abstracts of project studies course 1

Abstract_MGG1German Development Institute /
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Axel Berger China and the Global Governance of Foreign Direct Investment: The Effects of Growing Outward Foreign Direct Investment on Chinese Bilateral Investment Treaties
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Romy Chevallier Addressing climate change in the context of the development agenda
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Delane Botelho Policies and institutions related to TNC-SME linkages: The Brazilian case
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Qinsile Delwa The State Machinery and Economic Growth in South Africa
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Denise Laufer India as an actor in global governance – an analysis
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Yang Guoliang The Sustainable Trade Policy and Cooperation Architecture Between China and the EU
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Hu Dawei Conflict or Cooperation? China’s energy diplomacy in the era of globalization
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Sachin Joshi India’s Relations with Africa. Practice and Potentials from an Indian Perspective
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Ana Patricia Silva Vera Balancing the Agenda: Are Conditioned Cash Transfer Programmers With a Gender Approach Having an Impact on Women’s Empowerment?
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Article on best practices for innovation within public institutions (untitled)
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Global Environmental Governance – a Brazilian Perspective 15
Sandhya S. Iyer Aligning Aid Effectiveness for Public Spending on Social Sectors: An Analysis for South Asia and Sub-Saharan Africa
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Wang Hao German Development Cooperation. What Can China Learn from It?
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Ye Meng Analysis of the policies and practices of the information society in the European Union
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Zhan Shiming The International Community and the Settlement of Internal Conflicts in Africa – A Case Study of Sierra Leone
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Zhu Ming The European Union’s Development Policy in Africa
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Abstract José Eduardo Alatorre Bremont, Peter Nunnenkamp
FDI in Mexico: An Empirical Assessment of Employment Effects Mexico is fairly attractive for foreign direct investment (FDI). It has participated more than proportionally in booming FDI since the early 1990s. Inward FDI stocks amounted to 8.5 percent of Mexico’s GDP in 1990, closely resembling the share of worldwide FDI stocks in world GDP at that time. Reviewing the existing literature, recent research shows that Mexico has derived significant economic benefit from FDI inflows, e.g. in terms of higher and incomes and wages. Nevertheless, no empirical assessment of the impact on the Mexican labor market, with its growing labor force, has been carried out so far, so that we lack a reliable basis for policy recommendations concerning the promotion of FDI and its structure. Since the manufacturing sector and financial services received three quarters of FDI inflows in 1994-2004, and the importance of the financial sector for the labor market is very low, the present analysis focuses on the measurable impact of FDI on the employment of almost 200 enterprises in the Mexican manufacturing sector between 1994 and 2006. Some interesting empirical findings were made on the basis of estimates of the influence of export orientation, wage and capacity levels. It turns out that FDI has a significantly positive, though quantitatively modest, impact on employment for both blue-collar (low/un-skilled) and white-collar (highly skilled) workers. Moreover, the findings do not support the widely held view that FDI adds to white-collar employment in the first place. Furthermore, FDI-induced total employment effects become more pronounced when the export ratio increases. Although there is no evidence for a correlation between capital intensity and employment effects once FDI has been implemented, the interaction of FDI with capital intensity proves to be significantly positive, reaching a level of 10 percent, for white-collar employment. This tends to support the view that physical capital and skilled labor are complementary factors of production, which means that white-collar workers benefit more from FDI-induced employment effects in industries with higher capital intensity. In the end, all this offers an important policy lesson, namely that generalized verdicts on the employment implications of FDI are not warranted. Many proponents and critics of FDI have in common that they ignore the heterogeneity of FDI, i.e. whether the investments under consideration go into manufacturing or financial or other services. The case of Mexico clearly suggests that the employment effects of FDI depend on various factors. On the one hand, this calls into question the euphoria about FDI currently prevalent among policymakers. On the other hand, our results indicate that it is equally unreasonable to argue that FDI only deepens the divide within the labor force at the expense of poor and unskilled workers in host countries such as Mexico.
