A piece on the Guardian‘s Poverty Matters Blog today sets up one of the oddest, and most pointless, dichotomies I’ve seen in a discussion of development. To summarize, the post by Rick Rowden argues that a focus on aid effectiveness and poverty reduction
perpetuates a bloated aid industry that doles out millions of dollars each year to legions of contractors and NGOs to carry out projects in dozens of poor countries.
What it does not do, apparently, is work toward any definition of development
In recent decades, earlier notions of development economics have been replaced with meeting the MDGs. But poverty reduction is not development. We seem to have suffered collective amnesia about the history of development, which used to be widely understood as industrialisation – in which poor countries undergo a transformative process out of primary agriculture and extractive industries into manufacturing and services industries with higher value-added over time.
First, this is an absurdly reductionist definition of development. If Rowden wants to talk down to his readers about the history of development, he’d do well to note that his particular take fell out of currency in the late 1960s because IT DIDN’T WORK. There is a reason modernization/big push theories fell out of favor (unless you are Jeff Sachs, and then you are forever reviving the corpse of the big push at the community level via the MVP. Then again, Sachs doesn’t seem to read development history, either). In short, the borrowing required for industrial ramp-ups almost never paid off with enough revenue to pay off the loans. To understand why this happened is to understand the country-specific interplay of three key factors. First, there were (and still are) structural issues in world trade that locked much of the developing world out of key markets. Second, these policies failed because markets were dominated by large corporate entities operating with very small margins because of their huge economies of scale, basically undercutting any new competitors on price because they had the advantage of a huge head start provided by colonialism. Third, massive corruption within countries drained the productive capital out of these loans, dooming the projects there were meant to fund. Countries had to address either two or three of these factors, in varying ratios, at different times. Modernization theories pushing industrialization had little to offer in addressing them. This is why we eventually saw the rise of an attention to institutions and governance in development – not just at the level of the state, but also in markets and broader trade arenas. It is also why so many countries in the Global South found themselves saddled with crushing debt at the end of the last century – many of those debts were the original loans and continued accumulation of interest tied to these failed policies.
The other issue is that industrialization requires resources (to make products) and consumption (to sell them). At a time when our demand on the natural environment is already beginning to overshoot its capacity to serve our needs, asking countries to take on even more unsustainable activities is an absurdity that will end in failure. There is nothing sustainable in this pathway – and if you look at the post, you will see that the entire argument is framed in an unlimited world, where the only constraint on development is growth:
If countries are unable to use the industrial policies they will need to transform their domestic industries, diversify their economies and build up their own tax bases over time, how will they ever get off the foreign aid bandwagon? Here the “poverty reduction” discourse is misleading; it neglects to ask how countries are supposed develop without industrialising.
Well, that isn’t totally true unless you take a very, very narrow reading of the poverty reduction discourse. A lot of us are working in this space to imagine alternatives. Indeed, there are community level projects that, while not elevating people to the standards of living seen in the Global North, have created sustainable, substantive changes in the quality of residents’ lives. The examples are out there if people want to look.
Beyond all of this, though, is the larger issue – Rowden clearly has no idea what he is talking about when it comes to development when he dichotomizes poverty reduction and development. Even if we saw economic growth as the be-all, end-all of development, there is a lot of work out there arguing that endemic poverty is a huge drag on economic growth and therefore has to be addressed as part of a growth package (see the OECD Observer here). So even in a fairly reductionist view of development, you need poverty reduction . . . and I don’t know anyone who believes that growth adequately addresses poverty. Not even at USAID. Really.
So poverty reduction and development are not an either/or proposition, from any reasonable perspective on development. Rowden’s piece would have been interesting . . . in 1960. I have no idea what the point was in publishing it today.
Dear Ed:
Thank you for your review of my post on the UK Guardian’s Global Development/Poverty Matters blog titled “Poverty reduction is not development.” I thought I would respond to just a couple of your points. You say that my definition of development, “in which poor countries undergo a transformative process out of primary agriculture and extractive industries into manufacturing and services industries with higher value-added over time” is absurdly reductionist and that it did not work. Yet, it did work in all of the OECD countries over the last few hundred years and in northeast Asia in the last 50 years. I am not clear on what else you think the industrialized countries did, but I believe most historians would say they definitely underwent a transformation out of primary ag and extractives into manufacturing and services.
You are right to point out, as did many critics of in the 1970s, that there were certainly some very unsuccessful instances of industry policy failures in developing countries. But I wish you would be a bit more fair and go back through the history yourself and see that a more nuanced view is in order. The critics were selective in their criticisms and ignored successful cases. Please see the books I cited with live hyperlinks in my post by Ha-Joon Chang, Alice Amsden and especially Erik Reinert, and you should also see Robinson, J. (2009) “Industrial Policy and Development: A Political Economy Perspective,” Paper prepared for the 2009 World Bank ABCDE conference in Seoul, June 22-24. Furthermore, the critics of industrial policies did not account for why industrial policies had worked so well in the US, Europe and East Asia but failed so badly in Africa and elsewhere. Instead, they just tossed out the baby with the bathwater and took the whole discussion of industrialization off the table. Again, you are right to point out that particularly in Africa and Latin America, many industrial policies used by governments to support and protect infant industries failed because they were used inappropriately, with poor sequencing, and were often driven by political considerations, nepotism or corruption, and not by economic analyses or strict efficiency grounds. In the cases of Latin America, often the industrial policies were kept in place too long, and were too inwardly focused on small domestic markets, neglecting the need to develop international competitiveness. In contrast, the structures of the political economy in several East Asian countries included institutions that tended to enforce stricter rules for which industries got subsidies and trade protection, and which got cut-off from them when they failed to meet performance targets. Yet, crucially, this history says more about how industrial policies should be done, not if they should be done.
