Commentary

Liberal Democracy in Africa Can Wait

YAOUNDÉ – Africa’s policymakers understand that strong economic and political leadership is essential to growth and stability. For years, African economies have fared better than expected, owing to a commitment to improving governance. The question now is how to sustain the momentum.


Current strategies do not provide an adequate answer. Although leaders at a recent African Economic Conference in Addis Ababa, Ethiopia, committed to keeping governance reforms at the top of Africa’s agenda, they offered no blueprint. From my perspective, this void presents an opportunity to consider new governance paradigms, including those that borrow from two commonly discussed models: the “Washington Consensus” and the “Beijing Model.”

Development practitioners have long debated which model offers the best framework for reform. Put simply, “governance” refers to a dynamic framework of rules, structures, and processes that help a government manage its economic, political, and administrative affairs.

But which principles a government focuses on varies by approach. The model championed by the West places a premium on human rights and democracy, while the one advocated by China is more concerned with political stability and economic growth.

Since the election of President Donald Trump, the United States, which remains one of Africa’s top donors, has focused more on the principles China favors – like political stability, trade, and counterterrorism – than on human rights. The rationale is that the Beijing Model is better for Africa in the short and medium term. And, while it might not be popular to admit, Trump has a point.

Simply put, food, shelter, health, and good sanitation are more relevant for most Africans than the right to vote. Moreover, only a moderately wealthy population, with a healthy middle class, can adequately demand the rights that democracy provides. Paradoxically, the fastest way to build a strong middle class in Africa would be to move toward the hierarchy of principles that China’s model promotes.

For Africa to reorient its governance approach, and embrace a post-Washington Consensus, its leaders must commit to improving institutional effectiveness and economic management.

The first set of reforms would involve establishing clear lines of sovereignty with international partners. Africa’s relationship with Western donors, for example, has historically placed individual rights over national rights. But in my view, individual rights should not supersede sovereign ones. Punishing entire countries for laws that affect a minority is counterproductive.

An example of such collective punishment occurred in Uganda in 2014, when the World Bank froze some $90 million in loans following the government’s enactment of legislation criminalizing homosexuality. As a Ugandan government spokesman said at the time, the bank “should not blackmail its members” to adopt Western values. Yet, when governance models are judged solely through the lens of the Washington Consensus, there is very little alternative.

Along the same lines, the second set of reforms pertains to prioritizing economic rights over political rights. For example, politicians who manage an economy well should not be subject to term limits. Neither Singapore nor China is a democracy; but leaders in both countries have used their political power to improve living standards. Forcing leaders to step down in the middle of economic reforms seems counterproductive.

These are not far-fetched ideas. Today, leaders in Rwanda, which is widely considered an African success story, have improved stability by moving away from the Washington Consensus approach to governance.

Politically, Rwanda is strong, disciplined, and organized, but it is not liberal. The landslide reelection of President Paul Kagame last year had more to do with power than democracy. Although Kagame remains popular, his government was criticized for stifling free speech and human rights in the run-up to the vote. The conclusion I draw is not that human rights don’t matter, but that political discipline and imperfect forms of democracy are acceptable if the tradeoff is sustained progress in economic and institutional governance.

We should be intellectually honest and call a spade a spade. Rwandans should not be ashamed to value economic and administrative strength more than fair elections. The question for other African states seeking to reform their governance models, then, is how much of Rwanda’s approach to emulate.

Neither the Washington Consensus nor the Beijing Model has all the answers. But, as Rwanda has demonstrated, if discipline and strong leadership are improving lives and delivering public goods, perhaps liberal democracy should be a long-term priority.

Simplice A. Asongu is Lead Economist in the research department of the African Governance and Development Institute.

By Simplice A. Asongu

The Transformative Power of Africa’s Youth

TORONTO – A few years ago, during a conversation with young people from some of Senegal’s poorest communities, a pair of social entrepreneurs told me about projects they were working on to help their peers succeed. One young man said he planned to put more computers into primary schools; another had set up a network to connect rural job seekers in the urban tumult of Dakar, Senegal’s capital.


After they finished sharing their plans, I congratulated them, and said that their parents must be very proud. But instead of accepting the compliment, they demurred. “My parents are against what I’m doing,” they said, almost in unison, before explaining that young people face family pressure to get a government job or use their English skills to work as a tour guide – not to become a risk-taking entrepreneur.

For ambitious young Africans, there are many obstacles to success. The journey to a job – whether formal or informal, entrepreneurial or traditional – is often a solitary one. Many young people lack access to skills training or even a favorable social environment to try something new. As I was reminded that day in Senegal, helping young people find gainful employment is the most important thing that the international community can do to help Africa develop.

Africa is home to the world’s largest population of young people. In about 25 years, those young people will be part of the biggest workforce in the world, with more than 1.1 billion people of working age. By some forecasts, 11 million people will enter Africa’s labor market each year for the next decade, most of whom will be first-time job seekers.

If African countries boost job growth and equip young people with employable skills, this youth bulge can deliver rapid, inclusive, and sustainable economic growth to the continent. In turn, millions would have the opportunity to lift themselves out of poverty.

But Africa cannot achieve this future alone. At the Mastercard Foundation, we believe that, if Africa is to reach its potential, gaps in two keys areas must be closed.

