Development Blogs.com

Over the past three decades the world has been transformed. In 1974, nearly three-quarters of all countries were dictatorships; today, more than half are democracies. More recently, however, “democratic recession” has affected many crucial parts of the world, including Russia, Venezuela, or Nigeria. Despite these setbacks, the desire for democracy runs deep around the world. There are no global rivals to democracy as a broad model of government. But how and why exactly does democracy progress? Is it really possible to build free and democratic societies throughout the world? In CIPE’s latest Feature Service article, Larry Diamond, senior fellow at the Hoover Institution and the Freeman Spogli Institute for International Studies at Stanford University, answers this crucial question....

Education is the backbone of any modern, competitive society. In this Feature Service article, Manilka W. Leanage, 3rd place winner in CIPE’s 2007 Youth Essay Contest in the category of ‘Education Reform and Employment,’ talks about the need to make Sri Lanka’s education system more responsive to the needs of students and the market. Despite very high literacy rate and free education up to the tertiary level, young Sri Lankans find themselves unprepared for the challenges of a modern workplace. Many are unable to pass highly selective university entrance exams; and even those who complete their university education often lack the skills and entrepreneurial drive to succeed professionally. Leanage highlights the problem of youth unemployment among the educated: “I personally...

Zimbabwe’s economy suffers from ever-escalating inflation levels, price distortions for key commodities and utilities, high unemployment rates, rising poverty levels, foreign exchange and commodity product shortages, deteriorating public services, rising inequalities, and large income disparities. This harsh economic reality is crowding out young people’s ambitions of career and entrepreneurial development. In this Feature Service article, Roselyn Sekai Kapungu, 3rd place winner in CIPE’s 2007 Youth Essay Contest, talks about the destructive effects that this acute economic crisis has had on Zimbabwe’s education system and opportunities for the country’s youth. Education is conventionally thought to bring private benefits through increased earnings. But education brings greater...

Building the institutional framework for better companies and better societies is a learning process, where the public, private, and civil society sectors share mutual responsibility to strengthen good governance, particularly in the context of developing countries. All stakeholders must ensure that the rules of the game are written and applied for the benefit of all of society and not for the private gain of the few. If that is not the case, corruption can take its most extreme form: state capture, where a country is run for the benefit of political elites colluding with narrow private interests at the expense of the society at large. This Feature Service article is based on the report of the International Consultation on the “Role of the Private Sector in Ethics and Corporate...

In the second half of 1997, four East Asian countries – Thailand, Malaysia, the Republic of Korea, and Indonesia – experienced a massive reversal of the large foreign capital inflows they enjoyed through much of the 1990s. The outward swing amounted to more than $100 billion and exceeded 11 percent of their collective GDP. This capital flight precipitated large currency devaluations, severe financial asset and output declines, and impairment of financial institutions, rivaling Latin America’s debt crisis in the 1980s. In a matter of months, countries that experienced unprecedented growth and prosperity over the previous three decades were suddenly and deeply troubled. In this Feature Service article, George J. Vojta and Damon C. Morris from Financial Standards...

Major systemic transformations in the post-Soviet states are over. Yet the outcome in most cases is not a full-fledged democratic market economy but rather an unsatisfactory compromise between socialism and free markets. Transition countries by and large focused their energies on creating a “social market economy” à la Western European welfare states. Thus, socialism as a system of completely centralized decision-making has been replaced by interventionism, a system with various degrees of state involvement in economic affairs. This “third way”-ism took the place of Marxism as an ideological pillar of the new post-communist world; however, it failed to produce a viable alternative to how the goal of greater social well-being can be accomplished. In this Feature Service article,...

During the last few decades, China has been witnessing the success of unorganized, leaderless grassroots movements in bottom-up expansion of civil rights. Whether resisting the restrictions on freedom of movement or seizing individual liberties gradually conceded by the government, unorganized, non-ideological, and apolitical grassroots movements have fundamentally altered key elements of China’s one-party regime and its society at large. In this Feature Service article, Dr. Kate Zhou, associate professor of political science at the University of Hawaii, argues that this freedom-seeking spirit of the ordinary Chinese has been driving the country’s booming economy and it has affected many elements of daily life. The Chinese Government reacts rather than leads in this transformative...

