Discussion 6
Wellbeing & Human Development
a. Case Study: Economic Globalization and Africa
Economic globalization has had tremendous effects—both positive and
negative—around the world since the early 1990s, when it became a fact of life for
most states and people. It has led to a significant decline in the percentage of people
living in extreme poverty worldwide from over 50 percent in 1981 to 22 percent by
2015, although over 1.4 billion people were still living on less than $1.25 a day. The
South’s share of the global middle class expanded from 26 percent to 58 percent
between 1990 and 2010. Virtually all states had achieved improvement on the UN
Development Programme’s Human Development Index in 2014 compared to 1990.
While Africa remains the least-developed continent, it too has made
significant strides in economic and human development. Despite the presence of
many armed conflicts, there has been strong economic growth in many parts of the
continent, with twenty non-oil-producing states in Africa experiencing growth of over
4 percent annually between 1998 and 2008. The reforms initiated by the Bretton
Woods institutions, including structural adjustment programs and debt reduction
initiatives (the Heavily Indebted Poor Countries Initiative [HIPC] and the Multilateral
Debt Relief Initiative [MDRI]), have yielded growth in some cases. Africa also
weathered the storm of the 2008 financial crisis due to the boom in primary
commodities and greater economic diversification. Since 2000, real income has
increased by more than 30 percent. Individual lives in many countries have improved.
There has been a 30 percent reduction in deaths from malaria and a 74 percent
reduction in the incidence of HIV/AIDS. Life expectancy has increased by 10 percent
and child mortality rates have fallen steeply, all key indicators of an expanded view of
development, namely human development. Africa is unusual, however, in that
population growth has not dropped along with its economic growth as has happened
in Latin America and Asia. Total fertility rate—the number of children a woman can
expect to have—is still 4.7.
At the current rate of population growth, projections indicate that the
continent’s population will exceed 2.4 billion by the year 2050. This significant
increase brings to the forefront a myriad of complex and interrelated issues that will
need to be addressed to ensure sustainable development and improved quality of life
for all inhabitants.
Firstly, future economic growth is a major concern. As the population swells,
the demand for jobs, goods, and services will rise proportionally. It will be crucial for
governments and private sectors to implement policies and strategies that stimulate
economic activity and foster job creation. This includes investing in industries that
have the potential for high employment, such as manufacturing, technology, and
agriculture, while also encouraging entrepreneurship and innovation.
In tandem with economic considerations, the food supply must be
meticulously planned and managed. The agricultural sector will need to undergo
significant transformations to increase productivity and ensure food security for the
burgeoning population. This may involve adopting advanced farming techniques,
improving supply chain efficiency, and ensuring sustainable practices to mitigate
environmental impacts. Additionally, addressing issues related to land use, water
resources, and climate change will be imperative to maintaining a stable food supply.
Education is another critical area that will demand attention. With a rapidly
growing population, the education system will need to expand and adapt to
accommodate more students. This involves not only increasing the number of schools
and educational institutions but also ensuring that the quality of education is
maintained or improved. Investing in teacher training, educational infrastructure, and
technology will be key to providing a robust education that equips the younger
generations with the skills needed for future job markets.
Healthcare systems will also face tremendous pressure as the population
grows. Ensuring that healthcare infrastructure, services, and personnel can meet the
increased demand will be vital. This includes expanding hospitals, clinics, and other
healthcare facilities, as well as training more healthcare professionals. Preventative
healthcare measures, public health campaigns, and advancements in medical
technology will play essential roles in managing the health of the population.
Infrastructure development will be another critical component in managing
population growth. Transportation networks, energy supply, water and sanitation
systems, and housing will need substantial upgrades and expansions. Urban planning
will be crucial in creating sustainable cities that can handle increased population
density while providing a high quality of life. Investments in renewable energy and
smart city technologies could also help in making infrastructure development more
sustainable and efficient.
In summary, as the continent’s population is projected to surpass 2.4 billion by
2050, a comprehensive and multifaceted approach will be necessary to address the
challenges associated with this growth. Economic policies, agricultural advancements,
educational reforms, healthcare improvements, and infrastructure developments must
all be integrated into a cohesive strategy to ensure that the needs of the population are
met in a sustainable and equitable manner. By proactively planning and investing in
these key areas, it will be possible to support a thriving population and foster long-
term prosperity.
These advances have been possible, in part, because both foreign direct
investment (FDI) and development aid to African countries have increased. Since
2000, FDI to the continent increased from $33.5 billion to $246.4 billion in 2012. The
amount supplied by the EU, China, Japan, and the United States grew by nearly five
times during that time period, driven primarily by China. China’s FDI grew at an
annual rate of 53 percent, while Japan’s increased by 29 percent, the EU’s by 16
percent, and the United States’s by 14 percent. Trade between China and Africa grew
from $10 billion to $200 billion between 1990 and 2013, an average annual increase
of 19 percent. Other countries, such as Malaysia and South Korea, are likewise
turning to Africa, particularly for natural resources, contributing to their own and
Africa’s development. Major international banks also now see a number of African
countries as stable enough to be attractive investment opportunities. Under the
auspices of the Millennium Development Goals, US aid too has again been flowing to
Africa. In 2004 the United States established the Millennium Challenge Corporation
(MCC), promising funds to deserving countries. Of the twenty-six signed MCC
compacts, fourteen are with African states, amounting to $5.5 billion in aid.
Governance in Africa has improved as well, in part a reflection of the donor
community’s emphasis on “good governance.” Although only a few African countries
have achieved Western standards of democratic governance, many of the more
authoritarian regimes have trended toward broadly better governance, with more
efficient tax collection systems and increased emphasis on rooting out corruption.
Twenty-five out of fifty-three countries in Africa have some form of democratic
government. Civil society in Africa has expanded. Perhaps most critically, the number
of civil conflicts has dropped precipitously, from a high of sixteen in 1999 to around
seven in the 2000s, and these conflicts have not been as deadly in terms of battlefield
deaths.
All of these developments, characterized by dynamic economic changes,
demographic shifts, and sociopolitical transformations, have led to a proliferation of
articles and analyses focusing on the continent's evolving landscape. Headlines such
as "Emerging Africa" (The Economist 2013) highlight the continent's potential and
growing influence on the global stage. This particular article delves into the various
factors contributing to Africa's rising prominence, from increased foreign investments
and burgeoning industries to improvements in governance and infrastructure.
Similarly, another notable piece titled "Africa’s Economic Boom: Why the
Pessimists and the Optimists Are Both Right" (Devarajan and Fengler 2013) provides
a balanced perspective on the continent's economic trajectory. This article explores the
dual nature of Africa's economic developments, acknowledging the significant
progress made in many regions while also addressing the persistent challenges that
need to be overcome. It examines the reasons behind the optimistic outlooks, such as
robust GDP growth rates, expanding middle class, and technological advancements,
as well as the factors fueling the pessimistic views, including political instability,
income inequality, and infrastructural deficits.