The first area is access to financial products and services. According to the World Bank, some two billion people around the world currently lack such access. In Sub-Saharan Africa, just 34% of adults have a bank account, making it difficult for people to put money aside for unplanned events, like a bad harvest, or to save for school. This must change, with Africans gaining not only better access to banking systems, but also improved financial literacy.

The second key challenge that must be addressed is exclusion from secondary and higher education. While progress has been made in some regions, only about one-third of Africa’s young people graduate from high school. Girls are particularly disadvantaged; according to UNESCO, in Sub-Saharan Africa, an estimated nine million girls under the age of 11 have never been to school, compared to six million boys.

To address these issues, the Mastercard Foundation has established partnerships with local organizations to design education and financial-literacy programs aimed at helping young people find and keep jobs. By building a better-trained workforce, the Foundation’s programs are helping to empower the next generation of Africa’s community members and leaders, so that they can help their families, communities, and countries achieve a brighter and more prosperous future.

Already, a new generation of educated and ethical entrepreneurs, like those I met in Senegal, is emerging across Africa, demonstrating a profound commitment to building a stronger Africa. For example, when I ask young people participating in our Scholars Program what they plan to do with their new skills, they almost always reply that after getting a job, they plan to help somebody else, by returning to their secondary schools to serve as mentors to younger students.

Some of our program’s graduates have even established community projects in their villages to address HIV/AIDS or to build shelters for orphans and young children. Every one of these bright young Africans – examples of what the Mastercard Foundation calls “transformative leadership” in action – has the potential to drive change in their own countries and communities.

Those of us working in the field of international development can help level the playing field even more, by giving young Africans from all backgrounds an opportunity to lead in transformative ways. If we succeed, Africa’s dreamers of today will be the catalysts of positive change tomorrow.

Reeta Roy is President and CEO of the Mastercard Foundation.

By Reeta Roy

Accelerating Africa’s Energy Transition

PARIS – For much of Africa, the transition from fossil fuels to cleaner forms of energy is seen as an environmental imperative. With fossil fuels comprising a majority – as high as 70% in some cases – of the energy mix, the situation on the continent is indeed ecologically dire.


But Africa’s energy transition is economically urgent as well. Each year, oil subsidies consume 1.5% of the continent’s GDP – roughly $50 billion. That is enough money to provide solar power to some 300 million people. If the continent could rebalance its energy portfolio, moving away from hydrocarbons slowly, those subsidies could be reallocated in ways that would yield both environmental and economic benefits.

Today, neither oil exporters nor importers are adequately insulated from price shocks. When oil prices declined rapidly in 2015, for example, Africa’s energy importers spent less on oil, while exporting countries suffered financially. When prices rebounded, the relationship switched: energy-exporting countries’ revenues inched up, while importing countries struggled to maintain consumption levels.

This is a needless cycle. Integrating cleaner power into national energy systems would not only raise local capacities; it would also free up hydrocarbons for export. The resulting revenue could then be invested into new forms of greener power. Such a transition, which would require cooperation with the oil sector, promises to boost socioeconomic progress.

Among the biggest benefits would be the electrification of areas that, under current distribution systems, are literally in the dark. Today, just 30% of Africa has access to reliable electricity. But, with a total capacity estimated at around ten terawatts, installed solar capacity in Africa could broaden access dramatically. In fact, according to some estimates, the increase in solar generation by 2030 could range from 15 to 62 gigawatts.

Fossil fuels are not destined to be phased out anytime soon, but an energy mix that included a significant increase in solar power would have major economic advantages for Africa, especially in areas where agriculture is the largest economic sector. Electrifying agricultural areas would facilitate the storage and transportation of farmed products, improve food security, and increase farmers’ earning capacity.

In the drive to rebalance Africa’s energy mix, the continent maintains one crucial advantage over developed economies: a clean slate. The relative absence of legacy investments is the principal reason why green power is Africa’s best energy option. Although every country must balance its own energy needs, reliance on renewable sources, and solar power in particular, is the most cost-efficient strategy for fostering rapid economic development throughout the continent.

Evidence of this potential can be found in the few photovoltaic power plants that have begun operating in Africa. For example, the Senergy 2 solar plant in Senegal sells electricity to the Senegalese power utility at a price that lowers the cost of the energy mix by 50%. Similar solar solutions are being implemented by African telecoms to electrify communication towers.

The best way to accelerate the transition from hydrocarbons to greener forms of energy would be to redirect a portion of national oil subsidies to renewables. This would create stronger incentives to reduce fossil-fuel consumption, while encouraging investment and growth in green-energy output. For Africa’s rural regions, moreover, such policies would help bring communities out of darkness and lead to the installation of other critical infrastructure that economic growth requires.

But while renewables hold the key to Africa’s long-term prosperity, the continent’s transition to cleaner power should not lead to an immediate, full-scale repudiation of hydrocarbons. The oil sector will still have an important role to play. The industry’s experience on the continent will be needed to navigate the energy transformation. And, because fossil fuels will remain part of the continent’s energy mix, the oil sector must be encouraged to clean up its own act.

This may sound like an impossible alliance. But as policymakers across the continent seek to secure adequate supplies of clean energy to ensure rapid, inclusive economic growth and environmental sustainability, they are likely to find that there is no alternative. Cooperation between old and new energy industries may be the only engine that is capable of powering Africa forward.

