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Approaches, Actors,

Issues, and Practice

Edited by

Paul A.Haslam

Jessica Schafer

Pierre Beaudet

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INTRflDUCTIflN

Tfl INTERNATIflNAT DEVET()PMENT Approaches, Actors, Issues, and Practice

PaulA.Haslam

Jessica Schafer

Pierre Beaudet

THIRD EDITIOI{

oxroRD rJNIVERSITY PRESS

OXFORD UNIVERSITY PRESS

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Library and Archives Canada Cataloguing in Publication

Introduction to international development: approaches, actors, issues, and practice I edited by Paul Haslam, Jessica

Schafer, and Pierre Beaudet. - Third edition.

Previous edition has subtitle: Approches, actors, and issues. Includes bibliographical references and index.

ISBN 978-0-19-901890-l (paperback)

1. Economic development-Textbooks. 2. Political development Textbooks. I. Beaudet, Pierre, editor II. Haslam, Paul Alexander, editor

Ill. Schafer, Jessica, editor

HD82.l58 2016 338.91 C2016-905036-X

Cover image: Cultura RM Exclusive/Philip Lee Harvy, Getty Images

Oxford University Press is committed to our environment. Wherever possible, our books are printed on paper which comes from

responsible sources.

Printed and bound in the United States of America

1 2 3 4 - 20 19 18 17

CONTENTS List of Boxes x List of Figures and Tables From the Publisher xv A Word from the Authors Acronyms xx Contributors xxiv

xilt

xviii

Each chapter includes, at the beginning, Learning Objectives, and, at the end, Summary, Questions for Critical Thought, Suggested Readings, and Bibliography.

FART I Theories and Approaches in International Development I

Meaning, Measurement, and Morality in lnternational Development 2 Jessica, Schrr,fer, Puul. A. Hcuslctnt. u,t¿d Pi,erre Bea,u.tlet What ls the Develop¡ng World? 3 Labelling in lnternational Development 5 Growth, lnequality, Poverty, and Development 8 Global Ethics and lnternational Development 15 Ethical Behaviour and the Development Practìtioner 19

lmperialism and the Colonial Experience Eri,c Allh¿u,

European Expansion and Conquest 26 Rival Empires of Trade 29 "High" lmperialism in Africa 33 Common Themes ¡n the Colonial Experience

Theories of Development Ra,dhi.fut, I)e.vt,i,

Development Avant La Lettre 45 The Moment of Developmenl 47 DisputingDevelopment 49 Conclusion:WhitherDevelopment? 60

Post-Development and Alternatives to Development 65 Aru,n Ziu,i,

The Origins of Post-Development 66 Post-Development: CoreArguments 68 Alternatives to Developmenl 74 DebatingPost-Development 78 Conclusion: Two Positions 80

iv Contents

Gender and Development: Theoretical Contributions, lnternational Commitments, and Global Gampaigns 84 Rebeac¡t, Tiessen,, Jtnte Pa.rpul't, und l'ktliutn¿e H. J[arcl¿untl

lntroduction 85 Theoretical Contributions and Feminist lnsights 86 Masculinities,Gender-BasedViolence,and(ln)security 93 lnternational Commitments and Global Campaigns 95 Taking Stock: Achievements, Possibilities, and ongoing Gaps

in Gender and DeveloPment 96

Globalization and DeveloPment

Pierre Beu,utle.t

to2

lntroduction 103 Globalization and Developing Countries Another Globalization? 1J1' Movement from Below Il'4 Can the World Change? 1'I7 Facing the Biggest Challenge 7I9 Looking Ahead tLg

103

F&ffiT Ëã International Development Actors 123

State of the State: Does the State Have a Role in Development? L24 At¿il,Ilira,

What ls the State? The Legacy of Colonialism 125 Defining the State's Role in Development 728 Central Debates about the Role of the State ¡n Economic Development Governance as a Process of Democratizat¡on 135

1,29

National Development Agencies and Bilateral Aid

Stephen, ßroun,

1-4L

Clarifying the Terminology I42 overview of Aid Donors 743 Donor l\4otives 1,46 Characteristics of Donors 749 Aid Recipients 752 Current Trends and Controversies 155

The lnternational Financial

I'Io,rrrts T'a,ylor

lntroduct¡on 162 The 0rigins of the IMF and World Bank Governance Structures 764

lnstitutions

162

161

](

The Turbulent 1970s 166

Contents v

The Debt Crisis, Structural Adjustment, and Conditionality 167 Beyond Structural Adjustment? 168 The World Bank, Good Governance, and Institution-Building 170

The IMF and the Asian Crisis 171 Into the New Millennium: Poverty Reduction and Country Ownership 172

A New Crisis or a New Beginning? 175

The United Nations and Multilateral Actors

in Development 180

Dewiel Sogge

The United Nations System 181

The Agencies 184 Trends and Prospects for UN Agencies 192 Multilateral Organizatiqns Anchored in Western Governments 193 Multilateral Organizations Anchored in Non-Western Governments 195

One World, Many Regions 197

Private Enterprise and Development

Panl A. Haslmn

Entrepreneurship and Small-Scale Enterprise 201

What Is a Multinational Corporation? 203 What Motivates Multinationals to Go Abroad? 204 Relationship between States and Multinationals 209

International Regulation of MNCs 212 Corporate Social Responsibility 213 Partnerships for Development 214 Conclusion 217

Civil Society and Development

Henry Veltnieyer

Civil Society: The Itinerary of a Concept 223 Civil Society in Context 224

221

200

The Economic and Political Dynamics of Development and Civil Society 226

The Emergence of a Global Civil Society: The Political Dynamics of Anti-Globalization 227

Civil Society and Local Development 229

NGOs: Catalysts for Development or Agents of Outside Interests? 232 Civil Society and Multinational Corporations 233

Development beyond Neoliberalism: Civil Society and the State 234 Globalization, the State, and Civil Society 237

China and the Emerging Economies

Jing Gn

Introduction 241 China's Approach to International Development 241 China in Africa 244 New Development Thinking and Institutions 247 The BRICS and Other Emerging Economies 250

Conclusion 257

240

vi Contents

PART lll Issues in International Development 261

Debt and DeveloPment

Joseplr' Hut'Iott rtntl Tint, Jones

262

Lending to Developing Countries 263 Governments, Politics, the Cold War, and the Debt Crisls

The 1980s Debt Crisis and HIPC lnitiative 266 The South and the Poor Pay to Solve the Northern Crisis

What ls the Responsib¡lity of the Lender? 275

265

269

Free Trade, Fair Trade, and South-South Trade 282 Gu,uù¿ Fridell

lntroduction 243 Free Trade and Fair Trade since 1945 247 The Limits of a Trade Perspective: "lt's Not about Free Trade" 293 The Rise of South-South Trade 295 The Future of lnternational Trade: "Dynamic" or "Defy¡ng" comparative Advantage? 297

Democracy (]é.clric Jou,rd,e

302

Clar¡fying the Concepts: A Difficult Task 303 "Waves" of Democratization 308 Explaining Democratization: stfuctures or Actors? The National or lnternational

Arena? 309 After Democrat¡c Trans¡tion: consolidat¡on or a Return to Authoritarian Rule?

The causal weight of Democratizat¡on in Economic and social Development 374

316

Climate Chan$e, Environment, and Development 32O (.1 htL.knartnrcr ij e Ok erelte att'd Abu- B akttr S. tlu'ssrr'c1tto'i

lntroduction 327 The Central Paradox and Contending Approaches 32I A History of Global Env¡ronmentalism and lnternational Co-operation for Sustainable

DeveloPment 324 Climate Change 327 Controversies and Crosscutting Themes 334

Rural DeveloPment

Jo.slnru.L Ru,nt"isch

341"

lntroduction 342 Puttingthe "Rural" in Context 342 RuralTransformations 346 Models 351 Challenges 356

Urban Development: Cities in the Global South

Anne Latendresse, Lisa Bornstein, ancl Jane Reid

Introduction 363

Understanding Urbanization 364

Urbanization across Time and Space 364

Contents vii

362

Urban Crisis and the Challenge of Sustainable Urban Development 367

Cities, Globalization, and Socio-Spatial Fragmentation 368

The Expansion of Slums 371

Forces of Change: International Institutions, Local Governments,

and Grassroots Initiatives 374

The Right to the City 375

Future Needs 376

Development and Health

Teel Schrecker

382

Introduction: Wealth, Health, and the Rest of the Story 383

"Great Divides" and Socio-Economic Gradients 384

Globalization and Health: Trade and Investment Agreements as a Case Study 387

The Changing Landscape of Global Health and Development Policy 390

Development and Health: The Uncertain Future 392

Conflict and Development 400

'l'orunn Wirnpelmann ancl Astri 811hrke

Posing the Question 401

Definitions, Approaches, and Methods 402

Conflict and Development: Perspectives and Findings 403

Development as a Conflictual Process: No Development without Conflict? 409

Dealing with the Development-Conflict Nexus: Intervention and Peace-Building 412

Learning from History 416

Information Technologies and Development

Erwin A. Alwnpay

Technology and Society 420

The Information Society 423

ICTs and Society 426

The Digital Divide 429

Using ICTs for Development 432

Culture and Development

Nissirn 1l1annathukkaren

Introduction 442

What Is Culture? 443

The Cultural versus the Material 444

441

Culture as Domination and Culture as Resistance 448

The Cultural Turn 451

419

viii Contents

PART lV Practice in International Development 46L

-?: é =€ È., .. 8.. é:g '.'E-

Understanding Global Poverty Reduction: and lnstitutions 462 Døaicl Hulme øncl Sophi,e King

Poverty in Social and Development Theory 463 Development as Poverty Reduction: A Brief History 466 Reducing Poverty: ldeas, Actors, and lnst¡tutions 468 Material Capabilities and National lnterests 472 What Has Been Achieved? 474 Conclusions 477

ldeas, Actors,

Measuring and Evaluating Poverty

I{eeti,e Roelen

48L i:

lntroduction 442 Evolution of Thinking on Poverty 442 Monetary Poverty 444 Mult¡-D¡mensional Poverty 489 Different Measures, Different Outcomes Poverty Measurement and Policy 495

493

ç :.4 t.

. )'::!

Inequallty and Social Policy

Arjcr,n de Ha,a,n

f ntroduction 5O2

501

What ls lnequality? 5O2 Approaches to Social Policy 513 Conclusion: Measuring Social Policy Success 577

." þ e=r Planning and Appraising Development Projects :. . Da,uid Potts

What ls a Project? 521, The Project Process 523 Planning Projects and the Logical Framework 526 Project Appraisal 527 Financial Analysis 531 Economic Analysis 534 Cost-Effectiveness Analysis and the Social Sectors 536 Sensitivity and Risk Analysis 536

520

E ä=-.,

q3 Humanitarian Assistance and lntervention 539 Lu,ttt'ct, Ham,mond

lntroduction 540 A History of Humanitarian Action 540 Dunantist and Wilsonian Human¡tarian Organizations 544 ContemporaryChallengestoHumanitarianism 544 Whose Responsibil¡ty to Respond? 547

Glossary 576

Index 588

The Challenges of Long-Term Recovery 549

Humanitarian Accountability 550

Political Economy of Humanitarian Assistance 552

Research and the Humanitarian Future 552

Ethics of Development

Des Gasper

Introduction 556

Historical Context 557

555

Justice and Harm; Rights and Responsibilities 559

Reflection on Meanings of Well-Being and Ill-Being 563

Activities and Tools in Development Ethics 566

Conclusion 572

Contents ix

usT 0F B0xEs IMPORTANT CONCEPTS

President Truman's Point 4 4 How to Judge Right and Wrong: Three Philosophical Approaches to Morality L7 The Drowning Ch¡ld AnalogY l-8 Ethics of ParticiPatorY Rural Assessment 2I An "Oriental Despot": British Company Rule in South Asia 32 Stuart Hall on Discourse 67 A Critique of GDP 7I Buen VivÌr 76 The Washington Consensus LO4 The Nature of Authority in the State !26 The Debate between Keynesians and Free Marketers 130 The Many Uses of Foreign Aid 1'43 The 0.7 Per Cent Aid Target I47 What Makes a Good DeveloPment Agency? Lessons from the United Kingdom l-53 Results-Based Management 155 The US Aims for Bretton Woods l-63 IMF: lnitial Function 1'64 World Bank: lnitial Function 164 IMF Quotas and World Bank Subscriptions 165 Robert McNamara's Call for a "Basic Needs" Approach 167 Micro-Finance: Building Entrepreneurship? 202 Global Value Chains and the New lnternational Division of Labour 2O8 One Belt, One Road Priorities 248 What Are the BRICS? 25L BRICS New Development Bank (NDB) 255 lndia and Substantive Democracy 307 Defining "Collective Action Problem" and "Tragedy of the Commons" 322

Land Tenure and lnequality 348 What ls a Slum? 373 Urban Agriculture: A Survival Strategy for Poor Urban Dwellers? 374 Participatory Budgets and Local Democracy 376 Gender and Housing Rights 377 Appropriate Housi ng Technology: Earthbags 421, Freedom of lnformation, Open Data, and Open Government 434 lmplementing Universality: Regulatory Measures to Fund lt 435 Are Hunter-Gatherers Poor? 445 The Protestant Ethic 447 The "American Dream" 449 Che as a Capitalist lcon 453 Universal Values 456 What ls Poverty? 464 Sen's Framework for Conceptualizing Human Development 469 The United Nations Open Working Group Recommendations for the Sustainable Development Goals (SDGs) 474 Setting the Food Poverty Line and Poverty Line in Myanmar 486 The "Big Mac lndex" 487 Relative Poverty in Middle-lncome Countries 487 Foster-Greer-Thorbecke (FGT) Class of Poverty Measures 489 Sen's Capability APProach 490 Gross National Happiness (GNH) lndex in Bhutan 497 How ls lncome Measured? 503 Social Policy Regimes 51'2 Discount Factors 528 The Net Present Value (NPV) 530 The lnternal Rate of Return (lRR) 530

28.1 Two Sides of the Same Coin: Dunantist

and Wilsonian NGOs 545

29.1 Questions in Development Ethics 557

29.4 Immersion Visits: Putting Yourself in

Other People's Shoes 567

CRITICAL ISSUES

1.2 What Is Development? 16

2.2 The "Scramble for Africa" 35

2.3 Development Project as White

Elephant: The Office du Niger 40

4.3 Ferguson on the Structural Limitations

of Development Discourse 73

5.1 Maternal and Reproductive Health

Strategies 87

5.2 HeForShe Campaign 92

5.3 Resolution 1325 93

5.4 Nike and the "Girl Effect" 96

5.5 Plan International and the "Because

I am a Girl" Campaign 97

5.6 Malala Yousafzai 98

6.2 A Global Age? 105

6.3 Are Things Getting Better? 107

6.4 Billionaires in India 108

6.5 Poverty in Sub-Saharan Africa 109

6.6 Is Globalization Reducing or Increasing

Poverty and Inequality? 110

6.7 Governance 111

6.8 Shanghai Cooperation

Organization 114

6.9 Latin America at a Crossroads 115

6.10 Occupy! 116

6.11 Pope Francis: Solidarity Is the

Key 118

6.12 Climate Change: Time Is Running Out

119

7.3 "The Chilean Miracle" 132

7.4 Good Governance and Good

Institutions 133

7.5 Does the 2008 Financial Crisis Mark a

Shift Away from Neoliberalism? 137

7.6 Global Chains of Production 138

8.2 Foreign Aid Cycles 145

8.4 Tied Aid 149

List of Boxes xi

29.5 Basic Questions and Tools in Value

Sensitive Discourse Analysis and

Philosophical Ethics 569

29.6 Policy Instruments for Promoting Human

Rights 571

8.5 The Canadian International

Development Agency 151

8.8 How Effective Is Foreign Aid? 156

8.9 Chinese Development

Co-operation 158

9.6 The Bank Reflects on Structural

Adjustment 169

9.7 IFls Embracing Anti-Poverty 174

9.8 Argentina Pays Back the IMF 175

9.9 The World Bank and Climate

Change 177

11.3 Women and Export Processing

Zones 210

11.4 Investor-State Dispute

Settlement 213

11.5 The Changing Face of FOi: The Third

World Multinational 215

11.6 Private Foundations and

Development 216

13.1 Foreign Aid with Chinese

Characteristics 242

13.2 Growing Wave of Chinese SM Es in

Africa 244

14.1 Congo, Kleptocracy, and the Cold

War 267

14.4 The Jubilee Campaign 278

15.1 Neoliberalism and "Endogenous"

Development: The Jeans Industry in

Pelileo, Ecuador 286 15.2 Regulating Markets: The International

Coffee Agreement 288

15.5 Worker Realities and Worker Suicides in

China 296

15.6 South-South Co-operation in St Vincent

and the Grenadines 297

17.2 The Environment-Development Paradox:

The Case of China 325

xii List of Boxes

t7.4

1.8.2

18.5 18.6

20.L 20.2

20.3 20.4

2L.t 2L.2 21,.4

22.2 22.3 22.4 22.6

The Post-2O15 Sustainable Development Agenda 328 Rural Livelihoods and

Diversification 347 The Green Revolution 354 Gender Dimensions of Household Livelihoods 357 The Double Burden of Disease 385 The 10/90 GaP and Health Research 388 The Alma-Ata Vision 391 Ebola: Lessons for Global Health Policy

and Politics 394 War as a ComPlex "Event" 4O4 Primitive Ethnic Violence? 408 Accounting for the Non-Violent Actors in

Conflict Settings 4t3 Three SeParate Worlds 427 Global Care Chains 428 Mobile MoneY 430 Bridging the Digital Divide: The Case of NepalWireless 432

22.9 Communication Rights lssues Pertaining to Content 436

2S.L Development sans Culture 443 23.4 The MYth of Nationalism 449 23.6 The Culture-ldeologY of

ConsumPtion 451- 29.7 Symbolic Struggles 452 23.LO "Asian Values" 457 24.2 How Many Poor People Are There and

Where Do TheY Live? 465 25.6 lndividual Poverty Measure 492 26.2 Views on the Need for More

EqualitY 505 26.4 Social Funds 515 28.2 To Stay or Go? We¡ghing the Costs

and Benefits of Working in Ethically Challenging Environments: Goma'

L994 548 29.2 Adjudicating Development-Forced

Displacement: "Talk Softly and Carry a

Big Boomerang" 562 29.g .lapan: The "Calculus of Meaning" 566

Transnational Corporations: The UN

Changes Course 189 Multilateralism: Which Way Forward? I97 APPO: Popular Assembly of the People

of Oaxaca 226 NGOs as Drivers of CommunitY Engagement-To Ensu re Successfu I

Project lmPlementation 235 Brazil's Landless Workers' Movement 236 Argentina, lllegitimate Debt, and Vulture

Funds 276 Repeating the 1980s in Greece 277 Fair Trade Coffee in an Unfair World? 29O Fair Trade and Labour Exploitation 29t Mali and the Freedom House Ranking 306 lmportant Events and Agreements towards an Environmental Regime 328

Counting the Costs of Climate Change 331 Looking Ahead: A Post-2o20 Climate

Agreement 332 Governing Climate Change: The

UNFCCC 333 Global Food Crisis: 2008 and Beyond 343 The Global "Land Rush" 350 Competing for the OlYmPics 370 Refugees, the Displaced, and Host Cities 372 The New Urban A$enda and Habitat

ilr 375 Sierra Leone's "Blood Diamonds" LL COIN: Winning Wars through DeveloPment? 4L5 Leapfrogging Stages of ICT DevelopmenL 43l"

22.5

L7.6

L7.5

L7.3

t7.7

18.1

19.5

1,8.4 1,9.L L9.2

2t.3 2t.5

10.1

LO.2 1-2.t

L2.2

1,2.3

L4.2

L4.3 15.3

15.4 16.1

CURRENT EVENTS

LIST OF FIGURES AND TABLES

FIGURES

1.1 Gross National Income Per

Capita, 2014 7

2.1 European Exploration, 1420-1542 27

6.1 World Economies by Size of

Merchandise Trade, 2013 106

6.2 FDI Inflows, by Region, 2010-13 107

6.3 Debt Ratio for Sub-Saharan Africa 109

8.1 Total Aid Flows, 1960-2013 145

8.2 Total Foreign Aid by DAC

Donor, 2013 146

8.3 Relative Generosity of DAC

Donors, 2013 147

10.1 Major UN Entities with Development

and Humanitarian Functions 185

11.1 FDI and ODA Flows to Developed

and Developing Economies,

1990-2013 204

13.1 Average Annual Growth Rates for the

BRICS and Three Major Developed

Economies 253

13.2 GDP Per Capita for the BRICS and Three

Major Developed Economies 254

14.1 Developing-Country Debt and

Payments 268

14.2 United States Consumer Debt 271

14.3 Developing-Country Foreign Currency

Reserves Compared to External

Debt 273

15.1 World Export Trade 283

17.1 World Human Development,

1870-2007 323

17.2 Environmental Kuznets Curve 323

17.3 Living Planet Index, 1970-2005 324

17.4 Climate Change Vulnerability

Index, 2015 330

JJ\BLE

1 .. :l The Distribution of Income in Brazil

by Quintiles, 1981-2012 (% share of

national income) 10

18.1 Timeline of Dominant Ideas

in Rural Development 352

19.1 Urban Population by Region,

1950-2050 365

20.1 Gradient in Under-5 Mortality Rate by

Household Income Quintile, Selected

Countries 387

22.1 JCT Subscribers per 100 Inhabitants, by

World Region, 2014 429

22.2 JCT Development Index Framework

towards an Information Society 433

24.1 Truly Global Poverty Rates 465

25.1 Poverty Gap 488

25.2 The Unlucky 1.6 Billion: Multi

Dimensional Poverty across the

Globe 492

25.3 Correlation between Monetary Poverty

and Multi-Dimensional Child Poverty in

28 Sub-Saharan Countries 494

25.4 Venn Diagrams: Monetary and Multi

Dimensional Child Poverty in Ethiopia

and Vietnam 494

25.5 Monetary Poverty in Nepal 496

26.1 Patterns in Public Social Policy

Spending 508

27.1 The Project Cycle 523

27.2 A Problem Tree 525

27.3 Objectives Analysis: A Solution

Tree 526

27.4 An E xample of a Logical Framework: The

Project Planning Matrix 527

28.1 Global Government and Private

Humanitarian Assistance,

2011-15 546

28.2 Core Humanitarian Standards 550

1.2 Countries Ranked by HDI and GDP Per

Capita, 2014 14

3.1 Theories of Development 50

xiv List of Figures and Tables

3.2 Parsons's Pattern Variables or Roles in Traditional Society and Modern Society 53 Anti-Development and Post-Development 79 ODA and "ODA-Like Flows" from Non- DAC Providers,2OL3 t44 Commitment to Development lndex, Aid Component,2Ol4 L52 Proportion of Total ODA by Region, DAC Members, 2Ot2-13 153 Largest ODA ReciPients, 2013 L54 Ten Most ODA-DePendent Countries, 20L3 L54 Largest Multinational Corporations by Assets, lncluding from Developing Countries, 2012 (US $ millions) 2O5 Development Spending in Billions of US$, Selected Foundations, Countries, and lnternational Organizations, 2074 21'6 Potential Strengths and Problems for the AllB 249

16.1 The Freedom House Classification of Political Regimes 305 Characteristics of the Three "Rural Worlds" in the 2008 World Development Report 345 Comparison between the lndustrial Age and the lnformation Age 423 Types of Accounts and PaYment Methods, by Region, 2Ot1-, Share of Population (%) 425 Progress with the MDGs lo 2Ot4 475 Measures of lnequality in a Sample of Countries 503 Annual Statement of Costs and Benefits (D$ '000 constant market prices) 529 Cash Flow (D$ '000) 532 Distribution of Costs and Benefits (Market Prices) 534 Vocabularies of the Overview Chapters in the Human Development Reqort 2007/8 and World Development Report 2070 570

18.1 4.1

8.1 22.1

8.2 22.2

8.3

8.4 8.5

24.t 26.1-

27.1 L1".t

1,L.2

27.2 27.3

29.1

t3.t

FROM THE PUBLISHER

Oxford University Press is delighted to present the third edition of Introduction to International

Development, which continues to offer comprehensive coverage of theories and topics in

international development studies in a manner that is sophisticated yet proven to engage

students from various backgrounds at the first- and second-year level.

Whereas most international development textbooks are anchored in a single discipline such as

political science or economics, Introduction to International Development draws on contributions

from internationally acclaimed experts representing the spectrum of subject areas that contribute

to field, including anthropology, economics, education, geography, history, international affairs,

politics, population studies, sociology, urban planning, and women's studies.

Organized into four parts examining the theories, actors, issues, and practice of inter

national development, the third edition features new chapter-length coverage of alternatives

to development, gender and development, China and the emerging economies, and climate

change. Part IV, on the practice of international development, is entirely new and boasts

chapters devoted to measuring poverty, planning projects, humanitarian assistance, ethics,

global poverty reduction, and social policy. This edition also incorporates a full-colour,

student-friendly design and a strong ancillary suite encompassing an instructor's manual, a

student study guide, a test bank, and links to audio podcasts and videos.

KEY FEATURES OF THE THIRD EDITION

The third edition of Introduction to International Development brings together an assortment

of features designed to enhance the experience of both students and educators.

lll -� �, "'Lh t,,;1� IIIIC!'I• pc'-<) a:xl 1rMm•t=•I � ec?l",ent �,c-, in -i....,.,,nl,lpt, .. ._ -- ale3s ICala,e •�pe,�;;;allyur,:e-a:=<l to r ... allh �,,.,.__, • To�:or,-ela:n,l,arw,thrr,a.->rei<'..-,.ntscrte"

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Learning Objectives

help students focus their

reading on the central

themes of each chapter.

xvi From The Publisher

a Three types of themed boxes highlight important concepts, critical issues, and relevant current events.

BOX 22,7 | Frettl<rn oflnforùìâtion. flperì Datn. lnd Open (lolerDùìcnt

Freedom of information laws g¡ve people the right to access infomat¡on from the government Such laws often keep cit¡zens in the know about their government.

Related to th¡s ¡s the concept of open dâta. According to Oæn Data Handbook. this refers to data that cân be freely used, reused, and redisùibuted by anyone-subject only, at most, to the requirement to atkibute and share alike. fhe argument for open datâ is that the best use of data is left for people/ slakeholders, not necessarily the or¡ginal generator of that data.

Both concepts are connected to the conc pafticipation ¡n public affairs, and forways to m able, and effectìve.

lmportant Concepts boxes highlight the many theoretical perspectives

that contribute to inter- national development

studies, along with the discipline's most influ- ential scholars, activists, and institutions.

BOX 5.2 | HeForshe Campa¡gn lhe HeForshe is a sÍategy designed to engage men añd boys in effons to promote gender equality. lt was ¡nitìated ¡n 2014 by uN Women as an altemative to targeting g¡rls as rec¡p¡ents of ctevelopment a¡cf by shiftinElthe focus to understanding soc¡al relationships that support and reproduce geñder inequal¡ty. The campa¡gn ¡ncludes a goal of ensuring that more than one million men ancl boys take the HeForshe pledge: a pledge that acknowÌedges that gender equal¡ty ¡s not only an ¡ssue for women and gils but ¡s a human rights ¡ssue that requires everyone's paticìpation. The pledge calls for act¡on to end forms of violence and discr¡mination faced tly women and gir¡s. lhe popular¡ty of lhe HeForshe campaign was augmented by the endorsement ofthe ¡nitiative bythe Br¡t¡sh acÍess Emmâ watson, now the uN Women goodGll amttassador (and known for her role as Herm¡one in the Harry Potter movìes). Emma watson's impassioned speech ¡n September 2014 has been vie' video on YouTube and has crculated widely on other so sure to th¡s padicular svategy of address¡ng gender in€

Clitical lssues boxes present cases from around the world that students can analyze using their new theoretical toolkit. Top- ics include the HeForShe

campaign, "mobile mone¡" and South-South coopera-

tion in St Vincent and the Grenadines.

Current Events boxes take a critical look at the media's coverage of topics ranging from fair-trade coffee to climate change, with a particular focus on the details of interest to students of international development.

a End-of-chapter aids to student learning include summaries, review questions, and recommended print and online resources, all designed to enhance the reader's engagement with the chaptert central concepts.

SUTMARI

EE¡E@I@

æIETiÐE

BOX 15.3 | Fair Tråde Coffee iil an UDfåir \\¡orld?

Research conducted on farùade groups in the Sourh sugeststhat laitêde provides impn¿nt sæial ônd economìc beñeñis to cedified producers, âlthough w¡th impodant qual¡fcations (Hudson et al., 2013; Fñdell,2007; Jaffee,2007). Th¡scan b€ seen in thecaseofthe Union oflndigenous Commun¡ties of the lsbmus Region (ucrRD, one of the most successful lâr ùade coffee co'op€ratives iñ the sodd, located ¡n Oaxaca, Mexico. Through theh Fd¡ciFlion ¡n faù trade, ucrRr members haye ata¡ned higher iñcomes and signiñ€nlly Þtter access to sæial señices through co.operative prcj€cts in heallh care, educatìon, and ta'niné. ucrR¡ also has constructed its ñn ecoñomic infrastructure, such as coffee. pr@essing ând transportation facìlities, ând has provided Ìts members with enhanc€d access to credit, technologx and môil€t¡ng skilts. Yet, despite the co opeÉtile s success in combatting exùeme m¡sery, ucrRr members still repod the persistence of Éeneral pmdy (Fridell, 2007). Faù tade pri€es are inad equate¡y low because they must remain somewhât competitive with conventional coffee bean pf¡ces, Moreover, ucrR¡ membrs remain highlyvulnerable to Élobl marþt and climate cond¡tions beFnd their contol. A majorcoffee leaf rust infestation, intensified bythe imp¿cts ofclimâte change, desùoyingcoi fee haruests throughout Mexico and Cental Am€nca beginning ¡n 2012. has brought uclRr to the verge ofcotlapse, with members repodiñg:'Everythingwe have fought loroverthe past 30years we are losing to climàte change and rusr (quoted ¡n Byrne and Sharye,2074:124). How effective can the fair ùåde netmrk be ât the lffil level against the tide of global forces beyond its conùd?

CURRENT EVENTS

From The Publisher

• Vivid photographs, maps, tables, and figures help to introduce students to the

on-the-ground reality of development work, as well as sites of importance and key statis

tical trends from around the globe.

•

19 I Latendresse elal: Urban Oe\elopment

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Bolded key terms throughout the text help students from different disciplines develop

the working vocabulary needed to read and write about international development.

A glossary of key terms at the back of the book serves as a convenient reference for

readers and an indispensable review tool for students preparing for tests and exams.

xvii

A WORD FROM THE AUTHORS

This is the third, revised and updated edition

of Introduction to International Development:

Approaches, Actors, Issues, and Practice. The world

of development has changed significantly since the

launch of the first edition in 2008. To mention only

a few of these changes, poverty rates have declined

in most regions; a more active state has returned

to manage development; China and emerging

economies provide lessons that have yet to be fully

understood; and climate change threatens some of

the advances that have been made. This new edition

addresses these changes head-on. Chapters from

the earlier editions have been rewritten, and new

chapters have been added to address these changes,

including a new section on development practice.

Introduction to International Development sets

out to respond to the particular needs of undergrad

uate international development programs. Given

that many programs of study are multidisciplinary

in nature, there is a clear need for a text that is ex

plicitly multidisciplinary in its approach to the key

issues. Multidisciplinarity has been at the heart of

this project from the beginning; it has guided our se

lection of authors, who were drawn from disciplines

as varied as political science, economics, sociology,

anthropology, history, women's studies, and geogra

phy. Many of these authors also have been involved

in working for and advising development agencies,

are grounded by their solid experience of local real

ities, and represent the ideals of praxis to which our

students aspire.

THE CHALLENGE OF

MULTIDISCIPLINARITY

Introduction to international development courses

are often highly popular electives in the first and

second years of Bachelor of Arts programs. This

means that textbooks in international development

need to serve a population with diverse disciplinary

experiences and without a common theoretical or

conceptual background. Typically, students do not

come just from the diverse fields of the social sciences

but also from the faculties of "hard" or applied

science and from other multidisciplinary programs

with no common-core theoretical apparatus. The

challenge of teaching development studies to such

an undergraduate audience is not simply one of

providing multiple views on particular issues

or exposing students to the diversity of issues in

development studies; it is also more fundamentally

about grounding students with a common theoretical

and conceptual intellectual toolkit applicable to the

multidisciplinary nature of development problems.

To our knowledge, no other textbook currently

available has the explicit objective of grounding a

multidisciplinary audience in a way that permits the

sophisticated understanding of development issues.

In this respect, the core mission of this book is to

build a conceptual toolkit for first- and second-year

undergraduate students with no prior knowledge

of development and with diverse disciplinary back

grounds. For this reason, the book is structured into

four sections: Approaches; Actors; Issues; and Practice.

The six chapters in Part I, Theories and Approaches

in International Development, introduce the student

to key concepts, historical contexts of development

thinking and action, and theoretical approaches. A

noteworthy feature of this section is the accessible ac

count of postmodern and post-colonial approaches,

which are rarely taught at this level but constitute the

fundamental epistemology for much recent work in

development. Part II, International Development Ac

tors (Chapters 7-13), explains various key external and

internal forces that shape developmental outcomes.

Chapters 14-23, which comprise Part III, Issues in In

ternational Development, apply the toolkit learned in

the first two sections to a wide variety of issue-areas.

In Part IV, Practice in International Development,

Chapters z4-29 explore practical and policy issues in more detail, bringing together the student's knowledge

of development approaches, actors, and issues. The book is designed to teach the student by establishing a

series of layers that progressiveþ deepen the studentt knowledge of international development theory and practice.

At the end of a course, the student has not just accumulated knowledge about development issues but, much more fundamentall¡ has learned how to approach and study development.

FI.EXIBITITY FOR TEACHING

In addition to the need to ground a multidisciplinary audience with a common theoretical toolkit, an in- troductory textbook also needs to be pedagogically flexible. Some programs minimize exposure to the- ory in favour of problem-solving and case studies, while others introduce students to development the- ory early on. To cover these diverse situations found across undergraduate development programs, the four distinct sections of this book (Approaches, Ac- tors, Issues, and Practice) offer the instructor consid- erable flexibility. He or she may follow the logic of the book, which progressively builds towards a more

sophisticated integration ofconcepts, actors, and is- sues, and their application to policy and practice, or may pick and choose, perhaps preferring to twin only approaches and actors, or actors and issues, or even

ACKNOWTEDGEM ENTS

Over the last three editions, this textbook has been developed, edited, and improved by many people. The many authors who contributed chapters to this book are, of course, the foundation of its success. We'd also like to thank our editors at Oxford University Press: Kate Skene, who saw the potential

A WORD FROM THE AUTHORS xix

to focus simply on issues and practice. Each chapter has been written to stand alone without requiring the assignment of previous chapters, although the collection is organized in such a way as to permit the instructor to draw connections between theor¡ actors, issues, and practice when the student moves

sequentially from the first chapters to the last. At the same time, the range of chapters makes it possible for an instructor to pick and choose the elements of the text that correspond with his or her course design.

The chapters follow a common structure to fa- cilitate the book's use in undergraduate teaching. Teaching tools are provided in each chapte¡ includ- ing learning objectives, questions for discussion, and sources for further reading. Text boxes draw on examples from a wide range of regional and histori- cal experiences to illustrate the main text.

We hope that this new third edition of Introduction to International Development will play an important role in providing students from multidisciplinary backgrounds with the conceptual toolkit necessary to understand a wide range of development issue-areas and help to launch them into this challenging and rewarding discipline that combines values, reflection, and action.

Paul A. Haslam, Iessica Schafer, Pierre Beaudet

School of lnternational Development ønd Global Studies

University of Ottawa

September zot6

of this book when it was only an idea in our heads; Dorothy Turnbull and |ennifer Charlton, who saw us through the first edition; Mary Wat and Richard

Tallman, who produced the second edition; and Meg Farrell Patterson and Richard Tallman, who

ably managed the third edition to its publication.

ACRONYMS ACCCRN Asia Cities Climate Change Resilience CEDAW Convention on the Elimination of

Network All Forms of Discrimination Against

ACP Group African, Caribbean, and Pacific Group Women

of States CELAC Comunidade de Estados Latino-

AfDB African Development Bank Americanos e Caribe

AGH' Africa Growing Together Fund CEO chief executive officer

AIIB Asia Infrastructure Investment Bank CEPCO Oaxacan State Coffee Producers

f\LGA Bolivarian Alternative for the Americas Network

.liNC African National Congress CHS Core Humanitarian Standards

A0SIS Alliance of Small Island States CIA Central Intelligence Agency (US)

(UNFCCC) CIDA Canadian International Development

APP Asia-Pacific Partnership on Clean Agency

Development and Climate CliES Convention on International Trade in

,�PP0 Popular Assembly of the People of Endangered Species

Oaxaca (Mexico) Cls compulsory licences

!\SCAN Association of Southeast Asian Nations CNPC China National Petroleum Company

AU African Union C0F Council of Europe

BCE before the Christian era COIN US military doctrine for counter-

BCR benefit-cost ratio insurgency

BEE Broad-Based Economic Empowerment COP Conference of Parties (UNFCCC)

(South Africa) CPAFFC Chinese People's Association for

BHN basic human needs Friendship with Foreign Countries

Em bilateral investment treaty CPEs complex political emergencies

BK8BN National Family Planning Coordinator CPHC comprehensive primary health care

Board (Indonesia) CRA Contingent Reserve Arrangement

BMGF Bill & Melinda Gates Foundation CRS Catholic Relief Services

BHAC Bangladesh Rural Advancement CSG Child Support Grant (South Africa)

Committee cso civil society organization

RRICS Brazil, Russia, India, China, South CSR corporate social responsibility

Africa DAC Development Assistance Committee

BWls Bretton Woods institutions {OECD)

CA capabilities approach DAH development assistance for health

CAFTA-DR Central American Free Trade DAWN Development Alternatives with Women

Agreement with the Dominican for a New Era

Republic DDR disarmament, demobilization, and

CAP Consolidated Appeal Process (UN) reintegration

CRA cost-benefit analysis ODT dichlorodiphenyltrichloroethane

CBC Bartolome de Las Casas Centre OF discount factor

CBDH common but differentiated DFID Department for International

responsibilities Development (UK)

C8DH+C common but differentiated DG DEVCO Directorate General for Development

responsibility plus the capability and Cooperation (European

principle Commission)

CCVI Climate Change Vulnerability Index DIRCO Department of International Relations

CDl\1 Clean Development Mechanism and Cooperation (South Africa)

CE Christian era DPA Development Partnership

CEA cost-effectiveness analysis Administration (India)

DPKO Department of Peacekeeping Operations (UN)

DRC Democratic Republic of the Congo EC European Commission ECA Economic Commission for Africa (UN) ECHO European Community Humanitarian Aid

Department ECLA/ECLAC Economic Commission for Latin

America and the Caribbean (UN) ECOSOC Economic and Social Council (UN) EEAS European External Action Service EKC Environmental Kuznets Curve EMNC emerging multinational corporation EPZ export processing zone ESCAP Economic and Social Commission for

Asia and the Pacific (UN) ESCWA Economic and Social Commission for

Western Asia (UN) ESF Emergency Social Fund (Bolivia) EU European Union EZLN Ejercito Zapatista de Liberaci6n

Nacional FAQ Food and Agriculture Organization (UN) FDI foreign direct investment FGT Foster-Greer-Thorbecke poverty

measures FOCAC Forum on China-Africa Cooperation FPI foreign portfolio investment FSR farming systems research FTAA Free Trade Area of the Americas G shortfall from the poverty line G7/8 Group of Seven/Eight G20/G21 Group of 20/21 G24 Intergovernmental Group of Twenty-

Four on International Monetary Affairs and Development

G7 7 Group of 77 GAD gender and development GATT General Agreement on Tariffs and

Trade GAVI Global Alliance for Vaccines and

Immunization GDI Gender Development Index GDP gross domestic product GHG greenhouse gases GLTN Global Land Tool Network GM gender mainstreaming GMP Gates Malaria Partnership GNH Gross National Happiness Index GNI gross national income GNP gross national product

GTZ German development agency

HCR High Commission for Refugees HDI Human Development Index

HFCS

HIPC

HIV/AIDS

HPI

HYV

IBRD

IBSA

ICA

ICRC

ICTs

IDA

IDGs

IDL

IDM

IDP

IDRC

IEPL

IFAD

IFI

IIA

ILO

IMF

INDCs

INSTRAW

IPCC

IRD

IRR

ISi

ISP

ITT

LCD

LDCs

LEDS

LFA

LGBT

LMICs

LPI

M&As

high-fructose corn syrup

Acronyms xxi

heavily indebted poor countries human immunodeficiency virus/ acquired immune deficiency syndrome

Human Poverty Index

high-yielding varieties International Bank for Reconstruction and Development (World Bank) India, Brazil, and South Africa

International Coffee Agreement International Committee of the Red Cross

information and communication technologies

International Development Association (World Bank)

International Development Goals international division of labour Individual Deprivation Measure internally displaced people International Development Research Centre

International Extreme Poverty Line (World Bank)

International Fund for Agricultural Development international financial institution international investment agreement International Labour Organization (UN)

International Monetary Fund intended nationally determined contributions

International Research and Training Institute for the Advancement of Women (UN)

intellectual property Intergovernmental Panel on Climate Change

integrated rural development internal rate of return import substituting industrialization Internet service provider information technology International Telephone and Telegraph low carbon development least developed countries low emission development strategies

logical framework logical framework approach lesbian, gay, bisexual, and

transgender low- and middle-income countries

Living Planet Index mergers and acquisitions

xxii Acronyms

M C C Millennium Challenge Corporation (US) PRI Institutional Revolutionary Party (Mexico)

MDB multilateral development bank PRSs national poverty reduction strategies

MDGs Millennium Development Goals (UN) PRSPs Poverty Reduction Strategy Papers

MEF Major Economies Forum on Energy and R&D research and development

Climate Change RBM results-based management

MERCOSUR Common Market of the South RDA Resources Development

MGE mainstreaming gender equality Administration (Pandora)

MGNREGA Mahatma Gandhi National Rural RRA rapid rural appraisal

Employment Guarantee Act (India) RTA regional trading arrangement

MNC multinational corporation RUF Revolutionary United Front (Sierra

MNE multinational enterprise Leone)

MOF Ministry of Finance (China) SADPA South African Development

MOFA Ministry of Foreign Affairs (China) Partnership Agency

MOFCOM Ministry of Commerce (China) SAPs structural adjustment programs

MPI Multidimensional Poverty Index SARS severe acute respiratory syndrome

MSF Medecins Sans Frontieres SDGs Sustainable Development Goals

MSR Maritime Silk Road (China) SDRs special drawing rights

MST Landless Workers' Movement (Brazil) SE social exclusion

MTEFs Mid-Term Expenditure Frameworks SER shadow exchange rate

N population size SEWA Self-Employed Women's Association

NAFTA North American Free Trade Agreement (India)

NAM Non-Aligned Movement SGBV sexual and gender-based violence

NAPs National Action Plans SHE Secretary of Hydrocarbons (Ecuador)

NASA National Space Agency (US) SIDA Swedish International Development

NATO North Atlantic Treaty Organization Cooperation Agency

NOB New Development Bank SMART specific, measurable, achievable,

NGO non-governmental organization relevant, and time-bound

NICs newly industrialized countries SME small and medium-sized enterprise

NIDL new international division of labour SMS short messaging systems

NIEO New International Economic Order SOE state-owned enterprise

NPV net present value SREB Silk Road Economic Belt (China)

OAS Organisation of American States SRF Silk Road Fund (China)

OBOR One Belt, One Road initiative (China) STABEX export earnings stabilization system

OCHA Office for the Coordination of SVG St Vincent and the Grenadines

Humanitarian Affairs (UN) SWAPs sector-wide approaches

ODA official development assistance SWR shadow wage rate

OECD Organisation for Economic TNC transnational corporation

Co-operation and Development TPP Trans-Pacific Partnership

OIF Organisation internationale de la TRIMs trade-related investment measures

Francophonie TRIPs trade-related aspects of intellectual

OLI ownership, location-specific, and property rights

internalization TRIPs-plus stronger version of TRIPS

OPEC Organization of Petroleum Exporting U5MR under-five mortality rate

Countries UCIRI Union of Indigenous Communities of

OPHI Oxford Poverty and Human the Isthmus Region

Development Initiative UHC universal health coverage

OWG Open Working Group on the SDGs UK United Kingdom

PA participatory assessment UN United Nations

POPs Stockholm Convention on Persistent us United States of America

Organic Pollutants UNASUR Union of South American Nations PPP purchasing power parity UNCBD UN Convention on Biological Diversity PPPs public-private partnerships UNCCD UN Convention to Combat PRA participatory rural appraisal Deser tification

Acronyms xxiii

UNCDF UN Capital Development Fund UNV UN Volunteers

UNCED UN Conference on Environment and USAID United States Agency for International

Development Development

UNCTAD UN Conference on Trade and USSR Union of Soviet Socialist Republics

Development VAT value-added tax

UNCTC UN Centre on Transnational WAD women and development

Corporations WBCSD World Business Council of Sustainable

UNDP UN Development Programme Development

UNECE UN Economic Commission for Europe WCED World Commission on Environment

UNEP UN Environment Programme and Development (UN)

UNESCO UN Educational, Scientific and Cultural WFP World Food Programme (UN)

Organization WHA World Health Assembly (WHO)

UNFCCC UN Framework Convention on Climate WHO World Health Organization (UN)

Change WID women in development

UNFP/UNFPA UN Population Fund/UN Fund for WIDER World Institute for Development

Population Activities Economics Research

UN-HABITAT UN Human Settlements Programme WMCCC World Mayors Council on Climate

UNHCR UN High Commissioner for Refugees Change

UNICEF UN Children's Fund WMO World Meteorological Organization

UNI FEM UN Development Fund for Women WSF World Social Forum

UNOSSC UN Office for South-South WSIS World Summit on the Information

Cooperation Society

UNRISD UN Research Institute for Social WSSD World Summit on Social

Development Development

UNRWA UN Relief and Works Agency for WTO World Trade Organization

Palestine Refugees in the Near East ZOPP/OOPP objective-oriented project planning

CONTRIBUTORS Erwin A. Alampay is associate professor in the

National College of Public Administration and Gov

ernance (NCPAG) at the University of the Philippines.

Eric Allina is associate professor in the Department

of History at the University of Ottawa.

Pierre Beaudet is Deputy Director and an associate

professor at the School of International Develop

ment and Global Studies, University of Ottawa.

Stephen Brown is professor of political science at

the University of Ottawa.

Lisa Bornstein is associate professor in the School

of Urban Planning at McGill University.

Radhika Desai is professor in the Depar tment of

Political Studies at the University of Manitoba.

Gavin Fridell is a Canada Research Chair and asso-

Paul A. Haslam is an associate professor at the

School of International Development and Global

Studies, University of Ottawa.

Joseph Hanlon is visiting senior fellow at the

London School of Economics and at the Open.

University (England).

Anil Hira is professor ofPolitical Science at Simon

Fraser University.

David Hulme is professor in the School of Environ

ment, Education, and Development at the University

of Manchester.

Tim Jones is a senior policy and campaigns officer

for the Jubilee Debt Campaign.

Cedric Jourde is associate professor in the School

of Political Studies at the University of Ottawa.

ciate professor of International Development Stud- Sophie King is a research fellow at UPRISE, a re

ies at Saint Mary's University. search centre within the School for the Built Envi-

Des Gasper is professor of States, Societies, and

World Development at the International Institute of

Social Studies at Erasmus University.

Jing Gu is Research Fellow and Director of the Cen

tre for Rising Powers and Global Development, and

Convenor of the Rising Powers in International De

velopment Programme at the University of Sussex.

Arjan de Haan is program leader of the Employ

ment and Growth Program at the International De

velopment Research Centre, Ottawa.

laura Hammond is reader and head of the Depart

ment of Development Studies at the School of Orien

tal and African Studies at the University of London.

ronment at the University of Salford.

Anne Latendresse is professor in the Departe

ment de Geographie at the Universite du Quebec.

Nissim Mannathukkaren is associate professor in

the Department oflnternational Development Stud

ies at Dalhousie University.

Marianne H. Marchand is Chair in International

Relations in the Department of International Rela

tions and Political Science at the Universidad de las

Americas, Puebla.

Abu-Bakar Siddiq Massaquoi is doctoral re

searcher in the Department of Geography and En

vironmental Sciences at the University of Reading.

Chukwumerije Okereke is Reader in Environ

ment and Development in the Department of Geog

raphy and Environmental Sciences at the University

of Reading.

Jane Parpart is research professor in the Depart

ment of Conflict Resolution, Human Security, and

Global Governance in the McCormack Graduate

School at the University of Massachusetts.

David Potts is head of the Bradford Centre for

International Development at the University of

Bradford.

Joshua Ramisch is associate professor in the

School of International Development and Global

Studies at the University of Ottawa.

Jane Reid is a PhD student in the School of Urban

Planning, McGill University

Keetie Roelen is a research fellow at the Institute

of Development Studies and co-director of the

Centre for Social Protection at the University of

Sussex.

Jessica Schafer is Performance audit manager,

Office of the Auditor General of British Columbia.

Contributors xxv

Ted Schrecker is professor of Global Health Policy

in the School of Medicine, Pharmacy and Health

at Durham University and a fellow at the Wolfson

Research Institute.

David Sogge is an independent analyst based in

Amsterdam and an associate of the Norwegian

think-tank NOREF.

Astri Suhrke is senior researcher at the Chr.

Michelsen Institute, Bergen, Norway.

Marcus Taylor is associate professor and gradu

ate chair in the Department of Global Development

Studies at Queen's University.

Rebecca Tiessen is associate professor in the

School of International Development and Global

Studies at the University of Ottawa.

Henry Veltmeyer is professor of Sociology and

International Development Studies at Saint Mary's

University.

Torunn Wimpelmann is post-doctoral researcher

at the Chr. Michelsen Institute, Bergen, Norway.

Aram Ziai is professor in the Institute of Political

Science at the University of Kassel.

PART I

Theories and Approaches in

International Development

William Kamkwamba built a windmill out of a broken bicycle, a tractor fan blade, an old shock absorber, and blue gum trees

to power his famiiy's home in Malawi after borrowing books from a small community lending library. After hooking the windmill to a car battery for storage, William was able to power four light bulbs and charge neighbours' mobile phones. I Source: Photo by Lucas Oleniuk/Toronto Star via Getty Images

Meaning,Measurement,and Morality in International Development Jessica Schafer, Paiil A. Haslam, ancl Pierre Beaudet

LEARNING OBJECTIVES

• To understand the commonality and diversity • To consider development as a multi-dimensional

among developing countries. phenomenon and to identify the major scholars • To differentiate among the meaning of various la- associated with this apprnach.

bels used to describe the developing world. • To reflect upon the ethical dilemmas associated

• To understand the relationship between national with foreign aid and development practice.

wealth, distribution of income, and poverty.

• African schoolchildren playing with a globe in Vale Shingwedzi, Mozambique, where residents of areas within the newly

created Great Limpopo Transfrontier Park have been resettled. I Source: Photo by Ute Grabowsky/Photothek via Getty Images

:t I Schafer et al.: Meaning, Measurement, and Morality in International Development 3

WHAT IS THE DEVELOPING WORLD?

The 1968 photo of "Earthrise" taken by the Apollo 8

astronauts as they orbited the moon was the first im

age of our world as a whole, hanging in the blackness

of space. For many, it made it possible to think of the

common fate of humanity, without nations or borders,

and regardless of wealth or poverty, making it an icon

of the emerging gloha[i,1,ation. Almost 45 years later,

NASA released "Earth at Night," a composite image of

the Earth taken by satellites, which showed the planet

illuminated by millions of points of light originating

from cities, towns, and villages. As David Hulme notes,

these points of light can be used as indicators of ur

banization, infrastructure, and development, and their

absence, as a lack of development (Hulme, 2013: 17). In

this regard, NASA's "Earth at Night" gives us an image

of our world simultaneously unified and divided, rich

and poor.

PHOTO 1.1 I NASA's "Earth at Night."

If you were to descend from the satellite-eye's

view and traverse the many regions of the world, you

would immediately notice the rich diversity of hu

man experience and social organization. You would

observe strikingly different landscapes; hear up to

7,300 different languages (SIL International, 2009);

see the wide range of activities that people perform

to earn a living; experience home life in many dif

ferent forms, from nuclear families in suburbia to

multi-generational households, families led by pa

triarchs with several wives, single-parent families,

and groups of families in nomadic communities; and

encounter a wide variety of political organizations

from liberal democracies, to kingdoms, duchies, and

principalities, Islamic and people's republics, and

dictatorships.

At the same time, you could not fail to notice that

certain areas-towns, cities, countries, and regions

exhibit signs of material wealth: sumptuously decorated

""' (/) ""' z

4 PART I I Theories and Approaches in International Development

buildings; abundant consumer goods; energy-intensive activities; a highly developed infrastructure of roads, telecommunications, hospitals, and schools. By contrast, other regions and locales are devastatingly poor: human dwellings do not protect inhabitants from the elements; infrastructure is lacking for the movement of people, goods, and information; and the poorest have insufficient food and health care for survival. Many of these are the black areas in NASA's "Earth at Night."

Similarly, you would begin to realize that some human beings enjoy a wide range of opportunities and

choices with respect to' the way they live their lives, while others struggle to survive in conditions over which they exercise little control. And yet, you would see that there is no simple pattern to these opportuni ties. While there are richer and poorer countries, you would still see great wealth and great poverty existing side-by-side within both. And, even in these poor ar eas, few people are truly isolated from the global econ omy, as they are linked in to some degree by cheap consumer goods, cell phones, mass media, and migra tion flows.

The study of international development aims to explain both the diversity evident in the world in re lation to human well-being and the common patterns

BOX 1.1 I President Truman's Point 4*

that emerge when comparing people, social groups, nations, economic and political systems, and regions of the world. Some explanations are based on histor ical evidence, finding the causes of today's poverty in the actions (and injustices) of past societies (see Chapter 2). Other explanations for worldwide pat terns of wealth and poverty focus on the results of economic "laws" and their functioning through in dividual rational action in impersonal market trans actions. Still other theories of development, hold

that the economic logic of capitalism requires that some countries remain poor while others profit (see

Chapter 3). And some theorists reject the concept of development altogether, heralding an era of "post development" (see Chapter 4).

But before we get to the theories put forward to explain global development, poverty, wealth, and hu man well-being, we need to understand some con cepts that are central to international development. The next section considers the words and labels that scholars, practitioners, and the popular media use in talking about development. Following that, we intro duce different concepts of poverty and measurements of human development. The final two sections address global ethics and ethical issues for development re searchers and practitioners.

We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half of the peo ple of the world are living in conditions approaching misery. Their food is inadequate, they are victims of

disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and more prosperous areas. For the first time in history, humanity possesses the knowledge and the skill to relieve the suffering of these people ... our imponderable resources in technical knowledge are constantly growing and are inexhaustible .... The old imperialism-exploitation for foreign profit- has no place in our plans.

*This was the fourth foreign policy goal that President Truman outlined in his Inaugural Address and, therefore, has become

known as his "Point 4."

Source: Inaugural Address, President Harry S. Truman, 20 January 1949, in Inaugural Addresses of the Presidents of the United

States (1989), cited by Esteva (2010: 1).

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 5

LABELLING IN INTERNATIONAL

DEVELOPMENT

The terms used to describe people, places, and pro

cesses within international development reflect the

evolution of thinking about poverty, wealth, and the

relationship among nations. Critical theorists have

pointed out that labelling plays at least two important

roles: labels make existing practices appear legitimate,

and they also shape future polic y -making (Sachs, 2010;

Wood, 1985). Understanding the history of labelling

within the field of international development therefore

helps to track the progression of important concepts

and approaches.

The modern concept of "development" is often

traced back to US President Harry Truman's 1949

Inaugural Address (Box 1.1), when he spoke of "un

derdeveloped areas," a term still in common usage

today. If we unpack the term "underdeveloped areas,"

the concept implies a universal measurement of devel

opment and that nations can be assessed against this

standard. Those that meet the standards are considered

"developed," while those that do not are considered

"underdeveloped." In his speech, Truman suggested

several criteria for measuring development: on the side

of underdevelopment, he mentioned inadequate food,

disease, primitive economic life, and poverty; on the

side of development he placed scientific advancement

and industrial progress, as well as skill and technical

knowledge. The use of the word "imperialism" also

suggests the areas to which Truman was referring:

the large number of countries in Africa and Asia still

at that time under political rule by European powers,

and the countries of Asia and Latin America that had

emerged from European colonial rule over the course

of the previous 150 years.

Truman's use of the term "underdeveloped areas"

implied a single, overarching scale on which to com

pare nations' success or progress in relation to each

other. It also suggested the need for outside interven

tion by those who deemed themselves to have achieved

progress or development success on behalf of those who

have not yet done so or who do not possess the neces

sary conditions to do so. Indeed, this notion of "trus

teeship" (acting for others) is considered by many to

be a key element of the modern idea of" development,"

and has a long history that dates back at least as far

as the colonial period (see Cowen and Shenton, 1996;

Chapter 2).

In 1952, the French demographer Alfred Sauvy

used the term "tiers monde" ("Third World") to refer

to countries outside the two major power blocs of the

West and the Soviet Union (Fry and Martin, 1991). His

intent was to draw a parallel with the tiers etat (Third

Estate) in pre-revolutionary France, which referred to

the bottom layer of the social pyramid, beneath the

clergy and the nobility. The Third Estate had a very

diverse membership, from peasants virtually enslaved

under feudal lords to bourgeois merchants with great

wealth, who had little in common apart from exclu

sion from the nobility and clergy. Similarly, the Third

World to which Sauvy referred in the 1950s included

countries with diverse economic, social, and political

histories, which were following widely varied trajec

tories of development. Gradually, though, the term

"Third World" took on connotations primarily related

to poverty at the national level.

The deepening hostilities of the Cold War dur

ing the 1950s meant increasing political tensions and

rivalries between the ideologically opposed First and

Second Worlds (respectively, the nations of the North

Atlantic Treaty Organization and those of the Warsaw

Pact or Soviet bloc). The Non-Aligned Movement

(NAM) brought some political unity to the group of

countries outside the two superpower blocs following

a conference in 1955 in Bandung, Indonesia, and the

first official Non-Aligned Movement summit in 1961 in

Belgrade, Yugoslavia. In this context, the term "Third

World," like the NAM, suggested a political bloc that

provided an alternative to the ideological power group

ings (see Chapters 3 and 10). Although the First World

and Second World designations became irrelevant with

the fall of the Berlin Wall in 1989, and the Non-Aligned

Movement declined in influence, the term "Third

World" remains as a kind of catch-all category in inter

national development circles. However, it is difficult to

identify any enduring similarities among the countries

that have been referred to under this category over the

past 50-plus years, and numerous questions have been

raised about its value.

Is it a sufficiently clear and useful term, given that

there are no precise criteria to identify whether a given

country falls within the category or not?

6 PART I I Theories and Approaches in International Development

Does the label have negative connotations? Recent public discussions about which countries should be considered part of the Third World suggest that many people feel it is a pejorative, patronizing term and therefore prefer their own country not to be included within the category.

Is it ever possible for a country to move out of the Third World category, or is it a historically determined and static denotation? Some Eastern European coun tries with low scores on the Human Development Index (discussed below) are not commonly considered part of the Third World, whereas countries of South America may be automatically i11cluded even though some of them, such as Argentina and Chile, have achieved high human development scores.

Finally, many are unhappy with the way the term "Third World" seems to imply a world hierarchy and a single path to development success, just as the term "underdeveloped areas" did.

In the 1970s, a new term emerged as a result of eco nomic transformation among a number of countries formerly considered part of the "developing world": the Newly Industrialized Countries (NICs). These countries included Hong Kong, South Korea, Singapore, and Taiwan. More recently, the term "emerging" has become more commonly used, and Thailand, India, Mexico, Brazil, China, South Africa, Turkey, and Malaysia have been included. The term "emerging markets" suggests they are perceived by the leaders of global capitalist enterprises as potential markets to target for profit bul also that once they have embraced the rules of market economics, they may be admitted into the coveted circle of successful developed coun tries. In this regard, "emerging markets" and "emerg ing economies" imply an optimism for lhe future that is not captured by the terms "underdeveloped" or "Third World."

The most commonly used term for countries that have not yet reached the level of economic success necessary to be considered "developed" or "rich" is "developing countries." A country's gross domestic product (GDP) was the standard measure used in the past to classify countries as developed or developing, but this classification produced anomalies. GDP is a measure of the value of goods and services produced in a national economy and can be high as a result

of natural r�source wealth, even when other sectors of its economy and social well-being may not show signs of development such as industrialization, in creased life expectancy, or higher levels of education. For example, Equatorial Guinea, an African country that saw its GDP shoot up in the mid-199os with the discovery of oil reserves, could have been included in the "developed" category simply on the basis of per capita GDP. Yet other key indicators of human well-being in the country, such as life expectancy and literacy, remain very low. These problems with economic measurement are dev�loped further in the next section.

The World Bank has established its own system of classification, partitioning countries into low-, middle-, and high-income groups as a basis for de termining the loan programs for which a country is eligible to apply. It uses a meast1re of gross, national income (GNI), calculated according to its own for mula but basically similar to GDP or GNP (gross na tional product).' The wide range of national income levels across the globe is illustrated by Figure 1.1. The World Bank has further subdivided the cate gories to include lower-middle-income and up per-middle-income groups. There is also a second categor y of high-income countries: those belonging to the Organisation for Economic Co-operation and Development (OECD). In World Bank reports, the term "developing economies" is used to refer to low- and middle-income economies, but it offi cially recognizes that this terminology should not be taken to imply that these economies are mak ing "progress" towards development or that those that do not fall into the two groups have already achieved "development." (See the World Bank web site for more detail.)

The term "Fourth World" has come into usage more recently, although it is not yet common or central in the international development lexicon. It has been used in two quite distinct ways. One is to denote the poorest of the poor countries, often the "failed states" of recent parlance, which have experienced serious set backs in human well-being and political governance, typically in connecti n with armed conflict, such as Somalia and Afghani tan ( ee Chapters ;u. and 28). The lher and earlier use of "Fourth World," derived

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 7

The world by Income

low (S1,045 Of less) 0

Lower middle ($1,046-$4,125) O

Upper middle ($4,126-$12,735) O

High ($12,736 or more) •

No data 0

FIGURE 1.1 I Urmrn National Income Per Capita, 2014

Source: Based on World Bank estimates of 2014 GNI per capita.

from the work in the 1970s of the Canadian Aboriginal

leader and writer G eorge Manuel, is in reference to the

internal colonization of Aboriginal peoples, whose sta

tus and citizenship rights vary considerably globally

but who have frequently suffered dispossession and

abrogation of political, economic, social, and cultural

rights within countries where the dominant settler

group has acted as a colonizer.

Discontent with "Third World" and "developing"

or "underdeveloped," for many of the reasons men -

tioned, has prompted people to adopt alternative words

to refer to the subjects of international development,

such as "two-thirds world" and "majority world."

These terms highlight the fact that the overwhelming

majority of the world's population are the targets, sub

jects, or objects of development. The idea of strength

in numbers underlies the hopefulness of these terms.

The label "South" seems to provide a neutral

way of referring to countries b ecause it emphasizes

geographical location over other characteristics.

Yet using "South" to refer to countries that qualify

as the targets for development does imply charac

teristics beyond simply location in the southern

hemisphere, since Australia and New Zealand, for

example, are donor rather than recipient countries

in international development, while some countries

in the northern hemisphere receive aid and exhibit

socio-economic characteristics similar to countries

of the "South."

The term "Global South" has gained favour in the

development community more recently and appears

better able to incorporate the centrality of historical

and contemporary patterns of wealth and power into

a loosely geographically defined concept. The phrase

8 PART I I Theories and Approaches in International Development

may take better account of the fact that poverty and social conditions formerly identified with the Third World are to be found throughout the world (including in otherwise "rich" countries) and not simply in one geographical region.

Examining language and discourses of develop ment helps to illuminate the deeper ideas and beliefs underlying development practice and policies. We need to be aware that how we talk about development shapes and is shaped by our culturally informed as sumptions and historical position, as well as by ex isting relations of power and knowledge. Words or labels, which appear to be non-political, natural, or in stinctively rational, should be examined for the ways they may mask practices of control, regulation, and reproduction of particular power configurations or policy processes (Crush, 1995: 15). In addition, by su perimposing new labels on existing practices, we run the risk of creating the illusion of reform while leav ing power relations underlying the labels unchanged (Adams, 1995). Yet, at the same time, we should rec ognize the possibility for creativity in discursive prac tice and search for ways in which language can be a force for transformation (Wood, 1985). We should not assume that concepts or practices of "development" are fully determined by those who believe themselves to be their architects. Instead, we need to recognize the agency exercised by those who have responded to, reacted to, and resisted being the objects of develop ment (Crush, 1995: 8).

GROWTH, INEQUALITY, POVERTY,

AND DEVELOPMENT

Although vast diversity exists in the standard· of living between, among, and within developing countries and even within the developed world-it remains diffi cult to define concisely what "development" is and how exactly to measure It. Different approaches to defining "development" reveal different aspects of the problem: the need to distiflgui ·h between levels of industriali zation the need to consider different segments of the population, the need to look specifically at poverty, and the need to consider development as an "ideal" or aspi ration for betterment.

Growth

Development has most frequently been equated with growth of the economy over a prolonged period of time. This approach was most common during the 1950s and 1960s under the influence of theories such as Walt Rostow's Stages of Economic Growth (see Chap ter 3), but remains prevalent today. When the World Bank compares the level of development of different countries, it typically ranks them by their average in come per inhabitant-or GDP per capita-although the Bank prefers the term "gross national income." GDP per capita figures also are adjusted by purchasing power parities (PPPs), which take into account the dif ferent buying power of a dollar in different economies. This gives an average income per person that allows us to compare the annual incomes of, for example, an average American who earns $52,947 to the average Tanzanian who earns $1,654. This kind of compari son reveals that the United States is the world's ninth richest country and Tanzania is one of the world's poorest-159th out of 187 (see Table 1. 2).

GDP per capita is an extremely useful way of com paring levels of development. It also gives us the most widely used measure of how countries are improving (or deteriorating) in their level of development. GDP growth rates (the percentage change in national income between any two years) are like the Academy Awards of the developing world, clearly indicating which econo mies have been performing (in terms of adding wealth) and which have not. The top-performing economies in the developing world may have growth rates exceed ing 10 per cent per annum-such as China in the early 20oos-but others may post negative rates, as was the case for much of sub-Saharan Africa during the 1980s and early 1990s. However, growth rates in developing countries, where the economy might be based on a few exported products or resources, are very volatile and may be high one year and low the next. In contrast, developed countries generally have slower GDP growth rates, usually between 2 and 3.5 per cent, but these rates are more stable over time. One of the world's most prominent development economists, Jeffrey Sachs, has argued that the current gulf in wealth between the de veloped and developing countries is almost entirely caused by small differences in growth rates over the period since 1820. In 1820, he argues, the difference

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 9

in GDP per capita between developed and developing countries was relatively small (only 4:1), but two centu ries of different'ial growth rates have led to a twenty-fold gap (Sachs, 2005: 29-31).

Rapid growth in GDP is usually caused by rapid in creases in productivity in agriculture, natural resource extraction, or industrialization. When GDP per capita reaches the level of a middle-income developing coun try, it usually means that a certain level of industri alization has been reached, including the production of manufactured goods such as textiles and consumer durables (refrigerators, cars) and of some intermediate goods such as steel and petrochemicals. It was gener ally assumed that growth of national wealth (as meas ured by GDP per capita) would "trickle down" to the poorest segments of society in such a way that most people would benefit. In other words, development, viewed through the prism of increasing GDP per cap ita, was about copying the industrialization experience of the West.

But it should not be forgotten that GDP per capita is a measure of the average income in a country. There are numerous problems with GDP per capita, includ ing that it is an estimate that depends on the quality of information collected by government statistical agen cies and that it fails to count the "value" of non-market subsistence activities, which may be quite important in less developed rural areas (for a trenchant critique, see Seers, 1979: 14-17). Although a good indicator of the degree of industrialization, GDP tells us relatively little about the extent of poverty-specifically, what propor tion of the population is extremely poor-or whether growth is in fact "trickling down" to the poor. It is pos sible for countries to grow rapidly in GDP per capita but for only the richest segments of society to benefit. In this respect, development cannot be as simple as GDP growth, because growth does not necessarily reduce poverty.

Inequality

In order to know how many poor people there are in a given country and whether they are benefiting from the overall growth of the economy, we need to include another concept: the distribution of income. The distribution of income (also known as income ine quality) is a measure of how the wealth of a country

is distributed among its population: what share of that wealth is owned by the rich, and how much the poorest earn in comparison to the wealthiest. Indeed, income inequality is the direct link between GDP per capita and the number of people living in poverty.

Income inequality can be measured in two ways: a comparison of the income earned by different strata of the population and the Gini coefficient (see Chapter 26). Income inequality is often evaluated by dividing the pop ulation into five or ten equally populous strata, known re. spectively as "quintiles" or "deciles," and comparing the average incomes of these different strata to each other. A standard comparison is between the earnings of the wealthiest 20 per cent of the population and the poorest 40 per cent (the ninth and tenth deciles compared to the first to fourth deciles). However, the Gini coefficient is the most commonly used measure of income inequality. It is a number between o and 1, with relatively equal societies such as the Scandinavian countries scoring around 0.25 while very unequal societies like Brazil score around o.6. 2

Income inequality is important in part because it forces us to confront the injustice in most develop ing societies: that a privileged minority lead luxurious lives while the vast majority of their own countrymen and women struggle in abject poverty. But income inequality is also an important constraint on devel opment. It means that growth often comes from the richer segment of the economy and is less likely to translate into poverty reduction by "trickling down" to the poor. Poverty is always eliminated more quickly when GDP growth is combined with improvements (greater equality) in the distribution of income.

Societies in developing countries tend to be much more unequal than societies in developed countries. Latin America, although an upper-middle-income area of the developing world, is also the region with the most unequal distribution of income. This means that the super-rich and the super-poor coexist in the same countries. Mexico, for example, has the second richest man on the list of the world's richest people, China has six people on the list, and India has five, while citizens of the developing world as a whole oc cupy 23 of the top 100 places (Forbes, 2015). Brazil, one of the most unequal countries in the world, has three billionaires on the Forbes list, European-trained elites, and a world-class aeronautics industry-but also Javelas (Portuguese for "slums") surrounding its

10 PART I I Theories and Approaches in International Development

major modern and cosmopolitan cities such as Sao Paulo. The share of national income appropriated by

the richest 20 per cent and that appropriated by the poorest 20 per cent hardly changed over the 1981-2001 period, despite significant growth that resulted in the doubling of per capita income (see Table 1.1). l n 2001 the top quintile took horn almost 62 per cent of the national income while the bottom quintile pocketed only 2-5 per cent. TI1e degree of inequality between the top rn per cent and the bottom 10 per tent is even more pronounced: 42 per cent and 1 per cent of the national income .in 2013, respectively. Yet, there is also reason for hope. In the 2002-12 period (the latest date for which there are figures), the Brazilian government made a concerted attempt to channel resources to the poorest sectors of society, resulting in some improve ment in the distribution of income.

The realization that income inequality makes the task of raising people out of poverty even more diffi cult has led to the current focus of international organ izations and research on "growth with equity," which seeks to combine the goal of GDP growth with the goal of distributing the benefits of that growth to the poor. Growth remains important because it "grows the pie," but it is not enough in itself. Furthermore, some evi dence suggests that countries that grow faster do not always improve the situation of the poorest (such as

Brazil), while countries with low growth rates and GDP per capita may succeed relatively well in reducing the vulnerability of the poorest segments in society (such as Cuba or the Indian state of Kerala). This means that high GDP growth is not strictly necessary for poverty reduction, although it may make it easier. It is also

worth underlining that the poorest and those who are least W<ely to benefit from the "trick le down" of growth are usually tho e wh belong to disadvantaged etlmic, Lingui tic, and cultural group . In Latin America, for example, thi frequently mea:ns Indigenous people and people of African descent.

Although inequality undermines the opportu nities for material advancement of the poor, it also has broader cultural effects on the rich. Dudley Seers writes, "The social barriers and inhibitions of an un equal society distort the personalities of those with high incomes no less than those who are poor" (1972: 23). Whe11 inequality become part of a national cul ture, it undermines the broad and diffuse social trust, what Robert Putnam, among others, has called social capital (Fukuyama, 1995; Putnam, 1993). Social capital refers to the extent to which individuals are willing to co-operate in the pursuit of shared goals and is usually thought to be essential to the development of a civic

and democratic culture (see Chapters 12 and 16). Pub lic opinion polling in highly unequal societies such as Latin America demonstrates that people are less trust ing of strangers than is the case in the developed world. Gated communities and barred windows are common place. Furthermore, one may well a k if the traditional conservatism of elites in the developing world and their unwillingness to tolerate reformist groups or extend the rights of social citizenship to the poor comes from fear of loosening their grip on the masses, who know very well who benefits from the status quo and who does not.

Although ioeqllality is a common feature of most developing countrie , it is very difficult to explain why.

TABLE 1.1 I The Distribution of Income in Brazil by Quintiles, 1981-2012 (% share of national income)

Qulntlle .198.1 1990 2001 2007 20.12

1 (poorest) 2.89 2.36 2.45 3.02 4

2 6.01 5.27 5.84 6.85 8

3 10.59 9.72 10.79 11.78 12

4 18.84 18.19 18.94 19.62 19

5 (richest) 61.67 64.46 61.98 58.73 57

GNl/capita* $1,850 $2,540 $3,310 $6,140 $12,390

*Atlas method, US$.

Source: World Bank 2014, World databank, at: databank.worldbank.org/ddp/home.do.

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 11

There are many possible reasons , some of which are

discussed in more detail in subsequent chapters. At least three explanations seem plausible. First, the im

pact of colonial rule or neo-colonial economic rela

tions may have forged or consolidated unequal social

relations based on slavery, feudalism, and landown

ership patterns that continue to influence the present

(see Chapters 2 and 3). Second, the characteristics of

late industrialization-that is, the use of inappropriate

capital-intensive technology-reduce the employment

potential of GDP growth (see Chapters 7 and 22). Third,

inadequate or non-existent social safety nets and re

gressive taxation systems prevent the redistribution of

national income towards the poor and middle classes,

as occurred in the developed economies after the Great

Depression. The good news is that although income

inequality makes development more difficult, it is not

impossible to overcome. The recent expansion of tar

geted poverty reduction (see Chapters 24 and 25) and

broad-based social programs (see Chapter 26) in much

of the developing world has contributed to a significant

reduction in the incidence of poverty and slight reduc

tions in inequality.

Defining Poverty and Development

Income inequality leads us to the direct question of the

proportion of poor people in a given country. (For a

more detailed discussion of poverty and exclusion, see

Chapters 24 and 25.) Poverty, however, is a difficult

concept to define. It is usually defined as an extremely

low level of income. For example, the World Bank dis

tinguishes between absolute and moderate poverty in

much of its work. Absolute poverty refers to being be

low the minimum level of income required for physical

survival. The World Bank defines this level as US$1.25

per day measured in 2005 dollars at international pur

chasing power parity-that is, adjusted for the buying

power of a US dollar in the local market. The defini

tion of the absolute poverty line was revised in 2008

from the commonly cited US$1 a day level (in 1993 dol

lars). Moderate poverty is typically considered to be an

income of US$2 per day, a level at which basic needs

are barely met but survival is not actually threatened.

According to these new measures, the World Bank re

ported that 1.2 billion people were below the absolute

poverty line in 2013, more than had been estimated

previously but approximately 700 million less than in

1980 (Olinto et al., 2013).

In the 1960s, however, American sociologists such

as Talcott Parsons and Kenneth Clark, addressing pov

erty and in particular the status of African Americans

in US society, began to develop the concepts of rela

tive poverty and social exclusion. Relative poverty re

fers to a kind of poverty that does not threaten daily

survival but in which an individual may not have the

income necessary to fully participate in his or her soci

ety (Thomas, 2000: 13, citing Townsend). One may well

imagine how an individual without computer access

and knowledge would be seriously hampered in terms

of his or her ability to access important information

and even do basic tasks such as looking for employ

ment. The poverty we refer to in developed countries is

almost exclusively, even for the very poorest, an issue of

relative rather than absolute or even moderate poverty.

A related concept is "social exclusion" or social citizen

ship, which is discussed in greater detail in Chapter 26.

Nonetheless, the concept of relative poverty reveals

that poverty is not just about income levels; it also has

social, political, psychological, and moral elements

and this is true in both the developing and the devel

oped world. In other words, although GDP per capita is

a good indicator of poverty as income deprivation, it

does not tell the whole story. Consequently, alleviating

poverty or doing development also must be much more

complicated than simply spurring economic growth

or even reducing poverty. Three thinkers in particular

have been fundamental in redefining how poverty, and

therefore development, should be understood.

The idea that development involved much more

than economic growth or an increase in income per

capita began to gain ground in the late 1960s, promoted

by development theorists and practitioners such as

Dudley Seers and Denis Goulet. The arguments of these

scholars have led to an understanding of poverty and

development as multi-dimensional. Seers rephrased the

question of how to develop by asking, "What are the

necessary conditions for a universally acceptable aim,

the realization of the potential of human personality?"

(Seers, 1979: 10). He concluded that six conditions were

necessary: adequate income to cover the needs of basic

survival; employment (including any non-paid social

role that contributes to self-respect and development

of the personality); improvement in the distribution

12 PART I I Theories and Approaches in International Development

of income; an education, particularly literacy; politi

cal participation; and national autonomy (belonging to a politically and economically independent nation). Denis Goulet, writing at about the same time, asserted that development should promote "life-sustenance" (the basic requirements for survival-food, clothing, health, and shelter), self-esteem (or dignity and identity

of the individual), and freedom (an expanded range of choice and freedom from "servitudes") (Goulet, 1971: 87-97; Seers, 1979: 10-13; Todaro, 1989).

It is evident that those closely involved in devel opment were beginning to see growth as an inade quate measure of development and even entertained

the possibility that rising incomes, although they im proved the ability of individuals to meet basic physi cal needs, might not contribute to "development" in

its more sophisticated and multi-dimensional aspects. These ideas were further developed in the work of Nobel Prize-winning economist Amartya Sen, who

argues lhat development should not be seen simply as rising income levels but rnther as an increase in indi viduals' substantive freedoms. His approach is often called "development as freedom," after the title of his

popular 1999 book, or the 1. p· bilit. , ppro.i ·h. As Sen put it, the real value of wealth a .nd income is that "they are admirable general-purpose means for having

more freedom to lead the kind of lives we have reason to value" (Sen, 1999: 14). In this respect, Sen sees pov

erty primarily as kinds of "un£reedom," or depriva tion of freedoms, that limit the ability of individuals

to improve their lives. Such unfreedoms may include

a lack of access to health and welfare services, gender or ethnic discrimination, and limits on basic political, civic, and economic rights. According to Sen, lack of freedom can be the result of either processes (denial of

rights normally considered "procedural," like political, civic, and human rights) or the opportunities that peo ple do not have (inability to feed themselves, receive

PHOTO 1.2 I Inequality: hillside slums and the beachfront, Rio de Janeiro.

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 13

an education, access health services, avoid premature

morbidity) (Sen, 1999: 14-17). It is worth underlining

that these deprivations are absolute, not relative, as all

people need a certain level of capabilities in order to

function as fully human (live a good human life). Some

of Sen's followers, such as Martha Nussbaum, have pro

duced lists of these minimum but universal require

ments (Nussbaum, 1995: 84-5).

The key to Sen's argument, therefore, is the way in

which the expansion of people's capabilities-that is,

their ability to lay claim to or access various resources

(such as civil and political rights and government

services)-can improve their ability to make choices

that they value. At the same time, an increased ability

to make choices feeds back to build their "capabilities."

One can imagine, for example, how the right to vote

and participate in politics could lead to governmental

decisions that increase local educational opportuni

ties, which in turn could expand the choices of those

who participated in the political process by voting. Sen

writes, "Greater freedom enhances the ability of people

to help themselves and also to influence the world, and

these matters are central to the process of development"

(Sen, 1999: 18). Sen makes it clear, therefore, that level

of income does not relate directly to "development" and

that poverty is better seen as the deprivation of basic

capabilities or freedoms.

Sen points to a number of compelling examples to

illustrate his argument, including the fact that, using

data from 1993, African Americans (on average) had a

lower probability of reaching old age than citizens of

China, Sri Lanka, or Costa Rica, despite having much

higher incomes. Furthermore, male African Ameri

cans from Harlem were even worse off than the aver age, being less likely to reach the age of 40 than men

in Bangladesh (Sen, 1999: 21-3). In this example, Sen

shows that African-American men suffered from re

strictions on their "capabilities" despite having incomes

much higher than people in the other countries cited. It

is important to underline that, for Sen, although free

dom (including free markets) has intrinsic value and

does not have to be justified in terms of outcomes, a

significant part of the expansion of capabilities (ability

to access freedoms) comes through access to govern

ment services. Therefore, Sen sees the ability to access education, health care, and unemployment insurance

as central elements that expand people's capabilities.

The inverse of this observation is that sometimes low

income does not reflect the opportunities people have.

This should be intrinsically clear to students in a uni

versity or college setting, where their income (meas

ured by summer earnings or part-time jobs) would

put them below the national poverty line. In no way

does this income level reflect the real capabilities and

freedoms commanded by students or the opportunities

before them.

Sen's work has been instrumental (together with

that of Seers and Goulet) in opening the door to more

multi-dimensional measures of development that go be

yond the ubiquitous GDP per capita. In defence of GDP

per capita, it is easily measured, and levels of absolute

and moderate poverty can be clearly established accord

ing to certain income cut-off points. Even one of its most

ardent detractors, Dudley Seers, referred to GDP per

capita as a "very convenient indicator" (Seers, 1979: 9).

However, is it possible to measure a multi-dimensional

concept like Sen's "development as freedom"? Some au

thors have criticized such an approach as being impossi

ble to quantify (Rist, 1997: 10). Nonetheless, efforts have

been made to construct measures that better capture

the multi-dimensional aspects of development. The best

known is the Human Development Index, or HDI, of the

United Nations Development Programme (UNDP),

constructed with input from Amartya Sen (Table 1.2).

The annual Human Development Report, which

ranks the countries of the world by their HDI score, is the

UNDP's flagship publication and was developed in 1990

as an alternative and more multi-dimensional measure

of development than GDP per capita. Many people see

it as an intellectual and philosophical challenge to the

World Bank's annual publication, the World Develop

ment Report, which continues to use GNI per capita as

a measure of development. The Human Development

Index is a composite measure of three equally weighted

factors: a long and healthy life, knowledge, and stand

ard of living. A long and healthy life is measured by

life expectancy at birth; knowledge is a composite of

the adult literacy rate and the combined gross enrol

ment ratio for primary, secondary, and post-secondary

schools; and standard of living is measured by GDP per

capita. In this respect, the index recognizes that in

come levels are important but that other factors also

are significant in human development. One may view

the education and longevity measures as proxies that

14 PART I I Theories and Approaches in International Development

TABLE 1.2 I Countries Ranked by HDI and UNI Per Capita, 2014

HDI Ranking Country (according to GNI Per Capita

201.4 World Bank category) HDI Score (PPP US$)

Very high human development

1 Norway 0.944 64,992

8 United States 0.915 52,947

9 Canada 0.913 42,155

9 New Zealand 0.913 32,689

11 Singapore 0.912 76,628

14 United Kingdom 0.907 39,267

20 Japan 0.891 36,927

39 Saudi Arabia 0.837 52,821

42 Chile 0.832 21,290

High human development

50 Russian Federation 0.798 22,352

72 Turkey 0.761 18,677

73 Sri Lanka 0.757 9,779

75 Brazil 0.755 15,175

9 0 China 0.727 12,547

Medium human development

106 Botswana 0.698 16,646

110 Indonesia 0.684 9,778

115 Philippines 0.668 7,915

129 Tajikistan 0.624 2,517

130 India 0.609 5,497

142 Bangladesh 0.570 3,191

Low human development

150 Swaziland 0.531 5,542

151 Tanzania 0.521 2,411

152 Nigeria 0.514 5,341

154 Madagascar 0.510 1,328

181 Sierra Leone 0.413 1,780

185 Chad 0.392 2,085

188 Niger 0.348 908

i Indicates country whose HDI ranking is higher than its GDP per capita ranking.

J, Indicates country whose HDI ranking is lower than its GDP per capita ranking.

Source: UNDP, Human Development Report 2015, at: http://hdr.undp.org/en/statistics.

GNI Per Capita

Ranking

11 i

20 i

32 i

4 J,

23 i

27 i

12 J,

53 i

49 J,

60 j,

102 i

74 J,

33 J,

65 j,

101 J,

108 l

156 i

126 j,

147 i

125 J,

159 i

128 J,

178 i

165 l

163 j,

1831

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 15

take account of the various government services that Seers, Goulet, and Sen see as crucial to expanding the range of individual choice. Indeed, the first Human Development Report (1990) was explicit about this link, noting that "Human development is a process of en larging people's choices" (UNDP, 1990: 10).

For the UNDP, countries with a HDI score of o.8 or more are considered highly developed, while those with a score of 0.5 or less are considered to have low development. In the 2015 Human Development Re port, classifications are given for 188 countries in the following categories: very high human development (49), high human development (55), medium human development (38), and low human development (43), with HDI values ranging on a scale between o and 1. The HDI shows that many countries rank much higher in "human development" than average per capita income would predict. Even Norway, holding the number-one spot on the HDI (five spots higher than its GNI rank ing), does not do as well in converting GNI per capita to human development as New Zealand, which is ninth in the HDI but thirty-secondth in GNI. New Zealand has almost half the per capita income of Norway but a very similar HDI outcome. Results can be even more diver gent in developing countries: at almost the same GNI per capita of just over $9,000, we find both high-HDI Sri Lanka (#73) and medium-HDI Indonesia (#110). This shows that some countries do much better than others in converting income level into human development.

Perhaps mostimportantly, the HDI has embedded the idea of poverty and development as a multi-dimensional phenomenon in the modern approach to development. The UNDP has also developed a number of other mul ti-dimensional measures inspired by the HDI, in order to focus on other aspects of poverty, exclusion, and devel opment. For example, the Inequality-adjusted Human Development Index combines the HDI with a measure of inequality; the Multidimensional Poverty Index (MPI) assesses how multiple "deprivations" affect people's qual ity of life; the Gender Inequality Index (GII) assesses the discrimination faced by women and girls; and the Gen der Development Index (GDI) uses the same approach as the HDI, but tuned to the gap between male and female outcomes. Even the Millennium Development Goals (MDGs), the comprehensive framework developed to focus the activities of all bilateral and multilateral aid agencies between 2002 and 2015, and their successor, the

Sustainable Development Goals (SDGs), can be viewed as operationalizing a multi-dimensional approach to development.

Recently, the multi-dimensional approach to un derstanding development has been twinned with a human-rights-based approach. The idea of develop ment as a human right has been debated within the UN system since the early 1970s, but it was not until it was linked with Sen's capability approach that the human rights approach entered the mainstream (Uvin, 2010: 164-8). Proponents immediately saw the similarities between actions needed to increase people's capabilities on multiple dimensions and the various human rights treaties that governments had signed committing to improve access to food, education, health care, adequate housing, security, justice, and civil and political rights. Identifying development as a human right was supposed to put political pressure on governments to fulfill their existing obligations to improve the capabilities of their populations. In other words, activists wanted to use international law as a kind of "stick" to push recalcitrant countries forward. It was also hoped that international law would provide an opening for citizens to claim their rights from their own govern ments (Uvin, 2010: 170-4). The human-rights-based approach to development was officially launched with the publication of a framework linking development and human rights by the UN High Commission for Human Rights in 2006 (UNHCHR, 2006). Since that time, human rights considerations have become an increasingly important part of the debate over how to advance development goals.

GLOBAL ETHICS AND INTERNATIONAL

DEVELOPMENT

Wherever you live, you are reading this book because you have an interest in international development and, by extension, in the global distribution of wealth and power, well-being, and poverty. It may seem obvious, therefore, that the negative consequences of poverty for human health and well-being are on the whole a bad thing, both within your own country and in other coun tries throughout the world. You probably also believe that it foilows logically from this that we should take

16 PART I I Theories and Approaches in International Development

CRITICAL ISSUES

BOX 1.2 I What Is Development?

"Development" is a contested term. There are debates surrounding the meaning of development, con testation over the best approach to achieve development, and even questions about whether it Is worth

pursuing at all (see Chapters 3 and 4). Today's dominant usage of "development," in which it is under

stood as virtually synonymous with economic growth and modernity, emerged in the post-World War II

period. However, ideas about human progress that undergird this vision of development are rooted in the European Enlightenment.

With the rise of industrial capitalism in the eighteenth century, many philosophers began to see his

tory as linear, as having an ultimate destination, a "progression to the better," as German philosopher Georg Hegel saw it (Leys, 1996: 4). At the same time, capitalism's transformation of society gave rise to new social ills, such as dispossession, unemployment, and poverty, and many saw the need for an antidote to these problems. Ideas of economic progress and social transformation were taken up and expressed through the European colonial enterprise, in complex ways and diverse forms. In particular, it

has been sugges_ted that the idea of development was based on the Eurocentric Idea of "trusteeship" those who were already "developed" could act on behalf of those iridividuals and societies that were yet to realize their potential (Cowen and Shenton, 1995).

Some thinkers, such as Arturo Escobar (1992), argue that the colonial roots of the concept and

practice of development call into question the validity of the contemporary development enterprise. They emphasize the destructive and disciplinary power of development in its interventions in and transforma tions of non-Western societies (see Chapter 4). Development can be seen to have changed societies for the worse, rather than improving people's lives, as development discourse would have us believe (Watts, 1995: 45). Gilbert Rist (1997, 2007) refers to development as a "toxic word" because it necessarily en

tails the destruction of both the environment and social bonds in the process of transforming natural and human resources into economic commodities. In fact, Rist sees "development" as a discourse that legiti mates the global expansion of capitalism while simultaneously obfuscating its negative effects on people.

However, development is not a homogeneous project. Development, "for all its power to speak and to control the terms of speaking, has never been impervious to challenge and resistance, nor, in re sponse, to reformulation and change" (Crush, 1995: 8). Just as a body of scholarship has uncovered the interactions and mutual shaping that took place during the colonial encounter between (multiple) coloniz

ers and (multiple) colonized peoples (see Chapter 2), research is also emerging that explores the ways people who are the ''objects" of development policy subvert and In turn transform the people, ideas,

projects, agencies, and societies that are held up as the paradigm of the developed world (Scott, 1990).

action to avoid, mitigate, or reverse poverty wherever

possible-and not just within our own country.

However, while few people would argue that poverty is not a bad thing, the further belief that we

should take action to address poverty is not univer-

_ally shared. In addition, even among those \vbo do ace· pt that action should be taken to address global poverty, there a re inteme .intellectua I and pol iti

(al debates over how we can justify action on global

poverty and what· actions are justified. Several influ

ential approaches to global poverty have had an im

pact on these debates within the field of international development and on policy action. We provide a brief

overview of these approaches in this ecti,on, and then we explore dilemmas that you, as a student of interna

tional development, might face when assessiJ1g your options for action or when taking part in international

development policy-making or practice.

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 17

Central to the international development arena is a simple question: Do our moral duties extend beyond our families, neighbours, and fellow citizens?

Over the course of the twentieth century, most Western societies developed systems of social support to ensure that no citizen would be left to die or suffer severe deprivation as a result of poverty. These systems became known as "welfare states."

However, while the welfare state in various forms became ubiquitous among European and North Amer ican nations, a global institution equivalent to national welfare state agencies has not emerged to take respon

sibility for guaranteeing security and meeting the ba sic needs of all people through similar forms of wealth redistribution and universal public service provisions. Nonetheless, many people believe that the principles of basic human rights and security should apply to all humans, regardless of where they happen to live in the world. Thus, we have moved from a time when most discussions about justice were concerned primarily with distribution within states to a time when many are considering arguments surrounding distributive justice globally, or what has become known as global ethics.

Cosmopolitan Arguments for Global Redistribution

Those who argue that principles of justice imply a moral obligation to address the needs of the poor not only within national boundaries but beyond these

borders largely fall within the philosophical category referred to as cosmopolitanism. According to cosmo politanism, justice is owed to all people regardless of where they happen to live or where they happen to have been born, and regardless of their race or gender, class or citizenship (O'Neill, 2000: 45). National boundaries are therefore of little or no moral importance in consid erations of justice.

Within cosmopolitan thinking, Charles Jones (1999) identifies three main types of justification for global re distributive justice: a consequentialist ethic (as exempli fied in the works of Peter Singer); a contractarian ethic (as in the works of Charles Beitz and Thomas Pogge); and a rights-based ethic (Jones's own position and that of Henry Shue). These three views are outlined in Box 1.3.

Peter Singer's argument is that if we can take ac tion to prevent people from dying of starvation without compromising anything else of equal moral value, an impartial view of justice would clearly say that we are morally bound to take that action. Box 1.4 presents an example that he offers readers to persuade them of the moral correctness of this c<;msequentialist position.

If Singer's position is correct, we can draw the con clusion that we should be giving away all of the "sur plus" income we have as long as it does not cause us to give up something of greater moral value than the lives of people facing starvation anywhere in the world. One might characterize this as the "Mother Teresa" approach (Doyle, 2006) or radical sacrifice (Gasper, 1986: 141), since it seems to require that we give up

BOX 1.3 How to Judge Right and Wrong: Three Philosophical Approaches to Morality

Consequentialist philosophy assesses whether an action is morally just on the basis of the goodness or value of the outcomes it produces.

Contractarian philosophy holds that moral norms are justified according to the idea of a contract or mu tual agreement (as in the political philosophy of Thomas Hobbes, John Locke, and, most recently, John Rawls).

Rights-based philosophy justifies moral claims on the basis of fundamental entitlements to act or be treated in specific ways. Justifications for rights-based morality are complex, but they include the idea that we have rights because we have interests or because of our status.

18 PART I I Theories and Approaches in International Development

BOX 1.4 I The Drowning Child Analogy

Peter Singer (2002) suggests that the following situation illustrates why justice requires us to act to pre vent needless and extreme suffering regardless of national boundaries. Imagine you are walking to work and see a small child fall into a pond. She is in danger of drowning. You could easily walk into the pond and save her without endangering your own safety, but you would get your clothing and shoes muddy.

You would have to go home and change, causing you to be late for work, and your shoes might be ruined.

Our moral intuition tells us that you should clearly put aside those minor inconveniences in order to save the child's life-and that if you ignored her and continued on your way, you would have done something

seriously morally wrong. Furthermore, it should make no moral difference whether this little girl is your own child, your neighbour's child, or someone you don't know at all. But, Singer argues, are we not in the same position, morally speaking, when we choose to spend money on frivolous or luxurious items that are no more important than the muddy shoes in the example, rather than use that money to prevent

someone from dying of starvation (for example, through donation to humanitarian agencies that have proven competence in delivering aid to the starving and needy)? And, he argues, this is clearly true even if that starvation is occurring in another part of the world that we may never visit. Is that thousand-dollar bottle of champagne, that gold-encrusted tuna steak, that Tiffany diamond ring really more important, morally speaking, than a human life (or many of them)?

everything we have until we are in a similar position of poverty and have nothing left to give that would pre vent another person from dying of starvation.

Thomas Pogge (2002, 2005) iu-gues for the moral duty to add re world poverly using different ju t'i fications. He suggests that one of the mnin reasons we have a moral duty to aUeviate global poverty is be ause we are caus ally responsible for the current situation as a result of the colonial destruction of local econonties and societies. imilar premises underlie the argument by Walter Rod

ney (t972), an in/luential Guyane e writer, that interna tional development and assistance are simply a way to give back what bad been taken from the Global Sollth.

Another argument Pogge provides takes a con tractarian approach (see Box 1.3). He holds that an eco nomic order should be considered morally unjust if it causes massive and severe human rights deficits that could be avoided under a different and practically pos sible institutional arrangement. He argues that this is dearly the case witb the current global econom.ic order, wh_ich presei:ve the advantages of the wealthy and al low serious and avoidable deprivation among t..he poor despite there being a "feasible institutional alternative

under which such severe and extensive poverty would not persist" (Pogge, 2005: 4). Thus, according to Pogge, our obligation to address world poverty is based at least u1 part. on u.r duty not to linrm otliers.

Rights-based approaches to global justice and the problem of poverty take the idea of human rights as implying duties for individuals, states, and other insti tutions to protect ,rnd aid those whose ba ic needs are not being met through contemporary global market economies (see Chapter 24).

Charles Jones argues tbat the right to subsi tcnce (principaLiy fo d, shelter, and a level of health required for basic human functioning) is ba ed on the recog nition tbat these are universally shared burrnrn needs and, therefore, a1"e moraUy important. They are the most. basic interests we have, because "wil'houl food, shelter, and a rea onable level of health maintenance,

human lives are simply not po sible" (Jones, t99 : 58).

Not all states, however, are currently in a position

to ensure the right to sub istencefor all of their citizens,

becau e some lack suffi"ient re ·ource . 1his means that.

state· with n1ore than tl1ey need to ensure the fulfill

ment of the right Lo subsistence shoald redistribute

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 19

wealth and resources to states unable either to provide

subsistence rights to their citizens or to protect those

rights (Jones, 1999: 70). Hence, a rights-based approach

to justice also can provide moral justification for global

redistribution of wealth in order to protect and aid all

peoples in achieving the right to subsistence.

Arguments against Global Redistributive Justice

The two main ethical positions opposed to cosmo

politan approaches to redistributive global justice are

communitarianism and libertarianism. Communitar

ianism takes issue with the cosmopolitan assumption

that national borders have no moral importance. In

stead, communitarians believe that political and social

community is morally relevant. Thus, some commu

nitarians hold that we are justified in giving (moral)

preference to the needs of our fellow citizens, because

membership in the nation creates special bonds, a kind

of extended version of kinship.

Libertarian philosophy is best exemplified in the

work of Robert Nozick, Anarchy, State and Utopia (1974).

It has been influential among a number of development

theorists (for example, Deepak Lal and Peter Bauer) in

the formulation of what is now known as neoliberalism

(see Gasper, 1986; see also Chapter 3). Nozick argues that

individual rights to freedom and non-interference are

the central moral good, and he places particular value

on the right of individuals to acquire and retain private

property. Therefore, libertarians oppose any form of

obligatory redistribution of wealth, whether within one

country or among countries.

Another aspect of Nozick's argument on justice is

that the simple existence of (even extreme) inequality of

wealth and poverty does not indicate injustice (Gasper,

1986: 143). As long as the wealth was obtained by le

gitimate means, the situation should be deemed just.

Individuals should be free to give donations to poorer

people if they choose to, but there is no moral obliga

tion to do so, and there should be no corresponding

demand on the part of a state or other body.

If we look at statements by actors and institu

tions operating in international development, many suggest a widespread belief in universal human rights

and transnational duties to protect and assist people

regardless of where they live in the world. Common

values and human rights were an important justifica

tion for the adoption of the Millennium Development

Goals in 2002 and the Sustainable Development Goals

in 2015 (UN General Assembly, 2005). The GS has pos

ited that "fighting poverty is both a moral imperative

and a necessity for a stable world" (GS, 2000). The UN

High Commissioner for Human Rights has promoted a

"right to development" (UNHCHR, 2006). "Rights talk"

is fashionable, and it would be virtually unthinkable

for a political leader to deny the principle underlying

universal human rights-that all human life is of equal

worth. And yet, much of the actual practice of Western

aid allocation seems to imply a far less consistent view

of the moral obligation to address global poverty, with

aid often seen as non-obligatory charitable donations,

serving the national interest, or rewarding allies (see

Chapter 8). As you read this book, you should reflect on

the moral principles that remain highly relevant to in

ternational development, and ask yourself what might

be needed to bring our beliefs about justice in line with

our actions in the global sphere (see Chapter 29).

ETHICAL BEHAVIOUR AND THE

DEVELOPMENT PRACTITIONER

Development ethics also addresses the issue of how

each of us should behave as development practition

ers and researchers working in the developing world.

As Des Gasper (1999: 6) puts it, those who work on

the front line "need ethical frames by which they

can better understand their situation, structure their

choices, avoid debilitating degrees of doubt and guilt,

and move forward." Gasper's contribution in Chap

ter 29 provides more detailed tools to assist in analy

sis and reflection about our ethical responsibilities as

researchers, development practitioners, and students

participating in internships and exchanges. Here, we

introduce some key ideas that you should keep in mind

as you are thinking about your role in the future of

international development.

Although there are differences between the

ethical responsibilities of researchers and those of

practitioners, important commonalities between

them are required for work in developing countries.

Researchers tend to be principally concerned with

the issues of informed consent and respect for the

20 PAA' I I Theories and Approaches in International Development

privacy and confidentiality of those who participate

in their studies, the implications of relationships

of reciprocity with key local informants (what

researchers owe them, if anything), and the benefits

of the research for the community (including how to

share the findings with them) (Marchall, 1992: 1-3).

An overriding injunction at all times is to "do no

harm"-to ensure that the vulnerable are not put at

risk as a result of their participation in the research

or project (Adams and Megaw, 1997; Jacobsen and

Landau, 2003: 193). These ethical responsibilities are

salient for practitioners as well, although informed

consent usually translates to ensuring that partici

pation is willing and voluntary in the development

project at hand.

Above all, being ethical as a development worker

or researcher suggests a kind of permanent, ongoing

self-critique and evaluation of one's actions and their

effects, taking care to identify, privilege, and respect

the rights of others over one's more narrow profes

sional objectives (Adams and Megaw, 1997). In other

words, development ethics subordinates the goals (what

we want to do) to the means of development (how we

do it).

We are always aware when we do not have the

power in a relationship, but well-meaning people

such as the typical development worker or student-are

not always aware when they do!

This situation is captured by the idea of pu iti n

,tHI y, which suggests that researchers or development

PHOTO 1.3 I A man with polio makes sandals in a UNDP-funded employment project In Makeni, Sierra Leone.

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 21

BOX 1.5 I Ethics of Participatory Rural Appraisal

Robert Chambers's injunctions for participatory rural appraisal may be viewed as good ethical guidelines for the

development practitioner: "ask them; be nice to people; don't rush; embrace error; facilitate; hand over the stick;

have fun; relax; they can do it (i.e., have confidence that people are capable)" (Chambers, 1997: 1748).

practitioners must be aware of and reflect upon the

social and power relationships in which they are em

bedded, particularly their position relative to the lo

cal people with whom they interact (Binns, 2006: 19).

However, the development practitioner's positionality

is not always easy to assess; as the representatives of

donor agencies, they are often seen by locals as hav

ing power and authority. Choices made by research

ers and practitioners-such as the social and political

background of principal assistants and translators, the

non-governmental organizations (NGOs) they work

with, and the political "gatekeepers" who help them

all contribute to how local people interpret who they

are and whose interests they represent. Resources

distributed by practitioners create "relationships of

'help', 'trust', and 'friendship"' as they intersect with

"people's strategies for earning money" (Pink, 1998:

9-10); at the same time, this distribution of resources

also can create conflict among locals who struggle to

capture benefits (Pouligny, 2001). Taking positionality

seriously, therefore, means that the development prac

titioner needs to reflect on the implications of his or

her power position on others.

Lifestyle, dress, and behaviour abroad are important

to local perceptions. In general, development workers are

expected to live modestly with the people they are sup

posed to assist. Professionalism and advanced technical

capacity should go hand in hand with high moral and

ethical standards based on transparency and democratic

accountability. Most development experts see hiring

and buying locally as an ethical obligation to spread the

wealth. Likewise, participating in local cultural events,

observing local standards of dress and modesty, and

learning the local language are essential elements in build ing a healthy relationship with local partners (Apentiik

and Parpart, 2006: 39-40; Binns, 2006: 20). Nonetheless,

some development practitioners earn the derisory mon

iker "development tourists" as they jet in and out of

poor countries dispensing advice with little understand

ing of local conditions (Adams and Megaw, 1997, citing

Chambers, 1997). There are too many examples of devel

opment mission staff lecturing politicians from the Global

South "like schoolboys" in a (deliberate?) attempt to leave

them powerless (Klitgaard, 1991, cited in Gasper, 1999: 24).

Today, anyone who wishes to be involved in inter

national development cannot but experience a great

sense of modesty as compared to the kind of intellectual

arrogance that was prevalent in the past. Modesty can

mean many things, including a sense that the "West

ern" way is not the only way, that the achievements of

richer countries are not necessarily replicable or even

desirable in poor countries, that Western science and

techniques are not always value-neutral, and that there

are other narratives to explain reality and to change it

in a pro-people way. Development agencies and practi

tioners should not assume they can solve local problems

from the outside when solutions exist at the local level,

which is frequently the case. Above all, development

workers need to do more listening and less talking. This

growing self-critical attitude among contemporary re searchers and practitioners in what we may term the

post-naive era of development represents a welcome

break from the simplistic interpretations of the past. In lieu of conclusion, we may ask future develop

ment practitioners and researchers to reflect upon the words of Mahatma Ghandi: "Recall the face of the poor est and the weakest man whom you may have seen, and

ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it re store him to a control over his own life and destiny? In

other words, will it lead to Swaraj [self-rule] for the hun

gry and spiritually starving millions?" (Kerala, 2003: 12).

22 PART I I Theories and Approaches in International Development

SUMMARY

In this chapter we have considered important concepts and ideas in the study of international development. We

began by discussing the birth, evolution, and implications

of the term "development" and related nomenclature

such as "developing countries," "Third World," and

"Global South"-used by academics, practitioners, and

international organizations. We then turned to a crit

ical examination of growth, inequality, and absolute

and moderate poverty. This led to discussion of "de

velopment" as a contested concept. Multi-dimensional

approaches to development were considered in detail,

particularly Amartya Sen's capability approach and its

translation into the Human Development Index. We also explored the ethics and morality of international devel

opment and looked at various arguments for and against global redistributive justice by asking whether develop

ment assistance should be considered a moral obligation for rich countries and their citizens, or little more than

an individual choice akin to a charitable donation. The

chapter concluded by introducing the personal ethical

dilemmas experienced by development practitioners and researchers, including the need to be attentive to power

and positionality, as well as local norms of ethical and culturally sensitive behaviour.

QUESTIONS FOR CRITICAL THOUGHT

1. W hy is the concept of" development" a subject of debate? What concept of development do you think is most

appropriate, and why? 2. W hy is inequality the crucial link between GDP per capita and the number of people living in poverty in a

given country?

3. W11y is GDP an inadequate measure of development?

4. What i a "multi-dimensional" approach to development?

5. W hat dilemmas might people working in development agencies face? How should they address these ethical

dilemmas?

Acemoglu, Daron, and James Robinson. 2012. W hy Nations

Fail: 1he Origins of Power, Prosperity, and Poverty. New

York: Crown Business.

Deneulin, Severine. 2014. Wellbeing, Justice and Development

Ethics. New York: Routledge and Earthscan.

Desai, Vandana, and Robert B. Potter, eds. 2006. Doing

Development Research. London: Sage.

1. Gross domestic product is a measure of the market

value, in monetary terms, of all goods and services pro

duced within a country over a specific time period (usu ally a year, hence, annual CDP). Gross national product

and gross national income are measures that include GDP plus net income from abroad, such as investments.

Thus, GDP is a bet I er mea 11re of the activity ofa national

Gasper, Des. 2006. "lntroduction: Working in development

ethics-A tribute to Denis Goulet." Ethics and Economics 4, 2: 1-24.

Sachs, Jeffrey D. 2005. The End of Poverty: Economic

Possibilities for Our Time. New York: Penguin.

Todaro, Michael P., and Stephen C. Smith. 2014. Economic Devel

opment, 12th edn. Upper Saddle River, NJ: Prentice-Hall.

economy, that is, of domestic production, than is GNP/

GNI, which better reflects national wealth.

2. The Gini coefficient is based on the Lorenz curve, which

plots the proportion of nati nal income accml.ng to each gmenl of the popuJntion. 'Th.e G.ini coel:ficicnl is a ratio

oft:he area between the curve and a line repres nfrng total

equality to the total area under the line of equality.

1 I Schafer et al.: Meaning, Measurement, and Morality in International Development 23

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Imperialism and the Colonial Experience

LEARNING OBJECTIVES

• To understand the causes for imperial expansion. • To differentiate between the colonial experience

To learn about the strategies indigenous rul- in various regions in the developing world.

ers followed in their engagement with European • To appreciate the important consequences of

empires. colonial rule for indigenous societies.

Day of the Dead banners hanging in front of Parroquia De San Miguel Archangel Church Tower in San Miguel de Allende,

Mexico. I Source: Rob Tilley/Getty Images

26 PART I I Theories and Approaches in International Development

"He was a sugar planter or something. Wasn't that it,

Manuel?"

"Yes madam. He was sugar. He was sugar, wine, sugar

brandy, coal, sardines, water, everything . . . . He took

the water from the people and sold it back again."

"You mean he developed the country."

H.E. Bates, Summer in Salandar

From "First and Third World," to "centre and periph

ery," to "developed and developing," we have now

arrived at "Global North and South" to describe the

world 's uneven distribution of political and financial

capital. Each of these paired terms has a history, and

as much as the compass-oriented labels now in vogue

strive to elide that history, they cannot, if only be

cause some parts of the "South" lie an inconvenient

distance north of the equator, just as some parts of the

"North" are inexplicably located south of the equator.

What each pair unsuccessfully attempts to euphemize

is a separation of the world along a gradient, a sepa

ration whose modern history began with the creation

of European empires in what is now known as the

"South." There are, of course, exceptions to prove this

rule, perhaps none more outstanding than the United

States, a world superpower for much of the twentieth

century, a state composed of former British, French;

Dutch, Russian, and Spanish colonies.

We might trace the history of interaction be

tween this Global North and South back to the

fifteenth-century explorations, led by the Portuguese

and the Spanish, that gave rise to European expansion

into the Americas and Asia. Yet the "age of explora

tion," as it has sometimes been called, is something of

a misnomer: by the time Portuguese sailor Vasco da

Gama's sea voyage in 1497-9 turned Europe's contact

with Asia into one of regular (if not rapid) exchange,

people, goods, and ideas had been Lravelling along

the great Central Asian bighway known as the " i!J(

road" for centuries. Europeans besides Marco Polo

had made the trip east, and Chinese and other inhab

itants of Asia had gone west. This very long history

of interaction was one reason that da Gama knew of

his destination in advance: the world he entered was

known to those who lived in it, if not to him (Newitt,

2005: 2-3). Such earlier interactions notwithstanding,

most exchange between Europe and Asia had taken place through intermediaries, with merchants and

traders all along the southern and eastern portions of the Mediterranean Sea marketing Asian and African

products to European consumers. Previously, only the

rare traveller moved from one sphere into the other, but such movement now became more routine.

EUROPEAN EXPANSION

AND CONQUEST

Southern Europe's interactions with largely Muslim

traders were an important factor in Portuguese and Spanish decisions to embark on the seafaring explo

rations that led to Europe's more direct contact with a wider world. The kingdoms of Portugal and Spain

had only been established following the centuries-long

military reconquest of the [berian Pen.i.n,sula (completed

in 1492), territory tl1e Christian mlers had eized from

its Muslim occupants. This foundational conflict was

one impul e that led the Spanish and Portuguese to

confront their North African neighbours. Accardi ngly,

in 1415 Portuguese forces invaded Ceuta, a city whose

wealth made it known to the Portuguese as the "flower

of all other cities of Africa" (Diffie and Winius, 1977:

53). The assault was successful, and following their

conquest and occupation of the city, the Portuguese

learned more about the sources of its great wealth, such

as its access to a gold trade that came from points south

of the Sahara northwards into the Mediterranean

world. The motives for expansion were thus at once

political-religiou , born of a competitive tension with

Muslim neighbours, and economic, owing to ambitious

Europeans' de ir for more direct access to go ds-not

only gold but pi e and te:xiiles as well, much sought

after in Emope' growing towns and citie , now begin

ning to recover from the ravages of the Black Death.

The desire for more direct b·adc with African and

Asian societies, eliminating Muslim middlemen, was

fulfilled in the vast seaborne expansion during the

sixteenth century. Spain and Portugal established

their previously tmplanned presence in the Amer

icas and created footholds in Africa and Asia. They

were soon joined by the French, the English, and the

Dutch, leading to several centuries of expansion, oc

cupation, and competition among the European em

pire-builders for control over these far-flung sources

of wealth, power, and glory. Over the next three cen

turies, the Spanish, French, Portuguese, and British

2 I Allina: Imperialism and the Colonial Experience 27

ARCTIC OCEAN

GREENLAND

NORTH AMERICA

• Amsterdam

tu'ror�

Mexico Cit)- JAMAICA

�� Cartagefl,il PAC IF IC Panama OCEAN

1520

SOUTH AMERICA

� Potosi r

Strait of

Cape Horn Megellan

\Aq '!,

ASIA

CHINA Canton

INDIA Macau:

,Go, Calk1 •

Malacca .

IN D I A N Sumatra Borneo

OCEAN Java

JAPAN

PACIFIC

OCEAN

PHILIPPINES

15</

New Guinea

AUSTRALIA

0 1,500 3,000 Km. Portuguese explorers

.,. __ Dias

Spanish explorers

Columbus Vespucci Magellan

I--'--.-..____, � OaGama

0 1,500 3,000 Mi,

FIGURE 2.1 I European Exploration, 1420-1542

Source: Richard W. Bulliet et al., The Earth and Its Peoples: A Global History, 3rd edn (Boston: Houghton Mifflin, 2005), 427.

founded-and mostly lost-vast colonial possessions

in the Americas, while their holdings in Africa and

Asia only grew.

If there is consensus on the motives for Europe's

initial phase of expansion, the same cannot be said for

the final burst of conquest and occupation towards the

end of the nineteenth century. Following an interpreta

tion offered by English scholar John Hobson and also

strongly associated with Vladimir Lenin (the Russian

revolutionary and theorist who helped end the rule

of Russia's Romanov dynasty and launch the October

Revolution in 1917, bringing forth the Soviet Union),

many scholars believe that economic motives linked to

the Industrial Revolution launched the classic "high"

imperialism of this period (Hobson, 1902; Lenin,

1920 [1916)), According to this view, the expansion of

European empires was undertaken as part of a search

for new markets: economic returns within Europe were

dwindling, and industrial capitalism had to search

abroad for new investment opportunities and consum

ers. Renewed expansion and the creation of new colo

nies were thus necessary, because most of Europe still

practised protectionist trade policies. This economic

explanation offers an appealing logic, and the emphasis

on the role of capitalism dovetails neatly with the even

tual exploitation, most especially of African labour,

that followed during the era of"high" imperialism. The

Hobson-Lenin thesis nonetheless has its critics, among

them economic historians who point to the limited in

vestment made in the new overseas colonies, as well as

other scholars who find the model places too much im

portance on impersonal economic structures in general

28 PART I I Theories and Approaches in International Development

and ignores any role Asians and Africans may have played in particular.

Another approach also focuses on Europe but combines political and economic factors to explain the rapid expansion of empire. According to this view, "Great Power" rivalry, most especially among Britain, France, and Germany, drove Europe's statesmen in a rush to seize territories as yet unclaimed in Southeast Asia and Africa. European leaders saw the opportu nity to expand as part of a zero-sum game, and in light of the tensions and rivalries that existed in crowded Europe none were content to wait while any of their neighbours moved ahead, especially after the discov ery of diamonds (1867) and gold (1-886) in South Africa. Although a desire tu secure access to strategicaUy im portant industrial "inputs, such as rubber, r lo gain control over areas long believed to possess great riches, such as pans of tropical Africa, was not irrelevant, this understand i.ng e.i;npha izes the imperial powers' race to keep pace with their neighbours.

Associated with the Great Power explanation is the belief in the important role played by nationalist sen timent, which flourished at the end of the nineteenth century. Thus, the emergence of Germany and Italy as unified states was a key factor, especially for France, an older in1pe.i·ial power now concerned with it· German neighbour's new expansionary activity. Nearly all of Emope's nations, however, were preoccupied with at taining the degree of prestige and sense of greatness they believed was their due. This explanation is often deployed to account for the outsized role played by 13elgium and Portugal, two small and relatively minor European powers whose ilwo.lvement in tl1e' cramble for Africa" had no clear connection to political or eco nomic interests, yet both countries ended up with vast African colonies.'

What none of these explanations include, how ever, is much room for the actions of what some histo rians call the "men on the spot," a term most common in studies of the British Empire though just as useful elsewhere. These men-for they were all men-often made decisions to expand European activity and ter ritorial claims even when such moves (and the means by which they were achieved) went beyond or even ran counter to official metropolitan policy. Reacting to lo cal crises or opportunities amid a wider atmosphere of tension and transformation, their improvisations

may have had little immediate connection to indus trial capitalism or domestic nationalism, but the effect was to expand the European field of action and build bigger empires.

Most scholars now accept the idea that each of these xplanations can account for some important part of the hist ry of empire-building. All hough some may long for a theory that might· explain all imperial expan ion in the final third of the nineteenth centw-y, the staggeringly far-flung e>..1:ent of these endeavours, encompassing such very different parts of the world with accordingly dillerent political and economic con ditions, defies any such attempt short of writing a "total history" (Sanderson, 1974; Kennedy, 1977).

The debates over the causes of imperialism or colonialism are unfortunately matched by lack of con sensus over just what either of the two terms may be said to mean. In common usage, "imperialism" refers to the era of European expansion that began in the sixteenth century, when first the Portuguese and the Spanish and then the English, French, and Dutch cre ated empires of trade in tl,e Americas and Asia and, to a lesser extent, Africa. Afi;\qU1 territory did not, for the most part, come under imperial control or witness coloni:rnlio 1 (outside of Algeria and South Africa) until the last quarter of the nineteenth century; some scholars target in particular the period from 1870 to 1914 as the era of"high" imperialism. The word "impe rialism" itself first came into use in the late nineteenth century, when it referred t the operation of Britain's empire: a political sysrem by which colonies are ruled from a centrnl seat of power in the pmsuit of largely if not entirely economi goals (William , 1983: .159). This meaning of "imperialism" neatly de cribes ome of urn earlier European empires (such a the Spanish, English, or French territories of the Caribbean and the Ameri cas) as well as those that covered Africa and good parts of South and Southeast Asia from the last quarter of the nineteenth century through the mid-twentieth century.

Another meaning of "imperialism," however, casts it not as a political system but as an ec nomic ne in which a tate pursues "external investment-amt

penetration of markets and sources of raw materials" (Williams, 1983: 159-60). This idea of imperiall ·m is closely associated with the concept of nt>o olottl' r �111, by which the economies offormally independent coun tries remain subject to the control of others, often their

2 I Allina: Imperialism and the Colonial Experience 29

former colonial rulers. Such a system, of course, may

continue past the formal end of colonial rule, with the

former imperial power continuing to exert strong con

trol over a nominally independent ex-colony. In some

uses, prior colonization is not considered necessary,

such as might be the case when imperialism is applied to

the involvement of the United States in the Middle East

since the mid-twentieth century or of China's increas

ing influence in sub-Saharan Africa-via the action of

state-run enterprises but also the largely spontaneous

initiative of individual Chinese immigrants looking to

benefit from Africa's new growth (French, 2014)-since

the turn of the twenty-first century.

Colonization, in the sense of settling and occupy

ing a specified territory, can refer to other contexts as

well. Some scholars of early African history, for exam

ple, consider the expansion of African societies into

unpopulated or sparsely populated areas as a process

of colonization. Similarly, most evidence suggests that

the earliest human societies in Madagascar were es

tablished by colonists who travelled to the island from

Southeast Asia. However, neither of these instances of

distant settlement took place as part of an imperial ex

pansion or resulted in ongoing political or economic

links between the society of origin and the society of

settlement. The foundation of a colony may simply in

dicate the displacement and resettling of a population;

colonialism implies the rule of some people over others

(Cooper, 2006: 28).

The relationship of imperialism and colonial rule

with development has drawn great interest from schol

ars, politicians, and policy-makers alike, and many

have sought to explain how European imperial expan

sion led to or prevented development in those areas of

the world now considered to be developing countries.

Few would question that colonial rule had an impact

on economic development in colonized territories, but

there is no consensus on just what kind of develop

ment European imperialism (and colonialism) brought

about in Africa, the Americas, and Asia.

RIVAL EMPIRES OF TRADE

Ventures to the east brought Europeans into a crowded

arena that joined together several regions, each one

washed by the Indian Ocean. Local and regional trading

networks had long linked South Asia to peninsular and

insular Southeast Asia and to the Arabian and Red Sea

regions and the coast of East Africa to the west. After the

Portuguese arrival in South Asia in 1498, Europe soon

established a permanent presence with Lisbon's con

quest of Goa, an urban trading centre on present-day

India's western coast, in 1510. The English, Dutch,

and French quickly joined the expansion into Indian

Ocean waters, all hoping to dislodge the Portuguese

from the position of dominance they had seized as Eu

ropean pioneers. The Dutch and English soon created

chartered companies-the Dutch and English East

India companies-in an effort to enlist private invest

ment in the service of empire. The English East India

Company, established in 1600, was followed 70 years

later in British North America with the formation of

the Hudson's Bay Company, which had effective con

trol over all the lands draining into Hudson Bay. The

French organized similar companies, in North Amer

ica and the Far East, in an effort to compete, while the

Portuguese Crown retained more direct control over its

eastern empire. The recruitment of private capital by

the English and Dutch proved a shrewd decision, for it

broadened the financial base for expansionary activity

and provided a sturdier platform that better withstood

the cut and thrust of imperial rivalries.

Out of this seaborne scrum, the rivals began to

carve out areas of influence: the Dutch soon assumed a

dominant position in the spice trade out of the South

east Asian islands (present-day Indonesia and Malaysia,

though in other areas, such as present-day Taiwan, they

had to contend with the power of China's Ming dynasty,

giving way to what some have called a "co-colonization"

of the island under Dutch and Chinese efforts), lead

ing the English East India Company to concentrate on

the South Asian subcontinent. The French competed

with the British on South Asia's east coast, while the

Portuguese clung to their base on the west coast. The

various European powers sought openings overseen by

the Mughal emperors, the recently risen rulers of the

South Asian subcontinent. The Mughals welcomed the

outsiders' rivalry because the emperor could capital

ize on the competition among them to demand better

terms of trade, reversing the trend that had prevailed

during the first decades of Portuguese monopoly, when

the newcomers had been able to impose trade terms less

favourable to them.

3 A TI I Theories and Approaches in International Development

PHOTO 2.1 I Troops from German East Africa (present-day Tanzania), before 1919.

TI1e "new" world that Europeans entered in the Americas differed greatly from the one they encoun tered in Asia. In Central and South America, European arrival and the labour practices imposed on conquered Amerindian societies produced a staggering popu lation collapse, making any continuation of existing politi.caJ systems a near impossibility. European sail ors and explorers carried smallpox to the Americas; the indigenous peoples of the Americas had no prior exposure and virtually no resistance to the virus. TI1e disease laid waste to the previously populous societies of Meso-Arnerica. Alongside this unintended biologi cal assault, the Spanish, in their eagerness to acquire as much silver and gold bullion as possible from their rap idly growing empire, enslaved indigenous people by the thousands and worked them to death mining gold and silver. In some places, such as the island of Hispaniola

(present-day Haiti and Dominican Republic), the death toll resulted in near extinction: the indigenous Taino people numbered at least one million (and per haps as many as five million) in 1492 but by 1550 had disappeared, In present-day Mexico, the Azte slate collapsed as the po_pu lation plrn11Jneted from perhaps 25 million in 1518 to just over a million in t6o; (Watt , 1999: 84-90). No pobtical institution could survive this degree f social destruction, a11d that facl en ·ured that any political ystem lhat might be created in New World empires would be cut from whole cloth.

Imperial expansion, especially in Spain' New

World possessions, brought an unlmagined wealth to the lberian couquistadores. lhe captmed In a ruler Atahualpa, for example, offered his Spanish captors a ransom of 6,000 kilogram f gold and 12,000 of silver. (The Spanish eagerly took the ransom but instead of

2 I Allina: Imperialism and the Colonial Experience 31

granting Atahualpa his freedom only gave him a choice

between being burned at the stake and being baptized,

then strangled, as a believer in Christ. He chose bap

tism and strangulation.) The prospect of such immense

wealth, together with the decimation of Amerindian

societies, resulted in greater immigration to the

Americas than to other imperial possessions. Spanish

colonists sought their fortunes in gold and silver min

ing and wielded great power, staffing the viceroyalties

of Peru and New Spain, as the Spanish territories were

called. The large numbers and eventual strength of

this colonial elite led to broad tensions with the Span

ish Crown, which recognized the potential threat they

posed to ongoing imperial control.

Meanwhile, along with gold diggers, the Portuguese

introduced the cultivation and export of sugar, which

they had pioneered on the Atlantic islands of Madeira

and the Azores. Sugar production-and an important

product thereof, rum-flourished in Brazil and espe

cially on the Caribbean islands, and sugar became a

major item in the so-called triangular trade with Europe

and Africa. From the later 1600s, export of African slaves

to the Americas grew enormously, largely to supply

labour for sugar (and later cotton and tobacco) produc

tion. The elimination of the Amerindian population was

a major factor in Europeans' decision to purchase mil

lions of African slaves and export them to the Americas,

although the ability of European merchants to purchase

slaves in Africa in exchange for relatively low-cost man

ufactured goods was also important. Towards the end of

the seventeenth century, this forced African migration

far outstripped European settlement, and colonial mas

ters depended mightily on their black slaves, who built

the foundations of the New World colonies and ensured

their economic growth for centuries to come.

In contrast to Meso-America, South America, and

the Caribbean, South Asian polities remained robust in

early and ongoing interactions with agents of European

empire, both in defence of local sovereignty and in pur -

suit of economic interest. To a certain extent, agents of

European empire were compelled to accept terms dic

tated by the Mughal emperor: as much as the Europeans

held sway at sea-for the Mughals had no navy or mer

chant fleet-Indian rulers accepted no challenge to their

dominance on land, strictly limiting the outsiders' rights

even to self-defence. Unlike the situation in the Americas,

Europeans arrived in Asia with no significant advantage

in military technology, and local armies were more than

their match. Such was all the more the case in East Asia,

especially in present-day Taiwan, where four decades of

Dutch rule ended in 1662 when the Dutch East India

Company fought forces from mainland China, losing a

war in which both sides used prolonged sieges, effective

espionage, and breathtaking brutality (Andrade, 2010,

offers a marvellous "global microhistory"). Technology

alone, however, was not the critical factor of difference

between the Americas and Asia. As noted above, the

decimation by disease of indigenous populations in the

Americas made European conquest relatively simple.

Even more important, many Amerindian groups-espe

cially those that had not formed hierarchical city-states,

had a communitarian ethos and culture, which led at

first to their sharing with and helping the European

newcomers, and their often non-sedentary lifestyle and

community organization led the Europeans to believe

the Amerindians were "uncivilized." Such a Eurocentric

assumption was not possible in South Asia.

The greater the number of European firms angling

for access to Indian markets, the stronger the Indian

negotiating position. The question of competition

would come to be of great strategic importance in fu

ture years: as Mughal power began to fade around the

turn of the eighteenth century, the British and French

sought to expand their influence with the regionally

based successor states that emerged. Through the first

several decades of the eighteenth century, European

trading companies found that by allying with and even

fighting on behalf of the rulers of Indian states, they

could secure valuable concessions, such as duty-free ex

port rights, that could boost their profits significantly.

Through the middle of the eighteenth century,

France and Britain vied for dominance in South Asia as

in Europe and the Americas. Britain topped her rival in

Asia, especially after the English East India Company

gained control of Bengal province in 1765. Exploiting

rivalries within Bengal's political and commercial

elites, the Company defeated the Mughal armies, and

although Bengal remained part of the Mughal empire on paper, the Company emerged as the real power in

eastern India. The province was one of India's most

economically productive, and the Company now held

the rights to Bengal's revenue as well as free rein to

trade there. As much as it was a significant political

evolution, this development also marked an important

32 PART I I Theories and Approaches in International Development

turning point in the economic history of imperial activ ity. Previously, the Company had financed its purchas ofTndiaJ1 exports with gold bullion, but with rights to locally raised tax revenues, its operations were now lo cally financed. Thanks to its military adventures, the Company now exercised an economic dominance as well and could rely on its ability to raise local revenue

to fund its military actions, a practice known as "mili tary fiscalism."

From this point forward, the English East India Compru1y became a virtual Juggernaut; alLhough it ruled on l:y a part of llldia di.rectly, it wielded great in Ouence over a much wider area thrnugh alliances with the princely r ulers of individual states. With control

BOX 2.1 An "Oriental Despot": British Company Rule in South Asia

Queen Elizabeth l's government created the English East India Company in 1600, granting it extensive powers and a measure of autonomy from the state, rights conveyed by a document known as a charter. At the same time, the English state devolved the burden of raising capital and the inevitable risk of the distant undertaking to private investors. With a monopoly on British trade with Asia and the right to arm its trading fleet, the Company possessed the economic and coercive force that would make it the most powerful actor in European imperial history.

For most of its first two centuries, the Company jockeyed for position with rival Dutch and French companies. It also vied to create a more secure relationship with Indian rulers who controlled the Com pany's access to the subcontinent's producers and to consumers. Outlasting its European competitors, whose position weakened in part because of a changing domestic political landscape, the Company, powered by England's early industrialization, was alone in a position to challenge India's princely rulers in the last quarter of the eighteenth century.

Having spent nearly two centuries as a naval or at most a coastal power, the Company expanded throughout South Asia In the late eighteenth century and the first half of the nineteenth century. Despite its new dominance, it continued to recognize the Mughal emperor as a symbol of Indian authority and in individual states left princes on their thrones as figureheads. Doing so meant that the public, visible face of authority-embodied in the "magnificence of princely courts [and] the gifting and patronage activities they sustained"-would remain Indian. Behind the throne, the Company's resident officers controlled military forces, negotiated relations with other rulers, and oversaw revenue collection, often seizing vast fortunes for their personal enrichment (Metcalf and Metcalf, 2006: 75). These "men on the spot" had tremendous latitude to make decisions independent of Company policy, which sometimes lagged behind their improvisations.

This indirect rule preserved a veneer of indigenous authority over the reality of Company power and was in keeping with British beliefs that essential cultural differences between South Asian people and Europeans made European-style representative government impossible. The Company (and later the British government, once the British Crown took charge of India following a rebellion in 1857) insisted on governance that represented a rule of law: a commitment to law, rather than the personal rule of a prince or emperor, believed to characterize "Oriental despotism," was part of the way that the Company justified its writ. Yet in refusing any role for South Asian representation in government and in establish ing a legal code that privileged colonizers' rights and interests and those of the wealthy local elite, the English East India Company (and eventually the British colonial state) was the "Oriental despot" until the end of colonial rule in 1947.

2 I Allina: Imperialism and the Colonial Experience 33

over Bengal's vast revenues, the Company expanded

its military forces, creating a professional army that

made it among the most powerful of any in the region.

Having squeezed out its European rivals (French influ

ence receded rapidly through the last third of the eight

eenth century, and the Dutch East India Company was

dissolved in 1795), the Company held a commanding

position in its relations with Indian elites-political, fi

nancial, and commercial-who saw in the Company a

powerful partner that could secure their own interests.

For some whose loyalties were locally rooted, the ben

efits that might come from alliance with the Company

were far more important than the consequences of such

partnerships for people in other parts of the subcon

tinent or for the overall balance of power. Absent any

broadly shared identity, ambitious individuals in South

Asia had no reason to resist the Company's influence if

they might profit from its presence.

In tandem with the English East India Compa

ny's growing control over territory in South Asia came

a more active role in economic life as well. No longer

confined to importing and exporting goods, the Com

pany used its influence to begin reshaping the regional

economy. Of signal importance was the extensive rail

network constructed in the middle of the nineteenth

century. Linking the vast hinterland to port cities (and

the ports to one another), the railway greatly reduced

transport times and costs, transforming the economy.

In the process, however, it also laid down in iron rails

the features of an underdeveloped economy: an infra

structure suitable for the export of high-bulk, low-value

products. It was a missed opportunity to develop closer

ties among the subcontinent's different regions and to

integrate potentially complementary economic sectors.

Instead, the export-oriented network served the Com

pany's interests, and with financing from British inves

tors, the system generated profits that left the country

instead of producing revenue that might have been in vested locally.

"HIGH" IMPERIALISM IN AFRICA

If South Asia's encounter with European imperialism

was a case of conquest in slow motion, with the bet

ter part of three centuries elapsing between Vasco da

Gama's arrival and the English East India Company's

emergence as a territorial power, the creation of

European colonies in Africa occurred at a breakneck

pace by comparison. The last two decades of the nine

teenth century saw Europeans burst forth from scat

tered coastal enclaves, some of which they had held

for centuries, to seize the entire continent, except for

Ethiopia. In this era of "high" imperialism, Africa oc

cupied centre stage, with Belgium, England, France,

Germany, Portugal, Italy, and Spain all establishing

African colonies, albeit the last two limited to compar

atively small territories.

However, Europe's imperial powers felt such am

bivalence about the colonial endeavour in Africa that

nearly all sought to find a way to draw non-state ac

tors into the process, mostly by granting charters to

private companies that undertook many of the initial

steps (and sometimes more). Perhaps the most famous

of these companies was Cecil Rhodes's British South

Africa Company (founded in 1889), a vehicle for his

continent-sized ambition, which the diamond baron

used to seize present-day Zambia and Zimbabwe. But

the British also used companies in Kenya (the Imperial

British East Africa Company) and Nigeria (the Royal

Niger Company), as the Germans did in Tanganyika

(the German East Africa Company).

Similarly, the French rented out a wide swath of

Central Africa to concessionary companies, and the

Belgian government was so uninterested in creating an

African empire that King Leopold II on his own pur

sued a vast private fief in the present-day Democratic

Republic of the Congo, parts of which he leased out

to private companies in return for a percentage of the

profits. (Only in the face of international protest over

the abuses committed there was the Belgian state per

suaded to take over the territory from Leopold.)

Most of these companies held their state-like pow

ers for only a decade or so before being replaced by

formal colonial administrations early in the twentieth

century, but they carried out the strategically vital, ex

pensive, and bloody tasks of conquest and construction

of basic infrastructure. Rhodes's company lasted longer

than most, ceding its powers only in 1923, although it

was outlived by two companies Portugal had created in

Mozambique in the 1890s, one of which endured until

1929 and the other until 1942.

The first generations of scholarship on the history

of colonialism in Africa focused a good deal of attention

34 PART I I Theories and Approaches in International Development

on perceived differences between British, French, and

Portuguese approaches to colonial rule. German rule,

being comparatively short-lived,2 tended to be ignored

in these analyses, as was the Italian and Spanish co

lonial presence, while Belgian rule was similarly over

looked. The focus on metropolitan differences, largely

confined to the realm of formal policy, made much of

an apparent difference between British indirl'd ruk

versus French direct rule. The Portuguese, on the other

hand, were judged to have followed a third path, an es

pecially hands-on and, according to some, more violent

version of direct rule. Yet conquest across the board

was prosecuted with violence, and all colonial rule was

backstopped by violence or its threat; the variation in

actual practice on the ground owed more to time and

place than to the national origin of the colonizer. As

one historian noted, indirect rule was associated with

Britain "not so much because the British applied more

indirect rule but because they talked about it more than

others" (Kiwanuka, 1970: 300).

The focus on the European ongms of colonial

policies misses the important ways in which policies

imagined in London or Lisbon were transformed by

the challenge of putting them into practice and by the

opportunistic nature of many colonial administrators,

who seized whatever openings were available in striv

ing to meet their goals. Britain's policy of indirect rule

for its African colonies was, in important respects, a

product of failure more than anything else: an inability

to break the power of local African rulers in northern

Nigeria led the British administrator responsible for

the region to declare instead his intention to keep them

in place so that he might rule indirectly through them.

If there was any genius to the policy, it was in public

relations-in making virtue out of failure and pro

claiming the result to be official policy (Cooper et al.,

2000: 124-5).

Indirect rule in colonial Africa followed closely

on the early model the British had established in South

Asia. It was perhaps even more in this later case a

PHOTO 2.2 I Cecil Rhodes (centre) In the Matopo Hills, Zimbabwe.

2 I Allina: Imperialism and the Colonial Experience 35

CRITICAL ISSUES

BOX 2.2 I The "Scramble for Africa"

The late nineteenth-century European conquest of Africa is often referred to as the "scramble for Africa,"

a phrase that suggests both speed and disorder. On the eve of Africa's partition, European powers had

only a handful of colonies on the continent despite having visited and traded with coastal African socie

ties for more than 400 years. When German Chancellor Otto von Bismarck convened the Berlin Confer ence in late 1884 (with not a single African representative in attendance), the European powers agreed

on ground rules for their land grab. Henceforth, a claim to African territory would be commonly recognized if the claimant had established "effective occupation" of the area. The effect was to accelerate the pro

cess, with the scramblers rushing to put "boots on the ground." In the resulting flurry of activity, seven

European states divided the continent into 40 colonies, leaving only Ethiopia unclaimed or unoccupied, while resistant African leaders clung to a fragile and dwindling independence.

The political and economic topography of late nineteenth-century Africa at the time of partition was markedly uneven. Large African empires with powerful centralized rulers, some controlling long-distance

trade in ivory and slaves, existed in most regions of the continent, while smaller independent polities

ruled by local authorities were also common. In some areas, notably coastal West and East Africa and

their littorals, regional economic networks had grown ever stronger since the abolition of the slave trade

earlier in the century, and through these networks, local producers (mostly producers of vegetable prod

ucts sought by European industry but also elephant hunters who supplied ivory for growing middle-class

consumption overseas) were tied to international commercial networks. With their links to overseas

finance, these areas became even more "extroverted" in their orientation, while other parts of the con

tinent were characterized by locally oriented self-sustaining economies. In many instances, the European powers inserted themselves into areas fraught with tension, at

times born of friction between expanding states and at others resulting from competition over trade.

Amid such tensions, African leaders were eager to sign treaties with Europeans, hoping to gain an edge over their neighbours or enemies. In view of these existing divisions, the European powers employed

less of a strategy of "divide and rule," but they were deft in their manipulation of local rivalries. African

rulers soon found that after a rival had been subdued or defeated, their erstwhile allies turned on them,

now demanding their submission. Standing alone against encroaching European forces, sometimes

reinforced by African troops drawn from among those already conquered, remaining African leaders

faced a choice between signing treaties that presumed their submission or fighting to remain sovereign.

Armed with the Maxim (machine) gun, fortified against malaria with quinine, and more manoeuvrable

than ever before with easily assembled (and disassembled) steam-powered flat-bottomed riverboats, the scramblers' forces encountered few opponents who could withstand their attack.

decision based on practicality. By keeping local rulers

in place (or creating them where indigenous authorities

proved difficult to identify or co-opt), colonizers saved

themselves the difficulty of establishing new forms of

authority or the expense of employing large numbers of

European administrators. European colonizers found

quick profits in only a few parts of the continent, such as

South Africa's gold and diamond strikes or the Congo

Free State's short-lived rubber boom, and despite an en

during myth that African colonies would turn out to be

another El Dorado, the colonizing powers were reluc

tant to invest much or incur ongoing costs in Africa.

In much the same fashion that the English East India

Company had done in South Asia, colonial adminis

trators sought to identify and codify the "customary"

law that they believed governed African societies; their

36 PART I Theories and Approaches in International Development

aim was to rule Africans indirectly through their own

laws, enforced by their own leaders, who answered to

colonial administrators. If they could incorporate local

African rulers at the lower rungs of colonial admin

istration, they could achieve at low cost a dominance

that they believed would be viewed legitimately by the

African population at large: "hegemony on a shoe

string" (Berry, t992).

Colonial rule did not affect all colonized peo

ple in the same manner. Depending on their posi

tion in society, especially their exposure LO specific

economic or political practices, certain groups of

individuals might lose (or gain) ma terial or social

capital. The clearest cases of such differential imptlct

occurred with indirect rule, under which many local

elites benefited: some helped to collect new tax levies

nnd received a portion for their role, while oLhers,

wilh the tacit support of the colonial state, imposed

new burdens on their subjects. But more broadly, the great political and economic changes associaled

with colonial r ule areated winners and losers, and

some people gained it1fluencc over others in lhe

process. The overall effect was to strengthen exist ing cleavages or Lo create new ones in indigenous

societies, with resulting social tensions. Particularly

towards Lhe end of the colonial era (the 1930s and

1940s in Asia and the 1950s in Africa), political con

stituencies manoeuvred for position as independ

ence approached, and these cleavages-along lines

of religion, language, ethnicity, race, and class became sources of heightened tension and outright

conflict, at times very violently so.

PHOTO 2.3 I The sultan of Zanzibar, c. 1890s. with British naval officers and colonial officials. Zanzibar. an

archipelago off the coast of East Africa. gained Its Independence in 1963 and joined with Tanganyika in 1964

to become Tanzania.

2 I Allina: Imperialism and the Colonial Experience 37

COMMON THEMES IN THE COLONIAL

EXPERIENCE

The colonial rule established under imperial systems of

government lasted long enough-two centuries or more

in South Asia and parts of the Americas, less lengthy in

Africa, where some scholars emphasize the brevity of

the colonial era by pegging it at "only" eight decades

to transform indigenous societies in a fundamental

manner. The breadth of change wrought in political

and economic life was such that it is difficult to address

overall in a cohesive fashion.3 Rather than attempting

an encyclopedic coverage, this section focuses on three

broad themes that reflect common elements of the co

lonial experience: European faith in essential cultural

differences and in the superiority of European peoples,

often used to justify exploitative economic policies and

violently abusive governance practices; metropolitan

states' ambivalence regarding the overseas commit

ments of empire; and a movement, in the twilight years

of colonial rule, towards the promotion of economic

development in colonial territories.

Late-nineteenth-century imperial boosters rallied

others, including sometimes reluctant government

ministers, to their cause with claims regarding the

inferiority of peoples and cultures outside of Europe.

The idea of subject peoples as different and inferior was

nothing new to the "high" imperial era-as a charac

teristic of imperialism it goes back to Roman times, if

not earlier. Indeed, some scholars argue any system of

imperial rule depends on the creation or maintenance

of differences (cultural or otherwise), because as an em

pire incorporates new lands and peoples, a hierarchy of

difference becomes necessary to order and legitimize

the subordination of some people to others (Burbank

and Cooper, 2010).

Influenced by so-called social Darwinist ideas,

which had little to do with the evolutionary theory

Darwin offered in On the Origin of Species in 1859,

those advocating renewed imperial expansion applied

the idea of evolution not to individual species but in

stead to human societies. They believed that European

peoples represented a more evolved type of human be

ing and human society, while other, darker-skinned

people and societies were supposedly examples of

still-surviving earlier forms. These beliefs powerfully

shaped attitudes towards empire in two ways. First,

with Asian or African cultures seen as inferior and even

"primitive," their subordination and even destruction

were easily justified in the name of progress. Follow

ing on this, because indigenous African or Asian soci

eties were regarded as backward, their transformation,

by force if necessary, was judged to be a moral duty of

Europeans as the bearers of a higher civilization.

These secular beliefs were prosecuted with a zeal

not unlike the longer-standing and persistent spiritual

impulse to spread Christianity and "save" souls from

what was believed to be their unhappy heathen fate.

The belief in indigenous inferiority was so tightly held

that, in its refusal to entertain the possibility that it was

not correct, despite plenty of proof to the contrary, it

resembled faith. Thomas Macaulay, a senior British official who served in India from the 1830s, exempli

fied this stance, infamously expressed in his claim that

"the entire native literature of India and Arabia" was

not worth "a single shelf of a good European library."

The claim stands as a hallmark of European chauvin

ism, all the more remarkable in light of Macaulay's lack

of knowledge of any Indian language. He instead was

a proponent of anglicization for Britain's Indian sub

jects, supporting English-language education to create

a "class who may be interpreters between us and the

millions we govern; a class of persons Indian in blood

and colour but English in tastes, in opinions, in morals,

and in intellect" (Metcalf and Metcalf, 2006: 81; Bose

and Jalal, 2004: 67).

Imperial expansion did not always occur quickly

or decisively, for metropolitan governments were some

times unsure of the benefits of expansion and leery of

taking on new commitments, particularly overseas. Yet

once imperial powers committed themselves to acts of

colonial conquest-sometimes because they feared they

might be outmanoeuvred by a European rival-they

prosecuted these wars with maximum force. In the im

perial era of the late nineteenth century, particularly in

Africa, this meant marshalling the resources of a mod

ern industrial state against opponents nearly always

outmatched in military terms. There were exceptions.

One of the most successful cases of indigenous resist

ance was that of Samori Toure, the ruler of a large state

in West Africa, who fought French forces tenaciously

for the better part of two decades before succumbing to

conquest in 1898. (Ethiopia's successful stand against

38 PART I I Theories and Approaches in International Development

the Italians, dealing their forces a devastating blow in 1896, is the single case of a European empire defeated in Africa.) Still, even after imperial powers established control over the territories they sought, they remained ambivalent about investing the resources that would have brought the reality of colonial rule into line, even partly, with the rhetoric of the civilizing mission.

Those who examine colonial attitudes and policies towards indigenous peoples sometimes point to stated differences among French, Portuguese, and British ap proaches, such as the French intention to assimilate Africans and make them "black Frenchmen" as op posed to the British commitment to creating "civilized Africans." Although formal differences existed among these approaches, all were based on a faith in the supe riority of European culture and in the benefit it could bring to African societies. In addition, for most of the period of colonial rule, these policies affected very few people: French "assimilation," for example, required at tainment of literacy in French, an achievement beyond most people's means, given colonial neglect of African education. Instead, the underlying belief in cultural hi erarchy and racial difference was used to justify a wide range of practices whereby indigenous people were forced-sometimes through great violence-to serve Europeans' objectives and needs.

Part of the progress that European powers claimed to be bringing to their colonial territories was a trans formation of economic life to the "modern" level of European economies. What this meant in practice was an overwhelming orientation of African economies towards production of raw materials for export. Min eral extraction-especially of copper, gold, tin, and diamonds-was enormously important in many parts of western, central, and southern Africa, but so were agri cultural commodities. Africans produced sugar, cocoa, cotton, peanut oil, and other tropical products to sup ply European markets, setting the stage for longer-term economic dependencies and vulnerabilities.

The "high" imperial era looked ·omewhat differ ent in Latin America. The Spanish colonies and Brazil had won their independence early in the nineteenth century, a local elites had chafed under and eventu allychaUenged imperial rule successfully. Formal inde pendence did not bring-equal statu between colonizer and ex-colony, however. For example, Britain and the

United States-a new member of the imperial ranks sought to control trade rather than territory. The Brit ish financed a vast expansion of South American rail lines, aiming to seal their access to the continent's large consumer markets for the sale of industrially produced ma h.ine g ods and textiles and to s-peed t:}..l)0rt of ag ricultural pr ducts. Argentina, for example, wa able to export great quantities of wool, wheat, and beef, generating important revenue for those who control1ed these industries. Such a conc.entration fprimary com modity production, however, along with the neglect of investment in domestic industry, produced structural imbalances and laid a foundation for future weakness (see Chapter 3).

Only comparatively late in the history of colonialism-the early to mid-twentieth century for the most part-did colonizers b gin to institute poli cies that brought significant i1westment i11tended to benefit ind igen u populations. Toe field of develop ment, as a professionalized and elf-conscious effort to .transform economies outside of Lhe industr .ialized West, dates from this time and still bears some rem nants of its origin in the colonial era. In Africa, the end of the 1930s brought what historians used to call the "second colonial occupation" but is now seen as the emergence of the development era. The i:;bift came amid realization on the part of colonial governments that their past practices had not yielded the expected re sults. Coercive Jabour practices-by which hundreds of thousands of Africans were forced to engage in heavy manual labour without pay, a "modern slavery" that often undermined their ability to support themselves and their families-and heavy-handed unequal treat ment did not result in the "civilized" Africans colonial boosters had promised but rather in an embittered and impoverished population.

World War II, a war in which Africans fought alongside Europeans for the right of European and Asian nations to s •H-dct rminotion and freedorn.Jrom foreign rule, forced a re-examination of the colonial endeavour. Africans increasingly exhibited a new mil itancy. They refo ed to remain confined Lo the narrow grooves cut by the traditional society imagined by co lonial rulers, but rather made demands and articulated rights by draw.ing on metropolitan principles-not only th se of elf-determina.ti.on butalso oflabour rights.

2 I Allina: Imperialism and the Colonial Experience 39

Part of the colonial response to such actions on the

part of colonial subjects was a new approach, at least by

Britain and France, to social and economic policy in the

colonies. The British passed the Colonial Development

and Welfare Act in 1940, and the French established

the Investment Fund for Social and Economic Devel

opment in 1946. Both expanded the scale of colonial

development activities in the post-war period, partly

by increasing the flow of funds from the metropole,

primarily through loans. Beyond the greater scale of

assistance, however, they also changed the nature of co

lonial efforts to promote economic and social change.

The plan for a "modern future set against a primitive

present" was part of an attempt to prolong empire amid

growing anti-colonial mobilization; economic devel

opment would be the "antidote to disorder" (Cooper,

1997: 65, 67). Coming at the time it did, the shift did

not have a great impact on Britain's or France's closing

years of colonial rule in South Asia or Southeast Asia,

but it powerfully shaped Africa for the future.

Alongside the growth in scale came an associated

increase in the personnel involved: local administra

tors (who may have improvised on their own initiative,

perhaps on the basis of observations of and interactions

with the Africans whose lives they administered) were

now replaced with a nascent bureaucracy charged with

studying, planning, and executing projects conceived

to meet priorities set by ministries based in Europe.

Colonial intervention in agriculture, forestry, water

supply, and livestock was not new, but there was now

an emphasis on "harnessing scientific and technical ex

pertise" to such efforts (van Beusekom and Hodgson,

2000: 31). It was a new approach to an older ideal

delivering modernity to "natives" who were believed to

be incapable of achieving such progress on their own.

With the assistance of European experts, indigenous

societies and cultures would thus evolve to the norm

established by the West. Rather than continuing the

mission, spiritual and otherwise, to "civilize" indige

nous societies in accordance with European norms,

colonial rule in its final two decades shifted to the "de

velopment" of those societies. In the effort to modern

ize African economies, the new form of colonial rule

took aim not merely at farming techniques or livestock

grazing practices but also at the social relations that

organized those economic activities. As such, colonial

development fo cused on indigenous social life as much

as on economic life, as being in need of modernization.

In the same way that an earlier generation of colo

nial policy-makers had aimed to foster cultural trans

formation and "evolution" in indigenous societies, in

keeping with a belief that the European model pre

sented a natural path to progress, colonial planners

now demonstrated faith that an economic makeover

would set African societies on a similarly inevitable

path. The increasingly advanced degree of political mo

bilization in post-war African colonies made colonial

administrations wary of overly forceful implementa

tion and occasionally responsive to African opposi

tion to some projects. The turn towards development

of indigenous societies came at a time when the inev

itability of Indian independence was becoming clear,

but in Africa, colonial rulers saw development plans in

part as a way to return the mercurial genie of nation

alist sentiment back into its bottle (Cooper, 1997). Still,

the timing was crucial for the future, because the new

development approach was bequeathed to a generation

of African leaders who were mostly products of colo

nial education and had absorbed the associated idea of

African "backwardness." Science and technology, held

to have originated in the industrialized West, were the

metric by which economic practices were to be eval

uated. Although most post-colonial African leaders

embraced African cultural practices, they were also

enamoured of scientific knowledge as distinct from lo

cal knowledge and were thus skeptical of the practical

experience of anyone who lacked a formal education.

The full turn towards development took place

in a world divided by the Cold War, with the West

including all the colonial powers-arrayed against the

Soviet bloc and its mission of "exporting revolution."

Many leaders of nationalist independence movements

in Africa and Asia sought and received aid, both

military and financial, from the Soviet bloc. As anti

colonial mobilization intensified, the colonial pow

ers reassessed their commitment to political control

in their colonies. They questioned the financial ben

efits and feared the political costs, perceiving that

continued denial of self-determination, and the

greater oppression it would entail, might drive anti

colonial movements and newly independent states

into the arms of the Soviet Union. Fiercely fought

40 PART I I Theories and Approaches in International Development

CRITICAL ISSUES

BOX 2.3 I Development Project as White Elephant: The Office du Niger

The Office du Niger, a sprawling agricultural project planned for the French Soudan (present-day Mali), exemplified the ambition and oversight of colonial development planning. Conceived in the 1920s, the project signalled its outsized aims in the area targeted for development: 18,500 square kilometres, some of which fell within the Niger River's inland delta but much of which lay considerably outside of it. The plan called for the construction of several dams to irrigate vast tracts of land to be planted with cot ton and rice. Planners did not speak of making the desert bloom, but their aim was to develop what they saw as underused land on the edge of the Sahara Desert. Yet because much of the area was arid and

the population density accordingly low, many of the one million farmers imagined for the project would have to be resettled from elsewhere in French West Africa.

The plan had shortcomings sufficient to doom it from the start, chief among them poor "expert" knowledge and a yawning gap between the projected objectives and the interests and desires of the Africans expected to participate. Of all the planning shortcomings, perhaps the most astonishing was that the irrigation network-the project's very backbone-provided inadequate or ill-timed water flows in some areas, making successful cultivation nearly impossible. Other problems abounded: some planned villages lacked wells, forcing settlers to collect water from irrigation ditches, while other wells were dry or contaminated (van Beusekom, 2002: 89, 94).

A rejection of African farmers' considerable knowledge and experience was of a piece with the hi erarchical nature of the endeavour. Volunteers for resettlement on the project were few; in 1938, one colonial official estimated that 90 per cent of those settled in the villages had been forcibly recruited (Beusekom, 2002). The forced labour recruitment prevalent in the French colonies was quite useful for this purpose, and to secure settlers for the project the Office tapped into the lines of authority that extended down through district-level administrators to local African authorities. Amid the wider political setting of coercion under colonial rule, it is hardly surprising that most Africans had little interest in the project, where they could expect an especially high degree of surveillance and control.

As with other colonial projects, the plan imagined not only a transformation of African agriculture but also a re-engineering of African social and economic life, changing the way Africans farmed, the structure of their families, and the values that underlay the organization of work and community. In the end, the project fell far short of its goals, whether defined by the area cultivated, the number of settlers, the processes of cultivation, or the crops planted. To the extent that the African settlers on the scheme succeeded in creating a livelihood for themselves, it was owing to their insistence on choosing their own crops, cultivated according to unapproved methods and frequently outside the areas designated

for planting. Many others fled the settlement scheme instead, and those who remained, forging their own path, found the freedom to do so after 1946, when France abolished forced labour in its colonies.

anti-colonial wars in Vietnam, Algeria, Cameroon,

and Kenya-to name only a few-proved the limits to

continued colonial rule. Economic links replaced co

lonial ministries as the means of influence, and deliv

ering development to colonized peoples was seen as a

way to present capitalism and the West in a good light.

Looking forward into a post-colonial era, past colo

nial rulers and a new ally, the United States, sought to

maintain the loyalty of former colonies as client states

in the Cold War.

SUMMARY

The idea of development, as it is understood in the

twenty -first century, has a history of not even a hundred

2 I Allina: Imperialism and the Colonial Experience 41

years, yet political, economic, and cultural interactions

between today's industrialized and developing regions

go back half a millennium and more. In examining the

long history of European expansion and conquest into

what is now known as the developing world, this chap

ter puts those interactions and the ideas that underlay

them in a longer time frame. The deeper historical con

text sets the stage for many of the themes and problems

examined in subsequent chapters dealing with contem

porary issues in development. Although the initial steps

of expansion, often unplanned, were taken by traders,

chartered companies, fortune-seekers, and "men on the

spot," the Industrial Revolution marked the arrival of

"high" imperialism, as the English, French, German,

and Portuguese states raced to carve out rival empires

that circled the globe. Europeans encountered diverse

and different societies. In the Americas, the populous

empires of the Aztecs and Incas as well as many other

indigenous peoples suffered demographic collapse as a

result of diseases, especially smallpox, brought by the

Europeans. While Africa remained largely unsettled

until the "scramble for Africa" after 1884, it provided

the slaves that powered the plantation economies of the

Americas. Throughout the colonial period, imperial

powers remained ambivalent about the endeavour and

sought to use private chartered companies for expan

sion, as well as to govern on the cheap through indirect

rule. Despite important differences across countries,

the colonial experience has played an important role

in structuring developing societies in the post-colonial

world. Indeed, the first concerns for "development"

emerged as the colonial powers responded to national

struggles for self-determination after World War II.

Political and economic inequalities between individ

ual countries (and within them) and world regions, of0

ten with origins in the imperial era, continue to figure in

relations between the Global North and South. Finally,

many of the questions and themes in development

including, but not only, the importance of gender, cul

ture, and indigeneity; accounting for sustainability and

environmental impact; the effect of politics, such as

socialism and capitalism and the state in general-have

clear antecedents in the "pre-history" of development

during the colonial era.

QUESTIONS FOR CRITICAL THOUGHT

1. What continuities might be identified between economic conditions created under colonial rule and those

that prevail today in former colonies?

2. How did colonial policies help to contribute, even if indirectly or unintentionally, to the end of colonial rule?

3. How might present-day conflicts in former colonies be seen as a legacy of specific colonial policies?

4. What colonial-era ideas about indigenous peoples in Africa, Asia, or Latin America are still present in con

temporary understandings of the "Global South"?

Allina, Eric. 2012. Slavery by Any Other Name: African

Life under Company Rule in Colonial Mozambique.

Charlottesville: University of Virginia Press.

Andrade, Tonio. 2010. "A Chinese farmer, two African boys,

and a warlord: Toward a global micro history." Journal of

World History 21, 4: 573-91.

Bose, Sugata, and Ayesha Jalal. 2004. Modern South Asia:

History, Culture, Political Economy, 2nd edn. New York:

Routledge.

Calhoun, Craig, Frederick Cooper, and Keven W. Moore,

eds. 2006. Lessons of Empire: Imperial Histories and

American Power. New York: New Press.

Coatsworth, John H., and Alan M. Taylor, eds. 1998. Latin

America and the World Economy since 1800. Cambridge,

Mass.: Harvard University Press.

French, Howard W. 2014. China's Second Continent: How a

Million Migrants Are Building a New Empire in Africa.

New York: Alfred A. Knopf.

Hochschild, Adam. 1998. King Leopold's Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa. New

York: Houghton Mifllin.

Thornton, John. 1998. Africa and Africans in the Making of the Atlantic World, 1400-1800, 2nd edn. Cambridge:

Cambridge University Press.

42 PART I I Theories and Approaches in International Development

1. For broad syntheses of the debates about the motiva tions for the European colonial enterprise, see Sander son (1974) and Kennedy (1977).

2. Following World War I, Britain and France divided most of Germany's colonies, with Belgium taking

Rwanda and Burundi; southwest Africa was something

of an exception, being entrusted to South African rule under a League of Nations mandate.

3. Central Asia is one area of colonial rule outside the

context of colonization by Western European powers

- ..... -- -- -

': BIBLIOGRAPHY

Beissinger, M. and C. Young. 2002. Beyond State Crisis: Postcolonial Africa and Post-Soviet Eurasia in

Comparative Perspective. Washington and Baltimore: Woodrow Wilson Center Press and Johns Hopkins University Press.

Berry, S. 1992. "Hegemony on a shoestring: Indirect rule and access to agricultural land." Africa 62, 3: 327-55.

Bose, S. and A. Jalal. 2004. Modern South Asia: History, Culture, Political Economy, 2nd edn. New York: Routledge.

Burbank, J. and F. Cooper. 2010. Empires in World History:

Power and the Politics of Difference. Princeton, NJ: Princeton University Press.

Cooper, F. 1997. "Modernizing bureaucrats, backward Africans, and the development concept." In F. Cooper and R. Packard, eds, International Development and the Social Sciences: Essays on the History and Politics

of Knowledge. Berkeley: University of California Press, 64-92.

--. 2006. "A parting of the ways: Colonial Africa and South Africa, 1946-48." African Studies 65, 1: 27-44.

--, T.C. Holt, and R. J. Scott. 2000. Beyond Slavery: Explorations in Race, Labor, and Citizenship in

Postemancipation Societies. Chapel Hill: University of

North Carolina Press. Diffi.e, B.W., and G.D. Winius. 1977. Foundations of the

Portuguese Empire, 1415-1580. Minneapolis: University of Minnesota Press.

and is large] ab ent from comparative holarship, wilh the exception of Beissinger and Young (2002). It came under Ru ian imperial rule in the igbt eenlh ccntur , and the ovieL Union later asserted conlrol. Empire and colonial rule thus may fl urish

in the absence of a capita Ii.st economic system; many of the economl and political outcomes on idered

characteri tic f post-c Ionia! societie are videnl in post-Soviet Central Asia.

Hobson, J. A. 1902. Imperialism: A Study. London: J. i. bet.

Kennedy, P. M. 1977. ''"D1e Lbeor and practice oCimperialism."

Historical Journal 20, 3: 761-9. Kiwanuka, M. S. 1970. "Colonial pc licics and adm i nistrati 11

in Africa: The myth of the contra ts.� ,fric,111 Historical

··111dics 3, 2: 295-315. Lenin, . I. 1920 I 1916]. imperialism: The Highest Stage

oj Capitalism: A Popular Outline. Moscow: Foreign Languages Publishing House.

Metcalf, B.D., and T.R. Metcalf. 2006. A Concise History of Modern !11dit1, 2nd dn. Cambridge: Cambridge University Press.

Newitt, M. 2005. A History of Portuguese Overseas Expansion, 1.400-1668. New York: Routledge.

Sander On, G. . 1974. "1he European partition of Africa: Coin idcn t! or njccrure?" Journal of Imperinl n11rl Commonwealth History 3, 1: 1-54.

van Beusekom, M.M. 2002. 11go1intirig Development: African Farmers and Colonial Experts tit the Office du Niger, 1920-1960. l:'o,tsmouth, NH: Heinemann.

-- and D.L. Hodgson. 2000. "L ons learned: Devc.lopment experiences in the late olortial period." Journal of African History 41, 1: 29-33.

Watts, S. 1999. Epidemics and History: Disease, Power, and Imperialism. ew Haven: Yale University Press.

Williams, R. 1983. Keywords: A Vo ·r1b11/ary of Culture and

Society, rev. edn. New York: Oxford University Press.

Theories of Development Raclh:ika Desa1:

LEARNING OBJECTIVES

To understand development as an aspiration since

the beginnings of capitalism and the centrality of

the nation-state and industrialization in it.

To learn how development as a project emerged

from post-war political tensions.

To identify the main theoretical approaches to de

velopment in their historical context.

To understand the implications of the BRICS, other

emerging economies, and multipolarity for the pros

pects for development in the twenty-first century.

To mark the 130th anniversary of the death of Karl Marx in May 2013, his hometown, Trier, Germany, hosted an installation of 500 figures of the author and theorist created by Ottmar Hoerl. I Source: THOMAS WIECK/AFP/Getty Images

44 PART I I Theories and Approaches in International Development

11,e economic and fi11anciaJ crises of the early tweuty-fu- l cennuy opened a new phase in the his tmy of capitalist development. 'Il1ree change marked it. Fir·t, neoliberalisrn, the free-market dogma re sponsible for the development crisis of rece111 decades, was discredited. econd, growth in the rich countTies

slowed to a near halt while some developing coun tries, the "emerglog economies," continued their rapid growth, nanowing even faster the enormous gap that separated their incomes and welfare from rich coun lrie . Closing that gap had been the goal of the post-war development project and, for decades, substantial pr gress had eluded all but a few rather small countries, such as outh Korea and Taiwan. So the faster growth, particularly i.n China and [.ndia, which between I.hem account for a third of lnunanity, constitutes a mo mentou development though il leaves out too many countries and to many people even in the rapidly de veloping countries. Finally, less spectacular but equally important, has been the turn, primarily in Latin Amer ica duri_ng the 2000s, to progressive policies that flout the tenet of neoUberalism and put popular welfare at the centre of the political agenda. Th is shift ha sig nalled at least a start in confronting the region's leg endary social and economic inequality.

After decades of pessimism nnder neoliberalism, development Lheory now has the altogether more hope ful task of assimilating the development experiences of today's fu t-grnwu1.g economies and centre-left gov ernments for other poor countries and people. This involves retJ1inking development u1 a longer-term his torical perspeclive, not as som thing that began after World War II and concerned only the poor OllJJldes but as an a.spiration thal arose wilh the first stirrings

of capitalism and i_nduslsialism and involves today's rich and poor countries alike. finally, the rising pro ductivity of widening circles ofbumanity rai.ses critical e ological question that require development theory to (re)consider the defi.nition of the g od life. This will once agaLn merge development theory with the wider body of modern social and political thought from which it originated.

lt gene rally is agreed that the division of ountrfos i11to ri h and poor began witl1 the rise of capitalism, and the colonialism and imperialism that went with il, more than five centuries ago. More importantly, W'ith the onset of industrialism, the gap widened more or

lcs continuously, and one writer estimates that average incomes in the rich cmmlries were a stu1111ing 23 times

higher than those i11 the restofthe world in 2ooo·(Free rnan, 2004: 47). 11,e "development'" proje l emerged at the end of World War II to abolish this divide when it was a fractio11 of what it is today but was already po litically unacceptable. I.ts persi tent· widenu1g was the

clearest indicator of the failw·e of the development project.

Development uffered its worst setbacks in the re cent decades. Beginning in the t980s, neoUberalism rolled bad earlier gains. "Globalization" and 'empire"

sidelined it. foternational showmanship disguised tl1e actually very modesl Millennium Development Goals as radical initiative . 'Post-development" currents re jected development outright as a worthy aspiration. Worse, lbe 11ew reckoning of national i ncomes i.n "pnr chasing power parities" (PPPs) rather than i11 US dollar suggested that the problem was an optical, or rather statistical, .illusion (see Chapter 1 for an explanation f PPPs). PPP measures systematically placed the incomes of poor countries with low wages higher (since th is cit izens could theoretically afford to buy more goods and s rvices produced by their equally low-i.ncome fellow citizens). uch development by statistical redefinition added in ult to the injury of low i_ncomes by congral ulating a people for those low incomes when raisi11g them was precisely the goal of development.

However, as the rapid development of the emerg ing economi · and the popular upsurge that have

produced centre-left governments in many Latin American coiu1tries make clenr, the a piration to de velopment cannot be reversed, idelined, diminish d, 1·ejected, or denied. Development may have emerged as a project only a�er World War II, and a body ftbeory

dubbed development theory may have emerged only then to comprehend development's problems and pros pects, but development as an aspiration has deep roots

in history. lt is effectively the most endu ri.ng nat i nal and social w·ge or modern times.

ln this chapter we begin by recallfog the hist rical e>.."µerience that gave rise to the development a piraLion and the ideas tJ1at articulated il. "l11is help put the de velopment of today's rich countries in the same frame as that of today's fast developers and thos yet ro come. 'llien, we examine the origins of the development pro ject after World War II and the rec;ord of development

in the following decades. With this essential back

ground, we can consider the succession of theories

that attempted to explain and shape the course of de

velopment. Our conclusion assesses their theoretical

and analytical gains and dwells on the new tasks that

development theory must now undertake.

DEVELOPMENT AVANT LA LETTRE

Development is linked to the idea of universal pro

gress. It began to become widely accepted with the In

dustrial Revolution, which, more than 200 years ago,

hurled people in the northwest corner of Europe into

"change" and "improvement" faster than ever before

and portended similar changes for other peoples. Be

fore that, economic and social improvement had been

slow, easily reversed, and often at the expense of others.

The Industrial Revolution promised absolute and rapid

increases in wealth in which, theoretically at least, all

individuals, groups, and societies could partake.

However, things proved more complicated. The

Industrial Revolution took place amid a new social

organization of production-capital ism. It organized

production in private units whose owners had the cap

ital to buy the means and materials of production and

the labour of workers who had no other means of mak

ing a living but to sell their labour power, their capac

ity to work, on the market. The market was the main

mechanism for matching workers, producers, and con

sumers. Capital and markets had hitherto been either

absent or constrained by social custom and political

regulation. Under capitalism, they came to govern

more and more of the social product, and custom and

regulation changed to serve rather than constrain them

as new capitalist states became committed to creating

and maintaining this type of productive order.

Production and human productive capacity, no longer bridled by any social or political estimate of

need, expanded massively and societies that had been

agricultural for millennia were transformed into indus trial ones. As Karl Marx and Friedrich Engels memora bly put it, the new industrial capitalists "created more

massive and more colossal productive forces than ... all preceding generations together" by systematically

applying science to production and improving technol ogy, remarking that earlier centuries had no idea that

3 I Desai: Theories of Development 45

"such productive forces slumbered in the lap of social

labour" (Marx and Engels, 1967 [1848]: 84-5).

Increased production did not, however, corre

spondingly increase demand since workers were not

paid the full value of their product. So capitalism

required, and created, a constantly expanding world

market, bringing all societies into it. It was not created,

as is popularly believed, through commerce alone:

conquest was employed equally if not more often. No

wonder the world's first industrial capitalist country

Britain-acquired a colossal colonial empire in the

nineteenth century, despite its proclaimed commit

ment to "free trade." Both imperial control and world

market dynamics augmented the economic advantage

of the industrial and colonizing nations and com

pounded the disadvantage of the colonized (see

Chapter 2). Capitalism's geographical spread was uneven,

creating agglomerations of wealth in some societies

and pools of poverty and misery in others.

Industrial capitalist society's promise of general

ized prosperity was broken in at least two other ways.

First, because workers were paid only a fraction of the

value of what they produced, incomes were unjustly and

unequally distributed. Second, market co-ordination

of privately organized production often broke down

and crises, such as the Great Depression of the 1930s

and today's Great Recession, interrupted and occasion

ally reversed increases in production. Karl Marx's fa

mous critique of capitalism (Capital, the first volume of

which was published in 1867) encompassed all of these

problems. Never before in human experience had so

cieties been governed by such unjust, impersonal, and

uncontrolled institutions.

Ideas of "progress," what we now call "develop

ment," emerged out of the tension between the tan

talizing possibilities for general human welfare that

industrial capitalism offered and their failure to ma

terialize for a majority of the people in the world under

capitalism. Modern social thought is largely a series of

attempts to comprehend and master the deeply con

tradictory dynamic of capitalism for human societies.

Except for short-sighted and vulgar celebrations and

condemnations, all accounts of industrial capitalist

society, whether "economic" or "philosophical," re

flect capitalism's double-sidedness. Marx's critique

of capitalism's injustice and anarchy was balanced by

an appreciation of its prodigious productivity. Adam

46 PART I I Theories and Approaches in International Development

Smith's A11 Inquiry into tire Nature and Causes of the Wea/ti, of Natfons (1937 (1776]) may have celebrated the Industrial Revolution but Smith was no advocate of unbridled free markets. Rather, Smith was a thinker who believed that markets needed to be controlled by the moral senti ments and relations that constituted society's necessarily human basis (Go�men, 2007). As the onward march of capitalism tended to replace those sentiments and relationships with the dreaded ''cash nexus," a mere four decades after tl1e publication of Smith's Wealth of Nations, thinkers such as the great German philosopher Georg Wilhelm Friedrich Hegel saw the state as indispensable for corre cting and oppos ing corrosive market forces.

State regulation is not necessarily socialist. The frequency of "market failure" iJ1 capitalism more or less guarantees that economic or market regulation will be supplemented by state or political regulation. Karl Polanyi's idea of a "double movement" captures this aptly. Market failure was endemic to capitalism, he argued, because it treated land, labour, and cap· ital (i.e., social and productive organization) as com· modities even though iliey were not produced for sale. Therefore, markets alone cannot regulate an economy and "no economy bas e..\'.isted that, even in principle, was controlled [purely) by markets" (Polan)ri, 1944: 44). The nineteenth·century spread of market society provoked a countervailing movement: "While on the one hand markets spread all over the foce of the globe and the amount of goods involved grew to u nbelicvablc proportions, on the other haJ1d a network of measures and policies was integrated into powerful institutions designed to check ilie action of Lhe market relative to labour, land and money." It was "a deep-seated move ment" through which "[sjociety protected itself against Lhe perils inherent in a self.regulating market system." This "double movement" was "the one comprehensive feature of the history of the age'' (Polanyi, 1944: 76).

WhjJe Polanyi thought of the "double movement" operating within societies, the emergence of nations and the problem of national development can be seen as part of the operation of a similar sort of double movement at a geopolitical level. Although nations of· ten are seen as cultural entities, they are products of the "machinery of world political economy" (Nairn, 1981: 335-6), specifically, of its uneven and combined de velopment (Trotsky, 1934: 26). Capitalist development

occurred unevenly, concentrated in some parts of the world and economically subjugated, through coloni· zation or other means, other parts of the world. Colo nized or less powerful peoples experienced capitalism not as development but as lack, deprivation, imposition, domination, and exploitation. TI1ey "learned quickly enough that ProgTcss in the abstract meant domina· tion in the concrete, by powers which they could not help apprehending as foreign or alien." Development elsewhere threatened to wash over them like a "'tidal wave' ... of outside interference and control" (Nairn, 1981: 338).

In response, colonized and less powerful peo ples sought to create nations as barriers against such tidal waves to avoid being "drowned'' by them. Such national assertion worked against economic and im perial pressures to undertake combined development bol-boused, state-led development of production. Though these efforts were not universally successful, this process eventually resulted in the nation-state system. As Benno Teschke (2003: 265) bas noted:

the expansion of capitalism was not an eco· 11omic process in which the transnalionalising forces of the market or civil society surrepti tiously penetrated pre-capitalist states, driven by the logic of cheap commodities that even tually perfected a universal world market. It was a political and, n fortiori, geopolitical pro cess in whkh pre-capitalist state classes had to design counterstrategies of reproduction to defend their position in an international envi ronment which pul them at an economic (lttd coercive disadvantage.

Some countries, pre·eminently the United States, Germany, and Japan, not only defe11dcd themselves against economic and political subjugation to the world's first industrialized country, Britain, but also challenged its supremacy. Armed with the ideas of thinkers who exposed the ruling free trade ideology as merely the dogma and ruling ideology of British su premacy, they promoted the national development of tJ1eir countries through political means. For thinkers such as Alexander Hamilton and Henry Carey in the United States and Friedrich List in Germany, free trade concentrated and reinforced the economic advantage

of some countries as much as conquest did, creating an

international division of labour in which some coun

tries produced higher-value manufactured goods and

others lower-value agricultural, primary, or (today

also) cheap, low-tech, manufactured products. It could

be challenged only by non-market, political means.

Contrary to ideologies of free trade and its

modern-day equivalents, neoliberalism and globali

zation, national development has always been, and

remains, a matter of state management of trade and

production to enable the economy to produce higher

value goods, while managing a transition in agriculture

to make it more productive and capable of fulfilling

the greater demands of industrial society. This un

derstanding exposes the conventional economic idea

of "comparative advantage," in which the productive

specialization of each nation-essentially, industrial

powers producing industrial goods and colonies or

weaker countries producing raw materials and agricul

tural goods-was to be accepted without question, as

little more than a justification for the unequal interna

tional division of labour. Since it was created both by

commerce and by conquest, political means are indis

pensable for breaking out of inherited specialization in

low-value goods and to begin producing higher-value

goods as the road to prosperity.

This is exactly what is going on in the BRICS (Brazil,

Russia, India, China, and South Africa) and emerging

economies, China in particular, but with one critical

difference. In the late nineteenth century, Britain's

industrial challengers, rejecting the breezy free-market

ideas that demand and supply would balance each

other out-an idea that only served to disguise the

critical role of colonies as suppliers and markets (Desai,

2010)-and that "comparative advantage" would

ensure the common prosperity through free trade,

aimed to ensure the supply of industrial raw materials

and the markets for their products in part by creating

and expanding formal empires. Imperial competition

intensified in the closing decades of the nineteenth

century and culminated in World War I. By contrast,

the "developing" countries of the second half of the

twentieth century had been formal or informal colo

nies that could not acquire colonies of any significance

to facilitate their industrial development.

This difference keeps the question of development

and imperialism intertwined. The way out of potential

3 I Desai: Theories of Development 47

subjugation for the so-called "late industrializers," such

as Germany, the US, and Japan, lay in an intellectual

and practical critique of "free trade" and was aided by

extensive colonies. The way out of actual subjugation

for the developing countries of the post-war period and

the emerging and BRICS economies of today requires,

in addition, undoing the effects of imperialism and

doing so without colonization. That effort was and re

mains much more difficult.

THE MOMENT OF DEVELOPMENT

The development project that began in earnest after

World War II marked a historic turnaround. After cen

turies during which colonizers justified colonialism

with racist rationales such as the white man's burden

and his "civilizing mission," colonial and imperial ex

ploitation, oppression, and plunder were at last recog

nized for what they were. As decolonization began, the

development project aimed to reverse these realities

and aid the poor countries' "catching up" to the rich

world's levels of income and material welfare.

This historical moment was long in the making

and the result of the interaction of a range of actors

the US government, the Soviet Union, and (not least)

national governments of newly independent but poor

nations, with different and sometimes even opposed

motivations-emerging from the "30-year crisis" of

1914-45, spanning two world wars and a Great Depres

sion (Mayer, 1981). It was the crucible of a new world

order. Three massive changes produced and defined

the "moment of development" as the Thirty Years'

Crisis ended. First, the US temporarily emerged as

the world's most powerful capitalist nation. Though it

had become the largest single economy by 1913, it came

to account for fully half of world production by 1945,

thanks to the destruction two world wars had caused

in Europe and elsewhere. Without much of a formal

empire of its own, the US began to sponsor decoloni

zation, reconstruction, and development to cut its cap

italist rivals down to size and to take up the capitalist world's leadership.

A second change made development urgent

for the US-led capitalist world: the Soviet Union,

formed after a Communist revolution in the midst of

World War I, had experienced remarkably successful

48 PART I I Theories and Approaches in International Development

industrialization based on state planning and direc

tion while the capitalist world languished in the Great

Depression. This industrialization proved critical in

the Allied victory in World War II, and Soviet power

and prestige balanced US power in the Cold War that

followed as the Communist world, which now also

included the Communist regimes in Eastern Europe

and China, not only truncated the size of the capitalist

world but also became an alternative pole of attraction

for newly independent countries, forcing the US into

"altruistic" grooves to keep or wrest poor countries

from the attractions of communism. Third, after World

War I, many national liberation movements, supported

by the revolutionary Soviet government, had demanded

decolonization. Only after World War II, however, did

the US consistently support it to undermine its capi

talist rivals and compete against the Soviet bloc for the

support of nationalist movements and governments.

Together these developments placed the "catch-up"

of former colonies to the levels of prosperity of rich

countries on the world agenda. This was the develop

ment project-in a critical sense the ransom that the

capitalist world had to pay to keep poor countries from

communism. They were the stakes in the Cold War,

which turned hot in such cases as Korea, Cuba, and

Vietnam.

Development has come to mean many things---: rising levels of education, political participation and

democracy, urbanization, technology, health and

welfare-but higher incomes and greater material

welfare were critical, and industrialization and state

direction were seen as essential to achieving them. And

they remain equally essential today even though pop

ulist, neoliberal, and postmodern discourses of the late

twentieth century insist otherwise and portray states as

inherently oppressive and industrialization as unnec

essary, indeed positively harmful, for poor countries

(for a critique, see Kitching, 1982). The poor countries

were predominantly agricultural and the rich coun

tries predominantly industrial. Industry provided the

critical advantage in productivity. Thus, development

involved industrializing predominantly agricultural

economies, as had already happened in rich societies,

and the state was its agent.

Intellectually, development was the product of the

confrontation between capitalism and communism

as much as of their interaction. The experience of the

Great Depression in capitalist countries, the contem

poraneous success of state-directed industrialization of

a predominantly agrarian economy in the USSR, and

the unavoidable necessity of comprehensive planning

during war, which proved so popular for its egalitarian

effects, had taught

the politicians, officials and even many of the

businessmen of the p ost-war West ... that

a return to laissez-faire and the unrecon

structed free market were out of the question.

Certain policy objectives-full employment,

the containment of communism, the mod

ernization of lagging or declining or ruined

economies-had absolute priority and justi

fied the strongest government presence. Even

regimes dedicated to economic and political

liberalism now could, and had to, run their

economies in ways which would once have

been rejected as "socialist." (Hobsbawm, 1994:

272-3)

This new consensus held that the ills of capitalism

could be remedied by planning, state ownership, and a

large state role in making capitalist economies more pro

ductive as well as more egalitarian through welfare and

redistributive measures. The economist John Maynard

Keynes, who witnessed the collapse of economic activ

ity during the Great Depression, recommended that at

such times the government could step up its activity to

compensate and loosen money supply to restart private

economic activity. Keynesian policies, which intruded

less on the private capitalist economy than Soviet-style

planning, formed the basis of post-war macroeconomic

management in the rich countries and of early ideas of

"development," though Keynes's ideas were actually far

more radical than these policies implied (Desai, 2009).

