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Ceramics
industry looks for new clay deposits With the expansion
of the ceramic industry it is important to locate good quality feldspar
deposits to ensure enough supplies of raw material, Dr. N.P. Wijayananda,
director of the Geological Survey and Mines Bureau, said. Giving an overview
of ceramic raw materials at a recent Ceramics Symposium organised
by the Sri Lanka Ceramics Cluster, Dr. Wijayananda said it was necessary
to identify new deposits if the industry is not to face shortages
in future. Large resources
of clay are available for detailed investigations, he added. Different grades
of locally refined kaolin clay are valued at between Rs. 5,000 and
Rs. 18,750 a tonne. Investigations
for deposits of ball clay also are required since there could be
a shortage as no new reserves have been identified, Dr. Wiyajananda
said. But there are
enough reserves of quartz, he said. Inferred reserves have been
calculated as over 20 million tonnes. The symposium
was told that the ceramics industry is considering the possibility
of entering the lucrative market for advanced ceramic applications
such as in medicine. Professor Vasantha
Amarakoon, Professor of Ceramic and Electrical Engineering and director
of the NYS Centre for Advanced Ceramic Technology, Alfred University,
New York said ceramics have a wide range of applications. In a paper
on advanced ceramic applications, he said ceramics is used in such
everyday items as electrical insulators, TV and clock parts, dishes
and glasses, computers, tiles, and even in shirt buttons. It is also
used in jet engines and as glass and carbon fibres to build lightweight
aircraft and spacecraft as well as in robots and sonars and in optical
instruments, CAT scanners, and ultrasound imaging equipment. Biomedical
ceramics are used for tooth and jaw repair, joint implants, bone
repairs, heart valves, eye-lens replacement, cancer treatment and
anti-bacterial coatings. An increase
in military-related applications has been noted because of increased
defence spending following last year's terrorist attacks on America.
Charles Conconi
of the USAID-funded The Competitiveness Initiative, which helped
organise the symposium, spoke about the importance of differentiation
- of moving out from making low value products for a broad market
to manufacturing high value products with a narrow focus. Competitiveness,
he said, is not abundant natural resources, cheap labour, cheap
currency, better government incentives, subsidies or protection,
or tight control of knowledge. Rather, it
is about the sophistication of companies and the quality of the
macro-economic environment in which they operate, he said. Globally, competitive
performers share common characteristics such as investing in technology
with a commitment to upgrading their production processes and encouraging
innovation, and having an intimate knowledge of the end-customer,
he said. The ceramics
industry has set itself a target of achieving annual ceramics exports
of over five billion rupees in the next five years. Exports last year were worth about Rs. 3.7 billion.
The petitioner had alleged that the travel boss was trying to intimidate and coerce male members of the travel department to perform sexual favours and those who refused were verbally abused and victimised.
There is an
ongoing debate on conditionality and its effect on the development
of emerging economies. The growing
consensus is that conditions imposed on countries by international
institutions are too detailed and numerous. They force
governments to concentrate their efforts on meeting the loan requirements,
rather than improving the standards of living of their citizens.
A number of alternatives to detailed conditionality have been proposed.
