The Development Debate a Multi Dimensional Approach

The conventional growth literature looks at development in terms of improved welfare. In welfare economics we evaluate the effects of welfare changes by means of the indirect utility function (the consumer is worse off if indirect utility function at a later date is lesser than that of an earlier date [v(p1,w)

The international discourse of development is how do measure development. Real classical economists would want debates on development to center around issues like levels of investment, savings, consumption and production. All economic theories of development, follow this path. Development of course here is measured in terms of economic indicators such as ”GDP growth rate etc. However, these conventional means of defining and evaluating development has been put to test. For instance, when we say economic growth was attained at 5 %, you very well know that it is possible for ten people to make an economy grow to that level against a population of 30 millions. And then, how did we arrive to it!

So the new nomenclatures advanced by people like Stiligz and Sen is we do not have to explain development models in the sense of economic indicators. Other than asking, how much the economy grew, why not ask:
-how many boreholes of water were constructed
-how many children were able to access schooling opportunities
-how many hospitals were constructed
-how free were elections and did the voices of the poor reign
-are institutions properly constituted and is the rule of law upheld.

In some countries, people are beginning to ask how happy are the people (Gross Domestic Happiness). Greece uses this methodology to compute their economic growth? Bhutan’s great resource at the moment is the happiness of its people. It is assumed, people are only happy when then they have access to the basic needs. (you can think of many other humanistic indicators).

Hernandos De Soto discusses reasons why capital does not reproduce itself (the failure of capitalism) in advancing countries. His other book the other path discusses at length about a key feature of developing economies as seen in the informal sector. According to Hernandos a key solution or hindrance to the development problem is property rights. Gustavo Gutierez a Latin American theologian sees liberation as an end which requires the widest possible set of opportunities. Accordingly Gustavo suggests that we replace the term development with liberation. Development according to Gustavo is purely an economic concept and does little in considering the person as a psycho, social, religious and somatic person. Gustavo’s writings have had a lot of influence in Latin America and the Catholic Church in general. It is unfortunate that Gustavo was later silenced by the Catholic church and could no longer continue his writings on liberation theology.

Armatya Sen on the other hand developed the capability approach which focuses on the ability to do and to be which he calls functionings. Hence to Sen development is an end while the capabilities which are a set of functionings are the means. Key in the capability approach are the conversion factors which are the relationships between the state (means) and the ability to achieve certain beings and ends. One recent important contribution to the development literature is Prof. Grzegorz Kolodko who suggests the Integrated Index of Socio Economic Well Being (ZIP). Kolodko’s index looks at the output level in the economy measured by ppp per capita, the well being of the population (health, satisfaction, expectation and education), environment and leisure time (cultural values). The index in assessing development goes beyond the normal economics confinement and integrates other important factors.

Development as can be seen is not a function of GDP growth or decline per se. It is more. It incorporates many other inputs as can be seen from the Kolodko’s index (health, satisfaction, expectation and education) and other development experts. Countries therefore in their endervor to develop should ask themselves practical questions. On the other hand the question of big plans or small searches come to the lime light too. At times conventional assumptions may need to be relaxed or changed, omitted in search for a development answer.

What Advice Would Work in the Quest for Africa’s Development?

The following story (abit extended and exaggerated by me though) is quite interesting, later on I would like to link it to my argument in this blog. The rats were experiencing a great problem. There was a cat that was eating them, and they had lost many of their dear ones. Their greatest fear was that within no time, this cat would wipe out all the rats from the face of the earth. The rats then convened a great meeting known as the “Council of Rats of the World to Put an End to a Threat on Rats’ Lives Caused by a Greedy Cat.” In the council they invited world renowned consultants who discussed their problem at length. Some of the consultants were very ignorant with their situation, while others felt that they understood their problem. At the end of the great council several suggestions were arrived at as follow:

1. A meeting was to be convened between the rats and the cat so that they could help the cat to explore other types of food and leave the rats alone.
2. The rats were to develop a cage to put in the cat.
3. A loud bell was to be tied on the neck of the cat so that whenever he was around the rats would hear and run away.

All these suggestions were applauded for their novelty and the ability to save the lives of the rats. The problem with all these suggestion was the fact that they could not be accomplished because there was no volunteer among the rats to carry out any of the specific recommendations. So until today the rats are looking for volunteers among themselves for a reconciliatory meeting with the cat, the rats who would cage the cat and the ones to mount the bell on the neck of the cat. The cat on the other hand continues eating the rats.

