Development Context

The Context of Development
Administration:
Political, Economic & Socio-
Cultural
Dr. Edwin B.R. Gbargaye
Instructor
Department of Public Administration
University of Liberia

Outline
• Background
• Framework
• Enabling Factors for Development
– Culture
– Economic
– Political
• Conclusion

Background
• Development is largely a post- WWII
phenomenon
• Before WWII, little sense of moral/ethical
obligation of one nation to another
• Idea of development is based fundamentally on
classical Western concepts of evolution (i.e, of
unfolding of pre-determined plan) and unending
progress

What is Development?
• “A country can be called developed, when
it has acquired an institutional setup that
allows it to mobilize resources and carry
out changes necessary to systematically
and effectively deal with problems that the
country is facing”.
Ehrlich, I. 1990. The problem of development: Introduction. J. Political Economy
98 (5, Part 2): 1-11.

What Do We Mean by Development?
• Operational definitions:
– Millennium Development Goals (MDG’s) to be
achieved by 2015
– Human Development Index (HDI): achievement
of the goals or improvement in the index is a
measure of development.

Development Measurements
• Economic growth and expansion (GDP, GNP),
institutionalized by WB and IMF
• International trade (export and import)
• Wealth accumulation (foreign reserve, etc)
• Mass production and consumption
• One is considered as being “developed” if it can
meet these measurements

UNDP:
Human Development
• The most used quantification for human development
by UNDP is the Human Development Index (HDI). It
combines
– standard of living, measured with PPP
– longevity, measured with life expectancy at birth
– education, measured as adult literacy and gross
school enrolment.

Millennium Development Goals
• Eradicate extreme poverty and hunger.
• Achieve universal primary education.
• Promote gender equality and empower women.
• Reduce child mortality.
• Improve maternal health.
• Combat HIV/AIDS, malaria, and other diseases.
• Ensure environmental sustainability.
• Develop a global partnership for development.

Is There Progress Towards the
Millennium Development Goals?
"We will have time to reach the Millennium
Development Goals – worldwide and in most, or
even all, individual countries –but only if we
break with business as usual. We cannot win
overnight. Success will require sustained action
across the entire decade between now and the
deadline.”
Former United Nations Secretary-General Kofi A. Annan
In Larger Freedom March 2005

• Yet at the same time, dozens of countries have become poorer,
devastating economic crises have thrown millions of families
into poverty, and increasing inequality in large parts of the
world means that the benefits of economic growth have not
been evenly shared. Today, more than a billion people — one
in every six human beings — still live on less than a dollar a
day, lacking the means to stay alive in the face of chronic
hunger, disease and environmental hazards. In other words, this
is a poverty that kills. A single bite from a malaria-bearing
mosquito is enough to end a child's life for want of a bed net or
$1 treatment. A drought or pest that destroys a harvest turns
subsistence into starvation. A world in which every year 11
million children die before their fifth birthday and three million
people die of AIDS is not a world of larger freedom. ”
Former United Nations Secretary-General Kofi A. Annan In Larger Freedom
March 2005

• “The past 25 years have seen the most dramatic
reduction in extreme poverty that the world has ever
experienced. Spearheaded by progress in China and
India, literally hundreds of millions of men, women
and children all over the world have been able to
escape the burdens of extreme impoverishment and
begin to enjoy improved access to food, health care,
education and housing.
Former United Nations Secretary-General Kofi A.
Annan In Larger Freedom March 2005

Causality of Development
• Geography
• Culture
• Property rights
• Lack of freedom

The Aim of Development
• To increase GDP, real GDP/capita
• To improve the non-monetary indicators
• Mitigation of poverty
• Entitlements and capabilities
• Freedom
• Sustainable development

What is Aid?
• Aid As Inputs ($$$; 0.7 of GDP, etc)
• Aid As Process (e.g. Participation,
partnership, etc)
• Aid As Output (schools built; #s Trained…)

Two Models of Aid
1. The Humanitarian Approach. Focus on poverty,
deprivation: The Lotta Hitschmanova Model
2. The Developmental Approach. Focus on
Socioeconomic Reconstructio, Wealth creation,
Development, Innovation, etc
The Marshall Plan Model
NB: Aid to Africa is Predominantly Humanitarian;
Necessary but not sufficient for Development in
an Era of globalization

Official Development Assistance (1975-2007)
Net Disbursements
(Constant Prices, 2006 USD millions)
0
20000
40000
60000
80000
100000
120000
140000
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Bilateral Multilateral

Total ODA Flows by Region
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Europe Africa America Asia Oceania Developing Countries unspecified
ODA Receipts
US$ 2006, millions

Reaching the 2010 Target for Africa will
require exceptional efforts
Source: OECD Development Assistance Committee (DAC) and World Bank Staff estimates.

