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In December 2013, David spoke at a session at the Houses of Parliament for the ‘Emerging Powers, International Development and Foreign Aid: What role for the UK?’ seminar series. This seminar addressed questions such as: what responses are needed in aid, trade, private sector engagement, climate change negotiations and diplomacy? Does the UK need to reframe its aid policies or foster new partnerships or identify policy lessons to transfer from the BRICs? BWPI colleagues Armando Barrientos, Stephanie Barrientos and Kunal Sen also spoke at the Houses of Parliament event.
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Emerging Powers and the Future of International Development: What Role for the UK?
David Hulme
Brooks World Poverty Institute
The UK and International Development: Looking Good
• Last 15 years have seen UK play a leading role• Prominent with MDGs, Monterrey Consensus, Africa
Commission, post-2015 Agenda• Increasing aid to 0.7% level –against the OECD trend• Contributes to positive image of the UK: seen as
committed and very competent (DFID)• Strong supporting institutions – Universities, NGOs,
faith groups and commercial advisory services
Official Development Assistance as % of GNI
(UK 2002-2012)
(Germany 2002-2012)
(Netherlands 2002-2012)
(Japan 2002-2012) (United States 2002-2012)
KEY: BLUE = DAC Total
RED = Country Total
(France 2002-2012)
International Development on the Move
• Significant improvements in economic and human development indicators since 2000
• Complex patterns but all regions show improvements – from Afro-pessimism to progress in Africa (eg child mortality)
• But, global governance of development seen as ‘glass half full’ or ‘weak’ or ‘failing’– Lack of progress with MDG Goal 8 (global
partnership)– United Nations Development System and
bilateral aid remain uncoordinated
Child Mortality 1990 & 2012
(UNICEF, WHO, WB and UN-DESA, 2013: Levels and Trends in Child Mortality Report)
The Changed Context
• From uni-polar to multi-polar world – ‘post-American world’; no longer capitalism versus socialism but Anglo-Saxon model or Chinese model or Brazilian model; rise of G20
• Climate change steaming ahead 2oC guaranteed• Population growth and demographic challenges
(ageing, migration, youth)• Urbanisation and the urbanisation of poverty and
inequality• Technological change – especially ICTs• Security threats continue but are changing
International Development at Manchester
• UK’s biggest concentration of researchers and postgraduate students on international development
• International centres of excellence – Brooks World Poverty Institute– Institute for Development Policy and Management– Effective States and Inclusive Development Centre– IRIBA (Brazil in Africa)– Capturing the Gains– Humanitarian and Conflict Response Institute
…and much more
Today’s Focus – Emerging Powers
• Research at Manchester makes a number of distinct contributions – focus on three issues today
1. BRICs beyond China – especially Brazil and India’s influences
2. Beyond the BRICs – emergence of new middle and regional powers: South Africa, Turkey, Indonesia and others
3. Creating analytical frameworks that help understand the greater choices developing countries have on polices and models
An Analytical Framework for Understanding these Changes
Ideas
Material Capabilities Institutions
Robert Cox’s Framework (2002)
Emerging Powers Impacting on Material Capabilities• Material Capabilities – technological and organizational
capabilities with productive or destructive potential– China – manufacturing growth and demand for raw
materials– India - affordable pharmaceuticals for developing
countries; software and ICTs– Brazil – high productivity tropical agriculture;
aeronautics– South Africa – agriculture; raw materials and
minerals; commercial conservation and hunting– And others…
Emerging Powers Impacting on Ideas
Ideas – the concepts and narratives that explain what is happening/should happen. These shape norms and values. Often they are several and opposed.
– Turkish model of growth, democracy and moderate Islam
– Brazil: national development banks for infrastructural development; social protection and conditional cash transfers
– India: rights-based approaches to development; democracy with capitalism
– China: centralized authority is best for growth and poverty reduction
– And others…
Emerging Powers Impacting on Institutions
– Institutions - amalgams of material resources and ideas usually based on the power relations of their time of origin. They commonly take an organizational form.
– China renegotiating capital contributions to World Bank and IMF– South Africa means BRICS Bank will be small – less of a
challenge to World Bank and regional banks– Brazil has put sustainable development goals on par with post-
MDGs at the UN– South African retail models spreading across Africa– India – notable for its failure to take a lead to initiate change in
international organizations– OECD - Spanish as the emerging de facto second language
(Spain, Mexico and Chile)
Three Major Examples
• Today we focus on three examples of the impact of emerging powers that are not given sufficient attention in the UK
• The rise of India and the reshaping of international development (Kunal Sen)
• Is there a Brazilian model of development? (Armando Barrientos)
• South Africa: Emerging Power or African Power? (Stephanie Barrientos)
The Rise of India and the Re-shaping of International Development
Kunal Sen
Institute of Development Policy and Management (IDPM)
Brooks World Poverty Institute
India’s Rise
• The emergence of India along with China as major forces in the global economy has been one of the most significant economic developments in the past quarter century.
• Rapid convergence to living standards of advanced market economies, halving of the GDP per capita gap in
1990-2009.
