Arabian Business Consultants for Development

14/11/2020

The Rise of Platforms and the New World Order
Fascism is a political system in which governments are directed and driven by economic interests. As such, the political entities which are governments, serve the narrow interests of a national ruling economic class, not the interests of their citizens, whom governments imply that they serve. Today, the most dominant global businesses provide platforms for users (citizens) from around the world to exploit and benefit from.
These global businesses are not physical. These businesses are virtual and as such do not have loyalty to a geography, a political system or a ruling political elite. These business have established their own policies and procedures which provide a virtual (legal framework) for their users (citizens) to use and prosper from. As these platform-based global businesses continue to grow they will may displace the nation state as a governing framework for humanity.
Evolution of Governments:
To understand how governments have evolved, one must understand the economic systems they were derived from.
Hunters and Gatherers: Human beings all around the world, were initially hunters and gatherers. People hunted animals for food and foraged for food (nuts, berries, vegetables, etc.) from the immediate land to sustain themselves. Being close to water resources was extremely important. Society was highly decentralized, as any given geographic areas could only support a specific number of people for a specific amount of time. As such, people formed into small groups, or tribes, and constantly moved about in search for the next meal. The natural wealth of the land which people inhabited or moved through (in terms of wildlife and plant resources) determined the size of the tribe or group. As these groups were transient and mobile, the group protected itself by itself and was self-governing.
The Agricultural Revolution: As humans evolved they began identifying patterns in life such a growing seasons and the reproductive cycles of animals. Humans began organizing themselves to exploit these patterns. As such, human settlements began forming around arable land and water resources.
Production of agricultural and animal output was related to land, water resources and labour (human and animal). For the first time in human history, humans were able to plan and execute production based on knowledge of growing seasons and animal reproductive cycles. Human survival became organized. Food surpluses were generated for society, enabling societies to start specializing in other economic functions (handicrafts, clothing, building, basic tool manufacturing, etc.). Regular and consistent food surpluses led to the growth of settled communities as well as to the commoditization of food and other organized essential outputs.
Humans became increasingly sedentary because they became associated with specific geographies. This occurred because the value of fertile land, water and animal resources related to a specific geography became increasingly obvious to society. This was very different from the mobile and nomadic nature of the hunter gatherer.
Specialization of labour and the labour intensity of various economic activities required that society organize itself beyond the tribe into geographic communities. These new human settlements had to take into consideration the societal value of land and resources for the survival of the community. As such, and because land had an organized and productive value, the issues of law, legal enforcement within the community became important as well as protection from raiding hunter and gatherer tribes. This led to the rise of governments and the organized relationship between citizens and a governing or organizing class. Productive citizens sacrificed certain rights and functions to enable an organized governing class to provide protection and administer organizational affairs of society. This was the first social contract.
The agricultural revolution can be characterized by increased use of knowledge in agriculture and basic manufacturing as well as the development and use of specialized organizational knowledge to organize increasingly large land holdings, markets to sell generated surpluses and knowledge to administer the affairs of society and protect the community. This was the start of the nation state.
The nation-state, a political model integrates two principles:
1. The principle of state sovereignty: This was first described in the Treaty of Westphalia (1648), which documented the right of states to govern their geographic territories without foreign interference.
2. The principle of sovereignty, which recognizes the right of national communities to administer/govern their own affairs. Sovereignty is based on principle of popular sovereignty. The sovereignty of states/nations belong to their people. Thus, the legitimate rule of a state requires the consent by the governed.
As such, nation states oversaw and governed the development of their own individual national economies. Agriculture, land and natural resources and human and animal labour remained the fundamental basis for economic activity and national wealth until the mid-1700s. Nation states established and organized institutions to carry out these duties and to improve the productivity of the productive class (canals, rudimentary roads, courts, markets, etc.). The governing class imposed taxes on the productive class to enable them to provide security and administer affairs of the productive class.
The industrial Revolution: The industrial revolution started sometime in the 1760s in Great Britain. This revolution was characterized by the use of steam power, the rise of factories and the mass production of goods. Industry arose not only because of new power sources (steam, petroleum then electricity) but also because of improvements in organizational skills and capabilities. Improvements in organizational capabilities enabled surpluses to be generated in areas once dominated by low volume production artisans and craftsmen.
Industrial organization led to the beginnings of the development of the managerial class. The managerial class was tasked with the optimization of resource use. Increased use of science, knowledge and data as inputs to production characterize the management class. Combined with a declining dependency on local human and animal effort because of developments in energy sources (steam, hydropower, coal and petroleum) and development of transportation systems (rail, bus, trucks, ships) industry has become less geographically centralized. Today, competitive manufacturing is executed globally, sold globally and managed globally. Competent manufacturing and has become a global economy.
Over the past five decades, improvements and advancements in information technology (IT), originally funded by governments and militaries, have permeated the fabric of industry. Additionally, the use of computers once relegated to governments, space programs and very large corporations, have become within the reach of small businesses and the average person. Thus, today, industry is highly automated, with companies such as Oracle, Baan, SAP, etc., providing IT solutions which help the managerial class improve the productivity of their companies. The increasingly low cost of computers and the rise of software as a service and the increasing prevalence of cloud computing has made access to very sophisticated managerial and enterprise planning software (ERP, CRM, etc.) much more affordable. Companies using these software services input their data and the software provides analysis and record keeping enabling and empowering management of smaller companies to take sophisticated and studied decisions similar to larger corporations. It is through these software modules or services that quality and structured management is increasingly becoming a commodity.
The Rise of Platforms: The increased prevalence of and access to IT systems, particularly web-based systems and services in combination with global manufacturing capabilities and agricultural output, has turned agriculture, manufacturing and management into global commodities. It is increasingly difficult for nations and corporations to claim and sustain competitive advantage by virtue of science, engineering, industrial organization or managerial capabilities.
Global Mega companies such as Amazon, Facebook, Oracle, Google, Ali Baba, etc., have formed global communities which operate on a single platform. Amazon had 150 million prime users in Q4 2019. Google has 2 billion users and 400million mobile device users. These platforms are creating massive new communities which are being organized by global mega companies. Platform users are required to abide by the rules and regulations established by the companies. As such, global users are increasingly becoming platform citizens. If citizens do not abide by the rules of the platform they will be prevented from using the platform. Since, manufacturing, agriculture, logistics, and management have increasingly become global commodities, it is highly unlikely that the individuals will be able to produce and prosper without platform use. This is a hostage market.
In fact, these global companies have become so large and serve such large communities, that several of these companies are considering issuing digital currencies in their name. In early 2020 Facebook was considering issuing its own digital currency. Because Facebook has 2.7billion users, any currency it issues could theoretically become the new global reserve currency. The same is true for Amazon, Google, etc. This is a sovereign move and as such could indicate the demise of the nation state. Existing nation states would devolve into becoming land lords for the physical world while global online giants would control and govern the virtual world. The virtual world does not have physical limitations and governing it will enable platform giants to harvest the intellectual and creative efforts of the globe. Ideas and creativity are mankind’s only infinite resource and it is likely to be controlled through the governance of platforms. These global giants are too large for most countries to take on and over time, they will likely dominate human development. This is the New World Order.

