Is Competition Always the Answer? A Case Study of Vietnam’s Power Sector

nguyentueanh5 Comments

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Since 2001, the Vietnamese government has acknowledged the need to increase generation capacity in the electricity sector. With unprecedentedly growing demand of 14% per annum, the electricity industry, however, commonly fails to deliver, especially during peak hours and dry seasons. It is reported that ‘in the whole country there were 3,000 blackout incidents due to system overloading during the first 7 months of 2008’, equivalent to ’14 blackouts a day’ (Nguyen and Dapice, 2010). As a way to mitigate this chronic electricity shortage, the industry’s biggest player, Electricity Vietnam (EVN) has to buy in all that is produced domestically and import from neighbouring countries such as Laos and China. Yet, not only cannot EVN satisfy its primary objective of ensuring a secure electricity supply, but it also suffers significant annual financial losses of hundreds of million dollars. EVN claims that too low average pricing of electricity is the cause of this loss. In addition, audit reports reveal that EVN’s diversification policy had caused further losses.

The inefficiency in infrastructure investment and inadequacy in organizational management have caused anger amongst the public, creating an extremely negative attitude towards the traditional monopoly structure of the electricity sector. Utilising a popular measure, policy makers therefore choose to apply the ‘marketisation’ or liberalization model that is, in theory, similar to the liberalization model that has been implemented in the UK and EU since the 1990s. The main reasons behind the policy are: 1) to assist the government in infrastructure investment; 2) to expose EVN to competitive forces through encouraging private and foreign investment which would force it to improve its financial and operational performance; and 3) to provide affordable and stably-priced electricity. These 3 major objectives are thought to be the outcomes of introducing competition to the traditional monopolistic market structure. This causal link is, however, usually assumed rather than discussed and tested.Read More »

Re-centering Inequality in African Economic History

Alden Young3 Comments

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African economic history today lacks a literature to provide an accurate portrayal of economic growth in Africa during the decades after the Second World War. [1] The scholarly field of African Studies has exacerbated problems caused by the lack of synthetic works on African economic history or discussions of national or regional policymaking, because of its focus on localized studies often undertaken with an anthropological focus. One of the fathers of the anthropological turn in African history, Steven Feierman noted in 1999 that the success of his methodology was making it increasingly difficult to tell African history at a macro-level on its own terms. [2]  Read More »

Unequal Inequalities Revisited

jpellg7 Comments

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Any discussion of inequality includes an implicit normative or ethical comparison of distributions; a certain distribution of some good, or of gains in that good, is acceptable or not acceptable, is better or worse, is improving or stagnating. If discussions of inequality also inevitably involve rankings and comparisons of different distributions, then how inequality is defined and measured will affect these rankings and comparisons. The choice of measurement of inequality is therefore not value neutral.Read More »

What Can We Learn from Alternative Theories of Economic Development?

Ingrid Harvold Kvangraven7 Comments

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As people across the world are struggling to understand the rise of Trumpism, anti-establishment and anti-free trade movements, Erik Reinert (Tallinn University of Technology), Jayati Ghosh (Jawaharlal Nehru University) and Rainer Kattel (Tallinn University of Technology) have put together an impressive Handbook of Alternative Theories of Economic Development that can help make sense of what’s going on. As the field of Economics has become increasingly narrow since the 1970s, many important scholars and theories have been excluded from the field, and since forgotten. This Handbook presents rich historical accounts and ideas that can help explain economic and social development, and is a much needed attempt to correct for the existing biases in the field of Economics.Read More »

Kicking Away the (Statistical) Ladder

assaj4012 Comments

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Developed countries often lecture developing and emerging countries on the appropriate policies and institutions necessary for economic success. This is done either bilaterally or through multilateral organizations such as the World Bank, IMF, OECD or European Union. Cambridge economist Ha-Joon Chang exposed the hypocrisy of this approach in his provocative 2002 book Kicking Away the Ladder: Development Strategy in Historical Perspective. Chang suggests that when today’s rich countries were themselves developing, they used practices opposite to what they preach today, including industrial policies, high tariffs and infant industry protection. Therefore their current advice to poorer countries amounts to ‘kicking away the ladder’ of development.

A lesser-known but equally disturbing process has occurred in the realm of economic statistics, in particular national income accounts. The EU and OECD often criticize the national accounts of developing countries, and a recent example is a claim made in a blog by Robert Barro: “There are suspicions that China’s reported growth rates in recent decades have been boosted by manipulation of the national-accounts data.” While no statistical system is beyond doubt, the biggest manipulations of data in history, in fact, have benefited (and were supported by) rich countries.Read More »

UN report on access to medicines is an opportunity for sustainable solutions

sfparrLeave a comment

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September’s UN special session on antimicrobial resistance (AMR) was a vivid reminder of the shared responsibility of governments to promote research and development (R&D) combat global health threats. The complexity of the AMR threat made clear that a combination of market forces, policy incentives, and regulation, as well as norms and standards was needed to ensure innovation that would deliver accessible and affordable treatments.

The report of the UN Secretary-General’s High-Level Panel on Access to Medicines offers an important opportunity for national governments, UN organizations, philanthropies, civil society, and pharmaceutical manufacturers to move forwards and address this challenge. AMR is just the latest global health priority that cannot be resolved with the current incentive system for investing in medical R&D. AMR threatens to render a whole range of treatments ineffective and reverse 20th century advances in medicine. Numerous other health priorities are neglected because they do not present a business potential for investment, and millions of people lack access to medicines and treatments that are priced out of reach.

In a world of unprecedented medical advances, these unmet needs present a moral dilemma, and one of the most critical challenges for humanity. The Panel, on which I had the privilege to serve, makes a number of concrete proposals to promote needs-driven R&D financing and to expand access to medicines for people in need. As a whole, the report makes short-term and long-term recommendations towards introducing more systematic and sustainable approaches to meeting unmet needs in innovation and access.

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The Rise of the Rest? A shameless plug

ilanstrauss2 Comments

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During the summer I wrote a piece on the rise of emerging markets since World War II for the Delma Institute, a consulting firm based in the UAE. The piece is designed to be read on the web as an interactive (apparently that is what all the hip kids are doing nowadays). This blog post is a shameless plug to get you to read it. Below I pick a few juicy items from it to wet your appetite.

But first, who should read the full piece? It will make for perfect holiday reading if:

  • You want to take extended bathroom breaks to escape your family and need some reading.
  • You want a big picture overview – for yourself or your undergraduate students – of global economic development since WWII.
  • You haven’t been on your computer enough during the last quarter.

The piece essentially tries to answer two questions: Have emerging markets ‘risen’? And will their ‘rise’ become more widespread? It does so by painting a picture of the major changes in the global economy since World War II, focusing on: 1. Increasing global economic integration and the spread of capital; 2. The rise of emerging Asia (and China in particular); and 3. The fall of communism. Read More »