International Development

FSI researchers consider international development from a variety of angles. They analyze ideas such as how public action and good governance are cornerstones of economic prosperity in Mexico and how investments in high school education will improve China’s economy.

They are looking at novel technological interventions to improve rural livelihoods, like the development implications of solar power-generated crop growing in Northern Benin.

FSI academics also assess which political processes yield better access to public services, particularly in developing countries. With a focus on health care, researchers have studied the political incentives to embrace UNICEF’s child survival efforts and how a well-run anti-alcohol policy in Russia affected mortality rates.

FSI’s work on international development also includes training the next generation of leaders through pre- and post-doctoral fellowships as well as the Draper Hills Summer Fellows Program.

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Nick Hope will consider the extent to which China has moved closer to the goals of an efficient enterprise system and a functioning banking system, and give his views on what is still needed to atttain both objectives. After China decided to implement the "socialist market economy" in a landmark decision of the Party Congress in November 1993, economic policy makers were challenged to introduce sweeping reforms that affected all aspects of the Chinese economy. Despite the apparent need to advance on all fronts simultaneously, enterprise reform and financial system reform lagged noticeably. But in the new millennium, China has been better positioned to tackle the problems of both enterprises and banks and has approached those problems with more urgency and greater purpose.

Masahiko Aoki, Senior Fellow, Shorenstein Asia-Pacific Research Center will moderate.

This series is co-sponsored with the Center for East Asian Studies at Stanford University.

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Nick Hope Deputy Director and China Program Director Speaker Stanford Center for International Development
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China's high technology companies are experiencing a significant shortage of senior and mid-level talent to support the development of their enterprises. Professionals who can operate at world class levels are in very limited supply--and this talent constraint is limiting the growth of the technology sector. How should leading companies in China address this talent shortage?

Heidrick & Struggles and the Stanford Project on Regions of Innovation and Entrepreneurship (SPRIE) have interviewed over 80 C-level executives in China's knowledge-intensive industries--semiconductor, e-commerce, computer hardware/software, and telecommunications. The result is a view into China's leadership and talent issues, and a playbook on how Chinese companies can accelerate the development of key talent.

Today, China's base is manufacturing, but to drive its economy in the decades ahead, China must rely in part on more knowledge-intensive industries. How successfully Chinese technology executives address today's talent shortages will help to define China's development path.

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Jonathan Hoyt Principal Speaker Leadership and Performance Strategies
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The profile of foreign domestic workers in Hong Kong has changed in significant ways since Hong Kong's reunification with the People's Republic of China in 1997, the Asian financial crisis of the late 1990s, and the SARS outbreak of 2003. Several changes have also appears, the most striking of which is the influx of about 90,000 Indonesian domestic workers and the relative decrease in the number of Filipinas. Another change is the tenor and scope of the workers' activism.

Drawing from recent migrant worker protests (including the anti-WTO protests of December 2005,) Dr. Constable considers the increasingly global and transnational aspects of foreign domestic worker activism and the increased breadth of their networks and affiliations, as well as the implications of such activism in relation to newly generated and displaced meanings of citizenship and human rights within and beyond the context of the self-ascribed "Asian World City" of Hong Kong.

Nicole Constable received her MA and PhD degrees from the University of California at Berkeley in 1989. She is a sociocultural anthropologist whose interests include the anthropology of work; ethnicity, nationalism, and history; gender, migration, and transnationalism; folklore; and ethnographic writing and power.

Her geographical areas of specialization are Hong Kong, China and the Philippines. She has conducted fieldwork in Hong Kong on constructions of Hakka Chinese Christian identity and on resistance and discipline among Filipina domestic workers.

Her current research involves Chinese and Filipino immigrants to the U.S. and U.S.-Asian correspondence marriages.

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Nicole Constable Professor, Department of Anthropology Speaker University of Pittsburgh
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One of Japan's most effective leaders, Prime Minister Ryutaro Hashimoto has guided some of the most important developments in modern Japanese history, from improving trade and security relations with the United States to implementing crucial deregulation policies and administrative reforms. The regulatory reforms enacted during his term as prime minister - in the areas of administration, fiscal and economic structure, social security, and education - remain the most important items on the current Japanese political agenda.

In his first-ever Stanford address, Prime Minister Hashimoto will consider the changes under way in Japan with the candor and insight that only a former head of state can offer. The return to prominence of Hashimoto's Liberal Democratic Party (LDP) - after a September 2005 landslide victory - only increases the timeliness of his perspective.

Ryutaro Hashimoto is an experienced policy expert. He served two years as prime minister of Japan and thirteen terms in the House of Representatives. He has held a number of important cabinet posts, including minister of finance and minister of international trade and industry. As prime minister, Hashimoto tackled such pressing domestic issues as administrative reform and deregulation. He also made significant gains on the diplomatic front, and through summit meetings with U.S. President Bill Clinton, reinforced the bilateral security arrangements on which the post-Cold War Japan-U.S. alliance is founded. Since leaving office in 1998, Prime Minister Hashimoto has served as senior adviser to Prime Minister Koizumi, senior advisor for Administrative Reform Promotion at the LDP headquarters, and Minister of State for Administrative Reform.

