Development Paradigm

Development Policies

Globalization is defined with a concensus on the fact that the world now operates –– socially, culturally, politically and economically –– more as a single, integrated system and less as a collection of separate societies insulated from each other by national boundaries. What we are witnessing is the neo-liberal corporate globalization which is the expanding network of transnational movements and networks that has sought to redefine the process of globalization to emphasize the universalization of rights (human rights, women’’s rights and workers’’ rights) and the defense of transnationally shared interests (most prominently ecological sustainability), the so called “global justice movement.”The dark side of the Globalization is not the oppressive role of neo liberal global governance but the lack of global governance. At any level hegemony which depends on the construction of consent is a much more effective form of rule than domination as coercion by itself, now more than ever regimes are forced to retreat to rule by domination.

But as we become closer in the process of globalization, people of various genders, ethnicity, religious, racial and cultural diversities demand recognition of their identities, their representation in decision making, they demand to be heard in discussions and dialogues by wider society. Women are also demanding social justice, while suffering discrimination and marginalization from social, economic and political opportunities. In the era of globalization, preserving local cultures and diversity has become an issue of challenging deprivation. A sense of identity and belonging to a group with shared values and other bonds of culture are important for individuals. There are historic questions of social changes, of struggles for fairplay, of new understandings of human freedom and democracy. Democracy as a rare commodity needs global mobilization for mass production through out the globe. Global social movements need coherent capable global governance to make its way. Global governeance institutions need powerful effective global social movements to keep them from becoming predatory in captive of priviledges.

Participatory policy development in turn is a process that enables those experiencing deprivation to be more directly involved in designing policy. Through wider involvement there is a greater chance that weaknesses will be identified and rectified before implementation, and that policies will therefore be more effective. In addition the process leads to greater accountability – through direct engagement, as well as through greater understanding, both of issues faced by poor people and of policy development. True participatory policy development is an ongoing process of analysis, prioritisation, problem solving and review. There are a number of tools that can facilitate this process, and one of the most widely used is Participatory Poverty Assessments (PPAs), processes established in the international development arena which are supported by the World Bank, among others. PPAs attempt to define poverty within a country from the perspective of those experiencing it. PPAs have then informed government policy development, often ensuring that the priorities of those living in poverty become those of the government as well.

Deprivation often works through processes of exclusion, from livelihood, from free thinking, free speech, exclusion from access to knowledge, exclusion from basic health and security. These are dimensions that the process of institutionalized poverty and deprivation turns people as a stranger in their local geography. Religious intolerance and fundamentalism has been also the source of widespread exclusion, to the point that is about to intimidate our civilization.

With many countries experience increase of poverty under programmes of so called economic reform, unfair income distribution and institutionalized monopoly and greed the future is not promising. These concerns have led to changes in our thinking about how realistic we are in our development policies. This includes social sector spending, budget allocation and the funding of social programmes.


The Meaning of Development

The following four definitions of development are representative of the existing approaches.

(a) “Economic Development as distinct from mere economic growth, combine:
1. Self-sustaining growth
2. Structural change in patterns of production
3. Technological upgrading
4. Social, political and institutional modernization
5. Widespread improvement in the human condition” (Adelman, 2000, p. 1)
It is clear that were we to monitor a reform process designed in this framework, the intermediate goals to check would be associated with suitably defined targets for each of the five conditions listed. This view is representative of the “traditional” conception of development as structural transformations.

(b) “Sustainable development requires attention not just to economic growth but also to environmental and social issues ... the core challenge for development is to ensure productive work and better quality of life (World Development Report, 2003, p. 1).” The WDR 2003 analyzes the intermediate goals that should be pursued and expresses some consistency conditions among the goals. First, it states that any serious attempt at reducing poverty requires sustained economic growth. Second, after reviewing the threats posed by widespread poverty, widening inequality, devastating conflicts, air pollution, the shortage of fresh water, the degradation of the soil, the destruction of the forests, disappearing bio-diversity and the decline of fisheries, the Report says that “None of these social and environmental patterns is consistent with sustained growth in an interdependent world over the long term” The Report discourages developing countries from following strictly the strategies of developed countries because “development strategy to date has often relied on drawing down environmental resources and replacing them with human-made assets. This was the strategy followed by today’s industrial countries”. And there is no guarantee that such a replacement will be possible in the future because certain critical thresholds could be breached. In this regard, it is critically important to take into account the precautionary principle for decision taking under uncertainty.

