Reinventing Development

Lord Mawuko-Yevugah

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317068402
• Edition: 1
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

Global development actors such as the World Bank and the International Monetary Fund claim that the shift to the poverty reduction strategy framework and emphasis on local participation address the social cost of earlier adjustment programs and help put aid-receiving countries back in control of their own development agenda. Drawing on the case of Ghana, Lord Mawuko-Yevugah argues that this shift and the emphasis on partnerships between donors and poor countries, local participation, and country ownership simultaneously represents a substantive departure from earlier versions of neo-liberalism and an attempt by global development actors and local governing and social elites to justify, and legitimize the neo-liberal policy paradigm. This book shows how the new architecture of aid has important implications in three distinct but related ways: the discursive construction and production of post-colonial societies; the changing focus of Western aid and development policy interventions; and the reproduction of the politics of inclusive exclusion. The author provides detailed and original research on the new development paradigm and develops a critical theoretical approach to re-think conventional analyses of the new discourses on aid whilst offering a fresh, alternative interpretation of changes in international aid relations.

Chapter 1 Introduction: Discourses on Aid and Development Policy Reform

DOI: 10.4324/9781315604640-1

For over three decades, the predominantly Western international donor community led by the two Bretton Woods Institutions (BWIs),—the World Bank and the International Monetary Fund (IMF)—has influenced and shaped the economic and development processes of countries in Sub-Saharan Africa and other regions of the global South. This dominance has been largely defined through Structural Adjustment Policies (SAPs) promoted from the late 1970s and early 1980s.¹ These policies came to be known as the ‘Washington consensus,’² a term first used in 1989 by a World Bank economist, John Williamson, to describe a set of policies first introduced in Latin America then later, in other regions of the global South to stabilize their economies and spur on growth.³ The structural adjustment policies also represented a form of policy conditionality whereby loans from the World Bank, IMF and regional development banks, aid from bilateral donors and even private finance became effectively conditional on the agreement by the recipient government to implement often far-reaching economic policy reforms. Broadly, the key policy instruments in the implementation of the SAPs were privatization of state enterprises and downsizing of the public sector, trade and financial liberalization, fiscal austerity and tight monetary policy to reduce inflation.⁴ These measures, were aimed at stabilizing the domestic economy, make it attractive for private-sector led development and attractive to foreign direct investment. As a result, across board, the SAPs emphasized export-led growth, privatization and liberalization, and the efficiency of the free market.⁵

1 For detailed discussion on the theory as well as the impact of structural adjustment policies implemented across the South since the late 1970s and early 1980s see Giles Mohan et al., 2000. 2 In his work, ‘What Washington Means by Policy Reform.’(1990), John Williamson, summarized the Washington Consensus as follows: fiscal discipline, trade liberalization, macroeconomic stability, and getting prices right. These prescriptions which became fashionable in Latin America as a remedy for the region’s poor economic performance became the standards for donor aid and development policy in the developing world. 3 Williamson, 1990. 4 Mohan et al., 2000. 5 Hoogvelt, 2001.

Many years of promoting and implementing economic restructuring in the form of structural adjustment policies however failed to transform the economies as well as the social conditions in Africa and other regions of the global South. As a result, from the middle of the 1980s, these policies became the target of sustained criticisms from within the BWIs and from outside. From within the Bretton Woods establishment, there developed an opposition to the Washington Consensus in the form of critical commentary and resignations of prominent officials.⁶ The opposition of SAPs also manifested in a growing international movement for justice and debt relief, led by the anti-globalization movement and the Jubilee 2000 campaign.⁷ A key criticism against the Washington Consensus policies represented by the SAPs was their failure to eradicate poverty in Africa and elsewhere in the developing world. In the contrary, these countries continued to accumulate more debt and were increasingly unable to provide basic social services.

7 Peet, 2007. 6 Joseph Stiglitz, the World Bank’s chief economist at the time became one of the fiercest critics of the BWIs from within, calling for a ‘Post-Washington Consensus.’ His subsequent resignation was interpreted by many as an attempt by the Washington establishment led by the US Treasury Department and the IMF to silence internal dissent. See also Fine, 2006; Chang, 2001.

