Book Read Free

How to Spend $50 Billion to Make the World a Better Place

Page 11

by Bjorn Lomborg


  political barriers to overcome if governance is to be

  improved.

  In his view, the key issues for discussion are the obstacles to good global governance and the difficulties of institutional 90

  P1: OyK

  0521866790c05

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:4

  The Challenge of Poor Governance and Corruption

  91

  reform. Various factors, including the end of the Cold War and the current round of globalization, have raised the pro-file of governance as an issue in recent years, but there are a number of reasons why comparatively little improvement

  has been made. In particular, there is a feeling among developing countries that reform is inequitable, with wealth-

  ier countries continuing to look after their own interests.

  Multinational companies, for example, may see little incentive to move away from ways of doing business that have

  served them well, and these companies are often strongly

  supported by their home governments.

  This means that developing countries are unsure about

  how much assistance they will get with reform, or what

  share of the fruits of cooperation will be theirs. Reforming governments that are highly dependent on powerful interest groups is never easy, and strong incentives are needed if the effort is to be successsful. Effective reform of national governance is only likely to come about if global governance is first improved. In particular, international organizations must recognize that there are no universally applicable governance norms and that change is possible under any polit-

  ical regime.

  Equally, there must be recognition that the transition

  to market democracy encouraged by international institu-

  tions is not only difficult and costly, but also politically sui-cidal for many authoritarian regimes. Dictators can foster genuine economic growth if they forgo short-term personal

  gain, whereas reforms can disadvantage some sectors of

  society. Democratization and liberalization also may them-

  selves allow new forms of corruption to develop.

  P1: OyK

  0521866790c05

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:4

  92

  How to Spend $50 Billion to Make the World a Better Place Success in tackling corruption can only come from

  balancing political realities with appropriate institutional reform. Although the reforms proposed by Rose-Ackerman

  are credible, their political feasibility is questionable.

  Andvig, in his opponent paper, concentrates on just one

  of the opportunities in the challenge paper: international efforts to limit high-level corruption in business. However, first he discusses the difficulty of distinguishing perception of corruption from hard facts. He is clearly in agreement with Cartier-Bresson that reliable data is impossible to come by. In particular, he highlights the problem of “informational cascades”: Statements on the degree of corruption are taken as true and repeated, even though there may be

  no hard evidence to support them.

  He nevertheless agrees that corruption is a serious chal-

  lenge, in particular where government is either itself dis-honest or too weak to deal with corrupt institutions. In the absence of revolution or invasion, only relatively weak tools are available to deal with this. Some of these take the form of interventions from rich countries (“the North”) to poorer, developing countries (“the South”).

  The first route for influence is via the behavior of multinational companies (MNCs), deemed to be ethical and hon-

  est in their home countries. Unfortunately, evidence from

  World Bank surveys is not encouraging: MNCs appear to

  act in much the same way as local companies in a corrupt

  business environment. Effort is needed to improve this situation. Punishing corruption by denying companies the right to bid for international contracts is one route, but must

  be strictly and fairly applied. Transparency initiatives as

  P1: OyK

  0521866790c05

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:4

  The Challenge of Poor Governance and Corruption

  93

  covered in the challenge paper also have their place, but

  voluntary agreements are not sufficient.

  Foreign aid is another major route of influence. Deny-

  ing it completely to dysfunctional states could, as Rose-

  Ackerman argues, have negative effects, but it could well

  be targeted to less corrupt sectors in a given country, or to projects under the control of international agencies. There is also a case for being more objective about where to target aid: use of corruption indices (however imperfect) and hard evidence is preferable to choice based on perceptions alone.

  There are some aspects of aid which can actually pro-

  mote corruption. In particular, wages for tasks performed

  by foreign aid agencies are often much higher than regular government pay.

  In summary, while both authors are quite supportive of

  the challenge paper, they present rather pessimistic assessments of the outlook for improving governance and tackling corruption.

  P1: OyK

  0521866790c05

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:4

  94

  P1: JPJ

  0521866790c06

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:51

  JERE R BEHRMAN1, HAROLD ALDERMAN2

  AND JOHN HODDINOTT3

  6

  Hunger and Malnutrition

  Introduction: the challenge of hunger and malnutrition

  Alongside the tragedy of acute famine, which is frequently shown on our televisions, there is a much bigger problem of chronic hunger and malnutrition in developing countries.

