After four years of efforts to bring them together, this week, through CIPE’s assistance, 20 leading chambers from across Pakistan including representation from Federation of Pakistan Chambers of Commerce & Industry (FPCCI) spent two days at a conference to discuss economic challenges faced by Pakistani businesses, and business readiness to meet the challenges of economic recovery. Read the rest of this entry »

Although institutional reform has become a buzzword of international development, its meaning and implications often remain poorly understood. Nobel Prize winning economists Douglass North and Oliver Williamson shed some light on the issue. North emphasized in his work as an economic historian that a common cultural heritage is an integral part of countries’ institutional structure as it provides a common framework for decision-making by individuals. Williamson identified several different levels of institutional structures as well as the timeframes within which those institutions change, ranging from constant adjustments to decades or centuries of transformation.

In this Feature Service article, my colleague Aleksandr Shkolnikov and I discuss how the experience of corporate governance reforms in the Middle East and North Africa (MENA) illustrates the complexity of institutional reform and the importance of local context. CIPE began working on corporate governance in MENA in the late 1990s, as countries in the region increasingly began looking for investment and poor company governance quickly became an issue. The most significant initial challenge was the lack of a single term in Arabic for corporate governance, forcing local business leaders to either say it in English or use one of several imprecise Arabic terms. It was clear that for corporate governance to take root in the Arab world, the first step was to engage local stakeholders on the issue of language. Read the rest of this entry »

In the weeks since Algerian President Abdelaziz Bouteflika launched a probe into Sonatrach, the country’s largest state gas company, a different, more compelling narrative has emerged which points to the powerful Department of Security Intelligence (DRS) as the origin of the probe. That is, the investigation and removal of Sonatrach’s top officials is seen as a direct affront to Bouteflika’s civilian control over Algeria’s lucrative oil and gas industry, which accounts for 98 percent of exports. Why on earth would Bouteflika launch an anti-corruption drive which weakens his own Minister of Energy, Chakib Khelil, who is one of his closest allies? Read the rest of this entry »

Reporting from a closed country such as Burma can be a life-or-death business. Yet, despite great personal risk, a group of brave citizens defied the odds to bring the images of their society’s struggles to the outside world. Acclaimed filmmaker Anders Østergaard tells their story in his powerful documentary Burma VJ, screened earlier this week at the National Endowment for Democracy. Winner of over 40 international awards, the film traces the work of Burmese video journalists who, using small handycams and cell phone cameras, have provided invaluable footage of crucial events in Burma to the world. That unique on-the-ground source was particularly invaluable during the information blockade accompanying massive protests of Buddhist monks in 2007. See the trailer here:

Twenty years ago almost to the day, on February 21, 1990, the new president of then Czechoslovakia Václav Havel delivered a memorable address to the Joint Session of the U.S. Congress. It was an amazing time of change – the Soviet bloc was crumbling and the symbol of the East-West division, the Berlin Wall, fell only three months earlier. But it was also a time of great uncertainty when the outcomes of this sweeping change were still uncertain and the democratic transition that began in the region still feeble. Havel very well understood that building democracy is a long-term transformation. On a more philosophical level, he also appreciated that democracy can never really call itself complete but rather must always strive for improvements, just like human beings strive for but can never fully claim perfection. He said,

“As long as people are people, democracy, in the full sense of the word, will always be no more than an ideal. One may approach it as one would the horizon in ways that may be better or worse, but it can never be fully attained. (…) the salvation of this human world lies nowhere else than in the human heart, in the human power to reflect, in human meekness and in human responsibility.”

Read the rest of this entry »

On June 12 2009, 3,324 women were elected to local councils throughout the Kingdom of Morocco, representing nearly 12 percent of the total seats under contention. Thanks to an electoral quota system pursued by women’s rights advocates, this percentage dramatically increases the representation of women in elected government. Winning electoral campaigns is likely the easiest hurdle these courageous women will have to overcome. Women in elected office are often seen simply as a rubber stamp for the initiatives of their male colleagues and consigned to only managing issues limited to family, social affairs or health care. Recent reforms in Morocco aimed to address this issue have resulted in momentum for women’s participation in politics that may continue across the Arab world. Read the rest of this entry »

Since 2008, President Bakiev has embarked on a privatization mission. Lessons from around the world and most recently other former Soviet countries, including Russia, Kazakhstan, and others, clearly illustrate that privatization is not an end to itself. Rather the process of privatization is the key to successful transition from a centralized to a market economy. With this goal in mind, Kyrgyz civil society, with the business community at its helm, continues to sound alarms over speedy privatization that ensues in Kyrgyzstan with little transparency and much public skepticism. Opaqueness in the privatization process, combined with drastic increases in utility costs, undermines the public’s trust in the government and leads to a potential further consolidation of economic power in the hands of the elite. Kyrgyz civil society is rightly concerned regarding today’s decisions that damage tomorrow’s economic prosperity. Read the rest of this entry »

A few months ago, the Lebanese Anti-Bribery Network—an initiative of the Lebanese Transparency Association (LTA) supported by CIPE—organized a roundtable in Beirut to discuss a draft policy paper on good governance in the Lebanese electricity sector, with representatives of the national utilities company Electricité du Liban present. In an eerie strike of irony, an hour into the event, the hotel hosting the roundtable experienced a power shortage that resulted in a brief blackout. Read the rest of this entry »

