Flashcards
Political Economy of Development
Cards in this deck (29)
- 1What is Development?- Originate post-WW2 in response to huge disparities between countries
- How to industrialise poorer nations
- 'Difference' between developed & developing world i.e. US vs Brazil - rests around ideas of democratisation as most developed form country can take
- Development project 'winning over' developing countries to divert influence of USSR
- Countries in Global South adversely impacted by colonialism. Vulnerability/impoverishment. US targeted aid to forge alliances, protect from influence of USSR
- Hegemonic powers influence developing countries through aid - soft power
- Push developing world onto path of 'Western-style development' - 2Development Theory I: Modernisation (1945-)- W. W. Rostow (1958) - 'The Stages of Economic Growth: A Non-Communist Manifesto'
- Move away from Soviet influence
5 stages of development - final stage as age pf mass consumption
- Emphasis on capitalist development as mode of modernisation needed
- Influential in US 1960s - involved in how US pioneer devpt. policy
- - Development as a ‘process of social change whereby less developed societies acquire characteristics common to more developed societies’ (Lerner, 1972: 386)
- Why should developing countries replicate same modes of development as US - 3Target for modernisation: the global South- Undergoing own qs around modernisation/export-oriented growth
- Many developing cs were colonised & had been involved in export-oriented growth during WWs
- Needed own industrial base - experimenting in industrialisation, raising tariffs, independent of former colonial, independent in global system
Decolonisation (1940s-70s)
- Concerns over econ direction of new states
- Formation of new global governance institutions - 4Modernisation in Policy & Practice- Influenced by modernisation theory
- Pumps big volumes of aid to d countries & promotes trade 'openness'
- US believed aid could move countries from one stage of devpt to next
- Kennedy embarks on 'development decade' - est. of key devpt agencies in US: Peace corps, Alliance for Progress in LA, Agency for Intl. Devpt.
- Modernisation critiqued for ethnocentrism
- Aid injected but no econ devpt. - 5New institutions of global governance- US role in post-WW2 institutional building
- Bretton Woods Agreement: WB, IMF, GATT
(tariff reduction, trade liberalisation)
- US hypocrisy- promotes US emulation/trade openness but its econ built on protectionism/high tariffs
- Increase membership of developing cs
- Countries in south primarily exporting commodities
- 1950s L. America - would trade openness benefit countries in south - 6Development Theory (1950s-) II: Under-De- Developing countries no econ devpt from trade openness
- Prebisch at UN Econ Commission on LA arguing in 1950s/60s that rel poverty of people in South not due to lack of modernisation but bc it was essential to capitalism for these countries to remain in this state of underdevelopment
- INtegral to industrial devpt of North
- Conceptualisation of world econ into 'core' and 'periperhy'
- Declining 'terms of trade' over time - Singer-Prebisch Hypothesis – price of primary commodities – agricultural products, oil declines relative to price of manufactured goods over long-term - 7Core & Periphery- 'core' engaged in high value-adding production, periphery in primary commodity production
- Declining terms of trade had adverse socio-econ conseuqences in S
- Developing cs cannot build industrially/econ due to structural impediments of global trade system
- Unable to gen levels of NI required for ecno devpt.
- Exacerbated - producing more primary commodities to afford manufactured productions from N
- Part of nature of capitalism - poor/rich
- Declining terms of trade & structural entrenchment of 'underdevelopment'
- These structures & trade patterns est. under colonialism didn't disappear w decolonisation - sectors shaped by it. - 8Development policies form the South: Import Substitution In Industrialisation (ISI)- Economists in LA used dependency theory to create new devpt policies: ISI
- Against export-driven trade liberal
- State-led devpt: industrialisation through protectionism & taxation. State directs by raising import tariffs on manufactured goods to protect infant industries
- 'Catch up' w Nort by protecting domestic econ from cheap, foreign imports
- drive for autonomy
V popular in LA, Africa, Asia post-colonial - 9ISI: Ghana- Ghana under British colonial rule
- Econ dependent on imported manufctured goods from Britain. It extracted raw materials from Gold Coast
- Independence from Britain 1957
- Industrialisation key for Nkrumah Peoples Party - production of consumer goods, processing of exports - higiher stage in value adding
- Expansion of electrical machinery industr
- V sucessful 1960s
INcreased manufacture output
- ISI pursued large-scale, state-owned manufacturing industries - mixed - 10responding to limits of Global GOvernance Institutions- Industrialised econs in N keen to pursue trade liberalisation during ISI
- ISI v important for devpt. in GS
- Developing cs sought form coalitions to protect interests within GATT etc. - called for special inferential treatment, leniency & respect for soveriegnty
- Coalition-building led to est. of - Non-Alignment Movement (1955), New INtl Econ Order (1974), UNCTAD and G77 (1964) - 11Divergence in Development: 'East Asian Tigers'- Many developing countries struggling - dependency on primary exports
- Taiwan, S. Korea, Singapore, HK, Japan see huge growth
- They opened up to global trade - allowed TNCs to source components from low labour cost economies (new intl. div of labour)
- Increased globalisation - need for new theories of devpt. - neoliberalism/neostatism
Markets vs states as best drivers? - 12Theory III: Neoliberalism- Rejects state intervention - cynical about role of pol in econ.
