Development Economics

Coca-Cola and Foreign Direct Investment in the Philippines

While I lived in the Philippines, I followed what happened in the Philippines.  The national and presidential election in May, the political scandals, foreign policy with other Asian countries, and even the love life of Kris Aquino, the sister of the current president and the subject of at least one news story every single day.  And I realized that none of this ever really made it onto the international news circuit.  In fact, the only stories that are ever picked up by the international news are bad ones - the Maguindanao massacre, in which more than 50 people were killed, including two dozen journalists, the hostage crisis in Manila, when 8 tourists from Hong Kong were killed by a deranged former police officer.  And now that I am back in the U.S., the first story I read about from my adopted second home is this:

Even in the world of diplomacy, there are times when language has to be clear and unmistakable – like after a flag is mistakenly displayed in a way to imply there is a state of war. The Philippine flag was displayed upside down behind President Benigno Aquino III when he met with President Obama and other leaders of the Assn. of Southeast Asian Nations on Friday. “This was an honest mistake,” Rebecca Thompson, a spokeswoman for the U.S. Embassy, said in a statement posted on the Official Gazette, edited by the Philippine president’s office.
Shit!  (more…)

Development Economics

Stephen Colbert Calls Bullshit on Congress

This is not a blog about domestic agriculture policy, nor is a blog about politics.  But mental gymnastics create the necessary link between Stephen Colbert's address to the House subcommittee on immigration and the main theme of this blog, poverty alleviation in the developing world.  I enjoyed this clip, not only because I harbor not a small amount of contempt for politicians in general and, in particular, the U.S. congress, but also because it is a good lesson in the cognitive dissonance of supporting free market principles and toughness on immigration. In short, migrant workers will work for less at harder jobs than most Americans.  That is true in the U.S. and outside the U.S.   If migrant workers cannot come to the U.S. to work on U.S. farms, then U.S. farms will move to where labor is cheapest: the home countries of migrant workers.  Putting on the blinders and ignoring the fact that migrant workers are currently lowering prices (or at least making farmers richer) by reducing production costs is like anti-free market.  Over to Colbert:

"So what's the answer?  Now I'm a free market guy.  Normally I would leave this to the invisible hand of the market, but the invisible hand of the market has already moved 84,000 acres of production and 22,000 farm jobs to Mexico and shut down over a million acres of U.S. farmland due to lack of available labor.  Because apparently, even the invisible hand doesn't want to pick beans."
When this principle is applied to trade, it is called protectionism, a policy diametrically opposed to the concept of free trade and a pro-market approach in general.  (more…)

Development Economics

“A Core Pillar of American Power”

This is how President Obama described the role of foreign aid in our geopolitical relationship with the world.  Today on All Things Considered, NPR had a segment on Obama's speech to the United Nations on America's changing approach to aid:

President Barack Obama on Wednesday defended U.S. aid to impoverished people even during sour economic times at home yet promised a sterner approach, favoring nations that commit to democracy and economic revival.

Addressing world leaders, Obama offered no new commitments of U.S. dollars, but rather a blueprint of the development policy that will drive his government's efforts and determine where the money flows. His message was that the United States wants to help countries help themselves, not offer aid that provides short-term relief without reforming societies. "That's not development, that's dependence," Obama said. "And it's a cycle we need to break. Instead of just managing poverty, we have to offer nations and people a path out of poverty."

This isn't necessarily revolutionary thinking, but it is still significant.  People have been talking about redefining the way we give money to developing countries, and it has always been a tool of foreign policy.  In the past decade USAID has been funding projects that shore up the private sector economy in countries around the world, even if government-to-government aid is still alive and well.  And just a few months ago, a memo titled "A New Way Forward on Global Development" was leaked, detailing this radical change in strategy and approach for foreign aid.

Obama talks about favoring countries that are committed to the principles of democracy and economic revival, though this is only partly true.  We have been known to give money to countries that are not exactly democracies in a traditional sense, and have have withheld money from other countries that are democracies.

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Foreign Policy

Thoughts on Leaving

I'm writing this on the plane from Bacolod, where I have spent that last 10 months, to Manila. [Note: I got back 4 days ago, and only now am getting around to posting this] Tomorrow I’ll get on another flight to Tokyo, then another to Detroit, and one more back to Boston to the home of my birth.  It is a good opportunity to write a stream-of-consciousness piece on leaving. I’ve called Bacolod my home for the better part of a year.  True, I’ve used the Philippines as a hub for the rest of Southeast Asia, but Bacolod has been my home for seven of those ten months.  When I return home from Bangkok or Saigon or Hong Kong, it isn’t to Boston.  Home has been Bacolod.  That is no longer the case, and that fact creates mixed emotions.  But first, some background that place. The Philippines is an archipelago with 7,100 islands.  Negros is located in the middle of the country, in a region called the Visayas, which also includes Cebu, Panay, Leyte, and Samar.  It is the divided into two provinces – Negros Occidental, of which Bacolod is the capital, and Negros Oriental.  It is called the Land of Sugar because it produces the majority of the sugarcane in the country.  In Bacolod, if you want to support local commerce, just pour out a couple of sugar packets.  Negros is also beautiful.  An active volcano, Mt. Kanla-on, stands prominently inland from the coastal city of Bacolod.  Get outside the city and you sink into miles and miles of sugarcane, standing about two meters high and very green.  When you aren’t surrounded by sugarcane, you might be looking out at lime green rice fields, low and vast.  Look to your right on the cliffside road to Dumaguete, the capital of Negros Oriental, and you see the coastline – blue meets green as you drive the dividing line. (more…)