The extensive coverage in these articles reflects a growing recognition of
Africa's potential to become a major economic powerhouse. They delve into the
various dimensions of this transformation, discussing how factors such as improved
macroeconomic policies, increased integration into the global economy, and
demographic dividends are driving growth. Moreover, they highlight the importance
of sustained efforts in education, healthcare, and infrastructure to support this upward
trajectory.
In "Emerging Africa," The Economist underscores the remarkable strides
being made across different sectors, from telecommunications to agriculture, and the
role of entrepreneurial spirit and innovation in fostering economic resilience. It also
touches on the geopolitical implications of Africa's rise, including shifts in trade
patterns and strategic partnerships with other regions and global powers.
On the other hand, "Africa’s Economic Boom: Why the Pessimists and the
Optimists Are Both Right" by Devarajan and Fengler delves deeper into the
complexities of Africa's growth narrative. It presents a nuanced analysis that goes
beyond surface-level statistics, examining the structural transformations occurring
within economies and the critical role of governance and institutional reforms. The
article argues that while the signs of progress are encouraging, there is a need for
cautious optimism, given the ongoing challenges such as corruption, inadequate
infrastructure, and the need for inclusive growth that benefits all segments of the
population.
Together, these articles paint a comprehensive picture of a continent at a
crossroads, poised for significant growth yet facing substantial hurdles. They
emphasize the importance of strategic planning, investment in human capital, and the
creation of robust institutions to harness the full potential of Africa's economic boom.
As such, they serve as essential readings for policymakers, investors, and scholars
interested in understanding the complexities and opportunities inherent in Africa's
ongoing transformation.
These changes have not happened overnight. They reflect efforts by IGOs
such as the World Bank, the African Development Bank, and the UN Economic
Commission for Africa, and efforts by Africans themselves. The New Partnership for
Africa’s Development (NEPAD) was unveiled at the G-7/8 meeting in 2001, the first
African-generated self-help plan. African leaders, reflecting the views of legislators,
lawyers, and other groups across the continent, agreed to five priority areas:
institutional capacity building for security, economic and corporate governance,
infrastructure and communication technologies, bank financial standards, and
agriculture and market access. They agreed that capital mobilization must be
domestic; external aid should serve as a complement to Africa’s own efforts. And they
agreed to police themselves and other African leaders, promoting good governance in
return for investment capital in the priority areas.
Despite this optimism, Africa remains the continent most needing
development. Countries with the highest concentration of people living in extreme
poverty in the world are all African, including Ethiopia, Liberia, Mozambique, and
Sierra Leone. While economic growth has occurred, it has not resulted in enough jobs
to support the growing youth population and efficient social services to protect the
vulnerable. High rural-urban inequalities have undermined the relationship between
growth and poverty reduction. Although child mortality has dropped, the rate in Africa
is still twice that in the developing world as a whole. The probability of an African
woman dying from pregnancy or birth remains high. Africa’s rural population still
lacks access to clean water and basic sanitation, affecting health and individual well-
being. Changes in climate are projected to further diminish Africa’s water resources
and alter agricultural production. In at least ten African countries, more than 75
percent of government expenditures are still funded by aid, which is indicative of the
continent’s dependency on external actors. Africa’s mixed experience illustrates that
economic growth does not necessarily lead to human development for either all states
or all individuals.
Thus, the debate over economic globalization itself and over the liberal
economic system as an engine for that globalization continues unabated. Scholars,
policymakers, and economists frequently engage in discussions and analyses,
examining the multifaceted impacts of globalization on both developed and
developing nations. These debates encompass a broad spectrum of issues, including
the distribution of wealth, the role of multinational corporations, environmental
sustainability, cultural homogenization, and the impact on local economies. As these
discussions unfold, they inevitably lead to fundamental questions about the very
nature of development.
What, then, is development? How has this complex and multifaceted idea
evolved over time? And what is the most effective strategy to achieve its diverse
objectives?
Development, at its core, refers to the process of improving the quality of life
and economic well-being of people. Traditionally, development was often measured
by economic indicators such as GDP growth, income levels, and industrialization.
This approach, dominant in the mid-20th century, focused primarily on economic
output and assumed that increased production and economic expansion would
naturally lead to better living standards and societal progress.
However, over the decades, the concept of development has undergone
significant transformation. By the latter half of the 20th century, it became
increasingly clear that economic growth alone was not sufficient to ensure
comprehensive human development. Issues such as poverty, inequality, health,
education, and environmental sustainability began to take center stage. This shift was
influenced by the recognition that economic growth did not always equate to equitable
distribution of resources or improved quality of life for all citizens.
The emergence of the Human Development Index (HDI) by the United
Nations Development Programme (UNDP) in 1990 marked a pivotal moment in the
evolution of the concept of development. The HDI introduced a more holistic
approach by considering factors such as life expectancy, education, and per capita
income. This broader perspective underscored the importance of creating conditions
that allow people to lead long, healthy, and creative lives.
Furthermore, the idea of sustainable development gained prominence,
particularly with the publication of the Brundtland Report in 1987. Sustainable
development emphasized the need to balance economic growth with environmental
protection and social equity, ensuring that development meets the needs of the present
without compromising the ability of future generations to meet their own needs.
In contemporary discourse, development is increasingly viewed through the
lens of inclusivity and sustainability. The Sustainable Development Goals (SDGs),
adopted by the United Nations in 2015, reflect this comprehensive approach. The 17
SDGs encompass a wide range of objectives, including eradicating poverty and
hunger, promoting good health and education, achieving gender equality, ensuring
access to clean water and sanitation, fostering economic growth, and combating
climate change.
Given this evolved understanding of development, what then is the best
strategy to achieve its objectives? The answer lies in adopting a multifaceted and
integrated approach. Effective development strategies must address economic, social,
and environmental dimensions simultaneously.
Firstly, economic policies should focus on inclusive growth, ensuring that the
benefits of economic expansion reach all segments of society, particularly the most
vulnerable. This involves creating job opportunities, promoting fair wages, and
implementing social protection measures.
Secondly, investing in human capital is crucial. Education and healthcare are
foundational pillars of development. Providing access to quality education and
healthcare services empowers individuals and communities, enabling them to
contribute meaningfully to economic and social progress.
Thirdly, sustainable development requires robust environmental policies.
Protecting natural resources, reducing carbon emissions, and promoting renewable
energy sources are essential to mitigate the impacts of climate change and ensure
long-term sustainability.
Moreover, good governance and strong institutions play a vital role in
development. Transparent, accountable, and inclusive governance fosters an
environment where development initiatives can thrive. It ensures that resources are
managed effectively, corruption is minimized, and citizens can participate in decision-
making processes.
