Globalisation and the Third World

Ray Kiely, Phil Marfleet

• Publisher: Routledge
• Year: 2004
• eBook ISBN: 9781134769476
• Edition: 1
• Topic: Physical Sciences
• Subtopic: Geography
• Index: Geography

This book examines the changing position of the Developing World within the world system. It focuses on particular issues which cut across communities, nations, regions and, in consequence, the world. These include migration, health and disease, the media, transnational corporations, religion, and political and economic institutions. The contributors draw on a wealth of illustrations and global examples to examine topics such as HIV/AIDS transmission, the mediatized Gulf War, consumption patterns, the Third World in the First, Orientalism and Islam, environmental and urban movements, liberation theology in Latin America and the impact of the media. This book provides a critical introduction to the Third World around the unifying theme of globalisation.

chapter 1
The crisis of global development

Ray Kiely

Whilst the 1980s and 1990s can be considered a time of crisis, the period from the 1950s to the 1970s was one of great optimism concerning the prospects for development in the Third World. The 1960s was declared the United Nations’ First Decade of Development, with the declared aim to be ‘the attainment in each less developed country of a substantial increase in the rate of growth, with each country setting its own target, taking as the objective a minimum annual rate of growth of aggregate national income of 5 per cent at the end of the decade’ (UN Yearbook 1961, cited in Leys 1996:109). This growth rate target was increased to 6 per cent per annum in the Second Development Decade (the 1970s), and ambitious industrialisation targets were also set. These growth rate targets were far higher than those achieved by most of the earlier industrialised countries. Perhaps even more important, development practitioners generally believed that such growth rates would lead to the alleviation of poverty in the developing countries.

The ‘lost decade’ of the 1980s saw the apparent death of such optimism. By the beginning of the 1990s, most people in sub-Saharan Africa were poorer than they had been thirty years before. Of the population of about 500 million, nearly 300 million are living in absolute poverty (Leys 1994:34). In the developing countries as a whole, nearly 800 million people do not get enough food, and about 500 million are chronically malnourished. Almost one-third of the population of developing countries—about 1.3 billion—live below the poverty line. The infant mortality rate, at around 350 per 100,000 live births, is about nine times higher than that in the ‘advanced’ industrial countries (UNDP 1995: 16).

Clearly, then, ‘development’¹ has in some sense failed. Growth rates for many parts of the Third World—parts of East Asia and Latin America were notable exceptions—rarely reached the projected figures outlined at the start of the development decades, and in many cases fell in per capita terms in the 1980s. Moreover, the growth that did occur in the 1960s and 1970s often failed to ‘trickle down’ and so did not appear to relieve the problem of poverty. These problems were intensified in the 1980s as growth rates and living standards for many fell.

This chapter examines the crisis of development in the 1990s. The principal concern is therefore with discourses of development and the Third World, rather than with globalisation—although it will become clear that after 1945 the development discourse was a global one, and debates around development were increasingly simultaneously debates about the character of global processes. In focusing on development the chapter stresses its uneven, unequal and (in part) contingent and contradictory nature, issues taken up in later chapters which are more explicitly concerned with globalisation processes.

I start by outlining the context and content of development, and how this has shifted over time. This is followed by a critical analysis of the dominant development discourse of the 1980s and 1990s, neo-liberalism. I then attempt to deconstruct the idea of development, and criticise its tendency to reduce concrete agents of development to passive objects, awaiting the benefits of development. At the same time, however, I show that a simplistic anti-development position is itself problematic. Finally, I conclude by suggesting that attempts to impose development in a top-down fashion has led to resistance in the Third World (and elsewhere), an issue taken up in later chapters.

The context and content of development

Although the idea can be traced back to at least the nineteenth century, it was in the post-war period that the idea of development was made explicit. In his inaugural address as president to the people of the United States in 1949, Truman argued that there was a need for the countries of the modern world to solve the problems of the underdeveloped areas.

More than half the people of the world are living in conditions approaching misery. Their food is inadequate, they are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history humanity possesses the knowledge and the skill to relieve the suffering of these people… I believe that we should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realize their aspirations for a better life…What we envisage is a program of development based on the concepts of democratic fair dealing… Greater production is the key to prosperity and peace. And the key to greater production is a wider and more vigorous application of modern scientific and technical knowledge.

(cited in Escobar 1995a:3)

Truman’s famous address is a very clear statement of the basic thinking behind the idea of development. The Third World (as it came to be known) was regarded as backward and primitive, but these problems could be overcome by following a similar path of development to that of the Western (civilised) world. Indeed, this path would be achieved more easily because the West could share the benefits of material prosperity and scientific knowledge with the ‘backward’ areas, and so hasten the transition to modernity. Above all, this could be achieved through an increase in production in underdeveloped areas, and this in turn could occur through the introduction of rational scientific methods.