Charlotte Aubin is CEO of GreenWish Partners, a renewable-power producer dedicated to Sub-Saharan Africa.

By Charlotte Aubin

China, the Innovation Dragon

WASHINGTON, DC – China has achieved much since 1978, when Deng Xiaoping initiated the transition to a market economy. In terms of headline economic progress, the pace of China’s transformation over the past 40 years is unprecedented. The country’s GDP grew by nearly 10% per year on average, while reshaping global trade patterns and becoming the second-largest economy in the world. This success lifted 800 million people out of poverty, and the mortality rate of children under five years old was halved between 2006 and 2015.


The question now is whether China, well positioned to become the world’s innovation leader, will realize that opportunity in 2018 or soon after.

China’s transformation has been underpinned by an unprecedented manufacturing boom. In 2016, China shipped more than $2 trillion worth of goods around the world, 13% of total global exports. It has also pursued economic modernization through massive infrastructure investment, including bridges, airports, roads, energy, and telecoms. In less than a decade, China built the world’s largest bullet train system, surpassing 22,000 kilometers (13,670 miles) in July 2017. Annual consumption is expected to rise by nearly $2 trillion by 2021, equivalent to adding another consumer market the size of Germany to the global economy.

Earlier this month, Apple CEO Tim Cook declared that, “China stopped being a low-labor-cost country many years ago, and that is not the reason to come to China.” The country’s manufacturing strengths now lie in its advanced production know-how and strong supply-chain networks. Understandably, China’s leadership wants to increase productivity and continue to move further up the value chain.

Building on its 13th Five Year Plan (in May 2016), the authorities established objectives for China to become an “innovative nation” by 2020, an “international innovation leader” by 2030, and a “world powerhouse of scientific and technological innovation” by 2050. It also committed to increasing its expenditure on research and development to 2.5% of GDP and almost doubling the number of patents filed per 10,000 people by 2020.

To enable this innovation, municipal governments are building technology hubs, hoping to attract talent. The city of Guangzhou is encouraging researchers, entrepreneurs, and corporations to base themselves there. General Electric recently committed to build its first Asian biopharmaceutical project in an $800 million bio-campus. The southern city of Shenzhen is already known as the “Silicon Valley of Hardware,” and the greater Shenzhen-Hong Kong area is ranked second in terms of global inventive clusters (measured by patents).

Business in China often operates at a speed and nimbleness unlike anywhere else in the world. China is fully embracing digital models, not just digitizing old models. Its lack of legacy systems has already enabled it to leapfrog the West in areas such as digital payments, the sharing economy (dockless bicycles are sweeping the world), and e-commerce.
Total spending on R&D in China (as a percentage of GDP) more than doubled from 0.9% in 2000 to 2.1% in 2016. To date, the increase has mostly been focused on applied research and commercial development, with only 5% dedicated to basic science. Nevertheless, China ranked 22nd in the 2017 Global Innovation Index (a survey of 127 countries and economies based on 81 indicators) ahead of Spain, Italy, and Australia. China’s share of high-impact academic publications (the top 0.1% of papers in Scopus, which rates by citations) has grown, from less than 1% in 1997 to about 20% in 2016.

The sheer volume of university graduates (6.2 million in 2012, six times the 2001 total) combined with an internationally trained, highly skilled diaspora whose members return home in large numbers – there are 800,000 Chinese students in tertiary education abroad – is likely to produce enough talent to achieve the desired effect.

American workers are still considerably more productive than their Chinese counterparts. On average, each Chinese worker generates only about 19% of the amount of GDP that an American worker does. But this lead is being eroded.

Other factors in America’s favor include 30 of the top 100 universities in the world, a risk-taking, entrepreneurial culture, and its companies’ heavy exposure to market forces. Traditionally, this has driven US firms to compete aggressively, often relying on innovation.

But American industry is not as dynamic as it once was. Between 1997 and 2012, two-thirds of America’s industries experienced an increase in market concentration, and a record 74% of employees are working at these aging (16 years or older) incumbents.

US President Donald Trump’s administration seems to have completely misunderstood what is needed. Trump favors a more protectionist future, which would take the pressure off US companies to be globally competitive or truly innovative. American universities are being undermined by changes in the tax code and impending spending cuts – part of what appears to be a broader war on science. And immigration – an essential source of talent and ideas – looks likely to be restricted.

Given its own policies, and those of the US, China is on track to become the world’s innovation leader. By the end of 2018, it will be more apparent just how quickly and easily this latest chapter in the Chinese success story will be written.

Simon Johnson is a professor at MIT’s Sloan School of Management and the co-author of White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You. Jonathan Ruane is a lecturer in the Global Economics and Management group at MIT and an adjunct professor at Trinity College Dublin.

By Simon Johnson and Jonathan Ruane

Making Journalism Great Again

OXFORD – In the debate over the future of journalism, “fake news” has taken center stage, with storylines featuring a ranting American president, Russian communication “bots,” and betrayal and subterfuge competing for public attention. But in an era of diminishing profits and shrinking audiences, is fake news really the biggest threat that traditional media face?


In a news environment increasingly prone to hyperventilation, it can be difficult to separate fact from fabricated or deliberately skewed content shared via social media. The proliferation of “bots” – computer programs that automatically spread disinformation – has blurred these lines further. And as the methods of manipulation multiply, the problem is only likely to worsen.

