhighperformance).Calculationsbasedon1,189country-yearobservations.
Working Papers
ISS Working Papers can be found on the ISS website at www.iss.nl/Library/Publications/Working-Papers. They can also be ordered in hard copy from The Bookshop, PO Box 29776, 2502 LT The Hague, The Netherlands
506 Interactions Between States And Markets In A Global Context Of Change: Contribution For Building A Research Agenda On Stakeholders’ Social Responsibility / Patricia Almeida Ashley
505 Climate Change And The Language Of Human Security / Des Gasper
504 Socio-Economic Determinants Of Road Traffic Accident Fatalities In Low And Middle Income Countries / Michael Grimm And Carole Treibich
503 Cultivating Humanity? Education And Capabilities For A Global ‘Great Transition’ / Des Gasper And Susan George
502 To What Extent Can Disparities In Compositional And Structural Factors Account For The Gender Gap In Unemployment In The Urban Areas Of Kenya? / Wambui R. Wamuthenya
501 Does Inequality In Health Impede Growth? / Michael Grimm
500 Economic Crisis And Women’s Employment Rate In A Sub-Saharan African Country: Explaining The Rise In Women’s Employment Rate In The Urban Areas Of Kenya / Rose Wambui Wamuthenya
499 Short And Long Run Macroeconomic Effects Of Trade Policy In The Presence Of Debt Servicing / Syed Mansoob Murshed
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Figure 1: Cross-Country Relationship between Stock Market Turnover and Growth Rate for 34 Less Developed Countries
(2001-2006 Averages)
Thispaperquestionstheconventionalwisdomthatstockmarketsencouragegrowth.Theresearchisbasedonapaneldataanalysisof34lessdevelopedcountriesovertheperiod2001-2006.
the present study
Inthestockmarket,saversprovideinvestiblefundstofirms.Inturn,andifallworkswell,saverscanrecouptheirinvestmentatanytimeoftheirchoice.Ahighlybuoyantstockmarketprovides
themarketmechanismforpromotinggrowthandinvestmentasfirmscanfloatnewsharestoraisecapitalforinvest-ment.
Data Source and MethodologyTheactivitiesofthestockmarketaremeasuredbystocktradinginrelationtoGDP.Intheprocess,themarketvalueofthefirmsgenerallyrises,whichiscapturedbyrealmarketcapitalization(whichisthemarketvalueoftotalsharesorstocksofallthedomesticcompanieslistedinthestockmarketsofacountrydividedbythegeneralpriceindex)inrelationtoGDP.Theturnoverratio(TURNOVER)istheratiobetweenthevalueofstockstradedandrealmarketcapitalization.Thisratioisoftenusedtogetaroughideaofthebuoyancyinthestockmarket.Anothervariabletomea-surethesizeofthestockmarketisthenumberofdomesticfirmslistedonthenationalstockmarket.Forcross-countrycomparisonitisdeflatedbythesizeofpopulation(LISTPOP).
Forthisstudy,weobtainedthere-levantWorldBankdataforGDPgrowth(GGDP),TURNOVERandLISTPOPfor34lessdevelopedcountries(LDCs)
Does the Stock Market Promote Growth?Prabirjit Sarkar
Dostockmarketswork?Isthereanylinkbetweenstockmarketdevelopmentandgrowth?So-called‘mainstream’journalsof
economicsarefullofarticlesprovidinganaffirmativeanswertothesequestions.Moreover,thisliteraturearguesthatfinancial
marketsingeneralandstockmarketsinparticularworkbetterinanAnglo-Saxonlegalenvironmentasthisprovidesbetter
investorandcreditorprotection.Itisfurtherarguedthatthelessdevelopedcountriesinheritingthislegalenvironmentfollowing
colonizationexperiencehigherfinancialdevelopment:financialinstitutionsandstockmarketsflourishandthegeneralpublic
participatesmoreinfinancingcompanyinvestmentprojects.Asaresult,oneaspectofthepresentregimeofglobalizationhasbeen
atendencytowardslegalglobalization.Dancingtothetuneofthistrendoflegalglobalization,shareholderandcreditorprotection
lawunderwentsubstantialchangesinmanycountries.
10
fortheperiod2001-2006.Twoscatterdiagramsdepictingthecross-countryaveragerelationshipbetweeneachstockmarketdevelopmentindicatorandrealGDPgrowthrate(allaveragedovertheperiod)provideasnapshotviewofwhatwefound.Theyshownoclearrela-tionshipbetweenstockmarketdevelop-mentandrealgrowthrate.
Foramorerigorousinvestigation,weundertookaregressionanalysisoftherelationshipbetweeneachofthestockmarketdevelopmentindicatorsandthegrowthrate.Thiswasbasedonafullpaneldatasetof204observations(ratherthanthe34observationsusedinthescatterdiagrams)andincludesaproxyvariableforthestageofdevelop-ment,namelytheinitial(2001)GDPpercapita.Inaddition,weincorporatedanindexoffinancialdevelopment,domes-ticcredit-GDPratio.
Ourestimatesshowthattherealgrowthratehasneitherasignificantrelationshipwithstockmarketturnoverrationorwithstockmarketlisting.Similarlythereisnosignificantrelationshipbetweengrowthanddomesticcreditexpansion.
ToincorporatetheAnglo-Saxonlegalorigineffect(whereallegedlyfinancialmarketsfunctionbetter),wedistinguishthesecountriesfromtherestwiththehelpofadummyvariable.Thisassumesthevalueofonefortheninecountries(Ghana,HongKong,India,Malaysia,Nigeria,Pakistan,Singapore,SouthAfricaandThailand)withanAnglo-Saxonlegalheritageandzeroforallothercountries.Theresultcontradictsthemainstreamliterature.Itisnegativeandhighlysignificant,indicatingalowergrowthrateinthecountrieswithAnglo-Saxonlegalheritage.ThismaybepartlybecauseofhighergrowthratesinChinaandotherex-socialistcountrieshavingnoAnglo-Saxonlegalheritage.
Theresultsthereforeconfirmtheinsightsfromthetwodiagrams:wefindnodirectandpositiverelationshipbetweenfinancialandstockmarketdevelopmentandrealgrowthrate.
observations
JohnMaynardKeynescomparedstockmarketswithcasinosanddiscountedtheimportanceofthestockmarketforcapitalaccumulationandgrowth.Nevertheless,inthepresenteraof
financialliberalizationundertheaegisofthethreepillarsoftheBrettonWoodssystem,stockmarketdevelopmenthasbeenanimportantpartofbothinternalandexternalfinancialliberalizationinlessdevelopedcountries.
Yet,ourstudyfindsnorelationshipbetweenstockmarketdevelopmentandrealgrowthrate.Furthermore,wefindnoevidenceofarelationshipbetweengrowthrateandfinancialdevelopmentasmeasuredbydomesticcredittoGDPratio.Apossibleexplanationforthisisthatinmostcasessharesareboughtonlytosellatalaterdatetoappropri-atecapitalgains.Buyingandsellingonthestockmarketisoftengovernedbyspeculationand/orincorneringthemarkettomakeaquickprofit.Indeed,thesearethedominantactivitiesinthesharemarketinfluencingshareprices,stockmarketcapitalizationandsoonandareunrelatedtolong-termcapital
formationandgrowth.ThislackofarelationshipbetweengrowthandstockmarketdevelopmentwasalsonotedinanearlierstudyinthecontextofIndia(IndiaMacroeconomicAnnual2008).Similarly,a1993WorldBankstudyshowedthatstockmarketsonlyplayedaminorroleinthepost-warindustrializa-tionofEastAsia.RobertWade(1990),inhiswell-knownbookGoverningtheMarket,discussedindetailtheroleofthestateintheeconomicdevelopmentofEastAsia,arolewhichothershavealsoarguedisfarmoreimportantthantheroleofstockmarkets.TheEastAsiancrisisof1997andtheconsequentretar-dationoftheirgrowthowedmuchtotheirfinancialopennessandtherelatedspeculativeactivitiesthroughtheirstockmarkets.Thecrisisofthepresent-dayworldeconomy,ontheotherhand,wastriggeredbyso-calledfinancialinnova-tions(creditexpansionthroughsecuriti-zation)bythebanks–anover-expansionofcredit.
TosumupinthewordsofNobelPrizewinningeconomistRobertLucas:economists‘badlyover-stress’theroleoffinancialfactorsineconomicgrowth.
PrabirjitSarkarisProfessorofEconomicsat
JadavpurUniversity,India.Hecanbecontactedat
John Maynard Keynes
compared stock markets
with casinos
Figure 2:Cross-Country Relationship between Stock Market Listing of Firms and Growth Rate for 34 Less Developed Countries
(2001-2006 Averages)
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MA Research Papers published onlineIn 2008, ISS started publishing MA Research Papers online. Due to the success of this, we have decided we’d like to publish as many Research Papers written before 2008 as well. If you’d like your Research Paper to be available online, let us know by typing the following link into your browser https://extensionform.dabbledb.com/page/mapapersonline/ZIVXpafj
ISS in The HagueISS is one of the leading global academic centres for Development Studies. It is therefore appropriate that ISS is housed in The Hague: the international City of Peace and Justice.
