(November 2014. Author: Bryce Young)
The debate over the relationship between global investment and the environment is shaped by differing assumptions about the nature of transnational corporations (TNCs) and the global market. This paper will examine four perspectives of thinkers who view themselves as environmentalists, as explained in Clapp and Dauvergne’s Paths to a Green World: The Political Economy of the Global Environment (2011). The first perspective is the market liberal. Rooted in neoclassical economics, the ideas of market liberals hold globalization in a positive light. The theory maintains that, through forces like TNCs, the private market can provide humanity with technological innovations such as sustainable energy to cope with environmental ills. More foreign direct investment (FDI) by TNCs results in increased national prosperity on a global scale. Market liberals assert that prosperous global market can curb the primary drivers of environmental degradation, which are poverty and lack of economic growth.
The second perspective is from the institutionalists who agree with market liberals that environmentalism is about responsible, sustainable development. While market liberals highlight TNCs and free markets as dynamic sources of solutions for environmental needs, institutionalists are more willing to admit the faults of private companies in their global citizenship. Institutionalists advocate for strong global institutions that integrate the needs of all national economies to enforce global norms that allow for environmentally and economically sustainable growth. This theory establishes “lack of global cooperation as a key source of environmental degradation” (Clapp 2011, 7).
The third and fourth environmental perspectives on globalization will be referred to as resistance theories, as coined by Peters (2004). These theories see global economic growth as the root cause of environmental problems as evidenced by community-level studies, focusing on the most poor and vulnerable populations in the world. Bioenvironmentalists stress the limits of Earth’s natural resources as society moves forward, seeing the planet in an environmental crisis caused by the unlimited growth of the economy and the human population. Bioenvironmentalists generally see TNCs as engines of environmental devastation. Their activities result in deforestation, overfishing, overmining, and desertification. They create a culture of consumerism saturated with clever advertising, and they shift pollution to poor countries. Social greens agree with the destructive nature of the forces of globalization, emphasizing the devastating social effects that globalization has on communities and their natural environments. Many social greens “advocate a return to local community autonomy” (Clapp 2011, 14) to restore and protect the social, economic and environmental integrity of communities worldwide. Both theories emphasize the need to curtail the growth of both the economy and the human population if humans are to exist sustainably on the earth.
The bulk of this paper will examine a global agribusiness investment project called Growing Africa, a World Bank Group (WBG) report on the potential for the development of economically competitive agriculture in Africa. WBG sees the development of agribusiness as an absolute necessity for the development of production agriculture, providing the African agriculture sector with increasingly efficient technologies in transportation, energy, farm inputs, and distribution. Growing Africa is structured in such a way that investment by TNCs entails investments from multiple sectors including the technologies listed above. Growing Africa is part of a larger series of reports called Doing Business, which aims at increasing investment in the developing world in order to increase the wealth of nations around the world.
Market Liberal
Growing Africa is written from a market liberal standpoint, focusing on sustainable development as a means of environmentalism. The goal of investment is to create a borderless world market in which there are “increasing opportunities for higher sales and higher profits” (Clapp 2011, 161). Market liberals contend that the increased profits will create wealthier nations who have more money to invest in clean technologies and provide increased protection for the environment.
The goal of market liberals is to “view environmental management not as a cost, but as a business opportunity” (Clapp 2011, 182). While Africa has not attracted much FDI historically, today it is fertile ground for the seeds of investment. An article from Fox News reports that Africa is home to six of the world’s fastest growing economies “and a rapidly expanding middle class with increased spending power” (Fox 2014). The same article outlines Obama’s recent USD$33 billion commitment to African development “aimed at shifting U.S. ties with Africa beyond humanitarian aid and toward more equal economic partnerships” (Fox 2014).
In today’s age of increased support for renewable energy sources riding the wake of climate change and species extinction - to name two of many human-caused environmental disasters - Africa represents the perfect opportunity for businesses to fill that green market space while growing economies and reducing poverty. US Secretary of State John Kerry supports this claim, proclaiming that “Africa can be the clean beacon of the world, and energy prosperity can actually replace energy poverty” (Kelemen 2014).