With the free market abolished in the Communist

countries and restricted and regulated in the advanced

capitalist and developing economies, a "golden age" of

capitalism ensued, demonstrating that the "economy

of private enterprise ('free enterprise' was the pre

ferred name) needed to be saved from itself to survive"

(Hobsbawm, 1994: 273) and, ironically, saved by the in

struments of its enemy, socialism and communism.

The international counterpart of these domestic

policy instruments was the governance of trade and fi

nance through a set of rules, pre-eminently capital con

trols, and institutions-the so-called Bretton Woods

institutions, of which the International Monetary Fund

(IMF), the World Bank, and the General Agreement on

Tariffs and Trade (GATT) were the most important (see

Chapters 9 and 15). During the 1950s and 1960s, at least,

these controls and institutions worked to enable national

economic management for growth and development.

Capital was not allowed to cross frontiers

without government approval, which permit

ted governments to determine domestic inter

est rates, fix the exchange rate of the national

currency, and tax and spend as they saw fit to

secure national economic objectives. National

economic planning was seen as a natural ex

tension of this thinking, as were domestic

and international arrangements to stabilize

commodity prices. It is not a great oversim

plification to say that "development theory"

was originally just a theory about the best

way for colonial, and then ex-colonial, states

to accelerate national economic growth in this

international environment. The goal of devel

opment was growth; the agent of development

was the state and the means of development

were these macroeconomic policy instru

ments. (Leys, 1996: 6-7)

Of the numerous terms and euphemisms that have

emerged over the decades to refer to the poor countries

of the world and what they shared despite their diver

sity of cultural and material endowments-developing,

underdeveloped, post-colonial, less developed, back

ward, Southern, and so on-the term "Third World"

best captures the tensions of the development project's

formative historical moment (see also Chapter 1). First,

these countries sought to balance the capitalist First

World and the Communist Second World in interna

tional politics, particularly through the Non-Aligned

Movement (NAM) formed at the Bandung conference

of 1955 to assert independence from Cold War blocs

and put issues of importance to development on the

world agenda. Second, most nationalist leaderships

3 I Desai: Theories of Development 49

and governments needed to balance politically weak

capitalist forces against the strength of socialist and

communist forces and popular hopes aroused by na

tional liberation movements. In India, Egypt, and

Indonesia, for example (Ahmad, 1992: especially 297-

304), the "Third World" was understood as a "third

way" between capitalism and communism. Although

"development" meant the development of capitalism,

planning and state direction were to make it a reformed

capitalism: more productive and egalitarian than the

liberal capitalism that had come to grief in the inter

war period. Indeed, so low had capitalism's reputation

sunk in the Thirty Years' Crisis that the capitalist world

was on the defensive and avoided using the term "cap

italism," preferring to deploy "development" and "free

world" in its ideological war with Communism.

DISPUTING DEVELOPMENT

With conducive national and international institutions

and policies in place, a two-decade-long "golden age" of

growth of unprecedented tempo and duration ensued.

Third World economies were swept along, though crit

ical problems remained. The continuing dependence of

many Third World economies on commodity exports

was the most important. Despite their attempts to in

dustrialize, and despite some significant successes, too

much of the growth of Third World economies in the

1950s and 1960s originated in high demand for pri

mary products by the First World, perpetuating rather

than breaking colonial economic relationships. Both

First and Third World dominant classes had vested

interests in the continuation of these relationships and

were able to keep them in place: clearly, decolonization

and development marked breaks from the past but of

ten of an ambiguous sort.

Even with these shortcomings, in retrospect this

"golden age" was development's best. Neither world

growth nor Third World growth has reached such

long-term rates since then. Beginning in this relatively

optimistic period, and continuing over the next dec

ades as prospects for development dimmed, a succes

sion of development theories, outlined in Table 3.1,

held sway, with stimulating debates punctuating each transition.

50 PART I I Theories and Approaches in International Development

TABLE 3.1 Theories of Development

Theory/ Emergence/ Disclpllne/

Theme Dominance Thinkers Tradition The Problem The Solution

Development 1950s Lewis, Keynesian Low-level Injection of capital

economics Rosenstein- economics equilibrium and management

Rodan of disequilibria

to put economy

on a growth path

to high-level

equilibrium

Modernization Late Rostow, Shils, Weberian/ Traditional Modernization

theory 1950s Pye, Almond, Parsonian society through diffusion

Huntington sociology of modern values

and institutions

Dependency 1960s Cardoso, Frank, Prebisch-Singer Dependency Delinking, fully

theory Wallerstein, thesis, Economic within a world or partially, or

Amin Commission for capitalist system socialism

Latin America

approach,

Marxism

Marxism 1970s Brenner, Warren Marxist theory Articulation Not prescriptive

of modes of of modes of but development

production production of capitalist

relations of

production/

socialism

Neoliberalism 1970s- Bauer, Balassa, Neo-classical, State Free markets

present Kreuger, Lal marginalist intervention

economics,

Austrian

economics

Developmental 1970s- Amsden, Listi an Free markets State management

states present Haggard, Chang, national "neo- of the economy

Reinert mercantilist" to increase

political economy productivity,

equality, and

technological

upgrading

Development Economics

Oe dopment ernnonuc was the fo·sttheory of devel opment and it was imply Lbe contemporary form of

posing the perennial questions of economics.

variety of labels: from an idealistic promotion

of "public happiness" to the nationalistic cre

ation of wealth and greatness of nations and rulers, and the winning of wars. (Jomo and Reinert, 2005: vii)

For centuries economics was-at its very

core-an art, a practice and a science devoted to "economic development," albeit under a

Development economics was predominantly I ., ,es

t n and saw capitalist Cl'ises such as the Great Depres

sion as products of cyclical deficits of demand, which

made capitalists reluctant to invest in productive plant

and eager to keep their capital "liquid." The state could

remedy this through fiscal and monetary macroeco

nomic policies to increase state spending and expand

credit at the beginning to buoy up investment and con

sumption and "smooth out" the highs and lows, restor

ing equilibrium at high levels of employment of labour

and capital. The state was also seen to provide health

care, education, and social safety nets, such as institut

ing unemployment insurance and public pensions, and

to own and operate key industries.

Keynesians sought to accelerate growth in de

veloping countries by injecting capital and pursu

ing macroeconomic policies adapted to developing

economies. Assumptions that applied to developed

economies, such as decreasing returns to scale, la

bour scarcity, and "perfect competition," did not

apply to developing ones: labour was far from fully

employed while capital and technology were very

scarce. Equilibrium was also undesirable: disconti

nuities and disequilibria were necessary to achieve a

quantum leap to a higher growth path in "stagnant"

economies in low-level equilibrium. As W.A. Lewis

saw it, for example, largely agrarian labour-surplus

economies had to be put on an industrial growth

path such that employment in industry made labour

scarce enough for wages to rise (Ros, 2005: 8 9-91).

The great initial effort needed to put an economy

onto a self-sustaining growth path invited com

parison with an airplane taking off: "Launching a

country into self-sustaining growth is a little like

getting an airplane off the ground. There is a critical

ground-speed which must be passed before the craft

can become airborne" (Rosenstein-Rodan, 1961,

quoted in Ros, 2005: 81).

While Keynesianism legitimized national eco

nomic management, its tools were macroeconomic

and aimed to adjust or massage national economies.

They paled in comparison with the policies of Listian

industrialization employed in the rise of the first set

of nations (the US, Germany, and Japan) to challenge

the then-existing world division of labour, let alone the

means employed in Soviet industrialization. In retro spect, whether they could overturn the even wider gap in incomes and productivity that now lay between the First World and the Third was doubtful. At the time, however, the mood was optimistic and the effectiveness

3 I Desai: Theories of Development 51

of Development Economics was not initially called into

question.

Modernization Theory

Sure enough, by the late 1950s it was clear that, while

most developing countries grew, none was launched on

a path to self-sustaining industrial growth. ,\Iodcrn

ization theory now emerged to pin responsibility on

social and political factors largely outside the purview

of development economics and to supplement econom

ics with sociology and political science in theorizing

the preconditions for, and obstacles to, development,

which it conceived as the "modernization" of "tradi

tional" societies.

Walt Rostow's Stages of Economic Growth, in

which economics was central without being the ex

clusive focus, marked the transition between develop

ment economics and modernization theory. Relying on

the growth experience of the developed countries and

combining it with an appreciation of key social and po

litical factors that facilitated growth, Rostow discerned

five broad states through which "traditional" societies

passed to become modern "high mass consumption"

societies-"traditional," "preconditions for take-off,"

"take-off," "drive to maturity" and "modern." Tradi

tional agricultural societies had "pre-Newtonian" at

titudes towards nature and thus suffered low levels of

technology and growth. The preconditions for take-off

were fulfilled by key economic changes, including

trade expansion and increases in investment, but the

creation of a national state was critical. W hile these

changes had occurred more or less autonomously in

England and Western Europe, in most countries they

were the result of external pressures that undermined

the structures of "traditional societies." Take-off would

occur when total investment in the economy reached

10 per cent of GDP and both industrial and agricultural

productivity outstripped population growth. The drive

to maturity featured further instalments of growth and

modernization of the economy with the production of

a more diverse range of goods, including technologi

cally sophisticated ones, and greater integration into

the world economy. High mass consumption society

was the end state where average incomes were high and

consumption expanded beyond basic needs. Societies

could then institute welfare states and also spend more

52 PART 1 I Theories and Approaches in International Development

�

on the military as they sought to project their power

internationally.

Rostow's account bore all the marks of moderni

zation theory: consciousness of the stakes in the Cold

War (he subtitled his work A Non-Communist Man

ifesto); an assumption that the First World was the

model and end state for the Third; optimism about

the prospects for growth in the Third World; and an

assumption that the First World would be instrumen

tal in promoting it. His observation that the danger

of Communism was greatest when the preconditions

for take-off were being met because conflicts were

most likely during that period also anticipated mod

ernization theory's authoritarian turn under Samuel

Huntington.

Unlike Rostow's economic history, the principal

modernization theorists employed sociology and po

litical science, relying particularly on Talcott Parsons's

Ihe Structure of Social Action (1937), a breezy adapta

tion of Max Weber's complex and rather gloomy so

ciology of modernity. "Modernity, Parsons believed,

implicitly but fundamentally, formed a coherent,

unitary, uniform and worthwhile whole, and had to

be apprehended by a social science that shared these

qualities" (Gilman, 2003: 75). Though not concerned

with the Third World, the overall question that framed

Parsons's study-"what made the West different?"

eminently suited Cold War modernization theory. His

"pattern variables" (see Table 3.2) distinguished mod

ern from traditional societies by opposing them and

modernization theory merely added that development

occurred when modern characteristics-values and in

stitutions, in addition to capital and technology-from

the formerly imperial "modern" were "diffused" to the

ex-colonial "traditional" countries until they matched

the former as closely as possible. For modernization

g..--11111... If,

"' -" s _g

"' "

0 V,

"" "'

@ ...... ia.-..... _____ ...,;_ ____ ___::....==!?!

PHOTO 3.1 I Oil refinery and storage tanks on the outskirts of Kisumu town on the road to Maseno in w estern

Kenya, East Africa.

3 I Desai: Theories of Development 53

TABLE 3.2 I Parsons's Pattern Variables or Roles in Traditional Society and Modern Society

Tradltlonal Society

Affectlvlty

Predominance of roles that give affective or emotional

gratification

Ascription

Predominance of roles according to non-achievable

status or attributes (sex, age, family position, etc.)

indifferent to quality of performance

Diffusion

Predominance of roles in which a number of functions

may be combined: e.g., family memberships and

work on a farm

Particularism

Predominance of roles in which expectations are

particular to the status of the performer

Collectivity orientation

Predominance of roles oriented towards the collective,

such as society or kinship group

theory the obstacles to "modernization" lay in local

and inherited "tradition."

This narrative of modernization simply assumed

away the history of imperialism. The "traditional" soci

ety was in a state before capitalist development, which

would now be brought to them through capital injection

and/or "diffusion" of modern values and institutions

that required increasingly close contact-economic,

social, political, and cultural-with formerly imperial

countries. While a liberal wing of mo dernization

theory assumed that modernization was inevitable and

imminent and would lead to democratic orders, there

was also a darker side to the theory.

Modernization scholars identified closely with the

world aims and activities of the US but, to their disap

pointment, most of them never became influential in

making US or World Bank development p olicy. Instead

they inhabited the well-funded US government spon

sored "area studies" departments that sought to know

parts of the world that Washington was interested in

or had become involved in. A couple of modernization

theorists did become influential in US foreign policy.

Walt Rostow served as head of the policy planning staff

under John F. Kennedy and as national security adviser

Modem Society

Affective neutrality

Predominance of roles whose performance is

affectively neutral

Achievement

Predominance of roles in which achievement is the

basis of status

Specificity

Predominance of roles specific to particular functions,

as in a bureaucracy

Universalism

Predominance of roles in which performance is

measured irrespective of the status of the performer

Self-orientation

Predominance of roles in which private self-interest is

the prime motivation

under Lyndon Johnson. He was widely known as the

chief architect of the Vietnam War.

Rostowians saw the world locked in a commu

nist-capitalist struggle whose outcome would

be decided in the developing areas. South Vi

etnam was the linchpin in this struggle. Under

Walt W. Rostow's guidance, the Doctrine be

came the primary tenet of American policy to

ward the developing areas in the 1960s and the

principal rationale for US intervention and con

duct in Vietnam ... . The international order de

pended on whether the developing areas could

be "modernized"-a process Rostow equated

with Western-style economic development.

(Grinter, 1975, quoted in Gilman, 2003: 249)

Samuel Huntington never attained high office

but did exert a chilling influence on US policy in Vi

etnam. Having given up on democracy in the Third

World, preferring "order" instead because "the most

important political distinction among countries con

cerns not their form of government, but their degree of

government," he advocated "urbanization" in Vietnam,

54 PART I I Theories and Approaches in International Development

including by bombing and defoliating, to undercut

rural support for the enemy. As one of his colleagues

remarked, "Sam simply lost the ability to distinguish

between urbanization and genocide" (Ahmad, 1992,

quoted in Gilman, 2003: 233).

Huntington's trajectory revealed the deeply

anti-democratic currents in post-war US intellec

tual life: modernization theory's core understanding

of development as a transition from traditional to

modern society itself contained the seeds of its later

anti-democratic turn. When optimism about, and then

patience with, populations allegedly under this tran

sition wore out, breezy optimism about democracy

could easily turn into an authoritarian concern for

order (Gilman, 2003: 45-63; see also Cammack, 1997;

O'Brien, 1971; the key text is Huntington, 1969).

Modernization theory was less the basis of policy

in the developing countries and more the basis of the

US government's involvement in them. As such, its va

lidity was protected from policy challenge. It remains

the dominant paradigm governing the understanding

of the Third World in the US to this day. By the end

of the 1960s, however, the "golden age" of capitalist

growth had ended. As it came to an end, the comfort able assumptions of modernization theory soon were

challenged.

Dependency Theory

Dependency theory remains to this day the most sig

nificant challenge to mainstream understandings of

development. The dependentistas reinstated the history

of imperialism in the understanding of development, or

lack thereof, and sought to theorize post-war informal

imperialism through concepts like "neo-colonialism."

Not surprisingly, perhaps, dependency theory originated

in Latin America, the one region of the Third World

where, although the vast majority of nation-states had

been independent for more than a century, underdevel

opment remained a problem and where some countries,

such as Argentina, had had levels of income and welfare

to rival the rich countries at the end of World War II but

fell rapidly behind in the following decades.

Dependency theory turned the central assump

tions of modernization theory on their heads. Whereas

modernization theory studied countries, dependency

theory studied the whole capitalist "world system."

Whereas modernization theory assumed that the

problem of development was an original state of

non-development, dependency theory argued that a

single and integrated historical process of world capi

talist development developed some countries and un

derdeveloped others. Whereas modernization theory

assumed that development would help " traditional"

societies "catch up" with "modern" ones, the stronger

forms of dependency theory insisted that develop

ment was impossible under capitalism: socialism was

the only solution. Whereas modernization theory saw

the elites of "traditional" societies diffusing modern

values, ideas, practices, and institutions to the rest,

dependency theory saw them collaborating with im

perialism to produce underdevelopment. Rather than

conceiving the world economy as divided between " tra

ditional" and "modern" societies, dependency theorists saw it as divided between an advanced industrial "core"

and a largely agricultural "periphery."

The varied strands of dependency can be traced to two principal sources. The first was the UN's Eco

nomic Commission for Latin America (ECLA) under

Raul Prebisch in the 1950s. He challenged conventional

development economics in two ways. First, Prebisch

contested conventional development economics, which

assumed that trade between the centre and the periph

ery would generate development. Rather, he argued,

it would exacerbate inequalities between them. He

pointed to the experience of the two world wars and

the intervening Great Depression when trade between

Latin America and the core countries was disrupted

and Latin American countries diversified and industri

alized. These gains were being lost in the post-war re

sumption of close trading relations with core countries.

Second, reflecting on the experience of the peripheral

countries during the "golden age" he, in parallel with

Hans Singer, took issue with conventional trade theory.

It supposed that trade between industrial and agricul

tural countries would eventually favour the latter be

cause they would benefit from advances in technology

in industrial countries, reducing the prices of industrial

goods faster than the prices of agricultural goods. The

Prebisch-Singer thesis argued that instead of permit

ting the prices of industrial goods to fall in tandem with

technological progress, advanced industrial countries

kept the benefits of technical progress by keeping prices

high while prices of primary products tended to decline

as more producers and countries entered the market.

The second major source of dependency theory

was the work of Paul Baran. Baran sought to under

stand how imperialism worked in the second half of

the twentieth century-when the Third World was

composed of formally independent nation-states, not

colonies. The classical theories of imperialism pro

posed by Marxist intellectuals and leaders, including

Lenin, in the early twentieth century understood im

perialism and imperialist competition of the time as

endemic in, and necessary to, capitalism: both would

be ended only by socialism. Baran fur thered this anal

ysis, arguing that capitalism was a hierarchical inter

national system based on a transfer of surplus from

underdeveloped to developed countries-a process in

which multinational corporations played an increas

ingly important role, blocking industrial development

and producing stagnation and underdevelopment in

the poor countries.

Dependency theory had many strands: politically,

many dependency theorists spoke as representatives of

their own national bourgeoisie, "chafing at its subor

dination to the interests of foreign companies and the

influence of the US state in domestic politics" (Leys,

1996: 12) or they sided with the working class and

other radical currents. Theoretically, Gabriel Palma

(1981) classified dependency approaches in terms of

how much each theorist thought development possi

ble. Some currents merely pointed to the difficulties of

development. A second current, which included Palma

himself, F.H. Cardoso (who would become president of Brazil), and Enzo Faletto, focused on "concrete sit

uations of dependency" and on how external obstacles

were complemented by domestic class configurations

to impede development. They also believed that some

capitalist development-"dependent development"

was possible within these parameters. Peter Evans

(1979), for instance, analyzed how a "triple alliance" of

state capital, domestic capital, and foreign capital had

determined the actual pattern of industrialization in

Brazil. Finally, there were those-pre-eminently Andre

Gunder Frank-who argued that no real development

was possible without socialism and a delinking from the structures of world capitalism.

3 I Desai: Theories of Development 55

To Palma's classification we must add the theories

of Samir Amin, a major theorist of dependency from

Africa; he differed from dependency theorists' claim

that underdevelopment was a capitalist condition, see

ing it instead as the result of a combination of capital

ist and pre-capitalist structures in peripheral societies.

He did, however, think that selective delinking from

the world economy could be combined with a broadly

based and internally generated process of capitalist ac

cumulation and development.

No discussion of dependency theory is complete

without mention of the related "world system" ap

proach. It relied on the French Annales school of his

torians, in particular Fernand Braudel, whose detailed

history of world capitalism drew on Marxism but also

differed from it by defining capitalism in terms of mar

kets, not the relations of production. For Immanuel

Wallerstein, the most prominent representative of the

world system approach, the capitalist world economy

resulted from the centuries-long expansion of a world

market centred on Europe from the fifteenth century.

Though it contained various political and economic

forms, it was and remained a worldwide capitalist econ

omy with a unified character. No unit within it could

be analyzed separately. This structure generated "une

qual development and therefore differential rewards ...

there was the differential of the core of the European

world economy versus its peripheral areas, within the

European core between states, within states, between

regions and strata" (Wallerstein, 1974: 86). This capital

ist world economy was divided into a core, a periphery,

and a semi-periphery, and though at times the position

of individual countries changed, the overall structure

was unchanging.

Dependency turned out to be a mere mirror im

age of modernization theory: the one inevitabilist, the

other impossibilist. Most dependentistas dismissed the

possibility of autonomous national development in the

context of the powerful and varied structures and prac

tices of imperialism that persisted despite the nominal

independence of Third World countries. While this

was one-sided, dependency scholarship deepened our

understanding of the specific mechanisms of imperial

ist subjection and exploitation, which Marxists tended to ignore because they focused on how workers, rather

than on how nations, were exploited. Dependency

5() TI I Theories and Approaches in International Development

scholars generated a wealth of writing on the operation

of "unequal trade" (Emmanuel, 1969); multinational

capital (Hymer, 1972); and debt, aid, and the official

development organizations (e.g., George, 1988; George

and Sabelli, 1994; Hayter and Watson, 1985; Payer,

1991), all of which illuminated how imperialism and

dependency characterized world capitalism.

Marxists had long understood capitalism as a con

tradictory and unjust, crisis-prone and exploitative

form of society that had nevertheless vastly improved

human social productive capacity. Although they

claimed to be Marxists, dependency and world sys

tem theorists focused on the negative effects of capi

talism through the exploitation and subordination of

countries. It was, however, the success of capitalism in

spurring human social productive capacity that gave

rise to the ideas of development and progress in the

first place. A brief review of the Marxist critique of de

pendency makes some of the implications of depend

ency's one-sidedness clear.

Dependency and world system scholars main

tained that the inclusion of new areas or countries

into the world market was sufficient to deem them

capitalist and if the results were different, even oppo

site, from those in the core lands of capitalist accu

mulation, well, that was imperialism and dependency

for you! Their Marxist critics begged to differ: capital

ism was a matter of the social relations of production

(and not only exchange) and world market inclusion

did not always lead to the development of capitalism:

Latin American latifundia (large agricultural estates)

and Eastern Europe's "second serfdom," not to men

tion the still-numerous peasantries of the world, all

constituted forms of world market incorporation that

did not lead to the development of capitalist relations

PHOTO 3.2 I The revolution in Cuba was central to the development of dependency theory.

of production. While the "ar ticulation of modes of

production" approach of these Marxists was theo

retically rich (see, e.g., Laclau, 1977; Brenner, 1978;

Banaji, 1977), and while the debates between Marxists

and dependentistas enriched our understanding of

the range of different types of world market inclusion

and their specific effects-for instance, such inclusion

on terms of merchant capital tended not to develop

capitalism but only to reinforce pre-capitalist forms

of exploitation-they also revealed that the Marxist

idea of capitalist exploitation had been reduced to the

extraction of surplus value from wage workers alone.

It had little purchase on understanding how underde

velopment was created and how nations could subor

dinate and exploit other nations.

Marxists kept open the possibility of an end to

underdevelopment through the development of capi

talist relations of production, and some criticized them

for underestimating the problems of the Third World

(Lipietz, 1982). And in doing so, they did question

the "impossibilism" of dependency approaches, point

ing to counter-indications, particularly the "mirac

ulous" rise of the East Asian Newly Industrializing

Countries (NICs) and the more widespread phenom

enon of industrialization in a great number of Third

World countries that was becoming clear in the 1970s

(Warren, 1973, 1980).

Neoliberalism

The 1970s marked a watershed in the story of devel

opment. Growth in the world economy slowed as the

post-war recovery of Western Europe and Japan, which

had been the main motor of "golden age" growth, was

completed and new problems emerged, including slow

ing productivity growth, worker militancy, and oil

price increases. Slow growth in the First World meant

that primary exports, on which Third World coun

tries with little or no industrialization had remained

dependent, slowed perceptibly. Moreover, post-war in

ternational economic governance, which had proved

relatively benign for developing countries, unravelled and the restructuring of the main Bretton Woods in stitutions by the 1980s made them positively hostile to

development, while changes in the international mon etary system vastly increased the invidious power of these institutions (see Chapter 9).

3 I Desai: Theories of Development 57

The US had imposed the dollar on the world at

Bretton Woods but providing dollar liquidity by run

ning current account deficits had never worked and

never could work, thanks to the "Triffin Dilemma"

pointed out by the Belgian economist Robert Triffin

(Desai, 2009). The dollar was falling in value and, by

1971, its gold backing had been removed. Converti

ble currencies now floated against each other, creat

ing great financial uncertainty while the expansions

of international financial flows and inflation of asset

bubbles that now became systematically necessary for

the dollar to serve as world money (Desai, 2013) added

vastly to it. The Third World became caught up in the

earliest of these, the vast increase in international

bank lending in the 1970s, in a way that would prove

fateful for them.

In reaction to the falling dollar, the Organization

of Petroleum Exporting Countries (OPEC) dramati

cally raised oil prices from approximately $2 per bar

rel to $39 in the 1970s. This had a devastating impact

on all oil-importing countries and was particularly

punishing for many in the Third World. However, the

financial results of these oil price increases had the un

expected result of facilitating faster industrialization

in many Third World countries. As some relatively

successful industrializers broke ranks to forge ahead

while most others began sinking into a mire of eco

nomic stagnation or decline (political instability and

social disintegration that would worsen in coming

decades), the already disparate Third World began to

diverge even more.

Successful Third World industrialization in the

1970s occurred at a unique conjuncture. International

interest rates, never very high in the post-war pe

riod thanks to the "repression of finance" during the

"golden age," dipped even lower as First World growth

slowed and demand for capital slackened. Indeed,

given high inflation, real interest rates-the differ

ence between the nominal interest rates and the rate

of inflation-occasionally even turned negative. At this

time the vastly inflated OPEC revenues from oil sales

were deposited in US banks and they became eager,

even desperate, to lend money (see also Chapter 14).

The 1970s witnessed a boom in private bank lending

to sovereign Third World governments through open

variable-rate loans. They financed the substantial spurt

in industrialization and seemed to promise practically

58 PART l I Theories and Approaches in International Development

free capital and potentially high industrial growth for

Third World countries with the state capacity and po

litical will to foster it. If this promise had been realized,

the shift in the centre of gravity in the world economy

that the BRICS and other emerging economies caused

in the early twenty-first century would have happened

decades earlier.

However, the US turn towards "monetarism"

ended this hopeful prospect. Monetarism prescribed

raising interest rates to end inflation. Whether it ended

inflation remained moot, but it certainly caused a sharp

recession and delivered a harsh financial shock to Third

World borrowers who had accepted huge loans when

interest rates were low and even negative and now faced

sky-high principal and interest payments. In 1982, the

Third World "debt crisis" broke out as Mexico, Brazil,

and Argentina defaulted on their debt. Although not

originally designed to do so, the IMF and the World

Bank stepped in to manage the resulting financial cri

ses in a way that helped First World bankers evade their

responsibility (creditors' responsibility) for profligate

lending and passed the whole burden of adjustment to

the borrowers, mainly Third World governments. Act

ing more like instruments of US and Western power

than the multilateral institutions they were supposed

to be, the IMF and the World Bank rescheduled debts

to avert repudiation and imposed st rudu r:1 I adjust

llH'lll prngrnms (SAPs), which were stricter, more

market-friendly versions of the "conditionalities" that

the IMF was empowered to impose on countries in

balance-of-payments difficulties (see also Chapter 9).

These programs severely restricted consumption and

investment in favour of production of largely primary

goods for export to repay debts.

SAPs marked the single most important change

in the theory and practice of development. The

neoliberalism they embodied contested the original

goals and methods of development-to which, as we

have seen, state intervention to control and direct mar

ket outcomes and promote industrialization had been

central-in favour of dogmatically market-friendly

policies. While in the rich countries neoliberalism

resulted in unprecedented rates of unemployment,

poverty, inequality, and deindustrialization, ending

the "golden age" of high growth and the Keynesian

welfare state, its effects on the Third World were far

worse, leading to two "lost decades" of development

featuring low or even negative growth in already poor

countries.

Neoliberalism and structural adjustment were

anti-statist rhetorically and to a certain degree practi

cally, but in reality they entailed comprehensive state

intervention to re-engineer whole economies in favour

of private capital-foreign capital more than domestic

capital, financial capital more than productive capital.

Although a number of debt reschedulings followed

the outbreak of the debt crisis and small parts of the

debt were forgiven, little was done to alleviate the debt

burden that had expanded so vastly with the interest

rate increases. For the next two decades, countries un

der SAPs-a majority of Third World countries-were

forced to expand exports of mostly primary commod

ities and low-value-added industrial products to pay

back the debt. Consequently, the market for these com

modities was glutted, lowering prices and making it

harder for these countries to earn the foreign exchange

needed to repay inflated debts. Meanwhile, First World

consumers benefited as many tropical products, from

higher-value teas and coffees to cotton, fresh fruits and

vegetables, and even seafood, entered mass consump

tion in the 1980s for the first time. And contrary to all

notions of development, neoliberalism also engineered

a massive transfer of capital from the Third World to the

First, as the now inflated repayments were not matched

by new loans. The resulting crisis of development is of

ten blamed on poor government policies in the Third

World. However, with state spending restricted and in

terventionism ruled out, no attempt to break out of the

production of low-value-added products-in effect, no

development-could even be contemplated.

Neoliberalism's anti-state and pro-market dogma

ended "development" as originally conceived, with the

nation-state as its chief agent and industrialization its

central component. In the 1990s, the dominance of

neoliberalism was reinforced by the discourse of "glo

balization," which argued that nation-states were now

irrelevant. Then, as the twenty -first century opened

with 9/n and the US's "war on terrorism," a new set

of discourses on "empire" and "imperialism" portrayed

a number of Third World states as "rogue states," and

"failed states," to be dealt with, if necessary, by violence

often dressed up as "humanitarian intervention" and

protection of"democracy." Amid all this, prospects for

development, industrialization, and "catching up" to

First World levels of prosperity receded farther into the

distance for most of the Third World.

In retrospect, the story of development, in its

original sense, seemed more or less to have ended in

the 1970s:

By the early 1970s the vision of "catching up"

(culminating in Rostow's 1960 version, in a

"high mass-consumption" society, which im

plicitly included equity and democracy) had

already given way to more modest ambitions:

"redistribution with grow th"-i.e., some re

duction in inequality but financed out of

growth so that the better off in the developing

countries might be less unwilling to agree to

it-in a word, fewer illusions about democ

racy. And by the end of the 1970s, redistri

bution had given way to just trying to meet

the " basic needs" of the poor who, it seemed,

would always be with us after all; the goal of

equity had disappeared. Then came structural

adjustment; to get growth, underdeveloped

societies were to adjust themselves to the Pro

crustean bed allocated to them by the market,

and for this purpose even basic needs must be

sacrificed. (Leys, 1996: 26)

Neoliberalism was favoured also by Third World elites

disinclined to honour their obligations to their own

working and peasant classes implied by developmen

talism. Its policies involved cuts in state spending on welfare and subsidies, currency devaluation, deregula

tion of the economy and privatization, and restriction

of the rights of labour. Indeed, governments, rather

than being agents of development, were obstacles to

it-profligate, corrupt, inefficient, and parasitic. Gov

ernment intervention interfered with the market's

way of "getting prices right" and balancing economic

activity. Neoliberals also argued against the emphasis

on industrialization, insisting that markets assured

that each country would specialize in the economic

activity-and it could be agriculture-in which it had a "comparative advantage." If governments sought to

overturn the verdict of the market and to industrialize, they would only cause declines in welfare.

Neoliberalism appeared convincing insofar as many governments in the Third World had never

3 I Desai: Theories of Development 59

represented the interests of all the citizenry, only of its

propertied. A great many development failures could

indeed be placed at their door. Critics of neoliberalism

faced the uphill task of arguing that while that was

true, not only were governments capable of better in the right circumstances, only they could promote de

velopment against the obstacles posed by the political

and economic power of the First World. Only in follow

ing decades, when a new generation became acquainted

with the costs exacted by the oversimplifications of

neoliberalism and free-market thinking, would thinking

about alternatives rekindle.

But the contradictions of neoliberalism could not

be wished away. By the end of the 1980s, neoliberalism's

first decade, the high priests in its temples-the World Bank and the IMF-were already qualifying neoliberal

doctrine by admitting at least a limited role for the

state, and by the 1990s they were no longer able to argue

that free markets and free trade were desirable. Now

neoliberalism was replaced by "globalization," which

argued that free trade and markets were inevitable and,

in the 2000s, by discourse that there was no alternative

to subjection to US "empire" (see Chapter 6).

Amid all this, development discourse petered out

in a range of only apparently similar discourses-of

"post-development" or of NGOs-or in esoteric reflec

tions on the condition of various parts of the Third

World. All of these discourses differ from development

discourse in one critical respect: they posit no project

and address no agent (see Chapter 4).

However, in the first decade of the twenty-first cen

tury, two developments were already in train to alter the

landscape of development radically by the end of the

decade. A small number of countries, pre-eminently China but also India, Brazil, and others, grew spec

tacularly. Post-Communist Russia stabilized under

Vladimir Putin after a decade of neoliberal "shock therapy" (in reality, all shock and no therapy) un

der Boris Yeltsin. Double-digit growth rates in China

were, in particular, the result of the central role of the

Communist party-state in fostering development, and

it was clearly possible precisely because that apparatus retained its policy autonomy from the power of the rich countries (see Chapter 13). Elsewhere, also, growth was the result of policies that were not neoliberal or were "insufficiently" neoliberal, which the more

powerful states such as India or Russia or Brazil, able

60 PART I I Theories and Approaches in International Development

to stand up to US, World Bank, and IMF pressure, were

able to follow. The demonstration effect on the rest of

the Third World can hardly be understated. Second, and

only slightly less important, many countries in Latin

America, which had suffered some of the worst of the

IMF/World Bank's bitter neoliberal medicine, began

electing left-of-centre governments. These countries,

where not just the poor but vast swaths of the middle

classes had been adversely affected by neoliberalism,

explicitly rejected it. By prioritizing the repayment of

loans from the IMF and the World Bank over loans to

private creditors, they regained the policy autonomy

they had lost since the early 1980s and began to pursue

progressive economic policies, not only to strengthen

their economies but also to reorient them to serve

the interests of the poor and hitherto marginalized.

Development theory in the twenty -first century will

be centrally about assimilating these experiences and

drawing their lessons for the rest of the poor countries

of the world.

Developmental States

As it seeks to do this, development theory will be greatly

aided by a current within it that arose as a critique of

neoliberalism but was marginalized by the latter's po

litical power (Wade, 1996). While neoliberalism at

tempted to claim the development success of the Newly

Industrializing Countries (NICs) for neoliberalism,

new scholarship reaching back to nineteenth-century

anti-free trade economists (such as Hamilton, List,

and Carey, mentioned above) emphasized the role of

government in these industrial success stories. The re

sulting literature on developmental states-states that

consciously fo stered more or less successful capitalist

development, often benefiting sectors broader than the

capitalist classes alone-was part of a veritable "Other

Canon" (Reinert, 2007a, 2007b) of economic or de

velopment theory going back several centuries. Mar

ginalized with the emergence of the free-market bias

of economics in the nineteenth century, this "other

canon" converged with the Marxist emphasis on the

social relations of production, the political character of

the states to which they give rise, the range of policy op

tions available to such states, and the circumstances in

which the more progressive options could be expected

to be exercised (Bagchi, 2004, 2005). It also confirmed

dependency theory, arguing that autonomy from the

structures and practices of imperialism was crucial for

development (Chang, 2002, 2010).

CONCLUSION: WHITHER

DEVELOPMENT?

As the twenty-first century advances, the prospects

for development theory look very different from what

they were at its beginning. The Great Recession has

discredited neoliberal faith in free markets and, inso

far as it still lingers in the shape of "austerity" in the

First World, it only accelerates the shift in the world

economy's centre of gravity away from the stagnant

rich countries and towards the fast-growing emerging

economies. While their growth is hardly without prob

lems, the obstacles to this growth, like its motors, were

clearly more internal than external.

The gap in per capita incomes and material

well-being between the rich and poor countries, even

the most dynamic among them, remains large, but may

not be endemic. Incomes are contingent on wage lev

els, and they in turn depend on the self-organization of

labour. Industrialization in developing countries "has

more often than not led to the emergence of strong,

new labour movements ... rather than an unambigu

ous 'race to the bottom' and the subsequent expansion

of capital intensive, mass-production industries cre

ated new and militant working classes with significant

disruptive power" (Arrighi, 2003: 36-7).

While "development" has proved disappoint

ing in relation to the high hopes that launched it,

the end of colonialism and the generalization of the

nation-states system at least slowed income divergence

among countries. In his important survey of world

income inequality, Branko Milanovic concludes that

p opulation-weighted international inequality in per

capita incomes in the pre- and post-1950 periods exhib

ited very different trends:

The first was characterised by (i) strong di

vergence between countries, (ii) relative de

cline of populous countries, (iii) increasing

inequality among world citizens, and (iv)

decreasing within-country inequality. In the

second period, after 1950, (i) the divergence

among countries continued though at a slower

pace, (ii) populous and poor countries started

to catch up with the rich world, (iii) inequal

ity among world citizens moved slightly up,

and (iv) the overlap [between the poor of rich

countries and the rich of poor countries],

and perhaps within-country inequalities, in

creased again. In other words, the features (i)

and (iii) continued, but at a slower pace, while

the features (ii) and (iv) reversed. In effect, it

is the reversal of feature (ii)-namely, the end

of India's and China's falling behind the rich

world-that causes the increase in the overlap

component, as some part of poor countries'

populations now "mingle" with people from

rich countries. (Milanovic, 2005: 144)

3 I Desai: Theories of Development 61

This is the record of the whole period from 1950 to

2000, including the "lost decades" under neoliberalism.

With growth slowing in the rich countries and acceler

ating in the emerging economies, and with the prospect

that, learning the lessons of their development, even

more poor countries will join their ranks, the possibil

ity of faster progress on this front cannot be discounted.

The rec;ord of populous India is revealing. The most

significant break in India's twentieth-century growth

record came following independence in 1947: India's

economic growth rate in the first half of the twenti

eth century under colonialism has been estimated at

between o.8 and 1 per cent per annum, whereas in the

second half, when India became independent, it was

4.2 per cent per annum (Nayyar, 2006: 1452-3).

Decolonization was central to the story of India's

growth in the twentieth century. Surplus extracted

from colonies such as India, indeed pre-eminently In

dia, had contributed to the initial accumulation that

PHOTO 3.3 I Working on Infrastructure for development: bridge construction In northeast Brazil.

62 PART I I Theories and Approaches in International Development

led to the Industrial Revolution in Britain, and a cen tury later, when Britain's industrial supremacy began

to decline, this surplus had helped it to balance its pay menls against new ri ing manufacturing powers (see Arrighi, 2005; Patnaik, 2001, 2006). In India, the loss

of surpluses, and l be who! panoply of the practices of

colonialism, had meant stagnation.

Even without their own colonies to exploit, the

industrial capitalist development of the former colo

nial countries of the South was substantial prior to the

twenty-first century, lhough admittedly the development

of South Korea and TaiwruJ, the most sue essful up to

that time, was due in substantial part to the compulsions

of the Cold War that forced the US to grant these two

states on the "front line" against Communism levels of

aid, policy freedom, and access to US markets denied all

other ex-colonial countries. Moreover, at worst, national

independence-and the national economic manage

ment that went with it-has been a barrier to worsening

inequality. With the ascendancy of neoliberalism bro

ken, the merits of the dependency, Mru:xi t, and "devel

opmental state" theoretical currents i.n w1derstanding

and rectifying underdevelopment can now be tested.

SUMMARY

The post-war development project emerged amid the

Cold War and decolonization but this project must be

understood in the longer historical perspective of the

rise of modern capitalism. Aspirations to development

universal human progress-were rooted in and denied

by capitalist industrialization. Production increased

dramatically, but it rested on injustice and anarchy.

Colonialism, under which colonizers produced high value goods and colonies produced low-value goods,

was its geopolitical face. With decolonization, which

began in the late 1940s, newly independent countries at

tempted to address these international and domestic in

equalities under the rubric of the development project.

A succession of development theories articulated

this endeavour. Early development theories emerged

from the United States as it sought to increase its in

fluence in the hitherto European-dominated global or

der and to counter Communism, while later theories,

reflecting the experience of the developing world and

the difficulties of development there, criticized them.

However, for them all, industrialization was the main

goal and, given the deep crises-two world wars and

the Great Depression-that capitalism had just suf

fered, the nation-state, rather than the market, was to

be the main agent of achieving it. In the 1950s, Keynes

ianism focused on state corrections for market crises;

by the late 1950s, modernization theory focused on

the alleged social defects of developing countries that

prevented development; then, in the 1970s, dependency

theory pointed to the maldistribution of economi

power in world capitalism. It wa n ly in tbe 1980s that

neoliberali m radically rejected state intervention and

promoted free rmu:kets uncritically, while contempo

raneous post-development theories rejected the idea

of development altogether. However, theorists of the

developmental state continued and expanded on the

centrality of the state in promoting industtial devel

opment. The emerging economics and geopolitics of

the twenty-first century corroborate them, and point

to the strengths of the dependency theorists of several

decades earlier.

QUESTIONS FOR CRITICAL THOUGHT

1. How has the Great Recession of the twenty-first century changed the prospects for development? 2. Why is it important to think about development as something that began not after World War II but centuries

earlier?

3. What is neoliberalism? How has it affected development? 4- What are the enduring contributions of dependency theory? What were its chief problems?

5- Do you think developmental states are the key to development's future? If we are moving towards a post-state

future, who or what will be the agent of development?

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Post-Developlllent and Alternatives to Developlllent Ara1n Ziai

iEAHNING OBJECTIVES

• To understand why post-development differs from

earlier critiques of development policy.

• To understand the concept of development

discourse.

• To understand the main argument of post

development.

To get to know examples of "alternatives to

development."

• To distinguish between anti-development and

post-development.

• To evaluate the criticisms raised towards post

development.

Roy Sesana, lead applicant and leader of the First People of the Kalahari celebrates, 13 December 2006, his victory and the right for his people to go back to the Central Kalahari game reserve after the final hearing and judgement of their case against the Botswana government at the High Court in Lobatse, Botswana. I Source: GIANLUIGI GUERCIA/AFP/Getty Images

66 PART I I Theories and Approaches in International Development

During the last two decades, a novel and controversial

approach in development theory has been discussed

that also has been increasingly accepted in the aca

demic debate: the post-development school. Whereas

earlier criticisms, such as the dependency school, had

criticized development theory and policy usually with

a view to devising a better theory and policy of de

velopment (e.g., Hayter, 1971), the post-development

school explicitly refused to do so, engaging in destruc

tive instead of constructive criticism. In its first land

mark publication, Gustavo Esteva called development

an "unburied corpse .. . from which every kind of pest

has started to spread" (Esteva, 1992: 6). And Wolfgang

Sachs (1992: 1), in the introduction to the volume, pro

claimed that "[t]he idea of development stands like a

ruin in the intellectual landscape" and that "the time is

ripe to write its obituary." Post-development thus can

be seen as a fundamental critique, one intended to lay

to rest "development" and that called for "alternatives

to development" instead of "alternative development"

(Escobar, 1995: 215). In this chapter, we explore what

the authors meant by that criticism and why they op

posed the concept and practice of development so ve

hemently. First, we will deal with the historical origins

of the approach before engaging a number of its central

arguments and the alternatives it proposes. At the end

of this chapter, we discuss some criticisms that have

been raised in opposition to post-development and re

flect on the importance of this school of thought.

THE ORIGINS OF POST-DEVELOPMENT

W hile the first post-development publications emerged

in the 1980s (Esteva, 1985; Escobar, 1985; Rahnema,

1985; Rist and Sabelli, 1986; Latouche, 1986), the ap

proach has been influenced by three other bodies of

work: the writings of Ivan Illich, of Michel Foucault,

and of anti-colonial writers like Mohandas Gandhi

and Frantz Fanon. In order to better understand and

contextualize the approach, a look at their arguments

is useful. All of them unsettle the notion that "devel

opment" is a good thing and that the "less developed

societies" should become "developed."

During the 1960s and 1970s, Ivan Illich (1970,

1997), an Austrian theologian, criticized the institu

tions of Western industrial modernity because they

would teach people to be dependent: dependent on

doctors for healing, dependent on the school for edu

cation, dependent on the church for faith and spirit

uality. Concerning development aid in Latin America,

he argued that an understanding of progress as the

spread of these institutions was counterproductive, be

cause it produced needs that could not be fulfilled for

the majority of the population (e.g., for Coca Cola, for

advanced surgery, and for high school education) while

neglecting goods and services more suited to their sit

uation (e.g., vehicles that can handle rough terrain and

can easily be repaired, clean water, healing assistants,

communal storage, and public transport). In terms of

technology, not only goods produced as commodities

were problematic (i.e., those produced to be sold on the

market for profit-a view common among socialists)

but all goods that would come either with the price of

dependency on experts or that could be provided only

for a privileged minority. Development policy thus

would result in damaging institutions over which peo

ple themselves have control, subjecting them increas

ingly to institutions that threatened their autonomy

and produced poverty in the sense of unfulfilled needs

and dependence. Illich outlined a politics of"convivial

ity," based on tools and institutions that enhance peo

ple's autonomy and self-help capacity without having

these drawbacks (e.g., bicycles, phones, mail), as well as

on restraint in energy consumption.

The writings of French philosopher and historian

Michel Foucault �ere hardly concerned with issues of

the Global South. In his most popular writings he deals

with questions of knowledge and power, and with the

construction of what counts as normal and true. He

contends that what is accepted as true-even in the

sciences-is dependent on the historical, social, and

political contexts, on a "regime of truth" of this society

and epoch. In this way he cautions us not to believe that

what is currently seen as true and acceptable is irre

spective of history and place: it may easily be seen as

mad and monstrous in the next century-or in a dif

ferent discourse. The concept of discourse, understood

here as a system of representation linked to relations

of power with consequences on behaviour, is explained

well by post-colonial theorist Stuart Hall in Box 4.1. It

is used by a number of post-development writers.

A third body of work influencing post-development

is that of anti-colonial writers like Mohandas Gandhi

4 I Ziai: Post-Development and Alternatives to Development 67

BOX 4.1 I Stuart Hall on Discourse

A discourse is a group of statements which provide a language for talking about-i.e., a way of representing-a particular kind of knowledge about a topic. When statements about a topic are made within a particular discourse, the discourse makes it possible to construct the topic within a certain way. It also limits the other ways in which the topic can be constructed .... A discourse can be produced by many individuals in different institutional settings (like families, prisons, hospitals, and asylums). Its integrity or "coherence" does not depend on whether it issues from one place or from a single speaker or "subject." Nevertheless, every discourse constructs positions from which alone it makes sense. Anyone deploying a discourse must position themselves as if they were the subject of the discourse. For example, we may not ourselves believe in the natural superiority of the West. But if we use the discourse of "the West and the Rest" we will necessarily find ourselves speaking from a position that holds that the West is a superior civilization .. . . Foucault argues that statements about the social, po litical, or moral world are rarely ever simply true or false; and "the facts" do not enable

us to decide definitively about their truth or falsehood, partly because "facts" can be con strued in different ways. The very language we use to describe the so-called facts interferes in this process of finally deciding what is true and what is false. For example, Palestinians fighting to regain land on the West Bank from Israel may be described either as "freedom fighters" or as "terrorists." It is a fact that they are fighting: but what does the fight

ing mean? The facts alone cannot decide. And the very language we use-"freedom fighters/terrorists"-is part of the difficulty. Moreover, certain descriptions . . . can be made "true" because people act on them believing that they are true, and so their ac tions have real consequences. Whether the Palestinians are terrorists or not, if we think they are, and act on that "knowledge," they in effect become terrorists because we treat them as such. The language (discourse) has real effects in practice: the description becomes "true."

Source: Hall (1992: 201-3). PHOTO 4.1 I Stuart Hall.

-� .c

A 0.

68 PART I I Theories and Approaches in International Development

and Frantz Fanon. Mohandas ("Mahatma") Gandhi,

the icon of the non-violent Indian struggle for in

dependence, perceived centralization, also political

centralization through states, as inherently violent and

advocated decentralized village republics (swaraj). For

some post-development writers, Gandhi has been a

source of inspiration not only because of this concept,

but also because of his ideal of a "simple life." The latter

is manifest in the quote that "Earth provides enough to

satisfy every man's needs but not for every man's greed"

(Gandhi, 1997: 306). He was generally critical of tech

nological progress and concentration of wealth, yet not

in principle but-like Illich-because only a fraction of

humankind had access to them under the current system.

Frantz Fanon, a psychologist and physician from

Martinique, also was engaged in anti-colonial strug

gle, but in contrast to Gandhi he was no advocate of

non-violence-certainly not after he witnessed the

horrors of the war waged by French colonizers in

Algeria against the independence movement. How

ever, he was wary about the new elites emerging out

of the anti-colonial movements and warned that

merely to take over the states from the colonizers

would reproduce many problems. In the conclusion

of his book The Wretched of the Earth, he thus called

on Africans not to imitate Europe and not to be "ob

sessed with the desire to catch up with Europe" as the

former colonies that became the United States had

been, leading that country to become a "monster."

He suggested following neither the ideal of produc

tivism nor that of a return to nature, but proposed

to the Third World "starting a new history of Man,"

not oblivious to Europe's crimes or its achievements

(Fanon, 1961: 251ff. ).

These influences led the post-development authors

to strike a new chord in the critique of development the

ory and policy. They were not opposed to the dependency

critique of the capitalist world system as articulated, for

example, by Walter Rodney (2009), but for them it was not

enough to criticize capitalism. The reason was that many

of the features they criticized-the desire to catch up with

Europe, the unquestioned pursuit ofindustrialization and

growth, the rule of experts-could be found in the social

ist countries as well, and even in the newly independent

countries. Another novelty was the focus on knowledge

and discourse in the post-development school. They de

cried not only the exploitation of the "underdeveloped"

countries but also the very definition that they are

"underdeveloped" and in need of "development," as if

the "developed" countries could provide a universal

model to be followed.

POST-DEVELOPMENT:

CORE ARGUMENTS

Post-development is not a homogeneous school of

thought and there are no membership passes, but

some arguments can be encountered in the writings

of a number of different authors in a similar manner.

In the words of Escobar, post-development is char

acterized by the "rejection of the entire paradigm" of

development, an "interest in local culture and knowl

edge; a critical stance towards established scientific

discourses; and the defense and promotion of local

ized, pluralistic grassroots movements" (Escobar, 1995:

215). Beyond the authors already cited (Esteva, Escobar,

Sachs, Rist, Latouche, and Rahnema), writers like Van

dana Shiva (Mies and Shiva, 1993), Ashis Nandy (1988),

and Claude Alvares (1992) are often associated with

post-development, as is James Ferguson-although

he probably would not subscribe to all arguments

of the other post-development writers. In contrast,

the volumes edited by Apffel-Marglin and Marglin

(1990, 1996) and the work of an thropologist Helena

Norberg-Hodge (2009) and of subsistence feminists

Maria Mies, Veronika Bennholdt-Thomsen, and Clau

dia von Werlhof (Bennholdt-Thomsen and Mies, 1999)

are rarely mentioned in this context, although there

are striking parallels to post-development to be found

among this group. In this section, we will get to know

some of the central arguments of post-development.

The Invention of Development

Probably the most important intellectual move of

post-development is to conceive of" development" as a

discourse, a certain way of representing the world that

can be historically situated and is closely related to re

lations of power. The historical context in which this

discourse emerged was the imminent decolonization of

large parts of Asia and Africa after World War II and at

the beginning of the Cold War. Post-development writ

ers claim that when US President Harry Truman, in

4 I Ziai: Post-Development and Alternatives to Development 69

his inaugural address on 20 January 1949 (see Box 1.1), announced a "program of development" for the "un derdeveloped areas," he inaugurated the " development age" and promoted "a new way of conceiving inter national relations" (Rist, 2014: 71ff.). This "new way" replaced the hierarchies between colonizers and colo nized with the seeming equality of trading partners in a global economy, one group of which (the "underde veloped") lagged behind and were in need of assistance to catch up, which the "developed" generously granted.

Yet, the promise of prosperity given by Truman had not only (if at all) humanitarian purpose but also geopolitical motives: its thrust was to keep the coun tries in Africa and Asia, which were already in the process of becoming independent or were likely to be come so during the next decade or two, from joining the growing Communist camp. This, the containment of world Communism, was the prime imperative of US

foreign policy during the Cold War, and this is why Truman saw the poverty of these "underdeveloped ar eas" as a "threat, both to them and the more prosperous countries." Unlike the view of a world divided between exploiters and exploited, the new era's discourse of"de velopment" allowed the US and the European colonial powers "to maintain their presence in the ex-colonies, in order to continue to exploit their natural resources, as well as to use them as markets for their expanding economies or as bases for their geopolitical ambitions" (Rahnema, 1997a: ix).

Esteva emphasizes another aspect of this new dis course when he writes that through this new discourse, a "new perception of one's own self, and of the other" was created: "two billion people became underdevel oped" (Esteva, 1992: 6ff.). By this, he does not mean that they were materially impoverished by Truman giving his speech, but that they were perceived-and

PHOTO 4.2 I Tuareg man making a camel saddle, Agadez, Niger.

70 A!l'li t I Theories and Approaches in International Development

increasingly perceived themselves-as poor in com

parison to the industrial capitalist societies, not merely

as having a different model of society: they were judged

and found lacking according to the allegedly universal

standards of the West.

[T]hey ceased being what they were, in all

their diversity, and were transmogrified into

an inverted mirror of others' reality: a mirror

that belittles them and sends them off to the

end of the queue, a mirror that defines their

identity, which is really that of a heterogene

ous and diverse majority, simply in the terms

of a homogenizing and narrow minority.

(Esteva, 1992: 7)

That is, Tuareg nomads of the Sahara, Zapotec

farmers in Oaxaca, and Adivasi hunter-gatherers are

perceived first and foremost as underdeveloped-"not

seen as living diverse and non-comparable ways of

human existence, but as somehow lacking in terms of

what has been achieved by the advanced countries"

(Sachs, 1992: 3). Therefore, "development," catching up

with the "developed," was seen-by Truman and de

velopment experts from the North, but also by national

elites-as a goal that was necessary and desirable, even

ineluctable, for these countries. A significant point

(which leads us to the next argument) was that this di

agnosis was based on comparative statistical measure

ments of gross national product and per capita income,

which "proved" that living conditions in Third World

countries were far below US standards-but of course

this narrow economic perspective neglected many as

pects of life (see Box 4.2).

In this perspective, the lack of money to buy goods

and the lack of modern conveniences are conflated with

a lack of basic necessities oflife and identified with pov

erty, in the sense of an undignified condition that de

serves compassion and helping. Wolfgang Sachs tells the

story where in 1985 he was shown around the quarter

of Tepito in Mexico City and his remark that the people

were still terribly poor was countered with the stiff re

mark: "We are not poor, we are Tepitans!" (Sachs, 1990:

8). Apparently, the Tepitans were not willing to be de

graded by the supposedly rich Westerner; they wanted to

be seen for what they were, on their own terms. That peo

ple can learn to perceive themselves as poor is illustrated

by another story, told by Helena Norberg-Hodge. When

she first arrived in the village of Ladakh in Tibet, her

inquiry about where the poor people lived produced

perplexity among the Ladakhi she talked to: there were

no poor people in the village. But this confident attitude

changed through contact with tourists, development ex

perts, and the media. Some years later, the same Ladakhi

told a Western tourist: "If only you could do something

for us, we are so poor" (Norberg-Hodge, 1997: 35).

Opposing Econ01n·ics and Econ01nization

In the eyes of post-development writers like Esteva, the

development era reformulated the quest for a good life

as the pursuit of material wealth and ever-growing pro

duction; economic growth was seen as the answer to

the problems identified as underdevelopment. As econ

omies of subsistence were not recognized as productive

(although they supplied all means of sustenance for

indigenous communities), the economist's view did

not see a difference between poverty defined as lack

of cash income to buy goods through the market (fru

gality) and poverty defined as inability to satisfy basic

needs of food and shelter (destitution or deprivation).

According to post-development, the former is not nec

essarily problematic, and the latter occurs only after

people have been deprived of access to land and forest

through the enclosure of the commons that accom

panied the spread of capitalism since the colonial era,

forcing people into wage labour (Rahnema, 1992, 1997;

Shiva, 1989)-a mode of production associated by some

indigenous peoples with a pact with the devil (Taussig,

2010). For Vandana Shiva, "development" was a pro

cess of capital accumulation that continued a process

of colonization based on the exploitation of women's

"non-productive" labour, a "new project of Western pa

triarchy " (1989: 1).

Esteva (1992) argues that this process entailed

establishing economic value on the one hand (goods

and services were now traded as commodities on the

market), but devaluing all those resources, skills, and

activities that were not or could not be sold on the mar

ket. By conveying the message that a lack of consumer

goods prevents a dignified and happy life, advertising,

Western media, and tourists succeeded in creating

4 I Ziai: Post-Development and Alternatives to Development 71

BOX 4.2 I A Critique of GDP

Gross national product and gross domestic product measure the value of all the goods and services sold on formal markets in one state during one year, the difference being that GDP counts what is produced by foreigners in the country while GNP does not but incorporates the values "produced" by citizens abroad. The increase in GNP/GDP is what is regarded as economic growth. Per capita income is calculated by dividing GDP by the number of residents. Critics point out that production leading to environmental pollution (e.g., an oil spill) or other destructive results (e.g., guns and bombs) boost GDP twice: through the production of negative goods and services and through goods and services that try to negate the damage caused by this production. Abstaining from destructive production does not boost the GDP, thus, destruction of nature appears as wealth crea�ion. Goods lasting for decades contribute to the GDP, but goods breaking down quickly, needing fixing or replacement, do so much more. Other criticisms include that the informal sector and unpaid labour (especially by women) are not being measured and that dis tribution is entirely ignored. To this day, the World Bank continues to measure "development" through GDP. An alternative is the gross national happiness index (GNH), which combines indicators from nine do mains: psychological well-being, time use, community vitality, cultural diversity, ecological resilience, liv ing standard, health, education, and good governance. It was coined by the King of Bhutan, Jigme Singye Wangchuck, in 1972 and has attracted some criticisms in terms of methodology as well as because of the oppression of minorities in Bhutan (see Ekins and Max-Neef, 1992; grossnationalhappiness.com; happyplanetindex.org).

needs that could only be satisfied by commodities,

enticing people to abandon their subsistence lifestyle,

adopt wage labour, and trust the promise of" develop

ment" that one day all could live like the people in the

West did (see also Norberg-Hodge, 2009). Esteva links

this to the "law of scarcity" in economics textbooks,

according to which "man's wants are great, not to say

infinite, whereas his means are limited though im

provable" (1992: 19). He denies the universal validity of

this claim: voluntary frugality, snffi.ciency, and the re

jection of the desire to have more cannot be processed

within the prejudices of economists (see also Sachs,

1999: 16-19), which confuses "well-being" with "the

quantity of gadgets" (Latouche, 1997: 139). Thus, Esco

bar sees economics not as a science but as a "cultural

discourse," belonging to a certain historical period and producing certain truths that are far from universal

(1995: 58ff.) but based on the assumption of rational. profit-maxi.mi.zing individuals, which emerged during

capitalist modernity. (For a descripti n of this dis

course, see Escobar, 1995: ch. 3.) The economist Serge

Latouche agrees and maintains that the concept of this

individual (the homo economicus who constantly pur

sues his/her interest) cannot account for the host of ac

tions based on love, friendship, and solidarity, and that

the "currently dominating accounting categories [see

Box 4.2] represent a radical form of cultural imperial

ism" (Latouche, 1993: 110, 203).

Development as an Amoeba

Representatives of development theory and policy,

when faced with this critique, usually admit that early

modernization theories may be guilty of the econom

ism described above, but that the debate has progressed

a great deal since then. Post-development also takes note of these changes but interprets them differently.

Esteva (1992: 1 2-17) records the history of redefinitions

of development beyond the central idea of economic

growth, from basic needs to endogenous development,

from sustainable to human development, but maintains

that despite this "conceptual inflation" the concept was

72 PART I I Theories and Approaches in International Development

PHOTO 4.3 I Arturo Escobar.

still operationalized (not exclusively, but centrally)

through GDP. Sachs points out that because of all these

new definitions, "development became a shapeless

amoeba-like word" (1999: 7). It can mean just about any

thing and take almost any form: the building of dams,

the introduction of high-yielding varieties in agricul

ture, primary schooling for girls, biodiversity conversa

tion, population control, structural adjustment-all of

these projects (and many more) went under the label of

development. "Development thus has no content but it

does possess a function: it allows any intervention to be

sanctified in the name of a higher evolutionary goal"

(Sachs, 1999: 7).

Therefore, Escobar (1995: 42) argues: "although

the discourse has gone through a series of structural

changes, the architecture of the discursive formation

laid down in 1945-55 has remained unchanged, allow

ing the discourse to adapt to new conditions." Beyond

the two features described above, there is a third one described by Sachs (1999: 7) as follows: "Development

always entails looking at other worlds in terms of what

they lack, and obstructs the wealth of indigenous alter

natives." Even the more progressive representatives of

development discourse maintain that there are "devel

oped" and "less developed" societies, that the former

are to be found in the North and the latter in the South,

and that the search for a solution to the latter's prob

lems benefits from the knowledge of the former. One

could say that the subject position of this discourse is

that of a clinical gaze identifying deficits in the Other,

attributing knowledge about the cure to the Self while

ignoring the Other's knowledge. In this gaze, the North

does not become the object of development interven

tions. So, according to post-development, the constant

features of development are:

• the imperative of economic growth;

the legitimation of intervention into societies de

fined as "less developed";

based on the Eurocentric gaze of the "devel

oped Self" and its attribution of problems and

problem-solving knowledge; • based on a universal scale according to which soci

eties can be compared.

The Anti-Politics Machine

Another feature of development discourse has been

claimed by James Ferguson (and also by Arturo Es

cobar), namely, that it depoliticizes questions of in

equality. To understand this claim, we have to briefly

recapitulate some of the findings of Ferguson's work

on an integrated rural development project in Lesotho

(Ferguson, 1994). In his study, Ferguson documents

and analyzes the failure of this project to reduce pov

erty in the district of Thaba-Tseka through measures

designed to raise agricultural productivity. One ma

jor reason for this failure was that the target group

was misperceived by the development organization

as cattle farmers, while they were primarily migrant

labourers in South African mines (who also owned

cattle). The misperception is explained by Ferguson

through a bias in development discourse deriving from

the institutional necessities of development organiza

tions: in order to be able to offer meaningful solutions

for the problem of poverty in "developing" countries,

they construct the problem in such a way that it can be

4 I Ziai: Post-Development and Alternatives to Development 73

CRITICAL ISSUES

BOX 4.3 I Ferguson on the Structural Limitations of Development Discourse

An academic analysis is of no use to a "development" agency unless it provides a place for the agency to plug itself in, unless it provides a charter for the sort of intervention that the agency is set up to do. An analysis which suggests that the causes of poverty in Lesotho are political and structural (not tech

nical and geographical), that the national government is part of the problem (not a neutral instrument

for its solution ), and that meaningful change can only come through revolutionary social transformation in South Africa has no place in "development" discourse simply because "development" agencies are

not in the business of promoting political realignments or supporting revolutionary struggles .... For an analysis to meet the needs of "development" institutions, it must do what academic discourse inev itably fails to do; it must make Lesotho out to be an enormously promising candidate for the only sort of intervention a "development" agency is capable of launching: the apolitical, technical "development" intervention. (Ferguson, 1994: 68ff.)

solved through development projects, i.e., technocratic,

apolitical interventions (see Box 4.3).

The unwillingness of development experts to aban

don this discourse becomes visible in the following an

ecdote narrated by Ferguson: "After the failure of the

Thaba-Tseka project, one of the experts asked what his

country could do to 'help these people'. 'When I sug

gested that his government might contemplate sanctions

against apartheid, he replied, with predictable irritation,

'No, no! I mean development!' The only advice in ques

tion here is advice about how to 'do development' bet

ter" (Ferguson, 1994: 284). However, while development

organizations thus try to avoid politics, they are caught

up in it all the time-if only because they are co

operating with some groups in the country (usually the

government) and organizing a transfer of resources. In

the Thaba-Tseka project, the transfer of resources and

the recruitment for jobs took place through Village De

velopment Committees, which were in fact front organ

izations of the ruling National Party. The suggestion to

refuse co-operation with these committees was coun

tered with the statement that the development organ

ization could not afford to get involved with politics.

Sabotage of the project was attributed by ruling party

representatives to "enemies of development," which led

an observer to comment that politics was nicknamed

"development" nowadays (Ferguson, 1994: 244-7).

So, on the one hand, development discourse, accord ing to Ferguson, tends to ignore the political dimension

of problems, i.e., the conflicts and struggles between dif

ferent social and economic groups in a country, because

"development" is assumed to benefit the whole country

and is a technical problem. "By uncompromisingly re

ducing poverty to a technical problem, and by promis

ing technical solutions to the sufferings of the powerless

and oppressed people, the hegemonic problematic of

'development' is the principal means through which the

question of poverty is de-politicized in the world today"

(Ferguson, 1994: 256). On the other hand, the appara

tus of "development" interferes in these conflicts and

struggles, expanding bureaucratic state power (or, one

has to add, the reach of multinational corporations) and

thus performing political operations without designat

ing them as such. This is why Ferguson concludes that

this apparatus effectively functions as an "anti-politics

machine" (Ferguson, 1994: 256).

Two decades after Ferguson's research, Tanya

Murray Li (2007) conducted a similarly rich and de

tailed study of an integrated development project

in Central Sulawesi, Indonesia, and arrived at very

similar conclusions. Li illustrates that in neglecting

political-economic causes of poverty and reframing

social and environmental problems "in terms amena

ble to a technical solution" (2007: 126), the project

was bound to fail. Just like in Lesotho, she found that

"findings suggesting that 'the government' is not ded

icated to the public good cannot be processed by the

development machine" (134). Enhancing Ferguson's

74 PART I I Theories and Approaches in International Development

view, which hardly took into account the neoliberal

counter-revolution in development theory and policy

that occurred since the 1980s, Li finds that "(c]apitalist

enterprise and the search for profit appeared in the [de

velopment organization's] narratives only as a solution

to poverty, not as a cause" (267). She identifies three

"crucial limitations" still prevalent in contemporary

development interventions (even those emphasizing

participation and empowerment): the assumptions that

"the state apparatus .. . can be made to operate .. . in

the public interest"; the ignorance towards the power

relation implicit in the self-positioning as experts "with

the power to diagnose and correct a deficit . .. in some

one else"; and the continuous exclusion of "structural

sources of inequality" (275). l)epolititi1ation of pov

erty and blindness towards relations of power can thus

be added as another feature of development discourse

in the perspective of post-development.

The End of Development

1l1e name of post-development derives from two differ

ent claims: beyond the normative claim that we should

overcome the discourse and practices of"development"

there is tl1e empirical claim that the era of "develop

ment" i ending. Sachs (1992: 2-4) gives the following

reasons for this diagnosis:

1. The assumption of the superiority of industrial

ized countries has been "shattered by the ecolog

ical predicament," by the recognition that their

productivity is based on patterns of resource con

sumption and environmental destruction that are

not sustainable and can only be upheld if they re

main the privilege of a minority. Therefore, such

"productivity" would be an aberration rather than a model, and the pursuit of economic growth is

"leading towards an abyss."

2. After the end of the Cold War, the geopolitical

constellation that gave rise to the concept of de

velopment and the practice of aid no longer exists

and the project therefore is "bound to lose ideo

logical steam and to remain without political fuel":

the promise of universal material well-being and

"industrial paradise" will be given up.

3. The whole project appeared as a "blunder of plan

etary proportions" because the gap between rich

and poor countries had been growing ever wider

during the era of"development," on the one hand.

And on the other hand, while the traditional ways

of subsistence and making a living have been

smashed by colonialism and industrial capitalism,

the new ways are not viable for a large part of the

population in the South.

4. More and more people realize that "development's

hidden agenda was nothing else than the Western

ization of the world," leading to a loss of cultural

diversity and a global monoculture.

The last two points are significant because the

post-development authors claim they are not acting

as a theoretical avant-garde, but are merely describing

processes that take place in grassroots movements and

local communities.

In a new edition of his book, Sachs (2010) has

reflected on th se hypotheses in the light of global change since the first edition. He tates that for a

number of people in the Global South, the promise

of "development" h,1s indeed come true, leading Lo

the formation of a global middle c.lass strongly de

fending il (2010: vu), but that the underside of th.is

economic growth has been displacement and dis

possession or the p or, increased polarization, and

increased pollution (ix). Writing at a time where the

threat of climate change is obviou , Sach argues

that· dehnking the desire for equity from economic

growth (and linking it t .new notions of well-being)

and achieving a transition from economies based on

fossil-fuel resources (and towards economies based

OJl renewable resources) are the cornerstones of the

post-development age (xii).

ALTERNATIVES TO DEVELOPMENT

Esteva claims that because of the exclusion produced

by the project of "development," ordinary men and women would recover "their own definition of needs"

as well as "autonomous ways of living" (1992: 21). They

would be creating alternatives to "development." Ac

cording to the post-development school, "alternative

development" is not enough, because it reproduces

the idea that the majority of the world's population

is "underdeveloped" and needs to live like the West

4 I Ziai: Post-Development and Alternatives to Development 75

does. In other words, it merely seeks alternative ways

to the same goal: " development," understood as a way

of life similar to that of the modern industrial socie

ties. In contrast to that, post-development identifies

"alternatives to development" in grassroots movements

and communities reclaiming their lives in different

spheres: reclaiming politics vis-a-vis the state, reclaim

ing the economy vis-a-vis capitalism, and reclaiming

knowledge vis-a-vis science. In all these spheres, West

ern models were universalized during the eras of co

lonialism and "development," but those excluded by

these models have turned to alternatives, according to

post-development authors.

Various social movements have been referred to by

post-development authors, such as the Chipko move

ment of Indian women struggling against the destruc

tion of forest ecosystems (Shiva, 1989) and the Process

of Black Communities in Colombia defending their

way of life, their territory, and their identity against

capitalist corporations and socialist guerrillas alike

(Escobar, 2008). Yet the social movement cited most of

ten as an alternative to development is probably that of

the Mexican Zapatistas, which will be described in the

next subsection.

However, a closer look reveals that in many other

countries we find concepts that reject the self-description

of modern industrial capitalism as superior, assert

non-Western cultural identities, and articulate differ

ent values and world views, concepts, therefore, that

are closely connected to post-development (Dinerstein

and Deneulin, 2012). The concept of IJ1/rn l'i1'ir, rooted

in Andean indigenous cosmology, has become fa

mous during the last decade, in particular after it was

adopted by the governments of Ecuador and Bolivia (see

Box 4-4). In many African societies, the philosophy of

Ubuntu, which stresses the interconnectedness of hu

man beings, can also be seen as one of these concepts.

It derives from the Xhosa phrase "Ubuntu ungamn

tungabanyeabantu," which means "A person is a person

through other persons" (Murithi, 2006: 28). In Iran, the

concept of Gharbzadegi ("Occidentosis") was popular

during the 1970s, promoted by intellectuals like Ale-e

Ahmad and Ali Shariati (Mahmoodi and Zeiny Jelodar, 2011), and has become something like an implicit state doctrine after the Islamic Revolution in 1979. It reminds

us that post-development concepts can also be abused

or simply used-by conservative forces.

Post-Development in Mexico

On 1 January 1994, a rag-tag army of mostly indigenous

soldiers calling itself the Zapatista Army of National

Liberation (Ejercito Zapatista de Liberacion Nacional,

EZLN) occupied seven towns in the southeastern Mex

ican state of Chiapas and declared themselves to be

insurgent and at war with the Mexican government.

Demanding democracy, freedom, and justice, they

claimed that violence was their last resort after a long

history of discrimination and exclusion. After public

pressure arising from sympathy with the insurgents

and their demands had halted the ensuing military re

sponse by the government, the EZLN entered into nego

tiations that finally resulted in the San Andres Accords

(not adhered to by the government) and in an uneasy

truce constantly threatened by low-intensity warfare.

Yet the Zapatista insurgents have successfully upheld

their autonomy from the Mexican government since

then. During this period, they have captured the atten

tion of a left-leaning public not only with their eloquent

and poetic communiques, but through their slogans

manifesting a more modest and less self-assured revo

lutionary spirit ("A world of many worlds"; "question

ing, we proceed"; "all for all, nothing for us"; "we don't

need to conquer the world. It is enough to remake it";

"we walk at the pace of the slowest") they have been an

inspiration for many groups active in the global protest

movement since the 1990s (Munoz Ramirez, 2003; Ker

keling, 2006; Esteva, 2013).

However, what renders them interesting for this

chapter is that the principles guiding their autono

mous municipalities resonate clearly with some of

post-development's characteristics. Esteva (2013)

claims they have successfully "reclaimed their com

mons" and are living "according to their own ways"

"outside the logic" of capitalism and the state, and have

managed to improve their living conditions "without

receiving or accepting funds from the national gov

ernment." How does that look on the ground? Do the

Zapatistas really reclaim politics, the economy, and

knowledge, as post-development proponents envision?

Based on Esteva and Prakash (1998), Munoz Ramirez

(2003), Kerkeling (2006), Esteva (2013), and Gilgenbach

and Moser (2013), the following can be said.

The political system of the around 200,000 Zapa

tistas living in about 1,000 communities (which form

76 PART I I Theories and Approaches in International Development

C..<lNC�J _______________ __

BOX 4.4 I Buen Vivir

There is no single concept of buen vivir, but many similar ideas expressed by different indigenous com

munities gained prominence under this label in the early 2000s. Most notable among these are "sumak kawsay," the Kichwa expression for "fullness of life" in a community, in Ecuador, and "sumaqamana," a related Aymara concept, in Bolivia. Leaving aside particularities, buen vivir denotes a good life, which can only take place in community with other persons and nature. The indigenous cosmology, which includes a spiritual dimension and sees nature not as dead matter, but as "mother earth" (pachamama) and a subject of rights, is of central importance. According to Eduardo Gudynas (2011: 445), the concept pro motes the "dissolution of the Society-Nature dualism."

Concerning the paradigm of development, Gudynas (2011: 445) sees buen vivir as "a replacement of the very idea of development." Acosta (2009: 219) stresses that it does not include the ideas of social evolution and an "underdevelopment" that has to be overcome, and Walsh (2010: 17) points out that "the very idea of development itself is a concept and word that does not exist in the cosmovisions,

conceptual categories, and languages of indigenous communities." Further, the relationship to nature of buen vivir is entirely incompatible with the idea that nature has to be conquered and governed (Bacon's "natura parendi vincitur"), which is at the root of Western science and in turn constitutes the foundation of development thinking (Bajaj, 1988).

The growing influence of indigenous movements in Ecuador and Bolivia has led to the incorporation of buen vivir into the constitutions of these two states in 2008 and 2009, respectively, as well as to the explicit recognition of the rights of nature (Ecuador) and the plurinationality of the state (Bolivia). However, there are heated controversies regarding the extent to which the concept is actually followed

in everyday politics in both countries, especially visible in the YasunHTT case. The Yasunf lshpingo Tambococha Tiputini Initiative, launched by the Ecuadorian government in collaboration with the UN Development Program, had the objective of abstaining from the extraction of oil in the Yasunf biosphere reserve in exchange for compensation payments by the international community. After the international community of states was not willing to finance the initiative at a sufficient level, the Ecuadorian govern ment announced its plans to drill for oil in 2013, provoking accusations that it used the concept of buen vivir as window dressing for its extractivist policies (Guardiola and Garcfa-Quero, 2014).

over 100 municipalities, which in turn form five car

acoles) is based on grassroots democracy, equal par

ticipation in decision-making of all members, and

the principle of subsidiarity, i.e., the villages decide

autonomously on most issues. Elected representatives

have an imperative mandate and can be stripped of

office at any time, and they are supposed to "govern

through obeying" (the people) (see Photo 4.4). Political

offices are for the most part unremunerated (merely,

the person's fields are tilled by other villagers) and

rotating. The most important political bodies beyond

the community councils are the councils of delegates

from the municipalities ("Juntas de buengobierno"

councils of good government). Despite a women's law

and attempts to outlaw discrimination of women, their

participation in the political system is perceived as

insufficient. A tax law decrees that 10 per cent of any

financial support that communities receive through

development projects has to be given to another one

without such support. There is no police force, alcohol

and drugs are banned, and norm violation is sanc

tioned with warnings, advice, and support, and later,

4 I Ziai: Post-Development and Alternatives to Development 77

also, with community work. Domestic violence has

been largely eliminated.

A large part of the Zapatista economy is based on

collective forms of ownership and production. Work

on the land has provided livelihoods for many thou

sands of poor (mostly indigenous) peasants. But next

to subsistence production (guaranteeing some degree

of autonomy), there is also production for the world

market, e.g., fair trade coffee. In the production for the

market, volatile prices, middlemen, and pressure on

prices through competition are enumerated as prob

lems, but monetary income is seen as precious by many.

Self-organized production structures can also contrib

ute to processes of empowerment, as is the case with artisanal women's co-operatives. On the other hand,

no state subsidies are accepted in order to maintain in

dependence from the "bad government."

In the field of knowledge, there have been attempts

to recover practices of traditional medicine based on a

holistic model. Midwives and herbal women (and a few

men), the promotores de herbolarfa, are passing on to the

next generation the knowledge that was suppressed dur

ing the eras of colonialism and development. Yet "ordi

nary" physicians also are part of the health system, and

their methods and instruments prove to be very useful,

according to the midwives and health promoters, espe

cially regarding surgery. So, just like in the other areas,

there is a hybrid of traditional and modern practices.

Post-Development in Germany?

If we take seriously post-development's demand to

avoid the Eurocentric gaze, which sees problems in the

South and problem-solving knowledge in the North,

we should also look for "alternatives to development"

in Europe and North America. The example of debates

and practices in Germany based on the rejection of the

current model of society can show us that maybe it is

imprecise to talk about the Western model of society

when we talk about a capitalist economy, state-based

polity, and positivist universal science, because there

is some degree of dissatisfaction with it in the West.

It is more precise to talk about the hegemonic model. This model is rejected in some theoretical debates as

well as in some practices that exhibit clear parallels to post-development.

PHOTO 4.4 I Top sign: "You are In Zapatista

rebel territory. Here the people command and

the government obeys." Bottom sign: "North

Zone. Council of Good Government. Trafficking

in weapons, planting and use of drugs, alcoholic

beverages, and illegal sales of wood are strictly

prohibited. No to the destruction of nature."

Concerning the theoretical debates, there have

been those inspired by Ivan Illich in the 1970s, but espe

cially the subsistence feminism of Bennholdt-Thomsen,

Mies, and Werlhof has to be mentioned here

(Bennholdt-Thomsen and Mies, 1999). This stand

point envisions opting out of global capitalism and

patriarchy by "returning to the soil" and living closer

to nature. Leftists inspired by but dissatisfied with this approach because it evaded the system instead of

confronting it-and because they found some modern

technologies very useful (or were too lazy to engage in subsistence agriculture)-came up with a new concept

entitled "Undeveloping the North." It entails an end

to the oligarchic lifestyle based on the appropriation

of cheap labour and resources from the South (what

78 PART I I Theories and Approaches in International Development

Brand [2013] calls the "imperial way of living"), the prevention of military intervention, the downscaling of technology insofar as it is based on exploitative forms of production, and the appropriation of spaces needed for survival and regional autonomy (Spehr, 1996: 209-37). More recently, the debate about degrowth has become prominent (e.g., Paech, 2012), yet the concept comes in radical, liberal, and conservative variants.

Regarding alternatives to the current political system, there still is a small anarchist community in Germany. But even beyond that, the political cul ture in the radical left is strongly influenced by ideas of local autonomy and direct democracy. Decision making in political groups and camps is often based on consensus in order to minimize domination, even in the name of the majority. Acts of civil disobedience in the context of protest against nuclear transports, coal mining, or infrastructure projects like the Stutt gart train station renewal are a recurring feature. In the latter case, participation extended far beyond the radical left groups.

In the area of the economy, an estimated 2,000 people still are living in communes, and a far higher and increasing number of people engage in community-supported agriculture, local exchange and trading systems, give-away shops, and similar initia tives (Habermann, 2013).

In the area of knowledge, it seems difficult at first to find people in Germany rejecting the system of sci ence, but if we add up all those interested in (among others) esotericism, mysticism, new age spirituality, spiritual healing, hypnosis, acupuncture, Ayurvedic and other alternative medicine, the figure may become more impressive.

DEBATING POST-DEVELOPMENT

Since its rise to prominence during the 1990s, the post-development school has been widely and con troversially discussed. In this last section, some of the criticisms raised against it will be discussed, as well as responses by post-development authors and the dis tinction between anti- and post-development. In the end, two different readings and positions towards the approach are sketched.

"The Last Refuge of the Noble Savage": Criticisms of Post-Development

A frequent critique is that post-development romanti cizes the grassroots movements and local communities in the South in two respects: On the one hand, it ne glects relations of domination and exploitation within these movements and communities, in particular but not exclusively of women. On the other hand, it assumes that the people in these communities were not interested in accumulation and Westernization-projecting the romantic image of the "noble savage" onto them (Kiely, 1999: 44).

Another critique claims that while post-development overlooks the negative features of traditional subsistence societies, it ignores the huge achievements of modernity and "development." Corbridge (1998: 144ff.) argues that the progress achieved in terms of significant improve ment in life expectancy, for example, is based precisely on what post-development criticizes: the diffusion of West ern models of society across the globe, including science and the growth of productivity. Therefore, to simply de clare the "failure" of the "development project" was en tirely inappropriate.

According to Nederveen Pieterse (1998: 363), there are methodological deficits at the base of these points: instead of looking at differences and discontinuities, post-development authors constructed a monolithic development discourse impervious to more nuanced constellations. One of these constellations is described by Cooper (1997: 84) as follows:

Much as one can read the universalism of de velopment discourse as a form of European particularism imposed abroad, it could also be read . .. as a rejection of the fundamental premises of colonial rule, a firm assertion of people of all races to participate in global pol itics and lay claim to a globally defined stand ard of living.

Meera Nanda (1999: u) adds another point: the high value attributed to tradition and cultural iden tity leads to cultural relativism, i.e., to the belief that

4 I Ziai: Post-Development and Alternatives to Development 79

cultures exist separately and no culture can be judged

from the outside. This would allow elites in the South to

glorify the defence of their traditional privileges against

modern claims and practices (e.g., human rights) as an

act of anti-imperialism, sidelining political and eco

nomic conflicts within the country by pointing at al

leged cultural conflicts and blaming the West.

In the literature, it has been remarked that the

criticisms are valid for some post-development texts,

but not for others. Consequently, we actually have to

differentiate between approaches. Some scholars have

advocated the rejection of modernity and the return

to subsistence agriculture, and regard cultural differ

ence as central and cultures as static (designated as

anti-development approaches by Hoogvelt [2001] and

as neo-populist post-development by Ziai [2004]). The

perspective of others' approaches (genuine or skepti

cal post-development, respectively) is summed up as

follows: "The idea, then, in spite of' development,' is to

organize and invent new ways of life-between mod

ernization, with its sufferings but also some advantages,

and a tradition from which people may derive inspira

tion while knowing it can never be revived" (Rist, 1997:

244). Table 4.1 outlines these important differences.

"Slaying the Development Monster": Responses to the Criticisms

Although post-development authors like Rist (2012:

273), Sachs (2009: vi), and Escobar (2012: vii) concede

that their proclamation about the end of the era of" de

velopment" was premature, they reaffirm the necessity

of performing a "decolonization of the imagination"

(Sachs, 2010: ix).

Responding to the criticism that post-development

had presented "development" as monolithic while in

fact it was heterogeneous and contested, Escobar con

cedes that the critics were right. But, he continues, they

"fail to acknowledge . . . that their own project of ana

lyzing the contestation of development on the ground

was in great part made possible by the deconstruc

tion of development discourse" (Escobar, 2000: 12).

Post-development's project had been to "slay the de

velopment monster," i.e., to break the consensus about

"development" being necessary, self-evident, positive,

and unquestionable and thus pave the way for more

nuanced analyses. Romanticization, however, was an

accusation used against any and all visions of societies

that transcend the current model (Escobar, 2000: 13).

Sachs (2010: viii) also engages with the idea of con

testation and admits:

we had not really appreciated the extent to

which the development idea has been charged

with hopes for redress and self-affirmation. It

certainly was an invention of the West, as we

showed at length, but not just an imposition

on the rest. On the contrary, as the desire for

recognition and equity is framed in terms of

the civilizational model of the powerful na

tions, the South has emerged as the staunchest

defender of development.

This resonates with Cooper's criticism, mentioned

above, concerning the discourse of"development" that

could also (!) be read as a discourse of rights.

Another interesting response comes from Rist,

who engages with the criticism of cultural relativism

TABl.l: 4.1 I Anti-Development and Post-Development

Anti-Development

Rejection of Western modernity

Return to subsistence agriculture

Valorization of cultural traditions

Culture as static

Sources: Hoogvelt (2001); Ziai (2004).

Post-Development

Some elements of modernity can be useful; hybridization of modernity

and tradition

Different (also Western) lifestyles possible; no universal blueprint

Cultural traditions not necessarily superior to the West

Culture as dynamic; constructivist view of culture

80 PART I I Theories and Approaches in International Development

and supporting groups who disrespect human rights. He argues:

It may well be true that certain movements which oppose " development" have scant re gard for certain articles in the Declaration of Human Rights; or that they force boys to look after goats instead of going to school; or that, as in the case of our grandmothers in Europe, they do not allow women to go out of the house "bareheaded." Nevertheless, if respect for the values linked to modernity is the only criterion for judging the social or der, what should be said of our own society, which amid general indifference is increasing the numbers of those excluded in the name of economic growth? And what of the wars that cause countless victims, especially civilians, in the name of democracy and human rights? (Rist, 2012: 276)

The argument can be interpreted, of course, as countering the accusation of abusive practices in one group with a reference to abusive practices in some other group-not an entirely convincing argument. However, it could also be interpreted not as indiffer ence towards abusive practices, but as a refusal to at tribute these practices to the non-Western Other while exempting the Western Self, a stance that allows us to affirm our "civilizational superiority."

CONCLUSION: TWO POSITIONS

Post-development has been criticized vehemently by representatives of development theory and pol icy. This may have to do with the implication of post-development that the whole discipline is Eurocen tric and blind to the relations of power inherent in its categorizations.

Today, even the most ardent academic critics of post-development, such as Corbridge or Nederveen Pieterse, have implicitly adopted post-development ar guments concerning the Eurocentrism of development discourse and the relations of power constituting it (Ziai, 2015). But even if one subscribes to the arguments about the invention of " development," the "amoeba,"

or the "anti-politics machine," one can still easily re ject the call for "alternatives to development" and side with Corbridge that the achievements of the project of " development" must not be underestimated-nothing less than the number of dying children is at hand, and few would doubt that modern medicine can provide significant advances in this issue. Opposing this view, post-development authors (e.g., Rahnema, 1992) have pointed towards the difference between frugality and destitution: in subsistence communities not sabotaged by the expansion of global capitalism there is (or rather was) a lack of money but all basic needs are provided for. And DuBois (1991) has argued that even in successful development projects, which result in improvements in health or productivity of the target population, re lations of power are involved that create social group hierarchies and establish the superiority of one and the inferiority of the other culture. Apffel-Marglin (1990) has vividly described the violence of the vaccination squads in India in their crusade against smallpox and the fervour with which the (Indian!) modernizers tried to replace the old, "superstitious" medical practices with new "scientific" and only slightly more effective ones. Yet, is the preservation of culture worth human lives? One could easily consider relations of power the lesser evil. On the other hand, can the destruction of subsistence and dignity be compensated for by a more modern health system that allows us to live a little bit longer? Is the quantity of life always more important than the quality? These are ethical-and maybe even political-questions to which no universally valid an swer can be given. And to give the answer in someone else's stead is to lay claim to a powerful form of knowl edge. Here lies the contribution of post-development: it has lucidly pointed not only to the Eurocentrism but especially to the relations of power involved in devel opment discourse and practice, as well as to the resist ance and alternatives of those no longer willing to be classified and governed in the name of" development." It suggests that we look at global inequality using dif ferent concepts.

SUMMARY

This chapter has presented the post-development approach to development theory and policy. It is

4 I Ziai: Post-Development and Alternatives to Development 81

characterized as a fundamental critique that questions

the very categories and objectives of the discipline.

After outlining the origins of the school in Illich and

Foucault, the chapter has dealt with post-development's

central arguments: the invention of "development,"

how the concept evolved into an "amoeba" and func

tions like an "anti-politics machine," what is prob

lematic about conventional economics, and why the

era of " development" is ending. We also encountered

some of the "alternatives to development" in the North

as well as in the South and learned that there are

numerous, different post-development concepts to be

found in various contexts. Finally, we engaged the crit

icism that has been raised against post-development

(among other issues, concerning the romanticization

of subsistence communities and cultural relativism),

as well as the response given by post-development

authors. Summarizing, post-development does not

provide an explanation of global inequality like other

development theories, but it has revealed the Eurocen

trism and relations of power implicit in the concept of

"development."

QUESTIONS FOR CRITICAL THOUGHT

1. Do you find the post-development arguments convincing? Which ones?

2. Do you agree that the era of"development" is ending? Or that it should be?

3. According to Ferguson, how does the "anti-politics machine" work?

4. What would be the consequence of a post-development position for practical politics?

5. What do you think of the criticisms raised against post-development?

6. Which of the two positions outlined in the conclusion would you take? Or is there a third one?

7. Which other concepts could be used to describe and analyze situations of global socio -economic inequality?

SUGGESTED READINGS

Escobar, Arturo. 1995. Encountering Development: The Making and Unmaking of the Third World, 2nd edn. Princeton, NJ: Princeton University Press.

Ferguson, James. 1994. The Anti-Politics Machine: "Development," Depoliticization and Bureaucratic Power in Lesotho. Minneapolis: University of Minnesota Press.

Nandy, Ashis, ed. 1988. Science, Hegemony and Violence: A Requiem for Modernity. Tokyo: Oxford University Press.

Rahnema, Majid, with Victoria Bawtree, eds. 1997. The

Post-Development Reader. London: Zed Books.

Acosta, A. 2009. "Das 'Buen Vivir.' Die Schaffungeiner

Utopie." Juridikum 4: 219-23. Alvares, C. 1992. Science, Development and Violence: The

Revolt against Modernity. Delhi: Oxford University Press.

Rist, Gilbert. 2012. The History of Development. From Western Origins to Global Faith, 4th edn. London: Zed Books.

Sachs, Wolfgang, ed. 2010: The Development Dictionary: A Guide to Knowledge as Power, 2nd edn. London: Zed Books.

Ziai, Aram, ed. 2007. Exploring Post-Development: Theory and Practice, Problems and Perspectives. London: Routledge.

Apffel-Marglin, F. 1990. "Smallpox in two systems of

knowledge." In Apffel-Marglin and Marglin (1990:

102-44).

-- and S. Marglin, eds. 1990. Dominating Knowledge: Development, Culture and Resistance. Oxford: Clarendon.

82 PART I I Theories and Approaches in International Development

-- and --, eds. 1996. Decolonizing Knowledge. From

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Bajaj, J.K. 1988. "Francis Bacon, the first philosopher of

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Gender and Development: Theoretical Contributions, International Commitments, and Global Campaigns Rebecca T'iessen, Jane Pa1·vart, and lliarianne H. 2viarchancl

-----------------------------------------·-----------------------------

LEARNING OBJECTIVES

' To understand the linkages between gender and

development approaches and their applications in

development policy and practice.

To understand the historical and feminist theoreti

cal foundations of gender and development. • To learn about the range of strategies addressing

women's rights, girls' rights, and gender equality,

including United Nations' commitments and popu

lar campaigns.

To underscore past and contemporary challenges

to addressing gender and development.

• Members of the Gulabi Gang and villagers walk together as they seek ways to improve the condition of an agricultural field.

The Gulabi Gang, or "the pink gang" in direct translation from Hindi, is a group of women who came together as a response to domestic abuse and other violence against women. Its main purpose is to help promote better living conditions for women

around India. Since its formation in 2010, the Guiabi Gang is reported to have recruited more than 20,000 members and have

saved thousands of women's lives across the country. I Source: Photo by Jonas Gratzer/LightRocket via Getty Images

INTRODUCTION

Feminist theory, gender analytical frameworks, in

ternational commitments, and global campaigns are

intertwined and shape each other. It is not possible

to understand United Nations' (UN) commitments

to women, girls, and gender equality without un

derstanding how they have been influenced by fem

inist theory and gender and development thinking

over time. Commitments to gender equality can be

traced back many decades. For example, in 1970

Ester Boserup argued for the inclusion of women

and women's needs in development, particu

larly their economic contributions to development

(Boserup, 1970). More than four decades have passed

since the First World Conference on Women, held

in Mexico in 1975, adopted a global plan of action

for implementing the objectives of the International

Women's Year. At the start of the new millen

nium, the international community signed Security

Council Resolution 1325 designed to promote

women, peace, and security, and countries signed

on to the Millennium Development Goals (MDGs)

with two goals dedicated to gender equality and

women's empowerment and to reproductive health

for women. As the global community reorients in

ternational programs from the MDGs to the Sustain

able Development Goals (SDGs), this moment offers

an important space for reflecting on past challenges

and successes, as well as future opportunities for the

promotion of gender equality.

Many high-profile strategies and global cam

paigns have been employed to raise awareness about

gender inequality and women's rights. With the help

of feminist insights and gender and development an

alytical frameworks, we have a better understanding

of the complexity of gender relations, the persistence

of masculinities that perpetuate gender inequality,

and how structural processes and cultural practices

shape and reinforce unequal social relationships

and organizational practices. We have also achieved

important milestones in the promotion of human

rights (particularly for women and girls) and gen

der equality. Nonetheless, persistent challenges to

achieving gender equality continue to raise notable

5 I Tiessen et al.: Gender and Development 85

concerns for women's and girls' empowerment, and

for marginalized groups. Strategies to promote

gender equality in international development have

frequently slipped back into charitable models of

development that essentialize women and girls. For

example, women are portrayed almost exclusively

as mothers or victims with little agency, or they are

stripped to essentialist stereotypes of femininity.

Women and girls are frequently presented as the pri

mary recipients of donor programs that often serve

other purposes, such as using the protection and/

or education of girls as a means to justify military

spending when engaging in war. A focus on women

and girls has also overshadowed other important

gender equality concerns, including the oppression

of marginalized communities and transgender in

dividuals, and the role of masculinities in shaping

societal relations that benefit some groups at the

expense of others.

While feminist scholarship on development of

ten presents a continuum of development thinking

beginning with the women in development (WID) ap

proach, moving on to deeper analyses of gender ine

quality and masculinities, the programs and policies

that have emerged over time do not follow a neat his

torical and linear trajectory. Rather, strategies to pro

mote gender equality continue to represent a range of

charitable and transformative approaches. Charitable

development strategies target women and girls with

specific activities without due consideration of-and

strategies for addressing-the root causes of gender

inequality. While addressing gender inequality in in

ternational development is a human rights imperative,

as well as central to development projects' success and

efforts to improve the quality of life for all, achieving

gender equality requires involvement of diverse actors

and stakeholders informed by critical and theoretical

insights. The chapter outlines some of the important

advances in feminist thinking about gender and devel

opment, and documents how these analytical frame

works have shaped international commitments and

global campaigns on gender equality while also iden

tifying some of the ongoing challenges to moving be

yond simplistic strategies that primarily target women

and girls.

86 PART I I Theories and Approaches in International Development

THEORETICAL CONTRIBUTIONS

AND FEMINIST INSIGHTS

Early Analytical Frameworks: The Welfare Approach, Women in Development, and Women and Development

This section provides a brief discussion of early contri

butions to feminist literature in development studies,

particularly the welfare approach, women in develop

ment (WID), and women and development (WAD). The

welfare approach was highly influenced by prevailing

theories of modernization and economic growth. De

velopment issues were constructed as "problems" to be

solved with policies and programs geared to addressing

"overpopulation," rurality, and lack of modernization

(Moser, 1993). As such, the family planning approach

involved treating women as the "focus of social control

of fertility." Indonesia, for example, introduced a strong

national family planning program that dates back to the 1950s with the introduction of contraceptives. By 1970,

President Suharto had introduced the National Family

Planning Coordinator Board (BKBBN) to control popula

tion growth in the country. Family planning fieldworkers visited individual households and Village Contraceptive

Distribution Centres were set up around the country.

This comprehensive national policy provided most rural

and remote communities with contraceptives; however,

the contraceptive choices were limited, and the delivery

of services was shaped by authoritarian state structures

and coercion (Hartmann, 1995). Targeting women for

population control and essentializing them in relation

to biological functions as mothers continues to domi

nate some contemporary approaches to addressing ma

ternal and newborn health, treating women as "walking

wombs" (Tiessen, 2015). Box 5.1 provides a summary of

maternal and reproductive health strategies from a gen

der perspective (see also Chapter 20).

PHOTO 6.1 I A poster praising the value of family planning In the city of Panaji, Goa, lndla.

CRITICAL ISSUES

5 I Tiessen et al. : Gender and Development 87

BOX 5.1 I Maternal and Reproductive Health Strategies

A number of maternal and reproductive health strategies have been promoted globally since the 1950s. In 2000, the international community agreed to a set of strategies to improve maternal health, including targets specified under MDG #5 to reduce maternal mortality and increase access to reproductive health services. Access to effective contraception is linked to maternal deaths. The World Health Organization (WHO) argues that meeting family planning needs through safe and effective contraception will reduce maternal deaths by almost one-third (WHO, 2015). Yet women around the world continue to face high maternal death rates. For example, 8,000 women die every day from preventable causes related to pregnancy and childbirth and 99 per cent of those deaths occur in developing countries, particularly in sub-Saharan Africa. Between 1990 and 2013, maternal mortality dropped by 50 per cent (WHO, 2014); however, high death rates continue to be a development issue. As we move into the next phase of global development commitments (the SDGs), the focus on sexual and reproductive health and rights will re main on the post-2015 development agenda under the broader health goal: "Ensure healthy lives and promote well-being for all at all ages." This goal includes a number of strategies, including the reduction of maternal mortality by 2030 to fewer than 70 per 100,000 live births. One of the ongoing and most significant challenges in the international efforts to address maternal mortality and reproductive health programs is the failure to address the gender dynamics and social relations that prevent women from seeking out the support and services they need to prevent or space pregnancies and/or to have healthy pregnancies. A WID approach to maternal health and other strategies that target women and girls essen tialize women as "walking wombs," reducing women to the biological functions of giving birth. Gender and development approaches, alternatively, have highlighted the need for recognizing the social relations that shape women's decision-making power and access to reproductive services and resources.

By the early 1970s, some aid programs began to recognize the importance of involving women in de velopment projects. In addition to family planning, the WID framework began to address sexual violence, discrimination, inequality in access to resources, and women's limited participation in positions of power or influence. The WID approach challenged the assump tion that women would automatically gain from mod ernization/development policies and projects (Boserup, 1970). It called for specific attention to women as de velopment actors, drawing on liberal feminist demands for improving women's positions in social, economic, and political realms. Encouraged by the 1975 United Nations World Conference on Women, women's issues began to take a more prominent place in development agencies. Some development agencies set up WID of fices, hired personnel, and developed programs that addressed women's development issues. WID experts called for more accurate measures of women's access to education, training, property and credit, political

power, and economic livelihoods. Development pro grams addressing these issues were established and operationalized, and high hopes were held out for improving women's positions in societies around the world (Moser, 1993).

Yet, while WID policies and projects improved some women's lives, inequality between women and men remained stubbornly high. Some WID personnel, influenced by radical frniinist thinking and ,o(L1lisl fc1n i 11 is t concerns with gender inequality in the work place, began to consider new ways of fostering wom en's development. Drawing on the radical feminist argument that women can never achieve equality in a male-dominated world, some development exper ts argued for women-only projects that would protect women from patriarchal power structures and sexist cultural practices. Socialist feminists also raised ques tions about the difficulties facing women in a world shaped by Western patriarchal structures. These fem inist critiques inspired the women and development

88 PART I I Theories and Approaches in International Development

( WAD) approach, which focused on women's knowl edge, work, goals, and responsibilities and called for women-only projects that would enhance women's powers and sideline patriarchal forces. They called for recognition of women's special role in the devel opment process. While an important corrective to the uncritical assumption that gender power relations could be easily changed by development projects, WAD remained a minority approach to development. Yet its concern with women's cultures, economic exploitation, and the need for alternatives to capitalist development in some cases led local grassroots organizations to de velop women-only projects that were intended to keep women sheltered from the worst effects of capitalist development. These concerns would resurface in some of the theorizing emerging from the Global South con sidered below (Parpart, Connelly, and Barriteau, 2000).

Gender and Development

The limitations of both WID and WAD inspired a growing concern with gendered practices, relations, and hierarchies and their impact on gender equality. Influenced by socialist feminist thought, gender and development (GAD) emerged in the 1980s as an approach that brought a gendered perspective to the social, economic, and political realities of develop ment. It coincided with, but did not equate to, the Development Alternatives with Women for a New Era (DAWN) network, led by feminists from the Global South. DAWN launched critiques of mainstream devel opment, especially its neoliberal approach to women's issues and development goals and its ties to colonial legacies (Sen and Grown, 1987). Drawing on these cri tiques, GAD's goals have been twofold: to demonstrate that unequal gender relations hinder development and female participation in economic and political arenas, and to show the need to transform structures of power in order to facilitate more equal partnerships between the genders. In this fashion, both women and men, it is believed, can be empowered as decision-makers and beneficiaries of development (Rathgeber, 1990).

The shift from women to gender was driven by the limited success of two decades of development pro grams aimed at improving women's economic, polit ical, and social positions. Acknowledgement of this failure coincided with critiques from the Global South.

Drawing on critical political economy to explain the Global North's continuing domination over the Global South, feminist scholars and activists from the South, with a few northern allies, condemned liberal women-centred development programs for their un critical acceptance of modernity and their failure to analyze women's lacklustre position in economic, political, and social institutions. They called for greater attention to the complexities of women in the Global South (Sen and Grown, 1987).

These critiques, particularly the call for greater attention to the complex realities of poverty, race, eth nicity, and class facing women (and men) living in the Global South, inspired a gradual shift to gender and de velopment, with its focus on the power relations shaping the lives of poor women and men in the Global South (and North). The concept of gender emphasized the socially constructed attitudes and practices associated with women, femininities, and men and masculinities, and especially their impact on the gender relations and hierarchies that shape gendered access to power and influence in particular societies. For example-, the Japanese International Cooperation Agency (JICA) dis covered that the attitudes of men and women towards women's responsibilities in the economy, politics, and community life defined the gender division of labour and reinforced gender hierarchies that limited women's possibilities for advancement in economic and political institutions. Development projects that ignored these assumptions were bound to fail.

The initial focus of GAD projects aimed to transfer resources and support to women in the Global South to enable them "to put their own agendas and priorities into action and challenge the current top-down, male-biased model of global development" (Sweetman, 2013: 3). The central focus remained on women's position and the way gendered assumptions have shaped the possibilities for women's advancement. Programs for men generally focused on their role in this process rather than on the deeper issues facing men and boys, particularly mas culine norms associated with manly "success" and the difficulties of achieving these goals in an increasingly global, neoliberal world (Connell, 2005; Cornwall et al., 2011). While raising important issues about gender inequality, the GAD approach has largely operated within established development goals seeking to improve women's positions in a neoliberal world (Chant, 2012).

[ Scholars and activists from the Global South be

gan to question the Western bias in most gender and

development policies and programs. They argued that

Western development "experts" measured gender pro

gress with Western lenses (Mohanty, 1988) and called

for attention to the lived experiences of women (and

men) in the Global South, particularly the impact of

race, ethnicity, class, colonization, and culture on wom

en's and men's lives and relations. The focus on dif

ference highlighted the importance of placing gender

within specific cultural and historical context, as well as

socio-economic and historical contexts. In particular,

Mohanty's intervention set the tone for post-colonial

feminist scholarship to contribute to and intervene in

debates about gender and development. Its concerns

about representation, homogenizing, othering, and si

lencing of so-called "Third World" women influenced

further theorizing about gender and development

(Marchand and Parpart, 1995).

However, not everyone has accepted the term

"post-colonial" (see Chapter 4). Some Latin American

scholars, for example, argue that many present-day

societies in the Global South are still embedded in a

colonial context and culture. Indeed, Walter Mignolo

( 1998), Arturo Escobar (1998), and Enrique Dussel

(1992) argue that the construction of Latin America as a

region is a Western creation that prevents local scholars

from understanding and analyzing its social, economic,

political, and cultural complexities through the use

of homegrown theories and concepts. They call for a

decolonial perspective that aims to decolonize our (co

lonial) knowledge and knowing about Latin America

and the Global South in general. Decolonial feminists

from the region have joined these efforts by focusing

on the continuing power of colonial knowledge about

Latin American women, which has been internalized

by feminists in the region. They argue that dominant

or hegemonic feminist knowledges need to be decol

onized and opened up to other knowledges and ways

of knowing produced through the everyday practices

of local women, particularly Indigenous and Afro

descended women. This endeavour they call "ecology of

knowledges," and its aim is to deconstruct hierarchies

between different knowledges and forms of knowing (Red de Feminismos Decoloniales, 2014).

The question implicitly as well as explicitly raised

by post-colonial and decolonial feminists is whether it

5 I Tiessen et al.: Gender and Development

is possible to create alliances among women from differ

ent parts of the Global North and South. Such alliances,

based on the idea that women worldwide have some

thing in common, have been referred to as Global Sis

terhood. The critiques of women from the Global South,

in particular DAWN and other post-colonial and deco

lonial feminists, reveal serious problems with the idea of

a Global Sisterhood as it often reinforces the dominant

position of Western feminisms. Instead, feminists from

the Global South have looked for alternative ways of

creating alliances that would recognize and respect dif

ferences and adopt more democratic agenda-setting and

prioritizing of issues related to gender and development

(Mohanty, 2003). One such response has been trans

national feminism. Challenging the idea of Global

Sisterhood and insisting on intersectional and trans

versal theorizing of women's differences, transnational

post-colonial feminist scholarship also emphasizes the

importance of incorporating political economy into

analyses of gender and development (Mendoza, 2002).

At the same time, transnational feminism has been

challenged for primarily being a product of feminist ac

ademics from the Global South situated at (academic)

institutions in the Global North (Mendoza, 2002).

In sum, post-colonial and decolonial scholarship

continues to develop and expand, with consequences

for the analysis of gender relations and hierarchies. As

transnational feminism suggests, political economy is

increasingly seen as a central feature of these new ap

proaches (Sisson Runyan and Marchand, 2011). Femi

nists from around the world are also raising questions

about sexuality and family forms, challenging the de

velopment industry's tendency to assume a heterosex

ual (and often nuclear family) model, based on Western

practices and assumptions (Bergeron, 2011; Lind, 2011).

Thus, while incorporation of critical feminist work

from the Global South is uneven, GAD continues to

evolve in response to feminist scholarship from many

different perspectives and contexts.

Empowerment

Empowerment was initially regarded as a key tool

for challenging and transforming unequal politi

cal, economic, and social structures. It was seen as a

weapon for the weak-best wielded through participa

tory, grassroots community-based non-governmental

90 PART I I Theories and Approaches in International Development

organizations (NG0s). However, in the mid-199os

mainstream development agencies began to adopt the

term, and subsequently the language of participation,

partnership, and empowerment increasingly entered

mainstream development discourse (World Bank, 1995;

Elson and Keklik, 2002). While the wording remained

the same, meanings varied. Mainstream institutions

and their practitioners for the most part envisioned

empowerment as ·a means for enhancing efficiency

and productivity within the status quo rather than as

a mechanism for social transformation (Parpart, Rai,

and Staudt, 2002).

Empowerment first surfaced in gender and develop

ment debates when Sen and Grown argued that women

needed "to develop a collective vision, a set of strategies

and new methods for mobilizing political will and em

powering women (and men) to transform society" (Sen

and Grown, 1987: 87). Caroline Moser and others picked

up this thread in the 1990s. Moser concluded that women

needed to gain self-reliance and internal strength in or

der "to determine choices in life and to influence the

direction of change, through the ability to gain control

over crucial material and non-material resources" (1993:

74). Scholar/activists from the Global South joined the

discussion, noting that the concept of "empowerment"

had begun to lose its transformative edge. They called for

a more precise understanding of power and empower

ment, arguing that empowerment must challenge "exist

ing power relations and [with an aim] of gaining greater

control over the sources of power" (Batliwala, 1994: 130).

Placing empowerment at the centre of efforts to achieve

gender equality required self-understanding that enabled

the transformative potential of power within-a power

rooted in the ability to recognize and challenge gender

inequality in the home and the community (Kabeer,

1994: 224-9). These critiques focused on collective, grass

roots participatory action-the power to work with oth

ers "to control resources, determine agendas and to make

decisions" (Kabeer, 1994: 229); the transformative nature

of empowerment arguing that it is personal, relational

and collective, and involves moving from insight into

action (Rowlands 1997: 14-15); and emphasizing empow

erment's ability to move beyond enhancing choice to ex

tending the limits of the possible (Mosedale, 2005: 252).

At the same time, mainstream development insti

tutions increasingly adopted the language of empow

erment, especially for women. The Beijing Declaration,

produced at the 1995 Fourth UN Women's Conference,

stated unequivocally that women's empowerment is

"fundamental for the achievement of equality, devel

opment and peace" (United Nations, 1995: para. 13).

Official development institutions adopted the language

of empowerment, gender equality, and gender main

streaming as central to achieving gender equality and

improving women's lives around the world, particu

larly in the MDGs and other development policies (Par

part, 2014).

Despite the widespread adoption of the term, and

the tendency to assume empowerment was a feasible,

reachable, and measureable goal, some criticisms be

gan to emerge. Kabeer critiqued empowerment projects

for assuming that they could "somehow predict the

nature and direction that change is going to assume"

(1999: 462). Parpart, Rai, and Staudt (2002) warned

that the empowerment approach has often ignored

the entrenched opposition to empowering marginal

groups around the world. Cornwall and colleagues

have brought a critical edge to the term, exploring its

potential while fully aware of its limitations (Cornwall

et al., 2011). Empowerment thus continues to be seen as

a critical concept for achieving gender equality, but one

that requires greater attention to the impact of cultural

differences, economic and political power, colonial

histories, and gendered practices and relations. This is

a welcome expansion of the term and key to address

ing gender empowerment in an increasingly complex,

global, and still very patriarchal world.

Gender Mainstreaming

Gender mainstreaming (GM), with its promise of

gender equality, empowerment, and transformation,

has become a central pillar of development discourse,

policy, and practice, supported by mainstream as well

as more alternative development institutions. In the

1990s it emerged as a key mechanism for achieving

gender equality and women's empowerment. GM was

defined by the United Nations as the integration of gen

der into the design, implementation, monitoring and

evaluation of the policies and programs in all political,

economic and societal spheres (UNESCO, 1997). The

optimistic, policy-oriented, "can-do" language of GM

entered the development lexicon, becoming a central

pillar of development agencies. The Platform for Action

produced by the 1995 UN Conference on Women in

Beijing adopted gender mainstreaming as the central

mechanism for ensuring gender equality. GM soon be

came a necessary tool for every development agency

concerned with women and gender and the improve

ment in gender equality (Parpart, 2014).

An impressive list of analytical tools such as check

lists, gender impact assessments, awareness-raising,

training manuals, expert meetings, and data collection

reinforced the assumption that gender mainstreaming

could be both achieved and measured. Gender main

streaming began to be seen as beyond politics and

economics-something that had to be planned for and

executed. The possibility that intractable resistances to

GM might derail these plans has been largely ignored.

Yet the achievements of gender mainstreaming

policies and projects have often been disappointing.

There have been some success stories-law reform, in

creases in the number of women in parliaments, partic

ipation in peace processes, and building organizational

skills-yet these have been exceptions rather than

the norm (Rao and Kelleher, 2005). While the Beijing

Declaration called for the development of gender ex

pertise within political institutions to ensure that GM

would be implemented at all levels, the practice has

been quite the opposite. Under pressure to rationalize

(and downsize) bureaucracies, and thus reduce govern

ment spending, so-called national machineries, created

to pursue gender equality policies, have been disman

tled. Many critical development experts argue that

despite an increasingly sophisticated stock of analy ti

cal tools and gender experts, gender mainstreaming's

transformative potential remains in question (Parpart,

2014; Tiessen and Tuckey, 2015).

To understand the limitations of gender main

streaming, we need to explore resistances that under

mine its practice. Widespread skepticism about GM's

effectiveness within development agencies, govern

ment offices, and other institutions has limited the

potential for change of gender mainstreaming. Indeed,

the African Development Bank discovered uneven sup

port for GM from leadership in mainstream develop

ment agencies in most of 30 major GM projects. Efforts

to mainstream women into politics have often failed to

assess potential resistances, particularly masculinist

cultures opposed to women's participation in political and economic institutions (Parpart, 2014). The recent

5 I Tiessen et al.: Gender and Development 91

shift to a focus on women and girls and the celebra

tion of "girl power" by development agencies have also

ignored the impact of gender relations and structural

inequality on their potential to effect change. This ap

proach also ignores the fact that some women (and

girls) benefit from associating with powerful men and

consequently support gender hierarchies that privilege

masculine power and authority.

Given the limits of gender mainstreaming, some

development scholars and practitioners have suggested

that GM should give up its transformative agenda, scale

back expectations to limited and doable reforms, and

leave transformative goals to politics (Standing, 2007).

Others are more optimistic, arguing that transform

ative policies will require new ideas, language, and

practice, collaboration with NGOs involved in trans

formational work, and greater attention to the policies

that have improved gender equality as well as lessons

learned from those that do not. This approach holds out

the possibility for meaningful change and realistic ap

proaches to gender mainstreaming.

Men and Masculinities

Women remained the central development issue for

gender experts throughout the 1970s and 1980s. Men

and masculi n itics were rarely addressed, except as

potential or actual impediments to women's and girls'

progress. The 1980 World Conference on Women in

Copenhagen called for the inclusion of men into de

velopment work supporting women's equality and em

powerment, but for the next 15 years the role of men in

promoting (or inhibiting) women's rights received lit

tle attention. Gender inequality persisted. Patriarchal

privilege reinforced women's subordinate positions in

economic and political institutions, and men contin

ued to be seen largely as impediments to women's em

powerment rather than part of the solution to gender

inequality (Sweetman, 2013; W hite, 1997).

In the 1990s, men and masculinities were in

creasingly identified as development issues. Early

projects focused on the role of men in the spread of

HIV/AIDS, violence against women, and opposition to

women's empowerment. Men were also encouraged

to co-operate with gender mainstreaming efforts, al

though the focus remained on women. Since the turn

of the century, increasing attention has been paid to the

92 PART I I Theories and Approaches in International Development

developmental problems of men and boys, particularly

their underperformance in schools, their high levels of

youth unemployment, their involvement in crime, and

their role in the spread of HIV/AIDS. Programs for men

have generally focused on their role in the struggle for

gender equality (such as the HeForShe campaign sum

marized in Box 5.2) rather than on the deeper issues

facing men and boys, particularly masculine norms

associated with manly "success" and the difficulties of

achieving these goals in an increasingly global, neo

liberal world (Cornwall et al., 2011).

There has been some talk about a crisis of mas

culinity, of the need to change toxic masculine prac

tices and to create sensitized men who will be allies

in the struggle for gender equality. Less has been said

about the material and social consequences of patriar

chal privilege and its significance for men and women

around the world.

As a result, the few projects focusing on men as key

players in the creation of a more gender-equal world

have often been criticized by men who saw these pro

jects as inhibiting their advancement in a world where

increasing numbers of men have been having difficulty

meeting the ideals of masculine privilege and domi

nance. The subsequent insecurity has fuelled a backlash

against projects seen as threatening masculine privilege.

This hostility has intensified in the twenty-first cen

tury, which has witnessed an expansion of educational

CRITICAL ISSUES

BOX !5.2 I HeForShe Campaign

and employment opportunities for women along with

a global economic crisis that has undermined many

traditionally male-dominated sources of employment

such as construction, manufacturing, and investment.

Young men in particular have found it difficult to live

up to expected roles as breadwinners. Many (along with

some women) have turned to illegal activities to survive,

including the drug trade and smuggling of persons and

goods. Others have preferred to migrate and risk their

lives on a dangerous journey to a new destination in

an attempt to support their families. While migrations

have become increasingly feminized, involving more

women who are also migrating independently, women's

lives have been affected in multiple ways by migrating

male family members. They are now responsible for

keeping the household going while also becoming in

creasingly dependent on remittances. Consequently,

new attention has been drawn to the gendered migra

tion-development nexus (Marchand, 2008). Armed

conflicts have drawn young men (and some women)

into battle, inuring them to violence and highlighting

militarized masculine values. Resentment against more

"successful" males and females has fuelled violence

against vulnerable women and children (and some

men) in marginalized households and communities.

The recognition that many males are facing de

velopment challenges has inspired an interest in poli

cies and programs that pay attention to the many men

The HeForShe is a strategy designed to engage men and boys in efforts to promote gender equality. It

was initiated in 2014 by UN Women as an alternative to targeting girls as recipients of development aid by shifting the focus to understanding social relationships that support and reproduce gender inequality.

The campaign includes a goal of ensuring that more than one million men and boys take the HeForShe

pledge: a pledge that acknowledges that gender equality is not only an issue for women and girls but

is a human rights issue that requires everyone's participation. The pledge calls for action to end forms

of violence and discrimination faced by women and girls. The popularity of the HeForShe campaign was

augmented by the endorsement of the initiative by the British actress Emma Watson, now the UN Women goodwill ambassador (and known for her role as Hermione in the Harry Potter movies). Emma Watson's

impassioned speech in September 2014 has been viewed by nearly a million people on the official UN video on YouTube and has circulated widely on other social media sites, thus providing significant expo sure to this particular strategy of addressing gender inequality.

frustrated with their inability to live up to masculine

gender norms, particularly the expectation that they

should protect and control women, children, and sub

ordinate males. Organizations such as the UN Commis

sion on the Status of Women and the United Nations

Population Fund (UNFP) have designed programs to

encourage the adoption of more progressive gender

norms built around ideals of non-violence and "a sense

of male pride and dignity based on progressive, gender

based ideals" (Sweetman, 2013: 5). The programs aim to

foster progressive gender relations that support trans

gender rights, women's rights, and gender equality in

ways that benefit all individuals and the social worlds

in which they live. The focus of many of these programs

has been on addressing male roles, masculinities, and

gender-based violence.

CRITICAL ISSUES

BOX 5.3 I Resolution 1325

5 I Tiessen et al.: Gender and Development 93

MASCULINITIES, GENDER-BASED

VIOLENCE, AND (IN)SECURITY

Gender-based violence has become increasingly visible

in the twenty-first century. Policy-makers, academics,

and development practitioners have begun to focus on

the destructive patterns that encourage and legitimate

gender-based violence. Projects have been created to

challenge such masculine attitudes and behaviours,

and have urged men to change their behaviour and

take personal responsibility for confronting these prac

tices (Barker and Ricardo, 2006). In 2008, UN Security

Council Resolution 1820 officially recognized rape as

a weapon of war, building on earlier UN resolutions

to promote women, peace, and security (see Box 5.3).

The adoption of Security Council Resolution 1325 on women, peace, and security (SCR1325) on 31 October 2000 was a monumental achievement because it recognized sexual and gender-based vio lence (SGBV) as a human rights issue and introduced gender perspectives to the peace and security work of the United Nations. Specifically, Resolution 1325 acknowledges that armed conflict has a unique im pact on women and girls and that specific gender strategies are required to address the needs of women and girls during conflicts and in the post-conflict stages. The recommendations arising from Resolution 1325 include the prevention of SGBV; a gender perspective in peace negotiations, disarmament, demo bilization, and reintegration (DDR} strategies, peacekeeping operations, and reporting; and increased participation of women in international institutions and training, and as UN humanitarian personnel and military observers. To facilitate these recommendations, many UN member states have adopted National Action Plans (NAPs} documenting the country's commitments, policies, and strategies to address gender equality in armed conflict as well as, more broadly, the related issues of women, peace, and security (Tiessen and Tuckey, 2014). NGOs have played an important role in many countries in ensuring that the NAPS are prepared, reviewed, and updated and include reporting of successes and challenges. Since

2000, the successes internationally include greater attention to-and reporting on-gender issues in conflict and women's post-conflict participation in peace-building, including consultations with women's

organizations. However, those committed to gender equality face many ongoing challenges, including the

limited participation of women in peace negotiations and inadequate efforts to mainstream gender into DDR and peacekeeping operations. Most significantly, there remain high rates of SGBV and continued impunity for those who commit these crimes. Ongoing issues include continued reports of sexual abuse and exploitation by peacekeeping forces, women's limited participation in post-conflict decision-making, and continuing violence targeted at women. Furthermore, financial resources earmarked for women's protection and the promotion of gender equality are limited.

94 PAR ! I Theories and Approaches in International Development

Civil societies began tracking the incidence of rape

and other forms of sexual violence against women and

girls, and the International Criminal Court now con

siders rape as a punishable war crime. Such efforts are

imperative to the promotion of gender equality. Yet,

other forms of gender-based violence-such as male

on-male rape, violence directed at LGBT (lesbian, gay,

bisexual, and transgender) communities, and femicide

(the murder of women because they are women, a sex

ual and gender-based hate crime particularly prevalent

in Mexico and Guatemala)-have been met with fewer

commitments.

Despite a tendency to revert to a focus on women

and girls, development practitioners and research

ers concerned with men and masculinity have sought

to understand and address the beliefs and practices

among men and boys (and some females) that legit

imate male privilege and oppose efforts to produce a

more gender-equitable world. Challenging these toxic

beliefs and practices and encouraging new, more

gender-sensitive ways of thinking and behaving have

become important strategies for encouraging support

for gender equality and reducing gender-based vio

lence, HIV/AIDS, and gender disparities in education

and employment.

At the same time, efforts to challenge and alter

masculine attitudes and behaviour opposed to gen

der equality take place in a world where gendered

assumptions still largely define which sexed bodies,

performances, sexuality, and positionalities are seen

as deserving the material and social rewards offered

in particular societies. Trying to change long-held

assumptions about what kinds of men (and a few

women) should wield power is extremely difficult as

those who benefit from such systems are rarely willing·

to step aside for a more equitable system. Convincing

the powerful to give up their privileges is never easy,

and it is even more difficult if many men (and some

women) who benefit more indirectly from masculin

ist privilege still believe even their minimal power and

authority will be threatened if gendered structures of

power are altered. The World Bank, despite its World

Development Report 2012 supporting gender equality,

has remained focused on women. Indeed, women and

girls are increasingly seen as the "solution" to achieving

that goal (Chant, 2012).

Yet, the twenty-first century has produced con

ditions that are beginning to shift perceptions about

gender relations, men, and masculinlty/i.es, particu

larly their role in causing or challenging geader-based

violence. Some development agencies now see gender

based violence not only as a threat to women's em

powerment, but also as a systemic reaction of men

grappling with their own struggles with (dis)empow

erment on shifting economic and political sands. As

most of the world continues to suffer from growing

inequality, high levels of unemployment especially

among young men and competition from increasingly

skilled women entering the workforce are giving rise

to new social tensions that sometimes have dangerous

outcomes (Catala et al., 2012). Recognizing the psycho

logical implications of these social changes for many

men is essential for understanding and responding to

gender-based violence and promoting more equitable

gender relations.

Some NGOs and development agencies have begun

to recognize the role socialization plays in shaping and

responding to traditional patriarchal masculine ideals

and expectations. Small, local workshops where men

are able to openly discuss and negotiate their mas

culinity with other men have provided an alternative

vision of how men might explore their understand

ing and acting out of masculinity, as practised in the

CBC's (Centro Bartolome de las Casas) Masculinities

Program initiative in El Salvador (Bird et al., 2007). In

2000 UNICEF produced a series of educational films on

masculinities designed to help young men explore the

role of masculinity and how it relates to gender-based

violence in South Asia. A UNFP project worked with

boys between 10 and 15 years old to reflect on ma

chismo culture and its impact on sexual violence. These

are just a few examples of the many development pro

jects confronting gender-based violence by addressing

the role of masculinity as it impacts and shapes men

on an individual psychological level. They are signs

of progress. The current economic and political crises

provide an opening, but also a challenge-witness both

the resurgence of patriarchal power and resistances

to it in the post-Arab Spring Middle East (see http://

harassrnap.org/en/). The need for broad social change

has never been greater, but it will require collaboration

and commitment to creating a more gender-equitable

and fairer world. Such commitments will arise, in large

part, from international efforts to ensure gender equal

ity remains a priority in development programming. In

the section that follows, we examine some of the inter

national commitments and global campaigns to pro

mote gender equality.

INTERNATIONAL COMMITMENTS

AND GLOBAL CAMPAIGNS

Feminist scholarship has increasingly documented the

gendered nature of rape and sexual violence as weap

ons of war (see Baaz and Stern, 2013) and the role that

masculinities play in perpetuating gender-based vio

lence (see Parpart, 2010). Getting to the point where

sexual violence was recognized by the UN as a human

rights violation has been a long road. However, the

foundation for a more comprehensive understanding

of human rights and women's/gender rights as they

pertain to security can be found in earlier commit

ments, including the 1979 Convention on the Elimina

tion of All Forms of Discrimination Against Women

(CEDAW ) and the 1993 UN Declaration on the Elimina

tion of Violence against Women. The latter document

highlighted a range of important issues facing women

and called for "the universal application to women

of the rights and principles with regard to equality,

security, liberty, integrity and dignity of all human

beings." In this document, the relationship between

gender inequality and women's achievements in devel

opment and peace was highlighted, and nations and

governments were called on to ensure the "effective

implementation" of the 1979 Convention (UN General

Assembly, 1993).

The CEDAW, adopted by the UN General Assembly

in 1979, continues to serve as an important interna

tional bill of rights for women. The most important con

tributions of the Convention include its documentation

of what constitutes discrimination against women and

how to address these forms of discrimination through

national actions. The Convention called on states to

undertake a series of measures to end discrimination

against women through legal means, such as abolition

of discriminatory laws, and more generally to pro tect women from discrimination. It has served as a

5 I Tiessen et al.: Gender and Development 95

foundation for the promotion of women's rights for

nearly four decades.

International commitments and UN resolutions

are also the basis for global campaigns. The campaign

to stop rape and gender violence in conflict, for ex

ample, grew out of UN Resolution 1325 and includes

25 partners from the NGO sector, particularly the Peace

Laureates of the Nobel Women's Initiative. It calls for

improved leadership at all levels to prevent and stop

rape and gender violence; an increase in resources to

prevent and protect survivors and their families, in

cluding the end to stigma associated with survivors;

and justice for victims, including an end to impunity

and prosecution of perpetrators. The website for this

organization lists a number of "take action" events to

promote awareness of sexual and gender-based vio

lence around the world and initiatives to pressure gov

ernments into making this issue a priority.

The Beijing Conference represents another im

portant international commitment to the promotion

of gender equality. The Fourth World Conference on

Women organized by the United Nations-the Beijing

Conference-was attended by 17,000 participants plus

30,000 activists. An important outcome from Beijing

is the highly celebrated Platform for Action, which

outlined 1 2 strategic objectives and actions pertain

ing to gender issues ranging from poverty to politi

cal participation. Earlier UN conferences on women

(Mexico City in 1975, Copenhagen in 1980, and Nai

robi in 1985) also paved the way for the promotion of

a global agenda for gender equality. The documents

arising from the Beijing Conference-the Beijing Dec

laration and the Platform for Action-were adopted

unanimously by 189 countries, and numerous pro

grams and campaigns were spearheaded based on the

recommendations and strategies outlined in these

documents. In particular, a focus on the girl child

spawned a series of global campaigns from corpora

tions and NGOs. Two of those strategies are addressed

in greater detail in Boxes 5.4 and 5.5: Nike's Girl Ef

fect and Plan International's Because I am a Girl

campaigns.

The Platform for Action remains a defining frame

work today, and since the Beijing Conference, additional

international meetings (occurring in five-year intervals)

have influenced efforts to promote gender equality.

96 PAFH i I Theories and Approaches in International Development

CRITICAL ISSUES

aox 5.4 I Nike and the "Girl Effect"

The "Girl Effect," a slogan coined by Nike in 2008, was used to promote the importance of play in child hood for girls but also girls' role and involvement in development. The marketing around the Girl Effect included a number of athletic women sporting pink Nike shoes as the symbol of Nike's commitment to promoting women's and girls' rights. A series of videos were also prepared by the Nike Foundation to raise awareness about issues affecting girls, but without a clear connection to the Nike brand. This Nike Foundation initiative on the Girl Effect, in collaboration with international agencies such as the United Nations Foundation, advocates for girls to be included in social programming as part of a strategy for ending poverty. The focus on targeting girls for development projects was met with some criticism from development experts as the campaign essentialized girls by stereotyping specific roles and activities for girls, and ignored the social relations that cause gender inequality in the first place, thereby putting the expectations on girls to stimulate gender equity-based development.

Nonetheless, the Girl Effect was a rather effective marketing campaign as part of Nike's corporate social responsibility (CSR) strategy. Simplified messages of "giving girls a chance" and other charita ble acts were promoted as means to change communities and end poverty. Over the years, Nike has evolved its work on the Girl Effect by adding Accelerator, noting that girls are the "most powerful force for change on the planet" for entrepreneurship (http://www.girleffect.org/). It is important to track the role of private companies and foundations because their marketing power has had a major influence on the nature of the messages that are disseminated (see Chapter 11). The Girl Effect highlights a particular message that, on the surface, can be effective in raising awareness about girls' rights and opportuni ties. However, this approach is limited by its nature which offers targeted programs for girls rather than community-based solutions that address the masculinities and deep-seated inequalities that cause gender inequality.

An important set of commitments taking shape at the time this chapter was w ritten is the post-2015 Sustainable Development Goals and development agenda. Among the 17 goals proposed in the SDGs, a commitment to "Achieve Gender Equality and Empower all Women and Girls" remains a core priority (Goal #5). The SDGs build on a long series of international commitments (some of which have been emphasized in this chapter). Building on the MDGs (in particular MDG #3 and its commitment to eliminate gender disparity in primary and secondary education), the SDGs aim to make advancements in end ing poverty and promoting equality and sustainability in a 15-year period. However, numerous challenges remain. For example, many countries continue to limit access to education for girls. Pakistan is such an example, yet the importance of promoting girls' education has gained prominence through the efforts of Malala Yousafzai (see Box 5.6) and through the Malala Fund to empower girls through equal access to quality secondary education.

In addition to the lack of educational opportunities for women and girls, several other limitations of gender equality policies and commitments are worth noting. For example, countries may not track measures of gen der equality; policies may not translate into practice; organizations may not have funds at their disposal to put gender equality commitments into practice; and in dividuals may resist efforts to promote gender equality.

TAKING STOCK: ACHIEVEMENTS,

POSSIBILITIES, AND ONGOING G APS

IN GENDER AND DEVELOPMENT

The contemporary and historical commitments ad dressed above offer an important context for exam ining international actions, national strategies, and individual, private, or NGO campaigns to address

CRITICAL ISSUES

5 I Tiessen et al.: Gender and Development 97

BOX 5.5 I Plan International and the "Because I am a Girl" Campaign

Among its core priorities, Plan International focuses on the girl child and improved access to education for girls, including quality secondary education and increased funding for these educational programs; an end to child marriage; an end to gender-based violence in and around schools; and greater participation for girls and boys in decision-making and programming. The slogan adopted for the Plan International

campaign is "Because I am a Girl." This campaign involved extensive marketing employing banners, bill

boards, posters, and other advertising strategies that could be found in diverse locations from bus sta tion walls to websites. The goal of the Because I am a Girl campaign is to directly improve the quality of

life for at least four million girls by ensuring better access to school, enhanced skills, improved live lihoods, and greater protection. Through gender programming, Plan International also advocated for

reaching 40 million girls and boys in indirect ways and 400 million girls through changes in policy (Plan International, 2015).

Plan International continues to work to promote improved education and to end early and forced

child marriage. The awareness that Plan and other organizations have brought to the pressing problem of early and forced marriages culminated in a resolution to end early and forced marriage adopted by

the United Nations in 2014. The resolution recognizes that early marriage has longer-term development impacts, such as threats to women's health, to their educational and economic opportunities, and to

their overall social status. Furthermore, this resolution understands the practice of early and forced mar riage as a symptom of deeply rooted gender inequalities and practices that discriminate against girls. Child marriage affects both boys and girls; however, the majority of children who face early marriage are female and the age gap between girls and men can be substantial. UNICEF estimates that, globally, one in six adolescent girls (aged 15 to 19) is currently married or in union. South Asia has the highest propor

tion of married adolescents (29 per cent), followed by West and Central Africa (25 per cent) and Eastern and Southern Africa (20 per cent) (UNICEF, 2015). Efforts to promote the negative impacts of early and forced marriage have led to important changes in practice in some countries. For example, in July 2015, a Malawian village chief annulled 300 child marriages and sent the girls back to school. A female senior chief, lnkosi Kachindamoto, used recent legislation passed in Malawi that sets the legal age of marriage at 18 to annul marriages that af fected 175 girls and 155 boys (This is Africa, 2015). This is an important

first step in a country where half of the women have entered into child marriages (marriage before 18 years of age). Ending early and forced marriage requires changes in laws across the world; improved

understanding of the many negative impacts on children; and a commitment from men, women, boys, and girls to put an end to this practice.

gender inequality on a range of issues. Feminist the

oretical and conceptual insights have challenged de

velopment actors and policy-makers to incorporate

strategic commitments to ending gender inequality

by moving beyond the targeting of women and girls

for development initiatives and towards a deeper anal

ysis of the masculinities, structural constraints, and

social relations that perpetuate inequalities. The fu

ture of gender and development includes a number of

commitments that will shape the next phase of global

activities in the promotion of gender equality. One

such initiative will be the commitments to gender

equality within the Sustainable Development Goals

(SDGs) between 2015 and 2030, as noted above. In ad

dition, the United Nations Development Programme's

Gender Equality Strategy 2014-2017= The Future We

Want: Rights and Empowerment puts gender equal

ity and the empowerment of women at the centre of

98 PART I I Theories and Approaches in International Development

CRITICAL ISSUES

BOX 5.6 I Malala Yousafzai

Individuals can play an important role in shap ing how we understand gender inequality. Malala

Yousafzai, for example, has demonstrated the impact that one young woman can have on pro moting a particular cause, in this case the pro motion of girls' education. Malala is a Pakistani activist and a Nobel Prize laureate. Her name spread across the world when she was shot by a Taliban gunman at the age of 15 while travel

ling on a school bus to complete her exams in northwest Pakistan. After a lengthy and remarka

ble recovery, Malala continues to champion girls' education around the world. The United Nations dubbed 12 July 2013 Malala Day-Malala's six teenth birthday-in honour of her speech to the UN where she noted that "Malala day is not my day. Today is the day of every woman, every boy and every girl who have raised their voice for their rights" (The Independent, 2013). The Malala Fund was inspired by Malala's dedication to girls' ed ucation and empowerment. As a co-founder of the Malala Fund, Malala Yousafzai advocates for girls' right to a minimum of 12 years of quality education.

international development commitments. The starting

point for this UNDP initiative is recognizing that gen

der equality is central to human rights and to progress

in international development.

The commitments and theoretical insights iden

tified in this chapter provide an overview of some of

the diverse ways that international commitments to

the promotion of gender equality have taken shape

over the past several decades and how they have

been influenced by feminist scholarship. Much

has been achieved in terms of promoting im

proved understanding of the nature and extent of

gender inequality. However, many strategies re

main focused on simplified, targeted solutions

aimed at improving maternal health, educating girls,

or providing opportunities for girls' and women's

PHOTO 5.2 I Malala Yousafzai speaks at a press

conference during the United Nations Sustainable

Development Summit in September 2015.

involvement in sports, political decision-making,

and/or economic opportunities. These are impor

tant strategies that must, however, be accompanied

by broader commitments to understanding the root

causes of gender inequality and how inequalities are

shaped and sustained through power imbalances and

social relations. Key concepts such as empowerment

are important to this analysis, but so too are critical

reflections on the basic causes of pervasive inequali

ties that disproportionately affect women and girls in

many contexts, and more importantly, on the institu

tions, norms, and processes that facilitate inequality

and perpetuate practices favouring particular kinds of

masculinities. In order to make sense of the underly

ing factors that perpetuate gender inequality, we must

continue to revisit the feminist insights addressed

above as a guide for tackling gender inequality in

development practice.

SUMMARY

In this chapter we have provided a range of examples of

feminist insights, gender and development analytical

frameworks, international commitments, and global

campaigns. More importantly, we have demonstrated

how ways of understanding gender and development

over time have influenced development programs and

5 I Tiessen et al.: Gender and Development 99

international strategies. Gender inequality remains

an important issue in international development and

successful international development projects must

include gender issues as central to the planning and

implementation of development outcomes. Much

like other challenges in international development,

comprehensive and complicated approaches are nec

essary to ensuring development success. These strate

gies must involve the beneficiaries of development in

all stages, but they also must consider the important

historical, structural, and normative challenges to

development.

QUESTIONS FOR CRITICAL THOUGHT

1. What do you consider to be some of the most effective campaigns to promote girls' and/or women's rights?

Why were they effective? Did they promote targeted interventions specific to women and girls and/or address

gender inequality?

2. What have been the most influential United Nations commitments to addressing gender inequality and what

are the priorities identified in these commitments?

3. Why are masculinities important to the study of gender and development?

4. How has feminist theory contributed to improved commitments to gender equality?

SUGGESTED READINGS

Cornwall, A., J. Edstrom, and A. Grieg, eds. 2011. Men and

Development. London: Zed Books.

Kabeer, N. 1994. Reversed Realities: Gender, Hierarchies in

Development Thought. London and New York: Verso.

Marchand, M.H., and J. Parpart, eds. 1995. Feminism,

Postmodernism and Development. London and New

York: Routledge.

-- and A. Sisson Runyan. 2011. Gender and Global

Restructuring: Sightings, Sites and Resistances, 2nd edn.

London and New York: Routledge.

Momsen, J. 2004. Gender and Development, 2nd edn. London

and New York: Routledge.

Baaz, M.E., and M. Stern. 2013. Sexual Violence as a Weapon

of War? Perceptions, Prescriptions, Problems in the

Congo and Beyond. London: Zed Books.

Parpart, J., P. Connelly, and E. Barriteau. 2000. Theoretical

Perspectives on Gender and Development. Ottawa:

International Research Centre.

Tiessen, R. 2007. Everywhere/Nowhere: Gender Mainstrea

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Globalization and Development Pierre Beaiidet

LEARNING OBJECTIVES

• To acquire a critical understanding of globalization • To examine the impact that alternate globalization

in relation to development theories. approaches have on development theories and

To understand how globalization changes develop- practices.

ing countries.

A woman in Jiangsu province works on stuffed monkeys destined to be Valentine's Day gifts in North America. The most densely populated province in China, Jiangsu also has the highest GDP and is home to many of the world's leading exporters of electronics, chemicals, and textiles. I Source: STR/AFP/Getty Images

INTRODUCTION

Over the past decade, the concept of globalization has

invaded public space as well as the social sciences, in

cluding development studies. In many ways, the inter

nationalization of the world economy has changed the

way societies and states are structured and governed,

simultaneously with the contraction of time and space,

as explained by geographer David Harvey (2005). Schol

ars, practitioners, and experts debate the scope, depth,

and impact of globalization's reach into economics, pol

itics, culture, the environment, and so on. There is an

abundance of excellent analysis on this "hot" topic (see

the suggested readings at the end of this chapter).

Changing Paradigms?

This chapter focuses on the impact of globalization

on development and developing countries. It aims to

trigger new debates and reflections, especially for those

who are working on and studying development. The de

velopment "community," indeed, faces many questions:

Is globalization really transforming the architec

ture of the world we live in?

How can we understand the contradictory pat

terns of economic growth, as evidenced by grow

ing social gaps in many parts of the world? • How are China and other "emerging" developing

countries becoming economic leaders? Is this phe

nomenon changing the reality of what used to be

called the "developing world"? • Is the pattern of globalization forcing development

scholars and practitioners to revise their perspec

tives and theories?

These questions are both theoretical and practical. On the

one hand, they relate to the way concepts are constructed

in development studies. On the other, they are translated

into actions, programs, and projects by many govern

mental and non-governmental development agents.

GLOBALIZATION AND DEVELOPING

COUNTRIES

In the early 1990s, when the concept of globalization

became widely used, many scholars and policy-makers

6 I Beaudet: Globalization and Development 103

working on development were taken aback. One of

those was Fernando Henrique Cardoso, one of the

founders of the famous dependency school that had

such great influence on thinking in development stud

ies in the 1970s (see Chapter 3). He changed his earlier

analysis, giving this globalization-and-development

debate a rather provocative spin. After becoming the

president of Brazil in 1994, Cardoso (2007) argued that

past development theories were dead and buried and

that everything he had said about development was

wrong! At that time, he proposed that development

required full integration into the world system, which

implied, in turn, accepting the terms of current macro

economic policies as they were defined a decade before

in the Washington Consensus (Box 6.1). Under Car

doso's presidency, the social and economic priorities

of Brazil were refocused to adjust to the needs and re

quirements of international markets. Yet a few decades

previously, Cardoso and many of his colleagues in de

velopment studies had been arguing that the only path

to development was to "delink" from international

capitalism.

W hile Brazil and other developing countries

were changing paths, most of the nations of the world

sought to further integrate into the capitalist system.

These broad policies were promoted by the GB, an in

formal association of the richest countries in the world

(Canada, France, Germany, Italy, Japan, Russia, the

United Kingdom, and the United States).

Success Stories?

For former President Cardoso and other heads of state

of the developing world, there was simply no alterna

tive in the early stage of globalization. His argument

was fairly simple: the world had changed. Capitalism

had triumphed worldwide with the end of the Cold

War. Developing countries had to conform, and if

they did not, they would be left out. During that pe

riod, the World Bank (2004), in particular, produced

an enormous volume of analysis, arguing that develop

ing countries could and should prosper and progress

through fully "globalizing" and integrating into the

world economy (and not going against it).

The Bank specifically documented what it pre

sented as the "East Asian miracle" (see Chapter 7),

where the combination of shared Confucian cultural

104 PART I I Theories and Approaches in International Development

BOX 6.1 I The Washington Consensus

The Washington Consensus was put on the agenda in 1989 by the economist and former World Bank of

ficial John Williamson. The term has been associated with neoliberal policies first adopted by the United States and Britain in the early 1980s and later promoted by the World Bank and the IMF in developing countries. The "consensus" recommended the liberalization of capital flows and trade (through free trade agreements), the privatization of the public sector, and the abolition of market-restricting regula tions. It became a central component of structural adjustment programs imposed by the Bank and the IMF on countries that required loans.

heritage, strong government guidance, and export-led

economies produced high economic growth and

prosperity. The idea was that East Asia was the model

whereby developing countries that opened their bor

ders would find competitive niches and attract foreign

capital, thereby triggering economic growth, as in

deed happened in countries like China, South Korea,

and smaller "tigers" and "dragons"' that emerged as

big players in the global economy. Not only did these

countries experience rapid economic growth (Asian

Development Bank, 2013), but in addition, poverty de

clined rapidly, from 78 per cent in 1981 to 8 per cent

in 2011. In China, 753 million people moved above the

benchmark for extreme poverty ($1.25 per day) (World

Bank, 2015).

Parallel to these achievements, China's economy

continues to grow, while North America and Western

Europe are struggling to come out of the financial and

economic slump of 2008, the most severe since 1929.

Indeed, China has become the workshop of the world,

exporting a vast surplus of industrialized goods and, in

creasingly, high-tech products. Between 1990 and 2012,

China's share of total world exports rose from 1.8 per

cent to 10.4 per cent. China is on track to become the

world's biggest exporter, overtaking Germany (World

Trade Organization, 2012). (Also see Chapter 13.)

Time and Space Contracting

Put simply, globalization translates into new sets of re

lations and activities, mostly in the economic arena,

that are taking place irrespective of the geographical

location of participants. Globalization underpins a

transformation in the organization of human affairs

by linking together and expanding human activity

across regions and continents (Held and McGrew,

2003). Territory as a geographic reality no longer

co11Stitutes the whole of the "social space" in which

human activity occurs (see Box 6.2). Because of these

major changes, social geographer David Harvey

(2005) believes that modern capitalism has integrated

the world much more profoundly than ever before.

Time and space are no longer insurmountable, as

they were in the past, because with modern com

munication and transportation, everything moves

everywhere, including goods, services, and people.

Therefore, the geographic divide between the North

and the South appears to have become blurred

(WTO, 2009). This is not to say that the gap has dis

appeared. Rather, globalization is generating a new

pattern whereby poverty and wealth are redistributed

through a reconstituted structure of exclusion. For

Harvey (1990: 147), current patterns of development

under globalization lead to "shifts in the patterning

of uneven development, both between sectors and

between geographical regions."

Trade and Growth

No one could deny that enormous changes have taken

place in the past two decades in developing countries

and at a broader level as well. World trade, in particular,

6 I Beaudet: Globalization and Development 105

PHOTO 6.1 I People from the World Social Forum gather to denounce terror in Tunis, Tunisia, on 24 March

2015. In Tunisia a corrupt dictatorship was overthrown during the "Arab Spring."

CRITICAL ISSUES

BOX 6.2 I A Global Age?

Globalization is a transplanetary process or set of processes involving ... growing multi-directional

flows of people, objects, places and information, as well as the structures they encounter and create

that are barriers to, or expedite, those flows. Although globalization and transnationalism are often

used synonymously, the latter is a more limited process which refers largely to interconnections across two, or more, national borders. The sheer magnitude, diversity and complexity of the process

of globalization today lead to the conceptualization of the current era as the "global age."

Source: Ritzer (2010: 28).

has reached an unprecedented level. In 2013, exports and imports of goods and services exceeded $23 trillion, an increase of over 2 per cent from the previous year

(WTO, 2014). At the same time, exports from devel

oping countries are growing much faster in compar

ison with the rest of the world. In 2013, the share of

106 PART I I Theories and Approaches in International Development

developing economies in world merchandise trade set new records, with exports rising to 44 per cent of the world total (WTO, 2014) (Figure 6.1).

Much of this increase in exports from developing countries has to do with the fact that they have been encouraged by the IMF and World Bank to open their economies, liberalize trade, and increase expor.ts. Under the influence of the powerful agencies pro moting globalization, trade is expanding faster than production. The theory is Lhat lhe soothing influence of the market (the "invisible hand" oI Adam Smith) will heJp every country to find its "niche" selling and buying where its comparative advantage dominates

-�

US$ billion e 0-250 e 250-500 e 500-1000 e >1000

52%

ll1e top lOtraders in merchandise

trade accounted for a little over half of the world's total

trade in 201 3

(see Chapter L5}. Everyone wins in the end, ·o the stoq, goes. Most countries oft he world are now members of the World Trade Organization (Figure 6.2), the cham pion of international globalization, liberalization, and economic integration.

The World Bank remains convinced that globalization-i.e., integration into the world market is working for the poor and the developing world. For David Dollar, an economist working for the Bank (2004), the simple proof that globalization works is that poor-country growth rates are higher than rich-country growth rates for the first time in modern history. These positive trends towards faster growth

43%

Developing economies accounted for 43% of

world merchandise trade in 2013

US$ 17.8 tn

Merchandise exports of 160 WTO

members in 2013

FIGURE 6.1 j ,vorlcl Economies by Size of Merchandise Trade, 2013 Source: WTO (2014). © World Trade Organization (WTO) 2015

CRITICAL ISSUES

BOX 6.3 I Are Things Getting Better?

6 I Beaudet: Globalization and Development 107

According to the World Bank (2015), the number of the poorest of the poor (income of $1.25 per day or

less) has declined from 43 per cent of the world's population (1990) to 17 per cent in 2011, leaving over

a billion people at risk. The improvement is not as impressive for the "moderately" poor: there are still

2.2 billion people living on an average of $2 per day, as compared to 2.5 billion in 1981. China alone

accounts for a large proportion of the people who escaped extreme poverty (more than 750 million). Pov

erty levels remain stubbornly-and unacceptably-high in sub-Saharan Africa, where there has been lit

tle growth, and in South Asia, despite more rapid and sustained growth. Eighty per cent of the extremely

poor lived in South Asia (399 million) and sub-Saharan Africa (415 million). E xperience has shown that

economic growth alone is not sufficient to greatly reduce poverty in its many dimensions. Indeed, the

mixed record of poverty reduction calls into question the efficacy of conventional approaches involving

economic liberalization and privatization.

and poverty reduction are strongest in developing

countries that have integrated most rapidly into the

global economy. The World Bank is also encouraged

by the fact that the growth of exports from develop

ing countries is mostly in manufactured products.

At the same time, foreign direct investment (FDI)

in developing countries accounted for 52 per cent of

all FDI (Figure 6.3). However, the flows are asymmet

rical. Four countries (China, India, Brazil, and South

Africa) have received most of the FDI flows to develop

ing countries.

600

500

C 400

,g � 300 ... V,

::i 200

100

Who Is Benefiting?

In fact, when we look at the details, the picture is

more complex. Sub-Saharan Africa, for example, has a

high ratio of exports to GDP (30 per cent), yet remains

poor because its products are cheap. By contrast, rich

and powerful countries concentrate their produc

tive capacities and exports on high-value goods and

services. Also, only 12 developing countries are re

ally participating in this expansion of trade. For the

United Nations Conference on Trade and Development

2010 11!!12011 [3 2012 20131

Developing Asia Europe Latin America North America Transition Africa and the economies

Caribbean

FIGURE 6.2 I FDI Inflows, by Region, 2010-13

108 !!"Mt'i i I Theories and Approaches in International Development

(UNCTAD, 2014), the growth of exports in many poor countries does not necessarily lead to poverty reduc tion. The United Nations Food and Agriculture Organ ization estimates that about 805 million people were suffering from chronic undernourishment in 2012-14, out of which 791 million live in developing countries (FAO, 2015).

According to Oxfam International, the con trasting experiences of Latin America and East Asia illustrate that globalization-induced growth and poverty can coexist. Even when the market expands, "poor people are often excluded from opportunities by a lack of productive assets, weak infrastructure, poor education and ill-health" (Oxfam Interna tional, 2000). Since the 1950s, the income gap between rich countries and poor countries has wid ened considerably.

Amartya Sen (2002), a well-known economist originally from India who is critical of the World Bank and IMF policies, believes that the main issue is not globalization itself but inequitable sharing of its benefits. According to the World Commission on the Social Dimension of Globalization (2004) set up by the International Labour Organization, "Wealth is being created, but too many countries and people are not sharing in its benefits." The bottom half of the world's population owns the same as the richest 85 individuals in the world. All in all, the richest 1 per cent account for 48 per cent of world income (Oxfam International, 2014a).

CRITICAL ISSUES

0 .a,. I Billionaires in India

Sub-Salta1'an Africa on the Jl1aryins

Even the most ardent promoters of globalization will admit that Africa is facing a tough challenge (see Box 6.5). Exclusion from the benefits of globalization of the poore t comltrie , defined by the UN as the "leasL developed cmuitries" (LDCs), remains a dreadful re ality; CLu·rently, many African countries appear to be trapped in a vic.ious circle of interlocking handicaps, including poverty, illiteracy, civil strife, environmental pressures, poor governance, and inflexible economies largely dependent on a single commodity.

This bleak picture, however, needs to be nuanced. In the last decade, African social global indicators have been improving, in great part because of the good eco nomic performance of a small group of countries. In countries rich in oil and other natural resources, such as Angola and Nigeria, high growth rates have been reg istered. Some countries have even been able to improve access to basic social services, making progress towards achievement of the Millennium Development Goals (UN Department of Economic and Social Affairs, 2010).

More critical views, however, suggest that economic growth has not led to major social improvements and, moreover, remains fragile, linked principally to the scramble for African natural resources by developed country investors from the US, the European Union, and China. In addition, Africa's recent surge in growth was driven by commodity exports that did not induce much structural change. Instead, they merely reinforced

According to Oxfam, there are currently 61 billionaires in India (there were six in the previous decade) in a country of 1.2 billion. Collectively, they own more than $250 billion. In the meantime, public resources for basic services like health and education remain less than 1 per cent of GDP, which puts India at the bottom of Asian standards. The very rich are thought to often benefit from corruption widely prevalent in sectors like construction, mining, and telecommunications. Wealthy people also benefit from low tax ation and tax loopholes. Less than 37 per cent of total taxes collected by the government come from direct taxes on income, profits, and capital gains.

Source: Oxfam (2014b).

CRITICAL ISSUES

BOX 6.5 I Poverty in Sub-Saharan Africa

6 I Beaudet: Globalization and Development 109

Seventy-five per cent of the world's poorest countries are located in Africa. In 2010, 415 million people

were living in extreme poverty across the continent (48.5 per cent of the total African population).

Approximately 589 million Africans live without electricity. Because of lack of clean water and proper

sanitation, 50 per cent of Africans catch water-related illnesses. Approximately 900,000 Africans die

every year of malaria, out of which 80 per cent are children.

Fewer than 20 per cent of African women have access to education. One in 16 women living in

sub-Saharan Africa will die during childbirth or pregnancy (compared with one in 4,000 women in

North America).

Source: Borgen Project (2014).

Africa's narrow export base. Moreover, since 2013, these commodities have lost much of their previous value

while external markets have been squeezed because of

the slump in Europe and Asia (IMF, 2014). In the mean time, Africa accounts for less than 1 per cent of the

world's GDP. To add to the catastrophe, external debt has exploded-from $89 billion (1980) to $149 billion (2010). In 2014, while aid and investment flows into Africa represented $134 billion, financial outflows from Africa were almost $192 billion (Jubilee Debt Campaign,

70..- -- - ----------,60

-� 50 C

::,

8 40 0

:;; 30

:z 20

Decreasing debt ratio • Increasing debt ratio • Sub-Saharan Africa average,

right scale

2009 2010 2011 2012 201 3

Note: Excludes South Sudan.

40 1i. 0 G

30 � C Q)

� 20 �

FIGURE 6.3 I De.Lt Ratio for Sub-Saharan Africa.

Source: IMF (2014). p. 11.

2014), thus creating a net deficit of nearly $60 billion for the African economy.

China: Exception or Trend?

If African countries are generally in decline, other

countries, most notably China, seem to be profit

ing from globalization. Indeed, China has now sur

passed Japan to become the second biggest economy

in the world. Most of the FD! to the Global South is absorbed by China, creating hundreds of thou

sands of jobs, chiefly in coastal areas (Sung, 2005). Vast masses of rural people have moved to the cit

ies, where they have relatively better access to food,

health care, and education. T he rate of extreme pov

erty at the national level declined from 84 per cent in 1981 to 7 per cent in 2012 (Phelps and Crabtree, 2013). According to mainstream institutions such as

the World Bank, most of that success can be attrib

uted to the integration of China into the world econ

omy (China joined the WTO in 2001). But not everyone agrees. Some analysts argue that

changes in China (such as land reform and nationaliza

tion of productive assets) after the 1948 revolution, but before globalization, have had a more lasting impact

on economic and social progress than recent changes

related to globalization. Other China experts focus on

the flip side of the miracle in terms of class polarization,

110 (>ART I I Theories and Approaches in International Development

CRITICAL ISSUES

BOX 6.6 I Is Globalization Reducing or Increasing Poverty and Inequality?

Vandana Shiva (2000a), a well-known ecologist and advocate of peoples' movements in India, puts

globalization on trial using the example of peasants in India:

Globalization is leading to a concentration of the seed industry, the increased use of pesticides,

and, finally, increased debt. Capital-intensive, corporate-controlled agriculture is being spread

into regions where peasants are poor but, until now, have been self-sufficient in food. In the

regions where industrial agriculture has been introduced through globalization, higher costs are

making it virtually impossible for small farmers to survive. The globalization of non-sustainable

industrial agriculture is evaporating the incomes of Third World farmers through a combination

of devaluation of currencies, increase in costs of production and a collapse in commodity prices.

For Robert I. Lerman (2002), on the other hand, globalization is benefiting the poor:

It has helped the poor countries that adopted sound policies and contributed to income con

vergence among the countries participating in the global system. In principle, allowing trade,

investment and migration should reduce global poverty. Less clearly, it should also shrink the

gap between rich and poor. As firms move from high to low-wage areas, the demand for workers

should grow in low-wage areas and decrease in high-wage areas, again lowering inequality.

environmental degradation, and deteriorating govern

ance. According to Wen and Li (2006), China's growth

is not sustainable. It is triggering an immense energy

crisis coupled with declining food and water resources.

They predict that the current trend, if not reoriented,

could create an uncontrollable public health crisis as

well as ecological disasters (see Chapter 17).

What Is New?

Given this global panorama, we arrive at a simple ques

tion: what is new about globalization? Are we not see

ing the same thing, under new conditions perhaps, that

has been restructuring the world since the expansion of

Western capitalism? Is it not the same pattern observed

by Karl Marx and Friedrich Engels over 160 years ago?

The bourgeoisie has, through its exploitation

of the world market, given a cosmopolitan

character to production and consumption in

every country. Instead of the old local and

national seclusion and self-sufficiency, we

have intercourse in every direction, the uni

versal interdependence of nations. National

one-sidedness and narrow-mindedness be

come less and less possible, and from the nu

merous national and local literatures, there

arises a world literature. (Marx and Engels,

1967 [1848])

What does appear to be new is the speed and inten

sity of interconnections among entities across the world.

Around the world, 24 hours per day, financial markets

are imposing immediate economic decisions. New tech

nologies, at least partially, have created another reality

namely, the "world factory," managed by the world firm,

under a world label, where every thing from production

to marketing and design is integrated across continents

and communities. For Luis Hebron and John F. Stack

(2009), for example, globalization is powerful because

it brings together politics, economics, law, social struc

tures, media, and information technologies.

Who Makes the Decisions?

Globalization has a profound impact on politics. The nation-state, at the centre of the political architecture of the modern world, is losing parts of its sovereignty as economic actors such as large multinational corpo rations and financial institutions make transactions freely across borders (see Chapters 9 and 11). Kenichi Ohmae, in a provocative book, The End of the Nation State, explains: "the workings of genuinely global capi tal markets dwarf their ability to control exchange rates or protect their currency." Consequently, "nation states have become inescapably vulnerable to the discipline imposed by economic choices made elsewhere by peo ple and institutions over which they have no practical control" (Ohmae, 1995: 12).

For many experts, political structures inherited from the nation-state are becoming obsolete. Funda mental policies governing macroeconomics are dis cussed and determined by agencies far removed from the public arena (Lenhard, 2010). While the powerful have influence, most developing countries are left out of the process. For example, the IMF and the World Bank are directed by a small group of countries be cause these institutions, unlike the United Nations, are governed by powerful states that have larger voting shares because of their greater financial contributions to institutional functioning, contrary to the UN system where all member states, in principle at least, have an equal footing (see Chapters 9 and 10).

CRITICAL ISSUES

BOX 6.7 I Governance

6 I Beaudet: Globalization and Development 111

The governments of smaller or weaker states are therefore losing their influence in the international arena-but also at their own national level. At worst, this process ends up in a breakdown, as we have seen in several sub-Saharan countries (as well as in South east Europe and elsewhere). This disjuncture between the economic/private and the political/public spaces is creating a vacuum. It remains to be seen, for example, whether the United Nations will be able to recover from its current semi-marginalization, considering that the rich and powerful may not want it to do so.

The United Nations is frequently bypassed by mul tilateral and bilateral structures and economic and trade accords, such as the North American Free Trade Agree ment (NAFTA), that make decisions over a wide range of matters, including the maintenance of peace. Most coun tries have now joined the WTO and are negotiating their place on the ladder within this institution that imposes new rules for international trade. The GS, and now the more inclusive G20, an enlarged grouping of the most powerful countries, is there to "set the agenda," i.e., to de fine broader policies, norms, and targets that will be later adopted by or forced upon other national governments.

ANOTHER GLOBALIZATION?

Clearly, globalization appears set to remain at the centre of hot debates. The Global South is "re-" and " de"-com posing itself into a myriad of contradictory processes.

Joseph Stiglitz, former Chief Economist of the World Bank, wrote:

Unfortunately, we have no world government, accountable to the people of every country, to oversee the globalization process. Instead, we have a system that might be called global govern ance without global government, one in which a few institutions-the World Bank, the IMF, the WTO-and a few players-the finance, commerce, and trade ministries, closely linked to certain financial and commercial interests-dominate the scene, but in which many of those affected by their decisions are left almost voiceless.

Source: Stiglitz (2002: 21-2).

112 PART I I Theories and Approaches in International Development

The New Face of Irnperialism?

Some analysts believe that globalization is basically

just "another face" of imperialism, allowing the pow erful, mostly in the Global North, to extend their reach

and widen the net of international capitalism (Watts,

2011). The core, not to say the bulk, of key economic,

commercial, and financial transactions remains con

centrated in the "t ri;td," the traditional centre of power

composed of Western Europe, Japan, and North Amer

ica. Although representing less than 15 per cent of the

world's population, the triad accounts for most of the

economic output, even if the emergence of new eco

nomic powers is eroding this supremacy.

For Samir Amin, a radical economist from Egypt,

"their domination is exercised directly on all the huge

companies producing goods and services, like the fi

nancial institutions (banks and others) that stem from

their power" (Amin, 2009). Amin and other critics con

tend that even most of the "success stories" of East Asia

(except for China) represent a set of "arrangements"

with the triad, delocalizing some of the labour-intensive activities to countries that remain dependent, periph

eral, and under the dominating influence of the rich

countries. This situation is compounded by the fact that, in many respects, the East Asian "tigers" still de

pend on the Global North in key sectors such as finance

and high technology.

"Global South"?

Walden Bello, a political economist from the Phil

ippines, reminds us that the income gap continues

to grow between "rich" and "poor" countries even if,

within these countries, similar patterns are at play be

tween social groups (Bello, 2013). According to a UN

report on inequality (2014), 55 per cent of the global

income is concentrated in countries accounting for

16 per cent of the population.

Bello (2005) summarizes the process as the recon

figuration of a Global South, which is no longer just a simple geographic definition but a reflection of new

relations unfolding throughout the world. Bello de scribes a "restructured" worldwide capitalism where

the traditional South (the Third World) is now split be tween "emergent" countries with growing segments of their populations enriching themselves and countries and people who are being left further behind; at the

same time, in the traditional North (North America,

Western Europe, Japan), the mix of economic decline

and political/cultural fractures is producing growing

pockets of poverty to an extent not known in the last

Bo years.

O ther scholars explain that this dcterritori;, li-

1.ation is by no means confined to the delocalization

of economic activities (for example, industrial plants

moving from Europe, Canada, or the United States to

China or Mexico). It also implies the adoption of com

mon policies on major issues governing the economy

and society. Every country has to accept the rules es

tablished by the WT0 and the IMF in order to maintain

their "macroeconomic stability," as it is usually worded.

This implies cutting down on social expenditures such as education and health care and providing more in

centives to investors and financial institutions.

Pursuing that line of thinking, Amin (2004) sug

gests that globalization is setting the stage for a new

offensive from the United States to protect its impe

rial interests. The empire relies on unlimited military

might and the overwhelming influence of tram na

tw1w I uirporat ion·, (TNCs), compelling other coun

tries to submit.

Obviously, enthusiasm for globalization has been

challenged by many, such as the Indian scientist and

ecologist Vandana Shiva:

Globalization is not a natural, evolutionary or

inevitable phenomenon [but rather} a politi

cal process that has been forced on the weak by the powerful. ... "Global" in the dominant

discourse is the political space in which the

dominant seeks control, freeing itself from

local, regional, and global sources of account

ability arising from the imperatives of ecolog ical sustainability and social justice. (Shiva,

2000b: 92)

Within this context, a growing body of research

and policy argues that current globalization needs to

be "fixed" or eventually replaced.

Beyond the Triad

Globalization remains a process led by a few countries, mostly in North America and the European Union

(with Japan). It has been noted, however, that a small

number of countries in the Global South are now im

portant economic actors (see Chapter 13). According

to the World Bank, three of these countries (China,

Brazil, and India) are now among the top 10 economies

in the world.

Until recently, China was very quiet if not invisible

in international forums. But China's role is changing,

as one can see in the United Nations concerning con

troversial matters implicating Syria, Iran, and North

Korea. In some of the past proceedings of the WTO

(the "Doha round"), China sided with countries such

as Brazil and India to oppose agreements that exces

sively favoured northern countries on issues such as ag

ricultural protectionism and liberalization of trade and

services. Like previous southern-led initiatives such as

the Group of 77 and platforms such as UNCTAD, where

the call for a "new economic order" was launched in the

1970s, these efforts are not intended as much to oppose

globalization as to rebalance its impact. In addition to

seeking to open northern markets and protect south

ern assets, these countries also are critical of the liber

alization of the financial sector. Despite many demands

from the US and the international financial institu

tions, China thus far has refused to alter its exchange

control system, which keeps the Chinese currency out

side speculative manoeuvres of large (mostly Western)

financial institutions.

Apart from defending their assets and policies,

countries of the Global South are trying to reinvent

what used to be called "South-South solidarity." In

this context, for example, a regional grouping such as

the Association of Southeast Asian Nations (ASEAN) is

trying to create a regional economic bloc bringing to

gether 10 countries including China. In parallel, China

is promoting a regional security association called

the Shanghai Cooperation Organization (SCO) (see

Box 6.8). The idea is to bring together China, Russia,

Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan,

and eventually India, Iran, Pakistan, and Mongolia,

in a program of regional integration and security that

would not be controlled by the northern powers. In re

ality, the SCO is very far from being anything but a dis

cussion platform. But it might represent the beginning

of an important process.

In terms of substance, China and the other

"BRICS" countries (Brazil, Russia, India, China, South

Africa) want to renegotiate, not destroy, international economic integration and trade. BRICS is an informal

6 I Beaudet: Globalization and Development 113

intergovernmental network where "emerging" coun

tries discuss how to improve their status in the world

system. These countries feel entitled to more influence

in global governance because they have 25 per cent of

the world's land coverage, have 40 per cent of the world's

population, and hold a combined GDP of US$15.435

trillion. The BRICS want to reform organizations such

as the WTO so that southern interests are better inte

grated into the mainstream. The economic liberaliza

tion of these still underdeveloped economies, as the

BRICS see it, needs to be done gradually, protecting vul

nerable and strategic sectors while improving access

to northern markets. China, India, Brazil, and other

emerging countries also want to further regionalize

economic links, not necessarily against global integra

tion but as a platform to gain strength and access to the

global market on an equal footing. Through growing

South-South linkages, the idea is to diversify (or reduce

dependency on northern markets and investments)

and enlarge the economy. China is involved in finan

cial initiatives to enhance these linkages through the

Asian Infrastructure Investment Bank, the Asian Bond

Fund Initiative, and, in 2014, with the participation of

Brazil, India, Russia, and South Africa, the founding

of the New Development Bank (NDB) (formerly the

BRICS Bank), with a starting fund of $50 billion. It is

too early to say if the NDB will be able to compete with

traditional institutions such as the World Bank. In the

meantime, the United States has not been in favour of

the creation of the NDB. It is also working to promote

its own regional scheme under the Trans-Pacific Part

nership (TPP), which would link up several Asian coun

tries (but not China) with the United States, Canada,

Mexico, Chile, Peru, New Zealand, and Australia. It is

widely seen as another manifestation of the US-China

competition that is bound to become more extensive in

the decades ahead.

Will China and the BRICS face the challenge? Since

2010, China's economy has entered into a period of

"slow growth" (in relative terms). Brazil, Argentina,

and Algeria as well as other "emerging" countries have

been battered by the declines in the prices of commod

ities on which their growth was based (mineral and

agricultural resources). South-South relations are on a

bumpy road since China has the capacity to flood its

southern trade partners with industrial goods, which

prevents these countries from industrializing and con

fines them to primary-sector activities.

114 PART I I Theories and Approaches in International Development

CRITICAL ISSUES

BOX 6.8 I Shanghai Cooperation Organization

Created in 2001, the Shanghai Cooperation Organization aims to form a comprehensive network of co-operation among member states on several issues, such as military security, economic development, trade, and cultural exchange, with the implicit goal of curbing Washington's influence in Central Asia. Both Russia and China want to have the dominant influence over the rich energy resources of this region and also to link up with Middle Eastern countries concerned with Washington's policy of "regime change" in the region.

"Rebels" with a Cause

Some countries, mostly in South America, want to go even further within their region, demanding a reversal of the policies of trade liberalization and privatization and openly challenging the Washington Consensus. There are, of course, big differences between economic giants like Brazil, Argentina, and Mexico, and, on the other hand, small and poor countries like Ecuador and Bolivia. The idea of coming together in the tradi tion of Simon Bolivar (1783-1830), the leader of South American independence, in the "Patria grande" (one big country) is alive, but it clashes with contradicting economic, political, and social realities.

Nevertheless, in the last two decades, South American countries have made serious efforts to make their strength and capacities converge. One of the most important projects is MERCOSUR, a trade al liance between five states with a collective GDP of $2.9 trillion, which means that this South American bloc is the fourth largest in the world after the Euro pean Union, NAFTA, and ASEAN. Parallel to MERCOSUR are other initiatives such as the Bolivarian Alternative for the Americas (ALBA) launched initially by Vene zuela, with the goal of focusing on social development, equality, and access for the poorest of the population. Practically, Venezuela, Cuba, Bolivia, Ecuador, and other nations are engaged in several programs to sup port one another in such areas as health, education, oil, and the media. It remains to be seen whether these projects will last, given the vulnerabilities of the main actors.

MOVEMENT FROM BELOW

Beyond the recent phenomenon of states challenging neoliberal globalization, of course, is the ascendancy of a glob,d -:i, il societr expressing itself through nu merous demands, demonstrations, movements, and networks (see Chapter 12). And beyond the image of anti-globalization protests and riots, a "movement of movements" seems to be in the process of becoming a significant factor in world politics. Radical authors such as Michael Hardt and Antonio Negri (2000) and Naomi Klein (2015) think that new alternative "alter-globalist" movements and demands could even tually turn globalization upside down. Thus, just as the empire appears to be expanding, an alternative politi cal organization of global flows and exchanges is grow ing alongside it.

From Chiapas via Seattle to Bangkok and Tunis

In 1994 in southern Mexico, indigenous communities represented by a group known as the Zapatista Na tional Liberation Army, otherwise known as simply the Zapatistas, appeared on the world stage, apparently out of the blue, to express their rejection ofNAFTA and the neoliberal globalization policies attached to that pro cess, which, according to them, was threatening the livelihood of the large peasant and indigenous popu lations of that region. The movement captured the im agination of media around the world, partly because of

CRITICAL ISSUES

BOX 6.9 I Latin America at a Crossroads

6 I Beaudet: Globalization and Development 115

Created in 1985, MERCOSUR is a regional trade bloc comprising Brazil, Argentina, Uruguay, Venezuela,

and Paraguay. Chile, Colombia, Ecuador, Bolivia, Peru, and Suriname are associate members. The com

bined population of the five member states (not counting the population of associate members) is over

275 million people. Although focusing on trade issues, MERCOSUR is seen by its member states as the

beginning of a more comprehensive regional union that would take the path followed by the European

Union. The discussion is continuing currently under a larger forum, the Union of South American Nations

(UNASUR), launched in Brasilia in 2008, which intends to look at issues such as economic integration,

defence, and migration. UNASUR still has a long way to go before it looks like the European Union. This

process of South American integration has risen in parallel with the decline of American domination in

South America. South American trade relations with China and the European Union have surpassed

those with the US. In the meantime, South America actually killed a North-South integration scheme

(Free Trade Area of the Americas or FTAA) proposed by US President Bill Clinton back in 1994. The United

States and Canada saw the proposed FTAA as an extension of NAFTA southward.

the symbolism attached to Emiliano Zapata (a leader

of the Mexican revolution in the early twentieth cen

tury) and also, more substantially, because the revolt

was led by farmers and indigenous people who had

traditionally been left out of the political arena, even

by anti-systemic movements. In rather unique poetic

language, Zapatistas demanded the end of neoliberal

policies (see Marcos, 2001). They became widely known

through their audacious use of modern communica

tions at a time when use of the Internet was still em

bryonic for social movements and radical projects.

Moreover, the Zapatistas were capable of creating and

deploying new codes and modes of social interaction

and communication, different from the traditional left

ist approaches. They clearly asserted, for example, that

their rebellion was not about "taking" power, but about

"changing" it. It might have been just a brilliant for

mula, but it has indeed changed the paradigm for many social movements.

In Seattle in 1999, that cry was taken up by a

wide coalition of US and international NG0s and so

cial movements that was later defined as an alliance

of "teamsters" (trade unions) and "turtles" (environ

mentalists). The occasion was the ministerial meeting

of the recently formed World Trade Organization. A large "movement of movements" became visible after

Seattle, with its adherents demonstrating in the streets

of many cities in different parts of the world. Later the

anti-globalization movement spread out in Europe,

Asia, and Africa.

Then, in 2008, the world seemed to enter a new

phase. The crash of large financial institutions on

Wall Street and across the planet led to social and eco

nomic dislocation of a scale not seen since the Great

Depression of 1929. As millions of people lost their

jobs and sometimes their houses while others had to

face scarcity and uncertainty, a widespread sentiment

came about that the status quo was untenable. A few

years later, several popular uprisings have erupted

across the world. The "Arab Spring" in 2011 pushed out

long-established dictatorships in Tunisia and Egypt.

It was triggered by the self-immolation in December

2010 of a young unemployed street vendor, Mohamed

Bouazizi, in protest of his condition. Thousands of Tu nisians took to the streets and, unarmed, confronted

security forces-leading ultimately to the collapse of

the regime.

The Arab Spring was followed by protests against economic austerity in Southern Europe, notably in

Spain and Greece. The occupation of public places, the

takeover of closed-down factories, and the massive use

of social media to spread the word and to systematically

116 •;:.nr I Theories and Approaches in International Development

expose the negative impacts of neoliberal policies,

massive corruption, and elite complicity across state

boundaries have continued for several years.

In the United States and Canada, the "Occupy

Wall Street" movement reached over 70 cities in North

America, led by a new generation of educated youth,

dispirited by the lack of suitable job opportunities. The

CRITICAL ISSUES

B X &.· I Occupy!

third country of North America that we sometimes for

get, M.exico, was also shaken by protests and mobiliza

tions against state and gang violence and corruption.

Many anti-or alter-globalization movements are not caught up in the idea of replacing a "system" with

another, but in articulating a new perspective that

proposes to break down the structures of domination

In October 2011, a group of mostly young people decided to occupy an area right in the middle of the

famous financial district of Wall Street in New York City. Zuccoti Park became for a few weeks the epi

centre of a series of demonstrations, cultural events, and workshops in which many hundreds of people

protested against the corporate influence over the political system and political Institutions and against

the privileges enjoyed by the "1 per cent" that is. the very rich people in the United States. Being located

in New York City, the protest attracted world attention and went on until May 2012, when 50,000 peo ple demonstrated in the streets. One of the causes of that protest was the growing inequality in the

US, where those with higher incomes have gained a much larger share of the national revenue over the

last decades. Among the important features of the movement were its decentralized nature, the ap parent absence of hierarchy, and the fact that nobody appeared to be in charge other than the people

themselves functioning through daily general assembly. The Occupy movement impressed onlookers

as a flash mob of serious intent, and public opinion was struck, as were some of the political actors, including Barack Obama. The US President said that the movement was expressing "the frustrations the

American people feel, that we had the biggest financial crisis since the Great Depression, huge collateral

damage all throughout the country ... and yet you're still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on the abusive practices that got us into this in the

first place" (Memoli, 2011). Similar protests were held in Toronto, and in Los Angeles, Chicago, Seattle,

San Francisco, Boston, Houston, and many other American cities. The Occupy process later appeared in

several other Canadian cities, and in Europe, Asia, and South America.

After a while, the camps were dismantled and Occupy disappeared from the limelight. However,

similar processes of engagement continued in 2012 in North African and Arab countries during the Arab

Spring of 2011 and in the following years, and protests crossed the Mediterranean when thousands

of people took the streets in Spain and Greece. These citizen actions criticize governments for their inaction in front of important social problems such as youth unemployment, massive corruption and

diversion of public funds, and recurrent violation of human rights. Although different from one another,

these social movements expressed the aspirations of a large segment of the new generations for whom

the traditional channels to express dissent and demand changes, such as political parties and trade unions, are becoming irrelevant.

It is still too early to evaluate the impact of Occupy except to say that the idea of citizen mobilization

is getting more and more credibility in the world as economic hardship and political deadlocks appear, to many people, as obstacles that cannot be confronted by working within state and international insti tutions as these are currently structured (Rowe and Carroll, 2014).

I Beaudet: Globalization and Development 117

PHOTO 6.2 I Massive street demonstration in Caracas, Venezuela.

and exclusion that marginalize the poor. This push has

been exemplified in South America, where progressive

governments came into power after the first wave of

anti-globalization protests in Venezuela, then Brazil,

Argentina, Ecuador, Bolivia, Uruguay, etc. After more

than a decade in power, people's movements are still

struggling, facing unfulfilled promises and manipula

tive rules preventing popular movements from effec

tively participating in the process of power.

The demand for "another" globalization is captured

by important national and international movements

and social forces. Since 2001, many movements and

initiatives have started a new international dialogue

to build what they call a "counter-hegemonic project."

One of the manifestations of that collective search is the

World Social Forum (\VSF), which had its roots in Latin

American activism and held its first annual conference

in Brazil in 2001 as a counter to the World Economic

Forum held annually in Davos, Switzerland. The WSF

has become a truly world process led by civil society

groups, not only to protest the neoliberal institutions

of globalization but to define alternatives to the cur

rent system. Currently, more than 500,000 small and

large social movements in the world participate in the

WSF process, decentralized into many local, national,

and thematic forums and widely using the most ad

vanced information technologies to stage ongoing and

complex debates. In 2013 and 2015, after many years in

u8 PAR'f a I Theories and Approaches in International Development

CRITICAL ISSUES

BOX 6.11 I Pope Francis: Solidarity Is the Key

In October 2014, an unusual gathering of popular movements came to the Vatican for discussions with

Pope Francis. Since his inauguration in 2013, Francis has demarcated himself from previous papal administrations by his open support for social justice and his critique of social exploitation and environ

mental neglect. Here is an extract from his presentation to the gathering of social movement activists:

The poor not only suffer injustice but they also struggle against it! They are not content with empty promises, excuses or alibis .... You feel that the poor will no longer wait; they want to

be protagonists; they organize themselves, study, work, claim and, above all, practice that very

special solidarity that exists among those who suffer, among the poor, whom our civilization seems to have forgotten, or at least really like to forget .... Solidarity is a word that means much

more than some acts of sporadic generosity. It is to think and to act in terms of community, of

the priority of the life of all over the appropriation of goods by a few. It is also to fight against

the structural causes of poverty, inequality, lack of work, land and housing, the denial of social

and labor rights. It is to confront the destructive effects of the empire of money: forced displace

ments, painful emigrations, the traffic of persons, drugs, war, violence and all those realities

that many of you suffer and that we are all called to transform .... The scandal of poverty cannot

be addressed promoting strategies of containment that only tranquilize and convert the poor

into domesticated and inoffensive beings .... Climate change, the loss of bio-diversity, deforest

ation are already showing their devastating effects in the great cataclysms we witness, and you

are the ones who suffer most, the humble, those who live near coasts in precarious dwellings or

who are so vulnerable economically that, in face of a natural disaster, lose every thing .... The Popular Movements express the urgent need to revitalize our democracies, so often kidnapped

by innumerable factors. It is impossible to imagine a future for society without the active partic ipation of the great majorities and that protagonism exceeds the logical proceedings of formal

democracy ....

Source: Pope's address to popular movements, Vatican City, 29 Oct. 2014, http://www.zenit.org/en/articles/pope-s-address

to-popular-movements. © Libreria Editrice Vaticana

South America, the WSF moved to Tunis, the "capital"

of the Arab Spring, where it was attended by 65,000 del

egates. Social movements there agreed on a program of

social action:

We have forged a common history and a com

mon stream of work which has led to some

progress, with the hope to achieve a decisive

victory against the ruling system and to cre

ate alternatives for a socially just development

that respects nature. People all over the world

are suffering the effects of the aggravation

of a profound crisis of capitalism, in which

private transnational corporations, banks,

media conglomerates and international fi

nancial institutions are trying to increase

their profits by applying interventionist and

neocolonial policies with the complicity of

neoliberal governments .... We denounce the

false discourse of human rights defense and

fight against fundamentalism, which is of

ten used to justify military occupations. We

defend the right to people's sovereignty and

self-determination. (Declaration of the As

sembly of Social Movements, World Social

Forum, 2015)

FACING THE BIGGEST CHALLENGE

Critics of the current model of globalization insist on

the non-sustainability of the process. "Hyper-growth"

and the unrestricted exploitation of the planet's re

sources are seen as challenges that social movements

need to face and surmount. The International Forum

on Globalization (2002), an independent think-tank

based in Washington with a mandate to nourish so

cial movements with alternative perspectives, argues

that the economy should be geared to "meet human

genuine needs in the present without compromising

the ability of future generations to meet theirs, and

without diminishing the natural diversity of life on

Earth."