Democracy has made great strides around the world during the last few decades. Yet in many parts of the world the triumph of democracy has been less than absolute. Even in countries where elections take place, the liberal element of democracy is often missing and governments struggle with accountability and good governance. Why does democracy seem so fragile? What elements are required for a country to reach the threshold necessary to sustain democracy? Hon. Anand Panyarachun, Former Prime Minister of the Kingdom of Thailand, addresses these key questions in his Feature Service article, focusing on the pillars needed to support the infrastructure of democracy and to build citizenship that extends beyond elections. He says, “In addition to responsible citizenship through participation in...

Family firms have long been excluded from the debate on good governance, since corporate governance is conventionally viewed as applicable only in the domain of public corporations. Yet only 15 percent of family-owned businesses survive until the third generation, indicating a great need for improved governance. In his Feature Service article, Mr. A. Razak Dawood, Chairman of the Pakistan Business Council and the former Federal Commerce Minister of Pakistan, addresses crucial problems faced by family firms, such as inadequate focus on preserving their human and intellectual capital rather than just financial assets. He also talks about the ways in which governance in family firms can be improved, starting with the formulation of a statement outlining the purpose, values, and goals of...

Bhutan, a small country wedged between China and India, has made great strides over the past 45 years toward transforming itself from an isolated kingdom into a fledgling modern democracy. The country has progressed in terms of economic and political development, but one significant area still lagging behind is the education system. In his Feature Service article, Kinley Rinchen, Planning Officer in the Office of the Vice Chancellor at the Royal University of Bhutan and an honorable mention winner in CIPE’s youth essay competition, traces the development of Bhutan’s education system and analyzes its current challenges. He emphasizes that more reforms are necessary to make the country’s education system able to better meet the needs of students and employers. As the Bhutanese economy...

Zimbabwe’s economy is experiencing the worst inflation rate in the world (50,000%, according to BBC) and basic goods are often unavailable at stores. As Alex Shkolnikov blogged a few weeks ago, Zimbabwe has started printing a 10,000,000 dollar bill, and it’s currently worth just under 4 U.S. dollars at the black market exchange rate. It’s difficult to imagine how people manage to survive when a banana today costs 15 times what a four bedroom house did 7 years ago. Many rely on foreign remittances, but there are also local solutions, many of which are led by young people. As Thandazile Mpofu discusses in “In Spite of the Odds: Young Entrepreneurs in Zimbabwe” – an honorable mention winner in CIPE’s 2007 Youth Essay Competition – many young people in Zimbabwe see...

Free media, of course, if an integral part of democracy, and it depends just as much on the climate within which it operates (laws and regulations) as it does on the people behind the scenes.  Skilled journalists, in this regard, play a very important role in making democracies work, whether its by exposing corruption and providing citizens with access to information and critical thought.  Many organizations get involved in building the professional skills of journalists - and the importance of such efforts can’t be understated.  Still, what we often see is that it is not just the reporting skills that journalists lack - it is the understanding of issues that they are reporting on, particularly in the economic and business areas.  Take corruption for example - it is not enough...

The 1994 genocide in Rwanda horrified the world with its extreme brutality. However, in the intervening years, media coverage of the country has decreased dramatically, and Rwanda’s situation has faded from the attention of the international community. Most people outside of the country, therefore, are largely unaware of the immense social, political, and economic challenges still facing Rwanda. In his Feature Service article, Pie-Pacifique Kabalira-Uwase, a Rwandan living in exile in South Africa and an honorable mention winner in CIPE’s youth essay competition, describes how history is being re-written in the country and the government’s policies to de-ethnicize Rwanda are actually doing the opposite. Especially for young people, this widespread propagation of revisionist...