In order to create sustainable growth in the global socioeconomic realm, the WBG’s Agricultural Action Plan (AAP 2013) calls for responsible investments, entailing respecting land rights, strengthening rather than jeopardizing food security, upholding the responsibility of all stakeholders, consulting all those materially affected by investments, respecting the laws and best practice standards, generating desirable social impacts, and quantifying environmental impacts (32). These responsible investment practices are known as voluntary initiatives, and market liberals vie that “adherence to voluntary initiatives promises only positive outcomes for the environment” (Clapp 2011, 180). Voluntary initiatives are guidelines incentivized by market-friendly measures that encourage businesses to follow them. In Growing Africa, one incentive is that, because the project is seen as the hallmark of sustainable development, businesses have to be transparent in their actions that are socially and environmentally responsible.
Market liberals stand on a simple notion: more wealth “translates into more state and corporate funds for better environmental management” (Clapp 2011, 161). The AAP 2014-2015 claims that investment in agriculture by TNCs can provide African farms with the ability to practice climate-smart agriculture, recognizing agriculture as both a cause and an at-risk sector in relation to climate change. Critics point to things like pollution havens as evidence that foreign development projects result in higher amounts of pollution in developing countries because of decreased environmental regulations that attract investment. Market liberals provide that, in the rare case that pollution havens exist, it is for a brief time because “economic growth soon provides the means for a more adequate environmental response such as improved regulation and a rise in investment in cleaner production processes” (168).
Market liberals indicate that integrating African agriculture into the global market is something that can help end world hunger. They contend that the solution requires increased food production, and “Africa has more than half of the world’s agriculturally suitable yet unused land” (2013, 5). On a more local scale, the AAP 2014-2015 (2013) proposes that adherence to the plan will increase smallholder farmer incomes while linking them to new markets and providing consumers with safer, healthier, and more food.
Institutionalist
Most institutionalists, while maintaining that growth is the ultimate environmental panacea, “are more willing to see corporate activity as potentially negative more of the time” (Clapp 2011, 190). While market liberals see voluntary initiatives as being capable of guiding environmentally responsible behaviors, institutionalists hold that “the international community (through policies and financial incentives) needs to guide the actions of firms to ensure sustainable development” (Clapp 2011, 161).
Institutionalists contend that the idea of voluntary initiatives is flawed because it relies on the companies to follow through with actions that may not agree with their economic interests. While Growing Africa and AAP 2014-2015 outline a list of changes to national polices that “cultivate business-friendly environments for foreign investors in agriculture” (Martin-Préval 2014, 4), some institutionalists point out that these policy changes can remove economic, social, and environmental safeguards that protect the people and the environment. They use this to found their argument that the international community needs to adopt and enforce certain norms and regulations for responsible business practices.
Institutionalists see Growing Africa as a good method of economic development, focusing on assistance from the global North to the South so as to enable African prosperity while contributing to the global economy. By adhering to international guidelines that promote environmentally and socially responsible investment, Growing Africa can promote growth and prosperity at all levels from the local to the international.
Bioenvironmentalist
Bioenvironmentalists generally see Growing Africa as a business venture aimed at increasing the power of TNCs and the global elite. Under the guise of a development project, Growing Africa is a ‘Trojan horse’ for TNCs to gain a foothold in the African economy (Mayet 2009; Ngugi 2009). Writing for Africa, Ngugi (2009), political columnist for BBC, asserts that “once the mask of philanthropy is removed, we find hungry corporations vying to control” African markets. He concludes that “the philanthropic gift for Africa is, in reality, paving the way for further exploitation of [Africa’s] resources” (25).
Bioenvironmentalists compare Growing Africa to the Green Revolution that took place in India. Ngugi points out that “Indian farmers initially flourished under the Green Revolution because millions of dollars were used to buoy the farms” (24). However, when India’s agricultural system was successfully integrated into the world market, funding was cut and Indian farmers found that they could not afford the hybrid seeds and expensive pesticides required by the operation. As a result, the farmers “entered into debt, eventually losing their land to banks” (25) and ultimately the larger corporate farms who continued to dump harmful chemicals into the land. As such, while the economic development aspect of Growing Africa will appear to benefit Africans, in the long run it will hurt rural farmers and surrounding residents while benefiting a few large TNC farms.
