A guest article by 
Stephan Treuke

Salvador da Bahia, Brazil’s first capital until 1763, is a good example of socio-spatial segregation mirroring the expressive disparities within the population’s income and housing conditions. There is the common center-periphery dichotomy, where the middle and upper class have mostly settled in the central areas while the least fortunate tend to live in the outskirts of the city. Then there are the borders between socio-economically distant classes that have emerged both in central and peripheral regions, fostering the city’s socio-spatial fragmentation in a smaller scale. 

These spatial constellations have aroused increasing attention of Brazilian sociologists, inquiring whether the geographic closeness promote interaction between classes and help to attenuate social distances, or whether residential segregation generates a more conflictuous relationship and nurture territorial stigmatization.

Drawing on empirical data collected in Nordeste de Amaralina, a centrally-located shanty-town located in an area of affluent condominiums (Orla Atlântica Norte), I wanted to find out whether the opportunities of interaction between classes, particularly in the realm of employment relationships, could be verified. I asked twenty randomly selected interviewees to provide information about their social networks in various spheres of sociability: family, neighborhood, friendship/acquaintanceship, work, studies, associative life, religious associative life and leisure, in situations of job seeking and the provision of financial, social and emotional support. The main objective of my research was to analyse the so-called “inhabitants portfolios of risk management” or the ethnographic data on family livelihood strategies, and networks between classes and communities. 

Since the 1960s the neighborhood’s strategic proximity to the nearby affluent summer houses and condominiums of Rio Vermelho, Horto Florestal, Amaralina has attracted immigrants coming from Bahia’s poor rural hinterland regions. Gradually, this led to the region’s demographic densification and illegal land occupation, mostly by informal settlements.

The mostly precarious housing situation together with above-average unemployment rates is made worse by endemic violence and insecurity which are due to local drug conflicts and repressive police incursions. The harsh reality reflects on my interviewees’ social networks and economic integration, which underline the strong relevance of what I call the “primary units of socialization”, like family, neighborhood and friendship/acquaintanceship.

Primary social ties, based on frequent contacts between rather close relatives, neighbors and co-residents, are important in short-term socioeconomic activities and are mobilized in situations of emergency and daily adversities, including drug dependence and unemployment. Moreover, these bonding ties serve as main communication channels transmitting valuable information about employment opportunities, mostly located in the low-skill informal service sector, to in-group members.

According to the in-depth interviews, the geographical proximity to the middle- and upper-class condominiums is seen as positive as far as economic integration is concerned, and the short distances to work are regarded as an advantage compared to the more peripheral neighborhoods. Like Jose, a 34-year-old condominium guard affirms, the economic opportunities mostly belonging to the domestic sector offer good salaries and stable work conditions. 

Among twenty interviewees, four have jobs in the nearby affluent condominiums. In this sense, the two key-persons employed as security guards in the upper-class condominiums have an important bridging function. They have valuable job information and access to privileged contacts. Hence, they intermediate different low-skill informal employment opportunities like car washing and technical maintenance jobs that come up occasionally according to the demand of the wealthy condominium dwellers. “Almost everyone in the condominiums needs some small daily services, since the patrão (boss) comes home late from work and might be grateful for cheap car-washing or maintenance services”, Luiza, a 45-year-old maid contests.

Nevertheless, apart from these amplified employment opportunities the social distance between classes prevail in all the other spheres of sociability. “Our high class condominium neighbors don’t rely on people coming from our favela, given the bad housing conditions and a deteriorated public image. They mostly stick on their own and conversation remains restricted to work issues.” (José Antônio, 50 years old gardener) 

A wide range of social and cultural associations spread throughout the neighborhood, like community centers, capoeira and dance groups, football clubs and philanthropic third sector organisations, among others assume a crucial paper in the childrens’ and adolescentes’ socialization processes and strengthen the communitary identity. Nevertheless, these institutional-based networks mostly promote intra-groupal cohesion and solidarity without linking their group members to extra-local networks which possibly could give access to important job referrals.

The social networks built in the sphere of sociability religious associative life connect members of the same church congregation, strengthening the intra-groupal solidarity and providing a wide set of material and immaterial resources. These resources are mainly distributed in the context of social and philanthrophic communitary activities realized in the neighborhood, offering free lawyer counseling, health services and food baskets. For the majority of the interviewees, being part of a congregation turns out to be crucial for coping with economic deprivation. 

Apart from being a social safety net, in three cases, being a member of a church has increased their economic integration, though on the rather unstable informal labour market. Acquiring informal jobs often depends on having key contact persons within one’s institutionally-based networks. The key contacts often relay privileged information and contacts about local job opportunities. “In my local congregation, almost everyone relies on contacts drawn within the Assembleia de Deus church, as most of our members are hard-working, trustful people. Whether you find a job is just a matter of frequenting the daily congregations.” (Marta, 57 years old grocery owner)

In a way, the social segmentation and the class-hierarchized access to urban infrastructure and services (transport, hospitals, schools, leisure activities) limit inhabitants’ social interactions on the local level. This restriction within neighborhood boundaries leads to localism and make social ties more confined: “This neighborhood is quite self-sustaining and everything we need is located within our boundaries. My closest friend all come from the same street corner and I usually don’t trust people not coming from here, you have to know who to trust!” (Anna, 37 years old, informal street vendor)

Like in many lower-class neighborhoods of Salvador, public schools suffer from the State’s long-term disinvestment. Drawing from the adolescent interviewees’ self-report, public schools within neighborhood boudaries were unanimously depicted as potentially dangerous places, due to the presence of rival gang members and adolescent drug traffickers. Among three interviewed adolescents, only one confirmed that school served as his prime socialization unit in the process of social network building: “You have to be careful who you’re hanging with, since most of our classmates pursue gang activities. Poor school quality and failing job perspectives make it much easier to engage in drug business, bringing social status and fast money.” (Antônio, 15 years old student).

