Posts tagged under trade & investment
Last week’s blog, ‘Conditional Cash Transfers (CCTs): Big in Latin America, Small in Southeast Asia’, concluded by asking ‘what it is, that is holding back governments in Southeast Asia to experiment more with CCTs on a large scale?’ While I do not have an answer to that, I would like to discuss this question in the Indian context where a similar debate over replacing existing in-kind social programs with direct cash transfers is gaining prominence. This is particularly true for India’s largest social safety net, the Public Distribution System (PDS), an in-kind food subsidy program that consumes almost 1 percent of India’s GDP.
Under the PDS, all households identified as living ‘below poverty line’ can purchase 35 kg of food grains (wheat and rice) at rates as low as US$ 0.02 per kg from their local PDS shops every month. Many argue that the PDS is fraught with corruption and cite examples of Mexico’s Oportunidades and Brazil’s Bolsa Familia – two perennial favourites among proponents of cash transfers – to advocate for direct cash transfers as an alternative to the ‘dysfunctional’ PDS. However, those against such a move argue that leaving poor households at the mercy of the markets will only reduce their food security as cash transfers will not be able to account for local conditions such as sudden changes in the supply of food grains.
The global debate on conditional cash transfers (CCTs), their design and impact on poverty alleviation is raging. More academic research is becoming available that shapes our knowledge about CCTs, their blessings and curses. The folks at the World Bank Development Impact Blog have posted a series of articles on the question whether conditions are a good thing?
While many Latin American and a number of African governments have successfully implemented large scale CCT programs, Southeast Asia has been a bit of a late bloomer. Pro-poor transfer programmes traditionally were (or still are) in-kind provisions, targeted subsidies or unconditional cash transfers.
The Indonesia government, for example, caused public outrage in 2005 when it cut back its generous fuel subsidies which were intended to benefit the poor, but, in effect, benefited those who were already rich enough to own private vehicles. Some of these resources were reallocated into a program called “Bantuan Langsung Tunai” (Direct cash assistance) which represented an unconditional household subsidy for poor families. The cash transfer was intended to counteract a potential increase in poverty incidence caused by the raise of gasoline prices.
The ATM team got the chance to talk to Gideon Rachman, chief foreign affairs columnist at the Financial Times. He was visiting Singapore to participate in a roundtable event organised by the Asian Trends Monitoring Bulletin and the Lee Kuan Yew School of Public Policy on the topic of “Rising Asia, Growing Inequality”.
Rachman touched upon the issues of China’s growing economic influence in the region and its political consequences for ASEAN as an organisation as well as its individual member states. He drew comparisons to the European Integration process and pointed out how free of movement of goods, capital and labour helped bridge gaps in development between Eastern European member states and the core members. We also asked him about his perspective on the Arab spring revolts, the threat of social uprisings in Southeast Asia (e.g. a Burmese Spring) and regulatory gaps in the global financial system.
About Gideon Rachman
Gideon Rachman is chief foreign-affairs comlumnist for the Financial Times and author of Zero-Sum Future: American Power in an Age of Anxiety.
He joined the FT after a 15-year career at The Economist, which included spells as a foreign correspondent in Washington and as bureau chief in Brussels and Bangkok. He also edited The Economist’s business and Asia sections. His particular interests include American foreign policy, the European Union and globalization.
The Roundtable on “Rising Asia, Growing Inequality”, which was attended by a full house of about 220 guests, students and media, saw a lively debate on the nature of inequality witnessed today and the sense of injustice amplified by the social media, which is in turn facilitated by rapid technological change.
Watch the exciting debate among the six panelists moderated by Dean Kishore Mahbubani here. The first video features the only debate, further below you will find the Question & Answer Session.
- Professor Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy (Chair)
- Dr. Judith Rodin, President of the Rockefeller Foundation
- Dr. Anies Baswedan, President, Paramadina University and one of Indonesia’s leading public intellectuals
- Professor Fu Jun, Executive Dean, Peking University School of Government
- Mr. Gideon Rachman, Chief Foreign Affairs Columnist, The Financial Times
- Mr. Karim Raslan, writer and consultant based in Indonesia and Malaysia
Senator Ton Nu Thi Ninh, President, Founding Committee of Tri Viet University, Vietnam
We would like to express our gratitude to the Rockefeller Foundation, New York and the Centre for Strategic Futures, Singapore for their generosity in supporting this Roundtable event and the Asian Trends Monitoring Project.
