Friday, 20 September 2019
Lecture 3
International development
1980s in development- the lost decade. End of optimistic ideas on development.
More inequality, poverty more visible, people became more aware of the developing
world. Crisis in Latin America and Africa 983-1985 famine in Ethiopia (severe
droughts in many parts of Africa)
•Failures of modernisation-guided state-led (import substituting) development
policies
•“By the early 1970s the vision of catching-up had already given way to more
modest ambitions (p.59)”
From ideas of catching up to redistribution and basic needs
White elephants: isolated projects that do not function well in the area or functions
with a high cost
Neo-liberalism: self-interested, market fundamentalism, minimal state, low
taxation.
Key drivers neo-liberalism: IMF, World Bank, US treasury department
• From state-led development to market-led development, trickle-down economics
(laissez-faire) •Increasing privatisation and ‘smaller’ government
•Development through removing various kinds of distortions (countries should open
up their economy)
•Unleashing entrepreneurial spirit (e.g. emergence microcredit)
•Export-oriented industrialisation
Trickle down effect: by reducing taxes for the rich, they have more money hence
they spend more-more jobs, more tax revenue-new expenditure. Doesn’t work since
the extra money to the rich it remains stagnant rather than being spent. Basic and
extra need are met, people at the bottom would spend more.
1
, Friday, 20 September 2019
From import Substituting Industrialisation (ISI) to Export-oriented
Industrialisation. (p.167; p. 208-11)
Developing countries are rich in low wage, low skilled-labour. Export becomes
cheaper. Relocation of industrial production from Western world to the South (the
new international division of labour)
•From import substitution to export oriented industrialisation
•Emergence of export processing zones/free trade zones in developing countries
(see p. 210)
•Developing countries benefitting from surplus labour agricultural sector
•Lower transport costs (e.g. use of container ships)
•Rise of consumerist culture, fast fashion, “shopping as leisure”
Shipping containers- Lower transport prices, possibility of relocation of production.
Neo liberalism in practice: garments sector
Easy to set up: not much technology needed, easy source of export revenues, large
demand) Start-up industry in economic development process (low-technology, large
demand, easy source export revenues)
‘Sweating’ labour for competitiveness (‘the world market of nimble fingers’ p.210),
Using the biggest resource available in most developing countries (labour)
From 1974 until 2005 regulated under Multi Fibre Arrangements (MFA): countries
could only produce a maximum quota of garments
What did neoliberalism lead to up to the 1990s? (see p.168-69)
East Asian miracle: boom in economic and technological assets, catch-up in
Southeast Asia (e.g. Korea, Taiwan, Singapore)
Mixed patterns of development in Latin America, identifying alternative Latin
American pathways of development (e.g. Venezuela, Bolivia)
Africa generally impoverished and left behind, widening gap with the rest of the
World, worsening social indicators, escalating HIV/AIDS crisis
2
, Friday, 20 September 2019
Conclusion (part 1)
Modernisation and Neoliberalism too focused on the internalfactors that prevent
‘development’
Modernization more state centered -Neoliberalism on the market as regulator; Both
ethnocentric
Neither theory recognizes historical inequalities and power –presuming that an even
playing field exists (see lecture next week)
The 1990s
“Capitalism had won the cold war”- “the end of history”…
Third World loses its bargaining power (if no longer needed as strategic partners)?
The end of leadership of many Western-supported dictators
Emergence of the concept of globalisation
IMF and World bank at the height of their power
What is the role of IMF? Stabilising the global capitalist system. Economic stability.
Source of cash if in immediate need. Last source, country almost bankrupt. Garante
of global finance. Enforce ‘fiscal discipline’. Only US has veto power (‘the
democratic deficit’).
World bank: providing cheap loans for economic take-off, in 1990s mostly founding
infrastructures. Since early 2000 more in poverty reduction, focus in basic needs,
millennium development, sustainable development
IMF andWorld Bank in the era of Trumpism
Republican administrations have historically questioned multilateral institutions. The
IMF is viewed as a lumbering relic bailing out reckless nations. The purpose of the
World Bank, providing loans and technical assistance to low-income countries,
comes into question as emerging markets more easily gain access to capital in
global markets (NYT, 19-07-2017).
The so-called Ivanka fund (The Women Entrepreneurs Finance Initiative (We-Fi)),
might be a sign that —despite its “America First” policy —the White House is not as
combative toward multilateral institutions like the World Bank and the International
Monetary Fund as many in Washington expected (ibid).
