I. INTRODUCTION
Development must bring about an improvement in the living conditions
of people. It should, therefore, ensure the provision of basic
human needs for all: not just food and clothing but also shelter,
health care and education.This simple but powerful proposition is
often forgotten in the pursuit of material wealth and the conventional
concerns of economics.The problem is compounded by the
dominant ideology of our times, which states that markets and
globalization promise economic prosperity for those who join the
system and economic deprivation for those who do not.The reality
that has unfolded so far, however, belies the expectations of the
ideologues.
The development experience of the world economy from the
early 1970s to the late 1990s, which could be termed the age of globalization,
provides cause for concern, particularly when it is compared
with the period from the late 1940s to the early 1970s, which has
been described as the golden age of capitalism.
The reforms of the 1980s and the 1990s, inspired by the current-
Introduction:
Toward a People-Centered Approach to Development
Deepak Nayyar &Ha-Joon Chang
Deepak Nayyar is Vice Chancellor of the University of Delhi. Ha-Joon Chang is Professor of Economics
and Politics at the University of Cambridge.
ly dominant neo-liberal ideology, were introduced with great promises.They
were supposed to accelerate growth and raise efficiency by
expanding (through privatization) and freeing the private sector from
government intervention. They were supposed to reduce inequality
by getting rid of government regulations that create "artificial rents,"
or above-market rates of return, that increase inequality. And with
higher growth and better income distribution, poverty was naturally
expected to fall.
Unfortunately, these expectations have not been met. Growth
did not accelerate. It was much slower and more volatile. For example,
the developing countries grew at around 3 percent per annum
in per capita terms between 1960 and 1980, the "bad old days" of
state intervention and import substitution, but their growth rate fell
to half that rate between 1980 and 2000, following the reforms.
With increasing frequencies in financial crises, growth has been
more fitful than before. This process of lower-quality growth was
associated with higher levels of unemployment, as well as greater
insecurity of employment, almost everywhere. Moreover, a substantial
proportion of the workforce saw no significant increase in real
wages.
Available evidence suggests a divergence rather than convergence
in levels of income between countries and between people.
Economic inequalities increased in the last quarter of the twentieth
century as the income gap between rich and poor countries, between
the rich and the poor in the worlďs population, as well as between
rich and poor people within countries, has widened.
Clearly, markets and globalization do not ensure prosperity for
everyone; in fact, they exclude a significant proportion of countries
and people.There is inclusion and growing affluence for a few.There
is exclusion and persistent poverty for the many.This emerging reality
is morally unacceptable and politically unsustainable.
II. DEPARTURES
The conception of the idea to create an International Forum for
Development began with this concern about the dominant ideology
2 THE DEVELOPMENT IMPERATIVE
of our times.There are three fundamental points of departure from
the prevalent orthodoxy which deserve emphasis.
First, we start from the premise that the well-being of humankind
is the essence of development.This is often forgotten in the dominant
discourse, where aggregate growth figures or the pro-corporate concept
of "economic freedom" get more attention than the well-being
of people. Our focus, therefore, must be on people, ordinary people.
Second, it is essential to make a clear distinction between means
and ends. Economic growth and economic efficiency are means.
Economic development and social progress are ends. Similarly, trade
is a means, while development is an end.All these are often forgotten
in much of the current debate.
Third, it must be recognized that economic growth is necessary
but not sufficient to bring about the eradication of poverty. It cannot
suffice to say that the outcomes of economic policies, which ensure
growth with efficiency, should be moderated by social policies, say in
the form of safety nets.The dichotomy between economic and social
development is inadequate just as the dichotomy between economic
and social policies is inappropriate. Hence, as in industrial societies,
there is a clear need for an integration, rather than a separation, of
economic and social policies.At the same time, it is important to create
institutional mechanisms that mediate between economic growth
and social development.We believe that the time has come to explore
alternatives in development, where the focus is on people rather than
economies, and on ends rather than means.
III. OBJECTIVES
The essential purpose of the International Forum for Development is
to create and to institutionalize a meeting space for concerned scholars
and concerned citizens to come together to construct an alternative
worldview with a focus on people.
