Research the health-illness continuum and its relevance to patient.docx

Research the health-illness continuum and its relevance to
patient care. In a 750-1,000 word paper, discuss the relevance
of the continuum to patient care and present a perspective of
your current state of health in relation to the wellness spectrum.
Include the following:
1. Examine the health-illness continuum and discuss why this
perspective is important to consider in relation to health and the
human experience when caring for patients.
2. Explain how understanding the health-illness continuum
enables you, as a health care provider, to better promote the
value and dignity of individuals or groups and to serve others in
ways that promote human flourishing.
3. Reflect on your overall state of health. Discuss what
behaviors support or detract from your health and well-being.
Explain where you currently fall on the health-illness
continuum.
4. Discuss the options and resources available to you to help
you move toward wellness on the health-illness spectrum.
Describe how these would assist in moving you toward wellness
(managing a chronic disease, recovering from an illness, self-
actualization, etc.).
Prepare this assignment according to the guidelines found in the
APA Style Guide, located in the Student Success Center. An
abstract is not required.
This assignment uses a rubric. Please review the rubric prior to
beginning the assignment to become familiar with the
expectations for successful completion.
RUBRICS: A discussion on the importance of the health-illness
continuum in relation to health and the human experience in
patient care is presented. The discussion demonstrates that the
health-illness continuum is important to patient care. Strong
rationale is offered for support.
A thorough explanation of the relationship between the health-
illness continuum and the ability of a health care provider to

promote the value, dignity, and flourishing of patients is
logically and convincingly presented. The explanation draws
clear connections between the role of the health care provider
and the promotion of human flourishing. Strong rationale is
offered for support
A well-developed discussion of personal state of health is
included. The discussion demonstrates strong personal insight
into behaviors supporting or detracting from health and well-
being. The author clearly establishes where Options and
resources available that would be extremely helpful to help the
author move toward wellness on the health-illness continuum
are presented. The author clearly establishes how these will
assist in moving toward wellness. Insight into wellness as it
pertains to the health illness continuum is demonstrated
personal health falls on the health-illness continuum.
Thesis is comprehensive and contains the essence of the paper.
Thesis statement makes the purpose of the paper clear.
Clear and convincing argument that presents a persuasive claim
in a distinctive and compelling manner. All sources are
authoritative.
Writer is clearly in command of standard, written, academic
English.
All format elements are correct. Sources are completely and
correctly documented, as appropriate to assignment and style,
and format is free of error.
The Rise and Fall of the Washington Consensus as a
Paradigm for Developing Countries
CHARLES GORE *
United Nations Conference on Trade and Development, Geneva,
Switzerland

Summary. Ð The introduction of the Washington Consensus
involved not simply a swing from
state-led to market-oriented policies, but also a shift in the ways
in which development problems
were framed and in the types of explanation through which
policies were justi®ed. Key changes
were the partial globalization of development policy analysis,
and a shift from historicism to
ahistorical performance assessment. The main challenge to this
approach is a latent Southern
Consensus, which is apparent in the convergence between East
Asian developmentalism and Latin
American neostructuralism. The demise of the Washington
Consensus is inevitable because its
methodology and ideology are in contradiction. Ó 2000 Elsevier
Science Ltd. All rights reserved.
Key words Ð development theory, development policies, World
Bank/IMF policies
1. INTRODUCTION
Developing countries is an international
practice. The essence of this practice is the
mobilization and allocation of resources, and
the design of institutions, to transform national
economies and societies, in an orderly way,
from a state and status of being less developed
to one of being more developed. The agencies
engaged in this practice include national
governments of less-developed countries, which
have adopted ``development'' as a purpose to
which State power is put, and governments of
richer countries, which disburse o�cial devel-
opment aid to support and in¯uence this

process; a variety of non-governmental orga-
nizations concerned to animate and channel
popular concerns; and international intergov-
ernmental organizations, such as the organs of
the United Nations and the World Bank, many
of which have been expressly set up to resolve
various development problems. Often it is the
last group who have acted as the avant-garde of
development practice. It is because of their
activities, as well as the widespread tendency of
governments to copy successful practice else-
where, that it is appropriate to describe devel-
oping countries as an international practice.
But it is by no means global in scope. Indeed
the practice of developing countries is only
done in a particular set of countriesÐthose
which in the 1950s and 1960s were generally
called ``underdeveloped'' or ``less developed''
countries, but which now generally identify
themselves, and are identi®ed by others, as
``developing countries.''
This paper discusses trends in the body of
knowledge which guides and justi®es the prac-
tice of development. It examines, in particular,
the ideas propagated by international develop-
ment agencies, and focuses on the shift in
thinking which occurred in the 1980s with the
introduction and widespread adoption of an
approach to the practice of developing coun-
tries known as the ``Washington Consensus.''
In broad terms, this approach recommends that
governments should reform their policies and,
in particular: (a) pursue macroeconomic
stability by controlling in¯ation and reducing

®scal de®cits; (b) open their economies to the
rest of the world through trade and capital
account liberalization; and (c) liberalize
World Development Vol. 28, No. 5, pp. 789±804, 2000
Ó 2000 Elsevier Science Ltd. All rights reserved
Printed in Great Britain
0305-750X/00/$ - see front matter
PII: S0305-750X(99)00160-6
www.elsevier.com/locate/worlddev
* This paper is an extended version of comments made
at the Berlin-Brandenburgische Akademie der Wissens-
chaften Conference on ``Paradigms of Social Change''
held in Berlin on September 3±5, 1998. I would like to
thank John Toye, Gabrielle K�ohler, Richard Kozul-
Wright and two anonymous referees for critical com-
ments on an earlier draft. The arguments and interpre-
tations are those of the author. The views expressed do
not necessarily re¯ect those of UNCTAD. Final revision
accepted: 17 October 1999.
789

domestic product and factor markets through
privatization and deregulation. Propagated
through the stabilization and structural
adjustment policies of the International
Monetary Fund (IMF) and World Bank, this
has been the dominant approach to develop-
ment from the early 1980s to the present. The
paper examines the introduction of the Wash-
ington Consensus as a paradigm shift, and
assesses the con®guration of development
thinking in the 1990s and pressures for a
further paradigm shift, particularly in the light
of the East Asian ®nancial crisis and recent
attempts to construct a ``post-Washington
Consensus.''
The paradigmatic nature of the Washington
Consensus is most clearly evident in the work
of John Williamson (1990,1993,1997), who
coined the name and also set out a speci®c
formulation of the approach at the end of the
1980s. This formulation was founded on an
attempt to summarize, with particular reference
to policy reform in Latin America, ``the
conventional wisdom of the day among the
economically in¯uential bits of Washington,
meaning US government and the international
®nancial institutions'' (Williamson, 1993, p.
1329). Williamson never explicitly identi®es the
Washington Consensus as a paradigm. But the
way he describes the approach conforms in
many respects with Thomas KuhnÕs notion of
one.
1
Thus, he argued that the Washington

Consensus is a ``universal convergence,'' and
that it constitutes ``the common core of wisdom
embraced by all serious economists'' (William-
son, 1993, p. 1334). He codi®ed the approach as
a set of 10 axiomatic generalizations which,
given certain values, are generally shared by
scholars and practitioners concerned with
economic growth in developing countries; and
he listed remaining analytical problems on
which normal economic science needs to focus.
Finally, he dismissed those who challenged the
consensus view as ``cranks'' (p. 1330). As he put
it,
[T]he superior economic performance of countries
that establish and maintain outward-oriented market
economies subject to macro-economic discipline is
essentially a positive question. The proof may not be
quite as conclusive as the proof that the Earth is not
¯at, but it is su�ciently well established as to give
sensible people better things to do with their time than
to challenge its veracity (p. 1330).
The structure of the revolution in thinking
which occurred with the introduction of
Washington Consensus policies is usually seen
as a shift from state-led dirigisme to market-
oriented policies. Such a switch undoubtedly
occurred. But it is not a su�cient description of
the nature of the change as a paradigm shift. As
Kuhn shows, when paradigms change, there are
usually signi®cant changes in the ``methods,
problem-®eld, and standards of solution''
which are accepted by a community of practi-

tioners (Kuhn, 1970, p. 103). As a consequence,
``the proponents of competing paradigms
practice their trades in di�erent worlds...[they]
see di�erent things when they look from the
same point in the same direction'' (p. 150). In
examining the introduction of the Washington
Consensus as a paradigm shift, what matters is
not simply the substantive di�erences with
earlier approaches, but also the nature of the
change in the disciplinary matrix and world-
view.
Here it will be argued that together with the
swing to market-oriented policies, there was a
deeper shift in the way development problems
were framed and in the types of explanation
through which development policies were
justi®ed. This involved changes in the spatial
and temporal frame of reference of develop-
ment policy analysis. In brief, these changes
were: the partial globalization of development
policy analysis; and a shift from historicism to
ahistorical performance assessment.
2. THE PARTIAL GLOBALIZATION OF
DEVELOPMENT POLICY ANALYSIS
Specifying development policy problems
involves both explanations of development
trends and normative judgements about how
the world should be. For each of these activi-
ties, an important decision which must be made
is deciding the policy frame, i.e. what elements
should be included when viewing a problem
and what elements excluded.