A Review of Development Theories
–Adam Smith: The Classical Economy
–Malthus
–Keynes
–Rostow
–Structuralist & world-systems theory
–Institutionalism
–Neo-classical economy
–Human development

Classical Economy
• The classical economy (Adam Smith 1723-1790):
–The only real measure of value is labor, and the
division of labor makes the production more
efficient.
–In contrast to mercantilism, which offered
protectionism, markets should be allowed to
function freely.
• The government should provide the legal framework:
law and order.
–Other interventions should be minimal. Only
government investments to infrastructure such as
canals and roads were advocated.

Malthusianism
Population growth is geometric, where as the growth in food
production is arithmetic

Keynesianism
The government
has a strong role in
controlling credit
and currency, and it
also stabilizes
business cycles
with public savings
and investments

Neo-Classical Approach
“The Washington Consensus” by World Bank & International
Monetary Fund
• Remove price controls
• Fiscal discipline
• Prioritize Government expenditure in infrastructure & human
development
• Implement tax reforms
• Financial liberalization
• Remove foreign exchange controls
• Promote foreign investments
• Privatize public enterprises
• Deregulate economy
• Protect property rights

New Institutional Approach
• Institutions (legislative, juridical, executive,
administrative, informal [behavioral norms,
culture, religion…])
• Social interests (their structure, character)
• Game: the society
Rules: Institutions
Players: organizations and institutions

Examples:
Informal & Formal Institutions
• Formal: Government setup, NGOs, User
organizations, Donor agencies, Legislation,
Professional/technical “licensed” knowledge
• Informal: Good habits and manners, Traditions,
Culture/Kinship, Religions, Indigenous
knowledge, Attitudes/Values (voluntary,
goodwill, responsibility, commitment, trust)

Low-income societies can only hope to
develop economically if they give up
their traditional ways and adopt modern
economic institutions and cultural
values emphasizing savings and
productive investment.
Major figures: W.W. Rostow, Marion Levy
Modernization Theory

• third world response to modernization theory
• poor countries exist in a relationship of unequal
exchange with rich countries
– They are economically dependent on rich ones – and
politically subordinated as well
– their poverty is thus a result of exploitation, not their
own cultural or institutional failings
• the only solution: revolution
Dependency Theory
(Andre Gunder Frank)

Western Powers in Asia, Early 20th Century

World Systems Theory
(Wallerstein)
• Wallerstein believed that the periphery was
being exploited by richer countries (core
countries)
• Between core and periphery there are semi-
peripheral countries that import raw
materials from the periphery and hi-tech
goods from the core and export semi-
manufactured goods to the core and
industrial products to the periphery.

Other left-wing development theories sought
to take account of the rapid growth of some
poorer countries. Notable in this respect was
Immanuel Wallerstein’s World Systems
Theory.

core
semi-periphery
periphery
• finished goods
• minerals, ag
products, labor
World Systems Theory

Effect of Culture on Development
• Openness to new ideas
- Japan borrowing ideas from Europe and America since 1800s.
- Islamic world: 200 million people speak Arabic, but only 330
books are translated annually into Arabic (5 times more books
are translated into Greek, which is spoken by 12 million
people).
- Chinese technological superiority disappeared since 1300s as
the rulers of the Ming-dynasty preferred stable and controlled
environment – innovators and those adopting new thoughts
were dangerous (Joel Mokyr, 1990). Compare Roman Catholic
Church before Protestant Reformation or Soviet Union.

