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A history of international development – from the UN University Rector Dr. Malone

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As part of the Geneva Lecture Series concepted and conducted by prof. Anis H. Bajrektarevic, United Nations University Rector and Undersecretary General of the UN, Dr. David M. Malone gave a highly mesmerizing and content intensive lecture for the faculty members and Geneva-based diplomats.*  Excellency Malone outlined his view on international development, focusing on how the theory and (especially) the practice of such concept has evolved over the past decades. While international development has done much to improve the socio-economic situation in developing countries, much remains to be done, especially in the wake of the COVID-19 pandemic – Dr. Malone said.

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Talks about international development permeate current debates in academic and policy circles around the world. Yet, decades after its endorsement as one of the international community’s top priorities, the term continues to elude clear and univocal definitions, and it remains a contested concept. Dr. David M. Malone – an expert in international development, currently serving as UNU’s Rector in Tokyo, Japan – talked about his own take on the historical evolution of international development in an exchange with the students of Swiss UMEF University.

In a brief but comprehensive account, Dr. Malone noted that the concept of international development has emerged only fairly recently as a major issue on the world stage. The League of Nations, for instance, was not concerned with development, and even the United Nations did not initially devote much attention to this concept. Similarly, development was not on the agenda of the economic institutions established at the 1944 Bretton Woods conference – notably the International Monetary Fund (IMF), whose aim was to ensure monetary stability, and the International Bank for Reconstruction and Development (IBRD, the World Bank’s predecessor), whose focus was on the post-war reconstruction effort.

How did it happen, then, that these institutions gradually took the lead in promoting and sustaining development worldwide? The key factor underpinning this shift – according to Dr. Malone – is the process of decolonization, which started in the late 1940s with the independence of India, Pakistan, and Sri Lanka. Having freed themselves from the exploitative rule of colonial powers, these countries first sought to launch their first development programs, which often had a focus on agricultural development and famine prevention. At the time, international support to such efforts was very limited, consisting only of some experimental activities on specific technical issues, but with extremely tight budgets.

Yet, things started to change as a “huge decolonization wave” took off in the late 1950s, creating almost 80 new countries in the span of little more than 15 years. As these countries entered the UN en masse, they soon gained a majority in the organization. Questioning the UN’s single-handed focus on political and security issues, these countries – which were then labeled as “developing countries” – started to advocate for their own interest: the promotion of development throughout the developing world, with support from the international community.

These calls were rather successful. Entities such as the IBRD/World Bank, on a good track to completing their post-war reconstruction mission, soon started to shift their attention towards the developing world, ramping up the scale of their previously meager technical endeavors. Even more importantly, international support for developmental efforts started to materialize, both through bilateral agreements between countries and in the form of borrowed funds.

While the calls for international support were successful in raising the attention and the funds devoted to the topic of development, the early developmental endeavors were not always as successful. In a number of instances, the lack of adequate infrastructure prevented these endeavors from yielding the expected results, leading leaders to re-think their focus on what Dr. Malone termed “wildcat industrialization”. In addition, in their effort to finance development (and, at times, to amass personal wealth in the pockets of national elites), developing countries piled up an increasingly serious amount of debt, resulting in the debt crisis of the early 1980s.

The reaction of the industrialized world was mixed. Initially, shock and surprise prevailed, coupled with calls for developing countries to repay their debt at any cost. International institutions such as the World Bank and the IMF asked indebted countries to tighten their belt to free up funds for debt repayment. Lacking alternatives, many countries did so; yet, this came at a serious price over the medium to long term.Over time, however, a more realistic outlook on the issue emerged. Creditors organized in two groups – the “Paris Club” for official donors, and the “London Club” for private creditors – and discussed their response. Eventually, the strategy was two-fold: part of the debt was rescheduled, while another part was outright canceled.

