Paper Economies and the Politics of Growth in Nigeria

 

Lagos, Nigeria's largest city.

Lagos, Nigeria’s largest city.

Nigeria’s economy nearly doubled in size on Sunday, easily passing South Africa to become the continent’s largest. But the massive growth was not based in the country’s oil wealth, improvements in telecommunications and transportation infrastructure, expansion of agricultural production, or any of the other factors that typically accompany development. Rather, Nigeria’s growth merely occurred on paper.

Nigeria’s National Bureau of Statistics concluded a long process of evaluating historical data, leading the country to rebase figures on which annual economic growth data is based. Nigeria’s gross domestic product (GDP) figures had been based on extrapolations from figures nearly 25 years old. In other words, the figure was rooted in estimates based on figures that predated the rise of mobile phones, the Nigerian movie industry (Nollywood), the current era of globalization, and a host of other developments that have occurred in the last quarter century.

When the dust settled, Nigeria had officially transitioned from being a “low income” to being a “middle income” country, and the country’s gross domestic product grew to $510 billion.

But there’s an interesting shell game going on here as well. While the new figures undoubtedly present a more accurate picture of Nigeria’s economy, nothing changed for Nigerians when the economy was rebased. The country still faced the same problems. Millions of people still lacked access to basic services. And the country’s per capita GDP still remained very low. Yet in rebasing their GDP, Nigeria’s leaders can present a more positive picture and can claim the title of Africa’s largest economy…at least on paper.

Political Knowledge and Foreign Policy Opinion

In a recent public opinion poll, about 2/3 of Americans indicated that they were following the situation in the Ukraine closely or very closely. But when asked to find the Ukraine on a map, only 16 percent could find it on a map. Some located it as far away as South Africa, Greenland, or Greenland. But the most interesting finding was that those with the strongest opinions supporting intervention were the least likely to be able to find the country on a map. This finding held regardless of the age, political affiliation, or level of education of the respondent.

What factors do you think account for the findings of this study? Why are Americans who know less about Ukraine, its history, and its location, more likely to support the use of force in the country? And how does this finding influence your opinion about the role of public opinion in foreign policy decision making?

Afghan Elections

Elections in Afghanistan took place this weekend, with turnout reportedly high. The Taliban threatened to disrupt the elections, in which eight candidates are vying to succeed outgoing President Hamid Karzai.  But despite the threats, more than 12 million Afghanis cast ballots.

The ballot is widely seen as key to determining the future of Afghanistan. Among the eight candidates, two are seen as the leading contenders. Former Foreign Minister Abdullah Abdullah—generally seen as a reformer—is the leader of the National Coalition and a long-time opponent of outgoing President Hamid Karzai. Former Finance Minister Ashraf Ghani Ahmadzai, is running as an independent but has come out in support of a strategic partnership with the United States. And finally, Zalmai Rassoul was Minister of Foreign Affairs and is a close ally of President Hamid Karzai. If no candidate wins a majority of the ballot—an outcome that seems likely given the large number of candidates running and the three-way division among frontrunners—a runoff election would be scheduled for May 28.

Tax Policy, Transfer Pricing, and the Offshoring of Profits

Executives from the manufacturing firm Caterpillar—the world’s largest maker of construction and mining equipment—appeared before the Senate Permanent Committee on Investigations yesterday to defend a strategy that allowed the company to avoid paying $2.4 billion in corporate taxes in the United States. The practice, known as transfer pricing, allowed the company to shift profits from its domestic operations in the United States to a Swiss subsidiary.

Democrats attacked Caterpillar’s practice, which is widely practiced in international businesses. The subcommittee’s chair, Sen. Carl Levin (D-Mich), asserted that “Caterpillar is an American success story that produces phenomenal industrial machines, but it’s also a member of the corporate profit-shifting club that has shifted billions of dollars of profits offshore to avoid paying U.S. taxes…Caterpillar is shifting its parts profits to Switzerland, even though most of its parts operations and work is done right here in the United States. Nothing changed in the real world except Caterpillar’s tax bill.”

