Brij Singh's Random Musings

Wealth of Nations Hangs on WTO Talks

Wealth of Nations Hangs on WTO Talks

Alan Wheatley, Asian Economics Correspondent has written this report on coming globalization trade issue arising due to subsidies :

Is it fair that every European cow laps up $2.50 a day in subsidies while half the people in the world live on less than $2 a day?
Cutting through the technical jargon, that is the crucial political question that trade ministers from 146 countries must answer when they meet next week in the Mexican resort of Cancun.

The gathering will assess the prospects for the World Trade Organization's Doha round of market-opening talks, launched in the Qatari capital in November 2001 and ambitiously scheduled to be wrapped up by the end of next year.

The omens could be better. True, the talks got a confidence booster on Saturday when WTO envoys in Geneva agreed after endless haggling to let poorer nations override patent rules and import cheap generic drugs to fight deadly diseases such as AIDS.

But countries remain far apart on the issue that will make or break the Doha round: how far to lower barriers to business in manufactured products, services and, crucially, farm goods.

With 70 percent of the world's poor dependent on agriculture, increasingly assertive developing nations insist they will block the Doha round unless rich states get serious about cutting farm subsidies and opening their protected markets.

"Those that have more should be in a position to listen to those that have less," says Thomas Aquino, the Philippine undersecretary for international trade.

And there's the rub.

Many independent experts as well as developing countries believe that global trade rules as they now stand, especially in agriculture, mean the rich get richer and the poor get poorer.

COSSETED COWS

Rich countries spend some $300 billion a year on farm subsidies, about six times more than on development aid. The European Union cow is not the most pampered: the average Japanese cow receives $7.50 in subsidies, according to the World Bank (News - Websites).

Japan also provides support to its cosseted rice farmers that comes out to seven times more than the cost of production.

The United States funnels more than $3 billion a year in subsidies to its cotton farmers, three times its aid to Africa.

"Agricultural trade rules are among the most distorted in the world. They tilt precipitously in favor of rich countries. The many rules that must be rebalanced in agriculture are deeply entrenched and guarded by powerful political interests in the developed world," the Carnegie Endowment for International Peace, a Washington-based think tank, concluded in a recent report.

The World Bank estimates that scrapping farm protection and output subsidies in rich countries would boost global agriculture production by 17 percent, adding $60 billion a year, or six percent, to the rural incomes of low and middle-income states.

The British-based relief agency Oxfam points to Mexico, next week's host, as an example of the raw deal the poor are getting.

It calculates that U.S. corn growers receive an effective subsidy for exporting to Mexico of $105 million to $145 million a year, more than the total household income of the 250,000 corn farmers in the poor southern state of Chiapas.

"Over the past two years since Doha we've seen business as usual -- that is, the rich countries making very few concessions on development while pursuing very aggressively their short-term interest. Cancun is the moment when that must change," said Phil Bloomer, Oxfam's head of advocacy.

GRAND BARGAIN

Any grand bargain, then, in Cancun would need to involve more radical farm reforms than proposed so far by Washington and Brussels. In return, western firms would be given easier access to sell goods and services, such as banking and telecommunications, to poor countries.

Yet there are few saints in international trade, and many developing countries are reluctant to lower their barriers even to each other. Latin America imposes average tariffs on manufactured goods from the continent that are seven times higher than tariffs in industrial nations, according to the World Bank.

"The real value-added from this round, once the EU and the U.S. have sent the right signals, is developing-country liberalization," says Razeen Sally, a trade expert with the London School of Economics.

The thousands of anti-globalization protesters expected in Cancun will disagree, but a welter of academic evidence suggests that countries open to trade and investment grow faster than those that are not. North Korea was once richer than South Korea; after 50 years of hermit economics, it is now 16 times poorer.

If the Doha round fails, Sally is optimistic the world will not relapse into destructive 1930s-style protectionism. But the WTO could become an irrelevant talking shop and trade deals would be increasingly struck between pairs or groups of governments.

Countries in sub-Saharan Africa, or the likes of Pakistan or Bangladesh, would be the big losers if that were to happen: they would either have to accept tough conditions for improved market access or find themselves driven to the margins of the world economy -- with the attendant risks of political radicalization.

Instead, under the WTO's multilateral umbrella where every country has one vote, they have the chance to work for a deal that the World Bank estimates could yield gains of $2.8 trillion by 2015, of which $1.5 trillion would go to developing countries.

"When that trickles down, it's the equivalent of raising about 300 million people out of poverty," Sally said.

Measuring services in a business context

Measuring services in a business context

Loosely Couple's analysis on Web services SLA
IT and business stakeholders have to work together to define realistic service level criteria for commercial web services:
Traditional infrastructure SLAs measure 'feeds and speeds'
Web services SLAs must measure completed business events
Blending IT and business factors requires dialog
Business managers look to SLAs for competitive advantage
Feedback from service usage fuels further development

Thoughts on RISC

I will start off my attempt to understand RISC model by asking a question - What was common between Leo Tolstoy's War and Peace and Dostoevsky's Crime and punishment ? Both were stories of human life, struggle and change. Like all great fiction both novels attempted to address the fundamentals of human life using some metaphors. War and Peace used masses as a focal point whereas Dostoevsky used individual and his thoughts as a model to address fundamental issues affecting human beings. This masses versus individual approach is a matter of choice to convey the same points. Then why choose one over the other?
That begs a question as to how important is scale in dealing with any problem. Scale is what is so critical to the success of RISC.