© Deutsches Institut für Entwicklungspolitik (DIE) and InWEnt
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Abstract Carlos Alberto Arellano Esparza
Local Development: A Feasible Future In the XXI century, underdevelopment in particular regions of the world, with its consequences of social exclusion, marginalization and inequity, remain a core issue to be tackled. Underdevelopment is here understood as an imported product, whose characteristics have nothing to do with the historical conditions, the social processes and structures of those places in which it was meant to be inserted. Once the impact of European- and later North American- shaped capitalism forced more and more regions into the globalized market, it cancelled the natural evolution of those societies, keeping them from finding a way of their own to endogenous, self-determined development. Localness is understood as a minor geographic location of the kind found in the relation between rural communities and small cities. Traditionally, the local dimension has been relegated to a secondary position in the context of the development of modern society, the reason being the centralist inertia of the accumulation of economic and political power at the state or national level. In this regard, localness is merely a stepping-stone for politicians, or it is effectively designed to entitle people with power to preserve it. But the significance of localness is different. Localness shapes habits and the accumulation of knowledge. It is in this micro space that local development can be pushed forward, and where local public and private actors have information about their concrete needs and the legitimacy of development processes is generated – or not, due to the extent to which this information is integrated within development activities. After all, local development is an endogenous process that takes place within small territorial units and that enables economic growth and improves the quality of life of their inhabitants. Therefore, the essence of local development rests on three pillars that are mutually interdependent and reciprocally influence one another: processes within local territories, institutional consolidation and social participation. The outreach of these three might be intensified and broadened if an external agent is incorporated: international cooperation. The latter has to be seen as an outsider-induced ‘system shock’ that may change substantially the course of a social system that is ‘locked into’ a certain development path.
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Abstract Axel Berger
China and the Global Governance of Foreign Direct Investment: The Effects of Growing Outward Foreign Direct Investment on Chinese Bilateral Investment Treaties The economic and political rise of China will have significant impacts on the structure of global governance. In this context rapidly growing outward foreign direct investments (OFDIs) by Chinese companies are one of the most recent trends in the integration process of China into the world economy. Especially, Chinese investment activity in developing countries has been increasing recently, and while this has influenced significantly China’s policies towards these countries, it also goes hand in hand with opportunities in China’s overall foreign trade and business policy strategy. However, apart from the strong absolute growth of foreign investments by Chinese enterprises, OFDIs are still subordinate relative to inward foreign direct investments (IFDI) in the Chinese economy. Therefore China has to balance its interest and related policy as a net capital importer with a growing significance of capital exports. Several reasons suggest that Chinese OFDIs will grow strongly in the future and will have an increasing influence on Chinese international investment policy-making. The underlying rationale of expanding Chinese OFDIs can be generally distinguished into two sets of reasons: commercial interests of the enterprises involved in foreign investments and China’s strategic interests stemming from its growing dependence on imports of natural resources. The “Going Global” strategy of the Chinese government marked the transition of the Chinese OFDI policy from regulation to encouragement of foreign investments. It was first announced in 1998 and was later embedded in the Tenth Five-Year Plan for National Economy and Social Development in 2001. It mainly refers to foreign investment activities by Chinese enterprises and has resulted in the emergence of an independent OFDI policy in China. Since bilateral investment treaties (BITs) are the most important legal tool for China to protect inward as well as outward FDI, the development of the Chinese BIT policy is an important indicator for estimating what role China intends to play, and by what means, in the future concerning global economic integration and development. In addition to OFDI promotion measures the Chinese government introduced at the domestic level following the “Going Global” strategy, China has also been very active in signing BITs. In the 1990s China introduced a gradual policy change towards stronger and more comprehensive investment protection in its BITs. The renegotiated BITs with developed countries contain all of the standard provisions that are common to modern BIT practice worldwide. This analyses shows that China has fully agreed to international standards on legal protection of FDI. As far as developing countries are concerned, the Chinese government is negotiating BITs as a capital exporting country and insists on protection of its own investments, which are likely to be exposed to non-commercial risks that stem from weak legal systems and unstable political situations as compared to developed countries. China is therefore starting to adopt the position of an important global governance actor in the field of foreign investment.
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Abstract Romy Chevallier
Addressing climate change in the context of the development agenda The Intergovernmental Panel on Climate Change (IPCC) has presented evidence that climate change will have significant development consequences for all, above all for the most vulnerable (developing countries). According to the OECD, environmental sustainability is important for economic and human development, as environmental ‘costs’ at the global, national and local levels bear heaviest upon the poor. Climate variability therefore aggravates poverty and should be considered as an integral part of the international development agenda. Despite this recognition of the detrimental effects of climate change on the poor, the great challenge involved in ensuring developing-country participation in the reduction of harmful GHG emissions still remains. Climate change is not seen as a priority by developing countries, which are more preoccupied with immediate economic challenges and more pressing development needs on their domestic fronts. This comes particularly in light of a rapidly changing geo-political landscape, with the growth and emergence of ‘threshold countries’ and new developing economies with high emissions potential (namely China, India and Brazil). According to the Climate Change and Development Bulletin of the Institute of Development Studies (IDS), ‘increased contributions from developing countries are projected to match industrialized countries’ levels by 2020. Even though the interdependence of climate change and development – such as reduction of the coal exports of developing countries due to substitution of energy sources in the developed countries or growth of GHG emissions caused by advancing industrialization in developing countries - are the object of increasing scientific and public attention, the international development agenda still lacks an incorporation of environmental policy into the programming of the development agenda at the global level. The dominant tendency is still a top-down approach like that found in the UNFCCC (1994), Kyoto (1997) and the main focus of the previous climate change dialogue, which was concerned more with setting quantified emission limitation targets than with implementing policies for sustainable development. There are two proposed instruments to add to this a bottom-up approach that take particular national interests and development priorities into account. The Sustainable Development Policies and Measures (Winkler), which are firmly entrenched within the national sustainable development priorities of the host country but are still included in an international climate framework, and the “co-benefit” approach of the EU, which focuses on creating development- needs-oriented efforts to address climate change, or simply put, in duplicating areas of action for development and climate change. Such a multidisciplinary approach would include a more substantial and in-depth discussion of climate policies and bring together various opinions, best practice experiences, and it could more easily identify anticipated challenges concerning the viability and success of mainstreaming.