(c) “Expansion of freedom is viewed in this approach, both as the primary end and as the principal means of development. Development consists of the removal of various types of unfreedoms that leave people with little choice and little opportunity of exercising their reasoned agency” (Sen, 2000, p. xii). From an instrumental point of view, Sen distinguishes five types of freedom which are particularly important: (1) political freedoms; (2) economic facilities; (3) social opportunities; (4) transparency guarantees; and, (5) protective security. Each of these distinct types of rights and opportunities helps to advance the general capability of a person. Consequently, the intermediate goals of reform should be related to the
enhancement of these five types of freedom.

(d) “Polities significantly shape economic performance because they define and enforce the economic rules. Therefore an essential part of development policy is the creation of polities that will create and enforce efficient property rights” (North, 1994). In this approach there are no substantive intermediate economic goals to monitor. The reform should focus on building appropriate rules for the economic game. In fact, to focus on specific variables that are supposed to be correlated with growth, such as technology or human capital, may even be misleading. According to North, “A theory of economic dynamics is crucial for the field of economic development...Neoclassical theory is simply an inappropriate tool, to analyze and prescribe polices that will induce development.... When applied to economic history and development is focused on technological development and more recently human-capital investment but ignored the incentive structures embodied in institutions that determined the extent of societal investment in those factors” (North, 1994, p.359). In the same vein, Williamson (1996) states that the lessons of firm and market organization carry over to the study of development and reform. Running the risk of being too schematic to reap the benefit of clarifying some political dimensions of reform, we can classify these definitions of development in two categories, substantive approaches (SA) and procedural approaches (PA). A reformer sustaining SA will tend to specify the substantive goals to be achieved by reform (i.e. a given reduction in poverty, certain types of technological upgrade, a minimum growth rate) and, hence, the results of the reform could, in principle, be assessed on such bases. A reformer adopting PA, in contrast, will focus on building and improving the rules of the game. And, since it is the polity that sets and enforces the rules, the reform will attribute a key role to political economy factors. The SA emphasizes the final destination of the journey toward development; the PA focuses on the construction and improvement of the tracks that are supposed to lead the economy toward the best economic outcome. The substantivist policy maker claims to be judged by the results obtained, the proceduralist, by the quality of the track that the polity managed to build.

Although they follow distinct conceptions, definitions (a), (b), and (c) can be classified as substantive approaches to the extent that they identify development with the achievement of substantive and specific results. Besides, these results are explicitly distinguished from “mere” growth. In this regard, the first three definitions present key differences with (d), which defines development in a procedural way. Good economic performance is the outcome of good institutions and good institutions are built by good polities. Another difference with the other three is that there is no explicit concern for distinguishing development from growth. In fact, North (1994) and Williamson (1996) tend to use “growth” and “performance” as synonyms and to identify good performance with either high growth or development.

According to Sen, the efficiency results reached in the neoclassical framework alone do not guarantee distributional equity.15 “The far-reaching powers of the market mechanism have to be supplemented by the creation of basic social opportunities for social equity and justice” (Sen, 2000, P. 146). If we are prepared to assume that welfare is much more than preference satisfaction and to accept that freedom, equality, and justice are also relevant, it is necessary to adopt a broader view of the role of institutions. For example, the reform could aim at establishing rights and institutions that satisfy Rawls’s principles. This would lead to the design of institutions that will minimize the need for redistributive efforts and concentrate on the means with which individuals can construct their own good rather than directly satisfy preferences (Hausman and McPherson, 1997). Furthermore, this perspective would call for a more integrated view of institutions.

According to Sen, “Even though different commentators have chosen to focus on particular institutions (such as the market, or the democratic system, or the media, or the public distribution system), we have to view them together to be able to see what they can or cannot do in combination with other institutions. It is in this integrated perspective that the different institutions can be reasonable assessed and examined”(Sen, 1999, p. 142).


