Escolar Documentos
Profissional Documentos
Cultura Documentos
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PRIVATE SECTOR DEVELOPMENT: THE BIG READ
vvv.develomenl.asia 12DevelopmentAsiaAril}une2O12
Infamousforilshubris,lhe
Houslon-based comany ignored
lheadviceoflheWorldank,vhich
refused lo hnance lhe ro|ecl on
lhegroundslhalilvasloobig,loo
exensive,andeconomicallyirralional.
Lnronlhennegolialedlheover
lanlconlraclvilhlheGovernmenlof
Indiainsecrelbecausebolhsidesvere
anxiousloavoidublichearingsand
scrulinybylhemedia,accordinglolhe
bookConspiracy of Fools.
ncegroundvasbroken,Lnron
failedlogivelocalsasenseof
ovnershibybringinginanIndian
comanyasacororalearlner.
Anolhercomanylasevaslo
overlooklheolilicaloosilion
vhilecullivalingcloselieslolhe
Maharashlraslalegovernmenl.The
slralegyblevuin1995vhena
coalilionofHindunalionalislsvon
slaleeleclionsandlhrealenedlocancel
lheconlraclslheousledgovernmenl
hadsignedvilhforeigncororalions,
suchasLnron.
The Dabhol over lanl hnally
cameonlinebulilvasamoney
loserfromlheslarland,amida
disuleoveraymenls,ilvas
closedin2OO1shorllybeforeLnron
hled for bankrulcy. Seaking lo
The New York Times, Suresh Irabhu, a
formerIndianoverminisler,said:
Thisvasaclassiccaseofvhalshould
never be done.
WORD TO ACTION
The Lnron hasco had a ma|or imacl
onIndia.Ilgavelheconcelof
rivalizalionabadnameandselback
modernizalionoflheIndianover
seclorbydameninglheenvironmenl
forforeigninveslmenl.Morelhana
decadeaflerlheDabhollanlclosed
dovn,4O/oflheIndianoulalion
hasyellobeconnecledlolhe
eleclricilygrid.
YelLricIoslel,lheassislanl
adminislralorforeconomicgrovlh,
agricullure, and lrade al USAID, oinls
oul lhal mosl ma|or hrms invesling
abroadlodaycomefromanolher
mold and have a differenl mind-sel
comaredvilhmullinalionalsinlhe
196Os.Lvenlhoughlheayoffmay
nolbeimmediale,hesays,lhese
hrms lake lhe nolion of cororale
socialresonsibililyexlremely
seriouslybecauselheyrealizelheir
conlribulions lovard lhe vell-being of
local oulalions can also benehl lheir
shareholders.
Thesebiggercomaniessomelimes
lake an amazingly long-lerm viev,
Ioslelsays.Iflheyareconlribuling
lorimaryeducalion,lheyknov
lhallheeolelheyarehelingmay
beemloyeesorcuslomersin5or
1O years' lime.
r,inlhevordsoflheInlernalional
Iinance Cororalion's Saravia: The
rivaleseclorhaslomakemoney.
ul if you are able lo align lhe rohl
incenlive vilh roviding efhcienl and
PARTNERSHIP GONE SOUR Some
publicprivate partnerships have not
worked out well. Right, operations at
the Ninoy Aquino International Airport
Terminal 3 in Manila have been hampered
by the legal battle between the Philippine
government and private contractors.
%HORZWKLVOHSKRWRVKRZVWKH(QURQ
power station in Dabhol in Masharashtra
state, India before it was closed in 2001.
A
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vvv.develomenl.asia Aril}une2O12DevelopmentAsia13
reliableservices,lhenyoucanhavea
vinvin.
In Viel Nam, for examle, Mars,
oneoflhevorldslargeslchocolale
manufaclurers,hasleameduvilh
lhe governmenl and lhe World Cocoa
Ioundalionlolraincocoafarmers
in lhe Cenlral Highlands. Iarmers
aregivenadviceoncullivalion,
harvesling,fermenlingandarerovided
vilhcocoaseedlings,oeninglhedoor
loavaslexansionoflhecro.
Similar ro|ecls in Africa and Asia
rovideglovingublicilyforMars
vhilehelingloinsureasleadysuly
of high-qualily cocoa lo make candy.
Lverylhingvedoisaboulsellinglhe
slage for lhe fulure, says Hovard-
Yana Shairo, global slaff ofhcer for
lanlscienceandexlernalresearchal
Mars.
In anolher olenlial vinvin, 12 US
comanies,includingMicrosofl,
Molorola, and Ihzer, recenlly
arlnered vilh lhe ei|ing governmenl
loincreaseaccessibililyloheallhcare
in lhe IRC. In announcing lhe deal
in }anuary 2O11, lhen US Commerce
Secrelary Gary Locke, nov US
ambassador lo lhe IRC, said lhe
III vould hel lhe IRC achieve ils
develomenlgoals,buloinledoul
ilvouldalsooenunevexorl
markels for US hrms.
noccasion,lhereisevenmoney
lo be made in comlex ro|ecls lhal
may seem like obvious hnancial
losers.Iorexamle,ooreole,al
hrsl, may be unable lo ay markel
ricesforvalerorlighls.Yelrivale
comanies may slill hnd lhe incenlive
lolayvaleriesandbuildover
lanls because lhese ro|ecls can
imrovelivingslandardsandhel
lransilion nonaying benehciaries inlo
resonsible bill-aying cuslomers.
ThalslheideabehindlheIamir
Irivale Iover Iro|ecl in easlern
Ta|ikislan.
Themounlainousregionvasa
slralegic Soviel oulosl during lhe
Afghanislanvaroflhe198Os,lhuslhe
slalerovidedsubsidizedoverlo
evenlhesmalleslvillages.ulvhen
lhe Soviel Union collased in 1991 and
civil var engulfed Ta|ikislan, many
lanlsveredamagedordeslroyed,
overvasculoffloaboulhalflhe
oulalion,andeolebeganhacking
dovn lhe foresls for hrevood. Due
lolhehighbusinessrisksandlov
incomesoflheregion,allracling
oulsideinveslmenlloresloreover
seemedunlikely.
Illookavhile,bulasolulionvas
foundlhroughaarlnershibelveen
lhe governmenls of Ta|ikislan and
Svilzerland, lhe World ank, and
lhe Aga Khan Iund for Lconomic
Develomenl, lhe for-rohl arm
of lhe Aga Khan Ioundalion. They
crealedarivalelyovnedsecial
urosecomany,IamirLnergy,lo
generaleandsulyeleclricilylolhe
regions25O,OOOresidenls.Meanvhile,
lhe ro|ecl received $1O million in
concessional hnancing from lhe
Worldankanda$5milliongranl
from lhe Governmenl of Svilzerland lo
keelariffsaffordable.
A UN reorl called lhe Iamir ro|ecl
anexamleofhovIIIscanvork
eveninalransilioncounlryvilh
aerceivedhighlevelofolilical
risk. Slill, il look a lol of innovalive
lhinkinglomakelhedealcome
logelherandsomeexerlsoinllo
suchbrainslormingasexacllylhelye
ofvorkdevelomenlorganizalions
shouldfocuson.
Thegranlsandloanslhalused
lobelheirrincileorlfoliohave
becomelessimorlanlnovlhallhe
rivaleseclorissleinguloarlner
vilhgovernmenls.Aidorganizalions
andMDs,lheysay,shouldnov
concenlraleonlheirolenliallo
becalalyslsforarlnershisand
resecledvalchdogslhalcanromole
lransarenlgovernmenlandslable
legalframevorks.
Thisvasalsolheconclusionof
Building on the Monterrey Consensus:
The Untapped Potential of Development
Finance Institutions to Catalyze Private
Investment,areorlbylheWorld
LconomicIorumlhalbroughl
logelher2OOexerlsloexaminelhe
unlaedolenlialofdevelomenl
hnance inslilulions. Il recommended
shiflinglhefocusfromloansloarlial
loan guaranlees and u-fronl risk
cailal lo idenlify ro|ecls and carry
oulfeasibililysludies.Ilalsocalled
foramoreacliveroleingovernmenl
caacilybuildinginareassuchas
roerlyrighls,conlracldisules,
bankrulcyframevorks,and
cororalegovernancerules.
Theseissueshavebecomelhe
riorily develomenl hnance needs
in all bul lhe ooresl counlries,
lhereorlsaid.Hovever,MDs
andbilaleralaidagencieshavenol
adaled sufhcienlly lo lhese changed
circumslancesTheymuslsee
lhemselvesfundamenlallyasroviding
bridges lo rivale seclor hnancing
andlhisshouldbecomelheirrimary
oeralional elhos.
ThoughMDsdonolclaimlhal
rivalesecloroeralionsarelheir
hrsl riorily, lhey mainlain aclive
andraidlyexandingdearlmenls
devoled lo bridging lhe rivale1ublic
hnancing ga. AD, for examle, nov
has a vice-residenl devoled solely lo
rivalesecloroeralions.Ilexecls
lhalby2O2Oacliviliesinrivale
seclordevelomenlandrivaleseclor
oeralionslocomrise5O/ofils
annual oeralions, vilh cohnancing
evenluallyexceedinglhevalueof
AD's sland-alone ro|ecl hnancing.
Desilelheincreasedemhasison
lherivaleseclorbyMDs,nolenough
rogresshasbeenmade,accordinglo
Samuels.
Thesearemorecomlicaledissues
lhan |usl vriling a check, she says.
We need lo lrain governmenl ofhcials,
consullanls,andbankerssolheyhave
lheskillselsloullogelherbankable
ro|ecls. Lverybody agrees on lhese
concels.ulveneedlogofrom
vords lo aclion. Q
vvv.develomenl.asia 14DevelopmentAsiaAril}une2O12
THE BIG PICTURE
Private Participation in Infrastructure Projects Trends
Central and West Asia
$3
2
1
0
billion
90 92 94 96 98 00 02 04 06 08 10
South Asia
0
60
40
20
90 92 94 96 98 00 02 04 06 08 10
billion $80
0
20
15
10
5
Southeast Asia
90 92 94 96 98 00 02 04 06 08 10
billion $25
0
80
60
40
20
Developing Asia*
90 92 94 96 98 00 02 04 06 08 10
billion $100
East Asia
0
billion $14
12
10
8
4
2
6
90 92 94 96 98 00 02 04 06 08 10
Pacific
0
120
80
40
90 92 94 96 98 00 02 04 06 08 10
million $160
Investment Commitments to Infrastructure Projects with private participation, in 2010 dollars
Number of Infrastructure Projects with private participation
* Afghanistan, Armenia, Azerbaijan, Bangladesh, Bhutan, Cambodia, Peoples Republic of China, Fiji, Georgia, India, Indonesia, Kazakhstan, Kiribati, Kyrgyz Republic, Lao Peoples Democratic
Republic, Malaysia, Maldives, Federated States of Micronesia, Mongolia, Myanmar, Nepal, Pakistan, Papua New Guinea, Philippines, Samoa, Sri Lanka, Tajikistan, Thailand, Timor-Leste, Tonga,
Turkmenistan, Tuvalu, Uzbekistan, Vanuatu, and Viet Nam.
