Here is an elegant 11 min. animation depicting the proposed 10 dimensions of the multiverse.
Monday, June 29, 2009
Monday, June 22, 2009
Dead Aid
With estimates of world human population to reach 9 billion by 2050, even the most generous appraisals from experts suggest a sustainable level to be a mere half of where we are today (6-7 billion). Unstable growth in human population has far reaching repercussions from the amount of strain placed on resources. Sure, with the proliferation of the "green" movement, the effectiveness of our resources may be increased, but that will only take us so far. The emerging Asian countries that have dominated world population growth have shown clear signs of a plateau as successful development has taken hold in their economies. The gap between geographic regions with rapid and slow population growth is undeniably linked to disparities in wealth. However, as reported by the World Bank, Sub-Saharan Africa alone is at a rate of increase that will constitute 20% of the world population by 2050. So then, if we effect the economic circumstances in Africa, in-so-doing perhaps we can bring more stability to world population growth.
In Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa, Dambisa Moyo provides a no holds barred attack on the economic situation of the African continent, suggesting that foreign aid monies counterintuitively hinder economic growth rather than catalyze it. She provides a detailed critique, yet more importantly, provides alternative economic models for climbing out of the ditch that has been dug.
In the wake of a WWII, in 1947 George C. Marshall, US Secretary of State, outlined how a war ravaged Europe would receive US$13 billion (US$100 billion today, adjusted for inflation) from the USA for reconstruction. The success of the Marshall Plan served as the paradigm for raising the foundering economies of Africa. Over US$1 trillion has poured into Africa from richer countries since the 1940s. What no body has bothered to address is that post WWII Europe was on a reconstruction mission and was not so dependent upon aid, marking only 5% of GDP at most for any recipient country for the five year life of the program. African countries on the other hand are still developing, lacking the infrastructure and political stability to effectively use the foreign aid as one would with investment capital. Foreign aid to African countries has continued for well over 50 years and averages 15% of GDP across the continent today. It's a substantial amount of money, but how is it hurting Africa?
Systematic aid (monies from government-to-government or from organizations such as the IMF, to be contrasted with humanitarian aid) has consequences that have largely crippled the African continent. In the context of Africa, the legal borders carved across the continent from colonial powers with no regard for tribal homelands has led to great political instability and stalemates in their democratic politics. Eventhough aid is lent at interest rates far below the market, underdeveloped countries riddled with kleptocracy and cronyism, feed the pockets of corrupt officials and force the country into further aid-dependency to pay back the interest. In an underdeveloped economic climate, the influx of aid monies cannot be absorbed quick enough into the economy due to the lacking industry; there are often use-it-or-lose-it conditionalities and thus countries are too hard-pressed to find ways of investing wisely. This reduction in savings and investment means more money chasing consumer goods. Whether the consumer goods are produced locally or imported, the industry will have to keep up with demand, otherwise the scarcity of goods inflates prices. The inflationary consequences can choke off exports of domestic goods as prices are no longer competitive on the international market.
It's not just a slippery slope argument, these events have spiraled out of control for decades upon decades across the majority of the African continent due to the foreign aid economic growth model -- however, Moyo proposes several alternative approaches to raise the economies of African nations, approaches which have been tried and tested successfully in South Africa and Botswana.
Between Foreign Direct Investment and trade, there is great potential to get Africa on the right track. Yet, the tendency of developed nations to support domestic agro-business with government subsidies coupled with strict intra-African trade tariffs has left little ground for any economic growth from trade programs in Africa. That is with one exception; the ascent of the economic powerhouse of China has already positioned itself as a major player for the region. As China has seen unprecendented growth levels, Africa's resources pose a mutually beneficial relationship. Abundant natural resources and cheaper labor than in the developing Southeast Asia can mean big dollars for China. As of now only baby steps are being taken, but this comes along with the promise of a full-fledged China-Africa alliance.
Innovations in banking also hold the key to financial success in Africa. How can small businesses begin without loans? And how can loans be obtained when people have next to nothing for collateral? Muhammad Yunus, a Bangladeshi national was rewarded for his revolutionary approach to finance structuring with a Nobel Peace Prize in 2006. Yunus' approach was to revaluate the lacking quantitative assets of the poorest, most rural people with their qualitative assets; the opportunity to receive loans based on a community of interdependency and trust. The way it works is that a group of individuals form a coalition in order to receive the loans they desire. Person A receives a loan and if and only if person A repays the loan with interest does person B get their loan, and so on. Thus, a community is implicitly liable, willing to help a potential defaulting individual in order to get loans for the rest of the community. This banking procedure has popped up across dozens of countries already. Further banking reforms include the global decentralization of banking loans. Suppose a Burundian man wants US$3,000 on loan. (Though it presupposes internet infrastructure) through an online interface, the risk can be divied up by individuals the world over by loaning with a predetermined interest rate in denominations of their choosing until the Burundian man has his desired loan.