Republicans asserted that the root cause of the practice is the relatively high corporate tax rate in the United States. Sen. Rand Paul (R-KY) argued, “We’ve got the wrong people on trial here. The tax code needs to be on trial here.”

For their part, Caterpillar defended the practice, arguing that they had an obligation to shareholders. Julie Lagacy, a Caterpillar vice president, testified that, Caterpillar has followed the law and paid all taxes due.

But the hearing highlights both the archaic nature of the US tax code, and the ways in which corporations operate to move profits to lower-tax countries. Nevertheless, reforming the tax code to address either of these challenges seems unlikely in the current era of divisive party politics in the US Congress.

 

[This post was previously published at the Election Center blog and is reprinted here with permission.]

Blogging in IR: Reflecting Divides in the Discipline

flags-waving-in-the-windI’m at the annual meeting of the International Studies Association meeting in Toronto this week. Last night, I attended the annual bloggers’ reception, where several outstanding blogs were recognized. The awards, organized by Duck of Minerva, are quickly becoming a key event at the ISA’s meeting.

Political Violence @ a Glance was recognized as the best group blog, with The Monkey Cage recognized as runner up. Dart Throwing Chimp was the best individual blog. Nuclear Diner was the best new blog. And Daniel Drezner was awarded a special achievement award for his work in contributing to the developing of blogging in international relations.

All of the awards were well-earned, and I encourage you to check them all out. But I was also struck by the relative lack of attention paid to the international political economy side of the discipline. Historically, IR has been divided into two main subfields: international relations, which tends to focus on security issues, and international political economy, which tends to focus on global economics. A massive conference like the ISA draws IR scholars and practitioners from both sides of the discipline. But it’s striking how little connection there often is between the two groups.

This is unfortunate. Just as the most interesting and important questions are unlikely to be successfully addressed by a single disciplinary field, so too the biggest questions in IR would likely benefit from the insights provided by both subfields. Climate change, for example, is both a security and an economic question. So why are we so bad at working beyond the (sub)discipline?

The Role of the Public and Private Sectors in the Good Society

Governments are increasingly reliant on private sector principles for the provision of public services.

The city government of Santa Barbara allows prisoners to upgrade their accommodations. For a mere $82 per night, detainees have access to a private cell, separate from the general population, and are permitted access to a greater variety of entertainment—ipods, computers, and so on.

In Washington, DC, lobbyists now pay homeless people to wait in line to get access to key committee hearings.

In Iraq and Afghanistan, private military contractors outnumbered military personnel on the ground and provided the vast majority of reconstruction efforts and service delivery in support of the US military effort.

In this TED Talk, Michael Sandel describes this as a “quiet revolution” in which we have slowly moved from having a market economy to becoming a market society.

On one side, fees for public services provide incentives for better service and introduce a greater level of efficiency in the public sector. Toll roads, for example, force individuals to balance the value of their time against the greater cost of driving the toll road. But Sandel argues that the introduction of market society undermines the inclusiveness of public life, facilitates inequality, and crowd out the “public good” from public life.

What do you think? Do market solutions to public service challenge promote more efficiency in the public sector or undermine the promise of inclusiveness and equality in the United States? Do you agree with Sandel’s argument presented in the video? Why? And what are the unintended consequences of such policy changes?

[This article was previously published at the Election Center blog and is reprinted here with permission.]

Banning Twitter in Turkey

The government of Turkey yesterday announced it would “eradicate Twitter,” prompting a sharp protests in social media.

Prime Minister Recep Tayyip Erdogan has a troubled history with social media, which has been sharply critical of his leadership. Critics of the government have used social media to mobilize protests and distribute information charging the government with corruption. Prime Minister Erdogan asserted that “We’ll eradicate Twitter. I don’t care what the international community says. Everyone will witness the power of the Turkish Republic.” But Google and Twitter quickly announced ways around the block, and the number of posts from Turkey actually increased following the announcement.

What do you think? Will Turkey be successful in its efforts to control the internet? Or does the decentered nature of the internet undermine Turkey’s ability to control it? And what might this suggest for the future of social media and its relationship to governments and politics around the world?