2
The framing of
policy issues has various aspects but one which
critically a�ects the practice of developing
countries is whether policy problems are seen
within a global or national frame of reference.
Explanations and normative judgements can
each be elaborated within a national or global
frame of reference, and so the thinking which
underpins the practice of developing countries
can be wholly national, wholly global, or some
combination of both (Figure 1). The full
globalization of development policy analysis
will be understood here to mean a shift from a
WORLD DEVELOPMENT790
national to a global frame of reference both for
explanations and normative evaluations.
Before the propagation of the Washington
Consensus in the 1980s, mainstream explana-
tions of the development process and evaluative
judgements of the goals of development were
both conducted within a national frame of
reference. First, economic and social trends
within countries were explained, in the main-
stream, on the basis of conditions within the
countries themselves, i.e. as a result of national
factors. Particular external relations might be
necessary to start the process, or to close ``gaps''
which threatened its breakdown. But the key
ingredients of a successful development process

were usually identi®ed through analyses of
sequences of change within already industrial-
ized countries, which were then applied in less
developed countries without any reference to
their di�erent external situation. Second,
development policies were geared toward the
achievement of national objectives. This orien-
tation was often simply taken for granted in
development policy analysis. But it was also
in¯uenced, more or less strongly, by political
and economic nationalism. According to John-
son (1967), key features of economic policy in
new StatesÐnamely, the desire for greater self-
su�ciency and early industrialization, the pref-
erence for economic planning and public
control, and hostility to foreign investmentÐ
can all be traced to the mutual supporting rela-
tions between nationalism, aid policy, and ideas
about the development problem formed in the
1930s. Those ideas became part of a common
understanding and language of national and
international policymakers after WWII.
There were, of course, major controversies
both over the meaning of development and the
means of achieving it. In the 1950s and 1960s
there were debates about development strategy
(for example, balanced or unbalanced growth),
the nature of dualistic development processes,
and the role of human capital. Moreover, in the
1970s the earlier focus on economic growth
with structural change was strongly challenged
by those who pointed to the need to focus on
social objectives, notably income distribution,
poverty, employment and basic needs satisfac-
tion.

3
But these disputes actually served to
reinforce the normative and explanatory frames
of development policy analysis as being
national. Whatever objectives were taken to be
central, national objectives were the focal
concern. Moreover the development strategy
debates essentially examined the articulation
and sequencing of internal (national) ingredi-
ents which could facilitate or accelerate the
national development process.
An important countercurrent to mainstream
development policy analysis before the 1980s
came from structuralist and dependency theo-
ries elaborated in Latin America (see Kay,
1989). Like the dominant approach the
normative concern of these theories was
national, and indeed strongly informed by
nationalist concerns. But their analytical
perspective was global in scope and this
underpinned their critiques of mainstream
thinking. Both structuralist and dependency
theorists emphasized the importance of center-
periphery relations as determining or condi-
tioning the national development process. But
some strands within dependency theory,
Figure 1. Four main combinations of explanatory and normative
framework in development policy analysis.
RISE AND FALL OF THE WASHINGTON CONSENSUS 791

instead of indicating how national development
was a�ected by the articulation between inter-
nal and external factors, simply put forward an
antithesis to the mainstream approach, arguing
that external factors were the only ones that
mattered, and then deduced that by delinking
from the world economy, an ``authentic''
development process, solely founded on inter-
nal factors, could be made to occur.
In the late 1970s and early 1980s, the growth
rate of most developing countries, with the
notable exception of some countries in East
Asia, collapsed. The economic crises which
beset most developing countries lent weight to
arguments that mainstream development prac-
tice had failed. But at the same time the East
Asian success neutralized those versions of
dependency theory which argued that devel-
opment would always be blocked on the
periphery, and also Latin American structu-
ralism, which allegedly was wedded to inward-
oriented import-substitution policies in
contrast to East AsiaÕs alleged outward-orien-
tation. In this situation, arguments which
emphasized the positive role of free markets in
development attracted greater attention. These
ideas had always been an element within
development policy analysis, represented, for
example, by early critiques of protectionism,
such as G. Haberler and H. Myint, Milton
FriedmanÕs support of free enterprise, and P.T.
BauerÕs dissection of mainstream thinking
(Bauer, 1971). The uptake of these ideas was
not strong however until the late 1970s and

early 1980s, when a new approach to develop-
ing countries, which was later labeled the
Washington Consensus, emerged as the main
alternative to national developmentalism.
4
The frame of reference for this new approach
was, like the Latin American countercurrents
of the pre-1980s, partially global and partially
national. But rather than combining normative
economic nationalism with a methodological
internationalism, the Washington Consensus
was its mirror image. It combined normative
economic internationalism with a methodolog-
ically nationalist form of explanation which
attributed what was happening within countries
mainly to national factors and policies
(Figure 2).
In this new approach, the key norms which
played the decisive role in de®ning development
practice were the norms of a liberal interna-
tional economic order (LIEO). In most general
terms, these norms involve a commitment to
free markets, private property and individual
incentives, and a circumscribed role for
government. But they can be speci®ed in
di�erent ways, according to di�erent interpre-
tations of the precise content of the LIEO. For
example, in the early 1980s, laissez-faire liber-
alism was strongly advocated. This entailed
liberalization of both external and domestic
economic relations. But at the start of the
1990s, this extreme market fundamentalism

was softened with the emergence of the so-
called market-friendly approach to develop-
ment (see, notably, World Bank, 1991). This
Figure 2. The con®guration of development policy analysis:
1950±1990.
continued strongly to advocate liberalization of
external trade and capital movements. But, the
scope of domestic economic liberalization was
limited, in particular, by recognizing more fully
the legitimacy of state intervention in cases of
market failure.
These norms were propagated through two
types of persuasive argument: ®rst, arguments
about the intrinsic ethical superiority of
economic liberalism; and second, theoretical
and empirical analyses which demonstrate that
conformity to the norms of a LIEO (variously
de®ned) would lead to better outcomes, not
simply for the world community as a whole, but
also for individual nation-states within it. The
latter, which have served as the principal form
of argument supporting the new approach,
have mainly been articulated on a terrain in
which promoting the national interest has been
narrowly equated with promoting economic
growth and increasing personal economic
welfare. Important developmentalist concerns
such as constructing national unity and realiz-
ing national sovereignty are thus excluded. On

this narrowed ground, attention and publicity
has been given to analyses which show that
national policies which are in con¯ict with the
norms of LIEO, including many elements at the
heart of earlier development practice, such as
protection of infant industries, managed inter-
est rates and selective credit, have been harmful
to national interests, and thus constituted
domestic mismanagement and ``irrationalities.''
At the same time, the policies of the East Asian
newly industrializing economies which had
actually achieved rapid and sustained growth
have been described in ways which suggest that
they conformed to the requisite liberal norms.
5
For both con¯icting and conforming policies,
their impact on the e�ciency of resource allo-
cation has been identi®ed as the main mecha-
nism by which domestic policies a�ect
economic growth.
While the normative frame of reference of the
new approach was global in scope, the
explanatory arguments which sought to prove
the instrumental superiority of the LIEO were
characterized by methodological nationalism.
That is to say, in explaining economic trends
within countries, they partitioned in¯uences
into external and internal factors and attributed
most of what was happening to internal
(national) factors and, in particular, to
domestic policy.
6

In making the case for trade
liberalization and export promotion, for
example, conditions of global demand are
generally ignored and, through the ``small
country'' assumption, it is typically assumed
that foreign markets are always available, and
at prices largely independent of a countryÕs
exports. Empirically, the most common
approach to prove the dynamic bene®ts of
outward-orientation has been crosscountry
regression analyses which establish the statisti-
cal relationships between indicators of national
economic change and a series of national vari-
ables, which include, in particular, indicators of
national policy. The essence of this methodol-
ogy is areal correlation between dependent and
independent variables, to identify the extent to
which variation in the former between a given
set of national territories matches variation in
the latter between the same territories. This can
be done at a certain point in time or for periods
of time (e.g. by using growth rates over 20
years). In either case, speci®c histories are
®ltered out and it is assumed that relationships
which pertained in the past will continue into
the future. Economic trends are necessarily
attributed to the behavior of the national
factors.
In the 1990s, changes in the nature of the
external environment are increasingly being
used to explain why liberalization, coupled with
the right macroeconomic fundamentals,
``works.'' Thus it is argued that in an increas-

ingly globalized world economy, in which there
is the globalization of production systems,
increasing reliance on trade and increased
availability of external ®nancial ¯ows, coun-
tries which do not follow Washington
Consensus policies will be especially penalized,
as they will be cut o� and thus excluded from
the intensifying (and implicitly bene®cial)
global ®eld of ¯ows. Concomitantly, those
countries which do follow the right policies will
be rewarded, as they can capture foreign direct
investment which brings technology and
market access, and they can also supplement
national savings with international capital
¯ows, thus reaping the bene®ts of the new
external environment. In this way, the case for
liberalization is rooted in the rhetoric of the
globalization. But the analysis remains meth-
odologically nationalist as it retains the
distinction between external and internal
(national) factors, and still attributes country
trends largely to domestic policy (see, for
example, IMF, 1997; World Bank, 1997).
Globalization is something which is happening
to the external economic environment of
countries; it is outside them.
3. THE SHIFT FROM HISTORICISM TO
AHISTORICAL PERFORMANCE
ASSESSMENT