International cooperation and partnerships are also key. In an increasingly
interconnected world, collaborative efforts between nations, international
organizations, and private sector entities can drive progress and innovation, sharing
knowledge, resources, and best practices.
In conclusion, as the debate over economic globalization and the liberal
economic system persists, the concept of development continues to evolve. From its
initial focus on economic growth to a more comprehensive understanding that
includes human well-being and environmental sustainability, development remains a
dynamic and complex objective. Achieving its goals requires a holistic approach that
integrates economic, social, and environmental strategies, supported by good
governance and international collaboration. Only through such a multifaceted
approach can we hope to achieve sustainable and inclusive development that benefits
all of humanity.
b. Evolution of the Idea of Development
Historically, the literature on development has been dominated by economists
who “have focused overwhelmingly on the process of economic development rather
than the broader processes of economic, social, cultural, and political advance” (Jolly
et al. 2004: 9). Economic growth and measures of rising living standards, then, have
long been the primary measures. Over time, however, thinking has evolved to include
questions of human rights, sustainability, and gender, with much of that debate
occurring within the UN. Ongoing debates on other issues such as how best to achieve
development, and the role of the state, the relationship between trade and
development, the effectiveness of various tools such as foreign aid and technology
transfer have occurred in multiple forums, posing major challenges to the liberal
economic model.
Liberal economic theory emphasizes the role of the market in stimulating both
individual and collective economic growth, namely economic growth of the state.
Government institutions perform critical functions of providing order and stability and
in facilitating the free flow of trade. If markets are permitted to allocate resources
efficiently, then increasing interdependence among economies will lead to greater
economic development for all states.
For economic liberals, MNCs represent the most efficient mechanism for
economic development and improved well-being. If investment from MNCs or
domestic savings is insufficient, grants and loans from other states and international
organizations may be needed to jump-start the economic development process, which
will eventually filter down to all the population. The emphasis in the liberal economic
view of development has historically been on state development, measured by growth
of gross national product (GNP) or gross domestic product (GDP) per capita.
This simplistic indicator shows strong differentiation between the developed
North, where the richest countries enjoy an average GNP per capita of $40,307, and
the developing South, where the poorest states average a GNP per capita of $2,830
and where 1.4 billion people live on less than $1.25 a day. Proponents of economic
liberalism point out that average per capita income in developing countries has
doubled over a fifty-year period, with the GNPs of some economies growing more
than fivefold. That trend will continue, they contend, and economic growth will lead
to development.
Beginning in the early 1950s, economists in the UN’s Economic Commission
for Latin America (ECLA) began to challenge the liberal economic model. They were
proponents of the dependency school, which argued that the developing world was
permanently mired in poverty and unable to grow. Since capitalist economic systems
are inherently expansionary, they require new resources from the developing world to
generate growth. Yet the prices of primary commodity exports from the developing
world do not keep pace with the prices of imported manufacturing goods. So if the
developing countries are to improve their position economically, fundamental change
in the international system is necessary. Otherwise, inequality between the developed
North and the developing South will remain relatively permanent, irrespective of the
domestic policies pursued or external assistance received.
ECLA’s critique and its prescription for extricating countries from dependency
became the basis for the establishment of the UN Conference on Trade and
Development (UNCTAD) in the 1960s and for the proposed New International
Economic Order (NIEO) in the 1970s. When UNCTAD was founded in 1964, many
newly independent states from Africa, Asia, and Latin America formed the Group of
77. In their view, the inherently unequal international liberal trading system could not
be made more equal without major changes. Because of the limited expertise of many
governments, however, UNCTAD’s secretariat played a key role in shaping the work
of the G-77 in challenging predominant liberal thinking about economic development.
In 1974, using its numerical voting majority in the UN General Assembly, the G-77
secured adoption of the Declaration on the Establishment of a New International
Economic Order and the Charter of Economic Rights and Duties of States, marking
the peak of confrontation between North and South, a divide that would affect every
UN body for several years.
The G-77 sought changes in five major areas of international economic
relations: commodity pricing, regulation of MNCs, improved means of technology
transfer, increased foreign aid, and improved trading provisions. Although they won
some concessions in trade relations, including recognition of the principle of
preferential treatment for developing country exports, on most issues the North
refused to negotiate. Two issues shaped by the G-77 persist four decades later—debt
relief and restructuring of the international financial institutions. The G-77 has sought
changes in the weighted voting structures of the World Bank and IMF, and in the
developed-country bias within the GATT/WTO. They have sought to alter basic
power relationships that would lead to different economic policies. Realignment of
voting shares has been negotiated, with China, Mexico, South Korea, and
Turkeygaining more power, although in the eyes of most G-77 members fundamental
power has not shifted.
Although the G-77 gradually splintered following the general acceptance
(some say triumph) of economic liberalism in the 1980s and the diverging interests of
many members, the leadership of the G-77 within the UN system provided the first
fundamental and sustained challenge to the dominant liberal economic ideology. The
group still enjoys legitimacy among many developing countries and has resisted the
efforts of developed countries to terminate UNCTAD.
While the proposed NIEO proved too radical a critique to gain acceptance,
there was recognition by the late 1970s that development defined as economic growth
was too narrowly construed, leading to unanticipated detrimental effects, including
environmental degradation and unsustainable growth. The book The Limits to Growth
(Meadows et al. 1972) modeled exponential economic and population growth rates
coupled with finite resource supplies, generating a vibrant public debate about the
possibility of unsustainable and limited growth. With the 1982 adoption of the World
Charter for Nature, the UN General Assembly began to articulate a newer approach to
development, namely sustainable development. In 1983 the General Assembly
established the World Commission on Environment and Development (WCED),
headed by Prime Minister Gro Harlem Brundtland of Norway and composed of
eminent persons. In the commission’s 1987 report (WCED 1987), titled Our Common
Future, the Brundtland Commission called for the adoption of the concept of
sustainable development, defined as development that meets the needs of the present,
alleviating poverty, supporting marginalized populations, and promoting
environmentally sound projects, without compromising the ability of future
generations to do the same. That approach subsequently was adopted by a number of
IGOs, NGOs, and national development agencies in Canada, Sweden, and the United
States.
Still another modification occurred in the 1990s with the UN Development
Programme’s introduction of the concept of human development. The annual Human
Development Reports put “people at the centre of development,” applying the concept
to provide “an integrated intellectual framework for catalyzing a new system-wide
approach to economic and social development.” The reports introduced a more
sensitive measure of human development with the Human Development Index (HDI),
which underscores that development is about improving the quality of life for human
beings, not just promoting economic growth. The index is based on a composite of
indicators, including health (infant mortality, life expectancy), education (years of
schooling), and GNP per capita (on a logarithmic scale).