Moreover, the class-stratified access to public recreational spaces that could promote cross-class interactions (shopping malls, plazas and public parks etc.) in many cases practically exclude the Nordeste de Amaralina dwellers close by because they don’t have enough money to participate in those spaces, and thus fear stigmatization. “The last time I entered their fancy shopping mall, I permanently had to deal with security controls and scared faces, even though I dressed up quite conveniently!” (Andreia, 19 years old student) 

Thus, leisure activities are restricted mainly to local opportunities. The concentration of high-quality urban equipment (hospitals, private universities, sophisticated supermarkets etc.) along the main causeway Avenida Juracy Magalhães – the major dividing line between the favela Nordeste de Amaralina and high-class condominios of Horto Florestal – do not offer any locational advantages for the poor populations, except for the privileged access to public transport. The major field of leisure activities is the Praia de Amaralina, a close-by beach avoided by the middle and upper class due to the high frequency of assaults and robberies “Well, they have their condominiums with swimming pools, gyms and stuff, they don’t belong to our beaches. I think it is also because some adolescents assaulting in public streets have mostly scared the few that still visited our closeby beach” (Jacira, 61 years old unemployed).

Despite reduced sample size, my research offers an important insight into the rather ambigious relationship of cross-class interactions, oscillating between economic integration within the low-paid domestic work on the one side, and social avoidance due to residential segregation and social segmentation, on the other side. The idea that there would be an opportunity-enriching “symbiotic” environment, where socioeconomically distant populations live close to each other and cross-class interactions are encouraged within “vertically integrated institutional spheres”, doesn’t comply with the way Salvador is organized in a hierarchical way in terms of space and social sphere. Shiftings of residential segregation patterns have occurred in scale but not in function, and social distance is upheld spatially by the means of security devices.

While the local context remains important for social interaction and the mobilization of social capital, it is particularly the local school context that has a negative influence in the process of childrens’ and adolescents’ socialization and contributes to the internalization and reproduction of class division.

The affiliation to institutional networks impacts positively on the individual’s social and economic mobility. My study has confirmed the importance of the so-called brokerage positions in social relationships. They promote crucial information about job opportunities, whereas the “primary units of socialization” play an important role for the integration into the informal labour market.

At the same time, it seems that the social networks of family, neighborhood and friendship, with strong elements of localism and homophily, may reproduce and even reinforce poverty as they encourage segregation. This is particularly evident if there is less interaction between different social groups, and if there is low solidarity and trust within a neighborhood.

The Nordeste de Amaralina case demonstrates that high rates of crime and violence undermine the collective norms which support the neighborhood-level cohesion and weaken the community’s capacity to engage in informal social control, particularly when it comes to the supervision of deviant adolescents. 

Poverty mitigation might be more effective if instead of individuals and households it targeted neighborhoods as a whole. It has become increasingly evident that area-based neighborhood revitalization programs that “bring the resources to the people” generate more positive spill-over effects than traditional individual and household-allocated welfare policies. Many policy initiatives grounded on social capital theory and their application to poverty reduction initiatives in Latin American cities have focussed on slum upgrading programs usually involving the mobilization of community support, the expansion of local economic opportunities and investments in (social) infrastructure while improving the interaction between citizens and the state.

However, macro-economic strategies remain crucial in order to overcome the favela inhabitants’ social vulnerability in a long term. Going beyond neighborhood-scale improvements, a more holistic approach to urban poverty should be given priority within public policies. These would entail a stronger regulatory state intervention into the labour and housing market systems in order to face the challenges arising from the transformations within the socio-productive paradigm of post-fordism. By the same token, the implementation of socially integrative programs widening the access to education and social services remain crucial at local level.

Stephan Treuke is with the Programa de Pós-Graduação em Ciências Sociais (PhD-Program - Social Sciences) at the Federal University of Bahia, Estrada de São Lázaro, 197 Federação, CEP: 40.210-730, Salvador da Bahia - Bahia, Brazil. StephanTreuke@hotmail.de

Photos © Stephan Treuke.



By Jelena Salmi

"I've heard that the new 2,000-rupee note has Modi's face on it,"
claims a middle-aged Muslim man outside a small informal shop on the outskirts of Ahmedabad, "but I haven't seen the note yet." A young woman standing next to him echoes his view: "Yeah, yeah, that's true", she says, nodding. A shopkeeper, who sells inexpensive biscuits, sweets and tobacco products, stretches out from behind his blue counter to contradict his customers: "No way, listen, only dead people's faces get printed on bank notes! I bet it's the Father of the Nation whose face is on that note. It's Gandhi's face, for sure. And that's the way it should be!"

It's November 21st and I am in Vatva, the largest concentration of slum resettlement sites in Ahmedabad. It has been thirteen days since the Indian Prime Minister Narendra Modi announced the nullification of all Rs 500 and Rs 1000 notes in a move to deal with the corruption, black money and counterfeit currency that according to Modi, is being used to finance terrorist activities in India. In his speech on Tuesday evening, November 8th, he assured that "the rights and the interests of honest, hardworking people will be fully protected" as all the smaller notes would remain legal tender and people could deposit their old notes of Rs 500 and Rs 1000 in banks or post offices during a period of 50 days ending on December 30th.

Sign in front of the Raipur gate in Ahmedabad announcing the fight against
corruption, black money and counterfeit currency.

