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NDRF News
FOOD: Reduce hunger, nurture women farmers Empower women and girls in fight against disasters says UNISDR New DARA Research on Humanitarian Aid from Donor Governments Finds Limited Progress Fiji: Flood prompts relocation of 140 villagers UN kicks off talks on new blueprint for disaster risk reduction
http://www.cid.org.nz/news/5-lessons-from-the-rise-of-the-brics/
3/11/2012
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Gazprom, but it also means heavy regulation, frequent intervention, and sometimes a degree of state control over markets and firms that doesn't look so capitalist. But this a statist means QUICKLINKS to a capitalist ends, designed to maximize long-term growth and encourage development. It Share doesn't always work out that way, but their success is hard to ignore, especially as the great free market stalwarts -- the U.S., Europe, Japan -- fall on increasingly hard times. CID Members The state capitalist model will be an attractive one for other developing economies. Rising neighbors in Asia, Africa, and Latin America may seek to engage with the global markets but, rather than opening everything overnight and letting Westerners conquer their entire economies, protect and grow domestic firms that can compete internationally and will funnel money back into development. But the West can learn as well. As free markets -- especially financial markets -- fail and fluctuate, free marketeers in Washington and London and elsewhere may want to ask if a bit more state intervention and regulation is worth considering. (4) CORRUPTION IS THE KILLER Think about how much of a problem corporate and industrial influence over politics has become in the U.S. Now imagine the companies are bigger, politicians face little or no public accountability, and there's often not a clear line between CEOs and the government bureaucrats who regulate them, who might even share an office or a boss. Add in billions of dollars in exploding growth and you'll get a sense of why corruption could be one of the biggest problems facing BRICs and other developing economies. State capitalism doesn't always work, and sometimes can fail badly. Politicians and party officials aren't always motivated by the selfless devotion to national well-being that is supposed to guide their management of markets and firms. Cronyism, corruption, and industrial capture are always big risks, but they seem to become more likely and more dangerous as the economies grow. After all, it's one thing for a Chinese Communist Party official to remain dispassionate and fair-minded when managing, say, a local bank. But it can't be as easy for the officials who guide the Industrial and Commercial Bank of China, which has $1.9 trillion in assets and a significant interest in guiding public policy. This means more than just free-riders leaching off the system. Growing economies sometimes have to make major changes to domestic industries to keep growth from stalling, but the private citizens and state officials who got rich and powerful off those domestic industries will want to resist changes that could hurt them. In China, for example, some analysts wonder if the Communist Party will be able to push through some overdue reforms that would boost domestic consumption but weaken state-controlled exporters, who are entrenched in the economy and political system. In Russia, the needs of Gazprom can seem to occasionally foreign policy, sometimes to the detriment of Russia and even its neighbors, as when Moscow cut off all natural gas to Ukraine as punishment for siphoning some off. Ukrainian officials fessed up and Gazprom got its money, but Russia's relationship with Europe was badly damaged. Free-market India is not immune from corruption's terrible effects, either. As investment money rushes in, politicians who feel little-constrained by the country's weak oversight and legal system are cashing in. In 2008, Indian government officials were bribed to sell cellphone bandwidth rights for far below market rates, effectively robbing the state of the $40 billion dollars by which it under-sold to telecom companies. A national protest movement, led in part by activist Anna Hazare, is channeling the country's collective outrage at corruption. But the movement has so far achieved little. (5) STRONG ECONOMIES NEED STRONG STATES AND STRONGER SOCIETIES If state capitalism is the BRICs' greatest strength, and corruption their greatest weakness, then the lesson may be that healthy government-led economies require healthy governments. That means a state that will manage the economy responsibly and selflessly, something that's not so easy when the only powerful institutions in a country are the state and the industries it must manage. At some point, the relation gets a little too cozy, and the intended beneficiaries -- the actual population of the country -- get forgotten. The best way to keep that from happening, or at least the best way that anyone has come up with so far, is for civil society to become a player in it's own right, strong enough to assert its interests and to pressure both the state and industry to behave responsibly. A strong civil society can come from a number of things: labor unions, public interest groups, political parties, and most importantly the right to elect and unelect leaders. Civil society is very weak in China and Russia, it is large but struggling in India, and it is relatively successful in Brazil. This may help explain why, of the four BRICs, Brazil seems to enjoy the greatest
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http://www.cid.org.nz/news/5-lessons-from-the-rise-of-the-brics/
3/11/2012
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stability. Compared to China's looming threats from inflation or a transition trap, Russia's demographic crisis, and India's rampant corruption, Brazil is downright boring. Its economy is lightly but competently managed, the hyperinflation crisis of the 1980s is behind it, and both the state and market seem to work in some kind of benign concert. The country has the greatest political rights and civil liberties of the four BRICs, according to the latest rankings from Freedom House, and its civil society actively participate in politics (unlike in India, where citizens vote but often have few other outlets, such as unions, for participation). It's not a cureall to solve the problems of a developing economy, but a strong and free civil society seems like a good way to at least deter them from getting too bad. The Alantic
http://www.cid.org.nz/news/5-lessons-from-the-rise-of-the-brics/
3/11/2012