12/04/2020

07/07/2018

A very interesting research paper authored by an ABCD intern (Ms. Emily Silcock) this summer

Public-Private Dialogue in the Policy-Making Process

1. Introduction
This paper outlines the benefits of public-private dialogue for the policy-making progress in the context of Jordan. The following section elucidates a model of the policy-making process. The third section notes weaknesses in this process in the context of Jordan. The fourth section outlines how public-private dialogue can remedy some of these problems. The fifth section gives case studies where public-private dialogue has been effectively used to improve policy-making.

2. Modelling the Policy-Making Process
The Buck Policy Process models policy-making in five stages, each of which are outlined here. Table 1 gives an overview of the process and the key stakeholders at each stage.

Phase 1: Agenda Setting
There are a multitude of possible problems that policy-makers may decide to address. Agenda setting is the part of the policy-making process where the mass of possible problems is narrowed down to the actual problems that reach the agenda of policy-makers (the ‘decision’ agenda). Three factors need to come together in order for a policy to make it past this stage: problems (the existence of an issue to be solved), policies (the possibility of there being a solution to the problem) and politics (political will and timing to solve the problem). The Buck Policy Process identifies three different ways in which this can happen:

1. Interest groups. There is a small group of individuals (the identification group) who are affected by the problem. There are also attention groups think the issue is important whether they are affected by it or not. If they organise themselves properly, they can bring the issue to the attention of the mass public. Problems that have the attention of the mass public are on the ‘systematic’ agenda (ie. all the issues that the political community agree need to be resolved). When these issues can no longer be ignored, they make their way onto the decision agenda. The movement from the systematic agenda to the decision agenda may be partly through lobbying and partly random.

