Development Context

The Context of Development

Administration:

Political, Economic & Socio-

Cultural

Dr. Edwin B.R. Gbargaye

Instructor

Department of Public Administration

University of Liberia

Outline

• Background

• Framework

• Enabling Factors for Development

– Culture

– Economic

– Political

• Conclusion

Background

• Development is largely a post- WWII

phenomenon

• Before WWII, little sense of moral/ethical

obligation of one nation to another

• Idea of development is based fundamentally on

classical Western concepts of evolution (i.e, of

unfolding of pre-determined plan) and unending

progress

What is Development?

• “A country can be called developed, when it has acquired an institutional setup that allows it to mobilize resources and carry out changes necessary to systematically and effectively deal with problems that the country is facing”.

Ehrlich, I. 1990. The problem of development: Introduction. J. Political Economy

98 (5, Part 2): 1-11.

What Do We Mean by Development?

• Operational definitions:

– Millennium Development Goals (MDG’s) to be

achieved by 2015

– Human Development Index (HDI): achievement

of the goals or improvement in the index is a

measure of development.

Development Measurements

• Economic growth and expansion (GDP, GNP),

institutionalized by WB and IMF

• International trade (export and import)

• Wealth accumulation (foreign reserve, etc)

• Mass production and consumption

• One is considered as being “developed” if it can

meet these measurements

UNDP:

Human Development

• The most used quantification for human development

by UNDP is the Human Development Index (HDI). It

combines

– standard of living, measured with PPP

– longevity, measured with life expectancy at birth

– education, measured as adult literacy and gross

school enrolment.

Millennium Development Goals

• Eradicate extreme poverty and hunger.

• Achieve universal primary education.

• Promote gender equality and empower women.

• Reduce child mortality.

• Improve maternal health.

• Combat HIV/AIDS, malaria, and other diseases.

• Ensure environmental sustainability.

• Develop a global partnership for development.

Is There Progress Towards the

Millennium Development Goals?

"We will have time to reach the Millennium Development Goals – worldwide and in most, or even all, individual countries –but only if we break with business as usual. We cannot win overnight. Success will require sustained action across the entire decade between now and the deadline.”

Former United Nations Secretary-General Kofi A. Annan

In Larger Freedom March 2005



• Yet at the same time, dozens of countries have become poorer, devastating economic crises have thrown millions of families into poverty, and increasing inequality in large parts of the world means that the benefits of economic growth have not been evenly shared. Today, more than a billion people — one in every six human beings — still live on less than a dollar a day, lacking the means to stay alive in the face of chronic hunger, disease and environmental hazards. In other words, this is a poverty that kills. A single bite from a malaria-bearing mosquito is enough to end a child's life for want of a bed net or $1 treatment. A drought or pest that destroys a harvest turns subsistence into starvation. A world in which every year 11 million children die before their fifth birthday and three million people die of AIDS is not a world of larger freedom. ”

Former United Nations Secretary-General Kofi A. Annan In Larger Freedom

March 2005



• “The past 25 years have seen the most dramatic reduction in extreme poverty that the world has ever experienced. Spearheaded by progress in China and India, literally hundreds of millions of men, women and children all over the world have been able to escape the burdens of extreme impoverishment and begin to enjoy improved access to food, health care, education and housing.

Former United Nations Secretary-General Kofi A. Annan In Larger Freedom March 2005

Causality of Development

• Geography

• Culture

• Property rights

• Lack of freedom

The Aim of Development

• To increase GDP, real GDP/capita

• To improve the non-monetary indicators

• Mitigation of poverty

• Entitlements and capabilities

• Freedom

• Sustainable development

What is Aid?

