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421. How to support a rights-based approach to nature-based solutions

Author:
Mikkel Funder and Marie Ladekjær Gravesen
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
While NbS offer many promises, it is critically important to ensure that such approaches safeguard and strengthen the rights of indigenous peoples and local communities in the use and governance of natural resources. The recent adoption of a Global Standard for NbS is an important step forward but the Standard needs support and additional actions if a rights-based approach is to be realized in practice. This policy brief provides recommendations for how Denmark can help ensure this.
Topic:
Climate Change, Development, Environment, Natural Resources, and Cooperation
Political Geography:
Europe and Denmark

422. Private Insurance, Public Welfare, and Financial Markets: Alpine and Maritime Countries in Comparative-Historical Perspective

Author:
A. van der Heide and S. Kohl
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Contemporary capitalist societies use different institutions to manage economic risks. While different public welfare state and financial institutions (banks, capital markets) have been studied across coordinated and liberal market economies, this paper adds the private insurance sector to the study of countries’ security arrangements, following up on Michel Albert’s classical distinction between Alpine and Maritime insurance cultures. Building on extensive new insurance data collections (1880–2017) and institutional analysis, this paper corroborates the long-run historical existence of two worlds of private insurance. Maritime countries (USA, GBR, CAN) developed much bigger life and non-life insurance earlier, with no state-associated insurance enterprises and riskier investments steered towards financial markets. Alpine insurance (AUT, DEU, CHE), by contrast, was initially smaller, with strong state involvement, a significant reinsurance tradition and relatively heavy investments in mortgages and property, due to economic and financial backwardness. We argue that the larger and more “Maritime” the insurance sector, the more it made welfare states liberal and securities markets large. Insurance is thus a hidden factor for countries’ varieties of capitalism and world of welfare. The recent convergence on the Maritime model, however, implies that the riskier and risk-individualizing type of private insurance has added to privatization and securitization trends everywhere.
Topic:
Development, Capitalism, Finance, and Welfare
Political Geography:
Global Focus

423. Mapping the “Women, Peace and Security” agenda in Latin America: a comparison of the UN’s National Action Plans

Author:
Paula Drumond, Tamya Rebelo, Isa Mendes, and Ana Velasco
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
BRICS Policy Center
Abstract:
Adopted on October 31, 2000 by the United Nations Security Council (UNSC), Resolution 1325 has since then been one of the main references for the development, strengthening, and expansion of policies aimed at promoting gender equality, giving rise to the so-called Women Peace and Security (WPS) agenda. This Policy Brief aims to map and systematize the diffusion of the WPS agenda in Latin America. This analysis aims to reflect on the contours of the agenda in the region and deepen the understanding of how Latin American countries engage with this global normative framework. Based on an analysis of the National Action Plans (NAPs) adopted so far by countries in the region (Chile, Argentina, Paraguay, Brazil, El Salvador, Guatemala and Mexico), the work reveals how the agenda is being adopted in these different contexts, seeking to identify existing convergences and particularities. The mapping and analysis of the NAPs are organized around three main aspects: (i) their elaboration process and the actors involved; (ii) the content, objectives, and measures adopted; and (iii) implementation and monitoring strategies. The goal is to offer a general diagnosis of the national engagements with the agenda, summarizing the main advances, limitations, and recommendations to promote its implementation in the region.
Topic:
Security, Development, United Nations, Women, Peace, and Equality
Political Geography:
Latin America

424. Economic and Social Impacts of FDI in Central, East and Southeast Europe

Author:
Doris Hanzl-Weiss and Branimir Jovanovic
Publication Date:
11-2022
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This study assesses the economic and social impacts of foreign direct investment (FDI) in 17 economies in Central, East and Southeast Europe (CESEE). More precisely, we investigate how different FDI inflows have affected various economic and social indicators, such as GDP growth, labour market outcomes, and poverty and inequality, for the period since the fall of communism until 2020. We pay particular attention to FDI that originates from the EU, as well as FDI from Germany and Austria, in order to evaluate whether their effects are different from the effects of FDI from other places of origin. We also examine whether there are differences in the impacts of different types of FDI – equity capital, reinvested earnings and intra-company debt, as well as of FDI that goes to different sectors of the economy – the primary, secondary and tertiary sectors. We find that FDI inflows have had, in general, a positive effect on economic growth in CESEE, and that this effect has been particularly strong for German and Austrian FDI. For total FDI, higher inflows of 1 percentage point (pp) of GDP are associated with 0.19 pp higher GDP growth. For FDI from Germany and Austria, this effect is five times higher – FDI inflows of 1 pp of GDP have led to 0.9 pp higher GDP growth. The positive GDP effects have come from the higher consumption and exports that the FDI has induced. FDI inflows have also reduced unemployment and increased wages, but have had no effects on labour productivity. Total FDI has had only limited effects on inequality and poverty, but FDI from Germany and Austria has been found to reduce both inequality and poverty, likely because they have benefitted mainly lower-income persons. There are differences in the effects of the different types of FDI, with reinvested earnings and equity capital having in general more beneficial effects than intra-company loans. Also, FDI in different sectors of the economy has had different effects, with inflows to the secondary and tertiary sectors having greater effects than inflows to the primary sector. The policy implications of these results are that CESEE economies should not give up on their efforts to attract more FDI, but also that their endeavours should be more targeted, focusing on investments that have greater economic and social impacts. Moreover, foreign investment should not be criticised for the perhaps unsatisfactory economic and social performances of the economies from this region. Instead, the reasons for this should be sought in domestic factors and in the modest growth of the European Union during the past two decades.
Topic:
Development, International Trade and Finance, Poverty, Foreign Direct Investment, Inequality, Economic Growth, and Unemployment
Political Geography:
Europe, Eastern Europe, Germany, and Austria

