Theoretical Perspectives on

Growth and Developmen t

Major Developments
298 CONTEMPORARY CHALLENGES
DEVELOPMENT 299
Beginning in the early twenty-first century, the international community formally recogni fall countries and key issues such as inequality and poverty are not confined to the developing
the global consensus on development by articulating specific development goals. At the ~~ 0
odd. The SDGS explicitly recognize that: 'The new Agenda builds on the Millennium
Millennium Summit in 2000, world leaders adopted the Millennium Declaration, which estab- ;evelopment Goals and seeks to complete what they did not achieve, particularly in reaching the
lished eight goals to be achieved by 2015. These Millennium Development Goals (MD Gs) hel ed ost vulnerable' (UNGA, 2015a, para. 16). In other words, the SDGs provide the broad
focus the development community around concrete targets. In recognition of the normative p rrarnework for contemporary development policy, and is referenced by governmental,
suc-
cess of the MDGS, the UN Secretary-General established the 'UN System Task Team on the intergovernmental and nongovernmental agencies concerned with promoting development in the
Post-2015 Development Agenda' in September 2011. Further political impetus was added to this developing world.
process when at the Conference on Sustainable Development (known as Rio+20) in 2012 . This chapter begins by exploring the debates over several of the key terms encountered in
, It
was agreed by UN member states that the Post-2015 Development Agenda would be shaped by a discussions of international development. In the next section, we explore two major debates -
set of new targets called the Sustainable Development Goals (SDGs; https: //[Link]/ goals) internal versus external causation, and the role of the state. Under Major Developments, we dis-
(see Box 13.1). While the SDGs are framed in terms applicable to all countries, both developed cuss changes in approaches to development and development planning. The key issues considered
and developing, nevertheless the SDGs are themselves the successor to the MDGs and, as such are the organization of development and the issue of debt and debt relief The North-South con-
mark an evolutionary rather than a revolutionary transformation of the global developmen; flict over development and international economic relations is also examined in Chapter 12 on
agenda.
race.
The SD Gs are embedded in Resolution 70/ 1 Transforming Our World: The 2030 Agenda for
Sustainable Development, which initiated a plan of action for 'people, peace and prosperity'
(UNGA, 2015a). This inclusive approach recognizes that sustainable development is the concern DEFINITIONS
Like many concepts in the social sciences, the concept of development remains ill-defined and con-
tested. As Gertz! (1995, p. 1) asserts: 'There is no consensus as to what development means or
requires.' Here, we discuss how people have interpreted the concept of development, and also the
controversies surrounding the terminology to be applied to countries in the process of overcoming
Goal 1. End poverty in all its forms everywhere.
mass poverty. Development, as used in the literature, suggests both a process and a condition. It is
Goal 2. End hu nger, achi eve food secu rity and improved nut rition and promote sustai nab le a process, insofar as attention is given to the means whereby a society may transform itself so that it
agricu lture. achieves self-sustaining economic growth. In the words of Anna Dickson (1997, p. 16), develop-
Goal 3. En sure hea lt hy lives and pro mot e we ll being for all at all ages. ment is 'an on-going process of qualitatively ameliorated social, political and economic change'. The
Goal 4. Ensure inclusive and equ itable qual ity educati on an d pro mote lifelong learn ing term is also used to denote the condition reached by those societies that have made the successful
opportun iti es for al l. transition to self-sustaining growth. It has also been seen as the condition in which 'individuals are
Goal 5. Ac hi eve gend er equality and empower all wo men and girls. more aware of, and have greater access to, (such) new technologies, and are induced to take advan-
Goal 6. En sure ava il ability and sust ainable ma nagement of water and sa nitation for all. tage of their possibilities through the working of market forces' (Sundrum, 1983, p. 15). Thomas
Goal 7. Ensure access to affordable, re liable, sustaina ble and modern energy for all. and Reader ( 1997, p. 91) define development as a 'multidimensional process involving change from
Goal 8. Promote sustain ed, inclusive and sustainabl e economic growth, full and productive a less to a more socially desirable state', which captures the idea of development as both a process
employment and dece nt w ork for all. and a condition.
Goal 9. Build resi lient infrast ructure, promote inclusive and susta inab le industrializati on and Modern economic growth emerged in Western Europe and has been successfully exported
foster innovation. almost exclusively to territories settled by Europeans. One unfortunate result of this has been a
Goal 10. Reduce inequality w ithin and among co untries. tendency to examine development as a process taking place almost exclusively in non-European
Goal 11. Make cities and human settl ements inclu sive, safe, resili ent and sustai nabl e. areas of the globe. Thus, although in 1948, the gap in living standards between some European
Goal 12. Ensure susta inabl e co nsumption and pro duction patterns. societies, for example Ireland, Portugal and Spain, and parts of the so-called 'developing world' was
Goal 13. Take urgent acti on to combat climate change and its impact s.
fairly narrow, economic growth in Europe was never seen in terms of development. And when, after
the fall of communism in Eastern Europe, attention turned to economic growth in the post-Soviet
Goal 14. Conserve and sustai nably use the oceans, seas and marine resources for sust ainabl e
deve lopm ent. empire, these countries were categorized as 'transitional economies' (or sometimes 'emerging mar-
kets') rather than as developing countries. Thus, development is, or shall we say became, the prov-
Goal 15. Protect , restore and promote sustainab le use of terrestrial ecosystems, sustainably manage
ince of Africa, Asia, Latin America and the Caribbean, and the Pacific. For some writers, this
fore sts, co mbat desertifi cation, and halt and reverse land degradation and halt biod iversity loss.
geographical limitation is part of Western control of colonial and postcolonial peoples and territo-
Goal 16. Promote peaceful and inclusive societies for susta inabl e development, provide access to
ries. In his influential book Encountering Development: The Making and Unmaking of the Third
ju sti ce for all and build effecti ve, acco untab le and inclu sive instituti ons for all.
World (1995), Arturo Escobar argues that the concept of development was created as a means of
Goal 17. Stren gthen the mea ns of impl ementati on and revitalize the Globa l Partn ership fo r
taming and controlling the Third World. This is an influential thesis but whether one is convinced
Susta inabl e Development.
by its claims rests on its further assertion that the development discourse is incapable of meeting its
300 CONTEMPOR ARY CHALLENGES DEVELOPMEN T
301
stated objective, that is, economic progress, since it is an instrument of control. We return t
issue later. 0 th·
is Life expectancy
In the immediate postwar period, development was defined in terms of economic gr at birth, 2021
where the standard measure was the gross national product ( GNP) of a country. This approa OWth
'
emphasized economic variables and gave little if any attention to the sociocultural aspects ch
developmen t. Moreover, because of its focus on aggregate growth, internal redistributio n th
. . . . ' at IS
?f
the different rates of growth of different regions, and the impact of growth on various soci~
classes were not taken into account. Underlying this perspective was a naive faith in the so -called 0.961 83 .2 18.2 13.0 64,660
'trickle-down effect'. Redistributive issues were perceived as second-orde r concerns. In othe 82 .7 19.2 13.8 55,782
0 .959
words, overall economic growth was necessary before attention could be given to dealing Wit~ 17.3 12.2 62,607
0 .952 85.5
inequality. This view was given scientific support by the Kuznets curve, which plotted
the relationship between economic growth and equality (Kuznets, 1966). According to the
Kuznets curve, an inverse relationship existed between growth and equity at the early levels of
development, with a more positive link developing as economic growth increased. This perspec-
tive, which equated economic growth with development, increasingly came under fire in the
1960s.
Dudley Seers' (1969) article 'The Meaning of Developmen t' provided the first
comprehensi ve alterrfative to the traditional definition. Seers contended that the development
as growth model was too restrictive and failed to address the multifaceted nature of develop-
ment. He was particularly concerned with equity and insisted that the definition of develop-
ment should include social objectives such as employment , health and shelter. In this perspective,
0 .693 61.1 10.3 16,198
developmen t was concerned with decreasing poverty and improving welfare indicators. Not
0 .692 63.6 9 .8 8,111
only has the definition of developmen t changed but the scope of traditional concerns has wid-
0.692 70.0 11.4 4,566
ened over time. Initially, developmen t policies also failed to recognize the gender dimension, but
since the publication of Ester Boserup's (1989) pioneering study Woman's Role in Economic
Development, increasing attention has been given to women's role in, and contribution s to,
developmen t, as well as the gendered impacts of particular development s strategies or policies.
This is partly the result of academic research and writing and partly a response to grassroots 0 .544 66. 1 8.7 4 .5 4,624
activism. 0.5 39 6 1.6 13.0 5.0 2, 167
Many economists continue to measure development in terms of income - gross national 0.535 63 .2 9.7 5.6 2,848
income per capita (GNI) ; or production - gross national product per capita (GNP), or gross 0. 535 52. 7 10.1 7 .2 4,790
domestic product per capita (GDP) . This should not be seen as a refusal to update their methods
Definitions: .
but rather reflects the advantages of using a single measure. Despite the various deficiencies that Human Development Index (HO /) : A composite index measuring average achievement ·1n t h ree bas1 ·c
..
have been raised concerning GNI, GNP or GDP as indicators, they are standard, well-known dimensions of human development - a long and healthy life, know ledge and a dece nt standard of l1v_1ng.
measures that allow cross-national comparisons to be made. But critics of an economic definition See Technical note 1 at [Link] es/hdr2022_technica 1_not [Link] fo r det ails
have also developed criteria with which to measure development. Perhaps the best-known measure on how the HDI is calculat ed. . . .. rn s
is the Human Developmen t Index (HDI), pioneered by the United Nations Developmen t Life expectancy at birth: The number of yea rs a newborn infa nt could expect to live if p~eva 11ing patte
Programme (UNDP). The HDI is based on a definition of development that takes into account of age- specific mortality rates at the tim e of birth st ay t he same t hroughout t he infant s life. ect to
social factors (see Table 13.1). Expected years of schooling: Number of years of schooling t hat a child of school ent rance, age can exp
receive if preva iling pattern s of age-specific enrolment rates persist throughout the child s life. d Id
In 1990, the UNDP published its first Human Development Report, which argued that 'the real
wealth of a nation is its people. And the purpose of development is to create an enabling environ-
Mean years of schooling: Average number of yea rs of ed_ucati on received by peopl e ages 25 an ° er.
converted from educati on attainment levels using official duration s of each level. . d ,-; d 'ts
ment for people to enjoy long, healthy creative lives' (UNDP, 1990, p. 9). This focus on human ucc,on an 1
Gross national income (GNI) per capita: Aggregate ·income of an economy generated by its pro . d by the
development goes beyond income. The UND P invented the HD I as a basis for classifying coun- ownership of facto rs of production, less the incomes paid for the use of factors of producti o~ ~wne .
tries. It is currently based on life expectancy, education (mean years of schooling and expected years rest of the world , converted to internati onal dollars using PPP rat es, divided by midyear popu a on.
of schooling) and income. The 2018 report (UNDP, 2018, pp. 24-5) ranked 189 countries into
four human development groups: Note: a ; Data refer to 2021 or the most recent year available.
Source: UNDP (2022. pp. 272-6)
302 CONTEMPORARY CHALLENGES DEVELOPMENT 303