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Abstract Delane Botelho
Policies and institutions related to transnational corporations - small and medium sized enterprise linkages: The Brazilian case One important source of inflows of development and technology into developing and emerging host countries is related to the externalities resulting from the linkages that local suppliers can forge with the foreign affiliates of transnational corporations (TNCs). The growing role of TNCs in global governance and world trade and the rising number of small and medium-sized enterprises (SMEs) included in international chains of production suggest that much of future SME activities will be situated within or around TNC production systems. Business linkages between TNCs and SMEs can create spillovers allowing small local producers to benefit from an exchange of relevant information and technical knowledge and promote production efficiency, productivity growth and market diversification, among other benefits. Also, there is evidence that the more TNCs are intertwined with local companies through supplier or other linkages, the more likely they are to maintain their operations in the country in the long term. TNCs also have strategic interest in forging links with domestic suppliers, but public policies and institutions (such as investment promotion agencies - IPAs) can play a crucial role in promoting linkages. On the other hand, the direct development impact of TNCs in developing countries is well documented (UNCTAD, 2005) and includes tax revenues, exports, research and development (R&D) and employment generated by their affiliates. What is crucial for a successful incorporation of TNC activities linked to their foreign direct investment (FDI) in Brazil’s economy, the largest recipient and source of FDI in Latin America, is the host country’s policy framework and economic climate. The Brazilian investment climate has improved significantly since 1994. The regulations in place ensure FDI access to the market and practically unrestricted national treatment in the area of goods. Such national treatment is firmly entrenched in administrative and legal practice. Micro and small enterprises in Brazil are what is known as the “social force of economy,” accounting for 99.2% of all enterprises registered in the country. Due to this importance as well as to the fact that these firms often find a less favourable position in international trade, Brazil has established an active and permanent policy to promote SMEs and their linkages with TNC, including programmes and institutions that offer credit access, provide and match information about TNC and SME activities in their particular sectors, promote local clusters, and strengthen local capacity building in SMEs. The activities of the IPAs also take into account issues of general political interest which are considered not market endogenous, such as the green procurement concept and Restriction of Hazardous Substances (RoHS) Directive (in manufacturing electronic and electrical equipments) or regional disparities. To conclude, the creation of TNC-SME linkages is, in fact, neither easy nor automatic. The existing levels of host country technological and structural development will determine what types of linkages will be the most appropriate. So Brazil needs to identify the types of investment that are most likely to form the types of linkage best suited to the country's stage of development, and to ensure that barriers to those types of linkage are minimized.
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Abstract Qinisile Delwa
The State Machinery and Economic Growth in South Africa South Africa this year celebrates 13 years of democracy. In this period the country has improved access to social services for the poor, enhanced rapid economic growth with the economy firmly integrated into the global economy, fully entrenched democracy, all these leading to the improvement of the standard of living for many South Africans. Beyond this success the government still faces the challenge of “creating a transformative state within the parameters of a market driven economic system”. These ideals are further reflected in the concept of a developmental state as state that seeks to foster equitable distribution of wealth between the rich and poor, addressing socio-economic imbalances caused by Apartheid. The South Africa government has acknowledged that the current economic climate is not conducive for the realization of the country’s development goals because of the nature of the county’s economic system, which is divided between the first (developed) and second (underdeveloped) economy. The developed part of the economy suffers from a lack of cost competitiveness in relation to the global economy. The underdeveloped part of the economy, which represents the experiences of a high proportion of South Africans, is an area where economic potential is not being enabled and harnessed due to backlogs and under-investment in social and productive capital. The current dual economy perpetuates inequality between the minority of the population that holds the maximum wealth of the country and the majority of the population living in unemployment and poverty. The theoretical concept of the developmental state features a state led economic project in partnership with the private sector and civil society and creates an effective bureaucracy that is able to pursue the development agenda. In South Africa this concept has been adopted by running the AsgiSA programme with a dual strategy: Responses to the macroeconomic (First Economy) targets remain the competence of government economic departments, which in essence deal with the more formal aspects of economic processes, while the social (Second Economy) aspects of AsgiSA are dealt with by government departments that traditionally deal with social services.