Today, however, there are reasons to believe industrialization can be done differently and better. There are increased numbers of citizen groups undertaking regular budget analysis, budget tracking and budget advocacy work to increase public scrutiny of public funds. In the last decade, dozens of countries have enacted formal statutes guaranteeing their citizens’ right of access to government information. Other efforts include local chapters of the international Publish What You Pay Coalition (PWYP), to better regulate the reporting of royalties paid to foreign investors in the extractive industries, and Publish What You Earn, to pressure foreign investors to disclose publicly the profits they are repatriating out of countries. There are efforts under way to get citizens more directly involved in economic policy making such as ‘participatory budgeting’ and economic policy ‘audits’ from a human rights-based approach. And advocacy by the international Tax Justice Network has sought to take on issues such as tax evasion, illicit capital flight and the role of offshore tax havens in an effort to help authorities increase and improve tax collections. These important trends suggest that citizens are increasingly intending on holding their governments to account for budgets, policies and priorities. These trends suggest that industrial policies which may have been less successful in the past may be much more successful in a modern climate of increased transparency,
public scrutiny and accountability.
Additionally, your critique of my article is false when you incorrectly state that “At a time when our demand on the natural environment is already beginning to overshoot its capacity to serve our needs, asking countries to take on even more unsustainable activities is an absurdity that will end in failure. There is nothing sustainable in this pathway – and if you look at the post, you will see that the entire argument is framed in an unlimited world, where the only constraint on development is growth.” In fact, I don’t know how you could have missed it, but the 6th paragraph, replete with useful live hyperlinks, actually stated: “In fact, the process out of primary agriculture and extractive industries into manufacturing and services is essential for development. Of course, today all countries must approach industrialisation differently, and shift to environmentally sustainable industrial policies based on low-carbon technologies, and shift to low-carbon food production, with gender justice, greater ecological balance and equity, and a new economics that places the environment at its centre.”
Lastly, it was not my intention set up “poverty reduction” and “development” as an either/or proposition, or create a dichotomy, as you suggested. I meant to suggest that poverty reduction is something that should be a result of successful economic development, not a replacement for it, as today’s aid industry discourse often presumes. Thanks for your consideration.
Sincerely,
Rick Rowden, author of “Poverty reduction is not development”
Rick:
Thanks for taking the time to write such a detailed and thoughtful response. I would like to respond to the issues you raise in this response.
First, I am fully aware of the development trajectories of the OECD countries. However, in raising these countries as a model, you are committing the same fallacy as committed by the modernization theorists of the 1960s – you are assuming that the world in which currently low-income countries must address in their development strategies is fundamentally the same as that in which the OECD countries emerged, and therefore the pathways occupied by the advanced economies are somehow appropriate models to be followed by all countries. It is fundamentally not. Simply put, any reasonable view of the history of development in the OECD must take into account the lack of competition from other parts of the world, the nascent state of the global economy, and the massive advantages conferred to many of these countries via colonialism. Industrial policy worked the way it did in these countries because of these factors.
Today, however, the world is completely different. The world economy is supercharged in most areas of the industrial economy, with sectors dominated by hyperefficient, massive corporate entities capable of operating at tiny margins because of their huge economies of scale. There is no way for an emerging industrial enterprise to compete with such highly efficient, massive organizations without many years of protection from competition – something that the major multilaterals and the US have long argued is a barrier to development. This, of course, is something of a hilarious argument given that the Asian Tigers, until recently the only states to really have shifted their position in the world since the 1960s (and still the only small-population, limited primary resource states to do so), all closed their markets to external competition until such time as their key industries were also operating at high levels of efficiency and economies of scale. I find it interesting that in your mention of their institutions you fail to note that they also more or less suspended civil liberties and democracy to allow for the hard decisions, and the hardship, that accompanied their economic transitions. Their transitions were not just about industrial policy – they were at least as much about political and social policy. In Latin America, what you identify as misapplied industrial policy was not so much the product of a failure of development/industrial understanding as it was the need to respond to a population and electorate that was not completely repressed (well, except in Chile, and they became a development darling because they could make hard choices and put down dissent in the population) – that is why protections were unevenly applied and applied for too long. Your examples are not arguments about what sort of industrial policy works – they are really arguments for what sort of political system enables economic transition into industrialization.
But that is beside the point, because as you rightly note that whole debate does not address if industrial development should be undertaken at all. The whole debate I have just reinterpreted above stands outside a simple fact: no matter how well executed, conventional industrial policy framed in terms of free trade was simply never going to work. It has not worked for any non-OECD country (and the BRICs are a mixed bag). And further, even if fair competition was possible, we cannot sustain it environmentally.
I think you fundamentally miss my point about sustainability in your response. While in principal I love the idea of “environmentally sustainable industrial policies based on low-carbon technologies, and shift to low-carbon food production, with gender justice, greater ecological balance and equity, and a new economics that places the environment at its centre,” this is not actionable guidance. It is so general that pretty much anyone could agree with it, because it doesn’t really say anything. What low carbon technologies will allow us to have 3% economic growth for everyone forever? We live on a finite earth, with a population that at in the most optimistic reading will touch 9 billion before leveling off – we simply can’t produce enough raw material for everyone to live like we do in the OECD countries. Right now, we live the way we do in the OECD countries because roughly 4 billion people do not consume very much. This is an inescapable fact – and nobody I know denies it, either in academia or in the development agencies. When they are not on the record, people at the highest levels of the major development agencies will tell you (and have told me) that development does not mean everyone will one day live like we do in the OECD. It means that maybe, just maybe, we can create a world where those currently on a dollar a day will instead have six to eight dollars a day. This sort of a change does not require industrialization of the sort and scale you are putting forward. It can be accomplished through small things like efforts to minimize spoilage of crops on the way to market. This income shift is a huge improvement, to be sure, but it is not an OECD standard of living. How can we talk about equity and justice in a world where this distribution of resources and their benefits is a fundamental fact, unless we address this distribution first? I would argue that until we do, such talk is just meaningless hand-waving.
