VMUN 2013 SPECPOL Committee Guide
VMUN 2013 SPECPOL Committee Guide
United Nations
The 12th Annual Conference • February 1–3, 2013
Background Guide
Special Political and Decolonization Committee
Vancouver Model United Nations
The 12th Annual Conference • February 1–3, 2013
Eric Liu My name is Julia Tombari, and I am a senior at Lakeside School in Seattle,
Chief of Staff Washington. This will be my third VMUN and my second time as staff. I
always look forward to this conference because the delegates come prepared,
Catherine Chou
well informed, and ready to jump right into the conference with energy and
Director-General
fervour. As your director, I anticipate committee sessions full of engaging
• and stimulating debate.
Aliya-Nur Babul The goal of the Special Political and Decolonization Committee is to discuss
USG Committees and take action on some of the most important issues present in a rapidly
changing global society. One of the most instrumental committees in the
Adam Chandani United Nations, the Special Political and Decolonization Committee (or the
USG Conference Fourth General Assembly) is dedicated to the issues of decolonization, refu-
gees, human rights, peacekeeping, mine action, outer space, atomic radia-
Parker Nann
USG Delegate Affairs 1 tion, and public information.
This year, the SPECPOL GA at VMUN 2013 will be discussing two topics,
Eden Lee the UN’s role in monitoring elections and the issue of global neocolonialism.
USG Delegate Affairs 2 I encourage all of you to read the background guides carefully, look into the
positions of your regional blocs, and really grapple with the questions that
Brian Kwok
USG Finance each topic presents. If you should have any questions, feel free to contact
me or my staff.
Andy Lee I look forward to a productive three days.
USG Marketing
Best wishes,
Catherine Wang
USG Marketing
Julia Tombari
Kevin Chien Director, Special Political and Decolonization Committee
USG Simulations
Jennifer Yoon
USG Sponsorship
Position Paper Policy
What is a Position Paper?
A position paper is a brief overview of a country’s stance on the topics being discussed by a particu-
lar committee. Though there is no specific format the position paper must follow, it should include
a description of the positions your country holds on the issues on the agenda, relevant actions that
your country has taken, and potential solutions that your country would support.
At Vancouver Model United Nations, delegates should write a position paper for each of the com-
mittee’s topics. Each position paper should not exceed one page, and should all be combined into
a single document per delegate.
For the Special Political and Decolonization Committee, position papers are optional but recom-
mended.
Formatting
Position papers should:
—— Include the name of the delegate, his/her country, and the committee
—— Be in a standard font (e.g. Times New Roman) with a 12-point font size and 1-inch docu-
ment margins
—— Not include illustrations, diagrams, decorations, national symbols, watermarks, or page
borders
—— Include citations and a bibliography, in any format, giving due credit to the sources used in
research (not included in the 1-page limit)
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Given the number of countries that have received some sort of assistance with elections in the past
few years, as indicated by the map above, the growing relevance of this issue, as more nations begin
to develop, is evident.
Timeline
Late 1940s Shortly after its creation, the UN becomes active in overseeing elections on the
Korean peninsula, in the hopes that these elections will result in the formation
of a government to rule a unified Korea.
1950 The UN’s plan for Korea fails as the Korean War breaks out in a larger conflict
between the US and the USSR. One cause of the war was dispute over elections:
the UN did not acknowledge the results of the North Korean elections because
Russia refused to let the UN oversee them.
1992 The United Nations Operation in Mozambique is formed. At the time, the
country was in the midst of civil war.
1992 The UN gives organizational assistance to Cambodia, and the United Nations
Transitional Authority in Cambodia (UNTAC) begins operation. In retrospect,
many believe UNTAC was unsuccessful because the presence of the UN troops
actually led to a rise in prostitution and AIDS among the Cambodian popula-
tion; the legitimacy of the peacekeepers also came into question in 1993 after
many cases of civil violence by UNTAC officials were reported.
