Are we short-changing people in developing countries?

If you listen to Lant Pritchett, a Professor of International Development at Harvard University’s Kennedy School of Government, he will tell you that lately there has been a trend of “defining development down” among the development agencies.  In his view, by choosing a low bar for development goals – such as setting a poverty threshold of “dollar a day”, or achieving universal primary education as laid out in the Millennium Development Goals – aspirations of billions of people living in developing countries, who are quite poor by the living standards of OECD countries, are being short-changed. [i]

Curious to hear and better understand his provocative narrative, we (the Macroeconomics and Fiscal Management Global Practice) invited Pritchett last month to come and give a talk at the World Bank. [ii]  Pritchett, who was at the World Bank for a number of years before moving to Harvard, presented two main themes in a jam-packed room:

1. The modern day agenda of development agencies seem to include everything but the promotion of broad-based economic growth.  The latter is fundamental to enhancing widespread prosperity and well-being in developing countries and this is what the citizens and governments of the developing world want the most.
2. By choosing low-bar goals and not backing prosperity for all citizens, development agencies risk losing relevancy as partners for developing countries.

It is reasonable to argue that in most countries, governments want to enhance the welfare of all their people, including focusing on the needs of poor and disadvantaged groups.  Are development agencies and the rich countries that support them backing away from the goals and hopes of the developing world?  What do the citizens of the poorer countries want from their governments?

In his presentation Pritchett gave some survey-based information on the most pressing problems in sub-Saharan Africa – see Figure 1 below. [iii]  According to these numbers, most respondents are more concerned about jobs, income, and infrastructure, rather than health, education and governance.  My sense is that this ordering would be about right in many developing country contexts.  For example, according to a 2014 WHO study, Delhi, India, has the worst air pollution among all cities in the world. [iv]  But if asked, I suspect Delhi citizens would rank jobs, income and housing higher in their list of development priorities than combating air pollution.  As countries climb the ladder of development and become richer, their citizens start putting less priority on materialistic things (activities usually associated with enhancing economic growth) and more value on non-material aspects of life (such as beautiful cities and pristine environments) – a point eloquently made by Pritchett.


Pritchett also challenged the World Bank Group’s twin global goals – eliminating extreme poverty (those living under $1.25/day) by 2030 and boosting shared prosperity by promoting income growth of the bottom 40 percent of the population.  His argument was based on the following twofold logic: First, there cannot be any line in human well-being, and near like individuals (such as those who are just above the $1.25/day line) cannot and should not be treated differently.  Second, the definition of shared prosperity also draws an arbitrary line at the 40 percent of the population.  What about the people in the 41 ^st or 42 ^nd percentile; they are close to the 40 ^th percentile but get left out of the equation.  And how about the median voter in a democratic society?  Unless he belongs to the extreme poor group, does his welfare not count as part of the shared prosperity goal?

One may side with Pritchett’s logic, but if you believe that (a) eliminating extreme poverty, and (b) promoting prosperity in each country are perhaps the noblest causes in development, the focus has to be on people who are economically disadvantaged to begin with.  The principle of shared prosperity relates to economic growth, which needs to be promoted in all developing countries.  The World Bank Group is focused on improving economic growth in developing countries in order to end extreme poverty and boost shared prosperity.  This approach to development seems pretty reasonable.

A democratically elected government is likely to agree that the poor and disadvantaged in the country need to be given extra care in their development programs.  They certainly would have objectives and goals that relate to enhancing the welfare of all of their citizens.  In that process, they may at times use imperfect methods – for example, producing electricity with coal that creates air pollution – to build the required infrastructure for increasing economic growth.  Some development agencies may decline to support such development projects.  In such cases, there could be differences in approaches to achieve national goals of growth and prosperity.  At the same time, it would be difficult to argue that a country’s development goals are inherently different from those of the development agencies.  Only time will tell whether such an approach would put the development agencies on a collision path with a majority of countries and make them rethink their development partnership.