1. Those with very high human development, with an HDI index of 0.800 or higher, curre developing countries was coined in the 1950s and has also come under critical scrutiny. The term
comprising 59 countries and including all the countries usually identified as dev l ntly '1hird World' reflected more a political than an economic division in the world bur came to be used
e oped interchangeably with chat of 'developing country'. Various critics have argued that the term 'Third
economies.
World' implies inferiority since third comes after first and second. However, such criticism is mis-
2. Those with high human development, with an HDI value of 0.700- 0.7.99, laced and signally fails to acknowledge the origin of the term. When Alfred Sauvy first used the
comprising 53 countries. ~errn in 1952, he was making an analogy with the Third Estate in French civil society and emphasiz-
3. Those with medium human develo,pment, with an HDI value of 0.550- 6.99, currently ing che revolutionary potential of the countries so classified. Thus, governments and many civil
comprising 39 countries. society organizations in the developing world have retained the use of this term since they do not
attach a negative connotation to it. In the 1970s, it became fashionable to refer to the Third World
4. Those with low human development, with an HDI value below 5.50, currently comprisin as che South since most of these countries were in the southern hemisphere. In the 1990s, this ter-
38 countries. This groups together many of the poorest countries in the world and is heavilg
minology was replaced by that of 'Global South', partly to indicate the fact chat conditions of pov-
concentrated in sub -Saharan Africa. For example, the 20 countries with the lowest HDI are ai erty and marginalization occurred in advanced industrial societies; thus, the term referred to people
from Africa. regardless of their geographic location. However, the term has become popularized in a manner
The use of GNI per capita versus the HDI is not just a statistical exercise. Because the H DI chat makes its usage no different from the term it replaced. But whether one uses developing, Third
measures social factors, it will give higher rankings to societies that have a more equal distribution World, South or Global South, the grouping is invariably the same.
of wealth and invest in social services. In contrast, GNI per capita can rank highly those societies While the debate about terminology is not substantive, a further debate concerning divisions
that have a large amount of wealth, no matter its distribution among the population. Using within this group of countries has greater political significance. The group defined as developing is
UNDP data, we can see Jhat the HDI rankings of the top four countries ranked by GNI per capita large and heterogeneous, as we discuss below. The heterogeneity of the group has given rise to a
are ten or more places belo"'; their income scores (see Table 13.2). The gap is particularly large for debate on the criteria to be used in making divisions within the grouping, and the names to be given
oil-producing nations. A country's relative ranking allows a government to claim it is doing well or to these various subgroups. Indeed, at various times, it has been argued that instead of a singular
for the opposition to attack a government for poor performance. category, we should recognize a number of different types of countries that are not developed.
It is now widely agreed that development cannot be confined solely to economic growth. W hile Division into groups is an inherently subjective and political exercise. For example, following the
there is agreement that development refers to socioeconomic and cultural variables, no consensus first oil price rise in 1973, it became fashionable to talk about a Third World, a Fourth World and
exists on either how to measure development or how it might be attained. To some extent, the a Fifth World, ostensibly on the basis of their access to petroleum resources, but this was an ideo -
search for a consensual meaning is a fruitless one and we will conclude this discussion with two logical intervention at a time when the solidarity of the developing world threatened Western inter-
observations. First, development is more than mere economic growth and involves structural ests. In a similar vein, when, in the 1990s, financial analysts began to refer to developing countries
change and attitudinal change in a given society. It requires a structural transformation of the econ- that offered the opportunity for profitable investment as 'emerging markers', this signified a positive
omy and a movement from a 'traditional' value system to a 'modern' one. Second, development evaluation and was designed to speed the transfer of funds to these countries.
consists of a set of material practices and a collection of ideas and statements. This controversy It is arguable that the binary distinction between developed and developing countries is unhelp -
concerning the term 'development' is mirrored in debates concerning the terminology and classifi- ful in the context of a rapidly changing global economy. In discussing aggregations of countries,
cation of countries seeking to make the transition to the ranks of the advanced industrial various divisions are used currently. These include developed economies, economies in transition
countries. and developing economies (WESP, 2014); advanced economies and emerging market and devel-
Immediately after the Second World War, these countries were variously called 'underdevel- oping economies (IMF, 2018); high income, middle income and low income (World Bank, 2018);
oped'. 'poor' or 'backward'. As more and more of these countries gained their independence, these developed economies, transition economies and developing economies (UN CTAD, 2019) .
terms came to be seen as derogatory and offensive. By the early 1960s, these terms were replaced by These debates are fundamentally unresolvable. In the remainder of this chapter, there will not be
the term 'less developed country', but by the mid-1960s, this term itself was held to be offensive and an attempt to impose a single term to encompass the group of countries variously referred to as the
was replaced by the now ubiquitous term 'developing country'. Another term to describe a group of Global South, the South, the Third World, or rte developing countries. First, as a matter of histori-
cal accuracy, some terms are more apposite than others. Thus, discussions of the debt crisis in the
1980s refer to the Third World debt crisis. Second, depending on the context, some terms are used
by the countries under discussion, and to do otherwise is to reject their agency. Third, despite argu-
ments concerning the fracturing of the developing country category, the nomenclature of develop -
ing countries persists. Countries that self-identify as developing countries continue to use the term
12 (see Farias, 2019); that is, the category of developing country remains of political relevance to deci-
42 sion makers in these countries. Moreover, the pursuit of poverty eradication, an end to hunger,
Luxembourg 17 healthcare that ensures an end to premature death and access to education are derived from efforts
to reduce global patterns of inequality.
Source: IJN DP (2022, pp. 272-6)
304 CONTEMPORARY CHALLENGES DEVELOPMENT

THEORETICAL PERSPECTIVES ON GROWTH AND Dependency theory argues that the development of some countries has resulted in the under-
development of others. Current advanced industrial societies only achieved ~his status through the
DEVELOPMENT
riation of economic surplus from the currently underdeveloped societies. Moreover, whereas
The political economy of development has initiated a number of theoretical debates and cont eJCpro P . . ..
ro- odernizanon theory predicted a successful transmon to development for the underdeveloped
versies. Theorists and practitioners interested in the economic development of a particular state or rnorld through the adaptation of specified practices, dependency theory argued that development
region can be divided according to their views on two issues. The first concerns the relative impor- :as an impossibility within a capitalist international economic system. It was only by delinking or
tance of internal or external factors for the failure of a society to achieve development. The second ting out that the poor would be able to prosper. Dependency theory contends that developing
is related to the comparative roles of the state and the market in promoting development. As will ;;untries do not have any meaningful choices since they are controlled directly or indirectly by
become apparent, these debates reflect and replay the inter-paradigm debate in IPE. Liberal theo-
e:,cternal influences.
rists have tended to emphasize the role of internal factors in the success or failure of a state to From the perspective taken in this book, both internal causation and external causation theories
achieve development. Writers influenced by the economic nationalist tradition have no consistent are incomplete. A complex phenomenon such as development is not attributable to forces arising
approach to this issue, with some agreeing with the liberal perspective and others agreeing with from a single level of analysis. National societies are, as we demonstrated in Part 2, integrally linked
radical writers, who give greater weight to the role of external factors in inhibiting national devel- to an emerging global political economy. This observation severely weakens the internal causation
opment. It is not surprising that in the arguments concerning the relative importance of the state perspective, which relegates external causes to, at best, a_ secondary role. Similarly, we h~ve pre-
and market as agents of economic development, economic nationalist writers will emphasize the sented evidence to show that external structures are mediated through internal processes m ways
role of the state and liberal theorists will give more credence to market-related factors . Critical that are not automatic, thus raising serious questions about the external causation approach.
p erspective writers, while focusing on the role of global capitalism, have tended to support state Moreover, the relationship between external and internal variables is not fixed and their relative
initiatives in this debate. importance will vary according to national society and historical period (see Box 13.2).
We spend some time Fxploring the first of these two issues before turning to the second.
Proponents of what we te~m the 'internal causation theory' begin from the assumption that the
absence of development in a particular society results from that society's failure to harness its
resources in a way relevant to the demands of modern economic growth. The causes of underdevel-
:r 2
External and internal influences on Haitian development