2. External Triggers. An external event suddenly puts the problem on the systematic agenda, bypassing the identification and attention groups. The process from the systematic agenda to the decision agenda is as before.

3. Discretionary Agendas. Legislators may also have their own discretionary problems that they choose to put onto the decision agenda, which have not necessarily made it into the agendas mentioned above.

Key stakeholders at the agenda-setting stage include individuals, as well as various interest groups such as NGOs and the private sector. The media might also be involved at the stage of creating issues, but they are more commonly used by other actors to influence opinion.

Phase 2: Policy Definition and Formation
Once a problem has made it onto the decision agenda, an appropriate policy is defined and formed. Policy definition refers to defining the exact aim of the policy. Policy formation is finding an exact policy solution to achieve this aim. Often these two processes are carried out in tandem.

Usually this process is achieved by bargaining between various factions of the government. In addition, the bureaucracy plays a key role in this stage by suggesting policies to the legislature and providing information on the strengths and weaknesses of proposed solutions. Media and special interest groups continue to use their influence in this stage, as they did in the previous one. At this stage, the media can be particularly influential.

Phase 3: Policy Legitimation
In tandem with the previous stage is the process of policy legitimation. Legitamy is a belief on the part of citizens that the current government represents a proper form of government and a willingness of the part of those citizens to accept to decrees of government as legal and binding. Legitimacy can be gained through:
1. Legislative process: through the fact they representatives are elected.
2. Administrative process: sometimes debated, but generally seen as legitimate.
3. The courts: the courts are particularly powerful in some countries, such as the US.
4. Direct democracy: eg. referenda or initiatives.

Phase 4: Policy Implementation
The policy implementation stage involved translating the policy goals into governmental actions. In this stage, the major actor is the bureaucracy.

There are two major reasons why this might not go to plan. The first is that there may not be the bureaucratic resources to implement the policy. The second is that there may be problems caused by poor policy design in the previous stage. Legislators often lack the technical expertise to draft legislation in the detail that is necessary for implementation. This leaves room for administrative discretion in policy implementation, which can lead to a disconnect between the intended policy and the implemented policy.

Phase 5: Policy Evaluation
Evaluation consists of two types. Formative evaluation takes place while the policy is being formulated. This allows mid-course corrections if the policy goals are being bypassed or there are unintended consequences.

Summative evaluation takes place when a policy is completed. It looks at the goals and how well the program has achieved those goals. This is dependent on how well the goals were defined in the second stage.

Evaluation can feed back into the first stage of the policy-making process if a policy is seen to be particularly effective or ineffective.

Table 1: The Buck Policy Process
Stage Definition Stakeholders
1: Agenda Setting Policy-makers decide which problems to address. Media, interest groups (individuals, NGOs, private sector etc.)
2: Definition and Formation Developing solutions to the policy problem. Bureaucracy, media, interest groups
3: Legitimation Developing the policy in such as way that citizens see it as legal and binding. Citizens
4: Implementation Translating policy goals into governmental actions. Bureaucracy
5: Evaluation Assessing the success of the policy. Bureaucracy

3. Policy-Making in Jordan
In 2012, the World Bank in association with the Jordanian Ministry of Planning published an assessment of the Jordanian public policy environment, entitled the Development Policy Review. While the Jordanian policy environment has changed over the last six years, for the most part, the key areas of weakness identified by the report remain pertinent today.

Phase 1: Agenda Setting
In terms of agenda setting, the Development Policy Review notes a lack of adherence to a comprehensive reform plan. Instead, they say policies are inconsistent, which negatively affects results and private investment decisions.

Phase 2: Policy Definition and Formation
The Development Policy Review identified two areas of weakness in the Jordanian process of Policy Definition and Formation.

First, they note a general public perception that past policies have failed, why they say implies a poor selection of policies. They state that there is a perception that the economy, corruption and government performance are getting worse.

Second, they identify a lack of genuine consultation in the policy design process. Instead, say decision-making is overly centralized and broad ownership and support of policies is weak among stakeholders.

Phase 3: Legitimation
Many of the common processes of legitimation are not available to Jordanian policy-makers. Ministerial posts are generally unelected, nor is there direct democracy or a strong court system. The lack of public willingness to accept government decrees as binding has been made apparent by the recent public reject of income tax changes.