The curious combination of global liberal-
ism
7
and methodological nationalism which
underpins the way in which development is seen
in the new paradigm has been buttressed by a
second key shift which occurred in develop-
ment policy analysis at the end of the 1970s.
This can be characterized as a shift from
historicism to ahistorical performance assess-
ment.
Theorizing on development strategy from the
1950s to the 1970s was historicist in the general
sense that it was founded on an attempt to
understand rhythms, patterns and laws of
development.
8
This understanding was based
on historical analysis of long-term sequences of
economic and social change, which had occur-
red in the past in already-industrialized coun-
tries and which were expected to re-occur,
particularly if the right policy interventions
were made, in ``less developed'' countries. Such
theorizing most typically understood develop-
ment as a societal and economy-wide transition
from a ``traditional'' (rural, backward, agri-
cultural) society to a ``modern'' (urban,
advanced, industrial) society. This process was
seen as a sequence of stages of growth, a
process of modernization, or recurrent patterns

of structural transformation.
9
All countries
were expected to go through such patterns of
development, and development agencies sought
to ensure or accelerate the arrival of a better
future for whole societies through interventions
in these long-term processes of historical
transformation.
With the shift to ahistorical performance
assessment, the focal object of enquiry has been
to describe and explain national ``performanc-
es'' of various types. Not surprisingly but now
taken-for-granted, the key word in the
discourse propagated by international devel-
opment agencies since the start of the 1980s has
been ``performance.'' Attention has been
particularly paid to economic performance, but
also agricultural performance, industrial
performance, trade performance, ®nancial
performance, ®scal performance, poverty
performance, human development performance
and so on. Using these various standards,
countries have been partitioned into good and
bad performers, and ranked according to their
performance in various new leagues of nations.
Moreover comparative performances have been
explained by reference to national factors and
national policy.
It is according to these performance stan-
dards that past development policies have been

criticized because they do not ``work'' and
narratives have been constructed about the
e�ectiveness of the Washington Consensus. A
succession of countries which have undertaken
policy reform in the requisite way and achieved
good short-term growth results have also been
identi®ed as, and dubbed, ``success stories.''
These stories have acted as exemplars for the
new paradigm, providing not only practical
rules-of-thumb guidance on how policy reform
should be undertaken, but also proof of the
validity of the Washington Consensus.
The transition from historicism to ahistorical
performance assessment started in the 1970s,
and was initially animated by those who sought
to re®ne the de®nition of development by
adding social aspects. E�orts to measure
poverty based on the quality of life and satis-
faction of basic needs were particularly
important in this regard. Michael LiptonÕs
book Why Poor People Stay Poor was a key
text in propagating a performance-oriented
approach. The uptake of the notion of urban
bias, a concept which was forged within debates
about how to achieve redistribution with
growth but which became central to the
neoliberal paradigm, can be attributed to its
performance-based de®nition, and the vitriolic
debates of the late 1970s, particularly with
Byres, can be interpreted as an attempt to
sustain a historicist view (see, for example,
Byres, 1979). In the 1980s, these initial moves
toward performance assessment were over-
taken by, and later incorporated in, the
discourse and practice of structural adjustment.

Adjustment involved improving the perfor-
mance of national economies by increasing the
e�ciency of resource allocation. The central
criterion used to measure performance was
current or recent GDP growth rate, and
macroeconomic stability, indicated by ®scal
and external payments balance and low in¯a-
tion. The dynamics of long-term transforma-
tions of economies and societies slipped from
view and attention was placed on short-term
growth and re-establishing ®nancial balances.
The shift to ahistorical performance assess-
ment can be interpreted as a form of the post-
modernization of development policy analysis.
It re¯ects, in particular, the questioning of
grand narratives of historical transformation
which was central to the appeal of the post-
modern ethos in the 1980s.
10
Before the shift,
development agencies acted as handmaidens of
``progress,'' ``modernization,'' ``industrialisa-
tion,'' or the emancipation of people from
oppression, exploitation, disease and drudgery.
After it most agencies re-oriented their work to
monitor and seek to improve ``performance,''
often through local problem-solving and local
social engineering designed to make economic
and social institutions ``work'' better. Adjust-

ment also entailed the abandonment of grand
long-term government-directed designs for
whole societies and a shift to decentralized
decision-making, laissez-faire and local social
engineering. But ironically, this shift away from
holism could not be achieved without a holistic
approach. Everything has been made subject to
the rules and discipline of the market. The
vision of the liberation of people and peoples,
which animated development practice in the
1950s and 1960s, has thus been replaced by the
vision of the liberalization of economies. The
goal of structural transformation has been
replaced with the goal of spatial integration.
4. THE CONFIGURATION OF
DEVELOPMENT POLICY ANALYSIS IN
THE 1990S
The collapse of communism in Eastern
Europe and the Soviet Union has served as
con®rmation of arguments which predicted the
impossibility of central planning and reinforced
the apparent superiority of a market-oriented
development approach. Since the late 1980s
however there have developed two important
challenges to the Washington Consensus. The
®rst is the UNDP's sustainable human devel-
opment (SHD) approach. This approach takes
up some of the themes of the UNICEF critique
of the dominant approach, Adjustment with a
Human Face, originally published in 1987, and
has been elaborated through the annual Human
Development Report, which ®rst appeared in
1990 (UNDP, Various years). The second is a

latent ``Southern Consensus,'' which is founded
on analyses made from the perspective of
countries undertaking late industrialization and
seeking to catch up with richer countries in the
global economy. This Southern Consensus does
not exist as a political reality. Nor has it, as yet,
been articulated analytically. Its existence is
apparent however in the convergence between
the policy conclusions of Latin American
neostructuralism, initially set out by ECLAC in
1990, and the deeper understanding of East
Asian development models, which is described
in ESCAP (1990), but has been most thor-
oughly reconstructed by UNCTAD in its
annual Trade and Development Report (partic-
ularly 1994, part 2, chapter 1; 1996, part two;
1997, part 2, chapters V and VI; and 1998, part
1, chapter 3).
11
These two challenges to the Washington
Consensus have shaped development thinking
and practice in di�erent ways. Indeed devel-
opment policy analysis is now characterized by
a double dialectic. The clash between the
Washington Consensus and the sustainable
human development approach acts to rein-
force and conserve the key elements of the
current paradigm, and in particular its ahis-
torical approach and its combination of
normative internationalism with methodologi-
cal nationalism, whilst the clash between the
Washington Consensus and ideas within the
two strands of the Southern Consensus serves

to undermine these elements and creates
tensions and pressures for a further paradigm
shift.
The key feature of the sustainable human
development approach which distinguishes it
from the Washington Consensus, is that it
espouses a di�erent set of values. Whereas the
Washington Consensus focuses on the promo-
tion of GDP growth, and has been imple-
mented through a top-down, donor-
conditionality-driven and outside-expert-led,
approach, the sustainable human development
approach argues that the ultimate test of
development practice is that it should improve
the nature of peopleÕs lives, and advocates that
it should be founded on participation and a
more equal partnership between developing
countries and aid donors.
This ``people-centered'' approach, which
explicitly identi®es itself as an alternative
paradigm (see, for example, ul Haq, 1995, Part
I), has been quite in¯uential. An important
strand of development research in the early
1990s has sought to refute its challenge by
showing that Washington Consensus policies in
fact serve to reduce poverty, increase employ-
ment and can, in themselves, deliver growth
with equity, and that therefore social concerns
are already adequately addressed by the main-
stream approach. But the SHD alternative has
promoted the introduction of poverty reduc-
tion as a key goal of development practice and
increasing attention to possible LIEO-compat-
ible relaxation of Washington Consensus poli-

cies in order better to achieve poverty objec-
tives (see World Bank, 1990).
These changes have certainly made the
Washington Consensus more humane. But at
the same time, the SHD approach has had the
e�ect of conserving key features of the world-
view of the dominant paradigm. Although its
di�erent values have emphasized di�erent
indicators and weighting systems, particularly
to capture levels of human development and
poverty, these measures have reinforced a focus
on short-term performance assessment. The
substitution of multidimensional indicators of
poverty for simple income poverty, for exam-
ple, has added greater reality to the description
of deprivation and more leverage for moral
outrage, but at the cost of crippling e�ective
analysis of the dynamics of change. Signi®-
cantly also, the analytical basis of the SHD
approach, which is itself somewhat loose, is
methodologically nationalist. A central focus is
the mismatch between economic growth
performance and social performance and the
ways in which domestic policy can rectify this
mismatch to deliver more social achievements
for any given level of GDP per capita. Even the
apparent di�erence in values between the SHD
approach and the Washington Consensus is less
clear-cut than it appears. This applies whether
human development is speci®ed rigorously, as