3
Lecture 3
International development
1980s in development- the lost decade. End of optimistic ideas on development.
More inequality, poverty more visible, people became more aware of the developing
world. Crisis in Latin America and Africa 983-1985 famine in Ethiopia (severe
droughts in many parts of Africa)
•Failures of modernisation-guided state-led (import substituting) development
policies
•“By the early 1970s the vision of catching-up had already given way to more
modest ambitions (p.59)”
From ideas of catching up to redistribution and basic needs
White elephants: isolated projects that do not function well in the area or functions
with a high cost
Neo-liberalism: self-interested, market fundamentalism, minimal state, low
taxation.
Key drivers neo-liberalism: IMF, World Bank, US treasury department
• From state-led development to market-led development, trickle-down economics
(laissez-faire) •Increasing privatisation and ‘smaller’ government
•Development through removing various kinds of distortions (countries should open
up their economy)
•Unleashing entrepreneurial spirit (e.g. emergence microcredit)
•Export-oriented industrialisation
Trickle down effect: by reducing taxes for the rich, they have more money hence
they spend more-more jobs, more tax revenue-new expenditure. Doesn’t work since
the extra money to the rich it remains stagnant rather than being spent. Basic and
extra need are met, people at the bottom would spend more.
1
, Friday, 20 September 2019
From import Substituting Industrialisation (ISI) to Export-oriented
Industrialisation. (p.167; p. 208-11)
Developing countries are rich in low wage, low skilled-labour. Export becomes
cheaper. Relocation of industrial production from Western world to the South (the
new international division of labour)
•From import substitution to export oriented industrialisation
•Emergence of export processing zones/free trade zones in developing countries
(see p. 210)
•Developing countries benefitting from surplus labour agricultural sector
•Lower transport costs (e.g. use of container ships)
•Rise of consumerist culture, fast fashion, “shopping as leisure”
Shipping containers- Lower transport prices, possibility of relocation of production.
Neo liberalism in practice: garments sector
Easy to set up: not much technology needed, easy source of export revenues, large
demand) Start-up industry in economic development process (low-technology, large
demand, easy source export revenues)
‘Sweating’ labour for competitiveness (‘the world market of nimble fingers’ p.210),
Using the biggest resource available in most developing countries (labour)
From 1974 until 2005 regulated under Multi Fibre Arrangements (MFA): countries
could only produce a maximum quota of garments
What did neoliberalism lead to up to the 1990s? (see p.168-69)
East Asian miracle: boom in economic and technological assets, catch-up in
Southeast Asia (e.g. Korea, Taiwan, Singapore)
Mixed patterns of development in Latin America, identifying alternative Latin
American pathways of development (e.g. Venezuela, Bolivia)
Africa generally impoverished and left behind, widening gap with the rest of the
World, worsening social indicators, escalating HIV/AIDS crisis
2
, Friday, 20 September 2019
Conclusion (part 1)
Modernisation and Neoliberalism too focused on the internalfactors that prevent
‘development’
Modernization more state centered -Neoliberalism on the market as regulator; Both
ethnocentric
Neither theory recognizes historical inequalities and power –presuming that an even
playing field exists (see lecture next week)
The 1990s
“Capitalism had won the cold war”- “the end of history”…
Third World loses its bargaining power (if no longer needed as strategic partners)?
The end of leadership of many Western-supported dictators
Emergence of the concept of globalisation
IMF and World bank at the height of their power
What is the role of IMF? Stabilising the global capitalist system. Economic stability.
Source of cash if in immediate need. Last source, country almost bankrupt. Garante
of global finance. Enforce ‘fiscal discipline’. Only US has veto power (‘the
democratic deficit’).
World bank: providing cheap loans for economic take-off, in 1990s mostly founding
infrastructures. Since early 2000 more in poverty reduction, focus in basic needs,
millennium development, sustainable development
IMF andWorld Bank in the era of Trumpism
Republican administrations have historically questioned multilateral institutions. The
IMF is viewed as a lumbering relic bailing out reckless nations. The purpose of the
World Bank, providing loans and technical assistance to low-income countries,
comes into question as emerging markets more easily gain access to capital in
global markets (NYT, 19-07-2017).
The so-called Ivanka fund (The Women Entrepreneurs Finance Initiative (We-Fi)),
might be a sign that —despite its “America First” policy —the White House is not as
combative toward multilateral institutions like the World Bank and the International
Monetary Fund as many in Washington expected (ibid).
3