Since the Earth Summit in Rio de Janeiro in 1992,

the world has been warned that the hyper-exploitation

of resources was creating an unprecedented problem

for humanity. However, after more than 20 years of

talks and negotiations, the problem remains as our

planet is threatened by a number of factors, including

the tremendous growth in emissions from fossil-fuel

combustion. Based on scientific evidence, there is a

real possibility that the climate will alter significantly

in the next 25-50 years so that many life forms and

CRITICAL ISSUES

6 I Beaudet: Globalization and Development 119

human settlements, particularly in the Global South,

will be at risk (see Chapter 17). Despite various at

tempts to reach a consensus, the United States and a

number of other governments seem unable to identify

affirmative policies to face the climate challenge, for

example, firm targets to limit emissions and legal re

course to enforce an agreement. As a result, it is up to

the diverse spectrum of social movements and NG Os

to take on the issue.

LOOKING AHEAD

For more than 70 years, the development debate has

been dominated by the issue of economic growth. As

the US and the Soviet Union were competing to win

allies, a limited number of states, mostly in Asia, were

able to use these processes to their benefit. But the real

ity is that for many southern countries the development

project has not yet tackled the main issues of poverty

and exclusion, although opinions differ about the vari

ety of causes that led to that result. As this debate con

tinues, macro and meta changes are taking place. In

many countries an astonishing number of social move

ments have mobilized broad sectors of society. They are

BOX 6.12 I Climate Change: Time Is Running Out

Canadian author and social activist Naomi Klein is one among many who have sounded the call for immediate action to stem the impending disaster of global climate change:

Climate change is not a problem that can be solved simply by changing what we buy-a hybrid instead of an suv, some carbon offsets when we get on a plane. At its core, it is a crisis born of overconsumption by the comparatively wealthy, which means the world's most manic consumers are going to have to consume less .... Our changing climate is like the landscape out the win dow [of a racing bullet train]: from our racy vantage point, it can appear static, but it is moving, its slow progress measured in receding ice sheets, swelling waters and incremental tempera ture rises. If left unchecked, climate change will most certainly speed up enough to capture our fractured attention-island nations wiped off the map, and city-drowning superstorms, tend to do that. But by then, it may be too late for our actions to make a difference, because the era of tipping points will likely have begun.

Source: Klein (2014).

120 PART I I Theories and Approaches in International Development

doing so (at least partially) by reinventing the language of protest while seeking more inclusionary politics. While political issues of power remain important, so cial movements increasingly do not focus exclusively

on the state. The strengths of this vast alter-globalist move

ment are obviously impressive-such as the capac

ity to create immediate coalitions to resist policies

and propose alternatives, sometimes to the extent of

changing the political leadership. At the same time,

the weaknesses of these movements are apparent as mirror images of their assets-i.e., their dispersion,

their fragmentation, their inability to propose coher

ent and long-term programs because such proposals

could jeopardize the narrow limits of the alliances on

which the movements are built. In the last while, many

popular movements were unable to stop the descent

into violent conflicts manipulated by unscrupulous

elites who skilfully played on ethnic, linguistic, reli

gious differences, as we see in many countries in Asia

and Africa. States have broken down not for the ben efit of democratic aspirations and movements, but to

abandon wide areas to the rule of the gun. Yet "alter"

experiments continue, even in war-torn countries and

regions where people literally fight for peace. Many of these networks are "glocal," meshing local issues with

global perspectives,

The old saying "think globally, act locally" no

longer applies, becau e alLer-globalist's are indeed acting globally. A strildng exampl f this phenom

enon concern the devastating HIV/AlDS epidemic. It was first addressed by gay communities in northern

Californfa, later afflicted poor communities (mostly

women) in sub-Saharan Africa with terrible conse

quences, and then was confronted by large-scale co

alitions in such places as South Africa. 1hat led to

the creation of an extraordinary "rainbow coalition' of movement intervening at the ver y heart of inter

national processes: in the UN, with powerful agencies like the World Bank, as well as directly with large

pharmaceutical corporations. 111e pressure built up, until U1eiich countries were forced to concede that the

countries most affected by the epidemic could have ac

cess to generic medication, bypassing the usual system of patents and protection for the giant pharmaceutical

companies. It was by no means a 100 per cent victory,

but the struggle allowed poor people access to some

treatment. Today, the struggle continues. These efforts

from below in combatting AIDS are mirrored in vari ous other global movements that have risen from the

grassroots. Now, governments and agencies are being challenged by well-organized and structured move

ments operating across borders, able to share informa

tion and elaborate strategies across the planet (Gibson,

2006).

SUMMARY

In this chapter, readers have learned that globaliza

tion means that new sets of relations and activities,

mostly in the economic arena, are taking place ir

respective of the geographical location of partic

ipants. In the meanwhile, even if the North-South gap remains and even if the rich countries of North

America and Western Europe remain powerful, a few countries like China have become economic

powerhouses. Out of these changes emerges a new

geopolitical and geo-economic architecture. In par

allel, globalization also ends up at the societal level,

where citizens interacting worldwide come up with important demands on social development and hu

man rights.

These changes have a huge impact over what tra ditionally has been considered as "development," in

particular, the struggle against poverty. Poverty and eco

nomic exclusion are no longer confined to the developing

countries, which explains, therefore, a new expression:

the "Global South." It means that the "South," i.e., regions affected by underdevelopment and poverty, is not only a geographic term but a reality crossing borders.

This new globalization, therefore, needs to be in

tegrated into the understanding and analysis of con temporary developmentissues. From the reform of the

United Nations to the struggle for global health or the

rehabilitation of decaying environments, new actors, new methodologies, and new approaches are acquir

ing a growing importance. The world we live in, along

with it all its development challenges, will never be the same.

6 I Beaudet: Globalization and Development 121

QUESTIONS FOR CRITICAL THOUGHT

1. How is globalization changing the meaning of"development"?

2. Why might some countries be characterized as "winning" in the globalization process? What explains that

others appear to be losing?

3. What is "alter-globalization"? What are the strengths and weaknesses of the various alternatives to neoliberal

globalization?

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ons" came to include other "emerging" Asian econo

mies like Malaysia and Vietnam.

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Harvey, D. 1990. The Condition of Postmodernity: An Enquiry

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Hebron, L., and J.F. Stack. 2009. Globalization: Debunk

ing the Myths. Upper Saddle River, NJ: Pearson

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Africa: Fostering Durable and Inclusive Growth.

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billion dollar losses." 15 July. http://jubileedebt.org.uk/

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billion-dollar-losses.

Klein, N. 2014. "The change within: The obstacles we face are

not just external." The Nation, 22 Apr. www.naomiklein.

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are-not-just-external.

- -. 2015. This Changes Everything: Capitalism vs. the

Climate. New York: Simon & Schuster.

Lenhard, J. 2010. Is Globalization Causing the Decline of the

Nation-State? Munich: Grin Verlag.

Lerman, R.I. 2002. "Globalization and the fight against

poverty." www.urban.org/publications/410612.html.

Marcos, Subcommandante. 2001. Our World Is Our Weapon.

New York: Seven Stories Press.

Marx, K., and F. Engels. 1967 (1848). The Communist

Manifesto. London: Penguin.

Memoli, M.A. 2011. "Obama news conference: Obama: Occupy

Wall Street protests show Americans' frustration." Los

Angeles Times, 13 July. Accessed 7 Oct. 2011.

Ohmae, K. 1995. The End of the Nation State: The Rise of

Regional Economies. New York: Free Press.

Oxfam International. 2000. Growth with Equity Is Good for

the Poor. Oxfam Policy Papers, 6-2000. team. http://

univparis1.fr/ teamperso/DEA/Cursus/L3/Memoire/

Growth_Inequality%20OXFAM.pdf.

--. 2014a. "Rigged rules mean economic growth

increasingly 'winner takes all' for rich elites all over

world." www.oxfam.org/en/pressroom/pressreleases

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--. 2014b. Working for the Few: Political Capture and

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Phelps, G., and S. Crabtree. 2013. "More than one in five

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Rowe, J., and M. Carroll. 2014. " Reform or radicalism: Left

social movements from the Battle of Seattle to Occupy

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202 (Sept.-Oct.).

--. 2000b. " War against nature and the people of the

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The Effects of Globalization and the WTO on Third

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91-125.

Stiglitz, J.E. 2002. Globalization and Its Discontents. New

York: W.W. Norton.

Sung, Y.-W. 2005. The Emergence of Greater China: The

Economic Integration of Mainland China, Taiwan and

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english/res_e/statis_e/its2014_e/its14_toc_e.htm.

PART II

International Development

Actors

Activists from the New Trade Union Initiative (NTUl)-a national platform of non-partisan left-democratic trade unions of

formal and informal sector workers in agriculture, forest, construction, manufacturing and services-stage a sit-in in New Delhi to protest against the arrest of the Union leader Binayak Sen. I Source: RAVEENDRAN/AFP/Getty Images

VERITABLE EXTRAIT DE VIANDE UEBIG.

State of the State: Does the State Have a Role in Development?

LEARt'J'ING OBJECTIVES

• To gain familiarity with the historical context of

debates about the role of states in development.

• To understand the differences between north

ern and southern states and why simple policy

prescriptions do not seem to gain traction in the

South.

• To be able to explain the differences between the

market-led and state-led views of development

and related debates.

To appreciate both the opportunities and con

straints upon state leadership and responsiveness.

• To understand the basic concepts and issues be

hind good governance.

.It. A historic poster depicting the colonies of the European powers: France, with illustrations of a French soldier, the palace of

former queen Ranavalo at Tananrive, Magagascar, along with certain exports and drawings of the colonized. I Source: © Lebrecht Music and Arts Photo Library/Alamy Stock Photo

WHAT IS THE STATE? THE LEGACY

OF COLONIALISM

Before we get to the role of the state, we first should de

fine it. The most prominent approaches-international

relations and Weberian theory-rely on simple criteria

to define the state: it is an entity with monopoly over

the means of force within a designated territory that it

controls, enjoying legitimate support for that monop

oly from the majority of the population residing in the

territory and recognition of its control by other states,

and is empowered by the population with making pub

lic decisions.

While this definition may seem straightforward, it

is problematic in a developing-country context and has

been accused ofEurocentrism-that is, being based on

European experience by those who consider this expe

rience to be normative. The most obvious problem is

that states in the European context, such as the United

Kingdom, developed a historical identity over thou

sands of years, along with slow political centralization,

that in part reflect natural geographic communities

(Poggi, 1978). For example, the UK's physical separa

tion from the European continent has and continues

to have consequences for its view of itself as a force in

dependent of Europe, demonstrated by its policies to

wards European integration. Even relatively new states

such as Germany and Italy, formed in the 1870s, share

a common language and cultural and religious identity

as well as historical experiences, including civil wars

and wars fought as a nation.

In the developing world, there was generally no

such historical evolution. Rather, states were carved out

through European conquest and division, and national

identities and states were forged over shor t periods

in response to European imperialism. In some cases,

nations such as Brazil had no centralized entity that

would resemble a modern state at the time of conquest.

In others, genocide through direct means and popula

tion loss caused by disease imported from Europe, as

happened in many parts of the Americas, wiped out

large portions of the indigenous population, opening

the way for the transplantation of completely new pop

ulations, including slaves from Africa. In Africa, the

Middle East, and parts of Asia, colonial states were

created with the express purpose of mixing different

7 I Hira: State of the State 125

populations together, a divide-and-conquer strategy

that allowed colonial masters to impose a relatively

privileged minority's control over a large, resistant na

tive population in spite of the relatively low numbers of

colonizers in relation to local populations. In several

colonies, the imposition of a new colonial elite made

up of a different group from another area was added to

local divide-and-conquer strategies, such as adminis

trators from South Asia imported as bureaucrats and

military officers in South Africa. In others (as in Japan's

control over Korea or the British favouring the Sunnis

over the Sh'ia in Iraq), the colonial masters simply cre

ated or chose a local minority to be their surrogates.

Colonial powers planted further seeds for ethnic strife

in the way borders were drawn, often across ethnic or

religious lines, creating permanently divided states.

The privileged locals chosen for administration formed

the core of the emerging states, through power struc

tures that often continued after independence. Thus,

a relatively small external power could control a vast

empire through its local allies, who then had a vested

interest in the continuation of the system, whether

through direct control or other ties (see Chapter 2).

While "artificial" in the sense of not representing

the natural evolution of historical and cultural identity

forces over prolonged periods, the states set up by colo

nizers nonetheless enjoy the other aspects of statehood:

control of the means of force (e.g., the army and police)

and the ability to make public decisions. What they

seem to lack in many cases is a strong sense of legiti

macy in terms of support among the population. This

does not diminish their central role in development,

but it does begin to shed light on the myriad additional

difficulties that developing states face above and be

yond those of Western states.

Even in states without a system of direct colonial

control, the colonial economic system created incen

tives for compliance. Colonial economies were set up

under a system called mercantilism to serve the inter ests of the colonizing or "mother" country. They pro

vided raw materials or slaves to the colonizing country,

receiving the home country's finished goods in return. They generally were banned from selling directly to

other countries, including colonies within the same

system, thus ensuring a profit for the home country acting as a middleman. The system also stifled or shut

down existing industries; in India, a budding textile

126 PART II I International Development Actors

C..O CEf!_..__ _____________ _

BOX 7.1 I The Nature of Authority in the State

What is the source of legitimate authority within a state? There are a number of competing theories about how a government can come to power with the acceptance of the vast majority of its citizens.

While empires formed early, such as China, were based on family dynasties, the situation was much

more complex than solving the problem of political succession by family lineage. Even in China, a strong set of values based on the teachings of Confucius insisted that leadership should have a meritocratic basis and that it had a paternalistic duty to govern its citizens well. Similarly, military governments that have taken over states in the South have always given reasons as to why their actions were necessary. Thus, even in non-Western empires and military dictatorships that we sometimes deem despotic, there is a sense of the need for a government to gain popular support and acceptance (legitimacy). While not dismissing the fact that many governments also use repression, no state in history relied solely on repression.

Much of political philosophy is concerned, therefore, with the terms and means by which a state gains legitimacy. Idealized notions based on the writings of John Locke suggest a legitimate state is one in which people come together voluntarily to create a compact for mutual defence and collective action; this is why political scientists often have focused on constitutions as the reflection of political will. Others, such as Thomas Hobbes, felt that passion guides men as much as reason and that a cen tral authority, one with a monopoly on the means of coercion but with the agreement of the population, was the only way to create peace. With the Enlightenment in eighteenth-century Europe, which empha sized reason over tradition, a more group-oriented view of the state started to develop. For example, Jean-Jacques Rousseau suggested that the state had to reflect the collective will of the people; thus the freely agreeing individuals of Locke's perspective could be superseded by what was best for the nation as a whole. This created the idea that a state might sometimes make decisions that were unpopular in the short run but that, nonetheless, were for the general good. It also supported popular revolutions in the American colonies and in France. As the twentieth century progressed, more cynical views of the state's sources of legitimacy appeared. One set of Marxist critiques sees the state as reflecting only the interests of the powerful. These arguments reverberate today with questions about the undue influence of corporations on political decision-making. Political theorists continue to work on these ideas, with much activity going into how vibrant participatory democracies can be created, ones in which citizens participate in decision-making well beyond an occasional vote.

industry collapsed under British pressure. For colonial

elites, many of whom had nobility status and/or had

been given large mineral and land rights from the col

onizing or metropolitan country during colonization,

their well-being depended on the system's continuation.

As colonies grew, local administrations relied al

most exclusively on taxes on exports of their products,

so the colonial state was very much tied into the com

modity trade of the mercantilist system. This also was

true in countries not directly colonized, such as China,

where control by European imperial powers over trade

and investment, extending at one point to dividing up

control over various ports, led to a strongly dependent

relationship between local Chinese administrations

and European states. In many cases, outside investors

controlled large and key strategic assets of the state,

such as the British building and owning Argentina's

railway. This system of economic control extended

even after many colonies achieved independence in

the post-World War II period. Thus, even though the

7 I Hira: State of the State 127

PHOTO 7.1 I Brazil has invested in oil exploration and exploitation via its state-owned enterprise Petrobras, as

indicated by these oil rigs off Rio de Janeiro.

formal mercantilist system broke down long ago, econ

omies continue to exhibit many of the patterns of the

colonial era. Those patterns include the frequent intru

sion of the military into state affairs and widespread

corruption in the state. This also can be seen in good part as a colonial legacy, as the military and adminis tration were the instruments of colonial power, reflect

ing the combination of force and co-optation used to control populations and extract resources.

Some analysts see this neo-colonial system as hav ing both pressures and opportunities for state leader ship. During the Cold War, for instance, the rivalry between the United States and the Soviet Union al

lowed some smaller states, such as Cuba, to play off the

two superpowers and thereby receive large amounts of

aid, in this case from the Soviets. Mainstream econo mists point to the rapid expansion of the world econ

omy during the 1960s and large US expenditures and

imports as an environment that allowed for the devel

opment of the East Asian economies of Japan, South

Korea, and Taiwan, the (temporary) "miracle" econo

mies of Brazil and Mexico, and rapid growth in states

such as Kenya. On the other side of the debate, critics

suggest that there is now far less leeway for states to

break away from neo-colonialism. The continuing re

liance of many countries on commodity exports and on external technology, investment (highlighted by the debt crisis throughout the developing world in the

198os-see Chapter 14), and imports, and the " brain drain" of the best and brightest to the West all are signs of the persistent difficulty that developing states face

in engendering economic development. A further dif

ficulty is the link between military rule in much of the

developing world over extended periods and the influ

ence of outside powers, such as US support of a variety

of dictators and strongmen during the Cold War.

128 PART II \ International Development Actors

DEFINING THE STATE'S ROLE

IN DEVELOPMENT

With this historical background, we can now turn to the

task of analyzing the role of the state in fostering devel

opment. At the most general level, the debate revolves

around whether a state should be an active leader or a

responsive follower. Part of the answer to this question

depends on whether you see the nature of the state as

compradorial or Weberian. The term "compradorial"

was coined by radical (Marxist-influenced) development

analysts to describe the ties of the developing state to

external interests, whether foreign governments, inves

tors, or military, and to the local resource-owning and

internationally oriented capitalist class. Thus, this line

of thinking sees the post-colonial state as continuing

to be colonial in nature, run by an elite " bought out" by

and/or in alliance with foreign interests. By contrast, a

Wcberian view emphasizes the rational-purposeful na

tionalism of a modern state, regardless of its origin. Thus,

in this view, even though India, for example, was created

by colonial fiat, that does not prevent it from developing

a government that is purposeful, rational, and legitimate.

State Capacity and Autonomy

Political economists such as Grindle (1996) have long

pointed out that developing states struggle in several ar

eas. The term ·tal � 1, dly is often used to suggest that

developing states may not be as capable of weighing tech

nical decisions as their counterparts in the North. Their

personnel may not be as well-trained; they may not have

as up-to-date equipment; and their budgets are likely

PHOTO 7.2 I Paraguay has developed an ethanol industry in an effort to reduce dependency on oil imports.

to be considerably smaller. The term state autonomy is

often used in this context to mean the degree of"insula

tion" that a state enjoys from social and external forces.

The governments of states overrun with political pres

sures are more likely to make politically rather than mer

it-based decisions. In short, they may make decisions that

favour a small group and themselves rather than the na

tion as a whole. For example, many developing-country

civil services appear to lack meritocratic hiring and pro

motion practices. States that are insulated may be better

able to resist pressures to escalate spending as a means

of gaining political support. On the other hand, insula

tion can mean greater opportunity either for enlightened

leadership or for corrupt and incompetent administra

tion. Scholars such as Evans (1995) point out that the sit

uation is much more complex in practice. Evans uses the

term embedded autonomy to refer to states that develop

strong network ties with foreign and domestic elites yet

manage to retain some degree of autonomy for the pur

suit of national interest. Miguel Angel Centeno's study of

Latin America (2002) adds other important insights into

why state autonomy is so often lacking in the develop

ing world. He suggests that Latin American states lack a

strong sense of nationalism, using as examples the lack of

shared national cultural symbols.

CENTRAL DEBATES ABOUT THE

ROLE OF THE STATE IN ECONOMIC

DEVELOPMENT

The Push for Early Industrialization

Considering the role of the state in terms of economic

development opens up a more detailed level of analysis.

Over the course of the twentieth century, Keynesians

argued for a significant state role in managing the

economy while free-market theorists (neoliberals)

proposed that the state's role should be minimal (see

Chapter 3).

Scholars such as Sir Arthur Lewis (1955) posited

that as previous colonies' agricultural sectors were

modernized, the natural labour surplus of agricul

tural workers would be free to move to cities. In fact,

continuing urbanization remains a central feature of

almost every economy. However, Lewis also expected

7 I Hira: State of the State 129

that the labour surplus would lower wages to the point

where the natural comparative advantage of abun

dant labour would begin to attract industries, creating

a positive cycle of growth and employment and thus

no need for state leadership. In the aftermath of World

War II, when many of the independent states of Africa

and Asia were created, the lack of evidence for "natu

ral" industrialization a la Lewis led to the adoption of

Keynesian-oriented policies, favoured for obvious rea

sons by states ( because it required their leadership) and

by organizations such as the International Monetary

Fund (IMF), the World Bank, and the regional devel

opment banks (which later would change their advice

to promote the free-market approach; see Chapter 9).

In the early 1960s, the push for industrialization

became one of the central goals of developing states

in order to "modernize." Industrialization would help

to diversify exports, reduce the commodity and other

dependency aspects of post-colonial economies, and

help to create a middle-class domestic market of highly

skilled workers. However, a second axis of debate about

the role of the state then became central: how was in

dustrialization to be accomplished? At one extreme,

many saw the Soviet Union at the time as a paradigm

of efficient and rapid industrialization, accomplishing

large and rapid increases in basic industrial produc

tion (such as steel) as a result of successful five-year

plans. Countries as diverse as India, Ghana, Cuba, and

Egypt began to emulate the state planning model by

the late 1950s and early 1960s. The Soviet model, and

later the Chinese model, was also attractive in terms of

socialism-an example of state leadership in creating a

more equitable nation that would correct the inequities

rooted in colonialism and exacerbated by capitalism's

privileging of elite classes. Skepticism, however, gradu

ally emerged regarding the ability of the model to cre

ate viable industries or improved equity. The standard

of living in Soviet bloc countries appeared to be well

below that of the West, and the gap was increasing over

time. Large amounts of steel did not translate into the

same price for or quality of middle-class consumer

goods such as automobiles. With regard to equity, the

image of socialism as a benign policy for the better

ment of people everywhere took a hit with the Soviet

repression of rebellions in the areas it controlled, such

as East Germany, Hungary, and Czechoslovakia, and

Chinese repression of internal dissent. There was also

130 PART II I International Development Actors

BOX 7.2 I The Debate between Keynesians and Free Marketers

While many of the pioneering works of economics are based on markets and free trade, such as the work

of Adam Smith and David Ricardo, the belief in markets was severely shaken by the worldwide Depres

sion marked at the outset by the 1929 New York stock market crash. The crash led to a ratcheting up of tariff walls, and as unemployment rates soared throughout North America and Europe, the beginnings

of the welfare state were constructed. John Maynard Keynes (1936) gained the attention of the Franklin

Roosevelt administration in the US and of various European governments by creating a new set of theo

ries about why the market might fail, including the possibility of a liquidity trap of low interest rates and

high unemployment (Hall, 1989). Keynesianism also reflected massive popular and social uprisings and

demands (Polanyi, 1944). In such cases, the state should step in to "prime the pump" by spending to

reactivate the economy. The state's role in addressing "market failures" then extended to many of the

aspects of life we take for granted in the West: subsidized education and health care, unemployment

insurance and pensions, and public aid for those who are not able to work. Around the same time, schol

ars such as the Austrian economist Friedrich Von Hayek (1944) suggested that states, not markets,

were more likely to fail. This view resonated during the Cold War, with fears of totalitarianism spreading

from the Soviet Union and also following the diagnosis that the increase in tariffs had choked off inter

national trade, leading to the Great Depression. As we discuss below, Milton Friedman, a University of Chicago economist, became the new champion of markets and helped to "win" this battle of ideas in

the political arena by the 1980s. Of course, with the most recent financial crisis, which began in the

US in 2008, the neoliberal free-market solution to all that ails economies once again has been found

wanting-for the simple reason that markets are not simply neutral, self-operative entities; rather, they

reflect all the positive and negative aspects of human individual and collective behaviour.

Source: PBS, "The Commanding Heights," at: www.pbs.org/wgbh/commandingheights/

growing awareness that the Communist states were creating their own coddled elites within the state party

and the bureaucracy. It is now well documented that

the cost of militarization and global conflict by proxy

imposed a heavy burden on the state socialist econo

mies, particularly the Soviet Union.

Industrialization in other areas began to occupy

a middle ground between market and state. In Latin

America, a school of thought called "structuralism" be

gan to emerge (Hira, 1998). Structuralist thinkers, led

by Raul Prebisch (1950), suggested that the state was

needed, at least initially, to destroy the "bottlenecks"

that prevented a market-based industrialized economy from developing naturally as expected. Prebisch, who

later became the head of UNCTAD (United Nations Conference on Trade and Development), was highly

influential throughout the world. One of his basic ideas,

the Prebisch-Singer hypothesis, suggested that commod

ity prices were more volatile and earned less, over time,

than industrial goods-because manufactured goods

became more sophisticated (while coffee remained cof

fee). Therefore, developing economies needed industry

to be able to reach the same standard of living as north

ern economies; the policies adopted became known as "import substituting industrialization" (IS!).

Prebisch's ideas about bottlenecks refer to the

foundations of any economy: its productive, financial,

and labour systems. In terms of productive systems, for

example, too many developing states rely on outside technology and know-how. They need to develop their

own technology to avoid being left behind and having

to pay for it and adapt it to local conditions.

As Gerschenkron (1962) pointed out, protection ism was part of the industrialization experience for northern states. Most developing states have poorly functioning financial systems. Because local popu lations do not trust their banking systems, for which regulatory oversight is generally poor (such as a lack of government-backed deposit insurance), those who can do so place their money in foreign accounts, while oth ers have little formal means of saving or borrowing. In terms of labour systems, the poor educational systems in developing countries mean that only a small num ber of people are well-trained and, lacking opportuni ties at home, they tend to emigrate. Thus, large-scale access to higher education is needed to create viable middle-class-based economies that can function as a domestic market for goods. Prebisch also suggested integrating southern economies to achieve more effi cient industries that can sell to each other until they can compete with well-established Western industries.

While Prebisch's ideas have been highly influen tial, they still leave a great deal of ambiguity in terms of how the industrialization process could best be pushed forward: where, precisely, does the state's role lie in the spectrum of possibilities between state planning and laissez-faire markets as a means of eliminating bottle necks? On this foggy ground, a secondary level of de bate has emerged.

Many of the World Bank projects in the early 1960s centred on large infrastructure projects, such as airports and hydroelectric dams, which were expected to create the foundation for a modern economy. At this time, argument ensued over whether a "big push" or a targeted industrialization strategy would work best. Scholars such as Rosenstein-Rodan (1961) argued that a " big push" of capital investment across a variety of industries would be needed to sustain industrializa tion. This idea was reinforced to some extent by Albert 0. Hirschman's idea of "linkages." Hirschman (1971) noted that some industries, such as the automotive in dustry, rely on a series of other industries for production of its final product-mining and smelting to provide the steel; rubber and tire manufacturers; and a variety of other producers for inputs. It also relies on a retail network to sell the product. However, for a developing country to pursue all industrial and infrastructure av enues simultaneously might not only be impossible in terms of its financial means but also might overwhelm

7 I Hira: State of the State 131

the technical and managerial capacity of the state. As an alternative, the state could start by targeting specific industries and then extend the effort to other indus tries. Japan, for example, initiated advanced industrial ization with electronics, with now well-known brands such as Sony and Toshiba leading the way under state guidance. Later, the Japanese began pushing into the more sophisticated and challenging auto industry.

By the early 1970s, economists and policy-makers had become disillusioned about the state's role in de velopment. In 1973, when the Organization of Petro leum Exporting Countries (OPEC) ramped up the price of petroleum, the world economy went into a tailspin of low growth and high inflation ("stagflation"), which Keynesian theory seemed inadequate to explain. In the short term, the situation created a large increase in li quidity in the form of petrodollars lent by newly wealthy oil sheiks to other developing countries via New York and London banks, which then used the free-floating dollar as the common currency. In the long run, this rash of increased borrowing for state projects created an extremely high level of indebtedness that continues to haunt the developing world today (see Chapter 14). Determination to end inflation led the US Federal Re serve to raise interest rates precipitously in 1982. Along with a drop in oil prices , this action ended the period of easy borrowing and created a major debt crisis for developing states that had borrowed on adjustable in terest rate terms in dollar denominations. With limited international borrowing and no mechanism of default (declaring bankruptcy), developing nations began to embrace or were forced into a new set of neoliberal pol icies, signalling the end of the era of state leadership for industrialization.

The Rise of and Justification for Neoliberalism

A number of factors lay behind the international wave of conservatism that swept the world in the 1980s. Stag flation was one factor, but on the political side, the sense ofloss of power in the US and Europe also played a role. For example, the US under President Jimmy Carter had suffered a prolonged humiliation when its embassy was stormed and hostages were taken during the 1979 rev olution in Iran, followed by a rescue attempt that failed miserably. These events resonated deeply with the

132 PART II I International Development Actors

earlier defeat in Vietnam and other historic "losses"

on the part of US allies in China, Nicaragua, and Iran

itself. Conservatives pushed for a return to the "good

old days" of power and security in the North. The

market-based economics they promoted was appeal

ing to many southern economists and policy-makers

because it seemed to offer a solution to the new con

straints on spending created by the debt crisis.

Challenges to neoliberalism sprang up almost im

mediately. While poverty diminished in some areas,

income inequality, by most measures, has increased in

most of the world (and between the North and South)

outside of the "miracle" economies of East Asia. And

are the gains sustainable in terms of the environment?

Moreover, efforts to create textbook free-market mod

els a la Chile (allegedly)-for example, in Ghana and

Jamaica-led to short-term monetary stability but

CRITICAL ISSUES

BOX 7.3 I "The Chilean Miracle"

to long-term stagnation and worsening equity (see

Box 7-3).

The most serious challenge to neoliberalism comes

from a wave of literature that sought to explain the

precipitous rise of East Asian states and their achieve

ments in both growth and equity. Authors such as

Chalmers Johnson (1982) led the charge that the state

not markets-was responsible for these achievements.

Johnson coined the term "developmentalist" state to

suggest that a state could target particular sectors for

successful promotion, which would lead to improve

ments in equity through job creation. This concept

raised the question as to why such efforts had appar

ently failed in the rest of the developing world. The

answer is complicated, but Johnson and others suggest

that the ability of the state to "govern" the market, or to

guide the domestic private sector through incentives,

In 1973, General Augusto Pinochet led a coup that took over Chile. By 1975, he had adopted economic

policies that followed his largely University of Chicago-trained economic advisory team, nicknamed "the

Chicago Boys." Chile's monetary stability, despite a crisis in 1982 and relatively high growth rates, acted

as a demonstration of the ability of markets, rather than of states, to lead to economic development.

In the case of Chile, the state reduced legislation and regulation regarding labour unions and strikes,

which the economists claimed made the Chilean labour market more flexible and adaptable (though

these moves clearly also served political purposes). These legislative and regulatory changes were

made possible by extreme repression of dissidents after 1973, which left thousands dead or in exile.

The Chilean government also reduced many import barriers that had been set up under the 1s1 system

to protect domestic producers, and unified and then, at least initially, floated the exchange rate. While

maintaining some requirements for how long capital should stay in the country, the state also invited

in foreign capital and investment. Chile went through a second wave of reforms in the 1980s, featur

ing the privatization of many state-owned companies (though not the copper company), including the

state energy companies, to foreign interests, which would have been unthinkable in the 1960s, when

anti-imperialist sentiments surged. Another major reform, also previously unthinkable, was to privatize

the social security system, allowing individuals to choose their own pension funds, overseen by gov

ernment regulation. Similar market-friendly reforms were carried out in education and health. Though

Chile is now a democracy, the same neoliberal policies have continued. Increased social spending has

reduced absolute poverty, and there has been a successful transition of government from left-wing to

right-wing parties (with both moving to the centre). Yet the success of new exports, such as fish, wood,

wine, and fruit, based on state policies, has not reduced income inequalities or a strong dependence on

copper exports. Therefore, the Chilean case remains controversial, both in its accomplishments and in its "lessons" for other developing states (Hira, 1998).

distinguishes the path followed in East Asia from that

of other states (Wade, 1990). For example, the devel

opmentalist state provides subsidies and/or protection

only if certain performance targets are achieved, and it

requires competition among domestic companies in a

bid for state help.

Arguably, the relative dominance of the East Asian

state enables it to provide greater leadership to the pri

vate sector than is possible in other regions with less

dominant states (Hira, 2007). Moreover, other authors

(Haggard, 1990; Gereffi and Wyman, 1990) who have

compared East Asian and Latin American industri

alization conclude that East Asia's export orientation

represents another key difference. Export orientation

means that domestic producers have to produce goods

and services that can compete in world markets. Ex

port earnings offer a new source of revenue that the

state can then f unnel into new investments, including

new industries, and thereby reduce pressure to borrow

from abroad, as well as decrease exchange rate and in

terest rate volatility. However, mainstream economic

institutions have not taken such challenges to market

supremacy lying down (see Box 7-4). In 1993, the World

Bank produced a rejoinder entitled The East Asian Mir

acle, suggesting that markets and macroeconomic bal

ance were primarily responsible for growth, although it

CRITICAL ISSUES

7 I Hira: State of the State 133

grudgingly conceded some role for the efficient Asian

institutions that allowed markets to function well

(World Bank, 1993).

From Neoliberalism to Governance

Mainstream economists, the vast majority of whom

continue to support neoliberal policies because they

are in line with mainstream economic theories, have

begun to consider institutions an important variable

for economic growth as they seek to explain the dis

appointing results of market reforms (Stiglitz, 2002).

Economists such as Anne 0. Krueger (2000), who went

on to become head of the IMF, suggest that a second

generation of neoliberal reforms is needed for markets

to function well. The state must become an efficient

market regulator, ensuring adequate contract enforce

ment and market-based information (such as price

information); it must be capable of taxing and restrict

ing spending; and it must be free of corruption in its

decision-making. Thus, for mainstream economists,

what went "wrong" with neoliberal reforms was not the

need to pare back the state and allow markets to make

decisions, but simply an underestimation of the impor

tance of state regulation for the minimization of trans

actions costs. Transactions costs involve running a

eox 7A- I Good Governance and Good Institutions

The early work of economist Douglass North (1981) as well as James M. Buchanan and Gordon Tullock

(1962) of the Virginia School presaged a slow but steady shift of economists, from the 1990s onwards, to begin to ack nowledge that non-market factors, particularly institutions, could play a major role in the

healthy functioning of markets, implying a subtle but important shift away from neoliberal perspectives. These perspectives focus on impediments to market functioning-such as lack of information and un certainty and inadequately enforced contracts or property rights. A somewhat more activist approach in development economics is starting to gel around the work of celebrated Harvard economist Dani Rodrik. Rodrik (2006) suggests an even more active state approach might be needed, acknowledging its role in East Asian development. Rodrik does not endorse any clear prescription, stating that diagnostics

for each situation must be conducted. His general approach is to suggest a market-conforming role for the state, such as investing in education or an industrial policy that helps to build upon existing export industries or ones where a clear comparative advantage exists. A weakness of these good governance

approaches is that they do little to distinguish what makes for a "good" versus "bad" institution, other than the results, or how one goes about creating "good" institutions.

134 PART II I International Development Actors

market, such as transporting goods from buyers to sell ers, and the costs of a lack of clear information, which

creates uncertainty and risk, and the lack of standards

(an example would be appliances that run on different

voltages). So, the second generation of reforms, par

ticularly developing sound judiciaries to enforce prop

erty rights and contracts and to eliminate corruption,

is really the key to spurring development in the South.

According to this view, while the state regulates to re

duce transactions costs, it cannot replace the market as

the primary economic decision-maker.

The World Bank has picked up on this theme,

using the term g0Yerna11cc to refer to its new-found

concern with how well states function in manag

ing markets. It is interesting to note that this new

tack still allows economists to avoid overtly politi

cal analyses (see Chapter 9). Governance thus came

into the debate to encompass a variety of attempts to

reform the state since the 1990s. Like globalization,

it has been used in different ways and contexts to

PHOTO 7.3 I Worker preparing small ornamental fig

trees for export, Las Palmas, Canary Islands.

mean different things. In the most general sense, the

idea of governance developed in response to the cri

sis of the state caused by neoliberal market-friendly

policies. Shackled with debt and forced to retrench,

the state lost its role as the leader in economic de

velopment. Even in welfare programs and utilities,

privatization, subcontracting, or publi.:--prn partner-hips are viewed as superior to the post

World War II Keynesian state, which was dispar

aged for the economic crises of the 1970s and 1980s.

On the other hand, the general lack of economic

growth and worsening income distribution between

the North and many parts of the South led some to

re-examine state capacity for development.

Rent-Seeking and State Capture: The Battle against Corruption

The idea that the state was the problem with-not the

solution to-economic development resonated with many people who had seen colonial states transformed

into patronage-heavy and highly inefficient public pro

jects and enterprises. Scholars such as Krueger (1974)

coined the term "rent-seeking" to describe how states,

even in the North, could become "captured" by special

interest groups in the private sector, leading to poli cies that benefited a privileged minority. The charge

of state corruption had broad appeal in the South and

led initially to the success of neoliberal populists such as Carlos Salinas in Mexico, Alberto Fujimori in Peru,

Fernando Collor de Melo in Brazil, Carlos Andres

Perez in Venezuela, and Carlos Menem in Argentina.

The fact that all these leaders were later pushed out on

corruption charges helped to sour the popular appeal

of neoliberalism but did not eliminate the central prob

lem of state capture. State capture now often includes

the idea that powerful private interests, such as, but

not limited to, foreign corporations, can undermine

the ability of the state to pursue national policies in the

collective interest and thereby undercut the democratic

process.

The focus on good governance for mainstream de

velopment agencies has meant a battle against corrup

tion. Various scoring indices have been developed for

an annual rating of the level of corruption of a country,

such as those of Transparency International, the World

Bank, and the World Economic Forum. The data for

these exercises are largely gathered from survey s of in

ternational business executives. While valuable, indi

ces based on such a limited and understandably biased

perspective only tell a part of the story, that is, how

" friendly" a particular country is to the interests of

international business, such as full profit repatriation,

which might not be in national interests.

The focus on good governance does not just stop at

how conducive to business the social and political envi

ronment is in a particular country. Most development

agencies have adopted some form of "results-based

management" and, at least rhetorically, a recognition of

the need to consult stakeholders. The Millennium De

velopment Goals, adopted in 2000 by a wide range of

multilateral and bilateral aid agencies, were designed to

create some clear, measurable targets for donor assis

tance levels, with results to be achieved (such as the wip

ing out of certain diseases) over certain periods of time,

and the requirement for good governance by recipients.

The goals were to be achieved in 2015, and while pro

gress was made in some areas, such as levels of aid and

trade, in other areas, such as access to medicines, the

results are both more ambiguous and limited. While

poverty has been reduced in the world, that reduction

has been concentrated in certain countries, particularly

China. Moreover, it is difficult to say whether achieve

ments, such as Bangladesh's policy efforts to reduce in

fant mortality, are a result of the goals or independent

of them. In 2016, the UN introduced the Sustainable

Development Goals (SDGs) to replace them. The SDGs

expand the number of goals to 17, to include many re

lated to the environment. Goal 16 is specifically focused

on "peace, justice and strong institutions," reflecting the

governance agenda. The goals, such as wiping out ex

treme poverty, are to be achieved by 2030.

What may be normal in regard to governance in

one place, such as allowing a friend speedier service,

may be viewed as corruption in another. For example,

Robinson (2009), reflecting findings by others, relates

how a serious overhaul of the civil service in Uganda,

including raising salaries and creating anti-corruption

agencies and independent revenue authorities, had in

itially promising results but ultimately ebbed into fail

ure. More ironically still, strong evidence indicates that

donor agencies and NGOs themselves suffer from a lack

of accountability and transparency (Berkman, 2008;

Cremer, 2008).

7 I Hira: State of the State 135

Thus, it is important to distinguish dicntclism

from corruption. Clientelism is favouritism for par

ticular groups that may be perfectly legal (unlike cor

ruption) but inimical to social interests. Continual

scandals in the North, from the fraudulent account

ing that led to the collapse of US companies Enron

and World.com in 2001-2 to investment misinfor

mation by Goldman Sachs and others in 2009, have

brought a new wave of interest in corporate ethics.

Moreover, a review of corruption indices over time,

such as that of Transparency International, shows

little movement from high to low corruption, and of

fers no real explanation for why corruption occurs.

All of this indicates that much deeper (possibly cul

tural and political) roots are at play in the fight against

corruption and clientelism, and that it is a universal,

not an exclusively southern, problem that deserves a

lot more attention.

GOVERNANCE AS A PROCESS

OF DEMOCRATIZATION

For non-economists, "governance" has come to mean a

wide variety of other things related to a supposed cri

sis of the state throughout the world. The crisis of the

state in the North refers to the lack of interest and elec

toral participation among large segments of the popu

lation, as well as a supposedly growing cynicism about

the increasing reach of the state over the course of the

twentieth century. In the South, the crisis stems from

the fragility of democracy, as well as from dissatisfac

tion with the ability of democracies to address long

standing structural inequalities. Therefore, the original

economic definition of "governance" that focused on

good regulation of markets is now matched with an

emphasis on finding additional means of enhancing

the participation of citizens, called "civil society," as

individuals and groups in collective decision-making

through state co-ordination (see Chapter 12).

For most economists and in practice, this evolution

has meant state co-ordination with the private sector.

Studies have suggested that greater civic and political

engagement ("social capital") leads to higher economic

growth and development (e.g., Putnam, 1993). Cer

tainly, southern democracies have a host of deficiencies,

ranging from common voter fraud to extremely weak

136 PART II I International Development Actors

opposition parties and judiciaries. These shortcomings have been viewed as both reflecting and exacerbating the often polarized nature of their polities. This Ii ne of thought led to a different use of "governance" to mean co-ordination of collective decision-making among stakeholders, and had profound effects on development policy-making and practice, which now actively so licits outside parties (the stakeholders, generally lim ited to certain acceptable points of view) to take part in the decision-making process, including civil society or the general public. Such an approach is different from allowing only well-organized and well-funded lobby groups into the decision-making process. Thus, the state becomes as much a facilitator as a leader. In theory, all those affected have a say in collective decision-making, and the process is as important as the decision itself. For example, experimentation with par ticipatory budgeting in certain municipalities in Brazil is seen as a new model for how to govern. The emphasis on client-based and results-based management is es sential to what is called the "new public management" approach.

In practice, such noble efforts are quite difficult to consummate. This new kind of open state requires a new level and set of skills in terms of state capacity that go well beyond simply posting information on a website. Even on the local level, where participation is easier, studies show that those with more means tend to participate more. Similarly, gender, ethnicity, literacy, and free time could affect rates of participation. Then there is the question of how to deal with highly tech nical issues, such as how to best set the central bank interest rate. Moreover, the general public could be wrong-for example, in underestimating the long-term costs of climate change. This version of governance aims (or claims) to enable equitable representation of the different segments of the population, as well as to weigh collective interest in decision-making. Yet strong critiques suggest that governance of this sort is impos sible, given the structural inequalities rife in the South.

On the other hand, others hold hope that a more open system will increase transparency and account ability to previously unheard constituents. This sea change of thought is behind the new forms of demo cratic populism, such as the attempts by Venezuela and Bolivia to create new constitutions and more represent ative constituent assemblies in the past decade. For an

external agency, taking local participation seriously po tentially changes the whole way that development op erates, from defining a mission to delivering resources to evaluating the "success" or "failure" of a project, and the same could be said of any public service in general (Hira and Parfitt, 2004).

Globalization and the Role of the State

Concern about representative accountable states that are engaged with equity as well as growth has increased in a globalizing world. By globalization, authors such as Manuel Castells (1996) refer to increasing economic and social transactions and ease of communication across states. The explosive power of the Internet demonstrates the way that states may be losing some aspects of their control-in this case, the ability to control information and the means of communication within a state territory (see Chapters 6 and 22).

In addition, the movement towards policies that encourage foreign investment has been paralleled by the increasing dominance of large global companies such as Microsoft and DaimlerChrysler. Some argue that these companies have no real national identity, pro vide few benefits to their home country, and drive hard bargains with the developing states that want to attract their activities (see Chapter 11). They are increasingly challenged by upstarts from the BRICS countries whose state backing allows them to make different types of bargains, such as infrastructure building, in exchange for investment (see Chapter 13).

There is even greater fluidity in financial transac tions. Much of the world's financial transactions now take place "offshore" in small tax havens, such as the Cayman Islands, where terrorists, drug traffickers, and corporations share banks. While most financial activity continues to occur in New York and London, the offshore centres serve as important routes to tax evasion. In 2016, the "Panama Papers" brought the staggering volume of unaccounted for financial trans actions into broad daylight. The papers, consisting of 11.5 million documents, were leaked information from Panama-based attorneys acting on behalf of clients all over the world to set up tax havens and launder money. Prominent leaders, including the Prime Ministers of the UK and Iceland, were associated with the Papers; the latter was forced to resign. The Papers also revealed

CRITICAL ISSUES

7 I Hira: State of the State 137

BOX 7.5 I Does the 2008 Financial Crisis Mark a Shift Away from Neoliberalism?

The 2008 worldwide financial crisis further polarized both sides of the debate about states and markets. The financial crisis was traced by many back to the deregulation of financial markets from the 1980s as an extension of neoliberal macroeconomic reforms. The end result was the delinking of banking assets and investment decisions from collateral as new financial instruments were created. Many of these instruments included highly complex packages of mortgage debts, bets on financial futures, and "dark pools" of trading among banks that were beyond regulation. Alan Greenspan, the celebrated Federal Reserve Chairman, had an unshakeable faith that markets would sort out the most efficient solutions. This perspective was encapsulated in the "rational expectations" school of economics that suggested that markets were efficient not only in the present but also in smoothing out future volatility of markets through arbitrage. Surprisingly, the use of highly mathematical quantitative models upon which invest ment decisions were made ignored long-term cycles in market valuations that occasionally led to major "corrections" unanticipated on the downside by the models. On top of all this, the freeing of the financial sector from regulation was accompanied by the linking of investment and capital across Europe and the US, increasing the likelihood of contagion, or spreading of panic, if one centre went down. The lack of transparency and an overall move to deregulation arguably resulted in the worst financial situation for the West since the Great Depression (Hira, 2013).

States were left with no choice but massive bailouts of their financial sectors, ironically begun by neoliberal believers such as Hank Paulson, US Treasury Secretary. Even Greenspan admitted that he may have misjudged human nature and its propensity for "irrational exuberance." On top of these devel opments, two other challenges have shaken what once seemed an unassailable neoliberal consensus. First, the rise of China as a global powerhouse through state backing/control of key industries extends the aforementioned challenge from the East Asian model. Second, the increasingly pressing challenge of climate change and the inability of markets to reduce emissions raise questions about whether the mar ket equilibrium is an acceptable one. Even some mainstream economists such as Nicholas Stern of the London School of Economics and Politics have weighed in on the side of major government intervention to avoid considerably higher, potentially disastrous, economic costs of climate change down the road. At the same time, the lack of employment recovery amid a return to financial solvency of companies has led some to question whether capital and labour are even more delinked in a globalized economy. All of this led to a mini-revival of Keynesian calls for further stimulus of Western economies to revive demand, and a broader questioning of neoliberalism. Even such stalwart institutions as the IMF and World Bank have begun to moderate their ideology towards markets, for example, by admitting that capital controls may sometimes make sense and by holding a conference on the potential for industrial policy, respectively.

For the developing world, there is a willingness to experiment, but the constraints pushing them to wards market models, through dependency on global financial flows and trade ties, are still very strong. Still, there are a number of interesting experiments beyond China, such as Bolivia's market-based social ism and Rwanda's attempt to become the information technology hub of Africa. These still fall far short of an alternative model, however.

massive corruption in the developing world as well as

conduits for capital flight, a far cry from expectations

during the neoliberal period for the benefits of finan cial reform.

During the 1980s, part of the neoliberal reforms in

volved setting up stock exchanges in much of the devel

oping world. The expectation was that these emerging

markets would be able to attract increasing amounts

138 PART II I International Development Actors

CRITICAL ISSUES

BOX 7.6 I Global Chains of Production

In 2005, New York Times journalist Thomas L. Friedman released a blockbuster book entitled The World Is Flat. Friedman suggests that global chains of production create a "level playing field" through which developing countries will start to participate fully in the world economy. Friedman points to the recent experience of Chinese and Indian companies springing up to compete in world markets, and uses as an example the production of a computer: programming may be done in one place, while the manufacture of components, the assembly, and the testing are done in several other locations. This modularization of production is what some scholars signalled as global commodity chain production. Friedman sees the rapid development of global production chains as largely beneficial, leading to greater participation and reduced poverty as well as reducing prices for consumers. Expansion of this participation means larger world markets, so employment does not have to decline in the West. Some scholars (Gereffi and Korzeniewicz, 1994) note that the nature of the product and what parts of the production chain countries are able to capture will determine the earnings they receive. For example, we pay some $4 for a fancy coffee at Starbucks, but coffee farmers in developing states receive a tiny fraction of that amount. This discrepancy has led to the fair trade movement (see Chapter 15).

of capital for their cash-starved growing businesses;

markets, not the state, would provide leadership, tak

ing on the risks and the analysis required to develop

new businesses. However, the experience with emerg

ing financial markets has been largely disappointing

(Lavelle, 2004). Questions also have been raised about

the international trade agreements that multiplied dur

ing the neoliberal period (see Chapter 15). For example,

NAFTA, signed by Canada, the US, and Mexico in 1994,

was supposed to lead to an age of prosperity for Mexico

because its comparative advantage-cheap labour

would be soaked up in US production chains. However,

the effects ofNAFTA on Mexico have been highly con

troversial. Critics suggest that only a limited number

of low-paying jobs have been created and that many

sectors, such as sugar cane production, have been ad

versely affected. They also note that with China's emer

gence, many of the labour-intensive industries have left

Mexico and relocated in a lower-wage environment.

Moreover, products such as computers are manufac

tured in a modular fashion, with components that can

be sourced and assembled in many different locations.

All of this has led some to suggest that the state has

weakened in the face of globalization (Strange, 1996).

Some critics even suggest that the state is dying, not

only in the developing world but also in the developed

world, and point to diminishing social welfare protec

tion in many states as evidence.

Yet other analysts, such as Linda Weiss (1998), ar

gue that such ideas are "greatly exaggerated" and that

the state is more important than ever. The state still

determines the rules for foreign investment and trade

within its own territory. The state is still the dominant

actor that chooses whether to trade and fixes the terms

for signing international trade and investment agree

ments. The state still can improve the nation's ability to

compete in global markets through strategic investment

in infrastructure and its own people. We can observe

that, as in the story of blind men describing different

parts of an elephant, both perspectives are correct. Glo

balization has weakened labour protections and power

across the North as labour-intensive manufacturing

has been replaced by cheaper imports of manufactured

goods from overseas, where labour regulations and en

forcement are less stringent. This does not mean that

developing states that capture new production are in

control, because production can move from one coun

try to another fairly quickly in response to global busi

ness supply decisions. For example, textile production

has moved from Taiwan and South Korea to China and

Central America. At the same time, several analysts

argue that strategic state intervention, not markets,

explains the ability of states such as China and India

to attract new global industries and services (Hira and

Hira, 2005). Certainly, the state still may choose to cre

ate forms of insulation from and adjustment to global

forces-Malaysia, for example, imposed controls over

the movement of capital from outside the country for

many years. Thus, the role of the state remains at the

forefront in the development debate.

SUMMARY

The state as an instrument of the public will is at the cen

tre of most development debates and action. The state is

the arena where political, social, and economic debates

and conflict are played out in terms of which public pol

icies are adopted and implemented. The state is highly

7 I Hira: State of the State 139

controversial, with some seeing it as an instrument for

preserving the concentration of benefits, while others

believe it is the sole instrument capable of leading a na

tion forward for the collective interest. This chapter has

explored the role of the state in economic development

through historical, discursive, and empirical analysis.

The state in post-colonial societies has different origins,

constraints, pressures, and possibilities for leadership

from its Western counterparts. Late entry into the indus

trialization and technological development processes

and domestic institutional weaknesses create serious

challenges for finding stable and inclusive economic

development paths. Contemporary issues such as glo

balization and the call for better governance are central

to this discussion. A number of case studies exemplify

questions regarding whether the state can and has been

a positive force for economic development in the South.

QUESTIONS FOR CRITICAL THOUGHT

1. Is the traditional international relations theory view of a state adequate to understand the types of states we

find in the developing world? Do states vary by region?

2. Select a developing state and identify the major issues it faces by examining current news reports. Then exam

ine something about its history (a basic online encyclopedia will do). To what extent are its current problems

tied to its colonial origins?

3. What are the advantages and disadvantages of market-based as opposed to state leadership? Consider effi

ciency and equity outcomes, economic stability, and employment.

4. If you were a state planner, what arguments could you see for and against a big push versus a targeted strategy

for development? What kinds of blockages can you see in a typical developing economy, and to what extent

are they related?

5. Is there a disadvantage to producing commodities instead of manufactured goods? Why or why not?

6. Why is the issue of corruption so polarized, with some claiming it is at the heart of poor development per

formance in the South and others suggesting it is just a way for external agents to ensure their investments

in the South are safe? How would you judge the merits and weaknesses of each explanation, and what is your

perspective?

Chang, Ha-Joon. 2002. Kicking Away the Ladder: Development Strategy in Historical Perspective. NY: Anthem.

Evans, Peter. 1995. Embedded Autonomy: States and Industrial Transformation. Princeton, NJ: Princeton University Press.

Gerschenkron, Alexander. 1962. Economic Backwardness in Historical Perspective. Cambridge, Mass.: Belknap Press of Harvard University Press.

Hira, Anil. 2007. An East Asian Model for Latin American Success: The New Path. Burlington, Vt: Ashgate.

North, Douglass C. 1990. Institutions, Institutional Change, and Economic Performance. New York: Cambridge University Press.

Wade, Robert. 1990. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization.

Princeton, NJ: Princeton University Press.

140 PART II I International Development Actors

Berkman, S. 2008. The World Bank and the Gods of Lending.

Sterling, Va: Kumarian Press.

Castells, M. 1996. The Information Age: Economy, Society

and Culture, vol. 1: The Rise of the Network Society.

Cambridge, Mass.: Blackwell.

Centeno, M.A. 2002. Blood and Debt: War and the Nation

State in Latin America. University Park: Pennsylvania

State University Press.

Cremer, G. 2008. Corruption and Development Aid: Confronting

the Challenges. Boulder, Colo.: Lynne Rienner.

Evans, P. 1995. Embedded Autonomy: States and Industrial

Transformation. Princeton, NJ: Princeton University Press.

Friedman, T.L. 2005. The World Is Flat: A Brief History of the

Twenty-First Century. New York: Farrar, Strauss and

Giroux.

Gereffi, G., and M. Korzeniewicz, eds. 1994. Commodity

Chains and Global Capitalism. Westport, Conn.:

Greenwood.

--and Donald L. Wyman. 1990. Manufacturing Miracles:

Paths of Industrialization in Latin America and East

Asia. Princeton, NJ: Princeton University Press.

Gerschenkron, A. 1962. Economic Backwardness in Historical

Perspective. Cambridge, Mass.: Belknap Press of

Harvard University Press.

Grindle, M.S. 1996. Challenging the State: Crisis and

Innovation in Latin America and Africa. Cambridge:

Cambridge University Press.

Haggard, S. 1990. Pathways from the Periphery: The Politics of

Growth in the Newly Industrializing Countries. Ithaca,

N Y: Cornell University Press.

Hall, P. 1989. The Political Power of Economic Ideas:

Keynesianism across Nations. Princeton, NJ: Princeton

University Press.

Hira, A. 1998. Ideas and Economic Policy in Latin America:

Regional, National and Organizational Case Studies.

Westport, Conn.: Greenwood.

- -. 2007. An East Asia Model for Latin America: The New

Path. Burlington, Vt: Ashgate.

--. 2013. "Irrational exuberance: An evolutionary

perspective on the underlying causes of the financial

crisis." Intereconomics: Review of European Economic

Policy 48, 2 (Mar.I Apr.): u6-23.

-- and Trevor Parfitt. 2004. Development Projects for a

New Millennium. Westport, Conn.: Greenwood.

Hira, R., and A. Hira. 2005. Outsourcing America. New York: Amacom.

Hirschman, A.O. 1971. A Bias for Hope: Essays on Development

and Latin America. New Haven: Yale University Press.

Johnson, C. 1982. MIT! and the Japanese Miracle: The Growth

of Industrial Policy, 1925-75. Stanford, Calif.: Stanford

University Press.

Keynes, J.M. 1936. The General Theory of Employment,

Interest, and Money. New York: Harcourt Brace.

Krueger, A.O. 1974. "The political economy of the rent seeking society." American Economic Review 64:

291-303.

--, ed. 2000. Economic Policy Reform: The Second Stage.

Chicago: University of Chicago Press.

Lavelle, K.C. 2004. The Politics of Equity Finance in Emerging

Markets. New York: Oxford University Press.

Lewis, W.A. 1955. "Economic development with unlimited

supplies of labour." The Manchester School 22 (May):

139-92.

Poggi, G. 1978. The Development of the Modern State: A

Sociological Introduction. Stanford, Calif.: Stanford

University Press.

Polanyi, K. 1944. The Great Transformation: The Political and

Economic Origins of Our Time. Boston: Beacon Press by

arrangement with Rinehart and Co.

Prebisch, R. 1950. The Economic Development of Latin

America and Its Principal Problems. New York: United

Nations.

Putnam, R.D., with R. Leonardi and R.Y. Nanetti. 1993.

Making Democracy Work: Civic Traditions in Modern

Italy. Princeton, NJ: Princeton University Press.

Robinson, M. 2009. "The political economy of governance

reforms in Uganda." In Mark Robinson, ed., The Politics

of Successful Governance Reforms. New York: Routledge,

50-72.

Rosenstein-Rodan, P.N. 1961. "Notes on the theory of the

big push." In H.S. Ellis and Henry C. Wallach, eds,

Economic Development for Latin America. New York:

St Martin's Press, 57-67.

Stiglitz, J. 2002. Globalization and Its Discontents. New York:

W.W. Norton.

Strange, S. 1996. The Retreat of the State: The Diffusion of

Power in the World Economy. Cambridge: Cambridge

University Press.

Von Hayek, F. 1944. The Road to Serfdom. London: Routledge.

Wade, R. 1990. Governing the Market: Economic Theory and

the Role of Government in East Asian Industrialization.

Princeton, NJ: Princeton University Press.

Weiss, L. 1998. The Myth of the Powerless State: Governing

the Economy in the Global Era. Cambridge: Polity Press.

World Bank. 1993. The East Asian Miracle: Economic Growth

and Public Policy. New York: Cambridge University

Press.

National Development Agencies and Bilateral Aid Stephen Broivn

LEARNING OBJECTIVES

• To understand the main terms and concepts appli

cable to bilateral foreign aid.

• To learn about the different reasons why donors

provide assistance and how their priorities can vary.

• To appreciate current trends in and debates sur

rounding foreign aid.

Despite the importance of the agriculture sector in Ethiopia, access to credit is limited. USAID uses its Development Credit Authority to share risk with local banks, thus opening financing for underserved but credit-worthy borrowers. Abebaw Gesesse, the owner of a poultry farm in Mojo, Ethiopia, received a $132,000 loan from Dashen Bank thanks to a USAID guarantee. Today Abe produces over five million eggs a year and enough chicken meat to feed 108,000 people. I Source: Morgana Wingard/USAID

I ....

142 PART II I International Development Actors

This chapter provides an overview of the main actors, modalities, and resource flows involved in the aid that countries in the North provide to recipients in the South. It begins by explaining some key terms in what is known as bilateral aid. It then examines global aid flows, highlighting the differences among donors and analyzing the issue of their underlying motives. Fi nally, it explores which regions and countries receive the most aid, before turning to an overview of current trends and controversies in foreign aid.

CLARIFYING THE TERMINOLOGY

The providers of development assistance are usu ally referred to as donors, although "lenders" may be a more appropriate term in cases where the aid is in the form of loans. Most donors provide the ma jority of their aid-an average of 65-70 per cent directly to developing countries (known as bilateral or government-to-government aid) and channel the remainder of their funds through multilateral organi zations such as the World Bank or UN agencies, for ex ample, UNICEF (multilateral aid). This chapter limits its discussion to bilateral aid and donors. Multilateral institutions and development assistance are discussed in Chapters 9, 10 and 28.

The expression "foreign aid" is often· used inter changeably with the more technical term official de velopment assistance (ODA), as we do in this chapter. The two, however, are not quite synonymous. While foreign aid can include a wide range of assistance, what can technically be counted as ODA is more restricted. According to its official definition, ODA refers to "flows of official financing administered with the promotion of the economic development and welfare of develop ing countries as the main objective, and which are con cessional in character with a grant element of at least 25 per cent" (OECD, 2003). This means that to qualify as ODA, funding must be provided by governments and its main purpose must be improving economic or social well-being in developing countries (see Box 8.1). Thus, donations from individuals, foundations, or private corporations, whether directly to developing countries or through the intermediary of non-governmental organizations (NGOs), do not count as ODA, nor do

military assistance and export credits meant primarily to promote the sale of goods from the donor country. Aid to countries not classified as developing, such as Russia, does not qualify as ODA and is usually referred to as "official assistance." ODA financing can be pro vided in the form of a grant (a non-reimbursable dona tion) or a loan (to be repaid), but to be counted as ODA the terms of the loan would have to be significantly better than what is available on the commercial market (with a lower interest rate, an extended period of re payment, and/or a "grace period" before the first repay ment falls due). For this reason, private investment and commercial loans are excluded as well. However, ODA does include administrative costs, such as the costs of maintaining aid agency offices and the salaries of staff both at home and abroad.

There is some controversy over what should be in cluded as ODA. For instance, donor governments have agreed to count as ODA the expenses incurred during the first year of resettling refugees in their countries. In this case, it is not clear that this fulfills the require ment that the main objective be "economic develop ment and welfare of developing countries"; moreover, the period of one year is rather arbitrary. Some ac counting measures are also contentious. For example, when debt is cancelled, the full outstanding amount is counted for the year in which the loan was forgiven, even if the scheduled repayment would not have been completed for decades. This allows donors to boost their ODA for a given year without actually spending any additional funds, which produces a temporary "blip" that distorts true aid trends. Furthermore, when development assistance is closely integrated with mil itary and diplomatic initiatives-in Iraq and Afghani stan, for instance-it can be hard to determine exactly what constitutes ODA and what does not. A few coun tries are trying to revise the guidelines to include the cost of peacekeeping operations as ODA, even if the funds are spent on the donor country's troops. (Cur rently, this only counts as ODA if the donor country is funding the participation of personnel from a devel oping country.) Critics object to the expansion of the definition of ODA, arguing that it leads to the milita rization or securitization of aid and can prioritize the interests of donor countries rather than those of the recipients.

8 I Brown: National Development Agencies and Bilateral Aid 143

PT..-��----�-----

BOX 8.1 I The Many Uses of Foreign Aid

Foreign aid can be spent in numerous sectors and ways, including:

To provide training and build local capacity.

To promote social services, including education and health care.

To promote the building of infrastructure, such as roads, bridges, dams, railways, and airports.

To support policy reform, for instance, drawing up new legislation and regulations to protect the environment, fight corruption, or liberalize trade.

To promote agriculture, including the adoption of new crop techniques.

To promote industry, such as processing food or natural resources.

To purchase technology.

To provide humanitarian assistance, notably emergency housing, food, or health care, especially in cases of war or natural disaster.

OVERVIEW OF AID DONORS

Most industrialized countries that provide foreign aid

belong to a donors' club known as the Development

Assistance Committee (DAC) of the Organisation for

Economic Co-operation and Development (OECD),

headquartered in Paris. DAC members regularly pro

vide the OECD with a breakdown of their aid figures,

and the OECD in turn compiles the information, mak

ing it publicly available. Not all donors, however, are

members of the DAC. Some OECD members have for

eign aid programs but do not belong to the DAC, such

as Hungary, Israel, and Turkey. Several Arab states,

including oil-producing Kuwait, Saudi Arabia, and the

United Arab Emirates, also provide assistance, as do some developing countries themselves, such as Cuba,

Taiwan, and Venezuela, but none of these is a member

of the OECD (see Table 8.1). China in recent years has

gained much attention for its foreign aid, especially

to Africa. However, most of it is in the form of loans

or investments that do not generally qualify as ODA.

Moreover, it does not disclose full information on its

aid, nor do other important providers of development

assistance, such as Brazil, India, and South Africa.

This chapter concentrates on the ODA provided by the

28 member nations of the DAC, which constitutes some

85-90 per cent of global ODA.

In 2013, DAC donors contributed US$134 billion

in ODA. Of this, over $93 billion was in bilateral assis

tance and $41 billion in contributions to multilateral

institutions. Of these amounts, $8 billion was spent on

humanitarian aid and another $5 billion was spent on

settling refugees in donor countries. Total ODA was

half the total amount of private flows to developing

countries (including direct and portfolio investment),

which totalled $263 billion for that year. Addition

ally, NGOs contributed about $31 billion (OECD, 2014:

Tables 2 and 13).

The total volume of foreign aid has followed var

ious trends over the decades. As Figure 8.1 illustrates

(using constant 2013 dollars to facilitate comparison),

total aid increased slowly in the 1960s and then much

more rapidly in the 1970s. In fact, total aid flows more

than doubled between 1970 and 1980, even when ad justed for inflation. Donors cut their aid in the early

and mid-199os, a period of"aid fatigue." Between 1991

and 1997, total aid dropped by one-fifth. Contributions

rose again quite dramatically after 2000, reaching an

144 PART II I International Development Actors

TABLE 8.1 I ODA and "ODA-Like Flows" from Non-DAC Providers, 2013

ODA/Gross

Natlonal

Donors US$ Mllllons Income(%)

OECD Non-DAC

Estonia 31 0.13

Hungary 128 0.10

Israel 202 0.07

Turkey 3,308 0.42

Other providers

Bulgaria 50 0.10

Chile* 44 Not available

China* 3,009 Not available

Croatia 45 0.08

Colombia* 95 Not available

Cyprus 20 0.10

India* 1,257 Not available

Indonesia* 12 Not available

Kuwait 186 Not available

Latvia 24 0.08

Liechtenstein 28 Not available

Lithuania 50 0.11

Malta 18 0.20

Romania 134 0.07

Russia 714 0.03

Saudi Arabia 5,683 Not available

South Africa* 183 Not available

Taiwan 272 0.05

Thailand 46 0.01

United Arab 5,402 1.34

Emirates

Notes: Countries whose names are followed by an asterisk

do not report their ODA figures to the OECD. The figures are

estimates of concessional finance for development ("ODA

like flows"). Data were not available for 2013 for Brazil, Mex

ico, and Qatar.

Source: OECD (2014: Tables 33 and 33a).

all-tirrie high to date in 2013, the latest year for which

figures are available, about 56 per cent higher than

10 years earlier, in 2003. The trend-breaking amounts

for 2005 and 2006 were inflated by exceptionally high

debt relief, which as explained above provides a

one-time boost reflected in accounting but not in ac

tual spending on development activities. Box 8.2 de

scribes these aid cycles in greater detail.

The most generous donor by far in dollar terms

was the United States, whose ODA totalled over

$31 billion in 2013 (see Figure 8.2). The next four largest

donors were the United Kingdom, Germany, Japan, and

France, each of which contributed between $11 billion and

$18 billion, roughly one-third to half of the disburse

ments of the US. At the other end of the scale, smaller

countries, such as Slovakia, Slovenia, and Iceland, each

contributed less than $90 million in that year. Of the

non-DAC donors that report their ODA figures to the

DAC, the largest in 2013 was Saudi Arabia, which con

tributed $6 billion, making it the world's sixth-largest

donor, followed by the United Arab Emirates ($5 billion)

and Turkey ($3 billion), all of which provided more ODA

than what each of the 17 smallest DAC donors contrib

uted. China's concessional finance for development is

estimated to total $3 billion in 2013, similar in size to

Turkey's ODA (see Table 8.1).

Although absolute figures in US dollars imme

diately reveal who the most-and least-significant

players are in the area of foreign aid, they tell us little

about how generous the countries actually are when

measured against their capacity to provide assistance.

Relative generosity is normally calculated by dividing

ODA by gross national income (GNI), gross national

product (GNP), or gross domestic product (GDP), each

of which provides almost identical figures.

In 1970, the UN General Assembly passed a resolu

tion whereby donors would provide at least 0.7 per cent

of their GNP in ODA by 1975 (see Box 8.3). DAC donors

as a whole failed miserably to reach that target. In 2013,

38 years after the deadline, they collectively provided

0.30 per cent, less than half the amount to which they

had committed. Nonetheless, this was significantly

higher than the 0.21 per cent provided in 1997-8

(OECD, 2014: Table 4).

Individual donors' relative generosity actually var

ies greatly from the average. In 2013, as illustrated in

Figure 8.3, five countries met or exceeded the UN target

of 0.7 per cent: Norway (1.07 per cent), Sweden (1.01 per

cent), Luxembourg (1.00 per cent), Denmark (0.85 per

cent), and the United Kingdom (0.70 per cent). At the

bottom of the scale, Slovakia contributed 0.09 per cent

8 I Brown: National Development Agencies and Bilateral Aid 145

180

160

140

V, "§_ 120 QM c� oo

-0 N - ....

100 co C

Et;; 0 C � 0

..... u <i:� 80 0""

0 Vl ::> .... QJ C z�

ii .�

0 N """ \0 00 0 N """ \0 \0 \0 \0 \0 \0 " " " "

0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ � � �

FIGURE 8.1 [ Total Aid Flows, H)G0-2013

Source: Data extracted from OECD (2015b).

CRITICAL ISSUES

BOX 8.2 I Foreign Aid Cycles

00 " 0\

0 N """ \0 00 0 N """ \0 00 0 N """ \0 00 0 N 00 00 00 00 00 0\ 0\ 0\ 0\ 0\ 0 0 0 0 0 � 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0 0 0 0 0 0 0 � � � � � N N N N N N N

Year

The 1970s were a period of great optimism regarding the use of foreign aid to promote development. Donors agreed at the United Nations in 1970 to steadily increase their ODA to reach a minimum of 0.7 per cent of their gross national product within five years. Although they failed to meet the target, as discussed above and in Box 8.3, donors did provide far more aid than ever before. In the 1980s, a period of slower growth in donor countries and severe economic crises in most recipient countries, new aid was often made conditional on major changes in economic policy. This slowed the growth of aid somewhat. In the 1990s, after the end of the Cold War and the collapse of the Soviet Union as a rival patron for many developing countries, Western donors cut their own foreign aid budgets, justifying the cuts mainly by invoking a need to trim their budget deficits. At the same time, donors were growing increasingly disenchanted with what they considered a lack of concrete results and unacceptably high levels of corruption in recipient countries. In 2000, the pendulum began to swing back the other way. A new consensus emerged on the urgent need to fight poverty, especially in Africa, leading to an agree ment on the Millennium Development Goals {MDGs, discussed below and in Chapter 24) to be reached by 2015. Total aid increased at a rate not seen since the 1970s.

146 PART II I International Development Actors

Iceland 0.0

Slovenia 0.1

Slovak Republic 0.1

Czech Republic

Greece

Luxembourg

New Zealand

Poland

Portugal

Ireland

Austria

s Finland

Korea

ai Belgium

Spain

Denmark

Switzerland 0

Italy

Australia 4.8

Canada 4.9

Netherlands 5.4

Norway 5.6

Sweden 5.8

France

Japan

11.3

11.6

Germany r------------ 14.2

United Kingdom , ... -.,;. ... _ ... _ ... _ ... _ ... _ .... _.,,._�,.,;.-_�_-_-.;;. ___ .,;;. ___ .;;. __ �_�_:_-_:.;;., .. 1 7 .9

United States 31.5

0 5 10 15 20 25 30 35

Net ODA in billions of US$

FIGURE 8.2 I Total Foreign Aid by DAC' Donor, 2013

Source: Data extracted from OECD (2015b).

of gross national income in 2013, while the figure for

Poland and Greece was 0.10 per cent. Paradoxically, the

world's most generous donor in absolute terms is also

one of the least generous in relative terms: the US ratio

was only 0.18 per cent for that year, one-sixth of Nor

way's contribution and barely a quarter of the UN target.

DONOR MOTIVES

Donors provide development assistance for numer

ous reasons. One of them-and for many, the most important-is simply to help the less fortunate abroad.

Thus, a primary justification is that just as social pro

grams provide assistance to poor people at home, ODA

should focus on helping people in other countries have

access to food, housing, health care, education, and

other basic necessities and opportunities. The best

means of providing development assistance is often

contested (as discussed below), but the goal from this

perspective should not be related to self-interest. This

motive is most often shared by NGOs and citizens of do

nor countries, if not by all development officials. There

are different forms of this mentality. One can be moti

vated by charity, often inspired by religious beliefs (and

sometimes viewed as paternalism), or by solidarity, a

8 I Brown: National Development Agencies and Bilateral Aid 147

BOX 8.3 I The 0.7 Per Cent Aid Target

In recognition of the special importance of the role which can be fulfilled only by official development as

sistance, a major part of financial resource transfers to the developing countries should be provided in the form of official development assistance. Each economically advanced country will progressively increase its

official development assistance to the developing countries and will exert its best efforts to reach a mini mum net amount of 0.7 per cent of its gross national product at market prices by the middle of the Decade.

Source: International Development Strategy for the Second United Nations Development Decade, UN General Assembly Resolu tion 2626 (XXV), 24 Oct. 1970, para. 43.

t=.a0.09

�0.10 � -0.10 !

Slovak Republic Poland Greece

Czech Republic Slovenia

Korea Italy

United States Spain

Portugal japan

Iceland New Zealand

Canada Austria

Australia Germany

France

�0.11 J:-- _, 0.13

j <E--- UN target= 0.70

.... C ::J

0 u

u <( 0

Switzerland Belgium

Ireland Finland

Netherlands United Kingdom

Denmark Luxembourg

Sweden Norway

• 0.13 0.17 0.18

"0.18 0.23 0.23

0.25 • 0.26

0.27 0.27

0.33 0.38

0.41 0.45 0.45 0.46

0.2 0.4

i I

0.54 C 67

0.70 � 0.85

0.6 0.8 Net ODA as percentage of gross national income

FIGURE 8.3 I Relative Generosity ofDAC Donors, 2013 Source: Data extracted from OECD (2015b).

• 1.00 1.01

1.07 1.2

-- 1

148 PART II I International Development Actors

more left-wing concept that frames actors in the recipi

ent country as equal partners. The latter is criticized by

some as being naively idealistic and wilfully ignorant of

the need for a donor to pursue its own national interest.

A more self-interested motive, however, is widely

shared, especially among government officials not di

rectly involved in aid delivery, including those working

in national defence, foreign affairs, and international

trade. From their perspective, aid is primarily a means

to pursue other foreign policy objectives, including

diplomatic, commercial, and security interests. Under

this logic, aid should be used to promote diplomatic

initiatives, including assisting "friendly" countries,

pursuing security objectives (for instance, rewarding

countries that take part in the "war on terror" or win

ning hearts and minds in a country where the donor

country's troops are deployed), or facilitating trade re

lations, including the sale of donor nation goods and

services in the recipient country. Aid programs also

can serve to raise the donor's profile internationally,

providing it with prestige among its peers as a coun

try that makes an important contribution on the global

level. The basic principle from this perspective is that

foreign aid can be used to help people abroad, but that

the selection of recipients and aid modalities should

prioritize instances where it maximizes the direct and

indirect benefits to the donor country.

Increasingly, donors are adopting a "whole-of

government approach" that integrates foreign aid more

closely with other foreign policy objectives. This men

tality is often criticized for using aid as a fig leaf, hiding

the pursuit of naked self-interest behind claims that

it is designed to help others. Simultaneously, donor

countries are placing greater emphasis on supporting

the private sector, often involving greater collaboration

with their own multinational corporations. Depend

ing on one's perspective, these partnerships can be

described as innovative financing modalities to meet

twenty-first century challenges or as corporate subsi

dies disguised as poverty reduction.

Since its origin at the end of World War II, foreign

aid has simultaneously manifested altruistic and self-in

terested characteristics. Most donor aid programs are a

compromise between these two perspectives, weighted

differently from donor to donor. On the one hand, much

foreign aid has been blatantly used as an instrument of

foreign policy, most clearly during the Cold War, when

foreign aid from the West often was explicitly targeted

to prevent the expansion of Communism. Currently,

ODA is more often linked to political and economic

liberalization, including strengthening democracy,

good gm erna nee, and the private sector in recipient

countries (see Chapters 7 and 9). Tied aid (discussed in

Box 8.4) is a clear manifestation of the principle that

the donor's economy should benefit from the aid it pro

vides, although most donors are phasing out the prac

tice. On the other hand, many billions of dollars have

been spent with no clear benefit to the donor. Emergen

cy-related humanitarian assistance best embodies the

principle of selflessness.

There are other justifications for the provision of

foreign aid, although they are not as widely held. Some,

especially in developing countries, view ODA as a form

of compensation for past or present injustices, whether

colonial exploitation or an unjust international sys

tem. From this perspective, northern countries have

enriched themselves from their unequal relationships

with southern countries, either under colonialism in

the past or currently under a global trading system that

still disproportionately benefits wealthier countries,

with an ongoing debt crisis that has many developing

countries paying more to service their debt than they

receive in foreign aid. Under this logic, if the net trans

fer of wealth is from South to North, donors have a duty

to increase their ODA to at least balance out the flow of

resources.

Under some interpretations of international hu

man rights law, foreign aid can also be considered an

obligation. For instance, under the International Cov

enant on Economic, Social and Cultural Rights, which

was adopted at the United Nations in 1966 and became

legally binding in 1976, everyone has the right to a

free primary education and to earn a livelihood. More

broadly, the UN General Assembly adopted a Decla

ration on the Right to Development in 1986. In cases

in which developing countries do not have the neces

sary resources to provide adequate opportunities for

schooling and employment, for instance, they cannot

be held responsible for not upholding those rights and,

one could argue, donors must assume the obligation

to ensure the rights are met. From this perspective, no

distinction can be made among recipients based on do

nor interests-these rights are universal. Some would

claim, however, that many developing countries have

8 I Brown: National Development Agencies and Bilateral Aid 149

CRITICAL ISSUES

BOX 8.4 I Tied Aid

Some ODA is conditional on the purchase of goods and services from the donor country, even if they are not the cheapest or the best value for money, a practice known as "tied aid." Tying aid increases costs by an average of 15 to 30 per cent, although in some instances the figure can be much higher (Jepma, 1991: 15). Sometimes the additional costs can be incurred for a decade or more. For instance, Cana dian aid to Mongolia's agricultural sector might require that equipment such as tractors be purchased from Canadian companies. Not only might those tractors cost more and be no better than, say, Japanese or Chinese ones, but Mongolia would have to buy Canadian replacement parts for as long as the tractors were in use.

Aid that can be spent regardless of the country of origin of the goods and services is referred to as "untied." Donors have committed themselves to progressively untying aid, although they have not spec ified a deadline for eliminating the practice altogether (OECD, 2015a). Some countries, such as Sweden and the United Kingdom, have abolished tied aid altogether. Others, however, continue to tie a sizable proportion of their ODA, including Greece (90 per cent in 2013), Portugal (70 per cent), the Czech Repub lic (60 per cent), Austria (56 per cent), South Korea (45 per cent), Slovakia (37 per cent), and the United States (27 per cent) {OECD, 2014: Table 23).

the means to meet these basic rights but fail to do so because of waste, corruption, or emphasis on other pri orities. In such cases, they believe, governments should be held accountable for their own failings, and donors should not be obligated to assume their responsibilities.

CHARACTERISTICS OF DONORS

Individual donor countries often choose to focus on a particular region on the basis of geography, security in terests, or former colonial ties. For instance, in 2012-13, Australia, Japan, South Korea, and New Zealand gave between 54 and 81 per cent of their ODA to Asia and Oceania, their "neighbourhood." Ten donors-Belgium, Canada, Denmark, Finland, Iceland, Ireland, the Neth erlands, Portugal, Sweden, and the United Kingdom gave more than half of theirs to sub-Saharan Africa. No country concentrated the majority of its aid on the Mid dle East and North Africa or on Latin America and the Caribbean. The United States prioritized both Africa and Asia/Oceania (OECD, 2014: Table 28).

Some countries transfer a much larger propor tion of their aid to multilateral institutions than they

disburse directly to developing countries (see Chap ter 10). By doing so, they reduce their administrative costs but also some of their control over where and how their funds are spent. Figures from 2013 range from Greece and Slovakia, which respectively pro vided 82 and 81 per cent of their aid through multilat eral channels, to the United States and Iceland, which respectively disbursed only 15 and 16 per cent multi laterally (OECD, 2014: Table 13).

Donors also have varying institutional arrange ments, priorities, and preferred aid modalities. The United States, for instance, the world's largest aid do nor, has two main governmental aid agencies. The first, the United States Agency for International Develop ment (USAID), since its creation in 1961 has been the principal government body for providing development assistance. A second government agency, the Millen nium Challenge Corporation (MCC), was launched in 2004 with a narrower focus than that of USAID. The MCC aims to fo ster economic growth in a smaller num ber of countries that meet specific criteria regarding free markets, democracy, and good governance.

The US government openly acknowledges the si multaneously selfless and selfish motives of its ODA.

150 PART II I international Development Actors

0 .c 0-

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@-----

PHOTO 8.1 I USAID youth development project, San Salvador.

For example, the USAID website states that "U.S. for

eign assistance has always had the twofold purpose of

f urthering America's interests while improving lives in

the developing world. USAID carries out U.S. foreign

policy by promoting broad-scale human progress at

the same time it expands stable, free societies, creates

markets and trade partners for the United States, and

fosters good will abroad" (USAID, 2015). The links be

tween US security interests and development assistance

are not difficult to trace. In 2012-13, the top recipient

of American ODA by far was Afghanistan, which alone

received 7-1 per cent of total US assistance to all devel

oping countries. Its other largest recipients were Kenya,

Ethiopia, and Tanzania (OECD, 2014: Table 32).

From its founding in 1968 to its abolition in 2013,

the Canadian International Development Agency ( CIDA) was responsible for disbursing most of Canada's

ODA. Absorbed into the Department of Foreign Affairs,

Trade and Development (renamed Global Affairs

Canada in 2015), Canada's aid program operates in

more than 100 countries. Its top five recipients in

2012-13 were Tanzania, Haiti, Ethiopia, Mozambique,

and Afghanistan (OECD, 2014: Table 32). More informa

tion on CIDA and its abolition can be found in Box 8.5.

France generally emphasizes aid to sub-Saharan

and North Africa, where most of its former colonies

are located. The top recipients of French aid in 2012-13

were Cote d'Ivoire, Morocco, Brazil, and Myanmar

(OECD, 2014). Most of France's aid is managed by the

French Development Agency, which provides assis

tance to more than 70 countries (Agence fram;:aise de

developpement, 2015).

Sweden, one of the world's most generous aid do

nors in relation to the size of its economy, channels its

aid mainly through the Swedish International Devel

opment Cooperation Agency (SIDA), which works un

der the authority of the Ministry of Foreign Affairs. It

provides aid to more than 120 countries. In 2012-13,

CRITICAL ISSUES

8 I Brown: National Development Agencies and Bilateral Aid 151

BOX 8.5 I The Canadian International Development Agency

From its creation in 1968 to its abolition in 2013, the Canadian International Development Agency spent over $100 billion in foreign aid. As Canada's lead provider of ODA, CIDA had long been the subject of

controversy. For decades, it has been widely criticized from a variety of perspectives. Some criticisms are rather unfair, notably some unrealistic expectations placed on CIDA. For

instance, when a Canadian Senate committee reviewed the agency's work in sub-Saharan Africa, it referred to "40 years of failure" (Canada, 2007). The authors of the report failed to understand that foreign aid is often not designed to deliver immediate results that can be attributed to the donor country. Increasingly, donors no longer provide aid to small-scale projects that they can identify as theirs, for example, six health clinics that Canadian aid made possible. Instead, they increasingly transfer funds to recipient governments in support for sector-wide programs, such as improving health

care across the country. Especially if Canada pools its aid with other donors' assistance, it may be impossible to identify Canada-specific outputs, but that does not make CIDA's assistance any less worthwhile.

Better founded criticisms are directed against CIDA's activities that detract from its mission to "[l]ead Canada's international effort to help people living in poverty" (CIDA, 2009). Commercial, diplo

matic, or security motives often influence the choice and amounts of assistance, such as, in recent years, Canada's massive injection of foreign aid to Afghanistan. Between 2001 and 2012, CIDA spent

over Cdn$2 billion in Afghanistan, constituting Canada's largest aid program ever. In 2007, that one nation received 11 per cent of Canada's total bilateral assistance (DFATD, 2015: 18, 36). A large part of that assistance was meant to shore up Canadian military operations against the Taliban. Though many believe that ODA can be used to improve security in places like Afghanistan, others argue that foreign aid risks being squandered in an environment that lacks security. For example, aid can finance the building of schools, but the money will be wasted if it is unsafe for students and teachers to travel to and from school every day.

Canada-like most other donor countries-is seeking to make its aid more effective. Among

other initiatives, it has been focusing its efforts on 20 to 25 "countries of concentration" and three

to five priority themes. Though working in fewer countries and sectors has the potential to improve aid effectiveness, the selection process itself becomes politicized and every new government, if not every new minister, changes the list of countries and themes. The resulting volatility and inability to undertake long-term planning, a hallmark of development, actually make aid less effective (Brown,

2015). The Canadian government justified CIDA's amalgamation into the newly created Department of For

eign Affairs, Trade and Development in 2013 in large part based on a desire to improve effectiveness.

Integration, at least in theory, would allow for greater coherence between aid policies and those in other sectors, such as diplomacy and trade. Moving aid agencies under the authority of foreign ministries is,

in fact, an important trend among donor countries. For instance, most Nordic countries have adopted that model. Soon after Canada abolished its stand-alone aid agency, Australia followed suit. Though cohabitation in one ministry can promote policy coherence, critics fear that in Canada-as has been the case elsewhere-aid policies will be subservient to diplomatic and commercial self-interest, rather than trade and diplomacy increasing the degree of consideration they accord to the interests of developing countries.

152 PART II I International Development Actors

its top five recipients were Mozambique, Tanzania,

Afghanistan, Democratic Republic of the Congo, and Kenya. African countries made up seven out of the

10 largest recipients (0ECD, 2014).

Most British aid is administered by the Depart

ment for International Development (DFID). Unlike its

counterparts in most other countries, DFID is a full gov

ernment department and is headed by a minister who

sits at the cabinet table. Like France, the UK focuses its

ODA mainly on its former colonies. Its top recipients in

2012-13 were Ethiopia, India, Pakistan, Afghanistan,

Nigeria, and Bangladesh (OECD, 2014).

Although one can easily compare budgets and rel

ative generosity, it is difficult to rank the overall per

formance of bilateral aid agencies. Some donors might

be strong in one area, such as support to community

development, but weak in another, for instance, be

ing overly bureaucratic. Nonetheless, a few systematic

comparisons of the main bilateral donors have been

made. For example, the Center for Global Develop

ment, a US-based think-tank, annually assesses and

ranks 27 donor countries' commitment to development

in a number of areas, including the quantity and qual

ity of their foreign aid. The aid component of the index

considers each country's relative generosity and adds

points for policies such as providing aid to the poorest

recipients and allowing tax deductions for private do

nations. Points are deducted for tying aid, for provid

ing aid to corrupt countries, and for splitting aid into

a large number of small projects. Table 8.2 summarizes

the results for 2014, with Denmark, Ireland, Sweden,

and the United Kingdom ranked highest and Greece,

Slovakia, Poland, and South Korea at the bottom of the

list. This ranking is provided as just one example of a

comparison of donors' aid policies. Other criteria and

calculations, of course, could produce quite different

results. The UK's Department for International Devel

opment is widely considered one of the top develop

ment agencies. Box 8.6 explains why.

AID RECIPIENTS

The OECD's Development Assistance Committee main

tains a list of countries and territories that qualify as

recipients of ODA. The main goal is to be able to com pile comparable statistics. Donors can still provide

TABLE 8.2 I Commitment to Development Index, Aid Component, 2014

Rank Country Score

1 Denmark 6.7

2 Ireland 6.6

3 Sweden 6.6

4 United Kingdom 5.9

5 Norway 5.9

6 Netherlands 5.7

7 Luxembourg 5.6

8 Finland 5.5

9 Canada 5.4

10 New Zealand 5.2

11 France 5.1

12 Portugal 5.0

13 Japan 5.0

14 Germany 4.9

15 Australia 4.8

16 Switzerland 4.6

17 Austria 4.6

18 Belgium 4.4

19 Spain 4.3

20 United States 4.3

21 Czech Republic 4.2

22 Italy 4.2

23 Hungary 4.2

24 Greece 4.1

25 Slovakia 4.1

26 Poland 4.1

27 South Korea 4.0

Note: Average score is 5.0.

Source: Center for Global Development (2015).

assistance to countries not on the list; they cannot,

however, count it as ODA. The DAC periodically revises

the list. For example, since 1989, following the collapse

of the Soviet bloc, it has added a number of poorer

European countries, including Albania, as well as a

number of new countries, including Belarus, Moldova,

Ukraine, and the former Soviet republics in Central

Asia. The Palestinian Administered Areas/West Bank

and Gaza Strip have been eligible for ODA since 1994

8 I Brown: National Development Agencies and Bilateral Aid 153

Eel---�------��-----

BOX 8.6 I What Makes a Good Development Agency? Lessons from the United Kingdom

Since it was created in 1997, the UK's Department for International Development has gained the repu tation of being one of the world's best bilateral development agencies. According to one study (Barder, 2007: 300-13), DFID's success can be attributed to a combination of factors, including:

DFID has focused its aid policy on achieving outcomes, basing it on concrete evidence rather than ideological preferences.

DFID has built strong in-house technical expertise but also consults widely with outside experts.

DFID resists short-term pressures, including promoting British commercial interests, and focuses on long-term strategies centred primarily on poverty reduction in low-income countries.

DFID is responsible for all British foreign aid, rather than its being split among various government departments.

DFID has been represented at cabinet by ministers with strong leadership skills and important political profiles.

DFID has enjoyed key support from the Prime Minister and the Chancellor of the Exchequer (finance minister).

(it was previously counted under ODA to Israel), while Kosovo and newly independent South Sudan were in cluded on the list in 2009 and 2011, respectively.

Countries sometimes are removed from the list when they "graduate" to a higher income level. In the 1990s, these countries included Portugal, Greece, Singapore, Israel, some Caribbean nations, and a few oil-producing countries. Between 2000 and 2014, Bah rain, Oman, and Saudi Arabia, several countries in the Caribbean, and numerous Eastern and Central Euro pean countries were deemed no longer eligible for ODA, notably Russia and countries that had recently joined the European Union or were negotiating accession.

Overall, sub-Saharan Africa receives more foreign aid than any other region. In 2012-13, it received 37 per cent ofDAC countries' ODA. As can be seen in Table 8.3, the second largest recipient region was South and Cen tral Asia, receiving 23 per cent of total ODA, followed by "Other Asia and Oceania" (16 per cent) and the Middle East and North Africa (12 per cent). At the bottom of the list were Latin America and the Caribbean (9 per cent) and Europe (3 per cent).

Many of the increases in ODA since 2000 have been in the form of debt relief or in aid to Afghanistan and Iraq rather than increased spending in other de veloping countries. Most of the remaining aid went to Africa, whose proportion of aid has increased quite steadily from a low of about 20 per cent in 1999 to over 40 per cent a decade later.

The top recipients of foreign aid often vary from year to year, depending more on international politics

TABLE 8.3 I Proportion of Total ODA by Region, D AC Members, 2012-13

Region ____ Share (%)

Sub-Saharan Africa

South and Central Asia

Other Asia and Oceania

Middle East and North Africa

Latin America and Caribbean

Europe

Source: OECD (2014: Table 28).

37.0

22.7

15.7

12.4

8.9

3.3

154 PART II I International Development Actors

TABLE 8.4

Country

Egypt

Afghanistan

Vietnam

Myanmar

Ethiopia

Syria

Tanzania

Kenya

Turkey

Bangladesh

Largest ODA Recipients, 2013

BIiiion US$

5.5

5.3

4.1

3.9

3.8

3.6

3.4

3.2

2.8

2.6

Source: Data extracted from DECO (2015b).

than on any thing else. For instance, as indicated in

Table 8-4, Egypt was the top recipient in 2013, obtain

ing $5.5 billion, closely followed by Afghanistan, which

received $5.3 billion. Aid to the former is closely related

to the complex changes in the country in the wake of

the 2010-12 Arab Spring. Afghanistan experienced

a surge in foreign aid that followed the US-led inva

sion in 2001, and this increased aid has gone hand in

hand with Western security interests and the presence

of foreign troops. Aid to the sixth-largest recipient of

ODA, Syria, does not necessarily go to the Syrian gov

ernment: Vast amounts are spent on humanitarian aid

(see Chapter 28). It is interesting to note that the ninth

largest recipient, Turkey, which obtained $2.8 billion

in aid in 2013, is also an important non-DAC donor,

providing $3.3 billion in ODA in the same year. This

example illustrates how the categories of donors and

receivers are becoming less distinct; a growing number

of countries are both.

Because of great variations in the size of their

economies, the top recipients of aid are not nec

essarily the most dependent on aid. The 10 most

aid-dependent countries in 2013 can be found in

Table 8.5. At the top of the list are three island nations

in the Pacific Ocean. With the exception of Afghan

istan, the top 10 are small countries, mainly in sub

Saharan Africa or the Pacific region. In these countries,

donors potentially have tremendous leverage to influ

ence domestic policy. Such aid dependence, however,

is relatively rare.

TABLE 8.5 j Ten Most ODA-Dependent Countries, 2013

ODA/GNI

Country (%)

Tuvalu 48.3

Micronesia, Fed. States 41.7

Marshall Islands 41.4

Malawi 31.5

Liberia 30.5

Solomon Islands 30.0

Afghanistan 25.7

Kiribati 25.5

Burundi 20.1

West Bank and Gaza 19.1

Source: World Bank (2015).

Different countries receive aid from different do

nors and for widely varying purposes. In other words,

the structure and purposes of ODA can vary tremen

dously. Bangladesh, for instance, has for many decades

been a top recipient of foreign aid. Its chief bilateral

donors in 2011-12 were the United Kingdom (the for

mer colonial ruler) and Japan (a fellow Asian country),

followed distantly by the United States and Australia

( OECD, 2015c). A densely and highly populated country,

Bangladesh is characterized by widespread poverty and

is particularly prone to natural disasters that include

cyclones and flooding. It is also known as the home of

the Grameen Bank, one of the world's most successful

and innovative micro-finance initiatives.

During the 1970s and 1980s, the Soviet Union and

many social democratic Western European donors

provided a high level of assistance to Mozambique. The

former was motivated mainly by geostrategic interests

related to a Cold War struggle for dominance in the de

veloping world, the latter by solidarity with a socialist

country in Africa on the front line of the fight against

apartheid in South Africa. The Mozambican civil war,

however, prevented this aid from translating into eco

nomic development. Since the end of the civil war in

1992 and the country's renouncement of socialism, a

wide range of donors have disbursed huge amounts

of aid to Mozambique, and the country has achieved

a consistently high rate of growth, admittedly from a

8 I Brown: National Development Agencies and Bilateral Aid 155

BOX 8.7 I Results-Based Management

Donors currently favour an approach known as results-based management (RBM). Although its goal of

improving aid effectiveness is widely lauded, its requirement for measurable and verifiable results intro

duces distortions and biases in development assistance that, some believe, could outweigh its benefits.

Not all goals can be easily or accurately quantified-for example, the rule of law, good governance, or

independence of the judiciary. Setting indicators means that efforts will be deployed to improve those

possibly arbitrarily chosen figures rather than meeting less tangible or undefined development objectives

that could be of equal or greater utility, especially in the long term. See Chapter 27 for more on RBM.

low starting point. In 2011-12, the country's top bilat

eral aid donor was by far the United States (formerly

its ideological opponent), followed by the UK, Portugal

(its former colonizer), Canada, Sweden, and Denmark,

many of which were continuing historical ties ( OECD,

2015c).

Haiti, the poorest country in the western hemi

sphere, has long been plagued with social and political

instability, notably since the Duvalier dictatorship was

overthrown in the mid-198os. Since then, the country

has experienced a succession of democratic elections,

military coups, and instances of violent unrest. It was

widely hoped that the 2006 elections would mark the

beginning of a new era of reconstruction and devel

opment. However, in 2010, a devastating earthquake

killed hundreds of thousands of people and destroy ed

much of the infrastructure, seriously setting back Hai

ti's development process. In 2011-12, the top donors by

far were the United States and Canada, both of which

are in the same "neighbourhood" as Haiti and have

large Haitian populations, followed by France, the for

mer colonial ruler, and Spain (OECD, 2015c).

CURRENT TRENDS

AND CONTROVERSIES

Some current trends in foreign aid are relatively un controversial. For instance, almost all donors are tak

ing measures to greatly reduce or eliminate tied aid.

Likewise, bilateral donors, for the most part, have

phased out loans, preferring to provide grants. In

2012-13, only 5.1 per cent of DAC countries' ODA com

mitments were in the form of loans, while 100 per cent

of the aid from many countries, such as Canada, the

Netherlands, the United Kingdom, and the United

States, was in the form of grants (OECD, 2014: Table 20).

Multilateral institutions, however, continue to provide

a high proportion of loans, which have led to an ex

tremely high rate of indebtedness in many countries

(see Chapter 14).

A long-standing debate in foreign aid is whether

the focus of assistance should be primarily on fighting

poverty or on promoting economic growth. For a long

time, especially in the 1950s and 1960s, the argument

was made that economic growth would eventually

"trickle down" to help the poor-that "a rising tide lifts

all boats." Faced with a lack of evidence to support that

assumption, the pendulum swung the other way in the

1970s, and donors put a higher priority on meeting the

more immediate basic needs of the poor. By the late

1980s, donors had turned to macroeconomic reform as

a prerequisite for growth, encouraging-some would

say forcing-recipient countries to implement pro

grams that actually weakened the social safety net for

the poor. A decade later, it became increasingly harder

to argue credibly that poverty was being reduced at an

adequate rate.

A new consensus emerged on the centrality of more

immediate action to alleviate poverty, culminating in

the United Nations Millennium Declaration in 2000.

156 PART II I International Development Actors

The accompanying Millennium Development Goals set

eight targets to be met by 2015, requiring urgent action

to improve the lives of billions of people in all regions

of the developing world (see Chapter 24). Although the

MDGs signalled that the pendulum had swung back to

placing priority on fighting poverty in the short run,

many other donor policies and activities still favour

an emphasis on longer-term economic growth. For

instance, debt relief and assistance from international

financial institutions and many bilateral agencies, no

tably the US's Millennium Challenge Corporation,

depend on the presence of a broadly defined "enabling

environment" deemed amenable to economic growth.

These conditions are often in addition to, rather than

instead of, the components of 198os-style structural

adjustment programs (see Chapter 9). Donors are thus

supporting policies that place a greater priority on

poverty reduction while simultaneously implementing

others that tend to reduce government spending on the

poor.

A related issue involves which countries aid should

be focused on. As mentioned above, many donors are

making sub-Saharan Africa a priority because of its

higher rate of poverty. But even within a given region,

which countries are more "deserving" of aid? Should

resources go to the poorest countries, since they need

it the most? Or should donors focus on well-governed

countries, where they believe it will be used more ef

fectively? Those who are pessimistic about aid's impact

CRITICAL ISSUES

BOX S,8 I How Effective Is Foreign Aid?

tend to favour the latter choice, which usually implies

concentrating on middle-income countries, arguing

that aid in poorly governed countries is all too often

wasted. Critics respond that well-governed, wealthier

countries are more able to attract investment or borrow

money on financial markets and therefore do not need

ODA as much. Low-income countries require aid, they

argue, precisely so that they can improve governance

and reach a stage at which they no longer need aid. Cut

ting them off, critics warn, would lead to "aid orphans"

and great suffering, possibly even political or economic

collapse, which could in turn threaten regional and

international stability (and perhaps require costlier

interventions later). Thus, those who believe that aid

contributes to social or human development-a goal in

and of itself, even if it does not quickly translate into

economic grow th-favour a greater emphasis on the

poorest countries.

Similarly, there is no consensus on what specific

recipient-country entity should be given ODA funds.

Most disbursements are made directly to governments,

but many worry that this only feeds bloated bureaucra

cies and leads to graft, especially in non-democracies.

Left-leaning proponents of foreign aid are more likely

to advocate providing funds to northern or south

ern NGOs, which they consider more likely to involve

communities and meet people's actual needs. Critics

respond that using voluntary organizations to deliver

services actually undermines the state and deprives it

The contribution of ODA to development success stories is hotly debated. In instances where rapid economic growth and poverty reduction have occurred, notably in East Asia, there is no consensus on what role, if any, foreign aid played. In fact, some scholars of foreign aid have long argued that aid cannot help bring about development. Some claim that it distorts economies and is actually detrimental to long-term economic growth. Books by former World Bank staff members William Easterly, The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much 1/1 and So Little Good (2006), and Dambisa Moyo, Dead Aid: Why Aid Is Not Working and How There Is Another Way for Africa (2009), epitomize the belief, shared by many, that most aid is at best wasted and at worst counterproductive. By way of contrast, celebrity economist Jeffrey Sachs's optimistic book The End of Poverty: Economic Possibilities for Our Time (2005) argues that aid can be extremely effective and that, in particular, a "big push" of well-designed development assistance would help billions of people escape the "poverty trap."

8 I Brown: National Development Agencies and Bilateral Aid 157

of resources necessary to ensure national standards and coverage. From a more right-leaning perspective, it is better for funds to be channelled through and to pro mote the growth of the private sector, which is consid ered the key to long-term development-a perspective that gained prominence in most donor countries in the 2010s. This approach, however, is criticized as inade quate, because a business's primary motive is to make a profit, not to meet people's needs.

In the 2000s, donors recognized the importance of co-ordinating their aid, channelling funds through joint programs and working more closely with recipient governments. The Paris Declaration on Aid Effective ness (2005) and subsequent Accra Agenda for Action (2008) epitomize this trend, attributing to recipient countries the lead role in the design and implementation of their national development strategy, to be supported by donors in an integrated and transparent manner. Advantages include the elimination of duplication or even contradictory programs-and of the onerous requirement of reporting separately to donors.

Uniting around one single development strategy, however, also carries some risks. It could be described as "putting all the aid eggs in one basket," when past experience has shown that development plans do not always produce the desired results. Moreover, it places a tremendous amount of power in the planning and administrative capabilities of the recipient govern ment, ignoring problems oflack of capacity or corrup tion. It also assumes that the government has consulted its population, represents it, or has its best interest at heart, which is not necessarily the case. Paradoxi cally, when donors act together, they are in a position of great power over the recipient country, which can hardly reject their opinions or pick and choose the ad vice it wishes to follow. After the aid funds have been transferred to the recipient government, however, do nors generally lose control over how it is spent. Still, provisions for transparency may compensate for that, allowing donors to suspend further contributions if the funds are not used according to agreement or do not produce the expected results.

The prospect of aid harmonization weakened in the 2010s, with the rise of"non-traditional" or "emerg ing" donors, such as Brazil, China, India, and South Africa, among others. As their domestic economies gather strength, they increasingly seek a greater place

PHOTO 8.2 I USAID project on Irrigation of urban

agriculture, Ethiopia.

in global political, economic, and commercial affairs. They have positioned themselves apart from the "tra ditional" DAC donors and, in fact, prefer to be called providers of development co-operation, rather than aid donors. The main label used to describe their de velopment activities is "South-South Co-operation," which is much more encompassing than ODA. It in cludes not only aid-like assistance but often trade- and investment-related activities as well. These countries signed onto the Paris Declaration as recipients but do not want to be guided by its provisions when they act as aid providers. They usually prefer to frame their co-operation as "mutual benefit," rather than as altru ism, and have retained many practices that generally are considered less effective in other contexts, such as tied aid (explained above) or sometimes, especially in the case of China, turnkey projects (for instance, building infrastructure with their own labour and handing it over once it is completed, without any local capacity-building). (See Chapter 13.)

158 PART I.! I International Development Actors

CRITICAL ISSUES

BOX 8.9 I Chinese Development Co-operation

Unlike most aid providers, China does not have a bilateral aid agency or a lead unit in its foreign ministry.

The Ministry of Commerce manages foreign aid grants and zero-interest loans, while loans that charge interest at concessional rates fall under the responsibility of the state-run Export-Import Bank. In her

comparison of Chinese and DAC aid, Deborah Brautigam (2011) explains how Chinese development assis

tance places greater emphasis on building infrastructure and economic growth than do Western donors,

who often prioritize social spending, such as primary education and poverty reduction. However, only a small fraction of China's financial support to developing countries meets the definition of ODA. Instead, the majority of funds consist of Chinese export and investment promotion and non-concessional loans.

Brautigam examined two prominent cases of Chinese development co-operation-a $10 billion loan to the Angolan government between 2003 and 2010 for reconstruction after the country's civil war and a

$2 billion line of credit with the Nigerian government in 2006-9 to rebuild its railways-and found that

neither should be counted as ODA, despite being described frequently as foreign aid. This does not mean that these forms of financing cannot promote development, but such spending should not be included in

tallies of ODA-and used in comparisons with other countries' aid levels.

Some Western observers express great concern

about the size of Chinese aid in particular and the way in

which it serves as an alternative to Western ODA, which

usually comes with conditions. Conditionality-free

Chinese aid thus can help developing countries es

cape some of those pressures, such as for good govern

ance. Usually, such fears are overstated. It is true that

China supports some unsavoury dictatorships, but so

do Western countries-just not necessarily the same

ones. Also, there is a convergence of interests: com

mercial enterprises from all donor countries, whether

"traditional" or "emerging," have a long-term interest

in stability and the rule of law in the recipient coun

try. Moreover, there is a tendency to report any form of

co-operation from southern donors as aid, which gen

erates misleading comparisons. Because southern do

nors usually mix in what would be considered ODA in

the OECD context with commercial and investment ac

tivities and they do not make publicly available all the

data, it is very difficult to compare their aid or develop

ment co-operation figures with those ofDAC countries.

As can be seen in Table 8.1 and Figure 8.2 above, es

timated Chinese foreign aid was actually smaller than

Italy's and Switzerland's in 2013, suggesting that its in

fluence is usually exaggerated.

SUMMARY

This chapter has provided an overview of the main

actors, modalities, and resource flows involved in

the bilateral aid that countries in the North provide

to recipients in the South. The chapter showed, for

instance, how the size of a donor's aid program can

differ greatly from its relative generosity. The United

States, though by far the largest donor by volume,

provides a much smaller proportion of its national

income in foreign aid than do donors such as Nor

way and Sweden, which have considerably smaller

economies.

Key terms were explained, including the different

forms of aid, such as tied aid, as well as various types

of aid donors. Aid can be provided by governments, in

ternational organizations, non-governmental organi

zations, private foundations, and individuals. To count

as foreign aid, or "official development assistance," it

must have as its main goal the promotion of well-being

in developing countries. The chapter also explored the

different reasons donors provide assistance: sometimes

out of humanitarian concern, but often relating to their

self-interests, including commercial, diplomatic, or se

curity interests.

T 8 I Brown: National Development Agencies and Bilateral Aid 159

The chapter subsequently examined global trends

in the provision of bilateral aid, including a compari

son of important donors that illustrated how their mo

tives, geographical focus, and priorities can vary. Some

focus on their own security interests, while others

concentrate their aid in former colonies, their "neigh

bourhood," or the world's poorest countries, mainly in

sub-Saharan Africa. The chapter also considered which

regions (above all, sub-Saharan Africa) and countries

receive the most aid (Egypt and Afghanistan in 2013),

as well as which ones are most dependent on it (mostly

very small countries, often islands in the Pacific Ocean).

Current trends and controversies in foreign aid were

discussed. For instance: Should aid seek to create eco

nomic growth or should it target more directly poverty

reduction? What kinds of countries should receive the

most aid? Finally, the chapter summarized bilateral do

nors' most recent consensus on how to make aid more

effective and highlighted some issues related to the rise

in importance of non-traditional donors, suggesting

that the latter might not have the negative influence

that some fear. In sum, this chapter has introduced

the reader to the main characteristics and debates re

garding bilateral aid and the national agencies that

contribute vast sums-almost $100 billion a year-to

international development.

QUESTIONS FOR CRITICAL THOUGHT

1. Why should wealthier countries give aid to poorer ones? How much should they give and for what purposes?

2. What kinds of conditions, if any, should donor countries attach to their aid?

3. How should donors decide on which countries to concentrate their assistance?

4. Should donors provide their assistance directly to the recipient country's government, to northern or south

ern civil society organizations, or to the private sector in the donor or recipient country?

5. What are the responsibilities of recipient countries, if any, in using foreign aid?

SUGGESTED READING

Collier, Paul. 2007. Ihe Bottom Billion: Why the Poorest

Countries Are Failing and What Can Be Done about It.

Oxford and New York: Oxford University Press.

Lancaster, Carol. 2007. Foreign Aid: Diplomacy, Development,

Domestic Politics. Chicago: University of Chicago Press.

Mawdsley, Emma. 2012. From Recipients to Donors: Ihe

Emerging Powers and the Changing Development

Landscape. London: Zed Books.

Agence Frarn;:aise de Developpement. 2015. "Who are we?"

w w w.afd.fr/la ng/en/home/ AF DJ presen t a t ion-afd.

Accessed 21 June 2015.

Barder, 0. 2007. "Reforming development assistance: Lessons

from the UK experience." In Lael Brainard, ed., Security

by Other Means: Foreign Assistance, Global Poverty,

Riddell, Roger. 2007. Does Foreign Aid Really Work? New

York: Oxford University Press.

Sumner, Andy, and Richard Mallett. 2012. The Future of

Foreign Aid: Development Cooperation and the New

Geography of Global Poverty. Basingstoke, UK: Palgrave

Macmillan.

and American Leadership. Washington: Brookings

Institution Press, 277-320.

Brautigam, D. 2011. "Aid 'with Chinese characteristics': Chinese

foreign aid and development finance meet the OECD-DAC

aid regime." Journal of International Development 23, 5:

752-64.

160 PART II I International Development Actors

Brown, S. 2015. "Aid effectiveness and the framing of new Canadian aid initiaLlves.'' In D. Bratt and C.J. Kukucha,

eds, Readings in Canadian Foreign Po/i91: Classi Debates

and New Ideas, 3rd edn. Don Mills, ON: xford niver ity

Press, 467-81 .

Canada. 2007. vercomi.11g 40 Years of Failure: A 1Vew Road

Map for ,1b- ahar1111 Africa. Ottawa: enate of anada,

Standing Senate Committee on Foreign Affairs and

Inter national Trade.

Center for Global Development. 2015. The Commitment

to Development Index. www.cgdev.org/lnHiative/

commitment-development-index/index. Acee ed 20 June

2,015.

DFATD. 2015. Synthesis Report- ummati11e Evaluatio11 of

Canada's Afgha11ista11 Development Program. Fiscal

Year 2004-2005 to 2012-2013. Gati1wau, Q : Foreign

Affairs, Trade and Development Canada.

Jepma, C. J. 1991. 77,e 1)ii11g of Aid. Paris: "ECD.

Organi ation for conomic Co-operation -and Develop

ment (O£CD). 2003. "Official Development A sistance

(ODA)." In Glossary of Statistical Terms. http://stats.

oecd.org/glossary/detail.asp?ID=6043. Accessed 21

June 2015.

--. 2014. "Statistics on resource flows to developing

countries." www.oecd.org/dac/stats/statisticsonresource

flowstodevelopingcountries.htm. Accessed 21 June 2015.

--. 2015a. Paris Declaration and Accra Agenda for Action.

www.oecd.or g/dac/effec tiveness/parisdeclaration

andaccraagendaforaction.htm. Accessed 21 June 2015.

--. 2015b. Query Wizard for Intern ational Development

Statistics. http://stats.oecd.org/qwids/. Accessed 20 June

2015.

--. 2015c. "Recipient aid charts." www.oecd.org/dac/stats/

recipientcharts.htm. Accessed 21 June 2015.

Sachs, J. 2005. The End of Poverty: Economic Possibilities for

Our Time. New York: Penguin.

United States Agency for International Development

(USAID). 2015. "Who we are." www.usaid.gov/who-we-are.

Accessed 21 June 2015.

World Bank. 2015. "6.11 World Development Indicators:

Aid dependency." http://wdi.worldbank.org/table/6.u.

Accessed 20 June 2015

The International

Financial Institutions

Marciis Taylor

LEARNING OBJECTIVES

• To understand why the IMF and the World Bank • To learn how the IMF has reacted to the current

were created and how their operations changed economic crisis, including the debates over grant-

over the subsequent decades. ing developing countries more power within the

To comprehend their role in the process of struc- institution.

tural adjustment and the ongoing controversy it

created.

c----· �----------------------------·----------�

• People are seen in front of a banner during the 2016 International Monetary Fund, World Bank Spring Meetings at IMF headquarters. I Source: MANDEL NGAN/AFP/Staff

162 PART II I International Development Actors

INTRODUCTION

Few actors in international development have fuelled

controversy to the same degree as the International

Monetary Fund (IMF) and the World Bank. Notwith

standing their official objectives of ensuring global

economic stability and promoting poverty reduction,

these international financial institutions have attracted

criticism from a wide range of social movements and

political groups. Opponents from the left of the polit

ical spectrum have claimed that their policies serve to

entrench global poverty and exacerbate inequalities. As

a consequence, the annual meetings of the institutions

are routinely confronted with protests. Conversely, con

servative voices have often claimed that the expanding

role of multinational corporations and global financial

markets has undercut the purpose of both institutions.

Editorials in the Wall Street Journal, for example, have

argued that the institutions are increasingly irrelevant

in today's globalized world and should be downsized or

disbanded (Wall Street Journal, 2013).

To help to understand these debates, this chapter

examines how and why the IMF and World Bank were

established and how their roles have evolved. We begin

with their creation at the Bretton Woods Conference

of 1944 and examine how they assumed a growing

influence on developing countries in the subsequent

decades. By the 1980s, the IMF and World Bank began

to use their considerable financial power to promote a

controversial set of policies known as "structural ad

justment." While the IMF and World Bank argued that

structural adjustment was necessary to promote strong

and stable economic growth, critics countered that

these reforms exacerbated poverty and inequality. In

examining this debate, we look at the ways in which the

international financial institutions (IFis) have reformed

their practices in response to such criticism. Notably,

current policies promoted by the World Bank focus not

just on economic reforms but on a wider set of changes

that incorporate such diverse features as "good govern

ance" and "empowering the poor." We outline each of

these in turn and ask whether they mark a change in

direction from structural adjustment or are merely an

appendage to the latter. Finally, we turn to the contro

versy surrounding the IMF over its interventions in the

East Asian financial crisis in the late 1990s before re

flecting on the impact of the current global economic

crisis on the IMF and its governance structures, with

special reference to the rise of China as a global power.

THE ORIGINS OF THE IMF

AND WORLD BANK

The IMF and World Bank were created as part of the

Bretton Woods Conference held in New Hampshire in

July 1944. With World War II drawing to a close, the

United States met with 44 allied countries to establish a

new international economic system that would set for

mal rules to co-ordinate economic relations between

countries. This goal stemmed from events in the 1930s,

when unrestrained economic conflicts between Euro

pean powers contributed to the outbreak of war. Ow

ing to its overwhelming economic and military power,

the US was able to ensure that its blueprint proposal

set the basis for conference discussions despite the lack

of a clear consensus. American delegates were explicit

about the type of international order they envisioned.

Given the superiority of the American industrial base,

the US sought a system in which international trade

could proceed relatively unhindered. This goal, the

US delegates claimed, would not only help America to

meet its goal of economic expansion but would also fuel

global prosperity and mutual development. U ltimately,

the US delegation successfully translated its vision of

a global economic order into the final agreement that

constituted what became known as the 3;·0 ,ton ·.v.-,,,(l

Monetary instability was blamed for the disin

tegration of international trade in the preceding era,

therefore, the Bretton Woods system was founded on

the establishment of fixed exchange rates between

national currencies. Each country would peg its

currency at an agreed amount of US dollars, which

in turn had a fixed worth in gold. Only small vari

ations to these exchange rates were permitted. The

idea was that fixed currencies would provide stable

monetary conditions necessary for an expansion of

world trade.

Once the articles of agreement were ratified by

member countries at the end of 1945, the International

Monetary Fund was set up to oversee the workings of

the system. Each member country paid into the IMF a

quota of its own currency, as well as some gold or dollar

9 I Taylor: The International Financial Institutions 163

holdings based on the size of its economy. When facing

economic problems, countries would be permitted to

draw temporarily on the reserves of the IMF to pay off

international debts. Usage of these funds was intended

to provide a country with sufficient time to stabilize its

economy without resorting to measures such as cur

rency devaluation that could destabilize the system.

Notably, at this point, the IMF functioned as an impor

tant yet modest instrument to maintain international

currency stability. This initial role gave no hint of the

Fund's later emergence as a powerful agent within in

ternational development.

Along with the establishment of the IMF came the

creation of the International Bank for Reconstruction

and Development (IBRD), which later became known

as the World Bank. The original role of the IBRD was

to make loans at preferential rates of interest to Eu

ropean countries devastated by war. This function

greatly diminished when the US's own Marshall Plan

began to provide credit directly to European nations

in 1947. Fortunately for the fledgling IBRD, a new

and growing set of clients emerged through the on

going process of decolonization. US President Harry

Truman is widely considered to have formalized the

project of international development in 1949 when he

suggested that the collapse of European empires was

creating an "underdeveloped world" that was in des

perate need of a "program of development." By serving

as a bank to provide development finance directly to

these new countries, the IBRD found a key role in this

project.

PHOTO 9.1 I John Maynard Keynes (right) and Harry

Dexter White at the Bretton Woods Conference. 1944.

The new and soon-to -be post-colonial countries

were commonly considered to be on a natural progres

sion through a sequence of structural transformations

leading from traditional agrarian societies to modern in

dustrial ones (see Chapter 3). Development economists,

BOX 9.1 I The US Aims for Bretton Woods

The purpose of the conference is ... wholly within the American tradition, and completely outside polit ical consideration. The United States wants, after this war, full utilization of its industries, its factories and its farms; full and steady employment for its citizens, particularly its ex-servicemen; and full pros perity and peace. It can have them only in a world with a vigorous trade. But it can have such trade only if currencies are stable, if money keeps its value, and if people can buy and sell with the certainty that the money they receive on the due date will have the value contracted for.

Source: US Department of State press release, cited in Peet (2003: 47).

164 PART II I International Development Actors

BOX 9.2 I IMF: Initial Function

Originally, the purpose of the IMF was quite limited: to provide financial resources to allow countries to solve balance-of-payments crises without devaluing their currencies. This would help to maintain the system of stable exchange rates established at Bretton Woods that facilitated stable international trade.

however, suggested that the rate of this development was limited by the stock of capital a country could draw upon for productive investment. In the post-colonial period, capital was scarce for most developing-world countries and many private international banks would not lend to these countries because they were viewed as a considerable risk. In this context the IBRD offered a solution by acting as an intermediary between private international banks and governments. Backed by the financial and political support of the leading Western countries, the IBRD was able to get loans from private international banks at low interest rates. In turn, the IBRD could then lend this money to governments in the developing world to finance development projects with only a small markup on the interest rate.

Initially, the Bank tended to fund very specific types of projects. In the first two decades of its exist ence, more than 60 per cent of its loans funded pro jects to build physical infrastructure such as highways, airports, electricity grids, and hydroelectric dams. To receive such funding, applications from developing countries needed to meet the criteria established by the Bank to ensure that the project was technically sound

BOX 9.3 I World Bank: Initial Function

and would generate sufficient revenue to repay the loan. These criteria tended to exclude many of the poorer na tions because they could not guarantee a significant rate of return.

To address this issue, the International Develop ment Association (IDA) was formed in 1960 as a new organization within the World Bank. Like the IBRD, IDA loans funded large-scale infrastructure projects. However, these loans were provided at a virtually interest-free status over long periods of repayment. This allowed the IDA to fund a range of projects that did not qualify under the conditions. A clear separation of purpose was therefore created between the IBRD, which provided subsidized credit to middle-income coun tries, and the IDA, which provided zero-interest loans to poorer developing countries.

GOVERNANCE STRUCTURES

Before tracing the evolution of the IMF and the World Bank, it is useful to examine their governance struc tures and the exercise of power within them. Unlike the

The original intent of the World Bank was to provide financing for post-war reconstruction and devel opment projects. From 1950 on, however, the Bank focused on providing loans to developing-world countries at lower rates of interest than those of private international banks. These loans were directed mainly towards building infrastructure for development.

9 I Taylor: The International Financial Institutions 165

United Nations General Assembly, where each country

has one vote, voting rights in the IMF and World Bank

are weighted according to quota subscriptions that re

flect the size of a country's economy. This ensures that

advanced industrial countries have consistently held

the majority of the voting power. At present, they hold

approximately 57 per cent of voting rights, whereas

the poorest 165 countries together have only 29 per

cent. The US currently holds close to 17 per cent alone,

providing it with a unilateral veto over constitutional

amendments.

Voting power translates into direct representation

at board meetings. While the IMF and World Bank are

run on a day-to-day basis by an internal management

structure, each has a Board of Executive Directors that

oversees these actions, including approving loans and

guarantees, setting the administrative budget, vetting

country assistance strategies, and making borrowing

and financial decisions. There are 24 seats on the Board,

and the representatives are chosen through vote shares.

As a consequence, the 46 sub-Saharan African coun

tries together have only two representatives on each of

the executive boards, while the five richest countries

each have one, as do China, Saudi Arabia, and Russia.

By convention, the US and the European Union also

enjoy a unilateral power to choose presidents: the US

appoints the president of the World Bank, and Europe

designates the president of the IMF. This caused contro

versy in 2005 when the US government of George W.

Bush insisted on placing Paul Wolfowitz at the head of

the World Bank despite significant opposition from the

developing world, European countries, and within the

Bank itself.

Clearly, these power relations affect the conduct

of !Fis. Although authors differ on the degree of power

they ascribe to the US, there are numerous historical

examples of American influence over decision-making.

For example, in the Cold War period of the 1960s and

1970s, US governments used their influence to ensure

that a disproportionate amount of financing was chan

nelled to strategic US allies and, following the Cuban

revolution of 1959, to governments seen as bulkheads

against Communist revolutions (Caufield, 1996).

More recently, the record of US influence has been

one of mixed success. For example, the US was success

ful in pressuring the World Bank's president to have

controversial chief economist Joseph Stiglitz removed

from his position at the Bank in 1999. However, it sub

sequently failed to significantly change the content of

the Bank's World Development Report 2000/2001 de

spite its opposition to the anti-poverty strategy it ad

vanced (Wade, 2001). In a more constructive way, the

BOX 9.4 I IMF Quotas and World Bank Subscriptions

On joining the IMF, each country must pay a subscription quota based loosely on the size of its economy

and measured in SDRs (Special Drawing Rights), the IMF's unit of account. A member's quota determines

both its financial commitment to the IMF and its voting power within the institution. These quotas also

determine how much a country can borrow from the IMF in times of crisis. Technically, a country can bor

row 100 per cent of its quota annually, to a limit of 300 per cent cumulatively. In special circumstances,

however, these limits can be waived. Quota sizes are reviewed every five years, and the current levels

can be viewed on the IMF's website (www.imf.org).

World Bank "subscriptions" also define voting rights. Upon joining the IBRD, member governments

must "subscribe" to a portion of the Bank's capital stock by pledging to purchase a specified number of

shares according to their financial capacity. Members are required to purchase only a small portion of

their subscription ("paid-in capital"), while the remaining portion ("callable capital") remains outstanding. Given that the IBRD raises the vast majority of its capital through bond issues, it has never had to request "callable capital" from its members.

166 PART II I International Development Actors

US Congress, under pressure from non-governmental

organizations such as the Sierra Club, lobbied the US

Treasury in 1989 to instruct the US director to vote

against all Bank projects that did not have an environ

mental impact assessment available 120 days before the

Board of Governors' vote. Two years later, this practice

became incorporated into standard Bank policy. The

relationship between the US and the IFis is therefore

quite complex and there is often considerable tension

generated as the latter seek to juggle appeasing Amer

ican interests with maintaining their multilateral

credentials.

THE TURBULENT 1970s

During the first two decades of their existence, the ac

tivities of the IMF and World Bank were relatively mod

est and did not provoke the controversy that currently

surrounds them. The decade of the 1970s, however, was

a period of instability and crisis in the global economy

that prompted transformation in both Bret ton ,roods

institutions. Most notably, the 1971 decision of the

United States to withdraw its support for the Bretton

Woods system, when it ceased to back US dollars with

gold reserves, undermined the official role of the IMF

to maintain currency stability. In adapting to the new

circumstances, the IMF did two things. First, it shed the

aims of the collapsing Bretton Woods system to recast

itself as an international lender of last resort. Countries

that needed short-term injections of money to pay in

ternational debts could turn to the IMF without needing

to maintain the value of their exchange rate. Indeed,

the IMF now frequently recommended that countries

devalue their currencies to strengthen their exporting

sectors, which was the opposite of its original purpose.

Simultaneously, the IMF also began to expand the

number of conditions attached to its loans and increase

its surveillance of the policies pursued by borrowing

countries. This trend would become increasingly im

portant in the years that followed. By accepting financ

ing from the IMF, countries were now forced to accept

an IMF-sanctioned reform program. As we shall see

below, in the 1970s and beyond, increasing numbers

of developing-world countries found it necessary to

borrow money from the IMF and this entrenched the

power of the institution within the developing world.

Through what were known as "stand-by arrangements,"

the standard IMF package involved austerity measures

aimed at reducing government spending and lowering

consumption within the economy so as to decrease im

ports and increase funds available for repaying interna

tional debts. In many countries, the financial solvency

of the state was restored through cutting subsidies on

basic consumption goods and reducing expenditures

on social services (Korner, 1986). These programs,

however, were widely criticized for their adverse effects

on the poorer segments of society.

For the World Bank, the 1970s were also a period

of notable transformation. Under the presidency of

Robert McNamara (1968-81) the institution dramat

ically expanded its operations. McNamara viewed the

Bank as an underutilized instrument in a fight against

global poverty and Communism. On assuming office

in 1968, McNamara challenged his staff to find ways to

increase lending, including making loans to countries

hitherto untouched by the World Bank. Lending activ

ity swelled from $2 billion in 1970 to over $11 billion

in 1980. At the same time, the Bank's lending profile

shifted away from large-scale infrastructure projects

to target a wider range of development objectives (see

Box 9.5). McNamara emphasized the need for the Bank

to fund direct anti-poverty efforts through social pro

grams and projects aimed at modernizing the agri

cultural sector. Simultaneously, by focusing on health

and education programs, McNamara's approach

became known as the "basic needs" approach (see

Chapter 24). Lending for infrastructure fell to about

30 per cent of total Bank funding, whereas loans for

anti-poverty projects (including an emphasis on help

ing small-scale farmers increase productivity) rose to

almost 30 per cent.

Two important changes stem from McNamara's

tenure as head of the World Bank. First, like the IMF,

the Bank became considerably more active and power

ful on a global level. No longer was it content to lend

cautiously to a limited number of developing-world

countries. Rather, it was prepared to actively propagate

projects in the developing world as part of a broader

mission to spread its vision of development. Second, in

emphasizing the need to focus on social objectives, the

Bank opened up a debate about its own purpose and that

of development finance in general. While McNamara's

approach was well received by some members of the

9 I Taylor: The International Financial Institutions 167

N EPt

BOX 9.5 I Robert McNamara's Call for a "Basic Needs" Approach

Nations need to give greater priority to establishing growth targets in terms of essential human needs: in terms of nutrition, housing, health, literacy and employment-even if it be at the cost of some reduction in the pace of advance in certain narrow and highly privileged sectors whose benefits accrue to the few.

Source: Speech of the World Bank President to the annual meeting, Washington, Fall 1972.

international development community, there was a powerful conservative reaction that suggested the Bank should focus simply on promoting economic growth.

THE DEBT CRISIS, STRUCTURAL

ADJUSTMENT, AND CONDITIONALITY

As the decade of the 1970s drew to a close, many developing-world countries were faced with the dual burden of high oil prices and falling prices for their key exports. To overcome budget deficits, they began to borrow heavily from private international banks that were keen to make lucrative high-interest loans to the developing world. In the glut of borrowing, countries across the developing world became heav ily indebted to European and North American banks. In Latin America, for example, the total external debt (private and public) leapt from $100,000 million in 1976 to $336,230 million in 1983 (see Chapter 14). When, in 1982, the US made a unilateral decision to raise interest rates, numerous countries across Latin America and Africa faced daunting levels of debt. Mexico was the first to threaten default when it announced on 12 August 1982 that it could not meet payments on an outstanding $80 billion of loans. By October 1983, some 30 countries owing a total of $239 billion had or were attempting to reschedule debt payments. Given the magnitude of the loans facing default, a number of major US and international banks feared collapse and this raised the spectre of a financial crash engulfing the entire Western financial system.

In response, the IMF and World Bank began to pipeline billions of dollars to debt-stricken countries as a means for them to continue making payments on their old debt. In becoming the funnel for emergency loans to the South, the IMF and World Bank proposed dramatic reforms for developing countries to imple ment. The basic premise of their operations was that the policies pursued by most developing countries over the preceding decades were profoundly misguided. For the IMF and World Bank, these policies promoting state-led industrialization had created inefficient econ omies, drained national resources, and encouraged overinflated bureaucracies that distorted markets while breeding corruption.

To overcome the debt crisis, they argued, it was not enough merely to stabilize the economies of the de veloping world through standard austerity programs. Rather, a more profound process of transformation was necessary alongside austerity: one that would open countries to foreign trade and reorient them towards export production. To achieve these objectives, bor rowing governments were mandated to rapidly cut back trade restrictions, end support to domestic indus tries, and remove subsidies to key consumer goods. The idea behind such liberalization was that market forces could then play a greater role in distributing resources across the economy, leading to improved efficiency and wealth creation. At the same time, foreign investment would flow into export-oriented sectors of the economy that would create new economic dynamism and earn the country valuable foreign earnings. This project be came known as "structural adjustment" and the first explicit structural adjustment loan of US$200 million

168 PART II I International Development Actors

was granted to Turkey in March 1980, with many oth

ers following during the debt crisis.

Both the IMF and World Bank knew that structural

adjustment would cause severe economic and social dis

location in the short to medium term. The theory held

that this short-term pain was necessary for long-term

gain. To ensure that countries undertook these diffi

cult measures, World Bank and IMF loans came with

binding conditions and the release of further portions

of credit was made dependent on the successful imple

mentation of prior requirements as decided by the IMF

and the Bank. With both institutions seeking to impose

mutually reinforcing cross-conditionality restrictions

on lending, the two became embroiled in a far closer

association than at any previous time. This rapproche

ment gave rise to the notion of the ,vashington Con

sensus as both IFis wielded their considerable influence

in order to propagate a common, US-supported devel

opment doctrine on a global scale.

The immediate phase of adjustment, usually man

aged by the IMF, consisted of severe austerity measures

to restore macroeconomic balances. Through a "shock

therapy" program of rapid liberalization of prices, cur

rency devaluation, and fiscal cutbacks, a deflationary

period could be engineered within which the govern

ment would balance its budget and inefficient indus

tries would collapse. In the medium term, structural

adjustment involved the rapid liberalization of trade,

deregulation of markets, the privatization of state-owned

industries, and the introduction of the private sector

into social service provision such as health care. This

was intended to allow market forces to play a greater

role in distributing resources across different sectors

of the economy and to encourage new and dynamic

export-oriented industries to form.

While the emphasis of structural adjustment was

on fostering long-term economic growth, these reforms

were also intended to ensure rapid debt repayment and

thereby re-establish the integrity of the international

credit system. Unsurprisingly, the IMF and World Bank

were widely perceived by post-colonial states and their

populations as assuming the role of debt collectors for

private banks. At no point did the institutions question

the morality of the burden of debt crisis being placed

on the post-colonial world rather than being shared

with the international banks that had lent money

irresponsibly (see Chapter 14). As an answer to the debt

crisis, therefore, structural adjustment appealed greatly

to the Western shareholders of the IMF and World

Bank. New loans consolidated the financial systems of

the North while structural adjustment opened avenues

for investment in the South and refocused the indus

tries in the South towards primary and secondary ex

ports that lowered commodity costs in the West. The

question remained, however, whether structural ad

justment would also provide a route towards long-term

economic stability and growth within the developing

world as its proponents claimed.

BEYOND STRUCTURAL ADJUSTMENT?

In the 1990s, the IMF and World Bank came under

growing pressure because structural adjustment was

widely critiqued as being unable to deliver on its pri

mary promises of stable growth and poverty reduction.

The severe austerity programs put in place following

the debt crisis often achieved their goals of reducing

inflation, lowering government deficits, and amelio

rating balance-of-payments problems. However, the

broader reforms of liberalization, privatization, and

deregulation did not appear to be producing a period

of rapid and sustained economic growth. On the con

trary, many countries in Latin America and Africa

faced enduring stagnation, while the social costs of ad

justment were often placed on the poorest segments of

society (SAPRIN, 2004). Although the IMF and World

Bank challenged negative interpretations of structural

adjustment-often placing blame on countries' unwill

ingness to follow their prescriptions sufficiently-they

nonetheless began to re-evaluate their primary goals

and their policy prescriptions. Three factors in particu

lar were important in forcing this rethink.

1. The "East Asian Miracle"

The countries of South Korea, Taiwan, Hong Kong,

and Singapore did not follow the structural adjustment

model. While they embraced export-oriented growth,

they achieved it through sustained involvement of the

state in protecting and subsidizing selected indus

trial sectors to compete on international markets. The

9 I Taylor: The International Financial Institutions 169

successes of the East Asian countries were encapsulated

in the notion of an "East Asian miracle," which seemed

to contrast greatly with the experiences of countries in

Latin America and Africa that had followed the ortho

dox structural adjustment model (see Chapter 7).

2. Stagnation in Sub-Saharan Africa

Owing to high levels of debt during the 1980s, the

IMF and World Bank wielded considerable influence

over many countries in sub-Saharan Africa. As a re

sult, these countries often undertook profound struc

tural adjustment programs. The results, however, were

greatly disappointing. With only a few exceptions, the

region was characterized by moribund economies and

worsening social indicators during much of the 1980s

and 1990s. Critics also claimed that the increase in

armed conflict in the region and the escalating HIV/

AIDS crisis were strongly related to the impact of struc

tural adjustment on state capacity.

3. The Mexican Peso Crisis

In the late 1980s and early 1990s, Mexico was heralded

as a success story that many advocates of structural

adjustment used to justify its validity. The structural

adjustment program pursued by Mexico in the 1980s

CRITICAL ISSUES

had initially imposed considerable economic and social

dislocation. However, with inflation tamed and market

liberalization encouraging a stream of US investment

into export-oriented industries in the early 1990s, Mex

ico appeared to be booming. Proponents suggested that

rapid economic growth would remedy low wages and

high poverty levels. In the latter part of 1994, however,

the flows of investment turned into capital flight as

investors became afraid that the Mexican boom was

built on unstable foundations. Mexico was thrown

into a deep recession, with wages falling further and

unemployment increasing. The economic turmoil was

resolved only when the US sponsored a massive IMF

bailout package and the Mexican government took

over the debts of private banks.

In view of the Mexican peso crisis, the East Asian

successes, and the failures of structural adjustment

in sub-Saharan Africa, the IFis faced growing criti

cism. In response, both institutions-but especially

the World Bank-have sought to reinvent themselves

by making changes to their policy prescriptions and

the ways in which they engage client countries. An

ongoing question is whether these changes have been

superficial-aimed primarily at improving public

image-or reflect substantive changes in the way that

the IFis conceptualize development issues and orient

their policy. This remains a matter of significant debate.

BOX 9.6 I The Bank Reflects on Structural Adjustment

In 2001, the World Bank published a report containing what it had learned from engaging with civil soci ety over the successes and failures of structural adjustment:

Adjustment should come "from within," based on local analysis, local knowledge, local perceptions of political "room for manoeuvre."

In some cases, a step-by-step approach to adjustment is appropriate to allow complex reforms to be closely linked with the development of institutions.

It is important to provide adequate safety nets to help mitigate potentially adverse effects of adjustment on the poor.

Special attention should be paid to safeguarding social expenditures and maintaining access to health care and education.

Source: World Bank (2001).

170 PART II I International Development Actors

THE WORLD BANK, GOOD

GOVERNANCE,AND

INSTITUTION-BUILDING

To explain the poor record of structural adjustment,

the Bank introduced the concept of "good govern

ance." Insisting that structural adjustment remained

the only correct long-term solution to the problems

of developing-world countries, the Bank argued that

positive outcomes were often lost because poorly run

state institutions were not enabling markets to work

efficiently. In short, market liberalization was not fail

ing the developing world but, rather, "bad governance"

was failing the markets. In response, the World Bank

has strongly promoted the goal of "good governance"

as a remedy to development problems. The aim of good

governance is to craft a political architecture that sup

ports market economies through transparency, rule of

law, and accountable decision-making. In the World

Bank's view, corrupt government officials often make

decisions favouring specific interests in return for

monetary reward, and this skews the playing field and

reduces the efficiency of the market. For good govern

ance to prevail, the Bank argued, it was necessary to

find mechanisms that would enforce transparency and

accountability. The former would ensure that citizens

could see how decisions were made and therefore could

compel state officials to make decisions that benefited

the common good, not special interests. Simultane

ously, if the rule of law is not applied freely and fairly,

the legal basis for a market system can falter. As Adam

Smith argued some 200 years earlier, market actors

must be certain that their private property is secure

and their contracts will be upheld. If the law is not ap

plied equally, a lack of confidence in the rules of the

game will restrain market activity and frustrate devel

opment. As a consequence, good governance also must

include judicial independence from both governmental

influence and private actors, and requires an account

able police force to implement the rule of law with an

even hand.

The notion of good governance offered a useful

concept by which the Bank could explain the failures

of structural adjustment and justify further reforms in

developing countries. For market-oriented develop

ment strategies to be effective, the political systems

that surround them must be made accountable, trans

parent, responsive, efficient, and inclusive. Critics, however, have delivered sharp responses. While few doubt that limiting corruption is an important goal in and of itself, they suggest that good governance has not been a necessary factor in the development of many

countries, including those in the West where corrup

tion was often rife during their early development. In a more contemporary setting, China-which has seen the most rapid expansion of any developing economy in recent decades-would fail on many counts of good

governance owing to a systematic lack of transparency

and accountability across government. By blaming the

political environment for the failure of structural ad justment, the good governance doctrine denies that

there may be weaknesses in the structural adjustment

strategy itself. Moreover, given that the World Bank

and IMF governing boards are Western-dominated and

operate in secrecy, it seemed hypocritical to demand

transparency and accountability from client countries

when the institutions themselves have a democratic

deficit.

The response from the World Bank to such cri

tiques has been to broaden the scope of the debate by

highlighting a wider spectrum of social and political

institutions that are conducive to successful reform.

Not only must accountability and transparency be

present in all political and legal processes, but the state

must play a proactive role in fashioning other social

institutions to help markets work efficiently and fairly.

Drawing on new theoretical trends in economics,

such as the "new institutional economics" represented

by such authors as Douglass North (see Harriss et al.,

1995; Chapters 3 and 7), the World Bank now places

greater emphasis on the institutional context in which

development occurs. Along with good governance,

governments are expected to enforce a clear, fair, and

consistent set of rules by which all market actors must

operate.

In emphasizing the role of institutions in develop

ment, the Bank is arguing that states need to facilitate

and regulate the conditions for free economic exchange

and to correct potential market failures caused by un

equally distributed information among market agents.

These situations are viewed to be particularly com

mon in the developing world and require the state to

proactively establish strong institutions that channel

9 I Taylor: The International Financial Institutions 171

information about market conditions, goods, and op

portunities to participants. This shift represented a par

tial re-evaluation of the role of the state in development.

In contrast to the idea of a minimalist state promoted

in early structural adjustment, the World Bank now en

visaged a more expansive state that would undertake

such tasks as preventing the establishment of monopo

lies that would strangle competition and ensuring the

efficient operation of labour markets by constructing

institutions that would maintain a suitably flexible la

bour force.

Consequently, in the early 2000s, the Bank in

troduced what it called a "comprehensive agenda" for

development that encompassed not just economic pol

icies but also the institutional, human, and physical

dimensions of development strategy. These areas range

from good governance and the rule of law through to

social safety nets, education, health, rural and urban

. strategies, and environmental and cultural dimensions

(Wolfensohn, 1999). Together, they form an ambitious

policy agenda covering a holistic range of issues that

broadens the scope of policy and institutional reform

well beyond the original confines of structural adjust

ment. Critics, however, suggest that this expansion has

drawn the World Bank into policy areas that far exceed

its expertise. Others suggest that solidifying structural

adjustment in this manner is unlikely to have a pro

found developmental effect. Instead, they advocate a

move away from the market-centric model to one that

acknowledges the central importance of the role played

by the state in development, as evidenced by the experi

ences of countries as diverse as the United States, Nor

way, Japan, and South Korea (Chang and Grabel, 2004).

THE IMF AND THE ASIAN CRISIS

W hil� the World Bank in the 1990s was expanding its range of policy advice, the IMF maintained a more

consistent focus on macroeconomic policy. During the

1990s, the IMF further emphasized the need for devel

oping countries to open themselves to foreign invest

ment. By removing restrictions on the entry of foreign

capital, the IMF suggested, developing countries could

tap into a large source of finance for development. In

particular, during the 1990s, the IMF argued that it was

necessary for developing countries to attract foreign

portfolio investment (FPI) by opening up their stock

markets to foreign investors. This process is called

"capital account liberalization," and the IMF suggests

that it complements other forms of liberalization and

enhances the ability of developing countries to attract

capital. Using these arguments, the IMF attempted, un

successfully, to have the goal of furthering capital ac

count liberalization written into its constitution.

The IMF's stance on capital account liberalization

quickly came under pressure following the 1994 Mex

ican peso crisis, when investors panicked and rapidly

withdrew their portfolio investment from the coun

try, causing intense economic dislocation and social

upheaval. Critics suggested that FPI is short-term,

speculative, and prone to creating financial bubbles.

Worse was to follow in 1997, when speculation on

global financial markets against the Thai currency

caused another crisis of confidence among investors,

who quickly withdrew portfolio investments from

across East Asia. Despite having been termed "miracle

economies" because of periods of relatively sustained

and stable growth, countries ranging from South Ko

rea to Indonesia faced a massive crisis. The crisis did

not stop in Asia: both Russia and Brazil faced capital

flight and economic turmoil in 1998. The countries

that were relatively least affected, however, were those

that had either refrained from capital account liber

alization or had quickly reestablished controls on the

movement of capital out of the country (Soederberg,

2004).

In response to the Asian crisis, the IMF claimed

the problems were homegrown and placed the blame

on "crony capitalism." According to the IMF, the close

relationships between East Asian governments and

local businesses had made it impossible for foreign

investors to judge the true conditions of the markets.

This contributed to an overestimation of the strength

of East Asian markets, leading to overinvestment

and eventually financial panic once true market

conditions were revealed. Good governance-i.e.,

openness, accountability, and transparency within East

Asian governments-was prescribed as the solution,

along with a series of new international institutions

known collectively as the "new international financial

architecture." These institutions were intended to

promote financial transparency and co-ordinate actions

among key nations at an international level.

17 2 ... t. �1i' , I International Development Actors

PHOTO 9.2 I A Rainforest Action Network banner in Seattle at the time of the 1999 "Battle of Seattle" protests

at the World Trade Organization meetings.

Critics, however, lambasted the IMF's position.

They pointed out that the Fund had praised the East

Asian countries just prior to the crash of 1997. The IMF,

they claimed, had been cavalier in its approach to cap

ital account liberalization, ignoring the potential risks

by encouraging countries to liberalize rapidly without

effective regulatory structures. This created the risk of

rapid financial meltdown in countries with otherwise

sound economies. Moreover, the immediate response

of the IMF to the crisis was to make bailout loans con

ditional on reform measures similar to structural ad

justment programs. The former World Bank chief

economist Joseph Stiglitz was among those who argued

that this IMF intervention was entirely inappropriate

for the East Asian countries and greatly exacerbated

the severity of the crisis. Besides denting the image of

the IMF, another consequence of the Asian debacle has

been the buildup of large foreign reserve stockpiles by

East Asian countries in order to avoid having to turn to

the IMF in the future.

INTO THE NEW MILLENNIUM:

POVERTY REDUCTION AND COUNTRY

OWNERSHIP

Stung by criticism over the Asian financial crises and

facing large protests at their annual meetings, the IFis

entered the new millennium under mounting pressure.

Their response has been to re-emphasize their role as

global poverty alleviators and to restructure the form

of their relationships with client countries. The empha

sis placed on poverty reduction reflected the need for

the IMF and World Bank to seek legitimacy for their

programs. As one unhappy World Bank researcher put

9 I Taylor: The International Financial Institutions 173

PHOTO 9.3 I The IMF and World Bank are burned in effigy, Pakistan, 2011.

it, "The poverty issue is so red-hot that IMF and World Bank staff began to feel that every action inside these organizations, from reviewing public expenditure to vacuuming the office carpet, should be justified by its effect on poverty reduction" (Easterly, 2001).

First and foremost, structural adjustment lending has been remodelled under the new motif of J'r,yi:riy !(t·ciHdio11 0lr:1tcgy l',1r•n, (PRSPs). According to the IMF, these lending agreements have replaced the older "structural adjustment facility" as the primary means of funding low-income countries to promote broad-based growth and reduce poverty. They formalize a clear di vision of labour between the IMF and World Bank, a relationship that former World Bank president James Wolfensohn referred to as " breathing in and breath ing out" (Wolfensohn, 1999). W hile the IMF concen trates on a familiar range of macroeconomic policies and objectives, the World Bank is now responsible for

overseeing the "social and structural" policies of par ticipating countries.

The first innovation in the PRSP model was the in troduction of "ownership." According to Wolfensohn (1999), ownership meant that "(c]ountries must be in the driving seat and set the course. They must deter mine the goals and the phasing, timing and sequencing of programs." By applying the concept of ownership, the World Bank argued that policies are no longer fash ioned in a top-down manner by the IFis but must find their initiative in the country itself. Reforms must be designed by the borrowing government and require the support of all affected social groups. W hen designing policies, therefore, governments must use participatory methods to ensure that all stakeholders-government, civil society, the private sector, and the international development community-are able to voice their opin ions on what should be included within the PRSP.

174 PART II I International Development Actors

,-- CRITICAL ISSUES

BOX 9. 7 I I Fis Embracing Anti-Poverty

The ultimate systemic threat today is poverty.

Michel Camdessus, IMF managing director, OECD forum speech, 15 May 2001.

Our dream is a world free of poverty.

World Bank mission statement (www.worldbank.org).

Although seemingly the opposite of conditional

ity, the notion of "ownership" has nonetheless caused

controversy. The concept is taken from management

theory, where it was developed to strengthen the com

mitment of employees to company projects. In that

sense, the practices associated with "ownership" oc

cur within power relationships between international

finance providers and national governments. Owner

ship aims at improving the viability and efficiency of

program design by allowing national governments to

take the lead in establishing reforms that respect lo

cal conditions. However, since both IMF and World

Bank boards must approve all PRSPs before funding is

granted, it is highly improbable that the reforms will be

allowed to diverge far from Bank and Fund orthodoxy.

On the contrary, given the wide propagation of what

the World Bank considers " best development practice,"

national governments are expected to internalize these

lessons if they are to receive funding. Thus, ownership

can also be viewed as a modification and extension

of conditionality. Indeed, some critics have suggested

that the ownership concept resembles the situation

of a taxicab. The developing country is in the driver's

seat, yet it goes nowhere until the World Bank gets in,

announces where to go, and pays the fare (Pincus and

Winters, 2002).

Beyond the notion of "country ownership," the

World Bank widely championed a new approach to pov

erty reduction in the 2000s. Poverty, it suggested, not

only represents a lack of income but also is manifested

in the conditions of"voicelessness" and "vulnerability."

Poor people suffer from an inability to influence polit

ical processes (voicelessness) and, because of a lack of

the illness or unemployment of a primary wage earner

(vulnerability). The Bank saw these three dimensions

of poverty interacting and reinforcing each other. De

spite this welcome new emphasis, the approach remains

explicitly focused on promoting what it terms "market

opportunities." The other aspects of poverty reduction

are valued insofar as they aid the functioning of mar

kets. The persistence of poverty within countries un

dergoing PRSPs, therefore, is explained by institutional

and social barriers that prevent poor people from par

ticipating in markets. In the words of the World Bank

(2000: 61), "Societies have to help poor people overcome

the obstacles that prevent them from freely and fairly

participating in markets." The possibility that markets

themselves might create or reproduce voicelessness and

vulnerability is downplayed in this approach.

How, then, does the Bank envisage fighting poverty

and its related component of vulnerability? To combat

vulnerability, the World Bank has lauded the concept

of "social capital" as a "missing link" in development

theory. Social capital is a concept used to identify the

networks and linkages an individual or a household

can use to gain access to resources. A household with

high levels of social capital has greater support net

works through family, friends, and the local commu

nity. These linkages facilitate access to extra assets and

information-for example, loaned money to help pay

medical bills or news about potential job opportunities.

For the World Bank, the theory of social capital helps to

explain the social dimensions of why some individuals

and groups are more successful in gaining the assets

to participate effectively in markets and also are less

vulnerable to market fluctuations and other unfore-

assets, are unable to adapt to sudden shocks, such as seen events, such as ill health. As a consequence, the

9 I Taylor: The International Financial Institutions 175

institution now funds programs designed to build up the social capital of the poor (see Chapter 12).

At the same time, to combat voicelessness, the Bank suggests that it needs to "empower the poor." It presents 1:mpum:nm,nl as a process through which the poor are mobilized to assist in generating reforms that reduce constraints on their economic activities and up ward mobility. Corruption, such as officials demanding bribes in return for letting people sell their goods, is seen as blocking market access. Similarly, unaccount able officials frustrate the growth of market activity by failing to provide poor people with the physical (roads, electricity) or social (health, education) infrastructure necessary for market activities. The solution, accord ing to the Bank, is to empower poor people by giving them voice: first, by promoting democracy and the rule of law; second, by promoting education; and third, through technical assistance to civil society groups in forming "pro-poor coalitions" that can enforce good governance.

The change in approaching poverty since the days of structural adjustment is marked. A World Bank that talks of "empowering the poor" would have been un thinkable prior to the new millennium. That said, the idea of empowerment promoted by the World Bank is relatively limited. Forms of empowerment that are not directly market-facilitating-such as the creation of trade unions or movements aimed at the redistribution of wealth within society-are given short shrift within the World Bank's framework, despite the important role they played in poverty alleviation in some Western countries. Most importantly for the critics, the Bank

CRITICAL ISSUES

BOX 9.8 I Argentina Pays Back the IMF

refuses to acknowledge that participation in markets, in some cases, can be a source of disempowerment. For example, jobs in the global textile industry are often characterized by extremely low wages, no job security, and repressive working conditions.

A NEW CRISIS OR

A NEW BEGINNING?

More than six decades have passed since the creation of the IMF and the World Bank. Despite the constant evolution of their roles, they have not been able to shake controversy and debate. Immediately prior to the world economic crisis of 2008, their continued relevance was under scrutiny. With ever-larger flows of private investment circulating within the global economy, analysts questioned why the Bank still made loans to middle-income countries such as China and India, which have seen no shortage of private invest ment over the past decade. It was suggested that the World Bank should be scaled back. No longer should it lend to the BRICS and other middle-income countries, but rather should provide aid simply to the poorest countries. Similarly, given the wide criticism of the IMF for mishandling the East Asian crisis, many countries in that region built up considerable reserves to avoid having to draw on the IMF's resources (see Box 9.8). By 2007, Turkey was the only major b orrower from the IMF. Without the revenues flowing from these coun tries, the institution even had trouble covering its own running costs.

In 2005, just four years after suffering a crippling financial crisis, Argentinean President Nestor Kirchner announced that the country would immediately pay back the entirety of its remaining $9.8 billion debt to the IMF. Kirchner used the occasion to make pointed barbs at the institution, accusing it of fostering financial instability through its liberalization policies and then refusing to aid Argentina in its negotia tions with creditors. Kirchner applauded the financial support of the Venezuelan government, which had bought $1 billion of Argentinean bonds, and encouraged other South American countries to affirm their sovereignty by severing links with the IMF. Whether such autonomy could withstand another major finan cial crisis, however, remains to be seen.

176 PART II I International Development Actors

This context of gathering irrelevance dissipated,

however, as many countries were faced with consid

erable economic distress following the worldwide fi

nancial crisis of 2008. Despite its origins in the West,

a number of factors conspired to hurt developing econ

omies, including the collapse of important commodity

prices, diminishing demand for exports, declining in

vestment flows, the reneging on aid promises by West

ern countries, and a considerable drop in remittances

from migrant workers based abroad. Moreover, unlike

Western countries that used large-scale deficit financ

ing to attempt to prop up consumption and alleviate

unemployment, many southern countries do not pos

sess such means. They faced profound economic con

traction with unsettling implications for wages and

employment, as well as growing pressures on financing

for social programs and other public-sector expendi

tures. These factors, moreover, act in combination with

the elevated prices of food commodities that, despite

falling from their 2008 peaks, still remain well above

the levels established during the preceding decade. In

deed, this food crisis alone was judged to have thrust a

further 100 million people into poverty during 2008.

Under these circumstances, the IMF and World

Bank sought to promote a renewed relevance as global

lenders. Once again, global economic crisis provided

an opportunity for both institutions to reinvent and re

assert their roles. To address the urgent financing needs

of countries facing financial stress, the G20 boosted the

Fund's concessional lending capacity to a level that,

by 2014, was 10 times higher than before the crisis.

Two new aspects were promoted as important to this

resurgence. First, the IMF promised a less doctrinaire

approach that could be more flexible in dealing with

the crisis than in the 1980s and 1990s. Second, long

promised changes to internal voting structures and the

boards of governors were argued to make the institu

tions more reflective of a world in which former clients

such as China appeared to be significant players in pro

moting a global economic recovery.

With regard to those issues, the jury is still out. At

the start of the crisis, the IMF trumpeted a reduction

in the strictness of its policy requirements as compared

to the original structural adjustment programs. This new

flexibility, however, appeared to apply unevenly. While

major countries in the West were encouraged to spend

their way out of recession with deficit-financed public

spending and bailouts for banks, countries in the South

that borrowed from the IMF were given constraining

targets for budget deficits and monetary policy. This

unequal approach was widely remarked to be a contin

uation of colonial double standards, although the IMF

argued it simply reflected different fiscal capacities

across countries. Regardless of the reasons, for coun

tries in the South, the shift within the IMF represented

a slightly more flexible approach rather than a substan

tive change of direction. Indeed, while some critics had

hoped that the 2008 crisis might elicit a broader policy

switch from export-oriented private-sector growth to

a broader public-financed development strategy, this

was not forthcoming. In a review of IMF lending to

13 low-income countries, one frustrated NGO document

declared: "The traditional biases of the IMF continue

to support macroeconomic frameworks where private

interests supersede public interests and the role of the

state, where the financial sector takes priority over the

productive sector, and where foreign investors and

corporate interests override those of domestic actors"

(Third World Network, 2010).

The second focus of change centred on the govern

ance of the institutions themselves. As addressed above,

voting rights and seats on the boards of governors for

both institutions are heavily weighted in favour of the

Western countries. This seemed to negate the impor

tant shifts in relative economic power ongoing with the

growth of China, India, and other key developing coun

tries. Negotiations are currently ongoing to give greater

presence to developing countries in terms of voting

rights and seats on the board of the IMF. This process,

however, is fraught with conflict because various Eu

ropean countries-which stand to be the prime losers

in the process-have blocked numerous proposals for

change. In January of 2015, the IMF Executive Board

released a statement lamenting the lack of progress on

reforms proposed five years previously. With the US

supporting change, a compromise will likely emerge

that will give more voice to the BRICS countries that to

day play a greater role in the global economy. That said,

the present proposal seeks to redistribute just s per cent

of voting rights, so any changes will be incremental and

unlikely to alter fundamentally the operating structure

of the IF Is. For a number of civil society groups seeking

to overhaul simultaneously the policies and operating

structures of the IFis in a way that promotes a greater

9 I Taylor: The International Financial Institutions 177

CRITICAL ISSUES

BOX 9.9 I The World Bank and Climate Change

The World Bank has a notably ambiguous stance on global climate change. This reflects a key contra diction within contemporary development policy. Most of the established goals of development involve expanding consumption and the infrastructures that underscore the production and transportation of goods within a globalized economy: all of which remains a carbon-intensive process. As a result, the Bank finds itself pulled in two directions at the same time. On the one hand, it emphasizes the need for strong mitigation efforts-Le., the reduction of greenhouse gas emissions. To this end, the Bank has championed the reduction of all subsidies in fossil fuels and invests some money in clean-energy projects. On the other hand, the Bank continues to directly fund projects that lead to considerable emis sions increases. Notably, over the past decade the Bank has been a major lender for fossil-fuel-based energy projects in the name of development, including coal-fired power stations. By its own accounts, the Bank provided $1.3 billion in direct funding to fossil-fuel-related projects in 2013-14. If indirect fund ing to fossil-fuel projects was considered, that total could more than double, representing a significant subsidy.

Alongside mitigation goals, the World Bank also began to integrate climate change adaptation into its operations in the mid-2000s. The idea of adaptation is to build the ability of households, commu nities, and countries to better deal with the threats posed by climatic change while taking advantage of new opportunities. As a result, all current and future development projects funded by the Bank are projected to address climate change adaptation as integral parts of their design and operation. The aim of this "climate risk management" is to make existing development investments more resilient to cli mate variability and extreme weather events while simultaneously improving the impact of development efforts in the present. Critics, however, have questioned whether the concept of adaptation is a way of safeguarding existing development strategies and therein avoiding a more profound shift in the very idea of development to reflect pressing sustainability issues (see Taylor, 2015).

degree of influence for countries of the Global South,

the reforms currently proposed are an opportunity lost

rather than a success to be celebrated.

More dramatically, China has responded to the

continued Western influence over the !Fis by an

nouncing the creation of its own development bank

that would directly rival the World Bank in Asia (see

Chapter 13). Using its substantial holdings of foreign

exchange, China has repeatedly sought to use develop

ment funding as a means to open markets and exercise

leverage across the post-colonial world and in sub-Sa

haran Africa and Central Asia in particular. This initi

ative is closely connected to a desire to gain influence

over key producers of raw materials and food. Pro

posed in 2013 and formally launched in October 2014, the Asian Infrastructure Investment Bank represents a

bold attempt by China to assume a dominant role as a

development funder in Asia. While the United States

has implacably opposed the new bank-purportedly

for a lack of clear governance protocols and environ

mental safeguards-other countries, including Britain,

Germany, France, and Australia, have nonetheless sub

scribed to become joint members. This shift in support

represents a major coup for the Chinese state, which

now leads a development initiative that has a starting

working capital of $50 billion, projected to rise to $100

billion. Notably, the explicit purpose of the Chinese in

itiative is to fund infrastructure, which was the found

ing goal of the World Bank 60 years previously, prior to

the dramatic escalation of its role. For some observers

including Nobel Prize-winning economist Joseph

Stiglitz-the Chinese state was conspicuously showing

the World Bank where its priorities should lie in the

twenty-first century.

178 PART II I International Development Actors

SUMMARY

From this chapter you will have gained a detailed un

derstanding of the history and policies of the Interna

tional Monetary Fund and the World Bank. In many

respects, these two institutions have been the official

face of international development and have exercised

a strong influence over both the idea of what devel

opment should look like as well as how it should be

implemented. The chapter captured not only the pro

found impact on international development that both

institutions have had over the past 60 years through

their lending and policy prescription, but also how

and why they have been repeatedly enmeshed in con

troversy. In particular, we examined the role of both

institutions in promoting structural adjustment pro

grams (SAPs) in the 1980s and 1990s, showing why

these policies created considerable protest in affected

countries. The chapter then charted how the institu

tions responded to criticisms during the 2000s, with

specific reference to anti-poverty strategies in the new

millennium. The question was raised as to whether

these new policy approaches represented a substantive change or merely a shift in style. Finally, the chapter

addressed how the institutions have reacted in the

face of the global economic crisis emerging in 2008

and looked at recent reforms intended to increase the

voice of developing countries within both institutions.

While the 2008 crisis appeared as an opportunity for

both institutions to reassert influence on a global scale,

the continued growth of middle-income countries

and-particularly-of China poses challenging ques

tions for the future of the IMF and World Bank over

the decade ahead.

QUESTIONS FOR CRITICAL THOUGHT

1. The IMF and World Bank remain powerful actors within international development. Is the power these institu

tions exercise over developing countries a positive force for ensuring equitable and sustainable development?

2. Structural adjustment was widely critiqued for its narrow focus on economic liberalization. Have the re

forms that the World Bank introduced to its policy prescription during the 2000s suitably addressed such

assessments?

3. The 2008 global economic crisis gave the IMF and World Bank a new sense of purpose within a changing

world marked by the growth of China and other middle-income countries. To what extent is this new rele

vance simply a temporary reprieve?

James, Harold. 1996. International Monetary Cooperation

since Bretton Woods. Washington: IMF; New York:

Oxford University Press.

Lewis, John, Richard Webb, and Devesh Kapur. 1997. The

World Bank: Its First Half Century, 2 vols. Washington:

Brookings Institution Press.

Moore, David, ed. 2007. The World Bank: Development,

Poverty, Hegemony. Scottsville, South Africa: University

of KwaZulu-Natal Press.

Pincus, James, and Jeffrey Winters, eds. 2002. Reinventing

the World Bank. Ithaca, NY: Cornell University Press.

Stiglitz, Joseph. 2002. Globalization and Its Discontents. New

York: W.W. Norton.

World Bank. Various years. World Development Report.

Washington: World Bank. econ.worldbank.org/wdr.

9 I Taylor: The International Financial Institutions 179

Caufield, C. 1996. Masters of Illusion: The World Bank and

the Poverty of Nations. New York: Henry Holt.

Chang, H.-J., and I. Grabel. 2004. Reclaiming Development:

An Alternative Economic Policy Manual. London: Zed

Books.

Easterly, W. 2001. The Effect of International Monetary Fund

and World Bank Programs on Poverty. Washington:

World Bank.

Harriss, J., J. Hunter, and C.M. Lewis, eds. 1995. The New

Institutional Economics and Third World Development.

London: Routledge.

Korner, P. 1986. The IMF and the Debt Crisis: A Guide to the

Third World's Dilemma. London: Zed Books.

Peet, R. 2003. Unholy Trinity: The IMF, World Bank, and WTO.

London: Zed Books.

Pincus, J., and J. Winters. 2002. "Reinventing the World

Bank." In J. Pincus and J. Winters, eds, Reinventing the

World Bank. Ithaca, NY: Cornell University Press, 1-25.

Soederberg, S. 2004. The Politics of the New International

Financial Architecture: Reimposing Neoliberal Domi

nation in the Global South. London: Zed Books.

Struc tural Adjustment Participatory Review International

Network (SAPRIN). 2004. Structural Adjustment: The

SAPRIN Report: The Policy Roots of Economic Crisis,

Poverty, and Inequality. London: Zed Books.

Taylor, M. 2015. The Political Ecology of Climate Change

Adaptation: Livelihoods, Agrarian Change and the

Conflicts of Development. London: Routledge.

Third World Network. 2010. Third World Resurgence 237

(May): 26-8.

Wade, R. 2001. "Showdown at the World Bank." New Left

Review 7: 124-37.

Wall Street Journal. 2013. "Doing in business at the World

Bank: An annual survey on free enterprise is under

attack." Wall Street Journal, 7 May. www.wsj.com/articles/

SB1000142412788732337250457846 8802587910308.

Accessed 11 August 2015.

Wolfensohn, J. 1999. A Proposal for a Comprehensive

Development Framework. Washington: World Bank.

World Bank. 1989. Sub-Saharan Africa: From Crisis to

Sustainable Growth. Washington: World Bank.

-. 2000. World Development Report 2000-2001: Attacking

Poverty. Oxford: Oxford University Press.

-. 2001. Adjustment from Within: Lessons from the

Structural Adjustment Participatory Review Initiative.

www.worldbank.org/research/sapri/index.htm.

The United Nations and Multilateral Actors in Development

David Sogge

LEARNING OBJECTIVES

• To learn about key development and humanitarian • To assess the organizations' respective signifi-

institutions operating within the UN system and cance in various developmental spheres.

outside it.

4 To understand how these organizations have ad

vanced or retreated, as affected by internal chal

lenges and geopolitical pressures.

,!-- ··------· --------------ct

A The UN Refugee Agency (UNHCR) resumed voluntary repatriation of tens of thousands of lvorian refugees from Liberia, after a pause of more than a year because land borders were closed to prevent the spread of a deadly Ebola outbreak. I Source: UN Photo/Abdul Fatai Adegboye

10 I Sogge: The United Nations and Multilateral Actors in Development 181

From killer viruses to tax evasion to the trade in weap ons, major problems continue to show no respect for national boundaries. Needs to co-operate transnation ally are more urgent than ever. To cope with such chal lenges, governments have committed themselves to international legal conventions, mutual defence pacts, international agencies, and economic blocs. Today there are more than 5,000 intergovernmental organi zations (uia.org/igosearch) and more than 560 major agreements (treaties.un.org). These embody multi laternlism, a term referring to formal arrangements among three or more states, commonly for peaceful purposes over extended periods. Multilateralism has developed over more than a century. Yet it has also met setbacks and spawned contradictions. In the name of the poor and powerless it has sometimes helped serve the rich and powerful. Questions continue to arise about multilateralism's scope, efficacy, and fairness in tackling problems.

Development has long been a multilateral pursuit. Rich countries have rallied under the banner of foreign aid, where multilateralism means singing from the same policy song sheets and contributing to the same collection boxes. Multilateral aid constitutes about 30 per cent of all net aid from Western governments. Yet that funding share understates its influence. Mul tilateral institutions design and transmit policy formu las about how non-Western countries should be run. Some observers claim that multilateral approaches are better than bilateral ones. Their virtues are said to in clude lower overhead costs, greater sectoral expertise, stronger capacities for long-term engagement, and lower risks that the self-interest of donor nations would dominate. Those are some assertions, but not everyone is convinced. This chapter begins with an overview of some of the main multilateral actors in development and some claims and counter-claims made about them.

Multilateral engagements can help governments improve their standing, influence, security, or eco nomic advantage. So-called middle powers such as Australia, Canada, and the Netherlands often prefer working multilaterally because results can be better, at less cost and risk, than going it alone. They can al low governments to take lower profiles and in effect to subordinate themselves to others; political leaders can thereby sidestep sovereign responsibilities and pass the buck. Big powers such as the United States often pursue

multilateralism "a la carte," co-operating only when it suits them and often acting on their own. This unilat eralism has today become more common, as shown in one-to-one trade pacts and the use of bilateral funds under the banner of multilateral action. Nevertheless, governments face incentives to work together in the face of large issues-climate change, Internet access, organized crime-that transcend borders. States are increasingly bound by treaties, consultation systems, and agencies controlled jointly. Matters of interna tional trade and investment are commonly framed and enforced under international "hard law" (see Chapter 11 on the private sector and Chapter 15 on free trade). Such arrangements allow powerful players in global capitalism to gain advantages. By contrast, global insti tutions with mandates regarding social development, human rights, and justice have far weaker suasion (see Normand and Zaidi, 2008), as their powers depend largely on normative guidelines or "soft law."

This chapter discusses multilateral organizations clustered according to the source of their oversight, as follows:

1. the United Nations system; 2. Western industrialized governments;

3. governments of non-Western countries.

The focus is on their functions and evolution accord ing to shifting ideological currents and power balances. That perspective highlights distinctions between inter national organizations (the products) and international organization (the process) as a means of understanding their roles and significance.

THE UNITED NATIONS SYSTEM

The United Nations was conceived in the closing months of World War II. The triumphant great pow ers-Britain, the Soviet Union, and the United States negotiated and eventually agreed on a design for a new body, the United Nations Organization, to replace its weak predecessor, the League of Nations (1919-46). The UN's design made it open to all countries but attuned to the strategic preferences of the great powers, espe cially the United States, the only state with the over whelming military, diplomatic, and financial means to

182 PART II I International Development Actors

bring about such a global project at that time. Yet while

the US may have wished to call all the shots, it could

not act alone. To shape the post-war order according

to its interests, it needed other nations' consent and

active co-operation. It therefore agreed that France

and China, together with Britain and the Soviet Union

(Russia after 1991), would be permanent members of

the UN Security Council, the world's pre-eminent fo

rum on urgent issues of conflict and insecurity.

The UN was created under the banner of peace and

security, but it rapidly took on mandates to promote de

velopment. During its first phase, up to the late 1950s,

it helped launch many global initiatives in the name

of economic and social well-being. It was the "mother

church" of developmental optimism. At the same time,

the UN served as a geostrategic instrument for a few

powerful countries. It provided legitimacy and mili

tary power in support of US foreign policy, such as for

the war in Korea in the early 1950s and during the up

heaval in the Congo in the early 1960s. As chief source

of funds, supplier of staff, and host of the UN headquar

ters in New York City, the US had decisive influence

over the organization. However, the UN has not always

behaved as an obedient servant to American overlords;

indeed, it has often been a platform for non-Western

countries to regroup and to resist Western pressures.

A second and more tumultuous phase began af

ter 1960, by which time UN membership had risen to

99 nations, up from 51 at its founding in 1945. The

one-state-one-vote balance in the General Assembly

began to tilt towards the non-Western world. New is

sues emerged on the UN's agenda and expanded the

scope of UN agency work. Colonial rule had largely

ended, but post-colonial transitions did not always fol

low the scripts written by the Western "First World"

or the "Second World" of the Communist bloc. New

states often took independent positions as members of

a "Third World" to chart their own ways forward.

In the 1990s, a third and far more troubled phase

began for the UN, ushered in by the collapse of the So

viet Union and the expansion of an especially preda

tory and unaccountable kind of capitalism. Western

nations supported the deployment of UN "blue helmet"

troops to conflict zones where Western powers had not

already intervened, such as in the former Yugoslavia,

Haiti, and the Democratic Republic of the Congo. Yet

where they initiated wars, those big powers bypassed

the United Nations. In Afghanistan, Iraq, Libya, and

Syria, "coalitions of the willing" under US leadership

have disregarded some fundamental international

rules, including UN safeguards against the use of

armed force.

For many non-Western countries, Western powers

have first defined the problems and then prescribed the

solutions according to their preferred policy formulas

(see Chapters 3, 9, and 15) through the International

Monetary Fund (IMF), the World Bank, the World Trade

Organization (WTO), and the G20 group of finance

chieftains. However, those Western-backed bodies have

regularly met dissent by non-Western nations, often in

UN forums. In response, Western powers have lowered

the priority and narrowed the roles they assign to the

UN. Nevertheless, expressions of universal intent such

as the UN's Millennium Development Goals and agree

ments such as the treaty banning landmines continue

to emerge and to affect policy internationally. While

trade and investment matters have driven both bilat

eral and multilateral deal-making, elites usually prefer

multilateral co-operation on issues of the environment,

public health, and humanitarian need. However, when

challenged to respond to inequity and disrespect of

rights or to create and maintain "global public goods,"

the founding norms of UN multilateralism face strong

headwinds.

Origin and Oversight of UN Agencies

The twentieth century saw the birth of many interna

tional organizations, many of them with humanitarian

and developmental mandates. Among the best known

are UN agencies. The United Nations Children's Fund

(UNICEF), for example, became a household word

thanks to its appealing roles towards children and

those caring for them.

These agencies arose amid certain assumptions.

One was a widespread optimism about the power of ex

pertise to solve problems. In the 1940s and 1950s, terms

such as "modernization," "planning," and "population

control" were commonplace. International agencies

por trayed development as an essentially technical is

sue beyond politics. Its guides were to be professionals

such as engineers, medical specialists, crop scientists,

and economists. Such experts and managers could be

trusted to define the problems properly and then get

10 I Sogge: The United Nations and Multilateral Actors in Development 183

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PHOTO 10.1 I UN Troops leaving Syria on 15 September 2014.

on with the job of solving them. Development agencies thus grew according to a logic of technical function

alism, in which each profession's know-how would be

applied through sector-specific organizations man

aged from the top down. The approach embodied

and indeed legitimated multilateralism as a path

way to universal development. Matters of national

sovereignty or class interests were seen as harmful

distractions. Framed in these ways, "development"

became a conflict-free project insulated from

left/right ideologies and from open debate. The

technicians-in-white-coats image of multilateral

action camouflaged its politics.

Later, donors began adjusting their approach.

UN agencies came to focus more on each country's

particular circumstances and plans rather than as

suming that problems and solutions were the same

in all new "modernizing" countries-an assumption

justifying one-size-fits-all multilateral approaches to

development.

According to the first article of its Charter,

the UN is intended "to achieve international

co-operation in solving international problems of an

economic, social, cultural, or humanitarian charac

ter, and in promoting and encouraging respect for

human rights and for fundamental freedoms for all."

The Charter mandated the creation of the Economic

and Social Council (ECOSOC), which is today com

posed of representatives of 54 states elected for

three-year terms by the General Assembly. In formal

terms, ECOSOC could be seen as the world's supreme

forum for development policy; however, not long

after its creation it was shown to have little authority,

even over the specialized UN agencies formally

answerable to it.

The UN categorizes its organizations mainly

according to their lines of accountability. One category

comprises specialized agencies. These are distinct bodies, established by intergovernmental treaties.

They have their own charters and governance; they

184 PART II I International Development Actors

appoint their own chief executives. States may join

or withdraw as they wish. Each specialized agency

has an agreement linking it to the UN, although that

seldom implies subordination. In formal terms, the

World Bank and the IMF are specialized UN agencies,

but in practice they operate in complete independence

of the UN.

The second category is that of UN organs, also

termed programs or funds. These are direct arms of

the UN itself and are thus answerable ultimately to the

General Assembly.

A third category comprises UN agencies, such as

for peacekeeping and humanitarian action, that operate

under the direct supervision of the Secretary-General's

office. Major UN bodies with mandates for development

and humanitarian tasks are depicted in Figure 10.1.

Overall contributions to the UN in 2011 were close

to US$40 billion (equivalent to British Columbia's pro

vincial government budget in that year). The ways by

which it gets and spends money have departed signif

icantly from its founding multilateral norms. Initially,

UN bodies were funded chiefly by mandatory contri

butions from governments to a general budget, based

on each country's capacity to pay.1 That was multilat

eralism then. Today, UN agencies compete with each

other to get most of their funding bilaterally from gov

ernments, who give on a voluntary basis, often with re

strictions. If one "follows the money" supporting the

United Nations, bilateralism has triumphed over mul

tilateralism (see Jenks, 2014).

THE AGENCIES

The UN family tree has grown many branches over

several generations. Its agencies, programs, funds,

commissions, and other institutions number several

dozen. This section discusses only the most prominent

ones, grouped by sector.

Food, Agriculture, and Rural Development

Established in 1945, the Food and Agriculture Organi

zation (FAO) is a UN specialized agency. Headquartered

in Rome, where an earlier world body, the International

Institute of Agriculture, had been based, the FAO's chief

mandate is to provide governments with information

and policy advice on food, agriculture, and rural devel

opment. It also runs development projects and provides

emergency assistance in response to droughts and in

sect plagues. Together with crop research institutes

financed by the Rockefeller and Ford foundations, it

promoted controversial "green revolution" technolo

gies designed for farmers and agri-businesses with suf

ficient land, skills, and financial assets (see Chapter 18).

Despite its reputation as a source of technical

know-how, the FAO continues to meet criticism. It

has been cited for its friendly stances towards global

agri-businesses, such as its Private Sector Mechanism,

an association involving many dozens of corporations

and agri-business networks. Financial constraints have

helped drive those relationships, and have also led it to

frame some activities as emergencies (for which fund

raising is easier) and to decentralize its management

(which lowers staff costs).

Also based in Rome is the World Food Programme

(WFP), a UN organ set up in 1961 by the FAO and tasked

initially with channelling Western food surpluses into

humanitarian relief efforts and labour-intensive public

works projects. As both the WFP and the FAO respond

to emergencies and seek support from the same donors,

rivalry between them has grown.

Following the 1974 World Food Conference, a

group of non-Western governments led by the Or

ganization of Petroleum Exporting Countries (OPEC)

established the International Fund for Agricultural De

velopment (IFAD). A specialized UN agency, !FAD oper

ates from Rome headquarters as a small international

bank for member governments, channelling most of its

loans through other UN bodies to support rural devel

opment projects. In the early 1990s a decline in OPEC

funding left IFAD dependent on Western donor govern

ments, with whom relations have been rocky.

Health, Children, and Women

In 1948, ECOSOC created the World Health Organiza

tion (WHO), a UN specialized agency based in Geneva.

Having defined health as something more than the ab

sence of disease or infirmity, WHO is supposed to pro

mote general physical, mental, and social well-being.

It is supposed to be on the front lines in combatting

endemic diseases and epidemics. It further aims to

10 I Sogge: The United Nations and Multilateral Actors in Development 185

General Assembly

Economic and Social Council ECOSOC

Functional Commissions: Human Rights;

Status of Women; Sustainable

Develpment; etc.

Regional Commissions:

Africa - ECA; Latin America - ECLA;

etc.

Standing Committees:

on NGOS; on Intergovernmental

Agencies; etc.

Expert Bodies: Development Policy;

Indigenous Issues; etc.

Ad Hoc Groups: on Burundi;

on Guinea-Bissau; etc.

Main Committees: social, humanitarian and cultural matters; special political and

decolonization

Human Rights Council

Other subsidiary organs

Specialized Agencies

International Labour Organization - ILO

World Health Organization - WHO

Food & Agriculture Organization - FAD

UN Educational, Scientific & Cultural Organization - UNESCO

UN Industrial Development Organization - UNIDO

International Fund for Agricultural Development - IFAD

Nat Shawn:

UN Security Council & Subsidiary Bodies (including peace-keeping missions);

UN Trusteeship Council (inactive since 1994); International Court of Justice; and Special Tribunals

Secretariat

Secretary-General

Dept. of Peacekeeping Operations - DPKO

Office for the Coordination of Humanitarian Affairs - OCHA

Dept. of Economic & Social Affairs

High Representative for the Least Developed, Landlocked & Small Island Developing States

Management, Political, Information, Legal, Financial

& other departments

Programs and Funds

UN Development Programme - UNDP

UNCDF UNV

UN High Commissioner for Refugees - UNHCR

UN Children's Fund - UNICEF

World Food Programme - WFP

UN Population Fund - UNFPA

UN Women

UN Conference on Trade & Development - UNCTAD

UN Environment Programme - UNEP

UN Human Settlements Programme - UN-HABITAT

Research & Training Institutes UN University & WIDER

UN Research Institute for Social Development - UNRISD

Other Entities Office of UN High Commissioner for

Human Rights - OHCHR; Programme on HIV/AIDS - UNAIDS;

Office for Project Services - UNOPS; etc.

Trust Funds UN Fund for International Partnerships;

UN Democracy Fund; etc.