A few months back, Martin Friedl wrote about the impact that the Instituto Invertir’s LíderAcción program has had on improving youth’s perceptions of a market economy and democracy. LíderAcción, a leadership and entrepreneurship program for rural Peruvian youth, is also providing students with the tools to start their own business. Having only just finished its second year, the results in numbers are impressive:

3,600 = number of university students that have applied for the program

300 = number of rural university students who have completed the courses on democracy, free market economics, leadership and entrepreneurship

5,000+ = number of other university students and community members reached through the multiplicative efforts of LíderAcción students

78 = number of business plans developed with guidance from leading academics and business practitioners

20+ = number of actual businesses all over Perú that have been started by LíderAcción students

Read the rest of this entry »

“No expectations – no disappointments” is the mood of most Ukrainians, according to Oleksandr Sushko of the Center for Peace, Conversion and Foreign Policy of Ukraine.  At an event on Ukrainian democracy hosted by PONARS Eurasia, Dr. Sushko went on to say that although elections can now occur in the country with democratic results, the quality of democratic governance in the country is very low, while quality and engagement of civil society is relatively strong.

Elections, as most Ukrainians have discovered, are mechanical exercises that serve as a referendum on the country’s leadership and, as is painfully obvious now, no number of clean elections will solve Ukraine’s governance problems.  As my colleagues Aleksandr Shkolnikov and Marc Schleifer noted in a Kyiv Post op-ed, a leader must step forward and tackle the unpopular reforms that are necessary for the country to move beyond its current deadlocked political state.

As Ukraine’s parliament is reshuffled, there is a chance that a person that is willing to sacrifice their political capital will emerge in the the Prime Minister’s post and finally enact reform.  As Ukraine begins to muddle in economic stagnation, it is important to remember that all other periods of dramatic economic reform occurred during crises – massive privatization in 1992, banking reform in 1998, and regulatory reform in 2001.

Good corporate governance undeniably brings resilience in companies, improves values, and attracts cheap capital. A recent study by the Philippine Institute of Corporate Directors (ICD) suggests that corporate governance practices in the country have improved over the last five years, and that new scores have led to significant change in the valuation of firms. The study determined the co-relationship between share prices and corporate governance in China, Hong Kong, Indonesia, the Philippines and Thailand. Jesus P. Estanislao, Chairman of the ICD, said that:

“The question as to whether in fact corporate governance makes a difference in the valuation of the firms in the stock exchanges, and in all five economies, the answer is very clearly so, and the result is that relationship is robust.”

Read the rest of this entry »

Protracted instability in Yemen and the serious security threats it poses have been subjects of heated international debates in recent months. However, apart from reiterating the grim outlook of Yemen’s future, few concrete suggestions emerged on what can be done to improve the situation there. In this Feature Service article, Danya Greenfield, Middle East and North Africa Program Officer at CIPE, talks about what the U.S. and the international community should consider in their approach. She says,

“Strategies to combat extremism cannot be viewed solely through the lens of counterterrorism, border security, and security sector reform. Addressing Yemen’s instability must also focus on good governance, corruption, and economic reform. A global approach is needed to bolster the capacity of the Yemeni government to respond to the needs of its citizens to help curb the poverty and hopelessness that breeds conflict, discontent, and extremism.”

Article at a Glance

• In order to combat extremism in Yemen, U.S. military assistance must be coupled with a comprehensive policy approach that examines good governance, corruption, and economic reform.

• International donors must prioritize their aid to Yemen by focusing on strengthening government institutions at all levels, uncovering the root causes of corruption, and supporting the Yemeni private sector.

• The ultimate responsibility for sustainable development in Yemen lies with Yemeni leaders, who must demonstrate real dedication in achieving lasting reform.

Thinking beyond immediate needs, what can developed nations do to help Haiti get back on its feet? Perhaps a Marshall Plan is in order? Or perhaps not, says Steve Forbes.

A Marshall Plan is a nonstarter. After World War II the U.S. pumped the equivalent of hundreds of billions in today’s dollars into war-shattered Europe, and the continent came back to life. But Europe was an economic powerhouse before the war and had the cultural traditions and institutions to make a quick comeback possible. Haiti, sadly, has none of those.

Its the institutions, stupid:

After all, tens of thousands of Haitian immigrants to the U.S. have done very well. It’s not a lack of entrepreneurial energy that has plagued this nation but the lack of an environment allowing those energies to be channeled productively.

Algerian President Abdelaziz Bouteflika’s “war” against corruption has recently reached the republic’s largest oil company. Sonatrach is a national oil corporation that employs 125,000 people and accounts for 98 per cent of Algeria’s foreign currency receipts in a country where gas exports make up 30% of the GDP. Sonatrach’s CEO and top management team have reportedly been suspended and placed under investigation for claims concerning company tenders for consultancy and security contracts. Read the rest of this entry »

Several public officials in Thailand are apparently guilty of submitting false disaster reports to claim funds from the emergency relief fund.  The fact itself is not that exciting in Thailand, a country where corruption has become a household name.  What’s more interesting is one of the main reasons public officials were able to do it – “disaster” was not clearly defined in regulations.

Weak legal definitions are one of the understated root sources of corruption.  In Russia, for instance, the legal definition of government official does not cover all public servants, which means that some get a pass from the anti-corruption legislations enacted by Russian authorities.