Modi also announced that banks and ATMs would remain closed for the next two days, after which there would be daily and weekly cash withdrawal limits to ensure the dispersal of new Rs 500 and Rs 2000 notes to all. Towards the end of his speech, he reached out to the common people, asking them to bear with him through difficult times:

"Brothers and sisters, in spite of all these efforts, there may be temporary hardships to be faced by honest citizens. Experience tells us that ordinary citizens are always ready to make sacrifices and face difficulties for the benefit of the nation. [...] Ordinary citizens have the determination to do anything if it will lead to the country's progress. So, in this fight against corruption, black money, fake currency, fake notes and terrorism, in this movement for glorifying our country, will our people not put up with difficulties for some days? I have full confidence that every citizen will stand up and participate in this mahāyajña [great sacrifice]."

In this blog I examine the elusive, mythical mahāyajña and ask: What kinds of sacrifices have been required from urban and rural poor in the face of demonetization? What are the effects of demonetization on the lives of the poor? While on a monitoring visit related to a development cooperation project by the Finnish NGO The Swallows of Finland, I had the chance to discuss the consequences of notebandhi ("closed notes") on everyday life with villagers from Dungarpur, Chhota Udepur, Anand and Kheda Districts, as well as with resettled slum-dwellers in Ahmedabad. I also had several discussions with representatives of an Ahmedabad-based non-governmental organization (hereby referred to as "NGO"), which works to enhance the rights and livelihoods of low-income female workers in India.

At the State Bank of India.

In Ahmedabad, the overnight nullification of 86 % of the country's currency was most concretely embodied in serpentine queues outside ATMs and banks. Throughout my sixteen-day stay, many ATM booths remained closed or had a "No cash" sign attached to the window. Everybody in the city seemed to be short of cash, both the rich and the poor. The rich, however, had a significant advantage: payment cards. I myself mostly dined in places that accepted cards, and due to their convenient payment system, I preferred to use Uber taxis instead of rickshaws. And, apparently so did many others who were fortunate enough to have plastic money. 

At one of Vatva's slum resettlement sites, where many men work as rickshaw drivers, I was told that business had been very bad since November 9th. And not just for rickshaw drivers: also marginal traders, daily-wage laborers and everyone operating on cash had been hit hard. "There's been no work available since notebandhi", an elderly man named Dilpesh told me. "We cannot even afford to pay this month's rent." Dilpesh did have a bank card for an account opened under Modi's Jan Dhan Yojna, but he didn't know how to pay with it. Besides, he bought his daily groceries from traders that only accepted cash. Luckily, he was able to buy food on credit, as traders in the neighborhood were his friends and acquaintances. For Dilpesh, demonetization meant increasing indebtedness.

Migrant laborers, however, rarely develop long-term relationships of trust with traders, therefore they cannot buy food on credit like Dilpesh can. In a meeting with the NGO's Urban Union I learned that two of Ahmedabad's numerous construction sites have been temporarily closed because all the migrant construction workers have either gone back to their villages or—less obviously—are queuing for money. They are not, however, standing in line to withdraw money from their own bank accounts—many of them do not even have one. Instead, queuing has become a profitable business for them: one is able to earn Rs 400 to Rs 500 a day by holding another person's place in a line outside a bank. This is more than workers can earn at construction sites. But not everyone can make a living from queuing. Some migrant workers have been forced to return to their villages empty-handed.

Queue outside the State Bank of India Head Office in Ahmedabad.

Unfortunately, the situation that awaits migrant workers in their villages is far worse. In the Chhota Udepur District, our team met a farmer named Anitaben. She told us about a woman who had sold her patch of land just a day before the demonetization. During the weekend, the woman learned that her money had turned into a worthless pile of paper, and she was so desperate that she took her own life. Banks were closed for two days and information about the possibility to exchange old notes into new ones had not yet reached her village. 

Anitaben herself lost the profits from approximately 720 kg of tomatoes, because the vegetable bazaar was closed for ten days after Modi's announcement. She lost more than 7000 rupees (approx. 100 euros). A representative of the NGO told me that as bazaars have now been opened again, there's the problem of big traders exploiting small farmers by paying low prices for agricultural products, and by paying with cheques instead of the urgently-needed cash. To tackle the drastic situation, NGO employees have been writing letters to District Collectors, asking them to intervene. Following these efforts, traders in some districts have now started paying in cash. The prices, however, are still lower than usual.

At the same time that Anitaben's tomatoes went to waste, women in the village of Khajuria in Dungarpur, Rajasthan, did not have money to buy vegetables. Many men from Khajuria work as migrant laborers at construction sites in Ahmedabad and Mumbai. With demonetization, the men had not been able to send money to their wives and children. Normally, cash had been sent home every fifteen days via a bus driver who takes Rs 100 for himself as a commission for transporting Rs 2000 from Ahmedabad to Khajuria. Without this money, the women were desperate. In the hope of filling their stomachs, they picked gram leaves from the field, spiced them up and ate them. To quote a representative of the NGO: "The situation is very dire in villages. People are literally starving."

Sudden demonetization also gave rise to various rumours. In Dungarpur, information was passed from person to person that not only big notes, but also ten-rupee coins had been nullified, and for this reason, no one wanted to accept them as payment. At the same time in rural Anand, a rumor came through the grapevine that the price of salt will go up significantly, and as a result, some people began to stock up on salt. Moreover, people started exchanging food crops: wheat for vegetables, vegetables for wheat.

Anitaben's fields.

In the face of the Indian government's radical move towards a cashless society, the poor are the ones who have been forced to sacrifice the most. Some have even sacrificed their lives. In his demonetization announcement, Modi claimed that "ordinary citizens are always ready to make sacrifices and face difficulties for the benefit of the nation". I, however, could not bring myself to ask the people with whom I spoke whether they considered their sacrifices "for the country's progress" to be fair and just.

Some names have been changed or omitted to protect the privacy of individuals.
Photos © Jelena Salmi.