Finally, you did set up a dichotomy between poverty reduction and development with your title and your article – for heaven’s sake, when you say “poverty reduction is not development” you are setting up a dichotomy. Either own it or retract it! But again, you miss my point. My argument was that economic growth is not a broad based solution for poverty. First, as I argue above, economic growth for everyone is long past possible, so even if it did work to “lift all boats”, it is still an infeasible pathway. Second, it is well-documented (and again, acknowledged in both academia and the development agencies) that economic growth policy has a nasty habit of leaving the poorest segment of the population behind – even when those policies target the poor. Therefore, poverty reduction cannot be an outcome of development – instead, it must be a foundation upon which development is built. It is also well-established (by economists, no less!) that poverty is a drag on economic growth – therefore, even if I was to accept the idea that development required growth, or was the same thing as growth, I would be compelled to address poverty as part of my growth strategy, as opposed to viewing poverty reduction as an outcome of that strategy.
All that said, where people treat poverty alleviation as a replacement for development, I would share your concerns. And this certainly does happen. But the solution is not to replace poverty alleviation-centered programs with “rethought” industrial policies. Instead, it is to think carefully about how to transition from aid and poverty alleviation to some sort of sustained improvement in the quality of life . . . which we tend to shorthand as development.
Dear Ed:
Regarding your point that the world is a different landscape for countries trying to develop today than it was for the OECD countries when they were developing, I of course agree with that. But if you are suggesting that this fact then translates into people in poor countries just throwing up their hands and saying, ‘OK, well we will just give up and stay in plantation mode for forever’, I would disagree. Korea, which was just as poor as Somalia in the 1960s, would have been reluctant to take your advice, as would have the Irish, who built a vibrant IT industry in just the last ten years.
Regarding your point that, “There is no way for an emerging industrial enterprise to compete with such highly efficient, massive organizations without many years of protection from competition – something that the major multilaterals and the US have long argued is a barrier to development.” Well that is certainly true under a free trade system, but the fact is it’s a good thing that there are also other possible options, and there is no reason why developing countries or regional groups of smaller developing economies today cannot and should not use trade protection until their industries are competitive internationally, just as most of the rich countries did. Indeed, just because major multinationals and the US say this or that or don’t like something, does not make it so. Clearly people outside of those power structures are capable of thinking for themselves and quite reasonably coming to opposing conclusions, and pursuing them, even without permission of the former.
Regarding, “Your examples are not arguments about what sort of industrial policy works – they are really arguments for what sort of political system enables economic transition into industrialization.” If you believe dictatorships are necessary for successful economic development, as others argue, it sounds like you would therefore go against all the “good governance first, development second” type of conditionalities that are fashionably prescribed in the discourse of the major donors? Of course, there are still many authoritarian regimes in the world today, and many more imperfect democratic ones, but the long-term trend is in line with the tendencies I described in my previous post to you, that citizens in growing numbers of places are intending on scrutinizing, monitoring, holding to account and regulating the abuses of policymakers and insisting that their interests be looked after in policy. Communications technology is only supporting these trends. While the ability of citizens to pressure even democratic regimes is far from perfect, I think it is not right to say that you need authoritarianism to develop.
Regarding your point about “sustainability” and that the technological shifts I referred to are “not actionable guidance,” I’d encourage you to familiarize with the live hyperlinks I included in the paragraph, as there are many thoughtful people working on these ideas all around the world and laying out very actionable ideas. Of course the “new economics” we need precisely makes your own arguments about the need to question the traditional notions of economic growth vs. our finite resources. There are many new technologies designed to use resources more efficiently and sustainably and this is where we should be putting our R&D, as we develop new technologies, processes and redefine traditional patterns of “consumption” per se. Please, I encourage you to read the links I provided; you will probably agree with a lot of them. The ideas laid out are also only as actionable as are the degrees of political and social mobilization such groups and movements can muster, so I’m sure they would appreciate your activism and support.
Regarding, “Right now, we live the way we do in the OECD countries because roughly 4 billion people do not consume very much,” I really think this is a fallacy of composition, I am afraid, not uncommon to my former university students, who feared a similar zero sum game was at work. Yes, for example, the rise of the East Asian Tigers may have taken some jobs from the West, but they also created important new markets for Western producers and new Western jobs, and new technologies were since developed in those countries that improved peoples’ lives in the West. I do not say it is all an even win-win, but only that the development of poorer areas of the globe is not a zero sum game as many often erroneously presume: this idea that others have to stay poor so that wealthier people can stay wealthier is overly simplistic, I think.
Regarding, “When they are not on the record, people at the highest levels of the major development agencies will tell you (and have told me) that development does not mean everyone will one day live like we do in the OECD.” Firstly, what can I say?—given the sheer disaster and utter failure to raise so few of the low-income countries (LICs) into middle-income countries (MICs) during the last three decades, I’d suggest that the people at the highest levels of the major development agencies are probably not the best ones to be listening to if you are interested in truly fostering development. Again, I am agreeing with you that not even the OECD can going living as the OECD unless we all radically make the shifts in production and consumption patterns as described in the links I provided.
