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181. Power and potential: The economics of Egyptian construction and ICT

Author:
Matteo Colombo
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Young Egyptians’ dissatisfaction with their employment prospects was a key driver of protests in 2011 and 2013. Since then, the country’s political authorities have worked hard to create job opportunities for young Egyptians by boosting growth in the construction sector (infrastructure and public works), among other things. Since the sector also generates substantial revenues for the country’s power elite, this has been a win-win strategy in the short-term. But overreliance on the construction sector has also created too many informal and unstable jobs that are a poor match for Egypt’s many well-educated graduates. Cairo’s growth strategy has not addressed some of the country’s long-standing economic problems, such as informality and a low overall employment rate. Giving the country’s promising ICT sector a boost similar to that of the construction sector to address such deficiencies and anticipate a looming debt crisis requires a paradigm shift with two elements. First, a deal between Egypt’s political authorities and the power elite that buys time in exchange for future rents. Second, facilitation of private sector dynamism through regulatory encouragement and public seed funding for new business activity.
Topic:
Development, Economics, Employment, and Construction
Political Geography:
Middle East and Egypt

182. Getting global development back on track: Focus and start at home

Author:
Erwin van Veen
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Since 2019, realisation of the Sustainable Development Goals (SDGs) has gone from patchy to off-track as a result of Covid-19, global price shocks caused by the war in Ukraine and accelerating climate change. About 100 million people were thrown back into extreme poverty and hundreds of millions more face reduced health, livelihood and income prospects for the rest of their lives. The climate change agenda also took a backseat. Long-term global effects will be profound in terms of growing migration flows, further climate degradation and, likely, more conflict, authoritarianism and populism. Putting global development back on track requires focusing on fewer priorities rather than the entire SDG agenda, namely those with the highest negative impact on developing countries: conflict, climate change and inequality. Addressing these problems primarily requires middle- and high-income countries to reduce their contribution to climate deterioration and inequality at home, and to increase their support for conflict resolution efforts elsewhere at a faster rate. While it may seem counterintuitive, the greatest development contributions that developed countries can make lie at home.
Topic:
Climate Change, Development, and Sustainable Development Goals
Political Geography:
Global Focus

183. Trading short-term gains for long-term costs: the Egyptian political economy under al-Sisi

Author:
Matteo Colombo
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Egypt’s political economy has been operating on the basis of three core principles over the last few decades. First, the country’s political authorities set strategic economic objectives in a top-down manner. Second, the power elite supports the political authorities and, in exchange, tightly supervises homegrown and foreign investment to generate revenues and job opportunities, as well as private benefits. Third, Egyptian citizens acquiesce, willingly or unwillingly, in this division of power that mostly benefits the political authorities and power elites in exchange for improvements in their livelihoods. Since 2014, President al-Sisi has held closely to these principles but relied increasingly on Egypt’s military networks (part of the power elite) to boost economic growth. This strategy has produced short-term gains – informal jobs and an array of consumer goods – at the expense of long-term economic prospects. In particular, the military’s economic influence has deepened some of Egypt’s structural problems: low productivity, inequality, informal unemployment and a suppressed private sector. This limits the future sustainability of the current economic model. Improving Egypt’s economic prospects requires reducing the role of the state – especially the military – in the economy in terms of decreasing the number of associated enterprises and lightening the regulatory framework. However, this is nearly impossible to realise in sectors in which the military already has a dominant profile, such as construction and extractives, because its support is essential for al-Sisi to maintain power. A more promising alternative for European policy makers to consider is influencing the Egyptian government to limit military influence in sectors with growth potential where the military is largely absent, such as manufacturing and Information and Communications Technology (ICT). A government strategy that prevents further military involvement in these sectors, crafts a regulatory framework conducive to private investment and invites foreign funding, can help Egypt realise greater economic growth and higher fiscal revenues.
Topic:
Development, Political Economy, Economy, and Abdel Fattah el-Sisi
Political Geography:
Middle East and Egypt

184. Migration in the Context of Climate Foreign Policy

Author:
Kira Vinke, Hannes Einsporn, Dana Schirwon, and Mahalia Thomas
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
German Council on Foreign Relations (DGAP)
Abstract:
Migration, displacement and resettlement in the context of climate change are not distant scenarios of the future, but are now materializing along increasingly severe extreme events and slow-onset degradation. In view of accelerating global warming and the danger of crossing tipping points in the Earth system, forward-looking climate foreign policy and development policy should increasingly focus on severe climate impacts.
Topic:
Foreign Policy, Climate Change, Development, and Migration
Political Geography:
Germany and Global Focus