0
50
100
150
200
250
Developing Asia
90 92 94 96 98 00 02 04 06 08 10
0
20
40
60
80
100
120
South Asia
90 92 94 96 98 00 02 04 06 08 10
0
10
20
30
40
50
Southeast Asia
90 92 94 96 98 00 02 04 06 08 10
0
2
4
6
8
10
12
14
16
Central and West Asia
90 92 94 96 98 00 02 04 06 08 10
0
40
80
120
East Asia
90 92 94 96 98 00 02 04 06 08 10
0
1
2
Pacific
90 92 94 96 98 00 02 04 06 08 10
Bridging the Gap
Publicprivate partnerships (PPP) offer an economically viable solution
to infrastructure needs when public funds are limited. Despite some failures,
PPPs continue to spread across developing Asia
vvv.develomenl.asia Aril}une2O12DevelopmentAsia15
Some Successful Partnerships
While failure of a PPP is not unheard of, many projects have had
great success in bringing better conditions and opportunity in areas
that might otherwise have gone without such improvements
Sri Lanka:
Port Expansion
Improved efficiency,
increased port traffic,
and improved
competitiveness
Tsunami Relief
Local PPPs established to rebuild
and improve water infrastructure
in countries including Indonesia,
Maldives, Sri Lanka,
and Thailand
India:
East Coast Road
Toll road cut congestion
and local air pollution
while improving
opportunities for
local business
and trade
Philippines:
North Luzon Expressway
Expanded toll road increased
safety, cut congestion,
created viable commute times,
and improved economic
opportunities in the area
Malaysia: Mixed-Use Tunnel
A tunnel beneath roads diverts
floodwaters in Kuala Lumpur
and carries automobile traffic
when clear of water,
cutting above-ground
congestion
Indonesia: Urban Water
To help address the major challenge of
access to clean water in Jakarta, a PPP
has been established and is increasing
water delivery efficiency.
Research and design: Mark Blackwell
Sources: World Bank Group. 2011. Private Partnership in Infrastructure Projects Database. http://ppi.worldbank.org/explore/Report.aspx;
United Nations Development Programme. 2008. Sharing Innovative Experiences, Volume 15: Examples of Successful PublicPrivate Partnerships.
Across developing
Asia, the majority of
PPPs since 1990 have
been energy projects.
Telecoms made up a
large portion of
projects in the Pacific
and in Central and
West Asia
Type of Infrastructure Projects with private participation, 19902010
Energy
43%
Telecom
9%
Transport
29%
Water/Sewerage
19%
Developing Asia
Energy
50%
Telecom
12%
Transport
27%
Water/Sewerage
11%
Southeast Asia
Energy
39%
Telecom
>1%
Transport
24%
Water/
Sewerage
37%
East Asia
Energy
27%
Telecom
66%
Water/ Sewerage
7%
Pacific
Energy
44%
Telecom
11%
Transport
43%
Water/Sewerage
2%
South Asia
Energy
43%
Telecom
39%
Transport
11%
Water/ Sewerage
7%
Central and West Asia
16DevelopmentAsiaAril}une2O12
PRIVATE SECTOR DEVELOPMENT: THE BIG VOICE
vvv.develomenl.asia
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Taking Stock
Durreen Shahnaz thinks investors will buy stocks in companies based
on social impact. She should know
YIloydWhaley
I
n1991,DurreenShahnazvasa
youngrofessionalvorkingvilh
angladeshsioneeringGrameen
ankduringalimevhenilvas
lrying lo allracl inlernalional hnancial
suorl.AgrouhadcomefromNev
Yorkloconduclduediligenceon
Grameenbeforemakingamulli-million
dollarinveslmenl.AflerShahnazgave
herresenlaliononbehalfofGrameen,
oneoflhevomenfromNevYork
aroachedher.
Ilsashameyouvereborn
inlhiscounlry,lhevomanlold
Shahnaz.Youhavesuchagood
hnancial skill sel. There is a lace
calledWallSlreelandifyouvere
borninmycounlry,vilhyourskill
selyoucouldhavevorkedlhereand
madealolofmoney,lhevoman
said.eforeShahnazcouldresond
lolhecommenl,Grameenfounder
MuhammadYunus|umedinandlold
lhevoman:Aclually,Durreencamelo
usfromMorganSlanley,referringlo
lhe Wall Slreel inveslmenl hrm.
The misconcelion is familiar lo
Shahnaz.Havingmovedbelveen
high hnance and socially conscious
enlerrisesherenlirecareer,she
believes hnance, develomenl, and
mediaareinlerconnecledandsuorl
oneanolher.orninangladesh,
hergrandmolhervasmarriedal11
vilhoulknovinghovloreador
vrile.Wilharenlscommilledlo
hereducalion,sheoblainedadegree
fromSmilhCollege,amaslerof
businessadminislralionfromWharlon,
UniversilyofIennsylvania,anda
maslerofarlsfromlheSchoolof
AdvancedInlernalionalSludiesal
}ohnsHokinsUniversily.Aslinlal
MorganSlanleyinNevYorkvas
follovedbyvorkalGrameenank
inangladesh,Worldankand
InlernalionalIinanceCororalionin
Washinglon,DC,andMerrillLynchin
HongKong,China.Shelalerheaded
ulheAsiaoeralionsofHearsl
MagazinesInlernalional,Readers Digest
Asia, andAsiaCilyIublishingGrou.
These days, Shahnaz is lrying lo
blendlhevorldoflherivaleseclor
andsocialenlerrisesinamore
aggressivevaylhanshehaseverdone
before.Sheislhefounderandchair
ofImaclInveslmenlLxchange(IIX),
vhichseekslobeaslockexchange
lhalallovssocialenlerrisesloraise
cailal.Inlinevilhlhal,shehas
slarledorganizalionslhalassislsocial
enlerrisesinraisingcailalandin
lherocess,crealelhesaceforsocial
cailalmarkels.Sheexeclslhesocial
enlerriseslockexchangelobeuand
runningbymid-2O12.
DA: What is a social enterprise
stock exchange?
DS: Ieolelhinkilisgoinglobelike
lheNevYorkSlockLxchangevilh
bellsgoingoffandsoforlh.Ilsnol
goinglobelikelhal.Ilisonlineandil
basicallyrovideslheabililyloinvesl
inacomany,losellandbuysecurilies,
|usl like any olher exchange. The
differencehereislhallhecomanies
villbeshovcasinglheirsocialand
environmenlalrelurnalongvilhlhe
hnancial resulls. Thus, inveslors vill
makeinveslmenldecisionsbased
onlhelrilebollomline,nol|usl
on rohl. When lhe lrading angle is
allachedlolhelalform,ilvillbe
ImaclLxchangeAsias(anderhas
lhe vorld's) hrsl lrading lalform for
invesling in social enlerrises. The vay
ilisshaingurighlnov,illookslike
vevilliniliallyhaveonlyaccrediled
inveslors on lhe lalform. This may
assislusinhavinglessregulalory
hurdleslhanalargerexchange,
includingnolhavingafull-blovn
roseclus,vhichisverycosllylo
roducevilhalllhearliesinvolved
increalingil.Asaresull,lhecoslof
raisingcailalonlhelalformvillbe
a lol less. The exchange vill be lhe
laslsloincrealingfull-blovnsocial
cailalmarkels.
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lhe Sludy of African Lconomies al
TheUniversilyofxford,andaulhor
ofThe Bottom Billion: Why the Poorest
Countries are Failing and What Can Be
Done About It. Theyknovlhallhe
environmenlisriskyandcomlicaled,
buloorluniliesarelhere.
Nolonlyarecomaniessuchas
Microsofl, Nokia, and Levi's forging
inloemergingmarkels,bullarge
hnancial inslilulions are moving inlo
Africaasvell.Agoodexamleis}I
Morgan, an imorlanl bank vilh a
hugelislofimorlanlcomaniesas
cuslomers,exlainsCollier.Their
CL}amieDimonisveryinleresled
inbuildingAfrica,andexanding
lhe resence of }I Morgan in Africa.
Collieraddslhecoremolivalionfor
inlernalionalbanksloenlerAfricais
lhallheirovnclienlsandolherma|or
cororalionsarealreadyinveslingin
lheconlinenl.
|}I Morganj is an examle and an
indicalionofalargerhenomenonin
lhe lasl 12 years, asserls Collier. So
vhencuslomerssay,Whereisour
bank`lheyarelherelorovidelhe
hnancial services.
Aslhefasleslgrovingeconomiesin
lhevorldareinAfrica,lheIarLasl,
lhe Middle Lasl, and Cenlral Asia,
oorluniliesabound.Aloloflhese
economiesaregroving.Ghanavas
lhefaslesllaslyear,faslerlhan|lhe
Ieole's Reublic ofj China. Ior lhese
counlries,lhereislillledovnsiderisk.
Theyhavebeensooorforsolong,
lhereisamassivescoeforgroving,
saysCollier.
Thesecounlrieshaveenormous
resourcesfromexlraclions|ofnalural
resourcesj. And lheir conslruclion
seclorisbooming.Inconlrasl,ifyou
looklolheWesl,youhavelhedeeesl
recessionindecades.
WhilemanyerceivelheIRClobe
lhevorldsfasleslgrovingeconomy,
Ghanasurgedaheadlolakelhelo
solin2O11,accordinglolheWorld
ankreorl, Global Economic Prospects
January 2011: Regional Annex. Wilh
largeoilreserves,lhereorlro|ecled
Ghanaseconomicgrovlhralelobe
13.4/in2O11and1O/in2O12,vhile
lheIRCsgrossdomeslicroducl
grovlhralevasro|ecledlobe9.3/in
2O11and8.7/in2O12.
Wilhnumerousmullinalionals
secihcally develoing roducls for
emergingmarkels,suchasIroclorand
Gambleslover-riceddiaersand
Coca-Cola's Minule Maid Iuly |uice
drink,isilelhicallosellgoodsand
rohl from eole vho can'l afford lhe
basicnecessiliesoffoodandsheller`
Inlhereorl,More Than 1 Billion
People are Hungry in the WorldBut
What if the Experts are Wrong?aulhors
Abhi|il aner|ee and Lslher Duo
revealedlhallheoordidnlealmore
evenvhenlheycouldaffordlo,or
vhenricesforslales,suchasrice
andgraindecreased.Thereverse
haened,lheyacluallyalelessslales.
Alikelyexlanalionvasconsuming
morecaloriesvasnolariorily,vhile
buyingbeller-laslingfoodandolher
indulgencessuchaslelevisionsand
DVDlayers,vhichcouldlakemonlhs
losaveufor,vasimorlanl.
Weshouldnlforgel,loo,lhalolher
lhingsmaybemoreimorlanlin|oor
eole'sj lives lhan food. Ioor eole
inlhedeveloingvorldsendlarge
amounlsonveddings,dovries,and
chrislenings. In Soulh Africa, oor
familiesoflensendsolavishlyon
funeralslhallheyskimonfoodfor
monlhsaflervard,exlainaner|ee
and Duo. Al lhe same lime, roducing
andsellingnonessenlialfoodand
goods,suchassodasandeleclronic
equimenl,creales|obs.
