Media and Development

Ulan Bator, July 2005

IPD’s journalism program

• We have a website• We do journalism training.• Will ask you to fill out an evaluation form at the

end to help us improve.• We are editing a series of manuals and

textbooks. ICFJ, oil and labor• Textbook out in in English, Vietnamese and

Mandarin, due out in 2005 in Arabic, Spanish, Serbian. French translation is in the works.

• We do this because educating the media is a necessary part of the development process

The Media Plays A Key Role• Development is a process of transformation[1], and such change is

best effected through the creation of a national dialogue on the need for change and a consensus behind what changes are required. Countries are too large for everyone to sit together in such a dialogue; it is largely through the media that such a national dialogue occurs. The media helps frame the issues and provides the information which form the basis of such a dialogue. How they characterize a reform may doom even a good reform to a premature death, or may enable a “bad” reform to continue to be debated. As participants in the debate increasingly realize the power of the press to help shape the debate, pressures will inevitably be brought to bear; reporters will be increasingly confronted with information and arguments by those wishing to shape the debate in particular ways.

•[1] See J.E. Stiglitz, Development as Transformation

Developing Countries Are Different

• One of the ways in which developed countries are different from developing countries is the “information density”: in developed countries there are a large number of channels through which information flows between government and the citizens, between markets and consumers, between individuals in one part of the country and those in another. With so many channels underdeveloped or blocked in developing countries, it is all the more important that those channels which work well; that they disseminate information which is accurate and unbiased. The absence of think tanks puts additional burdens on reporters to interpret the information. Thus, reporters need to get the information that will help them become more informed and think critically about this information.

• There are by now a large number of studies that show the critical importance of the media in both corporate and public governance. [1] reference

• [ 3] reference Dyck• [4] See J.E. Stiglitz, Development as Transformation

The Press is A Watchdog

• Sen’s work[1] shows, for instance, that countries with a free press are less likely to have famines; other work shows that a free press helps to limit corruption and ensure individual rights are not abused.[2] The press played a central role in exposing the corporate scandals in the United States, and continuing pressures for reform. Interestingly, there is some evidence that a foreign press may be particularly effective, not suffering from what we referred to earlier as “national bias,” and less beholden to powers within the country that would resist such exposure.[3] The Financial Times, for instance, was particularly active in exposing the problems in the New York Stock Exchange; even though the Wall Street Journal first noted the excessive salary of the Board’s CEO, it did little to push the story.

Writing About Globalization Is Now Part of the Job

• Globalization is an enormous topic for reporters now and one that is putting huge demands on the media.

• Globalization in its simplest form means the circulation of goods and services but it can also mean the circulation of ideas and ideology. The anti globalization movement is a global one so were the recent protests against the war in Iraq.

• The end of the Cold War have also meant globalization of economic ideologies such as that of the Washington Consensus and global capitalism.

The Global is Local• Globalization has a domino effect and often leads to more globalization. For example, the

countries affected by the economic crisis, which began in 1997 were often treated with similar responses whether they in Indonesia or in Argentina. In both cases countries having economic problems were told to cut deficit spending. Many countries which receive IMF and World Bank aid are given similar advice to each other—advice which is meant to bring them into the global economy such as trade liberalization or privatization which can lead to foreign ownership of local companies.

• This in turn has led to some global phenomena: protests against the reduction of food subsidies or suspicion of foreign ownership of local businesses have occurred in many countries around the world.

• Domestic economic policies have global impact as well. US or EU subsidies of agriculture mean that developing countries such as those in Africa find it harder to export their products. Joining the WTO can mean opening up local industries to foreign competition. The globalization of open capital markets has made countries vulnerable to global speculation in foreign exchange.

• There are myriad examples of this: trade agreements can mean local jobs will be lost. So there is an intertwining of the global and local.

• What this means for journalists is that today reporters everywhere cover global issues, and that local economic stories have become global ones. This has placed a huge burden on reporters all over the world. It is not enough to know about your local company anymore. You also need to know about global trends in the sector in which your local company operates. You can’t write about labor in Jakarta or Hanoi without knowing about the Nike boycotts in the US and Europe and yet many people do.

Global Knowledge is Key• Writing effectively about a local privatization or banking crisis means

having to know about what has happened in other countries. And yet reporters around the world are covering these topics with very little background information. I have met with reporters around the world and found two things:

• they are by and large (with some notable exceptions) ill-prepared to write about the complex economic issues facing their country.

• They lack information about what has happened in other countries.• A few examples: reporters in Ecuador covering electricity

privatization and Bulgaria also without knowing that both countries were looking at these issues.

