Enterprise Resilience Management Blog

Qatar Punches above its Weight

Qatar, the small Middle Eastern nation that pokes like a stubby finger into the Persian Gulf, has found a niche for itself in the diplomatic world ["Qatar, Playing All Sides, Is a Nonstop Mediator," by Robert F. Worth, New York Times, 9 July 2008]. Qatar's latest diplomatic foray was helping broker a deal in Lebanon.

"Editorialists praised the Qatari emir as a modern-day Metternich. Huge billboards went up on the road to the Beirut airport, proclaiming, 'We all say: Thank you Qatar.' An ice cream shop in downtown Beirut put out a sign offering a Doha Agreement Cone. But the Qataris did not linger over their diplomatic triumph. They were too busy trying to solve every other conflict in the Middle East."

Worth goes on to explain that the Qataris are becoming masters of gaining and using leverage in finding diplomatic solutions to nagging problems.

"In the past year alone, the Qatari foreign minister, Hamad bin Jassim bin Jaber Al Thani (widely known as H.B.J.), has flown his jet — repeatedly — everywhere from Morocco to Libya to Yemen, using charm, guile and large amounts of money to mediate disputes, with varying success. This work has not always earned him gratitude. In an increasingly divided Arab world, the Qataris have fashioned a reputation for themselves as independent-minded arbitrators who will cozy up to anyone — Iran, Israel, Chechen separatists — in pursuit of leverage at the bargaining table. ... Qatar has close ties with Iran, yet it also is host to one of the world’s biggest American air bases. It is home both to Israeli officials and to hard-line Islamists who advocate Israel’s destruction; to Al Jazeera, the controversial satellite TV station; and (at least until recently) to Saddam Hussein's widow. Saudi Arabia is a trusted ally, but so is Saudi Arabia's nemesis Syria, whose president, Bashar al-Assad, received an Airbus as a personal gift from the Qatari emir this year. 'They really put all the contradictions of the Middle East in one box,' said Mustafa Alani, a security analyst at the Gulf Research Center in Dubai."

Maintaining all of these strange bedfellow relationships has resulted in some interesting activities, including questionable gifts and investments. Worth reports:

"The Qataris also back their diplomacy with some eclectic investments. Many Americans know about the emir’s gift of $100 million to help Hurricane Katrina victims, but Qatar is also building a $1.5 billion oil refinery in Zimbabwe, a huge residential complex in Sudan and a $350 million tourist project in Syria."

Investments in so-called pariah states have raised more than just eyebrows. They have sometimes raised ire.

"Some call Qatar's policy deranged. The Qataris prefer to think of it as useful. Blessed with enormous oil and natural gas reserves, Qatar is surrounded by large and ambitious neighbors: Iran, Iraq and Saudi Arabia. Diplomacy has become a way for Qatar to protect itself and its riches, by forming alliances and by trying to stabilize the region. 'The idea is to try to keep everybody happy — or if we can't, to keep everybody reasonably unhappy,' said one former Qatari official, who spoke on the condition of anonymity because he was not authorized to discuss foreign policy. 'If that makes the Americans or the Russians a little cross, well, tough luck.' It does make them cross. American officials have been quietly furious about Qatar’s assistance to Iran and Syria, which includes substantial financial investments as well as votes against sanctions on Iran during Qatar's tenure on the United Nations Security Council. The Americans are also angry about Qatar’s hefty financial aid to the militant Palestinian group Hamas after it won elections in 2006."

Such patchwork pragmatism has kept both friends and foes a bit out of balance -- never really knowing what the Qataris are going to do next.

"Mr. bin Jaber, the foreign minister, who is also prime minister, has been coy about the details of Qatar's unusual diplomacy. He has given some interviews in which he says Qatar wants 'good relations with everyone' and defends his country's relationship with Israel. ... Qatar's policy was born in 1995, when the current emir, Sheik Hamad bin Khalifa Al Thani, carried out a bloodless coup against his father, who was on vacation in Switzerland. The new emir instantly began transforming Qatar from a sleepy, inward-turned backwater into a dynamic new state. At home, he began an ambitious remodeling of the emirate’s education policies with the help of his wife, Sheikha Mozah bin Nasser al-Missned. Abroad, the emir and his cousin, Mr. Jaber, began building a bold new way to engage with the world while maintaining their country’s independence."

Although its foreign policies have been met with both anger and amusement, according to Worth, they seem to be working for the country.

"Qatar ... has an absolute monarchy and virtually no domestic dissent. It is therefore free, unlike almost every other country in the world, to pursue iconoclastic policies abroad without worrying about how they play at home. The fact that Qatar also has the world's highest per capita gross domestic product, at more than $80,000, probably helps to keep things quiet. Unlike some other countries in the region, Qatar has had only one terrorist attack, a suicide bombing in March 2005 in a Doha theater popular with Westerners. One British citizen was killed and a dozen other people were wounded. Despite occasional diplomatic problems and frequent complaints, Qatar's policy seems to have worked, catapulting the country to new levels of recognition around the globe."

As further proof that Qatar has gained both reputation and respect, the country and its monarch were featured in a short article in The Economist ["Small country, big ideas," 7 June 2008 print edition]. The Economist article also alluded to the Emir's success in brokering the deal in Lebanon and it provided a bit more background on the country.

"In 1952, the year that Sheikh Hamad bin Khalifa al Thani was born, Qatar had fewer than 40,000 people, most of them barefoot nomads and fishermen, and not a single school. The emirate he rules now hosts Education City, a complex of branch campuses from some of the world's most prestigious colleges. According to IMF figures, the country's 950,000 residents this year surpassed those of Luxembourg to become the world's richest. They enjoy an income per person of $80,870. Yet that plump figure belies the far greater private wealth of native Qatari citizens, who number fewer than 200,000 but who own nearly all the emirate's assets, as opposed to the army of foreign guest workers who serve them."

Like many Gulf states, Qatari citizens enjoy the benefits of oil revenue and leave the hard work to foreigners. This may become problematic for Qataris in the long term. It's good to have money, but the day will come when the oil runs out. History has also shown that people are happiest when engaging in meaningful work that contributes to supporting the family. In the meantime, as Worth noted above, the Qataris are using their wealth to bolster their diplomatic missions. The Economist article continues:

"Qatar's oil money has certainly helped to make peace. A free week spent in one of Doha's six-star hotels would dull the meanest fighting spirit, and there are wags in Lebanon, for instance, who contend that their politicians pocketed other, bigger sweeteners. But there has been plenty of fast Qatari footwork too. Since Sheikh Hamad ousted his father in a bloodless coup in 1995, observers have questioned the apparently erratic course of Qatari foreign policy. But under the guidance of his distant cousin, Sheikh Hamad bin Jasim, the long-serving foreign minister, and more recently also prime minister, Qatar has cut the apron strings that traditionally tie smaller Gulf states to bigger, older regional powers such as Saudi Arabia and Egypt, and adopted a firmly independent line."

With Qatar's liquid natural gas output expected to double over the next five years, the short-term future of the country looks bright. Wise investments will likely keep the country flush and the growing reputation of its leaders as diplomatic troubleshooters will likely keep Qatar punching above its weight.

Algae and Unintended Consequences

In January, I wrote a post about research involving algae as a potential source of biofuel [The Potential of Pond Scum]. Biofuels edged their way into the news because of rising oil prices and have remained in the news because of the global food shortage. Critics have argued that extensive use of food crops (like corn, soybeans, and palm oil) as feedstock for biofuel refineries has contributed to the food shortage and rising prices. Proponents of algae a feedstock for biofuel argue that, because it is not a food crop and can be grown where food crops can't be grown, it is a good alternative to pursue. In a May post [Weeds and Biofuels -- a Warning], I focused on environmental concerns about using fast-growing "weeds" as a biofuel feedstock. Environmentalists are concerned that use of such grasses could get out of control and that fast-growing grasses could destroy local ecosystems. Now news out of the South Pacific demonstrates the unintended consequences of trying to produce commercial crops of algae by introducing a new species of algae into areas where algae had never before been a problem ["Corals, Already in Danger, Are Facing New Threat From Farmed Algae," by Christopher Pala, New York Times, 8 July 2008].

"Off the palm-fringed white beach of this remote Pacific atoll [of Butaritari, Kiribati], the view underwater is downright scary. Corals are being covered and smothered to death by a bushy seaweed that is so tough even algae-grazing fish avoid it. It settles in the reef’s crevices that fish once called home, driving them away. Dead coral stops supporting the ecosystem and, within a couple of decades, it will crumble into rubble, allowing big ocean waves to reach the beach during storms and destroy the flimsy thatched huts of the Micronesians."

Pala reports that the above scene is very reminiscent of what is happening in Kaneohe Bay on the island of Oahu, Hawaii. The seaweed doing all the damage is called Eucheuma. It was introduced to Butaritari as a source of income for locals who have few other means of producing revenue. Unfortunately, the seaweed is destroying the fishing upon which the locals rely for protein.