This paper presents the history of conditionality, as well as some alternatives. Role of World
Bank/IMF Bank has changed
over the years. Originally created to promote economic development
by means of loans and technical assistance, the bank has transformed
into an institution that supports not only the construction of economic
infrastructure, but also projects in the health and education sectors,
as well as other programmes intended to deal with poverty in developing
nations. By contrast,
the International Monetary Fund (IMF) was first created to provide
countries with short-term financial assistance at times when they
experienced balance of payments deficits. After the system
of fixed exchange rates was abandoned in the 1970s, the IMF transformed
into an institution that now manages financial crises in developing
markets, is a long-term lender to many developing countries, is
an advisor to many nations and a collector and disseminator of economic
data. The loans that
the financial institutions provide to the developing world are given
under a set of specific conditions. The purpose
of conditionality is to provide safeguards to ensure that financial
transfers occur only if key policies are implemented in a specific
country and to ensure the borrower that it will continue to receive
finances if the policies are fully implemented. Interestingly
enough, there are a number of countries that continue to receive
loans even though they are not able to meet the conditions under
which the loans were originally provided. Conditionality Institutional
reforms cannot be imposed on countries through external conditions,
instead they have to be built and developed from within. Originally
limited strictly to macroeconomic variables, the scope of conditionality
has evolved over the years. Developing countries faced only a few
structural conditions per programme in the 1980s, but by the late
1990s they had to meet an average of more than a dozen different
conditions. The growing
number of conditions increased the risk of countries failing to
meet them, and have resulted in an unwillingness of governments
to negotiate for loans. Detailed conditionality usually does not
give governments many options when designing policies for reform
and it is often viewed as an attack on national sovereignty. Despite increased
attention from the World Bank, Nigeria hasn't been able to significantly
improve its economic performance. Instead it
became more dependent on World Bank loans, while grants from international
donors have actually declined over the years. Nigeria frequently
asked for assistance from the IMF and the World Bank, but it often
suspended loan negotiations because of the number of conditions
that were imposed. Overall, in 1999, the World Bank and the IMF
imposed an average of 114 conditions on 13 sub-Saharan African nations.
Tanzania, with 150 conditions had the biggest share. It has proved
impossible for these African nations to meet this number of conditions
and at the same time successfully and effectively improve standards
of living. For example,
the conditions imposed on Turkey during recent negotiations for
an additional loan by the IMF include: 1. Greater
transparency of government operations. 2. State enterprise
restructuring. 3. Intensifying
privatisation. 4. Fostering
FDI. 5. Fiscal adjustments. 6. Disinflation
under the planned inflation targeting framework. For the past
decade both the IMF and the World Bank have worked to strengthen
their collaboration on conditionality and ultimately improve programme
design. They have focused on increasing country ownership in reform
programmes and clarifying institutional roles. One of the
outcomes of such work was the decision to focus on developing conditions
that are tied to results of the programmes rather than actions of
the governments. The idea is to impose a minimal number of conditions,
such as budget management and government transparency, allowing
the government full control over the policy formulation and implementation
process, which is an essential aspect of ownership and successful
reform. The programmes
based on outcome conditionality specify the desired results, leaving
the determination of the necessary steps for achieving the goals
to the governments themselves. Horst Kohler,
the Managing Director of the IMF, has also recognised the problems
that developing countries face from detailed conditionality. Reviewing
the IMF's work on conditionality, he noted that attention should
be paid to strengthening country ownership and the political support
needed for sustained implementation of reforms, and that the number
of conditions imposed when making loans should be decreased. Alternative
approaches * The Centre for International Private Enterprise (CIPE) - The approach CIPE has followed for years is to build political coalitions in developing countries to promote reform, much as the US Chamber of Commerce does it in the United States. Voluntary
associations * National
Business Agenda (NBA) - The NBA is a tool used by the business community
to encourage investment and stimulate economic growth. It mobilises
the business community to use their skills to affect public policy
by setting legislative and regulatory priorities and communicate
them to policymakers. National Business
Agendas present concerns of the business community to the government
in a unified voice, increasing the likelihood of affecting policy. * Corporate
Governance Programmes - A major component of CIPE's strategy is
to strengthen corporate governance practices worldwide. National business
communities are learning and re-learning the lesson that there is
no substitute for getting the basic business and management systems
in place in order to be competitive internationally and to attract
investment. Corporate governance
mechanisms require the development of key institutions that are
vital to successful economic and democratic reforms. CIPE has supported
successful programmes throughout the globe including Russia, Colombia,
Indonesia, and Poland. These programmes
have contributed to institutional development through local private