Over the following decades, this major debt-management operation did yield important results – Dr. Malone stressed. By 1995, developing countries were fully out of the debt crisis, and government officials in industrialized countries were less worried about the overall situation. Still, tensions between developed and developing countries persisted, including at the UN. The latter asked the former to contribute to their development as a reparation of past damages under colonialism, while the former accused the latter of mismanagement and claimed full control over the use of their own funds. As of the mid-1990s, this debate had not led anywhere: everyone wanted to move on, and so they did.

The game changer emerged around the turn of the new millennium, when the UN – under the lead of Secretary General Kofi Annan – heavily invested in the creation and promotion of the Millennium Development Goals (MDGs). The goals were narrow but ambitious; and yet, despite this ambition, most (although not all) of them were met by 2015. According to Dr. Malone, this success was made possible by the high growth rates enjoyed by developing countries through the first 15 years of the new millennium – a growth that, among other factors, was enabled by the previous debt-management strategy and by the increasing flow of international capital to the developing world.

The success in achieving the MDGs thus triggered a new process at the UN, which raised the bar and set for the world even more ambitious goals – the Sustainable Development Goals (SDGs). These objectives were underpinned by an assumption that the high rates of growth that had characterized the first decade of the new millennium would continue. As it became clear, however, this assumption was overly optimistic. The 2008 global financial crisis significantly slowed down growth, both in the industrialized world and (albeit to a lesser extent) in developing countries. As a result, international development efforts faced – and still face – increasing challenges. To respond to these challenges, the 2015 Addis Ababa Action plan sought to adopt a more sophisticated strategy to ensure funding for international development efforts. Moving away from a single-handed focus on official development assistance, the plan stressed the importance of multiple funding streams, including remittances and lending instruments. Yet, significant challenges remain as of today, and the path of international development remains uphill.

This is the context in which we can place the advent of COVID-19, which has been sweeping through the world since early 2020. So far, in direct terms, the virus has not affected developing countries significantly harder than developed ones, Dr. Malone noted. However, in a post-COVID world, the needs of developing countries will likely be much more compelling that those of their industrialized counterparts. In short, international cooperation and developmental efforts have achieved a lot over the past 70 years, but much more has yet to be achieved. As we enter the post-COVID era, the world should be aware of that.

United Nations University Rector and Undersecretary General of the UN, Dr. David M. Malone answered the call of the Swiss UMEF University in Geneva on November 05th2020, and gave this lecture under the auspices of so-called Geneva Lecture Series – Contemporary World of Geo-economics. Lecture series so far hosted former President of Austria, former Secretary-General of the Paris-based OECD and prominent scholars such as prof. Ioannis Varoufakis. Some of the following guests are presidents and prime ministers of western countries, notable scholars as well as the Nobel prize laureates. 

Guido Lanfranchi is an international affairs specialist based in Den Haag. He studied at the Dutch Leiden University and Sciences Po Paris, and working with the Council of the European Union in Brussels. His research focuses on the EU, Euro-MED and Africa.

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Economy

The Blazing Revival of Bitcoin: BITO ETF Debuts as the Second-Highest Traded Fund

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It seems like bitcoin is as resilient as a relentless pandemic: persistent and refusing to stay down. Not long ago, the crypto-giant lost more than half of its valuation in the aftermath of a brutal crackdown by China. Coupled with pessimism reflected by influencers like Elon Musk, the bitcoin plummeted from the all-time high valuation of $64,888.99 to flirt around the $30,000 mark in mere weeks. However, over the course of the last four months, the behemoth of the crypto-market gradually climbed to reclaim its supremacy. Today, weaving through national acceptance to market recognition, bitcoin could be the gateway to normalizing the elusive crypto-world in the traditional global markets: particularly the United States.

