ECONOMIC SECURITY

1
ECONOMIC SECURITY

• How is it different for a poor and weak state?

2
WHAT IS THE AIM?

• To get the goods you need when you need them, at
  the right price, with reliability of supply and
  preferably some choice
• To find a competitive and reliable niche in the
  world economy
• What sort of things could happen if you fail?
  - Unable to
  maintain defences and police (risk of invasion or
  domination) converse risk of drumming up a war
  atmosphere to distract people and keep them
  quiet emigration/depopulation starvation
  rebellion and state breakdown

3
WHY IS YOUR STARTING POINT WEAKER?

• Characteristics of the country limited natural
  resources and poor use of environment, likely to
  be producing raw materials if anything (low added
  value), bad infrastructure/ communications (esp
  if landlocked), lack of education/skills/health
  in population, fragile health and high disease
  burden, weak state and poor governance inc
  corruption, lack of laworder inc property
  protection few investments, few friends and
  protectors, low international prestigeinfluence
• Aspects of how the world economy works rules
  made by rich countries and still protectionist
  when there is a risk of poor countries flooding
  the market, unreasonable extra
  standards/conditionality set for economic
  governance, commodity price scissors (ie things
  poor people have to import like food and oil have
  high and rising prices, their main exports have
  low/stable prices), low effectiveness and
  distorting impact of development aid.

4
WHAT SPECIFIC THINGS COULD GO WRONG?

• Generated from inside - conflict, coups and
  negative regime change or regime degeneration,
  resource/environment exhaustion, infrastructure
  collapse, corruption siphoning off resources, bad
  policy decisions by govt /or business
• Generated from outside price and currency
  shifts, break-off of supplies, new conditionality
  on supplies or aid, aid fatigue and fashions
  diverting attention elsewhere, global diseases
  that hit you much harder, natural disasters, (if
  you are unpopular) sanctions, embargoes or even
  international invasion

5
ANY CONCLUSIONS??

• Managing the individual country (from inside, and
  by those intervening) - know and address the key
  weaknesses and maximize strengths, consider
  jumping stages in economic development to
  exploit new technologyintellectual capital, new
  modes of cooperation, proper use of aid to build
  appropriate, sustainable, multiplier
  capacities, need to move forward simutaneously in
  economy, security and governance
• Is it a problem for the global system? In
  security terms yes because of global impact of
  new conflicts, risk of weak links in chain for
  managing disease security, environment etc. In
  late 20th century rich/poor economic
  interdependence seemed less obvious as
  interaction grew mainly between western and
  stronger rising powers, but these powers may
  increasingly need to look to ways of working with
  poorer countries to gain an edge eg through
  outsourcing exploring the poor mass consumer
  market like China already! (Other forces in
  same direction concerns about global approaches
  to climate change growing demand for some
  specialized raw materials like cobalt)

6
INSURANCE AND SECURITY

• What is the basic purpose of insurance? to
  recompense you when something goes wrong so you
  can replace what you have lost
• Why does it work? something does not go wrong
  too often but everyone is willing and able to pay
  a small premium against the risk insurance
  providers balance different risks and are backed
  up by re-insurers

7
WHAT CAN GO WRONG?

• Can you get it? And if not.
• Can you get it at the right price? And if not
• poor country problems cant afford and cant get
  it eg against floods in Bangladesh result is no
  recompense/replacement or excess reliance on
  state or excess reliance on aid. (Need for
  micro-insurance initiative??)
• rich country problems excessive premiums eg on
  air travel after 9/11 at same time people can
  take stupid risks (eg building houses on Florida
  keys and get same insurance cover as the rest of
  us so insurance re-channels money to those who
  dont deserve or need it)
• Can the system sustain it? And if not risk of
  overload through combined costs of 9/11, SARS,
  other terrorist attacks, more frequent disasters
  governments tempted to step in but can they
  afford it??