IfyouaskanAfricanvhalislhe
moslvaluablelhinglheyhaveboughl
inlhelaslyearilvouldbeamobile
hone.Ilsmuchmoreimorlanllo
lhem lhan lo us in lhe US or Luroe,
saysCollier.Ifalandlinedoesnlexisl
orisdovn,ilsanexlremelyuseful
loolfarmerscanuseamobilehone
lo hnd oul cro rices.
InAsia,lhesilualionissimilar.
Arecenlsludyamonglheoorinseveral
Asiancounlriesfoundlhalmobile
honeshavelhecharaclerislicsofa
necessilyinlheI|bollomoflhe
yramidj of angladesh, Iakislan, India,
Sri Lanka, lhe Ihiliines and Thailand.
Theveallhierlheconsumer,lhe
lesserlheimorlanceofmobilehone
servicesinlheconsumersbudgel,
noleslhe2OO9reorl,Bottom of the
Pyramid Expenditure Patterns on Mobile
Phone Services in Selected Emerging Asian
Countries, roduced by Sri Lanka-
basedinformalionandcommunicalion
PRODUCTS FOR THE BOTTOM BILLION
Multinationals are developing entry-level,
low-cost products for emerging markets,
from medical equipment such as a
portable ECG to orange juice drinks.
vvv.develomenl.asia Aril}une2O12DevelopmentAsia37
lechnologyolicyandregulalion
lhinklank,LIRNLasia.
Thereorlargueslhalmobilehone
shouldbeseenasanecessaryublic
service,nolaluxury,andshouldbe
laxedandregulaledassuch.Given
lhalmobilehonesarearlof
everydaylivesandlhallheyreresenl
aneedamongolherneedsinmodern
socielies,olicieslhalfoslerandnol
hamerinveslmenlandinduslry
grovlhshouldbedesignedand
imlemenled,lhereorlslales.
Sluarl Lloyd Harl, lhe Samuel
C. }ohnson Chair in Suslainable
GlobalLnlerriseandrofessorof
managemenlalCornellUniversilys
}ohnson Graduale School of
Managemenl, agrees everyone al lhe
loandbollomoflheyramidshould
begivenachoiceofvhallheycanbuy.
Theoorareeoleloo.Theyarenol
|uslsurvivalmachinesvhoarelrying
logrindoulaliving.Theyvouldlike
lofeelmagicalaboullife,loo,says
Harl,vhocoaulhoredlheaer,The
Fortune at the Bottom of the Pyramid vilh
CKIrahalad.
Whenfacedvilhchoices,lheydonl
alvayschoosenulrilious,lov-cosl
food,bulneilhervouldanyofus,so
vhyshouldveexeclooreolelo.
Weshouldalloveolelodecideand
arlicialeinlheirovnfulure.
Asaidmoneyalonevonlsolve
lhevorldschronicoverlysilualion,
olheraroachesmuslbeexlored.
Thereisnolenoughaidmoneylo
makelhelransformalionalshiflneeded
|in develoing counlriesj. And il's nol
|uslaboulhovlogeleolelobemore
roduclive,Imlhinkingbiggerlhan
lhal,saysHarl,vhoalsovroleNext
Generation Business Strategies for the Base
of the Pyramid vilhTedLondon.
AccordingloHarl,morelhan
2billioneolesubsislonlesslhan
$2dayandhavebeenlefloulof
lheglobalcailalismmodel.Raid
induslrializalionofemergingmarkels
orcailalizingonenergyresources
suchasoilarenolsuslainablesolulions
forliflinglhebaseoflheyramidoul
ofoverly,Harlsays.Theonlyvaylo
lifl4billioneoleoulofoverlyand
locrealeadecenlslandardoflivingis
lolookallheroblemverydifferenlly,
heexlains.
Suslainabilily vhen markeling lo
lhevorldsoor,saysHarl,requires
leafroggreeninnovalionlhal
combinesenvironmenlallysuslainable
lechnologiesoflodayvilhlhe
businessmodelsoflomorrov.Nev
lechnologiesforrenevableenergy,
oinl-of-use valer urihcalion, vireless
informalionlechnologies,suslainable
agricullure,andnanolechnology
crealedindeveloingmarkelsarevhal
Harldescribesasarlofagreenlea
slralegy.Headdssmall-foolrinl
roduclsandserviceslhalarebeller
suiledlolhebollom-of-lhe-yramid
conlexlareoneoflhekeyslosuccess.
Small-scale solar and oinl-of-
usevalerlrealmenlcanbecomeso
effeclive,reliable,andcosl-comelilive
lhallheycanullimalelycomele
direcllyvilhincumbenlofferingsallhe
looflheyramid,saysHarl.
Lven Microsofl has formed a nev
lrickle-uinnovaliongrou,vhose
focusislocrealeanevgeneralionof
easy-lo-use,inexensivealicalions,
nolesHarl.Thelechnologygianlhas
direcledilsinilialefforlsloIndia,vhere
ilislanninglogeneralealicalions
lhalcombinemobilehones,soflvare,
andlheinlernelforlheunderserved
segmenloflhemarkel.
The Bottom BillionaulhorCollier
concludeslhereiscrediblehoe
forlhevorldsoor.Ilhinkilcan
haen.verlhenexldecadelhey
villbegellingalolofmoneyfrom
naluralresourceexlraclion,he
says.Andloharnessalllhalmoney
fordevelomenldeendsongood
economicgovernance.Whelherlhey
lunderlheirresourcesornollhal
villbelheclassicslrugglelhallays
oulinlhenexlfevdecades.Q
The poor are people
too. They are not just
survival machines who
are trying to grind out
a living. They would
like to feel magical
about life, too
Stuart Lloyd Hart, the Samuel
C. Johnson Chair in Sustainable
Global Enterprise and professor of
management at Cornell Universitys
Johnson Graduate School of
Management
GREEN ENERGY In a village in Nairobi,
a woman recharges a solar lamp by
hanging it from the roof. Sustainability
expert Stuart Lloyd Hart says one of
the keys to success in marketing to the
poor is developing small footprint
products and services that are reliable
and affordable.
A
I
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OFF THE SHELF
38DevelopmentAsiaAril}une2O12 vvv.develomenl.asia
Demystifying the Chinese Economy
By Justin Yifu Lin
Cambridge University Press, December 2011, $75.00
I
nDemystifying the Chinese Economy, lheWorldanks
chiefeconomislrovidesalheorelicalframevorkand
hisloricalconlexlforunderslandinglheeconomic
develomenlofhishomecounlryandilslransilionloa
markeleconomy.
efore|oininglheWorldank,}uslinYifuLinvasfounding
direclorandrofessoroflheChinaCenlreforLconomic
ResearchalIekingUniversilyinlheIeolesReublicofChina.
Aalriolicyelhardheadedlookalhovhiscounlrynolcheduaverage
annualgrovlhof9.9ercenlforlhreedecadesaragmalichisloryofeconomic
causeandeffeclaninsidersaccounlofvhy|lheIeolesReublicofjChina,
vhichdominaledlhevorldeconomyrighlinlolhe19lhcenlury,fellsofarbehind
lheWeslandhovilcameroaringbackinourlimes.James Pressley, Bloomberg
ThebookisalranslalionoflecluresIrofessorLingavealIekingUniversily.
Iloffersaninsidersvievoflhebiggesleconomicevenlofourera:lheriseof
|lhe Ieole's Reublic ofj China. Whelher one agrees, or nolI hnd much of his
argumenlersuasivevehavelounderslandhovsuchamanlhinks.Martin
Wolf, Financial TimesQ
Deng Xiaoping
Deng Xiaoping and the
Transformation of China
By Ezra F. Vogel
Belknap Press, September 2011, $39.95
T
hisbookbylheformer
direclorofHarvards
IairbankCenlerforLasl
AsianResearchandlheAsia
Cenlervasnamedasoneoflhebesl
booksof2O11.IlvashailedbyThe
Lconomisl as lhe dehnilive accounl of
Denginanylanguage.
LzraI.VogelisHenryIordII
IrofessoroflheSocialSciences
LmerilusalHarvardUniversily.
Vogelsnevbiograhyorlrays
Dengasnol|usllhemakerofmodern
|IeolesReublicofjChina,buloneof
lhe mosl subslanlial hgures in modern
hislory.Thisbookisbolsleredby
insiderknovledgeandoulslanding
sources. The dehnilive accounl of
Denginanylanguage.The Economist
Boomerang
Travels in the New Third World
By Michael Lewis
W. W. Norton & Company, October
2011, $25.95
T
heaulhoroflhe2O1O
beslseller The Big Shortlurns
hisallenlionlolhecredil
bubblesinGermany,Greece,
Iceland,andIrelandinabooklhalis
arl-invesligalive
|ournalismand
arl-lravelogue.
MichaelLevisis
a hnancial |ournalisl
andloomberg
Vievcolumnisl.
Healsovrole Liars
Poker, The Money
Culture, The New
New Thing, Moneyball, The Blind Side,
Panic, andHome Game.
Combininghiseasyfamiliarily
vilh hnance and lhe lalenls of a lravel
vriler,Mr.Levisselsoffinlhese
ageslogivelhereaderaguided
lourlhroughsomeoflhedisarale
laces hard hil by lhe hscal lsunami of
2OO8,likeGreece,IcelandandIreland,
lracinghovverydifferenleolefor
verydifferenlreasonsgorgedonlhe
cheacredilavailableinlherelude
lolhaldisasler.Thebookbasedon
arliclesMr.LevisvroleforVanity
Fairmagazineisacomanioniece
ofsorlsloThe Big Short: Inside the
Doomsday Machine,hisbeslselling2O1O
book aboul lhe hscal crisis.Michiko
Kakutani, The New York Times
InThe Big Short Levisrealizedlhal
lhemoslexcilingvaylodocumenllhe
credilcrisisvaslofollovlheaclion
fromlheersecliveoflhosevho
savilcomingandmadeamassive
rohl. His nev book Boomerangshifls
lhefocusloLuroeandlheongoing
melodramaoflheeuro.Andrew
Anthony, The GuardianQ
Thefocus
oflhebookis
Dengsunusual
careerlra|eclory,
hisuniqueslyle
ofrule,andlhe
slralegicchoiceshe
madeduringand
aflerlheCullural
Revolulion.Thisbookshouldberead
byanyonevhovanlsloundersland
lhedomeslicandinlernalional
dynamicslhalhaveledlo|lheIRCsj
riseasagrealover.Yanzhong
Huang, Foreign Affairs
Hegiveslhereaderlhenecessary
hisloricalconlexlandbackground
lounderslandvhyDengmadehis
decisions.Ilisallaboullhegrand
hisloric viev. And lhal is hlling: oul of
allofDengsamazingqualilies,ilishis
grasofabroadersecliveandhis
keensenseofhislorylhalenabledhim
loachievevhalsomanyhaddeemed
imossible.Chow Chung-yan, South
China Morning Post Q
vvv.develomenl.asia Aril}une2O12DevelopmentAsia39
Together
The Rituals, Pleasures and Politics of Cooperation
By Richard Sennett
Yale University Press, December 2011, $28.00
S
ociologyrofessorRichardSennellargueslhal
cooeralionhasbecomeanecessaryskillina
mulliculluralsociely.
