Thursday, March 15, 2012
STUDENT INFOBYTES: WORLD BANK, IMF, MALAYSIA, US COTTON SUBSIDIES ETC
I continue to be amazed by students' final papers in my INTL 5400 International Political Economy class. Here are some recent extracts. Jose wrote in my INTL 5400 2010 class about corruption and the World Bank: Today, the World Bank has lost focus of its primary mission and has developed into an ineffective bureaucracy. Of the 66 less developed countries receiving money from the World Bank for more than 25 years, 37 are no better off today than they were when they received such loans. Of these 37 countries, most (20 in all) are poorer today than they were before receiving aid from the Bank...The underlying corruption of the World Bank is evident in its encouragement of the activities of corrupt government officials across the globe. Reference: Johnson, Bryan. The Heritage Foundation. 16 May 2006. Michael wrote in my 2011 Spring class about US subsidies: To shed light on a wider analytic frame concerning US cotton subsidies and protectionism, it is important to have a short look at the country’s history of agricultural subsidies as well agricultural facts: There are an estimated group of 400 crops, which are grown in the US for agricultural usage. While this represents a good biodiversity range, Kwan point outs that from these 400 food and cash crops grown in the US, the minority of five crops receives the vast majority of all US agricultural subsidies. These commodity crops are corn, cotton, rice, soybeans, and wheat. She notes that “ALTHOUGH THE UNITED STATES PAID $164.7 BILLION IN FARM SUBSIDIES FROM 1995 TO 2005, OVER SEVENTY PERCENT—APPROXIMATELY $115.5 BILLION—WAS SPENT ON JUST THOSE FIVE CROPS”(Kwan,575). From these five crops, cotton and cotton farmers receive the biggest share. Joseph Stiglitz, winner of the Nobel Prize in economics, calculates that “THE UNITED STATES SPENDS $34 BILLION A YEAR SUBSIDISING COTTON: MUCH OF THE COTTON IS GROWN IN AREAS WHERE THEY SHOULD NOT BE GROWING COTTON[…] SO IT IS NOT ONLY BAD FOR OUR ECONOMY, BUT IS ALSO ACTUALLY BAD FOR OUR ENVIRONMENT.” (Stiglitz,6). References: Kwan, Charlene C. "Fixing the Farm Bill: Using the "Permanent Provisions" in Agricultural Law to Achieve Wto Compliance." Boston College Environmental Affairs Law Review 36.2 (2009): 571-606. Stiglitz, Joseph E. Fair Trade for All. How Trade Can Promote Development. Brooks World Poverty Institute Inaugural Lecture., Manchester, UK. Clovis Ouangraoua, in the same class, wrote about Malaysia's bid for independence from World Bank: In fact, MALAYSIA IS THE ONLY EXCEPTION, WHERE EXTRAORDINARILY LARGE FDI INFLOWS (6.6 percent of GDP) WERE LARGER THAN BANK AND PRIVATE SECTOR BORROWING (3.6 percent of GDP). (Steven Radelet, Jeffrey D. Sachs “The Onset of the East Asian Financial Crisis” in Currency Crises, , University of Chicago Press, January 2000, P. 122, http://www.nber.org/chapters/c86 91, accessed 03/07/2012). This exceptional result, the country owes it to a competitive realism strategy that allowed it to shelter its financial markets against foreign markets’ intervention. By rejecting IMF’s policies, Malaysia stood out. The IMF would later be forced to admit that the strategy did pay off despite initial claims of the contrary.