Three ways we could have more radical, progressive international development


by Owen Tudor    
9:30 am - February 11th 2013

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On Saturday I spoke at the University of Newcastle’s excellent International Development Conference (#IDC2013) about Progressive Development. Below is an edited version of my remarks.

My main argument was that changes in the global economy were making traditional approaches to development – which portray the economic issues facing emerging and developing countries as qualitatively different from those facing industrialised nations – less relevant.

1. Development isn’t different

It’s often said that the past is another country, and that’s an important issue in international development. In the 1930s, my uncle and aunt were domestic workers; my grandad was a street vendor. Both occupations are key elements of the informal employment that characterises so many poor communities in the global south.

But of course they were in Plymouth and Cardiff, and within a decade they were all in regular employment, with pensions, a National Health Service, and a home of their own. They were also paying income tax, which was a major change.

Seemingly intractable poverty can actually be overcome remarkably quickly. Even in Europe, we only made poverty history recently, and it may be on the way back.

What I take from this is that the challenges of international development are not so different from the challenges we face in our own country.

This morning’s Action Aid report about tax dodging by Associated British Foods in Zambia is not so different from last year’s domestic scandals about Amazon, Google and Starbucks. Tax justice is a global agenda, not specifically a northern or southern problem.

Another example is Oxfam, founded 75 years ago to mount famine relief programmes not in Africa but in Greece. We may even have come full circle with the expansion of food banks even in Britain.

When Make Poverty History was launched in the UK in 2005, it was about poverty in developing countries. But others did it differently. Make Poverty History Canada addressed domestic poverty as well.

2. Solidarity isn’t charity

I don’t agree with those who say that overseas aid is a bad thing, encouraging dependency. I see it more as a form of economic transfer payment like unemployment benefit. State expenditure has been vital to the economic development of industrialised countries and spending on education, health and infrastructure is as vital in developing countries as it is in the north.

But at the same time, unemployment benefit is only a sticking plaster to get people through the bad times, until economic growth returns. So I’m pleased to see politicians starting to talk about ending aid in our lifetimes.

China, for example, is the major success story in reducing the number of people in absolute poverty, and that’s been achieved through a mixture of economic growth and welfare safety nets, rather than external aid.

But what I particularly take from the Chinese model is that, primarily, you cannot eradicate poverty from outside: the people who will overcome poverty are the poor themselves, and our role is to support them in that rather than take over and do it for them.

We can certainly stop making things more difficult – for example by ensuring that multinational corporations don’t dodge their taxes, and adhere to international labour standards.

And we should certainly stop portraying people in poverty as powerless victims: the ‘starving black baby’ pictures that open people’s purse strings, but don’t challenge the fundamental causes of poverty here or abroad.

Indeed, we should take our lead from those who are demanding change, rathe than imposing our own model on them. That’s frankly the TUC’s main concern – among rather too many to be comfortable with – about this year’s ‘Enough IF’ campaign, which was developed without any southern leadership or even input at the planning stage.

3. We need a new model of development

So, the concluding point I would make is that we need a model of development campaigning that addresses issues that affect people across the globe: tackling inequality between and within countries, reconciling economic growth with environmental sustainability and social justice, that says saving a hospital in Lewisham is as important as opening one in Luanda.

Tax justice is easily the clearest example of this, but precarious employment and informalisation is a challenge in the USA and Southern Europe just as it is in Ghana and Nigeria. Violence against women is an issue affecting the UK with cuts to police domestic violence units and Women’s Refuges, even if South Africa, India and the DRC present more alarming news.

So we need development initiatives that span the G20 and the G77, campaigns that are led by southern as well as northern voices. Inequality has been thrust into the forefront in industrialised countries, and in particular the shift in extreme poverty from poor countries to middle income countries.

These are the issues that will condition the post-2015 agenda, rather than the largely technical issues of the MDGs.

And this is especially important in conditions of economic hardship in the industrialised world when the pressure on politicians and on civil society generally is to focus inwards. Because charity isn’t enough to change the world.

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About the author
Owen Tudor is an occasional contributor to LC. He is head of the TUC’s European Union and International Relations Department and blogs more regularly at the Touchstone blog.
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Reader comments


“China, for example, is the major success story in reducing the number of people in absolute poverty,”

Yes, yes it is.

“Seemingly intractable poverty can actually be overcome remarkably quickly.”

Yes, quite.

An interesting little economic statistic. GDP per capita in China in 1978 was around $1,000. This compares, roughly, to the UK in 1600 AD (yes, of course these numbers are inflation adjusted).

Today it’s around the $7,000, $8,000 level. This equates to the UK in 1948.

They’ve crammed three and a half centuries of economic development into only 35 years. Part of this, of course, is that they are playing catch up. Always a great deal easier than moving the technological frontier itself.

The rest of it is moving from a planned system to a rather more free market one (and believe me, actually the existing Chinese economy is a great deal more free market, warts and all, than the current UK one) plus globalisation.

You know, that neoliberal stuff. More markets, more trade and see the economy grow like gangbusters.

