Presentations by Kyla and Angela
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November 3, 2009 at 7:46 am |
I have decided that from now on I will define development as “minimizing the constraints on individuals to realize their potential.”
Why?
Firstly this definition recognizes individual agency. It is up to the the individual to realize or not realize their own ascent from poverty.
Secondly, this definition recognizes that there are obstacles to development that are not in the individual’s control and that there is a role for a third party (read: developed/rich nation to take away these obstacles.
Thirdly, by focusing on the individual it acknowledges that there isn’t one obstacle formula – there is a different set of circumstances required of a particular individual and therefore a unique way of addressing the obstacles that they face.
Recently Amnesty International has called poverty a denial of human rights. I have problems with this; afterall I believe that one is equally entitles to live in poverty or to not live in poverty. Furthermore, unlike torture, murder, rape it is not easy to construct a perpetrator/sufferer dichotomy. After all who’s fault is it for poverty in Zimbabwe – Mugabe, the IMF, colonialism, all of the above? It is not quite as easy to address as say the ICC charging Thomas Lumbaga for his slaughter spree in the DR Congo last year. This definition nicely skirts these issues and tackles development in a much more pragmatic way – collectively we have a duty to remove obstacles to development while the individual has a duty to seize opportunities to develop once those obstacles are removed (remember that the individual focus means that we can recognize different obstacles for individuals and adjust accordingly).
Anyone have another definition? Sorry if this isn’t totally on the economics article, but we jumped around a bit during discussion and I think its important to put forth a development definition to work with if we are in a development class.
November 13, 2009 at 9:22 am |
Just in response to Tanja’s definition of development:
I agree with you and I think it is very important, as you pointed out, that individual agency has to be taken into consideration.
I think if development can take more of a direction like that then maybe there will be more realistic and culturally sensitive foreign development initiatives for each specific country. I guess what I’m trying to say is that the attitude of “we’re going to set up a program and everyone in this village is going to rise from proverty, etc.” needs to be changed since it’s not realistic, probably not possible, and definitely doesn’t take into consideration individual agency.
November 18, 2009 at 2:57 am |
It’s very interesting how you brought up the definition of development. For some reasons, when I think of development, I always think in terms of economic growth and economic development (which are two different things). Where economic growth is the increase in GDP/capita, growth in economy and economic development is the growth in living standards: social development, etc.
I agree with the professor that foreign aid does not play a significant factor in the achievement of economic growth and development in developing nations. I feel that the exchange of knowledge, technology, skills, etc. play a much more influencing factor. This is true with economic theories as well, that change in technology increase economic growth.
In addition, as I mentioned in class, Economic growth and development is a great cost-benefit analysis example.
COST: inequality. There is a strong correlation between economic growth and inequality (as seen in the Industrial Revolution and many other industrialization throughout history). Of course, there isn’t really a proven causation theory. Some nations (such as Japan) were able to achieve great economic growth and sustain equality at the same time. However, the majority of nations that undergo economic growth and development usually undergo a phase of inequality (which often leads to inequality in the long run).
Other costs include: environmental damage, lost of a sense of state sovereignty, and many many others.
BENEFIT: Greater economic growth can lead to better living standards for everyone (may not be the same increase for everyone), social changes, and even political changes. There is also a strong correlation between economic growth and democracy.
So, often the benefit of economic growth/development is greater than the cost. I think it is important to recognize the cost-benefit analysis and try to limit cost as much as possible. For example, we can examine Japan’s economic growth and see how they were able to sustain equality within the nation and perhaps apply that to like-nations.
December 4, 2009 at 3:59 am |
I’d like to further touch on the speaker’s comment that “foreign aid does not lead to development,” but rather it’s technological innovation and free trade. This is from an economist’s perspective. Another economist, Jeffrey Sachs, said that if the rich nations devote 0.7% of GDP to foreign aid, we can end poverty in our generation. If foreign aid doesn’t lead to development and won’t “minimize the constraints on individuals to realize their potential,” ass Tanja noted above, then why are we pushing the MDGs?
I’m battling with the notion that there must be some truth in the idea that 0.7% to foreign aid will ‘fix’ global poverty. If it’s something so generally agreed upon, then why are organizations and individuals alike lobbying our government otherwise?
This was the comment that stayed with me once I left that class, and it’s still with me now. And I’m still battling with it because I don’t know where the truth is. Anyone care to enlighten my confused brain?
December 4, 2009 at 8:39 am |
I think that’s a very interesting point. I think it really depends on which economist’s work you are looking at. But most of the equations/theories I learned/studied focuses on foreign trade and technological innovations/inventions as the key to economic growth.
