INDENG-TECH-ECON-Leading Change in Procurement for Cornish Supply Chains

The following information is used for educational purposes only.

Clear About Carbon: Leading Change in Procurement for Cornish Supply Chains


Dec 14th, 2011




By Fernando Correia, Annie Pye, Beverley Hawkins, Mickey Howard & Simon Ramsay

During the last decade the significance of climate change and the scientific consensus around the need for significant reductions in carbon emissions have grown sufficiently to directly inform and influence public policy at several levels, from national security to public procurement. The UK, for example, has not only become the first European country to commit to a long-term, legally binding framework for emissions reductions (the 2008 Climate Change Act), but also has the most ambitious targets (an 80% reduction in emissions by 2050, measured against a 1990 baseline). The same Act includes a provision for the UK Government to use powers under the 2008 Companies Act to make carbon emissions reporting mandatory (or explain to Parliament why it has not done so) by April 2012. The UK central government is already incorporating carbon reduction criteria in its procurement policies, with the general policy expectation that these criteria will soon appear in all public tender documents and processes in the future.

The project aims to develop and instil low carbon literacy, leadership and management skills into public sector procurement and private sector supply chains.

Markets have been influenced by a growing awareness of carbon emissions for some time, although it is not always clear who is driving whom. Growing public awareness of climate change, public policy developments and consumer trends are all likely to have contributed, but so too have market mechanisms and simple bottom-line business measures, as energy prices increase and the supply of commodities becomes less reliable and more unpredictable. Moreover, larger businesses are not only looking at their own emissions, but also expecting reciprocity from their suppliers. Recent positioning of some of the UK’s main supermarket brands and suppliers gives an idea as to the course being set:
■Sainsbury’s recently published “20 by 20 Sustainability Plan” where the company sets expectations from its own-brand suppliers to reduce carbon emissions by 50% by 2020.
■Tesco had previously declared its aim to achieve a 30% reduction in carbon emissions in its supply chain by 2020
■Marks & Spencer’s Plan A now includes a dedicated section focused on reducing its suppliers’ carbon footprint, listing ten separate commitments, from energy efficiency targets in its food suppliers to changes in logistics and operations.
■Unilever has pledged to halve the greenhouse gas impact of its products across their lifecycle (i.e. including the full supply chain) by 2020.

October 2011 saw the publication of the new Greenhouse Gas Protocol which sets the standards for products and corporate value chain carbon accounting and reporting. These are expected to set an industry-wide benchmark under which companies can measure emissions both upstream and downstream of their operations, and of the full life cycle of their products, including raw materials, manufacturing, transportation, storage, use and disposal. The scale of the challenges ahead for companies is therefore impressive – particularly for SMEs – with the pressure for increased carbon reductions amounting from both the public and private sectors. It is within this charged arena that the University of Exeter Business School is currently developing its path-finding programme – ‘Clear About Carbon’ – assisting organisations in Cornwall to address these challenges. In so doing, this is also generating lessons for dissemination to a wider audience on how sustainable procurement can lead the change towards a low carbon economy.

Context & background
Clear About Carbon is a European Social Fund-Convergence funded project and partnership which for the past 2½ years has been working to develop and instil low carbon literacy, leadership and management skills into public sector procurement and private sector supply chains. Delivery of the project is being carried out by a quartet of local establishments (the University of Exeter Business School, Cornwall Development Company, Duchy College Rural Business School and the Eden Project), all with impressive credentials in leading local business and informing on issues surrounding carbon reduction. Under this partnership, the University of Exeter Business School has been working with public and private senior sector management teams in Cornwall to develop their leadership and management skills to better drive low carbon economic development in the region.

This interdisciplinary project involves the use of Action Learning Sets and Value Stream Mapping Workshops which provide valuable data on how managers learn to bring about change for low carbon procurement.

This interdisciplinary project aims to understand the nature of leading change in procurement and supply chain practice to achieve lower carbon impacts and better organisational performance in Cornish organisations and their supply chains. The study is underpinned by foundational research drawn from the fields of environmental management, leadership and change, and purchasing and supply chain management. It brings together knowledge from the areas of distributed leadership and change, lean process mapping and performance, and environmental literacy. The methodologies used, in turn, involve the use of Action Learning Sets and Value Stream Mapping Workshops which are facilitated by key project staff and which provide valuable data on how managers learn to bring about change for low carbon procurement. At the same time, this also helps senior leaders to bring about change and improvement in their practice, leading to lower carbon consumption and production throughout the organisation.

Whilst the primary focus of the Clear About Carbon project has been aimed at organisations in Cornwall, the project also has three European ‘transnational’ partners with whom knowledge transfer and learning experiences have been shared. These are the Finnish region of Ostrobothnia, home of the Vaasa Energy Cluster and one of Europe’s leaders in renewable energies technologies; the Association of Local Authorities in Skaraborg, Sweden and EcoInstitut Barcelona which has been supporting Barcelona Council to adopt sustainable procurement practices.

The relevance of the project has also been acknowledged recently with the receipt of the 2011 ESF Sustainable Development Specialist Project Leader Award, and part of its carbon literacy learning outputs and training materials now form part of the National Sustainable Public Procurement Programme run by Defra.

Process & methods
Working with senior managers at Cornwall Council, NHS-Peninsula Purchasing and Supply Alliance (NHS-PPSA), Devon & Cornwall Constabulary and Cornwall College Group, the University of Exeter Business School team has been supporting the development of the organisations’ low carbon procurement policies and strategies, as well as preparing Cornish SMEs to respond to the challenges of the low carbon economy. The team is responsible for a work package entitled ‘Leadership & Procurement Management Skills for Climate Change’, aimed at board and executive level management within both the public and private sector, with a special focus on potential overlaps that occur between public procurement, a low carbon economy and sustainability promotion. The team has successfully initiated the delivery of its leadership development programme with key organisations facilitated by its innovative methodology.

As a precursor to the Action Learning Sets, Associate Professor Mickey Howard, from the Business School’s Management Department, has been facilitating Value Stream Mapping workshops with purchasing teams, creating the first stepping stone for rethinking the procurement operations within the organisation. The process of revealing wasteful activity as a core element of low carbon procurement provides a springboard for engaging in an Action Learning Set, in which participants work in a small group over a period of time (usually six sessions) to review and reflect on their own actions and experiences in order to improve their performance. This methodology generates valuable longitudinal, process-oriented data which affords insight into the leadership learning and development process, while also helping participants to learn and develop low carbon literacy and improve their procurement practice. As a result, the programme has achieved significant impact at different leadership and managerial levels in these organisations, and led to wider change, once these senior managers have returned to their organisations. Learning outcomes have been disseminated as case studies and findings from the Clear About Carbon project are integrated into parts of the new One Planet MBA programme launched by the University of Exeter in conjunction with WWF, to provide informed content and promote critical discussion and review of the approach and its outcomes.

Organisations benefit the most when a flexible and adaptive delivery approach allows them to integrate this new “low carbon thinking” into their other current programmes.

This innovative aspect of the Clear About Carbon project, its theme, its leadership angle, its path finding approach and flexibility, have all given it the capacity to adapt and explore opportunities to assess its potential and application to other related contexts and initiatives. Indeed, this has been one of the main learning outcomes of project so far – that the nature of the theme (low carbon procurement and low carbon economy) is such that organisations benefit the most when a flexible and adaptive delivery approach allows them to integrate this new thinking into other programmes they might have currently running, rather than as a standardised package of training delivery. The following examples of the Cornwall College Group and NHS provide practical demonstrations of this.

Findings & key challenges
So how does this work for organisations? NHS-PPSA has become the first NHS organisation in the country to pilot the national Procurement for Carbon Reduction (P4CR) programme, developed by the Department of Health (DH). After the initial training by the DH supported by Cornwall Development Company, a selected group of managers has started work with the University of Exeter Business School on assessing the strategic implications of the adoption of low carbon procurement. This work is ongoing and after a consideration on how to integrate ‘low carbon thinking’ in a series of selected tenders or contracts, the approach is now evolving to a wider consideration on the incorporation of sustainable criteria and carbon savings on award criteria and evaluation scores.

Cornwall College Group was the first further education college in the UK to implement a Carbon Management Plan, under the Carbon Trust’s Higher Education Carbon Management Programme. The Action Learning Sets and Value Stream Mapping Workshops facilitated by the Business School under the Clear About Carbon project have provided the perfect complement to this programme, by bringing together the organisation’s senior managers to discuss the strategic implications, directions and decisions the College needs to consider if it is to achieve its aim of becoming a low carbon organisation.

Such organisational examples have led to important implications for our understanding of how and why people make decisions in relation to reducing the carbon footprint within their supply chain. In particular, these examples highlight the competing logics or mindsets of different individuals in different contexts that attempt to make sense of words like ‘carbon’ and ‘sustainability’. Each logic, grounded in the assumptions and values embedded in a localised, temporally specific, organisational culture, offers the individuals a different ‘right answer’.

The availability of solutions for reducing carbon emissions is seemingly dependent on which issues and agendas in terms of ‘sustainability’ are given priority, and these in turn, are influenced by the cultural lens through which they are perceived. As a result, there is no universal ‘best’ way to engage with this complex leadership challenge, because what is right in one context may appear wrong in another. It is clear that any heroic, all-conquering solutions to the reduction of carbon emissions are unlikely to succeed. What the Business School’s research has shown is that leaders find their way towards new and better courses of action based on the issues and potential answers to which they attend. Sharpening the focus in this way is affected in turn by many different factors, including the agendas of board members, government and indeed projects like Clear About Carbon itself. Leading change for low carbon procurement can therefore be a more clumsy process of grappling with contextually-embedded challenges, and cannot be entirely separated from the network of activities that constitute the organisation itself.