• Aid As Inputs ($$$; 0.7 of GDP, etc)

• Aid As Process (e.g. Participation,

partnership, etc)

• Aid As Output (schools built; #s Trained…)

Two Models of Aid

1. The Humanitarian Approach. Focus on poverty, deprivation: The Lotta Hitschmanova Model

2. The Developmental Approach. Focus on Socioeconomic Reconstructio, Wealth creation, Development, Innovation, etc

The Marshall Plan Model

NB: Aid to Africa is Predominantly Humanitarian; Necessary but not sufficient for Development in an Era of globalization

Official Development Assistance (1975-2007) Net Disbursements

(Constant Prices, 2006 USD millions)

0

20000

40000

60000

80000

100000

120000

140000

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Bilateral Multilateral

Total ODA Flows by Region

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Europe Africa America Asia Oceania Developing Countries unspecif ied

ODA Receipts

US$ 2006, millions

Reaching the 2010 Target for Africa will

require exceptional efforts

Source: OECD Development Assistance Committee (DAC) and World Bank Staff estimates.

A Review of Development Theories

–Adam Smith: The Classical Economy

–Malthus

–Keynes

–Rostow

–Structuralist & world-systems theory

–Institutionalism

–Neo-classical economy

–Human development

Classical Economy

• The classical economy (Adam Smith 1723-1790):

–The only real measure of value is labor, and the division of labor makes the production more efficient.

–In contrast to mercantilism, which offered protectionism, markets should be allowed to function freely.

• The government should provide the legal framework: law and order.

–Other interventions should be minimal. Only government investments to infrastructure such as canals and roads were advocated.

Malthusianism

Population growth is geometric, where as the growth in food

production is arithmetic

Keynesianism

The government

has a strong role in

controlling credit

and currency, and it

also stabilizes

business cycles

with public savings

and investments

Rostow’s Stages of Growth

Neo-Classical Approach

“The Washington Consensus” by World Bank & International Monetary Fund

• Remove price controls

• Fiscal discipline

• Prioritize Government expenditure in infrastructure & human development

• Implement tax reforms

• Financial liberalization

• Remove foreign exchange controls

• Promote foreign investments

• Privatize public enterprises

• Deregulate economy

• Protect property rights

New Institutional Approach

• Institutions (legislative, juridical, executive,

administrative, informal [behavioral norms,

culture, religion…])

• Social interests (their structure, character)

• Game: the society

Rules: Institutions

Players: organizations and institutions

Examples:

Informal & Formal Institutions

• Formal: Government setup, NGOs, User

organizations, Donor agencies, Legislation,

Professional/technical “licensed” knowledge

• Informal: Good habits and manners, Traditions,

Culture/Kinship, Religions, Indigenous

knowledge, Attitudes/Values (voluntary,

goodwill, responsibility, commitment, trust)

Low-income societies can only hope to

develop economically if they give up

their traditional ways and adopt modern

economic institutions and cultural

values emphasizing savings and

productive investment.

Major figures: W.W. Rostow, Marion Levy

Modernization Theory

• third world response to modernization theory

• poor countries exist in a relationship of unequal exchange with rich countries

– They are economically dependent on rich ones – and politically subordinated as well

– their poverty is thus a result of exploitation, not their own cultural or institutional failings

• the only solution: revolution

Dependency Theory

(Andre Gunder Frank)

Western Powers in Asia, Early 20th Century

Africa, Early 20th Century

World Systems Theory

(Wallerstein)

• Wallerstein believed that the periphery was

being exploited by richer countries (core

countries)

• Between core and periphery there are semi-

peripheral countries that import raw

materials from the periphery and hi-tech

goods from the core and export semi-

manufactured goods to the core and

industrial products to the periphery.

Other left-wing development theories sought

to take account of the rapid growth of some

poorer countries. Notable in this respect was

Immanuel Wallerstein’s World Systems

Theory.

core

semi-periphery

periphery

• finished goods

• minerals, ag

products, labor

World Systems Theory

Core – Periphery: 1800



Effect of Culture on Development

• Openness to new ideas

- Japan borrowing ideas from Europe and America since 1800s.

- Islamic world: 200 million people speak Arabic, but only 330

books are translated annually into Arabic (5 times more books

are translated into Greek, which is spoken by 12 million people).

- Chinese technological superiority disappeared since 1300s as

the rulers of the Ming-dynasty preferred stable and controlled environment – innovators and those adopting new thoughts were dangerous (Joel Mokyr, 1990). Compare Roman Catholic Church before Protestant Reformation or Soviet Union.