For example, the Neo-classical growth/Solow Growth model:
According to the Solow Growth Model, technological progress is crucial for increase in output per capita and economic growth. Technology, according to Solow, is labour augmenting, thus labour saving, which increases the productivity of workers. The Solow Growth Model also assumes that technology is exogenous and that an increase in technology creates an upward shift on the production function, increasing output.
In the book: the Lever of Riches
Mokyr further shows his support by saying that increase in technology can increase efficiency and even create new or better products. He applied his theory to Britain. For example, the technological advances in one sector often stimulate growth in other sectors as well, for example Watt’s steam engine was applied to ships, which led to better transportation. Thus, he concluded that with plenty of beneficial characteristics that facilitated technological growth and development, was inevitably the first to industrialize.
In terms of how big of a role foreign aid plays in economic growth. There are two terrific articles:
- “Eyes Wide Open: On the Targeted Use of Foreign Aid” by David Dollar
- “The Cartel of Good Intentions” by William Easterly (<– I highly recommend this one!! So very interesting and kind of bitter O_O)
*the above information taking from Economic 334 and Economic 255*
November 23, 2009 at 7:46 am |
I agree that any definition of development needs to take into account individual agency. Amartya Sen wrote about one definition which I rather like, which says that development is “a process of expanding the real freedoms that people enjoy”. He splits this up into different categories such as political freedom, economic freedom, social opportunities, protective security, etc.
The reason I like this definition is because development in this regard is treated as an end as well as a means. Unlike GNP, which is purely a means to other ends, human freedoms are both goals in and of themselves and means of reinforcing each other. For example, political freedom enhances economic freedom by providing stability; social opportunities in education (human capital) encourage economic freedom, etc.
To gear this discussion back towards the economics of development, I’ve been thinking about the best way to attain these freedoms. Despite the consensus on stepping away from GNP per capita as the sole measure of development, I can’t seem to escape the idea that economic development is the best way do this. More income leads to more food security, more opportunities for education, access to health care, and so on.
If we want to see examples of countries pulling out of poverty, we will undoubtedly look towards the Asian Tigers, Southeast Asia, and more recently China and India. My understanding of how they developed is that improved agricultural productivity allowed more workers to work in industry, which led to export-led growth and higher wages. Property rights & stability were a definite factor in this growth as well.
Any ideas on whether this can be applied to developing countries in Africa?
November 25, 2009 at 10:02 pm |
I agree that economic development is essential to enriching a poor country, and that looking at development projects from an economic viewpoint is a very efficient way of going about things. The difficulty is that when we base ‘development’ on economic type standards, we fall prey to the same timeline that a capitalist economy expects. Fast timelines with great returns. A cost-benefit analysis of situations is good for a world of robots- stable, exacting, calculative, unempathetic- but not so ideal in a world made complex by different situations, circumstances, and people.
We’ve already discussed how the Millenium Goals are flawed because of the impossible timeline that they are expected to be completed by. When we focus and depend on economic development to bring a country out of poverty, to ‘develop’ it, then we run into this same problem: impossible goals and expectations. Economics, investment, and all these good things are not magic. and should not be rushed in to. Capitalist economies work well within a strong framework that can balance out the social and material inequalities it inevitably creates. I agree with Eric in that property rights and stability are prerequisites to a good economic growth.
Political stability, good governance, and belief in the rule of law are equally important to balance out the inequalities that capitalism produces.
Without them, devoloping countries run the risk of becoming international markets that base decisions on how much money they can make, and not on how best to improve their citizens’ lives.
December 1, 2009 at 6:49 am |
Eric asked about Africa, well, the reason why Africa is not considered developed is that there is low investment in the continent. It is not economically attractive. We know about conflicts and corruption, but the most important barrier is the lack of infrastructure. As my ANTH prof says, things are slow in Africa. Access to some areas is limited by lack of proper roads. There are not enough infrastructure to support the investment. Therefore, investors need to start from scratch, but that ends up being costly. So one idea is that investment should go into the people in areas such as education, health care, social services, etc. Even though this kind of investment requires a long time to produce wealth, it is type of investment that most benefits the community. This type of investment does not necessarily harm the investor. It is not altruistic. e.g., Microsoft invests in Africa by providing computer training and access. People educated by Microsoft are attracted to the company and will end up working for the company. This benefits the community, b/c 1. this is a beneficial training (it’s like making baskets out of bamboo) 2. there is a job market. Microsoft also benefits b/c it will have a workforce and has promoted itself.
December 4, 2009 at 11:28 pm |
You said: “It is not economically attractive. We know about conflicts and corruption, but the most important barrier is the lack of infrastructure.”
