Question to Answer on the debate paper :Does foreign aid from countries in the Global North promote economic development in the receiving countries of the Global South, or is foreign aid ineffective at promoting economic development?Students should use the following readings ONLY as the primary resources in writing this papers. Please read carefully the Debate Paper Guidelines and follow the instructions.Three pages of text in length, not including a cover page or a bibliography. 5 articles, the longest is 16 pages
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yunus_2009.pdf
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dunning_2004.pdf
easterly_2002.pdf
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POLS 4133 International Political Economy
Debate Paper Guidelines
Spring 2017
The goal of the debate papers is to evaluate and critique major policy approaches to IPE
topics. Therefore, you will evaluate the information on a contentious issue and then
convince the audience that your opinion is valid and defensible. Your job is to take one
side of the argument and then persuade your audience that the evidence validates your
claims and refutes any counterclaims.
Guidelines for the papers are as follows:
1. Students may not select alternate topics. Specific questions for each debate will be
given.
2. Each paper will be a maximum of three pages of text in length, not including a cover
page or a bibliography. Your text should be no more than 3 pages, double-spaced, with
one-inch margins, and 12-point Times New Roman font.
Your paper will be organized to include:
• An introductory paragraph that describes your thesis/position statement on the
topic. Your position should be clear and based on facts rather than belief or
opinion.
• At least two to three paragraphs giving relevant evidence to support your position.
Each paragraph should focus on only one point of evidence. Paragraphs are
typically organized from weakest point to strongest point.
• At least one paragraph that provides a refutation of the most significant
counterargument to your position. Be sure to say why the counterclaim is not
supported based on facts or false logic in the claim itself.
• At least one paragraph concluding your paper.
To help you organize the information in your papers, you might wish to consider the
following questions as you read the sources and gather your evidence.
• What is the author’s main argument? What research question is the author trying
to answer? What are the assumptions, explicit and implicit, upon which the
author’s argument is based?
• What are the strengths and weaknesses of the author’s analysis? Can you think of
an alternative explanation for the author’s evidence?
• Do you agree or disagree with the author? How would you approach a similar
puzzle? What questions still need to be addressed?
• What advice would you give to policy makers based on this reading?
3. Students must use the readings provided to form the basis of their evidence. Students
may supplement these readings with additional evidence taken from credible sources or
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peer reviewed academic research. news Students must cite all sources with in-text
citations and include full citations in a bibliography.
4. Students are expected to submit papers that have been carefully edited and are free
from common mistakes in spelling, grammar, and formatting.
In grading your papers, I will be looking for evidence that you (a) clearly explain
your thesis, (b) provide strong support of your thesis using evidence from the course, (c)
provide a discussion of at least one counterclaim, (d) use concepts and themes from our
course, and (e) follow writing conventions. You will also receive credit for (f) relevant
and engaging class participation on the day of the debate.
NOTE: Failure to follow these guidelines will result in a reduction of points
awarded.
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Muhammad Yunus, founder and managing director of the Grameen Bank, was awarded the Nobel Peace Prize in 2006
for developing the concept of microcredit as “an important instrument in the struggle against poverty.” He is the author, with
Karl Weber, of Creating a World Without Poverty (Public Affairs, 2008).
Economic Security for a World in Crisis
Muhammad Yunus
Capitalism is in serious crisis. Even so, no
one is calling for it to be abandoned in favor
of some other system, such as socialism,
because everybody is convinced that, with
all its faults, capitalism is still the best
economic system known to humanity. As
every student knows, Adam Smith provided
the conceptual framework of capitalism. It
has been improved and elaborated throughout its long history, and though the world
has changed enormously, the fundamentals
described by Smith have remained largely
intact.
