Why AfricaShould Go Cashless

YAMOUSSOUKRO – India has lately been pursuing an ambitious goal: a cashless economy. Despite early missteps and frustrations, it will turn out to be a change for the better for the country’s 1.31 billion people. Africa should set a similar goal – and take the first step by establishing a monetary union.

Of course, achieving a cashless society is not an end in itself.Rather, it is a means to help advance financial inclusion, security, and prosperity. Today, an estimated 326 million Africans – 80% of the continent’s adult population – use no formal or informal financial services. But stashing bank notes under the mattress is no way to safeguard families’ savings, much less enable households to accumulate enough capital to escape chronic poverty.

Similarly, millions of Africans are scratching out a living in the informal economy, which represents about 41% of GDP in most parts of the continent. This leaves them unprotected, and without pathways to financial stability and wealth creation. Moving toward a cashless society would force citizens, companies, and policymakers to devise mechanisms to bring all Africans into the financial sector, drastically improving the lives of the millions who are now under- and unbanked.And it would bring many livelihoods into the formal economy – a major economic opportunity for African countries.

The goal should be to achieve prosperity through financial inclusion linked to economic activity. What small businesses and micro-enterprises need is fresh capital to create employment and expand the economic pie, and bank accounts connected to economic activity ensure that even those selling goods by the roadside can secure a piece of that pie.

But financial inclusion is not a natural by-product of the shift away from cash. On the contrary, as Harvard economist KennethRogoff argues, successful demonetization requires a comprehensive and implementable plan to increase financial inclusion and use of banks.

Such a plan should focus on building the right ecosystem for economic activity. In Africa, that means not just delivering financial services, but alsoadvancing financial literacy.Newly established bank accounts have few positive effects if they lie dormant. To ensure that financial inclusion actually enables economic transformation, Africans must gain the knowledge and tools to make the most of financial services.

Of course, none of this will be easy – a point made clear by India’s challenging experience implementing its radical demonetization process. Success will require, among other things, a gradual approach. Africa mustnot allowcash scarcity to cripple the informal economy, as it has in India.

But if Africa succeeds in this transition, the benefits will be profound. Demonetization would probably even save countries money. MasterCard estimates that countries worldwide spend as much as 1% of their GDP each year to mint, process, and distributebanknotes. That is money that could be better spent on meeting the United Nations Sustainable Development Goals, further improving the lives of Africa’s poor.

There is reason to believe that Africa can succeed in going cashless. Already, a large share of Africans uses digital payment systems like M-Pesa and EcoCash – precisely the types of innovative platforms that can play a pivotal role in the shift away from cash.

While hyperinflation is far from the ideal catalyst for such a shift, Zimbabwe’sexperienceproves that citizens can and will adapt to challenging circumstances. For example, some stores in the country will give credit to mobile money accounts in lieu of change.

But, to achieve a broader shift to a cashless Africa,progress toward monetary union will be essential for deepening economic integrationacrossthecontinent. That, in turn,wouldfoster a continent-wide digital financial services ecosystem capable of underwritinga massive expansion of intra-African trade –the quickest route to lifting people out of poverty.

Already, 14 countries in West and Central Africa share the CFA franc, which is pegged to the euro. And South Africa shares a monetary policy with Lesotho, Namibia, and Swaziland. We cannot stumble where the road is clear.

Africans are latecomers to the demonetization movement. But we can use this to our advantage,by learning from countries that have already made the transition or are on the way.These include not just India, but also Denmark, Norway, and Sweden. We must view this as a strategic advantage in the much-needed structural transformation of the African economy.

With a smart strategy, underpinned by patience and commitment, Africa can build a cashless economy, with high levels of financial inclusion supporting economic prosperity and security. Before too long, buying a “Kofi broke man” – a roasted plantain with groundnuts– by the roadside in Ghana could be a cashless transaction, one that helps the vendor prosper in the present – and save for the future. Carl Manlan is an economist and Chief Operating Officer of the Ecobank Foundation. He is a 2016 Aspen New Voices Fellow.

By Carl Manlan

How Federalism Can Trump Populism

BERKELEY – America remains deeply divided on many economic and political issues. Just as US President Donald Trump was touting the accomplishments of his first 100 days in office, a federal court, responding to a legal complaint brought by several jurisdictions, temporarily blocked his executive order to strip federal funding from “sanctuary” states and cities.

According to the ruling, Trump’s order violates the Constitution’s separation of powers clause, due-process guarantees, and the Tenth Amendment, which states that, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” In other words, states and cities may cooperate with the federal government by carrying out federal policies; but the Tenth Amendment provides the constitutional basis for them to challenge or resist federal policies that conflict with their own goals (in this case, shielding undocumented immigrants from arrest and possible deportation).

Citizens’ needs vary widely across the country, and federalism helps to ensure that they are addressed. State and municipal governments can implement policies more efficiently when they are free to source local ideas and enter into local partnerships with non-governmental actors.

Local-level pilot programs and policy experiments also accelerate innovation, with authorities able to close ineffective programs quickly and expand those that work. And, because a federalist approach encourages transparency and accountability in how policies are implemented, it also bolsters the public’s trust in government institutions and elected officials. This is why most Americans have maintained their confidence in state and local governments, even as their trust in the federal government has reached all-time lows.

State and municipal officials are often responsible for implementing federal policies – concerning health care, education, employment, law enforcement, and environmental protection – that directly affect people’s lives. And the federal government, for its part, uses a variety of tools to encourage innovation among state and local governments, including waivers, pay-for-performance contracts, and challenge grants. Waivers and state flexibility in Medicaid are at the heart of the fractious political showdown over health care.