  Although this carries a very real human cost, it is the purpose of this chapter to look purely at the economic aspects: Assuring better nutrition can both reduce the economic

  drain on poor societies and help them become wealthier

  by increasing individuals’ productivity.

  This chapter reviews the nature and scale of the prob-

  lem and the economic benefits that would flow from

  successful solutions. Four opportunity areas for effective 1 William R Kenan Professor of Economics and Director of the Population Studies Center, University of Pennsylvania.

  2 Lead Human Development Economist in the Africa Region of the World Bank, Washington DC.

  3 Senior Research Fellow in the Food Consumption and Nutrition Division of the International Food Policy Research Institute, Washington DC.

  95

  P1: JPJ

  0521866790c06

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:51

  96

  How to Spend $50 Billion to Make the World a Better Place use of resources to reduce malnutrition are then proposed:

  1. Reducing the prevalence of Low Birth Weight.

  2. Promotion of infant and child nutrition and exclusive

  breastfeeding.

  3. Reducing the prevalence of iron deficiency anemia and

  vitamin A, iodine, and zinc deficiencies.

  4. Investment in technology in developing country

  agriculture.

  Using resources to address these opportunities woul
d yield benefits greater than the cost, so these opportunities are economically justified. Benefits would, of course, also be realized on a wider social and human scale.

  The nature of the challenge

  Hunger has been described as “a condition in which people

  lack the basic food intake to provide them with the energy and nutrients for fully productive lives.” Malnutrition, in its strict sense, can be associated with over-consumption of food, resulting for example in obesity, diabetes, or heart disease. Such problems are of increasing importance in some

  parts of the developing world. However, currently malnu-

  trition in the developing world is primarily associated with undernutrition.

  Although some commentators believe the regular fig-

  ures published by the Food and Agriculture Organization

  of the United Nations (FAO) understate the true incidence

  of hunger, these nevertheless form the only relatively long-term global database. The figures indicate that the number

  P1: JPJ

  0521866790c06

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:51

  Hunger and Malnutrition

  97

  of undernourished people in the developing world was 798

  million in the 1999–2001 survey period: 17% of the total

  population of developing countries. Although this is an

  enormous problem, it should be seen against the back-

  ground of their rapidly growing populations. There was an

  increase of 662 million people during the previous ten years (nearly twice the population of the 15-member European

  Union), while the number of chronically hungry people

  fell very slightly (by 18 million). Thus the prevalence of undernourishment has fallen substantially. 90% of these

  people live in the Asia-Pacific region (505 million) or sub-Saharan Africa (198 million). Despite the larger number

  of people affected overall, the trend in Asia-Pacific has

  been a reduction in the number and percentage of hun-

  gry people, primarily due to better nourishment of peo-

  ple in China. In Africa, on the other hand, the overall

  number of malnourished people increased, and in some

  countries the proportion of the affected population also

  rose.

  The socio-economic breakdown of malnutrition has

  been estimated by the Hunger Task Force as approximately:

  r 50% in farm households.

  r 25% rural landless.

  r 22% urban.

  r 8% directly resource dependent (for instance, pastoral-

  ists and fishermen).

  Development of a baby prior to birth (the gestational

  period) is crucial in determining its birth weight and

  affects childhood development. Mothers who are of small

  stature (directly affected by their own fetal development

  P1: JPJ

  0521866790c06

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:51

  98

  How to Spend $50 Billion to Make the World a Better Place and childhood nutrition), poorly nourished and prone to

  endemic disease, tend to give birth to small children, who are at a developmental disadvantage. This is commonly

  measured by the incidence of Low Birth Weight (LBW),

  where an infant weighs less than 2500g at birth. In 2000, it was estimated that 16% of newborn babies in the developing world – 11.7 million children annually – could be classified as of LBW. In parts of south Asia, the situation is especially acute: an estimated 30% of babies are of LBW.

  LBW is one important factor in determining early child-

  hood development. Another is poor infant nutrition, particularly during the first two to three years of life. This has itself been linked to reduced breastfeeding. The net effect is reflected in the estimate that, in 2000, 162 million children (about one in three) were stunted.

  In addition to the negative effect of malnutrition (both

  of the child and mother) on physical growth of children,

  deficiencies in micro-nutrients can have a major impact on development of intelligence. Lack of both iodine and iron

  has been implicated in impaired brain development, and

  this can affect enormous numbers of people: It is estimated that 2 billion people (one-third of the total global population) are affected by iodine deficiency, including 285 million six- to twelve-year-old children. In developing countries, it is estimated that 40% of children aged four and under suffer from anemia because of insufficient iron in their diets.