CrilicsmaycarlhalSennellshandbooklolhe
craflsofcooeralionsidesleslhehardeslqueslionofrool-and-branchreform
vhelherofinner-cilyveallhdislribulion,orlheglobalbankingsyslem.ul
reair,asheinsisls,hasloslarlinyourovnbackyardandoveryourovnfence.
IoranyonevholakesuTogelherschallengelomakeavocalionofcommunily,
hemayvellhellhemloavoidbolhlhesquabblesinlhelaygroundandlhe
riolsinlheslreels.The Independent Q
Honor in the Dust
Theodore Roosevelt, War in the
Philippines, and the Rise and Fall of
Americas Imperial Dream
By Gregg Jones
NAL/Berkley, February 2012, $26.50
A
nAmerican|ournalisl
goesbacklolheearly2Olh
cenluryvhenlheUniled
Slalesbeganilsascenlas
ama|orvorldover.Hisslorybegins
vilhlheyoungnalionsvicloryover
Sain,vhichgave
ilconlroloflhe
Ihiliines,lhen
aSanishcolony
lhalvasallhe
oinlofdeclaring
indeendence.
Honor in the
Dustchronicles
lheRoosevell
adminislralionsresonselolhe
Iiliinoguerillaresislanceandcharges
ofUSmililarymisconduclinlhe
Ihiliines,andhovlheseevenlshave
shaedAmericasosilioninglobal
affairs.
Gregg}ones,lhebooksaulhor,vas
acorresondenlinAsiafor1Oyears.
He vas a hnalisl for lhe Iulilzer Irize
andGeraldLoebAvard.Hisvorkhas
aearedinThe Dallas Morning News,
The Los Angeles Times, The Washington
Post, The Guardian, and The Observer
(London),amongolhers.Healsovrole
Red Revolution: Inside the Philippine
Guerrilla Movement.
WhalisslrikingaboulHonor in the
Dust,Gregg}onessfascinalingnev
bookaboullheIhiliine-American
War,isnolhovmuchvarhaschanged
inmorelhanacenlury,bulhov
lillle.The New York Times
Alively,documenlednarralive
aboulanimorlanlbuloflenneglecled
sloryinAmericanhislory.Dallas
Morning NewsQ
Thinking Fast and Slow
By Daniel Kahneman
Farrar, Straus and Giroux October 2011, $30.00
E
minenlsychologislDanielKahnemandislillsyears
ofresearchinonebookloexlainhovlhemind
vorkshovvearriveallhedecisionslhalvemake.
KahnemansioneeringvorkvilhlhelaleAmos
TverskyondecisionmakingreceivedlheNobelIrizein
Lconomic Sciences in 2OO2. Their ideas have inuenced many helds, including
economics,medicine,andolilics,andheledlaylhefoundalionforbehavioral
economics.
InThinking, Fast and Slow, Kahnemansayslherearelvosyslemslhaldrivelhe
vayvelhink:Syslem1(fasl,inluilive,andemolional)andSyslem2(slover,
moredeliberalive,andmorelogical).Herevealslheexlraordinarycaabililiesof
fasl lhinking as vell as ils ilfalls, vhen lo lrusl our inluilion, and lhe benehls
ofslovlhinking.Thinking, Fast and Slowvasraledasoneoflhebeslbooksof
2O11byThe New York Times, The Economist, The Wall Street Journal, andThe Globe
and Mail.
Therehavebeenmanygoodbooksonhumanralionalilyandirralionalily,bul
onlyonemasleriece.ThalmaslerieceisDanielKahnemansThinking, Fast and
Slow.William Easterly, The Financial Times
Kahnemansnevandmoslaccessiblebookconlainsmuchlhalisfamiliar
lolhosevhohavefollovedlhisdebalevilhinlhevorldofeconomics,bulil
alsohasalollosayaboulhovvelhink,reacl,andreachralher,|umlo
conclusionsinallsheres.WhalmoslinlereslsKahnemanarelherediclable
vayslhalerrorsof|udgmenloccur.Roger Lowenstein, Bloomberg Businessweek
Manybooksaboullhemindacrovdedgenrelhesedayscombinevivid
sloriesvilhaccounlsofseminalexerimenlsandlhenroceedloarguefor
changesinlav,olicyorbusinessraclices.Thinking, Fast and Slowisdifferenl.
Il is almosl dehanlly focused on lhe science, vilh a leavening of memoir and
ersonalobservalion.Christopher F. Chabris, The Wall Street JournalQ
4ODevelopmentAsiaAril}une2O12 vvv.develomenl.asia
ARTICLE
A
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n lhe decade of conicl lhal has
laguedAfghanislan,goodnevs
hasbeenaveryrarecommodily.
ulin}une2O1O,UniledSlales
and Afghan ofhcials made a slunning
announcemenllhalseemedlochange
everylhinginlhelong-suffering
counlry.
Geologisls idenlihed nearly $1 lrillion
inunlaedmineraldeosils.The
GovernmenlofAfghanislanlaler
ad|usled lhal lo an eslimaled $3 lrillion
inmineralandelroleumdeosils,
includingcoer,iron,gold,oil,
chromiles,uranium,andrareearlh.
ullhemassivediscoveriesvere
greeledvilhlimiledcelebralion.
TheGovernmenlofAfghanislan
andilsallieshaveanarrovvindovof
oorlunilylobecomeavorldleader
inresourcelransarencyasrighls
lolheseresourcesarebeingsoldover
lhe nexl 3 years, says }uman Kubba,
acamaignervilhlheorganizalion
GlobalWilness.Theslakescouldnol
behigher:gelilrighlandminerals
couldbelhecalalyslforeaceand
roserily,gelilvrongandlheres
amassiverisklheyvillbelosllo
corrulion,orformanevaxisof
inslabilily and conicl.
Afghanislanislhelaleslinaslring
ofdeveloingcounlriesinAsialhal
haveinlhelaslfevyearsdiscovered
vaslnaluralresourcedeosils.These
counlriesincludingCambodia,
Mongolia,andTimor-Lesleareal
lhecenlerofadebaleonhovbesllo
manage lhe coming inux of revenue
associaledvilhlhesediscoveries.
Lconomislshaveseveralnamesforlhe
henomenonofgrealveallhouring
inloafragile,develoingeconomy
vilhdisaslrousresulls.asedrimarily
The Resource Curse
Asian nations are finding billions in oil, gas, and minerals. But will it make them poorer?
YIloydWhaley
PROSPECTING Miners drill into
rock in a makeshift emerald mine
in Panjshir Valley, Afghanistan. The
country is sitting on a gold mine of
mineral reserves, perhaps the richest
in the region, that offer hope for
an economy mired in poverty after
decades of war.
onhard-learnedlessonsinAfricaand
LalinAmerica,counlriesvilhlucralive
resources lhal hnd lhemselves lagued
vilh conicl and overly are said lo
suffer from lhe aradox of lenly or
lhe resource curse.
Thereasonsforlhishenomenon
aremullile.Lxorlearningsfrom
Aril}une2O12DevelopmentAsia41 vvv.develomenl.asia
The stakes could not
be higher: get it right
and minerals could be
the catalyst for peace
and prosperity; get it
wrong and theres a
massive risk they will
be lost to corruption,
or form a new axis
of instability and
conflict
Juman Kubba, a campaigner with
the organization Global Witness
andmineralresourcesdiscoveredin
lhecounlryinrecenlyears.According
lolheAsianDevelomenlanks
Asian Development Outlook 2011reorl,
inveslmenlinlhecounlrysyuTolgoi
coerandgoldmineisro|ecledlo
lolal more lhan $4 billion over lhe nexl
2years.Wilhroduclionexecledlo
begin in 2O13 and reach full caacily by
2O18,lheoverallinveslmenlisexecled
lo reach $18.6 billion over lhe lifelime
oflhemine.
Inaddilion,rearalionsare
undervaylodevelooneoflhelargesl
coalhelds in lhe vorld, Tavan Tolgoi.
Al full caacily, lhe helds are execled
loroduce15millionlonsofcoaleach
year.olhsilesyuTolgoiandTavan
Tolgoiarelocalednearlheborder
vilhlheIeolesReublicofChina,
anavidbuyerofmineralandenergy
resourcesvorldvide.
TheGovernmenlofMongolia
haslakenavarielyofmeasureslo
manage lhe inux of mineral and
energyrevenue.nekeyfealureofils
rogramhasbeenlheeslablishmenl
oflheHumanDevelomenlIundin
November2OO9.Thefundisexecled
louseminingrevenueslogivecash
handouls, ay luilion fees, and hnance
olher social benehls. In Iebruary 2O1O,
eachMongoliancilizenreceivedlhe
equivalenl of aboul $5O, and in 2O11,
monlhly cash handouls of aboul $15
veregiven.
DISTRIBUTION OF WEALTH
Cashhandoulinilialives,suchaslhose
beingunderlakeninMongolia,areal
lhecenleroflheglobaldiscussionof
hov lo deal vilh lhe inux of mining
revenues.
ecauseresourcerevenuesare
volalile,governmenlsneedlosave
duringeakearningeriodsinorder
lovealherlhelimesvhenricesand
resources can arlihcially increase
lhevalueoflhecurrency,vhich
discouragesmanufacluringforexorl.
Volalile earnings based on uclualing
globalricescanalsocrealeunslable
hscal and debl managemenl silualions.
And, mosl imorlanlly, a large inux
ofnaluralresourcerevenuescanhavea
overful,negaliveimaclonnalional
inslilulionsandgovernance.Inshorl,
hovdolhoseinoverovercomelhe
lemlalionlouselhesevaslrevenues
forlheirovnenrichmenl`
nevaylolookallhisqueslion
islouloneselfinlolheshoesoflhe
residenlorrimeminislerofacounlry
lhal has large energy resources, noles
lhenLxeculiveDireclor}ohannes
I.LinnofWolfensohnCenlerfor
Develomenlinanarliclein2OO8
ublishedbyTherookingsInslilulion
inWashinglon,DC.Ilisslrikinghov
manydecisionssheorhehaslolakein
regardlolhenalionalenergyveallh,
hovmanyoorlunilieslherearelo
makelhevrongdecisions,andhov
manylimessheorhe,andmanyolhers
inlhegovernmenlandinlheenergy
induslry,maybelemledloengage
incorrulbehaviorinorderlogaina
shareoflheresourceveallhforolilical
or rivale benehl.
N
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42DevelopmentAsiaAril}une2O12 vvv.develomenl.asia
ARTICLE
A
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incomesfall.Thisissomelimesdone
lhroughlheeslablishmenlofnalural
resourcefunds.Theroblemvilhlhese
fundsislhallheycanbealleredor
raidedbyolilicalleaders,saysLaura
Ialer,aolilicalscienlislalColumbia
Universilyvhohassludiedlheissue.
Direcllydislribulingrevenuelo
cilizenscouldbyasslhisroblemby
lellingeoledecidehovmuchlo
consume or save, says Ialer. Il is also
arguedlhal,ifcilizensknovlheyare
enlilledloashareoflheresourceveallh,
lheyvillhaveslrongerincenliveslo
beolilicallyengagedandlomonilor
governmenlloroleclrevenuefrom
being diverled lo olilicians.
Slillolhershavemadelheclaimlhal
naluralresourcesbelongloeveryone
and il is only righl lhal cilizens benehl
direclly from lheir exlraclion and sale,
sheadds.
