PSD Blog - The World Bank Group

Fight poverty by shopping at Wal-Mart?

Even without considering the $263 billion in consumer savings that Wal-Mart provides for low-income Americans, or the millions lifted out of poverty by Wal-Mart in other developing nations, it is unlikely that there is any single organization on the planet that alleviates poverty so effectively for so many people.

That's FLOW co-founder Michael Strong in TCS Daily, casting Wal-Mart as an unintentional development agency. I've always been stridently anti-Wal-Mart, but maybe it's time to recognize the positives. Yes, big box stores and chains of all sizes give suburban American a disturbingly homogenous feel and accelerate sprawl. At the same time, global brands compete on reputation - for their working conditions and environmental impact in every country - in a way that other firms do not. From Fortune: "a McKinsey & Co. study leaked to the press by walmartwatch.com found that up to 8% of shoppers had stopped patronizing the chain because of its reputation." So these chain stores face much greater incentives to exhibit socially responsible behavior.

If Wal-Mart follows through on plans for energy efficiency and organic cotton, I'll continue to soften my stance. If a vibrant union of Wal-Mart workers stateside emerges, I might even shop there. More from Strong's article:

An unreflective passion for social justice may be one of the biggest obstacles to creating peace and prosperity in the 21^st century. While there are most certainly factory owners in China whom we would rightly regard as criminal in their treatment of their workers, it is very important not to confuse these incidents with the phenomenon of globalization.

P.S. FLOW is kicking off a national series of Peace through Commerce events on September 30 in D.C.

End-of-summer reading list

Ordered from short to long for your time-management convenience...

• Sachs for President? (and a nice bit of commentary from Gristmill)
• A would-be serious game is looking for volunteer designers: "Village is a multiplayer online real-time strategy game for the PC that immerses the player into the role of an entrepreneur building companies to bring prosperity to the villages of the third world"
• FastCompany explains how Timberland just raised the bar on Corporate Social Responsibility Reports
• A "born-again organic farmer" in Turkey helps hundreds in his poverty-stricken region
• Can good economics ever be good politics? Case study of India's power sector, a World Bank working paper on how the lack of political will often reflects rational political behavior
• Managing governments: Unilever in India and Turkey, 1950-1980, a Harvard Business School working paper on how the strategies of this global consumer products company enabled it to survive the postwar "era of confrontation" which deterred most other foreign firms from investing in India and Turkey

Organizations, not countries, deliver aid

There is much talk - rightly - about improving development effectiveness. In Bill Easterly's excellent book The White Man's Burden, he points out that many aid organizations have multiple objectives without accountability, lack a culture of measurement and focus on high visibility activities rather than those with greater pay-offs - e.g. AIDS treatment rather than prevention. An August 15 editorial in the Financial Times (full text available at CGD) made the same point about the need for more measurement of development effectiveness.

A lot of measurement in the aid business focuses at the country level. For example, the interesting rankings recently published by the Center for Global Development include a component on aid volume from each of 21 countries, which is then adjusted for quality factors, such whether it is tied. There are exhortations from many commentators, such as Jeffrey Sachs, for countries to increase the amount of aid given as a percentage of GDP.

But aid is delivered by organizations, rather than countries. The variety of organizations (public, private, NGOs) and of financing types (grants, soft loans, commercial financing) involved in the aid business means that it is somewhat simplistic to group everything under 'aid'. What about benchmarking organizations - to see how focused they are, how they measure themselves, etc.?

St Helena musings: on diversification

In the 1850s, St Helena's capital, Jamestown, was one of the busiest ports in the world with 1,000-1,500 ships passing through each year. East Indiamen stopping on their journey home to England, American whalers revictualling after hunting sperm whales in the Southern Ocean, and Royal Navy ships intercepting slavers making the run between West Africa and the Caribbean - and dropping the freed slaves off in St Helena to recover - all meant that Jamestown was well known in shipping circles. St Helena's private sector flourished, as a full range of services were provided to the visiting seamen and passengers.

Thirty years later, nearly all of the ships had disappeared. The island was in crisis. Large numbers of people emigrated to the Cape to find work. What happened? Several disruptive technologies hit at once. The Suez canal opened in 1869. Steam replaced sail, and quicker journey times meant that ships didn't need to stop for water. The whale population fell dramatically and gas began to replace whale oil for lighting. The slave trade ended. St Helena effectively disappeared off the map.

Lesson: while the sun is shining, by all means make hay, but build a barn and think about diversifying.

Dams and development

The World Bank's lead dam specialist Alessandro Palmieri believes that the Bumbuna hydropower project, in post-conflict Sierra Leone, exemplifies the right way to implement stakeholder involvement in hydropower projects. A new World Bank working paper on The Role of Communication in Large Infrastructure Studies: the Bumbuna Experience finds that “transparency and participation are the best way to avoid criticism and opposition.” The working paper, by Leonardo Mazzei and Gianmarco Scuppa, suggests that lack of communication may be enough to cause large hydropower projects to fail. (Another conclusion I draw is that Italians know a lot about dams.)

