Loomnie

I was looking through my computer earlier today and I discovered a review I wrote during my first weeks as a Masters in Development Studies student at Uppsala in Sweden. The first thing those guys did was to encourage us to question the whole idea of development by making us read Gilbert Rist’s The History of Development: From Western Origins to Global Faith. Below is a review I wrote of the book – an assignment. As I read through it today I strongly resisted the urge to edit my 24 year-old self, so excuse the sometimes flowery language. 

Words, Spirits and History: A review of Gilbert Rist’s The History of Development

What is it with words? While some hardly make a sound others simply stand out, they call attention to themselves, beg to be heard. One of them is development. It is simply unimaginable that this word, and its most recent offsprings, human and sustainable development(s) should be subjected to as much rigorous examination and criticism as Gilbert Rist does in The History of Development. But the word is not what Rist battles with, it is the philosophy which gives the word life, which makes it relevant; it is the spirit which the word conjures, and the faith which it commands that necessitate such examination. Then, words have long had a way of creeping into our consciousness and dominating our imagination, but not without some aid. Rist set out to explain the process by which this word gained and kept prominence. Perhaps the first thing it would be good to know is that the word has an origin.

Even before opening the book we get an idea of where the word came from. From the subtitle of the book we have a vague idea of the word’s birthplace, but not its birth process. Rist traces the process by which development came to become the dominant paradigm of measuring relations between North and South, he shows that the word has its roots in Western consciousness. He goes as far as to Aristotle’s conception of nature as development in circles, i.e. as a series of beginnings and ends and new beginnings, to St Augustine’s view of history as eschatological as it is presumed to be linked to the Bible, and ultimately to Jean-Baptiste Say and his social evolutionists who saw the western world as the most advanced one because of its high level of production and consumption. Apart from this argument for the western world’s referencing of itself as the ideal, their defeat of “savage races” seemed to lend credence to social evolutionism. It seemed only sensible to conclude that the western human was the most advanced of humans. Of necessity, this set the stage for the next level in the development of the history of development: colonialism.

In the late nineteenth century, the savage needed protection, and guidance in utilising the abundance of natural resources which nature had deemed fit to thrust upon him, or so the colonialists say. It was a period in which global relations marched from conquered/ conqueror to savage/civilised, and so colonised/coloniser. Several arguments were used to convince the people of the nobility of the endeavour, one was economical and another was purely paternalistic. Who wouldn’t blame the civilised world if they failed to bring civilisation to the dark parts of the world? If some parts of the world were uncivilised it was only morally obligatory for the part that was to bring civilisation to the other part. But the dominant paradigm was soon to adopt a different, more portent and enduring concept, that of development.

Rist gives the birth of development as the time of President Harry Truman’s inaugural address. From that time on, the relationship of countries of the north and those of the south came to be defined by the level of development. The paradigm shifted from that of colonised/coloniser to underdeveloped/developed. The main problem of this distinction was its assumption that underdevelopment is a natural stage of humanity. It was not an effect but could only be the antecedent of the “developed” Northern world. It was as if the North could look at the South and see how it was before it was touched by development. This perception of things could absolve the North of any responsibility in making the South the way it was, as underdeveloped is an intransitive verb, it is not an effect but can only be affected. The peoples of the South were no longer viewed as individual nations with individual histories, they were simply underdeveloped countries; they were deprived of the privilege of having their situations explained by history and were instead described as the natural state of being that was embarrassing and so would have to be helped to the state of the industrialised countries. And the way to do this was given as increasing the GDP. Perhaps we should say a little about Rostow’s proposition and his stages of economic growth.

Rostow’s recommendation for economic growth underlines an assumption that is an offspring of the development paradigm. Since it is believed that underdevelopment is a natural state from which the developed countries rose, it was only natural to presume that to effect development all one had to do was to follow the steps through which the North rose and then development would necessarily arrive in the underdeveloped regions. Rostow’s scale of development then starts with the underdeveloped stage, a natural state in which development is lacking and which has to proceed to the stage in which the preconditions for development are taking shape. During this time the society is gearing for the next stage when the preconditions are already set and the society is ready to develop. This stage Rostow calls the take-off stage – the GNP starts rising and the move towards industrialisation is instituted. The fourth stage is the drive to maturity stage. Here, the societies are already experiencing a rise in GDP and since the elite are benefiting strongly from this they would be encouraged to ensure the continuation of growth. The final stage is that of high consumption rates since the gains of productivity is distributed to the people. This stage is also characterised by the welfare state. This is another evolutionist account of development that, needless to say, is doomed to fail in capturing the development process.

