DP1 Students: IA Engagements!
We've seen a range of theories on how to best develop a state, ranging from purely economic models to methods of development that encompass a wide range of factors (economic, social, political, environmental, etc.)
Modern development tends to follow the Neoliberal model put forward by the "Washington Consensus," where a capitalist system more or less rules the game, and development is a part of countries cooperation and interdependence (more on that below.)
Modernization Theory, proposed by economist Walt Whitman Rostow in the 1950s, argues that economic development is a linear process that all countries go through on their way to modernity. According to Rostow, there are five stages of development that a country must go through: traditional society, preconditions for takeoff, takeoff, drive to maturity, and high mass consumption. Rostow believed that economic development could be achieved through a combination of foreign aid, investment, and technology transfer.
Rostow based his assumptions on the idea that basically every state would follow the same steps as the United States; Modernization basically puts forward that there is one path towards development, and the end-stage is for a state to become a high-mass-consumption society. This is a flawed idea because it does not account for variety in economic ideas, or in economic systems. It presumes a market economy and embrace of capitalist ideals. Many modern-day states have blended economies, where socialist ideas (or social-democratic ideas) are blended with more typical market-oriented capitalism. We still do think about development as happening in "stages," but no longer refer to Rostow's model as one that accurately represents how states will develop.
Dependency Theory argued that the underdevelopment of many countries in the Global South was a result of their historical and ongoing dependence on more developed countries in the Global North. This dependence took many forms -- economic, political, and cultural -- and had its roots in the colonial and post-colonial period (up to the early 1970s.) According to Dependency Theory, the economies of the Global South have been structured in a way that benefits the Global North, with resources and labor flowing from the South to the North, and finished goods flowing in the opposite direction. This perpetuates a cycle of underdevelopment, poverty, and dependency (hence the name.)
States that embraced Dependency Theory sought to create a pathway to development that emphasized self-sufficiency and autonomy. This included efforts at "import substitution," which encouraged the growth of domestic industries and the purchasing of locally-made products, rather than relying on imports. It also promoted heavy government intervention in a state's economy. States that embraced this approach had some limited success, but ultimately had to move on because the global marketplace was changing thanks to early globalization. Self-sufficiency was good for kickstarting industries and helping some local businesses mature, but it was not enough to keep these states competitive.
While Modernization Theory emphasizes the importance of economic growth and development through industrialization, Dependency Theory highlights the negative effects of the unequal distribution of power and resources in the global economy. Both theories have been subject to criticism and revision over time, and scholars continue to debate their applicability to the contemporary global context.
By the 1980s, the world was basically ready to acknowledge the flaws of both systems. The consensus became that development was not a linear process like Rostow and Modernization Theory claimed, but also that countries in the Global South had different experiences and Dependency Theory was wrong to put every periphery or semi-periphery country in the same 'basket.'
As countries and IGOs worked to form a new set of ideals surrounding development, they also started to be more critical of the role of the state governments, particularly when it came to direct intervention in the economy. "Going it alone" was no longer possible, and countries accepted that there would just have to be some form of integration into a global economy. At the same time, some attention was paid to the imbalance of economic and political power between the Global North and the Global South. This led to...
This cartoon shows former IMF managing director, Christine Lagarde (France.)
Through the 1980s and early 1990s, states and IGOs had started to agree on a new paradigm of development that came to be known as the Washington Consensus.
The Washington Consensus was a set of policy recommendations whose main proponents were the World Bank, the International Monetary Fund (IMF), and the US government. The policies were focused on promoting economic liberalization, privatization, deregulation, and free trade, with the aim of creating a more market-oriented and globally integrated economy. It encouraged states to work to create a favorable environment for business and foreign investment (this is basically the beginning of FDI.) This meant decreasing state intervention, turning industries that were state-controlled (or that had been taken over by the state) into privately-owned and run firms. Free trade was promoted and even more socialist states started to move towards a market-based system (like China and its "socialism with Chinese characteristics," which is basically "Capitalism but the Party occasionally intervenes.")