For clarity, it is necessary to contrast our conception with the
existing meeting spaces. The World Economic Forum in Davos is
organized by corporate leaders to network with each other and to
meet with a select group of political leaders, policymakers and
3
media persons. The net extends to a few intellectuals and some
social activists. But this space belongs to captains of industry. The
World Social Forum in Porto Alegre is organized by social activists
to network with each other and to meet with a select group of
political leaders, policymakers, media persons, trade unionists and
academics who broadly share the same worldview. But this space
belongs to NGOs.
The International Forum for Development, we believe, is different.
We hope to create a meeting space for a genuine dialogue
between different stakeholders: scholars, parliamentarians, policymakers,
social activists, media persons, corporate leaders and trade unions.
These groups need to work together if we are to bring about meaningful
changes, but they do not talk to each other enough.We aim to
provide a space where they can communicate with each other, develop
mutual understanding and hopefully develop a common agenda.
Concerned scholars are expected to play a catalytic role in the process
by presenting state-of-the-art knowledge in accessible forms, highlighting
policy issues that deserve more attention and identifying new
issues. It will not, however, be an academic forum.The forum will be
a shared common space for every stakeholder, which does not belong
to any particular subset.
We are convinced it is possible to enhance understanding and
develop capabilities by learning from each other.We also believe differences
in perceptions and pluralism in thinking, through dialogue,
can provide the foundations of alternative policies for,and a new consensus
on, development.
IV. FORMAT
This annual meeting is designed as the flagship event of the
International Forum for Development.The discussion will focus on a
perennial theme and a conjunctural theme.These themes will change
from year to year. The perennial theme this year is growth and
employment.The conjunctural theme this year is the disguised unilateralism
implicit in the trade policies of industrialized countries. It
needs to be said that this annual event constitutes a modest beginning.
4 THE DEVELOPMENT IMPERATIVE
In the years to come, we hope to diversify our activities so that we
can use knowledge,dialogue and outreach for exploring development
alternatives.This is, obviously, an ambitious endeavor.We need to recognize
that the journey to our destination cannot be telescoped in
time. Indeed, we should think of five years as the minimum period of
transition before we begin to be recognized as an institutionalized
meeting space. Even so, given the strength of our common cause, we
are confident that it can be done.
V. ANALYSIS
The following points have emerged from the papers presented and
the discussions around them throughout the meeting.
It is rather well known that the last two decades of marketization
and globalization have witnessed increasing inequalities across and
within countries.While there is some debate on whether individual
income distribution on the world scale has become more equal or
not--the answer to which critically depends on how one estimates
the results of the spectacular growth in China and impressive growth
in India over the last two decades--there is little disagreement that
inequalities have markedly increased over the last two decades in most
countries (including China itself, which has seen a very sharp deterioration
in income distribution) and across the world sans China.
This record on inequality looks even more negative when we
consider that it has happened in the context of slower and more
volatile growth. In the early days of neo-liberal reforms, we were told
by proponents that while their reforms may introduce short-term
increases in inequalities,they will in the end lift everyone up by accelerating
growth and thereby producing more wealth.The sad truth, as
we have pointed out, is that these reforms have failed to deliver on
their central promise, namely, accelerated growth. And given this
growth failure, the poor record of neo-liberalism on income distribution
makes us wonder why we have to accept higher inequality if we
are not even getting higher growth in return.
Employment is another area where the neo-liberal policies have
performed very poorly. During the last two decades, unemployment
5
has risen, employment has become far less secure and real wages
have fallen for many people. In particular, with the casualization of
work women have borne disproportionate shares of the burden, as
many of them have become main breadwinners while having to
continue to perform virtually all the domestic work. In their obsession
with low inflation and (internal and external) financial balances,
neo-liberal policies have essentially relegated employment to
the position of a residual in policy design. In fact, provision of more
jobs of decent quality is the only sustainable way to provide decent
income, decent work and female empowerment, especially in the
context of most developing countries, where social welfare institutions
are extremely weak.
The orthodoxy naturally keeps quiet on these embarrassing
records, and, when confronted with them, attempts to blame the
governments for not trying hard enough--often saying that reforms
were not sincerely implemented or that there is still a lot more that
needs to be done--or pleads for patience, asserting that the reforms
need more time to work their effects.In fact,what needs to be pointed
out is that these poor records are inevitable results of the logic
behind the neo-liberal reforms, and not the results of poor implementation
or insufficient time. Lower investment in physical and
human capitals, slower and more volatile growth (punctuated by
speculative booms and financial crises), creation of greater insecurity
and higher unemployment in the labor market, and the increase
in inequalities are all inevitable results of the neo-liberal reforms that
emphasize low inflation, financial balances, and "flexible" (and thus
short-term oriented) markets.
