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    Small-Island Solidarity and Climate Common Sense

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    Charles Telfair Centre
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    Nadia Calviño, President of the European Investment Bank.

    Jutta Urpilainen, European Commissioner for International Partnerships.

    LUXEMBOURG – While efforts to mitigate and adapt to climate change will remain a top international priority for decades to come, the most urgent risks from global warming require immediate action and new ideas. As UN Secretary-General António Guterres said at the Pacific Islands Forum in Tonga last month, “If we save the Pacific, we save the world.”

    Since the Paris climate agreement was signed eight years ago, much progress has been made to create a more sustainable economy, with new technological solutions allowing countries to maintain strong growth while also reducing carbon-dioxide emissions. Governments, businesses, and households are increasingly determined to support climate investments. Renewable energy is becoming businesses’ first choice for electricity generation. Innovation is boosting the competitiveness of green alternatives. And financial institutions are allocating more than $1 trillion each year to green projects.

    In this context, sustained and concerted action at a global level will be the key to success. Yet the progress has been too slow for the world’s most vulnerable regions. For people living on small islands and grappling with rising sea levels, extreme weather, and ocean warming, climate change is already an existential threat. Despite their minimal carbon footprints, these regions are at the forefront of the problem. Their challenges today will become the global crises of tomorrow.

    For small islands, adaptation is critical. Caribbean and Pacific Island states, along with parts of Latin America, Africa, and Asia, face many more severe climate-related problems than other parts of the world. They also are more vulnerable financially. Whether borrowing money to recover from natural disasters or investing to strengthen their resilience to climate change, they face higher interest rates, and these additional costs come at the expense of investments in health and education.

    As the world leader in humanitarian and development aid, the European Union is one of the closest partners that small island states and other vulnerable regions have in combating climate change. Under the EU’s Global Gateway investment strategy, we have put our money where our mouth is, because our commitment reflects both genuine solidarity and common sense. We know that the costs of a disorderly green transition would far exceed the costs of investing in climate adaptation and mitigation right now. The gradual, credible changes that we make today are what will spare us the massive economic, social, and environmental damage caused by unchecked climate change.

    A few recent examples illustrate our commitment. In Kiribati, a small island state in the central Pacific, rising sea levels may render many islands uninhabitable within a few decades. So, the EU and its financial arm, the European Investment Bank, are working with the World Bank and other international financial institutions to study the possibility of building a new seaport, which will help relocate people from smaller islands to safer ground. Such projects can be a beacon of hope for vulnerable populations everywhere.

    In the Caribbean, where violent storms and rising temperatures are straining water infrastructure and the surrounding seas and marine ecosystems, an EU-backed water management and clean oceans program will provide expert support to launch water projects in 15 Caribbean countries. This work will improve water security, sanitation, solid-waste management, and flood protection, as well as helping to preserve our oceans.

    The EU and EIB are also pooling resources to transform the way Cabo Verde (an island country off the coast of West Africa) uses and produces energy. This ambitious project will assist the government’s plan to phase out fossil fuels by 2040. By focusing on renewable energy and storage, it will cut pollution and significantly benefit Cabo Verde’s water sector, which relies heavily on desalination – a highly energy-intensive process. With far-reaching environmental and economic benefits, such investments will make Cabo Verde a model for sustainable development across the region.

    Finally, in Barbados, we are supporting investments to help deal with floods and hurricanes. One project, in partnership with the Inter-American Development Bank, will improve sewage treatment and groundwater management, and we are also supporting a system to recycle wastewater for agricultural use. To enable these investments, we are funding a “debt for climate conversion” program that responds to Barbados’s particular financial needs in the bond market.

    These projects demonstrate what meaningful support for small island states looks like. The Global Gateway program is helping not only with adaptation and water security, but also with renewable energy, digital innovation, education, health care, and green transportation.

    In each case, we need to think differently, because we are confronting challenges that none of us has seen before. Tackling climate change is the most important mission of our time, and innovation and new ideas are essential. By working together to implement them, we will provide a better world for the world’s most vulnerable populations – and for us all.

    Copyright: Project Syndicate, 2024.
    www.project-syndicate.org

    Main photo by junsjazz on Flickr

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

    New fish found off Madagascar: remarkable long-nosed skate discovered in the deep ocean

    By
    Charles Telfair Centre
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    Simon Weigmann, Associated Scientist, Leibniz Institute for the Analysis of Biodiversity Change

    The Madagascar Ridge, in the southwestern Indian Ocean, is a remote, elevated area of seabed south of Madagascar. In 2016, my colleagues and I discovered a new cartilaginous fish species in its deep waters; a catshark that we named Bach’s catshark (Bythaelurus bachi) after German composer Johann Sebastian Bach. (In 2017 we discovered another new deep-water catshark that’s very similar to B. bachi but from the northwestern Indian Ocean off Somalia. We named it Bythaelurus vivaldii after another composer, Italian Antonio Vivaldi.)

    Sharks, rays and skates are all examples of cartilaginous fish; their skeletons are primarily composed of cartilage, not bone.

    Now we can add another new species from the Madagascar Ridge to our list of finds in African waters. We recently published a journal article describing the species, which we’ve named the Brown longnose skate (its scientific name, longirostris, means long, stiff snout – its most immediately visible defining feature). To date, both new species have only been found on the southern end of the Madagascar Ridge, and have not been recorded anywhere else in the world.

    Though this is exciting it also raises concerns. The International Union for Conservation of Nature (IUCN) Red List of Threatened Species estimates that, collectively and globally, 37% of shark, skate and ray species are currently threatened with extinction. Some skates are caught in targeted fisheries but the main threat they face is becoming by-catch of fisheries targeting bony fishes.

    Because we know so little about Leucoraja longirostris, it’s hard to understand what risks it might face from fisheries. However, we know from other examples elsewhere in the world that deep-water species like the Brown longnose skate battle to withstand intensive fishing pressure. That’s because, generally, deep-sea fish grow slowly, mature late and have a low reproductive rate.

    Further research is essential. Scientists must learn more about this and other skate species’ distributions, life histories, population sizes and trends, as well as the threats they face. This will not just fill in knowledge gaps: it can lead to more effective conservation and management policy decisions.

    Skates

    The smallest skate, the Cuban pygmy skate (Fenestraja cubensis) reaches a tiny maximum total length of 23 cm. The largest, the Roughskin skate (Dipturus trachyderma) can grow to a total length of 264 cm.

    However, although some skate species and their famous egg cases, affectionately known as mermaid’s purses, are rather well-known to the public, many are poorly known even among scientists.

    Many species are only found in deep waters – even recorded down to a depth of more than 4,000 meters. At this depth, known as the abyssal zone, the pressure is about 400 atmospheres, or 400 times greater than the pressure at sea level. Very few fish species enter such depths.

    In 1988/89, a large expedition was carried out by the Russian research vessel Vityaz, which sampled many areas in the deep western Indian Ocean, and during which a large number of interesting cartilaginous fish species were found. I became interested in this material more than a decade ago and began researching the fish species that live on the floor of the Madagascar Ridge. Most of the material is held in the Zoological Museum of the Centre for Taxonomy and Morphology of the Leibniz Institute for the Analysis of Biodiversity Change in Hamburg, Germany.