Democracy and Development

Democracy regarded as system of established rule of law is the pillar of development and reforms. The recent Human Development Report (UNDP, 2002) entitled Deepening Democracy in a Fragmented World, states that “political freedom and participation are part of the human development, both as development goals in their own right and as means for advancing human development” (p.52). There is less agreement, however, on how these goals relate to others, such as growth, more equitable income distribution, higher life expectancy, or increasing educational levels. The Report argues that there is no trade-off between democracy and growth and that democracies, in fact, contribute to stability and equitable economic and social development. In this view, the issue of the “relative price” of democracy becomes largely irrelevant. The literature, however, strongly suggests that the questions involved are far from settled. The Rawlsian tradition gives priority to democratic values. According to Rawls (1971), civil liberties, including political rights, “are not subject to political bargaining or to the calculus of social interests.”

A survey of 18 studies (Przeworski and Limongi, 1993) produced mixed results– the only pattern that one can discover in these findings is that most studies published after 1987 find a positive link between democracy and growth, whereas earlier studies, although not different in samples or periods, generally found that authoritarian regimes grew faster.

Przeworski et al.(2000) assess the relationship between democracy and development by analyzing the role of indicators such as population dynamics and life expectancy rather than growth. One relevant finding is that in democracies, controlling for differences in income, birth rates and death rates are lower and life expectancy is higher.

We do not consider income inequalities and crime rates owing to the lack of good quality comparable data. The available evidence suggests though that the Gini coefficient of income distribution is higher in democracies than in autocracies for all GDP per capita groups except for the lowest one (less than $1000). The gap is the highest for countries with GDP per capita of $3000 to $5000: 32-35% for dictatorships and 45-47% for democracies (Przeworski et al., 2000).

Capital Driven Development

from the macroeconomics side, the Mexican crisis in December 1994 and its repercussions called attention to the fact that the implementation of reforms and, specially, the financial integration with the world economy might have been more complicated than what had been expected. what made the Mexican crisis unique in terms of “signaling” a problem were two facts. First, it was the first large post-Washington Consensus crisis that occurred in a country that was not undergoing a particularly difficult period, such as a regime change from socialism to capitalism or a highly unstable situation (which could include armed conflicts) like some African countries that had implemented structural adjustment programs. Second, it was largely unexpected. This explains the international community’s interest in drawing “lessons” that the multilateral institutions engaged in structural reforms in other countries could apply. In this regard, the most relevant lessons were that capital movements can be volatile; that it was necessary to preserve financial stability based on good supervision and adequate prudential regulations; and, that it was necessary to avoid a large current account deficit that could be difficult to finance (see, for example, Calvo and Mendoza, 1996). In addition to the lessons, however, some researchers raised the question of whether something was missing in the WC in particular regarding the role of capital movements, its volatility, and the occurrence of irrational phenomena such as contagion and self-fulfilling prophecies (Stiglitz, 1998).

The South Asian Crisis 1997 occurred where they were least expected: in some of the East Asian Miracle countries, that is, countries that had shown very high growth rates for an extended period of time and generally had reasonably good macroeconomic management and open economies. They were unexpectedly experiencing macroeconomic and financial problems that appeared to be relevant only in Latin America, some transition economies, or countries like Turkey.

Large current account deficits
Excessive short-term foreign currency liabilities
Weak banking systems

the challenges that reforming countries were facing, other less impacting, though no less pressing, problems progressively appeared in the eighties and nineties as the process of structural reform unfolded. The most relevant were: the deterioration in social conditions of specific groups; the sluggish progress in poverty alleviation; environmental degradation; the difficulties to establish the required regulatory framework; the lack of transparency; rent seeking; political instability; and, corruption. to improve the quality of growth by attacking poverty and by promoting good governance and transparency. According to EBRD (1999), the quality of governance in the transition economies, as it is evaluated by the companies themselves, is negatively correlated with the state capture index. The relationship seems to be natural: the less corrupt the government, the better the quality of governance.

According to Wolfensohn (1999), the President of the World Bank, the SGR focuses on two questions, first, the structure of the right institutions to develop the institutional capability for reforms and, second, the issue of ensuring two primary goals of economic policy in the developing world: sustainable growth with poverty alleviation. Under the SGR approach, the World Bank and the IMF should coordinate efforts to better pursue both FGR and SGR objectives. Reforming countries, in turn, would have to improve the quality of policies and institutions (transparency, governance) (Camdessus, 1999, Rodrik, 1999).