"Seafood is virtually the only source of protein in Butaritari, complemented by breadfruit and coconut. This equatorial island of 4,000 people is the latest victim of a 30-year global effort to encourage poor people in the coastal areas of the tropics to grow seaweed that, while not edible, produces carrageenan, an increasingly sought-after binder and fat substitute used in the food industry, notably in ice cream. Today, about 120,000 dry metric tons a year are produced, mostly in the Philippines and Indonesia, where the two main algae originate. Kappaphycus alvarezii is most desirable because of its high carrageenan content; Eucheuma denticulatum is less valuable but easier to cultivate. Both were introduced in the past three decades to 20 countries around the world from Tonga to Zanzibar and the result in most of them has been failure or worse. The alga K. alvarezii invaded the Gulf of Manmar Biosphere Reserve in south India a decade after commercial cultivation began in nearby Panban. 'No part of the coral reef was visible in most of the invaded sites, where it doomed entire colonies,' the journal Current Science has reported. In the Pacific, for example, the two algae were introduced to 10 countries and are said to be commercially cultivated in three: Kiribati, the Solomon Islands and Tonga. But in the case of Kiribati, interviews with seaweed officials in Tarawa, the capital of this nation of tiny islands sprinkled over a swath of ocean the size of India, reveal that since the first effort to cultivate algae in 1986, the industry has lost money almost every year and the farmers have shown little enduring enthusiasm for the crop."

Although these seaweed farms are not intended to support the biofuel sector, the unintended consequences that the introduction of an invasive species of seaweed has had in many of these countries serves as fair warning about the need to move cautiously. Seaweed farming ended two years ago in Butaritari, but the seaweed problem remains. Local citizens have no resources (except manpower), to apply against the problem.

"[Henry Totie, a fisherman and the] Butaritari traditional chief, says the only way to prevent Eucheuma (which locals call seaweeda, since it has no local name) from destroying the entire lagoon is for the seaweed company to offer to buy it. 'Then the people would go out and get it and it would be gone in a few months,' he said. 'If they wait, the problem will just get worse.' [Kevin Rouatu, a stocky, cheerful former banker who runs the Atoll Seaweed Company in Kiribati,] agrees that some sort of noncommercial purchase plan needs to be set up to save the Butaritari lagoon, perhaps with foreign aid."

The point here is that good intentions don't necessarily make good sense. To underscore the point (if it really needs underscoring), the algae problem now facing Hawaii was actually instigated by a college professor trying to conduct "useful" research.

"In Hawaii, three kinds of algae were brought in during the 1970s by a professor of botany at the University of Hawaii, Max Doty, who developed the techniques of cultivation that were exported around the world. One species dominates Oahu's south and the two others, mostly Eucheuma, have spread to about half of the coral heads of Kaneohe Bay. Celia Smith, the successor to the late Dr. Doty at the university, is now a leader in the effort to save the bay. 'It's not easy,' she said, for the seaweeds grow at a rate of 7 percent a week. The university, state and Nature Conservancy devised Super Suckers, vacuum cleaners on powered catamarans that are sucking up 3,000 pounds of seaweed a day each. 'At the current rate, we’ll need 10 years to clean up the bay,' says Brian Hauk, the state aquatic invasive species supervisor."

Finding a way to use algae as the feedstock for the biofuel industry might help with the development of better harvesting techniques that could be used to clean up some of the trouble spots around the globe. It could also have the unintended consequences of fostering algae farms in inappropriate areas and spread the challenges already faced by sensitive ecosystems. Rarely can a silver bullet solution be found to any challenge. Good research, good planning, and good consequence management are critical for any new venture to succeed in a way that the benefits outweigh the risks.

Little Sacrifices that Make Big Differences

One of the reasons that I enjoy reading New York Times op-ed columnist Nicholas Kristof is that he is basically an optimist. He travels to some of the most devastated, war-torn, poverty-stricken places on earth and reports the terrible conditions he finds there; but he doesn't write about doom and gloom. Rather, Kristof looks at the situation and asks, "What can be done to make the situation better?" In one of his more recent columns, he related the story of how a group of Sunday School children may end up having a great impact on the future of an African nation ["The Luckiest Girl," 3 July 2008]. He begins:

"This year's college graduates owe their success to many factors, from hectoring parents to cherished remedies for hangovers. But one of the most remarkable of the new graduates, Beatrice Biira, credits something utterly improbable: a goat ... and it's appropriate that the goat that changed her life was named Luck."

So far we know that Beatrice Biira graduated from college and that a goat played an important role. As radio commentator Paul Harvey would say, "Now it's time for the rest of the story."

"The tale begins in the rolling hills of western Uganda, where Beatrice was born and raised. As a girl, she desperately yearned for an education, but it seemed hopeless: Her parents were peasants who couldn’t afford to send her to school. The years passed and Beatrice stayed home to help with the chores. She was on track to become one more illiterate African woman, another of the continent’s squandered human resources. In the meantime, in Niantic, Conn., the children of the Niantic Community Church wanted to donate money for a good cause. They decided to buy goats for African villagers through Heifer International, a venerable aid group based in Arkansas that helps impoverished farming families. ... One of the goats bought by the Niantic church went to Beatrice's parents and soon produced twins. When the kid goats were weaned, the children drank the goat's milk for a nutritional boost and sold the surplus milk for extra money. The cash from the milk accumulated, and Beatrice's parents decided that they could now afford to send their daughter to school. She was much older than the other first graders, but she was so overjoyed that she studied diligently and rose to be the best student in the school. An American visiting the school was impressed and wrote a children's book, 'Beatrice’s Goat,' about how the gift of a goat had enabled a bright girl to go to school. The book was published in 2000 and became a children's best seller."

The tale is already a remarkable one and the Sunday School children in Niantic, CT, would have undoubtedly been delighted had the story ended there. But, as we know, Beatrice's education did not stop with reading, writing, and arithmetic.

"There is now room for a more remarkable sequel. Beatrice was such an outstanding student that she won a scholarship, not only to Uganda's best girls' high school, but also to a prep school in Massachusetts and then to Connecticut College. A group of 20 donors to Heifer International — coordinated by a retired staff member named Rosalee Sinn, who fell in love with Beatrice when she saw her at age 10 — financed the girl's living expenses."

Beatrice has now graduated, as Luck (the goat) would have it. So what does the future hold for her? Kristof continues the story:

"Beatrice plans to earn a master's degree at the Clinton School of Public Service in Arkansas and then return to Africa to work for an aid group. Beatrice dreams of working on projects to help women earn and manage money more effectively, partly because she has seen in her own village how cash is always controlled by men. Sometimes they spent it partying with buddies at a bar, rather than educating their children. Changing that culture won't be easy, Beatrice says, but it can be done."

Beatrice's graduation was such a momentous event that, Kristof reports, "villagers in western Uganda recently held a special Mass and a feast to celebrate the first local person to earn a college degree in America." That's a great story, but Kristof is a realist and admits that humanitarian assistance doesn't always produce such amazing outcomes. The biggest challenge that prevents better results from aid is corruption and, according to Beatrice, there is a lot of corruption in Uganda. That is why she considers herself the luckiest girl in the world -- because everything fell in place to make her dreams a reality. Kristof writes about all of the things that could have gone wrong:

"Granted, foreign assistance doesn't always work and is much harder than it looks. ... A crooked local official might have distributed the goats by demanding that girls sleep with him in exchange. Or Beatrice's goat might have died or been stolen. Or unpasteurized milk might have sickened or killed Beatrice. In short, millions of things could go wrong. But when there's a good model in place, they often go right."

I entirely agree with Kristof about the value of good models. Using best practices and internationally recognized standards is part of the philosophy behind Enterra Solutions' Development-in-a-Box™ approach. Models, standards, and practices may have to be adjusted to fit local conditions, but if you don't start with a good model, good things are unlikely to result -- except by chance. Kristof concluded his column by encouraging people to get involved.

"When people ask how they can help in the fight against poverty, there are a thousand good answers, from sponsoring a child to supporting a grass-roots organization through globalgiving.com. (I’ve listed specific suggestions on my blog, nytimes.com/ontheground, and on facebook.com/kristof). The challenges of global poverty are vast and complex, far beyond anyone's power to resolve, and buying a farm animal for a poor family won't solve them. But Beatrice's giddy happiness these days is still a reminder that each of us does have the power to make a difference — to transform a girl's life with something as simple and cheap as a little goat."

Kristof notes that a dairy goat in Heifer’s online gift catalog costs $120; a flock of chicks or ducklings costs just $20. In previous posts, I've talked about how you can help provide microloans to people around the world (see, for example, Financing the Poor). Kristof may be right that it is "far beyond anyone's power to resolve" global poverty, but he is also correct that each of us can "make a difference." Our efforts at charity may never be written up in the New York Times or even have much of an impact beyond the few lives we touch. That's okay. To the person or family we touch, the impact can be enormous. Even if no one else ever knows what you did -- you'll know -- and life will be better.