in Amartya SenÕs capability approach which
underpins the human development index, or
through a vaguer focus on decentralization and
participation. SenÕs capability concept empha-
sizes freedom of choice which is quite conso-
nant with the liberal perspective.
12
Moreover
the project of making economic and social
institutions work better through decentraliza-
tion and the use of local knowledge, indigenous
management practices and the participation,
not of the masses, but of ``local people'' and
``small communities,'' can be, and has easily
been, fused into a kind of neoliberal popu-
lism.
13
Whereas the SHD approach has made a
moral critique of the Washington Consensus,
the two strands of the Southern Consensus,
Latin American neostructuralism and East
Asian developmentalism, remain focused on
economic growth as the central objective.
14
They o�er however a di�erent economic anal-
ysis of how growth occurs in late industrializing
countries and on this basis propose a di�erent
policy orientation to the dominant paradigm.
From the Southern perspective, national

economic growth involves a process of catch-
ing-up, in which national enterprises build up
production capabilities and international
competitiveness in a range of activities under-
taken in more advanced countries. The struc-
ture of the economy changes as the relative
importance of agriculture and natural resource
exploitation declines while that of manufac-
turing activities increases, and as production
progresses from less to more skill-, technology-,
and capital-intensive activities. At the macro-
level, growth, structural change and productive
upgrading is driven by a rapid pace of capital
accumulation, which depends on increased
domestic savings, investment, and exports,
linked together in a virtuous circle of cumula-
tive causation (ECLAC, 1990, pp. 48±49;
ESCAP, 1990, pp. 13±14, 115, 151; UNCTAD,
1996, pp. 108±112). At the microlevel, this
process is founded on imitation, adaptation
and learning of internationally available tech-
nologies in order to reduce costs, improve
quality, and introduce goods and services not
existing in the country, and the di�usion of best
practices from more advanced to less advanced
enterprises within the country, including from
foreign-owned to locally-owned ®rms (ESCAP,
1990, pp. 15±17 and pp. 92±95; ECLAC, 1990,
pp. 64±71).
An important feature of the Southern
Consensus is that it rejects the idea that growth
with late industrialization can be animated
using a general blueprint. Policy measures have
to be adapted to initial conditions and the

external environment, and change over time as
an economy matures (ECLAC, 1990, pp. 97±
102; UNCTAD, 1996, pp. 133±134; ESCAP,
1990, pp. 21±23, 140±141). It is possible
however, to identify some general policy
orientations which apply in all circum-
stances.
15
First, the process of growth and structural
change is best achieved through the ``strategic
integration'' of the national economy into the
international economy rather than either de-
linking from the rest of the world or rapid
across-the-board opening up of the economy to
imports and external capital. This means that
the timing, speed and sequencing of opening, in
relation to di�erent types of international ¯ows,
should be decided on the basis of how they
support the national interest in terms of
promoting economic growth and structural
change (Singh, 1994). Multilateral norms are
not disregarded (ECLAC, 1996, p. 86;
UNCTAD, 1996, pp. 156±157). As far as
possible, however, import liberalization should
be gradualÐto enable national enterprises to
build up production capabilities and thus face
external competitionÐand selective. Tari�s
should also be complemented by special
measures to promote exports (ECLAC, 1990,

pp. 103±107; ECLAC, 1995, chapter VI; and
for East Asian policies, UNCTAD, 1994, pp.
58±59). Capital account liberalization should
also be gradual and should be managed, in
coordination with domestic ®nancial develop-
ment, to ensure that capital ¯ows are, as much
as possible, additional to, rather than a
substitute for, domestic resources, that they
support increased investment rather than
consumption, and that they do not undermine
macroeconomic stability (ECLAC, 1995, pp.
285±291; UNCTAD, 1998, pp. 75±76, 101±
106). Inward FDI should support the build-up
of domestic production capabilities and
exports, and this is not automatic but requires
speci®c domestic policies (ESCAP, 1990, p.
132; ECLAC, 1990, p. 45; UNCTAD, 1996, pp.
131±133).
Secondly, growth and structural change is
best promoted through a combination of a
macroeconomic policy and what Latin Ameri-
can neostructuralists describe as a ``productive
development policy.'' The macroeconomic
policy is growth-oriented. It seeks to reduce
in¯ation and ®scal de®cits, but also aims to
ensure full utilization of production capacity
and encourage the pace of capital formation
(ECLAC, 1996, chapter V; ESCAP, 1990, pp.
17±19). The productive development policy
involves a range of measures, coordinated with
the trade policy, which are designed to improve
the supply capabilities of the economy as a
whole and also speci®c sectors within it, and to
help private enterprise identify and acquire
competitive advantages. These measures are

founded on a dynamic interpretation of the
principle of comparative advantage. In this
forward-looking approach, the opportunities of
current relative cost advantages are exploited to
the full, but e�orts are made at the same time to
promote investment and learning in economic
activities where comparative advantage can
realistically be expected to lie in the immediate
future as the economy develops and as other
late industrializing countries catch up (ESCAP,
1990, pp. 148±149; OECF, 1991; UNCTAD,
1996, pp. 112±123; ECLAC, 1995, pp. 132±135,
159).
Elements of a productive development policy
include: technology policy, ®nancial policy,
human resource development, physical infra-
structure development, and industrial organi-
zation and competition policy (UNCTAD,
1994, pp. 57±69, ECLAC, 1990, pp. 107±148,
ECLAC, 1995, pp. 161±190; ESCAP, 1990,
chapter V, pp. 149±150). These elements can
form part of, but they should not be simply
equated with, a selective industrial policy. They
are directed at improving productivity and
competitiveness in agriculture and natural-re-
source based activities as well as manufacturing
(ESCAP, 1990, pp. 22, 70±75; ECLAC, 1990,
pp. 126±137). They entail a mix of sectorally-
neutral as well as selective policies. Moreover
their main goal is to accelerate the rate of
capital accumulation and learning throughout
the economy.
Third, the successful implementation of these

development policies requires government-
business cooperation within the framework of a
pragmatic developmental State. The policies
are implemented, as far as possible, through
private initiative rather than public ownership,
and through the market mechanism rather than
administrative controls. But government plays
a key role both in animating the ``animal spir-
its'' of the private sector and harnessing the
aggressive pursuit of pro®ts, which are the
motor of the system, to the realization of the
national interest. This requires the enhance-
ment of state capacities rather than state
minimalism. Policy should be formulated by a
capable and pragmatic economic bureaucracy
which, through various formal and informal
ties with business, develops a common vision of
development objectives and targets, and a
common understanding of how these can best
be achieved (ECLAC, 1990, pp. 94±96; Evans,
1998). But government must ensure that any
support or protection for the private sector is
conditional on investment, export or produc-
tivity targets, and also temporary. Policies
should also focus on overcoming speci®c
problems which impede the achievement of
national development objectives, notably,
missing markets and the lack of an entrepre-
neurial base, imperfections in technology and
capital markets, risks of exporting, and
dynamic complementarities between sectors
which render competitiveness systemic rather
than just dependent on ®rm-level capabilities
(UNCTAD, 1994, pp. 50, 69; ECLAC, 1995,
pp. 152±157; ECLAC, 1996, Box VI.1; JDB/
JERI, 1993, pp. 53±56).

Fourth, distributional dimensions of the
growth process are managed in order to ensure
the legitimacy of the overall growth process.
This is primarily achieved through a produc-
tion-oriented approach rather than redistribu-
tive transfers. That is to say, the main bases for
a more equitable and inclusive growth process
are wide asset ownership and the expansion of
productive employment. Important policies in
this regard are: agrarian reform and rural
development policies; high rates of re-invest-
ment of pro®ts and the establishment of pro®t-
related payment systems; support for small and
medium enterprises, particularly through
®nancial policies; and broad-based human
resource development (Campos & Root, 1996;
ECLAC, 1992, pp. 15±27; UNCTAD, 1997, pp.
183±189).
Finally, regional integration and cooperation
policies are identi®ed as an important element
of strategic integration (ECLAC, 1990, chapter
VI; ECLAC, 1994, pp. 9±19; ESCAP, 1990, pp.
24±25; UNCTAD, 1996, Part II, chapter 1,
especially pp. 75±79, 92±94). Such policies
should support the goal of increased interna-
tional competitiveness, for example, by
promoting regional production chains, and also
nurture the development of regional markets in
order to reduce demand-side constraints on