During the past decade, many state and local governments have focused their attention on environmental policy. In 2006, 12 states sued the Environmental Protection Agency for its failure to classify greenhouse gases as pollutants, and to regulate them accordingly. In 2007, the Supreme Court issued a 5-4 decision, siding with the states; and in 2009, the EPA concluded that certain greenhouse gases endanger public welfare. That finding provided a basis for the Obama administration’s new auto-emissions standards and Clean Power Plan, which were established to help America meet its commitments under the 2015 Paris climate agreement.

Trump has now signed an executive order to roll back the Clean Power Plan, claiming, ironically, that he wants to weaken federal regulations as a way to return power to the states. Still, many states are already on track to meet the plan’s emissions targets, and have established their own standards for emissions and renewable energy, as well as their own cap-and-trade systems. And many municipal governments have joined the fight against carbon emissions by expanding mass transit and making government buildings more energy efficient.

California is leading the way in these efforts. It has implemented the strictest CO2 emissions standards in the US, and it is a leader in the Under U2 Coalition, a group of 170 national and subnational governments (representing 37% of the global economy) that are committed to achieving the Paris agreement’s emissions targets.

In addition to pursuing their own environmental policies, state and local governments can also resist or undermine federal policies. For starters, they can simply abstain from taking action, as we have seen with some states’ reaction to federal education reforms. Or they can withhold the state-level resources needed to enforce federal laws, as states that have decriminalized marijuana have done, and as sanctuary states and cities are now doing. The immigration showdown will ultimately be adjudicated in the court system; and Trump has already lost his first battles there.

Under federalism – whether cooperative or “uncooperative” – it is often assumed that state and local governments are pursuing the same goals. In fact, there is a deep divide between left-leaning “blue” cities and the right-leaning “red” states where many are located. And there are many ways that state governments can thwart progressive federalism at the municipal level. Cities, for their part, often lack the information and resources necessary for developing and implementing effective policies. A number of organizations have now emerged to strengthen the policy-making capacity of city governments including Michael Bloomberg’s Government Innovation Program, Fuse Corps, Results for America, Social Finance, Third Sector Capital Partners, and USAFacts.

There have been several legal fights recently between city governments and state legislatures over the principle of preemption, which holds that state laws override local laws. According to Preemption Watch, in 2016 alone, at least 36 state governments – most of them Republican-led – preempted cities by introducing laws on a wide range of issues, from minimum wage to environmental protection, gun control, fracking, immigration, and anti-discrimination ordinances. And 42 states have set limits on the taxes and expenditures of their cities.

The political struggle between red states and blue cities will continue to play out in judicial and legislative battles, while giving rise to new citizen-led initiatives. A new movement of grassroots progressive federalism, reflecting the powers conferred on citizens by the Tenth Amendment, has already begun to emerge. It is apparent in huge citizen marches, and in coordinated civil-society initiatives advocating for a national popular vote, congressional redistricting, automatic voter registration, and a higher minimum wage.

Trump did not accomplish much in his first 100 days. But he did unwittingly remind many Americans that the US Constitution delegates substantial political authority to states, cities, and individual citizens. And his administration has only further highlighted the importance of an independent judiciary, where the coming years’ battles among local, state, and federal government entities will be fought.

Laura Tyson, a former chair of the US President's Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley, and a senior adviser at the Rock Creek Group. Lenny Mendonca, Senior Fellow at the Presidio Institute, is a former director of McKinsey & Company.

By Laura Tyson and Lenny Mendonca

The Macron Miracle

PARIS –Before the just-concluded French presidential election, the United States’ National Public Radio (NPR) requested that I give an interview about the outcome. But there was a catch: the interview would take place only if the far-right National Front’s Marine Le Pen won. It seems that good news, like Le Pen’s defeat, is barely news at all nowadays.

But the truth is that the victory of the pro-European centrist Emmanuel Macron is a very big deal. Last year, when the United Kingdom voted to leave the European Union, and the US elected Donald Trump its president, the rise of right-wing populism went from seemingly impossible to seemingly irresistible.And, in many ways, France wasprimed for a right-wing populist to win power: beyond having been hit hard by the eurozone crises of the past decade, it has lately faced a wave of terrorist attacks.

But French voters– including many whose preferred candidate or party didn’t make it to the second round – recognized the perils of letting Le Pen reach the Élysée Palace, and delivered Macron a robust victory. It was a show of maturity and political intelligence, and a lesson to the UK and the US. (Perhaps that is the part NPR didn’t want to face.)

It helped that, in the second presidential debate, Le Pen destroyed the façade that she had worked so hard to construct. Her push to “de-demonize” the National Front – in 2015, she even kicked her father, Jean-Marie, out of the party he founded– was all an act. She is, and always will be, her father’s daughter.

But the French election played out as it did, to paraphrase the essayist Michel de Montaigne, not just because Le Pen was Le Pen, but also because Macron was Macron. At another time in history, Macron’s youth and independence would have been a major liability. But, in the current environment of mistrust toward the political establishment, Macron offered France the prospect of a kind of renewal.

Of course, the implications of the French election extend far beyond the country’s borders. Begin with the UK, where Prime Minister Theresa May’s call for a snap general electionnext month was intended to strengthen her hand in the upcoming Brexit negotiations.Now she is confronted with the prospect of a reconstituted Franco-German axis – one that would be more balanced, and therefore more stable, than before. Winston Churchill’s political heirs certainly could not root for a candidate who waxes nostalgic about Vichy France. But they are not wrong to worry that the victory of the election’s most pro-European candidate will isolate them further.