The above situation is what the Sub Saharan Africa faces. William Easterly one of the development critics for Africa advocates for a search model. According to him Africa will only develop if it solves one problem at a time. Some of the books he writes such as the White Man’s Burden and the Elusive Quest for growth and many of his articles give Africa in a very bad and misserable picture. The search model is one of Easterly’s major contributions to the wider development economics, however it might not benefit the people to whom it is addressed to when he seems to have little or no respect for them. The other growth model which Easterly has developed is the “total factor productivity” as a great driver to economic development. Easterly is a brilliant non conventional scholar, but his great contributions could be overlooked because of the way they are presented. Jeffrey Sachs of the other hand looks at Africa’s development from a much more holistic view point. The paths he suggests have been dubbed as “big plans.” He suggests that the west should write of debts for Africa and dedicate part of their national incomes to help Africa come up. The same path seems to have been taken by Paul Coullier in his Bottom Billion (2007) where he suggests that Africa needs a mixture of interventions (sort of a Marshal Plan) such as trade, aid and military support.

The global economic development statistics paint a really gloomy picture for the Sub Saharan Africa region and the entire African Continent as a whole. The African continent’s total GDP contribution to the whole world is 6.8%. That of Sub Saharan Africa is 5.3%. When Nigeria and South Africa are removed from this group the total GDP of the remaining 42 countries add up to 2.8% of the global GDP. These statistics of course look miserable and scary. Other statistics show that the total cost Africa has incurred as a result of armed conflict since 1990 is USD 300 billion at 1990 ppp. The highest cost was incurred in Burundi from 1993 to 2005, followed by Rwanda in 1990 to 2001. Child mortality is about 180 children per 1000 live births. The proportion of the population living on less than USD 1 by 2004 was 40%. When it comes to deaths as a result of malaria, HIV/AIDS and many other diseases (many are imaginable) the picture is more scary. What the statistics would like to show is that “All Africans” will die soon because they all might be sick. Sometimes I wonder who is more sick is it the statisticians and their work or the Africans (just a loud thought). Pictures taken of Africa by development workers have one thing in common and that is to depict Africa as a land of idiots, foolish and primitive people. The “global development fashion” at the moment is to depict Africa as a continent with no hope and full of misery.

As an upcoming African development economist, I know that the contributions of other economists in this field matter a lot. However, the fact that many development economists have no respect but contempt, ridicule and pity for Africa contributes a lot in killing the esteem Africa has. Once the African listens to the jeers of at times very ignorant professors whose opinions are shaped by the literature available and hence draw all their conclusions from it, it makes it hard for the student to share his or her own perspectives to what is happening in the development debate. In any case the voices of many brilliant African economists have been quashed because they feel psychologically subdued by a world that would not listen to them but quashes and tramples upon them. At the same level even the African professionals are not taken at par with their global colleagues as they are considered to be inferior. Students too in diaspora can attest to the fact that the efforts to integrate in the host communities and be accepted as a merit student takes much effort.

My conclusion is that time for African intellectual to express what they believe to be the African Solution is now. There is so much richness to read and evaluate the suggestions from all other people of the world despite their attitude towards Africa. However let the Africans see the feasibility of the solutions provided from practical perspective. We should not care about the bad labels given to Africa (the people giving these labels are ignorant) but let us care about what can possibly contribute to the African solution. One of the great Kenyan spirits is “harambee” i.e. pooling together and this had done much to the development of Kenya. I really think, it has reached a time to meet global intellectual fire with soul force. Africa will one time develop and the economic prophets of doom will be shamed!

The Population Optimism and Development in Africa (Wild Thought)!

On the 12th of October 1999 the world population was officially at 6 billion. In the year 2013 it will reach7 billion and in the year 2054 it will be 9 billion and stabilize at 10 billion by 2200 according to the United Nations. Developing countries currently account for 80% of the global population. Asia accounts for 61% of developing world’s population driven by giants such as India and China. The global annual rate of population peaked at 2.04% p.a. in the 1960’s and declined to 1.33% by 1999. The population of the developing world is currently growing at a rate of 1.59. The most notable of the growth rates is Africa which exceeds 2.3% p.a., being the highest growth rate in any major area of the world.