Rist also examines the different conferences and reports that were convened and prepared in the name of development. There is almost no need to examine each one in itself, the basic theme that runs though all of them is the desire to write away history by not focussing on the need for a redefinition of development. This is exemplified by the report of the New International Economic Order (NIEO). The text of the report is a reinforcement of the dominant paradigm, it emphasised “economic growth, expansion of trade and increased aid by the industrial nations” as the solution to the problem of underdevelopment. Like many reports produced by such organisations its recommendations were not implemented. Rist says it is really a relief that it was not, as the recommendations would have been more harmful to the Third World than before, it would have widened the gap between the rich and poor countries as it still situated the source of development in the North, and the source would have to help the poor countries to achieve development by assisting them with aid and investment. Experience has shown that private investment in poor countries only come when the investor knows that it can maximise his profit, and this often to the detriment of the economy of the poor countries.

However, there is a report that Rist says stands out for its boldness in declaring that another development is possible. The Dag Hammarskjörld Foundation report extends the concept of development from mere economic growth to something that has to be born by each society out of what is unique to it. This means that there cannot be a universal definition of development. Another thing that sets it aside from all other reports is that it includes the industrialised countries as part of the countries that need to become developed. They need to review their consumption patterns. This report was simply forgotten.

The structural Adjustment Programmes of the 1980s is another point that is worthy of note in the history of development. It was a direct child of the lending activities of Northern creditors who lent money irresponsibly, without enough security, to Southern countries. The major impact of structural adjustment programmes was in impoverishing the peoples the more. It was thought that for the countries to be able to pay off their debt they had to, among other things, cut down on the involvement of government in the economy and the financing of infrastructure projects. The meaning of this is continued impoverishment of the population. This era was the era of the trickle down policies. The harm these policies did in the Third World has been severally studied. Considering that Rist’s mission is to show how contradictory development could be, and in fact is, he paid too cursory an attention to it. For the recency of these programmes and their failure make them scream for attention.

One of the problems with works that set out primarily to criticise a notion is the failure to provide an alternative. Rist’s criticisms are the state of the art in its field; they capture the very contradictions of the term, its actions and proponents. But they fail to provide a way out of the problem. One could try to understand this problem by pointing at the fact that it was not easy to proffer a solution where a whole industry is built around a concept. Rist talks about this when he pointed to the organs of United Nations, and the NGOs, both local and global, that are founded around the development concept. If one were to do away with the concept and its baggage what does one do with the industry? Where does one put them?

Another problem is about what is to be done instead of giving aid and other forms of assistance to poor countries. Rist’s cynicism in criticising these moves as reinforcing the development paradigm is understood but, practically, what is to be done? What is the alternative to this? Isn’t it rather better to continue with these and all its different siblings than to simply sit and whine, especially as the paradigm does not seem about to change in the nearest future? I am saying this at the peril of sounding naïve and simplistic but, being a citizen of the Third World, I understand that a long-term solution would have to take into account not just the immediate satisfaction of hunger but the continued survival, and by extension peaceful existence of a people, it would be more naïve to fail to act for today while being pre-occupied with thinking about tomorrow.

