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Why have some countries, like China for example, been able to develop both their economy and their middle class, while many others have not?
Some development experts say the secret sauce is a strong central government that invests in social services like education and health. Others accuse corrupt governments and even aid organizations and institutions like the World Bank of supporting corrupt governments and making countries dependent on aid. Still others say the answer is more help.
But in a new book, titled Betting on development: why some countries win and others losethe Belgian-British economist Stefan Dercon asserts that far from following a single recipe for success, all the countries that have known success have bet on it.
He calls this the “development market”. It is when a country’s elite – those with the most power, resources and influence – collectively commit to pursuing long-term economic growth and development through bold, sometimes risky policy actions. .
This willingness to act on the part of those in power, says Dercon, is what pushes countries to a path to success. He comes to this conclusion after three decades of work in more than 40 countries. He is Professor of Economic Policy and Director of the Center for the Study of African Economies at the University of Oxford. He is also a former Chief Economist of the UK Department for International Development (DFID) and Policy Advisor to the UK Foreign Secretary.
We spoke with Dercon to better understand why [me countries have prospered while others have failed.
This interview has been edited for length and clarity.
So why have some countries prospered while others – like Nigeria, according to your book – have failed?
The quick and easy answer is: Despite very difficult circumstances, there are a number of countries in the last 20 to 30 years, in which the people with power and influence, coming from business, politics, the military – the elite – have forged some kind of joint commitment to make other agendas much less important than the underlying goal of trying to achieve growth and development.
What’s the gamble in that scenario?
In the short run, it may backfire. If you stop paying off the political supporters who brought you into power, you might lose power. If you invest that money in infrastructure instead, it may take awhile before those roads or ports are successful. You might make errors. There might be riots. That’s the gamble.
But the countries that make the gamble are convinced that in the long run, the benefits are worth the deep commitment, including some of the pain it takes, to be successful in growth and development. And if they’re willing to learn and adapt from mistakes, they will be successful.
Are you saying there’s no recipe for successful development, only a willingness to try?
For me, it was actually a little bit of a surprise over the last 10 years to realize that in virtually every country I visited — and I’ve spent time living and working in 30, 40 developing countries — those in charge more or less know what they should be doing. In fact, some of them are very good at making the perfect plans and talking about it.
Blavatnik School of Government, University of Oxford
The harder thing is to get a coalition of forces in your country to make a shared commitment to actually do those things.
Even China’s [former communist party leader] Deng Xiaoping had to win over all party leaders when he led policies in the 1970s that led to China’s growth and development.
But success looks different in different places, doesn’t it?
People look too much to East Asia to define success. China has thousands of years of history as a centralized state. No wonder it was a country where state-led development was most successful, because it had a strong state to begin with. But in many countries, this is not where development will begin.
Bangladesh, for example, is a very corrupt country. He has a weak state, and politics is very unstable. But I think that Bangladesh, even though it is still in its early stages of growth and development, has done remarkably well, especially for a country that has been called a “hopeless case” by [former U.S. Secretary of State] Henry Kissinger in 1972.
Its success lies in part in the fact that the state recognizes its own weakness and lets other forces [like non-governmental organizations, businesses and civil service] do the development. In many autocratic states – and sometimes in democratic states – non-governmental organizations are repressed. But Bangladesh understood: “We had better let them do it, because the state alone will not be able to bring about development. So it’s a country where you have the biggest NGO in the world, BRAC [a nonprofit international development organization], who has a lot of influence and capacity for action.
What about the countries that bet on development, but it didn’t work?
The one I know best is Ethiopia, where the bold [of a development bargain] was created, but by a coalition of elite players dominated by a very small ethnic group. Between 2005 and 2020, Ethiopia made great efforts, and its economic and development ambitions were actually very good – so much so that many countries, including the United States, really enjoyed dealing with Ethiopia .
But in the end, one ethnicity had more control over all the resources than the others, and at least two other groups grew impatient and felt they should start enjoying them today as well. Essentially, the elite coalition has collapsed. That is why there is now a conflict.
But I am still optimistic about Ethiopia’s ability to recover. The consensus on the economic and development front is quite deep, so if they can get the political coalition together and find a way to work, I’m hopeful they can get back to the growth path they were on.
How can the international community encourage more countries to “negotiate on development”?
The international community itself should be willing to bet on countries that are clearly moving towards a development market by giving those countries a lot more aid and development funding. They can also provide business opportunities or make illicit finance much more difficult, as it often pays a lot of dirty politics.
Any other takeaways for people interested in developing countries?
If you work in development, you have to learn to be patient. None of the development cases I mention in my book are pretty. In all these countries, there is corruption. There are still people who earn a little more than others. It’s not like they all suddenly look like Sweden. It’s much messier.
But just because they’re not perfect doesn’t mean they’re a failure. There are all these countries that don’t look like past successes, but mentally they are committed to development, and what they have managed to do so far is remarkable. We should give them credit.
Joanne Lu is a freelance journalist covering poverty and inequality around the world. His work has appeared in Humanosphere, The Guardian, washington global and war is boring. Follow her on Twitter: @joannelu
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