The larger, and more frequently debated, question is whether the hydroelectric power generated by large dams offsets the ecological damages they cause. With a few very notable exceptions, is the age of big dams over? Or is a resurgence of multilateral funding for big dams only beginning? The Asian Development Bank has just released an extensive e-paper on dams and development that should provide much fodder for the debate.

The ADB is responding to critics like the International Rivers Network, who argue that the resurgence of major multipurpose hydropower projects is a mistake. For example, the IRN is against plans for a series of dams in Chile. The NYTimes reports on Spanish firm Endesa’s bitter fight to construct several dams in the Patagonia region in Chile. Authors of the IRN report Spreading the Water Wealth: Making Water Infrastructure Work for the Poor advocate small, decentralized and more environmentally sustainable water projects to aid those in poverty. (via Acumen Fund)

Corporate bodies and guilty minds

A new book, published by the University of Chicago press and titled Corporate Bodies and Guilty Minds, by Wharton's William S. Laufer takes a fresh look at corporate behavior. Unlike most of the recent volumes on the topic, this book's focus is not on corporate social responsibility but rather corporate liability, and on how current structures fail to fashion liability rules that attribute blame to corporations.    

While the book is written mostly for corporate executives and lawyers, it should be of interest to policy makers, too - with its in-depth study of legal reforms and close examination of what works and what doesn't.  Laufer argues, with a witty and somewhat sarcastic tone, that there is no single constituency or interest group that strongly and consistently advocates the importance of corporate criminal liability. Unless and until such a unified voice emerges, we can expect to see continued gross corporate malfeasance.

Aceh Diary: Handing over the torch

Having returned to Washington DC in time for summer – lots of sun, heat, and humidity – the weather feels like I never left Aceh. I still sometimes find myself amazed and almost giddy from enjoyment of the bacteria-free hot water for showers and baths, a stable supply of electricity, the absence of dengue/malarial mosquitoes and regularly recurring stomach ailments. Supermarkets with endless brand choices in products from toothpaste to tuna, movies theatres, bakeries/cafes/restaurants carrying offerings from around the world, bookstores piled high from floor to ceiling with everything from Tolstoy to Tintin, museums, gyms, pool halls and bowling alleys, salons. In short, everything people living in cosmopolitan cities take for granted is all once again just a flick of a switch, a turn of a tap, or a short walk/drive away.

I left, unfortunately, at a time when things are really taking off. The reconstruction phase is definitely ramping up. Aceh just celebrated its first year of peace under the treaty signed in August 2005 between the Free Aceh Movement (in Indonesian: Gerakan Aceh Merdeka or GAM) and the central government. The long-awaited autonomy law was passed last month. The date for the historic first provincial elections has been set for December 11th. Finally, the foreign monitors of the Aceh Monitoring Mission have extended their stay for the third time until the polls are completed. But it’s not roses all the way...

The company of the future

What will tomorrow’s corporate giants look like? The rapid rise of world-beating firms from emerging economies ranging from hi-tech to extractives sectors, is already prompting changes in corporate strategy to stay ahead of the game. Now, a UK-based think tank, Tomorrow’s Company, has teamed with leading firms to launch an inquiry addressing core questions on the future role of business in society. Co-chaired by BP and Infosys and with experts such as John Elkington on the inquiry team it should spark some interesting debate. Will business really take on global challenges? Do you think the framing questions are even the right ones? In a welcome step, the inquiry is asking you to share your views here.

Scenarios: disaster response and the media

Strong Angel III (SA III) is a disaster response event/project/conference going on this week in San Diego. Blogging from the event is Sanjana Hattotuwa from ICT for Peacebuilding. He has several excellent posts up about how technology can/should be used in disasters, such as this one describing an audio interview with Internews regional director Mark Frohardt:

Speaking about new and traditional media, Mark emphasised the importance of disconnected traditional media such as FM radio and newspapers...he also said that we need to look at new and innovative ways to get messages out and in particular mentioned Microsoft FM radio enabled wrist watches (that at presently are first generation, somewhat unreliable for essential communications and not designed for humanitarian aid) that in the future could evolve into devices that could really help first response mechanisms work cohesively and collaboratively.

The title threw me at first (sounds a little too much like the Dark Angel TV show), but the event sounds fascinating. What exactly are they doing in San Diego? Addressing this scenario:

PSD Blog co-founder is a TV star!

He was too modest to tell you himself, but this blog's co-founder may well be the next economist crossover star. Tim Harford, everyone's favorite Undercover Economist, is in the midst of a 4-week special on the BBC2. "Trust Me I'm an Economist" applies the lessons of economics to everyday problems with love, work and more.

Watch a short clip to see why you should tune in Friday at 7 for the second episode, in which "Harford blows the lid off the strategies the retail chains use to target the unwitting customer and suggests a few strategies we can use to beat them at their own game".