Journal of International Affairs 

About: Journal of International Affairs is an academic journal published by Columbia University. The journal publishes majorly in the area(s): Politics & Population. It has an ISSN identifier of 0022-197X. Over the lifetime, 749 publications have been published receiving 15941 citations.

Banker to the Poor: Micro-Lending and the Battle against World Poverty

Abstract: Banker to the Poor: Micro-Lending and the Battle Against World Poverty Muhammad Yunus, with Alan Jolis (New York: Public Affairs, 1999) 288 pps. Start with two assumptions: 1) Entrepreneurial spirit is a wide-spread human trait and no less prevalent among the poor than among others. Or, as Muhammad Yunus puts it: "The poor are very creative. They know how to earn a living and how to change their lives. All they need is opportunity;" and 2) Putting an entrepreneurial idea into "practice" requires some amount of start-up capital--not necessarily much, but more than ever seems within reach if you are living on pennies a day. If you believe these fairly uncontroversial assumptions, microcredit--which allows poor people to borrow small sums to start their own business enterprises, enabling them to retain the value added by their labor and to pay back their loans incrementally--seems like an attractive strategy for economic development, and one that can directly improve the standard of living of many of the developing world's poorest inhabitants. Indeed, micro-credit programs have in recent years begun to attract the attention of both private and governmental national and international aid agencies and organizations. First, existing financial intermediaries are not suited to provide micro-credit: the amounts involved are often barely worth the loan paperwork for traditional banks. Second, many developing countries provide an inhospitable socio-political climate: beyond the lack of a tradition of incremental loan re-payment, one frequently finds--particularly in rural areas and among (systematically disproportionately poor) women--a bias against lending and borrowing, which is often deeply ingrained in the local culture and based on religious injunctions against usury and/ or the experience of exploitative practices of money lenders. These problems can be overcome at the local level, but expanding beyond the initial locale has proven difficult for those who have attempted to institute micro-credit programs in developing countries. Thus, A. Holmberg's 1950s project, enabling Indio farm workers in Peru to gain independence from overlord land holders, which proved a strong incentive to overcome quickly their seemingly deeply engrained passivity and lethargy, remained limited to the project's farming communities. And the 1960s Mit-Ghamr banking project--brilliantly described and analyzed by its founder Ahmed El-Naggar in his study "Zinslose Sparkassen: Ein Entwicklungsprojekt im Nildelta" (which regrettably remains available only in German and Arabic)--was terminated by a jealous Egyptian government, despite the fact that this first modern "Islamic Bank" had created not only broad-based economic growth in the rural province, but also financial intermediaries where none had existed before and a new "culture" of saving and investment, compatible with, and in fact strengthened by, Islamic law and tradition. Grameen Bank, founded by Muhammad Yunus in 1983 based on his late 1970s micro-credit pilot projects, is an exception in that it succeeded in expanding from one village to all of Bangladesh and has inspired a number of smaller successful projects elsewhere. Because of its success, Grameen bank has over the years attracted not just "imitators" Yunus notes 65 micro-lending projects set up along similar lines in poor areas of 27 countries--but the attention of scholars, leading to studies and reports by the UN, the World Bank, numerous other INGOs and various news media. Many of these studies provide thorough analyses of one aspect or another of Grameen bank. Yunus' autobiography complements these studies by providing an account of the project's history from its very beginning (long before it started to attract outside attention) and of the personal motivations behind it. Muhammad Yunus, author of Banker to the Poor, describes how he stumbled upon micro-credit through a study of the famine-stricken extreme poor in a university-adjacent village during his tenure as professor of economics at Bangladesh's Chittagong University in 1974. …

The shadow economy

Abstract: "Implicit in much of the literature on the shadow economy is the view that shadowy activity is undesirable ... However, it is not certain that all shadow economic activity should be discouraged." In seeking to understand the size of the world economy, we are usually guided by official statistics on output, trade and investment. But there is a driving force in today's world market that has, hitherto, rarely been recognized for its tremendous economic impact. It is what we will refer to as the shadowy economy. Its oversight in the calculus of the influences on the international economy is due to the statistical opaqueness that is part and parcel of criminal and informal transactions. Economic activity that falls outside the purview of government accounting is known by various names: shadow, informal, hidden, black, underground, gray clandestine, illegal and parallel.(1) Implicit in each, save for informal, is that these economic activities include conscious efforts to avoid official detection. Indeed, some unrecorded activities, such as the drug trade, are illicit. Some activities, such as day labor, however, are legal but may include an illicit component, such as unrecorded payments. Still others, such as household production, are wholly legal. Finally, it may be that unrecorded activities occur in a sector of the economy that is simply unregulated, rather than illicit. As these nuances indicate, simply defining the shadow economy is a challenge. Although most authors agree that it is a "fuzzy concept,"(2) the notion that activity in the shadow economy has important implications for the official economy is essentially unchallenged.(3) Despite decades of study on the issue from an empirical and historical point of view,(4) little agreement has been reached on the fundamental constructs that underlie the shadow economy. The lack of consensus in formulating a unified theory of the shadow economy, or even a precise definition of the components that comprise it, suggests that important questions remain unanswered. To what extent does the exclusion of shadow economic activity distort official estimates of macroeconomic variables, including output, employment and inflation? What are the policy ramifications of these exclusions? What is the distribution of shadow economic behavior between unrecorded, but legal, and illicit activities? Can the overall size of the shadow economy be estimated, and is it changing over time? Do countries at different stages of development possess different types of hidden economies? What is the relationship between regulatory (in)efficiency and the size of the shadow economy? This paper gives an overview of issues relating to these questions. We begin by discussing definitions of shadow economic activity and why the study of the shadow economy is important. We then review methodologies employed in the estimation of the size of shadow economies and present size estimates for several transition, developing and developed countries. We conclude with thoughts for future research. DEFINITIONS Unquestionably, the shadow economy represents some form of unofficial economy. However, there is extensive disagreement regarding the definition of the term. To some extent, the shadow economy is a "(pre)concept in search of a theory,"(5) and differences in the definitions of the shadow economy stem from differing research objectives, such as estimating the size of the shadow economy or explaining the motives for shadow economy participation. In general, there are two approaches to defining the shadow economy The first considers shadow economic activity as simply unrecorded economic activity (the definitional approach), while the second defines the shadow economy in terms of behavioral characteristics--its economic activity therein (the behavioral approach). The former is descriptive while the latter provides underpinnings of a theoretical explanation for shadow economic activity. …