A guest article by
Bonn Juego

In the past 15 years, “the private turn” in international development cooperation framework has become more evident. This shift in foreign policy is essentially characterized by a change in strategy from the old state-to-state relations centered on the giving and receiving of aid to the new economic diplomacy focused on the development of private sector business activities.

The implications of this emergent phenomenon for both development theory and practice are however understudied in (Nordic) development research, and no comparative studies have been undertaken. Such study is important in terms of: (i) the past, present, and future of North-South development cooperation; (ii) feasible development strategies for both developed and developing countries; and (iii) the processes of development and democratization in what used to be known as the “Third World” with durable authoritarian political regimes.

Since the beginning of the 21st century, and even during the Atlantic’s Great Recession of 2008 that led to a prolonged economic crises in Europe, the Nordic region—comprising of the governments of Sweden, Norway, Denmark, and Finland—have remained top donor countries, while many of their partner economies in Asia have become the world’s new growth areas. 

Contemporary Nordic-Asia development relations have not yet been thoroughly studied despite the fact that strategic engagements with Asia’s fast emerging economies are central to the official discourse and actual policy framework today of Nordic governments, as well as the OECD and other multilateral institutions. At the heart of this foreign policy re-strategizing is the crucial role assigned to the private sector as the driving force of development cooperation to pursue market-based solutions such as the promotion of entrepreneurship and the expansion of business operations to address poverty and other developmental problems.

Team Finland and the Nordic Development Institutions

The government of Finland, for instance, has formed “Team Finland” as a crucial institution to embody and implement the country’s emergent framework of private sector-oriented development cooperation. Team Finland is the network of state-funded organizations and programmes, including embassies and other funding agencies, with the mission to promote, support, or fund the internationalization of Finnish companies, enterprises, and investments even in high risk markets in many parts of the developing world. In addition to the trade, investments, and commercial sections of the Finnish missions in the world, four main agencies and programmes compose Team Finland, namely:
1. Finnfund (Finnish Fund for Industrial Cooperation), a development finance company that provides money for private sector projects in developing countries;
2. Finpro, a public organization helping Finnish companies, especially small-and-medium enterprises, to enter the international market, as well as to attract tourism and foreign investments to Finland, through its Growth Programs;

3. Finnvera, a specialized funding company whose specific mandate as Finland’s Export Credit Agency is to provide guarantees against political and commercial risks associated with Finnish export; and
4. Finnpartnership (Finnish Business Partnership Programme), a government programme that provides guidance and advisory services to Finnish companies through its Business Partnership Support Facility from the planning to implementation of projects in developing countries.
The same private enterprise-oriented development institutions and policy instruments are in operation in the other Nordic countries. Sweden has the Swedfund and Swedpartnership to facilitate the programme for private sector development. Denmark has the Danish Trade Council, the Investment Fund for Developing Countries, and the Export Credit Agency in line with their new foreign policy re-focusing on economic diplomacy that targets growth areas in today’s global economy. And Norway has Norfund, the Norwegian Investment Fund for Developing Countries, as their anti-poverty development finance institution funding private sector development programmes and other commercial activities for poor countries.

Historically, the role of the private sector in development cooperation has always been there since the United Nations’ First Development Decade of the 1960s. This began when developed countries committed to transfer one per cent (1%) of their gross domestic product (GDP) to achieve the five per cent (5%) GDP growth target for developing countries. The prescribed formula of one per cent of GDP as an indicator of a successful net positive transfer of real resources from developed to developing countries should have been 0.7% of official development assistance (ODA) from donor governments plus 0.3% flows from the private sector. 

However, during the five consecutive development decades, private flows have prevailed over donor government’s ODA whereby resource flows from rich to poor countries are subject to private incentives, rather than to development needs. Importantly, between 80 and 90 per cent of donor countries’ development finance, notably the development assistance budget of Nordic governments, are actually invested in the World Bank Group, Regional/Multilateral Development Banks, and other international development finance institutions together with other finance capital from private lenders and commercial banks that are loaned to developing countries.

Policy Choices and Business Strategies for Asian Regimes

What can also be observed in Nordic foreign policy nowadays is the geographical re-focusing of development cooperation partnerships with the economic growth areas of Asia, particularly with “rising China” and the emerging economies of Southeast Asia. Take, for example, the “China Action Plan” in 2010 of the Ministry for Foreign Affairs of Finland which identifies start-up and expansion opportunities for investors from both partner countries to do business in their respective economies. 

In 2015, “Finland’s Action Plan for Southeast Asia” was released which, notably, provides a detailed characterization of the politics and economies of the Southeast Asian countries Brunei, the Philippines, Indonesia, East Timor, Cambodia, Laos, Malaysia, Myanmar, Singapore, Thailand, and Vietnam, and their regional bloc ASEAN (the Association of Southeast Asian Nations). It also maps out Finland’s partnership priorities in each of these ASEAN member countries, including East Timor. This method of doing “political economy analysis” of the different types of socio-economic regimes of each of their (prospective) cooperation partners is telling of the shape to come in Finnish—and Nordic—international development strategy and policy.

Political economy analysis—which takes into account issues related to structural factors, institutions, stakeholder power constellation—now complements the established “technical and economic analysis of feasible solutions” in the planning, implementation, and management of development projects. While political economy analysis is still at its infancy in development policy advice, it will soon prove to be necessary and effective for the future of development studies and practice. Studies on contemporary Nordic-Asia development cooperation will have to test this new approach vis-à-vis empirical realities on the ground so as to re-articulate an analytical framework that could better guide development research and policy advice.

An important phenomenon integral to the Nordic’s private turn in development cooperation is the impact of the policy choices of their governments and the business strategies of the state-supported business enterprises on one of the fundamental objectives of their international development policy ideals: the promotion of democratic values which, at a minimum, means the establishment of the rule of law, respect for human rights, and good governance. The Nordic countries’ priority partners in East and Southeast Asia—specifically, China, Myanmar, and Vietnam—are generally characterized as authoritarian, undemocratic, or non-democratic regimes.