The recent bullish development is the launch of the ProShares Bitcoin Strategy ETF – the first Bitcoin-linked exchange-traded fund – on the New York Stock Exchange. Trading under the ticker BITO, the Bitcoin ETF welcomed a robust trading day: rising 4.9% to $41.94. According to the data compiled by Bloomberg, BITO’s debut marked it as the second-highest traded fund, behind BlackRock’s Carbon fund, for the first day of trading. With a turnover of almost $1 billion, the listing of BITO highlighted the demand for reliable investment in bitcoin in the US market. According to estimates on Tuesday, More than 24 million shares changed hands while BITO was one of the most-bought assets on Fidelity’s platform with more than 8,800 buy orders.

The bitcoin continued to rally, cruising over the lucrative launch of BITO. The digital currency rose to $64,309.33 on Tuesday: less than 1% below the all-time high valuation. In hindsight, the recovery seems commendable. The growing acceptance, albeit, has far more consequential attributes. The cardinal benefit is apparent: evidence of gradual acceptance by regulators. “The launch of ProShares’ bitcoin ETF on the NYSE provides the validation that some investors need to consider adding BTC to their portfolio,” stated Hong Fang, CEO of Okcoin. In simpler terms, not only would the listing allow relief to the crypto loyalists (solidifying their belief in the currency), but it would also embolden investors on the sidelines who have long been deterred by regulatory uncertainty. Thus, bringing larger, more rooted institutional investors into the crypto market: along with a surge of capital.

However, the surging acceptance may be diluting the rudimentary phenomenon of bitcoin. While retail investors would continue to participate in the notorious game of speculation via trading bitcoin, the opportunity to gain indirect exposure to bitcoin could divert the risk-averse investors. It means many loyalists could retract and direct towards BITO and other imminent bitcoin-linked ETFs instead of setting up a digital custodianship. Ultimately, it boils down to Bitcoin ETFs being managed by third parties instead of the investor: relenting control to a centralized figure. Moreover, with growing scrutiny under the eye of SECP, the steps vaguely intimate a transition to harness the market instead of liberalizing it: quiet oxymoronic to the entire decentralized model of cryptocurrencies.

Nonetheless, the listing of BITO is an optimistic development that would draw skeptics to at least observe the rampant popularity of the asset class. While the options on BITO are expected to begin trading on the NYSE Arca Options and NYSE American Options exchanges on Wednesday, other futures-based Bitcoin ETFs are on the cards. The surging popularity (and reluctant acceptance) amid tightening regulation could prove a turn of an era for the US capital markets. However, as some critics have cited, BITO is not a spot-based ETF and is instead linked to futures contracts. Thus, the restrain is still present as the regulators do not want a repeat of the financial crisis. Nevertheless, bitcoin has proved its deterrence in the face of skepticism. And if the BITO launch is to be marveled at, then the regulations are bound to adapt to the revolution that is unraveling in the modern financial reality.

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Is Myanmar an ethical minefield for multinational corporations?

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Business at a crossroads

Political reforms in Myanmar started in November 2010 followed by the release of the opposition leader, Aung San Suu Kyi, and ended by the coup d’état in February 2021. Business empire run by the military generals thanks to the fruitful benefits of democratic transition during the last decade will come to an end with the return of trade and diplomatic sanctions from the western countries – United States (US) and members of European Union (EU).  US and EU align with other major international partners quickly responded and imposed sanctions over the military’s takeover and subsequent repression in Myanmar. These measures targeted not only the conglomerates of the military generals  but also the individuals who have been appointed in the authority positions and supporting the military regime.

However, the generals and their cronies own the majority of economic power both in strategic sectors ranging from telecommunication to oil & gas and in non-strategic commodity sectors such as food and beverages, construction materials, and the list goes on. It is a tall order for the investors to do business by avoiding this lucrative network of the military across the country. After the coup, it raises the most puzzling issue to investors and corporate giants in this natural resource-rich country, “Should I stay or Should I go?”