    It was while studying this material that my colleagues and I identified the Bach’s catshark and the Brown longnose skate; there were specimens of both from the 1988/89 expedition but these had not been studied completely.

    The new species

    L. longirostris is uniformly brown above, like many other skate species living in dark, deep waters, where pronounced colour patterns are not really necessary. Rays and skates from shallower waters often use colour patterns to camouflage or to warn predators that they’re not safe to eat; in the deep sea this isn’t needed.

    L. longirostris can be distinguished from other skate species by its long snout and many other anatomical features. These include morphometrics (the measurement of living organisms and their parts) and meristic counts (countable traits such as number of tooth rows, vertebrae, fin rays etc.).

    The claspers are another important characteristic. These are paired organs that male cartilaginous fish use to assist the transfer of sperm into the body of the female during copulation.

    Species are grouped within genera and genera are grouped within families. L. longirostris’ claspers allowed us to show what genus it belongs to. The snout, meanwhile, is unique and confirmed that we were dealing with a previously unidentified species.

    Risks from fishing

    There’s not much information available about fisheries that operate in the area of the Madagascar Ridge, so it’s not possible to precisely quantify the risk to this skate. We assume that the risk isn’t high, since it’s in a rather remote area where it’s difficult to do bottom trawling; the southern Madagascar Ridge’s coral reefs also make it partially jagged.

    But we cannot be certain without more data. It will be crucial to learn more about the species to properly understand the risks it faces and to help contribute to conservation efforts. For that to happen, new specimens will need to turn up; we’ve studied and described what is available. In the meantime, I am continuing my research on poorly known cartilaginous fishes, with a special focus on the western Indian Ocean – who knows what still remains to be discovered?The Conversation

    This article is republished from The Conversation under a Creative Commons license. Read the original article.

    Main photo by dav12 on Flickr

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s). 

    How Financial Markets Can Drive Climate Action

    By
    Charles Telfair Centre
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    Lynn Forester de Rothschild, CEO of E.L. Rothschild, Founder and CEO of the Council for Inclusive Capitalism.

    LONDON – Climate change is on the ballot in November’s US presidential election. A second Donald Trump presidency could lead to an additional four billion tons of carbon dioxide emissions by 2030, erasing the progress made under President Joe Biden. Conversely, Vice President Kamala Harris, the presumptive Democratic nominee, established a record of being tough on polluters during her tenure as California’s attorney general.

    Meanwhile, Europe’s rightward shift and complicated coalition politics are slowing global climate action. As Western democracies grapple with rising political uncertainty, it may be up to capital markets to save the planet.

    Alas, our financial system is caught in a classic prisoner’s dilemma: it is costly for any single institution to decarbonize on its own while others continue to profit from carbon-intensive portfolios. But if all asset owners and managers committed to reducing CO2 emissions and supporting a just climate transition that protects workers, communities, and consumers, they could create long-term value and deliver prosperity for all.

    The inconvenient truth is that without robust climate policies – such as carbon pricing and elimination of fossil-fuel subsidies to reallocate capital toward clean energy – there is little incentive for collective action. In a world where it pays to pollute, investors will be tempted to support companies with unsustainable practices, shifting the burden of the energy transition to others and ultimately leaving everyone worse off.

    Contrary to activists’ hopes, climate action is not necessarily a win for everyone. A once-in-a-generation transition carries financial and political risks, as well as opportunities, creating winners and losers throughout the investment value chain. The question, then, is whether major asset owners and managers can steer markets toward achieving climate goals and generate sufficient financial returns.

    The answer is yes, but achieving this requires three major strategic shifts. First, investors must engage with high-emitting companies rather than simply divesting from them. Divestment campaigns often trigger partisan efforts to protect the fossil-fuel industry, whereas engaging with high-emitting companies and tracking their progress offers tangible climate benefits beyond portfolio decarbonization.

    In a 2023 study, for example, economists Kelly Shue and Samuel Hartzmark analyzed nearly two decades of emissions data from more than 3,000 companies, finding that high-emitting “brown” companies produce, on average, 261 times the emissions of climate-friendly “green” firms. This suggests that a 1% reduction in the emissions of an oil or gas company has a far greater environmental impact than a tech company or a bank achieving net-zero emissions. As geopolitical tensions rise and national fossil-fuel production becomes increasingly vital for energy security and affordability, policymakers should keep these findings in mind.

    Second, investors must actively seek emissions reductions instead of passively investing in low-carbon industries. As recent years have shown, exchange-traded funds focused on environmental, social, and governance investments not only underperform the market but also fail to accelerate climate action.

    Moreover, it has become abundantly clear that Big Tech companies like Meta (Facebook), Apple, Amazon, Netflix, and Alphabet (Google) tend to dominate sustainable equity funds. Although these funds may seem environmentally friendly at first glance, research shows that by directing capital away from high-emitting companies, they have inadvertently deprived critical sectors of the resources they need to invest in the clean-energy transition.

    By contrast, active funds that focus on encouraging carbon-intensive companies to decarbonize can drive climate action by channeling investments into sectors like renewable energy and waste management. A prime example of this approach is the $100 Billion Climate Action Plan launched by the California Public Employees’ Retirement System, which aims to improve cement production and retrofit fossil-fuel facilities.

    Importantly, there is little evidence that merely decarbonizing a portfolio translates into reduced greenhouse-gas emissions. To support the clean-energy transition, institutional investors must engage with both high- and low-emitting industries, incentivizing carbon-intensive companies to provide emissions disclosures to mitigate the negative impact of high emissions on their stock-market valuations. Given that the shift to a low-carbon economy requires significant long-term investment, institutional investors could also direct capital toward emerging technologies such as sustainable aviation and safe nuclear energy.

    Lastly, investors must seize the unique market opportunities created by weak national climate policies. According to the International Energy Agency, clean-energy investments will exceed $2 trillion in 2024 – roughly twice the amount invested in fossil fuels.

    To be sure, a second Trump administration could jeopardize the Biden administration’s landmark Inflation Reduction Act. But a slowdown in green investment is not inevitable, given that the IRA’s incentives – including $369 billion in tax breaks and subsidies for clean energy – have won support from voters, investors, companies, state and local officials, and even some Republican lawmakers. The IRA’s impact – catalyzing $240 billion in clean-energy investments in its first year – cannot be ignored.

    While green investments enable institutional investors to navigate domestic volatility, contribute to the fight against climate change, and generate returns, today’s unregulated carbon markets might give the impression that companies are prioritizing carbon offsets over meaningful decarbonization that benefits local communities. Initiatives led by climate and finance experts, such as the Integrity Council for the Voluntary Carbon Market, could thus play a pivotal role in setting standards for carbon credits and maintaining market integrity, helping to scale this essential climate-financing tool.

    Regardless of the political climate, 2024 is set to surpass 2023 as the hottest year on record. In an economy that values financial returns above all else, it is natural for individual companies to focus on profits. But focusing exclusively on generating returns overlooks the catastrophic impact of increasingly frequent extreme weather events like hurricanes, floods, and wildfires.

