Tuesday, February 27, 2007

Reality... on the Fringes!!

"You must look at Shenzhen in China! Look at the prosperity it created!" - a friend wrote to me.

He clearly did not agree with my two ealier posts on SEZs in India - and all the controversies around them, viz.,

  • Beware! SEZs Ahead
  • Dispencible People...

    So I did!... And here is what I found.

    According to Wikipedia:

      "The one-time fishing village of Shenzhen, singled out by late Chinese paramount leader Deng Xiaoping, is the first of the Special Economic Zones (SEZ) in China. It was originally established in 1979....

      In 2001, the working population reached 3.3 million. Though the secondary sector of industry had the largest share (1.85 million in 2001, increased by 5.5%), the tertiary sector of industry is growing fast (1.44 million in 2001, increased by 11.6%). Shenzhen's GDP totaled CNY 492.69 billion in 2005, up by 15 percent over the previous year. Its economy grew by 16.3 percent yearly from 2001 to 2005 on average...

      It ranked the 4th in GDP among mainland Chinese cities in 2001, while it ranked the top in capitation GDP during the same period. Its import and export volumes have been 1st for the last 9 consecutive years. It is the 2nd in terms of industrial output. For 5 consecutive years, its internal revenue within local budget ranks 3rd. It also comes the 3rd in the actual use of foreign capital.

      Shenzhen is also a major manufacturing centre in China. One highrise a day and one boulevard every three days is one famous line referring to Shenzhen in the 1990s. With 13 buildings at over 200 metres tall, including the Shun Hing Square (the 8th tallest building in the world), Shenzhen is a marvel of lights after sunset."
    (see the picture of the building below)

    ...which, obviously, is an impressive record of economic achievement!!!

    Here is another view of the same building

    According to a US Labor Dept Report:

      "Much of the evidence of child labor in China is derived from data from the large special economic zone of Shenzhen in southern China. Children between the ages of 10 to 16 are reportedly working up to 14 hours a day in factories in Shenzhen."
    Another site quotes a New York Time (Sept 14, 2005) news item:

      "Workers making clothing for Wal-Mart in Shenzhen, China filed a class action lawsuit against Wal-Mart in September 2005 claiming that they were not paid the legal minimum wage, not permitted to take holidays off and were forced to work overtime. They said their employer had withheld the first three months of all workers' pay, almost making them indentured servants because the company refused to pay the money if they quit."
    A Study by SACOM (Students and Scholars against Corporate Misbehaviour) investigated 13 Shenzhen electronics factories producing components for many well-known brand names. It found widespread labour abuses including issues such as:

    - child labour,
    - excessive overtime and overtime pay below legal minimum,
    - maximum working hours,
    - marital and sick leave,
    - maternity leave, pregnancy,
    - marital status and disability discrimination,
    - minimum wage and
    - social insurance.

    These factories produce components for the following 47 global brands:
      Acer, Apple, Asrock, Asus, BYD, Canon, Compaq, Datang Telecom, Dell, Delta, Dongju, Elecom, Epson, Evoc, Founder, Foxconn, Fujitsu, Gateway, Greatwall, Hancheng, Hanhua, HP, Huawei, IBM, Kinpo Electronics, Konka, Lenovo, LG, Maxim Integrated Products, Microsoft, Motorola, NEC, Nokia, Nortel, Panasonic, Philips, Ruijie (formerly Start), Samsung, Sharp, Siemens, Sony, TCL, Toshiba, Trigem, Tsinghua Tongfang, ZSSoft and ZTE.
    ...and a travelogue by a visiting student narrates this journey from Shenzhen to Dongguan (which passes though its fringes):

      "I’m living in a bubble. I know it, living on a campus in an English-speaking college. Even when we leave the campus we are pointed at certain parts of town, and see the glitz and gloss of downtown Shenzhen and the bright lights which are shining when I invariably get there after dark. Today I’m heading to Dongguan, and downtown Dongguan is exactly the same: new buildings, shining towers, and spotless public areas. That is what we Wai Guo Ren (foreigners) are meant to see.