In fact, Macron’s victory – which he celebrated to the tune of Beethoven’s “Ode to Joy,” the European anthem – is likely to invigorate more moderate, pro-European forces across Europe (with the possible exceptions of Hungary and Poland). Macron has proved that optimism, supported by a clear and firm pedagogy, can win an election, even in a Europe that has seemed bound by pessimism and fear. His approach will certainly be reflected in the coming year’s general elections in Germany and Italy.

Beyond transforming the image of France (and right-wing populism) in Europe, Macron’s victory is transforming Europe’s image in the world. Contrary to the claims of Russian President Vladimir Putin, the “old continent” isnot in the process of decay; it is still capable of renewal.

This might be disappointing for Russia. But, for China, Macron’s victory is a positive development. The Chinese do not, after all, like uncertainty, especially when it roils markets. And that is probably what a Le Pen victory would have done.

As for the US, responses to Macron’s victory are probably mixed. For the majority of Americans who did not vote for Trump, it probably inspires a combination of relief andsatisfaction. After all, to some extent, Le Pen’s defeat amounts to a rebuke of Trump himself. But there is probably also some envy mixed in:if only the Democrats had aMacron as their candidate, instead of Hillary Clinton, Trump would not be president.

Americanswho voted for Trump, for their part, may not be sure what to think. From an ideological standpoint, Macron’s victory is disappointing. But from a geopolitical viewpoint, it’s not such bad news. Indeed, by reinforcing the European pillar of NATO, it will benefit the entire Western world.As for Trump– much more a narcissist than an ideologue, who never actually met with Le Pen, even as many in his administration feted her – Macron’s victory can be spun in any number of positive ways.

For Macron, the work is just beginning. To deliver the change he has promised and remain a symbol of the world’s progressive hopes, his movement, La République En Marche!, will need to secure a majority in next month’s legislative elections. One hopes that French voters will again show self-awareness and wisdom, and deliver him the support he needs in the National Assembly. What is at stakeis not the future of a politician or his party, but the destiny of the French Republic– and the future of Europe. Dominique Moisi is Senior Counselor at the Institut Montaigne in Paris. 

By Dominique Moisi

Reducing Speed to Save Lives

NEW YORK – We can save so many lives around the world if we just slow down. Each year, more than 1.25 million people – many of them young people – die in automobile crashes.And a large proportion of these deaths are preventable: about one-third are due to vehicles traveling at excessive speeds. In low- and middle-income countries, that figure is closer to half.

Regardless of where one lives, speeding is a lethal problem. Studies show that on most roads, in most countries, 40-50% of all cars travel above the posted speed limit. And whether or not a car is speeding can be the difference between life and death. For example, someone who is hit by a vehicle traveling at 50 miles (80 kilometers) per hour has a three times higher risk of dying than if they had been hit by a vehicle moving at 30 miles per hour.

This means that just setting urban speed limits at 30 miles per hour or less, and allowing local authorities to reduce speed limits further around schools and other areas with high pedestrian traffic, would save many lives. It is encouraging that 47 countries around the world are already implementing these commonsense practices. But we must do far more to expand the reach of such measures, and to ensure that more governments adopt them.

Not surprisingly, countries that have embraced a comprehensive approach to road safety, such as the Netherlands, Switzerland, and the United Kingdom, have had the most success in reducing their rates of death and injury from automobile accidents. These countries have made it a high priority to reduce rates of speeding, and they have taken steps to improve the safety of their roads, vehicles, drivers, and all others who use roads, including pedestrians and motorcyclists.

For example, proactive countries have built their roads to include features that calm traffic, such as roundabouts. They have also established speed limits tailored to local road conditions, while stepping up enforcement to deter traffic violations. And they have begun to require that all new cars include life-saving technologies such as autonomous emergency braking.

Municipal leaders worldwide – from Addis Ababa to Mumbai to Bangkok – have played a key role in implementing these measures, which are not just saving lives, but also making their cities healthier in other ways. Safer streets encourage more people to walk and cycle, helping to reduce air pollution, which has been linked to chronic respiratory disease, cancer, and other noncommunicable diseases.

To build on these achievements, Bloomberg Philanthropies, the World Health Organization, and other partners are working with municipal leaders to help them gather the data needed to identify problem areas more effectively. They can then determine where to target their limited resources to make the biggest improvements. We are also providing support for local authorities to stage public-awareness campaigns that will help build grassroots support for new road-safety legislation and stronger penalties.

Improving road safety is one of the biggest opportunities we have to save lives around the world. And the good news is that, starting with the solutions outlined above, we already know how to do it.

The fourth annual United Nations Global Road Safety Week, May 8-14, provides a chance to draw more attention to these solutions. Over the course of the week, community events are being held in cities around the world, to help raise awareness of the problem and advance more solutions. These events will take many forms: street traffic will be slowed down, campaigns will be launched in many schools, and roundtable discussions will be held to explore how we can ensure that smart policies continue to spread.

All of these events and initiatives will bring together local and national leaders in government, civil society, business, law enforcement, and other sectors. To learn more about the week’s events, and how every community can take steps to reduce speeding, we encourage readers to visit the Road Safety Week website.

A world in which far fewer lives are lost to automobile accidents is possible and entirely within our reach. It is up to all of us to make it a reality.

Margaret Chan is Director-General of the World Health Organization. Michael Bloomberg is the World Health Organization’s Global Ambassador for Noncommunicable Diseases.

By Margaret Chan and Michael Bloomberg

Development Beyond Aid

BEIJING – Despite the apparent tranquility of this year’s spring meetings of the International Monetary Fund and World Bank, there are reasons to be concerned about the global economy. The United Kingdom’s impending “hard” Brexit from the European Union and US President Donald Trump’s anti-globalization agenda are creating economic uncertainty, and will continue to do so for some time.