opment are to be found in the underdeveloped society and the solution to underdevelopment is Haiti is one of the poorest countries in the world (Roy and Cara, 2023). Its development has been
therefore to be found at the domestic level. This view was first and most systematically articulated hindered by a comb ination of internal and externa l factors , although in th is case, the extern al
in modernization theory. ones have exercised a decisive ro le. Haiti was a French co lony that used Afri can slave labou r to
Modernization theory originated in American sociology and economics, and adopted an evo- export suga r, coffee and timbe r. Foll owi ng a successfu l slave revo lt in 1791, Haiti became t he
lutionary perspective on social change, taking the view that the currently underdeveloped societies fi rst independent, postco lonia l Black repub lic in 1804. External factors that have made econom ic
development difficu lt include continuous foreign interventi on by co lonial powers. The most
were at an earlier stage of development than the advanced industrial countries. These poor
significant one was that on achieving independence, France forced Haiti to assume a large debt
countries could develop if they adopted similar attitudes and social structures to the developed
and pay its former co lon ial slave masters mi llions of doll ars in repa rations. It is estimated t hat
world. Rostow's The Stages of Economic Growth (1960) presented the definitive statement of
Haitians pa id t he French the eq uivalent of $560 mi lli on. If t hat money had stayed in Haiti , it
modernization theory's approach. He argued that there were five phases or stages of development
wou ld have added $21 bill ion t o its economy (Porter et al., 2022).
that a country had to pass through. The movement from one stage to the next depended on raising
Internal factors that have frustrated economic growth include politica l instability, natural
standards of living and adopting modern values.
disasters and poor hea lthcare. Haiti was ruled by a father and son dictatorship from 1957 to
In contrast to this focus on internal causes of and solutions to underdevelopment, a 1986 and the n a rotating seri es of president s, coups and foreign peacekeeping operations in the
different approach, which can be termed the 'external causation theory', is adopted by many 2000s. Haiti has suffered nu merous natura l disasters, including earthquakes in 2010 and 202 1,
practitioners and scholars. From this perspective, underdevelopment is the result of external Hurricane Matthew in 2016 and Tropica l Storm Grace in 2021. Poverty and lack of a healthcare
forces that constrain a society's efforts to develop. The most widely influential example of external infrastructure have resulted in the spread of dengue fever, malaria and cholera.
causation theory is dependency theory, which arose in the mid- l 960s as a direct challenge to In Haiti 's case, external factors have made development virtua lly impossible and shaped
modernization theory. The dependency school began with analyses of Latin America (Dos Santos, internal fact ors in a destructive directi on. It is a case of externally driven underdeve lopment w ith
1970; Frank, 1967, 1969), but was extended to cover Africa (Amin, 1976) and the Caribbean little chance for counteracti ng interna l res ponses. In the co lon ial era slavery kept t he majority of
(Beckford, 1972; Thomas, 1974). Dependency theorists argued that a lack of development people in poverty, wh ile in the postco lonia l era France burdened Haiti w ith an unreasonable debt
was not the result of poverty and the absence of modern values but was instead the direct Thi s was fo llowed by US occupation (1915-34), which undermined the country's attempts to
consequence of economic exploitation. Whereas for modernization theorists, development build its own politi cal institutions. Haiti's external ly imposed role as a supp lier of timber resu lted
depended essentially on national efforts, for dependency theorists, underdevelopment was the in w id espread deforestati on, w hi ch worsened t he effects of storms an d f1oods. The conseq_uence
other side of development. Underdevelopment was a condition historically created by of t his comb inati on of external pressures has made it extremely difficu lt for Haitians to bu ild t he
development. internal institutions and economic structures needed to support economic growth and prosperi ty.
306 CONTEMPO RARY CHALLENG ES 307
DEVELOPM ENT

Turning to the two variants of the approaches discussed, it should be clear that moderni zat1on . Economic and welfare indicators for Asian NICs
, f il dd
t h eory s a ure to a ress external structural constraints omitted a crucial set of considerat1on ·
J?ependen cy th~ory was not only overly pessimistic but it overstated the impact of external cond:~
t10ns on domestic developme nt, and could not account for differential rates of economic progress
. f d . h . ·1 I hil h
o f ~ountries _ace wit. a_s1m1 ar ~xterna environme nt. W · et ere _are many cases in which deveI-
o~mg countries have limited cho1c~ and are satellites or appendage s of foreign companies or coun- 34
tnes, we do not have to accept the simple dependenc y hypothesis since it overstates the constraints
facmg · · makers.
· dec1s10n 11 59

In short, developme nt is neither solely an internal affair nor driven relentlessly by external P res- 79 98

sures. Furthermo re, the distinction between domestic and external policy is an analytical conve-
nience chat cannot be sustained when examining policy-mak ing and economic developme nt ·
poor, weak ~tates wit~ open econo_mies . For many governmen ts in the Third World, blaming t~
extern~! env1ronme~t 1s an easy option when domestic reform proves difficult. For most developing
countries, efforts to improve the external environme nt will not bring the hoped-for rewards unless
at the same time efforts are made to change internal policy-mak ing. The stress on external chan e 93
can be misguided and is frequently employed in an effort to avoid dealing with domestic problei!.
82
A thoroughly benign external environme nt cannot assist a dysfunctio nal domestic system. And it is
90 92.9 72 78.6
arguable that a malign external environme nt can do less damage to a country that has a degree of
flexibility and efficiency irtits decision-m aking. 75 91.8 70 77.3

On the other hand, attention to internal issues should not blind us to the fact that not all prob- Note: CPI = consumer price index.
lems are domestic in origin. There have been and continue to be external forces over which poor Sources: World Bank (1980, p. 11); UNDP (2000, p. 157)

countries have limited control. All developing countries can be injured or overwhelm ed by external
events and forces for which they bear no responsibility, such as the oil crisis or global inflation. The Two competing schools of thought developed - the neoliberal school, which emphasize d the
internation al system imposes a hierarchy of hindrances and dangers that affect different countries export-orie nted industrializ ation (EOI) policies adopted by these states, and the developme ntal
in different ways but do nevertheless create barriers of injustice. However, there are many cases state school, which put most stress on the ability of the state to intervene successfully in the econ-
where the choices for Third World nations are not completely determine d by outside forces, and omy. Neoliberal scholars argued that the success of the NI Cs derived from their adherence to mar-
these choices are neither trivial nor meaningless. The available choices may be sharply circum- ket discipline and promotion of export-led growth. Unlike the majority of developing countries,
scribed by the weakness and poverty of the Third World and the options available may be heavily which developed highly interventio nist policies, the NICs, in pursuing growth, had chosen to
conditione d by the attitudes and assumption s of the advanced industrial countries, but even within deregulate their economies . Success was the result of the pursuit ofliberal economic policies, a cli-
these boundaries , the possibility of better or worse decisions for each country has frequently mate conducive to foreign investment and a minimal role for the state (Hughes, 1988, 1989; World
remained open. Moreover, the persistent impact of nationalism , the growth oflndigeno us peoples' Bank, 1993). For successful industrializ ation, the governmen t's role should be limited to the pro -
capacities and the impact of internation al organizatio ns have increased the desire and ability of motion of free trade, the provision of free labour markets, high interest rates to encourage savings
developing countries' elites to make their own decisions. and conservative budgets. Neoliberals criticized the suspicious and at times hostile attitude to the
As enduring as the debate on the relative impact of external and internal variables is the debate internation al economy taken by most developing countries. These countries tried to limit interac-
between proponent s of the market and those of the state as the critical actors in promoting devel- tion with external actors and promoted industrializ ation through a process of import substitutio n.
opment. While the debate concerning the relative merits of the state and the market continues to Import substitutio n industrializ ation (ISI) denotes a high tariff policy in which the aim is to
engage adversaries concerned with promoting developme nt, we illustrate the key issues involved in keep foreign products out, develop domestic infant industries and industrializ e behind these high
the debate through an examinatio n of a specific historical moment. protection ist barriers. ISI policies tended to run into bottleneck s unless the developing country
The success of the Asian newly industriali zing countries (NICs) - Singapore, Taiwan, South had a sufficiently large market. The costs of industriali zation were immense, and the costs of
Korea and Hong Kong, collectively known as the 'four tigers' - spurred a debate concerning the imported technology and intermedia te goods meant that, far from saving foreign exchange, the
reasons for their success. Between 1965 and 1980, these countries achieved impressive levels of country was still running a large import bill. Neoliberal theorists argued that successful industrial-
economic performan ce characteriz ed by fast growth, low inflation, macroecon omic stability and a ization in the NI Cs was based on a strategy diametrica lly opposed to ISI (see Table 13.4 for statisti-
~trong fiscal position, high savings rates, open economies and thriving export sectors allied with cal support of the superiority of the NI Cs' export-led growth compared with Latin America's ISI
improvem ent in welfare indicators such as life expectancy and literacy (see Table 13.3). In the growth). Instead of protecting the domestic market, these countries had taken an open view t~wards
1980s a~d early 1990s, a second tier of East Asian countries - Indonesia, Malaysia, the Philippines foreign capital and had promoted industrializ ation through exports rather than rmport
and Thailand - appeared poised to repeat this success. substitutio n.
308 CONTEMPORAR Y CHALLENGES 309
DEVELOPMENT