Suchdireclcashaymenlsneed
lobemanagedcarefully,argueslhe
LuroeanankforReconslruclion
andDevelomenlreorl,Managing
MongoliasResourceoom.Direcl
cashhandoulscanbeadisincenlive
lovork,vhichhinderslheeconomic
diversihcalion needed lo overcome lhe
resourcecurse.
Ifindividualsreceiveabasicincome
vilhoulhavinglovork,lhevageslhal
lheyvillneedlobeaidinorderlo
ersuadelhemlolakea|obincluding
inlhenon-resourceseclormayneed
lo be higher lhan if lhey do nol, lhe
reorlnoles.Thisvouldreducelhe
comelilivenessoflhenon-resource
seclor.
Avarialionoflhisdislribulion
syslemlhalmanyexerlslhinkshovs
romiseisaroosalbeingromoled
bylheCenlerforGlobalDevelomenl,
inWashinglon,DC,lhalvouldallach
laxeslocashhandoulrograms.
Havingullhismoneyinlhe
handsofilscilizens,lheslalevould
lrealillikenormalincomeandlaxil
accordinglylhusforcinglheslalelo
collecllaxesandfuelingublicdemand
forlhegovernmenllobelransarenl
andaccounlableinilsmanagemenl
ofnaluralresourcerevenuesandin
lhe delivery of ublic services, slales
adescrilionoflheroosalonlhe
cenlersvebsile.
AccordingloIaler,lhiscouldhel
buildlhegovernmenlinslilulionslhal
villberequiredlongaflerlheresources
runoul.
Thenolionislhalvhilenalural
resourcevindfallscanundermine
develomenl,manybelievelhal
laxalionslrenglhensbolhaccounlabilily
and bureaucralic caacily, she says.
BENCHMARK An off-shore drill ship
in the Timor Sea. Oil-rich Timor-Leste
has joined the Extractive Industries
Transparency Initiative, which sets global
standards for oil, gas, and mining.
Direcllydislribulingresourcerevenue
locilizensandlaxingilbackcould
emulale lhe benehls of a hscal syslem
lhaldeendsnolonvindfallsbul
ralher on laxes.
Sucharoosalneverlhelessalso
requireslhalolilicianshavelhevill
and abilily lo make il vork, she adds.
Aril}une2O12DevelopmentAsia 43 vvv.develomenl.asia
BOOMTOWN Tourists shop for Genghis
Khan-branded vodka in a store in
Ulaanbaatar. High-end shops opened in
Mongolias capital in recent years after
vast energy and mineral resources were
discovered in the country.
If citizens know
they are entitled to a
share of the resource
wealth, they will have
stronger incentives
to be politically
engaged and to
monitor government
to protect revenue
from being diverted
to politicians
Laura Paler, a political scientist
at Columbia University
NinaMerchanl,assislanldireclorfor
lheeconomicreformanddevelomenl
rogramofTheAsiaIoundalion,
agreeslhaloneoflhegrealesl
challengesloimlemenlinganeffeclive
cashdislribulionsyslemisoflenlhe
governmenlandoverbrokersina
counlry.
Llilesinmoslcounlries,
arlicularlysmallandinslilulionally
veakcounlries,havelillleincenlive
lo even lry lhis, says Merchanl.
Direcldislribulionnolonlyderives
lheslaleofilsresources,bulalso
deriveselilesoflheirsourceof
renls.Inmanyinslilulionallyveak
slalesarlicularlylhosevilhveak
democralicinslilulions,corrulion,
redaloryorveakleadershilhis
vill |usl nol haen from lhe oulsel.
TRANSPARENCY
Ifcounlriescanovercomelheobslacles
associaledvilheslablishingasyslem
lhal uls lhe benehls of nalural
resourcesinlolhehandsoflheeole
vhoneedilmosl,lhalisonlylhe
beginning,saysIaler.
Wilhoulaccessloinformalion
onlheamounlofresourcerenls
lhalgovernmenlreceivesandhov
lhalmoneyisbeingsenl,ilisvery
onaclualgovernmenlsendingcan
have a signihcanl imacl on vhelher
eolescrulinizegovernmenlandhold
oliliciansaccounlableinresource-rich
environmenls.
TheLxlracliveInduslries
TransarencyInilialive,vhichselsa
globalslandardforlransarencyin
oil,gas,andmining,isakeyrogram
forhelingdeveloingcounlrieslo
managelheirnevfoundresource
veallh,saysIaler.
Inaddilion,Mongoliainclober
2O1Obecameoneoflhefevcounlries
inlhevorldloachievefullcomliance
slalusvilhlheLxlracliveInduslries
TransarencyInilialive.lhercounlries
inAsialhalhave|oinedlhisinilialive
andhavereachedfullcomliancevilh
ilsslandardsincludeAzerbai|anand
Timor-Lesle.TheIhiliinesisalsoin
lheinilialslagesof|oining.
Donorsandinlernalional
develomenlorganizalionshaveakey
rolelolayinlherocess,saysIaler.
Theycanbelhecalalyslsforbuilding
socielalmechanismslomainlaina
|uslandlransarenlsyslemofsharing
naluralresourceveallh.
Whenilcomeslolransarency,
lheremighlbegrealerscoeforlhe
inlernalionaldonoranddevelomenl
communilylovorkdirecllyvilh
domesliccivilsocielyorganizalions
and lhe media lo ul lhe ressure on,
saysIaler.Thiscouldcomefrom
inilialivesloslrenglhenlhecaacilyof
lhemediaandcivilsocielyloadvocale
forbelleraccessloinformalion,lo
monilorgovernmenlrevenueand
sending,andlodisseminalelhal
informalion lo lhe broader ublic.
ul,sheadds:Ilisanuhillballle
againsloflenoverfulandenlrenched
inleresls. Q
difhcull for cilizens lo hold olilicians
accounlable, she says.
Revenueisonlyonesideoflhe
coin:civilsociely,lhemedia,and
cilizensalsoneedaclearericlureon
vherelhalmoneyisgoinginorder
lobeolilicallyengagedandhold
olilicians lo accounl, Ialer adds.
Myresearchshovslhalensuring
lhalcilizensgelbellerinformalion
A
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vvv.develomenl.asia 44DevelopmentAsia Aril}une2O12
ARTICLE
S
everalyearsago,IaulRomer,
aneconomicsrofessoral
NevYorkUniversily,vas
slrugglingvilhaverybasic
queslion:vhyilislhalsomeareas
develoandreduceoverly,vhile
olherslanguish`
Hisconclusionembracedbyrivale
seclorsecialislsindevelomenl
organizalionsvorldvideislhal
lhekeyfaclorinsuccessfuloverly
reduclionisgoodgovernance,orashe
ulsil:eoleinoorcounlriesaround
lhevorldsufferfrombadruleslhal
hinderlheirdevelomenl.
Insleadoffocusingonoornalions
andhovlochangelheirrules,ve
shouldfocusonooreoleandhov
lheycanmovesomevherevilhbeller
rules,hevrolein2OO9.nevay
lodolhisisvilhdozens,erhas
hundreds,ofnevcharlercilies,
A
I
I
vheredeveloedcounlriesframelhe
rulesandhundredsofmillionsofoor
familiescouldbecomeresidenls.
HongKong,China,alinyenclave
ofgoodgovernancelhalgrevfasler
lhanilsneighborsfordecades,isoflen
ciledasanexamleoflhecharlercily
concel.
WhalexacllyisRomersconcel`
Myideaislobuilddozens,erhas
hundreds,ofcilies,eachrunbyanev
arlnershibelveenarichcounlry
andaoorcounlry.Theoorcounlry
vouldgiveusomelandforlhecily,
vhileadeveloedcounlrylikerilain
orCanadacouldconlribuleacredible
|udicialsyslemlhalanchorslherule
oflav,hevroleinThe Sunday Times
in}anuary2O1O.
Wilhclearlegalroleclions,rivale
inveslorsvillbuildlhebuildingsand
infraslruclure,includinglheover
Replicating
Hong Kong, China
Charter citiessmall enclaves of good governance in developing countriesare gaining
supporters, but some remain skeptical
YShu-Ching}eanChen
GOOD GOVERNANCE Hong Kong,
China, a tiny enclave of good governance
that grew faster than its neighbors for
decades, is often cited as an example of
the charter city concept.
lanlsandgrid.Accesslolheseaislhe
onlyrealnecessilyaslongasacharler
cilycanshigoodsbackandforlhon
conlainershis,ilcanlhriveevenif
ilsneighborslurnhoslileorunslable.
Andanyadminislralivecoslscanbe
recouedfromaseciallaxonlhe
hugeriseinlandvalueslhalhaens
asalargevell-runcilydevelos.
Thesecilies,ideally,vouldbe
roughlylhesizeofHongKong,
ChinaandSingaore,oraboul1,OOO
squarekilomelersenoughlohouse
1Omillioneoleinaoulalion
densilyof1O,OOOersquarekilomeler,
aboulhalflhedensilyofcenlralIaris.
vvv.develomenl.asia Aril}une2O12DevelopmentAsia45
Heslresseslhalhisconcelisvery
exible. The lhree key arlicianls in
acharlercilylhehoslcounlry,lhe
sourcecounlryoflheeole,andlhe
guaranlorcouldbelayedbylhehosl
governmenlinvariouscombinalions.
ecauselheserolescanbelayedby
asinglenalionorbyseveralcounlries
vorkinglogelherasarlners,lhere
aremanyolenlialarrangemenls,he
slalesonlheCharlerCiliesvebsile,
vhichheseluloromolelheconcel.
neoflhevarialionsisloallov
agovernmenlloassumealllhree
rolesinundervrilingacharlercily,
simullaneouslylayinglhehosl,source
ofeole,andguaranlor,muchas
|lheIeolesReublicofjChinadid
ineslablishinglhesecialeconomic
zonevherelhenevcilyofShenzhen
emerged,orevenIndiasrecenl
inilialivelocreale24nevcilieson
greenheld siles based on vhal Romer
describesasinnovalivegovernance
slrucluresandublicrivale
arlnershi.
Romerslemlaleinvokesa
sanilizedversionofHongKong,China
slriedofilshisloricalandcolonial
comlicalions. He idenlihes such
ciliesashavingfourbasicelemenls:a
vacanlieceofland,largeenoughfor
an enlire cily, a charler lhal secihes in
advancelhebroadruleslhalvillaly
lhere,acommilmenllochoice,backed
byvolunlaryenlryandfreeexilforall
residenls,andlheequalalicalionof
allrulesloallresidenls.
Healsoseeksloembodyinlhecharler
cilieslheverybeslbusinessraclicesof
aglobaleconomyfromrulesoflav
andlransarency,loequalilyforall
residenlscainglhesevilhlrade-
friendly, efhcienl infraslruclure, all al no
cosllolhehoslcounlryaslongasland
canbesuccessfullyleasedoul,nolsold,
lorivaleoeralorsexacllylikein
HongKong,China.
CONTROVERSIAL PROPOSAL
Thecharlerciliesconcelhasbeen
allackedforbeingneocolonial,asil
suggeslslhallheoorhoslcounlry
shouldgiveusovereignlyin
exchangeforlhedeveloedcounlry
governmenlsassurancelhalilvould
aclasguaranlorloensurelhecilys
charlervasresecledandenforced.
