November 2009

Development: What's next and what are we going to do about it?

We are now at a turning point in development thinking and practice, says Charles Gore, Special Coordinator for Cross-sectoral Issues at the United Nations Conference on Trade and Development.

A paradigm shift will occur in the next five years, however it may not be the one needed to re-boot the global development cycle in an inclusive and sustainable way.

Our task is to steer in the right direction. We should be midwives of a new era of development thinking and practice. Business as usual is not an option. 

This is an abstract from a presentation to the UKCDS Steering Board in October 2009.

Cycles of development

The global financial crisis of 2009 marks the ending of a 60-year global development cycle. During this long cycle, there were two periods of development thinking and practice, which each were about 30 years long.

What began in 1950 and continued through until 1980 was a period of national developmentalism which focussed on the liberation of peoples and economic growth. Economic development was understood as an essential aspect of the liberation of peoples and building of new nations, and this process was supported through foreign aid.

From 1980 up until now we saw an era in which the focus of policy has been global integration. This was prompted by the economic crisis of the early 1980s and the ideological revolution driven forward by Reagan and Thatcher in USA and UK. To manage the global fiscal and debt crisis, developing countries adopted structural adjustment programmes of liberalisation, privatisation and stabilization, a set of policies which later came to be known as the “Washington Consensus”. Economic development switched decisively from the liberation of peoples to the liberalization of economies.

In each of these periods, there has been an inflection in the latter stages of the 30-year period, with a shift towards redistribution with growth in the 1970s, and a focus on poverty and the Millennium Development Goals within the present decade. But each time the fundamental orientation - towards national developmentalism in the first period and global integration in the latter period - remained at the heart of development thinking and practice. 

As we reach the end of the current 60-year cycle, a new period of development thinking and practice should begin. The question is: what will 2010-2040 bring?

The nature of our time

The global financial crisis is a very significant event for developing countries.

By World Bank estimates, 55 million more people are now living in poverty as a result of the economic crash. And economic output in developing countries, excluding China and India, is expected to fall 1.6 percent in 2009, or 2.9 per cent in per capita terms.

This comes on top of chronic unemployment and underemployment in developing countries, rising numbers of hungry people and of course the imperative of climate change, which requires global deployment of sustainable energy technologies.

Many projections are indicating a weak recovery. But this is still uncertain and there still is widespread recession and slowdown outside certain Asian developing countries.

If the financial crisis is understood as marking the end of a long cycle of development, a sustained and inclusive improvement in the outlook will depend on the widespread deployment of new transport and communications infrastructure and new energy infrastructure which will act as carriers of a new wave of production and process innovations and of new patterns of economic development.
 
Energy innovations are particularly critical. Investment in this area has been much less than in ICT over the last 30 years. Some also predict we will reach the point of “peak oil”, that is the moment when global oil supply starts to decline, during the decade 2010-2020.

A new global approach to development thinking and practice should serve as an important part of the socio-institutional matrix which enables an early re-booting of the global development cycle, and also one which is sustainable and inclusive.   

A new paradigm

The most critical challenge for global and national economic governance is to find ways of mitigating and adapting to climate change whilst at the same time reducing global inequalities and realising the development aspirations and unrealised human potential of millions of people in developing countries.

A new paradigm is needed to tackle the deep roots of the financial crisis and also to ensure a transition into a new long-wave of widespread innovation and rising prosperity.

We need to move:

• From ‘global integration’ to ‘sustainable development’. 
• From ‘globalise to reduce poverty’ to ‘develop productive capacities’ with a central role for science, technology and innovation.  
• From ‘market fundamentalism’ to ‘development governance’. 
• From welfare to well-being.

It is not simply a matter of finding a more effective approach to poverty reduction. Rather what is needed is a new international development consensus; a new analytical and policy narrative about how development can be promoted; and a new approach to international development cooperation.

New capacities will also be required in UK development sciences.

The views are those of the author and not necessarily those of UNCTAD.