    As climate-related disruptions intensify, large institutional investors are uniquely positioned to lead the green transition while still delivering financial returns, thus bringing us closer to meeting the emissions targets set by the 2015 Paris climate agreement. Now is the time for markets to rise to the occasion and help us win the defining fight of our time.

    Copyright: Project Syndicate, 2024.
    www.project-syndicate.org

    Main photo by PixaBay on Pexel

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

    Rebooting the Sustainable Development Goals

    By
    Charles Telfair Centre
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    John W. McArthur, Senior Fellow and Director of the Center for Sustainable Development at the Brookings Institution

    Zia Khan, Senior Vice President for Innovation at The Rockefeller Foundation

    NEW YORK – It is a truism in the business world that vision without execution is a hallucination, and execution without vision is futile. The same principle applies to global policy: ambitions without solutions are just hopes, while solutions without ambition lead to stagnation.

    The Sustainable Development Goals (SDGs) for 2030 are a case in point. These 17 objectives and 169 underlying targets were unanimously adopted by all United Nations member states in 2015. They constitute an ambitious agenda to address global challenges like poverty, health, gender equality, labor, education, and climate change.

    With six years remaining until the 2030 deadline, the world is far from achieving most of these goals. Despite significant improvements in some areas – such as a million more children reaching their fifth birthday each year – progress has been too slow in many others.

    While financing gaps are rightly often cited as a key factor, the biggest obstacle to achieving the SDGs is the lack of systematic approaches to creating scalable solutions. Slow and steady gains can lead to significant advances over time, but if progress becomes too slow, the sense of achievement and hope for the future can dissipate.

    Achieving systemic gains requires boldness. In 2015, the SDGs were launched with a call for transformation. But calling for transformative solutions is easier than developing them. Although markets are powerful drivers of innovation, we need solutions capable of tackling broader public interests. Progress often requires new forms of collaboration between public, private, scientific, and civil-society institutions, or even the creation of new ones. But many organizations have difficulties updating their goals or building partnership strategies. Siloed professional communities are difficult to unite, leaving vested interests and the forces of inertia to crowd out innovation. Consequently, partnership remains more an aspirational value than a skills-based discipline, and policy debates often prioritize ideology over practical solutions.

    Against this backdrop, achieving the SDGs by 2030 requires new approaches that are audacious enough to inspire but also practical enough to be viable – concepts that capture the imagination while steering implementation debates toward tangible results. This could mean anything from a new global fund designed to ensure that digital cash transfers reach the world’s poorest communities, or an “interspecies money” mechanism that leverages artificial intelligence to provide animals with a say on how digital currencies can be spent on their own protection. It could also mean developing a public data tool to help investors identify and avoid companies that use forced labor.

    New technologies, institutions, and approaches all have the capacity to mobilize energy and expertise to achieve common, quantifiable objectives. Crucially, the fresh approaches we have in mind must convince people to abandon current practices and pool their creativity and resources toward a greater goal.

    But big ideas rarely emerge on their own. Our respective professional experiences and collaborative efforts have taught us that innovative SDG solutions must be encouraged, cultivated, and supported. As co-chairs of 17 Rooms, a partnership between the Brookings Institution and The Rockefeller Foundation, we have worked with several dozen groups of extraordinary professionals around the world on initiatives related to all 17 goals. Having watched them experiment with various approaches, we have learned a few lessons about how to drive positive change.

    First, venues for cross-sector cooperation on sustainable development remain too rare. We have been struck by the sense of novelty leaders from all sectors frequently express when encouraged to craft bold actions together to achieve even individual SDG targets.

    Second, how ideas are shaped matters. To create platforms for the best ideas to emerge, the world needs tools, processes, and systems that can bring together diverse views, and yet the lack of available tools for developing multi-stakeholder solutions is startling.

    Third, the development and adoption of big ideas should be interlinked. Too often, experts devise new solutions without understanding the realities faced by those who would be responsible for implementing them. Conversely, policymakers often fail to seek out innovative ideas and are rarely held accountable for not doing so.

    A fourth lesson concerns the need to determine early on who will pay and how. Regrettably, the SDGs were launched without sufficient agreement on funding, making even small amounts of money difficult to secure. Without adequate financing, big ideas will remain just that – ideas.

    Fifth, there is no substitute for leadership. Institutions and systems are crucial for large-scale deployment, but the passion and dedication of individuals championing big ideas are much more important than a perfect strategy or project. Since roadblocks are inevitable in an age of technological disruption, policy entrepreneurs must be as agile as their counterparts in the business world in navigating constantly shifting terrain.

    To be sure, some people may argue that the current geopolitical climate is too challenging to pursue big ideas or develop systematic approaches to achieving the SDGs. We disagree. If anything, today’s heightened tensions underscore the need to chart a better path forward. When the world seems stuck or off course, policy tweaks are unlikely to have a significant impact. New ideas, on the other hand, can foster a sense of opportunity and combat despair.

    Lastly, private-sector and civil-society leaders are just as vital to generating big ideas as public officials. Big ideas can drive change at every level, from local councils to international forums. But achieving the SDGs requires new platforms that can foster innovation across sectors and empower relevant actors to advance solutions independently.

    At 17 Rooms, we have learned from our successes and missed opportunities. With six years remaining until the 2030 deadline to achieve the SDGs, we are actively seeking big ideas. We hope others will adopt a similar approach and help all of us build platforms to facilitate innovative solutions.

    This commentary draws on insights generated through the 17 Rooms Initiative, convened by the Center for Sustainable Development at Brookings and The Rockefeller Foundation.

    Copyright: Project Syndicate, 2024.
    www.project-syndicate.org

    Main photo by United Nations Photos on Freepik

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

    As Disinformation Thrives, Democracy Dies

    By
    Charles Telfair Centre
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    Nishant Lalwani, Co-Founder and CEO of the International Fund for Public Interest Media.

    Maha Taki, Director of the What Works Unit at the International Fund for Public Interest Media.

    James Deane, Co-Founder of the International Fund for Public Interest Media.

    LONDON – Last year, OECD countries collectively allocated more than $220 billion in official development assistance (ODA). But a rising tide of disinformation is undermining the effectiveness of these investments.

    For example, a massive increase in financing for climate adaptation is urgently needed, but the impact of calls for increased investment would likely be limited if disinformation campaigns persuade people that global warming doesn’t exist or is not worth addressing. As COVID-19 showed, pandemic responses can be undermined if people fall victim to misleading health advice. And without a free and independent press to hold politicians and policymakers to account, famines become more likely, because increasingly scarce resources such as water and arable land may be poorly managed in the absence of transparent and equitable governance.

    More worryingly, disinformation threatens not only development, but also democracy itself. As news organizations struggle to survive in a complex and fast-changing media landscape, abuses of political and corporate power go unchecked. Independent journalism is one of the cheapest and most efficacious bulwarks against authoritarianism. In fact, it is so effective that autocrats are spending billions of dollars each year to undermine it by influencing domestic and foreign media narratives, as Freedom House’s report on China’s global media influence shows.