Coming on Monday: Full-length video of the event and footage from the Q&A Session. We will post it here.
The session was moderated by Dean Kishore Mahbubani and featured Dr. Judith Rodin, President of the Rockefeller Foundation; Dr. Anies Baswedan, President, Paramadina University and one of Indonesia’s leading public intellectuals; Professor Fu Jun, Executive Dean, Peking University School of Government; Mr. Gideon Rachman, Chief Foreign Affairs Columnist, The Financial Times; Mr. Karim Raslan, writer and consultant based in Indonesia and Malaysia; and Senator Ton Nu Thi Ninh, President, Founding Committee of Tri Viet University, Vietnam.
Don’t want to wait for tomorrow? To find out what the panelists discussed during the 90 minute debate, read a feature article about the roundtable event on the LKY School’s homepage here.
Our final preview before the official release of ATM Bulletin #12. (click to see full size)
If you’re in Singapore, don’t forget to attend the “Rising Asia, Growing Inequality” roundtable event organized by the ATM team. This event looks into the question of why Southeast Asia’s economic growth has led to the creation of parallel economies with dramatic social inequalities. The Roundtable will be held on September 30, 2011, 1:30-3:00 pm at the Lee Kuan Yew School of Public Policy.
(The ATM team is working on a new issue called “Innovations Against Inequality”, where we highlight a variety of poverty alleviation projects that are interesting and innovative. Here’s the next example!)
In absence of savings instruments the poor often find themselves unable to save up for the future. With small and irregular incomes, managing their financial affairs takes is a major concern for the poor. [i] Services such as checking and savings account, electronic payroll and 24 hours ATM utilization are taken for granted in developed countries, but completely absent for the poor in most developing countries.
They struggle with simple day-to-day money management:
- Where to keep their small daily earnings?
- Give it to a friend?
- Hide it?
- Spend it?
- Save it?
SafeSave, a financial service provider in the slums in Dhaka, Bangladesh, attempts to fill this gap for the poor. They offer a savings instrument that allows for small-scale savings of any value at any time with the right to withdraw on demand, combined with the possibility of taking small loans to smoothen unexpected cash expenditures.
(The ATM team is working on a new issue called “Innovations Against Inequality”, where we highlight a variety of poverty alleviation projects that are interesting and innovative. Here’s the second example!)
Have you ever wondered how the hundreds and thousands of small convenience store owners make a living?
They often run their store as an extension to their home, offering a range of products mostly in small packages which are affordable to the poorer population. Low sales volume and the micro-scale of their businesses leaves them with very little profits at the end of the day. Wouldn’t it be a good idea to organise a large number of these micro-stores in one sales network? That is exactly what the founders of Hapinoy thought in the Philippines, a country with approximately 800,000 sari-sari stores.
How does Hapinoy work?
Have you checked out our other infographics? Scroll down a few posts or click here.
Did you enjoy the first five answers by Robert Klitgaard on corruption and poverty (see previous blog entry)? Then you will be thrilled to watch the second half of the interview divided into five segments below.
The Asian Trends Monitoring team spoke to Robert Klitgaard, a globally renowned expert on corruption, about increasing transparency, cleaning up corrupt bureaucracies and convening local level officials to share their experiences in fighting corruption.
Q6: Prof. Klitgaard, can you name country examples where corruption was fought successfully?
Q7: What are the challenges at the local level, let’s say for governors and mayors?
Q8: Who owns these difficult reform processes? And do you typically need a few strong players?
Q9: What about systemic reform deadlock in contested democracies?
Q10: What strategies do you suggest for countries that do not have the fiscal space to pay their bureaucrats attractive salaries?
You missed questions 1-5 ? Just scroll to the previous blog entry, and enjoy!