25 March 2014
Lifting women out of poverty

Development: wisdom from experience

David Malone, Rector of the United Nations University, delivered fascinating insights on the challenges of development to a Tokyo audience organized by the English Speaking Union of Japan.

David Malone, the distinguished Canadian diplomat who is now Rector of the United Nations University, delivered fascinating insights on the challenges of economic development to a Tokyo audience, assembled by the English Speaking Union of Japan, and very ably chaired by Sadaaki Numata, ESUJ Chairman.

Malone has spent a life immersed in the idea and experience of development. As a child, he lived in Iran in the 1960s. At the time, Iran was a poster-child for development, celebrated for its progress and Western-orientation under the Shah. But it was the few rare sociologists, who witnessed a rural society under stress, who were correct. Iran subsequently succumbed to an Islamic revolution.

Another formative experience for Malone was his time in Egypt where he also covered the Sudan. Canada implemented a number of promising projects in that country. But on his return to the Sudan years later, Malone saw no trace of these projects.

Successful development is always an "internal process", driven from within a society, according to Malone. Foreign aid does not produce development, even if the international community can exert influence.

History shows that there is no perfect, single model of development. There are as many models of development as there are societies. History plays a critical role.

India has emerged strongly in recent years. But India was left in "shocking shape" by its former colonial masters from Britain. Colonisation was a rabid experiment in economic exploitation. 200 years of colonisation produced zero net economic growth.

The development project of India's new leaders in 1947 was greatly influenced by the times. Policies of "soft socialism" were motivated by India's experience of colonisation and anti-imperialism.

Food security was the urgent challenge. Under British rule, India suffered many famines.. The Great Bengal famine of 1943 was aggravated by the British authorities, and caused 1-3 million deaths.

Post-colonial India has not suffered famines, thanks to its democratic politics. To be re-elected, governments must ensure food security.

Nehru's post-colonial development model was based on heavy industrialisation. But this was a failure, and did not lead to development. But Nehru did give India a huge belief in itself, and firmly anchored its democracy.

But things began to change around 1990/91, as India was basically bankrupt. This motivated India to make some limited reforms, which empowered India's entrepreneurial genius.

Economic growth took off, especially in the services sector where IT outsourcing became a dynamic trend. India did not make much progress in industrialisation because it neglected its infrastructure.

India's development model has been one of trial and error, and 'muddling through'. In the past few years, the gloss has gone off India's development. But its potential remains enormous, and the outcome of the upcoming elections is critical.

China's development path has followed a similar time-line. The Chinese Communist Party took over the country in 1949, after defeating a corrupt Nationalist regime in a civil war.

Mao's communism was a horrendous, misguided experiment, with the Great Leap Forward and the Cultural Revolution resulting 20-40 million deaths. After Mao's death in 1976, Deng Xiaoping came to power in 1978.

With the experience of living through Mao's regime, Deng adopted a radically different approach. Deng began reform in the agricultural sector, by giving economic freedom to farmers. Under Mao, food security had been a major problem. But since Deng's reforms, China has had no more famines.

The second phase of China's development was export-oriented industrialisation, supported by strong investment in infrastructure. In contrast to India, China is nowhere in the services sector.

Although following similar time-lines, the Chinese and Indian models are fundamentally different. This is confounding for the experts. "Thankfully China ignored the advice of the World Bank", once said Former World Bank Chief Economist, Justin Lin, himself of Chinese origin.

More generally, one trend in the developing world has been the dramatic improvement in life expectancy and education. It remains critical, however, to improve the quality of education.

The global financial crisis in recent years has been a paradox. In the past, developing countries were the usual source of financial crises, like the Latin American, Asian and Russian financial crises.

This time, the global financial crisis originated in the West, which supposedly has better governance. And what's more, developing countries sailed through the global financial crisis. The developing world is much stronger than it was in the past.

The relationship between governance and development is also more complex than we used to imagine. China (and Vietnam) show that democracy is not the only path to development.

Civil conflict does not always have obvious adverse effects on development. Sri Lanka grew strongly through its civil war. Again, corruption does not always hinder development. China, India and Indonesia are countries that seem to have adapted to corruption, although they may have done ever better with less corruption.

History is also important for governance. In Haiti, the burden of 200 years of dictatorship means that it is difficult to change gears. The comparison of India and Pakistan suggests that democracy is broadly beneficial over time.

Overall, the quality of governance is important, whether a country is democratic or not. It is instructive to compare Argentina and Canada. A century ago, Argentina was richer than Canada. Argentina had everything, but suffered the consequences of populism. By contrast, Canada has succeeded by plodding along.

In conclusion, examination of the history of development suggests that great humility is required. We need to be more open to the possibility that we might be wrong! And we must be very suspicious of experts, especially those with lots of statistics and equations. The world has been misled by experts, and even deluded by them in the lead-up to the global economic crisis.

Development must be examined by a mixture of disciplines, like historians, geographers, sociologists, anthropologists, and lawyers. Development cannot be the monopoly of one discipline alone.

Malone's reflections of a life dedicated to development are very sobering, and provide great food for thought.

One angle that Malone did not explore is the possibility that bad regimes may not be 100% bad.

For example, India may have suffered at the hands of its British colonial masters. But India did not exist as a country before the British arrived. And three gifts from Britain are key to India's unity and identity. The English language unites this country of thousands of languages. India's railway system physically unites the vast sub-continent. And parliamentary democracy provides the institutional framework for this country where talking and arguing is the national pastime.

And despite Mao's murderous regime, the three decades of communism resulted in great improvements in the health and education of Chinese citizens. This "human capital" was of critical importance to the subsequent economic takeoff launched by Deng.

Perhaps the most powerful conclusion is that Asia has proven that development is possible, and poverty is not an unavoidable destiny. All successful cases have employed a cocktail of improvements in economic freedom, social investments in education and health, and improvements in governance. But successful societies must feel that they are driving their own destiny.

Finally, as the malaise of growing inequality and poverty today in Japan and many Western countries demonstrates, the development problematic involves constantly unfolding challenges.


John West
Executive Director
Asian Century Institute
Tags: japan, development, David Mallone, United Nations University, English Speaking Union of Japan, Sadaaki Numata.

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