1994 The General Assembly approves Resolution A/RES/48/131, titled “Enhancing
the effectiveness of the principle of periodic and genuine elections.”
1998 The General Assembly adopts Resolution A/RES/52/119, titled “Respect for the
principles of national sovereignty and non-interference in the internal affairs of
States in their electoral processes.”
2001 The UN becomes involved in Afghanistan to assist in the areas of social and
political stability, giving considerable humanitarian aid in the forms of food aid
and funding for education and healthcare. Additionally, the UN takes action
to deactivate landmines and provide support for the large number of Afghan
refugees (around 5 million). The International Security and Assistance Force is
established by the Security Council to keep Kabul stable.
2004 The General Assembly approves Resolution A/RES/58/180, titled “Strength-
ening the role of the United Nations in enhancing the effectiveness of the prin-
ciple of periodic and genuine elections and the promotion of democratization.”
2006 The General Assembly approves Resolution A/RES/60/164, titled “Respect for
the principles of national sovereignty and diversity of democratic systems in
electoral processes as an important element for the promotion and protection
of human rights.”
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2006 The United Nations begins intervention in Timor-Leste after its government
requests assistance due to an unstable military presence. A United Nations Inte-
grated Mission is formed, with the understanding that the UN will withdraw as
soon as elections conforming international standards are held, without a major
outbreak of violent activity. With a successful election being held this year, in
2012, the UN has begun to withdraw from the country.
2010 The United Nations and the African Union help Sudan hold presidential and
multi-party elections, the first in over 20 years, by providing logistical support
to the Sudanese National Election Commission.
2011 32 million citizens in the Democratic Republic of the Congo (DRC) are regis-
tered to vote in an election. The UN Organization Stabilization Mission in the
DRC (MONUSCO) supports the national electoral commission by providing
the necessary materials for the election, organizing meetings between key fig-
ures in the election, mitigating human rights violations, and training police to
secure polling stations.
2011 The United Nations is instrumental in providing support to the Haitian gov-
ernment and the Provisional Electoral Council in preparing for the legislative
and presidential elections of 2010/2011. 12,000 troops from the UN Stabiliza-
tion Mission in Haiti (MINUSTAH) and the UN Police are deployed to bolster
Haiti’s national police force by creating and securing over fifteen hundred vot-
ing centres across the nation as well as a tabulation centre in the nation’s capital,
Port-au-Prince. MINUSTAH, with the Organization of American States, also
helps to distribute materials and register voters.
2011 The UN Mission in Liberia (UNMIL) assists the electoral commission with
holding national elections in October and November 2011. UNMIL provides
technical and logistical support and helps to monitor polling venues.
2011 The United Nations Operation in Côté d’Ivoire is created to ensure the Decem-
ber 2011 elections in that country are transparent and fair, in accordance with
international standards and criteria.
2011 UNMIS and the United Nations Development Programme help the Sudanese
government carry out a referendum for the self-determination of South Sudan.
Historical Analysis
Post-conflict countries have often received the most UN election assistance, as they are typically
unstable and have often controversial political systems and election processes. UN intervention
is generally aimed at preventing a country from falling back into conflict and promoting better
electoral practices, usually by correcting gender biases. To “[assist] the national electoral admin-
istrative body”4 in holding elections, the UN cooperates with other national organizations and
international monitoring bodies; currently, there are five main groups — the European Union, the
4
[Link]
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Organization for Security and Cooperation in Europe, the Carter Center, the National Democratic
Institute (NDI), and the Asian Network for Free Elections (ANFREL) — that are monitoring the
Afghan elections.5 Within the United Nations, the UN Development Programme (UNDP) is deeply
involved in assisting nations to resolve controversies concerning ballot tabulation.6
There are three commonly used forms of electoral assistance, described below. Intervention in vola-
tile and unstable regions in any of the three forms has helped promote cooperation between diverse
communities, a sound democratic ideology, and a positive view among citizens of the federal polit-
ical system.7 In the past, UN helped out the host country through missions tailored towards specific
countries, composed of several member states that serve as international observers to the election.