A national business agenda (NBA) is a vital tool for the business community to encourage investment and stimulate business activity and economic growth. NBAs identify laws that impede the efforts of the private sector to advance businesses and effect economic growth. They also identify concrete recommendations and reforms to remove these barriers and improve the business climate. Developing an NBA is a democratic process that unites the business community, helps them to set common priorities, and provides a vehicle to communicate those priorities to policymakers. By doing so, the business community plays a key role in achieving public policy reform. To learn more about the NBA process, take a look at CIPE’s guidebook. CIPE has worked with countries as diverse as Egypt, Afghanistan,...

Doing business in some parts of the world can be risky. In addition to weak protection of property rights and confusing and contradictory laws, pervasive corruption often discourages businesspeople from entering a new market or makes their experience quite unpleasant. Too frequently, companies are faced with demands for facilitation payments in order to get things done – like get their goods through customs, obtain a business license, and pass safety inspections. Facilitation payments might seem like the poor cousin of bribery – somehow less of an offense – and companies often feel like they have no choice but to pay. However, transition payments are bribes – illegal and bad for business! In their recent article, “Small Bribes Buy Big Problems,” Alexandra Wrage, president...

Corporate social responsibility is viewed in many ways – some see it as a good thing for business and global development while others remain sceptical. CIPE’s most recent Feature Service article, “Mixed Perceptions of Corporate Social Responsibility: Experiences of Indonesia” by Yanti Koestoer, executive director of CIPE partner organization Indonesia Business Links, addresses this important topic by looking at the experiences of her country. In Indonesia, CSR is a relatively new concept and is frequently misunderstood, as the author argues. It shouldn’t be seen as a marketing scheme, she suggests, rather as a means of businesses’ engagement in sustainable development. We often discuss CSR programs in the context of ‘corporate citizenship,’ which conveys...

News about multinational companies paying different types of demand-side bribes – such as the protection money that Chiquita paid to Colombian paramilitary groups – has raised people’s awareness about the problems that companies face when working in high-risk environments. Demand-side bribery often puts companies in a very difficult position (ethically and practically): Should they pay corrupt officials to, for example, allow their goods through customs or should they refuse to pay the bribe and risk losing those goods? Regulations like Sarbanes-Oxley make paying bribes under any circumstances illegal, but companies working in places where rule of law is weak regularly encounter situations that make them choose between compliance with the law and moving their businesses forward....

In Kazakhstan, as in many former Soviet countries, the concept of entrepreneurship has long carried a negative connotation – and in the years following the collapse of the Soviet Union, this was just one of the hurdles facing businesspeople. Poor access to financing and an unfavorable legislative environment also hindered the development of the private sector, and the Kazakh government did not have a clear strategy to facilitate the development of the small- and medium-sized enterprise sector. In CIPE’s latest Feature Service article, “Breaking Down Administrative Barriers to Entrepreneurship in Kazakhstan,” Aliya Kantarbayeva discusses the development of the private sector in Kazakhstan and the many obstacles that it faced, and still faces. The article also offers a number of...

Investing in foreign markets can be risky, especially in countries where rule of law is weak and the economy is less than stable. However, investment is a major driver of economic growth, both for countries and individual firms. Fortunately, in environments where the institutions to protect investors do not exist, there is another mechanism available: international arbitration. In CIPE’s latest Economic Reform Feature Service article, “Expanding Business Opportunities through International Arbitration,” David Baron, Partner at McDermott, Will & Emery LLP and Adjunct Professor of International Law at American University discusses the importance of arbitration and the way the process works. The article is based on a presentation Mr. Baron made at CIPE in 2006, and you can...

Talking about corruption, the general public will often remain skeptical about business’s commitment not to engage in bribery, especially in emerging markets.  True, there are individual companies that engage in corruption (although bribery must be distinguished from extortion by government officials), yet it would be a stretch to argue that corruption is actually good for business.  Why do businesses pay bribes?  One answer has to do with the inefficient environments within which they operate.  The reality is, if you are stuck in a weak rule of law business climate, you are going to be more susceptible to bribes (whether on the grand or petty level).  This is why bribery by non-OECD companies operating in non-OECD countries is by far greater than bribery by OECD companies...

