Trajectories of Development: Thinking since the rise of New Nation States

Prof. Thandika Mkwadiwire

In the post-colonial rise of new nation states, the main focus was accumulation and production leading to a new field of development. Some of the progressive nations claimed a socialistic inclination.

This stage when nation states were free to think about development and protection and distribution collapsed by the end of the 70s, when there was a dramatic change in how policy space was viewed.

Today there is a new interest in development following the failure of the Washington consensus. The new thinking on development is a shopping list approach to development which is beset with problems, argues Prof. Thandika Mkwadiwire,Director of the UNRISD.

I had in the kind of mission statement proposed that the major challenge any development and how you measure any development should focus on 4 issues
1.
How society is reproduced: Care, gender relationships etc.

2.
Wealth of nations: how societies make material progress

3.
How you distribute wealth and

4.
How societies protect its people against vagaries of nature and economic circumstances.

We will look at these four issues reproduction, production, distribution and protection. Our research in the nine years was to look at those social policies along those four axes. I would argue that if you look at budget you have to look at these 4 issues. Does the budget ensure care and reproduction? Does the budget ensure the expansion of means of production?  Is it distributive? Does it provide social protection for people?

What has happened when after the World War II in new nations like India where everyone was concerned about development of a new field of development economics emerged? The main focus was accumulation and production. Some of the progressive nations claimed a socialistic inclination. They would have both production and some kind of distributive measures. In Europe the welfare state emerged and became stronger. More successful regimes included distribution and protection. Most successful ones also included issues of gender and reproduction. 

That stage when nation states were free to think about development and protection and distribution collapsed by the end of the 70s.By the end of the 70s there was a dramatic change in how policy space was viewed. There was the argument that you could no longer sit in a particular country and develop your strategies. The entire discipline of development economics was challenged. If you see some of the literatures of the 70s such as Rise and Decline of Development Economics by Herschman, The Poverty Of Developmental Economics by Deepak Lal then it was all about birth, rise and death of development economics.. The point I am trying to make is the idea of development as a strategic thinking was under attack. This was true not only of developmental economics but also in the adjacent subjects in political sciences, sociology, there was doubting of the society’s notion of  deliberately thinking of social change and development. 

There were books such as ‘Rise and Fall of Development Theories’ and a whole lot of literature questioning development in other disciplines. Any collective reflection of development was thought to lead to a statist regime. And you could not assume states that would benignly want to develop a country.

At the same time the East Asian economic miracle happened, which should have attracted a lot of attention in development. However there was a deliberate attempt to misinterpret the Asian experience by saying that this was the market at work.  This was seen as the evidence of neo classical thinking. There was a deliberate distortion of the Asian experience and the miracle was a statist development model.

There are two ways of looking at development. One as the spontaneous workings of markets and history and another is a deliberate attempt at doing that. However there was a shift in ideologies in the North with the rise of Thatchers and Reagans. The collective notion of development was ideologically under attack. Having criticized the neo liberals for questioning the notion of deliberate development, we have to acknowledge that there were problems in the way development was thought about. There were ideological problems with how development was seen. One of them was that of extreme inequality arising in all these cases. There was a debate about the basic needs, which was questioning the model of development adopted in many of these countries. They said that the models were not solving the problems of basic needs. Second critique of developmental economics was that many of the regimes were harsh and authoritarian. In Latin America they talked about the bureaucratic and authoritarian regimes .East Asian miracle was invariably authoritarian. The critique was from the perspective of democracy. In the case of Africa the critique was slightly different. Failure to meet basic needs of the people, growing inequality and authoritarianism was seen as the basic problem of developmental economics.

I argue that today there is a new interest in development driven by 3 major factors.
1. The failure of the Washington Consensus. In 1981 a book called the Byrd report was an agenda for accelerated development for Africa. The African nations asked the World Bank to prepare the report. Africa had been growing by 5% in 60s and 70s.They wanted the African nations to growth rate to be at the level of East Asia (7 per cent). The report was implemented and the growth rate plummeted to 0 per cent in Africa. The 20 years of SAP led Africa to 0 per cent growth rate. Even within the WB there was a talk about changing policy framework into one which was more comprehensive and started thinking about economic growth as an important story. The World Bank began to argue that the growth was good for the poor. What they didn’t prove was whether the WB was good for growth.  With growing political contestations in many countries the issue of poverty was brought back in the agenda of development. Partly because of democratization and NGOs and also failure  structural adjustment programme. There were also concerns of national security. The literatures try to link terrorism with the failed state. This has brought us where we are now. So now there are attempts at formulating a pro poor budget. I would like to quickly look at the poverty agenda. Obviously if we talked about poverty in the 50s, then there was sense that development could address poverty.
Now in the new debate we have two types of debates. 
1. the MDG type and

2. other is the PRSP.