425. Germany and the UK: Perspectives for Deepening the Bilateral Dialogue on Development Policy

Author:
Niels Keijzer and Ina Friesen
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Germany and the United Kingdom of Great Britain and Northern Ireland (UK) are the second- and fourth-largest providers of official development assistance (ODA) worldwide and are key actors in driving international policy discussions on global development in the Organisation for Economic Co-operation and Development (OECD), the G7, the G20 and other key groupings and platforms. The development policies of both countries witnessed important convergence and detailed cooperation during the first decade of this millennium – a period when Western countries understood development cooperation as a source of considerable soft power, which was demonstrated in rising budgets and like-minded policy directions. The austerity policies that followed the global economic and financial crisis, and the UK’s decision to leave the European Union (EU) in 2016, have challenged the bilateral relationship in the development policy area between Germany and the UK. The UK’s departure from the EU has reduced the number of joint interactions and corresponding opportunities for identifying cooperation initiatives. Halfway through the period envisaged for the completion of the 2030 Agenda, both countries are adjusting their development policies, seeking to determine their future European roles and global development ambitions, but they remain key partners in global development. Both the UK and Germany have recently revised or are in the process of preparing development policy strategies as part of their integrated foreign policies – a reflection process which in recent months has been challenged to adjust to the implications of the war in Ukraine. The case remains strong for regular exchanges and cooperation on development policy between both countries, including by intensifying dialogues and resuming formal secondments between the FCDO and the German Federal Ministry for Economic Cooperation and Development (BMZ). Two areas in particular offer good prospects. First of all, the UK and Germany should closely work together to deliver on the current G7 Presidency agenda – including the key focus on infrastructure investment, as initiated during last year’s UK Presidency. Other key opportunities for cooperation include gender and climate action, as well as the provision of global public goods. Secondly, Germany and the UK should seek to engage in and harness the role of the OECD as a provider of key standards for international development policy and as an important forum for peer learning. As key providers of global development finance, the legitimacy of its reporting system is essential to both countries’ influence and contribution to global development.
Topic:
Development, Bilateral Relations, European Union, Development Assistance, and Dialogue
Political Geography:
United Kingdom, Europe, and Germany