Within the city, ISS is strategically positioned and has undertaken initiatives and research that support the position of The Hague as an international metropolis of peace, justice and security. ISS has close links, teaching programmes and capacity building projects with many of the international organizations, ministries, embassies and NGOs in and around The Hague.
One of these is the 15th International Metropolis Conference which will took place in October 2010. This prestigious international event dealt with questions of migration, integration and citizenship. ISS was involved in developing the academic content of the event and hosted two of the workshops:
Citizenships Initiatives in Social Empowerment - the case of Laak Noord; coordinated by EFSQ
Realising human rights: towards cities of safety and sanctuary, coordinated by Helen Hintjens and Rachel Kurian
58th Dies NatalisThis years’ Dies Natalis took place on 14 October 2010. Apart from celebrating the ISS’ ‘birth date’, this years’ event also included the Inaugural Lecture of new ISS Rector Professor Leo de Haan. The title of his lecture was Development Studies in Perspective: Sharing the Future at
Opening MA programme 2010-2011The 2010/11 MA programme opened on 9 September. A total of 180 students have enrolled in the MA programme, representing 55 countries. The average age is 31 and 57 per cent are women. India has the highest number of participants this year with 18 students.
ISS and CDS sign Memorandum of UnderstandingThe Centre for Development Studies (Trivandrum, Kerala) and ISS recently signed a new memorandum of understanding (MoU) to consolidate and deepen 30 years of collaborative research and capacity building. It covered population issues under the umbrella of UNFPA global training programme on Population and Development in the 1980s and 1990s and
more recently on the joint diploma in Universalizing Socio-economic Security for the Poor (USS). The main aim of the MoU is to contribute towards knowledge, skills and tools for effective policy analysis of key development issues and institutional capacity building especially in relation to the dimensions of human poverty alleviation through locally and globally sustainable development processes. For further details please get in touch with Dr Mahmood Messkoub [email protected]
Alumni meetings in 2010Alumni meeting in Tegucigalpa, Honduras in April 2010.
Six alumni meetings where held around the world this year. From Ethiopia to Germany and from Honduras to Japan, these events brought together ISS staff and former students in an informal setting where news about ISS was exchanged for an update on what ISS alumni have achieved
since graduation. More meetings are planned for next year: if you’d like to get involved in organizing a meeting in your area please contact the alumni office at [email protected]
Martin Blok wins Dutchversity prizeMartin received his award at the Dutchversity event in Amsterdam in May. ISS Welfare Officer, Martin Blok won the Dutchversity Award which is presented to people who make a positive contribution to diversity. In Martin’s case it was presented for his work at ISS with the Worldschool and other projects involving ISS students, but also for his work outside ISS such as the sports and music projects he organizes for children from different backgrounds in his home city of Rotterdam.
ISS at a glance 2009What did ISS do in 2009? This question is answered in the ISS annual report ‘ISS at a glance 2009’ It gives a concise overview of ISS’ main activities in 2009 including details of Doctorate defences, ISS teaching and public debates. ISS at a glance 2009 is available from the ISS website.
ISS Tweets
ISS now also tweets! Follow us on http://twitter.com/issnl
ISS News
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Thereisnowlittlequestionthatthecrisishasaffectedmanywomenandmenlivinginpoverty.Shockshavebeentransmitted,impactshavebeenfeltandresponseshavebeenborneacrossallrealmsofeconomicactivity,fromthefinancialeconomytotheformalandinformalproductiveeconomies,throughtotheunpaidandpaidreproductive(orcaring)economywherethelabourforceisnurturedandreproduced,primarilybywomen.Towhatextentarethesevari-oustremorsgenderedandhowaretheydestabilizingthelivesofwomenlivinginpoverty?
Thecrisishasbeengenderedintworespects.
numbers
First,thenumbers ofwomenandmenaffectedbythecrisishasvariedwithinandacross,eacheconomicsphere.InEastAsia,womenfactoryworkershaveexperiencedsomeofthemostdramaticeffectsofthecrisis,whereasinZambia’scopperbelt,predominantlymalemin-ershavebeenlosingtheirlivelihoods.Unfortunatelyourabilitytoenumeratetheseeffectshasbeenlimited.Therehasbeenbothapaucityoftimelysex-disaggregateddataonthepovertyandemploymentimpactsofthecrisisandalackofeconomicandlabour-forcedata(whethersex-disaggregatedornot)ontheinformalandreproductivespheres
oftheeconomy(wherewomen’seco-nomiccontributionsaregreatest).
Butevencompletelabourandunem-ploymentdatawouldstillpaintonlyapartialpictureofthegenderedim-pactsofthecrisis;explainingneitherthereasonsnortheconsequentialrealitiesbehindlabour-forcechanges.Unemploymenthitspoorfamilieshard,regardlessofwhetheritisawomanormanwhoislaidoff.Butthechancesofafamilyrecoveringfromthissetbackisshapedbythedifferentlevelsofbargainingpowerthatwomenandmenhaveinthelabourmarketandtheirdif-ferentresponsibilitiesathome.
norms
Second,then,thesocial normsthatgov-erntherelationshipsbetweenwomen,menandtheinstitutionswithwhichtheyinteracthavelargelydeterminedhowindividualshavefelttheeffectsof,andrespondedto,thecrisis.Theserelationshipsareprofoundlydifferentforwomenandmen.Inmuchofthelabourmarket,forexample,womenarestillseenassecondarybreadwinners,makingthemmoresusceptibletobeinglaidoff,withemployersinglobalsupplychainsoftenignoringoutstandingpayandevadinglegalobligationstogivenoticeandpaycompensation(Emmett,2009).InThailand,despitesignificantprogressintermsofwomen’sparticipa-tionintheproductiveeconomy,they
remainstructurallydiscriminatedagainstintermsofoccupationalsegregationandprejudice,leadingtolowerposi-tionsandwages(Paitoonpong,etal.2009).Theimpactofthisonworkersandtheirfamiliesmaybeunderestimatedifgendernormsperpetuatethenotionthatmenaretheprimaryprovidersoffamilyincomewhilewomenworktoearnsmallamountstocoverincidentalexpenses.Ahousehold’sheavydepen-denceonafemalewageisusuallyasignofgreaterpoverty,fewerchoicesandlesspowertosurvivecrisis.
Socialnormsnotonlyaffectlabourforce-dynamics;theypermeateallaspectsofsociety.Forexample,inthehome,thetime-consumingandnon-remunerativeburdenoffeedingandcaringforhouseholdtendstofalldisproportionatelytowomen.
Thepreexistingsocialnormsthatleadtogenderinequalities–includingtheunder-representationofwomenatalllevelsofeconomicdecision-makingandtheirover-representationininformal,vulnerableandcasualemployment–haveoftenhadamoresignificanteffectinaggravatingtheconsequencesofthecrisisonwomenthanthegenderinequalitiesarisingspecificallyfromthecrisisitself.Similarly,prioritiesforgovernmenteconomicstimulihavefrequentlybeenbasedonapriornormthatprioritizessubsidisestoheavy
Gender and the Global Economic CrisisRichard King
ThebankingcentresofEuropeandNorthAmericamayfirsthavebeenshakenbyafinancialearthquakealittleovertwoyearsago,
buttheglobaleconomiccrisishassinceseismicallyexpandedtothe‘realeconomies’ofcountriesacrosstheglobe.Eachwaveof
impacthasbeentransmittedalonganumberoffaultlines,eachwithitsownuniquerhythmandamplitude.Twoyearson,some
economicplatesarealreadysettling,whileothersareyettobeshakenbyfiscalaftershocks.
13
industryratherthantextileorretailsec-torsthatemploymorewomen(EWL&Oxfam,2010).
Yettheseunderlyinginequalitiesarenotstatic;theyhavebeenexacerbatedbyacomplexwebofsudden-onsetshocksandlonger-termtraumasonwhichtheeconomiccrisishasbeensuperimposed.Theseincludefoodandfuelpriceshocks,changingclimaticconditionsandtheHIVandAIDSpandemic.Someoftheseordealsareinterlinked,othersareindependentofoneanother;allhaveaddedtothemarginalizationofwomenlivinginpoverty.
