Pathways towards development Models of development

Malthus:

• We are going to overpopulate to the point where the environment cannot sustain that many people o This is a threat to development, an example could be India, where the population is so large that it cannot provide for everyone

• Malthusian limits Rostow:

• Modernisation theory o Argues that through increased investment, increased exposure to modernised, Western society, and changes in traditional culture and values, societies will become more highly developed

• Traditional society  pre-conditions for take-off  take off  Drive to maturity

Dependency (World Systems Theory):

• Marxist foundation o Structure of world economy  Unequal system of trade  Core (industrialised countries) – periphery (developing countries)  Core exploits periphery + has interest in maintaining this imbalance o Evidence  Developing countries • High tariffs (tax) to protect industries (often on imports) • Overvalued currencies which made importation of inputs cheaper • Subsidised industries  Consequences • High levels of borrowing • Corruption • Pressure to change strategies Neoliberal theories:

• Minimal state intervention

• Leave markets free to operate (smith)

• Protection of the economy (tariffs and trade barriers) can be counterproductive o Why?

• Countries should specialise in producing goods and services they can provide cheaply compared to other countries

• Reduction of state intervention – smith: Invisible hand o This theory uses the “invisible hand” as a metaphor to describe how free markets can incentivise individuals, acting in their self-interests, to produce what is societally necessary. The invisible hand itself is a metaphor for the unseen forces that move the free market economy, and how self-interested individuals operate through a system of mutual interdependence  This interdependence incentivises producers to make what is socially necessary, even through they may only care about their own well-being

• Washington Consensus o 10 policy reforms originally targeted at Latin America to address economic instability  Tax reform  Trade liberalisation  De-regulation  Privatisation  Inward foreign direct investment o It was a level of agreement between the IMF, World Bank, and USA department of the treasury, on policy recommendations for developing countries o Operation of the free market and the reduction of state involvement were crucial to development in the global South

• Reflected in the IMF, World Bank, WTO, MDGs + SDGs

• World Bank Structural Adjustment Programme – reforms required prior to providing any loans

• “trickle-down” effect, provides a good claim and counter claim paragraph

Claims and counter claims:

• Private groups replace the state-motivation + basis for decision making may not be good for the community

• Reduces corruption

• More efficient use of resources

• Washington Consensus: Created wedges between reform and the realities of implementation

• Mixed results – some countries thrived; others stagnated. o Success of neoliberalism: Due to Margaret Thatcher’s neoliberal economic policies, Britain stopped economically lagging behind France, Germany and Italy, and by 2008 had a higher per capita income than all of them. Also the Asian Tigers o Failures: In attempting to implement policies in the Washington Consensus, there were some detrimental affects on the population of some Sub-Saharan nations in the initial reform period, as there was no careful consideration of the environment of incomplete markets and the institutional challenges faced by African governments

State Capitalism:

• State has supreme command over production and usage of capital

• Ownership of enterprises and subsidisation of economic activity

• Political ends vs economic goals – may not always be to the development benefit of the people Study: China’s State Capitalism:

• Has more companies on the Fortune Global 500 list than the US o 75% are state owned enterprises

• Three of world’s largest companies are Chinese

• Despite China being able to leverage its super-sized and super-scaled SOEs to consolidate dominant market positions in strategic global industries, this comes at a price, which is that there is a squeeze placed on China’s more efficient and productive private sector

• There has been a boost to try and keep state-owned enterprises productive, but generally there is a lower performance Capability theory:

• Rise in GDP does not guarantee good quality of life for people

• Life is a series of “doings and beings” linked by “functionings” o Focus of policies should be ensuring a person’s wellbeing and development, providing freedom to live the kind of life they choose or find valuable

• Nussbaum: basic capabilities of all humans: o Live a life of normal length o Good health, nutrition and shelter o Mobility to use senses, imagine, think, reason and have an education that nourishes these o Mobility to live for others and show concern for other humans o Mobility to laugh and enjoy recreation

• Critiques: o Illiberalism: often identify the focus of the approach as “the ability to achieve the kind of lives we have reason to value” – as problematic, because it appears to impose an external valuation of the good life, whatever people may actually value  Thus, the reasons for liberals to focus on the fair allocation of general purpose resources rather than achievements is this best respects each individual’s fundamental right to pursue their own conception of the good life o Under-theorised: does not say which capabilities are important or how they are to be distributed, he argues that those are political decisions for society itself to decide o Too individualist: some communitarians see Sen’s account as even overtly hostile to communal values because of an excessive focus on individuals. It has been for example argued that because this theory’s approach only considers states of affairs and social arrangements in terms of how good or bad they are for an individuals freedom and wellbeing. This thus excludes consideration of other goods that people have reason to value, such as shared language, moral norms or political structure Approaches for developing the economy

Trade liberalisation:

• Making the trading system free of government intervention o Reducing tariffs o Reducing barriers to trade

• Adopted as a principal by the WTO

• Should encourage product development where a country has comparative advantage

• Improves global competitiveness (reduced prices)

• E.g Asian Tigers of the late 1990s o Primary reason for the rise of their economics was their export policies, Hong Kong and Singapore implemented neo-liberal trading regimes that promoted free trade Export orientation:

• Increase in the production and export of goods where a country has a comparative advantage

• Effectively opens up domestic markets where trade is liberalised

• Encourages innovation and transfer of skills o E.g export of manufactured goods by Asian Tigers (See right above) Commodity-led growth:

• The production of goods, usually for export

• Similar benefit of trade liberalisation and export orientation Tourism:

