IRD 302

LCC International university

Happy
Valentine’s
Day
 Happy
Valentine’s
Day
 Assignments
No class Thursday

Human Development Report

Institutional Analysis Due on February 21!!

Review
Schaaf Ch. 4
What does
Modernization Theory
produce in terms of
development?
 Modernization Theory
• economic growth is fundamental to social & political transformation
• “Trickle Down” and top-down
• Authoritarian state + weak civil society?

The State: • Mastery of nature

• Rational design of social order
• Either neoliberal or Keynesian in approach

It is Outcome of Development Founded on MT

• Modern, Scientific, Industrialized
Political • Dubai, Singapore
• Petronas Twin Towers In Malaysia

However!
• “democratization has increasingly come to precede substantial
economic development” rather than result from economic growth
What do we mean by
“structures” when
talking about
international relations
and development?
What is a “radical”
view of the state?
 Structuralism:
• Structures of trade between developed and developing world are not
equitable
The Radical • For example, prices of primary products fell much more than
manufactured goods
State • Powerful states set the rules or bend them to their interests
• For example agricultural subsidies
• Singer-Prebisch Thesis: divergence in value of commodities (1°) and

An manufactured good (2°) over time.

Begets Dependency Theory:
Alternative • Mutual, but unequal dependence

Interpretatio
• Acquisition of resources, goods and wealth from satellite/peripheral
areas

n • Differences between Developed/developing and urban/rural

• Development *is* underdevelopment
• “The state is easily overwhelmed by international structures of
domination” (p. 117)
 Import substitution industrialization (ISI)
• Protective taxes & tariffs benefit indigenous industries/hinder

The imports
• But, this caused ‘inability to take advantage of the expansion in

Radical world trade in the 1960s.” (p. 117)

• Also, led to “grossly inefficient industries”

State Developmentalism: export-oriented industrialization

• Initial ISI for select industries
• Then, continued subsidies for support & export focus

Corrective • Large amount of public-private partnership

• Wary of FDI b/c of external control

Action • Authoritarian state–not neoliberal “state as night watchman”

• Reduced attention to Human Rights
• Growing # of states avoiding the IMF & neoliberal vision of the state
Sell used clothing or protect
domestic production –
the Dominican Republic
What does Schaaf
mean say about neo-
liberalism and good
governance?
 “Incorrect to assume that the neoliberal state is an absent state”
(p. 120)
Neoliberalism & • “The retreat of the state ironically requires considerable state
involvement” (p. 122)
Good Governance World Bank: “the promotion of a more efficient public
administration, the promotion of accountability, the establishment
of the rule of law and a capable judiciary, and transparency” (p.
Should the state 122-123)
be small? • “Good governments can look very different”
• Roll back in 1980s was “disproportionate to the ‘development
problem’ of state overextension” (p. 123)
• This recognizes the shortcoming of a de-politicized view of the
state in earlier development:
• Must recognize the state’s “political background as a
‘historical side of struggle”
Brazil’s progression: ISI (1950-63), export orientation (1964
onward), liberal market-based economy (1980s economic crisis
onward)—yet still a strong state
 Old View: Development is Technical
• Ignores political nature of reality
• Technical methods cannot achieve political ends
The State: New View: Development Context is Political
• “states and indeed markets, are produced through historical,
It is cultural and political contexts” (p. 127)
• “Relations of power”
Political • The quote to begin this lecture

Role of State:
• “A more active and intelligent government to keep our model
of a capitalist economy from running off the rails” (p. 129)
• Govt is more than national: regional, state/province and city
 The Development Assistance Committee
• 24 members (high GDP countries)
• Distributes aid to 150+ countries
Official
Development Official Development Assistance
Assistance (ODA) • Provided by official agencies (including state &
local govt) or their executive agencies
• Each transaction of which
• Promotes economic development & welfare of
developing countries
• Is concessional in character (at least 25% grant)
 Paris Declaration on Aid effectiveness
(2005)

Aid
Ownership
Alignment
Five principles Harmonization
efficacy Manage for Results
Mutual Accountability

Accra Agenda for Action (2008)—deepen

and accelerate implementation of the
Paris Declaration
 G8, G7 & G20
G8 = France, Germany, Italy, the UK, “closest institutional representation of an organizing
political intelligence at the summit of the world order in
Russia, Japan, Canada & the US existence” (p. 140)

Russia suspended over Crimean takeover

G7 = G8 – Russia (2014) Trump suggested Russia be reinstated, others
objected, Russia content with G20

G20 = G8 + Argentina, Australia, “apex body of global economic governance” (p. 141)
Brazil, China, India, Indonesia, Replaced the G7 in some estimations, though G7
continues
Mexico, S. Korea, Turkey & the EU
Jenkins Ch. 12
China &
Development
What are the three
categories in which
Jenkins analyzes Chinese
involvement in SSA and
LAC?
Jenkins Categories for Chinese Involvement in SSA &
LAC:

Strategic Diplomatic

Strategic Economic

Commercial Interests
List the examples for each
category from the reading.
List three major differences, from
the article between LAC and SSA.