'. ~ox ·.' Confucianism and economic development

13 .3 ..
The core va lues of Conf ucian ism are derived from t he concept of 'ren' (goo_d ness, humanity), w hich
describes the highest human ach ievement reached t hrough moral self-cu ltivatio n. The impli cations
f 0 r t he indiv id ua l include a co llective ori entati on , recip rocity and knowledge th ro ugh 1ntu1tio n. One
-0.3 2.7 -0.6 4.7 su it of the high priority given to t hese values in the business environment is a foc us on the social and
8.8 ~: lationa l aspects of t he business t ransaction. Trust developed t hrough interaction in the public and
3.0 9.8 2. 2 9.3 5.6 rivate lives of pa rtn ers is built to ensure t he long-t erm nature of business relationships. Decision-
1.9 2.7 0.6 2.9 7.9 4.9 ~ aking is less confro ntati ona l and invo lves consensus and cooperation, w it h mutual benefits being a
5.8 3.5 6.4 3.1 1.4 9.8 high priority of all business deals. The importa nce of t he fa mily to Confucianism permeates business
6.5 0.7 7.4 0.7 7.6 3.7 life. w ith compa nies becom ing the second fam ily of individua ls. Paterna listic leadershi p encourages
3.9 0.4 3.8 0.4 respect and long-term comm itment on the part of employees (see Ornat owski, 1996).
1.6 0.4
3.7 1.0 5.8 4.9 -9.5 11.3
6.0 1.6 7.0 1. 5 -1.0 3.6 It is also worth noting a third approach to explaining East Asian development. This is the cul-
tural approach, which emphasizes the role of Asian values. According to chis perspective, the NI Cs
succeeded because of the impact of Confucianism on their societies (see Box 13.3). What this argu-
8.6 7.1 n/a n/a 9.5 6.3 ment fails to confront is the many centuries in which Confucianism appeared to be an obstacle to
8.0 5.3 2.0 2.7 9.6 economic progress. It isn't clear how or why centuries of stagnation were suddenly transformed into
2.4
9.6 9.7
economic success when the cultural component remained the same.
8.7 13. 1 27.2 13.8
This debate between competing schools of thought was of profound importance to ocher devel-
7.3 4. 9 - 8.0 4.4 9.8 n/ a oping countries, since the various perspectives had implicit or, indeed, explicit assumptions con-
10. 1 6.1 13.2 5.9 4.7 8.1 cerning the relevance or lessons of East Asian success for their economies. The liberal laissez-faire
7.2 7.0 11.2 8.1 8.5 12.8 model was the easiest to follow and partly accounts for its success/ emulation for / by many develop-
7.2 7. 9 10.6 12.6 10.0 10 ing countries. This required countries to deregulate, privatize and dismantle governmental controls.
Source: Data from World Bank (1989, 1990) Although chis was not easy to do in societies where vested interests supported protectionism and
governments depended on these vested interests, it was, theoretically, the easiest option. The sec-
ond option required changes in governance structures and more fundamental societal change. The
Proponents of the developmental state perspective (Amsden, 1989; Wade, 1990; White, 1988)
conditions for the creation of a developmental state were far from obvious. The third approach was
did not dispute the export orientation of the NI Cs but argued chat the state had played a crucial
the most pessimistic, since Asian cultural values could not easily be transferred to Africa, Latin
and determining role in East Asian industrialization. In the first place, these countries did not
America, the Caribbean or the Pacific.
begin with a process of EOI but had undergone an ISi phase first. The crucial issue was not ISi
versus EOI but rather the point at which governments switched from ISi co EOI. Moreover, EOI
was not, as was claimed by neoliberal apologists, a recipe for laissez-faire economics; on the con- MAJOR DEVELOPMENTS
trary, governments had been active in promoting EOI. In chis perspective, the quality of govern- From the foregoing, it should be obvious chat the pursuit of economic development has excited
ment intervention and the choice of industrial policies and strategies were critical to economic passions, aroused debate and affected billions of people in the postwar era. While each society will
success. With the exception of Hong Kong, government intervention was extensive in East Asia. have its own periodization based on political and economic indicators, we outline two broad his-
Successful government intervention was based on a powerful sec of policy instruments, a corporat- torical periods in the evolution of development as an issue in the global political economy.
ist/ authoritarian model of the state and the ability to restructure the economy cowards high-tech Undoubtedly, views about development and development practices have altered many times in the
production. The success of the NI Cs was the result of strong states governing the market. In ocher past decades in response to the experiences of developing countries and a changing global economy.
words, government intervention was vital in promoting economic development. Arguably, however, a major change occurred at the beginning of the 1980s when, in McMichael's
The strength of the neoliberal approach lies in its critique ofISI, and its weakness arises from its ( 1996) terminology, the development project was discarded in favour of the globalization project.
failure to give sufficient attention to historical factors. The strength of the developmental state The first period we discuss is one in which the nation-state was perceived as a key instru~e~t in t~e
model arises from its comparative analysis of political factors in the success or failure of economic search for economic growth and development, and development was conceived pnnc1pally m·
policy, and its weakness lies in the difficulty of assessing the effectiveness of government interven- national terms. In the second period, far greater emphasis has been given to the importance of mar-
tion in development policy. ket fo rces, and development has been conceived primarily in terms of the world market.
 CONTEMPORARY CHALLENGES
DEVELOPMENT 311
Development and national capitalism, 194 7-81 At the beginning of this period, there was also a belief in trickle-down economics. It was believed
Development in this period was conceived principally as a proJ·ect of a strong and active g chat economic growth would trickle down from the rich to the poor within societies. Over time, it
. . overn-
ment. In the Keynesian postwar compromise, states were expected to establish a balance b became apparent that this optimism was ill-founded. During the 1960s, these views were increas-
etween
supply and demand for goods, encourage consumption, promote the growth of domestic ind . ingly challenged, as some analysts shifted the focus from the internal problems of developing coun-
. . .. . Ustnes
and provide a safety net for their cmzens m the form of social welfare. Keynesian economic th tries to the negative impact of the external environment.
. . . eory
sough t a baIance between non-mtervenuon m the market by the state and guided control. The orthodox position held at the beginning of this period came under sustained attack from a
The political conditions for the nationalist development project were laid by the post-inde number of sources. Although there was agreement with the dominant position that industrializa-
dence modernizing elites who were intent on securing economic growth as a mechanism to born- tion provided the path to development, the view that underdevelopment arose from domestic fail-
. I .. A h . f Ster
t h elf egmmacy. t t e same time, many o these regimes were weak or corrupt or both Thu h ings was challenged by dependency theory. However, from the perspective of policy-making, it was
d 1· . . . . s, t ey
pursue . p_o icies th~t support_ed their contmued hold on power rather than those most likely to lift che 'terms of trade' argument that made most impression. Simply put, the terms of trade thesis
the maJonty of thelf p~pulat10n out of ~overty. In a bid to protect the regime and its sovereignty, alleges that there is a persistent tendency for the value (or terms of trade) of primary commodities
many governments devised measures to mcrease the power of the state. A belief that the external to fall vis-a-vis manufactured exports. This thesis was propounded by Raul Prebisch, first Secretary-
environment was not conducive to development led, on one hand, to criticism of the international General of the United Nations Conference on Trade and Development (UNCTAD), and was
economy and the major international economic organizations and, on the other, to domestic poli- influential with policy makers in the developing world. The terms of trade thesis led to export pes-
cies of import substitution. simism and supported ISi policies, but it also led to two specific campaigns. First, it provided the
The quest for economic development was shaped and moulded by developments in the world economic rationale for preferential access for the manufactured exports of developing countries. If
economy and by the attitudes and actions of governments and international organizations. A num- dependence on primary commodities condemned developing countries to a foreign exchange gap,
ber of changes in the international economy were to have a profound impact on the prospects for it was logical to support their diversification into manufactured exports. Similarly, the terms of
development in this first period. A striking"characteristic of the international economy for most of trade thesis provided the rationale for international commodity agreements as a mechanism to halt
this period was economic recovery and strong growth trends, especially among the advanced indus- the decline in export earnings.
tri~l countries. Between 1947 and 1971, the world economy experienced unprecedented growth. The downturn in the world economy in the mid- l 970s and the failure of industrialization and
This growth began to falter in 1971 with the collapse of the Bretton Woods system of monetary trickle-down policies led to a new approach. The 'basic needs' approach, which gained support
management ~nd came t_o an en~ after th~ first oil crisis of 1973- 4. During this period, although from the ILO and World Bank in the mid- l 970s, rejected trickle-down policies and argued for
~any develo~mg countnes expenenced high growth rates, most of this increase was consumed by redistribution with growth, and also replaced the focus on industrialization with one giving greater
~1g~ populat10n growth. Moreover, the benefits from the long boom of economic growth were attention to agriculture and the rural sector. The basic needs approach argued that development
limited for developing countries. The postwar boom was based on the growth of manufactured should concentrate on meeting the employment, health, education and shelter needs of the poor.
exports and since most developing countries relied on primary commodities, the dynamism of the Furthermore, gender considerations had been absent from orthodox development theory. During
world economy was irrelevant to their prospects. But if their gains from postwar growth were mea- this period, research on gender and development began to show the necessity to bring such consid-
gre, the downturn in the world economy in the mid- l 970s created an unfavourable economic cli- erations to the forefront.
mate._ Th~ first oil shock triggered, but was not solely responsible for, the onset of the global Another crucial feature of this period was the development of a Third World coalition to cam-
recess10n m 1974. Non-oil-exporting developing countries were faced with a severely deteriorating paign for change in the international economic order. Modernizing Third World elites began to
balance of payments. It was in this period that Third World debt began to grow as governments articulate a distinctive set of interests within the global economy. Although divided by levels of
borrowed to meet their obligations. The second oil shock of 1979 plunged many countries into economic development, ideology, political systems, culture and an amazing diversity of domestic
severe balan~[Link] paym~nts problems, and heralded the difficult times ahead. These events exposed economic policies, the governing elites of developing countries were united in their demand for
the vulnerability of Third World economies and opened up divisions among them as the gap in the additional resources and reform of the international economic order. In the post-independence
pace of growth between the middle-income and low-income countries widened. world, Third World elites were willing to assert their own vision of development. They did so
. The practic~ of development was also shaped by changing ideas about development. Early th eo- through two main organizations. The Non-Aligned Movement, created in 1960, although mainly
n es of economIC development were concerned with establishing the characteristics of underdevel- concerned with political issues, progressively addressed what it saw as the failures of the postwar
opment. Studies such as Gunnar Myrdal's Asian Drama: An Enquiry into the Poverty ofNations liberal international economic order, and was instrumental in making reform of this order a key
(1968) helped to demonstrate the differences between the industrial world and the underdevel- diplomatic issue in the 1970s. The Group of 77 ( G77) became the chief vehicle through which
oped one. The standard view of an underdeveloped country saw it as one with a predominantly Third World demands were aggregated and articulated. The G77 lobbied UN organizations and, as
large popu!ation characterized by the absence of modern values. The theory of economic dualism the G24, brought a collective Third World voice to the World Bank and the IMF. During this
developed m the 1950s asserted that developing countries were characterized by a modern, dynamic period, the most intense and politically significant campaign occurred over proposals for a New_
~ector and a traditional, stagnant sector. The task was to expand the small modern sector through International Economic Order (NIEO ), which is discussed below.
mvestment. To the early development economists, it seemed that development was a relatively sim- The international political environment, and specifically the Cold War context, was also signifi-
ple matter that could be achieved with the application of certain techniques (see Stewart, 1972). cant for most of this period. Western and communist states competed for the allegiance of Third
312 CONTEMPOR ARY CHALLENGES DEVELOPMEN T 313