Bioenvironmentalists maintain that the ultimate goal in environmental protection is to “simply prevent some of the corporate exploitation of the global environment” through control of “both TNCs and local firms” (Clapp 2011, 191). They see Growing Africa as a social injustice resulting in higher amounts of environmental degradation in the South as an expense of improved conditions in the North. Growth – the very thing that market liberals stake their claim in to support their argument – is seen by bioenvironmentalists as the largest engine of environmental destruction, and Growing Africa is a means of growth that cannot be sustained by the planet’s increasingly limited natural resources. Increased development in areas of the agribusiness sector such as transportation and energy means more emissions, more pollution, increased reliance on oil, and increased production-centered environmental strain on other countries.
While all four perspectives argue that agriculture needs to become more ‘sustainable,’ the debate is over the definition of sustainability. The bioenvironmentalist point of view is that sustainable changes must involve a focus on small farms, a reduction in fertilizers and pesticides, crop rotations, and improved irrigation methods (Ching 2009, 14).
Concerning social responsibility, TNC investment in export-import agribusiness has increased the scale on which food can be produced by a country. However, while market liberals and institutionalists laud increased net production of food as evidence of the social benefits of Growing Africa, bioenvironmentalists argue that “increased food supply does not automatically mean increased food security” (Ching 2009, 9).
Social Green
Social greens maintain that decentralizing food production is the only way to truly benefit African communities socially, economically, and in terms of food provision. They believe that increasing the sustainability of agriculture involves reduction of markets to local scales, safety net support for peasant farmers, and regulations that increase the vivacity of local markets. They strongly contend that programs like Growing Africa increase the power of TNCs over African citizens and “the World Bank’s approach ultimately undermines the role of states in the formation of effective policies that support family farms” (Martin-Préval 2014, 14).
Social greens speak out against the idea that Growing Africa will result in prosperity. They maintain that those who prosper from a free-market, export-oriented food system are the companies involved in agriculture and agribusiness, while the economies of rural areas and areas surrounding the farms suffer. This is seen as a policy-driven disaster, resulting in the negative impacts commonly associated with GM and monocrop farming in developed and developing countries (subdued local markets, food insecurity, pollution). The chief argument is that food should not be a commodity. As it sits now, “the irony of our global economy is that food flows through trade from areas where people are hungry toward areas where there is money” (Nhampossa 2009, 32). For Growing Africa to truly benefit Africans – feed them, provide increased production capabilities and food sovereignty – African economies need to adopt policies “that would support peasant and family farm agriculture” (Nhampossa 2009, 32).
Social greens also view foreign agriculture investments as misguided. Nhampossa states that, in today’s Africa, free trade agreements have supported imports of “subsidized food from rich countries instead of negotiating with thousands of small local farmers” (32).He sees this as evidence that Growing Africa and the integration of Africa into the international market are aimed at benefiting the wealthy corporations at the expense of Africans. Coulibaly (2009) says that, “if rich countries really want to fight hunger in Africa, they must instead invest in farmers’ access to water (for irrigation) and agricultural equipment” (12). Bassey (2009), Executive Director of the Nigerian Environmental Rights Action, agrees, saying that Africa “is certainly not pushing towards a so-called Green Revolution baptized in chemical fertilizers and other imported inputs” (17) but is seeking respect and sovereignty. If investors and development groups wish to grant this to Africans, he argues, then they should move away from strategies that support monoculture and instead “assist in the development of rural infrastructure such as roads and water supplies” (17).
Social greens see many problems in the WBG opening up domestic agricultural markets to free trade. Namely it makes African countries vulnerable to the dumping of heavily subsidized agricultural products from TNCs, effectively running local, subsistence producers out of business. Writing from Mali, Coulibaly asserts that the increased presence of TNCs in Africa’s agriculture and agribusiness sectors “represents a real danger of total destruction of agriculture in the South” (12). Social greens highlight the elimination of peasant farming as a detriment to society. They assert that, “with 70% of the world’s poor depending on agriculture for income and employment, the World Bank’s approach contradicts its stated objectives of fighting poverty and creating shared prosperity” (Martin-Préval 2014, 14).