My “wild” reflection focuses on Africa and its quest for development given the current annual growth rate of 2.3%. Many demographic writings a decade a go did not regard the high rates of population in poor countries a worrying matter. But this seems to have changed in the recent writings (Dasgupta 1993). Confronted with data (especially panel data from different countries-developed and developing), and depending on how they are proxied, the link between population and development is not unequivocal. As already advanced, population is a source of labor, it creates demand, it’s a source of savings and investment etc (off course, from a purely economistic point of view). On the hand, population causes a strain on the available resources, especially is a large part of it is ‘unproductive’, that is people who are not working and but are consuming- a typical example of most of the developing countries. Off course, as it is the case with the latter, if the population grows faster than growth (especially economic growth) then we expect a definite negative relationship between the two. Which brings in the issue of policy, that is, the need to develop policies that will ensure population growth is commensurate to growth.


The policies, according to Sen and others need to take care ‘initial conditions’. People are initially provided with capabilities, then (i) they are empowered with the ability to angage in productive activities, create more opportunities; (2) they are also empowered to make decisions about their relative sizes of their families (education is key functioning here). For the latter argument, another text writer, Micheal Todaro agrees with Sen that investing in human capital, especially education is the top priority to deal with this policy issue. Todaro reasons it very simply… for instance, a girl who has primary school education, is well empowered to plan her family….she understands the importance of trees as she will not go all over cutting them and educated farmers conserve the environment more than the uneducated ones. Todaro calls this as social benefits of education. Educated people too plan better the number of their families.


In summary, both population growth which is not accompanied by equal growth leads to poverty, which is a sign of underdevelopment. In resource economics issues of carrying capacity also play a major role. Seminal work on population includes Malthus (1798) essay on the principle of population and Boserup (1965) criticized Malthusian theory on the basis that it ignored the role of technological changes occasioned by population pressure, thereby reversing the Malthus argument that growing population would expand into more marginal land, and returns to labour would inevitably decline. Morrison shows that the industrial revolution helped the world break from this trap in 1800. Could the ever growing population be a blessing for Africa when productivity is very low and poverty levels are escalating? Isn’t this what happened in Asia? Is the problem in Africa the population or “the conditions” as spelt by Armatya Sen?

Social Economy and its Contribution to Economic Development in EAC

The Project

At the moment I am certain about what I want to do in my project. I will try to look at the extent to which the social economy can become a tool towards economic development of the East African Community using Kenya and possibly Tanzania as case studies.

I will do this through:

i. Measuring the extent to which the government has failed to provide basic services
ii. Measuring the extent to which the private sector has failed to provide market based solutions
iii. From the gaps generated above, I will then develop a market-service continuum to which I will try to fit the social economy. The effectiveness of the social economic actors will be judged upon their elasticity within the continuum.

How I will do all this:

Evolutionary economics provides one strong tool for this study. It has important theories which will help shape my study as I go along. Computational economics also will also provide a closer solution to my problem. In computational economics I could test my models by manipulating my variables in oder to develop clear intuition to the problems at hand and hence be in a position to come up with better predictions. This however still remains an area to be developed.

The data to be used:

The Kenya Bureau of Statistics census data 1969, 1979, 1989, 1999 and possibly 2009.
Kenya: Ministry of Culture and Social Sevices on CBO's.
Kenya: Ministry of Planning and National development: Reports and plans on development in the country.
WTO: Trade map, Market access map and investment map.
AU: Kenya Peer Review Mechanism Report 2006.
If resources are available, I would love to extend this study o other countries of East Africa.

Output
My ambitious project hopes in the long run to develop causal links between economic development and the social economy in East Africa.

Assistance Needed

Any one with a better idea or suggestion on this is welcome

Human Trafficking of Women and Children for Purposes of Sexual Exploitation in Kenya and Tanzania

Koinonia Advisory Research and Development Service (KARDS) through the help of CMC Netherlands, a mission support organization is conducting a study on human trafficking of women and children for purposes of commercial sexual exploitation.

The objectives of the study are:

1. To make an inventory of the faith based initiatives, NGOs, Civic associations and CBOs active in the fight against human trafficking of women and children for purposes of commercial sexual exploitation.
2. To know and understand what the needs of these organizations are in terms of financial needs, capacity building etc.
3. To assist actors in Kenya and Tanzania share experiences, skills and information in order to promote general networking and collaboration hence avoiding wastage as a result due to unintended duplication.
4. To stimulate interest to more organizations to join in the fight against human trafficking in the two countries.

The study will focus on what is already being done to prevent, offer social support, legal and judicial support, reintegrate or help the victims and survivors of trafficking in any way. Anyone interested in being part of this study should get in touch with KARDS through

richomuko@gmail.com or info@kardsafrica.org

before the end of March 2009. It is hoped that the study will be out by the end of May. Kindly circulate this information to as many organizations as possible in Kenya and Tanzania.

