Hopeless?

I’ve just written a piece for Change.org about Oswaldo de Rivero’s book, The Myth of Development. De Rivero argues, in essence, that development is never going to happen for most of the poor countries in the world: they lack natural endowments, and more importantly, the world economic and political structure has changed in such a way that they cannot exploit or manipulate what they do have to achieve development in the same way that the currently developed world has done. It’s an advance on the crude biological determinism of Jared Diamond, in that it’s crude economic and political determinism as well.

I’m not much of a fan. On the one hand, it depends on predicting the future, something that economists have been very bad at in the past; indeed even historians have difficulty working out why economies developed in the way they did. On the other, he acts as if the global political regimes that stifle the poorest countries are givens that cannot be changed, which is unduly pessimistic. Also, if he is right, and certain countries can never develop, it immediately makes open borders and free migration the only real solution to endemic poverty (as the Roving Bandit would not doubt be quick to point out).

Yet the conclusion he does draw, that non-viable national economies should focus on the basics (water, sanitation, health and education) closely resembles the actual policies of many development agencies, even if these same entities would argue vigorously against the idea that development is impossible. Considering his arguments is worthwhile, then, just to focus our attention on the reality that we are doing far too little to actually address the economic problems of developing countries. We shy away from getting involved in the development of domestic capitalism, we do very little to encourage banking to the middle classes (a far bigger problem from a purely economic point of view than banking to the poor), and intently study our feet when called upon to make any strong statements on trade, subsidies, tariffs and the immense hypocrisy of the West on all of these issues.

I don’t believe in the inevitable economic failure of the poorest countries. But I believe that their success will take far longer than those countries that used colonies and force to accelerate their development and others who used their geopolitical importance to push through policies that would otherwise have been sabotaged by the Western powers unless we actually address the economy directly. It’s easy to focus on social development and ignore the national and international economy. It’s just also morally dubious.

2 thoughts on “Hopeless?

  1. Lee

    October 6, 2010 at 10:27pm

    Lant Pritchett’s pro-immigration argument is pretty much that. You don’t need development to be impossible to have a strong case for open immigration. All you need is a pretty realistic assessment of past, current and projected growth rates to see that with closed borders poverty will remain a problem in some countries for a long time.

  2. Ranil Dissanayake

    October 7, 2010 at 6:56am

    Lee – you’re quite right. although projected growth rates can’t tell us when an economy might ‘jump’ to a new growth path, as we’ve seen happen in most developed countries at some point in their past.

    But yes, your point is valid. It’s just that if development is impossible, then the argument to migration becomes much stronger in my opinion. Currently there are counter arguments about the impact it has on development of the ‘home’ country etc. (not wanting to get into any argument about remittances vs. brain drain and all the other sub-arguments here). If development is impossible, then the policy argument becomes almost black and white morality: condemn someone to permanent poverty or allow them to share in the riches of an economy that can support them, which after all was probably built on extraction of resources from other continents anyway.

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