And yet the near-constant focus on fake news has distracted many in the industry from more serious challenges confronting professional journalism. The erosion of business models and growing dependence on third-party digital distributors – like Facebook and Google – have handcuffed news organizations and cut deeply into their profits. Worse, audiences no longer trust the information presented to them. This suggests that the problem is bigger than fake news.

In fact, large, traditional, or legacy media organizations still trump social media as trusted sources. As the Reuters Institute for the Study of Journalism’s Digital News Report 2017 revealed, 40% of news consumers say that established media organizations – The New York Times, for example – accurately differentiate fact from fiction. For social media, this share is only 24%.

But this also means that 60% of news consumers regard the legacy media as being careless with facts. That statistic alone should be a cause for grave concern to everyone in the industry.

According to the report – which surveyed some 70,000 Internet users in 36 countries – 29% of respondents said they were avoiding news altogether. For many, this was either because producers’ preference for negative stories put them in a bad mood, or because they viewed the reporting as politically slanted and therefore untrustworthy.

Without trust, there is no audience; and without an audience, there is no business. If the survey’s results are representative of broader trends, one of the world’s most important pillars of democracy – a free and open press – is in jeopardy.

Perhaps this should come as no surprise. In the digital era, trust deficits have affected most major institutions, from political parties and big companies to religious organizations and universities. This could be a sign of a more informed and critical citizenry; or, more likely, it could be a response to feeling overwhelmed by choice and powerless in a complex world.

But what has changed for news organizations is that, thanks to social media, they no longer have a monopoly on holding the powerful to account. On the contrary, they have come to be identified with the powerful – part of a media-business-political elite divorced from the concerns of ordinary people. Having become a target of popular anger, journalism will need to “disrupt” itself to regain credibility and restore audiences’ trust.

To this end, media organizations should take at least six steps. For starters, news outlets must set their own agendas, rather than wasting resources on pursuing someone else’s. The international investigation that led to the Panama Papers and the Paradise Papers are brilliant examples of journalism that is relevant and interesting – two fundamental criteria that all reporting should meet.

Second, reporters have a responsibility to their audiences to analyze what powerful actors are doing, rather than what they are saying. As the Washington Post’s media columnist Margaret Sullivan recently observed, coverage of US President Donald Trump has focused narrowly on his words, at the expense of his policy.

Third, the media must become better listeners. Journalists’ distinction between “reporting” and “reporting on the ground” highlights the reality that a sizable proportion of newsroom staff never leave their desks. Journalists don’t necessarily do this by choice; many are glued to their screens because their companies lack resources, or force them to follow and report on twitter feeds. In a sense, reporters’ behavior is merely a symptom of an editorial pathology.

Fourth, news organizations must engage audiences – talking to them, not down to them. Very often, the news cycle is driven by assumptions about what viewers or readers might like, rather than what they actually want. Diversity in a newsroom is vital to broadening the relevance of its coverage.

Fifth, in the rush to experiment with new forms of storytelling, some media companies are forgetting their mission. News outlets should forego expensive, flashy projects if they do little to further audiences’ understanding of a story.

Finally, rebuilding trust will require a new definition of news itself. When audiences feel overwhelmed by information and complexity, the response can be to tune out. The media must give people a reason to tune back in. (One example: positive news is dramatically undervalued in today’s media environment.)

If traditional media outlets allow themselves to be defined by the fake-news debate, they, too, will be overwhelmed. So long as social media companies optimize for advertising revenue, their algorithms will tend to reward the extremes, and news organizations will waste valuable resources battling disinformation.

A better approach would be to make news less boring. Reputable media companies have always sought to capitalize on facts: the scoop, the exclusive interview, the probing investigation. Truth, like trust, is a commodity. The future of the industry depends on getting better at producing it.

Alexandra Borchardt is Director of Strategic Development at the Reuters Institute for the Study of Journalism.

By Alexandra Borchardt

An Inclusive Ukrainian Education

KYIV – Education is one of the few areas nowadays that is still considered a purely sovereign matter, an issue over which national governments – and, in many countries, even local authorities – should have control. But, in today’s world, it seems that no issue is immune to political manipulation. That is the case with Ukraine’s new framework law on education, which has become the target of harsh opposition not so much from within the country, but rather from some neighboring countries.


The law, adopted last month by Ukraine’s parliament, reflected a long and inclusive policymaking process. Among its provisions is Article 7, which specifies that students in schools and universities should study in the national language. Article 7 seems to be in accord with European norms. Perhaps more important, it will benefit all Ukrainian citizens, including minority-language speakers, who will be better equipped to integrate fully into Ukrainian society.

Under the previous education system, some students would receive their entire 11 years of schooling (to be raised to 12 under the new law) in a minority language, mostly Russian, but sometimes Hungarian and Romanian. About 400,000 students are currently on such a track, which has usually ended with students graduating high school lacking even a working knowledge of Ukrainian – the language in which the country conducts its business.

In fact, just this year, more than half of all graduates of Hungarian-language schools failed tests of Ukrainian. Unable to attend a Ukrainian university, these students have little choice but to find local work in Hungarian that requires only a secondary-school education, or move to Hungary.

The education reform will change this. From 2020, after a three-year transitional period, a minority language can be used as the main teaching language only in kindergarten and elementary school, from which point (after the fourth year of school) most instruction should be in Ukrainian. Some schools for indigenous people, such as Crimean Tartars, will be allowed to keep the old system, but for the most part, graduates of Ukrainian high schools will, under the new system, be adept in the Ukrainian language.