For further information about KARDS, kindly visit www.kardsafrica.org

Churches across America reflect on Obama election

By ALLEN G. BREED, AP National Writer Allen G. Breed, Ap National Writer – 1 hr 19 mins ago

AP – Dr. Shirley Caesar-Williams prays for President-elect Barack Obama during a church service at Mt. Calvary …

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RALEIGH, N.C. – Pastor Shirley Caesar-Williams opened her sermon Sunday at Mount Calvary Word of Faith Church with a prayer of thanks for the election of Barack Obama — at the risk of her flock getting "more excited over this than you do over the word."

"God has vindicated the black folk," the Grammy-winning gospel singer said as a member of the congregation waved an American flag and another marched among the pews blowing a ram's horn.

"Too long we've been at the bottom of the totem pole, but he has vindicated us, hallelujah," she cried. "I don't know about you, but I don't have nothing to put my head down for, praise God. Because when I look toward Washington, D.C., we got a new family coming in. We got a new family coming in. And you know what? They look like us. Amen, amen. They look like us."

Across the country, from a mostly white church in the Southwest to the pulpit from which the Rev. Martin Luther King Jr. preached his message of equality and nonviolent change, Christian clergy members on Sunday asked God to give Obama the wisdom and strength to lead the country out of what many consider a wilderness of despair and gloom.

And on the day King famously called "the most segregated day of the week," they also called for the nation to come together behind the man who will be the first black president.

In his Web message last week, senior pastor Gregg Matte of Houston's 167-year-old First Baptist Church decried a society that has turned to government as its savior.

"Today," he wrote, "Hollywood is our pastor, technology is our Bible, charisma is our value and Barack Obama is our President."

But from the pulpit Sunday, Matte asked the 1,000 or so mostly white faces staring back at him to "lift up President-elect Obama" even if he wasn't their choice on Tuesday.

"Regardless of whether you voted for him or not, he's now our president come Jan. 20," he said. "So we're going to come behind him and pray for him and pray for wisdom, that God will give him wisdom and be able to really speak to his heart."

At a white church in Mississippi, where roughly nine in 10 whites voted for Republican John McCain, the scene was more muted.

The neighborhood around the Alta Woods United Methodist Church in Jackson has seen its demographics shift from white to black in recent decades, and most of the parishioners have moved to the suburbs. While Pastor David W. Carroll recognized Obama's election as a "historic shift," he said he was also struck by McCain's patriotism in defeat.

"As the crowd began to boo a little bit ... he quieted them down and said, 'Now is not my time, but I'm an American first and I will serve the president-elect,'" he said. "In a loss, he showed us still how he could win through his service."

But in black churches from the capital of the Confederacy to the streets of Harlem, it was all about Obama.

At Hungary Road Baptist Church in a working-class suburb of Richmond, Va., the two-hour, 40-minute service was part celebration, part history lesson, led by a pastor who had felt the sting of the Jim Crow South. The Rev. J. Rayfield Vines Jr., pastor of the predominantly African-American congregation, paused briefly as he recalled the indignities he endured but did not bow to growing up Suffolk, in southeastern Virginia.

"I was there when you had ride in the back of the bus," Vines said under a simple cross illuminated by eight light bulbs. "I was there when you went to the department store and you couldn't try on the clothes. I was there when they had a colored toilet and a white toilet."

The pastor said he shared his humiliations Sunday to help give those "who had not tasted the bitterness of segregation ... an idea why we all shouted."

"My cup runneth over on Tuesday night," Vines said. "My eyes have seen the glory."

Inside Harlem's Abyssinian Baptist Church, Obama T-shirts vied with colorful plumed hats as a fashion statement. Church member Sheila Chestnut, 61, wore a rhinestone Obama pin on her suit lapel.

"I am so happy," she said. "I cried so much. I never thought that in this lifetime I would live to see an African-American become president of these United States."

When the Rev. Calvin Butts invited the congregation to stand up "and give God praise for the election," several hundred churchgoers rose as one, lifted their hands in the air and gave a sustained cheer, then chanted, "Yes we can! Yes we can!"

At Apostolic Church of God on Chicago's South Side, less than two miles from Obama's home, jubilant Sunday services were peppered with references to the election and calls to be grateful for his victory.

"We thank the Lord for this second Sunday (in November) after the first Tuesday," Dr. Byron Brazier said to resounding applause and cheers from the mostly black congregation. "This is a wonderful time to be alive."

