Issue 2.3 | October 1998 | Information in this issue may be out of date. Click here to link to the most recent issue.
One of the foundations of contemporary economic systems is that expertise can create value. Based on this notion, it follows that economic efficiency results if every person does what he or she does best. Preferences, competencies, and resource capacity in the world of economics and trade drive these choices. In humanitarian pursuits, the trade aspects are less clear, and the financial aspects are less relevant, but the efficiencies gained from applying limited resources to a global crisis are still clear and relevant.
The history of landmines and the attempts of countries, organizations, and individuals to deal with them suggest that there are a range of demining activities and requisite skills required to combat the problem of mines and unexploded ordnances (UXO) that remain from internal conflict and war. Compounding the dilemma are an equally diverse number of countries, locations, terrains, mine and UXO types, cultures, clan or tribal concerns, and support mechanisms that complicate location, detection, removal, and consequence management. Until recently, only a few poorly-funded organizations were involved with international demining activities, and these few organizations lacked the resources needed to bring disparate functions together into an integrated mine action plan that made the most use of the resources available.
Few governmental activities or non-governmental organizations (NGOs) have the resources, skilled labor, technical expertise, or logistics support structure to plan, organize, execute, and sustain an independent and comprehensive mine action program in any given country or region. It is a global imperative, therefore, that cost-efficient partnering and teaming arrangements be established, encouraged, and funded to maximize the benefits to mine-affected countries. As donors, governments and institutions look to the humanitarian community for guidance, one principle that can significantly enhance the efficiency of demining-related activities is comparative advantage.
Contrasting comparative advantage applications in international trade with similar concepts in humanitarian demining reveals certain key factors. The most notable of these factors is the potential economic and cost benefits that arise from encouraging organizations and activities to focus on their core competencies in humanitarian demining and in other related activities. As the resources for mine action programs increase, involved organizations are attempting to
It is to everyone's benefit if organizations and activities focus on their core competencies and increase those activities they do best, while teaming with organizations that have a more efficient capacity to provide other related products or services (comparative advantage) in accomplishing a mutually-supported objective.
The ideas behind comparative advantage are intertwined within trade theory and economic development. Without a broader understanding of these issues, however, the basic concepts of comparative advantage and how it might apply to mine action could be difficult to explain. Therefore, the following descriptive summaries are structured to provide
Please use Table 1 as a reference point for illustrating the concepts that will follow.
(Note: All cost and workload factors used throughout this paper are illustrative only for academic presentations and bear no factual or implied resemblance to actual organizational performance standards.)
Definition: When an activity is chosen, the opportunity cost is the benefit expected from the forgone best alternative. In making decisions, an individual or organization compares the expected benefits of one choice with the expected benefits of all other choices. The individual or organization then chooses the option that offers the greatest potential benefits. Once this option is selected, the benefits of the other options are given up, or forgone. The lost value of those forgone benefits is referred to as opportunity costs.
Definition: The individual (or country) that has the lowest opportunity cost associated with producing a particular product should specialize in producing that product.
Definition: The ability to produce something with fewer resources than other producers use. This production ability is determined by comparing the absolute cost of each good or service available.
Definition: Manpower, money (funding), materials, space, and time. Expanding on the classicist definition, we strongly recommend that information be considered a critical resource as well.
Sources of Comparative Advantages
Individuals can determine the variations in the productivity of labor by the technological differences between countries. Workers in industrial countries earn higher wages than workers in developing countries do because industrial countries possess particular technologies that allow their workers to produce more goods. This increased production can directly impact the available choices of goods and services an industrial nation produces, which explains that nation's particular comparative advantage in a given area.
Even though the output of goods might be equivalent (e.g., a trained mine dog), significant differences exist in the factors of production and the availability of resources needed to produce a given product. The availability of differing factors of production (land, labor, capital, technology, and infrastructure) are so varied among countries that those countries that wish to maintain a comparative advantage use relatively large amounts of their most abundant resource (Heckscher-Ohlin model).
Similar to the Productivity model, this factor is decided solely upon the availability of skilled versus unskilled labor. Great Britain, for example, has a well-educated labor force relative to many of the countries with landmine problems. Therefore, Great Britain has a comparative advantage in industries requiring large amounts of skilled labor. The inflicted countries, however, are usually war-torn developing nations with a large supply of unskilled labor. These nations would, accordingly, have a comparative advantage in those areas requiring large numbers of unskilled laborers.
Because of advances in technology, education, and market sophistication, comparative advantage can actually shift from one nation, organization, or activity to another. The initial comparative advantage lies with the original innovation or skills base. As other countries, organizations, or individuals look to compete or to enter the marketplace, that advantage is eroded and might, in fact, shift to those taking advantage of their factors of production in order to gain market control. For example, the companies that field mine detectors that operate more effectively in highly ferrous soils have an initial advantage over detectors that are less accurate. But once the technology spreads, that advantage might weaken and actually shift to those companies that can improve on the original design.