An important note is that while, in certain cases, the UN allows for the states participating in a mis-
sion to modify the results of an election to account for violations of international standards, this is
sometimes a controversial practice, as observers may be unaware of the specific election processes
of the host country and may be influenced by biases.
Technical Assistance
This form of assistance is most common, and includes:
—— Reviewing electoral laws and regulation and resolving electoral disputes
—— Delimiting voter region boundaries and helping to register voters
—— Assisting with various logistical components, including finances, voting materials, training
of officials, civil and social education, tabulation, and international donations8
5
[Link]
6
Ibid.
7
[Link]
8
[Link]
9
Ibid.
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—— Do the existing frameworks in place in the host country enable UN officials to make a dif-
ference? Will they be admitted to polling stations, or provided with official documents and
results, or be accredited? Will observers be in danger?
—— Are there enough personnel available for the mission? Is there enough time for training? Is
there sufficient funding?10
Bloc Positions
European Union
The following is a summary of the statements made by Ambassador Fernando Valenzuela, on be-
half of the European Commission, a major international organization that is deeply involved in
observing elections around the world.
Genuine elections are an essential foundation for sustainable development and a functioning
democracy. And support to election processes has become a key component of the European
Union’s external relations policy, where it is in a unique position to contribute to elections mon-
itoring through its global outreach, as well as its strict adherence to the principles of independence,
consistency, credibility and professionalism -- the very principles contained in the Declaration
being commemorated. In 2005, the EU Election Monitoring Missions (EOMs) were deployed to
the West Bank/Gaza, Guinea Bissau, Burundi, Ethiopia, and Lebanon; EU EOMs are still in the
field in Afghanistan, Liberia and Sri Lanka; and further missions are being prepared for elections
in Venezuela, Haiti, West Bank/Gaza and the Democratic Republic of Congo. The new standards
commit endorsing organizations to act impartially, monitor all stages of the election process, and
accept no funding from host governments. They also establish prerequisites that must be met for
international observation, including freedom of movement, freedom to make public statements
and free access to information.11
African Union
The position held by members of this bloc are outlined in the Draft Guidelines for AU Electoral Ob-
servation and Monitoring Missions document:
[Link]
10
[Link]
11
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1.1 Electoral observation and monitoring has become an integral part of the democratic and
electoral processes in Africa. International, regional and national observers have come to play
important roles in enhancing the transparency and credibility of elections and democratic gov-
ernance in Africa and the acceptance of election results throughout the continent. Electoral
observation and monitoring missions can also play key roles in diminishing conflicts before,
during and after elections. The African continent has made significant progress in institution-
alising electoral democracy over the course of the past decade. This is reflected in a number
of successful multiparty elections in most member states. Notwithstanding these achievements,
however, major challenges remain. These include the prevalence of conflict in some countries of
the continent, and violence and instability resulting from disputed elections. The major challenge
is the need to improve the integrity of electoral processes. One way of improving the integrity of
electoral processes is by involving local and international observers and monitors.12
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This training workshop is a part of the ongoing collaboration between the United Nations De-
velopment Program — Regional Center in Cairo (UNDP-RCC) and the League of Arab States
(LAS) on election and governance fields.
This collaboration has started last year [in 2011] when both RCC and LAS agreed to conduct
together a roundtable seminar for Arab EMBs to be hosted by the LAS following to the success-
ful regional BRIDGE workshop that took place in Amman in December 2011. The intensive
BRIDGE workshop designed to cover significant parts of four modules: legal framework, elec-
toral systems, election observation, and polling, counting & results.
The training took place in the premises of the League of Arab States in April for 120 members of
the mission to Algeria…Based on LAS’ request, UNDP-RCC election consultant[s] helped LAS
to assess the training and technical assistance required for LAS election observation mission to
Algeria.
Participants and officials of League of Arab States provided positive feedback of this workshop.
