INTRODUCTION
C. Capital
As an example that deals with capital in our set of land, labor, and capital exam- ples, we can deal with the stock market. It is a big source of capital under U.S.
capitalism, although Japan relies more heavily on bank savings and the tax-sup- ported MITI. A conflict of interest in stock brokerage is between small investors and the middlemen brokers who facilitate obtaining capital for big firms. The problem is that those who sell stocks and bonds would like to get as big a cut of their sales as possible. Those who buy stocks and bonds would like to pay as small a commission as possible.
Commissions could be increased to make both sellers and buyers happy by changing the present payment system. The current system pays sellers a percentage of what they get the investor to buy. This inherently encourages brokers to encourage investors to buy more than they possibly should, and to buy more of certain shares that pay high commissions. A win-win alternative would be to pay on the basis of good performance. That way a broker would get a substantial percentage of the dividends within the first five years, or what- ever percentage and time period are negotiated. The broker could also get a sub- stantial percentage of the increase in the value of stock upon resale. Such an arrangement could enable good brokers to make a lot more money, which would also benefit the stock buyers. A minimum fee could be provided on the basis of hours worked.
There is a need for more performance pay in all fields of the private and public sectors to enable both sellers and consumers to come out ahead of their best initial expectations. Total profits of stock sellers could also be increased if banks were allowed to sell stock. The competition could allow qualified banks to make a legitimate profit, which they are currently denied. The stock buyers would also benefit from the competition. Indeed, stimulated competition and the structured or channeled profit motive may be the two most important concepts in win-win economic policy.7
This Handbook on Economic Policy contains chapters dealing with the above and other economic issues. The chapters are organized in terms of eco- nomic policy in Africa, Asia, Europe, and Latin America/North America.
ENDNOTES
1. For further details on win-win analysis, see S. Nagel, Super-Optimum Solutions and Win-Win Policy: Basic Concepts and Principles (Quorum, 1997); S. Nagel, Public Policy Evaluation: Making Super-Optimum Decision (Ashgate, 1998); and S. Nagel, Policy Within and Across Developing Countries (Ashgate, 1998).
2. For further details on inflation and unemployment, see Charles Schultze, Memos to the President: A Guide Through Macroeconomics for the Busy Policymaker (Brookings, 1992); and Melvin Dubnick and Alan Gitelson (eds.), Public Policy and Economic Institutions (JAI Press, 1991).
3. On taxing, spending, and the deficit, see Robert Reischauer (ed.), Setting National Priorities: Budget Choices for the Next Century (Brookings, 1997); and Warren Sam- uels and Larry Wade (eds.), Taxing and Spending Policy (Lexington, 1980).
4. On organizing the economy, see Randy Ross, Government and the Private Sector:
Who Should Do What? (Rand, 1988); and Dennis Thompson (ed.), The Private Exer- cise of Public Functions (Associated Faculty Press, 1985).
5. On land and agriculture, see Emery Castle (ed.), The Changing American Country- side: Rural People and Places (Kansas, 1995); and Don Hadwiger and William Browne (eds.), The New Politics of Food (Lexington, 1978).
6. On labor and management, see Thomas Moore, The Disposable Work Force: Worker Displacement and Employment Instability in America (Aldine De Gruyter, 1996); and Lawrence Flood (ed.), Unions and public policy, in The New Economy, Law, and Democratic Politics (Greenwood, 1995).
7. On business and consumers, see Rogene Buchholz, Business Environment and Public Policy: Implications for Management and Strategy Formulation (Prentice-Hall, 1986); and Richard Judd, William Greenwood, and Fred Becker (eds.), Small Business in a Regulated Economy: Issues and Policy Implications (Quorum, 1988).
