The Impact of Crises on Relational Capabilities

Renouard, Cecile; Giraud, Gaël; L'Huillier, Hélène; Gupta, Rakesh; Ezvan-Dufeu, Cécile (2014). 'The Impact of Crises on Relational Capabilities' Paper presented at the annual conference of the HDCA, 2-5 September 2014, Athens, Greece.

Crisis and Relief in the Niger Delta (2012–2013): Assessment of the Impact on Relational Capabilities

Gaël Giraud, Hélène L'Huillier and Cécile Renouard 

Despite maintaining a strong growth rate in the recent years of global recession, Nigeria is still ranked 153rd out of 186 countries in the HDI. The Niger Delta region has a particularly high level of inequalities and oil companies tend to replace public authorities. In times of economic and environmental crisis, basic capabilities of the most vulnerable can thus be easily threatened.

During spring and summer 2012, eleven communities in the Onelga area experienced two different crises: a technical incident from an oil company and a flood. Some of the affected communities received financial or material aid from the oil company. Our research team collected data before and after the events in these communities and in non affected ones. For our estimations, we apply a difference-in-difference approach, and use a baseline survey from 2008 to verify the parallel trends assumption. We also conducted qualitative interviews onsite.

The results show that the events implied a rise in the MPI score of the affected communities, and that the help provided to some communities compensates this deterioration of material capabilities. In terms of the Relational Capability Index (RCI), qualitative analyses show that the level of trust deteriorated in the area of the oil incident due to rivalries in receiving the financial compensations, whereas it increased in the flooded area, where population displacements occurred alongside a high level of solidarity from the non-flooded houses.


Capability-Enhancing Policies – Social Capital, Institutions or Equality, and their Economic Payoffs

Gaël Giraud and Rakesh Gupta 

This paper explores the interplays of the RCI, social capital and institutions as capability-enhancing policy indicators, alongside their respective causes ranging from inequality, public spending, ethnicity, taxation, and standard measures of human development (HD) such as education and income.

Our research questions are: How has the literature employed the definitions of social capital and institutions? What are the implications for public policy with a capability-enhancement focus?

A multilevel analysis is made possible thanks to the Gallup World Poll. In addition, we implement standard OLS models along with an instrumental variable strategy to avoid endogeneity problems.

Our results are threefold: Firstly, the links between growth and capability-enhancing indicators suggest that education has a positive and significant effect on growth; price level of investment has a negative and significant effect on growth; institutions have a significant (positive, yet surprisingly negative around the crisis years, along with inequality emerging with a negative and significant) effect on growth. Secondly, the determinants of capability-enhancing indicators suggest that inequality and education are significant (negative and positive, respectively). Thirdly, we also attempt to disentangle the links between the capability-enhancing indicators.

Our paper is unique in three different respects: it revisits questions of growth and HD, complemented with the capability focus; it allows European countries to be considered separately, and for before/after the crisis; and preliminary results suggest that a public policy focused on capability enhancement has positive effects that are also transmitted to mainstream economic objectives.


Global social justice: why corporate responsibility matters.

Revisiting Martha Nussbaum's theory of justice

Cécile Ezvan-Dufeu and Cécile Renouard


The purpose of this paper is to analyze how Nussbaum's inclusive conception of justice provides us with an insightful vision of the roots of the current crisis, and show why corporate responsibility, enriched by Nussbaum's conception of human dignity, may be a key driver to foster global social justice.

As the current crisis illustrates, the 'mutual advantage' principle and the win-win game promoted by late economic liberalism can lead to: unfair distribution of resources between rich and poor nations; weak capabilities development for 'unproductive' people according to the market rules (inactive and disabled people, etc.); and extensive exploitation of resources.

The growing constraints related to resources depletion and climate change urge companies to endorse a new responsibility towards global public goods. However, despite the fact that MNCs have a great impact on resource-consumption and -distribution, Nussbaum does not consider them as key stakeholders for the social transformation she promotes: the scope of companies' actions is seen as limited to the regions in which they operate; their social responsibilities are assumed to lie within philanthropic activities but do not include the protection of justice as a whole.

Our paper will confront Nussbaum's conception of justice, with Renouard's CSR framework, using empirical research conducted in Southern India. This analysis will define how and to what extent private companies are accountable, both at local and international level, and in each field of their corporate responsibilities: financial, social, societal and political.


Crashes in a Goodwin–Keen model with heterogeneous households: An assessment in terms of Relational Capability

Gaël Giraud

This paper develops an augmented version of the dynamics first introduced by Keen (1995), which were based on Goodwin's (1991) adaptation of the Lotka–Volterra system (see also Solow (1990)). In this version, we supplement the analysis of Grasselli and Costa-Lima (2012) by making explicit the demand side of the market: the population is made up of three categories of heterogeneous households, which vary in terms of the share of wages, wealth, private debt, public subsidies and taxes.

We show how various fiscal and tax systems affect growth, inflation, and underemployment. In particular, we exhibit conditions under which the debt of households, the public debt and/or the debt of the production sector overwhelm the dynamics and induce a crash, or a deflation phase. We then study how various public policies may mitigate the recessionary impact of debt-deflation.

A specific emphasis is put on the impact of growth trajectories on the relational capability index (RCI) of the population. Based on an error correction model that links the main macro-variables with the RCI, we complement our dynamics via closed-loop modelling of how the RCI evolves along any trajectory. We are thus able to illustrate the logic behind the recession experienced by Greece since 2010. The fiscal austerity program driven by the 'Troïka' (IMF, ECB and European Commission) is then discussed.

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