Obama spoke at Apostolic on Father's Day in his first address to a congregation after leaving his longtime church, Trinity United Church of Christ, following inflammatory remarks there by his former longtime pastor and others.

Perhaps nowhere was the weight of history more palpable Sunday than at Atlanta's Ebenezer Baptist Church, from whose pulpit King spread his message of inclusion and across from which he lies entombed.

When the Rev. Raphael G. Warnock tried to put into words what it meant for Obama to win Virginia, where the first American slaves landed nearly 400 years ago, his words were drowned out by the applause and cheers from a capacity crowd whose faces captured the entire spectrum of the human rainbow.

"Barack Obama stood against the fierce tide of history and achieved the unimaginable," he said. "But he did not get here by himself. Give God some credit. He is the Lord."

But while he told the congregation that it was a time for celebration, he also reminded them it was "a serious time."

"We still have a whole lot of work to do," he said. "You have two little girls who will grow up in the White House. Around the corner, you have two little girls who will grow up in a crack house."

Among those in attendance was the slain civil rights leader's sister, Christine King Farris. She was reminded of her brother's prescience.

"As he predicted the night before he left us, 'I may not be with you, but as a people we will reach the promised land,'" she said stoically. "That promised land was realized Tuesday. Yes, it is our promised land."

___

Contributing to this report were Associated Press writers Andrew Adler in Atlanta, Karen Matthews in New York, Steve Szkotak in Richmond, Karen Hawkins in Chicago, John Porretto in Houston and Timothy R. Brown in Jackson.

World Trade Organization (WTO) and Power Play

World Trade Organization (WTO): the Power it Wields over the World

1.0 Introduction

The document “WTO in Brief”[1] describes the World Trade Organization as the only trade organization dealing with the global rules of trade among nations. Its main function is to ensure that trade flows smoothly, predictably and as freely as possible. In promoting free trade the WTO focuses on assisting consumers enjoy from a variety of choices, assuring producers and exporters that foreign markets will be available and by lowering trade barriers, it assists to lower other barriers amongst people and nations.

The heart of the WTO is the Multilateral Trading System[2] consisting of agreements, negotiated and signed by a wide majority of the World’s trading nations and ratified by their parliaments. These agreements are legal ground rules for international commerce. Essentially they are contracts guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within limits to everybody’s benefit.

2.0 Evolution of the GATT to WTO

The Bretton Woods conference (1944) was the starting point for a new world order with three cornerstones: International Monetary Fund (IMF), International Bank for Reconstruction and Development (IBRD) and International Trade organization (ITO). During the negotiations for ITO some countries saw a need for immediate tariff reductions that resulted in a General Agreement on Tariffs and Trade (GATT) with an initial membership of 23 nations in 1947. GATT was intended to be a stepping stone towards the establishment of the ITO and embodied many principles of the proposed ITO Charter.

In 1948 the ITO Charter was successfully completed in Havana which set basic rules for international trade and other international economic matters. The ITO charter however never entered into force, the US congress rejected it repeatedly. The usual argument against the new organization is that it would be involved into internal economic issues. In 1950, President Harry Truman announced that he would no longer seek the approval of the ITO charter and thus doing formerly away with ITO. In the absence of ITO, the world nations turned to GATT to handle problems concerning their trade relations.

GATT became an important provisional but promising institution for the promotion of an integrated global trading system. It is classified in the US as a treaty based on Reciprocal Trade Agreement Act. The agreement is based on the “unconditional most favored nation principle.” This means that the conditions applied to the most favored trading nation (i.e. the one with the least restrictions) apply to all trading nations.

One striking feature of the GATT history is the successive rounds of negotiations which led to new schedules of tariff concessions and new commitments towards greater liberalization. GATT signatories occasionally negotiated new trade agreements that all nations would enter into. Each set of agreements was called a round. In general each agreement bound members to reduce certain tariffs. Usually this would include many special cases of individual products, with exceptions or modifications for each country. The eighth round held in Uruguay from 1986 to 1994 is the one that ushered in the World Trade Organization along with many other agreements.

3.0 The GATT/WTO Rounds

As has been mentioned above, each set of GATT agreements was known as a round. Each of the eight rounds is summarized as follow

3.1 Geneva Round (April to October 1947)
The negotiations were based on bilateral “product by product request offer” basis. 123 negotiations were completed and 20 schedules established containing the tariff reductions. The agreements covered 45,000 tariff concessions amounting to about $10 billion in trade. This was a successful round since the US was enthusiastic about free trade, was willing to cut its tariffs on imports from Europe and did not put pressure on European countries to abandon their trade restrictions.

