Category: Global Development

Criticisms of the World Bank

The world bank may harm development by forcing countries to pursue neoliberal polices such as privatisation in return for loans.

The World Bank claims that its major goal is to promote global development through poverty reduction, but there are many critics who argue this is a smoke-screen, and the real aim of the World Bank is to use conditional loans in exchange for countries establishing neoliberal economic policies which ultimately benefit western companies and financial institutions.

bad-samaritans

Ha-Joon Chang (2007) for example argues that the World Bank (and the IMF) present themselves as a ‘good Samaritans’ whose only motives are to assist the developing world, but they are actually ‘bad Samaritans’ because their motives are essentially selfish.

Chang argues that the real point of the World Bank (along with IMF and the WTO) is to create a policy environment in the developing world that is friendly to Transnational Corporations, an environment which benefits TNCs and small groups of elites in developing countries, but results in deteriorating social development for the majority of the people.

John Pilger in ‘The New Rulers of the World‘ puts it more bluntly:

Pliger argues that the World Bank (along with the International Monetary Fund) is the agent of the richest countries on earth, especially America, and its function is to offer loans to poor countries, but only if they privatise their economies and allow western companies free access to their raw materials and markets.

The World Bank says its aim is to help poor people, calling this global development, but in reality, the effects of its policies are that the rich get richer on running up debt, cheap labour and paying as little tax as possible, while the poor get poorer as their jobs and public services are cut to pay just the interest on the debt owed to the World Bank.

The documentary also claims that the bank operated during the entire cold war as an institution which distributed money to mainly authoritarian regimes in the third world that supported the West in the Cold War.

The World Bank in Indonesia (1960s – 1990s)

Probably the best historical case study which criticizes the role of the World Bank in development is the case of Indonesia. 

In the 1960s General Suharto seized power in Indonesia secretly backed the United States and Britain. He removed from power the founder of modern Indonesia, Sukarno: a nationalist who believed in economic independence for the country. He had kept the Transnational Corporations and their agents, the World Bank, and the IMF, out of the country, but with Suharto coming to power they were called back in to ‘save’ Indonesia.

This regime change was one of the bloodiest mass murders in post WW2 history, with more than a million people estimated to have died in the process. Suharto took brutal steps to consolidate his power by rounding up thousands and thousands of civil servants, school teachers and basically anyone with communist leanings and murdering them.

Within a year of Suharto’s coming to power the economy of Indonesia was effectively redesigned, giving the west access to vast natural resources, markets and cheap labour, what Nixon called ‘the greatest prize in Asia.

Over the next 30 years the World Bank handed out $30 billion in loans for development to the Suharto regime, turning a blind eye to the estimated million people who Suharto massacred during his rule. The Indonesian elite instigated many development projects with World Bank loans during this time, and many of them were seen as opportunities to skim money for themselves.

The Asian financial crisis of 1998 collapsed the Indonesian economy which resulted in Suharto stepping down from power, ending a 30 year rule during which time he stole an estimated $15 to $30 billion from the Indonesian people, giving him the dubious honour of being the most corrupt dictator in modern world history.

According to the World Bank’s own documents, by the end of regime, $10 billion out of $30 billion in loans remained unaccounted for (so around half of the estimate above is straight from the World Bank). Of course the debt remained, and still had to be paid back to the World Bank by the Indonesian citizens who had never seen a cent of that money.

According to the auditor general of the World Bank, if the citizens of Indonesia made a legal challenge against the World Bank over the remaining debt (given that they never received the money), the World Bank would be bankrupt, because this has gone on the world over.

The World Bank in Bolivia (1994)

Another specific case study which demonstrates the harmful effects World Bank policies can have on poor countries is the case of the World Bank’s Structural Adjustment Programme in Bolivia in the mid 1990s, which is covered in ‘The Corporation’ documentary:


In 1994 the World Bank refused a $25 million dollar loan to a local water co-operative in Cochabamba, Bolivia. Instead, they insisted that the Bolivian government hand over the running of the local water supply to a French mulitnational named Bechtel. The agreement that the World Bank forced onto the Bolivian government gave the French company total control over the local water supply in Cochabamba, even over the rain water, and locals were forbidden from collecting rain water to drink – they either had to pay the company for water or die of thirst.

The problem was that the fees Bechtel was charging for water cost the average local resident more than they spent on food, or about half of their income (the other half they didn’t spend on food).

In response,  a resistance movement sprang up (no pun intended), to which the government responded with military force – and over a hundred people were wounded in the following skirmishes.

In this case, the government eventually backed down, and the water supply was returned to the control of the local community, meaning that water was again effectively available for free, but this goes to show the lengths the world bank will go to in support of Transnational Corporations.

A good documentary which puts the Bolivian water privatisation in historical and global context is ‘Blue Gold: World Water Wars’…

Some negative consequences of Structural Adjustment Programmes in Africa 

Structural Adjustment programmes are the primary vehicle through which the World Bank provides conditional loans for development – through them, a country only receives loans if it adopts neoliberal (pro-business) policies – there are four main strands to this – prviatising public services, cutting taxes, deregulation, and developing an ‘export driven’ economy.

This useful blog post summarises some of the harms that World Bank structural adjustment programmes have done in Africa. To summarise just a few of them…  

  • Privatisation has meant that Transnational Corporations have been able to buy state enterprises at very low costs.
  • Tax reforms under structural adjustment programmes typically have meant tax cuts for the wealthy (lowering taxes on profits for example) and shifted the tax burden onto middle and low-income groups.
  • Deregulation has made it easier for TNCs to shift their profits abroad – to offshore banking accounts for example.
  • Cuts to public services such as health have increased the number of people without access to health care.
  • Cuts in public sector employment, have led to large increases in unemployment. (for example 300 000 civil servants were retrenched in Zaire – now DRC – in 1995).
  • Liberalisation of labour markets have led to the phasing out of minimum wage legislation.
  • Export orientation in agriculture has led to the elimination of subsistence agriculture and pushed people towards cities, leading to rapid urbanisation and an increase in slum-living conditions.
  • Various NGOs funded by international aid agencies have gradually taken over government functions in the social sector.

Evaluations of these Criticisms 

  1. Many of these criticisms are historical, and they may not apply to World Bank policy today.
  2. It’s actually quite difficult to evaluate how successful World Bank policies have been in promoting development, because you can never be sure what would have happened if World Bank policies and conditional loans had not been put in place, and it’s difficult to isolate the specific effects of policies given the open-systems nature of global development.
Signposting

This material is of general interest to anyone interested in global social justice, but also to A-level sociology students taking the Global Development option in their second year.

Further Reading

Structural adjustment programmes – more harm than good for African development?  A useful blog post analysing the reasons why SAPs generally didn’t work in Africa, from 2015

The Role of the World Bank in International Development

The world bank provides aid and loans to help the development of the poorest countries, but it has many critics!

The World Bank’s main function is to provide long-term loans to developing countries for development. These loans support a wide array of investments in such areas as education, health, infrastructure, agriculture, and environmental and natural resource management.

The World Bank was established in 1944, towards the end of of World War Two with the intention of lending money to help countries rebuild after the war, and over the years ‘evolved’ into one of the main institutions which provides aid and loans to developing countries more generally.

Historically it is most closely associated with Modernisation Theory but in more recent decades it has adopted a more neoliberal agenda.

the-world-bank
The World Bank headquarters in Washington D.C.

According to the World Bank’s web site:

The World Bank Group has set two goals for the world to achieve by 2030:

  • End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%
  • Promote shared prosperity by fostering the income growth of the bottom 40% for every country

The World Bank is not a bank in the ordinary sense but a unique partnership to reduce poverty and support development. The World Bank Group comprises five institutions managed by their member countries.

Since the 1980s the World Bank’s primary role in development seems to have been in promoting free-market pathways to development, focusing primarily on GDP growth as the most important indicator of development. However, more recently there has been more of an emphasis on poverty alleviation and and improving social development, as well as making countries resilient to global challenges such as climate change and pandemics. .