Crimes against humanity

For most of the people in the country, war crimes and atrocities committed by the military are nothing new. For instances, in 1988, student activists led a political movement and tried to bring an end to the military regime of the general Ne Win. This movement sparked a fire and grew into a nationwide uprising in a very short period but the military used lethal force and slaughtered thousands of civilian protestors including medical doctors, religious figures, student leaders, etc. A few months later, the public had no better options than being silenced under barbaric torture and lawless killings of the regime.

In 2007, there was another major protest called ‘Saffron Uprising’ against the military regime led by the Buddhist monks. It was actually the biggest pro-democracy movement since 1988 and the atmosphere of the demonstration was rather peaceful and non-violent before the military opened live ammunitions towards the crowd full of monks. Everything was in chaos for a couple of months but it ended as usual.

In 2017, the entire world witnessed one of the most tragic events in Myanmar – Again!. The reports published by the UN stated that hundreds of civilians were killed, dozens of villages were burnt down, and over 700,000 people including the majority of Rohingya were displaced to neighboring countries because of the atrocities committed by the military in the western border of the country. After four years passed, the repatriation process and the safety return of these refugees to their places of origin are yet unknown. Most importantly, there is no legal punishment for those who committed and there is no transitional justice for those who suffered in the aforementioned examples of brutalities.

The vicious circle repeated in 2021. With the economy in free fall and the deadliest virus at doorsteps, the people are still unbowed by the oppression of the junta and continue demanding the restoration of democracy and justice. To date, Assistant Association for Political Prisoner (AAPP) reported that due to practicing the rights to expression, 1178 civilians were killed and 7355 were arrested, charged or sentenced by the military junta. Unfortunately, the numbers are still increasing.

Call for economic disengagement

In 2019, the economic interests of the military were disclosed by the report of UN Fact-Finding Mission in which Myanmar Economic Corporation (MEC) and Myanmar Economic Holding Limited (MEHL) were described as the prominent entities controlled by the military profitable through the almost-monopoly market in real estate, insurance, health care, manufacturing, extractive industry and telecommunication. It also mentioned the list of foreign businesses in partnership with the military-linked activities which includes Adani (India), Kirin Holdings (Japan), Posco Steel (South Korea), Infosys (India) and Universal Apparel (Hong Kong).

Moreover, Justice for Myanmar, a non-profit watchdog organization, revealed the specific facts and figures on how the billions of revenues has been pouring into the pockets of the high-ranked officers in the military in 2021. Myanmar Oil & Gas Enterprise (MOGE), an another military-controlled authority body, is the key player handling the financial transactions, profit sharing, and contractual agreements with the international counterparts including Total (France), Chevron (US), PTTEP (Thailand), Petronas (Malaysia), and Posco (South Korea) in natural gas projects. It is also estimated that the military will enjoy 1.5 billion USD from these energy giants in 2022.

Additionally, data shows that the corporate businesses currently operating in Myanmar has been enriching the conglomerates of the generals and their cronies as a proof to the ongoing debate among the public and scholars, “Do sanctions actually work?” Some critics stressed that sanctions alone might be difficult to pressure the junta without any collaborative actions from Moscow and Beijing, the longstanding allies of the military. Recent bilateral visits and arm deals between Nay Pyi Taw and Moscow dimmed the hope of the people in Myanmar. It is now crystal clear that the Burmese military never had an intention to use the money from multinational corporations for benefits of its citizens, but instead for buying weapons, building up military academies, and sending scholars to Russia to learn about military technology. In March 2021, the International Fact Finding Mission to Myanmar reiterated its recommendation for the complete economic disengagement as a response to the coup, “No business enterprise active in Myanmar or trading with or investing in businesses in Myanmar should enter into an economic or financial relationship with the security forces of Myanmar, in particular the Tatmadaw [the military], or any enterprise owned or controlled by them or their individual members…”

Blood money and ethical dilemma

In the previous military regime until 2009, the US, UK and other democratic champion countries imposed strict economic and diplomatic sanctions on Myanmar while maintaining ‘carrot and stick’ approach against the geopolitical dominance of China. Even so, energy giants such as Total (France) and Chevron (US), and other ‘low-profile’ companies from ASEAN succeeded in running their operations in Myanmar, let alone the nakedly abuses of its natural resources by China. Doing business in this country at the time of injustice is an ethical question to corporate businesses but most of them seems to prefer maximizing the wealth of their shareholders to the freedom of its bottom millions in poverty.

