24 November 2009 – The United Nations Research Institute for Social Development (UNRISD) hosted an international conference in Geneva on 12- 13 November 2009 to better understand the social and political dimensions of the current crisis and subsequent policy and institutional reforms, and their implications for developing countries. This podcast is the first in a series of five podcasts focusing on the some of the issues raised at the conference. It examines the impact of the crisis on the livelihoods of those in developing countries and looks at the coping strategies employed by people affected by the crisis in the developing world.
Please use the link to the right of this page to access the podcast. (17mins 42secs, MP3 file, 3.06mb)
Transcript of the podcast:
You’re listening to the UNRISD podcast, and my name is Maya Minwary. This episode features excerpts from the first session of UNRISD’s conference on the, “Social and Political Dimensions of the Global Crisis: Implications for Developing Countries.” We’ll hear from UNRISD Director Sarah Cook and former UNRISD board member and current Assistant Secretary-General for Economic Development of UNDESA Jomo Kwame Sundaram, along with a panel of researchers as they address the impacts of the crisis, coping strategies and livelihoods of people during economic downturn.
The Global Financial Crisis emerged from the collapse of the bank and financial institutions in advanced economies, particularly in the US and UK. Initially, it was thought that developing countries, because of their weak ties with the financial global market, would be less affected by the crisis. However, it is now clear that multiple channels have transmitted the crisis to low and middle-income countries.
Fiscal and monetary reforms have been the main focus of government strategies. Yet, the social and political dimensions of the financial crisis are as important in understanding the complex nature of the crisis and how governments as well as social actors in the South and North can best mitigate the current and future situation.
First, UNRISD Director Sarah Cook explains the urgency of addressing the social and political aspects of the crisis particularly its implication in developing countries by taking advantage of the space opened up by the crisis for a more equitable development agenda that will provide an alternative to the dominant neo-liberal discourse and policies.
As we emerge out of the severe shock of the immediate crisis and we think that our financial institutions are stabilizing and our economies are stabilizing, there's a real danger of neglecting and ignoring or forgetting about the urgency of what this means for many poor people and many poor countries. And I think we can see the status quo already beginning to reassert itself, the danger of going back to business as usual and losing the space that has existed from the crisis to really come up with major alternative development policies which emphasize social and political aspects and that will ultimately, can lead to more sustainable and equitable development. So I think we need to move into this space quickly and I think this conference is an opportunity to do that. I think it's extremely important because it brings together people who are really working at a very micro level, understanding the impacts and the coping strategies, the resilience - or lack of resilience - at a very grassroots level. Along with people thinking about national level policies and the global environment and the broader political economy and sort of paradigm, discourse issues.
And so I hope that by bringing all of these aspects together, we can really start moving forward to a more thoughtful and coherent agenda. Where do we go in terms of our research and how to we influence the policy debate and spaces. And so hopefully in this conference we will start to formulate that agenda.
Indeed, as developed nations are ready to officially announce the end of the recession caused by the crisis, experts predict that its ramifications are not over. Developing countries and rural economies in particular may continue to experience the direct and indirect shock of the crisis as markets remains volatile, while food and fuel prices continue to fluctuate.
With food security commitment in decline, the effect of the crisis has been particularly adverse in developing countries such as those in Africa, says Jomo Kwame Sundaram, former UNRISD board member and current Assistant Secretary-General for Economic Development for UNDESA.
Jomo Kwame Sundaram:
The impact has been more severe in Africa partly because of, not the deindustrialisation of Africa which has taken place of course, but the abandonment of the food security commitments in Africa in the last two or three decades, resulting in a very significant transformation of sub-Saharan Africa from a net food exporter into a net food importer. The poverty effects of this are of course quite severe. This gives you a sense that prices have come down from the high in early 2008 but still remain significantly higher than they used to be.
Given the existing stagnation in the agricultural sector and persisting vulnerabilities like hunger and malnutrition due to neo-liberal policy of cutting down public expenditure, the crisis will likely have a serious implication particularly for small-holder peasant agriculture as demand contracts in the rural economy, says Lecturer Arindam Barnajee from the Centre for Development Studies in Trivandrum, Kerala, India.