Living Standards (Per Capita Income)
1990
1991
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1993
1994
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1996
1997
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1999
2000
2001
2002
2003
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2008
2009
0
100
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500
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BrazilChinaIndiaIndonesiaSouth AfricaTurkey
GDP per capita in PPP (1990=100)
Changes in Poverty and Inequality, early 1990s to mid/late 2000s
Brazil
China
India
Indonesia
South Africa
Turkey
-50 -40 -30 -20 -10 0 10 20
Poverty ($1.25 a day)Inequality (Gini)
Percentage Point Change
A Different Growth Model in Asia
• All successful Asian countries moved from the import substituting phase of economic development to an export-oriented development strategy, with a strong growth in the labour intensive segment of the manufacturing sector.
• Surplus labour pulled in massive amounts from less productive agriculture to the more productive manufacturing sector.
• This did not happen in India.• Economic growth was mostly due to a export-oriented
services sector (information technology), not due to manufacturing.
• Very little shift of labour out of agriculture, and lack of labour-intensive growth.
Material Capabilities
• Private sector led development model.• Generic drug exporter to the world, increasing in
importance as patents for many best-selling medicines come to an end.
• Outward oriented entrepreneurs (e.g. large business groups such as Tata, Essar, and Reliance), not exporting goods as much, but business models, technology, management.
• And a ‘Look East’ policy of greater integration with East and SE Asia that is slowly taking shape, that has the potential to take South Asia closer to the growth poles of East Asia.
Ideas
• Democracy and Capitalism intertwined.• A ‘liberal’ counterweight to an authoritarian China? • A ‘laboratory’ for a rights based approach to
development: understanding the potential and the limitations.
Institutions
• A gradual shift towards more impersonal ‘rule of law’ institutions that check discretionary use of power (e.g. anti-corruption agencies, the Supreme Court).
• Greater accountability of the state and the private sector, with a vigorous free press and an active civil society.
• Market institutions now firmly embedded, with economic dynamism that bridges the large-small divide.
India in Africa
• Increasing presence in Africa, through telecoms, services, horticulture, …
• “The commerce between India and Africa will be of ideas and services, not of manufactured goods against raw materials after the fashion of Western exploiters.” (M.K. Gandhi).
• A different terms of engagement in Africa? Or more of the same?
• A more feasible model of economic growth for Africa than the classic East Asian developmental state?
India’s Role in the Re-shaping of International Development• No clear strategic focus on foreign policy.• Ideas vs Incentives: neither one nor the other,
somewhere in the ‘fuzzy middle’.• An international leadership role that it does not want to
assume.• A rising India would need to take on responsibilities
commensurate with its power.
Implications for UK Development Policy
• A greater presence/influence in Asia through a stronger partnership with India.
• Beyond aid: closer trade links with the EU, e.g. moving on the stalled EU-India Free Trade Agreement negotiations.
• Movement of people and ideas: not closing down the borders to either.
Is there a Brazilian ‘Model’ of Development?
Armando BarrientosBrooks World Poverty InstituteInternational Research Initiative on Brazil and Africa (IRIBA)[email protected]
Brazil’s emergence as a superpower 6th largest economy, leading role in the G20Brazil growing engagement in South-South trade and technical assistance
Marked improvement in economic and social indicators
Economic growth, although not at China’s levelsPublic finances: stable macroeconomic policies and high tax/GDP ratioPoverty: large reductions in povertyInequality: significant reduction in income inequality
…is there a ‘new development model’ in Brazil?Opinion is divided on several issues
When? Is there a break point?What, if any, are the main components of this ‘model’? How are Brazil’s achievements to be sustained?
Brazil’s growth performance improved in the 2000s
-3
-2
-1
0
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8
1981
1982
1983
1984
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1989
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1995
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1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Brazil - GDP (% growth p.a) 3-year average
GDP (% growth p.a)
IPEA Data
But, what is impressive is the quality of growth: Inclusive, pro-poor growth
Cum
ulati
ve g
row
th in
inco
me
per-
capi
ta (%
)
Growth incidence curves for Brazil, 2003–2011
60
50 49.00
40
30
19.66 20
10 9.98
0 5 8 11 14 17 20 23 26 29 32 35 38 41 44 47 50 53 56 59 62 65 68 71 74 77 80 83 86 89 92 95
Growth incidence curve. Growth rate in mean.