Discussion & implications
The significance of the Clear About Carbon project is not just to raise awareness amongst public and private Cornish organisations about the role of carbon and its effects on the environment as a whole. The importance of connecting carbon with daily activities and the role public procurement plays in addressing this is also fundamental. Using Action Learning Sets to raise collective awareness of the need for leadership around carbon reduction, and Lean Mapping Workshops to identify specific parts of the supply chain where activity within and between firms can be improved, the project has demonstrated that sustainability and more efficient business practices are not divergent but closely linked.

One of the key learning outcomes of the project so far is that public organisations are still at a stage of trying to understand the many implications – be they strategic, organisational, operational, financial or legal – of adopting a low carbon procurement approach. As a consequence, most still hesitate to publicly advertise or readily embrace a low carbon procurement agenda without receiving more clarity on these issues or obtaining clear mandates from their boards. With the support of the University of Exeter Business School’s programme, participants have been exploring and discussing these implications, gradually building their strategies around it, and tentatively considering the adoption of low carbon procurement approaches on selected pilot contracts or tenders. These discussions are providing rich information that will be reported to inform policy development.

Public organisations are still at a stage of trying to understand the many implications of adopting a low carbon procurement approach.

In terms of the private sector, the recent and rapidly evolving regulatory and market developments on carbon considerations have created new challenges and opportunities that the project could not have anticipated when it first started. For example, the cautious approach of public sector procurement described above can slow the engagement of businesses with carbon issues. Conversely, an increased market drive from bigger corporations on product carbon footprinting, is able to shift the balance the other way and place renewed pressure on the private sector to deliver carbon reductions. This potential volatility will force businesses to embrace new sets of leadership skills from that go beyond carbon literacy for public tendering, but rather require them to reconsider their whole strategic and commercial positioning in a carbon competitive marketplace.

As the participant organisations in the Clear About Carbon project move from attaining added clarity on implications and directions to the practical implementation of low carbon procurement, their experiences and results are bound to provide some of the most valuable lessons from and to practitioners, both on its challenges and the skills necessary to address the issue. The same situation is apparent within the private sector, as businesses move from strategy definition to testing practical approaches that place them in an advantageous position, both in terms of internal efficiencies and externally with their clients in terms of value chain carbon reductions.

The Clear About Carbon project aims to continue to follow and support the journey of Cornish organisations in their low carbon journey (and path-finding processes). In this sense, it is currently submitting a bid for further funding which would focus on the organisations’ experiences as they move from strategy to implementation, looking at issues of leadership, learning and change. By capturing the organisational and participants’ learning outcomes of its low carbon implementation attempts, Clear About Carbon would provide valuable practice-based case studies and outcomes that can inform future policy on skills development for the low carbon economy, of relevance for both national and international levels.

About the authors
Dr. Fernando Correia is a Research Fellow in the University of Exeter Business School. He has a PhD in sustainability and his current research focus on identification of best practices in sustainable and low carbon supply chain management. He has a professional and academic background on the areas of sustainability evaluation and certification.

Professor Annie Pye is Professor and Director of Research at the Centre for Leadership Studies, University of Exeter Business School. Her research explores how small groups of people ‘run’, organise and make sense of complex organisations, including those leading companies to bring about strategic change. She publishes widely and is Principal Investigator on the research project which underpins this article.

Dr. Beverley Hawkins is a lecturer in the Centre for Leadership Studies, University of Exeter Business School. She has a PhD in management and has published work on leadership, organisational culture, teamwork and sustainability. Her research interests focus on the collaborative, sense-making interactions that take place amongst people in organisations.

Dr. Mickey Howard is Associate Professor in Supply Chain Management at the University of Exeter Business School. His research investigates the implementation of supply chain strategy such as service-based innovation and low carbon procurement. He publishes widely, complements his research with private advisory work, and has guest lectured in business schools around the world.

Simon Ramsay has a degree in Ibero-American Studies and a background in communications, marketing and research. He joined the University of Exeter Business School to work on the transitional phase of the University’s One Planet MBA programme and now works, as an Associate Research Fellow, within the multi-disciplinary team on the Clear About Carbon project.


Source: www.europeanfinancialreview.com

TED Talks-Gayle Tzemach Lemmon:Women entrepreneurs, example not exception

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Transcript: Women entrepreneurs, example not exception, by Gayle T. Lemmon
We do not invest in victims, we invest in survivors. And in ways both big and small, the narrative of the victim shapes the way we see women. You can't count what you don't see. And we don't invest in what's invisible to us. But this is the face of resilience.

Six years ago, I started writing about women entrepreneurs during and after conflict. I set out to write a compelling economic story, one that had great characters, that no one else was telling, and one that I thought mattered. And that turned out to be women.

I had left ABC news and a career I loved at the age of 30 for business school, a path I knew almost nothing about. None of the women I had grown up with in Maryland had graduated from college, let alone considered business school. But they had hustled to feed their kids and pay their rent. And I saw from a young age that having a decent job and earning a good living made the biggest difference for families who were struggling.

So if you're going to talk about jobs, then you have to talk about entrepreneurs. And if you're talking about entrepreneurs in conflict and post-conflict settings, then you must talk about women, because they are the population you have left. Rwanda in the immediate aftermath of the genocide was 77 percent female. I want to introduce you to some of those entrepreneurs I've met and share with you some of what they've taught me over the years.

I went to Afghanistan in 2005 to work on a Financial Times piece, and there I met Kamila, a young women who told me she had just turned down a job with the international community that would have paid her nearly $2,000 a month -- an astronomical sum in that context. And she had turned it down, she said, because she was going to start her next business, an entrepreneurship consultancy that would teach business skills to men and women all around Afghanistan. Business, she said, was critical to her country's future. Because long after this round of internationals left, business would help keep her country peaceful and secure. And she said business was even more important for women because earning an income earned respect and money was power for women.

So I was amazed. I mean here was a girl who had never lived in peace time who somehow had come to sound like a candidate from "The Apprentice." (Laughter) So I asked her, "How in the world do you know this much about business? Why are you so passionate?" She said, "Oh Gayle, this is actually my third business. My first business was a dressmaking business I started under the Taliban. And that was actually an excellent business, because we provided jobs for women all around our neighborhood. And that's really how I became an entrepreneur."

Think about this: Here were girls who braved danger to become breadwinners during years in which they couldn't even be on their streets. And at a time of economic collapse when people sold baby dolls and shoe laces and windows and doors just to survive, these girls made the difference between survival and starvation for so many. I couldn't leave the story, and I couldn't leave the topic either, because everywhere I went I met more of these women who no one seemed to know about, or even wish to.

I went on to Bosnia, and early on in my interviews I met with an IMF official who said, "You know, Gayle, I don't think we actually have women in business in Bosnia, but there is a lady selling cheese nearby on the side of the road. So maybe you could interview her." So I went out reporting and within a day I met Narcisa Kavazovic who at that point was opening a new factory on the war's former front lines in Sarajevo. She had started her business squatting in an abandoned garage, sewing sheets and pillow cases she would take to markets all around the city so that she could support the 12 or 13 family members who were counting on her for survival. By the time we met, she had 20 employees, most of them women, who were sending their boys and their girls to school. And she was just the start. I met women running essential oils businesses, wineries and even the country's largest advertising agency.

So these stories together became the Herald Tribune business cover. And when this story posted, I ran to my computer to send it to the IMF official. And I said, "Just in case you're looking for entrepreneurs to feature at your next investment conference, here are a couple of women."

(Applause)

But think about this. The IMF official is hardly the only person to automatically file women under micro. The biases, whether intentional or otherwise, are pervasive, and so are the misleading mental images. If you see the word "microfinance," what comes to mind? Most people say women. And if you see the word "entrepreneur," most people think men. Why is that? Because we aim low and we think small when it comes to women.

Microfinance is an incredibly powerful tool that leads to self-sufficiency and self-respect, but we must move beyond micro-hopes and micro-ambitions for women, because they have so much greater hopes for themselves. They want to move from micro to medium and beyond. And in many places, they're there. In the U.S., women owned businesses will create five and a half million new jobs by 2018. In South Korea and Indonesia, women own nearly half a million firms. China, women run 20 percent of all small businesses. And in the developing world overall, That figure is 40 to 50 percent.

Nearly everywhere I go, I meet incredibly interesting entrepreneurs who are seeking access to finance, access to markets and established business networks. They are often ignored because they're harder to help. It is much riskier to give a 50,000 dollar loan than it is to give a 500 dollar loan. And as the World Bank recently noted, women are stuck in a productivity trap. Those in small businesses can't get the capital they need to expand and those in microbusiness can't grow out of them.

Recently I was at the State Department in Washington and I met an incredibly passionate entrepreneur from Ghana. She sells chocolates. And she had come to Washington, not seeking a handout and not seeking a microloan. She had come seeking serious investment dollars so that she could build the factory and buy the equipment she needs to export her chocolates to Africa, Europe, the Middle East and far beyond -- capital that would help her to employ more than the 20 people that she already has working for her, and capital that would fuel her own country's economic climb.

The great news is we already know what works. Theory and empirical evidence Have already taught us. We don't need to invent solutions because we have them -- cash flow loans based in income rather than assets, loans that use secure contracts rather than collateral, because women often don't own land. And Kiva.org, the microlender, is actually now experimenting with crowdsourcing small and medium sized loans. And that's just to start.