The need for reviewing the basic structure of capitalism has seemed appropriate on
many occasions, but never so clearly as it is
today. Indeed, in light of the current global
economic crisis, there is strong support for a
major overhaul of the system. In my view,
one major change in the theoretical framework of capitalism is necessary—a change
that will allow individuals to express themselves in multi-dimensional ways and address the problems left unsolved or even
intensified by the existing conceptual framework. And although my proposal may be
viewed as a significant change in the structure of capitalism, it is actually very consistent with what Adam Smith elaborated so
brilliantly in his Theory of Moral Sentiments
in 1759. Some 250 years later, however,
© 2009 World Policy Institute
some of Smith’s lessons still have not been
learned adequately.
Until the current economic crisis, observers around the world shared a remarkably optimistic view of the future of civilization. In the early years of the twentyfirst century, we were living in a time of
unparalleled prosperity, fueled in part by
revolutions in knowledge, science, and technology. This prosperity had dramatically
improved the lives of many; yet billions of
people still suffered from poverty, hunger,
and disease. In the developed world, a handful of economists and social scientists had
been clamoring to draw attention to their
plight. Many people, however, took a complacent view, assuming that the spread of
free markets would bring eventual prosperity even to the world’s poorest peoples.
The twenty-first century began with
high hopes and idealistic dreams, encapsulated in the United Nations initiative
known as the Millennium Development
Goals. These eight goals, to which the international community pledged its support, included several economic objectives (such as
eradicating extreme poverty and developing
a global partnership for development) as
well as other humanitarian objectives (such
as reducing gender inequality and achieving
universal primary education). Taken togeth5
er, these goals would carry us a long way toward the broader objective of greatly reducing the gulf between the rich nations of the
global North and the poor nations of the
global South. Many of us were convinced
that the coming decades would bring unprecedented wealth and prosperity, not just
for a few, but for all people on this planet.
Now the mood of optimism has
changed. Several major crises that few people foresaw—the financial crisis, the everworsening environmental crisis, and crises
over food and oil prices—have converged to
bring even greater misery and frustration to
the world’s bottom three billion people.
And these crises have also driven many in
the developed world to question the solidity
of the foundations on which they had assumed their future security and prosperity
were being built.
A Rude Awakening
The crises we face in food, energy, and the
environment have a host of immediate economic and physical causes. But they all have
one thing in common. They all reflect the
inadequacy of the current economic system.
In each case, we confront social problems
that cannot be solved solely by the free market as it is traditionally understood.
On top of all this has come the biggest
crisis of all. In the past few months, we’ve
witnessed perhaps the greatest evaporation
of wealth in history. The crushing collapse
of large sectors of the global financial system, first in the United States, then in other
nations of the developed world has doomed
giant financial institutions, bankrupted major manufacturing firms, and nearly shuttered entire domestic industries, now kept
alive only with unprecedented government
bailout packages. Many reasons have been
suggested for this historic economic collapse: excessive greed in the marketplace,
the transformation of investment markets
into gambling casinos, and the failure of
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regulatory institutions. But one thing is
clear. The financial system has broken down
because of a fundamental distortion of its
basic purpose.
Credit markets were originally created
to serve human needs—to provide business
people with capital to start or expand companies. In return for these services, bankers
and other lenders earned a reasonable profit.
Everyone benefited. In recent years, however, the credit markets have been distorted
by a relative handful of individuals and
companies with a different goal in mind—
to earn unrealistically high rates of return
through clever feats of financial engineering.
They repackaged mortgages and other loans
into sophisticated instruments whose risk
levels and other characteristics were hidden
or disguised. Then they sold and resold
these instruments, earning a slice of profit
on every transaction. All the while, investors
eagerly bid up the prices, scrambling for
unsustainable growth and gambling that the
underlying weakness of the system would
never come to light.
In time, the inevitable happened. The
house of cards came tumbling down. Because of the degree of globalization in financial markets, this economic tsunami has
spread across the world. Stock markets
around the globe have suffered losses in
the billions, even trillions of dollars. But
the rich will not be the most affected by
this financial crisis; rather it will be the
bottom three billion people on this planet
who will truly suffer, despite the fact that
they are not responsible in any way for creating this disaster. While the rich will continue to enjoy a privileged lifestyle, the
poor will face job and income losses that,
for many, will make the difference between
life and death.
