Development under siege

Sen, Sudhir

DEVELOPMENT UNDER SIEGE A PLEA FOR COMMON SENSE SUDHIR SEN The veteran AFL-CIO president George Meany who was known for his sharp tongue and robust common sense, once made a biting remark...

...The potential of these resources for wealth, jobs, and incomecreation can, in most cases, be tapped with little or no aid from outside, and without having to endure a long waiting period...
...It notes the uneven experiences of different countries and regions...
...It is curious that the Committee, after a long detour, arrives willy-nilly at what is the heart of the development problem, but refuses to face its implications squarely, shunned all specifics, and drifted back into some pious platitudes, such as: the importance of human resource development and "human capital accumulation...
...Forty professors, and the fatherland is lost...
...It worries over the implications of low growth in the industrial nations as well as the withdrawal of capital from developing nations by commercial banks and the unprecedented gobbling up of the world's savings by a debtor U.S...
...Ideological differences should be no reason to turn a blind eye to these heartening developments...
...Unfortunately, the Committee's principal recommendations constitute little more than a formidable wish list: governments must harmonize their macro-economic policies...
...This is the worst flaw in its analysis, as it is of so many other experts and agencies...
...domestic resource mobilization...
...Similarly, the need for education is too obvious to call for any comment...
...scrutiny of public sector policies to eliminate excessive bureaucratic regulations and to stimulate initiative and self-help...
...From domestic market development to export maikets this is the route they must travel, and not the other way round...
...The task now is to ensure that the slogan is turned into a reality...
...Hitherto the cry has been what the developed nations, the "industrial North," can do for the developing nations, the "poor South...
...This intellectual siege is all the more sinister because it is self-imposed, carries an aura of high authority, and is lethal in its impact...
...The need for controlling epidemics, providing safe drinking water, and making primary health services available to the masses of people is obvious and hardly needs any comment...
...For agriculture restructured on the lines indicated above will help maximize not only food production, but also job creation...
...And if it does, how much difference will it really make...
...All too often they have proved unable to see the SUDHIR SEN, a former resident representative of the United Nations Development Program, is the author of United Nations in Economic Development Need for a New Strategy, Reaping the Green Revolution , and Turning the Tide...
...Suppose that it would strike out on a radically different course, recognize half-a-dozen diverse axioms of development and, utilizing them as a foundation on which to build a strategy 649 worthy of the name, at long last liberate the developing nations by the shortest and quickest route from their present moribund and primitive economies to fast-growing, dynamic economies befitting the modern scientific age...
...Should it be sacrificed at the altar of a food-first, or agri-centered, approach to development as outlined above...
...In doing so, it has, even if implicitly, voted for the trickle-down theory and has, whether inadvertently or not, made third-world development hostage to the growth rate of the industrial nations...
...This failure, in the final analysis, must be attributed to a historical factor...
...and this has shattered the old ideas about adaptability of crops, soil fertility and land productivity, the economies of scale, and the law of diminishing returns...
...The adjustments, the Committee warns, will not be orderly 647 and controlled, but "disruptive and costly" unless cooperation is greatly strengthened...
...The benefits can be no more than marginal...
...Economic development, we have now learnt from bitter experience, is too important to be left to economists, especially to macroeconomic theoreticians...
...These disagreements are in fact fundamental...
...It is time to turn it around and focus it on the powerful engine of growth that lies dormant in the sprawling third world, time to rebuild its limping economies with a strategy of self-generating internal growth so that they may, in turn, help redress the mounting imbalances of the industrial world...
...The minimal goal here must be to stamp out illiteracy to provide at least primary education on a nationwide scale and to build, step by step, on its foundation, a full-fledged modern system of education...
...How to restore greater equilibrium in a world economy so visibly out of joint...
...Development under Siege, the recently-released report on the Committee's latest session held in New York last April, well illustrates these ingrained deficiencies...
...And the Committee, while agreeing that autarchy is defeatist, again divides over less drastic inward-looking development approaches...
...The world economy in 1987 shows "alarming signs" of strain and stress," says the report, stemming from huge imbalances in trade flows and international payments, severe maladjustment in exchange rates, conflicts over trade policies, a debilitating debt burden that has placed many countries of Latin America and Africa in "extreme predicaments," and real commodity prices which are still lingering at their lowest levels in many decades...
...expansion of "South-South" trade...