The Institutional Turn

“Capital fundamentalism” assumed that solving the problem of underdevelopment was primarily about increasing poor countries’ stock of capital. It was a vision with strong intuitive appeal. From the point of view of poor countries, it also lent itself to optimistic projections of future growth. However capital fundamentalism did not work to extend development and eradicating poverty —either theoretically or empirically. Given that capital, especially physical capital, is subject to diminishing returns, additions to the stock of capital could not possibly account for long-term growth of the kind experienced by the United States.4 Relying on increases in the capital stock to solve development problems in the global South didn’t work either. Capital tended to flow among rich countries rather than from rich to poor. International institutions, trying to compensate with loans and grants, found to their frustration that more capital often did little good. Visions of capital accumulation as a “magic bullet” persist, despite all, even in academic discussion.5 Nonetheless, the consensus has moved capital off its throne as magic bullet.

Bit Driven Growth

The new growth theory, which has become an established part of conventional theoretical discussions of growth in the last twenty years, started from Solow’s argument that “technological change” must account for most growth, then went further by making the production of new ideas “endogenous.”10 Instead of being something whose explanation lay outside the bounds of economic growth models, the emergence of productive new ideas (“rate of technological change”) was seen as depending on economic incentives which were in turn shaped by institutional contexts.

The theoretical presumption that inputs of capital are the key to increased well-being is thoroughly congruent with the preferences of those who control capital. The institutional turn threatens this congruence. Its implications for policy are complex and often ambiguous. It draws attention to ways in which the interests of the powerful may conflict with those of ordinary citizens, particularly in poor countries. Of most immediate concern here, however, is another effect of the institutional turn. It challenges social scientists outside of economics, who have traditionally claimed to be institutionally oriented, to engage with the new perspectives coming out of economics and demonstrate how their own approaches can help resolve some of the complications created by the institutional turn.

The importance of “bitbased” assets extends well beyond ideas and brands. Most corporations are partially bit-based. Purely physical commodities (e.g., steel, cotton, soap, or cloth) are increasingly the exception rather than the rule in the modern economy. A wide range of manufactured goods (e.g., Kleenex, Nike shoes) depend on associated images for their profitability and this is even more true of services—whether production or consumption oriented. Thus, the preferences of “bitbased entrepreneurs” play an ever growing role in defining economic rationality.

The disparity in technological development is one of the asymmetries between developed and developing countries that gives rise to sharply difficult policy dilemmas and conflicts of interest between countries situated at different stages of the development ladder. Key policy questions are whether there is an optimal strategy to shorten the distance in technological levels; to what extent a developing country should rely upon technology transfer and upon local innovation efforts; and what the regime of technology transfers should be to allow welfare maximization. it stimulates innovations by rewarding the inventor but at the price of inhibiting the dissemination of inventions. Many authors have cast serious doubts upon the usefulness of stricter protection of intellectual property rights (Chang, 2001; Boldrin, Levine, 2002). Second, even if there is a need to protect intellectual property rights, protection rules could be more lenient in developing countries. There seems to be a consensus among economists and policymakers that the transfer of technology to the poor countries is a highly efficient way to provide assistance. Yet, the TRIP agreements undoubtedly limit the transfer of technology to the South. TRIPS may also affect social development. Copyrights hinder the dissemination of information, knowledge and culture, whereas patents on pharmaceutical products limit the ability of the poor countries to fight diseases and lower mortality rates. It is only in cases of national emergencies, such as the AIDS epidemic in South Africa, that drugs can be purchased/produced with no regard to patent protection. Third, in developing countries, there is no clear reason to link intellectual property rights to the trade liberalization agenda as is currently happening within the WTO. The World Intellectual Property Organization (WIPO) was founded at the end of the 19th century, but TRIP agreements were worked out and introduced within the WTO framework. Industrialized countries are in the minority in WIPO and have no leverage on developing countries. In the WTO, instead, the protection of intellectual property rights is linked to trade liberalization and access to industrial countries' markets, which is crucial for developing countries.