    And yet, while autocratic regimes invest billions in disinformation, Western countries are doing little to address the problem. To be sure, policymakers and politicians emphasize the vital role of press freedom in speeches, disinformation reports, and democracy conferences. But global government investment in public-interest journalism remains shockingly low.

    The OECD Development Assistance Committee (DAC) recently published a landmark report that underscores this “mismatch between rhetoric and resource allocation.” A detailed mapping study of ODA for media found that donor countries have not allocated enough resources to respond adequately to the dramatic erosion of information integrity worldwide.

    Over the last decade, the percentage of the global population living under autocratic rule has risen, from 49% to 70%, disinformation has surged in every country, and the financial threats confronting independent media have become existential. But support for media has remained stagnant, with 38 OECD countries spending a total of around $500 million per year – or about a third of Russia’s estimated propaganda budget. This represents less than 0.2% of total ODA in 2022 (the most recent year for which statistics are available).

    Worse, only a small fraction of this support is directly channeled to independent media organizations in recipient countries. The report finds that less than 10% of ODA for media and the information environment is delivered to journalists, media outlets, and civil-society organizations focused on journalism. This represents a mere 0.05% of total ODA between 2016 and 2022. Unless ODA for journalism is significantly increased, public-interest media in many countries will die out, with dire consequences for the societies served by these outlets. Democratic processes will be destabilized, and progress on development will be stunted – perhaps irrevocably so.

    Fortunately, some donor countries have finally begun to recognize this need. In March, the OECD DAC published a new set of principles for providing relevant and effective support to media and the information environment, which call for increasing financial and other forms of support, and strengthening local leadership and ownership. This means “ensuring a more significant share of ODA for media development reaches local and regional actors directly” and “increasing the availability and accessibility of direct, flexible, and reliable support, including core funding and longer-term, multi-year funding.”

    This suggests that the low levels of spending on independent journalism do not reflect a lack of knowledge or evidence. Rather, donor countries consider this type of support to be politically challenging and difficult to execute – and rightly so. Investment in independent media can complicate government-to-government relationships. Moreover, even large donor countries are unable to invest in the staff required to support media organizations effectively as part of their bilateral ODA support to countries.

    In addition, preserving the editorial independence of media outlets remains essential. While the amount of ODA going directly to media organizations is unacceptably low, it would also be inappropriate for donor countries to increase direct support themselves – no government should be picking and choosing which news outlets are worthy of support.

    Our organization, the International Fund for Public Interest Media (which financially supported the OECD DAC study but played no role in data collection or analysis), was created to address these challenges. As a multilateral fund that pools contributions from a large and diverse group of donors, it is designed to channel funding to media outlets quickly and at scale, without compromising the editorial independence of the newsrooms it supports.

    Equally important are the other global, regional, and local organizations that help strengthen the capacity of independent media, advocate for press freedom, and push for regulatory reform. The International Fund was set up to work in synergy with these entities.

    All of these initiatives are ready to scale up their support. But they need more resources. They must also work together to make media support a more central part of political discussions related to foreign policy and international development. Working together, we can urge government decision-makers who have leverage over ODA spending to increase support for this critically important area. This can be achieved by amplifying constructive voices and broadening the coalition of actors supporting independent media, particularly by connecting journalism’s plight to other high-profile problems such as disinformation and corruption.

    Looking ahead, artificial intelligence will fundamentally alter the information ecosystem, making investment in journalism even more critical. With enough funding, independent news outlets will be able to develop the tools and the capacity to deploy new technologies in the service of the public interest, rather than being left behind – as they were after the rise of social media. If OECD donor countries increased their support for media from 0.2% to 1% of total OAD – a relatively small increase, given the scale of the challenge – more than $2 billion would be available for the sector globally.

    Western countries have been lamenting the crisis in independent media for over a decade now. But foreign-aid spending on journalism has remained flat over that period. The world has changed drastically in the last ten years, and a shift in donor strategy is long overdue. Now is the time to save independent journalism. The longer we let disinformation thrive, the less likely it will be that democracy survives.

    Copyright: Project Syndicate, 2024.
    www.project-syndicate.org

    Main photo by rawpixel.com on Freepik

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

    Workshop Proceedings: “60 Years On: What Future for Mauritius’ Electoral System?”

    By
    Charles Telfair Centre
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    Charles Telfair Centre, July 2023 

    The question of electoral reform in Mauritius has been on the political agenda for the last 22 years. Since 2002, various commissions have examined potential implementations, including the Sachs Report (2002), the Select Committee Report (2004), the Carcassonne Report (2011), the Sithanen Report (2012), and the Consultation Paper on Electoral Reform (2014). In 2018, a constitutional amendment bill aimed at enhancing fairness to parties and gender representation was tabled by the government. Despite these efforts, no substantial electoral or constitutional reform has ever been enacted. On the eve of general elections, electoral reform remains a pressing issue for Mauritius.

    To address this complex topic, the Charles Telfair Centre convened various stakeholders from both the public and private sectors at its recent workshop, “60 Years On: What Future for Mauritius’ Electoral System?” 

    Held on July 3rd at Charles Telfair Education, Moka and moderated by Rabin Bhujun, the event provided a platform for productive discussions on transparency, gender and ethnic representation, and misinformation within the electoral process. Expert insights from Dr Rama Sithanen, GCSK and Electoral Commissioner Irfan Abdool-Rahman, GOSK fuelled the debate and helped identify pathways for successful electoral reform.

    This brief highlights the key outcomes of the workshop.

    Electoral Process

    Mauritius employs a First-Past-the-Post (FPTP) electoral system across 21 constituencies, where the three candidates (and 2 for Rodrigues) with the most votes are elected to the National Assembly, totaling 62 directly elected members. Up to eight more members can be appointed through the Best Loser System (BLS), which aims to correct gaps in ethnic and religious representation. The BLS allocates seats based on community and religion, with the Electoral Supervisory Commission proposing a list of best losers—candidates with the highest number of votes who finished fourth in their constituency. From this list, up to eight are chosen to ensure fair representation of all communities in Mauritius.

    This system has served the country since the legislative assembly elections in  1967 and has contributed to political stability. However, nearly 60 years on, some flaws have become apparent, including poor fairness to parties, dismal gender representation in the National Assembly, and the division of the Mauritian population along ethnic lines. The workshop aimed to envision a way forward by addressing these imperfections while building on the system’s strengths.

    Strengths of the Current Electoral System

    “We might say that a change in the system is overdue, but it is important to take note of what currently works.”

    Electoral Commissioner Irfan Abdool-Rahman highlighted the strengths of the current system, particularly the independence of the the Office of the Electoral Commissioner, which has always operated without any interference from the executive branch or prime ministers: “We have worked in total independence”.

    Over the years, significant progress has been made in enhancing transparency, including the introduction of vote counting on the wall in 2013, identification requirements for voters in 2014, real-time delivery of results in 2019, and same-day vote counting for the Village Council elections in 2020 and Rodrigues Regional Assembly elections in 2022.