426. Is Foreign Direct Investment Losing Clout in Development?

Author:
Axel Berger and Alexandros Ragoussis
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Over the last decade, only a single projection of foreign direct investment (FDI) flows by the United Nations influential “World Investment Report” has proposed a negative outlook in the medium term. Based partly on surveys of business executives, these forecasts reflect ex¬pecta¬tions of investment growth which, however, have repeated¬ly failed to materialise. In fact, FDI flows to develop¬ing countries have remained stagnant over the past decade. Such wishful thinking is nurtured by a long series of positive narratives and facts about foreign investment. FDI has been one of the pillars of international development efforts for over 70 years. Its promise has not been limited to critical finance, but extends to longer term competitiveness through access to better technology, managerial know-how and, above all, prosperity through more and better paid jobs in the formal sector. From the old prescriptions of the so-called Washington Consensus to the hopeful Addis Ababa Action Agenda, the dominant development narrative has therefore favoured a rather indiscriminate pursuit of investment volume. This brief calls for rethinking of narratives and policies that help to improve the impact of FDI, based on secular trends that challenge our expectations. Four such trends stand out: First, while other sources of finance for development have grown considerably over the last decades, foreign invest¬ment has not followed the trend. Second, the kind of investment that is associated with stronger gains and longer term commitment in host economies – greenfield FDI – has also been in consistent decline as a share of total invest¬ment, while mergers and acquisitions and project finance have gained in importance. Third, the top 100 multinational enterprises (MNEs), accounting for nearly a quarter of global FDI stock, rely less on employment today than they used to in order to grow their foreign presence. Job creation, knowledge transfer and spillovers are therefore less likely to materialise through the presence of mega-firms and their corresponding investment at scale. Fourth, the growth of Chinese outward FDI within a strategic expan¬sionary political agenda stands to change rules and attitudes towards foreign investment moving forwards. We argue that, collectively, these trends invite a renewed conversation around the kind of foreign investment we want and expectations of this source of finance for develop¬ment. These facts obscure neither the broad benefits of FDI to developing countries, nor the value proposition of FDI attraction. Rather, they raise questions about expectations, priorities and the alignment of investment policy with the realities experienced across develop¬ing countries. To that end, we propose four priorities that stand to make a difference in the current context. We call for policy-makers to: 1) Place additional emphasis on retention of investment and linkages with the domestic economy. 2) Try new approaches for FDI attraction that focus on improving domestic investment facilitation frameworks. 3) Be selective as to investment sources and activities in order to mitigate political risks and align inward investment better with sustainable development. 4) Add evidence to improve our understanding of invest¬ment and inform decision-making. Overall, it is critical to engage in a serious multi-stakeholder conversation around expectations, actors and solutions that respond to the investment reality of today.
Topic:
Development, United Nations, Foreign Direct Investment, and Economy
Political Geography:
Global Focus

427. Europe’s Global Gateway: A New Geostrategic Framework for Development Policy?

Author:
Mark Furness and Niels Keijzer
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The proposal by the European Union (EU) to build a “Global Gateway” to the world is potentially an important juncture in EU foreign relations. Since its official launch in December 2021, most attention has been put on the initiative’s geo­strategic implications and whether the EU can compete with China. Less attention has been paid to the Global Gateway’s implications for EU development policy in terms of strategic objectives, decision-making, thematic focus and financing. Two aspects are important in this regard. The first is whether the Global Gateway is a serious proposal that can deliver on its headline promises to massively increase European infrastructure financing in developing countries, provide partners with an alternative economic and political model to that being offered by China, and make a meaningful contribution to their efforts to realise the 2030 Agenda. The EU’s announcement that the Global Gateway will generate up to EUR 300 billion in investment by 2027 grabbed headlines, many of them sceptical. There is, however, no reason to doubt that the initiative will be adequately financed. Although the planning for the EU’s international aid budget for 2021-2027 has mostly been completed, a significant proportion remains flexible and could be spent on Global Gateway projects. As for the EU’s implementing capacity, the Gateway’s financial toolbox draws on the EU’s recent experiences with the Juncker Investment Plan and the External Investment Plan, which have both been utilised by development banks and private investors. The second aspect is whether the Global Gateway heralds a change in the EU’s motivations, objectives and modalities for cooperation with developing countries and regions. On the surface, the Global Gateway does not seem to change much. There are many thematic overlaps with existing strategic frameworks for engaging with Africa and the EU’s Neighbourhood. There is even a sense that the Global Gateway turns back the clock to the days when the EU focussed aid spending on infrastructure and emphasised its “political neutrality”. The geopolitical context in which the EU finds itself is, however, being transformed by pandemic, wars and multipolarity. The impacts of epochal events such as the Covid-19 pandemic and Russia’s invasion of Ukraine are still playing out. The Global Gateway signals a major adjustment in the EU’s response to these transformations, particularly regarding its engagement with the “Global South”. This will create a new paradigm for EU development policy, defined by strategic interests. It is likely that the new geostrategic framework will weaken the EU’s commitment to, and observance of, core develop­ment policy principles, especially the focus on poverty, partner country ownership, open governance and the “do no harm” principle. The Global Gateway’s use of aid to cata­lyse commercial investment risks further instrumentalising EU development policy. Specific measures are therefore needed to safeguard and promote the principles that the EU and its member states have committed themselves to.
Topic:
Foreign Policy, Development, European Union, Development Aid, and Competition
Political Geography:
Europe

428. Determinants of Social Cohesion: Cross-Country Evidence

Author:
Yabibal M. Walle
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Noting that few studies to date have investigated the determinants of social cohesion in a comprehensive and systematic manner, this paper examines the macro-level determinants of social cohesion using a panel of up to 92 developing and developed countries for the period 1990–2020. Employing the system GMM dynamic panel data estimator, which addresses endogeneity concerns by means of internal instruments, I find that the levels of education, government size, globalisation, and economic development have significantly positive effects on most dimensions of a country’s social cohesion. In contrast, inflation, corruption and income inequality are detrimental to social cohesion.
Topic:
Corruption, Development, Income Inequality, Inflation, and Social Cohesion
Political Geography:
Global Focus

