POSC 2200 – International Political Economy Russell Alan Williams Department of Political Science

Unit Seven: International Political Economy "Development" Required Reading: Mingst, Chapter 9. Mingst, Chapter 9. Scott, The Great Divide in the Global Village, Mingst and Snyder, pp Scott, The Great Divide in the Global Village, Mingst and Snyder, pp Outline: 1. The “Development Gap” 2. Obstacles to Development 3. Alternatives/Solutions?

1) The “Development Gap”: Major challenge in IPE? Major challenge in IPE? Most states “developing countries” (“LDC’s”) Most states “developing countries” (“LDC’s”) However, little development occurring (!) However, little development occurring (!) Key concern because: Key concern because: Interconnection of globalisation Interconnection of globalisation Power of developing countries in IGO’s Power of developing countries in IGO’s Morality – belief there is a “right to development” Morality – belief there is a “right to development”

“Development” associated with: Increases in: Capital accumulation/savings Capital accumulation/savings Per capita incomes Per capita incomes Skills and technology Skills and technologyAlso: Falling birthrates Falling birthrates Political and institutional reforms Political and institutional reforms And perhaps also, More even distribution of wealth More even distribution of wealth Radical perspectives and World Bank Radical perspectives and World Bank Key measures? Key measures? GDP growth rates GDP growth rates Inequality Inequality

Measures – Growth Rate: World average = approx + 3% per year World average = approx + 3% per year Less then this is not “development”? Less then this is not “development”? Evidence? Evidence? – Majority of LDC’s less then 3% – Majority of LDC’s less then 3% Exceptions? Exceptions? East Asian “NIC’s” – “Four Tigers”: South Korea, Taiwan, Hong Kong and Singapore East Asian “NIC’s” – “Four Tigers”: South Korea, Taiwan, Hong Kong and Singapore Since 2000 a significant portion of LDC’s greater then 3% Since 2000 a significant portion of LDC’s greater then 3% E.g. China = more then 10% a year E.g. China = more then 10% a year However.... South still falling further behind (?) However.... South still falling further behind (?)

Measures - Income Inequality: Dark Blue = 4 X average income Dark Red = ¼ X average income

Measures – Income Inequality: “Gap Minder” “Gap Minder”

Trends? Trends? Average incomes going up... ? Average incomes going up... ? However, gap between richest and poorest segments of global population have gotten wider over last 30 years However, gap between richest and poorest segments of global population have gotten wider over last 30 years Implications for “Development”? Implications for “Development”? Political instability Political instability Economic problems cause political problems? Economic problems cause political problems? “Human security”? “Human security”? Struggle to meet basic human needs Struggle to meet basic human needs Approx 10 million children die per year from malnutrition Approx 10 million children die per year from malnutrition

2) Obstacles to Development: i) Legacy of colonialism: Sovereignty has not resolved problems caused by imperialism Political legacies: Political legacies: a) Displaced existing state/cultural structures Post Colonial states very artificial Post Colonial states very artificial b) Ethnic divisions

Economic Legacies: Economic Legacies: a) Colonies’ economies restructured to meet imperial needs E.g. Substance farming to cash crops Post-colonial economy: Post-colonial economy: Resource-export dependent (“mono- exporters”) Resource-export dependent (“mono- exporters”) Importers of basic foods Importers of basic foods Urbanization and unemployment Urbanization and unemployment Need for land reform? Need for land reform? b) Ineffective transportation links when colonies became independent Requires statist/mercantilist development policies?

ii) Structures of global capitalism: Radical perspective – form of neocolonialism has replaced colonialism MNC’s dominate global economy: MNC’s dominate global economy: Systematic exploitation of southern poor Systematic exploitation of southern poor Cheap labour etc. Cheap labour etc. Problem of “Technology Transfer” Problem of “Technology Transfer” Northern MNC’s own technology necessary to close “development gap” Northern MNC’s own technology necessary to close “development gap”

iii) Legacy of the “debt crisis”: “Debt Crisis”: Post 1970s balance of payments crisis for majority of southern states Inability to finance trade deficits and pay back old loans Inability to finance trade deficits and pay back old loans Result - most southern states have high ongoing debt servicing costs Result - most southern states have high ongoing debt servicing costs Implication: Economic surplus diverted to debt rather then local investment Implication: Economic surplus diverted to debt rather then local investment Net “de investment” since 1970s Net “de investment” since 1970s

Required IMF/World Bank “help” Required IMF/World Bank “help” “Structural Adjustment Programs”: IMF managed policy requirements for southern states in debt crisis Stipulations: Stipulations: Economic liberalism – no “mercantilist” development strategies! Economic liberalism – no “mercantilist” development strategies! Cutbacks in government spending Cutbacks in government spending E.g. “subsidies” E.g. “subsidies” Thought to have “failed” in many countries – reduced standards of living Thought to have “failed” in many countries – reduced standards of living

iv) Failure of Economic Liberalism “Washington Consensus”: Consensus that economic liberalism was correct development policy E.g. Lower tariffs PrivatizationLiberalization No resource cartels – e.g. “OPEC” Closely associated with “Structural Adjustment Policies” Closely associated with “Structural Adjustment Policies” “One size fits all strategy” “One size fits all strategy” Consensus corresponds with period of poor performance (1980s to 1990s) Consensus corresponds with period of poor performance (1980s to 1990s)

3) Alternatives/Solutions? Two “post-Washington Consensus” approaches to development Two “post-Washington Consensus” approaches to development a) Emphasis on “Sustainable Development”: Approach which emphasizes need to keep economic development in line with “ecological limits” Belief that this would address some problems of previous development strategies Belief that this would address some problems of previous development strategies E.g. Less emphasis on agricultural commodities that lead to local shortages of food E.g. Less emphasis on agricultural commodities that lead to local shortages of food

b) Emphasis on institutional development Need for “strong states” undermined by economic liberalism Need for “strong states” undermined by economic liberalism E.g. Bruce Scott E.g. Bruce Scott

Example: Bruce Scott - “The Great Divide in the Global Village” Assumes development failing – gap growing wider Northern states unfair Protectionism in agriculture Washington consensus hypocritical Argues development best supported by “strong states” Need institutional development Need international IGO’s that support “state by state” strategy Copy success of East Asian “Tigers” in rest of LDC’s

Problems? Neither emphasis on ecology or “strong states” addresses the capital ($$$) problem of southern states.... Neither emphasis on ecology or “strong states” addresses the capital ($$$) problem of southern states.... E.g. without resolution of the “debt crisis” most states will fall further behind E.g. without resolution of the “debt crisis” most states will fall further behind “Asian Tigers” never had debt problem! “Asian Tigers” never had debt problem! Progress of debt relief has been very slow.... Progress of debt relief has been very slow.... E.g. Current Financial Crisis.... E.g. Current Financial Crisis....

6) For Next Time... Unit Eight: Transborder Issues and New Challenges in International Politics Required Reading: Mingst, Chapter 10. Mingst, Chapter 10. Held et al., Globalization, Mingst and Snyder, pp Held et al., Globalization, Mingst and Snyder, pp