Kristof Pleads for Books, not Bombs

New York Times' columnist Nicholas Kristof spends a lot of his time traveling to locations never seen by most globe-trotting tourists. Such ventures, however, provide him with a world view that can only come through such experiences. I am working with the U.S. Chamber of Commerce and U.S. Department of Commerce to introduce U.S. business people to opportunities in Iraq, especially opportunities in the Kurdistan region where the environment is sufficiently stable to permit economic growth. A group of such business people were recently brought to Iraq to see conditions there for themselves. Sometimes that is the only way to really appreciate a situation. One of Kristof's latest ventures took him to countries surrounding Iraq and into areas where Iraqi refugees have fled over the course of the conflict there. He now fears that we are creating a new intractable security situation that will rival the Israeli-Palestinian situation ["Books, Not Bombs," 26 June 2008]. He writes:

"The dirty little secret of the Iraq war isn't in Baghdad or Basra. Rather, it's found in the squalid brothels of Damascus and the poorest neighborhoods of East Amman. Some two million Iraqis have fled their homeland and are now sheltering in run-down neighborhoods in surrounding countries. These are the new Palestinians, the 21st-century Arab diaspora that threatens the region’s stability. Many youngsters are getting no education, and some girls are pushed into prostitution, particularly in Damascus. Impoverished, angry, disenfranchised, unwanted, these Iraqis are a combustible new Middle Eastern element that no one wants to address or even think about."

Kristof is right to be concerned. As Bradd C. Hayes and Jeffrey I. Sands wrote in their book Doing Windows: Non-Traditional Military Responses to Complex Emergencies:

"[Refugees from conflict] become economic liabilities, have increased health risks, and form the core of politically discontent groups. Therefore, getting them out of refugee camps is one of the international community's highest priorities."

Policymakers (in the U.S. and elsewhere) apparently have not read the book because Kristof reports that Iraqi refugees have been all but forgotten. He believes the U.S. in particular owes it to these people to set things right.

"American hawks prefer to address the region's security challenges by devoting billions of dollars to permanent American military bases. A simpler way to fight extremism would be to pay school fees for refugee children to ensure that they at least get an education and don’t become forever marginalized and underemployed. We broke Iraq, and we have a moral responsibility to those whose lives have been shattered by our actions. Helping them is also in our national interest, for we'll regret our myopia if we allow young Iraqi refugees to grow up uneducated and unemployable, festering in their societies."

Kristof writes about the enormity of the challenge and why nobody wants to discuss it:

"Iraqi refugees don't get help in part because this is a problem that almost everybody wants to hide. Syria and Jordan worry that if the refugees get assistance, then they will stay indefinitely. The U.S. doesn't want to talk about a crisis created by our war, and Iraq's Shiite leaders don't much care about Sunnis or Christians displaced by Shiite militias. 'It's among the largest humanitarian crises in the world today,' said Michael Kocher, a refugee expert at the International Rescue Committee, which recently published a report on the crisis. 'It's getting very little attention from the Security Council on down, which we feel is scandalous and also bad strategy.' It's easy to blame the surrounding countries, such as Jordan and Syria, for not being more hospitable to Iraqis. But those countries have, however grudgingly, tolerated the influx despite the burden and political risk. Iraqi refugees are hard to count but may now amount to 8 percent of Jordan's population of six million. The average Jordanian family, which opposed the war in the first place, is now bearing a cost that may be as much as $1,000 per year for providing for the refugees."

Keeping the Iraqis in refugee camps in perpetuity is both bad policy and morally indefensible. What we need is a change of perspective -- a different way of looking at the challenge. Jonathan Moore has argued that the "reintegration into society of millions of repatriated refugees, returned displaced [persons], and demobilized soldiers presents an opportunity for wholesale progress in recovery and renewal" [The UN and Complex Emergencies: Rehabilitation in Third World Transitions (Geneva: UN Research Institute for Social Development, 1996)]. Looking at Iraqi repatriation as an opportunity rather than a problem may help garner support for Kristof's course of action. Kristof concludes:

"We have already seen, in the case of Palestinians, how a refugee diaspora can destabilize a region for decades. If Jordan were to collapse in part from such pressures, that would be a catastrophe — and the best way to prevent that isn't to give it Blackhawk helicopters, but help with school fees and school construction. If we let the Iraqi refugee crisis drag on — and especially if we allow young refugees to miss an education so that they will never have a future — then we are sentencing ourselves to endure their wrath for decades to come. Educating Iraqis may not be as glamorous as bombing them, but it will do far more good."

Kristof is being too sarcastic when he writes that "educating Iraqis" is not "as glamorous as bombing them." I have met far too many military people who are genuinely excited about helping the Iraqi people get back on their feet. These military people appreciate far more than their political masters the importance of programs that bring stability and prosperity to people's lives. There is far more satisfaction in helping people than in killing enemies -- although both may be necessary.

Iraq will probably not be the last intervention undertaken by the international community. When the next one comes around, they should not ignore the lessons that were re-learned during the Iraq War. Andrew Natsios has identified three operational principles that militaries should observe that would help mitigate future refugee crises ["Eleven Iron Laws for Responding to Complex Humanitarian Emergencies," speech given to participants in Exercise Agile Lion, U.S. European Command, 27 June 1995].

"First, avoid military actions that will encourage population movements and the subsequent creation of displaced camps;

"second, work with humanitarian relief organizations to develop a mix of incentives so people will not leave their home villages in the first place, and

"third, if camps are already formed, work with humanitarian relief groups -- as the military did so successfully in Kurdistan -- to return people voluntarily and as soon as practicable to their homes."

In Iraq, we are way beyond the "soon as practicable" timeframe, but it is not too late to address this challenge in a positive way. Returning Iraqis will need homes and jobs. Refugees should be given jobs helping to build the homes and other supporting infrastructure. Children need to get into school and off the streets. Hope needs to replace despair. This is best done by giving people a stake in Iraq's future. Living in camps outside the country gives them neither hope nor a stake in the future.

Looking for Jobs that Last

As the U.S. moves into the height of its presidential campaign season, the economy has taken center stage. Stones have been thrown at the North America Free Trade Agreement (NAFTA) because detractors claim it has cost good American jobs. The U.S. is not the only country lamenting the loss of jobs. Even nations once considered to be low-cost countries and, therefore, attractive for foreign investors, have found that it is hard to remain "low cost" enough ["The dark side of globalisation," The Economist, 31 May 2008, print edition]. For example, The Economist looks at what has happened in Slovakia over the past decade.

"A decade ago, Samorin—a small town in western Slovakia, on the banks of the river Danube—was one of many good places in which to watch the effect of globalisation on central Europe. The town was full of cheap, experienced workers in need of jobs, with unemployment at 20%. Foreign investors duly arrived, notably Samsonite, an American luggage-maker, which set up a factory there in 1997. The town’s location helped, near a four-way border where Slovakia, Hungary, Austria and the Czech Republic meet in a cat’s cradle of big roads and railway lines. There are scores of similar towns across the region that attracted jobs from higher-cost, more highly regulated labour markets farther west."

It's hard to find better conditions for an economic boom -- skilled workers, good infrastructure, and low costs. Of course, workers in countries that lost jobs weren't happy.

"Workers, trade unions and politicians in old Europe mourned each factory moving east. But, as a European Commission official explains off the record, such shifts were fully expected: offshoring 'was the whole idea of enlargement'. The process, though wrenching to some, made the European Union as a whole more competitive and spread the benefits of global trade to every corner of Europe."

Unfortunately for Slovakia, that is not where the story ends.

"So far, so familiar. But things have moved on in Samorin. Even though new investment and jobs are still arriving in Slovakia, and proximity still counts, this river town has already lost a factory to offshoring. Samsonite closed its plant in 2006, shedding all 350 staff and shifting production to China."

So what's happening? There are obviously lessons to be learned.

"Like its neighbours, Slovakia has seen wages rising fast as new jobs arrived and many of its own people headed west. In most of the new member countries, unemployment rates are lower than at any time since early 2000. But rising labour costs are only part of a more complicated story. Slovakia is still cheaper than the Czech Republic. In Samorin, unskilled workers might earn 12,000-15,000 crowns (€380-480) a month. Labour costs have risen faster in other new EU members too. In overheating Latvia, pay in the fourth quarter of 2007 was 30% up on a year earlier. Samorin is a witness to the way that globalisation is fragmenting as supply chains break into ever smaller parts, sending jobs in all directions. The European Restructuring Monitor (ERM), an EU outfit that tracks globalisation, has analysed about two dozen cases of offshoring from new members of the EU, often involving complex moves. In one example, a German lighting company shed 400 jobs in Slovenia and sent the manufacturing end jobs back to Germany. In another, a Hong Kong-owned textile-maker shut up shop in Latvia, citing a 'lack of workforce' in the region, and shifted production to Macedonia and Vietnam."