Most people have heard horror stories about hapless investors being taken in by fraudulent construction companies. Investors provide funds that are spirited off by the would-be builder, and the land on which the building should have been built remains an empty lot. These corrupt practices hinder investment and development in many countries, especially in countries where property rights are not protected and there is no recourse when a contract is broken. This is where the real estate appraiser comes in. Honest and competent real estate appraisers play a vital role in making real estate transactions fair and transparent in both developed and developing countries. In his interview with CIPE, Bill Endsley of the Appraisal Institute discusses many of the issues – like corruption –...

Last November, Dr. Charles Oman, who heads the OECD Development Centre, spoke at a CIPE roundtable on Uses and Abuses of Governance Indicators. The roundtable was based on a book of the same name by Christiane Arndt and Dr. Oman. [The book is available from the OECD]. At the roundtable, Dr. Oman led a very interesting discussion on the strengths and weaknesses of some of the most widely used indicators and how to apply them effectively. You can watch a streaming video of the presentation and question and answer period here. Now, as so many development agencies tie funds to meeting specific goals, these indicators are more important than ever. The MCC’s Millenium Challenge Account is the first example that comes to mind. Yet, as Dr. Oman and Ms. Amanpour point out in their recently...

CIPE’s recently published Economic Reform Feature Service article, “Trading in Power: The Politics of ‘Free’ Markets in Afghanistan”, addresses a pressing problem affecting Afghanistan’s political and economic development. According to the authors, Sarah Lister and Adam Pain of the Afghanistan Research and Evaluation Unit, Afghanistan is experiencing economic growth, but that growth does not benefit all citizens. Instead, it benefits only the wealthy and connected, leaving the majority of citizens disenfranchised. State institutions are currently unable to regulate the economy and ensure that all people have the opportunity to participate. An economy that is not governed by effective institutions will not lead to the development of a prosperous country. And while...

CIPE’s most recent Economic Reform Feature Service article discusses the publicly owned enterprise (POE) sector in Kosovo and the need for reform. The article is based on a longer report by CIPE partner the Riinvest Institute for Development Research, which has been trying to improve governance standards in Kosovo’s POEs.  Riinvest found that there are a number of institutional obstacles POEs face when implementing corporate governance best practices, ranging from a lack of awareness about the importance of corporate governance to the lack of a clear commitment on the part of the Government to POE restructuring and privatization. The set of policy recommendations Riinvest developed, should they be adopted, would go a long way towards strengthening the economy of Kosovo and...

In his interview with CIPE, Stephen Young of the Caux Round Table focuses on the role of business in society and the linkages between ethical business practices, institutional environment, and social progress.  According to him, some of the pressures against reforms that we so frequently observe come from the risk factor associated with market transactions: In many markets we are seeing a growing demand by people to provide protection against risk, protection against change. In some cases, this is a backlash against market reforms, private enterprise, and economic and social change. That is the origin of the recent debate on corporate social responsibility, corporate citizenship, and ethics. Further, he argues that backsliding from the course of market reforms in many countries could be...

CIPE recently published a Feature Service article on post-conflict reconstruction, “The New Post-Conflict Strategy: Building Domestic Capacity for Reform,” by Aleksandr Shkolnikov, Global Program Officer at CIPE. Shkolnikov argues that while humanitarian assistance plays a valuable role in post-conflict reconstruction, it is impossible to achieve lasting peace, democracy, and prosperity unless local groups get involved and become grassroots drivers of institutional reforms aimed at building democratic market economies. Post-conflict reconstruction is a much-discussed topic, due to the many high-profile countries featured regularly in the news. Shkolnikov’s article looks at the issue from a unique point of view and focuses on the need for local reformers to get involved...