Some social greens combine their ideas for development with those of institutionalists. In response to AAP 2014-2015, Ching (2009) calls for a “participatory” development of a sustainable agricultural action plan, involving local agencies in cooperation with the private sector and NGOs, facilitated by a lead agency. Ching suggests several measures to “move toward mainstreaming sustainable agriculture at a national level” (20). Measures involve adopting policies that incentivize sustainable agriculture, and integrating those agricultural policies with environmental policies to develop and grow a decentralized agriculture sector with strong emphasis on environmental sustainability. By doing this, Ching envisions, communities will prosper economically, and will have increased access to fresh food.
Conclusions
Each position is pushing for a sustainable agricultural system that allows for environmental and human flourishing. The solution to the world’s environmental and social ills, no matter which path is chosen, will give rise to more problems. This is why we must carefully analyze each position to determine the best course of action. The debate at hand is over the definition of sustainability in terms of what defines socially and environmentally responsible behavior. The market liberals and the institutionalists on one side say that TNCs increase the wealth of nations, which enables them to invest in cleaner technologies and practices that conserve the environment while allowing for global economic growth. Growth, as we have seen, is the primary vehicle for human flourishing according to the market liberal and institutionalist perspectives, as supported by Clapp and Dauvergne (2011) and Peters (2004). On the other hand, bioenvironmentalists and social greens claim that global economic growth in itself is unsustainable given the capacity of the Earth to provide for the increasing consumer-based population of today. The difference is the lens through which each position views the world.
Market liberals and institutionalists look at the overarching financial statistics, relying on measurable data to support their arguments. While numbers like average household income evidence increased wealth of citizens of nations, they do not support the underlying assumption that wealth improves lifestyle. While AAP 2014-2015 and Growing Africa state objectives and initiatives to benefit African citizens, the citizens themselves speak out against the efficacy of these objectives in creating positive change. These voices view Growing Africa as a dastardly operation. Market liberals and institutionalists could improve their image and, more importantly, their practices, by increasing the transparency and democratic nature of their practices.
The second way of looking at the effects of globalization is through case studies of real individuals and communities. This position, supported by bioenvironmentalists and social greens, has concrete evidence of successes and failures on a human level – the level that matters to the bulk of the world’s people. Even in America today, the rich are getting richer, the poor are getting poorer (or richer at a slower rate as some would argue), and there are increasing amounts of hungry people in cities despite statistics such as average household income. If the goal of Growing Africa is to benefit the world’s people, then this is the lens that the effects of TNC investments must be viewed through. Social greens “focus almost exclusively on the role of corporations in the global capitalist framework” (Clapp 2011, 175) as the primary cause of environmental degradation. This is a weakness of the social green standpoint because the view is too narrow and does not take into account things such as political regulations and population growth. By maintaining the human-scale viewpoint of the effects of globalization while expanding the argument beyond issues of corporate practice to include policy-based approaches that acknowledge the potential benefits of a global society, we can reach a reference point from which to candidly analyze Growing Africa and determine how it should be implemented, if at all.
It is said that, when a man has a hammer in his hand, every problem appears to be a nail. Similarly, with the force of the whole world behind the current model of globalization, everything appears to be solvable through growth, consumption, and the forces of the market. However, we are in an age where irrefutable evidence of the growth model causing significant environmental degradation should give rise to one of the most important questions of the times: is the current globalization model creating an ecologically and humanitarianly sound world?
The answer is both yes and no. A globalized economy in itself is a remarkable feat of human achievement, and we should not squander the international system that is already well-established. The institutions such as WBG and the IMF unite the global community, and this has the potential to work on the side of environmental preservation, and the protection of human rights. However, the current model has historically had negative effects on people and the environment. If we continue to see our problems as nails to be hammered, we will see Africa becoming an industrialized country with low labor costs that will result in the continent being a pollution haven and a destination for industrial flight. Corporatizing food will never be a socially-just endeavor because of the inherent irony of the system that it moves food from places with hungry people to places where there is money. Growing Africa will take fresh food away from rural populations by decreasing smallholder farms which contribute to farmer’s markets. It will increase the net amount of food that is available to Africa, but by running ‘peasant farmers’ out of business will decrease the amount of food that is available to people who need it the most. Additionally, large scale industrial farming will harm the waterways through pollution and it will deplete water resources through irrigation.