Which leads to an intersting question. Given that this is indeed how the Chinese economy has grown, and given that large numbers of people do insist that they’d like other economies to also so grow, from the UK to sub-Saharan Africa, why is it that people aren’t advocating the same policies, that neoliberalism, that made the Chinese economy grow?

I have a gut feeling that Nobel laureate W Arthur Lewis’s classic paper on: Economic Development with Unlimited Supplies of Labour (1954) is still relevant to many cases of promoting economic development in poor countries:

https://webspace.utexas.edu/hcleaver/www/368/368lewistable.pdf

BoB B

yep. here is a recent paper by Rodrik very much in that tradition.

usually people in the development world are at pains to deny a one-size-fits-all approach. What is gained by developing a campaign that tries to encompass the problems of rural poverty in Angola with unemployment in Aberdeen?

what is this idea that “the economic issues facing emerging and developing countries as qualitatively different … is less relevant” based upon?

Maybe we need fewer intellectuals each arguing we need “a new model of development” and more people focused on boring technocratic issues.

Luis

Thanks for a link to that recent paper by Rodrik – which I didn’t know of.

Of course, there are many structural differences contributing to unemployment in Aberdeen or Angola, just as there are many differences between, say, Aberdeen and the North East region in England or between Angola and other African countries so we need to refer to that substantial literature on: “the Resource curse”

“Africa’s mineral wealth hardly denting poverty levels, says World Bank – Report finds discovery of oil and mineral resources doing little to improve prospects for poor people, whose lot may even worsen” [Guardian 5 October 2012]

One crucial question to put is whether national economic growth is demand or supply constrained. If the constraint is on the supply side then boosting demand will generate inflation rather than real output and jobs.

A hugely significant change since Lewis wrote his paper (in 1954) is the advent of new communications technologies. Europe and North America invested the equivalent of billions in the early part of the last century in laying down fixed links for national telecommunications infrastructures. With mobile telephones, that investment won’t be necessary in Africa. Introducing mobile phones will bring the opportunity of instant news about trading opportunities in the next village or township which would have taken days or even weeks before.

“Europe and North America invested the equivalent of billions in the early part of the last century in laying down fixed links for national telecommunications infrastructures. With mobile telephones, that investment won’t be necessary in Africa.”

And what’s more important: not having to lay (so much) cables for telecommunications infrastructure enable the people in these countries to actually use the services, instead of paying bribes to bureaucrats to be allowed to lay the cables.

In many countries in Africa, getting a fixed line telephone used to take years, even decades. Not because laying cable itself there is any more difficult than elsewhere. But because the cable laying needs licenses and permits, and that gives planned economies a stranglehold on private individuals and businesses who need telephones.

Yes, mobile networks also need licenses and permits, but fewer of them per subscriber – once you have an operational mobile phone network in an area, the marginal cost of adding one subscriber is next to nothing.

Technology solving social problems.

The solutions aren’t necessarily technological.

For non-economists, the notion of a natural resource endowment becoming “a curse” may seem rather paradoxical but discovery of scarce natural resources can lead to the creation of a dual economy in which affluence prevails in one narrow enclave, where the resource is extracted and exported, existing alongside entrenched relative poverty in the rest of the national economy.

One reason why this happens is that exporting the resource can lead to a substantial appreciation of the national currency in the foreign exchange markets which renders parts of the economy disengaged from the exportable natural resource becoming uncompetitive in international trade. Those parts may previously have engaged in international trade then tend to shrink.

One early insight into this situation was gained in the Netherlands in the 1960s and 1970s from the discovery of substantial natural gas reserves off the Dutch coast – hence an early name for “resource curse” was the “Dutch disease”:
http://en.wikipedia.org/wiki/Dutch_disease

Adjustment in the Netherlands was achieved by maintaining a national consensus constraining wage increases: ” . . the reduction in wage growth after 1973 – even to less than 1 per cent a year during the 1980s – is quite remarkable, although it should be added that between 1990 and 1992 real wages again rose by 3 to 4 per cent a year.”

The result was that the annual increase in unit labour costs 1979-90 was kept down to 0.6 per cent, in marked contrast to what happened elsewhere in western Europe at this time. Try the review of the Netherlands economy by Bart van Ark and colleagues in Nicholas Crafts and Gianni Toniolo (eds): Economic Growth in Europe since 1945 (CUP, 1996) chp. 10 p.297.

Compare what happened here in the early 1980s as the British economy became a net oil exporter because of North Sea Oil – large swathes of manufacturing industry became uncompetitive as the Pound appreciated.

IMO it is a mistake to believe that a different kind of economics apply to developing countries.

Some developing countries – such as Nigeria – have been badly afflicted by the “resource curse” but it is worth recalling that some natural resource poor countries – such as Japan, South Korea and Taiwan – managed to overcome their disadvantage very well from relatively impoverished beginnings.

It is worth looking into how they managed that since WW2 and also as to how resource rich countries – such as the Netherlands, Australia and Qatar – managed to successfully adjust to the downstream consequences of their natural resource endowments.


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