To answer the questions about what to do Rist offers three answers. One of them borrows from Christian Comeliau. This approach advocates economic growth and the proper integration of the Southern economies into the world economy, especially according to how they can gain from it. This is against blindly advocating the promotion of free trade. He is not against loans as long as the terms of the loans ensure that they can be paid back. He also advocates the transfer of technology to poor countries by multinational companies. In the classic Rist tradition he picks apart this proposition by questioning the intentions of the people who are supposed to initiate these moves. Will they be sincere enough to initiate the needed reforms? And even if they are what is the assurance that the programmes won’t be abandoned after the next coup d’etat, or elections? What does this leave us but a feeling of utter dejection and disillusionment? The second answer draws from the experiences of some grassroots movements in some poor parts of the world. Instead of seeking to become like the rich countries they organise to change the attitude and behaviour of the people, encouraging them to concentrate on what they posses and not on what they lack. Although Rist admits that a person who believes in GDP and per capita income would point to the material needs of these people, he concludes that what they feel would nevertheless be fewer discontentments as it would be if they were concentrating on their needs. But for how long can such islands sustain in the world where diffusion of information is the norm and not the exception?

The third and most appealing answer to the question is a total rethinking of the relationship between societies, drawing from the anthropology and history disciplines, as against a purely economic approach. These disciplines should help to study alternative models to achieving the state popularly referred to as development. This is because theoretical models that are expected to capture the reality, and reality, or alternative reality, can be perceived basically from historical and anthropological perspectives. This is a theoretical approach that does not neglect the potency of the two earlier suggestions. For Rist, the three form a good team, although certainly not the best.

These answers are good enough on the surface but considering that development is such a new creature that has grown in so much importance over a short period of time, a creature that can be likened to a religion, with its own priests and institutions, what is the assurance that these are practical answers? Just like Rist criticises the first answer we can almost see resistance to the development of an alternative paradigm. To be practical, are studies advocated by anthropologists not going to be funded by development agencies? Are these anthropologists not going to work within certain frameworks prescribed by development experts? In a world where research-funding agencies provide funding only for projects in their own interest, what would be the incentive to embark on such studies? Rist’s book is a classic deconstructionist text but it falls flat when it attempts to do more than that.

From a new Accenture report titled At the tipping point: Financial services in Africa comes of age:

The Accenture research study… highlights new growth triggers for financial services, pointing to rapid market development in some countries. While the paths to growth vary, these triggers often include innovation through (very) low-cost offerings and distribution, dramatically opening up access to financial services; investment in physical infrastructure and financial infrastructure development through more sophisticated regulations, and institution building; strong economic growth and inward investment in the economy, including by financial institutions following their clients into new countries; and growth in consumer markets driven by demographic change, including the rise of the urban middle class, and the growth in microfinance-supported businesses in rural areas.

In Accenture’s view, banks and insurers will not achieve sustained success in Africa’s fast-developing markets simply by replicating traditional business models from developed countries. New strategies are needed — including adapting retail banking models to local cultural needs, and finding new ways to serve low-income customers profitably. Contributing to nationbuilding and the development of local communities is a further prerequisite in many countries. And attempts to roll out standardised models must take into account differences in local business and regulatory environments.

The report [pdf].

Based on a thorough review of the professional research literature and a re-examination of key hypotheses, our answer is “yes”.

That is from Channing Arndt, Sam Jones, and  Finn Tarp, all of University of Copenhagen. They continue:

Our study represents the most carefully developed empirical strategy employed in the aid-growth literature to date. The results provide solid support for the view that the effect of aid on growth is positive in the long run. In sum, our findings suggest that an inflow on the order of 10 percent of GDP spurs the per capita growth rate by more than one percentage point per annum in the long run. These estimates are consistent with the view that foreign aid stimulates aggregate investment and may also contribute to productivity growth, despite some fraction of aid being allocated to consumption.

The bleak pessimism of much of the recent aid-growth literature is unjustified and the associated policy implications drawn from this literature are often inappropriate and unhelpful. Aid has been and remains an important tool for enhancing the development prospects of poor nations.

Read it in full at the website of the Nordic Africa Institute.

H/T Onafrica

It is ‘the study of how to get rich without knowing how’.

What must we do to end world poverty? At last, an answer: OK, that’s too good to be true. There has been a search for sixty years for the right answer. Now most economists confess ignorance how to raise the rate of economic growth — how to progress more rapidly towards development and the end of poverty.

To get out of this dead end, I would respond to this question with more questions.

First, who is “we”? It seems like whoever “we” are, “we” must have unconstrained power to implement “the answer”, so “we” sounds like authoritarian leaders (national autocrats or World Bank officials dictating conditions).