FIGURE 10.1 I Major UN Entities with Development and Humanitarian Functions

I 186 PART II I International Development Actors

PHOTO 10.2 I The World Food Programme meets nutrition needs with a shipment destined for Pyongyang, the

capital of the Democratic People's Republic of Korea.

promote health services and training, better nutrition,

occupational health, and unharmful environmental

conditions. Among its functions are research and the

setting of standards for health practices and biological

and pharmaceutical products. It has taken progressive

stances by emphasizing basic health care and draw

ing attention to the causes of ill health and premature

death, including smoking and road accidents. But its

inept responses to crises (outbreaks of cholera in Haiti,

and of Ebola in West Africa, etc.) and its failure to pro

mote health services as a human right have left it open

to criticism. Critics cite WHO's accommodation of big

pharmaceutical corporations, whose interests seldom

focus on health problems of the poor. "Big Pharma"

promotes its corporate image through its donations

and business "partnerships" with WHO. Yet corpora

tions' relevance for universal improvement in health is

open to question, given their resistance to low-income

nations' production and use of low-cost generic drugs

(see Chapter 20). Meanwhile, WHO is no longer the

only player in global health. Competition comes from

"philanthrocapitalist"organizations such as the Bill and

Melinda Gates Foundation and from the World Bank

(see Chapter 9), which also offers health policy advice.

Despite these challenges, and Western pressures to re

strict it to merely technical matters, WHO is often seen

as among the more effective UN bodies. However, its

effects in promoting change are harder to detect than

those in promoting business-as-usual.

Set up in 1946 by the General Assembly to help

feed, clothe, and vaccinate children in post-war

Europe, the New York-based UN Children's Fund

(UNICEF) today pursues a worldwide mandate for child

survival and development, chiefly through communi

ty-based and national programs for preventive health,

nutrition, and education. For this kind of work, it was

awarded the 1965 Nobel Peace Prize. It also promotes

legislation for child protection consistent with the 1990

International Child Rights Convention. In the 1980s,

UNICEF stood out among aid agencies for its dissent

10 I Sogge: The United Nations and Multilateral Actors in Development 187

against orthodox macroeconomic austerity policies imposed by the IMF, the World Bank, and most other official donors. It has sometimes joined activist NGOs in challenging corporations; it denounced, for exam ple, the sale of infant formula foods sold by global cor porations in low-income countries. However, UNICEF selectively pursues donations from corporations, and recruits showbiz and sport celebrities in its highly suc cessful public relations efforts. UNICEF's data and analy ses, much of them produced at its Innocenti Research Centre in Florence, Italy, focus on poverty, inequality, and powerlessness.

In 1946, ECOSOC established a Population Com mission in response to fears of a "population explo sion" in non-Western lands. In 1967, with monies from the United States, the General Assembly set up the UN Fund for Population Activities (UNFPA). Its mandate was to disseminate information and promote policies for better access to family planning knowledge and services. In Cairo in 1994, the UN convened its third decennial world gathering on Population and Devel opment. At this conference, governments reached a unified view of linkages among population, develop ment, and women's rights. Reinforced by this political consensus, and in the teeth of conservative religious and political opposition, the UNFPA has managed to advance thinking and action on reproductive rights and reproductive health, which have largely displaced the discourses of family planning and population control.

Helping to drive these achievements was a global movement for women's rights and gender equity. It helped to create and steer UN commissions, confer ences, agencies, and research-and-training bodies. In 1946 the UN launched its Commission on the Status of Women. Along with other organizations, that body promoted legal statements such as the Convention on Political Rights of Women in 1952, followed by oth ers on working life, human trafficking, marriage, and property. UN conferences related to women have shaped thinking and built global networks. The World Confer ence of the International Women's Year, held in Mexico in 1975, was unprecedented in scope and importance. Among its results was the establishment of the UN De velopment Fund for Women (UNIFEM) within the UN Development Programme. Extending the impact of

these bodies are knowledge-based institutes. Among these was the International Research and Training Institute for the Advancement of Women (INSTRAW). Its work involved the promotion of women's rights as human rights. In July 2010, UNIFEM, INSTRAW, and two other UN bodies merged to form UN Women, the United Nations Entity for Gender Equality and the Em powerment of Women. Among its tasks are support to the UN Commission on the Status of Women, guidance to states seeking to implement policies and standards consistent with UN conventions, and pressures to hold the UN system accountable for its own commitments on gender equality (see also Chapter 5). Governments are expected to draw on these global policy commit ments when framing national legislation, legal sys tems, and budgets. While no doubt adding to forward motion, however, the success of UN efforts ultimately remain dependent on pressures from emancipatory movements at all levels.

Education, Science, Culture,

and Media

Established in 1946, the United Nations Educational, Scientific and Cultural Organization (UNESCO) is a specialized agency headquartered in Paris. UNESCO's mandate is both intellectual (promotion of education, culture, and media, exchange of knowledge, etc.) and normative (promotion of freedom of expression, of cultural rights, etc.). Those purposes are not easily rec onciled, especially among the world's governments, who are UNESCO's "owners." The advance of economic orthodoxies and the interests backing them have put its normative mandate under stress. For example, its pursuit of rights to education has been frustrated. In 1990, at an intergovernmental conference held in Jomtien, Thailand, UNESCO achieved adoption of the "Education for All" declaration, holding that basic ed ucation should be a public good. Yet that resolution has encountered ideological opposition. Some business in terests and governments, for example, have worked to turn knowledge and education into commodities. They frame them as products to be bought and sold in "mar ketplaces" rather than as public entitlements available to everyone regardless of ability to pay. As with many other UN agencies, UNESCO has had to seek financial

188 PART II I International Development Actors

and non-financial "partnerships" with businesses and

other private-sector actors. Weak management has

sometimes limited UNESCO's effectiveness. But exter

nal challenges-pressures to pursue "market-based"

approaches and to sidestep demands for universal

rights and freedoms-have been more detrimental.

Meanwhile, the World Bank has become a competing

source of expertise and influence over education policy

in low-income countries.

Environment and Shelter

Following citizen initiatives in Europe and North

America, the 1972 United Nations Conference on the

Human Environment, held in Stockholm, Sweden,

helped put global environmental issues on public and

political agendas worldwide. It led the UN General As

sembly in 1972 to create the United Nations Environ

ment Programme (UNEP). Headquartered in Nairobi,

Kenya, it has regional and specialized offices around

the world. Its chief tasks are to monitor and assess

global and regional environmental conditions, to facil

itate negotiations of global agreements and supervise

their enforcement, to raise awareness, and to manage

specific projects on issues such as climate change and

biodiversity. Some UNEP initiatives include anti-poverty

dimensions, such as combatting the pollution of urban

water supplies (see Chapter 17). UNEP is especially val

ued for the knowledge and norms it brings to the dis

cussion of public policies.

The United Nations Human Settlements Pro

gramme (UN-HABITAT), also based in Nairobi, focuses

on basic development and poverty issues. Founded in

1978, it was an outcome of the first Conference on Human

Settlements, known as Habitat I, convened by the UN in

1976 in Vancouver, Canada. In 1996 a second conference,

Habitat II, in Istanbul, Turkey, drew up a broad agenda

for governments and others to tackle the fast-growing

problems of cities in low-income countries. That agenda

contrasts with market-led approaches. It holds that ade

quate shelter is a right, not merely a commodity available

only to those who can afford to pay. Working with mem

ber governments and specialized NGOs, UN-HABITAT

pursues its normative mandate through research and

dialogue on policies, laws, and planning methods about

housing, land use, water and sanitation, security, and ur

ban governance (see Chapter 19).

Employment and Working Life

The International Labour Organization (!LO) emerged in 1919 after many decades of labour organizing and the advance of social democratic parties in industrialized

countries. Today, as a UN specialized agency headquar

tered in Geneva, it is unique among official organiza

tions in that representatives of civil society-organized

labour and employers' organizations-participate in

its governance. Historically, the IL0's main tasks have been normative: to define and promote standards for

working and social conditions, chiefly through inter governmental conventions. Most governments have

ratified !LO conventions on "Fundamental Principles

and Rights at Work," including the freedom of workers

to associate together, as well as other agreements and

guidelines to protect working people. Adherence to

those rules, however, is not universal. The United States

refuses to ratify conventions on freedom of association,

on the right to organize and collective bargaining, on

equal remuneration, and on discrimination in employ

ment and occupation. They may enjoy overwhelming

world support, but without US backing those covenants

lack strong promotion and enforcement.

The !LO has promoted responses to globalization

through studies, conferences, and thematic campaigns

on "decent work" and social protection. It is the only

UN body to have regularly paid attention to job crea

tion and decent work. Its efforts to influence policies

of the World Bank and IMF have met success only very

recently, when those bodies began to accept that em

ployment was an impor tant goal. Originally focused on

formal sectors, the !LO today addresses both the formal

and informal labour markets. In training and techni

cal assistance projects, such as labour-intensive public

works, the ILO has contributed to practical measures.

But in a world where workers are increasingly expend

able and unprotected, the ILO's original normative pur

poses are under severe pressures (see Standing, 2008).

Trade, Investment, and Corporate Accountability

In 1964, at the initiative of non-Western governments

wishing to end their disadvantages in the world eco

nomic system, the first UN Conference on Trade and

Development (UNCTAD) was held. It was rapidly

10 I Sogge: T h e United Nations and Multilateral Actors in Development 189

institutionalized, gaining a secretariat in Geneva. In its

first three decades, UNCTAD tried to forge new trade

policies, to serve as a forum for trade negotiations, and

to influence UN development thinking. Concepts of de

pendency and Keynesian social democracy guided its

campaign for a fairer world trade system (see Chapters 3

and 15). Non-Western countries were highly influential

in UNCTAD, chiefly through the Group of 77 (discussed

later in this chapter). Despite internal differences, those

countries agreed that no single development path was

best. UNCTAD was a global vehicle for them to gain oc

casional trade concessions, such as a 1970 agreement on

a "generalized system of preferences."

Rich countries disliked UNCTAD because it of

ten failed to follow Western prescriptions and posed

disadvantages for multinational corporations. West

ern countries sought to downsize it and to promote

the General Agreement on Tariffs and Trade (GATT),

which evolved into the more highly structured WTO

in 1995. The WTO (see Chapter 15) operates outside UN

auspices and takes positions "diametrically opposed"

to those of the UN (Wilkinson, 2014). In 1992, the

rich countries decisively marginalized UNCTAD as a

forum for negotiating trade rules. From that moment

on its focus shifted; each government was expected to

retool its economy along neoliberal lines. This meant

privatizing public assets, lowering taxes on external

trade and investment, and radically reducing business

taxes and state control over flows of capital. Along

these lines, the main obligation was to orient national

economies in an outward direction; development of

domestic markets could wait. UNCTAD's role shifted

from helping non-Western countries negotiate better

BOX 10.1 I Transnational Corporations: The UN Changes Course

deals with the global economic system to promoting

their integration into that system. Today, however,

UNCTAD has regained some autonomy. It promotes

alternatives to mainstream trade thinking through

its conferences, research, and analysis, including the

compilation of statistics on trade and investment.

UNCTAD staff also provide technical assistance to gov ernments on their trade and investment policies (see Chapter 15).

Humanitarian and Peacekeeping Action

From its earliest years, the United Nations has faced

humanitarian emergencies. In 1948, the flight and ex

pulsion of many hundreds of thousands from Palestine

led the UN to set up its Relief and Works Agency for

Palestine Refugees in the Near East (UNRWA). Nearly

70 years later, that UN program is still vital and effec

tive despite pressures from within Israel and the United

States. In 1950, the General Assembly created the office

of the High Commissioner for Refugees (UNHCR) to

co- ordinate action and raise money to help refugees.

In the early Cold War years, its priority was on people

seeking asylum from Communist Eastern Europe. In

1967, the UN broadened the UNHCR's mandate to in

clude future as well as past refugee flows and to cover

the entire world, thus effectively shifting its geographi

cal focus from Western to non-Western settings.

Complex political emergencies, many of them aris

ing from interventions by great powers, have produced

much human suffering. In response, the UN has set up

a number of multilateral agencies. Foremost among

CURRENT EVENTS

In 1973, Ecosoc set up the UN Commission on Transnational Corporations and a research program

managed by a New York-based Centre on Transnational Corporations (UNCTC). That centre acted as a

watchdog; it commissioned studies, held workshops, and prepared a draft code of conduct for transna tional corporations-a code that Western business interests contested and UN members never ratified.

In 1994, following concerted pressure by business lobbies, the UN abolished the UNCTC and placed its

residual responsibilities under UNCTAD's Investment, Enterprise and Development Commission, whose role is not that of a watchdog but mainly that of a promoter of global corporations (see Chapter 11).

190 PART II I International Development Actors

them is the Office for the Coordination of Humani

tarian Affairs (OCHA), headquartered in New York. Its

director has the status of a UN undersecretary-general.

0CHA's main tasks are to assess needs, raise money

from governments, develop humanitarian policy, and

co-ordinate field operations involving UN agencies,

Red Cross organizations, and NG0s. It supports spe

cialized organizations, including a news network, IRIN,

set up in 1995 in recognition of the power of media to

mobilize political and financial backing for humani

tarian action.

The UN has frequently coupled humanitarian

work with its peacekeeping missions. Between 1948

and 2015, it carried out 71 missions, 58 of them after

1988. The UN Department of Peacekeeping Operations

(DPKO), headquartered in New York, is tasked with

planning and directing UN efforts to bring stability and

security to selected conflict-affected places. As of 2015,

some 91,000 soldiers, 13,500 police personnel, and close

to 16,800 civilian staff were on active duty under UN

auspices in 16 countries; only the United States places

more military personnel abroad. Yet, in 2014-15, UN

peacekeeping accounted for less than half of 1 per cent

of total military spending across the globe.

The UN "blue helmets" are recruited mainly from

non-Western countries; as of 2015 the five leading

sources were Bangladesh, Ethiopia, India, Pakistan,

and Rwanda. Some UN missions, such as in Cote d'Ivo

ire and post-war Mozambique, clearly contributed to

peace; others, such as in Angola, Congo, and Rwanda,

largely failed to do so. That mixed record has led to

criticisms that UN interventions in the name of peace

often neglect the socio-political causes of conflict, and

furthermore that they can put durable solutions out of

PHOTO 10.3 I A Sudanese refugee from Darfur walks past tents during an open-ended sit-in outside the United

Nations High Commissioner for Refugees (UNHCR) in the Jordanian capital Amman, demanding better treatment

and acceleration of their relocation.

10 I Sogge: The United Nations and Multilateral Actors in Development 191

reach because strategies follow narrow "militarized" or

"securitized" lines, even if carried out in the name of

human security (see Chapter 21).

UN agencies have developed ties with non

governmental organizations, both international and

domestic, often in "partnerships" to manage projects

and deliver humanitarian aid. For example, the UN

refugee agency UNHCR, headquartered in Geneva, has

contracts with more than 800 NG0s and has referred to

NG0s as "our right arm." In most cases the relationship

is contractual rather than genuinely collaborative.

Steering Action, Influencing Thinking

In 1965, the General Assembly established the United

Nations Development Programme (UNDP) under

EC0S0C. Unlike other UN bodies, the UNDP has no spe

cific mandate or formal charter. Yet it has high stand

ing in the UN system; its chief executive officer, the

Administrator, ranks third after the Secretary-General

and Deputy Secretary-General. Set up originally to

co-ordinate aid efforts, the UNDP has assumed strate

gic positions high on aid chains as a promoter of policy.

Today, it describes itself as a network and advocacy or

ganization for development. According to its Strategic

Plan for 2015, the UNDP prioritized three "big ideas"

for development action: "sustainability, democratic

governance, and crisis response and prevention," with

"special emphasis on the eradication of extreme pov

erty and reduction of inequalities and social exclusion."

Headquartered in New York, the UNDP operates in

177 countries and territories, giving it more extensive

field presence than the World Bank. Because it is an

swerable to the UN General Assembly and to recipient

governments, it should be among the most accounta

ble and responsive development agencies. However, the

UNDP's dependence on annual voluntary contributions

from rich donor countries sets limits to what it can do

for recipients.

Under UNDP co-ordination, UN agencies face

pressures to perform well and to pursue results-based

management (see Box 8.7). All agencies are supposed

to follow a prescribed planning cycle, starting with a

country-level assessment and leading to a UN Devel

opment Assistance Framework and a UN country pro

gram and action plan. Such systems of management

may be technically competent and formulated through

consultative processes, but their relevance is limited by

aid system assumptions that poverty and governance

problems are mainly domestic matters to be resolved by

authorities within a given national territory. However,

in a globalized world, important drivers of develop

ment problems are not confined to national territories.

Indeed, many of them arise from global flows of money,

information, people, weapons, and other commodities

(see Chapter 6). For example, illicit capital flight takes

much more money out of Africa than the aid system

puts into it; yet illicit flows would be far smaller if tax

havens under Western jurisdiction did not exist. Hence,

major weaknesses of this new UN approach stem from

failures to tackle harmful global flows and to curb the

strong incentives that accompany them.

Several agencies operate under the UNDP. The UN

Capital Development Fund (UNCDF) uses a model in

which citizens co-determine the use of aid in local

development. The UN Volunteers (UNV) program an

nually supports about 7,700 persons working in devel

opment or rehabilitation projects, most of them linked

with UN agencies. The UN Office for South-South Co

operation (UN0SSC) began in 1974 at the initiative of

non-Western governments and today operates an on

line Global South-South Development Academy, or

ganizes an annual South-South Development Expo,

and runs a South-South Global Assets and Technology

Exchange.

Some of the UN system's most important work

promotes ideas, knowledge, and norms. Together with

the IL0, UNICEF, and UNCTAD, the UNDP has enabled

alternative views to be voiced in policy debates in

which organizations based in Washington, DC, are

accustomed to having the last word. From its first is

sue in 1990 onward, the UNDP's Human Development

Report has put forward social democratic viewpoints.

It thus competes with, and sometimes dissents from,

the World Bank's World Development Report, which

despite policy flip-flops (switching from negative to

positive stances towards the state, for example), follows

an orthodox line. Policy research from the UNDP's In

ternational Policy Centre for Inclusive Growth, based

in Brazil, provides counterpoints to centres of develop

ment orthodoxy.

Other units of the United Nations system also

engage in policy research, thus helping to draw atten

tion to issues and shape understanding of problems.

192 PART II I International Development Actors

Founded in 1963, the Geneva-based UN Research In stitute for Social Development (UNRISD) generates multi-disciplinary research on governance, market forces, social policy, and alternative models such as the "Social and Solidarity Economy." The United Nations University, established in 1973 and headquartered in Tokyo, comprises a worldwide network of research cen tres and programs in post-graduate education. One of these, the World Institute for Development Economics Research (WIDER), founded in 1984 and based in Hel sinki, Finland, promotes research on poverty, inequal ity, and growth.

In its first decade, the UN set up economic commis sions in most world regions. They are the UN Economic Commission for Europe (UNECE), based in Geneva; the Economic Commission for Latin America and the Caribbean (ECLAC), in Santiago, Chile; the Economic and Social Commission for Asia and the Pacific (ES CAP), in Bangkok, Thailand; the Economic Commis sion for Africa (ECA), in Addis Ababa, Ethiopia; and the Economic and Social Commission for Western Asia (ESCWA), in Beirut, Lebanon. These bodies gather statistics, monitor economic trends, help set standards, and develop trade arrangements. In some cases, such as the Commission for Europe, they promote expanded roles for private enterprise and the much-criticized "public-private partnership" approach (see Chapter 11). By contrast, since the 1950s ECLAC has promoted pro gressive policy alternatives, especially about world trade and investment.

TRENDS AND PROSPECTS

FOR UN AGENCIES

The foregoing snapshots of UN agencies focus on the past. What of the future? The UN was established to allow for v igorous debate. In that spirit, the UN has allowed voices to be heard about domination and de nial of rights. In the 1960s and 1970s in particular, non-Western governments tried using the UN as a fo rum where alternative ideas about development could compete and where issues of fairness and unequal power could gain a place on world agendas. However, many of those efforts have been deflected or blocked outright. From Washington to Frankfurt, powerful interests have insisted that "there is no alternative" to

neoliberal orthodoxy. Increasingly harnessed to one school of thought, the UN has seen its fundamental mandates-promotion of new developmental norms and of dialogue-set aside. Nevertheless, for a few development questions, the UN continues to serve as a vehicle for emancipatory answers. It has helped to advance the status of women and widen access to reproductive health and reproductive rights (see Chapter 5). It has helped move problems of slums and environmental degradation higher on world agendas (see Chapters 17 and 19). Why have these initiatives met success? A major reason is the active presence of forceful social movements, such as for women's emancipation, for rights of minority peoples, and for environmental sanity.

UN agencies, like many others in the aid and de velopment sector, struggle with internal deficiencies. Many of them suffer from technocratic ways of defining problems and solutions, non-transparency, high over head costs, poor engagement w ith citizens' organiza tions, and unproductive working cultures that depress staff morale. In development operations, UN agencies, on average, are less effective than other multilateral players (Picciotto, 2014). Limits to effectiveness can stem from fragmentation driven by technical function alism-agrarian issues for the FAO, children's issues for UNICEF, and so on. The lifeworlds of people targeted for interventions are not easily put into separate boxes. Yet aid agencies are seldom able to work flexibly amid this complexity and to respond "downward" to those in need. Rather, as new themes and funding possibilities arise, agencies respond by adding yet more objectives and tasks. The result is "mission creep." When a sense of crisis builds, such as at the height of the HIV/AIDS pandemic, new monies appear and agencies launch new programs. Duplication can be rife: at least 20 UN agencies work on issues of water supply. To promote coherence amid these overlapping agendas, UN agency heads committed themselves in 2005 to a "One UN" approach, with a single framework guiding all UN ef forts in each country. It was supposed to streamline aid delivery and allow the UN to satisfy both states that receive aid and those using the UN to give aid. However, seven years later an independent evaluation found no convincing evidence that the "delivering as one" approach had made any real difference (United Nations, 2012).

10 I Sogge: The United Nations and Multilateral Actors in Development 193

But can management reform resolve deeper

sources of dysfunction? Ultimately, the effectiveness of

UN agencies depends on who holds the purse strings,

who sets the agenda, and who makes the rules. Even

when the UN's voting system favours lower-income

countries because of their greater numbers, the power

of money is decisive. Top-level UN jobs are held in dis

proportionate numbers by Americans or citizens of

other big powers, and UN votes are often influenced

by big donors' offers of aid or threats to withhold it.

Agencies must increasingly compete with each other to

gain funding from bilateral donors, usually according

to those donors' personal and commercial interests. In

short, the United Nations will go on suffering deficits

in governance unless it can neutralize or sidestep the

power of rich nations and the interests they promote.

There are further challenges. The influence of large

corporations threatens the integrity and competence of

the United Nations. That influence-the "privatization

of multilateral institutions" (B0as and McNeill, 2003:

142)-has led to a weakening of the UN's orientation to

public service. This accelerated with the UN's "Global

Compact," a public relations initiative launched in 1999

at the World Economic Forum, a gathering of business

and political elites held annually in Davos, Switzerland.

On that occasion, the UN Secretar y-General appealed

to corporations to engage more closely with the UN;

by so doing they could improve their public image

something most of them badly need. In exchange, they

had to endorse guidelines on corporate behaviour. That

stipulation was easy to accept, since the guidelines are

not legally binding, nor are they seriously monitored in

any case. Concretely, the UN offered global companies

so-called "partnerships" with UN bodies: McDonald's

and Microsoft have teamed up with UNESCO, Novar

tis with WHO, Citigroup and Chevron-Texaco with the

UNDP, and so forth. The Global Compact has spon

sored conferences and publications with titles such

as Fighting Poverty: A Business Opportunity. Many

UN organizations added new departments to manage

this strategy, such as the UNDP Division for Business

Partnerships.

Collaborations between UN agencies and big busi

ness today number in the hundreds. Many corpora

tions have thereby gained public goodwill (they have

been bluewashed) through their association with UN

agencies. In their turn, some UN agencies have gained

a few more resources, while also adding to their over

head costs. Yet there has been embarrassment for the

UN. Some big firms signed up to the Global Compact

turned out to have violated OECD Guidelines for Mul

tinational Enterprises (see Chapter 11). The UN's own

Inspection Unit evaluated the Global Compact's first

decade and found that direction was poor, regulation

was weak, and means to verify results were lacking.

According to the evaluators, in promoting better be

haviour by corporations, the Global Compact had been

largely toothless. Even more serious is evidence that

close ties with corporations have weakened UN capac

ities to think and act critically on global issues (Utting

and Zammit, 2009).

As a result, many voices (see Browne, 2014) to

day call on the UN to escape the shadow of these in

terests, reduce cumbersome and often ineffective tasks

of co-ordination, and refocus its development efforts at

strategic political levels, chiefly in setting emancipatory

norms and in gaining compliance with those norms.

MULTILATERAL ORGANIZATIONS

ANCHORED IN WESTERN

GOVERNMENTS

Some multilateral arrangements are clubs open only

to rich countries. The following organizations reflect

the military or geostrategic interests of rich countries

vis-a-vis non-Western states and regions.

Development Policy

Established in 1961 to succeed a European steering

committee for Marshall Plan reconstruction aid from

the US, the Organisation for Economic Co-operation

and Development (OECD) is today a club of 34 govern

ments of upper-income countries, including former

aid recipients such as South Korea, Chile, and Poland.

Guided mainly by orthodox economic precepts, it pro motes consensus on aid and socio-economic devel

opment. The OECD's influence works through its vast

linkages with governments and private-sector actors.

It carries out "peer reviews" among official agencies

and runs sophisticated communication strategies to

make its findings virtually gospel among political

194 PART II I International Development Actors

classes. Rivalled only by the World Bank as an official

think-tank, the OECD produces large streams of analy t

ical reports, data, technical standards, and policy pro

posals. Some of those policies are generated through

open, public processes, but many-notably about cor

porate investment and taxation-are prepared behind

closed doors. For governments and opinion-makers,

the OECD is a vital source of concepts, knowledge, and

discourse. It has actively promoted macroeconomic

orthodoxies, such as the Washington Consensus (see

Chapter 9). More recently and positively, however,

some units of the OECD have begun putting forward

research findings and policy proposals on issues such

as inequality, tax avoidance, quality-of-life indicators,

and environmental threats.

European Organizations

The European Commission (EC), headquartered in

Brussels, is the executive branch of the European Un

ion (EU), which today consists of 27 Western and East

ern European countries. Only Norway, Switzerland,

and most nations of the former Yugoslavia are not

members of the EU. The EC is today one of the world's

largest single sources of multilateral aid, accounting

for about one-third of all multilateral aid spending and

for about 10 to 12 per cent of total world official aid.

Aid from the EC and from European bilateral donors

together accounts for about two-thirds of total net aid

from OECD countries.

The EC manages its relations with low-income

countries through several ministries or Directorates

General. In 2010 it created a "super-ministry" for for

eign affairs, the European E:dcrnal ,\ct ion Sen ice

(EEAS). Among sub-ministries is the Directorate Gen

eral for Development and Cooperation (DG DEVCO),

which designs and manages EU development and aid

policies, with special attention to Europe's ex-colonies,

formally referred to as the ACP (Africa-Caribbean

Pacific) countries. Working closely with it is the EC's

Humanitarian Aid and Civil Protection Department

(ECHO). As an interlocking set of bureaucracies, the EC

is plagued by poor management, infighting over bu

reaucratic turf, above-average overhead costs, slow de

livery, lack of transparency, an overload of objectives,

and spending biases towards better-off countries in its

near abroad-that is, North Africa and Southeast Eu

rope. The coherence of its strategies is often in question.

What Europe gives in aid is far surpassed by what it

takes by way of trade deals, natural resource extraction

(uranium and fish from West Africa, for example), and

especially capital flowing to offshore financial centres

under European jurisdictions. This redistribution from

poor to rich underscores criticism that multilateral

ism helps to conceal old predatory relationships and to

prettify them as neutral, market-based "partnerships."

Less well-known is a separate official European

body, the Council of Europe (COE). In 1949, govern

ments of 10 Western European countries signed a

treaty creating it, with a mandate to promote human

rights, democracy, and the rule of law throughout Eu

rope. Its founding strategic purpose was socio-political

cohesion and thus stability at a time when political and

trade union movements were seeking greater social

justice. Headquartered in Strasbourg, France, the COE

now has 47 members, including lower-income coun

tries, such as Armenia and Macedonia, formerly in the

Soviet sphere of influence. Canada, Japan, and the US

are among those with COE observer status.

In its human rights conventions, the COE sets

standards for domestic legislation to combat discrim

ination and social exclusion. Under COE auspices, the

European Court of Human Rights was set up in 1959 to

enforce obligations established in 1950 under the Euro

pean Convention for the Protection of Human Rights

and Fundamental Freedoms-the first international le

gal instrument safeguarding human rights on a broad

basis. The COE's committees, conferences, and research

units regularly draw attention to gaps between formal

adherence to and actual compliance with human rights

norms. This includes socio-economic rights, notably

those affirmed in the 1961 European Social Charter, an

important but often neglected multilateral treaty rati

fied by more than 40 states.

The C0E's Development Bank, founded in 1956 and

based in Paris, is Europe's oldest multilateral financial

institution and the only one with a mandate to promote

social solidarity. Its loans go to public-sector bodies in

support of social integration (housing, rehabilitation

of poverty-hit zones), environmental protection, and

human services in health and education. The COE is

mandated to follow basic societal purposes rather than

conventional "development" objectives. Perhaps for

that reason it is often overlooked among multilateral

organizations. Yet its mandate predates by four decades

the normative themes of human rights, social cohesion,

10 I Sogge: The United Nations and Multilateral Actors in Development 1 95

and democracy that are the talk of today's multilateral

development organizations.

"Sphere of Influence" Organizations

Since recognizing the formal sovereignty of states in

Africa, Asia, and Latin America, Western powers have

sought to maintain ties with their former colonies or

dependencies. To this end, they set up organizations

with active secretariats mandated to promote policy

dialogue, cultural ties, and even development efforts.

The major Western sphere of influence bodies include

the Organization of American States, la Francophonie,

and the Commonwealth.

The Organization of American States (OAS) origi

nated from US efforts in the 1880s to advance its com

mercial interests in Latin America. When the Cold War

began, amid fears of left-leaning social movements, the

US began to link its security and intelligence-gathering

policies with its aid efforts. In 1948, twenty Latin Amer

ican governments and the US signed the charter of the

OAS; in later decades, 13 Caribbean countries and Can

ada also joined. Cuba was expelled in 1962. Headquar

tered in Washington, DC, the OAS works to influence

political and business elites on issues of development,

women's status, drug trafficking, and human rights. It

convenes special committees and intergovernmental

conferences. The US enlisted the OAS in efforts to cre

ate the Free Trade Area of the Americas, a larger ver

sion of its highly contested North American Free Trade

Agreement (NAFTA) with Canada and Mexico, but af

ter 2003 that US-driven initiative became a dead letter.

Meanwhile, multilateral arrangements driven by Latin

American governments, some of which are noted later

in this chapter, are moving ahead.

The Organisation internationale de la Franco

phonie (OIF) comprises 57 member states in which

French culture and the French language play at least

some role in national identity. Canada is a member, and

Quebec has the status of "participating government."

Founded in 1970 as the Agence de cooperation cultur

elle et technique, la Francophonie is headquartered in

Paris, with regional offices in Gabon, Togo, and Viet

nam. Promotion of the French language and encour

agement of cultural diversity are its chief purposes. As

with comparable bodies, it also supports activities to

foster respect for human rights and democracy and to

improve education, media, information technology,

the environment, and the economy-in particular, the

integration of member nations into the world economy.

France's decline as an imperial power and weaknesses

and divisions among members of the club have cumu

latively weakened the OIF, despite some efforts by Can

ada to shore it up.

The Commonwealth of Nations, known before 1950

as the British Commonwealth, consists of 53 countries,

all but two of them (Mozambique and Rwanda)

ex-colonies of Great Britain. A number of Middle East

ern and Arab-aligned countries such as Sudan, though

eligible, have declined to join. With a secretariat in

London since 1965, the Commonwealth organizes gath

erings of public officials and business people for di

verse political, cultural, and commercial purposes. Its

Commonwealth Foundation facilitates interchange

among professional associations and non-governmen

tal organizations. In 1997, the Commonwealth Busi

ness Council was set up to promote trade, investment,

corporate social responsibility, and public-private

partnerships.

MULTILATERAL ORGANIZATIONS

ANCHORED IN NON-WESTERN

GOVERNMENTS

In the twentieth century, the triumph of national

ist parties and insurgent armies over the colonial

powers created optimism about collective action in

non-Western countries. It also gave rise to a number

of multilateral arrangements, including regional polit

ical alliances (e.g., the League of Arab States, 1945) and

trade groups (e.g., the East African Community, from

1967 to 1977, then revived in 1999). Created on crests

of enthusiasm, many of these groupings later became

dormant or died altogether, the victims of internal dif

ficulties or external pressures. Today, however, some of

them are steering global politics towards complex yet

possibly more equitable balances of power.

Lobbying Blocs

A 1955 conference in Bandung, Indonesia, was the

first multilateral forum in which non-Western lead

ers voiced their collective demands for an end to

colonialism. They also denounced their countries'

196 PART II I International Development Actors

adverse integration into the world economic system.

Six years later, the same group, reinforced by newly

independent African countries, set up the Non

Aligned Movement (NAM), an association without a

charter but oriented by UN principles. Today it com

prises 120 member states and 17 observer countries;

its Co-Coordinating Bureau is based at the UN in New

York. Founded to counter the Cold War, the NAM seeks

to uphold "the right of independent judgement, the

struggle against imperialism and neo-colonialism, and

the use of moderation in relations with all big powers."

Wishing to form a coherent front in trade talks

with rich countries, non-Western countries attending

the UNCTAD in 1964 created the Group of 77 or G77 (see

Toye, 2014). Today enlarged to 131 members, including

China, the G77 operates as an informal caucus. Its rep

resentatives gather annually at the UN General Assem

bly meeting and sometimes at UNCTAD assemblies. In

1974 the G77 proposed a New International Economic

Order (NIEO). Led by Iran, Venezuela, Mexico, and Al

geria (countries whose treasuries were then filling up

with petro-dollars on the strength of higher oil prices),

the G77 wanted three things: faster economic growth,

greater integration into the world trading system, and

more foreign aid. These were hardly radical claims; in

deed, they posed little threat to the global status quo.

Yet Western powers rejected them and began sidelining

UNCTAD. Since then, the attentions of key G77 members

India, China, and Brazil have shifted to activities with

Russia under the auspices of the BRICS (see below). Yet

the G77 has gained new means to propose alternatives

in the creation of two Geneva-based think-tanks: the

South Centre, which accounts to some 51 non-Western

governments, and the non-governmental International

Centre for Trade and Sustainable Development.

Under G77 auspices, a smaller grouping, the Inter

governmental Group of Twenty-Four on International

Monetary Affairs and Development (G24), emerged in

1971 to co -ordinate and sharpen views towards the IMF

and World Bank. With a liaison office in Washington,

DC, the G24 pursues policy dialogue and publishes

hard-hitting research often critical of elite orthodoxies.

While some of the older non-Western blocs have

suffered marginalization and decline, new linkages

have emerged. Among them is a grouping of major

economies of a non-Western bloc: Brazil, Russia, India,

China, and South Africa-collectively known as BRICS

(see Chapter 6). That semi-formal association exem

plifies intentions by non-core governments to go their

own way, sidestepping tutelage by institutions based in

Washington, DC.

Regional Bloc8

Governments across the world have sought to improve

prospects, especially of their larger businesses, through

economic pacts, or regional trading arrangements

(RTAs). Sometimes called developmental regionalism,

this strategy has advanced as an alternative to standard

arrangements promoting economic openness towards

the rich countries of the North-strategies that have

exposed many to predatory globalization.

Among Asian nations, there is a veritable "noodle

bowl" of RTAs. The oldest of these is the Association of

Southeast Asian Nations ( ASEAN), founded in 1967 by the

leaders oflndonesia, Malaysia, the Philippines, Singapore,

and Thailand. Initially fearful of Communist advances

in Asia, ASEAN has since admitted V ietnam along with

Brunei, Burma, Cambodia, and Laos. The year 2016 saw

the proclamation of an overarching ASEAN Community,

built on the original RTA economic pillar and newer pil

lars for collective security and socio-cultural relations.

Meanwhile, bigger powers are pushing their own brands

of multilateralism in Asia, such as the Regional Com

prehensive Economic Partnership led by China and the

Trans-Pacific Partnership led by the US and Japan.

In Latin America, a major RTA is the Mercado

Comun del Sur (MERCOSUR), or Southern Common

Market, founded in 1991 by Brazil, Argentina, Uruguay,

and Paraguay and joined in 2006 by Venezuela. Since

2004, a more ambitious initiative has developed-a Un

ion de Naciones Suramericanas (UNASUR), or Union

of South American Nations, a merger of MERCOSUR

with its older counterpart, the Comunidad Andina, or

Andean Community, composed of Bolivia, Colombia,

Ecuador, and Peru. Modelled on the European Union,

UNASUR has helped lower barriers to trade and travel

and has ambitions to issue a common South Amer

ican currency. It has approved the idea of a common

Latin American citizenship (including a single pass

port) and of a South American parliament, for which

a building is now under construction in Cochabamba,

Bolivia. In late 2011, regional leaders formally estab

lished a supranational bloc, Comunidade de Estado s

10 I Sogge: The United Nations and Multilateral Actors in Development 197

Latino-Americanos e Caribe (CELAC) or Community

of Latin American and Caribbean States, composed of

33 sovereign states. In essence, CELAC serves as an al

ternative to the OAS, whose legitimacy (as a US-domi

nated body) is in decline in Latin America.

Africa is home to a number of RT As, many of them

dormant. Large differences in economic capabilities and

uneasy political relationships among governments, as

well as the reinforcement of bilateral deal-making with

richer countries, have set limits to integration in Africa.

Have regional blocs promoted equitable develop

ment? Results thus far have been modest at best. New

trade arrangements may have boosted output, but that

growth has usually been uneven and often inequitable,

as stronger economies tend to reap larger shares of ben

efits. Nevertheless, multilateralism informed by prin

ciples of mutual advantage, especially within dynamic

regions such as Latin America, provides impulses for

more equitable development and political power.

ONE WORLD, MANY REGIONS

This chapter has noted the rise, and in some cases

the decline, of three kinds of multilateral organiza

tions. A factor found in the histories of many of them

is the role of a hegemonic power, the United States.

Together with several other "Anglo-Saxon" states, the

US has influenced development agendas, determining

which issues are to be managed multilaterally and

how. Using their political, diplomatic, and especially

economic power, Western states have successfully en

listed multilateral bodies in spreading standard pol

icy formulas about how non-Western places should

develop and be governed. Whereas terms such as

"equity," "non-alignment," and "self-determination"

once inspired multilateralism, today we hear private

business terms such as "global competitiveness" and

"public-private partnerships." Using the latter vocab

ulary, many multilateral bodies today propagate a new

"common sense," thereby frustrating the emergence of

more equitable and democratic norms of development.

As a result, a number of UN and other multilateral in

stitutions have lost legitimacy, especially for those out

side zones of privilege and especially in non-Western

regions of the world.

Nonetheless, transnational initiatives are emerg

ing on other planes. Social and political movements

are sharing ideas and demonstrating new solidarities.

In the progressive camp of civil society some of this

bottom-up multilateralism has created political lev

erage for responsive and equitable development, as

demonstrated in the cases of women's rights, weapons

control, and environmental sanity. In what measure

this kind of public action will continue promoting

emancipatory outcomes-or violent backlash born

of humiliation and anger-is central to the unfolding

dramas of change across the globe today.

BOX 10.2 I Multilateralism: Which Way Forward? CURRENT EVENTS

Political analyst Jens Martens holds that multilateralism has reached a fork in the road. It could continue

serving powerful interests, or it could reanimate founding norms and accountability rules that take needs and rights of the less advantaged fully into account.

International politics is at a crossroads. On the one hand, the path towards an elite multilateral ism, which shifts decisions on global policy increasingly into exclusive clubs and political circles

while excluding democratic control and participation; on the other, the path to a multilateralism of solidarity, which emphasizes and strengthens the responsibility of democratically legitimate public institutions and complements this through a comprehensive involvement of civil society organizations and the well-regulated interaction with the private sector. In the spirit of the UN Charter, one can only hope that over time, this model of a multilateralism of solidarity will prevail over the elite club model of global politics. (Martens, 2007: 6)

198 PART II I International Development Actors

SUMMARY

This chapter has aimed to widen understanding of

multilateral organizations, particularly of the ideas

and material measures that have guided and hindered

these organizations' pursuit of developmental and hu

manitarian mandates. It has presented facts and analy

ses about their operations and lines of accountability

within systems of geopolitics, especially the United

Nations, after 1945. Those lines of accountability and

funding routinely converge on Western powers, led

by the United States. Some multilateral challenges

to those powers have arisen from successful states in East Asia and Latin America, as well as from non state actors elsewhere. Further, we have seen how

corporations exert influence over multilateral bodies,

especially those of the UN. Inasmuch as many of the

ideas and policies outlined here are routinely debated,

designed, set in motion, or frustrated by multilateral organizations, this chapter may allow deeper under

standing of developmental issues discussed elsewhere

in this book.

QUESTIONS FOR CRITICAL THOUGHT

1. Given the grossly unequal distributions of power and wealth, how can multilateral initiatives produce more

equitable development outcomes?

2. Why would some countries prefer to engage in multilateral arrangements "a la carte" rather than to accept

comprehensive international agreements?

3. How might multilateral arrangements among countries of a specific region, or among countries sharing cul

tural affinities, lead to positive development outcomes?

4. World politics today are said to face a choice between elite multilateralism and a multilateralism of solidarity

(see Box 10.2). What forces have created this choice? Which kind of multilateralism would you bet on in the

long run, and why?

5. Given the emergence of new powers in the Global South, to what extent will traditional North-South frac

tures continue to dominate multilateral processes?

Adams, Barbara, and Jens Martens. 2015. Fit for Whose Purpose? Private Funding and Corporate Influence in the

United Nations. Bonn and New York: Global Policy Forum. www.globalpolicy.org/images/pdfs/images/pdfs/Fit_ for_whose_purpose_online.pdf.

B0as, Morten, and Desmond McNeil!. 2003. Multilateral Institutions: A Critical Introduction. London: Pluto Press.

Cox, Robert W., ed. 1997. The New Realism: Perspectives on Multilateralism and World Order. Tokyo: United Nations University Press

Gowan, Peter. 2003. "US: UN." New Left Review 24: 5-28. Jenks, Bruce, and Bruce Jones. 2013. United Nations

Development at a Crossroads. New York: Center on

International Cooperation, New York University. http:// cic.nyu.edu/content/united-nations-development crossroads.

McKeon, Nora. 2009. The United Nations and Civil Society: Legitimating Global Governance-Whose Voice?

London: Zed Books Malone, David, and Rohinton P. Medhora. 2014. Development:

Advancement through International Organizations.

Waterloo, Ont.: Centre for International Governance Innovation. www.cigionline.org/sites/default/files/cigi_ paper_31.pdf.

Mazower, Mark. 2009. No Enchanted Palace: The End of Empire and the Ideological Origins of the United Nations.

Princeton, NJ: Princeton University Press.

10 I Sog ge: The United Nations and Multilateral Actors in Development 199

,a,,., 1. Each UN member state's mm1mum contribution is

0.001 per cent of the UN's budget, an amount paid by 53

countries. Currently, the US pays about 22 per cent of

the UN's budget. If assessments were based purely on

BIBLIOGRAPHY

Browne, S. 2014. "A changing world: Is the UN development

system ready?" Third World Quarterly 35, 10: 1845-59.

Congressional Research Service (CRS). 2013. United Nations

System Funding: Congressional Issues. Washington:

CRS.

Jenks, B. 2014. "Financing the UN development system and

the future of multilateralism." Third World Quarterly

35, 10: 1809-28.

Martens, J. 2007. Multistakeholder Partnerships-Future

Models of Multilateralism? Dialogue on Globalization,

Occasional Paper 29. Berlin: Friedrich Ebert Stiftung.

Normand, R., and S. Zaidi. 2008. Human Rights at the UN:

The Political History of Universal Justice. Bloomington:

Indiana University Press.

Picciotto, R. 2014. The UN Has Lost the Aid-Effectiveness Race:

What Is To Be Done? Briefing 14. Future United Nations

Development System (FUNDS). New York: CUNY.

each country's share of the world's gross domestic prod

uct, the US would pay about 30 per cent and some poor

countries less than the 0.001 per cent minimum (CRS,

2013: 37).

Standing, G. 2008. "The !LO: An agency for globalization?"

Development and Change 39, 3: 355-84.

Toye, J. 2014. "Assessing the G77: 50 years after UNCTAD and

40 years after the NIEO." Third World Quarterly 35, 10:

1759-74.

United Nations. 2012. Independent Evaluation of Delivering

as One, Summary Report. UN document A/66/859, June.

www.un.org/en/ga/deliveringasone/.

Utting, P., and A. Zammit. 2009. "United Nations

business partnerships: Good intentions and

contradictory agendas." Journal of Business Ethics

90: 39-56.

Wilkinson, R. 2014. The WTO, the UN, and the Future of Global

Development: What Matters and W hy. Briefing 15.

Future United Nations Development System (FUNDS).

New York: CUNY.

Private Enterprise

and Development PaiilA. Haslam

LEARNING OBJECTIVES

• To understand the importance of the private sec

tor in development and poverty alleviation.

To identify the roles of small-scale entrepreneur

ship and large firms in development. • To differentiate between different kinds of strate

gies employed by multinational corporations and

their effects.

• To distinguish between the direct effect of the

private sector on development and its indi

rect effect as mediated by government regula

tion and in collaboration with other actors via

partnerships.

�----� ----·-.. �-----------------------·---.. ··---------------�--·---�--···--·---��----...-.-----------------··--- -�----------------�--4

A Olga Martinez at her outdoor workshop where she re-upholsters seats for vans and buses on Avenida La Castellana, south

of Guatemala City. Work in the informal sector occupies an important place in Latin American economies. I Source: ORLANDO

SIERRA/AFP/Getty Images

11 I Haslam: Private Enterprise and Development 201

The private sector is one of the most contentious, maligned, and misunderstood actors in international development. Important private-sector actors, particu larly multinationals, are often associated, in the pop ular imagination, with various acts of malfeasance, including low wages and exploitation in sweatshops, environmental catastrophes, human rights abuses, unethical practices, and corruption. And yet, the do mestic private sector and foreign multinationals oper ating in developing countries are responsible for much more investment and many more jobs than foreign aid programs-and good jobs are ultimately what develop ment is about. At the same time, we can point to major multinationals, some of the same ones you might as sociate with some of the negative consequences listed above, that have also acted constructively to support local communities and economic development.

Increasingly, governments and development agen cies are looking at ways to leverage private-sector in vestment to contribute to more and better economic development. And companies are beginning to realize that being a responsible corporate citizen in developing countries can be good for both profits and communi ties. The picture, then, is complex. Although the role of companies in development often generates heated debate between those who view them as scoundrels and those who view them as heroes, this chapter aims to steer between these polarized positions to present a balanced picture of the contribution the private sector can make to development, and how this role is affected by corporate strategy, the relations between firms and governments, and partnerships.

ENTREPRENEURSHIP AND

SMALL-SCALE ENTERPRISE

In common parlance, when we refer to the "private sector," we generally include all privately owned or ganizations, the purpose of which is to make a profit for their owners or shareholders. In other words, we would include in this definition the smallest entrepre neur who sells coffee and fried food out of a shopping cart, a plumber, a web designer who works from home, a small shop owner, a medium-sized manufactur ing company with 20 employees, and a multinational corporation that operates in 80 countries and makes

billions of dollars in profits every year. Some privately funded organizations, such as corporate charities or philanthropic organizations built on private fortunes, occupy an ambiguous position: insofar as they are in dependent of corporate influence and pursue a social purpose, we generally consider them civil society or ganizations, although they may retain the "can-do" and entrepreneurial culture of their founders.

It is important to remember that the private sector is the engine of capitalist economies, even where there is an important role for the public sector. Businesses make investments and hire people to make and sell goods and services at a freely determined price on the market (without significant government interference). When they do well, growth, jobs, and usually develop ment are the result. When businesses do less well, or fail, growth declines, jobs are lost, poverty increases, and individuals need the support of governments, communities, and family members to survive. In this respect, creating an environment in which the pri vate sector can flourish and grow is essential to good development.

Joseph Schumpeter (1883-1950) was the first to the orize about entrepreneurship and its role in capitalist economic development. For Schumpeter, the function of the entrepreneur was to innovate: he or she had a kind of special ability to see new ways to put economic factors together to cause economic growth, such as new products, new productive processes, or accessing new markets. As an approach to explaining what pushes capitalism forward, his argument was agent-focused, rather than relying on abstract categories like "accu mulation of capital" or "investment." Someone does something with capital. In this regard, Schumpeter links the leadership of special individuals, innovation, and economic growth and development (Thomas, 1987: 174). However, it fell to later theorists to address what conditions facilitated the emergence of entrepreneurs.

The distinction between small entrepreneurs and larger firms is fundamental. In many developing econ omies smaller firms are more likely to be locally owned, while large firms are more likely to be foreign. Formally registered small and medium-sized enterprises (SMEs) face many problems in developing countries and gen erally fail to develop into larger enterprises, but they do have some access to financing. In the informal econ - omy, we find the micro-enterprises and independent

202 PART II I International Development Actors

entrepreneurs operating businesses that aren't legally

registered, can't get bank financing, don't pay taxes,

and don't follow labour or health and safety regula

tions. The informal economy is of principal interest for

this discussion because in developing countries, most

entrepreneurial activity (in terms of employment)

takes place in this sector, and it is often a survival strat

egy for the very poor that is precarious and with little

potential for growth.

Recent thinking on how entrepreneurship is held

back in developing countries has focused on the prob

lem of informality. Hernan de Soto, in his classic text

The Mystery of Capital, argues that poor entrepreneurs

are unable to convert the assets they control into capital

because of an inadequate property rights regime. Those

working in the informal sector in developing countries

often don't have clear legal title to the assets they effec

tively control (such as a house built on unoccupied land

in a slum), and without legal title they don't have the

collateral to get a formal loan. From de Soto's perspec

tive, property rights allow people to imagine the diverse

ways that capital can be employed, while creating the

right incentives for individual productivity (provid

ing collateral, individual accountability by association

with a credit history, and protection from theft). In this

regard, the absence of enforceable property rights is a

kind of "missing link" that condemns entrepreneurs to

small-scale, unproductive, and precarious investments

(de Soto, 2000).

This line of thinking was taken up by a high-level

UN Commission on the Private Sector and Develop

ment (2004), which proposed a set of reforms to make

business work for the poor. The Commission agreed

with de Soto (who was a member) that widespread

informality and weak property rights were the root

causes holding micro-enterprise back in developing

countries. However, they also noted that the excessively

bureaucratic and costly process required to register a

P .. �--------------------..

BOX 11.1 I Micro-Finance: Building Entrepreneurship?

One of the most widely used tools to promote entrepreneurship in developing countries is micro-finance: the granting of small nominal loans to would-be entrepreneurs. Micro-finance came to worldwide atten tion through the work of Muhammad Yunus, who established the Grameen Bank in Bangladesh and won the Nobel Peace Prize for his work in 2006. Yunus established a system in which small loans would be granted to individual women organized within a larger group under the principle of collective responsibility (if one failed to repay, they would all lose access to the loans). Repayment of the loan was a gateway to more loans, and failure to pay resulted in exclusion from the system. The system also involved com pulsory savings by participants and intensive surveillance by caseworkers. This model of micro-finance used collective responsibility to substitute for a lack of collateral or property rights. It also promoted the empowerment of women in patriarchal societies by giving them access to loans and promoting solidarity and friendships with other women (Yunus, 2003).

Micro-finance is not without its problems. On the one hand, it can create indebtedness that is diffi cult for the poor to escape if their businesses are unsuccessful. As micro-finance has been scaled up to reach millions, there is also some evidence that normal financial criteria (such as having collateral) have become more important, meaning that micro-loans are not reaching the extremely poor. Perhaps most important is the gender critique (see Chapter 5), which points out that women are ideal clients for micro credit (more likely to repay) because they are disadvantaged by social norms (unable to move, dependent on their husbands, and with limited property rights or alternatives). In this regard, the microcredit system exploits the vulnerability of women while claiming to empower them. Studies have also shown that many women lose control over the use of their loans to male relatives, while remaining responsible for repay ment (Goetz and Sen Gupta, 1996).

11 I Haslam: Private Enterprise and Development 203

business made informality a logical choice for many

entrepreneurs. For example, in Peru it takes an en

trepreneur an estimated 278 days to formally register

and open a business (de Soto, 2000). In this regard, the

Commission insisted that three pillars were necessary

to develop the entrepreneurial sector: a level playing

field with fair rules and enforcement (to permit busi

nesses to establish themselves easily); access to credit;

and support for the development of skills and knowl

edge (human capital). This meant that the state had to

work actively to create an enabling environment for

entrepreneurship, including formalizing the economy.

The authors of the report also recommended that mul

tinational corporations work with governments to play

an active role in coaching smaller companies through

partnerships and developing skills.

WHAT IS A MULTINATIONAL

CORPORATION?

While it is generally agreed that the promotion of small

enterprise and local SMEs is good for development, the

role of multinational corporations (MNCs) is much

more contentious. Various terms are used to describe

multinational corporations and their activities, includ

ing transnational corporations (TNCs), multination,d

cnlerpri\t'� (MNEs), and foreign direct investment (FD!).

Overall, these terms can be and are used interchange

ably. Differences between them stem principally from

disciplinary and institutional divides and practices:

MNC is the most widely used term, employed by polit

ical scientists, sociologists, and the media; TNC is the

preferred terminology of the United Nations system;

and MNE is used in international business studies. FD!

is a catch-all phrase, often preferred by economists,

which refers to investment that is made across bor

ders. The word "direct" in "foreign direct investment"

indicates that the investment has a physical presence

or corporate form (such as a branch plant) and differ

entiates this mode of investment from indirect invest

ment, also known as "foreign portfolio investment"

or colloquially as "hot capital" flows, which include

the purchase of foreign debt, loans, and stock market

investments. Foreign direct investment is much more

stable than portfolio investment, since it involves an

investment in physical and productive assets such as

buildings, technology, and labour, which are more

costly to abandon.

John Dunning, the pre-eminent authority on the

multinational corporation, defines it as an "enterprise

that engages in foreign direct investment (FD!) and

owns or controls value-adding activities in more than

one country" (1993: 3). According to Dunning, the two

key features of the MNC that distinguish it from other

enterprises are that it co-ordinates value-adding activ

ities across national borders (that is, it creates some

kind of product based on bringing together produc

tive assets from different places in the world, including

capital, labour, technology, management expertise, and

know-how); and it internalizes the cross-border trans

fer of inputs used in the production process (in other

words, these transfers take place within the firm and

do not occur on the open market) (Dunning, 1993: 4).

In this respect, the MNC is a "hierarchy," meaning it

has an organizational structure based on command

and control, and is distinct from a market, in which

the price mechanism, not management, co-ordinates

relationships.

Although the two principles identified by Dunning

apply to all multinationals, the reality of the universe

of over 82,000 MNCs and 800,000 foreign affiliates

is that their size and the degree to which they are

internationalized vary greatly (Dunning, 1993: 3;

UNCTAD, 2006: 10; UNCTAD, 2009: 223). Furthermore,

the top 100 of these corporations are highly concen

trated, controlling a significant proportion of total

foreign assets, sales, and employment of all multination

als. Their proportion of sales and assets has increased

significantly over recent years, illustrating that the

world's largest multinational corporations are growing

relative to the rest of the pack. Furthermore, the world's

100 largest MNCs are also disproportionately from the

developed countries: 89 come from the US, Japan, and

Europe, and only eight are from developing countries

(UNCTAD, 2013). Although multinationals from devel

oping countries remain much smaller, they are rapidly

growing and becoming increasingly transnationalized

(see Box 11.5).

Contrary to popular belief, MNCs from rich coun

tries historically have invested more in other rich

countries than in developing countries. However,

in 2014, FD! to developing and transition countries

reached a historically high proportion, amounting

204 PART II I International Development Actors

to 55 per cent of total flows. FD! to Asia drove these

figures: that region received 68 per cent of the flows to

developing and transition economies, while Africa re

ceived less than 8 per cent (UNCTAD, 2015a: 2-3). How

ever, foreign direct investment constitutes the single

most important source of new money for developing

countries, with the possible exception of remittances

from migrant workers, about which there are few reli

able figures. If we compare the net inflows of different

sources of capital to developing countries, FD! inflows

to developing and transition economies accounted for

US$681 billion in 2014, as compared to approximately

$135 billion in official development assistance (ODA)

(UNCTAD, 2015a: 3). These figures are in marked con

trast to the beginning of the 1990s, when ODA, at just

over $50 billion of net inflows, was twice as large as

FD!, and commercial loans and portfolio flows were

at a similar level to direct investment (UNCTAD, 2006:

5). In the least developed countries, total ODA (from

bilateral and multilateral sources) exceeds the value

of FD! ($47 billion to $23 billion in 2013), but both

have doubled in value over the last decade (UNCTAD,

2015a: 78). Overall, foreign direct investment and the

activities of multinational corporations have become

relatively more important to many developing coun

tries than other sources of capital over the past two

decades.

However, it must be stressed that most of the FD!

inflows to the developing world are concentrated in

a handful of the more dynamic and industrialized

developing countries. Six countries-China, Hong

Kong (considered separately from China in FD! fig

ures), Singapore, Brazil, India, and Mexico-attracted

over 60 per cent of all inflows to the developing world

in 2014 and have consistently done so for a decade

(UNCTAD, 2015a: 4). Furthermore, FD! figures do not

always indicate new productive investments, known as

"greenfield" investments, and thus should be viewed

with caution. Mergers and acquisitions (M&As), in

which a foreign company buys out a local company,

involve only a transfer of funds, not an investment

in building new facilities or in employing more peo

ple. In 2005, cross-border M&As made up 78 per cent

of world FD! inflows; in 2014 they made up 36 per

cent (UNCTAD, 2006: 9; UNCTAD, 2015a: 11). For

eign investment figures may also erroneously include

domestic investment that has been routed through

.E ""

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

FOi to Developed

FDI to Transition

FOi to Developing

ODA

FIGURE 11.1 I FDI and ODA Flows to Developed

and Developing Economies, 1990-2013

Sources: UNCTAD (2015b); World Bank (2015).

organizations and countries located abroad ( known

as "round-tripping") in order to benefit from preferen

tial incentives and protection offered by some govern

ments to foreign investors (UNCTAD, 2006: 12). Thus,

the geographic concentration and the mode of entry of

massive inflows of money indicated by global figures

can be somewhat misleading as to their developmen

tal impact. Such caveats about the available figures and

their meaning point to the difficulty of evaluating the

effect ofFDI on host economies.

WHAT MOTIVATES MULTINATIONALS

TO GO ABROAD?

Why firms internationalize by establishing branch

plants or subsidiaries abroad, instead of by trade, is one

of the most important questions in the study of multi

national corporations. A second and related question is

what effect this internationalization has on the politics,

economy, and society of the host country. As in most

areas of the social sciences, the answers to these ques

tions vary according to the theoretical and ideological

frameworks used to analyze them. At the risk of some

l I Haslam: Private Enterprise and Development 205

'fM1LE H • .l I LargeHt :Multinational Corporations by A1�HetH, Including from Dewloping CountrieH, 2012 ( (Tr--;$ millionH)

Home Foreign Total Foreign Assets

Rank Corporation Country Industry Assets Assets as% of Total

1 General Electric USA electrical 338,157 685,328 49 and electronic

2 CITIC Group China diversified 71,512 514,847 14

3 Volkswagen Group Germany motor vehicles 158,046 409,257 39

4 Toyota Motor Japan motor vehicles 233,193 376,841 62 Corporation

5 Royal Dutch Shell UK petroleum 307,938 360,325 85

6 Exxon Mobile USA petroleum 214,349 333,795 64 Corporation

7 EDF SA France utilities 103,015 330,582 31

8 BP pie UK petroleum 270,247 300,193 90

13 Vodafone Group UK telecom 199,003 217,031 92

24 Petronas Petroleum Malaysia petroleum 38,907 150,435 26

28 Statoil ASA Norway petroleum 71,127 140,511 51

30 Nestle SA Switzerland food, 132,686 138,212 96 beverages

34 Vale SA Brazil mining 45,721 131,478 35

35 BHP Billiton Group Australia mining 62,284 129,273 48

50 Hutchison Whampoa Hong Kong diversified 85,721 103,715 83

60 Vattenfall AB Sweden electricity, gas, 54,165 81,269 67 and water

68 Hon Hai Precision Taiwan electrical and 65,471 70,448 93 Industries electronics

70 America M6vil SAB de Mexico telecom 32,694 67,590 48 CV

81 VimpelCom Ltd Russia telecom 33,381 55,360 60

82 AstraZeneca PLO UK pharmaceuticals 41,218 53,534 7 7

83 China Ocean Shipping China transport 40,435 52,230 7 7 (Group) Company (COSCO)

86 Teva Pharma-ceutical Israel pharmaceuticals 37,394 50,609 74 Industries

89 Barrick Gold Canada mining 45,335 47,282 96 Corporation

97 Koninklijke Phillips Netherlands electrical and 35,937 38,434 94 Electronics electronics

99 Cemex S.A.B. de Mexico mining 30,730 36,808 83 Mexico

Source: UNCTAD (2013). Reprinted with the permission of the United Nations.

206 PART II I International Development Actors

simplification, we can point to three main approaches

to understanding the internationalization of the mul

tinational corporation: a critical approach inspired by

Marxism; the mercantile or nationalist approach; and

the liberal or international business approach. Each

approach reveals different facets of the MNC and its

activities.

Dependency and Critical Approaches

Generally speaking, authors in the Marxist-inspired

or critical tradition have tended to view multinational

corporations as representatives of the global capital

ist system and therefore as having a negative impact

on the developing countries in which they invest. The

dominant current in this approach has been depend

ency theory, although to be fair, dependency exhibits

a wide range of attitudes towards foreign capital, some

of which are quite ambivalent as to its beneficial or de

structive effects (see Chapter 3). Much recent writing by

activist scholars critical of the exploitation of workers

and the environment by multinational corporations,

although no longer embedded in Marxism, continues

to be inspired by the vision if not by the letter of this

perspective and its critique of global capitalism (see

Klein, 2015; Korten, 2015).

The pioneers of dependency theory attributed an

important role to multinational corporations in the

maintenance of underdevelopment in the periphery.

The structuralist critique in its original formulation by

Raul Prebisch was a trade-based explanation of under

development (see Chapter 3). Later variations, drawing

more explicitly on Marxism, focused on the role of

multinational corporations in organizing this trading

relationship and their impact on the productive struc

ture of developing countries. Paul Baran argued that

multinational corporations, through the international

di,ision oflabour (IDL), in which high-value manufac

turing remained in the core countries and commodity

and resource extraction was conducted in developing

countries, maintained and deepened the underdevel

opment of the periphery. Profits made in the periphery

were sent back to the head offices in the core coun

tries of the North. Subsequent versions of this idea,

known as the new international divi1,ion of labour

(NIDL), argued that manufacturing MNCs sought out

Third World locations for their low-cost labour while

maintaining high-value-added manufacturing in the

developed countries with similar exploitative effects.

Baran also pointed to the political alliances formed

between multinational corporations and local elites

uninterested in the social welfare of the poor in their

countries. He described this alliance as a "political

and social coalition of wealthy compradores, powerful

monopolists [MNCs] and large landowners dedicated

to the defense of the existing social order" (as cited in

Evans, 1979: 20).

In this respect, multinational corporations change

how countries (or rather, elites in those countries) per

ceive their interests. When multinational corporations

control the major industries and a national bourgeoisie

is absent, weak, or co-opted by MNCs, autonomous

local development is impossible. That is, the logic of

industrialization follows the needs of external agents,

not internal ones (Amin, 1990: 1 1). This may le ad

to business choices that are dysfunctional for local

development. For example, it is argued that foreign

export-oriented multinationals are not interested in ex

panding local markets or in the buying power of local

consumers ( beyond sales to elites), use capital-intensive

productive processes that create few jobs, have few links

with local firms, and bring with them a cultural demon

stration effect that encourages conspicuous consump

tion by elites.

More sophisticated dependency analyses pointed

out that a specific kind of development and industri

alization can occur under the aegis of multinational

corporations in the larger Third World economies

what Cardoso and Faletto called "associated dependent

development." Peter Evans (1979) made this argument

most forcefully by pointing to the "triple alliance"

among the Brazilian state, multinational corporations,

and locally owned firms. He argued that the state can

act as an autonomous class actor or state bourgeoisie

by creating its own state-owned firms and promoting

joint ventures involving the state, multinational corpo

rations, and local firms. In this way, the state pushes

industrialization forward by benefiting from the tech

nology, management skills, and capital contributed by

foreign firms. Evans argued, however, that this indus

trialization has its limits, since it is oriented towards

production for upper-class consumption needs. It is

therefore inevitably elitist and excludes the popular

masses (Evans, 1979: 38).

11 I Haslam: Private Enterprise and Development 207

The Mercantile Approach

and the National Interest

Another common approach to the multinational cor

poration is to see it as a representative of the political

and economic interests of its home country. This ap

proach has been particularly important in the study of

US-based multinationals by both advocates of US he

gemony and its detractors. But it is also seen elsewhere

in the nationalist literature of all countries (particularly

in Japan and South Korea), which advocates the forma

tion of large domestic firms or national champions ca

pable of internationalizing and competing at the world

level. Robert Gilpin argued that the era of multination

als corresponds with the era of American hegemony.

The US actively promoted the expansion of its firms,

particularly oil companies, for a number of reasons: to

establish a safe supply of natural resources (a strategy

currently being copied by India and China); to supply

cheap petroleum to fund its political-military Western

alliance during the Cold War; to create a worldwide lib

eral and business-friendly culture; and to improve its

balance of payments and fund its military spending by

means of repatriated profits (Gilpin, 1975).

Beyond these general goals, evidence suggests that

US administrations during the Cold War used their

connections with certain multinational corporations

to pursue specific foreign policy objectives in the de

veloping world, including US attempts to undermine

or overthrow "unfriendly" governments. Two cases in

particular reinforced this opinion, the CIA-sponsored

coup d'etat in Guatemala (1954), which was often por

trayed as defending the interests of the United Fruit

Co., and the contacts between the CIA and Interna

tional Telephone and Telegraph (ITT) in Chile in the

period 1968 to 1970, which preceded the overthrow of

socialist President Salvadore Allende (see Sagafi-Nejad,

2008: 41-7). In the contemporary period, this perspec

tive remains relevant. Close ties between large multi

nationals and their home countries continue to exist,

and many governments seek to support the activities

of their firms internationally. Most countries con tinue to build "national champions," subsidize them

through various means, and defend their companies at

the World Trade Organization-well illustrated in the aircraft industry, where Airbus, Boeing, Bombardier,

and Embraer have become the national champions,

respectively, of the EU, the United States, Canada, and

Brazil. Multinationals in extractive industries continue

to play an important role in guaranteeing supplies of

needed raw materials for resource-poor countries, as

illustrated by the internationalization of Brazil's Petro

bras, Malaysia's Petronas, and China's China National

Petroleum Company.

International Business Perspective

Whereas the mercantile and dependency approaches

tend to view multinationals as homogeneous actors

that are structurally determined by the global distri

bution of power and wealth, the international business

perspective views them as differentiated actors with di

verse strategies. From this perspective, the dominant

explanation for the characteristics and international

ization of multinational corporations is the "eclectic"

or ou paradigm developed by John H. Dunning. This

approach turns around two questions: (1) Is there a

common nature or feature of the multinational that

distinguishes it from other kinds of firms? (2) What

explains the myriad forms of internationalization cho

sen by multinationals (subsidiary, joint-venture, equity

participation, licensing)? One question gets at the mul

tinational as institution and the other as actor.

According to the OLI paradigm, the multina

tional corporation is distinguished by ownership (O),

location-specific (L), and internalization (I) advantages.

Ownership advantages are those elements unique to the

firm in question and generally not available to other

firms, such as patents, processes, organizational abili

ties, marketing and management, and access to capital,

resources, and markets. Location-specific advantages

are those factors in a country where the investment

takes place that work with the firm's other advantages

and may include political (stability, political access and

coverage, investment regime and protection), social

(cultural, linguistic, ethnic commonalities), and eco

nomic (market size, market access, resources, work

force) factors. When location-specific assets abroad

add something truly important to the firm's activities,

then it will internationalize ( become multinational)

instead of simply trading with that country (Dunning,

2000: 164).

Internalization advantages are the advantages

of co-ordinating production within the hierarchical

208 PART II I International Development Actors

governance structure of the firm instead of buying

and selling the parts needed to produce any given

product through arm's-length market relationships.

Indeed, one of the key reasons why multinationals in

vest in production across borders is because interna

tional markets are overwhelmed by a vast number of

market imperfections (known as transaction costs). By

organizing production inside the multinational, sell

ing and buying from itself through administratively

determined transfer prices, it benefits from lower

transaction costs and is able to fully exploit ownership

advantages without losing control of them on the open

market. Open market relationships are much more

likely to allow competitors to copy key ownership ad

vantages like product design, technology, and indus

trial processes and are thus avoided (Dunning, 1993:

76-9; Eden, 1991: 204-7). Although the multinational

corporation is often represented as the paragon of

free markets, in fact the very existence of the multi

national proves that "free" markets are imperfect and

inefficient!

However, as globalization has intensified, many

transportation, communication, and organizational

costs (i.e., important transaction costs) have declined,

and companies have become more experienced with

international production. As a result, companies are

now more likely to take on a networked structure where

many key relationships are governed by the market

(like subcontracting to suppliers outside the corporate

structure), and only the most important core compe

tencies remain internalized, such as design , research,

technology, and software development. Thus, although

modern multinationals rely on outsourcing more

than their predecessors, functions that are essential to

BOX 11.2 I Global Value Chains and the New International Division of Labour

In the 1970s, multinationals started to move some of their manufacturing processes to the developing world. The production process, co-ordinated by MNCs, became increasingly globalized and hierarchical low-skill and labour-intensive processes were located in low-wage developing countries, while high-skill, high-wage activities remained at home in the North. This phenomenon, known as the new international division of labour, was characterized by the fragmentation of the production process across borders (letto-Gilles, 2005: 206). Global value chain theory emerged in the early 1990s to better understand this globally fragmented process in which different companies in different countries provided distinct inputs into the production of a single product. It described the interconnections between companies in volved as suppliers and contractors to a lead firm-usually a multinational corporation-that are neces sary to bring a product to market. It also established a clear hierarchy of activities within the chain, with a multinational co-ordinating, or governing, the multitude of relationships between separate companies (Gereffi and Sturgeon, 2005).

One of the most interesting contemporary questions about value chains is whether local firms in developing countries that supply particular parts within the value chain of an MNC can learn from the lead company over time and upgrade their technological and management capabilities, become more competitive, and move up the value chain into higher-value-added activities. When companies move up the value chain, it is expected that they will contribute more to the development of their national econ omies by increasing employment, developing the skills of their workforce, and exporting. The evidence, thus far, on upgrading is mixed. The ability of a firm to upgrade (move up the chain) depends to some extent on its prior capabilities and its pattern of learning, as well as the governance structure used by the multinational co-ordinating the chain. A governance structure that is more open, more akin to a mar ket or a network, rather than a hierarchy, is usually more conducive to upgrading (Gereffi et al., 2005; Giuliani et al., 2005).

11 I Haslam: Private Enterprise and Development 209

their competitiveness remain tightly guarded secrets

internalized within the corporate structure (Buckley,

2014: 232).

The other very important contribution of inter

national business studies is the recognition that mul

tinational corporations can have four very different

strategies when they go abroad to seek location-specific

assets:

• Resource-seeking strategy: MNCs require specific

resources that are only available abroad. Typically,

these resources may include natural resources or

agricultural goods, desirable services that can only

be accessed locally, and specific managerial or

technical skills.

Efficiency-seeking (or cost-reducing) strategy: MNCs

plan to make their global operations more efficient

through exploiting differences in the availability

and cost oflabour, capital, and resources. The loca

tion of light manufacturing and assembly plants in

low-wage countries is an example of this strategy.

Market-seeking strategy: MNCs establish a sub

sidiary to serve the consumer demand of a local

market directly instead of by trade. FDI is chosen

over trade because it is required by law to enter the

new markets, permits the product to be adapted to

local conditions, is less expensive, or is a strategic

response to competing firms. Direct investment

in small market-seeking factories was a common

response to import substituting industrializa

tion (ISI) policies, which tended to restrict trade

through high tariff barriers.

Strategic asset-seeking strategy: MN Cs buy up assets

of other corporations as part of a global strategy

to improve their competitiveness. Such a strategy

may generate benefits such as "opening up new

markets, creating R&D synergies or production

economies, buying market power, lowering trans

action costs, spreading administrative overheads,

advancing strategic flexibility, and enabling risks

to be better spread" (Dunning, 1993: 57-61).

Although it is important to consider the role of government policy, as we do in the next section of the

chapter, it is generally thought that corporate strategies

do affect development outcomes. Resource-seeking

MNCs are thought to have the least beneficial effect,

because they often operate as enclaves with few links to

the rest of the economy. Efficiency-seeking MNCs that

look for low-cost labour can increase employment, but

the wages, working conditions, and benefits are rela

tively poor. Market-seeking MNCs depend on skilled

workers, pay higher wages, and can contribute to a

healthy domestic economy. The most beneficial MNC

strategy for development is strategic asset-seeking, as it

offers the potential for research and development activ

ities, highly skilled jobs, and substantial growth.

RELATIONSHIP BETWEEN STATES

AND MULTINATIONALS

The strategies of multinationals alone do not determine

their effect on development. A crucial part of the im

pact of MN Cs on development is how governments me

diate this relationship. The historical record is full of

small states that have succeeded in getting important

concessions from big firms-as well as big firms that

appear to have had their way with small states. The ob

�olesci ng bargai 11 ing model offers a dynamic and flex

ible approach to state-firm relations in that it allows for

the reality that both firm and state strength (and ability

to get what they want) vary by country, firm, sector of

activity, and the historical conjuncture (Vernon, 1971).

The obsolescing bargaining approach assumes that

each actor-state and firm-wants to capture a greater

share of the benefits of the foreign investment. That is,

the firm wants more profits and the government wants

to increase the developmental spillovers of the invest

ment. Thus, multinationals and governments can bar

gain over a wide range of issues.

The outcome of this bargaining is affected by their

relative bargaining power (the resources each controls

that are desired by the other party and not available

elsewhere), strategy (how the investment fits into the

firm's and the country's economic strategy), and con

straints (the existence of alternatives and pressure from

domestic and international actors). The model gener

ally assumes that firms hold the upper hand when they

first invest, because governments try to out-compete

other potential locations by offering attractive condi

tions. Once the investment is sunk, however, and the

company cannot easily leave, the bargaining power

begins to shift towards the government. At this point,

210 PART II \ International Development Actors

CRITICAL ISSUES

BOX 11.3 I Women and Export Processing Zones

Export processing zones (EPZs) are specially designated manufacturing-for-export areas in developing countries that attract efficiency-seeking FOi through offering a regulatory regime favourable to multina tional corporations. Typically, EPZs allow duty-free imports and exports, have lower corporate taxation rates, may be exempt from minimum-wage legislation, and do not permit unionization of the labour force. Figures for 2007 from the International Labour Organization suggest that the EPZ labour force is 66 million worldwide (40 million in China alone), some 70 to 90 per cent of whom are women (Wick, 2010, citing Milberg and Amengual, 2008). In this respect, female labour is the backbone of the light manufacturing export industries based in developing countries (particularly in electronics, garments, and footwear).

There is a significant and unresolved debate about whether the employment of women under these conditions is liberating or exploitative. EPZ jobs involve low wages, long hours, and frequently poor work ing conditions. A spate of suicides by workers in Chinese plants drew media attention to these problems in 2010. On the one hand, entry into the wage labour force may allow women to escape the restrictive moral code of traditional households and cultures, form friendship and political networks, increase their power relative to men because of their contribution to household income, and provide a nest egg that increases their individual opportunities for advancement and education later on. On the other hand, light manufacturing firms may also reinforce gender stereotypes by selecting employees based on racialized or gendered characteristics, such as the "nimble fingers" that facilitate detail work, docility, youth, and marital status (Elson and Pearson, 1981). Young women also are considered "secondary wage earners" and therefore are paid less than men. Furthermore, the literature has recorded cases of factories us ing gender to control women: male floor managers; a paternalistic discourse to convince families that their daughters are being well looked after (and controlled); allocating "less-skilled" jobs (like sewing) to women while other "skilled" jobs (cutting) go to men; and beauty contests to reinforce traditional female norms. Evaluating whether EPZs liberate or exploit women is therefore a difficult question to resolve (see Wick, 2010).

the government may change the rules of the game and try to extract more benefits from the firm. The classic example of the obsolescing bargain can be found in the mining industry, which is a nationalist lightning rod for those who decry multinational investment as exploiting the national patrimony belonging to all citi zens (Moran, 1974; Kobrin, 1987).

During the 1990s, analysts increasingly questioned the relevance of the obsolescing bargaining model. On the one hand, firms proved they could protect them selves using political risk insurance and prominent financiers like the World Bank, or the protection of bilateral investment treaties (see Box 11.4) (Moran, 1998). It also appeared that states, under the influence of neoliberal ideology, were giving a lot away to attract

multinational corporations and doing very little to bar gain with them once they were established (Haslam, 2007). Gone were the battles over ownership and per formance requirements ty pical of the 1960s and 1970s. Some suggested that the obsolescing bargaining model had itself obsolesced as the overall mood in the 1990s became a co-operative one and governments and for eign corporations sought to complement each other in order to improve their ability to compete in world mar kets (Ramamurti, 2001; Stopford and Strange, 1991). Others argued that bargaining was counterproductive any way, and policies to encourage firms to integrate backwards with local suppliers had failed.

Theodore Moran argued that the greatest spill overs in the local economy occur when the MNC is

1 I Haslam: Private Enterprise and Development 211

PHOTO 11.1 I Workers in a garment factory, Southeast Asia.

PHOTO 11.2 I Open-pit mine in the Atacama Desert, Chile.

I 0

0 ' => .::;

·� �

212 PART II I International Development Actors

the most free to take the productive decisions that

make sense in terms of the company's global strat

egy. Companies not regulated by government are

more likely to be larger (up to 10 times larger than

import-substituting plants), to use more advanced

technology, to develop and coach local suppliers to

improve their product and production processes, and

to use professional management techniques (Moran,

2005). Moran's thesis is contentious and may be most

relevant to high-tech products like automobiles. Cer

tainly, in the early years of the twenty-first century, the

pendulum seems to be swinging towards more state

regulation of MNCs, especially in the resource sector.

In Latin America, since the early 2000s, left-of-centre

governments have successfully put pressure on min

ing and petroleum producers to contribute more to de

velopment (Haslam and Heidrich, 2016). Indeed, the

question "to bargain or not to bargain" may itself be

too simplistic. Most of the literature on the successful

developmental states of Southeast Asia points to the

need for a close and supportive working relationship

between foreign and domestic firms and governments

(see Chapter 7).

INTERNATIONAL REGULATION OF MNCs

The state-firm relationship is no longer determined

simply by the willingness of states to pursue either a

co-operative or a bargaining strategy. Increasingly,

international agreements limit the range of policy

choices open to governments in their relationships

with multinational corporations. In the 1960s and

1970s, developing countries organized themselves in

the United Nations General Assembly and the Group

of 77 (G77) to demand changes to the world trade re

gime that would be "fairer" for developing countries

(see Chapters 10 and 15). These demands, inspired

by nationalist and mercantile ideas, included con

trols on the activities of multinational corporations.

The major projects of this period that reflected these

concerns were the Charter of Economic Rights and

Duties of States (1974) and the Draft Code of Conduct

on Transnational Corporations. The draft code nego

tiations dragged out into the mid-198os before being

abandoned (UNCTAD, 2004: 9-n; Sagafi-Nejad and

Dunning, 2008: 89-123). Their importance, however,

was found in the counteroffensive it provoked from

the rich countries to protect the rights of foreign in

vestors in the developing world.

This counteroffensive took place on several

fronts: (1) a campaign was launched to sign bilateral

investment protection agreements with developing

countries; (2) investment issues were included in the

GATT negotiations; and (3) corporate social respon

sibility was promoted as a way to improve corporate

behaviour in lieu of state regulation. The first two of

fensives sought to build a body of international law

based on the principle of protection for foreign direct

investors.

The first efforts in this direction involved the ne

gotiation of bilateral investment treaties (or BITs)

between developed and developing countries. Such

agreements ty pically enunciated principles of treat

ment that foreign investors were entitled to receive

from host governments, such as most-favoured-nation

and national treatment (the same treatment as that

accorded to the firms of any third country or locally

owned firms), just and equitable treatment, full protec

tion and security (from expropriation), and the right

to sue host governments in international tribunals for

breach of obligations. The first BIT was signed between

Germany and Pakistan in 1959, but the web of agree

ments had expanded to approximately 3,271 worldwide

by 2014 (UNCTAD, 2015a: xii). Few developing coun

tries are not caught in this web, and many signed such

agreements in the hope that demonstrating the "right"

attitude towards foreign investors would encourage

increased FD! inflows. Thus far, the evidence that in

ternational investment agreements contribute to in

creased investment flows is mixed.

At the global and regional levels, rules to protect

foreign investors were included in trade agreements.

The Uruguay Round (concluded in 1994) of GATT ne

gotiations added agreements protecting the rights of

foreign investors, the most notable of which are the

TRIPS (Trade-Related Aspects oflntellectual Property

Rights) agreement requiring respect for intellectual

property and the TRIMs (Trade-Related Investment

Measures) agreement forbidding the use of certain

performance requirements (policies that imposed de

velopmental obligations on MNCs). Since that time, a

11 I Haslam: Private Enterprise and Development 213

CRITICAL ISSUES

BOX 11.4 I Investor-State Dispute Settlement

A major question related to international investment agreements (IIAs), such as bilateral investment treaties (BITS), is whether they restrict the policy space or the policy options open to governments in their dealings with multinational corporations (Gallagher, 2005: 10-12; Sanchez-Ancochea and Shadlen, 2008: 11-14; Van Harten, 2008). Most IIAs include investor-state dispute settlement provisions. These provisions permit a foreign corporation (but not a domestically owned firm) that believes its rights under an investment agreement have been violated to take the host government to "court" in binding interna tional arbitration. Frequently, multinational corporations will claim they have not received "fair and equi table treatment" or that a particular governmental measure has affected their profitability to the extent that it may be considered "tantamount to expropriation." Known arbitration cases have skyrocketed from a total of 14 in April 1998 to 608 by the end of 2014, with some resulting in major damage awards, such as the US$834 million award against Slovakia in 2004 (UNCTAD, 2010: 1; UNCTAD, 2015a: xii). Argentina alone has faced over 40 known cases, most of which were related to its financial crisis and currency devaluation of 2002. This may represent the tip of the iceberg, since several of the arbitration venues open to investors conduct the proceedings in secret. Environmental and social activists have been par ticularly concerned that such investment protection could limit the ability of governments to make policy in the public interest if the interests of multinational corporations were damaged in the process, or that a regulatory chill could result in which a government never implements good public policy for fear of being sued by affected foreign investors. For example, most developing countries have private health care delivery, but it might be too expensive to move to a universal public system if doing so damages the profits of multinational corporations and causes them to sue.

number ofregional free trade agreements, such as the North American Free Trade Agreement, have included investment disciplines. The Doha Development Round (2001-present) also had investment on the agenda, although it was dropped in 2005 because of opposition from developing countries concerned about its effect on their policy space. As a result of this legalization of the rights of foreign investors, multinational cor porations now enjoy more protection from govern ments and civil society groups than at any other time in history.

CORPORATE SOCIAL RESPONSIBILITY

The third element of this counteroffensive is the promotion of (orporatc s<Kia[ responsibility (CSR) as a way of forestalling or deflecting calls for government

regulation of the activities of MNCs. Corporate so cial responsibility, broadly speaking, is the idea that corporations have a responsibility beyond their shareholders to a broader set of "stakeholders." Such stakeholders include any group that is affected by the activities of the firm, including employees, local com munities, groups sharing the same resources (such as water), indigenous communities, and people involved in nearby economic activities (such as farming). CSR is a voluntary commitment of firms to improve the quality of their relationship with stakeholders. It is presented both as a moral argument that companies should behave ethically and as good business because it reduces operational risk, improves worker commit ment, increases efficiency, and promotes profitability. The contrast between rights and obligations should be immediately apparent: on the one hand, corpo rate rights have been enhanced through international

I I I I

214 PART II I International Development Actors

law and binding dispute settlement (Box 11-4); on PARTNERSHIPS FOR DEVELOPMENT the other, corporate responsibilities remain purely

voluntary.

The immediate response of the 0ECD club of rich

countries to the Draft Code of Conduct on Transna

tional Corporations was the Guidelines for Multina

tional Enterprises (1976). To this day, these guidelines

constitute the most significant corporate social respon

sibility effort by developed countries, requiring each

0ECD country to establish an institution, the National

Contact Point, to promote the guidelines and medi

ate disputes involving investors from that country.

Another prominent international code is the Global

Compact, an initiative of former UN Secretary-General

Kofi Annan. Each set of codes advocates different

principles, implies obligations for different actors, and

involves different standards of verification and com

pliance. The Global Compact, for example, requires

companies to voluntarily adhere to a set of 10 princi

ples on human rights, labour standards, environmental

stewardship, and anti-corruption. However, there is no

independent audit or verification of company efforts,

unlike codes that require "triple bottom-line account

ing" (quantification of economic, social, and environ

mental impacts).

Most multinationals have developed their own

codes of conduct, as well as adhering to global codes

promoted by international organizations. Yet there is a

debate as to whether CSR is appropriate for the devel

oping world. Much of the thought on CSR was created

in developed countries where a strong legal and social

framework already forces high standards of responsible

behaviour by corporations. In the Third World, where

this framework is often either absent or not enforced,

the appropriateness of putting the accent on voluntary

efforts may well be questioned. Furthermore, there is lit

tle systematic evidence on the consequences of corporate

social responsibility for development in poor areas. The

argument for its value has mostly progressed through

advocacy and case studies of good citizenship. None

theless, most world surveys of MN Cs show an increasing

uptake of CSR norms and practices by firms operating in

the developing world. In this respect, the contribution of

CSR to development may improve with time.

Up to this point we have been discussing the largely

accidental developmental effects that occur from self

interested behaviour by companies, sometimes mediated

by the intervention of governments. Increasingly, however,

private actors are purposefully playing the role of develop

ment agents. One of the most important vehicles for these

actions has been partnerships with governments and civil

society organizations. As of yet, there is no consensus defi

nition for the term "partnership" and it is used in many

ways by different authors. Nonetheless, a broad definition

of the term is currently in vogue that sees it as synonymous

with "cross-sectoral alliances," meaning co-operation that

bridges the governmental, corporate, and civil society sec

tors (Jamali and Keshishian, 2008: 279). The classic defini

tion from Waddock (1991) argues that different actors get

together to "cooperatively attempt to solve a problem or

issue of mutual concern that is in some way identified with

a public policy agenda item" (cited in Kolk, 2013). Utting

and Zammit (2006) add that within such alliances, actors

have "a common purpose, pool core competencies, and

share risks, responsibilities, resources, costs and benefits."

Therefore, the key features of a partnership are as follows:

(1) collaboration between business and other social actors;

(2) a social or public purpose (such as responding to a

policy or development problem); and (3) it should, ideally,

be beneficial for all the partners.

There were four main reasons for this move towards

partnerships. First, as many development agencies and

civil society organizations saw their budgets stretched

(or reduced) as needs grew, it was thought that the pri

vate sector could help fill the gap by mobilizing resources.

Second, it was thought that the efficiency and specialized

skills of private companies could create synergies with de

velopment agencies to do development better-sometimes

known as "creating shared value." Third, many large com

panies began to see doing development as integral to their

own activities, corporate image, and profitability. And,

fourth, for ideological reasons, some development agen

cies and governments were willing to spend money to pro

mote partnerships with the private sector. Of course, these

changes occurred after neoliberalism, which was favour

able to private enterprise, had become well entrenched.

CRITICAL ISSUES

11 I Haslam: Private Enterprise and Development 215

BOX 11.5 I The Changing Face of FDI: The Third World Multinational

In recent years, some developing countries have established homegrown multinationals-emerging multinational corporations (EMNCs)-that invest in other developing countries and in the OECD countries.

This change may prompt us to re-imagine some of the more simplistic approaches to the relationship between multinationals and developing countries. At the very least, it makes it harder to represent mul

tinationals as simply the North exploiting the South. Since some multinationals now call developing countries their "home," the issue of the impact

of FDI on development is an issue of its impact not just on host countries but also on home coun tries. FDI from developing countries offers a number of potential benefits for the home country, such as increased profitability and competitiveness, access to foreign financing (in developed-country

markets), technology transfer (especially if internationalization occurs through merger and acquisi tion of developed-country firms), integration into global production and distribution networks, secure

supplies of natural resources, and spillovers for local firms. Indeed, it appears that Third World multinationals are expanding in a different way than American multinationals did in the 1950s. They are expanding more quickly, their ownership advantages are weak, they are used to unstable environ ments, they expand simultaneously in developed and developing countries, and frequently they use mergers and acquisitions as vehicles (Guillen and Garcra-Canal, 2009: 26-30). Indeed, perhaps the most important and unique characteristics of Third World multinationals is that they seek to absorb First World technology and managerial practices through expansion, unlike First World MNCs, which seek to protect their ownership advantages from competitors (UNCTAD, 2006: 169-83; Hennart, 2012). Case studies suggest that EMNCs from India and China have been able to use expansion or participation in Western MNCs' global value chains (see Box 11.2) as a way of improving their global competitiveness and capabilities-in other words, to "absorb, adapt and build on technologies im ported from abroad" (Kumar, 2007: 7). In both cases, the government has helped support the inno vation capabilities of local MNCs by forcing foreign firms to establish relationships with local EMNCs (often in the geographic proximity of science parks) as the price of entry to the Chinese or Indian market (Altenberg et al., 2007). In addition to the impact on their home countries, Third World EMNCs also may be beneficial for other developing countries, as they frequently internationalize to poorer

countries in their immediate regional environment. As a result, investment from developing countries is particularly important to nearby economies that are relatively unattractive to First World MNCs. In this way, South Africa is a source of more than 50 per cent of investment inflows in neighbouring southern Africa (UNCTAD, 2006: 120).

The relatively recent emergence of South-South FDI flows means that it is hard to judge whether

this new phenomenon will have different developmental effects from those of North-South flows. Some possible benefits have been noted above. On the other hand, FDI from larger economies like China and India has shown little interest in the direct or indirect human rights violations (such as in Sudan) that might accompany their investments, and little permeability to pressure from domestic and transnational NGOs and civil society groups. This may represent a setback for activists who have successfully pushed Western MNCs to act more seriously regarding their responsibilities of corporate citizenship.

216 f'f-1.Bl' ii I International Development Actors

CRITICAL ISSUES

r:,< "11, I Private Foundations and Development

Private foundations have emerged as important actors in international development. Strictly speaking, such civil society foundations are legally and financially independent from the companies that founded them, yet many retain an entrepreneurial culture that promotes innovative problem-solving and techno logical solutions. One of the most influential is the Bill & Melinda Gates Foundation, which has net assets of US$42.9 billion, spends annually up to US$3.9 billion (2014), and has disbursed a total of US$33.5 billion (www.gatesfoundation.org). The Foundation is well-known for its innovative, o u t -of-the-box thinking and its encouragement of partnerships. For example, the Gates Malaria Partnership (GMP) supported a program led by the London School of Hygiene and Tropical Medicine to research existing malaria tools, develop new tools, and build the capacity to do malaria research in Africa. The program developed a collaborative approach with African institutions, founding a Ph.D. program for African scholars, supporting two research laboratories in Africa, and establishing malaria training and advocacy centres (Greenwood et al., 2006). Table 11.2 compares the development spending of some notable private foundations and selected coun tries and international institutions.

The partnership ideal is best expressed in the

concept of har ·c. -�htl' developed by Harvard Busi

ness School professors Michael E. Porter and Mark

R. Kramer, who argue that businesses should focus

on how they can combine enhancing competitiveness

with addressing the "needs and challenges" of society

(Porter and Kramer, 2011: 64). The argument is a re

sponse to fears that business has lost respect and legit

imacy in the public eye. The authors distinguish their

idea from philanthropic activities, seeing these as only

redistributing wealth. Instead, they argue that compa

nies should creatively rethink products and markets

with the purpose of addressing social problems, and

redefine their relationship with suppliers and clusters

to work constructively with small local firms in order

to improve their performance and skills and to develop

the communities in which they are located (Porter

and Kramer, 2011: 68-73). In other words, investing in

working with partners is not just a charitable act, but

is good for the competitiveness and profitability of all.

An example of such a partnership is found in the culti

vation of fair trade coffee suppliers by Starbucks. Con

cerned that it would be the target of a sustained activist

campaign, the company developed a partnership with

T-f.\�LE 1:.:: I Development f-ipending in Billions of L SS, Selected Foundations, Countries, and International Organizations, 2014 Private Foundations

Bill & M elinda Gates Foundation

Open Society Foundation

Ford Foundation

W.K. Kellogg Foundation

John & Catherine McArthur Foundation

Rockefeller Foundation

3.9

0.82

0.56

0.34

0.23

0.14···

Countries/International Organizations

Australia 4.50

Canada 4.42

New Zealand 0.49

United Kingdom 18.08

UNDP 4.24"

WHO 5.31 . .

'UNDP provisional (April 2014); .,WHO total funding 2014-15; ""2011 figures.

11 I Haslam: Private Enterprise and Development 217

the Ford Foundation, Oxfam America, and the Oaxa can State Coffee Producers Network (CEPCO) in order to source fair trade coffee. This partnership allowed Starbucks to help raise the quality of CEPCO's coffee, improve the skills of small farmers, and encourage the dissemination of knowledge to other co-operatives, all while fulfilling the American company's commercial objectives (Argenti, 2004).

But the practice of partnership is more contentious than the idea itself. On the one hand, partnerships, es pecially those known as public-private par tnerships (PPPs), can be very similar to privatizations, in which a company is contracted and partially subsidized to provide a public service, such as building roads, elec trification, or providing water (van der Wel, 2004). More problematically, the conditions for a truly suc cessful and equitable partnership are rarely realized. When corporations provide resources to civil society organizations to perform some kind of social service, it can be a unidirectional relationship, where the firm controls the money, objectives, and ideas (Jamali and Keshishian, 2009: 278). NGOs often enter partnerships as subordinates or philanthropic subcontractors chas ing the next paycheque, and can be pulled away from their core mission. At the same time, NGOs may be leery about their engagement with companies, fear ing that the partnership might harm their legitimacy and reputation (Kolk, 2013). A substantive partnership requires a good fit between the strategic objectives of the different partners, as well as significant resources, a high level of ongoing collaboration, and frequent and high-level management interaction (Jamali and Kesh ishian, 2009: 281). In this regard, partnerships are not a panacea for development problems, but have to be carefully constructed and implemented, drawing on the core competencies of every partner, to work prop erly (Kolk, 2013).

CONCLUSION

There is general agreement that the promotion of en trepreneurship is good for developing countries (if very difficult to attain). But it is difficult to evaluate whether multinationals are good or bad for poor and developing countries, for two principal reasons discussed in this chapter. First, FDI is extremely heterogeneous (different

MNC strategies and different firms have different ef fects on host countries), and second, the policy regime and bargaining outcomes vary greatly among states. In other words, some MNCs are better for development than others, and some states are simply better at get ting the most out of multinationals. In this regard, it is essential to evaluate the effects of individual invest ments both for their economic contribution to capital inflows, exports, government revenue, and spillovers in the wider economy (Sumner, 2005: 277-81; UNCTAD, 1999: 279-83) and for their political, cultural, and so cial impact.

Above all, the chapter has sought to demonstrate that the private sector is not a monolithic, homoge neous actor whose effects are structurally determined and easily characterized as good or bad. Instead, pri vate enterprises are diverse and complicated actors ap plying a wide range of strategies. Their developmental effects depend on the particular nature of their engage ment with governments, international organizations, and civil society actors. Multinationals, which are often the focus of criticism, are neither entirely responsible for the successes of development nor can they simply be blamed for its failures. UNCTAD (1999: 149) has ex plained that multinational corporations "do not sub stitute for domestic effort: they can only provide access to tangible and intangible assets and catalyse domestic investment and capabilities. In a world of intensifying competition and accelerating technological change, this complementary and catalytic role can be very valuable."

SUMMARY

This chapter introduced one of the most important and yet most misunderstood and under-analyzed actors in international development-private enter prise. After reading the chapter, the student should be able to differentiate between small and large firms, and the different roles they play in development. Entrepreneurs, especially those in the informal sector, face important challenges related to a lack of property rights and government support, which can hamper economic development. Multinationals also should be regarded as differentiated actors that apply a wide range of strategies with diverse effects on development.

218 PART II I International Development Actors

However, the chapter also underlined the need to con

sider the role of the state as a mediator. How well the

state regulates and bargains with firms has a signifi

cant effect on whether they have a good or bad effect

on development. Some states are better at getting more

from multinationals than others. However, the stu

dent should note that international investment agree

ments sometimes reduce the policy space available

to governments. In recent years, multinationals have

begun to act directly as development agents, through

corporate social responsibility programs that engage

communities and by forming partnerships with gov

ernment agencies and civil society organizations to

address development problems. In brief, the effects of

private enterprise on development depend on the size

of the company, the strategy it employs, mediation by

the state, and the way the company engages other ac

tors such as civil society. Companies, by themselves,

are not entirely responsible for the successes or the

failures of development.

QUESTIONS FOR CRITICAL THOUGHT

1. How important is it to encourage small-scale entrepreneurship in developing countries?

2. If some multinationals do not adequately contribute to development, is it their fault or the fault of host gov

ernments that fail to regulate them?

3. Can corporate social responsibility contribute to good developmental outcomes? Why or why not? What are

its limits?

4. Why would the emergence of Third World multinationals change how we evaluate MNcs' effects on develop

ing countries?

5. Can MNCs successfully act as "aid agents" through partnerships with governments and civil society

organizations?

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Civil Society and Development Henry T7eltrneyer

• To be able to identify the agents of change in the

process of local- or community-based develop

ment.

To understand the role of civil society organiza

tions in the process of alleviating poverty and em

powering the poor to act for themselves.

�-·------------------------------------------

A. Activ ists of the Nepal Federation of Indigenous Nationalities (NFIN) shout anti-government slogans during a general strike rally in Kathmandu. NEFIN is an umbrella organization of 59 Indigenous nationalities that has been fighting for the cultural, economic, and political rights of Indigenous peoples since its establishment in 1991. I Source: © epa european pressphoto agency b.v./ Alarny Stock Photo

222 PART II I International Development Actors

The idea of ciYil socicl y has achieved prominence over

the past two decades in connection with successive

waves of democratization that began in Latin America

and Eastern Europe and spread across the developing

world. A principal feature of this democratization was

not so much the restoration of the rule of law as it was

the active engagement of people in the public policy

formulation process and in the responsibility of gov

ernance. This democratization process paralleled a

similar process at the economic level (turning over the

responsibility for economic development to the private

sector and the market, and a reduced role for govern

ments with international co-operation and social par

ticipation). In this context of political and economic

development, civil society has been widely seen as an

agent for limiting authoritarian government, empow

ering popular movements, reducing the atomizing

and unsettling effects of market forces, enforcing po

litical accountability, and improving the quality and

inclusiveness of "governance," a term that denotes a

particular set of interactions between civil society and

governments.

Reconsideration of the limits of government in

tervention in economic affairs and a related neoliberal

attack on the welfare-and developmental-state (see

Chapter 7) also have led to an increased awareness of

the potential role of civic organizations in the provision

of public goods and social services, either separately or

in a synergistic relationship with state institutions. In

deed, it is possible to view the turn towards civil society

in the provision of hitherto public goods and services

as a form of privatization: turning over the economy

to the "private sector" (profit-oriented or capitalist en

terprises) and responsibility for economic and political

development to "civil society."'

Recourse to the notion of civil society, and the

construction of a civil society discourse, takes differ

ent forms. There are three different traditions in the

use of the term, each associated with a particular con

ception of civil society. One of these, associated with

a mainstream form of political science and economics

in which politics and economics are treated as analyti

cally distinct systems, can be labelled liberal.

The liberal tradition is fundamentally concerned

with "political development" -establishing a partici

patory form of politics and "good," i.e., " democratic,"

governance. Civil society, from this view, is rooted in

the Anglo-American tradition of liberal democratic

theory in which civic institutions and political activity

are essential components of "political society" based

on the principles of citizenship, rights, democratic

representation, and the rule of law. On the ideological

spectrum (left, centre, right), liberals see civil society as

a countervailing force against an unresponsive, corrupt

state and exploitative corporations that disregard en

vironmental issues and human rights abuses (Kamat,

2003).

The second tradition, rooted in a more sociologi

cal view of the state-society relation and the ideas of

Antonio Gramsci, is similarly concerned with the form

of politics but sees civil society as a repository of pop

ular resistance to government policies and the basis of

a "counter-hegemonic" bloc of social forces engaged in

a process of contesting state and other forms of class

power. It is based on a radical ideology-a shared belief

in the need for radical change. Civil society is thus seen

as a repository of the forces of resistance and opposition

that can be mobilized into a counter-hegemonic bloc.

The third tradition is associated with interna

tional co-operation for development. In this tradition,

civil society is viewed as an array of social organiza

tions representing "stakeholders" in a process of eco

nomic development, a strategic partner in the war

against global poverty waged by the World Bank and

other international development associations and

agencies. Here, civil society is viewed as an agent for

a participatory and empowering form of development.

Proponents share a liberal ideology in terms of seeing

in civil society the beneficial effects of globalization

for democracy and economic progress. On the other

hand, conservatives who hold this view of civil society

see non-governmental organizations (NGOs) as "false

saviours of international development" (Kamat, 2003).

The entire project of co-operation for international de

velopment (technical and financial assistance to poor

developing countries) is seen as misbegotten, more

likely to result in a stifling of initiative than to work

as a catalyst for improvement in the physical quality of

people's lives.

The purpose of this chapter is to deconstruct this

civil society discourse. First, we review the origins and

contemporary uses of the term. Then we turn towards

the development dynamics associated with the con

temporary discourse on civil society. This discourse

is of two types, one associated with the dynamics of

political development and the search for "democratic

governance," the other with the search for alterna

tive forms of development initiated from below and

within "civil society"-forms that are socially inclu

sive, equitable, participatory, and empowering. The

chapter ends with a brief review of the role of differ

ent types of civil society organizations in the devel

opment process. The central focus of this review is on

non-governmental organizations and social mow

ments, elements of civil society conceptualized as

agents of anti-globalization-repositories of the forces

of resistance against global capitalism in its current

neoliberal form.

CIVIL SOCIETY: THE ITINERARY

OF A CONCEPT

Definitions of "civil society" are bewilderingly diverse,

rooted in alternative social and political philosophies

that are hard to reconcile. However, for our purpose it

is important to come to some agreement about what it

means in the context of current development discourse.

One definition is that of an intermediate realm

between the state and the family, populated by organ

ized groups or associations that have some autonomy

in relation to the state and are formed voluntarily by

members of society to advance their interests, values,

or identities. This definition excludes most highly in

formal associations of the personal network kind

as well as families, since they operate in the private

sphere. Civil society, by contrast, operates in the pub

lic, albeit non-state, sphere. But some kinship organiza

tions above the level of the nuclear or extended family

may constitute elements of civil society. Civil society,

by this definition, generally excludes profit-oriented or

capitalist corporations, although several caveats are in

order. Certain types of firms, such as the media and

non-profit enterprises, are often important elements of

civil society. And when corporations and their CE0s

combine to form business associations, these associa

tions can also be regarded as part of civil society.

Civil society includes all manner of social organ

izations ranging between the family and the state

the state being an apparatus composed of institutions

such as governments, the judiciary, the legislature, the

12 I Veltmeyer: Civil Society and Development 223

armed forces, and any other institution used to deter

mine "who gets what." The United Nations Develop

ment Programme (UNDP), the World Bank, and other

such agencies of international development adopted

the term "civil society" in their discourse precisely be

cause it was so inclusive, containing within its scope

the "private sector" (basically, capitalist or multina

tional corporations governed by the logic of capital ac

cumulation or profit-making). The incorporation of the

"private sector" into the development process has been

a fundamental aim of these international organizations

since 1989 (Mitlin, 1998).

Another consideration is that civil society or

non-governmental organizations are generally

issue-oriented in their actions rather than class-based,

raising questions about whether or not to include social

movements. Social movements are generally concerned

with disputing state power-with bringing about a

change in government policies or, like political par

ties, in governments themselves (albeit in a different

way-mobilizing the forces of opposition and resist

ance rather than participating in elections). In contrast

to social movements, civil society in the form of NG0s

(or in the voluntary sector) is generally concerned with

more specific interest group issues such as the environ

ment, the empowerment of women, human rights, de

velopment education, disaster and other forms of relief

or emergency aid, or poverty alleviation. Some of these

issues also are targeted by some social movements,

which is to say that it is possible to mobilize forces for

change around these issues. The distinction we make

between social movements and non-governmental

organizations applies to the development rather than

to the political sphere. In this context NG0s are fun

damentally concerned with bringing about improve

ment in socio-economic conditions of the population

by means of a change in policy or institutional reform.

Social movements, in contrast, tend to have a more

confrontational approach in challenging directly the

holders and agencies of economic and political power.

The type of organization encompassed by civil so

ciety is not the only issue. Social organizations generally

take one of three forms: (1) associations or associational

(sharing an organizational objective); (2) communities

or community-based (held together by social bonds and

a culture of solidarity, a shared sense of belonging); and

(3) interest groups or class-based organizations (defined

224 PART II I International Development Actors

by a pursuit of economic interest or political power), such as capitalist enterprises, multinational corpora tions within the private sector of the economy, and la bour unions.

The size and strength of civil society in this organizational context are usually measured in terms of the number of "active" formally constituted social organizations, the density of the resulting social fab ric, and the networks that bring people together to act collectively to achieve or to pursue their shared goals and common objectives. A major factor here is the degree to which people rely on governments as op posed to their own social organizations and networks to achieve their goals and objectives. Thus, from the 1940s to the 1970s, with the growth of the welfare and development state (in which governments assumed primary responsibility for both welfare and develop ment), many societies increased their reliance on the government, with a corresponding weakening of civil society. In the 1980s, in a new context involving the insertion of many countries into the system of global capitalism (see discussion below on this "seismic shift"), there was a general retreat of the state, result ing in a corresponding growth and strengthening of civil society.

CIVIL SOCIETY IN CONTEXT

Social change can be analyzed in terms of three dy namic factors: agency (the strategies pursued and ac tions taken by diverse organizations and individuals), structure (the institutionalized practices that shape or limit action), and context (the specific "situation" or historical conjuncture of objectively given and sub jectively experienced "conditions" of social or polit ical action). In regard to the emergence, growth, and strengthening of civil society in the 1980s, six contex tual elements, each taking the form of a variable but persistent trend, can be analyzed in terms of three critical dimensions: (1) the actions or policies that pro vide the driving forces of social change; (2) the social, economic, and political impacts of these actions and policies; and (3) the strategic and political responses to these impacts by different social groups and classes ac cording to their location in the social structure and the broader system of global capitalism.

Globalization. The integration of countries across the world into a new world order in which the forces of economic and political "freedom" are allowed to flourish has had an ambiguous impact on civil society organizations. On the one hand, the invasive pressures of global mar kets often compromise their autonomy or sover eignty. On the other, globalization-particularly in terms of freer flows of information and com munication across national boundaries-has fostered the spread of "transnational communi ties" (see also Chapter 6) and an incipient global civil society. Democratization. The spread of democracy, as an idea and value, in recent years has changed the po litical and institutional environment in which civil society organizations operate (see Chapter 16). In some cases (see Box 12.1), civil society has been the locus of active opposition to authoritarian govern ments, providing a breeding ground for alternative, participatory, or " democratic" forms of political organization-and governance. In other cases, civil society is marginalized or weakened through state repression or withdrawal from active engagement in politics. Civil society in this context may con stitute a locus in which civic values and norms of democratic engagement are nurtured, although greater political freedom can be exploited to ad vance narrow, self-interested agendas that can ex acerbate political conflict and undermine good governance. Privatization. The rapid economic growth ex perienced by many developing countries from the 1950s onward was fuelled in large measure by growth of the public sector and a policy of nationalization-taking over from the private sector (the multinational corporations, that is) and buying out firms in the strategic sectors of the economy (oil production, for example). In the 1980s, this policy was reversed with a privatization policy: turning over state firms to private enter prise under the guise of a presumed "efficiency." This new policy allowed capitalist corporations often multinational in form and foreign-owned to acquire these enterprises at bargain-basement prices, greatly enriching their new owners (see Chapter 11).

Decentralization. Until 1980 or so, many political

scientists (and economists, for that matter) in both

liberal and conservative traditions subscribed to

the notion that democracy was not necessarily

conducive to economic development-that author

itarianism provided a better agent. In the 1980s,

however, there was a sea change in this idea, lead

ing to widespread calls for democracy and good

governance in the form of a more participatory

form of politics and development (see Chapters 9

and 16). To establish an appropriate institutional

framework for these developments (also to reduce

fiscal pressures on governments), the World Bank

argued for the need for a policy of administrative

decentralization, with a partnership approach to

both local governments and civil society ( World

Bank, 2004).

Economic liberalization. The improvement in

socio-economic conditions in the 1950s and 1960s

was based on the active agency of governments in

redistributing market-generated wealth and in

comes for the common benefit. In the developing

countries of the Global South, it was also based on

protectionism, a policy designed to protect fledg

ling industries from the forces of the world mar

ket, to give domestic companies a chance to grow

by placing restrictions on foreign investment and

the operations of multinational corporations in

their countries. Under the new economic model of

free-market capitalism and neoliberal globaliza

tion, this policy was reversed.

Liberalization has had a number of contradic

tory consequences for civil society. In some con

texts, it weakened predatory state structures and

limited the scope for "rent-seeking behaviour" by

political and bureaucratic elites. Some groups are

better placed than others to exploit the oppor

tunities created by liberalization for advancing

their own economic agendas, and organizations

representing their interests can wield considera

ble influence over decision-making. The removal

of price controls and other restrictions on eco

nomic activity are often accompanied by growth

of the informal economy and the emergence of a

dense network of groups and associations geared

towards the advancement of collective economic

interests. The removal of safety nets and reduction

12 I Veltmeyer: Civil Society and Development 225

in government welfare spending gave rise to a

proliferation of self-help groups and development

associations with a mandate to provide relief and

services to people marginalized or impoverished

by market reforms.

Inclusionary state activism. The neoliberal eco

nomic model based on free-market capitalism in

Latin America fell into disrepute almost as soon

as it was implemented by governments in the re

gion, and by the end of the 1990s powerful social

movements, organized and led by peasants, indig

enous communities, and landless rural workers,

had brought about the demise of neoliberalism

as an economic doctrine. In its place was a more

inclusionary form of development based on a new

(post-Washington) consensus as to the need to

bring the state back into the development process.

This, as well as dramatic changes in the world eco

nomic system (among them the rise of China and

the consequent demand for raw materials and pri

mary commodities composed of natural resources

such as minerals and metals), helped bring about

in Latin America a new wave of left-leaning or pro

gressive (post-neoliberal) political regimes com

mitted to the use of the revenues derived from the

exports of these commodities to reduce the inci

dence of poverty in their countries. The result has

been a significant reduction for many countries in

the region in the rate of extreme poverty as well

as a reduction of social inequality in the distribu

tion of society's wealth and income (Veltmeyer and

Petras, 2013).

Deregulation. State-led development is predicated

on government regulation of private economic ac

tivity and markets in the public interest. However,

from the perspective of firms concerned with max

imizing profit-making opportunities, this policy is

viewed as an intolerable attack on freedom, result

ing in "inefficiency," a distortion of market forces

that, if left unhindered, fails to produce an opti mal distribution of society's productive resources,

wealth, and income. In the 1980s, the perceived "failure" of the state-in the form of a widespread

fiscal crisis (an inability to finance costly social

and development programs out of government

revenues)-created political conditions for a re

versal of this regulatory approach.

226 PART II ! International Development Actors

BOX 12.1 I APPO: Popular Assembly of the People of Oaxaca

CURRENT EVENTS

When a woman advances there is no man who will retreat (on a placard in a political march).

APPO (the Spanish acronym for an organizing body of diverse protest groups) is a coalition of organ

ized social and political groups in southern Mexico. APPO is nothing if not popular, bringing together broad

sectors of the community and civil society organizations in a social movement for democratic transfor

mation, as John Gibler (2006) reported:

On Tuesday, August 1, about 3,000 women marched through downtown Oaxaca City banging

metal pots and pans in an oddly melodious cacophony that served as the background for their

chants demanding the ousting of Governor Ulises Ruiz ....

Once gathered in the central town square-where teachers and other protestors have been

camping out since May 22-the women decided to take over the statewide television and radio

company .... Not a shot was fired. Not a punch was thrown .... It took several hours of negoti

ation before the women were able to fix a live broadcast, during which-still clutching their pots

and wooden spoons, dressed in aprons and work clothes-they set out to correct the mistakes

in the station's reporting on the violent June 14 attempt by state police to lift the teachers'

encampment and demand on the air that the press "tell the truth" about the social movement that is taking over Oaxaca ....

On June 16, just two days after the raid, some 500,000 people marched to demand the

governor's resignation ....

THE ECONOMIC AND POLITICAL

DYNAMICS OF DEVELOPMENT

AND CIVIL SOCIETY

Development means a combination of improvements in

the quality of people's lives-marked by a reduction in

or alleviation of poverty, an increased capacity to meet

the basic needs of society's members, w:,(,1in,1bk lh ci 1

lwods, and empowerment-and the changes in institu

tionalized practices or structures needed to bring ahout

these improvements. The idea of development can be

traced back to the eighteenth-century Enlightenment

idea of progress-of the possibility of and necessity

for a better form of society characterized by freedom

from tyranny, superstition, and poverty, and attaining

some degree of social equality. But it was reinvented in

1948 in the context of (1) a post-war world order based

on the International Monetary Fund (IMF), the World

Bank, and the General Agreement on Tariffs and Trade

(GATT); (2) an emerging East-West conflict and Cold

War; and (3) a national independence struggle by coun

tries seeking to escape the yoke of colonialism-Pax

Britannica in the pre-war period, and Pax Americana

in the post-war period (see Chapters 2 and 3).

From the outset of this development process in

1948, signalled by Harry Truman's Point 4 Program of

development assistance, to the early 1970s, when the

world capitalist system ran out of steam and entered a

period of prolonged crisis, state-led development gener

ated an unprecedented period of economic growth and

societal transformation (see Chapters 1 and 7). Growth

rates, fuelled by rising wages and a rapid growth of do

mestic markets as well as international trade, exceeded

by a factor of two the economic growth rates of previous

decades, resulting in an incremental but steady improve

ment in the physical quality of life and the social condi

tions of health, education, and welfare. Historians have

dubbed these advances the "golden age of capitalism."

In 1973, at the height of an apparent crisis of over

production, characterized by cutthroat competition,

saturated markets and stagflation, sluggish productivity,

and falling profits, the capitalist class in the rich coun

tries, the CE0s of its multinational corporations, and

governments in their employ or service, abandoned the

system that had served them so well. Or, to be more pre

cise, they sought to renovate this system to resolve the

crisis of capitalist production by (1) changing the rela

tionship of capital to labour, favouring the former and

weakening the latter; (2) incorporating new production

technologies and constructing a new regime of accumu

lation and labour regulation (post-Fordism); (3) relo

cating labour-intensive industrial production overseas,

thereby unwittingly creating a "new international divi

sion of labour"; and, above all, (4) bringing about a "new

world order" in which the forces of "economic freedom"

were liberated from the regulatory apparatus of the

welfare-developmental state. The policies that facilitated

this process generated epoch-defining changes, a seis

mic shift in international relations-a new world order

in which it was thought that the forces of freedom and

democracy could prevail.

By 1990, most countries were aligned to this "new

world order" of "globalization" and free-market cap

italism. In the 1970s, in the first phase of neoliberal

experiments, the implementing agency was a series

of military regimes in the Southern Cone of South

America-in Chile, Argentina, and Uruguay (Petras

and Veltmeyer, 2013). When these neoliberal policy

experiments crashed in the early 1980s, a new crop of

liberal democratic regimes, forced into line by the re

alities of a region-wide debt crisis of historic propor

tions, initiated a second round of "structural reform."

They did so with the assistance of an emerging civil

society in the so-called "third sector" of non-profit vol

untary associations and non-governmental organiza

tions. These organizations, formed in response to the

retreat of the state from its erstwhile responsibility for

economic development, were enlisted by international

financial institutions (!Fis) such as the World Bank and

the international community of development associ

ations and aid donors to mediate with the poor-to

assist them in their self-development efforts in return

for acceptance of their policy advice (market-friendly "reforms" and "good governance").

The literature on these issues is divided. Some see the development NG0s as "false saviours of democracy,"

enlisted to help rescue capitalism from itself (Hayden,

2002; Kamat, 2003). These authors do not see the role of

12 I Veltmeyer: Civil Society and Development 227

NG0s as one of delivering economic assistance (through

micro-development projects or poverty alleviation

funds) but of promoting democracy, a "new activity

which the aid agencies and NG0s [originally] embarked

[upon] with some trepidation and misgivings," but by

the early 1990s this raison d'etre "[came] of age" (Ot

taway, 2003: vi). Others, however, see them as agents of

global capitalism-a "Trojan horse of neoliberal glo

balization" (Wallace, 2003)-to facilitate the entry of

foreign investment and the domestic operations of mul

tinational corporations and, in the process, to help some

achieve their imperial dream of world domination.

THE EMERGENCE OF A GLOBAL CIVIL

SOCIETY: THE POLITICAL DYNAMICS

OF ANTI-GLOBALIZATION

The measures associated with neoliberal policies in the

1990s led to a dramatic increase in social inequalities

disparities in the global and Nor th-South distribu

tion of wealth and poverty, marked by an extension

and deepening of existing poverty and a social polar

ization between the rich and the poor. In the 1990s,

this "inequality predicament" (as the United Nations,

in a 2005 study, defines it) assumed grotesque pro

portions. In a world of spreading poverty, neoliberal

policies produced a new class of multi-billionaires, the

clear "winners" of globalization. In 1996, according to

Forbes magazine, there were 793 of them, but within

a year the number of multi-billionaires had grown to

946. Today Forbes 2015 lists 1,826 billionaires, up from

a then-record 1,125 in 2008. Thirty-four per cent of

these super-rich are Americans. In the US, there were

just 13 billionaires in 1985 at the dawn of the neoliberal

era. Today, after close to three decades of free-market

casino capitalism, there are 615, a small group repre

senting the top 0.01 per cent of the US population that

has managed to appropriate at least 25 per cent of the

wealth produced over the past two decades.2 But some

emerging economies are quickly scaling the rankings:

China was in second place with 213 billionaires (12 per

cent), adding 71 new billionaires in the last year alone;

India had 90 (5 per cent); Russia had 88 (5 per cent);

and Brazil had 54 (3 per cent) (Forbes, 2015; Wikipe

dia, 2015).

228 PART II I International Development Actors

PHOTO 12.1 I An Informal street monument In Buenos Aires commemorating protestors killed during political

demonstrations In Argentina, 2001.

The UNDP (2001) has estimated that a roomful

of these super-rich, some 358 people, dispose of the

equivalent income of 45 per cent of the world's poorest

(3.5 billion) who have to subsist on less than $2 a day,

a statistic that the UNDP understandably finds "gro

tesque" and others see as criminal. The total wealth of

the world's richest individuals (Forbes's list of billion

aires), representing a one-hundred-millionth of the

population, increased by 35 per cent to $3.6 trillion in

2010-more than the total wealth of the world's poor.

In other words, poverty is the product of the same poli

cies and the same system that generated a very unevenly

distributed wealth: wealth for the few, the "winners" of

globalization, and poverty for the many, the "losers."

This grotesque situation can be traced out not only

at the level of international relations between rich and

poor countries but inside wealthy countries such as the

US that are dominated by the power of money-and

the political power wielded by a ruling class of incred

ibly wealthy financiers and super-billionaires (Dom

hoff, 2011). According to Domhoff and the respectable

business magazine The Economist (21 Jan. 2012: 31),

while the richest 1 per cent of Americans accounted

for 10 per cent of the national income in 1980 and 15

per cent in 1990, already by 2007 they had managed to

appropriate up to 34.6 per cent of the country's wealth.

Up to 94 per cent of all the financial wealth created over

the past two decades was appropriated by this class of

the super-rich, while the purchasing power of average

household income over the same period had substan

tially declined, pushing millions into poverty.

The reign of untrammelled free-market capitalism

over the past three decades and the neoliberal policies

that the World Bank describes as "pro-growth" and

"pro-poor" not only produced mass poverty but have

made some individuals incredibly rich. However, the

"losers" in the global competition for wealth-or the

victims, to be more precise-have not been passive in

their response to neoliberal globalization. They have

responded by forming social movements in opposition

to these policies, in resistance against the dynamics of

globalizing capital. These movements have taken dif

ferent forms in the North and the South. In the Global

South, they have been generally led by indigenous com

munities, peasant farmers, and rural landless workers

who have been the major targets and victims of "glo

balization." The working class, both in its waged/for

mal and its unwaged/informal forms, is also its victim.

But the capacity of the workers to mount either a defen

sive or an offensive struggle has diminished dramati

cally over the past two decades, which has meant that

the leadership of the popular movement in the Global

South now rests with landless rural workers, peasant

farmers, and indigenous communities.

As for the North (the rich industrial socie

ties, mostly in Europe and North America), the

anti-globalization movement that emerged and took

form in the last decade of the twentieth century was

based in the major urban centres and was rooted in

the middle rather than working class; and it has pre

dominantly taken the form of opposition to the power

and agenda of corporate capital, although in 2011 it

re-emerged in the US as the Occupy movement. Un

like the South, where anti-globalization is directed

against the neoliberal policies of governments, the

anti-globalization movement in the North has been

most visible in counter-summits to the GS summits of

the most powerful and richest countries, and protests

at the periodic gatherings of the World Trade Organ

ization (WTO) and other such organizations that rep

resent the interests of corporate capitalism, and at the

World Social Forum, which annually brings together

thousands of anti-globalization activists represent

ing hundreds of civil society organizations, to dis

cuss problems and debate strategy.3 Strictly speaking,

neither this broad anti-globalization movement nor

the more recent 2011 Occupy movement against the

super-rich, the 1 per cent who are estimated to have

appropriated up to 90 per cent of the wealth and in

comes generated in the US over the past two decades,4

is against globalization as such but rather against

its neoliberal and anti-democratic corporate form

(see Chapter 6). In this context, anti-globalization

12 I Veltmeyer: Civil Society and Development 229

can be seen as a movement formed in the search for

"another world," participatory democracy, a more

ethical form of globalization, a more equitable and so

cially inclusive and participatory form of society and

development-a democratic alternative to neoliberal

globalization and corporate power, free-market capi

talism, and imperialism.

In the spring of 2007, the UK Ministry of Defence

published a report (Global Strategic Trends 2007-2036)

warning that the whole system of global capitalism,

and with it the new world order, could well be brought

down by the mounting forces of resistance. The report

argues that excessive inequalities will likely lead to a

"resurgence of not only anti-capitalist ideologies . .. but

also populism and the revival of Marxism" (2007: 3). It

expresses particular concern that the widening global

divide in wealth and income has spawned a mass global

justice movement that threatens to unite the most di

verse forces of resistance and opposition to neoliberal

globalization.

The meaning of this anti-globalization movement,

and the growth of a transnational or global civil society

committed to the search for "another world," is subject

to continuing debate. Some see it as a palliative. Oth

ers see it as the salvation of humanity on a fast road to

self-destruction. But there is no question that it might

very well scuttle the best-laid plans of the new world

order architects for imperial rule.

CIVIL SOCIETY AND LOCAL

DEVELOPMENT

The search for a new development paradigm acquired

a particular vigour in the 1980s with the turn towards

a "new economic model" prioritizing the free market.

Proponents of the new paradigm visualize develop

ment as community-based and localized, reaching be

yond the state and the market into the localities and communities of the rural poor. The goal in this context

is to advance development that is human in form, sus tainable in terms of the environment and livelihoods,

socially inclusive and equitable, participatory-and

initiated "from below," from within civil society as op

posed to "from above" or "from outside."

To some extent, this paradigm shift has to do with

a long-standing concern with giving development a

230 .L�F.1 1i I International Development Actors

PHOTO 12.2 I A street demonstration in Mexico of citizen groups and workers against the neollberal policies

of the government is met by a police barricade.

social dimension. From the beginning, the study of de

velopment was dominated by economics, in which the

"social" and the "political" are often abstracted from

analysis, treated as "externalities" in a process viewed

in strictly economic terms. But in the new paradigm,

the social is given more weight, even with regard to

capital, the sum total of society's wealth (or income

generating assets). Economists had formulated the the

ory that economic development was based on capital

accumulation and advanced by increasing the rate of

savings and productive investment. However, "capital"

in this theory was defined purely in economic terms

money invested in the design of new technology, the

purchase of labour power, and the transformation of

natural resources into commodities or tradable goods.

Within the framework of the new paradigm, however,

society's productive assets ("capital") are also conceived

in social terms-that is, as the norms, institutions, and

organizations that promote trust and co-operation

among persons in communities and in the wider soci

ety. Initially advanced by several sociologists (notably

James Coleman and Pierre Bourdieu), this notion of

,,,,,,:1,ii �,1r,t,: l was elaborated by leading development

scholars such as Robert Chambers and Robert Putnam.

This was the thinking in the 1980s. In the 1990s, the

concept of social capital took on a new life, supported

and advanced by all manner of scholars, international

organizations, and policy-makers in their development

discourse. At issue in this discourse was an alternative

way of conceiving "development" and fighting the war

against world poverty (Durstan, 1999: 104). More spe

cifically, the proponents of this approach claim that the

accumulation of social capital based on norms of trust

and reciprocal exchange, and a culture of social soli

darity, can produce public goods, facilitate the "consti

tution of sound civil societies," and constitute the poor

as "social actors," empowering them to act on their own

behalf. As an asset that the poor have in abundance

(their only asset, one could add, besides their capacity

to labour), social capital promotes self-development of

the poor in their localities and communities, alleviat

ing the socio-economic (and psychological) conditions

of their poverty.

Robert Putnam's book Making Democracy Work

(1993) served as the catalyst for this interest in social

capital as a research and policy tool. But the rapid

spread and ubiquity of the notion in academe, and

its wide-ranging applications in research, policy for

mulation, and practice, have been followed by serious

questioning and several concerns. First, what is strik

ing about the concept of social capital is not only the

extent of its influence but its enthusiastic acceptance

by both scholars and policy -makers. This is evident in

the World Bank's notion of social capital as "the glue

that holds society together," as the "missing link" in an

analysis of the development process (Solow, 2000).

Second, despite the plethora of survey articles that

litter the intellectual landscape, the concept is notori

ously difficult to define. Most recent contributions to

the literature acknowledge this before adding a defini

tion of their own to suit their purpose. The ambiguity

of"social capital" is reflected in the suggestion that it is

merely a metaphor or a heuristic device and, with re

gard to the World Bank's formulation, is based on a vi

cious circle of tautological reasoning without any basis

in empirical fact (Portes, 1998).

Third, the concept of social capital is used to de

scribe and explain virtually anything and everything,

from the networks formed by the poor, the sick, the

criminal, and the corrupt to the social dynamics of

the (dys)functional family, schooling, community de

velopment, work and organization, democracy and

governance, collective action, the intangible assets

of the social economy, "the analysis and promotion

of peasant-level development," or, indeed, any aspect of

social, cultural, and economic activity across time and

place-everything, it would seem, except the norms,

12 I Veltmeyer: Civil Society and Development 231

institutions, and social networks formed by those who

constitute what the Australian documentary filmmaker

and award-winning journalist John Pilger (2003) terms

"the new rulers of the world," the class that runs the

global economy and makes its rules.

The final concern about social capital has to do with

ideology and politics. W hat is missing in the analysis

informed by the notion of social capital is any concern

for the structure of economic and political power. The

concept of social capital appears to serve analysts and

policy-makers in the same way that postmodern social

theory serves analysis: as a means of eluding in thought

what for most people is all too real-the dynamic

workings of the world capitalist system. The power re

lations that determine life for most people are inverted:

what is essentially a class struggle over the allocation

of society's productive resources, a matter of state and

economic power, is transmuted into empowerment-a

feeling of power gained by individuals through partic

ipating in decisions (such as how to spend the poverty

alleviation funds that come their way) that affect their

livelihoods and supposedly improve the physical qual

ity of their lives. The point is that empowerment means

changing oneself (how one feels about one's self ) rather

than changing the system.

Another criticism is that the concept of social cap

ital is ideologically all too convenient for the powerful

and is politically demobilizing. In this connection,

Harriss (2001) and others argue that making people

responsible for their own development falsely implies

that they were responsible for their problems, such as

poverty, which draws attention away from the operat

ing structures of the economic and social system. With

its focus on "civil society," social capital ignores the dy

namics associated with the formal structures and insti

tutions of society's political economy, particularly that

of state power.

Critics argue that the way in which the concept of

social capital is used has a demobilizing effect on the

dynamics of radical change. Local development built

on the basis of social capital brings limited improve

ments, with even more limited or no changes in the ex

isting distribution of "capital" in the form of land and

related resources or money in the form of investment

capital or credit. Access to these resources-arguably

the major factors of economic development-remains

in the hands (and institutions) of the rich and powerful,

232 PART II I International Development Actors

while the poor and powerless are encouraged to exploit

their own rather limited resources and to do so without

challenging the structures of economic and political

power. Some critics regard social capital and empow

erment as illusory-not that they are false assumptions

but rather a trick used by the rich and powerful to pre

serve their wealth and keep the have-nots at bay.

NGOs: CATALYSTS FOR

DEVELOPMENT OR AGENTS OF

OUTSIDE INTERESTS?

The major expression of civil society in the 1980s was

the voluntary private association or non-governmental

organization, formed in what at the time was defined

as the "third sector" (as opposed to the "private sector,"

composed of profit-making economic enterprises, and

the "public sector," organizations and enterprises set up

by the government).

At the beginning of the decade, there were relatively

few such organizations, most of them voluntary associ

ations to provide poverty relief or to assist communities

in their adaptation to the forces of change. By the end of

the decade, however, these non-governmental organi

zations had mushroomed, responding to the vacuum

left by the retreating state, assuming responsibilities

that it had hitherto fulfilled. W hile in 1970 there were

barely 250 development NGOs working in Latin Amer

ica, it is estimated that by the end of the 1990s the num

ber had grown to tens of thousands, organized to assist

poor communities in the quest for self-development

as well as to assist citizens in the struggle to prevent

the violation of human rights, advance women's equal

ity, protect the environment, and take on other such

concerns of the urban middle class. Political sociolo

gists, armed with a postmodern political imagination,

saw this development as the emergence of "new social

movements" (Escobar and Alvarez, 1992) concerned

with a multitude of issues, not just with state power or

transformative social change.

NGOs were enlisted by international organizations

such as the World Bank as strategic partners in the war

on poverty to act as intermediaries between the provid

ers of financial and technical assistance and the poor

communities ravaged by the forces of modernization

and abandoned by their governments (at the behest

of these same international organizations, it could be

added). "Development" here is conceived within the

optics of a new paradigm that valorizes "popular par

ticipation" and grassroots self-development initiated

"from below" with the support of civil society.

To create an appropriate institutional framework

for an alternative form of development, the development

associations involved in international co-operation

promoted a policy of administrative decentralization

in developing nations. This policy was incorporated

into a new economic model, together with the struc

tural reforms mandated as the cost of admission into

the new world order: privatization, financial and trade

liberalization, deregulation of markets and private eco

nomic activity, democratization, and good governance.

The NGOs were recruited not only to mediate be

tween the aid donors and the poor communities but to

promote the virtues of private enterprise and reform.

By the 1990s, the marriage between capitalism (the

free market) and democracy (free elections) had been

consummated, with the NGOs preparing the bridal

chamber. In the process, the NGOs helped to dampen

the fires of revolutionary fervour among the rural poor,

who were encouraged to turn away from the confronta

tional class politics of the social movements.

There are two fundamental theoretical perspec

tives on the NGOs in this context. One is to see them

as catalysts of an alternative form of development that

is participatory, empowering of women and the poor,

equitable and socially inclusive, human in form, and

sustainable in terms of both the environment and live

lihoods. Other scholars, however, take a less sanguine

view of these development NGOs, viewing many of

them not as change agents but as the stalking horse of

neoliberal globalization-a "Trojan horse" for global

capitalism-the paid, if at times unwitting, agents of

US imperialism (Wallace, 2003). Proponents of this

view argue that NGOs do not serve the interests of the

rural poor as much as the interests of their masters,

the new "rulers of the world," a transnational capital

ist class composed of corporate CEOs, financiers, and

major investors-the guardians of the new world order

and its billionaire beneficiaries.

The argument of these scholars is that NGOs are

enlisted as front-line soldiers in the war on poverty, in

the localities and communities of the poor, to provide

12 I Veltmeyer: Civil Society and Development 233

PHOTO 12.3 I Informal sector employment: A tuk tuk driver waits at Angkor Wat, Cambodia.

what assistance (poverty alleviation funds) might be

available and, in the process, to instill respect for the

virtues of capitalism and democracy. The war on pov

erty, it is argued, is simply a charade to mask the real

agenda: to create a world safe for capital-to facilitate

the entry of foreign investment and the multinational

corporations. The implicit mandate of these NGOs, it is

further argued, is to help turn the rural poor away from

joining social movements and engaging in the confron

tational politics of direct action against government

policy: to encourage them to seek change and improve

ments in their lives not by challenging the power struc ture but by turning inwards-to change not the system

but themselves (by "empowering" them to act on their

own behalf )-and to seek improvements and change

in the local spaces of the power structure rather than

challenging the power itself. That is, NGOs are seen as

unwitting agents of outside forces and interests, help

ing to depoliticize the poor in their struggle for change.

CIVIL SOCIETY AND MULTINATIONAL

CORPORATIONS

As multinational corporations move into Latin Amer

ica to take advantage of the extraordinary economic

opportunities involved in the extraction and sale on

the world market of natural resources and commod

ities, there is increasing pressure on governments to dampen the voice of civil society organizations work

ing to hold these governments and foreign firms ac

countable for their actions. In this context the primary role ofNGOs and other civil society groups and organ

izations has been to serve as intermediaries-to inter

mediate between the communities, on the one hand,

and the governments and companies, on the other-to

hold the latter accountable for any damage their oper

ations might do to the environment, ensure respect for

the culture and human rights of community members,

234 PART II I International Development Actors

and ensure the engagement of the companies with both the governments and the communities.

However, the actual dynamics of this intermedi ary role have not been without controversy and debate. On the one hand, some NG0s and other civil society groups and organizations have proven themselves ca pable of holding governments and companies account able for their actions. In this context NG0s and other civil society groups and organizations have formed ties with local communities to assist them in their conflicts with the mining companies and have mounted global campaigns against the most symbolic cases to create awareness and hold the mining companies accountable for the negative socio-economic impacts of their oper ations. In this context, there is increasing pressure on governments to dampen the voice of civil society or ganizations working to hold the foreign firms account able for their actions. On the other hand, many NG0s and civil society groups have been more concerned with smoothing the operations of extractive capital and to work with governments in ensuring "commu nity engagement." In this context, civil society organi zations tend to be aligned with the foreign companies and the governments in their shared concern with suc cessful project completion. Indeed, in many instances civil society takes the form of NG0s that are set up by the governments or companies, or funded by them. An example of this dual role of NG0s in the development process is given in Box 12.2.

DEVELOPMENT BEYOND

NEOLIBERALISM: CIVIL SOCIETY

AND THE STATE

The problem with the term "civil society" is that it is so nebulous as to make analysis and prescriptions for action difficult. It includes all manner of social organi zations, whose role in the development process must be carefully assessed. For the sake of this assessment, and to facilitate analysis, it is possible to break down "civil society" into three sectors:

i. A complex of associational-type organizations (as sociations formed for a common purpose, such as environmental protection, to advance the status of

women, or to promote development or respect for human rights). The anti-globalization movement in the North is an amalgam of such organizations. For the most part, they are located in the cities and are middle-class-based.

2. Community or grassroots organizations, making up the "popular sector" of civil society. The Landless Workers' Movement (MST) in Brazil is an example of this type of civil society organization ( CS0 ).

3. Private-sector interest groups or profit-oriented or ganizations. This sector includes the capitalist eco nomic enterprises and multinational corporations that until the 1990s were excluded because they were seen as a large part of the problem.

This chapter has already discussed the role of the first sector, which includes northern development NG0s, the main component of the middle-class sector of civil society activism. (In some contexts, as in India and Latin America, for example, "the new politics" or the politics of the New Left would be included in this grouping.) As for the third, these private-sector organ izations are normally excluded from the discourse on development, primarily because as a rule they do not have a development agenda. But in 1989, the UNDP launched a campaign to incorporate the private sector into the development process. For this effort, they used the ideological cover of a more inclusive "civil society" discourse (Mitlin, 1998).

This leaves open for discussion the role of the sec ond sector, namely, grassroots social organizations formed in the localities and communities of the poor. CS0s in this sector arguably have the greatest potential for constituting themselves as "actors." They consist of organizations targeted by international donors and northern NG0s as the object of aid policies and poverty alleviation funding (micro projects). They include social movements, a more politically oriented form of popu lar organization concerned with bringing about social change through social mobilization and direct action.

The MST (Movimento dos Trabalhadores Rurais Sem Terra or Landless Workers' Movement) in Brazil is a good example of this type of organization. It is ded icated to improving the access of its members to the land, using the politically confrontational tactic of "oc cupation," as well as organizing for agricultural pro duction on the land, a concern that requires a working

12 I Veltmeyer: Civil Society and Development 235

BOX 12.2 I NGOs as Drivers of Community Engagement To Ensure Successful Project Implementation

CURRENT EVENTS

Case studies show that an investor's willingness and ability to work with governments and local commu

nities from the outset is paramount for successful project completion. The examples of the Toromocho

copper mine owned by Chinalco in Peru and Andes Petroleum in Ecuador highlight this lesson particularly

well.

In Peru, Chinese state-owned enterprise (SOE) Chinalco's Toromocho mine also borders the Tropical

Andes Biodiversity Hotspot. In 2007, Chinalco inherited a commitment to relocate the 5,000 residents

of the existing city of Morococha to make way for the mine construction. Morococha is a former mining

camp and its water and soil have been badly contaminated from decades of nearby mining operations.

Prior to Chinalco's purchase of this project, the Peruvian government was expected to build a new town

for the residents, but Chinalco took on the obligation as part of the investment. While the old Moroco

cha had communal latrines and a limited water supply, "Nueva Morococha" promises a modern water

and sanitation system. Perhaps most importantly, the move was largely voluntary and the product of

dialogue and negotiation among community members, their elected authorities, the central government,

and the foreign investor (in this case a Chinese company)-considered the first example of voluntary,

participatory community relocation in modern Peruvian history. While it has not been without problems

(for example, Chinalco offered each moving family a title to their new homes, but the municipality has

delayed issuing them) and there continue to be a number of holdouts, it represents a step forward in

Peruvian mining community relations, and a community consultation process that was mediated by a

civil society organization (Sanborn and Chonn, 2015).

In Ecuador, however, the community consultation process has not gone so smoothly. Andes Petro

leum was given new concessions in early 2014. Ecuador is the only South American country where major

Chinese investments exist in an area with extremely high biodiversity in four different species groups

as well as traditional indigenous territory, so its respect for social and environmental safeguards are

especially important. Until recently, Andes Petroleum (a joint venture between Chinese SOEs Sinopec and

CNPC) has had better community relations than most of its competitors (including Ecuadorean SOEs), with

fewer protests due to contamination or unfulfilled social obligations. But its real challenge lies ahead, as

its current expansion has begun under acrimonious conditions without effective community consultation,

as it is alleged by activists that the Secretary of Hydrocarbons (SHE) circumvented state obligations un

der international law to indigenous communities by obtaining only the approval of the Sapara president

instead of seeking the majority approval of the Sapara and Kichwa communities. It is highly probable

that the services of some civil society organization will be sought to avoid further conflict and ensure

successful project implementation (Ray and Chimienti, 2015).

relationship with the state. Of course, there are less po

litical, more social forms of grassroots organizations as

well, such as Via Campesina, a transnational grouping

of some 88 peasant and indigenous organizations from

at least 25 developing countries (Desmarais, 2007). For

such organizations, some closely linked to the anti globalization movement, their relationship with the

state is critical, although it is characterized more by dia

logue and co-operation than by the conflict that defines

the relationship between most social movements and

the state.

The relationship between the state and organiza

tions such as the MST is characterized as much by con

flict as by co-operation, because it tends to be marked

236 PART II I International Development Actors

by dispute and pressure rather than by partnership and dialogue. To push for change and to increase pres sure on the state, social movements-and the MST represents an excellent case study of this point-often form alliances with groups and organizations in other

sectors of civil society. In the 1990s, for example, the MST expanded its ties to diverse solidarity and advo cacy networks, such as the World Social Forum and Via Campesina, that make up what many regard as an emerging "global civil society" (see Box 12.3).

BOX 12.3 I Brazil's Landless Workers' Movement CURRENT EVENTS

The Movimento dos Trabalhadores Rurais Sem Terra (MST) is a grassroots movement of rural landless workers (peasants) in Brazil formed to bring about land reform through direct collective action-by oc cupying land that is not in productive or social use and thus subject to expropriation under the 1988 constitution. Over the past two decades the movement has evolved into the largest and most powerful social movement in Latin America, allowing hundreds of thousands of landless small peasant farmers and their households to reclaim their connection to the land and their rural livelihoods.

Conditions for the emergence of the MST could be found in the late 1970s with the rise of liberation theology and pressure from the Catholic Church for the government to address a fundamental issue of land reform-a condition of landlessness for an estimated one million families headed by small peasant farmers. Isolated struggles occurred in rural areas as the impoverished peasantry grew more desperate and began to occupy state land. Officially born in 1984, the MST scored a major victory in 1988 when the constitution was changed to mandate land redistribution.

Over the course of the land struggle the MST evolved to encompass not only a strategy of social mobilization and direct collective action (land occupations) but a social organization of some 60 food co-operatives, a complex of small agricultural industries based on local production, and an organization committed to providing its members a system of alternative education and health services. The MST's literacy program involves 600 educators who work with both adults and adolescents. The movement also monitors 1,000 primary schools in their settlements, in which 2,000 teachers work with about 50,000 children.

The MST opposes previous governments' neoliberal policy regime, gross corruption, and more gener ally the system that has resulted in an extreme concentration of wealth. Its alternative "Popular Project" includes a program of agrarian reform focused on small, self-sufficient, and environmentally friendly col lectives and an end to IMF and World Bank debt repayments in favour of social spending at home. In gen eral, the MST continues to challenge the tenets of neoliberalism: "there is no economic or social reason that impedes every Brazilian having access to land, work, dignified housing, quality public schools, and food. But we need to have the courage to change our government, rethink economic policy and challenge the profits of the powerful" (Manifesto to the Brazilian People, Delegates of the 4th National Congress of the MST, 11 Aug. 2000).

With the support of Via Campesina, an international social movement of peasant farmers (camp esinos), the MST has evolved into a powerful force of global and local resistance against the dominant model of agricultural production based on large-scale and capital-intensive corporate farming, leading the opposition to the neoliberal model used by governments both in Brazil and in many other countries to guide macroeconomic policy and advance capitalist global production. For its work in leading the global struggle against this model the MST has received a number of international awards, including the Right Livelihood Award and an education award from UNICEF.

As for the relationship between the state and

grassroots csos, whether non-governmental or so

cial movement in form and action, it is difficult to

generalize. One pattern is for social movement-type

organizations-such as the MST, Latin America's larg

est and most dynamic grassroots movement-to take

on the central government in the demand for social

change. Other grassroots social organizations, in con

trast, tend to work with the state at the level of local

governments (see Box 12.1). At this level, one can find

many cases of "good practice" as well as "local devel

opment theory."

GLOBALIZATION, THE STATE,

AND CIVIL SOCIETY

A conclusion reached by some analysts of develop

ment is that neoliberal globalization is dysfunctional,

unethical, and unsustainable (see Chapter 6). The

benefits of neoliberal globalization are appropriated

by the few, a small group of super-billionaires, while

its social costs are borne by the vast majority, many

of whom are dispossessed, excluded, or impover

ished in the process. In the theory of globalization

the benefits of the economic growth generated by

the free market will eventually trickle down to the

poor. But this is evidently not the case. Apart from

the super-rich the only apparent beneficiaries of the

globalization process are the "global middle class,"

who, on the basis of their education, are able to posi

tion themselves favourably in the world market and

thus improve their life chances. Most of the world's

urban and rural poor have neither the opportuni

ties nor the education of this middle class, and thus

are socially excluded from any benefits of economic

globalization.

Another conclusion, more directly related to the

topic of this chapter, is the need for a better balance

between the market and the state-to restore the ca

pacity and authority of the state to regulate private eco

nomic activity and restrict the power of big capital, as

well as the freedom of private interests, and to do so

for the public good (Ocampo, Jomo, and Khan, 2007).

This does not necessarily mean a return to the welfare

and development state. Although the government and

12 I Veltmeyer: Civil Society and Development 237

regulatory apparatus of the state needs to be reinsti

tuted, it is evident, too, that it needs to be given an en

tirely new form (see Chapter 7).

People need to assert their "right to develop

ment" and to organize-both to empower themselves

to act in their collective interest and to advance the

local, regional, and national development of soci

ety as a whole. This means that the rights of private

property need to be restricted, particularly regarding

the appropriation of an excessive share of wealth and

income. These resources should be shared and dis

tributed more equitably. It also means the abolition

of class rule-i.e., reducing the capacity and power of

one class, by virtue of its property entitlement (own

ership of the means of social production), to set the

rules and control who gets what. Above all, it means

that civil society should be strengthened and that the

relationship between the state and civil society should

be democratized.

SUMMARY

This chapter explored the notion of "civil society." In

the 1990s the term "civil society" was incorporated

into development discourse as it sought to allevi

ate poverty and to effect social change and "devel

opment" in the societies of the Global South on the

periphery of the world capitalist system. In this dis

course, civil society, a complex of non-governmental

organizations, appears as a fundamental agency of

social change, replacing the state in this regard. The

NGOs, which make up part of civil society and work

within it, have become a major object of debate. Some

see them as agencies of democracy and participatory

development in the struggle for progressive social

change. Others, however, see them as agents of the

World Bank and other international organizations

(as well as of governments in the Global North), en

gaged in the project of "international co-operation"

for the purpose of economic and social development

as defined by these major proponents of globalization.

At the same time, grassroots social movements in the

Global South, such as the MST in Brazil, have entered

the discourse to work for a different, and more equi

table, world.

238 PART II I International Development Actors

QUESTIONS FOR CRITICAL THOUGHT

1. How is civil society constituted-in response to objective changing conditions and trends or as a means of

bringing about these conditions?

2. What is the role of civil society in the social change and development process in mediating between donors

(and outside forces) and the localities/communities of the poor?

3. Are NGOs a positive factor in the development process? Whose interests do they primarily represent-those

of the donors and the guardians of the new world order, or the groups that are socially excluded, marginal

ized, and poor?

4. What is the best way to advance the interests of the socially excluded, marginalized, and poor-by joining

(and encouraging the poor to join) anti-globalization movements for social change or to serve as strategic

partners of overseas development associations and their so-called "war on poverty"?

5. Is it possible for development NGOs to support or facilitate self-development of the poor outside the program

of international co-operation-without serving as strategic partners of the development associations or mul

tinational corporations and without any funding from them?

Bebbington, Anthony, Samuel Hickey, and Diana C. Mitlin,

eds. 2008. Can NGOs Make a Difference? The Challenge

of Development Alternatives. London: Zed Books.

Craig, D., and D. Porter. 2006. Development beyond

Neoliberalism? Governance, Poverty Reduction and

Political Economy. Abingdon, UK: Routledge.

1. The term "civil society" dates back to the

eighteenth-century Enlightenment, when moral phi

losophers such as Adam Ferguson invented the term to

distinguish more clearly between "society" and "gov

ernment" in their writings about "progress." But the

term "civil society" disappeared from the map of social

scientific discourse until it was resurrected in the 1980s

by a generation of social scientists concerned once again

with creating a new and better form of society-this

time liberated from Soviet authoritarianism as opposed

to the class-based and elitist monarchy that was char

acterized by a ruling, landowning aristocracy, serfdom,

monarchy, and an all-powerful church.

2. It is evident that Bill Gates and others who made

their fortunes via technical innovations or wealth/

Keane, John. 2003. Global Civil Society? Cambridge:

Cambridge University Press.

Munck, Ronaldo. 2007. Globalization and Contestation: The

New Great Counter-Movement. London: Routledge.

Veltmeyer, Henry. 2007. Civil Society and the Quest for Social

Change. Halifax: Fernwood.

job-generating industries or services are in a distinct

minority. The vast majority of the world's billionaires

used the money of others and speculation to build their

fortunes. Many, as in Russia, built their fortunes by

looting public assets, pillaging the state's accumulated

assets, stealing, and using speculative investment and

commodity trading-in construction, telecommunica

tions, chemicals, real estate, agriculture, vodka, foods,

land, media, automobiles, and airlines.

3. On this anti-globalization movement see, among oth

ers, Engler (2007).

4. On the Occupy movement see, among others, Thomp

son (2011) as well as the Wikipedia entry "Occupy

Movement." Note that Wikipedia most often is an un

reliable source of relevant data and studies in this field.

BIBLIOGRAPHY

Desmarais, A.A. 2007. La Via Campesina: Globalization and

the Power of Peasants. Halifax and London: Fernwood

and Pluto Press.

Domhoff, W. 2011. "Wealth, income, and power. Who rules

America?" www2.ucsc.edu/whorulesamerica.

Durston, J. 1999. "Construyendo capital social comunitario."

Revista de CEPAL no. 69: 103-18.

Engler, M. 2007. Defining the Anti-Globalization Movement.

Thousand Oaks, Calif.: Sage. http://democracyuprising.

com.

Escobar, A., and S.E. Alvarez. 1992. The Making of Social

Movements in Latin America: Identity, Strategy, and

Democracy. Boulder, Colo.: Westview Press.

Forbes. 2015. "Inside the 2015 Forbes billionaires list: Facts

and figures." www.forbes.com/sites/kerryadolan'2o15/

o 3/02/inside-the-2015-forbes-billionaires-list-facts

and-figures/. Accessed 20 August 2015.

Gibler, J. 2006. "Scenes from the Oaxaca rebellion." ZNet,

4 Aug. https://zcomm.org/znetarticle/scenes-from-the

oaxaca-rebellion-by-john-gibler/

Harriss, J. 2001. Depoliticising Development: The World Bank

and Social Capital. New Delhi: Left Word Books.

Hayden, R. 2002. "Dictatorships of virtue?" Harvard

International Review 24, 2: 56-61.

Kamat, S. 2003. "NGOs and the new democracy: The false

saviours of international development." Harvard

International Review 25, 1: 48-59.

Mitlin, D. 1998. "The NGO sector and its role in strengthening

civil society and securing good governance." In

Armanda Bernard, Henry Helmich, and Percy Lehning,

eds, Civil Society and International Development. Paris:

OECD Development Centre.

Ocampo, J.A., K.S. Jomo, and Sarbuland Khan, eds. 2007.

Policy Matters: Economic and Social Policies to Sustain

Equitable Development. London and New York: Orient

Longman and Zed Books.

Ottaway, M. 2003. Democracy Challenged: The Rise of Semi

Authoritarianism. Washington: Carnegie Endowment

for International Peace.

Petras, J., and H. Veltmeyer. 2013. Social Movements in

Latin America: Neoliberalism and Popular Resistance.

Basingstoke, UK: Palgrave Macmillan.

12 I Veltmeyer: Civil Society and Development 239

Pilger, J. 2003. The New Rulers of the World. London: Verso.

Portes, A. 1998. "Social capital: Its origins and applications

in modern sociology." Annual Review of Sociology

24: 1-24.

Putnam, R.D., with R. Leonardi and R.Y. Nanetti. 1993.

Making Democracy Work: Civic Traditions in Modern

Italy. Princeton, NJ: Princeton University Press.

Ray, R., and A. Chimienti. 2015. "A line in the equatorial

forests: Chinese investment and the environmental

and social impacts of extractive industries in

Ecuador." Boston: Boston University Global Economic

Governance Initiative Working Paper 2015-17.

Sanborn, C., and V. Chonn. 2015. "Chinese investment in

Peru's mining industry: Blessing or curse?" Boston:

Boston University Global Economic Governance

Initiative Working Paper 2015-9.

Solow, R. 2000. "Notes on social capital and economic

performance." In Partha Dasgupta and Ismail

Serageldin, eds, Social Capital: A Multi-faceted

Perspective. Washington: World Bank.

UK Ministry of Defence, Development Concepts and

Doctrine Centre. 2007. Global Strategic Trends 2007-

2036. www.dcdc-strategictrends.org.uk.

United Nations Development Programme (UNDP). 2001.

Human Development Report 2001: Making New

Technologies Work for Human Development. New York:

UNDP.

- -. 2014. The New Extractivism: A Model for Latin

America? London: Zed Books.

Wallace, T. 2003. "NGO dilemmas: Trojan horses for global

neoliberalism?" In Socialist Register 2004. London:

Merlin Press.

Wikipedia. 2015. "List of countries by the number of US

dollar billionaires." https://en.wikipedia.org/wiki/

List_of_countries_by_the_number_of_US_dollar_

billionaires. Accessed 20 August 2015.

World Bank. 1994. Governance: The World Bank Experience.

Washington: World Bank.

- -. 2004. Partnerships in Development: Progress in the

Fight against Poverty. Washington: World Bank.

China and the Emerging Economies Jing Gu

LEARNING OBJECTIVES

• To understand changing international develop

ment objectives.

• To gain knowledge about China's new develop

ment activism. • To understand factors underpinning co-operation

among BRIGS countries.

• To acquire critical awareness of new institutions

in international development backed by China and

the emerging economies.

J., Workers fix steel rail track sections to concrete sleepers at the Kathekani T-girder and rail sleeper manufacturing plant, which makes parts for the construction of the new Mombasa-Nairobi Standard Gauge Railway (SGR) line in Tsavo, Kenya. By providing an alternative to roads, the 1,100-kilometre (684-mile) Chinese-financed railway will slash the time and cost of transporting people and goods between East Africa's landlocked nations. I Source: Riccardo Gangale/Bloomberg via Getty Images

INTRODUCTION

For much of the last century, the world economy and the

world of states have been dominated by the economic

and political power and influence of the United States

and Western economies. For many observers, however,

the twenty-first century is already showing signs of a

significant shift towards "emerging economies." China

has captured the headlines with its dramatic rise to be

come the world's second largest economy and, in the

expectations of many, will soon overtake the United

States to claim the top ranking. However, emerging

economies are to be found not only in East Asia but

also in South Asia, Africa, Latin America, Eurasia, and

Eastern Europe. This process of change is perhaps most

evident in the coming together of the BRICS countries

(Brazil, Russia, India, China, and South Africa), while

other economies showing significant growth and eco

nomic resilience in recent years are regarded as poten

tially forming a further wave of emerging economies in

Southeast Asia, Eurasia, and Central America.

Emerging economies are widely regarded as

driving global growth. Nonetheless, the role and sig

nificance of the emerging economies is subject to

widespread debate. On the one hand are arguments

that these economies offer a break with the past. With

their own histories of colonial legacy, impoverishment,

conflict, and eventual political stability, recovery,

and growth, these countries, proponents claim, have

a closer understanding and empathy with the needs

and aspirations of the Global South and the billions

of people in developing countries. As a consequence,

supporters believe they can bring a new approach to

critical issues such as international sustainable devel

opment. On the other hand, critics argue that little is

different, in practice, in the way these economies act

in other developing countries, leading some political

leaders and commentators in developing countries to

label them as new colonialists.

Whichever school of thought one adheres to,

these economies, with their growing strength, are

having an increasingly significant impact on interna

tional development as emerging powers with global

reach, importance, and influence. For some, they bring

new international development voices and perspec tives, perhaps distinct from those of Western powers.

Emerging powers are engaged in their own continuing

13 I Gu: China and the Emerging Economies 241

development journey, wrestling with inequities and

exclusion. They are also important international devel

opment actors. This chapter explores the development

trajectories of the emerging powers and the interna

tional development implications.

The chapter seeks to develop a sound understand

ing of the domestic and international development

issues central to the emergence of these "economies"

or "powers." It explores domestic development impli

cations of their high-speed growth, and assesses their

impact on trade, finance, and investment and their

growing role as international donors. The discussion

begins with an analysis of China's approach to interna

tional development before turning to look at the BRICS

and other emerging economies.

CHINA'S APPROACH TO

INTERNATIONAL DEVELOPMENT

China's role in international development and the im

plications of that role are subject to intense interest

and debate. China's role is immensely controversial,

and divides opinion in the global development com

munity. Critics argue that, fundamentally, China is

really no different from any other state when it comes

to fulfilling its national economic, political, and

strategic interests and goals. China's core interest is

in accessing raw materials and exporting its labour

and goods, while doing little or nothing to counter

human rights abuses, corruption, or structural ine

qualities in its trade and corporate practices. Positive

commentaries, however, are more accepting of the

so-called "win-win" nature of China's development

relations in Africa and elsewhere, pointing to major

infrastructural investment improving the sinews of

developing-country economies and improving daily

lives through social welfare, health, and agricultural

technical assistance.

The Chinese government has responded to inter

national criticism that it lacked a clear policy statement

on international development and that its approach,

therefore, remained opaque. In an attempt to present just such a statement and indicate its evolving think

ing on this issue, the government published its first

White Paper on Foreign Aid in April 2011 (MOFA,

2011), with a second issued in July 2014 (MOFA, 2014).

242 PART II I International Development Actors

The W hite Papers offer useful insight into China's per

spective on international development, one that differs

significantly from Western concepts of development in

ideational, even ideological, character and set out the

principles of foreign aid with "Chinese characteristics"

(Box 13.1). These differences mainly derive from Chi

na's own experiences of development and as a recipient

of foreign aid.

The Chinese government, agencies, and enter

prises have been on a steep learning curve as the coun

try's development assistance and technical support to

its growing number of development partners in Africa

and beyond accelerates, broadens, and deepens (Zhou,

2014). But the formulation of China's approach, a pro

cess that had been developing for a few years prior to

the issue of the W hite Papers, is highly complex, in

volving the legacies of China's own historical expe

riences, current and anticipated national economic,

political, and strategic interests and needs, and the

evolving pattern of relationships with other countries

and global institutions. This is set within an overarch

ing commitment to ensuring that China's development

is peaceful and contributes to building a harmonious

world.

To some extent, China's present policy delibera

tions and international development practices carry the

legacy of its turbulent past. As a consequence, China's

understanding of"development" has differed markedly

from that of many Western countries. W hile the gen

eral Western model is economic as well as ideological

CRITICAL ISSUES

(human rights, social welfare, democracy), the Chinese

emphasis is on "a wider remit of economic relations"

(Gu et al., 2014). In other words, China seeks develop

ment partnerships as embedded in the broad spectrum

of economic co-operation through trade and invest

ment (particularly in infrastructure capacity-building),

as well as in project support and provision of technical

know-how.

In addition to this legacy factor is that of institu

tional policy-making. China's foreign aid policy and

implementation responsibilities are spread across four

agencies: the State Council, the Ministry of Finance

(MOF), the Ministry of Commerce (MOFCOM), and the

Ministry of Foreign Affairs (MOFA). The State Council

seems to be the body that oversees all aid programs

by China, while MOFCOM is the leading agency that

co-ordinates China's foreign policy, such as review

ing requests that come from the Ministry of Foreign

Affairs that require approval, conducting feasibility

studies for aid projects, choosing aid implementers,

and conducting project reviews. This raises organiza

tional challenges of co-ordination, capacity, and re

sources, as well as other difficulties cited by officials

including a lack of personnel, limited resources, and

the need for a long-term strategy. The institutional in

frastructure is further complicated by the myriad of

additional agencies engaged in the "development" do

main. These include the financial agencies such as the

Export-Import Bank of China (Exim Bank); various

administrative units at the provincial and municipal

BOX 13.1 I Foreign Aid with Chinese Characteristics

China's first White Paper on Foreign Aid in 2011 emphasized five principles of its foreign aid:

helping recipient countries build up their self-development capacity;

imposing no political conditions;

adhering to equality, mutual benefit, and common development;

remaining realistic while striving for the best;

keeping pace with the times and paying attention to reform and innovation.

The 2014 White Paper re-emphasized these five aspects and added one more, "keeping promises," an

indication of China's expressed commitment to its overseas development projects.

levels of government; state-owned enterprises and the

rapidly growing legion of private firms operating in

developing countries; and peak industry associations

such as the China-Africa Business Council and bilat

eral friendship associations exercising their network

ing influence.

In recent years, China's development approach,

both domestically and internationally, has evolved

into a broader, deeper, and more complex framework

and process (Shambaugh, 2014; Gu et al., 2014). One

aspect of this has been greater emphasis placed on pro

moting and strengthening people-to-people relation

ships. The Chinese government's long-established and

preferred approach to its relations with development

partners has been that of government-to-government

or par ty-to-par ty. This is partly a reflection of Chi

na's own domestic political culture, which involves

a closely regulated civil society, and partly a reluc

tance to become too deeply involved in the domes

tic affairs of its partners, potentially compromising

its non-interventionist principle. However, there has

been criticism in Africa and elsewhere of China's ret

icence to extend its breadth and depth of engagement.

Chinese awareness of this difficulty has led to active

encouragement of greater contact between Chinese

societal organizations and their counterparts in part

ner countries. A number of these organizations are

semi-civil (i.e., civil society organizations that operate

in the civil domain but remain regulated, approved,

and monitored by government ministries) bilateral

"friendship associations," lodged within the overar

ching framework of the Chinese People's Associa

tion for Friendship with Foreign Countries (CPAFFC),

which since 1954 has been responsible for promoting

friendly relations with other countries. According to

the CPAFFC, it has established "46 China-regional or

China-national friendship organisations and estab

lished friendly cooperation relationships with nearly

500 nongovernment organisations and institutions in

157 countries" (CPAFFC, n.d.).

China's foreign aid principles are quite distinct from those of many Western states and international

institutions (see Box 13.1). Comparing China's current aid policy with the Eight Principles for Economic Aid and Technical Assistance to Other Countries set out

by China's former Premier Zhou Enlai in 1964, there has been a clear coherence and consistency in China's

13 I Gu: China and the Emerging Economies 243

aid policy across the intervening decades, as well as a

clear divergence with Western aid principles. Recent

analyses, however, have examined the evidence that

the Chinese government may, after all, be quietly ad

justing its stance on non-interference to a gradually

more "creative involvement" approach, particularly in

Africa, namely respecting sovereignty, consulting on

an equal footing, and promoting peace and impartial

dialogues (Lu, 2012). The motivation for such a pro

found change is subject to debate. For some, the ration

ale is to be found in the heightened exposure and risk

to Chinese nationals and enterprises as they increase

their presence exponentially across Africa (SIPRI, 2014:

vi). Alternative explanations argue that changes actu

ally are a response by Beijing to mounting international

criticism.

The Role of the Chinese State and Businesses in Development Co-operation

China's business sector has become increasingly in

volved in development projects, fuelled in part by its

"Going Global" strategy initiated in 2000. This policy

used state incentives, including preferential trade ac

cess, low interest loans, and Exim Bank support, to

promote the outward investment and global expansion

of China's leading firms and state-owned enterprises

(S0Es).

The engagement of S0Es in development projects

is driven both by China's need for raw materials to

fuel its domestic growth and by the quest to build up

China's own multinational firms in new markets. S0Es

have been involved in labour-intensive manufacturing

and infrastructure construction in developing coun

tries, often through joint ventures with local private

and state-owned enterprises, and have become highly

influential in developing countries (see Chapter n).

However, beyond multinational S0Es, a new wave of

Chinese private firms and small and medium enter

prises (SMEs) also is moving abroad (Gu, 2009). These

SMEs are driven by growing domestic competition to

seek new market opportunities overseas, but they do so

with little co-ordination and direction from the state,

and often are underprepared for operating in foreign

and new environments.

244 PART II I International Development Actors

In recent years, China's economic and political

influence in low-income countries has increased dra

matically, necessitating enhanced dialogue among dis

parate development partners. China can offer as advice

its recent first-hand experience in achieving economic

growth and reducing poverty. For developing countries,

these lessons and strategies are more relevant than the

experiences of many Development Assistance Com

mittee (DAC) donor countries. Some of China's current

challenges are also relevant for developing countries, in

cluding those related to income inequality, agriculture,

technological innovation, and the environment. China's

global reach and influence have become more signifi

cant, and nowhere is this more evident than in Africa.

CRITICAL ISSUES

CHINA IN AFRICA

As China's economy has experienced dramatic growth,

there has been major growth in both public and private

investment in Africa. In the short span of a few years,

between 2009 and 2012, the growth rate of Chinese in

vestment reached a remarkable 20.5 per cent. This was

matched by the increase in trade. In 2012, the total vol

ume of China-Africa trade reached US$198,49 billion,

a year-on-year growth of 19.3 per cent (Government of

China, 2013). This expansion in China's engagement

with Africa is subject to widespread debate. Opinion

is polarized between those, such as He Wenping, who

see China's involvement and contribution as adding

BOX 13.2 I Growing Wave of Chinese SMEs in Africa

A new dynamic presence is spreading rapidly and widely across Africa: that of Chinese private enter

prises. For these firms, Africa is "the last golden land" of economic opportunity. Why are these enter

prises investing in Africa? What are their perspectives on Africa's investment climate?

A growing number of firms are contradicting the stereotype of Chinese firms in Africa. Pushed by

intense competition within China's domestic marketplace and pulled by the glint of new opportunities,

many small, private manufacturing firms are heading to Africa quite independently of the Chinese gov

ernment. They take this opportunity in a "three jump" pattern. The first jump is doing business with

Africa from China, via exports; the second jump is investing in production in Africa; and the third jump is

investing in industrial parks in Africa. This last jump involves Chinese firms clustering in new business

parks, collaborating with each other in co-ordinated production.

Yet simultaneously, and contrary to popular perceptions, they are most concerned about their com

petitive position in China and not by competition from African or other foreign firms in Africa. Estimates

of the number of Chinese enterprises in Africa vary considerably. In 2006, the Chinese Export and Import

Bank estimated that there were about 800 Chinese companies operating in Africa. Approximately 85 per

cent were privately owned. However, evidence from Chinese embassies and the Chinese business com

munities in Africa indicates that China now has over 3,000 enterprises in Africa. According to one senior

Chinese official: "To be honest, we don't know how many firms, especially private firms, invest overseas.

There are only a limited number of companies registered with us [in our province]. In fact, I believe that

there are more firms. I hope they come to register with us."

The Chinese business sector in Africa, thus, has "enclave" characteristics: enterprises are located

together in business parks. They are relatively optimistic about the investment climate in Africa, espe

cially regarding those obstacles created by governments and public policy. However, Africa's prospects

for successfully harnessing the Chinese private firms to its development goals depend on how each adapts to the other.

Source: Gu (2011) at http://www.ids.ac.uk/files/dmfile/RsWp365.pdf.

substantial, and much-needed, value-added to Africa's

development (He, 2013). Proponents, including South

African President Jacob Zuma, see China's engagement

as a means by which Africa can begin to reduce its de

pendency on Western aid and dispense with what are

viewed as paternalistic conditionalities forced upon re

cipients (see Chapter 9). They see China as treating Af

rican states "as equals" and point to China's investment,

trade, and aid, particularly in building infrastructure,

as significant contributors to Africa's development

(RT, 2015).

Critics and skeptics, such as Nigerian Central

Bank Governor Lamido Sanusi, view the relationship

as more "zero-sum" than "win-win" (Sanusi, 2013).

Here the primary motivation for China's renewed in

terest in Africa is its intensifying need for energy and

raw materials and for access to Africa's markets for its

manufactured products. The critical headlines ques

tion China's attitude towards African states accused

13 I Gu: China and the Emerging Economies 245

of human rights violations and corruption. But the

criticisms are also much broader and include the use

of imported Chinese workers; poor labour and envi

ronmental practices; the undercutting of local firms; a

weak commitment by many Chinese firms to corporate

social responsibility; and a poor record in knowledge

and skills transfers. It is argued that China's growing

presence puts at risk all the advances in "good govern

ance" made by the international donor community in

recent decades (Mwiti, 2015).

The role of the Chinese state as the central

driving force and co-ordinating agency behind

this increased presence has come under particular

scrutiny as China's presence in Africa has grown (Li

and Farah, 2013; Piketty and Goldhammer, 2014;

Stiickelberger, 2015; Strauss and Saavedra, 2009;

Brautigam, 2009; Taylor, 2009; He, 2007). Recently,

more attention and recognition has been paid to the

diverse range of agencies involved and the lack of

,_..,"""'"',.____.!!l X

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ni :,

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x 6 'g 0..

0.. <(

PHOTO 13.1 I Former Chinese Premier Wen Jiabao embraces a local chief during a visit to Accra, Ghana, In 2006.

246 PART II I International Development Actors

co-ordination between the Chinese state, business,

and other organizations operating in Africa. This

suggests that the argument that the Chinese state

essentially directs Chinese business investment in

Africa is overstated (Gu et al. 2016).

As this readjustment of focus was emerging, so

was a reassessment of Africa's role. Established wisdom

regarded Africa as a passive recipient, reactive rather

being than proactive in its engagement with China

and other foreign powers. In the revised perspective,

the emphasis is on the active role that African govern

ments play in negotiating investments in development

(UNECA, 2013; UNCTAD, 2013; Mohan and Lampert,

2013; EU, 2014: article 18), a perspective expressed by

the African Union's new vision and strategy, Agenda

2063. As the United Nations Economic Commission for

Africa (UNECA) argues in relation to the BRICS coun

tries, "The continent also needs to be assertive when

negotiating, and to pursue all areas of cooperation to

stimulate production and entrepreneurial develop

ment" (UNECA, 2013: 3-4).

PHOTO 13.2 I A Chinese store in Abidjan, Cote d'Ivoire.

China's Africa Policy and practice is framed by

its foreign policy principles of "Peaceful Development

and A Harmonious World" (Government of China,

2005) and the values of political equality, mutual

benefit, "win-win" co-operation, cultural exchange,

and non-interference. In seeking to understand this,

it is necessary to recognize the importance of the

close relationship between China's domestic circum

stances and its external relations. China's principle of

non-interference in the sovereign affairs of its African

partners stems from China's own intolerance for for

eign interference in its affairs. Moreover, the legitimacy

of the Chinese state depends on its ability to deliver

economic development to its citizens (Gu et al., 2008).

Therefore, while Western states that value civic and

political rights talk about "good governance," Chinese

officials, who prioritize social and economic rights, talk

of "effective governance." Thus, China's approach to

governance in Africa is to pay close attention to those

who are, in practice, effective partners and to build ca

pacities rather than pressing for the rule of law as a first

priority. China's emphasis on building infrastructure,

including transport, hospitals, and education, reflects

this prioritization of building capacities. The Chinese

slogan "Development first, governance second," under

lines China's belief that overcoming state fragility is

primarily about improving economic conditions rather

than being preoccupied with political governance per

se (Gu and Carty, 2014: 57-69).

China has been using diverse means to build rela

tions with developing states, particularly in sub-Saharan

Africa, for example, through direct co-operation with

the African Union (AU), the African Development Bank

(AfDB), and other regional banks (Gu et al., 2014). Chi

na's leaders have conducted intensive and extensive di

plomacy over the past 25 years, undertaking numerous

tours of Africa. It is notable that the first overseas tour

of President Xi (elected in 2012 for an initial five-year

term and limited to two terms) after his appointment

was to Africa. A successful platform has proved to be

the Forum on China-Africa Cooperation (FOCAC), es

tablished in 2000 to advance partnerships between the

African Union and China. As Lan Xue notes, referring

to the 2014 FOCAC meeting: "The forum has also be

come an important platform in extending 'summit

diplomacy' to 'people diplomacy' through the involve

ment ofNGOs and business people" (Xue, 2014: 40).

China is not a new donor, but its objectives, mech

anisms, and levels of finance have changed significantly.

Over the course of its own development experience, its

international co-operation has evolved from the ideo

logically motivated foreign aid of the Mao era to a more

pragmatic and flexible strategy involving aid, trade, and

Chinese companies "going out" (Shen, 2014). China's

leadership has called for the establishment of new multi

lateral institutions and the deployment of a comprehen

sive development strategy more reflective of the changing

global economic landscape and emerging economies.

Africa and China are central to each other's de

velopment co-operation, combining economic, polit

ical, strategic, and cultural interests. This is evident

not only in the substantial number of diplomatic visits

made to Africa by Chinese leaders, government offi

cials, Party representatives, and business and techni

cal co-operation staff and African visits to China, but

in the economic statistics. Reciprocal trade flows grew

to US$200 billion in 2013, making China Africa's larg

est trading partner. In his visit to Ethiopia, Nigeria,

13 I Gu: China and the Emerging Economies 247

PHOTO 13.3 I Chinese Premier Li Keqiang and

Kenyan President Uhuru Kenyatta, 10 May 2014, at

State House in the capital, Nairobi.

Angola, and Kenya in May 2014, Premier Le Keqiang

announced China's intention to increase this to

US$400 billion by 2020 and to increase investment

stocks to US$100 billion, compared to US$25 billion

in 2013. China would also top up the China Africa

Fund, run by the China Development Bank to invest

in firms in Africa, by an extra US$2 billion to take

its total capitalization to US$5 billion (China Daily,

2014). Building on these measures, the May 2014 an

nual meeting of the African Development Bank ap

proved the creation of an Africa Growing Together

Fund (AGTF), a US$2 billion trust fund created by

China to enable the Bank to respond to the grow

ing needs of its regional member countries and pri

vate-sector clients (AfDB, 2014).

NEW DEVELOPMENT THINKING

AND INSTITUTIONS

Consequently, the most important moves made by

China, marking a critical watershed in the direction

and focus of its foreign and development policies, are

the "Belt and Road" initiative and establishment of the

Asian Infrastructure Investment Bank (AIIB). Together,

these ambitious initiatives represent the first substantial

intervention by China into the institutional architec

ture of global trade, investment, and financial govern

ance. The importance of these initiatives is not solely

248 PART II I International Development Actors

economic and financial; it is fundamentally political,

representing the first major step by China in acting

upon its discontent with the failure to reform the ex

isting global economic and political system. The AIIB,

in particular, is a declaration of intent, a challenge and

alternative to what it views as Western-centric global fi

nancial institutions. For China, the AIIB can bring ben

efits in terms of demonstrated international leadership

and a new avenue through which to extend its influence.

The Belt and the Road Initiative

The One Belt, One Road initiative (OBOR) is China's

flagship initiative begun under President Xi Jinping.

It brings together two separate but interrelated ele

ments: a land-based Silk Road Economic Belt (SREB)

and a sea-based twenty-first-century Maritime Silk

Road (MSR). The initiative was born in September and

October 2013 during President Xi's tours of Central

Asia and Southeast Asia. The SREB includes countries

situated on the original Silk Road through Central

Asia, West Asia, the Middle East, and Europe. The

initiative envisages the integration of the region into

a cohesive economic area, which will involve invest

ing in infrastructure, widening cultural ex changes,

and increasing trade. In addition to this area with its

obvious historical roots, the SREB also includes South

Asia and Southeast Asia. The MSR is intended to

complement the SREB by building partnerships and

collaborative relations with countries in Southeast

Asia, Oceania, and North Africa as the "Road" trav

erses the South China Sea, South Pacific, and Indian

Ocean.

The initiative is rich in colourful rhetoric, but

there is a firm and substantial commitment already

evident to help bring the projects to fruition. China

has made significant investments totalling approx

imately US$100 billion. Of this, some US$40 billion

has been allocated to the Silk Road Fund (SRF), an

other US$50 billion to the new Asian Infrastruc

ture Investment Bank (AIIB), and US$10 billion to

the BRICS New Development Bank. In President Xi

Jinping's view, the SREB and MSR "will promote the

trade and investment between China and the coun

tries along the routes, promote the connectivity and

new-type industrialisation of countries along the

routes, and promote the common development of all

countries as well as the peoples' joint enjoyment of

the fruits of development. We hope that the annual

trade volume between China and the countries along

the routes will surpass 2.5 trillion USD in a decade or

so" (MOFA, 2015).

BOX 13.3 I One Belt, One Road Priorities

1. Policy Co-ordination

Macroeconomic and development policies, and large-scale projects

2. Facilities Connectivity

Improving land and sea transportation links, ensuring more integrated energy networks and pipelines

3. Unimpeded Trade

Removing investment and trade barriers to facilitate the movement of goods and services, including

through creation of free trade zones

4. Financial Integration

Building a "currency stability system, investment and financing system, and credit information system

in Asia"; establishing new financing institutions

5. People-to-People Links

Promoting academic links, cultural exchanges, and tourism, sharing information on threats, e.g.,

epidemics

Asian Infrastructure Investment Bank (AIIB)

The Asian Infrastructure Investment Bank (AIIB) has

emerged from an idea first put forward by China in

2013 (Table 13.1). This led to discussions and the formal

launch of the proposal in Beijing in October 2014, with

the Articles of Agreement signed in late June 2015. As

its title indicates, the purpose of the AIIB is to provide

much-needed investment in infrastructure capacity in

the Asia-Pacific region. The establishment of the AIIB

is a direct response to the identified critical need for

large-scale investment in many Asia-Pacific countries.

According to an assessment by the McKinsey Global

Institute, the projected global investment for 2015-30 is

around US$57.3 trillion (Wall Street Journal, 2015). The

founding of the AIIB also grew from China's assessment

that the heavy dominance of the US and Japan in the

ADB and the lack of progress on reform meant that an

alternative financial institution was needed.

13 I Gu: China and the Emerging Economies 249

The AIIB, perhaps unsurprisingly, has proven to

be highly controversial. This became evident follow

ing press reports that the US opposed the setting up

of the AIIB and was conducting quiet, and ultimately

unsuccessful, diplomacy to pressure US allies such as

Indonesia, Australia, and the UK not to sign up for AIIB

membership. US officials were alleged in a New York

Times report to have lobbied against the development

bank to persuade other countries not to join it. The

newspaper also stated that "[t]he United States Treas

ury Department had criticized the bank as a deliber

ate effort to undercut the World Bank and the Asian

Development Bank, international financial institutions

established after World War II that are dominated by

the United States and Japan .... Washington also sees

the bank as a political tool for China to pull countries

in Southeast Asia closer to its orbit, a soft-power play

that promises economic benefits while polishing its

image among neighbors anxious about its territorial

claims" (New York Times, 2014).

TABLE 13.1 I Potential Strengths and Problems for the AIIB

Potential Strengths

The Bank has a specific focus: specializing in Asia and infrastructure development.

It promises to be more open, transparent, and inclusive than existing multilateral development banks (MOBS).

The AIIB's founding documents and statements also commit to high professional standards.

This new institution provides an opportunity for innovation, particularly in terms of the issue of voting rights.

Potential Problems

The most challenging aspect of the Bank's work will be to ensure that it balances what is likely to be heavy demand while maintaining its stated principles and standards.

The Bank will have to address quickly the need to embed openness, transparency, and inclusivity into its organizational culture and governance systems.

As a principal driving force behind the founding of the Bank, China's role in its day-to-day operations will have to be further clarified and justified, especially in relation to other members such as India.

Just how the AIIB is going to work effectively with other MOBS presents a further challenge that requires prioritization in its establishment phase.

The specific regional focus is intended to help promote The AIIB will have to consider its role and promotion of economic growth, encourage integration, and mobilize its members' interests in the wider global institutional financial resources across the region. architecture.

The Bank also provides for public-private partnerships.

By drawing together regional members into this new multilateral tier of co-operation, it is hoped that existing tensions and differences can be reduced or overcome.

The Bank's structure will need to provide robust project monitoring and problem-solving response mechanisms.

250 PART II I International Development Actors

Scholars, the Chinese government, the World

Bank, the African Development Bank, and, more re

cently, US President Barack Obama, however, have ar

gued that the AIIB should not be seen as competition

to other development initiatives but should be viewed

as an opportunity for co-operation (Li and He, 2015).

Infrastructure needs cannot be filled solely by the AIIB

and, thus, co-operation and complementarity with

existing institutions are key to the effectiveness of the

AIIB. Nonetheless, the AIIB is not just about develop

ment finance but is the first real attempt by the Chi

nese government to institutionalize its financial power

globally (Griffith-Jones et al., 2016). The AIIB will not

necessarily transform development finance, but it

will transform multilateral engagement and global

governance.

China and the Post-2015 Sustainable Development Goals (SDGs)

Within the post-2015 debate, China has fo cused on

the question of how to balance economic develop

ment, social justice, and environmental protection.

