POLITICS AND DEVELOPMENT PLANNING: THE CHALLENGES OF STRUCTURAL ADJUSTMENT PIA 2501: Week Seven

End of Century Development Dilemmas: Donor Fatigue and Internal Capacity Limitations Structural Adjustment

Donor Fatigue: ( ) Donors defined as a problem as they set agendas for LDCs Expatriates are consumers (of LDC privileges): Development Cynics Career prospects shift from “Insensitive / AID / Embassy Types” to Grassroots, cultural sensitivity and eventually to NGOs (Lederer and Burdick Ugly American influence) Donors begin to advocate privatization and contracting out

Themes: Post-Dependency Themes Basic Needs and Change New International Economic Order Donor Fatigue Structural Adjustment Failure of Private Sector The Foreign Aid Debate

Structural Adjustment Policies Failure of the Developmental State Goran Hyden - Linked to “pre-scientific modes of production of peasants” Economy of Affection Failure of State and “Exit Option” (See work of Albert O. Hirschman) and Barter Problem of Endemic Patronage and Corruption

State Failure

Economy of Affection- Barter

THE LIMITS OF DEVELOPMENT MANAGEMENT The Bureaucracy and the Failure of the Post-Colonial State Focus: Private Sector Structural Adjustment and “The Chicago Boys”

Neo-Orthodoxy View of Development Management Five year plans of over 1500 pages for a country of less than a million people Part of unfulfilled rhetoric of development National Planning to be replaced by local and regional planning (and Projects The Role of the State in the Economy

AMTRAK- Public or Private?

WASHINGTON CONSENSUS Solutions

Structural Adjustment Policies plus…. The Structural Adjustment Argument- Need to 1. stabilize currency and markets (getting the prices right) 2. Promote Free Trade 3. Need to refocus role of state from development to law and order and deregulation 4. Address the problem of Debt and Structural Adjustment reforms (IMF and World Bank)

Goal of Structural Adjustment

University of Chicago School

Currency Exchange

Neo-Orthodoxy: An Assessment Development management- development programs are “bad” Can’t make planning better Neo-Orthodoxy and privatization Market Currencies, Free Trade and Small Government

Choices: Contracting Out and Privatization NGOism and Grants Capacity Building (HRD) A Mixed Scanning Approach Democracy?

Change: the Neo- Orthodoxy The Realities: To End of 1980s- Focus on anti-Marxist, growth regimes Korea, Taiwan, Brazil, Chile, South Africa (newly emerging States) Politics not important The Asian Model

Private Sector Weakness: Chickens are Hard

Problem: The Failure of Private Sector Development Problem: failure to develop an indigenous capitalism Limited to European settlers Pariah groups—Jews and Roma in Eastern Europe, Chinese in much of Asia Lebanese and East Indians in parts of Africa and Latin America (See V.S. Naipaul) Conflict and Marginalized People

Internal Capacity Issues Debates: the “Attitudes Problem” Indigenous Elites have been co-opted and are linked to Northern Tier states- Cronyism and Markets

Internal Capacity Issues (Bryant & White) Debates: the “Attitudes Problem” Settlers and indigenous peoples Sometimes referred to as “Comprador” classes or “dependent elites,” since they have been co-opted and are linked to Northern Tier states Expatriate Attitudes? Pariah Elites- Are they real?

Private Sector Weakness The Problem with Pariah Groups Limited to settler, pariah groups— Jews and Roma in Eastern Europe, Chinese in much of Asia, Lebanese and East Indians in parts of Africa and Latin America (See Books of V.S. Naipaul)

Pariah Groups: Gypsies (Roma) in Europe

Idi Amin Expels Uganda Asians

Lebanese Fleeing Violence in Sierra Leone, 1997

PICARD “Unpaid Editorial”

Problems with Structural Adjustment Too much Rambo? (Reagan Administration Symbol)

A Critical View….

Structural Adjustment Goals Rigid Reduce the size of the public sector (infamous 19% cut) Promote Privatization or “NGOism”—Negative on the State Privatization (Rambo vs. Effete) Faith in Capitalist Entrepreneurialism Neo-Orthodoxy had a purist element: “Rambo Privatization”

Reminder: The Expanding Civil Service (Despite Structural Adjustment)  Civil Servant Component of the total Current Budget  10 to 15% in MDCs  30 to 60% in LDCs  South Africa in 2001, 46%  Benin in the 1980s, 64%  Central African Republic in the 1960s, 81%

Neo-Orthodoxy Argument Bureaucracies are socio-economic actors What to do about Crony Capitalists Good example: Land reform and bureaucracies A study of 25 major land reforms--in 15 cases the bureaucracy was major beneficiary in the process

Structural Adjustment Policies The Argument for “NGOism” Left wing Privatization (Private Voluntary Organizations, Cooperatives, Community Based Organizations, Non-Profits) Energy of NGOs Structural Adjustment Public Sector Reform—Reduce size and restructure state Populist ALSO SELF INTERESTED?

Internal Capacity Issues Reminder Debates: the “Attitudes Problem” and the Public Sector Myth of civil service neutrality: Bureaucratic elites have interests “Statism” At best what results is benign neglect, at worst resource extraction Problem: failure to develop and indigenous capitalism

Summary: End of development model assumptions (2000) Orthodoxy: Overseas capital investment Accepts Foreign or "Pariah" group ownership and control of trade and commerce A New Reality: Local soft political institutions, weak private sectors Reliance on Non-Profits

Internal Capacity Issues (Bryant & White) Debates: the Bureaucratic “Attitudes Problem” continued How developmental are bureaucrats? Can the state be used for SOCIAL ENGINEERING? Is the private or non-profit sector better at development?

QUESTIONS AND DISCUSSION?