    Dr Sithanen emphasised the stability and decisiveness of Mauritius’ electoral process, noting that its effectiveness in decision-making reinforces the country’s political stability. He also commended the system’s ability to avoid single-issue parties and protect voter choice. Despite these strengths, areas for improvement remain, particularly concerning accountability of politicians, socio-demographic representation, and fairness to parties.

    Areas of Improvement

    Fairness to Parties: One main concern was reconciling stability with fairness. The current system provides political stability but fails to ensure proportional fairness between vote share and allocated seats. This was attributed to the FPTP system and the politico-cultural legacy of the country, which resists change that might challenge the status quo: “People don’t want change if that change could be a challenge to them” shared one participant. A lack of political knowledge among the population of the current plurality voting system, the collective belief that what is best for the party is also best for the country, and politicians vested interest all hinder reforms that would align votes with seat allocation. Finally, the ability of the prime minister to set election date with limited constraints put the ruling party at an advantage.

    Accountability of Politicians: Participants identified a lack of accountability among politicians: “What happens before dissolution of parliament in Mauritius is gross misconduct”, one participant claimed. It was recommended that political leaders recognise that free, fair, and credible elections where they are accountable for their promises and actions should apply throughout the entire government term, not just during election periods. The lack of technical skills and competence of appointed ministers was also flagged as a significant flaw of the current system.

    Diversity of Representation – Ethnic Representation: The “rainbowness” of representation in the National Assembly, mainly afforded by the BLS, was praised but also critiqued: “There has been a significant increase in ethnic representation, but this comes at a price” noted one participant. The BLS requires the division of the Mauritian population into three ethno-religious groups and a fourth residual group (Hindu, Muslim, Sino-Mauritian, and General Population), which risks entrenching ideological and cultural fragmentation. Additionally, this categorisation fails to capture nuances within the groups, raising questions about the extent of minority representation. The discussion unveiled strong controversy about ethnic representation. While some members argued for a new population census, others strongly advised against it: “We need to avoid redoing a population census. We would not be able to stop the list containing more than eight ethnicities.”

    Diversity in Parties: A lack of diversity in political parties was noted, with the political landscape dominated by two major families since independence. “In the last campaign, 67 parties presented for the elections. These parties grow like mushroom just around elections times and disappear right after”, one participant noted, “new parties want to get in the race without putting in the effort.” The dearth of commitment from potential new candidates and the rift between the political establishment and the youth were identified as barriers to new party emergence.

    Diversity of Representation – Gender Representation: Mauritius ranks last in Africa for women’s participation in politics, a major concern among participants. The low rate of female inclusion was noted as “an absolute disgrace,” attributing it to patriarchal values and the reluctance of male decision-makers to enhance women’s participation. The discussion raised whether gender inclusion should be imposed by law or implemented democratically.

    Transparency and Misinformation: The current method of voter registration was seen as lacking transparency. While the Electoral Commissioner reassured that the system captured 98.4 % of people who were eligible to be registered (18 years old and above) in the 2023 voter registration round, concerns were raised about the effectiveness of the door-to-door enrolment due to cultural and lifestyle changes.

    Enhancing transparency through same-day vote counting was also suggested, though resistance from trade unions to have civil servants working around the clock poses a challenge.

    Misinformation and “fake news” undermine public trust in the electoral system. Social media channels, particularly Facebook, were identified as platforms for propaganda. Participants emphasised the need for political parties and the media to avoid propagating false information.

    Recommendations

    The workshop identified key pathways for electoral reform, drawing on best practices from around the world and insights from academic literature.

    Accountability: To enhance political accountability, participants proposed the establishment of a bicameral system with a senate. This upper house would facilitate more in-depth debates and ensure that ministers are held accountable throughout their tenure. Such a system is successfully employed in countries like France and the United States, where the senate acts as a check on the executive branch.

    Additionally, workshop participants advocated for technocratic governance where appointed ministers may not necessarily be elected officials but chosen based on competence rather than loyalty. This would not only enhance the competence, expertise, and efficiency of the executive branch of government, but by having ministers who are not part of the legislative body, the executive branch will be able to function with a degree of separation that might reduce conflicts of interest and enhance overall accountability.

    This approach is supported by the literature on good governance, which emphasises the importance of merit-based appointments in enhancing governmental efficiency and public trust.

    Ethnic Diversity: The workshop discussions recommended “de-ethnicising” the Constitution to promote nation-building and avoid social fragmentation. This approach aligns with the experiences of countries like South Africa, where the proportional representation (PR) system have effectively subsume the need for a specific ethnic representation system.

    However, maintaining ethnic inclusion while de-ethnicising remains complex. Some proposed to retain three-member constituencies to ensure balanced candidate slates and implementing a proportional representation (PR) list to complement subsume the Best Loser System (BLS). The electoral systems, used in countries like Germany and New Zealand, combine FPTP and PR to ensure that the number of seats won by a party properly reflect the number of votes received..

    Diversity in Parties: To attract new talent, participants suggested collecting data on youth voting patterns to understand the disconnect between young voters and the political establishment. This approach is mirrored in the practices of countries like Canada, where extensive youth engagement initiatives have been implemented to increase political participation among young people.

    Inspired by the Seychelles’ electoral system, a proposal for two-term mandates for appointed governments was discussed. Although challenging to implement, this approach could ensure more frequent accountability and responsiveness of elected officials to the electorate’s needs.

    Gender Representation: To address the low rate of female participation in politics, it was recommended to enable legislation to favour gender representation such as restricting funding to political parties that do not meet gender representation standards. Legislative incentives have been effective in countries like Rwanda, where gender quotas have resulted in one of the highest percentages of women in parliament globally.

    However, overcoming deep-seated patriarchal values requires significant cultural and structural changes. Comparative studies suggest that educational campaigns and targeted support for female candidates can enhance women’s political participation.

    Transparency and Misinformation:

    Voter Registration: Participants recommended establishing an online registration system to improve transparency and accessibility. Continuous voter registration, despite requiring constitutional amendments, was also suggested. Such systems are in place in several democracies, including Sweden and Norway, where continuous registration ensures that voter lists are always up to date and accurate.

    Same-Day Counting: To enhance transparency, the workshop participants recommended implementing same-day vote counting. While this method faces resistance from trade unions, it has been implemented in countries like India, where logistical arrangements ensure that results are available in a relatively short time frame, thereby boosting public confidence in the electoral process.

    Misinformation: Addressing misinformation, particularly on social media, was identified as crucial. Participants emphasised the responsibility of political parties and traditional media to avoid spreading false information and exercise systematic facts-checking. This approach aligns with practices in countries like Finland, which has implemented comprehensive media literacy programs to combat misinformation and educate the public on identifying fake news.

    The current electoral system of Mauritius has contributed significantly to the nation’s political stability and inclusive representation, and as the nation grows, and the global context changes we have the opportunity to consolidate and update our electoral system. By embracing electoral reform, Mauritius stands poised to enhance fairness, accountability, and representation, thereby solidifying its status as a modern, democratic nation-state dedicated to the principles of equity and transparency. This journey towards reform promises not only to strengthen the democratic fabric of the nation but also to inspire confidence and trust in the electoral process among all Mauritians.

