All Roads Lead to Monopsony? Moyo on China’s Commodity Grab

Following the success of Dead Aid (which I enjoyed very much), Dambisa Moyo tried a repeat with Winner Take All – a book on China’s rising dominance of global commodity markets – with very little success.

The first half of Winner Take All is mostly a recount of statistics (most of which are already in the public domain) and general information on the state of the global commodity markets. It is not until the second half of the book that Moyo delves into the real issues regarding her subject matter – global commodities and China’s insatiable appetite for the same. But even then, the chapters are rather short on actual information on China and are instead full of comparative statics with the rest of the world (or more accurately, mostly the United States of America).

Moyo is not a China expert, and it shows in Winner Take All.

If you are looking for an indepth take of Chinese firms involved in the global commodity markets, their specific investments, strategies and relationships with the Chinese authorities, you will be disappointed. Moyo simply treats all of China as a single actor. There is no domestic politics. There is no discussion of redistributive concerns within China and how they will impact China’s economic performance. There is no nuance on the potential impact of China’s impending demographic decline (except in the concluding chapter). In the end the whole thing reads like it should be a special in the Atlantic Monthly rather than a stand-alone book.

The book, mistakenly, falls into the trap of Western declinism, suggesting that China will undoubtedly emerge to be the ultimate monopsonist in the global commodity markets (almost unchallenged). There is also loose talk of potential for conflict over resources – something that is contradictory to discussions in other sections of the book that emphasize the symbiotic relationship between China and the rest of the world.

The greatest strength of the book is its balanced take on the economic, political and social effects of the rise of China – especially with regard to Chinese investments in the rest of the world. The “Angola Model” of infrastructure-for-resources, discussed in the book, is far superior to the Swiss-accounts-for-resources model that has been the preserve of the West in many resource-rich developing countries over the last half century.

Winner Take All is a far cry from the provocative Dead Aid. It lacks a substantive discussion on the political economy of China’s economic rise (whether domestically or globally). Instead, it gives perspective (for those not in the know) of the implications of China’s economic rise.

Most importantly, it is also a welcome addition to the works of scholars like Deborah Brautigam who continue to remind us – and rightly so – that China’s economic adventures in the developing world have net positive benefits, despite the overwhelmingly negative press. For this reason I would recommend the book. 

Crosswinds at Dusseldorf airport

Because it is Friday and I can’t seem to get anything done as I await the quarter final match between Germany and Greece (so called “bailout battle” at Euro Cup 2012). Btw, should Greece win the match they should get a blank cheque from Ms Merkel (It is also kind of neat that the two men leading the battle with the Germans both on and off the pitch are both named Samaras).

Anyway, back to Dusseldorf…. Being an absolute fan of air travel I found the mad skills of these pilots who land and take off under scary conditions to be pretty cool.

On Rwanda’s brand of Developmental Authoritarianism

Many, including yours truly, have a love-hate relationship with Paul Kagame and his RPF regime in Rwanda.

On the one hand, his adventures in eastern DRC; alleged involvements in the assassination of opposition figures both at home and abroad; and overall restriction of political space in Rwanda are cause for concern. But on the other hand, he seems to be doing a marvelous job on the economic front (see here and here, for instance).

Source: Kigali City Official Website

In the latest issue of African Affairs, Booth and Golooba-Mutebi explore the nature of state-led development in Rwanda, with particular attention to how state-run companies are “ice breakers” for private sector firms in different sectors of the economy. The paper also observes Kagame’s strict separation of state and private accumulation of wealth, a fact that is demonstrated by Rwanda’s comparatively good performance on corruption indices. It is definitely worth reading.

Here is part of the abstract:

This article addresses one thematic gap – the distinctive approach of the RPF-led regime to political involvement in the private sector of the economy. It does so using the framework of a cross-national study which aims to distinguish between more and less developmental forms of neo- patrimonial politics. The article analyses the RPF’s private business operations centred on the holding company known successively as Tri- Star Investments and Crystal Ventures Ltd. These operations are shown to involve the kind of centralized generation and management of economic rents that has distinguished the more developmental regimes of Asia and Africa. The operations of the military investment company Horizon and of the public–private consortium Rwanda Investment Group may be seen in a similar light. With some qualifications, we conclude that Rwanda should be seen as a developmental patrimonial state.