The Washington Consensus was heavily criticized by many scholars and policymakers for its failure to take into account the diversity of experiences among countries and its emphasis on one-size-fits-all policy prescriptions. Critics argued that the policies of the Washington Consensus often led to increased inequality, social unrest, and economic instability, particularly in countries in the Global South.
In response to these criticisms, there has been a growing recognition of the importance of taking a more nuanced and context-specific approach to development. This has led to the emergence of new paradigms of development, such as the human development approach and the capabilities approach, which prioritize social and human development outcomes over purely economic ones.
⬅️ "To the left, to the left"
(Beyonce, "Irreplaceable," 2006)
The image to the left includes the original set of ideas put forward as the Washington Consensus, as well as subsequent additions. This list is a pretty good summation of neoliberal economic ideas. You can note that it's based on market ideas and creating a friendly business environment (e.g. lower tax and decreased corruption --> more attractive for investors.)
Remember that Amartya Sen's idea of development (with contributions and elaboration from philosopher Martha Nussbaum) centers on the concept of building people's capabilities. He argues that development should not be measured solely by economic growth or material progress, but rather by how much freedom people have to choose the kind of life they want to live. In other words, development should be focused on expanding people's opportunities and capabilities to do what they value, such as being healthy, educated, and productive, and participating in social and political activities.
A few good examples of how capabilities theory can be applied to the real world lie in the realm of social justice and the pursuit of universal access to benefits like health and education. A universal healthcare system enabled everyone to have a healthy life, not just the wealthy who can afford care. Expanding access to education, and working to extend the number of years that young people stay in school, further creates opportunities to develop a population's capabilities.
Costa Rica: Often held up as a success story for both sustainability and boosting the capabilities of its citizens, Costa Rica expanded healthcare access and education for its citizens. It's transformation of the tourist industry created many opportunities for citizens to learn new skills, start businesses, and help the country move towards a more sustainable lifestyle.
South Korea: More details are elsewhere on the site, but in a similar way South Korea and its particular focus on bolstering the higher education system has been very beneficial for the country and its population. S. Korea became almost an overnight success story with high-skilled workers in tech, in particular.
Looking at these examples, it isn't a stretch to say that human development includes a number of factors that Sen and Nussbaum would argue are important (note that the HDI includes measures of education and health in its calculation.)
Uruguay is a relatively small South American country, but it's also one of the most underrated development success stories. In many ways, its path lines up with Nussbaum's and Sen's idea that development should build capabilities.
Similar to the Nordic countries (Sweden, Norway, Denmark, Iceland, etc.), Uruguay has pursued social democracy; it never gets the same level of attention or praise as its European counterparts, though. Uruguay has invested heavily in education and healthcare, as well as social programs to support vulnerable populations. As a result, Uruguay has achieved high levels of human development, with low levels of inequality and poverty.
Famously, Uruguay's former president, José Mujica (pictured above, with the former and current president of Brazil, Lula Ignacio da Silva), embraced a simple lifestyle, often riding a super old bicycle around and living in a small house. Uruguay does not have a showy sense of wealth, but especially in Mujica's five years as President they managed to improve quality of life dramatically, with the BBC noting in 2015 that Uruguay enjoyed "a relatively healthy economy and social stability that its larger neighbors could only dream of."
Bhutan is a small Himalayan kingdom that has pursued a model of development based on the concept of Gross National Happiness (GNH), which prioritizes the well-being of people and the environment over economic growth; Bhutan was one of the first countries, if not THE first, to place happiness at the center of its development efforts. Bhutan has made significant investments in education, healthcare, and environmental conservation, and has achieved high levels of human development, while also maintaining its cultural heritage and traditional way of life.
Bhutan's aims are humble; they do not have a military (they have an agreement with India regarding their defense) and generally are not interested in playing a big role in the global economy. Pretty straightforward for a country that is roughly 75% Buddhist and 25% Hindu.