growth.
These substantive features of the Southern
Consensus arise because Latin American
neostructuralism and East Asian developmen-
talism are rooted in a totally di�erent world-
view to the Washington Consensus (Figure 3).
This does not reject performance standards as a
guide to policy, but actions are founded on
historical analysis, particularly of long-term
processes of late industrialization in the
periphery of the world economy. A global
analytical perspective is adopted and this has a
realist rather than idealist view of the way in
which market economies work. This recognizes
vulnerabilities associated with integration into
the international economy and also external
constraints due to restrictions in access to
advanced country markets, falling terms of
trade for primary commodities and simple
manufactures, cartelization in global markets,
di�culties in gaining access to technology, and
instabilities of the international ®nancial
system. Finally, the approach is normatively
rooted in a distinctive form of economic
nationalism. This is not ideologically commit-
ted to self-su�ciency or public ownership, nor
hostile to foreign ownership in and of itself. It
does not seek the appearance of catching up,
through either imitating consumption stan-
dards, or setting up showcase industries. It
respects multilateral rules and arrangements,
engaging in their design, negotiation and
interpretation. But its aim is to build interna-
tional competitiveness as part of a long-term

national economic project founded on the
development of national capabilities.
Of the two strands of the Southern Consen-
sus, the challenge from the East Asian devel-
opment models has proved to be most powerful
because these models have, in terms of their
performance and according to the criterion of
economic growth, ``worked'' spectacularly well.
Since the early 1990s, the major fault line in
development policy analysis has thus been the
discrepancy between the policies which have
been pursued in rapidly growing and industri-
alizing East Asian economies and the policies
advocated by the Washington Consensus.
16
Figure 3. The con®guration of development policy analysis:
1990s and beyond.
Kuhn argues that the questioning of a para-
digm begins when anomalies arise between
paradigmatic expectations and actual events,
and shows that numerous ad hoc modi®cations
typically are made to maintain an old paradigm
before the accumulation of anomalies requires,
and the availability of a superior alternative
paradigm enables, a paradigm shift. With
increasing awareness of the discrepancy
between Washington Consensus recommenda-
tions and East Asian development practices,

such a process has occurred with the Wash-
ington Consensus. The discrepancy has been a
key factor which has impelled the shift in the
Washington Consensus from laissez-faire
liberalization to the market-friendly approach.
But more fundamental change has, at the same
time, been slowed by semantic ambiguities,
particularly centred on the key words `òut-
ward-oriented'' and `òpenness'' (see Gore,
1996a), and also further work to re-describe the
East Asian experience as being compatible with
the norms of the market-friendly LIEO. The
World BankÕs East Asian Miracle studyÐ
which was prompted by disagreements between
the Japanese government and the World Bank
on speci®c development policy mechanisms and
which Wade (1996) has explicitly dubbed an
exercise in the `àrt of paradigm mainte-
nance''Ðis a particularly signi®cant example of
the latter (World Bank, 1993).
These re-descriptions have, like earlier char-
acterizations, now been shown to have incon-
sistencies and ambiguities (Amsden, 1994;
Rodrik, 1994). But the debate has taken yet
another turn with the ®nancial crisis in East
Asia, and the apparent fall of the newly
industrializing economies which hitherto had
been claimed on all sides as ``legitimating
angels.''
5. THE COMING PARADIGM SHIFT
The ®nancial crisis in East Asia is signi®cant
for the future directions in development
thinking and practice. Economic growth has

fallen dramatically in developing countries and,
just as there was during the crisis of the early
1980s, there is now increasing reason to call
into question the e�ectiveness of dominant
policies. Commentators of every persuasion
have been quick to argue that events con®rm
their analysis. Some of those who support the
Washington Consensus have reversed their
earlier description of East Asian policies as
market-friendly, and identi®ed domestic
mismanagement, in the guise of crony capital-
ism and excessive government intervention, as
responsible for the crisis. On the other side, it is
argued that the crisis is mainly due to specu-
lative ®nancial ¯ows and contagion. But
domestic policy, particularly fast ®nancial
liberalization, is also said to have played a role.
The abandonment of government coordination
of capacity expansion has led to overinvest-
ment, and the lack of government supervision
of the scale of the foreign debts of domestic
companies has precipitated overexposure to
external debt. Finally, the IMF bailout pack-
ages are said to have exacerbated the problem.
At best they are seen as a misdiagnosis; at
worst, an attempt to use the crisis further to
impose in a deeper way LIEO norms on
domestic economic activity.
Although these debates are still playing
themselves out, it is becoming increasingly
unconvincing to attribute the crisis solely to
domestic mismanagement (see, for example,
Chang, Palmer & Whittaker, 1998), or analyt-
ically to separate external and internal factors.

Moreover the Washington Consensus has
cracked in the practical sense that real di�er-
ences of opinion have emerged in Washington,
between the IMF and the World Bank, on the
causes of the crisis and how best to handle it.
One important opinion-leader, Paul Krugman
(1995), has already written the obituary of the
Washington Consensus. After the Mexican
crisis of 1994, he argued that the major mech-
anism through which its policies have worked is
a speculative bubble in emerging markets in
which policy reforms attracted private capital
¯ows, and the attraction of the ¯ows stimulated
policy reforms, and that this bubble had now
burst. In e�ect, he exposed market-friendly
policies as actually being markets-friendly ±
®nancial markets, that is. Similarly, Joseph
Stiglitz (1998a,b) has argued that there is a need
for a ``post-Washington Consensus,'' a new
paradigm. This should seek to achieve broader
objectivesÐembracing a focus on the living
standards of people and the promotion of
equitable, sustainable and democratic develop-
ment. It should use a wider range of instru-
ments to build markets as well as to correct
market failure, and to foster competition as
well as liberalization and privatization. It
should also adopt limited forms of regulation,
if necessary controlling short-term interna-
tional capital ¯ows. Finally change should not
be imposed from outside but requires owner-

ship, participation, partnership and consensus-
building.
It may be too early yet to announce the fall of
the Washington Consensus. Stiglitz's proposed
new paradigm contains some important shifts
on values, continuing the incorporation of the
goals and implementation style advocated by
SHD, and, perhaps more signi®cantly, it argues
for a return to the notion of a development
strategy, based on a long-term perspective,
respecting historical speci®cities and with a
more holistic approach centred on the trans-
formation of societies. Development should no
longer be a monopoly of economists. But the
proposed post-Washington Consensus consen-
sus can also be interpreted as simply a change
to preserve the old order by making it more
e�ective as well as more humane. In elaborating
the new paradigm, Stiglitz (1998b, p. 34)
explicitly states that a key task is to lessen the
momentum of an expected swing of the
pendulum of opinion against openness. The
proposal retains a strong commitment to the
fundamental principles of a LIEO founded on
open trade regimes, competitive markets and
open societies. But, by de-linking trade and
®nancial liberalization and then analytically
separating short-term from long-term interna-
tional capital ¯ows, it reduces the risk that in
the aftermath of the ®nancial crisis the liberal-
ization of external economic transactions will
be called into question as a whole. Through this
analytical splitting, what previously was prop-
agated as a total package can now be taken to
be a more ¯exible menu of options, and any

possible backlash against liberalization can be
more easily contained.
Whether or not StiglitzÕs courageous inter-
vention is a rupture with the past or the pres-
ervation of the old regime, more profound
change is inevitable. This is because the forced
marriage of global liberalism and method-
ological nationalism, the latter providing the
empirical justi®cation for the internalization in
domestic policy of the prescribed international
norms of the former, is inherently unsustain-
able. The only circumstances under which
methodological nationalism is a completely
coherent approach to explanation is if national
economies are completely isolated and closed
from outside in¯uences. The more that the
norms of a LIEO are adhered to, the more that
national economies become open to outside
in¯uences, the less tenable methodological
nationalism becomes as a form of explanation.
The dominant paradigm is thus unstable. Its
ideology and methodology are in contradic-
tion.
The coming paradigm shift will be driven by
the main ``workable'' alternative, East Asian
models, politically strengthened through their
convergence with Latin America neostructu-
ralism, and extended to Africa and the least
developed countries. But while this approach
can o�er a more e�ective way of developing
countries than the Washington Consensus, it
does not, as it stands, provide an ideal alter-
native paradigm. This is not because the

current ®nancial crisis has somehow nulli®ed
the development transformation which has
occurred in East AsiaÐthough the crisis
demands closer consideration of the issue of
``development strategy in the age of global
money.''
17
Rather it is because it remains a
moot point whether it is possible to achieve
similar results to those achieved by East Asian
countries in their high-growth period, given the
widespread, simultaneous adoption of past
East Asia-type policies. Moreover, though
exaggerated, some new global rules, particu-
larly concerning technological borrowing and
adaptation, may inhibit the replication of some
of these policies.
In the future, the full globalization of devel-
opment policy analysis seems inevitable (Figure
3). This will entail the explanation of national
development trends in a global context, and
also the elaboration of alternative normative
principles for the international regimes which
constrain and enable national policy choices.
Signs that such a spatial frame shift is now
occurring are evident in diverse and uncon-
nected analytical arenas. These include:
attempts to link international trade theory to
labor market performance (Wood, 1994); the
development of the new economic geography
(Ottavino & Puga, 1998) and sociological
analysis of global production chains (Gere�,
1995); work on global environmental