Even more nuanced measures have been introduced to capture the
complexities of development and poverty. One of the significant advancements in this
regard is the Multidimensional Poverty Index (MPI). The MPI, developed by the
Oxford Poverty and Human Development Initiative (OPHI) and the United Nations
Development Programme (UNDP), provides a comprehensive framework for
understanding poverty beyond traditional income-based measures.
In 2014, MPI reports revealed startling statistics: approximately 1.6 billion
people across the 104 countries surveyed were living in multidimensional poverty.
This figure represents individuals who experience acute deprivation in several critical
aspects of life, including health, education, and living standards. The MPI evaluates
poverty through a set of indicators that reflect the different dimensions of deprivation
faced by people, such as malnutrition, inadequate sanitation, lack of education, and
insufficient access to clean water.
Health deprivations, for instance, include factors such as child mortality and
nutrition. A household is considered deprived if any child under the age of 18 has
died, or if any adult or child in the household is malnourished. Education deprivations
are assessed based on years of schooling and school attendance. A household is
deemed deprived if no member has completed at least six years of schooling or if any
school-aged child is not attending school up to the age at which they would complete
class eight. Living standard deprivations encompass aspects like access to electricity,
clean drinking water, improved sanitation, cooking fuel, flooring, and asset
ownership.
The introduction of the MPI has significantly broadened the understanding of
poverty by highlighting the interconnections between different types of deprivation. It
underscores the reality that poverty is not merely about low income but involves a
lack of fundamental capabilities and opportunities. This multidimensional approach to
poverty measurement shifts the focus towards the overall well-being of individuals
and communities, acknowledging that a person’s quality of life is influenced by
various interrelated factors.
According to this perspective, development should be evaluated based on how
well people are performing across a range of indicators, rather than solely on
economic metrics like GDP per capita. For instance, improvements in health and
education are just as crucial as economic growth, if not more so, because they directly
impact people's ability to lead fulfilling lives. Access to clean water, adequate
sanitation, and reliable energy sources are essential components of living standards
that contribute significantly to overall well-being.
Moreover, this holistic view of development emphasizes the importance of
sustainability. Sustainable development ensures that progress made today does not
come at the expense of future generations. It involves managing resources
responsibly, mitigating environmental impacts, and fostering inclusive growth that
benefits everyone. In this context, development is not just about achieving specific
targets but also about creating systems and structures that enable long-term
improvements in quality of life.
The concept of sustainable development has gained traction globally,
particularly with the adoption of the Sustainable Development Goals (SDGs) by the
United Nations in 2015. The SDGs comprise 17 goals and 169 targets that address a
wide array of global challenges, including poverty, inequality, climate change,
environmental degradation, peace, and justice. These goals recognize the
interconnected nature of development issues and the need for comprehensive
solutions that address the root causes of poverty and deprivation.
For example, Goal 1 of the SDGs aims to end poverty in all its forms
everywhere. This goal encompasses targets that address various dimensions of
poverty, such as ensuring access to basic services, implementing social protection
systems, and building resilience against economic, social, and environmental shocks.
Similarly, Goal 3 focuses on ensuring healthy lives and promoting well-being for all
at all ages, recognizing that health is a fundamental aspect of development.
In practice, measuring development through the lens of multidimensional
poverty and sustainability involves a range of strategies. Governments and
organizations need to collect and analyze data across various indicators to identify the
specific deprivations affecting their populations. Policies and programs should be
designed to address these deprivations in an integrated manner, ensuring that
improvements in one area, such as education, are complemented by advancements in
others, such as health and living standards.
Furthermore, achieving sustainable development requires a participatory
approach that involves communities in decision-making processes. Local knowledge
and perspectives are invaluable in designing interventions that are culturally
appropriate and effectively address the unique challenges faced by different groups.
Empowering communities to take an active role in their development ensures that
solutions are inclusive and sustainable.
In conclusion, the introduction of nuanced measures like the Multidimensional
Poverty Index (MPI) represents a significant advancement in the way development is
understood and assessed. By highlighting the multiple dimensions of poverty and
emphasizing the importance of sustainability, the MPI provides a more
comprehensive and accurate picture of human well-being. This approach aligns with
the broader goals of sustainable development, ensuring that progress is inclusive,
equitable, and capable of meeting the needs of both current and future generations. As
such, development should be measured by how well people are doing across a variety
of dimensions and whether that development is sustainable, ultimately aiming to
improve the quality of life for all individuals.
Human development ideas continue to be expanded, debated, and refined.
Among the most influential contemporary thinkers is Amartya Sen, one of the authors
of the HDI and 1998 recipient of the Nobel Prize in Economics. Sen (1999) sees
development as freedom. Governments need to remove barriers so that their citizens
have the capability and hence the freedom to choose the course of their lives for
themselves. Subsequent Human Development Reports, each of which has a different
theme and lead authors, have refined and expanded these ideas, strengthening the
notion of capabilities.
c. Alternative Strategies to Achieve Development
Not only has development been an evolving concept, but how to achieve
development continues to be widely debated, particularly the role of the state. To
those in the liberal economic tradition, the role of the state is to provide a level
playing field, including law and order, so that the private sector and individuals can
unleash their productive energies. Since the East Asian “tigers” such as South Korea,
Singapore, and Taiwan successfully used a statist approach to their rapid development
during the 1980s and early 1990s, there has been a revival of thinking embedded in
statist mercantilism, namely that the state should actively support key industries
through subsidies to enhance their international competitiveness and that
internationally strong industries will bring economic wealth to the state. Indeed,
mercantilism emphasizes the subordination of all economic activities to the goal of
statebuilding.
More recently, a variation on this thinking has been labeled the Beijing
Consensus, pointing to China’s rapid, state-driven growth as a model. While there is
no precise definition, the Beijing Consensus implies experimenting with policies that
may be compatible with a state’s political structure and cultural experience. In this
perspective, state-owned or statemanaged corporations may be used to invest capital
in their own markets and abroad. At the same time, private companies are permitted to
function. This approach has been viewed more favorably since the global economic
crisis and China’s success in weathering that crisis. Economists and political scientists
have also linked success to particular types of economic and political institutions.
Daron Acemoglu and James Robinson (2012) argue, for example, that successful
development demands strong economic and political institutions.
States can escape from poverty and achieve sustained economic growth and
development when they establish robust institutions that protect private property,
promote fair competition, and ensure the rule of law. These institutions are critical in
creating a stable and predictable environment where individuals and businesses can
invest, innovate, and thrive without the fear of arbitrary expropriation, corruption, or
unfair competition. In this context, the rule of law is essential for preventing
corruption and the extraction of rents by elites, which often undermine economic
development and perpetuate poverty.
The importance of institutions in the development process cannot be
overstated. Effective institutions create a level playing field where resources are
allocated efficiently, property rights are secure, and contracts are enforced. This
fosters an environment conducive to economic activity and entrepreneurship. When
individuals and businesses are confident that their investments are protected by law,
they are more likely to engage in productive activities that contribute to economic
growth.
