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Have technology and globalization kicked away the ladder of ‘easy’ development? Dani Rodrik thinks so

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Dani RodrikEconomic transformation is necessary for growth that can lead to poverty reduction. However, economic transformation in low-income countries is changing as recent evidence suggests countries are running out of industrialization options much sooner than once expected. Is this a cause for concern? What does the past, present, and likely future of structural transformation look like? Read on to find out why leading economist Dani Rodrik is pessimistic and what some possible rays of light are. 

Dani Rodrik was in town his week, and I attended a brilliant presentation at ODI. Very exciting. He’s been one of my heroes ever since I joined the aid and development crowd in the late 90s, when he was one of the few high profile economists to be arguing against the liberalizing market-good/state-bad tide on trade, investment and just about everything else. Dani doggedly and brilliantly made the case for the role of the state in intelligent industrial policy. But now he’s feeling pessimistic about the future (one discussant described it as ‘like your local priest losing his faith’).

The gloom arises from his analysis of the causes and consequences of premature industrialization. I blogged about his paper on this a few months ago, but here are some additional thoughts that emerged in the discussion. He’s also happy for you to nick his powerpoint.

Dani identified two fundamental engines of growth. The first is a ‘neoclassical engine’, consisting of a slow accumulation of human capital (eg skills), institutions and other ‘fundamental capabilities’. The second, which he ascribed to Arthur Lewis, is driven by structural differences within national economies – islands of modern, high productivity industry in a sea of traditional low productivity. Countries go through a ‘structural transformation’ when an increasing amount of the economy moves from the traditional to the modern sector, with a resulting leap in productivity leading to the kinds of stellar growth that has characterized take-off countries over the last 60 years.

Simulated Manufacturing Employment SharesManufacturing has been key to that second driver. It is technologically dynamic, with technologies spreading rapidly across the world, allowing poor countries to hitch a ride on stuff invented elsewhere. It has absorbed lots of unskilled labour (unlike mining, for example). And since manufactures are tradable, countries can specialize and produce loads of a particular kind of goods, without flooding the domestic market and driving down prices.

But that very dynamism has produced diminishing returns in terms of growth and (especially) jobs. Countries are hitting a peak of manufacturing jobs earlier and earlier in their development process (see graph). And it could get much worse – just imagine the impact if/when garments, the classic job-creating first rung on the industrialization ladder, shift to automated production in the same way as vehicle production.
 

How can big aid organizations become Fit for the Future? Summary of my new paper

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My navel-gazing paper on the future of INGOs and other big aid beasts came out last week. Here’s a summary I wrote for the Guardian. Thanks to all those who fed in on earlier drafts. Oxfam’s Deputy CEO Penny Lawrence gives a semi-official response.

UK International Search and Rescue teamA miasma of existential doubt seems to hang over large chunks of the aid industry, even here in the UK, where I’ve argued before that a combination of government, NGOs, think tanks, academics, media, public opinion and history constitutes a particularly productive and resilient ‘development cluster’. The doubts materialize in serial bouts of navel-gazing, worrying away about our ‘value add’ and future role (if any).

So when asked to add to the growing pile of blue sky reports, I decided to approach the topic from a different angle: what does all the stuff I’ve been reading and writing about systems thinking, complexity, power and politics mean for how international NGOs and other big aid beasts function in the future?

The result, published this month by Oxfam, is a discussion paper, Fit For the Future? But if you can’t face its 20 pages, here are some highlights:

What happens when historians and campaigners spend a day together discussing how change happens?

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woman offers a flower as a symbol of peace to a Military Police OfficerDuncan Green provides a series of lightbulb moments from a recent conference bringing together historians and campaigners.

Part of the feedback on last month’s post calling for a ‘lessons of history’ programme was, inevitably, that someone is already doing it. So last week I headed off to Kings College, London for a mind expanding conference on ‘Why Change Happens: What we Can Learn from the Past’. The organizers were the History and Policy network and Friends of the Earth, as part of its excellent ‘Big Ideas’ project (why haven’t the development NGOs got anything similar?) About 70 people, a mix of historians and campaigners. Great idea.

The agenda (12 UK-focussed historical case studies on everything from resistance to the industrialization of farming post World War 2 to municipal activism in Victorian Britain to why England (though not Scotland and Ireland) hasn’t had a famine since the 16th Century) was great, as was the format (panels, followed by table discussions, no Q&A).

What do we know about the long-term legacy of aid programmes? Very little, so why not go and find out?

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We talk a lot in the aid biz about wanting to achieve long-term impact, but most of the time, aid organizations work in a time bubble set by the duration of a project. We seldom go back a decade later and see what happened after we left. Why not?

Orphaned and homeless children being given a non-formal education at a school in IndiaEveryone has their favourite story of the project that turned into a spectacular social movement (SEWA) or produced a technological innovation (M-PESA) or spun off a flourishing new organization (New Internationalist, Fairtrade Foundation), but this is all cherry-picking.  What about something more rigorous:  how would you design a piece of research to look at the long term impacts across all of our work? Some initial thoughts, but I would welcome your suggestions:

One option would be to do something like our own Effectiveness Reviews,  but backdated – take a random sample of 20 projects from our portfolio in, say, 2005, and then design the most rigorous possible research to assess their impact.