Definitely. My dad’s company owns a piece of land in Western Africa (ohh, the evils of international companies…) upon which they are involved in the extraction of natural gas. Having eavesdropped on phone conversations (he talks loud and i’m a bad person, what do you expect!) as wellll as helping him out with presentations and such, I have gotten a pretty good idea as to what the process of dealing with African governments is like, from a Western point of view. And let me tell you, it is terribly, terribly slow. And complicated. And corrupt. And often, irrational. There are so many challenges and obstacles to development in Africa that it becomes very costly to invest here. There are a lot of jobs to be had which, if negotiated properly, could benefit the economy of African countries quite a bit. This is a bit idealistic of course, and the fact of the matter is a lot– nah, the majority– of African governments are highly corrupt. Resource-rich countries should not be home to a starving population. Something is not working properly, and that something is the absence of viable infrastructure. I like that you mentioned a need for investment into health care, social services, education, etc. Roads and stuff would be good too. I am very aware that this is a hugely complex issue, of which I have limited understanding, but I just wanted to express my agreement with Iran’s infrastructure discussion.
December 2, 2009 at 7:44 am |
While I believe there have been some good points being made about the importance of looking beyond an economic development/cost-benefit model, I do want to caution us in our discussion of ‘individual agency’ as a measure of development. I personally believe that an effective definition has to bring together the individual and the collective.
Like Eric has mentioned and Iran reiterated, Hernando De Soto Polar’s idea of private property rights as the key to investment and the creation of capital (from dead capital) is a valid one. Yet in order to have effective private property rights, there needs to be a legal framework established. This framework must be established collectively- and thus it relies too on a willing government and subsequent pressure and guidance from intergovernmental and non-governmental organizations.
Private Property rights is an ultimate end to be strived towards. But it takes more than an individual agent to ensure this system is both effective and economically sustainable.
December 2, 2009 at 9:11 am |
In response to Eric’s comment:
In terms of the Asian tigers and the Asian development, I think a very powerful, central government is the key in the countries’ development. More specifically –> authoritarian regime.
Korea: underwent much development under the leadership of Park Chung-hee where he enforced many many economic reforms. He was able to suppress opposition to reforms with military might.
Japan: although Japan had a democratic system with multiple parties. It was dominated by the LDP party and thus, the LDP party was able to enforce economic reforms and such to increase Japan’s industry might and export potential.
China: under the Communist regime, new economic reforms, such as Special Trade Zones, State-Own Enterprises (SOEs), etc., were enforced. For China it was a little different because it was able to lift 300million out of poverty with domestic reforms such as breaking down of the communes system, etc. rather than relying on foreign trade (like Korea and Japan).
So, my summary is:
1. good reform policies –> eg. opening up FDI, but keeping control over financial markets (to prevent financial crisis, eg. 1997 Asian Financial Crisis)
2. good control over economy
3. strong, VERY strong, government.
I think for developing countries in Africa, one of the major concerns (for example, from a foreign investor’s point of view) is corruption and instability in governance.
This goes too with Foreign aid. If a country does not have good governance (instability, corruption, etc.), then how do we know if the aid money is going anywhere that would be efficient or effective?
I don’t really know how we can bring about to tackle the issue of “good governance” in the future because then it would be intruding on other nations’ sovereignty.
And I don’t really know if authoritarian governments are the only way about it….. but that’s the type of blueprint from the Asian Tigers.
December 4, 2009 at 4:09 am |
I’d like to comment on Anna’s comment on the China situation. I’m currently taking a class on China’s development and transition to a market economy.
In China’s case, none of the three points (of which you made summaries of) are actually true.
First, China did not actually have ‘good reform policies.’ The movement of townships and villages moving away from collectivization was something sporadic and not initially approved by the central government. It began in a few regions due to local governments wanting to increase taxable profits to increase their own regional budgets.
Second, China did not necessarily have a good control of its economy. It was actually due to the fact that this control was broken up over regions that initial development took off.
Third, China did not have a strong central government because of the Cultural Revolution and the Great Leap Forward. Regions were willing to take matters into their own hands because the government reforms failed them. The State-Owned Enterprises (SOEs) were actually extremely costly for the government because they were neither efficient nor competitive. It was actually the regional initiatives with the Township and Village Enterprises (TVEs) that notably increased China’s GDP. China’s government was strong in censoring matters.
December 4, 2009 at 7:54 am
Hey Andra,
I completely understand your input. I’m taking a Chinese politics class (with economic additions to it) and all those points you mentioned are completely valid.
I suppose I should have explained my summary more clearly. I think we both have valid points, but are based on different lens and at, perhaps, different times.