But there are also companies not hesitating to do something right by showing their willingness not to be a part of human right violations of the regime. For example, Australian mining company, Woodside, decided not to proceed further operations, and ‘get off the fence’ on Myanmar by mentioning that the possibility of complete economical disengagement has been under review. A breaking news in July, 2021  that surprised everyone was the exit of Telenor Myanmar – one of four current telecom operators in the country. The CEO of the Norwegian company announced that the business had been sold to M1 Group, a Lebanese investment firm, due to the declining sales and ongoing political situations compromising its basic principles of human rights and workplace safety.

In fact, cutting off the economic ties with the junta and introducing a unified, complete economic disengagement become a matter of necessity to end the consistent suffering of the people of Myanmar. Otherwise, no one can blame the people for presuming that international community is just taking a moral high ground without any genuine desire to support the fight for freedom and pro-democracy movement.

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The Covid After-Effects and the Looming Skills Shortage

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coronavirus people

The shock of the pandemic is changing the ways in which we think about the world and in which we analyze the future trajectories of development. The persistence of the Covid pandemic will likely accentuate this transformation and the prominence of the “green agenda” this year is just one of the facets of these changes. Market research as well as the numerous think-tanks will be accordingly re-calibrating the time horizons and the main themes of analysis. Greater attention to longer risks and fragilities is likely to take on greater prominence, with particular scrutiny being accorded to high-impact risk factors that have a non-negligible probability of materializing in the medium- to long-term. Apart from the risks of global warming other key risk factors involve the rising labour shortages, most notably in areas pertaining to human capital development.

The impact of the Covid pandemic on the labour market will have long-term implications, with “hysteresis effects” observed in both highly skilled and low-income tiers of the labour market. One of the most significant factors affecting the global labour market was the reduction in migration flows, which resulted in the exacerbation of labour shortages across the major migrant recipient countries, such as Russia. There was also a notable blow delivered by the pandemic to the spheres of human capital development such as education and healthcare, which in turn exacerbated the imbalances and shortages in these areas. In particular, according to the estimates of the World Health Organization (WHO) shortages can mount up to 9.9 million physicians, nurses and midwives globally by 2030.

In Europe, although the number of physicians and nurses has increased in general in the region by approximately 10% over the past 10 years, this increase appears to be insufficient to cover the needs of ageing populations. At the same time the WHO points to sizeable inequalities in the availability of physicians and nurses between countries, whereby there are 5 times more doctors in some countries than in others. The situation with regard to nurses is even more acute, as data show that some countries have 9 times fewer nurses than others.

In the US substantial labour shortages in the healthcare sector are also expected, with anti-crisis measures falling short of substantially reversing the ailments in the national healthcare system. In particular, data published by the AAMC (Association of American Medical Colleges), suggests that the United States could see an estimated shortage of between 37,800 and 124,000 physicians by 2034, including shortfalls in both primary and specialty care.

The blows sustained by global education from the pandemic were no less formidable. These affected first and foremost the youngest generation of the globe – according to UNESCO, “more than 1.5 billion students and youth across the planet are or have been affected by school and university closures due to the COVID-19 pandemic”. On top of the adverse effects on the younger generation (see Box 1), there is also the widening “teachers gap”, namely a worldwide shortage of well-trained teachers. According to the UNESCO Institute for Statistics (UIS), “69 million teachers must be recruited to achieve universal primary and secondary education by 2030”.

From our partner RIAC

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