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Ryutaro Hashimoto Former Prime Minister of Japan Speaker
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Kwon, Hyeok Yong Assistant Professor of Political Science Speaker Texas A&M University
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Pre-emption used to be the watchword of Bush foreign policy. The world's sole superpower would not hesitate to wield force against an imminent threat to its security. The old doctrines of the Cold War era -- of containment and deterrence of a potential enemy -- were disdained as weakness.

Now, facing the most serious national security challenge since the end of the Cold War -- the nuclear weapons programs of Iran and North Korea -- the administration is reaching back to those oldies but goodies.

The determination of Iran and North Korea to develop nuclear weapons has so far been largely unchecked by this administration. The North Koreans, since breaking out of the freeze agreed to during the Clinton administration, have been steadily producing plutonium, and presumably warheads. The Iranians, after the election of hard-line President Mahmoud Ahmadinejad, reversed their deal to suspend uranium-enrichment activities, the crucial step toward nuclear weapons.

Diplomatic negotiations in both cases have produced little movement. But a military strike on their nuclear facilities is almost inconceivable. The danger of potentially horrendous retaliation and the sapping of American will and resources in Iraq have almost killed that option.

"As shaky as a policy of containment is, it is certainly preferable to confrontation, 'rollback,' or 'regime change' through military force,'' wrote conservative national security expert Thomas Donnelly in a recent analysis. "Containment is, in fact, regime change by tolerable means, and the solution to the problems of Iran and North Korea lie in an indirect approach.''

While we try to contain a nuclear Iran and North Korea, suggested Donnelly, we should surround Iran with movements for democratic change in Iraq and Afghanistan. North Korea, he believes, will be changed through Chinese influence.

Donnelly cautions that there may be circumstances when containment proves even more risky than intervention -- say if Iran tries to slip nuclear materials to Islamist terrorists. Iran is less stable than the Soviet Union, though it is worth remembering that the first 15 years of the Cold War brought us to the brink of nuclear war once and close to it several times.

For the administration, this is a stealth policy shift. That is no surprise. It flows directly from the mess in Iraq, a mistake the administration can never really acknowledge.

For those who once touted American global domination, it is still hard to face the reality that containment is impossible without allies and partners. By ourselves, we cannot press those regimes by cutting off their access to investment and advanced technology.

The administration is rightly moving to take Iran to the United Nations Security Council to seek a mandate to enforce the demands of the International Atomic Energy Agency. North Korea is undoubtedly watching this carefully.

China and Russia, who have veto power in the Security Council, are reluctantly going along. But they still resist any move to impose economic sanctions against Iran. Nor are the Europeans, Japanese and others who depend on oil and gas from Iran eager to halt their investment and trade.

Similarly in the case of North Korea, the Chinese and South Koreans are not prepared to cut the flow of economic aid and investment into the otherwise isolated North Korean state. This is less a case of economic interests than a fear that sanctions will escalate to greater confrontation, even war.

"The strategic challenge the Bush administration faced was to convince the rest of the world that Iran is more dangerous than the United States,'' says nuclear proliferation expert George Perkovich. "They finally did it -- and it took Ahmadinejad to do it,'' referring to the inflammatory rhetoric, including threats to "wipe Israel off the map,'' issued by the Iranian leader.

The administration made some headway down the same path with North Korea by engaging in direct talks with that regime this past fall, dispelling the image that the United States was unwilling to negotiate. But that progress has been undermined recently because hard-liners inside the Bush administration pulled the plug on such talks.

Managing an effective containment partnership will be a huge challenge. And there is still tremendous resistance inside the administration to engaging and negotiating -- and compromising -- with the enemy. But that was always a part of making containment succeed, even at the height of the Cold War.

Containment is no silver bullet. It is merely, as Donnelly puts it, "the least bad alternative, but not by a lot, and not under all circumstances.'' And right now, it is the only game in town.

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China's economic growth and integration with global markets is restructuring the world economy and raising issues important to the future of US companies and workers. In the US market, we hear concerns over a range of Chinese trade practices, including subsidies, dumping; and the exchange rate. In the China market, lack of enforcement of IP protections and non-market behaviors, such as subsidies and industrial policies, give rise to concerns that the deck is being stacked against US companies. At the same time, US exports to China continue to grow rapidly and US invested companies report strong profits. Many also note that low cost imports from China keep the cost of living in the US low and enhance the competiveness of some US companies in global markets. President Bush has described our relations with China as "complex." Our economic relationship is the embodiment of that description.