My point regarding China is post-Cultural Revolution and GLF (where of course, the GLF was one of the most unsuccessful campaigns in history and resulted in the Great Famine). So, the points I made were based on the economic reforms that the government undertook after Deng Xiaoping came to power.
So, based on post-CR and GLF period, here are the points why I think China was able to reach great economic growth (economic miracle) under the centralized/strong government:
(When I wrote my comment, I just typed down the reforms that I remembered on top of my head. I didn’t really explain each of them clearly, so I suppose I could do that now. But even so, it does not do the topic justice for China is so diverse and there are many things I may/probably missed)
1. Decollectivation – to Andra’s comment (“It began in a few regions due to local governments wanting to increase taxable profits to increase their own regional budgets.”). I would say otherwise. The decollectization process was not largely due to trying to increase taxable profits for the government (it may be factual in certain regions, but I’ve never heard any of my professors mentioning this point as a key contribution for decollectization in China). Instead, the process was due to the fact that Deng wanted to increase agricultural output and that the communes had epically (sorry for the non-academic term) failed. Deng initially experimented decollectization with Sichuang (of course, they weren’t the very first as some other smaller villages did decollectize without informing the government) and the central government approved it. It is important to note that although the land reforms was not initially drafted by the government, the government approval in the end made the biggest difference. If the government did not approve of decollectization, a “crack-down” may have occurred and the villages who decollectizaed may have been punished for their actions. By approving it, overnight, villages across the nation decollectised. Although it was not their policy, the government was able to recognize the importance of it and implement it à therefore, it was a good economic policy.
2. TVEs (Township and Village Enterprises) – The village were in control over the TVEs and they were able to keep profits (therefore, increased incentives). “Key driving force: new incentives (reassignment of property rights), right to keep the profits, coupled removal of village income (by handing control over harvest income to individuals)” (Tiberghien, 2009). By the end of 1980s, over 100 million people were employed in TVEs with “9x growth in 10 years, key contribution to China’s exports” (Tiberghien, 2009). This was another economic policy that the government enforced that helped alleviate poverty.
3. SEZs (Special Economic Zones) are zones that opened up to free foreign trade. Initially, there were only 4 (HK-Shenzhen, Shantou, Macau-Zuhai, TW-Xiamen). These areas would attract great FDI (foreign direct investment) and build export industries, which increased GDP. Then, the SEZ zones expanded as other regions also wanted to tap into the FDI and growth. The expansion included: 1980, Xiamen, Zhuhai, etc.; 1984, Ninbo, Fuzhou, Beihai, etc.
4. SOEs (State Owned Enterprises) received mixed results and uncertain reforms. These were targeting urban areas. The SOEs were more essential in regions near the interior China, not near the coast, where the TVEs and FDI companies are growing. This was a source of income for the government for they owned the enterprises and were able to obtain revenue from it. In addition, with the iron-rice bowl policy (where workers are guaranteed work and pay for life), the government received a lot of support. However, from an economic efficiency point of view, this was disastrous because there were no incentives, the firms were not as competitive as foreign ones, and it did not aid the country’s economic growth. Because the SOEs were inefficient, the government eventually did shut many down. The government was able to enforce economic reforms to privatize many of the SOEs. The ones that were left were given new incentives, tax cuts, more say for the supervisors, the power of supervisors to dismiss employees, etc. The ones that were privatized were left to survive on their own, where many did go bankrupt. This reform eliminated the inefficient SOEs. The reason why the government took so long to implement the reform can be partially due to that resistance from the urban sector. Without the SOEs, iron-bowl workers became unemployed with no social services, no housing, and no income. This generates social unrests even to this day in Northern and Interior China. But, overall, the policy of reforming and ending the SOEs were correct.
5. Close financial market. I think this policy is of key importance! Our professor keeps emphasizing on this. To open up trade, you can open up current flows (of goods and services, FDI, etc.) and/or open up financial flows. Originally, many economist believed that you had to open up both trade flows and financial flows in order to gain the most benefits from trade, however, the Chinese government chose to open only trade flows. This led to an increase in FDI and long-term investment in China. Post the 1997 Asian Financial Crisis, economists, such as Stiglitz (nobel laureate in economics), believes that China’s economic policy regarding closed financial flows is correct. When ST foreign investments (in the form of financial investment) got pulled out from Asia, only China was able to stand strong to the speculation and was even able to come out stronger than pre-crisis. This was because China (mainland) had no foreign financial investments to be pulled out, therefore, they did not suffer the financial crisis the other Asian miracle countries suffered. (HK is an exception to this as they do have free financial markets).