Like other middle-income countries, it also has em

phasized common but differentiated responsibili

ties (CBDR), i.e., differential responsibilities within

a universal agenda (Leong, 2014), and has stated

that at this point in its development, South-South

co-operation should serve as a supplement rather

than as a replacement for North-South co-operation.

In addition to supporting the co-ordinating position

of the UN, China sees the AIIB and OBOR assuming

crucial roles in post-2015 global development by pro

viding critically needed infrastructural investment

and important focal points for common develop

ment (Gu, 2015).

In the post-2015 world, sustainable development

is a top priority for global development agendas and

requires increased commitment and co-operation in

development efforts. This era provides opportunity

for experts in international relations, trade, climate,

and domestic policy to engage in conversation about

how each country, as part of a global effort, can con

tribute to fair and sustainable growth. While the world

can count on China to continue to be innovative with

new approaches to and partnerships for development,

China intends to continue to adhere to its principle of

"common but differentiated responsibilities" into the post-2015 era.

THE BRICS AND OTHER EMERGING

ECONO IES

What is an emerging economy or power? As we have

already suggested, there are contending answers to this

question. Some commentators are even skeptical of the

whole idea that there are emerging economies, arguing

that while there may well be a strong case for applying

the term to China, there is little substance to extend

it to other economies as their trajectories of growth

and the foundations of political stability are relatively

recent and tentative. Such reservations notwithstand

ing, the BRICS and other emerging economies are a

prominent part of the contemporary landscape of in

ternational development and a deeper understanding

of their role and significance is necessary.

The first point to make is that the range of coun

tries actively engaged in international development

co-operation today is much broader and diverse than

many might imagine (also see Chapter 6). Beyond

the activities of the BRICS, South-South dialogue and

co-operation has also involved bilateral and multilat

eral initiatives with next-wave "emerging economies"

such as Indonesia, Mexico, and Turkey. Turkey, for

example, has had a development partnership dialogue

with Africa reaching back to 1998 and held its Second

Turkey-Africa Partnership Summit in November 2014

in Malabo, Equatorial Guinea (RoT, 2014). That be

ing said, it is quite clear that the BRICS countries have

particular characteristics that mark them for specific

attention in the domain of international development.

Beginning from a dialogue process initiated in 2006,

the organization and its members have evolved to be

important actors. In 2001, Jim O'Neill, at that time the

head of Global Economic Research at Goldman Sachs,

coined the acronym "BRIC" as a convenient collective

term and play on words to describe the four economies

he was analyzing in his global economics research pa

per (O'Neill, 2001). As political impetus for a grouping

of these economies, later to be joined by South Africa,

the BRIC acronym gained political and institutional

currency. BRICS has steadily established itself as an im

portant organization on the international stage.

....

Commonalities and Dif ferences

The BRICS countries have a number of commonalities

and convergences in their approaches to the "develop

ment agenda." In terms of commonalities, all the BRICS

members have extensive territories and significant pop

ulations, and have recorded impressive rates of GDP

growth (see Figure 13.2). They accept the idea that the

state has a legitimate and important role to play in do

mestic and international development. Each, with the

exception of the Russian Federation, would classify it

self as a developing country-although Russia still faces

substantial challenges of poverty, inequality, health

problems, and deprivation. Other shared characteristics

include the recent experience of conflict, poverty, and

inequalities; the implementation of successful reforms,

resulting in economic recovery and eventual growth

and political stability; increasing global influence based

in part on their regional dominance; and recent efforts

to establish themselves as new sources of international

development assistance and co-operation. The BRICS

members have also committed to a collective process of

institutionalizing their co-operation.

There is a common belief in the importance of

South-South co-operation. There are two aspects to

13 I Gu: China and the Emerging Economies 251

this co-operation. First, it is seen by the BRICS members

to be supplemental to North-South relations, facilitat

ing triangular development co-operation strategies

and projects between a traditional donor, an emerg

ing donor in the South, and a beneficiary country in

the South. Triangular technical co-operation, defined

by Brazil as establishing agreements with both devel

oped and developing countries "to acquire and dis

seminate knowledge applied to social and economic

development" (Brazilian Cooperation Agency, n.d.) is a

growing component of the emerging architecture of in

ternational development promoted by emerging econ

omies, such as Brazil and China. China, for example,

works with the UK government on development pro

jects in Africa. This approach nests within a substantial

theme of international development co-operation. The

Accra Agenda for Action called for further develop

ment of triangular co-operation. In response, various

organizations and groupings such as ECOSOC, the G8,

the UNDP, and the OECD-DAC have held conferences on

triangular development co-operation.

Second, although supplementary, South-South

co-operation is regarded as vitally important in its own

right, providing an important framework and trajec

tory for developing countries, emerging economies,

......,,..,-...S,_ _____________________ __,

BOX 13.4 I What Are the BRICS?

BRICS is a dialogue and co-operation platform among member states (Brazil, Russia, India, China, and South Africa).

BRIGS started active life in 2009 as BRIC with Brazil, Russia, India, and China and saw South Africa join the group in 2010.

The grouping accounts for 30 per cent of global land, 43 per cent of global population, 21 per cent of the world's gross domestic product (GDP), 17.3 per cent of global merchandise trade, 12.7 per cent of global commercial services, and 45 per cent of the world's agriculture production.

The group holds annual BRIGS summits, rotating through the membership (eight meetings have been held between 2009 and 2016).

BRICS countries have increased their share of global GDP threefold in the past 15 years.

Source: BRIGS: The Strategy for BRIGS Economic Partnership, Official Website of Russia's Presidency in BRIGS. http://en.brics2015.

ru/documents/.

252 f'J\ln n I International Development Actors

and BRICS. South-South co-operation emphasizes

development partnerships and the BRICS grouping

stresses that BRICS are "partners," not "donors." The

principles of South-South co-operation have been very

important in framing how some of the BRICS (particu

larly India and Brazil) define themselves as develop

ment co-operation providers.

In terms of differences, the BRICS members bring

to the grouping very different geographies, histories,

cultures, and values as well as different political sys

tems and economic systems. One major difference in

political terms, quite evidently, centres on "political

democracy" and the way that the term is understood

and practised in the respective BRICS member states

(see Chapter 16). While India is widely recognized as

the world's largest political democracy grounded in a

pluralistic, multi-party, representative governmental

system, Brazil, Russia, and South Africa have laboured

to establish equivalent systems in recent decades, with

Brazil and South Africa both stressing the importance

of democratization in their development pathways at

home and internationally. China, on the other hand,

interprets democracy quite distinctly, retaining the

paramount and "vanguard" role of the Communist

Party as central to the political and social system, both

constitutionally and in practice, while promoting a

market economy. This diversity gives rise to very dif

ferent approaches to the role and purpose of civil so

ciety and non-governmental organizations, as well as

to issues of transparency and accountability, civil and

human rights (freedom of expression and the role of

the press and other media). Such issues of a domestic

nature overflow into international development prac

tices ranging from human rights to corporate social

responsibility and the promotion of good governance.

History plays an interesting and important con

temporary role. For example, Brazil's initial steps in

building development co-operation with states in

sub-Saharan Africa reflected a shared experience of

Portuguese colonialism and the linguistic and cultural

legacies that have remained within the Lusophone

countries. This pattern is also evident in China's rela

tions with African development. China's own experi

ence of Portuguese colonialism, on the island of Macao,

PHOTO 13.4 I BRICS leaders 2014: Russian President Vladimir Putin, Indian Prime Minister Narendra Modi,

Brazilian President Dilma Rousseff, Chinese President XI Jinpfng, and South African President Jacob Zuma.

...

provided China with a legitimate basis with which to establish a "Macao Hub," through which to promote, support, and consolidate its relations with Lusophone countries in Africa and Latin America. Brazil's approach has also drawn upon the historical roots with Africa originating in the European colonial slave trade from Africa, offering Brazil an important theme of shared history and familial roots by which to foster and legitimize its development role in Africa within the South-South co-operation and dialogue framework. The volume of the provision of development assistance also varies, reflecting various factors such as annual rates of growth and changing government, policy, and budget priorities. The recent slowdown in economic growth in Brazil, shifting domestic priorities, and an increasingly commercial character to its development co-operation seem to suggest a drawing-back in its assistance. Other countries, notably India and China, appear to be committed to increasing their assistance provision despite a slowing of their own growth rates (see Figure 13.1). Institutionalizing BR/CS

ls the breadth of issues tackled and the work involved increasing the body of gained infrastructure? BRICS members already have more than 20 institutionalized forms of co-operation, from yearly summits to working groups, addressing international information security, health care, agriculture, science, and technology. Major policy

Brazil

Russia

India

China

South Africa

Japan

0 -

- -

2 4

....J

13 I Gu: China and the Emerging Economies 253

initiatives such as the Contingent Reserve Arrangement (CRA) and the New Development Bank (NDB) are not only key organizational bodies, but are widely regarded as a statement of intent by the BRICS countries to establish substantial alternative financial agencies to those of the IMF and World Bank and to the Western economies. From its first summit in Yekaterinburg in Russia, the central focus of BRICS has been to tackle what the group's leaders hold to be the exclusivity of a Western club of global financial and political institutions; effectively favouring non-BRICS economies and their enterprises and marginalizing the BRICS countries and other emerging economies and their firms. The Joint Statement of the BRICS Countries' Leaders called for a "greater voice and representation in international financial institutions, and their heads and senior leadership should be appointed through an open, transparent, and merit-based selection process" (BRICS, 2009). Reflecting these concerns, the leaders agreed to create a Business Council and, based on a proposal at the fourth summit held in Delhi in 2012, to work towards establishing joint financial institutions of their own. This dialogue eventually led to the CRA and to the 2014 NDB agreement that came into force in July 2015. The group also operates a BRICS Banking Forum and BRICS Exchanges Alliance (cross-listing shares from over 7,000 BRICS companies with a total capitalization of about US$8 trillion). In the view of some observers, "The establishment of BRICS-led MDBs [multilateral

% growth

6 8 10 12

1,. 2001-2011 I,,. 2010-2014 I

FIGURE 13.1 j Average Annual Grnwth Ra.tes for the BRICS a.nd Three Major Developed Economies Source: Walker (2014). Calculated from IMF World Economic Outlook Database, October 2014.

254 PART II I International Development Actors

Brazil

10 20

US$ thousands*

30 40 50 60

Russia

India

China

South Africa

Japan

FIGURE 13.2 I GDP Per Capita for the BRIC� and Three Major Developed Economies

'Based on purchasing power parity.

Source: Walker (2014). Calculated from IMF World Economic Outlook Database, October 2014.

development banks] will be beneficial for global devel

opment to the extent that it helps cover some of the cur

rent infrastructure financing gaps. Moreover, the new

banks organize a 'voice' for EMDCs [ economically more

developed countries] and rebalance representation of

the non-OECD countries in multilateral development

lending. This is likely to speed up reform even in the

established multilaterals. Competition is building for

the existing Bretton Woods system" (Reisen, 2015: 6).

Unsurprisingly, given the interwoven nature of the

international institutional architecture, the agenda of the

BRICS is not solely about economic and financial institu

tional reform but also seeks reform of the United Nations.

The expectations regarding the economic perfor

mance and relative weight of the BRICS countries in

the global economy have been high, and their average

annual growth rates largely met these expectations in

the decade through to 2011. Since 2010, however, there

has been a slowdown in their growth rates, with Brazil

and Russia most affected. Significant strides have been

made in reducing poverty, improving health care and

education, and providing employment with dignity.

Nevertheless, these economies still face substantial de

velopment challenges, reflected in their low GDP per

capita and by the fact that they are recipients of devel

opment assistance as well as providers. Despite this, the

BRICS are a pivotal component in the global economic

system and much rests on their continued performance.

In terms of international development co-operation,

the BRICS have established a declaratory commitment to

addressing issues of peace, poverty, and access to health

care and education for all, as well as to making sure that

global economic growth and sustainable development

are an inclusive process. For example, the first BRIC

summit called for greater international action to deal

with the global food crisis. Nonetheless, up to 2015, the

majority of actions were taken directly by BRICS mem

bers, rather than collectively through the organization.

The BRICS group has yet to formulate its own in

stitutional development policy and strategy. This is

due mainly to two factors. First, as we have already

noted, the initial spur to the creation of BRICS was to

co-ordinate a response to the global financial crisis and

to address the weaknesses in the existing international

economic, financial, and political institutions they be

lieve contributed to the crisis and to a weak response

to it. This has remained a core focus and goal of BRICS

through its several summits. Second, the member

states are relatively new to becoming development ac

tors in their own right and are still working through

their own ideas and understanding of development

co -operation assistance; for some of the members it is

still a work-in-progress and a steep learning curve.

However, three factors are likely to change this

situation: (1) the creation of the NDB; (2) the inter

governmental dialogue on the Post-2015 Sustainable

Development Goals (SDGs); (3) the signing of the Strat

egy for BRICS Economic Partnership. The NDB has at

tracted worldwide attention and is worth examining in

more detail.

The New Development Bank (NDB)

The process of formulating a distinctive BRICS ap proach to international sustainable development is one that might be said to have begun with the 2012 pro posal for a BRICS development bank. The stated aim of the NDB is to "mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries." The primary function of the NDB is to provide lending ( up to an approved limit ofUS$34 billion annually) for pro jects. In focusing on infrastructure, the NDB reflects a widely acknowledged critical need in developing econ omies for infrastructural investment to support sus tainable development and growth.

Are the BRICS Members Really Different?

The central question raised about BRICS is about the extent to which these countries, as a group, represent a new and different approach to international relations and to international sustainable development. The an swer involves both the principles upon which BRICS

13 I Gu: China and the Emerging Economies 255

operates and what it actually does in practice. In terms of the shared or common principles or values ofBRICS, these are noted in the Ufa Declaration issued at the end of the seventh summit in July 2015 in Russia as follows:

principles of openness, solidarity, equality and mutual understanding, inclusiveness and mutually beneficial cooperation. We agreed to step up coordinated efforts in responding to emerging challenges, ensuring peace and security, promoting development in a sus tainable way, addressing poverty eradication, inequality and unemployment for the benefit of our peoples and the international commu nity. We confirmed our intention to further enhance the collective role of our countries in international affairs." (Ufa Declaration, 2015)

China's President Xi Jinping's speech to the sev enth BRICS summit in Ufa, Russia, in July 2015 set out his vision of a BRICS approach emphasizing the need for developing countries to take on more responsibil ity for their own development while BRICS provides assistance in meeting critical capacity-building needs

BOX 13.5 I BRICS New Development Bank (NDB)

The NDB is a multilateral development bank operated by the BRIGS states (Brazil, Russia, India, China, and South Africa) with an initial capitalization of US$50 billion, rising to an eventual US$100 billion.

The NDB is headquartered in Shanghai, with an Africa Regional Centre to be established in Johannesburg, South Africa.

The purpose of the NDB is to "mobilize resources for infrastructure and sustainable development projects in BRIGS and other emerging economies and developing countries."

Each participant country holds an equal number of shares and equal voting rights, and none of the countries will have veto power.

The BRIGS members state that the NDB is not intended to challenge or replace institutions such as the IMF and World Bank, but to support and supplement the work of these organizations, but some observers see the NDB and the same-sized contingent reserve arrangement (GRA) as "institutions that aim to be both competitor and antithesis to the World Bank and International Monetary Fund" (Pizzi, 2015).

The President of the NDB for the first five years is India's K.V. Karnath.

�- -, ' - -

------ - -

256 PART II I International Development Actors

and promotes further South-South Co-operation. In

President Xi's view, "The BRICS nations should also es

tablish a new ty pe of global development partnership,

urge the developed countries to shoulder their due re

sponsibilities, and help developing countries improve

their self-development capability, so as to narrow the

North-South gap, intensify South-South cooperation

and seek self-improvement through cooperation on the

basis of mutual benefit and win-win." Brazil's approach

also stresses the importance of working within the

principles and practices of South-South Cooperation

"as it enhances general interchange; generates, dissem

inates and applies technical knowledge; builds human

resource capacity; and, mainly, strengthens institu

tions in all nations involved" (Brazilian Cooperation

Agency, n.d.).

What does this mean in practice for international

sustainable development? The emphasis. is less on the

traditional or established idea of "foreign aid," a term

and practice believed by the BRICS and other emerging

economies to carry connotations of an unequal rela

tionship based on donors and recipients (see Chapter 8).

This is particularly salient for these economies as they

are, in various ways, recipients of aid as well as contrib

utors. Their approach, therefore, is to move away from

the "donor-recipient" aid relationship to form develop

ment "partnerships." It also means that, while humani

tarian assistance and welfare "aid" are still components

of their relationships with developing countries, the

substantial weight is on capacity-building for self-help

through infrastructural investment and project work,

knowledge and skills transfers through partnerships,

and self-development.

The Principle of Non-Intervention

A core BRICS principle is non-intervention in the do

mestic affairs of their partners, retaining the values

of mutuality and equality of relations. In other words,

the guiding principle is to respect the legal and polit

ical sovereignty of partner states by not intervening

in their domestic affairs. This principle, of course, is

highly controversial and is a focus of pointed critic! m

from thee tablished, "traditional" Western donors and

institutions, which emphasize making assistance con

tingent on a list of domestic reforms. The principle has

a long history, however, including the famous Bandung

Conference of newly independent and non-aligned

states that met in 1954, with a prime contributor to

the declaration from that conference being Chinese

Premier Zhou Enlai, who introduced China's own Five

Principles of Peaceful Coexistence into the conference

debate and final document, principles that remain part

of the political position of China and many developing

countries today. Yet, while the BRICS countries gen

erally adhere to this principle of non-intervention in

their common approach to international development,

it is also a source of differentiation between them,

most notably with respect to South Africa and Brazil.

The South African government and the ruling African

National Congress place significant importance on hu

man rights and democracy in international relations

and development perspectives. Brazil, for its part, also

identifies democracy as a key value and principle in in

ternational development, as does India. India, Brazil,

and South Africa have established their own grouping,

IBSA, that emphasizes democracy as one of its most im

portant principles.

Growing Multilateralism

The development approach of the respective BRICS part

ners shows they share a number of characteristics, such

as regularizing processes of consultation with partners.

Much of this is undertaken on a bilateral, state-to-state

basis, but there are signs of growing multilateralism,

for example, in the Forum on China-Africa Cooper

ation and in the retreat on the theme of "Un.locking

Africa's potential: BRICS and Africa Cooperation on

Infrastructure," held between BRICS and African lead

ers after the fifth BRICS summit held in Durban in

2013, which was focused on the theme of "BRICS and

Africa: Partnership for Development, Integration and

Industrialization."

In addition, the BRICS members are responding

individually to the increased importance of interna tional development by restructuring their interna

tional development bureaucracies. In China, as we

will see below, international development has taken

time to become absorbed into the political agenda. It

has taken hold wiLh extensive deliberation over \'\'bat internati na.l assistance means and the form it should

ta.lee, with the establishment of new research and pol

icy centres and with the publication of the two White

Papers on Foreign Aid. India's growing development co-operation has been consolidated through the crea tion in 2012 of the Development Partnership Admin istration (DPA) within the Ministry of External Affairs. The DPA, organized in three divisions that cover pro ject appraisal and lines of credit, capacity-building and disaster relief, and project implementation, reaches out to countries throughout Asia as well as in Africa and Latin America (Government of India, n.d.). South Af rica has a new co-ordinating agency, the South African Development Partnership Agency (SADPA), under the Department of International Relations and C oopera tion (DIRCO).

Overall, the BRICS and a number of other emerging economies are making an increasing contribution to international development by providing much-needed investment, technical know-how, knowledge, and skills, as well as financial and broader economic and political support. To date, their role remains compar atively small compared to developed economies, but they are catching up rapidly. Many of these economies offer to developing-country partners a common his tory of colonial or semi-colonial experiences, relatively recent independence, poverty and inequality, and con flict, while also presenting recent histories of success ful reform, stability, and growth that are attractive to development partners. Adherence to the principle of non-interference is controversial, particularly with re gard to claims of human rights violations in or, as is often alleged, by partner states. However, along with an unwillingness to travel the path of conditionality for assistance-such as structural reforms, principles of non-interference, equality, and mutuality-and a con tinuing acceptance of the importance of a role of the state in promoting development, all offer a tantalizing alternative to the established sources of development assistance.

CONCLUSION

Global development has reached a critical turning point. In addition to achieving middle-income sta tus, several recipient countries are emerging donors. As the international development community starts down the road of the ambitious post-2015 agenda, China has rapidly expanded its development finance

13 I Gu: China and the Emerging Economies 257

program and has launched new multilateral initiatives. From discourse and pathways of co-operation to new institutions, China has served as an influential driver of shifting development models. With this increasing diversity of actors and development patterns, the inter national development community now faces difficult questions about how to move forward, and beyond aid, together.

The international community adopted the SDGs at the UN Summit in New York in September 2015. At this significant moment, a fundamental ques tion arose as to the salience of the orthodox, largely Western-derived understanding of and operational approach to international development co-operation. How valid is it in the light of the growing importance of the BRICS and other emerging economies? In classic international relations, emerging powers relate to the existing order in three possible ways: by accepting and being absorbed into the system as a status quo mem ber; by seeking a "revisionist" adjustment within the system to match its own interests; or by a more "revo lutionary" rejection of the system in its entirety. How do we classify China and the other emerging econo mies with respect to the international development co-operation regime? These are hard and complex questions to answer convincingly.

Elements of each stance are to be found in China's approach. China is actively engaged in the interna tional development assistance system and in the reg ularized system of institutionalized conferences and policy determination procedures; and China is an in creasingly assertive and vocal advocate for its position and for developing countries. This position suggests a degree of acceptance of the need to work, at least for the time being, with the existing architecture and underly ing principles and values derived mostly from Western origins and precepts.

The BRICS and other emerging countries have been pressing vocally for substantial reforms in the present system, but with limited success. China's approach to aid significantly differs from that of Western donors and is still evolving. Recognition of differences in per spectives behind aid and development remains central to future successful aid co-operation. The institutional context of China's development co-operation is com plex. Western donors and external partners must take these differentiated political roles into consideration in

258 PART I ! International Development Actors

order to effectively pursue initiatives such as trilateral

development co-operation. It is possible that we are

reaching the tipping point where revisionist-reformists

move decisively (perhaps reluctantly) to the final "rev

olutionary" position in rejecting the status quo and re

placing it with an alternative system. The first signs are

already there.

The increasing presence of the emerging econo

mies has raised the question of what kind of develop

ment co-operation we are going to see in the future.

This issue is particularly significant in light of the for

mal agreement on the Sustainable Development Goals

in 2015. These goals call for a global partnership to be

established to mobilize behind the universal nature

of the SDGs and targets. The breadth and scale of the

post-2015 development agenda and the complexity of

the immense challenge of implementation mean that a

multilateral approach is required. The emerging econ

omies and the new perspectives, approaches, and in

stitutions they are bringing with them will need to be

recognized as they form an important part of the global

par tnership.

SUMMARY

1ll_iS chapter has p1·ovided a critical overview of the

growiJ1g iJ11portance and role of China and the emerg

ing economies in international development. It has

provided the reader w:ith grounding in the distinctive

perspectives and approaches of these new development

actors, the innovation they are lnb·oducing, and the

key i ues and debates surrounding tJ1eir expanding

involvement.

For the student reader, the chapter's learning

outcome lie in gaining a greater knowledge and un

derstanding of current devdopment thinking and

practice. Tue inclu ion of this chapter in this volume

recognizes the increasing importance and influence of

these economies in global development. Ihe chapter re

lates to the wider theme of development addressed in

this book, for example, new thinking and practice, the

role of the private ector and the emerging post-2015

international institutional development architecture ,

and the implications of the arrtval of these new devel

opment actors for development practice.

QUESTIONS FOR CRITICAL THOUGHT

1. Where do the emerging economies fit within the field of development studies?

2. How is "development" understood and practised by the emerging economies?

3. How does China as a growing power, investor, consumer, and donor engage with specific regional and global

development regimes?

4. How ha China haped development discourse and the major debates around it?

5. What d es the emergence of China and the BR!CS mean for traditional donors and other development

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cooperation." The Asia Foundation. 21 Aug. http://

asiafoundation.org/in-asia/2013/08/21/engaging-china

in-international-development-cooperation/. Accessed

15 Oct. 2014.

PART Ill

Issues in International

Development

A woman washes her face at a water pump belonging to the public water distribution service in the center of Goma,

Democratic Republic of the Congo, where most of the one million residents of the city do not have clean, uncontaminated tap

water in their homes. Goma lies on the edge of one of the largest soft water reservoirs in the world, Lake Kivu, where it rains

abundantly, but most people have to go to the lake to fetch water and chlorinate it for drinking, or buy some from sellers.

I Source: JUNIOR o. KANNAH/AFP/Getty Images

l I

Debt and Developlllent Josevh Hanlon and Tini Jones

LEARNING OBJECTIVES

To learn that lending has a long history and that

even lending to developing countries goes back

700 years.

• To understand the roots of the debt crises of the

1980s and 2000s, and the similarities between

the most recent financial crisis in the North and

earlier debt crises in the Global South.

• To see how lending to developing countries is

linked to economic cycles and capital surpluses,

and to "loan pushing" and default, and to recog

nize the role of the South as lender to the North.

• To understand the concepts of illegitimate and

odious debt and changes in lending that increase

the liability of lenders.

• Two boys stand near a banner in Siby, Mali, where over 200 delegates from seven countries in West Africa met in 2002

to come up with African solutions to African problems, organized by the Malian branch of the anti-globalization Jubilee 2000

committee, which militates in favour of the cancellation of poor countries' debt. I Source: ISSOUF SAN0G0/AFP/Getty Images

Borrowing and lending are often sensible and neces

sary. Borrowing to cover unexpected expenses or loss

of income, such as through sickness or a bad crop, has

been common for millennia. Capitalism is based on

borrowing for productive investment-a piece of ma

chinery or an irrigation system or simply more stock

that will produce increased income to more than repay

the initial loan. Most large companies and many coun

tries grow with borrowed money. Many people live in

mortgaged houses-rather than save over many years

to build a house, they borrow money and repay it over

many years, and during that period the borrower can

live in a better house.

Banking originated in Babylonia before 2000 BCE,

when temples and palaces provided safe places for the

storage of valuables-initially deposits of grain and

later other goods, including cattle, agricultural imple

ments, and precious metals. By the reign of Hammu

rabi in Babylon (c. 1792-1750 BCE), lending had become

common, and his famous code-the first public written

code of laws-covers banking and debt.

Initially, people would borrow from relatives, tem

ples, or merchants who might provide goods on credit.

Credit-based banking had developed in the Mediter

ranean world by the fourth century BCE. The Roman

Empire developed banking that took deposits and lent

money at interest, but this ended with the decline of

Rome. Modern banking began to develop in the Medi

terranean in the twelfth to fourteenth centuries CE. As

banking systems developed, individuals, kings, compa

nies, and even countries borrowed.

But from the beginning, three issues have domi

nated. First, what happens when the borrower cannot

repay? Can the lender take property from the borrower?

Can the lender force the borrower to work for him or

her? Can the loan become a liability of spouses or chil

dren? The Hammurabi code contains two important restrictions. Article 48 says that if a person owes on

a loan and the crop fails because of lack of water or a

storm, not only does the person not have to make debt

payments in that year, but no interest is paid for that year as well. Article 119 says that a man in debt can give

himself or his wife, son, or daughter in forced labour

to the creditor, but only for three years, after which the

debt is considered paid and the person freed.

Second, what can the lender charge the bor

rower? Interest payments are most common, usually

14 I Hanlon and Jones: Debt and Development 263

a percentage of the outstanding loan each year. The

borrower pays back part of the money borrowed-the

principal-plus interest. The basis of modern com

mercial banking is to take deposits and pay interest

on those deposits and then lend out the money at a

higher interest rate, with the difference between the

two interest rates covering risk of losses for non

repayment and allowing some profit for the bank. This

remains controversial, and usury-excessive interest

rates-has been an issue down through the ages; most

religions allow interest but ban usury. But the Greek

philosopher Plato (427-347 BCE) opposed lending at

interest. The Qu'ran also opposes lending at interest

but permits trading profits and profit from invest

ment, which means that banks should invest in busi

nesses, sharing risk and profit, rather than lending to

them.

The third issue has become more important only

with the growth of capitalism: what happens if an indi

vidual, a company, or a country borrows money for an

investment that proves not to be profitable and the loan

cannot be repaid? Until the mid-nineteenth century in

both the United States and Britain, debtors who failed

to repay were thrown into prison. This was replaced by

bankruptcy laws that allowed most of the assets of the

debtor to be distributed to creditors, thus ending the

debt, even if the assets were insufficient to cover full re

payment. This proved to be one of the most important

provisions of modern capitalism, because it encouraged

business people to take risks without the fear of being

thrown in debtors' prison. Over the twentieth century,

bankruptcy laws became even more liberal, allow

ing individuals to keep their homes and giving more

rights to workers in a company facing bankruptcy

even finding ways to keep a company operating rather

than liquidating it to sell its assets. Thus, lenders have

come to take an increasing share of the risks of modern

capitalism.

LENDING TO DEVELOPING COUNTRIES

Private banks in developed countries have been lend

ing to poorer developing-country governments and

businesses for centuries, and the record has often

been one of default and political intervention. In his

prescient book The Money Lenders, Anthony Sampson

PART Ill I Issues in International Development

(1981: 29-31, 54-6) describes some of the failings of

English kings:

After King Edward I expelled the Jews in 1290

he needed the Italians to finance his wars . ...

To these Italian bankers England was a wild

developing country on the edge of the world,

a kind of medieval Zaire [now Democratic

Republic of the Congo]. Its exports of wool

offered prospects of big profits; but with its

despotic monarchs, its tribal wars and cor

rupt courtiers, it had a high country risk. . ..

But after King Edward III came to the throne

in 1327 he was confident that he could com

pel his own English merchants to finance his

wars; he defaulted on his Italian debts, and

the [Florentine] banks of Bardi and Peruzzi

collapsed.

A century later, King Edward IV's Wars of the

Roses took him deeper into debt. "After trying to re

schedule their debts with the King, the Medici Bank

had to write off 52,000 florins and close their London

office. Rather than refuse deposits," Sampson explains,

the Medicis succumbed to the temptation of seeking

an outlet for surplus cash in making dangerous loans

to princes. "It was a warning relevant to more modern

bankers," comments Sampson.

Four centuries later, London was lending to the

new United States. "London saw it as a very unrelia

ble developing country, with a black record of embez

zlement, fraudulent prospectuses and default," notes

Sampson. But the bankers made loans in any case. In

1842, 11 states, including Maryland, Pennsylvania,

Mississippi, and Louisiana, defaulted. Setting a prece

dent that would be used often in later years, Barings

Bank simply intervened in local politics. In Maryland,

Barings helped to finance candidates in the next elec

tion who were willing to repay. "In the elections in 1846

the 'resumptionists' narrowly won, and soon afterwards

Maryland raised new taxes which enabled it to repay its

debts. The campaign had cost Barings about $15,000;

it was worth it," writes Sampson. Mississippi held out.

By 1929, the unpaid debt was estimated at $32 million,

and as recently as 1980, London banks were still try

ing to get Mississippi to repay the loans it defaulted on

138 years earlier.

Sometimes there was military action in response.

After Mexico defaulted in 1861, Britain, France, and

Spain invaded. France installed Ferdinand Maximilian

as emperor; he lasted only four years and failed to repay

the debts (Eichengreen and Lindert, 1989).

But why do banks lend to foreign governments

when it is potentially easy for them to default? In part,

they do so because many of these loans are profitable for

both parties and are repaid. In his book Manias, Panics

and Crashes, the eminent economist Charles Kindle

berger (2000 [1978]) details his view of economic cycles

and international lending. He argues that each cycle

starts with a period of real growth involving a rise in

profits, often coming from the use of new technologies

or new transportation/communication systems such as

railways. This growth is linked to a rapid expansion of

bank credit. Eventually, money growth outstrips pos

sible productive investments, while investors look for

ever higher rates of profit. Increasingly, money goes

into speculation, and this is often linked to fraud and

swindles. This is the period of " bubbles," or what Kin

dleberger calls "manias." It usually involves interna

tional lending as banks run out of domestic borrowers,

become more desperate to lend, and make higher-risk

foreign loans-just as the Medicis did with Edward IV

in the fifteenth century. Eventually, the bubble bursts,

prices fall, and investors try to sell or to collect on their

loans. This is the period of "panic" as investors all rush

for the exit. The panic feeds on itself, leading to the

"crash." Kindleberger points to the tulip mania of 1634,

the South Sea Bubble of 1720, the cotton and railway

booms of the 1830s, and so on.

The past 250 years have seen four of these cycles:

1. Growth 1780-1820; mania 1820s; crisis 1830s and

1840s.

2. Growth 1850s; mania 1860s; crisis 1870s and 1880s.

3. Growth 1893-1913; mania 1920s; crisis 1930s.

4. Growth 1948-67; mania 1967-79; crises in early

1980s, late 1990s, and 2008, each followed by a new

mania.

The 1870s, the 1930s, and the period from 2008 saw cri

ses triggering major global depressions.

After each cycle, there have been retrospective

complaints of reckless lending and of loan pushing

banks and lending agencies so desperate to lend money

that they encourage foreign governments to take loans

they do not need and encourage borrowers to live

beyond their means. Towards the end of the mania,

borrowers are encouraged to take new loans simply

to repay old ones. With the panic, lending suddenly

stops, borrowers cannot repay, and they default. Fran

cis White, the US assistant secretary of state for Latin

American affairs in the early 1930s, commented that

"in the carnival days from 1922 to 1929, when money

was easy, many American bankers forsook the digni

fied, aloof attitude traditional of bankers and became,

in reality, high pressure salesmen of money, carry

ing on a cut-throat competition against their fellow

bankers, and once they obtained the business, endeav

oured to urge larger loans on the borrowing coun

tries" (Drake, 1989: 43). During the 1920s, according

to evidence before the Senate Committee on Finance,

there were 29 representatives of US financial houses

in Colombia alone trying to negotiate loans with the

government.

In 1973, the US Federal Reserve governor, An

drew Brimmer, noted that "the main explanation" for

the sharp rise in lending to less developed countries

was the "failure of demand for loans from borrowers

in developed countries to keep pace with the expan

sion of credit availability" (Darity and Horn, 1988:

8). Brimmer cited a particular form of loan pushing

that involves a drastic softening of terms-similar to

a drug pusher offering cheap heroin in order to create

addiction. In the mid-197os, international loans had a

negative real interest rate-that is, in real terms (taking

inflation into account), poor countries had to repay less

than they borrowed. Loan pushers in the mania phase

stressed that they were literally giving money away. But

these loans were on variable interest rates, and in the

early 1980s those rates jumped dramatically, setting off

the threat of default and fuelling the panic.

International development lending has two phases.

In the growth period, lending can be profitable and

promote productive investment and growth; indeed,

careful borrowing by poorer countries has accelerated

industrialization and development by allowing invest

ment in infrastructure and equipment that could not

have been afforded otherwise. But in the mania and

loan-pushing phases, when bankers are "high pressure

salesmen of money," poor countries take unproductive loans they cannot repay.

14 I Hanlon and Jones: Debt and Development 265

GOVERNMENTS, POLITICS, THE COLD

WAR, AND THE DEBT CRISIS

Initially, most lending was by banks, but increasingly in

the late nineteenth and early twentieth centuries, loans

were in the form of bonds, which could be sold to indi

viduals and other investors (and which were often highly

speculative or fraudulent). During World War I, the

United States government became a substantial lender

to the countries fighting against Germany. In 1923, it ex

tended the repayment period until 1983 and reduced the

interest rate, but in 1934, in the depths of the Depression,

Britain and five other European countries defaulted. No

further payments were ever made, except by Finland.

The debts are still on the books, and the US Treasury

reported that as of 30 June 1997, they stood at $33.5 bil

lion. Outstanding World War I debts to the US include

$14.6 billion for the UK, $11 billion for France, and $3.2

billion for Italy. But in 2009, the British government con

firmed that it had no intention of paying this debt.

World War II was even more expensive, and in

1945 Britain became the world's largest debtor. J ohn

Maynard Keynes was sent to Washington, and in De

cember 1945 he negotiated the best deal he could get

for Britain-a loan of $3.75 billion at 2 per cent interest.

The final repayment was made only in 2006.

(West) Germany was treated differently than it

had been after World War I. Rather than enforcing

reparations on the defeated country, it received funds

through the Marshall Plan and in 1953 half of its debts

from both before and after the war were cancelled.

Significantly, repayments on the remaining debt were

linked to West Germany having a trade surplus, which

meant its creditor countries had an incentive to trade

with the country (Kaiser, 2013).

The end of World War II brought about four ma

jor changes in global politics and economics (some of

which had their roots in earlier decades):

Decolonization began, and many countries be

came independent.

The Depression of the 1930s and then the war had

made clear that new international institutions

were needed, leading to the creation of the United

Nations and the two Bretton Woods institutions

(BWis)-the World Bank and the International

266 PART Ill I Issues in International Development

Monetary Fund (IMF). The World Bank first lent

for European reconstruction and then to newly in

dependent countries (see Chapter 9).

Major corporations began to arise, increasingly

international and often backed by "export cred

its" (loans given to borrowing governments and

companies to import goods from companies in the

lending country).

The advent of nuclear weapons changed the nature

of war and of empire. Military power and brute

force were no longer the means to conquest, re

placed instead by three options. The first option

was so-called " low-intensity warfare" in which

unacceptable governments were undermined or

overthrown by security services backed by limited

military force. For example, the United States cre

ated or backed opposition movements in Nicara

gua, Angola, and Mozambique. The second option

involved larger wars but limited (more or less) to

single countries, as was the case in Vietnam. The

third, and most important for this chapter, was

the growing use of non-military means of subju

gation-economic power in particular. Thus, loans

became an important way of wielding power.

The first example was US lending to Britain in 1945.

The United States required Britain to move quickly to

free trade and to make the pound convertible to the dol

lar within 15 months. The outflow of money from Britain

was so great that much of the loan was dissipated, and

convertibility was abandoned within weeks. But this was

an early example of the kind of package of conditions that

in the 1970s became known as structural adjustment.

John Perkins, in Confessions of an Economic Hit

Man (2004), describes working for one of the largest

international consulting firms and, indirectly, for the

US National Security Agency from 1971 to 1981. He

was one of a group of people, he writes, whose job was

to produce hugely exaggerated economic growth fore

casts to justify vastly oversized electricity, railway, and

other infrastructure projects that would be financed by

international loans (from both commercial banks and

the World Bank). Some money was siphoned off into

the foreign bank accounts of these countries' leaders to

ensure they would not "notice" that the projects were

indeed white elephants. This strategy had two goals.

First, contracts would go to US engineering companies

(and often the money never left the US). But second,

and much more sinister, was a conscious effort to bur

den the developing country with unpayable debts "so

they would present easy targets when we needed favors,

including military bases, UN votes, or access to oil and

other natural resources" (Perkins, 2004: 15).

The Cold War led to quite extensive lending in order

to prop up and tie client dictators to the Western pow

ers, especially to the United States. One study (Hanlon,

2006) estimated that one-quarter of developing-country

debt consisted of Cold War loans to Western-backed

dictators, such as Joseph Mobutu (see Box 14.1).

THE 1980s DEBT CRISIS

AND HIPC INITIATIVE

In 1970, developing-country debt was $69 billion, which

may seem like a lot of money, but it proved to be quite

small in comparison to what was to come in the following

years. The decade of the 1970s was one of Kindleberger's

mania periods, with a surplus of capital. There was a sharp

increase in loan pushing; in the mid-197os, global interest

rates were 3 per cent lower than global inflation, which

meant that real interest rates were negative-countries

were being told, in effect, that they could repay less than

they borrowed. Over the decade, developing-country debt

increased sevenfold, to $494 billion in 1980. Figure 14.1

shows both total debt stock and what is called "net trans

fer on debt"-that is, new loans minus interest payments

and principal repayments on old debts-which is thus the

actual cash flow into or out of the borrowing country. The

top graph shows the sharp increase in debt, while the bot

tom graph shows that there was a real transfer of money

to developing countries in the 1970s.

But by 1984 lenders had raised real interest rates to

a peak of 12 per cent. In 1982, Mexico could not pay the

interest on its $60 billion debt and defaulted, setting off

a massive debt crisis. Throughout the remainder of the

1980s, debt was constantly being renegotiated, and new

loans and bonds were issued to repay old loans. Most

commonly, the new bonds or loans allowed a longer

time to pay and sometimes lower interest rates. Money

was borrowed to pay even the unpaid interest on old

loans, which meant interest was charged on the interest.

Initially, it was hoped that the crisis was temporary

and that if debt was rescheduled or refinanced, it could

CRITICAL ISSUES

14 I Hanlon and Jones: Debt and Development 267

BOX 14.1 I Congo, Kleptocracy, and the Cold War

General Joseph Mobutu took power in the Congo in 1965, changing the country's name to Zaire. Mobutu

may have been on the West's side in the Cold War, but he was also one of the world's most corrupt dic

tators, and his government was widely described as a "kleptocracy." In 1978, the IMF appointed its own man, Irwin Blumenthal , to a key post in the central bank of Zaire. He resigned in less than a year, writing

a memo saying that "the corruptive system in Zaire with all its wicked manifestations is so serious that

there is no (repeat no) prospect for Zaire's creditors to get their money back." When Blumenthal wrote his report, Zaire's debt was $4.6 billion. When Mobutu was overthrown and died in 1998, the debt was $12.9 billion, and Mobutu had luxury estates in France and billions of dollars stashed abroad. For once,

the private sector saw that they had no chance of getting their money back and stopped lending after 1981. But shortly after the Blumenthal memo, the IMF granted Zaire the largest loan it had ever given

an African country. The World Bank was hardly involved in Zaire when Blumenthal wrote his memo, but during the next 15 years it lent $2 billion to Zaire-and was still giving new money to Mobutu as late as

1993. Western governments were the biggest lenders and continued to pour in new money until 1990- even though Zaire had virtually stopped repaying its debts in 1982. In particular, Mobutu provided a

home for US covert action against neighbouring Angola, and the US pushed through yet another IMF loan to Zaire, this time over the objections of some IMF officials.

After the overthrow of Mobutu in 1997, Zaire was renamed the Democratic Republic of the Congo (DRC). For 15 years after Mobutu fell, debt payments were made in an ad hoc way as people in the coun try suffered under various civil wars. The DRC eventually qualified for debt cancellation under the Heavily

Indebted Poor Countries initiative in 2010. Its government foreign-owed debt fell from $11 billion to $4 billion, but the remainder of Mobutu's debt has continued to be paid.

be paid off eventually. The IMF and World Bank gave new

loans to allow the payment of at least the interest on debts.

But it was becoming clear that the crisis was systemic (see,

e.g., George, 1988; Payer, 1991; Pineda-Ofreneo, 1991).

Debt is often sold, and this goes back to at least

the fifteenth century. Typically a bank or an investor

gives cash to the original lender, usually for less than

the actual face value of the loan, and takes on the re

sponsibility of collecting the debt. Factoring or invoice

selling became a common method of industrial finance

in the twentieth century. For example, a company sells

goods and sends an invoice requiring a promise of pay

ment in 90 days but then immediately sells the invoice

to a finance company; the company is thus paid im

mediately, which reduces its need for working capital.

Bonds are explicitly a form of tradable debt, because

the original bondholder, who actually lent the money,

can sell the bond to other investors. A market grew

up in which developing-country debt was traded, and

some countries bought their own debt back at a dis

count. But as Figure 14.1 shows, that debt was still ris

ing inexorably. Many of the loans in the 1970s had been made to

private companies and banks rather than to govern

ments, and in the 1980s finance ministers in industri

alized countries became worried that the debt crisis

would lead to the collapse of major banks. So they

pushed developing-country governments to take over

these private loans-in effect, the North demanded that

the South nationalize private debt. BWis and govern

ments provided bond issues, new loans, and refinanc

ing to take over the private debt, but with conditions

linked to free-market and neoliberal economic policies.

By 1996 the World Bank and the IMF accepted that

the poorest countries could not sensibly repay their

debt, and they launched the lieal'ily Indebted J'o,ir

Counlries foiti.tliH. It broke new ground by accept

ing for the first time that some loans made by the two

268 PART Ill I Issues in International Development

Developing-country total debt stock 1 ($trillion= $1000 billion)

3 ·c

Developing country2, net transfer3 on debt

400

350�

300

250

200 C Debt repayments larger than ,g 150 new lending

100

-50

-100

FIGURE 14.1 I Developing-Country Debt and Payments

Notes:

1 "Stock" is the total amount owed.

2 "Developing countries" are those with 2014 GNI (gross national income) per capita of less than $12,746, calculated by the World Bank atlas method.

3 "Net transfer" is the amount of new lending minus interest payments and principal repayments. It is thus the total amount developing countries received from (above the 0 line) or paid to (below the 0 line) all creditors.

Source: World Bank International Debt Statistics, July 2015.

institutions would have to be cancelled. This was to be

done in parallel with proportionate debt cancellation

by government (bilateral) creditors. The IMF and World

Bank handled the negotiations and demanded that

developing countries follow strict neoliberal structural

adjustment. The process was very complex, and in the

first two years there was no debt cancellation.

Meanwhile, Jubilee 2000, an international cam

paign launched in 1997 (see Box 14.4), called for "can

cellation of the unpayable debt of the world's poorest

countries by the year 2000 under a fair and transpar

ent process." The campaign was highly successful in

three ways. First, it took what had been considered an

arcane and technical issue, which supposedly could

be understood only by economists, and turned it into

an easy-to-understand campaigning issue. Second, it

joined together local debt campaigns in numerous coun

tries in the North and South. Third, it gained unexpected

support-24 million people from 166 countries signed a

petition-and successfully brought pressure on north

ern governments. At the 1999 meeting of the finance

ministers of the Group of Eight (GS) richest countries

in Koln, Germany, it was agreed that debt cancellation

for heavily indebted poor countries (HIPCs) would be

increased from $55 billion to $100 billion. At that time,

41 countries were considered to be HIPCs, and they had

$207 billion in debt. But of that, $100 billion was not

being serviced anyway-mainly with the agreement of

the IMF and World Bank, since most of those countries

had Bank and IMF programs. The $100 billion simply

would go to writing off debt that the institutions knew

would never be repaid-not a particularly generous

move. In 2005, the GS countries finally agreed to can

cel more debt, which was actually being paid through

a new scheme called the Multilateral Debt Relief Initia

tive. As of 2015, $130 billion of debt has been cancelled

for 36 countries, primarily in sub-Saharan Africa. For

many of the countries, debt payments have fallen consid

erably, though new rounds of lending are threatening to recreate debt crises. This debt cancellation only applied

to countries judged to be both heavily indebted and ex tremely impoverished. Most developing countries were excluded.

The first graph in Figure 14.1 shows that despite a brief drop in 2000 due to debt cancellation, total debt

continued to increase. But the huge increase in debt did

not bring any benefit to developing countries. The second

14 I Hanlon and Jones: Debt and Development 269

PHOTO 14.1 I IMF Headquarters, Washington, DC.

graph in Figure 14.1 shows that for two decades, despite

a massive increase in debt, there was a transfer of money

from South to North. For the two decades 1984-2003,

total debt tripled from $729 billion to $2,214 billion,

yet in the same period poor countries gained nothing

and actually gave $350 million to the rich countries as

they had to pay more in interest payments and princi

pal repayments than they received in new loans. For 20

years, the developing world gave $48 million to the rich

world every day-yet the debt burden increased by $204

million every day. The OECD Development Assistance

Committee estimates that total aid (excluding debt re

lief, technical assistance, and humanitarian aid) in those

20 years was $893 billion, so nearly one-third of aid went

right back to the North. Aid and debt cancellation were

like using a bucket to try to empty an ever-deeper ocean.

The key point is that developing countries in the

1970s did gain money through international borrow

ing, but in the years since the crisis of the 1980s, they

gained nothing. Struggling to repay and sending more

and more money to rich countries, they fell deeper and

deeper into debt.

THE SOUTH AND THE POOR PAY

TO SOLVE THE NORTHERN CRISIS

The previous big crisis was the Great Depression of the

1930s. It largely affected the United States and Europe,

270 PART Ill I Issues in International Development

while developing countries, notably in Latin Amer ica, continued to grow. Within the then industrial

ized countries, the Depression hit both rich and poor.

The rich countries, and mainly the United States, re sponded to the 1979 crisis by trying to ensure that the

Depression of the 1930s was not repeated. They tried

to export the crisis to the South and to poorer people within their own countries. Money was to be extracted

from the developing countries in order to prevent de pression in the industrialized countries, and they used

new manias and borrowing to transfer wealth from

poor countries and poor people to a small wealthy elite. The development model that originated in the 1930s

Depression and continued through the 1960s and 1970s

was state-led growth-not just in the then socialist coun tries but also in European and Asian capitalist countries and in developing countries following either model. This

also led to improving the conditions of poorer people in both North and South and reduced inequality.

But the crisis beginning in the late 1970s was marked by stagnation in the US economy and led to the introduction of an entirely new economic model neoliberalism. First introduced by Augusto Pinochet after he took power following a US-backed coup in Chile in 1973, it was later adopted by the British gov ernment of Margaret Thatcher beginning in 1979 and the US administration of Ronald Reagan from 1981. Linked to right-wing libertarian political philoso

phies, this policy called for smaller government, pri vatization, withdrawal of the government from the economy, sharply reduced regulation and reduced

power for trade unions, and lower taxes on the rich to encourage them to invest (usually accompanied by lower spending on health and education, on the

grounds that the poor should take more responsibility for looking after themselves). An important part of the package was free movement of goods and capital (but not people), so customs barriers and capital controls were removed.

An effect of neoliberalism was increasing inequal

ity, both within countries and between them, as wealth was accumulated by the rich, and notably the wealthiest

1 per cent. By contrast, poor countries and people were forced to borrow to maintain their living standards.

The 1980s saw the developing-country debt crisis, which was followed by new speculative and lending mania. This became so grotesque that there was even a

Hollywood film, Wall Street (1987), in which the lead ing character says, "greed, for lack of a better word, is good. Greed is right, greed works." Greed continued until the Asian financial crisis of 1997-9. Then it re sumed, and the early 2000s saw an unprecedented ma nia of borrowing and speculation, leading to the crash of 2008. Whereas the debt crisis of the early 1980s and

the Asian financial crisis of the late 1990s largely af fected the Global South, the crisis after 2008 affected the industrialized North.

Inequality and Household Debt

Through the 1980s, 1990s, and 2000s inequality rose in many Western countries as the power of trade unions to

bargain for higher wages was reduced, taxes on richer people were cut, and financial deregulation made it easier for companies and rich individuals to evade and

avoid tax. Relatively more economic output went to the rich through earnings on capital, rather than to ordi nary people through wages. The rich spend less of their

income than middle- and low-income earners, and in stead use it to speculate in financial markets. This led to the boom in financial speculation and increased the supply of loans, and thus debt.

"The gap between rich and poor keeps widening.

Growth, if any, has disproportionally benefited higher income groups while lower income households have been left behind" the OECD said in 2015. And it warned that "growing inequality is harmful for economic growth."

The United States Census Bureau (2015) reported that all incomes rose until 1979, but comparing in comes in 2013 with those in 1979, it found that the av erage real income of the bottom fifth of all families had

fallen 11 per cent. The next poorest fifth had incomes the same as in 1979. But for the top 5 per cent, real in

comes had increased by 65 per cent.

People were encouraged to borrow in order to maintain their consumption levels. Figure 14.2 shows ballooning US consumer debt. Credit card debt hit $1 trillion in 2007. In the United States, mortgage companies gave home loans to people who were man

ifestly unable to pay, and like the "loan pushers" of the 1920s and 1970s, they offered low interest ini tially and encouraged people to borrow more than

they needed and to spend the money on consumer goods. The mortgage companies then sold the loans

to gullible bankers, who packaged them as allegedly

safe investments. By 2006 there were $600 billion in

sub-prime mortgages, but they supported $6 trillion

of securities and investment vehicles. The crisis came

when banks realized that poor people could not re

pay the outstanding billions of dollars in loans and

that the original lenders were taking no responsibility

for what was clearly illegitimate lending. The whole

house of cards collapsed; not only could the sub

prime mortgages not be repaid, but the loans for the

investment vehicles could not be repaid, either. This,

in turn, triggered the 2008 economic crisis. But as

Figure 14.2 shows, the slowdown in lending was very

brief, and the lending mania continued.

Shifting the Crisis to the South

During the Depression of the 1930s, many interna

tional borrowers simply defaulted. Europe stopped

:.c 2"" 0 0 0

N'll Revolving debt

- All consumer debt

14 I Hanlon and Jones: Debt and Development 271

paying its World War I debt to the US in 1934. Most

Latin American borrowers also stopped paying. Why

did developing countries not do the same thing and

simply not repay after 1979? Why did they, instead, tri

ple their debt simply to repay the initial debt?

The answer is that the US pursued three strategies to

shift the ongoing post-1979 crisis onto the Global South:

1. US President Ronald Reagan sharply raised inter

est rates in the early 1980s, as noted above, which

initially created a flow of money from South to

North but also triggered the 1980s debt crisis that

began in Mexico.

2. The US used "aid" to impose a neoliberal economic

model and enforce debt repayment.

3. Borrowing was employed to fuel consumption.

Countries were forced to keep dollars as reserves.

The following discussion elaborates these strategies.

0NM��OO�0NM��0NM��0NM��0NM� ��00000000000000��0000000�� 00000000000 ---------------------NNNNNNNNNNN

FIGURE 14.2 I United States Consumer Debt

Notes: "Consumer credit" is all outstanding credit extended to individuals for personal expenditures, excluding mortgages. "Revolving credit" mostly comprises credit card loans.

Source: US Federal Reserve System, July 2015.

272 P.l\R't m \ Issues in International Development

The major difference between the 1930s and the

1980s was the existence of the Bretton Woods insti

tutions (BWis). Poor countries became increasingly

dependent on "aid," and the "donors" made their

aid conditional on recipient countries having World

Bank and IMF programs, which in turn imposed

two sets of conditions. One was continued debt re

payment. Little concession was made for economic

problems such as bad crops, and debt bondage lasted

indefinitely. Indeed, with respect to the Bretton

Woods institutions, developing countries have fewer

rights than the citizens of Hammurabi's Babylon did

nearly 4,000 years ago.

The second highly controversial condition was

that poor countries adopt neoliberal economic pol

icies and what were known as "structural adjust

ment programs" (also discussed in Chapters 3 and 9).

Import-substituting industrialization was the model

followed earlier by the now-industrialized countries

and was the model being followed by the developing

world (Chang, 2002), but the BW!s forced poor coun

tries to open their borders to manufactured goods

from the industrialized countries, and instead to adopt

a model of export-led growth. This resulted in many

countries rapidly expanding the production of agri

cultural and mineral exports, which in turn meant in

creased competition and a drop in the prices paid by

the rich countries to the poor countries. Cocoa sold for

$2,604 a tonne in 1980, less than half that ($1,267) in

1990, and even less in 2000 ($906). Commodity prices

began rising again from 2004. But for two decades, the

industrialized countries forced the developing world to

sell industrial inputs for ever-lower prices while also

forcing them to buy imported manufactured goods

instead of producing them locally. Debt had become a

major weapon of economic power used by the industri

alized countries.

Meanwhile, the US was increasingly consum

ing much more than it produced. The trade deficit

(goods and services) was small until the 1990s, when

it started to jump, from $31 billion in 1991 to $372

billion in 2000, and $761 billion in 2006 (US Census

Bureau, 2015). In other words, the US was importing

goods instead of producing them, and it had to borrow

money to pay the bills. US public debt in 1940 was $45

billion, and by 1970, it had only risen to $371 billion.

But as stagnation set in, the US started to borrow at an

unprecedented rate, pushing the debt to $909 billion in

1980, $3 trillion ($3,000 billion) in 1990, $6 trillion in

2000, and $18 trillion by 2015.

The United States had already made another

change, the impact of which became clear only later.

From 1934, the price of gold had been fixed at s35 per

ounce; gold was used as financial reserves by most

countries. But the US was having trouble paying

for the Vietnam War, and in 1971 President Richard

Nixon announced that there would be a free market in gold; the price rose to $140 within two years. As well

as helping to pay for the war, this move had a much

more subtle effect-instead of gold, US dollars became

the world's reserves. Each dollar that a country holds

as a reserve is a promise by the US government to even

tually provide one dollar in goods. Indeed, reserves

are mostly held in US government bonds or as depos

its in US banks. US external debt (public and private)

jumped from $6 trillion in 2002 to $17 trillion in 2015,

with more than $1.3 trillion in US Treasury securities

held by China (US Department of the Treasury, 2015).

Thus, in effect, countries holding reserves are lending

money to the United States.

Figure 14.3 shows that sharp increase in foreign

reserves in the twenty-first century. Two very different

factors led to the increase in foreign holdings of US

bonds and dollars. The East Asian financial crisis of

1997-9 was triggered in part by excessive and specu

lative international and domestic borrowing, causing

the collapse of banks and currencies. With a sudden

outflow of speculative capital, Thailand, Malaysia, In

donesia, the Philippines, and South Korea all found

themselves unable to pay short-term debt. The IMF

and the US offered to "help" but imposed neoliberal

conditions requiring that the economies become even

more open. This was exactly the wrong response and

made the crisis worse. As a result, East Asian coun

tries built up their reserves sharply so that when the

next cyclic monetary problem occurred, they would

not need to turn to the IMF. That proved to be a wise

choice, and they were less affected by the 2008 crash.

But in one way, this suited the United States, because

middle-income East Asian countries were holding

large amounts of dollars-in effect, giving a big loan

to the US.

Meanwhile, the IMF insisted that poor countries

substantially increase their reserves. They were too poor

,...._ C

6 -

,Q 5 ii 0 0

"" 4 -.!!,

� 3 ·.::: ...., ""

- Foreign exchange reserves

- Debt

14 I Hanlon and Jones: Debt and Development 273

FIGURE 14.3 I Developing-Country Foreign Currency Reserves Compared to External Debt

Note: Debt is external debt stock of "all developing countries," according to the World Bank. Foreign exchange reserves are for "emerging and developing countries," according to the IMF.

to use these reserves to gain independence from the

IMF, and many thought the reserves were excessive and

that the money would be better spent on development.

Figure 14.3 shows foreign reserves held by developing

countries and makes clear the dramatic rise from 2003,

when the US and its allies needed money to pay for

the Iraq war. Reserves of all developing and emerging

economies in 1995, before the Asian crisis, were only

$456 billion; by 2003 this had risen to $1.3 trillion, and

by 2015 to $7.7 trillion, acco rding to the IMF. More than

$4 trillion of US public debt is held by foreign govern

ments as reserves. Thus, by forcing poor countries to

hold extra reserves, the IMF is, in effect, forcing poor

countries to lend to the United States to prop up the US dollar.

Figure 14.3 also shows that since 2005, foreign

currency reserves held by developing countries have

been larger than their total external debt. In other

words, developing countries are net lenders to the

US and other industrialized countries-not the

other way around. Poor countries are lending more

than $2 trillion to the rich countries, preventing a

193os-style depression in the industrialized coun

tries while depressing the economies of the devel

oping countries.

Is Foreign Borrowing Sensible?

The changing nature of international debt in the sec

ond half of the twentieth century-and the way that

post-1980 debt has mounted astronomically without

any apparent benefit to developing countries-raises a

question about the whole concept of foreign borrowing.

Poor people well understand the debt trap, con

stantly borrowing to survive and sinking ever deeper

into debt, with debt service payments becoming greater

than any benefit gained from the initial borrowing.

And yet the other side of borrowing is also obvious.

Borrowing to buy a car and having the use of the car

while paying off the loan over three years means that

because of interest we pay far more than the actual cost

of the car or house but we consider it reasonable since

274 T m I Issues in International Development

PHOTO 14.2 I Women protest indebtedness resulting from micro-finance loans, Hyderabad, India.

we have the use of the car during that period. And large

parts of modern industrial development are based on

borrowing money to construct a building or buy a piece

of machinery that will make a company more produc

tive and thus sufficiently profitable to pay off the loan.

This is exactly the argument used by the World Bank

and developing countries alike for foreign borrowing

to stimulate more rapid growth.

But economists distinguish between foreign and

domestic borrowing. Does a country borrow from

its own banks and citizens-say, by issuing bonds

or does it borrow from foreign banks and the World

Bank? Economists such as Cheryl Payer (1991) have ar

gued that few countries have successfully developed on

the basis of foreign loans, or at least not for very long

periods. Foreign borrowing makes very different re

payment demands from those of domestic borrowing,

and the imposed policies of the Bretton Woods institu

tions become very important.

Traditionally, countries developed by protecting

their infant industries from foreign competition so

that these companies could sell their goods locally,

become profitable, and repay their loans. The im

posed neoliberal model requires that economies be

open, which gives no space for local industry to grow

and become profitable. Further, foreign borrowing is

in currencies of the industrialized world-US dol

lars or euros. Therefore, the BW!s pushed countries

to produce exports they could sell for hard currency,

but as everyone produces more of the same exports,

the prices fall. At the same time, structural adjust

ment policies often demanded devaluation of the

local currency. All of this made foreign loans much

more expensive than domestic ones, and as it turned

out, economies simply did not grow rapidly enough

to pay the much higher cost of foreign borrowing,

because the imposed BWI policies did not promote

growth.

WHAT IS THE RESPONSIBILITY

OF THE LENDER?

The Philippine dictator Ferdinand Marcos was finally overthrown in 1986 and fled into exile. He had more than $5 billion stashed away in foreign banks, sug gesting that up to one-third of the Philippines' foreign borrowing had passed into his very deep pockets. The largest single debt was for the Bataan nuclear power station, built at the foot of a volcano and on an earth quake fault, and financed by the US export credit agency Ex-Im Bank, Union Bank of Switzerland, Bank of Tokyo, and Mitsui and Company, all of which were repaid. In 2007, the Philippines finally paid off the debt for the 30-year-old power station that never should have been built and was never used.

In international law, it is widely accepted that when a government changes, the successor government assumes the laws, contracts, and debts of the previous government. The United States created one of the few exceptions to this convention after it seized Cuba from Spain in 1898. Spain demanded that the US pay Cuba's debts, but the US refused on the grounds that the debt had been "imposed upon the people of Cuba without their consent and by force of arms." Furthermore, the US argued that in such circumstances, "the creditors, from the beginning, took the chances of the invest ment. The very pledge of the national credit, while it demonstrates on the one hand the national character of the debt, on the other hand proclaims the notori ous risk that attended the debt in its origin, and has attended it ever since" (Adams, 1991: 164). The US held a similar view in 2003 after the invasion oflraq to overthrow the government of Saddam Hussein, when US Treasury Secretary John Snow said, "Certainly the people oflraq shouldn't be saddled with those debts in curred through the regime of the dictator who is now gone" (Hanlon, 2006: 211).

The name and doctrine of odious debt was formal ized by Alexander Sack in 1927, who wrote:

If a despotic power incurs a debt not for the needs or in the interest of the state, but to strengthen its despotic regime, to repress the population that fights against it, etc., this debt is odious to the population of all the state. This

14 I Hanlon and Jones: Debt and Development 275

debt is not an obligation for the nation; it is a regime's debt, a personal debt of the power that has incurred it, consequently it falls with [the] fall of this power. (Quoted in Adams, 1991: 165)

Surely the same rule regarding odious debt should have been applied to the apartheid regime in South Africa and dictators in Zaire and the Philippines. But lend ers, including the World Bank and the IMF, refused to accept that their original lending had been improper.

Although the Jubilee 2000 campaign initially fo cused simply on "unpayable debt," campaigners in creasingly took up the issue of lenders' co-responsibility and of what came to be defined as the broader areas of "illegitimate debt"-loans that were improperly made and that should be the liability of the lender, not the borrower. The Jubilee Debt Campaign in 2015 said that it regarded three-quarters of the developing-country debt still owed to the UK government as "illegitimate," including loans to pay for arms sales to dictators in Indonesia (General Suharto), iraq (Saddam Hussein), Argentina, Ecuador, Egypt, and Kenya.

Rapidly growing consumer protection in the sec ond half of the twentieth century applies also to lend ing. Increasingly, lenders take due care to see that a loan is reasonable, that the borrower is competent to borrow, and that the borrower can reasonably be ex pected to repay. Modern civil and commercial law has broadened contractual obligations in complex business transactions beyond the strict delivery of goods and services to include dissemination of professional ad vice, discovery of special risks, and so forth, especially if one party is less knowledgeable than the other and therefore must trust the other's superior skills. Neglect ing these accessory obligations may be considered a breach of contract. Loans like those to apartheid South Africa, to Mobutu in Zaire, and for the Bataan nuclear plant would simply not be acceptable under domestic law in most industrialized countries. But as Boxes 14.2 and 14.3 show in regard to Argentina and Greece, in ternational lenders still claim the right to make outra geous loans and collect on them.

Three governments have moved on this issue. In 2006 Norway became the first creditor country to acknowledge the concept of i llcgiti mate dcbl and that such debt must be cancelled. That year, Norway

i 276 PART Ill \ Issues in International Development I

BOX 14.2 I Argentina, Illegitimate Debt, and Vulture Funds

CURRENT EVENTS

During the 1970s lending boom to developing countries, the World Bank, governments (including the US and UK), and Western banks funded the oppressive military junta that, between 1974 and 1983, ran a "Dirty War" against the Argentine people. Over 30,000 people were "disappeared," as the regime tortured and killed trade unionists, students, and anyone believed to be associated with "socialism." The UK government made loans to finance warships, helicopters, and missiles that were later used in the junta's invasion of the British-controlled Malvinas (Falkland Islands) in 1982. Defeat in the Falklands War led to the collapse of the junta. A new government elected in 1983 was saddled with a huge debt, which undermined the economy throughout the 1980s.

In the 1990s, under Carlos Menem, Argentina turned to the IMF and became a poster-child for the neoliberal mix of free-market economic policies, including privatization, trade liberalization, and free movement of capital. Poverty increased but so did foreign funds-until the East Asian financial crisis in 1997, when the foreign capital suddenly flowed out. A four-year recession began in 1998. By the end of 2001, the government debt had become unpayable, costing half of the country's revenues from exports. Argentina defaulted at the start of 2002. After a few months of crisis, poverty began to fall. Prior to the default, in July 2000, after extensive investigations by Alejandro Olmos Gaona and Daniel Marcos, an Argentine federal court found that many Argentine bonds were illegal in origin.

Between 2005 and 2010 Argentina reached deals with 93 per cent of its creditors to pay 30 cents on every dollar that was owed. However, a group of investment funds, called vulture funds, had bought Argentine and Zaire/Congo (see Box 14.1) debt for very low prices during the period when the countries were not paying, and continued to demand full repayment. One fund, FG Hemisphere, bought Zaire debt for $3 million and subsequently claimed over $100 million.

There was then a confusing split in international courts. In 2010 Britain passed a law saying that private companies could only sue HIPCs in British courts for the amount they would have got if they had taken part in the debt relief initiative-effectively enforcing the HIPC settlement on all creditors. This re flects British domestic legal practice, where a debt reduction agreed with most creditors can be enforced on any holdouts. Two Congo vulture funds sued in the British dependency of Jersey and lost their case.

In contrast, in 2013 and 2014, two vulture funds, NML Capital and Aurelius Capital Management, won judgments in the New York courts that Argentina either must pay them in full on its debt or the country would not be allowed to pay any of the creditors who accepted the debt restructuring. This judgment was enforceable because Argentina makes its debt payments through US banks. Argentina initially refused to pay the vulture funds in full, which meant it was unable to pay any of its creditors. But, a newly-elected federal government settled the outstanding debt for US$ 9.3 billion in April 2016 in order to gain access to international credit markets. However, it did so by borrowing more money at high interest rates.

unilaterally cancelled export credit debt for ships

that had been used to promote Norwegian shipyards

rather than for developmental purposes. And in 2010

it launched the first "creditor audit" of all of its lend

ing to developing countries. On the debtor side, the

government of Ecuador established an independent

Public Debt Audit Commission in 2007, which found

that only 20 per cent of debt was related to development

projects and 80 per cent was the result of refinancing

old debt with new debt. It found that debt had been

BOX 14.3 I Repeating the 1980s in Greece

14 I Hanlon and Jones: Debt and Development 277

CURRENT EVENTS

"Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide

their mounting debts," explained the New York Times (13 Feb. 2010). From 2001, US investment banks lent money to Greece, but in ways that kept the loans off the books because they would have violated

European Union rules. In effect, Greek officials mortgaged the country's airports and highways, pledged future lottery revenues, and bought and sold special bonds. It was loan pushing and sub-prime lending on a global level.

Greece spent double the European average on the military. From 2002 to 2006, Greece was the world's fourth biggest importer of conventional weapons, buying submarines, planes, and tanks from Germany, France, and the United States-on credit. And with loan pushing, two major German compa

nies admitted paying large bribes in Greece (Smith, 2012). After the 2008 financial crisis, the international lenders responded to Greece exactly as they

had to developing countries three decades earlier. First, they pushed up the interest rates being charged to Greece-and by 2010 it was clear the debt was unsustainable and Greece could not pay. A deal was made with a group called the "troika," the IMF, the European Commission, and the

European Central Bank, for a bailout. Over the five years 2010-14 the troika provided €252 billion (about $325 billion) in new loans. Of that, €232 billion simply went directly to the previous lenders in principal and interest payments and just €20 billion to the Greek people (Jones, 2015). Much Greek debt was to private banks and companies and the troika's main goal was to protect them, by nationalizing the debt.

Indeed, Greece's debt slightly increased, from €310 billion in 2010 to €317 billion in 2014. Even

worse, the lenders imposed the same neoliberal structural adjustment package they had imposed on developing countries in the 1980s, with heavy austerity involving cuts in wages and pensions and sharp

increases in taxes. In 2010 the IMF predicted that the austerity would lead to a fall in GDP (gross domes tic product) of 1.5 per cent between then and 2014. In fact, the GDP fall was 22 per cent over this period and, with a declining economy, it became harder and harder for Greece to pay. In 2014, real wages were 17 per cent lower than in 2009; two-thirds of young people in Greece were unemployed, and one-in-five

people suffered from severe material deprivation. To be sure, Greece does not need 1, 300 tanks and four new submarines. But who is responsible for

the loans that paid for them-Greece's poorest pensioners, or the German company that paid bribes to sell its submarines? What responsibility does the IMF have for imposing an austerity package that makes it impossible to repay the IMF loans?

In 2015 the Greek parliament set up a debt audit commission, chaired by the speaker of parliament.

It concluded "that Greece should not pay this debt because it is illegal, illegitimate and odious." Many of the initial private loans were given in bad faith by companies and banks that acted "irresponsibly" by not observing their due diligence obligations-to see that the loans were appropriate, followed Greek law, and were repayable. Thus, those banks and companies should carry the risk of their irresponsible

actions. The subsequent troika debt "is also illegitimate because it was converted from private to public debt under pressure"; it benefited only private banks and companies and not the Greek people (Hellenic Parliament, 2015).

278 PART Ill I Issues in International Development

refinanced in this way in violation of both national

and international law, that debt contracts violated

Ecuador's sovereignty, and that excessive interest rates

amounted to usury. President Rafael Correa declared

the debt "illegitimate" and refused further payments.

And in Greece, a committee established by parliament

raised the issue of illegitimacy in 2015.

Lender-borrower co-responsibilities, as well as

odious and illegitimate lending, are now becoming

recognized as concepts in international law, and

domestic lending concepts such as unfairness and

broader obligations of lenders are being taken into

account. This has revived calls to establish some

thing similar to the common practice with respect to

debt in national laws, and thereby to create an inter

national "bankruptcy" procedure for governments to

force all creditors to accept debt reductions. In Sep

tember 2014, the UN General Assembly voted by 124

to 11 to establish new debt resolution rules. However,

CRITICAL ISSUES

BOX 14.4 I The Jubilee Campaign

those countries voting against included the US, Ger

many, Japan, and the UK, so it may take several more

years before the principle becomes established.

The 2008 Financial Crisis

In 2008 a global financial crisis was triggered not in the

South but in the North. The worst financial crisis since

the Great Depression of the 1930s was set off first in

the United States when the "bubble" burst on lending

for "sub-prime mortgages" that could never be repaid.

Lehman Brothers, the fourth-largest investment bank

in the US, had been dealing heavily in obscure financial

instruments based on these unpayable mortgages and

went bankrupt. The crisis spread, and five European

states (Greece, Portugal, Ireland, Spain, and Cyprus)

were unable to repay or refinance their government

debt and had to be bailed out by the IMF and European

Commission.

In the mid-1990s, a global campaign began calling for the debts of 52 countries in the Global South

to be cancelled for the millennium. The campaign used the imagery of a "jubilee year"-a year every 7 and/or 49 years recorded in the Jewish scriptures when debts were cancelled and slaves freed. By the year 2000, over 20 million people had signed a petition globally calling for debts to be cancelled,

and tens of thousands had marched in protests during G8 summits in Birmingham (UK) and Cologne (Germany).

There were disagreements within the campaign as to how to present the issue. Much campaigning in

the Global North focused on the damage debt was causing, without reference to where loans had come from. Campaigners in the Global South-who launched "Jubilee South"-wanted more emphasis on the odious nature of original loans, with their slogan "Don't owe, won't pay."

The global response to the jubilee campaign was the creation and enhancement of the Heavily Indebted Poor Countries Initiative, which by 2015 had led to $130 billion of debt being cancelled

for 36 countries. However, the structural changes demanded by the campaign were not imple mented. Concepts in the jubilee campaign have continued through global net works such as the African Forum and Network on Debt and Development, Asian Peoples' Movement on Debt and

Development, Latin American Network on Debt and Development, and European Network on Debt and Development.

In Spain, Ireland, and Britain, house prices had risen faster than incomes since the early 2000s, and the loan pushers encouraged people to borrow more than the value of the house and use the money for holiday or consumer spending, because they could always sell the house later at a higher price. It was a classic Kindleberger mania. Throughout the boom years of the 2000s, Germany and other "core" Eu ropean countries lent, through their banks, large amounts to banks and governments in periphery countries such as Greece, Portugal, and Ireland. These loans enabled those countries to buy German exports, maintaining German industrial compet itiveness, but building up a debt bomb. With the panic, house prices fell and individuals could not service the loans and banks could not sell the houses to recover the loans, while governments found they could not pay their German loans.

The response was quantitative easing, where cen tral banks in Europe and the US created new money electronically in the hope of stimulating their econ omies. But more money was created than the banks could use, and as Figure 14.1 shows, this triggered a new lending mania to developing countries. One as sessment based on IMF and World Bank predictions shows that two-thirds of low-income countries face large increases in the share of government income spent on debt payments by 2024 (Jones, 2014). It seems much like a return to the 1970s, with loan pushing and excessive lending pointing towards a new debt trap for many developing countries.

SUMMARY

Lending and borrowing, and regulations to control them, go back 4,000 years and international lending goes back 700 years. Loans can be a source of ex ter nal resources for investment and economic devel opment. However, lenders have their own interests,

14 I Hanlon and Jones: Debt and Development 279

which have harmed developing countries. Banks with surplus capital have pushed inappropriate loans on countries as part of their speculation. Loans promote expor ts, especially of weapons. Governments some times want to support or to promote political allies, including dictators, regardless of what the money is spent on.

Charles Kindleberger proposed that the global economy runs in cycles of growth, mania, and panic. In the growth period lending can promote develop ment. The mania includes loan pushing that turns to economic bust and panic. This was the case in the 1930s and in the 1980s, which led to two "lost decades of de velopment" across much of the Global South. For two decades, the developing world gave $48 million to the rich world each day-yet every day the debt burden in creased by $204 million.

Similarly, the global financial crisis in 2008 was rooted in excessive lending, followed by a sudden bust. And the pattern was repeated. The North printed money through quantitative easing, and some of this surplus money was lent to the South, promoting what would become a new debt crisis.

Meanwhile, within the rich countries, wealth has been transferred from rich to poor while poorer peo ple have been encouraged to borrow to maintain min imal levels of consumption. And the US has built up a huge foreign debt by forcing developing countries to keep US dollars as reserves, making developing coun tries net lenders to the US and other industrialized countries.

At the heart of lending and borrowing relation ships is power. If development is about creating more equal sharing of power in the world, lending has the possibility of doing so, as it is the sharing of resources by those with more. But increasingly, debt has been used as a means of increasing imbalances, increasing wealth and power in industrialized countries, and ex tracting resources from the Global South and prevent ing genuine development from taking place.

280 PART Ill I Issues in International Development

QUESTIONS FOR CRITICAL THOUGHT

1. Should lenders take more resp onsibility for improper lending?

2. How would you define "illegitimate lending"?

3. Are developing countries building up excessive reserves in US dollars and thus lending too much to the

United States? What are the alternatives?

4. Do developing countries need to borrow internationally?

Chang, Ha-Joon. 2002. Kicking Away the Ladder. London:

Anthem.

Graeber, David. 2011. Debt: The First 5,000 Years. New York:

Melville House.

Hanlon, Joseph. 2006. "'Illegitimate' loans: Lenders, not

borrowers, are responsible." Third World Quarterly 27,

2: 211-26.

BIBLIOGRAPHY

Adams, P. 1991. Odious Debts. London: Earthscan.

Chang, H.-J. 2002. Kicking Away the Ladder. London:

Anthem.

Darity, W., and B. Horn. 1988. The Loan Pushers: The Role

of Commercial Banks in the International Debt Crisis.

Cambridge, Mass.: Ballinger-Harper and Row.

Drake, P. 1989. "Debt and democracy in Latin America,

1920-198os." In Barbara Stallings and Robert Kaufman,

eds, Debt and Democracy in Latin America. Boulder,

Colo.: Westview.

Eichengreen, B., and P. Lindert. 1989. The International Debt

Crisis in Historical Perspective. Cambridge, Mass.: MIT

Press.

George, S. 1988. A Fate Worse Than Debt. London: Penguin.

Hanlon, J. 2006. "'Illegitimate' loans: Lenders, not borrowers,

are responsible." Third World Quarterly 27, 2: 211-26.

Hellenic Parliament. 2015. Truth Committee on Public

Debt-Preliminary Report. w w w.hellenicparliament.

gr/UserFiles/fJqoa23-7696-49db-9148-fa4dce6a27c8/

Report_ web. pdf.

International Monetary Fund (IMF). 2009. Currency

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(COFER), July.

Jones, T. 2014. Don't Turn the Clock Back: Analysing the

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Jochnick, Chris., and Fraser A. Preston, eds. 2006. Sovereign

Debt at the Crossroads. Oxford: Oxford University Press.

Kindleberger, Charles. 1978. Manias, Panics and Crashes, 1st

edn, London: Basic Books-Macmillan; 4th edn (2000),

New York: John Wiley.

Perkins, John. 2004. Confessions of an Economic Hit Man.

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Free Trade, Fair Trade, and South-South Trade Gavin Fridell

LEARNING OBJECTIVES

• To discover the differences and debates between

"free trade" and "fair trade" theories and practices.

• To situate the dominant trade regime in relation

to the past and the current rise of South-South

trade.

To engage in informed discussion on trade policy

and its developmental impacts at the local and

global levels.

• To understand the politics behind international

trade.

• A member of the Lisu hill tribe picks Thai arabica coffee beans at the Thai High coffee farm In Phrao, northern Thailand. The

organic fair trade coffee farm was chosen to help produce Black Ivory Coffee. The new brand of coffee is produced by harvesting

the beans from the dung of a Thal elephant. It takes 15 to 30 hours for the elephant to digest the beans, then they are plucked from their dung and washed and roasted. I Source: Paula Bronstein/Getty Images

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 283

INTRODUCTION

Over the past decades, world trade has grown at an

unprecedented rate. The total value of world exports of

merchandise trade increased from $1.2 trillion in 1989

to more than $16.6 trillion in 2013. During this pe

riod, several booming Asian economies increased their

share of the value of trade exports, whereas the poor

est countries in South Asia and sub-Saharan Africa

experienced only limited gains-sub-Saharan Africa's

share of the value of world merchandise expor ts in

creased from an average of around 0.7 per cent per year

from 1990 to 1993 to 1.6 per cent from 2009 to 2013

(WITS-UN-COMTRADE, 2015) (see Figure 15.1). While

the wealthiest economies have more or less maintained

their dominance, several emerging southern giants

have increased their weight, while the poorest coun

tries remain well behind. All of these trends have ma

jor significance for human development, social change,

global politics, and economics.

7,000,000

6,000,000

5,000,000

4,000,000 i? ·-

"" 3,000,000 -

2,000,000

1,000,000

Because of its significance, international trade

seems to find its way into most development debates.

The connection between trade and development is

made even stronger by the growing number of in

ternational "free trade" agreements, which, as many

commentators have pointed out, go well beyond trade

to include a wide range of rules that intrude on the

broader social and economic policies of states (Harvey,

2005; Gill, 2003; Hoogvelt, 2001; McNally, 2006). Con

sequently, it becomes difficult to discuss perspectives

on international trade without getting lost in a conver

sation around the general theories of development dis

cussed in Part I of this book.

Nonetheless, at the risk of oversimplification, it is

possible to speak about two overarching perspectives on

trade that generally are apparent in most development

works. I will refer to these as a free trade perspective

and a fair trade perspective. Neither of the two per

spectives can be precisely defined. Some development

thinkers might fit very well into one of the two groups,

Europe & East Asia & North Latin Middle East South Asia Sub-Saharan Central Asia Pacific America America & & North Africa

Caribbean Africa

Region

Average Annual Export Trade 1989-1993 a Average Annual Export Trade 2009-2013

FIGURE 15.1 I World Export Trade

Note: averages exclude data from 1989 for sub-Saharan Africa.

Source: WITS-UN-COMTRADE (2015).

284 PA.f?T rn I Issues in International Development

whereas others might fit only partially into a group or

present ideas compatible with both. The notion of a free

trade perspective and a fair trade perspective is thus a

reference not to two cohesive approaches to develop

ment but rather to two general overarching assump

tions that allow us to talk about general trends-to

focus on the forest and not get lost in the trees.

The first of these perspectives, that of free trade,

is premised on the notion that the removal of barriers

to trade and the limitation of state intervention in eco

nomic and social interactions will provide the greatest

social gains in the North and the South. This is the

dominant view today within most official international

organizations, such as the World Bank (officially the In

ternational Bank for Reconstruction and Development,

IBRD), the International Monetary Fund (IMF), and the

World Trade Organization (WTO), as well as within

many national governments and non-governmental

development organizations, although certainly not all.

Free trade moved to the centre of global trade policy

in the 1970s, spurred on by the influence of neoliberal

thinkers such as economist Milton Friedman (1962)

and his University of Chicago disciples, nicknamed

"the Chicago Boys." Drawing on neo-classical eco

nomic ideals from the nineteenth century, neoliberals

are deeply opposed to state intervention in the econ

omy, which they feel is bound to be inefficient and

inaccurate because of state officials' limited access to

information and their tendency to be biased towards

the demands of specific interest groups, such as unions

or trade lobbies. The unregulated market, in contrast,

offers a "hidden hand" that responds efficiently and

accurately to the "rational," self-interested actions of

countless individuals through the undistorted market

signals of supply and demand. The state is depicted

as choking individual liberty and causing economic

waste, while the market, as summarized by David Har

vey, is viewed as "the best device for mobilizing even

the basest of human instincts such as gluttony, greed,

and the desire for wealth and power for the benefit of

all" (2005: 20-1).

Neoliberal thinkers have been central to advancing

a free trade vision based on a particular understand

ing of the histories of highly industrialized countries,

especially the United States and the United Kingdom.

They argue that a main driver behind the rapid eco

nomic growth experienced by these countries in the

eighteenth and nineteenth centuries was a devotion

to free trade, which sparked competition, leading to

technological innovation and specialization as nations

sought to enhance their comp,HaliH: adYa11L1gc-a

concept formulated by David Ricardo in the nineteenth

century.

Ricardo's theory held that each nation had an

economic advantage relative to other nations for the

production of some goods. Thus, Country A might

produce both iron and wheat more efficiently than

Country B, which also produced the same goods. But

Country A might be most efficient at producing iron.

Consequently, it would be in the relative interest of both

nations if Country A focused on iron and Country B

focused on wheat, with the two trading iron and wheat

to their mutual benefit. Based on these assumptions,

free traders today argue that developing countries need

to remove their barriers to trade to gain access to rich

countries' technology, products, and investment, while

producing and trading those goods for which they have

or can develop a comparative economic advantage rel

ative to other nations (Bhagwati, 2002; Sachs, 2005). If

each nation specializes in the products for which it has

a comparative advantage, all of the nations will benefit

in relative terms, making trade not a zero-sum game

but rather, in the words of Earth Institute director Jef

frey Sachs, "one that everybody can win" (2005: 31, 54).

Some free trade proponents are less optimistic

about its benefits. "New trade theory" advocates Paul

Krugman and Anthony Venables argue that trans

portation and communication advancements have

significantly reduced the need for industries to cluster

together in regions close to consumer markets to min

imize transportation costs. Corporations can now lo

cate themselves wherever labour is cheapest, allowing

southern states to promote industrialization through

the competitive advantage of cheap labour. As trans

portation costs increasingly decline, industry increas

ingly moves to the South. In the end, real wages between

the North and South are likely to converge through this

process, resulting in a situation "in which the periph

eral nations definitely gain and the core nations may

well lose" (Krugman and Venables, 1995: 859). While

this would not be the rosiest outcome for northern

workers, Krugman and Venables argue that protec

tionist policies in the North would only wreck its com

petitiveness and unjustly suppress industrialization in

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 285

the South. In their view, free trade may not bring about

a strictly win-win scenario, but it represents the best

choice of the available options.

In contrast, the fair trade perspective has been

even less optimistic about the possibilities of a win-win

situation in international trade-unless the terms of

North-South trade are readjusted. Fair trade propo

nents challenge free traders' historical understanding

of trade and assert that markets have always been reg

ulated, generally in the interests of the rich and pow

erful. They argue that the rich nations in the North,

as well as the newly industrialized countries (NICs) in

East Asia and Latin America, all emerged historically

behind a protective wall of import controls, tariffs,

levies, quotas, and preferences designed to protect do

mestic industry and enhance export industry (Chang,

2008; Stiglitz, 2002, 2003). Market regulation, in par

ticular, has been employed by powerful nations to en

sure their dominant position in the global division of

labour: they demand relatively easy access to raw ma

terials and markets in the South while erecting trade

barriers to protect key industries in the North from

southern competition. To counter this historical leg

acy, fair traders argue that market regulation must be

used to protect the weak, not the strong, and to cre

ate a more equal international trading system (Barratt

Brown, 1993).

The strongest proponents of the fair trade per

spective tend to be located within a broad school of

thought on underdevelopment and dependency the

ory, which moved to the fore of critical development

during the 1960s and 1970s. As discussed in Chapter 3,

PHOTO 15.1 I Low-priced clothing in a Walmart store. Such clothing is usually manufactured in low-wage developing countries.

-r-a----------------------�

I I

I I Issues in International Development

·ists have argued that the history of colo

led to the formation of a world system

, First World imperialist nations in the

.,vrth and Third World neo-colonial nations in the

South. Rather than southern countries being in a posi

tion to enhance their comparative advantage through

international trade, their national development is

restricted and distorted by the unequal exchange of

lower-priced primary commodities (such as coffee,

tea, cocoa, and bananas) for higher-priced industrial

goods, technology, and services from the First World

(Frank, 1972; Prebisch, 1950). While some southern

N!Cs have been able to attain rapid industrialization

since the 1970s, many of these countries have moved

into the low-waged manufacturing stage of production

while remaining dependent on the North for advanced

technology, services, investment capital, and core

markets (Hoogvelt, 2001: 43-6). In this context, in

ternational trade does not bring about a win-win sce

nario for all but, as famously stated by Andre Gunder

Frank (1972), the "development of underdevelopment"

for the South.

CRITICAL ISSUES

Fair traders criticize free traders for focusing too

much on speculative trade models while neglecting the

political conditions under which the battle for compar

ative advantage is carried out and the human impact of

this competitive struggle. In many cases, free trade pol

icies present southern producers with a double-edged

sword. On the one hand, they result in domestic mar

kets being flooded with high-technology industrial

goods produced by northern-based transnational cor

porations (TNCs) that employ their competitive advan

tages (including enormous economies of scale) to beat

out potential local competitors.

On the other hand, they unleash extensive compe

tition for agricultural and low-waged industrial goods

around which poor southern regions hope to eke out

their comparative advantage. This is exemplified by

the intense competition in the global textile industry.

A celebrated blue jeans industry dominated by small

producers in Ecuador in the 1980s was devastated by

free trade reforms in the 1990s that opened domestic

markets to fierce competition from other low-waged

jeans producers (see Box 15.1). Similarly, most of

BOX 15.1 I Neoliberalism and "Endogenous" Development: The Jeans Industry in Pelileo, Ecuador

The town of Pelileo in Tungurahua, Ecuador, long had a reputation for its successful blue jeans industry, constructed on the basis of small-scale, family-run textile enterprises. A 1995 World Bank report on

Ecuador held up Pelileo's jeans industry as an example of small producers attaining social progress and

rural diversification in a neoliberal world. Research conducted by Liisa North (2003), however, revealed

that Pelileo was far from a neoliberal success story. The core aspects of Pelileo's development lay in

a variety of "endogenous" (internal) factors, including the absence of large estates and servile social

relations; the existence of a broad class of efficient, small-scale agriculture producers; Pelileo's long

history as a strategic point of commercial exchange; and the early construction of transportation and

communication infrastructure in the region. These endogenous factors formed the basis for a boom in

the jeans industry in the 1980s, which then declined significantly by the end of the millennium after

the introduction of neoliberal reforms. Neoliberal structural adjustment programs (SAPs) and the dollar

ization of Ecuador's currency in the 1990s caused a national economic crisis that reduced domestic

demand for jeans, while trade liberalization policies opened the region up to overwhelming competition

from other jeans producers. From 1999 to 2000, from 25 to 50 per cent of Pelileo's jeans establish

ments disappeared. Rather than promoting human development in Pelileo, North (2003: 224) argues

that neoliberal reforms were "overwhelmingly destructive" to the town's previously successful endoge

nous development.

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 287

Africa's domestic textile industries have been limited

by heavy competition from Asia combined with north

ern charities dumping second-hand clothes on African

markets at unmatchable prices (Bunting, 2005). While

industries in Ecuador and Africa have lost out in this

competitive environment, low-waged Asian producers

have gained, along with giant US retailers like Wal

mart, which have profited significantly from enhanced

access to cheap textiles (Gill, 2003: 210). Outcomes such

as these have led fair traders to argue that the poorest

countries cannot develop viable industries without ac

tive government support at the national and interna

tional levels to protect them from overpowering global

market forces (Fridell, 2013; Change, 2008; Bello, 2004;

Stiglitz, 2003, 2002).

FREE TRADE AND FAIR TRADE

SINCE 1945

While free trade is the dominant paradigm today,

both fair and free trade perspectives have had signifi

cant influences on world trade and development pol

icy, and the tug-of-war between the two overarching

approaches is ongoing. In media, academic, and pol

icy circles, the debate frequently focuses on whether

the state should or should not intervene in the mar

ket. However, regardless of what perspective one

adopts, the state remains the essential player in con

structing and enforcing the rules around which mar

kets operate (see Chapter 7). W hile free traders, for

example, might find state intervention in the market

for social and environmental reasons unacceptable,

they do not oppose the need for the state to protect

private property rights or to create powerful institu

tions, like the World Bank, the IMF, and the WTO, to

regulate and to enforce free-market policies (Harvey,

2005: 21; McNally, 2006). Consequently, the core is

sue of debate is less about the extent than it is about

the manner in which the state should regulate the

market.

Towards the end of World War II, in July 1944,

regulations for an international trade and development regime with various mechanisms for enforcing both

free and fair trade policies were adopted at meetings

in Bretton Woods, New Hampshire, through a negoti

ated process dominated by rich countries. In free trade

terms, most of the participants at the negotiations

viewed protectionist policies prior to the war as having

been responsible for the economic chaos of the 1930s,

along with the rise of fascism. Consequently, they

sought to create a liberal international trading system

through the negotiated reduction in trade barriers

managed by the General Agreement on Tariffs and

Trade (GATT).

Along with this free trade mechanism, however,

was a regulated international monetary system,

dominated by the US and designed to provide sta

bility for the new trading system. This entailed an

exchange rate system pegged to the American dollar,

a fixed American dollar-gold convertibility, and

international co-operation to control short-term

financial flows (Helleiner, 1994; Gowan, 1999). Two

key institutions were formed to oversee the system: the

IMF, designed to provide short-term loans for coun

tries with balance-of-payment difficulties; and the

World Bank, designed to provide long-term financing

for development projects (see Chapter 9). The interna

tional trade regime that emerged is frequently referred

to as one of embedded liberalism because it com

bined a mixture of state intervention to control capi

tal and investment flows with liberal trade objectives

(Helleiner, 1994).

Even within the realm of trade, however, the Bret

ton Woods system allowed for significant regulations

to ensure a degree of stability for southern economies.

Among the most noteworthy were commodity control

schemes, which entailed the use of buffer stocks that

were built up in times of surplus production and run

down in times of shortage. When prices were low,

participating countries agreed to withhold a specified

amount of their products from the market until prices

were forced up. In the 1950s, international agreements

under the oversight of the newly formed United Nations

(UN) were signed for most major commodities, includ

ing coffee, cocoa, cotton, sugar, wheat, tin, rubber, and wool. Over time, most of them subsided for var

ious political-economic reasons; for example, a sugar

agreement failed in the 1960s after the United States

unilaterally boycotted Cuban sugar amid the Cold War

(Barratt Brown, 1993: 89-92; Furtado, 1976: 215-21).

Some commodity control schemes, however-in par

ticular, the one for coffee-succeeded in providing im

portant price supports to small producers (see Box 15.2).

288 PART Ill I Issues in International Development

CRITICAL ISSUES

BOX 15.2 I Regulating Markets: The International Coffee Agreement

One of the most successful examples of regulating international prices is the International Coffee Agree ment (ICA). It was formed in 1963 under pressure from coffee-producing states and was renewed several times until 1989, when major participants, in particular the United States, withdrew their support as part of the movement towards free trade. The ICA was a quota system signed by all major producing and con suming countries designed to stabilize and increase coffee prices by holding a certain amount of coffee beans off the global market to avoid oversupply. John Talbot (2004) has calculated that the ICA resulted in higher coffee bean prices, which translated into a greater retention of coffee income in the South. At the same time, the agreement was plagued by many difficulties, including an inability to deal with the structural causes of oversupply, the failure to do little more than dampen the unpredictable swings of the coffee cycle, and the persistence of conflict among signatory nations over the quota system.

Moreover, the ICA proved to have a minimal effect on how the extra wealth retained in the South was

distributed. Countries that pursued social reformist projects that distributed greater resources to small farmers and workers, such as Costa Rica and Colombia, attained better development gains than coun tries with highly unequal distributions of land and resources, such as El Salvador, Guatemala, and Brazil (Fridell, 2007: 135-72). Yet, as Talbot (2004: 163-95) has noted, overall, !CA-supported prices provided varying degrees of "trickle-down" improvements to the living standards of broad sectors in the South. In contrast, the decades since the end of the ICA have been characterized by extreme market volatility and periodic severe crises for millions of small coffee farmers and workers (Fridell, 2014; Talbot, 2004).

In this light, defenders of commodity agreements argue that the ICA was a more successful model for promoting human development than an unregulated, free trade coffee market.

General disillusionment with sluggish economic

and trade growth in the South led to the first United

Nations Conference on Trade and Development

(UNCTAD) in 1964 (see Chapter 10). At the conference,

resolutions were passed by a majority of mostly

southern nations in favour of a greater transfer of

wealth from the North to the South through aid,

compensation, and, most importantly, "fairer trade."

The strategy for attaining fairer trade focused on two

key demands: the replacement of financial aid with

efforts to ensure fairer prices for southern commodities

through direct subsidies for poor producers (a demand

that sparked the slogan "trade not aid"); and a call

for northern states to eliminate "unfair" protectionist

policies that blocked southern exports and stymied at

tempts to develop the value-added processing stages of

primary production (Barratt Brown, 1993: 92; Furtado,

1976: 221-4). Particularly glaring instances of this sys

tem are the escalating tariff rates that continue to be ap

plied to primary products today. For example, the tariff

rate for coffee beans entering the EU in 2010 was zero

for unprocessed green beans, 7.5 per cent for roasted

beans, 9 per cent for decaffeinated roasted beans, and

11.5 per cent for substitutes containing coffee, such as

instant coffee (European Commission Database, 2010).

This means that coffee countries are, in effect, punished

by the EU for processing their beans, stifling coffee

manufacturing in the South.

The first UNCTAD failed to address the key de

mands as northern representatives voted against or

abstained from every major resolution. UNCTAD itself,

however, was established as an important fair trade fo

rum and research body (Bello, 2004: 34-5). One of its

more successful efforts was the promotion of compen

satory finance schemes in which producers received

compensation when commodity prices dropped below

agreed-upon levels. The most notable example of this

was the export earnings stabilization system (ST ABEX)

agreement adopted by the European Community

in the early 1970s and designed to compensate its

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 289

ex-colonies-known as the African, Caribbean, and

Pacific Group of States (ACP Group). STABEX estab

lished target prices for more than 50 products, and the

European Community pledged to make up the differ

ence when prices fell below the target. In practice, Eu

ropean nations frequently failed to provide sufficient

funds and in some years STABEX failed to meet even

40 per cent of its obligations. Nonetheless, despite its

shortcomings, it did provide much-needed price sub

sidies to poor producers in the South (LeClair, 2002).

UNCTAD, along with other UN bodies, developed

into a key advocacy forum wherein southern nations

demanded better prices for commodities, preferential

access to northern markets, reforms to the interna

tional monetary system, new aid flows, and codes of

conduct for T NCs. These demands became codified in

the UN Programme of Action for the Establishment

of a New International Economic Order (NIEO) (1974)

and the UN Charter of E conomic Rights and Duties of

States (1976) (Bello, 2004: 38-41; Hoogvelt, 2001: 41-2).

By the end of the decade, however, fair trade was on

the decline and the pendulum had swung further in

the direction of free trade. Declining economic growth

rates in the North compelled more powerful states

in particular the United States, with its burgeoning

trade deficit-to seek to pry open southern economies

in search of new markets and cheap labour (Helleiner,

1994; Gowan, 1999). The result was a renewed interest

in free trade policies.

Among the most powerful mechanisms for the

expansion of free trade policies were neoliberal struc

tural adjustment policies (SAPs), which were imposed

on highly indebted nations after a series of loan de

faults emerging out of the debt crises of the 1980s (see

Chapters 9 and 1 4). In response to the defaults, the IMF

offered indebted nations "rescue packages," which in

cluded refinancing and rescheduling loan pay ments on the condition that they agreed to severe cuts to pub

lic spending, reducing or eliminating trade barriers

and capital controls, and devaluing local currencies

to make exports more competitive. By the early 1990s,

more than 100 highly indebted southern nations had

initiated SAPs. They proved to be ineffective in solv

ing debt crises, and indebted countries had an esti

mated net outflow of resources to the North of more

than $200 billion in the 1980s (Cobridge, 1993: 123-39; Gowan, 1999; Stiglitz, 2003).

What SAPs did accomplish was to usher in a new

era of free trade. The political support upon which

many fair trade mechanisms had been constructed dis

solved, and most declined or disappeared. At the end of

1994, the GATT agreements were ratified at the Uruguay

Round, and the WTO was formed, charged with polic

ing and promoting free trade and deregulation among

its member states. In 2000, the WTO succeeded in

pressuring the European Union and the ACP Group to

gradually phase out all preferential trade arrangements,

including STABEX. Today, the WTO has 161 members,

more than 80 per cent of all countries in the world, all

of which have committed, at least officially, to the goals

of free trade and market liberalization.

Fair Trade and Social Movements

While the 1980s to the 2000s marked the growth of free

trade as the dominant discourse in most official devel

opment institutions and government agencies, they

also were the decades where considerable challenges

emerged to free trade hegemony. Throughout the globe,

an array of labour, environmental, indigenous, human

rights, and women's groups actively protested against

free trade policies and their impacts on local commu

nities (see Chapter 12). These groups put intense pres

sure on southern governments, some of which grew

increasingly resistant to the trade agenda advanced

by northern governments and international financial

institutions (McNally, 2006; Rosset, 2006). One of the

most notable examples of this was the emergence of a

coalition of developing countries that refused to settle

on a new agreement at the WTO Fifth Ministerial Con

ference in 2003, an event marked by global protests. The

coalition united around a series of demands consistent

with both fair trade and free trade ideals, in particular

the elimination of northern agricultural export subsi

dies and protectionist barriers blocking southern com

modities (Rosset, 2006). Since 2003, WTO members

repeatedly have carried out failed negotiating rounds

and have been unable to move ahead with major re

forms (although agreement was reached in December

2015 to begin a process of eliminating agricultural

export subsidies, the outcome of which remains to be

seen). Several of the leaders of the developing coalition

have gone on to form the BRICS (Brazil, Russia, India,

China, and South Africa) group of states, which has

290 PART Ill I Issues in International Development

held annual summits since 2010 to promote economic

and political co-operation and which has become an

influential global association (see Chapter 13).

Outside the state, fair trade ideas have had an in

fluence on a wide variety of social movements. Some of

these movements have focused on stemming the tide

of global market integration by prioritizing produc

tion for local and national markets over international

trade. This is exemplified by "food sovereignty" groups

like the Landless Workers' Movement (MST) in Brazil,

a country with one of the most unequal patterns of

landownership in the world. Since 1984, the MST has

seized more than 50,000 square kilometres of land,

upon which they have settled hundreds of thousands

of families and constructed co-operative enterprises,

public schools, houses, and health clinics with a view

towards farming aimed, first, at local and national

markets (Rosset, 2006).

Other movements have sought to attain the

integration of poor workers and farmers into global

markets under better conditions. Chief among these

is the fair trade network, which emerged in the post

war era out of a variety of direct-purchase projects

that linked northern NGOs to poor and disadvantaged

artisans and producers. In the late 1980s, fair trade

transitioned into a third-party certification system that

verifies private companies through a market-driven

model. The network connects small farmers, workers,

and craftspeople in the South with organizations

and consumers in the North through a system of

"fair trade" rules and principles, including demo

cratic organization (of co -operatives or unions), no

exploitation of child labour, environmental sustainabil

ity, a minimum guaranteed price, and social premiums

paid to producer communities to build community

infrastructure (Hudson et al., 2014; Fridell, 2007;

Jaffee, 2007).

While there are many instances of fair trade bring

ing meaningful benefits to specific local communities,

critics have expressed concern over the limited reach of

fair trade because of its dependence on relatively small

niche markets in the North. For example, the network's

more than 730,000 certified fair trade coffee producers

represent less about 3 per cent of the 25 million coffee

farmer families worldwide (Fridell, 2007, 201 4). Even

for those who have been reached by fair trade, its de

velopmental impact is contentious and concerns have

been raised around its limited benefits for small farm

ers (see Box 15.3) and, more recently, rural workers (see

Box 15.4).

BOX 15.3 I Fair Trade Coffee in an Unfair World? CURRENT EVENTS

Research conducted on fair trade groups in the South suggests that fair trade provides important social and economic benefits to certified producers, although with important qualifications (Hudson et al., 2013; Fridell, 2007; Jaffee, 2007). This can be seen in the case of the Union of Indigenous Communities of the Isthmus Region (UCIRI), one of the most successful fair trade coffee co-operatives in the world, located in Oaxaca, Mexico. Through their participation in fair trade, UCIRI members have attained higher incomes and significantly better access to social services through co-operative projects in health care, education, and training. UCIRI also has constructed its own economic infrastructure, such as coffee processing and transportation facilities, and has provided its members with enhanced access to credit, technology, and marketing skills. Yet, despite the co-operative's success in combatting extreme misery, UCIRI members still report the persistence of general poverty (Fridell, 2007). Fair trade prices are inad equately low because they must remain somewhat competitive with conventional coffee bean prices. Moreover, UCIRI members remain highly vulnerable to global market and climate conditions beyond their control. A major coffee leaf rust infestation, intensified by the impacts of climate change, destroying cof fee harvests throughout Mexico and Central America beginning in 2012, has brought UCIRI to the verge of collapse, with members reporting: "Everything we have fought for over the past 30 years we are losing to climate change and rust" (quoted in Byrne and Sharpe, 2014: 124). How effective can the fair trade network be at the local level against the tide of global forces beyond its control?

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 291

BOX 15.4 I Fair Trade and Labour Exploitation CURRENT EVENTS

In 2013 and 2014, several in-depth investigations shook up the fair trade and ethical certification world

by suggesting modest, or even less, developmental benefits to certified communities in the South. One

report, examining fair trade and UTZ certified coffee in seven regions of Ethiopia, Uganda, and Kenya from 2008 to 2013, concluded that the impact on farmers' total income was "modest and fairly limited";

that "[structural] change of bargaining relations throughout the coffee chain hardly occurred"; and that certification had "not resulted in a widespread perception that coffee farming [was] a profitable business venture" (Hoebink et al., 2014: 8, 12). Another report, examining five cases of sustainably cer tified co

coa and tea farms in Ecuador, Ghana, and India, was more optimistic, stating that voluntary certification standards revealed "an overall positive impact" on such things as income, while concluding: "We have

not found evidence that sustainability standards, especially without significant additional producer sup port programmes, are able to lift smallholder households out of poverty." Positive impacts on gender inequality were "very limited" and hired labourers were "not reached by sustainability standards" (Nelson and Martin, 2013: 77, 85-6).

Perhaps most surprising of all was a report produced out of the Department of International Devel opment at the School of Oriental and African Studies, University of London, focused specifically on rural

wage labourers on fair trade certified coffee, flower, and tea plantations in Ethiopia and Uganda. Based on the extensive gathering of micro-evidence, including over 1,000 "person days of direct field research,"

the researchers determined that they were unable to find any evidence of positive impacts on wages and

working conditions for labourers on fair trade farms. In fact, they conclude that "the data suggests that those employed in areas where there are Fairtrade producer organisations are significantly worse paid,

and treated, than those employed for wages in the production of the same commodities in areas without any Fairtrade certified institutions" (Cramer et al., 2014: 16, 18). The authors suggest a key reason for

this could be the scale of large, non-fair trade farms, which have the resources to offer better pay and

working conditions, and are often highly exposed to public scrutiny. They also point to the specificities of individual farms (which can have good or bad labour conditions for many complex reasons) and to the

"blindness" of fair trade standards, which have traditionally focused on small farms while neglecting the rural labourers who work on them (Cramer et al., 2014: 101). Outcomes such as these have sparked

considerable debate and point to the need to carefully consider the developmental impacts of fair trade and other voluntary certification schemes as they currently exist.

Concerns also have been raised that the growth

of the fair trade network has been driven by the

increasing participation of corporations and in

ternational institutions that are using token sup

port for fair trade to mask their broader devotion

to free trade. Thus, corporations such as Starbucks

gain positive publicity for selling 8.1 per cent of its

coffee beans as fair trade in 2012, even though over

91 per cent of its beans were not fair trade certified

and lacked its rigorous third-party verification. The

World Bank has supported fair trade certification,

both in its policy documents and by serving fair

trade tea and coffee to its employees in Washington,

while insisting it must be combined with privatiza

tion, liberalization, and deregulation-policies that

fair trade groups have traditionally opposed (World

Bank, 2013; Fridell, 2007, 2014; Jaffee, 2007). Fair

trade author and activist Daniel Jaffee has expressed

concern that unless the principles of the fair trade

network can be adopted by national and interna

tional governing bodies as a matter of state policy,

"it might indeed become irrelevant in the face of the

larger effects of corporate-led economic globaliza

tion" (2007: 266).

292 PART Ill I Issues in International Development

PHOTO 15.2 I Fair Trade co-founder Francisco VanderHoff examines coffee plants in Buena Vista, Oaxaca, Mexico.

The Scorecard on Free versus

Fair Trade

Free trade policies continue to dominate the inter

national trade regime, and their effects continue to

spread, with diverse results in different regions in the

South. At the same time, the onset of the global eco

nomic recession at the start of 2008 reignited debate on

the pitfalls of unregulated markets and has given new

impetus to advocates for regulated fair trade mecha

nisms, as discussed below.

While the future of global trade policies remains

contentious, some general assessments can be made

about their developmental impact on the basis of past

performances. In a report by the US-based Center

for Economic and Policy Research, The Scorecard on

Globalization, the authors compare 20 years of em

bedded liberalism, from 1960 to 1980, during which

time fair trade policies were on the rise, to 20 years of

neoliberalism, from 1980 to 2000, when free trade pol

icies emerged as the dominant trade paradigm. They

determine that despite some of the shortcomings of

embedded liberal policies, the 1960s to the 1980s was

a period of previously unprecedented overall progress

in the South for most major indicators of human de

velopment, including life expectancy at birth, GDP per

capita, infant and child mortality rates, education, and

literacy. In contrast, the decades of neoliberal poli

cies since the 1980s were accompanied by a decline in

progress for most of these indicators (Weisbrot et al.,

2001). Included among these statistics is economic

growth, which slowed significantly after the 1980s for

most countries, even while free traders claim it to be a

central goal of their policy objectives-GDP per capita

in Latin America grew by 75 per cent from 1960 to 1980

compared to only 6 per cent from 1980 to 1998 (Stiglitz,

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 293

2003; Weisbrot et al., 2001). If the "scorecard" reads like

this, why do free trade policies continue to dominate

the international trade agenda?

THE LIMITS OF A TRADE PERSPECTIVE:

"IT'S NOT ABOUT FREE TRADE"

Beyond debating the developmental impact of free

trade policies, one can also debate the extent to which

the many official free trade arrangements genuinely en

tail freeing trade, which at a minimum involves evenly

eliminating trade barriers. The WTO negotiations have

failed in this regard, as more powerful countries have

used a variety of techniques to warp trade relations

in their favour. For example, while rich nations have

dramatically reduced their tariff barriers over the past

20 years, they have at the same time increased their

use of quotas and non-tariff barriers to trade (Jones,

2010; Rasset, 2006; McNally, 2006; Oxfam Interna

tional, 2002). Particularly contentious, and a major

stumbling block at the WTO, has been the massive use

of agricultural subsidies (a non-tariff barrier) by north

ern states-by one estimate, in 2009 $62 of every $100

that a US farmer earned came from some level of gov

ernment, amounting to a total annual farm subsidy of

$180.8 billion (McKenna, 2010).

Despite the WTO's shortcomings, passionate free

trader Jagdish Bhagwati (2008) still prefers its multi

lateral vision to the burgeoning array of bilateral "free

trade" agreements that involve two or a select group

of countries. While these agreements may appear to

be freeing trade by lowering barriers between specific

members, they discriminate against non-members,

which in effect erects further barriers to trade for

non-members. To Bhagwati, these agreements are not

free trade, but rather "preferential trade" agreements,

and their widespread growth and adoption since the

1990s is a "pandemic" that threatens the prospects of genuine free trade being negotiated by all WTO members.

If free trade mechanisms are not effective at evenly eliminating trade barriers, political scientist David

McNally (2006: 27) provocatively argues that this is

because they are "not about free trade." Instead, they

have as a key goal that of protecting the property rights

of transnational corporations and limiting the rights

of states to intervene in their operations for the sake

of social, environmental, or developmental concerns.

For example, the North American Free Trade Agree

ment (NAFTA) contains a Chapter 11 that allows for

eign investors to sue governments if they believe their

company has suffered a loss because of a violation of

an array of special investment rights and protections.

In the mid-199os, when the governor of the Mexican

state of San Luis Potosi blocked attempts by US-based

Metalclad Corporation to build a toxic waste landfill

site in the state, the company filed a Chapter 11 com

plaint. In 2000, the NAFTA tribunal ruled in favour of

the company and ordered the Mexican government to

pay $16.7 million in damages to the company (McNally,

2006: 43-5).

Since then, dozens of cases have been brought

before NAFTA tribunals, awarding millions to cor

porations and raising concerns of a chilling effect on

government policy-makers (Sinclair, 2010). These cases

suggest that NAFTA is less about promoting free trade

than about formulating a "new constitutionalist frame

work" that elevates the rights of transnational corpora

tions above the social and environmental concerns of

communities and citizens (Gill, 2003). Concerns have

been raised recently that the 12-member Trans-Pacific

Partnership (TPP), signed in February 2016 and cur

rently awaiting ratification by the member states,

contains a similar investor-state dispute mechanism.

The manner in which such trade deals as the TPP are

crafted in a secretive fashion was highlighted by trade

campaigner Stuart Trew, who observed, in regard to

the TPP, that "while 600 corporate lobbyists have seen

the negotiating texts, they are not made available to the

public in any participating country" (2012: 20).

If we accept McNally's premise that the array of

agreements and organizations regulating the interna

tional trade regime are not concerned primarily with

free trade, why do global institutions, national gov

ernments, and NGOs persist in discussing and debat

ing trade issues along free trade lines? Some thinkers,

drawing on the work of political and cultural theorists

like Antonio Gramsci and Michel Foucault, have ar gued that the concept of"free trade" is most powerfully

understood as an ideological tool designed to ensure

the "hegemonic" dominance of the world system by

the elites in northern countries. Free trade is more

than a mere policy proposal; rather, it is a discursive

294 PART Ill I Issues in International Development

component of a power/knowledge regime designed

to naturalize and legitimize the current world order

(Goldman, 2005; Harvey, 2005) (see Chapter 4).

According to sociologist Michael Goldman, this

regime is in part maintained by international organiza

tions such as the World Bank, which produces moun

tains of reports and policy frameworks that construct

"knowledge" about development and what it should or

should not entail. The knowledge the Bank produces is

not value-neutral but is designed to promote the idea

that "there is no connection between increased poverty

in the South and increased wealth accumulation in the

North, and that such global institutions as the World

Bank are composed of mere technocratic experts offer

ing transhistorical truths to those who lack know-how,

experience, and skills" (Goldman, 2005: 21). Conse

quently, while neoliberal policies may not have proved

very effective at promoting actual free trade or com

batting poverty in the South, the World Bank has spent

tens of millions of dollars per year developing reports,

working papers, data analyses, seminars, journals, and

policy prescriptions to advance the opposite claims.

Many of these sources are self-referential, lack the

scholarly requirements of independent research, and

are produced by officials who tend to share a "scientific

esprit de corps that is rare among research institutions"

(Goldman, 2005: 101). The result, states Goldman

(2005: 103), is that "[k]nowledge is indeed power for the

World Bank."

Fair trade concepts are not immune to the above

critique, and many have suggested that fair trade ideas

remain largely within the discourse of neoliberalism.

They assert that despite their differences in approach,

both free and fair traders aspire ultimately to com

petitive markets, open trade, export competitiveness,

and a reliance on foreign investment (Bello, 2004;

Fridell, 2007; Hart-Landsberg and Burkett, 2005:

13-25; McNally, 2006). Indeed, one of the criticisms

PHOTO 15.3 I A fair trade cotton farmer weighs his crop, Mali.

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 295

of neoliberal reforms most frequently made by fair

traders is that they do not do enough to promote true

free trade, which they posit would work in the best

interests of the poor and the rich as long as the proper

institutional supports are provided (Oxfam Inter

national, 2002; Stiglitz, 2002). Critics charge that,

when fair traders adopt this position, they inadvert

ently narrow the development debate down to what

is and is not the most effective way to integrate into

global markets, while neglecting and obscuring alter

native visions of development and trade (Bello, 2004;

McNally, 2006).

THE RISE OF SOUTH-SOUTH TRADE

Try as analysts might to predict the future, it is always

elusive. Perhaps one of the most unpredictable events

to have occurred in the past decade or so has been the

much discussed and debated "Rise of the South," which

has had major impacts on global trade policy and prac

tice. Several economic giants, led by China, India, and

Brazil, have emerged as major players in international

trade after decades of rapid economic growth, leading

to improved social indicators and enhanced political

influence (see Chapters 6 and 13). Flows of South-South

foreign direct investment (FDI) grew from $2 billion in

1985 to $60 billion by 2005, and the share of South

South trade composing world merchandise trade grew

from 8 per cent in 1980 to 26 per cent by 2011 (UNDP,

2013: 2; Shirotori and Molina, 2009).

Southern giants have emerged as lead players in

both importing and exporting goods. China, for exam ple, is the world's second largest economy and second

largest exporter, as well as the number-one purchaser

of major goods, from cars and pork to timber, gold,

and crude oil. Even with products that are relatively

"small" in the Chinese market, China is set to become

a world leader. Coffee, for example, remains less popu

lar than tea in China, but the country still is predicted

to be among the world's top coffee importers by 2020

because of its huge population. The same is true about other southern economic giants. Brazil, long the world's

largest coffee producer, became the second largest con

sumer in 2012 and might yet overtake the United States

as the largest coffee-consuming country by the end of

the decade (Fridell, 2014; WITS-UN-COMTRADE, 2015).

Southern trading powers have had significant im

pacts on global trade policy in ways that have both chal lenged and conformed to the dominant trade agenda.

On the one hand, a country like China has accounted

for the majority of global poverty reduction since the

198os-from 1981 to 2005, China's poverty rate de

clined from 85 to 15 per cent. And yet, while China has

been a major trader, its production and trade growth

have taken place under massive state involvement in

the economy, with regulations on foreign investment

and capital and gradual, selective liberalization. This,

combined with other examples throughout the South,

has given rise to a new emphasis on "pragmatic" trade

policies aimed at promoting human development

alongside economic growth. In a manner reminiscent

of the old fair trade vision, the UNDP (2013: 4) has re

cently called for these policies to be conducted by "a

proactive developmental state" (UNDP, 2013: 4).

On the other hand, the policy impacts driven by

southern trading powers have often conformed to the

free trade agenda. Brazil, for example, in 2002 famously

launched a WTO trade dispute against the United States

over subsidies paid to US cotton farmers. In 2005,

Brazil won, and the United States agreed to tinker with

its subsidy program and offer Brazil US$147 million

per year until it reformed its cotton subsidy system.

The Brazilian victory was widely celebrated as a sign

of the rising South. Critics, however, argued that the

winners were not small farmers-who lack the econ

omies of scale to compete with global transnational

corporations-but Brazilian agribusiness, dominated

by giant, vertically integrated corporations that are

now among the world's largest. In policy terms, Kristen

Hopewell (2013: 618) has observed that the Brazilian

victory signified "an intense focus on liberalizing ag

riculture markets through the removal of subsidies,

rather than advocating policies that would mark a

more radical departure from the WTO's traditional

neoliberal trade paradigm."

Despite the many unique changes to world trade

heralded by the rise of the South, it remains a highly

uneven and unequal process, with the greatest gains at

tained by the most powerful countries and those from

the upper and middle classes within countries. The

Brazilian cotton dispute was originally depicted as a

victory for all southern cotton exporters, in particular

the poorest ones in West Africa. In the end, however,

296 PART Ill I Issues in International Development

most southern countries will not benefit as they lack

the ability to compete against Brazilian agribusiness

and will not gain access to the millions of dollars paid

directly to Brazil as a penalty. Similar inequalities exist

within nations (Hopewell, 2013). In China, for exam

ple, a key factor in its economic success has been the

intensive exploitation of low-paid workers, vulnerable

and desperate for work in a world dominated by cor

porate giants working in partnership with the Chinese

state (see Box 15.5).

Some southern projects have sought to directly

address uneven development and inequality within

and among states, and chart an explicitly alternative or

more radical pathway to the dominant trade agenda.

Perhaps most notable has been the emergence of ALBA

(Bolivarian Alliance for the Peoples of Our America),

launched by its lead promoters, Venezuela and Cuba,

in 2004, and since expanding to include Antigua and

Barbuda, Bolivia, Dominica, Ecuador, Nicaragua,

CRITICAL ISSUES

St Lucia, St Vincent and the Grenadines (SVG), and a

handful of observer states. ALBA represents a conscious

alternative to free trade and proposes a socially ori

ented regional trade bloc where wealth would be re

distributed to poorer members and social issues such

as local food sovereignty, access to generic drugs, and

environmental rights would take precedence over lib

eralized trade. Paul Kellogg (2007: 201) states, "where

traditional trade deals use language like 'comparative

advantage,"' ALBA instead argues that "the political,

social, economic and legal asy mmetries of both coun

tries have been taken into account." One of ALBA's

most successful projects has been a unique agreement

wherein Venezuela has sent thousands of barrels of oil

a day to Cuba in exchange for Cuba sending thousands

of doctors and medical supplies to poor and rural com

munities in Venezuela, providing medical services and

training to 17 million people (Gibbs, 2006: 265-79).

This is one of numerous South-South development

BOX 15.5 I Worker Realities and Worker Suicides in China

While China has posted major economic and social gains over the past 30 years, these gains have been distributed highly unequally. While the number of billionaires in China skyrocketed from 3 in 2004 to 354 by 2014, second only to the United States (Baer, 2015), long working days under punishing physical and psychological conditions have confronted millions of low-paid workers-a key ingredient to the country's competitive advantage.

Responding to abysmal working conditions, in 2010, 18 young migrant workers, all between the ages of 17 and 25, attempted suicide at Foxconn Corporation facilities in China. The Taiwanese-owned Foxconn is the world's largest contract manufacturer of electronics, producing half of the world's elec tronics for major corporations like Apple, HP, Dell, and Nokia, and employing over one million people in China (Ngai and Chan, 2012).

The shocking suicide attempts inspired the creation of the Foxconn Research Group, composed of researchers in China, Hong Kong, and Taiwan, who conducted an extensive investigation into Foxconn labour conditions in nine cities. They determined that workers frequently worked 12 hours a day with only four days off per month; laboured under intense and monotonous conditions with constant surveillance; lived on factory "campuses" under tight control and security; and often experienced "loneliness and frag mented lives." These conditions were facilitated by the state, which provided Foxconn with physical in frastructure, tax breaks, and labour recruitment-including funnelling young "interns" from local schools into Foxconn factories to gain "training." Far from a developmental success story, lead researchers Pun Ngai and Jenny Chan conclude that "Foxconn as a form of monopoly capital generates a global 'race to the bottom' production strategy and repressive mode of management" that deprives migrant workers "of their hopes, their dreams, and their future" (Ngai and Chan, 2012: 402-05).

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 297

projects that have emerged in recent years, involving such things as preferential trade arrangements, conces sional funding for oil, and various forms of "in-kind" payment and assistance, including a unique project to construct an international airport on the small island state of SVG (see Box 15.6).

ALBA is still in its infancy and faces an uphill bat tle against many constraints. In particular, some of the most ambitious ALBA projects relied on the oil wealth of Venezuela, which has suffered a great deal with the decline of global oil prices since the 2008 financial crisis. Critics, moreover, have charged that ALBA rep resents less a coherent alternative to free trade than an attempt by the Venezuelan government to extend its sphere of influence . Yet, while the development of ALBA may in part be driven by the geostrategic inter ests of Venezuela, a similar critique can also be lev elled at international free trade agreements, which often have been adopted by elite- dominated autocratic

CRITICAL ISSUES

states under intense pressure from northern powers, the World Bank, the IMF, and the WTO (Ellner, 2007). "Power politics" has always played a central, if unfor tunate, role in shaping the nature of modern interna tional trade regimes (Gill, 2003; Gowan, 1999).

THE FUTURE OF INTERNATIONAL

TRADE: "DYNAMIC" OR "DEF YING"

COMPARATIVE ADVANTAGE?

The rise of southern powers, combined with growing recognition of the failed policies of the 198os-2ooos and the global financial crisis beginning in 2008, has called into question dominant assumptions around the benefits of free trade and sparked a rethinking of global trade policy. Even within the World Bank, long an un wavering promoter of rapid trade liberalization, signs

BOX 15.6 I South-South Co-operation in St Vincent and the Grenadines

The "rise of the South" has brought with it a renewed interest in "a proactive developmental state" not just among the largest southern economies, but also among smaller or more vulnerable ones (UNDP, 2013: 4). One unique example of this has been St V incent and the Grenadines, where the government of Prime Minister Ralph Gonsalves, in office since 2001, has boosted public spending on social programs (e.g., education and health care) and physical infrastructure (e.g., roads and low-income housing) to combat the negative impacts of the global economic recession and the decline of traditional industries, in particular bananas, which had thrived on the basis of a preferential agreement with the EU until it was quashed by the WTO in the 2000s.

In the wake of declining preferential supports from northern governments, SVG has found increasing assistance from southern partners, including through membership in ALBA. Most notably, since 2008, Venezuela and Cuba have provided SVG with millions of dollars of assistance and soft loans to construct a new international airport designed to promote fresh opportunities for trade, tourism, and services. An estimated $112 million of this assistance-over 40 per cent of the cost of the airport-comes mostly in the form of "in-kind" support, including free engineering services, heavy machinery, wind stations, and an on-site laboratory. Additional support has come from other, non-ALBA countries, including grants and loans from Taiwan, Trinidad and Tobago, Iran, and Libya,and a free Airport Master Plan provided by Mexico (Fridell, 2013; Gonsalves, 2012).

The airport is due for completion by the end of 2016. While projects such as this may not be able to overcome the vulnerability experienced by small island states in a highly uneven global economy, they do point to new and original forms of South-South co-operation that challenge the northern-based con sensus around free trade, while supporting governments developing southern-based alternatives to it.

298 PART Ill \ Issues in International Development

have emerged that a reconsideration of hegemonic

trade assumptions is occurring. Justin Lin, Chief Econ

omist and Senior Vice-President of the World Bank,

and other prestigious economists have called for a new

consensus on "dynamic comparative advantage," based

on a recognition that the most successful economies in

the world, North and South, relied on government "in

dustrial policy" to encourage manufacturing, research

and development, technological advancement, educa

tion, employment, training, and entrepreneurialism.

While Lin believes, along the lines of conventional free

trade thinking, that economic policy ultimately must

follow a country's comparative advantage, he departs

from this reasoning by arguing that a "facilitating state"

should gradually encourage private-sector upgrading

and technological advancement (Lin and Chang, 2009).

Departing from this view, economist Ha-Joon

Chang argues that following comparative advantage

is not enough; instead, a developing country must

"defy comparative advantage." While comparative

advantage is an important consideration, the concept

remains limited to a country's current endowments

such as its technological capabilities-and is unable to

provide a map for transcending these limitations in

the long run. "In the real world," argues Chang, "firms

with uncertain prospects need to be created, protected,

subsidized, and nurtured, possibly for decades, if in

dustrial upgrading is to be achieved." Reflecting on the

historical rise of the Japanese auto industry, he points

out, "Japan had to protect its car industry with high

tariffs for nearly four decades, provide a lot of direct

and indirect subsidies, and virtually ban foreign di

rect investment in the industry before it could become

competitive in the world market" (Lin and Chang,

2009: 491, 501).

The vigorous debate between Lin and Chang offers

a welcome revival of long-standing debates over free

versus fair trade, centred in particular on what role the

state should or should not play in managing markets.

Regardless of the debate, however, actual trade policies

between states and within international organizations,

including the World Bank, have not changed all that

much. The particular free trade agenda of the richest

and most powerful nations continues to dominate in

ternational trade policy, while fair trade alternatives,

driven by less powerful supporters, continue to face an

uphill political battle. Trade policy is ultimately driven

not strictly by the battle of ideas, but by the political

and economic interests of competing states in a highly

uneven global economy. For development thinkers,

however, the ultimate measure of the success of trade

projects should be the extent to which they promote

and enhance human development. International trade

should be merely a means to this end.

SUMMARY

In this chapter, the student learns about two overar

ching perspectives on trade: free trade, premised on

the notion that the removal of barriers to trade and

the limitation of state intervention in the market will

provide the greatest developmental gains for all; and

fair trade, premised on the belief that the poorest de

veloping countries cannot attain substantial benefits

from global trade unless the terms of North-South

trade are readjusted and market interventionist mech

anisms are employed to support development efforts.

These two perspectives, in manifold ways, have dom

inated post-war policy discourse and debate on trade

and development globally, and are of key importance

to understanding the dominant development theories

and practices. The second half of the chapter discusses

the rise of South-South trade and how it has shaken

up the old debate on free versus fair trade, giving rise

to new and previously unanticipated trade patterns,

political and economic impacts, and development

agendas. The rise of China and the BRICS, and the

return of the "pragmatic" activist state, has injected

fresh energy into the old debate, in the form of a new

trade policy contest between "dynamic" or "defying"

comparative advantage-one that promises to set the

stage for trade and development agendas in the years

to come.

15 I Fridell: Free Trade, Fair Trade, and South-South Trade 299

QUESTIONS FOR CRITICAL THOUGHT

1. What are the major issues of disagreement between "free trade" and "fair trade" perspectives? Are there

similarities?

2. Do free traders oppose any form of state involvement?

3. In terms of human development, how does the era of neoliberal free trade since the 1980s compare to the

previous era of "embedded liberalism"?

4. What are some of the political issues driving free and fair trade policies? Why do the world's most powerful

institutions generally support free trade?

5. What has been the impact of the rise of South-South trade on global trade policy? Do you think it has altered

things significantly?

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Byrne, Stacey, and Errol Sharpe. 2014. In Pursuit of Justice:

Just Us! Coffee Roasters Co-op and the Fair Trade

Movement. Halifax: Fernwood.

Chang, Ha-Joon. 2008. Bad Samaritans: The Myth of Free

Trade and the Secret History of Capitalism. New York:

Bloomsbury Press.

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Democracy Cedric J ourde

LEARNING OBJECTIVES

To be able to distinguish between different defini

tions of democracy.

• To understand the various theories of regime

change (democratization; authoritarian backlash)

and to be able to apply them concretely to specific

countries and situations.

• To understand the dangers that could pull a dem

ocratizing country back towards authoritarianism.

• To appreciate the debate surrounding the rela

tionship between democracy and economic and

social development.

-"' Myanmar democracy leader Aung San Suu Kyi waves the flag of the National League for Democracy (NLD) party at the party's

fun fair music concert in Yangon, Myanmar. After Initiating a nonviolent, pro-democracy movement in 1989, Suu Kyi led her pro

democracy party to victory in the 2015 elections. I Source: © epa european pressphoto agency b.v.jAlamy Stock Photo

The concept of democracy is a source of much debate

among researchers studying the politics of developing

countries. We will explore four of these debates in this

chapter. The first relates to the meaning of democracy:

neither scholars nor political actors can agree on a

common definition. "Democracy" is a polysemic con

cept-that is, it is a word with many different meanings.

The differences can be very large, not only between

countries but also within countries. The second debate

concerns the pathways that lead to democracy. Special

ists do not agree on the causes or factors that trigger

democratic transitions. For example, can we say that

the level of economic development is a factor that fa

vours the emergence of democracy? Some believe this

is the case, whereas others emphasize entirely different

factors. Third, researchers disagree with respect to the

factors that hinder (and favour) the consolidation of

democratic institutions. Once a country establishes its

first democratic institutions, how can we ensure that

they will develop fully and not disintegrate a few years

after the transition? Finally, the fourth debate revolves

around the causal role of democracy: what is the ef

fect of democracy and democratization on social and

economic dynamics? Some researchers believe that de

mocracy hinders the economic and social development

of the world's poorest countries because it promotes

constant competition and political one-upmanship. In

contrast, others believe that democracy is the only type

of government capable of establishing firm foundations

upon which to build a functioning economy and legit

imate and just social relations. These are the four main

debates explored in this chapter.

CLARIFYING THE CONCEPTS:

A DIFFICULT TASK

The first task is to clarify our concepts, since terms in

common usage are often ambiguous and admit of mul

tiple definitions. Yet even if we try to be as clear as pos

sible with the terms we use, it is impossible to come to a

universally accepted definition.

When scholars consider political institutions in

developing countries, their first step is to determine the

type of political regime in place. "Political regime" re

fers to the set of principles and rules that govern power

relations between society and the state (Przeworski

16 I Jourde: Democracy 303

et al., 2000, 18-19). More simply, what political rules

connect leaders and citizens? These rules can be formal

(such as those written in a constitution) and informal

(unwritten and unofficial, yet very effective nonethe

less), in which case it is more difficult, but just as im

portant, to know about them (Helmke and Levitsky,

2006). In some cases, those rules and principles can be

qualified as democratic, and in other cases, they can

instead be qualified as authoritarian.

Usually, democratic regimes are distinguished

from authoritarian regimes. The latter are regimes in

which rules and principles enable state officials to pre

vent society from participating in the decision-making

process; to resort frequently to arbitrary violence

against their population; to extract, use, and distribute

economic resources in an unaccountable and often vi

olent fashion; and, finally, to avoid any mechanism that

would make them accountable for their actions and de

cisions (Levitsky and Way, 2010: Appendix 1).

Increasingly, researchers also differentiate democ

racies and authoritarian regimes from a third type of

regime. Its name and definition are, once again, the sub

ject of debate: it is usually called a semi-authoritarian

regime (or a hybrid regime). Here we are referring

mainly to countries that undertook democratic reforms

at the beginning of the 1990s. Although they officially

abolished the one-party system and/or removed the

military from political office, elites of the old regime

still perpetuated (sometimes informally, sometimes in

a more formal fashion) a plethora of heavily authori

tarian political practices. These practices ranged from

the repression of opposition to massive electoral fraud

or even to the systematic use of public administration

for personal gain (Boogards, 2009; Levitsky and Way,

2010; Wigell, 2008).

In addition, scholars often differentiate between

two phases in the process of democratization

democratic transition and democratic consolidation.

"Democratic transition" refers to the phase during

which authoritarian institutions and practices are in

the process of being reformed and replaced by institu

tions and practices that are more democratic (or less

authoritarian). This transitional phase is characterized

by a degree of uncertainty; as during all transitions, no

one is completely certain about the outcome of the pro

cess. It is not clear whether democracy will be achieved,

because the actors or forces pushing for democracy are

_1f)4 ART Ill I Issues in International Development

struggling with those attempting to maintain the au

thoritarian status quo. This phase is distinct from a

more stable phase, democratic consolidation, which

is characterized by a solidification of the democratic

foundations. During this phase, political actors are no

longer in debate over whether they should conserve the

authoritarian regime or adopt a democracy but rather

over how they should go about reinforcing the demo

cratic regime (Schedler, 2001).

The concepts of democratic transition, democratic

consolidation, and even authoritarianism remain,

nonetheless, relatively vague unless we clarify the most

central concept of this chapter, democracy. This con

cept is a subject of intense debate among researchers,

and it is clear that a single and universal definition does

not exist. To generalize somewhat, one of the debates

reveals a division between two main camps: those who

advance a pro cdural dctinition of Jcmocr.u:y and

those who propose a .!.ub�tantivc d •linition of Jemoc

rac1 (Collier and Levitsky, 1997).

Researchers who adopt the procedural approach,

which is sometimes labelled "minimalist," argue that a

regime is democratic as long as certain basic but fun

damental political rules and principles are enforced.

First, all citizens can regularly and uninterruptedly

choose political representatives who govern in their

name. This choice is made through free and fair elec

tions in which any citizen can stand as a candidate as

well as being able to participate as a voter, regardless of

gender, ethnicity, language, race, religion, social class,

or disability. Second, the state must guarantee the

fundamental freedoms of all its citizens, in particular

rights of participation, assembly, expression, and in

formation. This definition is sometimes characterized

PHOTO 16.1 I A young woman lights a candle for the "disappeared" victims of Argentina's bloody 1976-83

dictatorship, Buenos Aires, Argentina.

as minimalist because it requires only a mm1mum

number of elements to be present in order to deter

mine whether a regime is democratic or not. This will

become increasingly clear when we expand on the sub

stantive approach.

One corollary of the minimalist definition is its

universal character: if only a few features are neces

sary to determine whether a regime is democratic, it

entails that democracies can actually be observed, and

counted, across time and space. Thus, proponents of

the minimalist approach believe that we can count

and classify different regimes of the world, either by

distinguishing democracies from non-democracies

(a binary distinction) or by classifying them accord

ing to their degree of democracy and observing the

changes that take place from year to year (Munck and

Verkuilen, 2002). For example, Larry Diamond (2002:

26) has created a typology that classifies political re

gimes into six different categories. The most democratic

countries are found in the first two categories: "lib

eral democracies" and "electoral democracies." They

are followed by less democratic regimes: "ambiguous

regimes," "competitive authoritarian," or "hegemonic

electoral authoritarian," and finally, the "politically

closed authoritarian" regime. Other researchers, such

as those who work for the US-based Freedom House

or the Polity V Project, quantify the degree of democ

racy of each political system in the world by giving

them a grade. Freedom House distinguishes between

three types of regimes: "free," which is the equivalent

of democracy, "partly free," and "not free." Table 16.1

gives us an overview of the evolution of democracy

in the world since 1974 (the year that Freedom House

started to collect its data). We see, for example, that

16 I Jourde: Democracy 305

the number of democratic regimes-grouped together

under the "free" category-has significantly increased

since 1974. Democracies represented 28 per cent of all the

regimes of the world in 1974, increasing to 34 per cent

in 1985. Today, at 45 per cent, they represent nearly half

of the countries of the world. In contrast, authoritarian

regimes-classified under the "not free" category

represented 41 per cent of the regimes in the world in

1974 and represent merely 25 per cent today.

The procedural approach has provoked significant

reactions from many scholars who find it too reduc

tionist and minimalist (Zuern, 2009). They propose

what is known as the "substantive approach" to em

phasize the importance of looking at the "substance"

of a democracy, not only its procedures. While they do

not challenge the components of the procedural defi

nition, they consider them insufficient. Proponents of

this substantive approach usually focus on one of the

following three dimensions: cultural, socio-economic,

and citizenship.

The cultural-substantive definition is based on

the idea that the concept of democracy, while having a

certain universal dimension that is understood world

wide, should nevertheless incorporate local meanings

of the term. According to these researchers, the mean

ing of the word "democracy" varies from one society

to another and even varies strongly within a given

society (something often forgotten). Frederic Schaf

fer (1998) gave a good summary of the problem when

he demonstrated that the American understanding

of the concept of democracy was not necessarily the

same as a Senegalese view; as a matter of fact, even

within a country like Senegal, there seems to be a dif

ference between how peasants conceive of democracy

Tl\BLE 16.1 I The Freedom House Classification of Political Regimes

1974 1985 1991 2015

Type of Regime Total % Total % Total % Total %

Free 42 28 57 34 76 41 88 45

Partly free 47 31 56 34 66 36 59 30

Not free 63 41 53 32 42 23 48 25

Note: The total number of countries in the survey increased starting from 1991 onward with the independence of the ex-Soviet republics, the disintegration of Yugoslavia and Czechoslovakia, and the independence of countries such as East Timar and Eritrea.

Source: https://freedomhouse.org/sites/default/files/FITW_World_Map_24x16_fa_GF2015.jpg.

I 306 PART Ill I Issues in International Development

BOX 16.1 I Mali and the Freedom House Ranking CURRENT EVENTS

The case of Mali, one of the poorest countries in the world, provides an illustration of the global tendency

that Freedom House has documented. During the 1970s and 1980s, the military regime of Moussa

Traore reigned over Mali, placing this African nation within the category of a "not free" regime. After

Traore's regime was toppled in 1991, however, political actors began to construct a multi-party system

and to design a constitution that guaranteed fundamental liberties. As a result, Mali started to receive

much higher grades. It moved up into the category of "partly free" countries in 1991-2, then into the cat

egory of "free" countries the following year. The regime eventually fell back into the "not free" category

in 2012 when a military faction ousted the president through a coup d'etat, and the country plunged into

a war with terrorist organizations and separatist movements in the North. Elections were held in 2013

and the situation slightly improved, with the regime now rated as "partly free."

and how urban, Dakar-based intellectuals under

stand it. In the United States, according to Schaffer,

democracy evokes the notions that were previously

highlighted in the procedural definition. In Senegal,

demokaaraasi, as it is locally called, at least among

peasants, evokes notions of solidarity, consensus, and

equal treatment among people. He also observed that

in Senegal, an election does not have the same mean

ing that it does in the United States. The act of putting

a slip of paper into a ballot box is not seen as "democ

racy in action"; rather, it is perceived as an economic

transaction between a "politician-businessperson" and

a "voter-client." Schaffer, like other researchers, defines

the concept of democracy as being variable between

one national (or sub-national) culture and another.

To say that the basic meaning of democracy varies

from one country to another also implies that it can

refer to political actors and political dynamics unique

to a particular society. For example, when Romain

Bertrand (2002) conducted research in Java-the most

populous island of Indonesia, an archipelago with

around 230 million inhabitants-he realized that if

he wanted to understand fully their democratic pro

cess, he could not limit himself to analyzing the actors

normally studied in Western countries (political par

ties; governors; civil society activists; military officers;

etc.). He had to include actors involved in what can

be called "invisible world," the world of "witchcraft,"

"spirits," and other "invisible forces." Of course, po

litical parties, journalists, non-governmental organi

zations (NG Os), the central government, and women's

movements are democratic actors in Indonesia in ex

actly the same way they are in a country such as Ger

many. In Indonesia, however, one must also study the

role of "supernatural experts," "forces of the night,"

and religious leaders who-in the eyes of Indone

sians-play a critical role in politics. For Bertrand, as

for other researchers, it is not a matter of drawing a

caricature of an exotic political system but rather sim

ply of saying that we cannot understand democratiza

tion if we focus our analysis only on electoral results

and parliamentary reforms.

The second aspect of the substantive approach

is socio-economic in nature. The argument put forth

here is that the procedural approach is too minimalist

because it ignores one of the fundamental characteris

tics of any political system: the distribution of wealth

and economic well-being. W hereas supporters of the

procedural approach might classify a country as "dem

ocratic" once the electoral cycle is put in place cor

rectly and political freedoms are respected, supporters

of the substantive approach might hold that this same

country is hardly democratic if it exhibits profound

socio-economic inequalities (Zuern, 2009). From the

procedural point of view, distribution of wealth has

nothing to do with the definition of democracy; in the

substantive approach, this issue is at the very heart

of democracy. Thus, those who support the substan

tive approach would paint a very different picture of

countries such as South Africa and Brazil. In these

countries, there are free elections, and most political

liberties are either respected or in the process of being

implemented (freedom of expression, right of assem bly, and so on). Yet the level of inequality is so high in Brazil, for example-with the richest 10 per cent in 2013 enjoying more than 41.8 per cent of national wealth (compared to 25.7 per cent in Canada), while the poorest 20 per cent of the population have to make do with less than 3.3 per cent (compared to 7.1 per cent in Canada)-that we cannot consider this country as a true democracy. And in South Africa in 2011, the in equality of income distribution was even greater, with the richest 10 per cent having 51.3 per cent of national wealth and the bottom 20 per cent getting only 2.5 per cent (World Bank, 2016). According to this approach, then, democracy is not merely a matter of electoral cycles and individual rights; it also presumes a more equitable distribution of wealth within a country (see Box 16.2).

Finally, the third component of the substantive definition, directly related to the previous one, raises the question of citizenship. For supporters of this ap proach, a democratic regime is one in which all adult citizens are granted a wide range of social and political rights. Moreover, for the regime to be truly democratic, these rights must be applied universally, equally, and systematically. In a number of countries, unfortunately,

16 I Jourde: Democracy

citizenship is often heterogeneous in that political rights are not respected in a systematic and univer sal way. For example, in a number of Latin American countries, access to justice, social services, security, or any other public service is unequally distributed and depends on whether a person lives in a city or in the country or even in certain neighbourhoods over oth ers. There are zones of "complete citizenship" but also a number of "brown areas," as Guillermo O'Donnell (2004) calls them. Impunity, arbitrariness, violence, and discrimination based on one's identity (e.g., ethnic, racial, social class, and gender) are the norm in these brown areas. Consequently, while officially everyone is an equal citizen, carrying the same social and po litical rights, individuals within these countries do not hold equal citizenship in practice. De facto citizenship can vary according to whether one is a native peasant woman, a doctor in a gated community in Rio, or a young Afro-Brazilian living in one of the Jave las that surround the big cities (Calderia and Holston, 1999). In such cases, the officials who represent the state (i.e., judges, the police, cadastral officers, and, more gener ally, civil servants) cannot or do not want (the differ ence is important) to guarantee equal citizenship for all. This infringes on the most fundamental principles

BOX 16.2 India and Substantive Democracy

During the debates surrounding the drafting of India's first constitution as an independent nation in 1949, Shim Rao Ambedkar, the leader of the Untouchable (or Dalit) Movement (the most disadvantaged group in the Hindu caste system), argued that India's democratic political institutions were not enough to make India a true democracy. According to Ambedkar, the Indian constitution lacked democratic sub stance because it did not take into account the massive socio-economic gap separating the different social groups of Indian society, notably between the untouchables and the so-called "noble" castes. Ac cording to him, limiting the notion of "democracy" to elected assemblies, elections, and political parties was not only insufficient, it was dangerous. Here is what he said in 1949:

On January 26, 1950 [the date when the new Indian constitution would be enacted], we will enter into a life of contradiction. In politics we will have equality and in social and economic life we will have inequality . . .. We must remove this contradiction as quickly as possible, or else those who suffer from inequality will blow up the structures of political democracy this Assembly has so laboriously built up. (Quoted in Keer, 2005: 415)

307

308 PART Ill I Issues in International Development

of citizenship and constitutes a significant limit to the

democratic nature of the regime.

The issue of citizenship also arises in relation to

the question "Who is a citizen?" This varies greatly

from one country to another. In countries such as

the Democratic Republic of the Congo, Cote d'Ivoire,

and Malaysia, the formal distinction between citizens

and non-citizens who reside on national territory has

even been the source of conflict. Some politicians

have campaigned for the state to distinguish and dis

criminate between the "real sons and daughters of

the country" (bumiputri in Malay, for example) and

"foreigners." They argue that foreigners should not be

granted the status of citizens. For them, a "foreigner"

can be an individual born in the country but whose

great-great-grandparents moved into the area

100 years ago. The Chinese in Malaysia and in Indo

nesia, the Indians in Malaysia, the Malinkes in Cote

d'Ivoire, and the Tutsis in the Democratic Republic

of the Congo all have seen their citizenship brought

into question in recent years because their forefathers

and mothers migrated to the country decades ago;

occasionally granted citizenship, occasionally hav

ing it revoked, their position is always precarious

(Bah, 2010). They can no longer buy land, enter the

civil service, or even vote. In sum, for this approach,

a regime is not worthy of being called democratic if it

does not grant full and complete political and social

citizenship.

As we can see, although democracy might seem

to be a simple concept, it is a source of numerous de

bates among scholars. Thus, it is not easy to answer the

question "What is democracy?" The main point is that

it is not necessary to agree on a universally accepted

definition-an apparently impossible endeavour-but

rather to realize that we must indicate clearly the ap

proach we have chosen and that we must be as clear

and precise as possible when we use the concept of

democracy.

"WAVES" OF DEMOCRATIZATION

Similarly, explaining why and how countries have

democratized is a matter of debate among research

ers. This section presents the different approaches

researchers use to explain and understand these transi

tions to democracy.

Before we examine them, we should say a few

words about the historical sequence of democratic tran

sitions. Samuel Huntington's metaphor of the "wave"

(1993) is interesting, despite some limitations, in that

it clearly evokes the idea that the process of democra

tization has often affected a large number of countries

simultaneously and within a relatively short period of

time, as occurred with varying degrees of success in the

Arab world in 2011 (the so-called Arab Spring).

With respect to developing countries, we can

divide these transitions into three main historical

periods. The first started in the middle of the nine

teenth century and lasted until the beginning of the

twentieth. During this period, many European, North

American, and Latin American countries (such as

Chile and Argentina) established representative in

stitutions, with parliaments and heads of state elected

by the people and independent judicial systems

(Valenzuela, 2000).

The second historical wave began immediately after

World War II and ended towards the beginning of the

1960s. As Chapter 2 outlines, this was a period during

which a number of colonies obtained their independ

ence. These newly independent countries often inher

ited democratic institutions that the colonial powers

had set up in the final years of colonization. However, a

number of them soon were overtaken by some form of

authoritarian rule, ranging from single-party systems

to military regimes. An important exception was India,

which has maintained and developed its democratic in

stitutions ever since independence in 1947, depending,

of course, on the definition of democracy we use (see

Box 16.2).

Finally, Huntington's "third wave of democra

tization" started in 1974 with the democratization

of Portugal, gained pace at the end of the 1980s, and

continues to the present day. Clearly, the way we con

ceptualize these "waves" depends on how we choose

to define democracy and democratization. Also, the

fact that numerous authoritarian regimes are going

through a democratic transition does not preclude the

fact that they may eventually deviate from the dem

ocratic model and find themselves transformed into

more semi-authoritarian regimes.

,...

EXPLAINING DEMOCRATIZATION:

STRUCTURES OR ACTORS? THE

NATIONAL OR INTERNATIONAL

ARENA?

Various theoretical approaches have been proposed to explain and understand these waves of democratic transition. All studies of the process have to address two central questions, and although these theoretical approaches are presented separately here, in reality they are not mutually exclusive. Indeed, researchers of

ten mix and combine approaches. First, we can distinguish between the approaches

in terms of their level of analysis. For some specialists the fundamental causes that explain democratization are to be found at the international (or "exogenous") level, while for others these causes are mainly situated at a national level (i.e., within the borders of a coun try, or "endogenous"). Thus, when a scholar states that the end of the Cold War was the principal cause of the third wave of democratization in Africa and Asia in the 1990s, she is suggesting that the most important level of analysis for understanding democratization is the exog enous or international level. Conversely, if a researcher argues that the role played by women's movements and labour unions in a given country explains the democ ratization of that country's political regime, then she privileges the national or endogenous level of analysis.

Next, researchers have to take a position on a ques tion that has endured since the beginning of the social sciences, that is, the fundamental source of social, economic, and political change. To simplify, we can say that those who identify with Emile Durkheim-a

French scholar who was one of the founders of the social sciences-and, to some extent, with Karl Marx propose an approach according to which the funda mental causes of democratic transitions are structural or systemic in nature. The starting premise is that major social and political phenomena-such as revolutions, ethnic conflicts, or democratization-are the result of changes that take place within large political, eco nomic, institutional, cultural, or social structures. In

other words, they are not the product of individual de cisions and actions.

16 I Jourde: Democracy 309

Conversely, those who identify with another father

of the social sciences, the German Max Weber, assert that the source of social and political change-such as democratic transitions-lies with individuals and

their relationships with other people. This approach

is an agency-based explanation. In this framework, we explain democratization based on the preferences, interests, strategies, and identities of political actors,

the information at their disposal and what they choose to do with it, their representations of the world, and,

of course, the relationships these actors develop with each other (including negotiations, conflicts, tricks,

and pacts). In this view, the decisions and actions of political actors, and not structural forces over which these actors have no control, explain important polit ical change such as democratization.

Thus, if we combine each of the possible answers to these two questions (international or national; struc tures or agency), we have four principal approaches:

democratic transitions are caused by national struc

tures, international structures, national actors, or international actors. We will now use concrete exam ples to illustrate each of these four cases.

National Structural Approach

This approach involves explaining the causes of a dem ocratic transition by examining the political, social, and economic structures within the borders of a na tion-state. Those who use this approach often argue that changes within a country's social and economic structures are one of the principal causes of democ ratization (Lipset, 1959; Moore, 1966; Rueschemeyer et al., 1992). Note that the modernization approach de scribed in Chapter 3 has had a direct influence on this theory. Researchers have demonstrated that when the economic structures within a country that is authori tarian begin to develop-especially when the economy is experiencing rapid industrialization and a high rate

of urbanization-the social structures of the country are transformed, notably an accelerated growth of the working and middle classes. These classes are concen trated in the major cities and close to the centres of po litical power. Once they attain a certain size and level of education, they become powerful forces that challenge authoritarian leaders to an unprecedented degree. The

3 10 PART Ill I Issues in International Development

authoritarian regime is thus unable to maintain the sta

tus quo-namely, a political regime that excludes the

majority of the population from the political game. It

was easy to deny democratic reform when the majority

of the population was scattered in rural areas, without

basic education and with barely enough income to pay

heed to anything other than daily survival. The situa

tion completely changed, however, with large transfor

mations in economic structures, namely, urbanization

and industrialization, which in turn transformed the

social structure, increasing levels of education and in

come for large groups of people who were previously

disadvantaged. Supporters of this approach point to a

quasi-mechanical effect (a characteristic of structural

approaches) in hypothesizing that these economic and

social structural transformations will lead to demo

cratic transitions. Taking the recent events in North

Africa and the Middle East, some could argue that

the main reasons for the ousting of the Ben Ali (Tuni

sia) and Mubarak (Egypt) regimes are to be found in

structural domestic factors. For instance, we could say

that a critical cause is the growing socio-economic gap

between an extremely wealthy but small political elite

and a booming class of urban poor and middle classes

who are educated but whose conditions of living have

declined significantly in recent years (as compared to

those of the elite). At a certain point, the social and po

litical exclusion of these large segments of society is no

longer viable.

Not all researchers agree on the causal role of

structural economic transformations in the process

of democratization. Carles Boix (2003), for example,

introduced an important nuance, demonstrating

that an increase in the level of economic develop

ment is not sufficient to generate a transition towards

democracy. According to Boix, this transition is sta

tistically more likely to occur if economic develop

ment is accompanied by a redistribution of national

wealth. To simplify, imagine two countries adminis

tered by similar authoritarian regimes. Suppose that

both countries experience similar economic growth

but that severe inequalities persist in one country,

while growth in the other country is accompanied

by a relatively equal distribution of the fruits of de

velopment. For Boix, the probability of a democratic

transition is much stronger in the second case than

in the first.

Other researchers entirely refute the hypoth

esis of a causal link between the development of

socio-economic structures and democratic transi

tion. One of the best-known examples is the work of

Adam Przeworski and his colleagues (1997, 2000), who

demonstrate that there is practically no statistically

significant connection between the level of economic

development and the likelihood of democratization. In

other words, the fact that an authoritarian regime ex

periences economic growth has no effect on the prob

ability that this regime will eventually transform itself

into a democracy. The thesis of Przeworski and his col

leagues is illustrated by the cases of China, Vietnam,

and Singapore. While these countries have experienced

significant economic and social transformation (eco

nomic growth, industrialization, urbanization, and so

on), these changes have not led to the democratization

of their political regimes. The only significant relation

ship that these authors found was that the higher the

level of economic development, the smaller the chance

a democratic regime will collapse and be replaced by

an authoritarian regime. On that last point, these re

searchers would argue that the sudden democratic

breakdown in Mali (see Box 16.1) was predictable: one

of the poorest countries in the world, Mali's low level of

development made it more likely that the democratic

regime would succumb to a socio-political crisis and

revert to some form of authoritarianism.

International Structural Approach

For some researchers, structural changes are clearly

the cause of democratic transitions, but international

structural change is most important rather than

change on a national level. To demonstrate their hy

pothesis, these researchers point to the two most re

cent waves of democratization, one that began at the

end of the 1940s and the other that started at the end

of the 1980s. What was particular about these two pe

riods? The answer, according to these researchers, lies

in major transformations of the international system.

With respect to the wave that began towards the end of

the 1980s, there was a massive change in the interna

tional system as the world moved from a bipolar con

figuration-dominated by the two superpowers of the

Cold War-to a unipolar configuration with only one

superpower. This change in the international system

generated a significant amount of pressure on author

itarian regimes, forcing many of them to undertake

democratic reforms. In fact, the dissolution of the So

viet bloc signalled the victory of the model of liberal

democracy. Liberal democracy became the norm in the

international arena, a norm to which most countries

had to adapt. Authoritarian regimes often owed their

survival (and very existence) to the structural rivalry

between the American and Soviet superpowers. This

Cold War rivalry, in effect, had served to subordinate

questions about whether a particular country was

democratic or not: as long as the authoritarian regime

aligned itself with one of the two camps, its survival

was guaranteed. Loyalty towards either of the two poles

allowed the state to crush any pro-democracy move

ment within its borders. Once the superpower rivalry

disappeared, the authoritarian regime's survival was

no longer guaranteed. This international structural

transformation exerted more pressure on the author

itarian regimes of the developing world, which in turn

increased the likelihood of democratization.

If we apply this hypothesis to the cases of South

Africa and Indonesia, for example, the reasoning would

be as follows: the only reason these authoritarian re

gimes were capable of crushing opposition movements

was that they held key positions in the international

alliance system of the Cold War. The international

East-West bipolarity created a system of"international

clientelism" in which client states offered their loyalty

to one of the two superpowers in return for military,

political, economic, and diplomatic support (Clapham,

1996; Afoaku, 2000). Thus, being a geostrategic link be

tween the Atlantic and Indian oceans and surrounded

by self-proclaimed Communist regimes, the authori

tarian and apartheid regime of South Africa was the

recipient of unfailing Western support. As for the

Southeast Asian country of Indonesia, it was located

in one of the "hottest" regions of the Cold War, right

next to the front line of Vietnam and the Indochinese

peninsula and fairly close to the two Koreas and the

Communist regional superpower, China. W hether

in southern Africa or Southeast Asia, the question of authoritarianism was structurally subordinate to or

relegated beneath the sole priority of the day: the East

West rivalry. Once the international system was trans formed at the end of the 1980s, the South African and Indonesian regimes found themselves vulnerable to

16 I Jourde: Democracy 111

the challenge of pro-democracy movements. Democ

ratization was the logical consequence in these two

countries. In 1994, the once banned African National

Congress won the first free elections and the country

elected its first black president, Nelson Mandela. The

ANC has won all elections since then. In Indonesia, the

de facto military dictatorship of Suharto fell apart in

1998, and the country is today ruled by a civilian pres

ident, Joko Widodo, elected in 2014. Even if the Cold

War is over, however, the current context of the global

fight against terrorism has become a structuring fea

ture of world politics, which once again could provide

support for authoritarian regimes-such as in Egypt,

Algeria, Pakistan, and Ethiopia-that have positioned

themselves for the past decade as allies in the "war on

terror" (Pop-Eleches and Robertson, 2015).

On the other hand, specialists of North Africa

and the Middle East could argue that the recent upris

ings in this region are mostly explained by important

global changes. First, the global, worldwide spread of

information technologies is a necessary condition, for

these have facilitated communication among domes

tic activists and between these activists and the global

public opinion. Furthermore, more than 10 years after

the 9/u attacks in the United States, the international

community has been going through a learning curve

and is now aware that North African and Middle East

ern autocrats are not necessarily the "solution of last

resort against Islamic terrorism" they pretend to be.

Hence, without these global structural factors, the re

gime changes in that region would not have been possi

ble, these scholars would argue.

National Actor Approach

As explained above, agency-based approaches are

founded on a very different set of assumptions from

those of the two we have just discussed. First, support

ers of this approach criticize their counterparts for hav

ing an overly mechanistic vision, giving the impression

that democratization is an automatic process without

the possibility of deviation, contingencies, mistakes,

or surprises. Moreover, they argue that the structural

ist vision is "teleological" in the sense that it gives an

impression-a false and misleading one, according to

these critics-that we can know in advance whether a

country will democratize (the end point of that process)

312 PART Ill I Issues in International Development

and how it will go about the transition. According to

the supporters of the agency-based approach, transi

tions are full of uncertainties and contingencies. They

really depend on the choices made by a number of ac

tors. For example, the West African countries of Benin

and Togo both have similar underdeveloped domestic

economic structures and both have evolved within the

same international structures, yet Benin democratized

in 1991 while Togo remains trapped in authoritarian

ism. Thus, the factors that really count must be found

elsewhere. This "elsewhere" -what makes the differ

ence in democratization-is the role of political actors.

Just as with the structural approach, however, the

supporters of an agency-based approach are differ

entiated according to whether they focus on national

(endogenous) actors or international (exogenous) ac

tors. Studies that explain democratization by analyz

ing the struggles between the governing faction of the

authoritarian regime and the faction spearheading

pro-democracy movements (and the alliances and di

visions within each respective faction) are examples

of the national actors approach. This type of approach

has been used to study the case of South Africa, for ex

ample. The argument is that South African democra

tization was made possible because at the end of the

1980s the ruling bloc of the apartheid regime split into

two rival factions, each with different interests and

strategies. One group was known as the "securocrats"

and the other as the "technocrats." The first group was

composed of military officers who took a hard line

against the democratic and anti-apartheid movements.

They were insensitive to the risks entailed by a frontal

confrontation with the anti-apartheid movement. The

technocrat group, however, was composed of high-level

bureaucrats and business people who were more prag

matic (soft-liners) and open to negotiation with their

opponents. At the time, this group was led by the newly

elected president, Frederik W. de Klerk. This split in the

authoritarian regime developed in parallel with a split

among opponents of the apartheid regime. On one side

was the African National Congress (ANC) led by Nel

son Mandela, which was more open to dialogue and

envisioned a democratic and multiracial South Africa.

On the other side were groups such as the Pan Afri

canist Congress, which were completely opposed to

the presence of a white population on South African

territory and the idea of negotiating with the leaders

of apartheid. The agency-based approach analyzed the

strengths and weaknesses of each of these actors, their

ideology, their calculations (and miscalculations), their

interests, and the negotiations between the "moder

ates" of both camps who sought dialogue rather than

an absolute confrontation. The argument was that the

moderates (of both respective camps) made a political

calculation: they estimated that their first preference

was unattainable (i.e., to avoid giving in to their adver

sary), and therefore they agreed to fall back on their

second-best option, that being "collusion" or a willing

ness to play the game of negotiation.

If we look at the recent regime change in North

Africa and the Middle East, some could argue that the

main reason for the successful ousting of autocrats in

Tunisia and Egypt was a split within the ruling elites,

in Tunisia between the Ben Ali family and the top of

ficers in the army (the latter becoming increasingly dis

satisfied with how the former managed the country's

economy and how they appropriated most of the coun

try's resources for themselves), and in Egypt between

the Mubarak clan and top army generals (for reasons

similar to those of the Tunisians). In both cases, the

fall of the regime was possible because key actors in the

military and the security apparatus literally stopped

supporting the autocrats in power. Had they decided to

stick with the leaders, the argument goes, they would

still be in power today-or they might have become en

meshed in a civil conflict, as occurred in Libya.

Continuing with the national actor approach,

some researchers have conducted in-depth studies of

the role of social movements in the process of democ

ratization. They emphasize an often neglected aspect

of politics-namely, the capacity to garner support by

drawing on symbols, rhetoric (in the true sense of the

term), and representations. Often, these social move

ments spearhead the process of democratization in de

veloping countries, especially since they cannot rely on

coercive measures or financial resources. Their main

strength is their ability to mobilize a large number of

people by way of persuasion and moral arguments,

presenting alternative ways of interpreting the politi

cal situation and moving people into action. All of this

depends on a given movement's strategies, choices, and

continuous work.

For example, studies have highlighted the case

of a women's movement in Argentina-the Madres

(mothers) of the Plaza de Mayo-that emerged in Buenos Aires at the end of the 1970s and the beginning of the 1980s. Argentina had a military dictatorship at the time, and the women were demanding the truth about the disappearance of thousands of youth abducted by the military. These women, without financial or (obviously) military power, managed to create a movement that enjoyed widespread support among the population. They did so because they chose (the notion of choice here is key) the appropriate images and symbols: rather than presenting themselves as "revolutionaries," for in stance, they decided to personify the roles of mothers and grandmothers-that is, legitimate and respected actors in Argentinean society. The military dictator ship was trapped by its own rhetoric: it was accustomed to confronting and repressing "revolutionaries," "com munists," "terrorists," and even "feminists" (the expres sions it used at the time), but in this case it found itself challenged by a segment of Argentinean society repre senting "traditional" figures-grandmothers, mothers, sisters-and values. Given that the regime had always promoted a traditional conception of Argentinean society, it could not repress the movement. The Madres of the Plaza de Mayo thus dealt a powerful blow to the military junta through the use of symbols and rep resentations that served to delegitimize the regime. The military regime finally stepped down from power in 1983 (Oxhorn, 2001).

In Tunisia and Egypt, diverse social groups, com prising students, young unemployed people, and pro fessionals (teachers, lawyers, etc.) strategically used powerful words and symbols to denounce the auto crats in power. As the state's repression intensified, they made efficient decisions, demonstrating in certain strategic places in Tunis and Cairo, using foreign jour nalists to show the regime's atrocities, and convincing soldiers and officers not to kill their own compatriots simply to defend a moribund autocrat (Clarke, 2015).

International Actor Approach

Some analysts accept that actors (and their interac tions with each other) provoke a number of demo cratic transitions but hold that the most important actors are those operating in the international arena. Such international actors include foreign states (usu ally superpowers or regional powers), international

16 I Jourde: Democracy 313

organizations, international non-governmental organ izations, and other transnational networks (formed around a diaspora or around a particular ideal, such as human rights or women's rights). Authors such as Levitsky and Way (2010), for example, affirm that the "leverage" democratic states have used against author itarian regimes can play a significant role; the actions of one powerful democratic state over a relatively weak authoritarian state can trigger a democratic transition. Examples of!everage include military pressure and eco nomic sanctions (i.e., "conditionalities"). Levitsky and Way add, however, that these tactics have a relatively modest impact and that many factors undermine their effectiveness, at the level of both the country employing the tactics and the country subject to them. With re gard to a powerful democratic country, its willingness to apply leverage is often weakened by competing stra tegic interests (for instance, a Western government's willingness to impose economic sanctions over a given country may be lessened by influential companies that do business with that country). In a targeted country, authoritarian regimes with considerable military or economic power (or both, as in the case of Iran and China) are more able to resist the democratic pressures exerted by third-party states. Some could argue, for in stance, that the toppling of the Ben Ali and Mubarak regimes would have been impossible without the stra tegic role played by specific international actors. These researchers would say, to illustrate, that had the US government not strongly condemned the two regimes' repressive measures (and used its financial aid as a stick to pressure the Tunisian and-especially-the Egyp tian governments), there would have been much less re straint on the part of these regimes, and demonstrators never would have been able to impose the same degree of pressure as they actually did.

Instead of concentrating solely on relations be tween states, other researchers prefer to analyze the critical role played by non-state actors, such as interna tional institutions, non-governmental organizations, and transnational networks. The latter are conglomer ations of people from several countries who come to gether around common principles such as human rights or democracy. These groups have been able to exert relatively strong pressure on certain authoritarian re gimes. Their strength lies in their capacity to bridge the gap between individuals living in democratic countries

.) 14 PAH' f

!,! I Issues in International Development

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PHOTO 16.2 I The popular uprising for democracy in Egypt: demonstrators in Tahrir Square, Cairo.

and those living in authoritarian regimes. These net

works also facilitate the exchange of information and

ideas, drawing the attention of the international pub

lic to the injustices, atrocities, and repression that exist

under an authoritarian regime. They can put pressure

on other international actors, including industrialized

democracies and international organizations, which in

turn exert pressure on the authoritarian regime iden

tified in the activists' campaigns. Keck and Sikkink

(1999) have called this technique the boomerang effect,

in which activists solicit international actors that are

better placed to "hit" the authoritarian regime in ques

tion. For these scholars, such actions may not be suffi

cient by themselves, but they are nonetheless necessary

in explaining many processes of democratization.

It is important to understand that these four dis

tinct approaches are not necessarily mutually exclusive.

They are presented separately here both for the sake of

clarity and because researchers often do not agree on

the virtues and shortcomings of each approach. Cer

tainly, when we wish to analyze a democratic transition

in a given country, we are not obliged to choose only

one approach. On the contrary, researchers often com

bine and use several approaches at once.

AFTER DEMOCRATIC TRANSITION:

CONSOLIDATION OR A RETURN TO

AUTHORITARIAN RULE?

Numerous factors serve to consolidate democratic

gains in developing countries, and conversely, other

factors might pull a regime back to authoritarianism or

semi-authoritarianism.

Here again, researchers offer several explana

tions. Among the factors that can contribute to dem

ocratic consolidation, popular support is fundamental.

Research groups connected to the "barometer" insti

tutes (present in every region of the developing world)

have carried out opinion polls in many countries to

gauge popular support for democratic governments.

Although reservations exist with respect to these opin

ion polls-in particular, that they assume a procedural

conception of democracy-they nonetheless provide

some interesting indicators. For example, researchers

working for the Afrobarometer conducted opinion

polls in 19 African countries in 2014-15, asking the

same questions of each respondent (Afrobarometer,

2015). The results were revealing: on average, 70 per

cent of those polled thought that "democracy is pref

erable to any other kind of government" and only 9 per

cent supported the claim that "in some circumstances,

a non-democratic government would be preferable."

In Latin America, the Latinobarometro conducted a

survey in 2010 that showed a somewhat lower approval

rate-averaging 61 per cent approval for the statement

"Democracy may have some problems but it is the best

system of government." In some countries, such as Uru

guay and Venezuela, support was around 75 per cent,

but in Guatemala agreement was only at 46 per cent

(Latinobarometro, 2010: 25). Clearly, popular support is

not a guarantee of democratic consolidation. However,

it is certainly a fundamental factor. A country cannot

consolidate democracy if the population does not per

ceive the system as being legitimate in the first place.

A second factor of importance for democratic con

solidation is the institutionalization of defeat. Indeed,

one of the fundamental characteristics of political life

in any democracy is that it is normal and legitimate for a government to lose power. Political actors accept de

feat in democratic regimes because they know they can run for office again during the next election. Learning to lose and accepting defeat mean that politicians will

not seek non-democratic means to regain power, nor

will they seek to hold on to power at all costs (Wong and Friedman, 2008).

In many democratizing countries, a defining test is whether those who led authoritarian regimes for

years or even decades, and whose willingness to hand

over the power they had monopolized for so long was

in doubt, will finally accept stepping down. We can

think of countries where an institution, the military or a single-party regime, or a dictator monopolized po litical power. This was the case in Brazil, for instance,

16 I Jourde: Democracy 315

where the military and their allies in right-wing par

ties headed the authoritarian regime for more than

20 years (1965-85). A major test occurred when they

eventually conceded defeat to candidates and parties

they had repressed during the heyday of the authori

tarian era, such as centre-left candidate Fernando Hen

rique Cardoso (elected president in 1994 and again in

1998), and later Luiz Inacio "Lula" da Silva (2002-10)

and Dilma Rousseff (2010-16), both from the popular

left. (However, the dismissal from office of President

Rousseff in May 2016 could suggest that some polit

ical elites who were opposed to the popular left have

been gaining some traction.) Likewise, the Institu

tional Revolutionary Party (PRI) of Mexico, which had

held power without interruption since the 1930s, lost

the presidential election for the first time in 2000 and

again in 2006. The end of this lengthy reign signalled to

other political actors that the PRI had finally accepted

the idea that voters could shift political power through

the ballot box. Similarly, in Africa, many political par

ties that had governed their respective countries from

independence (dating back to the 1960s in most cases)

have recently succumbed to defeat. For example, the

Socialist Party of Senegal lost the presidential election

in 2000 and parliamentary elections in 2001, and in

Kenya, the Kenya African National Union party was

dislodged from power in 2004 for the first time since

independence (1963). In countries that have recently

ousted autocrats, as in Tunisia and Egypt, some would

argue that the odds of seeing a strong consolidated

democracy flourishing depend a lot on whether ac

tors, such as the military and the political elites of the

former dominant party, will accept civilians and new

political actors and groups attaining power. In Tunisia,

the military has not stepped into the transition pro

cess, leaving civilians alone in the management of the

transition, regardless of whether elections were won

by a candidate they favoured or not. But in Egypt, the

military eventually deposed and arrested the president

who had been elected only a year before, in the after

math of the Arab Spring. They then decided to organ

ize new elections, which were won by their very own

leader, now President of the country, General el-Sissi.

Of course, the institutionalization of defeat is not a suf

ficient condition for speaking of democratic consolida

tion, but it is nonetheless necessary, just as the other

indicators are.

316 PART Ill I Issues in International Development

Nevertheless, a number of significant obstacles

may surface during the process of democratization,

and these can weaken democratic consolidation and

can even turn the regime semi-authoritarian. A com

plete list of obstacles would be too long to elaborate,

so we will look at only a few here. First, as supporters

of the "substantive" approach to defining democracy

often claim, the problem of socio-economic inequality

is an important factor. This is particularly critical in

countries where the process of democratization takes

place simultaneously with drastic economic reforms.

According to Marcus Kurtz (2004), for instance, the

application of neoliberal economic reforms since

the 1980s has had disastrous effects on the quality

of democracy in Latin America. The economic diffi

culties these reforms produced seem to have resulted

in a lack of political motivation among Latin Ameri

cans and reduced the capacity of the most marginal

ized social classes to undertake sustained collective

action.

Another important factor that can derail a

country from democratic consolidation is political

violence, especially when it pertains to identity. In

a number of countries, democratization has been

concomitant with the development of ethnic, reli

gious, linguistic, or racial violence. In many cases,

the authoritarian regime created-or at the very least

played up-identity tensions as a means of averting

calls for democracy. This has been the case notably

in a number of African and Asian countries, where

regimes have created and encouraged violence be

tween ethnic or religious communities. For example,

some argue that given the level of ethnic and religious

tensions in Nigeria, a country of many ethnic groups

and languages where terrorist groups have preyed on

defenceless villages in northern Nigeria and where

armed groups from rival local militias often attack

one another in the central regions such as the Plateau

State and in the Niger Delta region, democracy will

always be difficult to consolidate. Though the Nige

rian opposition won the presidential and legislative

elections in 2015, for the first time since the transition

in 1999, the fact is, they would argue, that the high

level of violence continues to be a major threat for

democratic consolidation, as it destabilizes the foun

dations of the country's democratic life (Salehyan and

Linebarger, 2015; Houle, 2015).

THE CAUSAL WEIGHT OF

DEMOCRATIZATION IN ECONOMIC

AND SOCIAL DEVELOPMENT

Instead of looking at the factors that may lead to

democratization and democratic consolidation, we

now turn to the effects democracy can generate. The

causal direction is reversed here. Democracy is not the

consequence, but the cause. Debate on the impacts of

democracy has continued since a number of develop

ing countries gained independence in the middle of

the twentieth century. Many observers believe it was

ill-advised for the newly independent states to adopt

democracy, claiming that democratic governance

could undermine economic and social development.

They argue that if a poor country opts for democracy,

this type of regime triggers a political cycle that has a

devastating effect on the economy.

From this viewpoint, democracies are fundamen

tally based on short electoral cycles. This encourages

politicians to think only of the short term and base

their decisions solely on the goal of being re-elected.

As a result, these politicians will be inclined to over

spend their country's meagre resources on showering

the electorate with "gifts," thereby undermining the

foundations of an already fragile economy. Politicians

also might seek to borrow funds internationally, which

can put the country further into debt (see Chapter 14).

They also rarely make decisions that are politically dif

ficult but economically necessary (for example, to abol

ish generous subsidies for an industrial sector that is

running a deficit or to sell a failing public enterprise).

The logic, then, is that it is preferable, initially, for a

poor country to set up an authoritarian regime. Then,

after the authoritarian regime has brought the coun

try to a certain level of economic development, the

country should adopt democracy. Samuel Huntington

(1968) advanced the argument that military regimes

are best placed to resist and repress excessive financial

demands from the working class, middle class, peas

ants, and unions, to name but a few-demands that are

impossible for a poor country to meet. The examples

that researchers cite most often are those of Chile,

Taiwan, and South Korea, countries that would not

have achieved such a high level of development without

a strong authoritarian regime.

Other researchers contest this argument. Przewor

ski et al. (2000) found that, statistically, authoritarian

regimes do not produce more wealth than democra

cies. Moreover, according to them, nothing indicates

that leaders of authoritarian regimes are necessarily

"enlightened despots" who make sound economic or

social decisions. A number of authoritarian regimes

were governed by dictators or military officers whose

sole preoccupation was to satisfy their own personal

needs (and the needs of their entourage). Suharto's In

donesia, Marcos's Philippines, the military generals in

Nigeria: these and other authoritarian regimes literally

pillaged the resources of their country. Even in coun

tries that seemed to grow well for a period of time, such

as Tunisia, it has become clear by now that the ruling

family had in fact been depleting the country's assets

for more than a decade.

Furthermore, some would argue that democracies

are much more appropriate in terms of establishing a

sound economic base and, more generally, a society

that looks after the well-being of its citizens. In democ

racies, the population holds decision-makers liable for

their actions and accountable for their decisions. Dem

ocratic decision-makers, so the argument goes, cannot

pillage the national resources of their country without

paying the price at the next election. Democracy is

founded on mechanisms of transparency and checks

and balances that reduce the risks and magnitude of

corruption, which has disastrous consequences for a

country's economic development.

Moreover, to the extent that democracy is a system

in which conflicts and tensions between political actors

are managed in a peaceful, predictable, and legitimate

way-not arbitrarily or through oppression-the risks

of political instability and violence are significantly re

duced. In the absence of such risks, it is much easier to

achieve economic and social development. In addition,

given the fact that a democracy is based on holding

decision-makers accountable, politicians are institu

tionally conditioned to adopt inclusive social and eco

nomic policies rather than policies that benefit only

16 I Jourde: Democracy 317

the favoured few. The ability of the public to replace

decision-makers who do not head in this direction is

an inevitable constraint that all democratic politicians

must face.

SUMMARY

For any country of the world, the potential for

socio-economic development is closely related to its

political system. One cannot be fully understood

without the other. And nowadays, politics in develop

ing countries involves debates about democracy and

democratization. Accordingly, this chapter addressed

four main issues. (1) Democracy is a central issue

globally but its meaning is contested. Some argue for

a universal definition that centres on a collection of

liberal electoral procedures. For others, democracy is

more complex because it is embedded in the specific

culture(s) of each society; it also includes other com

ponents such as socio-economic rights. (2) Countries

can democratize, or fail to do so, for various equally

contested reasons. One debate is about the role of do

mestic factors and international factors: are the prime

causes of democratization located within the country

or are they located at the international level? Second,

both actors (politicians, activists, social movements)

and large structural forces (i.e., a country's rising level

of socio-economic development) are variously seen

as the main engines of change. (3) Once democratic

institutions and practices are established, various

factors can consolidate and strengthen them, or, con

versely, can cause their downfall. (4) Democracy and

socio-economic development are clearly related one to

another, but how exactly? Some believe that only an

iron-fisted authoritarian regime is capable of impos

ing difficult and necessary decisions to foster develop

ment. Others point out that many predatory dictators

have plundered national resources and that democracy

is thus the best form of regime to improve social and

economic welfare.

,, I

I 318 PART Ill I Issues in International Development

QUESTIONS FOR CRITICAL THOUGHT

1. Compare the different definitions of democracy. Which one seems most convincing to you? Explain why.

Beyond the elements presented in this chapter, what additional criteria would you add to arrive at your own

personal understanding of democracy?

2. Using developing countries you are familiar with, compare their experiences with democratization. Which

of the analytical approaches for explaining democratization seems to be the most convincing in each of these

cases? Make a list of the strengths and weaknesses of each approach with respect to the specific cases that

interest you.

3. In your view, what factors-in addition to the ones presented in this chapter-are absolutely necessary for

democratic consolidation? Using countries that are of interest to you, write a list of obstacles that prevent

democratic consolidation. Which of these obstacles pose short-term risk, and which ones might be dangerous

over the long term?

4. If you were the head of an international organization such as the United Nations and a country that wanted

to establish democracy came to you for advice, what major reforms would you recommend? Are there certain

reforms that could be useful for one country but not for another? Why?

Boogards, Matthijs. 2009. "How to classify hybrid regimes?

Defective democracy and electoral authoritarianism."

Democratization 16, 2: 399-423.

Karlstrom, Mikael. 1996. "Imagining democracy: Political

culture and democratisation in Buganda." Africa 66, 4:

485-505.

Levitsky, Steven, and Lucan Way. 2010. Competitive

Authoritarianism: Hybrid Regimes after the Cold War.

New York: Cambridge University Press.

Afoaku, O.G. 2000. "US foreign policy and authoritarian

regimes: Change and continuity in international

clientelism." Journal of Third World Studies 17, 2: 13-40.

Afrobarometer. 2009. Neither Consolidating nor Fully

Democratic: The Evolution of African Political Regimes,

1999-2008. Afrobarometer Briefing Paper No. 67.

Bah, A.B. 2010. "Democracy and civil war: Citizenship and

peacemaking in Cote d'Ivoire." African Affairs 109,437:

597-615.

Bertrand, R. 2002. Indonesie: La democratie invisible. Paris:

Karthala.

Boix, C. 2003. Democracy and Distribution. Cambridge:

Cambridge University Press.

Boogards, M. 2009. "How to classify hybrid regimes?

Defective democracy and electoral authoritarianism."

Democratization 16, 2: 399-423.

O'Donnell, Guillermo. 2004. The Quality of Democracy:

Theory and Applications. Notre Dame, Ind.: University

of Notre Dame Press.

Pop-Eleches, G., and G.B. Robertson. 2015. "Structural

conditions and democratization." Journal of Democracy

26, 3: 144-56.

Clapham, C. 1996. Africa in the International System: The

Politics of State Survival. Cambridge: Cambridge

University Press.

Clarke, K. 2015. "Unexpected brokers of mobilization:

Contingency and networks in the 2011 Egyptian

uprising." Comparative Politics 46, 4: 379-97.

Collier, D., and S. Levitsky. 1997. "Democracy with adjectives:

Conceptual innovation in comparative research." World

Politics 49, 3: 430-51.