In addition to protecting property rights, institutions that promote competition
are vital for economic development. Competition drives innovation, improves
efficiency, and leads to better products and services. It prevents monopolies and
oligopolies from dominating the market, ensuring that consumers have access to a
variety of choices at competitive prices. Strong regulatory frameworks that prevent
anti-competitive practices and support market entry are essential components of such
institutions.
Ensuring the rule of law involves more than just the existence of laws; it
requires the fair and consistent enforcement of those laws. Judicial independence,
transparency, and accountability are key elements in maintaining the rule of law.
When courts are free from political influence and corruption, they can impartially
adjudicate disputes and uphold the rights of individuals and businesses. This legal
certainty reduces risks and transaction costs, making economic activities more
predictable and secure.
Moreover, institutions play a crucial role in preventing corruption, which is a
major impediment to development. Corruption diverts resources from productive uses
to the hands of a few, eroding public trust and weakening the state’s capacity to
deliver essential services. Anti-corruption measures, including transparent public
procurement processes, effective oversight bodies, and stringent penalties for corrupt
practices, are necessary to build and maintain clean institutions.
Extractive rents, which refer to the unearned income derived from the
exploitation of resources or market power, are another significant challenge in many
developing countries. Institutions that prevent the extraction of rents by elites ensure
that wealth generated from natural resources or economic activities is distributed
more equitably and invested in public goods such as infrastructure, education, and
healthcare. This not only promotes social cohesion but also lays the foundation for
long-term economic growth.
In short, the current thinking in development economics is that institutions
play a more critical role in successful development than the liberal economic model
suggests. While the liberal economic model emphasizes the importance of free
markets and minimal government intervention, it often overlooks the foundational
role of institutions in creating the conditions necessary for markets to function
effectively. Without strong institutions, markets can become distorted by monopolies,
corruption, and rent-seeking behavior, leading to inefficient resource allocation and
stunted economic growth.
Historical examples further illustrate the pivotal role of institutions in
development. Countries that have successfully transitioned from poverty to prosperity,
such as South Korea and Singapore, have done so by building strong institutions that
support economic activity. These countries implemented land reforms, invested in
education and infrastructure, and established transparent legal and regulatory
frameworks. As a result, they created environments where businesses could flourish,
innovation was encouraged, and economic growth was sustained.
Conversely, countries with weak institutions often struggle with persistent
poverty and underdevelopment. In these contexts, insecure property rights, rampant
corruption, and ineffective legal systems create significant barriers to economic
activity. Without the assurance that investments are safe and contracts will be
enforced, both domestic and foreign investors are hesitant to engage, stifling
economic growth and development.
In conclusion, the escape from poverty and the achievement of sustainable
development are heavily dependent on the presence of robust institutions. These
institutions protect private property, promote competition, and ensure the rule of law,
which collectively create an environment conducive to economic growth and
development. The current consensus among development economists underscores that
institutions are more critical to successful development than the liberal economic
model alone would suggest. By building and strengthening these institutions, states
can create the conditions necessary for long-term prosperity and improved quality of
life for their citizens.
A second debate is over the relationship between trade and development.
There is no doubt that economic globalization has occurred in large part because of
the expansion of trade. But does development necessarily follow from economic
growth? The WTO’s Doha Round was named the “development round,” but as one
commentator cynically noted, “affixing the label ‘development’ . . . may have warmed
a few hearts, but it has not filled any bellies” (Christy 2008: 24). That assessment
reflects the position that states may develop gradually behind trade barriers before
trade liberalization is instituted. Eliminating trade barriers, as liberal economists
propose, may increase trade, but it does not necessarily lead to development.
There are also debates about specific development tools such as private
investment and foreign aid and their relative effectiveness. And, how effective are
other tools such as technology transfer and technical assistance? Most liberal
economists view market-driven private investment as the most effective, while still
others acknowledge that foreign aid and technical assistance may be necessary to
jump-start the process. Dependency theorists are skeptical of both private investment
and foreign aid, as both bind dependent states to wealthy states. Proponents of human
development are more agnostic about what tools will work. What is critical is to
utilize all available tools to advance well-being.
Having explored the evolution of these ideas about development, sustainable
development, and human development, we now turn to a detailed examination of how
various actors on the global and regional stages have emerged to address the
multifaceted challenges of human development. These actors span a wide spectrum,
encompassing formal and informal entities, public and private sectors, and
introducing new forms of governance that collectively contribute to the development
landscape.
On the global level, a multitude of international organizations play pivotal
roles in promoting development. The United Nations (UN) stands at the forefront,
with its various agencies such as the United Nations Development Programme
(UNDP), the United Nations Children's Fund (UNICEF), and the World Health
Organization (WHO), each focusing on different aspects of human development.
These agencies work towards achieving the Sustainable Development Goals (SDGs),
which provide a comprehensive framework for addressing poverty, inequality, health,
education, and environmental sustainability.
The World Bank and the International Monetary Fund (IMF) are also key
global actors in development. The World Bank provides financial and technical
assistance to developing countries for development projects that are expected to
improve economic prospects and quality of life. The IMF, on the other hand, offers
monetary cooperation and financial stability, often implementing economic policies
and structural reforms aimed at fostering development.
Additionally, global non-governmental organizations (NGOs) such as Oxfam,
Save the Children, and the Bill & Melinda Gates Foundation have emerged as
influential actors. These organizations often fill gaps in areas where state capacities
are limited, providing critical services, advocating for policy changes, and mobilizing
resources to support development initiatives. Their work in areas such as health,
education, and poverty alleviation has a significant impact on human development.
At the regional level, organizations such as the African Union (AU), the
European Union (EU), and the Association of Southeast Asian Nations (ASEAN) play
crucial roles. The African Union, for example, works to promote peace, security, and
economic development across the continent through initiatives like Agenda 2063,
which aims to achieve inclusive and sustainable development.
The European Union, through its various programs and policies, supports
development both within its member states and globally. The EU’s development
policy focuses on sustainable development, addressing issues such as climate change,
migration, and human rights. Similarly, ASEAN promotes regional cooperation and
integration, addressing development challenges through collaborative efforts in areas
such as trade, education, and disaster management.
National governments are primary actors in the development process. Through
public policy and governance, states implement strategies to promote economic
growth, reduce poverty, and improve social welfare. Governments play a critical role
in creating the legal and institutional frameworks necessary for development,
investing in infrastructure, education, and healthcare, and ensuring the rule of law and
property rights.
Innovative public policy approaches have been observed in countries like
Rwanda, which has implemented policies focused on rapid development and
technological advancement, and Costa Rica, which has emphasized sustainable
development and environmental conservation. These examples highlight the
importance of context-specific strategies tailored to the unique challenges and
opportunities of each country.