Countries that want to benefit from globalization must reconcile themselves to the reality that it fragments supply chains and sends jobs in all directions. As my colleague Tom Barnett puts it, "Globalization integrates trade by disintegrating production chains and dispersing them across economies." Slovakia apparently understands this phenomenon and accepts it.

"Slovakia is currently a European cheerleader for open markets and free trade. In a Pew Global Opinion survey last year, Slovaks were more enthusiastic than Americans, Swedes or Britons about multinational companies, with 72% agreeing that big foreign companies were good for their country, a European record (55% of French respondents thought foreign firms were bad for them, setting a record in the opposite direction)."

The fact is that the vast majority of global trade involves multinational corporations. If you want to get in front of that money you had better embrace them. Why? Not only are multinationals involved in the bulk of global trade, but half of that trade is intra-network trade -- meaning trade within industry sectors or within the multinational companies themselves. That is really what cost Samorin its Samonsite factory.

"Labour costs were higher than in Asia, but location trumped cost advantage. The factory’s role was to manage peak demand for the highest-priced products. What killed [the] plant was the effect of higher labour costs on suppliers, who one by one moved to Asia. By the end, the factory was having to fly in materials to fill urgent orders at great expense."

Understanding the supply chain is critical for understanding what types of job will last. China is likely to suffer a similar fate to Slovakia if parts manufacturing ever shifts to Africa. The Economist notes that demographics is also playing a role in Slovakia (as it is in the rest of Europe).

"Alarmingly, the idea has taken hold across central and eastern Europe that the most pressing crisis is a shortage of people. Every day, newspapers report plans to ship in Vietnamese textile-workers, Ukrainian road-builders or Moldovan waiters to fill vacancies. There may well be some immigration, but it will not be the cure-all some seem to expect. ... Small, mundane changes would help. In some countries workers who have taken early retirement would lose their pensions if they went back to work. Bulgaria has no laws covering temporary work. [One] factory in Samorin, ... has started recruiting toolmakers and other specialist workers from eastern Slovakia. But he notes that once he has persuaded skilled workers to uproot themselves and move 300-400km westward, some of them will keep going to Britain or Ireland to earn two or three times more. Everything is becoming more mobile, making life more complicated. But many central and eastern European workers remember the days when they were not free to move. They are a tough, flexible bunch and do not think the world will stop for them. The EU is lucky to have them."

Eastern European workers may be tough, but it will be their flexibility that helps them create jobs that will last. They've already learned a difficult lesson about global supply chains. The fact that they are more receptive to multinational corporations should help them find a nice fit for the future.

Revolution or Ruse in Rice Production?

Science involves the search for understanding and truth. It's about generating hypotheses and then testing them to either prove or disprove them. Although we are used to seeing competing theories debated, we normally associate such debates with high level physics rather than agriculture. With the world locked in the grips of a food shortage (which will be exacerbated by the flooding taking place in America's breadbasket states), a controversy has arisen about the best way to grow rice -- one of the world's most important food crops ["Food Revolution That Starts With Rice," by William J. Broad, New York Times, 17 June 2008]. The controversy surrounds the theories of Norman T. Uphoff, an emeritus professor at Cornell University.

"Many a professor dreams of revolution. But Norman T. Uphoff, working in a leafy corner of the Cornell University campus, is leading an inconspicuous one centered on solving the global food crisis. The secret, he says, is a new way of growing rice. Rejecting old customs as well as the modern reliance on genetic engineering, Dr. Uphoff, 67, an emeritus professor of government and international agriculture with a trim white beard and a tidy office, advocates a management revolt."

It is not just Uphoff's methods that have spawned the controversy it is his claims concerning them.

"Harvests typically double, he says, if farmers plant early, give seedlings more room to grow and stop flooding fields. That cuts water and seed costs while promoting root and leaf growth. The method, called the System of Rice Intensification, or S.R.I., emphasizes the quality of individual plants over the quantity. It applies a less-is-more ethic to rice cultivation. In a decade, it has gone from obscure theory to global trend — and encountered fierce resistance from established rice scientists. Yet a million rice farmers have adopted the system, Dr. Uphoff says. The rural army, he predicts, will swell to 10 million farmers in the next few years, increasing rice harvests, filling empty bellies and saving untold lives."

Critics argue that his claims about harvest yields and the number of farmers using Uphoff's methods are both exaggerated. But Uphoff continues to argue his case.

"'The world has lots and lots of problems,' Dr. Uphoff said recently while talking of rice intensification and his 38 years at Cornell. 'But if we can't solve the problems of peoples' food needs, we can't do anything. This, at least, is within our reach.' That may sound audacious given the depths of the food crisis and the troubles facing rice. Roughly half the world eats the grain as a staple food even as yields have stagnated and prices have soared, nearly tripling in the past year. The price jolt has provoked riots, panicked hoarding and violent protests in poor countries. But Dr. Uphoff has a striking record of accomplishment, as well as a gritty kind of farm-boy tenacity."

His critics, however, are powerful, also enjoy a global reputation, and have a proven record of accomplishment.

"[Uphoff] and his method have flourished despite the skepticism of his Cornell peers and the global rice establishment — especially the International Rice Research Institute, which helped start the green revolution of rising grain production and specializes in improving rice genetics."

The reason that the controversy continues is that critics argue that Uphoff uses anecdotes rather than controlled experimentation to make his case.

"Critics dismiss S.R.I. as an illusion. 'The claims are grossly exaggerated,' said Achim Dobermann, the head of research at the international rice institute, which is based in the Philippines. Dr. Dobermann said fewer farmers use S.R.I. than advertised because old practices often are counted as part of the trend and the method itself is often watered down. 'We don't doubt that good yields can be achieved,' he said, but he called the methods too onerous for the real world. ... In 2006, three of Dr. Uphoff's colleagues at Cornell wrote a scathing analysis based on global data. 'We find no evidence,' they wrote, 'that S.R.I. fundamentally changes the physiological yield potential of rice.' While less categorical, Dr. Dobermann of the rice research institute called the methods a step backward socially because they increased drudgery in rice farming, especially among poor women."

Nevertheless, Uphoff has a broad base of support and it seems to be growing.

"His telephone rings. It is the World Bank Institute, the educational and training arm of the development bank. The institute is making a DVD to spread the word. ... He lists top S.R.I. users as India, China, Indonesia, Cambodia and Vietnam among 28 countries on three continents. In Tamil Nadu, a state in southern India, Veerapandi S. Arumugam, the agriculture minister, recently hailed the system as 'revolutionizing' paddy farming while spreading to 'a staggering' million acres. Chan Sarun, Cambodia's agriculture minister, told hundreds of farmers at an agriculture fair in April that S.R.I.'s speedy growth promises a harvest of 'white gold.'"

Uphoff has even managed to win over some former critics.

"A former skeptic sees great potential. Vernon W. Ruttan, an agricultural economist at the University of Minnesota and a longtime member of the National Academy of Sciences, once worked for the rice institute and doubted the system’s prospects. Dr. Ruttan now calls himself an enthusiastic fan, saying the method is already reshaping the world of rice cultivation. 'I doubt it will be as great as the green revolution,' he said. 'But in some areas it’s already having a substantial impact.' Robert Chambers, a leading analyst on rural development, who works at the University of Sussex, England, called it a breakthrough. 'The extraordinary thing,' he said, 'is that both farmers and scientists have missed this — farmers for thousands of years, and scientists until very recently and then some of them in a state of denial.' The method, he added, 'has a big contribution to make to world food supplies. Its time has come.'"

Uphoff's story is an interesting one. Broad reports:

"Dr. Uphoff's improbable journey involves a Wisconsin dairy farm, a billionaire philanthropist, the jungles of Madagascar, a Jesuit priest, ranks of eager volunteers and, increasingly, the developing world. ... On Cornell's agricultural campus, Dr. Uphoff runs a one-man show from an office rich in travel mementos. From Sri Lanka, woven rice stalks adorn a wall, the heads thick with rice grains. His computers link him to a global network of S.R.I. activists and backers, like Oxfam, the British charity. Dr. Uphoff is S.R.I.’s global advocate, and his Web site (ciifad.cornell.edu/sri/) serves as the main showcase for its principles and successes. 'It couldn't have happened without the Internet,' he says. Outside his door is a sign, 'Alfalfa Room,' with a large arrow pointing down the hall, seemingly to a pre-electronic age. ... Dr. Uphoff grew up on a Wisconsin farm milking cows and doing chores. In 1966, he graduated from Princeton with a master's degree in public affairs and in 1970 from the University of California, Berkeley, with a doctorate in political science. At Cornell, he threw himself into rural development, irrigation management and credit programs for small farmers in the developing world. In 1990, a secret philanthropist (eventually revealed to be Charles F. Feeney, a Cornell alumnus who made billions in duty-free shops) gave the university $15 million to start a program on world hunger. Dr. Uphoff was the institute’s director for 15 years. The directorship took him in late 1993 to Madagascar. Slash-and-burn rice farming was destroying the rain forest, and Dr. Uphoff sought alternatives. He heard that a French Jesuit priest, Father Henri de Laulanié, had developed a high-yield rice cultivation method on Madagascar that he called the System of Rice Intensification. Dr. Uphoff was skeptical. Rice farmers there typically harvested two tons per hectare (an area 100 by 100 meters, or 2.47 acres). The group claimed 5 to 15 tons. 'I remember thinking, "Do they think they can scam me?"' Dr. Uphoff recalled. 'I told them, "Don't talk 10 or 15 tons. No one at Cornell will believe it. Let's shoot for three or four."' Dr. Uphoff oversaw field trials for three years, and the farmers averaged eight tons per hectare. Impressed, he featured S.R.I. on the cover of his institute's annual reports for 1996 and 1997. Dr. Uphoff never met the priest, who died in 1995. But the success prompted him to scrutinize the method and its origins."