Diamond, L. 2002. "Thinking about hybrid regimes." Journal

of Democracy 13, 2: 21-35.

Helmke, G., and S. Levitsky, eds. 2006. Informal Institutions

and Democracy: Lessons from Latin America. Baltimore:

Johns Hopkins University Press.

Houle, C. 2015. "Ethnic inequality and the dismantling of

democracy: A global analysis." World Politics 67, 3: 469-505.

Huntington, S. 1968. Political Order in Changing Societies.

New Haven: Yale University Press.

--. 1993. The Third Wave: Democratization in the Late

Twentieth Century. Norman: University of Oklahoma

Press.

Keck, M.E., and K. Sikkink. 1999. "Transnational advocacy

networks in international and regional politics."

International Social Science Journal 159: 89-101.

Keer, D. 2005. Dr Ambedkar: Life and Mission. Mumbai:

Popular Prakashan.

Kurtz, M. 2004. "The dilemmas of democracy in the open

economy: Lessons from Latin America." World Politics

56: 262-302.

Latinobarometro. 2010. L atinobarometro Report 2010.

Santiago, Chile.

Levitsky, S., and L. Way. 2010. Competitive Authoritarianism:

Hybrid Regimes after the Cold War. New York:

Cambridge University Press.

Lipset, S.M. 1959. "Some social requisites of democracy."

American Political Science Review 53: 69-105.

Moore, B. 1966. Social Origins of Dictatorship and Democracy:

Lord and Peasant in the Making of the Modern World.

Boston: Beacon Press.

Munck, G., and J. Verkuilen. 2002. "Conceptualizing and

measuring democracy: Evaluating alternative indices."

Comparative Political Studies 35, 5: 5-34.

O'Donnell, G. 2004. The Quality of Democracy: Theory and

Applications. Notre Dame, Ind.: University of Notre

Dame Press.

Oxhorn, P. 2001. "Review: From human rights to citizenship

rights: Recent trends in the study of Latin American

16 I Jourde: Democracy 319

social movements." Latin American Research Review 36,

3: 163-82.

Pop-Eleches, G., and G.B. Robertson. 2015. "Structural

conditions and democratization." Journal of Democracy

26, 3: 144-56.

Przeworski, A., M.E. Alvarez, J.A. Cheibub, et al. 2000.

Democracy and Development: Political Institutions

and Well-Being in the World, 1950-1990. New York:

Cambridge University Press.

Przeworski, A., and L. Fernando. 1997. "Modernization:

Theories and facts." World Politics 49: 155-83.

Rueschemeyer, D., E. Huber Stephens, and J.D. Stephens.

1992. Capitalist Development and Democracy. Chicago:

Chicago University Press.

Salehyan, I., and C. Linebarger. 2015. "Elections and social

conflict in Africa, 1990-2009." Studies in Comparative

International Development 50, 1: 23-49.

Schaffer, F. 1998. Democracy in Translation: Understanding

Politics in an Unfamiliar Culture. Ithaca, NY: Cornell

University Press.

Wong, J., and E. Friedman, eds. 2009. Learning to Lose:

Dominant Party Systems and Their Transitions. New

York: Routledge.

World Bank. 2016. "World Bank Indicators: Distribution of

income or consumption." http://wdi.worldbank.org/

table/2.9.

Zuern, E. 2009. "Democratization as liberation: Competing

African perspectives on democracy." Democratization

16, 3: 585-603.

Climate Change, Environment, and Development

Chukiuu,,,neri,:ie Okereke and Aln1-Baku.r 8. lliu.ssu.aucn:

LEARNING OBJECTIVES

• To understand the intricate and complex relation

ship between climate change, environment, and

development.

• To learn about the significant historical and more

recent developments in the environment, climate

change, and development nexus.

To engage with the key debates, concepts, actors,

and institutions in the global governance of envi

ronment and sustainable development.

• A Chinese boy runs past a coal-fired power plant near his house on the outskirts of Beijing, China. China's government has set

2030 as a deadline for the country to reach its peak for emissions of carbon dioxide. I Source: Photo by Kevin Frayer/Getty Images

17 I Okereke and Massaquoi: Climate Change, Environment, and Development 321

INTRODUCTION

From its original position as a subject of peripheral con

cern, the environment has become one of the central

topics in international development discourse. Today,

climate change, a quintessential environmental prob

lem, is generally recognized as the most important de

velopment challenge in the twenty-first century (IPCC,

2014). In addition to acknowledging its many signifi

cant direct consequences, development discourse in

creasingly uses climate change to frame discussions

on other important global challenges, such as health,

energy, and food security.

For a long period in international development

history, the focus of debates and policies was essentially

about how to stimulate economic growth, mostly by

increasing industrialization and mass consumption in

developing countries. A popular philosophy underpin

ning the emphasis on economic growth was the notion

that environmental protection was the preserve of the

rich-something that is necessary only after a certain

level of economic growth has been attained. This phi

losophy, which continues to exert powerful influence

today, is not without some intuitive appeal. For exam

ple, alleviating poverty would seem a natural priority

when compared to measuring the size of or closing a

hole in the ozone layer. While the former would im

mediately strike many as a matter of urgent need, the

latter, in contrast, might seem to be an exotic and ab

stract scientific preoccupation. Moreover, common

observation shows that developed countries generally

tend to have cleaner environments (air, water, etc.) in

addition to a higher quality of life. It is difficult to ques

tion the many benefits that economic development has

brought to poorer countries, for example, an improved

mortality rate, better education, improved well-being,

and enhanced sanitation.

In recent years, however, the place of the environ

ment in economic development has become a matter of intense academic and public policy debate. The rise of environment as a key issue in international devel

opment is rooted in three facts. First is the extensive and increasing impact of humans on all aspects of the

environment (IPCC, 2014; Millennium Ecosystem As

sessment, 2005). Second, advances in science and tech nology have afforded not only better understanding of the extent of the environmental damage being caused

by humans, but also the tools to communicate and dis

seminate this information more widely. Consider, for

example, the impact of iconic images of environmental

degradation in the Nigerian Niger Delta, an entire vil

lage in Bangladesh being displaced by flooding induced

by climate change, or, more recently, live TV pictures

of the BP oil spill in the Gulf of Mexico in 2010. Third,

there has been a greater realization of the propensity

of environmental degradation to undermine the very

basis of economic development and human well-being,

for example, air pollution in rapidly developing China.

Since the late 1960s, environmental issues and their

links with development have been a subject of increas

ing international co-operation, with the creation of in

stitutions and multilateral environmental agreements.

Currently, the global community has decided to adopt

Sustainable Development Goals (SDG) as the overarch

ing framework for a post-2015 development agenda, in

a move that perhaps marks the clearest acknowledge

ment of the environment and development connection.

The SDGs build on the eight Millennium Development

Goals (MDGs) established through a UN summit in

2000. The Sustainable Development Goals, covering

17 areas including food, water, housing, energy access,

and climate change, were officially launched in New

York in September 2015 with much pomp and fanfare.

Overall, despite the rise of environment as a central

factor in international development and the elaboration

of institutions and governance processes at national and

global levels, a widespread sense remains that interna

tional development efforts are yet to truly incorporate or

internalize environmental considerations (Epstein and

Buhovac, 2014; Reid, 2013). Over 30 years after the con

cept of global sustainable development was introduced

through the Brundtland Report (WCED, 1987) as the

guiding principle of economic and international devel

opment, there are still no easy answers to the question

of how best to effectively combine the goals of environ

mental protection and economic development at na

tional and global levels (Ehresman and Okereke, 2014).

THE CENTRAL PARADOX AND

CONTENDING APPROACHES

The central paradox of the environment-development

relationship is that whereas economic development

322 PART Ill I Issues in International Development

is needed to achieve well-being, the process of eco nomic growth often leads to environmental degrada tion, which in turn reduces well-being. Differences in understanding the exact nature of this relationship and how to resolve the complex interactions constitute the central challenge of environment-development politics across different scales of governance, from local through national to international levels. In ad dition, or rather in close relation to this paradox, en vironmental problems also exhibit two other defining characteristics-the tragedy of commons and the col lective action problem (Box 17.1).

Figure 17.1 shows the steady and dramatic increase in the quality of human lives from 1870 to 2007 based on life expectancy at birth, mean years of schooling, expected years of schooling, and gross national income per capita (Escosura, 2013). Measurements based on other development indicators such as infant mortality, the number of people with access to safe drinking wa ter, and the number of undernourished children also show that quality of living has been increasing across all regions of the world (Escosura, 2013).

Advocates of modernization theory (see Chapter 3) are quick to link these improvements to industrialization,

urbanization, advances in technology, and increases in global trade. Accordingly, they suggest that economic growth is undeniably a good thing to which all countries should aspire. Moreover, they argue that the best help rich countries can offer poor countries is to export the same development models of state intervention used by the West and to help fast-track poor countries through the various stages of growth (Chambers, 2014).

In addition, some economists have hypothesized that the relationship between economic development and environmental quality takes the form of an in verted U-shape, called the Environmental Kuznets Curve (EKC) (Figure 17.2) (Dietz et al., 2012). The EKC theory suggests that although environmental degrada tion generally increases as modern economic growth occurs, this increase comes to a halt and then· starts to reverse after average income reaches a certain level in the course of development. To date, the moderniza tion theory and the EKC remain highly influential in shaping international environmental and development policies. These approaches suggest that the solution to pollution and environmental degradation resulting from economic growth is, in fact, the pursuit of even more economic development.

T CONC P.IS ______________ �

BOX 17.1 Defining "Collective Action Problem" and "Tragedy of the Commons"

Collective action problem describes the situation in which multiple individuals (also communities or countries) would all benefit from a certain action, for example, reducing greenhouse gas emissions that cause climate change, but the associated cost of taking action makes it highly unlikely that any individual can or will undertake and solve the problem alone.

Famously linked to American ecologist Garrett Hardin (1968), the tragedy of the commons describes an economic problem in which individual users of a commonly owned resource (say, land for grazing or the atmosphere) each continue to try to reap the greatest benefit from exploiting the resource even when it is apparent that the demand for the resource has overwhelmed the supply. The tragedy is that every individual who consumes an additional unit directly harms others who can no longer enjoy the benefits. Furthermore, the overexploitation, driven by individual gain, Hardin argues will ultimately result in the degradation of the common resource (for an interesting critique of Hardin's thesis, see Ostrom, 1990; Stonich et al., 2002).

17 I Okereke and Massaquoi: Climate Change, Environment, and Development 323

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1 --

1870 1880 1890 1900 1913 1929 1938 1950 1960 1970 1980 1990 2000 2007

OECD -- Latin America

Central & Eastern Europe (including Russia) -- Asia (excluding Japan)

--Africa

FIGURE 17.1 I World Human Development, 1870�2007

Note: The vertical scale on the left indicates the Human Development Index (HDI), a composite statistic that measures key dimensions of human development.

Source: Adapted from Escosura (2013).

However, it has been noted that the scale of en

vironmental destruction associated with economic

development over the decades has become increasingly

large. Figure 17.3 is a graph of the global Living Planet

Index (LPI), which shows the rapid decline in the num ber and diversity of vertebrate species living in terres

trial, marine, and freshwater ecosystems. Recent global

ecosystem assessment projects have shown that over

the past 50 years humans have altered and negatively

impacted the natural environment in far more dra

matic fashion compared to any other time in human

history (Seppelt et al., 2011). Other global assessments

also reveal a drastic decrease in world biodiversity, ex

tinction of many species, pollution of various types of

ecosystems, and even decrease in levels of happiness (Defries et al., 2012).

C 0

-�

Cl Q)

cii c

e ·;; C

� Turning point

improves

Per capita income

FIGURE 17.2 I EnYironmenta.! Kuznets CurYe

324 PART Ill I Issues in International Development

Population Index = 1 in 1970

1.8

1.6

1.4

1.2

1.0 ._

0.8

0.6

0.4

0.2

Living Planet Index

-Terrestrial Index

- Marine Index

Freshwater Index

0.0 +- ------�-- ----�-----�-----�

1970 1980 1990 2000 2010

FIGURE 17.3 I Living Planet Index, 1970-2005 Note: The Living Planet Index is an indicator of the state of the world's biodiversity: it measures trends in populations of vertebrate species living in terrestrial, freshwater, and marine ecosysytems.

Source: UNEP-WCMC Living Planet Index available at: www.unep-wcmc.org /system/dataset_file_fields/files/000/000/129/origi naljliving_Planet_lndex._Guidance_for_national_and_regional_use.pdf

Critics have observed that in addition to elevating

Western values over indigenous cultures, moderniza

tion theory promotes a scale of environmental resource

exploitation and consumerism that is ultimately unsus

tainable (Hannigan, 2014). In addition, the validity of

EKC has been challenged. It has been pointed out that

the relationship may not hold true for many pollutants,

for natural resource use, and for biodiversity conserva

tion, especially when a global perspective is taken. For

example, energy and land resource use do not fall as

income rises (Dietz et al., 2012). Moreover, it has been

argued that many developed countries attained and

were able to maintain a certain level of environmental

quality only because they were able to get most of their

resources from and shifted a high proportion of their

pollution to the poor developing countries (Ewing and

Rizk, 2008; Wackernagel et al., 1999).

Furthermore, pointing to the degradation of global

common pool resources such as the oceans and the

atmosphere, and especially the role of Western indus

trialization in this process, many argue that more mod

ernization can only portend danger for humanity as a

whole (Gills, 2015; Takahashi, 2010). That said, many

states and citizens in developing countries have not

concealed their desire to attain a level of development

comparable to the West and a willingness to achieve

this goal irrespective of the immediate costs to the

environment. The World Bank (2010: 44) sums up the

sentiment behind this view rather well by declaring that

"it is ethically and politically unacceptable to deny the

world's poor the opportunity to ascend the income lad

der simply because the rich reached the top first." These

observations form the foundation of the argument that

only a global approach is sufficient to tackle the prob

lem of environmental degradation and international de

velopment (Okereke, 2008). At the same time, it is also

argued that the question of how to achieve or maintain

economic growth that supports a good quality of living

without undermining the natural support base, upon

which both growth and lives depend, cannot be met

with a simple answer of"just more growth."

A HISTORY OF GLOBAL

ENVIRONMENTALISM AND

INTERNATIONAL CO-OPERATION

FOR SUSTAINABLE DEVELOP MENT

Modern environmentalism can be traced to the early

1960s when various movements, some of which were

transnational in nature, campaigned to draw attention

to the environmental hazards associated with nuclear

weapons testing. Many scholars (e.g., Rootes, 2014;

17 I Okereke and Massaquoi: Climate Change, Environment, and Development 325

CRITICAL ISSUES

BOX 17.2 I The Environment-Development Paradox: The Case of China

China has experienced rapid economic growth in the past 30 years, which has resulted in dramatic increases in certain aspects of well-being and a rise of significant environmental challenges. China's manufacturing industries currently produce the highest volume of industrial products in the world, includ ing clothing, electronics, steel, cement, and fertilizer (Zhang, Abbas, and Shishkin, 2012), and recently China ranked fourth for crude oil production globally (National Bureau of Statistics of China, 2012, cited in Zhang et al., 2012). However, this rapid growth fuelled by energy, principally from burning coal, has caused severe environmental problems, especially water and air pollution. China is home to some of the world cities with the worst air pollution (Liu and Diamond, 2005). Respiratory and heart diseases related to air pollution are the leading causes of death in China (Xu et al., 2014), with some studies suggesting that the problem of air pollution costs China up to 10 per cent of GDP every year. China fares equally badly in relation to many other environmental issues. Five of China's cities are in the top 25 of cities most vulnerable to climate change in the world (Maplecroft, 2013). In addition, about 40 per cent of the water in the country's river systems is unfit for human consumption, and the combination of de sertification and erosion has swept over almost 30 per cent of China's land over the last two decades (Liu, 2013).

However, a comprehensive understanding of the environmental situation in China requires an ac knowledgement of the impact of wider global economic forces and structures (Yang et al., 2013). China may have taken a high polluting route to development at least in part because of politics, national eco nomic interests, and ideological conflicts, which made it difficult for the country to access cleaner tech nologies from the West. Furthermore, many of the businesses that powered industrial development in China are Western companies interested in maximizing profit and value for their Western shareholders. Today, a vast proportion of the products being made in China are designed for consumption by Western citizens. At the same time, China's real ecological footprint goes far beyond its own borders and reaches far corners of the world, especially Africa, where many Chinese companies are engaged in intensive ex ploitation of various natural resources including oil, wood, and precious metals (Mol, 2011).

Dryzek, 2013) have linked global environmentalism to

the rise of environmental movements in the US. The

publication of Silent Spring by Rachel Carson in 1962

is often seen as in important landmark . Carson argued

that uncontrolled and unexamined pesticide use in the

United States, mostly DDT, was harming and killing

animal populations (especially birds).

Furthermore, she stressed that through the pro

cess of bioa..:cumuh1tio11, dangerous amounts of pesti

cides were finding their way into the human food chain

and causing serious harm. Carson was highly critical

of capitalism, which she said placed profit above con

siderations of health and safety. She was also very crit

ical of mainstream science, which she said downplayed

or completely ignored the risks and uncertainties

associated with widespread pesticide use. Carson's book

sparked a vociferous national debate not just about the

safety of the use of a number of chemicals, but also

about the impact of Western industrialization through

out the world . In the end, the book prompted a reversal

in the national pesticide policy and motivated an en

vironmental movement that engendered the establish

ment of the US Environmental Protection Agency.

Another publication with a far-reaching impact

on the rise of global environmentalism was The Limits

to Growth (Meadows et al., 1972). This book, which

originated from research commissioned by the Club

of Rome, painted an apocalyptic picture of famine, re

source scarcity, hunger, ecosystem collapse, pollution,

and reduction in life expectancy, because of what it

326 PART Ill I Issues in International Development

described as exponential increase in population and

environmental degradation over the last 30 years. Like

Carson before them, the authors were critical of ma

terialism and called for environmental regulation and

greater emphasis on conservation at the global level.

In response to these currents of opinion for sus

tainable use of environmental resources the United Na

tions (UN) organized the United Nations Conference

on the Human Environment in 1972 in Stockholm.

This was the first-ever environmental conference con

vened at the United Nations level. Representatives from

113 countries attended, as did others from many in

ternational non-governmental organizations, inter

governmental organizations, and other specialized

agencies (Egelston, 2013). A key result of the conference

was the Stockholm Declaration containing 26 princi

ples aimed at addressing the need to safeguard and im

prove the human environment. The document reflected

on the development-environment nexus, including the

idea that environmental protection is fundamental

to a good quality of life and the enjoyment of human

rights, and that population growth and economic de

velopment pose a considerable threat to environmental

protection (Dodds, Strauss, and Strong, 2012).

PHOTO 17.1 I Air pollution in Shanghai, China.

As a follow-up to the conference, the UN General

Assembly established the United Nations Environ

ment Programme (UNEP) in 1972. UNEP's core f unc

tion, as outlined in the original mandate, was to lead

the UN's work on environment and its links to inter

national development (see Chapter 10). In 1983, the UN

Secretary-General asked Dr Gro Harlem Brundtland,

the Norwegian Prime Minister and a public health spe

cialist, to chair a World Commission on Environment

and Development (WCED). The launch of the Commis

sion was sparked by a number of high-profile environ

mental incidents around the world, including a severe

drought in Africa that killed about a million people and

endangered the livelihoods of 36 million people, and a

leak from a pesticide factory in Bhopal, India, which

immediately killed more than 2,000 people and injured

over 200,000 people. Also notable were an explosion

of liquid gas tanks in Mexico City, which killed 1,000

and left thousands more homeless, and the Chernobyl

nuclear reactor explosion, which sent nuclear fallout

across Europe, increasing the potential risks of human

cancers.

Following extensive consultations and meetings

across all the continents, the Brundtland Commission

17 I Okereke and Massaquoi: Climate Change, Environment, and Development 327

published its pioneering report, Our Common Future,

in April 1987, which brought the term "sustainable de

velopment" firmly into public discourse. The report de

fines sustainable development as "a development that

meets the needs of the present generation without com

promising the ability of future generations to meet their

own needs" (WCED, 1987: 43). It recommended that for

sustainable development to be attained, "societies need

to meet human needs both by increasing productive

potential and by ensuring equitable opportunities for

all" (WCED, 1987: 44). In the view of the WCED, sus

tainable development required the utilization of re

sources, the arrangement of institutional structures,

and the orientation of technology in a manner that

fits and improves both current and future potential to

meet human needs and aspirations (Ghai and Vivian,

2014; Lafferty and Eckerberg, 2013). Furthermore, the

Brundtland Report cited ways of linking environment

and development, and stressed the significance of con

sidering the interrelationship and interdependence of

economic, environmental, and social issues in framing

and implementing development policy decisions to ad

dress global environmental challenges (Chatterjee and

Finger, 2014).

The 1980s saw some of the most influential ad

vances in climate science and international response

to global environmental change (Dryzek, 2013). For

example, the Vienna Convention became a frame

work to protect the ozone layer in 1985, and the Mon

treal Protocol (a protocol to the Vienna Convention)

in 1987 further protected the ozone layer by phasing

out the production of substances that cause ozone

depletion.

In 1992, the United Nations Conference on En

vironment and Development (UNCED), commonly

known as the Earth Summit, was held in Rio de Janeiro,

Brazil. Believed to be the biggest global environment

conference ever, the key aim of UNCED was to reinforce

the links between environment and development. The meeting produced 21 principles for actualizing sustain able development at the global level, with Principle 4 asserting that "environmental protection shall consti tute an integral part of the development process and

cannot be considered in isolation from it." In addition,

a more detailed blueprint for the protection of the earth

and its sustainable development at local levels, known as Agenda 21, was also adopted.

Agenda 21 had a wide-ranging focus, including

decreasing deforestation, preventing pollution, alle

viating poverty, promoting chemicals management,

and avoiding the depletion of natural resources. In full

support of the objectives of Agenda 21, the UN Gen

eral Assembly founded the Commission on Sustaina

ble Development in 1992 as part of the Economic and

Social Council. Furthermore, UNCED produced the

UN Convention on Biological Diversity (UNCBD), the

UN Convention to Combat Desertification (UNCCD),

the UN Framework Convention on Climate Change

(UNFCCC), and broad Principles on Forest Conserva

tion. A number of global summits of sustainable de

velopment have been held since the Rio Earth Summit.

These include Rio+10, otherwise known as the World

Summit on Sustainable Development, in Johannes

burg, South Africa in 2002, and more recently Rio+20

on the theme of the Green Economy, convened once

again in Rio de Janeiro.

CLIMATE CHANGE

The earth's climate can be affected by natural elements

that are external to the climate system, such as altera

tions in volcanic activity, solar output, and the earth's

orbit around the sun. Of these, the two important is

sues on time scales of present-day climate change are

changes in volcanic activity and changes in solar ra

diation. Climate change can also be caused by human

activities, such as the burning of fossil fuels and the

conversion of land for agriculture and forestry. In ad

dition to other environmental impacts, these activities

change the land surface and emit various substances to

the atmosphere such as carbon dioxide, a greenhouse

gas that influences the amount of inward and outward

energy and, thus, can have both warming and cooling

effects on the climate.

Climate change exemplifies the intricate connec

tions and tensions between global economic develop

ment and environmental sustainability perhaps more

than any other environmental issue (Okereke and

Schroder, 2009). There are at least three points of con

nection, all of which are of great significance. First,

through its severe negative impacts on the natural,

human, social, and economic systems of developing

countries, climate change could reverse decades of

328 PART Ill I Issues in International Development

BOX 17.3 I Important Events and Agreements towards an Environmental Regime

CURRENT EVENTS

1972: United Nations Environment Programme (UNEP) created by UN General Assembly

1973: Convention on International Trade in Endangered Species (CITES)

1979: Bonn Convention on Migratory Species

1985: Vienna Convention for the Protection of the Ozone Layer

1987: Montreal Protocol on Substances that Deplete the Ozone Layer; WCED report, Our Common Future,

published

1988: Intergovernmental Panel on Climate Change (IPCC) established

1992: United Nations Commission on Environment and Development (UNCED) publishes Agenda 21,

a blueprint for sustainable development

1992: Convention on Biological Diversity

2000: Cartagena Protocol on Biosafety adopted to address issue of genetically modified organisms

2000: Millennium Declaration: environmental sustainability included as one of eight Millennium

Development Goals (MDGs)

2001: Stockholm Convention on Persistent Organic Pollutants (POPs) 2010: Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES)

2011: UNEP produces the Green Economy Report, Towards a Green Economy: Pathways to Sustainable

Development and Poverty Eradication, in the context of sustainable development and poverty erad

ication as the key theme for Rio+20.

2015: Paris Agreement adopted during the 21st Conference of the Parties of the UN Framework Conven

tion on Climate Change (UNFCCC) in Paris

2015: Sustainable Development Goals (SDGs), successor to MDGs

CRITICAL ISSUES

BOX 17.4 I The Post-2015 Sustainable Development Agenda

At the Rio+20 UN Conference on Sustainable Development in 2012, 17 Sustainable Development Goals

(SDGs) were identified, and these were adopted by the UN General Assembly in New York in September

2015. The SDGs build on the eight Millennium Development Goals (MDGs) established by the UN in 2000.

Before the launch, the SDG process engaged governments, international organizations, and the wider

civil society to propose a universal sustainable development agenda, which is likely to extend until

2030. The groundwork also included developing a set of measurable indicators and targets through an

intergovernmental Open Working Group (OWG). This 30-member group, established in January 2013, was

assigned the responsibility of submitting a report to the UN General Assembly in September 2014. Many

member countries see the SDGs as an opportunity to address prevailing and potential sustainable de

velopment challenges. Nonetheless, a counter-current has emerged, particularly in respect to ensuring

that the SDGs don't end up largely unfunded, like the MDGs. Overall, a lot of hope is being expressed

about the SDGs, with many member countries motivated by its promise to offer innovative and transform

ative approaches to achieving sustainable development, such as new and stronger global partnerships,

capacity-building and information-sharing opportunities, and measures to improve accountability through

effective monitoring and reporting (https://sustainabledevelopment.un .org/focussdgs.html).

17 I Okereke and Massaquoi: Climate Change, Environment, and Development 329

PHOTO 17.2 I A biodiversity display of beans in p ainted clay pots at the Deccan Development Society (DDS) Biodiversity Festival in Pastapur village, Andhra Pradesh.

international development efforts and further limit the

resources available to fight poverty in both rich and

poor countries. Some of the potential impacts of cli

mate change in developing countries include increased

frequency and severity of extreme climate events, re

duced crop yield causing food insecurity, desertifica

tion, ecosystem collapse, fresh water shortages, lower

incomes and scant economic growth, population dis

placement, and exposure to new health risks (IPCC,

2007, 2014).

Second, while large-scale economic development

is needed to pull billions of citizens in developing

countries out of abject poverty, a business-as-usual ap

proach to development will exacerbate the problem of

climate change with potentially irreversible long-term

consequences (IPCC, 2014, 2007). Furthermore, pov

erty contributes to environmental degradation and

climate change, which in turn increase poverty

and underdevelopment-the so-called poverty trap

(Okereke and Charlesworth, 2014). A well-known

example of this is the relationship between poverty,

population growth, and deforestation in developing

countries. Third, climate change will considerably

shape development choices in developing countries,

where governments will need to jump to smarter

technologies and more effective and resilient struc

tures (Okereke and Yusuf, 2013). Hence, while climate

change poses profound challenges to international de

velopment, it also offers unique opportunities to pur

sue growth and build more resilient economies.

A crucial dimension of climate change is that al

though its impacts are and will be felt the world over, its

current and future impact will fall disproportionately

on the world's poor populations who have contributed

the least to the problem. The Climate Vulnerability

Monitor (2012) indicates that climate change is already

contributing to the deaths of nearly 400,000 people

a year, 98 per cent of whom reside in poor countries,

(.) ct'.

fil

(0 0

PART m I lss__s

;g 0

;ernational Development

,vailable reports suggest that

d 250 million people in Africa

;reased water stress triggered by

20, which will significantly affect

ion and lead to increasing food in

:rition (Kjellstrom, 2015).

:nces could increase the costs of

au"J-' - :ast 5 to 10 per cent of Africa's GDP

(Tanner and hv,n-Phathanothai, 2014). Furthermore,

the Climate Change and Environmental Risk Atlas (Ma

plecroft, 2013) noted, for 2015, that the top 10 affected

countries were in the Third World (Figure 17.4). These

countries, in order of estimated negative impacts, are:

1. Bangladesh

2. Sierra Leone

3. Nigeria

4. South Sudan

5. Chad

6. Haiti

7. Ethiopia

8. Philippines

9. Central African Republic

10. Eritrea

1 Haiti

The Climate Regime

Global effort to address climate change has fo cused on

the United Nations Convention on Climate Change

(UNFCCC) negotiated in 1992 as part of the UNCED.

The Kyoto Protocol is a key component of the UNFCCC

because it contains mandatory targets for emissions

reduction for states, detailed measures for implemen

tation, and a compliance mechanism, which is the

only one of its kind (Hovi, Stokke, and U lfstein, 2013).

In December 2015, during the 21st Conference of the

Parties of the UNFCCC in Paris, a new agreement de

signed to replace Kyoto was adopted (the P aris Agree

ment). It is intended that the Agreement will come into

force in 2020. The Intergovernmental Panel on Climate

Change (IPCC) provides crucial scientific evidence for

climate policy. The IPCC was established in 1988 by the

Executive Council of the World Meteorological Or

ganization (WMO) and United Nations Environment

Programme with a mandate to provide the world with

a clear scientific view of the current state of knowledge

on climate change and its potential environmental and

socio-economic impacts. In the same year of its crea

tion, the UN General Assembly endorsed the action by

WMO and UNEP in jointly establishing the IPCC and

Extreme Risk High Risk Medium Risk Low Risk No data

FIGURE 17.4 I Climate Change Vulnerability Inclex. 2015 .

Source: Used by permission of Verisk Maplecroft.

17 I Okereke and Massaquoi: Climate Change, Environment, and Development 331

BOX 17.5 I Counting the Costs of Climate Change CURRENT EVENTS

A number of recent reports draw attention to the intricate links between the projected climate risks in developing countries and the future state of the global economy. The Climate Change and Environmental Risk Atlas, for example, highlights the extent to which global economic growth is endangered by climate change. The sixth annual edition of the At/as discloses that by 2025, 31 per cent of the global economic yield will be from countries recording "high" or "extreme risks" from the impacts of climate change. This forecast doubles current levels of climate change. A costing using a Climate Change Vulnerability Index (CCVI), which is a core par t of the At/as, shows that about 67 countries with a combined yield of $44 trillion will be severely affected by climate change. These estimates confirm that some of the countries upon whose growth the world currently depends, such as China, will be hit extremely hard by climate change if present-day development practices in the public and private sectors go unchanged. In 10 more years beyond 2015, China and India are predicted to record an increase in their GDPs from current levels to $28 trillion and $5 trillion respectively, which will amount to nearly 23 per cent of the world's economic output.

Equally, the situation is grim for most countries in Africa, including Nigeria, the region's largest economy. Recently released climate projections from the Intergovernmental Panel on Climate Change for the period up to 2040 clearly indicate that a significant warming of about 2°c is projected for West Africa, which indicates an increase in rainfall and humidity and severe consequences for communi ties, governments, and businesses. In the case of Nigeria, which in 2013 was ranked the sixth most climate-vulnerable country in the world according to the CCVI, climate change will mainly affect the oil sector and surrounding communities through erosion and sea level rise. Already the impacts are being felt, with flooding between July and November 2012 resulting in an estimated loss of 500,000 barrels per day in oil production, equal to more than one-fifth of the country's total production capacity (Maplec roft, 2013).

called on the body to submit its first assessment report

in time to feed into the United Nations Conference on

the Environment and Development in 1992. Today,

the IPCC is the world's foremost agency for scientific

research on climate change, with five "assessment re

ports" to its credit, produced in 1990, 1995, 2001, 2007,

and 2014.

The UNFCCC and Kyoto Protocol, for their part,

may well pass as the most elaborate and complex

agreement the world has ever negotiated (Luterbacher

and Sprinz, 2001). The regime embraces two main re

sponses in its action against climate change. The first

is mitigation, which focuses on the reduction of the

amounts of greenhouse gas that states and other actors

are emitting into the atmosphere. The second is adapta

tion, which focuses on how to cope with the impacts of

climate change effects that cannot be mitigated. More

recently, the concept of resilience, which considers

adaptation as a process of coping with, responding to

and recovering from climatic shocks and stresses, has

gained prominence (Bahadur, Ibrahim, and Tanner,

2013). Mitigation and adaptation overlap, as the more

climate change effects are mitigated, the less the pros

pect that individuals, communities, and countries will

need to adapt. Conversely, some efforts at adaptation,

such as planting trees, can also help in mitigation.

Developing countries have consistently demanded

an effective global response to climate change with

emphasis on urgent and ambitious mitigation efforts

by rich countries that are thought to be responsible for

the course of climate change at least in historical terms.

Second, they call for assistance in terms of finance, tech

nology, and capacity-building to help them increase

their adaptation to climate impacts. More recently,

low carbon development (LCD) and cognate terms

like climate compatible development, low emission

I I

i I

332 PART Ill I Issues in International Development

BOX 17.6 I Looking Ahead: A Post-2020 Climate Agreement

CURRENT EVENTS

The overriding purpose of the 1997 Kyoto Protocol was to develop a long-term process for managing

climate change, including quantified emission reduction obligations from states. The first commitment

period of Kyoto was 2008 to 2012. There are wide differences in opinion about how effective the Kyoto

Protocol was. Signatories to the UNFCCC meet every year in what is called the Conference of Parties

(COP) to negotiate on various aspects of the international climate agreement. Since 2005, there have

been negotiations about how to maintain momentum on climate action after the first commitment pe

riod of Kyoto. An agreement was supposed to be reached in Copenhagen (COP-15) in 2009, but this did

not happen because of disagreements between states such as China and the US. Since the failure in

Copenhagen, much has been done to spark a renewed interest in UNFCCC-led negotiations, with the

COPS in Cancun (2010), Durban (2011), and Doha (2012) seen as interventions to rebuild trust between

developed and developing countries. Accordingly, in November 2015 an agreement to replace the Kyoto

Protocol was signed at the Conference of Parties (COP-21) meeting in Paris, which will come into force

in 2020 and provide a framework for long-term global action on climate change. The Paris Agreement,

however, is based on voluntary pledges of emission reductions from all countries called Indented Na

tionally Determined Contributions (INDCs), which will be submitted and reviewed every five years. Despite

widespread enthusiasm, some have expressed serious concerns about building a hope for effective

global emissions reductions on the voluntary pledges of states. Wide sentiment suggests that the Paris

Agreement does not provide enough support for developing countries to enable them to take climate

action with regard to mitigation and adaptation.

Source: http://www.rff.org/Publications/Resources/Pages/185-Negotiating-a-Post-2020-Climate-Agreement.aspx.

development strategies (LEDS), and green growth have

all become popular in international environmental

and sustainable development discourse. Their popu

larity has stemmed from the notion that they offer a

new hope for continued growth in the South while also

serving as a soft alternative to hard, quantified GHG

emission reduction targets for the developing countries

(Nussbaumer, 2009). LCD is also attractive because it

appears to hold the promise of reconciling a long and

deep conflict between the economic development as

pirations of developing countries and the imperative

to cut anthropogenic global greenhouse gas emissions

that are causing climate change. However, over 20 years

since the negotiation of the UNFCCC, there remains a

wide sense of frustration from developing countries

that the rich countries are not only denying their ob

ligations to reduce emissions and help poor countries

adapt to climate change, but that they are surrepti

tiously conscripting developing countries into under

taking burdensome emission reduction commitments.

The Paris Agreement, which will come into effect in

2020, expects all countries (both developed and de

veloping countries) to commit to ambitious emission

reduction programs.

Key Actors and Roles

Many actors, including UN agencies, other multilat

eral organizations such as the European Union and

US Agency for International Development (USA ID),

and transnational public-sector institutions and busi

nesses play crucial roles in global climate govern

ance. For example, the climate change sub-program at

UNEP focuses on building the capacity of institutions

in developing countries so that they can mainstream

climate change decisions into national development

strategies. These different strategies are principally

linked to the broader UNFCCC framework for global

climate governance. Nonetheless, recent developments

in the climate regime have led to a renewed interest in

1 · I Okereke and Massaquoi: Climate Change, Environment, and Development .n3

multilateral and transnational partnerships outside the

UNFCCC structure. These partnerships, such as the G8

and G8+5, largely seek to address climate issues outside

the UNFCCC agenda, while others seek to demonstrate

the crucial role multilateral institutions play in ad

dressing global environment-development challenges

(Green, 2012).

It could be that these responses reflect the fail

ures of the UNFCCC to regulate emissions reductions

and stimulate an awareness of their importance, or to

provide adequate funds for adaptation in developing

countries (Morin and Orsini, 2014). Andonova and col

leagues describe the partnerships between the UNFCCC

and developing countries in relation to three overlap

ping roles: information-sharing; capacity-building and

implementation; and decision-making (Andonova,

Betsill, and Bulkeley, 2009). The main drive, as Bulke

ley and Jordan (2012) note, is to outline the priorities

of these partnerships for addressing climate change.

Conversely, while such partnerships seek to strengthen

the UNFCCC process, others, such as the Asia-Pacific

Partnership on Clean Development and Climate

(APP ) created by US President George W. Bush after

the withdrawal of the US from the Kyoto Protocol in

2005, enthusiastically wanted to build a parallel frame

work to the UNFCCC. Nevertheless, the Major Econ

omies Forum on Energy and Climate Change (MEF),

which succeeded the APP, has been instrumental in

relinking the parties with the UNFCCC (Tanner and

Horn-Phathanothai, 2014).

Global climate deliberations have also led to an

important set of public- and private-sector multina

tional responses , including the C40 Climate Lead

ership Group, an association of 58 of the world's

megacities; the Asia Cities Climate Change Resilience

Network (ACCCRN) formed by the Rockefeller Foun

dation; and the World Mayors Council on Climate

Change (WMCCC), which seeks to connect industrial

ized and developing municipalities through an advo

cacy for city-based climate responses. In the private

sector also, a number of consortia have been formed.

A notable example is the World Business Council of

Sustainable Development (WBCSD), which works with

29 leading world companies from 14 industries to

BOX 17.7 I Governing Climate Change: The UNFCCC CURRENT EVENTS

The UN Framework Convention on Climate Change architecture involves 196 country parties, each with a

focal point for representation and negotiations, usually located in a ministry dealing with environmental

matters. Negotiations are also attended by bilateral and multilateral agencies such as the World Bank

and United Nations agencies. The framework categorizes country parties into three groups, the first two

of which are interlocking: Annex I parties, numbering 43 and including the European Union (EU), are de

veloped countries and Eastern European "economies in transition"; Annex 2 parties, numbering 24 and

including the EU, are members of the Organisation for Economic Co-operation and Development (0ECD),

and are expected to provide technical and financial assistance to the transitioning economies of the

former Soviet bloc and to developing countries to help them in mitigating greenhouse gas emissions and

with the impacts of climate change; non-Annex 1 parties consist mostly of developing countries. The UNFCCC is governed through a Conference of Parties (COP) comprising representatives of country parties

to the Convention, who meet once a year. During negotiations, countries with common interests tend to

form groups to save time and make stronger cases. These groups change, however, depending on the is sues being negotiated. Some prominent groupings under the UNFCCC include: the Alliance of Small Island States (A0SIS) comprising 42 countries and observers; the Least Developed Countries (LDCs), consisting

of 48 country parties; the African Group, with 53 members from Africa; the EU Delegation comprising

the 28 countries of the European Union; and the Umbrella Group, which has no formal members but

usually is made up of the United States and some other non-EU developed countries, including Russia, New Zealand, Canada, Japan, and Norway.

334 PART Ill I Issues in International Development

develop a "Vision 2050" that describes how a global

population of 9 billion will live contentedly within

the obtainable natural resource limits (Wilkinson

and Mangalagiu, 2012). However, many scholars have

pointed out the irony of development agencies like the

World Bank and business organizations like WBCSD

projecting themselves as leading actors in the efforts

to address global environmental problems when, in

fact, these actors are actively engaged in activities (e.g.,

funding the development of dams and coal-fired power

station and exploitation of tar sands) that cause envi

ronmental degradation (Korten, 2001).

Clearly, a lot of work is required by multiple actors

and at multiple scales to stem global environmental

degradation and the seeming ineffectiveness of inter

national institutions for environmental and sustain

able development governance. Failures of global and

country-level institutions to surmount the collective

action challenge and offer means through which coun

tries, organizations, and businesses can act together to

address pressing challenges of poverty and environ

mental degradation remain a key global challenge of

the twenty-first century.

CONTROVERSIES AND

CROSSCUTTING THEMES

Environmental and Climate Justice

One major issue that has dogged international

co-operative effort for global governance of cli

mate change and sustainable development is equity

and social justice. Contestations for climate justice,

mainly in the form of demands for fair treatment

by poor countries, have provoked the most vocifer

ous debates and controversies between rich and poor

countries in global sustainable development policy

circles (Okereke, 2008, 2010). Concern for climate

justice has been expressed in many forms. First, poor

countries are keen to point out that rich countries

are responsible for and have profited disproportion

ately from the bulk of the pollution that is causing

today's global environmental problems. A good ex

ample is climate change, where 25 countries account

for 75 per cent of historic global emissions (Bulkeley

and Newell, 2015).

Second, poor countries point out that they bear a dis

proportionate burden of global environmental impacts

arising from past and current global economic activities

as a result of their geographical location, lack of protective

infrastructure, and low adaptive and response capacities.

This would seem doubly unfair because the rich countries

have benefited and still tend to benefit more from these

harm-producing activities because of their advantageous

position in the global economic structure (Lewis, 2013).

Third, poor countries fear that they are not able to partic

ipate effectively in the negotiation of global environmen

tal agreements because of poor capacity and structural

weaknesses (Okereke and Charlesworth, 2014). They

insist that procedural justice is necessary to elaborate

rules that are fair to all countries. Fourth, poor countries

fear they may be saddled with responsibilities that could

undermine their development aspirations. Again, to use

climate change as an example, developing countries have

pointed out that they have been forced into committing

to significant cuts in their own emissions, though they

only contributed one-fifth of global emissions between

1850 and 2002 (World Bank, 2005).

Developed countries, for their part, have argued

that the fact of a rapidly deteriorating environment

demands that all countries must make commitments

and sacrifices to help facilitate an effective response

(Chasek, Downie, and Brown, 2013). Moreover, they ar

gue that emphasis on historical responsibility for envi

ronmental and climate damage is unhelpful and point

out that it is hardly justice to seek to punish sons for

the sins of their fathers. Rich countries also often sug

gest that developing countries are the architects of their

own poverty and vulnerability through several decades

of corruption and poor governance (Rodrik, 2014).

A major equity concept that has been devised to

mediate the justice conflict between developed and

developing countries is the Common but Differenti

ated Responsibility and Capability principle (CBDR+C).

However, despite its popularity and frequent invocation

in environmental agreements and policy circles, the

CBDR+C principle has done little to resolve satisfacto

rily the deep moral impasse that characterizes environ

mental and climate change bargaining (Okereke, 2008).

Developing countries have so often focused on the" dif

ferentiated" side of the norm, while developed coun

tries tend to emphasize the "common" side to highlight

the need for equal commitment. The result is that while

17 I Okereke and Massaquoi: Climate Change, Environment, and Development 335

almost all major global environmental agreements ne

gotiated since 1972 contain copious references to equity

and justice, many developing countries feel they have

made very little progress in securing real justice.

A major argument by developed countries in re

sponse to concerns for equity is that a focus on distrib

utive justice-especially in the form of North-South

financial or technology transfer-will undermine ef

fective and efficient approaches to deal with climate

change. For this reason, developed countries insist that

it is much better to use market approaches or instru

ments in dealing with environmental issues.

In contrast with earlier views that pursuing equal

ity reduces economic efficiency, recent evidence sug

gests that extensive inequality hinders socio-economic

growth and that addressing equity and social justice

concerns can deliver fair and lasting development

impacts (Acemoglu and Robinson, 2012). In addi

tion, it has been proposed that inequality in access to

PHOTO 17.3 I Cleaning up an oil spill, Spain 2003.

education and other resources, such as land and credit,

can hamper economic growth, since the talents, ideas,

views, and experiences of a large proportion of the pop

ulation are not wholly utilized (Leach et al., 2012).

Nonetheless, market approaches have dominated

global environmental and sustainable development

rule-making, including policies like the Clean Develop

ment Mechanism ( CDM), a policy tool formulated in the

Kyoto Protocol, that have been crafted as part of solu

tions for North-South distributive justice (Elah and

Okereke, 2014). Through the CDM, developed countries

are supposed to get tradable emission credits by investing

in emission reduction projects in poor countries. Also,

the CDM has been viewed by most developing-country

parties as a way of taking the pressure off rich countries

that need to make domestic cuts in emissions reduc

tions rather than buy their way out of local liability. In

some critical literature, the CDM has been referred to as

a form of carbon colonialism (Bachram, 2004).

336 PART Ill I Issues in International Development

What Does Sustainability Mean Anyway?

Another major source of controversy that characterizes

global sustainable development policies stems from

fundamental differences in the way the very concept of

sustainability is understood by different sections of the

global community. In its broadest sense, sustainability

means the ability of any system to maintain its perfor

mance over time. Performance in this context refers

to development in relation to the social and individ

ual qualities of life (Tanner and Horn-Phathanothai,

2014). From this understandings, it can be supposed

that sustainability is concerned with a "development

that lasts," which may require placing an emphasis on

safeguarding natural resources (natural capital) that

provide a range of services for humans and the envi

ronment, or substituting natural capital with other

forms of produced capital. In effect, this is a choice

between weak sustainability and strong sustainability,

respectively (Dietz and Neumayer, 2007).

In respect of a weak sustainability paradigm, the

understanding generally is that capital assets are sub

stitutable and the focus ought to be on the total stock

of capital. Proponents of weak sustainability com

monly assume that natural and produced capital are ex

changeable, and that no inequalities exist in the kinds

of well-being they produce. Within this perspective, it

is thought that it does not matter whether the current

generation depletes non-renewable environmental re

sources or continues to increase carbon emissions, as

long as employ ment, technologies, and basic services are

provided in return (Dietz and Neumayer, 2007). Obvi

ously, a weak view of sustainability demands increased

monetary compensation for environmental degrada

tion and resulting conditions such as climate change. In

contrast, advocates for a strong sustainability paradigm

emphasize that some capital assets are more important

than others, implying that others cannot be substituted.

In their view, policies should be formulated to safe

guard environmental resources upon which economic

development primarily depends. Within this context,

sustainability involves preserving and growing people's

capital stock, with a focus on guiding the present gener

ation through taking just as much as they need, so that

the next generation will have as much as they will re

quire (Tanner and Horn-Phathanothai, 2014).

Driving Forces behind Environmental Change

The impact of humans on the environment is generally

measured using the equation I= PAT. Accordingly, the

impact (I) of any population on the environment is ex

pressed as a product of three characteristics: population

size (P), its affluence (measured in per-capita consump

tion) (A), and the prevailing technologies in use (T). In

short, impact (I) is calculated as a combined function of

population (P), a.ffiuence (A), and technology (T).

While this seems simple and straightforward,

there is a huge controversy, often reflecting differences

in value, about the relative role of the various com

ponents and where emphasis should lie in designing

global environmental policy. Simply stated, the contro

versy is often about whether the actual cause of envi

ronmental change is population growth in developing

countries, or power, a.ffiuence, and use of technology in

the rich and developed countries. Developed countries

often like to focus on the impact of population on the

environment. They suggest that a key aspect of global

sustainable development policy must include some

measure of population control in developing countries.

For example, it is projected that the next two decades

will see unprecedented growth in urban populations,

from three to five billion people, who will mostly live in

developing countries. Furthermore, from this perspec

tive, growth in population is believed to be the major

cause of the increasing demand for energy, which is ex

pected to rise mainly in developing countries in few a

decades (Tanner and Horn-Phathanothai, 2014).

But developing countries often prefer to stress

affluence and technology as the main sources of the

problem. They point out that most of this stress on the

global environment comes from only 25 per cent of the

world's population, who consume 75 per cent of global

resources (forest, cement, paper, energy, precious met

als, etc.). Because of technological growth and afflu

ence, global electricity demand is projected to double

by 2030 (from a 2004 baseline) if current consumption

trends remain. T ied to this are rapid urbanization and

the growth of cities, which account for 60 to 80 per cent

of global energy consumption (Kamal-Chaoui and

Robert, 2009) (see Chapter 19).

The impact of technology on the environment

is far more complex. On the one hand, advances in

17 I Okereke and Massaquoi: Climate Change, Environment, and Development 337

technology have helped to stem environmental degra

dation. Common examples are renewable energy and

mechanized farming methods used in large-scale food

production. On the other hand, advances in technology

have made resource depletion much easier and quicker,

as evident in large-scale fish trawling in the oceans and

deepwater oil exploration. Furthermore, technology

has been considered a cause in the widening income

inequality gap, as the rich are able to access special

ized and expensive equipment to grow their wealth

at the expense of poor people, who only benefit from

the wages they are paid for working on the rich men's

farms and in their industries (Milanovic, 2015).

SUMMARY

This chapter has sought to make the case that global

environmental challenges are now central in interna

tional development discourse. Indeed, environmental

issues and international development are so intricately

bound that it is inconceivable to ignore environmental

issues in any major debate or academic work on devel

opment. This chapter provides a foundation for under

standing the intricate and complex relationship among

climate change, environment, and development. It pre

sents the key historical and more recent developments

related to the environment, climate change, and devel

opment nexus, and engages with the key debates, con

cepts, actors, and institutions in the global governance

of environment and sustainable development.

While the global community has attempted to

respond to these challenges by intensive co-operation

marked by the creation of numerous institutions and

policies, finding optimum solutions for balancing envi

ronmental protection and economic growth, especially

in the context of global inequality, remains difficult.

It was noted that the main challenge in addressing

environment-development problems has to do with

the intricate and paradoxical relationship between

economic growth and environmental degradation, as

well as the fact that global environmental challenges

are classic examples of the collective action problem.

The chapter also highlights the roles of many other

factors, such as ideological differences between the

developed and developing countries about the role of

the market in solving environmental challenges, the

problem of agreeing what "sustainability" means in

practice, and fundamental disagreements about how to

resolve thorny issues of justice and fairness.

The above difficulties have been further illustrated

by exploring the issue of climate change, which has been

described as the greatest development challenge of the

twenty-first century, with its impacts touching both

present and future generations. The chapter shows that,

despite wide acknowledgement of the need for urgent

and organized response, the likelihood of achieving

the level of co-operation required to ensure effective

action remains in serious doubt. It is a huge "ask" for

international politics, which is marked by power and

self-interested calculations of states as well as by societal

commitments to luxury and high levels of consumption,

to respond to the radical changes in behaviour, struc

ture, and systematic injustice required to address climate

change. The chapter underscores the thesis that effective

global governance of sustainable development appears

to require radical changes in global values, as well as se

rious attention to questions of justice and fairness.

While there are edited volumes and books on dif

ferent aspects of the link between environment and

development, this chapter provides students with the

insights and concepts required to understand and en

gage with a global debate that is fast evolving as a re

sult of the challenges and choices presented by climate

change. As the book at hand is essentially about inter

national development approaches, actors, issues, and

practice, this chapter has presented the ways in which

development choices conflict with or support arrange

ments oriented towards environmental protection,

climate management, and sustainable development.

338 PART Ill I Issues in International Development

QUESTIONS FOR CRITICAL THOUGHT

1. Is environmental degradation an inevitable consequence of economic growth?

2. Why is it so difficult for developed and developing countries to agree on just and equitable policies for the

pursuit of global sustainable development?

3. What obligations, if any, do rich countries owe the poorer ones for the damages caused by climate change?

4. Discuss the relative impact of population, affluence, and technology on environmental pollution.

Adams, William M. 2009. Green Development: Environment and Sustainability in a Developing World. London and New York: Routledge.

Ehresman, Timothy G., and Chukwumerije Okereke. 2014. "International environmental justice and the quest for a green global economy: Introduction to special issue." International Environmental Agreements: Politics, Law

and Economics 15, 1: 5-u.

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Rural Development Joshua J. Ramisch

LEARNING OBJECTIVES

To understand and be able to explain the key fea- thinking about rural development.

tures of "rurality." • To be able to distinguish between the "labour-rich" • To use the "sustainable rural livelihoods" con- and "land-rich" patterns of rural development and

cept to understand agriculture in context and to understand the importance of population pres-

critically assess claims made about smallholder sure or other factors on innovation.

households (e.g., as "rational," "tradition bound," • To discover the principal challenges to rural devel-

or "multi-locational"). opment in the twenty-first century.

To learn about and evaluate the paradigm shifts in

A Hmong ethnic hilltribe families harvest rice on a terrace rice field in the northern mountainous province of Yen Bal, Vietnam. The local residents, mostly from the Hmong hill tribe, grow rice In the picturesque terrace fields, which have existed for several centuries. Because of hard farming conditions, locals produce only one rice crop per year. I Source: HOANG DINH NAM/AFP/Getty Images

342 PART Ill I Issues in International Development

Agricultural development policies are unduly

affected by urban, roadside, dry-season,

male-based perceptions of rural life and its

problems.

Richards (1985: 156)

INTRODUCTION

While agriculture remains the primary livelihood

source for the rural poor (and particularly rural women), for the first time in human history the major

ity of us ( 54 per cent according to FAO figures in 2014)

live in towns or cities and not in rural areas. Yet the

global food crisis that flared in 2008-when food prices

spiked and "food riots" challenged governments large

and small-reminds us that the problems of rural pov

erty and agricultural development are far from being

resolved (see Box 18.1). Indeed, most ( 70 per cent) of

the world's population earning less than $1 per day is still "rural" (World Bank, 2015). This state of affairs will

persist for many decades even with the present rates of

urbanization, meaning that "rural development" will

remain a crucial element of the developmental agenda

long into the twenty-first century.

This chapter introduces the rural face of devel opment in economic, social, and historical terms that

reflect the incredible diversity and complexity of rural

livelihoods and environments. Other recent reviews

of rural development (e.g., S coones, 2015; World Bank,

2007; Ashley and Maxwell, 2001) reaffirm its impor

tance despite a history of failure or only ambiguous

successes. Taking a global perspective on development processes that by definition differ according to their lo

cal contexts, the chapter begins by exploring the notion

of "rurality " and its relevance, and considers the pat

terns of contemporary rural poverty in relation to past histories of rural transformation and evolving models

for rural development. Particular attention is focused

on the rise and fall of several important ideas, such as the emphasis on "small farms" or agriculture as the en gine of rural development, the benefits and challenges of taking an integrated approach to rural problems,

and the merits and limitations of participatory ap

proaches to rural development.

Perhaps more than most fields of development

studies, the history of rural development is tangled

with internal contradictions and frustrations at unmet

targets. While agriculture has served as the basis for growth and has reduced poverty in many countries, it is also true that livelihoods based largely on subsistence

agriculture remain quite vulnerable and are frequently

caught in vicious circles or "poverty traps," which are so

widespread and enduring that rural poverty can appear

inevitable (Ellis, 2000; Barrett et al., 2001). A caustic

review almost 40 years ago at the height of interest in

rural development noted that "rural development does

not usually achieve its objectives" and "[b ]y any criteria,

successful projects have been the exception rather than

the rule" (Williams, 1981: 16-17). Flows of overseas development assistance (ODA) targeting the rural sector

stagnated in the early 1980s, then declined until 2007

at an average annual rate of 7 per cent (far steeper than

the overall downward trend in ODA) (OECD, 2010: 1).

Donor commitments since the 2008 food price crisis

have increased agriculture's share of ODA to close to 9 per cent, but this is still much less than the 17 per cent

share it held in the early 1980s (OECD, 2015: 1). Neither

the Millennium Development Goals (MDGs) nor their

Sustainable Development Goal (SDG) successors ex plicitly acknowledge rural poverty, which therefore fail to recognize where the poor live and how they make

their living. The MDGs, for example, only addressed rural poverty indirectly, through targets relating to

food security, natural resources, and the overall goal

of halving poverty by 2015.

PUTTING THE "RURAL" IN CONTEXT

The village is the centre; you are peripheral (In

dian village leaders' comment to development

visitors).

Chambers (1983: 46)

To the development planner (or student), the

twenty-first-century world of instant, electronic, global

interconnectivity seems at first glance inherently dis

tinct from the world of the peasant. A vast range of places that might be recognizable as "rural" includes farmlands, forests, savannas, pastoral rangelands,

mountain villages, and mining or coastal communi

ties. Yet the apparently "obvious" categorical divisions

18 I Ramisch: Rural Development 343

BOX 18.1 I Global Food Crisis: 2008 and Beyond CURRENT EVENTS

Through most of the twentieth century, global food production rose and food prices declined, leading

many to assume we had entered an unending era of cheap food. However, in early 2008, as the price of

oil rose from $70 to peak at $140 a barrel, the prices of most of the world's main agricultural commod

ities surged to historically unprecedented levels. The rising cost of food and fuel sparked widespread

political protest, especially across Asia and Africa, and even led the Haitian prime minister to resign in

April after "food riots" killed five people. Global attention to these violent outbursts led to an emergency

High-Level Conference on World Food Security in June 2008, and the World Bank dedicated its 2008

World Report to "Agriculture for Development." Rural communities and farmers did not benefit from rising

commodity prices-and often suffered greatly-because the costs of purchased inputs were also sky

rocketing. The food crisis was overshadowed later in 2008 by the broader banking financial crisis and,

for a time, many food prices stabilized or declined as demand fell. However, when prices spiked again in

2011, it was clear that many factors that contributed to the initial crisis remained in place. Critical schol

ars considered the ongoing crisis a consequence of increasing reliance on capital-intensive, high-input,

globalized agriculture that puts pressure on soil, water, non-renewable energy sources, and land itself,

with feedback from climate change, dietary changes, and population growth intensifying those pressures

(Lang, 2010).

The 2008 food price crisis was clearly linked to suddenly rising oil prices, since globalized industrial

agriculture not only uses fossil fuels to run farm machinery and transport crops to market but also trans

forms them into the fertilizers needed to grow crops intensively (Headey and Fan, 2008). A second factor

was reduced global reserves of key commodities (wheat, maize, soybeans, and rice). At the time, many

blamed economic growth in China and India for depleting these reserves, but in fact both countries'

demand for foodstuffs was stable and self-sufficient over the period (Headey and Fan, 2008). Instead,

the accumulated impacts of policy shifts in the Global North were more important, including policies to

reduce agricultural overproduction (e.g., reductions in subsidies and environmental conservation pro

grams) and to increase agricultural demand (e.g., initiatives in the US and EU to promote biofuel produc

tion from food crops) (Piesse and Thirtle, 2009). Critical outcry about the food security impact of these

latter policies has seen biofuel production shift to non-food crops (although see Box 18.4).

A final cause was seasonal or longer-term crop failures in important growing regions (e.g., Australia,

Ukraine, and Canada for wheat; Thailand for rice). Global climate change appears to be increasing the

variability of production in many of these regions, even as the genetic diversity and water resources that

support this production are stretched to their limits.

between "rural" and "urban" (or "local" and "global")

may actually be quite ambiguous.

National statistical services distinguish urban pop

ulations from rural ones by threshold levels: an urban

area must ty pically contain a certain non-agricultural

production base and also a minimum population level or density per square kilometre. Within such frame

works, rural areas therefore become a catch-all defined

against the urban: the "not-urban." Conceptualizing

"rural" this way is problematic on two counts. First,

the thresholds vary considerably between countries

and regions: towns as large as 15,000 are considered

"rural" in India, while in Honduras the threshold is a

settlement of 150 people. This makes aggregated, global

comparisons of "rural" data (on poverty or productiv

ity, for example) problematic, although many institu

tions like the World Bank and Food and Agriculture

Organization (FAO) do not hesitate to present aggre

gated numbers as if"rural" meant the same thing in all

places. Second, the diversity oflivelihoods found in ru

ral areas (including petty commerce, "cottage" indus

try or artisanal production, and seasonal or long-term

..L

344 PART Ill I Issues in International Development

migrations to cities, factories, mines, or ports) blurs the

notion that certain activities, or residential patterns,

can actually or meaningfully distinguish the "urban"

from the "not-urban" (McDowell and de Haan, 1997).

Beyond the logic of national statistical services,

we can distinguish at least four enduring, material fea

tures of "rurality":

1. A relative abundance of natural capital (land, wa

ter, soil, trees, wildlife, and other natural resources)

and therefore a dependence on (and vulnerability

to) the unpredictable elements of the natural envi

ronment, including drought or flooding, pests and

diseases, and global climate change.

2. A relative abundance of labour, which is often

structured and negotiated at the household level on

the basis of gender and age (e.g., household tasks

and the care of crops are often conceptually di

vided into duties done only by men, by women, or

by children). Seasonal or prolonged out-migration

of the fittest labourers is often widespread and may

adversely affect the quality of the labour actually

available in rural areas, particularly at "bottle

necks" of high labour demand in the rural calen

dar, such as land cultivation, planting, weeding,

and harvesting.

3. A relative isolation (because of remoteness, inter

nal distances, or the general lack of infrastruc

ture) that translates into a relatively high cost of

movement and a relatively limited ability to par

ticipate in or influence national politics. As will be

discussed, although the lack of infrastructure is a

direct result of political indifference or neglect by

central authorities, the urbanite's image of rural

"isolation" is often much stronger than the reality.

4. A relative importance of social factors in stratify

ing or structuring access to resources that may

be equal to or greater than the importance of

PHOTO 18.1 I A recognizably "rural" landscape of Indonesia, featuring Intensively managed rice fields, Irrigation networks, family homes, and a reliance on an overwhelmingly female labour force .

market-based mechanisms (if these exist at all).

Examples include the likely coexistence of mul

tiple (formal and informal) land tenure regimes

(e.g., governing access to farmland, water, fuel

wood, pasture rights), the prevalence of reciproc

ity in social networks ( based on kinship, ethnicity,

religion, or other groupings), and obligations in

hierarchical relationships (such as between elders

and y ounger generations, "native" and "migrant"

populations, men and women, "big men" leaders

and their "clients," to name just a few).

Each of these features can be challenged and ob

viously may not be true in all rural places or all time

periods. Furthermore, they should not be accepted as

politically neutral "facts," unrelated to the urban char

acteristics against which they are defined. For example,

the extractive flow of capital and labour out of rural

areas to urban areas often sustains the perceived "isola

tion" or "underdevelopment" of rural areas. Ashley and

Maxwell (2001: 407) also point out that rural areas, even

ones of great poverty and apparent marginalization, of

ten have much greater income diversity, stronger ru

ral-urban links, and longer-standing interactions with

the world economy than is normally assumed. Most

of the rural world was transformed, often violently

and radically, by the colonial networks of resource

18 I Ramisch: Rural Development 345

exploitation that spanned the globe from the sixteenth

to the twentieth centuries (see Chapter 2). Thus, while

development planners might imagine that "remote"

parts of the world (e.g., much of rural sub-Saharan Af

rica) would benefit from "linking farmers to markets,"

these areas have been incorporated into global markets

for labour or commodities for centuries, albeit on very

unfair and unequal terms (Ferguson, 1994).

Worldwide, rural contexts can be distinguished

on the basis of the relative importance of agriculture in

GDP growth and the relative levels of rural poverty. In

many countries, the rise of national incomes has seen

agriculture's share of GDP and labour decline, although

these patterns clearly vary according to local con

texts and histories. Nonetheless, this apparent process

of structural transformation informs much current

thinking about the nature of the "rural" economy, such

as the categorization of three different "rural worlds"

found in the 2008 World Development Report: Agricul

ture for Development (World Bank, 2007) (Table 18.1):

AgriculLure-bascd counlrics, where the contribu

tion of agriculture to overall GDP growth is greater

than 20 per cent and where rural poverty accounts

for at least 60 per cent of all the people living on

less than $1.08 per day. Most countries in this cat

egory are found in sub-Saharan Africa.

TA Bi E 18.1 I Characteristics of the Three "Rural "Torlds" in the 2008 World Developnient Report

Agriculture-based

countries

(n = 31)

Rural population (millions), 2005 417

Rural share of population (%), 2005 68

GDP per capita (2000 US$) 379

Agriculture share of GDP (%) 29

Annual agricultural GDP growth, 1993-2005 (%) 4.0

Annual non-agricultural GDP growth, 1993-2005 (%) 3.5

Number of rural poor (millions), 2002* 170

Rural poverty rate, 2002 (%)* 51

Note: Averages are weighted and based on 74 countries with at least 5 million people. 'Poverty rate is $1.08/day.

Transforming Urbanized

countries countries

(n = 25) (n = 18)

2,220 255

63 26

1,068 3,489

13 6

2.9 2.2

7.0 2.7

592 32

28 13

:ource: Adapted from World Bank (2008). World Development Report 2008: Agriculture for Development. Washington: World ank. At: go.worldbank.org/ZJIA0SUFUO.

346 PART Ill I Issues in International Development

Transforming countries, where agriculture is no

longer a major contributor to economic growth (less than 25 per cent of overall GDP growth) but

rural poverty remains widespread (at least 60 per cent of total poverty). Most of the world's rural

poor-2.2 billion people in 2005-are actually

now found in "transforming" countries, including

India, China, Indonesia, Morocco, and Thailand.

This category includes most of East and South Asia,

the Pacific, the Middle East, and North Africa.

Urbanized countries, where rural poverty ac

counts for less than 60 per cent of overall poverty

and agriculture contributes to less than 20 per cent

of overall GDP growth. This category includes most

countries of Latin America, the Caribbean, East

ern Europe, and Central Asia.

The 2008 World Development Report pre

sents these categories as part of an evolutionary,

modernization-style model, tracking the pro

gress of countries such as China and India from

"agriculture-based" to "transforming" or Indonesia

from "transforming" to "urbanized" over the 1993-

2005 study period. The Report assumes that commer

cial agriculture and off-farm or urban employment

will eventually drive growth across all three "rural

worlds," and rather optimistically dismisses the many

deviations from this model simply as "idiosyncrasies"

(World Bank, 2007: 28). However, a dominant theme

to be lauded in the Report is that heterogeneity does

exist between and within countries. For example, even

in a strongly "transforming" country like India or an

"urbanized" country like Mexico, sub-national regions

such as the state of Bihar in India and Chia pas state in

Mexico remain strongly agrarian in orientation. This

internal heterogeneity has important implications for

equity and future rural development and change.

Defining rural areas purely on the basis of spatial

or economic features, of course, privileges the knowl

edge and priorities of urban-based elites. The rural that

is "recognizable" to rural inhabitants, in fact, may be

based much more on social or cultural attributes: the

types of communities and relationships, the crops or

animals raised, and the foods consumed. W hereas eco

nomic responses to hunger and food insecurity would

focus on increasing crop production, the rural solu

tions might be social, calling on potential reciprocity

within social networks to acquire food in times of need

(see Box 18.2).

"Peasant" societies, for example, are rural cultures

highly reliant on local production, where the distribu

tion of wealth and power at a local level is affected by

contact with a nation-state. Such societies are typically

highly structured and stratified as a result of that con

tact, especially on the basis of who owns or controls

access to the fundamental resources (land and labour).

These hierarchical structures (of landlords, chiefs, or

local administrators) are reinforced by cultural, eco

nomic, gendered, religious, or cosmological systems

and technologies.

Despite such commonalities of structure, peasant

societies are complex and varied and have adapted and

evolved over centuries around the world as one of the

dominant forms of human organization. The resilience of peasant societies (and smallholders more generally) is

now well documented, and the contribution of that un

derstanding to rural development theory and practice

will be discussed in various forms below. Nonetheless,

many of the inherited structural constraints of unjust

social orders are overlooked in the ideal image of the

rural. As a result, the "tradition-bound, conservative

peasant" is an image still regularly invoked and looked

down upon by leaders and planners or chastised by rev

olutionaries for not throwing off the yoke of oppressive

landlords or village chiefs. To begin to get a sense of the

potential that local knowledge and experience can offer

rural development, we now consider how rural change

has been shaped in various parts of the world.

RURAL TRANSFORMATIONS

Societal Perspectives on Rural Transformation

Contemporary rural development interventions are

only the latest forces restructuring rural landscapes

and communities. The industrial revolutions that

swept the temperate world, from England beginning in

the mid-eighteenth century to Japan in the late nine

teenth century, were preceded and fuelled by agricul

tural growth. In previous centuries, the lack of rural

opportunities (experienced as rural poverty and mis

ery) had sparked peasant rebellions and uprisings from

CRITICAL ISSUES

18 I Ramisch: Rural Development .H7

BOX :Hs.2 I Rural Livelihoods and Diversification

A "livelihood" as a whole represents "the capabilities, assets (including both material and social re

sources) and activities required for a means of living. A livelihood is sustainable when it can cope with

and recover from stresses and shocks, maintain or enhance its capabilities and assets, while not

undermining the natural resource base" (Scoones, 1998: 5). The concept of sustainable livelihoods is

particularly relevant to the rural context, where, for example, the seasonal fluctuations of climate drive the viability of different activities within an agricultural calendar and oblige individuals and households to consider multiple strategies if they are to exploit their environment and flourish.

Livelihood analysis considers how different types of capital (financial, natural, social, human, or physical) are combined in a particular context (of policy settings, politics, history, agro-ecology, or socio-economic conditions). Different livelihood strategies (agricultural intensification or extensification, diversification, or migration), therefore, can be pursued depending on the mediation of institutional pro

cesses (the matrix of formal or informal institutions or social organizations, such as land tenure or inher itance patterns).

For example, in rural western Kenya a household reported meeting its needs (for food security, school

fees, medical services, and funeral expenses) over a six-month period using a range of agricultural and non-agricultural livelihood strategies: cultivating maize and beans (staple crops), cassava (long-term

crop), and tea (cash crop) on their own farm; "borrowing" food, fruit, and milk from relatives; growing and selling vegetables; selling firewood; pension money from a retired railway employee; working for day wages and a cooked lunch on neighbours' farms at planting, weeding, and harvest seasons; working as "casual labour" for local woodcutters; selling handicrafts sewn at home; and searching for work as a watchman or bicycle taxi driver in a nearby town (Ramisch and Akech, 2005, unpublished data).

Such strategies represent a combination of coping mechanisms to address immediate hardships

as well as longer-term adaptations (e.g., migration of one or more family members to town in search of work) to adjust to changing conditions or crises and to reduce vulnerability or poverty. Population growth, urbanization, education, global climatic change, and structural adjustment have all called into play a

diversity of activities geared towards making a secure livelihood.

the time of the Roman Empire, through medieval Eu

rope and feudal Asia, colonial Latin America and the

Caribbean, South and Southeast Asia, and Africa (see

Box 18.3). Finally, throughout history colonial powers

have exploited the rural sector for resources, stepping

up pressure in times of economic hardship to maintain

the revenue flow (e.g., the French in West Africa during

the 1930s, or the British in India in the 1880s and dur

ing Ireland's potato famine in the 1840s).

Although a nation's successful rural development is tied to the opportunities and constraints of its his torical context, many scholars have been inspired to use the histories of currently industrialized societies as models. Two countries are often chosen, since their

contrasting factor endowments parallel the extremes

that still frame much present-day rural poverty: Japan

(portrayed as "labour-rich" but with limited land re

sources) and the United States (portrayed as "land-rich"

but with scarce labour until the early twentieth cen

tury) (Hayami and Ruttan, 1985; Tomich et al., 1995).

Rural Developnwnt in Japan: Intensification

Japan's experience during the Meiji restoration period

(1868-1920) was framed by a limited land base and

an abundant rural population. New land could not

be brought into production because Japan was a fully

, I

348 PART Ill I Issues in International Development

BOX 18.3 I Land Tenure and Inequality

Although an agricultural landscape may appear full of "farmers," increasing numbers of the rural poor do not own the land they work on. Land tenure, or the security with which individuals, households, or com

munities have access to land, is regulated both by customary (traditional norms and practices) and for mal legal frameworks. Rights to land range from "usufruct" (use-rights such as cultivation, tree-planting or cutting, grazing, house-building, or drawing water) through to the rights of full "ownership" (e.g., to sell, subdivide, or bequeath land as an inheritance). Many resources crucial to rural livelihoods (such as fisheries, pastures, or seasonal watering points) are managed as "common property " by complex, customary social arrangements that regulate conflicting use-rights.

The complexity of land tenure regimes often also means that the inequality in landownership and use-rights is deeply entrenched. Women in many societies have been excluded from formal land rights, and rely much more than men on informal and customary access to common property resources. In

much of Latin America one's position as landlord or tenant farmer is effectively hereditary, while access to land in Africa or Asia is also often structured by long histories of ethnic, caste-based, or racialized power structures. The demand for land reform, to break up large farms or plantations for the benefit of the landless, has fuelled national revolutions (e.g., in Mexico or China) and social movements (e.g., Brazil's contemporary Landless Workers' Movement [MST]). Land reform is hard to achieve if it does not address the underlying power structures. The efforts to redistribute previously white-owned land in post-apartheid South Africa confronted the reality that many landless black households did not have sufficient labour available for farming, and did not have the financial resources either to cope with agri cultural risk or even to relocate to the newly freed land (Zimmerman, 2000).

With the emphasis on the rationality of "small farmers" (see below), many rural development pro jects also have assumed that granting formal legal title to land is essential to securing land rights and creating a land market. Yet, a vast literature shows that simply replacing customary regimes with legal title does not necessarily increase security or willingness to invest in agriculture. For example, in Hon duras (Jansen and Roquas, 1998), the land-titling process actually increased conflicts over land, as holders of some customary rights were favoured over others, state intervention in the local community increased to solve conflicts, and conflicts effectively suppressed any potential land market.

settled island nation, and so agricultural production

and the rural economy grew over this period through

agricultural intensification, increasing the overall

crop output of the land by increasing inputs of labour,

capital, knowledge, and technological resources. High

lights of the Japanese experience include the following:

Overall production was improved by farm-

ers working relatively small pieces of land (0.5- •

2.0 hectares), not by industrial agriculture. The

smallholder-led strategy focused on improved va

rieties of the staple crop (rice), increasing reliance

on inorganic fertilizers, and increased use of irri

gation to manage and regulate water supply.

As rice production increased, non-farm income

opportunities also expanded in the small towns

dotting the countryside, maintaining a low degree

of inequality in income and lifestyle between ru

ral and urban areas or within rural communities

themselves.

Success depended on the strong collaboration of

the leadership and resources of the national gov

ernment and a national research and extension

system to promote the latest scientific knowledge.

• Meiji leaders were under intense external pres

sure to "modernize" their society by opening up

to the outside world as producers and consumers

of global goods, a pressure that has been exerted

on states gaining independence from colonialism

through to the present day forces of globalization.

Seemingly unique aspects of the Japanese expe

rience could be barriers to reproducing this success

story in contemporary land-scarce contexts. These

include the relative homogeneity of Japanese society

(a common language, traditions, and ethnic heritage)

and the now-mythologized perception of the enlight

ened and progressive "vision" of the Meiji leaders.

The reality is that more than 200 peasant uprisings,

four samurai revolts, and significant internal discord

within the government severely constrained the "free

hand" that the Meiji rulers supposedly used to reshape

their nation (Tomich et al., 1995: 99). Their strongly

nationalist desire to industrialize rapidly was matched

by an awareness that a growing economy would en

rich them, too, and not simply serve the public good.

In other words, the policies that effectively stimulated

agriculture and the rural non-farm economy appear

to represent a happy convergence of factors that might

just as easily have led to corruption, rent-seeking, and

stagnation.

Rural Developrnent in the US: Extensijication

Compared to Japan, the United States had abundant

and cheap land but relatively scarce and expensive la

bour. This meant overall output was increased through

a!2.ricultural c:-.:tensiticat io11-by expanding the areas

cultivated. The following factors were important to the

American experience:

Fertilizers were not a significant input in Ameri

can agriculture until the 1930s. Before this point,

the incentive to intensively manage soil fertility in

a given piece of land was outweighed in nearly all

locations by the ease with which new, fallow land

could be put into cultivation.

For most of the nineteenth century, agricultural

policy was aimed at opening up "virgin" land and creating new family farms, which relied heavily on

18 I Ramisch: Rural Development 349

the household labour (and draft animals) of the

settlers themselves.

Expanding the transportation network was the

greatest stimulus to rural development in the inte

rior. Navigable rivers and canals were important in

the Northeast and Upper Mississippi, but railroads

were the most crucial link between the expanding

areas of settler agriculture and the growing urban

markets back in the East.

Lessons drawn from the experience of the United

States are typically considered most relevant to the Af

rican context. For example, Wood (2002) argues that

an increasingly prosperous Africa could be "more like

America" than land-scarce regions such as Asia and

Europe. Since Africa, like the Americas, is land-rich

in relation to its population, its primary (rural, agri

cultural) sector will tend to predominate over its man

ufacturing sector. With the bulk of its land mass far

from the sea and without major navigable waterways,

internal transport costs are comparatively higher. This

also leads Wood to conclude that a prosperous Africa

will have urban, industrial concentrations along its

coasts and a less densely settled interior, dominated by

agriculture and mining (see Box 18.4).

Cultural and Technological Perspectives on Rural Transf orrnation

To understand the full range of experiences of ru

ral transformation, it is illuminating to consider lo

cal patterns of rural technological change. The work

of the Danish economist Ester Boserup (1965, 1981)

is one of the most comprehensive and useful frame

works for understanding smallholder adaptations

cross-culturally. Before Boserup, models of rural trans

formation assumed that technology was the primary (if not the only) engine of agricultural change. Progress

was the ability to command larger sources of energy,

and the smallholder in such scenarios was inevitably

doomed to obsolescence because human labour would

eventually be replaced by draught animals, mechanical power, and fossil f uels (Netting, 1993: 270). Boserup's

emphasis on relationships among population density,

technological change, agricultural intensification, and

markets is of particular value, since these relationships

are not presented as part of an evolutionary model of

I 35 0 PART Ill I Issues in International Development

BOX 18.4 I The Global "Land Rush" CURRENT EVENTS

In the wake of the 2008 food crisis, many countries reconsidered their own food security situation. One response that drew international attention (and criticism) was a rush by foreign companies to acquire

large areas of farmland in Africa, Latin America, and Central and Southeast Asia for producing food and biofuel crops for export. When a South Korean company (Daewoo Logistics) tried to lease 1.3 million

hectares in Madagascar for growing maize and oil palm for Korean markets, the resulting street protests ultimately overthrew the government in early 2009. The new president, Andry Rajoelina, declared the

Daewoo deal dead but the incident drew international attention to similar "land grabs" being proposed across the Global South (Cotula et al., 2009).

Media and activists framed these as "land grabs" since investors from high- and middle-income

countries appeared to target low-income countries with abundant land and weak governance. Such leases are typically justified as opportunities for foreign investors to put "underutilized" land to more pro

ductive, commercial use through plantation-style agriculture, echoing colonial language and practices. Local and international critics point to disruptive impacts on livelihoods and marginal environments, the

high risk of corruption, and the minimal contributions of foreign-owned exports on domestic economies. While the pace of these types of investments has accelerated since 2004, it is difficult to assess

their actual scale, which is cited as anywhere between 15 and 203 million hectares globally since 2000 (Schoneveld, 2014: 34). Many deals are announced quite publicly but never materialize, while potentially more disruptive land-grabbing by domestic elites does not attract the same international attention. Schoneveld's review (2014) of 563 deals in Africa counters the dominant narrative that Chinese or Gulf States' hunger for farmland is driving the "land rush," finding that the majority of investors are from

North America and Europe, interested in biofuel rather than food production. Nonetheless, with rural livelihoods and food security already at stake, the added pressure of international capital-whether from new or traditional sources-looking for investment opportunities is a new challenge.

stages or "progressive" change. As such, she breaks

with the more rigid formulations suggested by Thomas

Malthus and Karl Marx.

Boserup's hypothesis is that an increase in popu

lation density is an independent variable sufficient to

trigger agricultural intensification and the technical in

novations needed to support it. More labour-intensive

technologies-such as replacing natural fallows with

the spreading of animal manure as a means of im

proving soil fertility, or replacing digging sticks with

hand hoes, ox ploughs, or tractors for cultivation and

planting-are only sensibly developed and adopted in

the face of the scarcity induced by population pressure.

This "pressure" may be due to a population's natural

increase, the influx of migrants, or land degradation

that reduces the amount of usable land. This relation

ship between rural population density and agricul

tural intensification helps to explain why it is not some

innate "conservatism" on the part of rural dwellers

but rather an entirely rational choice that would keep

farmers from adopting the ploughs or purchasing

pesticides used by their neighbours in more densely

settled landscapes or promoted by an "enlightened"

extension agent (Netting, 1993: 263). It also explains

why a context of out-migration or other population

decreases could rationally lead smallholders to aban

don labour-intensive soil conservation methods or to

return to "older" methods of land clearance such as

burning, even if farmers are aware of more "modern"

techniques.

Originally developed from observations of Asian

and European smallholder farming systems, Bose

rup's expected patterns of agricultural intensification

have since been validated when applied to popula

tion densities in a range of conditions and time pe

riods (see Turner et al., 1993, for Africa). Successful

intensification also may be "induced" by forces other

than land shortage, such as policy changes or the im

provement of infrastructure and better access to mar

kets (Boserup, 1981). These more sophisticated models

show how the benefits of intensification may be hin

dered or missed altogether if not supported by policy,

credit and infrastructure development, or access to

growing markets.

Malthus, Marx, and Boserup understood the sys

tematic interaction of population, environment (land),

and technology (agricultural methods) in different

ways. For Malthus in early nineteenth-century Europe,

land was the ultimate constraint against population

growth. He acknowledged that exogenous technolog

ical changes could improve food production (and thus

general welfare) but did not see any instances in which

such innovations were anything more than random,

and certainly not in response to population pressures

(Netting, 1993: 278). Marx, on the other hand, con

cluded that economic growth is powered by exogenous

technological change. He saw these changes as guided

by the interests of landowners, not rural population

density, with greater intensification supporting the ex

traction of surplus value from the labour of agricultural

workers. In contrast, Boserup shows how population

growth drives technological innovation and agricul

tural intensification that can significantly increase the

productive potential of a fixed piece of land so that it

keeps pace with (or even exceeds) population growth.

MODELS

As the history of rural change suggests, there is

no shortage of models or potential ideas about ru

ral development. Since World War II, thinking

about rural development has undergone two key

paradigm shifts (Ellis and Biggs, 2001). Before the

mid-196os the dominant belief held that smallholder

"peasant" agriculture was inherently inefficient and

therefore destined to be replaced by more modern

forms. The first shift was based on evidence that

saw smallholders were "inherently rational" and

actually a potential driving force for increased ef

ficiency and productivity. The second shift, in the

late 1980s, was from top-down rural development

led by national-level policies and the " blueprint"

18 I Ramisch: Rural Development 351

transfer of technologies, towards efforts to make ru

ral development more "participatory," led or at least

more controlled by the rural communities them

selves at the grassroots.

In the 1950s, the "two-sector" theory of develop

ment assumed the small-farm subsistence sector had to

be replaced by "modern" activities. This view was ex

emplified by Sir Arthur Lewis (1954), who postulated

that low productivity subsistence agriculture offers a

potentially "unlimited supply" of surplus labour that

could be attracted to higher-wage activities. The "tra

ditional" sector would therefore eventually vanish as it

supplied labour and land resources to "modern" sectors

in towns or in industrial agriculture, commercial plan

tations, or ranches.

The catalyst for the first paradigm shift came with

the publication of Transforming Traditional Agriculture

(Schultz, 1964), which drew lessons from emerging ex

perience in Asia where agriculture took a lead role in

economic growth. T.W. Schultz's central proposition

was that "traditional" small farmers in fact allocated

their limited resources rationally and more efficiently

than large-scale farmers, and therefore could lead ru

ral development if given additional resources. This new

perspective suggested an emerging industrial sector

would be supported by the agricultural contributions

of labour, capital, food, foreign exchange (from export

crops), and markets for consumer goods. In effect, if it

could be shown that the "rural poor" were also "small

farmers," growth and equity concerns could be ad

dressed in a single, pro-smallholder, pro-agriculture

strategy of rural development-an apparent "win-win"

situation.

Such ideas have been incredibly powerful, moti

vating practitioners of "integrated" rural development

and the Green Revolution's pioneers (as well as their

successive generations of critics) to see their work as

focused on improving the efficiency of smallholders

with technologies "appropriate" to their conditions

(see Chapter 22). Schultz's ideas continue to hold sway,

as in International Fund for Agricultural Development

(IFAD) reviews of global data that show the agricultural

productivity of"small" farms to be at least twice that of

"large" farms in settings as diverse as Colombia, Brazil,

India, and Malaysia (IFAD, 2001: 79). The greater

productivity of smallholder farmers is attributed to

more intensive use of labour and land, particularly in

348 Pt Issues in Interns en (')

ivelopment

,1 :::0 e- 1tercropping, Community Development

,rnne-WaKe response�

.) p... large P';- � biof·d f>) �

, 111 0.. 0 ri:t � a "9

TJ.<il" .J

..,

s -;:: "

g ro" a n,

...

Er M

(ti

i3 f>)

' �

Cll o-t> o' .... ,.... "'

d f>)

(ti

'"" Cl'

C ..... Dl

0 (1)

� 0

-0

3 (1) � ,-+

....

1ore "partic

; also gained

b.at it is now

to the most

ted in part

e-led " inte

� 1970s and

ls began to

. Of course,

1" rural <le

d by inter

--- .. �uu, uuc1ul-1a1 ana aonor actors through structural

adjustment (see Chapters 3 and 9).

Figure 18.1 presents a very simplified overview of

the evolution of ideas and modes of thinking about rural

development over the past half-century. Note that the

dominant ideas of a given time period may have taken

10 to 15 years to fully spread from academic circles to

policy arenas and practical action, while many minority

or dissenting theories and orientations have simmered

(or boiled) underneath, even up to the present.

1940s 1950s 1960s 1970s

I State-led rural development _

I I

'. "Two sector" models I I

The "community development" approach of the 1950s de

rived from both British experience in "preparing" India

for independence in the 1940s and the domestic policy of

the United States in the 1930s. Community development

then became the guiding logic of American development

assistance-primarily in Asia, where rural development

was seen as a powerful antidote to communist agrarian

movements-and of the United Nations system.

Community development was defined as a process,

program, and/or movement involving communities in

teaching democratic processes and facilitating transfer

of technology to a community for more effective solu

tion of its problems (Holdcroft, 1976: 1-3). The "rural

reconstruction" movement in pre-independence India

had demonstrated that rural people would take initi

ative when they realized that they would benefit from

community-wide efforts. From these roots, community

development programs were assumed to have universal

relevance as part of a democratic social movement em

bracing the idea of a balanced, integrated development

of the whole of community life.

1980s 1990s I 2000s I 2010s

Market-led rural development

' I Structural adjustment� PRSPs l

I "Small-farm first" approaches ("Rising yields on efficient small farms") I Communlt�� development I Integrated rural development I

l Sustainable livelihoods "Participatory" approaches

e.g., Farming Systems Research (FSR), Partidpatory / Rapid Rural Appraisal (PRA &. RRA)

I I

I Critiquesnparticipation L Green Revolution f·

I .............. ·I Biotechnology I Agro-ecology I Permaculture

FIGURE 18.1 I Timeline of Dominant Ideas in Rural Development

Source: Adapted and updated from Ellis and Biggs (2001: 439, 442).

I 1

I I

The approach flourished through the 1950s, and

(as we shall see) has much in common with present-day

"sustainable livelihoods" approaches that emphasize

a holistic development that is locally "owned" and re

sponds to "felt needs." The approach relied heavily on

specially trained civil servants (e.g., "multi-purpose

village workers" in India), who would be accountable to

and working on behalf of both the local communities

and the national governments to facilitate the commu

nity development process. This usually spawned a large

bureaucracy at the national, regional, and local lev

els to support and co-ordinate the efforts of technical

ministries such as agriculture, education, and health.

Given the complexity of co-ordination, community

development practitioners increasingly stressed the

unique contribution of their own subject matter (e.g.,

agricultural production, co-operative development,

local government, rural education, rural health, social

welfare, development economics) while believing that

any shortcomings arose from inadequate support from

other subject matter areas.

By the mid-195os, community development pro

grams had become institutionalized standard "models."

The price of this oversimplification and standardization

was that by the 1960s, most programs were not reach

ing their stated targets for rural poverty alleviation or

food security. As these supposedly universal models

contended with local realities, the (usually expatriate)

community development specialists' ideals and social

scientific perspectives often ran against the interests

of the national technical specialists (particularly in

agriculture). These tensions were resolved mainly in

favour of the more bureaucratically established techni

cal services personnel, to the extent that by 1965 many

host-country "development" ministries were absorbed into the more disciplinarily focused ministries of the

interior or of agriculture (Holdcraft, 1976: 28).

Integrated Rural Development

The decline of the community development approach fed into two contrasting strains of thought. On the one hand, it led to the emerging emphasis on small-farm growth and agricultural improvement through Green

Revolution technologies (see Box 18.5). On the other

hand, its lingering influence brought about renewed e f

forts to promote balanced ru.ra I development through

18 I Ramisch: Rural Development 353

even larger-scale "integrated rural development" (IRD)

projects, supported by multilateral institutions.

By the late 1960s, the context of rural development

had evolved from the community era. Many more

countries (particularly in Africa) were newly inde

pendent from colonialism and were contending with

increasing economic inequality even as the bulk of

poverty remained rural. The IRD approach attempted

to revive and build on community development while

incorporating the new ideas of small-farm efficiency,

promoting balanced development strategies that

would target all regions of a country instead of rely

ing on urban, industrial growth as the engine of the

national economy. The comprehensive nature of !RD

strategies also reflected free-market efforts to mirror

China's apparent success during the same period in

improving production and consumption through rural

collectivization.

The appeal of IRD to the World Bank, its greatest

proponent, was that the results promised by projects

integrated with each other would theoretically out

weigh the results of projects implemented on a piece

meal basis. For example, investment in an irrigation

system could be combined with improvement of local

roads so that surplus agricultural produce could reach

other markets. However, the large-scale nature of these

projects and the consequently large budgets made them

ripe targets for political manipulation as prizes to be

shared among governments, donors, and contractors

(Ferguson, 1994). Thus, the selection of target locations

for !RD projects would become highly political. Leaders

with vested interests could divert development funds

away from the areas in greatest need, reinforcing ex

isting power structures and inequalities rather than

overcoming them.

In general, despite strong donor support, !RD in

the 1970s and 1980s had only mixed results. The most

common criticisms focused on the projects' top-down

nature, supply-driven approach to technical assistance,

and heavy, unsustainable, project-specific management structures. While many IRD projects were designed to

be replicated elsewhere if successful, most floundered

because of numerous obstacles, including fiscal con

straints, the shortage of personnel with the appropri

ate interdisciplinary expertise, and regional differences

(e.g., cultural, social, organizational, and administra

tive) between the pilot and replication sites.

354 PART Ill I issues in International Development

CRITICAL ISSUES

BOX 18.5 I The Green Revolution

These and other developments in the field of agriculture contain the makings of a new revolution.

It is not a violent Red Revolution like that of the Soviets, nor is it a White Revolution like that of the

Shah of Iran. I call it the Green Revolution.

(William Gaud, USAID director, 1968)

The so-called Green Revolution of improved crop varieties, fertilizer, and irrigation technologies that

transformed South Asia from a famine-prone, food-insecure region into a net exporter of foodstuffs between the mid-1960s and the 1980s is often presented as the greatest success of rural devel opment, if not of agricultural research generally. Many of the plant breeders and agronomists who

developed and promoted high-yielding varieties (HYVs) of such staple crops as wheat and rice became household names. Among these leaders in the Green Revolution was Norman Borlaug, who developed disease-resistant, high-yielding varieties of wheat and subsequently won the Nobel Peace Prize in 1970. Innovation continues in plant breeding (and now also in biotechnological methods), broadening the range of crops for which HYVs have been developed and selected for improved drought or pest resistance or

tolerance of salinity, soil acidity, or low fertility conditions. HYVs significantly outperform traditional varieties in the presence of adequate irrigation, pesticides,

and fertilizers. In the absence of these inputs (e.g., under the prevailing conditions of most resource-poor farmers), traditional varieties may outperform HYVs. A further criticism of HYVs is that, genetically, they are hybrids, meaning they need to be purchased by a farmer every season rather than saved as seed from the previous season's crop, thus increasing a farmer's production costs. Alternative strategies like agro-ecology or permaculture attempt to intensify production in environmentally and socially sustainable manners by mimicking natural ecosystems (Altieri, 1995), but are faulted by Green Revolution adherents as too labour- and knowledge-intensive to support the demands of current populations and lifestyles (Collier 2008).

Decades later, the Green Revolution remains polarizing: critics argue that increasing production without considering social contexts is both environmentally and socially unsustainable (Patel, 2013). While Green Revolution advocates claim that HYVs have allowed more farmers to grow more food without needing to clear forested lands, such impacts are difficult to measure in practice since increased pro ductivity creates opportunities for landowners to expand their cultivation, forcing less productive farmers to relocate elsewhere. Critics also note negative environmental consequences of increased reliance on

commercial fertilizers, the breakdown of soils under continuous cropping, contamination of groundwater, and the loss of biodiversity as HYVs displace local varieties (Shiva, 1991).

Participatory Rural Appraisal

Unlike the grand schemes for rural change promoted

by community development or IRD, "participatory ru

ral appraisal" (PRA) is more of a conceptual framework

for rural development in the South that stresses putting

"farmers first" and "handing over the stick" of control

to local communities. An approach popularized by

Robert Chambers (1983), it grew out of holistic research

traditions such as farming systems research (FSR) and

rapid rural appraisal (RRA) to reflect critically on the

failure of most rural development programs in the

1970s and 1980s to substantially improve rural liveli

hoods in large parts of the South.

The assumption is that top-down planning without

the adequate involvement of concerned stakeholders

18 I Ramisch: Rural Development 355

PHOTO 18.2 I Integrated rural development programs emphasized the export of cash crops as a means for "agriculture-based" or "transforming" countries to derive significant foreign currency earnings. Such dependence on cash crops Is still widespread even as commodity prices have declined. Leading cash crops include tea (shown here in Kenya), coffee, cotton, sugar, tobacco, cut flowers, fruits (bananas, oranges), oil palm, spices, and vegetables such as French beans and snow peas.

(especially local people) was one of the core reasons for

the failure of previous approaches. The PRA paradigm

seeks to incorporate local communities in analyzing,

planning, and implementing their own development

programs. The key to PRA, which Chambers (1983)

repeatedly emphasized and which stands in contrast

to the earlier community development approach, is that "experts" must change their paternalistic atti tudes towards local people: facilitating change without dominating local processes. While PRA is a family of approaches, methods, and behaviours, rather than a single method, it is now part of standard practice for many development agencies promoting community development.

Development initiatives that emphasize rural peo

ple's voices and ways of supporting governments to

respond to those voices have had mixed success since

their rise in the 1990s. Weaknesses identified include

inadequate ownership of the processes by government

(e.g., too much has been devolved to isolated NGOs) and

consequently weak links with the macro policy envi

ronment and the wider processes of governance. These

rural development initiatives also have the tendency to

see the "rural poor" mainly as "farmers." Such a disci

plinarily restricted perspective limits the opportunities

to address wider aspects of rural livelihoods, such as

the roles of the rural poor as labourers and consumers,

or indeed the broader questions of how and why these

356 PART Ill I Issues in International Development

groups are politically marginalized. As well, many problems are related to sustaining such interventions once their external funding comes to an end.

Finally, "participation" is itself criticized for be coming a "new tyranny" (Cooke and Kothari, 2001) of rhetoric and routines-like community development or IRD before it-that do not actually provide the tools or space for community empowerment. Translating the rhetoric of participation into practice has often proved complicated and resource-demanding. This leads to a cynical view that many projects dress up their top-down, blueprint activities in the current politically correct language of participation, thereby debasing the potential for truly participatory work to develop. Critics would also argue that PRA has strayed from its emancipatory roots and has been co-opted for utili tarian and instrumental purposes: indeed, the World Bank's online "Participatory Sourcebook" is now the largest repository of participatory writing and research.

Sustainable Livelihoods

The sustainable livelihoods approach (see Box 18.2) is the latest attempt to confront the issues of rural poverty in as holistic a manner as possible (Ellis, 2000; Scoones, 2009). Its greatest value, according to its backers, is that it challenges the "farming first" mentality of previous approaches and considers instead the full range of live lihood strategies being pursued in rural areas. Even in agricultural countries, such as most of sub-Saharan Af rica, where the persistent image is of subsistence farm ers, non-farm (often non-rural) sources may already account for about half (40 to 60 per cent) of average household income and seem to be growing in impor tance (Barrett et al., 2001: 316). This means it is mislead ing to assume, just because the rural poor happen to be engaged in farming, that they are therefore farmers or are automatically interested in investing in means to im prove those farms with new agricultural technologies.

Clearly, this perspective draws heavily on Cham bers's work (1983) on the multiple realities of rural pov erty, which is shown to be an outcome not merely of financial or nutritional deprivation but, more impor tantly, of political and socio-economic exclusion. Sen's definitive work on famines (1981) is also crucial: his argument is that famines occur not because of a lack of food but rather because of inequalities in people's

rights (their "entitlements") to access or distribute that food. Finally, we can see roots in the ideas of Boserup and the understanding that decisions about technology are rationally made with reference not only to environ mental variables (population density, land quality and availability) but also to socio-economic factors (access to markets, policy or institutional settings).

The livelihoods framework does allow us to better describe and understand the processes occurring in the rural context (see Box 18.6). It is not yet clear, however, whether the sustainable livelihoods approach will be better able to master the interdisciplinary complexity that in the past ultimately limited the implementation of holistic approaches such as community development or IRD. Thus, while the sustainable livelihoods frame work is currently de rigueur among rural development donors, such support may not be sustained if (as was the case with "integrated" approaches of the 1950s and 1970s) interdisciplinary ·collaboration means funding potentially critical (or at least skeptical) social research and disciplinary experts who are working towards fun damentally different agendas.

Finally, it is also worth noting that the sustainable livelihoods approach currently vies with a quite dif ferent stream of thinking about rural development namely, the "re-branding" since 1999 of structural adjustment as Poverty Reduction Strategy Papers (PRSPs) (see Chapter 9). These commitments by aid-re ceiving nations are organized according to economic sectors, meaning that their approach to rural poverty remains heavily centred on agriculture and a persis tence of the "two-sector" model. Livelihoods research suggests, of course, that rural poverty reduction de pends on inter-sector mobility and adaptability, and diversified, resilient agriculture (Ellis, 2000: 532). How ever, most PRSPs stick to the neoliberal orthodoxies of fered by the 2008 World Development Report as nearly universal remedies to the heterogeneous poverty of the Global South, such as promoting commercial agricul ture and linking farmers to markets.

CHALLENGES

To synthesize across the themes already discussed the complex nature of "rural" and "local" livelihoods, the diverse histories of rural transformation, and the

CRITICAL ISSUES

18 I Ramisch: Rural Development 357

BOX 18.6 I Gender Dimensions of Household Livelihoods

While it is convenient to describe "households" as if they were units, they often are fraught with inter nal dynamics and tensions. Frequently, the most important divisions within households are gendered, although age differences may also intersect powerfully with gender in decision-making and power over household resources such as land and income. The livelihoods framework allows us to look inside the household and its multiple activities to see, for example, who has the power to make (or block) deci sions about cropping patterns and labour allocation. In processes of rural development, which involve the introduction of new resources or knowledge alongside the introduction of new labour demands or adaptations, decisions about allocating these benefits and burdens within the household can involve significant internal negotiation.

For example, even if household incomes are rising, the welfare of women and children can worsen. Consider that in many societies, women have the primary responsibility for food preparation, child care, and other domestic tasks such as cleaning and fetching water and fuel. In much of sub-Saharan Africa, women are the main agricultural workers and suppliers of food for the household, to the extent that it is often conceptually useful to refer to "the farmer and her husband" rather than abiding by the patriar chal assumption that the male household head is the "farmer." If the labour demands of new crops or agricultural activities fall mainly on women, as is the case with many input-intensive, Green Revolution technologies (see Box 18.5), they will either have to work much harder than they already do, reduce the time spent caring for children, or both (see Chapter 5).

While some crops may be known culturally as "women's" crops, we do not know in advance whether a new activity also will be considered the responsibility or privilege of women. Very often, cash crops that produce revenue (such as tea, coffee, or sugar cane) are considered to belong to men. However, even staple crops, such as maize, rice, and vegetables, also might become controlled by men if they are commercialized. Household decisions to switch land from staple crops to marketed ones, therefore, may be hotly contested, affecting women's rights over land and its produce, which could have implications for food consumption and allocation within the household. Likewise, intergenerational disputes about labour allocation and whether (or how) to subdivide the household's land can often be pivotal in young people's decisions to migrate out of rural areas.

ever-changing approaches to rural development-we

will consider two concluding issues. First, what is the

potential for agriculture-led development? And second,

is the rural still important in a world of multi-locational

households pursuing diverse livelihoods?

Cmnnwdities and Agriculture-Led Develoznnent

If the current global goal of reducing poverty-as

embodied in the PRSPs and Sustainable Development

Goals-now depicts rural development as nearly syn

onymous with agricultural development, there are at

least three reasons to be concerned. First, even with

recent upward pressures on food prices, the real price

of every agricultural commodity has fallen steadily

over the long term, making the profitability of agri

culture as a business questionable in the absence of

subsidies (Ashley and Maxwell, 2001). For example,

even accounting for recent price spikes, world cereal

prices are nearly so per cent lower in real terms than

in 1960. This may be advantageous for net food buy

ers but is not likely to benefit food producers, since

the prices of inputs, such as fertilizers, have increased

substantially relative to outputs over the same period.

Second, agriculture in many parts of the globe con

fronts environmental limitations, particularly in terms

of soil and water (Scoones, 2015). Third, and clearly as

358 PART Ill ! Issues in International Development

a consequence of the first two points, diversification

out of agriculture appears to be widespread and in

creasing, even in dynamic rural economies (Haggblade

et al., 2007 ).

These observations have important implications,

especially with the prevailing interest in linking farm

ers to markets (World Bank, 2007: 118-34). If in many

supposedly "agricultural" countries the current agri

cultural production per capita is insufficient to meet

food security needs, then these needs are increasingly

being met by food purchased from non-farm and

non-rural sources (wage labour, remittances, reciproc

ity) (Barrett et al., 2001; Rigg, 2006). Describing rural

Lesotho in the 1980s, where rural communities gained

most of their livelihoods from working as migrant la

bour in South African mines, Ferguson (1994) points

out that the conventional wisdom about farmers and

markets was actually completely backwards: the rural

areas of the country were not the "suppliers" of food

but rather the "market" for it. As a result, any further

penetration of markets and infrastructure (such as

new roads) into Lesotho's rural areas would not raise

the farm-gate prices paid to agricultural producers but

rather make it even easier for residents of those areas

to buy food and give even less incentive to grow food

domestically.

Agricultural growth must certainly play a part in

pathways out of poverty. Abundant evidence, most re

cently summarized by the World Bank in its World De

velopment Report for 2008 (World Bank, 2007; see also

Scoones, 2015; IFAD, 2001; Ellis, 2000), does show that

improved or diversified agricultural production will

benefit some segments of the rural poor and in some

settings will stimulate the rural non-farm economy.

But while targeting agriculture is clearly important,

it cannot improve the livelihoods of the "rural poor"

PHOTO 18.3 I Sugar cane worker, Philippines. While global sugar prices reached an all-time high In 2011,

wages of plantation workers have not risen, meaning that such workers have become steadily impoverished in

the world food economy.

as a whole. Not only are non-farm activities becoming

central to rural livelihoods, but increasing numbers of

households-in "agricultural" countries, not just in

"transforming" ones-have no commitment to farm

ing whatsoever (Rigg, 2006: 181).

Blw·ring the Urban-Rural Divide

A final issue is livelihood diversification and the sup

posed urban-rural divide. If smallholders are indeed

rational, their decisions to leave farming (or at least

balance their commitment to farming with other ac

tivities) are also clearly rational. The importance of

multi-locational households, with members resident

in or moving between various communities, economic

sectors, and even nation-states, is on the increase (Rigg,

2006). One outcome of this multi-locationality, besides

blurring the boundaries between rural and urban iden

tities, has been to boost the importance of remittance

income from migrants as a force in rural development,

equal to or surpassing that of national investment or

international development assistance. In rural Mexico,

Mali, and the Philippines, for example, these remit

tances support infrastructure development and social

services to a degree that the government simply can

not, and help to build health clinics, schools, and even

roads. This reality could be better supported by migra

tion policy and financial systems to facilitate the direct

transfer of funds back to rural areas.

On a deeper level, the increasing irrelevance of the

artificial urban-rural divide in terms of livelihoods,

markets, and activities also needs to be addressed

(see Chapter 19). Assumptions that productivity gains

in agriculture will drive increased consumption of

non-agricultural goods (e.g., Hayami and Ruttan, 1985)

18 I Ramisch: Rural Development 359

now look flawed and incomplete. The rural non-farm

economy today accounts for 35 to 50 per cent of aver

age rural household income across the Global South

(Haggblade et al., 2007). Given the range oflivelihood

strategies now pursued in rural areas, "rural" and

"urban" may not be so easily distinguished on the basis

of economic activities. But since non-farm opportu

nities in rural areas are often barely more productive

than agriculture, they deserve to be developed in their

own right.

SUMMARY

This chapter has demonstrated two key ways in which

thinking about rural development has evolved. The first

is how attitudes that smallholder "peasant" agriculture

is inefficient and outmoded must confront evidence

that smallholders are "inherently rational" and there

fore the potential driving force of increased efficiency

and productivity. The second is the rising challenge

to top-down rural development made by more partic

ipatory approaches led by, or at least more controlled

by, rural communities, which acknowledge that rural

"sustainable livelihoods" do not always rely solely on

farming. Targeting agriculture is therefore necessary,

but not sufficient, for rural development. The ongoing

food crisis illustrates that agricultural development,

rural development, and food security are not synony

mous, and we cannot emphasize increased production

without attention to social and environmental impacts.

Rural development in the twenty-first century will

need to learn from the diversity of rural people's pres

ent and past experiences if it is to contend with climate

change, land pressures, and volatile commodity prices.

QUESTIONS FOR CRITICAL THOUGHT

1. Do rural and urban areas differ in meaningful ways in regard to livelihoods and alleviating poverty? How do

episodes like the 2008 global food crisis change or reinforce any distinctions or differences? 2. Considering the long history of failed rural development projects, does Boserup's model of agricultural in

tensification and technological change provide any better explanation of this failure than the perspectives of Malthus or Marx?

358 " II I Issues in International Development

1sidering the various rural development models of the past 50 years, how can the development chal

;es move beyond arguments of specialist versus generalist knowledge or of top-down versus bottom-up

roaches?

4. In a world where over a billion people are food insecure, to what extent can or should agriculture lead rural

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Urban Development: Cities in the Global South __llnne Laterulresse, L -isa Bornstein, and Jane Re'icl

LEARNING OBJECTIVES

• To understand global trends in urbanization and cities in the Global South, with specific reference

factors contributing to the urbanization of devel- to shelter and sustainability.

oping countries. • To learn about the major players in urban develop-

To become familiar with key concepts and theoret- ment-private developers, international agencies,

ical approaches to understanding and interpreting governments, NGOs, and urban movements-and

the transformation of urban areas in developing be able to provide examples of their role in con-

countries. temporary urban restructuring.

To appreciate the central development issues for

Residents in the "pacified" Pavao-Pavaozlnho fave/a community in Rio de Janeiro, Brazil. The favela stands above famed

Copacabana and lpanema beaches, two of Rio's wealthiest neighborhoods. The government recently created a commission

with the objective to increase social projects in favela communities that have a Pacifying Police Unit (UPP). The new aim

acknowledges that the communities, many of which remain plagued by violence and other issues, cannot be "pacified" solely by police operations. I Source: Photo by Mario Tama/Getty Images

INTRODUCTION

In 2014, an estimated 54 per cent of the planet's

population-3.9 billion people-resided in urban ar

eas (UN, 2014a). According to the United Nations (UN),

the world's urban population is growing at a faster rate

than the total population of the planet, and most of

this growth will occur in the Global South. By 2050,

two-thirds of humanity will live in cities (UN, 2014a).

This shift is justly seen as a significant revolution in hu

man history, marked as it had been with a scattering of

cities-some great, some small-in a landscape domi

nated by rural settlement patterns and associated live

lihoods. In the words of Anna Tibaijuko (2007), former

executive director of the United Nations Human Set

tlements P rogramme (UN-Habitat), the human species

has now become "Homo Urbanus."

Cities have come to play an increasingly important

role in shaping possibilities for human development and

economic well-being. Urban dwellers need livelihoods,

shelter, services (from water to education), and ways

to meaningfully engage with the society in which they

live. Equally important, "living gently on the land" has

become a pressing reality, as the environmental con

sequences of resource-intensive and waste-generating

human activities have wreaked havoc at the local, re

gional, and global scales (see Chapter 17). Yet, despite

these imperatives, the relationship between urbani

zation and human well-being is one of mixed results.

Cities are places of growth and opportunity. Cities also

reflect inequalities and unevenness in wider develop

ment; they may grow because of an increase in trade

flows, or because of immigration provoked by crises

elsewhere. Urban processes-the design and construc

tion of the built environment, and the act of living in cities-generate development challenges. Socio-spatial inequality and segregation, for example, have become

dominant features of urban areas throughout the world, starkly depicted by some observers as a planned city for the richest and upper-middle-class inhabitants, and unplanned settlements or homelessness for the

poorest. Such contrasts are apparent in cities through

out the world, whether in the wealthiest areas, those in

the midst of economic crises (e.g., Greece), conflict (e.g.,

Syria and South Sudan), or disaster (e.g., Nepal), or those

simply undergoing ordinary (uneven) <level pment. At the same time, cities are places of innovation-social,

19 I Latendresse et al.: Urban Development 363

political, economic, and technological-and of strug

gles for citizenship, democracy, and individual and col

lective freedoms (Isin, 2000; Harvey, 2013).

Urban agglomerations of the Global South, the fo

cus of this chapter, are often depicted as large, polluted

cities surrounded by a belt of slums. This image is not

so far from the reality: Delhi has 25 million inhabit

ants (the second largest city in the world after Tokyo),

Shanghai has 24 million, and Sao Paulo, Mumbai, and

Mexico City have 21 million each (UN, 2014a). Many

cities of the Global South are characterized by high lev

els of inequality and burgeoning demand for state and

humanitarian services.

The vast majority of cities have a troubled relation

ship with their surroundings, and cities of the Global

South are no exception. Cities are large consumers of

water and energy resources, and producers of green

house gas emissions and industrial and residential

waste. Cities depend on rural areas for food and other

resources, yet often expand onto and consume agri

cultural and open land. Such expansion can bring

needed infrastructure and economic opportunities to

the urban periphery; it also can generate processes of

speculative "land-grabbing" and displacement of

rural and small-town residents, while reducing nearby

sources of food, water, and energy. Immigrants-both

economic migrants seeking a better quality of life than

that available in their places of origin and refugees dis

placed by conflict, disaster, environmental, economic,

or other crises-swell the numbers of urban residents.

Moreover, it is already known that climate change

and its manifestations seriously affect populations of

developing countries, particularly inhabitants of

slums and informal neighbourhoods (World Bank,

2015). Given the severity of the challenges, an impor

tant issue for the future will be how urban actors

governments, the private sector, community groups,

and international partners-confront these challenges

in innovative ways.

This chapter examines urbanization in relation to development. We tackle the phenomenon as a his

torical process of spatial transformation that has de

mographic, economic, political, social, and cultural

dimensions. In the first part, we present major trends

and patterns of urbanization occurring in developing

countries and review the main factors contributing

to it. The second part focuses on the urban crisis faced

364 PART Ill I Issues in International Development

by cities and governments of developing countries since

the 1980s and explores implications for the living con

ditions of city inhabitants. We introduce the elements

of the crisis, cover the main debates about its causes as

posited in the fields of geography and sociology, and

identify key challenges. The third part of the chapter

examines these challenges in greater depth, discussing

spatial expressions of deepening environmental chal

lenges and socio-economic inequalities; our focus is on

shelter. Finally, we consider central actors in urban de

velopment and provide indications of collective actions

by local actors, movements, and municipal govern

ments that seek to promote more just and sustainable

forms of urban development.

UNDERSTANDING URBANIZATION

Urbanization is the transition over time of a rural

society to a more urban one (known also as "urban

transformation"). It is a process that has modified and

continues to modify the spatial distribution of the pop

ulation in every region of the globe. We can therefore

refer to the "rate of urbanization" or "urbanization

level" in a country or region by comparing the popula

tion living in cities to the total population.

The evolution of cities and towns has been influ

enced by the phy sical characteristics of the environ

ment, their role within larger political and economic

territories, their internal economic structure and ac

tivities, the dominant model of development, daily life,

culture, and customs. In addition to historical legacies,

in the contemporary era the state, private sector, civil

society, social movements, and citizens all contribute

in distinct ways to city-making. For these reasons, cit

ies and towns vary greatly over time and space.

Yet researchers, planners, and geographers seek a

definition of a city that is relevant regardless of country,

region, or historical period of study. Today, most re

searchers agree on the following elements: a politically

and administratively defined territory; a relatively high

population size and density; the presence of a division

of labour and functional diversity; and social organiza

tion based on complex and varied interrelations.

Once the city is defined qualitatively, what is the

threshold at which it is possible to say that it is indeed

an urban entity ? And on what basis can researchers and

observers monitor the urbanization of a country and

compare it to that of other countries and other regions?

One of the main problems is that the threshold

defining an urban entity differs from one country to

another. For example, an urban centre in Canada is an

area with at least 1,000 people and a population den

sity of at least 400 people per square kilometre; and in

Botswana, in southern Africa, a city is an agglomera

tion of 5,000 or more people where at least 75 per cent

of the economic activity is non-agricultural. Popula

tion growth on the periphery of a city may or may not

be counted as urban; in India, for example, city bound

aries are slow to adjust, since reclassification of land as

urban carries with it requirements for costly municipal

provision of services.

Data on urbanization ty pically are supplied by a

country's census or national statistical agency, which

uses its own definitional criteria. In addition to the ab

sence of a universal definition, the uneven quality of

data collection produced in various countries reduces

the reliability of information and, therefore, leads to

difficulties when comparative analyses are necessary.

For example, slum dwellers, squatters, and homeless

people are difficult to count accurately since they lack a

formal place of residence. The World Bank and United

Nations compile nationally collected data for compar

ative and country-specific purposes: the data allow

tracking of human welfare and progress towards de

velopment goals (such as the Millennium Development

Goals or MDGs) over time; assessment of development

policies and urban programs; and consideration of lo

cal conditions in policy formulation and funding deci

sions. International agencies may conduct independent

household surveys to supplement national data, but

most information comes from local sources based on

local criteria and definitions.

URBANIZATION ACROSS TIME

AND SPACE

Available data allow comparison of global levels of

urban population by region and time period (see

Figure 19.1). Latin America and the Caribbean began

their urban transition-shifting to a majority urban

population-about six decades ago. Today, just over

80 per cent of the total populations of these regions live

C 5

e C 4 0

·.;::;

g_ 3 0 a. C "'

19 I Latendresse et al.: Urban Development 365

• Oceania

Northern America

• Africa

Latin America and the Caribbean

• Europe

• Asia

FIGURE 19.1 I Urban Population by Region, 1950-2050 Source: UN (2014b: 12).

in cities. Asia and Africa, where the urban population currently is estimated at 39 per cent, began this process later. However, Asia already contains half of the world's urban population, half of the world's cities of at least one million people, and half of the mega-cities of 10 million or more inhabitants (UN, 2014a). Africa has the world's highest urban growth rate, of between 3 and 4 per cent per year, but China and India alone account for 37 per cent of the world's population, and in both cases the urban population continues to grow dramatically: the cities of just three countries, China, India, and Nigeria, are projected to account for one-third of the increase in the world's urban population (some 900 million res idents) by 2050. Growth of large agglomerations is ex pected to continue: in 2014, there were 28 mega-cities of 10 million or more, housing one-eighth of the world's population; by 2030, there will be 41 such mega-cities. Most of these mega-cities are located in the Global South. In parallel, smaller cities remain important; nearly half the world's city dwellers reside in settlement areas of less than 500,000 people (UN, 2014a).

Rur I-urban migration and n.\turnl inlr as' fuel the growth of cities now, as in the pa t. Migration is the 11lajor cau e of city growth in China, where over

�60 million rural Chinese have migrated to urban areas in the past 10 years. Elsewhere, natural increase-the

excess of births over deaths-accounts for approxi mately 60 per cent of urban population growth (UNFPA, 2007). Reclassifying previously rural areas as urban, such as when fringe areas and neighbouring villages are incorporated into a metropolitan area, also contrib utes to the swelling of urban populations.

In other respects, contemporary urbanization dy namics are distinct from those of past eras. Urbaniza tion of Europe and North America occurred in a period marked by industrialization and economic growth. Throughout the nineteenth and early twentieth cen turies, the state played a crucial role, creating the eco nomic and physical infrastructure to support urban growth: rail and road systems supported the growth of new cities, towns, and suburbs; landownership and banking systems facilitated real estate booms and home ownership; and social welfare systems helped as sure subsidized housing, job creation, and a safety net for many of those in need of assistance.

Urbanization in the Global South has differed because of both historical and contemporary factors. For example, colonization accelerated urbanization and the structuring of cities around colonial relations (King, 1990). In some instances, colonialism disrupted existing settlement patterns, for example, by creat ing separate quarters in the city for settlers and their

366 PART Ill I Issues in International Development

institutions, often at the expense of local inhabitants.

Post-independence did not, in most cases, reverse colo

nial patterns of city location along international trade

routes, or the internal dualistic structure of cities, with

their "modern" quarter and the "traditional" one, the

latter housing the majority of the migrants seeking jobs,

education, and other opportunities in the post-colonial

city (Drakakis-Smith, 2000). Countries urbanizing to

day do so in the context of globalization, neoliberalism,

and, in many cases, in the wake of structural adjust

ment programs, as discussed in other chapters. Unlike

in past eras, where industrialization, urbanization, and

economic growth occurred together, contemporary

restructuring of economic activities and the advent of

information and communication technologies have de

coupled such relations. Indeed, with the exception of

certain parts of Asia such as China, urbanization hap

pening in the South entails neither industrialization

nor economic growth (Glaeser, 2014; Gollin et al., 2013).

This situation explains why certain experts refer to the

"urbanization of poverty" (UNFPA, 2007), a trend most

visible in the housing sector: 863 million people today

live in informal settlements and slums (UN-Habitat,

2014). Indeed, as Sylvia Chant (2013: 9) contends, "pros

perity is not an inevitable outcome of urbanization,"

and instead, in much of the Global South, cities are

places where "poor living standards .. . socioeconomic

disparities, and lack of decent work opportunities" pre

dominate, "often associated with violence, crime, inse

curity, and mental and physical ill-health."

International, regional, and local forces and actors

influence the rate and distribution of urban growth

in direct and indirect ways. Public, private, and in

ternationally funded projects may prompt particular

forms of urbanization; for example, the construction

of roads opens up areas of the country to settlement,

labour-saving agricultural technologies usually prompt

rural-urban migration, and the construction of dams

usually displaces people. Disasters and conflict may

force rural people to move to the cities. However, these

forces are entwined with wider economic and political

relations as well as the policies of international bodies

such as the UN and the World Bank (see Chapter 9).

Indeed, globalization-understood as a contempo

rary process of restructuring economic, political, and

cultural dimensions of the world order-engenders

socio-spatial restructuring at different scales (global,

regional, national, and sub-national) that directly

affects urban areas (see Chapter 6).

All of these shifts are accompanied by an environ

mental crisis that many see as linked to, if not largely

caused by, the forms of production and consumption

associated with the city. The consequences include

climate change, and increasing risks and hazards for

many (see Chapter 17). These factors make urban de

velopment in the contemporary period more complex,

particularly in poorer countries of the world, where ba

sic challenges of development become intertwined with

those of urbanization.

While cities have long been associated with disor

der, chaos, and violence, throughout history they also are

linked to human creativity (Mumford, 1961). Technolog

ical innovations-from the first agricultural revolution

of the neolithic age to the Industrial Revolution and,

most recently, the information revolution, have been

prompted by the needs of urban development and have

profoundly restructured urban form and urban life. The

polis in Greece gave birth to democratic practices, and

these cit y -states evoked the birth of citizenship (Hall,

1998). The history of cities is a reminder that spatial

concentration has prompted humans to create new tech

nologies, and new political institutions and practices, at

times leading to innovative solutions to urban problems.

The developmental and sustainability challenges

associated with urbanism are reflected in the following

observations:

1. The location, pace, and scale of urbanization un

derway are unprecedented in human history.

2. Urbanization and urbanism are associated with a

new geography of economic activity, political al

liances, and socio-economic outcomes. More spe

cifically, cities are part of a global urban network

in which distinctive forms of urban development,

polarization, instability, and environmental stress

are emerging both within cities and among them.

3. Cities are major resource users and producers of

wealth, but not all cities consume nature in the

same way or at the same levels. Moreover, envi

ronmental risks and poor-quality environments

are unequally distributed, with low-income people

disproportionately vulnerable.

4. The capacity, resources, and political will to ad

dress urban, developmental, and environmental

problems are often most lacking in the places

where they are most needed. Nonetheless, ef

forts to address problems and create better cities

are apparent, with some highly innovative initi

atives emerging from even the poorest and least

well-resourced countries.

URBAN CRISIS AND THE CHALLENGE

OF SUSTAINABLE URBAN

DEVELOPMENT

Some experts at the UN and other research agencies

have used the term "urban crisis" to denote the con

tradictory effects of urban population growth; in this

view, urban growth, fuelled by individual hopes for a

better life, has social, economic, and ecological effects

that weaken cities' potential as places to live. To sup

port such an argument, experts point to the example of

peasants who arrive in the city in search of a better life

but end up residing in a cardboard shack, unemployed.

Students and scholars of development recognize, in

contrast to such arguments, that blaming migrants

for their own urban misfortunes misses the forces that

shape opportunities, in both rural and urban areas, for

migrants and long-term residents alike. It is true that

many urban dwellers live in informal settlements. Or

they may work informally in an employment relation

ship "not subject to labour legislation, income taxa

tion, social protection or other employment benefits"

(!LO, 2013a), constituting the so-called informal sector

that includes street vendors and shoeshine boys (see

Chapter 11). However, informality in shelter and em

ployment, rather than an outcome of overpopulation

per se or of individual aspirations for a better life, must

be seen as consequences of wider structures, policies,

and practices. These structures, policies, and practices

create the various dimensions of an urban crisis, as well

as the bases for sustainable urban development.

The cases of shelter and disasters are illustrative. Housing shortages are often linked to highly unequal land tenure patterns and to the difficulties newly in dependent states face in establishing communal in frastructure such as housing, sanitation, and public transit. These forces combine to create a crisis, one that is only aggravated by the structural adjustment

19 I Latendresse et al.: Urban Development 367

programs imposed by international institutions such as

the World Bank and the International Monetary Fund

(IMF) (Davis, 2006). Lack of sufficient adequate hous

ing at prices and locations accessible to low-income

households, coupled with lack of decent work, prompt

many people-from schoolteachers and government

bureaucrats to unemployed youth-to rely on informal

housing for shelter and informal work for primary or

supplementary income.

Alongside these now-recognized phenomena, new

problems are coming to light, particularly in terms of

natural catastrophes, environmental crises, and global

climate change. The earthquakes that hit Kathmandu in

April 2015 killed over 8,000 people, landslides washed

away nearly 300 people in Rio de Janeiro in March 2010,

and the 1984 gas leak from a Union Carbide chemical

plant in Bhopal, India, killed several thousand people

immediately and caused long-term health impacts for

many more over a longer period. In each case, these

events reveal a link between socio-economic inequali

ties and environmental risk. Indeed, underlying social,

economic, and political vulnerabilities increase the risk

of disasters. Low-income populations are the most vul

nerable to the impacts of climate change (IPCC, 2014;

World Bank, 2015). Post-disaster reconstruction special

ist Gonzalo Lizarralde (2015: 130) identifies poor build

ing techniques, construction in areas prone to disaster,

and "less tangible characteristics that put people in frag

ile situations, such as ... lack of property titles or insur

ance and limited education" as among the many "unsafe

circumstances that societies develop and institutions

tolerate." In this sense, he observes, disasters are never

strictly "natural." Vulnerability is socially constructed.

It is important to ask whether there are links be

tween these various crises. In other words, are they dif

ferent crises with independent causes, or are we dealing

with a global crisis that affects the food and agriculture

system, the environment, and cities, or even a crisis that

is both systemic and sectoral? While some experts adopt

a Malthusian approach and continue to see population

growth as a main cause of the urban crisis, others look

to the links between the global economy and the forms

of urban development occurring in both industrialized

and developing countries. For theorists such as David

Harvey and Immanuel Wallerstein, the current chaos

is not caused by crises; rather, one systemic crisis, based

on capitalism as a mode of production, is the root cause

368 PART Ill I Issues in International Development

PHOTO 19.1 I Slum dwellers on Boeng Kak Lake in Cambodia are vulnerable to the increased frequency and severity of storms.

of various ills facing humanity. This crisis is exacer

bated by international policies and institutions.

Today, even the World Bank recognizes the fail

ure of the policies previously put forward for human

and economic development, including in urban areas.

Urban theorists, civil society organizations, and so

cial movements question how the economic system is

shaping cities in different parts of the world. A growing

number of researchers now call for better urban plan

ning regulations, economic development stimuli, and

infrastructure and services provision, as well as the

need for participation of communities.

CITIES, GLOBALIZATION, AND

SOCIO-SPATIAL FRAGMENTATION

Urban theorists argue that globalization has its own

spatial expressions and relations; and they have doc

umented the resulting spatial and socio-economic

characteristics of cities. Saskia Sassen's The Global

City (1991) examines in depth the very large cities that

are international financial centres, such as New York,

Tokyo, and London. Glohal cities, she contends, ful

fill their global functions through the spatial concen

tration of high-level international command functions

and linked business services (for example, advertis

ing, insurance, and business advisory companies). As

Sassen (1998) observes, "The new growth sectors, the

new organizational capacities of firms, and the new

technologies-all three interrelated-are contributing

to produce not only a new geography of centrality but

also a new geography of marginality."

Castells (1996) agrees, seeing in these cities the

nodes of a form of globalization that maintains finan

cial control over modes of production in some global

cities, while the sites of production of goods are trans

ferred from developed to developing countries. Some

metropolises in the Global South are now part of this

network of major metropolitan areas that concentrate

power and economic and financial flows. Shanghai, Sao

Paulo, and Singapore are finance centres for the global

economy, while Dubai acts as a transport hub and Ban

galore is a centre for information technology. They are

part of the circle of major urban areas at the heart of the

world economy.

Even Dhaka in Bangladesh and Lagos in Nigeria,

both large cities that are economically and politically

marginalized, are shaped by global systems. The design,

urban fabric, and infrastructure of their downtowns

resemble those of many large cities in developed coun

tries. They are marked by the presence of an affluent

class that is part of the international elite and whose

lifestyles and consumption patterns resemble those of

other major urban cities (Jenks et al., 2008). Local offi

cials may turn their backs on "traditional," "informal,"

and "unregulated" ways of using urban space (planting

crops in the city, street vending, etc.) in favour of specu

lative and spectacular urban projects, a form of develop

ment also associated with a loss of community and civic

space, a lack of public amenities, and the severe envi

ronmental degradation of urban areas. Indeed, the most

ecologically unsustainable aspects of cities in wealthy

regions-high consumption, massive waste, automobile

dependency, low-density sprawl, and continued reliance

on high levels of resource extraction (from agricultural

PHOTO 19.2 I Favela (slum) in Rio de Janeiro, Brazil.

19 I Latendresse et al.: Urban Development 369

land to groundwater to oil and other minerals)-are

increasingly characteristic of other parts of the world.

Economic and spatial polarization is a core element.

In all these cases, the city fabric reflects exposure

to the global economy and has generated new forms of

entrepreneurial city-building. The built environment

has become an object of speculation, while simultane

ously being reshaped to serve the needs of a growing

cadre-in some cities-of people in new economic

activities (from data processing and call-centres to

software development and high-level management).

Gated communities, elite downtown condos, and

slums are recurrent elements of these cities (Marcuse,

2008; Caldeira, 2000). Property-led development, with

an emphasis on revitalizing older parts of the city for

new international functions, is apparent in diverse

cities of the world (e.g., Mexico City, Bangkok, Singa

pore, and Cape Town). Global events, such as summits

of world leaders and the Olympics, and megaprojects

are actively pursued as a means to better brand major

370 PART Ill I Issues in International Development

cities and make them ever more visible on the world

stage (Bornstein, 2010) (see Box 19.1). While such in

vestment dynamics result in revitalization of older ur

ban areas and provision, in some cases, of major urban

BOX 19.1 I Competing for the Olympics

infrastructure, the consequences for ordinary city res

idents are less certain; evictions, displacement, and se

curity crackdowns rather than improved quality of life

are common (Davis and Monk, 2008).

CURRENT EVENTS

Competition for the Olympics starts well before the lighting of the Olympic flame. While much of our attention focuses on the years of preparation undergone by athletes, cities also prepare, hone their

offerings, and compete: hosting the Olympics, and other international sporting events, is seen as a

prize in itself, one that places the host city and country on the podium of the world stage. Historically,

few countries in the Global South acted as hosts. In recent years, various rising economies have sought

such status, often submitting repeat bids in their efforts to "win the gold." Almaty, Baku, Beijing, Doha,

Istanbul, and Rio de Janeiro have submitted bids to host the Summer or Winter Olympics in the last

decade and are likely to do so again. Cities compete actively, perhaps ruthlessly, and at considerable

cost in the bidding game. City governments and local chambers of commerce generally see international sporting events as a

good investment. Major upgrades in local facilities and infrastructure are needed to satisfy international

requirements; Beijing used the 2010 Summer Olympics to introduce a subway system, reconfigure the

city around a modern core, construct arenas of striking architectural design, and attract international

investment and tourism. Local promoters hope this visibility and the physical upgrades will be long-term

assets for profit-making: that the city will become a destination for other sporting events, conferences,

independent tourism, investment, and trade. The construction jobs, lucrative media contracts, thou

sands of tourists, and global visibility are argued to benefit government, private-sector promoters, and

local residents.

The reality is often quite different. A strong bid means demonstrating that the "conditions for a

successful event" are in place: economic and political stability, high-level security, land availability, and

easy, comfortable access for the many visitors-athletes and non-athletes alike-to the various venues.

These imperatives have led to a slew of negative policies and practices associated with international

games that include displacement of low-income people who occupy desired lands; relocation of home less and other "undesirables" in the days and weeks leading up to the event; rushed, low-quality con

struction that both reduces the life of infrastructure and endangers the lives of the construction workers

on the projects; and branding of the city and event for a "mass audience" at the expense of local culture. And few long-term benefits may materialize. Tourism and investment may not outlast the event itself.

Facilities, whose construction costs may take decades to pay off, may end up underused.

There are alternatives. In some cases, local civil society groups have mobilized to oppose the bid,

construction plans, or associated human rights abuses. For instance, in South Africa, StreetNet Interna

tional joined with refugee, sex worker, and slum dweller organizations to protest evictions in advance of

the World Cup (Robbins, 2012). In other cases, such as Cape Town's unsuccessful 2004 Olympic bid,

promoters partnered with civil society to ensure benefits-such as job training, environmental clean-up,

and investment in needed social infrastructure-would flow to local people. Meanwhile, international

campaigns, such as that spearheaded by Transparency International (2014: 5-6), have called for major

reforms, including independent oversight of international sport associations and bidding criteria that "make internationally accepted and binding standards on fundamental rights (e.g. human rights) and

anti-corruption a prerequisite for any event."

PHOTO 19.3 I UNHCR refugee camp.

In sum, numerous global forces affect the urban form of metropolitan areas. Four trends are appar ent: a rise in new types of cities that play important co-ordinating roles in the global economy; new spatial tendencies of fragmentation, fracturing, and polariza tion within globalized cities; a parallel rise in inequal ity, poverty, and vulnerability; and an increase in new forms of governance that emphasize local strategies for economic growth in the spatial order-and thus a more entrepreneurial-state stance towards promotion of the city-over other development needs.

In the next section, two contemporary challenges that illustrate these dynamics are discussed, namely population displacement and shelter.

THE EXPANSION OF SLUMS

As noted above, slums are a feature of contemporary urbanization (see Box 19.3). Whether they are called bidonvilles, shantytowns, poblaciones, Jave/as, or slums, these informal housing areas are present on

19 I Latendresse et al.: Urban Development 371

all continents. There were 792 million people living in slums in 2000, and 863 million in 2014 (UN-Habitat, 2014). China has the highest number of slum dwellers (180 million) and India is second (104 million). How ever, in some countries, nearly all housing is inadequate or produced via informal means. Sub-Saharan Africa overall has 70 per cent of its population (199.5 million) living in slums and, the Central African Republic has a striking 96 per cent of the population classified as slum dwellers (UN-Habitat, 2014).

In some parts of the world, informal settlements are located within the formal city, as in Rio de Janeiro in Brazil. Elsewhere, slums create one or more belts sur rounding the city. Davis (2006) observes that the rise of mega-cities has been paralleled by the rise of mega-slums, linked together into continuous swaths of informal hous ing that lack sanitation, water, roads, and other services. At a human level, this means that a vast proportion of people in the world live in places where water is polluted and there are no adequate basic services; overcrowding means that privacy is non-existent, housing is makeshift, and there is little possibility of securely holding land.

372 PART Ill I Issues in International Development

BOX 19.2 I Refugees, the Displaced, and Host Cities CURRENT EVENTS

Images of "boat people" in overloaded vessels leaving Africa for Europe and of thousands of Haitians

crowded into tents following the 2010 earthquake have drawn attention to a major phenomenon of the

twenty-first century: human displacement and forced migration. In 2014 alone, 33.3 million people had

no option but to leave their houses and lands to seek refuge elsewhere. The reasons are threefold:

"natural" catastrophes including those linked to climate change; war and conflict; and economic factors.

Most of those displaced from their homes, "some 60 per cent of the total 14.4 million refugees and

80 per cent of the 38 million internally displaced people (I DPs)," end up in cities (UN-Habitat, 2015a). The massive and unplanned arrival of refugees or displaced people in urban areas is generating new, and

highly visible, tensions: observers point to the massive scale of displacement, the difficulty in untangling

so-called opportunistic reasons for movement (i.e., economic migrants who opt to move in search of a

better economic future) from crisis-related reasons (such as war or an earthquake), and the perceived

competition newcomers could pose for scarce urban jobs, services, and shelter. Such considerations

may, in some countries, outweigh or parallel a humanitarian, compassionate response of welcome and

assistance.

In other instances, ongoing conflict, lack of resources, political will, and/or institutional capacity

have meant "temporary" shelter for displaced populations persists for years or decades. The cases of

Somali and Palestinian refugee camps are illustrative (see Brynen and El-Rifai, 2007; Roberts, 2010;

IDMC, 2015). Refugee settlements, often located on the fringe of existing cities, have become part of

the wider urban conglomeration, albeit under UN authority and with distinct characteristics. Typically,

the tents that predominate at first are replaced by small houses of permanent construction, and basic

services such as water, sanitation, and electricity are provided. Physical conditions come to resemble

those of surrounding areas, that is, with significant variation across the region, quite poor, for example,

in Palestinian camps in Jordan and Lebanon (Roberts, 2010) and better in Gaza and the West Bank (Brynen and El-Rifai, 2007: 36). Overcrowding is common, with self-built extensions to homes frequent.

Camp residents remain vulnerable; for instance, although the Somali residents of Kenya's Dadaab refu

gee camp have access to education and basic services lacking in their conflict-torn areas of origin, they

do not have the right to work, vote, or remain long-term in Kenya (Warner, 2015). Indeed, as is true of

other displaced people, these refugees and their descendants have not been able to take part fully in

the political, economic, and civic life of nearby cities.

In the most basic sense, slums form for two rea

sons: (1) the growth of the population outpaces the

production of housing for low- and moderate-income

households; and (2) governments-and other urban

actors-cannot find means to provide shelter for those

households, whether by stimulating private developers

to build more housing, undertaking state production

of housing, or planning settlements in which informal

construction could be accompanied by service provi

sion and better settlement planning. Historic legacies

play a part as well and include concentrated ownership

ofland; lack of investment in sanitation and water ser

vices; settlement in areas prone to hazards or far from

the city's economic hubs; and limited land made avail

able for formal production oflow-income housing (Da

vis, 2006). Regulations can make it difficult for poor

households to gain title to land or its use, and govern

ment neglect or active destruction of informal housing

also contributes to the ongoing growth of slums. Davis

(2006: 62) further blames "the current neoliberal eco

nomic orthodoxy" for exacerbating the housing short

age by shrinking government programs and privatizing

BOX 19.3 I What Is a Slum?

19 I Latendresse et al.: Urban Development 373

A slum household lacks one or more of the following five conditions:

1. Durable housing that is built on a non-hazardous location and can adequately protect inhabitants

from climatic conditions.

2. Sufficient living area, where not more than three people share the same room.

3. Access to improved water in sufficient amounts and at an affordable price, without requiring

extreme effort.

4. Access to sanitation in the form of a private toilet or a public toilet shared with a reasonable

number of people.

5. Secure tenure, through documentation or de facto protection against forced evictions.

Source: Adapted from UN-Habitat (2008).

housing markets. Finally, in recent years, globalization

and the competition between cities to attract invest

ments have favoured speculation and high prices for

better-located real estate, worsening the living condi

tions of lower-income households, who are pushed to

the outskirts of the formal city.

Whether slum dwellers reside in central areas or

the periphery of the city, they are exposed to a variety of

risks. Environmental health hazards of poorly serviced

and planned settlements, such as exposure to industrial

toxins or lack of clean water, are compounded by the

more recent impacts of a changing climate (Anderson

et al., 2008; Aguilar, 2009). While these settlements

are poorly regulated and serviced by government, they

are places where people establish homes, form friend

ships, start small businesses, and survive as best they

can; rather than clearance of slums or their residents,

most researchers and many advocacy organizations

call for policy reforms that would improve conditions

and grant expanded political voice for slum dwellers. A focus on regularization of ownership and titles to

property, a dominant approach to slum upgrading in the 2000s, has now been replaced by approaches that

improve conditions, ideally in situ; the risk remains of relocation of slum residents to more peripheral parts of the city, as centrally located lands are redeveloped for

spectacle or speculation (see Box 19.1).

Slum dwellers lack decent employment in addi

tion to decent housing, and the numbers of unem

ployed and underemployed have swelled with the

recent economic crisis. Youth unemployment is at

record highs, with the International Labour Organi

zation (!LO) reporting an increase from 11.9 per cent

unemployment in 2007 to 12.6 per cent in 2013-that

represents 73.4 million economically active youth

aged 15-24 who could not find work. In develop

ing countries, economic crises also mean reduced

hours and wages for those who are employed, a rise

in working poverty, greater difficulty for women to

find work, and a turn to informal economic activities

(!LO, 2013). One promising direction is urban agricul

ture (see Box 19.4). A second is municipal infrastruc

ture; as cities grow and age, there is a pressing need

to invest in the expansion, maintenance, and repair

of water, sewage, transport, and power systems, and

employment-generating approaches could provide

job growth (ILO, 2006). The !LO has coined the phrase

"decent work" in its platform for action, and has

pushed-in partnership with local governments, un

ions, and rights-based groups-to incorporate clauses

protecting the health, safety, and dignity of workers

into trade agreements and the MDG replacement,

the UN 2030 Agenda for Sustainable Development

(UN, 2015b).

PART Ill I Issues in International Development

0 CEP

BOX 19.4 I Urban Agriculture: A Survival Strategy for Poor Urban Dwellers?

Growing food in urban areas is a long-standing practice, from the hanging gardens of Babylon to the pres ent. For many years, however, urban agriculture virtually disappeared from cities throughout the world;

restrictions on food production by city managers who feared associated nuisances, the industrialization of food production, and the availability of refrigeration conspired to shift food systems away from local production. Yet, beginning in the 1970s, urban agriculture began to reappear. Small home gardens and

urban farms emerged in major cities of Africa, Asia, and Latin America. Community farming also blos somed in some cities of the developed world.

To explain the re-emergence of urban agriculture, researchers point to the "economic worsening of the situation of the poor as a consequence of structural adjustment programs" (Ratta and Nasr, 1996, in Bryld, 2003), rapid urbanization, and a lack of inexpensive transport for agricultural products coming from rural areas. For urban households, urban agriculture is a strategy to enhance food security. Indeed, it is "one of the most important factors in improving childhood nutrition, by increasing both access to food and nutritional quality" (Halweil and Nierenberg, 2007: 50). Moreover, it can contribute to local

economies in terms of jobs and incomes, better management of waste, and improved quality of life. Some 800 million people were engaged in urban agriculture by the mid-1990s, the majority in Asia

(UNDP, 1996). Among them, 200 million engaged in production for the market. The Food and Agriculture Organization (FAO) estimates that 130 million African and 230 million Latin American urban dwellers plant fruit and vegetables to supplement their diets or incomes (FAO, 2015). For some it is their only source of income, as in Yaounde, Cameroon, where 70 per cent of urban farmers have no other work, and in

Cairo, Egypt, where rooftop gardening provides income-earning possibilities for teenage women who for cultural reasons-cannot leave the home. Income and output from urban farms can be significant. As Bryld (2003) mentions, "In Africa, urban cultivation has become a permanent part of the landscape. Today, 70 per cent of the poultry food consumed in Kampala is produced within the city boundaries. In Kathmandu and Zambia, more than a third of the subsistence food production is produced within the city."

Urban farming can make efficient use of resources (such as wastewater and organic waste), uses less water and land for equivalent outputs than conventional farming, and can help prevent erosion, cleanse water in sensitive areas, and provide nutrients for urban wildlife (Halweil and Nierenberg, 2007). Yet barri ers to expanded urban agriculture remain, including conflicts over land tenure and pressures to build. Ad ditional areas for municipal support include repeal of regulations prohibiting urban agriculture, designation

of uncontaminated lands for cultivation, and establishment of local markets and distribution networks.

FORCES OF CHANGE:

INTERNATIONAL INSTITUTIONS,

LOCAL GOVERNMENTS, AND

GRASSROOTS INITIATIVES

The World Bank has emerged as a major player in the

field of urban development. Its urban focus emerged

in the 1970s out of the recognition that "because they

serve as reserves for capital and for research, as sites

of concentrated production, and of modern consump

tion, cities are becoming major economic players"

(Osmont, 1995: 7). The policies of the World Bank and

other institutions and agencies have deepened many

of the pernicious trends described above. World Bank

urban policy has entailed limited public intervention,

privatization ofland and real estate, promotion of free

19 I Latendresse et al.: Urban Development 375

BOX 19.5 I The New Urban Agenda and Habitat III CURRENT EVENTS

The United Nations' third Conference on Housing and Sustainable Urban Development, Habitat 111, was held in Quito, Ecuador, in October 2016. The Habitat Conference brought together stakeholders from across the world to review progress, highlight urban challenges, and lay out global goals and commit ments for the next 20 years. The aim of Habitat Ill was to identify "drivers of change" that will help gov ernments and other stakeholders manage urban areas in a socially, environmentally, and economically sustainable way. One potential driver is a New Urban Agenda, a policy document prepared for adoption during the conference. Diverse stakeholders provided input to the New Urban Agenda with policy pa pers (www.unhabitat.org/issue-papers-and-policy-units), committee meetings in New York, Nairobi and Jakarta, and dialogues (www.habitat3.org/sitemap). Discussions focused on identifying ways to support:

patterns of urban growth that support other forms of sustainable development, such as the growth of "green economy" practices;

urban plans and policies that reach beyond the traditional boundaries of the city and connect urban, peri-urban, and rural areas;

institutional arrangements at the national and sub-national levels that enable governments to effectively deliver the New Urban Agenda.

The UN sees an important role for young people in the formulation of the New Urban Agenda. It is esti mated that by 2030, as many as 60 per cent of all urban dwellers will be under the age of 18. Currently, cities, especially those in the Global South, provide youth with insufficient access to education and em ployment. By engaging with Habitat Ill, youth, it is hoped, can have the opportunity to raise awareness of the needs of young urban dwellers, their participation in urban life, and their potential contributions to the planning and management of our cities.

markets for housing, and decreases in assistance to res idents (Renard, 2003: 242). In short, the city becomes a laissez-faire playing field.

During the 1990s the Bank recognized the fail ure of its interventions. According to Renard (2003), it is now shifting towards an emphasis on local gov ernance and urban planning. In addition, the rhetoric of the Bank and other actors such as UN-Habitat now emphasizes citizen participation, such as in the Hab itat III consultations (see Box 19.5) or participatory budgeting (see Box 19.6). This change in terminology, support for the active involvement of NG Os and civil society as major players in sustainable urban devel opment, and the promotion of participatory democ racy indicate a turning point in World Bank thinking. However, some question the value of this new dis course within the Bank, and caution that the Bank

may take lessons learned from urban movements or innovative cities and strip them of their potential for social transformation. In such cases, citizen and civil society participation could be incorporated into technocratic and managerial approaches to the city instead of into popular mobilization processes that aim for the transformation of social and political relations.

THE RIGHT TO THE CITY

This shift in rhetoric has coincided with the failure of structural adjustment programs imposed on many countries by the World Bank and with the outbreak of urban riots in Casablanca, Tunis, Cairo, and other cities in the late 1980s. It also coincided with the

376 PART Ill I Issues in International Development

BOX 19.6 I Participatory Budgets and Local Democracy

In 1989, Porto Alegre, Brazil, initiated participatory budgeting. This is a process of involving city resi dents and key local stakeholders, such as unions and neighbourhood committees, in the preparation of the city's investment budget. The process, named a Best Practice in Good Governance by UN-Habitat in 1996, relies on direct participation and on representation: residents in each neighbourhood identify priorities for investment for their district and region through direct participation, and then elect repre sentatives to the city-wide budgeting process. Participatory budgeting is an important breakthrough in governance and urban planning: it provides a mechanism for redistributing resources in the city, improves transparency and increases accountability of elected officials, and contributes to the renewal of local democracy (Abers, 2001; Latendresse, 2006). Following the example of Porto Alegre, about 1,500 other cities in the world have experimented with various forms of participatory budgets. Both large urban centres-Johannesburg, Cologne, and Chicago-and less well-known municipalities-Rosario, Argentina; Entebbe, Uganda; Dondo, Mozambique; and Zwolen, Poland-have introduced some level of participatory budgeting.

emergence, since the early 1990s, of various initiatives

around the world to promote appropriation of the city

and its neighbourhoods by residents. Practices associ

ated with participatory democracy, such as the experi

ence of participatory budgeting in Brazil and in several

other cities in the world, are a small-scale answer to the

urban crisis.

The World Urban Social Forum and other net

works seeking to create just, ecologically sustainable,

inclusive, and democratic cities have begun to draw on

the theoretical concept of the right to the city developed

by the sociologist Henri Lefebvre. Lefebvre affirmed

the right of those living in cities (regardless of their

citizenship status, class, gender, ethnic, linguistic, re

ligious, or other identity) to take part in the definition

of the city. Thousands of local actors, including munic

ipalities, as well as worldwide urban movements, aspire

to see this right recognized along with other social and

economic human rights. A network of institutions and

NGOs has developed a World Charter for the Right to

the City. The preamble of the Charter (2005) outlines

this right:

The Right to the City broadens the traditional

focus on improvement of peoples' quality of

life based on housing and the neighbourhood,

to encompass quality of life at the scale of the

city and its rural surroundings, as a mecha

nism of protection of the population that lives

in cities or regions with rapid urbanization

processes. This implies initiating a new way

of promotion, respect, defense and fulfill

ment of the civil, political, economic, social,

cultural and environmental rights guaranteed

in regional and international human rights

instruments.

Alongside this collective project of the global

justice movement, actors in the public and private

sectors are experimenting with new practices that

converge in the same direction: the need to integrate

the poorest populations, as well as women, indigenous

people, ethnic minorities, and other marginalized

social groups (see Box 19.7). Without idealizing the

scope of these initiatives, which face many obstacles

and constraints, it is important to note that they are

exploring new avenues for participatory governance

and sustainable urban planning and will contribute

some elements, however modest, to the response to

the urban crisis.

19 I Latendresse et al.: Urban Development ,--_,; I

PHOTO 19.4 I Sao Paulo, one of the largest cities in the world. Paul Haslam

1 ·nd rand Hou.·in gRight,·

The Right to Housing is the "right to live somewhere in security, peace and dignity" (UN-CESCR, 1991). Access to secure and decent housing provides psychological and physical security; it is also a means to struggle against poverty and inequality. Once a family has access to decent housing conditions, adults are able to concentrate their efforts on income-generation or improvements to their living conditions while children are more likely to have access to education. The right to adequate housing has emerged as a key policy agenda for housing movements, NGOs, and international agencies, one that increasingly

is recognized as tied to gender equality. As Miraftab (2001: 154, 156) observes:

Housing is a key resource for women; it is an asset important to their economic condition and central to their physical and social well-being. It is the site of child rearing and income genera

tion and a nexus for social networks of support and community-based reliance .... Housing is a

significant economic asset to women that contributes to their independence, economic security

and bargaining power with men in their households and in society at large. Most importantly, it

helps women determine their own futures and make the decisions that affect their lives.

Despite progress against gender discrimination, women disproportionately lack adequate housing (Chant, 2013; UN-IANWGE, 2009). Women head about 20 per cent of urban households worldwide but, in many coun

tries, they do not have full rights to inheritance or property tenure. Where basic services are not supplied to the home or immediate neighbourhood, it is women and girls who typically fetch water or gather fuelwood, often at great distances, impinging on time for income-generation, schooling, and child care. And it is women and girls whose safety and comfort is most compromised by lack of sanitation, toilets, street lighting, and

(continued)

378 PART Ill I Issues in International Development

secure public transport: for instance, since they work at home in greater numbers, they are exposed to the environmental and health risks of poor infrastructure (such as diseases linked to poor drainage, open def ecation, and decomposing rubbish) while lack of separate-sex toilets in schools may lead adolescent girls

to drop out or be targeted for sexual violence. The vulnerability and insecurity faced by women and girls, in both the public and private realms, limit their ability to access services and pursue economic opportunities; gender-based violence is especially high under conditions of conflict, disaster, and their aftermath.

In urban areas, priorities to reverse and reduce gender inequalities include combatting overt forms of

discrimination-such as biases in ownership, inheritance, and land titling regulations, in hiring and remu neration, or in political representation-and overcoming "gender blindness" in the planning and provision of urban services. Researchers from the World Bank and independent university studies "consistently show

that when mothers have greater control over resources, more resources are allocated to food and to chil

dren's health (including nutrition) and education" (UN-IANWGE, 2009). The 1996 Habitat Agenda advocates

for community mortgage programs that can help provide women with the access to capital, credit, land,

technology, information, and other resources they need to improve their situation. Gender blindness-that is, the ignorance of and indifference to the distinct needs and priorities of women and of groups of women,

such as the elderly, professionals, the informally employed, and students-is another barrier to change,

and one that becomes of increasing importance as overt discrimination is eliminated. Bolivia, Colombia,

Honduras, Peru, and Venezuela have changed how the head of a household is defined, allowing women to be recognized as responsible for and to sign legal documents (including ownership and loan contracts) on behalf of the family (Rolnik, 2011). Other important initiatives include the UN-Habitat Land Security and

Urban Governance's campaign for property regulation reform, and, sharing similar goals, the Global Land Tool Network (GLTN) promotion of tools to facilitate women's access to property (land and housing).

FUTURE NEEDS

Cities-and the lifestyles of those who live, produce,

and recreate in them-will need to radically shift to

wards more sustainable forms. It is in the cities that the

decisive action to mitigate climate change and adapt

to new environmental patterns must occur. Certainly,

many coastal cities will need to adapt to rising sea lev

els, and changing weather and climate patterns will im

pact inland cities as well. "It is particularly ironic that

the battle to save the world's remaining healthy ecosys

tems will be won or lost, not in tropical forests or coral

reefs that are threatened, but on the streets of the most

unnatural landscapes on the planet" (Worldwatch

Institute, 2007: xxiv). Challenges of livelihoods, em

ployment, and shelter are pressing. There is insufficient

"productive and decent" employment for urban resi

dents, with numerous implications for human welfare

and service provision. The lack of adequate shelter ex

perienced by one in seven urban residents in develop

ing countries must be addressed immediately. While

urbanization does not guarantee development, efforts

to promote social justice, rights to the city, and sustain

able settlements attest to the potential of cities as sites

of innovative solutions to human problems.

SUMMARY

In this chapter, we have treated urbanization as a

process that develops differently, depending on the

region of the world, and we have examined demo

graphic, economic, political, social, and environmen

tal dimensions. This perspective allows the student

to distinguish the current context in developing

countries from the experience of industrialization in

the industrialized countries. We underline that the

globalization of the economy, which directly affects

cities as places of production and consumption, and

neoliberalism, which transformed the role and na

ture of the state, are structural factors that impacted

cities and their ability to absorb growing numbers

of inhabitants. Urbanization in most developing

countries has occurred without industrialization or

growth, contributing to the urbanization of poverty.

Urban crisis is manifested, most notably, in the ine

qualities visible in slums side-by-side with rich areas.

The arrival of migrants displaced by natural disas

ters, conflict, or economic reasons affects the ability

19 I Latendresse et al.: Urban Development 379

of cities to cope. Students should note that cities oc

cupy a paradoxical position. On the one hand, they

contribute to environmental crises, on the other, they

offer new opportunities for people to engage their

municipalities to solve these problems: for exam

ple, through participatory governance, civil society

movements, and urban agriculture.

QUESTIONS FOR CRITICAL THOUGHT

1. What distinguishes the urbanization of developing countries from that of developed countries?

2. What is meant by the term "urbanization of poverty"? What are the links between urbanization and

development?

3. What are the main components of the urban crisis that has hit developing countries?

4. Why do slums emerge? What could be done to better provide poor households, women, and refugees with

adequate shelter?

5. Explain some of the dilemmas raised by community participation and grassroots initiatives in the manage

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Development and Health r

ecl 8 chrecker

LEARNING OBJECT VES

To achieve familiarity with key concepts such as

social determinants of health and socio-economic

gradients in health.

• To be able to assess arguments about the relative

contribution of health care or health systems and

social determinants of health to socio-economic

gradients in health and population health status.

• To be able to identify and assess the potential e f

fects on health o f domestic social and economic

policy and international development policy in

areas that are superficially unrelated to health.

• To become familiar with major elements of the

changing landscape of global health governance.

• To be able to assess the prospects for future

improvements in population health outside the

high-income countries in light of key develop

ments in the international political economy.

• Female patients waiting on hospital beds in the Comprehensive Community Based Rehabilitation in Tanzania (CCBRT)

hospital. I Source: Photo by Thomas Trutschel/Photothek via Getty Images

INTRODUCTION: WEALTH, HEALTH,

AND THE REST OF THE STORY

Imagine for a moment a series of disasters that killed almost 800 people every day for a year: the equivalent of three or four daily crashes of crowded airliners. Such a situation would quickly be regarded as a humani tarian emergency: the stuff of headlines, especially if ways of preventing the events were well known and widely practised in some parts of the world. This is the casualty count from complications of pregnancy and childbirth, which kill an estimated 289,000 women per year-poor women, in poor countries. In Canada, a woman's lifetime risk of dying from complications of pregnancy or childbirth is one in 5,200; across the whole of sub-Saharan Africa, the world's poorest re gion, it is estimated at one in 38 (MMEIG, 2014).

The most basic explan_ation for this disparity has to do with wealth and poverty. One recent estimate is that providing a bare minimum of essential health services for all the residents of a low-income country would cost an average of US$86 per person, per year (in 2012 dollars; Centre on Global Health Security, 2014). This sum would not buy anything like the care most readers of this chapter take for granted, yet is several times what many low-income countries spend on health care. For example, in 2012 the public budget for health care, adjusted for purchasing power, was US$27 per person in Bangladesh, US$37 in Ethiopia, and US$23 in Madagascar (WHO, 2015b). Meanwhile, high-income countries spend thousands of dollars per person per year on their health-care systems, which operate in facilities like the US cancer centre shown in Photo 20.1. In many poor countries, resources for cancer care are almost non-existent despite rapid in creases in the number of cases (Knaul, Anderson, Bradley, et al., 2010; Livingston, 2013).

Low-income countries, in particular, cannot re alistically provide even a bare minimum standard of care without external resources, which is why develop ment assistance for health (DAH)-discussed later in the chapter-is so important. Domestic priorities also come into play, and the health of the poor and mar ginalized may simply not be high on the agenda. For example, in 2001 the member states of the African Un ion (AU) committed (without a deadline) to increasing

20 I Schrecker: Development and Health 383

public spending on health to 15 per cent of general government expenditure. A decade later, only six of 53 AU member states had met this target (Committee of Experts, 2011); AU finance ministers had unsuc cessfully attempted to force its abandonment. And in 2015 a newly elected Indian government announced a 16 per cent cut in its health budget (Mudur, 2015), even though India's performance on basic indicators like lit eracy, immunization, and child nutrition lags well be hind some even poorer countries (Dreze and Sen, 2013: 40, 45-80). Protection of health, especially the health of the poor, is merely one competitor among many for policy attention and state resources, just as it is in wealthier countries. Further complicating the story, a number of low-income countries (such as Cuba, Sri Lanka, and Costa Rica) and regions within countries (India's Kerala state is the example most often cited) have achieved Good Health at Low Cost-the title of a 1985 study of such jurisdictions (Halstead, Walsh, and Warren, 1985). More recent research identifies Bangla desh, Ethiopia, Kyrgyzstan, Thailand, and the Indian state of Tamil Nadu as jurisdictions that have achieved substantial improvements in health despite low public expenditure levels, although health systems are in no respect comparable to those in the high-income world (Balabanova, Mills, Conteh, et al., 2013).

Health care is only one of the influences on health, and in many contexts is less important than social determinants of health: conditions under which people live and work that affect their oppor tunities to lead healthy lives. T hese were the focus of a commission established by the World Health Or ganization (WHO), whose 2008 report was organized around eliminating health inequities: unjust and avoidable inequalities in health (Commission on Social Determinants of Health, 2008). Some of the more extreme illustrations: despite progress over the past decades, and with some uncertainties about data quality (as is often the case), an estimated 795 million people in the world suffer from chronically insuffi cient caloric intake, the most extreme form of malnu trition (FAO, 2015). Paradoxically, according to WHO there are now roughly twice as many people in the world who are overweight (WHO, 2015a)-another form of malnutrition and one that may actually have more serious consequences for health because of links with cardiovascular disease, diabetes, and

384 PART Ill ! Issues in International Development

PHOTO 20.1 I One building on the campus of the M.D. Anderson Cancer Center, Houston, Texas.

other non-communicable diseases (Dixon, 2010).

This is an important aspect of, and contributor to,

the double burden of disL·asc (Box 20.1). Again, de

spite recent progress, more than 600 million people

lack access to clean drinking water and 2.4 billion

lack access to basic sanitation (UNICEF and WHO,

2015). This is one of several ways economic depri

vation creates situations in which daily routines of

living are themselves hazardous. Charcoal or dung

smoke from heating and indoor cooking is a major

contributor to respiratory disease among the world's

poor (Kurmi, Lam, and Ayres, 2012). It is estimated

that more than 800 million people now live in slums,

including 62 per cent of the urban population of

sub-Saharan Africa (UN-Habitat, 2013: 112); there is

room for disagreement about definitions, but on al

most any definition slums do not provide a healthy

environment (see Chapter 19).

"GREAT DIVIDES" AND SOCIO

ECONOMIC GRADIENTS

Against the background of casualty figures like those

that began the chapter, one of the "great divides" in

health and development is whether the glass should

be considered half empty or half full. Those in the lat

ter camp emphasize progress in such areas as measles

control, where deaths dropped from 548,000 in 2004 to

158,000 in 2012 as a result of large-scale immunization

campaigns (Perry, Gacic-Dobo, Dabbagh, et al., 2014),

or the twelvefold increase between 2003 and 2013 in the

number of people living with HIV whose lives are being

prolonged by access to antiretrovirals (UNAIDS, 2012,

2014). Even the optimists concede the importance of

intensive efforts to ensure that progress continues.

Another such divide involves the relative priority that

CRITICAL ISSUES

BOX 20.1 I The Double Burden of Disease

20 I Schrecker: Development and Health 385

For a long time, population health researchers believed that countries would undergo a relatively stand ardized epidemiological transition as they grew richer. Infectious or communicable diseases, many of which disproportionately affect children, would decline in importance as causes of death while deaths from non-communicable diseases such as cardiovascular disease and cancer, which normally affect people later in life, would increase. Although reductions in infant and under-5 mortality make an impor tant contribution to the improvement in health status that often accompanies increases in income in low- and middle-income countries (LMICs), the full picture is more complicated.

Communicable diseases continue to take a toll in the low-income world. Roughly 95 per cent of new

HIV infections now occur in LMICs, especially in sub-Saharan Africa, where AIDS kills 1.1 million people per year despite increases in access to antiretroviral therapy (UNAIDS, 2014). Malaria and tuberculosis continue to kill an estimated 600,000 and 1.3 million people per year, respectively, despite consider

able progress in recent years (United Nations, 2014) and despite the demonstrated effectiveness of relatively low-cost solutions. At the same time, people in LMICs are increasingly exposed to industrial

pollution; to risk factors for non-communicable diseases such as cardiovascular disease and diabe

tes, exemplified by rapid increases in overweight and obesity; and to road traffic accidents, which kill. an estimated 1.1 million people per year in LMICs. The number of non-fatal injuries, often resulting in

permanent disability, is vastly larger and even less well documented (WHO, 2013). The double burden of disease refers to the persistence of communicable diseases in parallel with the rapidly growing prev alence of non-communicable diseases and injuries-often thought, stereotypically but inaccurately, to be diseases of wealth.

As with most other causes of disability and death, a pronounced socio-economic gradient exists

in road traffic injuries: pedestrians and users of unsafe or unregulated forms of public transportation, many of whom have little hope of ever affording a vehicle, are disproportionately likely to be injured or killed on the roads. The toll is expected to increase as members of the expanding middle class buy more cars, while health systems are unable to afford anything approaching high-income countries' standards of expensive trauma care.

should be accorded to promoting advances in medical

care (biomedical approaches) and to social determi

nants of health.

The Lancet, one of the world's leading medical

journals, often commissions long, multi-authored re

view articles on topics of special interest. In 2013 and

2014, two of these Lancet articles articulated dramat

ically different visions for global health. The lead au

thors of one article (Jamison, Summers, Alleyne, et al.,

2013a) were two former World Bank economists, one

(Lawrence Summers) also a former US Secretary of the

Treasury. The second team ( Ottersen, Dasgupta, Blouin,

et al., 2014) was led by a neuroscientist, the president of the University of Oslo, and included Sir Michael

Marmot, the distinguished epidemiologist who chaired

WHO's Commission on Social Determinants of Health.

This second team focused on "power asymmetries" and

the "political determinants of health" in a globalized

world; its treatment of biomedical interventions was

limited to considering the role of trade agreements in

restricting access to essential medicines. The first team

dismissed policies to address the social determinants of

health in a paragraph and concentrated on how best to

develop and diffuse biomedical interventions, although

it did concede the importance of such health promotion

measures as high alcohol and tobacco taxes, along with

taxes or regulations addressing highly processed foods.

They also argued that improved health could accelerate

386 PART Ill I Issues in International Development

economic growth (Jamison et al., 2013a: 1912-18),

although their own assessment of evidence for this

point falls back in part on "the inherent plausibility of

the finding" (Jamison, Summers, Alleyne, et al., 2013b).

The tension between these approaches is partly il

lusory. No amount of poverty reduction will produce

an effective measles vaccine or treatment for HIV in

fection. Conversely, vaccines and therapeutics cannot

address the problems of deprivation-related indoor air

pollution, or the rapid dietary transitions that lead to

increases in overweight and obesity. A critical point for

development policy is that neither perspective provides

support for policy nostrums that prioritize economic

growth in the expectation that health improvements

will follow, sooner or later. This is not a caricature. A

2001 article in the British Medical Journal (Feachem,

2001) claimed that "globalization is good for your

health, mostly" because countries that integrate into

the global economy more rapidly, specifically through

trade liberalization, experience more rapid growth and

are therefore better able to reduce poverty. For several

reasons, some explored in the next section of the chap

ter, few responsible researchers would now support this

claim without numerous qualifications.

The historical record is clear that health improve

ments do not follow automatically or rapidly from

economic growth. Historian Simon Szreter (1999) has

shown that during a period of rapid economic growth

associated with industrialization in nineteenth-century

England and Wales, national average life expectancy

remained constant (at 41 years) through most of the

century, but in the crucibles of industrialization, cit

ies like Manchester and Birmingham, it plunged to

29 years by the 1830s and did not recover for several

decades. (To put the chronology into perspective,

Friedrich Engels's The Condition of the Working Class

in England, graphically describing conditions that

endangered life and health, was published in 1845.)

Szreter explains the eventual improvement with refer

ence to the provision of water and sanitation services

by local governments, responding to demands from an

alliance of the newly enfranchised working class and

an industrial and mercantile bourgeoisie concerned

about the health of its workforce. As he puts it: "The re

lationship between market-led, rapid economic growth

and human health and welfare . . . is critically medi

ated by politics" (Szreter, 1999: 146). Underscoring

this point, many jurisdictions that have achieved rapid

improvements in population health have done so not

only by committing resources to health care but also

through education, rural development, and prioritiz

ing the empowerment of women (Balabanova et al.,

2013)-what has been referred to as investing in "so

cial growth" (Riley, 2008) as well as economic growth.

Further social science research is needed on the polit

ical conditions under which health and the reduction

of health inequalities are more or less likely to become

policy priorities in LMICs.

So far, this chapter has discussed health outcome

data in terms of national averages. Such averages can be

misleading; they conceal substantial socio-economically

patterned differences in health: social gradients or

socio-economic gradients (Commission on Social De

terminants of Health, 2008: 30-2). Figure 20.1 shows

the gradient in mortality among children five years old

and younger (under-5 mortality rate or USMR, a com

mon health indicator) in six LM!Cs; note that not only

the absolute values but also the steepness of the gra

dient vary substantially. Such differences are not con

fined to LMICs and are observed within much smaller

areas than those defined by national borders. Within

the borders of the small English local authority where

I live and work, the difference in male life expectancy

at birth between the most and least deprived districts is

17 years (Public Health England, 2015), comparable to

the difference in national average male life expectancy

between the United Kingdom and Senegal. Infant mor

tality (death before the age of one year) is 10 times as

common in the poorest area of Washington, DC, the

capital of the United States, as in the richest area (Save

the Children, 2015: 42).

Socio-economic gradients are important to under

standings of development and health for at least two

reasons. First, they exist even in high-income jurisdic

tions that (in theory) offer universal access to health

care independently of ability to pay, like the United

Kingdom, which suggests the importance of social

determinants of health in explaining health inequal

ities. Second, especially in middle- and high-income

countries, socio-economic gradients in health are only

partly attributable to the effects of material deprivation.

Marmot's studies of British public servants (the White

hall studies, referring to the street in London where the

main offices of the British public service historically

300

V, 250

Q) 200

0 0 0 150

V, 100

0 - Brazil Senegal India Peru

20 I Schrecker: Development and Health .,87

1996 1997 1998-9 2000 Uganda 2000-1

Nicaragua 2001

FIGURE 20.1 I C-i-raclient in l'mler-3 Mortality R.ate by Household Income Quintile, �elertecl Countries

Source: Data from Gwatkin, Rutstein, Johnson et al. (2007).

were located) are central to the research literature on

socio-economic gradients. They showed a gradient in

various health outcomes across a population none of

whom were living in poverty or affected by inadequate

nutrition or insalubrious housing; in most cases they

also enjoyed considerable job security. Marmot has

argued powerfully, with reference to well-established

physiological effects of psychosocial stress, for an ex

planation based on the quite different ways in which

stress is experienced depending on one's access to eco

nomic resources and position within a social hierarchy

(Marmot, 2004).

GLOBALIZATION AND HEALTH: TRADE

AND INVESTMENT AGREEMENTS AS A

CASE STUDY

An extensive literature now exists on the relation

between globalization and health (see, e.g., Labonte,

Schrecker, Packer, and Runnels, 2009; Blouin, Chopra,

and van der Hoeven, 2009; Ruckert and Labonte,

2012; Schrecker, 2014a, 2014b), which is dearly an

area of concern for development policy. This chapter

concentrates on one specific area: the implications

for health of the changing nature of the international

trade law and policy regime, which provides essential

legal infrastructure for the global reorganization of

production, commerce, and finance. The first rounds

of multilateral trade negotiations and agreements after

World War II focused on reducing tariffs (customs du

ties). Tariffs, along with quotas on imports and some

forms of product standards, operate "at the border,"

figuratively if not literally. By contrast, many elements

of contemporary trade and investment agreements

take effect "behind the border," by limiting the range of

government actions that might have the consequence

of restricting trade or limiting the profitability of for

eign investment. The effect, and often the intent, is to

limit governments' plll icy space: "the freedom, scope,

and mechanisms that governments have to choose,

design, and implement public policies to fulfill their

aims" (Koivusalo, Schrecker, and Labonte, 2009: 105).

This is true of several agreements that came into force

in 1995 as part of the WTO regime, but also of some

agreements like the North American Free Trade Agree

ment (NAFTA) that predate the WTO.

One example is the harmonization of intellectual

property (IP) protection under the WTO Agreement on

388 PART Ill I Issues in International Development

Trade-Related Aspects of Intellectual Property Rights

(TRIPS). TRIPS was driven in the first instance by trans

national, mainly US, corporations: "in effect, twelve

corporations made public law for the world" (Sell, 2003:

96); they included pharmaceutical giants Bristol-Myers

(now Bristol-Myers Squibb), Merck, and Pfizer. A sub

sequent civil society campaign organized around low

ering the prices of patented antiretroviral drugs to treat

HIV/AIDS, in the face ofbitter opposition from the phar

maceutical industry (Gellman, 2000; 't Hoen, Berger,

Calmy, et al., 2011), also led to the adoption in 2001 of

the Declaration on the TRIPS Agreement and Public

Health (Doha Declaration), which established the prin

ciple that health concerns could outweigh intellectual

property protections under certain conditions. How

ever, initial use of this flexibility was slow (Kerry and

Lee, 2007), and even a decade later the issuance of com

pulsory licences-which override patent protection

had been limited, with "few instances" of compulsory

licences for diseases other than AIDS, and no compul

sory licences "for high-impact diseases with patented

treatments such as malaria, multi-drug resistant tuber

culosis, or sepsis." The authors of the cited study con

cluded "that the barriers" to using TRIPS flexibilities "go

well beyond the lack of production capacity, and likely

extend to health system incapacity, political pressure

against CLs [compulsory licences], and the legislative

difficulties of issuing a CL" (Beall and Kuhn, 2012).

CRITICAL ISSUES

Meanwhile, the United States in particular ac

tively pursued IP protection that goes beyond TRIPS

("TRIPS-plus" provisions) in bilateral and regional

trade and investment agreements, such as an agree

ment with several Central American countries and

the Dominican Republic (CAFTA-DR) that has kept off

the Guatemalan market even some generic drugs that

are available in the US (Roffe, Von Braun, and Vivas

Eugui, 2008; Shaffer and Brenner, 2009; Correa, 2013:

903-4). Such agreements often reflect fundamental

inequalities of bargaining power, in that governments

must make substantial concessions in order to secure

modest gains in access to the markets of a much larger

and richer trading partner (Shadlen, 2005). As in the

case of (non-)investment in national health systems,

the fact that the health of the poor is most immediately

affected may further limit the political salience of ac

cess to medicines. This said, IP protection is probably

less important in terms of the overall pattern of access

to medical advances than a more fundamental prob

lem: diseases that affect mainly or exclusively the poor

are not commercially attractive in terms of research in

vestment (Box 20.2).

A trade policy impact of quite a different kind in

volves the relation between trade liberalization and the

nutrition transition to diets high in sugar and fat, now

occurring in many LM!Cs more rapidly than it did in

high-income countries (Popkin, 2007). An important

BOX 20.2 I The 10/90 Gap and Health Research

Private for-profit firms, mainly pharmaceutical firms, now substantially outspend governments worldwide on health research (Burke and Matlin, 2008: 28), but the objectives and accountabilities involved are quite different. The result is a continuing mismatch between health research priorities and the illnesses

of primary concern outside the industrialized world: the so-called 10/90 gap, referring to the fact that 10 per cent or less of the world's health research spending is directed to the conditions that account for 90 per cent of the global burden of disease. The poor do not constitute a market of sufficient size

to attract research funding based on anticipation of commercially viable products. Between 1975 and 2010, only a handful of the thousands of new pharmaceutical entities developed were for treatment of tuberculosis, tropical diseases, and other neglected conditions of the poor (Balasegaram, Childs, and Arkinstall, 2014: 251). The need, therefore, is not only for reform of IP protection regimes, but also and more fundamentally for multilateral initiatives to change how medical research and innovation are financed and to mobilize new sources of funds (Moon, Bermudez, and 't Hoen, 2012).

driver of the transition is rapid transformation of food

systems by imports of ultra-processed foods (Monteiro,

Moubarac, Cannon, et al., 2013) and by foreign invest

ment in supermarkets, food processing, and fast-food

chains (Popkin, 2014)-facilitated by a liberalized

trade and investment regime (Hawkes, Chopra, and

Friel, 2009; Thow, Snowdon, Labonte, et al., 2015). A

strong correlation has been found between the level of

foreign investment as a percentage of GDP and "greater

exposure to unhealthy food commodities, especially

for soft drinks, processed foods and alcohol" across

50 LMICs, and LMICs that have trade agreements with

the US have per capita levels of soft-drink consumption

more than 50 per cent higher than those that do not

(Stuckler, McKee, Ebrahim, et al., 2012). According to

a trade publication "McDonald's arrived in Chile tar

geting the segment of children, but over time, the cus

tomer base has expanded from not just children to also

their parents, as well as young people. This strategy has

PHOTO 20.2 I Clean water Is essential to public health.

20 I Schrecker: Development and Health 389

allowed this brand to claim an important part of the

category, and it has established itself amongst consum

ers of fast food" (Euromonitor, 2011).

The combination of farm subsidies in the US and

the removal of trade and investment barriers between

the US and Mexico under NAFTA led to rapid trans

formation of the Mexican food system: "exporting

obesity" (Clark, Hawkes, Murphy, et al., 2012). Specif

ically, US exports of subsidized corn to Mexico, partly

as high-fructose corn syrup (HFCS), rose sharply after

a 2006 WTO dispute settlement ruling invalidated a

Mexican tax on soft drinks sweetened with anything

other than cane sugar; HFCS is thought by some re

searchers to play a significant role in the rising inci

dence of diabetes (Goran, Ulijaszek, and Ventura,

2013). Perhaps predictably, Mexican prevalence of

overweight and obesity is now comparable to US lev

els. The agricultural subsidy programs that enable US

exporters to underprice Mexican producers remain

390 PART Ill I Issues in International Development

permissible under the current trade law regime, and

the US has doggedly resisted efforts to end them. At

the very least, such conflicts between trade and health

policy objectives suggest the need for greater "policy

coherence" (Blouin, Drager, and Heymann, 2008). Are

the international institutions established to protect

and promote health up to the task? More fundamen

tally, is the issue one of coherence, or one of a project

of neoliberal globalization that systematically subordi

nates health protection to commercial objectives?

THE CHANGING LANDSCAPE OF

GLOBAL HEALTH AND DEVELOPMENT

POLICY

The increasingly complex twenty-first-century global

health policy landscape is often discussed in terms of

global health governance. The term reflects the lack

of a supranational authority and the expanding role

of organizations that are neither agencies of national

governments nor multilateral agencies in the conven

tional mould. Only a few of the most important actors

and institutions are discussed here (for more detail see,

e.g., Youde, 2012; Hein, 2013).

WHO is the UN system agency with primary

responsibility for health protection, with its constitu

tion designating it "as the directing and co-ordinating

authority on international health work" (see also

Chapter 10). Its 193 member states meet annually as the

World Health Assembly (WHA) to set policy, which is

overseen by a 34-member executive board. It operates

147 country offices and six regional offices as well as

its Geneva secretariat. Since 2006-7, WHO has operated

on an annual budget of approximately US$4 billion,

which represents a substantial decline once inflation is

taken into account. In recent years only about 25 per

cent of that amount represented "assessed contribu

tions" paid as part of members' UN obligations (WHO,

2014). For the balance, WHO must rely on discretion

ary contributions from member states, meaning that

WHO programming and priorities are donor-driven

to a degree that is often difficult to discover (People's

Health Movement, Medact, and Global Equity Gauge

Alliance, 2008: 224-39). WHO is further constrained by

the fact that, in the words of the editor of The Lancet,

it is "intergovernmental, not supra-governmental,"

and thus lacks any source of authority apart from

the co-operation and commitment of member states

(Horton, 2009: 28). In recent years, while pressures

for WHO reform intensify, the organization is increas

ingly seen as irrelevant. "One of the fiercest conflicts

in global health, concerning the TRIPS agreement and

access to medicines, unfolded with WHO playing only

a marginal role" (Hein, 2013: 56), and WHO came in for

criticism over the slowness of its response to the Ebola

outbreak of 2014 (Box 20.4).

WHO once sought leadership in promoting com

prehensive primary health care ( CPHC), a strategy

for integrating prevention and treatment at the core

of the goal of achieving "Health for All in the Year

2000," which was endorsed by member states in 1978

at the Alma-Ata Conference. The vision articulated at

Alma-Ata (since renamed Almaty), Kazakhstan, in

cluded not only comprehensive access to health care,

but also many elements that would now be described

in terms of social determinants of health (Box 20.3).

For various reasons, WHO failed to defend effectively

this admittedly ambitious vision against critics, both

within the medical and health communities (including

within WHO itself) and outside them (Brown, Cueto,

and Fee, 2006; Lawn et al., 2008). Meanwhile, the much

larger and richer World Bank and International Mon

etary Fund (IMF) emerged as decisive players in devel

opment policy, with both direct and indirect influence

on health and health systems. The Bank's importance

derives both from its role as a channel of develop

ment finance and from its formidable research budget

for gathering and analyzing data. As a result of this

capability, the policy advice it provides is often incor

rectly perceived as beyond politics and ideology (see

Chapter 9).

Historically, the Bank aggressively promoted a

market-dominated concept of health-sector reform

that favoured private provision and financing, includ

ing reliance on user fees, with the public sector as a

residual provider of a limited, "cost-effective" set of

interventions (Rowden, 2013), an approach that may

have contributed to the eventual demise of WHO's com

mitment to CPHC (Hall and Taylor, 2003). "The Bank's

argument, presented as one tenet of a broader neolib

eral economic agenda, that health care was largely a

private not a public good, and thus deliverable through

CRITICAL ISSUES

BOX 20.3 I The Alma-Ata Vision

20 I Schrecker: Development and Health 391

Primary health care . .. (2) addresses the main health problems in the community, providing pro motive, preventive, curative, and rehabilitative services accordingly; (3) includes at least: education concerning prevailing health problems and the methods of preventing and controlling them; promo tion of food supply and proper nutrition; an adequate supply of safe water and basic sanitation; maternal and child health care, including family planning; immunisation against the major infectious diseases; prevention and control of locally endemic diseases; appropriate treatment of common diseases and injuries; and provision of essential drugs; (4) involves, in addition to the health sector, all related sectors and aspects of national and community development, in particular agriculture, animal husbandry, food, industry, education, housing, public works, communications, and other sectors .... and demands the coordinated efforts of all those sectors .... (6) should be sustained by integrated, functional, and mutually supportive referral systems, leading to the progressive im provement of comprehensive health care for all, and giving priority to those most in need ....

All governments should launch and sustain primary health care as part of a comprehensive national health system in coordination with other sectors.

Source: Alma-Ata Declaration, 1978, as reproduced in Lawn, Rohde, Rifkin, et al. (2008).

the market, proved influential throughout the latter decades of the twentieth century, spilling over into the 21st" (Harmer and Buse, 2014: 3). The Bank is now less dogmatic in its enthusiasm for private financing, in the context of growing global support for universal health coverage (Rowden, 2013), discussed in the concluding section of the chapter.

In addition to promoting private health financing, the Bank often acted in concert with the IMF during the era of structural adjustment lending (discussed in Chapters 3, 9, and 14), demanding a relatively standard package of macroeconomic policies designed primarily to ensure that debt service payments to external credi tors could be maintained. Destructive effects on social determinants of health were documented in an author itative UNICEF study as early as 1987 (Cornia, Jolly, and Stewart, 1987), yet throughout the first decade of the century the IMF continued to demand strict lim its to the growth of public expenditures on health and education, even when funds had been committed by donors, because of concerns about potential domestic inflation and about currency appreciation that would reduce the competitiveness of exports (Ooms and Schrecker, 2005; Independent Evaluation Office, 2007; Working Group, 2007). Among other consequences,

the weakening of African national health systems may have compromised responses to the Ebola outbreak of 2014 (Box 20-4).