In contrast to Trump, Chinese President Xi Jinping has come to the defense of globalization, and made new capital available for creating global pubic goods, enhancing connectivity, and creating jobs in developing countries. More than 60 countries have welcomed Xi’s “One Belt, One Road” initiative, and 28 heads of state will attend an OBOR summit in Beijing on May 14. So, what is China’s rationale for pursuing this grandiose vision – one that so many countries, especially in the developing world, have embraced?

In our new book, Going Beyond Aid: Development Cooperation for Structural Transformation, we argue that official development aid (ODA) need not always be concessional, and make the case for going “beyond aid,” toward a broader approach – like that taken by China – that includes trade and investment. Right now, the OECD’s definition of ODA does not even include some of the more effective instruments for facilitating structural transformation in recipient countries, such as equity investment and large non-concessional loans for infrastructure.

By combining aid with trade and investment, donor and recipient countries alike can benefit. For example, the South-South development cooperation uses all three activities to capitalize on recipient countries’ economic strengths. This allows the SSDC to avoid the bottlenecks in partner countries that one sees under the standard ODA model, which separates aid from trade and private investment – and thus impedes countries from exploiting their comparative advantages.

In our book, we look at this topic through the lens of New Structural Economics. NSE treats modern economic development as a process of continuous structural change in technologies, industries, and hard and soft infrastructure – all of which increases labor productivity, and thus per capita income.

According to NSE, the most effective and sustainable approach for a low-income country to jumpstart dynamic growth and development is to develop those sectors in which it has latent comparative advantages: where production costs are low, but transaction costs are high due to inadequate hard and soft infrastructure. Governments can help to reduce transaction costs by creating special economic zones or industrial parks, improving infrastructure, and making the overall business environment more attractive in those enclaves. With this approach, a developing country can grow dynamically, and create a virtuous circle of job creation and poverty reduction, even if its overall infrastructure and business environment are still lacking.

Moreover, large emerging-market economies such as China, Brazil, and India can use their comparative advantages in infrastructure and light manufacturing to help others. For China, this is in keeping with a Confucian dictum: “One who wishes himself to be successful must also help others to be successful; one who wishes to develop himself must also help others to develop.”

China has a clear comparative advantage in infrastructure construction, owing to its lower labor costs (the cost of a project site foreman in China is one-eighth that of OECD countries) and vast domestic market, which have enabled it to achieve economies of scale that other countries simply cannot. Consequently, the overall construction cost for high-speed rail in China is two-thirds of what it is in industrial countries.

But China’s comparative advantages in 46 of 97 subsectors – particularly in manufacturing – benefit other developing countries, too. As labor costs in China rise, labor-intensive industries are relocating to lower-wage developing countries, providing millions of job opportunities. For example, the Huajian Shoemaking Company, C&H Garments, and China JD Group (an apparel maker), are now operating in special economic zones in, respectively, Ethiopia, Rwanda, and Tanzania.

In addition to exporting its comparative advantages, China also deploys “patient capital,” which has a maturity of ten years or more. In a recently published paper, we conceptualize patient capital as an investment in a “relationship,” whereby an investor has a long-term stake in a country’s development. Patient-capital owners are like equity investors, but they are willing to “sink” money in the real sector for an extended period of time.

Patient-capital owners are also more willing, and better able, to take risks. In the chart below, we show that a country’s net-foreign-asset position correlates strongly with its long-term orientation. On the other hand, net-foreign-asset positions of countries with a short-term orientation and a low savings rate tend to deteriorate, while their foreign debts mounts. [chart]

Patient capital plays an important role in infrastructure financing, because it is often accompanied by technological and administrative know-how, which helps to improve global connectivity and accelerate development.

So far, China’s large reserve of patient capital has been used to finance its own domestic projects. But it will increasingly be exported as more Chinese enterprises and banks “go global.” In fact, China could soon become the world’s largest net creditor, and a portion of its net foreign assets will take the form of patient capital that is suitable for improving infrastructure, developing manufacturing sectors, and creating jobs around the world.

Since 2015, development finance has started to come less from traditional aid, and more from development-finance institutions, development banks, and sovereign wealth funds in emerging economies. China, for example, has committed $60 billion in development financing to Africa for the 2016-2018 period – much of it patient capital.

China and other emerging economies are also shifting from bilateralism to multilateralism, by working with partners from the global North and South. As new South-led institutions such as the Asian Infrastructure Investment Bank and the New Development Bank work with established multilateral development banks, they are learning to be better partners, and adding momentum to global development efforts.

China, moreover, is trying to learn from its partners so that it can improve its own governance, labor, and environmental standards. And this two-way process is giving rise to new ideas, theories, and concepts – our book being one of them. China’s embrace of a global role should be welcomed. We are cautiously optimistic that the North and South can work together to ensure peace and prosperity for all.

Justin Yifu Lin is a former chief economist at the World Bank, Director of the Center for New Structural Economics, Dean of South-South Cooperation and Development, and Honorary Dean of the National School of Development, Peking University. Yan Wang is a Senior Fellow at the Center for New Structural Economics, Peking University.

By Justin Yifu Lin and Yan Wang

Why Did Trump Accept Venezuela’s Money?

CAMBRIDGE – There is a certain irony in recent news that Venezuela donated a half-million dollars to Donald Trump’s presidential inauguration through Petróleos de Venezuela (PDVSA), the state-owned oil company. Venezuela, of course, is a serial defaulter, having done so more times than almost any other country over the last two centuries.