Identify two other differences from an

external source(s). Please provide
empirical data.
Categories of Impact of China on LAC and SSA

Economic

Social

Political

Environmental
International Financial
Institutions
Schaaf Ch. 3
Video: IMF & WB
Bretton Woods
 World Bank Int. Monetary Fund (IMF)
Int. Monetary Aims: Aims:
Fund • Longer-term development
• Poverty reduction
• Global economic growth
(macro)
Approach: • Stable international monetary
system
vs. • More holistic than IMF
Open trade not protectionism
• More participatory
• More open to NGOs, civil of 1930s

The World Bank society & smaller scale

projects
World Development Reports:
• Multidimensional nature of
dev.
• Role of humans
1980s: interest % ↑ & oil $ ↓
IMF helps balance of payments
deficits with loans to states
Loans require structural
reforms: reduce public
expenditure, restructure debt,
tax reform, strengthen financial
sector
Poverty Reduction Strategy Papers (PRSP)
Responding to criticism of structural adjustment Policies
• More holistic PRSP and Heavily Indebted Poor Countries (HIPC)
Initiative
• PRSP required for “unconditional” debt relief under HIPC
• PRSP were initiated and supervised by WB and IMF
• But, were intended to be
• “Country-owned and country driven”; not, one size fits all
• Participatory – local govt, Ngo, civil society, private sector,
community groups
 Holism talk was mostly rhetoric, not reality

Neoliberal underpinnings - PRSP conflicts with macro-

economic policy of WB & IMF

WB and IMF still in control – they have the power to reject

Criticisms PRSPs

of SAP and PRSPs did not integrate gender and minority interests

PRSP Limited real involvement of civil society – middle-class

technocrats dominate

Lack of customization – not outside the box

*However, WB has shown greater “openness toward NGOs

and other civil society actors”
1 difference between Country Report and
st

PRSP
Schaaf Ch. 3 – Int. Financial INstitutions
Modernization Theory
• Development is linear = traditional
> preconditions for take off > take
off > drive to maturity > mass
consumption
• Development is replicable in any
context
• Top-down, led by international or
nation-state actors
Advent of Neoliberalism
• The Wealth of Nations (1776), but what about The
Theory of Moral Sentiments (1759)
• Invisible hand of markets = greater prosperity
and economic growth
• Rustow (1938), Friedman (1951), Hayek
• Keynes – government spending and full
employment post depression & WWII
• Visible hand of state planning is necessary for
economic growth
• Reaction to Keynesianism (late ’70s)
• Liberation of market forces
• Called “neo-liberalism”
 Fiscal Discipline Public expenditures focused
on high-yield investments
including healthcare and
education

Tax reform Financial liberalization to

achieve a moderately positive
interest rate
Washington Exchange rates managed Remove barriers to FDI
Consensus for export
competitiveness
Recommendations
Privatize state enterprises Deregulation to enable
competition and new firms

Provision of property
rights
Post-Washington Consensus

“‘Market “Greater inclusion of

fundamentalism’ – the state and civil
not markets per se – society in
that has been greatly development planning
discredited” (p. 80) and practice” (p. 80)
What is Schaaf’s Definition of Neoliberalism?

“Policy prescriptions united by an

organizing theme: the liberation of
market forces to achieve economic
growth and prosperity.” (p. 75)
What they fail to mention!

The World Bank Reports that life-expectancy across the globe rose from
53 to 72 year from 1960 to 2016; and the gap in life-expectancy between
high and low-income populations decreased from 27 to 18 years. “Life
expectancy at birth, total (years),” The World Bank, accessed January 21,
2019, https://data.worldbank.org/indicator/SP.DYN.LE00.IN.
Or, the percent of the world’s population living in extreme poverty (=
$1.90 in 2011 PPP) has fallen from 39% in 1984 to 10% in 2015. “Poverty
headcount ratio at $1.90 a day (2011 PPP) (% of population),” The World
Bank, accessed January 21, 2019,
https://data.worldbank.org/indicator/SI.POV.DDAY?locations=1W&start=1
981&end=2015&view=chart
.
 Assignments
No class Tuesday

Human Development Report

Institutional Analysis Due on February 21!!