Donor Countries and Countries viable for World Bank Assistance 

The World Bank is funded primarily by the governments of the world’s richest 60 developed nations, and the amount each country provides is broadly related to its GDP – the USA is the largest donor, for example, having contributed $1.5 billion, while the UK is third, with a contribution of just under $900 million (2010 figures). NB It’s worth noting that the amount of money channeled through the World Bank is increasing.

world-bank-commitments

This means that the remaining 130 countries, mostly outside of Europe, are eligible for development aid through the World Bank.

World Bank recpient countries.png
Countries eligible for World Bank Assistance 2016

The Scale Development Assistance Given by the World Bank

In 2016 the World Bank made over $64 billion dollars of commitments to developing countries, broken down by region below (World Bank Annual Report, 2016)

world-bank-commitments

So what does the World Bank actually do to promote development?

TBH it’s difficult to say – exactly what the World Bank does in each country depends, to an extent, on that country’s level of development. To check out what the World Bank does in each country, and for progress, see the World Bank’s country pages.

Historically, the World Bank has had a Neoliberal Development Agenda

Despite there being different development programmes in different countries, since the 1980s, the World Bank has generally favoured a neoliberal approach to development by offering loans only if developing countries adopt neoliberal policies such as the privatization of public services, deregulation, lowering taxation, and developing an export-driven (rather than a subsistence) economy (Chapman et al, 2016).

The World Bank and Structural Adjustment Programmes (SAPs)

Structural Adjustment Programmes (SAPs) are one of the main policy vehicles through which the World Bank and the IMF* have sort to encourage economic development in poorer countries. They basically involve encouraging poorer countries to adopt a neoliberal pathway to development, favoouring free-trade. 

Structural Adjustment Programmess were first introduced by the World Bank and the IMF in the 1980s in response to a debt crisis in Africa in the 1970s. Under SAPs, countries are able to get loans from the IMF or the World Bank if they accept conditions, which usually consist of adopting neoliberal policy reforms.

How did SAPs intend to fuel development?

SAPs required numerous developing countries to introduce the following neoliberal policies, which favoured free-market capitalism.

  1. Lower taxation, especially on profits – to provide incentives businesses and attract international investment.
  2. Privatisation of public services – neoliberals believe that state run services (such as health and education) are inefficient, privatising them means handing them over to private companies to run, which should deliver better services for cheaper because they’re more concerned with cost-cutting to maintain and increase profit.
  3. Deregulation – which included reducing the rules surrounding minimum wages, environmental legislation and health and safety, all of which make it more difficult to do business.
  4. Refocusing the economy to favour production for export rather than ‘import substitution’ –  many SAPs encouraged developing countries to invest money in ‘export processing zones’ which were special areas (typically near ports) which TNCs could move into to manufacture goods cheaply for export, taking advantage of the cheap labour in poorer countries, rather than spending money supporting smaller,  local industries producing goods for domestic consumption. A good example of this is provided through the current case study of Malawi. The World Bank’s web site says: ‘With support from the World Bank and other donors, the Malawi government has been developing a new national agricultural policy to refocus smallholder subsistence farming to commercial approaches’.

So What is the role of the World Bank in International Development?

Historically we can certainly say that the World Bank has made considerable efforts to support free-market capitalism, and some of its policies do seem have benefited some developing countries, such as the IDA graduates.

However, unfortunately for the World Bank, there is a lot evidence that many of its policies have not helped developing countries at all and numerous critics argue that its interventions in poor countries have actually made things worse for a lot of people, which is covered in a later post….

Signposting and Related Posts

The World Bank is one of the main global institutions students need to know about for the Global Development module, one of the options in the second year of A-level sociology.

Generally speaking, the World Bank is supported by Modernisation Theorists but criticised by all other theories of development.

Immediately after reading this post you should read this post on the Criticisms of the World Bank.

Further Reading

Structural adjustment programmes – more harm than good for African development?  A useful blog post analysing the reasons why SAPs generally didn’t work in Africa, from 2015

The World Bank’s Malawi page

The New Rulers of the World – A Summary

The New Rulers of the World (2001) by John Pilger provides a good example of a Dependency Theory analysis of the consequences of neoliberal globalisation, focusing on Indonesia as a case study.

The fact that this is a dependency view of development is quite clear from John Pilger’s own summary of the documentary:

“There’s no difference between the quite ruthless intervention of international capital into foreign markets these days than there was in the old days, when they were backed up by gunboats…. The world is divided between the rich, who get richer, and the poor, who get poorer, and the rich get richer on the backs of the poor. That division hasn’t changed for about 500 years” (the link above will take you to this quote)

Below I provide a brief summary of the documentary. The documentary is 15 years old now, but it provides a very useful introduction to the following concepts within global development.

  • It provides an unambiguous example of a Dependency Theory analysis of underdevelopment in one country – Indonesia
  • It’s an especially useful analysis of neo-colonialism – how economic institutions now work to extract wealth from a poor country.
  • It introduces you to the role of the World Bank and the International Monetary Fund in an accessible way.

NB this documentary is now over 15 years old, so you might like to think about the extent to which it still applies to Indonesia 15 years on, and the extent to which you can generalise this analysis to other countries today. 

(NB – the headings below are my own, not from the documentary)

John Pilger – The New Rulers of the World – intro section 

In recent months, millions of people around the world have been protesting against a new economic order called globalisation.

Never before has the human race enjoyed such enormous capacity to create wealth and reduce poverty, but never before has inequality been so great.

A small group of individuals controls more wealth than the billion people in Africa, and just a handful of corporations dominate a quarter of the world’s economic activity – for example General Motors is now bigger than Denmark.

The famous brands of almost everything are now made in poor countries, with wages so low it borders on slave labour.

Tiger Woods is paid more money to promote Nike than the entire workforce in Indonesia are paid to make Nike products.

Is this the new global village we’re told is our future, or is this an old project, that used to be run by the divine right kings, but is now run by the divine right of corporations and the government s which back them?

This film is about the New Rulers of the World – and especially their impact on one country – Indonesia.

Indonesia –history/ background

indonesia-underdevelopment

Indonesia is where the old imperialism meets the new. This is a country which should not be poor as it is rich in natural resources such as oil and gold, copper,  timber and the skills of its people.

It was first colonised by the Dutch in the 16th century, and plundered by the west for hundreds of years, a debt which is yet to paid back.

Pramoedayo Ananta Toer (ex political prisoner)

“For hundreds of years Indonesia and many other countries were sucked dry by the European countries, who became strong, and the masters of finance and commerce, and now they are dictated to by the World Bank and the IMF – Indonesia has been turned into a country of beggars because its elite is spineless.

George Monbiot (well-known environmentalist)

“We’re told that globalisation is going to bring us all together and help combat poverty but what we’ve actually seen is the opposite – the poor are becoming poorer, and the wealthy are becoming staggeringly wealthy”.

Rich and poor in Indonesia

world-bank-indonesia

The World Bank famously called Indonesia a ‘model pupil’, a success story of economic growth.

To illustrate this success the video now cuts to a lavish wedding between two merchant families – these are the elite who have reaped the benefits of globalisation –the freedom to earn money and let that money make more money.

However, Indonesia is also a very unequal country and only a relatively few people have benefited from this economic growth: 70 million people live in extreme poverty – and they’ve calculated that it would take one of the waiters working at the wedding 400 years to pay for such a wedding.

The lavish wedding is contrasted to an Indonesian labour camp less than 5 miles way where young people make the cheap consumer goods we consume in the west.

This is the backyard of global capitalism, the side we don’t see, the human price we pay for the cheap goods we buy. The average worker here gets £0.72 a day, the minimum wage in Indonesia, just over half a living wage (according to the government).

Dormitories are made from breeze blocks, they flood when it rains, and open sewers spread diseases which kill children.

The labour camp is set in an economic processing zone, which is basically a vast area of sweat shops.

Investigating Poor Working Conditions in Indonesia

GAP sweatshop.jpg

The documentary crew posed as fashion buyers to gain access and secretly filmed in one factory, and also conducted dozens of interviews with workers in these factories.

Working conditions are claustrophobic, frenzied, the workers fatigued, and working under strip-lighting in temperatures of up to 40 degrees (the management however have air conditioned offices.

They also have horrendous working hours – which can be upped when deadlines for orders are due. The workers are typically young women and one worker is on camera saying that she once worked a 24 hour shift with no breaks.  She says she is too scared to refuse or even question the working hours.