The LAS representatives requested that this workshop becomes a first in a series of trainings tar-
geting the LAS using different modules of BRIDGE over the course of 2012//2013. The following
are some excerpts from LAS representatives and participants’ final evaluation and closing of the
workshop: “I benefited a lot on the personal and professional levels which is reflected on the work
field and acquiring a lot of experience.” “I have been participating in several election observation
missions with the League, but this is the first time to feel that I am now capable and equipped to
professionally observe elections” “The training is really positive and develops one’s understand-
ing and adds to one’s experience in the field of managing/observing elections.”16
Discussion Questions
1. What are the elements of a democratic election? Should the UN actively promote dem-
ocracy as the model of ideal government around the world? What are the merits of other
political systems, such as autocracy or theocracy?
2. Is it necessary for the UN to monitor elections and provide technical assistance in order
to alleviate greater humanitarian or political concerns? If so, is the UN currently doing
enough in this area?
3. In overseeing and sometimes intervening in elections, is the UN overstepping cultural
boundaries or being insensitive to nations?
4. What criteria should nations have to meet in order to receive assistance with elections from
the UN?
5. What are some of the flaws, inherent or otherwise, in the ways the UN intervenes? How can
these issues be corrected, if at all?
6. Has your country, or another country in your region, been the beneficiary of UN assist-
ance? If so, did the assistance put that country on the right path, or did it simply lead to
more problems?
7. Should the UN hold votes to pressure countries that reject UN assistance?
[Link]
16
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Additional Resources
[Link]
A report by the OAS on election observation
[Link]
Website of the United Nations
[Link]
Al Jazeera
[Link]
CIA World Factbook
[Link]
Website of the UN Development Programme
[Link]
Website of the SPECPOL Committee
Sources
[Link]
LINES%20FOR%20ELECTIONS%20OBSERV%20&%20MONITORING%[Link]
[Link]
vation-mission-to-timor-leste/
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
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Topic B: Global Neocolonialism
Introduction
Imperialism is defined as “the policy, practice, or advocacy of extending the power and dominion
of a nation especially by direct territorial acquisitions or by gaining indirect control over the pol-
itical or economic life of other areas.”1 Though some view neocolonialism as a more modern form
of imperialism, generally speaking, neocolonialism refers to “the economic and political policies
by which a great power indirectly maintains or extends its influence over other areas or people.”2
This topic will address the definition of neocolonialism, the theories behind it, and the presence of
neocolonialism in our world today.
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Others see neocolonialism in different contexts. For Robert Young, neocolonialism is advanced
through “development and dependency theory.” Young argues that is very difficult for Third World
states not to be influenced by Western nations, and once they do become influenced —economic-
ally, politically, culturally — they then become perpetually dependent. 5
Western countries and their colonial holdings in the late 19th century
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Timeline
1624 England colonizes Barbados and St. Kitts.
1950–1960 Decolonization efforts are launched in Africa.
1965 At Algers, Che Guevara speaks about the continued presence of colonial prac-
tices in underdeveloped countries, declaring “as long as imperialism exists, it
will, by definition, exert its domination over other countries. Today that dom-
ination is neocolonialism.”
1965 Kwame Nkrumah coins the term neocolonialism in his book The Last Stage of
Imperialism.
1974 The UN General Assembly passes Resolutions 3201 and 3202.
1997 The International Monetary Fund intervenes by providing billions of dollars in
loans to help with the financial and economic crisis sweeping across Asia.
2008 Daewoo, a South Korean company, secures 1.3 million hectares of land in
Madagascar.
2000–2010 Foreign investment in Africa, primary from the Middle East and Asia, spikes.
Historical Analysis
Dependency Theory
This theory is critical to understanding economic neocolonialism. Dependency theory states that
the wealthiest countries at the centre of the global economy will obtain resources, including human
capital, natural resources, and production output, from the poorer countries at the perimeter of the
global economy, leaving the latter impoverished.