The private sector is increasingly recognized as a vital partner in development.
Businesses, ranging from multinational corporations to local enterprises, contribute to
development through investment, job creation, and innovation. Corporate social
responsibility (CSR) initiatives and public-private partnerships (PPPs) have become
common, wherein businesses collaborate with governments and NGOs to address
development challenges.
Market-based approaches, such as impact investing and social
entrepreneurship, have also gained traction. Impact investors seek to generate social
and environmental benefits alongside financial returns, while social entrepreneurs
develop innovative solutions to social problems. Companies like TOMS Shoes, which
follows a one-for-one model, and organizations like Grameen Bank, which provides
microfinance to the poor, exemplify how private sector initiatives can drive
development.
Civil society organizations (CSOs) and grassroots movements play crucial
roles in advocating for human development and holding governments and businesses
accountable. These organizations often work at the community level, addressing local
issues and empowering marginalized groups. They are essential in ensuring that
development initiatives are inclusive and equitable, providing a voice to those who
are often excluded from formal decision-making processes.
Grassroots movements have been particularly effective in areas such as
environmental conservation, human rights, and social justice. Movements like the
Chipko movement in India, which focused on forest conservation, and the global
climate strikes led by youth activists, demonstrate the power of collective action in
driving change.
Emerging forms of governance, such as networked governance and multi-
stakeholder partnerships, reflect the increasingly interconnected nature of
development challenges. Networked governance involves collaboration among
various actors, including governments, international organizations, private sector
entities, and civil society, to address complex issues that no single actor can solve
alone.
Multi-stakeholder partnerships, such as the Global Fund to Fight AIDS,
Tuberculosis and Malaria, bring together diverse partners to pool resources, expertise,
and efforts towards common goals. These partnerships are characterized by their
inclusivity and ability to leverage the strengths of different stakeholders, leading to
more effective and sustainable development outcomes.
Technological innovation and digital transformation are revolutionizing
development efforts. The proliferation of mobile technology, the internet, and digital
platforms has enabled new approaches to education, healthcare, financial inclusion,
and governance. For instance, mobile banking services like M-Pesa in Kenya have
transformed financial inclusion, allowing people without access to traditional banking
services to participate in the economy.
Digital tools and data analytics are also enhancing the efficiency and
effectiveness of development programs. Real-time data collection and analysis enable
more informed decision-making, better targeting of resources, and improved
monitoring and evaluation of development initiatives.
In conclusion, the landscape of human development is shaped by a diverse
array of actors, each contributing in unique ways to address the complex challenges of
development. Global and regional organizations, national governments, the private
sector, civil society, and emerging forms of governance all play critical roles.
Technological innovation further amplifies these efforts, providing new tools and
approaches for driving progress. By leveraging the strengths and resources of various
actors, and fostering collaboration and innovation, the global community can make
significant strides towards achieving sustainable and inclusive human development.
d. Actors in Promoting Development
The actors involved in promoting human development have become
increasingly diverse. States are clearly important, because traditionally they have been
responsible for their own growth and development as sovereign entities. Since the end
of World War II the UN, World Bank, and regional development banks have taken on
new responsibilities, as have many other UN specialized agencies. Many developed
countries became contributors to development through bilateral assistance programs
or official development assistance during the Cold War, and the continuation of these
programs is a political and moral imperative. MNCs, too, have filled a critical role.
And with the emergence of the human development agenda, many NGOs have taken
on new responsibilities to meet the needs of individuals and often marginalized
populations. Other nonstate actors, including philanthropic organizations and
foundations, diasporas, and even individual celebrities such as Bono, are now part of
the panoply of development actors.
The General Assembly provides overall direction; ECOSOC is tasked with
coordination and the specialized agencies with operational activities. The World Bank
has become the focal point for financing major development initiatives, with the IMF
becoming important more recently as debt relief became an issue beginning in the
1980s. For linking trade and development, UNCTAD has served as the forum for
developing countries, as GATT was viewed as serving developed countries’ interests.
And as human development has gained currency, other UN specialized agencies such
as the WHO and FAO, in the areas of health and agriculture respectively, have gained
prominence.
The World Bank and development financing. During the 1950s the World
Bank shifted its focus from postwar reconstruction in Europe to development in Latin
America, Asia, and later Africa, lending funds with interest to states proposing major
economic development projects. The Bank generates these funds from member-state
contributions and from borrowing in international financial markets. The loans are
designed to complement private capital by funding projects that private banks would
not support, such as infrastructure (dams, bridges, highways), social services
(education, health care), and government restructuring. Unlike private banks, the
World Bank attaches conditions to its loans in the form of policy changes it would like
to see states make to promote economic development and alleviate poverty.
To aid the Bank in meeting the needs of developing countries, the
International Finance Corporation (IFC) was created in 1956, the first of four
subsidiary organizations of the World Bank Group. The IFC provides loans to
promote the growth of private enterprises in over 100 developing countries, providing
typically no more than 25 percent of the total estimated costs. Working with over 750
financial institutions, its 184 members provide about a third of the financing provided
by international institutions to the private sector. Another Bank family member, the
Multilateral Investment Guarantee Agency (MIGA), established in 1988, was meant
to further augment private capital’s contribution to less developed countries by
insuring investments against losses. Such losses may include expropriation,
governmental currency restrictions, and losses stemming from civil war or ethnic
conflict. In 1960, the establishment of the International Development Association
(IDA) provided no-interest “soft” (concessional) loans to the poorest countries, with
repayment schedules of fifty years. Today, about eighty countries are eligible for this
concessional lending based upon GNP per capita below an established threshold. IDA
funds have to be continually replenished or added to by major donor countries.
Currently, the World Bank’s 188 members together with its affiliates such as
the IDA provide over $30 billion annually to 100 countries for more than 300
projects. Until the 1990s, loans were granted exclusively to governments and often
were combined with loans from the principal bilateral donors (United States, Japan,
Germany, United Kingdom) and other IGOs. This restriction now has been relaxed
and private groups and NGOs can also be loan recipients. Since the 1950s, there have
been major shifts in development strategies that are reflected in money allocated to
different sectors such as agriculture, transportation, or education. At times the World
Bank, the IMF, and the UN itself have been at the forefront of articulating new
strategies, and at other times they have responded to changes initiated by both the
bilateral donor community and NGOs. During the 1950s and 1960s, the World Bank
emphasized large infrastructure projects (dams, electric facilities,
telecommunications). In the 1970s, under the leadership of President Robert
McNamara, the Bank shifted to a “basic needs” orientation, funding projects in health,
education, and housing geared to improve the economic needs of the masses. During
the 1980s, the mantra became private sector involvement, followed by sustainable
economic development. In the 1990s, the focus shifted to “good governance.”