This section examines the context within which post-war development thinking emerged, and the concrete content of development strategies.

The context of development

The idea of development arose in a very specific post-war context. The United States had emerged as by far the most powerful economy in the world, and so it was bound to have a strong influence on the structure of the global economy. At the same time, there was an alternative social and political system to that of the West—communism in the Soviet Union. Equally important was the fact that it was clear by the end of the war that the days of the old European and Japanese empires were numbered, as people in the colonial world demanded independence. These three inter-related factors—US dominance, the Soviet alternative and the beginning of the end of empires—all influenced the way in which development was perceived.

At the end of the Second World War, the United States controlled around 70 per cent of the world’s gold and foreign exchange reserves, and 40 per cent of industrial output (Brett 1985:63). By this time the United States was largely converted to the principle of free trade (although certain interests such as the farming lobby successfully resisted its full implementation both nationally and internationally), but such a commitment was bound to be resisted by weaker economies who feared being out-competed by the powerful US economy. At the same time, the United States was also committed to an anti-communist foreign policy, and it was primarily for this reason that it was prepared to compromise with other countries over the shape and future direction of the international economy. The institutions which were to influence the nature of the post-war international economy were established at Bretton Woods in the United States in 1944, and they largely reflected the US interest in free trade combined with a willingness to compromise with its allies. As Brett (1985:63) argues, the Bretton Woods agreement was based on compromises by the United States ‘in which it used its economic strength to provide short-term inducements to the weaker countries to co-operate, in exchange for a willingness to build a long-term commitment to liberalisation into the structure of the institutions themselves’. There were only eighteen developing countries present at the Conference out of a total of forty-four countries, and so not surprisingly the interests of these nations were largely marginalised.

At Bretton Woods the International Monetary Fund (IMF), the World Bank and the General Agreement on Tariffs and Trade (GATT) were established. The principal role of the IMF was to regulate the economies of countries facing balance of payments deficits. After Bretton Woods, exchange rates were fixed by tying currencies to the value of the dollar, whose value was in turn fixed to the value of gold. It was recognised, however, that some countries facing balance of payments deficits would have to devalue in order to return to a situation of equilibrium. The IMF was to play a crucial role in regulating this process through the provision of short-term credit to countries in this situation. Some representatives (such as the British economist John Maynard Keynes) at Bretton Woods recommended that large amounts of credit be supplied to the IMF, largely from the ‘advanced’ industrial countries. The provision of such credit had the potential to transfer resources from the richer to the poorer countries, a position not dissimilar (although considerably milder) to the Third World demands for a new international economic order in the 1970s (discussed below). The United States, however, successfully resisted this proposal, and the IMF was left with limited financial resources. As a result, the conditions applied to IMF loans were often very stringent, and this became a major (possibly the) development issue in the 1980s. The resources were paid by the member states of the Fund, and voting power reflected the size of the contribution made by member states—and was therefore heavily weighted towards the industrial nations.

Keynes similarly wanted the World Bank to have sufficient amounts of credit for nations to borrow from it at cheap and affordable rates, but the US view again won the day. The Bank received little money from governments and so it had to raise most of its funds from private financial institutions. The result was that the Bank, set up to promote development in the ‘underdeveloped areas’, had to charge commercial rates of interest to borrowers and promote conservative financial policies. Government contributions were significant in so far as the size of each contribution determined voting strength within the institution. Some later concessions were made to the Keynesian view, such as the creation of the International Development Association, a soft loan affiliate of the Bank, in 1960. However, this institution similarly lacked the funds which could have made softer loans more generally available.

Finally, there was the General Agreement on Tariffs and Trade, which was less a formal institution than a debating forum for international trade negotiations. A more formal International Trade Organisation was rejected by the US Congress, largely in response to the interests of domestic US farmers, who opposed free trade in agriculture. The GATT was committed to the gradual implementation of free trade, through, for instance, the promotion of a general trend in tariff rates, but developing countries were allowed some concessions— for example in terms of effective rates of protection for domestic industry. These concessions, which increased in the Kennedy Round of tariff negotiations, 1964– 7, encouraged increasing numbers of previously sceptical developing countries to become signatories to the GATT.

On the whole, then, the post-war settlement was favourable to the United States, but it was also based on unavoidable compromise. The United States, fearing the spread of communism, was prepared to give sufficient space (hence some protectionism) and indeed actively encouraged (through Marshall Aid) the ‘advanced’ capitalist countries to rebuild their economies. The developing countries were in a minority at Bretton Woods (most were still colonies in 1944), and so their voice was largely unheard. However, it was clear by this time that the days of empire were numbered as nationalist movements demanded independence throughout the colonial world. The United States for its part, fearing a spread of communism if Third World independence movements were ignored, was largely sympathetic to these calls. The nationalist movements which won independence for new states throughout the world were for their part largely sympathetic to the idea of ‘development’, although they had their own ideas about how this might be brought about.