These factories are owned by Taiwanese and Korean contractors who take orders from companies such as GAP (whose products were made in the above factory where the workers are paid extremely low wages).

GAP has codes of conduct which are supposed to apply to working conditions globally, and GAP representatives do visit the factories, but the workers interviewed say they are warned by management to not tell them about forced overtime.

Dita Sari – Trade union leader

Points out that codes of conduct are meaningless in a country like Indonesia because there is high unemployment and terrible poverty, so the people are desperate enough to put up with dismal working conditions, and the government is unwilling to enforce the codes because they want Indonesia to be as attractive as possible to international companies (which means keeping labour cheap).

If you pay £8.00 for a pair of boxer shorts, then an Indonesian worker will receive approximately £0.04 pence of that.

In the previous year, the profits of gap were just short of £2 billion, and the CEO ‘earned’ £5 million, figures typical of many multinational companies.

For the sake of the documentary, they had to keep the factories anonymous, because the workers would have Victimisation from contractors and violence from anti-unionists.

Barry Coats – World Development Movement

We should aim to be better informed as consumers – when we buy something, we need to ask the company where it was produced and to give assurances that the workers are treated fairly.

The secret history of globalisation in Indonesia

president_suharto_1993
President Suharto – The most corrupt leader in modern history, according to Transparency International, having embezzled an estimated $15-35 billion during his rule

In the 1960s General Suharto seized power in Indonesia secretly backed the United States and Britain.

Suharto removed from power the founder of modern Indonesia, Sukarno – a nationalist who believed in economic independence for the country. He had kept the Transnational Corporations and their agents, the World Bank, and the IMF, out of the country, but with Suharto coming to power they were called back in to ‘save’ Indonesia.

This regime change was one of the bloodiest mass murders in post WW2 history, with more than a million people estimated to have died in the process. Suharto took brutal steps to consolidate his power by rounding up thousands and thousands of civil servants, school teachers and basically anyone with communist leanings and murdering them.

He did this with the support of the CIA, who provided a list of 5000 people they wanted dead, and the British ambassador at the time suggested a little shooting was necessary to ease the transition, while British war ships played a supporting role in protecting Indonesian troops.

Within a year of Suharto’s coming to power the economy of Indonesia was effectively redesigned, giving the west access to vast natural resources, markets and cheap labour, what Nixon called ‘the greatest prize in Asia.

The American press reported these events not as a crime against humanity, but in terms of ‘The West’s best news for years’.

In 1967 – a conference in Switzerland planned the corporate take-over of Indonesia, with most of the world’s large international companies represented, such as ICI, General Motors and American Express. For western business this was the start of the gold rush which later became known as globalisation, and barely anyone mentioned the million dead Indonesians.

Professor Jeffrey Winters

Has never heard of a situation like this where global capital holds a meeting with the state and hammered out their interests. The conference lasted for three days – and the companies present hammered out policies which would be acceptable to them on a sector by sector basis. They basically designed the legal infrastructure for investment in the country.

It basically becomes clear from a series of interviews, despite their evasiveness, that the international business community new they were dealing with a nepotistic mass murderer.

Globalisation – the British arms connection

Globalisation began in the 1980s when Margaret Thatcher dismantled manufacturing and poured billions of pounds into building up the arms industry. Suharto was an important customer for the UK arms industry at that time, and sales to Indonesia were supported by ‘export credits’, in other words, a large part of Suharto’s arms bill was paid for by the British tax payer.

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The Queen – entertaining the mass murderer and dictator general Suharto

So important was Suharto to British arms exporters, that he was welcomed to London by the Queen.

The World Bank and the IMF – The New Rulers of the World

Who are the new rulers of the world? Their empire today is greater than the British Empire ever was. Basically they are the World Bank, and the International Monetary Fund, two bodies which are the agents of the richest countries on earth, especially America.

Initially set up to help rebuild European economies after WW2, they later they began offering loans to poor countries, but only if they privatised their economies and allowed western companies free access to their raw materials and markets.

Barry Coates

Debt has been used by an instrument by the World Bank and IMF to get their policies implemented. The poorest countries are in a cycle of poverty, and current debt-reduction (not forgiveness) is not sufficient to allow them.

Susan George

The difference between Tanzania and Goldman Sachs

Tanzania – is a country with a GDP of $2.2 billion shared among 25 million, Goldman Sachs is an investment bank with profits $2.2 billion dollars shared among 162 partners.

The World Bank says its aim is to help poor people, calling this gobal development. It’s an ingenious system, a sort of socialism for the rich and capitalism for the poor – the rich get richer on running up debt, cheap labour and paying as little tax as possible, while the poor get poorer as their jobs and public services are cut to pay just the interest on the debt owed to the World Bank.

Here in Indonesia, the hand-outs to the rich have been extra-ordinary, internal documents from the World Bank confirm that up to a third of the banks loans went into – around $8 billion.

The 1998 Financial Crash, the End of Suharto and Indonesian Debt Repayment

Globalisation means that capital (big money) can be moved anywhere at any time, without warning.

In 1998 short-term capital was suddenly pulled out of Asia, collapsing the miracle economy overnight. This actually benefitted Nike in Indonesia, because they ended up labour costs were cut to 25% of what they had been previously.

With the economy collapsed, and Indonesia on the verge of revolution, Suharto was forced to step down, having already stolen an estimated $15 billion.

During his reign of more than 30 years, Suharto had handed out public utilities to his family and cronies, driving from Jakarta airport, you actually paid a toll to Suharto’s daughter.

Interview

The bank presents itself as an economic development agency, focusing on poverty reduction, but in fact, the bank operated during the entire cold war as an institution which distributed money to mainly authoritarian regimes in the third world that supported the West in the Cold War.

The Indonesian elite instigated many development projects with World Bank loans during Suharto’s 30 year reign, and many of them were seen as opportunities to skim money for themselves. In total, $10 billion remained unaccounted for out of $30 in loans. Of course the debt remained, and still had to be paid back to the World Bank.

According to the auditor general of the World Bank, if the citizens of Indonesia made a legal challenge against the World Bank over the remaining debt (given that they never received the money), the World Bank would be bankrupt, because this has gone on the world over.

Interview with Chief Economist of the World Bank – Nicholas Stone

In response to the question of how the World Bank didn’t realise that $10 billion of aid money to Indonesia had gone missing, his response was firstly to deny any knowledge of the $10 billion figure, then (on having been shown the World Bank’s own report) to say that figure was made up. He finally argued that progress had been made during Suharto’s regime if we look at literacy and infant mortality figures, even if the numbers in poverty had doubled from 30 million to 60 million.

When asked why there was such a silence over the atrocities of Suharto, he simply said the World Bank got it wrong, and they will get it wrong in the future too.

Dita Sari

Globalisation creates debts, creates misery, creates crisis, and creates privatisation, which pushes up the prices people have to pay for basic goods. In effect the money stolen by the Suharto regime is being paid back by the people who never benefited from that money.

Debt and the International Monetary Fund (IMF)

Every day nearly $100 million is transferred in debt repayments from the poorest countries to the richest, it is a debt that can never be paid back, given that half the world’s population live on less than $2 a day.

Interview with Stanley Fischer, from the International Monetary Fund

John Pliger asks whether debt cancellation should be a priority if we are to alleviate poverty, given that some countries spend half their GDP on debt repayments.

Fischer argues that we should not necessarily cancel their debt – we should rather look at the policies on education and health, and look at what sort of economies they run – do they integrate into the world economy, or do they run corrupt economies.

Fischer basically argues that countries need to repay their debts because they need to keep more resources flowing into their countries, and if they don’t repay them, they’ll never be leant to again. He sees debt as a ‘normal’ part of expanding enterprise and increasing economic growth.

NB – The subtext to the interview is that Western financial institutions depend on the debt repayments being kept up too.

Dita Sari

(In order to keep up debt-repayments) the government, as recommended by the IMF. has cut subsidies on electricity, water and education, which means that the workers have to pay more their children through school.

Now people now eat two meals rather than three meals a day.

Protests at the World Trade Organisation

Two years ago, protestors from all over the world converged on Seattle at a meeting of the World Trade Organisation….

Evaluation – How Valid are the Findings of this Documentary Today?

The documentary makes the following claims, all of which are worth investigating to see if they are still true today….