Butwhilsttherearesignsthattheeconomiccrisishasreinforcedmanyexistinggendernormsanddeepenedinequalities,thereisalsoevidencethatsomeofthesenormsaredecomposingandbeingcalledintoquestionbythecrisis.Forexample,menwhofindthem-selvesunemployedasaresultofthecri-sismaytemporarilytakeonroleswithinthereproductiveeconomythattheyarenotaccustomedto,suchascookingthefamilymeal.AmongstaffectedsheanutgatherersinGhanamenarenewlybeingaskedtocontributetowardsfamilyfood(Dogbe&Marshall,2009).InVietNam,thegenderdivisionoflabourhasbeenbreachedamongsomedaylabourerssincetheonsetoftheeconomiccrisisaswomenhavebeenforcedtoacceptconstructionjobsthatareusuallythepreserveofmen.ResearchbyOxfamsuggeststhat,withlimitedsourcesofof-ficialsupport,crisis-affectedworkersinHanoi’smobileday-labourmarkethavedevelopedaverystrongsenseofcom-munityandhaveadoptedarangeofinformalcopingstrategies.Bothwomenandmenoftenworkinagroup,receiveequalpayandsharelivingexpensesbylivingwithfellowmigrantsfromthesamevillages.Whetheranygendernormswillbetransformedonaperma-nentbasis–withthetraditionaldivi-sionoflabour,andmen’sandwomen’soverallworkburden,beingrenegotiatedwithinboththereproductiveandpro-ductiveeconomies–remainstobeseen(KingandSweetman,2010).
increased informalization
Forbothmenandwomen,theeconom-iccrisishasresultedinincreasedinfor-malization.ResearchconductedbytheInclusiveCitiesprojectontheimpactsofthecrisisontheinformaleconomies
of10developingcountriesfoundthat60percentofintervieweesbelievedthatthemajorityofnewentrantstotheirparticularinformalsectorwerewomen.Thisisthoughttobebecausewomenemployedintheformalsectorholdthemostprecariousjobsandaremostvulnerabletobeinglaid-offduringeco-nomiccontractions(Horn,2009).FormerfactoryworkersinThailand,forexample,haveturnedtoinformalhome-basedwork,whileelsewhere,laid-offwomenhavebeguntocookforaliving.Initialanalysissuggeststhatstreetvendorsinseveraldevelopingcountriesaresuffer-ingfromthetwinsqueezesofincreasedcompetitionfromretrenchedworkersturningtoalivelihoodwithlowbarrierstoentryandreducedconsumerdemand
aseconomiescontract.Home-basedworkershavesimilarlysufferedfromareductioninexportdemand,areductioninpayratesforpieceworkandfrombe-ingundercutbynewmigrantentrantstothemarket(Horn,2009).Bothmustalsocontendwithhigherbusinessoperatingcostsaswellasreducedearnings.
Inspiteofthesedifficulties,informalworkremainsanecessityformanywomenastheyhavebeenleftwithfewotheralternativesbytheirpersonal,socialandeconomicmarginalization.InPakistan,forexample,InclusiveCities’home-basedintervieweesliveinanareawherewomenarediscouragedfromworkingoutsideofthehomeeventhoughmanyworkerspossesspecialist
Sasithorn, 29, former factory worker skips meals so that her children
can eat three meals a day. She now baby-sits other workers’ children.
14
skillsthatcouldincreasetheirincomes(Horn,2009).Butevenwherewomencanworkinformallyoutsidethehouse,theeconomiccrisishasforcedthemtoworklongerhours,givingthemlesstimetofulfilthesocialreproductionrolestheyarealsocommittedto.
resilience and social capital
Nonetheless,oneofthemoststrikingfindingsofOxfam’sresearchontheeconomiccrisis(across12countriesonfivecontinents)istheextenttowhichcommunitieshave,thusfar,beenabletoresistorabsorbtheshocksthey’vefaced.Inasurprisingnumberofcases,migrantshavenotreturnedtotheirvillages;householdshavebeenabletofeedthemselvesfromtheirgardensorfarms;mostpeoplehavekepttheirjobs,albeitwithlowerwages,fewerhoursandworseconditions;andfamilieshavemanagedtokeeptheirchildreninschool.Familyandsocialnetworkshavesharedfoodandlenteachothermoney(Greenetal.,2010).InthecaseofVietNam,Hanoi’sdaylabourershavedevelopedjob-sharingarrangements;withfeweropportunities,labourershavebeencompelledtotakewhateverjobopportunitieshavebeenavailable,yettheyhavealsobeenwillingtosharetheworkaswellasinformationaboutemploymentopportunitieswithoth-ers,therebysacrificingsomeoftheirownpotentialincome.Labourershavealsoborrowedmoneyfromeachotherduringidledays.Thoughtheseinformalcopingmechanismsareinsufficienttomaintainthesamelevelsofincomethattheypreviouslyreceived,theydoatleastprovideaverybasicmeansofsubsistenceandeasethelivesofpoorfemaleandmaleworkersandtheirde-pendents(Paitoonpongetal.,2009).
Mostpeoplelivinginpovertyhaverelied,whetherthroughchoiceorother-wise,ontheirownnetworksoffriends,family,neighbours,religiousbodies,orcommunityinstitutionstoweatherthiscrisis.However,withoutaccesstoadequatesocialprotectionthisappa-rentresiliencehasitslimits.Assets,oncedepleted,takeyearstorecoup;workingextrahoursinsecondorthirdjobsleavesalegacyofexhaustion;loanstakenontofinanceconsumptionaccumulateintocrushingdebtburdens;andmealsforegonecanaffectchildrenfortheirentirelifetimes.
Aswomenaretheprimarycarersinvirtuallyallsocietiesandaremainlyresponsibleformanaging,produc-ingandprocessingfood,theyarealsoexpectedtofindwaysofensuringtheirhousehold’ssurvival.Manywomenarethereforepayingaparticularpricethroughtheiradditionalunpaidworktosupporttheirhouseholds.Forwomenespecially,thetwinpressuresofproduc-tiveandreproductiverolescanquicklybecomeoverwhelmingintimesofcrisis;itdoesnottakemuchforcopingstrate-giestotipoverintoaformofself-de-featingdesperation.Wherewomenareprovidingsafetynetsfortheirfamiliesanddependentswithoutadequatestatesupport,theirtangibleandintangibleassetsarebeingdepletedandtheiressentialbasicneedsforfoodandsleeparebeingforegone.Wherehouse-holdsareforcedintodistresssalesoftheirreserveassets,women’saremorevulnerablethanmen’s.ResearchbytheInstituteofDevelopmentStudiesintothe‘food,fuelandfinancialcrises’hasuncoveredsignsthatgenderinequitiesinthedistributionofhouseholdresour-cesareworsening(IDS,2009).
Additionally,women’sstocksofsocialcapital(forexamplesocialnetworksthatpotentiallyoffermutualhelpandsupport)areerodedduringtimesofeconomiccrisis.Neitherwomen’snormen’sstocksofsocialcapitalarelimit-lessandneithercansubsidisethecostofeconomicimpoverishmentindefinite-ly;whenassetsarefullydepleted,socialcapitaldriesup.Butaswomentypicallyhavelessaccessto,andcontrolover,financialandphysicalcapital,theytendtorelymoreheavilyonsocialcapitalandplayamoreactiveroleingeneratingitthandomen.Whenhouseholdsarepittedagainsteachotherinastruggleforsurvival,andwhentheirtimeisatsuchapremium,itisoftendifficultforwomentofindthetimetonurturetheserelationships.
Theextentoftheapparentresiliencethatwomenaredisplaying,orthedegreetowhichitwillactuallyerode
futurelivelihoodchancesandchildren’scognitivedevelopment,dependstoalargedegreeonthelevelofbufferingprovidedbyappropriatepublicex-penditureandsocialprotectionmeas-ures.Worryingly,fromthisperspective,someofthemostsevereimpactsofthecrisisforwomenmay,perhaps,stillbeemerging.
Worse yet to come?
Budgetanalysisfrom24poorcountrieswithsocialspendingdetailsavailablesuggeststhat,inordertoreinintheirwideningfiscaldeficits,18countriesarecuttingbudgetallocationstooneormoreoftheprioritysocialsectorsofeducation,health,agricultureandsocialprotection.Educationandsocialpro-tectionareparticularlybadlyaffected,withaveragespendinglevelsin2010lowereventhanthosein2008(KyriliandMartin,2010).Suchcutsarelikelytodisproportionatelyburdenwomenasfemaleshavebothprimaryresponsibilityforfamilywellbeingandcomprisethemajorityofpublicsectoremployees.