• Hard work
-Classic Greek culture: work is for slaves
-Protestant reformation: People were created to work. Material
success sign of God’s favor (Calvin).
-In a US survey from year 1985, 46% said that work is more
important than leisure, 33% chose leisure. Protestants chose
work 10% more frequently than Catholics.
-Max Weber (a sociologist) argued that hard work explained
the early development of protestant regions in Europe.
• Saving for the future
-No correlation between savings rate of the immigrant’s source
country and the amount the immigrant saved after immigrating.

• Trust
Economic activity requires trust. Trust increases efficiency and
allows specialization.
-John Stuart Mill (1848): 'There are countries in Europe..where the
most serious impediment to conducting business concerns on a large
scale, is the rarity of persons who are supposed fit to be trusted with
the receipt and expenditure of large sums of money.‘
-Kenneth Arrow (1972): 'Virtually every commercial transaction has
within itself an element of trust, certainly any transaction conducted
over a period of time. It can be plausibly argued that much of the
economic backwardness in the world can be explained by the lack of
mutual confidence'.
-Knack and Keefer (QJE, 1997) asked in their survey: 'Generally
speaking, would you say that most people can be trusted, or that you
can't be too careful in dealing with people?'. 62% of Norwegians said
that people can be trusted, only 7% of the people in Brazil thought so.

Relationship Between Trust and
Investment
Source: Knack & Keefer (1997), Heston et. al (2002)

What Determines Culture
• Religion
• Climate, natural resources: is it vital for survival to
save?
• Cultural homogeneity and social capital
-Ethnic fractionalization correlates with bad
governments (colonial past).
- Rich countries are somewhat more fractionalized
religiously (more tolerant of minority rights?)
• Population density: higher density allows for division of
labor as markets are larger; more experience with
government.

Ethnic Fractionalization vs GDP
Per Capita
Source: Alesina et. al (2003)

Population Density vs Economic
Growth
Source: Burkettt, Humblet, Putterman (1999)

Cultural Change
• David Weil (2005, s. 428): Cultural attribute that leads
to economic growth is not necessary good in any
moral sense or desirable. “the idea that cultural
attributes necessary for economic growth are actually
bad was championed by none other than the great
economist John Maynard Keynes (1930). In his view,
many of the cultural attributes that promoted
economic growth - the love of money, the
glorification of hard work, and the focus on how to
improve things in the future rather than living in the
moment - were downright distasteful. Keynes
cautioned that once the economy has grown rich
enough that human wants have been satisfied, the
necessity of admiring such values will be removed”

The Role of Culture: The Korean
Experiment
• Korea: economically, culturally and ethnically homogeneous at
the end of WWII.
• If anything, the North more industrialized.
• Exogenous" separation of North and South, with radically
different political and economic institutions.
-ie separation not related to economic, cultural or geographic
conditions in North and South
• Big differences in economic and political institutions
-Communism (planned economy) in the North
-Capitalism, albeit with government intervention and early on
without democracy, in the South
-Huge differences in economic outcomes.

Political Freedom and Economic
Rights
 Quintessential Question:
What should come first – removing poverty and
misery, or guaranteeing political liberty and civil
rights, for which poor people have little use anyway?
 1993 Vienna Conference on Human Rights
‘Why bother about the finesse of political freedoms
given the overpowering grossness of intense economic
needs?’

Arguments against Political Freedom
and Civil Rights
• First: Freedom and rights hamper economic growth
and development.
• Second: Given a choice between having political
freedom and fulfilling economic needs, poor people
will choose the latter.
• Third: Western Priority v. Asian Values. Western
priority emphasize political freedom, liberty and
democracy, as against Asia values which is more keen
on order and discipline.

Arguments Against Political Freedoms
and Civil Rights
• Universal recognition of human rights can be
harmful if universalism is used to deny or mask the
reality of ‘diversity’ - Foreign Minister of Singapore,
1993 Vienna Conference on Human Rights
• Individuals must put the state’s rights before their
own - Chinese Foreign Minister, 1993 Vienna
Conference on Human Rights.

Preeminence of Political Freedom and
Democracy
• The basic dichotomy that appears to undermine the
relevance of political freedom because addressing
economic needs is more urgent is wrong.
• The real issues that have to be addressed lie
ELSEWHERE, and involves taking note of extensive
interconnections between political freedom and the
understanding and fulfillment of economic needs.
• The intensity of economic needs adds to – rather than
subtracts from – the urgency of political freedom.