An Agenda for Development Research

In empirical terms, it would be both topical and significant for development research on contemporary Nordic-Asia cooperation to investigate: To what extent are Nordic governments’ policy choices and business strategies informed by a political economy analysis of each of their development partner countries in East and Southeast Asia? This also means asking in theoretical terms the questions: What are the implications of private sector-oriented development cooperation for the agenda of democratization? Is there any correlation between political objectives and economic agenda in contemporary development cooperation?

A couple of main research objectives will have to be pursued in studying this phenomenon of the private turn in Nordic-Asia development cooperation. The first is that it will identify risks, contradictions, and complementarities in doing business in these so-called non-democratic regimes vis-à-vis the motives behind the policy choices made by Nordic governments and the strategies conceived by their supported private enterprises. And the second is to determine the extent and logic of development cooperation between Nordic democratic regimes and a variety of largely non-democratic regimes in parts of Asia, and their implications for democratization processes and the evolution of the global economy.

Preliminary observation suggests that the private turn, or the private enterprise-oriented development framework, encourages the economic imperatives for entrepreneurship and investments to take precedence over the political agenda for democracy promotion. As a result, Nordic business interests can be made, or are being made, to operate even within the context of non-democratic political regimes in parts of East and Southeast Asia.

Bonn Juego is Postdoctoral Researcher specializing in political economy and development studies at the University of Jyväskylä, where he is also part of the core teaching staff of the Master’s Programme in Development and International Cooperation. In the autumn of 2016, he is based in Denmark as Guest Researcher at the Nordic Institute of Asian Studies, Department of Political Science, University of Copenhagen working on a project for a Nordic-wide research consortium on the political economy of contemporary Nordic-Asia development relations.



By Jukka Jouhki and Kenneth Bo Nielsen (guest author)

The meaning of 'development' has been significantly transformed during the past decades of global neoliberal restructuring. As the political scientist Kanchan Chandra wrote recently with reference to India:
Before liberalisation, the term 'development' usually meant large state-led infrastructure or public works projects. Private sector activity was not considered 'developmental.' In the postliberalisation economy, the term 'development' has become a shorthand for a package of vaguely defined terms including 'urbanisation,' 'industrialisation,' and 'infrastructure creation' in which it is assumed that the private sector will take the lead.
What Chandra observes in India is of course not particular to that country, and it shows very clearly how almost anything that involves economic activity spearheaded by private capital can be subsumed under the label 'development' – including, perhaps surprisingly, gambling.

In this article we look at how gambling is being promoted as a driver of economic development in two small former Portuguese enclaves – Goa and Macau – in two of the world's most important emerging economies, namely India and China.

Goa and Macau were for centuries part of the Portuguese Estado da India, the Portuguese state of India. In 1961 the Indian army kicked out the Portuguese and Goa joined the Indian Union; sovereignty over Macau was, in contrast, transferred to China in 1999 under more peaceful circumstances, leaving Macau to operate with a high degree of autonomy.

As part of a (crumbling) sea-based Portuguese empire it was maritime trade – and not least a short-lived but very lucrative opium commerce – that for centuries connected these two trading stations. Apart from this shared colonial history, what unites them today is their reliance on gambling as a way of developing their respective tourism-based economies.

There are several more or less well-developed arguments for why casinos are good for economic development. They create jobs; they generate tax revenues that can be used to fund, for example, public education and health; and they boost local retail sales. These arguments are often heard when casinos are justified in the small state of Goa, known as the Las Vegas of India.
Goa, 'Las Vegas of India'. Source

The first casino in Goa opened in the late 1990s and the state is one of only three places in India where legal casinos operate. The others are the remote hill state of Sikkim and the small Union territory of Daman & Diu, the latter also a former Portuguese enclave. But, Goa is the only place where ‘live gaming’ – with a real person dealing you the cards or spinning the roulette – takes place on the handful of Goa’s floating casinos that are located offshore on the Mandovi River where it runs through the capital city of Panjim. In addition, Goa has several casinos located on land.

Most of the customers are domestic Indian tourists, and the casinos generate significant annual revenue for the state coffers. The exact figures appear to be uncertain and estimates range from anywhere between USD 30 million to 100 million per year. Although this amounts to no more than one to five percent of the annual state budget, it is a sum that the state cannot currently do without:

Goa's Chief Minister Laxmikant Parsekar defening Goa's casinos. Source: Calvin Ayre.com.

Over the past years the Goan economy has been badly hit by a total ban on mining, something which has hurt the state finances. And even though mining recently resumed, the sharp fall in the global price of iron ore means that mining no longer generates the kind of revenue that it did six or seven years ago. Not only do the casinos generate revenue and taxes, they also attract large numbers of domestic tourists who may spend lavishly also outside the casino – on food, drinks, accommodation, shopping, and more.

The gaming industry is enthusiastic about the future of casino gaming in Goa. With the Indian middle class growing, and with gaming only being legal in very few places, Goa looks set to remain the no. 1 holiday destination for Indians with money to spend. Thus, Jaydev Mody, the chairman of Delta Corp which operates two offshore casinos, recently said that it was possible to ‘create a destination just like Singapore or Macau’ in Goa. All one had to do was to create resorts and casinos and fill them up, he told the BBC.