Phase 4: Policy Implementation
A wide gap between law and actual implementation was shown by the Global Integrity Index until it was discontinued in 2011. According to the Development Policy Review, this is due to four reasons:

1. Blurred ministerial mandates and insufficient coordination among ministries.

2. Frequent changes in government and ministerial leadership, leading to changes in policy direction. During the last decade, the average term of a Jordanian government was less than 1.5 years.

3. Discretion and arbitrariness in implementation, which allows for corruption.

4. Weak technical capacity. The Development Policy Review notes an absence of functional or technical specialists who could provide analytical support and advice. They state that this is due to a bureaucratic system where promotion is not via merit.

Phase 5: Policy Evaluation
While Jordan ranks well in comparison to other ‎MENA‎ countries,‎ the Development Policy Review notes that Jordan’s ‎level ‎of ‎accountability‎ is low by international standards.

4. The Role of the Private Sector in Policy-Making
While public-private dialogue will not solve all the problems of policy-making in Jordan, it does have the potential to bring significant benefits to the policy-making process. The Public Private Dialogue Handbook argues that Public Private Dialogue, when well-implemented, can have positive impacts on all five stages of the policy-making process.

Phase 1: Agenda Setting
Public-private dialogue can lead to better diagnosis of problems, especially, although not limited to, the investment climate. In general, the private sector knows better than the public sector the effects of legislation on some issues, including the investment climate. Strong public-private dialogue can put these issues onto the decision agenda in a structured and cohesive way.

Phase 2: Policy Definition and Formation
Public-private dialogue can promote better design of policy reforms, by giving governments a sounding board. According to the Public Private Dialogue Handbook, “Governments that listen to the constraints of the private sector are more likely to devise sensible prioritization plans and workable reforms. This, in turn, can encourage investors to take a longer view and cooperate with laws and regulations. When governments and businesses are mutually mistrustful and uncommunicative, investors lack confidence and are disproportionately drawn to short-term returns and the informal sector.”

Phase 3: Legitimation
Public-private dialogue can help build an atmosphere of mutual trust and understanding between the public and private sectors, improving social cohesion and civil society, simply by bringing people together on a regular basis and allowing them to get to know each other

Phase 4: Policy Implementation
According to the Public Private Dialogue Handbook, public-private dialogue can also make policy reforms easier to implement. “When entrepreneurs understand what a government is trying to achieve with a reform package, they are more likely to accept and work with the reforms in practice. All too often, legislation may get onto the statute book but have little effect in reality because of lack of follow-through. PPD can help to ensure that reforms actually take effect on the ground, by helping disseminate awareness of the changes, feed information back, and keep up the pressure for action.”

Phase 5: Policy Evaluation
Finally, public-private dialogue can promote transparency and good governance, and create pressure of public scrutiny. Without the structured form of public-private dialogue, private advocacy tends to take a narrower form, with specific sectors lobbying for specific reforms, without a regard for unwelcome effects on other sectors. This can lead to a climate with a low level of transparency, which is vulnerable to corruption. The structure imposed by public-private dialogue enhances transparency around private interests in public policy as well as nurturing in the private sector a more rounded view of what’s good for the economy as a whole. The example of openness and scrutiny set by public-private dialogue can also have ramifications for governance of both public sector agencies and corporations, by seeking to set a standard to which the media and public may hold the participants in their other affairs.

5. Cast Studies of Public-Private Dialogue for the Purpose of Policy-Making
While there are many examples of successful public-private dialogue, the example here focus on Middle East and North Africa.

Tunisia
Tunisia launched a programme of public-private dialogues in January 2014 on a pilot basis, in four sectors/clusters: IT services, electronic components, human medicinal products, and clothing. This led to notable reforms, most recently the Startup Acts, which encourages entrepreneurship, provides access to funding, streamlines the process of creating and liquidating a business, and promotes internationalization. Among the most notable measures the law introduces are tax exemptions for startups for up to eight years, giving public and private sector employees one year to set up a new business after which they have the right to return to their old jobs, and a state-funded salary for up to three founders per company during the first year of operations. They all aim to encourage young people with limited financial resources to become entrepreneurs. Furthermore, the law promotes the internationalization of the sector by making it legal for prospective entrepreneurs to set up a foreign currency account they can use to procure materials and set up branches or invest in companies abroad.

The World Bank has identified five learning points from the Tunisian process:

1. Public-private dialogue is most productive when organized at the cluster and/or value chain level rather than at the sectoral level. In Tunisia the public-private dialogue n clothing was less successful than in the pharmaceutical sector. The reason was that focusing on a specific cluster or value chain resulted in more concrete conclusions from the dialogue, which allowed the implementation of key reforms.