For every producer or provider of a good or service, there is a consumer of that good or service. Rather than being a supply factor, as is each of the previous situations, the demand side of comparative advantage recognizes that consumers have preferences that have little to do with the efficiencies of production. The preferences for a specific provider exist even when two competing alternative sources provide a good or service that is exactly equal. Many of the NGOs have spent years building solid relationships with donors and other providers, and these NGOs might be reluctant to shift to a different source of funding regardless of the economic incentives to do so.
Strengthening Comparative Advantages
The United Nations has had the most comprehensive role in attempting to orchestrate global demining and related activities. Salaries for deminers are paid from UN trust funds. Mine Action Center management is frequently UN sourced, and a limited amount of equipment and expertise for peripheral development and equipment has made its way to the field through the UNDP. This role has been limited by reorganizations within the UN demining offices, resource realignments, lack of consensus by the demining community on the role of the UN, the application of their demining standards, and the debates around the diversion of UN demining funds for bureaucratic management and oversight. The need to emphasize comparative advantages, however, has been a UN priority for some time, as is shown in the following excerpt form a paper by Mr. Stephane Vigie.
"However, on the international stage it is also important that the principle of comparative advantage applies and that essential activities are undertaken only by those organizations with the corporate capacity and experience to meet the challenges."2
This emphasis on capacity and experience clearly shows a UN preference for the Heckscher-Ohlin model, which uses factor abundance as a determinate of comparative advantage. Mr. Vigie also suggests that new entrants carefully assess their ability to be efficient in these areas before committing resources to mine action. Given the UN's need for quick, high-visibility results and the limited funding available to achieve those results, this particular comparative advantage is necessarily a short-term solution and does little to build a long-term indigenous capacity without cooperation and consensus from the NGO community of a strong, central government support structure. In other words, this comparative advantage does little good to prime a dysfunctional pump.
However, it is also not unexpected to see shifts from differing determinants of comparative advantage as different phases of a country mine action plan evolve. The leading factor might initially be preference as established relationships within the NGO and the relief community look to build upon existing networks and procedures rather than risk donor support by "thinking outside the box" and developing innovative and creative solutions to specific mine-related problems. As solutions arise within these relationships, we would expect to see the initial life cycle determinates emerge as organizations select applicable technologies and tools for a given initiative or region. These determinates will quickly be followed by organizations with human factors advantages as low-skill, high-risk tasks begin to proceed. Finally, as small-scale programs begin to integrate, they will be augmented (and frequently subsumed) under additional management structure and technology insertion dominated by organizations or activities that have comparative advantages in productivity and factor abundance.
This cycle cannot be postulated as a model at this point because little empirical data exists to support it. From observing and discussing demining-related projects, however, this model seems rational, realistic, and logical. The key point is that different organizations with different comparative advantages should work together as early as possible to ensure the cost effectiveness and indigenous capacity built are at their greatest.
The global humanitarian demining community is relatively small, and the identification of particular organizations and activities with specific skills and talents is not difficult to accomplish. There are two Web sites that have begun to identify NGO activity and the country in which these NGOs are operating. These organizations and their on-line locations are
This step is considerably more difficult because it requires a qualitative assessment and judgment, and it compares organizations that do not wish to be compared. Success, however, sells itself in the marketplace, and past performance by many organizations and activities is a reasonable basis upon which to presume future performance. If, for example, HALO Trust or Norwegian People's Aid (NPA) commit to a demining project, their reputation for results is excellent, and their expertise, skills, and training are paralleled by few. If, on the other hand, the Michigan Order of Fraternal EOD Specialists (fictitious) wants to do UXO work in Namibia, a more comprehensive review by donors or supporting governments should naturally occur. This difference in reputation does give a market advantage to early players and trusted agents already working the issue, but as we have seen, new entrants with an economic comparative advantage might serve the entire demining community by bringing down costs and by expanding the pace at which demining and related activities are accomplished.
A number of international firms are already in the field and are building a considerable amount or experience in a variety of countries. The efforts of some firms are restrained only by donor contributions and can "surge" to greater levels of productivity proportionate to the resources available. It seems imperative to identify these particular organizations at the outset of activities in order to provide the fastest initial capacity growth. Thereafter, other organizations with less experience or limited donor support should be identified and resourced to fill shortfalls in larger programs or teamed with others in larger endeavors.
This step involves locating donors and capabilities that exist but have no current active or passive role in humanitarian demining or related activity. Any excess capacity in the organizations or countries should be encouraged to be diverted or resourced against demining and augmented with national or donor funding where appropriate and feasible. It should be strongly emphasized that this process should be one of consensus and partnership. The NGO community should be heavily involved in identifying organizations with whom they feel they can establish themselves more quickly and efficiently. This involvement might not be possible in cases where the NGOs themselves are competing for certain contracts or additional funding; however, there are ample instances where NGO input can emphasize or validate the comparative advantages of other organizations.
This process might not be as intuitive as it sounds, for relatively little multinational central guidance for humanitarian demining and related activities has been done. Demining organizations have been relatively free to pursue their own "targets of opportunity" and to develop partnerships and relationships that fit those objectives. With a stronger role by Mine Action Centers and the UN, the priorities for clearance, assistance, and technical support will be driven less by individual NGO desires and more by well-developed country plans for economic reconstruction. Once these specific tasks are identified within each country, teams and partnerships of organizations and activities should necessarily compete for or be awarded contracts for specified tasks based on the comparative advantages each teaming relationship demonstrates. This identification process is going to be difficult until country program managers learn to use comparative advantage determinations in their decision matrix. Strong central government management might also constrain or facilitate these initiatives depending on training, motivations, and political objectives.
