The Great Debate

U.S., China and eating soup with a fork

Bernd Debusmann

Oct 29, 2010 10:35 EDT

-The opinions expressed are the author’s own-

Are economists the world over using an outdated tool to measure economic progress?

The question, long debated, is worth pondering again at a time when two economic giants, the United States and China, are sparring over trade, currency exchange rates and their roles in the global economy.

In the run-up to U.S. mid-term elections on November 2, politicians from both parties, for different reasons, blamed trade with China for American job losses. China responded with irritation and hit back by accusing the U.S. of “out of control” printing of dollars tantamount to an attack on China with imported inflation.

Measured by Gross Domestic Product (GDP), the United States tops the list of countries. China overtook Japan in August to become number two. Depending on whose forecasts you believe, China will overtake the United States in 2020, 2035 or 2040 and therefore turn the 21st century into the long-predicted Chinese Century. It’s becoming conventional wisdom that the United States will play a reduced role on the world stage.

Crystal ball gazers might do well to remember that long-range forecasts have often been wrong in the past. At the turn of the 20th century, eminent strategists predicted that Argentina would be a world power within 20 years. In the late 1980s, Japan was seen as the next economic leader, on the strength of supposedly unstoppable progress. Forecasters extrapolated from past GDP growth rates.

They are widely used to compare standards of living in one country with those in another but critics say GDP is too narrow to be a realistic indicator. Joseph Stiglitz, the Nobel-prize winning American economist, has complained that world leaders make a fetish out of it and suffer from GDP-obsession.

from The Great Debate UK:

“Week of Action” on arms trade treaty

- John Duncan is the United Kingdom Ambassador for Multilateral Arms Control and Disarmament. He comments regularly via Twitter and on his own Blog. The opinions expressed are his own. -

Former United Nations Secretary General Kofi Annan once remarked that in terms of people killed and injured every day, conventional weapons are the worst weapons of mass destruction in the 21st century.

Monday sees the start of a “Week of Action” to generate support for a new International Arms Trade Treaty, organised by NGO alliance "Control Arms" which brings together Amnesty International, Oxfam and IANSA.

Control Arms have been lobbying for an ATT for the best part of ten years; inauspicious timing perhaps in a decade that is increasingly refereed to as “the Decade of Stalemate” in the field of international multilateral diplomacy.

The low point of international efforts to curb the proliferation of conventional weapons was probably 2006, with the collapse of the United Nations Review Conference on Small Arms and Light Weapons in New York. But it was also the year that a group of seven countries (Argentina, Australia, Costa Rica, Finland, Kenya, Japan, and the UK) launched a process in the United Nations leading to the negotiation of a new legally binding treaty to regulate the international arms trade.

The humanitarian and moral case for regulation is unassailable, with hundreds of civilians being killed every day by weapons that have found their way into the hands of criminals, terrorists, insurgents and more recently pirates.

But economics is an equally important driver in this debate. As the discussion in the UN has moved forward, more and more companies from the arms industry itself have come to support the need for international regulation of what is now a global industry. The patchwork of arms export control agreements that currently exist has frustrated cooperation amongst responsible companies and served as a brake on inward investment. They have had the effect of creating competitors operating on different standards who are pushed towards the areas of the market where there is the highest risk these weapons will be misused or diverted.

from Africa News blog:

Time to stop aid for Africa? An argument against

Reuters Staff

Feb 23, 2009 00:35 EST

Earlier this month, Zambian economist Dambisa Moyo argued that Africa needs Western countries to cut long term aid that has brought dependency, distorted economies and fuelled bureaucracy and corruption. The comments on the blog posting suggested that many readers agreed. In a response, Savio Carvalho, Uganda country director for aid agency Oxfam GB, says that aid can help the continent escape poverty - if done in the right way:

In early January, I travelled to war-ravaged northern Uganda to a dusty village in Pobura and Kal parish in Kitgum District. We were there to see the completion of a 16km dirt road constructed by the community with support from Oxfam under an EU-funded programme.

The road is bringing benefits in the form of access to markets, education and health care. Some parents say their daughters feel safer walking to school on the road instead of through the bushes. Many families have used the wages earned from construction work to pay for school fees and medical treatment. This is the impact of aid.

Having lived and worked in east Africa, I have witnessed the positive effects of aid. But done badly, it can be very limiting and even has the potential to create more harm. To avoid this, it must be provided within an enabling environment in which it is used as a catalyst for change and not as an end in itself. Governments must show leadership through an accountable system.

For individuals, access to resources – including aid - is like an investment. Aid can build up poor people’s assets, support good governance and enhance skills and capacities to bring about transformation. But it can become a bane when it makes communities dependent, lazy and hopeless. Governments, aid agencies and the United Nations need to ensure the delivery of aid is well planned and coordinated, leading to higher self-reliance among poor communities.

Aid is also beneficial when trade is fair. There are several examples in Africa, like the case of coffee farmers in Uganda, where aid has been used effectively to improve the overall quality of the coffee seeds, thereby giving farmers better prices for their produce. When they have access to markets at home and abroad, they generate income which is ploughed back into increased output, better access to health and education, and overall improvement in the quality of their lives. To make this happen, developed countries need to stop procrastinating and put in place fair trade practices.

Aid works well if governments are accountable – in other words, when they are responsible and encourage active citizenship. On this continent, civil society is still weak and needs to be nourished. But stopping aid will not resolve frustrations about poor governance, which is partly a result of weak public scrutiny. Aid should be used to help fight corruption and promote accountability through active input from ordinary people.