    Main photo by Charles Telfair Centre

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

    Why the tropical majority is key to creating effective ocean solutions at COP28, and beyond

    By
    Charles Telfair Centre
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    Josheena Naggea, Hoffmann Fellow, Innovation for Small-Scale Fisheries and Aquaculture, World Economic Forum

    Alfredo Giron, Head of Ocean, World Economic Forum Geneva

    Ana Spalding, Director of the Adrienne Arsht Community-Based Resilience Solutions Initiative & Staff Scientist Smithsonian Tropical Research Institute, Nippon Foundation Ocean Nexus Principal Investigator, EarthLab, University of Washington

    • Ocean solutions will be among the subjects of discussion at COP28, but those most affected by climate change are often underrepresented during these conversations.
    • The ‘tropical majority’ must be adequately represented to help ensure that more adapted solutions are coming ‘from the tropics for the tropics’.
    • By recognizing the expertise of Indigenous people and local communities, we can shift the global conversation from tropical crises to tropical opportunities.

    Leaders from across the world will convene to discuss ocean and climate solutions at the United Nations’ climate conference, COP28. However, all too often, the voices of those most affected by climate change are underrepresented.

    People in the tropics, or the ‘tropical majority’, encompass billions of voices living in the most biodiverse regions of the world, who often have intricate connections to the ocean, as well as geographic extent and deep knowledge of ocean ecosystems.

    Indeed, what we may typically refer to as small island developing states are, in fact, large ocean states. Mauritius, for instance, has an ocean area 1,000 times its landmass and is also a biodiversity hotspot where marine species face extinction risks.

    However, like many other island states, Mauritius also faces climate impacts – from rising sea levels to an increasing frequency of disasters.

    Talk must shift from tropical crises to tropical opportunities

    With global climate discussions set to be held during COP28 in the United Arab Emirates, we must push the conversation from tropical crises to tropical opportunities.

    Large ocean states often make multiple efforts to develop their ocean economies sustainably and equitably, and leaders, experts, knowledge-holders, and communities from the tropics possess a unique understanding of the ocean’s intricacies.

    Better inclusion of the tropical majority would, therefore, ensure that more adapted solutions are coming ‘from the tropics for the tropics’ for greater resilience in the face of climate change.

    Here are four actions that can help bring a tropical majority lens to achieving tangible ocean sustainability solutions.

    1. Centring equity in ocean science and governance

    Ocean science and governance have long been dominated by institutions and researchers from developed nations. To achieve ocean sustainability, we must redress power asymmetries and take intentional steps toward equity, ensuring that researchers, experts and decision-makers from tropical regions are actively involved in shaping ocean policies and governance initiatives.

    This can be achieved through international collaborations, joint research programmes and funding opportunities that prioritize the inclusion and support leadership of tropical researchers across temporal and geographical scales and sectors.

    Governance approaches must also ensure accountability for historical impacts on tropical coastal states and, through programmes such as the climate loss and damage funds, make sure that future funding and benefits are equitably distributed.

    There is also a need to formalize existing and potential hybrid systems of governance – for instance, beach management units help co-manage fisheries resources in coastal areas in East Africa.

    By acknowledging, empowering and supporting the unique expertise and experiences of the tropical majority, especially Indigenous peoples and local communities, we can foster a more comprehensive understanding of ocean dynamics, vulnerabilities and solutions.

    2. Reconnecting people and the ocean

    For many communities in tropical regions, the ocean is an integral part of their cultural identity and livelihoods.

    Reconnecting people with the ocean requires ensuring access to ocean resources and coastal areas through reversing privatization and degradation and stopping top-down, exclusionary “fortress conservation”.

    By integrating traditional ecological knowledge into scientific research and management strategies, we can enhance our understanding of marine environments and identify sustainable practices that have been successfully employed by local communities for generations.

    This mutual exchange of knowledge also strengthens community resilience, fosters stronger local stewardship of coastal and marine areas, and supports livelihoods highly dependent on the ocean like small-scale fisheries and coastal tourism.

    3. Redefining ocean literacy

    Ocean literacy should not be limited to scientific jargon accessible only to experts. It must be redefined to encompass a broader audience, including local and Indigenous knowledge and practical ocean wisdom.

    In tropical regions, where communities often live near the ocean, enhancing ocean literacy can inspire ocean stewardship. Educational programmes can communicate ocean science in a culturally relevant, safe, and accessible manner and help more tropical residents discover the beauty and importance of coastal and marine ecosystems and resources.

    Engaging storytelling, art and traditional knowledge can be powerful tools to inspire the next generation of ocean stewards and encourage broader public support for sustainable ocean policies.

    4. Decolonizing ocean science

    Historically, the study of ocean science has been influenced by colonial perspectives that disregarded the wisdom and practices of Indigenous and local communities.

    Decolonizing ocean science involves recognizing and rectifying these historical injustices, building equitable partnerships with Indigenous and local communities, respecting their rights and knowledge, and ensuring that research conducted and data collected from tropical regions includes and benefits these communities directly.

    This requires concerted efforts to build capacity for all relevant parties to understand and interact with data and the knowledge generated from it.

    Building better solutions for global ocean challenges

    By centring equity in ocean governance, reconnecting people and the ocean, redefining ocean literacy, and expanding ocean science to encompass all knowledge systems and approaches, we can better build solutions to pressing ocean challenges.

    We must decolonize science while broadening the scope of who leads, who participates, and who benefits. Being aware of power dynamics at play at multiple scales can help ensure we are not drowning out the tropical majority in discussions pertaining to solutions in the ocean-climate nexus.

    Incorporating tropical perspectives in ocean science and governance is not solely a moral and ethical imperative; it is also a pragmatic approach to achieving sustainable and tangible solutions for ocean sustainability.

    It is high time to recognize the invaluable contributions and expertise of the tropical majority, understand why their voice matters in ocean sustainability, and work together towards a shared goal for a healthier, more resilient, and sustainable ocean for all.

    Josheena Naggea is a visiting scholar at the Charles Telfair Centre. 

    This article is republished from the World Economic Forum. Read the original article.

    Main photo by lex on Flickr

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

    Floating solar panels could provide much of Africa’s energy – new research

    By
    Charles Telfair Centre
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    Iestyn Woolway, NERC Independent Research Fellow, Bangor University

    Alona Armstrong, Professor of Energy & Environmental Sciences, Lancaster University

    New research has found that several countries could meet all their energy needs from solar panel systems floating on lakes. Climate, water and energy environmental scientists R. Iestyn Woolway and Alona Armstrong analysed how much energy could be produced by floating solar panels on just 10% of the water surface of one million bodies of water globally. They found that Ethiopia and Rwanda could generate more energy than their current national energy need from the floating energy systems alone.

    How do floating solar panels work?

    Also known as floating photovoltaic systems, these are solar panels mounted on structures that float on water bodies like lakes, reservoirs and ponds.