Describing how economies improve is not exactly simple. Prominent economic theorists have all had their own ideas, but the world tends to change and what seems to be "the answer" at one time will almost certainly be obsolete within a few decades (at most.) One common factor with economic development tends to be the involvement of the state and its government, at least in a decision-making process over what should encouraged and prioritized. There is healthy debate over how far a state should go in that intervention, or even if they should at all. But, for our purposes, we're more interested in the ideas :)
A country's natural resources, or lack thereof, have a big part to play in the way an economy develops. A resource-rich state may seek to exploit those resources (oil, gas, minerals) either for export or for use in a country's domestic industries. A state lacking natural resources may instead try to develop its human resources. Cases include...
Singapore: Singapore has no natural resources, unless you consider "deep water" to be a natural resource. Over the last 50 years, Singapore developed into a regional (and global) hub for business and finance in part by building up one of the world's most highly skilled workforces. The bar is set HIGH in Singapore schools (no MDID-guaranteed-graduation there) and their high schools and universities are some of the best-performing in the world. Companies are keen to open in Singapore due to the strength of the work force that is already there, and that hum of activity further attracts talent from other countries in the region and beyond.
Norway: Norway is not well-known for being a "oil and gas" country... but it is an oil and gas country. Norway has been strategic in its exploitation of these precious resources, and have used many of the funds it gained to develop a world-class education system and fund social welfare programs. In this way, Norway has developed its economy and society. (They also put limits on the use of its oil and gas reserves, with an eye towards sustainability.)
Trade liberalization is one of the oldest tricks in the book for economic development, heavily promoted by Rostow in his 5-stage Modernization Theory, and trade liberalization remains important to this day.
The basic idea is that reducing tariffs (taxes) and other regulations like import/export quotas creates an environment that is attractive for business and foreign investment. Trade liberalization frees up a state to sell its products on the global market more easily, and makes it easy to purchase and import the stuff it needs.
The downside of liberalization is that it can be hard for a state's domestic companies, as they are now forced to compete with larger international brands (imagine a local mobile phone company going toe-to-toe with Apple, Google, and Samsung -- ouch.)
This strategy involves fostering a culture of innovation and entrepreneurship to create new businesses and industries. This can be done through policies that support small and medium-sized enterprises (SMEs), such as tax incentives, access to financing, and support for research and development.
Many more developed countries put a great deal of importance on the establishing (and survival) of SMEs, including the United States. During the pandemic, the U.S. government issued loans to SMEs in an initiative called "paycheck protection program" (PPP) to help small and medium-sized business stay open at the height of the crisis. Many of these loans were ultimately forgiven, meaning that those SMEs did not need to pay them back -- essentially serving as an economic stimulus!
In less-developed countries, something like a microfinance program can help poorer people become more financially literate and, in some cases, these programs can help in starting small business in local communities.
As an economy matures, developing a larger primary industrial sector (natural resources, agriculture products, etc.) and/or secondary industrial sector (manufacturing, etc.) the question becomes: who is this stuff for? Are we going to use it ourselves, or is most of what we do oriented for people and businesses beyond our borders?
An export-oriented strategy involves focusing on producing goods and services for export rather than for the domestic market. The aim is to increase foreign exchange earnings and boost economic growth. Export-oriented economies typically have a strong manufacturing sector, with products that are competitive in international markets. China's tremendous economic growth over the last 30 years is largely due to an export-oriented approach (with hundreds of millions of people in that workforce.)
A commodity-led approach involves developing a country's economy by focusing on the production and export of natural resources or commodities. Examples include oil-producing countries like Saudi Arabia and Venezuela or countries with abundant mineral resources like Australia and Chile.
This is most applicable to highly-developed countries, but it can set up as a goal for countries still in the process of development.