  Potential benefits of meeting the challenge

  Reduction of the incidence of malnutrition would have a

  number of benefits. The most important ones identified are:

  P1: JPJ

  0521866790c06

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:51

  Hunger and Malnutrition

  99

  r Reduction in infant mortality rates associated with LBW

  and deficiencies in micronutrients. The World Health

  Organisation (WHO) estimates that malnutrition con-

  tributed to 3.4 million child deaths in 2000; 60% of total child deaths. Reporting in 2001, a WHO commission

  estimated that a 10% increase in average life expectancy

  at birth results in an additional 0.3–0.4% of economic

  growth per year.

  r Those who survive the effects of long-term malnutrition

  are more susceptible to disease, which further compro-

  mises their welfare. This also is a direct drain on health care services.

  r Poor nutrition can directly affect physical productivity.

  Reduction in chronic hunger increases an individual’s

  capacity to do physical work and increases his or her

  earning power. For example, a study of workers in rural

  Brazil reported that a 1% increase in height (associated

  with improved nutrition) leads to a 2–2.4% increase in

  wages or earnings.

  r For a variety of reasons, childhood malnutrition often

  leads to an individual receiving less schooling, which

  translates directly into lower lifetime earnings for the

  people affected.

  Opportunities related to hunger and malnutrition

  Framework for considering opportunities

  Although reduction in malnutrition would have clear eco-

  nomic benefits (in addition to human and social benefits), the purpose of the Copenhagen Consensus is to compare as

  P1: JPJ

  0521866790c06

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:51

  100 How to Spend $50 Billion to Make the World a Better Place objectively as possible these benefits with those delivered by meeting the other nine challenges.

  This is done partly by comparing the overall net finan-

  cial gain, which may sound relatively straightforward but

  is complicated by the fact that benefits accrue in many

  cases over long periods (the remaining lifetimes of chil-

  dren whose nutrition is improved, for example). To bring all projects to a common basis, an estimate must be made of

  the current value of all benefits to be received in the future.

  This is done by a process called discounting, which is simply an assumption of the future value of money compared

  with that of today. However, the choice of a particular discount rate will, over a period of ten years
or more, make an enormous difference to the current value (what economists

  call the Present Discounted Value). Indeed, it can make

  the difference between an opportunity being seen as highly valuable and being rejected as having too small economic

  benefit to warrant the cost. There are other problems in

  making such estimates as well. Putting aside the question

  of discounting, for example, it is difficult to estimate the impacts of interventions given imperfect data that generally is generated by individuals’ behaviours and it often is difficult to estimate costs given programs that bundle interventions and use accounting prices that differ from marginal

  scarcity prices. Finally, for the efficiency motive for public subsidies what is needed are differences between private

  and social rates of returns, but such estimates are difficult to make and rarely available.

  In a nutshell, there are no easy answers that are likely to be universally applicable. It is expected that a more subtle

  P1: JPJ

  0521866790c06

  Printer: cupusbw

  CUFX043/Lomborg

  0 521 86679 0

  May 7, 2006

  16:51

  Hunger and Malnutrition

  101

  Table 6.1. Summary of benefits and costs for opportunities related to Hunger and Malnutrition

  Opportunities

  Benefits-

  Discount

  and targeted

  costs

  rates

  populations

  Benefits ($) Costs ($)

  ratio ($)

  (%)

  Treatments for

  $580–986

  $200–2000 0.58–4.93

  3–5%

  women with

  asymptomatic

  bacterial

  infections

  Breastfeeding

  $131–134

  $133–1064 4.80–7.35

  3–5%

  promotion in

  hospitals in

  which norm has

  been promotion

  of use of infant

  formula

  Vitamin A (pre

  $37–43

  $1–10

  4.3–43

  3–5%

  child under six

  years)

  Dissemination of

  8.8–14.7

  3–5%

  new cultivars

  with higher yield

  potential

  analysis of costs and benefits at a country level – and their sensitivity to variables – would be necessary.

  Opportunity 1: Reducing the prevalence of Low

  Birth Weight

  Some 12 million children in the developing world are born

  each year weighing less than 2500g, and are classified as

 

‹ Prev