The Cold War
The tension between the United States and Soviet Union led to considerable debate in the inter-
national community about whether the two nations were using neocolonialist tactics to advance
their national interests. Ultimately, this led to the formation of the Non-Aligned Movement (NAM),
whose members pledge mutual non-aggression, peaceful co-existence, and are not members of any
power bloc.
Multinational Corporations
In poorer countries, multinational corporations (MNCs) are often able to exert an undue amount of
influence on a country, leading to many adverse effects, including high unemployment and poverty
rates and low per capita income. Because many MNCs simply exploit the cheap labour pool instead
of building lasting improvements, the host country is unable to progress and becomes dependent
on the MNC.
International Banks
International organizations such as the World Bank, the IMF, the Group of 9, and the World Eco-
nomic Forum grant loans to countries, but because these countries are heavily in debt, they are
often unable to repay their loans and thus largely fall under the control of these banks. Ironically,
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though these organizations operate on the pretence of helping countries in dire straits flourish
and prosper, in reality, the burden of debt repayment is so heavy that the original problem is only
exacerbated.
Current Situation
The following countries are deeply interested in the wealth of resources on the African continent
and may be considered to be practising neocolonial activities.
China
China is accused of being a neocolonialist power with regards to its relations with various African
countries. The World Financial Review has noted that China’s business model for African develop-
ment has only limited benefits to the local economy, specifically criticizing:67
—— Chinese support to undemocratic regimes. However, China is often quick to dismiss the
hypocritical moralizing of some Western governments and notes Western complicity in
sustaining brutal and undemocratic regimes throughout Africa, particularly in those coun-
tries that the West regards as strategically important.
—— Its disregard for environmental standards. This is exacerbated by the limited capacity of
African governments to enforce regulations.
—— Poor labour practices. Chinese companies have been condemned for their poor labour
practices, including bringing labour from China and forcing workers to accept low pay and
extremely harsh working conditions.
—— Unfair competition in African domestic market: China’s hyper-competitive manufacturing
sector has negatively affected African local industries by displacing local manufacturing
firms.
Specific examples of China’s involvement in Africa are cited below:
The Chinese have extensively involved themselves in the major industries in Africa, ranging from
the mining industry in Zimbabwe and Congo to the oil drilling sector in Nigeria and Sudan.
China has being making several purchases across the African continent, importing platinum,
copper and cobalt from Zambia and timber from Congo Brazzaville. It is estimated that the Chi-
nese currently have investments in 27 major oil and gas projects and they have showed no sign
to decrease investments in African nations. In their trips to Africa in 2006, China’s Prime Min-
ister Wen and President Hu made promises to commit US$2.5B investment in Egypt and also
extended similar promises to other African nations.
…
China’s zealous enthusiasm in investing in African states, however, has been placed under scru-
tiny. Some have attributed the country’s generous investments in Africa to the fact that China
needs to obtain natural resources to sustain its rapidly growing economy. China is currently
importing 30% of its oil from Africa and its state-owned giant energy enterprise China National
Petroleum Corporation is the largest shareholder of the Greater Nile Petroleum Operating Cor-
6
[Link]
7
[Link]
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poration, the company that controls almost all of Sudan’s oil fields.8
France
France has deep ties with many African countries, strengthened by the fact that the primary lan-
guage in large parts of Africa is French. Over a hundred French conglomerates have deals in place
with African countries, and the French Development Agency provides billions of dollars in aid
to Africa each year. In Côte d’Ivoire, for example, the French Bouygues group is one of the coun-
try’s largest utilities and construction companies, and over half of the country’s foreign investment
comes from France; on the other hand, allegations of neocolonialism arose when France intervened
in the Ivorian Civil War in 2002.9
Germany
Germany has also established several treaties and partnerships with African countries, especially
concerning energy and raw materials. However, it has also stressed in the past that it is seeking to
establish symbiotic relationships that are beneficial to both parties.10
United States of America
The United States’s interest, and the amount of money it has invested, in the African continent has
increased considerably over the past few years — unsurprisingly leading to claims that it is exerting
undue influence on other countries:
The United States has always been a leading source of FDI in sub-Saharan Africa, accounting for
more than 37% of the capital flows from developed nations to sub-Saharan Africa during the late
90s. Though US investment in Africa remain a small part of worldwide total US involvement,
FDIs in Africa has more than doubled since 1998, increasing from $7B to $18.5B…[Secretary of
State Hillary Clinton reiterated the] US’s opposition to any form of neocolonialism, [noting that
the] “United States is investing in the people of Zambia, not just the elites.”11
United Kingdom
The UK’s investments in Africa have grown considerably in recent history and have largely been
centred in South Africa. Recently, a British biofuel company was granted a 99-year lease on land in
Tanzania for free in return for promised investment by the company in infrastructure benefiting
the local population — an example of a mutualistic relationship.12
South Korea
South Korea is becoming more and more involved in Africa, whose wealth of natural resources
make it attractive to technology companies and manufacturers. Specifically:
South Korean companies such as steelmaker HSG and electronics producer LG have announced
their plans to build manufacturing plants in South Africa. Korean investments mainly flow into
8
[Link]
foreign+investment+in+[Link]
9
Ibid.