Second, are “we” going to allow poor people to choose their own paths? Of course not, because “we” already know the “right answer” for them.

So this question only makes sense in approach to development that is authoritarian and paternalistic, using Top Down Planning, which in fact has been the prevailing – but unsuccessful – approach to development for six decades.

The paradox of development economics is that Development does NOT require any one person (Expert, Leader, or Aid Official) to have a comprehensive understanding of how to achieve Development (sort of like how evolution managed to happen on its own before Darwin).

(I am drawing on a lecture I gave here at NYU.)

Why is it so hard to figure out how to raise growth? Nobel Laureate Friedrich Hayek once suggested a possible answer:

The growth of reason is based on existence of differences. . . . {between} individuals, possessing different knowledge and different views. [I]ts results cannot be predicted . . . . [W]e cannot know which views will assist this growth and which will not.

Growth is innovation, and you can’t know in advance how to do the innovative thing, or else it wouldn’t be an innovation. Development is BOTTOM-UP outcome of lots of unpredictable individual successes and failures.

But this is not a counsel of hopelessness; in fact, it means economists can still say lots of useful things. You want an environment that is favorable for “searchers:” the private and social entrepreneurs who figure out these innovations. You want to create as many opportunities as possible through comparative advantage, gains from trade, and gains from specialization. This means individual rights, property rights, and not too much interference with markets or free trade. Public goods like infrastructure, health, and education are necessary, but arise best in response to demand, not determined by bureaucratic supply. This means a democratically accountable government. Individual freedom and democracy also allows social entrepreneurs to flourish.

Institutions are necessary to make markets work, but institutions also evolve from the Bottom Up, with pro-market institutions arising from values like individualism, trust, and respect for others.

So the paradox of development economics is that it’s the study of how to get rich without knowing how. As Hayek put it:

It is because every individual knows so little and… because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.

The current issue of The Economist has this in a leader about mobile money in Africa:

ONCE the toys of rich yuppies, mobile phones have evolved in a few short years to become tools of economic empowerment for the world’s poorest people. These phones compensate for inadequate infrastructure, such as bad roads and slow postal services, allowing information to move more freely, making markets more efficient and unleashing entrepreneurship. All this has a direct impact on economic growth: an extra ten phones per 100 people in a typical developing country boosts GDP growth by 0.8 percentage points, according to the World Bank. More than 4 billion handsets are now in use worldwide, three-quarters of them in the developing world (see our special report). Even in Africa, four in ten people now have a mobile phone.

With such phones now so commonplace, a new opportunity beckons: mobile money, which allows cash to travel as quickly as a text message. Across the developing world, corner shops are where people buy vouchers to top up their calling credit. Mobile-money services allow these small retailers to act rather like bank branches. They can take your cash, and (by sending a special kind of text message) credit it to your mobile-money account. You can then transfer money (again, via text message) to other registered users, who can withdraw it by visiting their own local corner shops. You can even send money to people who are not registered users; they receive a text message with a code that can be redeemed for cash.ve a text message with a code that can be redeemed for cash.

Also check out their special report on mobiles in Africa

Krugman speaking on Finland: Speaking at a forum on Finland’s economic development organised by the Finnish Innovation Fund, Sitra, Krugman said that technically the global economy began to rebound at the end of the summer. He added, however, that unemployment could worsen for up to a year and a half, despite growth.

“Prospects for slow growth–maybe even some quarters of negative growth are really quite strong. The forces of recovery now are largely temporary factors. We don’t have very much reason to think we’ve got a solid recovery on tap,” said Krugman.

While Krugman sees some bright spots, he added that the recession in Finland could last for quite some time. The effects of the government’s stimulus efforts are wearing off and exports offer little remedy in global markets still gripped by the downturn.

“From the general grounds that Finland is a manufacturing, exporting economy, I would expect GDP growth to turn positive quite soon because we’re seeing a worldwide bounce back in manufacturing–but that’s a long way from full recovery,” Krugman explained.

For now, Krugman says Finland’s best bet is to stick to its stimulus efforts to protect jobs.

“There are times when it’s good to run deficits and this is one of them, so don’t try to balance the budget right now,” advised Krugman.