· http://www.thomascrampton.com/china/stiglitz-china-is-doing-the-right-thing/
· http://en.bimba.edu.cn/article.asp?articleid=2870
Now, to address the strength of the CCP in controlling the economy and the nation:
I truly believe the CCP was (and still is) very strong. With great legitimacy and support (which can be backed up by empirical evidence, surveys, and reports), the CCP was able to implement the economic reforms without question. Most of the economic reforms the CCP undertook were good for the Chinese economy.
In terms of the strength of the government, I would argue it was very strong… it is a Communist Authoritarian regime…
Whether it was reforms or just freedom of speech, the government was able to suppress democracy and actions without their consent (eg. June 4, 1989 Tiananmen Movement). Of course, it can be argued that the CCP had a factionist battle, between the Conservatives and the Reformers, where the policies that the government enforced sometimes didn’t match (“Fang/Shou Cycle”).
BUT, overall, when the government does decide on a policy, it implements it on all levels, even if it means by force (for example, the village elections). I do agree with Andra’s argument that sometimes the regions took control of matters into their own hands, but I think by and large, the government still had pretty good control over the regime. The fact that the CCP remained standing during the time when many other Communist states around them were collapsing showed their strength (1989 fall of the Berlin Wall, USSR breakdown, etc.).
In addition, this importance and key role of the government can be seen where after the 1989 Tiananmen incident, all economic reforms came to halt because people didn’t know what the government wanted. It was then started up again with a visit from Deng to Shenzhen where he said that Shenzhen (a very free capitalistic city) was the model for China.
So, I still stand by what I originally said: the strong Chinese government was able to implement correct and beneficial economic reforms for China, which brought about economic growth and prosperity.
*All notes are from Political Science 321 class lectures, readings, and notes.
December 4, 2009 at 8:05 am
Sorry for the run-ons, grammar mistakes, and all that other writing goodness..=S
December 3, 2009 at 12:07 am |
I really liked that our discussion during this class focused on the development of social capital. Just as was mentioned in class, developing a means of investing in people to strengthen a society’s capacity is a powerful way to have long term benefits. The discussions above regarding lack of infrastructure are really interesting, and I think bear a great deal of significance in the debate surrounding development in Africa. Lack of institutional capacity and government corruption are definitely indicators of a lack of infrastructure and pose barriers to foreign investment. That said, I would rather comment on Iran’s astute statement that “things are slow in Africa.” One of the distinctions I learned to make in my everyday life in Tanzania was that between English Time, Swahili Time, and Tanzanian Time – all different. English Time refers to how we tell time – 24 hours in a day, midnight is 00:00, etc. Swahili Time refers to a different way of numbering the hours, where 1am is what the Western World would call 7am, ie. when the sun rises. Tanzanian Time, on the other hand, refers to a different perception of how daily life fits into a temporal framework. If a meeting time is set for 1pm and you are operating within the cultural framework of Tanzanian Time, the people you are meeting with could arrive anywhere between 12pm and 4pm – this is considered both culturally acceptable and, in most cases, expected. Operating in a Western temporal framework, this would be considered late and probably also rude. Granted, it can be somewhat inefficient if you are attempting to schedule a day’s activities as tightly as we tend to do in the Western world (think about your class schedules during the day, then a shift at work, then a teleconference for a student committee, then homework, then a fifteen minute weekly conversation with your mother…). Is this a cultural difference, or an example of inefficiency? Is imposing our values of scheduling and temporally structuring our lifestyles ethical? I encountered this idea again while working for the First Nations Child and Family Care Society this summer in Ottawa. You can find a fact sheet on “Indian Time” here: http://www.fncfcs.ca/docs/InfoSheet1-IndianTime.pdf./ It is short and informative, but if you don’t have time to read it, this quote sums up some central ideas: “Indian time is often a misunderstood concept and has fallen prey to the Eurocentric notion that it means one is always late. On the contrary, Indian time means “the right time” and is hardly ever linear. It is cyclical and understands life to be always in motion and in constant flux.”
Thus, I find myself truly stumped by this issue. Does integration into the global marketplace necessitate conforming to Western ideals…and is that ethical?
December 4, 2009 at 2:58 am |
Anna – I really liked your comments pertaining to the Asian tigers. Often people just take the bottom line that export-led growth established the Asian Tigers, and don’t take appropriate note of the government regimes that got them there. Authoritarian regimes, while ostracized by democracies, have made great strides in development (although often at immense human cost) that arguably may not have been possible under a more liberal political system. A classic historic example of rapid economic growth overseen by an authoritarian government is the Soviet Union’s great industrialization under Stalin.