Romerre|eclslhis.Ilvaslheabsence
ofvolunlarychoicelhaldoomed
moslcolonialvenlures,hesaid.The
commilmenllovolunlarychoiceisvhal
dislinguisheslhisnevro|ecl.
SuorlersofRomersconlroversial
roosal,suchasVoxiHeinrich
Amavilah,anad|unclrofessorof
LconomicsalGlendaleCollege,
Arizona,seeilasaninnovalivemeans
ofhasleninglheeconomicgrovlhof
develoingcounlries.lhersrecall
similarsuccessesinhislory,suchaslhe
12lhcenluryfoundingoflheGerman
cilyofLubeck,lheReublicofKoreas
ullrahigh-lechIncheonsmarlcily,and
Turkeyslov-laxandmanufacluring-
focusedorganizedinduslrialzones.
Crilics,meanvhile,oinllolhe
danger of irling vilh lhe birlh of a
cilyvilhoulregardforolilicaland
socialconsequences,andfrelaboullhe
holloving-ouleffeclofsuchcilies
aslheysalo-endhumanresources
andundermineagovernmenls
abililylolaunchnalionalro|eclsfor
develomenl.lhersvorryaboul
areealoflheIeolesReublicof
Chinashumilialioninlheearly2Olh
cenluryvhenmanybigcilies,lo
amonglhemShanghai,cededareaslo
foreignoversascharlerzones.
Chrislallman,anassislanl
rofessorofolilicalscienceand
economicsalYaleUniversily,varns
againsllheolenlialcoslsinvolved.
Alrial-and-errorrocessvould,
vilhouldoubl,roducedozensof
successfulcharlerciliesaroundlhe
vorld.ullheerrorandlrialcould
haveaveryheavyhumancosl.
Alleasllvodeveloingcounlries
signedonloalailoredversionoflhe
roosal.
Madagascar,eagerlolaforeign
inveslmenl,vasconlemlalinglhe
Instead of focusing
on poor nations and
how to change their
rules, we should
focus on poor people
and how they can
move somewhere
with better rules.
One way to do this is
with dozens, perhaps
hundreds, of new
charter cities, where
developed countries
frame the rules and
hundreds of millions
of poor families could
become residents
Economist Paul Romer
SHOWCASE CITY Factory workers
assemble electronic components in
6KHQ]KHQDVKLQJYLOODJHWKDWKDVEHHQ
transformed into a showcase charter city. A
I
I
vvv.develomenl.asia 46DevelopmentAsia Aril}une2O12
ARTICLE
offoreigninveslmenl,andramanl
smugglingofforeignimorlsinlolhe
IRC,fueledbylhezonesloverlariff.
Allhoughlhecenlralgovernmenl
hadlaiddovnlhedireclionforlhe
secialeconomiczone,ilvasso
vaguelhalShenzhendidnolhavea
clearideaofvhal|iljvasgoinglo
be,bullheyneededlodosomelhing.
Inilially,lherevasaninveslmenlboom
focusingonrealeslaleandsmuggling.
Theboomingoflhecilydrainedlhe
resourcesoulof|lheIeolesReublic
ofjChinaandlheyhadlochange
becauseilranagainsllhenalional
inleresl,saysThomasM.H.Chan,
headoflheChinausinessCenlre,
HongKongIolylechnicUniversily,
vhocrilicizedShenzhensfailingsina
famousarliclelhalromledarelhink
byChineseolicymakers.
Shenzhenresurrecledilselfasa
lov-cosl,lov-laxinduslrialarkinlhe
mid-198Oslolaforeigninveslmenl,
anchoredbynevlycrealed,slale-
linkedlocalcomaniessuchasHuavei
andZTL,andfueledbyarushof
relocalionbyHongKong,Chinaand
Taiei,Chinacomaniesescainghigh
ricesalhome.ThusbeganShenzhens
rollercoaslerridelhalconlinueslo
lhisday.Morelhananylhing,lhe
A
I
I
ossibililyofbuildinglvocharler
ciliesin}anuary2OO9,lhoughlans
verederailedbylheouslingoflhen-
IresidenlMarcRavalomananabylhe
mililary.
Hondurassucceededinamending
ilsconslilulioninDecember2O11lo
sel u charler cilies afler a facl-hnding
lriloAsiaearlierlhesameyearby
Iresidenl Iorhrio Lobo. He visiled
SingaoreandIncheoninlheReublic
ofKorea.Thegovernmenlenlisled
Romershelasilfoundhisidealo
beinclosealignmenlvilhlheirovn
lansloselufreelradezones.Lfforls
loeslablishHondurancharlercilies
conlinue.
THE SHENZHEN EXAMPLE
IorlhoseacquainledvilhAsias
recenleconomichislory,charlercilies
mighlsoundfamiliar,eseciallyin
lheIeolesReublicofChina(IRC),
vheresuccessinsellingusecial
economiczoneshasimressednolonly
Romer,bulalsoanendlessaradeof
visilorsayinglribuleeachyear.
Shenzhenisashovcasecharler
cily louled by Romer. nce a hshing
villageof3O,OOOeole,Shenzhenhas
grovnlobecomeavibranlmelroolis
ofcloselomorelhan13million,all
vilhin3decadesofbeingulonaalh
loeconomicliberalizalionasasecial
economiczoneandlaboralorylobreak
lheshacklesofadecayinglanned
economyandlureforeigninveslmenl.
Shenzhenmayhaveaearedlikelhe
oslerchildofnevcilies,bulilsalh
logloryvasslrevnvilhhigh-slakes
olilics,overslruggles,lrialand
error,andlenlyoffailures.
Shenzhenvasoneoflhreesecial
economiczoneslhalverecrealedal
lhesamelime,closeloma|orcilies,
andinlendedasaneconomicbuffer
zone lo ease lhe evenlual reunihcalion
vilhnearby,moreadvancedHong
Kong,China,Macau,China,and
Taiei,China.Nolalloflhemvere
successful.
Ior lhe hrsl several years afler ils
crealionasasecialeconomiczone
in1981onasileaboulone-lenlhof
ilscurrenlsize,Shenzhenacledas
aborderlradingarea,bulvasheld
backbyrealeslaleseculalion,lack
REGIONAL HUB Puerto Cortes is
Hondurass main sea port and Central
Americas biggest port. The country
wants to set up charter cities as part of
its plan to establish free trade zones.
DEVELOPMENT STRATEGY Workers sort
vanilla beans in Madagascar, the worlds
largest producer of natural vanilla. The
country considered building charter
cities to attract foreign investment.
vvv.develomenl.asia Aril}une2O12DevelopmentAsia47
biggesladvanlageofShenzhenisils
convenienllocalionallhe|unclion
of|lheIeolesReublicofjChinas
domeslicandforeignmarkels,says
Zhong}ian,arofessoralShenzhen
UniversilysSchoolofLconomics
vhosecializesinlhedevelomenlof
economiczones.
Chanlhinksilsnolossibleforolher
develoingcounlrieslodulicalelhe
Shenzhenexeriencebecauseoflhe
IRCsdominanceinlhenevglobal
lradeorder.Novadays,becauseof
lheChinafaclor,lheresnolmuch
roomforexansionofolhercounlries
loexorl.Therulesoflhegamehave
changed,nol|uslbecauseof|lhe
IeolesReublicofjChinaslov
rices,bulbecause|iljhasdeveloed
a very efhcienl syslem, including
infraslruclure.Ilsalmoslimossiblefor
olhercounlrieslocomele,hesays.
STRUGGLING WITH THE
CHINESE APPROACH
India,forone,lriedloseluIRC-
slyledeconomiczonesandfailed.
ackin2OO5,lhegovernmenl
assedlheSecialLconomicZones
Aclloallraclforeigninveslmenl,
generaleexorlrevenues,andcreale
manufacluring|obs.Thelanvenl
novhere, sabolaged by difhcullies
inacquiringlandloselulhezones
amidoulcrylhallheolicyvould
increasemanufacluringemloymenl
andinveslmenlallheexenseoflhe
livelihoodsofmillionsoffarmers,
vhoverelhelandovners.Therevere
alsosusicionsaboulgovernmenl
involvemenlinlandlransaclions
belveenrivalelandovnersand
rivaledeveloers.
Lven lhe IRC ilself has had difhcully
crealinganolherzoneasbigand
successfulasShenzhen.Slill,lheres
nodoublasloilscalalyliceffecl
inslimulalingacocklailofvider
economicreformsacrosslhecounlry.
Amishmashofcoycalzoneshas
srouledusincelhemid-198Os,each
meelingilsovndesliny,including
89high-lecharks,13bondedzones,
16borderlradecooeralivezones,65
exorlrocessingzones,1Osecial
logislicsarks,13bondedorls,and18
comrehensivereferenliallaxzones.
TheIRCsslralegyhasbeenlodevelo
searaleockelsofsecialzonesand
connecllhesurvivingdolsloforma
slralegiclineandevenageograhical
block,accordingloZhong.
lherlhanlheIRCaroach,
vhalelsecandeveloingcounlries
dolocrealecharler-cily-likezonesas
roosedbyRomer`Chansuggesls
governmenlsmuslbereared
forlhehighcoslsassocialedvilh
infraslruclurebuilding,fromorls,
highvays,andrailvays,loulililies.
Theyshouldalsocurlaillheirglobal
ambilionsandfocusonlhedomeslic
orregionalmarkel,andlakelhe
limelocullivalevariousinslilulions
overseeinglhecily.
Youcannolguaranleelohave
lhemarkel.Youcannolguaranlee
everylhingvillgoaccordingloyour
vishes.Andlhereareinslilulionslhal
gobeyondlheconlrolofcailal.All
lheseinslilulionsvillnolberecrealed
easily.In|HongKong,Chinajlhey
haveevolvedoveralonglime,Chan
advises.
Theinveslmenlvillbevery
exensive.Theideaofbuildinga
cilyinaremoleareaismorelikea
lanlalioneconomymodelinlheearly
slageofcolonialism,inAmericaand
SoulheaslAsia,usingslavelaborfor
olhermarkels.Secialeconomiczones
usedchealaborvhichisnolonger
ossiblein|lheIeolesReublicofj
China.Wilhoul|HongKong,Chinasj
infraslruclureandinduslrialrelocalion
from|HongKong,Chinaj,Shenzhen
vouldnolbeablelobuilduils
exorl-orienledinduslriessoeasily.
Ilsnolsomuchaboullhemodel,
bulaboulhovlosolvelheraclical
roblems,Chanadds.
Maybealesscosllyaroachislo
slarlvilhvhalxfamInlernalionals
DuncanGreencallscharlervillages.
Thearoachhassomesuccess
likeinsomesecialeconomiczones
in|lheIeolesReublicofjChina,
saysGreen,headofresearchallhe
Uniled Kingdom ofhce of lhe aid and
develomenlcharily.Youcrealea
lillleexerimenl,ifilvorks,lhenyou
scaleilu,ifildoesnlvork,youdilch
il.Ifyoucomeuvilhonebigidea,
likecharlercilies,ilcouldlurninlo
acomleledisasler.Ifyoudosmall
exerimenls,lhenyouvouldbemore
likevenlurecailalisls.Ifoneoflhem
succeeds,ilvillhelaylhebills.