- Roots in neoclassical - self-interest people
- Politics therefore produces distortions
- human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterised by strong private property rights, free markets and ‘free’ trade’ (Harvey, 2005)
- Devpt. requires consolidation of market-based mechanisms & depoliticisation of econ activity - state out.
-Need participation w/out state in market - 13theory IV: Neo-Statism- State should play key role in directing econ activity - 'developmental state'
- Associated w authoritarian govts. w long-term econ planning
Differs from ISI - states may direct econ devpt. through openness - 14EA growth- Rapid devpt. of EA seen as led by 'developmental states' - neo-statist
- States directed & shaped process - not free market
- State-controlled competition evidence - advocated large state subsidies
- Success due to engagement w globalisation/trade openness - export-oriented aspect - 15Divergence Development: 1970s- EA grows, countries in LA & Africa struggle. Problems w GF system, inflation, interest rates rise
- Impact on developing Cs esp. LA countries that borrowed lots from US under ISI
- ISI constrained by oil price hikes & demand by industrialised econs to repay debts
- Mexico defaults - commercial banks stop lending - crisis when refinancing of existing debt is refused
- Neoliberalism becomes core global development project - revolution.
- IMF moves to restructure repayments, reduce govt. spending
more market-oriented econs in GS - 161980s onwards- Developing countries face debt crisis due to lack of liquidity in GF markets
- SAPs - controverisal mechanism of development - money given to countries defaulting - rapid injection of aid
- Neoliberalism core global devpt. project
- Bail outs issued by IMF/WB w conditionalities - open market, privatisation
Washington Consensus - 17Trade Liberalisation and position of developing countries- WTO (1955) agenda of global trade liberalisation - benefitted industrialised econs
- GATT merges into WTO
- Agri major contention in WTO - subsidies in North
- 2003 - stalemate in WTO - countries increasingly turn to bilateral/regional trade
- Developed countries (US/EU) - huge subsidised agri systems, & not willing to reduce subsidies. Unfair for developing to compete w prices of North. - 18Development in 2000s: Growth- Growth shifts from Japan & NIEs to China & India
- China & INdia engaging in GVCs, trade liberalisatiojn
Africa recovering - growth from increased exports
- Divergence between developing countries 1. focused one manufactures (EA NIEs, China)
2. Those reliant on export of primary comms (LA, Africa) - 19Globalisation & Development)- Wolrd's devpt problem remains significant
- Large prop of population in poverty, deprivation - inequalities exist & growing
- Global devpt. agenda not put necessary conditions in place - 20Proponents vs critics of globalisation-Proponents of Globalisation:
o It is government failure, not globalisation’s failure
o Failures of development are due to ‘exclusions’ from globalisation
o Level of ‘openness’ does not always correlate to the impact of global crises Critics of Globalisation
o Policies of globalisation are counter-productive to social, economic and political stability
o Neoliberal development orthodoxy does not understand the complexities of global political economy
o Recurrent global crises are crises of globalisation - 21Broome on Development- Global diffusion of development gained prominence after WW2 – broader social & political trends – decolonisation, changing conceptions of intl. aid. (Lumsdaine, 1993)
- Broad definitions of development:
1. Understanding of development as a coordinated process that is geared towards achieving broad goals associated with improvements in material well-being
2. A more specific set of strategic developmental targets & intended outcomes
3. Development as an ideological project that is underpinned by implicit assumptions about social & economic progress & stages of historical change in different societies (Payne & Philips 2010: 5) - 22Broome on reasons for underdevelopnent- - Development targets aim at achieving both quantitative and qualitative changes in an econ – infrastructural development, capital accumulation, improvements in health, literacy, life expectancy, environmental sustainability
- Main drivers of development emerge in historically contingent political, economic and social circumstance.