Given this situation in terms of the prices which producers have been receiving, what we find is that with the onset of the financial crisis, some of the initial trends where a further crash in prices of commodities like rubber and almost for every commodity which are mainly the exportables of the country, like coffee and pepper prices, showed a decline with the onset of the financial crisis towards the end of 2008. And the other notable thing that is also there for the cotton prices or for the other commodities like coffee or rubber is the extremely short cycles of high price that is existent for these commodities and what happens often is that once the prices go up and the farmers decide to undertake the cultivation of certain crops, very often it happens that before the harvest season comes, they find that the prices have gone down into the loss making region. And therefore, even though the average prices might be higher for some commodities over a longer period of time, the benefit of that doesn't really go to the producers.
In the Caribbean Economies, the main effects of the crisis has been felt through decline in remittances, foreign direct investment, access to international credit, and export of goods and services, especially in the tourism sector. These reductions have had a negative impact on economic growth, balance of payments, fiscal balance, labour markets, and real wage argues Andrew Downes Professor of Economics and Director of the Sir Arthur Lewis Institute of Social and Economic Studies at the University of the West Indies in Barbados.
Clearly it is expected and it's probably the greatest impact that will probably come from this particular year. We are seeing significant declines, in fact the growth rates are negative so far, for the evidence that we have for the first two quarters for most Caribbean countries. So we've seen clearly that the problem occurred and from there everything seemed to go downhill. We've seen a fall off in tourism and I think for some countries this was probably the first sign of the shock. In all the Caribbean countries we've seen both a reduction in long stay tourists and also cruise ship passengers. There was also some decline in tourism and constructor activity both for residential and commercial activity. In some countries, the issue of second homes, residential second homes for those living in North America was a problem. Bahamas is a classic example of this. We saw very early signs of the decline occurring there, particularly the reduction in wealth accruing from the financial crisis. We've seen a steady decline in the flow of remittances, Guyana and Jamaica specifically have seen a significant slow down in remittances from these countries and those are the two countries that are probably the most prominent in the region in relation to remittances from abroad. And of course, one would expect if the economy is in a decline, reductions in growth, reductions in remittances, that would have it's first impact on the balance of payments and as indicated we're seen where that if you look at the current account deficit as a percentage of GDP we're seeing clearly a reduction in that particular regard.
Communities in developing countries have responded in various ways to the crisis. May Tan-Mullins, Research Associate at the Department of Geography in Durham University, U.K, illustrates the coping strategies of Chinese rural fishing communities. As a high influx of migrant workers return to rural villages to look for work, they pose a problem for the locals since they are willing to take on jobs for a lower wage. According to Tan-Mullins, in order to cope with the shock of the crisis such as job loss due to migrant workers, the fisherfolk in China have made cutbacks on unnecessary spending, including money for school, relied on transnational and local familial networks, filial piety, guanxi and even marriage.
Now let's look at the Chinese coping strategy. The Chinese context has been interesting as I mentioned earlier. When I visited these two families, no actually I visited eighteen, four of them I couldn’t talk to. The problem we are seeing is that there is cutback on unnecessary education, again like just now one of the speakers mentioned. Education, especially for women, for young girls, are the first one to go as this is deemed as unnecessary spending as compared to food on the table. What we are seeing in this context is also that these transnational and local familial networks. What is very important in the China context is this concept of filial piety. Filial piety meaning that the young girl's generation has to support the older generation. In terms of monthly allowance - pocket money for the parents. So this is how they work, this is a so called informal social security net, if they can't get it from the government. And of course everybody who has studied a little bit on Chinese studies and culture, guanxi is a very very important concept as well in terms of social network and social security in a Chinese context. Which means that the more people you know the better it is and these people will do favors for you with or without expectation of reciprocity. And finally marriage. Marriage is very interesting because when I talked to Mr.Liu who is one of the families I interviewed, he actually said, because he's single, he's 45, he has a very ill Mum and he can't go out to fish because there is nobody at home to take care of the Mum, so what he did he actually said, "I'm going to matchmaking next week." I said, why? Why the sudden desire to go to find a partner? Because with a wife, I can actually go out to work because she will then take care of my Mum and her family will help her to take care of my family too. So what we're seeing is very interesting in that marriage has been deployed as a coping strategy in this context.
China’s government has introduced stimulus packages to mitigate the shock of the crisis. In comparable efforts, governments around the world have introduced similar packages, as well as bail out packages to financial institutions. Diane Elson, Professor at the University of Essex and a member of the Advisory Committee for UNRISD’s Policy Report on Gender and Development, contends that though governments have been swift to safeguard the social reproduction of capital during the crisis, they have been slow when it comes to protecting the social reproduction of human beings.