The content of development

As the quotation from Truman above makes clear, the key to the development of the underdeveloped areas was economic growth. Development was regarded as a technocratic process in which the state would play a leading role in planning output and investing in dynamic sectors such as new industries. In this way, the underdeveloped areas would gradually catch up with the advanced industrial world. Development—or modernisation—was therefore defined as

the process of change toward those types of social, economic and political systems that have developed in Western Europe and North America from the seventeenth century to the nineteenth and have then spread to other European countries and in the nineteenth and twentieth centuries to the South American, Asian and African continents.

(Eisenstadt 1966:1)

Although there were some important differences of emphasis between different theorists and practitioners of development, all were united around the strategy of modernisation through rapid economic growth. Industrialisation was seen as a key strategy because new rounds of technological investment increase productivity and thereby expand output. As Moore argued:

What is involved in modernization is a ‘total’ transformation of a traditional or pre-modern society into the types of technology and associated social organization that characterize the ‘advanced’, economically prosperous, and relatively politically stable nations of the western world.

(Moore 1963:89)

The leaders of new states in the Third World were critical of the way in which the existing international order tended to marginalise their interests, and responded by forming pressure groups that attempted to change Northern priorities and the balance of power in the world system. In 1961 the Non-Aligned Movement was formed in order to promote an independent path between the interests of the communist and capitalist world. This was followed in 1964 by the formation of the United Nations Conference on Trade and Development (UNCTAD), which attempted to win some reforms in the international economy. These organisations had a different emphasis from Western-based theories of modernisation, but both approaches shared the assumption that the most effective strategy for development was rapid economic growth. Nationalist leaders such as Nehru (India), Nkrumah (Ghana) and Sukarno (Indonesia) were particularly keen to develop the potential of their people, which had been held back by colonialism, while at the same time taking advantage of the opportunities that Western aid and technology had to offer.

The major development strategy used in the Third World from the 1950s to 1970s was import-substitution industrialisation. This policy involved the development of a domestic industrial sector, initially producing for the domestic market, but with the long-term aim of breaking into lucrative export markets. In order to develop these industries, the state would have to protect new producers from competition from cheaper foreign imports, through high tariffs or import controls. Although initial investments were to be concentrated in consumer goods industries, state planners envisaged a time when new states would diversify into the intermediate and capital goods sectors such as industrial machinery.

Post-war development was therefore based on state planning, with the explicit purpose of raising productivity and output. Such planning applied not only to the industrial sector, but also to strategies designed to increase output in agriculture such as the Green Revolution. This strategy involved the introduction of a technological package such as modern high-yielding varieties, chemical fertilisers and irrigation schemes with the express purpose of increasing agrarian output. This strategy was actively implemented by many Third World states (such as Mexico, the Philippines and India) from the 1950s and 1960s onward, and enjoyed the backing of pro-development institutions from the United States such as the Rockefeller Foundation.

From the late 1940s to the late 1960s, then, development was largely seen as a process whereby ‘the traditional Rest’ caught up with ‘the modern West’. This was to be achieved primarily through economic growth (although the adoption of modern Western values was also considered important—see McClelland 1961), which would raise productivity. The resultant increase in output would relieve the ‘handicap of poverty’ and thereby enable the peoples of the Third World to ‘realize their aspirations for a better life’.

By the late 1960s, however, such a view was becoming increasingly difficult to sustain. International Labour Office (ILO) figures for 1972 estimated that 39 per cent of the population of the Third World was ‘destitute’, and 67 per cent was described as ‘seriously poor’ (cited in Kitching 1982:70). Such figures showed the inadequacy of official measures of development, such as Gross National Product. GNP measures the total output of a country for a given year, and this is usually divided by the size of the population in order to arrive at a per capita GNP figure. The problem, however, is that such a figure tells us nothing about the way that such income is distributed within a country, or whether everyone has access to elementary needs such as food, education, health-care and housing.

Recognition of these problems helped to pave the way for a revised development strategy in the 1970s, based on the ideas of ‘redistribution with ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contributors
• Introduction: Globalisation, (post-)modernity and the Third World
• Chapter 1: The crisis of global development
• Chapter 2: Transnational companies, global capital and the Third World
• Chapter 3: Migration and the refugee experience
• Chapter 4: Global aspects of health and health policy in Third World countries
• Chapter 5: The Biodiversity Convention and global sustainable development
• Chapter 6: Globalisation, ethnic identity and popular culture in Latin America
• Chapter 7: Globalisation and cultural imperialism: a case study of the music industry
• Chapter 8: Globalisation and religious activism