There will be some serious methodological challenges to doing that, of course. The further back in time you go, the more confounding events and players will have appeared in the interim, diluting attribution like water running into sand. If farming practices are more productive in this village than a neighbour, who’s to say it was down to that particular project you did a decade ago? And anyway, if practices have been successful, other communities will probably have noticed – how do you allow for positive spillovers and ripple effects? And those ripple effects could have spread much wider – to government policy, or changes in attitudes and beliefs.
 

How does Gender change the way we think about Power?

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One Billion Rising-Delhi-14 Feb 2013The importance of gender to 'Thinking and Working Politically' is often overlooked, as are power and politics in gender discussions. Duncan Green reviews a concept brief from Developmental Leadership Program on the links between gender and power.

I can’t attend the next get together of the Thinking and Working Politically network in Bangkok next month because of a prior commitment to speak at DFID’s East Kilbride office (ah, the glamour of the aid biz….). Apart from missing out on the Thai food, it’s also a shame because they are focusing on an area I’ve previously moaned about – the absence of gender from a lot of the TWP/Doing Development Differently discussions.

Ahead of Bangkok, some of the participants have fired some useful preemptive shots. Tomorrow I’ll review an ODI survey on aid programmes promoting women’s leadership. Today it’s the turn of the Developmental Leadership Program, which has just published an interesting, if tantalizing, six-page ‘concept brief’ on Gender and Power by Diana Koester.

Koester argues that a gender lens can add a lot to the TWP’s analysis, but also vice versa – we need more thinking about power and politics in gender discussions. Some excerpts:

"Donors have largely neglected ‘gender’ in their efforts to understand power relations in partner countries. In particular they are often blind to the ways in which power and politics in the ‘private’ sphere shape power relations at all levels of society; the ways in which gender hierarchies mark wider economic, political and social structures and institutions; and the opportunities for peace and prosperity emanating from feminized sources of power. By addressing these blindspots, a focus on gender can significantly enhance donors’ insights into power dynamics and their ability to ‘think and work politically’ overall.’

This paper "addresses three main questions: What is power and how can a gender perspective help us understand it? What is gender and how can a power perspective help us understand it? What policy and operational messages follow from a focus on gender and power?"
 

If Complexity was a person, she would be a Socialist. Jean Boulton on the politics of systems thinking.

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Jean Boulton (physicist, management consultant and social scientist, right) responds to Owen Barder’s Wednesday post on thinking of development as a property of a complex adaptive system.

Jean BoultonI’d like to go a bit further than Owen on the implications of complexity for how we understand power and politics. It is generally the case that the powerful get more powerful and the big get bigger. We know this through bitter experience, captured in complexity language by the notion of ‘positive feedback loops’ which equate to the economists’ ‘increasing returns’. In general there is no reason to expect that economies will self-regulate and find a ‘natural’ balance. Even forests, if left to themselves for long enough, reduce in diversity, increase in efficiency and become ‘locked in’ to ecological patterns that are hard to invade and change and can easily collapse (see below, left). Despite the popularity of the phrase ‘complex adaptive systems’, complex systems do not always adapt.

Instead, complexity suggests that  if we want economic development that equalizes power, reduces inequality and incorporates longer-term environmental goals, there is a need for some sort of regulatory processes to counter the seemingly inevitable coalescing of power and wealth in fewer and fewer hands. Otherwise the rise out of poverty is linked more to growth than to development (development meaning a qualitative change in shape and form of the economy rather than a quantitative change – you can obviously have both). And an economy that is growing can in fact take our attention away from underlying structural exacerbations of inequality. Growth cannot go on forever, as land, water and minerals are consumed – not to mention the impact on climate change – but growth can mask just who captures the bulk of resources and can exert control over governments, markets and societies.
 

Can aid agencies help systems fix themselves? The implications of complexity for development cooperation

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Owen BarderOwen Barder gave a brilliant lecture on complexity and development to my LSE students earlier this year. Afterwards, I asked him to dig deeper into the ‘so whats’ for aid agencies. The result is this elegant essay (a bit long for a blog, but who cares?). I will try and get some responses to his arguments from similarly large brains.

If economic development is a property of a complex adaptive system, as I’ve argued elsewhere, then what, if anything, can development agencies and NGOs do to accelerate it?

ants in thailandTo be clear what we mean when we say that development is a system property, here’s an example from the animal kingdom. You may have seen recently that ants have recently developed “super colonies” – including one that covers 6,000km along the Mediterranean that is said to be the largest co-operative unit in the animal kingdom. It is natural to talk about the “behaviour” of the colony, even though we understand that we are really talking about the individual actions of hundreds of millions of ants. Each ant responds to its external environment, including the behaviour of other ants. Because all the ants are adjusting to each other, this creates the sense that the colony as a whole is changing its behaviour, and we soon begin to ascribe intent and agency to the colony rather than the individual ants of which it consists.