Developing countries thus find themselves between a rock and a hard place: either access to developed markets with no easy transfer of technology or easy transfer of technology with restricted access to those markets. Since trade liberalization has an intrinsic value for developed and developing countries, to hold it hostage for the protection of intellectual property does not seem to be a rational policy. Indeed, it has been suggested that trade negotiators are “captured” by industry and that intellectual property policies can become overprotective even if trade policy negotiators are equally concerned with all domestic interests (i.e. those of consumers and producers), because intellectual property is the only available tool by which cross-border externalities can be recaptured by the innovating country. To a trade policy negotiator, profit earned abroad
is unambiguously a good thing, and the consumers' surplus conferred on foreign consumers does not count at all (Scotchmer, 2003).


Learning Organisations

As practitioners know, development is non-linear, unpredictable, and what is needed for sustaining development on a non-trivial scale is poorly understood. In this process, there is only a small range of things organisations actually have any control over, and a great many over which they don’t. It is not clear which aspects are most important, when and how they interact, and what downstream effects will be if ‘success’ or anticipated change is achieved in any one area. This presents a significant challenge to any organisation committed to learning, because it is not always clear what it should be learning or how to make sense out of what it learns. Ellerman argues that this learning challenge is greatly compounded when development organisations, including some with enormous influence and resources, embrace ‘dogma’, try to identify the ‘One Best Way’, and become deeply wedded to these beliefs. This creates significant obstacles to learning, as people focus on explaining away failures (bad single-loop learning) rather than question the dogma or dominant paradigm (double- and triple-loop learning). Bloch and Borges suggest that NGOs tend to get stuck in single-loop learning because their planning and evaluation tools focus on the operational level, and fail to engage people in critical reflection on underlying issues of behaviour, values, and agency. They agree with Michael Edwards that the complexity and diversity of the development process ‘means that to develop capacity for learning and to make the connections is even more important than accumulating information’ (Edwards 1997).

The competitive lens used by private sector is not the most useful for analysing actors in the development sector, particularly as collaboration has become increasingly important for achieving development and humanitarian goals. Development and humanitarian organisations in different countries, of different sizes, with different missions, mandates, and accountability structures have to collaborate with each other in the hope of having an impact. Even within a given organisation, there can often be many hierarchical levels and a variety of sectors or units, as well as remote offices, each with their own cultural contexts, each of which may have very different worldviews. The challenge in the development field is to instil learning capabilities, including the learning challenge of consistently and effectively working with others, in a range of very diverse organisations, which operate at different and/or multiple levels and in profoundly different contexts. Several papers tackle aspects of the challenge that collaboration poses for both individuals and organisations. Laura Roper examines academic–NGO learning collaborations and argues that different organisational cultures can undermine partnerships that would seem to have enormous potential.

In the politicised context of bilateral programmes, in a joint rural development effort of the Dutch and Kenyan governments, Samuel Musyoki finds that the ability to carry forward any learning from one phase to the next is hindered by high staff turnover, national politics, diplomatic considerations, and shifts in the international development agenda. Learning organisation theory tends to assume some degree of consensus or shared vision, both of which can be elusive in development programmes that involve multiple actors, competing interests, and conflicting goals.Where leadership structures are highly politicised, as in the case analysed by Musyoki, learning and change may be very threatening to the status quo. Commitment to a shared vision may not exist, even nominally, and it may be necessary to create alternative, communitybased structures that can build trust and hold officials accountable.


New Development Paradigm

“As thinking about development has changed, so too has what we have come to expect from development agencies such as the World Bank. At the time when much of development thinking placed planning at centre stage, the Bank helped finance the big projects which were at the heart of many of these plans. When the emphasis shifted to the policy environment, particularly getting prices right, the Bank promoted stabilization and trade liberalization and financed structural adjustment. Now, the agenda has stronger governance and institutional elements, including helping societies provide effective public services oriented to the poor. This calls for a different role for the Bank: one that puts still more emphasis on learning and knowledge. In many cases communities have to learn for themselves how to design effective institutions that work in their setting” (Collier, et al. 2000).

When the party celebrating the new world order ends, there will be a moment for reflection. That moment might coincide with another Mexican financial disaster, because there is little real hope that Mexico can ever pay off the debts it incurred to shore up the old foreign investment, much less the new investment that rushed in when the marching bands started up again. It might occur with the collapse - under the weight of poverty, fundamentalism, corruption and political myopia.