• Hard work

-Classic Greek culture: work is for slaves

-Protestant reformation: People were created to work. Material success sign of God’s favor (Calvin).

-In a US survey from year 1985, 46% said that work is more important than leisure, 33% chose leisure. Protestants chose work 10% more frequently than Catholics.

-Max Weber (a sociologist) argued that hard work explained the early development of protestant regions in Europe.

• Saving for the future

-No correlation between savings rate of the immigrant’s source country and the amount the immigrant saved after immigrating.


• Trust

Economic activity requires trust. Trust increases efficiency and allows specialization.

-John Stuart Mill (1848): 'There are countries in Europe..where the most serious impediment to conducting business concerns on a large scale, is the rarity of persons who are supposed fit to be trusted with the receipt and expenditure of large sums of money.‘

-Kenneth Arrow (1972): 'Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence'.

-Knack and Keefer (QJE, 1997) asked in their survey: 'Generally speaking, would you say that most people can be trusted, or that you can't be too careful in dealing with people?'. 62% of Norwegians said that people can be trusted, only 7% of the people in Brazil thought so.

Relationship Between Trust and

Investment

Source: Knack & Keefer (1997), Heston et. al (2002)

What Determines Culture

• Religion

• Climate, natural resources: is it vital for survival to save?

• Cultural homogeneity and social capital

-Ethnic fractionalization correlates with bad governments (colonial past).

- Rich countries are somewhat more fractionalized religiously (more tolerant of minority rights?)

• Population density: higher density allows for division of labor as markets are larger; more experience with government.

Ethnic Fractionalization vs GDP

Per Capita

Source: Alesina et. al (2003)

Population Density vs Economic

Growth

Source: Burkettt, Humblet, Putterman (1999)

Cultural Change

• David Weil (2005, s. 428): Cultural attribute that leads to economic growth is not necessary good in any moral sense or desirable. “the idea that cultural attributes necessary for economic growth are actually bad was championed by none other than the great economist John Maynard Keynes (1930). In his view, many of the cultural attributes that promoted economic growth - the love of money, the glorification of hard work, and the focus on how to improve things in the future rather than living in the moment - were downright distasteful. Keynes cautioned that once the economy has grown rich enough that human wants have been satisfied, the necessity of admiring such values will be removed”

The Role of Culture: The Korean

Experiment

• Korea: economically, culturally and ethnically homogeneous at the end of WWII.

• If anything, the North more industrialized.

• Exogenous" separation of North and South, with radically

different political and economic institutions.

-ie separation not related to economic, cultural or geographic conditions in North and South

• Big differences in economic and political institutions

-Communism (planned economy) in the North

-Capitalism, albeit with government intervention and early on without democracy, in the South

-Huge differences in economic outcomes.

North & South Korea

Political Freedom and Economic

Rights

Quintessential Question:

What should come first – removing poverty and

misery, or guaranteeing political liberty and civil

rights, for which poor people have little use anyway?

1993 Vienna Conference on Human Rights

‘Why bother about the finesse of political freedoms

given the overpowering grossness of intense economic

needs?’

Arguments against Political Freedom

and Civil Rights

• First: Freedom and rights hamper economic growth and development.

• Second: Given a choice between having political freedom and fulfilling economic needs, poor people will choose the latter.

• Third: Western Priority v. Asian Values. Western priority emphasize political freedom, liberty and democracy, as against Asia values which is more keen on order and discipline.

Arguments Against Political Freedoms

and Civil Rights

• Universal recognition of human rights can be harmful if universalism is used to deny or mask the reality of ‘diversity’ - Foreign Minister of Singapore, 1993 Vienna Conference on Human Rights

• Individuals must put the state’s rights before their own - Chinese Foreign Minister, 1993 Vienna Conference on Human Rights.

Preeminence of Political Freedom and

Democracy

• The basic dichotomy that appears to undermine the relevance of political freedom because addressing economic needs is more urgent is wrong.

• The real issues that have to be addressed lie

ELSEWHERE, and involves taking note of extensive

interconnections between political freedom and the

understanding and fulfillment of economic needs.