Recently, Venezuela’s despotic socialist government has been so desperate to avoid another default (which would be the country’s 11th since independence) that it mortgaged its industrial crown jewels, including the United States-based refiner Citgo, to the Russians and the Chinese. (The Citgo brand is especially famous in my hometown of Boston, Massachusetts, where the company’s iconic sign has become a landmark in the environs of Fenway Park, where the Red Sox baseball team plays.)

It is not exactly clear why Venezuelan President Nicolás Maduro is so desperate to avoid defaulting on the country’s foreign debt that he is starving his own people, much the way Romanian dictator Nicolae Ceauşescu did in the 1980s. With such severe shortages of food and basic medicines, there is little doubt that if and when the autocrat is finally deposed, there will be some eerily familiar horror stories.

It is simplistic to portray the Venezuelan tragedy as an apocryphal tale of what happens when a country is taken over by left-wing populists. The right-wing governments of the 1980s and 1990s were also corrupt; and, while national income rose, income distribution was among the most unequal in the world. But it is true that Venezuela’s current horror show is very much a product of two decades of left-wing misgovernment.

There was a time when a contribution such as the one Venezuela made to Trump was a mere pittance in a much larger aid budget. Under its previous president, the charismatic Hugo Chávez, Venezuela spread its oil money far and wide, mostly to support other populist anti-American governments in the region. Chávez even funded heating fuel for some low-income households in the US, a program made famous by former US representative Joe Kennedy II’s 2006 television ads.

That was back when high and rising oil prices helped to maintain Venezuela’s revenues even as economic mismanagement sent oil production into a downward spiral. Mind you, Venezuela was never nearly as rich as the US, so its aid budget was like giving to the poor by taking from the almost poor.

Now, with oil prices having fallen dramatically since Chávez’s death from cancer in 2013, his successor, who has all the charisma of a lifelong apparatchik, is being forced to get by without the same easy revenues. And while Chávez was also autocratic, he probably won his elections.

Maduro’s election in 2013, by contrast, was a very close affair that many people question; for one thing, the opposition was allowed virtually no television time, even if starry-eyed US academics insisted that Maduro won fair and square. It is understandable that left-leaning scholars found some of the socialist government’s redistribution and education policies appealing, as Nobel laureate Joseph Stiglitz did when visiting Caracas, the country’s capital, in 2007. But the left’s willingness to overlook the dismantling of democratic institutions in Venezuela is more reminiscent of right-leaning Chicago-school economists’ relationships with Latin American dictators in the 1970s.

Today, Venezuela’s economy is a full-blown disaster, with the collapse in growth and near-hyperinflation causing widespread human suffering. In such circumstances, one might expect a traditional Latin American military coup. The absence of one in Venezuela is hardly a reflection of strong democratic institutions. Rather, the government gives the military a free hand in running the drug trade, making many generals and officials extremely rich – and able to buy the loyalty of key troops.

And this bring us back to the bizarre spectacle of this economically desperate country helping to fund Trump’s inauguration festivities. Like Joe Kennedy II, the Trump organizers can plead that if Venezuela wants to spend its money on making life better for its much richer northern neighbor, who are they to say no?

Well, in both cases, the US should have said no: while the aid is transparent, the symbolism of a rich country taking money from a poor neighbor with millions of suffering people is hardly attractive. And it is particularly bizarre that even as US policy toward Mexico has greatly increased the chances of an anti-American Chávez-type character becoming president there, officials are providing positive publicity to a government that is a caricature of disastrous governance.

Trump’s predecessor, Barack Obama, took a principled stand in US dealings with Venezuela, imposing sanctions to rein in rogue behavior, a policy that drew broad bipartisan support. The Trump administration needs to stay the course, especially as lower oil prices have weakened the Venezuelan government’s hand. Instead of bashing Latin America, the US needs to show it can be a steady and principled friend that will not be swayed by corrupt bribes of any type. Kenneth Rogoff, a former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University.

By Kenneth Rogoff

Where We Must Vaccinate

KARACHI/GANDHIDHAM-GUJARAT – With measles outbreaks currently spreading across Europe and the Midwestern United States, and meningitis infecting US college students, health experts are doing something they never thought they’d have to do in early 2017: reminding people in developed countries that vaccines save lives.

Perhaps vaccines are a victim of their own success: they work so well in protecting people against certain illnesses that many in the West have forgotten how devastating preventable diseases can be. With the recent outbreaks in the US and Europe, parents are being reminded that foregoing vaccinations for their children is a deadly gambit.

Sadly, in many other parts of the world, particularly South Asia, parents need no reminding that immunization saves lives. What they need is access to vaccines.

Preventable disease outbreaks, rare as they are in Western countries, are all too frequent occurrences in a region that is home to the world’s largest number of unvaccinated children. In the early 1980s, one of us almost lost our baby son to bacterial meningitis, because no vaccine was available in Pakistan at the time. The boy made a full recovery, but only because of an early diagnosis and care at a premier hospital, which is out of reach for many parents in Pakistan. The boy’s siblings were later vaccinated, too, but only after stocks of the vaccine were secured in the US and hand-carried back to Pakistan.

Fortunately, going to such lengths is largely unnecessary today. On average, 90% of children in South Asia now receive vaccines for preventable illnesses such as tetanus, influenza, diphtheria, and pertussis, and the number of infants protected against Hepatitis B has increased by nearly 60% in the last decade. Moreover, six countries in the region were declared polio-free in 2014, following extensive vaccination campaigns. Only those living in marginalized and remote areas remain unvaccinated for polio, typically owing to local hesitancy and refusals.