Recently it has become very much in fashion to call women "the emerging market of the emerging market." I think that is terrific. You know why? Because -- and I say this as somebody who worked in finance -- 500 billion dollars at least has gone into the emerging markets in the past decade. Because investors saw the potential for return at a time of slowing economic growth, and so they created financial products and financial innovation tailored to the emerging markets.

How wonderful would it be if we were prepared to replace all of our lofty words with our wallets and invest 500 billion dollars unleashing women's economic potential? Just think of the benefits when it comes to jobs, productivity, employment, child nutrition, maternal mortality, literacy and much, much more. Because, as the World Economic Forum noted, smaller gender gaps are directly correlated with increased economic competitiveness. And not one country in all the world has eliminated its economic participation gap -- not one.

So the great news is this is an incredible opportunity. We have so much room to grow. So you see, this is not about doing good, this is about global growth and global employment. It is about how we invest and it's about how we see women. And women can no longer be both half the population and a special interest group.

(Applause)

Oftentimes I get into very interesting discussions with reporters who say to me, "Gayle, these are great stories, but you're really writing about the exceptions." Now that makes me pause for just a couple reasons. First of all, for exceptions, there are a lot of them and they're important. Secondly, when we talk about men who are succeeding, we rightly consider them icons or pioneers or innovators to be emulated. And when we talk about women, they are either exceptions to be dismissed or aberrations to be ignored. And finally, there is no society anywhere in all the world that is not changed except by its most exceptional. So why wouldn't we celebrate and elevate these change makers and job creators rather than overlook them?

This topic of resilience is very personal to me and in many ways has shaped my life. My mom was a single mom who worked at the phone company during the day and sold Tupperware at night so that I could have every opportunity possible. We shopped double coupons and layaway and consignment stores, and when she got sick with stage four breast cancer and could no longer work, we even applied for food stamps. And when I would feel sorry for myself as nine or 10 year-old girls do, she would say to me, "My dear, on a scale of major world tragedies, yours is not a three."

(Laughter)

And when I was applying to business school and felt certain I couldn't do it and nobody I knew had done it, I went to my aunt who survived years of beatings at the hand of her husband and escaped a marriage of abuse with only her dignity intact. And she told me, "Never import other people's limitations."

And when I complained to my grandmother, a World War II veteran who worked in film for 50 years and who supported me from the age of 13, that I was terrified that if I turned down a plum assignment at ABC for a fellowship overseas, I would never ever, ever find another job, she said, "Kiddo, I'm going to tell you two things. First of all, no one turns down a Fullbright, and secondly, McDonald's is always hiring." (Laughter) "You will find a job. Take the leap."

The women in my family are not exceptions. The women in this room and watching in L.A. and all around the world are not exceptions. We are not a special interest group. We are the majority. And for far too long, we have underestimated ourselves and been undervalued by others. It is time for us to aim higher when it comes to women, to invest more and to deploy our dollars to benefit women all around the world.

We can make a difference, and make a difference, not just for women, but for a global economy that desperately needs their contributions. Together we can make certain that the so-called exceptions begin to rule. When we change the way we see ourselves, others will follow. And it is time for all of us to think bigger.

Thank you very much.

(Applause)

ECON-TECH-The Emerging Innovation Challenge to the West

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India Inside: The Emerging Innovation Challenge to the West


Dec 14th, 2011



By Nirmalya Kumar and Phanish Puranam

For many firms, developing new products for consumers around the world is the most visible manifestation of innovation – the real deal. It is one thing for firms to manage another firms IT system or to field calls from its customers, but quite another to conceptualise a new product or service offering and take the idea all the way from conception to sale. This latter notion is the kind of innovation that people have in mind when they ask, ‘where are the Indian Googles, iPods and Viagras?’. The problem with this perspective is that it virtually ignores innovation in the B2B space and how new product development is currently conducted in MNCs. Today, the new-product development activities of MNCs are segmented across geographies, and consequently much of this development is visible only in B2B context. For example, most passengers neither know nor care where the aircraft engine inside airplanes was designed and manufactured; most electricity consumers do not know which country came up with the wind turbines that generate their electricity; and few computer users – hardcore technophiles excluded – realize which country designed the microprocessor in their machines. The answer, in each case, could be India.

These invisible innovations were all triggered by the availability of highly skilled employees at low prices in India (budget-conserving talent). In contrast, visible innovations from India like Nano or GE’s new ECG machine are catalyzed by the need to serve markets with low purchasing power (budget-constrained customers, though undoubtedly, the budget-conserving talent helps to make these innovations possible). However, there is more to this approach than just making things cheaper. Carlos Ghoshn, who heads Renault-Nissan, is credited with coining the term frugal engineering to signify achieving more with fewer resources. Frugal engineering is not mere jugaad, that is, making fixes and finding work-arounds. Whereas jugaads – while undoubtedly creative and inventive – essentially signal resignation to current constraints, frugal engineering can be a systematic approach to making those constraints irrelevant, or at least less important. As many are beginning to recognize, excessive dependence on the jugaad mind-set may in fact impede the ability to fundamentally transform a situation through disciplined engineering, frugal or otherwise.

Frugal engineering is very much a child of its context. Its development has been intimately tied to the brute fact of low purchasing power among the vast majority of Indian consumers. At the same time, the fruits of frugal engineering could well be valued outside India and, in our view, may be the basis on which Indian innovation gains global visibility.

In addition to making things cheaper, frugal engineering signifies achieving more with fewer resources.

For instance, when Armin Bruck, managing director of Siemens in India, set out to convince the German engineering company’s board of the potential of Indian innovation, he gave the board members the keys to a Tata Nano. He wanted to convey the smell and feel of a revolutionary mass-market product and persuade them to improve the pipeline of local inventions aimed at Indian consumers. Peter Loscher, the company’s chief executive, and his colleagues Heinrich Heinsinger and Joe Kaeser piled into the world’s cheapest car and drove to New Delhi. The test drive fortified the company’s effort to reconfigure its strategy to develop high quality engineering technology for low-cost emerging markets.

Another MNC has employed frugal engineering in a much more modest product. For many years, Nestle sold its Maggi brand dried noodles only to rural Pakistan and India, for about twenty cents per serving. In 2008 the company began promoting Maggi in Australia and New Zealand as a budget-friendly health food with no oil, less salt, and no monosodium glutamate.

Siemens, the German engineering giant, discovered that developing a low cost X-ray machine for India helped improve its models sold in Europe and the United States. While trying to frugally engineer an X-ray machine for operating theatres in its Indian R&D center, the company found that the camera at the core of the machine could be produced for about $500, as opposed to $2,000 in the western models. “The new camera is not a cheap copy of a western model,” said Vishnu Swaminathan, head of the embedded hardware system program at Siemens Corporate Technology India. “We redesigned everything from scratch with a view to cutting costs while meeting the specific needs of local doctors.” Since the new camera is much cheaper but comparable to the original version in quality, it makes sense to install it in the models aimed at developed markets.

The general principle is simple – the fundamental rethink of a product that accompanies frugal engineering efforts in an emerging market may throw up solutions that are also valuable in developed markets.

The general principle is simple – the fundamental rethink of a product that accompanies frugal engineering efforts in an emerging market may throw up solutions that are also valuable in developed markets. It should not be surprising that cutting-edge innovation in mobile phone services, alternative energy generation, and cheap mass transport may come from countries like India and China.

Reva Eectric Car Company in Bengaluru suggests this type of global potential. Its agile two-seater, called the REVAi, has been well received outside its home market. For example, in London (where the car sells as G-Wiz), a standard model costs around £10,000. Because it is an electrically propelled vehicle, G-Wiz is exempt from the London congestion charge, which prohibits most drivers from keeping a car, and parking it is free. Drivers in other European countries have found ways to buy the REVAi; new markets have sprung up in Spain and Norway, as well as on other continents, such as in Costa Rica and Brazil. General Motors agreed to license technology from Reva for its Spark car, which it planned to launch in Indian and U.S. markets. However, Reva was acquired by Mahindra & Mahindra in 2010, and GM ended its relationship with Reva soon after- which may tell us something about the seriousness with which GM view Mahindra & Mahindra as a competitor.

Innovation in India may not be powered by breakthroughs in basic science or conducted for consumers with big wallets and a taste for novelty, until India’s science infrastructure and the purchasing power of Indian consumers improves dramatically. However, the innovation that does occur in India is conducted in a context that makes frugal product development practices as natural as breathing – and it is conducted for a group of consumers who are in the fastest-growing segments in the world. Thus, success in Indian visible innovation may come largely from frugal engineering for budget-constrained consumers, just as much of Indian invisible innovation may come from budget-conserving talent available at a scale unheard-of in most other parts of the world. So what does this mean for managers and policy makers?

- MNCs stand to benefit by tapping into Indian frugal engineering:
1.The resulting innovations can be offered in India as a complete product line to meet the needs of different segments of consumers.
2.The innovations can be offered in other budget-constrained, emerging markets.
3.The MNCs gain unique offering for budget-constrained niche segments in developed markets.

- Western policy makers should consider how frugal engineering practices may help to provide cost efficient public services – in health car, for instance.

- Best practices in frugal engineering are unlikely to come from a textbook. It is up to sophisticated Indian engineers and managers in companies to create a set of standards, a body of knowledge, and a community of practitioners around the concept, much as it has been created for quality management or the Toyota production system. Policy makers in India can help encourage research and training in codified frugal-engineering practices, once these have developed sufficiently. Indian companies and MNCs operating in India need to leverage the capability that the country is developing for frugal engineering. These capabilities enable product development with the following features:


1.Develop product robustness to harsh and varying operating conditions.
2.Work on portability to move solutions to people in remote and poorly connecting areas.
3.Defeature products to reduce junk DNA of products and to begin design afresh.
4.Leapfrog technology to make existing infrastructural constraints irrelevant.
5.Use megascale production to drive down costs.
6.Develop service ecosystems to help economically customize products and related services.