...The army of small-holders will work like bees on their farms to produce more and to earn more, knowing full well that they will reap the benefit of what they produce with the sweat of their brow...
...It is high time to realize that the millions of man-hours now wasted are equivalent to billions of dollars...
...Will it do any better in a climate of constraint...
...But the fact is: once the two imperatives are satisfied, agriculture will be set on the march, and everything else will tend to fall in place more or less automatically, often as a result of grass-roots movements sprouting in the countryside...
...vigorous technological growth...
...The most curious fact is that, even in their own time, both grossly misjudged the nature and role of agriculture...
...Briefly, they are as follows: 1. The developing countries are poor in terms of GNP and per-capita income, but they are rich in physical resources: land, water, minerals, forest, profuse sunshine, and abundant manpower...
...It is past the time to end this egregious anomaly...
...Their income is rising at a fast rate, doubling every five or six years...
...This is exemplified, above all, by their attitude towards agriculture...
...Meanwhile, economic growth in Europe and North America has remained sluggish, with unemployment persisting at abnormally high levels...
...The underlying assumption was that such a galaxy of economists would provide the needed light and guidance for development to proceed apace along the right track...
...They are assumed to be three: reliance on export-led growth...
...Yet, amazingly few economists are able to grasp this simple, overriding fact...
...The Committee for Development Planning of the United Nations which consists of twenty-four eminent economists handpicked by the Secretary General from as many countries, has delivered a resounding proof of the melancholy truth embodied in George Meany's words...
...Yet it is not only feasible, but also inescapable if these countries are to solve their poverty and hunger...
...And third, today it is not just third-world development which is under siege, but also the industrial nations with intense, almost cut-throat, competition among themselves for market shares...
...That hope has been sadly belied...
...Given this dreary record, few would today dare opt for an encore of such an illconceived non-strategy...
...Modern agriculture will, albeit, need a lot of other things as well, such as irrigation, improved seeds, fertilizer, plant protection materials, warehouses, transport, communication, power, and, in due course, an extension service built with trained experts...
...First, the agri-centred approach as adumbrated here, far from holding back industrial development, represents the surest, quickest, and most efficient road to it...
...readjustment of intrasectoral priorities (e.g., provision of primary health services versus building costly urban hospitals...
...6. And finally, there must be an effective family planning program in every developing country to brake the runaway growth of population...
...Once small-holders are assured of their title to land, one of the first things they will do is to build homes for themselves, even if on a modest scale, often using their own labor as far as possible...
...Meanwhile, agriculture itself has been revMi olutionized because of the miracles wrought by science and technology, particularly in chemistry, biology, and genetical engineering...
...Developing nations in general can and should learn from today's China...
...Until it is lifted, and a new vision with a sound strategy emerges in its place, there can be no real hope for development...
...The lamentation over "development under siege" which fills its latest report, cannot but evoke mixed feelings...
...As for promoting trade among developing countries, though this remains a limited option for the longer term, past schemes have booked little success...
...this is, in fact, the route Japan, South Korea, and Taiwan have already traveled...
...Moreover, family planning will be really effective only when it is combined with vigorous efforts on the fronts mentioned above, that is, to provide food, jobs, shelter, education, and health services...
...They are jobs, shelter, health services, education...
...But the report noted, flows of trade and capital are marked by "great and anomalous imbalances," and financial and monetary instability point to considerable downside risk...
...They came to grief primarily because little heed was paid to cost-benefit calculations and the extent of the market available for their products...
...652...
...This is a familiar recipe which has been repeated many times in different forms and forums, but which has so far yielded little tangible result...
...Such reactions are hasty and superficial...
...They can, if they so wish, repeat on their own soil the economic miracle that is taking place in rural China...
...This is their real capital, the source of their hope for a bright economic future...
...It can be decisively won and the masses of people finally freed from the grip of hunger and poverty only when their rate of population growth is reduced drastically, their economic growth boosted significantly, and the benefits are spread widely among the people...
...They are a symptom of the pervasive fact that development problems are seldom sufficiently thought through or subjected to deep X-rays...
...He has served as economic adviser to the Indian Embassy in Moscow and chief executive of the Damodar Yalley Corporation ("India's TVA...
...It is like discussing at length the patterns of home decoration while ignoring the foundation on which the house is to be erected...
...And today, before our very eyes, China is giving a spectacular demonstration of the effectiveness of this strategy...