10
Ibid.
11
Ibid.
12
Ibid.
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natural resource projects such as oil mining in Nigeria. 77% of total FDIs from South Korea
goes to the mining sector. Headlines were made in 2008 when South Korea’s Daewoo Logistics
attempted to sign a 99-year land lease agreement with Madagascar involving 1.3 million hectares
of arable land (half of Madagascar’s arable land). The lease agreement collapsed under pressure
from claims of neocolonialism.”13
India
Annually, India trades over 30 billion dollars worth of goods with African nations. At a recent
summit, the Indian Prime Minister, Manmohan Singh, pledged several billion dollars in future
infrastructure projects to improve transportation and to construct new manufacturing facilities,
helping least developed countries move up the “value chain.”14
International Finance Institutions (IFIs)
IFIs, specificially the World Bank and the International Monetary Fund, are largely controlled by
Western nations. Therefore, though organizations impartially provide aid to help countries de-
velop, they have been criticized for actually being instruments through which Western nations can
impose neocolonialist policies on others. Two other issues concerning IFIs have also emerged:
IFIs are also criticized for issuing loans with conditionality, which often calls for [the] liberal-
ization of the economy and privatization of nationalized industries. Loans are only given when
countries comply with program conditions and this is…[viewed by critics] to be neocolonialism
backed by financial coercion.
In addition, the involvement of IFIs in [the] formulation of economic programs (i.e. Structural
Adjustment Programs) in Sub-Saharan Africa…[has increased] because the…[requirements] for
IMF and World Bank [funds] has increased and more technical advice from IFIs is provided to
the African nations to support the execution of planned projects and policies.15
African Countries
Unsurprisingly, many African states resent neocolonialist policies that often infringe on sovereign-
ty. However:
Africa does realize its need for capital, and must find ways to end agreements that are currently
exploiting citizens and harming their economies. This is depicted in what is known as the “farm-
land grab trend” in which the country and its governments are lending land to investors and
other nations in order to boost employment and infrastructure.16
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be a consequence of foreign investments. As such, it would to like to issue regulations and intro-
duce measures to prevent neocolonialism in the aim of ensuring that respect for any involving
nations’ sovereignty, a fundamental principle of the United Nations as enshrined in Article 2 of
the UN Charter, is upheld.17
As for intervening in nations under neocolonialist powers, the United Nations has noted the fol-
lowing:
—— Ideally, the United Nations would be involved as soon as the conflict begins, or even before-
hand. Early and preventive deployment can greatly mitigate the consequences of violence.18
—— In cases where early deployment is not possible, the UN can also employ peacemaking
strategies. Peacemaking, which refers to the ceasing of hostilities between the belligerents
of a conflict, can only be successful with international support. Mediation can be helpful at
times, but when employed in excess, can be wholly unfruitful. In order to ensure that any
peace is sustained, efforts also need to be made to end arms proliferation (often one of the
root causes of violence) and to continually monitor parties involved. Sanctions may also be
considered.19
—— To avoid exacerbating the situation, UN missions must tread carefully. For one, it is difficult
for NGOs and other organizations to protect civilians from military regimes or general vio-
lence — oftentimes, combatants will take advantage of relief supplies intended for civilians.