• Reporters in Turkey curious about the debt crises in Argentina and Brazil.

Lack of Knowledge Hurts Coverage• This lack of knowledge hurts coverage. For one thing, reporters will turn to the nearest available source and

sometimes report their views uncritically. Too easy to take the IMF or government WB press release and repeat it verbatim. IMF/WB says privatize but without knowing whether it worked or why it failed in Czech republic but not Poland or other countries leads to weaker reporting and lack of analysis.

• Also reporters learn about these complex subjects from their sources and of course their sources often involved in the subject and so are not objective. If you learn about the stock market from a trader, he will have his own views about the market. These views may not be the same as that held by an economist or a retail investor. Inevitably, this lack of knowledge hurts coverage. Business and economics reporters are especially vulnerable because the subjects they write about are so technical and require so much knowledge Naturally, reporters will turn to the nearest available sources and, regrettably, they sometimes report what they learn uncritically, not realizing the biased perspectives. When a journalist is on deadline and writing about a topic that is unfamiliar to them it is all too easy to take the nearest press release and repeat it verbatim. The problem is that those who devote resources to public relations usually have a motive for doing so. They typically want to convince others to support the positions that they advocate. But too often reporters take press releases as “facts” rather than as “advocacy.”

• The international economic institutions, for instance, have well honed and well-funded public relations departments. If they are urging a country to privatize its water supply , they naturally will explain why it will enable more investment, and therefore greater access to clean water. They will typically not mention the enormous opposition to water privatization in other countries, and if the issue gets raised in a press conference, they will either quickly dismiss such opposition or explain why it was misguided. They are unlikely to emphasize the problems that have occurred elsewhere—the increase in the prices, making clean water unavailable to some that previously had access; the one-sided renegotiations—if the foreign concessionaire bids in a way that leads to low profits, he insists on new terms, often with pressure brought to bear by the foreign government; but if the foreign concessionaire has high profits, pressure from the government to renegotiate are strongly resisted. If there are discussions of an electric power agreement, the emphasis will be on the increased availability of electricity, not on the price or on the large risks which the government may assume.

• Other readily available sources of information often reinforce these biases. The water company obtaining the concession or the international firm signing the electric power agreement often have well functioning and well financed public relations departments that attempt to shape public opinion.

Beware of Agendas• Everyone journalists meet will have an agenda or an opinion on what you

are writing about. That is fine and normal they need to be aware of it. They may also make assumptions about you and what you believe in. It is important to work out what their agenda is and why they are talking to. Which faction of the government are they in? are they trying to send a message to someone?

• --there is often a hectoring/moralistic approach to covering economics/business. I tell reporters they would do well to avoid this sort of mind set as it gets in the way of reporting. Big problem in all countries, natural assumption that sources from our country are giving us correct information and that you can not trust the foreigners.

• In Vietnam IMF/WB lectured the Vietnamese government on what they were supposed to be doing. Reporters would take on the same tone of voice and talk about “much needed reforms” .

• This sort of attitude is patronizing and also unprofessional. Our job as reporters is to listen and understand what is going on and to explain it to our readers.

Double Standards in Coverage• sources and readers make assumptions about your views because of who reporters

work for.• They will assume you agree or disagree with their views on a variety of issues• Certainly national biases are prevalent in a lot of news writing • US coverage of the French and German economies is often a bit derisive. We have

all seen articles in the US press about the spa vacations for German workers, how the shops shut on Sundays, the French retire young and only work 35 hours a week. There is a sort of patronizing attitude: these people need to restructure their economy, don’t they get it, they don’t work as hard as we do in the US.

• Articles about corruption all the time and cronyism. Yes, developing countries have a lot of corruption but also no question that it’s the richer countries who pay the big bribes.

• Asian countries blamed for cronyism in 1997 crisis but there is a debate about whether it had a major effect economically. Some economists feel that corruption is essentially a tax and that the economic impact is not huge

• With the US scandals at Enron other companies and on Wall St. the US is also implicated and it’s become a lot harder to go around complaining about lax accounting standards overseas as the US used to. This is not to say that lots of countries don’t need to improve their standards, of course they do.

• Russia coverage on the oligarchs there has been very one sided in the US.

A Second Example: Enron In India

• Remember that I am not an economist and I am not here to discuss the correct way countries should handle their economic policies. I want only to talk about effective journalism and how bias means one can miss the story.