• The intensity of economic needs adds to – rather than

subtracts from – the urgency of political freedom.

Considerations towards the direction of a

general preeminence of basic political and

liberal rights

1. Their direct importance in human living associated

with basic capabilities (including that of political

and social participation).

• Poor people in general do care about civil and political

rights (e.g. struggle for democratic freedom in South

Korea, Thailand, Bangladesh, Pakistan, Burma, etc.)

2. Their instrumental roles in enhancing the hearing

that people get in expressing and supporting their

claims to political attention (including the claims

of economic needs).

• Political leaders stand to gain when they listen to

what their constituents needs.

• No substantial famine has occurred in any

independent country with democratic form of

government and a relatively free press.



liberal rights

3. Their constructive role in the conceptualization of

‘needs’ (including the understanding of ‘economic

needs’ in a social context).

• The exercise of political rights makes it more likely

not only that there would be a policy response to

economic needs, but also that the conceptualization of

‘economic needs’ itself may require the exercise of

such rights.



liberal rights

Freedom in the World (as of 2008)

Country Population Political

Rights

Civil

Liberties Status

Global

Standing

(2007

GNI)

CHINA 1,318,000,000 7 6

Not

Free 33

NIGERIA 144,400,000 4 4

Partly

Free 161

PHILIPPINES 88,700,000 4 3

Partly

Free 142

SINGAPORE 4,600,000 5 4

Partly

Free 31

THAILAND 65,700,000 6 4

Partly

Free 113

“Under dictatorial rule, people need not think – need not

choose – need not make up their minds or give their

consent. All they need to do is follow……By contrast, a

democracy cannot survive without civic virtue….The

political challenge for people around the world today is

not just to replace authoritarian regimes by democratic

ones. Beyond this, it is to make democracy work for

ordinary people.”

Former President Fidel V. Ramos

1998 Nov. Speech at the Australian National University

Why China Works: Inside the Command

Capitalism that will outrun all Rivals (Newsweek, January 19, 2009)

• The main reason China is not slowing as fast as the other big economies is its capacity for what economists ridicule, in normal times, as state meddling.

• China's successful use of command capitalism also carries, at most, limited lessons for the United States or Europe. It's much easier to boost growth by ordering engineers working in an autocratic system to build roads where there are none, as in parts in China, than to stimulate growth in a developed nation like the U.S.

• It doesn't matter if a cat is white or black, as long as it catches the mouse.

• Autocratic capitalism would provide economic growth, while the Communist Party would retain absolute political power.

References

Ehrlich, I (1990) The Problem of Development Introduction, The Journal of Political Economy 98

(5): 1-11

Sachs, J (2005): The End of Poverty. Economic Possibilities of our time

Mankiw, G; Romer, D and Weil, D (2005). "A Contribution to the Empirics of Economic Growth".

Quarterly Journal of Economics 107: 407–437

World Values Survey http://www.worldvaluessurvey.org/

Burkett, J., Humblet,C; Putterman, L (1999) “Pre-Industrial and Post-War Economic

Development: Is There a Link?” Economic Development and Cultural Change, 47 (3): 471-95.

Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance,"

Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic

Research.

References

Keefer, P; Knack, S (1997). "Why Don't Poor Countries Catch Up? A Cross-National Test of

Institutional Explanation," Economic Inquiry, Oxford University Press, 35(3):590-602.

Knack, S; Keefer, P, (1997). "Does Social Capital Have an Economic Payoff? A Cross-Country

Investigation," The Quarterly Journal of Economics, MIT Press, 112(4): 1251-88.

United Nations (2005) In larger freedom: towards development, security and human rights for all.

Report of the Secretary-General

Sen, A. (1999) Development As Freedom, 146 – 159

Foroohar, R. (2009), Why China Works, Newsweek, January 19, 2009, 23 – 25

Freedom House, http://www.freedomhouse.org/template.cfm?page=249

The World Bank, http: // web.worldbank.org/ WBSITE/EXTERNAL/DATASTATISTICS/0 ,

contentMDK:20399244~menuPK:1504474~pagePK:64133150~piPK:64133175~theSitePK:23941

9,00.html#ranking

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