I often tell my friends that at the end of the day, really, all that matters is that we bring down infant mortality to under 10/1000 live births [this is a good proxy for quality of life] and improve the standards of living for the average person, everywhere.

With that in mind, the favored retort among anti-democracy crowds in Sub-Saharan Africa – that “you can’t eat democracy” – has some truth in it. I bet most people would rather live in authoritarian Singapore than democratic Malawi (feel free to disagree).

The point here is that good governance (and for that matter, democracy) are means to an end, and we should never forget what the end is – that is, the improvement of the human condition for all. And yes, I agree that democracy, i.e. political freedom, could also be an end in itself, with the qualifier that those most likely to enjoy freedom are those that are already fed, clothed and housed, with a little more time to spare to blog and read Chinua Achebe, Ngugi wa Thiong’o or Okot P’Bitek.

China and Vietnam in Asia, and now Rwanda and Ethiopia in Africa, are cases that will continue to invigorate the debate over how to improve living standards for the largest number of people in the least amount of time.

For now my love-hate relationship with Paul Kagame and Meles Zenawi [of Ethiopia] continues….

So you want to be a bank robber?

Turns out being a bank robber is not as lucrative as it may sound.

“In what’s billed as the first cost-benefit analysis of such crimes, the authors note that Britain saw 106 attempted or successful robberies of 10,500 branch banks in 2007. The average haul was $31,600, including the one-third of attempts that came up empty. The average “successful” heist landed about $46,600 — but about 20% of those successes were later tarnished, to say the least, when the raiders were arrested. Each incident involved an average of 1.6 people, resulting in a per-person take of $19,750: a mere half-years’ worth of wages for the average Britisher. (In the U.S., the authors say, the average total bank-robbery take, per incident, is even smaller, just over $4,000.) Think a half-year’s salary isn’t bad for one day’s work, plus a little planning? A “career” bank robber would more likely than not be arrested after only four attempts” [Shea, WSJ Blog]

More on this here.

Uganda is Not Spain

The Ugandan cyberspace went abuzz (see this, this, and this, for instance) following Spanish PM Mariano Rajoy’s quip a few days ago that Spain is not Uganda. Many commentators lamented at the implicit disdain that the Spanish Premier had for Uganda. Few, however, paused to consider why it is that Uganda is the country that first came to mind when Mr. Rajoy needed a representative state that did not have its sh*t together.

One exception is Daniel K. Kalinaki of the Uganda Monitor who tries to grapple with some of the difficult questions that many have skirted when reacting to Mr. Rajoy’s unfortunate comments:

“As far as making comparisons between the sizes of the two economies and their place in the world, Rajoy was speaking the truth, brutal as it might sound to our patriotic ears. The world would notice if Spain became bankrupt because of the size of its economy, which is several times bigger than ours, and its more central place in the international economy.

……..I am concerned about the ill-advised rants by foreign leaders such as Rajoy. I am concerned about the snide references, from James Bond movies to American TV series, of Uganda as a war-plagued basket case. I am also concerned about the misrepresentation by opportunistic do-gooders like Jason Blair and his Invisible Children.

………… We gloss over newspaper stories that speak to the modern-day horrors of parents tying their ill children to trees because there is no proper medical care available for them from a government that spends Shs350 billion a year in sending its officials and cronies to foreign hospitals. Where is the outrage over that?

……. I am proud to defend my country when our honour and genuine achievements are disparaged, but I am unable to find it within myself to ride the bandwagon of empty, predictable navel-gazing, played to a cyber gallery, while ignoring the potholed boulevard of our broken dreams.”

More on this here.

Reason for African Petro-Rulers to be Worried

Africa’s petrorulers (heads of state of Angola, Cameroon, Chad, Congo-Brazzaville, Equatorial Guinea, Gabon, Ghana, Nigeria, South Sudan, and Sudan) may be headed for tough times later this year. According to a piece by (Steve Levine) over at FP, Saudi Arabia – the world’s leading oil producer – is considering flooding the global oil markets with the aim of sticking it to the Russians and Iranians. Saudi action of this nature could lower prices to as low as US $40 a barrel from the current $83.27.