This change will help to eliminate de facto segregation of minority-language speakers, thereby unifying Ukrainian society – critical to a strong and vibrant democracy. It will also equip all students, including ethnic and linguistic minorities, not just to thrive in the labor market, but also to participate more fully in Ukrainian democracy, potentially securing government positions that enable them to advance further the interests of their fellow ethnic minorities.

It should also be noted that, while the rule will lead to less minority-language instruction, it does not preclude it. Education in minority languages will be provided through separate classes and groups, with some programs allowing for instruction in multiple languages. For example, if a Hungarian speaker were studying Hungarian literature, they would be able to do so in their native tongue.

All in all, the case for Ukraine’s new education law could not be stronger. Yet neighboring countries are deliberately distorting the legislation’s significance, claiming that it is somehow a threat to ethnic minority groups. And they are prepared to punish Ukraine for it.

Hungarian Foreign Minister Péter Szijjártó has declared that, if the law is not changed, his country will block further Ukrainian integration into Europe. “We can guarantee that all this will be painful for Ukraine in future,” he added. Szijjarto, along with his counterparts from Romania, Bulgaria, and Greece, also voiced opposition to the Council of Europe and the Organization for Security and Cooperation in Europe.

Moreover, Romania’s president canceled a visit to Ukraine scheduled for this month, and withdrew an invitation for the speaker of Ukraine’s parliament to visit Bucharest. And, perhaps most ominous, Russian Foreign Minister Sergei Lavrov accused Ukraine of trying to “Ukrainize” the education system, in violation of the country’s constitution and international agreements.

Beyond being a gross misrepresentation, this approach is blatantly hypocritical, as the countries that are complaining about Ukraine’s new language rules have similar systems in place. Though Hungary is home to some 8,000 Ukrainians, there is not a single Ukrainian-language school in the country. The same is true for Russia, with its Ukrainian minority of over two million. In Romania, with its roughly 50,000 Ukrainians, there is only one Ukrainian-language school.

The Ukrainian government has said that it will submit the law to the Council of Europe, allowing the Venice Commission to determine whether it meets CoE standards. President Petro Poroshenko has promised to consider changing the law, depending on the Commission’s conclusions.

But, judging by Article 8 of the CoE’s European Charter for Regional or Minority Languages, which Ukraine has ratified, it seems reasonable to expect that changes won’t be needed. That provision states that a system that guarantees sufficient minority-language learning in ordinary schools (in separate classes) is just as acceptable as one that ensures minority education through separate minority-language schools. Moreover, the charter states that, in secondary education, it is sufficient to guarantee “the teaching of the relevant regional or minority languages” – not necessarily other subjects – “as an integral part of the curriculum.”

Regardless of the Venice Commission’s assessment, the response from Ukraine’s neighbors remains a serious problem, as it represents a flagrant effort to manipulate internal Ukrainian policy through intimidation. Ukraine, which has been occupied for more than 300 years of its history, knows what it is like to have its language threatened. Even its own government, under deposed President Viktor Yanukovych, attempted to undermine the Ukrainian language in 2012 with its Russia-encouraged “Russification” policy.

Ukrainian is the official language of Ukraine, just as Russian is the official language of the Russian Federation, Hungarian is the official language of Hungary, and Romanian is the official language of Romania. While minority languages are important and the rights of their speakers must be respected – as Ukraine’s new education law does – it is the official language that unites a society and enables citizens to participate in it fully. Ukraine’s government has the right – indeed, the duty – to ensure that all of its citizens are proficient in it.

Oleksandr Sushko is Research Director at the Institute for Euro-Atlantic Cooperation in Kyiv and a member of the Maidan People’s Union Council.

By Oleksandr Sushko

Giddy Markets and Grim Politics

CAMBRIDGE – Economic growth worldwide picked up in 2017, and the best guess is that the global economy will perform strongly in 2018 as well. At the same time, a rising tide of populism and authoritarianism poses a risk to the stable democratic institutions that underlie long-term growth. And yet headlines seeming to portend political instability and chaos have not prevented stock markets from soaring. What gives?


First, the good news. Surely the largest single factor in the synchronized global upswing is that the world economy is finally leaving behind the long shadow of the 2008 financial crisis. Part of today’s good fortune is payback for years of weak demand. And the rebound is not over, with business investment finally picking up after a decade of slack, thereby laying a foundation for faster growth and higher productivity gains in the future.

True, economic growth in China is slowing somewhat as authorities belatedly try to contain a credit bubble, but many other emerging markets – notably including India – are set to grow faster this year. Rising stock and housing markets may fuel inequality, but they also drive increased consumer spending.

Investors and policy wonks are also cheered by the resilience of central bank independence in the major economies. US President Donald Trump has not only largely spared the Federal Reserve the not-so-tender mercies of his wee-hour tweets; he has also nominated highly qualified individuals to fill Fed vacancies. Meanwhile, the German right has failed to pull the plug on European Central Bank policies that have helped prop up Italy, Spain, and Portugal, and the ECB remains by far the most respected and influential eurozone institution.