Regarding, “How can we talk about equity and justice in a world where this distribution of resources and their benefits is a fundamental fact, unless we address this distribution first? I would argue that until we do, such talk is just meaningless hand-waving.” By stressing the importance of redistribution, now you are the one sounding like an old 1960s Marxist… Here I think you are misinterpreting cause and effect; its not simply about more equitable distribution, i.e., as in charity like more ODA, but rather it should be more about enabling the poorer areas to increase their own productive capacities so they can earn more of their own wealth, not have to have it given to them through greater global charity. In the absence of being allowed to utilize such industrial polices, and yes, with the requisite temporary trade protection until such industries are competitive internationally—then poor countries are not likely to be able to diversify, move forward and produce more of their own wealth. The historical records suggests that poorer are likely to get wealthier when they diversify their economies and enhance their domestic productive capacities. If that also has the effect of lessening global inequality, then that’s great, too, but not the point. That’s why I wrote the piece in the Guardian.
Regarding your claim that I did set up a dichotomy, and your plea for me to own or retract it, I respectfully disagree. It is not a dichotomy. I am not saying that either you have poverty reduction or development. I did not say that in either my Guardian piece or my post to your blog. I am saying that rather than only talking about addressing the symptoms of poverty, as does the dominant MDGs and “poverty reduction” donor discourse, we should be talking instead about actual economic development; I think that poverty reduction ought to be the successful result of development, not a rhetorical displacement of it. But I guess we can just agree to disagree on the right order, on which comes first.
I agree with you that growth alone is not development. I mean, for example, Malawi could have higher growth next year because commodity prices for tea and tobacco go up on world markets, so they would register higher GDP growth and the World Bank and donors would cheer accordingly, yet the economy would still be as much as a plantation as the year before, and it would not be moving forwards towards diversification into higher value added production.
Regarding: “But the solution is not to replace poverty alleviation-centered programs with ‘rethought’ industrial policies. Instead, it is to think carefully about how to transition from aid and poverty alleviation to some sort of sustained improvement in the quality of life . . . which we tend to shorthand as development.” This logic was exactly why I wrote my Guardian piece. I don’t think it is sufficient forego real economic development and just satisfy yourself with improvement in the quality of life—that IS the palliative MDGs logic. People in all of the advanced industrialized economies didn’t settle for that, many in the currently-industrializing countries are not settling for it, and I don’t think people in the lowest-income countries ought to be expected to settle for it.
Thanks very much for the thoughtful and interesting exchange.
Cheers,
Rick Rowden, author “Poverty reduction is not development”
Rick:
Thanks again for your response. I fear we are abusing our audience . . . but:
Let’s both agree that neither of us thinks that those living in the Global South should just throw up their hands. I am not arguing for that at all, and indeed my career has been about trying to think about and implement what development might be in a highly constrained world.
I agree that there are other options besides free trade . . . in principle. However, in practice the vast majority of poor countries are not in a position to negotiate for those other options in the face of concerted economic pressure from the Global North. That pressure is not, of course, monolithic (obviously there are differences between the EU and the US on the extent to which neoliberal policies should be implemented, and at what social cost), but there is a reason so many countries continue to open their borders to free trade despite its hugely damaging effects on sectors of their economy – the loans they need to undertake any sort of infrastructural development (which are necessary if we are to see industrial development) are contingent upon “economic reforms” that include embracing free trade. Plenty of people have argued for alternative trade blocs as means to address this issue – in Africa going back at least to Kwame Nkrumah in Ghana – but these blocs, such as ECOWAS in West Africa and SADC in Southern Africa are unwieldy and lack the consumer bases necessary to foster industrial development. The consumer base needed to become competitive in today’s world exists in the Global North, and you don’t get to participate in that market unless you play by the rules of the Global North – which generally includes free trade rules that will crush industrial sectors in the Global South. In other words, the world is as it is not simply because the US (or faceless corporations, or whatever – I think neither of us has time for such demonization) wants it that way – there are structures, regulations and processes that have accreted over the past century or more that have real impacts and must be addressed if any alternative is to be realized. This has long been the problem with postdevelopment writing (a la Arturo Escobar, James Ferguson and Gustavo Esteva) – it is most powerful when it is dissecting the language and practices that have created and perpetuated the development divide, but it is tremendously weak at dealing in alternatives, at least in part because it does not engage with the reality of these processes and practices. Unless one has worked in a development agency (no, consulting with one does not count, as consultants only see the tip of the institutional iceberg), it is impossible to really understand the internal (il)logic of a lot of these processes, where they come from, and how they might be transformed (this is not meant as a personal shot at you – I was certainly guilty of this until September, when I started in my current position, and I would argue that practically all of my academic colleagues are guilty of this). I think your response, unintentionally, comes off as simplistic because it sounds like you are more or less arguing that things can change because people are capable of seeing alternatives. The counter-argument that will be thrown at you is clear: people have seen alternatives for a long time (dependency theory, World Systems Theory, and postdevelopment are but three schools that critiqued how things worked, and laid the foundations for alternatives), but after at least four decades of these alternatives, what practices have actually arisen? The answer is almost nothing – and that is what we ought to be spending our time interrogating – why, in a world of smart people whose eyes are wide open, do we persist in the development policies and practices that we do?