Of these various changes, two trends have had the most profound impact. First
is the reorientation toward support of the private sector in the 1980s. While the World
Bank’s founding Articles of Agreement supported private investment, the Bank was
prohibited from making loans without government guarantees until the IFC was
established. The Bank now strongly supports private sector involvement and
privatization of government-owned industries in the expectation that growth will
trickle down and everyone will eventually benefit.
Second are the changes consistent with the sustainable development goals. As
discussed later, the Bank became more open to involving NGOs in planning and
executing projects in the 1990s in order to change individual lives. And the Bank
began to recognize that sustainable development, whether through public or private
funds, requires good governance. But in the early 1990s, the term “governance” was
left purposefully vague or defined very narrowly because of fear that the Bank’s
neutrality and apolitical mandate would be jeopardized. Not until 1995, under the
leadership of President James Wolfensohn, was governmental corruption mentioned
as an inhibitor of development. When the staff framed the issue in economic terms—
that corruption had negative effects on development—they were able to establish their
case. But developing good governance and rooting out systemic corruption require a
long-term commitment that the Bank has had difficulty sustaining, since it has a
history of making disbursements even when there is evidence of corruption in its own
projects (Weaver 2008: 108–113). Thus the World Bank has increasingly addressed
political issues, promoting sound governmental management and anticorruption
measures.
The International Monetary Fund and debt relief. Although the IMF was not
designed to be an aid agency, its role in development has grown, particularly since the
1980s, insofar as stable currency values and currency convertibility are necessary for
trade and development. While some states’ balance-of-payments shortfalls are
temporary and can be accommodated through standby arrangements, other states
experience long-term structural economic problems. And with heavy indebtedness,
states would never be able to repay loans, much less amass capital for development.
Thus the IMF, together with the World Bank and the G-7/8, became involved in the
persistent issue of debt relief.
In 1980 the debt of all developing countries was $567 billion; by 2000 it had
reached $2.2 trillion. In 1996 the IMF and World Bank undertook the Heavily
Indebted Poor Countries Initiative. Bringing together various creditors, including the
multilateral development banks, the Paris Club (official creditors) proposed to provide
the most indebted with a means to achieving sustainable levels of debt. Never before
had countries’ debt been canceled or substantially rescheduled. A second initiative, the
Multilateral Debt Relief Initiative, was undertaken in 2005. For the poorest countries
that had already reached completion points under the HIPC, their external debt would
be canceled in full. By the end of 2013, the HIPC and MDRI were completed for
thirty-five countries at a cost of $114 billion. Countries receiving such relief had to
submit plans to channel debt savings into poverty reduction programs. These
programs have substantially alleviated debt burdens in recipient countries and enabled
them to increase their poverty-reducing expenditures by 3.5 percent of GDP.
Reducing debt was only part of the IMF approach, however. It had become
increasingly clear that states that suffered from chronic balance-ofpayments
difficulties and heavy debt would be unable to extricate themselves from these
obligations, much less develop. The short-term remedies were not effective. For
development assistance to be used effectively, major structural changes needed to be
made.
The Bank and Fund collaboration in structural adjustment. In the 1980s the
IMF helped forge the Washington Consensus. States suffering from balance-of-
payments problems and heavy debt, mainly in the developing world, were required to
institute economic policy reforms in return for financial and developmental
assistance. These structural adjustment programs (SAPs) were carried out through
cross-conditionality between the Fund, the Bank, and many bilateral donors.
Academic studies are divided over the effects of the structural adjustment programs.
There is clear evidence that SAPs were successful in improving countries’ balance of
payments and in reducing inflationary pressures. Some of the Fund’s studies suggest
that SAPs had a positive effect on countries’ economic growth (IMF 2007; Harrigan
and el-Said 2010), but critics challenge those claims. For example, William Easterly
(2006: 67–68, 218) found that African countries under structural adjustment actually
experienced negative or zero growth, leading to a higher probability of state collapse.
Many scholarly articles and NGOs hold SAPs responsible for disproportionately
hurting the poor by cutting public expenditures, reducing subsidies on food, devaluing
the currency (Nooruddin and Simmons 2006), and adversely affecting the
environment.
Unquestionably, SAPs and particularly cross-conditionality led to some of the
most devastating critiques of the Bank and Fund. They also inspired mass public
demonstrations at the annual meetings of the Bank and Fund and critics blamed the
institutions for everything from food and urban riots to government failures. They
were also blamed for cuts in public health expenditures that contributed to worsening
the 2014 Ebola outbreak in West Africa. Some, but not all, of these critiques have
been consistent with neo-Marxist dependency theory, which calls for fundamental
change. As pressures intensified for change in the 1990s and academic studies as well
as studies within the IMF and Bank showed questionable outcomes, the general
consensus on SAPs unraveled.
In 2006 the World Bank established the Commission on Growth and
Development to reassess the effectiveness of the Washington Consensus and related
policies. Its report, issued during the 2008 global financial crisis, made quite clear that
a broad intellectual shift away from universalistic solutions to development is
imperative (World Bank 2008). Instead, the report called for far more policy
experimentation and targeted initiatives aimed at solving local problems, based on
local initiatives. Solutions are to be found in greater investment in infrastructure, job
creation, social protections, and equity (Birdsall and Fukuyama 2011). Governments
should play a key role in setting priorities that are country- and context-specific.
The Commission on Growth and Development’s report solidified changes that
had been brewing. Beginning in 2009, the IMF discontinued structural performance
criteria for loans to low-income countries. This represented a substantial overhaul of
the IMF lending framework. The amount of the loans can be greater, and they are to
be tailored according to the respective state’s needs. Monitoring is done more quietly,
to reduce the stigma attached to conditionality. Also, the IMF has urged lending to
programs that encourage social safety nets for the most vulnerable within the
population. It has even suggested that capital flows may need regulation and that
states might take a proactive role in coordinating economic development. In these
new emphases, cross-conditionality has been severed and the Bank and the Fund are
working more closely with civil society organizations (“CSOs” in the Bank’s lexicon)
and other donors.
e. Evolving Varieties of Development-Related Governance
Much as governments have added new agencies or ministries to deal with new
types of domestic issues, so too have specialized, functional organizations been
created at the regional or global level to address new areas of global governance. Yet
because issues do not always fall into neat “silos” and because particular IGOs may
not have the full array of resources and actors, new varieties of governance have
emerged, often involving different types of partnerships. Although various partners
may not agree on the nature of the problem or the best way to approach the issues, and
may have conflicting interests and be competitors for donor funding, development
actors are increasingly recognizing the need to pool resources and expertise, to
manage risk, and to collaborate to bring about the desired results.