Elsewhere, things are pretty much the same. In the United Kingdom, British Prime Minister Theresa May, early in her tenure, once took a swipe at the Bank of England, but quickly retreated. As Mohamed A. El-Erian has noted, many investors regard central banks as “the only game in town,” and they are willing to overlook a lot of political noise as long as monetary-policy independence is upheld.

But while politics is not, at least for now, impeding global growth nearly as much as one might have thought, the long-run costs of political upheaval could be far more serious. First, post-2008 political divisiveness creates massive long-term policy uncertainty, as countries oscillate between governments of the left and the right.

For example, the recent US tax overhaul has been advertised as a surefire way to boost corporate spending on long-term investment projects. But will it live up to its billing if businesses fear that the legislation, passed by a thin partisan majority, will ultimately be reversed?

Part of the case for trying to secure bipartisan agreement on major long-term policy initiatives is precisely to ensure stability. And policy uncertainty in the United States is nothing compared to the UK, where businesses face the twin disruptions of Brexit and (potentially) a Labour government led by the far-left Jeremy Corbyn.

Harder to assess, but potentially far more insidious, is the erosion of public trust in core institutions in the advanced economies. Although economists have endless debates about whether culture or institutions lie at the root of economic performance, there is every reason to be concerned that the recent wave of populism is a threat to both.

Nowhere is this truer than in the US, where Trump has engaged in unrelenting attacks on institutions ranging from the mainstream media to the Federal Bureau of Investigation, not to mention adopting a rather cavalier attitude toward basic economic facts. At the same time, the left seems eager to portray anyone who substantively disagrees with its proposals as an enemy of the people, helping fuel both economic illiteracy and a hollowing out of the center.

Beyond existential risks, there are near-term risks. One, of course, is a potential sharp growth slowdown in China, which more than any other major economy in the world today seems vulnerable to a significant financial crisis. Perhaps the number one risk to the global economy in 2018, however, is anything that leads to a significant rise in real (inflation-adjusted) interest rates.

Low interest rates and easy monetary policy have papered over a multitude of financial vulnerabilities around the world, from Italian and Japanese government debt to high corporate dollar debt in many emerging markets, and perhaps account for political support for trillion-dollar deficits in the US. Admittedly, markets see little chance of any significant rise in global interest rates in 2018. Even if the Fed raises rates another four times in 2018, other major central banks are unlikely to match it.

But market confidence that interest rates will remain low is hardly a guarantee. A plausible pickup in business investment in the US and northern Europe, combined with a sudden slowdown in Asian economies with surplus savings, could in principle produce an outsize rise in global rates, jeopardizing today’s low borrowing costs, frothy stock markets, and subdued volatility. Then, suddenly, the economy’s seeming disconnect from politics might end, and not necessarily in a happy way.

Kenneth Rogoff, a former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University.

By Kenneth Rogoff

Better Plastics for Healthier Oceans

LONDON – Plastics are among the most popular materials in use today. Given the material’s versatility, it is little wonder that some 320 million tons of it are used around the world each year. Indeed, the recent holidays left many with a mountain of plastic products and packaging. But plastics also pose a serious environmental threat.


If not disposed of properly, plastics can lie or float around for decades. In addition to being harmful to terrestrial and aquatic life, free-floating plastics in oceans can adsorb toxins and break up into micro-plastics, which then enter the food chain.

It is this seeming immortality that has led governments to tax certain environmentally damaging plastic products or ban them altogether. Many governments are also encouraging better waste management, and the reuse, redesign, and recycling of plastic products.

This is prudent policymaking. But while taxes, bans, and waste-management policies will reduce the problem of plastic pollution, they will not solve it. And, because plastics are made from a byproduct of oil refining, a ban would have little or no impact on hydrocarbon extraction, either. What taxes and bans will do is deprive the poorest people of a useful and inexpensive material.

The fact is that, despite the best efforts of well-intentioned lawmakers and nongovernmental organizations, thousands of tons of plastic waste are still entering the environment, particularly the oceans, every day. Clearly, a better approach is needed.

Some governments and companies have been persuaded that “bio-plastics” – which are derived partly from biomass like cornstarch – are the solution. But this argument is flawed: bio-plastics are very expensive and energy-intensive to produce, and still contain large amounts of material derived from oil.

Moreover, recycling bio-plastics requires that they be separated from ordinary plastic. Such polymers are tested to biodegrade, but only in the particular conditions found in industrial composting. In other words, while this technology might sound appealing, it will not solve the problem of plastic litter seeping into the environment.

The focus of the plastics industry has long been on a product’s functionality during its lifespan. This approach is no longer tenable. The world needs a new type of plastic – one that will perform well, but will also biodegrade much faster than the plastics we use today.

Enter oxo-biodegradable plastic. Unlike other plastics, including bio-plastics, OBP biodegrades anywhere in the environment, and can be recycled if collected during its useful life. Ordinary plastic products can be upgraded to OBP with existing machinery at the time of manufacture and at little to no extra cost, using technology that the Oxo-biodegradable Plastics Association is working to explain.

OBP is produced when a special additive is mixed with a normal polymer. The additive (produced by a company where I am a director) dismantles the molecular structure of the polymer at the end of its useful life and enables natural decomposition in an open environment.