    Floating solar panel systems use pontoons or rafts to keep the solar panels afloat. These floating structures are anchored or tethered to the edges of the water bodies to ensure stability. The systems can be designed to withstand varying water levels and weather conditions, including storms.

    About five million  square kilometres of Earth’s surface area (or 3.7% of the Earth’s surface that isn’t covered with ice) is taken up by lakes and reservoirs. Solar panel systems could be floated on many of these surfaces.

    Just like solar panels mounted on buildings or the ground, the floating systems convert sunlight into electricity using photovoltaic cells. The generated electricity is then transmitted to the grid or used locally. Being on water helps keep the floating solar panels cool, and they produce more electricity than land-based solar panels and may last longer.

    Floating solar panel systems are used by countries that do not have a lot of land available but do have large and numerous water bodies. Ghana recently installed the largest floating solar panel system in Africa on one of its reservoirs.

    We used a tool called the Global Solar Energy Estimator to help us calculate how much energy solar panels could generate in over 1 million water bodies around the world. We gathered data about sunlight and air temperature and specific details about the solar panels. Using satellite images of the water bodies, we worked out which parts of the water could be covered by solar panels.

    We did not include water bodies that dry up, freeze over for more than six months a year, are situated within a protected area, and are more than 10km from a population centre. We also limited the size of the floating solar systems, taking potential technical and environmental constraints into account.

    What are the advantages of floating solar systems for African countries?

    Our research found that Rwanda and Ethiopia could generate far more energy from these systems than they currently use. Rwanda could generate 237% of its current total energy needs, and Ethiopia 129%. Chad could generate 73% of its current energy need from floating solar systems alone. Mali, Madagascar, Malawi, Uganda, the Democratic Republic of Congo and Togo could generate between 15% and 58% of their total energy demand from floating solar panels.

    We also found that there are 1,977 water bodies across Africa that could be used to float solar panel systems. This would spare the land that would otherwise be needed for land-based solar panels.

    Floating solar panels can also help reduce water evaporation from lakes and reservoirs. This would benefit water scarce countries in Africa.

    Another benefit is that the panels shade the water and this can reduce harmful algae blooms – mats of toxic bacteria – growing on the surface of the water, destroying water quality and aquatic life. This can improve the health of water bodies and reduce water treatment costs.

    Floating solar panel systems can also be set up in rural, remote or off-grid areas that have never had a regular supply of electricity before.

    What are the hurdles?

    African countries will need to address these problems if they want to make full use of floating solar panel systems:

    Grid connectivity and infrastructure: Many regions in sub-Saharan Africa have limited or unreliable grid connections. The grids need to be improved if these countries are to make full use of the electricity generated by floating solar panel systems. If expanding the centralised grid is too expensive, off-grid solutions such as mini-grids near the water bodies need to be developed.

    Regulatory and policy support: Governments will need to encourage the development of floating solar panel projects, including incentives, subsidies and streamlined permitting processes. They’ll also need to set up strict regulations, including environmental and safety standards.

    Environmental considerations: Thorough environmental impact assessments will need to be carried out to avoid any potential negative effects on aquatic ecosystems and water quality.

    Social considerations: Engaging with local communities to gain their support is very important. It is critical to take into account how communities use the water body. The aim should be to ensure that everyone benefits from the energy generated in an equitable way, and that “green grabbing” – where nature is sold to set up green energy systems, disadvantaging indigenous people – is avoided.

    What else did you learn from your research?

    Many countries have large water bodies, a lot of sun and serious problems with water evaporation and algae blooms. Floating solar panel systems can address these environmental problems and create low carbon energy at the same time.

    The potential benefits are promising. But more research is needed to understand their environmental impacts and optimise their design and implementation. This includes studying the long-term effects on aquatic ecosystems and water management practices.

    Why is solar so important?

    Solar energy generation produces minimal greenhouse gases compared to conventional energy sources like coal and natural gas. This helps combat climate change and reduce air pollution. By using solar power, countries can reduce their reliance on imported fossil fuels, and enhance energy security and economic stability.

    Solar energy has also become more and more affordable. The world is aiming to achieve Net Zero – an end to all carbon gas emissions – by 2050. Floating solar panel systems can contribute to reaching this goal.The Conversation

    This article is republished from The Conversation under a Creative Commons license. Read the original article.

    Main photo by Hermann Unnsteinn on Flickr

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s). 

    The Right Industrial Policy Is Knowledge Policy

    By
    Charles Telfair Centre
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    Tanos Santos, Professor of Finance at the Columbia Business School

    Luigi Zingales, Professor of Finance at the University of Chicago

    Industrial policy is back in vogue. After decades of eschewing the use of market-shaping policy tools like tariffs and subsidies, many Western governments have embraced them, spurred by the COVID-19 pandemic, which exposed vulnerabilities in global supply chains, and by broader fears about Chinese technological and commercial dominance, which could cost the West countless well-paying jobs. If these efforts are to succeed, however, an emphasis on knowledge is crucial.

    Industrial policy has a poor track record in the West. When postwar governments tried it, they usually failed to achieve their goals, because they supported industries with no viable path to profitability. By the 1970s and 1980s, they abandoned industrial policy altogether. But if we view industrial policy as knowledge policy, its comeback can succeed.

    An effective knowledge policy would focus less on creation of knowledge than on its diffusion. While innovation is clearly valuable, it is also expensive and challenging, requiring a particular combination of conditions that is often difficult to ensure. Not every country can realistically aspire to be a technological frontier. But a country does not have to produce cutting-edge innovations of its own to be able to reap the benefits (including higher productive capacity, greater wealth, and stronger military capabilities) of new processes, methods, and ideas produced elsewhere.

    Knowledge diffusion – which depends on both access to knowledge and the ability to absorb it – is the key to a prosperous society. The German and Japanese economies recovered rapidly after World War II largely because, while their physical infrastructure was in ruins, their stock of knowledge was intact. Both countries had a cohort of engineers, doctors, scientists, and managers capable of absorbing, spreading, applying, and building upon the advanced knowledge brought by occupying American forces.

    Recognizing the value of such knowledge transfers, one might ask why the state needs to get involved. The answer is that knowledge diffusion is the quintessential externality. When an individual or a firm invests in knowledge, it typically captures only a fraction of the returns: knowledge acquisition often brings far higher social returns than private gains. This explains why the state has long supported and incentivized knowledge production, such as by creating a patent system and strengthening education.

    An effective knowledge policy must include both domestic and international components. On the domestic front, it requires a targeted education policy, subsidies encouraging local actors to import knowledge, and a flexible intellectual property (IP) framework, which strikes the right balance between motivating innovation and encouraging its diffusion. Countries that are far from the technological frontier are better off with lax IP regimes, such as the one that enabled India to build a thriving pharmaceutical industry. (Membership in the World Trade Organization has since driven India to adhere to stricter rules).

    In a geopolitically fragmented world, such domestic measures must be complemented by free-trade zones to facilitate knowledge-sharing among partner countries. These zones would allow for specialization in some areas, but not in all. Economists’ obsession with comparative advantage notwithstanding, this is not necessarily a bad thing. After all, a country at the technological frontier – or close enough that it can continue to absorb new knowledge – is likely to be a more productive and prosperous economic partner.