As we are living at a time that powerful forces are changing the world history there is no other solution but to respond by creating drastic changes in economy, changes in social arrangements. Measures should be taken by the World Bank, IMF and donor agencies triggered by external pressures from NGOs as well as, policy makers, researchers, and women activists to give a higher profile to the gender differentiated impacts of development policy reform and to modify policies on this basis.

Feminist scholars have argued that as gender was taken into development-policy processes, particularly as part of an effort to ‘mainstream’ gender issues, the focus was originally on women as the target group to be brought into development (Jackson and Pearson 1998). This process was based on the common and mistaken assumptions that:

(a) women were not already involved in some way;
(b) their labour was a ‘free’ good readily available for new activities; and
(c) women would automatically control the fruits of their labour in any such activities.

As the crudest mistakes were addressed, policy makers persisted with the need for a more careful inclusion of women, as it was recognised that successful use of women’s labour could make development occur more efficiently. But it is increasingly being recognized that unless the issues of gender inequality, women’s social and economic empowerment, and women’s role and contribution to the national and global economy is recognized and deeply intertwined into all aspects of macro policies- =including trade--the issues of poverty, inequality and under-development cannot be adequately resolved. Joekes (1995), Standing (1989) and the United Nations (1999), found that industrialization in the Newly Industrialized Economies (NIEs) (Taiwan, Hong Kong, South Korea and Singapore) is ‘as much female-led’ (the feminization of export) as it is ‘export-led’. This supports observations that “(t)he employment of large numbers of women in the low-value chains of global production
networks often provides the stepping stone for a systemic industrial strategy.” (See for example, Export Processing Zones (EPZs) in South Korea, Mexico, etc. where women are over 60% of the EPZ labour force. However, recent work on Taiwan, Hong Kong, South Korea and Mexico show a decline or reversal of women’s share in manufacturing— its de-feminization.

In general, economists assume that gender roles and relationships are not relevant to the study of macroeconomics and trade which deals with highly technical aggregates such as price stability, employment, external balances and policy instruments (fiscal, monetary, exchange rate, tariffs, NTBs). While conventional economic reasoning may accept the validity of gender at the micro level of analysis and in research and analysis focused on labour market issues, unpaid work, etc. there is resistance to the incorporation of gender as an analytical category in the so-called hard areas of macro analysis, trade and finance. The work of feminist economists and gender advocates has shown that “gender as a relation of power, is a social stratifier that influences the distribution of output, work, income, wealth, etc.” (Cagatay). And since, ‘gender also influences the behavior of economic agents’, it is critical to our understanding of the economy as well as the role of trade in the global economy.

For all the rhetoric we are hearing, unless women have higher representation in economic, politics, legal, judiciary, policy making, decision making and auditing processes, talking about human rights, fair play and democracy will be just some empty words. From a human development perspective all legal systems must conform to international standards of human rights, including gender equality. The courts applying the prevailing customary law should respect basic universal human rights and there should be legal measures to guarantee social justice. Globalization by incorporating innovative ways to include women and gender equity in development policies can bring recognition to local people through expansion of investments and knowledge. Respecting cultural identity and promoting socio-economic equity through participation and benefit sharing, that are possible as long as decisions are made democratically— by people, by states, and by local as well as international institutions.

Exctracted from:
1. Development, Women, and War - Oxfam, 2002
2. On the Philosophical, Political, and Methodological Underpinnings of Reform
José María Fanelli, Vladimir Popov, the Fourth Annual Global Development Conference.
3. The Role of Trade in The Global Economy, High Level session on Trade, Economic and Growth, Mariama Willams, April 2005, WTO
4. The Challenges of the Institutional Turn: New Interdisciplinary Opportunities in Development Theory: Peter Evans, Berkely Univ, 2004
5. The sex Wars, and the other Wars, Oxfam GB, First published in Development in Practice 13(2&3): 154–77 in 2003
6. Globalization, Social Exclusion and Work: with special reference to informal employment and gender,
Marilyn Carr and Martha Chen, ILO
7. Development and the Learning Organisation: an introduction, Laura Roper and Jethro Pettit
8. Let Them Eat Paradigms: Public Attitudes and the Long, Slow Decline of Development Cooperation By Ian Smillie
9. Gender budgets and beyond: feminist fiscal policy in the context of globalisation, Nilufer Cagatay, Oxfam GB
10. Formula for fairness: patient rights before patent rights, Oxfam Briefing Paper, PFIZER