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Abstract Denise Laufer
India as an actor in global governance – an analysis Since its independence in 1947 India has followed a multilateral international policy concept which was based on its colonial experiences with repression, racism and lack of national sovereignty. From its idealistic concept of a foreign policy formulated by its political and spiritual leaders in the time of independence, Ghandi and Neru, it derived the initiative to group the countries of the south in the Non-Alignment-Movement and to provide strong support for the UN institutions.
In recent years, since 1991, it must be noted that India has shifted towards a more classic configuration of foreign policy due to its negative experiences in the multilateral forums, including e.g. the international decisions concerning the Cashmere-conflict in the 1970s, the Western dominated negotiations in the World Trade Organization in the 1990s or the recent stagnating reform of the UN system, especially the Security Council. Therefore Indian politics has re-evaluated certain characteristics of classical power such as military strength (nuclear tests in 1998) and economic growth (liberalization and world market integration since 1991) as necessary tools to defend its own interests. Despite regional tensions with its powerful neighbors Pakistan and China due to security and territorial interests, rational consideration of the economic advantages of regional integration and the need for regional defence of interests in the arenas of global politics have contributed to a more pragmatic approach of Indian foreign policy aimed at strengthening regional governance structures such as the South Indian Association for Regional Cooperation (SAARC). As an emerging economic power with improved classic power capabilities, India still has a substantial interest in multilateral global governance. It has started to expend resources on economic cooperation with less developed countries in South Asia and in Africa, and it is still willing to participate in multilateral negotiations within the WTO framework and to foster the UN system, both aiming to secure national resource needs and market access for the country’s growing economy as well as to rebalance adverse power relations on the global level. It is up to a consolidated European strategy towards a multilateral world order to integrate this potential partner, that, in contrast to the other regional power, China, is strongly committed to democratic values. On such integration will also depends whether internal Indian politics tend towards a non-conditioned international development policy designed to defend India’s national interest or whether India is going to be a partner in the building of democratically inspired global governance structures.
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Abstract Guoliang Yang
The Sustainable Trade Policy & Cooperation Architecture between China and the EU In the last years the relationship between China and the European Union has featured a certain contrariness. On the one hand, bilateral trade between China and the EU has enlarged rapidly and the level of cooperation has been improved gradually. On the other hand, trade friction has heightened, including disputes about merchandise trade, i.e. over textiles and clothing in 2005, shoes in 2006 and, finally, over steel products in 2007. Since its accession to the World Trade Organization (WTO) China has been serious about observing the respective rules and has opened its domestic markets. China complied quickly with its commitments to cut tariffs from an average of 15.3% in 2001 to 9.9% in 2006. China’s WTO membership has therefore improved the bilateral trade environment, with the EU now having become China’s most important trading partner. The EU’s strategy concerning trade relations with China has lately been reflected in the Communication approved by the EU Commission, Parliament and Council and entitled “EU- China: Closer partners, growing responsibilities” of October 2006. These documents set out a framework for future China-EU economic relations, with the foremost objective to improve and balance trade relations through further opening of Chinese markets and adjustment to international standards. But the EU has also established some particular anti-dumping measures, Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) measures in order to ensure that domestic standards on the environment, public health and consumer safety are met. Another important aspect in the recent development of EU-China trade relations is the enlargement of the EU, which has brought into the common market several eastern European countries whose economic features, including low labor costs and relatively high industrial levels, will mean competition for Chinese import products. To foster their mutual trade relationship, which has contributed significantly to the economic prosperity of both, China and the EU should first of all try to balance the economic benefits, strengthening the comparative rather than complementary advantages of their respective economies. Secondly, both China and the EU should create a cooperation architecture to anticipate and regulate dispute settlement. Thirdly, Chinese corporations should look abroad and invest in EU member states with a view to gaining managerial and technical spillovers.
