ActionAid’s approach to development is all about empowering people in developing countries to claim their rights. To do this, we focus on areas such as the right to food and the right to education. But are we missing something – is this model of development like seeing Hamlet with the Prince of Denmark absent? Cambridge economist Ha Joon Chang thinks so.
Today he addressed a meeting at ActionAid with the proposition that there is a need to move beyond a focus on poverty reduction, to look again at production. Until the 1980s, there was consensus among development theorists, from right to left, that development is about transforming a country’s productive capabilities, so that it becomes able to produce higher-value goods as well as commodities, therefore generating more wealth. Over the last three decades, however, with the focus on poverty reduction and meeting basic needs, the importance of this has been lost.
Chang sees three reasons for this:
- The rise of neoliberalism, the currently dominant economic paradigm, which has much to say about market exchange but little about production of the goods to be exchanged. Chicago economist Coase called this (scathingly) ‘the economics of lone individuals exchanging nuts and berries on the edge of the forest.’ However, countries have in reality always developed based on some intervention in the market.
- The humanist reaction against the collectivist biases of earlier development models. They were all about savings, investment, surplus labour and aggregates, and the individual person hardly featured, or worse, was repressed. However, development of people’s abilities occurs mainly within businesses, ‘on the job’, not at school or in individual situations.
- The post industrialist model where countries can skip straight to an economic focus on services, without ever developing a strong manufacturing sector. However, this idea is somewhat illusory. States lauded for their service sectors, like Switzerland and Singapore, in fact have very strong productive sectors too.
Instead, he believes, countries need to focus on their productive sectors – taking parts of the ‘old’ ways from the 50s and 60s, but adding more recent thinking incorporation of technical innovation and knowledge about enterprise development.
Countries need to move beyond dependence on commodities like food crops or minerals, to transform their economies to encompass sectors which generate more wealth. Not only will this result in poverty reduction, he believes, but also provide the only material foundation without which people’s rights cannot to be realised.
What are your thoughts?