...Today's hostages can become tomorrow's liberators...
...The developing countries must abolish the still lingering feudal system and establish in its place an army of small-holders tending their own farms mostly with family labor...
...basic rethinking about economic systems...
...subduing inflation, "albeit at high cost...
...No wonder, then, that the Committee for Development Planning, with all its eminence and all its labor, spread over twenty years, has made so little contribution to the cause it was established to serve...
...The members of the committee, with very few exceptions, have been long on theories and short on practical experience...
...Science-based, input-intensive modem agriculture can never flourish in an agrarian environment crowded with tenant farmers and sharecroppers dominated by landlords...
...Recent history is littered with the wreckage of industries which were set up more or less mindlessly in pursuit of this goal...
...they are a kind of port-city-states, and so trade remains their lifeblood...
...But when it comes to the all-important question of how to break this unholy siege and infuse new life into development, it speaks in discordant, even contradictory, voices and falls back upon platitudinous generalities...
...War, it has been said, is too important to be left to generals...
...In today's developing world, agriculture is destined to serve as the engine of economic progress...
...4.The developing countries are burdened with huge, and still-soaring populations...
...Besides, they have often differed on fundamentals, yet their views have been juxtaposed, not reconciled...
...reordering public expenditures with greater emphasis on national.development and less on defense spending...
...Instead of being at the mercy of growth in the industrial nations, the developing countries can bring new hope for the world economy and infuse a new life into it...
...Instead, it has elaborately dealt with what are secondary or tertiary issues, if not symptoms of the root causes of underdevelopment...
...It is this scenario that spells sluggish growth for them in the coming years...
...The multiplier effects of increased food production will spill over in many directions transportation, communication, processing, distribution, as well as rising demand for farm labor, inputs, tools and equipment leading to a widening circle of new job opportunities...
...They should be systematically mobilized and put to productive work, especially wellconceived, quick-maturing public works projects relating to agriculture...
...650 All this may sound like a tall order...
...The stage will then be set for a variety of consumer goods and related industries which can be supplemented, in due course, by basic industries where conditions are favorable for their establishment...
...What about industrial development which is so dear to the economic planners of the third-world countries...
...3. To exploit the full potential of the land-and-water resources and to maximize food production, two inescapable imperatives must be satisfied...
...Mobilization of internal resources and intensive cultivation of the home markets must be given priority over everything else...
...Must it be left to the United Nations to prove: Twenty-four eminent economists, and development becomes a casualty...
...Unemployment has been mounting...
...For a generation or more, development economics itself has been under siege, mindlessly set up with inappropriate theories which, like some holy mantras, are solemnly intoned year after year by the high priests of development...
...2. By far the most important resources they possess are land and water (barring of course a few oil-rich desert countries...
...For a century or more economic thinking has been overwhelmingly dominated by two classical names giving rise to two generally opposing schools of thought: David Ricardo and Karl Marx...
...new financial resources and relief from the debt problem must be found for the developing countries, etc., etc...
...Yet economists, in general, have not been able to jettison their old concepts and reorient their theories to fit the vastly altered realities of today...
...Each member is appointed for a term of three years and serves in a personal capacity, uninhibited by any official direction explicit or implicit from his or her national government...
...All in all, the present situation is marked by "both constraints and opportunities...
...The result is that with great authority they have built inappropriate models of development on shaky premises...
...Moreover, since food is by far the most important basic need of human beings, and since it looms so large in the family budgets of people in the developing countries, their living standards will take a quantum leap as soon as they are provided with enough food...
...Far from devising an effective strategy to lift the present siege on development, the Committee has itself been besieged by facile assumptions, has surrendered to wordy and evasive recipes, and has glossed over the inevitable disagreements...
...And from this the CDP has drawn its pessimistic conclusion about the prospects of the developing countries...
...and national administrations...
...And what might such axioms be...
...The other imperative is to build all-weather roads, ending the spatial isolation of villages and linking them to readilyaccessible market towns...
...On the whole it ably depicts the multiple malaise that afflicts the world economy today and has, for several years, kept development under siege...
...If they are provided reasonable respite from the suffocating burden of their external debt, and if their productive forces are unleashed along the lines indicated above, their growth rate will soar, their markets will expand, and in turn provide strong underpinnings to the prosperity of the industrial nations and help boost their growth rates to significantly higher levels...