A knowledge economy is an economic system in which knowledge, ideas, and intellectual capital are the primary drivers of economic growth, rather than traditional factors such as natural resources, physical capital, or low-cost labor. In a knowledge economy, the creation, dissemination, and application of knowledge are key factors that drive innovation, productivity, and competitiveness.
In a knowledge economy, the production and distribution of goods and services are increasingly based on knowledge-intensive activities, such as research and development, design, education, and the creation of new intellectual property. This can include a wide range of industries, such as information technology, biotechnology, healthcare, education, and creative industries.
The United States: The USA is one of the "knowledge economy" leaders. Many of the country's top universities are equal parts schools and research / innovation labs. Even things like the Jet Propulsion Laboratory (JPL) which creates new engines for rockets are connected to large universities.
Japan: For a long time, the pioneers in robotics. Japan is still pushing the boundaries now, though they have also moved past Honda's weird little ASIMO robot.
South Korea: South Korea is a great example of a state whose knowledge economy is closely connected with the government's efforts. There is a tight link between Korea's top companies and the leaders of government.
Tourism can be a great money maker, and a country doesn't even need to have a fantastic climate to make it work!
Beyond bringing in revenue (money spent by tourists), a healthy tourism industry encourages development in a number of ways. Good infrastructure is necessary to help people get around, and citizens benefit from this infrastructure as much as tourists do. Cultural heritage gains some protection here, as what makes the country unique is part of what attracts people to come and visit. This can help to stave off some of the more undesirable effects of cultural globalization.
Tourism is, in many cases, a reliable source of income. Some places have a tourist "season," where more visitors arrive, as well as an "off-season" which allows for other types of economic activities.
COVID has shown that relying on tourism is a risky venture -- many businesses around the world that relied on tourist dollars had to shut down in 2020 and early 2021, and the employees who had worked in those places generally moved on and found other jobs.
Tourism on its own is not likely to drive a country's economic development, but it can make a significant contribution.
Like improving the economy, how to "improve" society depends a lot on what a society values. In East Asia, we see a lot of attention paid to education (longer school days, high-stakes exams, university entrance tests) while in other parts of the world "mental health" is the clarion call regarding what young people should focus on.
Developing society is also a bit tougher to measure than the economy; everyone knows how to see when money machine goes BRRRRRRR but it's much harder to see the effects of social development, as they often take years (or decades) to really appear meaningful.
Christine Lagarde, who ran the IMF from 2011-2019 (and who is currently head of the European Central Bank), goes over a number of ways that society can be developed in this interview.
Some kind of educational initiative is a mainstay of nearly every developing country. Even more developed countries have big initiatives regarding education (improving access, reducing costs, encouraging more students to move into areas like STEM, etc.) Common educational goals include...
Access: Making education more accessible to more people. This can involve building new schools, implementing policies that increase the proportion of girls in schools, and creating ways to pay for higher education (grants, scholarships, affordable loans, lowering tuition, etc.)
Quality: Investing in teacher training, curriculum development, and aligning the work of schools with 21st century skills that will be useful in university or the workforce. Some countries dramatically increase the funding that their schools and teachers receive, like Finland, while others really dig in and emphasize the importance of a curriculum, like in Singapore.
Promoting Lifelong Learning: Education shouldn't just last for the years that a person is in school; rather, it should instill habits that last a lifetime. Promoting lifelong learning can also include the creation of training (and re-training) programs for people seeking to change jobs or start a new career.
Build development goals into schools: For efforts that involve sustainability, educating young people about how to live a more sustainable lifestyle is a critical step in ensuring that those goals are met. This is why you see SDG programs in schools, regional and international student sustainability conferences, and international clubs like Roots and Shoots.
A social safety net basically exists to provide support for everyone in society. Typically, assistance is offered based on need, rather than applying to everyone equally, but there are times (e.g. Taiwan's NHI) where a social safety net extends to everyone.