Partnerships in development have gained more currency as human
development agendas have broadened. Multifaceted development requires
organizations with different skills and expertise in lobbying, agenda-setting, policy
formulation, and implementation. Yet partnerships are not all the same: some are
rather loose forms of organization, while others are highly institutionalized legal
entities, with a unified budget and shared personnel.
The World Bank, in a 2011 report on the effectiveness of its own aid,
differentiated among types of partnerships. Traditional partnerships focus on
harmonization of indicators and targets, joint missions to the field, and joint analytical
work. Other partnerships focus on country-level integration, coordinating country
needs, management processes, and donor activities (World Bank 2011a).
Representatives from both the UNDP and the World Bank acknowledge the criticality
of these partnerships and the problems arising from differing mandates and policy
frameworks. Still another kind of partnership builds upon a wider array of
stakeholders, including civil society, parliaments, and the private sector. The World
Bank itself is involved in nearly 120 global partnership programs and 50 regional
partnerships.
The Millennium Development Goals and partnerships. Beginning in 2004, the
MDGs spawned an experimental partnership called the Millennium Village project.
The project has been led by the UNDP, the New York–based nonprofit Millennium
Promise, and the Earth Institute at Columbia University, with financing from Japan,
philanthropist George Soros, private companies, and domestic sources. It has
identified fourteen clusters of villages in ten African countries, including Ghana,
Ethiopia, Malawi, and Nigeria. Village assistance, equivalent to annual investments of
$110 person, is based on the idea that concentrated but inexpensive changes in health,
water, agriculture, and roads can lift the 400,000 people in these villages out of severe
poverty relatively rapidly. Periodic assessments have shown strong results in
improving agricultural outputs and health and education outcomes. But questions
remain. Are these results sustainable without external assistance? Will there be
unintended outcomes such as undue reliance on fertilizer or irrigation to improve
agricultural productivity as Bill Hinchberger (2011) contends? Most damaging to the
credibility of the Millennium Village is the failure to design the project so that reliable
evaluation would be possible. No baseline data were collected; the sites were not
randomized; matched sites were not identified; and assessment measures were not
proposed (Clemens and Demombynes 2010).
Other partnerships have sprung up to provide services essential to achieving
the MDGs, such as the distribution of antiretroviral therapies to fight against
HIV/AIDS and supplying bed nets to fight against mosquitoes (through the Global
Fund to Fight AIDS, Tuberculosis, and Malaria), and the construction of safe water
systems (through the Water and Sanitation for the Urban Poor program). Studies on
transnational health partnerships have shown them to be particularly effective in
implementation of the healthrelated MDGs, but other partnerships, such as in water
and sanitation, have been less successful (Liese and Beisheim 2011). The SDG
planning process outlined earlier includes efforts to develop indicators to evaluate
specific partnerships. And as described, it involves a wide variety of groups, with
Beyond 2015 playing a major role in making this process participatory and inclusive.
The goals will undoubtedly be more ambitious; there will be more targets; and the
SDGs will not only help the poor, but also tackle issues to save the planet.
Collaboration through the OECD’s Development Assistance Committee. In
2011, the DAC convened the Fourth High-Level Forum on Aid Effectiveness in
Busan, Korea, with a goal of reinvigorating efforts to achieve the Millennium
Development Goals by broadening participation. This time, however, the traditional
DAC donors were joined by representatives from 160 states (including the BRICS),
CSOs, the UN system (the UNDP and specialized agencies), regional development
banks, and private sector actors. The goal was to create a partnership among these
various actors to promote a coordinated aid effort. The challenge post-Busan was to
“construct a ‘global-light,’ and ‘country-focused’ system that provided room for
‘differential commitments’ and adequate monitoring to ensure compliance” (Atwood
2012: 24). Under the partnership, after a recipient government’s development plans
were clearly articulated, various donors were to coordinate which groups would work
in specific areas. No longer would donors compete for the best projects, and only
projects compatible with the recipient’s development objectives would be supported.
Thus, what began as an OECD-led effort to collect data on development aid, became
the Global Partnership for Development—a nascent attempt at multi-actor
collaboration.
MNCs: From regulating to partnering. The MDGs did not specifically
incorporate MNCs, although many eventually bought into the goals. The reason for
that omission has historical origins, in the story of how MNCs transformed from
pariahs to be regulated into partners in human development. Critics of the liberal
economic model have long been dissatisfied with the roles multinational corporations
play in economic affairs, as described earlier. Yet determining what is to be regulated,
even defining what MNCs are, as well as the scope of regulations, has always been
problematic. The UN Commission on Transnational Corporations spearheaded the
first effort, beginning in 1974 under the NIEO, by developing information systems
about MNCs to help countries negotiate restrictions and by creating an international
code of conduct to govern their behavior. Yet by the mid-1980s, economic liberalism
had triumphed and privatization and deregulation were prominent on the international
agenda. Discussions of regulating MNCs were quietly abandoned. The search for an
international code of conduct officially met its demise in 1994 when the work of the
commission was integrated into UNCTAD. The mandate changed dramatically: to
provide governments interested in attracting foreign investment with the support to do
so.
The thirty-four members of the OECD agreed on the clearest and the simplest
model for regulation, namely voluntary guidelines. That approach has been effective
because the members have all supported the right of MNCs to invest as they see fit,
and all have strong functioning legal systems capable of enforcing restrictions on
MNCs. Few developing countries, however, have strong rule-based systems, and
some have been ideologically opposed to MNC activities. Furthermore, some MNCs
have clearly engaged in behaviors that negatively affect developing countries, such as
hiding profits and not paying taxes, fostering corrupt practices by allying themselves
with unsavory officials, degrading the environment, and abusing the human rights of
their workers.
NGOs have stepped in to monitor MNC behavior with the aid of technologies
that enhance their organizational and communication abilities. Transparency
International, for example, combats corruption worldwide, especially in business
transactions. Its annual Corruption Perceptions Index is widely used by the public and
private sectors. Key to its success is its network or coalition approach with businesses,
governments, the OECD, and international financial institutions. Corporate
Accountability International, previously known as Infact, is a grassroots organization
that since 1977 has been educating the public about the abuses of power by large
corporations and organizing for change.
As useful as NGOs are in monitoring harmful and illegal MNC behavior, the
international efforts to regulate MNCs failed and the international community began
to talk about bringing MNCs to the table as a way to monitor behavior. MNCs’ role in
health governance illustrates both the problems with MNCs that the developing world
has encountered and the benefits of the newer partnership approach. No one can doubt
the key role that the pharmaceutical industry has played in fostering better health
around the world. Still, beginning in 1963, less developed WHO member countries
sought assurances that imported drugs were of sufficient quality, and sought technical
assistance in monitoring quality control. The international drug companies largely
opposed these efforts. Yet in 1970 the WHO approved guidelines for drug-
manufacturing quality control, covering such issues as labeling, selfinspection, and
reporting of adverse reactions. But the relationship has remained rocky.