The article is taken from India Inside: The Emerging Innovation Challenge to the West, by Nirmalya Kumar and Phanish Puranam, published by Harvard Business Review Press. Excerpted by permission of McGraw-Hill.

About the authors
Nirmalya Kumar and Phanish Puranam are Professors at London Business School and serve as codirectors of its Aditya Birla India Centre. They have authored numerous books and articles on marketing, innovation, strategy and Indian business.

Source: www.europeanfinancialreview.com

FIN-POL-Islamic Finance In A Multipolar World*

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Islamic Finance In A Multipolar World*


Oct 20th, 2011



By Abbas Mirakhor

Continuation of debt-based financing regime will not necessarily allow the benefits of emerging multipolarity to accrue to the world economy. The new system can be more effective with a new regime of financing. Indications are that almost all emerging countries in Asia are actively considering risk sharing via Islamic finance as a possible alternative.

By 2025, Brazil, India, Indonesia, Korea, Russia are expected to join China as new growth poles in the global economy, according to a recent World Bank report.1 The size, dynamism and dominance in forward and backward linkages in trade and investment of an economy are the criteria for selection. The hypothesis is supported by three elements: (i) shifting balance of global growth from developed to emerging market economies leading to the emergence of a new global economic order; (ii) there will be a shift in the drivers and sources of global trade and investment flows; and, (iii) the international reserve currency structure will move from a unitary to multicurrency regime. The evidence for the hypothesis includes the fact that: (i) the emerging markets are leading the global growth; (ii) these economies have been a major source of origination of cross-border mergers and acquisition with a significant increase from US$27 billion in 1997 to US$254 billion in 2011 and from 576 deals to 2,447 over the same period; (iii) emerging market economy corporates have increased the strength of their presence in the global financial markets as their borrowing increased from US$123 billion in 2000 to US$461 billion by the end of 2010; and (iv) their borrowing costs have reduced.

The hypothesis has its challengers2 who argue that polarity is all about power, and multipolarity is a distribution of power among more than two countries with roughly equal powers. And, power, it is said, is represented by: (i) economic power; (ii) strategic (military) power and the capacity to project that power; and, (iii) the willingness to do so. Only China has the potential to share the global polarity space with the US and Europe-Japan. Other candidates fail to come up to standard because they do not possess the economic power (Russia’s GDP is only 1 percent of global GDP as compared with the US at 22 percent) and/or lack the other two assets. China can be expected to become a major player but the US will “remain master of the game”, and the US-centred unipolar system will continue. This system was based on: (i) a set of explicit and implicit economic and security arrangements between the US, Western Europe and Japan; all other countries were on the periphery; (ii) the US assumed responsibility for maintaining the stability of the system; and (iii) the US would serve as the market of last resort. In exchange at least three major benefits accrued to the US: (i) independence and autonomy in economic policy making (what was good for the US would be good for the rest of the world); (iii) this meant significant degree of flexibility for the US in managing their balance of payments, a flexibility not easily available to the rest of the world; and (iii) substantial benefit from the US dollar serving the world as the dominant, safe-haven international currency.

Unipolar regime under Debt Stress

The fall of the Soviet Union consolidated the power of the dollar-based unipolar international trade and financial system until the 2007/2008 global crisis. The stress and strain in the unipolar system and its associated arrangement were becoming apparent in the 1990s as Japan, followed by The Asian Tigers, Russia, Argentina, and Brazil were sending distress signals. Neither the signals nor the lessons of these crises made any significant impact on the way the centers of the dollar-based unipolar system were conducting policies. The regime was quick to impose policy and structural reforms, standards and codes through the International financial institutions (IFIs) in which the US-Western Europe-Japan held major sway. However, the center of the system itself was slow to adopt the prescriptions it was writing for the emerging market economies and developing countries. The case in point was the diagnostic device: Financial Sector Assessment as well as other best international practices and codes which the IMF required from all its members. The US were one of the last to adopt them but much too late to prevent the idiosyncratic trigger of the global crisis. Andrew Sheng in his finely textured analysis has demonstrated how the crisis would have been avoided had the system learned the lessons of the Asian crisis.3

“The fall of the Soviet Union consolidated the power of the dollar-based unipolar international trade and financial system until the 2007/2008 global crisis.”

A central and overwhelmingly cause of the Asian crisis was debt in all its dimensions. The global financial crisis has been analysed voluminously, and a variety of reasons have been given for the crisis. By far the most comprehensive has been the study by Reinhart and Rogoff (2009) which conveys a central message that all financial crises, whether currency or banking crisis, are at root debt crises.4 IMF had already focused on this issue in its post-Asian crisis diagnostics and had recommended that emerging markets and developing countries must avoid debt-creating flows and rely on foreign direct investment. The safe level of government debt-to-GDP was less than 25 percent according to these recommendations. Reinhart and Rogoff 2010 study; “Growth in a Time of Debt”5, confirmed that a government debt-to-GDP ratio beyond 30 percent begins to stress growth. They studied 44 countries for which data was available over a period of 200 years, dividing debt categories into: under 30 percent; 30-60 percent; 60-90 percent; and over 90 percent. They showed that growth comes under stress in all these categories but becomes quite seriously impaired at higher levels so that when the ratio reaches 100 percent, interest payments equal the nominal GDP.

Whilst the emerging economies learned the lessons of 1997/98 crises, put their macroeconomic policy house in order, reduced their exposure to sudden stops, and accumulated reserves, most advanced economies went in the opposite direction. They reduced their savings, increased consumption, ran fiscal deficits and accumulated large debts. In 2009, the IMF estimated that gross general government debt in high-income advanced G-20 economies is expected to grow from 78 percent of their GDP in 2007 to 120 percent in 2014, an increase of 40 percent over a 7 year period. These countries suffer from high unemployment, fiscal instability, low capacity utilization and high debt and leverage. Accordingly, growth is unlikely to provide a source of debt relief. Rogoff6 suggests that there are now $200 trillion of financial paper in the global economy, nearly 75 percent or US$150 trillion is in interest-bearing debt. Given that global GDP in 2011 is estimated optimistically at US$65 trillion, it is difficult to see how so much debt is to be validated. Observers suggest that Ireland, Portugal and Greece are only the tip of the proverbial iceberg and that there is a heightened risk of the emergence of an even more serious global debt crisis.

Emerging markets, a bright spot on a gloomy outlook

There are indications that the shift in the global economic growth drivers which began in the 1990s has accelerated. During the period of 2000-2008, twenty-nine countries had achieved sustained growth rates of 7 percent or higher for 25 years or more, thus cushioning global growth performance. Eleven of the 29 countries were African. Among these, the Asian economies were the best performers. The United Nations Economic and Social Commission for Asia and Pacific 2011, considers the region as the most dynamic in the global economy, growing at 8.8 percent in 2010 and forecasted to grow at 7.3 percent in 2011. This compares well with the anaemic growth performance of the countries at the center of the present unipolar system.

One of the most important implications of the shift is the potential for the emergence of multiple international reserve currencies. The Global Development Horizon, 2011 suggests three possible scenarios for the future: (i) continued dominance of the US$ as the international reserve currency; (ii) possibility of the SDR as the international reserve currency; and (iii) emergence of at least three international reserve currencies. In the first scenario, evidence suggests that the US$ is being used less and less as official reserve in invoicing of international transactions, as an anchor for other exchange rates, and in denominating international claims. The SDR, while originally designed with the intention of serving as the international reserve currency, has never been allowed to serve that function and it is not likely now. What is more likely, according to the report, is that Chinese currency will emerge as the third international reserve currency alongside the US$ and the euro. China is now the largest exporter in the world. As Chinese corporates and banks increase their activities across the world, they are likely to settle their trade, track accounts, and book their profits in renminbi. Chinese sovereign wealth funds are now among the largest in the world, China has large international reserves, and debt and equities are being issued in renminbi. Consequently expectation of its emergence as an international reserve currency is well founded.

Obstacles to the emergence of multiple growth poles

The emergence of multiple growth poles in the global economy has potential benefits, the most important of which is greater resilience of emerging market economies and developing countries to idiosyncratic shocks similar to what triggered the 2007/2008 crisis. Additionally, greater trade and investment opportunities between the emerging markets of the South and low-income developing countries can be enormously helpful and effective in accelerating growth, development and poverty reduction in the latter. China has been doing that effectively since the early 1990s particularly in the low-income countries of Africa. There are, however, major obstacles to overcome. These include, inter alia, the architecture and governance of global finance. The former is woefully inadequate in providing requisite infrastructure of supervision and regulation to accommodate balanced growth of global finance. The fact is that some four years after the beginning of the global crisis, there is no global agreement on cross-border financial flows, there is no internationally agreed sovereign – debt work-out mechanism and there is no effective representative global structure for policy coordination. Moreover, the existing structures are non-representative and suffer from high democratic deficit. They make policies, impose standards and codes of conduct and international best practices on the rest of the world without an effective representation of much of the world’s most dynamically growing economies. Last but not least, one of the obstacles to the global economic recovery and emergence of multiple growth poles is the important structure of global finance, which is overwhelmingly dominated by debt-creating flows. As indicated above, this structure is imposing anew a great deal of burden and stress on the recovery and growth of the global economy. Perhaps, the stresses and shocking financial events of recent months in Europe and the US are signs of regime uncertainty. The regime of interest rate-based finance is the source of much of the economic and financial uncertainty tightly gripping the global system.

