Thursday, April 9, 2009

Week 7: Classes

Nathan Cahn
David Schupak

Week seven was not as eventful as most weeks at the Center for Global Education in Namibia. It was marked mostly by excitement and anticipation for the rural homestays, the seminar in the North and Spring Break. Most people did not spend much time out of the house, as they spent most of their free time working on a research paper for The Development Process in Southern Africa. We did, however, take a full week of classes and had some interesting speakers.

We had a fascinating speaker in our class The Development Process in Southern Africa. The speaker had written an article on a case study that he and some colleagues had done and came to our class to discuss this case study through the lens of the effects of Foreign Direct Investment. The case study was done on the impact of the establishment of a factory owned by the Malaysian company Ramatex in Namibia’s capital city of Windhoek. The article painted a very grim picture of the impact of the establishment of the factory and the Namibian government’s role, highlighting many labor abuses by the factory managers and much special treatment afforded the factory by the Namibian government that had detrimental effects on Namibians.

During class, the speaker raised some interesting points and questions. The most interesting point was that, even though he had painted a grim picture of FDI, he still believes that FDI is positive. He said that, to him, the question is not whether FDI is positive, but rather what kind of FDI is positive. This was encouraging for me (David) because so far on this program, I have seen foreign-directed development in a negative light. I have seen many positive examples of internally-driven development, but few of externally-driven development.

More encouraging, however, is that the speaker offered possible ways to make FDI positive for developing and under-developed countries. The solutions that I thought were most notable were being selective in which FDI is accepted for the given country and creating regional and continental blocs. I found the former notable because I think, after reading the speaker’s article, that the biggest problem with the Ramatex factory was that the government offered the company too many incentives. It seemed to me that the factory was a law unto itself and I do not think that allowing corporations to occupy that kind of position in an industry is helpful.

I thought it was interesting that the speaker suggested forming continental and regional blocs because it made me think about the growing power of corporations in the current global economic climate. I began to think about how some of the largest corporations have become semi-states with the power to negotiate with, and bully, economically weak nations. It is interesting, I think, that someone is suggesting that nations form alliances to defend against the power of private companies.

The speaker also seemed to be addressing a widely held belief that foreign investment is the key to solving poverty in Namibia and other economically impoverished nations. This made me (Nate) think a lot about the nature of how countries are ranked according to a particular set of standards. Given the increasing global participation and involvement with the creation of the standards by which certain groups of people judge other groups of people, I suppose the rules become less biased and more valid. That is to say, certain development and wealth indicators such as GDP, GNP, GINI coefficient, etc., may indeed reveal accurate, reliable data, yet these indicators may merely reflect the values of one group at the expense of another group which falls under the former’s judgment.

Furthermore, not only does one group judge another group to be impoverished and underdeveloped, terms that can have little significance or different meaning to the judged upon group, but the judging group offers solutions to the judged upon group’s problems. Two assumptions are made here: that one group’s judgment of another group is consistent with the way that group sees itself and therefore valid, and connected but a step forward, that the judging group can therefore offer solutions that will “help” the other group.

Within this hypothetical model, I would say that the World Bank, International Monetary Fund, private investors, and other capitalist nations would be the group judging Namibia to be impoverished and underdeveloped. And the solution to these ailments, according to their ways of thinking, is foreign direct investment. And of course, Namibia is also a capitalist country and is a full participant in the global, formal economy, thus members of this country may fully agree that foreign direct investment is a viable solution to problems they believe the country has.

Nonetheless, assuming that Namibia has problems which need solving, that foreign countries know what is best for Namibia, and that capitalism is the most effective and universally health and happiness inducing system, then foreign investment is still not necessarily the answer to reducing poverty and inequality. After all, I need only to consider New York City. Some parts are extremely wealthy and many investors buy up land and other assets there, while neighborhoods nearby may remain very poor and experience high levels of inequality. As it relates to Namibia, and our speaker points out, foreign direct investment does not magically reduce poverty. If foreign investment is to actually help reduce poverty, then the investment must be directed towards the areas in need.

The speaker also made me think about our history class during the same week, in which we discussed the similarities and differences between segregation in the US and apartheid in Namibia. This relates directly to FDI in Namibia because it appears FDI and apartheid both contradicted autonomy and independence from other nations. Although the nation has been free for 19 years, it is clear that within the global economy, they are still being overpowered: in terms of not being able to control their own resources like the uranium and gold mines, as well as needing to import goods like bread and juice.

This phenomenon of continual subordination to foreign powers is similar to impoverished people in the US. As formal segregation has been largely eradicated over the past 50 to 60 years, many neighborhoods still seem to be segregated and outside the global economic order. By that I mean many poor, minority US citizens still do not have much power and autonomy in several aspect of their lives, considering lasting employment, home ownership, gentrification forces, and racial profiling. FDI and the legacy of segregation and apartheid represent impediments to autonomy and self- sufficiency for many US and Namibian citizens.

I (David) also saw one big parallel between general arguments made about FDI and the speaker we had in our politics class, who discussed Namibian democracy in general. What raised the biggest questions for me was when the speaker talked about how many people believe that others should “vote with their feet,” or move away from a locality if they do not like that locality’s government. I have since begun to think a lot about why, if FDI is so problematic, so many nations accept it. Many economists are adamant in their argument that the four “Asian Tigers” (Hong Kong, Taiwan, Singapore and South Korea) became prosperous through highly capitalistic reforms. Is FDI a good idea that many governments are still learning how to use effectively?

I personally am unsure about whether FDI is a boon for developing nations. Do the governments simply lack for better alternatives? Are the “Asian Tigers” anomalies (after all, two, Hong Kong and Taiwan, are not even nations and one, Singapore, is a tiny island that is very unlike many developing nations, especially those that are vast and hard to govern do to tribal divisions)? Are the governments of many developing nations acceding to the wishes of developed nations that they accept FDI because of dependency issues?

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