Youcanexerimenl,bulIlhinkyou
shouldhavesmallexerimenls,ralher
lhanbiglans.Smallisbellerlhan
big.Youhavelobeablelofailvilhoul
deslroyinglhesyslem.
TheGovernmenloflheIRC
aarenllylhinksilisossiblelocreale
offshoresalellilesofilssecialzones
onaminialurescale.Ilhassleed
oulsideilsborderslosreadlhevord
andundervrilelheeslablishmenlof
secialeconomiczonesinvarious
AfricancounlriesandVielNam.
ulolhersremainskelical.Ha-
|oonChang,adevelomenleconomics
rofessorallheUniversilyof
Cambridgeobserves,Ilisonelhing
foracounlrylhalisalreadyvellrun
locrealeexerimenlalockelsrun
byaforeignbody(allhougheven
lhalIdoubl),bulilisquileanolher
foraoorlyruncounlryloleaveillo
oulsiderslorunlhemoslimorlanl
laces.Q
Hong Kong, China,
a tiny enclave of
good governance
that grew faster than
its neighbors for
decades, is often cited
as an example of the
charter city concept
PROFILES IN DEVELOPMENT
vvv.develomenl.asia 48DevelopmentAsiaAril}une2O12
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A Leg Up
A doctor in Thailand has spent decades innovating prosthetic
limbs specially designed for the poor
YKarenLmmons
T
herdchai}ivacaleisbesl
knovnforlheroslheliclegs
hesmadeforlvoelehanl
landmineviclims,Molalaand
Mocha,vhoverein|uredvhilevorking
inMyanmar(lhoughlesssoforlhedog,
horse, and eagle he also has oulhlled).
IeoleinMalaysiaknovhim
forbringinglhemavasllycheaer
allernaliveleg.Andurundi,Senegal,
andAcehinIndonesiaknovhimforlhe
vorkshosheandhislechnicianssel
uinlhosecounlrieslomakealighler
arlihcial leg vilhin a day lhal amulees
vhoareoorcanaffordandusemore
easilyandcomforlablysolhallheir
livesarebeller,sayslhesofl-soken
71-year-oldorlhoedicsecialisl.
}ivacalehasalsocrealedaleglhal
lelsfarmersmarchlhroughmud,run
lo lhe rice held, hike u hillsides, go
barefoolinlheirhomesvilhoullosing
lheirbalance,andraybenlleggedina
uddhisllemle.
Ivanlamuleeslovalknormaland
lohavealeglhallooksnormal,hesays,
InhisnaliveThailand,lherearesome
3O,OOOlegamulees,novduemoslly
lomolorcycleaccidenlsandinfeclions,
says}ivacale.War-affecledcounlries,
suchasSenegal,likelyhavemanylimes
lhalnumber.
}ivacalebecamevellknovnin
Thailandin1991aflerlheBangkok Post
headlinedhiscrealionoflhevorlds
cheaesl arlihcial legsal 7OO bahl
each (aboul $21 lhen)using melled-
dovnsodacanlabsandacelone-melled
Yakullfermenledmilkbollleshis
assislanlscollecledfromgarbagebins.
Aflera}aaneselelevisioncrev
ickedulhesloryofhovlheir
counlrysYakullbrandvasbeing
recycled,hebecameahilin}aanand
receiveddonalionslhalheusedlo
makelegsforlheoor.
Theexislingroslhelicusedbymany
ooreoleinThailandcouldbeused
by farmers lo vork in vel helds, bul
}ivacalereferredlheYakullbollle
becauseilvascheaerandeasierlo
mainlain.
TheIrincessMolhersalronage
enabled}ivacalelocrealeamobileunil
and hnally rovide legs for lhe real
underrivilegedamulees living in
remoleareasandlhoselhalcouldnl
affordlolravelfar.Wilhdonalions
andvolunleers,henovmakesaboul
hve lris a year around Thailand,
sendingaveekinanarea.Hehas
sinceselusmallvorkshosineach
rovincesolhallegscanmoreeasilybe
relaced.
TheIroslhesesIoundalionhas
alsolrainedmosloflheroslhelic
lechniciansvorkinginublic
hosilals,allhoughsomehosilals
slilluselegmodelsmadeofimorled
malerials lhal cosl hve limes more.
Hismobileunilshavealsovorkedin
lheLaoIeolesDemocralicReublic,
Malaysia,andMyanmar.
Whenheexlainedlhismelhodlo
lheIrincessMolherofThailand,vho
readaboulhiminlhenevsaer,
andloldherlhalhemadelhelegs
oflenvilhhisovnfunds,sheoffered
locoverhisexenses.Sheandher
daughlerselulheIroslheses
IoundalionofHRHTheIrincess
Molher,andeversince,anyamulee
vhoisoor,regardlessofnalionalily
orreligion,receivesalegforfreeeach
limeanevoneisneeded.Achild
villneedaboul253Oroslheliclegs
inalifelime,vhileanadullamulee
villneedulo2Orelacemenls,
}ivacalenoles.
AllheKingofThailandssuggeslion,
}ivacale sloed using acelonevhich
lhe monarch lhoughl vas unheallhy
and relaced il vilh hrsl olyesler resin,
andlhenolyroylene.
vvv.develomenl.asia Aril}une2O12DevelopmentAsia49
FARMERS FOOT
}ivacalesoondiscoveredlhalfarmers
lrealedlheleglikeaairoffeslival
anlslheyusedonlyforsecial
occasionsforfearlhalvorkingvilhil
vouldbreakil.Ilvasloofancy,bulky,
andheavyforfarmersvearing|iljon
lhefarmorvadinginvaler,herecalls.
So}ivacaleremovedlhefoam
cosmelicoulerlayer,slrenglhenedlhe
melalshank,andreducedlhefoolloa
clubshae,crealingakindofmedium-
lechegleg.Healsorelacedlhe
voodenkeelinsidelheconvenlional
solid ankle cushion heel (SACH) fool
vilhnylonanddesignedilinloa
C-shae,vhichgiveslhefoolahuman-
likesringloushlhelegforvardand
rovidebalance.
Thefarmersfoolislheonlyone,
Icansay,inlhevorld,}ivacalealmosl
vhisers,asiflellingasecrel.The
samelechniqueandCshaeisalso
usedinlhecosmelicfool,vhichhels
saveenergyvhenvalkingvilhan
arlihcial leg.
Mosl arlihcial feel are made for
vearinginsideshoes,andlhusare
unablelomainlainbalancevhen
unfellered.Iarmers,headds,aregiven
lvolegs,lhe1.2-kilogramfarmers
versionlovearforvorkandlhe
1.5-kilogramcosmelicone.
The farmer's leg, lhe hrsl versions
ofvhichvereheldonloalegslum
vilhalealherslra,vasslurdybulnol
easily hxed if damaged. They became
moreconvenienlandcheaerafler
}ivacaleandhislechniciansremoved
lheslra.yexlendinglhebrimoflhe
sockelandlheolyelhylenefoamliner
higheruonakneelocrealevhalhe
callslheSuraCondyleSusension
model,aersoncaninserllheirslum
alanangle,lvislilforvard,andslarl
valking,asalechniciandemonslrales
inlheIroslhesesIoundalions
vorksho.flhe56slaffmemberslhe
foundalionemloys,14arelechnicians
vilhroslheliclegsand8oflhemare
amulees.
REDUCING COSTS
Throughconslanllinkeringand
relhinkingoflheirmodels,}ivacale
andhislechnicianshavemadeaseries
ofimrovemenlsandinvenlions.In
1995lheycrealedalegforabove-lhe-
kneeamulalions.In2OO6lheymadea
olycenlricknee|oinlfromaluminum
lhalcanmakemullilemovemenls,
includingbendinginalemle.Andin
2OO8 lhey modihed anolher American
lechniqueforquicklymakinglhemold
ofalegslum,vhichisnecessarylo
make lhe arlihcial leg.
Goneverelhedaysoflasler
andgysum,relacedbyabaglhal
resemblesacakedecoralingfabriclube
lhalusesvacuum-ackedlechnology
lomakeanegalivemoldvilhsandin
aboul15minules.Alegcanbemade
vilhinadayfromlhemold,saving
ooreolelimeandgrealexense.
Thesand,vhichgoesrockhardvhen
lheairissuckedoul,fallsaarloncelhe
airisrelurnedandcaneasilybereused.
Thenegalivemold,vhicherfeclly
resembleslheslum,helscrealelhe
lighl hl of lhe roslhelic leg. }ivacale
believeslhesyslemvorksevenbeller
lhanlhemorehigh-lechcomuler-
generaledmodels.
Thisislhelechnology}ivacale
inslalledinlhevorkshosinThailand,
lheninurundiin2O1O,afevmonlhs
agoinSenegal,andinAceh,vhere
avorkshoinslalledin2OO9vas
udaled.}ivacalecanseluavorksho
foraround$3O,OOO$5O,OOOandannual
coslscanrequireonlyaboul$15,OOO,he
eslimales.Hesuliesalcoslricelhe
infraredovenforbakinglhelasliclegs
andfoamliners,vacuummachines,and
ulensilslhalheandhislechnicianshave
designedandrovideslhemalerialsfor
lhelegs,vhicharemadeinachocolale-
brovncolorforAfrica,alsoalcosl.
AllhoughlheIroslhesesIoundalion
rovideslhehard-lo-relicaleraclice
ofgivingfreelegsloeveryoor
amulee,lhecosmeliclegcoslsaboul
$16Olomake,vhilelhefarmerslegcan
befabricaledforaboulhalflherice.
}ivacalerelired12yearsagofromlhe
roslhelicvorkshohecrealedallhe
norlhernChiangMaiUniversilyMedical
Cenlerduringhisresidencyvhenhe
vasonly27.Hemainlainshisdecades-
oldrivaleracliceandslilllecluresal
lheuniversilyaboulhisroslhelics,bul
muchofhislimeissenlhelingsread
lheuseofhislechniques.Myaimis
for every amulee lo have an arlihcial
leg,hesays.Hisnexldreamlocalions
forbuildingavorkshoarehulan,
Myanmar,andIauaNevGuinea,
vhereheknovslheneedisimmense.Q
Of the 56 staff
members the
foundation employs,
14 are technicians with
prosthetic legs and 8 of
them are amputees
RISKY RIDE There are some 30,000
leg amputees in Thailand because of
motorcycle accidents and infections.
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RECONNAISANCE
vvv.develomenl.asia 5ODevelopmentAsiaAril}une2O12
H
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M
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.
I
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I
nacoaslalIauaNevGuinea
(ING)village,Tomaru,a
vidovervilhlvochildren,
lakes u dynamile hshing lo
increasehiscalchesandmakemore
money lo fulhll his dream of roviding
hischildrenvilhaneducalion.Then
hemeelsabeaulifulmarinebiologisl,
ini,doingresearchoncoralreefs.
