Economics in Action

How can we help the developing countries of Africa? This three-minute BBC radio interview (RealPlayer required) features an interesting take on the issue from Paul Collier, an Oxford Professor of Economics.

Collier points out that Africa has some fragile democracies which are at real risk of falling to a military coup or descending into civil war. The security that comes from stable government makes it more feasible to escape the cycle of poverty. Hence the rich European countries could help by supplying some of their military power, if backed with a legitimate authority.

The UK has the fourth cleanest water in the world, and the fourth highest per capita military spending. A coffee from Starbucks involves resources from up to nineteen different countries. These are some of the hundreds of facts presented in interesting visual summaries by the International Networks Archive. Topics include The Global Arms Trade, the Coming Water Wars and the global success of McDonald’s.

Hatred of immigrants, sometimes translating into violence, is not only harmful to the immigrants themselves but is damaging the South African economy, reports the South African Human Rights Commission.

Immigrants workers and traders not only help the economy by providing skilled labour, but also spend money on goods and services. Traditional prejudices about immigrants from the rest of Africa contribute to an incorrect perception that they are contributing to crime and abusing social services.

Read more: “Xenophobia has an economic cost”, IRINNews.org, 31 July 2006.

Reference: “Report of the Open Hearings on Xenophobia and problems related to it”, SAHRC, 15 June 2006.

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Does lack of freedom result in greater support for rebellion in countries like China or Saudi Arabia? And if so, what is the cost of buying off the potential threat of greater instability via faster economic growth?

Research by Robert MacCulloch and Silvia Pezzini suggests that a policy of buying off trouble by going for growth when freedoms continue to be denied requires close to unattainable rates of sustained economic growth. Instead, more should be done to promote political rights and democracy, where revolutionary fervour is strongly increased by lack of freedom. (more…)

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In trying to reduce serious political conflicts within countries, it may be more effective to be tougher on the causes of discontent than on the unrest itself. That is the implication of research by Dr Patricia Justino, presented at the Royal Economic Society’s Annual Conference.

Her work suggests that, in unstable socio-political environments, social redistributive policies may be an important means of conflict management. For example, analysis of rioting in India over the past 30 years show that public expenditure on social services has contributed significantly towards the reduction of conflict, whereas the accumulated use of police over time is associated with increases in rioting. (more…)