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Abstract Hu Dawei
Conflict or Cooperation? China’s energy diplomacy in the era of globalization China’s economic growth in the last three decades has become a challenge for the world markets for raw materials and energy provision. According to the calculation made by the China National Statistic Bureau, China’s average annual GDP increase was 9.6% from 1979 to 2004. The total volume of the economy in 2004 expanded to 32 times its size in 1978. Before 2001 the growth rate of energy consumption figured below the growth rate of the economy, but from 2002 on there has been a turn-around. Since then energy consumption has increased 14.4%, reaching over 15% in 2003 and 2004, far higher than GDP growth. In more detail, the reasons for China’s growing energy demand can be found in an extreme dynamic urbanization process, with an increase in urban population of about 314% from 1978 to 2004, the still large population benefiting from greater prosperity, and extensive growth of energy intensive industries like steel, cement or car manufacturing, which are usual for this stage of development of a modern economy. Although China has became a net importer of energy products from 1993 on, it still has significant domestic energy production, mainly based in coal and covering 65% of China’s needs. Its own oil resources lack a huge and growing internal demand, and for this reason Chinese corporations like SINOPEC, CNOOC and CNPC have been exploring and exploiting oil sources abroad in the Middle East, North Africa, Russia and South America. Western powers have perceived this Chinese expansion with certain reservations, experiencing growing competition in the energy market with rising energy prices. Moreover, natural resources are limited, and this contributes to a more conflictual scenario in a zero-sum-game for the future decades. Counter to those rather geo-strategic fears about probable economic or even military conflicts in this field, the author states that the market process will lead, through its price indicators, to a rational substitution of oil and also coal based energy products by alternative energy sources and energy saving economic behavior. Still, there is a need for better inclusion of China, with its still growing energy demand in multilateral institutions like the International Energy Agency (IEA) in order to stabilize and strengthen the functioning of these markets. Confidence in market induced regulation is justified by the interdependence of the world’s economies, with the dominant powers, like the USA or Europe, fundamentally interested in a stable and therefore well supplied China.
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Abstract Sachin Joshi
India’s Relations with Africa Practice and Potentials from an Indian Perspective India, the world’s second most populous country, is already the fourth largest economy in the world in terms of purchasing power parity. India, along with China, is perceived as the next engine of world economic growth. The two countries with their phenomenal growth rates, demand for natural resources, and their growing economic and political power will re-shape the world economy and provide both competition and opportunities across the board to major trading partners in OECD countries, to developing countries, and to other emerging economies. India is also an important actor in global institutional reforms, global negotiations such as those on trade and climate change, and a regional player. Historically, India has been widely acknowledged as a leader of the non-aligned (developing) world, including Africa, and it aspires to continue to play or even expand that role. Ever since economic liberalization started in 1991, India’s foreign policy has been increasingly driven towards finding export markets and attracting foreign capital and technological know-how. Africa, due to its historical links and geographic location, is one of the main targets of this policy. Based on the pillars trade, direct investment and development assistance, India has expanded its role in Africa during the last 15 years. The recent surge in bilateral trade substantiates its importance. India-Africa bilateral trade increased almost tenfold from US$967 million in 1990-91 to US$9.14 billion in 2004-05. India’s development assistance consists mainly of financial assistance (for instance, providing subsidised credits) and technical assistance (for instance, training officials and providing know-how). India set up the ‘India Development Initiative’ (IDI) so as to intensify its development collaboration with developing/ least developed countries from the South. Concerning business cooperation, Indian companies expanding overseas are arguably fundamentally different from Chinese investment, in that many of these companies are from the private sector (though this goes for few companies in the oil business) and enjoy less backing by the Indian government – which has less leverage on the continent. The geographical proximity to European markets could boost the attractiveness of trade due to liberalization arrangements (i.e. Cotonou) between Europe and Africa - even further if they account for savings on shipping and inventory costs.
India benefits in this context from its leading role for the developing countries, first of all taking a pro-active role at the WTO negotiations. Most of the African states are also affected by agricultural subsidies and have lauded the role of India in the Doha round of negotiations, which have stalled over a divide between the European Union and the United States, on the one hand, and the major developing countries, on the other.
Presenting three possible scenarios concerning the probable development of the African-Indian relationship, Joshi arrives at the conclusion that it is likely that India will pursue a balanced Africa strategy in accordance with its image of being a ‘soft power’. Africa, as a continent, is critical to India’s economic growth, domestic energy requirements, and global standing. The Africa strategy will continue to be a mix of economic and development policies with an increasing role for private actors. The Indian government as well as private actors will increasingly become proactive to tap various opportunities and not lose out in the race to competitors such as China.
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Abstract Ana Patricia Silva Vara
Balancing the agenda: are Conditioned Cash Transfer Programmes with a gender approach having an impact on women’s empowerment? In her case study Patricia Silva Vara analyses the Oportundidades programme launched in 2002 by the federal government of Mexico. The program is a so called Conditioned Cash Transfer Program (CCTP) with a gender approach targeting, as a new tool, aid to the female heads of families living in extreme poverty, in an attempt to invest in the human capital of poor people, and as a way to help them to break the intergenerational poverty cycle. Conditioned transfer programmes were born from the concept of social protection as human capital investment. Their premise is that reproduction of poverty across generations is due to a lack of investment in human capital, and they seek to foster this investment by attaching conditions to transfers.