I am not a huge fan of the governance-first school of development. That said, I am no fan of the benevolent dictator model of development. Again, though, we have to accept the evidence of what has worked, and then wrestle with that to get something we see as acceptable. Dictatorship has worked better than democracy, at least up until now. And by worked better, I mean that transformation is easier under dictatorships – I am not talking about the quality of life under those dictatorships, which can be really horrible. So how to we get the efficiency of dictatorship with the transparency and freedom of democracy? Citizen pressure is great – but it is flawed to assume that this sort of pressure is feasible everywhere, or that it will work out in positive ways everywhere. One need only look at the PRSP experiences of Zambia and Kenya to see how divergent participation can be in different countries, and how differently it plays out in terms of monitoring government. I make an extended argument in my book for a serious reconsideration of participation not as a given, but as a concept whose definition needs to be negotiated between governments, governments and multilaterals, citizens and their governments, and communities and development/aid agencies at the outset of each project and policy process. Otherwise participation becomes a hollowed-out term that means whatever people want it to mean . . . and as a result, the less powerful often find that their expectations of participation do not, in the long run, align with the powerful’s expectations . . . leading to disenfranchisement, conflict, etc. ICT is no panacea for this – there is a hell of a lot of writing critiquing the assumption that communications technology necessarily furthers participation and transparency. We cannot wish these challenges away – I’ve spend a lot of time thinking about how to address this concretely.
I am quite familiar with the hyperlinked materials – and, to be honest, with a lot of the arguments you are putting forth. It might be worth my putting my background out there a bit. I’ve been working in development, globalization and global environmental change for nearly 14 years. I’ve been a lead author of the Millennium Ecosystem Assessment, GEO-4, and will be a review editor in the upcoming IPCC AR-5. I work on issues of gender and development and on issues of equity, environment and development (feel free to check my publications on my website). I am simultaneously a tenured associate professor at the University of South Carolina and an employee of the world’s largest development agency. I teach development theory and courses on environment and development at the Ph.D. level. And I have been engaged directly on how to rethink development to maximize the equity and justice of development outcomes for more than a decade – I’ve spend about two years of my life in rural villages in West Africa, working with those most susceptible to global economic and environmental change. I know where the rubber hits the road at the personal, community, state and international levels, and in the context of people and institutions, both through personal experience and research. Because of this work, I’ve had to encounter the very real barriers to implementing something that looks different in this world. I know about the various alternatives presented in the hyperlinked materials . . . but none of them point us to realistic implementation. How, exactly, are we to bring about changes in our resource use necessary to create a sustainable situation when the political ramifications of the associated reduction in standard of living are unpalatable to those who make policy? I am not saying that we should throw up our hands. I am pleading for concrete ways of addressing these challenges. Thinking different is not enough – if it was, academics would rule the world (and I say that as an academic).
I still think we are talking past one another on the sustainability issue. The planet Earth is, in the end, zero sum. I am not talking about jobs, etc. (though sooner or later that gets zero sum, too, assuming I am talking about the resource base required to sustain particular standards of living for human beings. The argument that we live the lives we do because others do not is demonstrable empirically – as I suggested before, you should have a look at the Millennium Assessment, which lays this out starkly. And that was the work of 1300 scientists from around the world, most of whom had expertise in a biophysical realm – not a bunch of ideologues, that crew. And if we want to get into resource-specific examples, look at the studies that all agree that if the Chinese alone were to adopt the same per capita use of automobiles as the US, we would be burning petroleum faster than we could pump it out of the ground, let alone refine it. That isn’t zero sum, but it illustrates the hard biophysical reality in which economic theory must operate (and which most economic theory ignores).
What I like about this exchange most is the fact that, as we’ve gone along, some points of agreement that were not there at first are coming clear:
I agree that the leaders of our development agencies are perhaps not the forward thinkers we need to change the world. I certainly don’t look to them for that sort of leadership – indeed, I see one of my roles in my current position as serving as one of those forward-thinkers for the agency. But the attribution of development’s failures to the leadership of these organizations, or to those working under that leadership, oversimplifies the challenge. As I argue in my book:
“The vast majority of people working for development organizations are intelligent and good-hearted. They care deeply about the plight of the global poor and labor each day on projects and policies that might, finally, reverse the trends of inequality and unsustainability that mark life in much of the world . . . If these agencies and individuals are, by and large, trying their hardest to do good and have billions of dollars to work with, why are they failing?”
This is the interesting question to ask (and note that I wrote the book before I started working in an agency) – and that involves backing up and questioning our very basic assumptions about how the world works before proceeding forward with existing or new plans. My argument is that our assumptions about how the world works (which shapes what we see as problems, solutions and measurements of progress) are fundamentally wrong – and in my book I spend a lot of time rebuilding an understanding of the world in which the outcomes of development and growth are a lot more contingent than we like to tell ourselves. Insofar as we agree on the need for a rethinking of what we do under the heading of development, we are not that far apart – my concern is that your ideas are simply replicating a lot of problematic assumptions, and relying too much on hope and not enough on clear points of intervention and practice that might bring about change.
You and I also agree completely on the need to move from charity/aid dependence (which is soul crushing for those caught in the trap, and why I so deeply loath the Millennium Village Project, which is producing just this sort of outcome) – we disagree as to how, in some ways. We agree that primary commodity dependence is no way to build an economy. I have warned about the dangers of primary commodity dependence – as I have pointed out recently, just because Ghana now has oil we should not assume that anything about the country’s economic precarity has changed – the Ghanaians have just added a third key commodity (alongside gold and cocoa) to their economy, susceptible to the same price fluctuations and demand shifts driven by markets over which they have no control. However, I am not as focused on wealth or income as a means or a goal of diversification, mainly because I think that we lack the resource base to drive that sort of approach forward realistically. There are ways to diversify one’s income (something already done by most small farmers in rural areas – something we often overlook in development and aid work) that don’t involve industrialization or even formal employment. Certainly, diversification is good . . . but to what end? I am still not clear on what you think the goal of development is. What transformation do you envision under this heading?