Atanu Dey has a provided a wonderful model of Rural Infrastructural & Services Commons (RISC) to address the problem of market coordination between different market building forces in a specific social setting. Its an excellent model which articulates the current market inefficiencies and provides a compelling argument to exploit information technology advances to raise the entrepreneurial activity for eventual market correction.

What problem RISC is solving: It addresses the market failure of coordination and attempts to introduce a market building platform which will radically bring down the information gap by facilitating the transactions between different parties. This will be made possible by the exploitation of Information and Communications Technologies (ICT) in a very scalable and affordable manner.

Working on the pareto's law, RISC model attempts to provide enough services to 5% of the rural population hoping that this entrepreunarial segment will pull the remaining 95% into more economic activity thereby initiating a chain of positive market intervention. With the assertion that a modest 10% increase in economic efficiency would mean $14billion of additional income this model makes you sit up and take note of its ambitious scale.

Personally I want RISC to happen with its current scope and scale, its so intricately tied to the formula that any attempt to remove them or "phase" them might bring some structural inconsistencies. My usecase oriented thinking says that first we need to identify all core set of economic services where person X might want to be engaged in and then go around building the infrastructural and application services to support his needs. This will have its own deterministic flow to it. To this Atanu is pointing towards projects which have attempted to work using partial and organic attempt to address this economic issue with only partial success.

RISC is compelling to me for several reasons and I am sure anybody who has a deep interest in finding models to bridge the rural and urban divide is going to be impressed by the "scale" of the project. It has that uncanny vision of removing information gap between rural and urban settings. Think of it, given equal and efficient information flow between these two social settings many of urban folks would like to move back to semi-urban (closer to rural) environments thus initiating several positive market building forces. Thats where RISC's model of creating micro-city right at the junction point has a strong chance of succeeding. It will not face any problem in evangelizing the concept. People will flock to it.

This micro-city model uses the computing platform analogy , where there are infrastructural services known as I-services which provides the foundation services such as power, telecommunication, banking etc. On top of this infrastructural services there is a provision for application services termed as S-level, which are providing user interfacing services. If we carry on with this analogy it sort of looks like RISC is proposing to build Internet using scale used by DARPA with the hope that one day Ciscos,AOLs and Ebays will make all this iron-and-fiber investment worthwhile. No reason why this cannot be accomplished, on the other hand DARPA analogy should be used as a selling point to emphasize the "already proven" models. In this model DARPA has to be a consortium run by somebody who has the similar power as Lee Kuan Yew enjoyed in Singapore.

Its main challenge would be to articulate a flexible and multi-phase plan without running into the operational risk of executing on a all-or-nothing vision. In subsequent articles I will further brainstorm on the challenges, magnets on the supply and demand side,need to build ebay effect into the model and why it must succeed.

(What are the known models which have successfully intervened in non-linear economic system as the one which is aimed by RISC. Study of those models will shed some light on the differentiating disruption which ICT brings to the equation.)

MIT Everyware

MIT Everyware

This is precisely the possibility RISC is trying to aim. With its micro-city platform sitting right at the junction of rural and urban society it can let thousands of eager minds learn the technology using distance education model. Its all about feeding the hungry mind.

Armed and Dangerous

Armed and Dangerous

Rather plain-english response by Eric to SCO's McBride on their accusation that OSI is tipped by IBM.

Why IT Does Matter

Why IT Does Matter

Rebuttal to Carr's article by two Harvard Professors -

Main points:
The most important thing that the CEO and senior management should understand about IT is its associated economics. Driven by Moore's Law, those evolving economics have enabled every industry's transaction costs to decrease continually, resulting in new economics for the firm and creating the feasibility of products and services not possible in the past. The economics of financial transactions have continually dropped from dollars to cents. New entrants have joined many industries and have focused on taking strategic advantage of IT's associated economics. Company boundaries have become permeable, organic, and global in scope through IT networks and the Internet.

Three suggestions to the CEO's -

- focused on improving cost savings and efficiencies.

- another should be focused on the incremental improvement of organizational structure, products, and services.

- another should be focused on the creation of strategic advantage through extending competitive scope, partnerships (customers and other parties), the changing of the rules of competition, and the provision of new IT-based services to extend the customer value proposition.

Its in the last category where author points out that IT will be the main driver.

Should You Sell Your Privacy?

Should You Sell Your Privacy?

Similar approach as I have been thinking where individuals have to start treating their privacy as asset and reverse the information exchange equation. More on this later.

BeepeeOO

BeePeeOO

In 2002, the business process outsourcing sector employed 171,000 people in India and brought in $2.4 billion in revenue, based on estimates by the National Association of Software and Services Companies (Nasscom).

Economy.com's forecast showed that offshore outsourcing will double that sector in India to 400,000 people in 2004 and triple the revenues to $6.1 billion. By 2008, the business process outsourcing (BPO) field will employ 1.2 million in India and haul in $23 billion in revenues.

How much of this is going to affect Silicon Valley ?

Designing IT for business

McKinsey Quarterly: Designing IT for business

Mckinsey came out with an article describing how IT systems are now get "rewired" along business functions.

Call for rehauling the IT infrastructure for business processes-

"Companies where business and technology people jointly overhaul IT systems achieve a dual objective. They not only simplify their IT architecture, making it more flexible and cost-effective, but also bridge the gulf between IT and business—the problem that lies at the heart of the poor returns from the technology binge of the 1990s. "

Decision Tools for Cost Management Tour

Decision Tools for Cost Management Tour

Interesting approach to compute IT's TCO. Still at the very qualitative level. Its very important to make this calculation as close to science as possible, any incomplete modelling will make way for subjective interpretations and short term conveniences.

Without tying Cost computation model with the operational framework its hard to calculate the hidden cost in providing IT infrastructure services.