  1. The rich are getting richer and the poor are getting poorer
  2. 200 Corporations control 25% of world economic activity
  3. The World Bank and the IMF dictate economic policy to poor countries
  4. These economic policies are shaped by the 200 (or so) largest global corporations and work in their interests, not in the interests of the majority of people in poor countries.
  5. There is a small elite in poor countries which benefit from these economic policies and enforce them, against the interests of the majority.

I’ll provide a summary of the rest at a later date… In the meantime, you might like to actually watch the rest of it! 

Related Sources

The New Rulers of the World – video on John Pliger’s website

The New Rulers of the World – the book!

 

The Millennium Development Goals – How Much Progress was Made?

The Millennium Development Goals (MDGs) were adopted by 189 nations during the UN Millennium Summit in September 2000. Eight MDGs were developed which responded to the world’s main development challenges.

millennium-development-goals

The goals ranged from halving extreme poverty rates to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015 – form a blueprint agreed to by all the world’s countries and all the world’s leading development institutions.

They have so far galvanized unprecedented efforts to meet the needs of the world’s poorest. The UN is also working with governments, civil society and other partners to build on the momentum generated by the MDGs and carry on with an ambitious post-2015 development agenda.

The MDGs aimed to measure development in eight categories, using 60 separate indicators. The final two goals were aimed more at developed countries, aiming to monitor things such as carbon dioxide emissions, development aid donations and fair trade rules.

Following the success of the eight MDGs, they have since ‘developed’ into seventeen global goals for sustainable development

The Global Goals for Sustainable Development

Sustainable Development Goals.jpg

The Millennium Development Goals – Progress to 2015 (selected)

The infographics below provide the headlines….

mdgs_infographics_english-mdg1

mdg 2 education.jpg

mdg3 gender equality.jpg

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mdg 5 reproductive health.jpg

mdg 6 disease.jpg

MDG7 drinking water.jpg

mdg-8-official-development-aid

And some further MDG achievements….

  • The proportion of undernourished people in developed regions  halved between 1990 and 2015.
  • In 1990, nearly half of the population in the developing regions lived on less than $1.25 a day. This rate dropped to 14 per cent in 2015.
  • The average proportion of women in parliament has doubled
  • The net loss of forests has reduced from an average of 8.3 million hectares annually in the 1990s to an average of 5.2 million hectares annually between 2000 and 2010.

 

Remaining Development Goals (selected)

  • At the global level more than 800 million people are still living in extreme poverty
  • Globally, an estimated 795 people are malnourished
  • Globally, 300 million workers lived below the $1.25 a day poverty line in 2015.
  • The proportion of the working-age population that is employed – has fallen from 62 per cent in 1991 to 60 per cent in 2015.
  • In countries affected by conflict, the proportion of out-of-school children increased from 30 per cent in 1999 to 36 per cent in 2012.
  • Globally, about three quarters of working-age men participate in the labour force, compared to half of working-age women.
  • Women continue to experience significant gaps in terms of poverty, labour market and wages, as well as participation in private and public decision-making
  • Between 1990 and 2012, global emissions of carbon dioxide increased by over 50 per cent.

 

The map below shows the regions where most and least progress was made over the 15 years of the Millennium Development Goals.

mdgmap-620x3991
Sub-Saharan Africa remains the region where the most progress is to be made.

Some strengths of the MDGs as indicators of development

  • Much broader range of indicators (60) – more validity! – Good for professional development workers!
  • Includes the developed nations (these also have targets – 7 and 8 especially)
  • NB – These have now become the ‘sustainable development goals’.

Some limitations of the MDGs as indicators of development

  • Not very ambitious – halving poverty by 2015, given up on the idea of ‘economic growth’.
  • Problems with some indicators – e.g. ‘finishing primary school’ doesn’t tell us about quality of education or how many days actually spent in school.
  • Do the MDGs lack ambition?

Sources Used

The main source used to write this post was the United Nations ‘Millennium Development Goals Progress Page’.

http://www.un.org/millenniumgoals/

http://www.un.org/millenniumgoals/multimedia.shtml

Further Reading

United Nations: The Millennium Development Goals Report 2015

Click to access MDG%202015%20rev%20(July%201).pdf

Click to access MDG%202015%20PC%20final.pdf

Post-Development Perspectives

The Post-Development Perspective became popular in the 1990s. Theorists from within this perspective are critical of Western models of development, arguing that development was always unjust, that it never worked, and that developing countries should find their own pathways to development.

Post-Development as a Rejection of the West
Post-Development as a Rejection of the West

Escobar (2008) criticised modernisation theory for being ethnocentric. He argued that it was only ever interested in making poor countries like rich countries and was dismissive of many ancient philosophies and traditions which had worked in poorer countries for thousands of years. According to Escobar this is both arrogant and disrespectful, and created the potential for opposition and conflict.

Escobar argued that the Western model of development justified itself by claiming to be rational and scientific, and therefor neutral and objective. However, in reality, modernisation theory was a top-down approach which treated people and cultures as abstract concepts and statistical figures to be moved up and down in the name of progress. Modernisation theory effectively denied people within developing countries the opportunity to make their own choices and decisions.

Sahlins (1997) argues that Western Aid agencies often incorrectly assume that people who lack material possessions are in poverty and are unhappy. However, he argued that people in developing world may have few possessions, but this does not necessarily mean they are poor. They may actually be happy because they belong to a supportive community and they have the love of their family. This idea has been practically applied in Bhutan where development is measured in terms of Gross National Happiness, rather than Gross National Product.

Other post-development thinkers argue that modernist explanations of underdevelopment have rarely sought contributions from sociologists and economists who actually live in the developing world. McKay argued that development strategies are too often in in the hands of western experts who fail to take account of local knowledge or skills and that development often has little to do with the desires of the target population.

Post-Development sociologists further argue that Western models of development have created a diverse set of problems for the populations of developing societies. Indigenous peoples have been forcibly removed from their homelands, grave environmental damage is being done to the rainforests, children’s labour is being exploited and aggressive marketing of unhealthy products is taking place all over the developing world, all in the name of achieving economic growth and the name of progress.

Some post development sociologists conclude that development is a hoax in that it was never really designed to deal with humanitarian problems, rather it was about helping the industrial world, especially the United States to maintain its economic and cultural dominance of the world.

Consequently, post-development thinkers argue we need alternative models of development rather than the industrial-capitalist model promoted by western countries.

Post-Development Perspectives – How should developing countries develop?

Korten (1995) argued that development needs to be more ‘people centred’ – which means given people more of a say in how their communities (and countries) develop and getting them to play more of a role in the process of development.

Similarly Amartya Sen (1987) argues, development needs to be about giving people independence so they have real power and choice over their day to day situations, it shouldn’t be ‘top down’ coming from the west, via governments and then trickling down to the people.
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People Centred Development theorists also have a much broader conception of what ‘development’ could actually mean. They don’t believe that development has to mean them becoming more like the West and development shouldn’t be seen in narrow terms such as industrialising and bringing about economic growth, development projects should be much smaller scale, much more diverse, and much more coming from the people living in developing countries.

Because of its support for diversity, there are many different paths to development within the Post Development/ People Centred Development perspective. Examples include:

  • Socialist models of development – where governments control most aspects of economic life – such as in Cuba
  •  The Islamic model of development – adopted by Iran – where ‘development’ means applying Islamic principles to as many aspects of social life as possible, rather than focussing on economic growth as the primary goal.
  • Indigenous peoples maintain traditional lifestyles, effectively rejecting most of what the west has to offer is also something post-development perspectives support, as in the example of Bhutan

gross-national-happiness

Appropriate Development

Post-development perspectives aren’t against charities or western governments giving aid, but they want aid to be ‘appropriate’ to local communities where development is taking place. Thus this perspective generally supports the thousands of small scale fair trade and micro finance projects around the world are good examples of PCD style projects embedded in a global network.

Criticisms of Post-Development Perspectives

All the other theories argue that, eventually, if a poor country really wants to improve the lives of its people en masse in the long term, it needs money, this can only come from industrialisation and trade, is it really possible to improve standards of living through small scale projects?

Focussing solely on small scale development projects still leaves local communities in developing countries relatively poor compared to us in the West, is this really social justice?