Collectively, these remarkable figures amount to a public health miracle. But too many children are still suffering needlessly. The just-concluded World Immunization Week (April 24-30) should spur us to redouble our efforts to vaccinate the millions of children in South Asia who remain unprotected from preventable illnesses.

Globally, more than 11 children under the age of five die every minute, many of them in South Asia, from preventable diseases. Despite the region’s progress, one in four children remain unprotected against diseases like measles and hepatitis, and the figures are even higher for major killers such as pneumonia and meningitis. As a result, the mortality rate for children in South Asia today is almost twice as high as it was in the US 50 years ago.

We have the tools to address these shortcomings and ensure that no child dies unnecessarily from an illness that vaccination could have prevented. To succeed, however, several obstacles must be overcome.

First, we must resolve systemic weaknesses in the region’s underdeveloped health systems, by improving training for health workers, ensuring proper storage and transportation of vaccines, and developing effective ways to deliver them. These improvements, together with more effective information sharing in the medical profession, are critical for better planning and accountability as well.

Second, we must actively confront the growing anti-vaccine lobby, which threatens to undo the gains made in recent years. These groups spread falsehoods about vaccine safety that can lead parents to leave their children unprotected. Foregoing vaccinations not only puts the health of individual children at risk; it also raises the likelihood of outbreaks that jeopardize the health of entire communities.

Finally, we must continue to encourage countries in the region to increase vaccine coverage rates, in particular with newer vaccines proven to protect against pneumonia and diarrhea, the two leading infectious killers of children.

Positive steps are already being taken to realize these goals. In Pakistan, for example, officials in Punjab province, hoping to protect one million children from a common form of diarrhea, recently introduced the rotavirus vaccine. Next door, India has vaccinated close to four million children since launching an initiative to expand the rotavirus vaccine’s coverage in ten states, and plans to reach 13 million children by the last quarter of 2017.

There is still much to do in both countries. In India, 13 million children annually are not reached with the rotavirus initiative; in Pakistan, five million children annually are not vaccinated. But, with help from Gavi, the Vaccine Alliance, more vaccines are being brought to the world’s poorest communities through funding, training, and delivery. Health officials everywhere can learn from and replicate the gains made in these two countries.

We are at a pivotal moment in the global vaccination drive. As pediatric professionals who have dedicated our lives to protecting children from preventable diseases, we believe it is within the world’s capacity to end this needless suffering. Vaccines are a proven tool for improving children’s health and development. Ensuring that children have access to them is an achievable public health goal behind which parents and pediatricians everywhere should unite.

Zulfiqar A. Bhutta is Founding Director of Aga Khan University’s Centre of Excellence in Women and Child Health in Karachi, Pakistan, Co-Director of SickKids Centre for Global Child Health, in Toronto, Canada, and President of the International Pediatric Association. Naveen Thacker is President of the Asia Pacific Pediatric Association and Coordinator of the International Pediatric Association, based in Gandhidham-Gujarat, India.

By Zulfiqar A. Bhutta and Naveen Thacker

Women in the Green Economy

LAGOS/STOCKHOLM – In Ghana, a group of enterprising women and young people is building bicycles out of an unlikely material: bamboo. Ten farmers grow the bamboo, and 25 builders craft it into environmentally friendly bikes that can be used on Ghana’s bumpy roads or exported overseas. Bernice Dapaah, the founder and CEO of Ghana Bamboo Bikes, plans to build two new factories soon, adding 50 more workers in communities with high unemployment.

Ghana Bamboo Bikes is just one example of the major role women can play in driving the transition toward sustainable economic growth and development. But such examples increasingly need to go together if we are to ensure a prosperous future on a healthy planet. The world needs more women climate leaders, whether around the tables where policy is made or at the helm of businesses, steering them toward sustainability.

When more women work, economies grow. According to the World Economic Forum, greater gender equality, which implies greater use of human capital, correlates positively with per capita GDP, competitiveness, and human development. Squandering that capital has the opposite effect: the United Nations Development Programme reports that gender inequality costs Sub-Saharan Africa, to name one example, $95 billion (or 6% of GDP) per year, on average.

Yet women around the world still face a massive gender gap in employment and wages. The proportion of women participating in the global labor force has hovered around 50% since 1990, compared to more than 75% for men. And, in most countries, the women who work earn, on average, only 60-75 cents for every dollar that men earn.

To support economic growth and development, we need to tap the potential of all workers, giving women opportunities not just to earn, but also to lead. Women need to be empowered, and their role in the economy transformed. What better moment to achieve this than now, when the world is pursuing another economic transformation, toward a green economy?

In fact, transforming women’s role in the economy could be even more urgent in the context of climate change. Traditional divisions of responsibility mean that men and women are often affected differently by climate change, particularly in developing countries.

Because men are more likely to perform wage labor or farm cash crops, a climate-driven event like drought may cost them their wages and force them to move to cities to find employment. Women, who are often responsible for growing local subsistence crops and taking care of their families, do not have that option.

Instead, women must find alternative means of securing food locally and of generating income to support their families, such as selling small assets or even withdrawing their children from school to help. The challenges women face are exacerbated in regions where women already spend hours each day fetching drinking water, and changing rainfall patterns could force women to travel even farther for it.

Against this background, it is crucial to empower women to seize the opportunity presented by the transition to a sustainable economy. Changes in four key areas could prove particularly valuable.

First, women need greater access to the financial system. In Sub-Saharan Africa, men are 30% more likely than women to have a bank account. To close this gap, we need to design loans and savings vehicles with more flexible requirements that work for women. This includes, for example, the expansion of microcredit – an approach that has already enabled women in many countries to become entrepreneurs.