And, when it comes to OBP, decomposition doesn’t mean breakdown into plastic fragments. As Ignacy Jakubowicz, a professor at the Research Institutes of Sweden and one of the world’s leading experts on polymers, explains, when OBPs break down, the material changes entirely, with hydrocarbon molecules becoming oxygen-containing molecules that can be assimilated back into the environment. According to international standards (such as ASTM D6954), the use of OBP would demand proof of degradation and biodegradation, and confirmation that there are no heavy metals or eco-toxicity.

As plastics change, the ways countries integrate them into their economies must change, too. The good news is that, though the United States and Europe have been slow to embrace innovative solutions, others have been more open to them. For example, Saudi Arabia and the United Arab Emirates have banned the import or manufacture of conventional plastics for a wide range of products, and both now require that plastic products be upgraded with OBP technology. They have not opted for “bio-based” plastics.

The world does not need new bans or taxes. Rather, it needs people who work with plastic, and their governments, to become as adaptable as the material itself, taking advantage of technological advances to ensure that we can make the most of a cheap and versatile material, without subjecting the environment to its damaging impact.

Michael Stephen, a former member of the UK Parliament, is Chairman of the Oxo-biodegradable Plastics Association, and a director of Symphony Environmental Technologies Plc.

By Michael Stephen

The Return of the Newspaper

BANGKOK – Social media are no longer the new kid on the block, but in 2016, platforms like Twitter and Facebook looked poised to nudge traditional newspapers into obsolescence. Following President Donald Trump’s victory in the United States, it seemed that the mainstream media had not only lost the plot, but had also lost their relevance.


Trump led the multi-pronged attack on traditional news media, and newspapers in particular. But many members of the press were also quick to declare that their own character limit had been reached. Accused of being elitist and out of sync with readers, newspapers’ reactions ranged from self-flagellation to repentance for the election result. Flummoxed by the clobbering from all sides, pundits who could not get the Trump election right prophesied that declining sales, falling readership, and flagging credibility heralded the demise of the newspaper, as we have known it.

But more than one year later, it is clear that Trump’s victory did not mean any such thing. On the contrary, his ascendancy has made the newspaper business more relevant than ever. The most remarkable media story of 2017 may have been how Trump inadvertently made newspapers great again.

Newspapers achieved this remarkable turnaround by doing what they do best: investigative journalism and breaking stories. Since November 2016, and particularly since Trump’s inauguration in January last year, newspapers have led with stories ranging from conflicts of interest involving Trump’s son-in-law, Jared Kushner, to evidence that the president’s former national security adviser, Michael Flynn, met with former Russian Ambassador Sergey Kislyak.

These tales of political intrigue competed for attention with lurid allegations of sexual misconduct by Hollywood producer Harvey Weinstein, US Senate candidate Roy Moore, and other powerful men. And the pummeling of Trump with inconvenient facts has not been limited to Russia’s meddling in the election.

It is important to remember that newspapers’ investments in rapid-response investigative teams, long-form stories, and data-driven journalism are possible only because more people are paying for their news, especially through digital subscriptions. Millennials in the West, dismayed by the surge in “fake news,” are helping reverse declining circulations in major markets. Growth trends are even more pronounced in the Asia Pacific region, where readers in China and India are leading a return to traditional newspapers.

Of course, newspapers’ post-election rebound was not entirely their own doing; it was also facilitated by social media’s failure to consolidate its gains. Blinkered by the illusion of having snatched whatever influence newspapers commanded, social media’s mavens bungled their attempts to dethrone the older medium. Instead of breaking stories, they took to drafting manifestos, like Facebook founder Mark Zuckerberg’s 5,700-word jeremiad about nothing in particular. And, while there was a time when 140 characters may have been more appealing than 700-word opinion pieces, brevity is no longer enough. (Nor, for that matter, is lengthy incoherence).

Having abducted the truth, social media were at a loss about what to do with it. They did not innovate by, for example, following the lead of BuzzFeed, a once-notorious “clickbait” factory that soon expanded into serious reportage and long-form journalism.

After the US election, BuzzFeed shook up the media industry by publishing the Steele dossier, a collection of private intelligence on Trump gathered by a former British MI6 officer. A few months later, it produced an 8,500-word expose on Milo Yiannopoulos, a former star commentator for Breitbart News. The Columbia Journalism Review called the article “groundbreaking,” though recent squabbles with CNN indicate a certain reluctance to accept BuzzFeed as a legitimate news organization – and, potentially, even the emergence of a new media war.

Meanwhile, most major social media platforms continued to feature whatever presidential nonsense interested or amused their users, like analyzing “covfefe.” This has led many to assume that Trump himself drives the social media agenda. Perhaps he does. But Trump’s ad nauseam tweets about failing newspapers and fake news have also spurred more reasonable consumers to embrace newspapers as a bastion of anti-Trumpism. In other words, newspapers’ revival is a visceral, if partisan, response to social media in the Trump era.

Trump, the upstart, is leading the battle against the media Brahmins, buoyed by a fellow disruptor, social media. But Trump’s campaign is a losing one. Newspapers have gained allies even on Capitol Hill. When Congress grills executives from Facebook, Twitter, and Google, glee is evident in news headlines.

To add insult to social media’s injury, it is newspaper articles that are being relentlessly quoted in congressional testimony. For example, former FBI Director James Comey’s memo on his interactions with Trump, which led to the hiring of a special prosecutor to investigate the Trump campaign’s connections to Russia, was leaked to The New York Times.