3.2 The Annecy, France Round (April to August 1949)
There was an additional 10 in membership. 13,000 more tariff reductions were negotiated. An agreement was reached that the accession of a new member country does not require unanimity, but only 2/3 majority of all existing member countries. And if a member votes against accession does not need to extend trade policy concessions to this country.

3.3 Torquay Round, England (September 1950 to April 1951)
Accession was extended to five more countries. There were additional tariff reductions emerging from 500 negotiations which were modest. 8,700 tariff concessions were made. The major problem during this round was between US and UK on bilateral trade cuts. During this round US communicated that the ITO charter would not be resubmitted to the US congress and thus marked the end of ITO.

3.4 Geneva Round (1955/1956)
After the difficulties in Torquay GATT remained in active and membership stagnated with some members withdrawing and very few more members being accessed. The momentum to lower tariffs was lost. There was growing protectionism in the US in retaliation to the European countries who were reluctant in eliminating their trade barriers. Low tariff countries were also frustrated by their inability to bargain effectively by high tariff countries. This round too produced meager results worth $2.5 billions of tariff reductions.

3.5 Dillon Round (1960-62)
This round was named in honor of the US Undersecretary of State Douglas Dillon who proposed the negotiations. Issues at table included sharply differing tariff rates within the European Economic Community (EEC). The round was divided into two phases: the first phase was concerned with negotiations with EEC member states on creation of a single schedule of concessions based on Common External Tariff (CET). This phase resulted in 4,400 tariff concessions covering $4.9 billion of trade. The second phase was a further general round of tariff negotiations with the CET for EEC falling to 10.4%. The agricultural and textile sectors were still not considered.

3.6 Kennedy Round (1964 to 1967)
This was the first round where the negotiations reached a stalemate. Senior politicians from US, UK and EEC put together a crisis agenda to break the deadlock. Sectoral groups for the discussion of five sensitive product sets (aluminium, pulp and paper, chemicals steel, textiles and clothing) were created which allowed more scope for lobbying by producer interest groups. As a result of this round tariff protection in manufacturing dropped significantly to be between 36% to 39% in late 1960 to early 1970’s.

3.7 Uruguay Round (1986 to 1994)
A committee was established to determine the objectives of a new round of negotiations to be launched in 1986. There was no agreement among the US, UK and the EEC. The initiative was taken by G9 group of mid sized industrial nations led by India and Brazil. The Uruguay round had four themes discussed by four groups as follow: trade barriers and related matters, sector specific matters, procedures and other matters regarding trade such as TRIPS and TRIMS.

3.8 Tokyo Round (1973 to 1979)
The Tokyo Round not only focused on further reducing the tariffs but addressed various non tariff barriers to trade. These included subsidies and countervailing measures, technical barriers to trade, import licensing procedures, government procurement, customs valuation, anti dumping, bovine meat arrangement, international dairy arrangement and trade in civil air craft.

3.9 Uruguay Round (1986 to 1994)
The eighth Round of negotiations. Besides negotiations for further tariff reductions, the agenda also included negotiations on new topics including services, intellectual property, agricultural goods, textile and clothing and investment measures. Two issues relating to institutional aspects were also addressed during the negotiations: the dispute-settlement rules and the "Future of the GATT System".
The Uruguay Round is probably the most important Round in the history of the GATT/WTO, not only because it is the longest in time (1986-1993), but also because of its achievements. It is in the framework of the Uruguay Round that the WTO was created.
3.10 Doha, Quatar Round (2001)
At the Ministerial Conference in Doha, in November 2001, WTO Members decided to launch the Doha Round. Twenty-one subjects are listed in the Doha Declaration mainly centered on implementation-related issues, agriculture, services, market-access for non-agricultural products, trade-related aspects of intellectual property rights, trade & investment, trade & competition policy, transparency in government procurement, trade facilitation, anti-dumping, subsidies, trade regional agreements, dispute settlement understanding, trade & environment, electronic commerce, small economies, trade, debt & finance, trade & technology transfer, technical cooperation & capacity building, least-developed countries, special & differential treatment.

4.0 Criticism of the WTO

The WTO has been placed under strong criticism. It is seen as a growing monster that interferes with the sovereignty of nations. Some critics argue that the WTO system has gone awry and if not checked, will permanently sacrifice state sovereignty on the alter of laissez faire trade liberalism. This criticism comes as a result of its record of striking down national laws that infringe free trade principles. This shift in power from a country to a global level bureaucracy undermines the cornerstone of democracy – the citizens working with the public officials to develop laws that protect the public welfare.