So what is System of Rice Intensification? Broad continues:

"The priest [who developed SRI], during a drought, had noticed that rice plants and especially roots seemed much stronger. That led to the goal of keeping fields damp but not flooded, which improved soil aeration and root growth. Moreover, wide spacing let individual plants soak up more sunlight and send out more tillers — the shoots that branch to the side. Plants would send out upwards of 100 tillers. And each tiller, instead of bearing the usual 100 or so grains, would puff up with 200 to 500 grains. One drawback was weeds. The halt to flooding let invaders take root, and that called for more weeding. A simple solution was a rotating, hand-pushed hoe, which also aided soil aeration and crop production. But that meant more labor, at least at first. It seemed that as farmers gained skill, and yields rose, the overall system became labor saving compared with usual methods."

Until a controlled field trial is conducted and the results confirmed, the controversy will undoubtedly continue. Fortunately, such a trial is coming.

"Opponents have agreed to conduct a global field trial that may end the dispute, he said. The participants include the rice institute, Cornell and Wageningen University, a Dutch institution with a stellar reputation in agriculture. The field trials may start in 2009 and run through 2011, Dr. Uphoff said. 'This should satisfy any scientific questions,' he added. 'But my sense is that S.R.I. is moving so well and so fast that this will be irrelevant.' Practically, he said, the method is destined to grow."

Obviously, the field trial and its subsequent impact won't impact the current food crisis unless it lasts several more years. Although current climatic conditions aren't helping this crisis pass, hopefully the food shortage will be short-lived. Regardless of the current situation, the field test should help drive the direction of rice production in the future. If SRI proves as effective as Uphoff claims, I suspect that technologies will be developed to help reduce the manpower requirements to make the method even more effective and efficient.

Rwanda's Women

As I noted in my last post [Moving Forward in Rwanda], the women of Rwanda have emerged a potent economic force over the past decade as Rwanda tries to emerge from the grasp of internecine warfare and poverty. Anthony Faiola, writing in the Washington Post, details how women are making an impact ["Women Rise in Rwanda's Economic Revival," 16 May 2008]. He writes:

"Sun-kissed plantations ring this village [Maraba, Rwanda], renowned in recent years for growing the rich arabica beans brewed and served in some of the world's finest coffee houses. But the secret to success here has had far less to do with the idyllic climate and volcanic soil than with a group of people who have emerged as Maraba's -- and Rwanda's -- most potent economic force: women."

Faiola notes that the violence that ripped the country apart in 1994 played a crucial role in the emergence of women.

"In the 14 years since the genocide, when 800,000 people died during three months of violence, this country has become perhaps the world's leading example of how empowering women can fundamentally transform post-conflict economies and fight the cycle of poverty. That is particularly clear here in Maraba, a southern village where a host of women -- largely relegated to backbreaking field work in the days before the genocide -- found unwanted opportunity in the fertile lands they would inherit from slaughtered husbands, fathers and brothers."

Like most traditional societies, Rwanda's economy has been primarily male dominated and driven. With so many of the men gone, women had to step in but few had the training or experience to do so effectively. Fortunately, they received help from outside organizations. A little help was all they needed.

"As both female and male survivors sought to rebuild coffee plantations with financial and technical assistance from international organizations, Maraba's women, most trying their hands at the business of farming for the first time, were by far the faster students. They showed more willingness than men, officials here said, to embrace new techniques aimed at improving quality and profit. Now, Maraba's female farmers are outdoing their male counterparts in both, numbering about half of all farmers in the village's coffee cooperative but producing 90 percent of its finest quality beans for export. The march of female entrepreneurialism, playing out here and across Rwanda in industries from agribusiness to tourism, has proved to be a windfall for efforts to rebuild the nation and fight poverty. Women more than men invest profits in the family, renovate homes, improve nutrition, increase savings rates and spend on children's education, officials here said."

These are exactly the derivative benefits that spurred Muhammad Yunus to loan money primarily to impoverished women when he started his Grameen Bank. Women are not only better financial risks they are more likely to invest for the future (be it in their businesses or in their families).

"It speaks to a seismic shift in gender economics in Rwanda's post-genocide society, one that is altering the way younger generations of males view their mothers and sisters while offering a powerful lesson for other developing nations struggling to rebuild from the ashes of conflict. 'Rwanda's economy has risen up from the genocide and prospered greatly on the backs of our women,' said Agnes Matilda Kalibata, minister of state in charge of agriculture. 'Bringing women out of the home and fields has been essential to our rebuilding. In that process, Rwanda has changed forever. ... We are becoming a nation that understands that there are huge financial benefits to equality.' ... The road to female prosperity runs through a path of male shame."

Faiola reports that the scenarios that played themselves out in Bangladesh for Yunus are repeating themselves in Rwanda for other microlenders. He provides the example of Jeanine Mukandayisenga.

"The 29-year-old wife of a disabled army officer and mother of two took out a $50 microloan in 2005 with a plan to support her family. Her pitch: Few people in her neighborhood owned cellphones -- so she would buy one and charge a few cents per call. She paid back the loan within a year. Last year, she took out a $400 loan to open a graining mill for cassava flour. Her businesses are earning the family a relatively princely sum of $650 a month. Officials at Vision Finance, the microloan arm of World Vision International that launched a program in 2005 in this town of 40,000, said that while women make up the majority of borrowers, four out of five defaulters are men."

Women in Rwanda have demonstrated uncommon wisdom in how they invest their money. Faiola reports, however, that they are not alone. Women throughout much of the developing world appear to be better at making investment decisions. He also makes reference to Yunus' experiences.

"Perhaps it should come as no surprise that women have been key in reconstructing Rwanda. In the effort to finance the reduction of poverty in the developing world, many leading experts said that women simply make better investments. The evidence has been building for years. In 1990, a major study on poverty in Brazil published in the Journal of Human Resources showed that the effect of money managed by women in poor households was 20 times more likely to be spent on improving conditions in the home than money managed by men. In Bangladesh, the Grameen Bank founded by 2006 Nobel Peace Prize winner Muhammad Yunus has focused its poverty-busting microloans on women, with success rates far higher for female than for male borrowers. Microloan programs in Africa, Asia and Latin America have shown similar results. In India's great economic transformation of the past 15 years, states that have the highest percentage of women in the labor force have grown the fastest as well as had the largest reductions in poverty, according to the World Bank.

It would seem that in frontier economies, the frontier should be run by women! That is not often easy because the laws are stacked in favor of men and against women. Before women could play a major role in helping Rwanda recover, Rwanda's legal system had to be reformed to provide women with protections they had not previously enjoyed.

"By 1999, reforms were passed enabling women to inherit property -- something that would prove vitally important to female farmers. At the same time, woman began rising to higher ranks of political power. Today women hold about 48 percent of the seats in Rwanda's parliament, the highest percentage in the world. They also account for 36 percent of President Paul Kagame's cabinet, holding the top jobs in the ministries of commerce, agriculture, infrastructure, foreign affairs and information. Success in economics mirrored the rise of women in politics. Today, 41 percent of Rwandan businesses are owned by women -- compared for instance with 18 percent in Congo. Rwanda has the second-highest ratio of female entrepreneurs in Africa, behind Ghana with 44 percent, according to the World Bank. At the same time, Rwanda has engineered a surprisingly fast economic recovery. After falling into devastation in 1994, with many farms and businesses abandoned, damaged or destroyed, Rwanda's economy has since tripled in size and has grown at an average rate of 6 percent since 2004. Though the population is balancing out -- women edge men by a rate of 52 to 48 -- women make up 55 percent of the workforce, according to Commerce Minister Monique Nsanzabaganwa. ... By Western standards, women still have a long way to go in Rwanda. Many of the women in [Rwanda] who have husbands are culturally expected to ask their permission before engaging in any form of business. But some of these women who have inherited land from genocide victims have been able to use income from farming or renting that land to gain a measure of financial independence."