commons; and the emergence of social exclu-
sion as a concept of deprivation (Gore, 1996b).
The spatial frame shift is likely to be linked to
the re-introduction of a historical perspective,
which is already becoming evident, for exam-
ple, in analyses of the history of globalization
of economic activity (Bairoch, 1993; Bairoch &
Kozul-Wright, 1998; Brenner, 1998). But with
the rejection of grand narratives, bringing
history back in should not presage a return to
the old teleological historicism, but rather
identify alternative situations and possible
development paths, and thereby inform a
pragmatic commitment to progressive change
in favor of present as well as future generations.
The values which will glue together the new
way of seeing the world are, like the methods of
global analysis, as yet unclear. The most likely
prospect is that we shall be blown into the
future facing backward, embracing a form of
embedded communitarian liberalism, which
seeks to reconcile the achievement of national,
regional and global objectives, and to marry
universal values with a respect for diversity. But
this is still waiting to be born.
NOTES
1. That is, a constellation of beliefs, values, techniques

and group commitments shared by members of a given
community, founded in particular on a set of shared
axioms, models and exemplars (see Kuhn, 1970). The term
``paradigm'' is used in this sense throughout this paper.
2. For an extended discussion of the importance of
frames in policy analysis, see Sch�on and Rein (1994).
The notion of the frame is also pivotal in Amartya SenÕs
work on development evaluation, though he uses the
term ``informational basis'' of evaluative judgements
rather than ``frame.''
3. For deeper discussion of these debates, and the role
of international development agencies in them, see
Arndt (1987), chapters 3 and 4.
4. This was a complex historical process. As Kuhn
(1970) explains, the timing of paradigm shifts is in¯u-
enced not simply by scienti®c and policy debate, but also
broader political and ideological con®gurations. These
broader changes, which include the election of conser-
vative political leaders in the United Kingdom, United

States and Germany in the late 1970s and early 1980s,
will not be dealt with here. For a subtle account, which
locates changes in development thinking and practice
within a broader counter-revolution against Keynesian
economic policies, see Toye (1993).
5. For these two lines of argument, see various World
Development Reports, particularly World Bank (1983,
1986, 1987). The last, as well as criticizing deviant
policies, is an exemplar of the mobilization of East Asian
experience to support key principles of a LIEO.
6. For an extended discussion of methodological
nationalism, see Gore (1996a).
7. The term ``global liberalism'' is used here as short-
hand for various types of LIEO, which may or may not
allow a circumscribed role for national government
intervention in market processes.
8. The term ``historicism'' is used here in the most
general sense given by Popper (1960, p. 3). It does not

imply that planning which aims at arresting, accelerating
or controlling development processes is impossible,
though some historicists would adopt this stronger
position (Popper, 1960, pp. 44±45).
9. Exemplars are Rostow (1960) and Chenery and
Syrquin (1975).
10. Lyotard (1984) sees the main criterion which is
used to legitimate knowledge after the questioning of
the grand narratives as ``performativity,'' which is
understood as assessment of the performance of
systems in terms of the best input/output relations
(p. 46).
11. Various academic books and articles are associated
with these policy reports. Key elements of Latin Amer-
ican neostructuralism, which developed as a response to
the weaknesses of both neoliberalism and import-
substitution industrialization, are set out in Bitar
(1988), Ffrench-Davies (1988), Sunkel and Zuleta

(1990), Fajnzylber (1990) and Sunkel (1993), and are
surveyed in Kay (1998). A Japanese view of the contrast
between East Asian developmentalism and the Wash-
ington Consensus is set out in OECF (1990), whilst
Okudo (1993) and JDB/JERI (1993) discuss the Japa-
nese approach, focusing on two important policy mech-
anisms which diverge from the tenets of the dominant
approachÐtwo-step loans and policy-based lending.
UNCTADÕs reconstruction of East Asian developmen-
talism, which was elaborated independently of Latin
American neostructuralism, draws on analyses of the
Japanese development experience, particularly Akama-
tsu (1961, 1962) and Shinohara (1982), and key ele-
ments are set out in Aky�uz and Gore (1996) and Aky�uz
(1998).
12. For an outline of this approach see, inter alia, Sen
(1993), and an analysis of the limits of its moral
individualism is made in Gore (1997).

13. For examples of a loose approach to poverty
analysis based on the concept of sustainable human
development, see UNDP (1995a,b); but Banuri et al.
(1994) attempt to give a more rigorous speci®cation of
the concept through the notion of social capital. An
interesting recent development has been to link sustain-
able human development to the promotion of human
rights discourse, which some see as an alternative global
ethics to neoliberalism. The increasing incorporation of
the voice of nongovernment organizations (NGOs) into
or alongside UN social deliberations is also a�ecting the
SHD approach. A good discussion of some of the
notions which animate these discussions is Nederveen
Pierterse (1998).
14. It is di�cult to identify an African strand to the
Southern Consensus, but Mkandawire and Soludo

(1999) seek to develop an African alternative to the
Washington Consensus, and UNCTAD (1998, part 2)
has drawn implications of the East Asian development
experience for Africa.
15. There are some divergences between the East Asian
and Latin American approaches. The latter gives more
prominence to environment and democracy, is less
committed to aggressive sectoral targeting (ECLAC,
1996, pp. 70±71; Ocampo, 1999), and has a more re®ned
policy analysis of the process of ®nancial integration
than East Asian developmentalism (ECLAC, 1995, Part
3). But their similarities, and common disagreements
with the Washington Consensus, are more striking.
16. For an interesting alternative interpretation of this
fault line, see Yanagihara (1997) who contrasts an
ingredients approach and a framework approach and
seeks ways of synthesizing them.
17. To paraphrase Yanagihara and Sambommatsu

(1996).
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Eleven
MAKING THE WORLD
A BETTER PLACE
CHAPTER OUTLINE
‘The best of all possible worlds’? 355
TNCs and corporate social responsibility 357
‘The business of business is business’ 357
Approaches to CSR 358
International CSR and GPNs 358
Types of code of conduct 361
How effective are codes of conduct? 362
States and issues of global governance 363
Global–national tensions 363
Regulating the global financial system 365
The established ‘architecture’ of the global financial system
365
Towards a new global financial architecture? 367
Regulating international trade 369
The evolution of world trade regulations 369
Battles within the WTO 371
Regulating TNCs 374
International guidelines and multilateral agreements 374
Dealing with problems of tax avoidance 375
Burning issues: global environmental regulation 378
The evolution of climate change initiatives 378
Where are we now? 379
A better world? 380
Alternative economies? 380
To be ‘globalized’ or not to be ‘globalized’: that is the
question 383
Eradicating extreme poverty: the UN Millennium Development

Project 384
Goals, aspirations and collective will 384
A moral imperative 387
11_Dicken-7E_Ch-11.indd 354 19/11/2014 10:46:32 AM
MAKING THE WORLD A BETTER PLACE 355
‘THE BEST OF ALL POSSIBLE WORLDS’?
As we have seen, the world has changed dramatically over the
past several decades.
It is, in very many ways, a different place. But is such a
‘globalized’ world a ‘better’
world? Voltaire, the eighteenth-century French writer, wrote a
wonderful satirical
novel, Candide, in which the eponymous hero lives in a world
of immense suffer-
ing and hardship, yet whose tutor, Dr Pangloss, insists that
Candide’s world is ‘the
best of all possible worlds, where everything is connected and
arranged for the
best’.1 Today, such a Panglossian view is held by those to
whom an unfettered capi-
talist market system – based on the unhindered flow of
commodities, goods, ser-
vices and investment capital – constitutes the ‘best of all
possible worlds’. Although
they might agree that globalization is a savage process, they
also argue that it is a
beneficial one, in which, they claim, the winners far outnumber
the losers.2 But it
is arguable that ‘now is the best time in history to be alive’.3

