Clan McLeod was out in force at this event, sharing the limelight with Joe Clark, Development Cooperation Minister Christian Paradis and a broad mix of Canadian development actors drawn from the memberships of the Canadian Council for International Cooperation (CCIC) and the Canadian Association of Independent Development Professionals (CAIDP).
The highlight of our participation was a session, ‘Taking Stock: the Changing Context for Development’. The event was informal, even if the room was packed. It was a set of frank and lively conversations orchestrated by Carolyn McAskie (who later played the same role for Joe Clark’s keynote session), with Ian Smillie, Diana Rivington and John Sinclair as the panel. They spoke about three distinct topics under the unifying theme of ‘new myths, old myths and Canada’s future’. These were respectively: private sector, gender equality and global institutions. There was lively interaction with and within the audience on Canada’s recent performance as a global development actor.
At other sessions, Betty Plewes spoke on Women’s Rights and Stephen Brown facilitated a session on multinationals.
This, for the record, is what the McLeod Group ‘Taking Stock’ panel said:
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Ian Smillie: Myths about the Private Sector and Development
Old Myth: Foreign direct investment is the answer to long-term sustainable growth
- During the 1960s and later, capital intensive industries did the opposite of what was needed: they minimized job creation, did local enterprises out of business and stunted local potential;
- Many were simply assembly plants rather than productive operations, adding little value to local primary products and building few backward and forward linkages into the economy;
- Through the initial tax breaks used to attract companies, and then transfer pricing, the profits of foreign investors were often kept offshore, minimizing local taxes and reducing the value of the investment.
New Myth: Foreign direct investment is the answer to long-term sustainable growth
- In addition to all of the old problems, prevalent since the Pearson Commission, we now cheer the fact that FDI outstrips development assistance by a factor of two or three or seven, as though all of the old lessons had been learned (or were never important in the first place);
- The government of a developing country wants FDI for three reasons: job creation, taxes and spinoffs into the local economy. If it doesn’t do these things (and that is a major problem with the extractive sector) then it accomplishes little: it boosts GDP and creates a false sense of growth, but it may actually stunt a country’s ability to create jobs and reduce poverty;
Old Myth: Technology is the answer
- Factories running at 25% capacity, broken infrastructure and rusting tractors were evidence that technology could not and cannot be “transferred” simply by loading it onto planes;
- Developing countries need support industries and a light engineering sector that can service larger industrial enterprises, and more importantly, a country’s own small and medium enterprise sector. In many developing countries that didn’t exist and still does not.
New Myth: Technology is the answer
- In some ways we are more than ever beguiled by the siren song of technology. The first item in almost every article about “Africa rising” gushes about cell phone usage as though this is a success story rather than a failure. The spread of cell phones is a success story, but the spread is so wide because governments have been unable to provide the most elementary forms of infrastructure: landlines in the case of telephones, electricity, roads, water, sanitation and other basics;
- Where is that light engineering sector that is so essential to almost every aspect of a productive economy?
- Where is the concern about technologies that create rather than reduce jobs?
Old Myth: The private sector can take care of almost everything
- No, it can’t. The private sector needs educated, healthy people in order to work well; education and health are functions of the state;
- It needs infrastructure (roads, electricity, water, communications); these are primarily functions of the state;
- It needs a fair and consistent regulatory environment. This is a function of the state.
New Myth: The private sector can take care of almost everything
- In addition to everything we can say about the old myth, we seem to be incapable of distinguishing between FDI and private sector development on the one hand, and between the development of our private sector and their private sector on the other. These are very different things;
- Where is the concern about their private sector: the creation of enabling environments for local rather than foreign investment; the care and feeding of small and medium enterprise) which is totally distinct from microenterprise)? Where is the encouragement for a light engineering sector; and infrastructure that encourages and services local investors?
Some Ways Forward:
- Developing country governments have to be discerning in the investment they seek and approve;
- Attracting appropriate investments isn’t easy, but it isn’t all about cash incentives and tax breaks; a fair, clear and consistent regulatory framework is essential;
- There is nothing wrong with Canada or any other country promoting its own companies and products abroad, but this is not and should not be part of the aid program;
- Donors need to stop generalizing about the beauty of FDI and look for ways to promote investments that build local capacities, add local value, create local spinoff industries and create jobs;
- Donors need to promote local private sector development as a matter of policy, and to promote the exports of locally produced goods by opening—rather than closing–their markets to producers in poor countries
Diana Rivington: What’s so hard about gender equality?
Old Myth: Just add “women” and stir
- About 40 years ago, civil society, academics, and aid agency self evaluations started remonstrating that, not only was aid programming not delivering for women, but that it was also causing harm
- So, in our rush to make a change, the first myth of women and development was born: just add women and stir.
- In part, the new focus on women in development framed women as helpless and vulnerable, waiting for our help – and agencies focused on process – were women consulted, did they participate in the project, was sex disaggregated information collected?
- It took for policy wonks to recognize that women were already actors in the mainstream of development; to listen to their voices; and to work with them to see that project and programe outcomes, whatever the sector, should lead to an increased voice for women in decision-making; a stronger defence of women’s human rights including sexual and reproductive health rights; and to reduced gender inequalities in relation to the resources and benefits of development whether in education, health, transport, water, small business, or forestry.