The WTO negotiations take place behind closed doors and they shut out a big number of interest groups. It hence lacks a mechanism of public accountability or participation. It is not required to consult with NGO’s or release documents until after decisions are made.

Trade liberalization and Multi-lateral Investment Agreement (MIA) undermines the least developed countries long term development prospect. Small scale, locally owned firms have difficulty in competing with transnational firms because they lack comparable access to capital, economies of scale or advanced technology. This concern is particularly acute in agriculture, where WTO rules on trade and domestic policy reform undermine national strategies to ensure food security.

The violation of worker’s rights and environmental standards is used by governments to gain unfair advantage in trade. Issues of child labour or environmental destructive technologies are not taken into account. Hence a feeling that the WTO puts downward pressure on country laws to match lower international standards. A country with lower international standard could therefore challenge the law as an impediment to trade.

5.0 WTO and Power

5.1 About Power
This analysis therefore discusses the evolution and operations of the WTO from a power perspective. Power has been defined as the capacity of one person’s actions to get another to do otherwise than he or she would have done. Power is extended to other concepts such as influence which simply is the realized or exercised power and authority which is the legitimated power.

Emerson (1962), provides that power to control or influence others resides in control over the things he values, which may range all the way from oil resources to ego support. Power therefore resides implicitly in the other’s dependency. Dependence and power are thus explained as follow:

Dependence (Dab). The dependence of actor A upon actor B is (1) directly proportional to A’s motivational investment in goals mediated by B and (2) inversely proportional to the availability of those goals to A outside the A-B relationship.

Power (Pab). The power of actor A over actor B is the amount of resistance on the part of B which can be potentially overcome by A.

5.2 The WTO and Power

5.2.1 The anatomy of the WTO

5.2.2 The WTO Membership and Structure

The WTO is made up of 146 members. It has several groups members. The main driving force behind the WTO is the USA and the EC. The second group wielding influence is the Cairns Group of Nations led by India and Brazil. These countries are mainly considered to be the middle income countries. Other small coalitions include the Third World Network (TWN), the Like Minded Group (LMG).

The following table summarizes the organogram of the WTO. See the appendix for the real organogram.

Top Organ
Ministerial Conference also referred to as Committee of the Whole (Cow)
Second level Bodies
Dispute settlement body
General Council (Trade negotiating Committee
Trade policy review Body
Third level
Committees,
Council for trade in goods
Council for TRIPS
Council for trade in services

parties and working groups
Committees, parties
Plurilaterals, committees and working parties

The needs of the countries represented by their Ministers of Trade is to find markets for the product produced in their countries and to negotiate for best deals for products not available in their own countries. The various interest groups exist to ensure that they get the best out of the WTO negotiations.

The second level and third level consists of country representatives and WTO bureaucrats. Country representatives are there to advance the interests of their own countries while the bureaucrats are there to advance the ideals espoused by WTO.

This is the anatomy of the WTO from the charts. However, the real WTO is not as presented here. In essence the Ministerial conference is not the overall decision making body. Some of the country representatives are just holding pseudo portfolios in Geneva and may not be effectively representing their countries. The decision making process is carried out in “green houses” by hand picked committee of whole. Other ministers attending the meeting are only surprised by the launch of a final agreement which they are required to sign.

5.2.3 Resource Flows

Ideally the WTO system is built upon the rule of law, the respect for the sovereign equality of nations. It is an open rule based multilateral trading system based on democratic values. The legitimacy of its processes is based on inclusivity. This should be the first biggest resource available to the WTO, its membership.

A majority of the WTO members are the Least Developed Countries with the least resources. Most of these countries lack the technical know-how of the complexity of international trade. This especially applies when models are presented in the Ricardian or the Hecksher Ohlin traditions or in some theoretical aspects underlying aspects of international trade. On the other hand, the powerful members of the WTO are those from the developed world. These have expertise and enormous resources.


5.2.4 How critical are these Flows
The way resources flow and change hands is mainly to promote the interests of the powerful countries. During 1999, during the electoral process to elect the new director general after Renato Ruggierro a gentleman’s agreement to have a representative from the third world was broken. Supachai Panitchpaki from Thailand was the favorite of the majority. However the selection process was made so tense with pressure being applied to LDC’s to change their position and elect Mike Moore. At long last a negotiation had to be reached which allowed Mike Moore to reign for the first three years then followed by Supachai. During the conclusion of the Doha Rounds countries that remained opposed to the round such as India, Pakistani and Kenya were put under undue pressure with Prime Minister Tony Blair calling directly the prime ministers and the presidents of the countries to advice their ministers to soften their positions. This softening came with various advantages such as Musharaf was accepted by the Americans as a legitimate president, India got enough concessions and Kenya increased its share in the AGOA among other benefits.