Eachsuccessivecrisisdepletesthecopingcapacities,bothphysicalandpsychological,ofpeopleandcommuni-tieslivinginpoverty.Butthedepthofresilienceandthedegreetowhichitwillbolsterfuturedevelopment,aretoalargeextentdeterminedlongbeforeeachcrisisactuallystrikes.Twoyearsonfromtheinitialfinancialshockthereisanurgentandparticularneedtotop-upthesesourcesofresilienceandtoreorganizesopeopleareabletoretainorenhancetheirabilitytodealwiththenextlargeshockbeforeitarrives.Policyresponsestodatehavetoooftenfailedtoadequatelyconsidereithertheneedsofpeoplelivinginpovertyorhowtheymightbegintoaddressthegenderinequalityinpower,workloadandop-portunitiesthatexacerbatewomen’sexperienceoftheworld’smultiplecrises.Unlesspolicyresponsesaresufficientlyattunedtoprovidingholisticsolutionsthatchallengethegender-biasedstatusquo,ratherthansimplyprovidingtem-poraryrespitefromthesymptomsofjustonecrisis,womenwillbeincreasinglyvulnerabletoeachsuccessivecrisis.
RichardKingisaPolicyResearcherwithOxfamGB.
…men…may temporarily
take on roles within the
reproductive economy…
15
Atthesametime,theNewYork-basedconsultingfirmCatalyst(2008a)foundthatwomenheldjustover15percentofalldirectorshipsatFortune500com-panies.Ofthese,66companieshadnowomenboarddirectorsatall,andonly92companieshadthreeormorewomenboarddirectorsin2008.Catalyst(2008b)alsofoundthatwomenheldjustunder16percentofcorporateofficerposi-tionsattheFortune500topcompaniesinthesameyear,comparedwithjustover6percentoftop-earningpositionsinthosecompanies.Atthesametime,therewere75Fortune500companieswithnowomencorporateofficersatall.
Thefinancialworldisincrisis.Andtheeffectsontherealeconomyareseri-ousandglobal.Oneofthepossibleexplanationsforthisisthatunbridledmasculinebehaviourhasledtobusi-nesspracticesthathaveprecipitatedcollapse.Thisshortarticlearguesforthedesirabilityofabalancebetweenfeminineandmasculinecharacteristicsinthebankingworldandsuggeststhatsomeimportantlessonscanbedrawnfromthecreditcrisisinthisrespect.
gender diversity as a factor of success
Thereisinallthisapitifullymissedop-portunity.Onedoesnothavetobeanardentfeministtorealizethathavingmorewomeninhighrankingposi-tionsinbusinesswillpromotedifferentoutcomes.Genderdiversityisaprovenfactorofsuccessinthebusinessworld(Joy,Carter,WagnerandNarayanan,2007;Lückerath-RoversandVanZanten,
2008;McKinsey2008).Psychologicaltestssuggestthatamanwithoutstresscanassessriskbetterthanawomanwithoutstress,buttestsalsosuggestthatinsituationsofstress–soperva-siveinthebankingandfinanceworld-theoppositehasbeenfoundtobethecase(vandenBos,HarteveldandStoop,2009).Whatlessonscanwedrawfromallthis?Itseemsthatdur-ingstableeconomicperiods,typically‘male’characteristicsmaybeparticularlyusefultofosterinnovationandencour-age‘healthy’risk-takingwhichcanhelptopromoteoveralleconomicgrowth.However,duringmoreuncertainperiods
ofeconomicinstability,moreclassically‘female’inputssuchascautionandcaringmaybeevenmoreessentialthanrisk-taking,whichcanaggravatereces-sionaryresponses.Arangeofeconomicexperimentshavesuggestedthatmixedteamsofmenandwomenactuallyperformbestacrosstime,andforthiskindofreason:suchteamsaremoreabletodealandrespondtobothstableperiodsandunstableperiodsofboomandbust(Gratton,2007;Kamas,PrestonandBaum,2008;Sent,vanStaverenandVyrastekova,2009).Toputitbluntly,wearetalkingaboutwomenbeingessentialtohardeconomicsandnotonlyabout
‘soft’issuesofwomen’sliberationandprofessionaldevelopment.
potential concerns
YetitisBritishfemaleeconomistBlytheMasterswhoiscommonlyheldrespon-sibleforcreatingCDSs(CreditDefaultSwaps)aswellasCDOs(CollateralizedDebtObligations).Shethusappearstobeoneoftheculprits,guiltyofengineeringintoplacethecurrentcreditcrisis.Wasn’titalsoDutchfemalebusinesswoman,NinaBrink,whohadahighlyquestionableroleinthefailedinitialpublicflotationoftheinternetcompanyWorldOnline?Perhapsso,butmaybethesewomenoperatedinthiswaybecausetheyfittedintoaverydominantlymaleculture,tomaintaintheirpositionsandto‘provethemselves’theequalsoftheirmainlymalecol-leagues.Womenneedtobepresentinacriticalmassinorderfortheircontribu-tiontobecomeapparentandpalpable.Ithasevenbeensuggestedthatwomenonlystarttoberegardedasindividualsintheirownrightoncewomenmakeupatleastonethirdofthebusinessteam(ChestermanandRoss-Smith,2006).
Inotherwords,adistinctioncanbedrawnbetweenfemaleandfeminin-ityandbetweenmaleandmasculinity.PlaceonewomaninaBoard,andonetendstoobservethatherbehaviourwill,throughpeerpressure,becomemoremasculinethaneventhatofsomeofhermalecolleagues.Thiswillbeherefforttofitintothenewenvironment.PlacetwowomeninaBoard,theywilloftenkeepadistancefromeachotherin
The crisis as an opportunity for
female leadership
Esther-Mirjam Sent
TheWorldEconomicForum’sgenderreportfor2010showedthatinthe20countries
surveyed,only2percentofCEOsintheFinancialServices&Insuranceindustrywere
female.Thiscomparedwith6percentoverallindustriesforthesamecountries
(ZahidiandIbarra,2010).
…..women have to first
jump off a glass cliff…
16
ordertoavoidtheimpressionthattheircollaborationisaconspiracy.OnlywiththreeormorewomeninaBoardcanaculturestarttobecreatedinwhichitisthinkableanddoabletodisplaysomeofthecharacteristicsthoughtofas‘typicallyfeminine’.Someofthequali-tiesthatwomencanbringtobusinessenvironmentscanthenstarttoasserttheirpositiveinfluence.Perhaps.
deeply ingrained prejudices
Sincediversityisaprovenfactorofsuc-cess, why then do more profit-mindedcompanies not hire more top women?Thereasonscanbefoundindeeply in-grainedprejudicesaboutwomenamongmale executives. This is expressed, forinstance, in an experimentinwhichtwoanonymousap-plication letters were shownto a group of male subjects(Norton,VandelloandDarley,2004). One candidate had abetter education, the otherhad more work experience.Theexperimentshowedthat75 per cent of all subjectschose the candidate with abetter education. But whenthe names of the applicantswerepresentedandthecan-didate with a better educa-tion was a woman, only 44percentofallsubjectspoint-edtoeducationasthemostrelevantfactor.Otherexperi-mentsshowthatawomanisvaluedlesswhenthereisonlyone female candidate, butthatajobitselfisvaluedlesswhentherearethreeormorefemale candidates (Heilman,2001). Some research alsosuggests that recommenda-tion letters for women tendto be formulated differently(Trix and Psenka, 2003). For instance,they tend to be shorter and includelessrepetitionofstrongwordslike‘out-standing,’ ‘excellent,’and ‘superb’ thanthe letters written for men. Moreover,whereasmenareportrayedmoreasre-searchersandprofessionals,womenaregenerallycommendedfortheirteachingandtraining.
Theideathatwomenarenot‘natural’leadersisadeeplyingrainedprejudice,asshowbyanotherexperiment(Porter,LindauerGeisandJennings,1983).Agroupofmenorwomenwereputat
arectangulartableandsubjectswereaskedwhotheythoughtwouldbetheleaderofthegroup.Themajorityofthesubjectspointatthepersonattheheadofthetable.However,ifthesubjectsareinamixedpartyandawomansitsattheheadofthetable,mostmenandwomenwillpointatamanwhoissittingelsewhereasthepotentialleaderofthegroup.
Suchdeeplyingrainedprejudiceswillpersistaslongasbusinessisdominatedbyamalecultureandcompanieswillfindithardtoidentifyorattractsuitablefemalecandidatesforhighrankingposi-tion.Womenwhoadjust,willcontinuetoberegardedascompetent,but
unkind.Womenwhodonotadjust,willberegardedasincompetent,but(orbe-cause)nice(Heilman,Wallen,FuchsandTamkins,2004).
