Development theory in the liberal order
We have already hinted at the ways in which development theory changed during the liberal international order. In this chapter we explore these changes more fully from the late 1970s through to the beginning of 2000s. Intellectually, politically, and economically these changes reflect the changing international order. They represent an obvious example of the triumph of liberalism in both its neoliberal economic and its political forms. They are shaped by the resurgent US hegemony and the end of the Cold War which provides new possibilities for more interventionist development strategies. And, finally, they are shaped by the discourse of globalization. The first part of this chapter explores what ‘neoliberalism’ is and what the main assumptions and arguments of neoliberal development theory were. It pays particular attention to the ways in which neoliberal development theorists understood the relationship between politics and economic development, as it is this understanding that provides the key to understanding neoliberal development theory. Neoliberalism became embodied in probably the most controversial development strategy ever undertaken – structural adjustment lending (SAL): the attempt on the part of the World Bank and the IMF to use conditional lending as a mechanism for neoliberal policy change. Despite the significance of neoliberal arguments, development theory changed through the late 1980s and 1990s. The two most important changes are first a growing concern with institutions and then good governance, which emerges very forcefully in the 1990s, and second a stress on ‘participation’, ‘ownership’ and ‘partnership’. To put it rather crudely, the first of these concerns emerges out of the recognition that neoliberal reform programmes were not producing the expected economic benefits, and the second emerges out of the recognition that conditional lending was not a terribly effective way of ensuring sustainable policy reform. One final and perhaps more subtle shift takes place under the impact of ‘globalization’ where the standard neoliberal economic model and a concern with institutions and governance became increasingly justified on the basis that these were necessary in order for developing countries to benefit from the globalizing circuits of finance and investment.