The real tragedy is that it took a tragedy for Rwandan men to appreciate the contribution that women can make to the economy. It is a lesson that needs to be learned in most societies, but especially in those that place less emphasis on educating females than males. No developing country can expect to emerge from poverty's grasp through the efforts of only half of its human capital.

Sometimes Local is Better than Global

Often in my discussion about Development-in-a-Box™ I have stressed the importance of connecting with the global economy. An article in The Economist reports that "not all of the developing world's most successful companies are globalising." ["The stay-at-home giants," 15 March 2008 print edition] The surprising thing is that many of these companies are successful even though what they offer is not necessarily the best product on the market.

"Israel is a 'powerhouse of agricultural technology', says Abraham Goren of Elbit Imaging (EI), an Israeli multinational. The country's cows can produce as much as 37 litres of milk a day. In India, by contrast, cows yield just seven litres. Spotting an opportunity, EI is going into the Indian dairy business. It will import 10,000 cows and supply fortified and flavoured milk to supermarkets and other buyers. So will EI lap up India's milk market? Not necessarily. As the Times of India points out, its cows will ruminate less than 100 miles from the headquarters of a formidable local producer—the Gujarat Co-operative Milk Marketing Federation, otherwise known as Amul. This farmers' co-operative spans 2.6m members, collects 6.5m litres of milk a day, and boasts one of the longest-running and best-loved advertising campaigns in India. It has already shown 'immense resilience' in the face of multinational competition, says Arindam Bhattacharya of the Boston Consulting Group (BCG). Its ice-cream business survived the arrival of Unilever; its chocolate milk has thrived despite Nestlé."

Resilience in all of its shades is of interest to me. The article points out that Amul is not the only local company that has done well (i.e., has demonstrated resilience) in the face of global competition.

"Amul is one of 50 firms—from China, India, Brazil, Russia and six other emerging economies—that BCG has anointed as 'local dynamos'. They are prospering in their home market, are fending off multinational rivals, and are not focused on expanding abroad. BCG discovered many of these firms while drawing up its 'global challengers' list of multinationals from the developing world. The companies that were venturing abroad most eagerly, it discovered, were not necessarily the most successful at home."

So what makes these particular "dynamos" so resilient? The short answer seems to be that they are consumer oriented and know their customers better than multinational companies.

"Of [the] 50 dynamos, 41 are in consumer businesses, where they can exploit a more intimate understanding of their compatriots' tastes. [BCG] gives the example of Gol, a Brazilian budget airline, which bet that its cash-strapped customers would sacrifice convenience and speed for price. Many Gol planes therefore depart at odd hours and make several hops to out-of-the-way locations, rather than flying directly. Similarly astute was India's Titan Industries, which has increased its share of India's wristwatch market despite the entry of foreign brands such as Timex and Swatch. It understood that Indians, who expect a good price even for old newspapers, do not throw their watches away lightly, and has over 700 after-sales centres that will replace straps and batteries."

These local dynamos have changed how analysts think about valuing companies. Because so many local companies in developing nations have either been state-owned or state-supported, companies that have done well in export markets have historically been valued higher than companies strictly focused on local markets.

"Emerging economies are still prey to what Harvard's Dani Rodrik has called 'export fetishism'. International success remains a firm's proudest boast, and with good reason: economists have shown that exporters are typically bigger, more efficient and pay better than their more parochial rivals. 'Exporters are better' was the crisp verdict of a recent review of the data. Countries like India and Brazil were, after all, once secluded backwaters fenced off by high tariffs. Prominent firms idled along on government favours and captive markets. In that era, exporting was a truer test of a company's worth. But as such countries have opened up, their home markets have become more trying places. Withstanding the onslaught of foreign firms on home soil may be as impressive a feat as beating them in global markets."

Local dynamos, beyond knowing their customers better, also have a few other things in common. The Boston Consulting Group describes some these:

"Exporters tend to be more capital-intensive than their home-bound peers; they also rely more on skilled labour. Many local dynamos, conversely, take full advantage of the cheap workforce at their disposal. Focus Media, China's biggest 'out of home' advertising company, gets messages out on flat-panel displays in 85,000 locations around the country. Those displays could be linked and reprogrammed electronically, but that might fall foul of broadcast regulations. So instead the firm's fleet of workers on bicycles replace the displays' discs and flash-cards by hand. The list of multinationals resisted or repelled by these dynamos includes some of the world's biggest names: eBay and Google in China; Wal-Mart in Mexico; SAP in Brazil."

I have found in my Development-in-a-Box work that local governments want a program that helps foster local businesses as well as attract multinational businesses. BCG's identification of characteristics that help make local businesses successful is helpful. It should provide confidence to local business people that they can compete if they take advantage of local knowledge and conditions. It may also help remove some of the fears about the spread of globalization.

Will a New China Emerge from the Earthquake's Rubble?

iIn a recent post about the earthquake in China [Globalization and Giving -- the Rise of Chinese Philanthropy], I noted some hopeful signs about how society is changing in there. New York Times columnist Nicholas Kristof, who traveled through China to see how the country is responding, also sees some hopeful signs ["Earthquake and Hope," 22 May 2008].

"In the aftermath of the great Sichuan earthquake, we've seen a hopeful glimpse of China's future: a more open and self-confident nation, and maybe — just maybe — the birth of grass-roots politics here. In traveling around China in the days after the quake, I was struck by how the public and the news media initially seized the initiative from the government. Ordinary Chinese are traveling to the quake zone to help move rubble, and tycoons, peasants and even children are reaching into their pockets to donate to the victims. ... Private Chinese donations have already raised more than $500 million. That kind of bottom-up public spirit is a mark of citizens, not subjects."

As one Chinese scholar quoted in my last post noted, "Thirty years ago, it would have been impossible to imagine this." Kristof reports that the changes are really bottoms-up, grassroots efforts. The government is having a more difficult time adjusting to events.

"Immediately after the earthquake, the Propaganda Department instinctively banned news organizations from traveling to the disaster area. But Chinese journalists ignored the order and rushed to Chengdu — and the order was rescinded the next day. Initial score: Propaganda Department, 0; News Media, 1. Since then, the authorities have managed to rein in the media again, and the Propaganda Department is ordering news organizations to report on how wonderful the relief efforts are. Many Chinese journalists are chafing instead to investigate corruption and the reasons schools collapsed when government offices didn't. The final score will depend on whether those stories are published."

The fact that the government is cooperating with private fundraising efforts and has accepted outside assistance is a good sign that not all Chinese bureaucrats are stuck in the past.

"China-watchers have long debated whether the country is evolving toward greater freedom and pluralism. One camp, myself included, believes it is. We see China slowly following the trajectory of South Korea, Indonesia, Mongolia and other neighboring countries away from authoritarianism. We see perestroika leading to glasnost. Frankly, the evidence has been mixed, and the skeptics are right to note that dissidents are still more likely to end up in jail than on the news. But on balance, the earthquake gives hope to us optimists."

The changes are bound to come slowly -- governments in single party states never change quickly. It was evolutionary changes in government policies, however, that permitted the economic changes that are revolutionizing Chinese society. Those societal changes will eventually spur more governmental changes. At least, that is the virtuous cycle that many analysts see in China's future.

"The rise of wealth, a middle class, education and international contacts are slowly undermining one-party rule and nurturing a new kind of politics. Prime Minister Wen Jiabao is hard-working and blessed with nearly a photographic memory, but he also may be the second-most boring person alive (after his boss, President Hu Jintao). Both Mr. Hu and Mr. Wen rose through the system as classic Communist apparatchiks — Brezhnevs with Chinese faces. Yet Mr. Wen has seen the political landscape changing and has struggled recently to reinvent himself. When the earthquake hit, Mr. Wen flew immediately to the disaster area and appeared constantly on television, overseeing rescue operations. Heroic tidbits seeped out. Mr. Wen fell and cut himself but refused medical attention. He bellowed directions to generals over the telephone and then slammed the handset down. He shouted to children buried in a pile of rubble: 'This is Grandpa Wen Jiabao. Children, you've got to hold on!' Mr. Wen's conduct is striking because it's what we expect of politicians, not dictators. His aim was to come across as a 'good emperor,' not to win an election. But presumably he behaved in this way partly because he felt the hot breath of public opinion on his neck."

In a country in which the media is controlled by the government, one may ask exactly how politicians can "feel the breath of public opinion"? The World-Wide Web, Kristof reports, provides at least part of the answer.

"China now has 75 million blogs, often carrying criticisms of the government, as well as tens of thousands of citizen protests each year. China's police announced that they had punished 17 earthquake 'rumor-mongers' last week, with penalties of up to 15 days in jail. But repression isn't what it used to be, and dissidents now are often less afraid of the government than it is of them."