In a globalising world it simply isn’t realistic to expect developing countries (such as Bhutan or groups living in the Rain Forest) to be able to tackle future problems if they remain underdeveloped – eventually population growth or climate change or refugees or drugs or loggers are going to infiltrate their boarders, and it is much easier to respond to these problems if a country has a lot of money a well functioning state and a high level of technology.

Post-Development perspectives are too relativistic – is it really the case that all cultures have equal value and diverse definitions and paths to development should be accepted? Do we really just accept that patriarchy and FGM are OK in places like Saudi Arabia and Somalia because that’s what their populations have ‘chosen’?

Related Posts

‘People Centred Development’ is closely related term to Post-Development – for the purposes of A level sociology, you can effectively treat them as the same thing!

Modernisation Theory was one of the main theories of development which Post-Development perspectives criticise:

Further Reading

Arturo Escobar – a post-development thinker to be reckoned with (Guardian Article)

This is a useful blog post on post-development perspectives

Sources

This post was mainly written using the following source:

Aiken D, and Moore, C (2016) AQA A Level Sociology Student Book 2, Collins.

 

 

Equatorial Guinea – High Income but Low Human Development (2017)

equatorial-guineaSince the 1990s, Equatorial Guinea has become one of the largest oil producing countries in Sub-Saharan Africa, and it is now the richest country per capita in Africa. It ranks 43rd in the world for gross domestic product per capita.

However,  the oil revenue is distributed very unequally and most people see no benefit from the high GDP. the country ranks 144th on the UN’s 2014 Human Development Index.

What this means is that Equatorial Guinea fails to convert a relatively high income into high life expectancy and formal education for its people.

 

hdi-eq
Equatorial Guinea – High GNI per Capita, Low Human Development (1)

 

Equatorial Guinea – Why High Income but Low Human Development?

For starters – Equatorial Guinea has been ‘blessed’ with a natural supply of oil and gas.

Most of the country’s income comes from oil and gas exports, as the export tree-map below shows (2012 figures)

Equatorial_Guinea_Export_Treemap.jpg

However, the income doesn’t trickle down because of an autocratic government which controls the oil industry and uses the revenue to enrich itself and keep itself in power. 

The current president of Equatorial Guinea is Teodoro Obiang, he has been quite literally running the country for three decades. He has extensive powers, including naming and dismissing members of the cabinet, making laws by decree,  negotiating and ratifying treaties and serving as commander in chief of the armed forces.The anti-corruption lobby Transparency International describes Obiang as one of the world’s “most kleptocratic” living autocrats and has put Equatorial Guinea in the top 12 of its list of most corrupt states.

The advocacy group Global Witness has been lobbying the United States to act against Obiang’s son, Teodorin, who is vice-president and a government minister. It says there is credible evidence that he spent millions buying a Malibu mansion and private jet using corruptly acquired funds.

During the three decades of his rule, Obiang has shown little tolerance for opposition. While the country is nominally a democracy, elections have generally been considered a sham. According to Human Rights Watch, the dictatorship of President Obiang has used an oil boom to entrench and enrich itself further at the expense of the country’s people. 

There’s also the fact that The U.S. Government and U.S. Corporations Support Obiang

Without the help of international oil corporations, it’s unlikely that Equatorial Guinea would have been able to drill for oil – think about it, drilling for oil requires heavy industry and lots of investment.

Exon Mobile, the USA’s biggest oil company, has been operating in Equatorial Guinea since the mid 1990s and controls a 75% stake in Equatorial Guinea’s most productive oil field, which produces 270 000 barrels of oil a day (the market value of oil is currently $50 a day, which means this one field returns a revenue of around $1.4 million a day, or around $400 million a year).

NB the government (which basically means Obiang’s family) only controls a 5% stake of this particular field, but this tiny stake from this one oil field returns them something in the region of $300 000 a day, and there are many more oil fields.

Despite his dismal human rights and corruption record, Obiang was recently invited (in 2014) to a U.S. African summit – along with a whole load of other human rights abusers on the continent. The general gist of the article is that the U.S. is tolerant of corrupt governments in Africa because if they don’t do business with them, then the Chinese will, there’s also the fact that they might be useful in combating Islamic extremism.

Related Posts (forthcoming)

This country case-study is also useful for illustrating how TNCs are not interested in promoting social development in other parts of the world.

(1) You’ll notice from the graph above that Cuba is a good example of a country which has a relatively high human development compared to its GNI per capita, more on that later. 

 

 

The Human Development Index

The United Nations uses The Human Development Index (HDI) as a summary measure for assessing long-term progress in three basic dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living. It provides a useful ‘snap-shot’ of a country’s economic and social development.

HDI Scores in 2020

Dark Green is high ranging through to dark red which is low….

Source

The Human Development Index

The Human Development Index measures Human Development using four indicators

  • To measure health – Life expectancy at birth
  • To measure education – the average (mean) number years of adult education adults over 25 have received and the number of expected years of education children attending school can expect
  • To measure standard of living – Gross National Income per capita (PPP)

Each country is then given a rank from between 0 and 1 based on how well it scores in relation to ‘constructed minimum’ and ‘observed maximum scores for each of these criteria. The minimum and maximum scores for each criteria are as below

 Minimum scores*Perceived maximums
Life expectancy at birth2083.2
Mean years of adult education adults over 25 have received013.2
number of years of education children attending school can expect020.6
Gross National Income per capita (PPP)163108, 211

(*This is the level below which the UN believes there is no prospect for human development!)

How does the HDI work out a country’s score? – it’s quite easy – if a country has a life expectancy of 83.2, and all the other maximums, it would score one, if it had a life expectancy of 20, and all the other minimums it would score zero. If it was half way between the minimum and maximum – it would score 0.5 – NB by the UK’s standards, this would be a pretty low level of human development!

The Human Development Index – Best and Worst Performers

Top

1 Norway0.954
2  Switzerland0.946
3 Ireland0.942
4 Germany0.939
4 Hong Kong0.939
6 Australia0.938
6 Iceland0.938
8 Sweden0.937
9 Singapore0.935
10 Netherlands0.933

Towards the Bottom 

179 Congo, Democratic Republic e0.459
180 Mozambique0.446
181 Sierra Leone0.438
182 Burkina Faso0.434
182 Eritrea0.434
184 Mali0.427
185 Burundi0.423
186 South Sudan0.413
187 Chad0.401
188 Central African Republic0.381
189 Niger0.377

What do the scores above mean?

  • If a country scores 1-0.788 it is classified as a ‘developed country’ with ‘high human development’ – as are 42 countries – most European countries come into this category. These are typically the countries with GNIs of $40K per capita or more, 13 full years of education and 80+ life expectancies.
  • If a country scores 0.48 or lower it is classified as having Low human development – e.g. Sierra Leonne – here you will see a GNI per capita of below $1000, 10 years or less of school and life expectancies in the 60s.

Advantages of the Human Development Index

  • It provides us with a much fuller picture of how well developed a country is, allowing for fuller comparisons to be made.
  • It shows us that while there is a general correlation between economic and social development, two countries with the same level of economic development may have different levels of social development. See below for examples.
  • Some argue that this is a more human centred approach, concerned more with actual human welfare than just mere economics. It gets more to ‘the point’ of economic development.

Two Limitations of the Human Development Index

  • Relying on the HDI score alone may disguise a lack of social development in a country – for example a very high GNI can compensate for poor life-expectancy, as is the case in the United States.
  • It is still only provides a fairly limited indication of social development – only health and education are covered – there are many other ways of measuring health and education.

Economic Indicators of Development

International organisations such as the World Bank prefer to measure development using economic indicators. There are three main economic indicators which are used to give an indication of the overall economic health of a country.

This post has primarily been written for students studying the Global Development option for A-level Sociology.