“Risk sharing, the principle modality in Islamic finance, has a number of desirable characteristics that recommend it as the ideal method of financing in the age of information superhighway.”

Risk sharing

One important expectation, among many, from accelerated globalization in the 1990s was improved risk sharing as a major source of consumption smoothing in the world economy. However, empirical studies indicate very little strengthening of risk sharing. Although equity portfolio and foreign direct investment flows were growing at a more rapid pace than debt-creating flows before the global crisis, their magnitudes were not significant enough to make a dent in the low level of risk-sharing coefficients in the empirical studies. For example, one study showed that even in the fast growing East Asia-10 countries the size of the coefficient of risk sharing was very small and some were negative (Indonesia and Malaysia).7 Clearly, debt-creating flows do not improve risk sharing, as they either transfer or shift risk. Even the emergence of a multipolar global economy may not improve risk sharing across the globe. Perhaps the most important reason for this state of affairs is the reliance of global finance on debt-creating flows with all its instability characteristics, e.g. sudden stops.

Risk-sharing finance regime as an alternative

The method of finance that renders pay offs to financial assets contingent on the outcome of economic activities – rather than on ex-ante fixed rates that must be paid as contractual obligation of the debtor regardless of the outcome of the project for which it was borrowed – is technically known as state-contingent financing. Arrow-Debreu8 proof of existence of a stable equilibrium for a competitive economy required that all assets must be state-contingent, i.e. their pay-offs depended on the outcome of economic activities. Residual payments to equity shares of modern corporations are the best examples of state-contingent claims. Risk sharing, the principle modality in Islamic finance, has a number of desirable characteristics that recommend it as the ideal method of financing in the age of information superhighway that weakens the rationale for existence of age-old debt financing, i.e. lack of information and all associated informational problems. One justification for rapid globalization was that it would increase interaction in the human community and create a “global village”. Risk-sharing will do just that since it would require a familiarity among partners to a risk sharing contract to make it work. As demonstrated by the recent crisis, dealing at “arms length”, a much-heralded characteristic of debt financing, has made shifting risks from financiers to taxpayers, without their knowledge or consent, a much easier task. Because of its contingent character, a risk-sharing contract requires close coordination between maturities, values, and pay offs of assets and liabilities sides of the balance sheet. These would move simultaneously in the same direction in response to changes in asset prices. In an economy dominated by state-contingent, risk-sharing finance, there would have to be a close correspondence between the real sector activities and the financial sector, as the rates of return to the former would determine the rate of return to the latter. This alone would impose limitation on credit expansion and leverage since these would increase only to accommodate growth in the real sector. These, and other characteristics assure the stability of the financial sector.9

It is often claimed that risk-sharing, or Islamic finance, increases risks in the economy. There appears to be a conceptual confusion in cognition of the justification for finance. If finance is conceived as intermediating and facilitating the link between demand for finance emanating from the real sector and the supply of finance, then there must be a close link between the real and finance sectors of the economy. In this case risks are taken in the real sector. When it comes to financing, the modality can be risk sharing, risk transfer or risk shifting. But the overall risk of the activity seeking financing does not increase. The exception is when finance is decoupled from real sector activities as it happened during the run up to the recent crisis. For a number of years during the 1990s, observers, including Hans Tietmier, the then President of Bundesbank, warned in international fora that “financial decoupling” was increasing the risks in global finance.10 These warnings were not attended to11 and consequences followed.

“Risk sharing could be an effective alternative to the debt-based ways and means of helping European countries facing sovereign debt crises.”

Continuation of a debt-based financing regime will not necessarily allow the benefits of emerging multipolarity to accrue to the world economy. The new system can be more effective with a new regime of financing. Indications are that almost all emerging countries in Asia are actively considering risk sharing via Islamic finance as a possible alternative. Quite a few are leveraging the “first-mover” status of Malaysia in education, manpower training and instrument innovation in Islamic finance to introduce their own brand of risk-sharing method of financing. If these efforts succeed, the benefits of emerging multiple growth centers will be buttressed further with greater stability and resilience in the supporting financial transactions through enhanced risk sharing. Even now, risk sharing could be an effective alternative to the debt-based ways and means of helping European countries facing sovereign debt crises. For example, Eurozone could issue long-term securities with pay offs based on the GDP performance in these countries. Similarly, China could buy Italian GDP-based securities rather than the consideration reportedly being given to purchase of Italian debt. This type of risk-sharing instruments have been proposed by analysts such as Shiller for some time now.12 Recently, Farmer suggested central banks’ purchase of equity shares to stabilize the equity markets.13 Perhaps the present regime uncertainty has created a valuable opportunity to seek alternatives to the debt-based finance regime.

About the author

Dr. Abbas Mirakahor, received his Ph.D. in Economics from Kansas State University in 1969. After teaching at various universities in the USA and in Iran he joined the staff of the Research Department of the IMF in 1984. He became an Executive Director of the IMF from 1990 until his retirement in 2008. He is the author of a number of articles and books on Islamic economics and finance. He is now the first holder of the INCEIF Chair in Islamic Finance.

Notes

*An earlier version was presented at the Asian Institute Finance Distinguished Speaker Series. Kuala Lumpur, 13 September 2011.
1. World Bank, Global Development Horizon, 2011. Washington, D.C.; see also Justin Yitu Lin and Mansoor Dailami: “Are We Prepared
for a Multipolar World Economy?” Project Syndicate, Syndicate.webarchive.
2. See for example http://www.ft.com/intl/cms/s/o/fdee214c_e044_llde_8494_00144feab49.html#axzz1VovLjnar.2011-06-02.
3. Andrew Sheng (2009). From Asian to Global Financial Crisis, Cambridge
University Press.
4. Reinhart, C. and K. Rogoff (2009). This Time Is Different: Eight Centuries of Financial Folly. Princeton University Press.
5. Reinhart, C. and K. Rogoff (2010). “Growth in a Time of Debt.” NBER working paper no. 15639.
6. Rogoff, K. (2011). “Global Imbalances without Tears.” Project syndicate,
2011-03-01.
7. Kim, s., et.al. (2005). Regional versus Global Risk Sharing in East Asia
8. Arrow, K.J. (1971). Essays on the Theory or Risk-bearing. Chicago: Markam.
9. Askari, H. et.al. (2010). Stability of Islamic Finance. Singapore: John Wiley.
10. Menkoff, L. and Tolksorf (2001). Financial Market Drift: Decoupling
of the Financial Market from the Real Economy? Heidelberg-Berlin: Springer-Verlag.
11. Epstein, G. (2006). Financialization and the World Economy. New York: Edward Elgar.
12. Shiller, T. (2003). The New Financial Order. Princeton: Princeton University Press.
13. Farmer, R. (2010). How the Economy Works: Confidence, Crashes, and Self-Fulfilling Prophecies. New York: Oxford University Press.

Source: www.europeanfinancialreview.com

ECON-Neoliberalism, World Crisis, and The New Pragmatism

The following information is used for educational purposes only.

Neoliberalism, World Crisis, and The New Pragmatism


Oct 20th, 2011


By Grzegorz W. Kolodko

The things happen, as they do, because many things happen at the same time.

This sentence, repeated as the guiding principle, is the foundation of what I call the coincidence theory of development and the New Pragmatism1. It essentially means a comparative and interdisciplinary explanation of the essence and mechanisms of social and economic development as a historical process. But this theory may also be very useful on other occasions, for example, to explain the causes and mechanisms of the great economic crisis of 2008-11. Most frequently the crisis is described in this timeframe, although its roots go back much earlier than 2008, and its consequences are going to be felt well beyond 2011.

It is the most extensive crisis in the post-war period; that is, during the lifetimes of three generations. However, it is an intellectually and politically unacceptable simplification to identify the current crisis with a temporary recession. If it is averaged, which as economists we enjoy doing, in principle the crisis could be deemed to be over, as already in the 4th quarter of 2009 world production was again rising. Unfortunately, the crisis continues, since it goes far beyond the narrowly understood field of production. Someone looking from the side might ask: why so much ado just because in 2009 the production level dropped by only one percent? In the context of the whole decade, during which it increased in total by as much as 40 per cent, it seems to be a trace change of insignificant importance. Someone else stresses that the Dow Jones index has again risen to over 12,000, so apparently the crisis is over, as the stock exchange quotations rise again. But in fact it is not over yet. Why?

First of all, the quoted indexes refer to the dynamics of GWP presented annually as average values for the whole world. And the world, as we know, is extremely diversified. It is sufficient to mention that in the first three years of the decade, global production increased on average by 3.1 percent per annum, while for the group of rich countries (i.e., the most developed economies populated by almost one billion people), the index was only 1.6 percent. In the case of the “developing countries” (in fact, in this context this phrase may be used without the quotation marks) inhabited by 6 billion people, the index was 4.3 per cent. In the period from 2005 to 2007, the indices of dynamics were respectively 2.8 and 7.7 percent, and during the crisis of 2008-10, the “scissors” open even more: in the former case the dynamics of global production oscillates around minus 0.5 percent, while in the latter it was as much as plus 4.3 percent. The global economic order has been changing. And the change has been for the better, since it reduces the enormous discrepancies resulting from the historical development process between the production levels and living standards in the highly developed countries and in those less developed. The crisis accelerates the process of diminishing the gap, which should be deemed favourable. It is worth considering that back in 2000 the GDP per capita in China (calculated according to purchasing power parity, PPP) constituted only 6.7 percent of the American level (respectively they amounted to 2,377 $PPP and 35,252 $PPP); in 2010, this relationship oscillated around 15 per cent (i.e., 7,200 $PPP and 47,400 $PPP)2.