Certainly, there is considerable divergence in the views of
ordinary people in
different parts of the world. For example, a poll of 34,500
people in 34 countries,
commissioned by the BBC World Service in 2008, concluded
that
in 22 out of 34 countries around the world, the weight of
opinion is
that ‘economic globalization, including trade and investment’ is
grow-
ing too quickly … Related to this unease is an even stronger
view that
the benefits and burdens of ‘the economic developments of the
last
few years’ have not been shared fairly … In developed
countries, those
who have this view of unfairness are more likely to say that
globaliza-
tion is growing too quickly … In contrast, in some developing
coun-
tries, those who perceive such unfairness are more likely to say
globalization is proceeding too slowly.4
There is, in fact, a highly differentiated geography of attitudes
towards globalization.5
Without doubt, large numbers of people in the developed
economies, and also
in the rapidly growing economies of East Asia, have benefited
from much
increased material affluence: ‘The average person is about eight
times richer than
a century ago, nearly one billion people have been lifted out of
poverty over the
past two decades.’6 There has been immense growth in the

production and con-
sumption of goods and services and, through international trade,
a huge increase
in the variety of goods available. But the evidence discussed in
Chapters 7 to 10
suggests a very different reality for a substantial proportion of
the world’s popula-
tion, not only in the poorest countries and regions, but also
among certain sectors
of the population in affluent countries, who have not benefited –
or have bene-
fited very little – from the overall rise in material well-being.
The fact remains that
there is vast inequality between the haves and the have-nots (or,
as some have put
it more ironically, between the ‘have-yachts’ and the ‘have-
nots’). And that gap has
been widening, despite the operation of precisely those
globalizing processes that
are supposed to create benefits for everybody. For many,
insecurity has become the
norm, much exacerbated by the impact of the 2008 financial
crisis:
PART THREE WINNING AND LOSING IN THE GLOBAL
ECONOMY356
Globalization increases objective and subjective insecurities
among a
great many workers and producers … different faces of
economic
globalization can be expected to have different implications for

risk.
For instance, some faces of globalization more than others are
visible,
direct, and palpable with respect to job risks – for instance, via
threats
of outsourcing by companies rather than via trade competition.7
What can or should be done? How can the world be made a
better place for all,
including those at the bottom of the heap? There is no simple
answer. Choices are
never unconstrained:
Our choices … are shaped by systems and structures over which
we,
as individuals, have no control. Economic, political,
technological and
social dynamics make some choices available and remove others
from
the table.8
We are all deeply embedded in specific contexts, structures and
places and con-
strained by our knowledge and resources. As we have seen, the
map of such con-
straints is immensely uneven; for many people, in many parts of
the world, the
exercise of choice is extremely limited. More broadly, of
course, it depends on
one’s political and ideological point of view. It is about
values.9 It is about where
we want to be. In terms of ‘making the world a better place’,
one person’s ‘utopia’
is another person’s ‘dystopia’.
For example, GCSOs vary widely both in their agendas and in

how these agendas
are pursued: from vociferous, often violent, confrontation
through to more reform-
ist movements. Anti-capitalist groups advocate the replacement
of the capitalist
system,10 although precisely what the alternative should be
varies between groups.
For some, it would be a democratically elected world
government; for others, a
structure in which the means of production and distribution
were controlled by
a nationally elected government. For some, it would be a system
of locally self-
sufficient communities in which long-distance trade would be
minimized. This is
the position, for example, of the ‘deep green’ environmental
groups. For some, the
focus is on ‘fair’, rather than ‘free’, trade – although who
decides what is ‘fair’ is a
crucial issue. For the more nationalist–populist groups, and for
some labour unions,
the agenda is one of protecting domestic industries and jobs
from external compe-
tition (especially from developing countries) and restricting
immigration. For some,
the objective is removing the burden of debt from the world’s
poorest countries or
improving labour standards in the developing world (especially
of child labour). The
problem is that, very often, these agendas are contradictory.
Not surprisingly, GCSOs have themselves attracted considerable
criticism from
some quarters, questioning their legitimacy and, in some cases,
their abilities to
further economic and social development goals for the poor.

Although the prolif-
eration of GCSOs has ‘unquestionably projected the
globalization debate into the
popular political consciousness in important ways … the
movements themselves
have a severe democratic deficit: representing humanity
ultimately requires legiti-
mation through some sort of people’s mandate’.11 Nevertheless,
GCSOs undoubt-
edly force people – including politicians and business leaders –
to recognize, and
to engage with, the uncomfortable reality that both the benefits
and the costs of
globalization are very unevenly distributed and that there are
severe and pressing
problems that need resolution:
The advocatory movements of global civil society are the
originators,
advocates and judges of global values and norms. The way they
create
and hone this everyday, local and global awareness of values is
by spark-
ing public outrage and generating global public indignation over
spec-
tacular norm violations. This they do by focusing on individual
cases.12
In fact, the major responsibility for making the world a better

place lies with two
dominant sets of actors/institutions: TNCs and states. The
central argument of
this book has been that, among the multiplicity of actors
involved in the global
economy, these two – whether in conflict or collaboration – are
responsible for
much of the shaping and reshaping of the global economic map.
As such, they
bear the primary responsibility for improving the lives and
livelihoods of people
throughout the world. For that reason they form the focus of the
next two sections
of this chapter. First, we will look at the role of TNCs in terms
of their corporate
social responsibility (CSR). Second, we will focus on states in
the context of global
governance issues.
TNCs AND CORPORATE SOCIAL RESPONSIBILITY
‘The business of business is business’
This statement, generally attributed to Milton Friedman, the
free market econo-
mist, implies that the primary purpose of firms is to maximize
shareholder value. In
other words, the only actors who matter are the shareholders
(stockholders): the
ultimate owners of the company. Everybody and everything else
– employees, cus-
tomers, suppliers, members of the communities in which the
company’s facilities
are located, the environment – are not the company’s direct
concern. This is the
ideology of business that dominates the USA and the UK
economies in particular:

the neo-liberal model of free market capitalism. It is
demonstrated most clearly
in the context of company takeovers, where the views of
employees are usually
ignored, even though they are much more directly engaged in
the company than
many of the shareholders (which are predominantly huge
financial institutions for
whom a firm is simply part of a broader portfolio), and have
more at stake (their
incomes and livelihoods). In fact, such a narrow view of
business responsibilities
ECONOMY358
is far from universal. In many European countries, for example,
a broader concept
of stakeholder capitalism exists in which other actors
(‘stakeholders’, such as labour,
consumers, suppliers) are explicitly recognized as having
legitimate interests in
business decisions.
Issues of corporate responsibility impinge on virtually all
aspects of modern life
and span the entire spectrum of relationships between firms,
states and civil soci-
ety.13 We cannot explore all of these. Instead we will
concentrate on those aspects
of CSR that have an explicitly international dimension.14

Approaches to CSR
Rob van Tulder and his colleagues identify four approaches to
CSR (Figure 11.1),
each of which reflects different degrees of relationship to the
social environment
and to external stakeholders:15
•• Inactive CSR is essentially that embodied in the ‘business of
business is business’
philosophy: ‘the only responsibility companies (can) have is to
generate profits …
no fundamental ethical questions are raised about what they are
doing’ (p. 143).
•• Reactive CSR is slightly different: it ‘shares the focus on
efficiency but with
particular attention to not making any mistakes … entrepreneurs
monitor
their environment and manage their primary stakeholders so as
to keep
mounting issues in check … Entrepreneurs … respond
specifically to actions
of external actors that could damage their reputation’ (p. 143).
•• Active CSR ‘represents the most ethical entrepreneurial
orientation.
Entrepreneurs … are explicitly inspired by ethical values … on
the basis of
which company objectives are formulated. These objectives are
subsequently
realised in a socially responsible manner regardless of actual or
potential social
pressures by stakeholders’ (p. 145).
•• Proactive CSR occurs where an entrepreneur involves
‘external stakeholders

right at the beginning of an issue’s life cycle’ (p. 145). It
implies active and
ongoing discussion with stakeholders: a ‘discourse ethics’
approach.
International CSR and GPNs
As we have seen throughout this book, the production,
distribution and consump-
tion of goods and services are primarily organized within GPNs,
usually controlled
and coordinated by TNCs. Such networks raise hugely important
questions, par-
ticularly regarding relationships between lead firms and
suppliers and the treatment
of labour throughout the network. In Chapter 8, we discussed
the developmental
implications of involvement (or non-involvement) in GPNs for
people and busi-
nesses in local economies using the criterion of various types of
upgrading. Of these,
social upgrading relates specifically to work and labour
standards. This includes a
whole spectrum of social, economic and ethical issues,
including pay, work condi-
tions, occupational health and safety, and human rights.
Questions of CSR, there-
fore, are intrinsically involved in the operation of GPNs.16 We
examine some specific
examples in the cases of agro-food (Chapter 13) and clothing

(Chapter 14).
The primary mechanism for attempting to ensure social
upgrading in GPNs is
the code of conduct. Such codes have proliferated to the extent
that they often over-
lap in highly confusing ways. In 2006, for example, it was
estimated that there
were around 10,000 different codes of labour practice.17 Two-
thirds of the 100
largest firms in the world operated a code of conduct by the
early 2000s.18 A
major reason for such proliferation is the increased
geographical extent and
organizational complexity of GPNs:
Codifications are triggered by intrinsic motivations …
[including] …
the greater strategic need to coordinate and control the firm’s
activities
spread over a large number of countries and constituencies …
This is
often the area of ‘internal codes of conduct’ or ‘codes of
ethics’. The
strategic need for the formulation and implementation of
external
codes of conduct as a coordination mechanism becomes bigger
when
firms engage in sourcing out activities to dependent affiliates
(off-
shoring) or to independent suppliers (outsourcing) in developing
countries, where the governance quality is often relatively low
and the
cultural and institutional distance … is relatively high. A large
number
of (procurement) codes thus addresses supply chain issues such

as
human rights, labour standards or the right to association … In
this
case firms have an incentive not only to formulate codes of
conduct,
Pro/interactive
Corporate societal
responsibility
‘Interactive duty’
In/outside–in/out
‘Doing the right
things right’
‘Doing well by
doing good’
Medium-term profitability
and sustainability
Active
Corporate social
responsibility
‘Positive duty’
or virtue based
Inside–out
‘Doing the right things’