Kristof believes that China is still a couple of decades away from having a government that more fully embraces democracy, but that transformation will be urged along by its continued embrace of capitalism.

"In the 1980s, China's hard-liners ferociously denounced 'heping yanbian' — 'peaceful evolution' toward capitalism and democracy. The hard-liners worried that if citizens had a choice of clothing, of jobs, of housing, of television programs, they might also want a role in choosing national policy. The earthquake may be remembered as a milestone in that peaceful evolution. My hunch is that the Communist Party is lurching in the direction, over 10 or 20 years, of becoming a Social Democratic Party that dominates the country but that grudgingly allows opposition victories and a free press. China today reminds me of Taiwan when I lived there in the late 1980s when the government was still trying to be dictatorial but just couldn't get away with it. It was no longer scary enough. Back then, the smartest of the Taiwan apparatchiks, like a young Harvard-educated party official named Ma Ying-jeou, glimpsed the future and began to reinvent themselves as democratic politicians. The epilogue: Mr. Ma took office this week as the newly elected president of a democratic Taiwan."

I share Kristof's optimism that China is moving in the right direction. Unfortunately, I don't believe the course it will take towards democracy is going to be a straight one. The rest of the developed world is going to have to find ways to help China back on the road whenever it takes a detour. As long as China keeps moving generally in the right direction, it will remain one of the world's most influential countries. In fact, its influence will only grow.

Coming to America

The recent raid of a kosher meat plant in Postville, Iowa, that netted more than 300 illegal immigrants working there reminds us that the debate about immigration is likely to remain a hot topic as America moves into the next phase of the presidential election ["Hundreds Are Arrested in U.S. Sweep of Meat Plant," by Susan Saulny, New York Times, 13 May 2008]. The raid also highlights the significant effects that such enforcement can have on local, national, and international economies.

"The plant has 800 to 900 people and is the country's largest producer of meat that is glatt kosher, widely regarded as the highest standard of cleanliness. The plant shut temporarily. ... Among people ...in Postville, 'there is a lot of fear,' said Prof. Mark A. Grey, who focuses on immigration at the University of Northern Iowa. 'It's absolutely devastating to the local economy,' Professor Grey said. ... According to Menachem Lubinsky, the editor of Kosher Today and a marketing consultant, AgriProcessors provides 60 percent of the kosher retail meat and 40 percent of the kosher poultry nationally, and most retail chains depend on it for supply. Mr. Lubinsky said the company was also the sole American packing plant whose products are accepted in Israel."

Undoubtedly, most of the illegal workers caught in the raid were from Mexico or countries south. According to an article in the Washington Post, immigrants from Mexico have less earning power and are the least educated immigrant group in America ["Study Says Foreigners In U.S. Adapt Quickly," by N.C. Aizenman, 13 May 2008]. As a result they end up in manpower intensive industries such as meat packing, agriculture, and construction -- backbreaking work where openings often go unfilled because enough willing employees cannot be found.

"Modern-day immigrants arrive with substantially lower levels of English ability and earning power than those who entered during the last great immigration wave at the turn of the 20th century. The gap between today's foreign-born and native populations remains far wider than it was in the early 1900s and is particularly large in the case of Mexican immigrants, the report said."

The news is not all bad, however. Aizenman reports that immigrants are actually assimilating faster than they did in the past.

"Immigrants of the past quarter-century have been assimilating in the United States at a notably faster rate than did previous generations, according to a study released today. ... The study, sponsored by the Manhattan Institute, a New York think tank, used census and other data to devise an assimilation index to measure the degree of similarity between the United States' foreign-born and native-born populations. These included civic factors, such as rates of U.S. citizenship and service in the military; economic factors, such as earnings and rates of homeownership; and cultural factors, such as English ability and degree of intermarriage with U.S. citizens. The higher the number on a 100-point index, the more an immigrant resembled a U.S. citizen."

Of the top ten immigrant groups, Canadian immigrants assimilate the best (no surprise there) and Mexican immigrants assimilate the least. Undoubtedly, the fact that there are large Latino populations in many areas of the U.S. means that Spanish speakers don't have to assimilate quickly to get along. Judging by the data, however, just "getting along" means having many fewer opportunities to improve one's quality of life than those who assimilate.

"In general, the longer an immigrant lives in the United States, the more characteristics of native citizens he or she tends to take on, said Jacob L. Vigdor, a professor at Duke University and author of the study. During periods of intense immigration, such as from 1870 to 1920, or during the immigration wave that began in the 1970s, new arrivals tend to drag down the average assimilation index of the foreign-born population as a whole. The report found, however, that the speed with which new arrivals take on native-born traits has increased since the 1990s. As a result, even though the foreign population doubled during that period, the newcomers did not drive down the overall assimilation index of the foreign-born population. Instead, it held relatively steady from 1990 to 2006. 'This is something unprecedented in U.S. history,' Vigdor said. 'It shows that the nation's capacity to assimilate new immigrants is strong.' A possible explanation, Vigdor said, was that the economic expansion of the 1990s created more job opportunities at all levels, speeding the economic integration of immigrants. It could also be that because today's immigrants begin at such a low starting point, 'it's easier to make progress to the next level up' of integration than it would be if the immigrant had to improve on an already high level of integration."

Frankly, that the U.S. has a strong capacity to assimilate new immigrants is a bit surprising based on the increasingly shrill attention given to the 12 million illegal immigrants living in America. It is difficult for many people to disassociate their negative feelings for illegal immigrants from their feelings about immigrants in general. The fact that presidential candidate John McCain had to abandon his relatively compassionate immigration bill in order to secure his party's nomination is a sign of the xenophobic tension tugging at America's heartland.

"Vigdor also said his findings included cause for concern: most notably, the fact that the 2006 assimilation index of 28 is less than the previous low point of 42 in 1920. The difference indicates the substantial change in the composition of today's immigrants compared with earlier immigration waves. Although new arrivals at the turn of the 20th century were most likely to be eastern and southern Europeans, he said, 'one of the top five origin countries was England, and close to 100 percent of them spoke English.' By contrast, the majority of immigrants today are Mexicans and other Latin Americans, with the next largest share coming from a range of developing nations with languages other than English. The overall assimilation index also masks big differences between immigrants from certain countries. Mexicans, for example have an index of 13, while Vietnamese were at 41. And although immigrants who arrived as children tend to be nearly identical to their U.S.-born counterparts, apart from their lower rates of citizenship, those who come from Mexico are less assimilated and have higher incidences of teenage pregnancy and incarceration."

Vigdor attributes much the lack of Latino assimilation to the fact that those in the U.S. illegally have many paths to assimilation cut off to them. Culturally, he points out, they actually assimilate better than immigrants from India or China (although they rank beneath those groups in economic assimilation -- with a score of 66 out of a 100 compared to 96 and 90 respectively). Assimilation is a critical factor in advancing globalization and assuring a healthy economic climate. Emotions are likely to color the immigration debates in the U.S. and elsewhere (such as recent attacks on immigrants in South Africa), which will make passing sensible immigration legislation more difficult. No country can long tolerate a flood of illegal immigration -- the security risks are too high and enforcement costs pose an unmeasured, but negative, tax on the economy. A satisfactory U.S. plan for dealing with this challenge has yet to emerge. When it does, it will undoubtedly be a compromise proposal that makes no one entirely happy.

Globalization and Giving -- the Rise of Chinese Philanthropy

With the death toll from China's recent massive earthquake expected to rise to nearly 50,000 people, the world has offered and Chinese leaders have accepted outside assistance. Western experts, for example, are monitoring some Chinese nuclear plants for damage that might have been created during the temblor. Other forms of aid from rescue units to money are also pouring in. One unexpected source of funds has been from the Chinese people themselves ["Chinese Open Wallets for Quake Aid," by Maureen Fan, Washington Post, 16 May 2008]. That may not sound surprising to outsiders (after all, who doesn't want to help when they see neighbors in need?), but as the article's sub-title explains, individual giving is rare "in a Society Long Under Sole Care of the State." This is not the first large natural disaster that has occurred since the Communists came to power, so why are the Chinese people opening their wallets in record numbers? Because, thanks to globalization, they can. Fan reports:

"At the headquarters of the Red Cross Society of China, volunteers turned a boardroom into a makeshift cashier's office Thursday, sending tens of thousands of fluttering bank notes through counting machines and handing receipts to people like Cai Lili, 30, who stood in long lines with bricks of cash to donate to earthquake relief efforts. Since a massive earthquake struck Sichuan province and surrounding regions three days ago, Chinese have donated $192 million to help their countrymen, according to China's Civil Affairs Ministry. The fundraising has come as officials have issued a rare public appeal for cranes and rescue equipment, hammers and shovels, bandages and medicine. In scale, the financial contributions have been unprecedented in China, which for decades taught its citizens that the state and the state alone would take care of them from cradle to grave."