Data Source Bianchi et al
Improvement in public finances
29.61
26.9626.49
27.0327.72
28.79
30.2931.00
32.3031.68
32.28
33.54 33.5234.22 34.30
33.8234.07
24.08
21.6620.96
21.6322.24
23.58
24.8025.54
26.5125.89 26.25
27.21 27.1127.66 27.67
26.8427.04
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Brazil - Improvement in Public Finances 1994-2010Al Govt. revenues/GDP Tax/GDP ratio
Data Source: Base CIAT-BID
Leading to sustained poverty reduction
1992 1993 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 2009
Extreme poverty % pop. 28.65 28.86 22.49 23.15 23.01 22.16 22.61 22.91 21.50 22.99 20.57 17.77 14.94 14.70 12.50 11.86Poverty % pop 53.13 54.08 45.81 45.45 45.60 45.05 45.95 45.58 44.79 46.83 44.92 41.60 37.04 35.97 32.49 31.07
-
10.00
20.00
30.00
40.00
50.00
60.00
Pove
rty
head
coun
t rat
e (%
of p
opul
ation
)
Brazil poverty indicators 1992-2009Data Source: IPEA
…and a reduction in income inequality
58.0
60.260.0 60.1 60.1 59.9
59.3 59.458.8
58.1
57.056.8
56.1
55.4
54.454.0
1992 1993 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 2009
Brazil - Gini coefficient of incomeGini
Data Soure: IPEA
When?
0
500
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2500
1980
1981
1982
1983
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1985
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Annu
al c
hang
e in
IPCA
(%)
Brazil - Consumer Price Inflation % p.a. (IPCA) Consumer Price Inflation % p.a. (IPCA)
1930s-1980s – Import SubstitutionIndustrialisation
1985-1993 – Crisis, democratisation and Adjustment
1988 New Constitution
1993-1996 – The Plano Real
What are the main components of a Brazilian ‘Model’?
Political consensus across parties focused on incremental and inclusive reform leading to stable macroeconomic and fiscal policy
F. Henrique Cardoso [1994–2002]; Lula [2002-2010] and Roussef [2010-?]
Continuity of state planning capacity and pragmatic interventionism
Market reform in early 1990s privatised State Owned EnterprisesCombination of liberal reform-driven incentives and persistence of state strategic planning and investment (e.g. National Development Bank
BNDES)Comparatively successful leveraging of inward FDI to realise improvementsin competitiveness
Investment in social policy – Education, health but primarily poverty reduction
Favourable external conditions, especially rising commodity
How are Brazil’s achievements to be sustained?
45.8
12.76.2
54.2
87.393.8
0
10
20
30
40
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60
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Brazil 2007 World 2005 OECD 2005
Domestic Energy Supply - Renewable vs non-renewables
Renewables Non-renewables
From Uribaci Sennes an Narciso [2009]
Green energy policy
In conclusion
Marked improvement in economic and social indicators in Brazil
Due to a combination of macroeconomic and financial stability; investment in social policies; and favourable external conditions
If there is a ‘model’, it lies in Brazil’s capacity to respond to globalisation on its own terms
IN TE R N ATIO N AL R E S E A R C H IN IT IATIV E O N B R A Z IL A N D A F R IC A
South Africa: Emerging Power or African Power?
Stephanie Barrientos
Institute of Development Policy and Management (IDPM)
Brooks World Poverty Institute
South Africa Context
• S. Africa emerging middle power – World GDP: Brazil 3%; India 2.5%; S. Africa 0.5%
• Economic & Social Challenges:– Strong links to EU (affected by euro crisis) – Unrest in mining sector (50% exports) – Marikana– High Inequality and poverty levels– Unemployment (25%), skills shortages– Addressing legacy of apartheid
• ZA largest African economy (30% Africa GDP)
Africa: ‘The New Growth Frontier’
• Rates of GDP Growth 5% Sub-Saharan Africa (WB 2012)• Nigeria - 6.6%• Kenya - 4.6% • South Africa – 2.5%
• Consumer growth within Africa (Accenture 2012)– Consumer growth SSA 4% p.a. 2000-2012– 9 countries key to est. $1 trillion consumer spending 2020
Country 2010 Spend 2020 Est. Spend
Nigeria $ 115 bn $167 bn
Kenya $ 23 bn $ 37 bn
South Africa $ 215 bn $ 315 bn
Shifting Markets
South Africa Fresh Fruit - Export Destination (% export value)
Region 2001 2011
Africa 4.7 7.3
Asia& Middle East 19.9 31.0
EU 27 (ex UK) 47.7 35.8
UK 22.1 15.9Source: ITC trade database 2012
Changing retail landscape
Rising Private Standards
localg.a.p.
Climbing Value Chain Ladder
Product: Domestic
SupermarktStandards
Product & Process: Regional
Supermarket Standards
Product, Process,
Environ & Social: Global Supermarket
Standards
Implications for UK Retailers & Development Policy• UK Retail
– "Africa is really important to Sainsbury's and our customers … because we source a wide variety of products from this vast continent. Judith Batchelar, Director, Sainsbury's Brand.“
• Aid for Trade (WTO, EU and UK)– At the border, behind the border…. Beyond the border (value
chain)– Donors – e.g. DFID Trade and Global Value Chain Initiative
• Building & Supporting African Alliances – Regional/trade organisations– Governments– Private Sector– Civil Society
Implications for UK Policies
• Points to significance of BRICs beyond China. Opportunities to partner Brazil or India?
• Points to significance of emerging middle powers for international development – South Africa, Turkey, Indonesia, others?
• Recognising that Turkey is more than an EU membership issue – major implications for international development. In isolation or in partnership with UK?
• Policy focus needed on ideas and institutional influences as much as financial and resource flows