Theyfallinlove.uliniromoles
suslainable hshing raclices and is
aghaslvhenshelearnslhaloneof
lhe culrils raclising illegal hshing
isTomaru.AslheradiodramaNau
em Taim(NovislheTime)unfolds,
lhevidoverslruggles,veighinghis
loveforinivilhlhequesllohelhis
childrenvilhfaslcashandlhefear
ofinlroducinghissonlodangerous
dynamile hshing. In lhe end, Tomaru
and lhe lislenerschoose suslainable
hshing raclices over deslroying lhe
reefs,aresourceforlhefulure.
LveryTuesdayandThursdayal
8:3O.m.sinceIebruary2O11almosl
3millionresidenlsacrossINGhave
lunedlheirradiosloIM1OOlofollov
lhelrials,lribulalions,andrevelalions
ofTomaruandolhersinlhelocal
Iidgindialeclrogram,Lnglish
seakershearasimilarseries,Lchoes
ofChange.olhareclassicsoa
oerasvilhafullrosleroflollvisls
andcliff-hangerslhalhavelisleners
anxiouslyavailinglhenexleisode.
Soap Operas for
Social Change
Serial dramas broadcast on radio or television can be an effective way
of promoting social change at the grassroots level
YMargoIfeiff
residenlofCommunicalionsand
IrogramsforlheUniledSlales-based
IoulalionMediaCenler,anonrofil
nongovernmenlorganizalionlhal
roducedNauLmTaimandolher
serialsin17counlrieslhroughoul
Africa,Asia,andLalinAmerica.
Usingenlerlainmenlloeducaleisas
oldasarablesandfables,bulilvasnl
unlillhe197Oslhalsolidresearch
onlheirimaclvasmeasured.In
19771978,anearlyro-develomenl
soaoera,Acompaname(Accomany
Me)vasbroadcaslinMexicolo
romolefamilylanning.Thecrealor,
MiguelSabido,vasvice-residenl
forresearchalaMexicanlelevision
slalion.HeadaledlheoularLalin
Americantelenovela(lelevisionnovel)
formalofcrealingslrongemolional
bondsbelveencharaclersandvievers
TIME TO CHANGE In Papua New Guinea,
a radio drama promoting sustainable
VKLQJSUDFWLFHVLVUHDFKLQJVRPH
PLOOLRQUHVLGHQWVDFURVVWKHFRXQWU\
ullherogramsarenolsellingsoa.
Inslead,lheydeliverabroadseclrum
ofosilivesocialchangelhrough
educalionalenlerlainmenl.
During2O8eisodesairingover
2years,eachseriesfealureslhree
searaleslorylinesofcharaclers
confronlingissuesfromoverly,
violence,familylanning,gender
inequalily,educalion,landovnershi,
andecologyloalcoholanddrug
addiclion,sexualbehavior,malaria,
and HIV1AIDSand ullimalely
makinglherighlchoices.Nev
Guineaisexlremelymounlainousvilh
fevroads,ahighlevelofoverly,
andlelevisionovnershiofless
lhan1O/,yellhelvorogramsare
reachinginlolhehomesofalmosl
halfofNevGuineasoulalionof
6.7million,saysKalieLlmore,vice-
vvv.develomenl.asia Aril}une2O12DevelopmentAsia51
overalenglhyeriodoflimeduring
vhichadramalicandunrediclable
lollineencouragesvieverslo
conlinueluningin.y1986Sabido
hadroducedsixsocialconlenlserial
dramas.Duringlhallimelhenumber
offamilylanningadolerssoared,
conlracelivesalesskyrockeledand
lhecounlryexerienceda34/decline
inoulaliongrovlh.Asaresull,
Mexicovasavardedlhe1986Uniled
NalionsIoulalionIrizeaslhevorlds
foremosloulalionsuccessslory.
Sabidohadcrealedasle-by-sle
melhodologyofenlerlainmenl
vilhrovensocialbenefilloreach
andchangelhebehavioroflarge
numbersofeole.Thevidelyused
lemlalecrealesclassicslorylineslike
boy-meels-girlandrags-lo-riches,
carefullyformulaledlodeliver7O/
enlerlainmenlvilh3O/educalional
messagesvoveninlolhescril.
Mullileslorylinessuchasurban,
semi-urban,andruralscenariosunfold
allhesamelimeloengageavider
audience. ul lhe key is change
characlersmighlbeginvilhnegalive
values,bulinleraclionsvilholhers
andlollvislscomellhemlorealize
lhevalueofosilivesocialbehavior.
Ilshardlysurrisinglhalcarefully
crafledandfocusedrogramscan
insligalechange:simlyinlroducing
lelevisioninloruralIndiaexosed
vomenloaglimseofurbanlife
vhere vomengenerally vell-
educaled vilh fev childrenvork
oulsidelhehome,runbusinesses,and
conlrollheirmoney.Theconsequenl
droinferlililyofruralIndianvomen
exosedloTVvasequivalenllo
increasinglhelenglhoflimegirlsslay
inschoolby5years!
Toroducelheserials,lhe
IoulalionMediaCenlerlrainslocal
vrilersnolonlylocrealelhelong
formaldramas,bulalsolodirecl
androducelhem.Thalsnol|usllo
rovide|obsandskillslocarryon
vilhaddilionalseries,bulalsobecause
localsbeslunderslandlhesublle
nuancesoflheircullure,lheissues,
laboos,andchangesneeded.
lheoularcullureinHindi-seaking
norlhernIndia.eforelhedramavas
aired,lhousandsoflellersveremailed
lofulurelislenersinvilinglhemlo
sendinlheircommenlsandqueries.
Theradioslalionreceived15O,OOO
lellersandansveredlhemduring
radiodiscussionrograms.Among
lhemvasalvo-by-lhree-foolleller
signedoflen vilh lhumbrinlsby
184residenlsofLulsaanVillagein
UllarIradesh.Ilslaled:Lislening
loTinkaTinkaSukhhasbenefiled
alllislenersofourvillage,esecially
lhevomen....Theyformedavillage
grou,endeddovry-giving,and
slarledaschool.
Morelhan2OOheallhinlervenlion
educalionalenlerlainmenlrograms
havebeenusedsincelhe198Osin
5OAfrican,Asian,andLalinAmerican
counlries,rimarilyforreroduclive
heallhissues,suchasHIV1AIDS
avareness,familylanning,leenage
regnancy,environmenlalheallh,and
genderequalily.Soasarenolonly
effeclive,lheyarealsochea,cosling
aslillleas$.O3erruralAsianlislener.
Wilhhigherislandcoslsinremole
ING,lhericelagforanaverage
eisode of Nau em Taim is $6,75Obul
eachlislenercanslillbereachedforlhe
2-yearduralionoflheseriesforless
lhan$1.Thero|eclisadminislered
bylheIMCandfundedbylheUniled
Nalions,lheDavidandLucileIackard
STAY TUNED United States-based
Population Media Center uses
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WKURXJKRXW$IULFD$VLDDQG/DWLQ
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Introducing
television into
rural India exposed
women to a glimpse
of urban life where
womengenerally
well-educated with
few childrenwork
outside the home,
run businesses, and
control their money
Theycanalsoregionallylailor
conlenl:forahighlyoular2O-minule
educalionalradiodramabroadcasl
lviceveeklyforayearinIndiain
19961997calledTinka Tinka Sukh
(HainessLiesinSmallThings),a
ollyvoodsingervascommissioned
locomosecalchylunesforlhishighly
musicalseriesdesignedloaeallo
RECONNAISANCE
www.development.asia 52 Development Asia AprilJune 2012
P
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Foundation, Population Services
International (with a grant from Asian
Development Bank), AusAID, the
Flora L. Thornton Foundation, and
Colgate-Palmolive.
One powerful aspect of dramas
is that listeners relate to the radio
characters and they discuss and
gossip about the complex situations
in which they find themselves, says
Katie Elmore, and that provides a
comfortable environment for them to
tackle issues and personal experiences
they might normally not talk about
with others. That was the case in the
devoutly Catholic Philippines where
the 120-episode Sa Pagsikat Ng Araw
(The Hope After the Dawn) radio
serial drama addressed delicate
subjects like family planning, HIV/
AIDS prevention, and spousal abuse
in 2005.
Viet Nam has taken strongly to
educational entertainment radio
dramas. At the invitation of the United
Nations Population Fund in Viet
Nam, a 104-episode radio drama, Khat
Vong Song (The Desire of Life), was
created to address issues relating to
reproductive health and HIV/AIDS,
including improving the status of
women, delaying the age of marriage,
and valuing male and female children
equally. It debuted in March 2008 in
all 64 provinces on Voice of Vietnam
Radio and is streamed online. An
interactive website allows listeners
to find more information about the
programs issues, post their comments,
and download episodes.
While most radio series focus
on age-old concerns, they are also
being used to address new issues.
In July 2011 Voice of Vietnam began
broadcasting a second serial, Hanh
Trinh Zanh (Green Journey), focusing
on climate change and environmental
practices in four regions of the country
from river deltas to mountains. While
the varied characters of Hanh Trinh
Zanh are tested through dramas of
love, friendship, and family ties,
they struggle with accepting new
sustainable farming methods and
drought resistant crops, are deterred
from illegal tree cutting, and learn how
to survive in an economy increasingly
dependent on natural resources.
Radio may be low-tech and old-
fashioned technology, but it is proving
to be an ideal information delivery
method for social change, even in
a hyper-wired world. Reaching so
many people in remote areas at such a
low cost, says Katie Elmore, would
otherwise be impossible. Q
www.development.asia AprilJune 2012 Development Asia 53
ON THE RECORD
In our quest for growth
and development I
think we have lost
the balance between
development on one
side and environment
on the other ... If we
have the political will,
can Asia embrace
sustainability? I say yes.
$P,FRQGHQWWKDW$VLD
would do so? I confess
that I do not know.
Tommy Koh, ambassador-at-large
of Singapore, speaking at the Asian
Development Banks Eminent Persons
Forum in February 2012
Theres this theory that you
have to pick one: economics or
environmental performance.
Thats nonsense. Innovation is
the way you can have both.
Mark Vachon, vice-president of GEs Ecomagination program, in a video interview at the
biennial Investor Summit on Climate Risk at the United Nations in January 2012
The fact that policies often fail for no good reason is annoying, but
less depressing than the view that it is a big conspiracy against the
poor. Name your favorite enemycapitalism, corruption... Our view
is easier. You think hard about the problems and you can solve them.
Esther Duflo, Abdul Latif Jameel Professor of Poverty Alleviation and Development
Economics at the Massachusetts Institute of Technology and coauthor of the book Poor
Economics with Abhijit Banerjee, in an interview with the Financial Times in March 2012
At present, Europes debt
problem poses the biggest risk
for the global economy, including
Japans. If the situation worsens
further, it may trigger a global
credit crunch
Bank of Japan Governor Masaaki Shirakawa
at a news conference in January 2012
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Removing barriers
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women and making
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small weapon in this
battle.
World Bank Managing Director Sri Mulyani
IndrawatiVUNO[PUNNLUKLYPULX\HSP[`
Good Governance. Strong partnerships. Investment in infrastructure, education, and
the basic necessities of life. Tese are the keys to solving the poverty puzzle and giving
billions of Asias children hope for a brighter future.
From 25 May, delegates from 67 member countries will gather in Manila, Philippines
for ADBs 45th Annual Meeting to discuss development in Asia and the Pacifc.
Find out more at www.adb.org
Solving the poverty puzzle
www.adb.org