The resource flow amongst the rich countries are critical, because they can be used to manipulate the outcomes they want. The Kenyan representative after the Doha agreement expressing his disappointment just said “we were presented with a draft a final draft to which no other adjustments could be made.” In the COW during the Doha Round the last minister to hold onto his position was the Indian minister. The Caribbean too that held up to the end got a massive aid to support their economy after the 9/11.

5.2.4 Bargaining Tacit

Buying Votes
Countries receive a package of aid and a bilateral short term bilateral trade agreement with the US or the EC.

Locked out of the COW (those sympathetic to EU, US)
This is the important committee that ratifies the document. Aileen (2003) in her power and politics says the countries chosen during the Doha finale included those that wield a lot of influence such as Brazil and India amongst the LDC’s. Among the Latin American countries included are Paraguay, Peru and Chile because they tend towards EC and USA. In Africa South Africa, Tanzania, Kenya and Nigeria. Zimbabwe would never get to the COW. In Asia Japan, India, Singapore, Quatar.

Intimidation
Stubborn countries among these few countries would be strongly intimidated to give in while in the green room.

Forced Rounds
This was a case of the Doha Round which was meant to be a Ministerial Conference but was turned to a round despite so much protest from the LDC’s. The LDC’s wanted sometime to digest the results of the Uruguay round.

Parallel Meetings
Many decisions of the WTO are not taken in the COW or in the green room but in informal meetings amongst the rich countries. At other times parallel meetings would be taking place in another location of the world away from the ministerial conferences. One example is a case where while the ministerial conference was taking place in Doha, the agreement document was being developed by the rich countries in Singapore.

Dividing members
Members have been divided into various groups and given labels such as Cairns or MIC’s which makes it shameful for them to take a hard stance against a motion. In fact it is backward to complain in WTO a sort of quasi or no solution to problems. So it has become a fashion whenever the MIC’s have to complain they pretend to be defending Africa while in essence they are releasing their own soul cry.

Terrorism (those who are for us stand with us)
The rise of terrorism too has complicated the ability of the poor countries to challenge the decisions of the WTO. Accounts are also given to show that after 9/11 countries became too cautious to raise complaints openly. They would do so but after a careful survey of the environment around them.

5.2.5 Alternative Strategies

Bhagwati (2004) advices the developing countries with a modicum of power to resist the political play of the rich countries to having the trade-unrelated issues in the WTO. While the WTO continues to serve as an important tool for globalization, sectional agendas could deviate it from the objectives that brought it to existence. This would mean that WTO should concentrate in promoting rule based relationships as opposed to power based relationships. However, as the saying goes you cannot bite the hand that feeds you and may be this would be an expensive way to move.

6.0 Conclusion

We described the WTO as the only organization that deals with trade rules across the world. In the heart of the WTO lies the multi lateral trading system based on the principle of the unconditional most favored nation. It must be acknowledged that the role played by the WTO is important, however, it is important that it tries to consider the interests of all its stakeholders as it evolves. Agendas should not be dominated by a few powerful group of nations but by all the trading nations of the world.

References
1. Bhagwati Jagdish (Jan/Feb 2005) “reshaping the WTO.” Far Eastern Economic Review
2. Richard Emerson, “Power Dependence Relations,” American Sociological Review (1962) (32)
3. Criticism of WTO, http://en.wikipedia.org/wiki/criticism_of_the_wto
4. WTO Structure, www.wto.org
5. Lawrence l. Herman; (15 September 2000)Cross Border Issues - "Criticism Of The WTO Should Be More Balanced" http://casselsbrock.com/publicationdetail.asp?aid=155
6. International Trade Organization http://en.wikipedia.org/wiki/International_Trade_Organization
7. General Agreement on Tariffs and Trade; http://en.wikipedia.org/wiki/GATT
8. General Agreement on Tariffs and Trade (GATT)/WTO History http://www.adb.org/Documents/Others/OGC-Toolkits/WTO/wto0100b.asp
9. Eileen Kwa (2003), Power, Politics in the WTO

[1] Wto.org
[2] Ibid