Absolute advantage in certain areas does not necessarily demonstrate comparative advantage. Some country programs, however, must acknowledge that some tasks will be most effectively done when the number of providers is limited or when smaller, in-country providers cannot compete with large, single-source firms for quantity, timeliness, or quality. This situation will be particularly true for "gap" activities that are critical to sustaining a country program or key to transitioning fromdifferent phases of a dimining operation or suvivor assistance initiative. for instance, if prosthetic development is available as well as re-training or other skills programs, but no rehabilitation activities are there to facilitate transition, the country program might rely on an outside source with a distinct absolute advantate (cost efficient) but not necessarily possessing a comparative advantage over other firms. Likewise, if contracted sources are determined to be a "choke point" that prevents progress or success in a country program, specifically-targeted activities might be acquired or requested to replace inefficient operations.
The President's Initiative
The President's 2010 Initiative on Global Humanitarian Demining aims to create an effective international coordination mechanism to ensure that sustained public and private resources for demining are directed, in an organized and rational manner, to programs in mine-affected countries. The Secretary of State and the Secretary of Defense are working in partnership to realize the following goals:
The concepts and principles underlying comparative advantages are useful in accomplishing many of these objectives. Because the US, along with other donor nations, will be a key player in directing the application of resources and coordinating their use, the emphasis on identifying and capitalizing on comparative advantages is a critical component in ensuring the most expedient course toward these objectives and the most efficient use of available funds. The following items are examples of achieving these objectives:
In creating sustained assistance to landmine survivors and communities, a strong investment must be made in host-nation capacity building. In the short term, investments in NGO initiatives seem the logical course versuscorporate or commercial activities. In the long run, however, local initiatives are critical to establishing a sustained capacity for victim/survivor assistance. As one NGO phrased it, "Aid ain't forever."3 This area might be where private initiatives, embedded in the community, are capitalized and guided into long-term care capabilities. Because a survivor will require $3,000 - $5,000 USD annually in medical, rehabilitation, and training service and a surviving 10-year-old victim might have up to 26 different prosthetic devices in their life, this "long view" is an imperative.
There are obvious assumptions and constraints that permeate each of these observations and generalities. There are, however, some "challenges" to meet in order to establish an empirical base for support.
Comparative advantage's success requires a number of ceteris parabis (all else assumed equal) assumptions be in place. The comparative advantage approach presumes perfect competition in the marketplace. Such assumptions have led to criticisms of the foundation upon which comparative advantage might or might not be a viable production or service concept given that these factors are rarely, if ever, equal. This criticism will be particularly true in the multinational environment that characterizes most national-level mine action programs.
It is the primary goal of all humanitarian demining initiatives to develop an indigenous, sustainable, host-nation capacity. This goal infers capacity building, infrastructure development, and socioeconomic development. There are some caveats and warnings to consider before assuming that all development based on comparative advantages is good.
A key element in strengthening comparative advantages in humanitarian endeavors, particularly in demining, is establishing a community consensus that partnerships and teaming arrangements that emphasize a particular organizational strength are more effective in the long run. This process is not as intuitive as first imagined, for the small NGO and aid organizations with long-established relationships have been in place for some time, and they distrust outside influences seeking to realign their resource allocations. This relationship is even recognized by the US Department of State in observing that, in demining, "collaborative efforts are not much in evidence."4
The use of comparative advantages to strengthen humanitarian demining and related activities will greatly benefit the global effort and provide significant resource savings to donors and governmental sources. The identification of these advantages, whether comparative or absolute, is a significant challenge. The identification of the appropriate teaming and partnership arrangements is even more difficult and can only be "encouraged" through incentives and investments in programs that fit the desired criteria. The long-term payoff for global humanitarian demining ultimately will be a community that functions in a more integrated fashion, is less disparate and divided, and shares a common vision at multiple levels of assistance. This objective should remain an institutional imperative to focus limited resources toward outcomes that use the synergy created by shared comparative advantages in accomplishing what they cannot do independently.
Humanitarian Demining and Related Activities: Functional Activity Outline
1 Boyes, William & Michael Melvin, Economics, Houghton-Mifflin, Boston, 1991, pp 971-975.
2 Vigie, Stephane, United Nations Department of Humanitarian Affairs, Mine Clearance Policy Unit, in a paper entitled "The United Nations and Humanitarian Mine Action," Journal of Humanitarian Demining, Issue 1.1, September 1997.
3 Merlotte, Andrews, OECD, at the Ottawa Ban Treaty Ceremony in Ottawa, Canada, December 5, 1997.
4 Cunningham, G. K., Colonel, USMC, US Department of State, PM/ISP, in a speech entitled "A View of the Future of Humanitarian Demining Programs," December 15, 1997, at James Madison University.