In response to these criticisms, the international donor community, led by the World Bank and the IMF through the 1990s until today, introduced a new set of policies including the Heavily Indebted Poor Countries (HIPC) initiative, Comprehensive Development Framework (CDF), the Millennium Development Goals (MDGs) and the New Partnership for African Development (NEPAD).⁸ In 1999, these new aid initiatives crystallized into the poverty reduction paper framework which is claimed to be ‘comprehensive’ and as having a ‘long-term perspective’ towards development.⁹ This ‘new’ architecture of aid seeks to refocus international development on poverty reduction¹⁰ and promises a new process for development lending, which would alter aid relationships by putting recipient countries in the driver’s seat of development policy making.¹¹ In other words, the essence of the new poverty reduction framework is to give countries in the global South the chance to develop their own development policies and to move away from what has been described as ‘the one-size-fits-all’ approach of SAPs.¹² Also, as a key component of the new aid agenda, or what has been referred to as ‘post-Washington Consensus’,¹³ the poverty reduction strategy policies (PRSPs) are supposed to facilitate the engagement of civil society in the developmental process. This new framework and its emphasis on social development, at least in theory, imply a significant shift from the earlier emphasis on strict market fundamentalism and economic growth under the structural adjustment policies and the Washington Consensus. It is in that vein that some have concluded that the PRSP framework marks a departure from the past development policies promoted by BWIs to an inclusive neoliberalism.¹⁴ The shift from the ‘Washington consensus’ in the form of the Structural Adjustment Policies (SAPs) to a ‘post-Washington consensus’ represented by the poverty reduction strategies raises a couple of interrelated questions that this book sets out to explore. The key question explored in the book is this: Has the new aid agenda enabled governmental and societal actors in countries like Ghana to assume control over their development policy agenda? Or, do the new policies represent the World Bank and the International Monetary Fund’s attempt to shift from direct conditionality to a more indirect conditionality? The two international financial institutions claim that the new poverty reduction and development agenda represents a shift from top-down, to one that puts developing countries in the driver’s seat of their own development policy making process.¹⁵ Therefore, the secondary question explored in the book is this: What, if anything, is ‘new’ about what is now called the ‘new architecture of aid’? Is it, as its critics charge, simply a replication of the neoliberal agenda of previous Western donor policies? In a nutshell, this book probes the degree to which the PRSP approach has transformed donor-recipient country relations and determines whether this ‘new architecture of aid’ does allow developing countries like Ghana the space to develop home-grown policies. Drawing on Ghana, the book interrogates these competing claims and examines the continuities and discontinuities in the shift from the SAPs to PRSPs. It does so by probing whether or not the emphasis on ‘country ownership’ and ‘civil society participation’ translates into actual policy changes, which indeed place aid recipient countries like Ghana in the driver’s seat of the development agenda. It also questions whether or not this new aid architecture with its promise of ‘poverty reduction’ challenges or aims to eradicate the structural inequalities within the global economy which have in many ways contributed to the high incidence of Third World poverty in the first place.¹⁶

8 Smith et al., 2007; Pender, 2001. 9 IMF and World Bank, 1999. 10 While ‘poverty reduction’ has been on the agenda of international development institutions such as the World Bank and the IMF, for a long time dating back to the 1940s, the two institutions in the past conceptualized ‘poverty’ within the narrow confines of GDP and economic growth (see Malinda Smith 2008) ‘Rethinking Poverty in a Global Era,’ in Janine Brodie and Sandra Rein (eds) Critical Concepts: an introduction to politics (4th edition), Toronto: Pearson Education. There have also been attempts to mainstream poverty reduction in the international development agenda, including the 1995 Copenhagen World Summit for Social Development. The final declaration of the Copenhagen Summit and adoption of a ‘Program of Action’ by the donor community, including a pledge by developed countries to commit 0.7 percent of GDP to international aid was hailed as representing a new consensus on the need to put people at the center of development. This commitments have however remained mere slogans until the issues of poverty reduction and social development re-emerged on the international development agenda towards the end of the 1990s in the form of the poverty reduction strategy process and the UN’s Millennium Development Goals (see Greig et al., 2007). 11 World Bank and IMF, 1999. 12 Zack-Williams and Mohan, 2005; Harrison, 2001. 13 The term, ‘Post-Washington Consensus’ was first used by Stiglitz in 1998 in relation to the emerging policy reforms spearheaded by new World Bank President, James Wolfensohn in the form of the Comprehensive Development Framework, with an emphasis on social development and broad local participation in the development policy making process. For details on ‘Post-Washington Consensus’ see Stiglitz, 1998; 1999; 2002. 14 Scholars such as Craig and Porter (2006) and Ruckert (2008) have interpreted the introduction of the poverty reduction framework as an attempt by the international donor community to ‘bring back the social’ into international development by integrating ideas of social development while maintaining the emphasis on the market and economic growth as the fundamental basis for human progress and well-being. 15 IMF and World Bank, 1999. 16 Smith, 2007.