...The Committee was established in 1966 by the Economic and Social Council...
...Despite the progress recently made in this field, the food-population-poverty race still looks desperate for most developing countries...
...The world economy, though visibly in disarray, is nonetheless growing...
...Homesteading will suddenly blossom, triggering a boom in the housing industry which, again, will create millions of new jobs...
...No wonder that the jargon-laden reports they have been turning out with abstract and mostly opaque recommendations, have so far produced more confusion than light...
...What, then...
...Suppose, by some miracle, common sense suddenly broke out in the Committee's deliberations, enabling it to make a clean sweep of the tortured and mostly misplaced premises with which it has been working all these years...
...In most developing countries agriculture has amazing potential for producing wealth, creating jobs, building industries, boosting incomes, and spurring GNP growth...
...5. Apart from food, there are four other basic needs which must be given the highest priority in any rational program for development...
...and important reforms already instituted...
...This is like viewing the problem from the wrong end of the telescope...
...Its declared task was to assess world development trends and prospects and to make concrete recommendations to promote development and economic cooperation among nations...
...remarkable progress made by many Asian economies, even at a:time of slow growth in international trade...
...Their thought-world, surprisingly enough, with all the dazzling tools of scientific analysis at their disposal, continues to be dominated by the ghosts of Ricardo and Marx...
...Of course the Committee goes into much more detail...
...The task, therefore, is to reinforce the promising trends and to defuse the danger points...
...Bismarck once remarked: "Vierzig Professoren, Vaterland verloren...
...This is the strategy the developing countries must follow to achieve rapid growth at a minimum cost...
...The World Health Organization launched a program a few years back under the motto'' Health for All by the Year 2000.'' The emphasis is appropriate...
...On the first, the Committee candidly admits it can offer "no unequivocal view...
...Second, if talks of export-led development are a costly and time-consuming digression, so too is the general thesis of import substitution...
...For the fact is that the Committee has consistently failed to address the fundamentals of the problem of development...
...For today's woes are, at bottom, only a symptom, the inevitable outcome of a much more deeply rooted malaise...
...Similarly, single-resource states like Libya and Kuwait must rely on exports of crude oil for their very existence...
...What options do developing countries have in today's "harsh external climate...
...obvious and have therefore missed the axioms of development...
...and an inwardlooking approach tapping the potential of domestic markets and resources...
...It depicts the far-from-exhilarating prospects for growth between now and the year 2000...
...Incidentally, Hong Kong and Singapore are atypical...
...Their very erudition, it seems, has served as blinders...
...DEVELOPMENT UNDER SIEGE A PLEA FOR COMMON SENSE SUDHIR SEN The veteran AFL-CIO president George Meany who was known for his sharp tongue and robust common sense, once made a biting remark that comes haunting across the years: "Economics is the only profession in which it is possible to achieve great eminence without ever being right...
...These are, however, exceptions which only prove the general rule...
...It will inevitably spawn a wide range of manufacturing, processing, and service industries which will both support and be supported by rising farm productivity...
...It was deliberately set up as an independent body, outside the bureaucratic apparatus of both the U.N...
...These axioms have some vital corollaries which are only too often overlooked...
...There have, of course, been some positive developments as well: Attempts by the major economic powers to "harmonize" their economic policies...
...the Japanese capital surplus should be used for world development...
...The result is a staggering waste of manpower...
...In a sense, the first two are directly related to food...
...Just as generals are proverbially busy "fighting the last war," economists mechanically tend to deploy past experience to solve today's problems when the very nature of the problems has undergone a sea change...
...Rural China is now on the march with its 800 million people...
...After this general discourse the Committee takes cogni648: zance, though rather grudgingly, of the obvious fact that the development budgets, for the most part, consist of domestic resources while, by contrast, external resources generally comprise only a small fraction of these budgets...
...The heart of the development problem is to activate their vast, but unused and underused resources with the amazing tools of modern science and technology to create wealth, jobs, and income at an optimum rate...
...Many experts, both in developed and developing nations, are still inclined to regard such an approach as too simplistic, too one-sided to meet the multifarious needs of a modem economy...
...The housing industry will add to them a whole new dimension with building and building materials industries across the countryside...
...The biggest adjustments still lie ahead, and the major industrial economies have yet to redress their own imbalances and help reduce the debt overhang to manageable proportions...

Vol. 114 • November 1987 • No. 20


 
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