The impact is already beginning to be
felt. As levels of global trade decline, exports from the developing nations are down.
Foreign direct investment in development
WORLD POLICY JOURNAL • SUMMER 2009
by the wealthy nations is expected to drop
by 20 percent this year. Funds for lending
have dried up, as have aid flows and remittances from citizens working abroad.
We have only seen the beginning of
these crises. We are in for a long and painful
period ahead. The combined effects of the
financial, food, energy, and environmental
crises will continue to unfold in the coming
months and years, affecting the security of
the bottom three billion with particular
force. One example: the World Bank has estimated that unless the financial crisis is
quickly resolved, an additional 1.4 million
to 2.8 million children in the developing
world will die of malnutrition between
2010 and 2015.
The troubles of the world’s poorest will
have an impact on those in developed nations, too. Social unrest, border clashes over
scarce resources, increasing instances of state
failure, and vast migrations by populations
desperate for relief from poverty and environmental disaster will create political and
military hot spots around the globe that
will threaten world peace and strain the
budgets of established and emerging powers
struggling to cope with these challenges.
Economic Security for a World in Crisis
Over the past several months, world
leaders have been particularly focused on
financial emergencies. This is quite understandable. But it should not be seen as a
problem of high finance only. This narrow
view of the financial crisis is likely to intensify our global social and political problems.
The human aspect of the financial crisis
must be integrated into a holistic solution
to the problems that we all face.
So far, governments have kept themselves busy coming up with super-sized
bail-out packages for the institutions responsible for creating the financial crisis, yet
little is being done to bail out the most vulnerable victims. Still, the decision in early
April by the leaders of the G-20 Summit to
“recapitalize” the International Monetary
Fund (IMF) to the tune of $750 billion is a
welcome start. These funds will enable the
IMF to help stabilize threatened banks in
troubled regions of the world, such as eastern Europe. In a global crisis like the one
we face today, relief to any region helps the
whole world by reducing the chance that
economic collapse will continue to spread.
Yet, in the face of all this dire news, it
is possible that this mega-crisis could be a
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mega-opportunity—to redesign our existing
economic and financial systems so that they
can become the foundations for lasting
global security.
Capitalism: a Half-Built Structure
Even if we can overcome the immediate
crises we face, we will still be left with fundamental questions about the effectiveness
of capitalism in tackling such unresolved
problems as persistent poverty, lack of access
to health care and education, and epidemic
diseases. In my view, the theoretical framework of capitalism that is widely accepted
today is a half-built structure—one that
prevents Adam Smith’s “invisible hand”
from operating as he believed it should,
transforming the pursuit of individual gain
into general social benefit through the
workings of the marketplace.
In a sense, we have chosen to disregard
half of Smith’s message. His landmark book,
The Wealth of Nations, has drawn all the attention, while his equally important Theory
of Moral Sentiments has been largely ignored.
The present theory of capitalism holds
that the marketplace is uniquely for those
who are interested in profit only. This interpretation treats people as one-dimensional
beings; but people are multi-dimensional, as
Adam Smith saw so clearly two and a half
centuries back. While we have a selfish dimension, we also have a selfless dimension.
The prevailing theory of capitalism, and the
marketplace that has grown up around the
theory, makes no room for the selfless dimension of people. If the altruistic motivation that exists in people could be brought
into the business world, there would be few
problems we could not solve.
Smith took the view that people are
born with a moral sense, just as they have
inborn ideas of beauty or harmony. Our conscience tells us what is right and wrong.
That conscience is something innate, not
something given to us by lawmakers or by
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rational analysis. And to bolster it we also
have a natural tendency to care about the
well-being of our fellow men and women,
an apparently universal feeling which Smith
calls “sympathy.” Between them, these natural senses of conscience and sympathy ensure
that human beings can and do live together
in orderly, beneficial social organizations.
With these ideas in mind, we can see
that Smith’s Wealth of Nations has generally
been misinterpreted. His thesis in that book
is generally summarized as an argument
that all will be well if people are allowed to
follow “self-interest,” which has been equated with selfishness and profit maximization.