Tobreaktheso-calledglassceilingandreachthetop,womenhavetofirstjumpoffaglasscliff,sincewomenwillmoreoftenthanmenbeputintoahighlyriskymanagementposition,wheretheirchancesofsucceedingareveryslim(RyanandHaslam,2005).Experimentalresearchagainsuggeststhatinpros-peroustimes,so-called‘normal’times,mostsubjectspreferamaleleaders,
butduringcrisis,mostpreferawoman(RyanandHaslam,2007).Asaresult,womenaremorelikelytobeputinadifficultmanagementpositionandcanfindthemselvesontheedgeofaglasscliff.
the crisis as an opportunity
Argumentsforincreasingthenum-berofwomeninleadershippositionshavebeenaroundforsometime.Yetlittlehasbeendonetoworkonthoseinsights.Thecreditcrisiscanbeachancetorevivethoseargumentsforemployingmorewomeninseniormanagement.Sincethefinancialworldiscompletelydominatedbymen,itisclearthattheiractionshavebeenthe
maincauseofthecreditcrisis.
Toputitcrudely,there-fore,thebehaviouralcharacteristicsthathavecausedthecrisistospinoutofcontrolaretypi-callymalecharacteristics,includingexaggeratedoptimism,over-devel-opedgreed,irrationallevelsofrisk-seekingbehaviourandalackofconfidence.Houseown-erswereoverlyoptimisticaboutrisinghousepricesandthengreedylenderstookenormousrisksinis-suingmortgagestoover-confidentpotentialhomeowners.Onceconfi-dencebegantocrumble,thefinancialworldwasshatteredintopiecesandlostconfidenceinpreviousstrategiesbasedonpreviouscalculationsofrisk,lossandprofit.
Researchsuggeststhatonthewhole,menaremoreoftenoverly-optimistic,excessivelygreedy,andrisk-seeking,andhavelessconfidenceinothers,thanwomen(CrosonandGneezy,2009;EckelandGrossman,2008).
AlongwithsomeofmycolleaguesintheEconomicsDepartmentatRadboudUniversityNijmegen,Ihavelookedintotherisksthatmenandwomentakeinplayingthegameshow‘DealorNoDeal’.Theshowrevolvesaroundluck,courage,strategyandtheartofstoppingattherighttime,ratherthan
17
continuingtothrowallone’s‘luck’away.Thepresenterhelpscandidatestode-cidewhethertheywilla)riskeverythingforthefirstprizeof250,000Euros,orcloseadealwiththebank.Iftheygoforthefirstprize,theyalsoriskhavingnoth-ingtotakehome.Inourownanalysisof120episodes,wefoundthatwomenweremorelikelytoaccepta‘safebet’andstopplayingthegamethanmen,whotendedtocontinueuntiltheylost.Acceptingthe‘safebet’gracefully,meantthatonaveragewomencontes-tantswonanaverageofaroundtwiceasmuchasthemencontestantsForthosewomenwhodidcompletethegame,theyendedupwithabiggerpay-offthanmenaswell(Sent,Groenendijk,Roosendaal,Vyrastekova,2008).
the crisis as a danger
Thecrisisthusofferssomeopportunitiesforwomentobecomemoreimportantinleadershippositions,especiallyinthedevelopedworld.Butatthesametime,itposesadangerformanywomenandgirlsindevelopingcountries,whoarehitespeciallyhardbythecrisis.Thefirstjobcutswereconcentratedinsectorsinwhichmillionsofyoungwomenandgirlsareemployed,especiallyinexport-
relatedindustries,forexampleinChina.Youngwomenandgirlsarethenforcedtoremainathomewithoutworkandtohelpinthehome.Sincethestartofthecrisis,thereisalsoevidencethatthechilddeathrateisincreasing,especiallyamonggirlchildren.Moregirlsandwomenwillalsobeforcedtocompeteinasexindustryalsohitbyfallingde-mandandfallingincomes.
Thisisaseriousdangerbecausegirlshavethefuture.Educatedyoungwo-menindevelopingcountriescanearnmoreforthemselvesandtheirfamilies(anestimated10percentmorewitheachadditionalyearofprimaryschool-ing;25percentwitheachadditionalyearofsecondaryschooling).Womenwillalsohavehealthierchildrenthelon-gertheycanremainineducation,andtheirgirlchildrenwillbemorelikelytogotoschoolthemselves.Thiscanhelptoimproveagriculturalproductionand
todecreasemalnutrition,sincewomentendtoinvestahighproportion–upto90percent–oftheirincomebackintothehousehold.Men,bycontrast,tendtoinvestjust30to40percentoftheirincomedirectlybackintothehousehold(PlanInternational,2008).Whatismore,acrossdevelopingcountries,ithasbeenestimatedthatifgirlshadthesameeducationalopportunitiesasboys,theresultcouldbeanincreaseineconomicgrowthof92billiondollarsperyear(PlanInternational,2008).
conclusion
Loesje(afamousDutchopinion-maker)wiselywrote:‘Childrenarethefuture,aslongastheirmothersgetafuturetoo.’Sincediversityingendertermshasbeenproventobeafactorinbusinesssuc-cess,thelackofwomeninhighrankingbusinesspositionsmaybeanoppor-tunitywhichitwouldbeapitytomiss.Thecurrentcrisismakesthecontrastbetweenthese‘top’executivewomen’schoicesandthechoicesofpoorwomenacrosstheworld,includingindevelop-ingcountries,allthemorepainful.
Esther-MiriamSentisProfessorofEconomicTheory
andPolicyatRadboudUniversityNijmegen.
6 new professors at ISSThanks to the Vereniging Trustfonds of Erasmus University Rotterdam, ISS has been able to appoint six new professors. One of the aims of the Trustfonds is to advance scientific research and education, in particular by establishing (special) professorial chairs. The ISS now has a total of 18 professorships.
The inaugural lectures have already or will take place this year or early next year.
Wil Hout - Professor of Governance andInternational Political Eeconomy (27 May 2010)
Max Spoor - Professor of Development Sudies in Particular Regarding Economies inTransition (30 September 2010)
Peter Knorringa - Professor of Private Sector and Development (4 November 2010)
Karin Arts - Professor of International Llaw and Development (18 November 2010)
Des Gasper - Professor of Human Development, Development Ethics and Public Policy (16 December 2010)
Irene van Staveren - Professor of Pluralist Development Economics (20 January 2011)
New and departing staffJan van Heemst – Senior lecturer in Development Economics, Gerrit Plugge – Head Internal Services and Maureen Koster - PhD office have retired after many years at ISS.
Other staff leaving are: Kristine Komives - Senior Lecturer in Rural Development, Environment and Population Studies, Frances Morris – Project Officer at ORPAS, Faroel Ibrahim - Finance Office.
New members of staff include Paul Huber who has joined ORPAS and Wim Geppaart to the Finance Office. Silke Heumann started work as lecturer in the field of Women Gender and Development. Kristen Cheney is our new senior lecturer Children and Youth Studies.
In November more staff will be joining ISS - Susan Newman as lecturer International Economics/Macroeconomics, Luca Tasciotti, Post-Doctoral Researcher and Diederik Meijering as senior Project Administrator.
Staff News
…diversity in gender…is a
factor in business success…
18
introduction
First there was no market.TheHermanCosterstraatMarket(HCM)wasestab-lishedmorethanseventyyearsagoattheinitiativeoftheMunicipalityofTheHague(MTH)afterlengthynegotia-tionswithvendors.Initially,vendorshadbeenopposedtotheideaofmovingfromtheiroriginalmarketplaceintheveryheartofthecitytotheHermanCosterstraatarea(atthattimepartofthesuburbs),fearingthemovewould
decreasetheirsales(Vonka,MunicipalArchives,2009).Nowadays,however,theHCMisatthecentreofanareathathasbeentransformedfromsuburbiaintoahubofeconomicandsocialactivity,andwithmorethan500stallsitissaidtobethelargestopenstreetmarketinEurope.
ByprovidingtheleadershipandtheservicesthatfacilitatedandsupportedtherapidgrowthoftheHCMandthe
developmentofthearea,andbycreat-ingaregulatoryframeworkthatallowedthedifferentactorstointeractwitheachother,theMTHlaidthefoundationsforapeacefulcoexistencethathasben-efitedallactorsinvolvedintheprocess.ThesynergiesamongthedifferentactorspresentattheHCMaretoalargedegreetheresultofaprocessinwhichtheMTHhasleadandaccompaniedthedevelopmentofthemarketven-dors,whileatthesametimeattendingtotheneedsandinterestsofthelocalcommunityandotherbusinessesintheperiphery.
Locatedstrategicallybe-tweenAmsterdamandRotterdam,TheHaguehaslongbeena‘worldcity’,aplaceofculturalandcommercialconflu-enceandexchangedespiteitsrelativelysmallsize(thepopulationislessthanhalfamillion).Inordertoadapttothesecircumstances,theMTHhasovertimebeenrequiredtogobeyondtheprovi-sionofpublicservicestraditionallyas-sociatedwithlocalgovernmentstobe-comeacentralandleadingactorintheprocessoflocaldevelopment.ThroughanexaminationoftheapproachbytheMTHtothedevelopmentandadmin-istrationoftheHCM,theaimofthisarticleistobetterunderstandhowlocalgovernmentscanmeaningfullycontri-butetoprocessesoflocaldevelopment.