185. Who Learns More from Afar? Spatial Empirical Evidence on Manufacturing and Services

Author:
Nina Vujanović
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper investigates spatial dependence of FDI knowledge spillovers in manufacturing and services using spatial panel techniques applied to the 2006-2014 Bureau Van Dijk’s Amadeus firm-level dataset for Croatia and Slovenia. The paper finds diverse results across the two sectors. The distance between regions does not hinder the absorption of foreign knowledge in manufacturing despite the strong market-stealing effects operating within regions as well as spatially. On the other hand, FDI knowledge spillovers decrease service productivity within regions, because of market-stealing effects operating strongly across a smaller geographical scale. However, its impact is lost as knowledge spillovers from more distant neighbours are accounted for, because the poaching of local labour is impeded by distance due to rising costs of labour mobility. The research indicates that for knowledge absorption, geographic distance plays differing roles in manufacturing and services, due to the different nature of the production process.
Topic:
Development, International Trade and Finance, Foreign Direct Investment, Manufacturing, Econometrics, and Competition
Political Geography:
Europe, Croatia, and Slovenia

186. Iraq’s Quest for a Social Contract: An Approach to Promoting Social Cohesion and State Resilience

Author:
Wolfgang Mühlberger
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This study sets out to examine state-society relations in Iraq through the conceptual lens of the social contract and also provides a starting point for deriving potential areas of activity for external actors, such as German development cooperation (DC) and technical cooperation (TC). These players could provide support for the re-negotiation of this fraught mesh of relationships. This analysis is founded on a concept of the social contract in which the relationship between the government and those it governs is viewed primarily as a process of negotiation and can be operationalised, for instance, on the basis of the three Ps (participation, provision and protection). As such, the concept is informed both by contemporary approaches and by traditional reflections of French and Anglo-Saxon thinkers, who focus on the restriction of individual freedoms in return for the provision of legal certainty by the state. This study is divided into three sections. The first section explores weak statehood and the breakdown of society in the heuristic context of the social contract. The role of external actors in Iraq’s post-2003 development is then examined in the next section, which takes a closer look at the political system of proportional representation and its socio-political implications. Finally, the third section synthesises the first two by considering how external actors from the development cooperation sector might contribute to the peaceful negotiation of Iraq’s dysfunctional social contract. These reflections are made against the systemic backdrop of a rentier state with a hybrid form of governance and take account of the extremely fragile government-society relationship on the one hand, and external interventions, which have largely failed to date, on the other. In this context, the shortcomings of the largely dysfunctional Iraqi social contract become apparent and at the same time provide starting points for its improvement and renegotiation.
Topic:
Development, Social Cohesion, Social Contract, Resilience, and Cooperation
Political Geography:
Iraq, Middle East, and Germany

187. The Future of EU Blended Finance and Guarantees: An Assessment of Cooperation Strategies with Least Developed Countries in Africa

Author:
Erik Lundsgaarde
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The European Fund for Sustainable Development Plus (EFSD+) is a core element of EU development cooperation and reflects the EU’s strong commitment to deploying blended finance and guarantees as development financing tools. This discussion paper examines the EU’s intentions concerning how the EFSD+ will be integrated into geographic programmes, focussing on the least developed countries (LDCs) in Africa. Based on a review of the Multiannual Indicative Programmes (MIPs) for 30 African LDCs as well as the regional MIP for Sub-Saharan Africa covering the period 2021-2027, the paper provides an overview of funding reserved for EFSD+ implementation in geographic programmes, identifies the expected EFSD+ sectoral priorities and summarises references to development finance institutions (DFIs) as EFSD+ implementation partners. This descriptive review highlights issues for the future monitoring and assessment of the EFSD+. The paper points to uncertainty about the magnitude of the management challenge that EU institutions face in EFSD+ implementation given the difficulties of predicting the scale of guarantee-backed operations in individual countries, the lack of information on the expected volume of blended finance operations, and the limited analysis of how EFSD+ tools relate to other EU funding approaches. The paper also notes that EU institutions should be more explicit about the criteria shaping EFSD+ resource commitments to clarify relevant prerequisites for the effective deployment of EFSD+ tools. Finally, the broad thematic scope for EFSD+ use implies that knowledge about how blended finance and guarantees function and how the financing approaches interact with other interventions needs to increase throughout the EU system.
Topic:
Development, European Union, Finance, Sustainability, and Cooperation
Political Geography:
Africa and Europe

