Saturday, June 16, 2012

Five international charters

From "The Bottom Billion" by Paul Collier, p. 139 - 156
"Five international charters - norms that I think would help reformers within the societies of the bottom billion to achieve and sustain change."
"The main point of pressure for the adoption of international standards would come from within the bottom-billion societies themselves, especially from civil society. An international charter gives people something very concrete to demand: either the government adopts it or it must explain why it won't. All societies of the bottom billion have plenty of latent opposition to bad governance. But transforming this latent opposition into effective pressure is difficult."
"Global public goods are grossly undersupplied because nobody has much interest in providing them. Being good for everybody, they face the ultimate free-rider problem. The real problem, therefore, is not that of not knowing what to do but getting around to doing it."

Charter for national resource revenues:
  1. awarding contracts by auction in a transparent process, avoiding bribes
  2. the risk-bearing should be put mostly on the oil company, not on the country's government
  3. make all payments of revenue transparent: need of a broker (preferably World Bank or IMF) to act as an accountant, not as a police officer, to convert a confusing morass of information (p.e. Angola has 34 foreign oil companies and one state-owned) into knowledge that citizens could use to scrutinize their government usage of the money
  4. transparency in public expenditures: effective public spending is the vital route to development
  5. smoothen public spending in the face of revenue shocks: need  for an international standard of simple guidelines on how to manage the volatility in resource revenues

Charter for democracy:

Elections alone are not enough (see: survival of the fattest),  they determine who is in power but they do not determine how that power is being used.
Checks and balances are the less visible but vital aspects of democracy. To accomplish these, we need an international standard for the freedom of media and on how money is raised and spent on election campaigning.

Charter for budget transparency:

A charter on budget processes could usefully specify scrutiny from the bottom up (p.e. Uganda: each time the Ministry of Finance released money it informed the local media, and it also sent a poster to each school setting out what it should be getting) as well as from the top to down and the comparison with peers.

Not only focusing on the honesty of budget expenditures, but also on their efficiency. Each time if scrutiny can make spending effective it then becomes more worthwhile to scale up aid.

Charter for postconflict situations:
  1. Guidance on behavior by donors and the international security regime to commit them for a long period of time, not just the first couple of high-glamor years.
  2. Postconflict governments should reduce their own military spending (as it is dysfunctional).
  3. They should have a transparent budgetary process.
  4. They should include opposition groups in power.
  5. They should sort out conflicting and confused property claims quickly.

Charter for investment:

Without radically higher private investment the reforming countries will not be able to reach middle-income status but will linger in limbo and risk falling back into one of the traps.

A key problem is the lack of reform credibility. National charters lack credibility for precisely the reasons that there is a problem in the first place, hence an international charter is needed, and one that applies to both foreign investors as domestic ones, otherwise capital flight would be accentuated. Essentially, a charter would preclude governments from strategies of confiscation.

There are two complementary solutions, international arbitration and investor insurance.

Other quotes from The Bottom Billion:


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