Achieving this requires convincing still-skeptical creditors that women are dependable – and, indeed, valuable – clients, including by citing data on microcredit, which prove that women repay loans as reliably as men, if not more so. Once women gain access to the financial system, they can create and invest in small businesses, while feeling more secure about dipping into savings when confronted with emergencies.

Second, women need equal rights to land. Ownership of land – whether co-ownership, for a married woman, or sole ownership, for a single female head of household – not only improves economic security and productivity, but also boosts access to traditional finance. With a formal claim to the land they are farming, women are also more likely to invest in the fertility of the soil, contributing to more productive and sustainable land-use patterns.

Third, women need policies that support their active participation in the emerging green economy, including better education, skills training, and protections against workplace discrimination. Because the clean-energy industry is so new, it could help draw women into non-traditional higher-paid jobs like engineering.

Finally, women need to be empowered politically. If half the population doesn’t have a say in political decisions, the legitimacy of policymaking suffers. Women can play an important role as governments implement incentives and regulations that support the transition to a sustainable and inclusive economy.

Even without such support, women are already seizing the opportunity presented by this transition. Solar Sister is a social business that has created jobs for 2,500 women selling affordable solar lighting in Nigeria, Tanzania, and Uganda. Lumos, another solar solution, empowers women entrepreneurs in Nigeria.

But women still don’t comprise a large enough share of the workers in the clean-tech industry, and those who do work in that industry are generally low on the job ladder. Changing that – enabling all citizens to meet their economic potential – will require active efforts to promote women’s social and political inclusion.

Closing the gender gap is the right thing to do for women and the planet. It is also smart economics. Let’s not miss this opportunity.

Isabella Lövin is Deputy Prime Minister of Sweden. Ngozi Okonjo-Iweala, former Finance Minister of Nigeria and Managing Director of the World Bank, is currently Board Chair of Gavi, the Vaccine Alliance, and a member of the Global Commission on the Economy and Climate.

By Isabella Lövin and Ngozi Okonjo-Iweala

Mending Bangladesh’s Garment Industry

KUALA LUMPUR – Four years ago, the deadly collapse of the Rana Plaza garment factory in Bangladesh pulled back the curtain on the employment practices of the global apparel industry. We had hoped that the tragedy, which killed more than 1,100 workers – the deadliest accident in the industry’s history – would have brought meaningful change to a business long left to its own devices. Unfortunately, our research suggests the opposite has happened.

Media reports highlight the industry’s ongoing transgressions in Bangladesh, in particular the persistent reliance on child labor. In 2014, the British current-affairs program Exposure found evidence of children as young as 13 working in factories (often under harsh conditions) producing clothes for retailers in the United Kingdom. Another undercover report by CBS News interviewed a 12-year-old girl who obtained a factory job using a certificate that falsified her age. And journalists from The Australian Women’s Weekly found girls as young as ten stitching clothes for top Australian brands.

While the media reports are troubling, they do not provide the entire picture. How many minors and adolescent girls are employed overall in factory jobs? More important, should they be barred from such jobs entirely?

Access to factories is restricted, and most employees will not disclose their actual age in the workplace. Indeed, journalists often mask their identity to document abuses. We took a different approach to assess the prevalence of underage workers in the garment industry, and to determine the sector’s value to Bangladeshi society.

As part of a recent nationwide census, we collected data from thousands of mothers and girls in Bangladesh’s three industrial districts with the highest concentration of ready-made garment factories (particularly those operating outside the Export Processing Zones): Ashulia, Gazipur, and Narayanganj. The majority of the country’s female garment workers are concentrated in these areas. For comparison, we also carried out interviews in 58 urban areas where garment factories are not located.

During our research, we identified 3,367 women and girls in the survey areas who reported being employed in the apparel industry. Of them, 3% were between the ages of ten and 13, and 11% were 14-17 years old. Of the 861 girls below the age of 18 who were engaged in any kind of work, 28% said they worked in the garment industry.

Based on this evidence, it would appear that Bangladesh’s garment factories are using child labor (particularly that of young girls) more pervasively than even the most sensational media reports suggest. But for us, the real question is whether this practice should be eradicated or reformed.

Global brands relying on cheap labor have promised eradication. In 1992, about 10% of the garment sector’s workforce was below the age of 14. The following year, after the introduction of the Child Labor Deterrence Act in the United States – the so-called Harkin Bill, which barred US imports of products made with child labor – some 50,000 underage workers were removed from the factory floor. Meanwhile, the Bangladesh Garment Manufacturers and Exporters Association has pledged to phase out child labor and put children back in school – female school enrollment is typically lower in areas of high garment-industry employment than in other areas – upholding a 2010 law prohibiting employment of children under 14.

Clearly, our data suggest that the industry’s promises have yet to be fulfilled (though the government of Bangladesh claims that there currently is “no child labor” in garment processing units).

But that may not be entirely bad for underage female workers in Bangladesh. Thanks to pressure on garment manufacturers in the wake of the Rana Plaza disaster, the industry’s minimum wage was increased 77%, to $68 a month. This has made it more attractive for young girls to take up paid employment in the sector, which, paradoxically, does have some social benefit.

The majority of young girls who are working in Bangladesh are from poor families. Even in garment manufacturing areas, relatively better-off families rarely send their daughters to work in factories. Although recent initiatives have lowered the cost of schooling for girls (through cash stipends and the elimination of school fees), many young women still drop out of secondary school, even without the opportunity to engage in paid work. That often leaves girls with one option: marriage. And in a country where minimum marriage-age laws are rarely implemented, earning a paycheck is the best way to avoid a premature wedding day.

In such a situation, when many young girls must choose between factory work and marrying young, banning factory employment for girls under 18 would do more harm than good. To help young girls avoid this choice, and to reduce the presence of minors and young girls in factories, requires greater emphasis on poverty reduction in rural areas.