World states, and this competition was not solely political or strategic. It was also an enga e jrnportant states. The debt crisis was also politically important since it increased the leverage of the
· i·d eo1ogy, mark
over economic ets an d access to resources. Was capitalism superior to commu
g rnenc
. rnultilateral financial institutions. The World Bank and the IMF were given prominent roles in
as the economic system likely to bring prosperity? Which side would have access to the stra:srn finding solutions to the crisis and, as lenders of last resort, they were able to impose stringent disci-
minerals in the developing world? Which side would find a lucrative market for its products, Th gic lines on Third World debtors.
questions framed the pursuit of development . Moreover, the Sino-Soviet split brought co.m es.e P The debt crisis also heralded a major shift in the development paradigm. It swept away the basic
tion between Moscow and Beijing for Third World support. In the immediate postwar peri:;r~- needs and poverty alleviation approaches and replaced them with the neoliberal policy of struc-
was believed that communist China and the Soviet Union were natural allies From the persp '. It tural adjustment (see Box 13.4). Although no single template exists for structural adjustment pro-
. . . . · ective
of development policy, m t~is ~enod of the Cold War, these nations provided an alternative model rarnmes (SAPs), they do have certain features in common. These include a curtailment of the role
to that espoused by the capitalist Western powers. The Sino-Soviet split was important in intr cl !f the state in the economy, a bias towards the export sector and a penchant for free markets. SAPs
0 Uc-
ing a new element of competition in Cold War politics. The simple dichotomy of competition sought to shift developing countries from a reliance on ISI to EOI. This shift in policy is frequently
between Moscow and Washington was replaced with antagonism between Beijing and Mosco referred to as the 'Washington Consensus' (Williamson, 1993), although the accuracy of this term
and Beijing and Washington. China provided a third model of economic development. The We: to refer to a specific consensus that guided policy-making is disputed (Nairn, 2000a, 2000b). An
responded to the perceived threat of communism with reform of the World Bank and the GATT intense debate that remains unresolved arose concerning the impact of SAPs on the economy, the
and in Latin America, the US sponsored the Alliance for Progress, a programme to boost economi~ poor and women. Critics allege that SAPs hurt the poorest, increase women's burdens and provide
growth and democratic government. But at the same time that limited reform efforts were under- no effective solution to debt (Bangura and Beckman, 1991; Pio, 1994; Sahn, 1994). Supporters
way and support was given for land reform, Western policy supported anti-commun ist govern- have acknowledged the negative impacts of SAPs, but have argued that these can be addressed
ments rather than those committed to development. The containment of communism was more (Kahn and Knight, 1986; Sisson, 1986). Their main contention is that countries undergoing adjust-
important than the eradication of poverty. This support for the security state apparatus resulted in ment have performed better economically than those without SAPs.
the squandering of economic resources. · As a consequence of the emphasis on rolling back the state, NGOs were given a greater
role in development. Increasingly, NG Os have played roles as service providers, bringing welfare,
development relief and social services to the poor. In those circumstances, where the state proved
Development, neoliberalism and beyond, 1982-2024
incapable of meeting basic needs, NG Os have been critical in supporting the material needs of
The eruption of the Mexican debt crisis in 1982 signalled a shift in the development project.
Importantly, it changed relations between developing countries and industrial countries, between
developing countries and internationa l organizations, and among developing countries. At the
end of the 1970s, the second oil crisis and consequent recession hit many developing countries
hard. It was apparent to astute commentato rs that development strategies at the end of the UN's
Follow ing the fin ancial cri sis in 1994, the Mexican governm ent and the IMF agreed a SAP. Thi s
Second Developmen t Decade had failed. The World Bank began the process of structural adjust- was the second ti me in just over a deca de that Mexico sought the IM F's assista nce, since t he
ment lending in 1980, but it was the conditions created by the debt crisis that brought structural 1982 debt crisis had already ushered in an adju st ment package. On 1 Feb ruary 1995, the IMF
adjustment lending to the fore since it strengthened the conditionali ty imposed by the Bank and approved an eightee n-mont h standby cred it fo r Mexico of up to US$ 17.8 billi on in support of
the IMF. the governm ent's 199 5-6 eco nomi c and fin ancial programme. The SAP attached t o thi s loa n had
In August 1982, the Mexican government announced that it was unable to service its debt, thus short- and long-t erm conditions. Structural adju stment was t he long-term condition. In relation
bringing into the spotlight the severely indebted nature of many developing economies. The debt to its Mexica n programme, t he IM F (1995) stated: 'The domestic adjustment package, co mbining
crisis was not only a problem for the international economy, it also had fundamental implications prudent fi scal and strong monetary and credit policies, a disciplined incomes poli cy, and furth er
for the distribution of power and ways of thinking about development . The debt crisis initially chal- structura l reform s, provi des an approp ri ate poli cy response to cu rrent circumsta nces.'
lenged not only developing economies but also the Western banking system. During this period, SAPs have a number of common fea tures. These inclu de t rade liberalization, privati zation,
the debt crisis was the main issue of importance to the development prospects of developing coun- deregul ation, cred it reduction and wage suppression. Criti cs of SAPs argue t hat growing poverty,
tries. The economic consequences of the debt crisis were disastrous for most of the developing unempl oyment, depression of wages, th e undermini ng of rural livelihood s and t he disint egratio n
world. The 1980s have become known as the 'lost decade', because of the overall decline in living of societies are also common to t hem. The 1995 agreement conso li dat ed and extended progress
standards and the increased numbers of people living in poverty. The debt crisis also led to a fall of made in th e area of IM F-imposed stru ctural reform since 198 2. It provided a reinforcemen t of the
investment in the developing world and a sharper concentratio n of investment in a limited number govern ment's strategy fo r privatizati on, including privatizati on of basic infrastructure (rail, ports,
of countries. It contributed to widening income gaps domestically and internationally, increased airports, electri city generation and radio and te lecommuni cati ons). Criti cs po int to t he adverse
differentiation among the developing countries and reversed many of the gains made in the previ- social effects that t he SAPs had on Mexico , including over 50 per cent of all Mexicans livi ng in
ous decade. Politically, the debt crisis put the Third World coalition under severe strain, partly pove rty, more than a qu arter of a milli on peopl e losing t heir jobs by May 1995, a sharp decli ne
because of the different levels of indebtedness, partly because of the uneven development that arose in rea l wages and t he govern ment's ban ning of free wage negotiation. Some even cla im that
and partly because the response of Western creditors favoured the more p olitically and strategically eco nom ic poli cies were t he ca use of th e Chiapas upri sing.
314 CONTEMP ORARY CHALLENGES DEVELOP MENT 315