But, there is also strong local opposition to the casinos which many see as a social evil and a bad influence on Goan society. In Panjim, many taxi drivers can tell you heart breaking stories of how they have taken devastated gamers from the floating casinos to the airport after they have gambled away their entire fortune in just a few hours. Gambling addiction is reportedly on the rise, and many want the casinos to either relocate out of the Mandovi and into the deep sea, or to shut down completely. But that is unlikely to happen. The current Chief Minister of the state, Laxmikant Parsekar, who had for many years stated that he is against casinos in Goa, has now – just like his predecessor in office – swung around to 'acknowledge' that the state depends on the casinos for employment and revenue. 
A floating casino in Macau. Source: Jukka Jouhki.

For Macau, the liberalisation of the state monopoly on gambling in 2002 is perhaps the single most important event to ever have taken place, politically, culturally and economically. After 2002, international casino companies and millions of gambling tourists rushed to Macau. Now, every year more than 30 million tourists visit Macau, the size of only one third of Manhattan and with a population of just 500,000, to spend their money in casinos, and on shopping in the casino complexes. Most tourists come from mainland China where gambling – other than lottery – is forbidden by law, but where different forms of gambling have been part of everyday life for ages. It is the growth of the Chinese middle class that has enabled tourism and recreational consumption so that Macau, as Professor Tim Simpson from the University of Macau puts it, is 'a laboratory of capitalist consumption for China'.

While Goa may be the Las Vegas of India, Macau is 'Vegas on Steroids'. In terms of revenue Macau surpassed Las Vegas as the global Mecca of gambling already a decade ago, and today revenue stands at six times that of Las Vegas. An average tourist spends only a day or two in Macau, but easily spends a thousand euros in a casino, and another thousand euros on shopping and services. Through taxation, the government of Macau earns more than 10 billion euros annually, making Macau's GDP per capita the second largest in the world. 

In the ten years after the gambling monopoly ended, Macau's total GDP grew fivefold; and, unlike in Goa where the number of casinos are limited in number, gambling has considerably increased the quality of life of many Macanese citizens. Employment rates are high because gambling, tourism and construction demand a large workforce, and some of the profits from the industry do trickle down to benefit people at large through better schools, better health care, heritage conservation, and so on.

However, this reliance on a single industry makes Macau's economy very vulnerable to the fluctuations of global economy and especially to the slowdown of China, where the anti-corruption campaign has stopped many wealthy mainland businessmen from traveling to Macau to spend their money. Hence, for a few years now Macau’s economy has slumped. The recent slump notwithstanding, however, the gambling boom has changed Macau culturally, socially, environmentally, and even geographically. 

A gondola inside the Venetetian Macao, the biggest casino in the world. Source: Jukka Jouhki.

The cityscape has become a 'casinoscape', and the increasing demand for gambling outlets has made Macau expand its territory into the sea. For example, a strait between two Macanese islands was filled to form the Cotai Strip, a concentration of casinos; and a new airfield was constructed by filling a strip of sea east of Taipa island. Incidentally, Goa too is in the process of building its second international airport in an attempt to increase tourist arrivals.

Even without the tourists, Macau is the most densely populated area in the world – three times more than nearby Hong Kong. Thus, hosting an additional 30 million visitors every year is a big challenge to the local transport system, to city planning and, of course, to local politicians who have to figure out ways to redistribute the gambling revenue and restrain inflation. As Professor of Political Science Bill Chou from the University of Macao observes, 'right now the biggest problem of Macau is that the benefit of the economic development is highly concentrated in the hands of a very small number of business people and pro-government organizations.' 

For that (and other) reasons, the Macanese citizens themselves are not uniformly enthusiastic about their economy being so dependent on gambling and, like in Goa, people are sceptical about the money laundering and prostitution that tend to accompany gambling on a large scale. Thus, while gambling is certainly a popular Chinese timepass that produces the kind of 'social heat' that is conventionally seen as good for social relationships, the way the industry works in contemporary Macau has rendered it somewhat morally dubious.

Seen from Goa, what has happened in Macau will appear as either a dream come true, or as the realisation of one's worst nightmare, depending on perspective. While there is no denying the fact that gambling increases economic activity and creates jobs, the question is whether this outweighs the perceived negative social impact of the gambling industry and, not least, the very real democratic deficit that emerges when a powerful gaming lobby acquires the clout to define state policy and economic priorities. 

Sources and more information



By Mowshimkka Renganathan

There is a famous saying in India, “you don’t cast your vote but you vote your caste” and it holds true in all the Indian elections. Castes in India are endogamous units of people synonymous with the term “ethnic” groups in other parts of the world. The entire population in India has organized itself into various castes and arranged themselves in a social hierarchy. Over the course of the past six decades, each caste has become its own political unit with leaders, registered associations, members etc. and they function to serve the interests of their caste members and to represent the caste in all matters necessary.

ADMK campaign. Source: The Indian Express.

While they appear to function and behave as a large extended family, they are viewed as viable “vote banks” by the politicians of India. Vote bank is an Indian term for a group of people who have a common identity or goal and can be relied upon to display solidarity while choosing whom to vote for.

Although not an explicit strategy, every political party strives to earn the support of the various caste groups that live in their constituencies. It is similar to Hillary Clinton appealing to the cause of the veterans or Donald Trump earning the support of the middle class voters in the US, but the difference is that when a caste allies itself with a political party, it is “understood” that almost everyone belonging to the caste would vote for the supporting party. These vote banks indirectly play a crucial rule in influencing the political discourse, policy making, candidate selection for constituencies, financial planning etc. of each state in India.

Tamil Nadu is a south Indian state which is historically known for its strong adherence to caste system and caste-based politics. The interplay of caste and politics are highlighted when elections are around the corner.

In May 2016, the state assembly elections were conducted in Tamil Nadu and I followed the election affairs to highlight the areas in which caste influence played a vital role. The important process of any election is the grouping of allies, announcing a manifesto (a declaration of plans and policies), selecting candidates for each constituency, campaigning, poll day and results.