The argument here is the type of investment that is appropriate for each region based on what its citizens need and what the government needs to prosper and provide for its citizens. This is what the WBG must enforce through Growing Africa as a way of ensuring responsible investments that truly benefit African. As an additional part of investment regulations, AAP 2014-2015 ought to have more stringent environmental policies. The WBG would benefit from implementing a program such as the one suggested by Ching (2009). Water management ought to be a subject of great discourse between African governments and foreign investors, especially in a day and age of climate change affecting water and soil – the two most important agricultural resources.
Another goal that Ching identifies is to develop and implement more research in support of sustainable agriculture by the bioenvironmentalist definition. Perhaps a regulation on what percent of TNCs’ income should be spent on social and environmental research and action on a local scale should be incorporated into AAP 2016-2017.
In conclusion, while TNC investments have proven to increase national wealth, they have also been proven to be environmentally and socially damaging to communities. Foreign investment must be guided by a set of regulations that includes cultural, environmental, and economic assessments on local scales according to the physical area of investment. Through this, businesses can prosper and, in turn, help local citizens while strengthening global relationships that, through international policy, can unite nations in solving global issues.
2017 Edit: Given the problem identified above, democratization of decisions in investment is one possible solution, and can be achieved through a blockchain investment firm that amplifies the voices of rural communities and helps guide sustainable investment.
References
Bassey, N. (2009). AGRA – A blunt philanthropic arrow. Voices From Africa: African Farmers and Environmentalists
Speak Out Against a New Green Revolution in Africa. Mittal, A. and M. Moore, eds. Oakland, CA: The
Oakland Institute.
Ching, L.L. (2009). The Case for Sustainable Agriculture: Meeting Productivity and Climate Challenges. Penang,
Malaysia: Third World Network.
Clapp, J. and P. Dauvergne. (2011). Paths to a Green World: The Political Economy of the Global Environment. 2nd
Edtion. Cambridge, MA: The MIT Press.
Coulibaly, I. (2009). GMOs do not address the needs or concerns of African farmers. Voices From Africa: African
Farmers and Environmentalists Speak Out Against a New Green Revolution in Africa. Mittal, A. and M.
Moore, eds. Oakland, CA: The Oakland Institute.
Foley, J. (2010). “The other inconvenient truth.” Lecture, Ted Talks. October 2010.
Fox News. (2014). Politics. Obama announces $33B in commitments for Africa. Published August 5, 2014. Retrieved
November 21, 2014. http://www.foxnews.com/politics/2014/08/05/obama-announces-33b-in-
commitments-for-africa/.
Kelemen, M. (2014). Morning Edition. Summit focuses investors on Africa’s energy opportunities. Published August
6, 2014. Retrieved November 21, 2014. http://www.npr.org/2014/08/06/338233979/summit-focuses-
investors-on-africas-energy-opportunities.
Martin-Préval, A. et al. (2014). “Unfolding Truth: Dismantling the World Bank’s Myths on Agriculture and
Development.” Oakland, CA: The Oakland Institute.
Nhampossa, D. (2009). What kind of aid does Africa need? Not dumping of food or industrial agriculture. Voices
From Africa: African Farmers and Environmentalists Speak Out Against a New Green Revolution in Africa.
Mittal, A. and M. Moore, eds. Oakland, CA: The Oakland Institute.
Ngugi, M.W. (2009). African food sovereignty or AGRA. Voices From Africa: African Farmers and Environmentalists
Speak Out Against a New Green Revolution in Africa. Mittal, A. and M. Moore, eds. Oakland, CA: The
Oakland Institute.
Peters, R.T. (2004). In Search of the Good Life: The Ethics of Globalization. New York, NY: The Continuum
International Publishing Group.
The World Bank Group. (2013). Agriculture Action Plan 2013-2015: Implementing Agriculture for Development.
Washington, DC: The World Bank Group.
The World Bank Group. (2013). Growing Africa: Unlocking the Potential of Agribusiness. Washington, DC. The
World Bank Group.
Zezima, K. and J. Eilperin (2014). World. Obama announces more investment in Africa by U.S. firms during leaders’
summit. The Washington Post. Published August 5, 2014. Retrieved November 21, 2014.
http://www.washingtonpost.com/politics/obama-announces-more-investment-in-africa-by-us-
firms/2014/08/05/bb3a9e98-1cd5-11e4-82f9-2cd6fa8da5c4_story.html.