The Great Debate

John D. Rockefeller’s immense wealth made “rich as a Rockefeller” part of the lexicon. But his legacy rests not on what he earned. As the founder of Standard Oil and the richest person in history, Rockefeller donated so much money during his life that he needed a team of philanthropy specialists to distribute it. The result was the Rockefeller Foundation, chartered in 1913 “to promote the well-being of mankind throughout the world.”

Much as the Gilded Age in the United States created titans like Andrew Carnegie, Cornelius Vanderbilt and Rockefeller, the economic success of emerging powers has produced a new class of multimillionaires and multibillionaires. Brazil, Russia, India and China are home to 276 billionaires, according to the most recent Forbes list, almost a quarter of the world’s total. Many have begun to focus on what Carnegie called “the business of benevolence.” This nascent trend is poised to grow. But it requires support if philanthropy is to meet its potential to tackle the developing world’s socioeconomic challenges.

Philanthropy is a powerful tool because its contributions can go well beyond money. Many emerging donors are prominent citizens because of their business success. This gives them familiarity with their countries’ economic and policy issues as well as an ability to influence the national agenda. They can invest not just financial resources but also expertise and connections that can bolster the projects they support.

The need for both is great. The same growth that has produced remarkable wealth in emerging countries has left many behind. According to the latest World Bank data, 22 percent of rural Chinese live on less than $1.25 per day — far fewer than in the past, but still alarming. In India, 34 percent of people in rural areas and 29 percent in urban areas live below the same threshold. And in Brazil, while acclaimed programs such as Bolsa Familia have drastically reduced poverty, the poorest 10 percent continue to earn less than 1 percent of all income. The richest 10 percent earn some 55 times as much. Organized philanthropy can play a central role in helping those who remain poor in increasingly rich societies.

Small-scale individual and community charity has a long history in the Global South. What is unprecedented is the number of people with the wealth necessary to tackle the root causes of major socioeconomic problems on a transformational scale. This capacity has existed in the West since Rockefeller, but developing economies have produced this level of private wealth only in the past two decades.

What more does India's central bank have to do? Last week data showed March inflation rising to almost 9 percent on an annual basis. More importantly, core inflation is above 7 percent for the first time in 3 years meaning demand-side pressures are rising fast. And that's despite the Reserve Bank of India raising interest rates eight times since last March.

The inflation data comes just after a quarterly HSBC report based on purchasing managers indexes showed that inflation in India seemed impervious to monetary policy tightening.

The truth, is the inflation-fighting central bank has little backup from the government which remains stubbornly in spending mode. Its foot-dragging on reform and foreign investment contributes towards keeping food price inflation high. This year's fiscal deficit target is 4.8 percent of GDP and even this
is seen as optimistic.

The following is a guest post by Angel Gurría, Secretary-General of the Organisation for Economic Co-operation Development. The opinions expressed are his own.

The world’s economic center of gravity is changing. Global GDP growth over the last decade owes more to the developing world than to high-income economies. If these trends continue, by 2030 developing countries will account for nearly 60% of world GDP on a purchasing-power parity basis, according to OECD calculations.

While high-income countries have been languishing in the worst recession since the 1930s, China and India have continued to power ahead. This is not a single stand-alone event, but a sign of an important structural transformation in the global economy, a process we call “shifting wealth.”

In its May economic outlook, the Organisation of Economic Cooperation and Development projected upward growth outlooks for BRIC countries Brazil, Russia, India and China -- the world's four largest emerging economies.

Strong growth in those economies is helping to pull other countries out of recession, the OECD said. The Paris-based organisation projects that China’s GDP growth will exceed 11 percent for 2010, and anticipates that India's real GDP growth will be 8.3 percent. Russia's GDP growth is expected to be 5.5 percent, and Brazil's is projected at 6.5 percent. By comparison, the OECD projects that the Euro area will see 1.5 percent real GDP growth, while the UK will see a 2.2 percent growth.

The "BRIC" acronym was created by Goldman Sachs economist Jim O'Neill in 2001 to mark a shift of economic power from the West. In June 2009, the BRIC leaders met in Yekaterinburg, Russia, for a summit, which was seen as the beginning of a geopolitical alliance, although their economies are very different: Brazil's economy is based on agriculture; Russia's on energy exports; India's on services and China's on manufacturing. At that time, the BRIC countries accounted for 40 percent of the world's population and about 15 percent of its economy.