This demonstration of giving is a positive sign for the Chinese government, its economy, and the rising quality of life the ordinary Chinese citizen. You can't give what you don't have. The Communist Party in China has been so concerned about maintaining control that it has banned most organizations that operate independently from the government, including charitable ones.

"There is no organized philanthropy here, and independent nongovernmental organizations are banned. Ordinary Chinese and famous Chinese, including Houston Rockets center Yao Ming, have simply decided to open their wallets to help the estimated 10 million people affected by the earthquake. Many have given as individuals in addition to or instead of giving at the office, saying they were making a statement about their gifts coming from the heart. 'I wanted to separate the collective action from the individual action,' said Cai, a clerk with the Beijing special armed police, who earlier gave $14 at the office, then stood patiently in line Thursday to donate $71 in her daughter's name. 'Although in this diverse society, there are many conflicting values, in the face of disaster we stand together.' On the opposite side of a table stood Zhao Shuangying, 48, sunglasses hanging from the collar of his pink polo shirt, belly protruding over a pair of white loafers. 'It's very simple. I cannot go to Sichuan, so I came here to help,' said Zhao, the owner of a technology company. In his hands were several bricks of notes totaling more than $14,000. 'I want to show that it's me who's donating. It's not connected with anybody else. I'm donating in my own name,' he said."

This show of philanthropy, mingled with individualism, is another indication of how much things have changed over the past few decades. Considering China's long history and how slowly things there normally change, things are now moving relatively fast. The involvement of the people shows a growing feeling of confidence, both in their economic well-being and in the ability to express their views.

"In the days before the ascent of private enterprise, the government compensated the disabled and gave medicine to the sick. And while farmers were often called on to help in government campaigns against insect infestations or rising floodwaters, the paternalistic nature of Chinese society made it difficult to imagine individuals stepping forward to lead or to hold officials accountable for relief efforts. The quake that struck central China, however, has inspired a completely different outlook among ordinary Chinese, many of whom belong to the country's growing middle class. The outpouring of support was partly in response to the unusually open news coverage of the earthquake, especially compared with the limited state-controlled coverage of previous disasters. This time, heartbreaking images, dramatic rescue accounts and humble requests for help have been the subject of nonstop live broadcasts, lengthy online postings and a large display in the lobby of the Red Cross building."

Fan reports that because the government has for so long monopolized every aspect of public life, a real gap in civil society exists. By that she means the ability of ordinary citizens to unite to carry out necessary social activity. The Merriam-Webster Dictionary defines one meaning of civil this way: "of, relating to, or involving the general public, their activities, needs, or ways, or civic affairs as distinguished from special (as military or religious) affairs." The rise of the "general public" in China is heartening to see. As one observer noted, the Chinese general public has longed for a role in civil society.

"Experts said the gifts fill an enormous need in a country that does not yet have a fully developed civil society. 'The Chinese value of helping others is never a problem for the people. The only problem is that there are institutional obstacles that have stopped them from showing this,' said Liu Junning of the Chinese Cultural Research Institute. 'There are no independent NGOs in China; even the foreign NGOs working in China have to register with the government. Real NGOs are more experienced in encouraging ordinary people to help and also in rescue work.' In an acknowledgment that many Chinese mistrust the way the government doles out financial aid, officials have promised to allow public supervision of how donation funds are spent and to submit to an audit process at the end of the relief effort, 'lest misappropriations occur,' said Wang Zhenyao, director of disaster relief with the Civil Affairs Ministry."

This rush to help also underscores a new Chinese nationalism that worries some outside observers. They fear that it will turn from simply being proud of being Chinese into something more belligerent. The fact that outside help is being sought and accepted, might help demonstrate that the world is not anti-Chinese and that the protests that have followed the Olympic torch have more to do with human rights than ethnicity.

"China is also accepting financial aid from other governments. Taiwan, the self-ruled island that Beijing considers a part of China, promised $65 million. Saudi Arabia has pledged $50 million in cash and $10 million in relief materials. The U.S. ambassador to China, Clark T. Randt Jr., presented a $500,000 check from the U.S. Agency for International Development as an 'initial contribution.' Yet it is the public donations that have been notable here. 'China has been through such rapid economic development in the last 30 years. So now it can raise such an impressive amount in such a short time,' said Qian Gang, author of a book about the 1976 Tangshan earthquake, which killed 250,000 people, a death toll that was a state secret for many years. 'Thirty years ago, it would have been impossible to imagine this.'"

Although it is too soon to dismiss a rising Chinese security threat, the signs continue to be mostly positive that the future is more likely to involve economic competition than military conflict. As Qian Gang said, "Thirty years ago, it would have been impossible to imagine this." That is the magic of globalization when it works.

Japan's Demographic Woes Remain Serious

I have written about Japan's demographic situation before [Demographics and Robots]. Blaine Harden of the Washington Post Foreign Service reports that Japan's demographic crisis seems to be growing worse ["Japan Steadily Becoming a Land Of Few Children," 6 May 2008].

"Japan celebrated a national holiday on [May 5th] in honor of its children. But Children's Day might just as easily have been a national day of mourning. For this is the land of disappearing children and a slow-motion demographic catastrophe that is without precedent in the developed world. The number of children has declined for 27 consecutive years, a government report said over the weekend. Japan now has fewer children who are 14 or younger than at any time since 1908."

As I noted in the previously mentioned blog, the Japanese fascination with robots is in large measure due to the hope that they will one day replace workers who, in the future, simply won't be available. The current situation in Japan creates two connected challenges -- too few young and a growing elderly population.

"The proportion of children in the population fell to an all-time low of 13.5 percent. That number has been falling for 34 straight years and is the lowest among 31 major countries, according to the report. In the United States, children account for about 20 percent of the population. Japan also has a surfeit of the elderly. About 22 percent of the population is 65 or older, the highest proportion in the world. And that number is on the rise. By 2020, the elderly will outnumber children by nearly 3 to 1, the government report predicted. By 2040, they will outnumber them by nearly 4 to 1."

Like some European countries, Japanese political leaders are encouraging their citizens to have children, but with little success. The downstream consequences are severe.

"Japan, now the world's second-largest economy, will lose 70 percent of its workforce by 2050 and economic growth will slow to zero, according to a report this year by the nonprofit Japan Center for Economic Research. Population shrinkage began three years ago and is gathering pace. Within 50 years, the population, now 127 million, will fall by a third, the government projects. Within a century, two-thirds of the population will be gone. In what is now being called a 'super-aging' society, department and grocery stores have recorded declining sales for a decade -- and new car sales have fallen for 18 consecutive years."

In some ways, what is happening in Japan foreshadows what is happening in rural areas of mid-American, where once thriving small towns are disappearing.

"Rural Japan, thus far, has borne the brunt of the slide. In depopulated small towns, stores are closing, governments are desperate for tax revenue and there are chronic shortages of doctors and nurses. The government is subsidizing the development of robots as caregivers for the old."

The rest of the world is bound to learn some valuable lessons from the Japanese experience; but for the Japanese, these lessons will come at a dear price. Harden reports that Japan is really becoming a country of big cities and all roads seem to lead to Tokyo.

"To a steadily increasing degree, Japan's future depends on metro Tokyo, the world's largest megalopolis. It is home to about 35 million people, or 27 percent of the country's population. But in Tokyo, children account for just 11.8 percent of the population, according to the new government report. That's the lowest proportion in all of Japan."

Tokyo is not the city you think about when you say "adults only." Inevitably, Japan will have to open its doors to immigrants. It is a policy that they have long postponed because they know that it will change their culture. They shouldn't be too concerned, however, some of the world's greatest cities have a wonderful mixture of cultures and ethnicities that help them thrive. The biggest challenge for Japanese leaders, should they allow immigrants in, will be to get them to settle in those that have for the past quarter century been depopulating. If they can do that, perhaps America can find a model for repopulating some of its rural areas as well.

The Psychology of Philanthropy

The recent cyclone in Myanmar, the enormous earthquake in China, and even the tornadoes in the U.S. are stark reminders that natural disasters occur with frightening regularity. People affected by natural disasters are generally desperate for immediate help. As most people are aware, the ruling junta in Myanmar has despicably and fatally limited the world's disaster response there. Washington Post columnist Shankar Vedantam examines a different kind of behavior that puts limits on global response -- the reaction of potential donors ["Where the Conscience Meets the Checkbook," 12 May

The recent cyclone in Myanmar, the enormous earthquake in China, and even the tornadoes in the U.S. are stark reminders that natural disasters occur with frightening regularity. People affected by natural disasters are generally desperate for immediate help. As most people are aware, the ruling junta in Myanmar has despicably and fatally limited the world's disaster response there. Washington Post columnist Shankar Vedantam examines a different kind of behavior that puts limits on global response -- the reaction of potential donors ["Where the Conscience Meets the Checkbook," 12 May