sector participation. * Millennium
Challenge Account (MCA) - In March 2002, President George W. Bush
proposed that the United States increase its assistance to the developing
world by $5 billion by 2006. Such assistance
will fund initiatives that will ultimately result in improving standards
of living in developing economies. Partnerships However, to receive the funds, the countries have to commit to good governance, development of education and health sectors, and support for private enterprise. * The New Partnership
for Africa's Development (NEPAD) - NEPAD is an effort by African
leaders to eradicate poverty and place their countries on a path
of sustainable growth and development. NEPAD provides a framework,
based on internal initiatives, of interaction between African countries
and the rest of the world to promote development programmes on the
continent. NEPAD is attempting
to attract heavy investments by building institutions and developing
key sectors in the countries of Africa. It pays special
attention to development of democracy and political governance,
establishment of economic and corporate governance mechanisms, developing
infrastructure, reducing poverty, improving market access and building
a strong environmental programme. * The Meltzer
Commission - In 1998 Congress established the International Financial
Institution Advisory Commission (IFIAC) as a part of legislation
authorising an additional $18 billion to the IMF to evaluate the
work of major international financial institutions. IFIAC, headed
by Professor Allan H. Meltzer, also became known as the Meltzer
Commission, and its work has gained the support of President Bush
and the other members of the Republican community. As Mr. Meltzer
has stated, the proposed changes were aimed at: 1. Increasing
transparency, 2. Improving
accountability, The Meltzer
Commission was unanimous in its recommendation that the debts of
"heavily indebted poor countries" that commit to "effective
economic and social development strategy" should be written
off. Too often poor nations end up in a situation where the new
loans they receive are only being used to pay off the interest on
the loans they have acquired in the past. In this situation
the conditions under which the loans are provided become impossible
to meet - in reality the debt is taken to pay off the old debt,
not for restructuring programmes. Changes The opinion
voiced by the Commission calls for the creation of pre-conditions
that have to be satisfied by governments prior to borrowing emergency
funds from the Fund. That was proposed
so that the IMF would not have to impose "detailed conditionality"
that has proved to be problematic for many nations by making IMF
programmes "unwieldy, highly conflictive, time consuming to
negotiate, and often ineffectual." The preconditions
listed are as follows: 1. Governments
should ensure that banks are adequately capitalised. 2. Governments
should allow for participation of foreign financial institutions.
This is done to limit corruption, increase capital base and reduce
risk through portfolio diversification. 3. Governments
that seek to borrow funds from the IMF should be required to provide
timely and accurate information on the financial markets. 4. The IMF
should establish proper fiscal requirements to which the countries
should commit themselves. While calling
for the IMF to become a short-term lender, the Commission recognised
that the development banks should assume responsibility of long-term
assistance to countries. The IMF should evolve into an organisation
that performs only a few emergency operations a year. But, according
to the Commission, the IMF should still regularly participate in
the consultations with governments about their macroeconomic and
financial policies, and only lend funds in case of a crisis. The World Bank
Group: Grants rather than loans The programmes
of the World Bank are also at times unsuccessful and ineffective.
World Bank programmes in poor countries are successful in less than
33 percent of cases. The poor countries
that receive those loans are likely to remain poor and many are
not going to be able to repay those loans. This comes
as no surprise, especially if we consider that the official debt
of the forty-two needy countries has climbed to over $170 billion.
It is estimated
that heavily indebted poor countries are currently repaying an estimated
$8 billion a year to the creditors. The Meltzer
Commission has recommended that the World Bank abandon its current
loan strategy to heavily indebted poor countries and instead provide
funds through grant programmes. The conditions
of the grant programmes are straightforward and countries will continue
to receive grants only if they can show results. The Commission
argues that many loans given to poor countries are frequently wasted
by governments who are corrupt and inefficient. Grant programmes
can ultimately lead to institutional development in poor nations
if reforms are supported through careful creation of essential institutions. The Meltzer
Commission' proposal to provide funding to the developing world
through grant programmes rather than loans has received a favorable
reception from US and international experts. President Bush
has also recognized the benefits of grant-based programmes. In his
address to the World Bank he proposed that "the World Bank...dramatically
increase the share of its funding provided as grants rather than
loans to the poorest countries." He has also
stressed that debt reduction programmes are working and the countries
are now using funds to improve health and education sectors rather
than paying off debts. Conclusion
Yet there may
not be a single correct alternative, rather the solution may lie
in a mixed reform package that encompasses both a grants approach
and outcome-based conditions on new loans. The right mix of solutions will help international financial institutions to work closely with developing nations to achieve a common goal of economic development and poverty reduction. |
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