Like any complex adaptive system, an ant colony will tend to go through long periods of stability and then sudden periods of rapid change that come about when ants all adjust their behaviour in response to changes in the behaviour of the ants around them. The emergence of a super-colony did not depend on the ants individually becoming fitter and stronger, learning new skills or becoming more entrepreneurial. They didn’t suddenly have access to better nutrients that made them healthier– nor have the ants benefited from universal education, access to microcredit, or new vaccines.  In fact, the ants haven’t changed at all: the colony’s behaviour can change even if the individual ants have not, because it is a self-organising complex system whose behaviour in aggregate is not simply the sum of its parts: it is determined to a large extent by the way those parts interact with each other.
 

Could the UN’s new Progress of the World’s Women provide the foundations for feminist economic policy?

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London launch of UN Women’s new flagship report,Progress of the World’s Women 2015-16Yesterday I went to the London launch of UN Women’s new flagship report, Progress of the World’s Women 2015-16, in the slightly incongruous setting of the Institution of Civil Engineers – walls adorned with portraits of bewigged old patriarchs from a (happily) bygone era (right).

The report is excellent. These big multilateral publications are usually a work of synthesis, bringing together existing research rather than breaking new ground. And that’s fine; it’s really important that a UN body has pulled such an excellent range of research together and made it accessible to policy makers. Gender and development debates suffer from a fair number of unsubstantiated claims and pretty dodgy stats (don’t get me started), and this report feels like something you can trust – I hope someone will go through it and pull out every major stat and graphic.

But the overall approach is both new and exciting, in that it applies an explicitly human rights approach to economic policy. Laura Turquet, UN Women researcher and report manager, summarized this as ‘bringing together human rights and economic policy-making to ask ‘what is the economy for?’’

This is a big deal, because the normal approach to gender and economic policy is incredibly reductive and instrumental – educate girls and get women into the workforce because it boosts growth! It ignores whether that will improve the lives of the said women or just pile more burdens onto their pre-existing roles as carers (of children, old people, neighbours), home maintainers etc etc.
 

Lifting the lid on the household: A new way to measure individual deprivation

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Guest post on an important new initiative, the Individual Deprivation Measure, from Scott Wisor, Joanne Crawford, Sharon Bessell and Janet Hunt.

Woman in her home. Kaski, NepalYou don’t have to look far to find assertions that up to 70% of the world’s poor are women ‑ despite Duncan’s efforts to show that the claim cannot be substantiated.

Just last month, ONE launched a new campaign called “Poverty is Sexist”, drawing on star power to bring attention to the issue of women’s poverty.

ONE didn’t use the 70% stat, but implied that poverty is feminized. Yet the reality is that it is still not possible to say whether women are disproportionately poor ‑ despite widespread calls  for better sex-disaggregated statistics.

Why? Because both monetary measures of poverty such as the International Poverty Line and multidimensional measures such as the Multidimensional Poverty Index continue to use the household as the unit of analysis. This assumes that everyone in a given household is equally poor or not poor – and that’s a big problem.

Not to mention concerns about the gendered differences in the experience of poverty. How do you price the value of being free from violence or securely accessing family planning?

These are not small problems. A great deal hangs on how we measure social progress. Are development programs working? Do anti-poverty policies make a difference? Is foreign aid alleviating poverty? Evaluating households makes it impossible to see how different members of the household are doing. And failing to assess dimensions of life that are particularly important to poor women, or men, limits our ability to show whether and how their poverty differs.

So what to do? Well, despite heated debates about measuring global poverty, something of a consensus has emerged. Most experts now agree that monetary poverty measurement should be complemented by multidimensional measurements. The individual, not the household, should be the unit of analysis. Poverty measurement should reflect the views and priorities of poor people. And in so far as possible, measurement should provide meaningful comparisons across contexts and over time.

Is a Data Revolution under way, and if so, who will benefit?

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RicardoFuentesNieva croppedGuest post from the beach big Data Festival in Cartagena, Colombia, by Oxfam’s Head of Research and paid up member of the numerati, Ricardo Fuentes-Nieva (@rivefuentes)

A spectre is haunting the hallways of the international bureaucracy and national statistical offices – the spectre of the data revolution.  Now, that might suggest a contradiction in terms or the butt of a joke – it’s hard to imagine a platoon of bespectacled statisticians with laptops and GIS devices toppling governments. But something important is indeed happening – let me try and convince you.

A new research report by ODI  “Data Revolution – Finding The Missing Million”  (launched yesterday in Cartagena during a Data Festival) tries to make sense of the coming data revolution, and what it means for international development. According to the authors: The data revolution is “an explosion in the volume of data, the speed with which data are produced, the number of producers of data, the dissemination of data, and the range of things on which there are data, coming from new technologies such as mobile phones and the internet of things and from other sources, such as qualitative data, citizen-generated data and perceptions data.”

For the numerically minded (I proudly include myself in this group) this is a rather welcome transformation. Data, data everywhere – but then why haven’t we, number geeks, solved all of the world’s problems yet?
 

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