While this method may have worked for the Asian tigers, it is unlikely to be replicated in other developing countries with weaker, crumbling governments. I think here we need to remember that the development of most Western nations occurred at an evolutionary pace (as to develop institutions ie legal systems/property rights, as brought up by Eric and Iran), and it is not realistic to assume revolutionary/fast-paced development is possible or the best method for all countries. Kyla’s comment was interesting regarding perceptions of time – I feel like here our Western notion of time tells us things should happen on a very short time frame. If we take the argument championing the importance of institutions for economic growth to occur, here we can especially see that longer time frame is necessary – it will take time for laws to become socially accepted norms, for property rights to be taken seriously, etc.
December 4, 2009 at 3:00 am |
Just in response to some of the comments here: Africa faces a lot of developmental challenges that many other countries don’t. In addition to the infrastructure issues that Iran mentioned, there are also a lot of geopolitical problems. Moreover, development is uneven across regions and states and many people (either due to gender, cultural and ethnic clashes) are excluded from accessing basic things like education or getting employment. There are also tough land and agricultural challenges, especially with continued wide-spread drought. And of course, with political transitions and the resulting instability, economic investment from overseas, int’l gov’ts or companies may become lessened or withdrawn.
December 4, 2009 at 9:00 am |
First of all, I agree with previous comments that we may not be able to apply models/blueprints from other nations to the nations in Africa. If we do this, we will be ignoring many key cultural, social, and economic factors that may not be cross-cultural. (It would be just as disastrous as how the IMF applied some of the same policies towards the 1997 Asian Financial Crisis as it had with the Argentina financial crisis… which didn’t work at all).
Second, in response to Alice’s comment.
I think if we just applied this view on Africa, then it seems like its future economic growth and development may be very grim.
Despite some of the issues that the developing nations in Africa are facing, I think the future is bright. My logic is just that many other countries, such as China, Japan, and even Britain and France, had issues very similar to Africa right now:
- “infrastructure issues” – Iran/Alice
- “rumbling governments” – Angela
- inequality in development across regions – Alice
- “tough land and agricultural challenges” – Alice
But these countries were able to develop despite these shortcomings.
If we just take Japan for example. Post-WWII, the nation was devastated by the fire bombings and sacrifices for the war effort, not to mention the nuclear bombs on Hiroshima and Nagasaki. During this time, infrastructure issues, rumbling government, and inequality existed. Japan, even to this day, don’t have many natural resources. However, the present Japanese economy is one of the most powerful economies in the world.
Although the current situation in Africa is grim, I think we should not just focus on what Africa doesn’t have, but what it does have.
I don’t know if I’m just being too idealistic =S
December 4, 2009 at 5:35 am |
I think much of the discussion here is good- touching on important issues such as infrastructure, authoritative governance, etc.
But I want to switch gears a little and talk about Food Security… an issue that CIDA and other international development organizations have realized is so crucial for economic growth.
Last year, in Econ 339 I wrote a paper called Lessons from India and Nigeria to today’s LDC. The paper examined why India was so successful in developing modern industries and increasing human capital in the process.
I examined India’s Green Revolution, an agriculture-based movement designed to transform the country’s few fertile regions into sustainable breadbaskets (Pepper, 2008).
The Green Revolution was a direct response to the famine crises of the decades before, famines which had led to mass starvation and a reliance on foreign grain and food aid from the United States. The Punjab region of India was chosen as the epicentre of this revolution. Scientists, government officials, and farmers began introducing “new irrigation techniques, hybrid seeds, fertilizers, pesticides, herbicides, and mechanizations.” (Pepper, 2008). Rice and wheat, India’s two main staple foods, were targeted, as high-yielding varieties of these crops were produced. Rather than relying on American food aid, India worked with the Rockefeller Foundation, who provided the technology behind these changes (US Library of Congress, 1995).
As a result, India was able to increase its land yield from 1.9 million hectares in the first five year plan of 1960, to nearly 43.1 million hectares by 1980 and 63.9 million hectares by 1990 (United States Library of Congress, 1995). Indian Agronomist S.K De Datta (1968) found that this new variety of rice led to a ten-fold increase from the yield of traditional rice. As a result, The Green Revolution increased production of food from 72 million tons in 1956-1966 to 152 million tons in 1983-1984, facilitating the establishment of new manufacturing and service sectors (PBS, 2007). Since 1994, India’s economy has grown at an average annual rate of 6.8 percent, reducing poverty by 10 percent (PBS, 2007). India’s booming economy has been fuelled by growth in the industrial and service sectors. Today, 70% of India’s population of 1.1 billion continues to live off the land, with modern industries such as cotton production arising to successfully conjoin both agricultural and manufacturing industries (PBS, 2007).