Henry A. (Hank) Levine serves as the Deputy Assistant Secretary of Commerce for Asia in the International Trade Administration's office of Market Access and Compliance. His responsibilities include the market access concerns and compliance with international trade agreements that affect U.S. companies operating in China, Japan, Korea, Taiwan, Mongolia, and the member countries of ASEAN. In his career State Department Foreign Service Officer, Mr. Levine has served as the Deputy Assistant Secretary of Commerce for Europe, the U.S. Consul General in Shanghai, China and Deputy Director for Economic Affairs in the State Department's Office of Chinese Affairs. Mr. Levine has a B.A. in Political Science from Bucknell University. He did graduate work in international affairs at the Fletcher School of Law and Diplomacy at Tufts University. He is a 1993 graduate, with distinction, from the U.S. National War College. He is fluent in Chinese (Mandarin).

Series Co-sponsored with the Center for East Asian Studies.

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Hank Levine Deputy Assistant Secretary for Asia, International Trade Administration Speaker U.S. Department of Commerce
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The talk will focus on David Michael's recent research into the globalization strategies of companies from China, India, and other rapidly developing economies. Increasingly, companies such as Haier, Huawei, CNOOC, Wipro, Bharat Forge, and Lenovo are emerging on the global stage. What strategies are these companies using, and what implications do they pose for their more-established competitors from developed markets? How are these companies leveraging engineering talent, low costs, and market access in their home countries? How do they approach global market entry, organizational development, and mergers and acquisitions? Which global industries are most threatened? What opportunities do such companies present to Western players? Which are the "most promising" new companies--the ones that you haven't yet heard of?

David Michael heads BCG's Beijing office and is on the global leadership teams of BCG's Technology and Communications practice and Operations practice. He has advised clients in various industries in the region for more than a decade and has worked in more than ten Chinese provinces. He holds a B.A. in economics magna cum laude from Harvard University and an M.B.A. from Stanford University, where he was awarded the Ernest W. Arbuckle award for outstanding class member. He was also a Rotary Scholar at the Chinese University of Hong Kong during the 1989-1990 school year.

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David Michael Senior Vice President, Beijing Office Speaker The Boston Consulting Group (BCG)
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In this paper we set out to accomplish three objectives. First, we wanted to track and describe the way the fiscal reforms have been implemented in China's townships. Second, we have tried to identify the effect that the fiscal reforms have had on the fiscal health of the township. This objective was pursued in three contexts: the effect on the average township; the effect on townships in different provinces; and the effect on townships in poor and rich townships. Finally, we sought to assess the impact that the fiscal reforms had on village fiscal health and farmer satisfaction.

Although farmers certainly have expressed their support for tax and fee reduction through a variety of media, our results show that the fiscal reforms are far more complicated and complex than tax reduction policies. They include a large set of policies that have sought to reassign expenditures, realign responsibilities (for control over resources that flow from county to town and town to county), reduce the importance of extrabudgetary and self raised funds, and increase investment into the public goods infrastructure in rural areas. When assessing the broad impact of these policies on township fiscal health, we find the average township has not fared well. Although county to town transfers have risen, the targeted transfers to offset the decline due to the tax and fee reduction policies do not nearly cover the losses of fiscal resources in the system as a whole. In addition, many policies are putting increasing control in the hands of the county financial office. through changes such as increasing requirement to hand up town to county transfers and expenditure reassignments (even though the fiscal resources come out of the township's budget). Hence, overall the fiscal condition of township's operating budget has clearly deteriorated between 2000 and 2004.

The bright side of the fiscal reforms has come in the area of capital budget management and flows of fiscal resources into new infrastructure investment. Between 2000 and 2004 there has been a veritable explosion of investment into the rural economy, mostly in roads, but also into irrigation, drinking water and to a lesser degree into clinics. The investments have risen largely due to the rising allocation by upper level governments. While we show that the rising investment from any source increases farmer satisfaction, there are some concerns with the new effort to improve rural infrastructure. First, in many places (and especially in Jiangsu and other richer townships) as investments from above have risen requirements for matching funds apparently have led to an increase in township debt. Second, the increasing reliance investment from above also has a drawback. While any investment from any source is shown to increase the satisfaction of farmers, ceteris paribus, when the investments come from above, they appear to reduce farmer satisfaction. Apparently, when villages are less involved with the project selection, design and implementation, the projects leave farmers less satisfied.

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Report to the World Bank, Fiscal Reform and the Role of the Township
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Scott Rozelle
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Health is an important factor in the process of economic development. Good

health is important for increasing the productivity of labor force and for raising the

income-earning ability of farm households. Health also has been shown to have positive and statistically significant effects on economic growth. For example, Fogel (1994) argues that about a third of income growth in Britain between 1790 and 1980 can be attributed to improvements in health. In developing countries, good health is viewed as a critical input into poverty reduction and long-term economic development. In short, it has been argued that investment in health is good business in many different settings and environments.

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Scott Rozelle
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