The Local Government as a Central and Leading Actor of Local Development: The case of the Herman Costerstraat Market in The Hague
Sergio Ferragut
‘Governments are in a position to make markets and
competition work better, by taking the lead in making
business easier and less expensive and in determining
the nature and level of regulation’ (ILO, 2007).
HermanCosterstraat,TheHague;MTHArchives,1920
19
the ever-evolving role of local governments
AsrecentlysustainedbyNelandBinns,‘localgovernmentisexpectedtomaximizesocialdevelopmentandeconomicgrowth,tohelpensurethatlocaleconomicandsocialconditionsareconducivetothecreationofemploy-mentopportunities,totakealeadershiprole,involvingcitizensandstakeholdergroupsinthedevelopmentprocessandtobuildsocialcapitalandgenerateasenseofcommonpurposetofindlocalsolutionsforsustainability’(NelandBinns,2001:357).
Localgovernmentsareusuallyrespon-sibleforarelativelysmallgeographicalarea,whichallowsthemtobecloseinproximitytotheirconstituents.Asare-sult,theyareinaprivilegedpositiontounderstandtheshortterminterestsandneedsoftheircitizens.Implementingpoliciesaimedatregulatingthedailycomplexrelationsofmultipleactorswhileachievinganinclusivelongtermvisionfordevelopmentrequireslocalgovernmentstotakeaproactiveap-proachbeyondtheprovisionofbasicservices.Inordertoexploitthesyner-giesandopportunitiesthatresultfromlocalinitiatives,itismostimportantthattheytakeacentralroleinregulatingtherelationsamongtheactorspresent.
AsNederveenPieterseoncesuggested,‘agglomerationincreasestheproductivi-tyofawide-rangingnumberofeconom-
icactivitiesinurbanareas.Essentially,agglomerationallowsfirmstoexperi-encethebenefitsofbotheconomiesofscaleandscope’(Pieterse,2000:8).Foragglomerationtoreapitsbenefits,stronginstitutionsandtheprovisionofaclearregulatoryframework(thatisinlinewiththelongtermvisionfordevelop-ment)mustbepresent.
running an open market
WithintheMTH,responsibilityfortheadministrationandcoordina-tionofsupporttothecity’ssevenstreetmarketslieswiththeOfficefortheAdministrationofStreetMarkets(OASM).TheservicesprovidedtotheHCMincludecleaningandmaintenanceofthemarket,runningawell-organizedtransportationnetwork,providingparking(currently470spacesundertheHCM),toilets,policing,settlingdisputesamongvendors,customersandresidents,andprovidingaccesstoelectricityandrunningwatertoallstalls(InterviewswithThelma,PoliceOfficerattheHCM,2009;Maria,OASMcleaningstaffattheHCM,2009;Marieke,OASMstaff,2009).
RulesandregulationsgoverningstreetvendinghavebeeninplaceinTheHaguesince1856,whenfirstintroducedbytheMTH.Overtime,thesehavebeenmodifiedtoadapttothechangingnatureofbusinessandsociety,mostre-centlyin2004(MunicipalArchives,2009).TherulesgoverningtheopenmarketscanonlybemodifiedbytheMTH,andareadministeredatthemarketlevelbytheOASM,thusfacilitatingthemonitor-ingofactivitiesandensuringanearlyresponsetoconflicts.
Bycoordinatingprovisionofservicesandcreatingandadministeringaclearandtransparentregulatoryframework,theMTHhasleadandfacilitatedthesustainabledevelopmentoftheHCManditssurroundingarea.Bybeingcloseinproximitytothevendors,theMTHhasbeenabletoensuretheirneedsareattendedtowhilepreventingtheescalationofconflictsandgrievances.Similarly,bytakingresponsibilityforthedailyadministrationofthemarket,theMTHhashelpedvendorskeepthemarketorganizedandrunning,thuscontributingtothemaintenanceandcreationofemploymentopportunities
the sellers
Approximately550vendorsheldOASM-issuedpermitsattheHCMin2009.Permitsareissuedforthreeyearsinthefirstinstance,andareeitherrenewedautomaticallyorinheritedbyfam-ilymembersifthepermitholderdies
TheOpenMarket,TheHague;OASMwebsite,2009,
HCM – local government
that went beyond its
traditional role…
20
(MTHwebsite,2009).Onceapermitisobtained,dailyrentsarequitelow,be-tween7and16eurospermarketday.Aswellaspayingrent,vendorspayincometaxesbasedonthekindsofproductstheysell.Insum,operationalcostsarelow,meaningthatvendorscanstartabusiness(iftheycangetastall)withrelativelysmallamountsofcapital.
HCMsellersarerepresentedbytwoorganizations:CentralAssociationforAmbulatoryTrade(CVAH),establishedin1921andmainlyrepresentinglong-establishedvendorsofDutchorigin,andVETRA,amorerecentlyformedorganizationthatgroupsmainlynon-Dutchvendors.DespitethepresenceoftheseorganizationsattheHCM,mostvendorsarenotthateagertotakepartandvoicetheiropinionsasagroup.Theoutcomeisadistinctlackoforganiza-tionalcapacityamongmarkettraderstomakestrong,consensualdecisions,andaweakbasisforcollectiveactionstodefendtheircommoninterests.
Themarketspaceisdividedintoseparateareasinwhichdifferenttypesofproductsaresold.Vendorsfromsimilaroriginscanendupsellingsimilarproductsandbelocatedinadjacentornearbystalls.Withineacharea,stallsareassignedonthebasisofhowestab-lishedvendorsare,andmanystallsarerunbymembersofthesamefamily.Thiscontributestoarelaxed,informalatmo-spherewherestallholders’competitioncanbemutedbyinter-connections.
customers and the local community
Themarketisaspaceforeconomicac-tivityandsocialinteractionandintegra-tion.Itcreatesnotonlyjobsandincomebutalsolinksamongpeopleandactorsthatcanleadtoincreasedand’better’economicandsocialdevelopment.Keepingthisbalanceamongalltheac-torspresentintheHCMandsurround-ingareaistheresponsibilityoftheMTH.
Over150,000customersfromthecityandbeyondvisittheHCMeveryweek(OASMwebsite,2009).Manycustomerschoosetoshopatthemarketbecauseofthehugevarietyofproductsavail-ableatpricesthataregenerallyverycompetitive.Migrantsespeciallyshoptheretofindproductsthatrelatetotheirdietandlifestyles.Othercustomersareinthemarketsimplybecausetheyenjoy
thebustle,theexperience,thecriesofthesellers.Evenpeoplenotthatinter-estedingettingtheirweeklygrocerieswillcometothemarkettobrowse,togoshoppingcasually,forgiftsorex-tras.Manystallsoffergoodsforpassingcustomers,includingarangeofsnacksanddrinks.
AlargenumberofpeoplecometotheHCM,andtheOASMtriestominimizenegativeeffectsonlocalresidentsintheimmediateneighbourhood.Sometimes,however,therearecomplaintsfromresidentsandbusinesseslocatedintheperipheryofthemarketandtheOASMisresponsible,inthefirstinstance,forreceivingsuchcomplaints.Themostcommoncomplaintsrelatetovendors’carsandtrucksblockingthestreetsaroundthemarketorentrancestoprivatehouses.Also,onmarketdaysthereisanincreaseinreportedpettycrime,mostofitinsidethemarketareaitself(Marieke,OASMstaff,2009).Inresponse,aspecialunitoftenpoliceofficershasbeensetuptopatrolthemarketfloorandsurroundingstreetsonmarketdays(Thelma,PoliceOfficerattheOASM,2009).SincethereisnoconsumerassociationandnoresidentsorneighbourhoodassociationaroundtheHCM,bydefaulttheMTHisalsoresponsibleforensuringresidents’andcustomers’rightsarerespected.
businesses in the periphery
Commercialactivityandsocialinterac-tionisnotlimitedtothemarketitselfasmanyshopslocatedintheperipheryoftheHCMofferproductsandservicestomarketcustomers.SomeoftheseshopshavebeenintheneighbourhoodforafewyearsbutmosthaveopenedrecentlytoservethehugenumberofcustomersvisitingtheHCM.
ThecontrastbetweenvisitingtheHCMareawhenthemarketisopenandclosedissignificant.Whenthemarketisclosed,thefewshopsthatremainopenareusuallyrunbytheirownersonly,whomostlyspendthedayreorganizingorcleaningtheshopwaitingforthenextdaythatthemarketisopen(Hussein,MoneyTransferService,2009).
