Development Channel

This is a post in a new series on the Development Channel,“This Week in Markets and Democracy.” Each week, CFR’s Civil Society, Markets, and Democracy Program will highlight noteworthy events and articles. Calais Crisis: Europe’s Migration Woes The escalating Calais crisis underscores Europe’s serious migration challenges. Thousands of African and Middle Eastern migrants are camping in makeshift shelters on the French side of the Channel Tunnel and risking their lives in desperate attempts to cross into Britain. In response to Calais and similar scenes playing out across Europe, growing anti-immigration rhetoric blames migrants for taking native-born citizens’ jobs and draining government funds. Yet a study by Oxford’s Migration Observatory finds migrants may actually raise average wages for the UK’s medium and high-paid workers. (Those most adversely affected by UK immigration are likely migrants themselves, who tend to be low-wage workers facing increased labor supply). And as the EU ages and birth rates decline, migration will be vital to maintaining GDP growth and standards of living. Europe is expected to lose nine million workers by 2060. In Germany, the IMF warns that starting in 2020, growth will take a hit due to an aging population. From Calais to the Greek islands, governments are struggling to deal with short-term migration costs without losing sight of longer-term economic needs–the balance will require more cohesive EU migration policies. Time for TPP Deal Running Out Domestic interests prevented the twelve Trans-Pacific Partnership (TPP) members from reaching a final deal last week in Maui, and upcoming elections in two TPP countries threaten further derailment. Who’s to blame? Australia’s farmers want more access to the heavily-subsidized U.S. sugar industry. Mexico, a major auto exporter, made new demands on rules-of-origin for car parts. And the United States is fighting for long-term pharmaceutical patents opposed by all other members, especially developing countries. While U.S. Trade Representative Michael Froman is “more confident than ever that the TPP is within reach,” Canada’s eleventh-hour holdout on dairy concessions, coming as the nation heads toward October elections, undermines that bravado. With other TPP members seeing the dairy issue as non-negotiable, Canada could potentially opt-out or be kept out of the agreement. And even if Canada comes around, TPP pessimists–who note that the stalled Doha Round of trade talks broke down over similar agriculture and intellectual property disagreements–worry that looming U.S. elections will push a deal beyond 2016. Post-2015 Agenda – Moving from Rhetoric to Reality One hundred and ninety-three countries reached final agreement on the Sustainable Development Goals (SDGs) this week, sealing the post-2015 development agenda the UN will adopt in September. Many civil society organizations and governments praised UN member states for reaching consensus on seventeen goals that aim to eradicate poverty “in all forms everywhere,” among other ambitious targets. Advocacy groups celebrated the addition of next generation development issues with increasing global relevance, from ending modern slavery and human trafficking to acknowledging the significance of global migration. Still other rights groups are concerned that the SDGs’ monitoring and review process is vague and insufficient, and lacks a meaningful role for civil society. Getting from rhetoric to reality involves both financing and governance challenges. Only together can the private sector, aid donors and domestic governments raise the estimated $3.3-$4.5 trillion a year needed to fund the post-2015 agenda and guide projects necessary to meet SDG goals–these untested arrangements are already showing cracks.  

Over the past decade, world leaders and practitioners alike have increasingly recognized that the practice of child marriage undermines development and stability. This is especially true in regions like sub-Saharan Africa, where Niger claims the highest rate of child marriage globally—at 75 percent—as well as in South Asia, where India is home to about one third of the world’s known child brides. Less common, however, are efforts to combat this practice in Latin America, despite high numbers in the region: According to a report launched in July by Promundo, a Brazil-based non-governmental organization (NGO), Brazil is ranked fourth in the world in terms of absolute numbers of girls married or co-habitating by age fifteen. More than 870 thousand women ages twenty to twenty-four years are married by age fifteen, and about three million—or 36 percent—will be married by eighteen. Despite these stark numbers, Brazil hardly registers on the international agenda as a hotspot for child marriage, and the subject is largely absent from national research and policy discussion. One reason for this could be the sheer size of Brazil’s population, which is the fifth largest in the world: given the overall number of people in the country, the absolute number of child marriages represents a smaller portion of the population than in most places where this practice is considered to be a serious challenge. In addition, informal unions—or cohabitations—are common in Brazil and many other countries in Latin America, which also helps mask the problem, as these unions often are not considered to be “marriage.” The practice of child marriage also has been overlooked in Central America, where institutionalized racism, poverty, ambiguous laws, and lack of opportunity fuel high rates in rural communities. For example, notwithstanding a legal prohibition against marriage before age eighteen in Oaxaca, Mexico, in 2010, twelve percent of adolescent girls fifteen to seventeen were married through formal or informal unions, and about 54 percent of these girls already had at least one child. In Guatemala, 30 percent of girls were married by eighteen nationwide, but in rural communities, this percentage nearly doubled to 53 percent. In an effort to combat the widespread belief among poor, rural, and indigenous communities that child marriage is a route out of poverty, some NGOs are working with communities in Latin America to shift norms and create safe spaces for adolescent girls. One community-based program led by the Population Council, called “Abriendo Oportunidades,” works with indigenous girls to foster financial literacy and self-esteem, promote sexual and reproductive health, and discuss topics like marriage. The program has reached nearly eight thousand indigenous girls since 2004 and provided them with alternatives to early marriage. According to an evaluation conducted in 2011, 97 percent of girls participating in the program remained unmarried throughout its duration. As governments determine whether to include a target on ending child marriage by 2030 in the Sustainable Development Goals currently under negotiation at the United Nations, incorporating experiences from Latin America will be critical. To achieve this ambitious target, we need to be clear-eyed about every region where child marriage takes place. Engaging with Latin America on this global issue will be critical to finally bringing this harmful practice to an end.