On the contrary, considered an African success story, boasting the second richest economy and a strong oil-rich industrial sector, Nigeria has been long considered the prototype for an effective dual economy. However, the past few years has seen Nigeria engage in an ongoing food crisis, that has taken its toll especially in rural communities and among her impoverished children.
Yet, Nigeria focus merely on the industrial sector, and the extraction of oil. This has had a negative effect on fertilizers and other agricultural inputs, crucial to food production. Due to the lack of high-yielding staple crops, a result of the inability to develop technology to help in domestic food production, Nigeria has been unable to increase output.
I won’t go too much in to the specific economic model- those that have taken Kotwal’s class have learned about his theory. Essentially, by adopting new technologies as the basis for agricultural productivity, countries can begin to facilitate the transfer of labour and capital accumulation into the resource-based industrial sector, through a more stable process. Because industry is capital intensive, savings and investments can take place, creating a process by which governments can create more effective socio-economic programs to combat social issues such as poor farming practices, disease, and pest control.
Conclusion: technological change/diffusion of technology needed to begin process of increasing agricultural productivity through increased food security which in return increases savings and investments which increases human capital.
December 4, 2009 at 9:09 am |
I’m just throwing this question out there.
If economic growth came at the cost social welfare and environmental degradation, then should we still encourage it?
I’m just looking at other models of development in countries such as Britain (factory system, child labour, etc.), the USSR (forced labour, land reforms, etc.), China (high inequality, sweat shops, etc.), and other countries that underwent drastic development in the last century… and many of the countries’ economic growth came at the cost of social welfare and environmental damage. (of course, there were other negative factors as well).
What do you guys think?
It’s like the classic butter and guns model….
hmmm… I can’t really formulate a stance on this question.
December 4, 2009 at 9:06 pm |
There’s been a lot of talk about property rights as necessary for economic development of the poor, and I would agree that a willing government is essential for property rights to be respected. However, if the government of a country is corrupt and ineffective, I believe that it will be very difficult to encourage them from implementing property rights. There must be another answer than simply giving more money to bad governments. One approach I recently discovered is a grassroots approach to strengthening civil society and legal empowerment of the poor. Many poor people don’t have access to the legal system in their country, and there are many ways in which traditional legal systems discriminate against the poor, the most basic one being the exorbitant cost (both in terms of legal fees and opportunity cost) of the justice system. One justice empowerment project I’ve been reading about is the Legal Empowerment and Assistance for the Disadvantaged project in Indonesia, carried out by the UNDP. They provide grants to NGOs and other civil society organizations who work towards improving access to information and free legal service for the poor. From April to June 2008 alone, LEAD’s partners distributed 14,000 posters and leaflets on legal rights; trained 400 paralegals and citizen advisors; held community discussions on legal issues with 13,700 villagers; produced 2,200 advertisements in radio, TV and print on legal rights and provided legal counseling and support for 88 cases. Not too shabby.
December 4, 2009 at 9:51 pm |
Andra, I really like your last point about projects overlapping and complementing one another. I think that building a network between organizations is crucial. So much time and effort are wasted on projects that are similar but use different methods/ideas/resources. A dialogue between organizations that are operating in the same country, and dialogue between organizations that are striving towards the same goal and are focusing on the same sector would certainly lead to increased innovation and efficiency. It is not a competition (well, it is, because humanitarian efforts end up operating within the business world), or rather, it shouldn’t be a competition to see ‘who can help the best!’. This totally loses focus of the end goal, and rather than individually developing strategies and implementing policies within a single organization, development agencies should be talking with one another to realize which areas are already being covered, which lack attention, which methods are the most effective, etc. And obviously, as has already been mentioned, there needs to be more communication with the local communities so that projects are relevant, welcomed, and assisted by the community.
I’m not so sure, though, that I agree with a humanitarian approach over business/economic with regards to development. To me, this seems like a way to placate the organizations rather than the community. It seems more ‘feel-good’. Like hey, rather than contributing to economic infrastructure, you gave a child some clothes! I’m not saying that providing for less-fortunate children is an unworthy cause (oy, this subject gets so delicate), I’m just saying that if we focus on economic and business interests (let’s face it, everyone wants to make more money and be part of a flourishing economy) then the community can eventually provide the clothes ITSELF. Keeping in mind the ‘clothing for kids’ example is just hypothetical of a feel-good effort. To me, while a lot of humanitarian efforts are certainly noble in their goals, they are short-term solutions rather than sustainable projects.