Three Economic Indicators of Development

  • Gross Domestic Product (GDP) is the total economic value of goods and services (expressed in US dollars) produced within the borders of a country in the course of a year and available for consumption in the market place.
  • Gross National Product (GNP) is the same but includes the value of all services produced at home and abroad. A country such as Ghana will have a relatively similar GDP to GNP because it doesn’t have many companies which produce things abroad: most production takes place within Ghana. America, on the other hand, which is where many Transnational Corporations are based, has a much higher GNP than GDP – Think about MacDonald’s for example –all of those Big Macs sold outside of the USA won’t appear in the GDP of the USA but will appear in the GNP.
  • Gross National Income (GNI) a hideous oversimplification of this is that it’s ‘Gross Domestic Product + the additional income that self-employed people pay themselves +income received from abroad’. This matters to a lot of developing countries who don’t produce much but have large diasporas, or populations living permanently abroad. Take Gambia for example (the country Paul Mendy takes your old toys to at Christmas) – 1/6th of its GNI is from money sent by relatives who abroad, this would not be included in either GDP or GNP.

You get slightly different country rankings if you use GNP or GDP rather than GNI. Don’t worry too much about the differences between the above – with a few exceptions* most developing countries tend to have similar GDPs, GNPs and GNI*s.

GDP and GNI per capita in India
*If you look at India’s Gross Domestic Product, it is the 6th richest country in the world, but if you look at its Gross National Income per Capita, it falls to the mid 100s, due to its enormous population, abut also due to the fact that it consumes a lot of the goods it produces itself, so it doesn’t export much, so there’s not a lot of income coming into the country.

‘Per Capita’ and ‘Purchasing Power Parity’

  • Gross National Product Per Capita – GDP/ GNP are often divided by the total population of a country in order to provide a figure per head of population, known as GDP/ GNP per capita.
  • The cost of living varies in different countries – so one dollar will buy you a lot more rice in India than it would in America. Purchasing Power Parity figures for GNI per capita factor in the cost of living which is useful as it gives you more of an idea of the actual standard of living in that country for the average person.

Gross National Income Per Capita

This section provides a closer look different levels of ‘development’ according to this particular economic indicator. Remember, global rankings will vary depending on whether you use GNI, GNP, or GDP. 

One measurement of development The World Bank uses is Gross National Income (GNI), which can be crudely defined as the total value of goods and services produced in a country in a year plus any income from abroad. If you divide GNI by the number of people in the country, you get the average amount of income per person, or GNI per capita.

GNI per capita is widely regarded as a good indicator of the general standard of living in a country, and it is a good starting point for giving us an idea of the extent of global inequalities between countries. For example, the United Kingdom has a GNI per capita of about $43 000, while India has a GNI per capita of about $1600, which is more than 20 times greater.

The World Bank’s map of countries by Gross National Income per capita map is a useful, interactive resources to easily find out how most countries fair by this indicator of development. 

The World Bank’s Four Income Categories

The World Bank categorises countries into one of four categories based Gross National Income per capita (per head): high, upper middle, lower middle and low income countries.

  • High income = $12, 536 or more – about 60 countries, including most of Europe
  • Upper middle income = $4,046 – $12,535 – about 60 countries, includes South Africa and China
  • Lower middle income = $1,036 – $4, 045 – about 50 countries, mostly in Africa, includes India
  • Low income = $1,035 or less – about 30 countries, mostly in Sub-Saharan

Comparing countries by GNI per Capita and total GDP

Top ten countries – GNI per capita (source)

Monaco.jpg
Monaco -full of wealth people but for some reason no longer at the top of the GNI per capita rankings!

1 Liechtenstein116,4302009
— Bermuda (UK)106,1402013
2  Switzerland85,5002019
3 Norway82,5002019
— Macau (China)78,6402018
— Isle of Man (UK)75,3402017
4 Luxembourg73,9102019
5 Iceland72,8502019
— Channel Islands (UK)66,2302007
6 United States65,7602019
7 Qatar63,4102019
8 Denmark63,2402019
9 Ireland62,2102019
10 Singapore59,5902019

Top ten countries Total by Gross Domestic Product (source)

United States.jpg
The United States – ranked number 1 in the world for total GDP
1 United States20,807,269
2 China[n 2][n 3]14,860,775
3 Japan4,910,580
4 Germany3,780,553
5 United Kingdom2,638,296
6 India2,592,583
7 France2,551,451
8 Italy1,848,222
9 Canada1,600,264
10 South Korea1,586,786

Question to consider: Why do you think the top ten countries are so different when judged by total GDP compared to GNI per capita?

Evaluating the Usefulness of Economic Indicators of Development

Three Advantages of using GDP/ GNP/ GNI as an indicator of development

  1. GNI figures provide a snap-shot indication of the huge difference between the more developed and less developed countries. In 2016, the GNP per capita in the UK was $43000 while in India it was only $1600. This means that there is 20 times as much money per person in the UK compared to in India
  2. Gross National Income figures are also closely correlated with social development – generally speaking the higher the GNI per capita, the better the education and health indicators are in a country.
  3. Total GDP figures give us an indication of who the most powerful nations are on earth in terms of military power. It’s not a perfect correlation, but the USA, China, Russia and the UK are all in the top ten for GDP and they are the biggest arms producers and consumers in the world too.

Four limitations of using GDP/ GNP/ GNI as an indicators of development

  1. Quality of life (Social Development) may be higher or lower than suggested by GNP per capita.
  2. They don’t tell us about inequalities within countries. The USA has one of the highest GNPs in the world but some extreme poverty.
  3. A lot of production in developing countries may not be included. For example, subsistence based production is consumed locally in the community, and not sold in the market place. Similarly goods obtained illegally on the black market are not included in GNP measurement
  4. They are very western concepts, equating production and economic growth with development. Some countries may not want economic growth and have different goals (Bhutan)

The United States – economically developed but socially retarded? 

The USA is a good example of a country that demonstrates why we can’t rely on economic indicators alone to give us a valid indication of how developed a country is. Despite ranking number 1 for total GDP, the USA does a lot worse on many social indicators of development – See this post – ‘The USA – an undeveloped country?’ for more details.

Review Questions 

  • Define Gross National Income Per Capita and be able to identify some high income and lower income countries.
  • Explain the difference between GNI, GDP, GNP, and understand the significance of Purchasing Power Parity.
  • Outline three strengths of using economic indicators of development
  • Outline at least three reasons why GNP may not be valid measurements of ‘development’

Defining ‘Development’

International development professionals categorise countries into ‘more’ or ‘less’ developed. This post explores the meanings and origins of these terms, looking at the concepts of first, second and third world, before looking at the criticism that such systems of classification are ethnocentric, western constructions. 

This post has primarily been written for students studying the Global Development option for A-Level Sociology.

What is development?

least developed countries.gif

The term development is used in several ways, but most sociologists agree that development should mean, at the very least, improvement or progress for people who desperately need positive change in their lives.

The main debates about development are underpinned by modernity, meaning that development agencies such as the World Bank and the United Nations aim to replicate within developing societies the material and cultural experience of modern Western societies such as the United Kingdom and the United States.

Consequently, most sociologists believe that development is about achieving economic growth, and the positive consequences which have generally stemmed from that, such as improvements in life expectancy, mass education and social welfare.

This generally means that most countries in Europe are defined as being ‘more developed’ while countries in Sub-Saharan Africa tend to be defined as the ‘least developed’.

Nigeria, in West Africa is an example of a ‘less developed country’

Key Statistics 

  • Population: 207 million
  • GNI per capita – $2030 (2018)
  • Life Expectancy at Birth – 54 (2017)
  •  Infant Mortality Rate – 74/ 1000 live births
  • Literacy Rates – Male 71%, Female – 53%
  • Child Labour Rate – 43%
  • Urban Population – 51%
  • Main export – Petroleum
  • Best World Cup performance – round of 16 (2014).

A Global Hierarchy of Development

Many sociologists and geographers today use the following four categories to distinguish between different ‘levels’ of economic and social development.