Population and Security: How Demographic Change Can Lead to Violent Conflict

Abstract: "While the marked decrease in population growth in many countries and regions is good news for those concerned about global population, it offers no clear relief for concerns about the security implications of population change." As we cross into the new century, the world seems finally to have turned the corner on population growth. A combination of increased education for women, national and international support for policies of population planning and the spread of economic development and accompanying movement along the demographic transition frontier have led to falling population growth rates around the world. Whether among the behemoths--China and India--or among the smaller but rapidly growing nations--such as Saudi Arabia, Kenya and Malawi--population growth rates have dropped dramatically in the last decade. (1) Yet while population growth rates have dropped around the world, they remain high in some areas. In particular, many nations in the Middle East, southeast Asia and central and northern Africa still are growing at nearly 3 percent per year, a growth rate that leads to a doubling of population in approximately 25 years. Moreover, although in most countries the rate of population growth has slowed, the absolute number of people being added to the world's population has not; the large number of women of childbearing age in the developing world, carrying the momentum of past population growth, ensure that even while growth rates fall as a percentage of the existing population, the number of new births each year continues to rise. For example, although China's growth rate has fallen to 1.0 percent per year, China will still grow by 10 to 11 million people per year for the next 15 years. The world as a whole will add roughly 80 million people per year, or another 960 million (that is, another India) in the next dozen years. (2) DEMOGRAPHY AND SECURITY: KEY FINDINGS After nearly three decades of debate and analysis, stemming from Myron Weiner's (1971) path-breaking study, scholars are beginning to develop much clearer answers to the complex questions regarding how population changes affect security concerns. Those answers can be summarized briefly in the following propositions, each of which we shall treat in greater detail below: 1) While population growth often brings degradation of forests, water resources, arable land and other local resources, such environmental degradation is not a major or pervasive cause of international wars, ethnic wars or revolutionary conflicts. Such degradation often brings misery, yet such misery does not generally trigger the elite alienation and opposition to the government necessary for large-scale violence to occur. 2) Population growth can give rise to conflicts over increasingly scarce resources, such as farmland, if those conflicts involve elites seeking to take resources from popular groups, or competition between elite factions for control of those resources. However, what determines whether violent conflict arises are the relationships among popular groups, elites and the state, and particularly whether the state has the capacity to channel and moderate elite conflicts. Only where elite conflicts or popular resistance to elite actions overwhelm weak states do major conflicts arise. 3) While overall population growth and population density do not generally predict political risks, a number of distinct kinds of demographic changes--rapid growth in the labor force in slow-growing economies, a rapid increase in educated youth aspiring to elite positions when such positions are scarce, unequal population growth rates between different ethnic groups, urbanization that exceeds employment growth and migrations that change the local balance among major ethnic groups--do appear to increase the risks of violent internal political and ethnic conflicts. In addition, there is some evidence that countries with larger populations have greater risks of both armed conflict and state repression. …

Women's Burden: Counter-Geographies of Globalization and the Feminization of Survival(1)