- And over the last forty years, there has been a broad international conversation led by global and local women’s organizations and ministries of women’s affairs from developing countries – through the four world conferences on women, the Cairo Conference on population, New York on children’s rights, Jomtien on education, Vienna on human rights, Rio on the environment –to make progress in all these areas, women said that they had as important a voice as men and that their participation was key to achieving international goals in all these areas. That is why goal 3 of the year 2000 MDGs is progress on gender equality.
But governments change and the new players want the new shiny thing, the signature project with the flag on it – They ignore the finding of evaluations and they forget that it took 40 years to learn about development and partnership and how to make it transformative, a contribution to a qualitative change in the lives of women and men. Instead they move back to the charity mode.
New Myth: Just add “women and children” and “girls” and stir
- So now Canada no longer funds women’s rights organizations or projects designed to address gaps in gender equality. It now has a vocabulary of “equality between men and women” and a much vaunted Muskoka initiative that is saving the lives of mothers and newborns. It is not a bad thing to save lives but this approach is not addressing why women and girls are at risk in childbirth.
- Saving women’s lives is not the same as making progress on women’s equality because it fails to tackle why women and girls become pregnant too soon or too often. Where is the quality information on modern family planning methods? What are the social and economic barriers between women and getting to the birth clinic?
- Alas, the Muskoka focus is on women and girls as “wombs on the walk”, whose main duty is to bear children, but not as citizens with the right to seek our support to choose NOT be pregnant.
- Now Minister Baird’s recent attention on child, early and forced marriage is welcome – child marriage is the most egregious and neglected of human rights abuses. But is it enough for Canada did introduce the first resolution in the UN General Assembly on the topic? How does this rhetoric link to development programming? Where is the increased funding to UNFPA or to girls’ education and keeping girls in school?
- And because of our inaction and our focus on “women and children”, Canada is no longer a trusted participant in the continuing international conversation on gender inequality and how to transform development.
We need a recommitment to gender equality.
John Sinclair — Global institutions, dead-end or way forward?
We live in a globalized world, but its modest successes are often built upon somebody else’s poverty or unemployment.
Old Myth: Decolonization would end poverty.
The myth was that, freed from exploitation by Britain and France, developing economies would flourish and poverty quickly fade.
There were also high expectations for new multilateral institutions such as the UN and World Bank. As sources of skills and financing, they promised to shape a better future.
But these, and new arrangements like the WTO, were shaped to protect the interests of traditional powers.
The shake-up caused by the first energy crisis in the 70s fizzled out as the West found a way of getting OPEC petrodollars recycled. Meanwhile the already poor, were left distinctly poorer.
Longer-term hopes for the UN were undermined, as parts fell into disrepair. Also, tighter aid money moved to the more politically favoured multilateral banks.
By the late-80s, growth — sometimes too fast, often unequal — turned sour. An accumulation of debt hit poorer nations particularly hard.
The ‘cure’ of ‘structural adjustment’ just compounded the problem. It left many developing countries feeling that old partnerships were just not there to help them.
Even success was undermined. The East Asia bubble created a huge debt crisis. Countries like Thailand and Malaysia emerged from the experience convinced that partnership, under IMF rules, was focused on protecting Western interests, not theirs.
Today’s Myth: Globalization is defeating poverty.
The new Millennium and its MDGs were an optimistic interlude, but then came 9/11 and the Iraq war. The human and economic costs were enormous.
The Paris Declaration recognized that aid effectiveness demanded partnership and country ownership. But two evaluations later – both led by Canada’s Bernard Wood – we know donors were not walking the talk.
Country ownership was still a myth.
Globalization was proving one-sided. Control of capital and technology favoured the North; developing countries supplied cheap labour, resources and markets. Fair wages and transparent pricing were just not on the table.
Today’s global financial crisis (2007 – now] took us to the brink of a new Depression. The perpetrators, NY bankers, show no remorse. Ordinary citizens, of both North and South, are recognizing that uncontrolled globalization is their enemy, not the way forward.
Inequality, that ‘top 1%’ issue, is increasingly recognized as a major impediment to effective development.
The South, both the powerful BRICS and even the very vulnerable ‘fragiles’, learnt they could tough out a Western economic implosion. And they now demand a stronger voice, real partnership, in managing the economic institutions controlled by the North.
Of course the real poor, such as women in Bangladesh’s garment plants, suffered doubly – they were exploited during the South’s growth spurt and then neglected as the North went into economic crisis.
So is there a Better Future? Is real partnership possible?
Today’s world is not a happy place, economically or politically. Only the very rich have emerged unscathed. The vulnerable are left further behind.
And I am not talking only of Harperland, but also Greece and Egypt even the US, not just the Haiti’s of our world.
We saw the bizarre reality that it was developing countries, especially emerging economies, that coped best. Optimistically, the global financial crisis may have made us, the North, more conscious that our own future is bound up with the South’s.
But is there an opening for that sort of partnership? If we look at Canada’s present trade policy, one based upon multiple bilateral deals, it is not clear we are on the right path.
There could be a viable partnership path, but it has to be an inclusive one, chosen by equals, in a spirit of sharing, not opportunism, worse exploitation.
A more unified G20, more representative of the poorest, and not just an expanded list of privileged nations, could be a key instrument.
The UN’s Post-2015 Agenda, with its goal of ELIMINATING extreme poverty by 2030, will be the centrepiece. It will be hard for anybody to not sign on. But will they deliver? That will be a quick test of whether North and South have learnt to work as partners.