CategoryKey features of countriesExamples
More economically developed countries   MEDCsThese are the wealthy industrial-capitalist countries which generally experience economic growth year on year. Their populations enjoy a good standard of living, which means high life expectancy of 80+ years, free primary and secondary education and access to good quality housing and consumer goods are the norm.Western European countries     The USA
Newly industrialized countries   NICsThese are the so-called ‘Asian-Tiger’ economies of which have rapidly industrialised in the past 40 years and which today have a large share of the global market in computers, electronics, plastics and textiles.China     South Korea
Less economically developed countries   LEDCsSocieties which have experienced extensive urbanization and therefor positive economic growth. However, the economies of these societies are also heavily dependent on agriculture, and extraction of raw materials. Poverty is still a big problem in many of these countries.Brazil,   India, Mexico Ghana
Least   economically developed countries LLEDCsThe poorest countries in the world, mostly in sub-Saharan Africa where absolute poverty is the daily norm. These societies experience low life expectancy of around 60 years, and high child mortality rates, linked to preventable diseases such as malaria. They also lack basic infrastructure such as roads, electricity and clean water. Many of these countries also experience high levels of conflict, which is both a cause and consequences of their underdevelopment.Sierra-Leone   Somalia DRCongo Afghanistan Bangladesh Haiti

Some development thinkers from the ‘post-development perspective’ have criticised the above system of categorisation for being an ethnocentric, Western perspective on development, because it implies that industrialised, wealthy nations are superior, and less economically developed countries in other parts of the world as inferior. The implication of this hierarchy is that all countries should aim to become more like those Western countries at the top.

Questions to consider:

  • In general, do you think that it’s fair to make the generalisation that European countries are more developed than Sub-Saharan African countries?
  • Should less developed countries strive to become more like Western, Industrialised countries?

The Origins of Western Ideas of ‘International Development’

The concept of rich countries helping poor countries to develop emerged after World War II in the context of the Cold War.

By the end of the Second World War many of the countries in Africa, Asia and Latin America had failed to develop and remained poor, and there was concern amongst the leaders of the western developed countries, especially the United States, that communism might spread into many of these countries, potentially harming American business interests abroad and diminishing U.S. Power.

The conventional way of seeing the world was to split it into first, second and third worlds

third_world_map.jpg
First WorldDescribed the industrialised capitalist world – the USA, Western Europe, Japan, Australia and New Zealand.
Second worldDescribed the industrialized communist world – The Soviet Union and Eastern Europe.
Third worldDescribed the rest of the world and covered a vast range of countries in different circumstances and at different stages of development, but what most of them shared in common was the fact that they lacked an industrial base, they had not gone through industrialization.

From the perspective of the developed first world, it was essential to encourage the poorer countries of Asia, Africa and Latin America to adopt a capitalist-industrialist model of development in order to prevent them from forming alliances with the communist second world. In short, development was seen as essential to halt the spread of communism.

The term ‘third world’ also made sense from the perspective of many of those in poorer countries: many countries wanted to pursue their own paths to development, without the ‘assistance’ of either the United States or Communist Russia.

It was immediately after World War Two that the main international institutions of development were established – such as The World Bank, the International Monetary Fund and the United Nations, and for decades, aid money was deliberately channeled to those countries most likely to ‘fall into the hands of the communists’.

Dependency Theorists and Post-Development Theorists (covered in a future lesson) have been critical of Western attempts to help third world countries develop. They argue that aid money and aid programmes have really been about maintaining western political and economic superiority, and less about helping poor countries actually develop,

However, since the collapse of communism in the 1990s, and thanks to significant reforms in the way aid money is distributed through international institutions, ‘development’ today seems to be more about actually helping poor countries develop and less about the west maintaining its political and economic superiority.

But there are those who argue that even today the international development agenda really has a deeper, political purpose, and ‘development’ is not necessarily about helping poor countries. For example a quarter of the UK aid budget goes to the military, and much of this is spent fighting.  Islamic extremists in Iraq and Afghanistan, which clearly has a political purpose, although you could just as easily argue that eradicating extremism is a necessary perquisite for any positive change to take place.

Questions to consider

Q1: Why where the countries of the first world concerned to help the countries of the first world develop after World War Two?

Q2: What is the ‘main purpose’ of the three development institutions mentioned above?

Q3: Why were some theorists critical of western attempts to help poor countries develop?

Criticisms of Western Constructs of Development

Writer Eduardo Galeano offers a (self-identified) third world perspective on ‘development’, which serves as a useful criticism of Western concepts of development. You should be able to find three criticisms of western ‘notions’ of development below. 

eduardo-galeano
Eduardo Galeano

It was the promise of the politicians, the justification of the technocrats, and the illusion of the outcast. The Third World will become like the First World – rich, cultivated and happy if it behaves and does what it is told, without saying anything or complaining. WE CAN BE LIKE THEM, proclaimed a gigantic illuminated board along the highway to development.

However, if the poor countries reached the levels of production and waste of the rich countries, our planet would die. Already it is in a coma, seriously contaminated by the industrial civilisation and emptied of its last drop of substance by the consumer society.

A further disadvantage with the Western notion of development is that it assumes that those countries that are more economically developed are better… i.e. more developed. In contrast, the developing world contains many worlds, the different melodies of life, their pains and strains: the thousand and one ways of living and speaking, thinking and creating, eating, working, dancing, playing, loving, suffering, and celebrating that we have discovered over so many thousands of years.

A further notion is that using terms such as ‘undeveloped’ implies that these countries are inferior and need help, it justifies intervention when this may not be wanted/ be perceived as interference.

Another, but substantially different, Third World approach to development was offered by the theory of self-reliance, put forward by Tanzanian President Julius Nyerere in 1967. The basic idea was self-reliance, or autonomy. It drew on the ideas of Mahatma Gandhi, who proposed a non-exploitative moral economics in which each level of society, from individual through village to state took only what was necessary and accumulation was perceived to be negative.

Case Study: The Island of Anuta

The island of Anuta, part of the Solomon Islands (population 300) seems pretty idyllic, but would these people be better off if they followed an industrial-capitalist model of development?

I first ‘discovered’ the island of Anuta thanks to the excellent BBC series Tribe, broadcast over a decade ago now. If you can track it down, the DVD is well worth a watch to see how things have changed for the islanders over the last decade.

Review Questions 

  • Outline some of the differences between the least and most developed countries on earth.
  • Explain where the terms ‘first world’, ‘second world’ and ‘third world’ came from, and some of the limitations of these concepts.
  • Outline three criticisms of ‘Western’ ideas of development

Sources

  • See the ‘about’ page for the main A-level text books I use as references, which are the ones the AQA draws on for the exam.
  • The stats above are taken from World Bank data
  • Eduardo Galeano: The Open Veins of Latin America.

America – A Less Developed Country?

The United States ranks either at the top, or very near the top on several of the main development indicators used by the World Bank and the United Nations, but if you look more closely you find that the United States might not be so ‘developed’ after all.

United States of America.gif
The U.S.A. – You don’t need to dig too deep to find squalor beneath the surface, in fact you don’t really need to dig at all!

This post starts out by exploring the seemingly positive indicators which suggest that the United States is one the most developed nations on earth, before looking at some other statistics and evidence which reveal the darker side of life in the United States, outlining some of the many areas where the U.S.A. looks very underdeveloped, despite its huge wealth and income.

Evidence for the apparent high levels of development in the United States

The U.S. ranks very high up the league tables for many economic indicators of development, such as Gross National Income, Gross National Product, and for total wealth. It also scores very highly in the United Nations Human Development Index which measure income, education and life-expectancy. 

Gross National Income and Gross Domestic Product 

The United States is the wealthiest country on earth by a long way, at least measured in terms of Nominal Gross National Income, where it’s GNI of $17 trillion is a long way ahead of second place China’s $10 trillion (2014 figures). GNI basically measures the value of goods produced in a country + wages earned abroad (fuller definition here). 

The chart below shows rankings by GDP (Gross Domestic Product) which measures economic output in a slightly different way  to GNI, but gives very similar rankings to the vast majority of countries when compared to the GNI rankings (see link above for the differences between GDP and GNI).

projected-gdp-nominal-ranking
Top 10 countries by nominal GDP (Gross Domestic Product) 2015

In terms of GNI per capita (GNI per person), the United States is also very near the top of the league table, coming 6th if we exclude the tax havens at the top, and the only country with a population over 200 million anywhere near the top.

Wealth Indicators 

According to Credit Suisse’s ‘World Wealth Report 2015‘, we see the same story in terms of wealth, where the Unites States remains one of the few countries with very high levels of wealth.

wealthiest-countries

The Human Development Index

If we take a slightly more in-depth look at the development levels of the United States, then according to Human Development Index (2015 figures) which gives countries a score based on a combination of GNI per capita, the average levels of education and life expectancy, the USA is in the highest ‘very high human development’ category and it still ranks an impressive 8th (the U.K. is 14th), and as with GNI per capita is the only country with a huge population in the top 10.

human-development-index-2015

 

Evidence of Underdevelopment in the United States

Despite its coming near the top of the league tables for many economic indicators, the U.S.A. comes much lower down many of the international league tables for social development, which suggests that the U.S.A. is failing to translate its enormous wealth and high levels of income into appropriate levels social development. 