• An example of where these underlying assumptions do a disservice to reporting:• US companies (and maybe others) building power plants in developing countries

routinely want to charge very high rates for power. While power costs may be 2-3 cents in the US and Europe a kwh they are often quoted at 5-6 cents in Asia. I recently reread a lot of the US coverage of Enron overseas and there were a number of articles about the Maharastra power plant in the US where there were a lot of protests about the price Enron was charging the Indian government in the take or pay contract they were signing. None of the articles by the US reporters mentioned or questioned why the price was so high for the Indians. None talked about whether it was fair for the Indian government to bear the risk of the plant. Typically the attitude of many US reporters overseas is that the countries are lucky to get US investment.

• This meant that US reporters were not prepared for the furor in India that greeted Enron’s proposal. The power deal in India was renegotiated at a lower price. No doubt many US reporters were surprised when this happened although the Indian press covered it in detail and asked tough questions before the controversy erupted.

More Examples of Double Standards

• Developing countries need to dismantle their subsidies/tariffs but we don’t

• They are supposed to privatize things we would never privatize such as pensions.

• They need to lift capital market controls and open their markets even though the West had them for years.

• They need to sign trade agreements even though they may lost jobs or wind up opening a lot of markets to foreign companies while not getting equal benefits.

Thinking Critically

• Thinking critically means asking why? Who will benefit? Who will lose? What is really going on?

• What are the parties involved any issue really thinking/planning

• Where are they getting their information?• Who are they talking to and what agendas do

those people have?• Put aside all the clichés of “market discipline”

and “the market knows everything”

NGOs Can’t Compete

• In some cases, NGO’s may attempt to provide counter information. But they are typically no where near as well-financed, and sometimes in their zeal, accuracy is lost. If the views of the NGO’s are presented, reporters are seldom in a position to do more than simply report; they can provide little assistance in understanding the sources of such marked differences in opinion.

National Bias is Prevalent

• National bias in the more advanced industrial countries has often presented a problem for those in the less developed countries. One of the main sources of information that reporters rely on are stories published elsewhere. The greater resources of those in the more developed countries enables them to provide seemingly more comprehensive and in-depth coverage, and many reporters in developing countries are accordingly tempted simply to repeat the perspectives developed there. In fact, in many cases developed country reporters get their information from the same sources available to those in the developing world, for instance the international economic institutions and financial institutions.

Get the Information You Need

• Critical reporting means talking to everyone you can find.• --Get all sorts of views; from the regular person, the workers. The head of the small

company, the other reporters from different countries. You get great stories by going to the people no one else talks to

• ---Go down the food chain, don’t just talk to the minister but the lower level person in the ministry. Don’t just interview the Central Bank governor but also someone in the the research division.

• --Read up on other countries’ experiences as a guide to what could happen in the country you cover.

• --If something seems weird, it may be weird. Don’t write what you don’t understand• --Be skeptical watch the numbers. Bailout figures often absurd. Huge headline

number is announced but not delivered. The headlines in Indonesia after the 1997 crisis promised an $83 million IMF bailout. That amount was not handed out to the country, some was delayed and can come in the form of different kinds of back-up lending lines.

• --If a company cant explain a number clearly, then maybe there is something wrong with it

• -If you are doing market stories, it is worth reading and interviewing academics. Often editors are dismissive of academics—too isolated and ivory tower. But they know a lot about how things are supposed to work and can give a counter intuitive view. While Wall Street was applauding the repeal of Glass-Steagall, academics were predicting what would happen and the academics were right

• -- Academics come out with lots of interesting reports which you can get story ideas from knowledge@wharton.com is a great resource for new research

• --The research dept of World Bank often in the lead and new research from there can set the way for later changes in policy. Example of this is the bank deposit insurance debate.

• --There are far fewer analysts being quoted now, more quotes from people on the buy side. Says who they are and how much money they manage

• --Go back and see if people were right. Reporters at The Ticker at Dow Jones now does this and they do follow up stories later on whether the investment analysts’ predictions came true.

Future Stories• Expect more financial crises and a continuing debate on bailouts and the

reform of the international financial architecture• Trade and intellectual property rights, agricultural subsidies will remain on

the agenda• Power and energy and infrastructure.• Continuing debate and reform within and outside the IMF and WB. The WB

goes through phases and the appointment of Jim Wolfensohn a few years back is a sign the bank is more in the phase it went through when Robert MacNamara was president, ie emphasizing country ownership of reforms as opposed to infrastructure construction. Wolfowitz will likely usher in a new era though the bank takes a long time to change

• Reform of the global financial architecture • Privatization is still a major issue in the developing countries.• Corporate governance is still a topic in the US and Europe given the recent

scandals. These have left developing countries suspicious of the US role model.

• Accounting also still a major topic.