Secondly, this is the crisis of redistribution rather than of production. The fluctuations, including absolute slumps, of the consumption volume and investments in particular, are much deeper than those of the GDP itself. There are also great differences per region or industry sector. Disturbances affected Western Europe more than North America, and in turn Eastern Europe suffered more than Western Europe. If we refer to the disturbance concerning distribution to the American economy (though not exclusively), the crisis here is much more severe for Wall Street, rather than Main Street: the financial sector, rather than the salaried workers. In other words, in comparison to the past, it has affected the white collars relatively more than the blue collars. The crisis is definitely more damaging for the automobile industry than food processing. At a large scale, the redistribution effects are greatly diversified, both globally, and at the level of particular countries.

Thirdly, tendencies present in the financial markets, sometimes the positive ones expressed in the increase of stock exchange quotations, are by no means the sign of the economy coming back to “normal” (if we assume that such a condition exists at all). Sometimes it happens the other way round: the speculation on financial markets may be the symptom of irrationality and, by excessive separation of the financial sector from the real economy, they could actually be the symptom of a production crisis, or they may even be one of its causes.

Fourthly, alongside disturbances in production and trade, there is a fall in employment, which is automatically followed by an increase in the unemployment rate. It increases continuously, even during the phase when the global economy starts to emerge from recession. It may be estimated that in 2011, the number of unemployed in the world is 60-80 million higher than three years ago. And the number keeps growing. Despite recovery, in 2009-10 the unemployment was rising in the USA and Germany, as well as in China and India. The unemployment rate in the USA is the highest in the last twenty-five years and, similarly to the European Union, it is close to the psychological threshold of 10 percent. In the case of the USA, if total unemployment includes those people without work but not registered as unemployed and people who are employed part-time, it amounts to over 16 percent. The fluctuations of the employment rate are very chaotic and they severely affect different sectors to a greater degree than the whole economy, in particular industries producing for export, but also the construction and automotive industries. In the labour market one may therefore also observe a far-reaching redistribution process, which affects not only the economic but also the social dimension of the reproduction process.

The fifth, and I believe the most important factor, is that the present crisis is of a fundamental nature. This is the systemic crisis. It is not just another case, no matter how spectacular, which is related to the business cycle. It is a systemic crisis of modern capitalism, and in particular of its neoliberal mutation, that is the contemporary laissez faire. And so it is by no means sufficient to talk about the end of the crisis by merely reversing negative tendencies in production or bouncing back from the bottom of recession and coming back to the growth path.

The question of whether it was possible to avoid the present crisis is frequently asked. Such a general question cannot be answered correctly, since it is necessary to define the timeframe it refers to. In other words, this is a complex question: not really “when”, but “how” was it possible to avoid the crisis of 2008-11? The answer will be different if one asked about such a possibility three years ago, if we were to analyse the period thirteen years ago, and different yet again if we had looked at the future from the perspective of thirty years ago. And such a threefold approach of three, thirteen and thirty year periods emphasizes the essence of the current crisis by revealing its causes, mechanisms and consequences. Above all, it is extremely illuminating from the point of view of proposals for actions to prevent similar disturbances in the future – in three, thirteen and thirty years. It is worth remembering that the present is nothing more than just the future of the past.

“The present crisis is of a fundamental nature. It is a systemic crisis of modern capitalism, and in particular of its neoliberal mutation, that is the contemporary laissez faire.”

It is obvious that three years ago the world crisis was not possible to avoid. The scale of detachment of the speculative financial sector from the productive real economy, which provides all goods and services necessary for life, as well as for further production, was so great that the required adjustment to level the size of such a detachment could occur only through crisis shock. What politics could not fix ex ante, was achieved ex post by crisis. It is an extremely expensive way of making adjustments.

Three years ago, the values related to good economic practice were already devastated; even if it had not been the case everywhere, it affected many segments of the economically inter-related world, and particularly its epicentre, which is still in the United Sates. The devastation was so advanced that within the existing institutions, there were no political powers that would have been able to re-direct the economy to the path of non-crisis development. The imbalance in the world economy was also too large. The characteristic feature of all economies is the lack of external balance, which is expressed in the deficit (more often) or surplus (rarely) of the current account balance. If we pass over any accounting errors and omissions or extraordinary losses, in the planetary scale the surpluses and deficits balance each other and the final result is zero. However, if we sum up the values of all deficits and all surpluses of current accounts and then if we refer to such an aggregate to the GWP, then in 2008 it oscillated around 6 per cent!3 And how is it possible not to fall at this scale of structural imbalances?

And thirteen years ago? Was it possible to avoid the present crisis? In this case the answer is more complicated. Some attempts were made. There was contentious debate between monetarism (which serves as theoretical basis of neoliberalism) and neo-Keynesianism, which seems to be enjoying rejuvenation in many circles4 but as such is not a panacea for contemporary complaints. In particular, there was a major battle between the advocates of far reaching uncontrolled de-regulation on the one hand, and the advocates of justified intervention of the government on the other hand; between the apologists of an unbridled market and supporters of the active role of government. In numerous countries it was possible to resist the neoliberal attack in total – for example, in large China, or in tiny Slovenia. In other countries it was only possible periodically, for example in India or in the largest post-socialist economy of East-Central Europe during the implementation of “The Strategy for Poland” from 1994 to 1997. In several Latin American countries, which trusted the Washington Consensus or allowed its imposition upon them, unorthodox actions were taken and they dominated later on, and not only in Brazil and Argentina. In the USA, attempts were made to create a different concept of development. So it was the case in the UK. However, neither the “Clintonism” inspired by the Democrats, nor the Labourite “Blairism” which was forced (quite unconvincingly and inconsistently) in the UK could manage the neoliberal storm. Hence, at the turn of the century neoliberalism won the mainstream position in economics as well as in economic policies. The flight of the moth to the flame was not stopped…

What about thirty years ago? Was it possible to avoid the present multi-layer crisis back then? The answer is of course positive. In the conditions of increasing globalisation, it was easy enough to refrain from following the ruts of neoliberalism, which were quite shallow then, and instead go forward towards the future along the path marked out by the model of the social market economy. The characteristic features of the social market economy include the imperative of social cohesion and economic institutionalisation, which allow for the development of private entrepreneurship while maintaining the State’s supervision over the balanced distribution of the fruits of growing labour productivity and capital efficiency.

However, the world went along a different track – due to aggressive greed and spreading short-sightedness, due to the relatively weak position of the Scandinavian countries on the international arena that enjoyed a social market economy, due to the fact that Germany (united) and Japan (during a structural crisis) were busy managing their own business, due to the gullibility of intellectual and political elites in the countries of the so-called emerging markets (more in the countries of postsocialist transformation than in other parts of the world). With the benefit of hindsight, it is necessary that we be able to draw conclusions for the future, with intellectual skill and political will.

Thus the source of the crisis lies deeply in neoliberal capitalism.5 It could not start in countries with a social market economy, as was the case of Scandinavia, but only in the conditions of the neoliberal Anglo-American model. Such an intense shock could take place only as a result of the coincidence of numerous political, social and economic circumstances (as well as technological, since it would not have been possible without the Internet). The overlapping of these conditions in a specific way, which accumulated the crisis-related phenomena and processes, was possible only in the case of a special combination of values, institutions and politics, typical of neoliberalism.

Such values definitely overestimate individualism. They unnecessarily support greed by elevating this vice to the level of an economy propelling virtue. They neglect the social cohesion aspects of the economy and they do not perceive a human being as the centre of the reproduction process. There is money instead. As far as values are concerned, neoliberalism leads to the translation of almost everything into monetary worth, since according to this doctrine it is possible and worthwhile to trade in everything, which may bring profit, including expectations. And, of course, irrational expectation too.

“The purpose of economic policy is sustainable long-term development. It should be sustainable not only economically, but also socially and ecologically.”

From the institutional side, neoliberalism converted the State with its regulations into a kind of a public enemy number one. By using (quite brilliantly, one has to admit) media to manipulate public opinion and, unfortunately, by using the opinion-forming capacity of some groups of social sciences experts, particularly of the economists, it imposes the idea of a small (read: weak) State (government) and diminishes its interventions in the spontaneous market processes6, while the State, alongside with the market, is the fundamental super-institution of the modern economy.7 A far-reaching economic success is possible only due to an intelligent synergy of the power of the invisible hand of the market and the visible head of the government. Institutional intervention is the necessity of contemporary capitalism, which is not accepted by neoliberalism due to its values and, above all, due to its care about the interests of special groups.

As far as neoliberal policy is concerned, it confuses its purposes with its measures, or the ends with the means. The purpose of economic policy is sustainable long-term development. It should be sustainable not only economically, but also socially and ecologically. Low inflation, positive interest rates, balanced budget, fast privatisation, currency exchange rate either fixed or fluctuating, stock exchange quotation, taxes (low, of course) – these are only instruments and tools of economic policy. It is not possible to subordinate any economic strategy or policy to indices, which only illustrate phenomena and processes from those areas. To improve the financial standing of narrow groups of elites at the expense of the majority of society, neoliberalism uses in policy-making and politics such great liberal ideas as liberty and democracy, private ownership and economic freedom, entrepreneurship and competition. However, supporting such ideas as pro publico bono on the one hand, and their usage for the benefit of the rich minority at the expense of the middle-class and poor majority on the other hand, are two totally different faces of economic policy.