I guess a related question: is inequality, at the community, state or global level, sustainable? I am not at all convinced that it is . . .
Finally, I think we agree about the relationship between aid and development, at least in terms of wanting to get past aid dependence. However, in your previous posts you seemed to suggest that the way forward on this was through economic growth. I argued that economic growth generally does not bring about poverty alleviation for the poorest of the poor, and therefore is self-limiting unless it is coupled with serious efforts at poverty alleviation aimed at the poorest and most vulnerable in society. That is a significant difference between us . . . and perhaps one that is not resolvable here (which is OK).
Best,
Ed
Hi Ed:
I am glad that you agree with me “that there are other options besides free trade . . . in principle” but of course it’s not just in principle but long and historical facts of highly regulated and managed trade among industrial societies.
I disagree with your assertion that “in practice the vast majority of poor countries are not in a position to negotiate for those other options in the face of concerted economic pressure from the Global North.” I understand what you mean, its very hard for individual small countries. But its not quite so black and white, and there have been interesting manifestations of resistance when developing countries coalesce. For example, the Brazilians with others blocked the FTAA and several of the major BRICs, with others, have pretty effectively stonewalled the whole WTO round of negotiations for the last 10 years.
I don’t know why you think change is so unlikely. Regarding my simplistic notion of what is possible with change, it just seems to me that change has always been unraveling and history is replete with such dynamism and changes. When the UK was a hundred years ahead of the US and mainland Europe in terms of its industrialization, that did not keep the latter from undertaking concerted efforts to follow suit. Those were big changes. Again, 150 years after that, the 4 Tigers in East Asia followed Japan’s process, and again these were not insignificant changes. As with the state of China and India just 30 years as compared to today, we see the world is a dynamic place. The reading of history is the reading of change. Things happen that are totally unexpected all the time. We know there have been very significant changes in the past, unpredictable ones. There is no reason why they shouldn’t come again. You seem to have a very static view of things, like everything will forever stay as it has been in the very recent period, but I don’t think there is any reason to think the world will stop changing.
Regarding the idea that history suggests transformation is easier under dictatorships, I understand why this appears this way, but that does not mean people cannot come up with more just, equitable and more environmentally sound ways of still bringing about transformations in the future. You seem to give very short shrift to those important civic trends I mentioned earlier—growing numbers of freedom of information laws getting passed in countries, the proliferation of budget-tracking and budget advocacy and participatory budgeting initiatives around the world, all enhanced by communications technologies. Surely such trends must hold suggestions for you about the qualities of new kinds of civic engagements going forward, no? Just to add, I did not say this was happening everywhere or evenly, nor that IT is a panacea, just that such activities are expanding and these are not insignificant trends for the future of policymaking or governance.
Regarding your last comment, “Finally, I think we agree about the relationship between aid and development, at least in terms of wanting to get past aid dependence. However, in your previous posts you seemed to suggest that the way forward on this was through economic growth. I argued that economic growth generally does not bring about poverty alleviation for the poorest of the poor, and therefore is self-limiting unless it is coupled with serious efforts at poverty alleviation aimed at the poorest and most vulnerable in society. That is a significant difference between us . . . and perhaps one that is not resolvable here (which is OK).” First, I think we are in agreement on the limited benefits of economic growth. I did not say the way to get out of aid dependency was economic growth. In fact I said, “I agree with you that growth alone is not development. I mean, for example, Malawi could have higher growth next year because commodity prices for tea and tobacco go up on world markets, so they would register higher GDP growth and the World Bank and donors would cheer accordingly, yet the economy would still be as much as a plantation as the year before, and it would not be moving forwards towards diversification into higher value added production.” So I am not narrowly fixating on growth. Second, what I said originally is the way countries seemed to have developed historically was through economic diversification out of primary ag & extractives and into manufacturing and services of higher value-added. This again points me to a key bone of contention I wish to raise regarding the discourse and the difference between specific efforts to realize “poverty alleviation” or to help “the poorest of the poor” and the broader discussion of what constitutes successful national economic development or not. It kind of boggles me the way the aid industry discourse intertwines these two concepts almost as if they were interchangeable. The point of my Guardian piece was that they are different things, marginally overlapping perhaps, but different things. Efforts to the “the poorest of the poor” are very nice and I’m all in favor of them, but the questions of development economics and national development strategies are different, and much broader.
Just on PRSPs, since you mentioned them, I worked with my NGOs colleagues in Africa on these, and their limitations, over many years. While I think there are some useful aspects to them, they tend to usurp other civic structures like parliaments and other democratic national processes and other national efforts at drafting domestically-derived national development strategies. And further, they omit participatory debate on macroeconomic policies and specifically fiscal deficit targets, interest rates, inflation-reduction targets and trade policy in the government-led NGO discussions. My Ugandan colleague and I documented such problems in a report called “Rethinking Participation” in 2004 and I watched it continue this way in many places since. This is wholly different from the types of civic engagements I would like to see more of, such as the participatory budgeting process as pioneered in Porto Alegre, Brasil and now practiced in increasing numbers of places, or the idea of “policy audits” from a human rights perspective as outlined in Balakrishnan, R. and Elson, D. (2008) “Auditing Economic Policy in the Light of Obligations on Economic and Social Rights,” Essex Human Rights Review, Vol. 5, No. 1, July. As opposed to the PRSP process, which really amounts to making a wish-list for how to spend the scraps of an insufficient budget without being able to question why the budgets are insufficient, these latter two processes explicitly start from the point of view that there are various arrays of options regarding different macroeconomic policies and people should debate the various options and have choices before the central bank and finance sign-off with IMF behind closed doors.