Moreover, as Vara points out, in the 1990s policy makers and institutions first acknowledged that women are the largest vulnerable group and that measures need to be taken in order to help them empower themselves and break the poverty cycle. Following these criteria, women are increasingly targeted as beneficiaries of anti-poverty interventions, either to improve their well-being directly or as a mechanism for indirectly targeting other groups, especially young children, since it is assumed that women can maximise the positive impacts of cash and food transfers, especially on child nutrition. The instrument of the CCTP and the gender approach were combined by the Oportundidades programme, giving targeted aid for a three-year period in the form of cash transfers (money for food and scholarships for their children) and food transfers (nutritional supplements) directly to the female head of the family. The scholarships offered privilege girls to compensate for the inequality of opportunities that girls face. In return, the beneficiaries have to attend educational seminars on different topics regarding health, nutrition, family planning and hygiene. Analyzing the qualitative impact of the Oportundiades programme, Vara cites evaluations which show that significant progress has been achieved in improving the capability of the beneficiaries to manage resources and to use them in ways that help the family, although the opportunity cost of getting the aid is high for poor women facing social and cultural contradictions. Vara concludes, finally, that even though Oportunidades is definitely having a positive impact on women’s human capital, within both their families and communities, social and cultural changes need to take place in order for deeper women’s empowerment to happen, including in particular changes related to the conception of women’s role in society, both at the family and the social level.
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Abstract José Manuel Rivas Ochoa
Article on best practices for innovation within public institutions (untitled) In the 21st century global markets are placing countries into a completely new competitive environment in terms of trade, labour force, production, foreign direct investment, etc. Country competitiveness levels have become the key indicator for forecasting national aptitudes for growth in the global environment. Within these new varying conditions it is necessary to create and constantly redesign strategies of innovation in the technical base of the economy as well as in the field of business administration in order to achieve positive performance.
To foster these strategies, public administrations would be well advised to devise their own internal innovation strategies to find new solutions to improve public policy concerning research and development or promotion of certain economic sectors and private enterprise. Public policies can exploit their own internal capabilities and resources even without requiring more public money.
Such strategies may consist of common public areas in the physical domicile of an institution, where the work of the overall institution can be visibly shared among the personnel, or can serve to implement better working conditions by providing of recreational facilities. More generally, instruments designed to decrease technical and less innovative work burdens can also increase the output of new ideas and political concepts, outsourcing parts of the technical administration of projects and programmes.
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Abstract Rodrigo Martins Vieira
Global Environmental Governance, a Brazilian Perspective Global warming is one of the most threatening consequences of the environmental disorder linked with deforestation and desertification. Experiences reveal that the effects of our actions now with regard to the climate will be reflected in the next 40 or 50 years. To aggravate the problem, the impacts of climate change are unevenly distributed, and this indicates that the poorest countries will suffer more from the effects of global warming. First, because they are at a geographical disadvantage and they are already warmer than the industrialized regions. Secondly, because they are more dependent on agriculture, which is very sensitive to climate change. Thirdly, because they are poor, and for this reason adaptation will be more difficult.
Seeking to respond to this development, governments have therefore created, during the last 30 years, a large number of multilateral environmental agreements (MEAs) and several multilateral organizations such as the UN Environment Programme (UNEP). New environmental laws have been created and issues concerning environmental diplomacy raised. However, all these measures have so far not been able to respond effectively to the challenges posed by globalization to world development. Proliferation of these agreements and the reluctance of many countries to share power with global governance institutions are producing a lack of cooperation and coordination among them. The rapid growth of actors dealing with environmental governance has made coordination more important, while the existing UNEP has proved unable to fulfill this requirement. In the face of this obvious development, discussions over the reform of global environmental governance have been intensified since the World Summit on Sustainable Development in Johannesburg in 2002, especially by European countries that have supported radical changes in the system and proposed the creation of a specialized United Nations Environmental Organization (UNEO). Developing countries, on the other hand, differ with the European proposal, but also recognize that changes in the area of environmental governance are necessary. It is argued that the creation of a super agency would be a step back in the process, since environmental issues, also involving related economic and social issues, have been negotiated under the broad scope of sustainable development. So developing countries tend more to strengthen the UNEP and its regional offices. Other proposals include creation of a World Environment Court to enforce sanctions on activities detrimental to the environment or efforts to strengthen the role of environmental issues in the context of the WTO. As a compromise to promote coordination between nation states, civil society and international organizations concerning global environmental governance, Viera suggests expanding the activity and resources of the Global Environment Facility (GEF) as an independent financial organization.
