chapter
21 Pages

Introduction

Understanding ‘development’ ‘Economic development’ is a term that emerged in the post-war period and was primarily aimed at confronting the issues affecting ‘lesser developed’1 countries, and as it became increasingly evident to fend off communism. Therefore, despite a variety of Western strategies competing with one another, the term became synonymous with the wills and ways of the dominant powers, i.e. the United States of America aided by the establishment of international institutions such as the World Bank and the International Monetary Fund (IMF ). Under the guidelines set, ‘lesser developed’ countries were viewed as being different from the industrialised nations and therefore needing a strategy to lift them out of their condition, based on a guiding belief that ‘every economy had an interest in the development of all’ (Gilpin, 2001: 309). In the first instance it was thought that a strong state alongside international investment would help develop the relevant institutions and policies so as to ensure public investment, trade participation and ultimately the mimicking of Western economic trajectories. In using David Ricardo’s (1977) theory of ‘comparative advantage’ and contesting Marx’s critique of capitalism, Walt Rostow (1960) believed that this could be achieved through the initial development of specific sectors, relevant to market needs (albeit based on a Western perspective), which culminated in five ‘stages of economic growth’ where a nation could develop from a ‘traditional society’ into one that is ‘preconditioned to take off ’, followed by ‘take off ’, a subsequent ‘drive to maturity’ and finally to an end point of ‘mass consumption’. It was perceived therefore that all countries could be located at a particular stage of development and that periodical investingment in it, through infrastructure and human resources for example (see Marshall, 2008: 13), would allow for elevation to the next stage at a faster rate and in the process avoid communism. As in the case of many states signed up to the ‘modernisation’ process, and even those that opted for similarly rigid nationalisation policies, diversity in production was hampered by over-reliance on prescribed areas of industry, which in turn were affected by over-production and constant price fluctuations in the market. A lack of diversity in production and inefficiency led to a reduction in exports and an increased reliance on imports. State debt therefore became a normality that ultimately affected social provisions. Dependency theorists emerging in the post-war era, such as A. G. Frank (1967) and T. dos Santos (1970) (with particular focus on Latin America), highlighted the extent to which ‘modernisation’ and the influx of ‘colonial’ capital distorted the structure of local economics and society (Hoogvelt, 2001: 38), imbuing subordination to and dependency upon the stronger Western economies. Dependency theorists (and neo-Marxists for that matter) have offered critical insights into the structural distortions affecting countries that were part of a ‘development’ programme. However, although influential in highlighting the human condition to development bodies, they have been less successful in forging a paradigmatic shift. In essence, while there is a general consensus amongst critics regarding development failures, there is a greater need to highlight the flawed

theoretical foundations in theories like Rostow’s that assume economic development is prescriptive, orderly in expectations and can be directed or controlled through restructuring without recognition of the myriad factors (internal and external) that can affect societies within an unknown timeframe. It is important to note then that countries do not develop in an identical manner because of the many diverse factors affecting societies; they can ‘miss stages, become locked in one particular stage, or even regress’ (Ingham, 1995: 38). Despite emerging criticisms, by the late 1960s and early 1970s growing concern surrounding the national debt of ‘developing’ nations ensured development economics had begun to swing to the right with the emergence of neoliberal thinkers such as Milton Friedman (1962) and the Chicago School who advocated ‘shock policy’ for ‘developing’ states by encouraging a rapid shift from nationalised models to free market economics.2 These ideas became embedded in development thought and, by the 1980s, statist economic failures strengthened calls for neoliberalism, supported by ‘empirical evidence of economic problems, such as the notoriously inefficient state owned industries documented in the World Bank’s 1982 report on Sub-Saharan Africa’ (Babb, 2009: 126). It was generally thought amongst neoliberals that the source of the problem was related to government policies which ‘distort economic incentives, inhibit market forces and actually work against economic development’ (Gilpin, 2001: 311), and the only solution to these problems was ‘structural adjustments’, or more succinctly, loans under conditions of reform that would attach a ‘developing’ country to the prevailing macroeconomic agenda governed by the US.3 In doing so it prescribed rapid deregulation, privatisation and free markets, all for the purpose of stimulating GDP thus favouring a macroeconomic framework over that of the micro. This became part of what is known as the ‘Washington Consensus’.4