people. This emphasis on the role of NG Os has been supporte d by national governme financing condition s and lower remittanc es' (UN, 2009a, p. 1) was widely shared, the impact
nts · of the
industria lized world and multilate ral developm ent agencies. It has been estimated that, . ·s has not been uniform in the developin g world. Whether the focus is on employm
in ~n the cr1s1 ent, social
NGOs disbursed $1 billion in developm ent aid but, by 1997, this figure had risen to rotection (te Velde, 2009), trade (Meyn and Kennan, 2009) or remittanc es (Calli and
$7.2 b~?O, Dell'Erba ,
(UNDP, 2002, p. 102). Furtherm ore, bilateral funds have been channelle d through NG ~009), the evidence suggests that the impact was varied, dependin g on external
Os (P· ion and internal
2001, p . 201), while multilate ral agencies have also increased funding to NGOs The
. . . . Inter, factors.
which this mcreasmgly close engagem ent between NG Os and official agencies is a· positive extent to Economi c recovery in the post-crisis period has been uneven and its . .
impact on developin g
devel
opment has been questione d by some analysts (Hulme and Edwards, 1997). ountries and regions is therefore varied. Recovery from the 2008 credit crisis was slow
- and then
. The failure of the demand for th~ NIEO suggested the difficulty faced by the Third World ~erailed by the onset of the Covid-19 pandemic in 2020 and the economic restriction
coali- ~ that fol-
tion _a_s a fore~ for change, but t~e impact of the debt crisis challenge d its very raison lowed. As Table 13.5 shows, economic growth in the develope d world has been weak,
d'etre. 1he with conse-
coalmon survived the fragmentat10n and forces of disintegr ation and has re-emerg ed quent falls in demand, private capital_ flo:Ws and FDI. ?verall, the conseque nces for
fi 11 · . al thou h employm ent
as p~wer u Y_ as_m the 1970s, as the mstrume nt through which a collective voice can ' g not and social protectio n have been negat1ve m the post-cns1s phase. The recovery of 2011-12
be heard. It was not
contmues to ms1st that glob~l ineq~alities remain relevant and coordina te positions sustained, with the conseque nce that global unemplo yment has continue d to be far in
before major excess of pre-
conferences. lnstea1 of argumg agamst the liberal system, as it did in the 1970s, it crisis levels (ILO, 2018, p. 6). The number of people unemploy ed has consisten tly registered
now seeks to above
ensure that developm g countries are not discrimin ated against. 190 million in the past five years. Rising unemplo yment and considerable underem
ploymen t in
. 1:'ntil the end of the_ Cold War in 1989, the internatio nal political syst~m was marked developing and emerging market economie s has created a post-crisis world that is
by con- fragile and
tmumg East- West tens10n and Sino-Sov iet rivalry, with developm ent need~ sacrificed uneven and presents workers in the developin g world with uncertain condition s. In
to political this context,
ends. The end of the Cold War in 1989 brought East- West competit ion in the developin the provision of forms of social protectio n is vital; however, while many countries ha:e
g world to ex~~nded
a close. The end of communi sm has resulted in competit ion for investme nt and aid between and expanded their social protectio n programm es, slow recovery after t~e g~obal fina~c1al
former cns1s a~d
c~m~uni st countries an~ traditiona l Third World countries. The end of communi sm later the pandemic led to a reduction in public spending and a contracn on m expenditu
also brought re on soC1al
with 1t the end of the Soviet-style model and, given that China had effectively abandone protectio n programm es (ILO, 2021b).
d socialis .
since the onset of the Four Moderniz ations programm e in 1979, developm ent was now The flow of remittanc es provides an exception to the negative trend. The evidence on the .
cast firm~ impact
in capitalist terms ..However, the dangers of an open world market were all too visibly of the global economic crisis suggests that, although faced with high tra_nsaction costs,
brought t: ~emit~ances
the fore by the Asian financial crisis that erupted in mid-1997 . It showed again how were resilient during the global financial crisis and in its aftermath (Bettm et al., 2014;
vulnerable S1rkec1 et al.,
developin g countr'.es were and how shallow much economic growth can be. The core 2012). This claim is supporte d by studies that show that historical ly remittanc es are stable
Asian tigers or coun-
were not as hard h it as the second-tier countries, especially Thailand and Indonesia . tercyclical (because they are driven by altruism or investme nt calculations) . Remittan
ce flows
This po~t-Col d War period has been noticeabl e for a modifica tion in the neoliberal increased from $342 billion in 2010 to $831 billion in 2022 (IOM, 2024, Ch. 2;
develop- World Bank,
ment paradigm . The 1992 UN Conferen ce on Environm ent and Developm ent (known 2019b, p. 3).
as the Rio
Conferen ce or Earth Summit) officially establishe d sustainable developm ent as the new
approach
to developm ent. Although no agreed definition of sustainable developm ent exists,
that of the
B~undda nd Commiss ion (World Commiss ion on Environm ent and Developm ent, 1987) KEY ISSUES
is most Developi ng countries continue to face a large number of issues in their quest for economic
widely used. The Brundda nd Commiss ion defined sustainable developm ent as developm de:elor
ent that ment. These issues are raised througho ut the book: developin g countries and the trade
meets the needs of the present generatio n without jeopardiz ing the resources available regime m
to future Chapter 6, bargainin g with TN Cs in Chapter 7, the debt crisis in Chapter 8, the division
gene~ations. The end [Link] Cold War and the movemen t to sustainab le developm ent of labour
were impor- in Chapter 10, North- South conflict in Chapter 12, sustainab le developm ent in Chapter
~ant m the new focus given to governan ce issues. It is now widely accepted that governan 14 and
ce is an governan ce issues in Chapter 18. Here, we focus on two key issues that have dominate
~p~rtan t compone nt of the search for developm ent and, in this pursuit, democrac y and d the global
democra-
t~zat1on have come to occupy centre stage. This is a view of developm ent far removed
from the
s1m~le economic input model with which we began in the 1940s. Views have changed
as the com-
pleX1ty ~f ~he task has become more apparent. But these changing views also represent Table 13.5 Economic growth by region , 2004-21
the triumph
of certam mterests. The integratio n of sustainable developm ent into the developm ent Advanced economies
paradigm as World
~ core_feature renewed interest in poverty alleviatio n and a focus on governan ce I .. .. I I .. I I
resulted in an ame-
lioration of ~he neolibera l approach or Washing ton Consensu s. For some writers, the 6.4
emergenc e of 4.1 1.6
a po~t-Was hmgton Consensu s, while an improvem ent on the original model, remains
too narrow 2.8 1.7 3.6
and mcapable of meeting the needs of the poor (Hayami, 2003; Oni§ and ~enses, 2005
). -1.9
From the perspective of 2024, it is apparent that the 2008 - 9 economic crisis did not -3.0 - 4.4
force a
or
radical rethink econo~ic policy and a final abandonm ent of neoliberalism. Although
the overall 6.0 5. 2 6.6
assessment that developm g countries are being severely hit through weaker trade, tighter
global Source: IMF (2022. p. 125)
316 CONTEMPORARY CHALLENGES

the immediate future: the organization of development and debt relief

---
debate on development at the beginning of the twenty-first century and will continue to do so .
in
IDA/IBRD disbursements by region , fiscal year 2022, millions of $s
IBRD
2,441
DEVELOPMENT

7,133
317

The organization of development 261 6, 544

Although the dominant view is that development will largely arise from national efforts, it is evi- 1,50 2
5,439
dent, as the previous section has shown, that development is also a process that is organized inter-
nationally. National development aspirations and efforts are shaped by international organization 4,580 764
s,
the policies of donor states and ideas concerning the meaning and practice of development. A. 8,911 510
major issue in the global political economy of development is the role of international organiza- 3,407 559
tions in this process. There are a number of controversies concerning the specific policies and gen-
3,1 29 4,20 2
eral impact of multilateral development agencies and international financial institutions. Here, we
provide a brief introduction to the role of the World Bank in the international organization of 28,168 21,214
development. source: World Bank (2022c, p. 99 and 103)

The Wo rld Bank

The World Bank is the world's premier multilateral development agency. It comprises five Table 13.8 IBRD lending commitments by theme, fiscal year 2022
organizations: Theme Millions of $s

• the International Bank for Reconstruction and Development (IBRD) 3,147

• the International Development Association (IDA) 13,664

4,37 5
• the International Finance Corporation
16,024
• the Multilateral Investment Guarantee Agency
5,101
• the International Centre for the Settlement of Investment Disputes.
4 ,671
The World Bank fulfils three main roles: it provides loans to countries; develops international
3,964
norms; and resolves disputes. The most visible of these functions is the provision of loans to its
member states. The IBRD, established at the Bretton Woods Conference in 1944, provides loans 10, 549
and development assistance to middle-income countries and creditworthy poorer countries. The Source: World Bank (2022c, p. 100)
IDA, established in 1960 as the sofi: loan affiliate of the IBRD, provides long-term loans at zero
interest to the poorest countries (see Tables 13.6-13.11). Through its research and development

Table 13.6 IDA/IBRD commitments by region , fisca l year 2022, millions of $s

Ta ble 13.9 IDA lending commitments by theme, fiscal year 2022
. ',

..
Theme
IBRD • • 2,236
2,907 15,266 Environment and Natural Resources Management 15,228
386 12,2 13 5,760
5,482 1,673 22,846
5,974 2,5 11
8,244
9,407 1,030
5,192
4, 135 817
6,5 68
4,78 1 4,2 17
33,072 19,375
37,727
Source: World Bank (2022c, p. 99 and 102) Source: World Bank (2022c. p. 103)
318 CONTEMPO RARY CHALLENGES DEVELOPM ENT 319

Table 13.10 IBRD lending commitments by sector, fiscal year 2022 structural adjustmen t lending, it ignited a debate on its lending policies that has not lessened even
Sector though these policies have shifted significantly since they were first instituted. Adjustmen t policies
ushed recipient countries to liberalize their economies and reduce the role of state interventio n in
~conomic manageme nt. Whether these were necessary reforms to counter decades of poor eco-
1,090
nomic policies or irrelevant and misguided policies that made poor countries even more vulnerable
3,06 9 co external shocks remains an issue of debate between supporters and critics of these policies .
1,877 .All sides are agreed, however, that the initial policies had consequences that were detrimental to the
6, 252 poorest, most marginalized sections ofsocieties undergoing adjustment; for example, they increased
1,916 the burdens on women.
By the mid-1990s, the World Bank (1998) had come to accept many of the criticisms of these
509
policies, and began designing safety nets for the most vulnerable groups in society. It also began to
6,484
shift its lending priorities away from adjustmen t and towards the new goal of sustainable develop-
3,446 ment. Under adjustmen t lending, it was believed that macroecon omic growth was the main target
3,036 and poverty reduction would follow from a general improvem ent in the economy. The move to
,, 1,782 sustainable developme nt lending has seen a greater focus on poverty reduction strategies but this is
' 33,072 coupled with an increased emphasis on the role of the private sector in the promotion of
development.
Source: World Bank (2022c, p. 99)
The role of World Bank lending remains controversial. Supporters argue that it provides devel-
oping countries with much-need ed capital and that the projects it supports are vital in the fight
Table 13.11 IDA lending commitments by sector, fiscal year 2022 against world poverty. In their view, these resources provide important supplemen tary assistance
for the governments of developing countries and enhance the perceived stability of the economy to
internation al investors. Supporters of World Bank policies think that the conditions it attaches to
its loans provide a framework of sound financial manageme nt for the governmen ts of its borrower
2,335
nations (Muuka, 1998; Picciotto, 2003). On the other hand, critics accuse the bank of putting
3,696
profits before people and distorting developme nt (Caufield, 1996; Danaher, 1994). To the critics,
1,346 these resources are often insufficient, inadequate and ineffective . They contend that the specific
4,2 69 conditiona lity imposed by the World Bank privileges external interests over those of the recipients
2,317 and is focused on repayment of the loan rather than improving welfare.
1,245 The World Bank espouses a liberal economic vision and it was conceived as an important instru-
ment in the constructio n of a liberal economic order. As such, its policy prescriptions support the
6,194
maintenan ce of liberal economic values. Its normative framework of market principles and eco-
4,792
nomic growth is opposed by radical critics and environmentalists, who believe that market-based
5,167 approaches cannot effectively contribute to developme nt and/ or promote sustainability.
2,357 Another critical issue in terms of the organizatio n of developme nt concerns the democratic
37,727 nature of the process. This is an issue that can also be illustrated with reference to the World Bank.
Source: World Bank (2022c, p. 103)
In the context of the bank, this issue is seen in two ways. First, democracy is discussed in relation to
the formal decision-making provisions of the organization. The World Bank's decision-making sys-
tem is one of weighted voting, in which member states are allocated differential voting shares based
activities and the conditions it attaches to its loans, the World Bank contribute s to the normative on their financial contributio ns to the organization. The weighted voting system came under
framework of internation al developme nt. It also tries to resolve disputes between its members and immense pressure from its critics and developing countries. The increased importanc e of the G20
between its members and private creditors. in the wake of the global financial crisis hastened reform of voice within the bank. Discussions at
While the World Bank attracted some form of critical scrutiny ofits operations from the outset, the G20 meetings in April and September 2009 addressed the issue of the governance of the bank
it has been in the forefront of controversy since the early 1980s. This is the result of a number of (and the IMF) and set in motion a reform process that resulted in increased voting power for devel-
~actors, of which the most important are the impact of its adjustmen t policies on poorer countries oping country members of the bank; and an additional executive director to represent Afri_ca.
m the 1980s and the impact of its policies on the environme nt. When the World Bank abandoned Nevertheless, these reforms instituted in 2010 have been met with scepticism. A trenchant civil
its basic needs approach in the early 1980s and, in tandem with the IMF, began to focus on society assessment argued that 'the World Bank will continue to be overwhelmingly dominated by
320 CONTEMPORARY CHALLENGES DEVELOPMENT 321