Perhaps the strongest indication that health is now firmly established as an element of the foreign policy agenda of the high-income countries is the increasing value of development assistance for health (DAH). On re cent estimates, this figure increased from US$6.9 billion in 1990 to US$35.9 billion in 2014 (Dieleman, Graves, and Johnson, 2015; figures in 2014 dollars), including funds from private sources like the Bill & Melinda Gates Foundation but not assistance for programs in such areas as water, sanitation, and nutrition that may have important health benefits. DAH cannot offset the far larger outflows of funds from most developing re gions associated with debt servicing (see Chapter 14) and capital flight (see Ndikumana, Boyce, and Ndiaye, 2014), but it nevertheless serves as a rough indicator of the extent of policy concern.

It is useful to distinguish between sources of DAH (the originators or "donors") and channels (the insti tutions by way of which it reaches its eventual users in destination countries). National governments, the United States in particular, are the dominant sources of DAH, much of which is disbursed through the channels

392 PART Ill I Issues in International Development

of their own bilateral aid agencies (such as Canada's

Ministry of International Development within Global

Affairs Canada and the United Kingdom's Department

for International Development). Middle-income coun

tries like the BRICS (Brazil, Russia, India, China, and

South Africa) are becoming increasingly important as

sources of development assistance and direct invest

ment (Harmer, Xiao, Missoni, et al., 2013); so far their

policy influence through development assistance-as

distinct from direct investment, at least in the case of

China-has been modest, but this may well change in

the future (see Chapter 13).

National governments also disburse funds through

channels like the World Bank and an expanding range

of hybrid, multi-sectoral, and multilateral organiza

tions. The Global Fund to Fight HIV/AIDS, Tuberculosis

and Malaria (the Global Fund), the most important of

these, was established by the GS countries in 2001, at

least partly to avoid the bureaucracy that was seen by

the United States in particular as compromising WHO

and the UN system more generally. The Global Fund

operates like an international granting council, mainly

funded by high-income country governments; its board

includes representatives of donor and recipient govern

ments, non-governmental organizations, and the pri

vate sector. As of 2014, it had disbursed US$30.9 billion

(in 2014 dollars) (Dieleman et al., 2015) to projects that

must first be proposed by recipient country applicants

and then approved by a scientific review panel. Like

other ventures of its kind, the Global Fund has been

criticized for emphasizing "vertical," disease-specific

programs at the expense of efforts to support overall

health system strengthening. The limits of vertical

programming, which has achieved demonstrated suc

cesses, may be less of a concern than the Global Fund's

lack of stable long-term funding: it relies on periodic

"voluntary replenishment conferences" where it in ef

fect passes around a hat. After the financial crisis of

2008, the Fund was temporarily forced to suspend sup

port for all new projects (Moszynski, 2011).

The increased importance of the Bill & Melinda

Gates Foundation (BMGF) signals what may be a

longer-term shift to supporting development and

health through private wealth rather than public

resources (People's Health Movement et al., 2008:

240-59). BMGF's resources enable it to spend more

annually than the value of assessed contributions to

WHO. Health promotion pioneer Ilona Kiekbusch and

a colleague have described this as "a scandal of global

health governance" in which WHO member states "are

giving up their major instrument to drive health pol

icy and ensure health security" (Kiekbusch and Payne,

2004). By 2014, BMGF had spent US$21.6 billion (2014

dollars) on health programming, or 5.7 per cent of total

DAH from all sources since 1999 (Dieleman et al., 2015).

Critics have commented on the large number of Foun

dation grants awarded to US-based recipients (McCoy,

Kembhavi, Patel, et al., 2009: 1650), and have drawn a

parallel between the rise of the BMGF and the influence

of the Rockefeller Foundation on international pub

lic health policy in the twentieth century: "Each was

started by the richest, most ruthless and innovative

capitalist of his day" (Birn, 2014: 1/27).

New kinds of co-ordinating institutions have

emerged in response to the multiplication of actors in

global health. One of these is the HS or Health 8, estab

lished in 2007, which comprises senior officials of four UN

agencies (the Joint United Nations Programme on HIV/

AIDS or UNAIDS, which is itself a multi-organizational

partnership, UNICEF, the UN Population Fund, and

WHO); the World Bank; the Global Fund; the Global

Alliance for Vaccines and I mmunization (GAV!, an

other hybrid institution); and BMGF. It is indicative of

the changing global health architecture that the World

Bank, BMGF, and two hybrid institutions participate

on an equal footing with UN system agencies that are

at least formally accountable through the UN General

Assembly. Like WHO, such co-ordinating institutions

depend entirely on the good faith and commitment of

their members; so far, also like WHO, they reflect little

or no recognition of the health consequences of choices

about such matters as trade, macroeconomic policy, and

public finance. This limitation assumes special impor

tance in view of a number of challenges for development

policy and health that lie ahead.

DEVELOPMENT AND HEALTH:

THE UNCERTAIN FUTURE

One of the most immediate concerns in global health

remains the mobilization of additional financing

for health systems. Based on the earlier cited esti

mate of US$86 per person per year as the minimum

PHOTO 20.3 I Health clinic in Gulu, Uganda.

cost of basic health care, the annual "financing gap"

amounts to US$196 billion (2012 dollars) (Centre on

Global Health Security, 2014), or several times the

current value of DAH. This is a very large amount

in terms of its potential impact; it is also trivial in

comparison with annual military spending world

wide, including in some DAH recipient countries,

or the US$14 trillion in cash and credit guarantees

that were mobilized to bail out financial institu

tions during the 2008 crisis (Bank of England, 2009).

Such comparisons leave aside important questions

of implementation, effectiveness, and accountability

(Sridhar, 2010), but nevertheless raise issues of global justice, which could indeed be the subj ect of a sepa rate chapter.

What motivates donors to allocate resources to improving health outside their borders? The simplest an sw er tnvolves concern about the spread of communicable

2 0 I Schrecker: Development and Health 393

diseases like influenza and SARS. Document-based re

search on health and foreign policy has found that

security -oriented rationales, specifically the fear of

international epidemics, predominate (Labonte and

Gagnon, 2010)-as shown, for example, by the charac

terization of HIV/AIDS "as a threat to both human and

national security" at the time of the UN General Assem

bly special session on HIV in 2001 (Mclnnes, 2009). The

political power of security concerns was underscored

by responses to the Ebola outbreak of 2014 (Box 20.4).

"This justification may explain why non-communicable

diseases rank low in aid and development discourse"

(Labonte and Gagnon, 2010: 5): Australians, Britons,

Canadians, or Germans have little to fear from (for ex

ample) maternal and child mortality or rising traffic fa

tality counts in low-income countries. At the same time,

security is not the only motivation for DAH, and in at

least some contexts it is probably driven by genuinely

394 PART Ill I Issues in International Development

CRITICAL ISSUES

BOX 20.4 I Ebola: Lessons for Global Health Policy and Politics

Responses in the high-income world to the 2014 outbreak of Ebola virus disease in West Africa repre

sented an extreme example of the fear factor at work. The New York Times reported on 10 March that

"[t]he world [had] spent more than $4 billion fighting Ebola," and in December 2014 President Obama

had called on Congress to support US$6.2 billion in emergency funding. In March, there were still only

four confirmed cases in the US. The effects of the disease are fearsome, but it cannot be transmitted

by asymptomatic individuals, and it was pointed out at the time that: "The numbers of children dying

every day from preventable causes are far greater than from this Ebola outbreak. One key difference, of

course, is that these health problems do not board planes to Europe or North America" (Wright, Hanna,

and Mailfert, 2015). In the aftermath of the outbreak, WHO was criticized by its own internal review panel for its limited emergency response capability (Stocking, Muyembe-Tamfun, Shuaib, et al., 2015);

the panel attributed this failure both to budget constraints and to management shortcomings, and

drew attention more generally to problems of financing research and development related to neglected

diseases. Less widely recognized was the fact that "the conspicuous unpreparedness of countries like

Guinea, Liberia, and Sierra Leone [was] a direct consequence of years of insufficient public investment

in the underlying public health infrastructure," attributable at least in part to the IMF's obsession with

fiscal restraint (Rowden, 2014; see also Kentikelenis, King, McKee, et al., 2015).

altruistic concerns. Here is one of several areas where

detailed research that gets inside the "black box" of the

policy process will be useful.

This is true in particular of the shift towards uni

versal health coverage (UHC) as a priority for develop

ment and health policy. Milestones include the 2008

GS Summit, which focused on health system strength

ening (Reich and Takemi, 2009); WHO's 2010 World

Health Report, organized around the move towards

universal coverage; and a 2012 resolution of the UN

General Assembly urging governments "to urgently

and significantly scale up efforts to accelerate the tran

sition towards universal access to affordable and qual

ity health-care services" (United Nations, 2012). The

imperative here involves not only protecting health,

but protecting people against the economic effects of

the lack of coverage: it is estimated that 100 million

people a year are driven into poverty by the need for

out-of-pocket health spending (Xu, Evans, Carrin,

et al., 2007). It remains to be seen how effectively the

substantial resources needed to provide UHC, espe

cially in low-income countries, will be mobilized,

and the extent to which (especially in middle-income

countries) domestic revenues can be drawn upon. The

meaning of UHC is also contested terrain. Support

for UHC would appear a decisive repudiation of the

market-oriented World Bank view that was hegem

onic at the end of the last century, but Sengupta (2013)

warns that UHC as a policy objective is fully compat

ible with a model in which coverage is universal but

confined to a limited range of interventions, while

governments function as managers of a health system

and purchasers of care from private, for-profit provid

ers. He argues that this is in fact the model envisioned

by many promoters of UHC and the one that charac

terizes current efforts to move toward UHC in Brazil

and India. Thus, UHC can actually "end up decreasing

equity and efficiency in health systems" (Sengupta,

2013: 20). This could happen, for instance, if UHC were

implemented in a way that concentrated resources in

clinical services at the expense of prevention, within

or outside the health sector (Schmidt, Goslin, and

Emanuel, 2015).

A further important element of context is the

changing nature of global capitalism itself. The financial

crisis of 2008 could have transformed the global

health and development policy landscape in a number

of ways, potentially foregrounding issues of justice

within and across borders. However, it is remarkable

how quickly the relevant policy discourses returned

to incrementalism and business as usual. Meanwhile,

evidence accumulates that capitalism is assuming

new and distinctly predatory forms on a global scale.

Sassen (2010) writes of a "savage sorting of winners

and losers" on multiple scales associated with neo

liberal globalization, and a former chief economist of

the World Bank (Bourguignon, 2015) is one of many

academic authors who argue that globalization is

magnifying economic inequalities, especially within

national borders. The implications for health and

health inequalities are far from clear, but the possi

bility must be considered that even well-intentioned

strategies organized around new therapies and

expanded access to care will be undermined by the

effects of rising levels of inequality and economic

insecurity, and by domestic political resistance from

those who see little gain from solidaristic health and

social policies.

20 I Schrecker: Development and Health 395

SUMMARY

From this chapter you will have gained a basic under

standing of the causes of health inequalities between

and within rich and poor countries. The chapter de

scribed some notable successes in improving health

outside the high-income world, but also identified

several challenges, including the double burden of dis

ease and the inadequacy of resources for health despite

substantial increases in development assistance. The

chapter emphasized the importance of macro-scale

processes such as the negotiation of trade and invest

ment agreements that may create collateral damage to

health, and a mechanism for financing health research

that leads to neglect of diseases of the poor. It also de

scribed a set of institutions for making decisions about

global health and development that are increasingly

complex and fragmented. Whether these institutions

will be able to mobilize the resources needed to reduce

health inequalities remains uncertain, as does the im

pact on health and health inequalities of the changing

nature of the world's economic systems.

QUESTIONS FOR CRITICAL THOUGHT

1. Do the moral obligations with respect to health inequalities within your country differ from those that

involve health inequalities between your own country and other, poorer ones? If so, how and why?

2. You are a senior official in the health ministry of a low- or middle-income country, trying to help the health

minister make the case for an increase in your ministry's budget to her cabinet or parliamentary colleagues.

What arguments would you be most likely to use, and why? What sources of opposition would you expect to

encounter?

3. You are a senior official in a national government department or agency with responsibilities for international

development and health in a high-income country, trying to help your minister or cabinet secretary make the

case to her cabinet and legislative colleagues either:

(a) that your country should make an additional multi-year commitment to development assistance for

health, or:

(b) that your country should assess its future trade policy commitments in terms of their effects on health in

LMICs.

What arguments would you be most likely to use, and why? What sources of opposition would you anticipate? Imagine that you are a journalist in the year 2025, looking back on developments in global health since 2015.

Write an imaginary history of no more than 1,000 words in which you identify the three most significant

developments and explain how and why they occurred.

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policy." General Assembly resolution No. A/67/L.36.

New York: UN. www.un.org/ga/search/view_doc.asp?

symbol=A/67/L.36.

--. 2014. The Millennium Development Goals Report 2014.

New York: UN. www.un.org/millenniumgoals/2014%20

MDG%2oreport/MDG%202014%20English%2oweb

.pdf.

Working Group on IMF Programs and Health Spending.

2007. Does the IMF Constrain Health Spending in

Poor Countries? Evidence and an Agenda for Action.

Washington: CenterforGlobalDevelopment. www.cgdev

.org/doc/IMF/IMF _Report.pdf.

World Health Organization (WHO). 2010. World Health

Report 2010: Health Systems Financing-The Path to

Universal Coverage. Geneva: WHO. www.who.int/whr

/2010/en/index.html.

--. 2013. Global Status Report on Road Safety

2013. Geneva: WHO. www.who.int/iris/bitstream/Io665

/78256/1/9789241564564_eng.pdf.

--. 2014. Programme Budget 2014-15. Geneva: WHO.

www.who.int/about/resources_planning/PB14-15_

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mediacentre/factsheets/fs 311/en/.

___ . 2015b. World Health Statistics 2015. Geneva:

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/1/9789240694439_eng.pdf?ua=1&ua=1.

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972-83 .

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Conflict and Development Torunn Wi11ivelniarin ancl Astri Siihrke

.::-------------------------------------------.

LEARNING OBJECTIVES

• To understand the liberal view of the relationship

between conflict and development. • To discover why and how the liberal theory of vi

olence has been challenged and alternative per

spectives developed.

• To learn how policy measures to contain violent

conflict have been conceived and implemented

and how these measures are related to differ

ent understandings of the conflict-development

nexus.

A mother from the village of Malual Kon, in South Sudan, reunites with two of her children who had fought for, but are

now demobilized by, the rebel army in Sudan. Child soldiers have been used on both sides of the conflict, being either forcibly

recruited or joining forces to protect themselves and their communities. The United Nations Children's Fund (UNICEF) estimates

that 15,000 to 16,000 children may have been used by armed forces and groups in the conflict. I Source: Photo by Cyril LE TOURNEUR/Gamma-Rapho via Getty Images

21 I Wimpelmann and Suhrke: Conflict and Development 401

This chapter introduces the ways in which social scien tists have understood the relationship between conflict and development. Within this wide and controver sial field of inquiry, the chapter identifies two main perspectives:

1. The liberal view, which sees underdevelopment as a cause of conflict and development as a way out of strife and towards peace.

2. A competing perspective, which sees conflict as integral to development. Development is therefore likely to produce conflict, although violent conflict may be contained by proper policy measures.

The first part of the chapter lays out these two per spectives and different methods of assessing whether conflict is part of development or outside it. The second part takes the reader to recent issues of development and peace, particularly the field of peace-building and Western interventionism to illustrate how these differ ent theories play out in practice.

POSING THE QUESTION

Conflict is the opposite of development-war is de velopment in reverse. This was the message of a major 2003 report on civil wars from World Bank research ers that was influential at a time when the Western peace-building regime was at its height. The study con cluded that "[w]hen development succeeds, countries become safer; when development fails, countries expe rience greater risk of being caught in a conflict trap" (Collier et al., 2003). At first glance, this seemed persua sive. Wars destroy lives, property, and the environment. As such, it is "development in reverse." Most recent wars, moreover, had taken place in poor countries in Africa, Asia, and Latin America. Western Europe and North America-by most accounts the richest and most developed countries in the world-have experi enced very little war since World War II. The Balkan Wars in the 1990s appeared to many as a shock, a ghost from a past it was assumed Europe had left behind.

On closer examination, however, the picture is not -&Q simple. Violence may set back "development," but it llls may sweep away older structures and make way f�r- change. Nor is national development necessarily a 11��et to safety, either for self or for others. Countries

considered as being "developed" have been subject to violent civil strife, such as race riots in the United States, separatist violence in Spain, sectarian fighting in Northern Ireland, and terrorist attacks in London. If we add international violence, we find that NATO members in recent years have repeatedly attacked other states (Iraq in 1991 and 2003, Kosovo and Serbia in 1999, Afghanistan in 2001, and Libya in 2011). At the other end of the development spectrum there is also some variation. Among the 10 least developed coun tries according to the Human Development Index of the United Nations Development Programme (UNDP), some have escaped what seemed to be a conflict trap (e.g., Mozambique and Niger ), while others have expe rienced recurrent conflict (e.g., the Democratic Repub lic of Congo and Burundi) (UNDP, 2014). Perhaps some are poor and underdeveloped because of recurrent vio lence caused primarily by other factors.

Social scientists, philosophers, and historians have long tried to understand the relationship between violence and development. Among the many perspectives and interpretations, two main streams are notable. A liberal theory of violence, which approximates the

World Bank report cited above, considers violence an aberration and as the opposite of development. The implication-sometimes spelled out-is that development is a way out of violence. From a very different perspective, violence is "at the heart of societal transformations," as Christopher Cramer writes, and also a frequent compan ion in the "expansionary modernism" of Western states (Cramer, 2006). If violence is at least potentially inherent in the very process of social change, there is little pros pect for an exit from strife-unless we declare "the end of history" (as some Western writers indeed did when the Soviet Union collapsed) (Fukuyama, 1992).

These perspectives will be explored below. We start with the proposition that underdevelopment leads to conflict and that development, therefore, is a way to reduce conflict. We then examine the competing view that development is a conflictual process and must be understood and studied as such, although the violent manifestations may vary and arguably can be modified. Finally, we discuss how ideas about the relationship be tween conflict and development have shaped-and to a degree also justified-Western-led interventions in conflict areas.

But first, a brief note on definitions, approaches, and methods.

402 PART Ill I Issues in International Development

PHOTO 21.1 I Training for carpenters at the

vocational school Young Africa, Mozambique.

Learning new skills is often used to encourage

demobilized soldiers to return to civilian life in post

conflict societies, such as Mozambique.

DEFINITIONS, APPROACHES,

AND METHODS

A discussion of the relationship between development

and conflict obviously depends on how development

is defined. Empirical studies in the positivist tradition

ty pically disaggregate development along one or several

dimensions-economic, social, and political-in order

to assess the relationship to conflict. For instance, if

development is understood primarily in terms of mac

roeconomic indicators (e.g., gross domestic product

or GDP), one can investigate the relationship between

growth rates and the incidence of conflict. If the focus is

on social development, indicators of education, health,

and distribution of material goods would be relevant.

Ethnic diversity and divisions are classic indicators in

studies of national integration. Elections, levels of cor

ruption, or freedom of speech are used to indicate po

litical development. Many recent studies have analyzed

the relationship between such dimensions statistically,

using indicators from generally accessible data banks.1

A very different approach is "the grand narrative,"

which seeks to uncover the essence of the develop

ment process as it has unfolded historically. The clas

sical scholars here are Karl Marx (1818-83) and Max

Weber (1864-1920). Writing at a time of rapid change

and much violence in Europe as well as beyond, they

tried to understand "development" and the processes

and patterns of social change. For Marx, development

cannot be separated from conflict or understood as in

dependent of it. Conflict is intrinsic to the development

process, the motor that drives it forward as power and

resources are redistributed to different classes and peo

ples. In a continuation of this grand narrative, Lenin

argued that imperialism was the highest stage of cap

italism; the imperialist nations, the "most developed"

in conventional terms, would then succumb to war

against each other (see Chapter 2).

In Weber's grand narrative, by contrast, capital

ism is peaceful, emerging through rationalization and

the efficiency of social and economic relations. Indus

trial capitalism overcomes its own internal tensions

through rational planning and orderly competition for

power within an arena of secular politics. The rules of

competition are guarded by a state that has a legitimate

monopoly of force. "Modernity," then, is associated

with societies ruled primarily by reason as enshrined

in predictable, efficient, and secular institutions. This

all suggests an exit from violence. In this tradition, a

recent major effort to understand how societies develop

mechanisms to ensure social order finds democratic in

stitutions are of critical importance (North et al., 2009).

Conflict, Violence, and Jl'ar

So far, we have used the terms "conflict," "violence," and

"war" interchangeably, but the meaning of these words

is a debate in itself. "Conflict" is generally understood

to mean tension between opposing views, interests,

or wills. Conflicts may or may not involve violence,

21 I Wimpelmann and Suhrke: Conflict and Development 403

even if we allow for the many meanings of "violence." The most obvious and common-sense meaning is phys ical violence. But there is also "structural violence," a concept launched by peace researcher Johan Galtung in the 1950s to denote extreme and systematic inequality, and "symbolic violence," understo od in the tradition of French sociologist Pierre Bourdieu as internalized hu miliation among the weak and legitimation of inequal ity and hierarchy. In the following exploration, we will focus on physical violence, particularly war.

War has long been considered a unique category of conflict. "War" suggests that special attention is war ranted: it signals extraordinary violence, a situation when normal rules do not apply but special rules have been de veloped (as in international law governing warfare). In the social sciences, war has usually been studied sepa rately from other forms of violence. Typically, students of international relations and political science study "war," while anthropologists and sociologists study "violence."

Within political science, one approach to the study of war in relation to development is to treat war as a dis crete event, the appearance of which can be examined statistically in relation to other factors believed to be its causes or (more rarely) consequences. Large databases have been established for this purpose since the 1960s, with data on events classified as internal and interna tional wars, as well as some hybrid forms. Classification systems are controversial, particularly with regard to the definition of "civil war." The most widely used data sets have both quantitative measures (1,000 battle related deaths per year or per duration of the conflict) and qualitative data such as organization of the bellig erent parties (usually states or rebels with some organi zation) and the incompatibility of their aims. 2

Use of these databases to determine the links between war and development, such as the World Bank study cited above, is subject to some limitations. One problem is the unreliability of raw data from war zones, particularly in conflicts where the belligerent parties are armed factions with no centralized organ ization and where human rights monitors have poor access. Estimates of casualties during the 1989-97 war in Liberia, for instance, vary from 60,000 to 200,000. U e. of different thresholds of casualties will produce �ifferent frequencies of war. No current data sets have '.ndicators for intensity, although this clearly affects the llllpact of wars on society and hence on development

in all its dimensions. For example, a thousand deaths in civil strife is much less significant for national de velopment in a country of more than one billion people (India) than it is for a state with just under one million (Timor-Leste). Moreover, what should be counted as battle-related deaths? In the classic image of warfare, war is fought on the battlefield between opposing ar mies. In many contemporary conflicts, violence is di verse, carried out by militias as well as state or rebel armies, and civilians are often the victims. It is unclear how massacres of unarmed people should be counted (most civil war data sets do not include the massacre of an estimated half a million to one million people in Rwanda in 1994, since it was mostly a one-sided gen ocide). Likewise, current civil war data sets rarely in clude deaths from war-related famine and disease, even though these typically outnumber battlefield deaths and often continue into peacetime at abnormally high rates. Difficulties also arise as to how we should treat complex and continuing wars, such as the recurring violence in Afghanistan during the past four decades.

Another way to consider war is to place it in its historical and sociological setting. We can then ex amine organized violence as part of a social process of transformation, with causes and functions that cannot be understood if abstracted from their context and en tered into a data set. This approach permits a deeper inquiry about not only the causes of violence, but also how violence can open the way for the formation of so cial capital and new institutions. In this way, the de velopmental as well as destructive functions of war are brought out. This approach is favoured by anthropol ogists and economists and political scientists working in the tradition of political economy (Cramer, 2006; Richards, 2005; Keen, 2001).

CONFLICT AND DEVELOPMENT:

PERSPECTIVES AND FINDINGS

When development theory became an academic field of study after World War II, it was largely based on the premise that development and conflict are sepa rate phenomena and appear sequentially: development stops when conflict starts and can continue when con flict subsides. In line with this, aid provided during

404 PART Ill I Issues in International Development

CRITICAL ISSUES

BOX 21.1 I War as a Complex "Event"

If we were to plot "the war in Afghanistan" as one event in a database, that clearly would be misleading.

The first phase started in April 1978, when the Afghan Communists seized power and the militant

resistance formed. A year and a half later, the Soviets invaded, and the resistance started receiving

international arms support and training. It was now an internationalized civil war. In 1989, the last Soviet soldiers withdrew, and after a brief peace, Afghan factions turned on each other in a full-scale civil

war. That lasted roughly until 1996, when the Taliban seized Kabul, thereby wielding power over some

90 percent of the entire country. In October 2001, US-led forces invaded the country and, with the help of

local factions, defeated the Taliban. After a brief peace, violence resumed and soon grew into a serious

insurgency that challenged the government and the international forces in almost all parts of the country.

How would we approach these Afghan conflicts using a qualitative approach? Starting from the

notion that war and development are not necessarily mutually exclusive, a first task is to explore what

kinds of governing structures, social relations, and economic activity developed during this long period

of upheaval. In some areas, warlords emerged; in other areas, traditional leaders or new political move

ments held sway. Many of them conducted "foreign relations" with outside governments or agencies.

Social and economic capital accumulated during periods of warfare was invested in times of (relative)

peace for personal or community benefits. Thus, after the Taliban lost power, one of the first public acts

of the "warlord of Herat" in western Afghanistan, Ismail Khan, was to beautify public parks and restore

the magnificent mosaic arches that grace the entrance to the city. The Taliban regime itself represented

an early stage of state formation by introducing a uniform system of social regulation and justice. Nevertheless, the most obvious impact of the long wars was destruction. Successive waves of

fighting left a trail of death and disintegration. Families and communities were displaced. The legal economy stagnated. Infrastructure was destroyed. Violence was pervasive-not only organized warfare

among fighting units but also alleged war crimes, crimes against humanity, and massive human rights violations. For those close to the event, it was difficult to see that this kind of destruction could be the

foundation for new development.

conflict was humanitarian relief designed to save lives,

not aid to support long-term development processes.

As a result, there was little effort to explore the relation

ship between development and conflict. Only in the

past decade or so has this separation been challenged

within mainstream development studies and practice.

Underdevelopment as a Cause of Conflict-Development as the Foundation for Peace

A powerful theme within Western liberal thinking is

that modernization and economic progress will bring

stability. Drawing on Weber's concept of modernity

as secularism and rationalism, Western political sci

entists produced a huge "modernization" literature

in the 1960s (see Chapter 3). Societies would develop

and modernize by establishing effectively functioning

bureaucracies, streamlining individual affinities away

from primordial or ethnic identities towards larger

national loyalties, incorporating modern technology,

and putting foreign aid to good use. The political de

velopment component was usually understood as the

establishment of representative institutions that could

aggregate interests and provide checks and balances on

executive power.

In fact, progress along this path was uneven, some

times abandoned, and often strewn with violence. The

deviations became increasingly clear as the Cold War

21 I Wimpelmann and Suhrke: Conflict and Development 405

between the superpowers was played out in what was

then called the Third World. The United States and

the Soviet Union exploited local divisions in order to

enhance their own interests, a process that in several

cases turned into "proxy wars" in Africa and Latin

America. More generally, the Cold War meant that

Western states reshaped the modernization agenda

to fit the anti-Communist struggle. This often meant

supporting military strongmen rather than democratic

forces (as in Southeast Asia and South America) and

promoting groups that in Weberian terms were dis

tinctly "unmodern." The latter included patrimonial

bureaucracies that served individual rulers, such as

Joseph-Desire Mobutu, President of Zaire from 1965

to 1997, as well as movements seeking unity between state and religion, such as the Afghan mujahedeen who

fought the Soviets in the 1980s.

The Democratic Peace

The old idea that democracies and peace belong to

gether was reborn in new research in the 1980s. This

work was inspired by Immanuel Kant's Perpetual

Peace, a small pamphlet written in 1795 in the shadow

of the French Revolution and Napoleon's rising power.

Perpetual Peace outlined the conditions for peace

among states. Prominent among these conditions was

a republican constitution (which did not mean de

mocracy in the form of majority rule) and free trade

encouraging economic interdependence. Prosperous

burghers, Kant believed, would not want to send their

sons into battle or pay for the national debt incurred

by war. Economic interdependence would make it

difficult in practice for states to fight each other. The 1980s version of this thesis launched by American

political scientists held that "democratic" states very

seldom went to war against each other, with "demo

cratic" defined as periodic competitive elections and

universal adult suffrage. Here, it seemed, was a clear

link between one dimension of development (political

democracy) and the absence of at least some kinds of violence (Rummel, 1975-81; Doyle, 1983). A flurry of

further studies confirmed the link. These studies relied on statistical analysis and provided little explanation for why countries with regular election and adult suf. frage did not fight each other. Yet-as critics pointed out-these countries did not shy away from going to

war against weaker states or entities, as demonstrated,

for instance, by the history of US military interven

tions in Central America, France's war against the

Algerian independence movement, and, just the dec

ade before this literature developed, the long US war

in Vietnam. In an earlier period, European states with

at least some democratic features had readily gone to

war to establish and maintain empires. In other words,

the democratic constitution of a state clearly produced

only a selective peace.

The promises of political democracy held out by

liberal theory seemed less ambiguous with respect to

internal wars. Using statistical analysis of data to com

pare types and frequency of internal disturbances with

indicators of democracy, one leading American scholar

found a clear pattern (Rummel, 1997). Non-democratic

countries were much more likely than democratic ones

to experience internal violence of almost all kinds,

ranging from civil wars to political assassinations and

terrorist bombings. Subsequent studies using statisti

cal methods affirmed the point but added a significant

elaboration. Countries defined as autocratic are as sta

ble as democracies when it comes to internal conflict.

It is the countries in between-the "anocracies" with

both autocratic and democratic features-that are sta

tistically most likely to experience internal violence

(Hegre et al., 2001; Fearon and Laitin, 2003).

Other studies /using qualitative methods con

firmed a pattern more in accord with the competing

prism of development as a conflictual process. The

European experience suggested that democratization

has been associated with war. In the 150 years between

the French Revolution and World War II, European

states underwent what today we would call a period of

rapid economic and political development. The process

fuelled nationalism and wars. "States being dragged by

social change into a transition to democracy," Edward

Mansfield and Jack Snyder conclude, "have been more

likely to participate in wars and more likely to start

them than have states whose [political] regimes did

not change" in the direction of greater democracy

(Mansfield and Snyder, cited in Snyder, 2000: 20).

More recently, the "Arab Spring" demonstrates that

attempted transitions to more democratic politics can

be extremely destabilizing. After decades of stable but

autocratic rule in Tunisia, Egypt, Syria, and Libya, pop

ular movements for democracy rapidly were replaced

406 PART Ill I Issues in International Development

by civil war (Syria and Libya) or heightened repression

(Egypt). Only one country (Tunisia) emerged relatively

peacefully. Yet it must be noted that different paths of

the transitions had quite complex causes, including ex

ternal interventions and violent countermoves by the

old regimes.

Ethnicity

Modernization theory assumed that as societies made

the transition to modernity, identities related to clan,

tribe, village, or ethnic group would become less im

portant and gradually be submerged by a higher na

tional identity. The point was supported by scholars of

nationalism, such as Ernest Gellner (1983), who argued

that growth of national identities paralleled the growth

of a modern market economy. By extension, ethnic

conflict would become less pronounced. World events

in the 1990s, however, suggested otherwise. Did the rise

of apparent ethnic conflict in the disintegration of the

Soviet Union and Yugoslavia represent a slip back to

an earlier stage, or was it a challenge to the idea that

modernity would reduce ethnicity? Perhaps "ethnic

conflict" itself was a problematic concept.

To many analysts, the conflicts in the Balkans

and the former Soviet Union were triggered by the

collapse of Cold War constraints that previously had

kept ethnic animosities in check. Some suggested

that the Balkans were trapped in ancient hatreds that

modernization had not quite neutralized. The view

was popularized by widely read authors such as Rob

ert Kaplan and the military historian John Keegan,3

who viewed the wars in Yugoslavia and the Caucasus

as a breakdown of civilized order, or as primitive tribal

conflicts that "only anthropologists can understand"

(Keegan cited in Cramer, 2006). Conflicts in sub

Saharan Africa, including the genocide in Rwanda,

were viewed through a similar lens in much of the in

ternational media and by popular writers. In a widely

read article in 1994, Kaplan discussed developments

in Africa under the title: "The coming anarchy: How

scarcity, crime, overpopulation, tribalism, and disease

are rapidly destroying the social fabric of our planet"

(Kaplan, 1994).

Yet historians and political scientists have docu

mented how ethnic identities have been profoundly

shaped by processes of modernization, including the

colonial experience. British colonial rulers, in particu

lar, institutionalized and reified ethnic identities in

subtle and not-so-subtle divide-and-rule strategies (see

Chapter 2). As constantly created and recreated, ethnic

identity cannot be understood simply as a feature of

tradition. If ethnic identity is constructed and malle

able, as numerous studies suggest, that makes the idea

of ethnic conflict more complex than the "ancient ha

treds" thesis claims (Horowitz, 1985). Moreover, even

conflicts that follow and are fuelled by ethnic divisions

are frequently intertwined with economic and political

interests in a very complex manner. The Rwandan gen

ocide and the Balkan War in the early 1990s illustrate

the point (see Box 21.2).

Inequality

Efforts to reduce systemic and overlapping social, eco

nomic, and political inequalities have been at the heart

of the development process in many countries. In a

few historically rare cases this has taken the form of

social revolutions (as in France, Russia, and China). At

times, such struggles have been intertwined with the

fight for independence from colonial rule (e.g., Algeria

and Vietnam). Conflicts born of structural inequal

ities also have led to more recent civil wars. During

the 1970s and 1980s, landless or poor peasants and

workers fought the landed oligarchy that controlled

the state and its armed forces in Central America. In

Nepal, caste and class coincided to create highly une

qual access to education, economic opportunity, and

political power. In both cases, radical movements mo

bilized the disenfranchised to challenge the structure

of power. The wars ended in compromise peace settle

ments in Central America and, eventually, in Nepal as

well in 2006.

Well-known cases such as these have raised ques

tions as to whether sharp inequality leads to violent up

heaval. Statistical analysis shows no clear link between

inequality and level of conflict, yet stubborn evidence

from historical cases of wars and revolutions suggests

that inequality does matter.

The most obvious explanation is that systematic

inequality is a necessar y but not sufficient condition

for violent social transformation. "The mere exist

ence of privations is not enough to cause an insurrec

tion; if it were, the masses would always be in revolt,"

21 I Wimpelmann and Suhrke: Conflict and Development 407

PHOTO 21.2 I A weapons cache, southern Africa.

Leon Trotsky observed in his History of the Russian

Revolution. Dissatisfaction and despair are the raw

material of violent change but not sufficient for a re

bellion to materialize, let alone succeed. Organized

revolt against the status quo requires mobilizing

people (or solving what is often called "the collective

action" problem) and finding resources and support

(consistent international support seems critical to success), and progress requires an accelerated weak

ening of the state that typically started as more pow erful than the rebels. All these conditions help explain

the three major revolutions in modern history-in

France, Russia, and China (Skocpol, 1979). Impor

tantly, when unequal access to political, economic,

and social resources coincide with cultural differences

among groups, the divisions will deepen. Coinciden tal boundaries among groups, what Frances Stewart

(2002) calls horizontal inequalities, are more likely to

produce political instability and conflict than cross

cutting divisions.

State Failure

During the last two decades, "state failure" has been

an influential concept in the literature on underdevel

opment and conflict. Western-based analysts and aid

organizations identified a number of "failed states"

in the post-colonial world, defined by the inability

of governments to perform core functions associated

with the modern state, such as upholding a monopoly

of violence or providing basic services (Suhrke, 2015).

Somalia, which has been without a functioning cen

tral government for most of the time since 1991, is of

ten featured as the prototypical failed state, but other

408 PART Ill I Issues in International Development

CRITICAL ISSUES

BOX 21.2 I Primitive Ethnic Violence?

Some 800,000 persons were killed in Rwanda in 1994. The victims were mainly ethnic Tutsi, while the perpetrators were mainly Hutu. Many outside observers initially attributed the violence to long-standing

tribal animosities between the Hutu and the Tutsi. Yet these ethnic identities were in part a product of Belgian colonial policy, which deliberately treated the two as separate peoples and issued ethnic iden

tity cards to institutionalize the division. The 1994 massacres were triggered by conflicts over concrete

issues (power-sharing in the government, distribution of economic aid) and an uneasy military standoff

between the (Hutu-led} government and (Tutsi) rebel forces. A radical Hutu faction that controlled the

state had meticulously planned and organized the massacres. The machete was the weapon of choice

which seemed to symbolize the primitive nature of the society and the violence it produced-but modern guns bought on the international market or received through aid agreements with France were also used

with decisive effect.

The violent breakup of the Socialist Federal Republic of Yugoslavia, it is commonly said, was caused

by ancient ethnic hatreds among Serbs, Croats, and Muslims, released after Tito's socialist regime

came to an end. These hatreds further defined the war, characterized by ethnic cleansing and massacres

of members of "the other" ethnic group. A more careful consideration of the dynamic of the breakup suggests a different picture. Socialist Yugoslavia had consisted of six republics, each with mixed popu

lations. The system was finely balanced by interlocking rights on the individual, republican, and federal

levels. After Tito's death in 1980, and with the encouragement of Western governments and the interna tional financial institutions, Yugoslavia moved towards a market economy and political reform. With both

economic and political reform on the table, the political contest intensified. Leaders in the various repub lics started to make appeals in terms of "national" (i.e., "ethnic") interests. Then, as Susan Woodward

writes, a cycle of mutual insecurity and exclusion developed:

[U]nder the budgetary austerities of macroeconomic stabilization, debt repayment, and eco nomic reform in the 1980s . . . political nationalism began to take an exclusionary form. Indi

viduals and politicians first claimed social and economic rights for their national group against

others, as they faced worsening unemployment, frozen wages, and declining welfare funds, and

then escalated those claims to political rights over capital assets and territory in moves towards

exclusive states' rights for the republics, in the name of their majority nation ... and, eventually

independence. (Woodward, 1999: 81)

countries such as Afghanistan and the Central African

Republic also made the list.

At the same time, economists pointed to the impor

tance of a well-functioning state for economic growth.

The terms "state failure" and "state fragility" were used

by the Organisation for Economic Co-operation and

Development (OECD) to develop guidelines for aid to

states that failed to pursue policies that donor agen

cies considered necessary for development. As a result,

"state failure" became a rather elastic concept, which

could mean anything from governments adopting the

"wrong" economic policies, to a situation without a gov

ernment in any meaningful sense. Gradually, a policy

consensus emerged to the effect that all these aspects

of state failure were interlinked, so that failure in one

field would reinforce failure in another (Wimpelmann,

2006). The related notion of vicious cycles and virtuous

cycles rested on the premise that the elements of what

is commonly associated with Western modernity are

mutually reinforcing. As such, the "failed state" fitted

neatly within the framework of a liberal theory of de

velopment as a way out of, or separate from, conflict.

21 I Wimpelmann and Suhrke: Conflict and Development 409

PHOTO 21.3 I Peace process: weapon destruction by demobilized guerrillas under UN supervision,

El Salvador, 1992.

DEVELOPMENT AS A CONFLICTUAL

PROCESS: NO DEVELOPMENT

WITHOUT CONFLICT?

Social Change as a Source of Instability

As noted above, the competing paradigm is that periods of change-whether economic growth or de

cline, political transitions, or social innovation-are associated with conflict. Existing institutions come un der pressure and may be unable to control or integrate new forces, demands, and collective actors. Change is

likely to be uneven and create a sense of relative depri vation, injustice, and threat among the loser . Men re

bel, the political scienti t Ted Gurr wrote in 1970, when they feel they a re worse off than their relevant reference

groups, and change is likely to produce precisely such

differences. Rapid cultural change likewise tends to cre ate individual anxiety, the sociologist Emile Durkheim noted more than 100 years ago. When accompanied by

rapid and uneven economic change, it may stimulate

radical reactions. Contemporary versions of this argu ment often appear in relation to "globalization," which has increased communication among societies but also

accentuated the often unequal distribution of benefits (see Chapter 6).

Conservative writers who accepted the weak nesses of the liberal theory of violence and devel

opment warned that social change was a source of instability and conflict and looked for ways to contain

the effects, particularly bottom-up violence by mobs, rebels, and revolutionaries. A notable example of this

genre among contemporary social scientists is Samuel

Huntington, whose influential 1968 book pointed to

the dangers of rapid modernization and development

(Huntington, 1968). The critical issue of development,

410

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PART Ill \ Issues in International Development

Huntington concluded, was the question of order. To

secure order, social mobilization must not proceed

ahead of the building of institutions. His conclusion

was a faint echo of the classic conservative lament of

Edmund Burke, who believed the common people were

an ignorant rabble and considered the revolutionaries

at the time of the French Revolution to be stupid, cruel

barbarians.

Violence in Development

In a radical perspective, the more interesting link be

tween conflict and social change is the role of violence

in social transformations. The premise here is that de

velopment is necessarily a conflictual process because

it involves redistribution of power and resources; this

typically involves violence in some form or other. An

obvious example is the colonization of Asia, Africa,

and the Americas. Often established and maintained

through violence, European domination facilitated the

flow of resources that underpinned the Industrial Rev

olution in the West. To what extent the colonial expe

rience also paved the way for later development in the

post-colonial states is more controversial.

The great trailblazer for this line of thinking is

Karl Marx. For Marx, violence played an important

role in social change. He held that history could be un

derstood through modes of production, characterized

by the technical and material inputs into production

as well as the social relations that men enter into when

producing. As the transition from one mode of produc

tion to another entailed a complete change of the rela

tions of production, it meant that property rights and

hence the distribution of resources radically changed.

Such processes were accentuated by the use of force; as

he put it, "revolutions are not made through laws."

In Capital, Marx described how he saw the tran

sition to the capitalist mode of production as having

emerged through a process he called primitive accu

mulation. His account of primitive accumulation was

closely linked to his understanding of capitalism,

which he saw as historically distinct: capitalists owned

the means of production, whereas workers had to sell

their labour to survive because they had no other

means (e.g., land) of subsistence. This state of affairs

in which capitalists owned all the means of production

and workers none-had not come about naturally.

Rather, it was a result of a process of primitive accu

mulation that entailed "conquest, enslavement, rob

bery, murder, briefly force" (Marx, 1867: ch. 26). A

prominent example of primitive accumulation is the

enclosure process in fifteenth- and sixteenth-century

England, when peasants were evicted, often forcibly,

from land that had previously been treated as com

mons. Similar processes, Marx noted, took place in

Scotland and Ireland as English soldiers were sent to

enforce the claims of landlords. Often, whole villages

were burned and destroyed.

Primitive accumulation did not occur only within

Europe. The colonial system facilitated the accumula

tion of riches from Asia, Africa, and America to cap

italists in Europe, Marx wrote. Here, the methods of

primitive accumulation were especially brutal. "The

treasures captured outside Europe by undisguised

looting, enslavement, and murder floated back to the

mother country and were there turned into capital"

(Marx, 1867: ch. 31).

W hile rebuking classical political economists for

painting a rosy picture of the origins of capitalism, Marx

nevertheless concluded that capitalism represented

technological and economic improvement that would

pave the way for socialism. The transition to social

ism would likewise necessitate violence, he predicted,

although less so than in the transition to capitalism.4

After socialism, however, social harmony would prevail.

In this regard, Marx appears as a modernist thinker: he

envisaged human history as a matter of continual pro

gress towards an emancipatory end point.

Influential contemporary social scientists have

likewise examined the role of violence in development.

Drawing on Marx's historical analysis, Barrington

Moore produced a now-classic study of the origins of

the industrial democracies in the United States, France,

and England, which showed that they grew out of civil

wars, slavery, physical violence, and structural violence

in the form of systematic oppression. The critical trans

formations in the development of these democracies

were violent. For instance, by destroying the condi

tions for a plantation economy based on slave labour,

the civil war in the United States laid the foundation

for the modern industrial development of the nation

and the growth of the middle class (Moore, 1966).

The development of the modern state in the

European experience also has been a violent process.

21 I Wimpelmann and Suhrke: Conflict and Development 411

Charles Tilly famously described early European state-building as "our largest example of organ ised crime" (Tilly, 1985: 167). Tilly depicted heads of states-in-the-making as self-interested entrepreneurs in the business of producing organized violence. As they set about to eliminate internal and external rivals who threatened their monopoly of violence, these rulers en tered into alliances with moneyed clients, merchants, landowners, and so on. These alliances functioned as a bargain. Rulers, needing funding for their war efforts, sold military protection to their clients. Their protec tion, however, was of a double nature. While the rul ers sold their clients protection against enemies, both within and outside the rulers' territory, they also sold their clients protection against the rulers. Clients who did not pay risked facing the rulers' coercive powers. In

effect, it was a protection racket. Thus, Tilly argued, or ganized crime was at the heart of early state formation.

Much recent literature on "war economies," some times referred to as the political economy of war, also belongs to a tradition that sees violence as intertwined with development. These scholars call for analysis of the dynamics of violent conflict in developing coun tries, including the economic transactions taking place through and during violence. Until recently, research ers have tended to put violence in a "black box," as David Keen (2001) argues. Whereas the causes of con flict are investigated, conflict itself has been seen as a breakdown of"normal" life: more or less a nothingness or wholly negative condition not worth exploring in its own right. It follows that during violent conflict, there is no development; rather, violent conflict constitutes

BOX 21.3 I Sierra Leone's "Blood Diamonds" CURRENT EVENTS

In 2000, a Canadian NGO published a report on the ongoing war in Sierra Leone called The Heart of the Matter: Sierra Leone, Diamonds and Human Security. It began: "This study is about how diamonds-small pieces of carbon with no great intrinsic value-have been the cause of widespread death, destruction and misery for almost a decade in the small West African country of Sierra Leone." The authors argued that diamonds played a central and hitherto unacknowledged part in the brutal war. The levels of vio lence in Sierra Leone, the authors argued, could only have been sustained through diamond trafficking. Indeed, they said, "the point of the war may not actually have been to win it, but to engage in profitable crime under the cover of warfare." The report urged the international community to address the issue. It received worldwide attention and contributed to an international momentum to stop the trade in "conflict diamonds." One result was the establishment of the Kimberley Process, a global certification system to trace the origin of diamonds, designed to stop international trade in diamonds by rebel groups who use the profits to finance violent conflict against UN-recognized governments.

Some argued, however, that the focus on diamonds risked reducing the war, and particularly the rebel movement Revolutionary United Front (RUF), to a simple greed for diamonds, thus obscuring the political dimension of the conflict. For instance, when the RUF leader Foday Sankoh was appointed head of the commission for mineral resources as part of a 1999 peace deal, this was seen by many merely as a confirmation that the movement, all along, only had been after control of the diamond fields. The case supported a more general argument that African wars were driven by individual "greed, not grievances" (Collier and Hoeffler, 2004). Yet, this conflict-as many others-was deeply rooted in political exclu sion and deteriorating living conditions. This had been a mobilizing factor for many rebel soldiers. The wartime diamond economy, moreover, did not represent a radical departure from peacetime practices in trade and production. A regional network of illicit production and trade in diamonds had existed for decades before the war. The RUF and other factions had been able to tap into and sometimes alter these structures, but they did not replace them completely and often entered into alliances with established traders, miners, and exporters. Thus, many of the actors in the Sierra Leone diamond industry remained the same through war and peace.

4 - PA T Ill I Issues in International Development

PHOTO 21.4 I The Kimberley Process, by establishing the certification of diam onds on the world market as

conflict-free, has sought to end the international trade in diamonds used by rebel groups to finance conflict,

notably in sub-Saharan Africa.

a pause or even a setback in the development process.

Keen and others (e.g., Cramer, 2006) assert, in contrast,

that war is no such "nothingness." War also entails in

tense economic activity and often involves a significant

transformation of power relations and the control of

resources. Hence, violence and development do not al

ways occupy separate social spaces.

DEALING WITH THE DEVELOPMENT

CONFLICT NEXUS: INTERVE TION

AND PEACE-BUILDING

The end of the Cold War opened up space for new and

unprecedented forms of Western intervention in con

flict areas. A reinvigorated UN engaged actively to end

wars that had been fuelled by superpower rivalry. Peace

settlements and post-war reconstruction followed in

short order in Central America (Nicaragua, El Salvador,

Guatemala), Asia (Cambodia), and southern Africa

(Mozambique). At the same time, the collapse of the

bipolar international order created new forms of up

heavals. Turbulent transitions occurred at the rim of the

ex-Soviet Union (in the Caucasus and the Balkans). In

the Horn of Africa, regimes that had been propped up

by the superpowers collapsed (Somalia). Elsewhere in

Africa, new violence developed as well-in Rwanda and

Zaire, Sierra Leone and Liberia. To deal with these con

flicts, the UN system honed its "peace-building" skills.

UN Secretary-General Boutros Boutros-Ghali de

fined the UN agenda in a 1992 document, I1·1e Agenda

for Peace. Just after the turn of the century, more than

20 major operations had been undertaken. Most had

21 I Wimpelmann and Suhrke: Conflict and Development 413

CRITICAL ISSUES

BOX 21A- I Accounting for the Non-Violent Actors in Conflict Settings

Much of the literature on war and conflict tends to emphasize the agency of perpetrators and beneficiar ies of violence. The focus is on warlords, faction leaders, and conflict entrepreneurs. Such perspectives

sometimes extend into peace-building processes as well. For instance, power-sharing deals, amnesty, or

concessions to natural resources often are offered to military leaders as incentives to give up violence.

In this landscape, "ordinary people" frequently appear simply as victims, innocent civilians who are

caught up in the mayhem. Some scholars, however, have stressed that people living in conflict zones

must be recognized as active participants in the conflict setting. They are not merely victims but agents,

adopting strategies of surviving and resisting conflict (Goodhand, 2006). Gilgan (2001) calls for more

research on why and how people choose not to fight. She suggests that people actively oppose violent

domination through non-compliance, political dissidence, and flight and that outside intervention must

recognize such acts of resistance to violence.

This also means that peace processes must be careful not to further marginalize local communities

vis-a-vis armed factions. Often, only those who have picked up guns are included in the peace negotia

tions. The numerous peace talks in southern Somalia were sometimes criticized for focusing too much

on "warlords" at the cost of traditional authorities and civil society, thereby conferring political legitimacy

on anyone who had gained military power:

Outsiders' insistence on holding high profile, centralized peace conferences for Somalia gives

warlords incentives to continue fighting. If they are disruptive enough to defeat peace proposals,

they get included in talks, which subsequently increases their reputation and consolidates their

position. If they "only" represent legitimate interests of a local community, they have a tendency

to be forced to concede powers. Thus, the international community empowers the violent war

lords. (Hansen, 2003: 72)

a military component of peacekeepers as well as an

administrative structure to co-ordinate myriad so

cial, economic, and political reconstruction activities .

"Peace-building" by this time had come to mean an

increasingly standardized package of post-war aid, de

signed to provide security (by UN soldiers and police),

promote demilitarization of the belligerent armies

or factions, encourage refugees to return, restart or

kick-start the economy, restore or democratize political

institutions, ensure the rule of law and respect for hu

man rights, and-sometimes-establish accountability

mechanisms for war crimes and massive human rights

violations perpetrated during the conflict.

The premise of the standard peace-building package

was an expanded version of what we referred to earlier

as "the democratic peace." In the peace-building con

text, it involved both economic and political reforms and

became known as "the liberal peace." The essence was a

set of reforms believed to constitute the foundation for

peaceful reconstruction and development. Political re

forms typically meant elections, with participation of po

litical parties and the establishment of plural institutions.

Civil society organizations and a free media were encour

aged. On the economic side, reforms focused on market

mechanisms, a minimalist but effective state, and macro

economic stability. In addition, human rights monitoring

was strengthened and legal reforms patterned on West

ern legal traditions were initiated. The package was firmly

anchored in the tradition of Western liberalism.

That these traditions would serve as reference points

for post-war reconstruction and development in Asia,

Africa, and Latin America was hardly surprising at a

time when the Soviet Union had collapsed and socialism

seemed a defunct concept. In ideological terms, political

and economic liberalism was the dominant paradigm in

the post-Cold War world. Recent Western scholarship, as

IPt,

414 PART Ill I Issues in International Development

we have seen, also seemed to affirm that this was a solid foundation for domestic and international peace. World Bank research recommended rapid post-war growth to sustain the peace. The case for political democracy and peace was often celebrated in triumphalist terms, as ex emplified by an American scholar and co-founder, in 2000, of the new Journal of Democracy:

The experience of this century offers impor tant lessons. Countries that govern themselves in a truly democratic fashion do not go to war with one another ... [they] do not "ethnically" cleanse their own populations . . . [they] do not sponsor terrorism ... [they] do not build weapons of mass destruction to use on or to threaten one another .... [They] form more reliable, open and enduring trading partner ships ... [they] are more environmentally re sponsible because they must answer to their own citizens. (Larry Diamond, cited in Paris, 2004: 35)

The limitations of the liberal theory of violence as a guide to understanding the relationship between development and conflict have been noted above. In addition, some scholars now asked whether liberal in stitutions were particularly ill-suited as a framework for post-war reconstruction. A trenchant critical anal ysis in this regard was developed by Roland Paris in At War's End (2004). Liberalism, he noted, invites open competition, whether in the market or in the political arena. Countries emerging from civil war, however, are more in need of integrative mechanisms to over come the divisive events of the past and reconstitute themselves as functioning societies. Above all, this requires structures of guidance, stability, and predict ability-in short, institutions that can regulate access to economic and political power. Hence, in an echo of the Huntingtonian prescription of the 1960s, Paris rec ommended the development of institutions before in troducing liberal reforms in order to strengthen peace.

The combination of large aid flows and high policy relevance turned peace-building studies into a growth industry. Much was applied research that as sessed the impact of particular projects, but there was also a considerable body of more academic work. For example, Doyle and Sambanis (2006) examined factors

associated with the degree and kind of peace estab lished in the post-war period within countries that had recently undergone violent conflict. Using compara tive and quantitative studies, they found that the post conflict package helped to stabilize peace at least in the sense that it prevented relapse into full-scale war. Other analysts worked in the tradition of critical analysis to understand the functions of peace-building in relation to the political, strategic, or organizational interests of the "peace-builders" (Duffield, 2001; Chandler, 2006; Cunliffe, 2012).

If the post-Cold War peace-building agenda was always entangled in Western foreign policy interests, the attacks in the US on 11 September 2001 and the ensuing "war on terror" sharpened the geopolitical aspects of subsequent interventions. In Afghanistan and Iraq, military combat operations that had little to do with conventional UN peacekeeping coexisted with the more familiar and multilateral "peace-building" efforts, such as UN-led political transitions and eco nomic development programs overseen by the World Bank. Even when the UN deployed its own soldiers, under the umbrella of a UN operation, they were in creasingly expected not to keep peace, but to produce it, through robust use of force. By 2015, it was estimated that two-thirds of UN peacekeepers were deployed in the midst of ongoing conflict, as opposed to implemen tation of peace agreements already in place (de Coning, 2015). The techniques and mandates of the wars in Iraq and Afghanistan were increasingly reproduced in UN operations. In Mali, for instance, UN peacekeepers were mandated to undertake the extension of "state authority" and stabilization, tasks far removed from the conventional peacekeeping role of a neutral arbi trator and monitor operating in relation to recognized and consenting parties to a conflict. In the Democratic Republic of Congo, the UN in 2012 set up an "inter vention brigade" tasked to carry out targeted offensive operations to neutralize armed groups that threatened state authority and civilian security. The result of these developments was to make international interventions in conflict settings more controversial, and the work of field staff, both military and civilian, much more dangerous.

Elsewhere, the UN became closely associated with what in much of the Muslim world was viewed as Western imperialism (by authorizing the bombing

21 I Wimpelmann and Suhrke: Conflict and Development 415

BOX 21.5 I COIN: Winning Wars through Development? CURRENT EVENTS

The first decade of the 2000s saw the codification of a US military doctrine for counter-insurgency

(COIN for short). Promoted by high-profile US commanders operating in Iraq, such as Stanley McChrystal

and David Petraeus, COIN drew explicitly on the experience of the colonial wars of France and Britain.

Its proponents argued that in order to defeat insurgencies such as those facing Western militaries in

Afghanistan and Iraq, it was not enough to defeat the enemy on the battlefield. The population had to

be won over to support the government and its military forces and to deny the insurgents the space to

operate. The "Coinistas" held that the key to winning the population was avoiding large civilian casual

ties, establishing "good governance" in the form of representative government, basic social services,

and development. Tactically, the COIN approach was expressed in the phrase "clear, hold, build," where

the military would clear an area of insurgents, hold it through the establishment of military checkpoints

and patrols, and thereby allow military and civilian actors to build peace and development to generate

popular support for the new order.

In practice, COIN proved less straightforward to implement, as the Afghanistan experience demonstrated.

Civilian casualties were large. Aid agencies central to the "building" phase of COIN proved reluctant or

ineffective partners. Some refused the close collaboration that COIN presumed, fearing it would compro

mise the neutrality on which they depended, or that it negated key criteria for development assistance

based on needs and sustainability. The alternative was to bring in private contractors, but they, too, had

difficulty working in areas that the military struggled to "clear" of insurgents and where their freedom

to move outside of military bases was restricted. The result during the "surge" in Afghanistan was an

enormous waste of resources, as COIN dictated rapid disbursement of aid, but implementing capacity

was weak and the conflict permitted very little access for oversight.

A more fundamental problem was the idea that the population could be "won over" simply by a checklist of good governance and service delivery. The international military often struggled to deal

with the subtleties of local politics, where loyalties did not follow neat ideas of corrupt "bad guys" and

non-corrupt "good guys." An alternative approach would have been to support political settlements at the local and national level.

of Libya in 2011), or a front line in the US-led war on

terror (by working closely with the US in Afghanistan).

T hese developments f urther eroded the traditional

UN role as an impar tial builder and keeper of the peace.

Two decades after the UN's agenda for peace in 1992

set the stage for international peace-building, there were clear signs that the enthusiasm for state-building

and modernization as part of a larger peace-building

package had dwindled. The difficulties experienced in Iraq and Afghanistan-two enormously costly and

inconclusive interventions-encouraged the search

for new approaches to deal with post-war situations. State-building and modernization "from scratch"

now seemed too ambitious and unrealistic. Instead,

peace-building programs had to be more pragmatic,

building on existing institutions and elites, whatever

their nature. Some scholars called for "hybrid" ap

proaches that mobilized "traditional" and local prac

tices (Boege et al., 2009), worked with local elites and

within the logic of local politics (De Waal, 2009), or

privileged traditional or informal justice as an alter

native to reforming the formal system of justice. More

generally, the emphasis was less on transformation and

development, or "progress," and more on short-term stabilization through the strengthening of existing

power structures (see Box 21.5). At the same time, the international order that

had enabled unprecedented peace-building inter ventions for two decades after the Cold War was

416 PART Ill I Issues in International Development

shifting. Following unsuccessful campaigns in Iraq

and Afghanistan, the debacle in Libya, which im

ploded after NATO's bombing removed its leader,

Mu'ammer Gaddafi, and financial difficulties in Eu

rope and the US, the "West" was no longer the evi

dent global hegemon it had been. The first firm sign of

change came with Syria, where a devastating conflict

by 2015 had displaced a fourth of the population but

prompted no UN-authorized military intervention to

establish peace. Instead, as during the Cold War, the

world community was politically divided and collec

tively reduced to only provide some humanitarian

relief. Even access to distribute that aid was sharply

limited by the violence itself.

LEARNING FROM HISTORY

Prepositions and conjunctions can be tricky. The title

of this chapter, "Conflict and Development," suggests

that violence is a separate thing that can be extracted

from a country's historical development. This is cer

tainly the starting point of many studies, particularly

recent research that relies on statistical analysis. But

the chapter could also be titled "Conflict in Develop

ment" to convey a different perspective-namely, that

conflict is embedded in development understood as

social change. Such change often becomes violent, es

pecially during major social transformations. To study

conflict in development therefore requires placing

events in their broader historical and deeper sociolog

ical contexts. The careful student can learn from both

approaches.

A related implication is the geographic location of

conflict. If we understand conflict as part of develop

ment, we can more readily recognize conflict-and its

potential for violence-as part of the history of nations

that today are "developed." The prosperous, industri

alized political democracies of the North are both di

rectly and indirectly founded on conflict, violence, and

suffering.

Violent conflict is not something that primar

ily afflicts the latecomers to development or involves

gruesome war tactics (such as amputating limbs, as

RUF rebels in Sierra Leone did, or beheadings as the

Islamic State militants carry out) that are uniquely

barbarian. Exercising "memory" in relation to our own

past, as Christopher Cramer calls it, is a precondition

for understanding and addressing the conflict potential

in all forms of development.

SUMMARY

This chapter provided an overview of how the relation

ship between conflict and development has been un

derstood and analyzed in social science. It identifies

two main strands. One strand views the lack of devel

opment as a cause of conflict and therefore sees devel

opment as a cure; the other conceives of development

as generating conflict or as a conflictual process in it

self. The chapter examined various attempts to make

a causal link between underdevelopment and conflict,

whether underdevelopment has been understood as

the absence of economic opportunities or democracy,

as inequality, or as ethnic loyalties. The chapter then

discussed conservative and radical claims that devel

opment might be associated with conflict. The conserv

ative version warns against the destabilizing effects of

rapid development, while the radical view understands

development as an often violent redistribution of re

sources and power, calling to attention the violent past

of Western capitalism.

Finally, the chapter considered international

efforts-often called "peace-building"-to help

reconstruct societies emerging from violence. Today,

peace-building operations premised on the assumption

that development and "state-building" are necessary

tools to recover from violent conflict might be ced

ing ground to a more realist position, which sees

large-scale transformation of war-torn societies as dif

ficult or costly. It was argued that this shift must be seen

in connection with the changing position of Western

countries, whose foreign policy interests and ideologies

had underpinned much of the peace-building

enterprise.

21 I Wimpelmann and Suhrke: Conflict and Development 417

QUESTIONS FOR CRITICAL THOUGHT

1. Taking a developed country you are familiar with, what do you think the role of conflict, especially violent

conflict, has been in its development?

2. Taking a developing country today that you are familiar with, do you see any parallels with the role of conflict

in its development? What accounts for similarities and differences?

3. What are the implications of using the term "conflict and development" versus "conflict in development"?

4. Why, and in what ways, does choice of methodology matter in analyzing the relationship between conflict

and development?

5. What are the strengths and weaknesses of contemporary peace operations?

6. Take one or several components of peace-building (e.g., UN peacekeepers, refugee return, elections, economic

reconstruction), and consider how they can promote peace or have unintended effects.

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and Development Policy. Washington: World Bank and Oxford University Press.

Cramer, Christopher. 2006. Civil War Is Not a Stupid Thing: Accounting for Violence in Developing Countries.

London: Hurst. Huntington, Samuel P. 1968. Political Order in Changing

Societies. New Haven: Yale University Press. North, Douglass C., John J. Wallis, and Barry R. Weingast.

2009. Violence and Social Orders: A Conceptual Frame-

1. For instance, Polity on democracy (www.cidcm.umd .edu/polity), the World Bank on economic statis tics (http://econ.worldbank.org), and the UNDP on socio-economic indicators (http://hdr.undp.org).

2. Among the best known are the Correlates of War project (www.correlatesofwar.org) and UCDP/ P RIO Armed Conflict Data Set (http://new.prio . no/CSCW-D a t a s e t s/ D a t a- o n-A r m e d-C on f l i c t/ UppsalaPRIOArmed-Conflicts-Dataset).

Boege, V., A. Brown, K. Clements, and A. Nolan. 2009. "Building peace and political community in hybrid political orders." International Peacekeeping 16: 599-615.

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Wood, Elizabeth J. 2003. Insurgent Collective Action and Civil War in El Salvador. New York: Cambridge University Press.

3. Robert Kaplan's "The coming anarchy" was hugely influential in the US.

4. "[I]n the former case [transition from feudalism to capitalism], we had the expropriation of the mass of the people by a few usurpers; in the latter [transition from capitalism to socialism], we have the expropria tion of a few usurpers by the mass of the people" (Marx, 1867: ch. 32).

Collier, P., et al. 2003. Breaking the Conflict Trap: Civil War and Development Policy. Washington: World Bank and Oxford University Press.

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418 PART Ill I Issues in International Development

Cramer, C. 2002. "Homo economicus goes to war: Metho

dological individualism, rational choice and the

political economy of war." World Development 30, 11:

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- -. 2009. "Trajectories of accumulation through war and

peace." In R. Paris and T. Sisk, eds, The Dilemmas of

Statebuilding. London, Routledge, 129-48.

Cunliffe, P. 2012. "Still the spectre at the feast: Comparisons

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de Coning, C. 2015. "Offensive and stabilization mandates."

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85: 99-113.

Doyle, W. 1983. "Kant, liberal legacies, and foreign affairs, parts

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-- and N. Sambanis. 2006. Making War and Building

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Duffield, M. 2001. Global Governance and the New Wars.

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lEAH.N ING OBJECTIVES

Information Technologies and Development

Erwin A. Ala1npay

To understand the challenges in transplanting ap- To appreciate the growing role played by infor-

propriate technologies for development. mation and communication technologies (ICTs) in

• To develop a critical understanding of the effects development.

of technologies on societies, institutions, work, • To consider if Internet access is a human right.

and individuals.

--------------------------------------

Female youth volunteers at a computer literacy training center, run by the Afghan Red Crescent Society (ARCS) in Herat, Afghanistan. There are 10 computers and 160 youths attend the classes in shifts. I Source: Photo by Shehzad Noorani/Majority World/UIG via Getty Images

,.po PART Ill I Issues in International Development

In 1998, the World Bank's annual World Development Re

port focused on the theme "Knowledge for Development."

In 2016, the World Development Report looked at how the

Internet affects the lives of people all over the world. In a

way, these reports are interlinked, given that information

is central to the things people do and access to it is im

portant to their development. As such, some even call for

Internet access to be considered a basic human right. This

is partly explained by the fact that in a rapidly developing

digitized society, more and more people need informa

tion communication technologies to access basic services

(e.g., water and health care), look for opportunities, and

exercise their freedoms (of expression, opinion).

This chapter explains how information and sys

tems for sending and receiving it can be used for de

velopment and governance. We begin with a brief

discussion of the relationship between technology and

development, then focus on information and commu

nication technologies (ICTs). ICTs discussed here are

not limited to computers and the Internet. We also

consider such ICTs as radio, television, telephone, and

indigenous information systems that may be available

and more appropriate for some contexts. ICTs can im

pact economies, how society organizes itself, and how

people work. This chapter examines these effects and

investigates important policy issues connected to them.

TECHNOLOGY AND SOCIETY

Every technology is both a burden and a bless

ing; not either-or, but this-and-that.

Postman (1992: 4-5)

Defining Technology

Technology is considered "the science and art of get

ting things done through the application of skills and

knowledge" (Smillie, 2000: 69). It may require the

organization and use of physical infrastructure, ma

chinery and equipment, knowledge, and skills. Using

technology is not simply a matter of obtaining ma

chines and needed infrastructure but also of putting

people's knowledge and skills to use and applying

them. In other words, technology refers to the practical

application of science to solve real-world problems.

Technology Creation and Diffusion

Technology can be developed and transferred in a

number of ways. Resource abundance and shortages

play an important role in the development and dif

fusion of technologies. A good example of this is the

need for grain and the resulting Green Revolution

(see Chapter 18). The Green Revolution was a cam

paign to develop higher-yielding strains of rice and

wheat in the 1960s and 1970s. A cross-bred variety

of rice was developed that doubled traditional yields,

and from 1982 to 1992 production of cereals grew

in Asia by 25 per cent and in Africa by 41 per cent

(Smillie, 2000).

While technologies can be created, they can also

be bought, copied, and stolen. Commerce and warfare

have also been contributors to technological devel

opment and diffusion. Early trading between China

and other Asian countries, for instance, brought with

it the diffusion of technologies for papermaking, tex

tiles, gunpowder, and porcelain. Aztec, Maya, and Inca

technology for intercropping ipil-ipil with maize was

transferred to Asia by the galleon trade (Smillie, 2000).

Arabian traders helped to spread Chinese steel technol

ogy and Arabian medical knowledge. In more recent

times, Japan, Korea, and Taiwan developed their auto

mobile, electronics, and computer industries based on

Western technologies.

The contribution of warfare to technological in

novation has included the use of crossbows, guns and

gunpowder, and mathematics to optimize distribu

tion systems and decode messages. Space travel, for

instance, is linked to the development of land-based

missile technologies. Similarly, the Internet developed

from the need to secure communications in the event

of a nuclear attack. Moreover, technological disparities

between civilizations have led to the conquest of na

tions. A good example of this is how the greatly out

numbered Spaniards were able to defeat the Incas in

the 1500s because of their guns, steel weapons, armour,

and horses (Diamond, 1999).

Appropriate Technology

Technology transfer, however, is not easy to accom

plish. In developing countries and marginalized com

munities, it is necessary to consider the socio-economic

22 I Alampay: Information Technologies and Development 421

and environmental context into which a technology

will be transplanted. The term appropriate technology

has its origin in the work of Fritz Schumacher on the

kinds of technology that fit small-scale, grassroots,

and community-centred organizations. These technol

ogies are appropriate to the environmental, cultural,

and economic context in which they are used. An

appropriate technology is not a "poorer" technology.

What is important is that it works, is suitable for the

context, and is sustainable. Some examples of appro

priate technologies include a polio vaccine that only

requires a drop on the tongue, heat-stable vaccines

that do not require refrigeration, vaccine cocktails in

a single shot (UNDP, 2001: 28), inexpensive hand water

pumps, fuel-efficient stoves, cheap electricity provided

by windmills (Smillie, 2000), earthbags for building

houses, bottled solar lights (see https://www.youtube

.com/watch?v=cQCHvO2Ho_o), water rollers that

ease the transport of clean water (see www.hipporoller

. org), and simple latrines that help reduce the incidence

of blindness by reducing the population of flies that

transmit the bacteria that causes trachoma (see www

.cartercenter.org). Appropriate technologies typically

require fewer resources, cost less, and have minimal

negative impacts on the environment. They also tap the

existing knowledge of local people and use local natu

ral resources (see Box 22.1).

C CEPTS

Technological Determinism versus Social Determinism

The interaction between technology and society can be

viewed in two ways: through technological determin

ism or through social determinism.

Technological determinism suggests that technol

ogy drives the evolution of society. The idea is that tech

nology begets technology and that society is continually

reformed in the wake of this process (Ling, 2007). For

example, the printing press contributed to the Protestant

Reformation by giving more people access to the Bible

and permitting individual interpretations of God's word.

Social determinism, on the other hand, considers

social interaction as having primacy in terms of the de

velopment and use of technologies. Thus, a technology,

while originally intended to function in a particular

way, can be reinterpreted and used in other ways. From

this viewpoint, technology is not inherently good or

bad, since the outcome depends largely on how it is used .

For example, nuclear technology can be used to provide

society with energy but has also been used for war. A

hand tractor originally intended for plowing farms has

been reinvented as a means of public transportation in

some rural villages in the Philippines, and gill nets are

being used to catch crab rather than fish. In the con

text of development, this interpretation highlights the

BOX 22.1 I Appropriate Housing Technology: Earthbags

An example of a feasible, low-cost housing technology that has been adopted in some developing coun tries is the earthbag (see www.earthbagbuilding.com). This natural building alternative, evolved from military bunker construction techniques, uses bags filled with local, natural materials, hence the term "earthbags." It reduces construction costs by lowering the production and transportation costs of build ing materials. After being filled, the bags are stacked like bricks. Houses are often domed, much like igloos. The method is durable and non-toxic, and can provide good insulation.

However, the transfer of technologies is not always perfect. In one site, the final layer of plaster was not placed correctly and did not adhere to the mud fill that was applied over the earth bag structure. �ence, plants ended up growing naturally in the earthen medium because seeds or roots were present in the bags at the time they were used (see www.earthbagbuilding.com/projects/clinic.htm).

422 PART Ill I Issues in International Development

PHOTO 22.1 I Farmers plough a rice field with a water buffalo, locally called •carabao•, and a hand tractor In a village in Dinaluplhan town, northwest Philippines.

importance of focusing on people, on what they can do

with technology, and on building their capacities.

Some technologies, however, are particularly

closed. They are difficult to reinterpret and use in way s

other than originally intended, while others are rela

tively open. Information and communication technol

ogies are particularly open. Hence, while the telephone

was originally intended for use by business, people soon

found other, more social and personal applications for

it. The same goes for the Internet, which is used not

only by scientists, researchers, and the military (as

originally intended) but also by ordinary people look

ing for recipes, life partners, and entertainment.

A very specific example of "openness" in this field

is the open data movement. Open data can be freely

used, reused, and redistributed by anyone-subject

only, at most, to the requirement to attribute and share.

The logic with this is that, often, the best use of data

is not necessarily known to the originator of the data,

but rather by other stakeholders in society since people

could look at the same data differently.

In the "Hole in the Wall" project in India, engi

neers conducted an experiment to test whether peo

ple in slum areas can independently learn to use an

Internet-connected computer without instruction (see

w w w.hole-in-the-wall.com). Among the findings was

how quickly children embraced the technology and

were able to develop their own vocabulary for teaching

each other about it.'

In the field of development studies, however, the

issue of whether technology shapes organizations or

whether society defines how technologies are used may

not be as important as the effects that result from the

interaction between society and technology.

Technology and Development

According to the United Nations Development Pro

gramme (UNDP, 2001: 27), many technologies can be

used for human development to increase incomes,

improve people's health, allow them to live longer and

enjoy better lives, and permit them to participate fully

in their communities. However, as Postman (1992) sug

gests, technology is both a burden and a blessing.

Fire, gunpowder, steam engines, electricity

and nuclear energy, trains, airplanes, the telegraph,

telephones-history is full of examples of technologies

that have changed the course of human development,

22 I Alampay: Information Technologies and Development 423

but not necessarily for the better. Thus, while technol

ogies are often seen as indicators of modernization and

material progress, they also have created new social

conflicts. During the Industrial Revolution, for in

stance, technology created tensions not only between

man and nature but also among men with different re

lationships to technology. Owners of capital were pit

ted against owners of land, progress against tradition,

and capital against labour (Briggs, 1963). As Jared Di

amond aptly puts it, "technology, in the form of weap

ons and transport, has provided the direct means by

which some peoples have expanded their realms and

conquered other people" (1999: 241).

Technologies also are identifiable with historical

eras. For instance, some would consider that what mech

anization did for the Industrial Revolution, computer

technology is doing for the Information Age (Naisbitt,

1984, cited in Webster, 2000: 8). The discovery of the

steam engine and later electrical production spurred

the Industrial Revolution and resulted in the transfor

mation of major social institutions such as the family,

the church, cities, and working life. In Western socie

ties, the family moved from being a multi-generational

unit of production and reproduction to become more

nuclear, with a mother, a father, and children, and with

economic production shifted to other work sites than the

household. The church lost much of its power, cities grew

larger, and organizations became bureaucratized (Ling,

2007). Similarly, an important question today is how in

formation and communication technologies are chang

ing society and these same institutions (see Table 22.1).

THE INFORMATION SOCIETY

Information and communication technologies are ar

guably the defining technologies of contemporary life.

ICTs encompass both the equipment and the services

that facilitate the electronic capture, processing, and

display of information (Torrero and Braun, 2006: 3).

They include computer technologies (computers, the In

ternet), telecommunications (mobile phones), audiovis

ual technologies (DVDs, cameras, MP4s), broadcasting

(radio, television), and newer technologies that combine

these functions (e.g., smartphones, tablets).

Convergence and Interactivity

New ICTs are the product of technological convergence

between old and new networks of technologies. Older

technologies, such as radio and television, were charac

terized by one-way provision of communication. Peo

ple were passive recipients of information. New ICTs

are characterized by "interactivity" whereby commu

nication is two-way and people have a choice in select

ing the information they want while also creating new

content for others.

In the near future, the issue of old versus new ICT

may no longer be salient, since convergence has resulted

in the "old" media of TV, radio, and telephones becom

ing digital. Furthermore, developed countries can also

learn from the innovation occurring in less developed

countries. For example, text messaging, which has been

popular in less developed countries, has been adopted

in some development projects. Projects like Frontline

SMS, which allows anyone to text-message with a large

group of people, now are used even among commu

nities in developed countries in the West (see www

.frontlinesms.com).

Approaches to Understanding the bif onnation Society

Five arguments can be made for considering the world to

day as an "information society": technological, economic,

occupational, spatial, and cultural (Webster, 2000).

TABLE 22.1 I Comparison bet-ween the Industrial Age and the Information Age

Productive Input

Output

Organizations

Workers

Industrial Age

Energy (steam, electricity); machines

Products

Large factories

Organized labour

lnfonnatlon Age

Information; 1crs

Services

Networked organizations

Individualization ------ - - - - - - - - - - - - - - - - ---

Sources: Adapted from Castells (2000); Rubery and Grimshaw (2001); Ling (2007); Winter and Taylor (2001).

424 PART Ill I Issues in International Development

The technological argument emphasizes the im

pressive technological innovations in information

processing, storage, and transmission. It is driven

by the "convergence" of telecommunications, broad

casting, and computing technologies and the creation

of networks of terminals among people and organi

zations that have provided people with new ways of

working.

The economic perspective on the information soci

ety derives from the work of Fritz Machlup (Machlup,

1984, cited in Webster, 2000), and measures the in

formation society in economic terms by classifying

technologies according to five broad primary industry

groups: education (e.g., libraries, universities), media

(radio, television, advertising), information machines

(computer equipment, musical instruments), infor

mation services (law, insurance, medicine), and other

information activities (research and development,

non-profit work). By quantifying the economic con

tributions of these industries, one can calculate the

growing economic significance of information and

knowledge in today's society.

The occupational argument focuses on occupa

tional change and the apparent predominance of oc

cupations based on informational work (more teachers,

lawyers, and entertainers than builders and coal min

ers, for example). This perspective is often used in com

bination with the economic perspective. In this view,

the distribution of occupations has shifted towards a

"white-collar society" and away from industrial labour.

A simplification of this dichotomy argues that in the

industrial sector, workers create, process, and handle

physical goods, while in the information sector, work

ers create, process, and handle information.

The spatial perspective is based on the informa

tional networks that now connect locations and affect

how society organizes around time and space, thereby

leading to a "flat world" (Friedman, 2005). This allows

organizations to operate 24 hours a day, with offices,

factories, suppliers, and employees located all over the

world, as a result of the global ICT infrastructure that

links them together, thereby making ICTs crucial driv

ers of globalization.

The cultural argument recognizes the extraordi

nary increase in information in social circulation be

cause of television, the Internet, cell phones, and other

devices. As a result, the behaviour and values of people

in the highly urbanized cities of the world may be more

similar than among people within the same coun

try who are less connected to the global information

network.

These five approaches to examining the idea of a

global information society remain problematic, how

ever. Identifying the types of economic activity that

constitute the information society is somewhat subjec

tive. Also, just about every profession deals with infor

mation and many of these professions have existed for

a long time. Furthermore, at what point (in terms of

percentage of GNP or readiness for e-commerce) can

we say that a nation already constitutes an information

society?

Credit card use, for instance, is important for par

ticipating in online commerce. However, except for

high-income countries, the rest of the world hardly has

access to credit cards (see Table 22.2). Does this mean

only high-income countries participate in information

societies? Or are there different types of information

societies whose economies function differently, as ex

emplified by the unique take-up of mobile money use

in the sub-Saharan region? The differences among

these regions clearly suggest that nuances in develop

ment need to be understood in relation to the "infor

mation society."

Finally, networks among people in the same occu

pation or profession have been around since long before

the creation of the Internet. Examples include machine

technicians, salespersons, lawyers, teachers, and doc

tors. Taking such phenomena into account, how does

one identify the point at which the information society

came to be?

From a pragmatic viewpoint, it may not matter

whether we are in an information society or not. What

matters is recognizing that ICTs are affecting society

economically, socially, and culturally. Societies are

confronted with the growing importance of informa

tion products, an increase in information itself, the

essential role of ICTs in many services and activities,

and the need for information processing in trading and

finance. Hence, it is important to understand what is

happening in the interaction between society and ICTS,

and what the implications of this interaction are for

development.

22 I Alampay: Information Technologies and Development

TABLE 22.2 I Types of Accounts and Payment Methods, by Region, 2011, Share of Population ( % )

Mobile Mobile

Account at Electronlc Moblle Phones Phones

a Formal Cheques Payments Phones Used to Used

4, -_,

Debit Flnanclal Used for Used for Used to Receive to Send Credit

Regions/Groups Card Institution Payments Payments Pay BIiis Money Money Card

High-income 61.4 89.5 33.4 55.2 49.8

countries

Other economies

East Asia 34.5 54.9 1.7 6.1 1.3 1.2 1 6.6

and Oceania

Europe and 36.4 44.9 3.7 7.8 3 2.7 2.5 16.2

Central Asia

Latin America 28.8 39.3 3.9 10.3 1.8 1.9 0.8 18.4

and Caribbean

Middle East and 9.1 17.7 4.1 2.2 1 2.4 1.3 2.4

North Africa

South Asia 7.2 33 6.6 1.6 2 1.9 0.8 1.6

Sub-Saharan Africa 15.5 24 3.3 4 3 14.6 11.2 2.9

World 30.4 50.5 9.4 14.5 2 3 2.2 14.8

Source: Global Financial Inclusion Database, from UNCTAD Information Economy Report 2015, p. 37. Reprinted with the permission of the United Nations.

Linking ICTs to Development

There are generally two sides to the JCT and develop

ment debate. Optimists, consistent with the discourse

on modernization and globalization, tend to embrace

ICTs. Modernization theory explains how societal de

velopment must go through a series of stages, with each

phase having a different technological base of produc

tion (see Chapter 3). In an information society, that

base would be information technology, following the

same modernization logic of radio to Internet, analog

to digital. Furthermore, economies of the world have

become more integrated, aided by information tech

nology, as a result of globalization (see Chapter 6).

Only over the past few decades has a technological in frastructure developed to permit the global economy to function as a unit on a planetary scale. This tech

nological infrastructure includes telecommunications,

information systems, micro-electronic processing, air

transportation, cargo systems, and international busi ness services all over the world (Castells, 1999).

In both the modernization and the globalization

perspectives, information technologies play a part in

development. According to modernization theory,

ICTs can be seen as a potential means of closing the gap

between nations. ICTs even allow countries to leapfrog

stages of economic growth by modernizing a country's

production system and increasing competitiveness at

a faster rate than in the past (Castells, 1999). ICTs are

viewed as an important aspect of a nation's ability to

participate in global markets. Others argue that ICTs

have helped level the playing field, as evidenced by

the shift of knowledge and information-based work

to less developed countries through outsourcing

(Friedman, 2005). On the other side are the skeptics,

influenced by the dependency and post-colonial dis

course, who highlight the growing disparities in ac

cess and the inequalities that also permeate the online

world.

The dependency paradigm, in particular, views

development in one country as inevitably implying

426 PART Ill I Issues in International Development

u 0 0:

-;, g

·5

underdevelopment in another-a sort of global zero-sum

game-and sees this as implicit in the nature of capi

talism (see Chapter 3). This perspective is consistent

with world systems theory, which views development

as a dynamic link between core regions of develop

ment and peripheral areas. Core regions are charac

terized by high income, advanced technologies, and

diversified products, while peripheral areas have lower

wages, rudimentary technology, and simple produc

tion mixes (Taylor, 1989, cited in Malecki, 1997). For

instance, call-centres, which have been a growth in

dustry in English-speaking developing countries such

as India and the Philippines, are viewed by some as

just another modern-day sweatshop. The system is au

tomated to queue calls in ways to minimize idle time

among workers. This contributes to negative effects of

call-centre work such as lack of sleep, lack of exercise,

increase in drinking and smoking, and less time for the

family (Hechanova, 2007). Odd work schedules, cou

pled with the mentally and physically stressful nature

of the work, are leading to high turnover rates in these

types of jobs.

Hence, the core-periphery dichotomy that was ev

ident during colonial times and the industrial era con

tinues in the information age, with the idea of divides

continuing to persist. As Castells explains, a network

society has the "simultaneous capacity to include and

exclude people, territories and activities," and this is

characteristic of "the new global economy as consti

tuted in the information age" (1999: 5).

Just as nations have to clarify their position with

respect to these development perspectives, they also

PHOTO 22.2 I The Ashaninka, an

indigenous tribe in the village of

Marankiarl Bajo, Peru, view the

Internet as a means to share their

traditions, while strengthening their

culture and language.

have to clarify the role of ICTs in their development

policies, since ICT use is also value-laden, cultural,

and contextual. For instance, as a tool for govern

ance, ICTs can be used to increase control, just as

they can be used to empower. They can be used to

develop national identity, just as they can be used

to better understand other cultures. In the end, ICT

is a tool, and it is up to the owners or users of the

technology to decide how it will be used for develop

ment-whether in commerce, education, health, or

governance.

ICTS AND SOCIETY

Access to ICTs can help communities. Most important

are the efficiency gains they provide. Access to phones,

for example, helps to reduce travel time and transpor

tation costs because physical commutes are no longer

necessary to communicate. It also provides more secu

rity, especially for those isolated in remote areas or in

dangerous locations, since access to ICTs enables people

to communicate more quickly with police, hospitals,

and emergency response services. Examples include

the 911 emergency phone line and tsunami warning

systems. Furthermore, with an increasingly mobile but

dispersed population, ICTs are useful in maintaining

family ties and in some cases have stemmed migration

because businesses have outsourced various processes

to developing countries.

There are various views on how ICTs affect society

and development. Some are optimistic and focus on

22 I Alampay: Information Technologies and Development 427

the benefits that ICTs can bring, including access to

economic opportunities, more efficient work, and in

stantaneous access to better and more relevant infor

mation. In a "networked economy," those included in

the network have the opportunity to share and increase

their life chances, while those who are excluded have

fewer opportunities and roles (Castells, 1999). Hence,

to keep pace with other countries, every nation must

be able to participate in the information economy. This

creates skepticism among some observers, who caution

that ICTs simply support existing social divides. For

them, the information society widens the gap between

the rich and the poor because of differences in their ac

cess to ICTs, their capabilities for using them, and the

ways that they can apply them. Some also view ICTs

as irrelevant to the majority of the poor and a possi ble negative influence on people's culture and lives (see

Box 22.2).

More pragmatic observers, however, see ICTs as

having varied effects on different groups and regions

across the world. Consequently, they see the challenge

is in making lCTs more relevant to different groups (see

Box 22.3).

Optimistic View

The optimists see the use of ICTs as a necessity that

helps to encourage the sustainable development of

CRITICAL ISSUES

BOX 22.2 I Three Separate Worlds

individuals, communities, and nations. At the World

Summit on the Information Society (WSIS) in 2003,

ICTs were considered crucial to development because

they can be used in public administration, business,

education, health, and environmental protection.

They are seen as useful in alleviating poverty by

expanding people's opportunities for economic de velopment. They also are seen as tools that provide

people with access to information that can be used to

undertake production, participate in the labour mar

kets, and conduct reciprocal exchanges w ith other

people.

The growing share of ICTs in world economic

output is cited as evidence of their importance. The

most optimistic see ICTs as providing developing

countries with an opportunity to "leapfrog" stages of

development and achieve the level of development of

the West. In fact, studies have found some beneficial

relationships in terms of economic growth when a

critical mass of access to ICTs such as mobile phones

(Waverman et al., 2005) and broadband (Katz, 2012) is

reached, with the impact being more significant in de

veloping than in developed countries. Mobile phones,

in particular, have been found to have an impact on

agricultural markets (fish and grains) by reducing the

dispersion of prices across markets, leading to im

proved welfare of fishermen and consumers (Aker and

Mbiti, 2010).

No country is purely based on services or information. Verzola (1998) argues that one of three sectors

will dominate: agricultural, industrial, or informational (that is, the service sector). This creates three disparate worlds and could lead to a widening gap between rich and poor societies.

The agricultural sector produces living matter for consumption; the industrial sector produces non-living finished goods from natural resources; and the information sector produces non-material goods based on high information content. In trade terms, this equates producing 160 pounds of coffee (if coffee costs $1 per pound) with producing one television set at $160 or selling one copy of the latest Microsoft Office Professional for the same price.

The unique characteristic of information-never wearing out, never being used up, and easily copied With minimal input of labour and materials-gives a significant advantage to societies with economies based more on information over those based more on agriculture or industry.

,.J.2 8 PART Ill I Issues i n International Development

- CRITICAL ISSUES

BOX 22.3 I Global Care Chains

An interesting example of the balance between positive and negative views of ICTs is the concept of

"global care chains," which are a "series of personal links between people across the globe based on paid or unpaid work of caring" (Hochschild, 2001: 131, cited in Munk, 2005). These chains emerged

as a result of greater numbers of women obtaining employment in "post-industrial" occupations cre

ated by the growing economic reliance on information as a commodity. The need for non-manual skills has particularly benefited women, in terms of new jobs it has created for them. However, the increase in the proportion of women in the labour force has had an impact on the nuclear family in developed

countries. It has fuelled a desire for migrant domestic workers from the South to serve families in the

North (Thomas and Ling, 2011). Similarly, those who stay in their countries of origin but serve the needs

of the North through outsourced services do so at odd hours. Thus, traditional family arrangements in

developing countries are affected.

Pessimistic View

An opposing view about lCTs is that they only will increase existing inequalities and social divides. Evidence for this perspective is taken from cases demonstrating that areas that have long benefited from excellent physical access and have been dom inant politically and economically are the ones benefiting from greater access to information tech nologies (Niles and Hanson, 2003). Historically, the introduction of new telecommunications has generally increased inequality, benefited mostly the wealthy, and had little impact on quality of life for the poor (Forestier et al., 2003). The idea that devel opment results from linking poor nations to ICTs the Internet in particular-was considered a myth (The Economist, 2005a). However, evidence is already emerging to nuance its impact on different countries' development (Waverman et al., 2005, ITU, 2012). Nonetheless, while ICTs have been instrumental in the development of India's information technology industry, this has not helped to reduce inequality between the rich and poor in Indian society (UNDP, 2001; Warschauer, 2004). To understand why the gap continues to increase, one simply needs to visualize the price and cost differential between commodities (see Box 22.2). Original software may cost $100 and can be duplicated at zero cost in minimal time. Con trast that to a farmer, who would need vast inputs

in resources and time to produce the same value in agricultural produce. Finally, for some countries, the utopian ideal of an information society requiring investment in ICTs is overshadowed by the more pressing basic needs of shelter, food, and health care.

Pragmatic View

The pragmatic view sees ICTs as playing a role in a country's development if applied appropriately. Anec dotal evidence shows that access to a telephone, for in stance, can have a dramatic effect on the quality of life of the rural poor. For example, Bangladesh's Grameen Village phone ladies were celebrated as a good model for areas where there is no widespread access to tele phones. Grameen provided micro-loans for women to start mobile phone businesses, in which they would buy a phone and then charge other villagers per call. At one point, village phone ladies were earning three times the average national income. However, as access to mobile phones in Bangladesh has increased, the income from this "shared-access model" has declined. Nonetheless, the model can still be viable in places where telephone access remains limited.

Hence, whether ICTs are useful for develop ment or not still depends on overcoming the same socio-economic barriers that contribute to under development in the first place. Strategies for using ICTs should consider their fit in the local context. In

22 I Alampay: Information Technologies and Development 429

180 • Mobile cellular subscriptions

160 • Wired broadband

140 • Fixed broadband subscription

120

100

40 6.7

20 3.1 0.4

'l,

�o q

'<,v

FIGURE 22.1 I ICT Subscribers per 100 Inhabitants, by World Region, 2014

Note: CIS is the Commonwealth of Independent States (formerly the USSR)

Source: ITU (2014).

addition, innovative public policies are required to

make sure that technologies are not only tools for pro

gress but also socially inclusive.

THE DIGITAL DIVIDE

At the World Summit on the Information Society, rep

resentatives of governments and civil society organiza

tions from 17 5 countries declared their common desire

and commitment to building a fairer society:

a people-centred, inclusive and development

oriented Information Society, where everyone

can create, access, utilize, and share informa

tion and knowledge, enabling individuals,

communities and peoples to achieve their full

potential in promoting their sustainable de

velopment and improving their quality of life.

(WSIS, 2003: 1)

The challenge of making a more inclusive information

society means overcoming the digital divide. The dig

ital divide refers to the difference between groups in

their access to and use of ICTs. Manifestations of this

divide are commonly seen between countries, rich and poor, genders, urban and rural areas, young and old,

and the educated and uneducated. The divide is usually measured in terms of the number of ICT users (e.g., fixed broadband subscribers) per inhabitant in a population.

The digital divide, however, is a relative concept.

The International Telecommunications Union (ITU)

reported that by the end of 2014, almost 44 per cent of

households in the world had Internet access at home.

However, there is a huge difference across regions, with

78 per cent in European homes having access, com

pared to only 11 per cent in Africa. Furthermore, in

Africa, fixed broadband subscription in 2014 stood at

only 0-4 per cent compared to 27.7 per cent in Europe

(see Figure 22.1).

Optimists would argue that access is always on

the upswing, given that the technology is rapidly de

veloping (see Box 22.4) and its capacity exponentially

increases at the same time that the cost decreases.

Pragmatists, however, would point out that any pro

gress towards access among the marginalized should

be examined against the progress made by developed

countries. For others, the idea of a digital divide may be

passe or irrelevant, because those who need ICTs in the

more developed countries already have them and those

who do not have access do not really need them. An

ecdotal evidence, however, suggests that access to ICTs

can make a difference to people who have been deprived

of it, even as there is clear evidence that such a divide

exists between and within countries (see Box 22.5).

In the end, the issue of whether the divide is increas

ing or not is less important than the question of how to

bridge it. Bridging the digital divide is important for a

number of reasons. The primary reasons are to provide

access to basic services and to promote social equality.

430 PART Ill I Issues in International Development

Access to Basic Services

Access to ICTs is a basic component of civic life that

some developed countries aim to guarantee for their

citizens. The primary argument for universal access

to ICTs, in fact, is security-related, not economic. Tele

phone service is often considered important for the se

curity and reduced isolation of remote areas. Health,

crime, disaster, and other emergencies can be handled

better if people have access to telecommunication sys

tems. Also important is how more information for

education, career, civic life, and safety purposes is

made available on the Internet, especially on websites.

Even social welfare services can be administered and

offered electronically, an example of which is the de

livery of m-money for conditional cash transfers and

salaries (see Box 22.4).

Social Equality

For people in developing countries without Internet

access, bridging the digital divide is a means of shar

ing the wide range of opportunities already available to

those who are connected (i.e., the rich, people in urban

CRITICAL ISSUES

BOX 22.4 I Mobile Money

areas, the educated). It gives them a means for partic

ipating and making better decisions (see Sen, 1999:

chs 1 and 24). This is especially important in the exercise

of good governance (see Chapters 7, 9, and 16). It varies

from the simple ability to search and access government

information to more ambitious visions of increased

public participation in elections and decision-making

processes. Direct participation through ICTs would

only be possible if access to these technologies were

available to all strata of the population.

From an economic standpoint, the development

and use ofICTs is widely believed to be a source of com

petitive advantage. Hence, the ability to harness their

potential is important so that no one is left behind.

If ICTs play an increasingly important role in con

tinued learning and career advancement, then mean

ingful education in their use is necessary. Unless such

education is widely available, the existing digital divide

discriminates against children of lower socio-economic

status. However, offering long-distance education

through ICTs can potentially reduce the cost of ed

ucation, especially at the post-secondary level, since

the cost of relocation and travel can be a disincentive

to continuing in school. In fact, this was the prime

Over half of the people in the world are unbanked, that is, they do not use formal financial services to save and borrow. This lack of access to financial services can exclude people with important need for capital. Hence, improving access to financial services is important for development because it can facil itate economic growth and help reduce income inequality.

With the growth in access to mobile phones in developing countries, there has been considerable optimism regarding their use as a conduit for reaching the unbanked, particularly through the develop ment of mobile phone-based financial services. New electronic payment systems based on the mobile phone are referred to as "mobile money," that is, "services that connect consumers financially through mobile phones. Mobile money allows for any mobile phone subscriber-whether banked or unbanked

to deposit value into their mobile account, send value via a simple handset to another mobile sub scriber, and allow the recipient to turn that value back into cash easily and cheaply." M-money can

be used for both transfers (m-money transfer) and payments (mobile payments). Systems like MPESA

(in Kenya), WIZZIT (in South Africa), and GCASH (in the Philippines) were pioneered in the less developed countries, which also shows how technology transfer can be adopted from "less developed" places.

In addition, m-money has been used in the delivery of conditional cash transfers, loans, salaries, and remittances.

22 I Alampay: Information Technologies and Development 431

BOX 22.5 I Leapfrogging Stages of ICT Development CURRENT EVENTS

Given how rapidly ICTs are developing today, many are optimistic that developing societies and commu nities are likely to catch up. Part of this optimism has to do with ICTs not only becoming more powerful, but also becoming more affordable. This is attributable to Moore's law, which states that the number of transistors on a chip doubles about every two years and leads to a rapid and continuing advance in computing power per unit cost. On this basis, the power of computers per unit cost doubles every 24 months. A similar law has held for hard disk storage cost per unit of information and random access memory. Hence, the technology is getting better while also becoming more affordable. Hopefully, this helps make it more accessible to the poor. For instance, in 2010, the Indian Institute of Technology and the Indian Institute of Science came up with a $35 touchscreen laptop. The "tablet," which can be run on solar power, is an example of how Moore's law, along with the declining cost of ICTs, is levelling access to ICTs, with technology appropriately developed for its context.

These advancements in ICT contribute to the concept of leapfrogging, which is a theory of devel opment in which developing countries skip inferior, less efficient, more expensive, or more polluting technologies and industries and move directly to more advanced ones. A frequent example is countries that move directly from having no telephones to having cellular phones, skipping the stage of land-line telephones altogether. The same is happening with Internet access being made available through mobile broadband. The benefit of leapfrogging in information technologies is that it promotes greater access to information and ICTs that is at par with the developed world.

motivation behind Mahabir Pun's quest to provide In

ternet service to his high school in Nepal (Box 22.6).

Students in the villages can now not only access more

information but also listen to guest teachers from dis tant places through the Internet.

Factors Contributing to the Digital Divide

Several factors work against equal Internet access and

use. These factors include distribution, affordability,

skills, and motivation.

Unequal diffusion/distribution of technologies.

The disparity among nations often begins with a lack of access to technological infrastructure. Access is of ten prioritized for urban centres and business areas.

This explains the divide between urban and rural

communities. The availability of technologies in a

community, however, does not guarantee usage. So

cial barriers also need to be overcome for technologies

to become useful. Foremost among these barriers are

gender differences, lack of education, and insufficient motivation.

Affordability. Even within urban enclaves where

ICTs are commonplace, one barrier to usage is some

times the cost of obtaining and using them. This con

tributes to disparities in the use of ICTs among the

rich and the poor. The popularity of cell phones over

land-line telephones in developing countries, for in

stance, was driven by the availability of prepaid cards

that allowed customers to overcome barriers to own

ership when credit histories were often a prerequisite.

Skills. Differences in the use ofICTs are also related

to educational attainment. The more educated tend to

use ICTs more. A gender dimension is also apparent,

especially in places where women have less access to

education and are therefore less likely to have access to

or use for ICTs.

Motivation. The motivation difference is especially

true with regard to the young and the old. Older people

tend to have a harder time adapting to new technolo

gies, partly because they are quite used to life without them. Motivation also is related to the relevance of the

technologies to a person's occupation. White-collar

professionals, for instance, may find more uses for ICTs

than farmers and fishermen do.

432 PART Ill I Issues in International Development

CRITICAL ISSUES

BOX 22 .6 I Bridging the Digital Divide: The Case of Nepal Wireless

This is Mahabir Pun's story of how he brought the Internet to his village.

In 1997, I wished to get Internet in my village for the first time after Himanchal High School got four used

computers as presents from the students of a school in Australia. Internet and e-mail were quite new

terms then. Students from Billanook College in Melbourne collected the computers and raised money

to ship them to Nepal. Our dream then was to have the students of the two schools communicate with

each other through e-mail. That dream did not come true instantly because there was no phone line in

the village to connect to the Internet. I tried everything to get a telephone line. Initially we got a radio phone for the village, but it did not

work well. I tried to find ways to get a satellite phone: however, the cost was beyond our means. I asked

political leaders and officers of the Nepal telephone company for help, but nothing happened. I kept

asking people for ideas. I wrote a short e-mail to the BBC in 2001, asking if they knew anyone who could

suggest ideas for getting cheaper Internet connection to my village. They wrote articles about my school

and the computers we had built in wooden boxes. That article changed everything: I got responses with ideas from people all over the world.

As a result of the BBC article, we received two volunteers in early 2002 who knew about wireless networking. We experimented with wireless cards to test the connection between two villages which were

1.5 kilometres apart across a river valley. We used ordinary TV dish antennas and home-built antennas

for the testing. The test was successful. Later on, many people from around the world helped provide

more ideas about the wireless technology. Others donated equipment for access points for the project. Additional tests were done to connect my village to Pokhara (the nearest city with an Internet Service Pro

vider [ISP]) using an ordinary TV satellite antenna. We pointed the antenna towards the mountain range

that was stretching between Pokhara and my village. These mountains were the main obstacle for us. To

overcome it, we used a tall tree on the top of the mountain as a relay station. We had partial success. We found that we could connect to Pokhara because we could connect to

Pokhara from a relay station hill. However, we could not connect to Pokhara directly from the village that time even though we tried everything we could. I played with the access points for a few more weeks. I

figured out that I could connect to Pokhara if I set the transfer rate of the radio at 2 Mbps, put the access points further apart, and put a screen made of aluminum foil in between them. It worked well but there

was shortage of power to run the radios all day. We had connection only for a couple of hours every day.

It took seven years for my wish to be fulfilled. Eventually, we got a grant from a foundation, which was

used to buy additional equipment. We have come a long way in the past three years, but we still have to go further to bring the full benefit of the Wi-fi technology to the villagers.

Source: Abridged from nepalwireless.netjstory01.php; see http://www.nepalconnection.org.np/about-mahabir-pun/

USING ICTs FOR DEVELOPMENT

The use of ICTs for development requires an integrated

approach that accounts for access to the ICT infrastruc

ture, the content and applications that can be used

intensively, and building the necessary capabilities to

use them, before it can impact on development (see

Figure 22.2). Universal service/universal access policies

deal with bridging the divide in access to ICTs.

Universal service in telecommunications is de

fined as "making affordable a defined minimum service

of specified quality to all users at an affordable price "'

22 I Alampay: Information Technologies and Development 433

1�--- .... ' 1 ,,-�,;-�·-l

1 I t"�;-(,1:.,_�-�� ' i ·�:, .· -�' 'i I._. ' I 1..-:, •

Stage 1 Stage 2 Stage 3

FIGURE 22.2 I ICT Development Index Framework towards an Information Society

Source: Adapted from ITU (2014).

(Prosser, 1997: 80). The focus of universal service poli

cies is to promote "'universal' availability of connections

by individual households to public telecommunications

networks" (Intven, 2000: 1). This means that universal

service is based on the availability of ICTs in homes.

Universal access, on the other hand, refers to "a

situation where every person has a reasonable means of

access to a publicly available telephone ... [which] may

be provided through pay telephones, community tele phone centers, teleboutiques, community Internet ac cess terminals and similar means" (Intven, 2000: 1). It

is often measured in terms of the proportion of people

in the population with access (i.e., percentage of people

with cell phones). Countries have varied definitions of access. Some define it in terms of distance (e.g., a pay phone within 20 kilometres of most people), while others define it with respect to time (e.g., a telephone Within a 10-minute walk) (Panos Institute, 2004).

Both universal service and universal access are based on the affordability, accessibility, and quality of

basic telecommunication services. The primary differ

ence is that universal service is focused on the availa

bility of services in all homes, whereas universal access

aims to have basic telecommunication services availa

ble in all communities. Policies are crucial in making

this possible (see Box 22.6).

With the convergence of technologies and the

development of wireless technologies such as the cell

phone, 4G, and TV White Space, "universal access" and

"universal service" have evolved to refer to access to the

types of services or functions a technology can deliver.

Developing countries are now moving towards access

to the Internet, in particular broadband Internet, as

their primary universal access objective.

Creating Value: Developing Relevant Content

Using ICTs for development, first and foremost, re

quires understanding the information needs and rights

434 PA T II I Issues in International Development

IMPORTANT CONCEPTS

BOX 2 . 7 I Freedom of Information, Open Data, and Open Government

Freedom of information laws give people the right to access information from the government. Such laws

often keep citizens in the know about their government.

Related to this is the concept of o n data. According to Open Data Handbook, this refers to data

that can be freely used, reused, and redistributed by anyone-subject only, at most, to the requirement

to attribute and share alike. The argument for open data is that the best use of data is left for people/ stakeholders, not necessarily the original generator of that data.

Both concepts are connected to the concept of "open government," which calls for greater civic participation in public affairs, and for ways to make governments more transparent, responsive, account

able, and effective.

of people (see Box 22.8). This understanding should

come from the intended users in the community. But

because people have different uses and needs, there

are calls for more "open data," with the idea that it is

people, in their respective contexts, who are in the best

position to know how to use data. It is from this that

innovation in content use will follow (see Box 22,7).

Pmniding (}uaritat-i11c 1P.mnsfonnat-ion: 1llakh1g JCT [.l,<;c Rdcvant to People

It cannot be assumed that ICTs alone can make a sig

nificant impact on an individual, an organization, or

a government. TI1eir impact also depends on the ca

pacities and values of the people using the technology.

Thus, investing in ICTs requires shaping people and de

veloping the necessary skills to permit them to succeed.

In fact, even though newer ICTs are more

"user-friendly" than those of the past, they still require

some degree of skill to operate. Being able to navigate

the Internet to find useful information requires the

ability to discriminate between what is useful and rele

vant and what is not. This is why more educated people

have been better able to take advantage of the benefits

offered by the Internet, such as surfing the World Wide

Web, e-mailing, using social networks, and creating

content.

[CJ;,; and Organ'izations

Since ICTs are tools, their impact on organizations

depends on the people who design what the system is

supposed to do and on how people, in the end, use it.

Thus, the impact also depends on what the user wants

the technology to be rather than just on the technology

itself. While the available technology defines to some

extent the limits of what can and cannot be done in an

organization, in the final analysis, how ICTs are used

tends to be socially determined by their managers.

Intc1'lud 'N'J'S'llS E:.i:lt'nw.l Foe-us

ICTs can be used to make internal processes within

companies more efficient (e.g., automation). They can

also be used to network different systems within organ

izations. Systems also can be designed to increase in

teraction between an organization and its clients. This

can be done by offering feedback mechanisms through

telephone hotlines, websites, or e-mail. Automated sys

tems and business process outsourcing to other parts

of the world also can enable an organization to offer

services around the clock, seven days a week.

Flc:ribirity nwsus Couf l'ol

ICTs can be used to make work easier and empower

ing. This can be done by giving people greater access to

22 I Alampay: Information Technologies and Development 435

IMPORTA J CDNCE�JS _____________ _

BOX 21J1 I Implementing Universality: Regulatory Measures to Fund It

Several policy and regulatory measures can be pursued to make universal access to ICTs possible.

1. Market-based reforms. In cases where the government had owned the telecommunication oper ations, evidence has shown that a marked improvement in access to services occurred follow ing privatization. Other reform measures include opening the market to more competition and cost-based pricing.

2. Mandatory service obligations. Service obligations are imposed through licence conditions or other regulatory measures. This may be through a policy requiring providers to serve all custom ers who are willing to pay the prescribed rates, or policies prescribing geographic limits to areas where service is mandatory.

3. Cross-subsidies. Surplus revenue earned from profitable services could be used to cover losses from unprofitable areas or services (e.g., long-distance rates subsidizing local rates, business rates subsidizing residential rates).

4. Universality funds. This refers to independently administered funds that collect revenue from var ious sources and provide targeted subsidies to implement universality programs. These sources may include government-appropriated budgets, charges for interconnection services, levies on subscribers, or providers (lntven, 2000).

different kinds of information within an organization

(e.g., through local networks with access to internal da

tabases) and outside the organization (e.g., providing

Internet access during working hours). However, ICTs

can also expand control over what employees are doing

by increasing the managers' span of control-thanks

to cell phones, for example, employees can be reached

anytime and anywhere.

ICTs and Work

The impact of ICTs on employment is mixed, just as

it is in other facets of development. On the plus side,

new kinds of jobs have been created. Some examples

are call-centre operators, computer programmers,

knowledge managers, systems administrators, web

designers, online tutors, and medical transcribers. In addition, ICTs can provide flexibility in careers and

Work opportunities, since people are no longer limited by their location and the opportunities available there.

They expand work opportunities available to people, giving them easier access to information about work

in different parts of the world. Such information can

enable people in developing countries to earn higher

pay than what the local market would normally pro

vide. It also can help workers balance their work and

family life.

On the negative side, however, jobs can be made

obsolete. Automated teller machines, for instance, take

the place of bank tellers. Lawyers no longer rely on sec

retaries to type their briefs. There's less need for mes

sengers and telegraph operators. Services outsourced to

developing countries take jobs away from other parts of

the world. While people may have more employment

opportunities, they also face more competition for

those jobs.

There are other drawbacks to always being "con

nected." For some people, being accessible at all times

opens the way to intrusion into their private space in

stead of helping balance work and family life. More

over, ICTs can create a distraction that could lead to

lower productivity-even abuse and addiction. Because

the Internet is content-rich, employees sometimes ven ture to websites or activities that are not work-related.

.. L,6 ,,,.,, ffl" m I Issues in International Development

PHOTO 22.3 I Technology helped protestors bring down the Mubarak regime in 2011: Tahrir Square, Egypt.

CRITICAL ISSUES

0 22.9 I Communication Rights Issues Pertaining to Content

There are a number of issues with respect to developing content for the information society. Among these are free access to useful and relevant information, freedom of expression, and the preservation of local cultures.

Open access versus intellectual property rights. Open access is important, especially when consider ing the social and economic necessity of sharing the benefits of technological developments and access to data (see Box 22.8). It becomes controversial, however, when pitted against commercial interests in terms of ownership and intellectual property rights. An example is the battle between proprietary software like Microsoft Explorer and open-source software, such as Firefox, that does the same thing.

Interestingly, in the World Wide Web, voluntarism and sense of community remain very much alive. This is evident in the numerous journals and websites that provide open access-Le., free, immediate, per manent, full-text, on line access-for any user, web-wide, to digital scientific and scholarly materials, and the growth of open-source software on line.

Censorship versus freedom of expression. On the negative side, there is concern about the poten tially harmful and dangerous content carried in ICTs, especially pornography and gambling, as well as

22 I Alampay: Information Technologies and Development 437

sites that encourage terrorism, foster hatred of identifiable groups, and teach how to improvise explo sive weapons. Hence, states are concerned about regulating content. On the other hand, some people

worry that increased regulation, especially in the form of censorship, might curtail people's freedoms to express, communicate, and access useful information. For instance, in 2007 in Burma, thousands of

Buddhist monks marched for freedom in the streets of Yangon. The state attempted to prevent the story from coming out by cutting off access to the Internet. Nonetheless, activists and journalists were able to smuggle images and video captured on mobile phones and broadcast these on YouTube. This generated worldwide condemnation of and concern over the events occurring in Burma. Similar attempts to control the Internet occurred during what is now referred to as the Arab Spring, the wave of demonstrations in the Arab world from late 2010 to early 2012 that forced a number of governments out of power. Some refer to it as the "Twitter revolution" in part to recognize the use of social media to organize and raise awareness among the population.

However, even governments in developed countries like the United States are not immune from wanting some regulation of online content because of "national security." This was the case, for in

stance, with Wikileaks, a whistleblower website that posted classified and sensitive documents about

the wars in Iraq and Afghanistan. Security versus privacy. Along with censorship, another form of regulation is increasing surveil

lance and monitoring of on line communications. This is because of the growing view among states that cyberspace is now a national security concern. Hence, some governments try to exert some control over

companies who own and operate in cyberspace. This has become an issue among companies such as Google and Yahoo! that operate in closed societies and non-democratic countries, including China and

the United Arab Emirates, as it raises ethical issues regarding the privacy of users and possible harass

ment of activists, regime opponents, and free-speech advocates. The issue of security versus privacy gained further prominence through the case of Edward Snowden,

who in 2013 revealed several global surveillance programs run by the US National Security Agency. Some sectors now consider him a hero, while others see him as a traitor. Another instance was the dispute between the FBI and Apple where the FBI demanded help to mine data from an iPhone used by a terrorist in the San Bernardino, California, shootings in 2015. Apple's position was that people around the world deserve data protection, security, and privacy, and sacrificing one over the other actually puts people at greater risk.

Diversity of content. One important issue with ICTs is the dominance of content created in the West. For example, the predominant language on the Internet is English, which may not be the first language

of choice in many countries of the world. Hence, some groups fear that ICTs can endanger local cultures and heritage. Furthermore, news conglomerates, often owned by a few powerful people, may present

biased perspectives on world events. Thus, an important challenge is to diversify the content, provide

information that celebrates different cultures, acknowledge differences in viewpoints, and provide more information in local languages.

These include answering personal e-mail, using instant

messaging, playing games, viewing movies and por

nography, and gambling.

Thus, balancing the benefits and hazards of pro viding Internet access in the workplace has become a policy concern in organizations and in countries around the globe. Determining who should have access

and restrictions in terms of time and content are per

tinent issues in the workplace today, just as they are

issues for states.

In the end, ICTs are not a panacea for making

corrupt governments less corrupt, bad organizations

good, or incompetent individuals competent. How

ever, as with other technologies, ICTs in the hands

438 PART Ill I Issues in International Development

of good people can make the people themselves and

their society better. That is what ICT for development

strives for.

SUMMARY

In this chapter, the student has learned about the grow

ing role of information and communication technol

ogies in everyday life and development in general.

However, these "digital dividends" are not guaran

teed, and there are uneven outcomes among regions,

genders, and income classes. For it to lead to positive

outcomes for all requires addressing non-digital com

plements, such as differences in access to infrastruc

ture, addressing inequalities in levels of education, and

putting in place regulations that expand opportunities

for people to obtain more affordable and good quality

services.

Finally, with the increased pervasiveness of ICTs,

emerging issues also affect the basic human rights that

governments must consider. Among these are rights of

privacy, security, free expression, intellectual property,

and open access to knowledge.

QUESTIONS FOR CRITICAL THOUGHT

1. What factors initially contributed to the digital divide in the Nepalese case discussed in the chapter? How

did the community overcome these problems? Could this solution to the digital divide be replicated in other

developing communities? Can such technology transfer be sustained?

2. Consider the case of earthbags (see Box 22.1). Is this technology appropriate for any place? How can problems

identified in the case be fixed or avoided in the future? What lessons does it offer about the transplanting of

technologies from one context to another?

3. What do you think are the benefits and problems that social media like Twitter and Facebook bring to soci

ety? What can people or organizations do to ensure that these media bring more good than harm?

4. There is a statistically significant relationship between the ICT Development Index and 20 (out of 48)

Millennium Development Goal indicators for which sufficient data are available (e.g., infant mortality,

maternal health, combatting hunger) (ITU, 2014). Do you think this would be sufficient evidence to say access

to ICTs should be considered as a basic human right?

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Webster, Frank. 2000. Theories of the Information Society. London and New York: Routledge.

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Aker, J.C., and I.M. Mbiti. 2010. "Mobile phones and

economic development in Africa." Center for Global

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using the capability approach." Electronic Journal

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Diamond, J. 1999. Guns, Germs and Steel: The Fates of Human

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and communication technologies be pro-poor?"

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Twenty-First Century. New York: Farrar, Strauss and

Giroux.

Hechanova, R. 2007. "The view from the other side:

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wellbeing and identity of Filipino call center workers."

Paper presented at the Living the Information Society

Conference, 23-4 Apr., Makati City, Philippines.

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Research to Date and Policy Issues. Geneva: ITU, Apr.

Ling, R. 2007. "What would Durkheim have thought?"

Plenary paper presented at the Living the Information

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Munk, R. 2005. Globalization and Social Exclusion: A

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Books.

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UNDP.

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440 PART Ill I Issues in International Development

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Warschauer, M. 2004. Technology and Social Inclusion:

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Culture and Development J\T issini JYI annath iikkaren

LEARNING OBJECTIVES

• To understand the concept of culture and to dispel • To develop an intercultural understanding.

the many myths surrounding it.

• To learn about the relationship between culture

and development.

------------------------------------------

• Hindu nationalist Bharatiya Janata Party convention goers are serenaded by ekkalam players during BJP festivities in Jaipur, Rajasthan state, India. I Source: Photo by Robert Nickelsberg/The LIFE Images Collection/Getty Images

442 PART Ill ! Issues in International Development

INTRODUCTION

Culture is one of the most misunderstood concepts

in the lexicon. It is often used rather loosely, denoting

entirely contradictory meanings. Misunderstandings

about culture have serious implications. In fact, in re

cent history, there are hardly any conflicts, major or

minor, that have not entailed invoking the concept of

culture in some way. It seems that in an age when hu

mankind has achieved the highest level of economic

prosperity and scientific and technological advance

ment, culture and its varied manifestations have ac

quired an all-pervasive influence as a concept that

can explain almost any thing. In academia, one of the

most important examples of this is the theorist Sam

uel Huntington's revival of his "clash of civilizations"

argument to explain the reality of the post-9/11 world.

Such arguments, as we will discuss in this chapter, have

only solidified misunderstandings about the concept of

culture in popular discourse, thus further exacerbating

the conflicts ostensibly rooted in culture. This possi

bility for aggravating or even causing conflict places a

greater responsibility on academics to develop a better

understanding of the term.

In the sphere of development, culture has also

assumed an unprecedented significance in explain

ing phenomena such as poverty, economic growth,

violence, and so on. From the policy formulations

of international financial institutions, such as the

World Bank and the International Monetary Fund

(IMF), to the theoretical and practical programs of

non-governmental organizations (NGOs), culture has

become the centre of attention. Hence, we see the

ubiquity of words such as "community," "ethnicity,"

and "gender" in the development discourse and the

differences associated with these concepts. This is in

marked contrast to the dominant tendency of twentieth

century development theory and practice, which

excluded questions of culture.

Since the Enlightenment in eighteenth-century

Europe, Western thought has been dominated by an

outlook that placed its faith in human reason instead

of in an extraneous supernatural authority, such as the

God ofJudeo-Christian religions. Reason was a univer

sal human trait and hence was not the property of any

one cultural group or formation. Reason was supposed

to liberate human beings from superstitions, serfdom,

and poverty and take them on the path of progress.

Development, until quite recently, was based on this

philosophical assumption. The means of realizing this

assumption was through a project of modernization,

which would destroy archaic institutions and relations.

Industrialization and urbanization were the ideal and

the necessary outcomes of this process of moderniza

tion (Escobar, 1997: 86). All this was made possible by

"rationality, the highest expression of which was sci

ence" (Shanin, 1997: 65).

Irrespective of cultural differences, all societies

could follow this path of modernization. But this uni

versal project of development based on reason, and

above culture, did not materialize. Moreover, the glori

ous tenets of the Enlightenment-liberty, equality, and

fraternity-have still not been accepted by all societies.

Even in societies that have accepted these values as core

constitutional principles, it is liberty (mainly economic

liberty) that has gained precedence. Since the emer

gence of capitalism and, more specifically, the Indus

trial Revolution, "the ceaseless production of endlessly

proliferating material goods" (Sainath, 2006: 66) has

increasingly connoted progress. Therefore, it was not

surprising that the entire development enterprise, as

implemented in the Third World, mainly meant revo

lutionizing the economic forces of production, a cause

for which all other questions, including cultural, were

sacrificed (see Box 23.1).

Recent criticisms that have emerged from a post

modern and post-colonial perspective have looked at the

Enlightenment values, including the crowning of rea

son and science, as European constructions that have

been imposed on the rest of the world (see Chapter 4).

Thus, the experience of colonialism, imperialism, and

development, and the monstrosities caused by them,

put a serious question mark on the efficacy of reason

itself. We stand at a juncture, therefore, in which the

ideas and values that ruled our consciousness for two

to three centuries have been deeply questioned-chief

among them being the conception that all societies have

a similar path to pursue and a similar goal to achieve.

Instead, we see the emphasis on diversity and "differ

ence" and the multiple paths and endeavours charac

terizing different cultural formations. Therefore, the

current explosion of the use of the concept of culture

can be seen as a justifiable backlash against ignoring

culture for so long.

CRITICAL ISSUES

BOX 23.1 I Development sans Culture

23 I Mannathukkaren: Culture and Development 443

The adoption of modernization and scientific rationality has led to an inevitable conflict between the world views of the modernizing elites and the masses who still continue traditional ways of living. There fore, development in many southern societies has seen rural peasants being subjected to policies con structed by the educated bureaucrats from the cities. One example is the relief package announced by

the government of India in 2006 for the debt-ridden farmers of western India, which included the distri bution of cattle to people who had never used them before and in a region that is deficient in water and

fodder. Ultimately, the result of the government's promoting dairying in a region not suited for it was that the farmers spent a lot of labour time in tending to the cattle, as well as the equivalent of three people's daily wages on the sustenance of one cow, with hardly any return from it (Sainath, 2006). Such examples

abound in the history of the development era, not only in the South but also in the North-South relation ship, seen especially in the devastating policies designed by institutions like the World Bank without due

consideration to the local, material, and cultural contexts of a region.

In the course of this chapter, we will look at cul

ture in its varied manifestations and its relationship to

development. One of the main goals will be to dispel

the many my ths that surround the concept of culture.

After setting out a plausible definition of culture, we

will deal with one of the important debates that char

acterizes the field: the cultural versus the material. Un

derstanding the relationship between these two spheres

is crucial to clearing up some of the misconceptions

about the concept of culture. In the final section, we

focus on the turn towards culture as an explanatory

variable to understand development and the reasons

and implications of such a turn.

WHAT IS CULTURE?

If we are to clear up misunderstandings about the term

"culture," the first step is to develop a precise defini tion of the concept. "Culture" derives from the Latin

word cultura and in its initial usage referred to the

cultivation or the nurturing of animals or crops. From

the sixteenth century onward, this original usage was

extended to include human beings and the cultivation

of the mind. Gradually, it took on the connotation of a

"progressive process of human development, a move

ment towards refinement and order and away from

barbarism and savagery " (Thompson, 1990: 124, 126).

Affinities with the Enlightenment idea of progress are

visible here. Similarly, culture can be seen as "a state or

process of human perfection, in terms of certain abso

lute or universal values" ( Williams, 1961: 41). One of

the problems in defining culture in this fashion is that

it can acquire an elitist and evolutionary connotation,

suggesting that culture is the property of a few people

while the majority lack culture, and that culture can

be attained only at a certain stage of development. This

elitist belief is common in many societies, but it took

its most pronounced form in the European encounter

with non-Europeans, especially colonized people. This

is the reason why the colonizing enterprise was also a

civilizing mission-to bring culture to the "primitives"

(see Chapter 2).

This notion of the inferiority of non-European cul

tures began to be corrected only with the emergence of

the discipline of anthropology towards the end of the

nineteenth century. Rather than seeing culture as an

evolutionary movement to a predestined state of perfec

tion defined by Europeans, anthropology began to look

at cultures, especially non-Western ones, without any

preconceived notions of inferiority (Benhabib, 2001: 3).

E.B. Tylor, one of the famous first-generation anthro

pologists, described culture as "that complex whole

which includes knowledge, belief, art, morals, law, cus

tom, and any other capabilities and habits acquired by

man as a member of society" (quoted in Thompson,

..:.

444 PART Ill I Issues in International Development

1990: 128). Similarly, culture can be seen as "a descrip

tion of a particular way of life, which expresses certain

meanings and values not only in art and learning but

also in institutions and ordinary behaviour." This defi

nition will "include analysis of elements in the way of

life that to followers of the other definitions are not

'culture' at all: the organization of production, the

structure of the family, the structure of institutions

which express or govern social relationships, the char

acteristic forms through which members of the society

communicate" (Williams, 1961: 41, 42). These defini

tions are devoid of the Eurocentric assumptions of the

evolutionary and elitist concept of culture that we saw

above. They do not seek to pass an evaluative judg

ment about what is good or bad. However, these defi

nitions can become very broad, encompassing almost

every thing that human beings do. This renders them

somewhat vague and imprecise (Thompson, 1990: 130).

It is therefore imperative that we move beyond both the

elitist and the anthropological understandings of cul

ture, while retaining what is useful in them.

It has been argued that the distinctive feature

of humans is that we have fully developed language

(Thompson, 1990). Therefore, a good starting point

is to focus the study of culture on the symbolic. Ac

cording to the distinguished anthropologist Clifford

Geertz, "man is an animal suspended in webs of signif

icance he himself has spun" (1973: 5). Culture becomes

important because human beings do not just inhabit a

world that is objective and natural. It is also simultane

ously a world that is constructed and subjective. This

means that human beings develop and attribute their

own meanings to the objective world they inhabit. And

these meanings may vary from one society to another.

Here, it would be productive to follow Thompson: "cul

ture is the pattern of meanings embodied in symbolic

forms, including actions, utterances and meaningful

objects of various kinds, by virtue of which individuals

communicate with one another and share their experi

ences, conceptions and beliefs" (Thompson, 1990: 132).

But this is only the first step towards a proper under

standing, especially when we are seeking to understand

culture's relationship with development.

The variety of understandings about culture is

mainly a result of the genuine complexity of cultural

formations that exist in the world. At the same time,

it would be fruitful to develop a definition that elim

inates some of the myths that surround culture. Thus,

the evolutionary definition, which holds that culture

is a constant movement towards perfection, would not

make sense unless we understood the elements that

constitute this idea of perfection and the actual social

and historical contexts that produce different ideas of

perfection. At the same time, we have to account for

values that do not meet the criterion of perfection.

There is also the need to avoid definitions that narrowly

treat culture as a mere by-product of other, "real" inter

ests in society (Williams, 1961: 43-4, 46). That does not

help us to understand what is intrinsic to the sphere of

culture. However, the study of culture cannot remain

at the level of culture alone either; it should move on

from a mere study of symbolic forms to a study of them

in "relation to the historically specific and socially

structured contexts and processes within which, and

by means of which, these symbolic forms are produced,

transmitted and received" (Thompson, 1990: 136). For

example, while we can easily identify with many of the

themes in William Shakespeare's plays, it would be

wrong to assume that we can learn all about the culture

of the period from the plays alone; instead, they have

to be placed within and understood in relation to the

context of sixteenth-century England.

THE CULTURAL VERSUS

THE MATERIAL

It would be a fascinating enterprise to study transfor

mations throughout history in the cultural sphere along

with transformations in the material sphere. Of course,

we must acknowledge that, in reality, these spheres are

inextricably intertwined and that only for heuristic

purposes do we try to make such distinctions. It would

be going along with a wrong, though commonsensical,

understanding that the symbolic is somehow beyond

all determinations and influences. The economic as

pect, for example, is a very important facet of the in

terrelationship between culture and other elements in

society. In fact, many misunderstandings about cul

ture stem from the belief that culture can be analyzed

without understanding its interlinkages with the eco

nomic dimension, which would include the forces of

production (land, labour, machinery) and the relations

of production (the relationship between classes in the

process of economic production). How can we under

stand the cultural forms of the present without an in

depth look into how capitalism-the dominant mode

of production of our time-functions? It has to be kept

in mind that the practice and interpretation of cultural

forms cannot be entirely random. The capitalist mode

of production (as any other mode of production) struc

tures in various ways the cultural forms that are pro

duced. How is it possible, as Garnham asks, to study

multiculturalism without studying the movement of

labour and people that created it in the first place? How

is it possible to study mass-mediated cultural forms

without understanding the broadcasting institutions

that produced them? Similarly, how can we understand

shopping and advertising without understanding the

processes of manufacturing and retailing (Garnham,

1998: 611)? These questions especially highlight the

inextricable linkages between culture and develop

ment. In the present these linkages have acquired an

extra-local character and culture has been "caught up

in processes of commodification and transmission that

are now global in character" (Thompson, 1990: 124).

Technology plays a crucial role in present-day cul

ture. The ways in which modern means of communi

cation and commodification have shaped culture show

that culture does not exist in a vacuum but is constantly

shaped by material forces. For example, communication

23 I Mannathukkaren: Culture and Development 445

technologies like the Internet and mobile phones have

had a significant impact on the cultural meanings of

human relationships and interaction, especially in the

Global South, where the paradoxes produced by the

coexistence of modern and traditional ways of life are

very pronounced (see Chapter 22). Technologies such

as photography and printing also have completely al

tered our relationship to the past. This new way of re

cording culture has a significant impact (both negative

and positive), especially on indigenous cultures with

strong oral traditions, societies that transmit their cul

ture across generations without a writing system. Simi

larly, science exerts an influence on cultural forms. The

detective story genre, for example, would not have been

possible in any age other than the scientific age. De

tective stories "could only appeal to-in fact, only be

comprehensible to-an audience accustomed to think

in scientific terms: to survey the data, set up a hypoth

esis, test it by seeing whether it caught the murderer"

(Macdonald, 1964: 37).

Even as the economic mode of production, along

with the level of science and technology, sets a limit

to the kinds of cultural forms that are produced, we

have to avoid conceiving of this relationship as me

chanical. The most difficult task is to understand this

relationship in a non-reductive manner-that is, to

study culture without reducing it to changes in the

economic sphere (or vice versa) (see Box 23.2). De

velopment, for a long time, was undertaken with the

CEP S------�-------

8,.,)X 23.2 I Are Hunter-Gatherers Poor?

The ideology of modernization and development characterized pre-modern subsistence economies as societies existing in precarious and extremely difficult conditions. The anthropologist Marshall Sahlins, in a famous study on the hunting and gathering tribes, has questioned characterizing a lack of material possessions as poverty. Sahlins instead argues that the lack of material possessions does not make these tribes poor but rather free. In their own evaluation, this lack is a positive cultural fact, for they privilege the freedom of movement over material accumulation (see Sahlins, 1997). It is important to ask here why our modern criteria would label people with such few wants as poor rather than as affluent, as Sahlins does.

---1-1-6 PART !II I Issues in International Development

belief that culture did not matter and that culture

would mechanically adjust itself to changes in the eco

nomic sphere, the consequences of which could be del

eterious. One example is the introduction of smallpox

vaccination by the British in colonies while outlawing

existing indigenous techniques that were intrinsically

linked with religious practice and worship (see

Marglin, 1990: 8). Cultural forms produced under

capitalism are not necessarily homogeneous, since

"the capitalist mode of production does not demand,

require, or determine, any one form of politics"

(Garnham, 1998: 605). While the United States, Japan,

and the United Kingdom are all capitalist societies,

their cultures are not identical. These cultural vari

ations show that culture cannot be explained merely

by the distinction between the owners of the means of

production and wage labour, as is the case in capitalism

(Grossberg, 1998: 614). While economic practices "de

termine the distribution of practices and commodities,"

they do not totally determine the meanings circulated

by these practices (Grossberg, 1998: 618).

One of the most important debates within the

social science tradition since its origin has been the

materialism versus idealism debate. The former as

serts the primacy of material factors in social change,

while the latter focuses on cultural factors, mental

phenomena, and ideas. As we suggested above, this

kind of binary distinction is problematic because of

the interlinked nature of social phenomena. Privileg

ing one over the other does not aid us in arriving at

a proper understanding of culture or development.

For instance, it has been a common practice among

modernization theorists and also within popular dis

course to blame the slowness of economic growth on

the "backward" mentality and superstitious beliefs of

"traditional" societies. These views, in the absence of

an understanding of material factors, portray devel

opment as primarily governed by thought processes.

PHOTO 23.1 I Religion Is Important in Latin America: the statue of Christ the Redeemer, Rio de Janeiro, Brazil.

Here, social phenomena such as poverty can be blamed on the poor themselves for their lack of "cor rect'' thinking (Allen, 2002: 454). On the other hand, material factors such as forces of production do not develop on their own. Labour is not a physical activ ity alone but also involves a mental component. Mod ern science and technology could not have originated unless the belief in the sacredness of nature had been substantially altered. Similarly, capitalism could not have originated or flourished without continuous sav ings and investments, which required a radical change in the meanings attributed to money and its use.

Nonetheless, it should be understood that con scious acts and agency themselves can turn into a structure: "structures created and perpetuated by a multitude of conscious, individual acts [can] develop some sort of internal logic, or institutional impera tive, over and above these acts" (Femia, 1981: 119). Very often, the economic realm, because of its cen trality to the sustenance and reproduction of human life, develops such structures with their own logic and dynamism, which are not easily circumvented except by the combined agency of a very large number of people. In this sense the economic sphere, along with other material factors such as natural and physical re sources, is seen to limit the "the range of possible out comes" of cultural imagination without mechanically

23 I Mannathukkaren: Culture and Development 447

determining them. Ultimately, what outcome becomes a reality is still decided by "free political and ideologi cal activity" (Femia, 1981: 119). Here, it is also impor tant to recognize what is intrinsic and unique to each sphere beyond its interlinkages with and determina tions by other spheres.

Culture and development thus are intrinsically in terlinked. With recent revisions to our understanding of development, following theorists such as the Nobel lau reate Amartya Sen, from mere economic development to the enhancement of human freedom in the broadest sense, development has begun to include the enhance ment of cultural freedom as well. Economic development also can lead to enhanced resources that can enable the exploration of a society's cultural history through his torical excavations and research. Sen argues that culture can thus become one of the basic ends of development. Culture plays another role for Sen: as a means of devel opment. As we observed above, symbolic understand ings can govern behaviour, including people's economic behaviour ( see Box 23.3). Thus, cultural traditions and norms can play an important role in influencing eco nomic success and achievement. In addition, they can constitute an important source of economic investment and returns through activities such as tourism promo tion, which has other positive benefits, including cul tural contact and interaction (Sen, 2001: 1-4).

MPORTA I CONCE- ....-�--- ------ - ---

BOX 23.3 I The Protestant Ethic

The most famous theory regarding cultural influence on economic behaviour is Max Weber's theory of the Protestant ethic, in which certain characteristics of Protestantism (especially Calvinism), such as valuing austerity, discipline, and hard work to attain material wealth and success as a route to personal salvation, were considered by Weber as having played a major role in the origin of capitalism. The theory has been crit icized heavily for its inability to explain the economic success of Catholic countries such as France and Italy and non-Christian Asian countries in the twentieth century. However, the Japanese economic miracle has been attributed to a different set of cultural values, "which emphasized group responsibility, company loyalty, interpersonal trust and implicit contracts that bind individual conduct." These values originate from a variety of cultural traditions, including Japan's history of feudalism, Confucian ethics, and the "Samurai code of hon our" (Sen, 2001: 6-7, 11) . In "transitional" and "developing" countries, it is claimed that one of the impor tant cultural barriers to efficient economic growth is the problem of corruption. Former socialist economies such as those of Russia and Eastern European countries are examples of this phenomenon (Sen, 2001: 14).

...

448 PART Ill I Issues in International Development

CULTURE AS DOMINATION

AND CULTURE AS RESISTANCE

One of the biggest myths about culture is that it is an

ahistorical entity-something that persists without

change. Thus, for example, whenever there is a discus

sion about religion or religious texts, especially from

the point of view of the faithful, the general tendency

has been to see them in abstract, universal, and essen

tialist terms. The fact that they originated in a particu

lar period, respond to particular needs, are subject to

many kinds of contestation, and change accordingly

throughout history is rarely recognized. Culture is as

much determined by relations of power as any other

sphere is. No work of art or ritual is above a particu

lar point of view or interest. Cultural forms "are always

produced or enacted in particular social historical cir

cumstances, by specific individuals drawing on certain

resources and endowed with varying degrees of power

and authority" (Thompson, 1990: 135). Cultural phe

nomena are distributed, received, and interpreted by

individuals and groups placed in different power loca

tions and with different material interests. The inter

pretation of cultural phenomena varies according to

these differences. In short, cultural phenomena are not

benign; rather, they are immersed in relations of power.

And these relations of power cannot be reduced to

economic relations or class power. They exist in other

spheres, such as gender relations, relations between

ethnic and religious communities, and nation-states.

Thus, the practice of cultural forms and the en

joyment of symbolic objects are not activities devoid

of ideology. Very often, symbolic objects provide the

cultural underpinnings of a dominant mode of devel

opment. Not all classes and groups in society influence

the formation of culture equally. In this sense, the ideo

logical and material interests of the ruling class and the

dominant groups tend to dominate the art and culture

of any period. The social scientific tradition inaugu

rated by Karl Marx and Friedrich Engels was the first

to theorize about this phenomenon.

Once we understand that culture is characterized

by power relations and the obvious resistances they

produce, it becomes easier to dispel the myth that cul

tures are homogeneous wholes. This myth essential

izes "the idea of culture as the property of an ethnic

group or race"; it reifies "cultures as separate entities

by overemphasizing their boundedness and distinct

ness" (Terence Turner, quoted in Benhabib, 2001: 4).

Such claims of cultural homogeneity and distinctness,

for instance, are routinely made in relation to national

ism, one of the most potent cultural forces in the pres

ent world. The culture-development linkage is very

clearly demonstrated in the nation-state: the concept

of the "nation" provides the cultural underpinning for

the state's pursuit of development. But what is crucial

from our perspective is the two-faced nature of nation

alism: even when the nation seeks to be a community

of people, it is in reality characterized by hierarchy and

domination and the perpetration of exploitation and

exclusions. Nationalism, in the present, becomes a cul

tural ideology that seeks to paper over the inequities

generated by the development process (see Box 23.4).

Culture, then, is not a static entity. Since all the el

ements of the bygone cultural past cannot be known

or practised as a part of a tradition, the question of se

lection invariably crops up. Here, the selection of par

ticular aspects of a period's culture will be governed

by many kinds of dominant interests, including class

interests. The student of development should relate the

particular selection and interpretations of tradition

and culture to each period's development context to see

how the interplay between material and cultural factors

is influenced by various classes and groups in society.

Development studies should endeavour to examine

how certain symbolic forms and ideas gain dominance

rather than seeing them as natural phenomena. It then

may be obvious that many of the ideas and symbolic

forms that appear as universal and abstract actu

ally originate in particular dominant groups-either

class-based or otherwise (see Box 23.5).

The ways in which cultural understandings are

a necessary basis of bringing about new forms of de

velopment are seen clearly in this phase of capitalist

globalization. Capitalism and the promise of material

affluence that comes with it become the new common

sense across the developing world, dismantling older

ways of living focused less on material goals. Leslie

Sklair (1991) has argued that the value system central

to capitalist modernization is the "culture-ideology

of consumerism." Capitalism is a system built on

the relentless pursuit of profits, which can happen

only with production of more and more goods, the

CRITICAL ISSUES

BOX 23.4 I The Myth of Nationalism

23 I Mannathukkaren: Culture and Development 449

Many homogeneous nationalisms that exist or are pursued today actually mirror the dominant ethnic

group's culture at the cost of the minority nationalities and ethnic groups. A good example would be

the recent efforts by Hindu fundamentalists to define Indian nationalism as Hindu, an approach that

seeks to erase the diversity of one of the most multicultural societies in history. Indian society is home

to all the major religions of the world and, besides Hinduism, India is the birthplace of Buddhism,

Jainism, and Sikhism, of which there are millions of adherents. Despite Hindus being the majority in

India, the country has the third largest Muslim population in the world as well as a substantial number of Christians and followers of the Baha'i faith and of other "minor" religious traditions. The right-wing

Hindu nationalists' attempt to build a majoritarian nationalism, often through violent means, has led

to the loss of many lives. Nationalists have also used religion in an instrumental fashion to garner the support of the majority Hindus. In placing religious and cultural issues such as the building of tem

ples and protection of Hinduism at the top of the agenda and in positing religious minorities such as

Muslims (or other nations such as Pakistan) as the main enemy, Hindu nationalists glossed over the fundamental divisions in society between the owners of capital and land and the labouring masses,

high and low castes, and men and women that mark all religious communities, including the Hindu majority. As a result, during their tenure in government from 1998 to 2004 no attempt was made to

level these hierarchies. For example, despite the fact that the Indian economy was growing at one of the fastest rates in the world, the country actually went down on the Human Development Index (HDI)

from 124th to 127th, suggesting that the boom in the economy benefited only the rich and the middle classes. In such an instance, nationalism becomes a rhetoric for political gain and entrenchment,

but it is not capable of meeting the material needs of even the majority community it claims to speak for. It merely becomes a symbolic tool in the hands of the powerful to mobilize the support of the

powerless, while also constituting a source of cultural pride for the classes that are included in the economic growth.

BOX � ::; . 5 I The "American Dream"

An example of how certain ideas gain universal acceptance and acquire an ideological form is the

idea of the "American dream," according to which if a person has talent and works hard, she or he can

lead a successful and prosperous life. This dream drives millions of people from all over the world

to move to the US. While the concept contains an element of truth, it hides the fact that the United

States, despite its wealth, is the least egalitarian society in the Global North, and structural inequal ities based on class and race (among other factors) prevent a majority of immigrants from attaining their dream.

450 PART Ill I Issues in International Development

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commodification of new objects, and the creation of new wants (some of which, over a short or longer pe riod, are elevated to become needs). The mass media and the entertainment industry have been the main vehicles for promoting new practices of the culture ideology of consumerism in the Third World. "[T]he promise of the 1970s that satellite television would rev olutionize education, public health and nutrition, and eliminate illiteracy throughout the urban and rural

PHOTO 23.2 I Brian Jungen, a Canadian artist,

uses modern consumerist artifacts (such as the

Nike footwear here) and reworks them to resemble

specified references to First Nations cultures, thus

creating new meanings to represent the complex

relationship of the Indigenous people to the modern

capitalist world.

Third World, has been largely unrealized" (Sklair, 1991: 165).

This is especially true for the Third World, where consumption practices modelled on Western lifestyles engineered by the mass media have brought about seri ous contradictions and a skewed relationship between production and consumption (see Box 23.6). The masses have been exposed to the glitzy and glamorous world of new global market culture without the material means to afford this culture. And culture-based economic ac tivities such as tourism can have harmful consequences because of excessive commercialization-selling exoti cized versions of "traditional" cultures primarily to rich Western tourists.

Despite this, there is a double movement in the do main of culture. While the dominant elements seek to control and rein in the subordinate elements, the latter are not passive actors; they are constantly seeking to re sist these attempts despite the fact that the contest is un equal because of the power possessed by the dominant elements (Hall, 1998: 443, 447). This follows the Marxist theoretician Antonio Gramsci, who argued that cultural struggle is not a one-sided process in which the ruling or dominant culture simply overruns or decimates the subordinate culture-as is a common misconcep tion-but is a complex process of struggle in which the former can become dominant only by accommodating the latter in some measure (Bennett, 1986: xv). There fore, against the common belief that cultural practices and objects come with inherent meanings, it has to be emphasized that meanings are created in the process of struggle and contestation. Thus, all cultures are contra dictory, containing different elements that intersect and overlap in the course of struggle (Hall, 1998: 452). Cul ture, therefore, is a process rather than a finished form (see Box 23.7).

Nevertheless, one of the main reasons for the ap propriation of subordinate and critical culture by the dominant culture is the fact that the power and the means of cultural production are concentrated in the hands of dominant classes and cultural industries. For example, in the early 1990s, the international mu sic recording industry was an oligopoly consisting of six companies (During, 1993: 16). This is an instance of the economic mode of production in a particular

CRITICAL ISSUES

23 I Mannathukkaren: Culture and Development 451

BOX 23.6 I The Culture-Ideology of Consumption

The "culture-ideology" of consumption has deleterious consequences for the developing world. The focus on attaining a lifestyle associated with the developed West has led to an ignorance of the ful filling of the basic necessities of the vast majority of impoverished people in developing societies. Capitalism is built on the philosophy of "planned obsolescence" in which goods are built such that they last only for short periods of time. The Apple campaign asking consumers to "think different" and the frenzy with which they flock to buy the latest versions of Apple products every few months is an example of this planned obsolescence and its success. Other than the cultural implications of this re lentless production and consumption of goods, what is of graver concern is the material consequence of the exploding rates of garbage production. The "Golden Age of Capitalism" in the West was also the "Golden Age of Garbage"-between 1960 and 1980 solid waste increased fourfold in the United States (Mannathukkaren, 2012). But the problem of waste is hidden in the developed world through egregious practices like waste imperialism-waste being dumped and treated in regions/countries where the marginalized populations live. Now this perilous feature of garbage and waste of capitalist development is affecting the developing world, which has non-existent waste disposal systems. Schol

ars estimate that South Asia will be the "fastest growing region for waste in the world by 2025" (Man nathukkaren, 2014). Even the hopes of avoiding industrialization's catastrophic production of waste and pollutants by transitioning to a digital world are a chimera. The fastest-growing component of waste in the world is electronic waste. It is estimated that e-waste from computers and mobile phones will go up by between 5 and 18 times, respectively, in India alone by 2020. What is most dangerous is the fact that 90 per cent of this waste is recycled in the informal sector in absolutely hazardous conditions and involving 4.5 million children (Mannathukkaren, 2014). This situation is not alien to other countries in the Global South.

period acting as the limiting force and it shows the in evitable intertwining of cultural and material domina tion (see Box 23.8).

THE CULTURAL TURN

We have seen briefly how the values of the Enlightenment have been subject to scrutiny in the recent past. In fact, the biggest theme animating the field of development is the cultural question. Recourse to explanations based on culture has also been the result of a general consensus about an impasse in development studies: the inability or the failure of much of development theory to explain reality, especially in the South (Booth, 1994). From the 198os, the endeavour has been to envision an alternative

path to development-of which the building block is cul ture. It can be summarized as "the challenge ... to find ways of increasing well-being without indiscriminately destroying valued ways of living and 'knowing' and without placing unbearable strains on the environment" (Jayawardena, 1990: vi). This search for an alternative was premised on the supposed failure of the Western model of development, which had been dominant es pecially over the past 60-odd years (see Chapter 4). The blind imitation of this model by the non-West, especially poor countries, has led to their ruin, according to critics:

It is taken as axiomatic that intellectual frame works borrowed from other historical, cultural and political environments can no longer be effective in understanding the complex realities

452 PART Ill I Issues in International Development

CRITICAL ISSUES

BOX 23.7 I Symbolic Struggles

Even as the culture of dominant groups and ruling classes tries to control the culture of subordinate

people, the latter mounts resistance. This has been a constant feature in all societies across the ages.

Thus, no dominant ideology can ever be completely dominant. Unless we factor in resistance waged at

the symbolic and material levels, we will not be able to explain social change. Such resistance has been

brilliantly theorized by James Scott, especially through his study of the peasantry in Malaysia. Accord

ing to Scott, despite the lack of material means and avenues to challenge the dominance of powerful

groups, the powerless resort to symbolic struggles in innovative and anonymous ways. Beyond the sur face appearance of a placid acceptance of dominant culture, the cultural sphere is actually simmering

with "gossip, folktales, songs, gestures, jokes, and theater of the powerless" through which they mount

a critique of power (Scott, 1990: xii).

We would not generally associate these things (along with others, such as rumour, linguistic tricks,

metaphors, and euphemisms) as anything to do with politics or the struggle for power, but they do constitute an important part of the symbolic armoury of the powerless. Gossip, for instance, especially

gossip that seeks to destroy the reputation of superiors, is a tool used by the dominated to ensure that

the former do not exceed acceptable levels of oppression (Scott, 1990: 137, 142-3). Similarly, symbolic

resistance to new economic modes of production, such as capitalism, that cause a tremendous disrup

tion to traditional ways of agrarian life (which, despite the lack of many modern freedoms, was secure

in many other aspects) can be seen in many parts of the South. One example is the belief by displaced peasantry in Colombia and Bolivia that capitalist proletarianization and commoditization are intimately

associated with the spirit of evil, and thus unnatural (see Taussig, 1980).

of the other, fundamentally different cultures

and contexts, or in giving direction to social

changes underway in them. The additional

question is how to use the total knowledge sys

tems that are available in the South to facilitate

this understanding. (Wignaraja, 1993: 6)

It was as much a case of the West dominating the

non-West as the latter's actively looking towards the

former in awe. After all, throughout the years of colo

nialism, the colonized were inculcated in systems of

education that glorified Western ways of living. Coloni

alism drew its justification by portraying the colonized

as "children" who needed to be looked after (Nandy,

1983). What this did was largely erase indigenous ways

of life and knowledge. This erasure altered the course

of the histories of colonized societies and has had real

effects in the post-colonial period. Almost all of these

societies are victims not only of economic underdevel

opment but also of cultural underdevelopment. Hence,

we see the adoption of the languages of the erstwhile

European rulers as official languages in these societies:

38 African countries have adopted a European language

as their official language (Dhaouadi, 1988: 220). This has

serious implications, for it systematically undermines

native languages and, therefore, cultures, since much

of what we call culture is expressed through language

and the unique thought processes imbued within spe

cific languages. The acceptance of a non-native lan

guage within a country also creates a divide between

elites, who have fluency in European languages, and

subordinate groups, who do not. Equally significant are

the substantial changes brought about in the sphere of

family and personal law. The diversity in the types of

families that characterized "traditional" societies was

replaced by the ideal of the European nuclear family.

The collapse of joint and extended families, for example,

has had deep psychosocial consequences that have not

been overcome in the rapidly modernizing societies of

the South.

23 I Mannathukkaren: Culture and Development 453

� IS

BOX 23.8 I Che as a Capitalist Icon

One of the best examples of the appropriation of a subordinate and critical culture by dominant culture

is the symbolic figure of Che Guevara, a leading Marxist revolutionary of the twentieth century who

fought alongside Fidel Castro during the Cuban revolution in the late 1950s and became a minister in Castro's government, and who was captured and executed in 1967 while working to organize an uprising

in Bolivia. If he was the inspiration of many a socialist insurrection in the 1960s and 1970s, his ruggedly

handsome visage now mainly adorns billboards and designer wear created by the capitalist market and

his name is used to sell numerous products, such as cigarettes (see photo below). Here, the symbol of

Che, as a result of its appropriation by the forces of capital, acquires a totally different meaning from

what he stood for as a revolutionary who sought to overthrow the influences of Western capitalism in

Latin America.

According to those who have questioned this dom ination, "[w]hat passes today for the truth of the history of humankind (that is, progressive access of every na tion to the benefits of development) is actually based upon the way in which Western society-to the exclu sion of all others-has conceptualized its relationship to the past and the future" (Rist, 1997: 44). Or, as more emphatically put by Jonathan Crush (1995: 11), "devel opment discourse is rooted in the rise of the West, in the history of capitalism, in modernity and globaliza tion of Western state institutions, disciplines, cultures and mechanisms of exploitation."

Academic theories also were implicated in ethno centrism. This was clearly obvious with theories such as modernization that posited one goal for all of the so called Third World countries-to become like the West (see Chapter 3). Modernization theory operated with dichotomies such as tradition/modernity or backward/ advanced, with a clear privileging of the second category:;- It was as if the entire history of Third World countries did not matter and what mattered was the future alone, in which they would become "modernized." Even de pendency and other Marxist-inspired theories that arose as a critique of modernization were deemed ethnocen tric because they operated "within the same discursive space of development" (Arturo Escobar, cited in Crush, 1995: :w) by not questioning the basic assumptions of developmenL, such a industrialization and growth. Moreover, they unwittingly replicated the structure of

-ftl-

PHOTO 23.3 I Che Guevara-the appropriation of a

radical symbol by the capitalist mass culture.

454 PART Ill I Issues in International Development

modernization through categories such as developed/

underdeveloped and centre/periphery. Again, what hap

pened inside the periphery (the "Third World" coun

tries) was less important than what the core (the "First

World" countries) did to it. It was disenchantment with

these theories that led to the emergence of the "post"

discourse: for example, postmodern, post-colonial,

post-development (see Rahnema and Bawtree, 1997).

This discourse seeks to go beyond the assumptions of

many of the interrelated projects that governed hu

mankind in the recent past: modernity, colonialism,

development, and so on. It has sought to lay the blame

for the current state of the world on modernity, that is,

the period since the Enlightenment that has elevated

reason to a privileged position (see Chapter 4).

In their search for an alternative, the critics of

modernity looked towards traditional and indigenous

cultural systems and to a recovery of the practices

associated with them, which had been dismissed as

"backward, irrational, superstitious, obscurantist" by

the Western paradigm of development. If the West is

characterized by episteme-the impersonal, a negative

moral connotation attached to labour, control over

nature, and a negative view of illness-non-Western

traditional societies are characterized by techne-the

personal, a divine conception of manual labour, con

trol over the self, and illness as a necessary imbalance

(Marglin, 1990: 8-26). Moreover, non-Western socie

ties embraced the "par ticipation of the people in de

cisions that affected their lives; sharing and caring for

the community beyond individual self-interest; trust,

innocence, simplicity, thrift; a work ethic with a fine

tuned balance between work and leisure; harmony

with nature and a rational use of resources; com

munal ownership of the commons; and complemen

tarity between men and women" (Wignaraja, 1993:

20). These values would constitute the fulcrum of an

alternative path.

The theories that have arisen under the "post"

rubric have taught us to look at non-Western socie

ties without the coloured lens constructed elsewhere.

Classic texts such as Edward Said's Orienta/ism decon

structed many commonplace assumptions about the

Orient. Said's work showed that the Orient the Occi

dent knew was more a construction than reality. It ex

posed the deep linkages between knowledge and power

(in this case, colonial power). According to Said, "the

essence of Orientalism is the ineradicable distinction

between Western superiority and Oriental inferiority"

(Said, 1978: 42). What the critique of modernity, colo

nialism, and development did was reclaim the history,

the culture, and the agency of the colonized, thus giv

ing them a sense of identity. More important, it put a

question mark over the assumption that the Western

way constituted the only path to civilization and de

velopment. The concept of development, which until

recently connoted mere economic development, was

redefined and expanded as a result.

Despite these achievements, the theories inspired

by postmodernism are ridden with problems. Most

have adopted an extreme stance vis-a-vis modernity

and development, ultimately proving counterproduc

tive for the marginalized and oppressed for whom the

theories claim to speak. The fundamental problem is

that culture becomes an all-encompassing explana

tory variable. At the same time, culture appears to be

detached from all other elements in society. Culture is

seen as a homogeneous and essentialist whole, without

fissures and conflicts. Hence, the large generalized cat

egories such as West/East or North/South, colonizer/

colonized, and modernity/tradition replicate the di

chotomies created by mainstream theories such as

modernization. Fear of the universalizing tendencies

of modernity and the Western development model

makes the postmodern-inspired theories essentialize

tradition and adopt an uncritical attitude towards it.

Consider, for example, Marglin's comment: "it may

be readily agreed that the sacrifice of a young woman

on an altar in traditional society is barbarous, but in

and of itself it is no more barbaric than the sacrifice

of a young man on a battle field in modern society"

(Marglin, 1990: 12). Such a view ignores (despite the

presence of ideological inculcation in both) the fact

that in the second case, physical coercion is absent (ex

cept in conscription).

Similar exercises of seeing culture in benign terms

can lead to defending practices such as female circum

cision rather than analyzing them in terms of power

relations-in this case, patriarchy. Therefore, these

theories ultimately end up as a nativist and "Third

Worldist" discourse, uncritically upholding tradition,

religion, community, and so on while ignoring issues

such as internal hierarchies and oppression within

these categories. A critique of practices such as the

2 I Mannathukkaren: Culture and Development 45-

PHOTO 23.4 I The impact of colonialism on the culture of a society: the Cahhatrapati Shivaji Terminus

(previously known as Victoria Terminus), built in the Victorian Gothic style by the British, Mumbai. India.

sacrifice of women on their husbands' funeral pyres

and female circumcision does not have to come from a

perspective that glorifies Western standards of justice.

Criticism and opposition are already present in these

"traditional" societies, as demonstrated by the fact that

coercion, especially physical coercion, is often required

to enforce norms.

Societies in the non-Western world are supposed to

have a divine conception of manual labour. But if that

were the case, how did a caste system based on an oc

cupational division of labour with a clear privileging of

mental over manual labour emerge in India? Why were

the "lower" castes performing the meni,d tasks sub jected to deep oppression for centuries? Similarly, the

non-Western world is supposed to be characterized by a harmonious relationship with nature. But, as David

Harvey (1993: 29) points out regarding "pre-modern"

China, "(t]he Chinese may have ecologically sensitive

traditions of Tao, Buddhism and Confucianism ... but

the historical geography of de-forestation, land degra

dation, river erosion and flooding . .. contains not a

few environmental events which would be regarded as

catastrophes by modern-day standards." These contra

dictions cannot be explained by the simple categoriza

tion of East/West and tradition/modernity. Ultimately,

although postmodern theories start out "with the in

tention of preaching tolerance and the recognition of

difference, ... [they come] dangerously close to a cele

bration of repression" (Kiely, 1995: 159).

These theories cannot avoid the slide into c.:i.dh11" I

rclali ·i m, because they refuse to acknowledge any

kind of universalism. Once they argue that cultural

practices are not necessarily right or wrong because

"there is no way of assessing their truth or falsity apart

from people's beliefs " (Margi in, 1990: 13), their justifica

tion of repressive practices becomes inevitable. Despite

456 PART Ill I Issues in International Development

BOX 23.9 I Universal Values

The traditional and modern ways of living do not have to be absolutely disparate, as postmodern crit icisms imply. For example, among the Boran tribal people, traditionally pastoral nomads living mainly in Ethiopia, the concept that comes closest to development is fidnaa. It basically denotes a variety of things including growth and reproduction of vital resources, "lack of fear and hunger, freedom from wor ries about one's nearest and dearest ... [and an] egalitarian and expanding social order that extends to neighbouring peoples" (Dahl and Megerssa, 1997: 55). The commonalities between this concept and the modern development enterprise are striking.

Thus, we come back to the problem that we started out with: culture is as marked by relations of power as any other sphere in society and is continuously changing according to the nature of contes tation and struggle. The other major flaw in the postmodern theoretical framework is the nearly total absence in it of an analysis of material relationships. This is very obvious in the post-colonial analysis of colonialism, in which colonial exploitation without material relations becomes mere Western cultural domination. Economic exploitation itself takes a back seat. Therefore, European domination appears unrelated to capitalism. As Dirlik argues, "Without capitalism as the foundation for European power and the motive force of its globalization, Eurocentrism would have been just another ethnocentrism ... [post-colonialism] fails to explain why this particular ethnocentrism was able to define modern global history, and itself as the universal aspiration and the end of that history, in contrast to the regionalism or localism of other ethnocentrisms" (Dirlik, 1997: 68).

In post-colonial theory, there is an obsessive focus on the colonial past and Eurocentrism that takes away an engagement with the present. Thus, the current internationalization and globalization initiated by late capitalism, of a scale unimaginable before, and the exploitation inherent in these processes cannot be countered by culturalism, especially when capitalism is increasingly becoming Asian-dominated. When almost the entire globe has come under the sway of capital and commodifi cation, it is not feasible to simply reject modernity or development. This is all the more true when the poor and marginalized, who constitute the vast majority of the world's population, also embrace values such as equality and democracy and seek goods such as health, education, shelter, and security that modernity has to offer yet so far have been available to only a minority. Without an internally differen tiated view that takes into account the different classes, castes, and groups within broad categories such as the East, the South, or traditional societies and their different (as well as common) experi ences under modernity and capitalism, any alternative proposal based on culture alone that aims to go beyond development can only be incoherent. More important, it can only help the ruling classes and elites in these deeply non-egalitarian societies to maintain their power, using the legitimacy of cultural difference. Rather than indulge in a romantic celebration of Eastern cultures, an alternative development project should include not only cultural decolonization but also a material transformation that would eliminate all kinds of exploitation, including economic exploitation that is perpetrated both by the West and by indigenous classes and groups within the "Third World." To this end, the critical resources of the West and the East, as well as modernity and tradition, would have to be mobilized (see Box 23.10).

the fact that colonialism and the Western development

model have used universalism instrumentally to their

own benefit and subverted some of its core principles,

there are problems in abandoning the concept itself.

Postmodern accounts have one-sidedly reduced mo

dernity and the Enlightenment to being indissolubly

associated with domination, alienation, deprivation,

and so on. This ignores the fact that the Enlightenment

was also founded on values such as liberty, equality,

and fraternity, which have inspired countless strug

gles against oppression all over the world, not just in

Europe. More important, these values are attractive be

cause of their deep affinity to at least some of the values

in non-Western societies (see Box 23.9). Although mo

dernity is a distinct period in human history and con

stitutes a break with earlier periods in significant ways,

as we saw above, criticism of oppression or the struggle

for equality cannot be said to be merely European or

modern; intimations of Enlightenment ideas can be

CRITICAL ISSUES

BOX 23.10 I "Asian Values"

23 I Mannathukkaren: Culture and Development 457

found in different parts of the world and in previous

periods of history. They are embedded in various ritual

practices, such as the "carnival in Catholic countries,

the Feast of Krishna in India, the Saturnalia in classical

Rome, the war festival in Buddhist Southeast Asia ...

[and] have provided the ideological basis of many

revolts" (Scott, 1990: 80).

The abuse of Enlightenment values does not mean

that we should therefore dismantle the entire European

critical tradition. An abandonment of universalism

would make any talk of social justice impossible, and

any oppression, including slavery, could be justified

on cultural grounds. As Martha Nussbaum argues, "to

give up on all evaluation and, in particular, on a nor

mative account of the human being and human func

tioning [is] to turn things over to the free play of forces

in a world situation in which the social forces affecting

the lives of women, minorities, and the poor are rarely

benign" (Nussbaum, 1992: 212). To overcome cultural

The resort to culture for legitimacy (of rule) by the elites is seen in the propagation of the "Asian values" thesis by the first Prime Minister of Singapore, Lee Kuan Yew, who argued that Asian culture is more conducive to discipline and order rather than to freedom and liberty (which suited the West). Such vast generalizations justifying authoritarianism are grievously erroneous, for they completely ignore the enormous diversity that exists within these large blocks called Asia and the West. Once we examine this diversity, we might find a different reality from the one outlined by Lee Kuan Yew. It would be even more obvious if we looked into the accounts of the marginalized and the oppressed, who would have a totally different understanding of discipline and order from that of the ruling classes.

The "Asian values" thesis also has been used as a cultural explanation for the economic success of Japan, China, and Southeast Asian countries. But again, as Amartya Sen argues, the problem is that the thesis is too broad, and ultimately inadequate for explaining the specificities of the different

countries. For example, how do the different traditions of Confucianism, Buddhism, and Shintoism prevalent in the region explain the same phenomenon of capitalist success? Moreover, the applica tion of the thesis is further complicated by the success of Islamic Indonesia and Malaysia and the emerging economic power of Hindu-dominated India. Thus, the thesis boils down to a cultural "grand theory" that seeks to explain major economic, political, and social outcomes across the world in terms of cultural differences-the kind of theory that, as in this case, does so rather unsuccessfully (Sen, 2001: 11-13).

458 PART Ill I Issues in International Development

relativism, Charles Taylor proposes that we talk in a

"language of perspicuous contrast" that would allow us

to "formulate both their way of life and ours as alterna

tive possibilities in relation to some human constants at

work in both" (Taylor, 1985: 126). Such constants obvi

ously rise above the particularities of different cultures

and constitute the basis of a universalist understand

ing. This is a dialogic process in which the West has as

much to learn from the non-West as the latter from the

former (see Box 23.9). Only such an understanding will

act as a check on the use of culture by the ruling classes

to justify authoritarianism.

SUMMARY

One of the main goals of this chapter has been to dispel

the many myths that surround the concept of culture

and to demonstrate that development is not merely a

material process. Students would have also learned that

while a focus on culture in relation to development is

vital, societal processes cannot be reduced to a single

explanatory variable such as culture. In reality, these

processes cannot as easily be broken down into vari

ous elements, such as culture, politics, and econom

ics, as they are in academic analysis. All elements are

interlinked and cannot be abstracted and studied in

isolation. Therefore, development does not make sense

at all without an understanding of the meanings and

the cultural value attributed to it by the people who

are subjected to it. At the same time, these meanings

cannot be entirely disparate because of certain univer

sal features of the human condition-and also because

the same material processes of commodification and

marketization are taking place across the world. The

task for the development studies student is to negoti

ate the lines between acknowledging the importance of

human agency, the process of creating meanings, and

understanding the structural limitations imposed by

material factors on cultural imaginations.

QUESTIONS FOR CRITICAL THOUGHT

1. Distinguish between the cultural and the material.

2. What is the role of culture in development?

3. Given cultural differences, can/should development have the same goals across societies?

4. Make a case for and against cultural relativism.

5. Identify instances where struggles for development have assumed cultural forms.

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PART IV

Practice in International

Development

Woman planting rice in Bali. I Source: Photo by Jorge Fernandez/LightRocket via Getty Images

Understanding Global Poverty Reduction: Ideas, Actors, and Institutions Daniel H'UI1ne and 8oTJhie ICin,g

• To understand how different conceptualizations of are linked to international political and economic

poverty have shaped the kinds of approaches and struggles between powerful actors.

targets applied to the challenge of poverty reduc- • To evaluate progress in achieving poverty reduc-

tion since the 1950s. tion around the world, including in terms of chang-

To understand the ideological underpinnings of ing attitudes towards poverty and inequality.

these different conceptualizations and how they

& The Micro-Gardens Project in Dakar was initiated in 1999 within the framework of a Technical Cooperation Programme

between the Food and Agriculture Organization (FAO) and the Senegalese Government, with the primary objective of poverty

reduction by providing fresh vegetables to poor families, thereby improving their food supply and nutrition. I Source: Erick

Christian Ahounou/AFP/Getty Images

24 I Hulme and King: Understanding Global Poverty Reduction 463

Placing global poverty eradication on the international

agenda in the 1990s was not the result of some natural

moral progression. Nor was it accidental. It arose out

of the interaction of social forces within the historic

structure of that era, as individuals, groups, organiza

tions, networks, nations, and associations of nations

pursued their goals and collaborated with and/or con

tested each other. Most of these actors promoted what

they believed to be in their self-interest: that the spread

of capitalism, and therefore economic globalization,

would benefit all of the world's people; that policies and

programs could be introduced to reduce flows of illegal

immigrants from poorer countries into richer coun

tries; that programs could be devised to discourage the

recruitment of young men into "terrorist" organiza

tions; that images of altruism could improve a country's

or organization's standing in international circles.

Many other self-interested reasons related to power,

profit, and security also were motivating factors. But

these were also tempered by compassion and informed

by various moral visions of the world that many actors

sought to live in and to bequeath to future generations.

Such visions have been grounded in a genuine desire to

improve the lives of very poor people; a belief that so

cial and economic inequality had to be reduced; a com

mitment to reducing the impact of climate change on

poorer people and preventing environmental destruc

tion; and religious beliefs and other moral sentiments.

Part of this moral vision focused on extreme poverty

and was favoured by a historic moment, the turn of the

millennium, which created an opportunity to push the

issue of poverty up the international agenda.

This chapter seeks to explain how the idea of global

poverty eradication emerged and was institutionalized

in initiatives like the Millennium Development Goals

(MDGs) and $1.25-a-day poverty measures, and also

will evaluate progress in achieving international agen

das. It begins by tracing the historical and ideological

underpinnings of poverty in social and development

thought, and how concepts like poverty and ideas about

how it can be reduced have come to shape development

approaches and practices in the contemporary era. The

chapter then examines how the complex interplay be

tween such ideas and a diversity of actors and institu tions (of differing degrees of power and influence) has led to significant but insufficient achievements towards global poverty reduction.

POVERTY IN SOCIAL AND

DEVELOPMENT THEORY

Contemporary ideas and concerns about poverty

especially the recently constructed idea of global

poverty (Hulme, 2015)-are closely interwoven with

development thought, but many of poverty's concep

tual roots lie in the historical analysis of social prob

lems in Western Europe. In the late eighteenth and

nineteenth centuries, as the Enlightenment unfolded,

European social thought began to address poverty

as a core issue. This included the search by de Con

dorcet and Paine for an end to poverty; the warnings

from Burke and Malthus of the dangers of such radi

cal thinking; Marx and Engels's examinations of the

evolution of capitalism and class relations; and the

identification by Booth and Rowntree of who exactly

was poor. Many ideas from these times-including

the separation of the "deserving" and "undeserv

ing" poor, the role of charity, poverty as a structural

or individual phenomenon, poverty lines, targeting,

and welfare dependency-continue to influence con

temporary development thinking. Such debates have

tremendous practical significance. If poverty is un

derstood as a lack of individual or household income,

policies to increase income are likely to be prioritized.

By contrast, if poverty is conceptualized along other

dimensions, such as limited access to basic educa

tion and health services, policies to expand and im

prove access to basic services are more likely to be

prescribed.

Across different schools of development theory

there are considerable tensions between those who

pursue concepts of poverty that facilitate measurement

(narrow, means-based, absolute, and objective) and

those who believe that such simplifications are flawed

as they avoid the more structural aspects of poverty

essential to understanding how poverty is produced

and reproduced. The "measurement camp" is usually

occupied by economists, econometricians, quantitative

sociologists, and social statisticians. Governments, in

ternational agencies, and policy-makers gravitate to

wards this camp. In the "structuralist camp" are critical

sociologists, anthropologists, political economists, and

heterodox economists. Their analyses are most often

picked up and supported by activist non-governmental

464 PART IV I Practice in International Development

IMeo IANT O EPl.---�=----------=-----.

BOX 24.1 I What Is Poverty?

Understandings of poverty can broadly be grouped into four oppositional conceptualizations: narrow versus broad; absolute and relative; objective and subjective; and whether poverty can be understood in terms of individual agency or social structures.

Narrow versus broad conceptualizations. A narrow approach is easily comprehensible and measura ble, while a broader approach explores the multi-faceted nature of poverty and the processes that cre ate, maintain, or reduce poverty. At the narrow end of this continuum are national poverty lines focused on income-based measures. Broader conceptualizations view poverty as a set of multi-dimensional material and non-material deprivations. An example is Amartya Sen's work on capabilities (Sen, 2001; see Box 24.3), which was instrumental in establishing the UN's Human Development Index (HDI). From Sen's perspective, people experience poverty when they are deprived of basic capabilities: the ability to avoid hunger, become literate, and appear in public without shame, or take part in social activities, for example.

Absolute and relative poverty. Absolute perspectives interpret poverty as occurring when people cannot meet their minimum physical needs because of lack of income. This leads to an unambigu ous poverty line. This method is simple and measurable and focuses on basic human needs. Major technical concerns arise, however, in dealing with differences in the minimum amount of nutrition that people need, for example, according to age, health status, employment, and household size. Those advocating a relative conceptualization recognize that human beings are social actors, and argue that poverty must be defined relative to others in a society. For some, relative poverty is only a small step in the right direction. It is relational poverty that needs to be analyzed-not merely income inequality but the unequal power relations between different groups in a society (see, for example, du Toit, 2009).

Objective and subjective measurements. "Objective" measurements such as the $1.25-a-day poverty line are specified by researchers who decide who is poor and non-poor according to rigorously conceptu alized definitions and survey analyses, permitting comparisons to be made over time and space. Critics question the objectivity of such measures, which inevitably involve explicit or implicit value judgments by the researchers. "Subjective" measures of poverty are made by people about their own status and others in their community or society. This has the advantage of letting those most knowledgeable about the experience of poverty determine how poverty is defined and measured, but the disadvantage is that people living in different areas may set different criteria that may change over time, making comparison difficult.

Human agency versus social structure. These contrasting conceptualizations of the underlying causes and solutions to poverty are particularly important for understanding debates about rela tionships between poverty and inequality. Agency-based approaches benefit from the simplicity and precision of thinking in terms of individual behaviour and experiences of poverty. Structuralists argue that the units of analysis are multiple (class, gender, race, and others) and overlapping, and that be haviours are complex and, at best, only partly predictable. Both approaches have their strengths and weaknesses, and Giddens (1984) has proposed a conceptual means-structuration-of integrating both approaches.

24 I Hulme and King: Understanding Global Poverty Reduction 465

CRITICAL ISSUES

BOX 24.2 I How Many Poor People Are There and Where Do They Live?

Counting the global poor is a highly contested issue. There are heated philosophical debates about whether poverty is absolute or relative, setting poverty lines, and whether poverty should be measured

in terms of income/consumption or in multi-dimensional terms. In addition, the data are often of low quality and are difficult to compare across different country contexts. Despite these problems, there is broad agreement among analysts about some key parameters:

Extreme poverty has decreased in all regions of the world since 1980, and especially in East Asia.

The greatest numbers of extremely poor people live in South Asia and sub-Saharan Africa.

Somewhere between 1.2 billion and 1.6 billion people were extremely poor around 2010.

Poverty is deepest in sub-Saharan Africa, i.e., on average poor Africans experience higher levels of deprivation than poor people in other regions.

Around 2.5 billion to 2.9 billion people could be viewed as being poor if one adopts a $2-a-day or relative poverty line.

Source: Hulme (2015, drawing on Ravaillon and Chen, 2014, and 0PHI, 2014)

organizations (NGOs) and civil society groups, trade unionists, environmentalists, and left-of-centre polit ical parties. The diehard measurers argue that quali tative approaches lack rigour and permit the analysts to select non-representative empirical materials to ad vance their argument. The diehard qualitative analysts

argue that by focusing on what is readily measurable at the individual and household level, these dominant measurement approaches neglect the analysis of cul ture, identity, agency, and social structure that are cen tral to the processes that create wealth and poverty (see Chambers, 1983).

€

g_ 40

0 30

�� Q) 20

€ 10

Truly global poverty rate

Absolute poverty rate for the developing world

Poverty rate for high-income countries

"Purely relative" poverty rate for the developing world

0-+------ -- ---�------�--�---...------.----�

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

FIGURE 24.1 I Truly Globa.l Poverty Ra.tes

466 PART IV I Practice in International Development

DEVELOPMENT AS POVERTY

REDUCTION: A BRIEF HISTORY

While mass poverty was the norm across Asia and Af

rica (and much of Latin America, the Caribbean, and

the Pacific) during the era of independence from colo

nial rule, reducing poverty was rarely an explicit ana

lytical or policy focus in the 1950s and 1960s in the way

it became so in the early 1970s and in the mid-199os

(Hulme, 2015). Rather, it was thought that the pursuit

of modernization and economic growth, through the

transfer of finance, technology, and institutions from

the US/Europe or the Soviet Union, would transform

economic and social conditions, including poverty.

For all except a few East Asian countries,

post-World War II promises of modernization were

not delivered. This led to two different responses.

First, from the developing world came the structur

alist analysis that "underdevelopment" (Fanon, 1961)

was blocking economic and social progress. Africa,

Asia, and Latin America (the periphery) were under

developed because of their relationships with the US

and Europe (the core), which meant that development

required the reform of the core's exploitative relations

with the periphery rather than "foreign aid" from ad

vanced nations. These radical ideas were prepared to

shift to revolutionary if required, identifying their pri

ority for action as tackling the root causes of poverty

and underdevelopment, namely, the structures and re

lationships of post-colonial capitalism (see Chapter 2).

In the early 1970s, development thought in the

major international agencies began to focus directly on

poverty. The International Labour Organization (ILO)

and other UN agencies proposed a basic need, approach

to development that encouraged national governments

and aid donors to prioritize policies, budgets, and ac

tions that would ensure disadvantaged people were

able to access a minimum level of well-being, including

food, water, shelter, and primary education. In 1974, the

World Bank began promoting a greater focus on rural

development rather than urban industrialization (see

Chapters 18 and 19). While "basic needs" and "rural

development" both sought to reduce poverty directly,

the former focused more on state-provided social pro

tection, while the latter focused on income generation

and enterprise promotion. This emphasis on poverty

analysis and direct poverty reduction within develop

ment thinking and practice was to prove only a brief

interlude, however. By the late 1970s, neoliberal ideas

were ascendant around the globe, and over the 1980s

and 1990s the Washington Consensus ( Williamson,

1990) and its structural adjustment policies dominated

the intellectual and policy agenda, arguing that eco

nomic growth was the key to development. This could

be achieved if countries deregulated, privatized, and

liberalized; as a side effect, poverty would automati

cally be reduced (see Chapters 3 and 9).

The year 1990 marked a tipping point in the evo

lution of ideas about development and how poverty

was positioned within development thought. Against

the backdrop of the end of the Cold War and growing

doubts about structural adjustment, the World Bank's

World Development Report 1990 chose poverty as its

theme, acknowledging the need for economic reform to

be accompanied by social policies. The report presented

the first serious attempt to count the world's poor us

ing a common measure. It introduced the dollar-a-day

head count measure of global poverty and estimated

that around 1.1 billion people lived in extreme poverty.

More significantly, the United Nations Development

Programme (UNDP) published the fi rst Human Devel

opment Report in 1990, promoting the idea of human

development as an alternative to economic growth as

a concept and goal. This facilitated the promotion of a

broader understanding of poverty reduction compared

to previous measurements of income and consumption

poverty, and made this alternative more accessible to

a wider group of professionals and the media. It gave

left-of-centre scholars and social activists a relatively

coherent framework from which to argue for policy

change.

The processes leading to the creation of the

poverty-obsessed Millennium Development Goals

(MDGs) (Hulme, 2010) can also be traced back to 1990,

when the World Summit for Children in New York

achieved political commitment for setting concrete tar

gets to improve the prospects of the world's children.

Then, in 1995, the World Summit on Social Develop

ment (WSSD) in Copenhagen pushed global poverty

reduction onto the international agenda, stimulating

an unprecedented conceptual, empirical, and policy

focus on poverty. It was here that a global consensus

(with 117 heads of state and government present) was

24 J Hulme and King: Understanding Global Poverty Reduction 467

PHOTO 24.1 I An elderly musician earns his keep by performing on the street, Rosario, Argentina.

first reached for placing poverty reduction as the prior

il y goal for development (UNDl', i997: 108). The WSSD

approved the target of eradicating dollar-a-day poverty.

Lnplicitly, ii drew on ·the idea of human development,

viewing_poverty as multi-dimensional. After Copenha

gen, explaining how poverty would be tackled became

a ignificant focus of international relatio11s and devel

opment thought.

The debates and declarations of the global confer

ences and summits of the 1990s were impressive. They

led to increased media coverage of the issues and raised

public awareness about development and poverty.

However, action after these events, with the exception

of the Child Summit, was often relatively limited and

levels of official development assistance (ODA) contin

ued to decline. This created unease among the OECD's

Development Assistance Committee (DAC)-leading

it to produce a report in 1996 that listed seven Inter national Development Goals (IDGs) in an attempt to

generate public support for foreign aid. These goals

brought together components from the declarations of

recent summit and conferences, although the Copen

hagen commitment to eradicating poverty was con

verted into halving extreme poverty by 2015. The IDGs

achieved political traction in some OECD countries,

such as the UK, but had little impact over other power

ful actors, including the United States, the World Bank,

and the IMF (Hulme, 2010). In developing countries,

U1,e poverty-focused IDGs had little or no re onance,

coming as they did from a docume11t produced entirely

by rich countries in which promise, of "partnersh.ip"

sow1ded like well-worn d1etoric. However, thi list

would make a comeback.

In 1998, the global poverty agenda continued to be reshaped. in preparation f.i r the UN's MJllennium As

sembly, held 111 New York in eptember 2000. Tue UN's

new Secretary-General, Kofi Annan, was keen -to make

global poverty _reduction central to the UN agenda.

Re identified four main themes for lhe Millennium

Assembly. The second of these was "development,

468 PART IV I Practice in International Development

including poverty eradication," signifying the institu

tionalization of the shift in development thought that

had emerged at Copenhagen. Development was no

longer about economic growth and generalized im

provements in welfare; rather, it was synonymous with

targeted poverty eradication (or at least poverty reduc

tion). Between 1998 and 2000, a complex set of formal

and informal negotiations and releases of competing

reports sought to specify exactly what poverty eradica

tion/reduction was. The aid donors of the OECD pushed

their conceptual and strategic preferences based on the

original IDGs and supported by the World Bank and

IMF. In parallel, the UN was producing a declaration for

the Millennium Summit, a document that had to sat

isfy a larger constituency with very different interests:

the 189 members of the UN General Assembly.

Over the summer of 2000 there were frantic negoti

ations about what should finally go into the Millennium

Declaration regarding goals of development and pov

erty eradication. With around 150 heads of government

or state due to attend, the Millennium Summit had to

be a success. As the big day approached, a compromise

was reached that included goals for rich countries (for

aid, debt, trade, and policy reforms) and strengthened

the goals related to gender equality and child and ma

ternal mortality. These additions, deletions, and com

promises worked. The Millennium Declaration was

unanimously approved at the UN General Assembly

on 18 September 2000, and what had once been "devel

opment" officially became " development and poverty

eradication" (UN, 2000). Negotiations over 2001 even

tually led to the creation of a task force comprising of

ficials from the DAC (representing OECD), World Bank,

IMF, and UNDP. This was the task force that finalized

the Millennium Development Goals (MDGs).