As calls to rein in social media grow, it is the world’s newspapers – until very recently thought to be on the ropes – that have provided the reporting needed to convince policymakers to act. Because social media companies, for all their power and potential, never developed the journalistic capacities needed to displace traditional news media, the pendulum has changed direction.

Bajinder Pal Singh is Director of Media and Communications at the Asian Institute of Technology in Thailand.

By Bajinder Pal Singh

A Trump Christmas Carol

NEW YORK – This Christmas, America’s gift to the world was a $285 million cut in the United Nations’ regular budget. Technically, the UN regular budget reflects a consensus decision of the body’s 193 member states, but the United States was clearly the prime mover in pushing for the cut. Indeed, Nikki Haley, the US ambassador to the UN, accompanied the Christmas Eve announcement with a warning that the US would be on the lookout for further reductions.


Ebenezer Scrooge could not have done better. The budget cuts will make it that much harder for UN agencies to prevent wars, help millions of people displaced by conflicts, feed and clothe hungry children, fight emerging diseases, provide safe water and sanitation, and promote access to education and health care for the poor.

President Donald Trump and Haley make much of the bloated costs of UN operations, and there certainly is room for some trimming. But the world receives an astounding return on its investments in the UN, and member countries should be investing far more, not less, in its organizations and programs.

Consider the sums. The UN regular budget for the two-year period 2018-2019 will stand at around $5.3 billion, $285 million less than the 2016-2017 budget. Annual spending will be around $2.7 billion. The US share will be 22%, or around $580 million per year, equivalent to around $1.80 per American per year.

What will Americans get for their $1.80 per year? For starters, the UN regular budget includes the operations of the General Assembly, the Security Council, and the Secretariat (including the Secretary-General’s office, the Department for Economic and Social Affairs, the Department of Political Affairs, and administrative staff). When a dire threat to peace arises, such as the current standoff between the US and North Korea, it is the UN’s Department of Political Affairs that often facilitates vital, behind-the-scenes diplomacy.

In addition, the UN regular budget includes allocations for the UN Children’s Fund (UNICEF), the UN Development Program, the World Health Organization, the UN High Commissioner for Refugees, the UN High Commissioner for Human Rights, the UN’s regional bodies (for Asia, Africa, Europe, Latin America), the UN Environment Program, the Office for the Coordination of Humanitarian Affairs (for disaster response), the World Meteorological Organization, the UN Office on Drugs and Crime, UN Women (for women’s rights), and many other agencies, each specializing in global responses to crises, conflicts, poverty, displacement, environmental hazards, diseases, or other public needs.

Many of the UN organizations receive additional “voluntary” contributions from individual countries interested in supporting specialized initiatives by agencies such as UNICEF and the World Health Organization. After all, those agencies have a unique global mandate and political legitimacy, and the capacity to operate in all parts of the world.

The silliness of the US attack on the size of the UN budget is best seen by comparing it to the Pentagon’s budget. The US currently spends around $700 billion per year on defense, or roughly $2 billion per day. Thus, the total annual UN regular budget amounts to around one day and nine hours of US military spending. The US share of the UN regular budget equals roughly seven hours of Pentagon spending. Some waste.

Trump and Haley are squeezing the UN budget for three reasons. The first is to play to Trump’s political base. Most Americans recognize the enormous value of the UN and support it, but the right-wing fringe among Republican voters views the UN as an affront to the US. A 2016 Pew Survey put US public approval of the UN at 64%, with just 29% viewing it unfavorably. Yet the Texas Republican Party, for example, has repeatedly called on the US to leave the UN.

The second reason is to save on wasteful programs, which is necessary in any ongoing organization. The mistake is to slash the overall budget, rather than reallocate funds and increase outlays on vitally needed programs that fight hunger and disease, educate children, and prevent conflicts.

The third, and most dangerous reason for cutting the UN’s budget is to weaken multilateralism in the name of American “sovereignty.” America is sovereign, Trump and Haley insist, and therefore can do what it wants, regardless of opposition by the UN or any other group of countries.

In her recent speech to the UN General Assembly session on Jerusalem, where member states overwhelmingly rejected America’s unilateral recognition of Jerusalem as the capital of Israel, Haley told the rest of the world: “America will put our embassy in Jerusalem. That is what the American people want us to do, and it is the right thing to do. No vote in the United Nations will make any difference on that.”

This approach to sovereignty is exceedingly risky. Most obviously, it repudiates international law. In the case of Jerusalem, resolutions adopted by the General Assembly and the Security Council have repeatedly declared the final status of Jerusalem to be a matter of international law. By brazenly proclaiming the right to override international law, the US threatens the edifice of international cooperation under the UN Charter.

Yet another grave danger is to the US itself. When America stops listening to other countries, its vast military power and arrogance often lead to self-inflicted disasters. America Firsters like Trump and Haley bristle when other countries oppose US foreign policy; but these other countries are usually giving good and frank advice that the US would be wise to heed. The Security Council’s opposition to the US-led war in Iraq in 2003, for example, wasn’t intended to weaken America, but to protect it, Iraq, and indeed the world, from America’s rage and blindness to the facts.

“Bah! Humbug!” said Scrooge. But Charles Dickens’s point was precisely that Scrooge was the great loser from his arrogance, miserliness, and insolence.

Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and the UN Sustainable Development Solutions Network.

By Jeffrey D. Sachs

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…