    When it comes to importing technology, countries should erect barriers only in sectors where catch-up is both achievable and desirable (the same sectors where direct subsidies might also be justified). In this sense, the United States and the European Union have much better reason to invest in strengthening their domestic semiconductor industries than India, which is so far behind in this area that any resources spent on catching up are probably wasted. But even the US risks failing to achieve its semiconductor ambitions, unless it also implements an education policy that encourages the study of engineering. Taiwan leads the world in semiconductor production thanks not only to its vast knowhow, but also to its appropriately educated workforce.

    But even for an economy with the right capabilities, if too many of its peers are trying to catch up in the same area, the costs of the strategy will rise, and the probability of success will drop. This brings us to another reason why free-trade zones are useful: they can facilitate policy coordination, at least among allies. India would be far more willing to abandon its semiconductor ambitions if it knew it could rely on a steady supply from a trusted partner.

    To be sure, that partner might make demands of its own – say, for India to strengthen its IP enforcement, which would be very costly. But, in today’s tense and divided world, such trade-offs are practically inevitable. A sensible knowledge policy must recognize the constraints under which allies operate.

    Western governments are bringing back industrial policy at a particularly fraught moment. Strategic considerations cannot be ignored, as they were during the decades when globalization was progressing rapidly, and Pax Americana remained firmly in place. Instead, leaders must rise to the challenge and devise sophisticated industrial-military strategies – including knowledge policies – that account for a wide range of risks, objectives, and pressures.

    Copyright: Project Syndicate, 2024.
    www.project-syndicate.org

    Main photo by CDC on Unsplash.

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

    Mauritius’ next growth phase: a new plan is needed as the tax haven era fades

    By
    Charles Telfair Centre
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    0

    Pritish Behuria, Senior Lecturer in Politics, Governance and Development, Global Development Institute, University of Manchester

    Mauritians will head to the polls by November 2024 and politicians are considering the economic direction of the island country.

    For the last two decades, the country’s economic growth has depended heavily on its offshore sector – the provision of financial services by banks to foreign firms.

    As an isolated country located in the south-western Indian Ocean, Mauritius has linked itself to global financial sectors by easing the flow of capital into and out of its economy. It has signed double taxation avoidance agreements with other countries, and its capital gains taxes are attractively low.

    Through double taxation avoidance agreements, foreign entities can establish funds in locations outside their home countries, to take advantage of lower taxes.

    But recent initiatives have dimmed prospects for the offshore sector. For instance, the OECD’s (the Organisation for Economic Cooperation and Development) multilateral convention to implement tax related measures significantly limits the incentives available under double taxation avoidance agreements.

    As a political economist, I take an interdisciplinary approach to studying development challenges in today’s connected world. My work examines how countries with relatively little economic power manage domestic and external forces to achieve economic transformation.

    Tax haven strategies have allowed countries such as Mauritius to gain huge amounts of foreign exchange. But in a recent paper I argue that these strategies may not have the same appeal in years to come. This leaves Mauritius at a crossroads once again.

    The Mauritian government has previously found ways to diversify its economy during times of crisis. First, from sugar to industry. Then to tourism. Later to the offshore sector. Now there is talk of investing in the blue economy, but there are few signs that a clear strategy has been defined. With offshore revenues threatened, the Mauritian economy may soon struggle to identify new sources of foreign exchange.

    Diversified economy

    Mauritius is Africa’s most widely celebrated democratic developmental state – held up as a shining example. It transformed itself from a country with a per capita income of US$260 in the 1960s to one with a per capita income of more than $10,000 in 2021.

    At independence in 1968, observers had little hope for the Mauritian economy. Nobel Prize winner James Meade predicted a tragic future for the island nation. He cited sugar dependence, population density and diverse ethnic composition as its weak points.

    Yet Mauritius has defied pessimistic predictions and conventional economic theory. It has become among the most diversified African economies.

    In the 1970s, economic development was largely focused on industrialisation to reduce dependence on imports. While there was minimal growth in exports, manufacturing employment grew from 5% to 20% of the labour force over the decade. But as sugar prices fell in the late 1970s, the Mauritian economy plunged into crisis.

    In the early 1980s, Mauritius adopted reforms, adhering to conditions set by the International Monetary Fund and the World Bank. The government decided to go further than simply liberalising its financial sectors and reducing capital controls. Against the advice of multilateral donors and foreign governments, Mauritian politicians decided to build an offshore financial centre.

    In the late 1990s and 2000s, Mauritius was widely celebrated for rapid economic growth and diversity. This came from special economic zones (promoting textiles and apparel growth), tourism and the offshore sector.

    For decades, African countries have sent government officials on study tours to learn from Mauritian success.

    But like most late developing countries (or former colonies), Mauritius is still heavily reliant on imports. Its offshore sector has provided vast amounts of foreign exchange to buy imports. If offshore sector revenues dry up, Mauritius might have to apply to the International Monetary Fund for loans.

    Mauritius as a tax haven

    In my paper, I describe the evolution of Mauritius as a tax haven. It started with strategic state involvement. The Mauritian government amended its banking legislation to offer lower taxation and exemption from exchange control.

    Its tax treaty with India soon became the most significant avenue for the development of Mauritius’ offshore businesses. An increasing number of Indian funds moved their businesses to Mauritius to take advantage of tax benefits.

    Similarly, Mauritian entities have been the leading investors in India since 2000. Mauritius-based funds have invested around US$170 billion in India this century. But things are changing. There are signs that funds are now selecting Singapore (as well as other competitors to Mauritius) as the preferred destination for investments.

    India’s response to the OECD’s convention to implement tax related measures has gone further than many other countries. The Indian government agreed to remove the capital gains exemption that entities held in Mauritius had enjoyed over the years. By 2018, Singapore had overtaken Mauritius as the leading investor into India.

    In March 2024, India and Mauritius amended their double taxation avoidance agreement to comply with the OECD’s measures. Among the changes, firms do not qualify for tax incentives if the principal purpose of their transaction is simply to avoid tax.

    What next for Mauritius?

    The new amendments to the double taxation agreement are likely to constrain the growth of Mauritius’ offshore sector. The financial sector has not transformed beyond providing basic services like fund administration. This is unlike other more diversified financial sectors like Singapore, which specialises in capital markets, foreign exchange, commodity trading and corporate banking, aside from fund administration.

    With foreign firms recently buying some of Mauritius’ biggest offshore management companies, there are signs that Mauritian banking will be relegated to simply doing basic work for larger financial centres. It is likely that overall revenues and foreign exchange from the sector will reduce.

    Focusing resources on a new pillar for Mauritian growth is more urgent than ever.

    In the last few years, Mauritian political discussions have been characterised by questions over Prime Minister Pravind Jugnauth’s authoritarian turn, as well as accusations of corruption, nepotism and cronyism. The nation will have to reach a new political and economic consensus to avoid future economic difficulties.

    Main photo by Stephen Dawson on Unsplash

    This article is republished from The Conversation under a Creative Commons license. Read the original article.

    Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

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