2. Combining the discussion aspect of public-private dialogue with a quantitative assessment of the sector/cluster, helped discussion remain relevant and lead to appropriate solutions.

3. Flexibility in the process is necessary in order to ensure that the continuity of the dialogue produced results while mitigating the political risks. In Tunisia, the process survived five changes of government since 2014.

4. Moderation and facilitation of the dialogues requires the intervention of a credible, neutral facilitator, both during the start-up phase and for the continuity of the process. The testimony of the participants on this subject was clear: the direct involvement of the Office of the Prime Minister and the technical support of the World Bank significantly increased confidence in the process and strengthened the commitment to invest in it.

5. Transparency and external communications enhance ownership of the PPDs and reduce the risk of resistance to change. Throughout the entire process, the documents, notes, and analyses were distributed to the private and public sector participants on a regular basis.

Egypt
Egypt implemented a public-private dialogue programme in 2006. Instability since 2011 has delayed projects and in general, public-private dialogue remains weak. However, one recent promising development was the “Securing the future of Baladi bread” conference, which sought to strengthen the role of the private sector in Egypt’s grain sector. The private sector could help improve the sustainability of grain imports in the country by contributing their know-how and financial means. The conference was hosted by the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD) and brought together representatives from both the private and public sectors. Conference participants came to conclusions on streamlining tender procedures, greater transparency and consultation in the application of agricultural hygiene standards in line with international practice with the aim of encouraging investment and reducing commercial risks and the cost of financing. However, these policies have so far failed to reach the implementation stage of the public policy process.

Morocco
In 2010, the Moroccan government decided to harmonise its various initiatives for promoting investment and developing a business climate, under the National Committee for Business Environment (NCBE). The National Committee is institutionally aligned to the Head of Government and is composed of representatives of both the Public Administration and private actors.

An example of a new policy enacted under this body is the setting up of a legal framework for “self-entrepreneurs”. The benefits of holding such status include:
● Simplified procedures for business creation.
● The ability to conduct business from home, rather than having a professional place to start business.
● A reduction in taxation: 1% of turnover for industrial, commercial and artisanal activities; 2% for services.
● No taxation if there was no turnover during the year of registration.

This policy was enacted in 2015. In 2016 more than 40,000 applications for self-entrepreneurship registration were made.

In the addition to the fact that the reforms and measures adopted in CNEA have had a direct and positive impact on the Moroccan private sector, they have also contributed to improve the country's attractiveness to foreign investments and Morocco’s ranking in international reports dealing with the business environment, such as Doing Business. As an indication, since 2009 Morocco has improved its ranking in Doing Business by 60 places, from the 128th place in 2009 to the 69th in 2017.

The CNEA still faces various challenges, especially with respect to longer-term planning and strengthening the role of the private sector within discussions.

6. References and Further Reading
The Buck Policy Process
Buck, Sarah J., “The Public Policy Process” in Understanding Environmental Administration and Law (Washington: Island Press, 1996). Available from Iowa State University.

Anderson, James E., Public Policymaking: An Introduction (Boston: Wadsworth, 2011). Available from Google Books.

Policy-Making in Jordan
World Bank, “Development Policy Review: Reducing Unemployment Through Improved Growth-Enhancing Policies”, 2012. Available from Jordanian Minister of Planning.

The Role of the Private Sector in Policy-Making
Herzberg, B. & Wright, A. The PPD Handbook. (Public-Private Dialogue, 2013). Available from publicprivatedialogue.org.

Public Private Dialogue Case Studies
Sold, K., “The Tunisian Startup Act”, Sada Middle East Analysis, 26 June 2018. Available from Sada Middle East Analysis.

Dourai, R. A. & Salhab, J., “5 Lessons learned from Public-Private Dialogues in Tunisia”, Voices and Views: Middle East and North Africa, 30 November 2011. Available from World Bank.

Zgheib, N., “FAO and EBRD host public-private dialogue on Egypt’s grain sector”, EBRD, 25 May 2016. Available from EBRD.

Khalid, B., Younes, E. & Yassine, M., “Morocco / Business Environment: The National Committee for Business Environment”, 2017. Available from Public-Private Dialogue.

For more case studies see http://www.publicprivatedialogue.org/case_studies

30/05/2018

http://www.nber.org/papers/w13264

NBER Working Paper No. 13264Issued in July 2007NBER Program(s):Development of the American Economy, Economic Fluctuations and Growth, Monetary Economics, Public Economics