I would still like to inquire if you found my piece in the Guardian so “absurd” because you think countries should not seek to industrialize. I have spent 20 years travelling in Africa and other developing countries and spending time in both the countrysides and in the cities, and whenever I am visiting in the cities, I make a point of visiting with the domestic business associations or local chambers of commerce. I am not referring to those “blend associations” which may have some foreign investors or subsidiaries of foreign investors also included, but the actual domestically-owned industry associations. I thinks its very interesting to talk with them, because its striking that they always complain about the same kinds of things: they complain they are getting hammered by floods of cheaper imports because of too much premature trade liberalization; they complain they cannot get affordable (low enough interest rates) on their commercial credit and they cannot get and support from the government in acquiring new technology. Again in my Guardian article I attributed all of these problems to the Washington Consensus policies—not just diktats from Washington but in the minds of the finance ministry and central bank guys who’ve gone to school in US or Europe in the last thirty years and only learned neoclassical economics. Particularly the high interest rates stem from the goal to drive inflation exceedingly low at all costs, even at the cost of prolonged lower growth and higher unemployment than is necessary—a reflection of the ubiquity of the logic of Reagan’s and Thatcher’s monetarism. Now, I am just one person, and I have my personal opinions and could easily be wrong about things and frequently am. But I would like to know what you would say to these domestic business associations—shall they just give up on creating new manufacturing and services industries and go back out the countryside and try to eek out an existence in small-scale agriculture? By 2007, half the human population had moved into the cities, rightly or wrongly, sustainably or not. What shall all these people in the cities do if not move into manufacturing and services as did the UK, US, Europe, Japan, the 4 Tigers, India and China? Shall the countries just stay in plantation-mode for forever?
You may think my essay “absurd” but are you saying the calls by the NAMA 11 countries in the NAMA talks on tariffs on manufactured goods in the WTO are absurd as well when they object to the asymmetries in the Swiss formula being insisted on by the rich countries? Should these countries not try to retain some semblance of trade protection for their industries as had been done by all the industrialized countries? Are the 46 countries of the G33 absurd to insist upon the right to put up temporary tariffs on floods of cheaper agricultural imports to save their business—even after President Bill Clinton’s Mach 10, 2010 remorseful testimony to the Senate Foreign Relations Committee about his administration having pushed premature trade liberalization on Haiti, “It may have been good for some of my farmers in Arkansas, but it has not worked. It was a mistake.” Do you think it absurd of the 130 countries of the G77 to call for an international debt court that offers protection from litigation in the event of a sovereign debt default with a fair arbitration process; the freedom to use capital controls as they determine necessary; the freedom to use counter-cyclical and more expansionary fiscal and monetary policies more than the IMF permits; for the right to use their full “policy space” for regulating their financial markets, institutions, instruments and capital flows, according to national priorities and circumstances or for meaningful reforms of the IMF and World Bank to address the democratic deficit in these institutions, or their many other demands for foreign aid reform or structural changes to the global economic architecture as described in the hyperlink I provided? Or would you agree with me that that what is absurd is that such voices are eliminated from the discussion of foreign aid reform in Washington?
Sincerely,
Rick Rowden
Rick:
I think our conversation could go on for quite a long time, but at this point it is quite clear that there are areas where we agree, and others where we do not. What I am now concerned about is a somewhat adversarial tone that is creeping into this that I have been trying to defuse for the last few responses. I feel as though, in several points of this response, you are attributing views to me that I have not stated nor that I agree with. Of course I believe that change can and does happen (I used to be an archaeologist who studied culture change) – if I didn’t why would I be engaged with development at all? Indeed, my core theoretical perspective is that our efforts at the explanation of social phenomena should be targeted at examining moments of apparent stasis and fixity, as social dynamics (and meaning, power relations, etc.) are in a constant state of evolution and flux. This does not exclude a realistic grappling with the existing political-economic structures in which development takes place today – indeed, a colleague and mine and I have dedicated the last few years to elaborating a theory of how to merge more structural economic explanation with poststructural theories of the social in the study of development and its outcomes (link here).
We are not debating if change can or does happen – we are debating the pathways of change most likely to bring about the outcomes that both of us would like to see – a world with greater opportunity and well-being for as many people as possible. I have never challenged the idea that this was your goal – all I have sought to do was push your thinking on this, even if you did not agree with me, toward concrete steps that we might take. I don’t think I know everything, or indeed all that much, despite my experience. Indeed, it is my hope that I will learn about interesting, actionable new ideas that might get us around some of these very difficult challenges.
I also don’t think we are debating whether or not there are transformative ideas out there that might reshape how participation can take place, and how it might become an effective tool for change. I have been raising my concerns with participation simply to push the discussion past “participation can work to make change/development happen” to a grounded discussion of HOW we can transform participation to this end. I have an entire chapter of my book dedicated to this very topic. So I am not arguing for dictators – I’m arguing for a reasoned discussion about how we make participation and democracy rhyme with the hard choices required for development to be truly transformative.
In other words, I am trying to be constructive.
Your last two paragraphs, though, worry me. I used the term absurd twice, in my original post. I never used it again. And I used it in a specific way. I did not call your post absurd. I called the particular definition of development that you offered in that post absurdly reductionistic. Recall, you said:
“We seem to have suffered collective amnesia about the history of development, which used to be widely understood as industrialisation – in which poor countries undergo a transformative process out of primary agriculture and extractive industries into manufacturing and services industries with higher value-added over time.”