429. Ten Recommendations for Germany’s Feminist Development Policy

Author:
Ina Friesen and Alma Wisskirchen
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
In early 2022, Germany’s development minister Svenja Schulze announced the adoption of a feminist development policy. With this announcement, Germany joins a growing group of governments that have adopted or declared the adoption of an explicitly feminist perspective in their external policies. Drawing on these governments’ policies and the observations and recommendations by civil society and researchers, this Discussion Paper outlines ten key recommendations for Germany’s first feminist development policy. The first three recommendations focus on the conceptual foundation of the policy and lay out the importance of 1) an inclusive definition of gender, 2) a clarification of the feminist approach and the policy’s overall goal as well as 3) the need for an intersectional approach. The second set of recommendations concerns the implementation of the policy and stresses the importance of 4) a permanent cooperation with gender-focused and feminist organisations and 5) the necessity to increase funding for gender-related objectives in general and 6) for feminist organisations in particular. Further recommendations include 7) widening the range of sectors that target gender equality through a transformative approach and context-sensitive programming and by providing mechanisms to monitor and evaluate the implementation of the strategy’s goals, objectives and activities. The last three recommendations emphasise institutional aspects and the importance of 8) creating an institutional environment that best supports gender equality within the development ministry and its main implementing organisations, 9) the necessity of a coherent feminist approach between the different ministries, and 10) the importance of addressing possible challenges the ministry might face in the implementation of its feminist development policy.
Topic:
Development, Inequality, Feminism, and Gender
Political Geography:
Europe and Germany

430. Inequality and Social Cohesion in Africa: Theoretical Insights and an Exploratory Empirical Investigation

Author:
Francesco Burchi and Gabriela Zapata-Román
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Inequality is bad per se and has adverse effects, among other things, on economic development and the environment. It is also often argued that high and increasing inequalities put societies under stress, which increases the likelihood of social conflicts. However, the literature on this topic is scarce and some of the conclusions are not adequately supported by empirical evidence. This is mainly because there are different definitions and measurements of social cohesion. Moreover, some definitions of social cohesion incorporate inequality, thus making it impossible to examine how these two phenomena interact with one another. This paper analyses both theoretically and empirically, the relationship between inequality and social cohesion. To do so, it employs a recent definition of social cohesion provided by Leininger et al. (2021). According to this definition, social cohesion is composed of three core attributes, namely trust, inclusive identity and cooperation for the common good. These attributes are examined in two dimensions, namely the horizontal (relationship among individuals) and vertical (relationship between individuals and state institutions) dimensions of social cohesion. This paper provides an overview of the empirical evidence regarding the relationship between inequality and the three attributes of social cohesion. We find that while inequality is likely to have a negative effect on all three attributes, the intensity of the relationship may depend on some key mediating factors. Moreover, we highlight the main pathways through which inequality could affect each of the three key attributes. The empirical analysis focuses on Africa. While there is some work in this field in Europe and Asia, to the best of our knowledge, there has not been any related empirical work thus far that has focused on African countries. To measure the three attributes of social cohesion, we use a database generated by Leininger et al. (2021), which is based on data from Afrobarometer and the V-Dem Institute. Inequality is mainly measured by the Gini coefficient and data are sourced from the World Income Distribution dataset. As expected, our analysis shows that countries with higher inequality usually have lower levels of social cohesion, which is measured by an aggregate index. This negative correlation holds when we analyse the relationship between the Gini coefficient and the three attributes separately; however, the intensity varies. It is stronger for trust (rho=0.25) compared with the other two attributes (both of which have a rho equal to approximately 0.1). Additional investigations point to substantially different results for the horizontal and vertical dimensions of social cohesion. Higher levels of inequality are associated with lower levels of horizontal trust and horizontal cooperation. On the other hand, higher levels of inequality are associated with higher levels of vertical trust and are essentially uncorrelated with vertical cooperation. These relationships remain substantially unchanged when we use measures of income inequality other than the Gini coefficient. Further analyses that aim to explain the puzzling results for the vertical dimension of social cohesion reveal that our findings are not clearly driven by trust in a specific institution and are also not an artefact of the specific data we used. Indeed, we obtain similar results using data from the World Values Survey. At the same time, it appears that the positive relationship between inequality and vertical trust is visible only among African countries, whereas it is not observed at the global level or for other regions. Further research is needed to confirm whether Africa is truly exceptional in this regard, and if so, why that may be the case.
Topic:
Development, Inequality, Economy, and Social Cohesion
Political Geography:
Africa