In Tamil Nadu, the three major political parties are DMK, ADMK and DMDK and their ideology is not caste-based. However, there are many other political parties formed directly by castes such as the Vanniyars, Dalits, Mutharaiyars, Nadars etc., and there are parties that are formed around minority Muslim groups. These parties form alliances with the three major parties.

The alliances formed between the above mentioned parties for the 2016 elections reflected the caste- affiliations. Each party collected their caste based vote banks based on their allies. (The complete details of alliances and names of the parties can be found here).

Manifestos are a good place to analyse the influence of castes in policy making; In April 2016, numerous booklets were dropped from door to door by different parties to ensure that the manifesto of each party reached every possible voter. All the major parties accused each other of “intellectual theft” regarding their policies, and it was indeed evident that it was difficult to distinguish a party from another in terms of their policies. In most manifestos, there were chapters entitled “Welfare of backward and schedules castes” and “Welfare of minorities” which addressed the caste based policies and schemes that would be implemented by each party after winning the elections. 

Above and below: Parties exhibiting their manifestos. Sources: One India Tamil.com, Yashnews.com.

At this point it is important to note that the castes in India are organized into various categories such as “backward”, “most backward” and “scheduled” based on their historic socio-economic status. Each category of castes is given special benefits by the government so they can achieve “development”. The process is known as a reservation system according to which admissions in schools, government jobs, and sections of government schemes are “reserved” in various percentages for the different categories.

However, the government ceases to provide the benefits for families whose annual income exceeds a mandated threshold, thereby excluding the “creamy layer” (Rich families) of each caste from the reservation system.

Collectively, all of the parties vowed to increase the “percentage” of reservations and the threshold income, in order to gain the votes of a richer section of all castes. Additionally, DMK promised to implement the caste-based reservation system in the private industry sector. It also promised to revise the “list” and “upgrade” the categories of several castes so that they could enjoy more benefits. PMK, on the other hand, promised that the welfare and rights of the religious minorities like Christians and Muslims would be specially protected, some religious convicts released on mercy, and “manual scavenging” (latrine cleaning) by certain castes abolished.

At this juncture, each caste would decide the party they wanted to vote for based on the policies they would benefit the most from. Each party strategically earned itself a vote-bank through such policy declarations.

Kongu Gounder caste party campaigning in a village. Source: The Hindu.

Following the manifesto comes the nomination of candidates; each party selected their candidates for the various constituencies. As per government rules, there are 234 state assembly constituencies out of which 44 are reserved for candidates belonging to “scheduled castes” and 2 are reserved for candidates belonging to “scheduled tribes”. The candidates are chosen based on their caste and the maximum possible vote banks they can cull in their constituency.

Finally, the parties appealed to the cultural and ethnic identity sentiments of the voters by using highly emotional political rhetoric. PMK is known for their ‘80s rhyming campaign slogan “The votes of Vanniyar caste is for no-one else”. Another caste-party claimed that they are “children of the sun” and that no one can defeat them while another party retorted by asking “Why can you not beat the summer heat but need AC, if you are the children of the sun?” 

PMK campaigning. Source: Indian Express.

Such witty and emotionally charged discourse between parties appeal to the ordinary citizen who feels the need to take sides to protect his identity. However, within the last decade, there has been an increase in the number of caste associations that aim for caste solidarity, which is also the aim of political parties during their election campaigns. The politicians might break ethnic barriers by dining with various caste members, drinking tea with the people on the road, naming newborn babies. The most common strategy is delivering hair raising speeches on unity and solidarity. 

The election results were announced on May 19th 2016 and in a surprising turn of events, many caste-based parties actually lost the elections while there were only a few strong caste-based party leaders who were elected. Thus, there might be a change in the people’s preferences to caste-based politics in Tamil Nadu. 

Tamil Nadu 2016 election results.

Nevertheless, politics in Tamil Nadu is still dominantly caste-driven, and castes participate in politics by forming official caste organizations, mobilizing funds, doling out free memberships to their caste members, implementing strict endogamy in marriages, asserting their dominance and identity through communal violence, and slowly rising to power as a formidable vote bank after which they can demand for favours and policies in return for their loyalty as a vote bank.

Note from the Editor: Mowshimkka Renganathan is a new member of Poverty and Development Research Center at the Department of History and Ethnology, University of Jyväskylä. Her ongoing PhD research focuses on the caste-based reservation system in Tamil Nadu, India.



Click here to read the book of abstracts. 

By Jukka Jouhki

Our conference Poverty's Causes and Consequences in the Urban Developing World gathered together poverty researchers from 19 countries and all major continents for three days of discussion exploring new perspectives on urban poverty. Fifty paper presentations and four keynote lectures offered critical perspectives and encouraged approaches on the intersection between micro and macro levels of analysis. Papers represented a wide variety of disciplines and presented local case studies from many different countries with relevance for larger issues as well as larger-scale studies with theoretical implications for micro-level research.

The first day of conference started with Prof. Laura Stark's welcome, followed by Prof. Bipasha Baruah's keynote that focused on gender equality in India, and presented an initiative called Women on Wheels in New Delhi. Then Dr. Dayabati Roy gave her keynote speech about the way in which poverty vis-à-vis unemployment is created and recreated as a consequence of the complex relationship between capital, class and the state in India. The afternoon continued with panels focusing on themes such as childhood, gender, urbanization, religion, governance, and land-use as well as how to measure poverty (please see the programme).

Keynotes: Baruah, Roy Ferguson and Anand. 

The next day, panels continued with papers discussing rightful share, rights, labor, education, and sexual risks. Prof. James Ferguson delivered the third keynote of the conference, in which he offered ways to rethink production and distribution which draw upon his widely popular book Give a Man a Fish (see also the Q & A session). The day ended with a conference dinner at Hotel Alba.