1
Environmental Policy in the African Development Bank and the Asian Development Bank
Morten Bøa˚s
University of Oslo, Oslo, Norway
I. INTRODUCTION—MULTILATERAL DEVELOPMENT BANKS AND THE ENVIRONMENT
In the Multilateral Development Banks (MDBs), environmental considerations are a relatively new theme,1 and both the African Development Bank (AfDB) and the Asian Development Bank (ADB) have been described as late-comers within this issue-area. Stein and Johnson (1979) described the situation in the ADB as one where the institution lacked any formal commitment to environmen- tal protection or to specific procedures for considering environmental impacts in loan preparation and negotiation, and as late as 1988, Mikesell and Williams (1992) found that the Environmental Unit of the ADB had little more than an advisory role. Its staff had not veto power on the approval of projects. In the AfDB, the situation was quite similar. In 1991, while officially advocating envi- ronmental policies similar to those of the World Bank, it had not taken any steps to embody these policies in its operations and its Environmental Unit was without any permanent staff.
Even though most observers agree that the environmental record of the AfDB and the ADB has improved during past years, this issue-area is still one of the most controversial and contested in the Banks. And it does not look like the political controversies related to environmental policy will diminish in the near future. On the contrary, they seem more likely to increase, because the Banks are now in the process of entering into the unknown field of post-industrial envi- 1
ronmental policy inhabited by cross-cutting issues like environment, indigenous people, involuntary resettlement and social forestry just to mention a few.2The main aim of this article is therefore to investigate into what kind of factors that have limited and what kind of factors that have prompted the development of an environmental policy in the AfDB and the ADB. The rationale for undertaking such an exercise is that improved knowledge of these factors may make it easier for these two important development institutions to overcome the challenges they are faced with today. It is also assumed that an interpretative comparative ap- proach will help us to highlight constraints to the development of environmental policy in such institutions, but also throw light on factors that can promote such policies.
In order to accomplish this task two single case studies of the AfDB and the ADB are presented before we, on the basis of these case studies, draw our conclusions. However, before we can proceed with this task we need a theoretical toolbox that can guide us in our search for factors that have limited and prompted the development of environmental policy in the AfDB and the ADB. The major assumption that guides the composition of the theoretical toolbox is that MDBs are political institutions. Subsequently, we will look at these processes in the Banks in light of a theoretical framework that highlights both competitive bar- gaining and the development of generalized principles of conduct for behavior.
The theoretical toolbox is therefore constituted by Young’s (1989, 1991, 1992) games of institutional bargaining and Ruggie’s (1993) brand of multilateralism.
Drawing on this theoretical reserve, we will start with the Bank on the African continent before we turn our attention to its Asian counterpart.3
II. MULTILATERAL DEVELOPMENT BANKS AS POLITICAL INSTITUTIONS
The main assumption for the analysis is that MDBs are political institutions be- cause their loans affect both domestic priorities and the distribution of wealth and power.4 They are therefore interpreted as arenas that promote international order and cooperation, but also as battlefields between various actors in world politics. However, the MDBs have since their founding advocated the doctrine of political neutrality. They have embraced the functionalist logic that technical economic questions could be separated from politics.5
Contrary to this view, a growing body of literature on MDBs gives attention to political conflict and how countries seek to use the MDBs as an arena to facilitate their own political and economic interests. Sanford (1982) argued that the United States strongly influences MDBs and their policies. According to Ya- sutomo (1983, 1995), Japan seeks to use ADB as a foreign policy tool, and Japa- nese ODA and MDB policies are not isolated cases but rather crucial components
in a new activism in Japan’s overall foreign policy. On the contrary, Krasner (1981) argued that the large donors do not enjoy voting influence commensurate with the size of their contributions. With respect to the AfDB, Mingst (1990) argued that even though the hegemons who had played such a key role in the other MDBs had been prevented from exercising inordinate influence in the Bank, the level of political conflict penetrated deeply into the institution. In short, MDBs are not technical institutions like functionalists or the institutions themselves have argued.6Instead, they are political institutions which in an interdependent world cannot be separated from the harsh world of politics nor from the process of change within it.7
A. The AfDB and the ADB as Negotiated International