Much of the debate about poverty suffers from a number of problems. First it is the shopping list approach to development. There are a  list of things you must do by a certain year and you either prepare a list of PRSPs with a list of those things and go to Washington and ask for money. Normally this is done through national consultations. The truth is that the documents are done in Washington. So African countries became smart and started to download documents from Kenya and write it in Malawi. It takes less time as they were already accepted .did worse than the Nordic countries which did not talk about poverty. In most  countries which spoke most about poverty are usually Anglo-Saxon countries the US and UK. They did worse than the Nordic countries who never talked about poverty. The best way to fight poverty is to do things that do not look as if they are aimed at poverty. Education, national inclusion, health, equity. The social welfare type of thinking. Any country which has a large number of pro poor policy is pursuing poor policies for the poor. That is the irony.

When you want to think about poverty then you have to think about more comprehensive social policies. It is not only about isolating poverty through the shopping list approach.  It should have protection, production, distribution and reproduction simultaneously and not one at a time. 

Your overall macro micro economy should not be socially blind. You have to have macro economy conscious of production, distribution and reproduction and protection. If you want to fight poverty than policies targeted to the poor at not very helpful. The more successful policies have been universal. Were people have access to certain things by right and citizenship. The debate against this kind of thinking is that we have limited resources and therefore we must focus on the poor.

There are many problems of targeting. Targeting is very complicated. The World Bank in argument against industrial policies by government has argued that the poor countries do not have the capacity to target industries because it is administratively complex. So how can you expect the same poor countries to target the social sectors . Human beings are much ore difficult to target. They can change identities, they can move, they can lie. Ironically when Finland went for universal policies, the reason they gave was that they do not have the administrative ability to target.  So if you need to target because you are poor, you can’t do it. If you can do it you don’t need it. In my country Malawi they are providing subsidies for fertilizers and there were two debates about whether they should be targeted to the poor or made universal. The government chose to go targeting. And its proving a nightmare because of corruption and administratively difficulties. There are two types of errors you can make with targeting

1. Include people who should not be included and
2. Exclude people who should not be excluded.  The better the targeting is the more poor people you will miss because they will not
qualify. Because the rules will be strict, they can’t answer questions and so on. So when you are trying to exclude the rich you end up excluding the poor.

The second argument about targeting is political Much of the donor debate about targeting is how to allocate their money. But If you think about allocating your money than you think about taxation also. The policy must be accepted by the middle class. That is why even in the US , social security that involves the middle class is the most difficult to touch. If it is only benefiting the poor you can knock it off. So if you want domestic funding for social policies you have to make it universal, you have to include the middle class. If it is aid money you don’t have to think about what the middle class think. But in most cases successful social policies involve domestic taxation and resources.  You need in a way to involve the middle class politically in funding your regime. Lately there has been more focus is on absolute poverty than on relative poverty. You cannot think in terms of absolute poverty. In India if you are thinking in absolute poverty terms then poverty is going down but may not have gone in terms of relative poverty. Finally the current debate on poverty does not think about the market economy.

Finally the debate on poverty does not question the fundamental macro economic model. It assumes the Washington model is okay and that poverty is fine tuning.  Again we cannot fight poverty by thinking that macro economics is constant. You have to question the whole model. You have to open the whole box. It is a question of the whole budget. Not just the expenditure but also about the revenue. Who is paying the taxes? Why is taxation the way it is? 

In all the successful and strong policies against poverty the capacity of the state is very important. In the 80s and 90s there was an anti   thinking. Where NGOs have been more successful against poverty is in the issue of advocacy. In the Nordic countries we saw how many NGOs began providing services and successfully forced the government to take over. Then the governments were forced to adopt these initiatives and make them into national policies. So we can make the state responsible. For instance you can say we have been providing this in village X , so why don’t you make it a national issue that villages having the same kinds of clinics. The social movements in Europe were successful because they could impose their social provisions into a national agenda. That means politics. Many of the NGOs have not been able to make political inroads. How do you persuade? You can do many things out of the parliament but in a democracy you have to engage the parliament and this is politics. How do you have a political impact so that on the political scene whether it is budget making and so on your ides enter the national agenda. That is high politics. You can’t avoid it. The word Political economy in its classical sense was very much around taxation. Political economy is largely around the fiscals the budgets, taxation. Because that is where the shift of resources from one group to other is affected by the state. You will ultimately be faced by political question.