UNHRC: Measuring Consequences and ImplicationsApril 25, 2013, 8:10 pm
Economists have often earned the ire of other social sciences for trying to boil everything down to statistics and numbers. This is because the field of economics is concerned with trying to make precise calculations, and that requires things to be measured.
The Measurement Fetish
Economists routinely claim to measure even rather elusive quantities such as people’s happiness, an individual’s preferences, and a society’s level of development. The critics are not wrong to be concerned. There are two kinds of problems that arise in this fetish for measurement. One is that complex considerations get articulated in ways that are too simple, just to facilitate measurement. Two is that it can misdirect inquiry away from what is important: the reality is that which is measurable is not always important, and things that are important are often not measurable. Nevertheless, it would also be a mistake to throw out the baby with the bathwater. The discipline and even limited objectivity that comes from measuring can provide useful insights, and helps to anchor and guide public debate without burying everything in the morass of competing views and opinions.
Three Opinions on the Resolution
The last few weeks in Sri Lanka has been a hive of such competing opinions with regard to the resolution on Sri Lanka adopted at the UNHRC meeting in Geneva. The debate has drawn out a wide range of views: (1) the nationalist view point is thatit is engineered by countries that are "unfriendly" and "unimportant" to Sri Lanka, (2) a section of civil society opinion that it assists the Sri Lankan public to exert appropriate democratic checks on the government. (3) politicalopposition view that it a sign of poor management of foreign relations. What might economists contribute to this discussion? It turns out that the votes for the resolution in 2012 and 2013 create some opportunities for engaging the measuring fetish, and in this case what is measured may also be quite important!
The countries that have a vote at the UNHRC change from year to year. Therefore only 30 countries had voting representation in both 2012 and 2013. Of them,not a single country changed their voting position between the two years (if abstained in 2012, they also abstained in 203 etc.). The total number of countries voting in the two years was 63. Of that,33 for the resolutions, 18 against and 12 abstained. This then is the cumulative result of the vote.
But what can these numbers mean? One way to understand their meaning and future implication is to evaluate them in terms of trading activities between Sri Lanka and the countries that voted. The findings are interesting and should inform public discussion: The first finding is that those who have a stronger trading relationship with Sri Lanka are also the most supportive of the resolutions. Those who opposed or abstained are those that have a weaker trading relationship.Figure 1 shows that those who voted for the resolution accounted for over 80% of Sri Lanka’s exports, and over 60% of Sri Lanka’s imports (within the voting group). The total combined quantity of Sri Lankan exports to those countries that voted against the resolution or abstained is onlyone fifth of Sri Lankan exports to those countries that voted for the resolutions. The total combined quantity of Sri Lankan imports from those countries that voted against the resolution or abstained is only about two thirds of Sri Lankan imports from those countries that voted for the resolutions. If trade is a sign of relational strength (this may be an example of how economists reduce complex matters to simple quantifiables!), it is those countries that have the strongest relationships with Sri Lanka that are saying that Sri Lanka should improve its governance.
The second finding is thatSri Lanka benefits more from countries that have voted for the resolution. Benefits of trade are usually estimated on the basis of positive or negative trade balances. A country is in a beneficial relationship to another, when it exports more to them than it imports from them. This is called a positive trade balance. The opposite is a negative trade balance. Figure 2 shows that Sri Lanka has a positive trade balance with countries that voted for the resolution (discounting India); and Sri Lanka has a negative trade balance with countries that voted against and the countries that abstained. India is an outlier that can tip the balance: Sri Lanka has a very high negative trade balance with India.
Many of the countries that voted for the resolution account for a large significant share of Sri Lankan exports. But Sri Lanka’s purchases from them only accounts for a microscopic share of their exports. The trading benefits are singularly one-sided, and in favour of Sri Lanka (with the notable exception of India).
Sri Lankan exports directly account for 17.8% of GDP (2011), and through the multiplier effect, the benefit to the economycould be considerably larger. The countries that sat on the UNHRC in 2013 alone account for 51% of total exports from Sri Lanka. The countries that supported the resolution accounted for 41%. That is a large chunk of Sri Lanka’s global trade relationships. It would not just be imprudent, but also inaccurate (given the measurement), to dismiss these countries as unfriendly or unimportant.
In early 2012 Sri Lanka went through a balance of payments fright that led to a sudden change of policy by the central bank and a sudden depreciation of the rupee. This caused severe stress to industry. Typically, sudden adjustments in economic variables are not helpful for producers of goods and services. A recent report evaluates Sri Lanka’s balance of payment to be vulnerable, with short term external liabilities accounting for 124% of current reserves. Countries with which Sri Lanka has a positive trade balance are countries that are helping Sri Lanka avoid a balance of payment problem, and vice versa. Discounting India, Sri Lanka has a large trade surplus (almost US$ 2,000) with the countries that voted for the resolution; and a large trade deficit (upwards of US$ 2,600) with the countries that voted against or abstained. Once again, those voting for the resolution emerge as the "beneficial friends".
Can Economists Contribute to the Opinions?
The measurements says that discounting India, Sri Lanka has stronger relationship with, and benefits more from, countries that voted for the resolution, than those that voted against or abstained. This accounting seems to undermine somewhat the nationalist view point. The countries that voted for the resolution cannot be dismissed as "unfriendly" or "unimportant". There yet remains a wide range of opinions on the UNHRC resolution that are not evaluated by these economic measurements.But the numbers do open up a new consideration. Thumbing the nose at the UNHRC process maybe good for the ego but not so good for the stomach.
(Verité Research provides strategic analysis and advice for governments and the private sector in Asia.)
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