WhilesupportingthegrowthoftheHCM,theMTHhasthereforealsocre-atedtheconditionsforotherbusinessesintheperipherytoflourish,astheydi-rectlybenefitfromtheservicesprovided
(publictransportationandsecurity,forexample)andthecustomersvisitingtheareaeachweek.
conclusion
First there was no market.Bytakingtheleadandbecomingacentralactorintheprocessofestablishing,regulatingandadministeringtheHCMandtherelationsandinterestsofthevariousactorspresentinthearea,theMTHhascontributedtothesustainabledevelop-mentoftheneighbourhoodandthecity.Intheearly1900s,nothingcouldhaveindicatedthepotentialoftheHermanCosterstraatarea.Itwasthelong-termvisionandcommitmentofthemunicipalitytothedevelopmentoftheareathatinitiallytriggeredandthencar-riedontheprocessthatresultedinthesuccessfulstoryofthemarketandtheneighbourhoodthatwewitnesstoday.ThecaseoftheHCMisthusanexampleoflocalgovernmentthatwentbeyondits‘traditionalrole’tobecomeacentralandleadingactorintheprocessoflocalandcommunitydevelopment.
AsforthelimitationsoftheHCMexperience,itisimportanttohighlightthelackofaunifiedrepresentativebodythatcouldeffectivelyguaranteethatthevoicesandinterestsofallthevendorsareincludedandconsideredwhenmak-ingdecisionsandtakingpositionsinne-gotiations.Thislackhamperseffortstoachievecommonlong-termbenefitsforallvendors.Whoshouldberesponsiblefortakingthatinitiative,isaquestionthatremainsopen.
Asannouncedin2010,theHCMareawillsoonbecompletelyrefurbishedaspartofthecomprehensiveurbandevelopmentplansturningthe‘Line11’tramzoneintooneof‘worldworkingandliving’(translatedfromtheDutch).Fromthemunicipality’sperspective,thechallengeforthefutureisonceagaintounderstandhowitcankeepcontributingtothefurtherdevelopmentandimprovementofthemarket,whileremainingsensitivetotheneedsandinterestsofallactorsinvolvedandpres-entinthearea.
SergioFerragutgraduatedfromISSin2009with
anMAindeveolopmentstudies.Hespecializedin
LocalandRegionalDevelopment.
21
the rise of ‘generation text’
In2001,thePhilippinesgrabbedtheworld’sattentionwithanexampleofPeoplePowerwhichledtotheoust-ingofthecountry’sleader.MorethanamillionpeoplegatheredatthehistoricEDSAAvenue,siteofthefirstPeoplePowerin1986,toexpressoutrageagainstwhattheyperceivedtobema-nipulationofthecountry’sfirstimpeach-menttrialagainstapresidentbyhisalliesinthesenate.
Themobilephoneservedasthemega-phonewhichcalledpeoplebacktoEDSA.Theappealtoprotestspreadlikewildfirefromonecellphonetoanother.Non-governmentorganizations,churchgroups,universitiesandotherinstitu-tionsconverged,withalargenumberfromtheyouthsector.
EdericEder,ayouthactivist,postedanarticleonhisbloginwhichhewroteaboutyouthparticipationinthePeoplePower.InFilipino,hewrote:
Wearereadytorespondtothecallofthetimes.Againandagain,wewilluseourstrengthandouryouth,andourgadgetstoensurethefreedomofourMotherlandandwearereadytoguardourquestforjustice.Weareonthesideofhistory...wearetheyouth,the‘hopeofthenation…Weare‘GenerationTxt’.
Thecellphonewasinstrumentalinmo-bilizingthepeople,especiallytheyouth.Ederacknowledgedthatyoungpeoplewerefun-lovingandtech-savvybuttheyknowwhentobepoliticallyinvolvedandtostandupandtakeaction.
Where has generation text gone?
Yetafterthe2001PeoplePower,thepassionoftheyouthandtheFilipinopeopleseemedtodissipate.Theprom-iseofanewleadershipwasdeemeda
Youth Power 2.0: Harnessing technology for youth mobilizationBy Marie Angelie Resurreccion
Technologyhasbecomecloselytiedwithyouthculturesofthepresentgeneration.InthecaseofthePhilippines,ithasbecomea
meansofmobilizingyouthduringsignificantnationalevents.Thisarticlewilllookintohowcommunicationtoolstranslatetheuseof
socialmediaintosocialactionamongtechno-savvyurbanFilipinoyouth.
22
failure.Thecitizenry,onceenergizedbynationalunity,succumbedtothetravailsofdailylife.Youngpeoplearenowac-cusedofapathybecausemobilizationhasbecomedifficultdespiteconstantcallstorallyagainstthepresentgov-ernmentbelievedtohavecommittedabuseofpower,corruption,electionfraudandhumanrightsviolations.Pessimistsallegethatpeoplearesuf-feringfrom‘peoplepowerfatigue’andhavegivenupfightingfordemocracy.Itisbelievedpeoplehavechosentogetonwiththeirlivesandletnationalissuestaketheircourse.
Wherehasthisgenerationwhichproudlybrandishedtheircellphoneslikeswordsgone?
Theynowspendmostoftheirtimegluedtonewergadgets,especiallytheinternet.Technologyhasnowbecomemoreubiquitous,especiallyamongthepresentgenerationofurbanyouth.The2006McCann-EricksonIntergenerationStudy,anationwidesurveyofurbanFilipinoyouth,revealedasignificantincreaseincomputer-relatedactivitybetween2000and2005.Internetuseofthreehoursormoreperdayrosefrom8percentto25percent,while54percentuseitforlessthanthreehours.
The2008Yahoo-NielsenIndexStudyamongurbanFilipinosrevealedinternetusersare‘likelytobebelow29yearsold,singleandbetter-educated’.Itclaims‘Filipinointernetusersaremorelikelytobeopinionleaders’.Thosebe-tween10-19yearsoldfollowedbythosebetween20-29frequentlyaccesstheinternet,with51percentvisitingsocialnetworkingsites.
Thiscouldbewhytheoldergenera-tiontendtoblameinternetuseforthedecreaseinyouthparticipationintraditionalvenuesofsocialandpoliticalinvolvement.However,whatgoesoninthisvirtualworldbearslookinginto.Theinternethasbecomeavaluablespaceforcreativeexpressionandpersonalde-velopmentamongtoday’swiredyouth.Withmorethan70percentoftheyouthspendingtheirtimeontheinternet,popularmediahasbecomeanexten-sionofyouthactivitiesandcultures.Thequestionnowiswhethertheinternetandsocialmediacaninfluencesocialparticipationandcivicinvolvementamongyoungpeoplethesamewaythemobilephonewasabletoin2001.
from social netWorking to social mobilization
TheTyphoonKetsanadisasterlastSeptember2009onceagainshowedhowtechnologycanbeharnessedformobilization.Ketsana,locallyknownas‘Ondoy’,dumpedanentiremonth’sworthofraininlessthantwelvehoursoverthePhilippinecapital,Manila.Over80percentofthemetropoliswassubmergedunderwaterandmorethan500,000peopleweredisplaced.
PeoplesafefromKetsana’swrathwonderedwhattheycoulddogiventhesituation.TheydecidedtotweetandupdatetheirFacebook.Initially,itwasaresponsetothelackofupdatesbytelevisionandradionetworks.Regularprogrammingwentonprovidingonlyhourlynewsflashes.Civilianshungryforinformationturnedtosocialmediatofindtheinformationtheywantedandtoprovidetheinformationtheyhad.ThroughmobileTwitterandFacebook,somepeoplestrandedbythefloodpostedupdatesregardingtheirsafety.Callsforrescue,donationsandvolun-teerswerepostedandreposteduntiltheyreachedwhoevercouldrespond.AnanonymousindividualcreatedaGoogleMapoffloodedareasandpass-ableroadstofacilitatesmootherrescueoperations.Bloggersgathereddataonhelplinestocallforemergenciesaswellasinstitutionsreceivingdonations.Socialmediabecamethepeople’snewsbureauandthepeoplebecamecitizenjournalists.
Afterthefloodssubsided,socialmediacontinuedtobethenation’sinforma-tiondesk.Thistime,statusupdatesandtweetscontainedtipsonhowtosalvagesubmergedequipment,homesandcarsorhowtoavoidcontractingwaterbornediseases.Itwashardlynecessarytotuneintotraditionalmediaoraccessnews
websitesbecausereportswereeas-ilyavailableonFacebookandTwitterposts.
Socialnetworkingprovedtobeavitallinkbetweeninformationandaction.Peopleoftensoughtinformationre-gardingorganizationswhichtheycoulddonatetoorvolunteerfor.Sinceclassesweresuspendedforaweek,asteadystreamofyoungvolunteerskeptcomingtohelp.Theyworkedthroughoutthedaytopreparecarepackagestobedistributedamongthemostaffectedareasofthemetro.Sometookpartinclean-upactivitiesofaffectedhomes.Theenergyandpassionoftheyouthwashighlyinfectiouswhichhelpedupliftthedespairintohope.WhathappenedduringtyphoonKetsanataughtyoungpeopleanimportantlifelessonongenerosity,sacrificeandfellowship.ItopenedtheireyestothegreatthingstheFilipinopeoplearecapableofandprioritizednationalunity.