On top of that, current disturbances of the world economy are not symptoms of the financial and economic crisis only. The difficulties started with a serious financial crisis, which rapidly advanced to other services and industries. Production dynamics crumpled and in many countries went into the stage of collapse. Now the crisis spreads to the social sphere, from where it slowly starts to have an impact on the political sphere too. As if that were insufficient, the crisis of the fifth sphere, that is the sphere of principles and values, starts to overlap. Therefore, the crisis rolls over five inter-related spheres:
- financial,
- real,
- social,
- political,
- ideological.

It is not, however, a general crisis of capitalism, since this political system has special adaptation capacities. It has been proven on many occasions in the past, and so will be the case in the foreseeable future. Nevertheless, the current crisis is a fundamental breakdown of the neoliberal model. By the time the crisis had become evident, this model managed to function fairly well, at times even remarkably well, by manipulating public opinion and politics. It was clearly noticeable wherever neoliberal tendencies dominated – from the USA in the times of Reaganomics and in the UK during the primacy of Thatcherism, via Latin American countries which allowed the imposition of the Washington Consensus in the 1990s, to Russia during the Yeltsin’s term of office or Poland during the “shock without therapy” in the early 1990s9. Now it is important to prevent the neoliberal doctrine, after minor cosmetic changes and insignificant adjustments, from imposing the main trajectory of the world economy again.

The crisis was not caused by the breakdown on the sub-prime loans market in the USA as that was only a fuse of the bomb, whose potential was accumulated as a result of the pathological relationships typical of neoliberalism, which existed for many years. Any interpretation, which shifts the responsibility for the crisis to the crash on the American sub-prime loans market, is either a neoliberal attempt to escape political and intellectual responsibility for bringing the crisis about, or a simplified consideration on the surface of phenomena. It was the gradual weakening of the position of the State and uncontrolled, destructive deregulation that increased the irrationalities in the world economy.

In the short term, the reaction of the immediate policies (fiscal and monetary) to the financial crisis has to be evaluated positively. An increase of the money supply in the conditions of increasingly underutilized production capacities was the right move. Lubricating economies with non-inflation money already brings positive results, from the USA, via Western Europe, to China and Brazil. However, it is only a reaction to the symptoms and consequences of the crisis.

It is indispensable to reach the systemic sources of the crisis. It is not possible to remove its primary causes without modifying the value system, re-orientating institutions (understood in a behavioural way, which means the rules of the market game) and changing the way of conducting policies. In particular, the values have to move more from “to have” towards “to be”, and greater attention must be paid to cultural conditions and social surroundings. The targets of development have to be redefined. It is necessary to introduce fundamental modifications to institutions, within which the global interdependent economy functions. The current international institutional arrangement facilitates chaos, rather than global order. The future requires institutions enabling political coordination on a global scale too. Considering the changing values and new targets, it is necessary to apply a different approach to the manner of conducting politics and its instrumentation. Emphasis must definitely move to the layer of supranational coordination.

Development strategy and economic policy can be efficient only if it is based on a sound economic theory. The coincidence theory of development, in an unorthodox and holistic way, answers the question about mutual dependencies in long-term development processes. The New Pragmatism implies a normative approach, which demonstrates the possibility of creating a better future by following this theory. There are eight main, constitutive characteristics of the coincidence theory of development:
1.Departure from dogmatism understood as an intellectual corset and a factor that unilaterally influences the search for answers to specific questions;
2.Avoiding blind subordination to any ideology or political line; instead, searching for objective truth without surrendering to conventional wisdom and consensual truth;
3.Abandonment of “all-istic” attempts to create a universal theory of economic growth; instead, paying attention to specific features of phenomena and processes integrally related to macroeconomic reproduction;
4.Interdisciplinary approach enriching economic thinking with considerations from other fields of social sciences, particularly from history, futurology, geography, law, sociology, psychology, management or the web-science;
5.Wide application of the comparative method of economic analysis;
6.Moving in the multi-dimension space comprising essentially historic, geographic, cultural, institutional, political, social and specific problem related substances;
7.Differentiation between targets and measures;
8.Instrumental flexibility open to multidirectional search for remedies fitting a specific and precise situation.

“The New Pragmatism points to the need of a new approach to state interventionism. It cannot mean interference in the production and trade, but it must come down to an intelligent regulation of such processes.”

Therefore pragmatism is needed. Great pragmatism. As little ideology as possible, but as much pragmatism as possible. It may be easily defined as New Pragmatism, since it has to be based on a new approach resulting from the analytical and theoretical understanding presented above.10 It is also new because it comprehensively takes into consideration the new conditions of managing the economy, unprecedented in the past, which emerged as a result of globalisation. We are talking here about an unorthodox theory of economics or, in a wider context, a theory of social sciences focused on practice. In the macroeconomic scale, which contemporarily implies the planetary scale, it is a policy or a global development strategy sensu largo. The New Pragmatism points as well to the need of a new approach to state interventionism. It cannot mean interference in the production and trade, but it must come down to an intelligent regulation of such processes. That is the fundamental alternative for the neoliberal myopia, which has been discredited so much in the context of the present-day crisis.

About the author

Professor Grzegorz W. Kolodko intellectual and politician, a key architect of Polish reforms, renowned expert on economic development and author of numerous books and research papers published in 25 languages. While Deputy Prime Minister and Minister of Finance (1994-97) he led Poland to the OECD. Holding the same positions in 2002-03, he played an important role in Poland’s integration with the European Union. He is Director of TIGER – Transformation, Integration and Globalization Economic Research at Kozminski University in Warsaw. He is a marathon runner and globetrotter.

For more information please visit: www.volatileworld.net
www.facebook.com/kolodko

References

• Bremmer, Ian (2010). “The End of the Free Market: Who Wins the War Between States and Corporations?”, Portfolio, New York
• Estrin, Saul, Grzegorz W. Kolodko, and Milica Uvalic (eds.) (2007). “Transition and Beyond”, Palgrave-Macmillan, Houndmills, Basingstoke, and Hampshire – New York
• Fukuyama, Francis (2004). “State Building. Governance and World Order in the 21st Century”, Cornell University Press, Ithaca, New York
• Harvey, David (2005). “A Brief History of Neoliberalism”, Oxford University Press, Oxford – New York
• Kolodko, Grzegorz W. (2000). “From Shock to Therapy. The Political Economy of Postsocialist Transformation”, Oxford University Press, Oxford – New York
• Kolodko, Grzegorz W. (2011). “Truth, Errors and Lies. Politics and Economics in a Volatile World”, Columbia University Press, New York (http://www.cup.columbia.edu/book/978-0-231-15068-2/truth-erros-and-lies).
• Roubini, Nouriel and Stephen Mihm (2010). “Crisis Economics. A Crash Course in the Future of Finance”, The Penguin Press, New York
• Skidelsky, Robert (2009). “Keynes: The Return of the Master”, Public Affairs, New York
• Joseph E. Stiglitz (2010), “Freefall. America, Free Markets, and the Sinking of the World Economy”, W. W. Norton & Company, New York – London

Notes

1. See Kolodko 2011 (www.volatileworld.net).
2. In the same period, the Chinese GDP per capita (according to PPP) reaches ca. 46 per cent of the Russian level and 39 per cent of the Polish level, while a decade earlier the indices amounted to 31 and 23 per cent respectively. GDP per capita estimates according to the Purchasing Power Parity – World Bank data.
3. It means in the scale of the planet the subtotal of negative and positive current accounts amounted to ca. USD 5 trillion, while GWP was ca. 78 trillion (as calculated in USD according to the current foreign exchange rates).
4. See Skidelsky 2009.
5. On the essence of the neoliberalism read more in the excellent study by Harvey 2005.
6. An advocacy point of view in favor of indeed weak government (yet presented as the argument against “State capitalism”) is presented in Brenner 2010.
7. See more on the role of State in modern economy in Fukuyama 2004.
8. See Roubini and Mihm 2010 and Stiglitz 2010.
9. On the issue of postcommunist transformation see more in Kolodko 2000 and Estrin, Kolodko, and Uvalic 2007.
10. See more on this subject in Kolodko 2011.


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LAW-The Illusions of Environmentalism

The following information is used for educational purposes only.

The Illusions of Environmentalism

Aug 15th, 2011

By Peter Dauvergne

The rising tide of consumption worldwide is swamping many of the gains from stricter environmental laws, higher environmental standards, and the creative energy of environmental activists and philanthropists. Why is this happening?

The ecological shadows of consumption are continually shifting. A rising global population and rising rates of personal consumption are causing these shifts, as are the globalizing pressures of corporations, trade, and financing, the values of new generations of consumers, and the consequences of technological and scientific “advances.” What are the impacts of these shifting shadows on the global environment? Looking at the consumption of products like automobiles and refrigerators over several generations, we find that the global environmental impacts of these—and a wide range of other—consumer goods have intensified even as environmentalism has grown stronger.

Why is this happening? This article argues that environmentalism has failed to slow the ways that producing, using, and replacing consumer goods deflect ecological costs into distant places and future generations. Consumption continues to deflect these costs into ecosystems, and it is doing so at a quickening pace. Moreover, even as the globalization of environmentalism reduces the per unit impacts of consumption and imposes global controls through international agreements, the economic forces of globalization are casting and lengthening ecological shadows. Economic globalization is also diminishing the capacity of activists and states to influence the direction, speed, and intensity of the environmental consequences of consumption which helps explain why so many ecosystems continue to slide into crisis even as so many of us celebrate the progress of environmentalism.

