Sources of development Domestic economy Trade—imports and exports Development requires capital Comes from international banks Comes from “official development.

Sources of development

• Domestic economy

• Trade—imports and exports

• Development requires capital

• Comes from international banks

• Comes from “official development

assistance”

• Comes through “foreign direct

investment”

• From “nongovernmental organizations”

Domestic economies

• Severely limited

• Focused on subsistence

• Capital generation limited

• Demand side limited—small market

• Supply side limited—lack of capital,

expertise, technology

• Government policy often prohibits

growth

• Foreign participation a must to succeed

Private & ODA debt in LDCs

Source: UNCTAD

Not as bad as it looks

Source: UNCTAD

Poverty distribution

Source: UNCTAD

NGO spending

Lack of NGO data

• No centralized source on how big

• No central source on what they’re doing

• OECD estimates $26.9 billion in 2005

• $16.5 billion from private donations

• $10.4 billion from governments

• Ireland, Norway: large % to NGOs

• Japan, France: small % to NGOs

• % means of total ODA spending

Biggest NGOs

• World Vision International: $2+ billion/yr

• Gates Foundation: $1+ billion/yr

• Save the Children: ~$500 million

• Care USA: ~$500 million

• Oxfam: <$500 million

• Plan International: <$500 million

• Catholic Relief Services: <$500 million

• Soros Foundation: <$300 million

The role of big business

Leaving profits in LDCs

FDI growing easier

The world’s largest TNCs

The world’s largest TNCs

Largest TNCs from dev. countries

TNCs: Exploiters or partners?

• History of exploitation, disaster

• Shell in Nigeria

• Union Carbide in India

• Nike in Indonesia

• Assumption: TNCs are bad

• Reaction is “corporate social

responsibility”

• Reaction is “resource nationalism”

CSR

• Companies adopting rules, policies on:

• Human rights

• Health care

• Environment

• Education

• Job health and safety

• Labor rights

Examples of CSR

• Extractive Industries Transparency

Initiative

• Construction Sector Transparency

Initiative

• Medicines Transparency Alliance

• Critics call all this “greenwashing”

• Many government requiring CSR

• Hey, it can’t be all bad

FDI in perspective

• Official development aid is diminishing

• Bank credit is hard to find, expensive

• FDI is growing in importance

• Development=foreign direct investment

• How to balance costs and benefits?

• How to ensure developing countries get

their share from FDI?

• Major issue in coming years

Doha again

• Doha round of WTO will define FDI rules

• Failure of Doha means not many rules

• Agriculture remains at core of disputes

• Meanwhile, TNCs go their own ways

• Resource nationalism causing conflict

• Global industry not united

• Some for, some against

The impact of financial crisis

• Protectionism on the rise

• LDC export earnings fell 44% in last year

• FDI down as much as 50%

• Millenium Development Goals look iffy

• Recent FAO conference considered a

failure

• U.N.: 1 billion people going hungry

• Crisis hurting poorest the most