The rest of this post explores the relatively poor performance of the United States in terms of social development (and I look at some more economic indicators too.)

The United States has VERY HIGH income and wealth inequalities 

According to the OECD, the USA was the third most unequal country in terms of income (2014 data).

The most graphic way of displaying this is through the GINI coefficient.  This ranks nations according to equality – A nation where every individual’s income is equal would have a gini index of 0. A nation where one individual gets all income, while everyone else gets nothing would have a gini index of 100.

To put this in terms which might be slightly easier to understand: In the USA, the top 20% of income earners take home almost nine times as much as the bottom 20% of income earners.

//www.compareyourcountry.org/inequality?cr=oecd&lg=en&page=0

(NB – The  U.K. isn’t much better – with the income of the top 20% being 6 times greater than the income of the poorest 20%.)

The graph below illustrates the increasing income inequalities in America – the share of national pre-tax income going to the top 1% has increased from around 13% to 21% (for only 1% of the population), whereas the share of income which goes to the bottom 50% has decreased from around 19% to 13%. America income inequality

In pre-tax income dollars, this means the top 1% earn an average of $1.3 million a year, while the bottom 50% of the American population earned an average of $16,000, which means that the top 1% earn 81 times the bottom 50%, compared to 1980 when it was only 27 times more.

Looking at post tax income, the difference isn’t so stark – the top 1% today earn 40* the bottom 50%, but again, if you look at the 40 year trend, the income of the rich has increased much faster than the income of the bottom 50%, whose income levels have more or less stagnated…

income inequality USA

If we look at the distribution of wealth in America, rather than income, there is an even higher degree of inequality. 

According to Allianz’s new Global Wealth Report (2015) which includes not just salary, but also property and investments held by a family found that America’s wealth inequality is even more gaping its income inequality.

wealth-inequality-usa
An approximation of the unequal distribution of wealth in America

The U.S. has $63.5 trillion, or 41.6% of the world’s private wealth (next to China with 10.5%, the U.K. is 4th with 5.6%), but the U.S. also has the largest wealth inequality gap of 55 countries studied, according to the report.

Allianz calculated each country’s wealth Gini coefficient — a measure of inequality in which 0 is perfect equality and 100 would mean perfect inequality, or one person owning all the wealth. It found that the U.S. had the most wealth inequality, with a score of 80.56, showing the most concentration of overall wealth in the hands of the proportionately fewest people.

This is a very useful video providing an infographical overview of wealth inequality in the USA (2016)

These statistics on income and wealth inequality are one of the main reasons why I think it’s fair to argue that America is in some ways an underdeveloped country – because such unequal distribution of income and wealth means the people at the bottom are effectively marginalised and don’t benefit from all that wealth and income sloshing about – what we effectively have are pockets of people who don’t benefit from the economic growth (‘development’) which the country as a whole has enjoyed over the past decades.

At least the bottom 20% (about 50 million of people in the U.S.A) face a daily struggle to get by, really only earning just enough for the basics of life – housing, heating, food, utilities, transport, maybe enough to save for birthday presents and a decent Christmas, but that’s pretty much it

Some grim evidence for this lies in the fact that 30 million Americans still can’t afford health insurance (Fiscal Times 2016), with a further 20 million only benefiting from it because of Obamacare (which may be Trashed following Trump’s election), which totals 50 million, or about 20% of the population. If 50 million people lack sufficient money for health care, they sure as hell won’t have enough money to fully participate in the full-blown joys of consumerism which is so much part of American culture.

So that’s 30 million (possibly soon to rise back up to 50 million) people within the United States, unable to access basic health care, just like in many poorer countries, which is pretty compelling evidence for labeling the United States ‘underdeveloped’. (NB if those 50 million people made up a country, it would be 28th most populated country on earth, out of 233).

On top of this, the relatively poor in America also have to contend with everyone else’s wealth and income being conspicuously consumed and displayed around them – on the streets, but especially in the media (if they’re stupid enough to watch T.V, which is most people), which adds an aspect of indignity into just earning enough to get by.

kim-kardashian-wealth
Kim Kardashian – making the rest of us feel even more worthless?

Of course if you were to compare the richest 10% with the bottom 10% the multiplier effect would be even greater, and it’s this section of the population which will be most likely to experience the many problems that come with poverty and extreme relative deprivation – facing the insecurity of flexible working conditions, living on sink housing estates, the threat of homelessness, the worries of debt, and living in the midst of higher crime areas.

15% of the population of America live below the official poverty line

Obviously related the above statistics, The Atlantic notes that the official US census data shows that ‘14.9 per cent of Americans, or almost 47 million people, falling below the poverty threshold of about $24,000 for the year.’ (2014 figures).

https://www.theatlantic.com/business/archive/2015/09/americas-poverty-problem/405700/

HOWEVER, the supplemental data shows that the true figure is slightly higher – standing at 15.3%.

USA poverty rates

America has relatively low life expectancy and healthy life expectancy

In 2016, the USA ranked a dismal 53rd for Life Expectancy, and the USA is one of only very few countries with ‘very high’ human development where the average life expectancy of the population is below 80 (you can see this in the Human Development Index table above), and in fact, according to the table below, there are several countries which are nestled alongside the USA, such as Puerto Rico and Cuba, which are considerably poorer but do much better on this key indicator of human development.

life expectancy rankings 2016.jpg

If you look at World Health Organisation data on healthy life  expectancy, then the relative development levels of the United States look even worse. There is a marked contrast between the USA and Europe European countries, which have similar levels of GNI per capita and education to the USA, have healthy life expediencies of 70+, while the United State’s healthy life expectancy languishes in the 65-69 bracket below, alongside the much poorer South American countries and China.Health LIfe Expectancy by Country.pngAmerica has 1.5 million children of primary-school age out of school

You might have thought that every industrialised, developed nation on earth had figured out how to keep 99% of its kids in school for 13 years or so, well America fails to do so. According to World Bank data,  it has a dismal primary enrolment rate of 93%, which slips down to 86% for tertiary education, and there are nearly 1.5 million children out of school (2014 figures)

 America is the 114th least peaceful country in the world

According to the Global Peace Index, America has witnessed the fourth largest decrease in peacefulness in last ten years, in terms of how far it’s regressed, it’s right next to Syria in the international league tables for the ten year decline in peacefulness.

America still has the highest military expenditure in the world

The Global Peace Index 2017 notes that: ‘The past year has been a deeply worrying one for the US, with the presidential campaign highlighting the deep divisions within American society. Accordingly, the score for intensity of organised internal conflict has worsened. Data have also shown a declining level of trust in government and other citizens which has generated a deterioration in the score for level of perceived criminality in society. Social problems within the US are also likely to become more entrenched and racial tensions may continue to simmer. Reflecting these tensions, rising homicide rates in several major American cities led to a deterioration in the homicide rate indicator, contributing to the decline in the US’s peace score.’

HOWEVER, the main contributing factor to America’s high violence rating is it’s continued high levels of expenditure on its military and heavy weaponry. Despite military expenditure declining in recent years, relative to other nations, the U.S. still spends a fortune on the machinery of violence.

On the subject of military expenditure…. America’s recent $110 billion arms deal with Saudi Arabia and support for their war against Yemen doesn’t help its peacefulness score. …

America’s War in Yemen

NB – This post is a work in progress, I’ll add to it at various points over the coming year… 

Things to follow….

The United States are by far the largest nuclear power producer, with 33.2% of the world’s total, followed by France (17.1%) and Russia (7.0%). The United Kingdom’s production accounts for 2.9%.

This also means that the United States is the largest producer of nuclear waste, including Plutonium, an essential ingredient in nuclear weapons.

Related Posts

What is the Global Peace Index

The Global Peace Index – What is it and How Useful Is It?

 

Sources 

World Development Indicator Maps

The difference between GNP, GDP and GNI (Economics Help)