limits its capacity t s. Criticism

rich countries for decades. Inadequate reform stunts the Bank's legitimacy, . . ortant to distinguish between the bank's bureaucracy and its .membe~
es' (Bretton Wood: . h i'p between bank staff and its more mfluenn al members,
serve the interests of developing countries, and violates democratic principl imp
4, Ith is Id . . to t h e re lanons
be sensmve
Project, 2010). s ou . . fi:en the states behind the bank that are setting policy. . the
occurred With the because it is o
A further example of the controversy relating to the World Bank's governance on and any effective criticism must recognize
with limited experience 1he World Ban k is . instituti
. a fi na ncial .
appointment of Paul Wolfowitz, a neoconservative academic and politician
(2005 - 7), Wolfowi tz 5. financial constraints under which it operates.
of development issues, as the bank's president. During his short tenure in office
an assumption in
was the subject of frequen t criticism. The debate over his appoint ment reflects 1h W,Orld Bank has b een m · a seemmg· IY endless process of remaking itself b its early. days.
h from d
e head effective ly dictates the organiza. . re l evance as an instituti on of governance as B k (AIIB) l d.
een quest10n e
much of the literature on the World Bank that the executiv e. .
times in its history, its
n of power and influence in cture Investm ent an e
tion's policies. This popular and persiste nt view is an oversimplificatio At vanous . . A ·1 201 S f the Asian Infrastru
° d l d d h h
· n by Chma m pn
the bank. For example, although Wolfowitz reorganized the bureaucracy, his main
policy initiatives The creatro e y the relevance o f t h e W,orld Bank i·n Asia. However, a stu y·1
cone Iu e t . at t de
strategy. In 2012, . ·s similar to existing multi atera agencies an
during his two years of office were concern ed with devising an anti-cor ruption rnany to qu r fi
ing countrie s challeng ed the US's pre- approach of the AIIB to developmkentH amen nan~mgdi Jones 2018) · As World Bank president, Jim
another controversy over bank leadership emerged as develop h 11 the World Ban ( an ,
Yong Kim, Us a memo-
rogative to appoint one of its citizens as presiden t. In 2012, the US nomina ted Jim does not
Ki c a enge . l .
ht to build cooperative re anons wit
. h l d of h
the AIIB . This led to the signing
developing countries . Apn·1 2017 to strength en coopera tion and know e ge exc ange
internat ional health expert, to be the World Bank presiden t but several Yongdum mofsougd '
un erstan d mg m
on merit rather than national ity<'.,· In particul ar, Brazil
insisted on a more open competi tion based between the two instituti ons (World Bank, 201
ran 7a).
Iweala, Nigeria's finance minister.
and South Africa advocated the appoint ment of Ngozi Okonjo-
the first time that there had
Althoug h Okonjo-Iweala's candidacy was unsuccessful, this marked
d. This revolt
officially been more than one candidate and the position was openly conteste D bt and debt relief
) Th
, a noted critic of
proved fruitless, and when President Donald Trump nomina ted David Malpass . roblem since the debt crisis (see by Chapter 8 . e
the bank, as its thirteen th presiden t in February 2019, he was elected unoppos ed in April 2019. e
Third World indebted ness fhas been a maJOr f
d bt on a country s economy can
be measured either the total exter-
dh .
A second aspect of the debate on the democra tization of the World Bank refers
to its openness severity an ence impact o e r byth e d eb tservic . e rati·o , that is , the relationship between debt
· fGDPo
In the 1980s, d loping countries, total external debt is high
to influence from civil society groups and the populat ions subject to its policies. nal debt as a propomdon o
export earnmgs.
. In
many eve ' l d
groups launche d a series of campaig ns to make the . . h h esi·ze of many countries annua exports an
develop ment, environ mental and women's service paymen ts an d b
term e ts outweig t .
nted. . h GDP d l nt
bank's decision -making more transpar ent and more account able for the policies it impleme
compare.d wit an ong- h . d b The impact of debt is a severe constrai bil'
engagem ent with bil' t ·ncome to repay t eir e ts. and constrai ns their a icy
its f h . d bted country
As part of the voice reform package, the bank set out procedu res to enhance thus their a ity Ito genera d
ei .
h spendm gpower o t em e
program matic col- F thermor e it weakens incentives to
civil society. These included policy dialogue meetings, formal consulta tions, on develop ment. t re uces t e
to fund educatio n, healthcare and other socia pr~grammes. ur
. l '
ed in a manner that
laborati on and grant-fu nding mechanisms. While the bank has not respond b d educes econom ic growth. l
satisfies all its critics, it has become more open to scrutiny by external groups and has increasingly invest in the de tor hcountry an fi rom civi . ·1 . [Link] governments and internat ional
society actors,
propose d changes in its The two most importa nt multilatera
engaged in consultative processes to discuss its policies and In response to t e pressure r 1· f
program mes. financial agencies have embarke d on de~t re ide bprodgrpam meCs . ntries (HIPC) Initiative and the
th Heavily In e te oor ou . . .
role as a devel- . f h . . 1996, the HIPC Initiative is a JOmt
As the above has demons trated, there are conflicting views on the World Bank's debt rehe mec b amsms are
R 1. f I · ·
e· (MDRI ) Launc h ed m .
the right of the political spectrum, it . h l il 1 bilateral and commercial creditors
opment agency. While it has been the target of criticism from Multilateral De t e ie mtrative
h h · h b · gs toget er mu t atera ,
te between the . I h fi t attempt to create a comprehen-
has attracted most criticism from the lefi:, as detailed above. Is it possible to adjudica IMF-W orld Bank sc eme, w ic rmo r countne
'd d b 1· f s twas t e rs
bank and its critics? in a scheme to provi e e f,t re hie to Pld'spoor o . . Th . t oductio n of the HIPC Initiative
£ k estcoun tnes. em r
sive debt relief ramewor or t e wor ld b . d . order to move the poorest coun-
int taken on e reqmre m
1. To a large extent, the perspective taken on the bank is linked with the standpo d b
was recognition that some e t cance aHIPC
11 t' on wou
i .. . . that qualify for debt relief have
. s .
econom ic aid, capitalism and governm ent interven tion in the economy U d r the .
Inmatrve, countne
c . .a The aim of the program me is
tries out of the poverty trap. n e en ten · h
. f, t' g certam perrorm ance
2. As the world's largest multilateral develop ment agency, the bank's profile means
that it inevita- their debt reduced m return or mee mework ror c h il . d bt d countries. The operatio n oft le
bl · f eav Y m e e i·n its operations, for examp e
to be given to f
bly receives a significant amount of criticism. Thus, in assessing the importa nce to create a sustaina e econom
b
ic ram
. . . d f, n absence o transpar ency
alternati ves. In other words, what are the or a . . 998 I h l been argued that the program me
any critique, it is necessary to probe the existence of HIPC Initiative has eendcrmcize
. fi h HIPC lm m 1 . t as a so .
feasible alternatives in organizing the specific aspect of develop ment? remove rom t e an d not su ffi cient . l f, sed on reducing poverty or improv-
when Nigena wasthe repayment of debt y ocu
is too focused on
of its adaptability
3. Much criticism of the bank is often out of date. Some critics appear unaware d. The Enhance d
e, in assess- ing economic growth (Oxfam Intern~t_i~nal, 2000). IPC Initiative was reforme
In 1999, in response to these cntrcisms, the ~ d d
and produce critiques ofpolicies or program mes that are no longer current. Therefor 'd faster deeper and broader
e to bank . ·
d country coverage and mtenl e£ to provi eduction' and social po mes.
ing any criticism of the bank, it is importa nt to ascertain its current relevanc HIPC Initiative increase 1
operations.
debt relief and strength en the links between debt re ie ' poverty re
322 CONTEMPORAR Y CHALLENGES

the transfer of additional funds to the HIPC (World Bank, 2006b).

---
While debt reduction is not sufficient for debt sustainability, the initiative had become a vehicle fi

The MD RI, created in 2006, provides for 100 per cent relief on eligible debt from the IMF h
World Bank, the Inter-American Bank and the African Development Bank to a group ofl't
or

e
g
betwee n ra nts and
loa ns or provide t [Link] statisti cs has f uell ed controversy
al., 2016). The creation of the China International Development Cooperation Agency 1n Marc

fo reign aid programme (Banik' 2019). Second, criti cs. have

.