The progress of environmentalism

A strengthening of environmentalism over the last half century has done much to prod the global political economy in new directions. Hundreds of international agreements now aim to protect ecosystems from the consequences of rising consumption, with controls on trading in endangered species, dumping hazardous waste, and emitting pollutants. Governments everywhere are adjusting domestic policies to mitigate the environmental impacts of economic growth.

Governmental capacity in the developing world to implement environmental policies is strengthening as well. Donors like Japan are providing bilateral grants and technical support to assist with training staff. Lenders like the World Bank are giving funds and policy advice, and agencies, as in the case of the Global Environment Facility (GEF), are financing the additional costs of meeting global environmental commitments. Since its founding in 1991, the GEF has supported over 1,950 projects in 160 developing and transitional countries with more than $7 billion in grants and with another $28 billion in cofinancing.

Just about every multinational corporation is also pursuing a sustainability policy, with some now investing considerable sums in environmental research and technologies. A few, such as the Swedish firm Electrolux, are actively working with suppliers, producers, users, and recyclers in developing countries to help them improve their environmental performance.

The capacity of environmental activists continues to increase as well. Hundreds of thousands of diverse groups have formed networks advocating for change, many repeating messages and images to embed new meanings and emotions into the public psyche, recasting for consumers, for example, the “hunting” or “harvesting” of seals as senseless slaughter. Advertisers, scientists, government officials, and business leaders are all contesting this education, and the crisscrossing of truths, word maps, and stories creates various outcomes. In some cases, a word with a positive ecological meaning (wetland) has replaced one with a negative common meaning (swamp). In other cases, corporate phrases like “unleaded gasoline” have become part of the consumer vocabulary, leaving the impression that firms are doing consumers a favor.

Increasingly, organizations like the WWF are partnering with companies as well. WWF-Sweden is working with the multinational food firm Tetra Pak on responsible wood purchases and climate change policies, and WWF-India with the Austrian crystal firm Swarovski to establish a wetlands visitor center in the Keoladeo National Park in northeastern India.

Corporate and consumer responses to the strengthening of environmentalism are opening and expanding many other markets as well. Organic agriculture has expanded to over 30 million hectares (74 million acres) of farmland, up from just 5 million hectares (12.4 million acres) in 2005. Sales of more energy-efficient products have risen steadily over the last decade. Consumers are shifting their choices and practices. Some are volunteering to work abroad with World Wide Opportunities on Organic Farms. Others are planting urban gardens on rooftops, composting organic waste, and searching supermarkets for food grown locally. More people in more cities are participating in curbside recycling programs.

What, then, is the net result of the strengthening of environmentalism? Most notably, there have been significant gains in energy and resource efficiency across the globe. Processors and manufacturers are upgrading to conserve energy. Supermarkets and department stores are selling more with less shelf space. Consumers are turning off lights and unplugging appliances to lower electric bills. New product designs are making the recycling stage easier and cheaper. And waste management firms are doing a better job at treating, incinerating, and disposing of garbage.

This is creating a global economy able to produce more consumer goods with less energy and less waste per unit of output. Still, such good news does not mean all is well with the earth as a whole.

The failures of incremental environmentalism

Stepping back to look at our global environment reveals a disturbing picture. The rising tide of consumption worldwide is swamping many of the gains from stricter environmental laws, higher environmental standards, and the creative energy of environmental activists and philanthropists. It’s also swamping the emerging environmental markets and the lower per unit environmental impacts of manufacturing. Because total consumption never falls unless an economy plunges into a depression or a society implodes into civil war or anarchy, the resulting numbers are daunting.

This relentless rise in consumption in a globalizing political economy of rising trade and investment is casting ever longer and deeper ecological shadows alongside—or sometimes within—the progress of global environmentalism. The solutions to problems posed by consumer goods almost always involve producing more of other goods, as in the case of cars: more seat belts, air bags, roads, traffic lights, and parking spaces. The solutions seldom involve producing less of a good and, even then, replacing that good with another almost always leads to consuming more overall.

The pursuit of profits and economic growth tends to supersede calls for precaution. As the globalization of trade and investment extends the distances between producers and consumers, the resulting process of change tends to displace consequences along ever longer trade and corporate chains connecting distant regions, from Africa to Asia to the Antarctic. Effects spill into the future as well, sometimes taking generations to appear. This obscuring and displacing of environmental costs makes it harder for consumers to perceive—and thus care about—the cumulative impact of seemingly inconsequential personal choices on the global environment. Moreover, producer and consumer prices of many traded products, such as timber and beef, do not reflect the full environmental or social costs of harvesting, processing, producing, transporting, marketing, or disposal. As such, they reduce revenues available for environmental management, a particular problem for regions that rely on natural resource exports to generate economic growth. The resulting low prices for consumer goods made from these resources then stimulate wasteful consumption and overconsumption in importing countries— which helps explain why, for example, supersizing is so profitable for fast-food chains and obesity is increasing worldwide.

“Producer and consumer prices of many traded products, such as timber and beef, do not reflect the full environmental or social costs and thus they reduce revenues available for environmental management.”

Over time, as sovereign states and multinational firms pursue their interests and cost-effective solutions, and as international financing props up economies with foreign debt, a disproportionate share of the environmental costs of such consumption tends to be shifted onto poor people and into ecosystems at risk—from the slums of India to the rainforests of Cambodia. Because such people and places tend to have less capacity to adapt to resulting changes, this further intensifies the consequences of consumption.

The conclusion here is deeply troubling. Not only is environmentalism failing to produce sustainable patterns of global consumption, much of what policy makers in high-consuming economies are labeling as “environmental progress” is in reality little more than the wealthy world deflecting consequences and risks into ecosystems and onto people with less power—and thus less influence over global affairs.

This in part explains why support for more economic growth among the ruling elites remains rock-solid even with clear signs of an escalating global environmental crisis. Many assumptions buttress this. It’s an individual’s right to consume. It’s a corporation’s function to offer competitive choices. And it’s the duty of a community to ensure the (increasingly material) well-being of its members, of a government to ensure steady economic growth, and job opportunities for its citizens, and of an international lending institution like the World Bank to stimulate global economic growth. A near consensus exists on the best path forward to enhance human welfare and promote a more sustainable form of development: more free trade, higher per capita incomes (in real terms), independent multinational companies, responsible global financing, competitive markets, and sound scientific research. The widely held belief is that trade and investment in competitive markets ensure the efficient allocation and use of resources. Financial assistance is necessary here to stimulate growth in less-developed economies, which in turn helps to keep the global order stable. At the same time, scientific research ensures both that technological progress will occur, thus improving consumer choices, and that the potential dangers of introducing new products will be accurately assessed.

One effect of this near consensus—or what some call “ideology”—is to empower industry scientists, thus enhancing the capacity of companies to obfuscate, placate, and generate uncertainty about the need to act (as well as to bolster fears about the economic consequences of “unnecessary regulations”). They did just that after independent scientists began to investigate the environmental presence and consequences of lead in the late 1960s and of chlorofluorocarbons in the 1970s. Despite much progress since then, today such corporate tactics continue to delay, block, and even gut many environmental regulations.

The technologies of globalization—planes, phones, computers—allow critics of the global order to communicate, and even organize vocal protests with worldwide media coverage. On the surface, this would seem to enhance the power of critics to induce global change. Yet the process of globalization is embedded in the world economic order—in the production and trade chains of the biggest corporations and most powerful states. For this reason, the net effect of globalization is to reinforce and expand the global culture of capitalism rather than to empower voices critical of consumerism.

Those in power tend to dismiss or ignore critics who argue that the structures of global interactions—free trade, multinational corporations, the United Nations system—give rise to unequal consumption, overconsumption, and wasteful consumption. The policy and corporate worlds label such critics “unrealistic,” and “hypocritical.” A few even label them “racist neocolonialists” for denying the poor of the developing world the right to consume. Thus calls to reverse economic globalization or to localize trade gain little traction even among nonprofit environmental groups. The world community is gravitating toward environmental solutions that fit into—and reinforce—the neoliberal economic order. Many of the buzz phrases of environmentalism embrace a corporate worldview: “business-NGO partnerships,” “ecoefficiency,” “corporate social responsibility,” “voluntary compliance,” “market mechanisms,” “technology transfers.” Most nongovernmental organizations are now focusing on small, achievable steps, on, for example, partnering with firms and states to improve the management of a particular ecosystem.

To reiterate, small, achievable changes are helping to mitigate particular environmental impacts of particular forms of consumption. Yet changes to mitigate the impact of global consumption on the earth’s environment remain too slow to avoid irreparable damage. The conclusion here is inescapable: despite much progress and prosperity over the last half century, if the world hopes to avoid an even greater crisis by the middle of this century, it must transform the processes of environmentalism. This raises a final—and most difficult— question: How?

“If the world hopes to avoid an even greater crisis by the middle of this century, it must transform the processes of environmentalism.”

This article is excerpted from The Shadows of Consumption: Consequences for the Global Environment, by Peter Dauvergne (The MIT Press, 2008).

About the Author

Peter Dauvergne is Professor of Political Science and Canada Research Chair in Global Environmental Politics at the University of British Columbia. He is the author of the award-winning Shadows in the Forest: Japan and the Politics of Timber in Southeast Asia (MIT Press, 1997), The Shadows of Consumption (MIT Press, 2008), and the coauthor of Paths to a Green World, 2nd edition (MIT Press, 2011, with Jennifer Clapp). His latest book is Timber (Polity Press, 2011, with Jane Lister).


Source: www.europeanfinancialreview.com