While the MDGs, and recently the post-2015 de

velopment agenda, have remained important in of

ficial public discussions (which remain excessively

influenced by the aid industry's interests), keeping

global poverty genuinely on the international agenda

has been difficult. Other priorities-terrorism, trade

policy, economic growth, national security, energy

security, the financial crisis-have proved more press

ing, and national self-interest remains the dominant

force in international negotiations, as evidenced by the

lack of progress over climate change and discussed in

more detail below (and in Chapter 17). Contemporary

development thought could be seen as having moved

to a synthesis position combining elements of struc

turalism with liberalism-so that growth, inequal

ity, and poverty all have a major analytical role-or

to an uneasy compromise in which liberals promote

the analysis of market-based growth by demonstrat

ing growth's (absolute) poverty-reducing effects, and

structuralists seek to promote the analysis of ine

quality through more relativist and relational poverty

analysis.

REDUCING POVERTY: IDEAS, ACTORS,

AND INSTITUTIONS

Following this brief history of the rise of the poverty re

duction agenda within international development, this

section of the chapter analyzes the interplay of ideas,

institutions, material capabilities, and national inter

ests that have underpinned the chain of events and the

ways in which initiatives like the MDGs have played out

over time and up to the present in deliberations over

the post-2015 development agenda.

Ideas and Actors

The idea of reframing international development as

global poverty eradication, rather than neoliberal

growth, gradually emerged over the 1990s. The moral

case for focusing on the poor and poorest had long

been known. The negative effects of structural adjust

ment programs had meant that the World Bank had

been forced to pursue "social dimensions" and social

fund initiatives since the late 1980s. In essence these

were direct poverty reduction programs, so the Bank

had some recent experience of poverty reduction. The

pressure for policy change from critics of structural

adjustment, allied to the need that the Bank's new

President, James Wolfensohn, perceived to transform

the institution's image (Mallaby, 2004), made poverty

reduction a politically attractive goal. But, how would

poverty reduction be conceptualized?

This was where the idea of human development

came in. The idea had provided general support for UN

conferences and associated declarations throughout the

1990s. While it has several variants, it promoted two

specific theoretical strands that became underpinnings

24 I Hulme and King: Understanding Global Poverty Reduction 469

for efforts to tackle global poverty. These particularly

shaped the MDGs. First, it advanced the case that devel

opment strategies needed to directly pursue the goals

of development, and not just the means (economic

growth). Human development provided an overarch

ing conceptual framework for arguing that education

and health improvements, gender equality, and other

goals were not only good in their own right but were es

sential components of the pursuit of a dynamic vision

of the good life. Social goals should not play second fid

dle to economic goals; they had to be pursued on an

equal footing.

Second, when the conveners of the UN Social

Summit in Copenhagen, the OECD's DAC and the UN

Secretariat, drew up lists of goals they could explicitly

or implicitly argue that a list was needed as develop

ment and poverty reduction were multi-dimensional.

Lists of goals were not mere "shopping lists" reflect

ing a failure to analyze problems and select priorities

(a criticism that had partly undermined UN promoted

"basic needs" strategies in the 1980s). Rather, multiple

goals were essential for any rigorously thought out pov

erty reduction effort. While the processes behind the

placing of items on such lists involved complex inter

actions of ideas, empirical evidence, political interests,

and personal values, human development provided a

well-reasoned case for multi-dimensional lists. In the

background were the works of Nobel Laureate Amartya

Sen. His name, along with others, could be cited in an

iconic fashion to show that a deep theoretical coherence

lay behind such lists.

But human development needed to reach an ac

commodation with ideas about economic growth if

it was going to be acceptable to those interests that

dominated decision-making in the most powerful

institutions and nation-states. The idea that eco

nomic growth was essential for global poverty re

duction, alongside the self-interest of the countries,

corporations, and people doing well out of capitalist

development, meant that the MDGs had not merely to

include but had to be headed by the goal of reducing

income poverty (i.e., raising incomes through growth).

BOX 24.3 I Sen's Framework for Conceptualizing Human Development

The conceptual foundations of the capability approach can be found in Amartya Sen's critiques of tradi tional welfare economics, which focuses on resource- (income, commodity command, asset) and utility

(happiness, desire-fulfillment) based concepts of well-being. Sen rejects these frameworks in favour of a more direct approach for measuring human well-being and development, which concerns itself with the full range of human function(ing)s and capabilities people have reason to value. Sen's framework makes the following distinctions:

Functionings. "The concept of 'functionings' ... reflects the various things a person may value doing or being. The valued functionings may vary from elementary ones, such as being adequately nourished and being free from avoidable disease, to very complex activities or personal states, such as being able to take part in the life of the community and having self-respect" (Sen, 2001: 75).

Capability or freedom. "A person's 'capability' refers to the alternative combinations of functionings that are feasible for her to achieve. Capability is thus a kind of freedom: the substantive freedom to achieve alternative functioning combinations (or, less formally put, the freedom to achieve various life-styles)" (Sen, 2001: 75).

Development. The expansion of freedom is the primary end and principal means of development. Development involves the expansion of human capabilities and the enrichment of human lives.

Source: Adapted from Clark (2006); Sen (2001).

470 PART IV I Practice in International Development

PHOTO 24.2 I Local women collect water at the borehole, Mozambique.

Importantly, the MDGs identified goals but did not

specify the strategy that would be followed to pursue

such goals. Should poverty reduction strategies be led

by growth or human development? This would have

required an agreement between the different sets of

institutions and interests championing these choices.

Such an agreement was infeasible and so the goals

were as far as the specification went. The concrete

policy choices would be battled over, ideationally and

politically, through processes like Poverty Reduction

Strategy Papers (PRSPs) and Mid-Term Expenditure

Frameworks (MTEFs).

The idea of human development was not just chal

lenged by those with material interests in maintaining

the status quo. Other institutions also contested the

emerging super-norm of the MDGs. The very strong

human development case for reproductive health was

challenged by the Vatican and a handful of conservative

Islamic states. As a result, the International Conference

on Population and Development's reproductive health

goal disappeared during the hidden negotiations to

finalize the Millennium Declaration in 2000.

The ideational adjunct to human development,

in terms of the MD Gs and plans to achieve the MDGs,

was results-based management (RBM). (For more

information on RBM, see Chapters 8, 25, and 27.) This

did not directly contribute to the content of global

goals and strategies but it determined the form they

took. This reflected the interests of the wealthy aid

donor countries and especially their politicians and

senior public servants, who wanted to be able to ex

plain to their publics that aid would not be wasted

because "best practice" management tools would

ensure effectiveness. The common-sense nature and

linearity of RBM made it attractive-set targets,

monitor achievement, and reward staff on the basis

of performance. For the aid-financed programs of

the DAC membership, World Bank, and UN it was

24 I Hulme and King: Understanding Global Poverty Reduction

particularly attractive. The widely reported under

performance of aid in earlier decades would not oc

cur in the future as RBM methods would ensure high

levels of performance.

RBM influenced the idea of global poverty eradica

tion in three main ways. First, it determined the struc

ture of the MDGs (and has continued to shape the UN

Sustainable Development Goals of 2015), and explains

why they are a nested hierarchy of goals, targets, and

indicators focused on time-bound "outcomes." RBM

theory argues that goals must be SMART-stretching,

measurable, achievable, realistic, and time-bound

and this thinking was applied to the goals emerging

from UN conferences.

Second, it shaped the specification of goals. While

determining what is "achievable" is not an exact science,

one sees this tenet in operation with the $1.25-a-day

poverty target. At the 1995 World Summit for Social

Development in Copenhagen this was set as "eradicat

ing" extreme poverty. RBM thinking about this target

reduced it to the elastic but feasible goal of "halving"

extreme poverty by 2015. Previously, the IDGs had tar

geted halving the proportion, rather than the absolute

number, of people living in extreme poverty. When ex

pected population growth is taken into account, achiev

ing a 50 per cent reduction in the proportion of people

in extreme poverty equates to only an approximate 19

per cent reduction in the number of people in extreme

poverty. The target is therefore considerably less ambi

tious than it might at first appear (see Pogge, 2004).

Third, the idea of RBM meant that the pursuit of

global poverty eradication was focused on measura

bles: this meant that politically contentious goals, such

as human rights and participation, could be avoided

on the technical grounds that they were difficult to

measure. China had particular concerns about human

rights, which it viewed as the imposition of Western

models on its development strategy, and countries in

Southeast Asia argued that "Asian values," such as a

focus on the collective good, were neglected in ideas

of participation that focused on the individual. These

issues could be placed in the introductions and conclu

sions of key documents as "principles," but not in the

lists that were to guide resource allocation and plans of

action. As a result, the variety of human development

that lay behind the Millennium vision of ending pov erty was more about "meeting basic needs" than "pro

moting human rights."

Institutions

A vast number and range of institutions have shaped,

and continue to shape, thinking and action (or lack of

action) on global poverty. These include the UN Gen

eral Assembly and UN specialized agencies, the GS

and G20, the OECD's DAC, the World Bank and IMF,

bilateral development agencies, the finance ministries

of developing countries, social movements, the Holy

See, NGOs, think-tanks, and epistemic communities.

Often these institutions form formal and/or informal

networks and coalitions, such as Jubilee 2000, in pur

suit of their aims.

The UN has been central to the reframing of in

ternational development as global poverty eradication

through the conferences and summits of the early and

mid-199os, the formulation of the Millennium Declara

tion and MDGs (1998-2001), and subsequent plans for

MDG implementation. This has involved the UN General

Assembly, the UN Secretariat, the UNDP, and other spe

cialized agencies. Early on the UN's main contribution

was as a convener, pulling together international con

ferences and world summits and persuading member

states to negotiate and agree to socially progressive dec

larations. Some parts of the UN apparatus made major

efforts and contributions. The UNDP played a central

ideational role by promoting the concept of human

development, as an alternative to neoliberal economic

growth, throughout the 1990s. UNICEF operated highly

effectively: it relaunched UN summitry, steered child

development to the heart of poverty eradication (and

the MDGs), and, pursuing a human rights approach,

achieved the C onvention on the Rights of the Child (see

Chapter 10).

However, the UN Secretariat was often walking a

tight rope, tasked with brokering agreements between

its members, and other groups that had very different

interests and ideas about what improving the human

condition meant and how global poverty reduction

might be achieved. As pointed out above, the Secre

tariat had to focus on "what should be achieved" but

not on "how it should be achieved." The Secretariat

brokered the "final" MDG deal in 2001 with the incor

poration of Goal 8 into the MDGs-what rich countries

should do. This made MDG implementation plans fea

sible but also created an Achilles heel-the lack of

specification of Goal 8 targets did not strengthen ac

countability mechanisms and meant that the world's

471

472 PART IV I Practice in International Development

most powerful countries could continue with business

as usual.

Within the broader UN system, but at the opposite

end in terms of its contribution to focusing on global

poverty eradication, was the IMF. While it participated

in key activities, such as being one of the four mem

bers of the technical committee that finalized the MDG

goals, and it renamed its key products (e.g., the Poverty

Reduction and Growth Facility), there is little evidence

that its actions or culture were impacted by the shift

of focus to poverty eradication. The IMF has been re

luctant to embrace goals that go beyond neoliberal

priorities of economic stability and economic growth

(Hulme, 2010). It has been able to give an impression

of being part of global agreements on poverty eradica

tion but has only changed its thinking and practice at

a snail's pace.

The World Bank has played a major role in think

ing and action about global poverty eradication. The

work of its Research Department in developing the

idea of dollar-a-day poverty helped persuade many

rich world politicians that global poverty counted (be

cause apparently precise figures could be produced

about it). The design of PRSPs was closely associated

with the Bank. While it is not possible to classify the

Bank's practice of poverty eradication as easily as it is

that of the IMF, it is clear that Bank rhetoric-about

participatory assessments of poverty and shifting to

country ownership of PRSPs-moved well ahead of its

actions. In particular, during the early 2000s, parts of

the Bank's Research Department mounted a powerful

campaign to prove that economic liberalization always

led to poverty reduction. This supported a continua

tion of the neoliberal policies of the 1980s and 1990s

and, although this was eventually discredited, it weak

ened attempts to broaden the focus of PRSPs beyond

market-based economic policies (see Chapter 9).

Civil society groups (social movements, NGOs,

faith groups, and others) were an influential force in

the promotion of the idea of global poverty eradication

and in its specification. Their profile and capacity had

risen greatly since the end of the Cold War and they

gained access to UN events and became powerful advo

cates for a range of international norms aimed at reduc

ing human deprivation and inequality and promoting

human rights. Particularly effective was the Jubilee

2000 coalition (see Chapter 14). Some groups aspired

to promote an agreement around an alternative devel

opment that did not merely reject neoliberalism but

was actively anti-capitalist (see Chapter 12). However,

they were bitterly disappointed about the configura

tion of the final MDGs, which accepted that globaliza

tion would be the means for economic growth. They

were also dismayed that the major responsibilities for

implementing poverty eradication were left to the IMF

and World Bank.

The types of institution that might have been able

to advance ideas that would have forced change on the

IMF and World Bank-a powerful social movement

for poverty eradication or a coherent epistemic com

munity promoting human development or human

rights-did not emerge at the Millennium moment.

The progress made with the idea of human develop

ment was the result of shifting networks and coalitions

of actors and did not produce a robust institutional

support for the idea. The idea of human develop

ment made progress, but still it fell between stools. It

did not lead to the emergence of a self-fuelling social

movement that could consistently place human devel

opment on the political agenda when decisions were

being made.

Nor did an epistemic community emerge (in aca

demia, the professions, and the media) that could agree

on a tightly defined analytical and causal framework

that could capture and dominate decision-making in

key institutions, as had the neoliberal epistemic com

munity at the IMF, World Bank, US Treasury, and

ministries of finance around the world. Human devel

opment, however, might be a concept that does not lend

itself easily to form the base for an epistemic commu

nity. It is broad, it recognizes the need for deliberation

and debate (and thus eschews the type of elite domina

tion that made the neoliberal epistemic community so

powerful), and it is multi-disciplinary.

MATERIAL CAPABILITIES

AND NATIONAL INTERESTS

Humanity now has the material capabilities (the tech

nological and organizational capabilities with produc

tive and destructive potentials), following Robert C ox's

24 I Hulme and King: Understanding Global Poverty Reduction 473

critical political economy, to dramatically reduce or

eradicate extreme poverty across the world. A redis

tribution of a small part of these capabilities would

permit the poor to meet their needs for basic goods

and services. In practice, reforming access to these ca

pabilities has proved very difficult. The national gov

ernments and associations of governments that might

rewrite "the rules of the game" for access to and use

of such resources have been prepared to reach general

agreement on the need for change, but key members

and groups of members oppose specific changes (such

as increasing their aid budgets or reforming the gov

ernance of the World Bank and IMF). This is partly

because of active opposition to changes driven by na

tional self-interest and partly due to a more passive

lack of interest in global poverty reduction. For most

high-income and upper middle-income countries (and

their governments, citizens, and corporations), poverty

in other countries is neither a high priority nor a press

ing public issue.

So, while material capabilities in the aggregate cre

ate the opportunity for global poverty eradication, the

contemporary distribution of those capabilities sets the

limits on achieving this goal. The concentration of ca

pabilities in the United States, until recently the world's

only superpower (economically and technologically),

means that it has been in a unique position to shape

the evolution of goals and plans for tackling global

poverty. It has appeared to be deeply ambivalent about

how to respond to the challenge of global poverty. At

times it has supported the processes, as in 2002, when

President George W. Bush spoke enthusiastically at

the Monterrey Finance for Development Summit and

announced massive increases in US foreign aid (Lan

caster, 2008). At other times it has appeared to oppose

international efforts, as in 2005, when John Bolton

(then US Ambassador to the UN) sought to have the

terms "Millennium Development Goals" and "pov

erty" removed from the "Millennium plus Five" Gen

eral Assembly declaration (McArthur, 2013). Despite this ambivalence, the United States is central to most

efforts and activities to end poverty: directly, through its vast resources and influence over institutions such

as the IMF, World Bank, and G7/8; and indirectly, as

every other actor ( governments, multilateral and bi

lateral agencies, social movements, NGOs, activists,

celebrities) in the process asks, "what is the US position

on this?"

The power of the United States, deriving from its

material capabilities, has had many impacts on the evo

lution of efforts to tackle extreme poverty. Most signifi

cantly, in 2000, the framing of global goals and plans of

action had to be done in a way that ensured the United

States would be a part of global efforts-this set limits

on how radical they could be. W hile the ideas behind

the UN conferences and summits (and later the IDGs

and MDGs) dismissed the thinking and prescriptions

of the Washington Consensus, those who proposed

new ways of thinking could not imagine challenging

the idea or practice of free-market global capitalism

as the basis for the improvement of the human condi

tion. Hence, MDG Goal 1/Target 1 is personal income

growth, which highlighted the need for economic

growth. How this goal was to be achieved-by rapidly

opening up an economy and encouraging foreign di

rect investment or through state-led industrial policy

to guide the establishment of infant industries-was

not specified, as that would have led to argument and

the blocking of an agreement. Similarly, the MDGs' fo

cus on reducing extreme absolute poverty was accept

able to the United States (and many of its allies and

business interests more generally).

But move on to 2015 and things have changed dra

matically. Economic growth in the BRICS (especially

Brazil, India, and China) has redistributed material

capabilities to the "emerging powers" and a group of

"emerging middle powers" (Turkey, Indonesia, Mexico,

South Africa) (see Chapter 13). The forms of negotia

tion about global goals have also changed dramatically

in terms of leading actors and ideas. Brazil, in par

ticular, has played a leading role promoting a Rio+20

agenda (the follow-up to the 1992 Earth Summit) and

in mobilizing the G77 (today, the 130 UN member states

who see themselves as "developing countries"). It has

converted the Post-2015 Development Agenda into

the Sustainable Development Goals (SDGs). The SDGs

incorporate most of the poverty agenda of the MDGs

but move well beyond it. They (i) target the eradica

tion of poverty; (ii) set goals for achieving sustainable

production processes and consumption patterns; and

(iii) seek to promote inclusive economic grow th. In

equality is no longer "off" the agenda and a goal has

474 PART IV I Practice in International Development

BOX 24.4 I The United Nations Open Working Group Recommendations for the Sustainable Development Goals (SDGs)

End poverty in all its forms everywhere. Goal1 Goal2

Goal 3

Goal4

Goal 5

Goals

Goal 7

Goal8

End hunger, achieve food security and improved nutrition, and promote sustainable agriculture. Ensure healthy lives and promote well-being for all at all ages. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. Achieve gender equality and empower all women and girls. Ensure availability and sustainable management of water and sanitation for all. Ensure access to affordable, reliable, sustainable, and modern energy for all. Promote inclusive and sustainable economic growth, and full and productive employment and decent work for all.

Goal9 Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.

Goal 10 Reduce inequality within and among countries. Goal 11 Make cities and human settlements inclusive, safe, resilient, and sustainable. Goal 12 Ensure sustainable consumption and production patterns. Goal 13 Take urgent action to combat climate change and its impacts. Goal 14 Conserve and sustainably use the oceans, seas, and marine resources for sustainable

development. Goal 15 Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage

forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss. Goal 16 Promote peaceful and inclusive societies for sustainable development, provide access to

justice for all, and build effective, accountable, and inclusive institutions at all levels. Goal 17 Strengthen the means of implementation and revitalize the global partnership for sustainable

development.

Source: Adapted from Open Working Group proposal for Sustainable Development Goals at http://sustainabledevelopment.un.

org/focussdgs. html.

been set for "reducing inequality within and across

countries." As in 2000, these goals are to be achieved

through a "global partnership," with a recognition that

the millennium goal partnership was not achieved.

At one level it might be argued that the shift from

the poverty-reducing MDGs to the broader SDGs means

that global poverty has slipped down the interna

tional a genda. But if one takes a close look at the SDGs,

one can argue that they have moved from targeted

poverty-reduction to prosperity and well-being for all

(including future generations). They promise to tackle

the root causes of poverty-increasing inequality,

conflict, and violence; weak institutions; an unfair

global trade system; access to technology-rather than

just the proximate symptoms.

WHAT HAS BEEN ACHIEVED?

Assessing what has been achieved by recent efforts for

global poverty reduction is a complex task that has

generated hundreds of reports and many data sets. A

summary of MDG performance to 2014 is provided in

Table 24.1 (and updates can be found at www.un.org).

24 I Hulme and King: Understanding Global Poverty Reduction 475

TABLE 24.1 Progress with the MDGs to 2014

MDG 1990-2015

1. Halve extreme poverty Target already achieved because of 80 per cent reduction in China. South

Asia close to target but sub-Saharan Africa significantly off track.

2. Universal primary education Close to target but will not be achieved in sub-Saharan Africa and South Asia

and progress has slackened.

3. Gender equality Close to achievement at primary and secondary school level but other targets

are lagging.

4. Reduce child mortality by

two-thirds

Substantial progress but target will not be achieved. Sub-Saharan Africa

significantly off track.

5. Reduce maternal mortality by

three-quarters

Least progress of all the MDGs with 300,000 pregnancy-related deaths per

annum. Very problematic in sub-Saharan Africa and South Asia.

6. Combat HIV/AIDS, malaria,

and other diseases

Most countries face difficulties in meeting targets. HIV/AIDS is a particular

problem and worst in sub-Saharan Africa. Malaria target on track but big

challenges remain.

7. Environmental sustainability Global greenhouse emissions have massively increased and deforestation

remains a threat. Unsafe water and lack of sanitation remain widespread.

8. Develop a global partnership No evidence of a step change in relationships.

· Decline in aid reversed but levels well below 0.7 per cent target.

· Debt burden of developing countries much lower than 2000.

· Trade talks stalled.

· Climate change-limited progress.

Sources: United Nations (2014) and author.

The accuracy of this information varies from indicator

to indicator because of the poor quality of much of the

underlying data and problems of estimation. Assessing

how twenty-first-century efforts to end poverty (MDGs,

Financing for Development, PRSPs, etc.) have contrib

uted to these changes in levels of human development

is even more difficult, as this would require isolating

the contribution of each mechanism from that of many

other factors (such as economic growth in China,

global warming, the war in the Democratic Republic

of Congo, patterns of rainfall in Asia and Africa, food

prices, or the global financial collapse of 2008). Such

assessments also vary with the perspective taken:

should we assume that anything less than 100 per cent

achievement for all eight MDG goals is failure or does

partial achievement represent significant progress?

Does China's overachievement in reducing extreme in

come poverty and other targets partially compensate

for underperformance in other parts of the world? Or,

given doubts about the data and time lags between pol

icy change and outcome change, should the focus be on

process changes and trying to identify whether or not

a step change occurred in international and national

efforts to reduce poverty around 2000?

iJfDO Perfonnance

The most recent data (UN, 2014) provide grounds for

being both deeply impressed with poverty reduction

achievements since 1990 and deeply alarmed by the

remaining scale of human deprivation, continued en

vironmental degradation, and lack of progress towards

"global partnerships." On the positive side, the period

since 1990 has witnessed the reduction of income/

consumption poverty at historically unprecedented

rates. Using the global poverty line of US$1.25-a-day

and the 2005 purchasing power parities (PPPs), then,

by 2010, the MDG Goal #1 /Target #1 was achieved five

years earlier than targeted. Projections indicate that by

2015, US$1.25-a-day poverty will have dropped from

around 42 per cent of humanity in 1990 to 15 per cent.

As a headline figure this is almost a two-thirds re

duction in extreme poverty in 25 years: not the "eradi

cation" target declared at the World Summit on Social

476 PART IV I Practice in International Development

PHOTO 24.3 I Reconstruction In Mymane, Afghanistan.

Development at Copenhagen in 1995 , but better than

the "halving the proportion" target of the MDGs. Two

qualifications to this good news need to be borne in

mind, however. First, much of this achievement has

been concentrated in China (but at what costs to work

ers and the environment?). Progress in sub-Saharan

Africa, and to a lesser degree in South Asia, has been

much weaker. Second, there are big questions about

how much of this extraordinary achievement can be at

tributed to international action to tackle global poverty.

Autonomous policy change in China in the late 1970s

and 198os-land and agrarian reform and the opening

up of the economy to international trade-may be re

sponsible for much income poverty reduction.

On the negative side, the maternal mortality goal

has proved very difficult to make progress on; global

emissions of carbon dioxide are 50 per cent higher

than in 1990; and there has been little progress towards

a genuine global partnership for development (for

example, the governance of the World Bank and IMF

is virtually unchanged). Moving beyond the headlines,

there are complex patterns of MDG achievement in

different regions and countries and for different goals.

Some of these are outlined below.

In 2000, the Millennium Declaration recognized

Africa's "special needs." Despite increased eco

nomic growth and improvements in human develop

ment indicators (especially a recent decline in infant

mortality), this special status is still justified. This is

the region of the world where MDG progress has been

most challenging and, even bearing in mind that the

MDG specification makes Africa's achievements appear

worse than they are (Easterly, 2009), progress has been

unsatisfactory. Between 1990 and 2010, extreme pov

erty has been well below the trend needed to "halve"

poverty (the decline has only been from 56 per cent

in 1990 to 48 per cent in 2010) and only a 36 per cent

reduction is estimated by 2015 (UN, 2014). This is

24 I Hulme and King: Understanding Global Poverty Reduction 477

clearly disappointing: but it must be noted that this is

a decline-poverty has reduced greatly in sub-Saharan

Africa despite the impression from parts of the media

that "things are getting worse."

Human development achievements are also disap

pointing: there has been only limited progress on uni

versal primary education; gender equality in primary

education has moved relatively slowly (from 52 per cent

in 1990 to 78 per cent in 2012); child mortality has de

clined but is at much higher levels than other regions

(98 deaths per 1,000 births in 2012, compared to South

Asia's 5 8 deaths per 1,000 births); maternal mortality

is more than twice South Asia's rate; and the region

has encountered great difficulty in achieving HIV/AIDS

reduction targets. The picture is not uniform across

the continent, and there are outstanding examples of

progress. For example, several sub-Saharan countries

have made significant strides in tackling the incidence

of malaria, and it is estimated that between 2000 and

2012 more than 3 million child deaths were averted

by anti-malaria interventions. Rwanda increased

the proportion of children under five sleeping under

insecticide-treated bed nets from 4 per cent in 2000

to 56 per cent in 2008. Countries that have achieved

high coverage of malaria interventions, notably Benin,

Madagascar, Rwanda, and Tanzania, have seen de

clines of more than 50 per cent in severe malaria cases

and deaths in health facilities (UN, 2009: 36). Signifi

cant progress is being made in certain areas, but Africa

still clearly merits special attention.

In terms of specific goals, then, the picture again

is mixed. The goal of achieving universal primary ed

ucation is likely to come close to achievement in 2015

but sub-Saharan Africa and South Asia will lag. A key

concern about this goal is whether the progress on the

numbers of children enrolled in schools has impacted

negatively on educational quality (schooling without

learning) and led to high dropout rates, especially by the poorest children. There is substantial achievement

in terms of gender equality at the primary school level

but less at the secondary school level as substantial

male:female gaps remain in sub-Saharan Africa and

South Asia. Work-related indicators (labour force par

ticipation, occupational levels, and wages) continue to

reveal significant gender gaps. The relative position of

women in most countries is progressing but the pace is often very slow.

Both good news and bad news can be identified

on the health targets. Child mortality has fallen in all

regions and is on target to reduce by three-quarters

(1990-2015) in East Asia, Latin America, and the Mid

dle East and North Africa (although it must be noted

that instability in the latter region, especially in Iraq,

Syria, and Libya, means that in some countries in

fant and maternal mortality has increased and life

expectancy has lowered dramatically). At the same

time, progress in sub-Saharan Africa has been limited

and easily preventable deaths remain high. Mater

nal mortality is the goal for which progress has been

most limited. Each year more than 300,000 women

die from pregnancy-related health problems. In 2013,

sub-Saharan Africa ( 5 10 deaths per 100,000 live births)

and South Asia (190 deaths per 100,000 live births) re

mained especially problematic. Most countries and re

gions face difficulties achieving HIV/AIDS targets, and

this is an exceptionally severe problem in sub-Saharan

Africa. Halting the incidence of malaria and tuberculo

sis also remains a challenge as drug resistance has been

building up.

In terms of environmental sustainability, the tar

get on access to water is likely to be met globally and

in many countries, though there are questions about

how "safe" much of this water is. However, the sanita

tion target has made more limited progress especially

in sub-Saharan Africa and South Asia. More than one

billion people routinely practice open defecation, and

this is a particular problem in India. Global CO, emis

sions have increased significantly since 1990, renewable

water resources in many parts of the world are becom

ing scarcer, and deforestation rates remain high.

The lack of quantitative targets for the goal of de

veloping a global partnership means this cannot be

judged against specific measures. However, with aid

at less than half of the 0.7 per cent target, the stalled

Doha trade round, and slow progress on the mitigation

of global warming, it seems reasonable to state that the

rich world has broken its promises.

CONCLUSIONS

If one rates the significance of an idea by how widely

cited it is, then the last 15 to 20 years have been a

bumper time for poverty (Ravallion, 2011). Since the

478 PART IV I Practice in International Development

·c "'

"' .c

"' ..

0.. (.)

PHOTO 24.4 I A woman carries her belongings In earthquake-devastated Port-au-Prince, Haiti.

demise of structural adjustment and the end of the

Cold War, the concept of poverty reduction has risen in

prominence and has been very closely associated with

international development-indeed, leading agencies

have at times seen these two as synonymous. Whether

this has been advantageous or disadvantageous to poor

people is unclear.

At the current juncture it would seem that a syn

thesis of two traditionally oppositional ideological

camps may be occurring (Brett, 2009) around theo

ries of poverty, which recognizes that both states and

markets have to work to improve human well-being.

Analysts of both structuralist and liberal tendencies

have coalesced around a "promote growth, reduce

poverty, and strengthen institutions" framework.

The international financial institutions (IFis) have

shifted away from one-size-fits-all policy prescrip

tions to a greater focus on customized national

poverty reduction strategies (PRSs) and institutional

development.

However, whether this is a genuine synthesis or

merely a temporary lull in the structuralism versus

liberalism contestations remains to be seen. Both sides

may agree that poverty reduction is a good thing, but

a yawning chasm remains between those who theorize

that the cause of poverty is inequality (and to whom

reducing national and international inequality is the

paramount issue) and those who theorize it is lack

of growth (and to whom releasing the power of the

market to increase growth is the top priority). The bur

geoning consultations, debates, and meetings about

the post-2015 development agenda have been shaping

the future of poverty in development thinking. An

alysts of a structuralist tendency were concerned

that with British Prime Minister David Cameron as

the OECD's representative on the three-person UN

24 I Hulme and King: Understanding Global Poverty Reduction 479

steering committee, the next set of goals will shift to

wards market-based growth. Scholar-activists such as

Richard Jolly and colleagues (2012) argued for a set of

goals that placed reducing inequality at their heart.

These liberal versus structuralist debates will rumble

on, and with 17 goals and 167 targets the SDGs appear

to be a new compromise on the goals of development

not a synthesis-between these two intellectual camps.

Poverty heads the SDGs but they are a much longer and

more complex set of goals than the MDGs.

SUMMARY

This chapter has sought to introduce the concept of

"poverty" and explain why ending poverty, or at least

poverty reduction, across the world gained entry to the

international agenda in the 1990s and crystallized into

the MDGs (approved by the entire UN membership)

and now heads the post-2015 SDGs. Ideas were of great

importance, especially the reformist idea of pursuing

human development in all countries and the existence

of a measuring stick (the dollar-a-day pover ty line)

that would make it possible to count how many people

were escaping extreme income poverty. A vast num

ber of formal and informal institutions shaped and

used these ideas in contests to achieve their goals of

either social mission or self-interest. At one level this

can be seen as a contest between the ideas of the Bret

ton Woods institutions (the Washington Consensus

built around economic development) and the other

UN agencies (human development). However, the pro

cesses of interaction-G7/8 meetings; UN summits;

regional conferences; civil society protests; the an

nual World Economic Forum in Davos, Switzerland;

and a million more-meant there were no clear sides

and no one fully understood what the products of de

bates would be. The material capabilities of particu

lar nation-states, and particularly the collapse of the

Soviet Union's economic power, underpinned these

processes. The growing wealth of the world made

it reasonable to argue that, at the very least, the ba

sic needs of all of humanity could be met. And ... it

was a time for some stardust. A new millennium de

manded that world leaders come up with something

grand: they could not come up with a real vision, but

they could agree (eventually) to a negotiated set of

anti-pover ty goals.

QUESTIONS FOR CRITICAL THOUGHT

1. What are the links between how poverty has been conceptualized and approaches to poverty measurement

and poverty reduction?

2. Have international commitments to poverty reduction been driven more by national interests or by altruism?

3. What has shaped the character of global social movements for poverty eradication?

4. How is the emergence of new powers like Brazil, India, and China shaping the international poverty reduc

tion agenda?

Deaton, Angus. 2013. The Great Escape: Health, Wealth

and the Origins of Inequality. Princeton, NJ: Princeton

University Press.

Hulme, David. 2015. Global Poverty: Global Governance and

Poor People in the Post-2015 Era. London: Routledge.

Pogge, Thomas. 2008. World Poverty and Human Rights:

Cosmopolitan Responsibilities and Reforms. Cambridge:

Polity.

480 PART IV I Practice in International Development

BIBLIOGRAPHY

Chambers, R. 1983. Rural Development: Putting the Last

First. Abingdon, UK: Routledge.

Clark, D. 2006. "Capability approach." In D. Clark, ed., The

Elgar Companion to Development Studies. Cheltenham:

Edward Elgar, 32-44.

Du Toit, A. 2009. "Poverty measurement blues." In T. Addison,

D. Hulme, and R. Kanbur, eds, Poverty Dynamics:

Interdisciplinary Perspectives. Oxford: Oxford University

Press, 225-46.

Easterly, W. 2009. "How the MDGs are unfair to Africa."

World Development 37, 1: 26-35.

Fanon, F. 1961. The Wretched of the Earth. New York: Penguin

Modern Classics.

Giddens, A. 1984. The Constitution of Society: Outline of

the Theory of Structuration. Berkeley: University of

California Press.

Hulme, D. 2010. "The making of the Millennium

Development Goals: Human development meets

results-based management in an imperfect world." In

J. Clapp and R. Wilkinson, eds, Global Governance,

Poverty and Inequality. London: Routledge, 135-61.

Jolly, R., G.A. Cornia, D. Elson, C. Fortin, S. Griffith-Jones,

G. Helleiner, R.E. van der Hoeven, R. Kaplinsky,

R. Morgan, I. Ortiz, R. Pearson, and F. Stewart. 2012.

Be Outraged: There Are Alternatives. EUR-ISS-EDEM.

Rotterdam: International Institute of Social Studies,

Erasmus University. http://hdl.handle.net/1765/38332.

Accessed 16 Sept. 2015.

Lancaster, C. 2008. George Bush's Foreign Aid: Transformation

or Chaos? Washington: Brookings Institution Press,

2008.

McArthur, J. 2013. "Own the goals: What the Millennium

Development Goals have accomplished." www.brookings

.edu/research/articles/2013/02/21-millennium-dev-goals

mcarthur. Accessed 16 Sept. 2015.

Mallaby, S. 2004. The World's Banker: Story of Failed States,

Financial Crises, and the Wealth and Poverty of Nations.

New York: Penguin.

OPHI. 2014. "Global Multidimensional Poverty Index, Oxford

Poverty and Human Development Initiative." www

.ophi.org.uk/. Accessed 16 Sept. 2015.

Pogge, T. 2004. "The first United Nations Millennium

Development Goal: A cause for celebration?" Journal of

Human Development and Capabilities 5, 3: 377-97.

Ravallion, M., and S. Chen. 2013. "A proposal for truly global

poverty measures." Global Policy 4, 3: 258-65.

Sen, A. 2001. Development as Freedom. Oxford: Oxford

University Press.

United Nations. 2009. The Millennium Development Goals

Report 2009. New York: UN.

--. 2014. The Millennium Development Goals Report

2014. New York: UN.

Williamson, J. 1990. "What Washington means by policy

reform." In J. Williamson, ed., Latin American

Adjustment: How Much Has Happened? Washington:

Institute for International Economics, 5-38.

Measuring and Evaluating Poverty Keetie Roelen

LEARNING OBJECTIVES

To learn about the evolution of thinking about pov

erty across time and place.

• To understand different approaches for measur

ing and interpreting poverty.

• To appreciate the importance of using comple

mentary measurement.

• To understand the use of poverty measurement

for policy.

A, A woodcutter rides in a train in Manikpur railway station, India, with his wood for sale. Collection and sale of firewood in

nearby markets is a regular source of income for families with little or no productive land. I Source: Photo by Akshay Gupta/ Pacific Press/LightRocket via Getty Images

482 PART IV I Practice in International Development

INTRODUCTION

Poverty must be one of the most frequently used words

in international development and development studies.

But what do we actually mean when we use the term

"poverty"? And do we all mean the same thing? This

is highly unlikely. Ask someone living in Sierra Leone

about what it means to be poor and she or he will

probably give you a very different answer compared to

someone living in Switzerland. Ask a child what pov

erty means to him or her and you are likely to get a very

different response than from an adult. And if you were

able to ask someone a century ago about what "living

in poverty" meant, you would have received a very dif

ferent answer than if you were to ask someone the same

question today.

To help gain an understanding of the different

concepts and measures of poverty, this chapter ex

amines how thinking about poverty has evolved over

PHOTO 25.1 I Woman and child in front of grass house, Burundi.

time and discusses main schools of thought that have

shaped poverty debates up to the present. We then

consider key questions around measuring poverty by

discussing the two main approaches to poverty meas

urement in more detail, namely, monetary poverty and

multi-dimensional poverty. Finally, the chapter ex

amines the extent to which these approaches provide

similar or different pictures of poverty and reflects on

implications for policy and practice.

EVOLUTION OF THINKING

ON POVERTY

I saw an old cottage of clay,

And only of mud was the floor;

It was all falling into decay,

And the snow drifted in at the door.

Yet there a poor family dwelt,

In a hovel so dismal and rude;

And though gnawing hunger they felt,

They had not a morsel of food.

The children were crying for bread,

And to their poor mother they'd run;

"Oh, give us some breakfast," they said,

Alas! their poor mother had none.

Excerpt from "Poverty" by Jane Taylor (1783-1824)

The excerpt from the poem "Poverty" poignantly re

flects how poverty was conceived in the nineteenth

century in England, referring to hunger and harsh

living conditions. The first comprehensive poverty

studies were undertaken in England around the turn

of the twentieth century. Charles Booth mapped liv

ing conditions in London (see photo of Booth's map

of London) by investigating various areas of people's

lives, including work and working conditions, hous

ing conditions, urban environment, and religious life.

Benjamin Rowntree conducted a similar study in York

a few years later to highlight that urban poverty was

not a phenomenon exclusive to the metropolis of Lon

don. He focused on whether city dwellers were able to

acquire basic necessities such as food, fuel, and cloth

ing and calculated a minimum weekly sum of money

25 I Roelen: Measuring and Evaluating Poverty -1-8:;

PHOTO 25.2 I Charles Booth"s map of London poverty in 1889.

necessary to enable families to secure the necessities of

a healthy life, thereby becoming one of the founding

fathers of what remains the dominant approach in pov

erty measurement.

Studies focusing on people's living conditions and

comparing those to a threshold of basic necessities were

replicated in many different areas and countries in the

first half of the twentieth century. As living conditions

in Europe and other Western countries improved, no

tions of the meaning of poverty shifted towards think

ing about poverty as the inability to live lives that are considered the norm or appropriate in that time and place rather than the inability to secure a minimum level of basic needs. This led to a shift in thinking from ab olut poverty to rt'lativc pu ·crt,-. One of the first scholars to consider this concept was Peter Townsend,

who said that poverty was about: "The absence or in

adequacy of those diets, amenities, standards, services

and activities which are common or customary in soci

ety" (Townsend, 1979). In other words, poverty was no

longer about being able to meet a basic minimum level

of living standards but about being able to live and do

as others in society.

Around the same time that thinking moved from

absolute to relative poverty, an Indian economist and

philosopher, Amartya Sen, argued that poverty is

not all about income or living standards but rather

about having the capabilities to achieve and live the

lives that people value. His "capability approach"

and its influence on thinking about development and

poverty reduction were so groundbreaking that he

was awarded the Nobel Prize in Economics in 1998.

484 PART IV I Practice in International Development

PHOTO 25.3 I Amartya Sen (left) receiving Nobel Prize in 1998.

In terms of poverty measurement, it inspired wider

thinking around multi-dimensional poverty and the

notion that poverty is a broader concept and should

include more indicators for it to capture all the differ

ent elements.

The issue of poverty measurement and the "right"

approach has remained and remains the subject of

extensive academic research and policy debate. Al

though somewhat crude, the division between mon

etary and multi-dimensional approaches to poverty

measurement is widely maintained, largely informed

by normative, conceptual, and empirical underpin

nings. Monetary approaches focus on the availability

of monetary resources as the main indicator of living

standards, while multi-dimensional approaches take

into account a broader spectrum of living conditions.

Monetary poverty measurement is therefore also re

ferred to as an indirect approach to poverty measure

ment as it considers the means to an end rather than

the end itself (Hulme, 2015).

MONETARY POVERTY

Monetary poverty remains the most prominent ap

proach in measuring poverty (Sumner, 2007) and is

based on a number of assumptions about how mon

etary resources can be translated into fulfillment of

basic needs. What makes the monetary approach so ap

pealing is its intuitive nature and that the use of money

as the main indicator makes for a very versatile meas

ure that can provide information about the number of

people living in poverty but also about how poor they

are and where they are.

Despite its basic intuitive nature, how to measure

monetary poverty has been widely debated. This in

cludes questions around how to determine someone's

welfare, how to decide on a minimum threshold (the

poverty line), and how to measure poverty.

The Welfare Measure

The first step in establishing whether someone is poor or

not in the monetary approach requires measuring some

one's welfare or looking at how much money someone

has at his or her disposal. This might appear a straight

forward exercise, particularly when living in high-in

come countries: you simply consider how much income

someone earns. This is not the case, however, in either

high-income countries or low-income countries. For ex

ample, people might earn income from multiple sources

and pay different types of taxes over those income

sources. People might also earn income with different

frequencies: a permanent job may provide the same in

come every month; seasonal or temporary jobs may pro

vide income at variable and unpredictable intervals; and

the sale of a house or land will constitute a large one-off

flow of income. In low-income countries these issues are

often compounded as most people do not have formal or

permanent jobs, income flows are highly variable, and

income earnings can be in cash or in-kind.

Given the complexities involved, a degree of com

mon practice has emerged to determine the amount of

monetary resources available. An important element of

that practice in low- and middle-income countries is

to consider how much someone consumes or spends,

rather than earns, as income. This might be more ap

propriate for a number of reasons. First, income fluc

tuates much more than consumption does; while the

income one earns might be dependent on the season,

for example, a basic level of consumption is main

tained throughout the year. Second, income is usually

under-reported as people are either reluctant to share

full information about their earnings or may not know

the full extent of their income, particularly if there are

multiple income sources. Consumption and spend

ing are less contentious to report and might be easier

to track in a diary, for example. Finally, income may

not take the form of money, particularly in developing

countries. People could be paid in food items, for ex

ample, or could not be paid at all but survive on their

own food production. Taking consumption as the wel

fare measure would account for all food that is eaten,

regardless of whether it is purchased with money or

homegrown (see Deaton and Grosh, 2000, for further

discussion).

It should be noted that welfare is usually estab

lished at the household level. Individual consumption,

spending, or earning patterns are aggregated to house

hold level, culminating into an indication of the level

of monetary resources available in the household as a

whole. The rationale for doing so is that resources are

generally shared across household members but indi

vidual members may not equally contribute to such

resources. Children are a case in point: they do not

earn an income by themselves but share in their house

hold's overall income. When referring to welfare at the

individual level, household-level measures of welfare

will have been translated back to the individual level

by dividing the total resources across all household members.

The Poverty Line

After having established how to measure welfare, the

next step is to establish what level of welfare consti

tutes poverty or not. In order to make this decision, one needs to set a threshold that divides the population

25 I Roelen: Measuring and Evaluating Poverty 485

into poor and non-poor on the basis of their welfare

level-a poverty line. If someone's welfare is lower than

the poverty line, that person is considered poor. As is

the case for establishing the welfare measure, setting

the poverty line is a complex and contentious process.

An important consideration is whether the pov

erty line should be absolute or relative. Should the pov

erty line represent a minimum standard of living-the

method employed by Benjamin Rowntree-or should

it be related to the society's wider living conditions-as

proposed by Peter Townsend? Although most high

income countries employ both types of poverty lines,

the relative poverty line has gained prominence in

the last two decades and is now most widely used in

European countries. This is in recognition of the fact

that even if everyone in society might be able to secure

minimum needs for survival, some may not be able to

participate in society according to conventional liv

ing standards. Absolute poverty lines remain the most

widely used method in low-income countries.

An absolute poverty line is usually based on the

costs of a minimum consumption basket. Many coun

tries apply a method calculating the cost of a basket

of food typically consumed to provide a daily caloric

intake of 2,300 calories (Hulme, 2015). This amount

is complemented with a non-food share to account

for costs of important non-food items such as shelter,

clothing, and cooking fuel. The first poverty line is of

ten referred to as the "extreme poverty line" or "food

poverty line," while the second poverty line is often

simply called the "poverty line" (Hulme, 2015). Box 25.1

describes how absolute poverty lines are calculated in

Myanmar.

The absolute poverty lines described above are na

tional poverty lines that will be different depending on

the country under consideration, making them very use

ful for in-country analysis but less helpful for cross-coun

try comparisons. International poverty lines serve the

purpose of measuring absolute poverty at a global scale;

the World Bank's International Extreme Poverty Line

(IEPL) is the most widely used measure. It is also known

as the "dollar a day" line, as this was its value when the

line was first established in 1990. The line has been ad

justed a few times since and currently stands at US$1.25

in 2005 purchasing power parity (PPP). PPP refers to the

process of taking account of the differences in the costs

of living across countries: even after the application of

let,;

4s6 PART IV I Practice in International Development

BOX 25.1 I Setting the Food Poverty Line and Poverty Line in Myanmar

Two poverty lines are presented in [Myanmar's] Poverty Profile based on the Integrated Household Living

Conditions Assessment, the "food poverty" and "poverty" lines. The food poverty line measures how

much consumption expenditure is required to meet basic caloric needs only. The poverty line simply

adds an allowance for non-food expenditure ... .

The Food Poverty Line

There are five basic steps which are required to set the food poverty line:

First, a "poor" reference group is selected, which, in the present case, is the second quartile (25 per

cent) of the consumption distribution, i.e. the bottom 25-50 per cent.

Second, the number of calories consumed by this reference group is calculated. This step requires

information on the quantities of food items consumed and the caloric content of these food items.

Third, the minimum required caloric intake is calculated for different population groups based on

nutritional norms. In Myanmar, different calorie requirements have been set for males, females,

children and urban/rural dwellers.

Fourth, the food actually consumed by the reference group is "scaled up or down" until it reaches

the minimum required level of caloric intake. In practice, this means that the "basket" of foods

consumed stays the same but the level is increased or decreased.

Finally, the cost of this new scaled food basket is calculated, and represents the food pover ty line.

It should be noted that the "food poverty" line is very meagre indeed. It represents the amount required

to meet caloric requirements assuming that a// household income is spent on food. As such, it repre

sents a level of extreme hardship.

The Poverty Line

The poverty line retains all of the above steps and simply adds an allowance of non-food expenditure.

Three additional steps are required:

First, the non-food share in consumption expenditure of the reference group is calculated.

Second, a monetary value is assigned to this share (by multiplying it by the food poverty line).

Third, the monetary value is added to the food poverty line to arrive at the poverty line.

Calculated in this way, the poverty line represents a minimum of food and non-food expenditures based

on the consumption pattern of the second quartile of the consumption distribution.

Source: IHLCA (2011: 5-6).

exchange rates, the amount of food (or any other goods)

that you would be able to purchase with US$1.25 in Nor

way would be very different from what you would be able

to purchase in Niger, for example. To ensure that the IEPL

reflects the ability to purchase the same basket of goods

anywhere in the world-the same purchasing power

adjustments have to be made using purchasing power

parity (PPP) exchange rates. As such, the IEPL ofUS$1.25

BOX 25.2 I The "Big Mac Index"

25 I Roelen: Measuring and Evaluating Poverty 487

A simplified and more intuitive version of PPP exchange rates is the "Big Mac Index." The Big Mac Index was invented by The Economist in 1986 as a light-hearted and simplified version of the PPP principle, cal culating the price of a highly standardized product-the Big Mac-in US dollars using market exchange rates. The Big Mac PPP exchange rate between two countries is obtained by dividing the price of a Big

Mac in one country (in its currency) by the price of a Big Mac in another country (in its currency). This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued.

Source: The Economist: http://www.economist.com/contentjbig-mac-index.

in 2005 PPP reflects the purchasing power of US$1.25 in

the United States in 2005 (Sillers, 2015).

Critics of absolute poverty lines have argued that

they objectify people as "cattle or livestock-being

reared, not part of society" (Hulme, 2015: 61) and that

poverty needs to be defined in relation to whether peo

ple are integrated and able to participate in society. Rel

ative poverty measures aim to do so by using countries'

average living conditions as a benchmark rather than

minimum needs for survival. The most commonly used

relative poverty line is 60 per cent of median income,

which is referred to as the "at-risk-of-poverty" line and

applied to all 28 countries in the European Union. As

the poverty line is tied to median income in a given

country, the value of such poverty lines differs con

siderably across countries (Eurostat, 2015). Also, while

an absolute poverty line allows for the eradication of

poverty-it is possible for all people to gain an income

that is higher than the absolute poverty line-there

will always be a degree of poverty when employing a

e�-.....--------�-------------

BOX 25.3 I Relative Poverty in Middle-Income Countries

Tying the poverty line to the income distribution of a given country ensures that poverty measures account for the cost of social inclusion rather than merely the cost of basic needs. The attributes of social inclusion will differ from one country to the next. They could include owning a car that allows for the daily commute to work, having the ability to go on a school trip with other classmates, or making contributions to important family celebrations such as weddings and funerals. Adam Smith-one of the founding fathers of economic theory-referred to linen shirts as an attribute of social inclusion in the context of Europe in the eighteenth century: "A linen shirt, for example, is, strictly speaking, not a nec

essary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty" (Smith, 1776: part 2 article 4).

488 PART IV I Practice in International Development

relative poverty line because the line is pegged against

the proportion of a country's income distribution.

The Po,verty JJ1easure

After having decided on the welfare measure and

poverty line, the next step entails establishing pov

erty measures that allow for aggregating information

at the household or individual level into meaningful

information about poverty. The so-called Foster-Greer

Thorbecke (FGT) poverty measures distinguish three

types of measures that each provide different infor

mation about poverty: (1) the headcount index, (2) the

poverty gap index, and (3) the poverty severity index

(see Box 25-4).

The first measure-the poverty hcadcn1111t index

is the most intuitive and widely used measure and sim

ply indicates what proportion of the population lives

in poverty. It is calculated by counting the number of

people below the poverty line and dividing that by the

total population. This is illustrated in Figure 25.1 by the

dashed lines for Countries I and II; in both countries,

50 per cent of the population have a level of monetary

resources below the poverty line.

The second measure-the povcrly gap index

provides insight into how deep poverty is. It does so by

taking into account the level of monetary resources and

its distance to the poverty line for every poor household

c .!9

C 0

�

Country I

Poverty gap ! ! I I I

Poverty line

50% 100%

Percentage of population

FIGURE 25.1 I Poverty Gap

or individual, representing individual shortfalls from

the poverty line. These individual shortfalls are aggre

gated and represent the poverty gap in a country, as is

represented by the dashed arrows in Figure 25.1. The

overall poverty gap is then divided by the poverty line

and averaged across the total population. Thereby the

measure represents "[t]he sum of these poverty gaps

[and] gives the minimum cost of eliminating poverty,

if transfers were perfectly targeted" (World Bank, 2005:

69). The poverty gap index is an important measure

for providing information on the depth of poverty. It

should also be noted that two countries can have iden

tical poverty headcount ratios but very different out

comes in terms of the poverty gap ratio, as reflected for

Countries I and II in Figure 25.1. While half of the pop

ulation is poor in both countries, poverty is "deeper" in

Country II since the combined gap between monetary

resources and the poverty line of those people living in

poverty is larger.

The third measure-the povcrt )' scn'rity i ndL·x-is

the least intuitive of the FGT measures but gives an indi

cation of how severe poverty is. It is calculated by giving

greater weight to larger poverty gaps by "squaring" in

dividual poverty gaps before dividing them by the pov

erty line and averaging this across the total population.

It can also be seen as a measure that takes inequality

among the poor into account by giving greater weight to

those who are further away from the poverty line.

Vl Q)

Country II

� l---::-----,,-------,,1--------- P overt y gap

I I I c "'

+-'

C 0

�

I I

50%

Poverty line

100%

Percentage of population

25 I Roelen: Measuring and Evaluating Poverty 489

BOX 25.4 I Foster-Greer-Thorbecke (FGT) Class of Poverty Measures

The equation below represents the formal mathematical notation of the FGT class of poverty measures, where N is the size of the population, z is the poverty line, and G; is the shortfall from the poverty line. It includes all three measures in one equation by varying the value for a. If a = 0, the equation represents the proportion of people living below the poverty line or the poverty headcount index (also noted as P

0 ).

If a = 1, the equation represents the average shortfall as a proportion of the poverty line or the poverty gap ratio (also noted as P

1 ). If a= 2, the equation gives greater weight to larger shortfalls and represents

the squared poverty gap index or the poverty severity index (also noted as PJ

Pa = �±(G;)a

N i=1 z

For a more detailed discussion, see World Bank (2005: ch. 4).

MULTI-DIMENSIONAL POVERTY

The measurement of multi-dimensional poverty can

be said to follow from heated debates around whether

poverty should be understood as the lack of means to

achieve a minimum standard ofliving or as the actual

shortfall from such a standard of living (Hulme, 2015).

As indicated earlier, monetary poverty approaches

essentially focus on the "means to an end," based on

the assumption that monetary resources can be trans

lated into non-monetary outcomes. Multi-dimensional

measures challenge that assumption and aim to cap

ture elements of standard of living more directly.

There are many shortcomings of the monetary ap

proach, mostly related to the underlying assumptions discussed previously (Bourguignon and Chakravarty,

2003). A first drawback relates to the assumption that

everything necessary for a minimum standard ofliving

can be expressed in monetary terms. A second short

coming relates to the assumption that everything can be bought on markets and that such markets function perfectly. This is not necessarily the case, particularly in developing countries. Third, monetary approaches

assume that a given level of income is also spent on the

minimum required set of basic needs, which may not

necessarily be the case. Finally, monetary approaches

assume that income at the household level is distrib

uted to individual members in equal measure or in

such a way that it meets individuals' requirements.

In addition to these conceptual challenges of the

monetary approach, empirical findings in the 1970s

also fuelled doubts about whether a purely economic

view fairly reflected reality on the ground in terms of

wider living conditions. In 1978, for example, Streeten

and Burki found that: "In spite of unprecedently [sic]

and unexpectedly high growth rates during the last

twenty-five years, and in spite of improvements in such

social indicators as literacy and infant mortality, pes

simism is widespread. The pessimism prevails because

aggregate economic growth appears to have done very

little for the poorer half of the Third World's rapidly

growing populations" (Streeten and Burki, 1978: 411).

In light of these conceptual and empirical chal

lenges, multi-dimensional poverty approaches were

developed. As indicated earlier, the work by Amartya

Sen on the capability approach (see Box 25.5) laid the

foundation for many approaches that were developed

subsequently. These approaches include the basic needs

approaches (Streeten, 1984, 1981) and social exclusion

methods (Marlier et al., 2009). Basic needs approaches

490 PART IV I Practice in International Development

BOX 25.5 I Sen's Capability Approach

While the capability approach originates from the 1970s, Amartya Sen's Development as Freedom (1999)

provides helpful insight into the meaning of the approach. He specifically sets the capability approach apart from the monetary approach by stating that the "capability approach" addresses poverty as "the deprivation of basic capabilities rather than merely as lowness of incomes." The space it operates in is "that of the substantive freedoms-the capabilities-to choose a life that one has reason to value" (Sen, 1999: 74). Capabilities thus refer to being able to do or be according to someone's values, thereby taking into account a complex combination of an individual's set of valued choices and degree of free dom and agency to act upon such choices. Sen writes that "[c]apability is thus a kind of freedom: the substantive freedom to achieve ... various lifestyles. For example, an affluent person who fasts may have the same functioning achievement in terms of eating ... as a destitute person who is forced to starve, but the first person does have a different 'capability set' than the second (the first can choose to eat well and be well nourished in a way the second cannot" (Sen, 1999: 75). Given the focus on indi vidual values and freedom to live up to such values, Sen has always been opposed to formulating a uni versal set of capabilities. Other scholars operationalizing the capability approach, most notably Martha Nussbaum, advocate a more prescriptive approach that includes the establishment of context-specific lists of basic capabilities.

build on the notion that a set of universal basic needs

holds across time and place and thereby mirrors abso

lute poverty as described as part of monetary poverty

measurement. Social exclusion methods emerged in

Europe in the 1970s and are grounded in concepts of

inclusivity and participation, postulating that poverty

measures should reflect whether people are able to par

ticipate in the society as measured against standards

that are relevant in that place and at that time. They

therefore resemble relative poverty measures as dis

cussed above. Although multi-dimensional poverty

approaches take different perspectives on what various

dimensions are to be included (which can sometimes

include income), they share the common ground that

poverty cannot be assessed on the basis of income

alone (also see Chapters 1 and 24).

The measurement of multi-dimensional poverty

is not without debate or caveats, however. Choices in

herent to the incorporation of multiple dimensions of

poverty in poverty measures are normative and subject

to value judgments. Often such choices are made im

plicitly, making multi-dimensional poverty estimates

susceptible to misinterpretation (Roelen, Gassmann,

and Neubourg, 2009) and controversy (Klasen, 2000).

One of the most contentious issues in measuring mul

tiple dimensions of poverty appears to be that of aggre

gation and the extent to which information on single

indicators or dimensions should be combined into

composite numbers or, rather, should be used at face

value. Ferreira and Lugo (2013) distinguish between

those favouring "scalar indices" versus a "dashboard"

approach. Proponents of scalar indices value the capa

bility to rank countries, households, or other units of

analysis and subsequently to be able to use such rank

ings in policy, communication, and advocacy (Birdsall,

2011). Aggregate indices can be strong in providing

quick overviews of main trends and inequalities, for

example. Opponents of such indices denounce the am

biguity in the choice of dimensions, thresholds, and

weighting schemes that is inherent in the aggregation

of individual indicators into a composite index (Rav

allion, 2011).

As such, the construction of multi-dimensional

measures is scrutinized to the same (if not greater) de

gree as monetary measures are. The questions to ask

and steps to take when measuring multi-dimensional

poverty are also much the same as they are for mone

tary poverty and include the establishment of a welfare

measure, poverty line, and poverty measure. Practice

around multi-dimensional poverty measurement is

much less harmonized, however, and these three dif

ferent questions are more intertwined, making it diffi

cult to discuss these steps one by one. We will therefore

discuss two prominent approaches-the Human De

velopment Index (HDI) and the Multidimensional Pov

erty Index (MPI)-detailing the steps for each of these

approaches.

Human Development Index (HD/)

The Human Development Index (HDI) was first pub

lished in the UNDP's annual Human Development

Report (HDR) in 1990 to provide an alternative to eco

nomic criteria for assessing the development of a coun

try, most notably the gross domestic product (GDP) or

gross national income (GNI). As highlighted on the

UNDP website: "The HDI was created to emphasize that

people and their capabilities should be the ultimate

criteria for assessing the development of a country, not

economic growth alone" (UNDP, 2015).

The HDI is a summary measure of average achieve

ment in three dimensions of human development:

experiencing a long and healthy life; being knowledge

able; and having a decent standard of living. Informa

tion about these three different dimensions is collected

at the country level and assessed against minimum and

maximum values. For example, the aspect of living a

long and healthy life is measured by considering av

erage life expectancy at birth in a given country and

normalizing this indicator using a minimum value of

20 years and maximum value of 8 5 years. A total of four

indicators are included in the HDI-one for health, two

for education, and one for living standards-with min

imum and maximum values serving as benchmarks

for each of these. The overall HDI score is calculated

by taking the average score across all three domains

(UNDP, 2015). This means that there is no threshold or

cut-off below which a country is deemed to be deprived

or to perform poorly; the HD! aims to allow for com parisons over time and across countries.

The HD! is grounded in Sen's capability approach, and although it only includes three dimensions and arguably only covers a limited range of issues beyond

25 I Roelen: Measuring and Evaluating Poverty 491

economic development, it presented an important

shift from focusing solely on economic indicators for

assessing global and regional progress towards devel

opment. The fairly intuitive inclusion of dimensions

has also added to its popularity, making it one of the

most popular tools for comparing a country's pro

gress towards development across time or to other

countries.

Multidimensional Poverty Index (MP/)

In 2010, UNDP extended its set of indicators by includ

ing the Multidimensional Poverty Index (MPI) in its

annual Human Development Report (HDR). The MPI

has been developed by the Oxford Poverty and Human

Development Initiative (OPHI) and is distinct from the

HDI as it captures information at the household level

rather than national level. This means that one can

analyze the extent to which households suffer multiple

deprivations at the same time.

The MPI includes information on the same three

domains as included in the HDI-education, health,

and standard of living. The range of indicators within

domains is more extensive, however, with two indi

cators in the education domain, two indicators in the

health domain, and six indicators in the living stand

ards. domain. There is a threshold for each indicator

determining whether a household is deprived with re

spect to that indicator or not. If a household is deprived

in more than 33.3 per cent of the weighted dimensions,

it is considered poor. The MPI poverty rate simply re

flects the proportion of people living in households that

do not meet this threshold.

The measure has been found to be rigorous, easy to

disaggregate by domain and demographic group and to

be useful for policy, and adaptable to different contexts.

Since its development in 2010, the MPI has been calculated

for the majority of low- and middle-income countries,

thereby representing the first official effort to calculate

the number of poor individuals globally through a multi

dimensional index and offering a complement to the

international monetary poverty measures. Using this

measure, more than a third of the combined population

in the 91 countries covered by the MPI lived in poverty

in 2014 (for further information, see Alkire and Foster,

2015; OPHI/BMZ, 2015; UNDP, 2015).

492 PART IV I Practice in International Development

Population in multi-dimensional poverty, 2015, %

0.0-19.9 D 20.0-39.9 40.0-59.9 • 60.0-79.9 D 80.0-100 D no data

FIGURE 25.2 I The Unlucky Ui Billion: :Multi-Dimem,ional Poverty acro8s the Globe

Source: The Economist (2015).

CRITICAL ISSUES

BOX 25.6 I Individual Poverty Measure

One of the criticisms of the monetary approach is that income is measured at the household level and

that assumptions are made about the extent to which this is shared within the household and poverty is distributed across household members. This is of particular concern when considering the situation of

vulnerable groups such as children and women (Vijaya, Lahoti, and Swaminathan, 2014). Although widely

expressed with respect to monetary approaches, this critique also holds for many multi-dimensional approaches to poverty measurement, including the MPI, as indicators refer to issues at the household

rather than individual level. The Individual Deprivation Measure (IDM) was developed to address this shortcoming and particularly to give insight into differences in multi-dimensional poverty across gender. It does so by including mostly indicators that are measured at the individual level, such as those related to health care, clothing, personal care and hygiene, and freedom from violence. Such a measure pre

sents an improvement in terms of capturing poverty status at the individual level but poses challenges in terms of data availability because many of the indicators are not available in current data sets.

Source: Wisor et al. (2014)

DIFFERENT MEASURES, DIFFERENT

OUTCOMES

The discussion above makes it clear that monetary

and multi-dimensional poverty approaches differ with

respect to their conceptual and normative underpin

nings about the extent to which monetary resources

may be translated into non-monetary outcomes. As

highlighted by Amartya Sen, capability-based or

multi-dimensional approaches focus on what is in

trinsically important while income-based approaches

focus on what is instrumentally important (Sen, 1999).

But one might ask whether such theoretical differences

make a difference in practice: does the use of different

approaches to measurement also lead to different pic

tures of poverty?

Conceptual and normative dissonance between

monetary and multi-dimensional poverty approaches

is increasingly corroborated by empirical findings. The

evidence base regarding incongruent outcomes when

using different measures is rapidly expanding. Studies

investigating the mismatch of poverty outcomes of

ten explore two elements, namely, the extent to which

measures report different headcount rates and to what

extent they identify different groups as being poor or

deprived. Findings from existing studies largely sug

gest that the use of monetary and multi-dimensional

measures results in different pictures of poverty,

pointing towards a modest, even limited, overlap of

results. Evidence originates from high-income coun

tries (Klasen, 2000; Tran, Alkire, and Klasen, 2015;

Laderchi, Saith, and Stewart, 2003) and low- and

middle-income country settings (Bradshaw and Finch,

2003; Perry, 2002; Wagle, 2009), and indicates that

monetary and multi-dimensional poverty measures do

in fact lead to different headcount rates and that these

different approaches identify different groups as being

poor. Such differences are exemplified even further

when asking people about their own experiences of liv ing in poverty.

Different Poverty Rates Studies that compare monetary and multi-dimensional

poverty rates highlight that the use of different measures

gives rise to differential levels of poverty. Figure 25.3

25 I Roelen: Measuring and Evaluating Poverty 493

maps monetary poverty and multi-dimensional child

poverty in 28 countries in sub-Saharan Africa and

shows that the two measures are not strongly related.

Monetary poverty rates are considerably lower than

multi-dimensional child poverty rates for most coun

tries included, such as Ethiopia and Chad. Notable

exceptions include Burundi and Rwanda, where mon

etary poverty is higher than multi-dimensional child

poverty (Plavgo and De Milliano, 2014).

These differences in magnitude have been found

not only in sub-Saharan Africa or with respect to child

poverty but are observed more generally. In Mexico,

Pakistan, and Egypt, for instance, there are twice as

many multi-dimensionally poor as there are poor us

ing the $1.25-a-day poverty measures (The Economist,

2015).

Different Poverty Groups

While a comparison of poverty rates indicates that the

proportions of poor people are different depending on

the measure under consideration, it does not give in

sight into the extent to which the same people are af

fected by both types of poverty. In other words, when

monetary poverty rates are lower, it does not necessar

ily mean that those who are monetary poor are also

multi-dimensionally poor. Venn diagrams represent a

useful method for analyzing the extent to which pov

erty measures identify the same groups as being poor

or not. They include circles that represent groups iden

tified as being monetary or multi-dimensionally poor

with the degree of overlap between those circles indi

cating to what extent the group experiencing monetary

poverty also experiences multi-dimensional poverty

and vice versa.

Figure 25,4 presents Venn diagrams showing the

overlap between monetary and multi-dimensional

child poverty in Ethiopia for 1999, 2004, and 2009 and

Vietnam for 2004, 2006, and 2008. Children are either

categorized as non-poor (group C), both monetary

and multi-dimensionally poor (group AB), exclusively

multi-dimensionally poor (group A), or exclusively

monetary poor (group B). Analysis points towards size

differences with substantial groups of children being

either multi-dimensionally poor (A) or only monetary

poor (B). The diagrams show that groups of children

being either monetary or multi-dimensionally poor

I I

494 PART IV I Practice in International Development

C 0 ·.;; C

100-

E so-

� .£

!/; 60 ·g_., "O

C � :Q {; 40 0 '#-

•GAB

'ti!� e NEG

•TZA • UGA

• SEN •GHA

•GMlflSWZ

•COM

ecoo

• BDI

•RWA

L,------�-----� -----�-----�--- 0 20 40 60 80

Poverty rate a t US$ 1.25 (PPP) a day(% of population)

R-squared = 0.1910

FIGURE 25.3 I Correlation between Monetary Poverty and Multi-Dimensional Child Poverty in 28 Sub-Saharan Countries

BEN: Benin BFA: Burkina Faso BDI: Burundi CMR: Cameroon CAF: Central Africa TCD: Chad COM: Comoros COG: Congo, Repul COD: Congo DR CIV: Cote d'Ivoire ETH: Ethiopia GAB: Gabon GMB: The Gambia GHA: Ghana GIN: Guinea KEN: Kenya LSO: Lesotho MWI: Malawi MOZ: Mozambique NEG: Niger NGA: Nigeria RWA: Rwanda SEN: Senegal SLE: Sierra Leone SWZ: Swaziland TZA: Tanzania TGO: Togo UGA: Uganda

Source: Plavgo and De Milliano (2014). Analysing Child Poverty and Depravation in sub-Saharan Africa: CC-MO DA - Cross Country

Multiple Overlapping Deprivation Analysis, Innocenti Working Paper No. 2014-19, UNICEF Office of Research, Florence.

Ethiopia

1999 2004 2009

Vietnam

2004 2006 2008

FIGURE 25.4 I Venn Diagrams: Monetary and Multi-Dimensional Child Poverty in Ethiopia and Vietnam Source: Adapted from Roelen (2015).

are largest in Ethiopia. This can partly be explained

by the indicators that are included in the measure of

multi-dimensional child poverty, which include school

attendance, the number of hours worked on farm

ing, and the number of hours worked on domestic

chores. While there is a positive link between mone

tary resources available in the household and school

attendance, the relationship between the numbers

of hours that children work on farming or doing do

mestic chores and household wealth is less clear and

sometimes negative, as children's work contributes

to household wealth. Indicators included in the Viet

namese measure of multi-dimensional child poverty

are more related to basic needs such as water, sanita

tion, and shelter and therefore more strongly linked

to household wealth. But despite a stronger link be

tween monetary and non-monetary outcomes, chil

dren in Vietnam living in multi-dimensional poverty

are not necessarily monetary poor and vice versa

(Roelen, 2015).

Different Experiences

The discussion above highlights how different meas

ures of poverty paint different pictures in terms of the

numbers of people who are poor but also about what

types of deprivation they suffer. Such differences are

further exemplified when asking people about their

living conditions and their own assessment of whether

they are poor or not.

Arguments for the importance of including peo

ple's voices in development processes were pioneered

by Robert Chambers in the 1980s when he advocated

for "putting the last first" and putting experiences

of the poor, marginalized, and destitute at the cen

tre of development (Chambers, 1983). One of the first large-scale efforts that involved asking poor people about their living conditions was the report Voices of the Poor (Narayan, 1999). It included information from

47 countries, highlighting that poverty is a painful ex perience, consists of many interlinked and interlocked

dimensions, and places undue weight on households

and families (Narayan, 1999). The study was ground

breaking as it presented the first comprehensive ef

fort to understand what people understood poverty to

mean and how they were faring with respect to those

conditions. Not only did this provide an important

25 I Roelen: Measuring and Evaluating Poverty 495

expansion of the evidence base on poverty, it also em

phasized the limitations of conventional measures in

capturing the complexities of living in poverty.

An example from Rwanda provides a pertinent

illustration of the dissonance between outcomes as

measured by poverty measures and as experienced

by people themselves. Rwanda has seen widespread

economic growth and great advances in both mon

etary and multi-dimensional poverty reduction, but

an assessment of lived experiences, derived by asking

Rwandans about their own views of the development

process, suggests "that life is not actually improving for

many Rwandans, that their wellbeing is poorly repre

sented by some of the simple development indicators"

(Dawson, 2015: 65). The dissonance between people's

own experiences and those reflected in monetary and

multi-dimensional indicators of poverty was linked to

lack of political freedom and participation in develop

mental processes. While programs such as "villagiza

tion" and housing modernization have contributed to

improved living conditions, as measured by indicators

related to shelter and access to services, the oppressive

process of implementation (with people being forced to

move) has led to negative impacts for many Rwandans

(Dawson, 2015).

POVERTY MEASUREMENT

AND POLICY

Poverty measurement is crucial for informing

policy-making and improving the lives of people liv

ing in poverty and vulnerability. Information about

the number of people living in poverty, who and where

they are, and how poor they are is crucial for ensuring

that programs reach the right people and address the

most pertinent issues, and for monitoring progress to

wards reaching goals and objectives.

Identifying Groups for Intervention

Poverty measurement is crucial for identifying groups

that should benefit from policies and interventions.

Monetary measures have long been used for establish

ing a poverty profile, which provides an overview of

who and where poor people are. Such a poverty profile

often considers variations by household characteristics

496 PART I V I Practice in International Development

(gender of the household head, educational attain - ment of the household head), community character istics (communities with or without a paved road or

hospital), and geography (urban versus rural areas;

region) (Haughton and Khandker, 2009). An assess ment of poverty patterns across such groups can help

to direct limited resources to groups of people who are

most in need.

Figure 25.5 provides an example of the identifica

tion of the most deprived regions in Nepal. An analy

sis of monetary poverty rates across regions highlights

large disparities in terms of the proportions of peo

ple living in poverty (or poverty headcount indices).

The regions around the capital of Kathmandu, in the

Central Region, have poverty rates lower than the na

tional poverty rate, while proportions of people living

in poverty are much higher in the western part of the

country. Many development programs therefore focus

their efforts on this relatively disadvantaged area of the country.

Targeting of policies and programs can also

occur at the household level, such as social assistance

programs that provide regular cash transfers to those living in poverty. The amount of income earned in a

household often determines eligibility for such pro

grams. In South Africa, for example, the Child Sup

port Grant (CSG) supports children living in poor

families with a monthly cash transfer, with income

thresholds of R3,300 per month for single caregivers

and R6,300 per month for married couples (Black

Sash, 2015).

The use of poverty measures for targeting

policies and programs is not limited to monetary ap

proaches. Multi-dimensional poverty approaches, and the MP! in particular, are increasingly being

adopted as official poverty measures for informing

PEOPLE LIVING BELOW POVERTY LINE

2003-04 30.85 %

POVERTY LEVEL

Urban 15.46 %

Rural 27 .43 % 2010-11 25.16%

FIGURE 25.5 I Monetary Poverty in Nepal

Source: Nepal Living Standards Survey (NLSS) at www.unicef.org/evaldatabase/files/Conducting_an_lnstitutional_Assessment_

and_Providing_Capacity _Development_and_Training_on_Social_Protection_in_Nepal.pdf

and guiding policy formulation. In Colombia, for ex

ample, a country-specific MPI was developed to inform

national policy-making processes, including the iden

tification of particularly deprived areas and groups of

people that receive policy priority. The National Devel

opment Plan 2014-2018 targets two regions with the

highest incidences of multi-dimensional poverty-the

Pacific and the Atlantic-while the MPI and income

poverty measures are used in conjunction for targeting

social programs such as Families in Action Plus and

UNIDOS (OPHI/BMZ, 2015).

Identifying Policy Areas for Intervention

Poverty measurement is also important for identifying

policy areas of particular concern or that should receive

priority. Multi-dimensional poverty measures are par

ticularly helpful in this respect because their inclusion

of different dimensions of poverty allows for drawing

direct linkages to policy areas. As noted by Neubourg,

25 I Roelen: Measuring and Evaluating Poverty 497

Roelen, and Gassmann (2009: 52), "the profile of peo

ple being deprived on several dimensions also reveals

where to direct attention when designing social policy."

The use of the MPI in Colombia illustrates how a

multi-dimensional poverty measure can also inform

decision-making in policy from this perspective . The

national MPI was further developed to construct a

measure that can be applied at the municipal level us

ing census data, thereby allowing for the creation of

local poverty maps to target social intervention pro

grams within municipalities (OPHI/BMZ 2015). A study

focusing on Villapinzon municipality in Cundinamara

illustrated that the application of such a local measure,

in combination with discussions with local residents,

can help to identify and prioritize areas for intervention

and convince local authorities to adapt policies accord

ingly. Housing conditions (overcrowding), education

(low levels of education and illiteracy), and labour mar

ket conditions (high rates of informal employment)

were found to be areas of most urgent concern in the

municipality (Torres and Bautista Hernandez, 2015).

C PTS ____ -------------.

BOX 25. 7 J Gross National Happiness (GNH) Index in Bhutan

For decades Bhutan has rejected conventional economic measures of development and poverty but instead focused on non-economic aspects of life. "Gross National Happiness" was first proposed in the 1970s by the King of Bhutan, Jigme SingyeWangchuck, and has led to national development being measured using the "Gross National Happiness (GNH) Index." The dedicated website describes the ini tiative as follows:

The concept implies that sustainable development should take a holistic approach towards notions of progress and give equal importance to non-economic aspects of wellbeing. The con cept of GNH has often been explained by its four pillars: good governance, sustainable socio economic development, cultural preservation, and environmental conservation. Lately the four pillars have been further classified into nine domains in order to create widespread understanding of GNH and to reflect the holistic range of GNH values. The nine domains are: psychological

wellbeing, health, education, time use, cultural diversity and resilience, good governance, com munity vitality, ecological diversity and resilience, and living standards. The domains represent each of the components of wellbeing of the Bhutanese people, and the term "wellbeing" here refers to fulfilling conditions of a "good life" as per the values and principles laid down by the concept of Gross National Happiness.

Source: GNH Index/Bhutan GNH Index at http://www.grossnationalhappiness.com/articles/.

498 PART IV I Practice in International Development

Monitoring Progress

A third important reason for measuring poverty is to

monitor progress towards goals and targets in terms

of development policy and poverty reduction. From

a global perspective, Sustainable Development Goal

(SDG) #1, on the eradication of all forms of extreme

poverty, includes a target to eradicate extreme poverty

everywhere using the $1.25-a-day measure as well as a

target to reduce poverty according to national defini

tions by at least half (OWG SDG, 2014). While mone

tary measures remain dominant, multi-dimensional

poverty approaches, and the MP! in particular, are in

creasingly being adopted as official poverty measures

for informing and guiding policy formulation at the

national level.

Colombia's adoption of a country-specific MP!

again provides a pertinent illustration. In 2011, Pres

ident Juan Manuel Santos announced a new National

Development Plan with a strong focus on poverty re

duction. A Colombian Multidimensional Poverty In

dex (MPI-Colombia) was included in the Plan as a tool

for setting poverty reduction targets and measuring

progress towards reaching those targets. The most re

cent National Development Plan of 2015 expands· the

role of this country-specific multi-dimensional poverty

measure even further by including specific targets for

each of the dimensions and indicators included in the

MP!. The reporting system employs a "traffic light"

tool that triggers alerts when progress towards any

indicator falls off track. A special ministerial cabinet

commission was established to ensure that progress

towards achieving such targets is on track (OPHI/BMZ,

2015), thereby ensuring that progress is not merely

tracked but also that policy-makers are held to account.

Other countries have followed suit, including

Chile, where the government announced its new na

tional Multidimensional Poverty Index (MP!) along

with its new income poverty measure in January 2015,

and the Philippines, where the government included a

multi-dimensional poverty measure in the Philippine

Development Plan (2011-16) (OPHI/BMZ, 2015). Bhutan

is one of the few countries that has long denounced the

singular use of economic indicators and focused on

wider measures of development instead (see Box 25.7).

SUMMARY

This chapter examined the evaluation of think

ing around poverty, the main approaches to pov

erty measurement, and the importance of poverty

measurement for policy. It is evident that poverty is

a fluid concept and that its meaning differs depend

ing on time, place, and group under consideration.

Monetary poverty and multi-dimensional poverty

represent two broad but main categories of poverty

measurement. While monetary poverty measurement

has dominated development discourse until recently

(and some may argue it still does), multi-dimensional

poverty measurement has gained prominence and is

now considered a viable or preferred alternative by

some. Ultimately, poverty is in the "eye of the be

holder": different approaches to poverty measure

ment suggest different magnitudes of the problem

and identify different groups as being poor. Comple

mentary and comprehensive poverty measurement is

therefore essential for gaining insight into the reality

on the ground and allowing for the formulation of ad

equate and appropriate policies.

QUESTIONS FOR CRITICAL THOUGHT

1. Is there an optimal way for measuring poverty and if so, what would it look like? Would this differ for low

and high-income countries and why? Would this differ for different groups in society? Explain.

2. Do monetary and multi-dimensional approaches to poverty measurement allow for the voices of people liv

ing in poverty to be included? How can poverty measures be inclusive?

3. How does the use of different poverty measures influence policies for eradicating or reducing poverty? Do

different measures play a different role?

Alkire, Sabina, James Foster, Suman Seth, Maria Emma

Santos, Jose Manuel Roche, and Paola Ballon. 2015.

Multidimensional Poverty Measurement and Analysis.

Oxford: Oxford University Press.

Haughton, Jonathan, and Shahidur Khandker. 2009.

Handbook on Poverty and Inequality. Washington:

World Bank.

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Research 2, 3: 245-63 .

Sillers, D. 2015. "Is $1.82 the new $1.25? Choosing the next

international extreme poverty line." USAID Economics

Brief. Washington: US Agency for International

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Wealth of Nations, Book 5, Chapter 2.

Streeten, P. 1981. First Things First: Meeting Basic Human

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Torres, M.F., and E. Bautista Hernandez. 2015. "An inclusive proposal for the use of mixed methods in studying

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In K. Roelen and L. Camfield, eds, Mixed Methods Research in Poverty and Vulnerability: Sharing Ideas

and Learning Lessons. Basingstoke, UK: Palgrave

Macmillan, 173-96.

Townsend, P. 1979. Poverty in the United Kingdom. London:

Allen Lane and Penguin Books

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disparities between monetary and multidimensional

poverty measurement: Evidence from Vietnam." OPHJ

Working Paper No. 97.

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from the household to the individual: Multidimensional

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http://dx.doi.org/10.1016/j.worlddev.2014.01.029.

UNDP. 2015. "Multidimensional Poverty Index." http://hdr

. u nd p.org/en / content/ m ult idi mensiona I- poverty

index-mpi. Accessed 7 Sept. 2015.

Wagle, U. 2009. "Capability deprivation and income poverty

in the United States, 1994 and 2004: Measurement

outcomes and demographic profiles." Social Indicators

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World Bank. 2005. Poverty Manual. Washington: World

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Inequality and Social Policy A1'ja,n, cle Haan

LEARNING OBJECTIVES

• To understand the importance of inequality and

how it is different from poverty.

• To become familiar with the concept of and

approaches to social policy.

• To understand why approaches differ for technical

and political reasons.

• To learn how social policy success can be

measured.

________________________________________'" _______________ .,

4 Brazilian Maria Nilza shows her Bolsa Familia social plan card in Serra Azul, Brazil. Bolsa Familia attempts to both reduce short

term poverty and fight long-term poverty by Increasing human capital through conditional cash transfers. It is currently the largest

condltional cash transfer program lh the world and has been responsible for a significant reduction in child labour and a 20 per cent drop In Inequality in Brazil since its Implementation in 2001. I Source: VANDERLEI ALMEIDA/AFP/Getty Images

502 PART IV I Practice in International Development

INTRODUCTION

Global poverty has been reduced significantly over the

last few decades, supported by economic growth and by

policies that have benefited poor populations directly. But

inequality has increased in many countries, particularly

in countries such as China where economic growth has

been rapid. In other countries, notably in Latin America,

income inequalities are very high, and in South Africa

and India, for example, social or group inequalities are

a central challenge of development policy. Even in the

poorest countries, inequalities matter, including those

between men and women. This chapter will examine why

inequality is important for development, and under what

conditions social policy can be useful in addressing it.

We discuss the differences and similarities be

tween inequality and poverty. Addressing inequali

ties requires a broader set of policies than addressing

poverty. This chapter introduces the concept of social

policy for that purpose: the broad set of public poli

cies that impact the well-being of entire populations.

It shows that the history of social policies is complex,

context-dependent, and ideologically driven. A wide

range of instruments exists, in terms of financing and

organization, which can be targeted on individuals

as well as groups. Social policy is subject to political

pressure, and its benefits are not always distributed to

wards the poorest. Examining and comparing differ

ent kinds of social policy is important to understand

and measure their impact on vulnerable populations.

WHAT IS INEQUALITY?

The Millennium Development Goals (MDGs) prin

cipally emphasized poverty reduction. MDG #1

called for the reduction of people living on $1 per

day poverty. (The aspirational Sustainable Develop

ment Goals [SDGs) adopted by the United Nations in

2015 revised this figure upward to $1.25 per day in

SDG #1.) This is an example of an "absolute poverty"

approach, which counts the number of people liv

ing below a certain, minimum standard of living. In

the MDG/SDG approach, this is a poverty line that is

internationally established and comparable; coun

tries also have poverty lines tailored to their specific

circumstances.

How is inequality different from poverty? Is not a

country that has, say, a larger number of people below

a poverty line more unequal? The answer is: it depends.

The extent of equality or inequality does not only de

pend on how many people are poor, but also on how

many people are not poor, or rich. It also depends on

how poor poor people are, and how rich the rest of the

population is. This chapter discusses how important

these differences are for policy -making, but first we

explain the key nuances in how we can understand

inequality.

Inequality of Outconie

Inequality can be defined and measured in two

main ways: inequality of outcome, and inequality

of opportunity. Inequality of outcome, put simply,

refers to how wealth or well-being is distributed

across a population. This can be measured in income,

assets, land, health, education levels, etc. If in a pop

ulation of 100 people, each person has 1 per cent

of the income, this country has perfect equality;

if one person has all the available income or land,

this country has maximum inequality. In practice,

of course, all countries fall somewhere in between

these extremes.

A number of indicators describe inequality.

Let's take the stylized example above to demonstrate

these. The '• , 1 ·" : , , , · � ,i; is possibly the most com

monly used measure. Its value varies between o for

perfect equality and 1 for complete inequality. The

Gini coefficient for selected countries is shown in

Table 26.1. Technically, the Gini reflects the area

between the line of actual income distribution, also

known as the Lorenz curve, and the line represent

ing perfect equality (the 45-degree line): the larger

the space between the two lines, the higher the Gini.

Global income inequality is estimated to be about

0.65. H igh-inequality countries like Brazil and South

Africa have Gini coefficients of 0.60, while in many

European countries it is 0.30 or lower; importantly,

in the latter case, this refers to net income, after

taxation.

A second main measure is : !1 �,; 11_:,,: ,; iia n; ,, based

on a description of populations in, usually, 5 or 10 in

come groups (called quintiles and deciles, respectively).

If a country is perfectly equal, of course, all income

BOX 26.1 I How Is Income Measured?

26 I de Haan: Inequality and Social Policy 503

This rather simple question, of key importance for both poverty and inequality measures, does not have as simple an answer as may be expected. In richer countries, a person's or household's income or what

they spend can be measured fairly accurately. For most agricultural families in poorer countries, however, only a part of what they produce and consume is monetized (bought or sold on the market). To reflect

such households' poverty or well-being, measurement focuses on consumption, with long lists of the goods such households consume, which are then converted into monetary value. This is how it is possi ble, also, to identify people living under or above the extreme poverty cut-off of $1.25 per day: this is not actually $1.25 of income, but instead reflects a bundle of goods that represent a minimum level of living.

Such measurements take households as their basis. This, too, is not uncomplicated. A household unit can mean different things in different contexts. Extended households, or households with migrants, for example, complicate measurement. Deciding what a household's minimum needs are requires as sumptions about the diverse needs of adults and children. Finally, measuring the welfare and poverty of households does not tell us anything about inequalities within those households. In particular, it does not give insight into gender inequalities (see Chapter 5).

Moreover, such measures of poverty are static. A household's current income in itself does not predict the risks of falling into poverty or the possibility of improving well-being. There is research that examines mobility in and out of poverty or across incomes, thus taking a more dynamic perspective. For social policy this distinction is important because many social policy instruments focus on risk and (social) insurance-in other words helping people protect themselves against temporary shortfalls in income-which tend to be least available for the poor.

groups have equal income shares: each decile has

10 per cent of the total income. In the completely une

qual country, the top 1 per cent has 100 per cent of the

income. Mexico and Colombia are among the most un

equal countries, with the richest 1 per cent of the pop

ulation holding over 20 per cent of the total income;

TABLE 26.1 I Measures of Inequality in a Sample of Countries

Extreme Poverty

GDP/Capita Glnl Income Share Income Share Headcount

(PPP$) Coefficient Top10% Lowest 20% $1.25/day f PPP) (%)

Brazil 15,413 53 42 3 4

China 12,609 37 30 5 6

Colombia 12,447 54 42 3 6

Denmark 42,777 27 22 9 0

Mexico 16,496 48 39 5 1

United Kingdom 37,614 38 29 6 0

United States 52,118 41 30 5 0

Source: World Development Indicators, online, most recent year available. PPP means purchasing power parity, an instrument to allow comparison of the prices of goods across countries.

504 PART IV I Practice in International Development

in Denmark this is 9 per cent.' These examples

summarized in Table 26.1-refer to inequality across

a country's population; as with poverty measures, this

can also be used at an international level, as well as at

sub-national and group levels.

How do these inequality measures compare to

the poverty measures? While the two are not unre

lated, it is not necessarily the case that more unequal

countries have more poor people. This depends on

two issues. First, how high or low the poverty line is

set relative to the average income: in the imaginary

perfectly equal country it is possible that all people

live below the poverty line, if that line was above

the average income. In reality, some low-income

countries-like China in 1978-have low inequal

ity and high poverty rates. Second, income inequal

ity can change without a change in poverty rates: if

income shifts from the top decile to the somewhat

less-rich, income inequality improves without a

change in poverty rates. Or income inequality can

worsen while poverty goes down, as has been the

case in China, which harbours the big success story

of poverty reduction since the early 1980s. China's

poverty rate declined from 84 per cent of the popula

tion in 1980 to 16 per cent in 2005. Poverty reduction

was directly related to the very high rates of economic

growth, on average 8 per cent per year during that pe

riod. But inequality rose, too: from a Gini coefficient

of 0.29 to 0.42 over the same period!

Inequality of Opportunity

The three measures discussed so far-the Gini coeffi

cient, income deciles, poverty rates-all refer to "out

come" measures. There are important political and

ideological differences regarding the question of how

much these matter. While many people would con

cur that Gini coefficients at Latin American or South

African levels are too high, this does not necessarily

mean there is agreement on the causes of inequality

or on the appropriate policy responses. Economists

have argued that inequality is an inevitable fact of

economic life, as it is associated with the incentives

necessary for a well-functioning economy. China, as

mentioned above, which experienced rapidly rising in

equality since the late 1970s, is a case in point: the re

forms started in 1978 were meant to restore producer

incentives and succeeded in doing so, at the cost of

the previous egalitarian structure. It is important to

stress also that there is no agreement on how much

inequality is good for an economy. Chinese leaders, for

example, thought the rising inequality throughout the

1980s was inevitable, but showed great concern when

income inequalities started to reach Latin American

levels.

For many people, what matters is whether

"opportunities" are reasonably equally distributed

and fair, even if outcomes are less equal. In fact,

complete equality of outcome is practically impos

sible: people have different talents, or-even if they

have the same chances-may apply different efforts

to increase their income. However, most people

agree that everybody should have the same opportu

nity to earn and improve their income, live a healthy

life, become educated, etc. Similarly, there is usually

a great degree of agreement that policies should help

to create a " level playing field": not to make sure that

outcomes are the same for everybody, but that every

body has the same opportunity to improve their

situation.

Inequality in opportunity-deemed unfair-can

relate to two things: differences in social treatment or

discrimination, often related to gender, race, or ethnic

group; and differences in conditions in family back

ground and resources (social class). In a "meritocratic"

view, inequality of outcome due to different efforts is

deemed fair (or at least not necessarily unfair), and

inequality due to different opportunities is not. For

example, different performances in education ( outcome)

are not necessarily unfair, but certain groups being

unable to go to school (opportunity) is. Measurement

of inequality of opportunity is more complex than

measuring inequality of outcomes. Most of the existing

research has focused on assessing whether inequality

in outcomes is due to discrimination against certain

individuals or groups.

Individuals and Groups

Most of the above discussion on measuring inequality

refers to individuals. An equally important question

often politically sensitive-is about inequality between

groups, based on race, ethnicity, caste, and gender.

These inequalities often have deep historical roots.

26 I de Haan: Inequality and Social Policy 505

PHOTO 26.1 I While poverty in China has decreased in recent decades, inequality has also risen.

South Africa is one of the world's most unequal

countries measured by individuals' income. Apartheid

created enormous group differences between blacks

and whites. At the heart of the economic differences

CRITICAL ISSUES

was the allocation of land along racial lines, but dis

crimination existed in all spheres of social and eco

nomic life. Since the end of Apartheid in 1994, the

group differences have diminished somewhat, partly

BOX 26.2 I Views on the Need for More Equality

The World Values Survey, administered in about 50 countries across the world, asks people if they think "incomes should be made more equal" or whether "we need larger income differences as incentives for individual effort." Respondents are asked to score these views on a 1-10 scale. This shows that in very unequal countries such as Brazil a high percentage of people do think inequalities should be reduced (26 per cent in Brazil scored a 1). In Chile and China as well, support for more equality is relatively high. In South Africa, on the other hand, support for reducing inequality is much lower. In relatively equal Sweden, there is still support for reducing inequality, more so than in the relatively unequal US. During the 2000s, in most countries public support for redistribution increased.

Sources: http://www.worldvaluessurvey.org/WVSOnline.jsp; IMF (2014).

506 PART IV I Practice in International Development

because of specific empowerment policies, which we

discuss below. But this has been accompanied by grow

ing inequalities within the black population.

South Africa's group inequalities, rooted in

colonial history, are to some extent unique, but Latin

American countries' social group differences also are

significant and have similar colonial origins. India's

social group differences have longer and indigenous

roots, even though colonialism documented them in

detail and probably reinforced them. There are at least

three marked types of socio-economic differences

in India. First, "Adivasi" groups (first nations or

indigenous-"scheduled tribes" in administrative

language) suffer from deeper poverty, isolation, and

lack of access to productive land. Second, India's

caste system is the world's most complicated system

of group differentiation, with "dalits" (untouchables,

or scheduled castes) being most deprived both

economically and socially. Third, inequalities exist

between religious groups, with Muslims deprived

compared to the Hindu population, and equally large

inequalities are found within these groups.

Gender inequality is the most common form of

inequality across societies. As previously mentioned,

the standard poverty and inequality measures provide

us with little insight, as these take households as the

unit of analysis. But there are many other measures

that show how women are disadvantaged in various

contexts. Women tend to earn lower wages than meri,

including when they have the same jobs and levels

of education (ILO, 2014). Earning lower wages often

also means women are disadvantaged with respect to

pensions, if these are proportional to income earned.

In what is called the informal sector, or jobs marked by

low productivity and lack of social protection, women

tend to have lower incomes too. In rural economies,

women tend to have less access and fewer rights with

respect to land, agricultural inputs, and extension

services (see Chapter 5).

A key aspect of gender inequality is women's role

in the "care economy" and time spent on those activ

ities (Razavi and Shireen, 2006). Social norms deter

mine that women have greater responsibility within

the household, in duties of cooking, care for children

and elderly, etc. They often spend very long hours in

these activities, and in poorer places this is often com

pounded by the absence of basic facilities. In certain

regions, women are expected not to work outside

the household. Where they do such work outside the

household, they usually carry a double burden of con

tinuing to have the main responsibility for care work,

and their care responsibility often reduces any career

opportunities that may exist.

Why Does Inequality Matter?

Why is inequality important? Two types of arguments,

based on "intrinsic" and "instrumental" reasons, are

usually considered.

Many people consider inequality as intrinsically

unfair. In particular, as mentioned, there is a great

deal of agreement that all people should have equal

opportunities, and civil rights and the anti-Apartheid

movements have focused on this aspect. There is gen

erally less consensus about the moral case for equality

of outcomes. National governments differ substantially

in the extent to which they redistribute incomes: Eu

ropean countries do this much more than the United

States, for example, and in developing countries redis

tribution of income is even more limited.

Second, inequality is important because it can

have negative economic or political effects, so-called

instrumental reasons. While economists argue that a

degree of inequality is important for economic incen

tives, certain forms of inequality may also reduce in

dividuals' or groups' chances to fully contribute to the

economy. For example, research has shown that wom

en's lack of access to productive opportunities reduces

overall economic growth. This form of inequality is

thus of great potential importance in low-income and

rural economies. But, as a report by the World Eco

nomic Forum (2014) argues, countries marked by more

gender equality also are more competitive. The reason

for this is not difficult to imagine: when there are eco

nomic barriers for half the population, the economy as

a whole is likely to suffer. Also, inequalities can have

an impact on saving and spending patterns: rich peo

ple tend to save more of their total income and spend

less of their total, thus potentially reducing stimulus to

the economy.

Moreover, there can be political consequences to

high or rising inequalities. Inequality can influence

voting behaviour. According to the so-called median

voter hypothesis, higher inequality-or the perception

26 I de Haan: Inequality and Social Policy 507

PHOTO 26.2 f When women do work outside the household, they usually carry a double burden of continuing to have the main responsibility for care work, and their care responsibility often reduces any career opportunities that may exist.

thereof-is likely to lead to increased pressure to re

distribute income. Higher inequality can also lead to

direct protests: the worldwide 99 per cent movement

is a recent example (see Chapter 6). While it seems in

tuitive that people might protest excessive income ine

quality, it is important to stress that these are usually

complex phenomena. For example, the growth in pro

tests in China since the early 1990s is often associated

with growing inequalities. But research shows that they

tend to be caused by feelings of injustice-often a con

sequence of corruption and land appropriation-not by rising income inequalities per se (Whyte, 2010).

Thus, the reasons why inequality matters are much more complex than we may have thought initially. The

types and levels of inequality matter. Norms of fairness

differ across countries and can change over time. In

addition, diverse policies aim to address inequalities, as

described next.

Social Policy for Development

In developing countries, policies have mostly focused

on addressing poverty, particularly through a targeted

approach, and with success. But these targeted ap

proaches are also part of a broader set of policies and

approaches that impact the entire population. We use

the notion of social policy for this purpose.

Social policy is a broader concept than poverty

alleviation. According to the Nigerian sociologist Tade

Akin Aina, social policy analysis needs to focus on the:

systematic and deliberate interventions in the

social life of a country to ensure the satisfac

tion of the basic needs and the well-being of

the majority of its citizens. This is seen as an

expression of socially desirable goals through

legislation, institutions, and administrative

508 PART IV I Practice in International Development

programs and practices . . . . [and] is thus

a broader concept than ... social work and

social welfare. (Aina, 1999: 73)

There are no generally agreed definitions of social policy.

In fact, the term "social policy" is not w idely recognized

in the field of development studies, where a number of

overlapping terms exist: "anti-poverty programs and

policies"; "human development policies," particularly

related to health and education; "social protection"; and

"social security."3 Aina's definition clearly distinguishes

social policy from social work and social welfare, which

are generally regarded as more "residual" or reactive

programs designed for disadvantaged groups, whereas

his broad definition focuses on the role of the state in

public provision of services to the entire population.

As with the different definitions of inequality,

defining "social policy " is not merely a technical or

academic question. For some, social policy is merely

about measures to mitigate the negative consequences

of markets and economic processes, such as tempo

rary crises-often labelled a "safety net" or "welfarist"

approach. For others, including Aina, social policies

need to be broader, and they create the preconditions

for market processes and even for nation-building. The

first argue for a minimalist state, the second for a more

interventionist state (see Chapter 7).

In this chapter, we include mainly health, edu

cation, social security or protection, and affirmative

action within the discussion of social policy. For rea

sons of space, we do not focus on housing policies, or

policies related to unemploy ment, labour markets, and

minimum wages. It is also important to emphasize

that poverty reduction is not only the result of social or

anti-poverty policies: it is also affected directly by eco

nomic growth and economic policies, but for reasons of

space these are not discussed here either.

How Much Do Countries Spend on Social Policy?

In broad definitional terms, social policy consists of

and data exist for-three sectors: education, health,

and social protection. Developing countries on aver

age spend about 4.5 per cent of their gross domestic

product (GDP) on health, 3 per cent on education, and

2 per cent on social protection (also see Chapter 20).

However, there is a large variation in how much coun

tries spend, as Figure 26.1 shows for health and educa

tion (the graph includes "outliers" such as the Persian

Gulf states, which spend relatively little). There are im

portant regional differences: Latin American countries

tend to have relatively high spending, and East Asian

countries traditionally keep spending low.

As countries become richer, they start spending

more on each of those sectors, in both absolute and

relative terms. For example, many rich countries spend

more than 20 per cent of their GDP on social protection

alone. Peter Lindert (2004) calls this process "grow

ing public": his in-depth study of the history of the

welfare state shows that governments take increasing

All co untries: health and education spending as a % of GNI 30.0-- - - --- - - --- - - --- - - -�---

25.0 t-- -- - --+-- -�·--+-- - - --+------<--- •

•

• • 20.0 t----- --+-- - - --+----- - ---+- - ------i -- -

0.0 �----�-----+------+ -- - -�- -- 250 1,000 4,000

FIGURE 26.1 I Pattenrn in Public Social Policy Spending

Note: GNI logged.

16,000 64,000

Source: Compiled by the author, based on data from the Human Development Report, 2014.

responsibility for public welfare as their countries grow

richer.

The data in Figure 26.1 show government spending.

Although the topic of this chapter is public spending, it

is important to put these figures in the context of private

spending by individuals on their social needs. In India,

for example, despite a public commitment to universal

health care, the government spends 1.2 per cent of GDP,

while private spending constitutes 1.8 per cent. High

shares of private spending suggest access to services

is unequally distributed, as the better-off can pay for

additional services. While these inequalities exist in

countries like the US, in poorer countries inequality

in access is even more acute: poor people lack access

to essential care, and if they have to pay for access,

spending often leads to personal indebtedness.

Governments raise resources to pay for social

policy in different ways, and this can have a big impact

on inequalities. In high-income countries, a large

share of government revenue comes from personal

income taxes, which are often progressive, meaning

that people earning higher incomes pay a higher

share of their income as tax. In low-income countries,

governments rely relatively more on indirect taxes

(such as the value-added tax, VAT) and the taxation

of natural resources. The low levels of direct taxation

can be explained by the fact that fewer people in

low-income countries are salaried workers and by

weak tax administrations, generous exemptions, and

low compliance.

To understand the impact of social policy on in

equality (or poverty), it is important to look at both

government spending programs (also known as trans

fers) and taxation. This can be done through benefit in

cidence analysis, which uses household survey data to

analyze how much households receive and have to pay

in taxes. In OECD countries, transfers and taxes jointly

reduce inequality on average by 12 percentage points,

from a Gini of 0.41 to 0.29 in 11 countries studied. In developing countries, this impact is much smaller: in

12 countries studied the net impact was a decline of

about 3 percentage points (Bastagli, 2015; Caminada

and Goudswaard, 2012).

The smaller impact of government transfers

and taxes is in part due to the lower overall levels of

taxation and spending. Also, developing countries

raise revenues through indirect taxation, such as on

26 I de Haan: Inequality and Social Policy 509

consumption. This is often less progressive than direct

taxation, as poorer people spend a larger share of their

income on consumption goods than richer people. Fi

nally, not all spending on social services leads to reduc

tion of inequalities. For example, pensions provided to

people working in the formal and government sectors,

if supported through general taxation, benefit the mid

dle classes rather than the poorest. Government spend

ing on expensive hospitals in urban areas also benefits

the better-off more than the people who live far away

and are poorer.

How Does Social Policy Emerge?

Social policies develop under the influence of a range of

factors (Gough, 2008). Politics is always a key factor, as

we describe below. Social policies also evolve alongside

major societal and economic change, often in reaction

to major crises.

Urbanization and industrialization have played

a key role in the emergence of social policies. His

torically, for rural areas, public policies have often

remained restricted to poor relief and mere tempo

rary measures during droughts and floods. More per

manent policies were thought to be unnecessary, as

rural populations were thought to have traditional

safety nets, particularly the support of families and

sometimes of local community and religious or

ganizations. Even for migrant workers, who moved

from rural to urban areas for work, rural safety nets

were seen by policy-makers as making social policy

unnecessary.

Urbanization creates a new demand for social

policies-even though living standards may be higher

than in rural areas. This demand is not simply about

(migrant) workers and growing trade unions claiming

new rights. Equally important have been concerns of

urban elites, including about safety. Urbanization can

lead to new (infectious) diseases, making health and

hygiene services a necessity (see Chapters 19 and 20).

Economic crises often prompt or create political

opportunities for new social policies. The New Deal in

the US was a policy response to the extended economic

crisis of the Great Depression and the visible depriva

tion of large groups of people. In a series of both suc

cessful and failed steps, this radically changed the role

of the US federal state. The UK welfare state, including

510 PART IV I Practice in International Development

its national health system, was designed during World

War II. In East Asia, the 1997 financial crisis led to an

expansion of what had been very limited social policies.

Similarly, social policies often emerge from emergency

relief, with temporary institutions becoming perma

nent, such as some of the major NGOs in Bangladesh

(see below).

International connections can play an important

role as well. European welfare states learned from each

other's experiences. Germany and the Nordic countries

industrialized later than other countries and started to

introduce social policies relatively early in their devel

opment. In newly independent countries, while new

social policies were often a central plank in leaders'

plans for nation-building, practices and traditions of

colonial powers continued to play an important role.

In aid-dependent countries, international agencies play

an important role in setting the agenda: while some

have been criticized for introducing neoliberal ap

proaches to the developing world, they have also been a

main supporter of primary health care and education,

and of increasingly new forms of social protection in

developing countries.

Who Implements Social Policy?

In both developing and richer countries, diverse ac

tors are involved in social policy implementation: pri

vate, public, and not-for-profit or non-governmental

organizations.

In many countries private spending on health care,

for example, is larger than public spending. This means

that most health care is provided by medical profes

sionals operating privately. Private spending, provi

sion, and insurance are not usually considered "social"

policy, but in practice these are part of the overall pro

visioning of services and hence should be part of an

overall analysis of social policy.

In systems of universal care, services are provided

by public institutions. Service providers are usually

employees in government service, and government

authorities decide what services will be available. In

federally organized countries, states or provinces often

have a key role in setting these social policies. This can

lead to complex and overlapping responsibilities, as is

the case in India where Centrally Sponsored Schemes

implement health and education policies, sometimes

bypassing the states that should have primary respon

sibility for those functions.

A third type of actor in provision of social services

is neither public nor private, but includes various types

of non-state, not-for-profit organizations. Historically,

charitable and often religious-oriented organizations

provided poor relief. Co-operative organizations provided

forms of support to members, such as farmers and

artisanal workers. A relatively new type of provider of

social services is the social enterprise. These are distinct

from charitable organizations as they aim to generate a

financial return as well as a social or environmental good.

They make their money from selling goods and services,

but reinvest their profits back into the business or the

local community (see Chapter u). Such activities for

the "bottom of the pyramid" (Prahalad and Hart, 2002)

are often set up by large companies with the objective of

reaching poor consumers: for example, Unilever (India)

created cheap water filters for the poor. Aravind Eye Care

hospitals in India were set up by an individual doctor,

using cross-subsidization to provide health care to all.

In international development, non-governmental

organizations play an important role, in a variety of

ways. Some organizations play a role in implementing

government policies or donor projects (involving inter

national NGOs like Oxfam or World Vision), often oper

ating in geographical areas where government services

are limited. Other organizations have played a more

independent role. In Bangladesh, the Grameen Bank

and BRAC (the Bangladesh Rural Advancement Com

mittee) have reached millions of poor people through

micro-finance and other empowerment programs.

Governments also have a key role in regulation of

social policy (to ensure that services are actually availa

ble even if not provided by government itself). Usually,

this role as regulator is supported by independent or

semi-independent institutions, such as elected school

boards, health care councils or pension fund boards.

Developing countries often continue to have uni

versal aspirations, but in principle the implementation

is in fragmented fashion. In most cases, the imple

mentation of social policies involves all three types of

actors (public, private, and non-profit). As previously

mentioned, India committed itself to universal health

provisions, but private provision and, increasingly, in

surance have come to play an important role, as gov

ernment spending remains very low and quality of

services is considered poor. Many NGOs are important

in this respect, often serving the poorest communities.

The type of actor implementing social policies

changes over time. European welfare states grew as

states incrementally provided more services publicly,

taking over f unctions that had been provided privately

but also taking over or unifying services provided by

charitable organizations. Governments keen to reduce

the public sector's role in social provision often try to

enhance the role of non-governmental organizations.

Social Policy: Fiscal Drain or Economic Investment?

A common concern about government spending on so

cial policies is that they absorb large amounts of govern

ments', and hence taxpayers', money. This is a concern

not only because of the need to balance government

budgets, but also because such spending may crowd out

other forms of investment. Also, many fear that provid

ing people with benefits-for example, against unem

ployment-will reduce their incentive to work.

However, spending on social policies is also an

investment. While pensions are often a substantial

contributor to government deficits, pension funds can

play an important role for the saving capacity of countries.

Investing in broad-based education is good for entire

economies, as it leads to a better-educated workforce, and

hence the potential for increasing productivity. The East

Asian economic miracle was helped by a well-functioning

education system. Similarly, public health is an essential

condition for a healthy labour force and, therefore, for a

vibrant economy. Public child care and maternity leave

can encourage more mothers into the workforce, and

thus is good for the economy as a whole.

Social protection, too, can play an important eco

nomic function. A well-designed safety net ensures

that people-and human capital-are protected dur

ing crises. England's Poor Law during the period from

1601 to 1834 may have helped the country's competi

tiveness. The system provided basic benefits, improving

health status. The benefits were portable, not tied to a

permanent residence, thus enhancing possibilities of

migration to find work elsewhere (Smith, 2008). Sim

ilarly, small cash transfers that are often feared to re

duce work incentives have also been found to do the

opposite, providing people with the means to search

26 I de Haan: Inequality and Social Policy 511

for jobs or diversify rural livelihoods (Mathers and

Slater, 2014). Economies that are more internationally

oriented tend to spend more on social protection: the

reason is that social protection is essential to absorb the

economic shocks that tend to afflict open economies

(Rodrik, 1998).

Of course, this does not mean that all social pol

icy spending is productive. Not all spending is "good"

spending: there can be wastage and corruption. In

many cases, spending does not benefit the poor: health

spending can be focused on tertiary care such as expen

sive hospitals in cities. Many relatively poor countries

have well-developed public pensions for civil servants,

taking up a large share of public social spending; its

benefits to the poor, and hence to economies as a whole,

are limited.

The Politics of Social Policy

The relationship between democracy and social pol

icy is complex. Amartya Sen (1999) emphasized the

importance of democracy and freedom of expression

in preventing fa mine. Non-democratic governments

have expanded social provisions, too, and at times have

done so effectively. Social policy also can contribute to

democratization, notably through education and the

norms expressed in the curriculum. This section dis

cusses how political processes and development of so

cial policy interacts.

Peter Lindert's study (2004) argues that economic

growth and public spending are compatible. The wel

fare state can look like a "free lunch," and investments

in health care and maternity benefits are economically

productive. But, Lindert asks, how do governments

make the right choices? Democratic process and polit

ical coalitions play a crucial role in ensuring that public

finances are well managed and that they do not exces

sively benefit one group over another or distort unduly. Well-functioning political systems facilitate both the

growth and the reform of social policies when these start

to expand in directions thought to be unfair or ineffec

tive. In this regard, democracy, in which the poor have

a voice, is an essential condition for good social policy.

To understand how social policies evolve, it is

critical to understand the politics behind them. This

has been analyzed in detail for OECD countries (see

Box 26.3). In democracies, leftist or social democratic

512 PART IV I Practice in International Development

BOX 26.3 I Social Policy Regimes

The way national histories and politics have impacted the shape of social policies in OECD countries is

analyzed in the classic work of Danish sociologist, G0sta Esping-Andersen (1990):

A liberal regime, with its roots in the nineteenth-century English political economy, has a strong

bias towards targeting of social assistance and a narrow definition of both risk and state responsibility.

A corporatist approach is more common in continental Europe, where, historically, both liberal

ism and socialism have played small roles. In this approach, risk is pooled through membership,

usually compulsory, based on professional status or sectoral occupation.

A third approach is universalistic, based on an ideology of national solidarity and the idea of

pooling all risks under one umbrella. Nordic social democratic welfare regimes-which emerged

after periods of violent civil strife-have emphasized universalism. Trade unions have regarded

it as means to strengthen solidarity across classes.

While such approaches are less distinct in developing countries, this characterization can be valuable in understanding the different approaches to social policy. In Latin America corporatism has played an

important role, following industrialization in the 193Os, with social security limited to those in govern ment services and large firms; recent new social protection programs aim to extend this corporatist ap

proach. East Asian policies also have displayed such characteristics, while maintaining low government spending. South Asian policies show the history of English colonialism. In Africa such historical traditions seem least distinct, partly because aid dependence has a distinct impact on social policies.

parties tend to be strong supporters of progressive so

cial policies. But non-democratic governments create

social policies too. The German "social state" (Sozial

staat) was developed in the 1870s under the conserva

tive government of Otto von Bismarck, with the aim of

gaining support from the working classes and under

mining the growing socialist movement.

In China, social policies are implemented as

part of a strategy to maintain political power and to

strengthen the idea of China as a nation (de Haan,

2010). Under Mao Zedong, after 1949, China built up

broad-based social policies with guaranteed access to

basic social services, although these policies privileged

urban over rural populations. With economic reforms,

inequalities in income and access to basic services

particularly health services, which were effectively

privatized-rose. Over time, pressure increased on

China's leaders-who since 1978 have focused on high

economic growth and ensuring full employment-to

address growing inequalities. From the early 2000s on,

this pressure led to renewed social policy initiatives,

which became encapsulated under the "harmonious

society" efforts of Hu Jintao and Wen Jiabao. This hap

pened as part of the Communist Party's explicit aim

to continue to remain in power. It was a response to

growing pressure and numbers of protests across the

country. Finally, growing threats of epidemics-HIV/

AIDS, SARS-helped to convince China's leaders of the

need for public policies to ensure a well-functioning

health system.

Processes of political democratization and exten

sion of citizens' rights often are accompanied by expan

sion of social policies. Under Apartheid, South Africa's

social policies discriminated heavily against non-white

populations. Since the transition, a range of new social

policies have been put in place or existing ones have

been expanded. The South Africa Child Support Grant

was introduced in 1998, replacing a discriminatory

provision, and now benefits about 10 million children

of poor families. In South Korea, economic transfor

mation was followed by political democratization,

which in turn contributed to expansion of previously

very frugal social policies during the 1990s. In Latin

America, the expansion of social protection policies

accompanied the return of democracy, which followed

a period of dictatorship; it was part of the "social con

tract" between the new democratic leaders and poorer

groups, in the context of very high inequalities.

In democracies, social policies can play a key role

in electoral strategies and debates. In India, "Abolish

Poverty" was the slogan of Indira Gandhi's successful

election bid in 1971. This was followed by the creation

of numerous targeted poverty programs. The national

employment scheme of the 2000s was associated with

the C ongress Party, while Prime Minister Narender

Modi, who was elected in 2014, has focused on sanita

tion. Such political drivers can play an important role

in expanding social provisions, but they can also lead

to inefficiencies and various overlapping schemes. At

local levels, there are often similar electoral promises,

and co-ordination can be problematic.

The development of social policy is usually not

only the result of contestation at the political level, but

also of that among service providers and government

departments. The establishment of universal health

systems is typically (including in the China example

mentioned above) based on a compromise between

public authorities and doctors who had previously

operated privately.

Social-political histories are thus critical in under

standing how countries' specific social policies evolve.

Within these, technical approaches can be distin

guished, which we discuss next.

APPROACHES TO SOCIAL POLICY

The social policy notion used above focuses on provi

sion of social services to a country's entire population,

and thus has a strong normative character. In prac

tice, provision can be achieved in different ways, and

26 I de Haan: Inequality and Social Policy 513

social provisions can be biased towards specific groups,

for example, urban populations. Here we consider the

main technical approaches within the field of social

policy, keeping in mind that the definitions of terms

can differ.

Social Security

Social security is traditionally defined, particularly by

the International Labour Organization (ILO), as con

tributory health, pension, and unemployment pro

tection. It protects workers and usually their families

against the risk of falling ill. Employers and workers

usually both contribute to funds, and this can be sup

plemented by governments from general taxes.

The !LO estimates that about 20 per cent of the

world's population has adequate social security cover

age of this kind. In Africa and South Asia this is less

than 10 per cent. Social security tends to be restricted

to occupational groups; historically, these groups have

tried to protect themselves collectively against specific

risks. Social security coverage tends to be low because

only people in wage employment in larger firms or gov

ernment employment have access to it. People working

within agriculture and in the informal sector have no

access, and in many developing countries the pro

portion of people in the informal sector has not been

declining.

Efforts have been made to extend social secu

rity to workers in the informal sector, such as by the

Self-Employed Women's Association (SEWA) in India.

SEWA is based in Ahmedabad, a city that used to have a

flourishing textile industry. It organizes women work

ing in the informal sector, with 1.8 million members

across India. It advocates for recognition and exten

sion of provisions that are available to the formal sec

tor, and sees contributory social insurance schemes as

empowering. It also provides an "integrated insurance

program" to cover the "life-cycle needs" of women,

"such as illness, widowhood, accident, fire, communal

riots, floods," etc. 4 However, such initiatives have re

mained limited, and they are not effective substitutes

for well-functioning health systems.

Countries have continued to develop health

services based on social insurance principles. South

Korea increased the coverage of health insurance

from 20 per cent in 1977 to full coverage in 1989, and

514 PART IV I Practice in International Development

in rural China a medical system based on insurance

principles has been in place since the mid-20oos. In

Ghana, a national health insurance system has been

developed since 2000. Like other newly independent

countries, Ghana at independence set up tax-financed

health provisions, and it then introduced user fees

(with exemptions) during the 1970s and 1980s. Since

the late 1990s, and particularly with the elections in

2000, policy has tried to abolish this "cash-and-carry"

system through the establishment of a health insur

ance system.5

Contribution-based approaches are often com

bined with free access to services or tax-based provi

sions. Costa Rica combines health insurance with free

access to health care. Pension systems in many coun

tries are multi-tiered, with a tax-financed pension for

the entire population (which is a very important redis

tributive mechanism), company-based pension funds

that allow employees to build up additional savings,

and/or private individual funds.

Universalism

At the time of developing countries' independence,

only small proportions of their populations had such

social security benefits, and provisions to the rest of

the largely rural populations were very limited indeed.

Faced with such disparities, many governments set out

to create universal provisions in health and education.

This had considerable success, for example, in Zimba

bwe and Zambia, where the numbers of health centres

and schools expanded rapidly during the 1960s and

1970s.

The expansion of social services came to a halt

with the onset of economic crisis and structural adjust

ment. Alongside insistence by international financial

institutions on reducing fiscal deficits and enhancing

efficiency, one of the most controversial changes, sup

ported by international donors, was the introduction

of user fees for health care. According to critique from

organizations like UNICEF (Cornia et al., 1987), this led

to a reversal of the progress made during the first dec

ades after independence.

In transition economies, structural adjustment

stressed the need to reform extensive social security

systems, but in many cases political opposition halted

such reforms. Chile has been regarded as one of the

success cases in the social security reform arena, mov

ing towards an individual contribution-based system.

These reforms have been heavily criticized because of

concerns that they would reduce access to services by

the poorest, but they are also credited with increasing

the country's savings capacity.

Partly responding to the international criticism of

structural adjustment, donors have continued to em

phasize universal provision of health care and educa

tion, particularly at primary levels. Many of the donor

initiatives came in the form of "vertical" programs,

including by now very significant private organiza

tions such as the Gates Foundation, focusing on spe

cific diseases (HIV/AIDS, malaria, worms) and groups

(mothers, children). These vertical programs have had

success, though, according to some, with limited at

tention to strengthening the capacity of health systems

(see Chapter 20).

Targeting

Since the 1980s, the principle of targeting has become

firmly rooted in policy practice, notably of international

agencies that showed increasing concern to ensure ben

efits reached those people who most needed them (also

see Chapters 24 and 25). Examples include India's public

food distribution scheme. In the 1960s it established a

food distribution system intended for the entire popu

lation. To reduce costs and to ensure benefits went to

those with more urgent needs, during the 1990s this

was converted into a targeted system. Now only peo

ple living below the poverty line can obtain subsidized

food rations. In the late 1980s the World Bank intro

duced "social funds," as described in Box 26-4, to miti

gate the negative impact of structural adjustment.

The focus on targeted poverty actions has been

particularly marked in Latin America. A new genera

tion of programs has focused on cash transfers to the

poor. Programs such as Bolsa Familia in Brazil provide

cash, allowing beneficiary households-with a key role

for women-to decide what to use it for. Often, this

is combined with an obligation to enter children into

school and health services. The benefits are targeted

towards households with an income below a defined

threshold. Balsa Familia in 2006 provided an average

of US$24 per month for 10 million families with a per

capita monthly income below US$34.

CRITICAL ISSUES

BOX 26.4 I Social Funds

26 I de Haan: Inequality and Social Policy 515

During the 1980s period of stabilization and adjustment the World Bank started to look for ways in which the impact of economic crises could be ameliorated, focusing on people directly impacted by crises. The main approach to this was named a "social fund." The first of these was the Bolivia Emergency Social Fund (ESF), which aimed to address the social costs of adjustment for miners laid off with the closing of state-run mines. Social funds in Ghana and Uganda were set up in a similar vein. In 2000, social funds existed in over 50 countries, with total expenditure amounting to US$9 billion. They remained a small part of social security activities in most countries, but the approach has greatly influenced international development in social policy.

Social funds are provided as loans to countries, usually co-financed with recipient contributions to ensure activities have ownership and sustainability. The social funds serve as an intermediary that channels resources to small-scale projects for poor and vulnerable groups. They are institutionally distinct from government sectoral policies and services. The funds support local groups, local NGOs, small firms, and entrepreneurial projects within a set menu of eligible projects, thus trying to ensure quick and targeted interventions. Over time, the emphasis of the social fund approach has shifted from short-term emergency relief towards more general developmental programs, and also has become closely connected to community-driven development.

While the move towards targeting has been criticized by those who see it as a move away from rights-based universalism, targeted programs have been successful in reducing poverty, particularly in Latin America. They have also helped to reduce in equality : research has shown that about one-fifth of the reduction in Latin America's inequality during the 2000s was due to cash transfers (Lustig et al., 2013).

To make targeting work is not always easy. There

are two main methods: one is self-targeting, applied through public works, for example. The general idea is that wages on public works schemes are low and/or work requirements so severe that only people who really need it will enter the scheme. In India, the Maharashtra Employment Guarantee Scheme operated successfully from the late 1960s, with the work requirement seen as key to targeting and avoiding dependency. This expe rience was used, and adapted, in the creation in 2004 of India's Mahatma Gandhi National Rural Employ ment Guarantee Act (MGNREGA; http://nrega.nic.in/ netnrega/ home.aspx).

The other method is administrative targeting: benefits are provided to households that meet certain eligibility criteria, ty pically having an income below a

set threshold. For example, in Brazil's Bolsa Familia, in 2010, families with a monthly income of less than R$140 (about US$85) received R$22 for young and R$33 for older children. Families with a per capita income below R$70 received an additional R$68.

While targeting of benefits may seem desirable, it has a number of disadvantages. There are administra tive costs to targeting, and it may be difficult in devel oping countries with limited administrative capacity. Inevitably, there is "leakage": some of the benefits are likely to go to non-eligible households. Targeting also can have a stigmatizing effect, as it singles out a group of people as "poor" and as "beneficiaries," dividing them according to specific programs and group characteris tics. Finally, there is the question of political support, whether middle classes are likely to support programs from which they themselves derive no benefits (there is actually little evidence of such lack of support in Latin American countries).

Within the social policy literature, there are large differences of opinion about the desirability of target ing. On the one hand, targeting was promoted strongly, as mentioned, in the 1980s by the World Bank, and more recently, following the success of the new social

516 PART IV I Practice in International Development

protection programs in Latin America. lbers empha size the need for universalism. Thandika Mkandawire (2005) in particular has argued that univer al social policy approaches have tended to g hand in hand with successful development and that the costs of targeting outweigh the benefits. In practice, most social policy systems combine universalism-or at least aspirations for universalism-with some forms of targeting.

Affirmative Action

Inequalities between groups are important in many countries and of a very different nature from inequal itie bet,ween individuals. In many countries, policies vis-it-vis social groups have played a critical role in the development of the broader social p olicy framework.� For example, South African social policies since 1-994 have focused on addressing the disparities created un der Ap,utheid. Old age pensions and child grants have been flagship cash transfer schemes, broadeping the previous discriminatory policies to include the entire population-while not affirmative action as such, the main beneficiaries have been the black population. The program Black Economic fanpowerment (BEE, later Broad-based Econon.1.ic Empowerment) was intro duced to m.a.ke economic act ivil y representative of the country's racial structure, for example, through skills development and preferential procurement.

In l.ndia, support for deprived groups is enshrined in the Consti.t1.1tion and is delivered through elabo rate administrative and financial mechanisms. Af firmative action exists in three areas: leg,;1I safeguards against discrimination; education and empowerment of deprived groups; and quotas, called "reservation/' in govern.ment services, admission in public educational i.nsUtulion , and seats in central, state, and local legis lative and administrative bodies. Nepal has introduced policies to address inequalities for deprived castes sim ilar to India's.

The politics of affirmative action is distinct. Malaysia introduced elaborate affirmative action as part f the New, Economic Policy after racial riots in 1969, aiming to provide equal opportunities to tbe in digenous population. In India, affirmative action has become a central feat me of many policies, even though they were introduced with the expectation that they were only temporary mea ure . Also, these policies

have been extended to an increasing number of s ial groups ("oLher backwa.rds castes") that claimed they were aJ o deprived, and have been the subject of much debate and political mobilization (including at univer sities) ( hah, 2002).

Affirmative action is among the most disputed forms of social policy. While racial difference were made central in Malaysia and South Africa, they were not in Rwanda after the genocide., and China's poverty policies focus on minority-area region, rather tban so cial groups per se. In some cases, it is argued that the focus should be on economic rather than social/racial differences. There is also a concern that affirmative action creates a "creamy layer," that the benefits-for example, quotas in universities-go to only a small group within the larger depri.ved groups. India's ex tensive system of affirmative action has come to lead its own life in the administrative structure and as pan of electoral politics, arguably without equal attenlion to addressing discrimination in legal, economic, and social spheres, as has been the ·case in the US wirb its strong civil rights movement.

Social Policy and Citizens' Rights

The welfare states in OECD countries are distinct not only because of the extensive government involvement in providing social services, but also because these were introduced a,s a right for a.JI citizens, denning a new relationship between the state a.nd its citizens. Many newly independent countries also introduced so cial provisions as a eight for their pop1.1lations. lndia's MG1'J REGA ha a rights-based orientation, with a guar antee of a number of days of work for ever ybody who wants to access the program.

While rights emerged from protracted processes of social contestation in OECD countries, in develop ing countries the achievement of those rights has been much more limited. This, however, is no reason to dis miss the notion of rights. Social policies are part of the way in which the relationship between the state and citizens is defined. In South Africa, social policies con tributed to Apartheid, and after the end of apartheid, soclal policies have had a key role in addressing ine qu, litie· and discTimination.

New social protection policies in countries such as Brazil have been discussed in the lit rature as

the formation of a new "social contract," part of the

new democratic regime's attempts to enhance legit

imacy through addressing inequalities. The political

drivers behind such programs always imply a risk

that a change in government could result in the end

of the schemes, but thus far this has not happened.

The maintenance of the program has been facilitated

by its popularity among the large number of benefi

ciaries, which creates expectations and a sense of en

titlement (even if not formally a "right"), as well as

evidence that these schemes have achieved their in

tended objectives.

In Africa, many social policies are supported by

the international community and development aid.

In fact, under the Millennium Development Goals

and supported by international summits, a large

share of aid did go to social sectors, perhaps at the

cost of supporting economic policies. Project fund

ing in social sectors, altruistic and voluntary in na

ture, has led to improved outcomes. Often, however,

these improvements have been achieved through

setting up "project implementation" units, which

have tended to function parallel to mainstream pol

icy institutions and, therefore, have not necessarily

strengthened the accountability of service provisions

and state-citizen relationships. Developing coun

tries often finance temporary programs with inter

national support, thus avoiding difficult political and

economic choices that are necessary for long-term

programs. Sustainable social policy provisions and

citizens' rights-or the progressive realization of

rights-are closely inter woven. They are part of po

litical processes and broader social contestation that

generates support for social policy implementation

and the taxation necessary to fund it.

CONCLUSION: MEASURING

SOCIAL POLICY SUCCESS

Compared to policies for reducing poverty, addressing inequality is harder to measure and evaluate. It involves assessing changes in well-being of the entire popula tion. Targeted approaches to reducing poverty can be assessed through measuring the impact on specific groups. This is not easy: for example, one needs to un derstand the counter-factual, that is, what would have

26 I de Haan: Inequality and Social Policy 517

happened in the absence of a policy or intervention. But

the question of impact on inequality-and the broader

sets of policies that this chapter has discussed-of

course requires a broader set of tools to assess success.

In the first place, the financing of social poli

cies is important. The way social policies are funded

and implemented can be more or less progressive.

Contribution-based approaches have large advantages

related to political sustainability, but are less suitable

for the most marginalized and those working in the in

formal sector. General taxation is crucial for building

up redistributive social policies, but methods of taxa

tion matter a great deal, and it is critical to assess the

net redistributive impact of governments' policies.

Second, social policies are multi-sectoral. Good

instruments exist to assess the impact of health and

education policies and cash transfers. However, the

well-being of populations and inequalities within these

populations depend on the composite of these meas

ures. Governments need to choose in which sector to

invest their resources: as described, health care has

tended to be relatively neglected. There are no hard and

fast rules on what the composition of an overall public

policy should be, but good policy analysis needs to take

into account the impact of all sectors-of health, edu

cation, social protection, etc.-on the well-being of the

population.

Third, good social policy analysis is also political

analysis. It is important to recognize the political na

ture of social policy formulation, their constituencies,

and, therefore, how these vary across countries. Ideo

logical differences are critical, and are here to stay. For

example, in some contexts inequality of opportunity

is regarded as the critical criterion of a public policy,

whereas in other contexts it is inequality of outcome.

Similarly, social or group differences drive public pol

icy and measurement in some areas, whereas individ

ual inequalities are the main concern elsewhere.

Finally, there are no simple measures of univer

salism. Social policies necessarily imply a mix of uni

versal policies (such as primary education or health

care, in many countries) and targeted policies (such as

unemployment benefits). They usually imply a mix of

tax-financed policies and contribution-based policies,

such as in multi-tier pension systems. Complete uni

versalism, like complete equality, does not exist and

may not be desirable, but it is important to develop a

518 PART IV I Practice in International Development

comprehensive assessment in support of the aspiration

towards universalism.

SUMMARY

This chapter has sought to explain the importance of

inequality in international development and how this

differs from poverty. There has been growing recogni

tion that inequality is important in low-income coun

tries as well as in high-income countries, and it is of

increasing significance in countries that have experi

enced rapid economic growth.

Inequality, as we have seen, can be measured. The

reasons why inequality matters are complex, and may

be more so than one might initially think. The types

and levels of inequality matter, and norms of fairness

and equality differ across countries or regions, as well

as change over time.

In addition, diverse policies aim to address

inequalities. The chapter introduced a broad notion of

social policy, emphasizing that there is no right or wrong

definition, and there are political reasons for adopting

one or another. The way governments tax is equally

important, particularly to assess the net redistributive

impact of government policy. History has shown that

governments over time are able to and have developed

better instruments to address inequalities. But these

paths and ideologies that drive social policy are diverse.

Social policy analysis needs to understand the political

motivations and constituencies, and the different social

policy approaches that emerge from this.

QUESTIONS FOR CRITICAL THOUGHT

1. To what extent should development policy for low-income countries focus on poverty or inequality?

2. What are the advantages and disadvantages of using a broad notion of social policy, compared to sectoral

approaches or those that focus on the negative consequences of economic growth?

3. What are the advantages and disadvantages of policies that focus on individual inequalities as compared to

those that focus on group inequalities? Are there differences in this respect for low-income versus higher

income countries?

4. Do you agree that the development of social policy is a political exercise? If so, what does this mean for the

role that international development policy can p!ay?

SUGGESTED READINGS

Barrientos, Armando, Jasmine Gideon, and Maxine

Molyneux. 2008. "New developments in Latin America's

social policy." Development and Change 39, 5: 759-74.

Esping-Andersen, G0sta. 1990. The Three Worlds of Welfare

Capitalism. Princeton, NJ: Princeton University

Press.

Gough, Ian. 2008. "European welfare states: Explanations and

lessons for developing countries." In Anis A. Dani and

1. http://oxfamblogs.org/fp2p/who-is-the-richest-man

in-history/.

2. See de Haan (2013) for a more detailed description

and sources. This also illustrates the different patterns

Arjan de Haan, eds, Inclusive States: Social Policy and

Structural Inequalities. Washington: World Bank, 39-72.

Mkandawire, Thandika, ed. 2004. Social Policy in a

Development Context. UNRISD. Basingstoke, UK:

Palgrave Macmillan.

Razavi, Shahra, and Shireen Hassim, eds. 2006. Gender and

Socia/Policy in a Global Context: Uncoveringthe Gendered

Structure of "the Social." Basingstoke, UK: Palgrave.

compared to India, where inequality rose less but pov

erty declined less.

3. Currently, the term "social protection" is used mainly

with reference to the new generation of conditional

cash transfers, implemented with much success in Latin

America. The term "social security" usually refers to

contribution-based social provisions.

4. In 2012 VimoSEWA had about 100,000 members

(www.sewainsurance.org/).

BIBLIOGRAPHY

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policy for reconstruction and development." In D.

Morales-Gomez, ed., Transnational Social Policies: The

New Challenges of Globalization. London: Earthscan,

69-87.

Bastagli, F. 2015. "Bringing taxation into social policy analysis

and planning." Working Paper 421. London: ODI. www

. o di.org/publications/967 1-bringing-taxation-into

social-protection-analysis-planning.

Caminada, K., and K. Goudswaard. 2012. "The redistributive

effect of social transfer programmes and taxes: A

decomposition across countries." International Social

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Cornia, G.A., R. Jolly, and F. Stewart. 1987. Adjustment with

a Human Face. Oxford: Clarendon Press.

De Haan, A. 2010. "The financial crisis and China's

'Harmonious Society'." Journal of Current Chinese

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Growth and Welfare in China and India. Working

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/IPCWorkingPapen10.pdf.

-- and S.K. Thorat. 2ou. "Addressing group inequalities:

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transformation." European Journal of Development

Research 24, 1: 105-24.

Esping-Andersen, G. 1990. The Three Worlds of Welfare

Capitalism. Princeton, NJ: Princeton University Press.

International Labour Organization (ILO). 2014. Global Wage

Report 2014/15. Geneva: JLO. www.ilo.org/global/about

the-ilo/newsroom/news/WCMS _3 246 51 /lang--en/

index.htm. International Monetary Fund (IMF). 2014. "Fiscal policy

and income inequality." www.imf.org/external/np/fad

/inequality/.

26 I de Haan: Inequality and Social Policy 519

5. www.who.int/healthsystems/topics/financing/health

report/GhanaN02Final.pdf.

6. De Haan and Thorat (2ou) describe these for the

emerging economies of Brazil, China, India, and South

Africa.

Lindert, P.H. 2004. Growing Public: Social Spending and

Economic Growth since the Eighteenth Century, 2 vols.

Cambridge: Cambridge University Press.

Lustig, N., C. Pessino, and J. Scott. 2013. "The impact of

taxes and social spending on inequality and poverty in

Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An

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growth: Research synthesis." London: ODJ. www.odi.org

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Mkandawire, T. 2005. Targeting and Universalism in Poverty

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bottom of the pyramid." Strategy and Business 26: 1-14.

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Policy in a Global Context: Uncovering the Gendered

Structure of"the Social." Basingstoke, UK: Palgrave.

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gap-report-2014.

Planning and Appraising Development Projects David Potts

LEARNING OBJECTIVES

• To understand the nature of development projects • To understand the criteria used for project

and their role in development. appraisal and how they are determined.

• To learn about the sources of project identification. • To be able to distinguish between financial and

• To discover the processes involved in project economic analysis and their meaning and purpose.

planning.

A Fixing a road like this one in Papua New Guinea would help users but has no sales benefits so how do we decide whether the

benefits justify the costs? I Source: ARIS MESSINIS/AFP/Getty Images

27 I Potts: Planning and Appraising Development Projects 521

WHAT IS A PROJECT?

The word "project" is used in many different ways, but in the context of development planning a project can be thought of as an investment of scarce resources in the expectation of future benefit. If resources are scarce they have to be used effectively, so development pro jects have to be planned with a clear objective in mind. A project has to have geographical and/or organiza tional boundaries so that we know what is included in the project and what isn't. A project is also time bound in that it has both a start and an end. Often, the end of a project as a project does not mean that the activities finish. It just means that they become part of the rou tine operation of the organization responsible for the project.

The association of projects with investment is im portant because we expect the early stages of the pro ject to incur net costs to society but that these costs will eventually lead to net benefits. The methods used for appraising projects are designed specifically to take ac count of the comparison of early net costs with later net benefits. These methods include cost-benefit analysis, where project benefits can be measured fairly easily, and cost-effectiveness analysis, where valuation of ben efits is more difficult, particularly in the health and education sectors.

Project Planning for Development

Projects can be undertaken by all sorts of organizations with different motivation. However, when we attach the word "development" to the word "project" it implies that the project is intended to contribute to develop ment. The use and meaning of the term "development" is contentious and is discussed extensively in Chapter 1 of this book. For the purposes of this chapter I will use the following definition: "Development ... implies the improvement over time and on a sustainable basis of the level and distribution of income and the physical and human resource basis" (Potts, 2002: 11).

A development project, therefore, has to contrib ute to development in the sense indicated above and its value should be judged on that contribution. We have to go beyond the simple measures of profitability used in private-sector projects to assess the overall welfare impact in a way that is appropriate to the type and

scale of the project under consideration. This does not mean that private-sector projects cannot be develop ment projects. It just means that development impact is not the same as private profitability. For this reason, when development banks fund private-sector projects, financial profitability would be regarded as a necessary constraint rather than the development objective. A development project must be financially sustainable or it will not work, but it must also contribute to devel opment objectives. Project planning for development therefore implies the use of resources in ways that pri oritize enhancement of the welfare of those groups in most need. In short, development projects should con tribute to poverty reduction. This has implications for both the design of development projects (determining objectives and the means to achieve them) and the ap praisal of their value ( ensuring that benefits are greater than costs for the economy as a whole and that an ade quate proportion of those benefits will go to the poor). This chapter will therefore pay particular attention to project design approaches and to the techniques of cost-benefit analysis.

The Role of Projects in Development

The role of projects in development has been the subject of considerable debate over the last 50 years. In the late 196�s and the 1970s there was growing disillusion with the results of macroeconomic planning in developing countries and regarding the impact of trade protec tion policies on market prices and related incentives. A number of major publications focused on the need to ensure the economic viability of productive-sector projects, particularly those involving substitution for imports (Marglin, 1967; Little and Mirrlees, 1969, 1974; UNIDO, 1972; Squire and van der Tak, 1975). Develop ment funding from aid donors and development banks placed greater emphasis on ensuring the viability of specific projects rather than the contribution of those projects to wider programs. It was implicitly assumed that, as long as an individual project could be shown to be economically viable, it would contribute to devel opment. The issues surrounding the economic policies of recipient governments were debated, but donor in fluence was exerted mainly through the choice of pro jects rather than the overall orientation of government policy. A great deal of donor funding was directed into

522 PART IV I Practice in International Development

investment projects and training planners in devel

oping countries in the planning and appraisal of such

projects.

In the late 1970s and early 1980s policy changes in

the major donor countries, particularly the UK and the

US, coincided with the declining influence of the Soviet

Union. This led to greater pressure on aid-recipient

governments to change their policies, particularly by

reducing the role of the state in the directly produc

tive sectors of industry and agriculture. Increasing

donor influence on policy issues through structural

adjustment programs changed the kind of projects

that donors would fund, with an emphasis on the in

frastructure and social sectors. The prevailing donor

view was that most industrial and agricultural projects

should be funded by the private sector and that invest

ment in the social sectors, in particular, would be done

on the basis of sector programs rather than projects.

In the period 1975-9, 43 per cent of World Bank pro

jects were in the agriculture, rural development, and

energy and mining sectors, while only 10 per cent were

in education, health, public-sector governance, social

protection, and the environment. In the period 2003-7

the proportions were 23 per cent and 41 per cent, re

spectively (IEG, 2010: 7). Valuation of benefits in the

social sectors is more difficult and contentious than for

directly productive and infrastructure projects, and

they are more likely to be planned as part of a wider

program. Consequently, external funding of train

ing in project analysis received less priority, and pro

ject planning capacity in many developing countries

tended to decline.

By the late 1980s the legitimacy of donor influ

ence on recipient country policies was more widely if

reluctantly accepted by those countries, partly because

they had little alternative. As a result, by the late 1990s,

PHOTO 27.1 I Indian farmers pluck ripe tomatoes in a field in the village of Alindra. How do we know if a

project, like a tomato canning operation is commercially viable? See how to calculate it, using the full schedule

of tables available in the onllne content for this chapter.

27 I Potts: Planning and Appraising Development Projects 523

donor funding packages contained a mixture of pol

icy interventions and support to capital and recurrent

spending in key sectors such as health and education.

This program approach led to a decline in the relative

importance placed on projects by donors and an em

phasis on sector-based development support, partly

because of a perceived weak impact of project-based

aid on growth and poverty reduction "in the presence

of poor policies" (Burnside and Dollar, 2000: 847).

This change in emphasis was reflected in the Paris

Declaration (OECD, 2005), which recommended har

monization of aid donor assistance in "co-ordinated

programmes aligned with national development strat

egies" rather than individual donor-planned projects.

A contrast was drawn between the so-called "project

approach" and "sector wide approaches" (SWAPs). The

"project approach" was perceived to be narrow in focus

and failing in terms of overall coherence. The empha

sis placed by donors on the planning and appraisal of

projects was therefore reduced. However, the idea that

a systematic approach to planning could involve both

coherent sector strategies and well-planned projects

seemed to be overlooked (see Chapter 8).

By 2010 a review of the use of cost-benefit analy

sis (CBA) at the World Bank (IEG, 2010) found that the

proportion of World Bank projects for which CBA was

undertaken had fallen from 70 per cent in the 1970s to

25 per cent in the early 2000s. Partly this was due to a

shift in lending towards sectors for which CBA is not

usually undertaken. However, although performance

improvements were observed in those sectors that do

use CBA, there was a general decline in its use. There

also seemed to be a failure on the part of donors to rec

ognize that, even if they were no longer using a "project

approach" to define their programs, this did not mean

that the investments did not have to be planned. A review by two IMF economists (Cardella and Dell'Aric

cia, 2003) suggested that budget support was more effective when the aid program was relatively small

compared to the resources of the recipients, while pro

ject aid was more effective when the aid program was relatively large. Less aid-dependent countries presum

ably have greater capacity to plan their projects effec

tively. While some projects fail even when they appear

to have been well planned, the quality of planning can

normally be expected to have a positive impact on pro

ject performance, so good project planning does matter.

THE PROJECT PROCESS

The most widely known model of the development of a

project is the "Project Cycle," originally developed by

Baum (1970, 1978). This model was developed for the

World Bank and reflected the processes of that organi

zation (Figure 27.1). Essentially, a project goes through

the processes of identification, preparation, appraisal,

implementation, and evaluation. The cycle is completed

when the evaluation process leads to a new project idea

and the cycle starts over again.

There have been many criticisms of the model for its

simplicity and rigidity and the fact that it does not rec

ognize the possibility of abandonment or termination.

A number of alternative and more detailed models have

been put forward (e.g., Rondinelli, 1977; Goodman and

Love, 1979; MacArthur, 1994). Picciotto and Weaving

(1994) developed a new version for the World Bank

that emphasized participation, flexibility, and account

ing for the interests of stakeholders. An alternative

approach that relates project development to the var

ious processes and stages but allows for modification

of design as well as termination is the "Project Spiral"

(Potts, 2002: 16). In this model the process of project

development is conceived as a series of concentric cir

cles that may eventually lead to project implementa

tion but may also involve changes in project design or

simply abandoning the idea. An emphasis is placed on

the various aspects of the project environment in the

Evaluation

,, .,.

Identification ,�

Implementation Appraisal

..________.,.,.

FIGURE 27.1 I The Project Cycle

Source: Baum (1978).

Preparation

524 PART IV I Practice in International Development

identification of projects and the process of project de

velopment. It is important to recognize that it is better

to abandon or redesign a bad project than to continue

to sink more and more resources into something that

is likely to fail.

Despite criticisms of the simplicity of the original

Baum model, very similar models are still used (see,

e.g., EC, 2004: 16) and they may be well suited to the

programming procedures of aid agencies. This associ

ation of project planning procedures in general with

procedures that are specific to aid agencies has contrib

uted to the rather misleading impression that proce

dures designed for aid programming are equally valid

for the far larger number of projects funded internally

by developing-country governments and other organi

zations in both the public and private sectors. In reality,

such models are useful to describe some processes but

may need to be adapted to reflect priorities and prac

tices of the organizations concerned. More generally,

projects can be identified and planned in a more or less

systematic process that may eventually lead to project

implementation but does not necessarily do so in all

cases if at any stage of the process it is determined that

the project is unlikely to succeed.

Identifying Projects

The project planning process starts with project identi

fication. Essentially, project ideas are derived from the

project environment. It is at this stage that the need for

sector strategies becomes important. The idea that sec

tor planning should be combined with more detailed

project planning is not new. As early as 1965 Singer

argued that development projects could not logically

be divorced from their planning context. A project is

more likely to succeed if it is part of a coherent program

that identifies constraints to be overcome and opportu

nities that can be taken, as well as alternative solutions.

Such a program often may include a number of related

projects that are important if both the program and the

constituent projects are to be successful.

Programs can be sector-based (e.g., a sector plan

or program), but they can also be geographically

based (e.g., a regional plan) or organizationally based

(e.g., plans and proposals from government organiza

tions, private-sector companies, NG0s, or community

groups). Often projects involve partners so the project

idea may be derived from the interaction of different

partners.

A project idea has to be based on the existence of

either a problem to solve or an opportunity to exploit

(e.g., the existence of an underutilized resource). The

process of identifying projects is therefore often based

on problem-solving techniques or reviews of resource

availability. A useful approach to developing project

ideas was first introduced by the German development

agency GTZ in 1983 and has been used systematically

since 1987 (GTZ, 1997: 29). The approach was given the

German acronym Z0PP, which can be translated as

"objective (or goal) oriented project planning (00PP)."

The approach has been combined with a tool originally

developed by USAID in 1969 called the logical frame

work (LF). The combination of 00PP with the LF is often

described as the logical framework approach (LFA). A

more recent explanation of these processes and their

variants is provided in the European Commission's

Project Cycle Management Guidelines (2004).

Assuming that a problem (or an opportunity) has

been identified, the first stage in 00PP is to identify the

relevant stakeholders, that is, the people who are likely

to be involved in a potential project or those who might

be affected either positively or negatively. The purposes

of the exercise are:

1. to ensure that resources are targeted to meet the

needs of priority groups;

2. to make appropriate arrangements for co-ordination

and participation;

3. to understand and address potential areas of con

flict in project design.

The next stage is sometimes described as "problem

analysis" and is designed to allow a systematic analysis

of causes and effects. One of the tools that can be used

for problem analysis is the problem tree (Figure 27.2).'

This approach is designed to identify the core problem

that a project is supposed to solve by building a chain

of causes and effects. The starting point is for the rele

vant stakeholders to brainstorm what they believe to be

problems and then, collectively, to select a "starter prob

lem." The problems are then arranged in a tree to deter

mine cause and effect. Those problems that are caused

by the starter problem are placed above the starter

problem and those that cause the starter problem are

27 I Potts: Planning and Appraising Development Projects 525

placed below. The various problems are then connected

by arrows to determine the hierarchy of problems and

their causes. In the process of analysis the core problem

at the centre of the tree might no longer be seen as the

original starter problem, as those doing the analysis get

a better understanding of cause and effect.

Once the problem tree has been constructed the

next stage is to determine how the problems can be

solved. This is described as "objectives analysis." In this

process the negative situations indicated in the prob

lem tree are replaced by positive outcomes that are sup

posed to be "realistic" and "achievable." The idea is then

to determine the measures required to achieve those

outcomes. The problem tree is replaced by an objectives

tree in which the negative statements are replaced by

solutions. In a pure project case this would simply con

sist of the activities needed in the project. However, in

many cases other actions (e.g., policy decisions) may

be necessary for the project activities to work. These

may become conditions that have to be satisfied before

the project planning process can start; otherwise, as

sumptions that are made, if wrong, might affect project

outcomes.

The process of objectives analysis might result in

multiple strategies to satisfy the intended objectives. It

is at this stage that detailed planning of the activities

Declining incomes of fishing famrlies

Declining fish stocks

takes place with the purpose of determining the most

appropriate set of actions to resolve the identified set

of problems. This is described as "alternatives analy

sis" or "analysis of strategies." In this stage the possible

strategies that could potentially resolve the problem

are compared and the most promising approaches

are identified for further analysis. In the case illus

trated in Figure 27.2, part of the solution might be a

project to improve wastewater treatment facilities.

This could be combined with a public education pro

gram, but successful implementation might depend

on tougher legislation and enforcement (Figure 27.3).

Whether the education program and the wastewater

treatment facilities should be a single project or two

related projects under different organizations is open

to question.

In some cases it may be that a project is not the

most sensible way to solve the problem, particularly if

the problem is caused by policy failure or a shortage of

recurrent resources, such as funding for the operating

costs of a wastewater facility. In such cases the process

would lead to recommendations for policy changes or

an increased recurrent budget in specific areas. Only

if the problem analysis identifies a need for specific

investments as a critical issue is a project approach

appropriate for solving the problem identified.

Houtehold waste dum

Factory wastes pumped Into river

Wastewater not treated

Poorpublk eduralion

FIGURE 27.2 I A Problem Tree

Ineffective leglslatlon

Inadequate wastewater treatment facilltles

526 A T IV I Practice in International Development

Increasing incomes of fishing families

i Increasing fish stocks

Reduced water borne diseases

Household waste Factory wastes Wastewater

treated treated

i t

! Improved Effective

public education legislation

FIGURE 27.3 I UbjP<'tin:>8 Anal?sis: A Solnt.ion TrPP

PLANNING PROJECTS AND

THE LOGICAL FRAMEWORK

When there is a clear idea of the problem to be solved or the opportunity to be exploited, and when it is also clear that some form of investment is required, it is possible to start to plan the project. In doing this, the problem tree helps to define the measures to be taken by the pro ject and may also help to identify particular issues that might affect the project but lie outside its jurisdiction. At this point an approach is needed to ensure that what is proposed is logically consistent with the defined ob jectives and to define what the project might be. The LF provides a tool that helps in clarifying project design. It is also the final stage in what has come to be known as the LFA, although it was developed earlier and can be used as a stand-alone tool.

There are various versions of the LF, but the one illustrated here is the approach used by the European Commission, based on the original German ZOPP model, originally described as the "Project Planning Matrix." The LF is a matrix of four columns and four rows. The vertical logic relates to the hierarchy of ob jectives. Project activities lead to project result s that contribute to a development outcome or purpose that

treated

Adequate wastewater treatment facilities

contributes to a wider overall objective or development impact. This vertical logic can be examined to ensure that the investment proposed in the project actually contributes to the intended outcome. If a project com ponent does not contribute to the outcome, why is it there?

The columns provide a description of the various objective levels, the indicators that show whether objec tives have been achieved, the means of verification for the indicators, and the important underlying assump tions that must hold if each level is to be achieved. The indicators column shows the most important things to be monitored during the implementation of the project and the means of verification column shows where the

necessary information can be found. It provides guid ance for the development of reporting systems for pro ject management. The assumptions column highlights the potential causes of project failure and therefore in forms those involved in project appraisal of some of the indicators that may need to be tested through sensitiv ity analysis.

The LF has been used extensively in many variants in many countries and by many development agencies. A number of criticisms have been raised in the liter ature (e.g., Gasper, 2000; Reidar, 2003; Bakewell and Garbutt, 2005). Some critics have described the LF as a

27 I Potts: Planning and Appraising Development Projects 527

Project Description Indicators Means of Verification Assumptions

Overall objective Improve family health Incidence of water-borne Hospital and clinic

diseases reduced by 50% records

Increase incomes of fishing Value of fish sales Fishing catch records Sustainable fishing families increase by 20% (date) practices adopted

Purpose

Improved river water quality National water pollution Water quality surveys Waste treatment process standard reached by effective (date) Public awareness

campaign effective

Results

Reduced volume of wastes and Volume of waste in Survey of households Upstream river flows wastewater discharged into water reduced by 80% and factories and water quality river by (date) maintained at specified

level

Activities

Rehabilitate waste treatment New plant completed Project monitoring plant and in operation (date) reports

Public health awareness program delivered

program (date)

FIGURE 27.4 I An Example of a Logical Framework: The Project Planning Matrix

"lockframe" (Gasper, 2000) that restricts creative think

ing because of the rigidity of a 4 x 4 matrix. There are

also questions about the terminology used for different levels and the number of levels in the vertical hierarchy.

It is not always easy to determine what to put into each level. The version of the LF from the Norwegian Agency

for Development Co-operation (NORAD, 1999) has five

levels with "inputs" at the lowest level, and the indi

cators and means of verification are combined so that

there are only three columns. There are also different

opinions as to whether the assumptions column should

only include factors outside the control of the project management.

The LF shown in Figure 27.4 is a simplified illus tration of what is involved that also illustrates some of

the issues that have been raised. In Figure 27.4 there

are two "overall objectives." Some would argue, as in the original version of ZOPP, that there should only be one overall goal. This can be achieved easily by add

ing the word "and" but it doesn't address the point

that multiple goals can lead to confusion about what is most important. Strictly speaking, the effectiveness

of the water treatment facility is in the control of the

project management, but this is a critical assump

tion. In some cases of complex projects with multiple

stakeholde'rs it may be difficult to fit the project into

only four levels. Should we accept the general idea but adapt the tool to the particular needs of the project in

question?

One of the most important points to be made

about the LF is that it only ensures that the project is

logical. It does not ensure that the design proposed

is the best design, nor does it ensure that the benefits

of the project exceed the costs. This is the subject of

project appraisal.

PROJECT APPRAISAL

Project planning is essentially about project feasibility. Will the project work? Tools like the LF and other pro

ject identification and design tools help to make sure

that the proposed activities of the project will con

tribute to the proposed output. However, if we want

528 PART IV I Practice in International Development

to judge whether a project is a good thing we need to

consider four major issues:

1. Do the overall benefits of the project exceed the

costs?

2. Do the net benefits to key stakeholders exceed their

costs, i.e., do they have the incentive to participate

as assumed?

3. Is the distribution of the costs and benefits of the

project such that it can be said to contribute to the

development objective?

4. Is the risk of failure sufficiently low for all relevant

stakeholders?

To answer these questions for projects with benefits

that can be valued without too much difficulty we need

some of the tools of cost-benefit analysis (CBA). CBA

can be done from the point of view of an individual

organization, group, or enterprise. This is described as

.financial analysis. It can also be done from the national

economic point of view. This is described as economic

analysis. Economic analysis can also be adapted to de

termine who gets the benefits and who pays the costs.

This can be described as distribution analysis.

In cases where benefits may be difficult to value,

particularly in some social-sector projects, we may

decide to use the tools of cost-effectiveness analysis

( CEA). CEA can also be done from financial, economic,

and distributional view points.

Basic Principles of Cost-Benefit Analysis

The first basic principle of CBA is that overall benefits

should exceed costs. This is a weaker criterion than

BOX 27.1 I Discount Factors

the traditional economists' concept of Pareto opti

mality where a welfare improvement is only certain if

everybody is better off. CBA has traditionally adopted

the Hicks-Kaldor criterion that welfare improvement

occurs if gainers can potentially compensate losers

even if the compensation does not take place. CBA

therefore allows for the possibility that there may be

losers as well as winners, although it is recognized that

in some circumstances it may be necessary to compen

sate the losers. The issue of the distribution of costs and

benefits has some significance in such cases.

An important issue for CBA is the timing of costs

and benefits. When investment takes place, net benefits

in the early part of the project will probably be negative,

and later on in the project life the benefits will exceed

the costs. Where net benefits are initially negative and

later positive, we have to have a means to compare ben

efits and costs at different points of time. The decision

criteria used for CBA are based on the principle of time

preference. It is assumed that people prefer to have ben

efits earlier rather than later, so the weight given to costs

and benefits in the future is lower than the weight given

to present costs and benefits. The standard measures

used for comparing costs and benefits over time there

fore assume that a discount rate (r) is applied to costs and

benefits over time with the weight applied to each year

falling by a given percentage. By definition the weight

given to the present is 1.0 and the present values (PVs) of

costs and benefits are calculated by applying discount

factors (DPs) to costs and benefits in future years.

The higher the value of r, the more weight we put on

the present in relation to the future. The issue of choos

ing the discount rate is therefore related to intergener

ational issues such as conservation of the environment.

If r is the discount rate and t is the year in the project life, the discount factor (DF1) is given by:

Oft= 1/(1 + r) 1

If the discount rate is 8%, the discount factor for Year 1 of a project is 1/1.08 = 0.926 and a benefit or cost of $100 in Year 1 of the project woul d have a PV of $100 x 0.926 = $92.60. The same benefit or cost in Year 2 would have a value of $100 x (1/(1.08)2) = $85.70.

27 I Potts: Planning and Appraising Development Projects 529

In estimating the costs and benefits of any project it is useful to distinguish between three categories of costs, namely, investment costs, operating costs, and working capital. Clearly all projects also have some source of revenue, which comes from sales in the case of a commercial project. These categories of costs and benefits will be illustrated with a simplified example of a tomato concentrate project. All values are expressed in thousands of domestic dollars (D$).2

Investment costs are the initial costs required to establish the project and often include replacement costs for items that have an operational life less than the life of the project. Vehicles are replaced in Year 6 and the remaining assets are sold at the end of the pro ject life in Year 10. This residual value is recorded as a negative cost.

For projects with outputs that are sold the bene fits can be described as revenue. However, although all projects should have some benefits, they do not neces sarily all have sales revenue. For example, road projects with no toll deliver benefits to road users but they do not have any sales. The distinction between the inter nal costs and benefits of a project and the wider impact on society marks the distinction between financial and economic analysis. In our example revenue comes from sales. Note that the value of sales is not always the same as that of production because projects will normally keep some stocks of output to ensure a regular supply to customers. In our example the stocks are sold off in the final operating year.

Operating costs are the costs incurred in running the project and can be variable, i.e., they relate to the level of activity of the project, or fixed, i.e., unchanged

by the level of activity. Sometimes particular catego ries of cost may include a mixture of fixed and variable costs, e.g., maintenance and operational workers.

Working capital includes stocks of materials re quired for the normal operation of a project as well as stocks of finished goods (for projects with a physical output) and also financial working capital, mainly credit given by the project to customers (accounts receivable) and credit received from suppliers (accounts payable). Note that what is recorded as a cost is the increase in working capital because the stocks from one period are used or sold in the following period and are therefore recorded in the operating costs. Likewise, credit re ceived or given in one period is paid for or received in the following period. At the end of the project life all the stocks of materials are used up, stocks of output are sold, outstanding credit is recovered, and debts are paid off.

Once the costs and benefits are determined they can be set out on a year-by-year basis in an annual statement of costs and benefits. This is sometimes de scribed, for financial analysis, as a cash flow or, in eco nomic analysis, as a resource statement. In this chapter the term "annual statement of costs and benefits" will be used and qualified by factors such as whether it re lates to economic or financial costs and benefits and whether it is set out in constant or current prices. Nor mally, CBA is conducted in constant prices of the year in which the project is planned to avoid any distortion induced by assumptions about inflation. An example of such a statement for our project is given in Table 27.1.

It can be seen that net revenue is negative in Years 1 and 2 and positive in all subsequent years. W hat is now required is a method to determine whether this is a

TABLE 27.1 I Annual Statement of Costs and Benefits (D$ '000 constant market prices)

Year 1 2 3 4 5 6 7 8 9 10

Investment 4,050.0 100.0 100.0 -1,150.0 costs

Operating 2,407.0 4,712.0 4,950.0 4,950.0 4,950.0 4,950.0 4,950.0 4,950.0 costs

Incremental 430.2 458.0 24.5 0.0 0.0 0.0 0.0 -912.7 working capital

Total costs 4,050.0 2,937.2 5,170.0 4,974.5 4,950.0 5,050.0 4,950.0 4,950.0 4,037.3 -1,150.0

Revenue 2,700.0 5,700.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0

Net revenue -4,050.0 -237.2 530.0 1,025.5 1,050.0 950.0 1,050.0 1,050.0 1,962.7 1,150.0

530 PART IV I Practice in International Development

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BOX 27.2 I The Net Present Value (NPV )

This is simply the sum of the net benefits in each year multiplied by the discount factor for that year:

NPV = � n (B1 -C1)

""-'t=1 (1 + ,y

The NPV can be calculated using standard spreadsheet functions (e.g., =NPV in Excel).

good project. If we simply add up all the net benefits we

do not take any account of the timing of the costs and

benefits. As indicated earlier, one way of dealing with

time is to apply the method of discounting. The most

obvious indicator to use if the discount rate is known is

the net present value (NPV).

If the NPV is positive at the given discount rate, the

project is accepted. If the discount rate is known and

there is no problem to secure investment resources (no

capital rationing) and no problem of uncertainty about

the values of the costs and benefits, the NPV gives a

clear and unequivocal decision rule. For this reason it

is regarded as the most reliable indicator of the value of

a project both for yes/no decisions and for ranking pro

jects (Belli et al., 2002: 217-19; Curry and Weiss, 2000:

55; Potts, 2002: 73). The NPV indicated in Table 27'.1 is

positive at an 8 per cent discount rate and so the project

is acceptable at that rate.

If the discount rate is not known or is uncertain an

alternative indicator can be used. This is the internal

rate of return (IRR). The IRR indicated in Table 27.1 is

13.5 per cent so the project is acceptable at all discount

rates up to 13.5 per cent.

The IRR is a measure of the efficiency of invest

ment. It is common practice to estimate both the NPV

at specified discount rates and the IRR in order to get a

clear indication of the value of a project, but the NPV is

regarded as more reliable because the IRR can be mis

leading when ranking projects (Belli et al., 2002: 222).

An example of such a situation is the case of a road im

provement project where the benefits are measured by

vehicle operating cost savings. Assuming a situation of

increasing traffic and a deteriorating road, the poten

tial vehicle operating cost savings will increase every

year and the value of the IRR will always increase if the

project is delayed (Potts, 2002: 76-7). However, because

the process of discounting reduces the value of future

benefits, the size of the NPV is reduced if the project is

delayed so the NPV can be used to determine the best

time to start the road project.

BOX 27.3 I The Internal Rate of Return (IRR)

The JRR can be defined as the discount rate at which the NPV is zero or the switching value for the NPV at which the NPV changes from a positive to a negative value.

IRR = r where NPV = 0

The JRR can be estimated by estimating the NPV at different discount rates and interpolating, but it is easier and more accurate to use a spreadsheet function (e.g., =IRR in Excel).

27 I Potts: Planning and Appraising Development Projects 531

Another measure that was widely used when CBA

was first adopted is the benefit-cost ratio (BCR). This

measures the ratio of the discounted value of benefits to

the discounted value of costs. A project is acceptable if the BCR is greater than one. This indicator is generally

not recommended, partly because different variants

can lead to inconsistency and partly because, like the

IRR, it is a measure of the efficiency of conversion of

costs into benefits and does not indicate the absolute

size of the net benefits (Potts, 2002: 69-71). The simple

BCR for our project (discounted benefits divided by dis

counted costs) at 8 per cent discount rate is 1.04, which

is greater than one so the project is acceptable.

FINANCIAL ANALYSIS

So far the analysis has simply measured the costs and

benefits to the project as a whole. There is no indication of how it is to be financed. Net benefits in Years 1 and 2

are negative but we do not know how these costs will be

financed. We assume that the project will be financed

partly by the shareholders and partly by a loan from a

development bank with an interest rate of 8 per cent. A

loan ofD$2.5 million is taken out in Year 1, interest due

in Year 2 is accumulated into the principal sum of the

loan, and the loan is repaid in equal total instalments of

interest and principal over a period of eight years from

Year 2 to Year 9.

To construct a financial analysis for the project it is necessary to draw up a depreciation schedule. In CBA

depreciation is not included because the costs and ben

efits are set out in full in the years when they occur.

However, we do need a measure of depreciation for fi

nancial analysis because governments allow enterprises

to write off part of the value of their investment costs as a cost in each year of the asset life. It is assumed that buildings and machinery have potential lives of 20 and 10 years, respectively, and vehicles have a life of four years. It is further assumed that depreciation is calcu lated on a straight-line basis.

The values in the depreciation schedule are not needed for the CBA, but they are needed to work out how much tax the enterprise will have to pay. This is estimated from the profit and loss account or income statement. Net pre-tax profit is estimated by deducting operating costs, depreciation and loan interest from the

project revenue. Interest includes unpaid interest on

the basis of the accruals principle in accounting.

The most important schedule for the financial

analysis is the cash flow shown in Table 27.2. This shows

the flows of cash into and out of the project. Although

the annual net cash flow can be negative in some years

(in Year 3 in this case), the cumulative cash flow must

always be positive; otherwise, the project runs out of money and will not work. Financial analysis is not just

about profitability-it is also about whether the finan

cial plan will work.

The return to shareholders can be estimated by

deducting the value of their share capital contribution

from the annual net cash flow. This can then be dis

counted to estimate the NPV and IRR to the shareholders.

This is an important indicator because the return to the

shareholders should exceed the return on their next best

alternative investment-either the next best project or

the return they could get from lending their money to a

bank. In this case the IRR to equity (13.3 per cent) is very

similar to the overall IRR to the project (13.5 per cent).

The example used is a commercial project because it illustrates a full set of schedules that might be re

quired. Clearly, a profit and loss account is not relevant

to a non-commercial project so the financial analysis

of a non-commercial project would not include such a

statement. However, a cash flow statement is needed for

any project because we need to know that the sources of

project funds will be enough to pay for the project activ

ities. Running out of money is a very common cause of

project delay or even project failure. Sometimes this is

related to inflation and, in principle, financial analysis

should be conducted in current prices. This introduces

complications that are outside the scope of this chapter.3

Measures like the NPV and IRR relate the value of

initial net costs to later net benefits and are relevant to

activities that involve initial investment costs followed

by later net benefits. Not all project activities involve

investment so sometimes it is necessary to use differ

ent indicators. This is particularly the case for projects

that involve changes in cropping patterns of small

holder farmers. In the project example used here it is

assumed that the factory will get its supply of tomatoes

from farmers who would otherwise grow rice. There is

no investment of money for the farmers but there are

changes in costs and revenue. It is assumed that tomato

yields for farmers in the first year are lower than in

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27 I Potts: Planning and Appraising Development Projects 533

PHOTO 27.2 I A farmer transporting tomatoes to market on a bullock cart in Puttaparthi, India. The return to labour from tomatoes is significantly better than for rice, but the amount of labour involved is greater.

subsequent years because they are a new crop. Farmers

use their own family labour so there is no financial cost

of labour, but there is an opportunity cost represented partly by the alternative of growing rice and partly by

the alternative of other work or leisure time.

An important indicator for small farmers is the

return per labour day. The return to labour from toma

toes is significantly better than for rice from the sec

ond operating year but the amount of labour involved

is greater. This could imply either forgone leisure time or forgone income opportunities such as casual labour for other farmers.

The aggregate incremental benefits and costs to farmers can be determined by multiplying the indi

vidual costs and benefits by the number of farmers.

In order to derive a measure of overall benefit to the farmers, an opportunity cost of D$10 per day has been assumed. Opportunity cost is an important concept for

economic analysis. It is defined as the next best alter

native use of a resource. In this case it is assumed that

the next best alternative for a farmer to working on his/

her own farm is to work as an unskilled labourer on

another farm for D$10 per day. This is slightly below

the return to labour for the rice crop.'

Having undertaken the financial analysis of the

project, it becomes clear that a number of different

stakeholders are involved in any project and financial

analysis can be done for each of those stakeholders. This

raises the obvious question as to whose benefits we are

concerned about. The individual enterprise is primarily

concerned about private profitability, but in our exam

ple we also know that if the project was not profitable

to the tomato farmers, they would not have the incen

tive to supply tomatoes to the factory. Likewise, if the

bank believed that it would be unable to get its money back, it would be unwilling to give the loan. The overall

benefits of the project are shared between the project

owners, the bank, the farmers, and the government,

as well as the organizations supplying and receiving credit. If a project is to work, all of those parties would

534 PART IV I Practice in International Development

have to be satisfied with the outcome. In addition, if the

government has to grant planning permission for the

project and if the bank is a development bank, they may

be concerned about the wider economic and distribu

tional impact of the project. To analyze this we need to

undertake an economic analysis.

ECONOMIC ANALYSIS

Economic analysis of projects is concerned with the

overall impact of the project on the national economy.

A first estimate can be obtained by adding together the

costs and benefits to different stakeholders identified

in the financial analysis. Most of these are covered by

the annual statement provided in Table 27.1. However,

we have now also estimated the benefits to the farmers.

If we add the farmers to the analysis, the value of the

tomatoes disappears because they are costs to the fac

tory and equal and opposite benefits to the farmers, as

shown in Table 27.3. It can be seen that the project now

has a very high internal rate of return (22.5 per cent)

and the NPV has more than doubled. Over 60 per cent

of the benefits go to the farmers. From an economic

point of view the project appears to be very good. It is

profitable to the owners, and it provides a significant

income increase to the farmers who might be regarded

as relatively poor. The economic case for the project ap

pears to be very strong.

If we believe that the prices of the goods and ser

vices used or created by the project provided good in

dicators of economic value we might be satisfied that

the project should go ahead. However, before such a

conclusion can be reached there are four questions we

need to ask:

1. Are there any c.dernalili,, arising from the pro

ject? One important potential question relates to

the impact on the environment. Does the project

enhance or damage the environment and how do

we measure environmental costs and benefits?

2. Are the prices used in the analysis good indicators

of economic cost or value? The most important is

sues here are the impact of the project on foreign

exchange, taxes, and workers' incomes. These is

sues are generally taken into account through the

uses of shadow prices.

3. Can the benefits of the project be measured in

money terms? This question is particularly impor

tant for health projects since the benefits are de

rived from reductions in sickness and premature

death. What value do we put on a human life or re

lief from sickness or pain? Similar questions arise

in relation to education projects but are slightly

less controversial.

4. How certain are we about the values we have es

timated for costs and benefits? What is the likeli

hood that our estimates will be so inaccurate that

they change the conclusion about project viability?

The techniques of sensitivity and risk analysis can

be used to answer these questions.

Externalities and the Environment

Measurement of external costs and benefits is one

of the most important aspects of economic analysis.

"!ABLE 27.3 Distribution of Costs and Benefits (Market Prices)

Year 1 2 3 4 5 6 7 8 9 10

Shareholders -1,550.0 -237.2 -23.1 361.9 378.6 270.1 361.0 351.1 1,253.1 1,150.0

Bank -2,500.0 518.6 518.6 518.6 518.6 518.6 518.6 518.6

Net creditors 163.2 185.0 18.5 -366.7

Government 34.5 145.0 152.8 161.3 170.4 180.3 191.0

Farmers 21.5 428.0 428.0 428.0 428.0 428.0 428.0 385.2

Total benefits -4,050.0 -52.5 1,143.0 1,472.0 1,478.0 1,378.0 1,478.0 1,478.0 1,981.2 1,150.0

NPV at 8% 3,253.4

IRR 22.5%

27 I Potts: Planning and Appraising Development Projects 535

Externalities can be defined as benefits or costs that are imposed by a project on another group without an equivalent charge for benefits or compensation for costs. For some sectors, such as roads, benefits may

be entirely in the form of externalities. These include

the benefits of vehicle operating cost savings, time

savings, and reduced accidents, as well as any effects on overall economic activity. Measurement of the

benefits of transport projects is not particularly prob

lematic in principle, although forecasts of traffic can

be subject to considerable uncertainty5 and tracing

the effects of traffic changes on air pollution can be

difficult when traffic may be diverted from one route

to another. Most large-scale transport projects are subject to some form of economic CBA in which the

measurement of external benefits is often the most im

portant exercise. Environmental externalities are more important

for some sectors than others. Energy projects are par ticularly likely to require some form of environmental

assessment, as are most water projects. Industrial pro jects often have implications for air and water qual

ity. Agricultural projects can involve water pollution

from agro-chemicals and damage to watersheds from forest clearance. Environmental assessment in CBA is

concerned with measuring the effects and allocating a

value to them.

The basic principles underlying environmental valuation relate to the reasons why an environmental resource might be considered to have some value and the effect of the project on that value. Environmental

values can be divided into use value (e.g., alternative uses of land) and non-use value, where a resource is

valued for reasons not related to its use that may include moral issues such as the right of rare species of animal to exist (World Bank, 1998: 3). Clearly, measurement of

environmental values in economic terms is much less problematic when it is based on measurable use values. The general rule for economic analysis is to measure and value what is possible and to give a qualitative assessment of those issues that are important but not easily measured. Approaches to the measurement of environmental externalities are often related to issues .of compensation for environmental damage. [f a project is I lkel:y to damage the enviromnent, what form

of <;ompensation measures shouJd be undertaken and Who should pay? In p1faciple the polluter should pay,

but it is not always easy to enforce this rule and it is

not always easy to measure the cost. If the polluter does pay, some of the costs may be passed on to consumers through higher prices. Anand (2012) provides a

summary of some of the issues and approaches to

environmental valuation.

Shadow Prices

Much of the early literature relating to CBA in a

developing-country context related to the use of shadow prices. In particular, it was believed that a typ

ical developing country was characterized by foreign

exchange shortages, high levels of unemployment or underemployment of unskilled labour, and high levels of taxes on trade, including import duties to protect

import substitution industries and taxes on primary

commodity exports. It was argued that the official ex change rate undervalued foreign exchange costs and

benefits, taxes distorted the economic values of traded goods, and minimum wage levels overstated the oppor tunity cost of unskilled labour in the formal sector. It

was therefore necessary to make the following adjust

ments to the analysis of projects at market prices:

1. Adjust all foreign exchange costs and benefits up ward to take account of the relative scarcity of for

, eign exchange using a shadow exchange rate (SER). This is usually expressed as a ratio of the SER to the official exchange rate.

2. Remove all elements of tax from the prices since

taxes are transfers from the taxpayer to the gov ernment, not real resource costs. The shadow price

for taxes is therefore zero by definition.

3. Adjust formal-sector unskilled labour costs down ward to take account of unemployment and under

employment using a shadow wage rate (SWR); this is usually expressed as a ratio of the SWR to the average

market price of unskilled labour in the formal sector.

Essentially this process was intended to ensure that the

shadow prices used would represent the opportunity

costs of the resource concerned. This kind of analysis can be very informative in identifying the economic

value of a project to the nation, as well as indirect dis tributive impacts, but it can also be quite demanding in terms of data requirements.

536 PART 1v I Practice in International Development

COST-EFFECTIVENESS ANALYSIS

AND THE SOCIAL SECTORS

CBA is not necessarily feasible for all projects. This ap

plies particularly to the health sector, where CBA would

require the estimation of values for human life and re

lief of suffering, but it also relates to other areas such as

primary education where universal public provision is

regarded as a policy goal. The question is not whether to

provide the service but how to use the available resources

as efficiently as possible. There are two main approaches

to cost-effectiveness analysis (CEA). The first can be de

scribed as the "efficiency approach," where the objective

is to achieve the maximum output for a given budget.

The second is the "economy approach," where the objec

tive is to achieve a given target for the minimum cost.

SENSITIVITY AND RISK ANALYSIS

All forms of project analysis make assumptions

about the future, which is inherently uncertain. It is

therefore clear that any of the estimates that go into

CBA or CEA have a margin of error. No analysis of a

project is complete without testing some of the main

assumptions. What percentage change in the value of

the benefits reduces the NPV to zero? How sensitive

is the project result to changes in the most important

cost items? How sensitive is the project to delay? In

principle, sensitivity analysis should be conducted for

all the most important variables. Decisions can then

be made on the basis of information on the potential

benefits of a project balanced by knowledge of the

potential risks if some outcomes differ from what was

assumed in the plan.

SUMMARY

This chapter introduced the definition of a development

project and some of the debates about the relative

importance of projects in development planning. It was

argued that, while such projects need to be planned in a

wider sector context, it remains important that project

investments are identified and planned in a systematic

way and appraised to ensure that they make a positive

contribution. Some of the useful tools for planning

and designing projects are included in the logical

framework approach, which has been used by many

development agencies. Projects in different sectors can

be appraised using the techniques of CBA and CEA. The

first stage in CBA is to set out the costs and benefits at

market prices to determine potential overall viability.

This can then be further refined into a financial

analysis to determine the financial profitability of

commercial projects and to ensure that the financial

plan of any project will work. To determine whether a

project is a good thing from the national point of view,

it is necessary to consider potential external costs and

benefits, including those associated with environmental

impact. It is also necessary to undertake an economic

analysis using shadow prices if market prices are

not perceived to reflect economic costs or values. In

the process it is possible to undertake a distribution

analysis to determine whether the benefits go to target

groups, particularly those that are relatively poor. For

some sectors, particularly in the social sectors where

benefits may be difficult to value, it may not be possible

to do CBA. In such cases it may be possible to undertake

CEA to ensure that expenditure is relevant and efficient.

Finally, it is important to account for the margin of

error in the estimates made to determine whether the

risk of failure is excessively high.

QUESTIONS FOR CRITICAL THOUGHT

1. What defines a project as a development project?

2. Is detailed project planning useful or is it a waste of time and money?

3. Does the LFA provide a helpful way to design a project? What are its weaknesses?

4. Is it practically possible to take account of environmental costs and benefits in CBA?

5. Is the use of shadow prices necessary in a world of liberalized markets?

6. Can CEA provide an effective way to prioritize spending in the social sectors?

27 I Potts: Planning and Appraising Development Projects 537

SUGGESTED READINGS

Curry, Steve, and John Weiss. 2000. Project Analysis in

Developing Countries. London: Macmillan.

Belli, Pedro, Jock Anderson, Howard Barnum, John

Dixon, and Jee-Peng Tan. 2002. Economic Analysis of

Investment Operations. Washington: World Bank. (1998

version available at www.d-ria.ru/blog/wp-content

/uploads/2010/11/WBHandbookEA.pdf.)

European Commission. 2004. Aid Delivery Methods:

Volume 1, Project Cycle Management Guidelines.

•a•JiiJ 1. The example used in Figures 27.2, 27.3, and 27.4 is a

simplified derivation of a more comprehensive example

used in EC (2004).

2. Only the summary tables are included here. Spread

sheet tables for the example project described below can

be accessed from the Oxford University Press Canada

website for this volume. A spreadsheet example also is

provided in Campbell and Brown (2003).

3. For a more detailed discussion of some of these issues,

see Potts (1996, 2002: ch. 16).

Anand, P.B. 2012. "Environmental valuation." In John

Weiss and David Potts, eds, Current Issues in Project

Analysis for Development. Cheltenham, UK: Edward

Elgar.

Bakewell, 0., and A. Garbutt. 2005. The Use and Abuse of

the Logical Framework Approach. Stockholm: Swedish

International Development Cooperation Agency.

www.intrac.org/data/files/resources/518/The-Use-and

Abuse-of-the-Logical-Framework-Approach. pdf.

Baum, W. 1978. "The World Bank Project Cycle." Finance

and Development 15, 4, 10-17.

Burnside, C., and D. Dollar. 2000. "Aid, policies, and growth."

American Economic Review 90, 4: 847-68

Campbell, H., and R. Brown. 2003. Benefit-Cost Analysis.

Cambridge: Cambridge University Press

Cordelia, T., and G. Dell'Ariccia. 2003. "Budget support

versus project aid." IMF Working Paper WP/03/88.

www.imf.org/external/pubs/ft/wp/2oo3/wpo388.pdf.

Dale, R. 2003. "The Logical Framework: An easy escape, a

straightjacket, or a useful planning tool?" Development in Practice 13, 1: 57-70

Brussels: EC. http://ec.europa.eu/europeaid/sites/devco/

files/methodology-aid-delivery-methods-project-cycle

management-200403_en_2.pdf.

Potts, David. 2002. Project Planning and Analysis for

Development. Boulder, Colo.: Lynne Rienner

Weiss, John, and David Potts, eds. 2012. Current Issues in

Project Analysis for Development. Cheltenham, UK:

Edward Elgar.

4. For more detailed discussions of issues related to assess

ment of costs and benefits to farmers, the classic source

is Gittinger (1982). Another useful source is FAO (1995).