Prof. Laura Stark welcoming our dinner guests. 

The last day of conference offered Sidy Lamine Bagayoko's ethnographic film on the challenges faced by a village school in Mali, and a panel about neoliberalism and urban politics. The last keynote of the conference was Dr. Harjit Singh Anand's talk about poverty and dynamics of the Indian informal work sector.

We wish to thank all the participants and our sponsor, the Academy of Finland.

Watch the keynote videos.



A guest article by
Kenneth Bo Nielsen

When people think of the Indian state of Goa it is usually images of beautiful beaches and coconut palms gently swaying in the breeze that spring to mind. Once a compulsory stop on the original hippie trail, Goa has now become a favoured playground for domestic Indian tourists who come to relax and have a good time in a place where kuch bhi chalta hai – ‘everything is ok’. 

What is less commonly known is that this small state on the Indian west coast has also been home to numerous, intense struggles over land and nature in recent decades. Mass tourism, for instance, is far from uniformly popular as it takes its toll on the environment: The hotels and resorts along the coast line lay claim to scarce space, produce unmanageable amounts of waste, and disrupt important tidal flows. 

Further inland, polluting industries have been resisted on many occasions, as have the state government’s attempt at setting up so-called special economic zones, that is, exclusive industrial enclaves. And, in the parts of the state that are farthest from the coast and bordering the Western Ghats – a UNESCO world heritage site – rampant and often illegal open pit iron ore mining has destroyed vast tracts of land and many water bodies. While mass tourism, industrialisation, and mining provide employment to many people and a much needed source of revenue for the state, they are thus, because of their impact on land and nature, also highly controversial and contested issues. 

Since 2015 I have been following an evolving controversy over a large tract of land in north Goa. Here, more than 2,000 acres on and around a large, lateritic plateau have been acquired by the state government to set up a new international airport. The airport project is being promoted by its supporters as a real economic book for the state as it will sustain and increase mass tourism during the years ahead, and, more generally, act as an economic catalyst for the northernmost part of Goa which is generally considered among the more ‘backward’ parts of the state. 

Aerial shot of the plateau. Source: Catch News

In contrast, those fiercely opposed to the airport – which includes both many locals as well as the larger environmental movement in the state – see it as not only destructive of Goa’s fragile nature, but also as a scam that is intended to benefit only real estate developers, wealthy entrepreneurs, land brokers, and corrupt politicians and bureaucrats. In the struggle over the land and the airport, both sides have relied on a vast array of arguments, both economic, political, and environmental, to argue their case and sway a larger public. Yet what struck me when listening to and studying these arguments was the radically different views the two sides had on the exact nature of land that was being acquired to make way for the airport, and what the impact of the airport would be. 

To the proponents of the airport, the plateau on which it would be located was little more than a rocky, barren patch of land without habitation, residents or permanent structures of any significance: ‘The land is largely non-cultivated due to an out cropping of lateritic soil and no residential and water bodies are found within the project location except few houses’, writes the mandatory Environmental Impact Assessment (EIA) report that was prepared at the behest of the Government of Goa. It added that ‘vegetation and trees are sparse’. Eighty-five per cent of the acquired land was, it said, either ‘land with scrub’ (55 %), barren rocky/stony waste (22 %) or scrub forest (8 %). 

In its conclusion, the report found that the airport would have a ‘medium impact’ on the local biological environment; but in effect, this ‘impact’ mostly referred to a larger risk of animals being killed in the increased car traffic, or falling into open construction pits or trenches. Beyond that, and given the seemingly rocky, inhospitable and barren nature of the place, a new international airport would have very little impact on the local land, water and socio-economic environment.

The airport project’s opponents would beg to differ. At a controversial public hearing on the EIA report which took place on top of the plateau itself on 2 February 2015, they spent considerable time deconstructing this view of the plateau as barren wasteland. To the project’s opponents, the plateau’s location close to the Western Ghats made it an intrinsically eco-sensitive zone almost on par with the Western Ghats itself, second only to the Amazons in terms of biodiversity. 

Some wildlife of the plateau. Source: Catch News.

The plateau was claimed to be home to a plethora of wildlife – including endangered species – and flora and fauna, as well as more than 40 surrounding perennial springs; and it performed an indispensable function in terms of ground water percolation and recharge, acting as a giant sponge that stored and released water throughout the year. To prove this point, activists did their own environmental impact assessment of the plateau, concluding that whereas the official EIA report mentions only the presence of mice, cats and dogs, leopards and bison in fact roam. The plateau recharged over two billion litres of water every year, it was found, meaning that if the plateau was destroyed to make way for the airport, its crucial role in the wider regional hydrology would be disrupted, leading to repercussions far beyond the plateau itself. 

A wrecked hydrology would not only destroy cultivation on the slopes of the plateau, and on the nearby plains below, but also the fisheries in the nearby Chapora and Tiracol rivers. Moreover, in the surrounding area agriculture was practised, including extensive cashew plantations on the slopes that generated an annual turnover of as much as 500 million INR, and which enabled the production of the locally popular cashew-feni, a strong liquor produced from the cashew apple. 

Sacred groves would be lost if the airport came up, including the Barazan on the very top of the plateau, a grove comprised by 12 trees at which important rituals were carried out yearly. For the same reason, one activist group consistently referred to the plateau as the ‘Barazan’, and not the more commonly used Mopa plateau, so as to underscore its importance in an ancient cultural and socio-economic order that was now fast disappearing.

The first phase of airport construction is planned to commence from November this year. By the time we know more about which of the two sides to the controversy got their facts about the plateau ‘more right’, it may thus be too late to do anything about it.

Kenneth Bo Nielsen is a post-doctoral researcher at the University of Bergen Department of Sociology.