Considerations towards the direction of a
general preeminence of basic political and
liberal rights
1. Their direct importance in human living associated
with basic capabilities (including that of political
and social participation).
• Poor people in general do care about civil and political
rights (e.g. struggle for democratic freedom in South
Korea, Thailand, Bangladesh, Pakistan, Burma, etc.)

2. Their instrumental roles in enhancing the hearing
that people get in expressing and supporting their
claims to political attention (including the claims
of economic needs).
• Political leaders stand to gain when they listen to
what their constituents needs.
• No substantial famine has occurred in any
independent country with democratic form of
government and a relatively free press.
liberal rights

3. Their constructive role in the conceptualization of
‘needs’ (including the understanding of ‘economic
needs’ in a social context).
• The exercise of political rights makes it more likely
not only that there would be a policy response to
economic needs, but also that the conceptualization of
‘economic needs’ itself may require the exercise of
such rights.
liberal rights

Freedom in the World
(as of 2008)
Country Population
Political
Rights
Civil
Liberties
Status
Global
Standing
(2007
GNI)
CHINA 1,318,000,000 7 6
Not
Free 33
NIGERIA 144,400,000 4 4
Partly
Free 161
PHILIPPINES 88,700,000 4 3
Partly
Free 142
SINGAPORE 4,600,000 5 4
Partly
Free 31
THAILAND 65,700,000 6 4
Partly
Free 113

“Under dictatorial rule, people need not think – need not
choose – need not make up their minds or give their
consent. All they need to do is follow……By contrast, a
democracy cannot survive without civic virtue….The
political challenge for people around the world today is
not just to replace authoritarian regimes by democratic
ones. Beyond this, it is to make democracy work for
ordinary people.”
Former President Fidel V. Ramos
1998 Nov. Speech at the Australian National University

Why China Works: Inside the Command
Capitalism that will outrun all Rivals
(Newsweek, January 19, 2009)
• The main reason China is not slowing as fast as the other
big economies is its capacity for what economists ridicule,
in normal times, as state meddling.
• China's successful use of command capitalism also carries,
at most, limited lessons for the United States or Europe. It's
much easier to boost growth by ordering engineers
working in an autocratic system to build roads where there
are none, as in parts in China, than to stimulate growth in a
developed nation like the U.S.
• It doesn't matter if a cat is white or black, as long as it
catches the mouse.
• Autocratic capitalism would provide economic growth,
while the Communist Party would retain absolute political
power.

References
Ehrlich, I (1990) The Problem of Development Introduction, The Journal of Political Economy 98
(5): 1-11
Sachs, J (2005): The End of Poverty. Economic Possibilities of our time
Mankiw, G; Romer, D and Weil, D (2005). "A Contribution to the Empirics of Economic Growth".
Quarterly Journal of Economics 107: 407–437
World Values Survey http://www.worldvaluessurvey.org/
Burkett, J., Humblet,C; Putterman, L (1999) “Pre-Industrial and Post-War Economic
Development: Is There a Link?” Economic Development and Cultural Change, 47 (3): 471-95.
Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance,"
Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic
Research.

References
Keefer, P; Knack, S (1997). "Why Don't Poor Countries Catch Up? A Cross-National Test of
Institutional Explanation," Economic Inquiry, Oxford University Press, 35(3):590-602.
Knack, S; Keefer, P, (1997). "Does Social Capital Have an Economic Payoff? A Cross-Country
Investigation," The Quarterly Journal of Economics, MIT Press, 112(4): 1251-88.
United Nations (2005) In larger freedom: towards development, security and human rights for all.
Report of the Secretary-General
Sen, A. (1999) Development As Freedom, 146 – 159
Foroohar, R. (2009), Why China Works, Newsweek, January 19, 2009, 23 – 25
Freedom House, http://www.freedomhouse.org/template.cfm?page=249
The World Bank, http: // web.worldbank.org/ WBSITE/EXTERNAL/DATASTATISTICS/0 ,
contentMDK:20399244~menuPK:1504474~pagePK:64133150~piPK:64133175~theSitePK:23941
9,00.html#ranking

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