Ghana is an important case study particularly because of its long association with the two IFIs-the IMF and the World Bank. Throughout the 1980s and 1990s the country was a ‘star pupil’ for the neoliberal policies of these institutions.¹⁷ But after more than two decades of faithful adherence to stabilization and adjustment policies of the BWIs, Ghana, like other African countries, remains highly indebted and poor.¹⁸ In the mid-1990s Ghana was ranked 133 on the United Nations Human Development Index (HDI); in 2006 Ghana dropped to 136 after a marginal rise between 2002 and 2004. Almost half of Ghana’s population lives in absolute poverty. Since the early 1990s, Ghana has emerged as one of Africa’s new democracies and has, from 2001 onwards, been involved in the HIPC and the PRSP processes. The Ghana Poverty Reduction Strategy (GPRS), initiated in 2001 has been implemented since 2003 as the country’s medium-term framework for poverty reduction. As a result, Ghana has benefited from much international assistance in the form of debt relief and increased bilateral and multi-lateral aid. Thus, the experience of Ghana as a leading reformer which has rigorously implemented the World Bank and the IMF’s standard policy prescriptions since 1983 but has little to show in terms of sustained growth and poverty reduction, presents an interesting case for studying the impact of the recent policy shift by the IFIs.

17 Herbst, 1993; Boafo-Arther, 1999; Aryeetey, 2000. 18 Dzorgbo, 2001; Hutchful, 2002; Sachs, 2005:272.

This book is written within the context of the unequal and highly contentious process of neoliberal globalization.¹⁹ This process, as argued by Mittelman, ‘has become normalized as a dominant set of ideas and a policy framework.’²⁰ The book is an attempt to analyze and unpack mainstream representations and dominant narratives resulting from the neoliberal development discourse and to imagine alternative approaches. As argued by Sindzingre, poverty reduction emerged as the central focus of international development in the 1990s.²¹ What she has not however indicated is the reasons for this new consensus given that the same donors, for the preceding decade, as discussed in Chapter 3 in the case of Ghana, paid little heed to calls for ‘adjustment with a human face.’ This book, in part aims at filling this gap by tracing the evolution of the poverty reduction mantra within the international development discourse. How can we understand the global thinking of poverty over time and space? In other words, my work is interested in exploring the various ways that the so-called transition from the Washington to a post-Washington consensus has opened up spaces to both engage dominant paradigms of development and to imagine alternatives approaches for transformation and social change.

19 My usage of globalization in this book follows that of other critical globalization scholars such James Mittelman (2000; 2004) who theorize globalization as encompassing ‘an historical transformation in the interactions among market forces, political authority, and the lifeways embodied in society, as they encounter and join with local conditions’ (see Mittelman, 2004:220). 20 Mittelman, 2000:4. 21 Zindzingre, 2004:165.

I draw on critical social theory, specifically Michel Foucault’s notions of governmentality as a point of departure to theorize and unpack the new architecture of aid and its emphasis on country ownership through local participation. In order to understand the postcolonial development enterprise in Africa, and to analyze how this enterprise has been particularly shaped by the IFIs and neoliberal globalization, I deployed ...