WHY DO SOME COUNTRIES DEVELOP? WHY DON’T OTHERS?

WHAT IS DEVELOPMENT? One definition: “The increasing capacity to make rational use of natural and human resources for social ends.” Is development an absolute or relative concept? Is development linear or exponential? Is development just about economics or something bigger? Economics is not just about having more resources. It’s tied to: The idea of progress over time Transformed gender and relations Secularism and science

Why should we care anyway?

HOW DO WE MEASURE DEVELOPMENT? Measurement issues: Population and development PPP vs. GNP vs. GDP Measurements within countries: Inequality: Comparing income at percentiles and GINI index measures Absolute poverty. Presently defined as living on <$1.90 a day at 2011 PPP. In 1990, this was 35% of all people on the planet. Today: 9%

SOME DATA ON HOW THINGS ARE CHANGING

Inequality is growing at the global level

But the typical person is better off (ignore y axis)

WHO IS GROWING? WHO IS NOT? (AND WHAT THAT CAN TELL US) The “bottom billion”: Mostly African (70%) The key variables: (1) Recent or ongoing civil war, (2) landlocked, (3) the resource curse (4) high populations of young men (5) conflictual ethnic groups, (5) bad governance The titans (BRIC): Brazil, Russia, China, & India (mostly just the last two). China is key. 1990, 2/3 of all Chinese lived on <$1.90 a day. Today: 2%. Let’s look at some data…

SOME MORE DATA…

SOME MORE DATA…

BUT THE DEVELOPED WORLD IS NOT DOWN FOR THE COUNT…

SOME MORE DATA…

WHAT DO POOR COUNTRIES NEED TO DEVELOP? Is under-development do to a lack of capital and different timelines? W.W. Rostow’s proposed “modernization theory” as a “a non- Communist Manifesto” What are the stages of development? And why is growth exponential instead of linear? Why should poor countries with access to capital get richer more quickly (the catch up thesis)? The bottom line: higher rich-poor gaps are natural, temporary, and show that things are improving Three approaches to fixing poverty from this perspective: Increase international development aid and knowledge transfer (e.g., World Bank Programs); microloans Use state capitalism to focus investment and build internal know-how Increased access to global markets and investment.

The legacies of colonialism ` Is underdevelopment is caused by the First World and can’t be solved by developing states? The legacies of colonialism World system theory: the core and the periphery Purposeful underdevelopment: enclave economies, and domestic elites, and international debt IMF, World Bank, and WTO as agents of capitalism and the AIDs Can states break out of the system? The old approach: import-substitution industrialization and protectionism? Did ISI have any positive long-term consequences? Brazil and India as examples Today’s approach: Export-oriented industrialization… Strong state involvement early on to make industries internationally competitive

Why might culture explain underdevelopment? Max Weber’s argument: Religion = science & capitalism The Protestant work ethic Scientific rationalism Individualism Meritocracy Modern versions of cultural explanations for underdevelopment: Openness to clientelism/patronage networks, nepotism Openness to corruption: Lootable assets, rent seeking, “Kleptocracies,” tax evasion and social investment Old solutions to poverty: “White man’s burden” and genocide; foreign occupation/colonialism, evangelical movements, divide and conquer with “good” groups; train the elite/trainable Today’s solutions: Democratization, globalization & trade; building state capacity, cultural exchange programs; investment in “soft power,” empowering women, increasing education, humanitarian intervention

Is underdevelopment mostly the product of weak/interventionist states and bad governments? Structural adjustment programs: Economic freedom, trade, & comparative adv. State building programs: Dealing with weak, multi-national, & undemocratic states Solu8tions from this perspective? The WTO and global trade are good The IMF and the Washington Consensus are helpful By-passing the state with micro-finance and globalization