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Abstract Sandhya S. Iyer
Aligning aid effectiveness for public spending on social sectors: An analysis for South Asia and Sub-Saharan Africa Economic integration amidst pervasive income and human poverty was the peculiarity of globalization in the last few decades of the 20th century. For the first time, there has been a global commitment to address the trade-off between rising poverty and rapid economic growth, known since 2001 as the Millennium Development Goals (MDGs). Official development assistance (ODA) has been an instrument to ensure redistribution of global resources to promote equitable global economic development and welfare in order to meet the MDGs, but empirical evidence on the impact of aid on economic growth has not been able to establish a causal relationship between the two variables. The background for the empirical analysis of the impact of international aid on national public spending is the capability based approach of Amartya Sen, where he argues that individual claims are to be assessed not in terms of the resources or primary goods (like rights, liberties, income and wealth) that they actually hold but by the freedoms people actually enjoy to choose the lives that they have reason to value. This approach considers income to be only one factor among many that influence the real opportunities that people enjoy. The income and human deprivation observed in most middle and low income aid recipient countries has been inhibiting economic and social opportunities for individuals to enhance their capabilities. A mere emphasis on growth-led strategies would be inadequate to ensure human freedom. In such societies, improvements in human development achievement can be sought only through the egalitarian and redistributive ethos that permeates all public policies. Though there are certain countries that are more aid-dependent than others, aid singularly may not be sufficient to address larger problems of income and social deprivation. It is therefore increasingly crucial to build synergies of aid and public spending in recipient countries to achieve broader developmental goals. The central conclusion of the empirical analysis is that there is a positive relationship between aid and public spending which is statistically significant. This shows that aid disbursements induce recipient countries to enhance public spending, although the results show as well that to realize an effective impact on aid and public spending there is a need to tackle macro-economic constraints that affect both structural conditions and foreign trade. In a comparison of South Asia and Sub-Saharan Africa, it was noted that highly aid-dependent countries are also more vulnerable because their macro-economic indicators are not stable enough to ensure sustainability of public spending; at the same time, the volatility of aid disbursements has pushed these countries into the low level equilibrium trap.
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Abstract Wang Hao
German Development Cooperation -What Can China Learn from It? Germany is one of the major bilateral donors of world development cooperation, with a history of nearly 50 years in this field. On the other hand, with the rapid economic development of China in the last two decades, China is becoming a more and more important donor to developing countries. Therefore an analysis of the German experience concerning institutions and processes of development cooperation can help China to avoid difficulties and improve its own upcoming development strategy. Examining German development policy, we can identify four mayor goals, which are: poverty reduction worldwide, building peace and democracy, promotion of equitable forms of globalization and protection of the natural environment. Like most other donors, Germany has committed itself in the European context to increase its official development assistance (ODA) in support of the Millennium Development Goals (MDGs) up to 0.51 percent of gross national income by 2010 and to 0.7 percent by 2015. Considering the overall tight fiscal situation and the need to balance the federal budget in a context of economic and social reform difficulties, this will be a big challenge for Germany. German official bilateral cooperation is executed via financial assistance (i.e. loans, non- repayable grants, joint financing), technical cooperation, strengthening human resources, debt relief and humanitarian aid. The second important approach used to conduct German development policy is the work of civil society organizations such as political foundations, churches and NGOs, which are mostly co-financed by the state, but also by private donors. Thirdly, the multilateral cooperation in which Germany collaborates has been gaining importance in recent years, mainly on the level of EU institutions, but also in the form of contributions for UN agencies. The German development cooperation system is multi-organizational. The Federal Ministry for Economic Cooperation and Development (BMZ) is the core of the framework. The BMZ differs from other government bodies in that it does not have a typical institutional sub-structure. In fact, the ministry commissions the so-called implementing organizations, such as the Agency for Technical Co-operation(GTZ), the KfW Development Bank (KfW), InWEnt (Capacity Building International), the German Development Service (DED) and the German Development Institute (DIE). This structure allows for flexible and dynamic activity of the involved institutions. Some problems arise from this differentiated structure because there are responsibilities that overlap in part as well as a certain competition among these agencies to hold or extend their budget shares. Several strategies designed to deal with these problems are discussed, i.e. the creation of coordinating inter-institutional country teams or even merging agencies with related duties. The author recommends the creation of a separate ministry for development cooperation similar to the German model but with a reduced number of implementing agencies.
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Abstract Ye Meng
Analysis of the policies and practices of the information society in the European Union The importance of the information and communication technologies (ICT) for global society is beyond doubt, indeed it can be even seen as one of the major causes of globalization processes in the first place. Given the rapid evolution of ICT and its penetration into nearly all spheres of human life, the term “information society,” though widely used, is still not well defined. In the European Union experiences with regional integration and creation of a single market are the guidelines used to structure and foster the development of ICTs, ensuring that they achieve what is considered desirable for society. With the i2010 program, the European Union set up a framework to address different aspects of the possibilities offered by ICTs. Creating a single European Information Space follows the general principles of market integration in the EU, suppressing market obstacles. An electronic communications regulatory framework is the most important element to avoid technical market barriers. This regulatory framework involves both telecommunication and broadcasting networks. For instance, EU activity in this field led to the reduction of roaming charges for travellers in the EU. Furthermore, regulation and management of service and applications is needed to alleviate market exchange, especially concerning e-commerce. Protection and encouragement of cultural variety and heritage as well as human dignity in communication markets is also part of EU integration in this field. Here we may cite the example of the European Digital Libraries as the flagship of the i2010 programme. To improve competitiveness, EU actors promote innovation and technological leadership in the ICT sector by providing financial support for research and development and encouraging private R&D investment. Finally, the political and social impact of the ICTs is also an objective of EU policies. Transparency of public activities and facilitation of access to public services can be named as major goals of the eGovernement action plan of 2006. But also in other political fields such as social inclusion, health, the environment and safety, the uses of ICT are being investigated and enhanced by the EU.
