Sudan’s national salvation

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Omar al Bashir has fallen in Khartoum. Beyond regime change–managed by the military– there’s a deeper economic crisis.

In April 11th after five days of sustained protests outside of the compound of the Military High Command in Central Khartoum, the Minister of Defense and First Vice President of Sudan,  Ahmed Awad Ibn Auf made a televised broadcast to the nation, announcing the arrest of President Omar El-Bashir and an unspecified number of other high ranking officials primarily associated with Islamist Movement. Ibn Auf declared the military’s intention to form a transitional government, the makeup of which would be announced later, and a three month state of emergency including a curfew. His demands have been rejected by the Sudanese Professional Association and other groups like Girfna, which have declared that only a civilian transitional government would be acceptable. The Sudanese Professional Association have published a Declaration of Freedom and Change which outlines a plan for a four year transitional government made up of civilian technocrats. Chants of tsgut bas (Just fall) changed overnight to sgut (fallen).

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Samir Amin and Beyond

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By Ushehwedu Kufakurinani, Ingrid Harvold Kvangraven and Maria Dyveke Styve

When the sad news came of Samir Amin’s passing on August 12th, 2018, a plethora of beautiful obituaries were published in his memory (see for example hereherehere or here). These have made it more than evident not only how important his scholarship and work through the World Social Forum is, but also what an extraordinary person he was. We never had the privilege of meeting Samir Amin in person, but he was very kind to grant us an interview over Skype for an e-book we put together in 2017 on the contemporary relevance of dependency theory (since published by the University of Zimbabwe Publishers). Now we wish to unpack his contributions to our understanding of political economy and uneven development, and explore how his ideas have been interpreted and adopted in different contexts, and their relevance today.

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Harvesting data: Who benefits from platformization of agricultural finance in Kenya?

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By Gianluca Iazzolino and Laura Mann.

Getting access to credit is a critical challenge for small-holder farmers all over Sub-Saharan Africa . A new breed of financial-technology firms (fintech) promises to address this issue, claiming that digital technologies can lower the barriers for borrowers and cut transaction costs for lenders. As part of our ongoing project on digitisation and data in US and Kenyan agriculture, we have been examining these claims, studying how tech companies translate them into business initiatives and exploring the implications for knowledge production, economic growth and value redistribution.

In rural Kenya, fintech innovations are premised on greater efficiency and transparency and inspired by narratives of digital disintermediation. Similarly to what argued for migrant remittances by Vincent Guermond in a previous post of this blog series , digital lenders harness data (extracted through digital infrastructures) and algorithms to make farmers more legible and, therefore, more predictable. In order to expand their pool of data, Kenyan fintechs are increasingly embedding themselves into inter-connected digital infrastructures, or platforms. These platforms provide farmers with end-to-end solutions, and thereby bundle together financial services with the provision of agricultural inputs and information extension services. In so doing, lenders recalibrate and harmonize their risk-assessment procedures, and construct an ideal type of farmer whose financial behaviours and importance in the local value chain can be clearly pinned down.Read More »

Financialising migration? Remittances, algorithms and digital finance

photo-1492940664705-726225a992a9.jpegHow are things “datafied?” This blog post aims to answer this question by offering a critical reflection on a wide range of recent initiatives that attempt to “datafy” remittances, i.e. leverage migrants’ and recipients’ money as a means to facilitate access to digital financial products and services for individuals and households, with a specific focus on Ghana. A handful of scholars have started to critically assess the political economy of the “financialisation of remittances”, calling into question an agenda that is animated not by the needs of migrant men and women but rather the political and financial concerns of a broad coalition of global and national actors relating to the socio-spatial expansion of markets (Datta, 2012; Cross,  2015; Kunz, 2013; Hudson, 2008; Zapata, 2018). Here, I want to focus on the yet neglected aspect of the construction of these remittance markets, rather than treating financialization as “an explanation in and of itself” (Fields, 2018:119).

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To be Poor in Times of the Current Financial Architecture

Late developers are nowadays confronted with the problem of having to earn foreign currency to finance structural transformation under extremely unfavourable conditions. The dependency on forex is rooted in the international financial architecture and represents a major pitfall for countries trying to catch up. However, this structural impediment to transformation is not paid much attention to by the dominant development economics.Read More »

Market Power = Trade Power? Why the Strong Don’t Always Win in Trade Negotiations

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Do stronger countries always get what they want in trade negotiations? My new book – Power in North-South Trade Negotiations – suggests not. In it, I ask how African, Caribbean and Pacific (ACP) countries were able to extract a series of concessions from the European Union in negotiations for free trade agreements over the last two decades. In doing so, I explore the underlying reasons why power relationships in trade politics are more complex than they appear at first glance. Read More »

Africa: Time to Rediscover the Economics of Population Density and Development

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By Erik Reinert and Richard Itaman.

At the OECD’s origin, we find the 1947 Marshall Plan that re-industrialised a war-torn Europe. At the very core of the Marshall Plan was a profound understanding of the relationship between a nation’s economic structure and its carrying capacity in terms of population density. We argue that it is necessary to rediscover this theoretical understanding now, in the mutual interest of Africa and Europe.Read More »

Increasing and Diminishing Returns – Africa’s Opportunity to Develop

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‘This tendency to Diminishing Returns was the cause of Abraham’s parting from Lot, and of most of the migrations of which history tells’ wrote the founder of neo-classical economics, Alfred Marshall, in the first edition of his textbook Principles of Economics (1890). In a footnote he refers to the Bible’s Genesis xiii : 6: ‘And the land was not able to bear them that they might dwell together; for their substance was great so they could not dwell together’. (Marshall 1890: 201)

Marshall’s observation also applies to today’s migration patterns: from countries where most activities are subject to constant or diminishing returns to countries whose key economic activities are subject to increasing returns to scale. Diminishing returns occur when one factor of production is limited by nature, which means that it occurs in agriculture, mining, and fisheries. Normally the best land, the best ore, and the richest fishing grounds are exploited first, and – after a point – the more a country specialises in these activities, the poorer it gets. OECD (2018) shows how this occurs in Chilean copper mining: every ton of copper is produced with a higher cost than the previous ton.

In Alfred Marshall’s theory, the ‘Law of Diminishing Returns’ is juxtaposed with ‘The Law of Increasing Returns’, also called economies of scale. Here we find the opposite phenomenon; the larger the volume of production, the cheaper the next unit of production becomes. Traditionally economies of scale were mainly found in manufacturing industry, and increasing returns combined with technological change has for centuries been the main driving force of economic growth. Increasing returns creates imperfect competition, market power and large barriers to entry for challengers – companies or nations – making it difficult for them to enter these industries. In contrast to the rents produced under conditions of increasing returns, raw materials – commodities – on the other hand, are subject to perfect markets, and productivity improvements spread as lowered prices. This is the essence of the theory which explains why former World Bank Chief Economist Justin Yifu Lin was correct hen he asserted that ‘Except for a few oil-exporting countries, no countries have ever gotten rich without industrialization first’ (Lin 2012 : 350).Read More »