Development Context


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HDI, MDG, Culture, Development Growth Stages,

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Development Context

  1. 1. The Context of Development Administration: Political, Economic & Socio- Cultural Dr. Edwin B.R. Gbargaye Instructor Department of Public Administration University of Liberia
  2. 2. Outline • Background • Framework • Enabling Factors for Development – Culture – Economic – Political • Conclusion
  3. 3. 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
  4. 4. 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.
  5. 5. 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.
  6. 6. 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
  7. 7. 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.
  8. 8. 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.
  9. 9. 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
  10. 10. Is There Progress Towards the Millennium Development Goals? • 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
  11. 11. Is There Progress Towards the Millennium Development Goals? • “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
  12. 12. Causality of Development • Geography • Culture • Property rights • Lack of freedom
  13. 13. 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
  14. 14. 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…)
  15. 15. 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
  16. 16. 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
  17. 17. 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 unspecified ODA Receipts US$ 2006, millions
  18. 18. Reaching the 2010 Target for Africa will require exceptional efforts Source: OECD Development Assistance Committee (DAC) and World Bank Staff estimates.
  19. 19. A Review of Development Theories –Adam Smith: The Classical Economy –Malthus –Keynes –Rostow –Structuralist & world-systems theory –Institutionalism –Neo-classical economy –Human development
  20. 20. 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.
  21. 21. Malthusianism Population growth is geometric, where as the growth in food production is arithmetic
  22. 22. Keynesianism The government has a strong role in controlling credit and currency, and it also stabilizes business cycles with public savings and investments
  23. 23. Rostow’s Stages of Growth
  24. 24. 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
  25. 25. 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
  26. 26. 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)
  27. 27. 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
  28. 28. • 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)
  29. 29. Western Powers in Asia, Early 20th Century
  30. 30. Africa, Early 20th Century
  31. 31. 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.
  32. 32. 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.
  33. 33. core semi-periphery periphery • finished goods • minerals, ag products, labor World Systems Theory
  34. 34. Core – Periphery: 1800
  35. 35. Core – Periphery: 1900
  36. 36. Core – Periphery: 2000
  37. 37. 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.
  38. 38. Effect of Culture on Development • 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.
  39. 39. Effect of Culture on Development • 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.
  40. 40. Relationship Between Trust and Investment Source: Knack & Keefer (1997), Heston et. al (2002)
  41. 41. 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.
  42. 42. Ethnic Fractionalization vs GDP Per Capita Source: Alesina et. al (2003)
  43. 43. Population Density vs Economic Growth Source: Burkettt, Humblet, Putterman (1999)
  44. 44. 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”
  45. 45. 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.
  46. 46. North & South Korea
  47. 47. 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?’
  48. 48. 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.
  49. 49. 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.
  50. 50. 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.
  51. 51. 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.)
  52. 52. 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. Considerations towards the direction of a general preeminence of basic political and liberal rights
  53. 53. 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. Considerations towards the direction of a general preeminence of basic political and liberal rights
  54. 54. 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
  55. 55. “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
  56. 56. 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.
  57. 57. 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 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.
  58. 58. 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, The World Bank, http: // WBSITE/EXTERNAL/DATASTATISTICS/0 , contentMDK:20399244~menuPK:1504474~pagePK:64133150~piPK:64133175~theSitePK:23941 9,00.html#ranking