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Abstract Zhan Shiming
The International Community and the Settlement of Internal Conflicts in Africa: A Case Study of Sierra Leone The economic and social development of the African continent is seriously hindered by frequent civil wars and internal conflicts. Since most affected African countries lack the capabilities to solve internal conflicts by themselves, the active involvement of international society is of great significance. The case of Sierra Leone is a recent example of how the international community played a very important role during the long and tortuous process from conflict to peace between 1991 and 2001. Particularly the United Nations (UN), the United Kingdom (UK) and the United States (USA), but also neighboring African countries such as Nigeria, Guinea, Ghana and Mali pushed the peace process forward. The conflict between the national government and the so-called RUF rebel group are rooted more in different economic interests of internal groups than in tribal conflicts. Especially the diamond industry attracted attention by several external actors. Controlling diamond exports gave sufficient material support for the conflicting parties to maintain their forces and carry on in the bloody civil war. During the 1990s UN commitment was limited due to the decreasing interest that the main powers had in Africa after the end of the cold war and because of the then urgent emerging conflicts in Yugoslavia. As the only significant Nation, the United Kingdom, the former colonial mother country, intervened at the end of the 1990s, sending own military units, and even contracting private mercenary troops to contain the activities of rebel forces. A formal peace agreement was achieved in 2001, although the situation is still not stable in all respects. Finally, the growing commitment of China in UN peacekeeping actions, as was the case in Sierra Leone as well, reflects China’s interest of broadening its economic influence in a continent like Africa which is naturally rich in resources and which represents potential future consumer markets. Furthermore, China uses its participation in UN missions like the one in Sierra Leone to train its military personnel and gain positive legitimacy in these kinds of international enterprises, as is customary for other regional and world powers as well.
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Abstract Zhou Xiaohui
Regulation of Hedge Funds Hedge funds, a private investment vehicle that pools the contributions of investors in order to invest in a variety of assets, have attracted growing attention from policy makers, financial market participants and the general public due to their rapid growth and substantial scale, their importance to banks as clients and the impact of their trading activity on global capital markets. In part, the greater attention has also been the result of concerns that hedge funds could in some circumstances exert a destabilizing influence on financial markets due to their limited transparency and their lack of regulation.
Although most hedge funds are legally based in offshore locations, such as the Cayman Islands, the British Virgin Islands, Bermuda, and so on, the United States is still home to the largest number of fund managers, responsible for managing nearly two-thirds of global assets in 2006, but there are an increasing number of Europe-based managers, particularly in London, and the hedge fund presence in Asia is also growing, reaching USD 115 billion. Concerning hedge fund products in Germany, the Investment Act (Investitionsgesetz) of 1 January 2004 permitted hedge funds as regulated investment products, although demand for on-shore hedge funds is still limited here. The benefit of hedge funds for the financial market consists in price transparency based on the use of considerable resources for market research, provision of products covering part of that range to investors seeking different combinations of risk and return and the effect of market clearing and liquidity. On the other hand, hedge funds could cause systemic risk as a result of market abuse (collusive actions by market players), or through herd behaviour. Despite these risks, hedge funds are generally not structured in a way that allows them to be regulated as harmonised funds under the European Investment Fund Directive (UCITS Directive). In particular, hedge funds do not adopt investment policies that comply with the strict investment limits imposed on authorised funds (UCITS). As a result, hedge funds have been promoted under a legislative patchwork, which varies across EU Member States. Even so, since 1998 the LTCM crisis risk management practice and capacity in investment banks and some large hedge funds have been substantially enhanced on the international level. Several public and private initiatives have been launched to improve the risk management practices of the counterparties to the funds, i.e. by the US President’s Working Group on Financial Markets and the G7/G8 ministers of finance in 2007. These strategies include improvement of data collection, risk measuring methods and stress test capabilities, among others. Concluding the study recommends a practicable regulation of hedge funds in China, which today still hardly exist, while taking into account the risks analyzed and the benefits named above.
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Abstract Zhu Ming

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