Setting up Biocon, Asia's largest biotechnology firm, was not a straightforward task for the woman who is now India's wealthiest businesswoman.

Kiran Mazumdar-Shaw chose the biotechnology sector as a fallback position after she realised at the age of 25 that India was not ready to accept a woman master brewer.

But abandoning her dream career of following in her father's footsteps did not mean she swept to success without any trouble.

Amid jitters about uncertainty in the financial markets over the past 16 months, many investors have continued to look toward the BRIC countries -- Brazil, Russia, India and China, which by 2050 are expected to be wealthier than most current major economic powers.

In all four countries, GDP has more than doubled since 1998, and in China and India it has trebled.

The Confederation of Indian Industry, a non-profit non-governmental, industry-led organisation, estimates India's GDP growth rate at 6.1 per cent in 2009-10.

- Kennji Kizuka was a consultant to the children’s rights division of Human Rights Watch and conducted research for their new report, Sabotaged Schooling: Naxalite Attacks and Police Occupation of Schools in India’s Bihar and Jharkhand States. The opinions expressed are his own. -

Late in the evening of November 29, 2008, a group of guerrilla fighters entered the remote village of Dwarika in the Indian state of Jharkhand and detonated improvised bombs inside the village’s only school. Doors blew apart, desks and chairs splintered, and portions of the classroom walls crumbled. No longer suitable or safe for learning, the school closed.

When I visited Dwarika in June of this year, local residents attributed the attack to the “Naxalites”—the term used in India to refer to Maoist-oriented insurgent groups who seek to overthrow the Indian state and establish a new social order to protect oppressed and marginalized people. They wage their armed struggle by attacking police, assassinating politicians, extorting businesses, and targeting government infrastructure – trains, roads, and schools.

Controversy still surrounds one of the world's worst industrial accidents 25 years after an estimated 8,000 people died in the immediate aftermath of a toxic gas leak in Bhopal, India.

At around midnight on December 3, 1984, a leak at a Union Carbide plant of methyl isocyanate gas -- a chemical compound used to make a pesticide marketed as Sevin -- led to about 50,000 people being treated for severe injuries to their eyes, lungs, and kidneys.

An estimated 15,000 to 25,000 may have later died from exposure to the gas.

Union Carbide, now part of Dow Chemical, settled a lawsuit in 1989 by paying $470 million in compensation to the Indian government. In return, the government agreed to drop criminal charges against the company.

One year ago, I asked whether then President-elect Barack Obama's plans for Afghanistan still made sense after the Mumbai attacks torpedoed hopes of a regional settlement involving Pakistan and India. The argument, much touted during Obama's election campaign, was that a peace deal with India would convince Pakistan to turn decisively on Islamist militants, thereby bolstering the United States flagging campaign in Afghanistan.

As I wrote at the time, it had always been an ambitious plan to convince India and Pakistan to put behind them 60 years of bitter struggle over Kashmir as part of a regional solution to many complex problems in Afghanistan.  Had the Mumbai attacks pushed it out of reach? And if so, what was the fall-back plan?

One year on, there is as yet still no sign of a fall-back plan for Afghanistan and the tense relationship between India and Pakistan remains the elusive piece of the jigsaw.

Indian Prime Minister Manmohan Singh is in the United States for the first official state visit by any foreign leader since President Barack Obama took office this year. While the atmospherics are right, and the two leaders probably won't be looking as stilted as Obama and China's President Hu Jintao appeared to be during Obama's trip last week (for the Indians are rarely short on conversation), there is a sense of unease.

And much of it has to do with AFPAK - the war in Afghanistan and Pakistan which is very nearly at the top of Obama's foreign policy agenda and one that some fear may eventually consume the rest of his presidency. America's ally Pakistan worries about India's expanding assistance and links to Afghanistan, seeing it as part of a strategy to encircle it from the rear.  Ordinarily, Pakistani noises wouldn't bother India as much, but for signs that the Obama administration has begun to adopt those concerns as its own in its desperate search for a solution, as Fareed Zakaria writes in Newsweek.

And that is producing a "perverse view" of the region, he says adding it was a bit strange that India was being criticised for its influence in Afghanistan. India is the hegemon in South Asia, with a GDP 100 times that of Afghanistan and it was only natural that as Afghanistan opened itself up following the ouster of the Taliban in 2001, its cuisine, movies and money would flow into the country. The whole criticism about India,  Zakaria says, is a little bit like saying the United States has had growing influence  in Mexico over the last few decades and should be penalised for it.