It is not as if alternative policies that would encourage decent
work, social solidarity and long-term oriented productive investments
are not known. Development experiences of the more
advanced countries, starting from eighteenth-century Britain down
to the more recent success cases of South Korea andTaiwan, provide
plenty of lessons, if not ready-made solutions, in this regard.
However, the use of policies that encourage long-term commitments
and social solidarity--which often involves the use of protec6
THE DEVELOPMENT IMPERATIVE
tion, subsidies and government regulations--is made difficult by the
current rules of the game and the balance of power in the world
economy.
This is most visible in the area of the international trading system
embodied in the WTO. Under the rhetoric of a "level playing field,"
the developing countries are denied many policies they need--such
as extra protection, greater use of subsidies, additional regulations on
foreign investment and weaker intellectual property rights--and are
instead put under pressure to open up their markets to the same
extent as that found in the developed countries.True, there are some
minimal allowances for their conditions under "special and differential
treatment," but these are being rapidly eroded in the name of creating
a level playing field.And to make it even worse, the developed
countries continue to protect the sectors where they are most vulnerable,
such as textiles and agriculture.
In addition to the "unfair" international trading rules embodied in
the WTO, the developing countries are subject to further pressures
from the developed countries to do even more than what is required
under their WTO obligations. The conditionalities imposed by the
IMF and the World Bank--as well as donor governments, informal
bilateral pressures and various bilateral and regional free trade agreements--all
work together to subject developing countries to a
"WTO-plus" regime.
Developing countries need more policy space that will allow
them to adopt policies that suit their levels of development and other
socio-economic conditions.This policy space is often denied on the
grounds that developing countries are prone to make bad policy decisions
and therefore should be prevented from harming themselves
through binding external constraints. The curious thing, though, is
that many of these orthodox economists who advocate limiting policy
autonomy for the developing countries would vehemently
denounce similar restriction on individual autonomy by national governments
as unwarranted paternalism. If they truly value choice and
autonomy, as they often claim, they should be willing to allow countries
to have "the right to be wrong."
7
VI. MESSAGES
There are a number of significant messages that have emerged from
the discussions at the first annual meeting of the International Forum
for Development.
* Employment must be placed center-stage. It should be seen as
an objective that has a strategic importance in itself, rather
than as a residual outcome of economic growth or economic
policies.
* The only sustainable solution for poverty eradication is
employment creation, just as it is the only real foundation for
decent work.
* The gender dimensions of employment are critical because
empowerment of women is an integral part of any process of
egalitarian development.
* There is a need to integrate economic and social policies. For
this purpose, it is essential to create institutional mechanisms
that mediate between economic growth and social development.
Safety nets will not suffice.
* For latecomers to development, it is essential to develop capabilities
at a micro level and institutions at a meso level.
* It is necessary to redefine the economic role of the state in this
age of markets and globalization.Yet, the role of the state is
critical if development is to bring about an improvement in
the living conditions of people.
* The rules of the game in the world economy, particularly in
the sphere of trade but also elsewhere, are unfair.We need fair
rules. Indeed, we may need affirmative action for the developing
countries in general and the least developed countries in
particular.
* Countries that are latecomers to industrialization need policy
space in the pursuit of national development objectives.
Indeed, countries and people have a right to be wrong so that
they can learn from mistakes.
8 THE DEVELOPMENT IMPERATIVE
VII. FUTURE
We do not see ourselves as incurable romantics, starry-eyed idealists
or even functional pragmatists. In our search for alternatives in development,
we seek to blend the desirable with the feasible. Our shortterm
motivation is to increase consciousness about,and impart a voice
to, the poor and the excluded. Our long-term objective is to change
thinking, exercise influence and ultimately shape outcomes. As a
group of concerned scholars and concerned citizens, we do not seek
to preach to the converted. Instead, we hope to reach out in persuasion.
It is only natural that we begin on such a modest note. And
beginnings are always difficult.We sincerely hope that an ever-widening
circle of concerned citizens at the International Forum for
Development can spread the message that a better world is possible.
9