We've seen swift action by states to safeguard capitalists' money and avert bankruptcies by large scale capitalist firms, particularly in the car industry it seems around the world. We've seen only very slow action by states to safeguard human beings. So the first point I want to make is this completely different sense of urgency when it comes to the safeguarding of the social reproduction of core bedrock relations of capitalist economies, capitalist money, and very slow action by states to safeguard human beings. Very often there's a feeling that well maybe states don't need to do that because maybe households and communities can provide their own safeguards and there's a lot of evocation of coping strategies.
Though coping strategies, such as the one used by Chinese families in fishing communities, can help to lessen the negative impact of the crisis, Elson warns of its potential adverse effect. She continues:
Just like the market economy, this process of unpaid social reproduction is a process full of tensions and contradictions. Yes, there's a lot of love involved, but there's also obligation, neglect and abuse. Violence and family breakdown. Again one of the risks of the rupture that we get in a crisis is intensification of neglect, abuse, violence and family breakdown, so we must not romanticize the ability of families and communities to pull together in a crisis.
One way in which responses to the economic finance can be equitable especially to the most vulnerable groups is to restructure development models into a paradigm that truly focuses on the protection of people’s social well being. Director of the Center for Development Alternatives, in Ahmedabad, India, Indira Hirway makes the case for restructuring development models in India.
Hardly, is trade and trading destroyed the goal or means of aiding human well being? This is one of the question we dare to ask in recession because composition of growth matters, GDP data going up doesn't matter, composition of growth matters and the growth which is creating, which is happening with low implement coefficients, which is increasing vulnerability and insecurity of people, which is widening inequalities in the economy, which is creating dualism in the economy - modern sector and large traditional sector - and which is environmentally non sustainable, that growth doesn't really help us. So we have to ask this question to ourselves also, that is trade and trade in this growth the goal or a means of affecting these things.
So these things also need to be incorporated and in that context I would like to say that we have to expand domestic markets. Now how do we expand domestic markets? It's very difficult to say. But as far as India is concerned, I think that providing social protection and adhering to labour standards, providing wages and working conditions, that itself will create purchasing power of the masses which will create a huge demand. National Employment Guarantee programme, employment guarantee, is another thing which will generate domestic demand, which will help. Access to human development, basic health education, will also improve productivity and which will also improve employability of workers which will create also, help in creating domestic demand, meeting domestic demand. Social infrastructure, drinking water, sanitation, focus on that and also social services along with that will also create domestic demand. And employment guarantee, national employment, we have this national, NREG, National Rural Employment Guarantee programme in rural areas, there is a demand for that in urban areas also. It may not be a large demand but if anybody takes part it can take place and that can protect vulnerable people as well as generate.
So inclusive trade policy, inclusive developmental goals and trade policy and a global policy framework and institutions should provide space to national economies to pursue developmental goals. We should not be pressurized by IMF or World Bank things or fiscal deficit norms or managing the macro economy in an efficient manner and so on and so forth. We should think in terms of our own, create our own space of national policies so that our developmental goals are including globalization and our economic development takes care of the masses of people.
The world stands at a crucial moment where it can change development models to be more equitable and sustainable. The framework and strategies of development must be restructured says UNRISD chairwoman and professor of anthropology at the National Autonomous University of Mexico, Lourdes Arizpe.
So my plea with you is to think, yes, what are the coping strategies? Yes, what is happening with the impact of the global crisis? But we will never be able to really have gains and benefits for the whole of the population for both men and women for all generations in most countries unless we rethink the framework in which development policies are being proposed.
The impact of the crisis is severe in many developing countries and especially for vulnerable groups such as women and children. Though they have adopted coping strategies, they may not always be a sufficient or appropriate solution to the shock of the current crisis. Government and policy makers must still bear in mind the social and political dimension of the financial crisis.
This podcast is part of a collection covering the UNRISD conference on the “Social and Political Dimensions of the Global Crisis: Implications for Developing Countries” and if you liked what you hear, the other podcasts in the collection may also interest you. For more information, go to our website, www.unrisd.org
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Thank you for listening. For UNRISD news, this is Maya Minwary, in Geneva.