There is no question that the private sector is the means to raise up African economies. The unconditional giving of aid to African governments has fueled corruption; when there is accountability to foreign monies, the stealing will only happen once before the country is cut off. (In contrast, the World Bank and IMF is essentially part of an industry of foreign aid with many jobs involved in the giving of aid. Insofar as the aid is being distributed, jobs are secure and there is no accountability for how the aid funds are used). If we can bring more economic security to the developing world, we can bring more stability to the world as a whole. However, it is imperative that in building up from ground zero, we heed to a conscientious approach to social and environmental factors.
In Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa, Dambisa Moyo provides a no holds barred attack on the economic situation of the African continent, suggesting that foreign aid monies counterintuitively hinder economic growth rather than catalyze it. She provides a detailed critique, yet more importantly, provides alternative economic models for climbing out of the ditch that has been dug.
In the wake of a WWII, in 1947 George C. Marshall, US Secretary of State, outlined how a war ravaged Europe would receive US$13 billion (US$100 billion today, adjusted for inflation) from the USA for reconstruction. The success of the Marshall Plan served as the paradigm for raising the foundering economies of Africa. Over US$1 trillion has poured into Africa from richer countries since the 1940s. What no body has bothered to address is that post WWII Europe was on a reconstruction mission and was not so dependent upon aid, marking only 5% of GDP at most for any recipient country for the five year life of the program. African countries on the other hand are still developing, lacking the infrastructure and political stability to effectively use the foreign aid as one would with investment capital. Foreign aid to African countries has continued for well over 50 years and averages 15% of GDP across the continent today. It's a substantial amount of money, but how is it hurting Africa?
Systematic aid (monies from government-to-government or from organizations such as the IMF, to be contrasted with humanitarian aid) has consequences that have largely crippled the African continent. In the context of Africa, the legal borders carved across the continent from colonial powers with no regard for tribal homelands has led to great political instability and stalemates in their democratic politics. Eventhough aid is lent at interest rates far below the market, underdeveloped countries riddled with kleptocracy and cronyism, feed the pockets of corrupt officials and force the country into further aid-dependency to pay back the interest. In an underdeveloped economic climate, the influx of aid monies cannot be absorbed quick enough into the economy due to the lacking industry; there are often use-it-or-lose-it conditionalities and thus countries are too hard-pressed to find ways of investing wisely. This reduction in savings and investment means more money chasing consumer goods. Whether the consumer goods are produced locally or imported, the industry will have to keep up with demand, otherwise the scarcity of goods inflates prices. The inflationary consequences can choke off exports of domestic goods as prices are no longer competitive on the international market.
It's not just a slippery slope argument, these events have spiraled out of control for decades upon decades across the majority of the African continent due to the foreign aid economic growth model -- however, Moyo proposes several alternative approaches to raise the economies of African nations, approaches which have been tried and tested successfully in South Africa and Botswana.
Between Foreign Direct Investment and trade, there is great potential to get Africa on the right track. Yet, the tendency of developed nations to support domestic agro-business with government subsidies coupled with strict intra-African trade tariffs has left little ground for any economic growth from trade programs in Africa. That is with one exception; the ascent of the economic powerhouse of China has already positioned itself as a major player for the region. As China has seen unprecendented growth levels, Africa's resources pose a mutually beneficial relationship. Abundant natural resources and cheaper labor than in the developing Southeast Asia can mean big dollars for China. As of now only baby steps are being taken, but this comes along with the promise of a full-fledged China-Africa alliance.
Innovations in banking also hold the key to financial success in Africa. How can small businesses begin without loans? And how can loans be obtained when people have next to nothing for collateral? Muhammad Yunus, a Bangladeshi national was rewarded for his revolutionary approach to finance structuring with a Nobel Peace Prize in 2006. Yunus' approach was to revaluate the lacking quantitative assets of the poorest, most rural people with their qualitative assets; the opportunity to receive loans based on a community of interdependency and trust. The way it works is that a group of individuals form a coalition in order to receive the loans they desire. Person A receives a loan and if and only if person A repays the loan with interest does person B get their loan, and so on. Thus, a community is implicitly liable, willing to help a potential defaulting individual in order to get loans for the rest of the community. This banking procedure has popped up across dozens of countries already. Further banking reforms include the global decentralization of banking loans. Suppose a Burundian man wants US$3,000 on loan. (Though it presupposes internet infrastructure) through an online interface, the risk can be divied up by individuals the world over by loaning with a predetermined interest rate in denominations of their choosing until the Burundian man has his desired loan.
There is no question that the private sector is the means to raise up African economies. The unconditional giving of aid to African governments has fueled corruption; when there is accountability to foreign monies, the stealing will only happen once before the country is cut off. (In contrast, the World Bank and IMF is essentially part of an industry of foreign aid with many jobs involved in the giving of aid. Insofar as the aid is being distributed, jobs are secure and there is no accountability for how the aid funds are used). If we can bring more economic security to the developing world, we can bring more stability to the world as a whole. However, it is imperative that in building up from ground zero, we heed to a conscientious approach to social and environmental factors.
Subscribe to:
Posts (Atom)