Other considerations are outlined below:
Working towards a coordinated international response, building a durable peace and promoting
economic growth, good governance, securing respect for human rights and the law, promoting
transparency and accountability in public administration…creating a positive environment for
investment and economic growth, emphasizing social development, restructuring international
aid, reducing debt burdens, opening international markets, support for regional operation and
integration.20
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(MFIs), loans to individuals who need some capital to kickstart their businesses. One real-world
example cited by Kiva is the case of Pedro, a farmer in Bolivia. The death of Pedro’s cow had serious
repercussions: it reduced his coffee bean output by half, thus reducing his income, in turn making
him too poor to afford adequate food for his family. Loans distributed by MFIs give farmers like
Pedro an incentive to keep going: Pedro was able to buy a tractor with the microloan, replacing
his cows, and ultimately multiplying his income. Finally, with his new increased income, Pedro
was able to repay the loan to the original donor.21 This provides another incentive, this time to the
donor, as it sparks a desire to keep contributing their money to help more individuals.
Another example of the value of creating incentives is PROGRESA, a program aimed at giving
children the opportunity to receive education in Mexico while helping their families acquire better
health care, food, and other services to boost their socioeconomic status. The incentive in PRO-
GRESA is in the operation. For society at large, there is a desire to educate children, as it increases
literacy rates and raises a child’s probability of earning a job in the future. For the family, there is
also a motivation to keep the child in school — it is a condition of the funding. To ensure that allo-
cated funds are being spent properly, families are frequently monitored and evaluated. As a result of
the PROGRESA program, families can improve their living conditions and brighten their children’s
futures.
In both of these examples, the incentives created give communities and individuals access to re-
sources and opportunities to improve their quality of life that they otherwise would not have. In
his book The Fortune at the Bottom of the Pyramid, C.K. Prahalad stresses that people who are at
the bottom of the societal pyramid are in fact crucial players in our world economy, and creating
opportunities for growth in economic areas (through incentives) can lead to significant progress.22
However, it is important to critically examine incentives before implementing them — sometimes,
their results can be counterproductive. One category of ineffective incentives is moral hazards.
For example, in Africa, insurance companies would historically reimburse farmers for dead cows;
as proof, the owner had to produced his cow’s ear. Unfortunately, farmers began to exploit this
program, cutting off the ears of their live cows and dishonestly collecting insurance money. Due
to moral hazards, today, there are few insurance companies willing to cover the poor (who often
cannot afford the premiums anyway).
Another issue with incentive alignment is the Principal Agent Problem. In this situation, a princi-
pal (a person or organization) will hire an agent (a person or a group of people), but it cannot be
determined whether that agent will act in the principle’s best interests. An example of this is when
somebody holds shares in a multinational corporation, but does not know whether the CEO will
abuse the proceeds.
Glossary
Divestment: The withdrawal of funds
21
[Link]
22
Pralahad, C. K. The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits. Wharton School: n.p.,
2004. Print.
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Official Flows: Aid or assistance to promote development
Commercial Loans: Loans given to governments or businesses by banks
Foreign Direct Investment (FDI): Direct investment into one country by a company (typically
a multinational corporation)
Foreign Portfolio Investment (FPI): The purchasing of stocks or bonds in another market
Discussion Questions
1. What kind of measures should the UN take to prevent the spread of neocolonialism?
2. What activities should nations be allowed to conduct in other nations? What limitations
should be placed on foreign investment, for example?
3. Western countries are often considered the policemen of the world. Is this an appropriate
role for them to play?
4. Will the dependency theory persist as time goes on? Why or why not?
Sources
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A. Banerjee and E. Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty
C.K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits
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