With the exception of Ghana and Cameroon, such a drop in oil prices would almost certainly lead to political unrest in the rest of Africa’s oil producers. Sudan and South Sudan are already facing huge revenue shortfalls due to a dispute over the sharing of oil revenue.

More on “The Coming Oil Crash” here.

The Myth of the Lone Inventor

“The canonical story of the lone genius inventor is largely a myth. Edison didn’t invent the light bulb; he found a bamboo fiber that worked better as a filament in the light bulb developed by Sawyer and Man, who in turn built on lighting work done by others. Bell filed for his telephone patent on the very same day as an independent inventor, Elisha Gray; the case ultimately went to the U.S. Supreme Court, which filled an entire volume of U.S. Reports resolving the question of whether Bell could have a patent despite the fact that he hadn’t actually gotten the invention to work at the time he filed. The Wright Brothers were the first to fly at Kitty Hawk, but their plane didn’t work very well, and was quickly surpassed by aircraft built by Glenn Curtis and others – planes that the Wrights delayed by over a decade with patent lawsuits.

The point can be made more general: surveys of hundreds of significant new technologies show that almost all of them are invented simultaneously or nearly simultaneously by two or more teams working independently of each other. Invention appears in significant part to be a social, not an individual, phenomenon. Inventors build on the work of those who came before, and new ideas are often “in the air,” or result from changes in market demand or the availability of new or cheaper starting materials. And in the few circumstances where that is not true – where inventions truly are “singletons” – it is often because of an accident or error in the experiment rather than a conscious effort to invent.

That is Mark Lemley of Stanford Law School. More on this here.

H/T Derek Thomson over at  The Atlantic.

Saitoti, Ojode Dead in Copter Crash

Internal security minister George Saitoti and his assistant Orwa Ojode died in a helicopter crash in Ngong Forest on Sunday. Messrs Saitoti and Ojode were headed to Ndhiwa in Nyanza Province. The cause of the accident is unknown. Five other people died in the crash.

More on this here.

The Cost of Justice

+++++++++++++++++++++UPDATE+++++++++++++++++++++

This point, from the comment section below is well taken.

“I think you have drawn the wrong conclusion from the article that you posted. Yes, broadly international justice is expensive. However, the article is referring to the wastage at the an Ad-hoc Special court for Sierra Leone. Similar claims of waste have been leveled at the Rwanda tribunal in Arusha. It should be remembered that one of the reasons for the establishment of the ICC was to reduce the wastage that came as a result of such ad-hoc courts. So in a sense, the expense of the Sierra Leone court justifies the ICC more than anything.”

++++++++++++++++++++++++++++++++++++++++++

I am on record as being pro the ICC. But this got me thinking about the absurdity of having such procedurally expensive justice systems meant to serve people who’s own justice systems are left to crumble….

“The entire budget for Sierra Leone’s domestic justice sector is roughly $13 million per year, including the Sierra Leone Police, the Prisons Department, all levels of the court system, and the various human rights and legal services commissions.  There are just 12 magistrates for the whole country outside of Freetown, and they hear between 4,000 to 5,000 criminal cases per year. The lack of judges, lawyers, and police investigators –even the lack of a few cents in cell phone credit to contact witnesses that might implicate or exonerate a defendant –is a serious obstacle to a functional justice system.

In contrast, a quick tally using the Special Court’s [that tried Charles Taylor] annual budget reports reveal costs of approximately $175 million for the prosecutions of 13 other defendants in Freetown, in addition to the hefty bill for Taylor’s trial in the Hague. And the Special Court boasted 11 judges and hundreds of staff members for its 14 cases spread over the past nine years.  Add on the testimony of Naomi Campbell, and it appears international war crimes have become a red-carpet affair.”

For more on the contrast between the under-financed and poorly staffed Sierra Leonean justice system and the special court’s extravagance check out a post by friend of the blog Alaina Varvaloucas [and her colleague] over at the CGD.

H/T Alaina.