The2001PeoplePowerandtyphoonKetsanawereentirelydifferentcircum-stanceswhichrequireddifferentkindsofyouthinvolvementbutbothshowcasedhowtechnologyplayedaroleinmobi-lizingparticipationamongtheyoung.However,italsoshowsthatthepeopletendtobemostactiveduringurgentsituations.
Youthcultureshavebecomecloselyin-tertwinedwithcommunicationtechnolo-gy.Tobetterunderstandyoungpeople,thereisalsoaneedtounderstandwhatitisabouttheinternetandsocialmediathatattractsthem.Insolittletime,ithasentrencheditselftoodeeplyinyouthactivitiestobedismissedasafad.Thechallengeishowtomaketheyouthreal-izetheworldisinneedoftheirpassion,energyandidealismonadailybasis.Thechallengeishowtoharnessexistingtechnologiestoattracttheyouthtobemoreproactive.Answeringthechal-lengewillnotbeeasy,butthereareenoughexperiencesinhistorytoshowitispossible.Thereareenoughexperi-encesinhistorytoprovideusclues.Thereareenoughexperiencesinhistorytoleadtheway.
AngiegraduatedfromtheChildrenandYouth
StudiesprogramattheInstituteofSocialStudiesin
December2009.Herresearchpaperwasaboutus-
ingpopularcultureasademocraticspaceforactive
citizenshipamongFilipinoyouth.
Social networking…a link
between information and
action.
23
Development and Change
Volume 41 / Number 4 / July 2010
SPECIAL ISSUE Negotiating Statehood: Dynamics of Power and Domination in Africa
Guest Editors: Tobias Hagmann and Didier Péclard
Tobias Hagmann and Negotiating Statehood: Dynamics of Power and
Didier Péclard Domination in Africa
Timothy Raeymaekers Protection for Sale? War and the Transformation of Regulation on the Congo–Ugandan Border
Lalli Metsola The Struggle Continues? The Spectre of Liberation, Memory Politics and ‘War Veterans’ in Namibia
Asnake Kefale Federal Restructuring in Ethiopia: Renegotiating Identity and Borders along the Oromo–Somali Ethnic Frontiers
Inge Ruigrok Facing Up to the Centre: The Emergence of Regional Elite Associations in Angola’s Political Rebuilding Process
Anita Schroven The People, the Power and the Public Service: Political Identification during Guinea’s General Strikes in 2007
Jason Sumich The Party and the State: Frelimo and Social Stratification in Post-socialist Mozambique
Till Förster Maintenant, on sait qui est qui: Statehood and Political Re-configuration in Northern Côte d’Ivoire
Marleen Renders and Negotiating Statehood in a Hybrid Political Order:
Ulf Terlinden The Case of Somaliland
Martin Doornbos Researching African Statehood Dynamics: Negotiability and its Limits
Volume 41 / Number 5 / September 2010
Saturnino M. Borras Jr. The Politics of Transnational Agrarian Movements
Daniela Gabor The International Monetary Fund and its New Economics
Sverre Molland ‘ The Perfect Business’: Human Trafficking and Lao–Thai Cross-border Migration
May Tan-Mullins,
Giles Mohan and Redefining ‘Aid’ in the China–Africa Context
Marcus Power
Ward Berenschot Everyday Mediation: The Politics of Public Service Delivery in Gujarat, India
Naomi Hossain Rude Accountability: Informal Pressures on Frontline Bureaucrats in Bangladesh
Benjamin Neimark Subverting Regulatory Protection of ‘Natural Commodities’: Prunus Africana in Madagascar
The journal Development and Change is published six times a year by Blackwell Publishers (Oxford, UK) on behalf of the Institute of Social Studies. For more information, see the ISS website or email us at d&[email protected]. Available online at http://www.blackwellpublishers.co.uk/online. Special rate available to ISS alumni.
24
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I S S i s t h e I n t e r n a t i o n a l I n s t i t u t e o f S o c i a l S t u d i e s o f E r a s m u s U n i v e r s i t y R o t t e r d a mDevISSues is published twice a year by the Institute of Social Studies, PO Box 29776, 2502 LT The Hague, the Netherlands, tel: +31 (0)70 4260 443 or 4260 419, fax: + 31 (0)70 4260 799, ISS website: www.iss.nl, email: [email protected] Editor: Jane Pocock. Editorial Board: Nicolas Glockl, Helen Hintjens, Mahmood Messkoub, Chantelle de Nobrega, Lorenzo Pellegrini, Nahda Younis Shehada. Editorial Assistant: Marie-Louise Gambon Design: MUNTZ Marketing Communication Group Production: Karen Shaw Circulation: 6,500. The text material from DevISSues may be reproduced or adapted without permission, provided it is not distributed for profit and is attributed to the original author or authors, DevISSues and the Institute of Social Studies. ISSN: 1566-4821. DevISSues is printed on FSC certified paper.
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is published twice a year by thePO Box 29776, 2502 LT The Hague, the Netherlands, tel: +31 (0)70 4260 443 or 4260 419, fax: + 31 (0)70 4260 799, ISS website: www.iss.nl, email: [email protected] : Jane Pocock. : Nicolas Glockl, Helen Hintjens, Mahmood Messkoub, Chantelle de Nobrega, Lorenzo Pellegrini, Nahda Younis Shehada. : Marie-Louise Gambon MUNTZ Marketing Communication Group : Karen Shaw : 6,500. The text material from DevISSues may be reproduced or adapted without permission, provided it is not distributed for profit and is attributed to the original author or authors, DevISSues and the Institute of Social Studies. ISSN: 1566-4821. DevISSues is printed on FSC paper.
Development and ChangeThe journal Development and Change is published six times a year by Blackwell Publishers (Oxford, UK) on behalf of the Institute of Social Studies. For more information, see the ISS website or email us at d&[email protected]. Available online at http://www.blackwellpublishers.co.uk/online. Special rate available to ISS alumni.
Volume 40 Number 3 May 2009Tor A. Benjaminsen,
Faustin P. Maganga and The Kilosa Killings: Political Ecology of a Farmer–Herder Conflict in Tanzania
Jumanne Moshi Abdallah
Toby Carroll ‘Social Development’ as Neoliberal Trojan Horse: The World Bank and the Kecamatan Development Program in Indonesia
Maria F. Tuozzo World Bank Influence and Institutional Reform in Argentina
Sarinda Singh World Bank-directed Development? Negotiating Participation in the Nam Theun 2 Hydropower Project in Laos
Juan Pablo Galvis Developing Exclusion: The Case of the 1961 Land Reform in Colombia
Xun Wu and M. Ramesh Health Care Reforms in Developing Asia: Propositions and Realities
Stefan Kühl Capacity Development as the Model for Development Aid Organizations
BOOK REVIEWS
Volume 40 Number 4 July 2009Leonardo Vera Reassessing Fiscal Policy: Perspectives from Developing Countries
Nikita Sud The Indian State in a Liberalizing Landscape
Halleh Ghorashi and The Iranian Diaspora and the New Media:
Kees Boersma From Political Action to Humanitarian Help
Philippe Le Billon and Building Peace with Conflict Diamonds?
Estelle Levin Merging Security and Development in Sierra Leone
Brian Dill The Paradoxes of Community-Based Participation in Dar es Salaam
Gabriel Medina, Benno Loggers, Development Agents and the Exercise of Power in Amazonia
Pokorny and Bruce Campbell
Huck-ju Kwon and Economic Development and Poverty Reduction
Ilcheong Yi in Korea: Governing Multifunctional Institutions
Working PapersISS Working Papers can be found on the ISS website at www.iss.nl/Library/Publications/Working-Papers. They can also be ordered in hard copy from The Bookshop, PO Box 29776, 2502 LT The Hague, The Netherlands
483 Understanding the diversity of conceptions of well-being and quality of life / Des Gasper
482 Gender, poverty and social justice / Amrita Chhachhi and Thanh-Dam Truong
481 Feminist knowledge and human security: bridging rifts through the epistemology of care /
Thanh-Dam Truong
480 Land reform in Bolivia: the forestry question / Lorenzo Pellegrini and Anirban Dasgupta
479 The 2007 ‘NO CAFTA’ movement in Costa Rica: reflecting on social movements and political
participation rights / Mercedes Alvarez Rudin and Helen Hintjens
478 The weight of economic and commercial diplomacy / Mina Yakop and Peter A.G. van
Bergeijk
477 Ensuring daughters survival in Tamil Nadu, India / by Sharada Srinivasan and Arjun Bedi