Transcript IR.week8b.DevelopmentWhatToDo

FIXING UNDERDEVELOPMENT: WHOSE FAULT IS
UNDERDEVELOPMENT?
It’s their own fault (modernization theory)
• Old explanations (“stages of devel” and and
“primitive” cultures)
• New explanations (neoliberal economics,
governance, and democratization )
• The fix for IR: Give them training, western know
how, and access to capital.
• Does it work? The record shows that access to
capital for broad development and technical know
how is critical; BUT it’s better if the market plays a
key role in the allocation of know how and capital
It’s our fault (liberals… not the tree hugging kind)
• We give bad advice, and misstargeted invest.
• We support support of undemoc., repressive regimes
• Most critically: we fix global trade on our terms only: AIDs
spend 300 billion a year on ag. Subs. (European cows = $2.50
a day in subsidies, > 1/3 of the Earth’s people).
• The fix: Increase access to free trade (WTO), provide capital
and debt forgiveness in ways that don’t allow corrupt elites
to use it (World Bank, IMF), provide focused external advice
in ways that fit local conditions and increase the
competitiveness/niche for bottom fifth (IMF), encourage
diversification of developing economies (little being done)
• Does it work? Free trade, especially involving manufacturing,
is playing a critical role in poor country growth, but it
benefits most only those societies with diversified
economies and especially those with large economies
(NAFTA as an example)
It’s our fault (Marxism and other “radicals”)
• Imperialism and theories of dependency: We shift suffering from
the core to the periphery; and we promote uneven, vicious
development
• Today’s chains that supposedly hold 3rd parties down: Debt,
MNCs, the World Bank, IMF, and the WTO
• Is there something to this ideological and technological
hegemony?
• What are the effects of cultural hegemony and control of the
development discourse? Did the label BRIC change Brazil’s
destiny?
• The IR fix: Break away from global capitalism, become selfdepend., and unite with other developing countries
• The record is mixed but much stronger than what most American
think: State-led capitalism has a record good (Japan, Germany, Br.,
and China) and bad outcomes (early efforts at import substitution;
counties with “resource” curses and corruption).
WHAT SHOULD WE (RICH COUNTRIES) DO TO HELP
THINGS ALONG? A SUMMARY OF YOUR READINGS
• Policy advice from abroad should fit local circumstances (India, S. Korea,
China ignored the Washington Consensus; Mexico & Argentina listened
• The best thing we can do to end global poverty is to increase trade and
economic access (Perhaps more international labor mobility? Evidence from
Mexican immigration)
• We need polices to increase savings and micro investment among the poor
so that developing countries have the capital that they need
• The IMF should encourage the adoption of best management and
transparency practices rather than “The Washington consensus”
• Chinese authoritarianism as a model that we shouldn’t ignore because
really poor states see its as a model worth following
• US hegemony helps things more than some people think: We are protecting
the commons and preventing civil wars. We need to keep doing so.
• Go after corruption, drugs (legalize them?), and off-shore havens
• Stop buying diamonds and so much oil from corrupt states? Short term pain
in poor countries, but long term growth and better govt. might emerge
IS MORE FOREIGN AID THE ANSWER?
UN millennium goals:
• by 2015 we should cut extreme poverty by half & infant
mortality by 2/3 (we are on the way)
• Rich countries should .7 of 1% of their GDP in foreign aid
• We should arrange debt forgiveness for extremely poor
countries
Jeff Sachs on the limitations of US Aid (2004 = .025% of GDP) as
part of the picture:
• Most of our aid goes to strategic countries, not to the
bottom fifth that needs it
• Aid is earmarked & almost none goes to community and
government programs to help people and governance.
• Most US aid goes to military expenditures
• Most non-strategic aid is for emergencies, not development