Well, since that post and my response, we’ve moved an awfully long way from calling development “industrialization”. And it is now clear, after several posts in this back-and-forth, that you didn’t really mean that development was, or should be, industrialization. Hell, at this point it is clear that you see any reduction of development to industrialization as absurd. However, I think that in retrospect I was not out of line to interpret your understanding of development as industrialization. FYI, I was not the only one. Several twitter feeds that mentioned your piece offered comments that could be paraphrased as “so, development is industrialization again.”
My second use of the term was part of an argument that said that demanding countries return to the failed industrial policies of the 1960s was absurd. Again, given our more recent exchanges, it is clear now that this is not what you meant – and again, I think that you would agree that a return to an all-out push for growth through industrialization is indeed absurd.
But I never called you absurd. I never called your essay absurd. And the content of your final paragraph is a fairly hostile, deep misreading of more or less everything I wrote over the past few days. It reflects a total lack of understanding of my politics and me. Google is a nice, if limited, tool . . . but had you bothered to look up some of my work (as I did for you), or read any other entries on the blog, you would know that I am no apologist for current policy or practice. Even the slightest effort to read my responses constructively would have allowed you to see that you and I do agree that the exclusion of alternative voices from the policy table is absurd . . . hell, my most recent pub (link here) makes exactly this argument for the REDD+ process, and I am using it to leverage change in those policies in my current position and beyond.
This was not a debate anyone was going to win – that was not the point. This was a challenging conversation that I found interesting and challenging – the best kind. I’d rather end it there than allow it to devolve into an implicit argument about whose politics are best.
Dear Ed:
I apologize if you interpreted my last post as somewhat adversarial. I don’t think my tone was any more adversarial than your original review of my Guardian essay, so please forgive me if I was offensive. Perhaps there is a lesson in there about the best approach to take when reviewing others’ essays. Of course, I do recognize from your thoughtful and very interesting subsequent posts that you are sincerely interested in a constructive discussion, and I certainly do appreciate it. I did not mean to sound unconstructive. And I’m also sorry to have misinterpreted some of your earlier points, and appreciate your clarifications. Its also clear that we do actually agree on several important points.
I think you may have misconstrued my main point, however. So just to clarify though, on my main point: I do, in fact, think that development is industrialization. Or that industrialization is a central part of successful national economic development as it has been conventionally understood, at least from the time of Henry VII in England in 1485, when he adopted some the first strategic industrial policies, all the way through to the successful East Asian industrialization of the last 50 years. We can agree to disagree on this and that’s OK. And we can also disagree on if my saying so is reductionistic, or even if it is absurdly reductionistic, but I would still stand by it. I think industrialization is a key part of development because the historical record is just very clear on it. I mean, its not really about me or what I may think, I could get hit by a bus tomorrow and go away and yet it would still be true that the rich, developed countries in the OECD are regularly referred to as “the industrialized countries” and for important reasons, namely because they took concrete and conscious steps to get out of plantation mode over time. And they used classic industrial policies that are today increasingly being restricted from use by developing countries in IMF/World Bank loan conditions and the proliferation of the trade and investment arrangements—that is exactly to what the G77, G33 and NAMA 11 countries are objecting. That’s not really just my opinion, but the very clear historical record, and the same can be said of Japan, the 4 Tigers, and more recently of India and China.
In your original post, you claimed that by saying this, I was advocating for the old “big push” ideas of the 1960s and 1970s that had failed. I responded by agreeing with you that in some times and places there were failures, but also that in other times and places there were successes. My main point of the Guardian piece was that rather than talking about how to do industrialization right, or different or better, it has instead been taken entirely off the foreign aid agenda and out of the development discourse for the last few decades. I think that’s a problem. The discourse we have been left with about “poverty reduction” or meeting the MDGs focuses exclusively on efforts to ameliorate the suffering of “the poorest of the poor” which is very nice and important work, but which, I posit, is not development economics nor does is it have much to do with industrialization, or the policies that will be needed to foster such transformations.
Regarding interesting ideas that are concrete and actionable, I did originally cite the concrete and actionable policies articulated by Gerald Epstein’s ILO paper calling for increased public investment and ways to increase employment, bring in firms from the informal sector into the tax-paying formal sector, and the concrete and actionable policy initiatives laid out in UNCTAD’s exceptionally important LDC Report 2006 on enhancing productive capacities and their Africa Report 2007 on mobilizing more domestic resources. I also provided links to what the G77, the G33 and NAMA 11 are expressly calling for, which in my opinion could not be more interesting, concrete or actionable. We can of course agree to disagree on the efficacy of these policies. But basically these groups of developing countries are saying that they would just like to be able to use many of the same classic industrial policies that were used by all the countries which industrialized already, including the more recent industrializers, and I think that is not unreasonable of them to be asking for. I also noted that it is unfortunate, and frankly a bit twisted in my opinion, that such voices are not front and center in Washington’s ongoing debates about how to improve foreign aid (the White House’s new policy strategy on development, State Dept’s new QDDR, etc). In nearly a decade of working on aid and development in Washington, I never once heard the voices of the developing countries themselves, let alone the specific calls of G77, G33 or NAMA 11, being invoked, and just find that a bit twisted. But I did hear alot about the specific projects and programs of little NGOs. I wrote the Guardian piece because I think aid activists should move beyond efforts to help the poorest of poor, not abandon those crucial efforts, but also expand beyond them and re-engage in the fundamentals of development economics, and they could do this most easily by simply listening to what groups of developing countries are actually calling for right now.
Cheers,
Rick