On April 24, 2013, the Rana Plaza factory, which manufactured apparel for Benetton, Primark, and J.C. Penney, among others, collapsed in Dhaka, Bangladesh. The disaster killed over 1,100 and injured another 3,000, most of them young women. In the tragedy’s wake, Bangladesh has tried to help the victims and their families, and to improve industry safety and working conditions more generally, with mixed results. Rana Plaza highlights both the best and the worst of what globalization and global supply chains bring to developing countries. Large-scale apparel manufacturing came to Bangladesh in the late 1970s. South Korean company Daewoo, better known today for its auto and electronics businesses, joined with local partner Desh Garments to found one of the first export-oriented garment factories, producing shirts. Many more followed–today the country claims over 5,000 garment factories with 4 million workers. In 2011, Bangladesh accounted for almost 5 percent of global apparel exports. The industry drives the domestic economy, representing 16 percent of GDP and spurring growth of nearly 6 percent a year for the last two decades. Apparel dominates exports, constituting over 90 percent of what the nation sends abroad. This trade has helped fundamentally change Bangladeshi society, in many ways for the better. Poverty rates have fallen from 70 percent in the 1970s to less than 40 percent today. The nation has made steady gains on the UN’s Human Development Index. And the garment industry gave particularly rural women an alternative to backbreaking agricultural labor and opened up the possibility of financial independence. A 2015 study in the Journal of Development Economics found that Bangladeshi women with access to garment factory jobs delay marriage and childbirth and stay in school longer, as literacy and math skills are valued on the factory floor. Yet the industry also pays poorly and restricts union membership. Workers routinely suffer from respiratory diseases, injuries, and even death. Rana Plaza is just the worst of many incidences: in 2005 the Spectrum garment factory collapse killed 64 and 112 people died in the Tazreen garment factory fire in 2012. The often blatant disregard for labor rights and safety standards comes in part from the way these supply chains function. A 2014 study by the NYU Center for Business and Human Rights found that international brands such as Zara and the Gap operate through indirect sourcing. By subcontracting to purchasing agents, the big brand names have little to no access and oversight. And outsourcing continues on down the production pyramid: factories that receive contracts from middlemen often then subcontract themselves in order to scale up to meet the volume and time demands of fast fashion. So Zara rarely knows, much less inspects, these multiple levels of dressmakers, leaving little to no transparency in the manufacturing process. And there is scant loyalty from big brands pursuing the lowest nominal cost, limiting factory incentives to invest and making accountability all the more difficult. As production moves to smaller and more unregulated factories–some just rows of sewing machines in garages or homes–abuses multiply. These facilities often fail to maintain even basic safety standards, for instance supplying fire extinguishers in the overheated, fabric-filled rooms. Low wages, long hours, and disregard for safety standards create the conditions for disasters like Rana Plaza. The response to the Rana Plaza collapse also underscores the good and the bad of this global commercial connectedness. International organizations quickly pressed for improved working conditions. The International Labor Organization’s (ILO) Better Work Bangladesh program pushes for more monitoring by the government and the industry itself. International brands and buyers founded the Bangladesh Accord on Fire and Building Safety and the Alliance for Bangladesh Worker Safety to help change the dangerous status quo. Still, these programs only target companies on the books–an estimated 40 percent of the industry. And the government’s National Action Plan to upgrade the garment sector remains an aspiration rather than a reality. While the Accord and the Alliance have spurred some positive shifts, the government lacks the funds and the capacity to revamp the industry. Some foreign firms are changing their practices. H&M inspects its subcontractors’ facilities and offers incentives for better working conditions. Uniqlo is shifting the way it works with suppliers, creating longer-term relationships, providing 18-month forecasts, and compensating local partners for any lost production. Still others, including the Gap, haven’t altered their practices or signed onto plans to monitor and finance factory safety, arguing it would expose the company to litigation in the United States. For the actual victims of the Rana Plaza, compensation and justice lag. An ILO-managed Rana Plaza Donors’ Trust Fund for the victims just reached its USD$30 million goal. And only this June were factory owner Sohel Rana and 41 others charged with murder. As Bangladesh struggles to improve wages and working conditions, the public and private sectors worry about losing the industry and its jobs. After the 2014 police crackdowns in Cambodia, the government instituted a higher monthly minimum wage for its garment industry. In response, many Western brands began to look elsewhere. New countries–particularly those in Africa–hope to boost their own manufacturing potential by joining the apparel supply chain, competing with Bangladesh and others on cheap wages and low power costs. Automation, including robotic sewing machines, threatens to replace manual labor altogether. How Bangladesh addresses these challenges will affect its economy, its politics, and its people. Still, the possibility for a prosperous future remains deeply tied to trade and to remaining an integral part of these and other global supply chains.