December 4, 2009 at 10:01 pm |
I’m not sure if we’ve discussed agricultural subsidies in this class or not – all of my classes seem to be jumbling together these days. Hopefully we haven’t, as this is the topic of my post. As I’m sure many of you are aware of, the U.S. and the European Union have maintained high subsidies on agriculture for their own farmers for a long, long time. Despite the trend since WWII of the entire world lowering tariffs and trade barriers of all kinds, agriculture has an exemption from those barriers. There are several reasons for this, but for the most part it is because agriculture is a incredibly politically sensitive sector. Farmers, despite their small numbers in developed countries, are able to organize into strong lobbies and influence their governments. Another reason is food security. It seems a bit strange talking about food security in developed countries, but should World War 3 break out tomorrow, it is obvious that countries would want to have a domestic agriculture base big enough to feed their country.
However, problems arise because the huge subsidies western governments give to their farmers allow American and European goods to flood the markets of poor countries at very low prices. As the poorest countries are mainly agricultural based, this poses a huge problem, as the local farmers who do not receive government money cannot compete with the imported food. This happened in Mexico after NAFTA – tariffs were brought down to zero but US subsidies on corn were maintained. This led to cheap US corn driving the Mexican farmers out of the market. The justification was that Mexicans can now buy corn at a lower price, thus benefiting the poor. However, the livelihoods of a majority of Mexicans are now threatened.
Agricultural subsidies were one of the main reasons the Doha round of the WTO failed (it was the first and only round of GATT/WTO that ended in failure). Developing countries demanded the end of agricultural subsidies, but developed countries were not able to do so. I read somewhere that ending agricultural subsidies in developed countries would provide more income to third world farmers than all of the aid money that has ever been sent. This is HUGE.
December 4, 2009 at 11:46 pm |
yes yes yes! Our class is so smart. hahah.
I wish we had been able to talk a bit more about this, because it seems like there are people in our class that are quite knowledgeable about this topic. I am not one of those people.
Eric, I think that you are so right when you say that agriculture is a politically sensitive subject. Consider the topic in the context of immigration in the United States under the Reagan administration. Congress was trying to pass a bill that made it illegal to knowingly employ illegal aliens (this mostly concerned immigration from Mexico and Central/South America), and restricted the number of immigrants allowed to enter the country. This was 1986, I believe. Anyways, the farmers totally freeeaked out and said that illegal aliens account for one-third of their employee base and that without them, all the perishable crops would rot and the US would have to import a ton of food and the economy would fail and ohmygod the world as we know it would end! So I guess they were pretty convincing, or something, and Congress ended up included a provision in the bill to implement a guest-worker program (meaning that farmers could bring immigrants up without granting them any sort of resident status just for the remainder of the farming season, after which they’d be shipped right home..) basically because the agricultural interest groups were so strong and so well organized. People are very concerned about the precarious nature of their food supply, and want to make sure that when it comes down to it, they will be okay no matter what. Hollywood should stop making movies about the apocalypse. Anyways, that rant was to show just how powerful these groups are.
What are the political reasons that these Western governments employ in defense of their ridiculous food subsidies?! It’s so counterproductive! They’re wasting so many resources trying to combat poverty and starvation in the developing world while at the same time are directly contributing to the artificial pricing of agricultural crops! Bah!
ooh. here’s a link to a bunch of articles about agricultural subsidies. I’m going to go do some learning.
http://www.globalpolicy.org/social-and-economic-policy/international-trade-and-development-1-57/agricultural-subsidies.html
December 4, 2009 at 11:56 pm |
Okay, so this has kind of turned into less of a discussion and more of me rambling about different issues that no one has really brought up, but the deadline is nearing and I guess I’ll stick to what I’m familiar with. So, to bring up yet another topic that we haven’t covered in class (but is certainly related to the ethics of development), I’d like to talk about the role of the IMF in developing countries. The IMF has a very different mandate today than it did at its creation. It has gone beyond a macroeconomic stabilizer to an organization involved in development. While it is most well known for its role in financial crises, it also gives loans to countries that aren’t facing crises. In many cases, it gives huge loans tied with conditionalities for reform. The reforms in the past few decades have been based on the Washington Consensus, which was basically a set of policies identified in 1989 that were seen as desirable in the development of Latin America. Many of them were well intentioned, and the original writer did not mean for the policies to be a “one-size-fits-all” framework for all developing countries. However, this is basically what it has turned into, with the IMF pushing government to deregulate businesses, cut spending and lower trade barriers. Clearly, it is dominated by western governments. Many argue that these policies failed in subsequent crises, most notably the 1997 Asian financial crisis. Despite the talk of reforms, there is still a lack of accountability in the IMF today. I think that a lender of last resort is necessary in today’s volatile world, but it needs to undertake under serious reforms, giving developing countries an equal voice.