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INTERNATIONAL DEVELOPMENT – DEBT, TAX AND TRADE

A handout given by John Nightingale to those who attended the session on International Development (23.8.18)

When we studied international development 55 years ago it was largely understood in economic terms, primarily as the increase in national income or to be more precise national per capita income.

The per capita income used was the mean average, in other words the total income divided by the total number of people in the nation in question. However even qualifications might be made. One might choose the modal average eg the income which most people had, which would work out lower than the mean average in a society with the majority poor and a few very rich.

And of course it was realized that money wasn’t everything. But, other things being equal, national income was felt to be a reasonable guide. So, what have been the trends in the income of in different parts of the world over the last 55 years, and earlier?

There are clues in the work of the late Angus Maddison and colleagues, some examples of which are mentioned in the first three examples below:

1) REBASING ‘MADDISON’: NEW INCOME COMPARISONS AND THE SHAPE OF LONG-RUN ECONOMIC DEVELOPMENT Jutta Bolt, Robert Inklaar, Herman de Jong and Jan Luiten van Zanden January 2018 – https://www.rug.nl/ggdc/html_publications/memorandum/gd174.pdf – page 16

“Western offshoots” consist of the United States, Canada, Australia and New Zealand. Western Asia is broadly speaking Egypt, Israel, Syria, Jordan, Turkey and the Middle East.

The main aim of the MPD (Maddison Project Database) is to provide data on GDP per capita for comparisons of relative income levels across countries. This is often called ‘real GDP per capita’ in the international comparisons literature, where ‘real’ refers to the series being based on a common set of prices across countries.

In the original work by Maddison (1995, 2001, 2007), such data was compiled by starting from a modern-day cross-country income comparison – for the year 1990 – and then using growth rates of GDP per capita from (reconstructed historical) National Accounts to make comparisons for earlier years.

An attractive feature of those data was that the change in real GDP per capita over time matches the growth rate from those National Accounts. However, this internal consistency came at the expense of distorted real GDP per capita comparisons in earlier years; see Section 3 on how, for instance, changing consumption patterns can lead to such distortions.

Limitations to data quality also means that estimating the growth of GDP per capita over many decades, or even centuries, is a hazardous undertaking that, despite the best effort of statisticians and researchers, will always be surrounded by a degree of uncertainty . . .

In the new version of the MPD, a new measure of real GDP per capita is therefore introduced, based on multiple benchmark comparisons of prices and incomes across countries. The resulting measure of real GDP per capita can best be understood as based on prices that are constant across countries but depend on the current year. In keeping with the terminology used in the Penn World Table (Feenstra et al. 2015), we refer to this measure of real GDP per capita as 𝐶𝐺𝐷𝑃𝑝𝑐. This variable is expressed in 2011 US dollars by correcting for inflation in the United States to provide magnitudes that are comparable over time, but it is a ‘current’ measure in the sense that the (implicit) relative prices used for the cross-country comparisons differ over time. As a result, the relative income levels from this exercise more closely reflect direct historical income comparisons.)

2) Development Centre Studies “The World Economy: A Millennial Perspective” p 28

https://theunbrokenwindow.com/Development/MADDISON%20The%20World%20Economy–A%20Millennial.pdf

3) Historical Trends in global distribution of GDP

https://en.wikipedia.org/wiki/Angus_Maddison

4) Millennium Development Goal 1: Eradicate Extreme Poverty and Hunger

The target of reducing extreme poverty rates – people living on just $1.25 a day – by half was met five years ahead of the 2015 deadline. Globally the number of people living in extreme poverty has fallen from 1.9 billion in 1990 to 836 million in 2015. However, target of halving the proportion of people suffering from hunger has narrowly been missed. The proportion of undernourished people in the developing regions has fallen from 23.3 per cent in 1990 to 12.9 per cent in 2014.

https://www.wvi.org/united-nations-and-global-engagement/article/were-mdgs-success

5) Sustainable Development Goals: The 2030 Agenda

https://www.theguardian.com/global-development/2015/jan/19/sustainable-development-goals-united-nations

These 17 goals replaced in Millennium goals and run from 2015-30. Within the goals are 169 targets, to put a bit of meat on the bones. Here are three of the goals:

1) End poverty in all its forms everywhere

For the least developed countries, the economic target is to attain at least a 7 percent annual growth in GDP. Other targets include reducing by at least half the number of people living in poverty by 2030, and eradicating extreme poverty (people living on less than $1.25 a day).

8) Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all.

10) Reduce inequality within and among countries.

The UN report “Inequality Matter: Report on the World Social Situation 2013” mentions that while inequality between countries has been declining that within countries has been very much increasing. https://www.un.org/esa/socdev/documents/reports/InequalityMatters.pdf

6) DEBT: The new developing world debt crisis: https://jubileedebt.org.uk/wp-content/uploads/2016/11/New-debt-trap-briefing_10.17.pdf

7) TAX: Tax for the Common Good:  http://www.catj.org.uk/uploads/1/1/8/6/118613197/cat_intro_leaflet_draft2.pdf

8) TRADE: Dangerous Deals Being Done in the Dark: https://www.globaljustice.org.uk/campaigns/trade

Also on WMNEG’s Facebook page:  https://www.facebook.com/groups/1582842795176672/permalink/1668095506651400/

 

 

 

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2. Green Economics: An Introduction to Theory, Policy and Practice 2009, by Molly Scott Cato

Matters to which local authorities ‘must have regard’ when drawing up their sustainable community strategy:

(a) the provision of local services

(b) the extent to which the volume and value of goods and services that are sold or procured by public bodies are produced within 30 miles of the boundary of the public body

(c) the rate of increase in the growth and marketing of organic forms of food production and the local food economy

(d) measures to promote reasonable access by all local people to a supply of food that is adequate in terms of both amount and nutritional value,

(e) the number of local jobs

(f) measures to conserve energy and increase the quantity of energy supplies which are produced from sustainable sources within a 30 mile radius of the region in which they are consumed

(g) measures taken to reduce the level of road traffic including, but not restricted to, local public transport provision, measures to promote walking and cycling and measures to decrease the amount of product miles

(h) the increase in social inclusion, including an increase in involvement in local democracy

(i) measures to increase mutual aid and other community projects

(j) measures designed to decrease emissions of greenhouse gases

(k) measures designed to increase community health and well being

(l) planning policies which would assist with the purposes of this Act including new arrangements for the provision of affordable housing

(m) measures to increase the use of local waste materials for the benefit of the community.

According to Richard Douthwaite, the four basic steps towards greater local self-reliance are:

  • Setting up an independent currency system so that the economy can still function no matter what happens in the global financial system;
  • The establishment of an independent banking system, such as a credit union, again to protect the local economy from international financial pressures;
  • The production of enough energy to meet the needs of the local economy;
  • Meeting people’s need for food and clothing from within the local economy.

The campaign for localisation has made most headway in the area of food—unsurprising given that this is our most basic need. The objective is not for self-sufficiency but for self-reliance. A system of farming that was truly designed to feed people and to go on doing so for the indefinite future, would be founded primarily on mixed farms and local production. In general, each country . . . would contrive to be self-reliant in food. Self-reliant does not mean self-sufficient. . . Self-reliance does mean, however, that each country would produce its own basic foods, and be able to get by in a crisis.

Essential Features of a Sustainable Territory

  • It has a stable population
  • It provides the basic necessities of life for its population from renewable resources under its control and expects to be able to continue to do so without over-using or degrading those resources for at least a thousand year
  • It is therefore able to trade with the outside world of choice rather than necessity
  • It is able to protect is renewable resources and its population both militarily and economically
  • Its collection of economic protection weapons includes an independent currency and banking system
  • It has no debts to lenders outside and there are no net flows of capital across its borders
  • It does not depend on continual economic growth to stave off collapse. Its economy grows very slowly if at all.

Source: Adapted from Douthwaite, 2004