Bangladesh’s garment industry is expected to quadruple in size over the next two decades, attracting millions more female workers, young and old, to the production floor. According to our estimates, one of every ten of these new employees will be between 10-17 years of age.

Consumers around the world reject clothing stitched by child labor, which is commendable. Children under 18 should be in school and learning important life skills, not working long hours under difficult conditions. But the lessons from the 2013 tragedy at Rana Plaza are more complicated than much of the international media make them out to be. The garment industry does need to reform; but, for the time being, if women and girls are not to suffer needlessly again, promising to eradicate child labor may not be the right answer.

M Niaz Asadullah is Professor of Development Economics at the University of Malaya, in Kuala Lumpur, Research Fellow at the IZA Institute of Labor Economics, and Visiting Fellow at the Center on Skills, Knowledge, and Organization Performance (SKOPE) at the University of Oxford. Zaki Wahhaj is a senior lecturer at the University of Kent.

By M Niaz Asadullah and Zaki Wahhaj

Theresa May’s Pyrrhic Victory

LONDON – The British election called by Prime Minister Theresa May for June 8 will transform the outlook for Britain’s politics and its relationship with Europe, but not necessarily in the way that a vastly increased majority for May’s Conservative Party might seem to imply. The scorched-earth defeat that Conservative Euroskeptics expect to inflict on Britain’s internationalist and progressive forces was symbolized by the Daily Mail headline on May’s election announcement: “Crush the Saboteurs.” But June’s resounding victory could ultimately lead to an even more stunning reversal, like Napoleon’s hubristic march on Moscow after he had destroyed all opposition in Western Europe.

Britain’s pro-European progressive forces could still snatch victory from the jaws of defeat for three related reasons. First, by bringing forward the British election, May has effectively extended the deadline for Britain’s withdrawal from the European Union from 2019 until 2022. The early election makes it inevitable that Britain will formally leave the EU in March 2019, because May will no longer face even the theoretical possibility of parliamentary opposition. But it also allows Britain to accept a long transition period after the 2019 departure deadline, so that businesses and administrative systems can adjust to whatever terms are agreed by then.

British business lobbies, as well as the government officials tasked with implementation, have been pressing for this transition period to be as long as possible. The EU, however, has insisted that during the transition period all of the current obligations of EU membership must continue, including budget contributions, free movement of labor, and enforcement of EU legal judgments.

Until the election was called, it seemed almost impossible to reconcile the business community’s need for a long transition period with the insistence of Conservative Euroskeptics on a complete and immediate break with the EU. A crushing election victory will give May the necessary authority to negotiate a long transition, despite the objections of anti-EU extremists, and will persuade more moderate Euroskeptics that, with Brexit now guaranteed, the precise timing of various EU obligations is less important.

As a result, although Britain will formally cease to be an EU member by March 2019, very little will change in Britain’s economy or way of life by the time of the next general election in 2022. In this sense, May’s decision to call an early election is a setback for extreme Euroskeptics, who might otherwise have forced her to break completely with Europe by March 2019.

This relates to a second reason why the imminent triumph for British Euroskeptics may end up a pyrrhic victory. Whereas the early election will delay economic changes, it will greatly accelerate the transformation of British politics.

Britain’s main opposition Labour Party has been in its death throes since 2015, but could survive in its present zombie condition until a general election was called. Because the next election was expected in 2020, it was possible that some unforeseen development in the three years might allow Labour to revive. By bringing the election forward, May has brought forward Labour’s disintegration as well, and virtually eliminated the possibility of its revival.

When the Labour Party collapses after its defeat in June, a realignment of progressive British politics will become almost certain. This realignment, uniting disillusioned Labour politicians and voters with Liberal Democrats, Greens, and perhaps Scottish and Welsh nationalists, is likely to produce an opposition that is much more effective than May currently faces, even if it has fewer parliamentary seats.

By the time of the next general election, most likely in 2022, Britain’s internationalist and progressive political forces will have had five years to prepare themselves to oppose May’s conservatism and English nationalism. By that time, the Conservatives will have been in power for three parliaments and 12 years. That is about how long it has typically taken Britain’s political pendulum to swing between right and left.

Moreover, owing to the extended transition period for Brexit made possible by the early election, it will only be around 2022 that the full consequences of terminating EU membership come into view, together with the contradictions in the Brexit coalition between libertarian free traders and socially conservative nationalists and protectionists. Meanwhile, efforts to negotiate free-trade agreements with the US and China will have revealed the weakness of Britain’s bargaining position. As a result, public opinion about the wisdom of Brexit could shift substantially by 2022. In any case, the changing relationship with Europe will be the core issue around which Britain’s socially liberal and internationalist political forces can coalesce after their defeat.

Suppose that, in the meantime, the EU continues its economic recovery. Suppose further that, after the French and German elections this year, a stronger Franco-German partnership drives the eurozone toward the closer political integration that is obviously needed for the single currency to succeed, whereas Denmark, Sweden, and Poland make clear that they have no intention of ever joining the euro. By 2022, British voters could well decide that re-joining a twin-track European Union is much more attractive than pleading for a junior partnership with the US, not to mention China. That is the third reason why Britain’s Conservative Euroskeptics could end up regretting their imminent electoral triumph.

Whatever happens, the decisive battle in the war for Britain’s long-term future will not be this year’s easy victory for May. It will be the clash, five years from now, between nationalist conservatism and a new outward-looking progressive opposition. Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics and the author of Capitalism 4.0, The Birth of a New Economy.

By Anatole Kaletsky

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