‘Doing good’
Long-term profitability
Corporate self-
responsibility
Inactive
‘Utilitarian’
legal compliance
Profit maximization
Inside–in
‘Doing things right’
‘Doing well’
Narrow
(internal) CSR
Economic
(wealth-oriented)
Broad
(external) CSR
Social
(welfare-oriented)

Scope
Nature of responsibility
Reactive
Corporate social
responsiveness
‘Negative duty’
Outside–in
‘Don’t do things wrong’
‘Doing well and
doing good’
Quarterly profits and
market capitalization
Figure 11.1 Differing approaches to CSR
Source: based on van Tulder with van der Zwart, 2006: Table
8.1; van Tulder et al.,
2009: Table I
ECONOMY360
but also to implement them. Extrinsic motivations for [TNCs]
are

gaining in importance as well: the risk of reputation damage
triggered
by critical NGOs precipitates [TNCs] to formulate international
codes of conduct or principles of ‘corporate citizenship’.19
Figure 11.2 sets out the different kinds of CSR supplier strategy
associated with
the four types of CSR discussed above (see Figure 11.1). The
upper part of Figure
11.2 sets out the variations in supply chain relationships
between different CSR
positions; the lower part shows how codes of conduct strategy
may vary. The codes
are classified along two dimensions:20
•• Specificity includes ‘how many issues it covers, how focused
it is, the extent to
which it refers to international standards and guidelines, and to
what extent
aspects of the code are measured’ (p. 402).
•• Compliance ‘is generally enhanced by clear monitoring
systems in place, com-
bined with a more independent position of the monitoring
agency and the
possibility of these organizations to formulate and implement
sanctions’ (p. 402).
Corporate self-
responsibility
Inactive Reactive Active Pro/interactive
Corporate social
responsiveness

Corporate social
responsibility
Corporate societal
responsibility
Price only.
Strong competition for
customers.
Active use of power
position in chain.
Suppliers responsible
for labour conditions.
Price and quality.
Suppliers responsible
for labour conditions.
Fair prices and high
quality.
Suppliers selected on
basis of approach to
e.g. labour conditions.
Joint responsibilities.
Prices and quality
set together.
Definition of fair wages
and labour conditions
based on consultation
and strategic dialogues.
CSR only if not too
costly and does not
mean higher
purchasing prices.

Cost, control, risk
aversion.
Below 5% CSR of
purchases.
Buy
Global
Internal Specific supplier General supplier Joint/dialogues
Low Medium/high Medium/low High
Low Medium/low Medium/high High
Low Medium/low Medium/high High
Cost, control, quality.
Below 25% CSR of
purchases.
Make or buy
Global
Control and quality.
Target of 25–60%
CSR of purchases.
Make
Regional

Co-development
and quality.
Target of 60–100%
CSR of purchases.
Cooperate
Local
CSR only if needed
and/or available and
does not mean higher
purchasing prices.
Upgrading according
to own standards.
Upgrading according
to joint and/or open
standards.
Chain
liability
Chain
responsibility
Type of code
Specificity
Compliance

Implementation
Supply chain relationships
Codes of conduct strategy
Figure 11.2 Types of CSR strategy towards suppliers
Source: based on van Tulder et al., 2009: Table II; van Tulder,
2009: Table 4
Firms positioned at the left-hand side of Figure 11.2 tend to opt
(if they do so at
all) for internal corporate codes or for codes drawn up in
collaboration with other
firms without prior dialogue with non-firm stakeholders. On the
other hand,
firms positioned towards the right-hand side of Figure 11.2 tend
to participate in
more open agreements with non-firm stakeholders. The pressure
from GCSOs
is to move as many firms as possible to that more open,
cooperative position.
Much will clearly depend upon the relative bargaining power of
the participants as
well as the ‘social conscience’ of firms. There has certainly
been some movement.
Even among the hard-line business-is-business community there
is now a consid-

erable (albeit often reluctant) recognition that companies do
have broader social
responsibilities.
Hence, there has been a rush to formulate corporate
responsibility statements.
Some of this may well be altruistic, in other cases mere self-
interest. However, it
is difficult to avoid the conclusion that a major catalyst for CSR
has been the
increasing pressure on TNCs to recognize their social
responsibilities and to con-
form to acceptable ethical standards.21 For example, there is no
doubt that such
pressures led to such leading companies as Apple and Nike to
publish a list of their
global suppliers in their CSR reports. This was an
unprecedented step for compa-
nies which had always been highly secretive about their supply
networks.
Types of code of conduct
There are four major types of code of conduct:
•• Codes devised by individual TNCs, or groups of TNCs, with
no involvement
of other stakeholders. Example: the Global Social Compliance
Programme
established by Wal-Mart, Tesco, Carrefour and Metro.
•• Codes drawn up by coalitions of interest groups in specific
industries, such as
clothing.22 Example: the Global Alliance for Workers and
Communities
involving Nike, and Gap, together with the World Bank and the
International

Youth Foundation.
•• Codes formulated by TNCs in association with some of their
stakeholders.
Examples: Global Framework Agreements (GFAs) between a
TNC and a
global labour union federation;23 the UK Ethical Trading
Initiative (ETI), an
alliance of companies, NGOs and labour unions.24
•• Codes established by international NGOs. Example: the UN
Global
Compact,25 which is based upon the ILO Declaration of
Fundamental
Principles and Rights to Work. Figure 11.3 sets out its 10
principles.
All such codes are, of course, the outcome of complex
bargaining processes:
They need to be understood as part of a contradictory process,
involv-
ing collaboration and conflict between commercial and civil
society
actors, in which inherent tensions play out.26
ECONOMY362
TNCs clearly have an interest in being seen as having a positive
relationship with
GCSOs, not least because it provides a ‘seal of approval’.

GCSOs need to find ways of
increasing their influence on TNC decision making. But there
are problems for both
of them in too cosy a relationship. In the final analysis, they
have very different aims
and objectives. But that need not mean that such collaboration
is not worth pursuing.
How effective are codes of conduct?
Are such codes mainly a cosmetic exercise? How fully are they
implemented? How
are they monitored? These are the questions commonly posed by
critics, to which
there are no unambiguous answers. Inevitably, there is a good
deal of scepticism
about voluntary codes, whether at the individual firm or
collective level. This is not
only because they are ‘voluntary’, but also because they are
rather marginal in their
scope and effect. Without some degree of compulsion – and the
monitoring of
compliance – there is always the danger that such codes will
amount to little more
than a gesture or that companies will be able to influence how
the process works.
In one sense, of course, anything that contributes to better
conditions for peo-
ple and communities should be welcomed:
Whilst in themselves codes of labour practice are limited, they
do have
a role in wider strategies to promote economic and social rights
of
vulnerable workers. But they are not sufficient (nor have they
aimed)

to achieve more sustainable systems of global production that
address
inherent inequalities and poverty … The issue, therefore, is
whether
and how codes contribute to a wider process that promotes the
rights
of the most vulnerable workers.27
Human rights
Labour standards
Environment
Anti-corruption
Principle 1:
Principle 3:
Principle 7:
Principle 10:
Principle 8:
Principle 9:
Principle 2:
Principle 4:
Principle 5:
Principle 6:

Support and respect the protection of international human rights
within their sphere of influence.
The freedom of association and the effective recognition of the
right to collective bargaining.
Support a precautionary approach to environmental challenges.
Work against all forms of corruption, including extortion and
bribery.
Undertake initiatives to promote greater environmental
responsibility.
Encourage the development and diffusion of environmentally
friendly technologies.
Make sure their own corporations are not complicit in human
rights abuses.
The elimination of all forms of forced and compulsory labour.
The effective abolition of child labour.
The elimination of discrimination in respect of employment and
occupation.
Figure 11.3 Principles of the UN Global Compact
Very often, the impacts are mixed. For example, a study of the

effects of the Ethical
Trading Initiative (ETI) reached the following conclusions:
ETI company codes have had a positive impact in relation to
certain
code principles, particularly health and safety, documented
minimum
(not living) wages and employment benefits. Company codes
were
found to have had little or no impact on other code principles,
par-
ticularly freedom to join an independent trade union, collective
bar-
gaining and discrimination … In general, permanent and regular
workers were found to have fared better from company codes of
labour practice … [However] … whilst there had been positive
impacts on regular workers, codes of labour practice were
failing to
reach more vulnerable casual, migrant and contract workers,
many of
whom were women.28
A detailed analysis of GFAs involving firms from the USA,
Europe and
Japan identified two important factors in how such codes of
conduct tend to be
implemented:29
•• The extent to which the various stakeholders participate in a
code’s formula-
tion. This tends to affect the likelihood of different levels of
implementation
and compliance, the nature of the codes themselves and the
degree of com-
promise involved.

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