      Going from Shenzhen to Dongguan you travel on the concrete flyovers of the expressway. Today, with time to spare, I take the slow, cheap bus. I know that it will take 3.5 hours, but this is a chance to see the real Guangdong experienced by the majority of its inhabitants. It proves a stark reminder of the poverty in which many live! It’s not all glitz and gloss here... They are the faces of immigrant workers, invariably tired, and all seeking their fortune on streets they believed paved with gold."
    Apparently, there is another reality that lies on the fringes of great economic achievements...
  • Tuesday, February 20, 2007

    World Bank criticises World Bank Research!!

    World Bank (or more specifically DEC, its Development Economics Group) publishes countless research studies, reports and papers, which influence development thinking and developmental policies of countries.

    A couple of months back, in December 2006, it released one more of its research reports. Titled "Evaluation of World Bank Research: 1998-2005", this report has not received as much publicity as it deserved (though The Financial Times did characterize the 165 page report as “a scathing critique” of the Bank’s selective use of unscientific data to advocate policies and projects that are ideologically in vogue, such as pension reform, aid effectiveness, and poverty mapping).

    This study, commissioned by World Bank, was conducted by a team of consisting of a panel of 24 established researchers (from places like London School of Ecnomics, MIT, Oxford, Universities of Columbia, Yale, Harvard, MIT, etc.), and was led by Profs Abhijit Banerjee (MIT), Angus Deaton (Princeton University), Nora Lustig (UNDP) and Ken Rogoff (Harvard University).

    While the report is not all negative - in fact, it also lauds some of WB's reports and also empathises the constraints of doing research on complex topics - here are some excerpts which are quite revealing:

    About the Quality of Research:

  • "...the panel had substantial criticisms of the way that this research was used to proselytize on behalf of Bank policy, often without taking a balanced view of the evidence, and without expressing appropriate skepticism. Internal research that was favorable to Bank positions was given great prominence, and unfavorable research ignored. There were similar criticisms of the Bank’s work on pensions, which produced a great deal that was useful, but where balance was lost in favor of advocacy. In these cases, we believe that there was a serious failure of the checks and balances that should separate advocacy and research."

  • "...evaluators generally found that Bank research was well-targeted towards important topics, but was often weak on execution and technique. While it is desirable for Bank technique to be behind the frontier, there has often been too large a gap. Some technically-flawed projects have run for years, and have been incorporated into country work without appropriate certification and review."

  • "Evaluators also noted that a high proportion of the citations in this group of papers are to other Bank papers, many of them unpublished. In some cases, where groups are almost entirely inward looking, the degree of self-reference rises almost to the level of parody."

  • "There is much selection of evidence, with obscure, sometimes unpublished, studies with the "right" message given prominence over better and often better-known studies that come to the "wrong" conclusion."

    About Conditions under which Research is done:
  • "They (the WB resarchers) tend to be more academic than policy oriented, the technical execution tends to be weak, and although they nearly always contain policy conclusions, the conclusions are rarely well based on the preceding analysis. We suspect that the relentless pressure to give every paper a policy conclusion, whether or not it actually has one, is largely responsible, though it was not always clear that researchers understood the limitations of their work, let alone communicated it to their readers."

  • The report quotes from a 1997 paper - "The World Bank as "Intellectual Actor"" - by Nicholas Stern (before he became the Vice President for Research at WB) and Francisco Ferreira about the difficulties of doing research in World Bank:

      "Researchers are not free to follow intellectual inspiration. They are under constraints of designated priorities and of an apparent need to be immediately useful to operations. Further there is the strong hierarchy and an atmosphere much more deferential then would be found in universities. Among researchers there is considerable concern with what superiors will think of conclusions reached, to the occasional detriment of whether an analysis is sound."
    ...and then goes on to say: "To this we would add that the superiors themselves are sometimes under pressure from the Bank Presidency and elsewhere not to say things that go directly against the broad policy line that the Bank is espousing."