• Movement of people temporarily from one place to another o Function of:  Improved transportation  Blurring of borders  Promotion

• Rapid growth has often contributed to development

• Source of foreign exchange

• Provision of infrastructure

• Jobs created but often low-paying o E.g. BRICS countries have emerged as a potential bloc in the developing countries which caters the major tourists from developed countries o These countries have grown at a robust growth rate, and are focal destinations for global tourists o In 2014% they made up nearly 30% of the world’s GDP Entrepreneurship:

• Assumption of risk and responsibility in designing and implementing a business strategy or starting a business

• Creates jobs and makes good use of capital, thus generating growth

• Exports bring in foreign currency

• Preconditions: o Sound infrastructure o Government policies freeing up markets o Stable institutions Knowledge economy:

• Knowledge + intellectual capabilities

• Involves production + services based on knowledge-intensive activities, accelerating pace of technical scientific advance

• Basic requirements (World Bank): o Educated + trained workforce o Sound infrastructure o Environment conducive to the dispersal of knowledge o Appropriate HR

• E.g. Switzerland has a high GDP per capita, and has the highest ranking for knowledge economy and world innovation ranking (it was 7 years in a row in 2017)

Circular economy:

• Linear economy production, consumption, disposal

• Circular economy  allows for recycling of otherwise waste products

• Materials divided into 2 groups: o Biological material  non-toxic o Technical material  cannot be processed into environment thus needs to be kept in good conditions

• Very much linked to sustainable development, considered a key element of it

• The EU seems to be leading the pack in the transition to a circular economy. France has been progressively banning single use plastics o In 2015, the European Commission ratified a plan to boost the continent’s transition to a circular economy. Included were 54 measures to “close the loop” on the life cycles of products, mainly focusing on five sectors, including construction and demolition o The Netherlands aims to be a country with an economy built 100% on circularity by 2050 Complementary currencies:

• Usually not legal tender

• Value agreed between parties exchanging

• Most commonly operate at levels below the national level and in communities

• May contribute to development through satisfaction

• They also contribute to development if for example, there is a regional currency, which would keep spending local

• A social aim is explicitly fulfilled or aimed to be fulfilled through the creation of a complementary currency Approaches to developing society

• 4 dimensions to sustainable development o Conservation, natural ; all living things o Democracy, political ; politics, policy, decision making o Peace, equality + Human Rights ; social, people living together o Appropriate development, economic ; jobs income Concern for citizenship skills + engagement:

• Skill set required for sustainable citizenship: o Open interaction o System of inputs and feedback o Adding value in the form of ideas o Ability to adequately acquire support for government decisions o Ability to influence government decisions

• Building citizenship skills: o Ability to scrutinise problems at the local and community levels (awareness + information) o Ability to recognise social, economic, ecological and political dimensions of issues o Ability to participate in steps taken towards a sustainable future

• Ability to think critically and enquire about issues

• Keep in mind different perspectives, institutions, policies

• Make informed decisions

• Actively participate in activities

• Tolerance towards all

• Communication skills ; ability to debate

• Cultivating skills o Optimum use of media, public resources and government documents o Participation in community service o Education + service

• E.g. Croatia – system of public consultation on laws, Denmark – MindLab, which was a cross-governmental innovation unit that is now into its second decade, it involves both citizens and businesses and is called a public innovation lab. It created a culture of innovation in the public sector

• Need for people to see themselves as world citizens and not just national citizens

Improving education + healthcare:

• No country has achieved rapid and continuous economic growth without at least a 40% literacy rate

• Education inherently linked to growth o Opens doors to employment to growth

• Education improves health outcomes, especially for girls e.g. reduced fertility but healthier children; improved status

• Education empowers citizens to make informed and better decisions

• Education promotes sustainable development by encouraging the young to assume responsibility for the future

• Good health results in better work and increased productivity o Also enables children to benefit from education o Good health care enables greater saving by individuals and families

• Resources not expended on healthcare can be spent on other areas of development o E.g. USA households spending so much money on healthcare that they cannot invest, save, or turn their savings into capital Changing roles of Women:

• Strong evidence that women play an important role in development, but there is obviously still going neglect and discrimination

• MDGs, Beijing Declaration all focused on improving the role and status of women

• Overt results: o Greater life expectancy o More education o Laws favouring equal rights

• Ongoing greater risk of poverty and dependence

• Access to employment, power + ownership of resources are issues

• Empowering women may be achieved by: o Educating girls o Changing cultural stereotypes and expectations o Challenging social norms o Allowing women to own businesses and earn equal wage o Allowing women to access political, cultural , economic and social positions of power

• Impact of empowering women: o Higher proportion of earnings reinvested in family o 20% increase in child survival rate when mothers control the household income o Less corruption o Women take control of their bodies More ecological living:

• Reducing factors that threaten environmental and ecological well-being

• The north has achieved significant development and is now pushing to achieve sustainability, while the South is struggling to grow, especially if restrictions are imposed on damaging the environment

• Adams and Jeanrenaud – as economies grow, environmental degradation increases. Many believe this theory to be true, but it seems this depends on the country. o Germany and Japan have managed to be ranked incredibly highly for sustainability, but also have GDPs of over $4 trillion. Indigenous revitalisation movements:

• Attempts to reinvigorate indigenous cultures

• May empower indigenous groups, at least within their communities

• Often sustainable, but not necessarily development focused e.g Native American revitalisation, dictionaries developed, the Sun Dance