Health and Nutrition: Some social services relate to providing food for needy people, typically those below the poverty line. This aid can come in the form of vouchers, which can be used to purchase groceries, or some other form of coupon or currency. In some instances, the food is straight-up provided to people. In recent decades, food assistance programs have worked to ensure that the food people get access to is nutritous, rather than relying on junk food or an excessive amount of processed food. Government policies that encourage supermarkets to open in working class areas also help in this area.
Social Inclusion: Caring for the elderly and the sick is becoming increasingly important as many countries face a rapidly aging population. Having elder care be a part of the social safety net helps ensure that younger generations are more able to focus on their own work and goals, rather than needing to put their lives on pause to care for their elders (though they should definitely be spending time with these folks.) This can also extend to people with disabilities; improving access to buildings and transportation for disabled people goes a long way in helping them live more normal lives, or at least a life with fewer unnecessary obstacles.
Poverty reduction: Overlapping with both economic goals and helping people build capabilities, reducing poverty is typically one of the top goals a country has. This can be done through financial welfare programs like social security, extension of medical benfits to people living in poverty (like the Medicaid program in the USA), and the creation and nurturing of retirement accounts for older people, to ensure they do not fall into poverty as they age out of the work force.
A lot of social development efforts focused on women and minorities are tied to empowerment. Basically, not just helping these groups live a better life, but actively trying to increase the role they play in a country's economic, social, and political efforts. Programs that support women and minority entrepreneurs can help to break down barriers and increase the share of women and minorities in the workforce, hopefully working up to positions in leadership. Similar efforts are often made in the political realm, as well. Recruiting women and minorities to run for public office, hiring them in key staff roles for officeholders, and seeking ways to gather more diverse perspectives in a decision-making process can all help social development.
Ironically, social development programs for indigenous people are often not geared towards helping them integrate into society. While integration IS a common goal, and many states want to see indigenous peoples play a larger role in business and politics, they also want to see indigenous culture be protected. Many social development policies encourage the preservation and use of local languages, and re-affirm indigenous rights to the use of their traditional land (or include indigenous voices in the decision-making process over what happens on that land.)
In many countries, indigenous peoples are an underserved community, so some social development efforts also focus on access to education, healthcare, and social welfare programs.
NGOs, social movements, and other non-state actors are often at the forefront of social development initiatives! Political parties' platforms, particularly in democratic countries, often include a number of policy proposals linked to social development. Even in authoritarian states, leaders and parties see social welfare as something worth focusing on (as a good quality of life can help people overlook a lower level of overall freedom).
Not everything has to come from a government!
Charitable initiatives thrive in many countries, and these efforts provide a wide range of social services. In the US, programs like Meals on Wheels helps deliver nutritious food to old people who live alone and poor families with young children. Groups like the Salvation Army collect used clothing and put items in good condition up for sale at a very low price, making work clothes and kids clothes affordable for impoverished families.
Many civil society actors work with underserved or underprivileged groups to help them improve themselves, gain access to education, and lead healthier lives. These can range from immigration service centers, which help new migrants get oriented in their new homes and help them with things like transportation and job interviews (my sister worked in a place like this for two years after college); other things might include low-cost childcare programs and even rehabilitation clinics, to help drug addicts recover and build habits that keep them away from drugs.
Civil society actors have an interest in seeing development succeed, and they can help monitor progress (in the same way that NGOs like Human Rights Watch monitor human rights issues around the world.)
Community groups can oversee food distribution or the handling of medical care in an emergency situation; online services and groups like Global Giving and Donors Choose can oversee donations for specific projects and help ensure that everything is "above board" and that the money reaches its intended recipients (and that it is used for its stated purpose.)
Civil society organizations can mobilize communities to take action on social issues, providing a platform for collective action and empowering individuals to make a difference in their own communities. This can help to promote social cohesion and a sense of community ownership over social development initiatives.
Arguably, community is one of the most important factors of social development. Most people's frequent interactions are within the area where they live, involving their neighbors and nearby businesses and institutions. It makes sense to get a community involved. Neighborhood cleanups, holiday celebrations, donation drives, etc. can all help people come together.