- Similar econ & environmental conditions won’t necessarily lead to the same development processes/outcomes in different countries
- Persistence of underdevelopment & poverty in many countries can be explained by assumptions that have underpinned evolution of global development policies:
1. National & intl. bureaucracies w responsibilities for development policies ‘know what actions achieve economic development’
2. Provision of advice and money from intl. donors ‘will make those correct actions happen’ - 23Broome on Global Poverty Today- Poverty: condition of rel. or absolute deprivation
- Extreme pov: deprivation of basic human needs
- Hulme: each on on avg: 'almost 1bn people will go hungry, 20 000 children will die from easily preventable health problems'
- From 1990s: focus of devpt projects on poverty reduction through foreign aid
- WB def: 'headcount' measures of absolute pov as prop of country's population living on less than US$1.25 p.d.
- Problem - should aid be allocated to poor countries or persons
- Foreign aid expanded to education, healthcare, infrastructure - positive impact
- Countries w high rates of poverty (Uruguay) tend to have high levels of income inequal
- 'poverty-efficient' aid allocation - 'how to get greatest amount of poverty reduction from smallest amount of aid' (Kapstein)
- Easier to quantitatively measure effectiveness of schemes aimed at reducing extreme pov than othre areas
- Extreme pov linked to othre fp concerns: state security, terrorism - 24More on Global Poverty Now- - In South Asia, poverty rates have fallen sharply from 61% in 1981 to 36% in 2008 BUT in Sub-Sahran Africa – increase in poverty from 51% 1981 to over 59% in 1993
- Extreme poverty headcounts rose sharply in many countries during the 1980s and the 1990s. This was associated with economic liberalization processes that reduced income security and existing social safety nets for many of the world’s poor, broader social and political changes brought about by the end of the Cold War & econ/financial vrises that further impoverished many people already below poverty line & pushing more under it, - 25Econ Development Strategies- Debates over whether market-/state-led strategies foster development & property reduction are superior
- Washington Consensus - IMF/WB assumed govt=failure was characteristic of devpt. strategies. Example fo ISI models to increase self-sufficiency & build econs of scale
ISI - used 1950s-80s esp. LA. reduced productivity & impeded devpt. of econs of scale
- 1991 World Development Report - WB concluded market-friendly policies embodied a new consensus that should be used everywhere - Washington C - 26Washington Consensus- Decline in efficacy of demand-management policies & demise of Bretton Woods system from mid-1960s to 1970s helped facilitate dominance of neoclassical approaches in IMF/WB from '80s
- Fiscal discipline
- Focus public expenditure on health, edu, infra
- Financial liberalisation
- Competitive & unified exchange rates
- Equal treatment for foreign & domestic businesses - 27ISI vs state-led devpt- ISI in LA criticised. Alternative state-led development strategies in NIEs of EA incl. Japan, S. Korea, Taiwan, HK, Singapore. Growth driven by establishment of policy frameworks that did not discriminate against exports (unlike ISI) – enabled efficient resource allocation, econs of scale through exports, incentives for firms to upgrade. V successful in rapid development.
- Claims over which model is superior driven by battle of political ideologies - 28Contemporary challenges- WB & regional devpt banks have poverty reduction as core of mandate
- - WB’s conception of what poverty is, how it’s measured & what steps should be taken to address it has changed substantially throughout history.
- Rise of the Washington consensus within the IMF & WB during 1980s/1990s challenged by emergence of Human Development paradigm. Promoted by likes of Mahbub ul-Haq, who sought to broaden global development agenda beyond income-rel. aspects of poverty & dominant focus on econ growth
- Launched first UNDP Human Development Report in 1990. Search for altenative indicators
- 21st C - devpt priorities shaped by agenda set by MDGs = 8 flagship objectives that 191 membr states of UN agreed. Ambitious - universal edu, eradicate extreme pov, gender equal, child/maternal health, combat HIV - 29Stoetzer on how income inequality affects support for populist parties- - OECD countries – increase in income inequality recently. Avg, share of disposabke income earned by top 10% has increased & is 9.3x higher than income of bottom of 10%
- - Liberal democracies increasingly contested by populist parties – ‘pure people’ v ‘corrupt elite’ – want to implement will of people. Rise of right-wing & left-wing populist parties. Over 1 in 4 people voters cast their vote for an authoritarian populist party last time voted in national election
- Michael Zurn: cultural division of society & growing inequality serves authoritarian populists.
- Income inequality leads to econ risks & insecurities - perceived income insecurity. People fearing they'll fall behidn willing to turn back on mainstream pol.
= Inequal distorts trust in representatives - q integrity. Risks.
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- What is Global Development? Development Strategies and Policies The relationship between Globalisation and Development
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- Isla Duguid
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