188. The Politics of “What Works”: Evidence Incentives and Entrepreneurship in Development Organisations

Author:
Pablo Yanguas
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Over the last two decades, national development agencies have committed to results-based approaches and to putting evidence at the centre of their decision-making. For evidence “optimists”, this is a much-needed corrective to past practice; in contrast, “pessimists” worry about ideology masquerading as science, and results-based approaches contributing to the further depoliticisation of development. This paper argues that reality falls somewhere in between these two extreme interpretations, and that the experiences of development organisations are varied enough to warrant further interrogation, not into whether evidence shapes policymaking, but into how it does so, and whose evidence matters most. The paper seeks to address these questions through an analytical framework that highlights the process of contestation between evidence agendas against a backdrop of policy complexity, professional barriers, and organisational incentives. A brief review of evidence from development cooperation agencies – with spotlight cases from Germany, Spain and the United Kingdom – reveals that institutionalisation and entrepreneurship play a critical role in enabling and shaping evidence-based policymaking. This leads to clear implications for practitioners, whose focus should be not only on getting the right kind of evidence, but on getting the politics of evidence right.
Topic:
Development, Entrepreneurship, and Incentives
Political Geography:
United Kingdom, Germany, and Spain

189. (R)evolution? Exploring the Potential of Post-Development Approaches for Reforming Development Cooperation

Author:
Patrick Köllner
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The concept and mainstream approaches of development cooperation (DC) have been criticised since the early beginning of their existence. Post-development (PD) scholars have been criticising international DC since 1990 for both its Western perspective and the lack of reflection on asymmetrical power structures. Since also today DC has to face a variety of criticisms, we perceive PD approaches as a starting point for efforts towards change. We asked (1) to what extent and how elements of post-development approaches are reflected in the current policy initiatives of international DC, and (2) what potential do PD approaches have to reform DC. We analysed three examples: German feminist development policy (FemDP) as a relatively new idea of transformation, the locally led development approach as a long-standing concept and Global Public Investment (GPI) as an approach towards a new concept of international cooperation. By means of a content analysis, four commonly used PD elements were selected and slightly adapted to examine whether and how the three policy initiatives acknowledge PD aspects in order to reform DC: (1) the concept of alternatives to development, (2) pluralism of knowledge and power dynamics, (3) user-centred approaches and a critical stance towards the established scientific discourse and (4) the promotion of grassroots movements and local ownership. We discovered a variation in the use of the different PD elements. Although aspects related to power relations, post-colonial structures and knowledge management are prominent in all three initiatives, elements such as grassroots movements are given less consideration in all three cases. Even though FemDP does not focus on an alternative to development, as defined by PD approaches, it puts a strong emphasis on a transformative approach when it comes to its user-centred empowerment and tackles power imbalances by approaching decolonisation. Subsequently, the efforts of German Development Minister Svenja Schulze do not just describe a rhetorical reorientation but involve actual transformative efforts. However, further implementation efforts need to be analysed. The locally led development approach seems to be a suitable springboard for the inclusion of local knowledge and grassroots movements. Whereas the approach mostly uses descriptions of change as a means to reach its objectives, the GPI concept in particular uses PD elements as a reformative approach, as per the PD definition, putting the objective of the transformation of international public finance in international cooperation at its centre. Valuing PD approaches, we conclude that they do influence public initiatives in one way or another. In the future, if inner-systemic change should become an option, we see the greatest added value when PD scholars succeed in underpinning their approaches with instruments that can be used as tools in DC practice.
Topic:
Development, Public Investment, and Cooperation
Political Geography:
Germany and Global Focus

190. Tax Expenditures in OECD Countries: Findings from the Global Tax Expenditures Database

Author:
Martin Beznoska
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The Global Tax Expenditures Database (https://GTED.net/) collects national reports on tax expenditures for 101 countries for the period from 1990 to the present. Based on these data, the development of tax expenditures in the 38 OECD countries between 1999 and today is examined. A look at the data shows that even in countries with high GDP and comprehensive tax coverage, reporting is often incomplete. For a subset of 16 OECD countries for which (relatively) continuous reporting over the period is available, we look at the development of tax benefits for households and firms. We can show that data availability improves over time. For the development of business tax expenditures, a weakly significant positive trend can be identified in terms of tax revenues foregone, driven mainly by the Netherlands and Ireland. Both countries are known for wanting to strengthen their business location through generous tax expenditures for businesses. Tax expenditures for private households, which are on average higher than the level of tax expenditures for businesses in the countries under review, do not show any significant time trend, even though they were increasingly used to relieve the burden on private households and businesses during the financial crisis of 2008/09. In order to compare tax expenditures between countries and to better assess their effectiveness, regular reporting at the national level, transparent definitions and ideally uniform standards would be helpful. Regular monitoring by a commission of experts could contribute to the consistency and comparability.
Topic:
Development, Business, Tax Systems, and OECD
Political Geography:
Global Focus