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? Is development just about economics or something bigger?

And why should we care anyway?

HOW DO WE MEASURE DEVELOPMENT? Measurement issues: Growing rich/poor gaps within countries (GINI measures) Population and development PPP vs. GNP vs. GDP

THE OLD DEVELOPMENT PROBLEM GNP per capita (1980 dollars) Low income countries 1950: $164 1980: $245 1990: $353 Developed countries 1950: $3,841 1980: $9,648 1990: $19,820 Since 1990? The south has split… with “the bottom billion” on one end and the emerging BRIC on the other…. See next page.  

SOME DATA ON HOW THINGS ARE CHANGING

While poor countries are doing better, it like poor people in aggregate are not (Oxfam 2015 data)… But is this as bad as it looks? (The zero-sum inequality bad assumptions vs. positive sum, Rawlsian approach)

But Trump may be onto something… (Oxfam 2015 data)

WHO IS GROWING? (AND WHAT THAT CAN TELL US) The titans: Brazil, Russia, China, & India (mostly just the last two). 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…

SOME MORE DATA

SOME MORE DATA

WHAT DO COUNTRIES NEED TO CHANGE TO DEVELOP? Is under-development just 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 will poor countries with access to capital easily catch up? The bottom line: higher rich-poor gaps are natural, temporary, and show that things are improving Two approaches to fixing poverty: Increasing international development aid and knowledge transfer (e.g., World Bank Programs); microloans State capitalism (a type of “mercantilism)

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

How do we address these problems? Is underdevelopment mostly the product of weak/interventionist states and bad government (aka: Neo liberalism)? Structural adjustment programs: Economic freedom, trade, & comparative adv. State building programs: Dealing with weak, multi- national, & undemocratic states How do we address these problems? The WTO and global trade The IMF and the Washington Consensus Institution building initiatives By-passing the state with micro-finance and globalization

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