    About WB's annual World Development Reports:
  • "We are also concerned with quality control over the Bank’s large number of "flagship" publications, here taken to be the World Development Reports and the DEC and non-DEC major topic studies to which the term is applied. These reports are sometimes enormously influential (though we suspect that many just gather dust) and they are the vehicles where the line between the Banks’ advocacy role and its role in producing new research ideas becomes particularly blurred."

  • "Trade-offs tend to be eschewed in favor of ubiquitous "win-win" scenarios, so that, for example, growth and environmental improvement are never seen as in conflict, because poverty and pollution are social problems that each mark institutional failure, so that institutional repair can somehow lead to both being dealt with simultaneously. A more equal income distribution is seen as a generally good thing, but there is no discussion of the optimal tax literature that formalizes the necessary trade offs between equity and incentives. More generally, trade-offs between competing goals are downplayed relative to sometimes far-fetched complementarities. While there is something to be said for such an approach in forging the compromises that are required to make progress in policy formation, it hardly leads to intellectual clarity. The World Development Reports suffer from always trying to make everyone happy."

  • "The Equity and Development WDR is perhaps the leading example. It contains no stable concept of what it means by inequality; again, we suspect that is a response to the need to try to make everyone happy, even when they have mutually incompatible views. For example, the report never resolves the tension between "equality of outcomes" and "equality of opportunity"."

  • Evaluation of World Bank Research: 1998-2005
  • Knowledge Bank-rupted: Evaluation says key World Bank research ‘not remotely reliable’
  • Tuesday, February 06, 2007

    ...Being Poor

    For most of us, poverty is just numbers... Some numbers that describe people with income less than such-and-such, people with access to so-many calories of nutrition/day, approximate number of people who live and sleep on the footpaths, who do not have land or any assets.... etc.

    Numbers are perhaps also our way of dis-infecting the emotions we would need to deal with (within ourselves) from the experiential reality poverty. They shield one from the experience of what it means to be poor, to understand poverty from the poors' point-of view.

    Partly, learning from some conversations I have been having with people like these in the pictures (all except one are mine, which I had downloaded from another site/blog; I would like to give credits, but have no references with me), partly trying to consolidate the overall meaning of some postings that I had made on this blog (have linked the URLs in the text), partly by observing how they are treated by others, and partly because I am reading a book called Voices of the Poor, here are a few things I have come to understand:

    Being poor, of course, means not having adequate and regular income, often having to sleep empty stomach, shivering during winters, and often not having a home to call one's own... But these are only the visible tip of the iceberg. The day-to-day living experience is far more daunting and demeaning. For instance:

  • being poor means living a life with a sense of powerlessness and anonymity - as if it of no consequence to anyone.... Slum demolitions and 'relocations' rarely make a headline, even though they displace many times more people than Tsunami did!!

  • being poor means having to live with - maybe perhaps get resigned to - a perpetual (24/7/365 in the modern terminology) sense of precariousness of one's livelihood and existence... A single rainy day, a one-day bandh, a new city-beautification scheme, or just a bout of week-long illness is enough to send one's existence ove the edge to the other side...

  • being poor means accepting public humiliation as a part of one's life... Ever seen a person refusing a beggar? Or observed the nature of one's own reaction (internal and/or external) when refusing a beggar?

  • being poor means being denied the basic rights as a citizen - errata: as a human being... Do street vendors or rickshaw-pullers have a right? - or the right to voice their rights?

  • being poor means being denied access to resources, information, credit, technology, markets and opportunities... I can get a car-loan or house-loan for around 8-10-12% on easy installments up to 84-150 months. I can also get a "gold" credit-card from some banks, simply because I travelled by air by producing my boading pass (no credit-rating checks!!)... But if I am a urban or rural poor, trying to incease my livelihood options by buying a rickshaw or seeds for my farmland, I will need to either produce an impossible plethora of documents, or pay higher interest (and EMIs up to max 36 months)...

    And lastly....

  • being poor means being blamed for being poor