But with human beings as they are—driven
by conscience and sympathy as well as the
desire for profit—“self-interest” includes
both profit maximization and social contribution. The Theory of Moral Sentiments, which
attached great importance to justice and
other moral virtues, is thus an important
corrective to the widespread but simplistic
understanding of Smith’s intentions in
The Wealth of Nations.
However, the present structure of economic theory does not allow this latter dimension to play out in the marketplace. In
the absence of such an opportunity, people
have tended to express their selflessness
through contributions to charities. Charitable efforts have always played a role in our
society and economy. They are noble, and
they are needed. But business has a greater
capacity than charity to innovate, to expand,
and to reach more and more people through
the power of the free market. If the efficiency, competitiveness, and dynamism of the
business world can be harnessed to deal with
specific social problems, the entire world
will be a much better place. Imagine what
we could achieve if talented entrepreneurs
and business executives around the globe
devoted themselves to goals such as ending
malnutrition, providing shelter for the
homeless, and eradicating disease.
WORLD POLICY JOURNAL • SUMMER 2009
With this in mind, I have proposed a
new type of business that would operate in
the same market along with existing profitmaximizing enterprises. I call these new
entities “social businesses,” because they
exist for the collective benefit of others.
Missing Element: Social Business
A social business is one whose purpose is to
address and solve social problems, not to
make money for its investors. It is a nonloss, non-dividend-paying company. The investor can recoup his investment capital, but beyond that, no profit is to
be taken out as dividends by the investors.
These profits remain
with the company and
are used to expand its outreach, to improve
the quality of the product or service it provides, and to design methods to bring down
the cost of the product or service. In effect,
social business will represent a third economic sector alongside the free market and
government.
It is important to distinguish the concept of social business from the well-known
idea of “socially-responsible business.” The
latter refers to traditional for-profit companies that choose to modify their business activities so as to promote social goals, or, at
least, to minimize the social harms they
cause. Socially-responsible businesses may
use environmentally-friendly methods, provide generous benefits to employees and
their families, and donate a portion of their
profits to worthwhile causes. Today, many
companies try to promote themselves as being socially responsible, and specialized investment funds exist to channel money toward such companies and away from others
that are polluters, abusers of their employees, or exploiters of the poor.
The difference between a social business,
“
Economic Security for a World in Crisis
as I define it, and a socially-responsible
business is that, for the latter, profit-maximization remains the primary goal. When
the goal of increasing profit is seen as conflicting with the goal of helping society, the
managers of the socially-responsible business
must favor the pursuit of profit. During bad
economic times, a socially-responsible business is likely to cut back on its charitable
giving and cut corners on its other social
commitments. A social business cannot
Business has a greater ability than
charity to innovate, expand, and
reach people through the power
of the free market.
”
make such a choice. Its whole reason for existing is to promote social benefits. Therefore, there can be no conflict between this
goal and the goal of earning a profit, which
the social business doesn’t recognize at all.
The concept of social business crystallized in my mind through my experience
with Grameen—a family of companies, 25
in all, founded by Grameen Bank over the
past 27 years in an attempt to address different problems faced by the poor in
Bangladesh. These companies vary widely in
their goals and business models. Grameen
Shakti, for example, produces and sells lowcost, renewable energy systems, including
solar panels and bio-gas converters that turn
otherwise valueless farm wastes into cooking
fuel. Grameen Health Care runs health clinics and provides affordable health insurance
to rural families. Grameen Fisheries and
Livestock operates fish farms and provides
vaccination and veterinary services to help
small farmers in Bangladesh improve profitability. Grameen Bank itself is a social
business. Owned by poor people, mostly
women, who are its depositors and borrow9
ers, it pays part of its profits back to the
owners in the form of dividends, and invests
the rest in expanding services to more villages and families throughout the country.
All of the revenues that flow through
Grameen Bank go to help the poor in one
way or another. In each case, the companies
address a specific social need. We designed
these businesse …
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