Abstract: "... households and whole communities are increasingly dependant on women fir their survival. [G]overnments too are dependent on their earnings as well as enterprises where profit making exists at the margins of the `licit' economy." The last decade has seen a growing presence of women in a variety of cross-border circuits that have become a source for livelihood, profit-making and the accrual of foreign currency. These circuits are enormously diverse but share one feature: they are profit- or revenue-making circuits developed on the backs of the truly disadvantaged. They include the illegal trafficking in people for the sex industry and for various types of formal and informal labor markets. They also include cross-border migrations, both documented and not, which have provided an important source of convertible currency for governments in home countries. The formation and strengthening of these circuits is largely a consequence of broader structural conditions. Among the key actors emerging in these particular circuits are the women themselves in search of work, but also, and increasingly so, illegal traffickers and contractors as well as the governments of home countries. I conceptualize these circuits as counter-geographies of globalization. They overlap with some of the major dynamics that compose globalization: the formation of global markets, the intensification of transnational and trans-local networks and the development of communication technologies, which easily escape conventional surveillance practices. The strengthening and, in some cases, formation of new global circuits is made possible by the existence of a global economic system and the associated development of various institutional supports for cross-border money flows and markets.(2) These counter-geographies are dynamic; to some extent they are part of the shadow economy, but they also use some of the institutional infrastructure of the formal economy.(3) This article maps some of the key features of these counter-geographies, particularly those involving foreign-born women. I focus on the possibility of systemic links between the growth of these alternative circuits for survival, profit-making and hard-currency earnings, on the one hand, and major conditions in developing countries that are associated with economic globalization, on the other. Among these conditions are growth in unemployment, the closing of a large number of typically small and medium-sized enterprises oriented to national rather than export markets, and high, and often increasing government debt. While these economies are frequently grouped under the label "developing," they are in some cases struggling, stagnant, even shrinking. In the interests of brevity, I will use the term "developing" as shorthand for all these situations. MAPPING A NEW CONCEPTUAL LANDSCAPE The various global circuits that incorporate growing numbers of women have strengthened at the same time as economic globalization has had a significant impact on developing economies. They have had to implement new policies and accommodate new conditions associated with globalization: Structural Adjustment Programs (SAPs), opening their economies to foreign firms, the elimination of multiple state subsidies, and, it seems almost inevitably, financial crises and the accompanying programs of the IMF. It is now clear that in most of the countries involved, these conditions have created enormous costs for certain sectors of the economy and population and have not fundamentally reduced government debt. Among these costs are the growth in unemployment, the closure of many firms in often traditional sectors oriented to the local or national market, the promotion of export-oriented cash crops which have increasingly replaced survival agriculture and food production for local or national markets and, finally, the heavy, ongoing burden of government debt in most of these economies. …

Privatization and Corruption in Transition Economies

Abstract: "If you think privatization is corrupt, try without it." --Anonymous official, in response to the Ukrainian parliament's decision to halt the privatization program on the grounds of possible corrupt methods (1994) Introduction and Initial Conditions Background The scale of privatization now underway in the transition economies of the former Soviet Union (FSU) and Central and Eastern Europe (CEE) is historically unprecedented. During the decade of the 1980s, about 6,000 firms were privatized throughout the world. During the first half of the 1990s, in contrast, well over 50,000 medium- and large-scale enterprises have been privatized in these transition economies--almost 10 times the number in half the time. Furthermore, these figures do not include hundreds of thousands of small-scale enterprises also privatized in the CEE/FSU region during the period--over 75,000 in Russia, 35,000 in Ukraine and 22,000 in the Czech Republic.(2) The perception has emerged, in parallel with this historic ownership transfer, that corruption has reached endemic levels in the transition economies of the FSU and CEE alone.(3) While empirical evidence is naturally elusive for such activities, some micro-surveys as well as anecdotal evidence--much of it widely reported in the freer press--is suggestive.(4) Moreover, empirical evidence now exists tracing the evolution of the unofficial component of the transition economies.(5) For the FSU, the share of the unofficial economy's contribution to the overall economy (unreported value added as a percentage of GDP) is estimated to have increased almost three-fold over the 1989-1994 period, from 12 percent to 33 percent. Although overall output has contracted sharply during the transition, the unofficial economy has grown significantly, in absolute as well as real terms. While the increase in its share in the CEE countries was smaller, the overall share of the unofficial economy there still exceeds 20 percent.(6) By comparison, similar measures for industrialized countries suggest that in most countries the share of the unofficial economy in GDP is in the single digits or teens. It is reasonable to assume some positive correlation between the relative magnitude of the unofficial economy and corruption in a country, considering the practical necessity of obtaining informal support from government officials for these unreported activities. For example, an enterprise survey of 200 firms in Ukraine and Russia indicates that firms that significantly underreport their activities have also had to make higher extra-legal payments than those that underreport less.(7) Against this background, it is not surprising that privatization and corruption have been perceived as closely linked in the FSU and CEE economies.(8) For these countries, privatization, in its many forms and variations, places a substantial share of the entire wealth of the economy "on the table" for sale or transfer from state to private interests. At the same time, the fiduciary controls that ordinarily operate to ensure that government transactions are fair and transparent have been largely crippled.(9) In this article we examine the relationship between corruption and privatization. Without privatization, the transition economies had no real hope of climbing out of the bankruptcy into which they had been placed by the central planners, with their politically-inspired, monumentally inefficient allocation of resources.(10) At the same time, there is a growing consensus today that corruption has negative effects on the costs of doing business, on aggregate investment, and on growth.(11) Is corruption the inevitable price to be paid for privatization? Where the transition continues, as it must, does broad-based privatization result in greater corruption than where privatization is delayed, partial or absent? Can privatization programs be designed to lessen the corruption that occurs during their implementation? …