201 s created ca utious opti mism that t hi s agency w ill provide greater overs ight, co he:10~ and
DEVELOPMENT

. her et
(Dre

assessed Chinas
h

ro le
323

ov.,.
point cla ri·ty t O Ch'na's
I . . . ' .
income countries. Eligible countries are those that have reached or will attain the completion I Pment acto r w it h a focus on t he distinctiveness of Chinas approach. Wh ile. some
as a deve o . .
under the HIPC Initiative. The MDRI is the result of a decision reached at the G8 summit at th t Chi na is a poor model, give n t he co ntrad ictions and deep- rooted pro blems of its own
argue I d a · h ch· · t h·
Gleneagles in July 2005. The MDRI is different from the HIPC Initiative in two respects. First, it interna eve Iopme nt (Hsu , 2015) , others have ca lled for greater engagement w it ina 1n 1s
is more comprehensive, in that it provides 100 per cent debt relief Thus, it will free up more multilateral space (Gu, 2015; Toa le, 2015). . . . . .
resources to be dedicated to the fight against poverty. Second, debt relief is restricted to debt issued Chi na's ro le in Latin America provides some 1ns1ght into these issues. China has . now
by the IMF, the World Bank, the Inter-American Bank and the African Development Bank. th Us as t he most importa nt desti nation for South America. n exportsI and Chi Bnesek
surpasse d e
There is no doubt that the HIPC and MDRI programmes have made a positive impact on the finance exceeds t hat provided by the World Bank. and t he Inter-America n Deve op ment an
indebtedness of the eligible countries. HIPC has provided total debt relief of $7 6.9 billion and combined (Ray and Ga llagher, 2015). This gives Latin American governments more development
,-; s but it also bri ngs numerous cha llenges. Chinese. investment focuses on ga ini ng access to
MD RI has provided total debt relief of $42.4 billion (World Bank, 2017b ). Moreover, thirty-six of op " on , . d t ti
natura l resources by provid ing financing for tra nspo rtation infrastructure an resource ex rac on
the thirty-nine eligible HIPC countries have reached the completion point. As of 2024, two coun-
tries (Somalia and Sudan) were in the process of receiving debt relief, while a thir_d, Eritrea, was not activiti es. Latin America pri marily exports agricu ltura l products such as soybeans and [Link]
yet participating. , such as pet ro leum and metals (zinc, coppe r), w hile importing manufactured goods '.ram China.
Thi s may be recreati ng t he poor terms of trade t hat Latin America has experienced with Western
The scheme has achieved a measure of success but challenges remain. The pre~decision countries
stat es. Increased Lati n America n resources exports are also creating large ca rbon footpnnts and
have made limited progress in crossing the threshold and face challenging domestic environments.
using vast amounts of water. Many Chinese development projects are located 1n Indigenous
In the absence of a stable peace and improved governance, they are unlikely to be able to meet the
peop les and environmentally sensitive lands, such as the project for a Nicara~uan cana l to riva l the
targets required to meet the decision point. There has been varied support from c~editors, while the
Panama Canal. Thi s ra ises t he likelihood of environmental and socia l confl ict over develop ment
multilateral agencies and members of the Paris Club have been effective participants. The Paris
strategies.
Club, an informal forum through which major creditors agree to take a common approach to debt
rescheduling, plays a key role in coordinating international efforts on debt relief Arguably, the
A combination of heavy borrowing and changed economic circumstances created a serious debt
Paris Club has evolved from its focus on creditors' claims when it was created in 1956 to an institu-
problem between China and a number of developing countries in the early 2020s .. Over the cou~se
tion supporting development in the South (Cheng et al., 2018). Moreover, for all countries, there
of a decade, many countries used Chinese loans to increase their de~t load - Pakistan doubled its
is a need to ensure that in the post-HIPC phase they will not slide back into indebtedness.
ublic debt Kenya increased its by nine times and Suriname by ten times. Although the figures are
China's growing importance as a development actor (see Box 13.5) means that it is increasingly
~isputed, s~me have claimed that by 2022, more than half the world's p~or countries owed more to
involved in international debt issues. Between 2000 and 2017, China lent more than $800 billion
China than all Western governments combined. (Bradsher, 2022) this became a prob_lem when
dollars to developing countries, becoming the world's largest official creditor, surpassing the World
countries were hit with a series of crisis between 2020 and 2022. The Covid-19 pan~em~c r~duced
Bank and IMF and even the twenty-two countries of the Western-led Paris Club (Behsudi, 2023 ).
demand for developing country exports and devastated the tourism ind~stry, whic~ i~ vital for
China's lending was part of its Belt and Road Initiative designed to build South- South economic
· sueh as Sri· Lanka and Kenya · War in the Ukraine raised food pnces as ·Ukramian
countnes d hwheat
relations and secure Chinese access to oil, mineral and food supplies. Chinese finance proved
could not easily make it to international markets. In addition, rising interest rates mcrease t ~ cost
attractive to many developing countries because it came without the conditions usually attached to as
of loans. Most Chinese loans were at variable rates, which means they became harder t~ service
Western finance. Most developing countries used the finds to build infrastructure such as roads,
bridges, railroads, ports, airports, and energy projects. interest rates increased. An example is provided by the 2014 $4.7 billion loan Argentma sec~re?
from China to finance two hydroelectric dams. With rising interest rates in 2022,. 1:'-rge~unas
twice-yearly interest payment increased from $87 million in January 2_0 22 to $1~7 million i~J~ly
(Bradsher, 2022). States having particular problems with Chinese debt mclude Sn Lanka, Eth10pia,
Ghana and Pakistan. fi
China's lending to developing countries has created a parallel system of development na~ce
Alt hough China is a key member of th e develop ing world coa lition and the BRICS, it also plays lenat;!
that runs outside the Western government, IMF, World Bank and Western pri~ate sector
a growing and importa nt ro le as a spo nsor of development in other co untries. Using its fi nancial
system. This has complicated international debt restructuring. Rather than forgive debt ant tdebt
surpluses gained from its massive export industries, Ch ina has been investing in As ia, Africa and
'haircut' on its loans, China's preferred response has been to pause debt repayments o~ supp Y h -
Latin America. The debate over Ch ina's ro le as a developme nt actor is frequently po larized. In the
context of China as a development actor, we focus on two t hemes. First, debate over China as
ors with more loans. China has also been reluctant to particip_ate in debt restructunng u~~;:n~
World Bank and regional development banks write down their loans. However, the Wor Ch' '
a foreign aid donor is controvers ial because Ch ina does not adhere to the Paris Club prin ciples.
argues that its loans are already concessionary and do not interfere with de_v~l~pme~t. ~n_a~
Beijing's fa ilure to adhere to Western human rights standards, and its refusal to distinguish
reluctance to provide debt relief complicates broader international debt rehe Y ot er O cia
324 CONTEMPORARY CHALLENGES

credito rs and t~e Wester n p~iv~te s_ect~r. The_co~cern is that countri

es whose ~ebt is reduced b
Wester n countn es or financial msmun ons will simply channe l the
paymen ts mto their Chi Y
loans. In 2020, the G20 launche d the 'Comm on Framew ork' for debt
treatme nt to facilitate i~ese
nationa l resoluti on of debt issues, but it has not yet been able
to resolve differences betw er-
credito rs. . een

CONCLUSION
In a powerful and influential critique of postwa r develop ment policy,
Escobar (1995) argues that
the develop ment discourse began in 1949 with Preside nt Truman's
inaugur al preside ntial address
in which he enuncia ted large-scale suppor t for develop ment. This
perspective usefully alerts us to
the role of externa l powers in constru cting develop ment and the importa
nce of the international
political climate . Escoba r's view is, however, a limited one, since it
removes autono my from devel-
oping countri es and makes them passive recipients of Wester n policy.
As we have seen, develop ment is centrally concern ed with materia
l and normat ive issues.
Wheth er the focus is on absolute or relative poverty, it is apparen
t that poverty shapes the life
chances of millions of individuals worldwide, constra ining access
to matefial and non-material
goods and services. While develop ment remains princip ally a nationa
l concern, it has, since the
outset of the postwa r develop ment assistance regime, been inscrib ed
on the interna tional agenda.
The organiz ation, promo tion and execution of nationa l and interna
tional develdp ment policies are
the result of structu ral change in the global politica l econom y and the
adaptat ion of state and non-
state actors to these changes.
An import ant aspect of recent develop ment theory and practice has
been a debate about how
econom ic growth can be reconci led with environ mental sustainability.
This echoes a broader con-
cern in the field ofIPE about the relationship bet~ee n political econom
y and the environ ment. We
examine the significance of the environ ment and its entangl ement
with politica l econom y in
Chapte r 14.

Ill Further Reading

The UN's annual Sustainable Development Goals Report is compu
lsory read ing for anyone int erested
in internati onal development. See UNDESA (2023) The Sustaina
ble Development Goals Report 2023.
Equal ly indispensable is the UN's Human Development Report. See
UN DP (2024) Human Development
Report 2023/2 024: Breaking the Gridlock: Reimagining Cooperation
in a Polarized World. Amartya Sen's
(1999) Development as Freedom is a classic t hat is worth readi ng.
Emma Aisbett's chapt er, 'Why are
the Critics so Convinced that Globa lization is Bad for the Poor7
' in An n Harrison (ed.) Globalization
and Poverty (2007, pp. 33-85), is an excellen t review of the debate
on globa lization and poverty.
For a thought fu l and insightfu l view of how people global ly view
t he Post-2015 Develop ment
Agenda , see t he UNDP (20 13b) report A Million Voices: The World
We Want. For a discussion of
the complexiti es of the classification of developing countries, see
Deborah Farias's (2019) article
'Outloo k for t he "Developi ng Country" Category: A Paradox of
Demise and Continu ity', Third World
Quarterly, 40(4): 1360-2 241.