International Development

President Obama proposed a “Clean Energy and Climate Partnership of the Americas” during his time at the Summit of the Americas.  Typical Barack MO: big, broad, ambitious.  The existing Latin America approach in the US Department of Energy is on country-by-country proposals and grants.  This is fine, but  the office of Energy Efficiency and Renewable Energy (EERE) could be providing other, more overarching support to this worthy goal of international RE partnership.  A couple of proposals:

**On the finance front, EERE should consider launching a collaboration with the Interamerican Development Bank to begin ‘greening’ the IDB project finance arm. See this link for good background.   There is some indication that the IDB is just beginning [pdf] to consider this type of change in the biofuels sector.   EERE should advise the IDB in finance concerns re solar, wind, and energy efficiency, too. Such a collaboration would help break the project finance logjam, and would also ensure scale, duration, and breadth of impact, far beyond EERE acting on its own.  (See also the “Green Bank” legislation just introduced in the US.)

First of all, I’m a big fan of the _idea_ of open source hardware (OSH).  (For reference, an excellent compendium of the idea has been growing here at the P2P Foundation wiki.) The notion of a global OS design database, a distributed network of fablabs, and a market driven not by the price signal but by collaborative communication, is very alluring — especially to nerds.

But I have lingering doubts…Certainly the movement is increasingly technologically feasible, and likely to create some sort of fringe guild ecology over the next 10 years.  But from an economic and social viewpoint, much remains to be sorted out in any rigorous way.   I should clarify here that my goal is to critique the OSH movement’s ability to have a meaningful impact for the welfare of the world’s poorest, or to meaningfully change the ecological footprint of the global economy.  Key to this dual goal are speed and scale: the OSH economy must grow at least as fast as the ‘traditional’ economy, and preferably should outpace it by an order of magnitude.   In other words, how can the OSH community lay plans to grow revenues by 25% per year for the next 10 years?

And in sorting out whether OSH has legs, we need to think about whether it will be able to harness the three forces that drive successful product/service growth: a business model that keeps investment dollars coming in, keeps producers gainfully employed, and keeps consumers happy.  I’ll look into possible business models for OSH in a later post.

A growing chorus of international development professionals are recognizing the scale and the seriousness of the tax haven problem as it relates to international development.  The World Bank endorses [pdf] third-party estimates that show the illicit outflows of revenues from the developing world, facilitated by tax havens, dwarf the aid flowing in to those countries by a factor of 10.   And more recently, in an interview with Reuters, a top OECD official made a point to reiterate that negative effects of tax havens disproportionately impact developing countries. Find the link here.

As an MBA candidate with an international development background, I think that the damage done by secrecy jurisdictions is an overlooked ‘area of moral clarity.’  With regards to global poverty eradication, there is little debate that that resource-rich, governance-poor countries are prime targets for international organized crime.  The resulting industry for ‘corruption services’ is lubricated by tax havens.  While demand for corruption services may be difficult to staunch, the supply for these services is a really a question of international, and in some cases national, regulation.  Unfortunately these services are still big business in the developed world, with the UK, Singapore, Switzerland, and the US being the biggest offenders.

Until this question lands squarely on the regulatory agendas of the EU, UN, US, and ASEAN, the $80bn of aid money from the countries of the North is throwing good money after bad.  Until tax havens are recognized as accomplices in global corruption that drains tax revenue from the poorest nations, humanitarian aid will continue, perhaps inadvertently, to perpetuate aid-dependency around the world.